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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 3, 1996
DENAMERICA CORP.
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(Exact name of registrant as specified in its charter)
GEORGIA 1-13226 58-1861457
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(State or other (Commission File No.) (IRS Employer ID No.)
jurisdiction of incorporation)
7373 N. Scottsdale Road, Suite D-120, Scottsdale, Arizona 85253
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (602) 483-7055
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DENAMERICA CORP.
FORM 8-K
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
ACQUISITION OF BLACK-EYED PEA U.S.A., INC.
On July 3, 1996, DenAmerica Corp. (the "Company") acquired all of the
issued and outstanding common stock of Black-eyed Pea U.S.A., Inc. ("BEP") from
BEP Holdings, Inc. ("BEP Holdings") pursuant to an agreement (the "Stock
Purchase Agreement") dated as of May 31, 1996, between the Company and BEP
Holdings (the "BEP Acquisition"). The purchase price for the stock of BEP
consisted of (i) cash of approximately $50.0 million, subject to adjustments
based upon certain of BEP's cash-related accounts as of July 3, 1996 as compared
with amounts stated in those accounts as of the February 5, 1996 balance sheet,
and (ii) a promissory note in the principal amount of $15.0 million issued to
BEP Holdings (the "BEP Purchase Note"). On July 3, 1996, the accounts of BEP
included cash of approximately $4.2 million.
BEP operates approximately 100 casual dining restaurants in 11 states
under the "Black-Eyed Pea" concept and franchises the right to operate an
additional 30 Black-eyed Pea restaurants to third parties. The Company currently
intends to continue to operate most of these restaurants as Black-eyed Pea
restaurants. As a result of the BEP Acquisition and the sale of 23 restaurants
as described in Item 5 of this Report, the Company currently operates 318
restaurants in 30 states.
The Board of Directors of the Company received a fairness opinion dated
July 3, 1996 from The Chicago Corporation, financial advisor to the Company, in
connection with the BEP Acquisition to the effect that the consideration paid
by the Company for BEP is fair to the Company's stockholders from a financial
point of view.
SOURCE OF FUNDS FOR THE BEP ACQUISITION
General
The Company obtained the funds for the cash portion of the purchase
price by entering into sale and lease transactions with (i) FFCA Acquisition
Corporation ("FFCA"), an independent entity, (ii) LH Leasing Company, Inc. ("LH
Leasing"), a corporation owned by Jack M. Lloyd, the Chairman of the Board,
President, and Chief Executive Officer of the Company, and William J. Howard,
Vice President, Secretary, and a director of the Company, and (iii) BEP and
Texas BEP, L.P. ("Texas BEP"), a limited partnership of which BEP is the
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general partner and of which a wholly owned subsidiary of BEP is the sole
limited partner. The Company entered into the sale and lease transactions
discussed below in order to accommodate the requirements of the Company's senior
lenders under the Amended and Restated Credit Agreement dated as of July 3, 1996
among the Company, Banque Paribas, as agent, and the lenders named therein (the
"Amended Credit Agreement") and FFCA. Messrs. Lloyd and Howard formed LH Leasing
only as an accommodation to the Company to enable it to consummate the
BEP Acquisition. Messrs. Lloyd and Howard received no compensation for the
transactions involving LH Leasing described below.
Sale and Lease with FFCA
The sale and lease transaction with FFCA consisted of the sale of the
real properties for 37 restaurants owned by BEP or Texas BEP to FFCA for cash in
the amount of $35.75 million. Concurrently with the sale of the properties to
FFCA, FFCA leased the properties to the Company and the Company subleased the
properties to BEP or Texas BEP. Each of the leases provides for a term of 20
years and includes renewal options for two terms of five years each. The leases
provide for an initial annual rent of 10.5% and additional rental payments if
restaurant sales volume exceeds specified amounts. In addition, the leases
require the Company to pay real estate taxes, insurance premiums, maintenance
costs, and certain other of the landlord's operating costs. The terms of the
subleases between the Company and BEP and Texas BEP are substantially identical
to the terms set forth in the leases between the Company and FFCA.
Sale and Lease with LH Leasing
The sale and lease transaction with LH Leasing consisted of the sale to
LH Leasing, for cash in the amount of $14.25 million, of the equipment located
at 62 restaurants leased by BEP and Texas BEP. Concurrently with the sale of the
equipment to LH Leasing, LH Leasing leased the equipment to the Company, and the
Company subleased the equipment to BEP and Texas BEP. The equipment lease
provides for a term of five years and grants the Company an option to purchase
the equipment at its fair market value upon the expiration of the lease. The
terms of the subleases between the Company and BEP and Texas BEP are
consistent with the terms set forth in the equipment lease between the Company
and LH Leasing.
In order to finance its sale and lease transaction with the Company, LH
Leasing borrowed cash in the amount of $14.25 million from FFCA. Messrs. Lloyd
and Howard jointly and severally guaranteed repayment of the loan. In addition,
Messrs. Lloyd and Howard pledged their stock in LH Leasing to FFCA as additional
collateral for the loan.
Sale/Leaseback Transactions with BEP and Texas BEP
In connection with the sale and lease transactions with FFCA and LH
Leasing, the Company entered into sale/leaseback transactions with BEP and Texas
BEP in which those entities sold to the Company the equipment located at the 37
real properties subject to the
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sale/leaseback transaction with FFCA described above. Concurrently with the sale
of such equipment to the Company, the Company leased the equipment to BEP or
Texas BEP. Each of the equipment leases provides for a term of five years. The
Company entered into the sale/leaseback transactions with BEP and Texas BEP in
order to convey a security interest and contractual landlord liens in the
equipment to FFCA.
BEP PURCHASE NOTE
The BEP Purchase Note is an unsecured obligation of the Company and is
subordinate to all of the Company's senior indebtedness, as defined in the BEP
Purchase Note, including the Company's borrowings under the Amended Credit
Agreement. The BEP Purchase Note bears interest at 12% per annum, subject to
adjustment as described below if the note is not repaid by March 31, 1997.
Interest on the BEP Purchase Note will accrue from July 3, 1996 to March 31,
1997, at which time any accrued but unpaid interest will be added to the
outstanding principal on the BEP Purchase Note. The Company will then pay all
accrued interest on the BEP Purchase Note on each June 30, September 30,
December 31, and March 31, beginning on June 30, 1997. The BEP Purchase Note
will mature on March 31, 2002.
To the extent permitted by the Amended Credit Agreement and related
intercreditor agreement, the Company, at its option, may repay all or any
portion of the amount outstanding under the BEP Purchase Note at any time
without premium or penalty. The BEP Purchase Note also requires the Company to
use its best efforts to repay all or a portion of the amount outstanding under
such note on or before March 31, 1997 and June 30, 1997, respectively, by making
certain borrowings as permitted under the Amended Credit Agreement or by
utilizing cash or other investments in excess of working capital needs as
permitted under the BEP Purchase Note and the Amended Credit Agreement. In the
event that (i) the Company makes a request for borrowings under the Amended
Credit Agreement to repay all or a portion of the BEP Purchase Note and, at the
time of the request, is in compliance with the requirements of the Amended
Credit Agreement with respect to such request, and (ii) Banque Paribas denies,
does not consent to, or otherwise prohibits such borrowings, then the interest
payable under the BEP Purchase Note will be adjusted to 14% per annum
retroactive to January 1, 1997. In addition to the prepayment requirements
described above, the BEP Purchase Note requires the Company to repay all or a
portion of the amount outstanding under such note in the event of certain
"Equity Issuances" or a "Change of Control," as those terms are defined in the
BEP Purchase Note.
The BEP Purchase Note contains certain other provisions with respect to
representations, warranties, covenants, reporting requirements, and events of
default. The BEP Purchase Note also contains certain provisions that, among
other things, limits the ability of the Company and its subsidiaries to incur
additional indebtedness, pay certain dividends or make certain distributions on
their respective capital stock, repurchase shares of their respective capital
stock, make or hold certain investments, or make asset acquisitions or sales.
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In conjunction with the BEP Purchase Note, the Company issued BEP
Holdings a Common Stock Purchase Warrant dated as of July 3, 1996 (the "BEP
Purchase Warrant"), which will entitle BEP Holdings to purchase that number of
shares of the Company's Common Stock equal to (i) the total amount of principal
and interest outstanding under the BEP Purchase Note on April 1, 1997, times
(ii) one half of one percent of the number of shares of Common Stock outstanding
on March 31, 1997, on a fully diluted basis (excluding shares issuable upon
exercise of the BEP Purchase Warrant and employee stock options). The exercise
price per share of Common Stock underlying the BEP Purchase Warrant will be 80%
of the lesser of (a) the fair market value of the Common Stock on July 3, 1996,
or (b) the fair market value of the Common Stock on the date that is five
business days following the publication of the Company's earnings release for
the period ending March 31, 1997. The number of shares purchasable and the
purchase price will be subject to adjustment pursuant to the terms of the BEP
Purchase Warrant upon the occurrence of certain events, including the sale or
issuance by the Company of shares of Common Stock for a per share consideration
less than the exercise price of the BEP Purchase Warrant in effect immediately
prior to such sale or issuance, stock dividends or distributions, stock splits,
or reorganizations. The BEP Purchase Warrant becomes exercisable on October 1,
1997 and will expire on March 31, 2002. In the event that the Company repays the
BEP Purchase Note in full on or before March 31, 1997, the BEP Purchase Warrant
will automatically be cancelled at the time of repayment. In the event that all
or a portion of the principal of the BEP Purchase Note is repaid on or after
April 1, 1997, but on or prior to September 30, 1997, the Company may elect to
redeem all or a portion of the BEP Purchase Warrant from BEP Holdings at a
redemption price of $0.25 per share issuable upon exercise of the BEP Purchase
Warrant.
In connection with the BEP Purchase Warrant, the Company entered into a
registration rights agreement (the "Registration Rights Agreement") with BEP
Holdings pursuant to which BEP Holdings has certain demand and piggyback
registration rights with respect to the Common Stock issuable upon the exercise
of the BEP Purchase Warrant. BEP Holdings' rights to have shares registered
pursuant to the Registration Rights Agreement are subject to certain
limitations, including certain "blackout periods" that may be imposed by the
Company and customary underwriters' cutbacks.
OTHER TRANSACTIONS
Repayment of Series A Notes
Pursuant to the Stock Purchase Agreement and as a condition precedent
to the closing of the BEP Acquisition, on July 3, 1996, the Company repaid all
of the $6.0 million principal amount outstanding on its Series A 13%
Subordinated Notes due 2003 (the "Series A Notes"), plus accrued and unpaid
interest on the Series A Notes as of July 3, 1996. Pursuant to an agreement
dated May 29, 1996 (the "Payoff Agreement") with BancBoston Ventures Inc.
("BancBoston"), the holder of the Series A Notes and a holder of approximately
14.3% of the Company's outstanding Common Stock on that date, the Company repaid
the Series A Notes by paying to BancBoston cash of approximately $5.2 million
and issuing to BancBoston 250,000
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shares of Common Stock valued at $4.00 per share, which was the fair market
value of the Common Stock on the date of the Payoff Agreement. Pursuant to the
Payoff Agreement, on July 3, 1996, the Company, BancBoston, and certain other
holders of the Company's Common Stock also amended the terms of a registration
rights agreement to which they are parties to include the 250,000 shares of
Common Stock issued to BancBoston as "registrable securities" under that
agreement. Pursuant to the terms of the Series A Common Stock Purchase Warrant
to purchase 188,047 shares of Common Stock held by BancBoston (the "Series A
Warrant"), the Series A Warrant was automatically cancelled upon repayment of
the Series A Notes.
Supplemental Indenture
As a result of the issuance of the BEP Purchase Note and repayment of
the Series A Notes in connection with the BEP Acquisition, the Company entered
into a supplemental indenture (the "Supplemental Indenture") with State Street
Bank and Trust Company, as trustee (the "Trustee") under the existing indenture
(the "Indenture") with respect to the Company's outstanding Series B 13%
Subordinated Notes due 2003 (the "Series B Notes"). The Supplemental Indenture
(i) reflects payment of the Series A Notes and issuance of the BEP Purchase
Note, which were senior to the Series B Notes; (ii) creates sub-series of the
Series B Notes designated as "Sub-Series B-1 Notes" and "Sub-Series B-2 Notes;"
(iii) differentiates the redemption rights of the Sub-Series B-1 Notes and
Sub-Series B-2 Notes in the event of an "Equity Issuance," as that term is
defined in the Indenture; and (iv) makes certain other technical amendments to
the Indenture to reflect the changes described above.
In connection with the Supplemental Indenture and the issuance of the
BEP Purchase Note, the Company, the Trustee, and certain of the holders of the
Series B Notes entered into an intercreditor agreement (the "Intercreditor
Agreement") pursuant to which such holders of Series B Notes may not enforce
remedies under the Series B Notes unless (i) such holders have given the holders
of the BEP Purchase Note written notice at least 30 days prior to taking any
action to enforce any remedies with respect to the Series B Notes and (ii) no
"Standstill Period" (as defined) is continuing. A "Standstill Period," as
defined in the Intercreditor Agreement, will be a period of up to 180 days
commencing on the date the Company receives a written notice of the imposition
of the Standstill Period from a representative appointed by the holders of the
BEP Purchase Note. The Intercreditor Agreement also provides that, at any time
prior to repayment in full of the BEP Purchase Note, any modification,
amendment, termination, extension or waiver, of any provision of the BEP
Purchase Note that is identical or substantially identical to any provision of
the Series B Indenture or Series B Notes (a "Parallel Provision") shall
automatically modify, amend, terminate, extend or waive the Parallel Provision.
In addition, any forebearance by the holders of the BEP Purchase Note of any
provision in the BEP Purchase Note will automatically result in an identical
forebearance of the Parallel Provision. However, no such modification,
amendment, waiver or forebearance will be effective as to the Parallel
Provision if it would (a) decrease the principal amount of Series B Notes, or
(b) decrease the interest rate payable on or in respect of the Series B Notes.
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Amended Credit Agreement
The Company, Banque Paribas, and the Company's other senior lenders
entered into the Amended Credit Agreement in order to amend and restate the
previous credit facility between the Company and those lenders so as to reflect
the BEP Acquisition and the various transactions associated with the BEP
Acquisition and to make certain other modifications to the previous credit
facility. The Amended Credit Agreement includes (i) modifications to certain
restrictive covenants that were required in order to permit the Company to
acquire BEP; (ii) amendments necessary to enable the Company to repay the Series
A Notes and to issue the BEP Purchase Note; (iii) amendments necessary to enable
the Company to enter into the sale and lease transactions with FFCA and LH
Leasing; (iv) changes to certain financial covenants; (v) changes made in
contemplation of additional security for borrowings under the Amended Credit
Agreement that the Company will provide as a result of the BEP Acquisition; and
(vi) changes made in contemplation of the sale of 23 restaurants to Mid-American
Restaurants, Inc., as described under Item 5 of this Report. Payments under the
Amended Credit Agreement are secured by substantially all of the tangible and
intangible assets of the Company, including the assets of BEP and its
subsidiaries. The Company also pledged all of the stock of BEP and BEP pledged
the stock of certain of its subsidiaries as additional security under the
Amended Credit Agreement. The Company paid Banque Paribas an amendment fee of
$650,000, plus certain other fees and expenses, in connection with the
negotiation and execution of the Amended Credit Agreement. In addition, the
Company issued to Banque Paribas a six-year warrant to purchase an aggregate of
300,000 shares of the Company's Common Stock. The exercise price for 150,000
shares of Common Stock issuable upon exercise of the warrant is $4.30 per share
and the exercise price for the remaining 150,000 shares issuable upon exercise
of the warrant is $6.45 per share.
ITEM 5. OTHER EVENTS.
SALE OF 23 RESTAURANTS TO MID-AMERICAN RESTAURANTS, INC.
Effective as of July 3, 1996, the Company sold the assets related to 23
restaurants operated under the "Ike's" and "Jerry's" trade names to Mid-American
Restaurants, Inc. ("Mid-American"), a corporation wholly owned by Haig V.
Antranikian, a former officer and director of the Company. As payment for the
restaurants, Mid-American issued to the Company a promissory note in the
principal amount of $4.6 million (the "Mid-American Note"). The Mid-American
Note (i) bears interest at the rate of 10% per annum through June 30, 2001, 11%
per annum through June 30, 2002, and 12% per annum through June 30, 2003, and
(ii) requires Mid-American to make 60 equal installments of $65,000 per month
beginning on July 31, 1996, 12 equal installments of $75,000 per month beginning
on July 31, 2001, and 11 equal installments of $85,000 per month beginning on
July 31, 2002. All unpaid principal and interest on the Mid-American Note will
be due and payable on June 30, 2003. Payment of amounts due under the
Mid-American Note is secured by (a) all of the assets transferred to
Mid-American, (b) the personal guaranty of Mr. Antranikian and his wife, and (c)
the pledge of all of the outstanding stock of Mid-American owned by Mr.
Antranikian. The Mid-American Note
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also contains provisions that require Mid-American to prepay all or a portion of
the outstanding principal under such note in the event of (1) an equity issuance
or other contribution to Mid-American's capital in excess of $500,000, in which
case Mid-American must make prepayments equal to 50% of Mid-American's net
proceeds from each such issuance or contribution up to $5.0 million and 100% of
such net proceeds in excess of $5.0 million, or (2) a sale by Mid-American of
any of its assets, to the extent that such sale results in net proceeds to
Mid-American in excess of $25,000.
In connection with the sale to Mid-American, the Company and
Mid-American entered into a master sublease agreement (the "Master Sublease")
with respect to the 23 restaurant properties pursuant to which Mid-American
subleases each of the restaurant properties on essentially the same terms as
the terms of the leases between the Company and the respective owners of those
properties. Mid-American's obligations under the Master Sublease are secured by
Mr. Antranikian's personal guaranty.
Also in connection with the sale to Mid-American, (i) Mr. Antranikian
repaid all outstanding principal and interest, totalling approximately $120,000,
under a loan made by the Company to Mr. Antranikian in April 1996; (ii) Mr.
Antranikian resigned as an officer and director of the Company; (iii) all of the
Company's obligations under Mr. Antranikian's employment agreement with the
Company were cancelled; and (iv) unvested employee stock options to purchase
28,667 shares of the Company's Common Stock held by Mr. Antranikian were
cancelled.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
As of the date of filing of this Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than September
16, 1996.
(b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
September 16, 1996.
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(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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<S> <C>
2.5 Stock Purchase Agreement dated May 31, 1996, between BEP
Holdings, Inc. and DenAmerica Corp.
4.6 Supplemental Indenture (Series B Notes) between DenAmerica Corp.
and State Street Bank and Trust Company, as trustee
4.7 Common Stock Purchase Warrant dated July 3, 1996, issued to BEP
Holdings, Inc.
4.8 Common Stock Purchase Warrant dated July 3, 1996, issued to
Banque Paribas
10.92A Amended and Restated Credit Agreement dated as of July 3, 1996,
among DenAmerica Corp., the Banks named therein, and Banque
Paribas, as Agent
10.96 Senior Subordinated Promissory Note dated July 3, 1996, in the
principal sum of $15,000,000, payable by DenAmerica Corp. to BEP
Holdings, Inc.
10.97 Registration Rights Agreement dated as of July 3, 1996, between
DenAmerica Corp. and BEP Holdings, Inc.
10.98 Intercreditor Agreement among DenAmerica Corp., certain holders
of DenAmerica's Series B Notes, and State Street Bank and Trust
Company
10.99 Sale and Lease Agreement dated July 3, 1996, among FFCA
Acquisition Corporation, Black-eyed Pea U.S.A., Inc., and Texas
BEP, L.P.
10.100 Form of Lease dated July 3, 1996, between FFCA Acquisition Corp.
and DenAmerica Corp.
10.101 Form of Sublease dated July 3, 1996, between DenAmerica Corp.
and Black-eyed Pea U.S.A., Inc.
10.102 Form of Sublease dated July 3, 1996, between DenAmerica Corp.
and Texas BEP, L.P.
10.103 Equipment Purchase Agreement and Bill of Sale dated July 3,
1996, between LH Leasing Company, Inc. and Black-eyed Pea
U.S.A., Inc.
10.104 Equipment Purchase Agreement and Bill of Sale dated July 3,
1996, between LH Leasing Company, Inc. and Texas BEP, L.P.
10.105 Equipment Lease dated July 3, 1996, between LH Leasing Company,
Inc. and DenAmerica Corp.
10.106 Equipment Sublease dated July 3, 1996, between DenAmerica Corp.
and Black-eyed Pea, U.S.A., Inc.
10.107 Equipment Sublease dated July 3, 1996, between DenAmerica Corp.
and Texas BEP, L.P.
10.108 Asset Purchase Agreement effective as of July 3, 1996, among
Mid-American Restaurants, Inc., Haig V. Antranikian, and
DenAmerica Corp
21.2 List of Subsidiaries of DenAmerica Corp.
</TABLE>
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
July 17, 1996 DENAMERICA CORP.
By: /s/ Todd S. Brown
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Todd S. Brown
Vice President and Chief Financial Officer
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EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
BETWEEN
BEP HOLDINGS, INC.
AND
DENAMERICA CORP.
MAY 31, 1996
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TABLE OF CONTENTS
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Section 1. Definitions................................................................. 1
Section 2. Purchase and Sale of Company Shares......................................... 5
(a) Basic Transaction........................................................... 5
(b) Purchase Price.............................................................. 5
(c) Post-Closing Purchase Price Adjustment...................................... 5
(e) Deliveries at the Closing................................................... 5
(f) Treatment of Intercompany Debt.............................................. 6
Section 3. Representations and Warranties Concerning the Transaction................... 6
(a) Representations and Warranties of Seller.................................... 6
(b) Representations and Warranties of Buyer..................................... 7
Section 4. Representations and Warranties Concerning the Company and its Subsidiaries.. 8
(a) Organization, Qualification, and Corporate Power............................ 8
(b) Capitalization.............................................................. 9
(c) Noncontravention............................................................ 9
(d) Brokers' Fees............................................................... 9
(e) Title to Personal Properties................................................ 9
(f) Subsidiaries. .............................................................. 10
(g) Financial Statements........................................................ 10
(h) Events Subsequent to February 5, 1996....................................... 11
(i) Compliance with Law and Other Related Regulations........................... 12
(j) Tax Matters................................................................. 13
(k) Real Property; Certain Other Matters........................................ 13
(l) Intellectual Property....................................................... 15
(m) Contracts................................................................... 15
(n) Litigation.................................................................. 16
(o) Employee Benefits........................................................... 16
(p) Bonds....................................................................... 17
(q) Environmental Matters....................................................... 17
(r) Certain Business Relationships With the Company and its Subsidiaries........ 18
(s) Certain Employee Matters.................................................... 18
(t) Accounts Receivable......................................................... 18
(u) Insurance................................................................... 18
(v) Minute Books................................................................ 19
(w) Accuracy of Statements...................................................... 19
(x) Franchises.................................................................. 19
(y) Labor Matters............................................................... 19
</TABLE>
(i)
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Section 5. Pre-Closing Covenants........................................ 20
(a) Financing.................................................... 20
(b) General...................................................... 20
(c) Notice of Developments....................................... 21
(d) Exclusivity.................................................. 21
(e) Letters of Credit and Comfort Letters........................ 21
(f) Covenants of Seller.......................................... 22
(g) Section 338(h)(10) Election.................................. 25
(h) Permitted Actions of Seller.................................. 25
(i) Audited Financial Statements................................. 25
Section 6. Post-Closing Covenants....................................... 25
(a) General...................................................... 25
(b) Litigation Support........................................... 25
(c) Transition................................................... 26
(d) Name Changes................................................. 26
(e) Prepayment of Buyer Note..................................... 26
(f) Returns for Periods Through the Closing Date................. 26
(g) Mutual Cooperation........................................... 26
(h) Employees and Employee Benefit Plans......................... 26
(i) Uniform Franchise Offering Circular.......................... 28
Section 7. Conditions to Obligation to Close............................ 28
(a) Conditions to Obligation of Buyer............................ 28
(b) Conditions to Obligation of Seller........................... 29
Section 8. Remedies for Breaches of This Agreement...................... 31
(a) Survival of Representations and Warranties................... 31
(b) Indemnification Provisions for Benefit of Buyer.............. 31
(c) Indemnification Provisions for Benefit of Seller............. 32
(d) Matters Involving Third Parties.............................. 33
(e) Treatment.................................................... 34
Section 9. Termination.................................................. 34
(a) Termination of Agreement..................................... 34
(b) Effect of Termination........................................ 35
Section 10. Miscellaneous................................................ 35
(a) Certain Understandings of Buyer.............................. 35
(b) Press Releases and Public Announcements...................... 35
(c) No Third Party Beneficiaries................................. 35
(d) Entire Agreement............................................. 35
(e) Succession and Assignment.................................... 36
(f) Counterparts................................................. 36
(g) Headings..................................................... 36
</TABLE>
(ii)
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(h) Notices.................................................. 36
(i) Governing Law............................................ 37
(j) Amendments and Waivers................................... 37
(k) Severability............................................. 37
(l) Expenses................................................. 37
(m) Construction............................................. 37
(n) Incorporation of Exhibits and Schedules.................. 38
(o) Confidentiality.......................................... 38
</TABLE>
EXHIBITS
Exhibit A - Form of Buyer Note
Exhibit B - List of 39 Owned Properties
Exhibit C-1- List of Letters of Credit
Exhibit C-2- List of Comfort Letters
Exhibit D - Certain Management Corp. Employees
Exhibit E - List of 63 Leased Properties
Exhibit F - Form of Transition Services Agreement
Exhibit G - Form of Opinion of Counsel to Seller
Exhibit H - Form of Opinion of Counsel to Buyer
Exhibit I - Form of Registration Rights Agreement
Exhibit J - Purchase Price Adjustment
Exhibit K - Permitted Actions between Signing and Closing
Exhibit L - Form of Warrant
Exhibit M - Letter Agreement regarding Series B Notes
Disclosure Schedule - Exceptions to Representations and Warranties
(iii)
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STOCK PURCHASE AGREEMENT
AGREEMENT entered into as of May 31, 1996, by and between DenAmerica
Corp., a Georgia corporation ("Buyer"), and BEP Holdings, Inc., a Delaware
corporation ("Seller"). Buyer and Seller are referred to herein as the
"Parties." Other capitalized terms used herein are defined in Section 1.
WHEREAS, Seller owns all of the outstanding capital stock of
Black-eyed Pea U.S.A., Inc., a Texas corporation (the "Company");
WHEREAS, the Company and its Subsidiaries are engaged in the business
of operating the Black-eyed Pea restaurant chain;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the outstanding capital stock of the Company;
WHEREAS, the purchase price for the capital stock of the Company will
consist of cash and a promissory note payable by Buyer; and
WHEREAS, Unigate Holdings, NV, the indirect parent of Seller, has
executed and delivered to Buyer a Guarantee Agreement, pursuant to which Unigate
Holdings, NV has guaranteed the obligations of Seller under this Agreement on
the terms set forth therein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
Section 1. Definitions.
"Adverse Consequences" means (i) all actions, suits, proceedings,
investigations, charges, complaints, claims, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts
paid in settlement, liabilities, obligations, taxes, liens, losses, expenses,
and fees, including court costs and reasonable attorneys' fees and expenses and
(ii) the amount of the loss, damage or expense (or decrease in the value of the
business of the Company and its Subsidiaries taken as a whole) that is actually
suffered or incurred by reason of a breach of a representation or warranty or a
covenant or agreement that would not have been suffered or incurred if the
representation or warranty or covenant or agreement not been breached.
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person
within the meaning of the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by Chemical Bank (or its successors).
"BEP Development Agreement" means a development agreement or license
agreement relating to the opening of additional BEP Restaurants.
"BEP Franchise Agreement" means a franchise agreement relating to the
operation of a BEP Restaurant.
"BEP Leases" means the leases relating to the BEP Restaurant
Properties.
"BEP Mortgages" means the mortgages (if any) relating to the BEP
Restaurant Properties.
"BEP Real Estate Documents" means the deeds, leases and other
documents pursuant to which the Company and its Subsidiaries own, lease or
otherwise occupy the properties associated with the BEP Restaurants.
"BEP Restaurant Properties" means the real properties associated with
the BEP Restaurants.
"BEP Restaurants" means the Black-eyed Pea restaurants operated by
the Company and its Subsidiaries (excluding restaurants operated by
franchisees).
"Black-eyed Pea Restaurants, Inc." means Black-eyed Pea Restaurants,
Inc., a Delaware corporation and the indirect parent of Seller.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(b) below.
"Buyer SEC Reports" has the meaning set forth in Section 3(b) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the preface above.
"Company Shares" means the shares of common stock, par value $.01 per
share, of the Company.
"Confidentiality Agreement" has the meaning set forth in Section
10(d) below.
"Credit Agreement" has the meaning set forth in the Buyer Note.
"Debt Agreements" has the meaning set forth in Section 3(b)(x) below.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan, or (d)
Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental Laws" has the meaning set forth in Section 4(q) below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FFCA" means Franchise Finance Corporation of America (or the
Affiliate of FFCA which provides financing to Buyer in connection with the
transactions contemplated by this Agreement).
"Financial Statements" has the meaning set forth in Section 4(g)
below.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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<PAGE> 8
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" has the meaning set forth in Section 4(l)
below.
"Knowledge" means actual knowledge without independent investigation.
"Latest Balance Sheet" has the meaning set forth in Section 4(g)
below.
"Management Corp." means Black-eyed Pea Management Corp., a South
Dakota corporation and wholly-owned subsidiary of Seller.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Registration Rights Agreement" means the Registration Rights
Agreement in the form attached as Exhibit I hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens on personal properties and liens securing rental payments
under capital lease
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<PAGE> 9
arrangements for real or personal properties, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"Seller" has the meaning set forth in the preface above.
"Store Change Funds" means cash held at stores for purposes of making
change.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) directly or indirectly owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors (or any partnership as to which
such Person has a similar ownership or voting interest).
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Unigate PLC" means Unigate PLC, a company organized under the laws
of England and Wales and the indirect holder of all of the outstanding capital
stock of Seller.
"Warrant" means the warrant to purchase shares of Buyer's common
stock in the form attached as Exhibit L hereto, which warrant will be issued to
Seller on the Closing Date and become exercisable in the future under the
circumstances set forth therein.
Section 2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell
to Buyer, all of the outstanding Company Shares for the consideration specified
in Section 2(b).
(b) Purchase Price. At the Closing, Buyer shall pay to Seller the
following as the purchase price for the Company Shares: (i) $50.0 million by
wire transfer of immediately available funds and (ii) a negotiable promissory
note in the principal amount of $15.0 million payable by Buyer to Seller in the
form of Exhibit A hereto (the "Buyer Note"). The purchase price paid at the
Closing shall be subject to adjustment as provided in Section 2(c) below.
(c) Post-Closing Purchase Price Adjustment. Within the time periods
set forth in Exhibit J hereto, the purchase price paid by Buyer to Seller at the
Closing shall be adjusted in accordance with Exhibit J. Any purchase price
adjustment owed by reason of the provisions of Exhibit J shall be paid by wire
transfer of immediately available funds and shall be accompanied by interest on
such payment from the Closing Date at the Applicable Rate.
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<PAGE> 10
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of O'Connor, Cavanagh,
Anderson, Killingsworth & Beshears, P.A., One East Camelback Road, Phoenix,
Arizona, commencing at 9:00 a.m. local time on June 24, 1996 (or, if later, the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself)) (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) Seller will
deliver to Buyer the various instruments and documents referred to in Section
7(a) below, (ii) Buyer will deliver to Seller the various instruments and
documents referred to in Section 7(b) below (including the Buyer Note, the
Warrant and the Registration Rights Agreement), (iii) Seller will deliver to
Buyer stock certificates representing all of the outstanding Company Shares,
endorsed in blank or accompanied by duly executed assignment documents and (iv)
Buyer will deliver to Seller the consideration specified in Section 2(b) above
for the outstanding Company Shares (as such consideration may be modified
pursuant to Section 2(c)(i) above).
(f) Treatment of Intercompany Debt. Immediately prior to the Closing,
all outstanding intercompany balances and promissory notes between the Company
and its Subsidiaries, on the one hand, and the Seller and its Affiliates (other
than the Company and its Subsidiaries), on the other hand, shall be combined and
netted. Any net amount owing by the Company and its Subsidiaries shall be
contributed to the capital of the Company. Any net amount owing to the Company
and its Subsidiaries shall be forgiven. If requested by Buyer, Seller shall
deliver written evidence of the consummation of such transactions at the
Closing.
Section 3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of Seller. Seller represents and
warrants to Buyer that the statements contained in this Section 3(a) are true
and correct as of the date of this Agreement.
(i) Organization. Seller is a corporation, duly organized and
validly existing under the laws of State of Delaware.
(ii) Authorization of Transaction. Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Seller, enforceable against it in accordance with its
terms. Seller does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement, except as required pursuant to the HSR Act.
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<PAGE> 11
(iii) Brokers' Fees. Neither Seller nor any of its Affiliates has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Buyer could become liable or obligated.
(iv) Company Shares. Seller holds of record and owns beneficially
all of the issued and outstanding Company Shares free and clear of any
restrictions on transfer (other than restrictions under the Securities Act
and state securities laws), taxes, security interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, demands, liens,
claims, charges and encumbrances. Seller is not party to any option,
warrant, purchase right, or other contract or commitment that could require
it to sell, transfer, or otherwise dispose of any capital stock of the
Company. Seller is not party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the
Company.
(v) Investment. Seller is not acquiring the Buyer Note or the
Warrant with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
(b) Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that the statements contained in this Section 3(b) are true
and correct as of the date of this Agreement.
(i) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia.
(ii) Authorization of Transaction. Buyer has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable against it in accordance with its
terms. Buyer need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement, except as required pursuant to the HSR Act.
(iii) Buyer Note, etc. Buyer has the corporate power and
authority to execute, issue and deliver the Buyer Note, the Warrant and the
Registration Rights Agreement and to perform its obligations thereunder.
Each of the Buyer Note, the Warrant and the Registration Rights Agreement
has been duly authorized and, when executed, issued and delivered to
Seller, will constitute the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
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<PAGE> 12
(iv) Noncontravention. The execution, delivery and performance of
this Agreement, the Buyer Note, the Warrant and the Registration Rights
Agreement (and the issuance of capital stock of Buyer upon exercise of the
Warrant) will not (i) violate any statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is subject or any
provision of the charter or bylaws of Buyer or (ii) result in a breach of,
constitute a default under, result in the acceleration or termination of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice or consent (other than notices previously given or
consents previously obtained) under any agreement, contract, lease,
license, instrument, or other arrangement to which Buyer is a party or by
which it is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets). The
issuance of the Warrant (and the issuance of capital stock of Buyer upon
exercise of the Warrant) will not breach or conflict with any preemptive,
first refusal or similar rights of any holder of Buyer's securities.
(v) SEC Reports. Buyer has filed all forms, reports and documents
required to be filed by it with the SEC since November 30, 1995 pursuant to
the federal securities laws and the SEC rules and regulations thereunder,
all of which, as of their respective dates, complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act (collectively, the "Buyer SEC Reports"). Except to
the extent cured in any filing made prior to the date of this Agreement,
none of the Buyer SEC Reports, including, without limitation, any financial
statements or schedules included therein, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(vi) No Material Adverse Change. Since March 27, 1996, there has
not been any material adverse change in the business or financial condition
of the Buyer.
(vii) Sufficient Funds. Buyer has cash available, and/or has
obtained commitments from financial institutions, in amounts sufficient to
pay at the Closing the purchase price for the Company Shares as provided in
Section 2(b) above.
(viii) Brokers' Fees. Neither Buyer nor any of its Affiliates has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Seller or any of its Affiliates could become liable or
obligated.
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<PAGE> 13
(ix) Investment. Buyer is not acquiring the Company Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(x) Debt Agreements. Buyer has provided to Seller true and
correct copies of all agreements and instruments of Buyer under which
Indebtedness (as defined in the Buyer Note) is outstanding or may be issued
("Debt Agreements").
Section 4. Representations and Warranties Concerning the Company and
its Subsidiaries. Seller represents and warrants to Buyer that the statements
contained in this Section 4 are true and correct as of the date of this
Agreement except as set forth in the disclosure schedule delivered by Seller to
Buyer on the date hereof (the "Disclosure Schedule"), as the same may be amended
pursuant to Section 5(d)(i) below.
(a) Organization, Qualification, and Corporate Power. Each of the
Company and its Subsidiaries is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and its Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification or good standing would not
materially interfere with the ability of the Company and its Subsidiaries to
conduct business or have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each of the Company and its Subsidiaries has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 500,000 shares of common stock, par value $.01 per share, of
which 22,499 shares are issued and outstanding. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by Seller. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Company to issue, sell, or otherwise cause to become
outstanding any additional shares of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights issued by the Company (or with respect to which the Company could
be required to make payments or issue any capital stock).
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of the Company or its Subsidiaries is subject or any
provision of the charter or bylaws of any of the Company or its Subsidiaries or
(ii) result in a breach of, constitute
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<PAGE> 14
a default under, result in the acceleration or termination in accordance with
its terms of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Company or its Subsidiaries
is a party or by which any of them are bound or to which any of their assets is
subject (or result in the imposition of any Security Interest upon any of their
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. None of the Company or its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement, except (i) under the HSR Act and (ii) where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
(d) Brokers' Fees. None of the Company or its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(e) Title to Personal Properties. The Company and its Subsidiaries
have good and marketable title to, or a valid and effective right to use, all of
their respective personal properties, including all personal properties
reflected on the Latest Balance Sheet or acquired since the date of the Latest
Balance Sheet (except property disposed of subsequent to that date in the
Ordinary Course of Business and except other immaterial items). Such assets and
properties are not subject to any mortgage, pledge, lien, claim, encumbrance,
charge, security interest or title retention or other security arrangement
except for liens for the payment of federal, state and other taxes, the payment
of which is neither delinquent nor subject to penalties, and except for other
liens and encumbrances incidental to the conduct of the business of the Company
and its Subsidiaries or the ownership of their assets or properties which were
not incurred in connection with the borrowing of money or the obtaining of
advances and which do not in the aggregate materially detract from the value of
the assets or properties of the Company and its Subsidiaries taken as a whole or
materially impair the use thereof in the operation of their respective
businesses. All leases pursuant to which the Company or any of its Subsidiaries
leases any substantial amount of personal property are valid and effective in
accordance with their respective terms.
(f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth
for each Subsidiary of the Company (i) if such Subsidiary is a corporation (A)
its name and jurisdiction of incorporation, (B) the number of shares of
authorized capital stock of each class of its capital stock, (C) the number of
issued and outstanding shares of each class of its capital stock, (D) the names
of the holders of shares of each class of its
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capital stock, (E) the number of shares held by each such holder and (F) the
number of shares of its capital stock held in treasury; and (ii) if such
Subsidiary is a partnership (1) its name and jurisdiction of organization, (2)
the names of the holders of its general and limited partner interests and (3)
the percentage general or limited partner interest held by each such holder. All
of the issued and outstanding shares of capital stock of each corporate
Subsidiary of the Company have been duly authorized and are validly issued,
fully paid and nonassessable. All of the outstanding general and limited partner
interests of each partnership Subsidiary of the Company have been duly
authorized and are validly issued. One of the Company and its Subsidiaries holds
of record and owns beneficially all of the outstanding shares of each corporate
Subsidiary of the Company and one of the Company and its Subsidiaries owns each
outstanding partner interest of each partnership Subsidiary of the Company, in
each case free of all security interests, liens, charges, claims and
encumbrances.
(g) Financial Statements. The following financial statements are
included in the Disclosure Schedule (collectively the "Financial Statements"):
(i) the consolidated balance sheets and statements of earnings,
changes in stockholders' equity and cash flows for the Company and its
Subsidiaries as of and for the fiscal years ended April 3, 1995 and April
4, 1994, which have been audited by KPMG Peat Marwick LLP; and
(ii) the consolidated balance sheet (the "Latest Balance Sheet")
of the Company and its Subsidiaries as of February 5, 1996, which balance
sheet has not been audited or reviewed by KPMG Peat Marwick LLP.
The Financial Statements referenced in clause (i) above have been prepared in
accordance with GAAP applied on a consistent basis and present fairly the
consolidated financial condition and results of operations of the Company and
its Subsidiaries as of and for the fiscal years ended April 3, 1995 and April 4,
1994. The Latest Balance Sheet has been prepared in accordance with GAAP applied
on a consistent basis and presents fairly the financial condition of the Company
and its Subsidiaries as of February 5, 1996; provided, however, that the Latest
Balance Sheet does not include footnotes and is subject to normal year-end audit
adjustments. Neither the Company nor any of its Subsidiaries has any material
liabilities of a type which would be included in a balance sheet prepared in
accordance with generally accepted accounting principles, whether related to tax
or non-tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated or otherwise, except (i) liabilities disclosed in the Latest
Balance Sheet; (ii) liabilities incurred since the date of the Latest Balance
Sheet in the Ordinary Course of Business; (iii) liabilities referred to in the
Disclosure Schedule and (iv) other liabilities which would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(h) Events Subsequent to February 5, 1996.
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(i) Since February 5, 1996, neither the Company nor its
Subsidiaries (A) has taken any material action outside the Ordinary Course
of Business; (B) has borrowed any money; (C) become contingently liable for
any borrowings of another Person (or guaranteed or become contingently
liable for the performance of contractual obligations of another Person);
(D) has failed to use its reasonable efforts to preserve its business
organization intact, to keep available the services of its employees and
independent contractors, or to preserve its relationships with its
customers, suppliers and other Persons with which it deals; or (E) has
increased or committed to increase the salary or compensation of any
officer.
(ii) Since February 5, 1996, none of the Company or its
Subsidiaries has engaged in any material practice, taken any material
action or entered into any material transaction outside the Ordinary Course
of Business (other than the transactions contemplated by this Agreement).
Without limiting the generality of the foregoing, since that date:
(A) there has been no change made or authorized in the
charter or bylaws of the Company or any of its Subsidiaries;
(B) none of the Company or its Subsidiaries has issued, sold
or otherwise disposed of any of its capital stock, or granted any
options, warrants or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital stock;
(C) none of the Company or its Subsidiaries has declared,
set aside or paid any dividend or made any distribution with respect
to its capital stock (whether in cash or in kind), or redeemed,
purchased or otherwise acquired any of its capital stock;
(D) the Company and its Subsidiaries have not created,
incurred, assumed or guaranteed more than $100,000 in aggregate
indebtedness for borrowed money and capitalized lease obligations;
(E) none of the Company or its Subsidiaries has sold,
leased, transferred or assigned any material assets, tangible or
intangible, outside the Ordinary Course of Business;
(F) there has not been any material adverse change in the
financial condition, business, properties, assets or results of
operations of the Company and its Subsidiaries taken as a whole
(provided that no representation or warranty is made as to the
decline in the performance of the business (including but not
limited to the decline in comparable store sales) experienced to
date, the circumstances or factors giving rise
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<PAGE> 17
to such decline or any continuation of such decline, circumstances
or factors in the future, all of which risks are being assumed by
Buyer);
(G) there has not been any destruction, damage or loss
(whether or not covered by insurance) to the assets or properties of
the Company or its Subsidiaries which materially affects or impairs
the ability of the Company and its Subsidiaries to conduct their
business, taken as a whole;
(H) there has not been any mortgage or pledge of any
material amount of the assets or properties of the Company or any of
its Subsidiaries; and
(I) none of the Company or its Subsidiaries has committed
to any of the foregoing.
(i) Compliance with Law and Other Related Regulations. Except in the
case of environmental, franchise and labor matters (which are exclusively
covered by the representations and warranties contained in Sections 4(q), (x)
and (y), respectively):
(i) Each of the Company and its Subsidiaries is in compliance
with all requirements of federal, state and local law and regulations, and
all requirements of all governmental bodies and agencies having
jurisdiction over it, the conduct of its business, the use of its assets
and properties and all premises occupied by it, except where failure to
comply would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(ii) Neither the Company nor any of its Subsidiaries has received
any written official notice or citation from any federal, state or local
authority or any insurance or inspection body that any of its assets,
properties, facilities, equipment or business procedures or practices
contravenes or fails to comply in any material respect with any applicable
federal, state or local law, ordinance, regulation, building or zoning law,
or requirement of any public body, including but not limited to any
federal, state or local law or regulations relating to health or safety
matters or any OSHA requirements, except for notices or citations as to
matters which would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(iii) Without limiting the foregoing, each of the Company and its
Subsidiaries has properly filed all material reports, paid all fees and
obtained all material licenses, permits, certificates and authorizations
needed or required for the conduct of its business and the use of its
assets and properties and the premises occupied by it in connection
therewith and is in compliance in all material respects with all
conditions, restrictions and provisions of all such material licenses,
permits, certificates and authorizations.
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(j) Tax Matters.
(i) Each of the Company and its Subsidiaries has filed or been
included in all federal, state and local, foreign and domestic, income,
employment, franchise, transaction privilege, sales, use, property or other
excise tax returns it was required to file or be included in, and has paid
in full or adequately reserved for or will pay all taxes shown due thereon
(together with all interest, penalties, assessments and deficiencies
assessed in connection therewith due through the date hereof). Such tax
returns and reports are correct in all material respects. Each of the
Company and its Subsidiaries has paid or will pay in full any taxes for
which a return or report may not be required, including all property taxes
due through the date hereof.
(ii) Section 4(j) of the Disclosure Schedule lists all Income Tax
Returns filed with respect to any of the Company and its Subsidiaries for
taxable periods ended on or after March 31, 1992 that have been audited and
indicates those Income Tax Returns that currently are the subject of audit.
Seller has delivered or made available to Buyer correct and complete copies
of all U.S. federal Income Tax Returns, state Income Tax Returns,
examination reports, and statements of deficiencies filed by, assessed
against or agreed to by any of the Company and its Subsidiaries since April
1, 1992.
(iii) None of the Company or its Subsidiaries has waived any
statute of limitations in respect of Income Taxes or agreed to any
extension of time with respect to an Income Tax assessment or deficiency.
(iv) None of the Company or its Subsidiaries is a party to any
Income Tax allocation or sharing agreement.
(k) Real Property; Certain Other Matters.
(i) Section 4(k)(i) of the Disclosure Schedule lists all real
property that any of the Company and its Subsidiaries owns. With respect to
each such parcel of owned real property, except for matters which would not
have a material adverse effect on the Company and its Subsidiaries taken as
a whole:
(A) the owner has good and marketable title to the parcel
of real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special
assessments not yet delinquent, recorded easements, covenants, and
other restrictions, and utility easements, building restrictions,
zoning restrictions, and other easements and restrictions existing
generally with respect to properties of a similar character;
(B) there are no leases, subleases, licenses, concessions,
or other agreements granting to any Person or Persons the right of
use or occupancy of any portion of the parcel of real property; and
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(C) there are no outstanding options or rights of first
refusal to purchase the parcel of real property.
(ii) Section 4(k)(ii) of the Disclosure Schedule lists all real
property leased or subleased to any of the Company and its Subsidiaries.
Seller has made available to Buyer copies of the leases and subleases
listed in Section 4(k)(ii) of the Disclosure Schedule. Each lease and
sublease listed in Section 4(k)(ii) of the Disclosure Schedule is legal,
valid, binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or
ineffectiveness would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(iii) Neither the Company nor its Subsidiaries has received
written notice from any landlord of any BEP Restaurant Property that the
Company or any of its Subsidiaries is in default of any material terms,
conditions, or provisions of any BEP Lease relating to the BEP Restaurant
Properties (other than written notices received in the past as to alleged
defaults which have been cured, waived or otherwise resolved). The BEP
Leases represent the entire agreement between the Company or its
Subsidiaries, as the case may be, and the respective landlords relating to
the BEP Restaurants. The Company directly or through its Subsidiaries
operates each BEP Restaurant Property in accordance with its authorized
use.
(iv) The buildings and material equipment, fixtures, furniture,
furnishings and office equipment (and other material tangible personal
assets and properties) of the Company and its Subsidiaries presently used
in their respective businesses are in reasonable operating condition and in
a state of reasonable maintenance and repair, normal wear and tear
excepted. The equipment, fixtures and other tangible personal assets and
properties located in the BEP Restaurants are reasonably sufficient to
operate the business of the BEP Restaurants as currently operated.
(v) The BEP Restaurants are served by public utilities which are
adequate for the current use of the BEP Restaurants. All utility connection
fees and use charges have been paid when due. The BEP Restaurants comply
with all applicable building, fire and safety codes, subject to such
exceptions as would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries taken as a whole. Seller
does not have Knowledge of any existing or proposed plan to widen, modify
or realign any street or highway adjoining any BEP Restaurant Property or
any existing or proposed eminent domain proceedings or private purchase in
lieu thereof of any BEP Real Property (or any portion thereof). Each of the
BEP Restaurants is operational and open for business.
(l) Intellectual Property.
(i) Section 4(l) of the Disclosure Schedule identifies the
following owned or used by any of the Company or its Subsidiaries: (A)
patents and pending patent applications; (B) trademark, service mark and
trade name
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registrations and applications therefor; (C) copyright registrations and
applications therefor; and (D) licenses and similar agreements for the use
of any intellectual property (including, without limitation, patents,
unpatented inventions and technology, trademarks, service marks and trade
names, copyrights and copyrightable works, know-how and trade secrets,
hereinafter collectively referred to as "Intellectual Property") to which
any of the Company or its Subsidiaries is a party, either as licensee or
licensor (other than licenses for the use of commercially available
computer software and related documentation).
(ii) The Company and its Subsidiaries own and possess all right,
title and interest in and to, or have a valid and enforceable license to
use, the Intellectual Property necessary for the operation of their
respective businesses and no written claim by any third party contesting
the validity, enforceability, use or ownership of any of the Intellectual
Property has been made or, to the Knowledge of Seller, threatened in the
last three years or is currently outstanding.
(m) Contracts. Section 4(m) of the Disclosure Schedule lists the
following written contracts to which any of the Company and its Subsidiaries is
a party on the date hereof:
(i) any agreement the performance of which is expected to involve
consideration in excess of $100,000;
(ii) any agreement which relates to the granting of a franchise
relating to the operation of a BEP Restaurant to a third party by the
Company, its Subsidiaries or any Affiliate of the Company or Seller;
(iii) any agreement which restricts or contains limitations on
the ability of any of the Company or its Subsidiaries to freely conduct
business anywhere in the world;
(iv) any collective bargaining agreement;
(v) any agreement with the Seller or its Affiliates (other than
the Company and its Subsidiaries);
(vi) any agreement for the employment of any individual on a
full- time, part-time, consulting or other basis providing annual
compensation in excess of $100,000; and
(vii) any agreement which relates to the borrowing of money or
the guarantee thereof.
Seller has made available to Buyer a correct and complete copy of each contract
or other agreement listed in Section 4(m) of the Disclosure Schedule.
(n) Litigation. Section 4(n) of the Disclosure Schedule sets forth
each instance in which any of the Company and its Subsidiaries (i) is subject to
any
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outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party to or, to the Knowledge of Seller, threatened with, any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation, if adversely determined,
would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
(o) Employee Benefits. Section 4(o) of the Disclosure Schedule lists
each Employee Benefit Plan that any of the Company and its Subsidiaries
maintains or to which any of them contributes.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code, except
where the failure to comply would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole; provided, however, the
Company makes no representation or warranty as to compliance subsequent to
the Closing.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan.
(iii) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan that is intended to meet the requirements of Code
Section 401(a) has (A) received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Code Sec.
401(a), or (B) an application for such a determination letter for such plan
has been timely filed within the remedial amendment period (as described in
Section 401(b) of the Code) with respect to the Tax Reform Act of 1986, as
amended, and subsequent federal legislation, or (C) such remedial amendment
period for such plan has not yet expired.
(iv) None of the Employee Benefit Plans set forth in Section 4(n)
of the Disclosure Schedule is subject to Title IV of ERISA.
(v) Seller has made available to Buyer true and correct copies of
the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan. Seller has made available to Buyer historical cost data with
respect to the provision of benefits to employees of the Company and its
Subsidiaries under Seller's Employee Benefits Plans.
(p) Bonds. Section 4(p) of the Disclosure Schedule identifies all
bonds, guarantees, comfort letters and similar instruments currently maintained
by or on behalf of the Company and its Subsidiaries.
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<PAGE> 22
(q) Environmental Matters. Except for (1) matters which would
not have a material adverse effect on the Company and its Subsidiaries taken as
a whole and (2) matters relating to the presence or use of cleaning solvents and
other substances normally used in the day-to-day operations of business such as
the BEP Restaurants:
(i) the Company and its Subsidiaries have obtained all
required permits, licenses, and other authorizations, if any, which are
required under federal, state, regional, county, local and foreign
statutes, codes, ordinances and other laws relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases, spilling, injecting, leaching, or disposing into
the environment or threatened releases of pollutants, contaminants,
chemicals, or industrial, hazardous, or toxic materials or wastes into
the environment (including, without limitation, ambient air, surface
water, ground water, land surface, or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, discharge into the environment, transport, or
handling of pollutants, contaminants, chemicals, or industrial,
hazardous, or toxic materials or wastes, or any regulation, rule, code,
plan, order, decree, judgment, injunction, notice, or demand letter
issued, entered, promulgated, or approved thereunder ("Environmental
Laws");
(ii) the Company and its Subsidiaries are in material
compliance with all terms and conditions of all required permits,
licenses, and authorizations, and are also in material compliance with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables
contained in the Environmental Laws;
(iii) there is no pending or, to the Knowledge of Seller,
threatened civil or criminal litigation, notice of violation, warning
letter, or administrative proceeding relating in any way to the
Environmental Laws (including, without limitation, notices, demand
letters, or claims under the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), as
amended by the Superfund Amendments Reauthorization Act of 1987
("SARA"), the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the Clean Water Act
of 1977, and the Clear Air Act of 1966, all as amended, and similar
foreign, state, or local laws) involving the Company or any of its
Subsidiaries;
(iv) there have not been and there are not any past or
present events, conditions, circumstances, activities, practices,
incidents or actions which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal
liability, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, arrangement for
disposal, transport, arrangement for transport, or handling, or the
emission, discharge, release, or threatened release into the
environment, of any pollutant,
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contaminant, chemical, or industrial, hazardous, or toxic material or
waste, including, without limitation, any liability arising, or any
claim, action, demand, suit, proceeding, hearing, study, or
investigation which may be brought, under RCRA, CERCLA, SARA, or
similar foreign, state, regional, county, or local laws; and
(v) to the Knowledge of Seller, no facts or circumstances
exist with respect to the real property owned by the Company and its
Subsidiaries which give rise to any liability based upon or related to
the processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment of any pollutant, contaminant or hazardous substance.
(r) Certain Business Relationships With the Company and its
Subsidiaries. Except for matters which are treated in the purchase price
adjustment to be made under Exhibit J and matters which are addressed by the
Transition Services Agreement attached as Exhibit F, none of Seller or its
Subsidiaries or other Affiliates (excluding for this purpose the Company and its
Subsidiaries) owns any material asset, tangible or intangible, which is used in
the business of, or provides any material service to, any of the Company or its
Subsidiaries.
(s) Certain Employee Matters. None of Theodore Papit, Jack
Davis and Don Martin, Jr. is an employee of the Company or its Subsidiaries.
(t) Accounts Receivable. The accounts receivable of the
Company and its Subsidiaries have been acquired in the Ordinary Course of
Business, are valid and enforceable and are fully collectible, subject to no
known defenses, setoffs or counterclaims, except to the extent of any reserve
reflected in the Latest Balance Sheet (as the same may be adjusted in the
Ordinary Course of Business subsequent to the date of the Latest Balance Sheet
consistent with past practice).
(u) Insurance. The Disclosure Schedule lists the insurance
coverage for the Company and its Subsidiaries and all such insurance coverage is
in full force and effect as of the date hereof.
(v) Minute Books. The minute books of the Company and each of
its Subsidiaries accurately record all material actions taken by their
respective shareholders and directors.
(w) Accuracy of Statements. Neither this Agreement nor the
Disclosure Schedule contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
(x) Franchises. Seller has made available to Buyer a true and
accurate copy of each BEP Franchise Agreement and each BEP Development Agreement
to which the Company, its Subsidiaries or any Affiliate of the Company is a
party. Neither the Company nor any of its Subsidiaries have received written
notice from any
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franchisor or franchisee that the Company or any of its Subsidiaries is in
default of any of the material terms, conditions, or provisions of any BEP
Franchise Agreement or BEP Development Agreement. Except as would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole:
(i) each such BEP Franchise Agreement and BEP Development
Agreement is valid, binding and enforceable in accordance with its
terms; each such BEP Franchise Agreement and BEP Development Agreement
is in good standing and neither the Company nor any of its Subsidiaries
is in default under any such agreement; and
(ii) each of the Company and its Subsidiaries which is a
party to any such BEP Franchise Agreement or BEP Development Agreement
has performed in all material respects its obligations under each such
BEP Franchise Agreement and BEP Development Agreement in accordance
with its terms. Neither the Company nor any of its Subsidiaries has any
agreements or understandings (written or oral) with, or contractual
obligations to, any franchisor or franchisee that will survive the
Closing other than under the BEP Franchise Agreements and the BEP
Development Agreements. All BEP Franchise Agreements and BEP
Development Agreements comply in all material respects with all federal
and state laws and regulations relating to franchising.
The foregoing notwithstanding, Seller makes no representations or warranties
regarding the impact or effect of any actions which Buyer may take before or
after the Closing or which the Company or its Subsidiaries may take after the
Closing.
(y) Labor Matters. The Company and its Subsidiaries have
complied with wage and hour determinations issued by the U.S. Department of
Labor under the Service Contract Act of 1965 and the Fair Labor Standards Act in
paying its employees' salaries, fringe benefits, and other compensation for the
performance of work or other duties in connection with contracts with the U.S.
government, and have complied with the requirements of the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act, the Civil Rights Act of 1964 (Title VII), as
amended, the Age Discrimination in Employment Act and state labor laws, except
failures to comply with any such determinations, laws, rules or requirements
which do not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
Section 5. Pre-Closing Covenants. The Parties agree as follows
with respect to the period between the execution of this Agreement and the
Closing.
(a) Financing. Buyer and its Affiliates will use their best
efforts to obtain financing under that certain commitment letter with FFCA dated
May 2, 1996 as soon as possible (and Seller will lend all assistance to Buyer
that Buyer may reasonably request in this regard). Buyer and its Affiliates will
use their best efforts in order to (i) assist FFCA in obtaining title insurance
commitments with respect to the 39 properties listed in Exhibit B hereto as soon
as possible and (ii) obtain landlord consents to FFCA's equipment financing.
Seller will lend all assistance to Buyer that
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Buyer may reasonably request in this regard. The foregoing notwithstanding,
Seller shall not be required to assist Buyer by providing guarantees of
borrowings, guarantees of performance under contracts or credit support or by
making payments to third parties in exchange for consents. At or prior to the
Closing, Buyer shall repay all outstanding principal and interest on its Series
A 13% Subordinated Notes due 2003. Prior to the Closing, Buyer will provide to
Seller true and correct copies of all new Debt Agreements and amendments to
existing Debt Agreements.
(b) General. Subject to Section 5(a), each of the Parties will
use its reasonable efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below). Subject to Section 5(a), each
of the Parties will (and Seller will cause each of the Company and its
Subsidiaries to) give any notices to third parties, and each of the Parties will
(and Seller will cause each of the Company and its Subsidiaries to) use its
reasonable efforts to obtain any third party consents that the other Party
reasonably may request in connection with the matters referred to in Section
3(b)(iv) and Section 4(c) above. Subject to Section 5(a), each of the Parties
will (and Seller will cause each of the Company and its Subsidiaries to) give
any notices to, make any filings with, and use its reasonable efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(a)(ii), Section
3(b)(ii), and Section 4(c) above. Without limiting the generality of the
foregoing, each of the Parties will file within 5 business days of the date of
this Agreement any Notification and Report Forms and related material that it
may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, will
supply promptly any additional information and documentary material that may be
requested in connection therewith, will use its reasonable efforts to obtain a
waiver from the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper, or advisable in connection
therewith.
(c) Notice of Developments.
(i) Seller may elect at any time to notify Buyer in
writing of any development causing a breach of any of its
representations and warranties in Section 4 above. Unless Buyer has the
right to terminate this Agreement pursuant to Section 9(a)(ii) below by
reason of the development and exercises that right within the period of
10 business days referred to in Section 9(a)(ii) below, the written
notice pursuant to this Section 5(c)(i) will be deemed to have amended
the Disclosure Schedule, to have qualified the representations and
warranties contained in Section 4 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development, in each case to the
extent of the disclosure contained in such written notice .
(ii) Each Party will give prompt written notice to
the other of any development causing a breach of any of its own
representations and warranties in Section 3 above. No disclosure by any
Party pursuant to this Section 5(c)(ii),
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however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation or breach of warranty.
(d) Exclusivity. Neither Seller nor its Affiliates will
solicit, initiate, or encourage the submission of any proposal or offer from any
Person or enter into any discussions, negotiations or agreements relating to the
acquisition of all or substantially all of the capital stock or assets of any of
the Company and its Subsidiaries (including any acquisition structured as a
merger, consolidation, or share exchange).
(e) Letters of Credit and Comfort Letters.
(i) The Parties agree and acknowledge that a portion of
the face amount of the Letters of Credit identified on Exhibit C-1
hereto are attributable to the operations of the Company and its
Subsidiaries and that the balance of the face amount of such Letters of
Credit are attributable to the other operations of Seller and its
Affiliates. Prior to the Closing, (A) Buyer and Seller shall contact
the insurance carriers holding the Letters of Credit identified on
Exhibit C-1 hereto and shall allocate the face amount thereof between
Buyer and Seller in an equitable manner which is reasonably acceptable
to the insurance carriers, (B) Buyer shall arrange for Letters of
Credit to be posted with the appropriate insurance carriers having face
amounts equal to its allocated portion of the face amount of the
Letters of Credit identified on Exhibit C-1 hereto (such Letters of
Credit to be issued by banks or other financial institutions reasonably
acceptable to such insurance carriers and supported by customary
counter-indemnities or similar arrangements between Buyer and the
issuing banks or institutions) and (C) the parties shall take all
actions necessary to cause the insurance carriers holding the Letters
of Credit listed on Exhibit C-1 hereto to return such Letters of Credit
to Seller or otherwise release Black-eyed Pea Restaurants, Inc. from
liability in connection therewith (subject to receipt from Seller or
Black-eyed Pea Restaurants, Inc. of replacement Letters of Credit
having face amounts equal to its allocated portion of the face amount
of the Letters of Credit listed on Exhibit C-1 hereto).
(ii) Pursuant to the terms of the comfort letters
identified on Exhibit C-2 attached hereto, Seller will cause Unigate
PLC to give written notice to Texas Commerce Bank N.A. of the
transactions contemplated by this Agreement and the division of the
Letters of Credit described in Section 5(e)(i) above.
(f) Covenants of Seller. Subject to Section 5(h) below, Seller
agrees that, unless Buyer otherwise agrees in writing and except as set forth in
the Disclosure Schedule, prior to the Closing Date:
(i) Truth of Representations and Warranties. Seller shall
use reasonable efforts to assure that the Company and its Subsidiaries
do not take any action which would render untrue in any material
respect any of the representations or warranties of Seller herein
contained, and Seller shall use reasonable efforts to assure that the
Company or its Subsidiaries do not omit to
22
<PAGE> 27
take any action, the omission of which would render untrue in any
material respect any such representation or warranty. If the Closing
occurs, Buyer shall not have any right of action or remedy against
Seller for breach of this Section 5(f)(i).
(ii) Preservation of Business. Seller shall cause the
Company and its Subsidiaries to use their reasonable efforts to (i)
preserve intact the present business organization of the Company and
its Subsidiaries, (ii) preserve the present goodwill and relationships
of the Company and its Subsidiaries with all Persons having business
dealings with the Company or its Subsidiaries, and (iii) preserve and
maintain in force all material licenses, registrations, franchises,
patents, trademarks, copyrights, bonds and other similar rights of the
Company and its Subsidiaries. Seller shall cause the Company and its
Subsidiaries to refrain from entering into any employment agreements
with any of their officers or management personnel which may not be
cancelled without penalty upon notice not exceeding 90 days.
(iii) Ordinary Course. Seller shall use reasonable
efforts to not cause or permit any of the Company and its Subsidiaries
to engage in any material practice, take any material action, or enter
into any material transaction outside the Ordinary Course of Business.
Seller shall use reasonable efforts to cause the Company and its
Subsidiaries to operate their businesses only in the usual, regular and
Ordinary Course of Business and to maintain all supplies, inventory,
and consumables at levels commensurate with those customarily
maintained by the Company and its Subsidiaries in the Ordinary Course
of Business at each BEP Restaurant during comparable prior periods.
Seller shall use reasonable efforts to cause the Company and its
Subsidiaries to operate their businesses in material compliance with
their contractual obligations. Without limiting the foregoing, Seller
shall use reasonable efforts to assure that neither the Company nor any
of its Subsidiaries (i) places a Security Interest on any property or
assets, (ii) except in the Ordinary Course of Business, incurs any
material obligation (contingent or otherwise), or purchases or
acquires, or transfers or conveys, any material assets or properties or
enters into any material transaction, or (iii) acquires any stock or
other equity interest in any corporation, trust or other entity.
(iv) Books and Records. Seller shall cause the
Company and its Subsidiaries to maintain their books, accounts and
records in the usual, regular and ordinary manner, and on a basis
consistent with prior years.
(v) No Organic Change. Except as contemplated by this
Agreement, Seller shall assure that neither the Company nor its
Subsidiaries (i) amend their charter or by-laws, (ii) make any change
in their capital stock by reclassification, subdivision, reorganization
or otherwise, or (iii) merge or consolidate with any other corporation,
trust or entity or change the character of their businesses.
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(vi) No Issuance of Shares, Options or Other
Securities. Seller shall assure that neither the Company nor its
Subsidiaries (i) issue any shares of capital stock or (ii) grant any
option, warrant or other right to purchase or to convert any obligation
into shares of capital stock.
(vii) Compensation. Seller shall assure that neither
the Company nor its Subsidiaries (i) increase the compensation payable
to any officer or to other management personnel from the amount payable
as of the date of this Agreement, except in accordance with normal and
customary practice, or (ii) introduce or change any pension or profit
sharing plan, or any other employee benefit arrangement, except for
insubstantial changes necessary to comply with the minimum requirements
of the Code or ERISA, or except as disclosed in the Disclosure Schedule
or as contemplated by this Agreement.
(viii) Dividends. Seller shall assure that neither
the Company nor any of its Subsidiaries (i) declares, makes or pays any
dividend or other distribution with respect to its capital stock or
otherwise, (ii) purchases, redeems or otherwise acquires any shares of
its capital stock, or (iii) transfers, distributes or pays, directly or
indirectly, any assets or properties (other than money) to any
shareholders of the Company or its subsidiaries, except in each case as
otherwise permitted in this Agreement.
(ix) Right of Inspection. Seller shall cause the
Company and its Subsidiaries to make available to Buyer, FFCA and their
representatives for inspection at all reasonable times all of the
assets, properties, facilities, records, agreements (including all
documents of any description evidencing any right or obligation of the
Company or any of its Subsidiaries) and the consolidated financial
statements of the Company and allow Buyer, FFCA and their
representatives the right to make whatever copies of such materials
they require, and Seller shall cause the Company to permit Buyer, FFCA
and their independent accountants to audit or make such audit tests
respecting the accounts of the Company and its Subsidiaries as Buyer,
FFCA or their accountants consider appropriate.
(x) Entry Into Obligations. Seller shall assure that
the Company and its Subsidiaries do not (i) enter into any lease,
contract, agreement or other obligation with any Person other than
contracts for the sale of products or services and contracts for the
purchase of supplies or services in the Ordinary Course of Business
(or, whether or not in the Ordinary Course of Business, which involve
obligations in excess of $100,000 (but excluding food purchases made in
the Ordinary Course of Business)), (ii) enter into any amendment,
modification, termination, extension or any other change of any of the
BEP Leases or any other presently existing material lease, contract,
agreement or other contractual obligation, or (iii) enter into any
service agreements, maintenance agreements, contracts or other
arrangements relating to the operation or maintenance of the BEP
Restaurants other than in the Ordinary Course.
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(xi) Confidentiality. Seller shall assure that the
Company and its Subsidiaries do not reveal, orally or in writing, to
any Person, other than Buyer, FFCA and their representatives, any of
the confidential business procedures or practices followed by it in the
conduct of its business or any other information of a confidential
nature.
(xii) Maintenance of Insurance. Seller shall cause
the Company and each of its Subsidiaries to maintain in force through
the Closing Date all of the insurance policies listed in the Disclosure
Schedule and to refrain from making any change in any insurance
coverage; provided that Seller may replace or renew such coverage with
coverage that is substantially comparable.
(xiii) Maintenance of Assets and Properties. Seller
shall use reasonable efforts to cause the Company and each of its
Subsidiaries to keep the premises occupied by it and all of the
equipment and other tangible assets and personal property of the
Company and its Subsidiaries in substantially the same condition as on
the date of this Agreement. Seller shall assure that the Company and
its Subsidiaries do not remove any personal property from the BEP
Restaurants unless same are replaced with similar items of at least
equal quality prior to the Closing Date. Seller shall assure that the
Company and its Subsidiaries do not sell or permit to be sold or
otherwise transferred or disposed of any material item or group of
items constituting personal property, except food, beverage and other
items sold in the Ordinary Course of Business. Seller shall assure that
the Company and its Subsidiaries do not convey any ownership or
leasehold interest in the BEP Restaurants.
(xiv) Satisfaction of Obligations and Liabilities.
Seller shall use reasonable efforts to cause the Company and each of
its Subsidiaries to (i) pay or cause to be paid all of the obligations
and liabilities arising out of its business as they mature, other than
immaterial items disputed in good faith by Seller or other items
disputed with the written approval of Buyer, (ii) maintain in all
material respects and perform in all material respects its obligations
under all agreements and contracts to which it is bound in a manner
consistent with past practice, and (iii) comply in all material
respects with all requirements of applicable federal, state and local
laws, regulations and rules in a manner consistent with past practice.
Seller shall cause the Company and its Subsidiaries to pay or cause to
be paid in full when due all bills and invoices for labor, goods,
materials, services and utilities of any kind relating to the BEP
Restaurants which were contracted for by the Company or any of its
Subsidiaries or which were delivered to or performed on the BEP
Restaurants other than immaterial items disputed by Seller or other
items disputed with the written approval of Buyer.
(g) Section 338(h)(10) Election. At Seller's request, Buyer
and Seller will join in the filing of an election under Section 338(h)(10) of
the Code with respect to the purchase and sale of the Company Shares hereunder.
At Seller's request, Buyer will join Seller in making corresponding elections
under any state, local or foreign tax law. Seller shall prepare all such
elections, including forms required to be filed in order
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to make such elections. Seller shall pay or indemnify Buyer against any tax
liabilities arising from the making of any elections under this Section 5(g).
(h) Permitted Actions of Seller. Notwithstanding anything to
the contrary herein, Buyer expressly agrees that Seller, the Company and their
Subsidiaries shall not be prohibited from, or need Buyer's written consent to,
take any of the actions set forth on Exhibit K attached hereto prior to the
Closing.
(i) Audited Financial Statements. Seller will use its best
efforts to furnish the audited consolidated financial statements for the Company
and its Subsidiaries to Buyer prior to the Closing, but in no event later than
July 10, 1996.
Section 6. Post-Closing Covenants. The Parties agree as
follows with respect to the period following the Closing.
(a) General. In case at any time after the Closing any further
reasonable action is necessary to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party may
reasonably request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below).
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the Company and its Subsidiaries, each of
the other Parties shall cooperate with such Party or its counsel in the defense
or contest, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with the
defense or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
(c) Transition. Neither Seller nor its Affiliates will take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of any of the
Company and its Subsidiaries from maintaining the same business relationships
after the Closing as it maintained with the Company and its Subsidiaries prior
to the Closing.
(d) Name Changes. Seller covenants that, within 5 days
following the Closing Date, Black-eyed Pea Restaurants, Inc. will change its
name to CB Restaurant Holdings, Inc. and Management Corp. will change its name
to CB Management Corp. (or other names not containing the words "Black-eyed
Pea").
(e) Prepayment of Buyer Note. To the extent permitted by the
Credit Agreement, Buyer will use its reasonable efforts to pay the outstanding
principal
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amount of the Buyer Note plus all accrued and unpaid interest thereon prior to
maturity.
(f) Returns for Periods Through the Closing Date. Seller shall
cause Black-Eyed Pea Restaurants, Inc. to include the income of the Company and
its Subsidiaries (including any deferred income triggered into income by Reg.
Section1.1502-13 and Reg. Section1. 1502-14 and any excess loss accounts taken
into income under Reg. Section1.1502-19) on its consolidated federal Income Tax
Returns for all periods through the Closing Date and pay any federal Income
Taxes attributable to such income. The Company and its Subsidiaries will furnish
Income Tax information to Seller for inclusion in Black-eyed Pea Restaurant,
Inc.'s federal consolidated Income Tax Return for the period which includes the
Closing Date in accordance with the Company's past custom and practice. The
income of the Company and its Subsidiaries will be apportioned to the period up
to and including the Closing Date and the period after the Closing Date by
closing the books of the Company and its Subsidiaries as of the end of the
Closing Date. Notwithstanding the provisions of Section 8 hereof, Seller agrees
to indemnify Buyer for any Income Taxes paid by the Company or Buyer
attributable to tax years in which any of the Company and its Subsidiaries was a
member of Black-eyed Pea Restaurants, Inc.'s consolidated federal Income Tax
Returns.
(g) Mutual Cooperation. Seller or one of its Affiliates shall
be responsible for handling the pending U.S. tax audits of Black-eyed Pea
Restaurants, Inc. Buyer, the Company and its Subsidiaries will cooperate fully
with Seller in connection with Seller's defense of any audit, proceeding or
litigation with respect to any Income Tax Returns filed pursuant to Section
6(f). Such cooperation shall include the retention and (upon Seller's request)
the provision of records and information which are reasonably relevant to any
such audit, proceeding or litigation and making employees available on a
mutually convenience basis to provide additional information and explanation of
any material provided hereunder.
(h) Employees and Employee Benefit Plans.
(i) Effective as of the Closing Date, each employee
and former employee of the Company and its Subsidiaries shall cease
participation in all Employee Benefit Plans of the Company, Seller or
any Subsidiary of Seller.
(ii) Effective as of the Closing Date, Buyer shall
cover each employee and former employee of the Company and its
Subsidiaries under workers' compensation programs and/or policies of
the Buyer existing as of the Closing Date. Buyer shall assume, bear and
discharge all liabilities for, and administration of, workers'
compensation benefits in connection with all claims of, or attributable
to, employees and former employees of the Company and its Subsidiaries
whether such claims arise or arose prior to, on or after the Closing
Date.
(iii) Effective as of the Closing Date, Buyer shall
cover each employee and former employee of the Company and its
Subsidiaries who is covered under Employee Welfare Benefit Plans of the
Company, Seller or any
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Subsidiary of Seller immediately prior to the Closing Date under
Employee Welfare Benefit Plans of Buyer, including but not limited to
health, disability, and life insurance plans, existing as of the
Closing Date (or similar plans implemented after the Closing Date)
which Buyer makes generally available to all of its other employees on
a non-discriminatory basis. With respect to each Employee Welfare
Benefit Plan of Buyer, employment with the Company, Seller and each
Subsidiary of Seller prior to the Closing Date shall be considered as
employment with Buyer for all purposes, including for purposes of
eligibility to participate, eligibility to receive benefits, waiting
and elimination periods, and preexisting condition limitation periods.
Each such Employee Welfare Benefit Plan of Buyer shall credit employees
and former employees of the Company and its Subsidiaries with their
deductibles and co-payments paid as of the Closing Date for the current
calendar year under Seller's or any Subsidiary of Seller's Welfare
Benefit Plans. Buyer shall assume, bear and discharge all liabilities
with respect to covered eligible welfare expenses that are incurred by
each such employee and former employee (to the extent such former
employees were covered under Seller's Employee Welfare Benefit Plans
prior to the Closing Date) and his covered dependents with respect to
Incidents occurring prior to, on and after the Closing Date. For
purposes of this Section 6(h)(iii), "Incident" includes, without
limitation, death, accident, disability, injury and disease. Seller
shall cooperate with Buyer to the extent reasonably necessary for Buyer
to administer or cause to be administered such claims.
(iv) Within 60 days of the Closing Date, Buyer or one
of its Affiliates shall offer employment to those Persons listed on
Exhibit D hereto that Buyer, in its sole discretion, deems appropriate.
Seller shall not take any action that is designed or intended to have
the effect of discouraging any such persons from accepting such offer
of employment. With respect to those Persons listed on Exhibit D, if
any, that Buyer or one of its Affiliates employs within 60 days of the
Closing Date, the provisions of Sections 6(h)(i) through (iii) above
shall apply as of the date on which each such Person begins his or her
employment with Buyer or one of its Affiliates.
(v) Buyer shall indemnify Seller (and each Subsidiary
of Seller) from and against any and all Adverse Consequences that
Seller (or any of its Subsidiaries) suffers as a result of (a) any
failure of Buyer to discharge its obligations in accordance with this
Section 6(h) (including any such failure of Buyer's claims
administrator or any other party engaged by Buyer to assist it in
connection with the proper discharge of Buyer's obligations herein), or
(b) any welfare benefit claim subject to the provisions of Section
6(h)(iii), or any workers' compensation or other benefit claim subject
to Section 6(h).
(i) Uniform Franchise Offering Circular. Seller will cause
Management Corp. (or the Company) to prepare the Uniform Franchise Offering
Circular with respect to the Company for 1996 in accordance with its past
practice and in a manner to ensure timely filing.
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Section 7. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of Seller
herein contained shall have been true and correct in all material
respects when made and, in addition, shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except as affected
by transactions contemplated hereby;
(ii) Seller shall have in all material respects
performed all obligations and agreements and complied in all material
respects with all its covenants and conditions contained in this
Agreement to be performed and complied with by it or on or prior to the
Closing Date;
(iii) there shall be no material adverse change in
the business, properties or financial condition of the Company and its
Subsidiaries taken as a whole (other than any material adverse change
resulting from or relating to (A) the decline in the performance of the
business (including but not limited to the decline in comparable store
sales) experienced to date, the circumstances or factors giving rise to
such decline or any continuation of such decline, circumstances or
factors in the future, (B) any pending or threatened litigation by or
on behalf of franchisees or (C) any actions taken or announced by Buyer
in connection with the transactions contemplated by this Agreement or
any reaction of employees or business relations of the Company or its
Subsidiaries to the transactions contemplated by this Agreement, all of
which risks are being assumed by the Buyer);
(iv) (A) no action or proceeding before any court or
governmental agency shall have been instituted or threatened which
would enjoin, restrain or prohibit (or which seeks substantial damages
as a result of or in connection with the transactions contemplated by
this Agreement) and which would in the reasonable judgment of Buyer
make it inadvisable to consummate such transactions (provided, however,
that the obligation of Buyer to consummate the Closing shall not be
conditioned on, and the closing condition contained in this clause
(iv)(A) shall not be triggered by, any action or proceeding pending or
threatened by or on behalf of franchisees) and (B) no court order shall
have been entered in any action or proceeding instituted by any other
Person which enjoins, restrains or prohibits the consummation of the
transactions contemplated by this Agreement;
(v) all applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise
been terminated;
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(vi) Buyer and FFCA shall have obtained title
insurance commitments with respect to the 39 properties identified on
Exhibit B hereto and such commitments, taken as a whole, shall be
reasonably satisfactory to FFCA;
(vii) Buyer and FFCA shall have received consents in
reasonable and customary form from the landlords of at least 60% of the
63 properties listed on Exhibit E hereof;
(viii) Seller shall have executed the Transition
Services Agreement in form and substance as set forth in Exhibit F
attached hereto;
(ix) the Company and its Subsidiaries shall have at
least $5.03 million in cash (plus any amounts constituting Store Change
Funds); provided, however, that if the sale of the restaurant site in
Midlothian, Virginia has not been completed prior to the Closing Date
(or if such sale has been completed and Seller has not caused the
Company to distribute the proceeds thereof to Seller), then this
closing condition shall be modified to require that the Company and its
Subsidiaries shall have at least $4.18 million in cash at the Closing
(plus any amounts constituting Store Change Funds);
(x) Buyer shall have received from counsel to Seller
an opinion in form and substance as set forth in Exhibit G attached
hereto, addressed to Buyer, and dated as of the Closing Date;
(xi) Buyer shall have received from Seller a
certificate of the president and secretary of Seller, dated the date of
the Closing Date, certifying that the closing conditions set forth in
Sections 7(a)(i), (ii) and (ix) are satisfied; and
(xii) all other documents required to be delivered by
Seller, the Company or its Subsidiaries under this Agreement at or
prior to the Closing Date shall be delivered or shall be tendered by
the Closing Date.
Buyer may waive any condition specified in this Section 7(a).
(b) Conditions to Obligation of Seller. The obligation of
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of Buyer
herein contained shall have been true and correct in all material
respects when made and, in addition, shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except as affected
by transactions contemplated hereby;
(ii) Buyer shall have in all material respects
performed all obligations and agreements and complied in all material
respects with all its
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covenants and conditions contained in this Agreement to be performed
and complied with by it on or prior to the Closing Date;
(iii) no action or proceeding before any court or
governmental agency shall have been instituted or threatened which
would enjoin, restrain or prohibit (or seeks substantial damages as a
result of or in connection with the transactions contemplated by this
Agreement) and which would in the reasonable judgment of Seller make it
inadvisable to consummate such transactions, and no court order shall
have been entered in any action or proceeding instituted by any other
Person which enjoins, restrains or prohibits the consummation of the
transactions contemplated by this Agreement;
(iv) all applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise
been terminated;
(v) Buyer or its Affiliates shall have offered
employment to the Management Corp. employees listed on Exhibit D
attached hereto;
(vi) Buyer shall have executed and delivered the
Buyer Note, the Warrant and the Registration Rights Agreement;
(vii) At or prior to the Closing, Buyer shall have
repaid all outstanding principal and interest on its Series A 13%
Subordinated Notes due 2003 and Buyer shall have amended the terms of
its Series B 13% Subordinated Notes due 2003 in accordance with the
letter agreement attached as Exhibit M;
(viii) Seller shall have received from counsel to
Buyer an opinion in form and substance as set forth in Exhibit H
attached hereto, addressed to Seller, and dated as of the Closing Date;
(ix) None of the Debt Agreements as in effect at the
time of the Closing shall be more restrictive on the ability of Buyer
to perform its obligations under the Buyer Note (including its ability
to borrow thereunder in order to pay the Buyer Note) than the Debt
Agreements in effect on the date of this Agreement without the consent
of Seller, such consent not to be unreasonably withheld;
(x) Seller shall have received from Buyer a
certificate of the president and secretary of Buyer, dated as of the
Closing Date, certifying that the closing conditions set forth in
Sections 7(b)(i), (ii), (v), (vi) and (vii) are satisfied; and
(xi) all other documents required to be delivered by
Buyer under this Agreement at or prior to the Closing Date shall be
delivered or shall be tendered by the Closing Date.
Seller may waive any condition specified in this Section 7(b).
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Section 8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in Sections 3 and 4
above shall survive the Closing hereunder and shall continue in full force and
effect for a period of one year thereafter.
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event that (A) Seller breaches any
representation or warranty contained herein and (B) Buyer makes a
written claim for indemnification against Seller with respect thereto
within one year after the Closing (which written claim shall specify in
reasonable particulars the basis of the breach being asserted and, to
the extent then determinable, a calculation of any Adverse Consequences
which Buyer claims to suffer as a result thereof), then Seller agrees
to indemnify Buyer from and against any Adverse Consequences Buyer
suffers which are proximately caused by the breach; provided, however,
that Seller shall not have any obligation to indemnify Buyer from and
against any Adverse Consequences caused by the breach of any
representation or warranty of Seller contained in Section 4 above
unless and until Buyer has suffered Adverse Consequences in excess of a
$250,000 deductible per occurrence (after which point Seller will be
obligated only to indemnify Buyer from and against further Adverse
Consequences associated with the occurrence in question).
(ii) Seller shall indemnify Buyer and its Affiliates
from and against any Adverse Consequences which they suffer in
connection with any action, suit or proceeding brought by any
franchisee of the Company or its Subsidiaries if and to the extent that
such action, suit or proceeding seeks relief in respect of actions or
omissions which occur prior to the Closing; provided that (A) a
$250,000 per occurrence deductible shall apply to indemnification
claims under this Section 8(b)(ii); (B) Seller shall not be obligated
to indemnify Buyer or its Affiliates in respect of any actions or
omissions of Buyer or its Affiliates at any time before or after the
Closing or any actions or omissions of the Company or its Subsidiaries
after the Closing; and (C) Seller shall not be obligated to indemnify
Buyer or its Affiliates in respect of any actions, suits or proceedings
if and to the extent they relate to the identity, finances or business
strategy of Buyer or its Affiliates.
(iii) Any indemnification for Adverse Consequences
suffered by Buyer or its Affiliates shall first be paid by reducing the
outstanding principal amount of the Buyer Note; provided, however, that
no such reduction shall occur unless (A) Buyer has made its claim for
indemnification in accordance with this Section 8(b) and (B) Seller has
agreed to such claim or, if Seller does not so agree, Buyer has
obtained a judgement in favor of Buyer from a court of competent
jurisdiction. Buyer and its Affiliates shall not be entitled to payment
in cash for any claim for indemnification unless and until (C) the
principal amount of the Buyer Note has been repaid and/or canceled in
full (or reduced to zero
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pursuant to this Section 8(b)(iii)) or (D) Seller has transferred the
Buyer Note to any Person (which is not an Affiliate of Unigate PLC).
(iv) Notwithstanding anything to the contrary herein,
Buyer and its Affiliates shall not be entitled to indemnification in
respect of any breach of the representations and warranties contained
in Section 4(k) above unless and until Buyer and FFCA have used
reasonable efforts to collect or recover under all Applicable Title
Policies (as defined below), and the Adverse Consequences (if any) for
which Seller is obligated to indemnify Buyer hereunder shall be reduced
by all amounts, if any, paid to or collected by Buyer or FFCA under
such polices at any time. As used in this Agreement, "Applicable Title
Policies" means with respect to a particular BEP Restaurant Property
all title insurance policies of which Buyer, FFCA, the Company or any
of its Subsidiaries is holder or beneficiary.
(v) Notwithstanding anything to the contrary herein,
Seller shall not have any obligation to indemnify Buyer or its
Affiliates from and against any Adverse Consequences to the extent the
aggregate Adverse Consequences Buyer and its Affiliates have suffered
exceed a $25 million aggregate ceiling (after which point Seller will
have no obligation to indemnify Buyer or its Affiliates from and
against any further such Adverse Consequences). The $25 million
aggregate ceiling covers all Adverse Consequences from all matters
(i.e., it is not a per occurrence ceiling).
(c) Indemnification Provisions for Benefit of Seller.
(i) In the event (A) Buyer breaches any
representation or warranty contained in Section 3 above and (B) Seller
makes a written claim for indemnification against Buyer with respect
thereto within one year after the Closing (which written claim shall
specify in reasonable particulars the basis of the breach being
asserted and, to the extent then determinable, a calculation of any
Adverse Consequences which Seller claims to suffer as a result
thereof), then Buyer agrees to indemnify Seller from and against any
Adverse Consequences Seller suffers through and after the date of the
claim for indemnification proximately caused by the breach.
(ii) Buyer shall indemnify Seller and its Affiliates
from and against any Adverse Consequences which they may suffer in
connection with any action, suit or proceeding brought by any
franchisee of the Company or its Subsidiaries if and to the extent such
action, suit or proceeding seeks relief (A) in respect of acts or
omissions of the Company or its Subsidiaries at any time after the
Closing or acts or omissions of Buyer or its Affiliates at any time
before or after the Closing or (B) as a result of the identity,
finances or business strategy of Buyer or its Affiliates; provided,
however, that a $250,000 per occurrence deductible shall apply to
indemnification claims under this Section 8(c)(ii).
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(iii) Except in the case of matters for which Buyer
is entitled to indemnification from Seller under Section 8(b) above, in
the event that Seller or any of its Affiliates are named as a party to
any action, suit or proceeding arising from, relating to or in
connection with any actions or omissions of the Company or its
Subsidiaries (whether before or after the Closing Date), then Buyer
shall fully indemnify and hold harmless Seller and its Affiliates from
all Adverse Consequences in connection therewith.
(iv) Notwithstanding anything to the contrary herein,
Buyer shall not have any obligation to indemnify Seller or its
Affiliates from and against any Adverse Consequences to the extent the
aggregate Adverse Consequences Seller and its Affiliates have suffered
exceed a $25 million aggregate ceiling (after which point Buyer will
have no obligation to indemnify Seller or its Affiliates from and
against any further such Adverse Consequences). The $25 million
aggregate ceiling covers all Adverse Consequences from all matters
(i.e., it is not a per occurrence ceiling).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly (and in any event within 5 business
days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing; provided, however, that failure
to provide such notice on a timely basis shall not release the
Indemnifying Party from any of its obligations under this Section 8
except to the extent the Indemnifying Party is materially prejudiced by
such failure.
(ii) The Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the Third
Party Claim with counsel of its choice; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be
unreasonably withheld or delayed) unless the judgment or proposed
settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or other equitable
relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 8(d)(ii)
above, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of each of
the Indemnifying Parties (not to be unreasonably withheld or delayed).
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(v) In the event that any Party suffers damage or
loss in respect of which it has or makes a valid claim against another
Party for indemnification, it must take reasonable steps to mitigate
its loss or damage.
(e) Treatment. All indemnification payments under this Section
8 shall be deemed adjustments to the Purchase Price.
Section 9. Termination.
(a) Termination of Agreement. This Agreement may be terminated
as provided below:
(i) Buyer and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing in the event
that (A) Seller has within the previous 10 business days given the
Buyer any notice pursuant to Section 5(c)(i) above and (B) the
development that is the subject of the notice (taken together with
developments which were the subject of any previous notices pursuant to
Section 5(c)(i)) has had a material adverse effect upon the Company and
its Subsidiaries taken as a whole (other than any material adverse
effect resulting from or relating to (1) the decline in the performance
of the business (including but not limited to the decline in comparable
store sales) experienced to date, the circumstances or factors giving
rise to such decline or any continuation of such decline, circumstances
or factors in the future, (2) any pending or threatened litigation by
or on behalf of franchisees or (3) any actions taken or announced by
Buyer in connection with the transactions contemplated by this
Agreement or any reaction of employees or business relations of the
Company or its Subsidiaries to the transactions contemplated by this
Agreement, all of which risks are being assumed by the Buyer);
(iii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing (A) in the
event that (1) Seller has breached any representation, warranty or
covenant contained in this Agreement, (2) such breach would have a
material adverse effect on the Company and its Subsidiaries taken as a
whole, (3) Buyer has notified Seller in writing of such breach and (4)
such breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before August 31, 1996 by reason of the failure of any condition
precedent under Section 7(a) hereof (unless the failure results
primarily from Buyer breaching any representation, warranty or covenant
contained in this Agreement); and
(iv) Seller may terminate this Agreement by giving
written notice to Buyer at any time prior to the Closing (A) in the
event that (1) Buyer has breached any representation, warranty or
covenant contained in this Agreement, (2) such breach would have a
material adverse effect on Buyer, (3) Seller has notified Buyer in
writing of such breach, and (4) such breach has continued
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without cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before August 31, 1996 by
reason of the failure of any condition precedent under Section 7(b)
hereof (unless the failure results primarily from Seller breaching any
representation, warranty or covenant contained in this Agreement).
(b) Effect of Termination. If either Party terminates this
Agreement pursuant to Section 9(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party which has committed a willful
breach hereof or any Party which fails to consummate the Closing notwithstanding
the fact that (1) all of the conditions running in its favor under Section 7
hereof have been satisfied and (2) all of the conditions running in the favor of
the other Party under Section 7 have been satisfied or waived); provided,
however, that the Confidentiality Agreement shall survive termination.
Section 10. Miscellaneous.
(a) Certain Understandings of Buyer. Buyer acknowledges (i)
that in the course of its independent investigation of the Company, it examined
the information contained in the draft Confidential Offering Memorandum (the
"Offering Memorandum") and attended presentations conducted by management of the
Company (the "Presentations"), (ii) Buyer is not relying on the information
contained in the Offering Memorandum or the statements made and information
furnished in connection with the Presentations in its decision to enter into
this Agreement and purchase the Company Shares hereunder, and (iii) that Seller
makes no representation or warranty concerning the information contained in the
Offering Memorandum or the statements made and information furnished in
connection with the Presentations.
(b) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party; provided, however, that either Party may make any public
disclosure it believes in good faith is required by applicable law, the
regulations of the SEC, the London Stock Exchange or the American Stock Exchange
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will use its reasonable efforts to consult
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the exhibits
and schedules hereto referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof; provided, however, that the
letter agreement between Buyer and Schroder Wertheim & Co. Incorporated
concerning confidentiality (the "Confidentiality Agreement") shall continue in
effect.
36
<PAGE> 41
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that any Party may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the assigning Party
nonetheless shall remain responsible for the performance of all of its
obligations hereunder); and provided further, however, that Buyer may assign to
FFCA its rights to pursue remedies against the Seller under this Agreement in
respect of the representations and warranties contained in Sections 4(e), (i),
(k), (n) and (q).
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The Section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then five
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller: Copy to:
BEP Holdings, Inc. Kirkland & Ellis
8115 Preston Road 200 East Randolph Drive
Dallas, TX 75225 Chicago, IL 60601
Attn: President Attn: Carter W. Emerson
With a copy to Unigate PLC: Copy to:
Unigate House Kirkland & Ellis
Wood Lane 200 East Randolph Drive
London W12 7RP Chicago, IL 60601
England Attn: Carter W. Emerson
Attn: Secretary
If to Buyer: Copy to:
DenAmerica Corp. O'Connor, Cavanagh, Anderson,
7373 North Scottsdale Road Kilingsworth & Beshears P.A.
Scottsdale, AZ 85253 One East Camelback
Attn: President Phoenix, AZ 85012
Attn: Robert S. Kant
37
<PAGE> 42
Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
duly authorized representatives of Buyer and Seller. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.
(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation or in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) Expenses. Each of Buyer and Seller will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Confidentiality. Following the Closing, Seller and its
Affiliates shall maintain the confidentiality of all nonpublic information
concerning the Company and
38
<PAGE> 43
its Subsidiaries; provided that Seller and its Affiliates shall be entitled to
use and/or disclose relevant portions of such information for tax, accounting
and financial reporting purposes and in connection with the enforcement of their
rights under this Agreement.
* * * * * *
39
<PAGE> 44
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
DENAMERICA CORP.
By:
-------------------------------
Title:
BEP HOLDINGS, INC.
By:
-------------------------------
Title:
<PAGE> 1
EXHIBIT 4.6
================================================================================
DENAMERICA CORP.,
a Georgia corporation
As Issuer,
AND
STATE STREET BANK AND TRUST COMPANY,
as Trustee
------------------------------------------
SUPPLEMENTAL INDENTURE (SERIES B NOTES)
Dated as of July __, 1996
------------------------------------------
Supplemental to the Indenture
between
DenAmerica Corp.
and
State Street Bank and Trust Company
dated as of March 29, 1996
================================================================================
<PAGE> 2
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE, dated as of July __, 1996, between DENAMERICA
CORP., a corporation duly organized and existing under the laws of the State of
Georgia (the "Company"), having its principal office at 7373 N. Scottsdale Road,
Suite D120, Scottsdale, Arizona 85253, and STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company (the "Trustee"), as Trustee under the Indenture,
dated as of March 29, 1996, between the Company and the Trustee (the
"Indenture").
RECITAL OF THE TRUSTEE
WHEREAS, the Company and the Trustee are parties to that certain
Indenture, dated as of March 29, 1996, pertaining to the Company's Series B 13%
Subordinated Notes due 2003 (the "Series B Notes").
RECITALS OF THE COMPANY
WHEREAS, pursuant to a Stock Purchase Agreement dated as of May 31,
1996 between the Company and BEP Holdings, Inc., a Delaware corporation (the
"Seller"), the Company has agreed to purchase from the Seller all of the
outstanding common stock of Black-eyed Pea Restaurants U.S.A., Inc. ("BEP USA");
WHEREAS, a portion of the consideration to be paid by the Company will
consist of a senior subordinated promissory note of the Company (the "Purchase
Price Note");
WHEREAS, on or prior to the date of this Supplemental Indenture, the
Company has repaid the Series A Debt (as defined in the Indenture) in full;
WHEREAS, the Company desires, pursuant to Section 7.1 of the Indenture,
to execute this Supplemental Indenture in order to amend the Indenture to
reflect the issuance of the Purchase Price Note and the repayment of the Series
A Debt, to subordinate the Series B Notes to the Purchase Price Note and make
certain other changes; and
WHEREAS, the Company has duly authorized the execution and delivery of
this Supplemental Indenture and has obtained consents from the Holders of a
majority in aggregate principal amount of the Series B Notes in order for such
provisions to be amended.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree for the equal and proportionate benefit
of all Holders of the Series B Notes, as follows:
<PAGE> 3
Section 1. Section 1.1 shall be amended as follows:
(a) The definition of "Company Intercreditor Agreement" shall be
deleted in its entirety and replaced with the following:
""Company Intercreditor Agreement" means the Intercreditor
Agreement, dated as of July __, 1996, among the Company, certain
Holders and the Trustee."
(b) The following definitions shall be inserted immediately
following the definition of the term "property":
""Purchase Price Debt" means all Indebtedness of the Company
or any of its Subsidiaries, contingent or otherwise, now or hereafter
existing, under or with respect to: (a) the Purchase Price Debt
Documents in an aggregate outstanding principal amount not exceeding
the sum of (i) $15,000,000, plus (ii) the aggregate principal amount of
Indebtedness evidenced by securities issued in payment of accrued
interest on any Purchase Price Debt, less (iii) the amount of all
permanent payments of principal made under the Purchase Price Debt
Documents from time to time after the date hereof; and (b) interest
(including interest accruing at the contract rate after the
commencement of any Insolvency or Liquidation Proceeding, whether or
not such interest is an allowed claim in such Insolvency or Liquidation
Proceeding) accrued on the outstanding principal described in clause
(a) and other amounts owing under the Purchase Price Debt Documents,
and premiums, fees, costs, expenses, indemnities, reimbursements and
other amounts owing under the Purchase Price Debt Documents.
"Purchase Price Debt Documents" means, collectively, (a) the
Purchase Price Note, (b) each instrument or agreement pursuant to which
obligations under the Purchase Price Note or any subsequent Purchase
Price Debt Document are deferred, extended, renewed, replaced, refunded
or refinanced, in whole or in part, and without limitation as to
parties, maturities, principal amount, interest rates or other
provisions, and (c) each other instrument or agreement executed in
connection with or evidencing, governing, guarantying or securing any
Indebtedness or other obligations under any instrument or agreement
referred to in the foregoing clauses (a) and (b); in each case (with
respect to any instrument or agreement referred to in the foregoing
clauses (a), (b) or (c)), as modified, amended or supplemented from
time to time.
"Purchase Price Note" means the Senior Subordinated Promissory
Note issued by the Company to BEP Holdings, Inc. on June __, 1996.""
2
<PAGE> 4
(c) The definition of "Senior Indebtedness" shall be deleted in
its entirety and replaced with the following:
""Senior Indebtedness" means the Senior Credit Agreement Debt
and the Purchase Price Debt."
(d) The definitions of "Senior Series A Intercreditor Agreement"
and "Senior Subordinated Intercreditor Agreement" shall be deleted in their
entirety and replaced with the following:
""Senior Purchase Price Debt Intercreditor Agreement" means
the Senior Intercreditor Agreement, dated as of July __, 1996, between
the Agent under the Credit Agreement and the holder of the Purchase
Price Note.
"Senior Subordinated Intercreditor Agreement" means the
Intercreditor Agreement, dated as of July __, 1996, among the Trustee,
certain Holders and the Agent under the Credit Agreement."
(e) The following definitions shall be inserted immediately
following the definition of the term "Special Default Period":
"Sub-Series B-1 Notes" means the Series B Note evidenced on
June 30, 1996 by Certificate No. B-3 in the principal amount of
$1,456,000.00, and any Series B Notes issued upon the transfer,
exchange or replacement of such Series B Note after June 30, 1996.
"Sub-Series B-2 Notes" means the Series B Notes evidenced on
June 30, 1996 by Certificate Nos. B-1 and B-2 in the aggregate
principal amount of $16,794,000, and any Series B Notes issued upon the
transfer, exchange or replacement of such Series B Notes after June 30,
1996."
(f) The definitions of "Series A Debt," "Series A Documents,"
"Series A Indenture" and "Series A Notes" shall be deleted in their entirety.
Section 2. Except in the case of Sections 3.8, 3.9, 4.9(a),
4.10(e)(ii), 4.12(a)(v), 4.12(b), 4.13(b) and 4.13(c) of the Indenture (which
Sections are being separately amended below):
(a) all references in the Indenture and the Series B Notes to "no
Series A Notes are" shall be deleted and replaced with "the Purchase Price Note
is not";
(b) all references in the Indenture and the Series B Notes to "any
Series A Notes are" shall be replaced with "the Purchase Price Note is";
3
<PAGE> 5
(c) all other references in the Indenture and the Series B Notes
to "Series A Notes" shall be deleted and replaced with "Purchase Price Note";
(d) all references in the Indenture and the Series B Notes to
"Series A Indenture" shall be deleted and replaced with "Purchase Price Note";
(e) all references in the Indenture and the Series B Notes to
"Series A Debt" shall be deleted and replaced with "Purchase Price Debt";
(f) all references in the Indenture and the Series B Notes to
"Series A Documents" shall be deleted and replaced with "Purchase Price Debt
Documents"; and
(g) all references in the Indenture and the Series B Notes to
"Senior Series A Intercreditor Agreement" shall be deleted and replaced with
"Senior Purchase Price Debt Intercreditor Agreement".
All references in the Indenture and the Series B Notes to "Section VIII of the
Series A Indenture and" shall be deleted in their entirety.
Section 3. The second paragraph of Section 3.1 shall be deleted in its
entirety and replaced with the following:
"If the Company is required to offer to redeem Sub-Series B-1
Notes or Sub-Series B-2 Notes pursuant to Section 4.13(b)(i) or
4.13(c), respectively, it shall furnish the Trustee, at least five (5)
Business Days before notice of the Offer is to be mailed to Holders, an
Officers' Certificate stating (a) that the Offer is being made pursuant
to Section 4.13(b)(i) or 4.13(c), as the case may be, (b) the
Redemption Date, (c) the maximum principal amount of Sub-Series B-1
Notes or Sub-Series B-2 Notes the Company is offering to redeem
pursuant to the Offer, (d) the Redemption Price, and (e) the amount of
accrued and unpaid interest thereon as of the Redemption Date."
Section 4. Sections 3.8 and 3.9 shall be deleted in their entirety and
replaced with the following:
"Section 3.8 Mandatory Offers.
(a) Subject to the terms and conditions set forth herein, if
the Company is required to offer to redeem Sub-Series B-1 Notes or Sub-
Series B-2 Notes under Section 4.13 hereof, then the Company shall
promptly mail a written offer to each Holder (with a copy to the
Trustee) to redeem Sub-Series B-1 Notes or Sub-Series B-2 Notes (as
applicable) ("Offer"), which Offer shall contain all instructions and
materials necessary
4
<PAGE> 6
to enable such Holders to tender Sub-Series B-1 Notes or Sub-Series B-2
Notes (as applicable) for redemption pursuant to the Offer and stating:
(i) that an Offer is being made pursuant to Section 4.13 (b)(i) or (c)
(as applicable), the length of time the Offer shall remain open, and
the maximum aggregate principal amount of the Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) that the Company is required to
redeem pursuant to such Offer; (ii) the Redemption Price for the Sub-
Series B-1 Notes or Sub-Series B-2 Notes (as applicable), the amount of
accrued and unpaid interest on such Sub-Series B-1 Notes or Sub-Series
B-2 Notes (as applicable) as of the Redemption Date, and the Redemption
Date (which date shall be not less than 20 days nor more than 40 days
after the date the Offer is mailed); (iii) that any Sub-Series B-1
Notes or Sub-Series B-2 Notes (as applicable) not tendered for
redemption will continue to accrue interest if interest is then
accruing; (iv) that, unless the Company fails to deposit with the
Paying Agent on the Redemption Date an amount sufficient to purchase
all Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable)
tendered for redemption, interest shall cease to accrue after the
Redemption Date on Sub-Series B-1 Notes or Sub-Series B-2 Notes (as
applicable) tendered for redemption; (v) that Holders electing to
tender any Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable)
or portion thereof for redemption will be required to surrender such
Sub-Series B-1 Notes or Sub-Series B- 2 Notes (as applicable), with a
form entitled "Option of Holder to Elect Redemption" completed, to the
Paying Agent at the address specified in the Offer prior to the close
of business on the Business Day preceding the Redemption Date, provided
that Holders electing to tender only a portion of any Sub-Series B-1
Notes or Sub-Series B-2 Notes (as applicable) for redemption must
tender a principal amount of $1,000 or integral multiples thereof; (vi)
that Holders will be entitled to withdraw their election to tender
Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable) for
redemption if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Redemption Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) tendered for redemption, and a
statement that such Holder is withdrawing his election to have such
Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable) (or
portions thereof) redeemed; and (vii) that Holders whose Sub-Series B-1
Notes or Sub-Series B-2 Notes (as applicable) are tendered for
redemption in part will be issued new Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) equal in principal amount to the
unredeemed portion of Sub-Series B-1 Notes or Sub-Series B-2 Notes (as
applicable) surrendered.
5
<PAGE> 7
(b) Subject to the provisions of Article VIII and the
restrictions on redemption set forth in the Credit Agreement and the
Purchase Price Note, on the Redemption Date for any Offer, the Company
will (i) in the case of an Offer resulting from one or more Equity
Issuances, redeem the maximum principal amount of Sub-Series B-1 Notes
or Sub-Series B-2 Notes (as applicable) or portions thereof tendered
pursuant to such Offer that can be redeemed out of Excess Securities
Proceeds from such Equity Issuances, (ii) deposit with the Paying Agent
the aggregate Redemption Price of all Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) or portions thereof to be redeemed
and any accrued and unpaid interest on such Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) as of the Redemption Date, and
(iii) deliver or cause to be delivered to the Trustee all Sub-Series
B-1 Notes or Sub-Series B-2 Notes (as applicable) tendered pursuant to
the Offer, together with an Officers' Certificate setting forth the
name of each Holder of such Sub-Series B-1 Notes or Sub-Series B-2
Notes (as applicable) and the principal amount of such Sub-Series B-1
Notes or Sub-Series B-2 Notes (as applicable) or portions thereof
tendered by each such Holder. For purposes of this Section 3.8, the
Trustee shall act as the Paying Agent.
(c) With respect to any Offer, (i) if less than all of the
Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable) tendered
pursuant to an Offer are to be redeemed by the Company for any reason,
the Company and the Trustee shall select on or prior to the Redemption
Date the Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable)
or portions thereof to be redeemed pursuant to Section 3.2, and (ii) if
the Company deposits with the Paying Agent on or prior to the
Redemption Date an amount sufficient to redeem all Sub-Series B-1 Notes
or Sub-Series B-2 Notes (as applicable) that have been tendered,
interest shall cease to accrue on such Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) as of the Redemption Date;
provided, however, that if the Company fails to deposit an amount
sufficient to redeem all Sub-Series B-1 Notes or Sub-Series B-2 Notes
(as applicable) that have been tendered, the deposited funds shall be
used to redeem on a pro rata basis the Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) tendered for redemption and
interest shall continue to accrue on all Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable), or the portion thereof, as
applicable, not redeemed.
(d) Subject to the provisions of Article VIII and the
restrictions on redemption set forth in the Credit Agreement and the
Purchase Price Note, promptly after consummation of an Offer, (i) the
Paying Agent shall mail to each Holder of Sub-Series B-1 Notes or
Sub-Series B-2 Notes (as applicable) or portions thereof accepted for
redemption, an amount equal
6
<PAGE> 8
to the Redemption Price for, plus any accrued and unpaid interest on,
such Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable), (ii)
with respect to any tendered Sub-Series B-1 Notes or Sub-Series B-2
Notes (as applicable) not accepted for redemption in whole or in part,
the Trustee shall return such Sub-Series B-1 Notes or Sub-Series B-2
Notes (as applicable) to the Holder thereof, and (iii) with respect to
any Sub-Series B-1 Notes or Sub-Series B-2 Notes (as applicable)
accepted for redemption, in part, the Trustee shall authenticate and
mail to each such Holder new Sub-Series B-1 Notes or Sub-Series B-2
Notes (as applicable) equal in principal amount to the unredeemed
portion of the tendered Sub-Series B-1 Notes or Sub-Series B-2 Notes
(as applicable).
(e) The Company will (i) publicly announce the results of the
Offer on or as soon as practicable after the Redemption Date, and (ii)
comply with Rule 14e-1 under the Exchange Act and any other securities
laws and regulations to the extent such laws and regulations are
applicable to any Offer.
Section 3.9 Certain Acknowledgments. The Holders acknowledge
that (a) the Purchase Price Note prohibits the redemption of Series B
Notes by the Company at any time while the Purchase Price Note is
outstanding (other than redemptions of Sub-Series B-1 Notes pursuant to
Section 4.13(b)(i) hereof), and (b) that the Company shall not be
permitted by the Purchase Price Note, and shall have no obligation
hereunder, to redeem or make any offer to redeem any Series B Notes at
any time while the Purchase Price Note is outstanding (other than
redemptions of Sub-Series B-1 Notes pursuant to Section 4.13(b)(i)
hereof)."
Section 5. Section 4.9(a) shall be deleted in its entirety and replaced
with the following:
"(a) Indebtedness of the Company under or in respect of the
Purchase Price Note, as in effect on the date of its issuance or as
amended, in an aggregate principal amount not to exceed $15,000,000
(plus any interest which is added to principal or capitalized under the
terms of the Purchase Price Note), less the amount of any repayment or
prepayment of the Purchase Price Note;".
Section 6. Section 4.10(e)(ii) shall be deleted in its entirety and
replaced with the following:
"(ii) Excess Securities Proceeds remaining after (x) the redemption of
Sub-Series B-1 Notes tendered pursuant to an Offer by the Company under
Section 4.13(b)(i), (y) the prepayment of the Purchase Price Note
7
<PAGE> 9
pursuant to Section 2(d) thereof with any Excess Securities Proceeds
after such redemption of Sub-Series B-1 Notes and (z) the redemption of
Sub-Series B-2 Notes tendered pursuant to an Offer by the Company under
Section 4.13(c) with any Excess Securities Proceeds after such
redemptions of Sub-Series B-1 Notes and the Purchase Price Note, or"
Section 7. Section 4.12(a)(C) shall be deleted in its entirety and
replaced with the following:
"(C) the Purchase Price Note, provided that such encumbrances or
restrictions are no more burdensome than those in effect under the
Purchase Price Note on the date of its issuance,".
Section 8. Section 4.12(b) shall be deleted in its entirety and
replaced with the following:
"(b) The Company will not enter into or become bound by any
agreement or instrument that directly restricts the Company from making
any payment on or in respect of the Series B Notes, except for the
Credit Agreement, the Purchase Price Note, the Intercreditor Agreements
and the documents governing any refinancing of the Purchase Price Note,
provided, that such restrictions are not more restrictive than the
restrictions provided in the Credit Agreement and the Intercreditor
Agreements as in effect on July __, 1996 and the terms of the Purchase
Price Note as in effect on the date of its issuance."
Section 9. Sections 4.13(b) and (c) shall be deleted in their entirety
and replaced with the following:
"(b) (i) If any Sub-Series B-1 Notes are outstanding on the
closing date of such Equity Issuance, the Company shall, if and to the
extent permitted by the Credit Agreement, and subject to the provisions
of Article VIII, commence an Offer to redeem the maximum principal
amount of Sub-Series B-1 Notes that may be redeemed with such Excess
Securities Proceeds (as permitted by the Credit Agreement), at the
Redemption Price therefor, plus accrued but unpaid interest thereon to
the Redemption Date. The Offer shall be effected in accordance with
Section 3.8 and Article III (to the extent applicable) and the
provisions of this Section 4.13. (ii) If (x) the Purchase Price Note is
outstanding on the closing date of such Equity Issuance and (y) no
Sub-Series B-1 Notes are outstanding on the closing date of such Equity
Issuance or, in the event that there are Sub-Series B-1 Notes
outstanding on such date, there are Excess Securities Proceeds
remaining after the making of the Offer to
8
<PAGE> 10
redeem Sub-Series B-1 Notes under Section 4.13(b)(1) above, then the
Excess Securities Proceeds shall be applied to repay the Purchase Price
Note in accordance with Section 2(d) of the Purchase Price Note,
subject to the terms of the Credit Agreement. Any Excess Securities
Proceeds which are in excess of the aggregate principal amount of the
Sub-Series B-1 Notes outstanding on the closing date of such Equity
Issuance (plus accrued but unpaid interest thereon through the
Redemption Date) shall be immediately available for application to the
repayment of the Purchase Price Note in accordance with Section 2(d) of
the Purchase Price Note. If, after the making of redemptions pursuant
to the Offer to the Holders of Sub-Series B-1 Notes, there are any
Excess Securities Proceeds remaining from the portion of the aggregate
Excess Securities Proceeds which was not immediately available for
application to the repayment of the Purchase Price Note by reason of
the preceding sentence, such remaining Excess Securities Proceeds shall
be made available for application to the repayment of the Purchase
Price Note."
(c) If (x) the Sub-Series B-1 Notes are not, and the Purchase
Price Note is not, outstanding on the closing date of such Equity
Issuance or (y) in the event that the Series B-1 Notes are, or the
Purchase Price Note is, outstanding on the closing date of such Equity
Issuance and there are Excess Securities Proceeds remaining after the
making of the Offer to redeem the Sub-Series B-1 Notes under Section
4.13(b)(1) above and the repayment of the Purchase Price Note in
accordance with Section 2(d) of the Purchase Price Note, then the
Company shall, if and to the extent permitted by the Credit Agreement,
and subject to the provisions of Article VIII, commence an Offer to
redeem the maximum principal amount of Sub-Series B-2 Notes that may be
redeemed with such Excess Securities Proceeds (in the case of clause
(x) above) or such remaining Excess Securities Proceeds (in the case of
clause (y) above)(in each case as permitted by the Credit Agreement),
at the Redemption Price therefor, plus accrued but unpaid interest
thereon to the Redemption Date. The Offer shall be effected in
accordance with Section 3.8 and Article III (to the extent applicable)
and the provisions of this Section 4.13. To the extent that any Excess
Securities Proceeds remain after redemption of all Series B Notes
tendered for redemption pursuant to such Offer, the Company may use the
remaining amount for any purpose not prohibited by this Indenture."
9
<PAGE> 11
Section 10. Schedule 4.13 shall be amended by adding the following:
"Purchase Price Warrants
See attached Purchase Price Warrant Certificate issued by DenAmerica
to BEP Holdings, Inc. in connection with the issuance of the Purchase
Price Note."
A copy of the Purchase Price Warrant issued by DenAmerica to BEP
Holdings, Inc. in connection with the issuance of the Purchase Price Note shall
be attached to Schedule 4.13.
Section 11. From and after the date hereof, the Indenture, as
supplemented by this Supplemental Indenture, shall be read, taken and construed
as one and the same instrument with respect to the Series B Notes.
Section 12. This Supplemental Indenture may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instruments.
* * * * * * *
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year above written.
DENAMERICA CORP.
By:___________________________________
Title:________________________________
Attest:
_____________________________________
Title:_______________________________
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:___________________________________
Title:________________________________
Attest:
_____________________________________
Title:_______________________________
<PAGE> 13
STATE OF ) ___________________
) ss:
COUNTY OF ) ___________________
On this _____ day of June, 1996, before me, a Notary Public in and for
said County and State, personally appeared the within named _____________
and____________, to me known, who each being first duly and severally sworn did
say that they, said _____________ and____________, are the _____________
and____________ of DENAMERICA CORP., respectively; that the seal affixed to the
foregoing instrument is the seal of said corporation; that said instrument was
signed and sealed in behalf of said corporation by authority of its Board of
Directors; and that _____________ and____________ each acknowledges the
execution of said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the date first hereinabove written.
____________________________________________
Notary Public, State of ____________________
[SEAL]
<PAGE> 14
COMMONWEALTH OF ) Boston
MASSACHUSETTS )
) ss:
COUNTY OF SUFFOLK ) __________________
On this _____ day of June, 1996, before me, a Notary Public in and for
said County and State, personally appeared the within named ___________________,
__________________________ to me known, who each being first duly and severally
sworn did say that s/he, is the __________________________ of STATE STREET BANK
AND TRUST COMPANY; that the seal affixed to the foregoing instrument is the seal
of said corporation; that said instrument was signed and sealed in behalf of
said corporation by authority of its Board of Directors; and that s/he
acknowledges the execution of said instrument to be the free act and deed of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the date first hereinabove written.
____________________________________________
Notary Public, Commonwealth of Massachusetts
[SEAL]
<PAGE> 1
EXHIBIT 4.7
NEITHER THIS WARRANT, NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED SALE OR TRANSFER.
COMMON STOCK
PURCHASE WARRANT
For the Purchase of Shares
of
Common Stock of DenAmerica Corp.
(Par Value $0.10 Per Share)
(Incorporated under the Laws of the State of Georgia)
VOID AFTER 5:00 P.M. PST ON April 1, 2002
Date of Original Issuance: July __, 1996
This is to certify that, for value received, BEP HOLDINGS, INC. or
assigns (the "Warrantholder"), is entitled, subject to the terms and conditions
hereinafter set forth, at any time after October 1, 1997 and on or before 5:00
P.M., Pacific Standard Time, on March 31, 2002, but not thereafter, to purchase
the Applicable Number (as defined below) of shares of common stock, par value
$0.10 per share (the "Common Stock"), of DENAMERICA CORP. (the "Company") for
the Warrant Price (as defined below), and to receive a certificate or
certificates for the shares of Common Stock so purchased. As used in this
Warrant, "Applicable Number" means the number obtained by dividing (A) the
product of (i) the total amount of principal and interest outstanding under the
Note (as defined below) on April 1, 1997 times (ii) one-half of one percent
(0.5% or .005) times (iii) the number of issued and outstanding shares of Common
Stock on March 31, 1997 on a fully diluted basis (giving effect to the exercise
of all outstanding options, warrants and other commitments to sell Common Stock
(excluding this Warrant and employee stock options) and the conversion of all
securities convertible into Common Stock by (B) one million dollars
($1,000,000). As used in this Warrant, "Note" shall mean the Senior Subordinated
Promissory Note in the original principal amount of fifteen million dollars
($15,000,000) originally issued by the Company to BEP Holdings, Inc. In the
event that the outstanding principal of the Note and all accrued and unpaid
interest thereon is repaid in full on or prior to March 31, 1997, this Warrant
shall be null and void and of no further force and effect.
<PAGE> 2
1. REDEMPTION OF WARRANTS.
In the event that all or a portion of the principal amount of the Note
(plus all accrued but unpaid interest thereon) is repaid on or after April 1,
1997 but on or prior to September 30, 1997, then the Company may elect to redeem
all or a portion of this Warrant from the Warrantholder on the following basis:
(a) The Company may elect to repurchase the percentage of this
Warrant which is equal to the percentage of the principal amount of the Note
outstanding on April 1, 1997 which was repaid on or prior to September 30, 1997.
(b) The redemption price to be paid by the Company (the
"Redemption Price") shall equal the product of (i) the percentage of this
Warrant to be redeemed times (ii) the Applicable Number times (iii) $0.25. The
Redemption Price shall be payable in cash.
(c) The Company must exercise its redemption right by
delivering written notice to such effect to the Warrantholder on or prior to
October 1, 1997. The Company's right to exercise its redemption right shall
expire if it is not so exercised on or prior to October 1, 1997. Notice of
redemption of this Warrant shall be given to the Warrantholder pursuant to
Section 8 of this Warrant not less than 10 days prior to the date established by
the Company for redemption (the "Redemption Date"). From and after the
Redemption Date, all rights of the Warrantholder under the redeemed portion of
this Warrant (except for the right to receive the Redemption Price) shall
terminate, but only if on or before the Redemption Date the Company has set
aside funds sufficient to pay the Redemption Price. The Warrantholder shall be
entitled to payment of the Redemption Price upon surrender of this Warrant to
the Company at its principal office or other place designated in the redemption
notice during the 60-day period beginning on the Redemption Date.
(d) Upon the closing of any such redemption, the number of
shares obtainable upon exercise of this Warrant shall be reduced by the
percentage of this Warrant which was redeemed.
2. TERMS AND EXERCISE OF WARRANTS.
(a) Exercise Period. Subject to the terms of this Warrant, the
Warrantholder shall have the right, at any time during the period (the "Exercise
Period") commencing on October 1, 1997 and ending at 5:00 P.M., Pacific Standard
Time, on March 31, 2002 (the "Termination Date"), or if such date is a day on
which banking institutions are authorized by law to close, then on the next
succeeding day which shall not be such a day, to purchase from the Company up to
the number of fully paid and nonassessable shares of Common Stock which the
Warrantholder may at the time be entitled to purchase pursuant to this Warrant
Certificate. Such shares of Common Stock and any other securities that the
Company may be required by the operation of Section 4 to issue upon the exercise
hereof are referred to hereinafter as the "Warrant Shares."
<PAGE> 3
(b) Method of Exercise. This Warrant shall be exercised by
surrender of this Warrant to the Company, at its principal office in Scottsdale,
Arizona, or at such other address as the Company may designate by notice in
writing to the Warrantholder at the address of the Warrantholder appearing on
the books of the Company or such other address as the Warrantholder may
designate in writing, together with the form of Election to Purchase, included
as Exhibit "A" hereto, duly completed and signed, and upon payment to the
Company of the Warrant Price multiplied by the number of Warrant Shares being
purchased upon such exercise (the "Aggregate Warrant Price"). Payment of the
Aggregate Warrant Price shall be made either by (1) cash, certified check or
cashier's check payable to the Company in an amount equal to the Aggregate
Warrant Price, (2) the surrender to the Company of debt or equity securities of
the Company having a Market Price (as defined below) equal to the Aggregate
Warrant Price or (3) a written notice to the Company that the Warrantholder is
exercising the Warrant (or a portion thereof) by authorizing the Company to
withhold from issuance a number Warrant Shares issuable upon such exercise of
the Warrant which when multiplied by the Market Price of the Common Stock is
equal to the Aggregate Warrant Price (and such withheld Warrant Shares shall no
longer be issuable under this Warrant). For purposes of this paragraph, (x) if,
at the time of exercise of this Warrant, the Common Stock is listed on a
national securities exchange or quoted on the Nasdaq National Market, the
"Market Price" of the Common Stock shall be valued for purposes of exercise as
the average of the high and low sales prices reported by such exchange or the
Nasdaq National Market on the day prior to the exercise date, or, if such day is
not a business day, then on the immediately preceding day when the Common Stock
was traded; (y) if, at the time of exercise of this Warrant, the Common Stock is
not listed or quoted as set forth in clause (x) above, the "Market Price" of the
Common Stock shall be the fair market value for such Common Stock on the date of
exercise, as determined by the Board of Directors of the Company in its good
faith judgment; and (z) the "Market Price" of any note or other debt security or
any preferred stock shall be deemed to be equal to the aggregate outstanding
principal amount or liquidation value thereof plus all accrued and unpaid
interest thereon or accrued or declared and unpaid dividends thereon.
(c) Partial Exercise. This Warrant shall be exercisable, at
the election of the Warrantholder, either in full or from time to time in part,
during the Exercise Period.
(d) Share Issuance Upon Exercise. Upon such surrender of this
Warrant certificate and payment of such Warrant Price as aforesaid, the Company
shall issue and cause to be delivered with all reasonable dispatch to the
Warrantholder in such name or names as the Warrantholder may designate in
writing, a certificate or certificates for the number of full Warrant Shares so
purchased upon the exercise of the Warrant, together with cash, as provided in
Section 5 hereof, with respect to any fractional Warrant Shares otherwise
issuable upon such surrender and, if applicable, the Company shall issue and
deliver a new Warrant to the Warrantholder for the number of shares not so
exercised. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of such Warrant Shares as of the close of business on the
<PAGE> 4
date of the surrender of the Warrant and payment of the Warrant Price, as
aforesaid, notwithstanding that the certificates representing such Warrant
Shares shall not actually have been delivered or that the stock transfer books
of the Company shall then be closed.
3. WARRANT PRICE.
The price per share at which Warrant Shares shall be purchasable on the
exercise of this Warrant shall be 80% of the lesser of (i) the Market Price (as
defined in Section 2(b)) of the Common Stock on the Date of Original Issuance or
(ii) the Market Price of the Common Stock on the date which is five (5) business
days following publication by the Company of the Company's earnings release for
the period ending March 31, 1997 (or, if no earnings release is made, the public
availability of the Company's financial results for such period), subject to
adjustment pursuant to Section 4 hereof (originally and as adjusted, the
"Warrant Price").
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
The Company agrees to reserve and shall keep reserved for issuance the
number of shares of Common Stock issuable upon exercise of this Warrant. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) If and whenever on or after the determination of the
Warrant Price under Section 3 above, the Company issues or sells, or in
accordance with paragraph 4(b) is deemed to have issued or sold, any shares of
Common Stock for a consideration per share less than the Warrant Price in effect
immediately prior to such time, then immediately upon such issue or sale the
Warrant Price shall be reduced to the Warrant Price determined by dividing (1)
the sum of (x) the product derived by multiplying the Warrant Price in effect
immediately prior to such issue or sale times the number of shares of Common
Stock Deemed Outstanding (as defined below) immediately prior to such issue or
sale, plus (y) the consideration, if any, received by the Company upon such
issue or sale, by (2) the number of shares of Common Stock Deemed Outstanding
immediately after such issue or sale. Upon each such adjustment of the Warrant
Price hereunder, the number of Warrant Shares acquirable upon exercise of this
Warrant shall be adjusted to the number of shares determined by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Warrant Price resulting
from such adjustment. "Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at such time,
plus the number of shares of Common Stock deemed to be outstanding pursuant to
paragraphs 4(b)(i) and 4(b)(ii) hereof regardless of whether the Options (as
defined below) or Convertible Securities (as defined below) are actually
exercisable at such time. Notwithstanding the foregoing, there shall be no
adjustment to the Warrant Price or the number of Warrant Shares obtainable upon
exercise of this Warrant with respect to issuance of
<PAGE> 5
shares of Common Stock (or the grant of options to purchase shares of Common
Stock) (A) to employees, directors or officers of the Company and its
Subsidiaries pursuant to arrangements approved by the Company's Board of
Directors or (B) to third parties not affiliated with the Company in full or
partial payment of the purchase price for assets useful in the restaurant
business or the stock of another company primarily engaged in the restaurant
business.
(b) For purposes of determining the adjusted Warrant Price
under paragraph 4(a), the following shall be applicable:
(i) If the Company in any manner grants any rights or
options to subscribe for or to purchase Common Stock or any stock,
units or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock, units or securities being herein
called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Warrant Price in effect immediately prior to the time of the granting
of such Options, then the number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange of the
amount of such Convertible Securities issuable upon the exercise of
such Options shall be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For purposes of this
paragraph, the "price per share for which Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such
Convertible Securities" is determined by dividing (A) the total amount,
if any, received or receivable by the Company as consideration for the
granting or sale of such Options, plus the amount of additional
consideration payable to the Company upon the exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the amount of additional consideration, if any, payable to
the Company upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (B) the number of shares of
Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Warrant
Price shall be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options or upon
the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(ii) If the Company in any manner issues or sells any
Convertible Securities and the price per share for which Common Stock
is issuable upon conversion or exchange thereof is less than the
Warrant Price in effect immediately prior to the time of such issue or
sale, then the number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be deemed
to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of this paragraph, the "price
per share for which Common Stock is issuable upon
<PAGE> 6
conversion or exchange thereof" is determined by dividing (A) the total
amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the aggregate amount
of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustments of the Warrant Price had been or are to be made pursuant to
other provisions of this paragraph 4(b), no further adjustment of the
Warrant Price shall be made by reason of such issue or sale.
(iii) If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable
for Common Stock change at any time, the Warrant Price in effect at the
time of such change shall be readjusted to the Warrant Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold and the number of
Warrant Shares issuable hereunder shall be correspondingly readjusted.
For purposes of this paragraph 4(b), if the terms of any Option or
Convertible Security which was outstanding as of the date of issuance
of this Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change.
(iv) Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Securities without the exercise of such Option or right, the Warrant
Price then in effect and the number of Warrant Shares acquirable
hereunder shall be adjusted immediately to the Warrant Price and the
number of shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or
termination, never been issued. For purposes of this paragraph 4(b),
the expiration or termination of any Option or Convertible Security
which was outstanding as of the date of issuance of this Warrant shall
not cause the Warrant Price hereunder to be adjusted unless, and only
to the extent that, a change in the terms of such Option or Convertible
Security caused it to be deemed to have been issued after the date of
issuance of this Warrant.
(v) If any Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor shall be deemed to be the
gross amount received by the
<PAGE> 7
Company therefor. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company
shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company shall be the Market Price thereof
as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the nonsurviving
entity in connection with any merger in which the Company is the
surviving entity the amount of consideration therefor shall be deemed
to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value
of any consideration other than cash or securities shall be reasonably
determined by the Company's Board of Directors in good faith.
(vi) In case any Option is issued in connection with
the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options shall be deemed to have been issued for a consideration to be
reasonably determined by the Company's Board of Directors in good
faith.
(vii) The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by
or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issue
or sale of Common Stock.
(c) In case the Company shall (1) pay a dividend, or make a
distribution, in shares of its Common Stock, (2) subdivide its outstanding
Common Stock into a greater number of shares, (3) combine its outstanding Common
Stock into a smaller number of shares, or (4) issue by reclassification of its
Common Stock any shares of capital stock of the Company (other than a change in
par value, or from par value to no par value, or from no par value to par
value), the Warrant Price and the number of shares of Common Stock or other
securities issuable upon exercise of this Warrant in effect immediately prior
thereto shall be adjusted so that the Warrantholder, by operation of Section
4(f) hereof, shall be entitled to receive the number of shares which he would
have owned or have been entitled to receive immediately following the happening
of any of the events described above, had this Warrant been exercised
immediately prior to the record or effective date thereof.
An adjustment made pursuant to subparts 4(c)(1)-(4) above shall become
effective immediately after the record date in the case of a dividend or
distribution (provided, however, that such adjustments shall be reversed if such
dividends or distributions are not actually paid) and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
paragraph, the Warrantholder shall become entitled to receive shares of two or
more classes of capital stock of the
<PAGE> 8
Company, the Board of Directors (whose determination shall be conclusive and
shall be evidenced by a resolution) shall determine the allocation of the
adjusted Warrant Price between or among the shares of such classes of capital
stock.
Whenever the Warrant Price is adjusted as provided in this Section
4(c), the number of shares of Common Stock or other securities issuable upon
exercise of this Warrant shall be adjusted simultaneously, by multiplying the
number of shares previously issuable by a fraction, of which the numerator shall
be the Warrant Price in effect immediately prior to such adjustment, and of
which the denominator shall be the Warrant Price as so adjusted.
(d) In case of any reclassification of the outstanding Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision, combination or
stock dividend), or in case of any consolidation of the Company with, or merger
of the Company into, another corporation wherein the Company is not the
surviving entity, or in case of any sale of all, or substantially all, of the
property, assets, business and goodwill of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall provide, by a
written instrument delivered to the Warrantholder, that the Warrantholder shall
thereafter be entitled, upon exercise of this Warrant, to the kind and amount of
shares of stock or other equity securities, or other property or assets which
would have been receivable by such Warrantholder upon such reclassification,
consolidation, merger or sale, if this Warrant had been exercised immediately
prior thereto. Such corporation, which thereafter shall be deemed to be the
"Company" for purposes of this Warrant, shall provide in such written instrument
for adjustments to the Warrant Price which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 4.
(e) No adjustment in the number of securities purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of securities (calculated to
the nearest full share or unit thereof) then purchasable upon the exercise of
this Warrant.
(f) For the purpose of this Section 4, the term "Common Stock"
shall mean (i) the class (or classes) of stock designated as Common Stock of the
Company at March 31, 1997, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time, as a result of an adjustment made
pursuant to this Section 4, the Warrantholder shall become entitled to purchase
any shares of the Company's capital stock other than Common Stock, thereafter
the number of such other shares so purchasable upon the exercise of this Warrant
and the Warrant Price of such shares shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 4.
<PAGE> 9
(g) Whenever the number of shares of Common Stock and/or other
securities purchasable upon the exercise of this Warrant or the Warrant Price is
adjusted as herein provided, the Company shall give the Warrantholder notice of
such adjustment and a certificate of the Company's chief financial officer
setting forth the number of shares of Common Stock and/or other securities
purchasable upon the exercise of this Warrant, the Warrant Price after such
adjustment, a brief statement of the facts requiring such adjustment and the
computation by which such adjustment was made.
(h) Irrespective of any adjustments in the Warrant Price or
the number or kind of securities purchasable upon the exercise of this Warrant,
the Warrant certificate or certificates theretofore or thereafter issued may
continue to express the same price or number or kind of securities stated in
this Warrant initially issuable hereunder.
5. FRACTIONAL INTEREST.
The Company shall not be required to issue fractional shares upon
exercise of this Warrant but shall pay an amount in cash equal to the Market
Price of the Company's Common Stock on the date of the surrender of the Warrant
pursuant to Section 2(b) hereof, or if there is no public market, cash equal to
the then fair market value of the shares as reasonably determined by the
Company, multiplied by such fraction.
6. TRANSFER AND EXCHANGE.
(a) Subject to the transfer conditions referred to in the
legend endorsed hereon, this Warrant and all rights hereunder are transferable,
in whole or in part, without charge to the Warrantholder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit "B" hereto)
at the principal office of the Company in Scottsdale, Arizona.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Warrantholder at the principal office of the Company in Scottsdale, Arizona,
for a new Warrant of like tenor representing in the aggregate the purchase
rights hereunder, and each of such new Warrants shall represent such portion of
such rights as is designated by the Warrantholder at the time of such surrender.
The date the Company initially issues this Warrant shall be deemed to be the
"date of issuance" hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrant."
<PAGE> 10
7. NO RIGHTS AS SHAREHOLDER: NOTICES TO WARRANTHOLDER.
Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferee any rights as a shareholder of the Company,
either at law or in equity, including the right to vote, receive dividends,
consent or receive notices as a shareholder with respect to any meeting of
shareholders for the election of directors of the Company or for any other
matter.
8. NOTICES.
Any notice given pursuant to this Warrant by the Company or by the
Warrantholder shall be in writing and shall be deemed to have been duly given
upon (a) transmitter's confirmation of the receipt of a facsimile transmission
or (b) confirmed delivery by a standard overnight carrier postage prepaid at the
following addresses:
If to the Company:
DenAmerica Corp.
7373 N. Scottsdale Road
Suite D120
Scottsdale, Arizona 85253
If to the Warrantholder, then to the address of the Warrantholder in
the Company's books and records.
Each party hereto may, from time to time, change the address to which
notices to it are to be transmitted, delivered or mailed hereunder by notice in
accordance herewith to the other party.
9. GENERAL PROVISIONS.
(a) Successors. All covenants and provisions of this Warrant
shall bind and inure to the benefit of the respective executors, administrators,
successors and assigns of the parties hereto.
(b) Choice Of Law. This Warrant and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware, including all matters of construction, validity, performance,
and enforcement, and without giving effect to the principles of conflict of
laws.
(c) Entire Agreement. Except as provided herein, this Warrant,
including exhibits, contains the entire agreement of the parties, and supersedes
all existing negotiations, representations or agreements and all other oral,
written, or other communications between them concerning the subject matter of
this Warrant.
<PAGE> 11
(d) Severability. If any provision of this Warrant is
unenforceable, invalid, or violates applicable law, such provision shall be
deemed stricken and shall not affect the enforceability of any other provisions
of this Warrant.
(d) Captions. The captions in this Warrant are inserted only
as a matter of convenience and for reference and shall not be deemed to define,
limit, enlarge, or describe the scope of this Warrant or the relationship of the
parties, and shall not affect this Warrant or the construction of any provisions
herein.
* * * * * * * *
<PAGE> 12
IN WITNESS WHEREOF, the Company caused this Warrant to be duly executed
as of the date first above written.
DENAMERICA CORP.,
a Georgia corporation
By:_____________________________________
Its:____________________________________
<PAGE> 1
EXHIBIT 4.8
--------------------------------------------------------
DenAmerica Corp.
Common Stock Purchase Warrant
Dated as of July 3, 1996
---------------------------------------------------------
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION UNDER SUCH ACT AND
LAWS IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH ACT
AND LAWS. THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Exercise of Warrant................................................... 1
1.1. Manner of Exercise......................................... 1
1.2. When Exercise Effective.................................... 2
1.3. Delivery of Stock Certificates, etc........................ 2
2. Adjustment of Common Stock Issuable Upon Exercise..................... 2
2.1. General; Warrant Price..................................... 2
2.2. Adjustment of Warrant Price................................ 3
2.2.1 Issuance of Additional Shares of Common Stock........ 3
2.2.2 Extraordinary Dividends and Distributions............ 3
2.3. Treatment of Options and Convertible Securities............ 4
2.4. Treatment of Stock Dividends, Stock Splits, etc............ 7
2.5. Computation of Consideration............................... 7
2.6. Adjustments for Combinations, etc.......................... 8
2.7. Dilution in Case of Other Securities....................... 9
2.8. Minimum Adjustment of Warrant Price........................ 9
3. Consolidation, Merger, etc............................................ 9
3.1. Adjustments for Consolidation, Merger, Sale
of Assets, Reorganization, etc............................ 9
3.2. Assumption of Obligations.................................. 10
4. Other Dilutive Events................................................. 11
5. No Dilution or Impairment............................................. 11
6. Accountants' Report as to Adjustments................................. 12
7. Notices of Corporate Action........................................... 12
8. Registration of Common Stock.......................................... 13
9. Restrictions on Transfer.............................................. 14
9.1. Restrictive Legends........................................ 14
9.2. Notice of Proposed Transfer; Opinions of Counsel........... 14
9.3. Termination of Restrictions................................ 16
10. Availability of Information.......................................... 16
11. Reservation of Stock, etc............................................ 17
12. Registration and Transfer of Warrants, etc........................... 17
12.1. Warrant Register; Ownership of Warrants.................... 17
12.2. Transfer and Exchange of Warrants......................... 17
12.3. Replacement of Warrants................................... 17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
13. Registration under Securities Act, etc................................ 18
13.1. Registration on Request.................................... 18
13.2. Incidental Registration.................................... 20
13.3. Registration Procedures.................................... 22
13.4. Underwritten Offerings..................................... 27
13.5. Preparation; Reasonable Investigation...................... 30
13.6. Indemnification............................................ 30
14. Definitions........................................................... 35
15. Remedies.............................................................. 41
16. No Rights or Liabilities as Stockholder. ............................. 41
17. Notices............................................. 41
18. Amendments.......................................... 41
19. Expiration.......................................... 41
20. Representation with Respect to Capitalization....... 42
21. Covenant with Respect to Books,
Records and Inspections.................................. 42
22. Expenses............................................ 42
23. Descriptive Headings................................ 42
24. GOVERNING LAW....................................... 42
25. Judicial Proceedings; Waiver of Jury................ 42
FORM OF SUBSCRIPTION................................................................ 43
FORM OF ASSIGNMENT.................................................................. 44
</TABLE>
ii
<PAGE> 4
DENAMERICA CORP.
Common Stock Purchase Warrant
No. _______ July 3, 1996
DenAmerica Corp., a Georgia corporation (the "Company"), for value
received, hereby certifies that Banque Paribas, Cayman Island Branch, or
registered assigns, is entitled to purchase from the Company 300,000 duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $.10 per share (the "Common Stock") of the Company. The purchase price
of the shares of Common Stock will be (a) with respect to the first 150,000
shares, 80% of the closing price of the Common Stock on the Effective Date (as
defined in that certain First Amendment to Credit Agreement (the "First
Amendment") by and among the Company, the Banks party thereto, and Banque
Paribas, individually and as agent (in such capacity, the "Agent"), which
amendment amends that certain Credit Agreement (the "Credit Agreement") dated as
of February 2, 1996, among the Company, the Banks named therein and Banque
Paribas, individually and as Agent) and (b) with respect to the remaining
150,000 shares, 120% of the closing price of the Common Stock on the Effective
Date (the "Warrant Price").
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include any such warrants issued in substitution
therefor) originally issued pursuant to the Fee Letter (the "Fee Letter"), dated
July 3, 1996, between American Family Restaurants, Inc., a Georgia corporation
and Banque Paribas (the "Lender"). Certain capitalized terms used in this
Warrant are defined in section 14; references to an "Exhibit" are, unless
otherwise specified, to one of the Exhibits attached to this Warrant and
references to a "section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. Exercise of Warrant. 1.1. Manner of Exercise. This Warrant may be
exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day on or before July 3, 2002, by surrender of this
Warrant to the Company at its principal office, accompanied by a subscription in
substantially the form attached to this Warrant (or a reasonable facsimile
thereof) duly executed by such holder and accompanied by payment, in cash, by
certified or official bank check payable to the order of the Company, in the
amount ob-
<PAGE> 5
tained by multiplying (a) the number of shares of Common Stock (without giving
effect to any adjustment thereof) designated in such subscription by (b) the
Warrant Price applicable to such shares, and such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) determined as
provided in sections 2 through 4.
1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in section 1.1, and at such time the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in section 1.3
shall be deemed to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable after
each exercise of this Warrant, in whole or in part, and in any event within ten
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to section 9, as such holder (upon
payment by such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Business Day
next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the holder upon such exercise as provided in section 1.1.
2. Adjustment of Common Stock Issuable Upon Exercise. 2.1. General;
Warrant Price. The Warrant
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<PAGE> 6
Price shall be adjusted and readjusted from time to time as provided
in this section 2 and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof is required
by this section 2.
2.2. Adjustment of Warrant Price.
2.2.1 Issuance of Additional Shares of Common Stock. In case
the Company at any time or from time to time after the date hereof
shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to
section 2.3 or 2.4) without consideration or for a consideration per
share less than the greater of the Current Market Price and the Warrant
Price in effect immediately prior to such issue or sale, then, and in
each such case, subject to section 2.8, such Warrant Price shall be
reduced, concurrently with such issue or sale, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such Warrant
Price by a fraction
(a) the numerator of which shall be (i) the number of
shares of Common Stock outstanding immediately prior to such
issue or sale plus (ii) the number of shares of Common Stock
which the aggregate consideration received by the Company for
the total number of such Additional Shares of Common Stock so
issued or sold would purchase at the greater of such Current
Market Price and such Warrant Price, and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such
issue or sale,
provided that, for the purposes of this section 2.2.1, (x) immediately
after any Additional Shares of Common Stock are deemed to have been
issued pursuant to section 2.3 or 2.4, such Additional Shares shall be
deemed to be outstanding, and (y) treasury shares shall not be deemed
to be outstanding.
2.2.2 Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional
stock or other securities or property or Options by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than (a) a dividend payable
in Additional Shares of Common Stock (b) a regular periodic cash
dividend, then, and in each such case, subject to section 2.8, the
War-
3
<PAGE> 7
rant Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades
on an ex-dividend basis, on the date prior to the commencement
of ex-dividend trading, less the amount of such dividend or
distribution (as determined in good faith by the Board of
Directors of the Company) applicable to one share of Common
Stock, and
(y) the denominator of which shall be such Current Market
Price,
provided that, in the event that the amount of such dividend as so determined is
equal to or greater than 80% of such Current Market Price or in the event that
such fraction is less than 1/5, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall receive, at the
time of exercise thereof, a pro rata share of such dividend based upon the
maximum number of shares of Common Stock at the time issuable to such holder
(determined without regard to whether the Warrant is exercisable at such time).
2.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to section
4
<PAGE> 8
2.5) of such shares would be less than the greater of the Current
Market Price and the Warrant Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading), as the case may be, and
provided, further, that in any such case in which Additional Shares of
Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price shall be made
upon the subsequent issue or sale of Convertible Securities or
shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, except in
the case of any such Options or Convertible Securities which
contain provisions requiring an adjustment, subsequent to the date
of the issue or sale thereof, of the number of Additional Shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities by reason of
(x) a change of control of the Company, (y) the acquisition by any
Person or group of Persons of any specified number or percentage of
the Voting Securities of the Company or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a
separate issuance of Additional Shares of Common Stock, Options or
Convertible Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise),
the Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or
date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not
have been exercised or the expiration of any rights of conversion
or exchange
5
<PAGE> 9
under any such Convertible Securities which (or purchase by the
Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall
not have been exercised, the Warrant Price computed upon the
original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and
any subsequent adjustments based thereon, shall, upon such
expiration (or such cancellation or retirement, as the case may
be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued or
sold upon the exercise of such Options were issued at the time
of the issue, sale, grant or assumption of such Options, and
the consideration received by the Company for the Additional
Shares of Common Stock deemed to have then been issued was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received
by the Company (pursuant to section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount in
excess of the amount of the adjustment thereof originally made in
6
<PAGE> 10
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof
shall declare or pay any dividend on the Common Stock payable in Common
Stock, or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
reclassifica- tion or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock
shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day upon
which such corporate action becomes effective.
2.5. Computation of Consideration. For the purposes of this
section 2,
(a) the consideration for the issue or sale of any
Additional Shares of Common Stock shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at
the amount of cash received by the Company, without
deducting any expenses paid or incurred by the Company
or any commissions or compensations paid or concessions
or discounts allowed to underwriters, dealers or others
performing similar services in connection with such
issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair
value thereof at the time of such issue or sale, as
determined in good faith by the Board of Directors of
the Company, and
7
<PAGE> 11
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities
or other assets of the Company for a consideration which
covers both, be the portion of such consideration so
received, computed as provided in clauses (i) and (ii)
above, allocable to such Additional Shares of Common
Stock, all as determined in good faith by the Board of
Directors of the Company;
(b) Additional Shares of Common Stock deemed to have
been issued pursuant to section 2.3, relating to Options and
Convertible Securities, shall be deemed to have been issued
for a consideration per share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale,
grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment
of such consideration to protect against dilution)
payable to the Company upon the exercise in full of such
Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of
such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision
(a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without
regard to any provision contained therein for a
subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible
Securities; and
(c) Additional Shares of Common Stock deemed to have
been issued pursuant to section 2.4, shall be deemed to have
been issued for no consideration.
2.6. Adjustments for Combinations, etc. In case the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or other-
8
<PAGE> 12
wise, into a lesser number of shares of Common Stock, the Warrant Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2.7. Dilution in Case of Other Securities. In case any
Other Securities shall be issued or sold or shall become subject to
issue or sale upon the conversion or exchange of any stock (or Other
Securities) of the Company (or any issuer of Other Securities or any
other Person referred to in section 3) or to subscription, purchase or
other acquisition pursuant to any Options issued or granted by the
Company (or any such other issuer or Person) for a consideration such
as to dilute, on a basis consistent with the standards established in
the other provisions of this section 2, the purchase rights granted by
this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this section 2 with re-
spect to the Warrant Price shall be made as nearly as possible in the
manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the
effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount
of any adjustment of the Warrant Price required pursuant to this
section 2 would be less than one percent (1%) of the Warrant Price in
effect at the time such adjustment is otherwise so required to be made,
such amount shall be carried forward and adjustment with respect
thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so
carried forward, shall aggregate at least one percent (1%) of such
Warrant Price.
3. Consolidation, Merger, etc. 3.1. Adjustments for
Consolidation, Merger, Sale of Assets, Reorganization, etc. In case
the Company after the date hereof (a) shall consolidate with or merge
into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall permit any
other Person to consolidate with or merge into the Company and the
Company shall be the continuing or surviving Person but, in connection
with such consolidation or merger, the Common Stock or Other Securities
shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (c) shall transfer all
or substantially all of its properties or assets to any other Person,
or (d) shall effect a capital reorganization or reclassification of
the Common
9
<PAGE> 13
Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common
Stock for which adjustment in the Warrant Price is provided in
section 2.2.1 or 2.2.2), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and
the terms and in the manner provided in this Warrant, the holder of
this Warrant, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive (at
the aggregate Warrant Price in effect at the time of such consummation
for all Common Stock or Other Securities issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock or
Other Securities issuable upon such exercise prior to such consum-
mation, the highest amount of securities, cash or other property to
which such holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as
possible to the adjustments provided for in sections 2 through 4,
provided that if a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than 50% of the outstanding
shares of Common Stock, and if the holder of such Warrants so
designates in a notice given to the Company on or before the date
immediately preceding the date of the consummation of such transaction,
the holder of such Warrants shall be entitled to receive the highest
amount of securities, cash or other property to which such holder would
actually have been entitled as a shareholder if the holder of such
Warrants had exercised such Warrants prior to the expiration of such
purchase, tender or exchange offer and accepted such offer, subject to
adjustments (from and after the consummation of such purchase, tender
or exchange offer) as nearly equivalent as possible to the adjustments
provided for in sections 2 through 4.
3.2. Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Fee Letter to the contrary, the
Company will not effect any of the transactions described in clauses
(a) through (d) of section 3.1 unless, prior to the consummation
thereof, each Person (other than the Company) which may be required to
deliver any stock, securities, cash or property upon the exercise of
this Warrant as provided herein shall assume, by written instrument
delivered to the holder of this Warrant, (a) the obligations of the
Company under this Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition
to, and shall not release the Company from, any continuing obligations
of the Company under
10
<PAGE> 14
this Warrant) and (b) the obligation to deliver to such holder such
shares of stock, securities, cash or property as, in accordance with
the foregoing provisions of this section 3, such holder may be entitled
to receive.
4. Other Dilutive Events. In case any event shall occur as to
which the provisions of section 2 or section 3 are not strictly
applicable but the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of such sections, then, in
each such case, the Company shall appoint a firm of independent
certified public accountants of recognized national standing (which may
be the regular auditors of the Company), which shall give their opinion
upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in sections 2 and 3, necessary to
preserve, without dilution, the purchase rights represented by this
Warrant. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make the
adjustments described therein.
5. No Dilution or Impairment. The Company will not, by
amendment of its certificate of incorporation or through any
consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder
of this Warrant against dilution. Without limiting the generality of
the foregoing, the Company (a) will not permit the par value of any
shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock
on the exercise of the Warrants from time to time outstanding, (c) will
not take any action which results in any adjustment of the Warrant
Price if the total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or
Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such
exercise, and (d) will not issue any capital stock of any class which
is preferred as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up,
unless the rights
11
<PAGE> 15
of the holders thereof shall be limited to a fixed sum or percentage of
par value or a sum determined by reference to a formula based on a
published index of interest rates, an interest rate publicly announced
by a financial institution or a similar indicator of interest rates in
respect of participation in dividends and to a fixed sum or percentage
of par value in any such distribution of assets.
6. Accountants' Report as to Adjustments. In each case of any
adjustment or readjustment in the Warrant Price and shares of Common
Stock (or Other Securities) issuable upon the exercise of this Warrant,
the Company at its expense will promptly compute such adjustment or
readjustment in accordance with the terms of this Warrant and cause
independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company) selected by
the Company to verify such computation (other than any computation of
the fair value of property as determined in good faith by the Board of
Directors of the Company) and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method
of calculation thereof and the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of
Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to
such issue or sale and as adjusted and readjusted (if required by
section 2) on account thereof. The Company will forthwith mail a copy
of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in
effect and showing in reasonable detail how it was calculated. The
Company will also keep copies of all such reports at its principal
office and will cause the same to be available for inspection at such
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the holder thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a
regular periodic dividend payable in cash) or other distribution,
or any right to subscribe for, purchase or otherwise acquire any
shares of stock of
12
<PAGE> 16
any class or any other securities or property, or to receive any
other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and
any other Person or any transfer of all or substantially all the
assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each recordholder of a Warrant a notice
specifying (i) the date or expected date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and
the amount and character of such dividend, distribution or right, and
(ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least 30 days
prior to the date therein specified.
8. Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of exercise of this Warrant
require registration with or approval of any governmental authority
under any United States federal or state law (other than the Securities
Act) before such shares may be issued upon exercise, the Company will,
at its expense and as expeditiously as possible, use its best efforts
to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national
securities exchange, the Company will, at its expense, obtain promptly
and maintain the approval for listing on each such exchange, upon
official notice of issuance, the shares of Common Stock issuable upon
exercise of the then outstanding Warrants and maintain the listing of
such shares after their issuance; and the Company will also list on
such national securities exchange, will register under the Exchange Act
and will maintain such listing of, any Other Securities that at any
time are issuable upon exercise of the Warrants, if and at the time
that any securities of the same class
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<PAGE> 17
shall be listed on such national securities exchange by the Company.
9. Restrictions on Transfer. 9.1. Restrictive Legends. Except
as otherwise permitted by this section 9, each Warrant (including each
Warrant issued upon the transfer of any Warrant) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of
1933, as amended, or any state securities laws, and may not be
transferred, sold or otherwise disposed of except while a
registration under such Act and laws is in effect or pursuant to
an exemption therefrom under such Act and laws. This Warrant and
such shares may be transferred only in compliance with the
conditions specified in this Warrant."
Except as otherwise permitted by this section 9, each certificate for
Common Stock (or Other Securities) issued upon the exercise of any
Warrant, and each certificate issued upon the transfer of any such
Common Stock (or Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 nor any state
securities laws and may not be transferred in the absence of
such registration or an exemption therefrom under such Act and
laws. Such shares may be transferred only in compliance with
the conditions specified in certain Common Stock Purchase
Warrants issued by DenAmerica Corp. A complete and correct
copy of the form of such Warrant is available for inspection
at the principal office of DenAmerica Corp. and will be
furnished to the holder of such shares upon written request
and without charge."
9.2. Notice of Proposed Transfer; Opinions of Counsel. Subject
to a holder's unlimited right to transfer Warrants to an Affiliate of
such holder without prior notice or approval, prior to any transfer of
any Restricted Securities which are not registered under an effective
registration statement under the Securities Act or any state securities
laws, the holder thereof will give written notice to the Company of
such holder's intention to effect such transfer and to comply in all
other re-
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<PAGE> 18
spects with this section 9.2. Each such notice (a) shall describe the
manner and circumstances of the proposed transfer in sufficient detail
to enable counsel to render the opinions referred to below, and (b)
shall designate counsel for the holder giving such notice (who may be
house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the
Company will promptly submit a copy thereof to its counsel. The
following provisions shall then apply:
(i) If (A) in the opinion of such counsel for the
holder the proposed transfer may be effected without
registration of such Restricted Securities under the
Securities Act and state securities laws, and (B) counsel for
the Company shall not have rendered an opinion within 15 days
after the receipt by the Company of such written notice that
such registration is required, such holder shall thereupon be
entitled to transfer such securities in accordance with the
terms of the notice delivered by such holder to the Company.
Each warrant or certificate, if any, representing such
securities issued upon or in connection with such transfer
shall bear the appropriate restrictive legend required by
section 9.1, unless in the opinion of each such counsel such
legend is no longer required to insure compliance with the
Securities Act. If for any reason counsel for the Company
(after having been furnished with the information required to
be furnished by clause (a) of this section 9.2) shall fail to
deliver an opinion to the Company as aforesaid, then for all
purposes of this Warrant the opinion of counsel for the
Company shall be deemed to be the same as the opinion of
counsel for such holders.
(ii) If in the opinion of either of or both such
counsel the proposed transfer may not legally be effected
without registration of such Restricted Securities under the
Securities Act (such opinion or opinions to state the basis of
the legal conclusions reached therein), the Company will
promptly so notify the holder thereof and thereafter such
holder shall not be entitled to transfer such Restricted
Securities until either (x) receipt by the Company of a
further notice from such holder pursuant to the foregoing
provisions of this section 9.2 and fulfillment of the
provisions of clause (i) above or (y) such shares have
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<PAGE> 19
been effectively registered under the Securities Act.
Notwithstanding the foregoing provisions of this section 9.2(ii), the
purchaser of the Warrants shall be permitted to transfer any Restricted
Securities to a limited number of institutional investors, provided
that (A) each such investor represents in writing that it is acquiring
such Restricted Securities for investment and not with a view to the
distribution thereof (subject, however, to any requirement of law that
the disposition thereof shall at all times be within the control of
such transferee), (B) each such investor agrees in writing to be bound
by all the restrictions on transfer of such Restricted Securities
contained in this section 9.2 and (C) the purchaser of the Warrants
delivers to the Company an opinion of counsel satisfactory to the
Company, stating that such transfer may be effected without
registration under the Securities Act.
9.3. Termination of Restrictions. The restrictions imposed by
this section 9 upon the transferability of Restricted Securities shall
cease and terminate as to any particular Restricted Securities (a) when
such securities shall have been effectively registered under the
Securities Act, or (b) when, in the opinions of both counsel for the
holder thereof and counsel for the Company, such restrictions are no
longer required in order to insure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive
from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable
legends required by section 9.1.
10. Availability of Information. The Company shall timely file
the reports required to be filed by it under the Securities Act and the
Exchange Act (including but not limited to the reports under sections
13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, will, upon the request of
any holder of Registrable Securities, make publicly available other
information) all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be amended from
time to time, (b) Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or
16
<PAGE> 20
(c) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has
complied with the requirements of this section 10.
11. Reservation of Stock, etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon
exercise of the Warrants, the number of shares of Common Stock (or
Other Securities) from time to time issuable upon exercise of all
Warrants at the time outstanding. All shares of Common Stock (or Other
Securities) issuable upon exercise of any Warrants shall be duly
authorized and, when issued upon such exercise, shall be validly issued
and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
12. Registration and Transfer of Warrants, etc.
12.1. Warrant Register; Ownership of Warrants. The Company
will keep at its principal office a register in which the Company will
provide for the registration of Warrants and the registration of
transfers of Warrants. The Company may treat the Person in whose name
any Warrant is registered on such register as the owner thereof for all
other purposes, and the Company shall not be affected by any notice to
the contrary, except that, if and when any Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject
to section 9, a Warrant, if properly assigned, may be exercised by a
new holder without a new Warrant first having been issued.
12.2. Transfer and Exchange of Warrants. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at
its principal office, the Company at its expense will (subject to
compliance with section 9, if applicable) execute and deliver in
exchange therefor a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft
or destruction of any Warrant, upon delivery of an indemnity bond in
17
<PAGE> 21
such reasonable amount as the Company may determine (or, in the case of
any Warrant held by any Institutional Holder or its nominee, of an
indemnity agreement from such Institutional Holder reasonably
satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at
its principal office, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
13. Registration under Securities Act, etc.
13.1. Registration on Request.
(a) Request. Upon the written request of one or more
Initiating Holders, requesting that the Company effect the
registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the
intended method of disposition thereof, the Company will, subject
to the terms of this Agreement, promptly give written notice of
such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company has
been so requested to register by such Initiating Holders for
disposition in accordance with the intended method of
disposition stated in such request,
(ii) all other Registrable Securities the holders of
which shall have made a written request to the Company for
registration thereof within 30 days after the giving of such
written notice by the Company (which request shall specify the
intended method of disposition of such Registrable
Securities),
(iii) all shares of Common Stock which the Company may
elect to register in connection with the offering of
Registrable Securities pursuant to this section 13.1,
all to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable
Securities and the additional shares of Common Stock, if any, so to be
registered.
(b) Registration Statement Form. Registrations under this
section 13.1 shall be on such appropriate registration form of
the Commission (i)
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<PAGE> 22
as shall be selected by the Company and as shall be reasonably
acceptable to the holders of more than 50% (by number of
shares) of the Registrable Securities so to be registered and
(ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods
of disposition specified in their request for such
registration. The Company agrees to include in any such
registration statement all information which holders of
Registrable Securities being registered shall reasonably
request.
(c) Expenses. The Company will pay all Registration
Expenses in connection with any registration requested
pursuant to this section 13.1 by any Initiating Holders of
Registrable Securities prior to the time at which three such
registrations shall have been effected in which 80% of the
Registrable Securities requested to be included in such
registration by any holders of Registrable Securities shall
have been registered pursuant to this section 13.1. The
Registration Expenses (and underwriting discounts and
commissions and transfer taxes, if any) in connection with
each other registration requested under this section 13.1
shall be allocated pro rata among all Persons on whose behalf
securities of the Company are included in such registration,
on the basis of the respective amounts of the securities then
being registered on their behalf.
(d) Effective Registration Statement. A registration
requested pursuant to this section 13.1 shall not be deemed to
have been effected (i) unless a registration statement with
respect thereto has become effective, provided that a
registration which does not become effective after the Company
has filed a registration statement with respect thereto solely
by reason of the refusal to proceed of the Initiating Holders
(other than a refusal to proceed based upon the advice of
counsel relating to a matter with respect to the Company)
shall be deemed to have been effected by the Company at the
request of such Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has
become effective, such registration becomes subject to any
stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any
reason, or (iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in
connection with such registration are not
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<PAGE> 23
satisfied, other than by reason of some act or omission by
such Initiating Holders.
(e) Selection of Underwriters. If a requested registration
pursuant to this section 13.1 involves an underwritten
offering, the managing underwriter or underwriters thereof
shall be selected by the holders of at least a majority (by
number of shares) of the Registrable Securities as to which
registration has been requested and shall be acceptable to the
Company, which shall not unreasonably withhold its acceptance
of any such underwriters.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this section 13.1 involves an
underwritten offering, and the managing underwriter shall
advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in
such registration (including securities of the Company which
are not Registrable Securities) exceeds the number which can
be sold in such offering within a price range acceptable to
the holders of a majority of the Registrable Securities
requested to be included in such registration, the Company
will include in such registration, to the extent of the number
which the Company is so advised can be sold in such
offering,(i) first, Registrable Securities requested to be
included in such registration by the holder or holders of
Registrable Securities, pro rata among the holders thereof
requesting such registration on the basis of the number of
such securities requested to be included by such holders and
(ii) second, securities the Company proposes to sell and other
securities of the Company included in such registration by the
holders thereof.
13.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its Common
Stock under the Securities Act (other than by a registration
on Form S-4 or S-8 or any successor or similar forms and other
than pursuant to section 13.1), whether or not for sale for
its own account, it will each such time give prompt written
notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this
section 13.2. Upon the written request of any such holder made
within 30 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to
be
20
<PAGE> 24
disposed of by such holder and the intended method of
disposition thereof), the Company will, subject to the terms
of this Agreement, effect the registration under the
Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, by inclusion
of such Registrable Securities in the registration statement
which covers the securities which the Company proposes to
register, provided that if, at any time after giving written
notice of its intention to register any securities and prior
to the effective date of the registration statement filed in
connection with such registration, the Company shall determine
for any reason either not to register or to delay registration
of such securities, the Company may, at its election, give
written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its
obligation to register any Registrable Securities in
connection with such registration (but not from its obligation
to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of any holder or
holders of Registrable Securities entitled to do so to
request that such registration be effected as a registration
under section 13.1, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected
under this section 13.2 shall relieve the Company of its
obligation to effect any registration upon request under
section 13.1 nor shall any such registration hereunder be
deemed to have been effected pursuant to section 13.1. The
Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant
to this section 13.2.
(b) Priority in Incidental Registrations. If (i) a
registration pursuant to this section 13.2 involves an
underwritten offering of the securities so being registered,
whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, (ii) the Registrable
Securities so requested to be registered for sale for the
account of holders of Registrable
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<PAGE> 25
Securities are not also to be included in such underwritten
offering (either because the Company has not been requested so
to include such Registrable Securities pursuant to section
13.4(b) or, if requested to do so, is not obligated to do so
under section 13.4(b)), and (iii) the managing underwriter of
such underwritten offering shall inform the Company and
holders of the Registrable Securities requesting such
registration by letter of its belief that the distribution of
all or a specified number of such Registrable Securities
concurrently with the securities being distributed by such
underwriters would interfere with the successful marketing of
the securities being distributed by such underwriters (such
writing to state the basis of such belief and the approximate
number of such Registrable Securities which may be distributed
without such effect), then the Company may, upon written
notice to all holders of such Registrable Securities, reduce
pro rata (if and to the extent stated by such managing
underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities the registration of
which shall have been requested by each holder of Registrable
Securities so that the resultant aggregate number of such
Registrable Securities so included in such registration shall
be equal to the number of shares stated in such managing
underwriter's letter unless reduction would cause the
Company to breach the terms of any existing contract.
13.3. Registration Procedures. If and whenever the Company
is required to effect the registration of any Registrable
Securities under the Securities Act as provided in sections
13.1 and 13.2, the Company shall, as expeditiously as
possible:
(i) prepare and (in the case of a registration
pursuant to section 13.1, such filing to be made within 60
days after the initial request of one or more Initiating
Holders of Registrable Securities or in any event as soon
thereafter as possible) file with the Commission the
requisite registration statement to effect such
registration (including such audited financial statements
as may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its
best efforts to cause such registration statement to
become and remain effective, provided, however, that the
Company may discontinue any registration of its securities
which are not Registrable Securities (and, under the
circum-
22
<PAGE> 26
stances specified in section 13.2(a), its securities which
are Registrable Securities) at any time prior to the
effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement until the earlier of such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or (i) in the
case of a registration pursuant to section 13.1, the
expiration of 180 days after such registration statement
becomes effective, or (ii) in the case of a registration
pursuant to section 13.2, the expiration of 90 days after such
registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter,
if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller and underwriter,
if any, may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities
owned by such seller;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or
blue sky laws of such jurisdictions as any seller thereof and
any underwriter of the securities being sold by such seller
shall reasonably request, to keep such registrations or
qualifications in effect for so long as such registra-
23
<PAGE> 27
tion statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such
seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements
of this subdivision (iv) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the
underwriters, if any of
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(y) a "comfort" letter (or, in the case of such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, a letter dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in
24
<PAGE> 28
opinions of issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities (with, in the case
of an "agreed upon procedures" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35;
(vii) notify the holders of Registrable Securities and
the managing underwriter or underwriters, if any, promptly and
confirm such advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(w) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(x) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(y) if at any time the representations and warranties of the
Company made as contemplated by section 13.4 below cease to be true and
correct;
(z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon the Company's discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to
such seller and each underwriter, if
25
<PAGE> 29
any, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first day of the Company's first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and will furnish to each such seller at least
five business days prior to the filing thereof a copy of any
amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such
seller shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the
rules or regulations thereunder;
(x) make available for inspection by a representative or
representatives of the holders of Registrable Securities, any
underwriter participating in any disposition pursuant to the
registration statement and any attorney or accountant retained
by such selling holders or underwriter (each, an "Inspector"),
all financial and other records, pertinent corporate documents
and properties of the Company (the "Records"), and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in
connection with such registration in order to permit a
reasonable investigation within the meaning of Section 11 of
the Securities Act;
(xi) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such
registration
26
<PAGE> 30
statement from and after a date not later than the effective
date of such registration statement; and
(xii) use its best efforts to list all Registrable
Securities covered by such registration statement on any
securities exchange on which any of the Registrable Securities
are then listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities shall be deemed to have
agreed by acquisition of such Registrable Securities that, upon receipt
of any notice from the Company of the occurrence of any event of the
kind described in subdivision (viii) of this section 13.3, such holder
will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii)
of this section 13.3 and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time
of receipt of such notice.
13.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under
section 13.1, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to be
satisfactory in substance and form to the Company, each such holder
and the underwriters, and to contain such representations and
warranties by the Company and such other terms as are generally
prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in
section 13.6. The holders of the Registrable Securities will
cooperate with the Company in the negotiation of the underwriting
agreement and will give consideration to the reasonable suggestions
of the Company regard-
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ing the form thereof, provided that nothing herein contained shall
diminish the foregoing obligations of the Company. The holders of
Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their option,
require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the
benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not
be required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations and warranties contained in a writing furnished by
such holder expressly for use in such registration statement or
agreements regarding such holder, such holder's Registrable
Securities, such holder's intended method of distribution and any
other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the
Securities Act as contemplated by section 13.2 and such securities
are to be distributed by or through one or more underwriters, the
Company will, if requested by any holder of Registrable Securities
as provided in section 13.2 and subject to the provisions of
section 13.2(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be
offered and sold by such holder among the securities to be
distributed by such underwriters, provided that if the managing
underwriter of such underwritten offering shall inform the holders
of the Registrable Securities requesting such registration and the
holders of any other securities which shall have exercised, in
respect of such underwritten offering, registration rights
comparable to the rights under section 13.2 by letter of its belief
that inclusion in such underwritten distribution of all or a
specified number of such Registrable Securities or of such other
shares of securities so requested to be included would interfere
with the successful marketing of the securities (other than such
Registrable Securities and other shares of securities so requested
to be included) by the underwriters (such writing to state the
basis of such belief and the approximate number of such Regis-
trable Securities
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<PAGE> 32
and shares of other securities so requested to be included which
may be included in such underwritten offering without such effect),
then the Company may, upon written notice to all holders of such
Registrable Securities and of such other shares of securities so
requested to be included, exclude pro rata from such underwritten
offering (if and to the extent stated by such managing underwriter
to be necessary to eliminate such effect) the number of such
Registrable Securities and shares of such other securities so
requested to be included the registration of which shall have been
requested by each holder of Registrable Securities and by the
holders of such other securities so that the resultant aggregate
number of such Registrable Securities and of such other shares of
securities so requested to be included which are included in such
underwritten offering shall be equal to the approximate number of
shares stated in such managing underwriter's letter unless
reduction would cause the Company to breach the terms of any
existing contract. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters
and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such holders of Registrable Securities. Any such holder of
Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and
any other representation required by law.
(c) Holdback Agreements. Each holder of Registrable
Securities agrees by acquisition of such Registrable Securities, if
so required by the managing underwriter, not to sell, make any
short sale of, loan, grant any option for the purchase of, effect
any public sale or distribution of or otherwise dispose of any
securities of the Company, during the 90 days after any
underwritten registration pursuant to section 13.1 or 13.2 has
become effective, except as part of such underwritten registration.
Notwithstanding the foregoing sentence, each holder of Registrable
Securities subject to
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<PAGE> 33
the foregoing sentence shall be entitled to sell during the
foregoing period securities in a private sale.
(d) Participation in Underwritten Offerings. No Person may
participate in any underwritten offering hereunder unless such
Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the
terms and conditions hereof, by the Company and the holders of a
majority of Registrable Securities to be included in such
underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other
documents (other than powers of attorney) required under the terms
of such underwriting arrangements. Notwithstanding the foregoing,
no underwriting agreement (or other agreement in connection with
such offering) shall require any holder of Registrable Securities
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations and
warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
13.5. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the Company
will give the holders of Registrable Securities registered under
such registration statement, their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate
in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment
thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent
public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
13.6. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and
hold harmless in the case of any registration statement filed
pursuant to section 13.1 or 13.2, the holder of any Registrable
Securities covered by such registration statement, its directors
and officers, each other Person who
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<PAGE> 34
participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such
holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such
director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Company will reimburse such holder and each such director,
officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability,
action or proceeding, provided that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus,
final prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company
through an instrument duly executed by such holder, specifically
stating that it is for use in the preparation thereof and,
provided, further that the Company shall not be liable to any
Person who participates as an underwriter, in the offering or
sale of Registrable Securities or to any other Person, if any,
who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure
to send or give a copy of the final prospectus, as the same may
be then supplemented or amended, within the time required by the
Securities Act to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable
Securities to such Person if
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<PAGE> 35
such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
holder or any such director, officer, underwriter or controlling
person and shall survive the transfer of such securities by such
holder.
(b) Indemnification by the Sellers. In the event of any
registration of any securities of the Company under the
Securities Act, the holders of the Registrable Securities
covered by such registration statement will, and hereby do,
indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this section 13.6) the
Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Any
such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any
such director, officer or controlling person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding
subdivisions of this section 13.6, such indemnified party will,
if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the
preceding subdivisions of this section 13.6, except to the
extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
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<PAGE> 36
reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of
such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent
that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or
enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release
from all liability, or a covenant not to sue, in respect to such
claim or litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any such action
without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this section 13.6
(with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under
any United States, federal or state law or regulation of any
governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required
by this section 13.6 shall be made by periodic payments of the
amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage
or liability is incurred.
(f) Contribution. If the indemnification provided for in the
preceding subdivisions of this section 13.6 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage
or liability referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability (i) in
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<PAGE> 37
such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the holder
or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and
of the holder or underwriter, as the case may be, on the other
in connection with the statements or omissions which resulted in
such expense, loss, damage or liability, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and the holder or
underwriter, as the case may be, on the other in connection with
the distribution of the Registrable Securities shall be deemed
to be in the same proportion as the total amount borrowed under
the Facilities (as defined in the Fee Letter) bear to the gain,
if any, realized by the selling holder or the underwriting
discounts and commissions received by the underwriter, as the
case may be. The relative fault of the Company on the one hand
and of the holder or underwriter, as the case may be, on the
other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or omission to state a material fact relates to information
supplied by the Company, by the holder or by the underwriter and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission, provided that the foregoing contribution agreement
shall not inure to the benefit of any indemnified party if
indemnification would be unavailable to such indemnified party
by reason of the provisions contained in the first sentence of
subdivision (a) of this section 13.6, and in no event shall the
obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party
would have been obligated to pay by way of indemnification if
the indemnification provided for under subdivisions (a) or (b)
of this section 13.6 had been available under the circumstances.
The Company and the holders of Registrable Securities agree
that it would not be just and equitable if contribution pursuant
to this subdivision (f) were determined by pro rata allocation
(even if the holders and any underwriters were treated as one
entity for such purpose) or by any
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<PAGE> 38
other method of allocation that does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
in the preceding sentence and subdivision (c) of this section
13.6, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
any such action or claim.
Notwithstanding the provisions of this subdivision (f), no
holder of Registrable Securities or underwriter shall be
required to contribute any amount in excess of the amount by
which (i) in the case of any such holder, the net proceeds
received by such holder from the sale of Registrable Securities
or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to
the public were offered to the public exceeds, in any such case,
the amount of any damages that such holder or underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
14. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective
meanings:
Additional Shares of Common Stock: All shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to
section 2.3 or 2.4, deemed to be issued) by the Company after the date
hereof, whether or not subsequently reacquired or retired by the
Company, other than
(a) shares issuable upon the conversion of options,
warrants, or other convertible securities outstanding on the
date hereof,
(b) shares issued upon the exercise of the Warrants,
(c) shares issued upon the exercise of the warrants
granted to holders of the Subordinated Notes or Series B
Subordinated Notes of the Company,
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(d) shares issued upon the exercise of options granted
or to be granted under the Company's stock option plans as in
effect on the date hereof or under any other employee stock
option or purchase plan or plans adopted or assumed after such
date; provided that any options granted after the date of
original issuance of the Warrants within any calendar year
shall not be exercisable for a number of shares greater than
1% of the issued and outstanding Common Stock of the Company
(on a fully diluted basis) on the first Business Day of such
calendar year.
Affiliate: With respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to,
all directors and officers of such Person), controlled by, or
under direct or indirect common control with such Person. A Person
shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to (i) vote 10% or more of the
securities having ordinary voting power for the election of
directors of such corporation or (ii) direct or cause the
direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
Business Day: Any day other than a Saturday or a Sunday
or a day on which commercial banking institutions in the City of
New York are authorized by law to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar
days.
Commission: The Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
Common Stock: As defined in the introduction to this
Warrant, such term to include any stock into which such Common
Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any
class or classes (however designated) of the Company the holders
of which have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
Company: As defined in the introduction to this Warrant,
such term to include any corporation which shall succeed to or
assume the obligations of the Company hereunder in compliance with
section 3.
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Convertible Securities: Any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.
Current Market Price: On any date specified herein, the
average daily Market Price during the period of the most recent 20
days, ending on such date, on which the national securities
exchanges were open for trading, except that if no Common Stock is
then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, the Current
Market Price shall be the Market Price on such date. If the
determination of Current Market Price is made in connection with
an underwritten registered public offering of Common Stock which
results in proceeds to the Company in excess of $5,000,000, then
the Current Market Price on such date shall mean the Market Price.
Exchange Act: The Securities Exchange Act of 1934, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
Fee Letter: As defined in the introduction to this
Warrant.
Initiating Holders: Any holder or holders of Registrable
Securities holding at least 75% of the Registrable Securities
(by number of shares at the time issued and outstanding), and
initiating a request pursuant to section 13.1 for the registration
of all or part of such holder's or holders' Registrable
Securities.
Institutional Holder: Any original purchaser of any
Warrant, any insurance company, pension fund, mutual fund,
investment company, bank, savings bank, savings and loan
association, broker-dealer, investment adviser, investment banking
company, trust company or any finance or credit company, any
portfolio or any investment fund managed by any of the foregoing,
any other institutional investor and any nominee of any of the
foregoing.
Lender: As defined in the introduction to this Warrant.
Market Price: On any date specified herein, the amount
per share of the Common Stock, equal to (a) the last sale price of
such Common Stock, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked
prices thereof
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on such date, in each case as officially reported on the principal
national securities exchange on which such Common Stock is then
listed or admitted to trading, or (b) if such Common Stock is not
then listed or admitted to trading on any national securities
exchange but is quoted on the Nasdaq Stock Market, the last
trading price of the Common Stock on such date, or, if no such
sale takes place on such date, the average of the closing bid and
asked prices thereof on such date, or (c) if the Common Stock is
not so quoted, the average of the closing bid and asked prices of
the Common Stock on such date as furnished by a professional
market maker making a market in the Common Stock selected by the
Board of Directors of the Company, or (d) if such Common Stock is
not then listed or admitted to trading on any national exchange or
quoted on the Nasdaq Stock Market or no professional market maker
is making a market in the Common Stock, the price determined by
the agreement of the Company and the holders of no less than 75%
of the then outstanding Warrants; provided that if the Company and
such holders cannot agree on a Market Price within 45 days, the
Market Price shall be determined by a financial expert selected by
holders of no less than 50% of the Warrants from a group of three
financial experts chosen by the Company, such financial experts to
be of recognized standing and experienced in appraising businesses
and properties of the type owned by the Company, who have not
previously performed services for, and are not Affiliates of, the
Company and its stockholders; provided further that the costs and
expenses of any such experts in making such valuation shall be
paid by the Company.
NASD: The National Association of Securities Dealers,
Inc.
Options: Rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common
Stock or Convertible Securities.
Other Securities: Any stock (other than Common Stock)
and other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall
be entitled to receive, or shall have received, upon the exercise
of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to section 3 or otherwise.
Person: A corporation, an association, a partnership,
an organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.
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Registrable Securities: (a) Any shares of Common Stock
or Other Securities issued or issuable upon exercise of this
Warrant and (b) any securities issued or issuable with respect to
any securities referred to in the foregoing subdivision by way of
stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b)
they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (d) they
shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the
Company's performance of or compliance with section 13, including,
without limitation, all registration, filing and NASD fees, all
fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance,
premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable
Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities,
but excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration
Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead
expenses of the Company, auditing fees, premiums or other expenses
relating to liability insurance required by underwriters of the
Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have
incurred in any event.
Restricted Securities: (a) any Warrants bearing the
applicable legend set forth in section 9.2, (b)
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<PAGE> 43
any shares of Common Stock (or Other Securities) issued upon the
exercise of Warrants which are evidenced by a certificate or
certificates bearing the applicable legend set forth in such
section, (c) any shares of Common Stock (or Other Securities)
issued subsequent to the exercise of any of the Warrants as a
dividend or other distribution with respect to, or resulting from
a subdivision of the outstanding shares of Common Stock (or Other
Securities) into a greater number of shares by reclassification,
stock splits or otherwise, or in exchange for or in replacement of
the Common Stock (or Other Securities) issued upon such exercise,
which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (d) unless the
context otherwise requires, any shares of Common Stock (or Other
Securities) issuable upon the exercise of Warrants, which, when so
issued, will be evidenced by a certificate or certificates bearing
the applicable legend set forth in such section.
Securities Act: The Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Subordinated Promissory Notes: The Company's 12%
Subordinated Notes due March 31, 2002 in an aggregate principal
amount not in excess of $15,000,000 issued to BEP Holdings, Inc.
on July 3, 1996, and BEP Holdings, Inc.'s permitted successors and
assigns thereunder.
Series B Subordinated Notes: The Company's 13% Subordinated
Notes due 2003 in an aggregate principal amount not in excess of
$18,250,000 issued pursuant to that certain Indenture (Series B
Notes) dated as of March __, 1996 between the Company and State
Street Bank and Trust Company, as trustee, as the same may be
amended, modified, restated or supplemented from time to time.
Transfer: Any sale, assignment, pledge or other disposition
of any security, or of any interest therein, which could
constitute a "sale" as that term is defined in section 2(3) of the
Securities Act.
Voting Securities: Stock of any class or classes (or
equivalent interests), if the holders of the stock of such class
or classes (or equivalent interests) are ordinarily, in the
absence of contingencies, entitled to vote for the election of the
directors (or persons performing similar functions) of such
business entity, even though the right so to vote has been
suspended by the happening of such a contingency.
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Warrant Price: As defined in section 2.1.
Warrants: As defined in the introduction to this Warrant.
15. Remedies. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default by the
Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or
otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained
in this Warrant shall be construed as conferring upon the holder hereof
any rights as a stockholder of the Company or as imposing any
obligation on such holder to purchase any securities or as imposing any
liabilities on such holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by
creditors of the Company.
17. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by registered or
certified mail, return receipt requested, or delivered by a nationally
recognized overnight courier, postage prepaid, addressed (a) if to any
holder of any Warrant, at the registered address of such holder as set
forth in the register kept at the principal office of the Company, or
(b) if to the Company, to the attention of its President at its
principal office, provided that the exercise of any Warrant shall be
effective in the manner provided in section 1.
18. Amendments. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought.
19. Expiration. The Company will give the holder of this
Warrant not less than six weeks nor more than nine months notice of the
expiration of the right to exercise this Warrant. The right to exercise
this Warrant shall expire at 5:30 p.m., New York City time, on July 3,
2002, unless the Company shall fail to give such notice as aforesaid,
in which event the right to exercise this Warrant shall not expire
until a date six weeks after the date on which the Company shall give
the holder hereof notice of the expiration of the right to exercise
this Warrant.
41
<PAGE> 45
20. Representation with Respect to Capitalization. The Company
hereby represents and warrants that, after giving effect to the
exercise or conversion of all warrants, options and convertible
securities of the Company outstanding on the date of original issuance
of the Warrants, the total issued and outstanding capital stock of the
Company would be 16,304,967 shares of Common Stock.
21. Covenant with Respect to Books, Records and Inspections.
The Company shall, and shall cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Company shall, and shall cause each of its Subsidiaries
to, permit any holder of the Warrants or any officers and designated
representatives of any purchaser of the Warrants to visit and inspect
any of the properties of the Company or any of its Subsidiaries, and to
examine the books of record and account of the Company or any of its
Subsidiaries, and discuss the affairs, finances and accounts of the
Company or any of its Subsidiaries with, and be advised as to the same
by, its and their officers and independent accountants, all upon
reasonable notice and at such reasonable times as such purchaser may
desire.
22. Expenses. The Company shall pay all reasonable
out-of-pocket costs and expenses of the Lender in connection with the
negotiation, preparation, execution and delivery of this Warrant
(including, without limitation, the fees and disbursements of Skadden,
Arps, Slate, Meagher & Flom, special counsel to the Lender and any
other attorneys retained by the Lender).
23. Descriptive Headings. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect
the meaning hereof.
24. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
25. Judicial Proceedings; Waiver of Jury. Any judicial
proceeding brought against the Company with respect to this Warrant may
be brought in any court of competent jurisdiction in the State of
Illinois or of the United States of America for the Northern District
of Illinois and, by execution and delivery of this Agreement, the
Company (a) accepts, generally and uncondi-
42
<PAGE> 46
tionally, the nonexclusive jurisdiction of such courts and any related
appellate court, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Warrant, subject to any rights
of appeal, and (b) irrevocably waives any objection the Company may now
or hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an
inconvenient forum. The Company hereby waives personal service of
process and consents that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of section
17, and service so made shall be deemed completed on the third Business
Day after such service is deposited in the mail or, if earlier, when
delivered. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of any
holder of any Warrant to bring proceedings against the Company in the
courts of any other jurisdiction. THE COMPANY HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS WARRANT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
DENAMERICA CORP.
By: ______________________________
Title:
43
<PAGE> 47
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To DenAmerica Corp.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______* shares of Common
Stock of DenAmerica Corp. and herewith makes payment of $________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ______________ , whose address is ___________________.
Dated:
______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
______________________________________
(Street Address)
______________________________________
(City)(State)(Zip Code)
- --------
* Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any
adjustment for Additional Shares of Common Stock or any other stock or
other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case
of partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the
holder surrendering the Warrant.
44
<PAGE> 48
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _____________________ the right
represented by such Warrant to purchase ___________ shares of Common Stock of
DenAmerica Corp. to which such Warrant relates, and appoints ________________
Attorney to make such transfer on the books of DenAmerica Corp. maintained for
such purpose, with full power of substitution in the premises.
Dated:
____________________________________
(Signature must conform in all re-
spects to name of holder as speci-
fied on the face of Warrant)
___________________________________
(Street Address)
___________________________________
(City)(State)(Zip Code)
Signed in the presence of:
__________________________________
45
<PAGE> 49
GUARANTEE OF SIGNATURE(S)
Authorized Signature ___________________________________
Name ___________________________________________________
(Please Print)
Name of Firm ___________________________________________
(Include Zip Code)
Address ________________________________________________
Area Code and Telephone Number _________________________
Dated __________________________________________________
46
<PAGE> 1
EXHIBIT 10.92A
- --------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
among
DENAMERICA CORP.
THE BANKS NAMED HEREIN
and
BANQUE PARIBAS
As Agent
Dated as of July 3, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS ................................................................. 1
Section 1.1 Definitions .................................................. 1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES ....................................... 21
Section 2.1 Term Loans ................................................... 21
Section 2.2 Revolving Loans .............................................. 22
Section 2.3 Delayed Draw Term Loans ...................................... 23
Section 2.4 Notice of Borrowing .......................................... 24
Section 2.5 Disbursement of Funds ........................................ 24
Section 2.6 Notes ........................................................ 25
Section 2.7 Interest ..................................................... 25
Section 2.8 Interest Periods ............................................. 26
Section 2.9 Minimum Amount of Eurodollar Loans ........................... 27
Section 2.10 Conversion or Continuation .................................. 27
Section 2.11 Voluntary Reduction of Commitments .......................... 27
Section 2.12 Voluntary Prepayments ....................................... 28
Section 2.13 Mandatory Prepayments ....................................... 28
Section 2.14 Application of Prepayments .................................. 30
Section 2.15 Method and Place of Payment ................................. 30
Section 2.16 Fees ........................................................ 31
Section 2.17 Interest Rate Unascertainable, Increased Costs, Illegality .. 31
Section 2.18 Funding Losses .............................................. 32
Section 2.19 Increased Capital ........................................... 33
Section 2.20 Taxes ....................................................... 33
Section 2.21 Use of Proceeds ............................................. 34
Section 2.22 Collateral Security and Consents ............................ 34
SECTION 3. LETTERS OF CREDIT ........................................................... 35
Section 3.1 Issuance of Letters of Credit, etc ........................... 35
Section 3.2 Letter of Credit Fees ........................................ 36
Section 3.3 Obligation of Borrower Absolute, etc ......................... 37
SECTION 4. CONDITIONS PRECEDENT ........................................................ 38
Section 4.1 Conditions Precedent to Initial Loans ........................ 38
Section 4.2 Conditions Precedent to All Loans ............................ 42
Section 4.3 Conditions Precedent to the Effectiveness of this
Amended Credit Agreement ........................... 43
SECTION 5. REPRESENTATIONS AND WARRANTIES .............................................. 48
Section 5.1 Corporate Status ............................................. 48
Section 5.2 Corporate Power and Authority ................................ 48
Section 5.3 No Violation ................................................. 49
Section 5.4 Litigation ................................................... 49
Section 5.5 Financial Statements; Financial Condition; etc ............... 49
Section 5.6 Solvency ..................................................... 49
Section 5.7 Projections .................................................. 49
Section 5.8 Material Adverse Change ...................................... 49
Section 5.9 Use of Proceeds; Margin Regulations .......................... 50
Section 5.10 Governmental Approvals ...................................... 50
Section 5.11 Security Interests and Liens ................................ 51
Section 5.12 Tax Returns and Payments .................................... 50
Section 5.13 ERISA ....................................................... 50
Section 5.14 Investment Company Act; Public Utility Holding Company Act .. 50
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 5.15 Original Closing Date Transactions ...................... 51
Section 5.16 Representations and Warranties in Related Documents ..... 51
Section 5.17 True and Complete Disclosure ............................ 51
Section 5.18 Corporate Structure; Capitalization ..................... 52
Section 5.19 Environmental Matters ................................... 52
Section 5.20 Senior Indebtedness ..................................... 53
Section 5.21 Patents, Trademarks, Franchise Agreements, Franchisor
Agreements etc .................................. 53
Section 5.22 Ownership of Property ................................... 53
Section 5.23 No Default .............................................. 53
Section 5.24 Licenses, etc ........................................... 53
Section 5.25 Compliance With Law ..................................... 54
Section 5.26 No Burdensome Restrictions .............................. 54
Section 5.27 Brokers' Fees ........................................... 54
Section 5.28 Labor Matters ........................................... 54
Section 5.29 Lease Consents .......................................... 54
Section 5.30 Amendment Closing Date Transactions ..................... 54
SECTION 6. AFFIRMATIVE COVENANTS ................................................... 54
Section 6.1 Information Covenants .................................... 54
Section 6.2 Books, Records and Inspections ........................... 58
Section 6.3 Maintenance of Insurance ................................. 58
Section 6.4 Taxes and Other Claims ................................... 58
Section 6.5 Corporate Existence, Franchises, Permits, etc ............ 59
Section 6.6 Compliance with Law ...................................... 59
Section 6.7 Performance of Obligations ............................... 59
Section 6.8 Maintenance of Properties ................................ 59
Section 6.9 Interest Rate Protection ................................. 59
Section 6.10 Bank Accounts and Concentration Accounts ................ 59
Section 6.11 Management Services Agreement ........................... 61
Section 6.12 Change in Financing Methods ............................. 61
Section 6.13 Omnibus Agreement ....................................... 61
Section 6.14 Landlord Consents ....................................... 61
Section 6.15 Merger .................................................. 61
Section 6.16 HA Divestiture .......................................... 61
Section 6.17 UCC Form ................................................ 61
Section 6.18 Opinions of Counsel ..................................... 61
Section 6.19 BEP Concentration Account ............................... 61
Section 6.20 Drop-Down Notes ......................................... 62
Section 6.21 Trademarks .............................................. 62
Section 6.22 Assignment .............................................. 62
SECTION 7. NEGATIVE COVENANTS ...................................................... 62
Section 7.1 Financial Covenants ...................................... 62
Section 7.2 Indebtedness ............................................. 64
Section 7.3 Liens .................................................... 65
Section 7.4 Restriction on Fundamental Changes ....................... 65
Section 7.5 Sale of Assets ........................................... 66
Section 7.6 Contingent Obligations ................................... 68
Section 7.7 Restricted Payments ...................................... 68
Section 7.8 Advances, Investments and Loans .......................... 69
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 7.9 Transactions with Affiliates ............................. 70
Section 7.10 Limitation on Modifications of Certain Documents ........ 70
Section 7.11 Changes in Business ..................................... 70
Section 7.12 Certain Restrictions .................................... 70
Section 7.13 Lease Payments .......................................... 71
Section 7.14 Sale and Leasebacks ..................................... 71
Section 7.15 Plans ................................................... 71
Section 7.16 Fiscal Year; Fiscal Quarter ............................. 71
Section 7.17 Restaurant Closing Costs ................................ 71
Section 7.18 No Additional Bank Accounts ............................. 71
Section 7.19 Real Property ........................................... 71
Section 7.20 New Store Limitations ................................... 71
Section 7.21 Issuance of Equity Securities ........................... 72
Section 7.22 New Franchise Agreements ................................ 72
Section 7.23 Subsidiaries Other Than BEP Entities .................... 72
SECTION 8. EVENTS OF DEFAULT ....................................................... 73
Section 8.1 Events of Default ........................................ 73
Section 8.2 Rights and Remedies ...................................... 76
SECTION 9. THE AGENT ............................................................... 76
Section 9.1 Appointment .............................................. 76
Section 9.2 Delegation of Duties ..................................... 77
Section 9.3 Exculpatory Provisions ................................... 77
Section 9.4 Reliance by Agent ........................................ 77
Section 9.5 Notice of Default ........................................ 78
Section 9.6 Non-Reliance on Agent and Other Banks .................... 78
Section 9.7 Indemnification .......................................... 78
Section 9.8 Agent in its Individual Capacity ......................... 78
Section 9.9 Successor Agent .......................................... 79
SECTION 10. MISCELLANEOUS ........................................................... 79
Section 10.1 Payment of Expenses, Indemnity, etc ..................... 79
Section 10.2 Right of Setoff ......................................... 80
Section 10.3 Notices ................................................. 80
Section 10.4 Successors and Assigns; Participation; Assignments ...... 80
Section 10.5 Amendments and Waivers .................................. 82
Section 10.6 No Waiver; Remedies Cumulative .......................... 82
Section 10.7 Sharing of Payments ..................................... 82
Section 10.8 Governing Law; Submission to Jurisdiction ............... 83
Section 10.9 Counterparts ............................................ 83
Section 10.10 Effectiveness .......................................... 83
Section 10.11 Headings Descriptive ................................... 83
Section 10.12 Marshalling; Recapture ................................. 83
Section 10.13 Severability ........................................... 84
Section 10.14 Survival ............................................... 84
Section 10.15 Domicile of Loans ...................................... 84
Section 10.16 Limitation of Liability ................................ 84
Section 10.17 Calculations; Computations ............................. 84
Section 10.18 Waiver of Trial by Jury ................................ 84
</TABLE>
iii
<PAGE> 5
Schedule 1.1(a) -- Banks and Commitments
Schedule 1.1(b) -- Restaurant Closings
Schedule 1.1(c) -- Liquor Licenses
Schedule 4.1(k) -- Paid-off Creditors
Schedule 5.4 -- Litigation
Schedule 5.10 -- Governmental Approvals
Schedule 5.13 -- ERISA Matters
Schedule 5.18 -- Subsidiaries; Capital Stock
Schedule 5.19 -- Environmental Matters
Schedule 5.21 -- Patents; Trademarks; Franchise Agreements
Schedule 5.22 -- Real Property; Material Equipment Leases
Schedule 5.23 -- Existing Defaults
Schedule 5.27 -- Brokers' Fees
Schedule 5.28 -- Labor Matters
Schedule 5.29 -- Equipment Lease Consents
Schedule 7.2 -- Existing Indebtedness
Schedule 7.3 -- Existing Liens
Schedule 7.6 -- Existing Contingent Obligations
Schedule 7.8 -- Existing Loans, Advances and Investments
Schedule 7.19 -- Existing Fee-Interests in Real Property
Schedule 7.21 -- Warrants and Unit Purchase Options
Schedule 7.23 -- Description of Non-BEP Entity
Exhibit A -- Form of Term Note
Exhibit B -- Form of Revolving Note
Exhibit C -- Form of Delayed Draw Term Note
Exhibit D -- Form of Leasehold Mortgage
Exhibit E -- Form of Fee Mortgage
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Guaranty
Exhibit H -- Form of Trademark Assignment
Exhibit I -- Notice of Revolver Reserve
Exhibit J -- Form of Security Agreement
Exhibit K -- Form of Legal Opinion of Loan Parties
Exhibit L -- Form of Assignment
Exhibit M -- Description of HA Divestiture
Exhibit N -- Form of Subsidiary Pledge Agreement
Exhibit O -- Form of Drop-Down Note
Exhibit P -- Form of Drop-Down Note Security Agreement
Exhibit Q -- Form of Subordination Agreement (Drop-Down Notes)
Exhibit R -- Form of Subsidiary Security Agreement
Exhibit S -- Form of Omnibus Agreement
Exhibit T -- Form of Senior Subordination Agreement
iv
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT (as set forth herein,
and as the same may from time to time hereafter be restated, modified,
supplemented or amended from time to time, the "Amended Credit Agreement"),
dated as of July 3, 1996 (the "Amendment Closing Date"), among DenAmerica Corp.,
a Georgia corporation (formerly known as American Family Restaurants, Inc.) (the
"Borrower"), the Banks (as hereinafter defined) and Banque Paribas, acting in
its capacity as agent for the Banks.
WHEREAS, Borrower, the Banks and the Agent are parties to that
certain Credit Agreement dated as of February 29, 1996 (the "Original Credit
Agreement"); and
WHEREAS, in order to amend certain terms and conditions of the
Original Credit Agreement, Borrower, the Banks and the Agent have agreed to
enter into this Amended Credit Agreement;
NOW, THEREFORE, the parties hereto hereby amend and restate
the Original Credit Agreement in its entirety and agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Amended Credit Agreement shall include in the singular
number the plural and in the plural number the singular.
"Acquisition" shall mean the consummation of the Merger and
the other transactions contemplated by the Acquisition Documents.
"Acquisition Documents" shall mean the Merger Agreement, the
Subordinated Debt Financing Documents, the Form S-4 Registration Statement of
the Borrower as initially filed with the Securities and Exchange Commission on
January 10, 1996 as amended on or prior to the Original Closing Date and
declared effective on February 5, 1996, the Proxy Statement/Prospectus sent by
the Borrower to its shareholders dated February 6, 1996, relating to, among
other things, the Merger, and all agreements and instruments executed and
delivered in connection therewith.
"Adjusted Consolidated EBITDA" shall mean, for any twelve
month period preceding the date of determination thereof, Annualized
Consolidated EBITDA for such period, adjusted to give effect to the Consolidated
EBITDA for such period of any Person or Restaurant acquired pursuant to a
Permitted Acquisition within such twelve month period at the time of
determination adjusted to give effect to the elimination of expenses in an
amount acceptable to the Agent and the Required Banks for redundant management
and administrative functions due to management changes that could have
reasonably been expected to have been achieved had the combination of the
operations of the Borrower and the Person or Restaurants so acquired occurred
and had such management changes been implemented immediately prior to such
twelve month period, in each case as set forth in a certificate from the Chief
Financial Officer of the Borrower, in form and substance satisfactory to the
Agent, detailing the adjustments and the bases therefor.
"Adjusted Senior Debt" shall mean, at any time of
determination, (i) Consolidated Senior Debt at such time minus (ii) the lesser
of (A) $3,000,000 and (B) the aggregate outstanding Capitalized Lease
Obligations at such time under Capitalized Leases entered into by the Borrower
and its Subsidiaries after the Original Closing Date.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control
another Person if such Person (A) possesses, directly or indirectly, the power
to (i) vote 10% or more of the securities having ordinary voting power
v
<PAGE> 7
for the election of directors of such corporation or (ii) direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise or (B) is the
direct or indirect beneficial holder of at least 10% of the then outstanding
capital stock (or other shares of beneficial interest).
"Agent" shall mean Banque Paribas acting in its capacity as
agent for the Banks and any successor agent appointed in accordance with Section
9.9.
"Agent's Office" shall mean the office of the Agent located at
Chicago, Illinois, or such other office as the Agent may hereafter designate in
writing as such to the other parties hereto.
"Amendment Fee Letter" shall mean that certain Fee Letter
dated as of July 3, 1996 to the Borrower from the Agent.
"Amendment Transaction" means each of the Transactions
contemplated by the Amendment Transaction Documents.
"Amendment Transaction Documents" means the Loan Documents,
the Franchisor Agreements, the LH Leasing/FFCA Leases, and the BEP Acquisition
Documents.
"Annualized BEP EBITDA" means, for any period commencing on
the Amendment Closing Date and ending on a calendar month preceding the date of
determination thereof, the result of dividing the Consolidated EBITDA of BEP for
such period by the annualization factor shown below:
<TABLE>
<CAPTION>
Period Ending Date Annualization Factor
------------------ --------------------
<S> <C>
7/31/96 .10
8/31/96 .20
9/30/96 .30
10/31/96 .39
11/30/96 .47
12/31/96 .55
1/31/97 .61
2/28/97 .68
3/31/97 .75
4/30/97 .83
5/31/97 .91
6/30/97 1.00
</TABLE>
Following 6/30/97, Annualized BEP EBITDA means Consolidated EBITDA of BEP for
the prior twelve-month period.
"Annualized Borrower EBITDA" shall mean for any period
commencing on the Original Closing Date and ending on the calendar month
preceding the date of determination thereof, the result of dividing the
Consolidated EBITDA of the Borrower (excluding, however, any amounts included in
the definitions of Annualized BEP EBITDA for such period) by the annualization
factor shown below:
<TABLE>
<CAPTION>
Period Ending Date Annualization Factor
------------------ --------------------
<S> <C>
4/30/96 .08
5/31/96 .16
6/30/96 .25
7/31/96 .35
8/31/96 .45
9/30/96 .55
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
Period Ending Date Annualization Factor
------------------ --------------------
<S> <C>
10/31/96 .64
11/30/96 .72
12/31/96 .80
1/31/97 .86
2/38/97 .93
3/31/97 1.00
</TABLE>
Following 3/31/97, "Annualized Borrower EBITDA" means Consolidated EBITDA of BEP
for the prior twelve-month period.
"Annualized Consolidated EBITDA" means, for any period
commencing on the Amendment Closing Date and ending on a calendar month
preceding the date of determination thereof, the sum of the Annualized BEP
EBITDA plus the Annualized Borrower EBITDA.
"Appropriate Amount" means, with respect to any prepayment of
the Loans from Net Equity Proceeds required under Section 2.13(b) hereof, (a) an
amount equal to the balance of the Net Equity Proceeds received by the Borrower
and its Subsidiaries after such Net Equity Proceeds have been used to prepay the
principal amount of the Subordinated Promissory Note together with accrued and
unpaid interest thereon (not to exceed the maximum principal amount of
$15,000,000 plus such accrued and unpaid interest) in accordance with the terms
thereof and subject to the Senior Intercreditor Agreement, or (b) if the
Subordinated Promissory Note has been paid in full and cancelled, an amount
equal to 100% of such Net Equity Proceeds.
"Asset Disposition" shall have the meaning set forth in
Section 7.5 hereof.
"Assignee" shall have the meaning provided in Section 10.4(c)
hereof.
"Assignment Agreement" shall have the meaning provided in
Section 10.4(d) hereof.
"Authorized Officer" shall mean any of the President, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, any Senior Vice President, any Vice President, the Controller, the
Treasurer or Assistant Treasurer acting singly.
"Bankruptcy Code" shall mean Title 11 of the United States
Code entitled "Bankruptcy", as amended from time to time, and any successor
statute or statutes.
"Banks" shall mean the Persons listed on Schedule 1.1(a)
hereto and the Persons which from time to time become a party hereto in
accordance with Sections 10.4(c) and 10.4(d).
"Base Rate" shall mean, at any particular date, the rate of
interest publicly announced by Morgan Guaranty Trust Company in New York, New
York from time to time as its prime rate, changing as and when such prime rate
changes. The prime rate is not intended to be the lowest rate of interest
charged by Morgan Guaranty Trust Company in connection with extensions of credit
to debtors.
"Base Rate Loans" shall mean Loans made and/or being
maintained at a rate of interest based upon the Base Rate.
"BEP" shall mean Black-eyed Pea U.S.A., Inc., a Texas
corporation.
"BEP Acquisition" shall mean the consummation of the purchase
of the Capital Stock of BEP by Borrower pursuant to the Stock Purchase Agreement
and the other transactions contemplated by the BEP Acquisition Documents.
vii
<PAGE> 9
"BEP Acquisition Documents" shall mean, collectively, the
Stock Purchase Agreement, the Subordinated Promissory Note, and all other
agreements and instruments executed and delivered in connection with the BEP
Acquisition.
"BEP Concentration Account" shall mean an account or accounts
maintained by BEP at the bank at which such account or accounts are maintained
as of the Amendment Closing Date and prior to the sixtieth day thereafter, and
within sixty (60) days following the Amendment Closing Date and thereafter, with
Wells Fargo Bank, or any successor thereto, and, if requested by Agent pursuant
to Section 6.10, with Agent or a Bank. Each of the foregoing accounts shall be
identified as a BEP Concentration Account for purposes of this Amended Credit
Agreement and the other Loan Documents.
"BEP Entities" shall mean BEP, Texas BEP, L.P., and BEP West,
Inc.
"BEP Restaurant" shall mean a Black-eyed Pea Restaurant owned
and operated by the Borrower or one of its Subsidiaries.
"BEP Sale and Lease Transaction" shall mean and include any
and all sale and lease agreements or arrangements to which Borrower or any of
its Subsidiaries is a party, pursuant to which Borrower or a BEP Entity sells
any interest in real property to FFCA or an Affiliate thereof and FFCA or such
Affiliate leases such real property back to Borrower or a BEP Entity, or
Borrower or a BEP Entity sells any interest in personal property to LH Leasing
and LH Leasing leases such personal property back to Borrower or a BEP Entity.
"BHI" shall mean BEP Holdings, Inc., a Delaware corporation.
"Borrower" shall have the meaning provided in the first
paragraph of this Amended Credit Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan of
one Facility from all the Banks on a given date (or resulting from conversions
or continuations on a given date) having, in the case of Eurodollar Loans, the
same Interest Period.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in Chicago or New York City a legal holiday or a day on which
banking institutions are authorized or required by law or other government
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks for U.S. dollar deposits in the London
interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, the sum of
expenditures (whether paid in cash or accrued as a liability, excluding the
portion of Capitalized Leases originally incurred during such period that is
capitalized on the consolidated balance sheet of the Borrower and its
Subsidiaries) by the Borrower and its Subsidiaries during such period that, in
conformity with GAAP, are included in "capital expenditures", "additions to
property, plant or equipment" or comparable items in the consolidated financial
statements of the Borrower and its Subsidiaries; provided that Capital
Expenditures shall not include any such expenditures (i) made in connection with
a Permitted Acquisition or (ii) made with purchase money Indebtedness permitted
pursuant to Section 7.2(f) hereof.
"Capital Stock" shall mean any and all shares of, or interests
or participations in, corporate stock.
"Capitalized Lease" shall mean, with respect to any Person (i)
any lease of property, real or personal, the obligations under which are
capitalized on the balance sheet of such Person, and (ii) any other such
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<PAGE> 10
lease to the extent that the then present value of the minimum rental commitment
thereunder should, in accordance with GAAP, be capitalized on a balance sheet of
the lessee.
"Capitalized Lease Obligations" of any Person shall mean at
any time of determination all obligations of such Person under or in respect of
Capitalized Leases.
"Cash Collateralize" means the pledge and deposit with or
delivery to the Agent, for the benefit of the Agent, the Issuing Bank and the
Banks, cash or deposit account balances pursuant to documentation in form and
substance reasonably satisfactory to the Agent and the Issuing Bank; such
documentation shall irrevocably authorize the Agent to apply such cash
collateral to reimbursement of the Issuing Bank for draws under Letters of
Credit as and when occurring, and in all cases to payment of other Obligations
as and when due. Cash collateral shall be maintained in blocked deposit accounts
at the Agent or a Bank (other than cash held in the Concentration Account or the
BEP Concentration Account).
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than 90 days from the date of acquisition, (ii) time deposits and
certificates of deposit of any Bank or any domestic commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 with
maturities of not more than 90 days from the date of acquisition, (iii) fully
secured repurchase obligations with a term of not more than 7 days for
underlying securities of the types described in clause (i) entered into with any
bank meeting the qualifications specified in clause (ii) above, and (iv)
commercial paper issued by the parent corporation of any Bank or any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 and commercial paper rated at least A-1 or the equivalent thereof
by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by
Moody's Investor Services and in each case maturing within 90 days after the
date of acquisition.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"Collateral" shall mean all property and interests in property
now owned or hereafter acquired in or upon which a Lien has been or is purported
or intended to have been granted to the Agent or any Bank under any of the
Security Documents.
"Collateral Account" shall mean one or more blocked deposit
accounts at the Agent or a Bank into which all cash collateral and proceeds of
Collateral may be deposited.
"Commitment" shall mean, for each Bank at any given time, the
sum of such Bank's Term Loan Commitment, its Delayed Draw Term Loan Commitment
and its Revolving Loan Commitment.
"Company" shall mean Denwest Restaurant Corp., a Delaware
corporation, which was merged with and into the Borrower on or prior to the
Original Closing Date as such corporation existed prior to the Merger.
"Concentration Account" shall mean an account or accounts
maintained by the Borrower on the Original Closing Date with First Interstate
Bank of Arizona, N.A., or any successor thereto and, after the Original Closing
Date, if requested by Agent pursuant to Section 6.10, with Agent or a Bank,
which account(s) shall be identified as a Concentration Account for purposes of
this Amended Credit Agreement and the other Loan Documents.
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<PAGE> 11
"Consolidated Bank Debt" shall mean at any time of
determination, the aggregate amount of Indebtedness of the Borrower and any
Subsidiary outstanding under this Amended Credit Agreement, to the extent that
such Indebtedness is reflected on (or required to be reflected on) a
consolidated balance sheet of the Borrower and its Subsidiaries as indebtedness
in accordance with GAAP.
"Consolidated Capitalization" shall mean, at any time of
determination, the sum of (i) Consolidated Total Debt at such time plus (ii)
Consolidated Net Worth at such time.
"Consolidated Cash Interest Expense" shall mean, for any
period, Consolidated Interest Expense for such period minus the amount of such
Consolidated Interest Expense not paid or payable in cash.
"Consolidated Current Assets" shall mean, at any time, the
current assets other than cash and cash equivalents of the Borrower and its
Subsidiaries at such time determined on a consolidated basis in accordance with
GAAP.
"Consolidated Current Liabilities" shall mean, at any time,
the current liabilities of the Borrower and its Subsidiaries at such time other
than the current portion of all long-term Indebtedness and any Revolving Loans
included in those current liabilities of the Borrower and its Subsidiaries at
such time determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any Person during any
period, the sum of (i) Consolidated Net Income for such period plus (ii) to the
extent deducted in the calculation of Consolidated Net Income for such period,
Consolidated Interest Expense for such period plus (iii) to the extent deducted
in the calculation of Consolidated Net Income for such period, federal and state
income taxes for such period, plus (iv) to the extent deducted in the
calculation of Consolidated Net Income for such period, depreciation and
amortization expense (excluding any amortization of Opening Store Costs to the
extent included in amortization expense), all determined on a consolidated basis
for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any Person and
any period, the total interest expense (including, without limitation, interest
expense attributable to Capitalized Leases in accordance with GAAP) of such
Person and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Income" for any Person and any period, means
the net income (or loss) of such Person and its Subsidiaries on a consolidated
basis for such period determined in accordance with GAAP, provided that there
shall be excluded from Consolidated Net Income (a) any net gains or losses in
respect of dispositions of property other than in the ordinary course of
business; (b) any gains or losses realized upon the refinancing of any
Indebtedness; (c) any gains or losses arising from the destruction of property
due to fire or other casualty; (d) any gains or losses from the revaluation of
assets; (e) the net income (or loss) of any other Person (other than a
Subsidiary of the Borrower) except to the extent of cash dividends or
distributions paid to the Borrower by such other Person in such period; (f) the
net income (or loss) of any Subsidiary of the Borrower except to the extent of
the interest of the Borrower in such Subsidiary; (g) the net income (or loss) of
any Subsidiary of the Borrower that is subject to any restriction or limitation
on the payment of dividends, distributions, loans or advances by operation of
the terms of its governing documents or by any contractual obligation or
applicable law, to the extent of such restriction or limitation in such period;
and (h) any gains or losses arising from the implementation of accounting
changes.
"Consolidated Net Revenue " shall mean the total amount of all
revenues of the Borrower and its Subsidiaries on a consolidated basis,
determined in accordance with GAAP.
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<PAGE> 12
"Consolidated Net Worth" shall mean, at any time, the sum of
the amount by which the total consolidated assets of the Borrower and its
Subsidiaries exceeds the total consolidated liabilities of the Borrower and its
Subsidiaries at such time, minus all amounts included in stockholder's equity
with respect to any common stock purchase warrants of the Borrower issued to the
holders of the Subordinated Debt or the holders of any Loans under this Amended
Credit Agreement, as determined in accordance with GAAP.
"Consolidated Occupancy Costs" shall mean the sum of
expenditures (whether paid in cash or accrued as a liability) by the Borrower
and its Subsidiaries for rent, insurance and taxes in connection with any
operating or real estate lease to which the Borrower or any of its Subsidiaries
is a party.
"Consolidated Senior Debt" shall mean, at any time,
Consolidated Total Debt, minus the total amount of the Subordinated Debt at such
time, minus all amounts included in stockholder's equity with respect to any
common stock purchase warrants of the Borrower issued to the holders of the
Subordinated Debt or the holders of any Loans under this Amended Credit
Agreement in accordance with GAAP.
"Consolidated Total Debt" shall mean, at any time, all
Indebtedness of the Borrower and its Subsidiaries, to the extent that such
Indebtedness is reflected on (or required to be reflected on) a consolidated
balance sheet of the Borrower and its Subsidiaries as indebtedness in accordance
with GAAP, plus all amounts included in stockholder's equity with respect to any
common stock purchase warrants of the Borrower issued to the holders of the
Subordinated Debt or the holders of any Loans under this Amended Credit
Agreement in accordance with GAAP.
"Consolidated Working Capital" shall mean at any time an
amount equal to Consolidated Current Assets minus Consolidated Current
Liabilities at such time.
"Contingent Obligation" as to any Person shall mean any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, 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 (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, 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 owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. 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 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.
"Credit Exposure" shall have the meaning provided in Section
10.4(b) hereof.
"Davis Subordinated Note" shall mean the promissory note of
Great Midwestern Restaurants, Inc. (which has subsequently been merged into the
Borrower) in the stated principal amount of $5,250,000 to Ronald C. Davis dated
May 17, 1995.
"Decision Period" shall have the meaning provided in Section
2.13(a).
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
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<PAGE> 13
"Default Rate" shall have the meaning provided in Section
2.7(c) hereof.
"Delayed Draw Term Loan" shall have the meaning provided in
Section 2.3 hereof.
"Delayed Draw Term Loan Commitment" shall mean at any time,
for any Bank, the amount set forth opposite such Bank's name in Annex I hereto
under the heading "Delayed Draw Term Loan Commitment", as the same may be
reduced from time to time pursuant to Sections 2.3, 2.11, 2.13, 8.2 or 10.4(d).
"Delayed Draw Term Loan Commitment Termination Date" shall
mean December 31, 1997.
"Delayed Draw Term Loan Maturity Date" shall mean December 31,
2001.
"Delayed Draw Term Note" shall have the meaning provided in
Section 2.6(a) hereof.
"Denny's Restaurant" means a Denny's restaurant owned and
operated by the Borrower or any of its Subsidiaries (other than the Joint
Venture Subsidiaries) under the terms of a Franchise Agreement.
"DenSouth Foods II Limited" shall mean DenSouth Foods II,
Ltd., a Florida limited partnership.
"Denwest Foods" shall mean Denwest Foods, Ltd., a Florida
limited partnership.
"Denwest Foods II" shall mean Denwest Foods II, Ltd., a
Florida limited partnership.
"Depositary Account Agreement" shall mean an agreement entered
into among the Borrower or its Subsidiaries, the Agent and any bank or other
financial institution which maintains a deposit or other account for or on
behalf of the Borrower or any of its Subsidiaries.
"Domestic Lending Office" shall mean, as to any Bank, the
office of such Bank designated as such on Annex I, or such other office
designated by such Bank from time to time by written notice to the Agent and the
Borrower.
"Drop-Down Documents" means, collectively, the Drop-Down Note,
the Drop-Down Security Agreement, and the Subordination Agreement (Drop-Down
Notes).
"Drop-Down Note" means any of the promissory notes,
substantially in the form of Exhibit O, executed by each BEP Entity in favor of
the Borrower, evidencing advances made to that BEP Entity by the Borrower, as
the same may be supplemented, modified, amended, restated, renewed, extended, or
supplanted from time to time.
"Drop-Down Note Security Agreement" means the Drop-Down Note
Security Agreement, substantially in the form of Exhibit P, executed by each of
the BEP Entities in favor of Borrower to secure the Drop-Down Notes, as the same
may from time to time be supplemented, modified, amended, restated, renewed,
extended or supplanted.
"Ending Balances" shall have the meaning provided in Section
2.13(e) hereof.
"Environmental Affiliate" shall mean, with respect to any
Person, any other Person whose liability for any Environmental Claim such Person
has or may have retained, assumed or otherwise become liable for (contingently
or otherwise), either contractually or by operation of law.
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<PAGE> 14
"Environmental Approvals" shall mean any permit, license,
approval, ruling, variance, exemption or other authorization required under
applicable Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person,
any notice, claim, demand or similar communication (written or oral) by any
other Person alleging potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Equity Interests" shall mean Capital Stock and warrants,
options or other rights to acquire Capital Stock.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time. Section references to ERISA are to ERISA,
as in effect at the date of this Amended Credit Agreement and any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA Controlled Group" means a group consisting of any ERISA
Person and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.
"ERISA Person" shall have the meaning set forth in Section
3(9) of ERISA for the term "person."
"ERISA Plan" means (i) any Plan that (x) is not a
Multiemployer Plan and (y) has Unfunded Benefit Liabilities in excess of
$100,000 and (ii) any Plan that is a Multiemployer Plan.
"Eurocurrency Reserve Requirements" shall mean, with respect
to each day during an Interest Period for Eurodollar Loans, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Federal Reserve Board or other governmental authority or agency having
jurisdiction with respect thereto for determining the maximum reserves
(including, without limitation, basic, supplemental, marginal and emergency
reserves) for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate" shall mean, with respect to each day
during an Interest Period for Eurodollar Loans, the rate per annum (rounded
upwards to the nearest whole multiple of one-sixteenth of one percent) equal to
the rate per annum at which deposits in U.S. dollars are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount substantially
equal to such Reference Bank's Eurodollar Loan comprising part of such Borrowing
to be outstanding during such Interest Period and for a period equal to such
Interest Period. The Eurodollar Base Rate for any Interest Period for each
Eurodollar Loan comprising part of the same Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and received by the Agent
from the Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.7.
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<PAGE> 15
"Eurodollar Lending Office" shall mean, as to any Bank, the
office of such Bank designated as such on Annex I, or such other office
designated by such Bank from time to time by written notice to the Agent and the
Borrower.
"Eurodollar Loans" shall mean Loans made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean with respect to each day during
an Interest Period for Eurodollar Loans, a rate per annum determined for such
day in accordance with the following formula (rounded upwards to the nearest
whole multiple of 1/100th of one percent):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall have the meaning provided in Section
8 hereof.
"Excess Cash Flow" shall mean, with respect to any fiscal
period of the Borrower, a positive number, if any, equal to (i) Consolidated
EBITDA for such fiscal period, minus (ii) Consolidated Cash Interest Expense
during such fiscal period, minus (iii) any federal and state income taxes
actually paid during such fiscal period, plus (or minus) (iv) decreases (or
increases) in Consolidated Working Capital from the last day of the preceding
fiscal period to the last day of such fiscal period, minus (v) the aggregate
amount actually paid in cash by the Borrower and its Subsidiaries during such
fiscal period for Capital Expenditures permitted pursuant to Section 7.1(g),
7.1(h) and 7.1(i) (except to the extent financed with the proceeds of purchase
money Indebtedness or insurance), minus (vi) all principal repayments and
prepayments of the Loans made during such fiscal period, provided that
repayments or prepayments of Revolving Loans other than pursuant to Section
2.13(d) shall not be included in the computation of Excess Cash Flow, minus
(vii) all regularly scheduled principal payments made during such fiscal period
in respect of Capital Leases and other Indebtedness (other than the Loans) to
the extent such Indebtedness and payments are permitted to be incurred and made
hereunder, plus (viii) to the extent excluded from the calculation of
Consolidated Net Income for such period, extraordinary gains to the extent cash
is received by the Borrower or any of its Subsidiaries with respect to such
gain, minus (ix) to the extent excluded from the calculation of Consolidated Net
Income for such period, extraordinary losses to the extent cash is paid by the
Borrower or any of its Subsidiaries with respect to such loss.
"Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended, and the rules and regulations promulgated by the SEC
thereunder.
"Excluded Sites" means either of the sites described in
Schedule 5.19 hereto.
"Expansion Capital Expenditures" shall mean for any period all
Capital Expenditures made by the Borrower in connection with Expansion
Transactions and the portion of Capitalized Leases with respect to equipment
leases originally incurred during such period that is capitalized on the
consolidated balance sheet of the Borrower and its Subsidiaries which leases are
entered into in connection with Expansion Transactions.
"Expansion Transaction" shall mean with respect to any
restaurant acquired by the Borrower through a Permitted Acquisition or owned and
operated by the Borrower on or prior to the Original Closing Date, the
acquisition of equipment by the Borrower in connection with new store
development of a Denny's Restaurant or a BEP Restaurant or the remodeling of a
Denny's Restaurant or a BEP Restaurant or the conversion by the Borrower of a
Restaurant (other than a Denny's Restaurant) to a Denny's Restaurant or a BEP
Restaurant (including all Opening Store Costs incurred in connection therewith),
but in any event shall not include the acquisition (by lease or otherwise) of or
investment in any interest in real property or payment of rent with respect to
any interest in real property.
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<PAGE> 16
"Facility" shall mean either the Term Loans, the Delayed Draw
Term Loans or the Revolving Loans.
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System as constituted from time to time.
"Fee Letter" means that certain Fee Letter dated December 20,
1995 to the Company and American Family Restaurants, Inc. from the Agent.
"Fees" shall mean all amounts payable pursuant to the Fee
Letter.
"FFCA" shall mean Franchise Finance Corporation of America, a
Delaware corporation.
"FFCA Real Property Leases" shall mean and include all leases
between Borrower or any BEP Entity and FFCA, pursuant to which Borrower or such
BEP Entity leases any interest in real property.
"Fixed Charges" shall mean, without duplication, for any
period, (i) all Consolidated Cash Interest Expense for such period, plus (ii)
scheduled payments due in such period for principal of the Term Loans, the
Delayed Draw Term Loans and Capitalized Leases and other Indebtedness of the
Borrower and its Subsidiaries (other than the Joint Venture Subsidiaries) plus
(iii) all Maintenance Capital Expenditures made in such period, plus (iv) the
payment of all rent and all other Consolidated Occupancy Costs made by the
Borrower and its Subsidiaries in such period.
"Franchise Agreements" shall mean any and all franchise
agreements to which the Borrower or any BEP Entity is a party relating to the
operation or development of any restaurant or restaurants owned or operated or
to be owned or operated by Borrower or such BEP Entity, including, without
limitation, any franchise agreement with Denny's Inc. or its Affiliates,
including those franchise agreements to which any of Borrower or any of its
Subsidiaries is a party as of the Original Closing Date and those franchise
agreements entered into from time to time by the Borrower or any of its
Subsidiaries other than the Kettle licensing agreements to which the Borrower is
a party as of the Original Closing Date.
"Franchisor Agreements" shall mean any and all franchise
agreements, development agreements, or license agreements to which Borrower or
any of the BEP Entities is a party relating to the operation or development by a
franchisee of a BEP Restaurant.
"GAAP" shall mean (i) for purposes of determining compliance
with the covenants set forth in Sections 7.1, 7.2 and 7.13 hereof, United States
generally accepted accounting principles as in effect on the date hereof and
consistent with those utilized in the preparation of the financial statements
referred to in Section 5.5 and (ii) for all other purposes, United States
generally accepted accounting principles as in effect as of the date of
determination.
"Guarantor" shall mean each BEP Entity and each other
Subsidiary (other than the Joint Venture Subsidiaries and other than Phoenix) of
the Borrower that may be required by the terms of this Amended Credit Agreement
to enter into a Guaranty from time to time.
"Guaranty" shall mean a guaranty substantially in the form of
the Subsidiary Guaranty set forth as Exhibit G hereto executed and delivered to
the Agent by each BEP Entity as the same may be amended, restated, modified or
supplemented from time to time.
"HA Note" means that certain promissory note in the amount of
$4,600,000 delivered by Haig Antranikian to the Borrower in connection with the
HA Divestiture.
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<PAGE> 17
"HA Divestiture" means the sale to Haig Antranikian of the
assets of the Borrower comprising twenty-three Ike and Jerry's restaurants, as
described in Exhibit M hereto.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than trade payables on terms of 90
days or less incurred in the ordinary course of business of such Person and
other than accrued liabilities arising in the ordinary course of business and
payable in accordance with customary trade terms), (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument, (iii) all
Capitalized Lease Obligations of such Person, (iv) all liability of such Person
in respect of banker's acceptances or letters of credit issued for the account
of such Person and, without duplication, all unreimbursed amounts drawn
thereunder, (v) all indebtedness of any other Person secured by any Lien on any
property owned by such Person, whether or not such indebtedness has been assumed
in an amount equal to the lesser of the fair market value at such date of such
property subject to such Lien securing such Indebtedness and the amount of the
Indebtedness secured by such Lien, (vi) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (vii) all indebtedness of such Person
secured by a Lien to secure all or part of the purchase price of the property
subject to such Lien, (viii) all Contingent Obligations of such Person, and (ix)
all payment obligations of such Person under any interest rate, currency or
commodity hedging or protection agreement (including, without limitation, any
interest rate, currency or commodity swaps, caps, floors, collars and similar
agreements).
"INS" shall mean the United States Immigration and
Naturalization Service or any governmental body succeeding to its functions.
"Indemnitee" shall have the meaning provided in Section
10.1(c) hereof.
"Insurance Reserve" shall have the meaning provided in the
Security Agreement.
"Interest Period" shall have the meaning provided in Section
2.8 hereof.
"Issue" means, with respect to any Letter of Credit, to issue
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Bank" means Banque Paribas in its capacity as issuer
of one or more Letters of Credit hereunder.
"Joint Venture Subsidiary" shall mean (i) Denwest Joint
Venture, a Florida joint venture between the Borrower (as successor in interest
to the Company) and Denwest Foods, (ii) Denwest II Joint Venture, a Florida
joint venture between the Borrower (as successor in interest to the Company) and
Denwest Foods II and (iii) DenSouth Restaurants II Joint Venture, a Florida
joint venture between the Borrower (as successor in interest to Great
Restaurants of the Midsouth, Inc.) and DenSouth Foods II Limited.
"L/C Amendment Application" means an application form for
amendment of outstanding Letters of Credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuance of
standby letters of credit, as appropriate, as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitment of the Banks severally to participate in, Letters of
Credit from time to time Issued or outstanding under Section 3, in
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<PAGE> 18
an aggregate amount not to exceed on any date the amount of $3,000,000,
provided, that the L/C Commitment is part of the combined Revolving Credit
Commitments, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit.
"L/C Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for standby letter of credit issuances, as appropriate.
"Leases" shall mean and include all leases pursuant to which
Borrower or any of its Subsidiaries leases any interest in real property on the
Original Closing Date and from time to time thereafter including, without
limitation, the FFCA Real Property Leases.
"Letters of Credit" means any standby letters of credit Issued
by the Issuing Bank pursuant to Section 3.
"LH Leasing" shall mean LH Leasing Company, Inc., an Arizona
corporation.
"LH Leasing Equipment Leases" shall mean and include all
operating leases between Borrower or any BEP Entity and LH Leasing, pursuant to
which Borrower or a BEP Entity leases any interest in personal property from LH
Leasing.
"LH Leasing/FFCA Leases" shall mean, collectively, the LH
Leasing Equipment Leases and the FFCA Real Property Leases.
"Lien" shall mean any mortgage, deed of trust, pledge, charge,
security interest, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority or other security agreement
of any kind or nature whatsoever, including, without limitation, any conditional
sale or other title retention agreement, whether or not filed, recorded or
otherwise perfected under applicable law, any financing lease having
substantially the same effect as any of the foregoing and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.
"Liquor Licenses" shall mean those liquor licenses required in
connection with the operation of the business of the Borrower and its
Subsidiaries as a result of consummation of the transactions contemplated by the
BEP Acquisition which will not have been obtained on or before the Amendment
Closing Date.
"Loans" shall mean and include the Term Loans, the Delayed
Draw Term Loans and the Revolving Loans.
"Loan Documents" shall mean this Amended Credit Agreement, the
Notes, the Guaranty, each Letter of Credit, each L/C Related Document, the Fee
Letter, the Drop-Down Notes, the Concentration Account Agreement, the BEP
Concentration Agreement, the Security Documents and all other documents,
instruments and agreements executed and/or delivered in connection herewith or
therewith or required hereunder or thereunder, as the same may be amended,
restated, modified or supplemented and in effect from time to time.
"Loan Party" shall mean and include the Borrower, the BEP
Entities and each Guarantor.
"Maintenance Capital Expenditures" shall mean Capital
Expenditures other than Capital Expenditures made in connection with Expansion
Transactions.
xvii
<PAGE> 19
"Management Information System Capital Expenditures" shall
mean Capital Expenditures made by the Borrower or any of its Subsidiaries for
the acquisition (whether by purchase, finance lease, or license) and/or
development of any and all computer systems, including all hardware, firmware,
and software, and any training, consulting, documentation, connection, or other
similar expenses required in connection therewith.
"Management Services Agreement" shall mean that certain
Management Services Agreement dated as of February 29, 1996 among the Agent,
Denny's, Inc., and DFO, Inc.
"Margin Stock" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect
upon (i) the business, operations, properties, assets, profits, business
prospects or financial condition of the Borrower and its Subsidiaries (after
giving effect to the Acquisition and the BEP Acquisition) taken as a whole or
(ii) the ability of the Loan Parties, taken as a whole, to perform, or of the
Agent or any of the Banks to enforce, any of the Obligations.
"Material Equipment Lease" shall mean any lease or master
lease of equipment by the Borrower or any of its Subsidiaries (other than the
Joint Venture Subsidiaries or Phoenix) which equipment subject to such lease or
master lease has a fair market value in excess of $200,000.
"Materials of Environmental Concern" shall mean and include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products.
"Merger" shall mean the merger of the Company with and into
the Borrower pursuant to the Merger Agreement.
"Merger Agreement" shall mean the Amended and Restated
Agreement and Plan of Merger dated as of August 9, 1995, as amended, between the
Company and the Borrower, together with all schedules and exhibits thereto
referred to therein, each in the form delivered to the Agent and Banks on the
Original Closing Date, without giving effect to any amendment, modification or
waiver thereof effected without the prior written consent of the Banks.
"Money Market Accounts" shall mean the money market account
maintained by the Borrower on the Original Closing Date with the financial
institution which maintains the Concentration Account, and the money market
account maintained by BEP on the Amendment Closing Date with the financial
institution which maintains the BEP Concentration Account.
"Mortgages" shall mean collectively, each mortgage, deed of
trust, leasehold mortgage or leasehold deed of trust, each in substantially the
forms of Exhibits D and E hereto executed and delivered by the Borrower or its
Subsidiaries to the Agent from time to time (other than the Joint Venture
Subsidiaries and Phoenix) pursuant to Section 4.1(a)(iv), 4.3(a)(iv) or Section
2.22 hereof or otherwise, as the same may be amended, restated, modified or
supplemented from time to time.
"Multiemployer Plan" shall mean a Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Equity Proceeds" shall mean all cash proceeds received by
the Borrower or any of its Subsidiaries (other than the Joint Venture
Subsidiaries) from any capital contribution or the issuance of any Capital Stock
or other equity securities (other than the issuance of common stock of the
Borrower upon exercise of stock options issued to employees or directors of the
Borrower or any of its Subsidiaries pursuant to an employee stock
xviii
<PAGE> 20
option plan approved by the Board of Directors of the Borrower), net of any
brokerage commissions and any other reasonable costs or expenses directly
attributable to such issuance.
"Net Loss Proceeds" shall have the meaning provided in the
Security Agreement.
"Net Sale Proceeds" shall mean all cash proceeds of each sale
or other disposition of assets (including, without limitation, by way of
sale/leaseback and any sales of any equity interest in any Joint Venture
Subsidiary) by the Borrower and its Subsidiaries (other than (w) the sale or
other disposition of assets (including real property) located at 9040 Signature
Road, Indianapolis, IN (the "Michigan Avenue Location"), (x) sales of inventory
in the ordinary course of business, (y) Asset Dispositions in an aggregate
amount not to exceed $100,000 per annum and (z) sale/leaseback transactions
permitted pursuant to Section 7.14 hereof, including, however, cash proceeds of
the sale or other disposition of assets (including real property) located at
10201 Midlothian Turnpike, Richmond, VA 23235 and 1905 Preston Road, Plano, TX
75093), in each case net of (i) reasonable expenses incurred or reasonably
expected to be incurred in connection with such sale or disposition, (ii) any
income, franchise, transfer or other tax payable by any Loan Party in connection
with such sale or disposition and (iii) any Indebtedness secured by a Lien on
such property or assets and required to be repaid as a result of such sale or
other disposition and, in any event, Net Sale Proceeds shall include all cash
proceeds of each sale or other disposition of assets by any Joint Venture
Subsidiary which proceeds are distributed to the Borrower or any of its
Subsidiaries.
"Notes" shall mean and include each Revolving Note, each
Delayed Draw Term Note and each Term Note.
"Notice of Borrowing" shall have the meaning provided in
Section 2.4 hereof.
"Notice of Conversion or Continuation" shall have the meaning
provided in Section 2.10 hereof.
"Obligations" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description of the Borrower and the other
Loan Parties from time to time owing to the Agent or any Bank or Indemnitee
arising under or in connection with this Amended Credit Agreement or any other
Loan Document whether direct or indirect, primary or secondary, joint or
several, absolute or contingent, due or to become due, now existing or hereafter
arising and however acquired.
"Opening Store Costs" shall mean costs incurred by the
Borrower in connection with opening new restaurants or remodeling a Denny's
Restaurant or a BEP Restaurant or converting a Restaurant (other than a Denny's)
to a Denny's or a BEP Restaurant, in each case which are capitalized in
accordance with GAAP.
"Original Closing Date" shall mean the date on which the
initial Loans were advanced hereunder.
"Participant" shall have the meaning provided in Section
10.4(b) hereof.
"Payment Date" shall mean the last day of each March, June,
September and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permitted Acquisitions" shall mean (i) at any time before all
amounts due with respect to the Subordinated Promissory Note has been paid in
full and such Subordinated Promissory Note cancelled, Restaurant Acquisitions
made by the Borrower which are approved in writing by all of the Banks and (ii)
at any time after all amounts due with respect to the Subordinated Promissory
Note has been paid in full and such Subordinated
xix
<PAGE> 21
Promissory Note cancelled, Restaurant Acquisitions made by the Borrower which
are approved in writing by the Required Banks.
"Permitted Holders" shall mean any of Jack Lloyd, William
Howard and their respective spouses, heirs, executors, personal representatives,
administrators and other legal representatives, the trustee of any bona fide
trust of which one or more of the foregoing alone, or together with their family
members, are the exclusive beneficiaries thereof.
"Person" shall mean and include any individual, partnership,
joint venture, firm, corporation, association, limited liability company, trust
or other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Phoenix" shall mean Phoenix Foods, Inc., a Florida
corporation and a wholly-owned subsidiary of the Borrower.
"Plan" means any employee benefit plan covered by Title IV of
ERISA, the funding requirements of which:
(i) were the responsibility of the Borrower or a
member of its ERISA Controlled Group at any time within the five years
immediately preceding the date hereof,
(ii) are currently the responsibility of the Borrower
or a member of its ERISA Controlled Group, or
(iii) hereafter become the responsibility of the
Borrower or a member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Pledge Agreement" shall mean a pledge agreement duly executed
and delivered by the Borrower to the Agent substantially in the form set forth
as Exhibit F hereto as the same may be amended, restated, modified or
supplemented from time to time.
"Pro Rata Share" as to any Bank shall mean
(i) with respect to all payments, computations and
determinations relating to the Term Loan Commitment or the Term Loan of
any Bank, the percentage obtained by dividing (A) the outstanding
principal balance of such Bank's Term Loan (or the amount of such
Bank's Term Loan Commitment, if the Term Loan has not been made) by (B)
the aggregate outstanding principal balance of the Term Loan (or the
Total Term Loan Commitment, if the Term Loan has not been made),
(ii) with respect to all payments, computations and
determinations relating to the Delayed Draw Term Loan Commitment or the
Delayed Draw Term Loans of any Bank, the percentage obtained by
dividing (A) such Bank's Delayed Draw Term Loan Commitment (or the
outstanding principal balance of such Bank's Delayed Draw Term Loans,
if the Delayed Draw Term Loan Commitments have been terminated pursuant
to the terms of this Amended Credit Agreement) by (B) the Total Delayed
Draw Term Loan Commitment (or the outstanding aggregate principal
balance of all Delayed Draw Term Loans, if the Delayed Draw Term Loan
Commitments have been terminated pursuant to the terms of this Amended
Credit Agreement),
xx
<PAGE> 22
(iii) with respect to all payments, computations and
determinations relating to the Revolving Loan Commitment or the
Revolving Loans of any Bank, or such Bank's interest in Letters of
Credit (including without limitation determinations of the commitment
fee under Section 2.16(b) and Letter of Credit fees under Section 3.2),
the percentage obtained by dividing (A) such Bank's Revolving Loan
Commitment (or the outstanding principal balance of such Bank's
Revolving Loans and all L/C Obligations in which such Bank has an
interest, if the Revolving Loan Commitments have been terminated
pursuant to the terms of this Amended Credit Agreement) by (B) the
Total Revolving Loan Commitment (or the aggregate outstanding principal
balance of the Revolving Loans and all L/C Obligations, if the
Revolving Loan Commitments have been terminated pursuant to the terms
of this Amended Credit Agreement), and
(iv) for all other purposes with respect to each
Bank, the percentage obtained by dividing (A) the sum of (1) the
outstanding principal balance of such Bank's Term Loan (or such Bank's
Term Loan Commitment if the Term Loan has not been made), (2) such
Bank's Delayed Draw Term Loan Commitment (or the outstanding principal
balance of such Bank's Delayed Draw Term Loans if the Delayed Draw Term
Loan Commitments have been terminated pursuant to the terms of this
Amended Credit Agreement) and (3) such Bank's Revolving Loan Commitment
(or the outstanding principal balance of such Bank's Revolving Loans
and all L/C Obligations in which such Bank has an interest, if the
Revolving Loan Commitments have been terminated pursuant to the terms
of this Amended Credit Agreement) by (B) the sum of (1) the aggregate
outstanding principal balance of the Term Loan (or sum of the Total
Term Loan Commitment if the Term Loan has not been made), (2) the Total
Delayed Draw Term Loan Commitment (or the aggregate outstanding
principal balance of the Delayed Draw Term Loans if the Delayed Draw
Term Loan Commitments have been terminated pursuant to the terms of
this Amended Credit Agreement) and (3) the Total Revolving Loan
Commitment (or the aggregate outstanding principal balance of the
Revolving Loans and all L/C Obligations, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Amended
Credit Agreement).
"Purchasing Banks" shall have the meaning provided in Section
10.4(d) hereof.
"Redeemable Stock" means any Equity Interest which, by its
terms, or upon the happening of any event matures, is mandatorily redeemable or
repurchasable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to 180 days after the final maturity date of the
Loans, or is, by its terms or upon the happening of any event, required to be
redeemed or repurchased, redeemable or repurchasable at the option of the holder
thereof, in whole or in part, at any time prior to 180 days after the maturity
date of the Loans.
"Reference Banks" shall mean Banque Paribas and LaSalle
National Bank.
"Regulation D" shall mean Regulation D of the Federal Reserve
Board as from time to time in effect and any successor to all or any portion
thereof.
"Related Documents" shall mean the Loan Documents and, the
Acquisition Documents.
"Related Transactions" shall mean each of the transactions
contemplated by the Related Documents.
"Reportable Event" has the meaning set forth in Section 4043
of ERISA (other than a Reportable Event as to which the provision of 30 days
notice to the PBGC is waived under applicable regulations), or is the occurrence
of any of the events described in Section 4063(a) of ERISA.
xxi
<PAGE> 23
"Required Banks" shall mean Banks holding more than 66 2/3% of
the principal amount of Loans outstanding or, if no Loans are outstanding, more
than 66 2/3% of the Total Commitments.
"Restaurant" shall mean any Denny's Restaurant, BEP Restaurant
or other restaurant owned or operated by the Borrower or any of its Subsidiaries
(other than the Joint Venture Subsidiaries).
"Restaurant Acquisition" shall mean any acquisition by the
Borrower after the Original Closing Date of any restaurant which was developed
and operating as a restaurant prior to the date of such acquisition whether
through the acquisition of shares of a corporation or by purchase of assets.
"Restaurant Closing" shall mean the closing of any of the
Restaurants by the Borrower or any of its Subsidiaries set forth on Schedule
1.1(b) hereto.
"Restaurant Closing Costs" shall mean any severance costs
related to the termination of employees, any costs related to the termination of
a lease, in each case incurred by the Borrower and its Subsidiaries as the
result of a Restaurant Closing and other costs associated with such Restaurant
Closing.
"Restricted Payments" shall have the meaning provided in
Section 7.7 hereof.
"Revolver Reserve" shall have the meaning set forth in Section
2.13.
"Revolving Loan Commitment" shall mean at any time, for any
Bank, the amount set forth opposite such Bank's name on Annex I hereto under the
heading "Revolving Loan Commitment," as such amount may be reduced from time to
time pursuant to Sections 2.11, 8.2 or 10.4(d).
"Revolving Loan Maturity Date" shall mean December 31, 2001.
"Revolving Loans" shall have the meaning provided in Section
2.2(a) hereof.
"Revolving Notes" shall have the meaning provided in Section
2.6(a) hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Security Agreement" shall have the meaning provided in
Section 4.1(a)(iii) hereof.
"Security Documents" shall mean and include the Security
Agreement, the Pledge Agreement, the Subsidiary Pledge Agreement, the Guaranty,
the Subsidiary Security Agreement, the Drop-Down Note Security Agreement, the
Subordination Agreement (Drop-Down Notes), the Trademark Assignment, and the
Mortgages.
"Senior Intercreditor Agreement" shall mean that certain
Senior Intercreditor Agreement dated as of July 3, 1996 among the Agent and the
holder(s) of the Subordinated Promissory Note.
"Senior Subordinated Intercreditor Agreement" shall mean that
certain Senior Subordinated Intercreditor Agreement dated as of March 29, 1996
among the Agent, the holders of the Series B Subordinated Notes and State Street
Bank and Trust Company, as trustee for such holders.
"Series A Subordinated Notes" shall mean the Borrower's 13%
Subordinated Notes due 2003 in an aggregate principal amount not in excess of
$6,000,000 issued pursuant to that certain Series A Subordinated Note Indenture,
dated as of March 29, 1996 between the Borrower and State Street Bank and Trust
Company, as Trustee, as the same may be amended, modified, restated or
supplemented as permitted under the terms of this Amended Credit Agreement.
xxii
<PAGE> 24
"Series A Subordinated Note Indenture" shall mean that certain
Indenture (Series A Notes) dated as of March 29, 1996 between the Borrower and
State Street Bank and Trust Company, as Trustee, as the same may be amended,
modified, restated or supplemented as permitted under the terms of this Amended
Credit Agreement.
"Series B Subordinated Notes" shall mean the Borrower's 13%
Subordinated Notes due 2003 in an aggregate principal amount not in excess of
$18,250,000 issued pursuant to the Series B Subordinated Note Indenture, as the
same may be amended, modified, restated or supplemented as permitted under the
terms of this Amended Credit Agreement.
"Series B Subordinated Note Indenture" shall mean that certain
Indenture (Series B Notes) dated as of March 29, 1996, as amended, between the
Borrower and State Street Bank and Trust Company, as Trustee, as the same may be
further amended, modified, restated or supplemented as permitted under the terms
of this Amended Credit Agreement.
"Solvent" as to any Person shall mean that (i) the sum of the
assets of such Person, both at a fair valuation and at present fair salable
value, will exceed its liabilities, including contingent liabilities, (ii) such
Person will have sufficient capital with which to conduct its business as
presently conducted and as proposed to be conducted and (iii) such Person has
not incurred debts, and does not intend to incur debts, beyond its ability to
pay such debts as they mature. For purposes of this definition, "debt" means any
liability on a claim, and "claim" means (x) a right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured, or (y) a right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured. With respect to any such contingent
liabilities, such liabilities shall be computed at the amount which, in light of
all the facts and circumstances existing at the time, represents the amount
which can reasonably be expected to become an actual or matured liability.
"Stock Purchase Agreement" shall mean that certain Stock
Purchase Agreement dated as of May 31, 1996 between Borrower and BHI.
"Subordinated Debt" shall mean Indebtedness incurred pursuant
to the Subordinated Debt Financing Documents.
"Subordinated Debt Financing Documents" shall mean,
collectively, the Series B Subordinated Note Indenture, the Subordinated Notes,
the Senior Intercreditor Agreement, the Senior Subordinated Intercreditor
Agreement and the Subordinated Debt Warrants.
"Subordinated Debt Warrants" shall mean the common stock
purchase warrants of the Borrower issued to the holders of the Subordinated Debt
on the Original Closing Date or the Amendment Closing Date.
"Subordinated Notes" shall mean the Subordinated Promissory
Note and the Series B Subordinated Notes.
"Subordinated Promissory Note" shall mean the Borrower's 12%
Subordinated Note due 2003 in an aggregate principal amount not in excess of
$15,000,000 plus accrued interest issued pursuant to the Stock Purchase
Agreement.
"Subordination Agreement (Drop-Down Notes)" means the
Subordination Agreement (Drop-Down Notes) substantially in the form of Exhibit
Q, executed by the Borrower and the Agent and acknowledged by each
xxiii
<PAGE> 25
BEP Entity, as the same may be, from time to time, supplemented, modified,
amended, restated, renewed, extended or supplanted.
"Subsidiary" of any Person shall mean and include (i) any
corporation 50% or more of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, is either a general partner or has a 50% or more equity interest
at the time.
"Subsidiary Pledge Agreement" shall mean a pledge agreement
substantially in the form of the Subsidiary Pledge Agreement set forth as
Exhibit N hereto executed and delivered to the Agent by each BEP Entity which
owns any equity interest of any person which is represented by a certificated
security or a partnership interest, as any of the same may be amended, restated,
modified or supplemented from time to time.
"Subsidiary Security Agreement" shall mean a security
agreement substantially in the form of the Security Agreement set forth as
Exhibit R hereto executed and delivered to the Agent by each BEP Entity , as the
same may be amended, restated, modified or supplemented from time to time.
"Term Loan" shall have the meaning provided in Section 2.1
hereof.
"Term Loan Commitment" shall mean at any time, for any Bank,
the amount set forth opposite such Bank's name in Annex I hereto under the
heading "Term Loan Commitment", as the same may be reduced from time to time
pursuant to Sections 8.2 or 10.4(d).
"Term Loan Maturity Date" shall mean December 31, 2001.
"Term Note" shall have the meaning provided in Section 2.6(a)
hereof.
"Termination Event" shall mean (i) a Reportable Event, or (ii)
the initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of all of the Banks at such time.
"Total Delayed Draw Term Loan Commitment" shall have the
meaning provided in Section 2.3(a) hereof.
"Total Revolving Loan Commitment" shall have the meaning
provided in Section 2.2(a) hereof.
"Total Term Loan Commitment" shall have the meaning provided
in Section 2.1 hereof.
"Trademark Assignment" shall mean a trademark security
agreement substantially in the form contained in Exhibit H hereof covering all
trademarks and tradenames owned by the BEP Entities and their respective
Subsidiaries, as the same may from time to time be supplemented, modified,
amended, renewed or supplanted.
xxiv
<PAGE> 26
"Transaction Costs" shall mean all costs and expenses paid or
payable by any Loan Party relating to the Transactions including, without
limitation, investment banking fees, financing fees, advisory fees, appraisal
fees, legal fees and accounting fees.
"Transaction Documents" shall mean the Loan Documents, the
Franchise Agreements, Leases, and the Acquisition Documents.
"Transactions" shall mean each of the transactions
contemplated by the Transaction Documents.
"Transferee" shall have the meaning provided in Section
10.4(e) hereof.
"Type" shall mean any type of Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar
Loan.
"Unfunded Benefit Liabilities" means with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan, but
including contributions deemed made to such Plan by the valuation date under
Section 404(a)(6) of the Code (on the basis of assumptions prescribed by the
PBGC for the purpose of Section 4044 of ERISA).
"Unit Purchase Options" shall mean the unit purchase options
of the Borrower described on Schedule 7.21 hereto.
"Unused Portion" shall mean (i) with respect to the Revolving
Loans, the amount by which the Total Revolving Loan Commitment in effect from
time to time exceeds the Revolving Loans outstanding from time to time and (ii)
with respect to the Delayed Draw Term Loans, the amount by which the Total
Delayed Draw Term Loan Commitment in effect from time to time exceeds the
Delayed Draw Term Loans outstanding from time to time.
"Warrants" shall mean the common stock purchase warrants of
the Borrower described on Schedule 7.21 hereto.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
Section 2.1 Term Loans. Subject to and upon the terms and
conditions herein set forth, each Bank severally and not jointly agrees to make
a single loan to the Borrower on the Original Closing Date of a sum not to
exceed the Term Loan Commitment of such Bank (each such loan, a "Term Loan").
The aggregate principal amount of the Term Loan Commitments shall not exceed
$35,000,000 (the "Total Term Loan Commitment"). All unutilized Term Loan
Commitments shall expire simultaneously with the making of the Term Loans on the
Original Closing Date. The Term Loan of each Bank made on the Original Closing
Date shall be initially made as a Base Rate Loan and may thereafter be
maintained at the option of the Borrower as a Base Rate Loan or a Eurodollar
Loan, in accordance with the provisions hereof. Once repaid, Term Loans may not
be reborrowed. The Term Loans shall mature on the Term Loan Maturity Date and
shall be repaid, without premium or penalty, by the Borrower, in amounts equal
to the installments set forth below, on the Payment Date specified below for
each such installment:
xxv
<PAGE> 27
<TABLE>
<CAPTION>
Payment Dates
occurring between Amount of
the following dates Installment
------------------- -----------
<S> <C>
June 30, 1996 through
and including December 31,
1996 $ 833,333
January 1, 1997 through
and including December 31,
1997 $1,375,000
January 1, 1998 through
and including December 31,
1999 $1,500,000
January 1, 2000 through
and including December 31,
2000 $1,750,000
January 1, 2001 through
and including September 30,
2001 $2,000,000
December 31, 2001 The remaining outstanding prin-
cipal balance of the Term Loans
</TABLE>
Section 2.2 Revolving Loans. (a) Subject to and upon the terms
and conditions herein set forth, each Bank severally and not jointly agrees, at
any time and from time to time on and after the Original Closing Date and prior
to the Revolving Loan Maturity Date, to make revolving loans (collectively,
"Revolving Loans") to the Borrower, which Revolving Loans shall not exceed in
aggregate principal amount at any time outstanding (i) the Revolving Loan
Commitment of such Bank at such time minus (ii) such Bank's Pro Rata Share of
the L/C Obligations at such time minus (iii) such Bank's Pro Rata Share of any
Revolver Reserve in effect at such time. The sum of the Revolving Loan
Commitments of all of the Banks (the "Total Revolving Loan Commitment") on the
Original Closing Date shall be $15,000,000. The Revolving Loans of each Bank
made on the Original Closing Date shall be initially made as a Base Rate Loan
and may thereafter be maintained at the option of the Borrower as a Base Rate
Loan or a Eurodollar Loan, in accordance with the provisions hereof.
(b) Revolving Loans may be voluntarily prepaid
pursuant to Section 2.12, and, subject to the other provisions of this Amended
Credit Agreement, any amounts so prepaid may be reborrowed. Each Bank's
Revolving Loan Commitment shall expire, and each Revolving Loan shall mature on,
the Revolving Loan Maturity Date, without further action on the part of the
Banks or the Agent.
(c) Each Borrowing of Revolving Loans shall be in the
aggregate minimum amount of $250,000 or any integral multiple of $100,000 in
excess thereof.
Section 2.3 Delayed Draw Term Loans. (a) Subject to and upon
the terms and conditions herein set forth, each Bank severally and not jointly
agrees at any time and from time to time on and after its receipt of financial
information required to be delivered pursuant to Section 6.1(a) hereof and
6.1(c) hereof to the Agent and the Banks for the Borrower's fiscal quarter
ending and month ending June 30, 1996 (but in no event prior to June 30, 1996)
with respect to Delayed Draw Term Loans borrowed to make Permitted Acquisitions,
and December 31,
xxvi
<PAGE> 28
1996 with respect to Delayed Draw Term Loans borrowed to refinance Subordinated
Notes, to and including the Delayed Term Loan Commitment Termination Date, to
make one or more term loans to the Borrower in an aggregate amount not to exceed
the Delayed Draw Term Loan Commitment of such Bank (each such loan, a "Delayed
Draw Term Loan"), provided, that:
(i) The aggregate principal amount of the Delayed Draw Term Loan
Commitments shall not exceed $15,000,000 (the "Total Delayed Draw Term Loan
Commitment").
(ii) the Borrower may not borrow Delayed Draw Term Loans unless (A) as
at the end of the most recent fiscal quarter of the Borrower as to which the
Borrower has delivered the financial information required to be delivered
pursuant to Section 6.1(a) hereof to the Agent and the Banks, and after giving
effect to the Borrowing of such Delayed Draw Term Loans (1) no Default or Event
of Default shall have occurred and be continuing on the date such Delayed Draw
Term Loans are made either before or after giving effect to the making of such
Loans and, as of the most recent fiscal quarter ended, the Borrower shall be in
compliance with the financial covenants set forth in Section 7.1, (2) the
Borrower's ratio of Adjusted Senior Debt to Adjusted Consolidated EBITDA (taken
as one accounting period) then ended is not greater than 3.25 to 1.0 and (3) the
Consolidated EBITDA of the Borrower and its Subsidiaries for the four
consecutive fiscal quarters of the Borrower (taken as one accounting period) for
the period ending as of the end of such most recent fiscal quarter is not less
than the amount set forth below with respect to the applicable period (provided
that for the first three of such calculations made in the foregoing clause (3),
such calculations shall be done based upon the period commencing with April 1,
1996 and ending with the quarterly period then ended; and provided, further,
that such calculations shall not include any Subsidiaries prior to the date on
which such entity became a Subsidiary of the Company, nor shall such
calculations include BEP and its Subsidiaries prior to July 1, 1996):
<TABLE>
<CAPTION>
Period Ending Minimum EBITDA
------------- --------------
<S> <C>
June 30, 1996 $ 5,000,000
September 30, 1996 $13,500,000
December 31, 1996 $19,500,000
March 31, 1997 $24,500,000
June 30, 1997 $26,000,000
September 30, 1997 $26,000,000
</TABLE>
and (B) the Borrower shall have delivered a certificate of the Chief Financial
Officer of the Borrower as to the foregoing clauses (A)(1), (A)(2), and (A)(3)
which sets forth in detail the calculations with respect thereto in form and
substance satisfactory to the Agent with the relevant notice of borrowing
delivered pursuant to Section 2.4; and
(iii) the Borrower may borrow Delayed Draw Term Loans or apply the
proceeds thereof (A) prior to December 31, 1996, to refinance the Subordinated
Debt with the consent of all of the Banks if all of the other conditions of this
Amended Credit Agreement, including, without limitation, the conditions set
forth in this Section 2.3, are met or (B) on or after December 31, 1996, (x) to
refinance the Subordinated Promissory Note with the consent of the Agent if all
of the other conditions of this Amended Credit Agreement, including, without
limitation, the conditions set forth in this Section 2.3, are met or (y)
subsequent to the payment in full and the cancellation of the Subordinated
Promissory Note, to refinance the Series B Subordinated Notes with the prior
written consent of all of the Banks, or (C) on or after the date on which the
Subordinated Promissory Note is paid in full and cancelled, to acquire by
purchase or otherwise any assets with the prior written consent of the Banks as
set forth in the definition of Permitted Acquisitions in Section 1.1 hereof.
(b) In the event that the Borrower shall repay any
Delayed Draw Term Loan in whole or in part prior to the Delayed Draw Term Loan
Commitment Termination Date, each Bank's Delayed Draw Term Loan Commitment shall
be reduced by such Bank's Pro Rata Share of the principal amount of such
repayment. All
xxvii
<PAGE> 29
unutilized Delayed Draw Term Loan Commitments shall expire on the Delayed Draw
Term Loan Commitment Termination Date without further action on the part of the
Banks or the Agent. Each Delayed Draw Term Loan of each Bank may be made as a
Base Rate Loan or, at the option of the Borrower, as a Eurodollar Loan, in
accordance with the provisions hereof. Once repaid, Delayed Draw Term Loans may
not be reborrowed. The Delayed Draw Term Loans shall mature on the Delayed Draw
Term Loan Maturity Date and shall be repaid, without premium or penalty, by the
Borrower, in amounts equal to the installments set forth below, on the Payment
Date specified below for each such installment:
<TABLE>
<CAPTION>
Payment Dates
occurring between Amount of
the following dates Installment
------------------- -----------
<S> <C>
January 1, 1998 through 6.25% of the aggregate outstanding
and including September 30, principal amount of the Delayed Draw
2001 Term Loans on the Delayed Draw
Term Loan Commitment Termination Date
December 31, 2001 The remaining outstanding principal balance
of the Delayed Draw Term Loans
</TABLE>
(c) Each Borrowing of Delayed Draw Term Loans shall
be in the aggregate minimum amount of $250,000 or any integral multiple of
$100,000 in excess thereof.
(d) Notwithstanding anything to the contrary
contained herein, any amendment modification, or waiver to this Section 2.3
shall be made only with the consent of all of the Banks.
Section 2.4 Notice of Borrowing. (a) Whenever the Borrower
desires to borrow Revolving Loans, Delayed Draw Term Loans or Term Loans
hereunder, it shall give the Agent at the Agent's Office prior to 10:00 A.M.,
Chicago time, at least one Business Day's prior telex, facsimile or telephonic
notice (promptly confirmed in writing) of each Base Rate Loan, and at least
three Business Days' prior telex, facsimile or telephonic notice (promptly
confirmed in writing) of each Eurodollar Loan to be made hereunder. Each such
notice (a "Notice of Borrowing") shall be irrevocable and shall specify (i) the
aggregate principal amount of the requested Loans, (ii) whether such Loans shall
be Term Loans, Delayed Draw Term Loans or Revolving Loans, (iii) the date of
Borrowing (which shall be a Business Day), (iv) the intended use of proceeds of
such Loans, and (v) whether such Loans shall consist of Base Rate Loans or
Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period to be
applicable thereto (provided, that no Eurodollar Loans may be requested or made
when any Default or Event of Default has occurred and is continuing).
(b) Promptly after receipt of a Notice of Borrowing,
the Agent shall provide each Bank with a copy thereof and inform each Bank as to
its Pro Rata Share of the Loans requested thereunder.
Section 2.5 Disbursement of Funds. (a) No later than 1:00
P.M., Chicago time, on the date specified in each Notice of Borrowing, each Bank
will make available its Pro Rata Share of the Loans requested to be made on such
date, in U.S. dollars and immediately available funds, at the Agent's Office.
After the Agent's receipt of the proceeds of such Loans, the Agent will make
available to the Borrower by depositing in the Borrower's account at the Agent's
Office the aggregate of the amounts so made available in the type of funds
actually received.
(b) Unless the Agent shall have been notified by any
Bank prior to the date of a Borrowing that such Bank does not intend to make
available to the Agent its portion of the Loans to be made on such date, the
Agent may assume that such Bank has made such amount available to the Agent on
such date and the
xxviii
<PAGE> 30
Agent in its sole discretion may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Bank and the Agent has made
such amount available to the Borrower, the Agent shall be entitled to recover
such corresponding amount on demand from such Bank. If such Bank does not pay
such corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Borrower and the Borrower shall immediately repay such
corresponding amount to the Agent. The Agent shall also be entitled to recover
from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to the
then applicable rate of interest, calculated in accordance with Section 2.7, for
the respective Loans. Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any default by such
Bank hereunder. Notwithstanding anything contained herein or in any other Loan
Document to the contrary, the Agent may apply all funds and proceeds of
Collateral available for the payment of any Obligations first to repay any
amount owing by any Bank to the Agent as a result of such Bank's failure to fund
its Loans hereunder.
Section 2.6 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, each Bank's Loans shall be evidenced by (i) in
the case of such Bank's Term Loans, a promissory note (a "Term Note") duly
executed and delivered by the Borrower substantially in the form of Exhibit A
hereto in a principal amount equal to such Bank's Term Loan with blanks
appropriately completed in conformity herewith, (ii) in the case of such Bank's
Revolving Loans, a promissory note (a "Revolving Note") duly executed and
delivered by the Borrower substantially in the form of Exhibit B hereto in a
principal amount equal to such Bank's Revolving Loan Commitment, with blanks
appropriately completed in conformity herewith and (iii) in the case of such
Bank's Delayed Draw Term Loans, a promissory note (a "Delayed Draw Term Note")
duly executed and delivered by the Borrower substantially in the form of Exhibit
C hereto in a principal amount equal to such Bank's Delayed Draw Term Loan
Commitment, with blanks appropriately completed in conformity herewith. Each
Note issued to a Bank shall (x) be payable to the order of such Bank, (y) be
dated the Original Closing Date, and (z) mature on the Term Loan Maturity Date,
the Delayed Draw Term Loan Maturity Date or the Revolving Loan Maturity Date, as
the case may be.
(b) Each Bank is hereby authorized, at its option,
either (i) to endorse on the schedule attached to its Revolving Note and/or its
Delayed Draw Term Note (or on a continuation of such schedule attached to either
such Note and made a part thereof) an appropriate notation evidencing the date
and amount of each Revolving Loan and Delayed Draw Term Loan, respectively,
evidenced thereby and the date and amount of each principal and interest payment
in respect thereof, or (ii) to record such Revolving Loans and Delayed Draw Term
Loans and such payments in its books and records. Such schedule or such books
and records, as the case may be, shall constitute prima facie evidence of the
accuracy of the information contained therein.
Section 2.7 Interest. (a) The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Base Rate Loan from the date
of the making of such Loan until such Loan shall be paid in full at a rate per
annum which shall be equal to the sum of 1.5% plus the Base Rate in effect from
time to time, such rate to change as and when the Base Rate changes, such
interest to be computed on the basis of a 365 or 366-day year, as the case may
be.
(b) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Loan from the date of the making
of such Loan until such Loan shall be paid in full at a rate per annum which
shall be equal to the sum of 3.5% plus the relevant Eurodollar Rate, such
interest to be computed on the basis of a 360-day year.
(c) In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
amount of all Loans and, to the extent permitted by law, overdue interest in
xxix
<PAGE> 31
respect of all Loans, shall bear interest at a rate per annum (the "Default
Rate") equal to the sum of two percent (2%) plus the interest rate otherwise
applicable hereunder to such principal amount in effect from time to time.
(d) Interest on each Loan shall accrue from and
including the date of the Borrowing thereof to but excluding the date of any
repayment thereof (provided that any Loan borrowed and repaid on the same day
shall accrue one day's interest) and shall be payable (i) in respect of each
Base Rate Loan, quarterly in arrears on each Payment Date, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable to such
Loan and, in the case of an Interest Period of six months, on the date occurring
three months from the first day of such Interest Period and on the last day of
such Interest Period, and (iii) in the case of all Loans, on any prepayment or
conversion (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Each Reference Bank agrees to furnish to the
Agent timely information for the purpose of determining each Eurodollar Base
Rate. If any one or more of the Reference Banks shall not furnish such timely
information to the Agent for the purpose of determining any such interest rate,
the Agent shall determine such interest rate on the basis of timely information
furnished by the remaining Reference Banks. The Agent shall give prompt notice
to the Borrower and the Banks of the applicable interest rate determined by the
Agent for purposes of Section 2.7(a), and the rate, if any, furnished by each
Reference Bank for the purpose of determining the interest rate under Section
2.7(a).
(f) If fewer than two Reference Banks furnish timely
information to the Agent for determining the Eurodollar Base Rate for any
Eurodollar Loan,
(i) the Agent shall forthwith notify the
Borrower and the Banks that the interest rate cannot be determined for
such Eurodollar Loan,
(ii) each such Eurodollar Loan will
automatically, on the last day of the then existing Interest Period
therefor, convert into a Base Rate Loan (or if such Loan is then a Base
Rate Loan, will continue as a Base Rate Loan), and
(iii) the obligation of the Banks to make,
or to convert Loans into, Eurodollar Loans shall be suspended until the
Agent shall notify the Borrower and the Banks that the circumstances
causing suspension no longer exist.
Section 2.8 Interest Periods. (a) The Borrower shall, in each
Notice of Borrowing or Notice of Conversion or Continuation in respect of the
making of, conversion into or continuation of a Eurodollar Loan, select the
interest period (each an "Interest Period") applicable to such Eurodollar Loan,
which Interest Period shall, at the option of the Borrower, be either a
one-month, two-month, three-month or six-month period, provided that:
(i) the initial Interest Period for any
Eurodollar Loan shall commence on the date of the making of such Loan
(including the date of any conversion from a Base Rate Loan) and each
Interest Period occurring thereafter in respect of such Loan shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided, however, that if
any Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
xxx
<PAGE> 32
(iii) if any Interest Period begins on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month;
(iv) no Interest Period in respect of any
Revolving Loan, Delayed Draw Term Loan or Term Loan shall extend beyond
the Revolving Maturity Date, the Delayed Draw Term Loan Maturity Date
or the Term Loan Maturity Date, as the case may be; and
(v) no Interest Period in respect of a Term
Loan or Delayed Draw Term Loan shall extend beyond any date upon which
a repayment of the Term Loans or Delayed Draw Term Loans, as the case
may be, is required to be made pursuant to Section 2.1 unless the
aggregate principal amount of Term Loans or Delayed Draw Term Loans, as
the case may be, which are Base Rate Loans or which have Interest
Periods which will expire on or before such date is equal to or in
excess of the amount of the Term Loan or Delayed Draw Term Loan, as the
case may be, repayment required to be made on such date.
(b) If upon the expiration of any Interest Period,
the Borrower has failed to elect a new Interest Period to be applicable to the
respective Eurodollar Loan as provided above, the Borrower shall be deemed to
have elected to convert such Eurodollar Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
Section 2.9 Minimum Amount of Eurodollar Loans. All
borrowings, conversions, continuations, payments, prepayments and selection of
Interest Periods hereunder shall be made or selected so that, after giving
effect thereto, (i) the aggregate principal amount of any Borrowing comprised of
Eurodollar Loans shall not be less than $500,000 or an integral multiple of
$100,000 in excess thereof, and (ii) there shall be no more than 15 Borrowings
comprised of Eurodollar Loans outstanding at any time.
Section 2.10 Conversion or Continuation. (a) Subject to the
other provisions hereof, the Borrower shall have the option (i) to convert at
any time all or any part of outstanding Base Rate Loans which comprise part of
the same Borrowing to Eurodollar Loans, (ii) to convert all or any part of
outstanding Eurodollar Loans which comprise part of the same Borrowing to Base
Rate Loans, on the expiration date of the Interest Period applicable thereto, or
(iii) to continue all or any part of outstanding Eurodollar Loans which comprise
part of the same Borrowing as Eurodollar Loans for an additional Interest
Period, on the expiration of the Interest Period applicable thereto; provided
that (A) no Base Rate Loan may be converted into a Eurodollar Loan at any time
during the first 3 days after the Original Closing Date and (B) no Loan may be
continued as, or converted into, a Eurodollar Loan when any Default or Event of
Default has occurred and is continuing.
(b) In order to elect to convert or continue a Loan
under this Section 2.10, the Borrower shall deliver an irrevocable notice
thereof (a "Notice of Conversion or Continuation") to the Agent no later than
10:00 A.M., Chicago time, (i) at least one Business Day in advance of the
proposed conversion date in the case of a conversion to a Base Rate Loan and
(ii) at least three Business Days in advance of the proposed conversion or
continuation date in the case of a conversion to, or a continuation of, a
Eurodollar Loan. A Notice of Conversion or Continuation shall specify (w) the
requested conversion or continuation date (which shall be a Business Day), (x)
the amount and Facility of the Loan to be converted or continued, (y) whether a
conversion or continuation is requested, and (z) in the case of a conversion to,
or a continuation of, a Eurodollar Loan, the requested Interest Period. Promptly
after receipt of a Notice of Conversion or Continuation under this Section
2.10(b), the Agent shall provide each Bank with a copy thereof.
Section 2.11 Voluntary Reduction of Commitments. Upon at least
one Business Day's prior irrevocable written notice (or telephonic notice
promptly confirmed in writing) to the Agent (which notice the Agent shall
promptly transmit to each of the Banks), the Borrower shall have the right,
without premium or penalty, to
xxxi
<PAGE> 33
permanently reduce each Bank's Pro Rata Share of all or part of the Total
Revolving Loan Commitment and/or the Delayed Draw Term Loan Commitment, provided
that any such partial reduction shall be in the minimum aggregate amount of
$1,000,000 or any integral multiple of $500,000 in excess thereof.
Section 2.12 Voluntary Prepayments. The Borrower shall have
the right to prepay the Loans in whole or in part from time to time on the
following terms and conditions: (i) the Borrower shall give the Agent written
notice (or telephonic notice promptly confirmed in writing), which notice shall
be irrevocable, of its intent to prepay the Loans, at least three Business Days
prior to a prepayment of the Loans, which notice shall specify the amount of
such prepayment and what Types of Loans and which Facilities are to be prepaid
and, in the case of Eurodollar Loans, the specific Borrowing(s) pursuant to
which such Eurodollar Loans were made, and which notice the Agent shall promptly
transmit to each of the Banks, (ii) each prepayment shall be in an aggregate
principal amount of $250,000 or any integral multiple of $50,000 in excess
thereof, (iii) prepayments of Eurodollar Loans prior to the last day of the
Interest Period applicable thereto shall be accompanied by any payments required
to be made by the Borrower in connection with such prepayment under Section 2.18
hereof, and (iv) partial prepayments of the Term Loans and the Delayed Draw Term
Loans shall be applied to the scheduled installments of principal thereof in the
inverse order of maturity.
Section 2.13 Mandatory Prepayments. (a) The Borrower shall
prepay the Loans with Net Sale Proceeds and Net Loss Proceeds as follows:
(i) if the Borrower or any of its
Subsidiaries (other than the Joint Venture Subsidiaries) receives any
Net Sale Proceeds (excluding, however, Net Sale Proceeds realized upon
the BEP Sale and Lease Transaction), the Borrower shall prepay the
outstanding Loans on the date of its receipt of such Net Sale Proceeds,
in an amount equal to 100% of the amount of such Net Sale Proceeds
minus $5,000,000 in the aggregate from and after the Original Closing
Date (the "Net Cash Proceeds Holdback") in accordance with the
provisions of Section 2.14;
(ii) subject to the terms of this Section
2.13, on the date that is 180 days after the date of the asset sale
that gave rise to such Net Cash Proceeds Holdback, the Borrower shall
prepay the outstanding Loans in an amount equal to the amount of such
Net Cash Proceeds Holdback that has not been reinvested in an Expansion
Transaction or Permitted Acquisition by the Borrower, in accordance
with the provisions of Section 2.14; provided that the Borrower shall
apply such Net Cash Proceeds Holdback on the date the Borrower or such
Subsidiary (other than the Joint Venture Subsidiaries) receives such
proceeds to repay the principal amount of the Revolving Loans
outstanding at such time to the extent such Net Cash Proceeds Holdback
are not reinvested in an Expansion Transaction or Permitted Acquisition
on the date such proceeds are so received and a corresponding reserve
against the Total Revolving Loan Commitment in an amount equal to the
Net Cash Proceeds Holdback applied to the Revolving Loans (the
"Revolver Reserve") shall be created and the Borrower shall deliver a
notice to the Agent on the date such proceeds are received in the form
of Exhibit I; provided further that if no Revolving Loans are
outstanding on such date or if the amount of the Net Cash Proceeds
Holdback so applied exceeds the amount of Revolving Loans outstanding
on such date, then the Borrower may, so long as no Event of Default
shall have occurred and be continuing, retain such proceeds in an
amount equal to the excess of the Net Cash Proceeds Holdback over the
Revolving Loans then outstanding. For up to 180 days after the date of
the related asset sale (the "Decision Period"), the Borrower may
provide one or more notices of borrowing of Revolving Loans to the
Agent in accordance with Section 2.4(a) which shall specify that the
proceeds of such Revolving Loans will be invested in an Expansion
Transaction or Permitted Acquisition, and subject to and upon the terms
and conditions set forth in this Amended Credit Agreement (including
without limitation, Section 4.2) the Banks shall make such Revolving
Loans in accordance with Section
xxxii
<PAGE> 34
2.2 in an aggregate amount necessary to finance such Expansion
Transaction or Permitted Acquisition in an amount not greater than the
Revolver Reserve; provided that the Revolver Reserve shall be reduced
during the Decision Period each time a Revolving Loan is made in
accordance with this Section 2.13 (a)(ii) by the amount of such
Revolving Loan; provided further that, should an Event of Default occur
and be continuing on the date the Agent receives such notice of
borrowing or on the date such Revolving Loans are to be made or should
the Decision Period have expired before such a notice of borrowing is
delivered to the Agent, then an amount equal to the Revolver Reserve
(as adjusted as described above) shall be applied to prepay the Loans
in accordance with the provisions of Section 2.14. If any Net Cash
Proceeds Holdback are retained by the Borrower as provided above, then
to the extent such Net Cash Proceeds Holdback are not applied within
the Decision Period to an Expansion Transaction or a Permitted
Acquisition, the Borrower shall apply such excess Net Cash Proceeds
Holdback to prepay the Loans in accordance with the provision of
Section 2.14;
(iii) if the Revolver Reserve is to be
applied as a mandatory prepayment in accordance with Section 2.14, the
Borrower shall be deemed to have requested Revolving Loans in an amount
equal to the Revolver Reserve, respectively, and such Loans shall be
made regardless of any failure of the Borrower to meet the conditions
precedent set forth in Section 4.2. Upon completion of such Expansion
Transaction or Permitted Acquisition, any unused Net Cash Proceeds
Holdback amounts shall constitute Net Sale Proceeds and shall be
applied as a mandatory prepayment in accordance with Section 2.14.
(b) On each date after the Original Closing Date on
which the Borrower or any of its Subsidiaries receives any Net Equity Proceeds,
the Borrower shall prepay the outstanding Loans in an amount equal to the
Appropriate Amount of such Net Equity Proceeds, in accordance with the
provisions of Section 2.14.
(c) On the date the Borrower is required to deliver
its financial statements referred to in Section 6.1(b) hereof after the close of
each fiscal year of the Borrower commencing with the fiscal year of the Borrower
ending on December 31, 1997 (or, if earlier, the seventh day following delivery
of the financial statements referred to in Section 6.1(b) in respect of such
fiscal year), the Borrower shall prepay the outstanding Loans in an amount equal
to 50% of the Excess Cash Flow for such preceding fiscal year, in accordance
with the provisions of Section 2.14.
(d) On each day on which the Total Revolving Loan
Commitment or the Total Delayed Draw Term Loan Commitment is reduced, the
Borrower shall prepay the Revolving Loans and/or the Delayed Draw Term Loans to
the extent, if any, that the outstanding principal amount of the Revolving Loans
and/or Delayed Draw Term Loans exceeds such reduced Total Revolving Loan
Commitment minus the L/C Obligations at such time and any Revolver Reserve in
effect at such time or the Total Delayed Draw Term Loan Commitment,
respectively.
(e) On each Business Day after the Original Closing
Date, if the aggregate balances in the Concentration Account, the BEP
Concentration Account and the Money Market Accounts, after giving effect to the
transfers permitted to be made pursuant to Section 6.10 to the Operating Account
and to the banks with which the Borrower maintains its disbursement accounts in
accordance with Section 6.10 hereof (the "Ending Balances"), collectively exceed
$1,000,000 plus an amount equal to the amount of all checks drawn on the
Operating Account and not presented for payment as of such Business Day (the
"Permitted Balance"), then the Borrower shall transfer to the Agent, to prepay
the outstanding Revolving Loans, an amount equal to the greater of (a) $250,000
or (b) an amount equal to the Ending Balances minus the Permitted Balance (but
only in integral multiples of $50,000).
(f) For each calendar year in which one or more
payments of principal or interest are due to the Borrower or any of its
Subsidiaries on the HA Note, the Borrower shall prepay the outstanding Loans in
xxxiii
<PAGE> 35
an amount equal to the sum of such payments (whether or not made) on December 31
of each such calendar year; provided, however, that if all or any portion of
principal or interest due on the HA Note has not been paid to the Borrower on or
before any December 31, the date on which the unpaid portion of such principal
or interest shall be due from Borrower shall be extended by the period in which
the Borrower uses its best efforts to enforce its rights under the HA Note.
(g) To the extent that the Borrower or any BEP Entity
receives proceeds as a result of the disposition of the Plano Property or the
Midlothian Property, the Borrower shall use such proceeds to reduce the
then-outstanding balance of the Revolving Loans.
Section 2.14 Application of Prepayments. All prepayments of
the Loans required by Section 2.13 (except as otherwise permitted in Section
2.13(a) and 2.13 (e)) shall be applied (i) prior to the Delayed Draw Term Loan
Commitment Termination Date, first, to prepay the Term Loans until such Term
Loans shall have been repaid in full, together with accrued and unpaid interest
thereon, second, to prepay the Delayed Draw Term Loans until such Delayed Draw
Term Loans shall have been repaid in full, together with accrued and unpaid
interest thereon, third, to prepay the Revolving Loans until such Revolving
Loans shall have been repaid in full, together with accrued and unpaid interest
thereon, fourth, to Cash Collateralize the then outstanding Letters of Credit,
and, fifth, to all other outstanding Obligations and (ii) on and after the
Delayed Draw Term Loan Commitment Termination Date, first, to prepay the Term
Loans and the Delayed Draw Term Loans pro rata based on the aggregate
outstanding principal amount of Term Loans and Delayed Draw Term Loans on the
date such prepayment is made until such Term Loans and Delayed Draw Term Loans
shall have been repaid in full, together with accrued and unpaid interest
thereon, second, to prepay the Revolving Loans until such Revolving Loans shall
have been repaid in full, together with accrued and unpaid interest thereon,
third, to Cash Collateralize the then outstanding Letters of Credit, and,
fourth, to all other outstanding Obligations. Simultaneously with any prepayment
of the principal amount of the Revolving Loans pursuant to the preceding
sentence, each Bank's Revolving Loan Commitment shall be permanently reduced by
such Bank's Pro Rata Share of such prepayment. Simultaneously with any
prepayment of the principal amount of the Delayed Draw Term Loans pursuant to
the second preceding sentence occurring prior to the Delayed Draw Term
Commitment Termination Date, each Bank's Delayed Draw Term Commitment shall be
permanently reduced by such Bank's Pro Rata Share of such prepayment. All
prepayments of the Term Loans and Delayed Draw Term Loans shall be applied to
the scheduled installments of principal thereof in the inverse order of
maturity. Subject to the other terms and conditions of this Amended Credit
Agreement, any amounts of the Revolving Loans prepaid pursuant to Section
2.13(e) hereof may be reborrowed.
Section 2.15 Method and Place of Payment. (a) Except as
otherwise specifically provided herein, all payments and prepayments under this
Amended Credit Agreement and the Notes shall be made to the Agent for the
account of the Banks entitled thereto not later than 12:00 noon, Chicago time,
on the date when due and shall be made in lawful money of the United States of
America in immediately available funds at the Agent's Office, and any funds
received by the Agent after such time shall, for all purposes hereof (including
the following sentence), be deemed to have been paid on the next succeeding
Business Day. Except as otherwise specifically provided herein, the Agent shall
thereafter cause to be distributed on the date of receipt thereof to each Bank
in like funds its Pro Rata Share of payments so received.
(b) Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
(c) All payments made by the Borrower hereunder and
under the other Loan Document shall be made irrespective of, and without any
reduction for, any setoff or counterclaims.
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Section 2.16 Fees. (a) The Borrower agrees to pay the fees in
the amounts and on the dates specified in the Fee Letter.
(b) The Borrower agrees to pay to the Agent for the
account of each Bank a commitment fee computed at the per annum rate of 0.50% on
the average daily Unused Portion of the Revolving Loan Commitment and the
Delayed Draw Term Loan Commitment on the basis of a 360-day year on each Payment
Date.
Section 2.17 Interest Rate Unascertainable, Increased Costs,
Illegality. (a) In the event that the Agent, in the case of clause (i) below, or
any Bank, in the case of clauses (ii) and (iii) below, shall have determined
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the
Eurodollar Rate for any Interest Period, that by reason of any changes
arising after the date of this Amended Credit Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of the Eurodollar Rate; or
(ii) at any time, that the relevant
Eurodollar Rate applicable to any of its Loans shall not represent the
effective pricing to such Bank for funding or maintaining a Euro-dollar
Loan, or such Bank shall incur increased costs or reductions in the
amounts received or receivable hereunder in respect of any Eurodollar
Loan, in any such case because of (x) any change since the date of this
Amended Credit Agreement in any applicable law or governmental rule,
regulation, guideline or order or any interpretation thereof and
including the introduction of any new law or governmental rule,
regulation, guideline or order (such as for example but not limited to
a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D of the Federal Reserve
Board to the extent included in the computation of the Eurodollar
Rate), whether or not having the force of law and whether or not
failure to comply therewith would be unlawful, and/or (y) other
circumstances affecting such Bank or the interbank Eurodollar market or
the position of such Bank in such market; or
(iii) at any time, that the making or
continuance by it of any Eurodollar Loan has become unlawful by
compliance by such Bank in good faith with any law or governmental
rule, regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful) or has become impracticable as a result of a contingency
occurring after the date of this Amended Credit Agreement which
materially and adversely affects the interbank Eurodollar market;
then, and in any such event, the Agent or such Bank shall, promptly after making
such determination, give notice (by telephone promptly confirmed in writing) to
the Borrower and (if applicable) the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, the Borrower's right to request Eurodollar Loans
shall be suspended, and any Notice of Borrowing or Notice of Conversion or
Continuation given by the Borrower with respect to any Borrowing of Eurodollar
Loans which has not yet been made shall be deemed cancelled and rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such
Bank, upon such Bank's delivery, written demand therefor to the Borrower with a
copy to the Agent, such additional amounts (in the form of an increased rate of
interest, or a different method of calculating interest, or otherwise, as such
Bank shall reasonably determine) as shall be required to compensate such Bank
for such increased costs or reduction in amounts received or receivable
hereunder and (z) in the case of clause (iii) above, the Borrower shall take one
of the actions specified in clause (b) below as promptly as possible and, in any
event, within the time period required by law. The written demand provided for
in clause (y) shall, absent manifest error, be final and conclusive and binding
upon all of the parties hereto.
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(b) In the case of any Eurodollar Loan or requested
Eurodollar Loan affected by the circumstances described in clause (a)(ii) above,
the Borrower may, and in the case of any Eurodollar Loan affected by the
circumstances described in clause (a)(iii) above the Borrower shall, either (i)
if any such Eurodollar Loan has not yet been made but is then the subject of a
Notice of Borrowing or a Notice of Conversion or Continuation, be deemed to have
cancelled and rescinded such notice, or (ii) if any such Eurodollar Loan is then
outstanding, require the affected Bank to convert each such Eurodollar Loan into
a Base Rate Loan at the end of the applicable Interest Period or such earlier
time as may be required by law, in each case by giving the Agent notice (by
telephone promptly confirmed in writing) thereof on the Business Day that the
Borrower was notified by the Bank pursuant to clause (a) above; provided,
however, that all Banks whose Eurodollar Loans are affected by the circumstances
described in clause (a) above shall be treated in the same manner under this
clause (b).
(c) In the event that the Agent determines at any
time following its giving of notice based on the conditions described in clause
(a)(i) above that none of such conditions exist, the Agent shall promptly give
notice thereof to the Borrower and the Banks, whereupon the Borrower's right to
request Eurodollar Loans from the Banks and the Banks' obligation to make
Eurodollar Loans shall be restored.
(d) In the event that a Bank determines at any time
following its giving of a notice based on the conditions described in clause
(a)(iii) above that none of such conditions exist, such Bank shall promptly give
notice thereof to the Borrower and the Agent, whereupon the Borrower's right to
request Eurodollar Loans from such Bank and such Bank's obligation to make
Eurodollar Loans shall be restored.
Section 2.18 Funding Losses. The Borrower shall compensate
each Bank, upon such Bank's delivery of a written demand therefor to the
Borrower, with a copy to the Agent (which demand shall, absent manifest error,
be final and conclusive and binding upon all of the parties hereto), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by such Bank in connection with the
liquidation or reemployment of deposits or funds required by it to make or carry
its Eurodollar Loans), that such Bank sustains: (i) if for any reason (other
than a default by such Bank) a Borrowing of, or conversion from or into, or a
continuation of, Eurodollar Loans does not occur on a date specified therefor in
a Notice of Borrowing or Notice of Conversion or Continuation (whether or not
rescinded, cancelled or withdrawn or deemed rescinded, cancelled or withdrawn,
pursuant to Section 2.17(a) or 2.17(b) or otherwise), (ii) if any repayment
(including, without limitation, payment after acceleration) or conversion of any
of its Eurodollar Loans occurs on a date which is not the last day of the
Interest Period applicable thereto, (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower, or (iv) as a consequence of any default by the Borrower
in repaying its Eurodollar Loans or any other amounts owing hereunder in respect
of its Eurodollar Loans when required by the terms of this Amended Credit
Agreement. Calculation of all amounts payable to a Bank under this Section 2.18
shall be made on the assumption that such Bank has funded its relevant
Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at
the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan
with a maturity equivalent to the Interest Period applicable to such Eurodollar
Loan, and through the transfer of such Eurodollar deposit from an offshore
office of such Bank to a domestic office of such Bank in the United States of
America, provided that each Bank may fund its Eurodollar Loans in any manner
that it in its sole discretion chooses and the foregoing assumption shall only
be made in order to calculate amounts payable under this Section 2.18.
Section 2.19 Increased Capital. If any Bank shall have
determined that compliance with any applicable law, rule, regulation, guideline,
request or directive (whether or not having the force of law) of any
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital or assets of such Bank or
any Person controlling such Bank as a consequence of its commitments or
obligations hereunder, then from time to time, upon such Bank's delivering a
written demand therefor to the Agent and the Borrower (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank or Person for such reduction.
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Section 2.20 Taxes. (a) All payments made by the Borrower
under this Amended Credit Agreement shall be made free and clear of, and without
reduction 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, in the case of the Agent and each Bank,
net income and franchise taxes imposed on the Agent or such Bank by the
jurisdiction under the laws of which the Agent or such Bank is organized or any
political subdivision or taxing authority thereof or therein, or by any
jurisdiction in which such Bank's Domestic Lending Office or Eurodollar Lending
Office, as the case may be, is located or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld from any amounts payable to the Agent or any
Bank hereunder or under the Notes, the amounts so payable to the Agent or such
Bank shall be increased to the extent necessary to yield to the Agent or such
Bank (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Amended Credit
Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Agent for its
own account or for the account of such Bank, 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 Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The agreements in this
Section 2.20 shall survive the termination of this Amended Credit Agreement and
the payment of the Notes and all other Obligations. If any Taxes constituting a
withholding tax of the United States of America or any other governmental
authority shall be or become applicable, after the Original Closing Date, to
such payments by the Borrower to a Bank, such Bank shall to the extent not
inconsistent with such Bank's internal policies use its reasonable efforts to
make, fund and maintain its Loans through a Domestic Lending Office or a
Eurodollar Lending Office, as the case may be, of such Bank located in another
jurisdiction so as to reduce the Borrower's liability hereunder, and if, as
determined by such Bank, in its sole discretion, the making, funding or
maintenance of such Loans through such other lending office does not otherwise
materially adversely affect such Loans or such Bank.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof (including each Purchasing
Bank that becomes a party to this Amended Credit Agreement pursuant to Section
10.4) agrees that, prior to the first date on which any payment is due to it
hereunder, it will deliver to the Borrower and the Agent (i) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, certifying in each case that such Bank is
entitled to receive payments under this Amended Credit Agreement and the Notes
payable to it, without deduction or withholding of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding tax. Each Bank which delivers to the Borrower and the
Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the preceding sentence
further undertakes to deliver to the Borrower and the Agent two further copies
of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner of certification, as the case may be, on or
before the date that any such letter or form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent letter
and form previously delivered by it to the Borrower, and such extensions or
renewals thereof as may reasonably be requested by the Borrower, certifying in
the case of a Form 1001 or 4224 that such Bank is entitled to receive payments
under this Amended Credit Agreement without deduction or withholding of any
United States federal income taxes, 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 Bank from duly
completing and delivering any such letter or form with respect to it and such
Bank advises the Borrower that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax, and in the
case of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
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Section 2.21 Use of Proceeds. The proceeds of the Term Loans
shall be used to refinance certain Indebtedness of the Borrower and the Company
outstanding on the Original Closing Date, and to pay the Transaction Costs. The
proceeds of the Revolving Loans shall be used for the Borrower's working capital
requirements, to repay the Term Loans, to finance Capital Expenditures
(including Expansion Transactions) permitted hereunder and to reimburse the
Issuing Bank with respect to any Letters of Credit pursuant to Section 3.1(d).
The proceeds of the Delayed Draw Term Loans shall be used, subject to the
limitations contained in Section 2.3(a)(ii) and (iii), first to repay the
principal amount of the Subordinated Promissory Note together with any accrued
and unpaid interest thereon and all other amounts due thereunder and second, to
repay the principal amount of the Series B Subordinated Notes together with any
accrued and unpaid interest thereon and all other amounts due thereunder or
third for Permitted Acquisitions.
Section 2.22 Collateral Security and Consents.
(a) As security for the payment of the Obligations,
the Borrower shall cause to be granted to the Agent, for the ratable benefit of
the Banks, a first priority perfected Lien on and security interest in all of
the following, whether now or hereafter existing or acquired subject only to the
Liens permitted to be incurred pursuant to Section 7.3 hereof: (i) all of the
shares of capital stock of each Subsidiary of the Borrower now or hereafter
directly or indirectly owned by the Borrower (other than Phoenix) and all
proceeds thereof, all as more specifically described in the Pledge Agreement and
the Subsidiary Pledge Agreement; (ii) certain of the assets of the Borrower and
all proceeds thereof, all as more specifically described in the Security
Agreement and the Mortgages; and (iii) certain of the assets of each Subsidiary
of the Borrower (other than the Joint Venture Subsidiaries and Phoenix) now or
hereafter directly or indirectly owned by the Borrower and all proceeds thereof,
all as more specifically described in the Subsidiary Security Agreements, the
Subsidiary Pledge Agreement and the Mortgages. To the extent the Agent for the
benefit of the Banks does not have a first priority perfected security interest
in any assets of the Borrower or any other Loan Party, the Borrower will use its
best efforts to grant, and cause any other Loan Party to grant, to the Agent for
itself and the benefit of the Banks a first priority perfected security interest
in such assets subject only to the Liens permitted pursuant to Section 7.3
hereof.
(b) Concurrently with the consummation of any
Permitted Acquisition or any other acquisition of any asset (including a
leasehold interest) by the Borrower or any Subsidiary of the Borrower (other
than the Joint Venture Subsidiaries) or the formation of any new Subsidiary of
the Borrower, the Borrower shall
(i) in the case of a Permitted Acquisition
of stock or any other acquisition of stock by the Borrower or any
Subsidiary of the Borrower (other than the Joint Venture Subsidiaries)
or the formation of a new Subsidiary: (A) deliver or cause to be
delivered to the Agent all of the certificates representing the capital
stock (or other instruments or securities evidencing ownership) of such
new Subsidiary which is being acquired or formed, beneficially owned by
the Borrower or such Subsidiary, as additional collateral for the
Obligations, to be held by the Agent in accordance with the terms of
the Pledge Agreement or a Subsidiary Pledge Agreement, as the case may
be; and (B) cause such new Subsidiary which is being acquired or formed
to deliver to the Agent (1) duly executed counterpart signature pages
to each of the Guaranty and the Subsidiary Security Agreement, in the
forms attached respectively thereto as Annex I, together with the
authorization to the Agent and the Banks to attach such signature pages
to the Guaranty and the Subsidiary Security Agreement, respectively,
the effect of which shall be that as of the date set forth on such
signature pages such new Subsidiary shall become a party to each such
agreement and be bound by the terms thereof, (2) if such new Subsidiary
owns any capital stock of any other Subsidiary, a Subsidiary Pledge
Agreement, (3) such Uniform Commercial Code financing statements as
shall be required to perfect the security interest of the Agent and the
Banks in the Collateral being pledged by such new Subsidiary pursuant
to the Subsidiary Security Agreement and (4) unless otherwise agreed to
in writing by the Required Banks, Mortgages and landlord consents in a
form reasonably acceptable to the Agent with respect to such Mortgages
for
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each real property owned or leased by such Subsidiary, together with
such title insurance policies, surveys and appraisals as the Required
Banks may have reasonably requested;
(ii) in the case of a Permitted Acquisition
of assets or any other acquisition of assets (including a leasehold
interest) by the Borrower or any Subsidiary (other than a Joint Venture
Subsidiary), deliver or cause to be delivered by the Borrower or such
Subsidiary acquiring such assets, (A) such Uniform Commercial Code
financing statements as shall be required to perfect the security
interest of the Agent and the Banks in the assets being so acquired,
(B) any additional instruments or documents evidencing the security
interest of the Agent reasonably required by the Agent and (C) unless
otherwise agreed to in writing by the Required Banks, Mortgages for
each parcel of real property or leasehold interest so acquired or
entered into and landlord consents in a form reasonably acceptable to
the Agent with respect to such Mortgages, together with such title
insurance policies, surveys and appraisals and other consents as the
Required Banks may have reasonably requested; and
(iii) in any case, provide such other
documentation, including, without limitation, one or more opinions of
counsel reasonably satisfactory to the Required Banks, articles of
incorporation, by-laws and resolutions, which in the reasonable opinion
of the Required Banks is necessary or advisable in connection with such
Permitted Acquisition or formation of such new Subsidiary or other
acquisition or lease.
(c) Within 30 days of the Borrower or any Subsidiary
(other than a Joint Venture Subsidiary or Phoenix) entering into any Material
Equipment Lease or any lease of real property after the Original Closing Date,
the Borrower shall deliver or cause to be delivered to the Agent a consent of
the equipment lessor or landlord with respect to each such lease in a form
reasonably acceptable to the Agent.
SECTION 3. LETTERS OF CREDIT.
Section 3.1 Issuance of Letters of Credit, etc. (a) Subject to
the terms and conditions hereof, at any time and from time to time from the
Original Closing Date through the day prior to the Revolving Loan Maturity Date,
the Issuing Bank shall issue such Letters of Credit as Borrower may request by
an L/C Application; provided that, giving effect to such Letter of Credit, (x)
the sum of the L/C Obligations then outstanding plus the then outstanding
principal amount of the Revolving Loans shall not exceed the Total Revolving
Loan Commitment minus any Revolver Reserve in effect at such time, and (y) the
aggregate L/C Obligations then outstanding shall not exceed the L/C Commitment.
Unless all the Banks and the Issuing Bank otherwise consent in writing, the term
of any Letter of Credit shall not exceed 12 months. No Letter of Credit shall
expire by its terms after the Maturity Date. No Letter of Credit shall be issued
except in the ordinary course of business of Borrower or any of its
Subsidiaries.
(b) The Borrower shall submit the L/C Application for
the Issuance of any Letter of Credit to the Issuing Bank at least five Business
Days prior to the date when required. Upon Issuance of a Letter of Credit, the
Issuing Bank shall promptly notify the Banks of the amount and terms thereof.
(c) Upon the Issuance of a Letter of Credit, each
Bank that has made a Revolving Loan Commitment shall be deemed to have purchased
a pro rata participation, from the Issuing Bank in an amount equal to that
Bank's Pro Rata Share, in the Letter of Credit. Without limiting the scope and
nature of each Bank's participation in any Letter of Credit, to the extent that
the Issuing Bank has not been reimbursed by Borrower for any payment required to
be made by the Issuing Bank under any Letter of Credit, each Bank shall, pro
rata according to its Pro Rata Share, reimburse the Issuing Bank promptly upon
demand for the amount of such payment. The obligation of each Bank to so
reimburse the Issuing Bank shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, Event of Default or any other
occurrence or event. Any such
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<PAGE> 41
reimbursement shall not relieve or otherwise impair the obligation of Borrower
to reimburse the Issuing Bank for the amount of any payment made by the Issuing
Bank under any Letter of Credit together with interest as hereinafter provided.
(d) Upon the making of any payment with respect to
any Letter of Credit by the Issuing Bank, Borrower shall be deemed to have
submitted a Notice of Borrowing for a Revolving Loan consisting of a Base Rate
Loan in the amount of such payment, and the Agent shall without notice to or the
consent of Borrower cause Revolving Loans to be made by the Banks in an
aggregate amount equal to the amount paid by the Issuing Bank on that Letter of
Credit, but not exceeding the Total Revolving Loan Commitment minus the then
outstanding principal amount of Revolving Loans and minus the Revolver Reserve,
and for this purpose, the conditions precedent set forth in Section 4 hereof
shall not apply. The proceeds of such Revolving Loans shall be paid to the
Issuing Bank to reimburse it for the payment made by it under the Letter of
Credit. Promptly following any Revolving Loans made under this Section 3.1(d),
the Agent shall notify Borrower thereof.
(e) To the extent that any Loans made pursuant to
Section 3.1(d) are insufficient to reimburse the Issuing Bank in full, Borrower
agrees to pay to the Issuing Bank with respect to each Letter of Credit, within
one Business Day after demand therefor, a principal amount equal to any payment
made by the Issuing Bank under that Letter of Credit, together with interest on
such amount from the date of any payment made by the Issuing Bank through the
date of payment by Borrower at the Default Rate. The principal amount of any
such payment made by Borrower to the Issuing Bank shall be used to reimburse the
Issuing Bank for the payment made by it under the Letter of Credit. Each Bank
that has reimbursed the Issuing Bank pursuant to Section 3.1(d) for its Pro Rata
Share of any payment made by the Issuing Bank under a Letter of Credit shall
thereupon acquire a pro rata participation, to the extent of such reimbursement,
in the claim of the Issuing Bank against Borrower under this Section 3.1(e).
(f) The Issuance of any supplement, modification,
amendment, renewal or extension to or of any Letter of Credit shall be treated
in all respects the same as the Issuance of a new Letter of Credit.
Section 3.2 Letter of Credit Fees. Borrower shall pay (i) a
letter of credit fee to the Agent of 3.5% of the stated amount of each Letter of
Credit per annum for the term of each Letter of Credit, payable in advance, for
the account of the Banks who have made Revolving Loan Commitments, according to
their respective Pro Rata Shares and (ii) an issuance fee to the Agent of 0.25%
of the stated amount of each Letter of Credit, payable in advance for the
account of the Issuing Bank. Upon (A) the issuance of each Letter of Credit,
Borrower shall also pay to the Agent for the account of the Issuing Bank an
amount equal to the greater of (i) $500 or (ii) the issuance fees; (B) the
amendment of each Letter of Credit, Borrower shall pay to the Agent for the
account of the Issuing Bank the amendment fees, in each case, as the Issuing
Bank normally charges in connection with a Letter of Credit and activity
pursuant thereto, in either case which fees shall be solely for the account of
the Issuing Bank; and (C) the incurrence of any reasonable out-of-pocket costs
and expenses in connection with the maintenance of any Letter of Credit,
Borrower shall pay to the Agent for the account of the Issuing Bank the amount
of such out-of-pocket costs and expenses so incurred.
Section 3.3 Obligation of Borrower Absolute, etc. (a) The
obligation of Borrower to pay to the Issuing Bank the amount of any payment made
by the Issuing Bank under any Letter of Credit shall be absolute, unconditional
and irrevocable. Without limiting the foregoing, such obligation of Borrower
shall not be affected by any of the following circumstances:
(1) any lack of validity or
enforceability of the Letter of Credit, this Amended Credit Agreement
or any other agreement or instrument relating thereto;
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(2) any amendment or waiver of or
any consent to departure from the Letter of Credit, this Amended Credit
Agreement or any other agreement or instrument relating thereto;
(3) the existence of any claim,
setoff, defense or other rights which Borrower may have at any time
against the Issuing Bank, any Bank, the Agent, any beneficiary of the
Letter of Credit (or any Persons for whom any such beneficiary may be
acting) or any other Person, whether in connection with the Letter of
Credit, this Amended Credit Agreement or any other agreement or
instrument relating thereto, or any unrelated transactions;
(4) any demand, statement or any
other document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever
so long as any such document appeared to comply with the terms of the
Letter of Credit;
(5) payment by the Issuing Bank in
good faith under the Letter of Credit against presentation of a draft
or any accompanying document which does not strictly comply with the
terms of the Letter of Credit;
(6) the existence, character,
quality, quantity, condition, packing, value or delivery of any
property purported to be represented by documents presented in
connection with any Letter of Credit or for any difference between any
such property and the character, quality, quantity, condition or value
of such property as described in such documents;
(7) the time, place, manner, order
or contents of shipments or deliveries of property as described in
documents presented in connection with any Letter of Credit or the
existence, nature and extent of any insurance relative thereto;
(8) the solvency or financial
responsibility of any party issuing any documents in connection with a
Letter of Credit;
(9) any failure or delay in notice
of shipments or arrival of any property;
(10) any error in the transmission
of any message relating to a Letter of Credit not caused by the Issuing
Bank, or any delay or interruption in any such message;
(11) any error, neglect or default
of any correspondent of the Issuing Bank in connection with a Letter of
Credit;
(12) any consequence arising from
acts of God, war, insurrection, disturbances, labor disputes, emergency
conditions or other causes beyond the control of the Issuing Bank;
(13) so long as the Issuing Bank in
good faith determines that the contract or document appears to comply
with the terms of the Letter of Credit, the form, accuracy, genuineness
or legal effect of any contract or document referred to in any document
submitted to the Issuing Bank in connection with a Letter of Credit;
and
(14) where the Issuing Bank has
acted in good faith and observed general banking usage, any other
circumstances whatsoever.
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(b) The Issuing Bank shall be entitled to the
protection accorded to the Agent pursuant to Section 9, mutatis mutandis.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1 Conditions Precedent to Initial Loans. The
obligation of each Bank to make its initial Loans and of the Issuing Bank to
Issue any Letter of Credit on the Original Closing Date is subject to the
satisfaction on the Original Closing Date of the following conditions precedent:
(a) Loan Documents.
(i) Credit Agreement. The Borrower shall
have duly executed and delivered this Credit Agreement to the Agent.
(ii) Notes. The Borrower shall have duly
executed and delivered to each of the Banks the appropriate Notes in
the amount, maturity and as otherwise provided herein.
(iii) Security Agreement and Equipment Lease
Consents. The Borrower shall have duly executed and delivered to the
Agent a security agreement substantially in the form set forth as
Exhibit J hereto (as amended, restated, modified or supplemented from
time to time, the "Security Agreement"), an Assignment of Trademarks
and a consent of each equipment lessor with respect to equipment leases
(whether Capitalized Leases or operating leases) of the Borrower set
forth on Schedule 5.29 hereto.
(iv) Mortgages and Landlord Consents. The
Borrower shall have duly executed and delivered to the Agent Mortgages
with respect to each interest in real property owned or held by
Borrower listed on Schedule 5.22 hereto and a landlord consent with
respect to leases of real property of the Borrower (whether Capitalized
Leases or operating leases) with respect to Restaurants which generate
at least eighty percent (80%) of the aggregate cash flow generated by
each of the Restaurants owned or operated by the Borrower as of the
Original Closing Date, such Mortgage each in a form satisfactory to the
Agent.
(v) Depositary Account Agreements with
respect to accounts of the Borrower and its Subsidiaries as requested
by the Agent and a list of all bank accounts of Borrower and its
Subsidiaries maintained as of the Original Closing Date and of BEP
maintained as of the Amendment Closing Date.
(vi) the Management Services Agreement dated
as of the date hereof among Denny's Inc., DFO, Inc. and the Agent.
(b) Opinions of Counsel.
(i) The Agent shall have received (A) a
legal opinion, dated the Original Closing Date, from O'Connor,
Cavanagh, Anderson, Killingsworth & Beshears, counsel to the Loan
Parties substantially in the form set forth as Exhibit K hereto and (B)
such other legal opinions, each dated the Original Closing Date, from
local counsel to the Loan Parties with respect to the Mortgages and
such other matters as requested by the Agent and in form and substance
satisfactory to the Agent.
(ii) The Agent shall have received the legal
opinions issued by the Borrower's counsel in connection with the
issuance of the Subordinated Debt and the legal
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opinions issued by the Borrower's and the Company's counsel in
connection with the Acquisition Documents, each of which opinions shall
either provide that it may be relied on by the Agent and the Banks or
shall be accompanied by a letter to such effect addressed to the Agent
and the Banks by the counsel issuing such opinion.
(c) Corporate Documents. The Agent shall have
received the certificate of incorporation of each of the Loan Parties as
amended, modified or supplemented to the Original Closing Date, certified to be
true, correct and complete by the appropriate Secretary of State as of a date
not more than ten days with respect to Arizona and Georgia and twenty-five days
with respect to all other states prior to the Original Closing Date, together
with a good standing certificate from such Secretary of State and a good
standing certificate from the Secretaries of State (or the equivalent thereof)
of each other State in which each of them is required to be qualified to
transact business, each to be dated a date not more than ten days with respect
to Arizona and Georgia and twenty-five days with respect to all other states
prior to the Original Closing Date.
(d) Certified Resolutions, etc. The Agent shall have
received a certificate of the Secretary or Assistant Secretary of each of the
Loan Parties dated the Original Closing Date certifying (i) the names and true
signatures of the incumbent officers of such Person authorized to sign the
applicable Loan Documents, (ii) the By-Laws of such Person as in effect on the
Original Closing Date, (iii) the resolutions of such Person's Board of Directors
approving and authorizing the execution, delivery and performance of all
Transaction Documents executed by such Person, and (iv) that there have been no
changes in the Certificate of Incorporation of such Person since the date of the
most recent certification thereof by the appropriate Secretary of State.
(e) Transaction Documents. The Agent shall have
received copies of each of the Transaction Documents (other than the Loan
Documents) and any amendments or supplements thereto, certified as of the
Original Closing Date by the Chief Executive Officer or Chief Financial Officer
of the Borrower to be true, correct and complete copies of such documents. The
Agent shall have received copies of all documents relating to existing
Indebtedness of the Borrower and its Subsidiaries that shall be outstanding on
and after the Original Closing Date, including, without limitation, terms of
amortization, interest, premiums, fees, expenses, maturity, amendments,
covenants, events of default and remedies.
(f) Officer's Certificate. The Agent and the Banks
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of the Borrower, dated the Original Closing Date, certifying
that (i) the Transaction Documents (other than the Loan Documents) are in full
force and effect and no material term or condition thereof has been amended from
the form thereof delivered to the Agent, or waived, except as disclosed in
writing to the Agent or its counsel prior to the execution of the Original
Credit Agreement, (ii) each of the Loan Parties and, to the best of his or her
knowledge, the other parties to the Transaction Documents, have performed or
complied in all material respects with all agreements and conditions contained
in such Transaction Documents required to be performed or complied with by each
of them on or before the Original Closing Date, (iii) subject to the foregoing,
neither any Loan Party nor, to the best of his or her knowledge, any such other
party is in default in the performance or compliance with any of the material
terms or provisions thereof, except to the extent that performance thereof or
compliance therewith or default has been waived with the prior written consent
of the Banks, and (iv) all of the representations and warranties of the Borrower
contained in the Loan Documents are true and correct, and (v) after giving
effect to the execution and delivery of the Loan Documents by each of the Loan
Parties and consummation of the transactions thereunder and the Transactions, no
Default or Event of Default shall have occurred and be continuing.
(g) Subordinated Notes. The Borrower shall have
issued the Subordinated Notes on terms and in amounts satisfactory to the Agent
and the Banks.
(h) Insurance. The Agent shall have received a
certificate of insurance demonstrating insurance coverage in respect of each of
the Loan Parties of types, in amounts, with insurers and with other terms
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<PAGE> 45
satisfactory to the Banks, which certificate shall indicate that the Agent and
the Banks are named additional insureds as their interests may appear and shall
contain a lenders loss payee endorsement in favor of the Agent in form and
substance satisfactory to the Agent.
(i) Lien Search Reports. The Agent shall have
received satisfactory reports of UCC, tax lien and judgment searches conducted
by a search firm acceptable to the Agent and the Banks with respect to the
Borrower and each Subsidiary in each of the locations set forth in Schedule IV
of the Security Agreement.
(j) UCC-1 Financing Statements. The Agent shall have
received acknowledgment copies (or other evidence of filing) of each UCC-1
financing statement signed by Borrower as debtor naming the Agent as secured
party and filed in the jurisdictions set forth in Schedule I to the Security
Agreement.
(k) Payoff Letters and Terminations. The Agent shall
have received (i) payoff and lien termination and release agreements, in form
and substance satisfactory to the Agent, from each creditor of the Borrower, the
Company and their respective Subsidiaries identified on Schedule 4.1(k) hereof,
including, without limitation, Ronald C. Davis as a creditor under the Davis
Note, and (ii) such Form UCC-3 (or its equivalent), trademark lien releases and
other lien and mortgage release and termination agreements, evidence of release
of federal and state tax liens, all in form and substance satisfactory to the
Agent, as the Agent shall request.
(l) Pro Forma Balance Sheet; etc. The Agent shall
have received a pro forma consolidated balance sheet of the Borrower and its
Subsidiaries, dated as of the Original Closing Date, giving effect to the
Transactions and the payment or accrual of all Transaction Costs, certified by
the chief financial officer of the Borrower, which balance sheet shall indicate
a Consolidated Net Worth plus all amounts included in stockholders equity with
respect to any common stock purchase warrants of the Borrower issued to the
holders of the Subordinated Debt or the holders of any Loans under the Original
Credit Agreement of the Borrower and its Subsidiaries of no less than
$18,000,000. The Agent and the Banks shall have received evidence satisfactory
to them from the Borrower indicating that the Borrower shall have sufficient
funds to consummate the Acquisition.
(m) Solvency Certificate. The Agent shall have
received a certificate signed by the Chief Financial Officer of the Borrower
containing conclusions as to the Solvency of the Borrower after giving effect to
the Transactions.
(n) Joint Venture Agreements. The Agent shall have
received copies of the joint venture agreements for each of the Joint Venture
Subsidiaries, as amended through the Original Closing Date, certified by an
officer of the Borrower.
(o) Franchise Agreements and Leases. The Agent shall
have received copies of all Franchise Agreements, Leases and Material Equipment
Leases to which Borrower or any Subsidiary (other than the Joint Venture
Subsidiaries) is a party as of the Original Closing Date, certified by an
officer of the Borrower.
(p) Instruments. The Agent shall have received all
duly endorsed instruments and chattel paper required to be delivered by the
Borrower pursuant to the Security Agreement certified by an officer of the
Borrower.
(q) Corporate Structure. The corporate structure of
the Loan Parties after giving effect to the Acquisition shall be satisfactory to
the Agent and the Banks.
(r) Financial Statements. The Agent and the Banks
shall have received (i) the unaudited balance sheet and income statement of the
Company for the fiscal year ending December 27, 1995 and the unaudited balance
sheet and income statement of the Company for the one-month period ending on
January 27, 1996 and (ii) audited financial statements of American Family
Restaurants, Inc., as such corporation existed prior
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to the Merger ("AFR") for the fiscal year ending September 27, 1995 and the
unaudited financial statements of AFR for the quarter ending December 27, 1995.
(s) Environmental Matters. The Agent shall (i) be
satisfied that neither the Borrower, the Company, any of their respective
Subsidiaries nor any other Loan Party is subject to any present or contingent
environmental liability deemed material by the Agent and that their operations
taken as a whole comply in all material respects (in the Agent's judgment) with
all Environmental Laws, (ii) be satisfied that neither the Borrower, the Company
nor any other Loan Party is the subject of any federal or state investigation
evaluating whether any remedial action, involving a material expenditure (in the
opinion of the Agent) is needed to respond to any release or other presence of
Materials of Environmental Concern and (iii) have received environmental audit
reports in form and substance satisfactory to the Agent and the Banks prepared
by an independent environmental consultant acceptable to the Agent and the Banks
with respect to the properties and business of the Borrower, the Company, each
of their respective Subsidiaries, the other Loan Parties (if applicable) and
each of their Environmental Affiliates as the Agent shall request.
(t) Funds Flow Instructions. The Agent and the Banks
shall have received detailed instructions satisfactory to them describing the
funds flow in connection with the Transactions on the Original Closing Date.
(u) Fees and Expenses. The Agent shall have received,
for its account and for the account of each Bank, as applicable, all Fees and
other fees and expenses due and payable hereunder on or before the Original
Closing Date, including, without limitation, the fees and expenses accrued
through the Original Closing Date, of Skadden, Arps, Slate, Meagher & Flom and
any other counsel retained by the Agent.
(v) Consents, Licenses, Approvals; Compliance with
Laws. The Agent shall have received copies of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrower, the Company or any of their respective
Subsidiaries, and the validity and enforceability, of (A) the Acquisition
Documents, or in connection with any of the transactions related thereto,
including, without limitation, all shareholder consents and all consents
required by any governmental authority except, solely in connection with
transactions related to the Merger, for consents, licenses and approvals
required in connection with the operation of the business of the Borrower and
its Subsidiaries as a result of consummation of the transactions contemplated by
the Merger which consents, licenses or approvals, if not obtained, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect and (B) the Loan Documents, or in connection with any of the transactions
related thereto, including, without limitation, all shareholder consents and all
consents required by any governmental authority, in each case certified by an
officer of the Borrower. The Agent shall have received copies of all consents
and approvals, if any, required by Denny's, Inc. or any other party under any
Franchise Agreements which were required to be entered into as a result of the
Transactions, and such consents and approvals shall be in full force and effect.
The Borrower shall have delivered to the Agent such evidence as the Agent shall
have requested, evidencing compliance by the Borrower, the Company, and the
other Loan Parties with all applicable laws, rules and regulations (including,
without limitation, ERISA, environmental and health and safety laws, rules and
regulations).
(w) Consummation of Acquisition. The Acquisition
shall have been consummated in accordance with the terms of the Acquisition
Documents.
(x) Projections. The Agent shall have received
projections prepared by the Borrower demonstrating the projected consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries after giving effect to the Transactions, for the period ending on
December 31, 2001, which projections (i) shall indicate that the Borrower and
its Subsidiaries shall have sufficient working capital, in the opinion of the
Agent to profitably operate their respective businesses for the period from the
Original Closing Date until the date
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on which the Obligations are paid in full and (ii) shall otherwise be in form
and substance satisfactory to the Agent and the Banks, and all of the foregoing
shall be satisfactory to the Banks.
(y) Process Agent. The Borrower shall have appointed
an agent satisfactory to the Banks for service of process in connection with any
action or proceeding arising under or relating to the Loan Documents, and such
agent shall have accepted such appointment in writing.
(z) Management Contracts. The Borrower shall deliver
to the Agent and each Bank copies of each written agreement that it, the Company
or their respective Subsidiaries has or contemplates entering into with its
officers or other members of management certified by an officer of the Borrower,
and each such contract shall be satisfactory in form and substance to the Agent
and the Banks.
(aa) Additional Matters. The Agent shall have
received such other certificates, opinions, documents and instruments relating
to the Transactions as may have been reasonably requested by the Agent or any
Bank, and all corporate and other proceedings and all other documents
(including, without limitation, all documents referred to herein and not
appearing as exhibits hereto) and all legal matters in connection with the
Transactions shall be satisfactory in form and substance to the Banks.
Section 4.2 Conditions Precedent to All Loans. The obligation
of each Bank to make any Loan (including the initial Loans made on the Original
Closing Date) and of the Issuing Bank to Issue any Letter of Credit is subject
to the satisfaction on the date such Loan is made or such Letter of Credit is
Issued of the following conditions precedent:
(a) Representations and Warranties. The
representations and warranties contained herein and in the other Loan Documents
(other than representations and warranties which expressly speak only as of a
different date) shall be true and correct in all material respects on such date
both before and after giving effect to the making of such Loans or the Issuance
of such Letter of Credit.
(b) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing on such date either
before or after giving effect to the making of such Loans or the Issuance of
such Letter of Credit.
(c) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any governmental authority shall
have been issued, and no litigation shall be pending or threatened, which in the
reasonable judgment of the Agent would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the making
or repayment of the Loans or the Issuance of such Letter of Credit or the
consummation of the Transactions.
(d) No Material Adverse Change. No event, act or
condition shall have occurred after December 28, 1994 which, in the judgment of
the Agent, has had or could reasonably be expected to have a Material Adverse
Effect.
(e) Notice of Borrowing. The Agent (or Issuing Banks,
respectively) shall have received a fully executed Notice of Borrowing or L/C
Application, as appropriate, in respect of the Loans to be made or Letters of
Credit to be Issued on such date.
Section 4.3 Conditions Precedent to the Effectiveness of this
Amended Credit Agreement. The effectiveness of this Amended Credit Agreement is
subject to the satisfaction of the following conditions precedent:
(a) Documents.
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(i) This Amended Credit Agreement. The
Company shall have duly executed and delivered this Amended Credit
Agreement to the Agent.
(ii) Pledge Agreements. The Borrower shall
have executed and delivered a Pledge Agreement with respect to the
capital stock of BEP, together with Stock Certificates and Stock Powers
executed in blank, BEP and BEP West, Inc., shall have granted a
collateral assignment of their respective partnership interests in
Texas BEP, L.P., and BEP shall have executed and delivered a Subsidiary
Pledge Agreement with respect to each Subsidiary of BEP (whether direct
or indirect) other than Texas BEP, L.P., together with Stock
Certificates and Stock Powers executed in blank.
(iii) Conveyance Documents. The Borrower or
the BEP Entities, as applicable, shall have duly executed and delivered
to the Agent certified copies of all conveyance documents including but
not limited to, all purchase agreements, bills of sale, guaranties,
assignment agreements, certificates, sale/leasebacks, or other similar
agreements, and each LH Leasing/FFCA Lease between the Borrower or any
of its Subsidiaries, as lessee, and FFCA or LH Leasing, as lessor, in
form and substance satisfactory to the Agent in connection with the BEP
Sale and Lease Transactions.
(iv) Leasehold Mortgages. Borrower shall
have duly executed and delivered to the Agent Leasehold Mortgages and
Memoranda of Lease with respect to each interest in real property
leased by Borrower from FFCA; and the Borrower shall have used its best
efforts to deliver executed Leasehold Mortgages with respect to all
leases of real property of those Restaurants operated by BEP (other
than those leased from FFCA). All such Mortgages shall be in a form
satisfactory to the Agent.
(v) Landlord Consents The Borrower shall
have delivered to the Agent with respect to any equipment leases
between the Borrower, as lessee, and LH Leasing, as lessor, duly
executed landlord consents of LH Leasing; and the Borrower shall have
used its best efforts to deliver executed landlord consents with
respect to all leases of personal property on which Restaurants
operated by BEP (other than those leased from FFCA) are located. All
such landlord consents shall be in a form satisfactory to the Agent.
(vi) Sub-Leases. The Borrower shall have
delivered to the Agent duly executed copies of one or more sub-leases
between the Borrower, as lessor or sub-lessor, and any of the BEP
Entities as lessee or sub-lessee, the effect of which is to sub-lease
to a BEP Entity personal property located on real property owned or
leased by a BEP Entity and used in the operation of a BEP Restaurant,
excluding, however, real property or personal property located on an
Excluded Site.
(vii) Guaranty. The BEP Entities shall each
have executed and delivered a Guaranty.
(viii) Security Documents. The BEP Entities
and shall have executed and delivered to the Agent a Subsidiary
Security Agreement, an Assignment of Trademarks, and such other
agreements and documents as the Agent may require in order to establish
a first, prior and perfected security interest in the assets of the BEP
Entities.
(ix) UCC Financing Statements. The Borrower
shall have filed all UCC Forms required to perfect the Agent's security
interest in the Borrower's and its Subsidiaries' assets hereunder.
xlvii
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(x) Drop Down Notes. The Drop Down Notes
executed by each BEP Entity.
(b) Good Standing. The Borrower shall have delivered
to the Agent a good-standing certificate (and any bring-downs) (i) with respect
to the Borrower, from the Secretary of the State of Georgia as to the good
standing of the Borrower, (ii) with respect to BEP and Texas BEP, L.P., from the
Secretary of the State of Texas as to the good standing of BEP and such
Subsidiaries, (iii) with respect to LH Leasing, from the Secretary of State of
Arizona as to the good standing of LH Leasing, and (iv) with respect to BEP
West, Inc., from the Secretary of the State of Delaware, all as of not more than
fifteen days prior to the Amendment Closing Date.
(c) Corporate or Partnership Documents. The Agent
shall have received the certificate of incorporation of each of the Loan Parties
(other than Texas BEP, L.P.) and LH Leasing, as amended, modified or
supplemented subsequent to the Original Closing Date, certified to be true,
correct and complete by the appropriate Secretary of State as of a date not more
than twenty-five dates prior to the Amendment Closing Date, the current by-laws
of each of the Loan Parties (other than Texas BEP, L.P.) and LH Leasing, and a
certified copy of the current Partnership Agreement of Texas BEP, L.P.
(d) Certified Resolutions. The Agent shall have
received (in sufficient copies for each Bank) a certificate, in form and
substance satisfactory to the Agent, of the secretary or assistant secretary (or
comparable officer) of each of the Loan Parties that is a corporation dated the
Amendment Closing Date, certifying (i) the resolutions of its Board of Directors
of each of them approving and authorizing the execution, delivery and
performance by it of this Amended Credit Agreement and each of the existing Loan
Documents, and the continued effectiveness thereof, and each of the Loan
Documents to be delivered hereunder, (ii) that there have been no changes in the
certificates of incorporation or by-laws of such Loan Parties since the Original
Closing Date and (iii) specimen signatures of its officers of each of such Loan
Parties authorized to sign this Amended Credit Agreement and each of the Loan
Documents to be delivered hereunder. In addition, the Agent shall have received
(in sufficient copies for each Bank) a certificate, in form and substance
satisfactory to the Agent, of the general partner of Texas BEP, L.P., certifying
(i) that all necessary approvals have been given pursuant to the terms of the
Texas BEP, L.P. Partnership Agreement authorizing the execution, delivery and
performance by it of any Loan Documents to which it is a party, and (ii)
specimen signatures of those Persons authorized to sign such Loan Documents on
behalf of Texas BEP, L.P.
(e) Certified Resolutions of LH Leasing. The Agent
shall have received (in sufficient copies for each Bank) a certificate, in form
and substance satisfactory to the Agent, of the secretary or assistant secretary
(or comparable officer) of LH Leasing dated the Amendment Closing Date,
certifying (i) the resolutions of its Board of Directors in form and substance
satisfactory to the Agent, (ii) the current certificate of incorporation or
by-laws of LH Leasing in form and substance satisfactory to the Agent and (iii)
specimen signatures of its officers authorized to agreements on behalf of LH
Leasing.
(f) BEP Acquisition Documents. (i) The Agent shall
have received copies of each of the BEP Acquisition Documents and any amendments
or supplements thereto, certified as of the Amendment Closing Date by the Chief
Executive Officer or Chief Financial Officer of the Borrower, dated the
Amendment Closing Date, certifying that the Loan Documents delivered as of the
Original Closing Date (excluding the Original Credit Agreement), the LH
Leasing/FFCA Leases and the BEP Acquisition Documents are in full force and
effect and no material term or condition thereof has been amended from the form
thereof delivered to the Agent, or waived, except as disclosed in writing to the
Agent or its counsel prior to the execution of this Amended Credit Agreement,
(ii) each of the Loan Parties and, to the best of his or her knowledge, the
other parties to the foregoing documents, have performed or complied in all
material respects with all agreements and conditions contained in such documents
required to be performed or complied with by each of them on or before the
Amendment Closing Date, (iii) subject to the foregoing, neither any Loan Party
nor, to the best of his or her knowledge, any such other party is in default in
the performance or compliance with any of the material terms or provisions
thereof, except to
xlviii
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the extent that performance thereof or compliance therewith or default has been
waived with the prior written consent of the Banks, (iv) all of the
representations and warranties of the Loan Parties contained in the BEP
Acquisition Documents are true and correct, and (v) after giving effect to the
execution and delivery of the Loan Documents by each of the Loan Parties and
consummation of the transactions thereunder and the BEP Acquisition, no Default
or Event of Default shall have occurred and be continuing.
(g) Subordinated Promissory Notes. The Borrower shall
have issued the Subordinated Promissory Note on terms and in amounts
satisfactory to the Agent and the Banks, and the Borrower shall have paid in
full the Series A Subordinated Notes.
(h) Insurance. The Agent shall have received a
certificate of insurance demonstrating insurance coverage with respect to BEP
and its Subsidiaries of types, in amounts, with insurers and with other terms
satisfactory to the Agent, which certificate shall indicate that the Agent and
the Banks are named additional insureds as their interests may appear and shall
contain a lenders loss payee endorsement in favor of the Agent in form and
substance satisfactory to the Agent and the Banks.
(i) Lien Search Reports. The Agent shall have
received satisfactory reports of UCC, tax lien and judgment searches conducted
by a search firm acceptable to the Agent and the Banks with respect to the BEP
Entities in each of the locations set forth in Schedule IV of the Security
Agreement.
(j) Pro Forma Balance Sheet; etc. The Agent shall
have received a pro forma consolidated balance sheet of the Borrower and its
Subsidiaries, dated as of the Amendment Closing Date, giving effect to the BEP
Acquisition and the transactions contemplated hereby, and the payment or accrual
of all Transaction Costs, certified by the chief financial officer of the
Borrower, which balance sheet shall indicate a Consolidated Net Worth plus all
amounts included in stockholders equity with respect to any common stock
purchase warrants of the Borrower issued to the holders of the Subordinated Debt
or the holders of any Loans under this Amended Credit Agreement of the Borrower
and its Subsidiaries of no less than $18,000,000. The Agent and the Banks shall
have received evidence satisfactory to them from the Borrower indicating that
the Borrower shall have sufficient funds to consummate the BEP Acquisition.
(k) Solvency Certificate. The Agent shall have
received a certificate signed by the Chief Financial Officer of the Borrower
containing conclusions as to the Solvency of the Borrower and its Subsidiaries
after giving effect to the BEP Acquisition and the LH Leasing/FFCA Leases.
(l) Franchisor Agreements. The Agent shall have
received copies of all Franchisor Agreements to which any BEP Entity is a party
as of the Amendment Closing Date.
(m) Instruments. The Agent shall have received all
duly endorsed instruments and chattel paper, if any, required to be delivered by
the Borrower pursuant to the Security Agreement or any BEP Entity pursuant to
the Subsidiary Security Agreement that has not previously been delivered to the
Agent, certified by an officer of the Borrower.
(n) Corporate Structure. The corporate structure of
the Loan Parties and LH Leasing after giving effect to the BEP Acquisition shall
be satisfactory to the Agent and the Banks.
(o) Environmental Matters. The Agent shall (i) be
satisfied that none of the BEP Entities is subject to any present or contingent
environmental liability deemed material by the Agent and that its operations
taken as a whole comply in all material respects (in the Agent's judgment) with
all Environmental Laws, (ii) be satisfied that neither the Borrower nor any
other Loan Party is the subject of any federal or state investigation evaluating
whether any remedial action, involving a material expenditure (in the opinion of
the Agent) is needed to respond to any release or other presence of Materials of
Environmental Concern and (iii) have received
xlix
<PAGE> 51
environmental audit reports in form and substance satisfactory to the Agent and
the Banks prepared by an independent environmental consultant acceptable to the
Agent and the Banks with respect to the properties and business of BEP and each
of its Environmental Affiliates as the Agent shall request.
(p) Funds Flow Details. The Agent and the Banks shall
have received detailed instructions satisfactory to them describing the funds
flow in connection with the transactions contemplated hereby on the Amendment
Closing Date.
(q) Consents, Licenses, Approvals; Compliance with
Laws. The Agent shall have received copies of all consents, licenses (other than
the Liquor Licenses) and approvals, if any, required in connection with the
execution, delivery and performance by the Loan Parties and the validity and
enforceability, of (A) the BEP Acquisition Documents, or in connection with any
of the transactions related thereto, including, without limitation, all
shareholder consents and all consents required by any governmental authority
except for consents, licenses and approvals required in connection with the
operation of the business of the Borrower and its Subsidiaries as a result of
consummation of the transactions contemplated by the BEP Acquisition which
consents, licenses or approvals, if not obtained, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect ,
(B) the Loan Documents, or in connection with any of the transactions related
thereto, including, without limitation, all shareholder consents and all
consents required by any governmental authority, in each case certified by an
officer of the Borrower, and (C) the LH Leasing/FFCA Leases. The Agent shall
have received copies of all consents and approvals, if any, required by any
person under any Franchisor Agreements which were required to be entered into as
a result of the transactions contemplated hereby, and such consents and
approvals shall be in full force and effect. The Borrower shall have delivered
to the Agent such evidence as the Agent shall have requested, evidencing
compliance by the Borrower and the other Loan Parties with all applicable laws,
rules and regulations (including, without limitation, ERISA, environmental and
health and safety laws, rules and regulations).
(r) Consummation of Acquisition. The BEP Acquisition
shall have been consummated in accordance with the terms of the BEP Acquisition
Documents.
(s) Projections. The Agent shall have received
projections prepared by the Borrower demonstrating the projected consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries after giving effect to the Amendment Transactions, for the period
ending on December 31, 2001, which projections (i) shall indicate that the
Borrower and its Subsidiaries shall have sufficient working capital, in the
opinion of the Agent to profitably operate their respective businesses for the
period from the Original Closing Date until the date on which the Obligations
are paid in full and (ii) shall otherwise be in form and substance satisfactory
to the Agent and the Banks, and all of the foregoing shall be satisfactory to
the Banks.
(t) Process Agent. The Borrower and LH Leasing each
shall have appointed an agent satisfactory to the Banks for service of process
in connection with any action or proceeding arising under or relating to the
Loan Documents, and such agent shall have accepted such appointment in writing.
(u) Representations and Warranties. The
representations and warranties contained herein and in the other Loan Documents
(other than representations and warranties which expressly speak only as of a
different date) shall be true and correct in all material respects on such date
both before and after giving effect to the execution of this Amended Credit
Agreement and the consummation of the BEP Acquisition.
(v) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing on such date either
before or after giving effect to the execution of this Amended Credit Agreement
and the consummation of the BEP Acquisition.
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<PAGE> 52
(w) No Material Adverse Change. No event, act or
condition shall have occurred after February 29, 1996, which, in the judgment of
the Agent, has had or could reasonably be expected to have a Material Adverse
Effect.
(x) Consents, Licenses, Approval. Each of the
documents required to be delivered pursuant to this Section 4.3 shall have been
obtained by the Agent and be in full force and effect.
(y) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any governmental authority shall
have been issued, and no litigation shall be pending or threatened, which in the
reasonable judgment of the Agent would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the
execution, delivery or performance by the Borrower or any of its Subsidiaries of
the Loan Documents, the consummation of the transactions effected pursuant to
the terms of the Loan Documents.
(z) Commitment Fee. The Agent shall have received,
for the pro-rata account of each of the Banks in accordance with their
respective Commitments, all commitment fees accrued up to and including the
Amendment Closing Date.
(aa) Costs, Fees and Expenses. The Agent and the
Banks shall have received all costs, fees and expenses payable by the Borrower
under this Amended Credit Agreement in connection with the preparation,
execution or delivery of the Documents, including, without limitation, (i) an
amendment fee in the amount of $650,000, (ii) the reasonable fees and expenses
accrued through the Amendment Closing Date of counsel to the Agent; and the
Borrower hereby agrees to pay, and to hold the Agent and each Bank harmless
against all documentary, stamp, transfer and similar taxes paid or payable in
connection with the execution, delivery or performance of the Documents.
(ab) Omnibus Amendment Agreement. The Borrower shall
used its best efforts to deliver to the Agent a duly executed Omnibus Amendment
Agreement in substantially the form attached hereto as Exhibit S.
(ac) Series A Subordinated Notes. The Borrower shall
have presented evidence satisfactory to the Agent that the Series A Subordinated
Notes have been paid in full and cancelled.
(ad) Officer's Certificate. The Agent and the Banks
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of the Borrower, dated the Amended Closing Date, certifying
that (i) the Amendment Transaction Documents (other than the Loan Documents) are
in full force and effect and no material term or condition thereof has been
amended from the form thereof delivered to the Agent, or waived, except as
disclosed in writing to the Agent or its counsel prior to the execution of the
Amended Credit Agreement, (ii) the Borrower and, to the best of his or her
knowledge, each of the other Loan Parties and each of the other parties to the
Amendment Transaction Documents, have performed or complied in all material
respects with all agreements and conditions contained in such Amendment
Transaction Documents required to be performed or complied with by each of them
on or before the Amendment Closing Date, (iii) subject to the foregoing, neither
the Borrower nor, to the best of his or her knowledge, the other Loan Parties or
any other party to the Amendment Transaction Documents is in default in the
performance or compliance with any of the material terms or provisions thereof,
except to the extent that performance thereof or compliance therewith or default
has been waived with the prior written consent of the Banks, and (iv) all of the
representations and warranties of the Borrower contained in the Loan Documents
are true and correct, and (v) after giving effect to the execution and delivery
of the Loan Documents by each of the Loan Parties and consummation of the
transactions thereunder and the Amendment Transactions, no Default or Event of
Default shall have occurred and be continuing.
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(ae) Additional Matters. The Agent shall have
received such other certificates, opinions, documents and instruments relating
to the Obligations or the transactions contemplated hereby, as may have been
reasonably requested by the Agent, and all corporate and other proceedings and
all other documents (including, without limitation, all documents referred to
herein and not appearing herein and exhibits hereto) and all legal matters in
connection with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Agent.
The acceptance of the proceeds of each Loan and the Issuance
of each Letter of Credit shall constitute a representation and warranty by the
Borrower to the Agent and each of the Banks that all of the conditions required
to be satisfied under this Section 4 in connection with the making of such Loan
or the Issuance of such Letter of Credit have been satisfied.
All of the Notes, certificates, agreements, legal opinions and
other documents and papers referred to in this Section 4, unless otherwise
specified, shall be delivered to the Agent for the account of each of the Banks
and, except for the Notes, in sufficient counterparts for each of the Banks, and
shall be satisfactory in form and substance to the Agent and each Bank in its
sole discretion.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Banks to enter into the Original Credit
Agreement and to make the Loans and to induce the Issuing Bank to Issue Letters
of Credit and to further induce the Banks to enter into this Amended Credit
Agreement, the Borrower makes the following representations and warranties to
the Agent and the Banks, which shall survive the execution and delivery of this
Amended Credit Agreement and the Notes, the making of the Loans and the Issuance
of the Letters of Credit:
Section 5.1 Corporate Status. Each Loan Party (i) is a duly
organized and validly existing corporation or partnership in good standing under
the laws of the jurisdiction of its incorporation or organization, (ii) has the
corporate or organizational power and authority to own its property and assets
and to transact the business in which it is engaged or presently proposes to
engage and (iii) has duly qualified and is authorized to do business and is in
good standing as a foreign corporation or partnership, if applicable, in every
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified where the failure to be so qualified
or in good standing could have a Material Adverse Effect.
Section 5.2 Corporate Power and Authority. Each Loan Party has
the corporate or organizational power and authority to execute, deliver and
carry out the terms and provisions of each of the Transaction Documents and, as
of the Amendment Closing Date, the Amendment Transaction Documents to which it
is a party and has taken all necessary corporate or other action to authorize
the execution, delivery and performance by it of such Transaction Documents and,
as of the Amendment Closing Date, the Amendment Transaction Documents. Each Loan
Party has duly executed and delivered each such Transaction Document and, as of
the Amendment Closing Date, the Amendment Transaction Documents, and each such
Transaction Document and, as of the Amendment Closing Date, the Amendment
Transaction Documents, constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
Section 5.3 No Violation. Neither the execution, delivery or
performance by any Loan Party of the Related Documents to which it is a party,
nor compliance by it with the terms and provisions thereof nor the consummation
of the Related Transactions and, as of the Amendment Closing Date, the BEP
Acquisition, (i) will contravene any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or governmental
instrumentality or (ii) will conflict or be inconsistent with or result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of
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the property or assets of any Loan Party pursuant to the terms of any indenture,
mortgage, deed of trust or other instrument or other material agreement to which
such Loan Party is a party or by which it or any of its property or assets is
bound or to which it may be subject, or (iii) will violate any provision of the
Certificate of Incorporation, By-Laws, or partnership agreement of any Loan
Party.
Section 5.4 Litigation. Except as set forth on Schedule 5.4
hereto, as of the Original Closing Date and the Amended Closing Date, there are
no legal or administrative actions, suits or proceedings pending or to the best
of Borrower's knowledge, threatened, against the Borrower or any of its
Subsidiaries which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect. There are no legal or administrative actions,
suits or proceedings pending or, to the best of Borrower's knowledge, threatened
(i) with respect to any of the Loan Documents or challenging the validity or
enforceability thereof or any provision thereof, (ii) with respect to any of the
Transactions, Transaction Documents, the Amendment Transactions or the Amendment
Transaction Documents, (other than the Loan Documents) which individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect or
(iii) that could reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect.
Section 5.5 Financial Statements; Financial Condition; etc.
Each of the financial statements delivered pursuant to Sections 4.1(l) , 4.1(r)
and 4.3(j) were prepared in accordance with GAAP consistently applied and fairly
present the financial condition and the results of operations of the entities
covered thereby on the dates and for the periods covered thereby, except as
disclosed in the notes thereto and, with respect to interim financial
statements, subject to normally recurring year-end adjustments. No Loan Party
has any material liability (contingent or otherwise) not reflected in such
financial statements or in the notes thereto.
Section 5.6 Solvency. On the Original Closing Date and at all
times after the Original Closing Date, and after giving effect to the
Transactions and, on and after the Amendment Closing Date, the Amendment
Transactions, each Loan Party will be Solvent.
Section 5.7 Projections. The projections delivered pursuant to
Section 4.1(x) and 4.3(s) have been prepared on the basis of the assumptions
accompanying them, and such projections and assumptions, as of the date of
preparation thereof and as of the Original Closing Date and the Amended Closing
Date, respectively, are reasonable and represent the Borrower's good faith
estimate of its future financial performance, it being understood that nothing
contained in this Section shall constitute a representation or warranty that
such future financial performance or results of operations will in fact be
achieved.
Section 5.8 Material Adverse Change. Since December 28, 1994,
there has occurred no event, act or condition which has had, or could be
reasonably expected to have, a Material Adverse Effect.
Section 5.9 Use of Proceeds; Margin Regulations. All proceeds
of each Loan will be used by the Borrower only in accordance with the provisions
of Section 2.21. No part of the proceeds of any Loan will be used by the
Borrower to purchase or carry any Margin Stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock. Neither the making of
any Loan nor the use of the proceeds thereof will violate or be inconsistent
with the provisions of Regulations G, T, U or X of the Federal Reserve Board.
Section 5.10 Governmental Approvals. No order, consent,
approval, license (other than Liquor Licenses), authorization, or validation of,
or filing, recording or registration with, or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to authorize,
or is required in connection with (i) the execution, delivery and performance of
any Related Document or BEP Acquisition Document or the consummation of any of
the Related Transactions or the BEP Acquisition or (ii) the legality, validity,
binding effect or enforceability of any Related Document or BEP Acquisition
Document, except (I) those listed on Schedule 5.10 that have already been duly
made or obtained and remain in full force and effect, (II) filings of financing
statements and the Mortgages, and (III) solely in connection with the
transactions related to the Merger, those
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required in connection with the operation of the business of the Borrower and
its Subsidiaries as a result of consummation of the transactions contemplated by
the Merger or the BP Acquisition which if not obtained, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
The Borrower has obtained all consents and approvals required by Denny's or any
other party under any Franchise Agreement which were required to be entered into
as a result of the Transactions and such consents and approvals are in full
force and effect. No consents or approvals are required by any party to any
Franchisor Agreement in connection with the Amendment Transactions.
Section 5.11 Security Interests and Liens. The Security
Documents create, as security for the Obligations, valid and enforceable
security interests in and Liens on all of the Collateral, in favor of the Agent
for the ratable benefit of the Banks, and subject to no other Liens (other than
Liens expressly permitted by Section 7.3 hereof). Upon the satisfaction of the
conditions precedent described in Sections 4.1(j) and 4.1(k) in connection with
the Original Closing Date, the filing of those UCC forms required to be
delivered in connection with Section 4.3(a)(ix) hereof, and the recordation of
an original Trademark Assignment with each relevant Governmental Agency, such
security interests in and Liens on the Collateral shall be superior to and prior
to the rights of all third parties (except as disclosed on Schedule 7.3), and no
further recordings or filings are or will be required (i) in connection with the
creation or enforcement of such security interests and Liens, or (ii) with
respect to Collateral in which a security interest may be perfected by filing
financing statements described in Sections 4.1(j) and 4.3(a)(ix), in connection
with the perfection of such security interests and Liens, other than the filing
of continuation statements in accordance with applicable law.
Section 5.12 Tax Returns and Payments. Each Loan Party has
filed all tax returns required to be filed by it and has paid all taxes and
assessments payable by it which have become due, other than those not yet
delinquent or those that are reserved against in accordance with GAAP which are
being diligently contested in good faith by appropriate proceedings.
Section 5.13 ERISA. The Borrower has no Plans other than those
listed on Schedule 5.13. No accumulated funding deficiency (as defined in
Section 412 of the Code or Section 302 of ERISA) or Reportable Event has
occurred with respect to any Plan. There are no Unfunded Benefit Liabilities
under any Plan. The Borrower and each member of its ERISA Controlled Group have
complied with the requirements of Section 515 of ERISA with respect to each
Multiemployer Plan and is not in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan. To the best knowledge
of the Borrower and each member of its ERISA Controlled Group, the aggregate
potential total withdrawal liability, and the aggregate potential annual
withdrawal liability payments of the Borrower and the members of its ERISA
Controlled Group as determined in accordance with Title IV of ERISA as if the
Borrower and the members of its ERISA Controlled Group had completely withdrawn
from all Multiemployer Plans is not greater than $100,000 and $100,000,
respectively. To the best knowledge of the Borrower and each member of its ERISA
Controlled Group after due inquiry neither the Borrower nor any member of its
ERISA Controlled Group has received notice that any Multiemployer Plan is or is
likely to be in reorganization (as defined in Section 4241 of ERISA or Section
418 of the Code) or is insolvent (as defined in Section 4245 of ERISA). No
material liability to the PBGC (other than required premium payments), the
Internal Revenue Service, any Plan or any trust established under Title IV of
ERISA (other than required contributions) has been, or is expected by the
Borrower or any member of its ERISA Controlled Group to be, incurred by the
Borrower or any member of its ERISA Controlled Group. Except as otherwise
disclosed on Schedule 5.13 hereto, neither the Borrower nor any member of its
ERISA Controlled Group has any contingent liability with respect to any
post-retirement benefit under any "welfare plan" (as defined in Section 3(1) of
ERISA), other than liability for continuation coverage under Part 6 of Title I
of ERISA. No lien under Section 412(n) of the Code or 302(f) of ERISA or
requirement to provide security under Section 401(a)(29) of the Code or Section
307 of ERISA has been or is reasonably expected by the Borrower or any member of
its ERISA Controlled Group to be imposed on the assets of the Borrower or any
member of its ERISA Controlled Group.
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Section 5.14 Investment Company Act; Public Utility Holding
Company Act. No Loan Party is (x) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (y) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (z) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
Section 5.15 Original Closing Date Transactions. On the
Original Closing Date and immediately prior to the making of the initial Loans
hereunder, the Related Transactions (other than the making of the Loans and the
BEP Acquisition) intended to be consummated on the Original Closing Date will
have been consummated substantially in accordance with the terms of the relevant
Acquisition Documents and in accordance with all applicable laws. All consents
and approvals of, and filings and registrations with, and all other actions by,
any Person required in order to make or consummate such Related Transactions
(other than the BEP Acquisition) have been obtained, given, filed or taken and
are or will be in full force and effect except, solely in connection with the
Merger, those required in connection with the operation of the business of the
Borrower and its Subsidiaries as a result of consummation of the transactions
contemplated by the Merger which if not obtained, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Section 5.16 Representations and Warranties in Related
Documents. All representations and warranties made by any Loan Party and by the
Company in the Related Documents (other than the Loan Documents), and, to the
best of the Borrower's knowledge, all representations made by each other Person
in such Related Documents, are true and correct in all material respects. None
of such representations and warranties are inconsistent in any material respect
with the representations and warranties of any Loan Party made herein or in any
other Loan Document.
Section 5.17 True and Complete Disclosure. All factual
information (taken as a whole) furnished by or on behalf of any Loan Party in
writing to the Agent or any Bank on or prior to the Original Closing Date, for
purposes of or in connection with the Original Credit Agreement or any of the
Transactions, and all factual information (taken as a whole) furnished by or on
behalf of any Loan Party in writing to the Agent or any Bank on or prior to the
Amendment Closing Date in connection with this Amended Credit Agreement or any
of the Amendment Transactions is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of any Loan Party in writing to
the Agent or any Bank will be, true and accurate in all material respects on the
date as of which such information is dated or furnished and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time. As of the Original Closing Date, there
were, and as of the Amendment Closing Date there are, no facts, events or
conditions known to any Loan Party which, individually or in the aggregate, have
or could be expected to have a Material Adverse Effect.
Section 5.18 Corporate Structure; Capitalization. Schedule
5.18 hereto sets forth, both before and after giving effect to the Transactions
to be consummated on the Original Closing Date and the Amendment Transactions to
be consummated on the Amendment Closing Date, the number of authorized and
issued shares of capital stock of the Company and each of its Subsidiaries and
of each Loan Party and each Subsidiary of each Loan Party, the par value thereof
and with respect to each Subsidiary of the Borrower the registered owner(s)
thereof. All of such stock has been duly and validly issued and is fully paid
and non-assessable. Except as set forth on Schedule 5.18, neither any Loan Party
nor any Subsidiary has outstanding any securities convertible into or
exchangeable for its capital stock nor does any Loan Party or any such
Subsidiary have outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
Section 5.19 Environmental Matters. (a) Except as set forth in
Schedule 5.19, (i) as of the Original Closing Date and the Amendment Closing
Date, to the best knowledge of the Loan Parties, each of the Loan Parties is in
compliance with all applicable Environmental Laws, (ii) after the Original
Closing Date and the
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Amendment Closing Date, to the best knowledge of the Loan Parties, each of the
Loan Parties is in compliance with all applicable Environmental Laws, except
where such non-compliance individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect, (iii) to the best knowledge of
the Loan Parties, each of the Loan Parties have all material Environmental
Approvals required to operate their businesses as presently conducted or as
reasonably anticipated to be conducted, (iv) none of the Loan Parties nor to the
best knowledge of the Loan Parties, any of their Environmental Affiliates, has
received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party is not in compliance with all Environmental Laws, where such
non-compliance individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect, and (v) to each of the Loan Parties' best
knowledge, there are no circumstances that may prevent or interfere with such
Loan Party's compliance in the future, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.19, there is no
Environmental Claim pending or, to the best knowledge of the Loan Parties,
threatened, against any Loan Party or its Environmental Affiliate which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Schedule 5.19, to the best
knowledge of the Loan Parties, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Material of Environmental
Concern, that could reasonably form the basis of any Environmental Claims
against any of the Loan Parties or any of their Environmental Affiliates, which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
(d) Without in any way limiting the generality of the
foregoing, except as disclosed in Schedule 5.19, to the best knowledge of the
Loan Parties, (i) there are no on-site locations in which any Loan Party has
disposed of Materials of Environmental Concern, (ii) there are no off-site
locations in which any Loan Party has disposed or arranged for the disposal of
Materials of Environmental Concern in violation of law, (iii) there are no
underground storage tanks located on property owned or leased by any Loan Party,
(iv) there is no asbestos contained in or forming part of any building, building
component, structure or office space owned or leased by any Loan Party, and (v)
no polychlorinated biphenyls (PCB's) are used or stored at any property owned or
leased by any Loan Party in violation of law in any case with respect to any
item described in any of the foregoing clauses (i) through (v) which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
Section 5.20 Senior Indebtedness. All of the Obligations, and
any renewals, extensions, modifications or refinancings thereof, constitute
"Senior Indebtedness" within the meaning ascribed to such term in the
Subordinated Debt Financing Documents.
Section 5.21 Patents, Trademarks, Franchise Agreements,
Franchisor Agreements etc. Each of the Loan Parties have obtained and hold in
full force and effect or are licensed to use all patents, trademarks, service
marks, trade names, copyrights, franchises and other such rights, free from
burdensome restrictions, which are necessary for the operation of its business
as presently conducted and Schedule 5.21 sets forth a complete and correct list
thereof as of the Original Closing Date and the Amendment Closing Date. To the
best knowledge of the Loan Parties, no material product, process, method,
substance, part or other material presently sold by or employed by any Loan
Party in connection with such business infringes any patent, trademark, service
mark, trade name, copyright, license or other right owned by any other Person.
There is not pending or, to such Loan Parties knowledge, threatened any claim or
litigation against or affecting any Loan Party contesting its right to sell or
use any such product, process, method, substance, part or other material, which
could reasonably be expected to have a Material Adverse Effect. Borrower has
furnished to Agent true, correct and complete copies of each Franchise Agreement
and each Franchisor Agreement to which each of Borrower and each Subsidiary is
subject (including all schedules and amendments in connection therewith). Each
Loan Party is a party to such Franchise Agreements and Franchisor Agreements
which are necessary for the operation of its business as presently conducted.
Set forth on Schedule 5.21 is a list of all such Franchise Agreements and
Franchisor Agreements in effect as of the Original
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Closing Date and the Amendment Closing Date. Each of the Franchise Agreements
and Franchisor Agreements is in full force and effect and constitutes the
binding obligation of the Borrower or its Subsidiaries, as applicable, neither
the Borrower nor any of its Subsidiaries is in default thereunder, except where
such default or defaults, if any, individually or in the aggregate could not
have a Material Adverse Effect, and such Franchise Agreements with Denny's Inc,
and the Franchise Credit Card Agreements between the Borrower and DFO, Inc.,
with respect to each Franchise Agreement collectively constitute all of the
material agreements between Denny's, Inc. and its Affiliates, on the one hand,
and the Borrower and its Subsidiaries, on the other.
Section 5.22 Ownership of Property. Schedule 5.22 sets forth
all the real property owned or leased by the Loan Parties as of the Original
Closing Date and the Amendment Closing Date and identifies the street address,
the current owner (and current record owner, if different) and whether such
property is leased or owned and a description of each lease of real property to
which the Borrower or any Subsidiary is a party. The Loan Parties have good and
marketable fee simple title to or valid leasehold interests in all of their real
property and good title to all of their personal property (tangible or
intangible) subject to no Lien of any kind except Liens expressly permitted by
Section 7.3 hereof. Schedule 5.22 also sets forth a list of each Material
Equipment Lease to which the Borrower or any Loan Party is a party as of the
Original Closing Date and the Amendment Closing Date. The Loan Parties enjoy
peaceful and undisturbed possession under all of their respective leases. The
Borrower has furnished to the Agent true, correct and complete copies of each
lease of real estate and Material Equipment Lease to which each Loan Party is
subject (including all schedules and all amendments in connection therewith).
Section 5.23 No Default. Except as set forth on Schedule 5.23,
no Loan Party is in default under or with respect to any Transaction Document
(other than the Loan Documents) or any Amendment Transaction Document or any
other agreement, instrument or undertaking to which it is a party or by which it
or any of its property is bound in any respect except where such default or
defaults, if any, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default
exists.
Section 5.24 Licenses, etc. The Loan Parties have obtained and
hold in full force and effect, all licenses (other than the Liquor Licenses),
permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which are
necessary for the operation of their respective businesses as presently
conducted except where the failure to so obtain or hold any of the foregoing
could not reasonably be expected to have a Material Adverse Effect and no event
has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any of the foregoing.
Section 5.25 Compliance With Law. Each Loan Party is in
compliance with all laws, rules, regulations, orders, judgments, writs and
decrees except where such non-compliance, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
Section 5.26 No Burdensome Restrictions. No Loan Party is a
party to any agreement or instrument or subject to any other obligation or any
charter or corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Section 5.27 Brokers' Fees. Except as set forth on Schedule
5.27, none of the Loan Parties has any obligation to any Person in respect of
any finder's, brokers, investment banking or other similar fee in connection
with any of the Transactions or Amendment Transactions other than with respect
to the Leases (other than the FFCA Real Property Leases).
Section 5.28 Labor Matters. Except as set forth on Schedule 5.28, there
are no collective bargaining agreements or Multiemployer Plans covering the
employees of the Company, any of its Subsidiaries or
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any of the Loan Parties, and none of such Persons has suffered any strikes,
walkouts, work stoppages or other material labor difficulty within the last five
years and no such action is threatened. No proceedings are pending against
Borrower or any of its Subsidiaries before the INS which could reasonably be
expected to have a Material Adverse Effect.
Section 5.29 Lease Consents. The Borrower has delivered to the
Agent on the Original Closing Date (a) a consent of each equipment lessor with
respect to equipment leases of the Borrower set forth on Schedule 5.29 and (b) a
landlord consent with respect to leases of real property of the Borrower set
forth on Schedule 5.29 which are Capitalized Leases or operating leases with
respect to Restaurants which generate at least eighty percent (80%) of the
aggregate cash flow generated by each of the Restaurants owned or operated by
the Borrower as of the Original Closing Date.
Section 5.30 Amendment Closing Date Transactions. On the
Amendment Closing Date, the Related Transactions intended to be consummated on
or before the Amendment Closing Date will have been consummated substantially in
accordance with the terms of the Related Documents and the BEP Acquisition
Documents and in accordance with all applicable laws, except where the failure
to do so would not have a Material Adverse Effect. All consents and approvals
of, and filings and registrations with, and all other actions by, any Person
required in order to make or consummate such Related Transactions and the BEP
Acquisition have been obtained, given, filed or taken and are or will be in full
force and effect, except where the failure to obtain such consents, approvals,
filings or registrations or to complete such action would not have a Material
Adverse Effect..
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that on and after the
Original Closing Date and until all of the Commitments of each of the Banks have
terminated, each of the Letters of Credit has expired or been terminated and the
Obligations are paid in full:
Section 6.1 Information Covenants. The Borrower will furnish
to the Agent (and the Agent shall furnish to each Bank):
(a) Quarterly Financial Statements. Within 45 days
after the close of each quarterly accounting period in each fiscal year of the
Borrower (or such longer period allowed pursuant to Rule 12b-25 promulgated
under the Securities Exchange Act of 1934, as amended ("Rule 12b"), to file the
Borrower's Form 10-Q subject to compliance with Rule 12b, but in no event more
than 50 days in the aggregate), the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such quarterly period and the related
consolidated statements of income, cash flow and retained earnings for such
quarterly period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, and in each case setting forth comparative
figures for the related periods in the prior fiscal year.
(b) Annual Financial Statements. Within 90 days after
the close of each fiscal year of the Borrower (or such longer period allowed
pursuant to Rule 12b to file the Borrower's Form 10-K subject to compliance with
Rule 12b, but in no event more than 105 days in the aggregate), the consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income, cash flow and retained
earnings for such fiscal year, setting forth comparative figures for the
preceding fiscal year and, with respect to such consolidated financial
statements, certified without qualification by Deloitte & Touche LLP or other
independent certified public accountants of recognized national standing
acceptable to the Agent and the Required Banks, in each case together with a
report of such accounting firm stating that in the course of its regular audit
of the consolidated financial statements of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default, or
if in the opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof.
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<PAGE> 60
(c) Monthly Financial Statements. Within 30 days
after the end of each monthly reporting period in each fiscal year of the
Borrower (or 45 days with respect to the monthly reporting periods ending April
30, 1996 and May 31, 1996), the consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such monthly reporting period and the related
consolidated statements of income, cash flow and retained earnings for such
monthly reporting period and for the elapsed portion of the fiscal year ended on
the last day of such monthly reporting period, and in each case setting forth
comparative figures for the related periods in the prior fiscal year and budget;
provided that with respect to the Borrower's fiscal year ending December 31,
1996, the comparisons to budget shall only be required for those months which
represent the end of a fiscal quarter of the Borrower.
(d) Management Letters. Promptly after the Borrower's
receipt thereof, a copy of any "management letter" or other material report
received by the Borrower from its certified public accountants.
(e) Budgets and Reports. Prior to the first day of
each fiscal year of the Borrower, a budget and financial forecast of results of
operations and sources and uses of cash (in form reasonably satisfactory to the
Agent and the Required Banks) prepared by the Borrower on a monthly basis for
such fiscal year, accompanied by a written statement of the assumptions used in
connection therewith, together with a certificate of the chief financial officer
of the Borrower to the effect that such budget and financial forecast and
assumptions are reasonable and represent the Borrower's good faith estimate of
its future financial requirements and performance. The Borrower shall forward to
the Agent any material revisions to such budgets as and when prepared, together
with an explanation as to the factors leading to such revisions. The financial
statements required to be delivered pursuant to clauses (a), (b) and (c) above
shall be accompanied by a comparison of the actual financial results set forth
in such financial statements to those contained in the budget and forecasts
delivered pursuant to this clause (e) together with an explanation of any
material variations from the results anticipated in such budget and forecasts
and an explanation describing any significant events which occurred during the
period covered by such financial statements.
(f) Officer's Certificates. At the time of the
delivery of the financial statements under clauses (a), (b) and (c) above, a
certificate of the chief financial officer of the Borrower which certifies (x)
that such financial statements fairly present the financial condition and the
results of operations of the Borrower and its Subsidiaries on the dates and for
the periods indicated, subject, in the case of interim financial statements, to
normally recurring year-end adjustments and (y) that such officer has reviewed
the terms of the Loan Documents and has made, or caused to be made under his or
her supervision, a review in reasonable detail of the business and condition of
the Borrower and its Subsidiaries during the accounting period covered by such
financial statements, and that as a result of such review such officer has
concluded that no Default or Event of Default has occurred during the period
commencing at the beginning of the accounting period covered by the financial
statements accompanied by such certificate and ending on the date of such
certificate or, if any Default or Event of Default has occurred, specifying the
nature and extent thereof and, if continuing, the action the Borrower proposes
to take in respect thereof. Such certificate shall set forth the calculations
required to establish (i) whether the Borrower was in compliance with the
provisions of Section 7.1 during and as at the end of the accounting period
covered by the financial statements accompanied by such certificate, and (ii) in
the case of the financial statements delivered pursuant to clause (b) above, the
amount of Excess Cash Flow for the respective fiscal year.
(g) Notice of Default or Litigation. Promptly and in
any event within one Business Day after any Authorized Officer of any Loan Party
obtains knowledge thereof, notice of (i) the occurrence of any Default or Event
of Default, (ii) any material default or event of default under any Franchisor
Agreement which could reasonably be expected to have a Material Adverse Effect,
or under any Franchise Agreement, Lease or LH Leasing/FFCA Lease, (iii) except
to the extent the Borrower has an obligation to Denny's, Inc. to maintain such
information as confidential, any material adverse change in the operations,
properties, assets, profits, business prospects or financial condition of
Denny's, Inc. or any litigation or governmental proceeding pending or threatened
against Denny's, Inc. which could reasonably be expected to have a Material
Adverse Effect, (iv) any litigation or
lix
<PAGE> 61
governmental proceeding pending or threatened against any Loan Party which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect, (v) any other event, act or condition which could reasonably be
expected to result in a Material Adverse Effect, and (vi) any material adverse
change in the operations, properties, assets, profits, business prospects or
financial condition of a BEP Entity or any litigation or governmental proceeding
pending or threatened against a BEP Entity which could reasonably be expected to
have a Material Adverse Effect.
(h) ERISA.
(i) As soon as possible and in any
event within 10 days after the Borrower or any member of its
ERISA Controlled Group knows, or has reason to know, that:
(A) any Termination Event
with respect to a Plan has occurred or will occur, or
(B) any condition exists
with respect to a Plan which presents a material risk of
termination of the Plan or imposition of an excise tax or
other liability on the Borrower or any member of its ERISA
Controlled Group, or
(C) the Borrower or any
member of its ERISA Controlled Group has applied for a waiver
of the minimum funding standard under Section 412 of the Code
or Section 302 of ERISA, or
(D) the Borrower or any
member of its ERISA Controlled Group has engaged in a
"prohibited transaction," as defined in Section 4975 of the
Code or as described in Section 406 of ERISA, that is not
exempt under Section 4975 of the Code and Section 408 of
ERISA, or
(E) the aggregate present
value of the Unfunded Benefit Liabilities under all Plans has
in any year increased by $50,000 or to an amount in excess of
$100,000, or
(F) any condition exists
with respect to a Multiemployer Plan which presents a material
risk of a partial or complete withdrawal (as described in
Section 4203 or 4205 of ERISA) by the Borrower or any member
of its ERISA Controlled Group from a Multiemployer Plan, or
(G) the Borrower or any
member of its ERISA Controlled Group is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan, or
(H) a Multiemployer Plan is
in "reorganization" (as defined in Section 418 of the Code or
Section 4241 of ERISA) or is "insolvent" (as defined in
Section 4245 of ERISA), or
(I) the potential
withdrawal liability (as determined in accordance with Title
IV of ERISA) of the Borrower and the members of its ERISA
Controlled Group with respect to all Multiemployer Plans has
in any year increased by $50,000 or to an amount in excess of
$100,000, or
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<PAGE> 62
(J) there is an action
brought against the Borrower or any member of its ERISA
Controlled Group under Section 502 of ERISA with respect to
its failure to comply with Section 515 of ERISA,
a certificate of the president or chief financial officer of the Borrower
setting forth the details of each of the events described in clauses (A) through
(J) above as applicable and the action which the Borrower or the applicable
member of its ERISA Controlled Group proposes to take with respect thereto,
together with a copy of any notice or filing from the PBGC or which may be
required by the PBGC or other agency of the United States government with
respect to each of the events described in clauses (A) through (J) above, as
applicable.
(ii) As soon as possible and in any event within
two Business Days after the receipt by the Borrower or any member of its ERISA
Controlled Group of a demand letter from the PBGC notifying the Borrower or such
member of its ERISA Controlled Group of its final decision finding liability and
the date by which such liability must be paid, a copy of such letter, together
with a certificate of the president or chief financial officer of the Borrower
setting forth the action which the Borrower or such member of its ERISA
Controlled Group proposes to take with respect thereto.
(i) SEC Filings. Promptly upon transmission thereof,
copies of all regular and periodic financial information, proxy materials and
other information and reports, if any, which any Loan Party shall file with the
Securities and Exchange Commission or any governmental agencies substituted
therefore or which any Loan Party shall send to its stockholders.
(j) Environmental. Promptly and in any event within
two Business Days after any Authorized Officer of any Loan Party obtains
knowledge of the existence of any of the following conditions, a certificate of
the chief executive officer or chief financial officer of the Borrower
specifying in reasonable detail the nature of such condition and the applicable
Loan Party's proposed response thereto: (i) the receipt by any Loan Party of any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that such Loan Party is not in
compliance with applicable Environmental Laws, (ii) any Loan Party shall obtain
actual knowledge that there exists any Environmental Claim pending or overtly
threatened against such Loan Party or such Environmental Affiliate, or (iii) any
material release, emission, discharge or disposal of any Material of
Environmental Concern that could reasonably form the basis of any Environmental
Claim against any Loan Party or any of their Environmental Affiliates.
(k) Documents under the Subordinated Debt Financing
Documents. Simultaneously with delivery to the holders of the Subordinated
Notes, any report, financial statement, notice, certificate or other information
required to be delivered to any holder of Subordinated Debt pursuant to any of
the Subordinated Debt Financing Documents and copies of all notices of default
delivered to the Borrower by any such holder, promptly upon receipt thereof by
the Borrower.
(l) Leased Property and Franchise Agreements. After
the Amendment Closing Date, within 30 days after the Borrower or any of its
Subsidiaries enters into (i) any Material Equipment Lease or real property
lease, a description of the lease, the street address of the real property or
where the equipment will be located, the current owner of the real property (and
current record owner, if different) in the case of a real property lease, the
name of the landlord or lessor, a copy of such lease and all consents required
to be delivered pursuant to any Loan Document (ii) any Franchise Agreement, a
copy of such Franchise Agreement, and (iii) any Franchisor Agreement, a copy of
such Franchisor Agreement.
(m) Other Information. From time to time, such other
information or documents (financial or otherwise) as the Agent or any Bank may
reasonably request.
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Section 6.2 Books, Records and Inspections. The Borrower
shall, and shall cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries in conformity with GAAP and
all requirements of law shall be made of all dealings and transactions in
relation to its business and activities. The Borrower shall, and shall cause
each of its Subsidiaries to, permit officers and designated representatives of
the Agent or any Bank to visit and inspect any of the properties of the Borrower
or any of its Subsidiaries, and to examine the books of record and account of
the Borrower or any of its Subsidiaries, and discuss the affairs, finances and
accounts of the Borrower or any of its Subsidiaries with, and be advised as to
the same by, its and their officers and independent accountants, all upon
reasonable notice and at such reasonable times as such Bank may desire.
Section 6.3 Maintenance of Insurance. The Borrower shall, and
shall cause each of its Subsidiaries to, (a) maintain with insurance companies
with a Best rating of A7 or better insurance on itself and its properties in at
least such amounts, with such deductibles and against at least such risks as are
customarily insured against in the same general area by companies engaged in the
same or a similar business, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Original Closing
Date, (b) maintain the Agent and the Banks as named additional insureds and loss
payees in respect of such insurance at least to the extent the Agent and the
Banks are so named on the Original Closing Date, (c) furnish to the Agent from
time to time, upon written request, the policies under which such insurance is
issued, certificates of insurance and such other information relating to such
insurance as the Agent may reasonably request and (d) furnish to the Agent
certificates of insurance with respect to any new or replacement insurance
policies.
Section 6.4 Taxes and Other Claims. (a) The Borrower shall pay
or cause to be paid, and shall cause each of its Subsidiaries to pay or cause to
be paid, when due, all taxes, charges and assessments and all other lawful
claims required to be paid by the Borrower or such Subsidiaries, except those
that are not yet delinquent or are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves have been
established with respect thereto in accordance with GAAP.
(b) The Borrower shall not, and shall not permit any
of its Subsidiaries to, file or consent to the filing of any consolidated tax
return with any Person (other than the Borrower and its Subsidiaries).
Section 6.5 Corporate Existence, Franchises, Permits, etc. The
Borrower shall, and shall cause each of its Subsidiaries to, do or cause to be
done, all things necessary to preserve and keep in full force and effect its
existence and corporate franchises and its patents, trademarks, service marks,
trade names, copyrights, franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals except where the failure to so preserve any
of the foregoing (other than existence) could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain all
Franchise Agreements and Franchisor Agreement to which Borrower or any of its
Subsidiaries is a party in full force and effect, except to the extent such
Franchise Agreement or Franchisor Agreement is terminated in connection with an
Asset Disposition permitted pursuant to Section 7.5 hereof or in connection with
the conversion of a Kettle's Restaurant to a Denny's Restaurant, and except to
the extent such Franchisor Agreement is terminated by the BEP Entity party
thereto if such termination is determined by the Borrower in the exercise of its
reasonable business judgment to be in the best interests of the Borrower and its
Subsidiaries.
Section 6.6 Compliance with Law. The Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable laws, rules,
statutes, regulations, decrees, orders and judgments of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of their business and the ownership of their property,
including, without limitation, all Environmental Laws except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect.
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Section 6.7 Performance of Obligations. The Borrower shall,
and shall cause each of its Subsidiaries to, (a) perform all of its obligations
under the terms of each mortgage, indenture, security agreement, Franchise
Agreement, Franchisor Agreement and any other agreement with Denny's, Inc., debt
instrument, lease, undertaking and contract by which it or any of its properties
is bound or to which it is a party except where the failure to perform such
obligations individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect and (b) comply with the provisions of its
charters and bylaws.
Section 6.8 Maintenance of Properties. The Borrower shall, and
shall cause each of its Subsidiaries to, ensure that its properties used or
useful in its respective business are kept in good repair, working order and
condition, normal wear and tear excepted.
Section 6.9 Interest Rate Protection. The Borrower shall, no
later than one hundred twenty days after the Original Closing Date, enter into
interest rate protection agreements with the Agent subject to terms and
conditions reasonably satisfactory to the Agent, which agreements shall have a
notional principal amount at least equal to 50% of the scheduled maximum
outstanding amount of the Term Loans on the Original Closing Date for the first
3 years after the Original Closing Date and pursuant to which the effective
interest rate (inclusive of all fees and costs related to such agreements)
payable by the Borrower with respect to such amount will be capped at a rate no
greater than 11% per annum.
Section 6.10 Bank Accounts and Concentration Accounts.
(a) Each of the Borrower and the BEP Entities shall
cooperate fully with Agent in the establishment and operation of a cash
management program and provide Agent with such information as it may from time
to time reasonably require with respect to banking deposits and sweeps into the
Concentration Account and the BEP Concentration Account of various local
accounts maintained for restaurants of Borrower and each Subsidiary of Borrower
(other than the Joint Venture Subsidiaries). Each of the Borrower and its
Subsidiaries (other than the Joint Venture Subsidiaries and BEP and its
Subsidiaries) shall use its best efforts to obtain a Depositary Account
Agreement in form and substance reasonably satisfactory to the Agent from any
bank or other financial institution with respect to any account opened by the
Borrower, such Subsidiary (other than BEP and its Subsidiaries) at such bank or
financial institution after the Original Closing Date.
(b) The Borrower and each of its Subsidiaries (other
than the Joint Venture Subsidiaries) shall concentrate all of their bank and
depository accounts, including without limitation, all demand deposit, time
deposit, concentration and zero balance accounts, in the Concentration Account
or, in the case of the BEP Entities, in the BEP Concentration Account, with (a)
First Interstate Bank of Arizona, N.A. or any successor thereto, on and after
the Original Closing Date (subject to the following clause (b)), and (b) if
requested by the Agent, a Bank within 180 days after the Original Closing Date;
provided that the Borrower and its Subsidiaries (other than the Joint Venture
Subsidiaries) may maintain deposit accounts with any local bank or financial
institution subject to the other terms of this Section 6.10. The Agent and the
Borrower shall enter into a Concentration Account Agreement and, within sixty
(60) calendar days following the Amendment Closing Date, a BEP Concentration
Account Agreement, each in form and substance reasonably satisfactory to the
Agent with First Interstate Bank of Arizona, N.A. or its successor, or such
other Bank at which the Concentration Account shall be maintained with respect
to the Concentration Account, the BEP Concentration Account, the Money Market
Accounts and all other accounts maintained with such bank or financial
institution. The Borrower shall not permit the collective balances in the Money
Market Accounts, the Concentration Account and the BEP Concentration Account to
exceed in the aggregate $1,000,000 plus an amount equal to the amount of all
outstanding checks drawn on the Operating Account and not presented for payment
as of such Business Day at any time.
(c) Each of Borrower and its Subsidiaries (other than
the Joint Venture Subsidiaries) will, at their expense, cause all cash, checks,
drafts, bank charges, credit card receivables and other similar writings for the
payment of money and all Net Loss Proceeds, Net Asset Sale Proceeds, Net Equity
Proceeds,
lxiii
<PAGE> 65
dividends or distributions received by the Borrower or such Subsidiary each day,
wherever located, to be deposited on the Business Day received to the
Concentration Account (or, in the case of the BEP Entities, the BEP
Concentration Account) or an account maintained by the Borrower or such
Subsidiary at a local bank or other financial institution maintained pursuant to
the terms of this Section 6.10. At least two times per week, the Borrower and
each of its Subsidiaries shall cause all balances in each such local account to
be transferred to the Concentration Account, or, in the case of the BEP
Entities, to the BEP Concentration Account; provided that Borrower and its
Subsidiaries may retain up to $500 in each such local account maintained by it
with local banks to cover any minimum deposit requirements, fees and other bank
charges in respect of such account and such additional amount as may be
necessary from time to time to cover previously deposited returned checks the
amount of which was previously sent to the Concentration Account or the BEP
Concentration Account, as applicable, provided that no checks may be written on
any such accounts. In addition, at least two times per week, BEP shall cause the
balance in the BEP Concentration Account to be transferred to the Concentration
Account. Borrower and its Subsidiaries shall use their respective best efforts
to convert to cash all checks, drafts, bank charges and credit card receivables
received by it as promptly as practicable after receipt thereof (and, in any
event no later than (i) 7 Business Days after receipt in the case of checks and
drafts and (ii) 10 Business Days after receipt in the case of bank charges and
credit card receivables (40 days in the case of American Express card
receivables or 28 days in the case of Denny's Inc. receivables). Borrower shall
not, and shall not permit any Subsidiary (other than the Joint Venture
Subsidiaries) to maintain any deposit or other bank accounts other than (i)
accounts with local banks, subject to the restrictions provided in clause (a) of
this Section 6.10 and the first two sentences of this clause (c), (ii) the
Concentration Account, the BEP Concentration Account and the Money Market
Accounts, and (iii) up to five disbursement accounts opened within 30 days after
the Original Closing Date maintained with a bank or banks acceptable to the
Agent, provided that the Borrower notifies the Agent within 30 days of the
opening of or any change in any account maintained by the Borrower or such
Subsidiary, including each such disbursement account and each account with a
local bank, and further provided that no balance is maintained in such
disbursement account and amounts are transferred to such disbursement account on
any day only to the extent necessary to cover checks which were written on such
disbursement account and have been presented for payment on or prior to such day
and bank fees with respect to such accounts.
Section 6.11 Management Services Agreement. The Borrower
shall, and shall cause each of its Subsidiaries to, take all actions necessary
or reasonably requested by the Agent to allow any party to the Management
Services Agreement to perform its obligations under, and to facilitate any such
party's performance under, the Management Services Agreement.
Section 6.12 Change in Financing Methods. If the Borrower
shall implement alternative financing methods from those financing methods used
in the preparation of the financial statements referred to in Section 5.5, the
Borrower shall enter into negotiations with the Agent in order to amend the
financial covenants set forth in Section 7.1 so as to reflect such change in
financing methods with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such change as if such
change had not been made.
Section 6.13 Omnibus Agreement. The Borrower shall deliver a
duly executed Omnibus Agreement within fourteen calendar days following the
Amendment Closing Date.
Section 6.14 Leasehold Mortgages and Landlord Consents.
(a) Leasehold Mortgages. The Borrower shall exercise
best efforts to deliver executed Leasehold Mortgages with respect to all leases
of real property of those Restaurants operated by BEP. Within one hundred and
twenty (120) calendar days following the Amendment Closing Date, the Borrower
shall deliver executed Leasehold Mortgages with respect to leases of real
property of those Restaurants operated by BEP which generate at least seventy
percent (70%) of the aggregate cash flow generated by such Restaurants. All such
Mortgages shall be in a form satisfactory to the Agent.
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<PAGE> 66
(b) Landlord Consents. The Borrower shall exercise
best efforts to deliver executed landlord consents with respect to all leases of
personal property located on real property leased by the Borrower or a BEP
Entity. Within one hundred and twenty (120) calendar days following the
Amendment Closing Date, the Borrower shall deliver executed landlord consents
with respect to leases of personal property located on real property leased by
the Borrower or a BEP Entity which generate at least seventy percent (70%) of
the aggregate cash flow generated by such Restaurants. All such landlord
consents shall be in a form satisfactory to the Agent.
Section 6.15 Merger. On or before December 31, 1996, the
Borrower shall effect a merger of BEP and BEP Texas with the Borrower, and the
Borrower shall be the surviving entity; provided, however, that the foregoing
shall not be required to the extent that the Borrower in the exercise of its
reasonable business judgment determines that the completion of such a merger is
not in the best interests of the Borrower and its Subsidiaries and the Agent
waives such requirement in writing.
Section 6.16 HA Divestiture. The Borrower shall obtain the
prior written consent of the Banks as to the form and substance of any documents
executed by the Borrower in connection with the HA Divestiture and as to the
form and substance of the HA Note.
Section 6.17 UCC Form. The Borrower shall deliver to the Agent
acknowledgement copies (or other evidence of filing) for each UCC form required
to be filed pursuant to Section 4.3(a)(ix) upon receipt of such filing copies
from the appropriate filing offices, if any.
Section 6.18 Opinions of Counsel. The Borrower shall cause to
be delivered to the Agent executed opinions of counsel described in Exhibit K
hereof, each in form and substance satisfactory to the Agent, on or before 6:00
p.m., Chicago time, on July 3, 1996.
Section 6.19 Liquor Licenses. Within ninety (90) days
following the Amendment Closing Date, the Borrower shall cause to be delivered
to the Agent copies of all Liquor Licenses, except for those Liquor Licenses
which, if not obtained, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
Section 6.20 Drop-Down Notes. Within fourteen (14) days
following the Amendment Closing Date, the Borrower shall cause to be delivered
to the Agent and the Drop-Down Note Security Agreement, each executed by each
BEP Entity, and the Subordination Agreement (Drop-Down Notes) executed by the
Borrower.
Section 6.21 Trademarks. The Borrower shall, and shall cause
its Subsidiaries to, execute and deliver all documents to the Agent and effect
all filings from time to time requested by the Agent in connection with
trademarks, tradenames and related intellectual property rights.
Section 6.22 Assignment. The Borrower shall, and shall cause
its Subsidiaries to, execute and deliver to the Agent (i) an assignment of
Franchisor Agreements in form and substance satisfactory to the Agent within
thirty (30) days following the Amendment Closing Date and (ii) an assignment of
equipment leases between the Borrower as lessee and LH Leasing as lessor in form
and substance satisfactory to the Agent within ninety (90) days following the
Amendment Closing Date.
SECTION 7. NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the
Original Closing Date until the Total Commitment has terminated, and the
Obligations are paid in full:
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Section 7.1 Financial Covenants.
(a) Leverage Ratio. The Borrower shall not permit the
ratio of Consolidated Total Debt to Consolidated Capitalization to exceed .9 at
any time.
(b) Interest Coverage Ratio. The Borrower shall not
permit the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense
for any four consecutive fiscal quarters of the Borrower (taken as one
accounting period) ended during any period set forth below provided that for the
first three of such calculations made after the date of this Amended Credit
Agreement, such calculations shall be done based upon the period commencing with
April 1, 1996 and ending with the quarterly period then ended, to be less than
the ratio set forth opposite such period:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter n/a 2.50 3.00 3.70 4.50 5.00
Second Quarter 1.40 2.75 3.20 3.90 4.75 5.00
Third Quarter 2.20 2.90 3.40 4.10 5.00 5.00
Fourth Quarter 2.50 3.00 3.60 4.30 5.00 5.00
</TABLE>
(c) Fixed Charge Coverage Ratio. The Borrower shall
not permit the ratio of Consolidated EBITDA to Fixed Charges for any four
consecutive fiscal quarters of the Borrower (taken as one accounting period)
ended during any period ending on a fiscal quarter, commencing with the third
fiscal quarter of 1996, to be less than 1:1; provided, however, that for the
first three of such calculations made after the date of this Agreement, such
calculations shall be done based upon the period commencing with April 1, 1996
and ending with the quarterly period then ended.
(d) Consolidated Total Debt to EBITDA Ratio. The
Borrower shall not permit the ratio of Consolidated Total Debt to Consolidated
EBITDA for any four consecutive fiscal quarters of the Borrower (taken as one
accounting period) ended during any period set forth below provided that for the
first three of such calculations made after the date of this Amended Credit
Agreement, such calculations shall be done based upon the period commencing with
April 1, 1996 and ending with the quarterly period then ended, to be greater
than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter n/a 4.00 3.50 2.40 1.90 1.50
Second Quarter 29.00 3.75 3.25 2.25 1.75 1.50
Third Quarter 8.50 3.75 2.75 2.10 1.60 1.50
Fourth Quarter 5.00 3.75 2.50 2.00 1.50 1.50
</TABLE>
(e) Consolidated Senior Debt to EBITDA Ratio. The
Borrower shall not permit the ratio of Consolidated Senior Debt to Consolidated
EBITDA for any four consecutive fiscal quarters of the Borrower (taken as one
accounting period) ended during any period set forth below provided that for the
first three of such
lxvi
<PAGE> 68
calculations made after the date of this Amended Credit Agreement, such
calculations shall be done based upon the period commencing with April 1, 1996
and ending with the quarterly period then ended, to be greater than the ratio
set forth opposite such period:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter n/a 3.25 3.25 2.25 1.40 1.00
Second Quarter 19.00 3.25 2.75 2.00 1.25 1.00
Third Quarter 5.60 3.25 2.50 1.75 1.10 1.00
Fourth Quarter 4.00 3.25 2.25 1.50 1.00 1.00
</TABLE>
(f) Consolidated Bank Debt to EBITDA Ratio. The
Borrower shall not permit the ratio of Consolidated Bank Debt to Consolidated
EBITDA for any four consecutive fiscal quarters of the Borrower (taken as one
accounting period) ended during any period set forth below provided that for the
first three of such calculations made after the date of this Amended Credit
Agreement, such calculations shall be done based upon the period commencing with
April 1, 1996 and ending with the quarterly period then ended, to be greater
than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter n/a 2.25 2.25 1.15 0.75 0.75
Second Quarter 12.00 2.25 1.75 1.00 0.75 0.75
Third Quarter 3.50 2.25 1.50 0.85 0.75 0.75
Fourth Quarter 2.75 2.25 1.25 0.75 0.75 0.75
</TABLE>
(g) Expansion Capital Expenditures. The Borrower
shall not make or incur (or commit to make or incur) and shall not permit any of
its Subsidiaries (other than the Joint Venture Subsidiaries) to make or incur
(or commit to make or incur) any Expansion Capital Expenditures, except
Expansion Capital Expenditures of the Borrower and its Subsidiaries (other than
the Joint Venture Subsidiaries and other than Phoenix) in any one fiscal year of
the Borrower set forth below not in excess in the aggregate of the amount set
forth below opposite such period:
<TABLE>
<CAPTION>
Period Maximum Amount
------ --------------
<S> <C>
April 1, 1996 through $10,000,000
December 31, 1996
Each fiscal year of the $7,000,000
Borrower thereafter
</TABLE>
; provided, however that, the Borrower and such Subsidiaries may carry forward
to Borrower's fiscal year 1997 the amount of Expansion Capital Expenditures
permitted to be made or committed to during the fiscal year of the
lxvii
<PAGE> 69
Borrower ending December 31, 1996 which have not been used for the period ending
December 31, 1996 in an amount not to exceed $3,000,000 in the aggregate.
(h) Maintenance Capital Expenditures. The Borrower
shall not make or incur (or commit to make or incur) and shall not permit its
Subsidiaries (other than the Joint Venture Subsidiaries) to make or incur (or
commit to make or incur) any Maintenance Capital Expenditures in an amount in
excess of the aggregate amount obtained by multiplying the number of individual
Restaurants of the Borrower and its Subsidiaries (other than the Joint Venture
Subsidiaries) by $10,000 in any fiscal year of the Borrower in the aggregate for
all Restaurants.
(i) Management Information System Capital
Expenditures. The Borrower shall not make or incur (or commit to make or incur)
and shall not permit its Subsidiaries to make or incur (or commit to make or
incur) any Management Information System Capital Expenditures in an amount in
excess of $1,000,000 in the aggregate during the first twenty-four months
following the Original Closing Date term of this Amended and Restated Credit
Agreement.
(j) Minimum Net Worth. At all times during the term
of this Amended and Restated Credit Agreement, Borrower shall maintain a minimum
net worth of $16,500,000.00, based on the book value of Borrower's shareholders'
equity, as determined in accordance with GAAP.
Section 7.2 Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume, suffer to exist or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness or Redeemable Stock, other than:
(a) Indebtedness hereunder and under the other Loan
Documents;
(b) Indebtedness outstanding on the Original Closing
Date and set forth on Schedule 7.2 hereto less the amount of any repayment,
prepayment or redemption of any such Indebtedness;
(c) Indebtedness incurred (i) under or with respect
to the Series B Subordinated Notes and the Series B Subordinated Note Indenture
in an aggregate principal amount not to exceed $18,250,000 less the amount of
any repayment, prepayment or redemption of any Series B Subordinated Note, (ii)
under or with respect to the Subordinated Promissory Note in an aggregate
principal amount not to exceed $15,000,000 (together with any accrued interest
thereon) less the amount of any repayment, prepayment or redemption thereof, and
(iii) Indebtedness the proceeds of which are used to refinance the Indebtedness
described in clause (ii) of this Section 7.2(c); provided that any such
Indebtedness (A) is in an aggregate principal amount not greater than the
principal amount of, and interest, fees and expenses accrued on, such
Indebtedness in respect of the Subordinated Promissory Note at the time of such
refinancing thereof, (B) is on terms (including maturity, amortization, interest
rate, premiums, fees, covenants, events of default and remedies) not less
favorable to the Borrower or more adverse to the Banks in each case as
determined by the Required Banks in their sole discretion than the terms of such
Indebtedness in respect of the Subordinated Promissory Note, and (C) is
subordinated in a manner and pursuant to subordination terms satisfactory to the
Required Banks as determined in their sole discretion;
(d) Indebtedness permitted under Section 7.6;
(e) Indebtedness of the Borrower of the type
described in clause (ix) of the definition of Indebtedness to the extent
required under Section 6.9;
(f) Indebtedness with respect to Capitalized Leases
and other purchase money Indebtedness, in each case incurred to finance
Capitalized Leases and Capital Expenditures, not in excess of $7,500,000 in
lxviii
<PAGE> 70
the aggregate per year; provided that any such Indebtedness shall not exceed
100% of the lesser of the purchase price or the fair market value of the asset
so financed;
(g) Non-current accounts payable which such Person is
contesting in good faith and by appropriate proceedings diligently conducted,
and with respect to which adequate reserves have been established, and are being
mainta ned, in accordance with GAAP; and
(h) Indebtedness in respect of the deferred payment
of insurance premiums, provided, that the aggregate amount of such premiums
which may be deferred in any fiscal year shall not exceed $2,000,000.
Section 7.3 Liens. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist,
directly or indirectly, any Lien on any of its property now owned or hereafter
acquired, other than:
(a) Liens existing on the Amendment Closing Date and
set forth on Schedule 7.3 hereto;
(b) Liens for taxes not delinquent or which are being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are being maintained in accordance with GAAP;
(c) Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law
(other than any Lien imposed by ERISA or pursuant to any Environmental Law)
created in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate bonds have been posted;
(d) Liens (other than any Lien imposed by ERISA or
pursuant to any Environmental Law) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(e) Easements, rights-of-way, zoning and similar
restrictions and other similar charges or encumbrances not interfering with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries and
which do not detract materially from the value of the property to which they
attach or impair materially the use thereof by the Borrower or any of its
Subsidiaries or materially adversely affect the security interests of the Agent
or the Banks therein;
(f) Liens granted to the Agent for the benefit of the
Banks pursuant to the Security Documents securing the Obligations;
(g) Liens created pursuant to Capitalized Leases and
to secure other purchase money Indebtedness permitted pursuant to Section
7.2(f), provided that such Liens are only in respect of the property or assets
subject to or purchased with, and secure only, the respective Capitalized Lease
Obligations or other purchase money Indebtedness;
(h) any Lien with respect to specific property
subject to any operating lease entered into by the Borrower or any of its
Subsidiaries which lease is permitted pursuant to Section 7.13; and
(i) any Lien granted to FFCA on the date hereof to
secure the Borrower's obligations to FFCA under the FFCA Real Property Leases.
lxix
<PAGE> 71
Section 7.4 Restriction on Fundamental Changes.
(a) The Borrower shall not, and shall not permit any
of its Subsidiaries (other than the Joint Venture Subsidiaries) to, enter into
any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), discontinue its business or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of transactions,
all or any substantial part of its business or property, whether now or
hereafter acquired, except (i) as otherwise permitted under Section 7.5, and
(ii) any wholly-owned Subsidiary of the Borrower may merge into or convey, sell,
lease or transfer all or substantially all of its assets to, the Borrower or any
other wholly-owned Subsidiary of the Borrower provided that in any such merger
involving the Borrower, the Borrower shall be the surviving corporation.
(b) The Borrower shall not, and shall not permit any
of its Subsidiaries (other than the Joint Venture Subsidiaries) to, (i) acquire
by purchase or otherwise any property or assets of, or stock or other evidence
of beneficial ownership of, any Person, except (A) in connection with the
Acquisition, (B) Capital Expenditures to the extent otherwise permitted by
Section 7.1(g) and 7.1(h), (C) Permitted Acquisitions, (D) for Restaurant
Acquisitions (other than pursuant to the BEP Acquisition), to the extent
permitted by the terms of the Subordinated Debt Financing Documents in an
aggregate amount not to exceed $1,000,000, (E) for Restaurant Acquisitions made
with common stock of the Borrower to the extent the issuance of such common
stock is permitted pursuant to Section 7.21(a)(iv), (F) purchases of inventory,
materials and supplies in the ordinary course of Borrower's or such Subsidiary's
business, and (G) in connection with the BEP Acquisition; (ii) create any
Subsidiary (other than in connection with the BEP Acquisition), (iii) enter into
any partnership or joint venture or (iv) have or hold less than 50% of the
voting control in any Joint Venture Subsidiary.
(c) Borrower shall not and shall not permit any of
its Subsidiaries to, amend its certificate of incorporation or by-laws,
partnership agreement or any joint venture or other similar corporate document
in any manner adverse to the interests of the Banks.
Section 7.5 Sale of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries (other than the Joint Venture Subsidiaries)
to, convey, lease, sublease, sell, transfer or otherwise dispose of (or agree to
do so at any future time) all or any part of its property or assets ("Asset
Dispositions"), except:
(a) sales of inventory in the ordinary course of
business;
(b) sales of equipment which is uneconomic, obsolete
or no longer useful in its business provided that the aggregate net book value
of all equipment so sold does not exceed $100,000 per fiscal year;
(c) Asset Dispositions which satisfy the following
conditions:
(i) the market value of assets sold or
otherwise disposed of in any single transaction or series of related
transactions does not exceed $100,000 and the aggregate market value of
assets sold or otherwise disposed of in any fiscal year does not exceed
$250,000;
(ii) the consideration received is at least
equal to the fair market value of such assets and at least 80% of the
consideration shall consist of cash;
(iii) if the consideration received is not
solely in cash, all non-cash consideration is pledged to the Agent
pursuant to documents satisfactory to the Agent so that the Agent has
received a first priority perfected security interest in such non-cash
consideration to secure the Obligations;
lxx
<PAGE> 72
(iv) the Net Sale Proceeds of such Asset
Disposition are applied as required by Section 2.13(a);
(v) after giving effect to the sale or other
disposition of the assets included within the Asset Disposition and the
repayment of Indebtedness with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section
7.1, recomputed for the most recently ended month for which information
is available and no Event of Default shall have occurred and be
continuing;
(vi) no Default or Event of Default shall
result from such sale or other disposition;
(d) Asset Dispositions permitted pursuant to Section
7.4(a)(ii);
(e) Asset Dispositions which constitute Restaurant
Closings; provided that each of the conditions specified in Section 7.5(c)(ii)
through (vi) above must be satisfied with respect to any such Restaurant
Closing;
(f) Asset Dispositions effected in connection with
the BEP Sale and Lease Transactions; and
(g) Asset Dispositions effected in connection with
the HA Divestiture.
Section 7.6 Contingent Obligations. The Borrower shall not,
and shall not permit any of its Subsidiaries to, create or become or be liable
with respect to any Contingent Obligation, except:
(a) pursuant to the Guaranty or the Security
Documents; and
(b) Contingent Obligations which are in existence on
the Amendment Closing Date and which are set forth on Schedule 7.6.
Section 7.7 Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries (other than the Joint Venture
Subsidiaries) to, directly or indirectly (i) declare or pay any dividends or
other distributions (other than dividends payable solely in common stock), or
return any capital to, its stockholders or owners or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders or
owners as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of any class of its capital stock or other equity
interest now or hereafter outstanding (or any options or warrants issued with
respect to its capital stock), or (ii) make 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 Subordinated Debt or set aside any funds for any of the foregoing
purposes (all the foregoing "Restricted Payments"), except that:
(a) dividends and distributions may be made to the
Borrower or any of its Subsidiaries by any of its wholly-owned Subsidiaries;
(b) so long as no Default or Event of Default exists
or shall result from the following, the Borrower may make the scheduled periodic
payments of interest under the Series B Subordinated Notes (as in effect on the
Amendment Closing Date) in accordance with the terms thereof, but subject to the
subordination provisions contained in the Series B Subordinated Note Indenture
and to the provisions contained in the Senior Subordinated Intercreditor
Agreement;
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<PAGE> 73
(c) subject to the subordination provisions of the
Senior Intercreditor Agreement, the Borrower may make the scheduled periodic
payments of interest under the Subordinated Promissory Note (as is in effect on
the Amendment Closing Date or as amended in accordance with the terms hereof) as
follows:
(i) in the event that after December 31,
1996 and prior to July 1, 1997, the Borrower has requested an advance
under the Delayed Draw Term Loan and each of the conditions required to
be satisfied pursuant to Section 2.3 has then been satisfied and the
Agent shall fail to approve the Borrower's use of the proceeds of the
Delayed Draw Term Loans to refinance the Subordinated Promissory Note
pursuant to Section 2.3 (a)(iii), Borrower shall be permitted to pay in
cash (if otherwise permitted pursuant to the terms and conditions of
this Agreement) all interest accrued on the Subordinated Promissory
Note up to and including June 30, 1997, and such interest rate may be
calculated at a rate that reflects an increase in the interest rate on
the Subordinated Promissory Note to fourteen percent (14%) per annum,
commencing on January 1, 1997, and continuing thereafter for the
remaining term of the Subordinated Promissory Note; and
(ii) in any event, the Borrower may,
commencing on April 1, 1997, make scheduled periodic payments of
interest in cash (if otherwise permitted pursuant to the terms and
conditions of this Agreement) under the Subordinated Promissory Note;
provided, however, that, except as provided in Section (i) hereof,
interest accrued and unpaid prior to April 1, 1997 shall be paid only
at such time as the Subordinated Promissory Note is paid in full and
cancelled; and
(d) so long as no Default or Event of Default then
exists or shall result from the following: (i) subject to the subordination
provisions contained in the Senior Intercreditor Agreement, the Borrower may
prepay the Subordinated Promissory Note (1) with the proceeds of Indebtedness
permitted to be incurred pursuant to Section 7.2(c)(iii) only to the extent such
Indebtedness is permitted to be incurred pursuant to Section 7.2(c)(iii), (2)
with proceeds of the Delayed Draw Term Loans subject to the conditions set forth
in Section 2.3, (3) with Net Equity Proceeds to the extent that such Net Equity
Proceeds are not required to be applied to a prepayment of the Loans pursuant to
Section 2.13(b), (4) with Net Sale Proceeds if the Banks waive the mandatory
prepayment requirements under Section 2.13(a) hereof and (5) with the proceeds
of the disposition of the Michigan Avenue Location, and (ii) so long as the
Subordinated Promissory Note has been paid in full and cancelled, the Borrower
may redeem the Series B Subordinated Notes in accordance with the Series B
Subordinated Note Indenture and subject to the subordination provisions
contained in the Series B Subordinated Note Indenture (1) with proceeds of the
Delayed Draw Term Loans subject to the conditions set forth in Section 2.3, and
(2) with Net Equity Proceeds to the extent that such Net Equity Proceeds are not
required to be applied to a prepayment of the Loans pursuant to Section 2.13(b);
and
(e) the Borrower may issue Subordinated Debt Warrants
in connection with the BEP Acquisition, so long as such Subordinated Debt
Warrants do not grant in the aggregate an interest in the capital stock of the
Borrower in excess of 8.5% of the total capital stock of the Borrower (as
initially calculated under the terms of the Unigate Warrant as in effect on the
date hereof).
Section 7.8 Advances, Investments and Loans. The Borrower
shall not, and shall not permit any of its Subsidiaries to, lend money or credit
or make advances to any Person, or directly or indirectly purchase, acquire or
own any stock, obligations or securities of, or any partnership interest
(whether general or limited) or beneficial interest in, or any other debt or
equity interest in or any other interest in, or make any capital contribution to
or other investment in, any Person, or permit to exist or remain outstanding any
of the foregoing, except that the following shall be permitted:
lxxii
<PAGE> 74
(a) accounts receivable owned by the Borrower and its
Subsidiaries, if created in the ordinary course of the business of the Borrower
and its Subsidiaries and payable or dischargeable in accordance with customary
trade terms;
(b) loans and advances to the Borrower by any of its
Subsidiaries;
(c) loans, advances and investments existing on the
Original Closing Date and identified on Schedule 7.8 hereof in an amount not
greater than the amount thereof on the Original Closing Date;
(d) loans and advances made after the Original
Closing Date by the Borrower to Phoenix not to exceed $100,000 in the aggregate
at any one time outstanding;
(e) loans and advances by the Borrower and its
Subsidiaries to their employees in the ordinary course of its business not
exceeding $500,000 in the aggregate at any time outstanding prior to the first
anniversary after the Original Closing Date or $350,000 in the aggregate at any
time outstanding from or after the first anniversary of the Original Closing
Date;
(f) Restaurant Acquisitions permitted pursuant to
Sections 7.4(b)(i)(D) and 7.4(b)(i)(E) and Permitted Acquisitions;
(g) the Borrower and its Subsidiaries may acquire and
hold Cash Equivalents and may maintain the bank accounts permitted pursuant to
Section 6.10 hereof;
(h) the BEP Acquisition;
(i) moneys owed the Borrower under the HA Note; and
(j) intercompany debt incurred pursuant to the terms
of the Drop-Down Documents.
Section 7.9 Transactions with Affiliates. The Borrower shall
not, and shall not permit any of its Subsidiaries to, (i) enter into any
transaction or series of related transactions (including any investments, loans
or advances by or to any Affiliate), whether or not in the ordinary course of
business, with any Affiliate, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable at the
time in a comparable arm's-length transaction with a Person other than an
Affiliate and the terms of which in good faith are fair and reasonable to the
Borrower or such Subsidiary or pursuant to the terms of the Drop-Down Documents,
(ii) enter into any Lease with any Affiliate (excluding, however, the BEP Sale
and Lease Transactions), or (iii) enter into any transaction or series of
related transactions with LH Leasing (excluding, however, the BEP Sale and Lease
Transactions). Notwithstanding the foregoing, Restricted Payments which are
expressly permitted pursuant to Section 7.7 hereof shall not be deemed to be
transactions with Affiliates and shall not be prohibited by this Section 7.9.
Section 7.10 Limitation on Modifications of Certain Documents.
The Borrower shall not, and shall not permit any of its Subsidiaries to amend,
modify or waive, or permit the amendment, modification or waiver of, (i) any
material provision of any Acquisition Document (other than any Subordinated Debt
Financing Document) in any manner which, in the reasonable opinion of the
Required Banks, would adversely effect the interests of the Agent and the Banks,
(ii) any term or condition of any LH Leasing/FFCA Lease, the effect of which
would be (A) to increase the total amount of any or all lease payments, the
amount of fees payable thereunder, if any, the lease rate factor, the purchase
price of any equipment that is the subject thereof, or the term of the lease or
(B) to cause a Material Adverse Effect, or (iii) any provision of any
Subordinated Debt Financing Document other than amendments, modifications or
waivers which (w) decrease the rate of interest payable on the Subordinated
Promissory Note or the Series B Subordinated Notes, (x) provide for the
extension of the maturity
lxxiii
<PAGE> 75
date with respect to any principal or interest payment to be made under any of
the Subordinated Notes, (y) provide more flexibility to the Borrower in
connection with any covenants or (z) waive any defaults existing in connection
with any Subordinated Debt; provided that in no event shall the Borrower consent
to any amendments, waivers or modifications of the Series B Subordinated Note
Indenture or Article II of the Senior Intercreditor Agreement or any mandatory
redemption provision or other payment term (except as provided in clause (x)
above) contained in any Subordinated Debt Financing Document; provided further,
however, that Borrower may amend or modify such Subordinated Debt Financing
Documents in connection with effecting the BEP Acquisition to the extent not
inconsistent with the foregoing.
Section 7.11 Changes in Business. The Borrower shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
the business of owning, leasing, operating, developing, re-imaging and acquiring
restaurants and restaurant franchises provided that at least forty-five percent
(45%) of such restaurants are and shall be Denny's restaurants and at least
twenty-five percent (25%) of such restaurants are and shall be BEP Restaurants.
Section 7.12 Certain Restrictions. The Borrower shall not, and
shall not permit any of its Subsidiaries or any Person controlling the Borrower
to, enter into any agreement (other than the Transaction Documents as in effect
on the Original Closing Date, the BEP Acquisition Documents and the documents
required pursuant to the BEP Sale and Lease Transaction) which restricts the
ability of the Borrower or any of its Subsidiaries to (a) enter into amendments,
modifications or waivers of the Loan Documents, (b) sell, transfer or otherwise
dispose of its assets, (c) create, incur, assume or suffer to exist any Lien
upon any of its property, (d) create, incur, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness, or (e) make any
Restricted Payment to the Borrower or any of its Subsidiaries, provided that
Capital Leases or agreements governing purchase money Indebtedness which contain
restrictions of the types referred to in clauses (b) or (c) with respect to the
property covered thereby shall be permitted.
Section 7.13 Lease Payments. The Borrower shall not, and shall
not permit any of its Subsidiaries to, incur, assume or suffer to exist, any
obligation for payments under operating leases whether for real or personal or
mixed property (including, without limitation, rental payments and payments of
taxes thereunder), except that (i) the Borrower and its Subsidiaries may incur
rental payment obligations pursuant to the LH Leasing/FFCA Leases and (ii) the
Borrower and its Subsidiaries may incur rental payment obligations (other than
the rental obligations referred to in clause (i) of this section) not to exceed
in the aggregate an amount equal to 10% of Consolidated Net Revenue in any
fiscal year; provided that any unused portion in any fiscal year may not be
carried over to any succeeding fiscal year.
Section 7.14 Sale and Leasebacks. The Borrower shall not, and
shall not permit any of its Subsidiaries to, become liable, directly or
indirectly, with respect to any lease, whether an operating lease or a Capital
Lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired, (i) which the Borrower or such Subsidiary has sold or
transferred or is to sell or transfer to any other Person, or (ii) which the
Borrower or such Subsidiary intends to use for substantially the same purposes
as any other property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to any other Person in connection with such lease
except that the Borrower and its Subsidiaries may enter into such transactions
described in the foregoing clauses (i) and (ii) so long as the Borrower or such
Subsidiary sells or transfers such property substantially contemporaneously with
the acquisition of such property.
Section 7.15 Plans. The Borrower shall not, nor shall it
permit any member of its ERISA Controlled Group to, take any action which would
increase the aggregate present value of the Unfunded Benefit Liabilities under
all Plans to an amount in excess of $100,000.
Section 7.16 Fiscal Year; Fiscal Quarter. The Borrower shall
not, and shall not permit any of its Subsidiaries to, change its fiscal year or
any of its fiscal quarters other than to a calendar year.
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<PAGE> 76
Section 7.17 Restaurant Closing Costs. The Borrower shall not,
and shall not permit any of its Subsidiaries (other than the Joint Venture
Subsidiaries) to incur Restaurant Closing Costs in excess of $3,500,000 in the
aggregate.
Section 7.18 No Additional Bank Accounts. Except as provided
in Section 6.10, the Borrower shall not and shall not permit any of its
Subsidiaries (other than the Joint Venture Subsidiaries) to open, maintain or
otherwise have any bank accounts.
Section 7.19 Real Property. Except as provided in Schedule
7.19 or in connection with the BEP Acquisition, the Borrower shall not, and
shall not permit any of its Subsidiaries to, acquire, by purchase or otherwise,
any fee interest in real property except pursuant to sale and lease transactions
permitted pursuant to Section 7.14.
Section 7.20 New Store Limitations. The Borrower shall not
open, build and/or develop more than fifteen (15) new Denny's or BEP Restaurants
(in the aggregate) in any fiscal year of the Borrower. The Borrower shall not
permit any of its Subsidiaries (other than the Joint Venture Subsidiaries only
with respect to Denny's restaurants and the BEP Entities) to open, build and/or
develop any new restaurants.
Section 7.21 Issuance of Equity Securities.
(a) The Borrower shall not, and shall not permit any
of its Subsidiaries (other than the Joint Venture Subsidiaries) to, issue, sell,
give away, transfer or assign any Equity Interests, except:
(i) the issuance of common stock or warrants
to acquire common stock to (A) the holders of Warrants upon exercise
thereof in accordance with the terms thereof as in effect on the
Original Closing Date, and (B) holders of the Unit Purchase Options
upon exercise thereof in accordance with the terms thereof as in effect
on the Original Closing Date;
(ii) the issuance of employee stock options
to employees or directors of the Borrower or any of its Subsidiaries
pursuant to an employee stock option plan approved by the Board of
Directors of the Borrower, and the issuance of shares of common stock
of the Borrower upon exercise of such options in accordance with the
terms thereof;
(iii) the issuance and sale by the Borrower
of Capital Stock of the Borrower (other than Redeemable Stock) in one
or more underwritten public offerings or private placements; provided
that (A) prior to and after giving effect to such issuance of Capital
Stock, no Event of Default shall be continuing, (B) the consideration
received by the Borrower from such issuance of Capital Stock consists
solely of cash, and (C) all of the Net Equity Proceeds of such issuance
of Capital Stock are used by the Borrower as set forth in Section
2.13(b); and
(iv) the issuance of common stock of the
Borrower to make Restaurant Acquisitions; provided that the aggregate
value of all common stock of the Borrower issued from and after the
Original Closing Date to make such Restaurant Acquisitions shall not
exceed $10,000,000. For purposes of this clause (iv), the value of
common stock of the Borrower issued in connection with any Restaurant
Acquisition shall be the average trading price for common stock of the
Borrower on a national securities exchange as of the close of trading
for the ten (10) trading days immediately preceding the date of such
Restaurant Acquisition;
(v) any pledge of Capital Stock to secure
obligations under the Loan Documents; and
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(vi) the issuance of warrants in connection
with the BEP Acquisition in accordance with Section 7.7(e).
Section 7.22 New Franchise Agreements. The Borrower will not,
and will not permit any of its Subsidiaries (other than the Joint Venture
Subsidiaries) to, enter into any Franchise Agreement after the Original Closing
Date unless such Franchise Agreement contains a right of the franchisor party
thereto to terminate such Franchise Agreement on the same terms as those
contained in that certain Omnibus Amendment Agreement dated as of February 29,
1996 among Denny's, Inc., the Borrowers and each of its Subsidiaries.
Section 7.23 Subsidiaries Other Than BEP Entities. The
Borrower will not and will not permit any of its Subsidiaries to engage in the
following with respect to any Subsidiary of BEP that is not a BEP Entity:
(a) Make any loan, investment, capital contribution,
or other similar disbursement of any kind, whether in cash or otherwise, to any
such Subsidiary;
(b) Engage in any transaction of any kind with any
such Subsidiary, as more fully described in Section 7.9 hereof;
(c) Permit any such Subsidiary to engage in any
business or activity, or hold or acquire any cash, assets, or other property
other than the business, activity, cash, assets, or other property described in
Schedule 7.23 hereof with regard to such Subsidiary.
(d) Sell, assign, transfer, or otherwise dispose of
any assets in any manner other than as the result of an activity permitted
pursuant to Section 7.4(a) hereof.
SECTION 8. EVENTS OF DEFAULT.
Section 8.1 Events of Default. Each of the following events,
acts, occurrences or conditions shall constitute an Event of Default under this
Amended Credit Agreement, regardless of whether such event, act, occurrence or
condition is voluntary or involuntary or results from the operation of law or
pursuant to or as a result of compliance by any Person with any judgment,
decree, order, rule or regulation of any court or administrative or governmental
body:
(a) Failure to Make Payments. The Borrower shall (i)
default in the payment when due of any principal of the Loans or (ii) default,
and such default shall continue unremedied for five (5) or more Business Days,
in the payment when due of any interest on the Loans or in the payment when due
of any Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any
representation or warranty made by any Loan Party herein or in any other Loan
Document or in any certificate or statement delivered pursuant hereto or thereto
shall prove to be false or misleading in any material respect on the date as of
which made or deemed made.
(c) Breach of Covenants.
(i) The Borrower shall fail to perform or
observe any agreement, covenant or obligation arising under Sections
6.1(g)(i) or 7.
(ii) The Borrower shall fail to perform or
observe any agreement, covenant or obligation arising under this
Amended Credit Agreement or any other Loan Document (except those
described in subsections (a), (b) and (c)(i) above), and such failure
shall continue for thirty (30) days.
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(d) Default Under Other Agreements. The Borrower or
any of its Subsidiaries (i) shall default in the payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) of
any Indebtedness of the Borrower or any of its Subsidiaries (other than the
Obligations) in excess of $1,000,000 in the aggregate, or (ii) shall default in
the performance or observance of any obligation or condition with respect to any
such Indebtedness, or any other event shall occur or condition exist, if the
effect of such default, event or condition is to accelerate the maturity of any
such Indebtedness, or to permit (without regard to any required notice or lapse
of time under any agreement with respect to any such Indebtedness) the holder or
holders thereof, or any trustee or agent for such holders, to accelerate the
maturity of any such Indebtedness, or any such Indebtedness shall become or be
declared to be due and payable, or shall be required to be prepaid, redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness or leasehold interest shall be required to be made.
(e) Bankruptcy, etc. (i) Any Loan Party shall
commence a voluntary case concerning itself under the Bankruptcy Code; or (ii)
an involuntary case is commenced against any Loan Party and the petition is not
controverted within 10 days, or is not dismissed within 30 days, after
commencement of the case; or (iii) a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of any Loan Party or any Loan Party commences any other proceedings
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to any Loan Party or there is
commenced against any Loan Party any such proceeding which remains undismissed
for a period of 30 days; or (iv) any order of relief or other order approving
any such case or proceeding is entered; or (v) any Loan Party is adjudicated
insolvent or bankrupt; or (vi) any Loan Party suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 30 days; or (vii) any Loan Party makes
a general assignment for the benefit of creditors; or (viii) any Loan Party
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; or (ix) any Loan Party shall
call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or (x) any Loan Party shall by any act or failure to
act consent to, approve of or acquiesce in any of the foregoing; or (xi) any
corporate action is taken by any Loan Party for the purpose of effecting any of
the foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or
(ii) any Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived or (iii)
the Borrower or a member of its ERISA Controlled Group shall have engaged in a
transaction which is prohibited under Section 4975 of the Code or Section 406 of
ERISA which could result in the imposition of liability in excess of $100,000 on
the Borrower or any member of its ERISA Controlled Group, or (iv) the Borrower
or any member of its ERISA Controlled Group shall fail to pay when due an amount
which it shall have become liable to pay to the PBGC, any Plan or a trust
established under Title IV of ERISA, or (v) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that an ERISA
Plan must be terminated or have a trustee appointed to administer any ERISA
Plan, or (vi) the Borrower or a member of its ERISA Controlled Group suffers a
partial or complete withdrawal from a Multiemployer Plan or is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan, or (vii) a proceeding shall be instituted against the
Borrower or any member of its ERISA Controlled Group to enforce Section 515 of
ERISA, or (viii) except with respect to required contributions, any other event
or condition shall occur or exist with respect to any Plan which could subject
the Borrower or any member of its ERISA Controlled Group to any tax, penalty or
other liability in excess of $100,000.
(g) Security Documents. At any time for any reason
other than the sole action or inaction of the Agent or any of the Banks, any of
the Security Documents shall for any reason cease to be in full force and
effect, or shall cease to give the Agent the Liens, rights, powers and
privileges purported to be created thereby including, without limitation, a
perfected first priority security interest in, and, except as otherwise
expressly permitted by the Loan Documents, Lien on, any material part of the
Collateral in accordance with the terms thereof.
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(h) Guaranty. The Guaranty shall cease to be in full
force and effect, or the Guarantor or any Person acting by or on behalf of the
Guarantor shall deny or disaffirm all or any portion of the Guarantor's
obligations under such Guaranty.
(i) Change of Control. (a) An event or series of
events occurs by which any Person or group (as defined under Rule 13d-3 under
the Exchange Act) (other than any Permitted Holder) is or becomes the beneficial
owner (as defined under Rule 13d-3 under the Exchange Act) directly or
indirectly of (i) more than 50% of the combined voting power of the then
outstanding securities of the Borrower (on a fully-diluted basis as if all
convertible securities and other rights had been converted or exercised)
ordinarily having the right to vote in the election of directors, or (ii) more
than 20% of the combined voting power of the then outstanding securities of the
Borrower (on a fully-diluted basis as if all convertible securities and other
rights had been converted or exercised) ordinarily having the right to vote in
the election of directors, if such Person or group has the ability to elect,
directly or indirectly, a majority of the members of the Board of Directors of
the Borrower, (b) an event or series of events occurs by which Jack Lloyd shall
cease to own and control, with the power to vote, in the aggregate at least 90%
of the combined voting power of the then outstanding securities of the Borrower
owned by Jack Lloyd immediately following the closing of the Merger (on a
fully-diluted basis as if all convertible securities and other rights had been
converted or exercised) ordinarily having the right to vote in the election of
directors, (c) the employment of Jack Lloyd as President and Chief Executive
Officer of the Borrower is terminated for any reason, (d) a majority of the
Board of Directors of the Borrower over a two-year period from the directors who
constituted the Board of Directors at the beginning of such period are replaced,
which replacement shall not have been approved (i) by the Board of Directors as
so constituted at the beginning of such period or (ii) by directors whose
nomination for election by the shareholders of the Borrower was approved by such
Board of Directors or (iii) by directors elected by such Board of Directors or
(iv) by directors approved in the same manner as (i), (ii) or (iii) above that
were nominated or elected by directors approved as set forth in (i), (ii) or
(iii) above, or (e) Jack Lloyd and Bill Howard shall cease to own 100% of the
combined voting power of the then-outstanding securities of LH Leasing.
(j) Management Group Stock Ownership. Any of Jack
Lloyd, Jeffrey Miller or William Howard shall cease to own or control any of the
shares of capital stock of the Borrower owned by such member on the Original
Closing Date during the period commencing on the Original Closing Date and
ending one year thereafter.
(k) Judgments. One or more judgments or decrees in an
aggregate amount of $1,000,000 or more shall be entered by a court or courts of
competent jurisdiction against any of the Borrower or any of its Subsidiaries
(other than any judgment as to which, and only to the extent that, a reputable
insurance company has acknowledged coverage of such claim in writing) and any
such judgments or decrees shall not be stayed, discharged, paid, bonded or
vacated within 30 days after entry thereof or, in any event, shall remain
unstayed, undischarged, unpaid, unbonded or unvacated later than 15 days prior
to the date of any proposed sale or shall not have been discharged within 30
days after the expiration of such stay.
(l) Environmental Matters. (i) Any Environmental
Claim shall have been asserted against any Loan Party or any Environmental
Affiliate thereof which could reasonably be expected to have a Material Adverse
Effect, (ii) any release, emission, discharge or disposal of any Material of
Environmental Concern shall have occurred in violation of law, and such event
could form the basis of an Environmental Claim against any Loan Party or any
Environmental Affiliate thereof which could reasonably be expected to have a
Material Adverse Effect, or (iii) any Loan Party or its Environmental Affiliate
shall have failed to obtain any Environmental Approval Necessary for the
management, use, control, ownership, or operation of its business, property or
assets or any such Environmental Approval shall be revoked, terminated, or
otherwise cease to be in full force and effect, in each case, if the existence
of such condition could reasonably be expected to have a Material Adverse
Effect.
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(m) Material Adverse Change. Any event, act or
condition shall occur which has had or could reasonably be expected to have, in
each case in the judgment of the Required Banks, a Material Adverse Effect.
(n) Franchise and Lease Agreements. (i) Any default
by the Borrower or any Subsidiary of the Borrower (other than the Joint Venture
Subsidiaries) in the payment, performance or observance of any condition or
obligation shall occur under or any event of default in respect of the
Borrower's or such Subsidiary's action or inaction shall occur under (A) any LH
Leasing/FFCA Lease which default is not cured within the time period provided in
such lease, (B) under any Lease (excluding FFCA Leases) by the lessor of such
property if any such defaults or events of default individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect, (C)
any Franchise Agreement or Franchisor Agreement if any such defaults or events
of default, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect; (ii) any Franchise Agreement or Franchisor
Agreement shall terminate or be terminated prior to its respective stated
expiration date (except to the extent a Franchise Agreement or Franchisor
Agreement is terminated in connection with an Asset Disposition permitted
pursuant to Section 7.5 hereof) , or any event, act or condition shall occur
that would permit such termination if any such termination or terminations or
events, acts or conditions, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect; (iii) any LH Leasing/FFCA Lease
shall terminate or be terminated prior to its respective stated expiration date;
or (iv) any term of any Franchise Agreement or Franchisor Agreement shall be
amended or modified in any respect which, or shall be renewed on terms which,
are not substantially as favorable to the Borrower and its Subsidiaries as those
terms that exist on the Original Closing Date (or, in the case of BEP and its
Subsidiaries, on the Amendment Closing Date) if any such amendments,
modifications or renewals individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
(o) Management Services Agreement. If (i) the
Management Services Agreement shall cease to be in full force and effect or any
party thereto (other than the Agent) shall deny or disaffirm all or any portion
of its obligations thereunder or the Management Services Agreement shall be
terminated prior to its expiration date and (ii) the Management Services
Agreement is not replaced with substitute contractual arrangements or other
accommodations acceptable to the Agent and the Banks which provides the Banks
with substantially equivalent protection as the Management Services Agreement.
(p) Changes in LH Leasing. There shall be any
amendment, modification, or waiver of any provision of Articles 2, 7, or 14 of
the LH Leasing Articles of Incorporation or Sections 3.02. 3.11 or 5.07 of the
LH Leasing By-laws without the prior written consent of the Agent in a manner
adverse to the interests of the Banks, or LH Leasing shall cease to have a
minimum of one independent director.
Section 8.2 Rights and Remedies. Upon the occurrence of any
Event of Default described in Section 8.1(e), the Commitments shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentation,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by Borrower, and the obligation of each Bank to make any Loan
hereunder shall thereupon terminate; and upon the occurrence and during the
continuance of any other Event of Default, the Agent shall at the request, or
may with the consent, of the Required Banks, by written notice to Borrower, (i)
declare that the Commitments are terminated, whereupon the Commitments and the
obligation of each Bank to make any Loan hereunder shall immediately terminate,
and (ii) require the Borrower to deposit with the Agent Cash Collateral in an
amount equal to the maximum aggregate amount that is, or at any time thereafter
may become, available for drawing under any outstanding Letters of Credit
(whether or not any beneficiary shall have presented, or shall be entitled at
such time to present, the drafts or other documents required to draw under such
Letters of Credit), and declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans and
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any and all accrued Fees and other Obligations to be, and the same shall
thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower; provided that events described in Section 8.1(o) shall constitute an
Event of Default under this Amended Credit Agreement only after the Borrower and
the Agent have used best efforts for a reasonable period of time to find
substitute contractual arrangements or other accommodations acceptable to the
Agent and the Banks described therein.
SECTION 9. THE AGENT.
Section 9.1 Appointment. Each Bank hereby irrevocably
designates and appoints Banque Paribas as the Agent of such Bank under this
Amended Credit Agreement and each other Loan Document, and each such Bank
irrevocably authorizes Banque Paribas as the Agent for such Bank, to take such
action on its behalf under the provisions of this Amended Credit Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of this Amended Credit
Agreement and each other Loan Document, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Amended Credit Agreement, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
shall be read into this Amended Credit Agreement or otherwise exist against the
Agent. The provisions of this Section 9 are solely for the benefit of the Agent
and the Banks and no Loan Party shall have any rights as a third party
beneficiary or otherwise under any of the provisions hereof. In performing its
functions and duties hereunder and under the other Loan Documents, the Agent
shall act solely as the agent of the Banks and does not assume nor shall be
deemed to have assumed any obligation or relationship of trust or agency with or
for any Loan Party or any of their respective successors and assigns.
Section 9.2 Delegation of Duties. The Agent may execute any of
its duties under this Amended Credit Agreement or the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct or any agents or attorneys-in-fact
selected by it with reasonable care.
Section 9.3 Exculpatory Provisions. The Agent shall not be (i)
liable for any action lawfully taken or omitted to be taken by it or any Person
described in Section 9.2 under or in connection with this Amended Credit
Agreement or any other Loan Document (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to any of
the Banks for any recitals, statements, representations or warranties made by
any Loan Party contained in this Amended Credit Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received under or in connection with, this Amended Credit
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Amended Credit Agreement, or
any other Loan Document or for any failure of any Loan Party to perform their
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Amended Credit
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party. This Section is intended solely to govern the
relationship between the Agent, on the one hand, and the Banks, on the other.
Section 9.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
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 any Loan
Party), independent accountants and other
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experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless the Agent shall have received
an executed Transfer Supplement in respect thereof. The Agent shall be fully
justified in failing or refusing to take any action under this Amended Credit
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Amended Credit Agreement and the other
Loan Documents in accordance with a request of the Required Banks, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Banks and all future holders of the Notes. The Agent shall act or
refrain from taking any action under or with respect to the Management Services
Agreement in accordance with requests from the Required Banks and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Banks and all future holders of the Notes.
Section 9.5 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Agent has received notice from a Bank or the Borrower referring to
this Amended Credit Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks. The Agent shall take such action with respect to such Default or Event of
Default as shall be directed by the Required Banks; provided that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as the Agent shall deem advisable
and in the best interests of the Banks.
Section 9.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent, nor 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 Agent hereafter
taken, including, without limitation, any review of the affairs of any Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Bank represents and warrants to the Agent that it has, independently
and without reliance upon the Agent or any other Bank 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 Loan Parties and made
its own decision to make its Loans hereunder and enter into this Amended Credit
Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Amended Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, prospects,
financial and other condition and creditworthiness of the Loan Parties. Except
for notices, reports and other documents expressly required under the Loan
Documents to be furnished to the Banks by the Agent, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, prospects, financial
and other condition or creditworthiness of the Loan Parties which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
Section 9.7 Indemnification. The Banks agree to indemnify the
Agent and its officers, directors, employees, representatives and agents (to the
extent not reimbursed by the Loan Parties and without limiting the obligation of
the Loan Parties to do so), ratably according to their Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, the fees and disbursements of
counsel for the Agent or such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
the Agent or such Person shall be designated a party thereto) that may at any
time (including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Agent or such
Person as a result of, or arising out of, or in any way related to or by reason
of, (i) any of the Transactions or the Amendment Transactions or the execution,
delivery or performance of any Loan
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Document or any other Transaction Document or Amendment Transaction Document or
(ii) the Management Services Agreement or the execution or delivery by the Agent
of the Management Services Agreement or the performance of its obligations
thereunder or in connection therewith (but excluding any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the gross negligence or willful
misconduct of the Agent or such Person as finally determined by a court of
competent jurisdiction).
Section 9.8 Agent in its Individual Capacity. The Agent and
its affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Loan Parties as though the Agent were not the
Agent hereunder. With respect to Loans made or renewed by it and any Note issued
to it, the Agent shall have the same rights and powers under this Amended Credit
Agreement as any Bank and may exercise the same as though it were not the Agent,
and the terms "Bank" and "Banks" shall include the Agent in its individual
capacity.
Section 9.9 Successor Agent. The Agent may resign as Agent
upon 30 days' notice to the Borrower and the Banks. If the Agent shall resign as
Agent under this Amended Credit Agreement, then the Required Banks during such
30-day period shall appoint from among the Banks a successor agent, whereupon
such successor agent shall succeed to the rights, powers and duties of the Agent
and the term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Amended Credit Agreement or any holders of
the Notes. Notwithstanding anything herein to the contrary, so long as no Event
of Default shall have occurred and be continuing, the appointment of each
successor Agent shall be subject to the approval by the Borrower, which approval
shall not be unreasonably withheld or delayed. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 9 and Section
10.1 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Amended Credit Agreement.
SECTION 10. MISCELLANEOUS.
Section 10.1 Payment of Expenses, Indemnity, etc. The Borrower
shall:
(a) whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation, preparation, execution
and delivery of the Loan Documents and the documents and instruments referred to
therein, the creation, perfection or protection of the Agent's Liens in the
Collateral (including, without limitation, fees and expenses for lien searches
and filing and recording fees), and any amendment, waiver or consent relating to
any of the Loan Documents (including, without limitation, as to each of the
foregoing, the reasonable fees and disbursements of Skadden, Arps, Slate,
Meagher & Flom, special counsel to the Agent and any other attorneys retained by
the Agent) and of the Agent and each Bank in connection with the preservation of
rights under, and enforcement of, the Loan Documents and the documents and
instruments referred to therein or in connection with any restructuring or
rescheduling of the Obligations (including, without limitation, the reasonable
fees and disbursements of counsel for the Agent and for each of the Banks);
(b) pay, and hold the Agent and each of the Banks
harmless from and against, any and all present and future stamp, excise and
other similar taxes with respect to the foregoing matters and hold the Agent and
each Bank harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
the Agent or such Bank) to pay such taxes to the extent not prohibited by law;
and
(c) indemnify the Agent and each Bank, its officers,
directors, employees, representatives and agents (each an "Indemnitee") from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of
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any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of, (i)
any of the Transactions or the Amendment Transactions or the execution, delivery
or performance of any Loan Document or any other Transaction Document or
Amendment Transaction Document, (ii) any violation by any Loan Party or its
Environmental Affiliate of any applicable Environmental Law, (iii) any
Environmental Claim arising out of the management, use, control, ownership or
operation of property or assets by any of the Loan Parties or any of their
Environmental Affiliates, including, without limitation, all on-site and
off-site activities involving Materials of Environmental Concern, (iv) the
breach of any environmental representation or warranty set forth in Section
5.19, (v) the grant to the Agent and the Banks of any Lien in any property or
assets of any of the Loan Parties or any stock or other equity interest in any
of the Loan Parties, and (vi) the exercise by the Agent and the Banks of their
rights and remedies (including, without limitation, foreclosure) under any
agreements creating any such Lien (but excluding, as to any Indemnitee, any such
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements to the extent incurred solely by reason
of the gross negligence or willful misconduct of such Indemnitee as finally
determined by a court of competent jurisdiction). The Borrower's obligations
under this Section shall survive the termination of this Amended Credit
Agreement and the payment of the Obligations.
Section 10.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to any
Loan Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Bank (including, without limitation, by branches and
agencies of such Bank wherever located) to or for the credit or the account of
any Loan Party against and on account of the Obligations of the Loan Parties to
such Bank under this Amended Credit Agreement or under any of the other Loan
Documents, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 10.7, and all other claims of any nature or
description arising out of or connected with this Amended Credit Agreement or
any other Loan Document, irrespective of whether or not such Bank shall have
made any demand hereunder and although said Obligations, liabilities or claims,
or any of them, shall be contingent or unmatured.
Section 10.3 Notices. Except as otherwise expressly provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy, telex, or
cable communication), and shall be deemed to have been duly given or made when
delivered by hand, or when received after being deposited in the United States
mail, postage prepaid, or, in the case of telex notice, when sent, answer back
received, or, in the case of telecopy notice, when sent, or, in the case of a
nationally recognized overnight courier service, one Business Day after delivery
to such courier service, addressed, in the case of each party hereto, at its
address specified opposite its signature below or on the appropriate Transfer
Supplement, or to such other address as may be designated by any party in a
written notice to the other parties hereto.
Section 10.4 Successors and Assigns; Participation;
Assignments.
(a) Successors and Assigns. This Amended Credit
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Banks, the Agent, all future holders of the Notes and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Amended Credit Agreement without the
prior written consent of each Bank. No Bank may participate, assign or sell any
of its Credit Exposure (as defined in clause (b) below) except as required by
operation of law, in connection with the merger, consolidation or dissolution of
any Bank or as provided in this Section 10.4.
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(b) Participation. Any Bank may at any time sell to
one or more Persons (each a "Participant") participating interests in any Loan
owing to such Bank, any Note held by such Bank, any Commitment of such Bank and
or any other interest of such Bank hereunder (in respect of any such Bank, its
"Credit Exposure"). Notwithstanding any such sale by a Bank of participating
interests to a Participant, such Bank's rights and obligations under this
Amended Credit Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note for all purposes under this Amended Credit Agreement (except as
expressly provided below), and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Amended Credit Agreement. The Borrower agrees that if any
Obligations are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence and during the continuance of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Amended Credit
Agreement and any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Amended Credit Agreement
or any Note, provided that such right of setoff shall be subject to the
obligations of such Participant to share with the Banks, and the Banks agree to
share with such Participant, as provided in Section 10.7. The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.17,
2.18 and 2.19. Each Bank agrees that any agreement between such Bank and any
such Participant in respect of such participating interest shall not restrict
such Bank's right to agree to any amendment, supplement, waiver or modification
to this Amended Credit Agreement or any other Loan Document, except where the
result of any of the foregoing would be to extend the final maturity of any
Obligation or any regularly scheduled installment thereof or reduce the rate or
extend the time of payment of interest thereon or reduce the principal amount
thereof or release all or substantially all of the Collateral (except as
expressly provided in the Loan Documents).
(c) Assignments. Any Bank may, in the ordinary course
of its business and in accordance with applicable law, at any time assign to any
Bank or any affiliate thereof or, with the consent of the Agent, to any other
Person (each an "Assignee") all or any part of its Credit Exposure; provided,
that in the case of any such assignment to a Person that is not another Bank or
an affiliate of the assigning Bank, each such assignment shall be (i) for a
Credit Exposure not less than $5,000,000 and (ii) to an Assignee approved in
writing by the Agent and the Borrower (which approval shall not be unreasonably
withheld). Such consents of the Agent and the Borrower shall be substantially in
the form attached as Schedule II to Exhibit L hereto. The Borrower, the Agent
and the Banks agree that to the extent of any assignment the Assignee shall be
deemed to have the same rights and benefits under the Loan Documents and the
same rights of setoff and obligation to share pursuant to Section 10.7 as it
would have had if it were a Bank hereunder; provided that the Borrower and the
Agent shall be entitled to continue to deal solely and directly with the
assignor Bank in connection with the interests so assigned to the Assignee
unless and until such Assignee becomes a Purchasing Bank pursuant to clause (d)
below.
(d) Assignments to Purchasing Banks. Subject to
Section 10.4(c), any Bank may at any time and from time to time assign to one or
more Persons ("Purchasing Banks") all or any part of its Credit Exposure
pursuant to a supplement to this Amended Credit Agreement, substantially in the
form of Exhibit L hereto (an "Assignment Agreement"), executed by such
Purchasing Bank. Upon (i) such execution of such Assignment Agreement, (ii)
delivery to the Agent of a notice of assignment substantially in the form of
Schedule I to Exhibit L hereto (a "Notice of Assignment") with a copy to the
Borrower, together with any consents required pursuant to Section 10.4(c) above,
(iii) payment by such Purchasing Bank to such transferor Bank of an amount equal
to the purchase price agreed between such transferor Bank and such Purchasing
Bank and (iv) payment of a $5,000 fee to the Agent for processing such
assignment, such assignment shall become effective on the effective date
specified in such Assignment Agreement, which effective date shall be at least
five (5) Business Days after delivery of such Notice of Assignment to the Agent,
such transferor Bank shall be released from its obligations hereunder to the
extent of such assignment and such Purchasing Bank shall for all purposes be a
Bank party to this Amended Credit Agreement and shall have all the rights and
obligations of a Bank under this Amended Credit Agreement to the same extent as
if it were an original party hereto, and no further consent or action by the
Borrower, the Banks or the Agent shall be required. Such Assignment Agreement
shall be deemed to amend this Amended Credit
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Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank as a Bank and the resulting adjustment of the
Commitments, if any, arising from the purchase by such Purchasing Bank of all or
a portion of the Credit Exposure of such transferor Bank. Promptly after the
consummation of any transfer to a Purchasing Bank pursuant hereto, the
transferor Bank, the Agent and the Borrower shall make appropriate arrangements
so that a replacement Note is issued to such transferor Bank and a new Note is
issued to such Purchasing Bank, in each case in principal amounts reflecting
such transfer.
(e) Disclosure of Information; Confidentiality. The
Borrower authorizes each Bank to disclose to any Participant, Assignee or
Purchasing Bank (each, a "Transferee") and any prospective Transferee any and
all financial and other information in such Bank's possession concerning the
Borrower which has been delivered to such Bank by the Borrower pursuant to this
Amended Credit Agreement or which has been delivered to such Bank by the
Borrower in connection with such Bank's credit evaluation of the Borrower prior
to entering into this Amended Credit Agreement; provided that each Transferee
shall enter into an agreement whereby such Transferee shall agree to hold any
confidential nonpublic information in confidence, except for disclosure (i) to
other Banks, (ii) to their respective Affiliates, (iii) to their respective
legal counsel and accountants, (iv) to other professional advisors of such
Transferee who shall be instructed that the information is to be treated as
confidential, (v) as required by law, regulation or legal process, or (vi) in
connection with any legal proceeding to which such Transferee is a party.
Section 10.5 Amendments and Waivers. Neither this Amended
Credit Agreement, any Note, any other Loan Document to which the Borrower is a
party nor any terms hereof or thereof may be amended, supplemented, modified or
waived except in accordance with the provisions of this Section. The Required
Banks and the Borrower may, from time to time, enter into written amendments,
supplements, modifications or waivers for the purpose of adding, deleting,
changing or waiving any provisions to this Amended Credit Agreement, the Notes,
or the other Loan Documents to which the Borrower is a party, provided, that no
such amendment, supplement, modification or waiver shall (a) extend any
installment or required prepayment of any Obligations or reduce the rate or
extend the time of payment of interest on any Obligations, or reduce the
principal amount of any Obligations or reduce any fee payable to the Banks
hereunder, or release all or substantially all of the Collateral (except as
expressly contemplated by the Loan Documents) or change the amount of any
Commitment of any Bank, or amend, modify or waive any provision of this Section
10.5 or the definition of Required Banks, or consent to or permit the assignment
or transfer by the Borrower of any of its rights and obligations under this
Amended Credit Agreement or any other Loan Document, or amend any provision of
Section 2.3(a)(i), in each case without the written consent of all the Banks, or
(b) amend, modify or waive any provision of Section 9 or any other provision of
any Loan Document if the effect thereof is to affect the rights or duties of the
Agent, without the written consent of the then Agent. Any such amendment,
supplement, modification or waiver shall apply to each of the Banks equally and
shall be binding upon the Borrower, the Banks, the Agent and all future holders
of the Notes. In the case of any waiver, the Borrower, the Banks and the Agent
shall be restored to their former position and rights hereunder and under the
outstanding Notes, and any Default or Event of Default waived shall be deemed to
be cured and not continuing, but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any right consequent thereon.
Section 10.6 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Agent or any Bank or any holder of a Note in exercising
any right, power or privilege hereunder or under any other Loan Document and no
course of dealing between any Loan Party and the Agent or any Bank or the holder
of any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof of the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Agent or any Bank or the holder of any Note would otherwise
have. No notice to or demand on any Loan Party in any case shall entitle any
Loan Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent, the Banks or
the holder of any Note to any other or further action in any circumstances
without notice or demand.
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Section 10.7 Sharing of Payments. Each of the Banks agrees
that if it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or sums received by
other Banks is in a greater proportion than the total of such Obligation then
owed and due to such Bank bears to the total of such Obligation then owed and
due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in such Obligations owing to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
Section 10.8 Governing Law; Submission to Jurisdiction. (a)
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to
this Amended Credit Agreement or any other Loan Document and any action for
enforcement of any judgment in respect thereof may be brought in the courts of
the State of Illinois or of the United States of America for the Northern
District of Illinois, and, by execution and delivery of this Amended Credit
Agreement, the Borrower hereby accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts and appellate courts. The Borrower irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower at its address set forth opposite its signature
below. The Borrower hereby irrevocably waives, to the extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection with
this Amended Credit Agreement or any other Loan Document brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of the Agent, any Bank or any holder of a Note to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
Section 10.9 Counterparts. This Amended Credit Agreement may
be executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 10.10 Effectiveness. This Amended Credit Agreement
shall become effective on the date on which all of the parties hereto shall have
signed a counterpart hereof and shall have delivered the same to the Agent which
delivery, in the case of the Banks, may be given to the Agent by telecopy (with
the originals delivered promptly to the Agent via overnight courier service).
Section 10.11 Headings Descriptive. The headings of the
several Sections and subsections of this Amended Credit Agreement are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Amended Credit Agreement.
Section 10.12 Marshalling; Recapture. Neither the Agent nor
any Bank shall be under any obligation to marshall any assets in favor of any
Loan Party or any other party or against or in payment of any or all of the
Obligations. To the extent any Bank receives any payment by or on behalf of any
Loan Party, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or
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<PAGE> 88
required to be repaid to such Loan Party or its estate, trustee, receiver,
custodian or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of such Loan Party to such Bank as of the date
such initial payment, reduction or satisfaction occurred.
Section 10.13 Severability. In case any provision in or
obligation under this Amended Credit Agreement or the Notes or the other Loan
Documents 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 in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 10.14 Survival. All indemnities set forth herein
including, without limitation, in Sections 2.17, 2.18, 2.19, 2.20, 9.7 and 10.1
shall survive the execution and delivery of this Amended Credit Agreement and
the Notes and the making and repayment of the Loans hereunder.
Section 10.15 Domicile of Loans. Each Bank may transfer and
carry its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Bank.
Section 10.16 Limitation of Liability. No claim may be made by
any Loan Party or any other Person against the Agent or any Bank or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Amended Credit Agreement or any
other Transactions or Amendment Transactions, or any act, omission or event
occurring in connection therewith; and each Loan Party hereby waives, releases
and agrees not to sue upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor and each
Loan Party agrees to notify the Agent and each Bank, as applicable, of any such
claim promptly upon learning of any such claim.
Section 10.17 Calculations; Computations. The financial
statements to be furnished to the Agent and the Banks pursuant hereto shall be
made and prepared in accordance with GAAP consistently applied throughout the
periods involved and consistent with GAAP as used in the preparation of the
financial statements referred to in Section 5.5, and, except as otherwise
specifically provided herein, all computations determining compliance with
Section 7.1 hereof shall utilize GAAP.
Section 10.18 Waiver of Trial by Jury. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AMENDED CREDIT AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amended Credit Agreement as of
the date first above written.
DENAMERICA CORP.
By:
-------------------------------------------------------
Title:
Notice Address: 7373 N. Scottsdale Road
Suite D-120
Scottsdale, AZ 85253
Telephone: (602)483-7055
Facsimile: (602)483-9592
Attention: Todd S. Brown
BANQUE PARIBAS, as Agent and as a Bank
By:
-------------------------------------------------------
Title:
By:
-------------------------------------------------------
Title:
Notice Address: 227 West Monroe
Suite 3300
Chicago, IL 60606
Telephone: (312) 853-6000
Facsimile: (312) 853-6020
Attention: Gerald O'Keefe
<PAGE> 90
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.
Its: Agent/Manager
By:
-------------------------------------------------------
Title:
Notice Address: 2850 W. Golf Rd
5th Floor
Rolling Meadows, IL 60008
Telephone: (847) 734-2000
Facsimile: (847) 734-7910
Attention: Contract Administration
LASALLE NATIONAL BANK
By:
-------------------------------------------------------
Title:
Notice Address: 120 S. LaSalle
Chicago, IL 60603
Telephone: (312)
Facsimile: (312) 904-6242
Attention: Jeff Kadlic
<PAGE> 1
EXHIBIT 10.96
THIS NOTE IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET
FORTH IN SECTION 7 HEREIN. THIS NOTE WAS ORIGINALLY ISSUED ON
JULY 3,1996 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW.
SENIOR SUBORDINATED
PROMISSORY NOTE
July 3, 1996 $15,000,000
DenAmerica Corp., a Georgia corporation (the "Company"), hereby
promises to pay to the order of BEP Holdings, Inc., a Delaware corporation, or
its permitted assigns (the "Holder") the principal amount of Fifteen Million
Dollars ($15,000,000), together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note (this "Note"). Certain
defined terms used herein are set forth in Section 5 hereof.
The indebtedness represented by this Note is subordinated to Senior
Indebtedness pursuant to the terms of the Intercreditor Agreement and is senior
to Subordinated Obligations, including the Series B Notes.
1. Payment of Interest.
(a) Rate.
(i) Subject to Section 1(a)(ii) below, interest shall accrue
on a daily basis at the rate of twelve percent (12.0%) per annum on the
unpaid principal amount of this Note outstanding from time to time (or,
if less, at the highest rate then permitted under applicable law),
commencing on the date hereof.
(ii) If, at any time on or after January 1, 1997 and prior to
July 1, 1997, (A) the Company makes a borrowing request under the
Delayed Draw Facility (including any borrowing request which the
Company is required to make under Section 2 hereof), (B) at the time of
such request (and after giving effect to the borrowings covered by such
request), the Company is in compliance with all financial covenants and
other conditions precedent under the Credit Agreement (as in effect on
the Issue Date) which must be satisfied in order to make such
borrowings under the Delayed Draw Facility (other than Agent consent)
and (C) the Agent under the Credit Agreement denies, does not consent
to or otherwise prohibits such borrowings, then the interest rate on
the principal amount of this Note shall automatically increase to
fourteen percent (14.0%) per annum (or, if less, the highest rate then
permitted under applicable law). Any such increase in the interest rate
shall be retroactive to January 1, 1997 (and any interest owed with
respect to periods prior to the Effective Date (as defined below) by
reason of any such increase shall be due and payable on the first
scheduled interest payment date
<PAGE> 2
under Section 1(b) below following the Effective Date). As used herein,
"Effective Date" shall mean the earlier of (Y) the date on which the
Agent notifies the Company that it will deny, will not consent to or
will otherwise prohibit the requested borrowings or (Z) the 30th day
following the Company's borrowing request, if the Agent has not granted
its consent to such borrowings on or prior to such date (provided that,
in the case of any borrowing request made prior to March 31, 1997, the
date stipulated by this clause (Z) shall be the earlier of such 30th
day or March 31, 1997 and provided further that, in the case of any
borrowing request made on or after March 31, 1997 and prior to June 30,
1997, the date stipulated by this clause (Z) shall be the earlier of
such 30th day or June 30, 1997). In the event that the Company makes a
borrowing request under the Delayed Draw Facility and the Agent under
the Credit Agreement rejects such request on the basis that the amount
of borrowings requested would cause the Company not to be in compliance
with the financial covenants contained in the Credit Agreement, the
Company shall re-submit a reduced request for borrowings for the
maximum amount which would permit the Company to so comply.
(b) Timing.
(i) As and to the extent provided under Section 2(a)(i)
hereof, the Company shall pay to the Holder on or prior to March 31,
1997 all accrued interest for periods through March 31, 1997. Any
interest not so paid on or prior to March 31, 1997 shall be added to
the principal amount of this Note and shall accrue interest at the rate
specified in Section 1(a) above. After March 31, 1997, the Company
shall pay to the Holder all accrued interest on the last day of each
June, September, December and March, beginning June 30, 1997. Any
accrued interest which for any reason has not theretofore been paid
shall be paid in full on the date on which all remaining principal
amount on this Note is paid.
(ii) Notwithstanding Section 1(b)(i), (x) all interest accrued
on this Note through March 31, 1997 shall be payable in cash on March
31, 1997 if the Agent under the Credit Agreement denies, does not
consent to or otherwise prohibits any borrowing request made by the
Company under the Delayed Draw Facility prior to March 31, 1997 under
the circumstances described under Section 1(a)(ii)(B) above and (y) all
interest accrued on this Note through June 30, 1997 (including any
interest previously added to principal under Section 1(b)(i) above)
shall be payable in cash on June 30, 1997 if the Agent under the Credit
Agreement denies, does not consent to or otherwise prohibits any
borrowing request made by the Company under the Delayed Draw Facility
on or after April 1, 1997 but prior to June 30, 1997 under the
circumstances described in Section 1(a)(ii)(B) above.
(c) Overdue Amounts. Interest at the rate specified in Section 1(a)
above shall accrue on any principal payment due under this Note and, to the
extent permitted by applicable law, on any interest which has not been paid on
the date on which it is due and payable until such time as payment therefor is
actually delivered to the Holder.
<PAGE> 3
2. Payment of Note.
(a) Scheduled Payments.
(i) If, based on the Company's financial condition as of
December 31, 1996 and its results of operations through such date, the
Company has satisfied those financial covenants and other conditions
precedent under the Delayed Draw Facility which must be satisfied in
order to make borrowings thereunder (other than Agent consent), the
Company shall request the maximum amount of borrowings under the
Delayed Draw Facility which it is entitled to make and shall use the
proceeds of such borrowings to repay the principal amount of, and
accrued interest on, this Note. The Company shall use its best efforts
to cause the effective date of such borrowings, and the repayment of
this Note, to occur as soon as practicable after the availability of
its financial statements as of and for the period referred to above,
but not later than March 31, 1997.
(ii) If, based on the Company's financial condition as of
March 31, 1997 and its results of operations through such date, the
Company has satisfied those financial covenants and other conditions
precedent under the Delayed Draw Facility which must be satisfied in
order to make borrowings thereunder (other than Agent consent), the
Company shall request the maximum amount of borrowings under the
Delayed Draw Facility which it is entitled to make and shall use the
proceeds of such borrowings to repay the principal amount of, and
accrued interest on, this Note. The Company shall use its best efforts
to cause the effective date of such borrowings, and the repayment of
this Note to occur, as soon as practicable after the availability of
its financial statements as of and for the period referred to above,
but not later than June 30, 1997.
(iii) If, at any time prior to June 30, 1997, (A) payment of
the principal amount of this Note and accrued interest thereon is
permitted under the terms of the Senior Indebtedness (including but not
limited to the terms of the Intercreditor Agreement) without causing a
default thereunder and (B) the Company has cash on hand or Investments
of the type described in Section 4(i)(iii) (in either case in excess of
the working capital needs of its business (as determined in good faith
by the Company's Board of Directors)), then the Company shall repay the
principal amount of this Note and accrued interest thereon to the
maximum extent possible. At the request of the Holder, the Company
shall provide the Holder with reasonable financial information in
support of the Board of Director's determination of the Company's
working capital needs.
(iv) In the event that a Company fiscal quarter does not end
on December 31, 1996 or March 31, 1997, then the references to December
31, 1996 or March 31, 1997 contained in Sections 2(a)(i) or (ii) above
(as the case may be) shall be deemed to be references to the last day
of the Company fiscal quarter ending closest to such date.
(v) Subject to Sections 2(d) and 2(e) below, the maturity date
of any principal amount of this Note which has not been repaid on July
1, 1997 shall be March 31, 2002 (the "Maturity Date").
<PAGE> 4
(b) Optional Prepayments. To the extent permitted by the Intercreditor
Agreement, the Company may, at any time and from time to time, without premium
or penalty, prepay all or a portion of the outstanding principal amount of this
Note; provided, however, that any prepayment shall first be applied to any
accrued but unpaid interest on the principal amount prepaid.
(c) Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of New York, such payment shall be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest in connection with such payment.
(d) Certain Mandatory Prepayments. This Note shall be subject to (i)
mandatory prepayment with the proceeds of certain Equity Issuances as and to the
extent provided in Section 4(l) below, (ii) mandatory prepayment from any and
all proceeds (net of taxes and actual expenses) from the sale of the owned
restaurant location at 9040 Signature Road, Indianapolis, Indiana (Michigan
Avenue) and (iii) mandatory prepayment following the occurrence of a Change of
Control; provided, however, that the prepayment required by clause (iii) shall
only be made after the indefeasible payment in full of the Senior Indebtedness.
Any prepayment required by clause (iii) of the preceding sentence shall be made
promptly after such indefeasible payment in full of the Senior Indebtedness. The
amount of any mandatory prepayment shall first be applied to any accrued but
unpaid interest on the principal amount prepaid.
(e) Best Efforts to Prepay. If all or any portion of this Note is not
repaid prior to July 1, 1997, then the Company shall use its best efforts to
repay all outstanding amounts hereunder as soon as practicable thereafter (and
in no event later than the Maturity Date) from all available sources (including,
without limitation, the Delayed Draw Facility) to the extent consistent with (i)
its obligations to holders of the Senior Indebtedness and (ii) the working
capital needs of its business (as determined in good faith by the Company's
Board of Directors). At the request of the Holder, the Company shall provide the
Holder with reasonable financial information in support of the Board of
Director's determination of the Company's working capital needs.
3. Events of Default.
(a) Definition. "Event of Default," wherever used herein, means the
occurrence and continuance of any one of the following events (whatever the
reason for such Event of Default and whether it shall be caused voluntarily or
involuntarily or effected, without limitation, by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of any interest on this Note as and
when the same becomes due and payable, and the continuance of such
default for a period of ten (10) Business Days;
(ii) default in the payment of all or any part of the
principal of this Note as and when the same becomes due and payable at
maturity or otherwise;
<PAGE> 5
(iii) default in the observance or performance of, or breach
of, any covenant, agreement or warranty of the Company contained in
this Note, other than a default in the performance of any covenant,
agreement or warranty which is specifically addressed elsewhere in this
Section 3(a), and continuance of such default or breach for a period of
30 days after there has been delivered, by registered or certified
mail, to the Company by the Holder, a written notice specifying such
default or breach, requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(iv) (A) the Company or any of its Subsidiaries shall fail to
make any required payment, whether as a result of any failure to pay
any installment of principal or any accrued interest, or as a result of
maturity, on any Indebtedness of the Company or any of its Subsidiaries
in excess of $1,000,000, and such failure shall continue, without
having been duly cured, waived or consented to, for a period of thirty
(30) days or (B) any Indebtedness of the Company or any of its
Subsidiaries in excess of $1,000,000 shall be accelerated prior to its
stated maturity date by the holder or holders thereof;
(v) one or more judgments or decrees in an aggregate amount of
$1,000,000 or more shall be entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries (other than
any judgment as to which, and only to the extent that, a reputable
insurance company has acknowledged coverage of such claim in writing),
if, within 60 days after entry thereof, any such judgments or decrees
shall not have been satisfied and discharged, bonded or stayed pending
appeal, or within 60 days after expiration of such stay any such
judgments or decrees shall not have been discharged;
(vi) a decree, judgment or order by a court of competent
jurisdiction shall have been entered adjudging the Company as bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization of the Company under any Bankruptcy Law, and such decree
or order shall have continued undischarged and unstayed for a period of
60 days; or a decree or order of a court of competent jurisdiction
ordering the appointment of a Custodian for the Company, or for the
winding up or liquidation of the affairs of the Company, shall have
been entered, and such decree, judgment, or order shall have remained
in force undischarged and unstayed for a period of 60 days; or
(vii) the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition,
or shall consent to the appointment of a Custodian of it or any of its
material assets or property, or shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay
its debts generally as they become due.
(b) Consequences of the Occurrence of an Event of Default.
(i) If an Event of Default (other than an Event of Default
described in Sections 3(a)(vi)or (a)(vii)) occurs and is continuing,
then, and in every such case, unless the principal of this Note shall
have already become due and payable, the
<PAGE> 6
Holder by a notice in writing to the Company (an "Acceleration
Notice"), may declare all of the principal of this Note, together with
accrued interest thereon, to be due and payable immediately. If an
Event of Default specified in Section 3(a)(vi) or (a)(vii) occurs, all
principal of and accrued interest on this Note shall automatically be
immediately due and payable without any declaration or other act on the
part of the Holder.
(ii) Subject to the provisions of Article II of the
Intercreditor Agreement, if an Event of Default occurs and is
continuing, the Holder may pursue any available remedy to collect the
payment of principal or interest on this Note or to enforce the
performance of any provision of this Note. No delay or omission by the
Holder in exercising any right or remedy accruing upon an Event of
Default shall impair such right or remedy or constitute a waiver of or
acquiescence in the Event of Default. Every right and remedy given by
this Section 3 or by law to the Holder may be exercised from time to
time, and as often as may be deemed expedient, by the Holder.
(iii) No right or remedy herein conferred upon or reserved to
the Holder is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
4. Covenants.
(a) Financial and Other Reports; Compliance Certificate; Notice of
Default.
(i) To the extent required by applicable law or regulation,
including the requirements of Section 13 or 15(d) of the Exchange Act,
the Company shall file with the SEC all quarterly and annual reports
and such other information, documents or other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) required to be filed pursuant to such provisions
of the Exchange Act. The Company shall deliver to the Holder, within 5
days after it files the same with the SEC, copies of the quarterly and
annual reports and the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules
and regulations prescribe) that it files with the SEC. To the extent
that the Company is not subject to the requirements of Section 13 or
15(d) of the Exchange Act, the Company nonetheless shall deliver to the
Holder the information described in Sections 13 and 15(d) of the
Exchange Act within the time periods provided in Sections 13 and 15(d)
for filing with the SEC as if the Company were subject to Section 13 or
15(d) of the Exchange Act.
(ii) The Company will deliver to the Holder:
(A) copies of all reports, financial statements,
compliance certificates and other notices and information
required to be delivered to the lender or lenders (or any
agent therefor) under any Credit Agreement,
<PAGE> 7
promptly upon delivery thereof to such lender or lenders (or
agent therefor), and copies of all notices of default
delivered to the Company by any such lender or lenders (or
agent), promptly upon receipt thereof by the Company;
provided, that upon receipt by the Company of a written
request from the Holder to stop delivering such notices and
information to the Holder, the Company shall stop delivering
such notices and information to the Holder until the Holder
delivers a written request to the Company requesting that the
Company recommence delivery of such notices and information to
the Holder;
(B) copies of all reports, financial statements,
compliance certificates and other notices and information
required to be delivered to the holder or holders (or any
agent therefor) under the Series B Indenture or the Series B
Notes, promptly upon delivery thereof to such holder or
holders (or agent therefor), and copies of all notices of
default delivered to the Company by any such holder or holders
(or agent), promptly upon receipt thereof by the Company;
provided, that upon receipt by the Company of a written
request from the Holder to stop delivering such notices and
information to the Holder, the Company shall stop delivering
such notices and information to the Holder until the Holder
delivers a written request to the Company requesting that the
Company recommence delivery of such notices and information to
the Holder; and
(C) the Company's annual report to stockholders,
promptly upon delivery thereof to the stockholders.
(iii) The Company shall mail to the Holder within 60 days
after the end of each of the first three fiscal quarters in each fiscal
year, and within 120 days after the end of each fiscal year, an
Officers' Certificate stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal quarter or
fiscal year has been made under the supervision of the signing Officers
with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Note and further
stating, as to each such Officer signing such certificate, whether or
not the signer knows of any failure by the Company or any Subsidiary of
the Company to comply with any conditions or covenants in this Note
and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity.
(iv) The Company shall, so long as this Note is outstanding,
mail to the Holder, promptly upon becoming aware of any Default or
Event of Default under this Note, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking
or proposes to take with respect thereto.
(b) Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on account of, or purchase,
redeem or otherwise acquire for value, any Capital Stock or other Equity
Interests of the Company or any such Subsidiary (other than (A) dividends or
distributions payable by the Company in Capital Stock (other than Redeemable
Stock) of the Company, or (B) dividends or distributions payable by a Subsidiary
of the Company in cash or Capital Stock (other than Redeemable Stock) of
<PAGE> 8
such Subsidiary so long as, in the case of any dividend or distribution payable
on any class or series of any Capital Stock or Equity Interest of any such
Subsidiary, the Company or the Subsidiaries of the Company receive at least
their pro rata share of such dividend or distribution in accordance with their
Equity Interest in such class or series), or (ii) purchase, redeem, or otherwise
acquire or retire for value, or make any payment or prepayment of principal,
interest or other amounts on or in respect of, any Subordinated Obligations,
directly or indirectly, (the foregoing actions set forth in clauses (i) and (ii)
being referred to as "Restricted Payments"); except (x) the payment of interest
on the Series B Notes in accordance with the terms thereof, as in effect on the
Issue Date or as amended in compliance with this Note (provided that no such
interest may be paid if a Default or Event of Default shall be continuing at the
time of such payment of interest or shall result therefrom) and (y) payments
required by Section 4.13(b)(i) of the Series B Indenture (provided that no such
payments may be made if a Default or Event of Default shall be continuing at the
time of such payment or shall result therefrom).
(c) Corporate Existence. The Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if (i) the
Board of Directors of the Company shall determine (as evidenced by a Board
Resolution) that the preservation thereof is no longer desirable in the conduct
of the business of the Company and (ii) the loss thereof is not disadvantageous
in any material respect to the business and operations of the Company. The
Company will not, and will not permit any of its Subsidiaries to, engage in any
business other than the business of owning, leasing, operating, developing,
re-imaging and acquiring restaurants and restaurant franchises (the "Restaurant
Business").
(d) Payment of Taxes and Other Claims. The Company shall, and shall
cause each of its Subsidiaries to, pay or discharge, or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or any of its Subsidiaries or upon any properties of the Company or any of its
Subsidiaries, and (ii) all material claims, whether for labor, materials,
supplies, services or anything else, which become due and payable and which by
law have or may become a Lien upon the property of the Company or any of its
Subsidiaries; provided, however, that the Company and its Subsidiaries shall not
be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP.
(e) Maintenance of Properties and Insurance.
(i) The Company shall cause all properties used or useful to
the conduct of its business and the business of each of its
Subsidiaries to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made
<PAGE> 9
all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its reasonable judgment may be
necessary, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4(e) shall prevent the Company or
any of its Subsidiaries from discontinuing any operation or maintenance
of any of such properties (including, but not limited to, the closing
of any of the restaurants it operates), or disposing of any of them, if
such discontinuance or disposal is (A) in the judgment of the Board of
Directors of the Company (as evidenced by a Board Resolution),
desirable in the conduct of the business of the Company or its
Subsidiaries, (B) not prohibited by Section 4(j) hereof, and (C) not
disadvantageous in any material respect to the business and operations
of the Company.
(ii) The Company shall provide, or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company are adequate and
appropriate for the conduct of the business of the Company and its
Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by
such methods as shall be customary, in the reasonable, good faith
opinion of the Company, and adequate and appropriate for the conduct of
the business of the Company and its Subsidiaries in a prudent manner
for Persons similarly situated in the restaurant industry.
(f) Compliance with Laws, Contracts, Licenses and Permits. The Company
will, and will cause each of its Subsidiaries to, comply in all material
respects with (i) all applicable laws and regulations wherever its business is
conducted, (ii) the provisions of its charter documents and bylaws, (iii) all
material agreements and instruments by which it or any of its properties may be
bound, and (iv) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, operating right, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Company or any of its Subsidiaries may fulfill any of
its obligations under this Note, the Company or such Subsidiary will promptly
take or cause to be taken all reasonable steps within its power to obtain such
authorization, consent, approval, operating right, permit or license, and, upon
written request of the Holder, furnish to the Holder evidence thereof.
(g) Waiver of Stay, Extension or Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any usury law or other similar law which would prohibit or forgive the Company
from paying all or any portion of the principal of or interest on or other
amounts payable under this Note as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Note; and (to the extent that it may lawfully do so) the
Company hereby expressly waives all benefit or advantage of any such law insofar
as such law applies to this Note.
(h) Limitation on Additional Indebtedness. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume,
<PAGE> 10
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness or Redeemable Stock, except:
(i) Indebtedness of the Company under or in respect of this
Note, as in effect on the Issue Date or as amended in accordance with
Section 6 hereof, in an aggregate principal amount not to exceed
$15,000,000 (plus any interest which is added to principal or
capitalized under the terms hereof), less the amount of any repayment
or prepayment of this Note;
(ii) Indebtedness of the Company under or in respect of the
Series B Notes, as in effect on the Issue Date or as amended in
accordance with Section 4(n) hereof, in an aggregate principal amount
not to exceed the aggregate principal amount outstanding on the Issue
Date, less the amount of any repayment, prepayment or redemption of the
Series B Notes;
(iii) Senior Indebtedness incurred from time to time, and any
guaranties of Senior Indebtedness, and any costs and expenses due under
any of the Loan Documents (as defined under the Credit Agreement) by
any Subsidiary of the Company;
(iv) Indebtedness of the Company and its Subsidiaries under
Interest Rate Agreements relating to Indebtedness permitted hereby;
(v) Existing Indebtedness, less the amount of any repayment,
prepayment, or redemption of Existing Indebtedness;
(vi) Capitalized Lease Obligations and Indebtedness
constituting purchase money obligations for property acquired in the
ordinary course of business;
(vii) other Indebtedness that is expressly permitted under
Section 7.2(g) or (h) of the Credit Agreement, as in effect on the
Issue Date; and
(viii) additional unsecured Indebtedness of the Company not
otherwise permitted by any of clauses (i) through (vii) above, provided
that the aggregate outstanding principal amount of such additional
Indebtedness shall not at any time exceed $5,000,000.
(i) Limitation on Investments. The Company shall not, and shall not
permit any of its Subsidiaries to, have outstanding or acquire or commit itself
to acquire or hold any Investment, except:
(i) Investments existing on the Issue Date;
(ii) Investments by the Company and any of its Subsidiaries in
the Company or in any wholly-owned Subsidiary of the Company;
(iii) Investments in: (A) cash, (B) marketable obligations
issued or guaranteed by the United States of America which mature
within one (1) year after the date of acquisition thereof or which are
required to be repurchased, within ninety (90) days after the date of
acquisition thereof by any commercial bank or trust
<PAGE> 11
company incorporated under the laws of the United States of America or
any State thereof or the District of Columbia, (C) commercial paper
maturing within one (1) year from the date of acquisition thereof and
having, at the date of acquisition thereof, the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation, (D) bankers' acceptances eligible for rediscount under
Federal Reserve Board requirements accepted by any commercial bank or
trust company referred to in clause (B) hereof, (E) certificates of
deposit maturing within one (1) year from the date of acquisition
thereof issued by any commercial bank or trust company referred to in
clause (B) hereof, having capital and surplus of at least $100,000,000
and having at least an "A" rating or better, and (F) certificates of
deposit issued by any bank organized under the laws of any other
jurisdiction and having combined capital and surplus of not less than
$100,000,000 and having at least an "A" rating or better;
(iv) Investments expressly permitted under Section 7.8(a), (d)
and (g) of the Credit Agreement, as in effect on the Issue Date; and
(v) Investments constituting Restaurant Acquisitions or assets
used or useful in the Restaurant Business.
(j) Limitation on Asset Sales, etc. The Company will not, and will not
permit any of its Subsidiaries to sell, lease, sublease or otherwise transfer or
dispose of any property (an "Asset Sale"), except:
(i) Asset Sales consisting of sales of inventory in the
ordinary course of business, sales of obsolete equipment, or sales of
equipment which is uneconomic or no longer used by the Company or any
Subsidiary;
(ii) Asset Sales consisting of sales of property having a fair
market value, in the aggregate for all such Asset Sales from and after
the Issue Date, of not greater than $21,000,000; provided, that (1)
prior to and after giving effect to such Asset Sale, no Event of
Default is continuing and (2) the consideration received by the Company
or such Subsidiary on the closing date of such Asset Sale shall be
equal to the fair market value of the assets sold and at least 80% of
the consideration shall consist of immediately available funds
(provided that the Company and its Subsidiaries shall be entitled to
sell non- or under-performing restaurants in transactions which fail to
meet the 80% test contained in this clause (ii) so long as the fair
market value of the aggregate proceeds of such transactions does not
exceed $10,000,000);
(iii) Asset Sales in connection with sale/leaseback
transactions;
(iv) Asset Sales by any wholly-owned Subsidiary of the Company
to the Company or to any other wholly-owned Subsidiary of the Company;
(v) Asset Sales expressly permitted by Section 7.5(e) of the
Credit Agreement, as in effect on the Issue Date; and
(vi) Asset Sales consisting of in-kind swaps of restaurant
properties with other owners or operators of restaurant properties.
<PAGE> 12
(k) Subsidiary Payment Restrictions; Conflicting Agreements.
(i) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary to (A) pay dividends or make any other
distributions on its Capital Stock, or pay any Indebtedness owed to the
Company or any of its Subsidiaries, (B) make loans or advances to the
Company or any of its Subsidiaries or (C) transfer any of its
properties to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (1) the
Credit Agreement, provided that such encumbrances or restrictions are
no more burdensome than those in effect under the Credit Agreement on
the Issue Date, (2) this Note, (3) the Series B Indenture or the Series
B Notes, provided that such encumbrances or restrictions are no more
burdensome than those in effect under the Series B Indenture or Series
B Notes on the Issue Date, (4) applicable law, (5) customary
non-assignment provisions in leases and franchise agreements entered
into in the ordinary course of business and consistent with past
practices, and (6) the instruments governing purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (C) above on the
property so acquired.
(ii) The Company will not enter into or become bound by any
agreement or instrument that directly restricts the Company from making
any payment on or in respect of this Note or otherwise performing and
complying with its obligations hereunder, except for the Credit
Agreement, provided, that any such restrictions in the Credit Agreement
are not more restrictive than the terms of the Credit Agreement as in
effect on the Issue Date.
(l) Issuance of Equity Securities.
(i) The Company shall not, and shall not permit any of its
Subsidiaries to, issue, sell, give away, transfer or assign any Equity
Interests, except:
(A) the issuance of Warrants in connection with this
Note or the Credit Agreement;
(B) the issuance of common stock or warrants to
acquire common stock to (1) the holders of Warrants upon
exercise thereof in accordance with the terms thereof as in
effect on the Issue Date, (2) holders of the Unit Purchase
Options upon exercise thereof in accordance with the terms
thereof as in effect on the Issue Date and (3) BancBoston
Ventures in connection with the repayment of the Company's
Series A 13% Subordinated Notes due 2003 prior to the Issue
Date;
(C) the issuance of employee stock options to
employees or directors of the Company or any of its
Subsidiaries pursuant to an employee stock option plan
approved by the Board of Directors of the Company, and the
issuance of shares of common stock of the Company upon
exercise of such options in accordance with the terms thereof;
<PAGE> 13
(D) the issuance and sale by the Company of Capital
Stock of the Company (other than Redeemable Stock) to Persons
selling stock or assets to the Company in a Restaurant
Acquisition; provided, that the aggregate value of all Capital
Stock issued from and after the Issue Date to acquire such
assets shall not exceed $25,000,000. For purposes of this
paragraph (D), the value of any common stock of the Company so
issued shall be the average trading price for common stock of
the Company on a national securities exchange as of the close
of trading for the ten (10) trading days immediately preceding
the date of such Investment and the value of any other Capital
Stock of the Company so issued shall be reasonably determined
by the Company's Board of Directors; and
(E) the issuance and sale by the Company of Capital
Stock of the Company (other than Redeemable Stock) in one or
more underwritten public offerings or private placements (an
"Equity Issuance"); provided that (1) prior to and after
giving effect to such Equity Issuance, no Event of Default
shall be continuing, (2) the consideration received by the
Company from such Equity Issuance consists solely of cash, and
(3) all of the Excess Securities Proceeds of such Equity
Issuance are used by the Company as set forth in subparagraph
(ii) below; and
(F) any pledge of Capital Stock of any Subsidiary of
the Company to secure Senior Indebtedness and any other
obligations under the Loan Documents (as defined in the Credit
Agreement).
(ii) Within 10 days after the closing date of any Equity
Issuance (an "Equity Issuance Trigger Date"), the Company shall, if and
to the extent permitted by the Credit Agreement (as in effect on the
Issue Date) and subject to Article II of the Intercreditor Agreement
and Section 4.13(b)(i) of the Series B Indenture (as in effect on the
Issue Date), use such Excess Securities Proceeds to prepay the
principal amount of this Note plus accrued and unpaid interest thereon
to the date of such payment. To the extent that the Company is
prohibited by the Credit Agreement (as in effect on the Issue Date)
from prepaying this Note with Excess Securities Proceeds as
contemplated by this Section 4(l), the Company shall promptly use all
Excess Securities Proceeds to permanently reduce outstanding Senior
Indebtedness. To the extent that any Excess Securities Proceeds remain
after prepayment of this Note in full and prepayment of all Senior
Indebtedness, the Company may use the remaining amount for any other
purpose.
(m) Transactions with Affiliates. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into any
transaction with any Affiliate (an "Affiliate Transaction"), except for
transactions (including any investments, loans or advances by or to any
Affiliate) the terms of which in good faith are fair and reasonable to the
Company or such Subsidiary, as the case may be, and are at least as favorable as
the terms that could be obtained by the Company or such Subsidiary, as the case
may be, in a comparable transaction made on an arms' length basis between
unaffiliated parties; provided that with respect to any Affiliate Transaction
resulting in consideration to either party in excess of $250,000, a majority of
the Board of Directors of the Company that are not affiliated with the other
party to such Affiliate Transaction shall have approved such Affiliate
Transaction, as evidenced by a Board Resolution. Notwithstanding the foregoing,
<PAGE> 14
the following transactions shall not be deemed to be Affiliate Transactions for
purposes of this covenant: (i) any Restricted Payment not otherwise prohibited
pursuant to Section 4(b), and (ii) transactions between or among any of the
Company and its wholly-owned Subsidiaries.
(n) Amendments to Certain Documents.
(i) The Company will not amend, modify, supplement or restate
any of the Series B Notes or the Indenture with respect to the Series B
Notes.
(ii) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate its articles or
certificate of incorporation or by-laws in any manner (unless required
by amendments after the date hereof to applicable corporate laws) that
would individually or in the aggregate materially adversely affect the
rights or interests of the Holder.
(iii) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate any instrument or
agreement governing any Existing Indebtedness in any manner that would
(A) increase the principal amount thereof or interest rate payable
thereon, (B) make the mandatory prepayment, repayment, redemption,
repurchase or sinking fund obligations thereunder more burdensome on
the Company or any of its Subsidiaries, or (C) make the covenants or
events of default more restrictive or burdensome in any material
respect on the Company or any of its Subsidiaries.
(iv) The Company will not amend, modify, supplement or restate
the Delayed Draw Facility if the result thereof would be to have a
material adverse impact on the Company's ability to borrow under such
Facility or use such borrowings to prepay this Note, as compared to the
terms of the Delayed Draw Facility in effect on the Issue Date.
5. Definitions.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. A Person shall be deemed to "control"
(including with correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person (a) is
an executive officer or a member of the Board of Directors of the controlled
Person, (b) is the direct or indirect beneficial holder of at least 10% of the
then outstanding capital stock (or other shares of beneficial interest) of such
Person, or (c) otherwise possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of the controlled Person,
whether through ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" shall have the meaning specified in
Section 4(m).
"Asset Sale" shall have the meaning specified in Section 4(j).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
<PAGE> 15
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" of any Person means, at the
time any determination thereof is to be made, the amount of the liability in
respect of a capital lease of such Person which would at such time be required
to be capitalized on the balance sheet of such Person in accordance with GAAP.
"Capital Stock" means any and all shares of, or interests or
participations in, corporate stock.
"Change of Control" means a change of control or any other
term having a similar or correlative meaning contained in the Credit Agreement
(including Section 8.1(i) thereof) or any other instrument defining the rights
of Indebtedness of the Company.
"Company" shall have the meaning specified in the preamble.
"Credit Agreement" means (a) the Amended and Restated Credit
Agreement, dated as of July __, 1996, among the Company, Banque Paribas, as
agent, and the Lenders party thereto, as modified, amended, restated or
supplemented from time to time, and (b) each agreement or instrument pursuant to
which obligations under the Credit Agreement described in clause (a) above, or
any subsequent Credit Agreement, are amended, deferred, extended, renewed,
replaced, refunded or refinanced, in whole or part, in each case, as modified,
amended, restated or supplemented from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which constitutes, or after notice
or passage of time or both would constitute, an Event of Default.
"Delayed Draw Facility" means Delayed Draw Term Loans (as
defined in the Credit Agreement, as in effect on the Issue Date).
"Dollars" and "$" mean lawful currency of the United States of
America.
"Equity Interests" means Capital Stock and warrants, options
or other rights to acquire Capital Stock.
"Equity Issuance" shall have the meaning specified in Section
4(l).
"Equity Issuance Trigger Date" shall have the meaning
specified in 4(l).
<PAGE> 16
"Event of Default" shall have the meaning specified in Section
3.
"Excess Securities Proceeds" means, with respect to any Equity
Issuance, the aggregate cash proceeds received by the Company or any Subsidiary
from such Equity Issuance, less the amount of all brokerage commissions and
other reasonable costs and expenses (including fees and expenses of counsel and
investment bankers) incurred by the Company or any Subsidiary in connection with
such Equity Issuance.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Existing Indebtedness" means Indebtedness of the Company and
its Subsidiaries described in Schedule I hereto.
"Extension of Credit" means any loan, letter of credit or
other extension of credit of any kind or character.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board which are in effect
in the United States at the time and for the period as to which such accounting
principles are to be applied.
"Holder" shall have the meaning specified in the preamble.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person for borrowed money, whether current or funded,
secured or unsecured, (b) all indebtedness of such Person for the deferred
purchase price of property or services, other than trade payables and accrued
liabilities arising in the ordinary course of business and payable in accordance
with customary trade terms, (c) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all indebtedness of such Person
secured by a Lien to secure all or part of the purchase price of the property
subject to such Lien, (e) all Capitalized Lease Obligations of such Person, (f)
any liability of such Person in respect of banker's acceptances or letters of
credit, and (g) all indebtedness referred to in clause (a), (b), (c), (d), (e)
or (f) above which is guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss.
"Insolvency or Liquidation Proceeding" means, with respect to
any Person, (a) any insolvency or bankruptcy or similar case or proceeding, or
any reorganization, receivership, liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (b) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of such Person.
"Intercreditor Agreement" means (a) the Senior Intercreditor
Agreement dated as of July __, 1996 between Banque Paribas, as Agent under the
Credit Agreement and the Holder, as amended, modified, restated or supplemented
from time to time, and
<PAGE> 17
(b) each agreement or instrument pursuant to which obligations under the
Intercreditor Agreement described in clause (a) above, or any subsequent
Intercreditor Agreement, are amended, deferred, extended, renewed or replaced,
in whole or in part, in each case, as amended, modified, restated or
supplemented from time to time.
"Interest Rate Agreement" means the obligation of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"Investment" of any Person means (a) any share of capital
stock, evidence of indebtedness or other security issued by any other Person,
(b) any loan, advance, or extension of credit to, or contribution to the capital
of, any other Person, (c) any purchase of the securities or business or any
integral part of the business of any other Person (including any purchase of all
or any substantial portion of the assets of such Person), or any commitment to
make any such purchase, and (d) any other investment in any other Person;
provided, however, that the term "Investment" shall not include (i) trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trade terms, and letters of
credit or other instruments securing the same, or (ii) advances to officers or
employees, but only to the extent that the aggregate amount of all advances to
officers and employees outstanding at any particular time does not exceed
$500,000 at any time prior to the first anniversary of the Issue Date and
$350,000 from and after the first anniversary of the Issue Date.
"Issue Date" means the date of first issuance of this Note.
"Legal Holiday" means any date on which banks are not open for
business generally in New York, New York.
"Lien" means any mortgage, lien, pledge, charge, security
interest, or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest, and any option or other agreement to give any security interest).
"Officer" means, with respect to the Company, the Chairman of
the Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Secretary of the Company.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"Post-Petition Interest" means, with respect to any
Indebtedness of any Person, all interest accrued or accruing on such
Indebtedness after the commencement of any Insolvency or Liquidation Proceeding
against such Person in accordance with and at the contract rate (including,
without limitation, any rate applicable upon default) specified
<PAGE> 18
in the agreement or instrument creating, evidencing or governing such
Indebtedness, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Insolvency or Liquidation
Proceeding.
"principal" of any Indebtedness (including this Note) means
the principal of such Indebtedness plus any applicable premium on such
Indebtedness.
"property" means any right or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Redeemable Stock" means any Equity Interest which, by its
terms, or upon the happening of any event, matures, is mandatorily redeemable or
repurchasable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to 180 days after the maturity date of this Note, or
is, by its terms or upon the happening of any event, required to be redeemed or
repurchased, redeemable or repurchasable at the option of the holder thereof, in
whole or in part, at any time prior to 180 days after the maturity date of this
Note.
"Restaurant Acquisition" means the acquisition by the Company
after the Issue Date of any restaurant which was previously developed and
operating as a restaurant (whether or not operated as a restaurant on the date
of such acquisition), whether through the acquisition of shares of a corporation
or by purchase of assets.
"Restaurant Business" shall have the meaning specified in
Section 4(c).
"Restricted Payment" shall have the meaning specified in
Section 4(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means all amounts payable (including,
without limitation, any Indebtedness) by the Company under or with respect to
(a) Extensions of Credit under the Credit Agreement in an aggregate principal
amount not exceeding the sum of (i) $57,500,000, plus (ii) the aggregate
principal amount of Extensions of Credit under the Credit Agreement the proceeds
of which are used, substantially simultaneously, to prepay this Note, minus the
sum, without duplication, of (A) all permanent repayments of Extensions of
Credit under the Credit Agreement, and (B) all permanent reductions of
commitments for revolving credit under any Credit Agreement, and (b) interest
(including Post-Petition Interest), fees, costs and expenses owing under any
Credit Agreement and incurred in compliance herewith.
"Series B Indenture" means the Indenture, dated as of March
29, 1996, between the Company and the State Street Bank and Trust Company, as
trustee, governing the terms of the Series B Notes, as amended by the
Supplemental Indenture of even date herewith.
"Series B Notes" means the Series B 13% Subordinated Notes due
2003, issued by the Company pursuant to the Series B Indenture.
<PAGE> 19
"Subordinated Obligations" means all Indebtedness of the
Company which is subordinate or junior in right of payment to this Note,
including, without limitation, all Indebtedness of the Company under or in
respect of the Series B Notes.
"Subsidiary" with respect to any Person, means (a) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (b) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at such time, directly or indirectly, owned by
such Person.
"Unit Purchase Options" means the unit purchase options of the
Company in existence on the Issue Date.
"Warrants" means the common stock purchase warrants of the
Company in existence or in effect on the Issue Date.
6. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Note may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.
7. Transfer and Exchange. The Holder, by its acceptance of this Note, agrees
that it may not transfer or assign this Note or any of its rights hereunder
unless (i) the Holder transfers or assigns all of its rights and interests under
this Note and (ii) such transfer is in accordance with all applicable laws.
8. Cancellation. After all principal and accrued interest at any time owed on
this Note have been paid in full, the Note shall be surrendered to the Company
for cancellation and shall not be reissued.
9. Place of Payment; Notices. Payments of principal and interest and any notice
hereunder are to be made by Company check and are to be delivered to the
following addresses:
To the Holder:
BEP Holdings, Inc.
815 Preston Road
Dallas, Texas 75225
To the Company:
DenAmerica Corp.
7373 North Scottsdale Road
Suite D-120
Scottsdale, Arizona 85253
<PAGE> 20
or to such other address as specified by prior written notice to the other
party. Notices sent by either party shall be deemed received when delivered
personally or one (1) day after being sent by Federal Express or other overnight
carrier or five (5) days after being sent by certified or registered mail.
10. Governing Law. All questions concerning the construction, validity and
interpretation of this Note will be governed by and construed in accordance with
the domestic laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
11. Waiver of Presentment, Demand and Dishonor. Except as otherwise provided in
this Note, the Company hereby waives presentment for payment, protest, demand,
notice of protest, notice of nonpayment and diligence with respect to this Note,
and waives and renounces all rights to the benefits of any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals, and modifications hereof.
12. Other Matters. At any time when this Note is held by any Affiliate of
Unigate PLC, this Note shall be subject to offset under that certain Stock
Purchase Agreement dated May 31, 1996, between the Company and BEP Holdings,
Inc.
* * * * * *
<PAGE> 21
IN WITNESS WHEREOF, the Company has executed and delivered
this Note on the date first above written.
DENAMERICA CORP.
By ___________________________
Its __________________________
<PAGE> 1
EXHIBIT 10.97
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of July
____, 1996, by and between DenAmerica Corp., a Georgia corporation (the
"Company") and BEP Holdings, Inc., a Delaware corporation (the "Holder").
WHEREAS
A. The Holder owns all of the outstanding capital stock of Black-eyed
Pea U.S.A., Inc., a Texas corporation ("BEP").
B. The Company and Holder have entered into a Stock Purchase Agreement
dated as of May 31, 1996 (the "Purchase Agreement") pursuant to which the
Company will acquire all of the outstanding capital stock of BEP (the
"Acquisition").
C. Pursuant to the terms of the Purchase Agreement, at the "Closing" of
the Acquisition, as that term is defined in the Purchase Agreement, the Company
will issue to Holder the "Buyer Note" and the "Warrant," as those terms are
defined in the Purchase Agreement, as a portion of the consideration for the
shares of capital stock of BEP to be acquired by the Company.
D. Pursuant to the terms of the Buyer Note, in the event that the Buyer
Note, together with accrued but unpaid interest thereon, has not been paid in
full at or prior to March 31, 1997, the Warrant will become exercisable to
purchase the Company's Common Stock, par value $.10 per share (the "Common
Stock").
E. The Purchase Agreement requires that, as a condition precedent to
the Closing of the Acquisition, the Company and the Holder shall have entered
into this Agreement on or before the "Closing Date" of the Acquisition, as that
term is defined in the Purchase Agreement.
F. The Holder understands that the Company intends to effect one or
more financings, which may include an offering of the Company's Common Stock or
other securities convertible or exercisable into shares of the Company's Common
Stock (each, a "Subsequent Financing"), within 36 months after the Closing Date
of the Acquisition, for the purpose (among others) of redeeming the Buyer Note
and all of the Company's then-outstanding Series B 13% Subordinated Notes due
2003.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
<PAGE> 2
I. REGISTRATION RIGHTS
1.1 Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
(a) The term "Act" means the Securities Act of 1933,
as amended.
(b) The term "Blackout Period" means any period (A)
beginning on the date on which the Company notifies the Holders (as defined
below) that (i) the Board of Directors of the Company, in its good faith
judgement, has determined that there are material developments with respect to
the Company such that it would be seriously detrimental to the Company and its
shareholders to utilize a registration statement pursuant to Sections 1.2 or 1.3
below; (ii) the Board of Directors of the Company, in its good faith judgment,
has determined that financial statements with respect to the Company, which may
be required to utilize a registration statement pursuant to Sections 1.2 or 1.3
below, are unavailable; or (iii) the Company has notified the Holders that it
intends to file a registration statement for a Subsequent Financing within 30
days of the mailing of such notice in accordance with Section 2.3 hereof, and
(B) ending on the date (1) with respect to clause (i) above, as soon as
practicable but not more than 90 days after the date on which the Company
notifies the Holders of the Board of Directors' determination; (2) with respect
to clause (ii) above, as soon as financial statements sufficient to enable the
Holders to sell their Registrable Securities under the Act have become
available; and (3) with respect to clause (iii) above, 90 days after the
effective date of the registration statement for the Subsequent Financing.
(c) The term "Holders" means those persons owning or
having the right to acquire Registrable Securities (as defined below).
(d) The term "Maximum Includable Securities" shall
mean the maximum number of shares of each type or class of the Company's
securities that a managing or principal underwriter, in its good faith judgment,
deems practicable to offer and sell at that time in a firm commitment
underwritten offering without materially and adversely affecting the
marketability or price of the securities of the Company to be offered. Where
more than one type or class of the Company's securities are to be included in a
registration, the managing or principal underwriter of the offering shall
designate the maximum number of each such type or class of securities that is
included in the Maximum Includable Securities.
(e) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(f) The term "Registrable Securities" means (i) the
shares of Common Stock issued or issuable upon exercise of the Warrant; and (ii)
any shares of Common Stock or
2
<PAGE> 3
other securities of the Company issued as (or issuable on the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to the Common Stock referred to in clause (i)
above, or in exchange for or in replacement of the Warrant or the Common Stock
referred to in clause (i) above.
(g) The number of shares of "Registrable Securities
then outstanding" shall be equal to the sum of the number of shares of Common
Stock outstanding which are Registrable Securities plus the number of shares of
Common Stock issuable upon conversion or exercise of the Warrant (and any other
outstanding Registrable Securities).
(h) "SEC" means the United States Securities and
Exchange Commission.
1.2 Demand Registration Rights.
(a) If the Company shall receive at any time after
the Closing Date of the Acquisition a written request from the Holders of a
majority of the Registrable Securities then outstanding that the Company file a
registration statement under the Act covering the registration of at least 50%
of the Registrable Securities then outstanding (or a lesser percentage if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $1,000,000), then the Company shall, within 10 days of
the receipt thereof, give written notice of such request to all Holders and
shall, subject to the limitations of Section 1.2(b), effect as soon as
practicable the registration under the Act of all Registrable Securities which
the Holders request to be registered within 30 days of the mailing of such
notice by the Company in accordance with the notice provisions of Section 2.3
hereof.
(b) If the Holders initiating the registration
request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company of the identity of the proposed managing or principal
underwriter(s) as a part of their request made pursuant to this Section 1.2. The
selection of such managing or principal underwriter(s) shall be subject to the
approval of the Company, such approval not to be unreasonably withheld. The
Company shall include information regarding the identity of the managing or
principal underwriter and the proposed terms of the underwriting in the written
notice to all Holders referred to in Section 1.2(a). The right of any Holder to
include the Holder's Registrable Securities in such underwritten registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. The Company and all
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders and reasonably acceptable to the Company.
3
<PAGE> 4
(c) Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Company in writing that marketing
factors require a limitation of the number of shares or other securities to be
underwritten, then the Company shall furnish all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto with a written
statement of the managing or principal underwriter as to the Maximum Includable
Securities, and the number of each type or class of Registrable Securities that
may be included in the underwriting shall be allocated among all Holders
requesting registration on a pro rata basis, with the number of each type or
class of Registrable Securities of each Holder thereof included in the
registration to be that number determined by multiplying the total number of
such type or class of security included in the Maximum Includable Securities by
a fraction, the numerator of which will be the total number of such type or
class of security that such Holder owns, and the denominator of which will be
the total number of such type or class of security owned by all Holders that
have requested inclusion of such type or class of security in the registration.
Any reduction of more than 50% of the Registrable Securities sought to be
registered will not be considered a registration under this Section 1.2 for the
purposes of Section 1.2(d).
(d) The Company shall be obligated to effect only one
such registration pursuant to this Section 1.2.
(e) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2 a certificate signed by the President of the Company stating that a
Blackout Period is in effect, the Company shall have the right to defer such
filing during the term of such Blackout Period; provided, however, that the
Company may not utilize this right more than twice in any 12-month period or in
a manner that results in Blackout Periods pursuant to any and all provisions of
this Agreement aggregating more than 180 days during any 12-month period.
(f) If the Holders give written notice requesting
registration of their Registrable Securities pursuant to this Section 1.2, and
if the Company at that time is not eligible to register its securities on Form
S-3, the Company shall prepare and file a registration statement on Form S-1 or
S-2 (or other appropriate form for the general registration of securities) as
may be appropriate in accordance with the terms and conditions set forth in this
Section 1.2.
(g) The Company may propose to include additional
shares ("Additional Shares") of Common Stock or other securities to be sold by
the Company and/or by other holders of Common Stock or other securities in any
registration statement to be filed pursuant to this Section 1.2. The Holders
shall have the right to reduce the number of Additional Shares requested to be
registered by the Company pursuant to this Section 1.2(g) (including, if
necessary, to zero) if, in the good faith opinion of the underwriter or
underwriters of such offering, the inclusion of such Additional Shares would
materially and adversely affect the marketability or price of the Registrable
Securities to be offered by the Holders in such registration.
4
<PAGE> 5
(h) From and after the date hereof, the Company shall
not, without the prior written consent of the Holders of a majority of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or
prospective holder to require the Company to include shares or securities in any
registration initiated under Section 1.2 of this Agreement, unless under the
terms of such agreement such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities is subject to the cutback contained in Section 1.2(g) above.
1.3 Registration on Form S-3.
(a) In addition to the registration rights provided
pursuant to Section 1.2 hereof, if at any time that the Company is eligible to
register its securities on Form S-3 (or any successor to Form S-3) the Company
shall receive a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act on Form S-3 to register for resale at least 50% of the
Registrable Securities then outstanding (or a lessor percentage if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $1,000,000), then the Company shall, within 10 days of
the receipt thereof, give written notice of such request to all Holders and
shall, effect as soon as practicable, the registration on Form S-3 under the Act
of all Registrable Securities which the Holders request to be registered within
30 days of the mailing of such notice by the Company in accordance with the
notice provisions of Section 2.3 hereof.
(b) The Company shall be obligated to effect only one
such registration pursuant to this Section 1.3.
(c) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.3 a certificate signed by the President of the Company stating that a
Blackout Period is in effect, the Company shall have the right to defer such
filing during the term of such Blackout Period; provided, however, that the
Company may not utilize this right more than twice in any 12-month period or in
a manner that results in Blackout Periods pursuant to any and all provisions of
this Agreement aggregating more than 180 days during any 12-month period.
(d) If the Company shall furnish to Holders whose
Registrable Securities have been registered pursuant to this Section 1.3 a
certificate signed by the President of the Company stating that a Blackout
Period is in effect, the Holders shall not sell any Registrable Securities
during such Blackout Period, notwithstanding the fact that such Registrable
Securities may otherwise be sold pursuant to the effective registration
statement or otherwise.
(e) The Company may include Additional Shares of
Common Stock or other securities to be sold by the Company and/or by other
holders of Common Stock or other securities in any registration statement to be
filed pursuant to this Section 1.3.
5
<PAGE> 6
1.4 Piggy-Back Registration Rights.
(a) Except as provided in Section 1.4(e), if at any
time the Company proposes to file on its behalf and/or on behalf of any of its
securityholders a registration statement under the Act on Form S-1, S-2 or S-3
(or any other appropriate form for the general registration of securities) with
respect to any of its capital stock or other securities, the Company shall give
each Holder written notice at least 20 days before the filing with the SEC of
such registration statement. If any Holder desires to have Registrable
Securities registered pursuant to this Section 1.4, such Holder shall so advise
the Company in writing within 15 days after the date of mailing of such notice
from the Company. The Company shall thereupon include in such filing the number
of Registrable Securities for which registration is so requested, subject to its
right to reduce the number of Registrable Securities as hereinafter provided,
and shall use its best efforts to effect registration under the Act of such
Registrable Securities. Notwithstanding the foregoing, the Company shall not be
required to provide notice of filing of a registration statement and to include
therein any Registrable Securities if the proposed registration is:
(1) a registration of stock options, stock
purchases or compensation or incentive plans, or of
securities issued or issuable pursuant to any such
plan or a dividend reinvestment plan on Form S-8 or
other comparable form then in effect; or
(2) a registration of securities proposed to
be issued in exchange for securities or assets of, or
in connection with, a merger or consolidation with
another corporation.
(b) In the event the offering in which any Holder's
Registrable Securities are to be included pursuant to this Section 1.4 is to be
underwritten on a firm commitment basis, the Company shall furnish the Holders
with a written statement of the managing or principal underwriter as to the
Maximum Includable Securities as soon as practicable after the expiration of the
15 day period provided for in Section 1.4(a). If the total number of securities
proposed to be included in such registration statement is in excess of the
Maximum Includable Securities, the number of securities to be included within
the coverage of such registration statement shall be reduced to the Maximum
Includable Securities as follows:
(1) no reduction shall be made in the number
of shares of capital stock or other securities to be
registered for the account of the Company; and
(2) the number of Registrable Securities and
other securities that may be included in the
registration, if any, shall be allocated among the
Holders of Registrable Securities and holders of
other securities (the "Other Holders") requesting
inclusion on a pro rata basis, with the number of
each type or class of securities of each Holder and
Other Holder thereof included in the registration to
be that number determined by
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multiplying (A) the total number of such type or
class of security included in the Maximum Includable
Securities less (B) the number of such type or class
of security to be registered for the account of the
Company, by a fraction, the numerator of which will
be the total number of such type or class of security
that such Holder or Other Holder owns, and the
denominator of which will be the total number of such
type or class of security owned by all Holders and
Other Holders that have requested inclusion of such
type or class of security in the registration.
(c) To the extent that the offering of Registrable
Securities proposed to be included in a registration statement is not to be
underwritten on a firm commitment basis, then there shall be no reduction in the
number of Holders' Registrable Securities to be registered in such registration
statement. If such offering is to be underwritten on a best efforts basis, the
shares of Common Stock or other securities of all participants, including the
Company and the Holders, shall be sold in a proportionate basis, based upon the
number of shares of Common Stock or other securities registered on their behalf.
(d) The Company shall, in its sole discretion, select
the underwriter or underwriters, if any, who are to undertake the sale and
distribution of the Registrable Securities to be included in a registration
statement filed under the provisions of this Section 1.4.
(e) At such time that the Company intends to effect a
Subsequent Financing, it shall notify the Holders of such intent and shall
designate the proposed offering as a Subsequent Financing. Except to the extent
that the Company, in its sole discretion, may otherwise permit, the Holders
shall have no right to have any Registrable Securities registered pursuant to
this Section 1.4 in any Subsequent Financing.
(f) The right to registration provided in this
Section 1.4 is in addition to and not in lieu of the demand registration rights
provided in Section 1.2. The provisions of this Section 1.4 shall apply even
though the Holders requesting registration pursuant to this Section 1.4 are or
may be free, at the time, to sell any or all of the Registrable Securities with
respect to which such registration was requested in accordance with Rule 144 (or
any similar rule or regulation) promulgated under the Act.
1.5 Obligations of the Company. Whenever required under
Section 1.2, Section 1.3, or Section 1.4 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration
statement on such form as the Company deems appropriate with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective. With respect to registration statements filed
pursuant to Section 1.2 or Section 1.4 hereof, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder the Company
shall keep such registration statement effective for up to 180 days, or such
shorter period as is required to
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dispose of all securities covered by such registration statement. With respect
to the registration statement filed pursuant to Section 1.3 hereof, the Company
shall keep such registration statement effective for two years, or such shorter
period as is required to dispose of all securities covered by such registration
statement; provided, however, that the two-year period shall be extended by that
number of days equal to the number of days that the Holders were prohibited from
selling any Registrable Securities as a result of any Blackout Period.
(b) Notify the Holders promptly after it has received
notice of the time when such registration statement has become effective or any
supplement to any prospectus forming a part of such registration statement has
been filed.
(c) Notify the Holders promptly of any request by the
SEC for the amending or supplementing of such registration statement or
prospectus or of additional information.
(d) Prepare and file with the SEC, and promptly
notify the Holders of the filing of, such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(e) Prepare and file with the SEC promptly upon the
request of any such Holders, any amendments or supplements to such registration
statement or prospectus which, in the reasonable opinion of special counsel for
such Holders, is required under the Act or the rules and regulations thereunder
in connection with the distribution of the Registrable Securities by such
Holders.
(f) Not file any amendment or supplement to the
registration statement or prospectus to which any Holders shall reasonably
object after having been furnished a copy a reasonable time prior to the filing
thereof.
(g) Advise each Holder promptly after it has received
notice or obtained knowledge thereof of the issuance of any stop order by the
SEC suspending the effectiveness of any such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(h) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(i) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as
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shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business, to file a general consent to service of process, or to become
subject to tax liability in any such states or jurisdictions or to agree to any
restrictions as to the conduct of its business in the ordinary course thereof.
(j) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering, together
with each Holder participating in such underwritten offering, as provided in
Section 1.6(c).
(k) Notify each Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered under
the Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(l) Prepare and promptly file with the SEC, and
promptly notify such Holders or their special counsel of the filing of, any
amendment or supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under the
Act, any event has occurred as the result of which any such prospectus must be
amended in order that it does not make any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, not
misleading, in light of the circumstances in which they were made.
(m) In case any of such Holders or any underwriter
for any such Holders is required to deliver a prospectus at a time when the
prospectus then in effect may no longer be used under the Act, prepare promptly
upon request such amendment or amendments to such registration statement and
such prospectus as may be necessary to permit compliance with the requirements
of the Act.
(n) If any of the Registrable Securities are then
listed on any securities exchange or the Nasdaq Stock Market, the Company will
cause all such Registrable Securities covered by such registration statement to
be listed on such exchange or the Nasdaq Stock Market.
1.6 Obligations of Holders. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Agreement
that each of the selling Holders shall:
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(a) Furnish to the Company such information regarding
themselves, the Registrable Securities held by them, the intended method of sale
or other disposition of such securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required to
effect the registration of their Registrable Securities.
(b) Notify the Company, at any time when a prospectus
relating to Registrable Securities covered by a registration statement is
required to be delivered under the Act, of the happening of any event with
respect to such selling Holder as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(c) In the event of any underwritten public offering,
each Holder participating in such underwriting shall enter into and perform its
obligations under the underwriting agreement for such offering, and, if
requested to do so by the underwriters managing such offering, each Holder shall
enter into a customary holdback agreement.
1.7 Expenses of Demand Registration and Registration on Form
S-3. The Company shall bear and pay all expenses incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2 or Section 1.3
(other than underwriting discounts and commissions with respect to Registrable
Securities included in such registration), including (without limitation) all
registration, filing, and qualification fees, Blue Sky fees and expenses,
printers' and accounting fees, costs of listing on any exchange or the Nasdaq
Stock Market, costs of furnishing such copies of each preliminary prospectus,
final prospectus, and amendments thereto as each Holder may reasonably request,
fees and disbursements of counsel for the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 or Section 1.3 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of
the Registrable Securities to be registered (in which case the Holders
participating in such offering and favoring such withdrawal shall bear such
expenses); provided further, however, that if such registration request has been
withdrawn by virtue of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant Section 1.2 and Section 1.3.
1.8 Expenses of Piggy-Back Registration. The Company shall
bear and pay all expenses incurred in connection with any registration, filing
or qualification of Registrable Securities with respect to each of the
registrations pursuant to Section 1.4 (other than underwriting discounts and
commissions with respect to Registrable Securities included in such
registration) for each Holder, including (without limitation) all registration,
filing, and qualification fees, Blue Sky fees and expenses, printers' and
accounting fees relating or apportionable thereto, costs of listing on any
exchange or the Nasdaq Stock Market, costs of
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furnishing such copies of each preliminary prospectus, final prospectus, and
amendments thereto as each Holder may reasonably request.
1.9 Limitations on Registration Rights. Notwithstanding any
other provision of this Agreement, with respect to any other securities of the
Company for which the Company has granted registration rights prior to the date
of this Agreement, the Registrable Securities shall not be registered and sold
at the same time as such other securities are being sold pursuant to an
underwritten offering if the managing underwriter of such offering believes that
the sale of the Registrable Securities could have a material adverse effect on
the amount of, or price at which, such other securities being registered can be
sold.
1.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) The Company will indemnify and hold harmless each
Holder, the officers and directors of each Holder, any underwriter (as defined
in the Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), against any losses, claims, damages, or
liabilities (joint or several) to which such person or persons may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will reimburse each such Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by such person or persons in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 1.10(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon (i) a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, underwriter or
controlling person, or (ii) the failure of such Holder, underwriter, or
controlling person to deliver a copy of the registration statement or the
prospectus, or any amendments or supplements thereto, after the Company has
furnished such person with a sufficient number of copies of the same.
(b) Each selling Holder will indemnify and hold
harmless the Company, each of its officers and directors, and each person, if
any, who controls the Company within the
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meaning of the Act, any underwriter and any other Holder selling securities in
such registration statement or any of its directors or officers or any person
who controls such Holder, against any losses, claims, damages, or liabilities
(joint or several) to which the Company or any such officer, director,
controlling person, or underwriter or controlling person may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such officer, director,
controlling person, underwriter or controlling person, other Holder, officer,
director, or controlling person in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 1.10(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld. Notwithstanding anything to the contrary herein
contained, a Holder's indemnity obligation, in such person's capacity as a
Holder, shall be limited to the net proceeds received by such Holder from the
offering out of which the indemnity obligation arises.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnified party, except that such fees and expenses shall be paid by
the indemnifying party if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.10.
(d) The indemnification provided by this Section 1.10
shall be a continuing right to indemnification and shall survive the
registration and sale of any of the Registrable Securities hereunder and the
expiration or termination of this Agreement.
1.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act, the Company agrees to use its best efforts to:
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(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule
144, the Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Amendment and Waiver. Any amendment or waiver of any
provision under this Agreement may be effected only with the written consent of
the Company and the holders of at least a majority of the Registrable Securities
then outstanding.
1.13 Remedies. The parties hereto acknowledge and agree that
the breach of any part of this Agreement may cause irreparable harm and that
monetary damages alone may be inadequate. The parties hereto therefore agree
that either party shall be entitled to injunctive relief or such other
applicable remedy as a court of competent jurisdiction may provide. Nothing
contained herein will be construed to limit any party's right to any remedies at
law, including recovery of damages for breach of any part of this Agreement.
II. MISCELLANEOUS
2.1 Notification for Benefit of Holders. In the event that (i)
the Company is actively pursuing the preparation and filing of a registration
statement for an underwritten offering in which it may be possible for the
Holders to participate pursuant to Section 1.4 of this Agreement, and (ii) the
Holders are not actively pursuing an underwritten offering or selling
Registrable Securities pursuant to an underwritten offering at that time, the
Company shall promptly notify the Holders of such activity. Upon receipt of such
notice, the Holders shall cease any sales of Registrable Securities pursuant to
any registration statement or otherwise until the earlier of (a) 90 days after
receipt of such notice; (b) two trading days after the Company files such
registration statement or publicly announces its intention to file such
registration statement (subject to the restrictions on any such sales provided
for elsewhere in this Agreement); or (c) the Company notifies the Holder that it
no longer is actively pursuing such underwritten offering. The Company shall
promptly notify the Holders of any changes in its plans for or active pursuit of
such underwritten offering.
2.2 Cancellation of Warrant. In the event that the Warrant
does not become exercisable, this Agreement shall be null and void and of no
further force or effect.
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2.3 Controlling Law. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement, shall be governed
by and construed in accordance with the laws of the State of Delaware,
notwithstanding any Delaware or other conflict-of-law provisions to the
contrary.
2.4 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received when delivered
against receipt, upon receipt of a facsimile transmission or when deposited in
the United States mails, first class postage prepaid, addressed as set forth
below:
(a) If to the Company:
7373 North Scottsdale Road
Suite D-120
Scottsdale, Arizona 85253
Facsimile: (602) 230-9592
Attention: President
with a copy given in the manner
prescribed above, to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
One East Camelback Road
Phoenix, Arizona 85012
Facsimile: (602) 263-2900
Attention: Robert S. Kant, Esq.
(b) If to any Holder, to the address of such Holder
as it appears in the stock or warrant ledger of
the Company.
Any party may alter the address to which communications or
copies are to be sent by giving notice of such change to each of the other
parties hereto of address in conformity with the provisions of this paragraph
for the giving of notice.
2.5 Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors, and assigns, including any
subsequent Holders of the Warrant or any Registrable Securities.
2.6 Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied,
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oral or written, except as herein contained. The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof. This Agreement may not be modified or amended
other than by an agreement in writing.
2.7 Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
2.8 Gender. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
2.9 Indulgences, Not Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
2.10 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories. Any photographic or xerographic copy of this Agreement, with all
signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as of it were an executed counterpart of this
Agreement.
2.11 Provisions Separable. The provisions of this Agreement
are independent and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
2.12 Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or holiday.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
DENAMERICA CORP., a Georgia corporation
By:
-----------------------------------------
Jack M. Lloyd
Chief Executive Officer
BEP HOLDINGS, INC., a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
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EXHIBIT 10.98
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "Agreement") is entered into as of
July __, 1996, among (i) DENAMERICA CORP., a Georgia corporation (the
"Company"), (ii) certain of the holders of the Series B Notes (as defined below)
and (iii) State Street Bank and Trust Company, as trustee for the holders of
Series B Notes (the "Trustee").
RECITALS
WHEREAS, pursuant to a Stock Purchase Agreement dated as of May 31,
1996 between the Company and BEP Holdings, Inc., a Delaware corporation (the
"Seller"), the Company has agreed to purchase from the Seller all of the
outstanding common stock of Black-eyed Pea Restaurants U.S.A., Inc.;
WHEREAS, a portion of the consideration to be paid by the Company will
consist of a senior subordinated promissory note of the Company in the stated
original principal amount of $15,000,000 (the "Purchase Price Note");
WHEREAS, the Company has outstanding on the date hereof Series B 13%
Subordinated Notes due 2003 (the "Series B Notes"), governed by the Indenture,
dated as of March 29, 1996 between the Company and the Trustee, as supplemented
by a Supplemental Indenture of even date herewith (the "Series B Indenture");
and
WHEREAS, the parties desire to enter into this intercreditor agreement
for the benefit of the holders of Senior Debt (as defined below).
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms, when used in this
Agreement, including the introductory paragraph and Recitals hereto, shall,
except where the context otherwise requires, have the following meanings:
"Agreement" means this Intercreditor Agreement.
"Bankruptcy or Insolvency Proceeding" means (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to its
creditors, as such, or to its property, (b) any liquidation, dissolution,
reorganization or winding up of the Company, whether voluntary or involuntary,
partial or complete, and whether or not involving receivership, insolvency or
<PAGE> 2
bankruptcy, or (c) any assignment for the benefit of creditors of the Company,
or any other marshaling of property or liabilities of the Company.
"Company" has the meaning specified in the introductory paragraph
hereto.
"Enforcement Action" means (a) the acceleration of any Subordinated
Debt, (b) the commencement of, or the joining with any other Person in the
commencement of, any Bankruptcy or Insolvency Proceeding, or (c) the enforcement
of any of the rights or remedies of any Subordinated Creditor against the
Company, whether under the Subordinated Debt Documents or otherwise, and whether
by action at law, suit in equity, arbitration proceedings or otherwise.
"Enforcement Action Notice" has the meaning specified in Section
3.1(a).
"payment in full" and "paid in full" mean payment in full in
immediately available funds.
"property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Price Note" has the meaning specified in the Recitals hereto.
"Representative" means the indenture trustee or other trustee, agent or
representative for any class of Indebtedness.
"Senior Creditors" means, collectively, (a) any holders of any Senior
Debt and (b) any Representatives of any holders of Senior Debt.
"Senior Debt" means all Indebtedness of the Company or any of its
Subsidiaries, contingent or otherwise, now or hereafter existing, under or with
respect to:
(a) the Senior Debt Documents in an aggregate outstanding principal
amount not exceeding the sum of (i) $15,000,000, plus (ii) the aggregate
principal amount of Indebtedness evidenced by securities issued in payment of
accrued interest on any Senior Debt, less (iii) the amount of all permanent
payments of principal made under the Senior Debt Documents from time to time
after the date hereof; and
(b) interest (including interest accruing at the contract rate after
the commencement of any Bankruptcy or Insolvency Proceeding, whether or not such
interest is an allowed claim in such proceeding) accrued on the outstanding
principal described in clause (a) and other amounts owing under the Senior Debt
Documents, and premiums, fees costs, expenses, indemnities reimbursements and
other amounts owing under the Senior Debt Documents.
"Senior Debt Documents" means, collectively, (a) the Purchase Price
Note, (b) each instrument or agreement pursuant to which obligations under the
Purchase Price Note or any
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subsequent Senior Debt Document are deferred, extended, renewed, replaced,
refunded or refinanced, in whole or in part, and without limitation as to
parties, maturities, principal amount, interest rates or other provisions, and
(c) each other instrument or agreement executed in connection with or
evidencing, governing, guarantying or accruing any Indebtedness or other
obligations under any instrument or agreement referred to in the foregoing
clauses (a) or (b); in each case (with respect to any instrument or agreement
referred to in the foregoing clauses (a) or (b)), as modified, amended or
supplemented from time to time.
"Senior Default" means an event of default under any Senior Debt
Document, or any event or condition which, with the giving of notice or the
passage of time, or both, would become an event of default under any Senior Debt
Document.
"Senior Representative" means the Person appointed from time to time by
the holders of a majority of the outstanding principal amount of Senior Debt, as
designated in a written notice to the Company by such holders, as the Senior
Representative for purposes of this Agreement, or, at any time that no such
Person has been so appointed, the holder of the greatest aggregate principal
amount of Senior Debt.
"Series B Notes" has the meaning specified in the Recitals hereto.
"Series B Indenture" has the meaning specified in the Recitals hereto.
"Standstill Notice" has the meaning specified in Section 2.2(g).
"Standstill Period" means, in relation to any Standstill Notice, the
period beginning on the date such Standstill Notice is received by the Company
(as provided in Section 2.2(a)) and ending on the date determined pursuant to
Section 2.2(b).
"Subordinated Creditor" means, (a) any holder of Series B Notes from
time to time party hereto, and any successor or assignee of such holder deemed
to be a party to this Agreement pursuant to Section 5.8, and (b) any
Representative of any holder of Subordinated Debt.
"Subordinated Debt" means all Indebtedness and other obligations of the
Company or any of its Subsidiaries to any Subordinated Creditor, contingent or
otherwise, now or hereafter existing, under or in respect of any Subordinated
Debt Documents, and interest (including interest accruing after the commencement
of any Bankruptcy or Insolvency Proceeding) and premium, if any, thereon and
other amounts payable in respect thereof (including any such obligations to
prepay, repurchase, retire, redeem or acquire for value any such Indebtedness).
"Subordinated Debt Documents" means, collectively, (a) the Series B
Indentures, (b) any Series B Notes held by any Subordinated Creditor, and (c)
each instrument or agreement now or hereafter executed in connection with or
evidencing, governing, guarantying or securing any Indebtedness under any such
document.
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"Trustee" has the meaning specified in the introductory paragraph
hereto.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in The Commonwealth of Massachusetts.
SECTION 1.2 Purchase Price Note Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including the introductory paragraph and Recitals hereto, that are defined in
the Purchase Price Note, have the meanings given to such terms in the Purchase
Price Note.
SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including the introductory paragraph and Recitals
hereto, with such meanings.
SECTION 1.4 General Provisions Relating to Definitions. Terms for which
meanings are defined in this Agreement shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The term
"including" means including, without limiting the generality of any description
preceding such term. Each reference herein to any Person shall include a
reference to such Person's successors in title and assigns or (as the case may
be) such Person's successors, assigns, heirs, executors, administrators and
other legal representatives. References to any instrument or agreement defined
in this Agreement refer to such instrument or agreement as originally executed,
or, if subsequently varied, replaced or supplemented from time to time, as so
varied, replaced or supplemented and in effect at the relevant time of reference
thereto.
ARTICLE II
LIMITATIONS ON ENFORCEMENT ACTIONS
SECTION 2.1 Limitations on Enforcement Actions. No Subordinated
Creditor will take any Enforcement Action unless:
(a) such Subordinated Creditor shall have given to the Company and the
Senior Representative not less than 30 days prior written notice (an
"Enforcement Action Notice") of the intent of such Subordinated Creditor to take
such Enforcement Action; and
(b) no Standstill Period is continuing.
SECTION 2.2 Imposition of Standstill Period.
(a) The Senior Representative may at any time give to the Company and
to the Trustee a written notice (a "Standstill Notice") of the imposition of a
Standstill Period.
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(b) Each Standstill Period will commence on the date the Company
receives the Standstill Notice commencing such Standstill Period and will
terminate upon the earliest to occur of (i) the date 180 days after the
commencement of such Standstill Period, or (ii) the date such Standstill Period
shall have been terminated by notice to the Company and the Trustee from the
Senior Representative. Any number of Standstill Notices may be given and any
number of Standstill Periods may be commenced, but the aggregate length of all
Standstill Periods during any period of 365 consecutive days shall not exceed
180 days.
ARTICLE III
WAIVERS
SECTION 3.1 Waivers of Notice, etc. The obligations of Subordinated
Creditors under this Agreement, and the subordination arrangements contained
herein, shall not be to any extent or in any way or manner whatsoever impaired
or otherwise affected by any of the following, whether or not any Subordinated
Creditor shall have had any notice or knowledge of any thereof:
(a) the dissolution, termination of existence, death, bankruptcy,
liquidation, insolvency, appointment of a receiver for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any Bankruptcy or Insolvency Proceeding by or against, the Company or any
Subsidiary thereof;
(b) the absorption, merger or consolidation of, or the effectuation of
any other change whatsoever in the name, membership, constitution or place of
formation of, the Company or any Subsidiary thereof;
(c) any extension or postponement of the time for the payment of any
Senior Debt, the acceptance of any partial payment thereon, and any and all
other indulgences whatsoever by any Senior Creditor in respect of any Senior
Debt;
(d) any action or delay in acting or failure to act on the part of the
Senior Creditors under any Senior Debt Document or in respect of any Senior
Debt, any failure by any Senior Creditor strictly or diligently to assert any
rights or to pursue any remedies or claims against the Company or any other
Person or Persons under any of the Senior Debt Documents or provided by statute
or at law or in equity;
(e) any modification or amendment of, or any supplement or addition to,
any Senior Debt Document;
(f) any waiver, consent or other action or acquiescence by any Senior
Creditor in respect of any default by the Company in its performance or
observance of or compliance with any term, covenant or condition contained in
any Senior Debt Document; or
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(g) any Senior Debt Document or any provision thereof shall at any time
or for any reason whatsoever cease to be in full force or effect or shall be
declared null and void or illegal, invalid, unenforceable or inadmissible in
evidence
Each Subordinated Creditor hereby absolutely, unconditionally and
irrevocably ascents to and waives notice of any and all matters hereinbefore
specified in clauses (a) through (g).
ARTICLE IV
ADDITIONAL COVENANTS
Until all Senior Debt has been paid in full:
SECTION 4.1 Limitations on Transfers of Subordinated Debt. No
Subordinated Creditor will at any time sell, assign or otherwise transfer, by
operation of law or otherwise, any Subordinated Debt, unless on or prior to the
date of such sale, assignment or transfer, the purchaser, assignee or transferee
of such Subordinated Debt shall have entered into and agreed to be bound by this
Agreement as a Subordinated Creditor hereunder pursuant to documentation
reasonably acceptable to the Senior Representative.
SECTION 4.2 Information Regarding Subordinated Debt. The Company shall
furnish to the Senior Creditors from time to time all such information regarding
the Subordinated Debt as the Senior Creditors may from time to time reasonably
request.
SECTION 4.3 No Amendments to Subordinated Debt Documents. The Company
and the Subordinated Creditors acknowledge that the Purchase Price Note
restricts the amendment of the Subordinated Debt Documents without the consent
of the Senior Creditors.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Amendment, Waivers, etc.. The provisions of this Agreement
may from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by each Subordinated
Creditor or its Representative and by each Senior Creditor or its
Representative. No failure or delay on the part of any Person in exercising any
power or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand hereunder shall entitle any Person to any notice or demand in
similar or other circumstances, unless otherwise required by this Agreement. The
remedies herein provided are cumulative and not exclusive of any other remedies
provided at law or in equity. No waiver or approval by a Person under this
Agreement shall, except as may be otherwise stated in such waiver or approval,
be
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applicable to any subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 5.2 Amendments, Waivers, etc. of Series B Indenture.
Notwithstanding any contrary provision in any Subordinated Debt Document, any
modification, amendment, termination, extension or waiver (either permanently or
temporarily in whole or in part), at any time prior to the occurrence of a
Termination Event, of any provision of any Senior Debt Document which is
identical or substantially identical to any provision of any Subordinated Debt
Document (a "Parallel Provision") shall automatically result in an identical
modification, amendment, termination, extension or waiver of the Parallel
Provision in the applicable Subordinated Debt Document, as if all Subordinated
Creditors had executed and delivered all documentation necessary to effect such
modification, amendment, termination, extension or waiver. Any forbearance by
the Senior Creditors in respect of any Parallel Provision in any Senior Debt
Document shall, to the fullest extent permitted by applicable law, automatically
result in an identical forbearance obligation in respect of the Parallel
Provision in the applicable Subordinated Debt Document. Notwithstanding the
foregoing, no such modification, amendment or waiver shall be effective as to
the Parallel Provision contained in the Subordinated Debt Documents if it would
(a) decrease the principal amount of Subordinated Debt, or (b) decrease the
interest rate on or in respect of Subordinated Debt (except to the extent that
any modification, amendment or waiver shall be effective to cause any default or
overdue interest rate to be inapplicable). The Company shall promptly provide a
copy of any modification, amendment, termination, extension, waiver or
forbearance of or in respect of any Subordinated Debt Documents effected
pursuant to this Section 5.2 to the Trustee and to the Subordinated Creditors;
provided, that the failure to deliver any such notice to the Trustee or any
Subordinated Creditor shall not affect the validity or enforceability of any
such modification, amendment, termination, extension, waiver or forbearance.
As used in this Section 5.2, the term "Termination Event" means the
indefeasible repayment in full of the Senior Debt.
SECTION 5.3 Further Assurances. Each of the Subordinated Creditors and
the Company will, from time to time at its own expense, promptly execute and
deliver all such further instruments or agreements, and take all such further
action, as may be reasonably necessary or appropriate, or as any Senior Creditor
may reasonably request, in order to carry out the intent of this Agreement.
SECTION 5.4 Specific Performance; Remedies Cumulative. Each of the
Subordinated Creditors and the Company (a) acknowledge that a remedy at law for
any breach or attempted breach of this Agreement shall be inadequate, (b) agree
that the Senior Creditors shall be entitled to specific performance, and (c)
agrees to waive any requirement for obtaining or posting any bond in connection
with seeking or obtaining any such injunctive or equitable relief. Nothing in
the foregoing sentence shall limit the rights of any party to seek any available
remedy at law or equity. The rights and remedies of the Senior Creditors
provided herein are cumulative, and not exclusive of rights and remedies which
may be granted or provided by applicable law.
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SECTION 5.5 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, or affecting the
validity or enforceability of any such provision in any other jurisdiction.
SECTION 5.6 Enforcement by Senior Creditors. The Company and each of
the Subordinated Creditors acknowledge and agree that their respective
obligations hereunder are, and are intended to be an inducement and
consideration to each Senior Creditor to acquire and continue to hold Senior
Debt. Each Senior Creditor shall be deemed conclusively to have relied upon the
obligations hereunder of the Company and the Subordinated Creditors in acquiring
and continuing to hold Senior Debt. Each Senior Creditor is hereby made an
obligee hereunder and may enforce directly the obligations of the Company and
the Subordinated Creditors contained herein.
SECTION 5.7 Continuing Agreement. This Agreement shall in all respects
be a continuing agreement, and this Agreement and the agreements and obligations
of the Company and the Subordinated Creditors hereunder shall remain in full
force and effect until all Senior Debt is indefensibly paid in full.
SECTION 5.8 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company, the Senior Creditors and
the Subordinated Creditors and their respective successors in title and assigns.
Without limiting the obligations of the Subordinated Creditors under Section
4.1, the rights and obligations of any Subordinated Creditor under this
Agreement shall be assigned automatically to, and the term "Subordinated
Creditor" as used in this Agreement shall automatically include, any assignee or
successor of such Subordinated Creditor, and such assignee or successor shall
automatically become a party to this Agreement as a Subordinated Creditor
without the need for the execution of any instrument or the taking of any other
action.
SECTION 5.9 Trustee as Senior Creditor. The Trustee in its individual
capacity shall be entitled to all rights set forth in this Agreement with
respect to any Senior Debt which may at any time be held by it, to the same
extent as any other Senior Creditor.
SECTION 5.10 Notices. All notices and other communications provided to
a party hereunder shall (except as otherwise specifically provided herein) be in
writing or by facsimile transmission and addressed or delivered to it at its
address designated for notices set forth below its signature hereto or at such
other address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid, and
any notice, if transmitted by facsimile transmission, shall be deemed given when
received.
SECTION 5.11 Entire Agreement. This Agreement constitutes the entire
agreement among the Company, the Senior Creditors and the Subordinated Creditors
with respect to the subject matter hereof and supersedes any prior or
contemporaneous agreements, representations,
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warranties or understandings, whether oral written or implied, as to the subject
matter of this Agreement.
SECTION 5.12 CHOICE OF LAW. THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN THE COMMONWEALTH OF MASSACHUSETTS AND SHALL IN ALL RESPECTS BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 5.13 Service of Process. Each of the parties hereto by its
execution hereof (a) hereby irrevocably submits to the nonexclusive jurisdiction
of the state courts of The Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding arising
out of or based upon this Agreement or the subject matter hereof, and (b) hereby
waives, to the fullest extent not prohibited by applicable law, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such proceeding,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement, or the subject matter hereof, may not be
enforced in or by such court. Each of the parties hereto consents to service of
process in any such proceeding in any manner permitted by Chapter 223A of the
General Laws of The Commonwealth of Massachusetts, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified in or pursuant to Section 5.10, is reasonably calculated to
give actual notice.
SECTION 5.14 Waiver of Jury Trial. To the extent not prohibited by
applicable law which cannot be waived, each of the parties hereto waives, and
covenants that it will not assert (whether as plaintiff, defendant or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, action or cause of action arising out of or based upon this
Agreement or the subject matter hereof, in each case whether now existing or
hereafter arising and whether in contract or tort or otherwise. Each of the
parties hereto acknowledges that the provisions of this Section 5.14 constitute
a material inducement upon which the Senior Creditors are relying and will rely
in holding Senior Debt. Any party and any Senior Creditor may file an original
counterpart or a copy of this Section 5.14 with any court as written evidence of
the consent of each of the parties hereto to the waiver of its right to trail by
jury.
SECTION 5.15 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
SECTION 5.16 Headings. The descriptive headings in this Agreement are
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the day and in the
year first above written.
DENAMERICA CORP.
By:
-------------------------------------
Title:
----------------------------------
Address: 7373 Scottsdale Road
Suite D120
Scottsdale, AZ 35253
Fax: (602) 483-9592
Attention: William J. Howard
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
-------------------------------------
Name
------------------------------------
Title:
----------------------------------
Address:
Fax:
Attention:
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HOLDERS OF SERIES B NOTES:
----------------------------------------
Jack M. Lloyd
Address: c/o DenAmerica Corp.
7373 Scottsdale Road
Suite D120
Scottsdale, AZ 35253
Fax: (602) 483-9592
----------------------------------------
William J. Howard
Address: c/o DenAmerica Corp.
7373 Scottsdale Road
Suite D120
Scottsdale, AZ 35253
Fax: (602) 483-9592
11
<PAGE> 1
EXHIBIT 10.99
SALE AND LEASE AGREEMENT
THIS SALE AND LEASE AGREEMENT (this "Agreement") is made as of July ___,
1996, by and among FFCA ACQUISITION CORPORATION, a Delaware corporation
("Buyer"), whose address is 17207 North Perimeter Drive, Scottsdale, Arizona
85255, and the partnerships, corporations, limited liability companies and
other entities described on Schedule 1 attached hereto (individually called
"Seller" and collectively called "Sellers"), whose collective address is 7373
North Scottsdale Road, Scottsdale, Arizona 85253.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined terms used in
this Agreement shall have the meanings set forth in Section 1. BEP Holdings owns
all of the issued and outstanding capital stock of Franchisor. BEP Holdings, as
seller, and DenAmerica, as buyer, entered into the Stock Purchase Agreement for
the sale and purchase of all of the outstanding capital stock of Franchisor.
Sellers own the Sites and the Other Sites, and Buyer desires to purchase the
Sites and, other than the Vacant Site, lease the same to DenAmerica pursuant to
the Leases. Buyer desires to purchase the Vacant Site and lease the same to
DenAmerica pursuant to the Vacant Site Lease. DenAmerica, as lessee under the
Leases, will, on the Sale and Lease Closing Date, grant to Buyer, as lessor, a
first-priority lien and security interest in and to all of the Equipment owned
by DenAmerica in connection with the operation of a Blackeyed Pea restaurant on
each Site. Borrower will purchase certain personal property and lease the same
to DenAmerica pursuant to the Equipment Lease. Note Guarantors will acquire all
of the issued and outstanding capital stock of Borrower. Buyer has agreed to
make the Loan to Borrower to provide purchase money financing for the personal
property to be leased to DenAmerica pursuant to the Equipment Lease. The Loan
will be evidenced by the Note. Note Guarantors will execute the Note Guaranty to
secure the performance of Borrower's duties and obligations under the Note. Note
Guarantors will also execute the Stock Pledge Agreement for the benefit of Buyer
to secure the performance of the obligations described in the Stock Pledge
Agreement. Buyer will purchase the Sites and make the Loan pursuant to the terms
and conditions of the Sale and Lease Operative Documents and the Loan Operative
Documents. Simultaneously with the execution and delivery of this Agreement by
Sellers, Borrower shall execute and deliver to Buyer the Loan Agreement. The
consummation of the transactions contemplated by this Agreement and by the Loan
Agreement shall occur concurrently.
AGREEMENT:
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
for all purposes of this Agreement:
<PAGE> 2
"Affiliate" means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"BEP Holdings" means BEP Holdings, Inc., a Delaware corporation, or its
successor.
"Borrower" means LH LEASING COMPANY, INC., an Arizona corporation, or
its successor.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Commitment" means that certain Commitment Letter dated May 2, 1996,
between Buyer and DenAmerica with respect to the transaction described in this
Agreement.
"Counsel" means legal counsel to Sellers and DenAmerica, as selected by
Sellers and DenAmerica, and approved by Buyer, licensed in the state(s) in which
(i) each Site is located, (ii) Sellers and DenAmerica are incorporated or
formed, and (iii) Sellers and DenAmerica maintain their principal places of
business.
"DenAmerica" means DenAmerica Corp., a Georgia corporation, or its
successor.
"Environmental Condition" means any condition with respect to soil,
surface waters, groundwaters, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium, including, without limitation,
Hazardous Materials, comprising or surrounding the Sites, whether or not yet
discovered, which could or does result in any damage, loss, cost, expense,
claim, demand, order or liability to or against any or all of the Sellers or
Buyer by any third party (including, without limitation, any government entity),
including, without limitation, any condition resulting from the operation of the
respective Seller's business and/or the operation of the business of any other
property owner or operator in the vicinity of the Sites and/or any activity or
operation formerly conducted by any person or entity on or off the Sites.
"Environmental Laws" means all applicable present statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises, agreements and similar items, of
or with any and all governmental agencies, departments, commissions, boards,
bureaus or instrumentalities of the United States, the states in which the Sites
are located and political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment, including, without limitation:
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(i) all requirements, including, without limitation, those
pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, Releases or Threatened Releases
of Hazardous Materials into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials; and
(ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
"Equipment" means all of the appliances, furniture, fixtures, equipment
and other personal property to be owned as of the Sale and Lease Closing Date by
DenAmerica situated on the Sites and used in connection with the operation of
Black-eyed Pea restaurants on the Sites. As of the date of this Agreement, each
Seller owns the Equipment located on or at the Site owned by such Seller as
shown on Schedule A attached hereto.
"Equipment Lease" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Fee" means an underwriting and processing fee equal to one percent
(1%) of the sum of the Loan Amount and the Purchase Price. DenAmerica paid Buyer
an amount equal to $250,000.00 toward the Fee at the time of DenAmerica's
execution of the Commitment; the balance of the Fee will be paid by Sellers to
Buyer at the Sale and Lease Closing.
"Franchisor" means BLACK-EYED PEA U.S.A., INC., a Texas corporation, or
its successor.
"Hazardous Materials" means (a) any toxic substance or hazardous waste,
substance or related material, or any pollutant or contaminant; (b) radon gas,
asbestos in any form which is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment which contains dielectric fluid
containing levels of polychlorinated biphenyls in excess of federal, state or
local safety guidelines, whichever are more stringent, or any petroleum product;
(c) any substance, gas, material or chemical which is or may be defined as or
included in the definition of "hazardous substances," "toxic substances,"
"hazardous materials," hazardous wastes" or words of similar import under any
federal, state or local statute, law, code or ordinance or under the regulations
adopted or guidelines promulgated pursuant thereto, including, but not limited
to, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. SectionSection 9601 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. SectionSection 1801 et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. SectionSection
6901 et seq.; and the Federal Water Pollution Control Act, as amended, 33 U.S.C.
SectionSection 1251 et seq.; and (d) any other chemical, material, gas or
substance the exposure to or release of which is prohibited, limited or
regulated by any governmental or quasi-governmental entity or authority that
asserts or may assert jurisdiction over the Sites or the operations or activity
at the Sites, or any chemical, material, gas or substance that does pose a
hazard to the health and/or safety of the occupants of the Sites.
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"Lease" or "Leases" means, as the context requires, the lease agreement
substantially in the form attached hereto as Schedule B, executed and delivered
by DenAmerica, as lessee, and Buyer, as lessor, with respect to each Site, other
than the Vacant Site. A Lease shall be executed for each Site, other than the
Vacant Site. Except as otherwise specifically provided in this Agreement,
however, reference to a Lease or the Leases herein shall include reference to
the Vacant Site Lease.
"Loan" shall have the meaning set forth in Section 1 of the Loan
Agreement.
"Loan Agreement" means the Loan Agreement, in the form of Schedule C
attached hereto, to be dated and executed by Borrower and Buyer, as lender, as
of the date hereof relative to the Loan Transaction.
"Loan Amount" shall have the meaning set forth in Section 1 of the Loan
Agreement.
"Loan Closing" shall have the meaning set forth in Section 4 of the
Loan Agreement.
"Loan Closing Date" means the date specified as the closing date in
Section 4 of the Loan Agreement.
"Loan Transaction" means the transaction contemplated by the Loan
Agreement.
"Loan Operative Documents" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Material Adverse Effect" means, with respect to (i) any or all of the
Sellers, a material adverse effect on the business, operations, assets, or
financial condition of any one or all of the Sellers, (ii) any or all of the
Sites, a material adverse effect on the business, operations, assets, financial
or physical condition of any one or all of the Sites, and/or (iii) the
Equipment, a material adverse effect on the use, operation or physical condition
of the Equipment located on or at any one or all of the Sites if such effect
could reasonably be expected to materially impair the ability of DenAmerica, or
a Sublessee, to conduct business activities on or at any one or all of the Sites
with respect to the operation of Black-eyed Pea restaurants (except with respect
to the Vacant Site which will remain vacant and the Steak House Site which is
operated as a steak house restaurant).
"Memorandum of Lease" means a memorandum of lease substantially in the
form attached hereto as Schedule D, executed and delivered by DenAmerica, as
lessee, and Buyer, as lessor, and recorded with respect to each Lease. A
Memorandum of Lease shall be executed for each Lease.
"Non-Foreign Seller Certificate" means the certificate to be delivered
by each Seller on the Sale and Lease Closing Date substantially in the form
attached hereto as Schedule E.
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"Note" shall have the meaning set forth in Section 1 of the Loan
Agreement.
"Note Guarantors" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Note Guaranty" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Other Agreements" means the Sale and Lease Operative Documents (except
this Agreement), the Equipment Lease and any and all agreements, leases, loan
agreements, documents, assignments, instruments, promissory notes, mortgages,
deeds of trust, and indemnities (other than the remaining Loan Operative
Documents) entered into, now and hereafter, between (or by) (a) DenAmerica or
any Affiliate of DenAmerica, and (or for the benefit of) (b) Buyer or any
Affiliate of Buyer.
"Other Site" or "Other Sites" means, as the context requires, one or
more of the parcel or parcels of real estate, the addresses of which are listed
on Schedule F attached hereto and made a part hereof, together with all rights,
easements, privileges and appurtenances associated therewith and all buildings,
fixtures and other improvements now or hereafter located thereon (whether or not
affixed to such real estate). Each of the Other Sites is owned by the
corresponding Seller identified on Schedule F.
"Permitted Exceptions" means those exceptions to title approved in
writing by Buyer pursuant to Section 11.A.
"Person" or "Persons" means, as the context requires, any individual,
corporation, trust, partnership, limited liability company, unincorporated
organization, governmental authority or any other form of entity.
"Purchase Price" means the amount specified in Section 3.
"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping into soil, surface waters, groundwaters, land, stream sediments, surface
or subsurface strata, ambient air or any other environmental medium comprising
or surrounding the Sites in such a manner that violates any applicable
Environmental Laws.
"Sale and Lease Closing" shall have the meaning set forth in Section 5.
"Sale and Lease Closing Date" shall have the meaning set forth in
Section 5.
"Sale and Lease Operative Documents" means, collectively, this
Agreement, the Leases, Non-Foreign Seller Certificate(s), each Deed (defined in
Subsection 11.A), UCC-1 Financing Statements, each Memorandum of Lease and all
other documents, instruments, agreements, affidavits, notices, certifications
and estoppels executed (or to be executed before or after the
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Sale and Lease Closing) in connection with the transaction contemplated by this
Agreement (other than the Loan Operative Documents).
"Site" or "Sites" means, as the context requires, one or more of the
parcel or parcels of real estate, the addresses of which are listed on Schedule
A attached hereto and made a part hereof, together with all rights, easements,
privileges and appurtenances associated therewith and all buildings, fixtures
and other improvements now or hereafter located thereon (whether or not affixed
to such real estate). Except as otherwise specifically provided herein,
reference to a Site, each Site or the Sites in this Agreement shall include
reference to the Vacant Site and the Steak House Site. Each Site is owned by the
corresponding Seller as shown on the attached Schedule A.
"Steak House Site" means the Site identified on Schedule A as FFCA No.
8000-4428 located in Knoxville, Tennessee.
"Stock Pledge Agreement" shall have the meaning set forth in Section 1
of the Loan Agreement.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
dated as of May 31, 1996, between BEP Holdings, as seller, and DenAmerica, as
buyer, for the sale and purchase of all of the issued and outstanding capital
stock of Franchisor.
"Sublease" shall have the meaning set forth in Section 1 of the Lease.
"Sublessee" shall have the meaning set forth in Section 1 of the Lease.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding the Sites which may
result from such Release.
"Title Company" means LAWYERS TITLE INSURANCE CORPORATION, 40 East
Mitchell Drive, Suite 100, Phoenix, Arizona 85012.
"Transaction Costs" means all reasonable costs and expenses incurred in
connection with the transaction contemplated by this Agreement including,
without limitation, preparation of the environmental report(s) for each Site
described in Subsection 11.E, review of the condition of title for each Site by
Buyer, title insurance charges and premiums relative to the title insurance
described in Subsection 11.C(i), preparation and review of a survey for each
Site by Buyer as set forth in Subsection 11.D, Uniform Commercial Code search
relative to the UCC Search Parties and each Site as described in Subsection
11.C(ii), Sellers' legal fees and Buyer's outside counsel legal fees, all
escrow, recording and filing fees and charges, stamp taxes, and transfer fees.
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"UCC-1 Financing Statement" or "UCC-1 Financing Statements" means, as
the context requires, the UCC-1 Financing Statements executed by DenAmerica, as
debtor, for the benefit of Buyer, as secured party, in accordance with the terms
of the Leases. One or more UCC-1 Financing Statements will be executed and filed
for each Site with respect to each Lease in the appropriate state, county or
other applicable offices.
"UCC Search Parties" means, collectively, Sellers, DenAmerica and such
other parties as Buyer shall reasonably request.
"Vacant Site" means the parcel of real estate located in Chesapeake,
Virginia, identified on the attached Schedule A as store No. 2100/FFCA No.
8000-4412, owned by the corresponding Seller identified on Schedule A, together
with all rights, easements, privileges and appurtenances associated therewith
and all buildings, fixtures and other improvements now or hereafter located
thereon (whether or not affixed to such real estate).
"Vacant Site Lease" means the lease agreement in the form attached
hereto as Schedule G to be executed and delivered by DenAmerica, as lessee, and
Buyer, as lessor, with respect to the Vacant Site.
2. TRANSACTION. On the terms and subject to the conditions set forth
herein, Sellers shall convey to Buyer title to the Sites that each Seller owns,
Buyer shall purchase the Sites, Buyer shall lease the Sites to DenAmerica
pursuant to the Leases. DenAmerica shall grant to Buyer a perfected
first-priority lien and security interest in the Equipment owned by DenAmerica
located at each Site pursuant to each Lease and the corresponding UCC-1
Financing Statements. The sale and purchase of the Sites pursuant to this
Agreement and the lease of the Sites to DenAmerica pursuant to the Leases,
together with the Loan to be made by Buyer to Borrower in accordance with the
Loan Operative Documents, are not severable and shall be considered a single
integrated transaction.
3. PURCHASE PRICE. The purchase price for all of the Sites (the
"Purchase Price") shall be THIRTY-FIVE MILLION SEVEN HUNDRED FIFTY THOUSAND AND
NO/100 Dollars ($35,750,000.00). The Purchase Price shall be allocated among the
Sites as shown on Schedule A-1 attached hereto and made a part hereof. The
Purchase Price shall be paid at the Sale and Lease Closing in cash or its
equivalent subject to any prorations and adjustments required by this Agreement.
4. TRANSACTION COSTS AND FEE; TERMINATION. Sellers shall be responsible
for payment of all Transaction Costs, except Buyer shall pay its in-house Site
inspection expenses from the Fee. Sellers shall reimburse Buyer for all
Transaction Costs incurred by Buyer in connection with the transaction
contemplated hereunder other than Buyer's in-house Site inspection expenses to
be paid out of the Fee.
The portion of the Fee paid to Buyer at the time of DenAmerica's
execution of the Commitment was deemed fully earned and non-refundable upon
Buyer's receipt thereof,
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provided that if, after completion of Buyer's review and inspection of the
Sites, Buyer does not approve one or more of the Sites and, thereafter, if Buyer
and DenAmerica are unable, after negotiating in good faith, to agree on a
reduction in, and reallocation of, the Purchase Price based upon Buyer's
disapproval of one or more Sites, then, this Agreement, including all of the
obligations, duties and liabilities of the parties hereto, including, without
limitation, Buyer's obligation to make the Loan pursuant to the Loan Agreement,
shall terminate, in which event, Buyer shall refund to DenAmerica the portion of
the Fee paid to Buyer, less Buyer's reasonable out-of-pocket costs and expenses
incurred or paid in connection with the transactions contemplated by this
Agreement and the Loan Agreement, including reasonable attorneys' fees, through
the date of termination of this Agreement and the Loan Agreement, and the
parties hereto shall have no further liability or obligation to each other
hereunder or under the Loan Agreement, provided that after the Sale and Lease
Closing, no termination of this Agreement shall occur pursuant to this Section
4. The balance of the Fee shall be paid at the Sale and Lease Closing, shall be
deemed fully earned upon Buyer's receipt and will be nonrefundable at that time.
In the event the transaction set forth in this Agreement fails to close due to a
breach or default by any or all of the Sellers under this Agreement, Buyer shall
retain the portion of the Fee paid to Buyer at the time of DenAmerica's
execution of the Commitment (without affecting or limiting Buyer's remedies set
forth in this Agreement).
5. SALE AND LEASE CLOSING DATE. The purchase and sale of the Sites
shall be closed (the "Sale and Lease Closing") within 30 days following the
satisfaction of all of the terms and conditions contained herein, but in no
event shall the date of the Sale and Lease Closing be extended beyond July 8,
1996 (the "Sale and Lease Closing Date"), and any such extension shall not be
effective unless approved by Buyer in its reasonable discretion.
6. TITLE COMPANY. Prior to the execution of this Agreement by the
parties hereto, Sellers ordered a title insurance commitment from Title Company
for each Site, along with a Uniform Commercial Code search relative to each Site
and the UCC Search Parties. Prior to the Sale and Lease Closing Date, the
parties hereto shall deposit with Title Company all documents and moneys
necessary to comply with their obligations under this Agreement. Title Company
shall not cause the transaction to close unless and until it has received
written instructions from DenAmerica and Buyer to do so. All real and personal
property and other applicable taxes and assessments and other charges relating
to the Sites which are due and payable on or prior to the Sale and Lease Closing
Date, as well as such taxes and assessments due and payable subsequent to the
Sale and Lease Closing Date but which Title Company requires to be paid at Sale
and Lease Closing as a condition to the issuance of the title insurance policy
described in Subsection 11.C(i), shall be paid by Sellers at or prior to the
Sale and Lease Closing; and all other taxes and assessments shall be paid by
Sellers or DenAmerica, in its capacity as lessee under each Lease, in accordance
with the terms of such Lease. The Sale and Lease Closing documents shall be
dated as of the Sale and Lease Closing Date.
Sellers and Buyer hereby employ Title Company to act as escrow agent in
connection with this transaction. Sellers and Buyer will deliver to Title
Company all documents, pay to Title Company all sums and do or cause to be done
all other things necessary or required by this
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Agreement, in the reasonable judgment of Title Company, to enable Title Company
to comply herewith and to enable any title insurance policy provided for herein
to be issued. Title Company is authorized to pay, from any funds held by it for
Buyer's or Sellers' respective credit all amounts necessary to procure the
delivery of such documents and to pay, on behalf of Buyer and Sellers, all
charges and obligations payable by them, respectively. Sellers will pay all
charges payable by it to Title Company. Title Company is authorized, in the
event any conflicting demand is made upon it concerning these instructions or
the escrow, at its election, to hold any documents and/or funds deposited
hereunder until an action shall be brought in a court of competent jurisdiction
to determine the rights of Sellers and Buyer or to interplead such documents
and/or funds in an action brought in any such court. Deposit by Title Company of
such documents and funds, after deducting therefrom its reasonable charges and
its expenses and attorneys' fees incurred in connection with any such court
action, shall relieve Title Company of all further liability and responsibility
for such documents and funds. Title Company's receipt of this Agreement and
opening of an escrow pursuant to this Agreement shall be deemed to constitute
conclusive evidence of Title Company's agreement to be bound by the terms and
conditions of this Agreement pertaining to Title Company. Disbursement of any
funds shall be made by wire transfer, as directed by the respective Seller and
Buyer. Title Company shall be under no obligation to disburse any funds
represented by check or draft, and no check or draft shall be payment to Title
Company in compliance with any of the requirements hereof, until it is advised
by the bank in which such check or draft is deposited that such check or draft
has been honored. Title Company is authorized to act upon any statement
furnished by the holder or payee, or a collection agent for the holder or payee,
of any lien on or charge or assessment in connection with the Sites, concerning
the amount of such charge or assessment or the amount secured by such lien
without liability or responsibility for the accuracy of such statement. The
employment of Title Company as escrow agent shall not affect any rights of
subrogation under the terms of any title insurance policy issued pursuant to the
provisions thereof.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. The representations and
warranties of Buyer contained in this Section are being made to induce Sellers
to enter into this Agreement and consummate the transactions contemplated
herein, and Sellers have relied upon such representations and warranties. Buyer
represents and warrants to Sellers as follows:
A. Organization of Buyer. Buyer has been duly incorporated, is
validly existing and has taken all necessary corporate action to
authorize the execution, delivery and performance by Buyer of this
Agreement.
B. Authority of Buyer. The person who has executed this
Agreement on behalf of Buyer is duly authorized so to do.
C. Enforceability. Upon execution by Buyer, the Sale and Lease
Operative Documents to which Buyer is a party shall constitute the
legal, valid and binding obligation of Buyer, enforceable against Buyer
in accordance with their terms.
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D. Good Standing of Buyer. Buyer is in good standing under the
laws of its state of incorporation.
All representations and warranties of Buyer made in this Agreement
shall be and will remain true and complete as of the Sale and Lease Closing Date
as if made and restated in full as of such date.
8. REPRESENTATIONS AND WARRANTIES OF SELLERS. The representations and
warranties of Seller contained in this Section are being made to induce Buyer to
enter into this Agreement and consummate the transactions contemplated herein,
and Buyer has relied upon such representations and warranties. For purposes of
this Section 8, each Seller shall be deemed to have made the following
representations and warranties with respect to itself and with respect to all of
the Sites and all of the Equipment that each respective Seller owns, provided
that Franchisor shall be deemed also to have made the following representations
and warranties with respect to all of the Sellers (and DenAmerica, to the extent
applicable to DenAmerica) and with respect to all of the Sites and all of the
Equipment. Each Seller, as applicable, represents and warrants to Buyer as
follows:
A. Information and Financial Statements. Sellers have
delivered to Buyer financial statements (either audited financial
statements or, if any Seller does not have audited financial
statements, certified financial statements) and certain other
information concerning themselves, which financial statements and other
information are true, correct and complete in all material respects;
and no material adverse change has occurred with respect to any such
financial statements and other information provided to Buyer since the
date such financial statements and other information were prepared or
delivered to Buyer. Sellers understand that Buyer is relying upon such
financial statements and information and Sellers represent that such
reliance is reasonable. All such financial statements were prepared in
accordance with generally accepted accounting principles consistently
applied and accurately reflect, as of the date of this Agreement and
the Sale and Lease Closing Date, the financial condition of each
individual, partnership or entity to which they pertain.
B. Organization and Authority of Sellers. (i) Each Seller is
duly organized or formed, validly existing and in good standing under
the laws of each respective Seller's state of incorporation or
formation, and is qualified as a foreign corporation, partnership or
limited liability company, as the case may be, to do business in any
jurisdiction where any Site owned by such Seller is located and in any
other jurisdiction where such qualification is required, where the
failure to so qualify might reasonably be expected to result in a
Material Adverse Effect.
(ii) All necessary corporate, partnership or limited liability
company action, as the case may be, has been taken by each Seller to
authorize the execution, delivery and performance of all of the Sale
and Lease Operative Documents to which each is a party.
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(iii) The persons who have executed or will execute the Sale
and Lease Operative Documents on behalf of each Seller are duly
authorized so to do.
C. Enforceability of Documents. Upon execution by Sellers, the
Sale and Lease Operative Documents to which each Seller is a party
shall constitute the legal, valid and binding obligations of Sellers,
enforceable against Sellers in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and general principles of equity.
D. Litigation. Except as set forth on Schedule H attached
hereto, there are no suits, actions, proceedings or investigations
pending or, to the best knowledge of each Seller, threatened against or
involving any Seller or any of the Sites or Equipment before any court,
arbitrator, or administrative or governmental body which, if adversely
determined, might reasonably be expected to result in any Material
Adverse Effect. None of the matters, actions, demands or claims shown
on Schedule H, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect.
E. Absence of Breaches or Defaults. None of the Sellers is in
default, and the authorization, execution, delivery and performance of
the Sale and Lease Operative Documents will not result in any breach or
default under any other document, instrument or agreement to which any
Seller is a party or by which any Seller or any of the Sites or
Equipment is subject or bound, where such breach or default might
reasonably be expected to result in a Material Adverse Effect. The
authorization, execution, delivery and consummation of the Sale and
Lease Operative Documents to which each Seller is a party will not
violate any applicable law, statute, regulation, rule, ordinance, code,
rule or order, where such violation might reasonably be expected to
result in a Material Adverse Effect.
F. Utilities. As of the Sale and Lease Closing Date, each Site
will be served by public utilities which are adequate for the current
use of the Black-eyed Pea restaurant located on such Site and all
utility connection fees and use charges will have been paid when due.
G. Intended Use and Zoning; Compliance With Laws. DenAmerica
intends to sublease each Site to a Sublessee pursuant to a Sublease.
Sellers shall cause DenAmerica to occupy and use (or shall cause
DenAmerica to cause Sublessee to occupy and use) each of the Sites,
other than the Vacant Site and the Steak House Site, solely for the
operation of a Black-eyed Pea restaurant in accordance with the
standards of operations then in effect which are imposed by Franchisor
on its franchisees on a systemwide basis, and related ingress, egress
and parking, and for no other purposes. DenAmerica intends to sublease
the Steak House Site to Sublessee pursuant to the Sublease. Sellers
shall cause DenAmerica to occupy and use (or shall cause DenAmerica to
cause Sublessee to occupy and use) the Steak House Site solely for the
operation of
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a steak house restaurant in accordance with a standard of operations
that is customary and reasonable, and related ingress, egress and
parking, and for no other purposes. DenAmerica does not intend to use
the Vacant Site for any business purpose, and DenAmerica agrees not to
conduct business activities on the Vacant Site without Buyer's prior
written consent, which consent shall not be unreasonably withheld,
provided that DenAmerica agrees to maintain the Vacant Site in
accordance with the terms of the Vacant Site Lease. Such intended use
or uses, as the case may be, will not violate any zoning or other
governmental requirement applicable to the Sites. The Sites, other than
the Vacant Site and the Steak House Site, are suitable for Black-eyed
Pea restaurants in accordance with the standards of selection imposed
by Franchisor on its franchisees on a system-wide basis. The Steak
House Site is suitable for use as a steak house restaurant. The Sites
comply in all material respects with all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders and
approvals of any governmental agencies, departments, commissions,
bureaus, board or instrumentalities of the United States, the state in
which the Sites are located and all political subdivisions thereof,
including, without limitation, all health, building, fire, safety and
other codes, ordinances and requirements, all applicable standards of
the National Board of Fire Underwriters and the National Fire
Protective Association and the Americans With Disabilities Act of 1990,
where such failure to so comply might reasonably be expected to result
in a Material Adverse Effect.
H. Area Development; Wetlands. None of the Sellers has
received notice of the commencement of any condemnation or eminent
domain proceedings affecting any of the Sites and, to the best of each
Seller's knowledge, no such proceedings are contemplated. To the best
of each Seller's knowledge, the area where each Site is located has not
been declared blighted by any governmental authority. None of the Sites
is designated by any applicable federal, state and/or local
governmental authority as wetlands.
I. Licenses and Permits; Access. On or prior to the Sale and
Lease Closing Date, Sellers shall have obtained, or shall have caused
DenAmerica to obtain, all required licenses and permits, both
governmental and private, to use and operate the Sites and Equipment in
the intended manner, where the failure to so obtain such licenses and
permits might reasonably be expected to result in a Material Adverse
Effect. There are adequate rights of access to public roads and ways
available to each of the Sites to permit utilization of each Site for
its intended purpose and all such public roads and ways have been
completed and dedicated to public use.
J. Condition of the Sites. As of the Sale and Lease Closing
Date, each Site, other than the Vacant Site, including the Equipment
located thereon, will be of good workmanship and materials, fully
equipped and operational, other than the Vacant Site which may not be
fully operational, in good condition and repair, normal wear and tear
excepted, free from material structural defects, reasonably clean,
orderly and sanitary, safe, well-lit, landscaped, decorated and
well-maintained.
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K. Environmental. Based on Sellers' review of the
environmental reports described in Section 11.E, Sellers are familiar
with the present use of each of their respective Sites. Except as to
the matters set forth in the environmental reports described in Section
11.E, and to the best of each Seller's knowledge (i) no Hazardous
Materials have been used, handled, manufactured, generated, produced,
stored, treated, processed, transferred or disposed of at or on any of
the Sites, except in compliance with all applicable Environmental Laws,
and no Release or Threatened Release has occurred at or on any of the
Sites; (ii) the activities, operations and business undertaken on, at
or about each Site, including, but not limited to, any past or ongoing
alterations or improvements at such Site, are and have been at all
times, in compliance with all Environmental Laws; (iii) no further
action is required to remedy any Environmental Condition or violation
of, or to be in material compliance with, any Environmental Laws, and
no lien has been imposed on any of the Sites in any federal, state or
local governmental or quasi-governmental entity in connection with any
Environmental Condition, the violation or threatened violation of any
Environmental Laws or the presence of any Hazardous Materials on or off
any of the Sites.
There is no pending or threatened litigation or proceeding
before any court, administrative agency or governmental body in which
any person or entity alleges the violation or threatened violation of
any Environmental Laws or the presence, Release, Threatened Release on
or at any Site of any Hazardous Materials, and no Seller has any
knowledge of any facts which would give rise to any such action, nor
has any Seller (a) received any notice (and no Seller has any actual
knowledge) that any governmental or quasi-governmental authority or any
employee or agent thereof has determined or requires an investigation
to determine that there has been a violation of any Environmental Laws
at, on or in connection with any Site or that there exists a presence,
Release, Threatened Release of any Hazardous Materials on or at any
Site in violation of any applicable Environmental Laws, or the use,
handling, manufacturing, generation, production, storage, treatment,
processing, transportation or disposal of any Hazardous Materials at or
on any Site; (b) received any notice under the citizen suit provision
of any Environmental Law in connection with any Site or any facilities,
operations or activities conducted thereon, or any business conducted
in connection therewith; or (c) received any request for inspection,
request for information, notice, demand, administrative inquiry or any
formal or informal complaint or claim with respect to or in connection
with the violation or threatened violation of any Environmental Laws or
existence of Hazardous Materials relating to any Site or any
facilities, operations or activities conducted thereon or any business
conducted in connection therewith.
L. Title to the Sites. Title to each of the Sites is vested in
each respective Seller as shown on Schedule A. On the Sale and Lease
Closing Date, each Seller will convey to Buyer title to all of the
Sites owned by such Seller, free and clear of all liens, encumbrances,
charges and security interests of any nature whatsoever, except the
Permitted Exceptions.
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M. No Other Agreements and Options. Neither Sellers nor any of
the Sites are subject to any obligation or agreement, including, but
not limited to, any right of first refusal, option to purchase or lease
granted to a third party, which could or would prevent any Seller from
completing, or impair any Seller's ability to complete, the sale of the
Sites under this Agreement or which would bind Buyer, other than the
Permitted Exceptions, subsequent to consummation of the transaction
contemplated in this Agreement.
N. No Mechanics' Liens. There are no mechanics' liens, or
rights to claim a mechanics' lien in favor of any materialman, laborer,
or any other person or entity in connection with labor or materials
furnished to or performed on any portion of any of the Sites, and, to
the best of each Seller's knowledge, there are no delinquent
outstanding accounts payable which could result in the filing or
assertion of a mechanic's or materialman's lien relative to work
performed, materials furnished or services provided to, or for the
benefit of, any or all of the Sites; no work has been performed or is
in progress nor have materials been supplied to any of the Sites or
agreements entered into for work to be performed or materials to be
supplied to any of the Sites prior to the date hereof or prior to the
Sale and Lease Closing Date, which will not have been fully paid for on
or before the Sale and Lease Closing Date or which might provide the
basis for the filing of such liens against any Site or any portion
thereof; Sellers shall be responsible for any and all claims for
mechanics' liens and accounts payable that have arisen or may
subsequently arise due to agreements entered into for and/or any work
performed on, or materials supplied to any or all of the Sites prior to
the Sale and Lease Closing Date; and Sellers shall, and do hereby agree
to, defend, indemnify and forever hold Buyer harmless from and against
any and all such mechanics' lien claims, accounts payable or other
commitments relating to any and all of the Sites.
O. No Reliance. Sellers acknowledge that Buyer did not prepare
or assist in the preparation of any of the projected financial figures
used by Sellers in analyzing the economic viability and feasibility of
the transaction contemplated by this Agreement, and that Sellers have
not relied on any report or statement by Buyer in entering into this
Agreement. Furthermore, Sellers acknowledge that they have not relied
upon, nor may any Seller hereafter rely upon, the analysis undertaken
by Buyer in determining the Purchase Price, and such analysis will not
be made available to Sellers.
P. Net Worth. As of the Sale and Lease Closing Date, Sellers
shall cause DenAmerica to have a net worth of not less than
$15,000,000.00. For purposes of this Subsection, net worth shall mean
the book value of DenAmerica's shareholder's equity, as determined in
accordance with generally accepted accounting principles, consistently
applied from period to period.
Q. Approvals and Consents. As of the Sale and Lease Closing,
and except as otherwise shown on Schedule I attached hereto, Sellers
shall have obtained all
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consents, approvals and authorizations required to be obtained in
connection with the consummation of the transaction contemplated by
this Agreement.
R. Title to the Equipment; First-Priority Security Interest.
Title to the Equipment used in connection with a Black-eyed Pea
restaurant located on each of the Sites is vested in the corresponding
Seller as shown on Schedule A. On the Sale and Lease Closing Date, each
Seller will transfer and convey to DenAmerica title to all of the
Equipment owned by such Seller, free and clear of all liens, including
landlord, possessory and contractual liens, encumbrances, charges and
security interests of any nature whatsoever, except for the landlord's
lien and first-priority security interest granted in favor of Buyer
pursuant to the Leases and the security interest granted in favor of
Banque Paribas, as agent. The security interest in favor of Banque
Paribas, as agent, will, on the Sale and Lease Closing Date, be junior
and subordinate to Buyer's landlord's lien and security interest
granted pursuant to the Leases. From and after the Sale and Lease
Closing Date, Buyer shall have a landlord's lien and perfected
first-priority security interest on the Equipment located at each Site
pursuant to the Lease and UCC-1 Financing Statements that correspond to
such Site which landlord's lien and security interest will be senior
and superior to any lien or security interest in favor of Banque
Paribas, as agent.
S. Franchise Rights. Franchisor owns all of the rights and
privileges relative to the franchise rights associated with Black-eyed
Pea restaurants, including, without limitation, any and all trade
secrets, tradenames and trademarks relative thereto (collectively, the
"Franchise Rights"), free and clear of any and all rights, liens,
interests, claims, and encumbrances, except for the rights and
privileges granted to Franchisor's approved franchisees. As of the Sale
and Lease Closing Date, DenAmerica or Sublessee will have all of the
Franchise Rights required to operate the Sites as Blackeyed Pea
restaurants.
T. Other Sites. On and after the Sale and Lease Closing Date,
each of the Sellers identified on Schedule F shall own the Other Site
to which each such Seller's ownership corresponds, free of any monetary
lien, interest or encumbrance.
All representations and warranties of Sellers made in this Agreement shall be
and will remain true and complete as of the Sale and Lease Closing Date as if
made and restated in full as of such date and shall survive the Sale and Lease
Closing.
9. AGREEMENT OF SELLERS AND DENAMERICA. A. Inspection. Until the Sale
and Lease Closing Date, Sellers shall, at all reasonable times, (i) provide
Buyer and Buyer's officers, employees, agents, advisors, attorneys, accountants,
architects, and engineers with access to the Sites, all drawings, plans, and
specifications for each Site in possession of respective Seller, all engineering
reports relating to each Site in the possession of each such Seller, the files
and correspondence relating to each Site, and the financial books and records,
including lists of delinquencies, relating to the ownership, operation, and
maintenance of each Site, and (ii) allow
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<PAGE> 16
such persons to make such inspections, tests, copies, and verifications as Buyer
reasonably considers necessary.
B. Execution of the Loan Agreement. Simultaneously with the execution
and delivery of this Agreement by Sellers, Borrower shall execute and deliver to
Buyer the Loan Agreement.
C. Other Sites; No Transfer or Encumbrance. Until all of the
obligations evidenced by the Note are paid and satisfied in full, each Seller
who owns any of the Other Sites agrees not to sell, convey, transfer, encumber,
hypothecate, finance or refinance any or all of the Other Sites, without the
prior written consent of Buyer.
D. Approvals, Consents and Authorizations. After the Sale and Lease
Closing Date, Sellers, and any successor of Sellers, shall, to the extent not
obtained prior to the Sale and Lease Closing, use good faith best efforts to
obtain all of the consents, approvals and authorizations required to have been
obtained in connection with the consummation of the transaction contemplated by
this Agreement, including, without limitation, the consents and approvals shown
on Schedule I, and shall deliver copies of all such consents, approvals and
authorizations to Buyer upon obtaining the same.
E. Agreement of DenAmerica. At or prior to the Sale and Lease Closing
Date, DenAmerica shall execute and deliver to Title Company or Buyer, as may be
appropriate, the Leases, each Memorandum of Lease, the UCC-1 Financing
Statements and such other documents, instruments and certificates, as Buyer or
Title Company may reasonably require in form reasonably acceptable to Buyer or
Title Company, respectively, and shall pay such sums as are reasonably required
by the Sale and Lease Operative Documents, to which DenAmerica is a party, to be
paid by DenAmerica.
10. TRANSACTION CHARACTERIZATION. A. It is the intent of the parties
that the conveyance of the Sites to Buyer be absolute conveyances in effect as
well as form, and the instruments of conveyance to be delivered at Sale and
Lease Closing are not intended to serve or operate as mortgages, equitable
mortgages, deeds of trust, security agreements, trust conveyance or financing or
trust arrangements of any kind, nor as preferences or fraudulent conveyances
against any creditors of BEP Holdings or Sellers. After the execution and
delivery of the special warranty deeds described in Section 11, neither BEP
Holdings nor any of the Sellers will have any legal or equitable interest or any
other claim or interest in the Sites. Furthermore, the parties intend for the
Leases to be true leases and not a transaction creating financing leases,
capital leases, equitable mortgages, mortgages, deeds of trust, security
interests or other financing arrangements, and the economic realities of the
Leases are those of true leases. Notwithstanding the existence of the Leases,
neither party shall contest the validity, enforceability or characterization of
the sale and purchase of any of the Sites by Buyer pursuant to this Agreement as
an absolute conveyance, and both parties shall support the intent expressed
herein that the purchase of the Sites by Buyer pursuant to this Agreement
provides for an absolute conveyance and does not create a joint venture,
partnership, equitable mortgage, trust,
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<PAGE> 17
financing device or arrangement, security interest or the like, if, and to the
extent that, any challenge occurs.
B. This Agreement is a contract to extend a financial accommodation (as
such term is used in the Code) for the benefit of Sellers and may not be assumed
over the objection of Buyer in the event any Seller becomes a debtor or debtor
in possession in any bankruptcy proceeding. The financial accommodation made
through this Agreement is Buyer's acquisition of the Sites for the purpose of
leasing such Sites to DenAmerica pursuant to true leases.
11. CONDITIONS OF SALE AND LEASE CLOSING. The obligation of Buyer to
consummate the transaction contemplated by this Agreement is subject to the
fulfillment or waiver of each of the following conditions:
A. Title; Third-Party Beneficiary. Sellers shall convey to
Buyer title to all of the Sites by special warranty deeds (individually
the "Deed" or collectively the "Deeds"), free of all liens,
encumbrances, restrictions, encroachments and easements, except as
otherwise specifically agreed to in writing by Buyer ("Permitted
Exceptions"). Sellers or DenAmerica shall cause BEP Holdings to agree,
in form and substance reasonably acceptable to Buyer, that Buyer shall
have the right to bring an action against BEP Holdings for any breach
of the representations and warranties set forth in subsections 4(e),
(i), (k), (n) and (q) of the Stock Purchase Agreement that pertain to
the Sites and the Equipment, and that Buyer shall be an intended
third-party beneficiary of the Stock Purchase Agreement for such
purpose.
B. Condition of the Sites. Buyer shall have inspected and
approved each of the Sites, and each such Site shall be in good
condition and repair, normal wear and tear excepted, of good
workmanship and materials, fully equipped and operational (other than
the Vacant Site which may not be fully operational), clean, orderly,
sanitary, safe, well-lit, landscaped, decorated and with a suitable
layout, physical plant, traffic pattern and location all as determined
by Buyer in its reasonable discretion.
C. Evidence of Title. (i) Buyer shall have received a
preliminary title report and irrevocable commitment to insure title to
the Sites by means of an ALTA extended coverage policy of title
insurance (or its equivalent, in the event such form is not issued in
the jurisdiction where the Site or Sites are located) for each Site
issued by Title Company showing good and marketable title in each
respective Seller, based upon the ownership of the Sites as shown on
Schedule A, committing to insure Buyer's fee simple ownership in each
Site, subject only to Permitted Exceptions and containing the following
title endorsements as such may be available under the laws of the
states in which the Sites are located: contiguity, if applicable,
access, survey, tax parcel, owner's comprehensive 100, mechanic's lien,
surface, if applicable, and such additional title endorsements as Buyer
may reasonably require.
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<PAGE> 18
(ii) Buyer shall have received the results of the
Uniform Commercial Code search for each Site and the UCC Search Parties
showing title to all of the Equipment located at each Site is vested in
the Seller that owns such Site, based upon the ownership of the Sites
shown on Schedule A, free and clear of any and all liens, encumbrances
and interests. On the Sale and Lease Closing Date Sellers shall
transfer to DenAmerica title to all of the Equipment situated on the
Sites, free and clear of any and all liens, encumbrances and interests,
except the landlord's lien and first-priority security interest in
favor of Buyer granted pursuant to the Leases and the security interest
in favor of Banque Paribas, as agent, which security interest shall be
junior and subordinate to Buyer's landlord's lien and first-priority
security interest granted pursuant to the Leases.
D. Survey. Buyer shall have received a current ALTA survey of
each Site, the form and substance of which shall be reasonably
satisfactory to Buyer in its reasonable discretion.
E. Environmental. Buyer shall have received a Phase I
environmental report with respect to each Site (and a Phase II
environmental report, if necessary, as determined by Buyer in its sole
discretion), the form, substance and conclusions of which shall be
satisfactory to Buyer in its sole discretion.
F. Compliance With Representations, Warranties and Covenants;
Certification. (i) All obligations of Sellers under this Agreement
shall have been performed and complied with in all material respects,
and no event shall have occurred or condition shall exist which, would
upon the Sale and Lease Closing Date, or, upon the giving of notice
and/or passage of time, constitute a breach or default hereunder or
under any or all of the Sale and Lease Operative Documents and no event
shall have occurred or condition shall exist or information shall have
been disclosed by Sellers or discovered by Buyer which has had or would
have a material adverse effect on any of the Sites, the Equipment if
such effect could reasonably be expected to materially impair the
ability of DenAmerica or a Sublessee to conduct business activities on
the Sites relative to the operation of Black-eyed Pea restaurants (or a
steak house restaurant on the Steak House Site), Sellers or Buyer's
willingness to consummate the transaction contemplated by this
Agreement, as determined by Buyer in its reasonable discretion.
(ii) At Buyer's request, Sellers shall have delivered to Buyer
a certificate dated as of the Sale and Lease Closing Date certifying
that (a) all representations and warranties of Sellers under this
Agreement are true, correct and complete as of such date in all
material respects, (b) Sellers have performed all of their obligations
under this Agreement in all material respects, and (c) all documents
and information delivered to Buyer by Sellers under this Agreement,
including the financial statements, are true, correct and complete as
of such date in all material respects, and that there have been no
amendments to such documents or material changes to such information
not disclosed in writing to Buyer.
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<PAGE> 19
G. Proof of Insurance. Sellers shall have caused DenAmerica to
deliver to Buyer copies of insurance policies, showing that all
insurance required by each Lease and providing coverage and limits
reasonably satisfactory to Buyer are in full force and effect.
H. Opinion of Counsel to Sellers. Sellers shall have caused
Counsel to prepare and deliver to Buyer an opinion substantially in the
form attached hereto as Schedule J-1 pertaining to general corporate
matters relative to Sellers and DenAmerica, an opinion substantially in
the form of Schedule J-2 attached hereto relative to the Sites and the
laws of the states in which the Sites are located, and such other
opinions as Buyer shall reasonably request.
I. Sale and Lease Closing Documents. At or prior to the Sale
and Lease Closing Date, Buyer, DenAmerica and/or Sellers, as may be
appropriate, shall execute and deliver or cause to be executed and
delivered to Title Company, DenAmerica, Sellers or Buyer, as may be
appropriate, all documents required to be delivered by this Agreement,
and such other documents, payments, instruments and certificates, as
Buyer may reasonably require in form reasonably acceptable to Buyer,
including, without limitation, the following:
(i) Deed for each Site;
(ii) Lease for each Site;
(iii) Memorandum of Lease for each Site;
(iv) Proof of insurance under each Lease;
(v) Opinion(s) of Counsel;
(vi) Certificate of Sellers as to Representations and
Warranties, if requested by Buyer;
(vii) Non-Foreign Seller Certificates;
(viii) UCC-1 Financing Statements relative to the
Leases; and
(ix) Addition of Buyer as third-party beneficiary to the
Stock Purchase Agreement relative to
representations and warranties pertaining to the
Sites and the Equipment.
J. Loan Transaction. The Loan Transaction shall have closed
simultaneously with the Sale and Lease Closing.
K. Approvals relative to Acquisition of Black-eyed Pea
Restaurant Chain. Buyer shall have approved (which approval shall not
be unreasonably withheld) (i) the structure of the acquisition by
DenAmerica of the Black-eyed Pea restaurant chain pursuant to the Stock
Purchase Agreement, (ii) the 1995 year-end audited financial statements
for Denwest Restaurant Corp., a Delaware corporation, (iii)
DenAmerica's proposed balance sheet as of the date of DenAmerica's
acquisition of the Black-eyed Pea restaurant chain, (iv) DenAmerica's
five-year pro forma balance sheet and income statement, and (v) any and
all of the properties in connection with DenAmerica's
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<PAGE> 20
acquisition of the Black-eyed Pea restaurant chain that DenAmerica
intends to close and not operate, and the properties that DenAmerica
intends to convert to uses other than as Black-eyed Pea restaurants.
L. Net Worth Financial Statements. Sellers shall have caused
DenAmerica to deliver to Buyer such financial statements, information
and records pertaining to DenAmerica as are reasonably necessary to
show that DenAmerica has achieved the net worth described in Subsection
8.P.
Upon fulfillment or waiver of all of the above conditions, Buyer shall deposit
funds necessary to close this transaction with the Title Company and this
transaction shall close in accordance with the terms and conditions of this
Agreement.
12. DEFAULT AND REMEDIES. A. Each of the following shall be deemed a
breach of this Agreement and a default by Sellers:
(i) If any representation or warranty of any Seller herein was
false in any material respect when made or becomes false in any
material respect prior to the Sale and Lease Closing Date;
(ii) If any Seller fails to keep or perform any of the terms
or provisions of this Agreement or if any condition precedent is not
satisfied by any Seller at or prior to the Sale and Lease Closing Date
or if DenAmerica fails to keep or perform any of its duties or
obligations under subsection 9.E;
(iii) If any Seller or DenAmerica is or becomes insolvent
within the meaning of the Code, files or notifies Buyer that it intends
to file a petition under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts (collectively, an
"Action"), becomes the subject of either a petition under the Code or
an Action, or is not generally paying its debts as the same become due;
or
(iv) If any event occurs or condition exists which does or
would upon or following the Sale and Lease Closing Date constitute a
breach or default under any or all of the Other Agreements.
B. In the event of any breach or default, Buyer shall be entitled to
exercise, at its option, concurrently, successively or in any combination, all
remedies available at law or in equity, including without limitation any one or
more of the following:
(i) To terminate this Agreement by giving written notice to
Sellers in which case neither party shall have any further obligation
or liability, except such liabilities as Sellers may have for such
breach or default;
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<PAGE> 21
(ii) To bring an action for monetary damages against any or
all of the Sellers;
(iii) To bring an action to require any or all of the Sellers
specifically to perform their obligations hereunder;
(iv) To bring an action for specific performance to require
DenAmerica to perform its obligations under Subsection 9.E and, in such
event, to recover from DenAmerica any or all expenses, including
reasonable attorneys' fees, paid or incurred by Buyer in connection
with such action; and/or
(v) To recover from any or all of the Sellers all expenses,
including reasonable attorneys' fees, paid or incurred by Buyer as a
result of any breach or default by Sellers.
13. ASSIGNMENTS. A. Buyer may assign in whole or in part its rights
under this Agreement.
B. None of the Sellers shall, prior to the Sale and Lease Closing Date,
without the prior written consent of Buyer, which consent may be withheld in
Buyer's sole discretion, sell, assign, transfer, mortgage, convey, encumber or
grant any easements or other rights or interests of any kind in any of the
Sites, any of Sellers' rights under this Agreement or any interest in any of the
Sellers, whether voluntarily, involuntarily or by operation of law or otherwise,
including, without limitation, by merger, consolidation, dissolution or, a
transfer (by one or more transactions) of a majority of the voting stock of any
Seller or of a majority of the partnership interests in any Seller, regardless
of whether the transfer is made by one or more transactions or whether one or
more persons hold the controlling interest prior or subsequent to the transfer.
Sellers shall not permit DenAmerica, prior to the Sale and Lease Closing Date,
to assign, transfer, pledge or encumber any of DenAmerica's rights under this
Agreement or under any of the Sale and Lease Operative Documents without the
prior written consent of Buyer, which consent may be withheld in Buyer's sole
discretion.
14. INDEMNITY. A. Except for actions caused by the gross negligence or
wilful misconduct of the Indemnified Parties (as defined below), and excluding
Environmental Conditions that arise after the Sale and Lease Closing Date, all
of the Sellers agree to indemnify, protect, hold harmless and defend (with legal
counsel reasonably acceptable to Buyer) Buyer and its directors, officers,
shareholders, employees, successors, assigns, agents, as applicable
(collectively, the "Indemnified Parties"), from and against any and all losses,
costs, claims, liabilities, damages and expenses, including, without limitation,
Buyer's reasonable attorneys' fees arising as the result of an Environmental
Condition and/or a breach of any of the representations, warranties, covenants,
agreements or obligations of any of the Sellers set forth in this Agreement.
Without limiting the generality of the foregoing, such indemnity shall include,
without limitation, any damages incurred with respect to any engineering,
governmental inspection and reasonable attorneys' fees and expenses that the
Indemnified Parties may incur by reason of any Environmental Condition and/or
any representation or warranty set forth in Section 8.K being false, or by
reason of any investigation or claim of any governmental agency
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in connection therewith. The limitations, exceptions and exclusions set forth
hereinabove shall not affect, diminish, limit or impair the duties, obligations
and liabilities of Sellers or DenAmerica under the Leases or under any of the
other Sale and Lease Operative Documents.
B. Sellers agree to indemnify, protect, hold harmless and
defend (with legal counsel reasonably acceptable to Buyer) Buyer and the
Indemnified Parties from and against any and all losses, costs, claims,
liabilities, damages and expenses, including, without limitation, Buyer's
reasonable attorneys' fees arising as the result of the failure or inability of
Sellers to obtain all of the consents, approvals and authorizations required to
have been obtained in connection with the consummation of the transaction
contemplated by this Agreement, including, without limitation, the approvals,
consents and authorizations shown on Schedule I attached hereto.
15. MISCELLANEOUS PROVISIONS.
A. Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party pursuant
to this Agreement shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be
deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile with electronic confirmation,
(c) the next business day, if delivered by express overnight delivery
service, or (d) the third business day following the day of deposit of
such notice with the United States Postal Service, if sent by certified
or registered mail, return receipt requested. Notices shall be provided
to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Sellers: c\o Mr. William J. Howard, Vice President
DenAmerica Corp.
7373 North Scottsdale Road
Scottsdale, Arizona 85253
Telephone: (602) 483-7055
Telecopy: (602) 483-9592
With a copy to: Jeffrey H. Verbin, Esq.
O'Connor Cavanagh
One East Camelback Road
Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2728
Telecopy: (602) 263-2900
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<PAGE> 23
If to Buyer: Stephen Y. Schwanz, Vice President
Corporate Finance
FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2225
With a copy to: Dennis L. Ruben, Esq.
Senior Vice President and General Counsel
FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
B. Risk of Loss. Sellers shall assume the risk of loss, damage
or destruction of the Sites or any part thereof prior to the Sale and
Lease Closing Date.
C. Condemnation. In the event of a taking of all or any part
of any Site, Buyer at its sole option shall have the right to either
(i) receive the proceeds of any condemnation award and, proceed to
close this transaction or (ii) terminate this Agreement.
D. Real Estate Commission. Buyer and Sellers represent and
warrant to each other that they have dealt with no real estate broker,
agent, finder or other intermediary in connection with the transactions
contemplated by this Agreement. Buyer and Sellers shall indemnify and
hold each other harmless from and against any costs, claims or
expenses, including attorneys' fees, arising out of the breach of their
respective representations and warranties contained within this
Section.
E. Waiver and Amendment. No provisions of this Agreement shall
be deemed waived or amended except by a written instrument
unambiguously setting forth the matter waived or amended and signed by
the party against which enforcement of such waiver or amendment is
sought. Waiver of any matter shall not be deemed a waiver of the same
or any other matter on any future occasion.
F. Captions. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in any manner
in the construction or interpretation hereof.
G. Severability. The provisions of this Agreement shall be
deemed severable. If any part of this Agreement shall be held
unenforceable, the remainder shall remain in
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<PAGE> 24
full force and effect, and such unenforceable provision shall be
reformed by such court so as to give maximum legal effect to the
intention of the parties as expressed therein.
H. Construction Generally. This is an agreement between
parties who are experienced in sophisticated and complex matters
similar to the transaction contemplated by this Agreement and is
entered into by both parties in reliance upon the economic and legal
bargains contained herein and shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party
which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Each of the Sellers, DenAmerica
and Buyer were each represented by legal counsel competent in advising
them of their obligations and liabilities hereunder.
I. Other Documents. Each of the parties agrees to sign such
other and further documents as may be appropriate to carry out the
intentions expressed in this Agreement.
J. Attorneys' Fees. In the event of any judicial or other
adversarial proceeding between the parties concerning this Agreement,
the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to
which it may be entitled. References in this Agreement to Buyer's
attorneys' fees and/or costs shall mean the fees and costs of
independent counsel retained by Buyer with respect to this transaction.
K. Entire Agreement. This Agreement and the other Sale and
Lease Operative Documents, together with any other certificates,
instruments or agreements to be delivered hereunder or thereunder,
constitute the entire agreement between the parties with respect to the
subject matter hereof, and there are no other representations,
warranties or agreements, written or oral, between Sellers or
DenAmerica and Buyer with respect to the subject matter of this
Agreement. Notwithstanding anything in this Agreement to the contrary,
upon the execution and delivery of this Agreement by Sellers,
DenAmerica and Buyer the Commitment shall be deemed null and void and
of no further force and effect and the terms and conditions of this
Agreement and the other Sale and Lease Operative Documents shall
control notwithstanding that such terms are inconsistent with or vary
from those set forth in the Commitment.
L. Forum Selection; Jurisdiction; Venue; Choice of Law. Buyer,
Sellers and DenAmerica acknowledge that this Agreement was
substantially negotiated in the State of Arizona, this Agreement was
signed by Sellers, DenAmerica and Buyer in the State of Arizona and
delivered by Sellers, DenAmerica and Buyer in the State of Arizona,
consummation of the transaction contemplated by this Agreement occurred
in the State of Arizona, all payments under the Leases will be
delivered in the State of Arizona and there are substantial contacts
between the parties and the transactions contemplated herein and the
State of Arizona. For purposes of any action or proceeding arising out
of this Agreement, the parties hereto hereby expressly submit to the
jurisdiction of all federal
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<PAGE> 25
and state courts located in the State of Arizona and DenAmerica,
Sellers and Buyer consent that either may be served with any process or
paper by registered mail or by personal service within or without the
State of Arizona in accordance with applicable law. Furthermore,
DenAmerica, Sellers and Buyer each waives and agrees not to assert in
any such action, suit or proceeding that it is not personally subject
to the jurisdiction of such courts, that the action, suit or proceeding
is brought in an inconvenient forum or that venue of the action, suit
or proceeding is improper. It is the intent of the parties hereto that
all provisions of this Agreement shall be governed by and construed
under the laws of the State of Arizona. To the extent that a court of
competent jurisdiction finds Arizona law inapplicable with respect to
any provisions hereof, then, as to those provisions only, the law of
the state in which the Site that is the subject of such action, suit or
proceeding is located shall be deemed to apply. Nothing contained in
this Section shall limit or restrict the right of DenAmerica, Sellers
or Buyer to commence any proceeding in the federal or the state courts
located in the state in which the Site that is the subject of such
action, suit or proceeding is located to the extent Sellers or Buyer
deems such proceeding necessary or advisable to exercise remedies
available under the Agreement.
M. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
N. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Sellers, DenAmerica and Buyer and their
respective successors and permitted assigns, including, without
limitation, any United States trustee, any debtor-in-possession or any
trustee appointed from a private panel.
O. Survival. Except for the conditions of Sale and Lease
Closing set forth in Section 11, which shall be satisfied or waived as
of the Sale and Lease Closing Date, all representations, warranties,
covenants, waivers, agreements, obligations and indemnities of
DenAmerica, Sellers and Buyer set forth in this Agreement shall survive
the Sale and Lease Closing.
P. Waiver of Jury Trial and Punitive, Consequential, Special
and Indirect Damages. BUYER, SELLERS AND DENAMERICA HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES
HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP
OF BUYER AND SELLERS, USE OR OCCUPANCY OF THE SITES BY SELLERS,
DENAMERICA OR SUBLESSEE, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY
RIGHT ANY OF THE PARTIES HERETO MAY HAVE TO A
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<PAGE> 26
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR
BARGAIN. FURTHERMORE, SELLERS, DENAMERICA AND BUYER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM
THE OTHER WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES HERETO
AGAINST THE OTHER OR SUCH OTHER PARTY'S SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY SELLERS,
DENAMERICA AND BUYER OF ANY RIGHT EITHER MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
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IN WITNESS WHEREOF, Sellers, DenAmerica and Buyer have entered into
this Agreement as of the date first above written.
BUYER:
FFCA ACQUISITION CORPORATION, a
Delaware corporation
By___________________________________________
Printed Name: Stephen Y. Schwanz
Its: Vice President
Corporate Finance
SELLERS:
ATTEST: BLACK-EYED PEA U.S.A., INC., a Texas
corporation
By___________________________ By___________________________________________
Printed Name_________________ Printed Name_________________________________
Its__________________________ Its__________________________________________
TEXAS BEP, L.P., a Texas limited
partnership
By: BLACK-EYED PEA U.S.A., INC., a
ATTEST: Texas corporation, its general partner
By___________________________ By___________________________________________
Printed Name_________________ Printed Name_________________________________
Its__________________________ Its__________________________________________
DENAMERICA HEREBY EXECUTES THIS SALE AND LEASE AGREEMENT FOR THE
SOLE PURPOSE OF (1) AGREEING TO PERFORM ITS OBLIGATIONS UNDER SUBSECTION 9.E,
AND (2) ACKNOWLEDGING AND AGREEING TO THE TERMS AND CONDITIONS UNDER SUBSECTIONS
12.A.ii AND 12.B.iv ABOVE.
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ATTEST: DENAMERICA CORP., a
Georgia corporation
By ________________________________ By______________________________________
Printed Name ______________________ Printed Name: Todd S. Brown
Its _______________________________ Its: Vice President
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July , 1996, by
Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia corporation, on
behalf of the corporation.
________________________________________
Notary Public
My Commission Expires:
__________________________________
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<PAGE> 29
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___ ,
1996, by Stephen Y. Schwanz, Vice President, Corporate Finance, of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the corporation.
________________________________________
Notary Public
My Commission Expires:
__________________________________
29
<PAGE> 30
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___, 1996,
by _____________________________, the _____________________________________ of
Black-eyed Pea U.S.A., Inc., a Texas corporation, on behalf of the corporation.
________________________________________
Notary Public
My Commission Expires:
__________________________________
30
<PAGE> 31
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___, 1996, by
_________________________________, the _____________________________________ of
Black-eyed Pea U.S.A., Inc., a Texas corporation, the general partner of Texas
BEP, L.P., a Texas limited partnership, on behalf of the limited partnership.
________________________________________
Notary Public
My Commission Expires:
__________________________________
31
<PAGE> 1
EXHIBIT 10.100
LEASE
THIS LEASE (this "Lease") is made as of July _____, 1996 (the
"Effective Date"), by and between FFCA ACQUISITION CORPORATION, a Delaware
corporation ("Lessor"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, and DENAMERICA CORP., a Georgia corporation
("Lessee"), whose address is 7373 North Scottsdale Road, Scottsdale, Arizona
85253.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. CERTAIN DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Lease:
"Adjustment Date" means November 30, 2000, and on every fifth
anniversary of such date during the Lease Term.
"Affiliate" means any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership or voting securities or otherwise.
"Annual Percentage Rental" means 6% of Lessee's Gross Sales arising
from business conducted on the Premises for the applicable Lease Year in excess
of an amount equal to 105% of Lessee's Gross Sales arising from business
conducted on the Premises for the fiscal year ending April 5, 1996, provided
that if the Premises was not open for business during the full fiscal year
ending April 5, 1996, Annual Percentage Rental means 6% of Lessee's Gross Sales
arising from business conducted on the Premises (whether arising from Lessee's
business conducted on the Premises or from the business conducted on the
Premises by Lessee's predecessor) for the applicable Lease Year in excess of an
amount equal to 105% of such Lessee's Gross Sales for the first twelve months of
business operations at the Premises.
"Base Annual Rental" means, on the Effective Date,
$____________________, provided that such amount shall be adjusted on each
Adjustment Date. On each Adjustment Date, the then current Base Annual Rental
shall be recomputed to an amount equal to the Minimum Purchase Price then in
effect multiplied by the Rental Factor then in effect, with the applicable
resulting product constituting the Base Annual Rental due and payable until the
next Adjustment Date.
"Base Monthly Rental" means an amount equal to 1/12 of the applicable
Base Annual Rental.
"Borrower" means LH Leasing Company, Inc., an Arizona corporation, or
its successor.
<PAGE> 2
"Capital Leases" means any lease or leases of any property (whether
real, personal or mixed) which lease would, in conformity with generally
accepted accounting principles consistently applied, be required to be accounted
for as a capital lease.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, indentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, and (iv)
obligations under leases which shall have been or should be, in accordance with
generally accepted accounting principles consistently applied, recorded as
Capital Leases.
"Equipment" means all of the appliances, furniture, fixtures, equipment
and other personal property owned by Lessee and situated on or at the Premises
and used in connection with the operation of a Black-eyed Pea restaurant at the
Premises.
"Equipment Lease" means the Equipment Lease dated as of the date of the
Sale and Lease Agreement, between Borrower, as lessor, and Lessee, as lessee,
with respect to certain equipment.
"Fixed Charge Coverage Ratio" means, with respect to the fiscal year of
Lessee immediately preceding the time of determination, a fraction (a) the
numerator of which is equal to (i) the Net Income of Lessee allocable to such
period, plus (ii) depreciation and amortization allowances and charges of Lessee
allocable to such period, as determined in accordance with generally accepted
accounting principles consistently applied, plus (iii) Interest Expense of
Lessee allocable to such period, plus (iv) payments under Capital Leases made by
Lessee allocable to such period, and (b) the denominator of which is equal to
(i) the sum of the current maturities of long term Debt of Lessee allocable to
such period, and the current maturities of any Capital Leases of Lessee
allocable to such period, plus (ii) Interest Expense of Lessee allocable to such
period.
"Franchisor" means Black-eyed Pea U.S.A., Inc., a Texas corporation, or
its successor.
"Interest Expense" means, for any period, the sum of all cash interest
paid or due and owing in respect of all Debt during such period (including
interest attributable to Capital Leases in accordance with generally accepted
accounting principles consistently applied), as determined in accordance with
generally accepted accounting principles consistently applied.
"Lease Term" shall have the meaning described in Section 3.
"Lease Year" means the 12-month period commencing on the first day of
the calendar year or any other 12-month period as may be approved in writing by
Lessor after the commencement of the Lease Term and each successive 12-month
period thereafter.
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<PAGE> 3
"Lessee's Gross Sales" means all sales or other income arising from all
business which is conducted at the Premises, less (i) goods returned to sources,
or transferred to another store or warehouse owned by or affiliated with Lessee
solely for the convenience of Lessee and not for the purpose of consummating a
sale made in, at or from the Premises; (ii) the amount of credit for discounts
and allowances; (iii) cash or credit refunds made to customers in the ordinary
course of business, but this exclusion shall not include any amount paid or
payable for what are commonly referred to as trading stamps; (iv) sales taxes,
so-called luxury taxes, consumers' excise taxes, gross receipts taxes and other
similar taxes now or hereafter imposed upon the sale of merchandise or services,
but only if collected separately from the selling price of merchandise or
services and collected from customers; (v) proceeds from the sale of Lessee's
trade fixtures or equipment; (vi) proceeds from the sale of franchises; (vii)
service charges collected by Lessee from customers and invitees for the benefit
of employees in lieu of tips and/or gratuities; (viii) gratuities; (ix) employee
discount or employee coupons; (x) sales tax; and (xi) any amounts received from
not-for-profit sales of all non-food items in connection with promotional
campaigns, if any.
"Loan Agreement" means the Loan Agreement between Borrower and Lessor
dated as of the date hereof with respect to a loan made by Lessor to Borrower.
"Loan Operative Documents" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Material Adverse Effect" means, with respect to (i) Lessee, a material
adverse effect on the business, operations, assets, or financial condition of
Lessee, (ii) the Premises, a material adverse effect on the business,
operations, assets, financial or physical condition of the Premises, and/or
(iii) the Equipment, or any portion thereof, a material adverse effect on the
business, operations, assets, financial or physical condition of the Equipment
located on or at the Premises if such effect could reasonably be expected to
materially impair the ability of Lessee or Sublessee to conduct business
activities on or at the Premises with respect to the operation of a Black-eyed
Pea restaurant.
"Memorandum of Lease" means the memorandum of lease provided in Section
48 to be executed and delivered by Lessor and Lessee with respect to this Lease,
and recorded in the county and state in which the Premises are located.
"Minimum Purchase Price" means $_______________________________.
"Monthly Rental" means the sum of the Annual Percentage Rental if any,
and the Base Monthly Rental.
"Net Income" means, with respect to any period, the net income or net
loss for such period (before provision or benefit for income taxes or charges
equivalent to income taxes allocable to such period but after provision for
reasonable corporate overhead expense), as determined in accordance with
generally accepted accounting principles consistently applied.
3
<PAGE> 4
"Other Agreements" means the Sale and Lease Operative Documents (except
this Agreement), the Equipment Lease and any and all agreements, leases, loan
agreements, documents, assignments, instruments, promissory notes, mortgages,
deeds of trust, and indemnities (other than the remaining Loan Operative
Documents) entered into, now and hereafter, between (or by) (a) Lessee or any
Affiliate of Lessee, and (or for the benefit of) (b) Lessor or any Affiliate of
Lessor.
"Other Leases" means all of the leases dated as of the date hereof
between Lessor and Lessee entered into pursuant to the terms and conditions of
the Sale and Lease Agreement (other than this Lease).
"Person" or "Persons" means, as the context requires, any individual,
corporation, trust, partnership, limited liability company, unincorporated
organization, governmental authority or any other form of entity.
"Premises" means the parcel or parcels of real estate located in
_________________, County, __________________, legally described in Exhibit A
attached hereto, all rights, privileges and appurtenances associated therewith,
and all buildings, fixtures and other improvements now or hereafter located
thereon (whether or not affixed to such real estate).
"Rental Factor" means, on the Effective Date, ten and one-half percent
(10.5%), as such Rental Factor shall be subject to adjustment on each Adjustment
Date. On each Adjustment Date, the Rental Factor then in effect shall be
redetermined and reset to an amount equal to the greater of (i) 10.5%, or (ii)
the United States Treasury Rate, plus four percent (4%), provided that in no
event shall the Rental Factor determined on any Adjustment Date exceed twelve
and one-half percent (12.5%).
"Sale and Lease Agreement" means the Sale and Lease Agreement dated as
of the date hereof, between Lessor, as buyer, and Sellers pertaining to the sale
and purchase of certain parcels of real property and improvements described
therein, together with all of the exhibits, agreements, documents and
instruments entered into or executed in connection with the transactions
contemplated by the Sale and Lease Agreement.
"Sale and Lease Closing Date" means the date on which the closing of
the transactions contemplated by the Sale and Lease Agreement is consummated.
"Sale and Lease Operative Documents" means the Sale and Lease
Agreement, together with all of the documents, instruments, deeds, leases,
memoranda of leases, including the Memorandum of Lease, UCC financing
statements, agreements, affidavits, notices, certifications and estoppels
defined in the Sale and Lease Agreement or executed in connection with the
transaction contemplated by the Sale and Lease Agreement (other than the Loan
Operative Documents).
"Sellers" shall have the meaning set forth in Section 1 of the Sale and
Lease Agreement.
4
<PAGE> 5
"Sublessee" means any partnership, corporation, limited liability
company or other entity which is wholly owned, directly or indirectly, by
Lessee.
"Sublease" means a sublease agreement (in form and substance reasonably
acceptable to Lessor) entered into between Lessee, as sublessor, and Sublessee
relative to the subleasing of the Premises in accordance with the terms and
conditions of Section 26.
"United States Treasury Rate" means the rate per annum equal to the
weekly average yield on United States Treasury Securities--Constant Maturity
Series issued by the United States Government for a five-year term, rounded
upward to the nearest one-tenth (1/10) of one percent (1%), published on the
date that is prior to, and nearest, the applicable Adjustment Date by The Board
of Governors of the United States Federal Reserve System.
"UCC-1 Financing Statements" means the UCC-1 Financing Statements
executed by Lessee, as debtor, for the benefit of Lessor, as secured party, in
accordance with Section 30.
2. DEMISE OF PREMISES. In consideration of the rentals and other sums
to be paid by Lessee and of the other terms, covenants and conditions on
Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and
Lessee hereby takes and hires, the Premises.
3. LEASE TERM. The Lease Term shall commence as of the Effective Date
and shall expire on that date that is twenty (20) years after the Effective
Date, unless terminated sooner as provided in this Lease and as may be extended
for two periods of five years each as set forth in Section 27 below. The time
period during which this Lease shall actually be in effect is referred to herein
as the "Lease Term."
4. RENTAL AND OTHER PAYMENTS. A. If the Effective Date is a date other
than the first day of the month, Lessee shall pay Lessor on the Effective Date
the Base Monthly Rental prorated on the basis of the ratio that the number of
days from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the applicable Base Monthly Rental.
B. Commencing on the fifteenth day of the first month following the end
of the first Lease Year during which Annual Percentage Rental is due and
payable, and on or before the fifteenth day of each year for which Annual
Percentage Rental is due thereafter, Lessee shall pay Lessor the Annual
Percentage Rental, and contemporaneous with such payment Lessee shall furnish to
Lessor a written statement reasonably satisfactory to Lessor, which Lessee shall
warrant and certify to be true, complete and correct, setting forth Lessee's
Gross Sales arising from business conducted on the Premises for such year.
Within 30 days after the end of each Lease Year, Lessee shall furnish
to Lessor a written statement setting forth for that previous Lease Year the
Base Monthly Rental and the Annual Percentage Rental actually paid, Lessee's
Gross Sales arising from business conducted on the Premises and the Annual
Percentage Rental payable.
5
<PAGE> 6
For any partial year between the commencement of the Lease Term and the
beginning of the next Lease Year and the beginning of the last Lease Year and
the end of the Lease Term, calculation of the Base Annual Rental and the Annual
Percentage Rental shall be prorated on the basis of the ratio of the number of
days in such partial year to 365.
C. All sums of money required to be paid by Lessee under this Lease
which are not specifically referred to as rent ("Additional Rental") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rental as those provided herein
for the nonpayment of Base Annual Rental.
5. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor represents and
warrants to Lessee as follows:
A. Organization, Authority and Status of Lessor. (i) Lessor
has been duly organized and is validly existing and in good standing
under the laws of the State of Delaware. All necessary corporate action
has been taken to authorize the execution, delivery and performance by
Lessor of this Lease and the other documents, instruments and
agreements provided for herein. Lessor is not a "foreign corporation"
as such term is defined in the Internal Revenue Code and the
regulations promulgated thereunder. Lessor's United States tax
identification number is 86-0765661.
(ii) The person who has executed this Lease on behalf of
Lessor is duly authorized so to do.
B. Enforceability. This Lease constitutes the legal, valid and
binding obligation of Lessor, enforceable against Lessor in accordance
with its terms.
C. Good Standing. Lessor is in good standing under the laws of
its state of incorporation.
6. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied upon such representations and
warranties. Lessee represents and warrants to Lessor as follows:
6
<PAGE> 7
A. Organization, Authority and Status of Lessee. (i) Lessee
has been duly incorporated, is validly existing and in good standing
under the laws of its state of incorporation, and is qualified as a
foreign corporation to do business in the jurisdiction where the
Premises is located and in any other jurisdiction where such
qualification is required, where such failure to so qualify might
reasonably be expected to result in a Material Adverse Effect. All
necessary corporate action has been taken by Lessee to authorize the
execution, delivery and performance by Lessee of this Lease and of the
other documents, instruments and agreements provided for herein. Lessee
is not a "foreign corporation", "foreign partnership", "foreign trust"
or "foreign estate", as those terms are defined in the Internal Revenue
Code and the regulations promulgated thereunder. Lessee's United States
tax identification number is correctly set forth on the signature page
of this Lease.
(ii) The persons who have executed this Lease on behalf of
Lessee are duly authorized to do so.
B. Enforceability. This Lease, the Memorandum of Lease, the
UCC-1 Financing Statements and all other documents, agreements and
instruments required by this Lease and the Sale and Lease Agreement to
be executed and delivered by Lessee constitute the legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance
with their respective terms, subject to bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating
to or affecting the rights of creditors generally, and general
principles of equity.
C. Litigation. Except as set forth on Exhibit B attached
hereto, there are no suits, actions, proceedings or investigations
pending, or to the best of its knowledge, threatened against or
involving Lessee before any court, arbitrator, or administrative or
governmental body which, if adversely determined, might reasonably be
expected to result in any Material Adverse Effect.
D. Absence of Breaches or Defaults. Lessee is not, and the
execution, delivery and performance of this Lease and the documents,
instruments and agreements provided for herein will not result, in any
breach of or default under any other document, instrument or agreement
to which Lessee is a party or by which Lessee or the Premises is
subject or bound, where such breach or default might reasonably be
expected to result in a Material Adverse Effect.
E. Licenses and Permits. Lessee has obtained all required
licenses and permits, both governmental and private, to use and operate
the Premises in the intended manner where the failure to so obtain such
licenses and permits might reasonably be expected to result in a
Material Adverse Effect.
F. Financial Condition; Information Provided to Lessor. The
financial statements, all financial data and all other documents and
information heretofore delivered to Lessor by or with respect to Lessee
and/or the Premises in connection with
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<PAGE> 8
this Lease and/or relating to Lessee and/or the Premises are true,
correct and complete in all material respects, and there have been no
amendments to such financial statements, financial data and other
documents and information since the date such financial statements,
financial data, documents and other information were prepared or
delivered to Lessor, and no material adverse change has occurred to any
such financial statements, financial data, documents and other
information not disclosed in writing to Lessor.
G. Franchise Rights. Franchisor owns all of the rights and
privileges relative to the franchise rights associated with Black-eyed
Pea restaurants, including, without limitation, any and all trade
secrets, tradenames and trademarks relative thereto (collectively, the
"Franchise Rights"), free and clear of any and all rights, liens,
interests, claims, and encumbrances, except for the rights and
privileges granted to Franchisor's approved franchisees, and subject to
the security interest granted by Franchisor to Banque Paribas, as
agent. Lessee or Sublessee has the right to operate the Premises as a
Black-eyed Pea restaurant during the Lease Term and any extension
thereof.
H. Utilities. As of the Effective Date, the Premises will be
served by public utilities which are adequate for the current use of
the Black-eyed Pea restaurant located on the Premises and all utility
connection fees and use charges will have been paid when due.
I. Area Development; Wetlands. As of the Effective Date,
neither Lessee nor Sublessee has received notice of the commencement of
any condemnation or eminent domain proceedings affecting the Premises
and, to the best knowledge of Lessee and Sublessee, no such proceedings
are contemplated. To the best knowledge of Lessee and Sublessee, the
area where the Premises is located has not been declared blighted by
any governmental authority. The Premises is not designated by any
applicable federal, state and/or local governmental authority as
wetlands.
J. Licenses and Permits; Access. On or prior to the Effective
Date, Lessee shall have obtained, or shall have caused Sublessee to
obtain, all required licenses and permits, both governmental and
private, to use and operate the Premises and the Equipment in the
intended manner, where the failure to so obtain such licenses and
permits might reasonably be expected to result in a Material Adverse
Effect. There are adequate rights of access to public roads and ways
available to the Premises to permit utilization of the Premises for its
intended purpose and all such public roads and ways have been completed
and dedicated to public use.
K. Condition of the Premises. As of the Effective Date, the
Premises, including the Equipment located thereon, is constructed and
manufactured of good workmanship and materials, fully equipped and
operational, in good condition and repair, normal wear and tear
excepted, free from material structural defects, reasonably clean,
orderly and sanitary, safe, well-lit, landscaped, decorated and
well-maintained.
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<PAGE> 9
L. Environmental. Based on Lessee's review of the
environmental reports described in Section 11.E of the Sale and Lease
Agreement that relate to the Premises (the "Environmental Reports"),
Lessee is familiar with the present use of the Premises. Except as to
the matters set forth in the Environmental Reports, and to the best
knowledge of Lessee and Sublessee (i) no Hazardous Materials have been
used, handled, manufactured, generated, produced, stored, treated,
processed, transferred or disposed of at or on the Premises, except in
compliance with all applicable Environmental Laws, and no Release or
Threatened Release has occurred at or on the Premises; (ii) the
activities, operations and business undertaken on, at or about the
Premises, including, but not limited to, any past or ongoing
alterations or improvements at the Premises, are and have been at all
times, in compliance with all Environmental Laws; (iii) no further
action is required to remedy any Environmental Condition or violation
of, or to be in material compliance with, any Environmental Laws, and
no lien has been imposed on the Premises in any federal, state or local
governmental or quasi-governmental entity in connection with any
Environmental Condition, the violation or threatened violation of any
Environmental Laws or the presence of any Hazardous Materials on or off
the Premises.
There is no pending or threatened litigation or proceeding
before any court, administrative agency or governmental body in which
any person or entity alleges the violation or threatened violation of
any Environmental Laws or the presence, Release, Threatened Release on
or at the Premises of any Hazardous Materials, and neither Lessee nor
Sublessee has any knowledge of any facts which would give rise to any
such action, nor has Lessee or Sublessee (a) received any notice (and
neither Lessee nor Sublessee has any actual knowledge) that any
governmental or quasi-governmental authority or any employee or agent
thereof has determined or requires an investigation to determine that
there has been a violation of any Environmental Laws at, on or in
connection with the Premises or that there exists a presence, Release,
Threatened Release of any Hazardous Materials on or at the Premises in
violation of any applicable Environmental Laws, or the use, handling,
manufacturing, generation, production, storage, treatment, processing,
transportation or disposal of any Hazardous Materials at or on the
Premises; (b) received any notice under the citizen suit provision of
any Environmental Law in connection with the Premises or any
facilities, operations or activities conducted thereon, or any business
conducted in connection therewith; or (c) received any request for
inspection, request for information, notice, demand, administrative
inquiry or any formal or informal complaint or claim with respect to or
in connection with the violation or threatened violation of any
Environmental Laws or existence of Hazardous Materials relating to the
Premises or any facilities, operations or activities conducted thereon
or any business conducted in connection therewith.
M. Title to the Premises. Immediately prior to the Effective
Date, title to the Premises was vested in Sublessee. On the Effective
Date, Lessee shall have caused Sublessee to convey title to the
Premises to Lessor, free and clear of all liens, encumbrances,
restrictions, covenants, charges and security interests of any nature
whatsoever, except as otherwise specifically shown on the conveyance
instrument pursuant to which Lessor acquired title to the Premises (the
"Permitted Exceptions").
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<PAGE> 10
N. No Other Agreements and Options. Neither Lessee nor
Sublessee nor the Premises are subject to any obligation or agreement,
including, but not limited to, any right of first refusal, option to
purchase or lease granted to a third party, which could or would
prevent Sublessee from conveying title to the Premises to Lessor or
which could or would impair the ability of Lessor or Lessee to enter
into this Lease or which would bind Lessor, other than the Permitted
Exceptions, subsequent to the execution and delivery of this Lease by
Lessor and Lessee.
O. No Mechanics' Liens. As of the Effective Date, there are no
mechanics' liens, or rights to claim a mechanics' lien in favor of any
materialman, laborer, or any other person or entity in connection with
labor or materials furnished to or performed on the Premises, and, to
the best of knowledge of Lessee and Sublessee, there are no delinquent
outstanding accounts payable which could result in the filing or
assertion of a mechanic's or materialman's lien relative to work
performed, materials furnished or services provided to, or for the
benefit of, the Premises; no work has been performed or is in progress
nor have materials been supplied to the Premises or agreements entered
into for work to be performed or materials to be supplied to the
Premises prior to the Effective Date, which will not have been fully
paid for on or before the Effective Date or which might provide the
basis for the filing of such liens against the Premises; Lessee shall
be responsible for any and all claims for mechanics' liens and accounts
payable that have arisen or may subsequently arise due to agreements
entered into for and/or any work performed on, or materials supplied to
the Premises prior to the Effective Date; and Lessee shall, and does
hereby agree to, defend, indemnify and forever hold Lessor harmless
from and against any and all such mechanics' lien claims, accounts
payable or other commitments relating to the Premises.
P. Approvals and Consents. As of the Effective Date, Lessee
shall have obtained, or shall have caused Sublessee to obtain, all
consents, approvals and authorizations required to be obtained in
connection with the conveyance of the Premises by Sublessee to Lessor
and the leasing of the Premises by Lessor to Lessee pursuant to this
Lease.
Q. Equipment. Immediately prior to the Effective Date, title
to the Equipment was vested in Sublessee. On the Effective Date, Lessee
shall have caused Sublessee to transfer title to the Equipment to
Lessee, free and clear of all liens, encumbrances, and security
interests of any nature whatsoever, including landlord, possessory and
contractual liens, except for the landlord's lien and first-priority
security interest granted in favor of Lessor pursuant to Section 30 and
the Uniform Commercial Code ("UCC") security interest granted in favor
of Banque Paribas, as agent. As of the Effective Date, the UCC security
interest in favor of Banque Paribas, as agent, will be junior and
subordinate to Lessor's landlord's lien and first-priority security
interest granted pursuant to Section 30. From and after the Effective
Date, Lessor shall have a landlord's lien and perfected first-priority
security interest on the Equipment located at the Premises pursuant to
this Lease, which landlord's lien and security interest will be senior
and superior to any lien or security interest in favor of Banque
Paribas, as agent. The Equipment consists of all of the appliances,
furniture, fixtures, equipment and other personal
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<PAGE> 11
property reasonably necessary or required to operate the Premises in
the intended manner as a Black-eyed Pea restaurant, and no additional
Equipment is needed or required.
7. RENTALS TO BE NET TO LESSOR. The Base Annual Rental and the Annual
Percentage Rental payable hereunder shall be net to Lessor, so that this Lease
shall yield to Lessor the rentals specified during the Lease Term, and that all
costs, expenses and obligations of every kind and nature whatsoever relating to
the Premises shall be performed and paid by Lessee.
8. TAXES AND ASSESSMENTS. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against or imposed upon the
Premises during the Lease Term which affect in any manner the net return
realized by Lessor under this Lease, except Lessor's income taxes, including
without limitation, the following:
A. All taxes and assessments upon the Premises or any part
thereof and upon any personal property, trade fixtures and improvements
located on the Premises, whether belonging to Lessor or Lessee, or any
tax or charge levied in lieu of such taxes and assessments;
B. All taxes, charges, license fees and or similar fees
imposed by reason of the use of the Premises by Lessee; and
C. All excise, transaction, privilege, license, sales, use and
other taxes upon the rental or other payments hereunder, the leasehold
estate of either party or the activities of either party pursuant to
this Lease.
All taxing authorities shall be instructed to send all tax and
assessment invoices to Lessor. After recording the information on such invoices,
Lessor shall forward such invoices to Lessee for payment. Within 30 days after
each tax and assessment payment is required by this Section to be paid, Lessee
shall provide Lessor with evidence satisfactory to Lessor that such payment was
made in a timely fashion. Lessee may in good faith seek a refund, rebate or
abatement of any tax levied in connection with the Premises but only if Lessor
has approved of the arrangements for paying such tax prior to it becoming a lien
on the Premises, which approval should not be unreasonably withheld or delayed.
9. UTILITIES. Lessee shall contract, in its own name, for and pay when
due all charges for the connection and use of water, gas, electricity,
telephone, garbage collection, sewer use and other utility services supplied to
the Premises during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service.
10. INSURANCE. Throughout the Lease Term Lessee shall maintain at its
sole expense the following types and amounts of insurance (which may be included
under a blanket insurance policy if all the other terms hereof are satisfied),
in addition to such other insurance as Lessor may reasonably require from time
to time:
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<PAGE> 12
A. "All risks" property insurance against loss, damage or
destruction by fire and other casualty, including theft, vandalism and
malicious mischief, flood (if the Premises are in a location designated
by the Federal Secretary of Housing and Urban Development as a flood
hazard area), earthquake (if the Premises are in an area subject to
destructive earthquakes within recorded history), boiler explosion (if
there is any boiler upon the Premises), plate glass breakage, sprinkler
damage (if the Premises have a sprinkler system), all matters covered
by a standard extended coverage endorsement and such other risks as
Lessor may reasonably require, insuring the Premises and all
improvements thereon for not less than 100% of their full insurable
replacement cost.
B. Comprehensive general liability and property damage
insurance, including a products liability clause, covering Lessor and
Lessee against bodily injury liability, property damage liability and
automobile bodily injury and property damage liability, including
without limitation any liability arising out of the ownership,
maintenance, repair, condition or operation of the Premises or
adjoining ways, streets or sidewalks and, if applicable, insurance
covering Lessor and Lessee against liability arising from the sale of
liquor, beer or wine on the Premises. Such insurance policy or policies
shall contain a broad form contractual liability endorsement under
which the insurer agrees to insure Lessee's obligations under Section
17 hereof to the extent insurable, and a "severability of interest"
clause or endorsement which precludes the insurer from denying the
claim of either Lessee or Lessor because of the negligence or other
acts of the other, shall be in amounts of not less than $1,000,000.00
per injury and occurrence with respect to any insured liability,
whether for personal injury or property damage, or such higher limits
as Lessor may reasonably require from time to time, and shall be of
form and substance reasonably satisfactory to Lessor.
C. State Worker's Compensation insurance in the statutorily
mandated limits, employer's liability insurance with limits not less
than $500,000 or such greater amount as Lessor may from time to time
reasonably require and such other insurance as may be necessary to
comply with applicable laws, except for the State of Texas where Lessee
may self insure for the first $150,000.00 of State Worker's
Compensation; provided, however, that Lessee shall obtain insurance
coverage for all incidents and matters in excess of $150,000.00 per
injury and occurrence in the State of Texas.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the insurer
as to claims against Lessor, its employees and
agents;
(ii) Provide that such insurance cannot be unreasonably
cancelled, invalidated or suspended on account of
the conduct of Lessee, its officers, directors,
employees or agents;
(iii) Provide that any "no other insurance" clause in
the insurance policy shall exclude any policies
of insurance maintained by Lessor and that the
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insurance policy shall not be brought into contribution with
insurance maintained by Lessor;
(iv) Contain a standard without contribution mortgage
clause endorsement in favor of any lender designated by
Lessor;
(v) Provide that the policy of insurance shall not be
terminated, cancelled or substantially modified without at
least 30 days' prior written notice to Lessor and to any
lender covered by any standard mortgage clause endorsement;
(vi) Provide that the insurer shall not have the
option to restore the Premises if Lessor elects to terminate
this Lease in accordance with the terms hereof; and
(vii) Be issued by insurance companies licensed to do
business in the state in which the Premises is located and
which are rated A:VI or better by Best's Insurance Guide or
are otherwise approved by Lessor.
It is expressly understood and agreed that the foregoing minimum limits
of insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of worker's compensation insurance to the extent not available under statutory
law) shall designate Lessor and any mortgagee of Lessor as additional insureds
as their interests may appear and shall be payable as set forth in Section 19
hereof. All such policies shall be written as primary policies, with deductibles
not to exceed 10% of the amount of coverage. Any other policies, including any
policy now or hereafter carried by Lessor, shall serve as excess coverage.
Lessee shall procure policies for all insurance for periods of not less than one
year and shall provide to Lessor and any lender designated by Lessor
certificates of insurance or, upon Lessor's request, duplicate originals of
insurance policies evidencing that insurance satisfying the requirements of this
Lease is in effect at all times.
11. TAX AND INSURANCE IMPOUND. Upon the occurrence of a default under
this Lease by Lessee, Lessor may require Lessee to pay to Lessor sums which will
provide an impound account (which shall not be deemed a trust fund) for paying
up to the next one year of taxes, assessments and/or insurance premiums. Upon
such requirement, Lessor will reasonably estimate the amounts needed for such
purposes and will notify Lessee to pay the same to Lessor in equal monthly
installments, as nearly as practicable, in addition to all other sums due under
this Lease. Should additional funds be required at any time, Lessee shall pay
the same to Lessor on demand. Lessee shall advise Lessor of all taxes and
insurance bills which are due and shall cooperate fully with Lessor in assuring
that the same are paid. Lessor may deposit all impounded funds in accounts
insured by any Federal or State agency and may commingle such funds with other
funds and accounts of Lessor. Interest or other gains from such funds, if any,
shall be the sole property of Lessor. During the continuance of an event of
default by Lessee, Lessor may apply all impounded funds against any sums due
from Lessee to Lessor. Lessor
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shall give to Lessee an annual accounting showing all credits and debits to and
from such impounded funds received from Lessee.
12. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly Rental
and impound payments, if any, are transferred by wire or other means directly
from Lessee's bank account to such account as Lessor may designate. Any
delinquent payment (that is, any payment not made within 10 calendar days after
the date when due) shall, in addition to any other remedy of Lessor, incur a
late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and processing such delinquent payment and should not be
considered interest) and bear interest at the rate of 15% per annum, which
interest rate shall accrue from the date such payment was due, but in no event
shall Lessee be obligated to pay a sum of late charge and interest higher than
the maximum legal rate then in effect.
13. USE. At all times during the Lease Term, Lessee shall use the
Premises solely for the operation of a Black-eyed Pea restaurant or other use as
reasonably approved by Lessor in accordance with the standards of operations
then in effect which are imposed by Franchisor on its franchisees on a
system-wide basis and for no other purpose. Lessee shall not permit any third
party to occupy, operate or manage the Premises without Lessor's consent to be
given or withheld in accordance with Section 26. Lessee shall occupy the
Premises promptly following the Effective Date and, except as set forth below,
Lessee shall at all times during the Lease Term operate its business on the
Premises. Lessee may cease operation of business for a period not to exceed 90
days and may do so only once within any five-year period during the Lease Term.
If Lessee does discontinue operation pursuant to this Section, Lessee shall (i)
give written notice to Lessor 60 days prior to the day Lessee ceases operation,
(ii) provide adequate protection and maintenance of the Premises during any
period of vacancy and (iii) pay all costs necessary to restore the Premises to
their condition on the day operation of the business ceased at such time as the
Premises is reopened for Lessee's business operations or other substituted use
approved by Lessor as contemplated below. Notwithstanding anything herein to the
contrary, Lessee shall pay monthly as the Base Annual Rental and the Annual
Percentage Rental during any period in which Lessee discontinues operation an
amount equal to the mean average of the sum of the Base Annual Rental and the
Annual Percentage Rental for the same months in the two Lease Years immediately
preceding such period.
Lessee shall not, by itself or through any assignment, sublease or
other type of transfer, convert the Premises to an alternative use during the
Lease Term without Lessor's consent, which consent shall not be unreasonably
withheld or delayed. Lessor may consider any or all of the following in
determining whether to grant its consent, without being deemed to be
unreasonable: (i) whether the rental paid to Lessor would be equal to or greater
than the anticipated rental assuming continued existing use, and (ii) whether
the converted use will materially increase Lessor's risks or decrease the value
of the Premises.
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14. COVENANTS OF LESSEE; COMPLIANCE WITH LAWS, RESTRICTIONS, COVENANTS
AND ENCUMBRANCES. A. Lessee's use and occupation of the Premises, and the
condition thereof, shall, at Lessee's sole cost and expense, comply in all
material respects with (i) all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals of any governmental
agencies, departments, commissions, bureaus, boards or instrumentalities of the
United States, the state in which the Premises are located and all political
subdivisions thereof, including, without limitation, all health, building, fire,
safety and other codes, ordinances and requirements and all applicable standards
of the National Board of Fire Underwriters, and (ii) all restrictions, covenants
and encumbrances of record with respect to the Premises.
B. Lessee will not permit any act or condition to exist on or about the
Premises which will materially increase any insurance rate thereon, except when
such acts are required or reasonable in the normal course of its business and
Lessee shall pay for such increase.
C. Without limiting the generality of the other provisions of this
Section, Lessee agrees that it shall be responsible for complying in all
material respects with the Americans with Disabilities Act of 1990, as such act
may be amended from time to time, and all regulations promulgated thereunder
(collectively, the "ADA"), as it affects the Premises. Lessee further agrees
that any and all alterations made to the Premises during the Lease Term will
comply with the requirements of the ADA. Lessee agrees that it will defend,
indemnify and hold harmless Lessor and Lessor's shareholders, directors,
officers, agents, attorneys and employees from and against any and all claims,
demands, causes of action, suits, proceedings, liabilities, damages (including
consequential and punitive damages), losses, costs and expenses, including
reasonable attorneys' fees, caused by, incurred or resulting from Lessee's
failure to comply with its obligations under this Section.
D. Without limiting the generality of the other provisions of this
Section, Lessee shall (i) comply with all Environmental Laws (as defined below)
applicable to the operation or use of the Premises, (ii) cause all other persons
occupying or using the Premises over whom Lessee has control or the ability to
control, to comply with all such Environmental Laws, (iii) obtain and renew all
governmental permits, licenses and authorizations required under any
Environmental Law, and (iv) provide Lessor with prompt written notice of any
actual release of a Hazardous Material other than De Minimis Amounts (as such
term is defined below) on the Premises. Lessee covenants and agrees not to use,
generate, release, manage, treat, manufacture, store, or dispose of, on, under
or about, or transport to or from (any of the foregoing hereinafter a "Use") the
Premises any Hazardous Materials, other than De Minimis Amounts (as such term is
defined below). In the event Lessee breaches any of the foregoing covenants, in
addition to any and all other rights and remedies of Lessor, Lessor at its
option may either (i) require Lessee to reasonably and as required by any
applicable Environment Laws upon demand analyze, remove, abate and/or otherwise
remedy all such Hazardous Materials using licensed contractors reasonably
approved by Lessor or (ii) after reasonable notice to Lessee, perform or cause
to be performed such analysis, removal, abatement and/or remedial work as
required by any applicable Environment Laws for and at the sole expense of
Lessee, except to the extent such matter was caused, by the gross negligence or
wilful misconduct of Lessor. For purposes of this Section, (1) the term
"Hazardous Materials" shall include but not be limited to asbestos, urea
formaldehyde, polychlorinated biphenyls, oil, petroleum products,
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pesticides, radioactive materials, hazardous wastes, toxic substances and any
other related or dangerous, toxic or hazardous chemical, material or substance
in a quantity or at a level regulated by and defined as hazardous or as a
pollutant or contaminant in, or the Use of or exposure to which is prohibited,
limited, governed or regulated by, any Environmental Law; (2) the term "De
Minimis Amounts" shall mean, with respect to any given level of Hazardous
Materials, that level or quantity of Hazardous Materials in any form or
combination of forms which (i) does not constitute a violation of any
Environmental Law and (ii) is customarily employed in, or associated with,
similar businesses located in the county in which the Premises is located, and
(3) the term "Environmental Laws" shall mean any federal, state, or local
statute, law, rule, regulation, ordinance, code, policy or permit now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials.
E. In addition to the other requirements of this Section, Lessee shall,
at all times throughout the Lease Term, comply with all federal, state or local
statutes, laws, rules, regulations, ordinances, codes, now or hereafter in
effect and in each case, as amended, and any judicial order, consent, decree or
judgment, applicable to Lessee where the failure to so comply might reasonably
be expected to result in a Material Adverse Effect.
F. Lessee intends for this Lease to be a "true lease" and not a
financing lease, capital lease, mortgage, equitable mortgage, deed of trust,
trust agreement, security agreement or other financing or trust arrangement, and
the economic realities of this Lease are those of a true lease. The term of this
Lease, including any term extensions provided for in this Lease, is less than
the remaining economic life of the Premises. The option to purchase provided for
in this Lease may be exercised only by Lessee paying the greater of the fair
market value of the Premises (as determined pursuant to Section 22) and the
Minimum Purchase Price, which payment amount will not be nominal. Lessee waives
any claim or defense based upon the characterization of this Lease as anything
other than a true lease, and Lessee stipulates and agrees not to challenge the
validity, enforceability or characterization of the lease of the Premises as a
true lease and further stipulates and agrees that nothing contained in this
Lease creates or is intended to create a joint venture, partnership, equitable
mortgage, trust, financing device or arrangement, security interest or the like.
Lessee shall support the intent of the parties that the lease of the Premises
pursuant to this Lease is a true lease and does not create a joint venture,
partnership, equitable mortgage, trust, financing device or arrangement,
security interest or the like, if, and to the extent that, any challenge occurs.
G. Lessee shall sublease the Premises to Sublessee pursuant to the
Sublease. Lessee agrees to occupy and use (or cause Sublessee to occupy and use)
the Premises solely for the operation of a Black-eyed Pea restaurant in
accordance with the standards of operations then in effect which are imposed by
Franchisor on its franchisees on a system-wide basis, and related ingress,
egress and parking, and for no other purposes. Lessee's use of the Premises
shall not violate any zoning or other governmental requirement applicable to the
Premises. The Premises are and shall be suitable for a Black-eyed Pea restaurant
in accordance with the standards of selection imposed by Franchisor on its
franchisees on a system-wide basis. The Premises shall at all times comply in
all material respects with all applicable statutes, regulations, rules,
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ordinances, including zoning ordinances, codes, licenses, permits, orders and
approvals of any governmental agencies, departments, commissions, bureaus, board
or instrumentalities of the United States, the state in which the Premises are
located and all political subdivisions thereof, including, without limitation,
all health, building, fire, safety and other codes, ordinances and requirements,
all applicable standards of the National Board of Fire Underwriters and the
National Fire Protective Association and the Americans With Disabilities Act of
1990, where such failure to so comply might reasonably be expected to result in
a Material Adverse Effect.
15. CONDITION OF PREMISES; MAINTENANCE. Lessee has inspected, or had
the opportunity to inspect, the Premises and hereby accepts the Premises "AS IS"
and "WHERE IS" with no representation or warranty of Lessor as to the condition
thereof. The Premises shall be kept in good, clean, sanitary and working
condition; and Lessee shall at all times at its own expense (subject to the
rights of Lessee to use any award, compensation or insurance proceeds paid in
connection with any Taking or casualty as specifically provided in Subsection
19.D(2)) maintain, repair and replace, as necessary, the Premises, including all
portions of the Premises.
16. WASTE; ALTERATIONS AND IMPROVEMENTS. Lessee shall not commit actual
or constructive waste upon the Premises. Lessee shall not alter the exterior,
structural, plumbing or electrical elements of the Premises in any manner
without the consent of Lessor, which consent shall not be unreasonably withheld,
delayed or conditioned; provided, however, Lessee may undertake alterations to
the Premises costing less than $50,000.00 without Lessor's consent. If Lessor
consents to the making of any such alterations over $50,000.00, the same shall
be made by Lessee at Lessee's sole expense by a licensed contractor and
according to plans and specifications reasonably approved by Lessor and subject
to such other conditions as Lessor shall reasonably require. Any work at any
time commenced by Lessee on the Premises shall be prosecuted diligently to
completion, shall be of good workmanship and materials and shall comply with all
the terms of this Lease. Upon completion of any alterations, Lessee shall
promptly provide Lessor with a certificate of occupancy if applicable, and any
other documents or information reasonably requested by Lessor. Lessee shall
execute and file or record, as appropriate, a "Notice of Non-Responsibility," or
any equivalent notice permitted under applicable law in the state where the
Premises is located. Any addition to or alteration of the Premises shall be
deemed a part of the Premises and belong to Lessor, and Lessee shall execute and
deliver to Lessor such instruments as Lessor may reasonably require to evidence
the ownership by Lessor of such addition or alteration. Lessee shall maintain
the Premises free from mechanic's and materialman's liens relating to
alterations or improvements made thereto.
17. INDEMNIFICATION. Except for the gross negligence or willful
misconduct of Lessor and Lessor's shareholders, directors, officers, agents,
lenders, attorneys and employees, Lessee shall indemnify, protect, defend (with
legal counsel reasonably acceptable to Lessor) and hold harmless Lessor and
Lessor's shareholders, directors, officers, agents, lenders, attorneys and
employees from and against any and all claims, demands, causes of action, suits,
proceedings, liabilities, damages (including consequential and punitive
damages), losses, costs and expenses, including Lessor's reasonable attorneys'
fees, caused by, incurred or resulting from Lessee's operations of or relating
in any manner to the Premises, whether relating to their original design or
construction, latent defects, alteration, maintenance, use by Lessee or any
person thereon, supervision or otherwise, or from any breach of, default under
or failure to perform any term
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or provision of this agreement by Lessee, its officers, employees, agents or
other persons. It is expressly understood and agreed that Lessee's obligations
under this Section shall survive the expiration or earlier termination of this
Lease for any reason.
18. QUIET ENJOYMENT. So long as Lessee shall pay the rental and other
sums herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have the right to the
peaceful and quiet occupancy of the Premises.
19. CONDEMNATION OR DESTRUCTION. A. In case of a taking of all or any
part of the Premises or the commencement of any proceedings or negotiations
which might result in a taking for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by agreement between Lessor, Lessee and those authorized to exercise
such right ("Taking"), Lessee will promptly give written notice thereof to
Lessor, generally describing the nature and extent of such Taking and including
copies of any documents or notices received in connection therewith.
B. In case of a Taking of the whole of the Premises, other than for
temporary use ("Total Taking"), this Lease shall terminate as of the date of
such Total Taking and all rentals, sums of money and other charges provided to
be paid by Lessee shall be apportioned and paid to the date of such Total
Taking; provided, however, in the event of a Total Taking, if the net award or
payment, after deducting all reasonable costs, fees and expenses incident to the
collection thereof (the "Net Amount"), for such Total Taking is less than the
Minimum Purchase Price, Lessee shall pay to Lessor within 10 days of Lessor's
receipt of the Net Amount an amount equal to the difference between the Minimum
Purchase Price and the Net Amount, if any. Total Taking shall include a taking
of substantially all the Premises if, in the reasonable determination of Lessor,
the remainder of the Premises is not useable and cannot be made useable for the
purposes provided herein. Lessor shall be entitled to receive the entire award
or payment in connection with any taking of the Premises, without deduction for
any estate vested in Lessee by this Lease. Lessee hereby expressly assigns to
Lessor all of its right, title and interest in and to every such award or
payment and agrees that Lessee shall not be entitled to any award or payment for
the value of Lessee's leasehold interest in the Lease. Lessee shall be entitled
to claim and receive any award or payment from the condemning authority
expressly granted for the taking of Lessee's personal property, the interruption
or loss of its business and moving expenses. Lessee shall promptly send Lessor
copies of all correspondence and pleadings relating to any such claim.
C. In case of a temporary use of all or any part of the Premises by a
Taking ("Temporary Taking"), this Lease shall remain in full force and effect
without any reduction of Base Annual Rental, Additional Rental or any other sum
payable hereunder. Except as provided below, Lessee shall be entitled to the
entire award for a Temporary Taking, whether paid by damages, rent or otherwise,
unless the period of occupation and use by the condemning authorities shall
extend beyond the date of expiration of this Lease, in which case the award made
for such Taking shall be apportioned between Lessor and Lessee as of the date of
such expiration. At the termination of any such Temporary Taking, Lessee will,
at its own cost and expense and pursuant to the terms of Section 16 above,
promptly commence and complete the restoration of the Premises; provided,
however, Lessee shall not be required to restore the
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Premises if the term of this Lease shall expire prior to, or within one year
after, the date of termination of the Temporary Taking, and in such event Lessor
shall be entitled to recover all damages and awards arising out of the failure
of the condemning authority to repair and restore the Premises at the expiration
of such Temporary Taking.
D. (1) In the event of a Taking of less than all of the Premises for
other than a temporary use ("Partial Taking") or of damage or destruction to all
or any part of the Premises, all awards, compensation or damages shall be paid
to Lessor, and Lessor shall have the option to (i) terminate this Lease by
notifying Lessee within 60 days after Lessee gives Lessor notice of such damage
or destruction or that title has vested in the taking authority or (ii) continue
this Lease in effect, which election may be evidenced by either a notice from
Lessor to Lessee or Lessor's failure to notify Lessee that Lessor has elected to
terminate this Lease within such 60-day period. Lessee shall have a period of 60
days after Lessor's notice that it has elected to terminate this Lease during
which to elect to continue this Lease on the terms herein provided. If Lessee
does not elect to continue this Lease or shall fail during such 60-day period to
notify Lessor of Lessee's intent to continue this Lease, then this Lease shall
terminate as of the last day of the month during which such period expired.
Lessee shall, no later than ten (10) days after such termination, vacate and
surrender the Premises, all obligations of either party hereunder shall cease as
of the date of termination (provided, however, Lessee's obligations to Lessor
under Section 17 and Lessee's obligations to pay Base Annual Rental, Additional
Rental and all other sums (whether payable to Lessor or a third-party) accruing
under this Lease prior to the date Lessee vacates the Premises shall survive
such termination) and Lessor may retain all such awards, compensation or
damages. If Lessor elects not to terminate this Lease, or if Lessor elects to
terminate this Lease but Lessee elects to continue this Lease, then this Lease
shall continue in full force and effect on the following terms: (i) all Base
Annual Rental, Additional Rental and other sums and obligations due under this
Lease shall continue unabated, and (ii) Lessee shall promptly commence and
diligently prosecute restoration of the Premises to the same condition, as
nearly as practicable, as prior to such partial condemnation, damage or
destruction as approved by Lessor.
(2) Lessor shall promptly make available in installments as restoration
progresses an amount up to but not exceeding the amount of any award,
compensation or damages received by Lessor, upon request of Lessee accompanied
by evidence reasonably satisfactory to Lessor that such amount has been paid or
is due and payable and is properly a part of such costs and that Lessee has
complied with the terms of Section 16 above in connection with the restoration.
Lessor shall be entitled to keep any portion of such award, compensation or
damages which may be in excess of the cost of restoration (the "Excess Amount")
and this Lease shall be amended pursuant to an amendment to be entered into
between Lessor and Lessee in order to (A) reduce the Minimum Purchase Price then
in effect by an amount equal to the Excess Amount, and (B) recompute the Base
Annual Rental then in effect to an amount equal to the Minimum Purchase Price in
effect after making the adjustment described in (A) above multiplied by the
Rental Factor in effect as of the date such Excess Amount is paid to Lessor.
Lessee shall bear all additional costs, fees and expenses of such restoration in
excess of the amount of any such award, compensation or damages.
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E. Notwithstanding the foregoing, if at the time of any Taking or at
any time thereafter Lessee shall be in default under this Lease and such default
shall be continuing, Lessor is hereby authorized and empowered but shall not be
obligated, in the name and on behalf of Lessee and otherwise, to file and
prosecute Lessee's claim, if any, for an award on account of any Taking and to
collect such award and apply the same, after deducting all costs, fees and
expenses incident to the collection thereof, to the curing of such default and
any other then existing default under this Lease.
20. INSPECTION. Lessor and its authorized representatives shall have
the right, upon giving reasonable notice, to enter the Premises or any part
thereof and inspect the same and make photographic or other evidence concerning
Lessee's compliance with the terms of this Lease. Lessee hereby waives any claim
for damages for any injury or inconvenience to or interference with Lessee's
business, any loss of occupancy or quiet enjoyment of the Premises and any other
loss occasioned by such entry except to the extent such matter was caused by the
gross negligence or wilful misconduct of Lessor. Lessee shall obtain and
maintain at all times such books, records and accounts as are reasonably
necessary to establish Lessee's Gross Sales arising from business conducted on
the Premises for the fiscal year ending April 5, 1996. Lessee shall keep full,
complete and appropriate books of account and records of Lessee's Gross Sales
and business relating to the Premises in accordance with generally accepted
accounting principles consistently applied. The books and records of Lessee
shall at all times be open for inspection during reasonable business hours by
Lessor, its auditors or other authorized representatives and shall show Lessee's
Gross Sales arising from business conducted on the Premises, claimed exclusions
therefrom, inventories and receipts of merchandise at the Premises. Daily
receipts from all sales and other transactions on or from the Premises, shall be
recorded at the time of sale and in the presence of the customer and shall be
recorded in a point of sale system with a cumulative total. Lessee further
agrees to keep on the Premises or at its principal office for at least two (2)
years following the end of each Lease Year all records with respect to the gross
income, sales and occupancy tax returns with respect to such Lease Year and all
pertinent original sales records sufficient to allow an independent auditor to
perform a thorough and complete audit thereon. At its option, Lessor may at any
time upon five days' prior notice to Lessee, cause a complete audit (including a
physical inventory) to be made by an auditor selected by Lessor of the entire
records and operations of Lessee relating to the Premises for the period covered
by any statement issued or required to be issued by Lessee. Lessee shall make
available for Lessor's auditor at Lessee's address for notices within five days
following Lessor's notice requiring such audit, all of the books, pertinent
sales records and income, sales and occupancy tax reports of Lessee which such
auditor deems necessary or desirable for the purpose of making an audit. If an
audit or examination by Lessor of Lessee's records of Lessee's Gross Sales
arising from business conducted on the Premises and Annual Percentage Rental
computation discloses that Annual Percentage Rental has been underpaid, Lessee
shall immediately pay Lessor all delinquent Annual Percentage Rental, together
with interest thereon at the rate set forth in Section 12 above. If any
statement of Lessee's Gross Sales previously made by Lessee shall be found to be
more than 10% less than the amount of Lessee's Gross Sales arising from business
conducted on the Premises, as shown by such audit, Lessee shall immediately pay
the cost of such audit; otherwise the cost of such audit shall be paid by
Lessor. A second occurrence of an audit which shall disclose an understatement
of such Lessee's Gross Sales of 10% or more for any Lease Year during the Lease
Term shall automatically, without
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notice to Lessee, constitute a default under this Lease, and shall entitle
Lessor to exercise any and all remedies set forth in Section 23 of this Lease.
21. FINANCIAL COVENANTS. A. At all times during the Lease Term, and any
extension thereof, Lessee shall maintain a Fixed Charge Coverage Ratio equal to
or greater than 1.25:1. The failure of Lessee to so maintain such Fixed Charge
Coverage Ratio shall constitute a breach and default by Lessee under this Lease.
B. At all times during the Lease Term, and any extension thereof,
Lessee shall maintain a net worth of not less than $15,000,000.00. For purposes
of this Subsection, net worth shall mean the book value of Lessee's
shareholder's equity, as determined in accordance with generally accepted
accounting principles, consistently applied from period to period.
22. OPTION TO PURCHASE PREMISES. Lessee shall have the option during
the 90 days immediately preceding the tenth, fifteenth and twentieth
anniversaries of this Lease and during the 90-day period immediately preceding
the end of the first and second optional extension terms set forth in Section 27
of this Lease (as applicable, the "Window"), to give Lessor notice (the "Option
Notice") of Lessee's election to purchase the Premises for the greater of (i)
its fair market value (which fair market value shall be determined in the manner
set forth below) or (ii) the then current Minimum Purchase Price. The closing of
such purchase must occur during the first 90 days (the "Purchase Period")
following the end of the applicable Window if such appraisal has been received
and, if not, a day for day extension will be allowed until the appraisal is
received. Within 90 days of Lessor's receipt of the Option Notice, Lessor shall,
at Lessee's sole expense, retain an independent MAI appraiser to prepare an
appraisal of the fair market value of the Premises including any additions or
renovations thereto. In determining the fair market value of the Premises, the
appraiser shall utilize the cost, income and sales comparison approaches to
value. In utilizing the income approach, the appraiser shall determine the
"leased fee" value of the Premises, which shall be arrived at by considering (i)
the income that would be produced by this Lease through the end of the fully
extended Lease Term (including, without limitation, income that could be
reasonably expected to be produced from the payment of Annual Percentage
Rental), and (ii) any other factors relating to such approach which the
appraiser shall deem relevant in his reasonable discretion. If within 20 days
after being notified of the result of such appraisal Lessee elects to reject
that appraisal, then the first appraisal shall become null and void and Lessor
shall nominate to Lessee a list of not less than three independent MAI
appraisers who are experienced with appraising property similar to the Premises,
and Lessee shall select one such appraiser. Within 60 days of such selection,
Lessor shall retain such appraiser to prepare an appraisal of the Premises in
the same manner described above. Within 20 days after the results of that
appraisal have been delivered to Lessee, Lessee shall notify Lessor of its
election to exercise this option to purchase the Premises for the price set
forth in such appraisal. If such notice of exercise is not received by Lessor
within such 20-day period, the option for such time period shall lapse and this
Lease shall remain in full force and effect.
Upon exercise of this option, Lessor and Lessee shall open an escrow
account with a recognized title insurance or trust company selected by Lessor.
Such escrow shall be subject to the standard escrow instructions of the escrow
agent, to the extent they are not inconsistent
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herewith. At or before the close of escrow, Lessor shall deliver to the escrow
agent its special warranty deed conveying to Lessee all of Lessor's right, title
and interest in the Premises free and clear of all liens and encumbrances except
liens for taxes and assessments and easements, covenants and restrictions of
record which were attached to the Premises as of the date hereof, attached
during the Lease Term through Lessee's action or inaction, as the case may be,
have been granted by Lessor in lieu of a taking by the power of eminent domain
or the like, have been approved by Lessee. In the event Lessor is unable to
convey title as required, Lessee shall have the right to accept such title as
Lessor can convey or elect not to consummate its exercise of the option, in
which case the option for such time period shall lapse and this Lease shall
remain in full force and effect; provided, however, that Lessor shall remove any
monetary lien or encumbrance against the Premises created by Lessor. Both Lessor
and Lessee agree to execute a purchase agreement, escrow instructions and such
other instruments as may be necessary or appropriate to consummate the sale of
the Premises in the manner herein provided. All cost of exercise of the option,
including, but not limited to, escrow fees, title insurance fees, recording
costs or fees, reasonable attorneys' fees (including those of Lessor), appraisal
fees, stamp taxes and transfer fees shall be borne by Lessee. Lessee shall
continue to pay and perform all of its obligations under this Lease until the
close of escrow which in no event shall occur after the date of the expiration
of the Lease Term or the expiration of any extension thereof. The purchase price
paid by Lessee in exercising this option shall be paid to Lessor or to such
person or entity as Lessor may direct at closing in immediately available funds.
Lessee shall not have the right to exercise this option or consummate the
exercise thereof if at the time of exercise or consummation Lessee shall be in
default of any of the terms and conditions of this Lease or if any condition
shall exist which upon the giving of notice or the passage of time, or both,
would constitute a default by Lessee under this Lease.
The failure of Lessee to consummate the purchase of the Premises as
contemplated herein shall not release Lessee from its obligations under this
Lease and the Lease shall remain in full force and effect until the expiration
of the Lease Term or applicable extension period. In the event Lessor fails to
perform its duties and obligations under this Section within thirty (30) days
after receiving notice from Lessee to so perform, and provided Lessee shall have
performed its duties and obligations hereunder, Lessee shall be entitled to
exercise any remedies available to Lessee at law or in equity against Lessor
arising out of Lessor's failure to so perform, including the right to seek
specific performance of Lessor's obligations under this Section. The escrow
shall close within the Purchase Period, or Lessor, at its option, may terminate
Lessee's option to purchase the Premises during such time period. The closing
date may be extended for a reasonable period of time to permit Lessor to cure
title defects or to permit either party to cure any other defects or defaults
provided each party is diligently seeking to cure such defect or default and
Lessee continues to perform its obligation hereunder.
Lessee may not sell, assign, transfer, hypothecate or otherwise dispose
of the option granted herein or any interest therein, except in conjunction with
a permitted assignment of Lessee's entire interest herein and then only to the
assignee thereof. Any attempted assignment of this option which is contrary to
the terms of this paragraph shall be deemed to be a default under this Lease and
the option granted herein shall be void. Notwithstanding the foregoing, Lessee
shall have the right to designate the person or entity to whom title to the
Premises will be transferred pursuant to Lessor's special warranty deed.
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23. DEFAULT, REMEDIES AND MEASURE OF DAMAGES. A. Each of the following
shall be deemed a material breach of this Lease and a default by Lessee:
(i) If any material representation or warranty of Lessee
herein was false when made or if Lessee renders to Lessor any
materially false statement or account;
(ii) If any rent or other monetary sum due hereunder is not
paid within 10 calendar days after the date when due;
(iii) If Lessee becomes insolvent within the meaning of the
Code, files or notifies Lessor that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute
relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts (collectively, hereinafter, an "Action"), becomes
the subject of either a petition under the Code or an Action (or if
involuntary, such petition is not dismissed with 120 days thereafter,
or is not generally paying its debts as the same become due;
(iv) If Lessee vacates or abandons the Premises;
(v) If Lessee fails to observe or perform any of the
covenants, conditions, or obligations of this Lease;
(vi) If any breach or default under any of the Other
Agreements is not cured after the giving of any notice required to be
given thereunder and the expiration of any applicable cure period; or
(vii) Any attempt by Lessee to revoke the powers of attorney
created under this Lease or the Memorandum of Lease.
B. If any default occurs pursuant to subsection A.(ii) above, then such
event shall not constitute a default hereunder and Lessor shall not be entitled
to exercise its remedies set forth in subsection D. below unless and until
Lessor shall have given Lessee notice thereof and a period of 10 calendar days
from the delivery of such notice shall have elapsed without such default being
cured.
C. If any such breach or default does not involve the payment of any
rent or other monetary sum, does not place any material rights or property of
Lessor in immediate jeopardy, and is within the reasonable power of Lessee to
cure within 30 days after receipt of notice thereof, all as determined by Lessor
in its reasonable discretion, then such event shall not constitute a default
hereunder, except as set forth in Section 20, unless and until Lessor shall have
given Lessee notice thereof and a period of 30 days shall have elapsed, during
which period Lessee may correct or cure such event, upon failure of which a
default shall be deemed to have occurred hereunder without further notice or
demand of any kind. If such nonmonetary breach or default cannot reasonably be
cured within such 30-day period, as determined by Lessor in its reasonable
discretion, and Lessee is diligently pursuing a cure of such breach or default,
then the event giving rise to such default shall not constitute a default
hereunder unless and until a
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reasonable period of time (not to exceed 90 days after Lessor's notice to Lessee
described above in this subsection C.) shall have elapsed without such default
being cured.
D. As a material inducement to Lessor executing this Lease, in the
event of any breach or default, and with or without any notice or demand, except
the notice prior to default required under certain circumstances by subsections
B and C above or such other notice as may be required by statute and cannot be
waived by Lessee (all other notices being hereby waived), Lessor shall be
entitled to exercise, at its option, concurrently, successively, or in any
combination, all remedies available at law or in equity, including without
limitation any one or more of the following:
(i) To terminate this Lease, whereupon Lessee's right to
possession of the Premises shall cease and this Lease, except as to
Lessee's liability, shall be terminated;
(ii) To reenter and take possession of the Premises, any or
all personal property or fixtures of Lessee upon the Premises and, to
the extent permissible, all permits and other rights or privileges of
Lessee pertaining to the use and operation of the Premises and to expel
Lessee and those claiming under or through Lessee, without being deemed
guilty in any manner of trespass or becoming liable for any loss or
damage resulting therefrom, without resort to legal or judicial
process, procedure or action except for any gross negligence or wilful
misconduct of Lessor. No notice from Lessor hereunder or under a
forcible entry and detainer statute or similar law shall constitute an
election by Lessor to terminate this Lease unless such notice
specifically so states. If Lessee shall, after default, voluntarily
give up possession of the Premises to Lessor, deliver to Lessor or its
agents the keys to the Premises, or both, such actions shall be deemed
to be in compliance with Lessor's rights and the acceptance thereof by
Lessor or its agents shall not be deemed to constitute a termination of
the Lease. Lessor reserves the right following any reentry and/or
reletting to exercise its right to terminate this Lease by giving
Lessee written notice thereof, in which event this Lease will terminate
as specified in said notice;
(iii) To seize all personal property or fixtures upon the
Premises which Lessee owns or in which it has an interest, in which
Lessor shall have a landlord's lien and/or security interest, and to
dispose thereof in accordance with the laws prevailing at the time and
place of such seizure or to remove all or any portion of such property
and cause the same to be stored in a public warehouse or elsewhere at
Lessee's sole expense, without becoming liable for any loss or damage
resulting therefrom and without resorting to legal or judicial process,
procedure or action, except for any gross negligence or wilful
misconduct of Lessor;
(iv) To bring an action against Lessee (whether or not Lessor
elects to exercise its other rights and remedies hereunder) for any
damages or losses sustained by Lessor or any equitable relief available
to Lessor, including, without limitation, the right to bring an action
against Lessee for losses incurred due to a breach or default of any of
Lessee's representations, warranties or covenants hereunder;
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<PAGE> 25
(v) To relet the Premises or any part thereof for such term or
terms (including a term which extends beyond the original term of this
Lease), at such rentals and upon such other terms as Lessor, in its
reasonable discretion, may determine, with all proceeds received from
such reletting being applied to the rental and other sums due from
Lessee in such order as Lessor, may, in it sole discretion, determine,
which other sums include, without limitation, all repossession costs,
brokerage commissions, reasonable attorneys' fees and expenses,
alteration, remodeling and repair costs and expenses of preparing for
such reletting. Lessor reserves the right following any reentry and/or
reletting to exercise its right to terminate this Lease by giving
Lessee written notice thereof, in which event this Lease will terminate
as specified in said notice;
(vi) To accelerate and recover from Lessee all rent and other
monetary sums due and owing and scheduled to become due and owing under
the Lease both before and after the date of such breach for the entire
original scheduled term of this Lease taking into account the present
value thereof based upon a discount rate as may be determined to be
reasonable by a court of competent jurisdiction, provided that Lessor
agrees to use good faith efforts to mitigate Lessor's damages
hereunder.
(vii) To recover from Lessee all costs and expenses, including
reasonable attorneys' fees, court costs, expert witness fees, costs of
tests and analyses, travel and accommodation expenses, deposition and
trial transcripts, copies and other similar costs and fees, paid or
incurred by Lessor as a result of such breach, regardless of whether or
not legal proceedings are actually commenced;
(viii) To immediately or at any time thereafter, and with or
without notice, at Lessor's sole option but without any obligation to
do so, correct such breach or default and charge Lessee all reasonable
costs and expenses incurred by Lessor therein. Any sum or sums so paid
by Lessor, together with interest at the then existing maximum legal
rate, but not higher than 15% per annum, shall be deemed to be
additional rent hereunder and shall be immediately due from Lessee to
Lessor. Any such acts by Lessor in correcting Lessee's breaches or
defaults hereunder shall not be deemed to cure said breaches or
defaults or constitute any waiver of Lessor's right to exercise any or
all remedies set forth herein;
(ix) To immediately or at any time thereafter, and with or
without notice, except as required herein, set off any money of Lessee
held by Lessor under this Lease against any sum owing by Lessee
hereunder; and/or
(x) To enforce, and Lessee does hereby consent to such
enforcement, notwithstanding the laws of the State to the contrary, all
of Lessor's self-help remedies available at law or in equity without
Lessor resorting to any legal or judicial process, procedure or action.
24. MORTGAGE, SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. Lessor's
interest in this Lease and/or the Premises shall not be subordinate to any
encumbrances placed upon the Premises by or resulting from any act of Lessee,
and nothing herein contained shall be construed
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to require such subordination by Lessor. Lessee shall keep the Premises free
from any liens for work performed, materials furnished or obligations incurred
by Lessee. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR
ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST OR ENCUMBRANCE OF ANY KIND
UPON ALL OR ANY PART OF THE PREMISES OR LESSEE'S LEASEHOLD INTEREST THEREIN
(EXCEPT THAT LESSEE MAY ENCUMBER LESSEE'S LEASEHOLD INTEREST HEREUNDER IN FAVOR
OF BANQUE PARIBAS, AS AGENT, PROVIDED LESSOR SHALL HAVE APPROVED THE FORM OF
LEASEHOLD MORTGAGE, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR
DELAYED), AND ANY SUCH PURPORTED TRANSACTION SHALL BE VOID. FURTHERMORE, ANY
SUCH PURPORTED TRANSACTION SHALL BE DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S
RELATIONSHIP WITH LESSEE AND LESSOR'S FEE OWNERSHIP OF THE PREMISES.
This Lease at all times shall automatically be subordinate to the lien
of any and all mortgages and trust deeds now or hereafter placed upon the
Premises by Lessor, and Lessee covenants and agrees to execute and deliver, upon
demand, such further instruments subordinating this Lease to the lien of any or
all such mortgages or trust deeds as shall reasonably be desired by Lessor, or
any present or proposed mortgagees or trustees under trust deeds, upon the
condition that Lessee shall have the right to remain in possession of the
Premises under the terms of this Lease, notwithstanding any default in any or
all such mortgages or trust deeds, or after foreclosure thereof, so long as
Lessee is not in default under any of the covenants, conditions and agreements
contained in this Lease.
If any mortgagee or trustee elects to have this Lease and the interest
of Lessee hereunder be superior to any such interest or right and evidences such
election by notice given to Lessee, then this Lease and the interest of Lessee
hereunder shall be deemed superior to any such mortgage or trust deed, whether
this Lease was executed before or after such mortgage or trust deed and in that
event such mortgagee or trustee shall have the same rights with respect to this
Lease as if it had been executed and delivered prior to the execution and
delivery of the mortgage or trust deed and has been assigned to such mortgagee
or trustee.
Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be reasonably required for
such purposes, and in the event Lessee fails so to do within 10 days after
demand, Lessee does hereby make, constitute and irrevocably appoint Lessor as
its agent and attorney-in-fact and in its name, place and stead so to do, which
appointment shall be deemed coupled with an interest.
In the event any collateral assignee or purchaser at a foreclosure sale
acquires title to the Premises pursuant to the exercise of any remedy provided
for in the collateral assignment, mortgage or trust deed or otherwise, Lessee
shall attorn to such purchaser and recognize such purchaser as Lessor under this
Lease, which shall continue in full force and effect as a direct lease between
such purchaser and Lessee. The foregoing provision shall be self operative and
effective without the execution of any further instruments.
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Lessee shall give written notice to any lender of Lessor having a
recorded lien upon the Premises or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under this
Lease and give such lender at least 60 days beyond any notice period to which
Lessor might be entitled to cure such default before Lessee may exercise any
remedy with respect thereto. Upon request by Lessor, Lessee shall also provide
Lessee's most recent audited financial statements to Lessor or any such lender
and certify the continuing accuracy of such financial statements in such manner
as Lessor or such lender may reasonably request.
25. ESTOPPEL CERTIFICATE. A. At any time, and from time to time, Lessee
agrees, promptly and in no event later than 10 days after a request from Lessor,
to execute, acknowledge and deliver to Lessor or any present or proposed
mortgagee or purchaser designated by Lessor a certificate in the form supplied
by Lessor, certifying: (i) that Lessee has accepted the Premises (or, if Lessee
has not done so, that Lessee has not accepted the Premises, and specifying the
reasons therefor); (ii) that this Lease is in full force and effect and has not
been modified (or if modified, setting forth all modifications), or, if this
Lease is not in full force and effect, the certificate shall so specify the
reasons therefor; (iii) the commencement and expiration dates of the Lease Term
and the terms of any extension options of Lessee; (iv) the date to which the
rentals have been paid under this Lease and the amount thereof then payable; (v)
whether there are then any existing defaults by Lessor in the performance of its
obligations under this Lease, and, if there are any such defaults, specifying
the nature and extent thereof; (vi) that no notice has been received by Lessee
of any default under this Lease which has not been cured, except as to defaults
specified in the certificate; (vii) the capacity of the person executing such
certificate, and that such person is duly authorized to execute the same on
behalf of Lessee; and (viii) any other information reasonably requested by
Lessor, or its present or proposed purchaser or mortgagee.
B. Lessor agrees, promptly and in no event later than 10 days after a
request from Lessee, to execute, acknowledge and deliver to, or as directed by,
Lessee a certificate certifying: (i) that this Lease is in full force and effect
and has not been modified (or if modified, setting forth all modifications), or,
if this Lease is not in full force and effect, the certificate shall so specify
the reasons therefor; (ii) the commencement and expiration dates of the Lease
Term and the terms of any extension options of Lessee; (iii) the date to which
the rentals have been paid under this Lease and the amount thereof then payable;
(iv) whether Lessor has notified Lessee of any existing defaults by Lessee in
the performance of its obligations under this Lease, and, if so, a description
of the nature of such default; (v) that no notice has been received by Lessor of
any default under this Lease by Lessor that has not been cured, or, if such
default has not been cured, a description of the nature of such uncured default;
(vi) the capacity of the person executing such certificate, and that such person
is duly authorized to execute the same on behalf of Lessor; and (vii) any other
information reasonably requested by Lessee, or its present or proposed
mortgagee.
26. ASSIGNMENT. Lessor shall have the right to sell or convey the
Premises subject to this Lease or to assign its right, title and interest as
Lessor under this Lease in whole or in part. In the event of any such sale or
assignment other than a security assignment, Lessee shall attorn to such
purchaser or assignee and Lessor shall be relieved, from and after the date of
such
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transfer or conveyance, of liability for the performance of any obligation of
Lessor contained herein, except for obligations or liabilities accrued prior to
such assignment or sale.
A major consideration for Lessor's execution of this Lease is Lessor's
anticipation of receiving substantial percentage rentals from Lessee's
contemplated use of the Premises. Furthermore, Lessee acknowledges that Lessor
has relied both on the business experience and creditworthiness of Lessee and
upon the particular purposes for which Lessee intends to use the Premises in
entering into this Lease. Lessee shall not, without the consent of Lessor, which
consent shall not be unreasonably withheld or delayed (i) assign, transfer,
convey, pledge or mortgage this Lease or any interest therein, whether by
operation of law or otherwise except to Banque Paribas, as agent, pursuant to
documents reasonably acceptable to Lessor or (ii) sublet all or any part of the
Premises, except that Lessee shall have the right to sublet the Premises to
Sublessee pursuant to the Sublease. It is expressly agreed that Lessor may
reasonably withhold or condition such consent based upon such matters as Lessor
may in its discretion reasonably determine, including, without limitation, the
experience and creditworthiness of the assignee, the assumption by the assignee
of all of Lessee's obligations hereunder by undertakings enforceable by Lessor,
payment to Lessor of any rentals owing under a sublease which are in excess of
the rentals owing hereunder, the transfer to such assignee of all necessary
licenses and franchises to continue operating the Premises for the purposes
herein provided, receipt of such representations and warranties from such
assignee as Lessor may reasonably request, including such matters as its
organization, existence, good standing and finances and other matters, whether
or not similar in kind. Prior to the time of any such assignment, Franchisor and
Lessee's assignee, as franchisee, shall have entered into a franchise, license
and/or area development agreement approving such assignee as franchisee and
permitting such assignee to operate a Black-eyed Pea restaurant on and at the
Premises and will have a term that will not expire prior to the expiration of
the initial term of this Lease without taking into consideration any extension
periods hereunder (called the "Franchise Agreement"), provided that the
foregoing covenant relative to entering into the Franchise Agreement shall not
pertain to any assignee which is a partnership, corporation, limited liability
company or other entity which is wholly owned, directly or indirectly by Lessee.
Lessee shall provide Lessor with a copy of such executed Franchise Agreement. At
the time of any such assignment which is approved by Lessor (i) the assignee
shall assume all of the obligations of Lessee under this Lease pursuant to
Lessor's standard form of assumption agreement, (ii) assignee shall create the
powers of attorney in favor of Lessor, as agent, in form substantially similar
to the powers of attorney contained in the Memorandum of Lease, (iii) Franchisor
shall provide Lessor with a Franchisor's certification (in form reasonably
acceptable to Lessor) as to the validity of the Franchise Agreement between
Franchisor and such assignee and agreeing to provide Lessor with a copy of any
"notice of default and demand to cure" letters sent to such assignee, as
franchisee, and to notify Lessor of the intent of Franchisor, or of the
assignee, as the franchisee (of which Franchisor may have knowledge) to cancel
or terminate the Franchise Agreement and the effective date of such intended
cancellation or termination. No such assignment or subletting shall relieve
Lessee of its obligations respecting this Lease. Any purported transfer,
conveyance, pledge or mortgage in violation of this paragraph shall be voidable
at the sole option of Lessor.
27. OPTION TO EXTEND. Lessee, provided it is not in default hereunder
at the time of exercise or at the expiration of the Lease Term or, if
applicable, the first extension of the Lease
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Term, shall have the option to continue this Lease in effect for up to two
additional successive periods of five years each in accordance with the terms
and provisions of this Lease then in effect, except for the following:
A. In the event the annual fair market rental value of the
Premises (to be determined as set forth below) is greater than the Base
Annual Rental then in effect, then the annual fair market rental value
of the Premises shall be substituted for the Base Annual Rental and all
other provisions shall remain the same; or
B. In the event the annual fair market rental value of the
Premises is less than the Base Annual Rental then in effect, then the
provisions of this Lease shall remain the same.
Lessee shall exercise such extension option by giving notice to Lessor
of Lessee's intention to do so not more than 270 days or less than 210 days
prior to the expiration of the Lease Term or the first extension of the Lease
Term and upon receipt of such notice Lessor shall within 90 days, at Lessee's
expense, cause an appraisal of the fair market rental value of the Premises to
be made by an independent MAI appraiser. If within 20 days after being notified
of the result of such appraisal Lessee elects to reject that appraisal, then
Lessor shall nominate to Lessee a list of not less than three independent MAI
appraisers who are experienced with appraising property similar to the Premises,
and Lessee shall select one such appraiser. Within 60 days of such selection an
appraisal shall be made of the Premises by that appraiser and within 20 days
after the results of that appraisal shall have been delivered to Lessee, Lessee
shall notify Lessor of Lessee's election to exercise its option to extend this
Lease and shall pay the rental so established above which shall be absolutely
net to Lessor as provided in Section 7 hereof. If such notice of exercise is not
received by Lessor within the 20-day period then this Lease shall terminate on
the last day of the Lease Term or, if applicable, the last day of the first
extension of the Lease Term. If Lessee shall have assigned (pursuant to Section
26, with Lessor's consent) its interest in this Lease, the option to extend
granted under this Section may only be exercised by such assignee, as Lessee, if
the term of the Franchise Agreement (defined in Section 26) relative to the
Premises is extended for a period of time not less than the applicable Lease
extension period under this Section.
28. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Lease shall
be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next business
day, if delivered by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with the United States
Postal Service, if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses (or facsimile
numbers, as applicable) specified below:
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If to Lessee: Mr. William J. Howard
DenAmerica Corp.
7373 North Scottsdale Road
Scottsdale, Arizona 85253
Telephone: (602) 483-7055
Telecopy: (602) 483-9592
With a copy to: Jeffrey H. Verbin, Esq.
O'Connor Cavanagh
One East Camelback Road
Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2728
Telecopy: (602) 263-2900
If to Lessor: Dennis L. Ruben, Esq.
Senior Vice President and General Counsel
FFCA Acquisition Corporation
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.
29. HOLDING OVER. If Lessee remains in possession of the Premises after
the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Base Monthly Rental shall be automatically increased to
one-hundred and twenty-five percent (125%) of the Base Monthly Rental then in
effect, and to comply with all the terms of this Lease; provided that nothing
herein nor the acceptance of rent by Lessor shall be deemed a consent to such
holding over. Lessee shall defend, indemnify, protect and hold Lessor harmless
from and against any and all claims, losses and liabilities for damages
resulting from Lessee's failure to surrender possession upon the expiration of
the Lease Term, including, without limitation, any claims made by any succeeding
lessee.
30. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor shall
have a landlord's lien, and additionally hereby separately grants to Lessor a
first and prior security interest, in, on and against all personal property,
appliances, furniture, fixtures and equipment (collectively, the "Equipment")
owned by Lessee from time to time situated on the Premises, which lien and
security interest shall secure the payment of all rental and other charges
payable by Lessee to Lessor under the terms hereof and all other obligations of
Lessee to Lessor under this Lease. Lessee further agrees to execute and deliver
to Lessor from time to time such financing statements and other documents as
Lessor may then deem appropriate or necessary to perfect and maintain said lien
and security interest, and expressly acknowledges and agrees that, in addition
to any and all other rights and remedies of Lessor whether hereunder or at law
or
30
<PAGE> 31
in equity, in the event of any default of Lessee hereunder, Lessor shall have
any and all rights and remedies granted a secured party under the Uniform
Commercial Code ("UCC") then in effect in the State in which the Premises is
located. If Lessee shall fail for any reason to execute any such financing
statement or document within 10 days after Lessor's request therefor, Lessor
shall have the right to execute the same as attorney-in-fact of Lessee, coupled
with an interest, for, and on behalf, and in the name of Lessee. Lessee
covenants to promptly notify Lessor of any changes in Lessee's name and/or
organizational structure which may necessitate the execution and filing of
additional financing statements (provided, however, the foregoing shall not be
construed as Lessor's consent to such changes). Notwithstanding the foregoing,
Lessor agrees that upon Lessee's request, Lessor will without charge subordinate
its landlord's lien and security interest in any Equipment owned by Lessee to
the purchase money security interest of any unaffiliated lender or seller.
Lessee shall have the right to grant to Banque Paribas, as agent, a UCC security
interest in the Equipment owned by Lessee so long as the UCC security interest
in favor of Banque Paribas, as agent, is, and shall at all times be, junior and
subordinate to the landlord's lien and first-priority UCC security interest of
Lessor granted pursuant to this Section 30.
31. REMOVAL OF LESSEE'S PROPERTY. At the expiration or termination of
the term of this Lease, and if Lessee is not then in default pursuant to Section
23 hereof, Lessee may remove from the Premises all personal property belonging
to Lessee. Lessee shall repair any damage caused by such removal and shall leave
the Premises broom clean and in good and working condition and repair inside and
out, ordinary wear and tear excepted. Any property of Lessee left on the
Premises on the tenth day following the expiration of the Lease Term shall
automatically and immediately become the property of Lessor.
32. FINANCIAL STATEMENTS. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor (i) complete financial statements of Lessee, including a
balance sheet, profit and loss statement, statement of changes in financial
condition and all other related schedules for the fiscal period then ended; (ii)
income statements for the business at the Premises; and (iii) such financial and
other information as is necessary to compute, and determine compliance with, the
Fixed Charge Coverage Ratio requirement and net worth provisions of Section 21.
All such financial statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied from period to period, and
shall be certified to be accurate and complete by Lessee (or the Treasurer or
other appropriate officer of Lessee). Lessee understands that Lessor is relying
upon such financial statements and Lessee represents that such reliance is
reasonable. In the event that Lessee's property and business at the Premises is
ordinarily consolidated with other business for financial statement purposes,
such financial statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses pertaining to the Premises with the
basis for allocation of overhead of other charges being clearly set forth. The
financial statements delivered to Lessor need not be audited, but Lessee shall
deliver to Lessor copies of any audited financial statements of Lessee which may
be prepared, as soon as they are available.
33. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a
31
<PAGE> 32
period equal to any such prevention, delay or stoppage, except the obligations
imposed with regard to rental and other monies to be paid by Lessee pursuant to
this Lease.
34. TIME IS OF THE ESSENCE. Time is of the essence with respect to each
and every provision of this Lease in which time is a factor.
35. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth the
matter waived or amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter shall not be deemed a
waiver of the same or any other matter on any future occasion. No acceptance by
Lessor of an amount less than the monthly rent and other payments stipulated to
be due under this Lease shall be deemed to be other than a payment on account of
the earliest such rent or other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying any such payment be
deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.
36. SUCCESSORS BOUND. Except as otherwise specifically provided herein,
the terms, covenants and conditions contained in this Lease shall bind and inure
to the benefit of the respective heirs, successors, executors, administrators
and assigns of each of the parties hereto.
37. NO MERGER. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not result in a merger of
Lessor's and Lessee's estates, and shall, at the option of Lessor, either
terminate any or all existing subleases or subtenancies, or operate as an
assignment to Lessor of any or all of such subleases or subtenancies.
38. CAPTIONS. Captions are used throughout this Lease for convenience
of reference only and shall not be considered in any manner in the construction
or interpretation hereof.
39. SEVERABILITY. The provisions of this Lease shall be deemed
severable. If any part of this Lease shall be held unenforceable by any court of
competent jurisdiction, the remainder shall remain in full force and effect, and
such unenforceable provision shall be reformed by such court so as to give
maximum legal effect to the intention of the parties as expressed therein.
40. CHARACTERIZATION. A. It is the intent of the parties hereto that
the business relationship created by this Lease and any related documents is
solely that of a long-term commercial lease between landlord and tenant and has
been entered into by both parties in reliance upon the economic and legal
bargains contained herein. Neither the provision set forth herein for the
computation of the Annual Percentage Rental, nor any one or more of the
agreements contained herein, is intended, nor shall the same be deemed or
construed, to create a partnership between Lessor and Lessee, to make them joint
venturers, to make Lessee an agent, legal representative, partner, subsidiary or
employee of Lessor, nor to make Lessor in any way responsible for the debts,
obligations or losses of Lessee.
B. Lessor and Lessee acknowledge and warrant to each other that each
has been represented by independent counsel and has executed this Lease after
being fully advised by said counsel as to its effect and significance. This
Lease shall be interpreted and construed in a fair
32
<PAGE> 33
and impartial manner without regard to such factors as the party which prepared
the instrument, the relative bargaining powers of the parties or the domicile of
any party.
41. BANKRUPTCY. A. As a material inducement to Lessor executing this
Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) Lessee's
timely performance of all of its obligations under this Lease notwithstanding
the entry of an order for relief under the Code for Lessee and (ii) all defaults
under the Lease being cured promptly and the Lease being assumed within 60 days
of any order for relief entered under the Code for Lessee, or the Lease being
rejected within such 60 day period and the Premises surrendered to Lessor.
Accordingly, in consideration of the mutual covenants contained in this
Lease and for other good and valuable consideration, Lessee hereby agrees that:
(i) All obligations that accrue under this Lease (including
the obligation to pay rent), from and after the date that an Action is
commenced shall be timely performed exactly as provided in this Lease
and any failure to so perform shall be harmful and prejudicial to
Lessor;
(ii) Any and all rents that accrue from and after the date
that an Action is commenced and that are not paid as required by this
Lease shall, in the amount of such rents, constitute administrative
expense claims allowable under the Code with priority of payment at
least equal to that of any other actual and necessary expenses incurred
after the commencement of the Action;
(iii) Any extension of the time period within which the Lessee
may assume or reject the Lease without an obligation to cause all
obligations under the Lease to be performed as and when required under
the Lease shall be harmful and prejudicial to Lessor;
(iv) Any time period designated as the period within which the
Lessee must cure all defaults and compensate Lessor for all pecuniary
losses which extends beyond the date of assumption of the Lease shall
be harmful and prejudicial to Lessor;
(v) Any assignment of the Lease must result in all terms and
conditions of the Lease being assumed by the assignee without
alteration or amendment, and any assignment which results in an
amendment or alteration of the terms and conditions of the Lease
without the express written consent of Lessor shall be harmful and
prejudicial to Lessor;
(vi) Any proposed assignment of the Lease to an assignee: (a)
that does not possess financial condition, operating performance and
experience characteristics equal to or better than the financial
condition, operating performance and experience of Lessee as of the
Effective Date, or (b) that does not provide guarantors of the Lease
obligations with financial condition equal to or better than the
financial condition of the original guarantors, if any, of the Lease as
of the Effective Date, shall be harmful and prejudicial to Lessor;
33
<PAGE> 34
(vii) The rejection (or deemed rejection) of the Lease for any
reason whatsoever shall constitute cause for immediate relief from the
automatic stay provisions of the Code, and Lessee stipulates that such
automatic stay shall be lifted immediately and possession of the
Premises will be delivered to Lessor immediately without the necessity
of any further action by Lessor.
B. No provision of this Lease shall be deemed a waiver of Lessor's
rights or remedies under the Code or applicable law to oppose any assumption
and/or assignment of this Lease, to require timely performance of Lessee's
obligations under this Lease, or to regain possession of the Premises as a
result of the failure of Lessee to comply with the terms and conditions of this
Lease or the Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
D. For purposes of this Section addressing the rights and obligations
of Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
42. NO OFFER. No contractual or other rights shall exist between Lessor
and Lessee with respect to the Premises until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Lessor and
notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of
this Lease. The submission of this Lease to Lessee shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest on the part of
Lessee in the Premises.
43. OTHER DOCUMENTS. Each of the parties agrees to sign such other and
further documents as may be necessary or appropriate to carry out the intentions
expressed in this Lease.
44. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. References in this Lease to Lessor's attorneys' fees and/or costs
shall mean the fees and costs of independent counsel retained by Lessor with
respect to the matter.
45. ENTIRE AGREEMENT. This Lease, and any other instruments or
agreements referred to herein, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no other
representations, warranties or agreements except as herein provided. Without
limiting the foregoing, Lessee specifically acknowledges that neither Lessor nor
any agent, officer, employee or representative of Lessor has made any
representation or warranty regarding the projected level of Lessee's Gross Sales
from the Premises or the
34
<PAGE> 35
projected profitability of the business to be conducted on the Premises.
Furthermore, Lessee acknowledges that Lessor did not prepare or assist in the
preparation of any of the projected figures used by Lessee in analyzing the
economic viability and feasibility of the business to be conducted by Lessee at
the Premises.
46. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee
acknowledges that this Lease was substantially negotiated in the State of
Arizona, the executed Lease was delivered in the State of Arizona, all payments
under the Lease will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Lease, the parties hereto expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Lessee and Lessor consent that it may be served with any process or paper by
registered mail or by personal service within or without the State of Arizona in
accordance with applicable law. Furthermore, Lessee and Lessor waive and agree
not to assert in any such action, suit or proceeding that it is not personally
subject to the jurisdiction of such courts, that the action, suit or proceeding
is brought in an inconvenient forum or that venue of the action, suit or
proceeding is improper. The creation of this Lease and the rights and remedies
of Lessor and Lessee with respect to the Premises, as provided herein and by the
laws of the state in which the Premises is located, shall be governed by and
construed in accordance with the internal laws of the state in which the
Premises is located without regard to principles of conflict of law. With
respect to other provisions of this Lease, this Lease shall be governed by the
internal laws of the State of Arizona. Nothing contained in this Section shall
limit or restrict the right of Lessor or Lessee to commence any proceeding in
the federal or state courts located in the state in which the Premises is
located to the extent Lessor or Lessee deems such proceeding necessary or
advisable to exercise remedies available under this Lease.
47. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original.
48. MEMORANDUM OF LEASE. Concurrently with the execution of this Lease,
Lessor and Lessee are executing Lessor's standard form memorandum of lease in
recordable form, indicating the names and addresses of Lessor and Lessee, a
description of the Premises, the Lease Term, and the terms of any options to
extend the Lease Term, or purchase the Premises, but omitting rent and such
other terms of this Lease as Lessor may not desire to disclose to the public.
49. NO BROKERAGE. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Premises. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and from all liabilities,
claims, losses, costs, damages and expenses, including attorneys' fees, arising
out of, resulting from or in connection with their breach of the foregoing
warranty and representation.
50. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
35
<PAGE> 36
WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, LESSEE AND LESSOR, EACH TO THE OTHER, HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES FROM THE OTHER WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY EACH PARTY OF ANY RIGHT IT
MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as
of the date first above written.
LESSOR:
FFCA ACQUISITION CORPORATION, a
Delaware corporation
By______________________________________
Printed Name: Stephen Y. Schwanz
Its: Vice President
Corporate Finance
36
<PAGE> 37
LESSEE:
Lessee's Tax Identification Number: DENAMERICA CORP., a Georgia
58-1861457 corporation
ATTEST:
By _________________________________ By _________________________________
Printed Name________________________ Printed Name: Todd S. Brown
Its_________________________________ Its: Vice President
Witness
In accordance with the requirements of Arizona Revised Statutes Section
14-5503, the undersigned has executed this Lease solely for the purpose of
witnessing the grant of the powers of attorney by Lessee to Lessor, as described
in this Lease.
___________________________
Printed Name of Witness
37
<PAGE> 38
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___, 1996,
by Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia corporation,
on behalf of the corporation.
_________________
Notary Public
My Commission Expires:
______________________________
38
<PAGE> 39
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ____, 1996,
by Stephen Y. Schwanz, Vice President Corporate Finance of FFCA Acquisition
Corporation, a Delaware corporation, on behalf of the corporation.
_________________
Notary Public
My Commission Expires:
______________________________
39
<PAGE> 1
EXHIBIT 10.101
FFCA
DenAmerica
Black-eyed Pea
Location:
--------------------
--------------------
(________)
Store #____
SUBLEASE
THIS SUBLEASE is made and entered into as of the ____ day of ______,
1996, by and between DENAMERICA CORP., a Georgia corporation ("Sublessor"), and
BLACK-EYED PEA U.S.A.,INC., a Texas corporation ("Sublessee").
RECITALS
A. Sublessor has entered into a certain Lease of even date herewith
(the "Base Lease"), with respect to certain premises more particularly described
therein at the location and bearing the store number set forth above (the
"Premises").
B. Sublessee desires to sublease the Premises from Sublessor, and
Sublessor desires to sublease the Premises to Sublessee, on the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sublessor and Sublessee hereby
agree as follows:
1. GRANT. Sublessor hereby subleases the Premises to Sublessee, and
Sublessee hereby subleases the Premises from Sublessor, on the terms and
conditions herein set forth.
2. INCORPORATION OF BASE LEASE; EXCEPTIONS. Each and every provision of
the Base Lease is incorporated herein by reference. Sublessor shall sublet the
Premises to Sublessee under the same rental, terms and conditions to which
Sublessor agreed as the "Lessee" in the Base Lease, except as otherwise herein
provided. Wherever the term "Lessor" appears, it shall be deemed to refer to
Sublessor and wherever the term "Lessee" appears, it shall be deemed to refer to
Sublessee. Sublessee shall render performance to Sublessor as required under all
of the terms of the Base Lease. Sublessee shall be entitled under this Sublease
to all of the rights and benefits that the Sublessor, as Lessee, enjoys under
the Base Lease.
<PAGE> 2
(A) TERM. Sublessee's right to occupy and possess the Premises shall
commence as of the date set forth above and shall expire one day prior to the
end of the term of the Base Lease.
(B) BASE RENT AND OTHER CHARGES. Sublessee shall pay to Sublessor at
the times and as provided in the Base Lease the rent and any and all property
taxes and assessments, common area expenses, insurance costs and other charges
which Sublessor incurs as Lessee as set forth in the Base Lease.
(C) EXTENSION OF LEASE BY SUBLESSEE. Sublessee shall have the right to
extend the term of this Sublease on the same terms as set forth in the Base
Lease by giving notice to Sublessor not later than the five (5) days prior to
the date on which Sublessor, as Lessee, must exercise its option under the Base
Lease. Sublessor, as Lessee under the Base Lease, shall timely exercise all
corresponding options under the Base Lease.
(D) NOTICES. The initial notice addresses of the parties hereto, for
purposes of the notice provision of the Base Lease, shall be as set forth below.
3. REAFFIRMATION OF BASE LEASE. All of the terms, conditions and
provisions of the Base Lease are reaffirmed by Sublessor and Sublessee.
4. TERMINATION. In the event of the termination of the Base Lease under
its own terms or under any provision thereof that authorizes such termination,
this Sublease shall simultaneously and automatically terminate (without being
deemed, however, to be a waiver by Sublessee of any other rights or remedies it
may have under this Sublease).
[remainder of page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Sublease as of the
date first above written.
SUBLESSOR:
ADDRESS: DENAMERICA CORP., a Georgia corporation
7373 N. Scottsdale Road By: _________________________________________
Suite D-120 Name: Todd S. Brown
Scottsdale, Arizona 85253 Title: Vice President
SUBLESSEE:
ADDRESS: BLACK-EYED PEA U.S.A., INC.,
a Texas corporation
7373 N. Scottsdale Road By: _________________________________________
Suite D-120 Name: _______________________________________
Scottsdale, Arizona 85253 Title: ______________________________________
3
<PAGE> 4
ACKNOWLEDGEMENT AND CONSENT
FFCA Acquisition Corporation, a Delaware corporation ("FFCA"), as
Lessor under the Lease, hereby acknowledges and consents to this Sublease,
provided that FFCA shall not be deemed to have assumed any obligation, liability
or duty by virtue of its acknowledgement and consent.
FFCA ACQUISITION CORPORATION, a Delaware
corporation
By: _________________________________________
Name: Stephen Y. Schwanz
Title: Vice President, Corporate Finance
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia
corporation, on behalf of the corporation.
_____________________________________________
Notary Public
My commission expires:
________________________
4
<PAGE> 5
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by ____________, the ________________ of Black-eyed Pea U.S.A.,
Inc., a Texas corporation, on behalf of the corporation.
___________________________________
Notary Public
My commission expires:
_________________________
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Stephen Y. Schwanz, Vice President, Corporate Finance of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the corporation.
___________________________________
Notary Public
My commission expires:
_________________________
5
<PAGE> 1
EXHIBIT 10.102
FFCA
DenAmerica
Black-eyed Pea
Location:
-------------------
-------------------
(------)
Store # ____
SUBLEASE
THIS SUBLEASE is made and entered into as of the ____ day of ,
1996, by and between DENAMERICA CORP., a Georgia corporation ("Sublessor"), and
TEXAS BEP, L.P., a Texas limited partnership ("Sublessee").
RECITALS
A. Sublessor has entered into a certain Lease of even date herewith
(the "Base Lease"), with respect to certain premises more particularly described
therein at the location and bearing the store number set forth above (the
"Premises").
B. Sublessee desires to sublease the Premises from Sublessor, and
Sublessor desires to sublease the Premises to Sublessee, on the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sublessor and Sublessee hereby
agree as follows:
1. GRANT. Sublessor hereby subleases the Premises to Sublessee, and
Sublessee hereby subleases the Premises from Sublessor, on the terms and
conditions herein set forth.
2. INCORPORATION OF BASE LEASE; EXCEPTIONS. Each and every provision of
the Base Lease is incorporated herein by reference. Sublessor shall sublet the
Premises to Sublessee under the same rental, terms and conditions to which
Sublessor agreed as the "Lessee" in the Base Lease, except as otherwise herein
provided. Wherever the term "Lessor" appears, it shall be deemed to refer to
Sublessor and wherever the term "Lessee" appears, it shall be deemed to refer to
Sublessee. Sublessee shall render performance to
<PAGE> 2
Sublessor as required under all of the terms of the Base Lease. Sublessee shall
be entitled under this Sublease to all of the rights and benefits that the
Sublessor, as Lessee, enjoys under the Base Lease.
(A) TERM. Sublessee's right to occupy and possess the Premises shall
commence as of the date set forth above and shall expire one day prior to the
end of the term of the Base Lease.
(B) BASE RENT AND OTHER CHARGES. Sublessee shall pay to Sublessor at
the times and as provided in the Base Lease the rent and any and all property
taxes and assessments, common area expenses, insurance costs and other charges
which Sublessor incurs as Lessee as set forth in the Base Lease.
(C) EXTENSION OF LEASE BY SUBLESSEE. Sublessee shall have the right
to extend the term of this Sublease on the same terms as set forth in the Base
Lease by giving notice to Sublessor not later than the five (5) days prior to
the date on which Sublessor, as Lessee, must exercise its option under the Base
Lease. Sublessor, as Lessee under the Base Lease, shall timely exercise all
corresponding options under the Base Lease.
(D) NOTICES. The initial notice addresses of the parties hereto, for
purposes of the notice provision of the Base Lease, shall be as set forth below.
3. REAFFIRMATION OF BASE LEASE. All of the terms, conditions and
provisions of the Base Lease are reaffirmed by Sublessor and Sublessee.
4. TERMINATION. In the event of the termination of the Base Lease under
its own terms or under any provision thereof that authorizes such termination,
this Sublease shall simultaneously and automatically terminate (without being
deemed, however, to be a waiver by Sublessee of any other rights or remedies it
may have under this Sublease).
[remainder of page intentionally left blank]
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Sublease as of the
date first above written.
SUBLESSOR:
ADDRESS: DENAMERICA CORP., a Georgia corporation
7373 N. Scottsdale Road By:_____________________________________
Suite D-120 Name: Todd S. Brown
Scottsdale, Arizona 85253 Title: Vice President
SUBLESSEE:
TEXAS BEP, L.P., a Texas limited
partnership
7373 N. Scottsdale Road By: Black-eyed Pea U.S.A., Inc., a
Suite D-120 Texas corporation
Scottsdale, Arizona 85253 Its: General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
3
<PAGE> 4
ACKNOWLEDGEMENT AND CONSENT
FFCA Acquisition Corporation, a Delaware corporation ("FFCA"), as
Lessor under the Lease, hereby acknowledges and consents to this Sublease,
provided that FFCA shall not be deemed to have assumed any obligation, liability
or duty by virtue of its acknowledgement and consent.
FFCA ACQUISITION CORPORATION, a Delaware
corporation
By:__________________________________________
Name: Stephen Y. Schwanz
Title: Vice President, Corporate Finance
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia
corporation, on behalf of the corporation.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
4
<PAGE> 5
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by _____________________, the ________________ of Black-eyed Pea
U.S.A., Inc., a Texas corporation, General Partner of Texas BEP, L.P., a Texas
limited partnership, on behalf of the limited partnership.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Stephen Y. Schwanz, Vice President, Corporate Finance of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the corporation.
------------------------------------------
Notary Public
My commission expires:
- ----------------------
5
<PAGE> 1
EXHIBIT 10.103
EQUIPMENT PURCHASE AGREEMENT
AND
BILL OF SALE
THIS EQUIPMENT PURCHASE AGREEMENT AND BILL OF SALE (this "Agreement")
is made this 3rd day of July, 1996, by and between LH LEASING COMPANY, INC., an
Arizona corporation ("Buyer"), and BLACK-EYED PEA U.S.A., INC., a Texas
corporation ("Seller").
RECITALS
A. On May 31, 1996, DenAmerica Corp. entered into a Stock Purchase
Agreement for the purchase of all of the stock of Black-eyed Pea U.S.A., Inc.
(the "Purchase Agreement").
B. In conjunction with the Purchase Agreement, DenAmerica Corp., its
subsidiaries and LH Leasing Company, Inc., desire to transfer and lease certain
assets used in the operation of the restaurants acquired by DenAmerica Corp. as
a result of the Purchase Agreement.
C. Seller desires to sell, and Buyer desires to buy, all of the
appliances, furniture, fixtures, equipment and other personal property, if any,
owned by Seller and situated on or at the restaurants located at the restaurant
locations identified on Schedule A attached hereto (the "Equipment"), pursuant
to the terms and conditions of this Agreement, which shall also serve as a bill
of sale for the Equipment.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE.
1.1 EQUIPMENT AND RIGHTS TO BE SOLD AND PURCHASED. Seller hereby sells
and Buyer hereby purchases, subject to the terms and conditions of this
Agreement, the Equipment owned by Seller, located at the restaurant locations
identified on Schedule A, together with all rights of Seller under express or
implied warranties from manufacturers, wholesalers and distributors with respect
to the Equipment.
SECTION 2. PURCHASE PRICE; BILL OF SALE.
2.1 AMOUNT AND PAYMENT OF PURCHASE PRICE. As full and complete payment
for the Equipment, Buyer has paid to Seller $_____________________, and other
good and valuable consideration (the "Purchase Price").
<PAGE> 2
2.2 BILL OF SALE. This Agreement is intended to, and shall, be
evidence of the transfer of the Equipment as provided for herein, and such
transfer is made with the representations and warranties provided for herein. In
exchange for the Purchase Price paid by Buyer at or before the execution and
delivery hereof, the receipt and sufficiency of which is hereby acknowledged by
Seller, Seller hereby conveys, grants, bargains, sells, transfers, sets over,
assigns, aliens, remises, releases, delivers and confirms unto Buyer, its
successors and assigns forever, all right, title and interest in and to all of
the Equipment, wherever situated and located.
If the conveyance of any of the Equipment attempted to be made
hereunder would be ineffective as between Buyer and Seller without the consent
of any third person, or would serve as a cause for terminating, invalidating or
materially altering the rights of Seller, or of Buyer as a transferee thereof,
arising under any agreement, lease, permit, license, right, claim or otherwise,
or would cause or serve as a cause for the loss of ownership thereof by either
Seller or Buyer, then such Equipment is temporarily excluded from the aforesaid
conveyance and assignment and no assignment or conveyance of such Equipment
shall be deemed to have occurred. However, Seller shall, to the greatest extent
permitted, hold such Equipment for the exclusive use and benefit of the Buyer
and its successor or assigns until such consent has been obtained. After
consummation of the transaction contemplated by this Agreement (the "Closing"),
Seller shall use good faith best efforts to obtain all consents and approvals
necessary or required to transfer title to the Equipment to Buyer, which
obligation shall survive the Closing and continue in effect. Upon the obtaining
of such consent, no further conveyance or assignment shall be required, but full
and complete title to such Equipment shall automatically become vested in Buyer
by virtue of this Agreement.
SECTION 3. SELLER'S REPRESENTATIONS AND WARRANTIES. To induce Buyer to
enter into this Agreement, Seller represents and warrants to Buyer as of the
date of this Agreement as follows:
3.1 CORPORATE STATUS AND AUTHORITY. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, has the requisite corporate power and authority to
own and operate the Equipment and to carry on its business as now being
conducted and is duly qualified to conduct its business in all jurisdictions in
which the nature of its business requires such qualification. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof have been validly authorized by
all necessary corporate action of Seller partner, and this Agreement constitutes
the valid and binding obligation of Seller enforceable in accordance with its
terms.
3.2 NO NOTICE OF VIOLATION OF LAW. Seller has not received any
written, official notice or citation from any federal, state or local authority
or any insurance or inspection body that any of the Equipment is in
contravention of, or fails to comply in any material respect with, any
applicable federal, state or local law, ordinance, regulation, building law or
requirement of any public body, including, but not limited to, any federal,
state or local laws or regulations relating to health or safety matters or any
OSHA requirements, except for notices
2
<PAGE> 3
or citations as to matters which would not have a material adverse effect on the
Equipment or Seller's use of the Equipment, taken as a whole.
3.3 CONDITION OF EQUIPMENT. The Equipment used in Seller's
business as of the date hereof is in reasonable operating condition and in a
state of reasonable maintenance and repair, normal wear and tear excepted. The
Equipment located in the restaurants identified on Schedule A attached hereto is
reasonably sufficient to operate the business of the respective restaurants as
currently operated.
3.4 TITLE TO EQUIPMENT. Seller has good and marketable title
to all of the Equipment. The Equipment is not subject to any mortgage, pledge,
lien, claim, encumbrance, charge, security interest or title retention or other
security arrangement, except for liens for the payment of federal, state and
other taxes, the payment of which is neither delinquent nor subject to
penalties. All leases pursuant to which the Seller or any of its subsidiaries
leases any substantial amount of personal property that constitutes a portion of
the Equipment are valid and effective in accordance with their respective terms.
SECTION 4. BUYER'S REPRESENTATIONS AND WARRANTIES. To induce Seller to
enter into this Agreement, Buyer represents and warrants as of the date of this
Agreement that Buyer is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been validly authorized by all appropriate corporate action.
SECTION 5. NO FURTHER WARRANTIES OF SELLER. ALL SALES, CONVEYANCES,
ASSIGNMENTS, TRANSFERS AND DELIVERIES TO BE MADE HEREUNDER WILL BE MADE WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, WHETHER EXPRESS OR IMPLIED,
EXCEPT AS EXPRESSLY SET FORTH HEREIN. ALL ASSETS AND RIGHTS SOLD, CONVEYED,
ASSIGNED, TRANSFERRED AND DELIVERED HEREUNDER ARE SOLD, CONVEYED, ASSIGNED,
TRANSFERRED AND DELIVERED "AS IS," (EXCEPT AS EXPRESSLY SET FORTH HEREIN) AND
SELLER EXPRESSLY DISCLAIMS ANY ADDITIONAL WARRANTIES OF CONDITION, OR WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. This Agreement is made,
however, with full rights of substitution and subrogation of the Buyer in and to
all covenants, warranties and other rights of indemnification by others
heretofore given or made to Seller with respect to any of the Equipment.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties contained in this Agreement shall survive the
execution of this Agreement.
SECTION 7. INDEMNIFICATION. The parties hereto hereby agree to defend,
indemnify and hold harmless each other, and their respective successors and
assigns, for, from and against, any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and expenses (including,
without limitation, reasonable counsel fees and costs and expenses incurred in
the
3
<PAGE> 4
investigation, defense or settlement of any claim covered by this indemnity)
with respect to or arising out of any demand, claim, inquiry, investigation,
proceeding, action or cause of action which the party seeking indemnification
hereunder, its successors or assigns, may suffer or incur by reason of the
inaccuracy of any of the representations or warranties of the other party hereto
contained in this Agreement.
SECTION 8. APPOINTMENT OF ATTORNEY-IN-FACT. Seller hereby constitutes
and appoints Buyer, its successors and assigns, as Seller's true and lawful
attorney-in-fact and attorneys, with full power of substitution, in Seller's
name and stead, but on behalf and for the benefit of Buyer, its successors and
assigns, to demand and receive any and all of the Equipment, and to give
receipts and releases for and in respect of the same, and any part thereof, and
from time to time to institute and prosecute in Seller's name or otherwise, on
behalf and for the benefit of Buyer, its successors and assigns, any and all
proceedings at law, in equity or otherwise, which Buyer, its successors or
assigns, may deem proper for the reduction to possession of the Equipment and
enforcement of any claim or right of any kind hereby sold, conveyed, transferred
and assigned, or intended so to be, and to do all acts and things relating to
the Equipment that Buyer, its successors or assigns, shall deem desirable,
Seller hereby declaring that the foregoing powers are coupled with an interest
and are and shall be irrevocable by Seller. Seller shall cooperate with Buyer in
connection with realizing Buyer's rights and benefits with respect to the
Equipment.
SECTION 9. NO THIRD PARTY BENEFICIARIES. Notwithstanding anything
contained herein to the contrary, nothing in this Agreement, express or implied,
is intended to or shall be construed to confer upon, or give to, any person,
partnership, corporation or other entity other than Buyer and its successors and
assigns, any remedy or claim under or by reason of this Agreement or any terms,
covenants or conditions, promises and agreements hereof, and all the terms,
covenants and conditions, promises and agreements contained in this Agreement
shall be for the sole and exclusive benefit of Buyer and its successors and
assigns.
SECTION 10. FURTHER ASSURANCES. Seller and Buyer shall execute and
deliver all such other instruments and take all such other action, as any party
may reasonably request from time to time, in order to effectuate the
transactions provided for herein. The parties shall cooperate with each other
and with their respective counsel and accountants in connection with any steps
to be taken as a part of their respective obligations under this Agreement.
SECTION 11. BROKERS AND FINDERS. Each of the parties hereto represents
and warrants to the other that it has not employed or retained any broker or
finder in connection with the transactions contemplated by this Agreement, nor
has it had any dealings with any person which may entitle that person to a fee
or commission from any other party hereto. Each of the parties indemnifies and
holds the other harmless from and against any claim, demand or damages
whatsoever by virtue of any arrangement or commitment made by it with or to any
person that may entitle such person to any fee or commission from the other
parties to this Agreement.
4
<PAGE> 5
SECTION 12. GENERAL PROVISIONS.
12.1 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received when delivered
against receipt or upon actual receipt by personal delivery or registered or
certified mail, postage prepaid, return receipt requested.
12.2 BINDING NATURE OF AGREEMENT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no party may assign or transfer
its rights or obligations under this Agreement without the prior written consent
of the other party hereto, which consent may not be unreasonably withheld or
delayed.
12.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
12.4 CONTROLLING LAW. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed, interpreted and enforced in accordance with the laws
of the State of Arizona, notwithstanding any conflict-of-law provisions to the
contrary.
12.5 SCHEDULES AND EXHIBITS. All Schedules referred to herein
or attached hereto are hereby incorporated by reference into, and made a part
of, this Agreement.
12.6 WAIVER. Neither the failure nor any delay on the part of
a party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
12.7 TITLES NOT TO AFFECT INTERPRETATION. The titles of
Sections contained in this Agreement are for convenience only, and they neither
form a part of this Agreement nor are they to be used in the construction or
interpretation hereof.
12.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof,
5
<PAGE> 6
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories. Any photographic or xerox copy of this
Agreement, with all signatures reproduced on one or more sets of signature
pages, shall be considered for all purposes as of it were an executed
counterpart of this Agreement.
12.9 PROVISIONS SEVERABLE. The provisions of this Agreement
are independent and severable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
LH LEASING COMPANY, INC., AN ARIZONA
CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
SELLER:
BLACK-EYED PEA U.S.A., INC., A TEXAS
CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
Witness
In accordance with the requirements of Arizona Revised Statutes Section
14-5503, the undersigned has executed this Agreement solely for the purpose of
witnessing the grant of the powers of attorney by Seller to Buyer, as described
in this Agreement.
-----------------------------------
Signature and Printed Name of Witness
7
<PAGE> 8
ACKNOWLEDGMENT
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this day
of July , 1996, by ________________________________ , the
_________________________________ of LH Leasing Company, Inc., an Arizona
corporation, on behalf of the corporation.
-------------------------------------
Notary Public
My commission expires:
- ---------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this day of July ,
1996, by ______________________________________________ , the
________________________ of Black_eyed Pea U.S.A., Inc., a Texas corporation, on
behalf of the corporation.
-------------------------------------
Notary Public
My commission expires:
- ----------------------
8
<PAGE> 1
EXHIBIT 10.104
EQUIPMENT PURCHASE AGREEMENT
AND
BILL OF SALE
THIS EQUIPMENT PURCHASE AGREEMENT AND BILL OF SALE (this "Agreement")
is made this 3rd day of July, 1996, by and between LH LEASING COMPANY, INC., an
Arizona corporation ("Buyer"), and TEXAS BEP, L.P., a Texas limited partnership
("Seller").
RECITALS
A. On May 31, 1996, DenAmerica Corp. entered into a Stock Purchase
Agreement for the purchase of all of the stock of Black-eyed Pea U.S.A., Inc.
(the "Purchase Agreement").
B. In conjunction with the Purchase Agreement, DenAmerica Corp., its
subsidiaries and LH Leasing Company, Inc., desire to transfer and lease certain
assets used in the operation of the restaurants acquired by DenAmerica Corp. as
a result of the Purchase Agreement.
C. Seller desires to sell, and Buyer desires to buy, all of the
appliances, furniture, fixtures, equipment and other personal property, if any,
owned by Seller and situated on or at the restaurants located at the restaurant
locations identified on Schedule A attached hereto (the "Equipment"), pursuant
to the terms and conditions of this Agreement, which shall also serve as a bill
of sale for the Equipment.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE.
1.1 EQUIPMENT AND RIGHTS TO BE SOLD AND PURCHASED. Seller
hereby sells and Buyer hereby purchases, subject to the terms and conditions of
this Agreement, the Equipment owned by Seller, located at the restaurant
locations identified on Schedule A, together with all rights of Seller under
express or implied warranties from manufacturers, wholesalers and distributors
with respect to the Equipment.
SECTION 2. PURCHASE PRICE; BILL OF SALE.
2.1 AMOUNT AND PAYMENT OF PURCHASE PRICE. As full and complete
payment for the Equipment, Buyer has paid to Seller $_____________________, and
other good and valuable consideration (the "Purchase Price").
<PAGE> 2
2.2 BILL OF SALE. This Agreement is intended to, and shall, be
evidence of the transfer of the Equipment as provided for herein, and such
transfer is made with the representations and warranties provided for herein. In
exchange for the Purchase Price paid by Buyer at or before the execution and
delivery hereof, the receipt and sufficiency of which is hereby acknowledged by
Seller, Seller hereby conveys, grants, bargains, sells, transfers, sets over,
assigns, aliens, remises, releases, delivers and confirms unto Buyer, its
successors and assigns forever, all right, title and interest in and to all of
the Equipment, wherever situated and located.
If the conveyance of any of the Equipment attempted to be made
hereunder would be ineffective as between Buyer and Seller without the consent
of any third person, or would serve as a cause for terminating, invalidating or
materially altering the rights of Seller, or of Buyer as a transferee thereof,
arising under any agreement, lease, permit, license, right, claim or otherwise,
or would cause or serve as a cause for the loss of ownership thereof by either
Seller or Buyer, then such Equipment is temporarily excluded from the aforesaid
conveyance and assignment and no assignment or conveyance of such Equipment
shall be deemed to have occurred. However, Seller shall, to the greatest extent
permitted, hold such Equipment for the exclusive use and benefit of the Buyer
and its successor or assigns until such consent has been obtained. After
consummation of the transaction contemplated by this Agreement (the "Closing"),
Seller shall use good faith best efforts to obtain all consents and approvals
necessary or required to transfer title to the Equipment to Buyer, which
obligation shall survive the Closing and continue in effect. Upon the obtaining
of such consent, no further conveyance or assignment shall be required, but full
and complete title to such Equipment shall automatically become vested in Buyer
by virtue of this Agreement.
SECTION 3. SELLER'S REPRESENTATIONS AND WARRANTIES. To induce Buyer to
enter into this Agreement, Seller represents and warrants to Buyer as of the
date of this Agreement as follows:
3.1 CORPORATE STATUS AND AUTHORITY. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the state of its formation, has the requisite power and authority to own and
operate the Equipment and to carry on its business as now being conducted and is
duly qualified to conduct its business in all jurisdictions in which the nature
of its business requires such qualification. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof have been validly authorized by all necessary
action of Seller's general partner, and this Agreement constitutes the valid and
binding obligation of Seller enforceable in accordance with its terms.
3.2 NO NOTICE OF VIOLATION OF LAW. Seller has not received any
written, official notice or citation from any federal, state or local authority
or any insurance or inspection body that any of the Equipment is in
contravention of, or fails to comply in any material respect with, any
applicable federal, state or local law, ordinance, regulation, building law or
requirement of any public body, including, but not limited to, any federal,
state or local laws
2
<PAGE> 3
or regulations relating to health or safety matters or any OSHA requirements,
except for notices or citations as to matters which would not have a material
adverse effect on the Equipment or Seller's use of the Equipment, taken as a
whole.
3.3 CONDITION OF EQUIPMENT. The Equipment used in Seller's
business as of the date hereof is in reasonable operating condition and in a
state of reasonable maintenance and repair, normal wear and tear excepted. The
Equipment located in the restaurants identified on Schedule A attached hereto is
reasonably sufficient to operate the business of the respective restaurants as
currently operated.
3.4 TITLE TO EQUIPMENT. Seller has good and marketable title
to all of the Equipment. The Equipment is not subject to any mortgage, pledge,
lien, claim, encumbrance, charge, security interest or title retention or other
security arrangement, except for liens for the payment of federal, state and
other taxes, the payment of which is neither delinquent nor subject to
penalties. All leases pursuant to which the Seller or any of its subsidiaries
leases any substantial amount of personal property that constitutes a portion of
the Equipment are valid and effective in accordance with their respective terms.
SECTION 4. BUYER'S REPRESENTATIONS AND WARRANTIES. To induce Seller to
enter into this Agreement, Buyer represents and warrants as of the date of this
Agreement that Buyer is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been validly authorized by all appropriate corporate action.
SECTION 5. NO FURTHER WARRANTIES OF SELLER. ALL SALES, CONVEYANCES,
ASSIGNMENTS, TRANSFERS AND DELIVERIES TO BE MADE HEREUNDER WILL BE MADE WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, WHETHER EXPRESS OR IMPLIED,
EXCEPT AS EXPRESSLY SET FORTH HEREIN. ALL ASSETS AND RIGHTS SOLD, CONVEYED,
ASSIGNED, TRANSFERRED AND DELIVERED HEREUNDER ARE SOLD, CONVEYED, ASSIGNED,
TRANSFERRED AND DELIVERED "AS IS," (EXCEPT AS EXPRESSLY SET FORTH HEREIN) AND
SELLER EXPRESSLY DISCLAIMS ANY ADDITIONAL WARRANTIES OF CONDITION, OR WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. This Agreement is made,
however, with full rights of substitution and subrogation of the Buyer in and to
all covenants, warranties and other rights of indemnification by others
heretofore given or made to Seller with respect to any of the Equipment.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties contained in this Agreement shall survive the
execution of this Agreement.
SECTION 7. INDEMNIFICATION. The parties hereto hereby agree to defend,
indemnify and hold harmless each other, and their respective successors and
assigns, for, from and against, any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and expenses
3
<PAGE> 4
(including, without limitation, reasonable counsel fees and costs and expenses
incurred in the investigation, defense or settlement of any claim covered by
this indemnity) with respect to or arising out of any demand, claim, inquiry,
investigation, proceeding, action or cause of action which the party seeking
indemnification hereunder, its successors or assigns, may suffer or incur by
reason of the inaccuracy of any of the representations or warranties of the
other party hereto contained in this Agreement.
SECTION 8. APPOINTMENT OF ATTORNEY-IN-FACT. Seller hereby constitutes
and appoints Buyer, its successors and assigns, as Seller's true and lawful
attorney-in-fact and attorneys, with full power of substitution, in Seller's
name and stead, but on behalf and for the benefit of Buyer, its successors and
assigns, to demand and receive any and all of the Equipment, and to give
receipts and releases for and in respect of the same, and any part thereof, and
from time to time to institute and prosecute in Seller's name or otherwise, on
behalf and for the benefit of Buyer, its successors and assigns, any and all
proceedings at law, in equity or otherwise, which Buyer, its successors or
assigns, may deem proper for the reduction to possession of the Equipment and
enforcement of any claim or right of any kind hereby sold, conveyed, transferred
and assigned, or intended so to be, and to do all acts and things relating to
the Equipment that Buyer, its successors or assigns, shall deem desirable,
Seller hereby declaring that the foregoing powers are coupled with an interest
and are and shall be irrevocable by Seller. Seller shall cooperate with Buyer in
connection with realizing Buyer's rights and benefits with respect to the
Equipment.
SECTION 9. NO THIRD PARTY BENEFICIARIES. Notwithstanding anything
contained herein to the contrary, nothing in this Agreement, express or implied,
is intended to or shall be construed to confer upon, or give to, any person,
partnership, corporation or other entity other than Buyer and its successors and
assigns, any remedy or claim under or by reason of this Agreement or any terms,
covenants or conditions, promises and agreements hereof, and all the terms,
covenants and conditions, promises and agreements contained in this Agreement
shall be for the sole and exclusive benefit of Buyer and its successors and
assigns.
SECTION 10. FURTHER ASSURANCES. Seller and Buyer shall execute and
deliver all such other instruments and take all such other action, as any party
may reasonably request from time to time, in order to effectuate the
transactions provided for herein. The parties shall cooperate with each other
and with their respective counsel and accountants in connection with any steps
to be taken as a part of their respective obligations under this Agreement.
SECTION 11. BROKERS AND FINDERS. Each of the parties hereto represents
and warrants to the other that it has not employed or retained any broker or
finder in connection with the transactions contemplated by this Agreement, nor
has it had any dealings with any person which may entitle that person to a fee
or commission from any other party hereto. Each of the parties indemnifies and
holds the other harmless from and against any claim, demand or damages
whatsoever by virtue of any arrangement or commitment made by it with or to any
person that may entitle such person to any fee or commission from the other
parties to this Agreement.
4
<PAGE> 5
SECTION 12. GENERAL PROVISIONS.
12.1 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received when delivered
against receipt or upon actual receipt by personal delivery or registered or
certified mail, postage prepaid, return receipt requested.
12.2 BINDING NATURE OF AGREEMENT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no party may assign or transfer
its rights or obligations under this Agreement without the prior written consent
of the other party hereto, which consent may not be unreasonably withheld or
delayed.
12.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
12.4 CONTROLLING LAW. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement, shall be
governed by and construed, interpreted and enforced in accordance with the laws
of the State of Arizona, notwithstanding any conflict-of-law provisions to the
contrary.
12.5 SCHEDULES AND EXHIBITS. All Schedules referred to herein
or attached hereto are hereby incorporated by reference into, and made a part
of, this Agreement.
12.6 WAIVER. Neither the failure nor any delay on the part of
a party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
12.7 TITLES NOT TO AFFECT INTERPRETATION. The titles of
Sections contained in this Agreement are for convenience only, and they neither
form a part of this Agreement nor are they to be used in the construction or
interpretation hereof.
12.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party
5
<PAGE> 6
whose signature appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories. Any photographic or
xerox copy of this Agreement, with all signatures reproduced on one or more sets
of signature pages, shall be considered for all purposes as of it were an
executed counterpart of this Agreement.
12.9 PROVISIONS SEVERABLE. The provisions of this Agreement
are independent and severable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
LH LEASING COMPANY, INC., AN ARIZONA
CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
SELLER:
TEXAS BEP, L.P., A TEXAS LIMITED PARTNERSHIP
By: Black-eyed Pea U.S.A., Inc., a Texas
corporation
By:
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Its:
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Its: General Partner
Witness
In accordance with the requirements of Arizona Revised Statutes Section
14-5503, the undersigned has executed this Agreement solely for the purpose of
witnessing the grant of the powers of attorney by Seller to Buyer, as described
in this Agreement.
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Signature and Printed Name of Witness
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ACKNOWLEDGMENT
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this day of July,
1996, by _________________________ , the ______________________________ of
Black-eyed Pea U.S.A., Inc., a Texas corporation, General Limited Partner of
Texas BEP, L.P., a Texas limited partnership, on behalf of the limited
partnership.
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Notary Public
My commission expires:
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STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this day of July,
1996, by ______________________ , the ____________________ of LH Leasing
Company, Inc., an Arizona corporation, on behalf of the corporation.
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Notary Public
My commission expires:
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EXHIBIT 10.105
EQUIPMENT LEASE
THIS EQUIPMENT LEASE (this "Lease") is made as of July _____, 1996 (the
"Effective Date"), by and between LH LEASING COMPANY, INC., an Arizona
corporation ("Lessor"), whose address is 7373 North Scottsdale Road, Scottsdale,
Arizona 85253, and DENAMERICA CORP., a Georgia corporation ("Lessee"), whose
address is 7373 North Scottsdale Road, Scottsdale, Arizona 85253.
W I T N E S S E T H:
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. CERTAIN DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Lease:
"Equipment" means all fixtures, furniture, appliances, equipment and
other personal property owned by Lessor which are located on the Premises.
"FFCA" means FFCA Acquisition Corporation, a Delaware corporation, or
its corporate successors and assigns and any successor in interest to FFCA as
holder of the Note.
"Franchisor" means Black-eyed Pea U.S.A., Inc., a Texas corporation, or
its successor.
"Lease Term" shall have the meaning described in Section 3.
"Lease Year" means the 12-month period commencing on the first day of
the calendar year or any other 12-month period as may be approved in writing by
Lessor after the commencement of the Lease Term and each successive 12-month
period thereafter.
"Loan Agreement" means the Loan Agreement dated as of the date hereof
between Lessor, as borrower, and FFCA, as lender, relative to a loan made by
FFCA to Lessor.
"Loan Operative Documents" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Material Adverse Effect" means a material adverse effect on the
business, operations, assets or financial condition of Lessee.
"Monthly Rental" means $316,983.38.
"Note" means the promissory note dated as of the date of this Lease
executed by Lessor in the original principal amount of $14,250,000.00 and made
payable to FFCA.
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"Premises" means, as the context requires, the parcel or parcels of
real property on which Black-eyed Pea restaurants are located, together with all
buildings, structures, fixtures and improvements located thereon, the addresses
of which are shown in Exhibit A attached hereto.
"Sublease" or "Subleases" means, as the context requires, a sublease
agreement, in form and substance reasonably acceptable to FFCA, between Lessee,
as sublessor, and a Sublessee relative to the subleasing of the Equipment, as
provided in Section 23.
"Sublessee" means, one or more partnerships, corporations, limited
liability companies or other entities which are wholly owned, directly or
indirectly, by Lessee.
2. DEMISE OF EQUIPMENT. In consideration of the rentals and other sums
to be paid by Lessee and of the other terms, covenants and conditions on
Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and
Lessee hereby takes and hires, the Equipment.
3. LEASE TERM. The Lease Term shall commence as of the Effective Date
and shall expire on August 1, 2001, unless terminated sooner as provided in this
Lease.
4. RENTAL AND OTHER PAYMENTS. If the Effective Date is a date other
than the first day of the month, Lessee shall pay Lessor on the Effective Date
the Monthly Rental prorated on the basis of the ratio that the number of days
from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the applicable Monthly Rental.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR. Lessor
represents and warrants to Lessee and covenants as follows:
A. Organization, Authority and Status of Lessor. (i) Lessor
has been duly organized and is validly existing and in good standing
under the laws of the state of its incorporation. All necessary
corporate action has been taken by Lessor to authorize the execution,
delivery and performance by Lessor of this Lease and the other
documents, instruments and agreements provided for herein to which
Lessor is a party.
(ii) The person who has executed this Lease on behalf of
Lessor is duly authorized so to do.
B. Enforceability. Upon the execution hereof by Lessor, this
Lease constitutes the legal, valid and binding obligation of Lessor,
enforceable against Lessor in accordance with its terms; subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of creditors
generally, and general principles of equity.
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C. Title to Equipment. As of the date of this Lease title to
the Equipment is vested in Lessor free and clear of all liens,
encumbrances, charges and security interests.
D. No Lessor Indebtedness. Until all of the obligations
evidenced by the Note are paid and satisfied in full, Lessor shall
incur no indebtedness of any nature during the term of this Lease,
other than the indebtedness evidenced by the Note.
E. No Encumbrance. Until all of the obligations evidenced by
the Note are paid and satisfied in full, Lessor shall not encumber or
pledge, or permit to be encumbered or pledged, the Equipment, or any
portion thereof, without the prior written consent of FFCA.
F. No Transfer. Until all of the obligations evidenced by the
Note are paid and satisfied in full, and except as otherwise expressly
permitted under Section 23, Lessor shall not transfer, sell or convey
the Equipment, or any portion thereof.
G. No Amendment. Until all of the obligations evidenced by the
Note are paid and satisfied in full, Lessor shall not amend, modify or
terminate, or permit to be amended, modified or terminated, this Lease
without the prior written consent of FFCA.
6. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied upon such representations and
warranties. Lessee represents and warrants to Lessor as follows:
A. Organization, Authority and Status of Lessee. (i) Lessee
has been duly organized, is validly existing and in good standing under
the laws of its state of incorporation, and is qualified as a foreign
corporation to do business in any jurisdiction where such qualification
is required, where such failure to so qualify might reasonably be
expected to result in a Material Adverse Effect. All necessary
corporate action has been taken by Lessee to authorize the execution,
delivery and performance by Lessee of this Lease and of the other
documents, instruments and agreements provided for herein to which
Lessee is a party.
(ii) The persons who have executed this Lease on behalf of
Lessee are duly authorized to do so.
B. Enforceability. Upon the execution hereof by Lessee, this
Lease constitutes the legal, valid and binding obligation of Lessee,
enforceable against Lessee in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of creditors
generally, and general principles of equity.
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C. Litigation. Except as set forth on Exhibit B attached
hereto, there are no suits, actions, proceedings or investigations
pending, or to the best of Lessee's knowledge, threatened against or
involving Lessee before any court, arbitrator, or administrative or
governmental body which might, if adversely determined, reasonably be
expected to result in any Material Adverse Effect.
D. Absence of Breaches or Defaults. Lessee is not, and the
execution, delivery and performance of this Lease and the documents,
instruments and agreements provided for herein to which Lessee is a
party will not result, in any breach of or default under any other
document, instrument or agreement to which Lessee is a party or by
which Lessee is subject or bound, where such breach or default might
reasonably be expected to result in a Material Adverse Effect.
E. Intended Use. Lessee intends to use, or to permit a
Sublessee pursuant to a Sublease to use, the Equipment solely in
connection with the operation of Black-eyed Pea restaurants at the
Premises. Such intended use will not violate any governmental
requirement applicable to the Equipment or the Premises.
F. Licenses and Permits. Lessee has obtained all required
licenses and permits, both governmental and private, to use and operate
the Equipment in the intended manner, where the failure to so obtain
such licenses and permits might reasonably be expected to result in a
Material Adverse Effect.
G. True Lease. Lessor and Lessee intend for this Lease to be a
"true lease" and not a financing lease, capital lease, security
agreement or other financing or trust arrangement, and the economic
realities of this Lease are those of a true lease. The term of this
Lease, including any term extensions provided for in this Lease, is
less than the remaining economic life of the Equipment. Lessee waives
any claim or defense based upon the characterization of this Lease as
anything other than a true lease, and Lessee stipulates and agrees not
to challenge the validity, enforceability or characterization of the
lease of the Equipment as a true lease and further stipulates and
agrees that nothing contained in this Lease creates or is intended to
create a joint venture, partnership, trust, financing device or
arrangement, security interest or the like. Lessee shall support the
intent of the parties that the lease of the Equipment pursuant to this
Lease is a true lease and does not create a joint venture, partnership,
trust, financing device or arrangement, security interest or the like,
if, and to the extent that, any challenge occurs.
7. NO WARRANTIES. LESSOR HAS PROVIDED THE EQUIPMENT FOR THE BENEFIT OF
LESSEE, AND LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE
MANUFACTURER'S AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS
OF ANY KIND AS TO ANY MATTER WHATSOEVER, INCLUDING, BUT NOT LIMITED TO THE
CONDITION, DESIGN, QUALITY OR CAPACITY OF ANY EQUIPMENT, THE MERCHANTABILITY OF
ANY EQUIPMENT OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE
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WORKMANSHIP OF THE EQUIPMENT, COMPLIANCE OF THE EQUIPMENT WITH THE REQUIREMENTS
OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO, PATENT
INFRINGEMENT OR LATENT DEFECTS. IN NO EVENT SHALL ANY DEFECT IN OR UNFITNESS OF
ANY EQUIPMENT RELIEVE LESSEE OF THE OBLIGATION TO PAY RENTAL OR TO MAKE ANY
OTHER PAYMENTS REQUIRED HEREUNDER OR OF ANY OTHER OBLIGATION HEREUNDER. WITHOUT
LIMITING THE FOREGOING, LESSOR SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM ANY DEFECT IN THE EQUIPMENT, INCLUDING LOSS
OF USE OF ANY OF THE EQUIPMENT OR FOR ANY INTERRUPTION IN LESSEE'S BUSINESS
OCCASIONED BY LESSEE'S INABILITY TO USE ANY OF THE EQUIPMENT FOR ANY REASON, OR
OTHERWISE, NOR SHALL ANY SUCH DEFECT PERMIT LESSEE TO TERMINATE THIS Lease OR TO
EXERCISE ANY OTHER REMEDY AGAINST LESSOR. Lessor hereby assigns to Lessee for
the Lease Term any warranty which has been extended to Lessor by the
manufacturer and/or vendor of such Equipment or any predecessor in interest of
Lessor and which Lessor has the right to so assign. All proceeds of any such
warranty recovery from the manufacturer or vendor of the Equipment or any
predecessor in interest of Lessor shall be used to repair the affected Equipment
or, if an event of default has occurred and is continuing, paid to Lessor, at
Lessor's option, and any excess proceeds shall be the property of Lessor and
shall be paid to FFCA and applied to the indebtedness evidenced by the Note in
the order provided in the Note.
No mortgage or other security interest which now or hereafter may cover
or affect any property or interest of Lessee, shall attach to the Equipment or
affect or become prior to Lessor's right, title and interest in the Equipment.
Lessee shall, if requested by Lessor, permanently affix or attach to
the Equipment throughout the Lease Term a tag provided by Lessor to disclose
Lessor's ownership of the Equipment. Lessee need not affix any such notice to
any item of Equipment in a place which would detract from the attractiveness of
such Equipment. Lessee will not allow any other name to be placed on any
Equipment as a designation or claim of ownership.
8. RENTALS TO BE NET TO LESSOR. The Monthly Rental payable hereunder
shall be net to Lessor, so that this Lease shall yield to Lessor the rentals
specified during the Lease Term, and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Equipment shall be paid by
Lessee.
9. TAXES AND ASSESSMENTS. Lessee shall pay, as the same become due and
prior to delinquency, all taxes and assessments which accrue during the Lease
Term and would affect in any manner the net return realized by Lessor under this
Lease, including without limitation the following:
(a) All taxes and assessments upon the Equipment which are
assessed or come due during the Lease Term or any tax or charge levied
in lieu of such taxes and assessments;
(b) All taxes, charges, license fees or similar fees imposed
by reason of the use of the Equipment by Lessee; and
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(c) All excise, transaction, privilege, license, sales, use
and other taxes upon the rental or other payments hereunder, the
interest of either party or the activities of either party pursuant to
this Lease, except for any tax upon or measured by the net income and
profits of Lessor generally.
Within 30 days after each tax payment by Lessee, Lessee shall provide
Lessor with evidence reasonably satisfactory to Lessor that such tax payment was
made in a timely fashion. Lessee may contest any tax levied or assessed on the
Equipment and may seek a refund, rebate or abatement of any tax levied or
assessed on the Equipment, but only if arrangements for paying such tax prior to
it becoming a lien on the Equipment, together with all interest and penalties,
are made to the written reasonable satisfaction of Lessor.
10. INSURANCE. Throughout the Lease Term Lessee shall maintain at its
own expense the following types and amounts of insurance (which may be included
under a blanket insurance policy if all the other terms hereof are satisfied),
in addition to such other insurance as Lessor may reasonably require from time
to time:
(a) All risks property insurance against loss, damage or
destruction by fire and other casualty, including theft, vandalism and
malicious mischief, flood (if and to the extent any of the Premises is
in a location designated by the Federal Secretary of Housing and Urban
Development as a flood hazard area), earthquake (if and to the extent
any of the Premises is in an area subject to destructive earthquakes
within recorded history), boiler explosion (if there is any boiler upon
the Premises), sprinkler damage (if and to the extent any of the
Premises has a sprinkler system), all matters covered by a standard
extended coverage endorsement and such other risks as Lessor may
reasonably require, insuring the Equipment for not less than 100% of
its full insurable replacement cost. Any insurance policy or policies
shall designate Lessor and Lessee as the named insureds as their
interest may appear.
(b) Comprehensive general liability and property damage
insurance, including a products liability clause, covering Lessor and
Lessee against bodily injury liability, property damage liability,
including without limitation any liability arising out of the
ownership, maintenance, repair, condition or operation of the
Equipment. Such insurance policy or policies shall contain a broad form
contractual liability endorsement under which the insurer agrees to
insure Lessee's indemnification obligations hereunder to the extent
insurable and a "severability of interest" clause or endorsement which
precludes the insurer from denying the claim of either Lessee or Lessor
because of the negligence or other acts of the other, shall be in
amounts of not less than $1,000,000 per injury and occurrence with
respect to any insured liability, whether for personal injury or
property damage, or such higher limits as Lessor may reasonably require
from time to time, and shall be of form and substance reasonably
satisfactory to Lessor.
(c) State Worker's Compensation insurance in the statutorily
mandated limits, employer's liability insurance with limits not less
than $500,000 or such
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greater amount as Lessor may from time to time reasonably require and
such other insurance as may be necessary to comply with applicable
laws, except for the State of Texas were Lessee may self insure for the
first $150,000.00 of State Worker's Compensation; provided, however,
that Lessee shall obtain insurance coverage for all incidents and
matters in excess of $150,000.00 per injury and occurrence in the State
of Texas.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the
insurer as to claims against Lessor, its employees and agents;
(ii) Provide that such insurance cannot be
unreasonably canceled, invalidated or suspended on account of
the conduct of Lessee, its officers, directors, employees or
agents;
(iii) Provide that any "no other insurance" clause in
the insurance policy shall exclude any policies of insurance
maintained by Lessor and that the insurance policy shall not
be brought into contribution with insurance maintained by
Lessor;
(iv) Contain a standard without contribution mortgage
clause endorsement, or its reasonable equivalent, in favor of
any lender designated by Lessor;
(v) Provide that the policy of insurance shall not be
terminated, canceled or substantially modified without at
least 30 days' prior written notice to Lessor;
(vi) Provide that the insurer shall not have the
option to restore or replace the Equipment if Lessor elects to
terminate this Lease in accordance with the terms hereof; and
(vii) Be issued by insurance companies licensed to do
business in the state in which the Premises is located and
which are rated A:VI or better by Best's Insurance Guide or
are otherwise approved by Lessor.
It is expressly understood and agreed that the foregoing minimum limits
of insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of worker's compensation insurance to the extent not available under statutory
law) shall designate Lessor as an additional insured as its interests may appear
and shall be payable as set forth in Section 18 hereof. All such policies shall
be written as primary policies, with deductibles not to exceed 10% of the amount
of coverage. Any other policies, including any policy now or hereafter carried
by Lessor, shall serve as excess coverage. Lessee shall procure policies for all
insurance for periods of not less than one year and shall provide to Lessor
certificates of insurance or, upon Lessor's request, duplicate originals of
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insurance policies evidencing that insurance satisfying the requirements of this
Lease is in effect at all times.
11. TAX AND INSURANCE IMPOUND. Upon the occurrence of any default under
this Lease by Lessee, Lessor may, at any time in its sole discretion, upon
written notice to Lessee require Lessee to pay to Lessor sums which will provide
an impound account (which shall not be deemed a trust fund) for paying up to the
next one year of taxes, assessments and/or insurance premiums relative to the
Equipment. Upon such requirement, Lessor will reasonably estimate the amounts
needed for such purposes and will notify Lessee in writing to pay the same to
Lessor in equal monthly installments, as nearly as practicable, in addition to
all other sums due under this Lease. Should additional funds be required at any
time, Lessee shall pay the same to Lessor upon written demand to Lessee. Lessee
shall advise Lessor of all taxes and insurance bills which are due and shall
cooperate fully with Lessor in assuring that the same are paid. Lessor may
deposit all impounded funds in accounts insured by any Federal or State agency
and may commingle such funds with other funds and accounts of Lessor. Interest
or other gains from such funds, if any, shall be the sole property of Lessor.
During the continuance of an event of default by Lessee, Lessor may apply all
impounded funds against any sums due from Lessee to Lessor. Lessor shall give to
Lessee an annual accounting showing all credits and debits to and from such
impounded funds received from Lessee.
12. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any set off, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Monthly Rental and
impound payments, if any, are transferred by wire or other means directly from
Lessee's bank account to such account as Lessor may designate. Any delinquent
payment (that is, any payment not made within the period specified in Section
20) shall, in addition to any other remedy of Lessor, incur a late charge of 5%
(which late charge is intended to compensate Lessor for the cost of handling and
processing such delinquent payment, and should not be considered interest) and
bear interest at the rate of 15% per annum, which interest shall accrue from the
date such payment was due, but in no event shall Lessee be obligated to pay a
sum of late charge and interest higher than the maximum legal rate then in
effect.
13. USE. Lessee shall use the Equipment solely in connection with its
operation of Black-eyed Pea restaurants in all material respects in accordance
with the standards of Black- eyed Pea operations then in effect which are
imposed by Franchisor upon its franchisees on a system wide basis and for no
other purposes. Except as set forth below, Lessee will at all times during the
Lease Term keep the Equipment on the Premises in which it is now located. Lessee
shall not move the Equipment to an alternative location during the Lease Term
without Lessor's prior written consent which consent shall not be unreasonably
withheld.
14. COMPLIANCE WITH LAWS.
A. Lessee's use of the Equipment, and the condition thereof,
shall, at Lessee's sole cost and expense, comply in all material
respects with all applicable statutes, regulations, rules, ordinances,
codes, licenses, permits, orders and
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approvals of any governmental agencies, departments, commissions,
bureaus, boards or instrumentalities of the United States, the state in
which the Premises at or on which the Equipment is located are located
and all political subdivisions thereof.
B. Lessee will not permit any act or condition to exist with
respect to the Equipment which will materially increase any insurance
rate thereon, except when such acts are required or reasonable in the
normal course of its business and Lessee shall pay for such increase.
D. Without limiting the generality of the other provisions of
this Section, Lessee shall (i) comply with all Environmental Laws (as
defined below) applicable to the operation or use of the Equipment,
(ii) cause all other persons using the Equipment over whom Lessee has
control or the ability to control, to comply with all such
Environmental Laws, and (iii) obtain and renew all governmental
permits, licenses and authorizations required under any Environmental
Law, where the failure to so obtain and renew might reasonably be
expected to result in (a) a Material Adverse Effect, or (b) a material
adverse effect on the use operation or physical condition of the
Equipment located on or at any one or more of the parcels constituting
the Premises if such effect could reasonably be expected to materially
impair the ability of Lessee or Sublessee to conduct business
activities on or at any one or more of the parcels constituting the
Premises with respect to the operation of Black-eyed Pea restaurants.
Lessee covenants and agrees not to use, generate, release, manage,
treat, manufacture, store, or dispose of, on, under or about, or
transport to or from (any of the foregoing hereinafter a "Use") the
Premises any Hazardous Materials, other than De Minimis Amounts (as
such term is defined below). In the event Lessee breaches any of the
foregoing covenants, in addition to any and all other rights and
remedies of Lessor, Lessor at its option may either (i) require Lessee
to reasonably and as required by any applicable Environment Laws upon
demand analyze, remove, abate and/or otherwise remedy all such
Hazardous Materials using licensed contractors reasonably approved by
Lessor or (ii) after reasonable notice to Lessee, perform or cause to
be performed such analysis, removal, abatement and/or remedial work as
required by any applicable Environment Laws for and at the sole expense
of Lessee, except to the extent such matter was caused, by the gross
negligence or wilful misconduct of Lessor. For purposes of this
Section, (1) the term "Hazardous Materials" shall include but not be
limited to asbestos, urea formaldehyde, polychlorinated biphenyls, oil
petroleum products, pesticides, radioactive materials, hazardous
wastes, toxic substances and any other related or dangerous, toxic or
hazardous chemical, material or substance in a quantity or at a level
regulated by and defined as hazardous or as a pollutant or contaminant
in, or the use of or exposure to which is prohibited, limited, governed
or regulated by, any Environmental Law; (2) the term "De Minimis
Amounts" shall mean, with respect to any given level of Hazardous
Materials, that level or quantity of Hazardous Materials in any form or
combination of forms which (i) does not constitute a violation of any
Environmental Law and (ii) is customarily employed in, or associated
with,
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similar businesses located in the county in which the applicable
Premises is located, and (3) the term "Environmental Laws" shall mean
any federal, state or local statute, law, rule, regulation, ordinance,
code, policy or permit now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous
Materials.
E. In addition to the other requirements of this Section,
Lessee shall, at all times throughout the Lease Term, comply with all
federal, state or local statutes, laws, rules, regulations, ordinances,
codes, now or hereafter in effect and in each case, as amended, and any
judicial order, consent, decree or judgment, applicable to (i) Lessee,
where the failure to so comply might reasonably be expected to result
in a Material Adverse Effect, and (ii) the Equipment, where the failure
to so comply might reasonably be expected to have a material adverse
effect on the use, operation or physical condition of the Equipment if
such effect could reasonably be expected to materially impair the
ability of Lessee or Sublessee to conduct business activities on or at
any one or more of the parcels constituting the Premises with respect
to the operation of Black-eyed Pea restaurants.
15. CONDITION OF EQUIPMENT; MAINTENANCE. Lessee hereby accepts the
Equipment "AS IS" and "WHERE IS," with no representation or warranty of Lessor
as to the condition thereof. The Equipment shall be kept in good, clean,
sanitary and working condition; and Lessee shall at all times at its own expense
(except as otherwise specifically provided in Subsection 18(d)(2)) maintain,
repair and replace, as necessary, the Equipment including all portions of the
Equipment.
16. WASTE; ALTERATIONS. Lessee shall not commit or permit any actual or
constructive waste with respect to the Equipment. Any repairs, alterations or
other work at any time commenced by Lessee on the Equipment shall be prosecuted
diligently to completion, shall be of good workmanship and materials and shall
comply fully with all the terms of this Lease. Any addition to or alteration of
the Equipment shall be deemed a part of the Equipment and belong to Lessor at
the expiration of the Lease Term. Any equipment substituted for the Equipment
during the Lease Term shall be deemed a part of the Equipment and belong to
Lessor at the expiration of the Lease Term.
17. INDEMNIFICATION. Except for the gross negligence or willful
misconduct of Lessor and Lessor's shareholders, directors, officers, agents,
attorneys and employees, Lessee shall defend (with legal counsel reasonably
acceptable to Lessor), indemnify and hold harmless Lessor and Lessor's
shareholders, directors, officers, agents, attorneys and employees, from and
against any and all claims, demands, causes of action, suits, proceedings,
liabilities, damages (including consequential and punitive damages), losses,
costs and expenses, including attorneys' fees, caused by, incurred or resulting
from the use or operation of the Equipment by Lessee or its respective Sublessee
relating in any manner to the Equipment, whether relating to its original design
or construction, latent defects, alteration, maintenance, use by Lessee or any
person thereon, supervision or otherwise, or from any breach of, default under
or failure to perform
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any term or provision of this agreement by Lessee, its officers, employees,
agents or other persons, including, without limitation, Lessee's failure to
comply with its obligations under Section 14. It is expressly understood that
Lessee's obligations under this paragraph shall survive the expiration or
earlier termination of this Lease for any reason.
18. CONDEMNATION OR DESTRUCTION.
(a) In case of a taking of all or any part of the Equipment
located on or at any one or more of the parcels constituting the
Premises or the commencement of any proceedings or negotiations which
might result in a taking, for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or
eminent domain or by agreement between Lessor, Lessee and those
authorized to exercise such right ("Taking"), Lessee will promptly give
written notice thereof to Lessor, generally describing the nature and
extent of such Taking and including copies of any lawsuits or notice
received in connection therewith.
(b) In case of a Taking of the whole of the Equipment located
upon any parcel described in Exhibit A attached hereto, with regard to
such parcel, other than temporary use ("Total Taking"), this Lease
shall terminate as of the date of such Total Taking as to the Equipment
located on or at that particular parcel, but this Lease shall remain in
force and effect relative to the remaining parcels constituting the
Premises, Lessor shall be entitled to the entire award for such Total
Taking and all rental and other sum or sums of money and other charges
provided to be paid by Lessee shall be paid, without any reduction of
rent or any other sum payable hereunder, and Lessor shall pay the
entire award in accordance with subsection 18(f). Total Taking with
regard to such parcel shall include a taking of substantially all the
Equipment if, in the reasonable determination of Lessor, the remainder
of the Equipment located on such parcel is not useable and cannot be
made useable for the purposes provided herein.
(c) In case of a temporary use of the whole or any part of the
Equipment located on or at any one or more of the parcels constituting
the Premises by a Taking, this Lease with regard to such parcel or
parcels shall remain in full force and effect without any reduction of
rent or any other sum payable hereunder. Lessee shall be entitled to
the entire award for such taking, whether paid by damages, rent or
otherwise, unless the period of occupation and use by the condemning
authorities shall extend beyond the date of expiration of this Lease,
in which case the award made for such taking shall be apportioned
between Lessor and Lessee as of the date of such expiration. At the
termination of any such use or occupation of the Equipment, Lessee
will, at its own cost and expense, promptly commence and complete the
restoration of the Equipment. Lessee shall not be required to make the
restoration if the term of this Lease shall expire prior to, or within
one year after, the date of termination of the temporary use so taken,
and in such event Lessor shall be entitled to recover all damages and
awards arising out of the failure of the condemning authority to repair
and restore the Equipment at the expiration of such temporary taking.
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<PAGE> 12
(d) (1) In the event of a Taking of less than all of the
Equipment with regard to any parcel described in Exhibit A attached
hereto, other than a temporary use ("Partial Taking") or of damage or
destruction to all or any part of the Equipment with regard to such
parcel, all awards, compensation or damages shall be paid to Lessor,
Lessor shall pay the awards, compensation or damages in accordance with
subsection 18(f), and Lessor shall have the option to terminate this
Lease with regard to such parcel by notifying Lessee in writing within
60 days after Lessee gives Lessor notice of such damage or destruction
or that title has vested in the taking authority, provided that this
Lease shall remain in force and effect as to the Equipment located on
or at the remaining parcels constituting the Premises. Lessee shall
thereupon have a period of 60 days in which to elect in writing to
continue this Lease with regard to such parcel on the terms herein
provided. If Lessee does not elect to continue this Lease with regard
to such parcel or shall fail during such 60-day period to elect to
continue this Lease with respect to such parcel, then this Lease shall
terminate with regard to such parcel as of the last day of the month
during which such period expired, but shall remain in force and effect
as to the Equipment located on or at the remaining parcels constituting
the Premises. Lessee shall then immediately deliver the Equipment to
Lessor, all obligations of either party hereunder with regard to such
parcel shall cease as of the date of termination and Lessor may retain
all such awards, compensation or damages, without any reduction of rent
or any other sum payable hereunder and all such awards, compensation
and damages shall be paid in accordance with subsection 18(f). If
Lessor does not elect to so terminate this Lease, or if Lessor so
elects but Lessee elects to continue this Lease, then this Lease shall
continue on the following terms: Rental and other sums due under this
Lease shall continue unabated, and Lessee shall promptly commence and
diligently prosecute restoration of the Equipment to the same
condition, as nearly as practicable, as prior to such partial
condemnation, damage or destruction as approved by Lessor in its sole
discretion.
(2) Lessor shall promptly make available in
installments as restoration progresses an amount equal to any award,
compensation or damages received by Lessor, upon written request of
Lessee accompanied by evidence reasonably satisfactory to Lessor that
such amount has been paid or is due and payable and is properly a part
of such costs and that there are no mechanics' or similar liens for
labor and materials theretofore supplied in connection with the
restoration. Lessor shall be entitled to keep any portion of such
award, compensation or damages which may be in excess of the cost of
restoration, and all such awards, compensation and damages shall be
paid in accordance with subsection 18(f), and Lessee shall bear all
additional costs, fees and expenses of such restoration in excess of
the amount of any such award, compensation or damages.
(e) Notwithstanding the foregoing, if at the time of any
Taking or at any time thereafter Lessee shall be in default under this
Lease and such default shall be continuing, Lessor is hereby authorized
and empowered but shall not be obligated in the name and on behalf of
Lessee and otherwise, to file and prosecute
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<PAGE> 13
Lessee's claim, if any, for an award on account of any Taking and to
collect such award and apply the same, after deducting all costs, fees
and expenses incident to the collection thereof, to the curing of such
default and any other then existing default under this Lease.
(f) If Lessor receives any damages, destruction or
condemnation awards pursuant to this Section relating to the damage,
destruction or taking of any of the Equipment located on or at any one
or more of the parcels constituting the Premises, Lessor shall
immediately pay all of such award and proceeds to FFCA to reduce the
outstanding principal balance of the Note, without any reamortization
of the Note, provided that if any default shall have occurred under any
of the Loan Operative Documents, all such awards and proceeds shall be
applied to the obligations evidenced by the Note and the other Loan
Operative Documents as FFCA shall determine.
19. INSPECTION. Lessor and its authorized representatives shall have
the right, upon giving reasonable notice, to enter the Premises, or any portion
thereof, and inspect the Equipment and make photographic or other evidence
concerning Lessee's compliance with the terms of this Lease.
20. DEFAULT AND REMEDIES. A. Each of the following shall be deemed a
breach of this Lease and a default by Lessee:
(i) If any material representation or warranty of
Lessee herein was false when made, or in the event that any
such representation or warranty is continuing and becomes
false at any time, or if Lessee renders any false statement or
account;
(ii) If any rent or other monetary sums due hereunder
remain unpaid for 10 calendar days after written notice
thereof to Lessee;
(iii) If Lessee becomes insolvent within the meaning
of the Code, files or notifies Lessor that it intends to file
a petition under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts
(collectively, hereinafter, an "Action"), becomes the subject
of either a petition under the Code or an Action (or if
involuntary, such petition is not dismissed within 120 days
thereafter, or is not generally paying its debts as the same
become due;
(iv) If Lessee fails to observe or perform any of the
covenants, conditions or obligations of this Lease.
B. If any default occurs pursuant to subsection A.(ii) above
and such default is not cured within the 10-day period after notice of
such default is given
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<PAGE> 14
as required by subsection A.(ii), then such default shall constitute a
default hereunder and Lessor shall be entitled to exercise its remedies
set forth in subsection D. below.
C. If any such breach or default does not involve the payment
of any rental or other monetary sum, does not place any rights or
property of Lessor in immediate jeopardy, and is within the reasonable
power of Lessee to cure within 30 days after receipt of notice thereof,
all as determined by Lessor in its reasonable discretion, then such
event shall not constitute a default hereunder, unless and until Lessor
shall have given Lessee notice thereof and a period of 30 days shall
have elapsed, during which period Lessee may correct or cure such
event, upon failure of which a default shall be deemed to have occurred
hereunder without further notice or demand of any kind. If such breach
or default cannot reasonably be cured within the 30-day period, as
determined by Lessor in its reasonable discretion, and Lessee is
diligently pursuing a cure of such breach or default, then the event
giving rise to such default shall not constitute a default hereunder
unless and until a reasonable period of time (not to exceed 120 days
after Lessor's notice to Lessee described above in this subsection C.)
shall have elapsed without such default being cured.
D. As a material inducement to Lessor executing this Lease, in
the event of any breach or default, and with or without any notice or
demand except the notice prior to default required under certain
circumstances by subsections B. and C. above or such other notice as
may be required by law and cannot be waived by Lessee (all other
notices being hereby waived), Lessor shall be entitled to exercise, at
its option, concurrently, successively or in any combination, all
remedies available at law or in equity, including without limitation
any one or more of the following:
(i) To terminate this Lease whereupon Lessee's right
to possession of the Equipment shall cease and this Lease,
except as to Lessee's liability, shall be terminated;
(ii) To enter the Premises (or any parcel
constituting the Premises) and take possession of the
Equipment or any part thereof (which repossession shall not
operate to terminate this Lease unless Lessor expressly so
elects) and to dispose thereof in accordance with laws
prevailing at the time and place of such seizure or to remove
all or any portion of the Equipment and cause the same to be
stored in a public warehouse or elsewhere at the cost of
Lessee;
(iii) To relet the Equipment or any part thereof for
such term or terms (including a term which extends beyond the
original term of this Lease), at such rentals and upon such
other terms as Lessor, in is sole discretion, may determine,
with all proceeds received from such reletting being applied
to the rentals and other sums due from Lessee in such order as
Lessor may, in its sole
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<PAGE> 15
discretion, determine, with Lessee remaining liable for any
deficiency;
(iv) To recover from Lessee an amount equal to the
difference between the rentals and such other sums (including
all sums required to be paid by Lessee, such as taxes and
insurance) to be received from the date of such breach to the
expiration of the original term hereof and the reasonable long
term rental value of the Equipment for the same period;
(v) To recover from Lessee all expenses, including
attorneys' fees, court costs, expert witness fees, costs of
tests and analysis, travel and accommodation expenses,
deposition and trial transcripts, copies and other similar
costs and fees paid or incurred by Lessor as a result of such
breach whether or not legal proceedings are actually
commenced;
(vi) To accelerate and recover from Lessee all rent
and other monetary sums due and owing and scheduled to become
due and owing under this Lease both before and after the date
of such breach for the entire original scheduled term of this
Lease taking into account the present value thereof based upon
a discount rate as may be determined to be reasonable by a
court of competent jurisdiction, provided that Lessor agrees
to use good faith efforts to mitigate Lessor's damages;
(vii) To immediately or at any time thereafter, and
without notice, except as required herein, correct such breach
or default without, however, curing the same for the account
and at the expense of the Lessee. Any sum or sums so paid by
Lessor, together with interest at the then existing maximum
legal rate, but not higher than 15% per annum, and all costs
and damages, shall be deemed to be additional rent hereunder
and shall be immediately due from Lessee to Lessor. Any such
acts by Lessor in correcting Lessee's breaches or defaults
hereunder shall not be deemed to cure said breaches or
defaults or constitute any waiver of Lessor's right to
exercise any or all remedies set forth herein;
(viii) To immediately or at any time thereafter, and
with or without notice, except as required herein, set off any
money of Lessee held by Lessor under this Lease against any
sum owing by Lessee hereunder; and/or
(ix) To enforce, and Lessee does hereby consent to
such enforcement, notwithstanding the laws of the State to the
contrary, all of Lessor's self-help remedies available at law
or in equity
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<PAGE> 16
without Lessor resorting to any legal or judicial process,
procedure or action.
Upon the occurrence of a default hereunder by Lessee, Lessee shall, upon request
by Lessor, assemble all of the Equipment and, at Lessee's sole cost, deliver all
such Equipment to Lessor at a place and location selected by Lessor or make the
Equipment available to Lessor and its designees. Lessee shall cooperate with
Lessor in all manners in assembling, delivering and making the Equipment
available to Lessor and shall bear the risk of damage, destruction, theft or
vandalism with respect to the Equipment.
21. SUBORDINATION. Lessor's interest in this Lease and the Equipment
shall not be subordinate to any liens or encumbrances placed upon the Equipment
by or resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Equipment free from any liens for work performed, materials furnished or
obligations incurred by Lessee. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT
AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, CHATTEL MORTGAGE, SECURITY
INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE EQUIPMENT OR
LESSEE'S LEASEHOLD INTEREST THEREIN (EXCEPT THAT LESSEE MAY GRANT TO BANQUE
PARIBAS, AS AGENT, A SECURITY INTEREST, IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO LESSOR AND FFCA, AGAINST LESSEE'S INTEREST UNDER THIS LEASE,
INCLUDING THE OPTION TO PURCHASE GRANTED PURSUANT TO SECTION 39), AND ANY SUCH
PURPORTED TRANSACTION SHALL BE VOID.
This Lease at all times shall automatically be subordinate to the lien
of any and all security agreements now or hereafter placed upon the Equipment by
Lessor, and Lessee covenants and agrees to execute and deliver, upon demand,
such further instruments subordinating this Lease to the lien of any or all such
security agreements as shall reasonably be desired by Lessor, or any present or
proposed mortgagees or upon the condition that Lessee shall have the right to
remain in possession of the Equipment under the terms of this Lease,
notwithstanding any default in any or all such security agreements, or after
foreclosure thereof, so long as Lessee is not in default under any of the
covenants, conditions and agreements contained in this Lease.
If the holder of any security interest in the Equipment elects to have
this Lease and the interest of Lessee hereunder be superior to any such interest
or right and evidences such election by notice given to Lessee, then this Lease
and the interest of Lessee hereunder shall be deemed superior to any such
chattel mortgage, security agreement, or security interest, whether this Lease
was executed before or after such chattel mortgage, security agreement, or
security interest, and in that event such chattel mortgagee, receiver or other
secured party shall have the same rights with respect to this Lease as if it had
been executed and delivered prior to the execution and delivery of the chattel
mortgage or security agreement and has been assigned to such chattel mortgagee
or secured party.
Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be reasonably required for
such purposes, and in the event Lessee
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<PAGE> 17
fails so to do within 10 days after demand, Lessee does hereby make, constitute
and irrevocably appoint Lessor as its agent and attorney-in-fact and in its
name, place and stead so to do, which appointment shall be deemed coupled with
an interest.
In the event the holder of any security interest or purchaser at a
foreclosure sale acquires title to the Equipment pursuant to the exercise of any
remedy provided for in the security agreement or otherwise, Lessee shall attorn
to such purchaser and recognize such purchaser as Lessor under this Lease, which
shall continue in full force and effect as a direct lease between such purchaser
and Lessee. The foregoing provision shall be self-operative and effective
without the execution of any further instruments.
Lessee shall give written notice to any lender of Lessor having a
properly perfected security interest in the Equipment of any breach or default
by Lessor of any of its obligations under this Lease and give such lender at
least 60 days beyond any notice period to which Lessor might be entitled to cure
such default before Lessee may exercise any remedy with respect thereto. Upon
request by Lessor, Lessee shall also provide Lessee's most recent audited
financial statements to Lessor or any such lender and certify the continuing
accuracy of such financial statements in such manner as Lessor or such lender
may reasonably request.
22. ESTOPPEL CERTIFICATE. At any time, and from time to time, Lessee
and Lessor agree to promptly and in no event later than 10 days after a request
in writing from the other, execute, acknowledge and deliver to the other a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect as modified and stating the modifications) and the dates to which the
rental and other charges have been paid.
23. ASSIGNMENT AND SUCCESSORS. Lessor shall not sell or convey the
Equipment subject to this Lease or to assign its right, title and interest as
Lessor under this Lease in whole or in part without the prior written consent of
FFCA, and provided such sale is carried out in a commercially reasonable manner
for full and fair value. In the event of any such sale or assignment, Lessee
shall attorn to each purchaser or assignee and Lessor shall be relieved, from
and after the date of such transfer or conveyances of liability for the
performance of any obligation of Lessor contained herein, except for obligations
or liabilities accrued prior to such assignment or sale. All proceeds received
by Lessor from a sale of the Equipment shall either (a) be paid by Lessor to
FFCA to reduce the outstanding obligations under the Note, or (b) be used by
Lessor to purchase Equipment which replaces that which was sold. All proceeds
from the sale of Lessor's interest in this Lease shall be paid to reduce the
outstanding obligations under the Note. If FFCA succeeds to the rights of Lessor
under this Lease, whether by assignment of this Lease, acquisition of the stock
of Lessor or by merger, FFCA shall have no liability for any breach of Lessor's
representations or warranties hereunder or for any covenants or actions of
Lessor undertaken or given prior to the date that FFCA succeeds to the rights of
Lessor pursuant to or in connection with this Lease Agreement.
Lessee shall not assign, transfer, convey, pledge or encumber this
Lease or any interest therein, whether by operation of law or otherwise, or
assign transfer, convey, pledge or encumber any interest in Lessee, whether by
operation of law or otherwise or sublet all or any part of the Equipment without
the prior written consent of Lessor which, consent shall not be
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<PAGE> 18
unreasonably withheld, provided that Lessee shall have the right to sublet all
or a portion of the Equipment to Sublessee pursuant to the Subleases. Lessor may
withhold or condition such consent upon such matters as Lessor may in its
reasonable discretion determine, including without limitation the experience and
creditworthiness of the assignee, the assumption by the assignee of all of
Lessee's obligations hereunder by undertakings enforceable by Lessor, the
payment to Lessor of any rentals owing under a sublease which are in excess of
the rentals owing hereunder, the transfer to such assignee of all necessary
licenses and franchises to continue use of the Equipment for the purposes herein
provided, receipt of such representations and warranties from such assignee as
Lessor may request, including such matters as its organization, existence, good
standing and finances and other matters, whether or not similar in kind. No such
assignment or subletting shall relieve the original Lessee, any prior assignee
or any guarantor of their obligations respecting this Lease. Any purported
transfer, conveyance or pledge in violation of this paragraph shall be voidable
at the sole option of Lessor.
24. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Lease shall
be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next business
day, if delivered by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with the United States
Postal Service, if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses (or facsimile
numbers, as applicable) specified below:
If to Lessee: Mr. Todd S. Brown
DenAmerica Corp.
7373 North Scottsdale Road
Scottsdale, Arizona 85253
Telephone: (602) 483-7055
Telecopy: (602) 483-9592
With a copy to: Jeffrey H. Verbin, Esq.
O'Connor Cavanagh
One East Camelback Road
Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2728
Telecopy: (602) 263-2900
If to Lessor: Mr. William J. Howard
LH Leasing Company, Inc.
7373 North Scottsdale Road
Scottsdale, Arizona 85253
Telephone: (602) 483-7055
Telecopy: (602) 483-9592
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<PAGE> 19
With a copy to: Dennis L. Ruben, Esq.
Senior Vice President and General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.
25. HOLDING OVER. If Lessee fails to deliver the Equipment to Lessor
after the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a Lessee on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Monthly Rental shall be automatically increased to one-hundred
and twenty-five percent (125%) of the Monthly Rental then in effect and to
comply with all the terms of this Lease; provided that nothing herein nor the
acceptance of rent by Lessor shall be deemed a consent to such holding over.
Lessee shall defend, indemnify, protect and hold Lessor harmless from and
against any and all claims, losses and liabilities from damages resulting from
Lessee's failure to deliver the Equipment to Lessor upon the expiration of the
Lease Term, including, without limitation, any clams made by any succeeding
lessee.
26. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth the
matter waived or amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter shall not be deemed a
waiver of the same or any other matter on any future occasion.
27. NO JOINT VENTURE OR PARTNERSHIP. No provision of this Lease shall
be deemed or construed to create a partnership between Lessor and Lessee to make
them joint venturers, or to make Lessor in any way responsible for the debts or
losses of Lessee.
28. CAPTIONS. Captions are used throughout this Lease for convenience
of reference only and shall not be considered in any manner in the construction
or interpretation hereof.
29. SEVERABILITY. The provisions of this Lease shall be deemed
severable. If any part of this Lease shall be held unenforceable by any court of
competent jurisdiction, the remainder shall remain in full force and effect, and
such unenforceable provision shall be reformed by such court so as to give
maximum legal effect to the intention of the parties as expressed therein.
30. CHARACTERIZATION. This Lease is a commercial lease between
entrepreneurs which has been entered into by both parties in reliance upon the
economic and legal bargains contained herein. This Lease shall be interpreted
and construed in a fair and impartial manner without regard to such factors as
the party which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Lessee hereby acknowledges that this Lease
is a
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<PAGE> 20
"true lease" and is not a financing lease, equitable chattel mortgage, chattel
mortgage, security interest or other financing arrangement and Lessee waives any
claim or defense based upon the characterization of this Lease as anything other
than a true lease.
31. OTHER DOCUMENTS. Each of the parties agrees to sign such other and
further documents as may be appropriate to carry out the intentions expressed in
this Lease.
32. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. References in this Lease to attorneys' fees and/or costs shall mean
the fees and costs of independent counsel retained with respect to the matter.
33. ENTIRE AGREEMENT. This Lease, and any other instruments or
agreements referred to herein, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no other
representations, warranties or agreements except as herein provided.
34. TIME IS OF THE ESSENCE. Time is of the essence with respect to each
and every provision of this Lease in which time is a factor.
35. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fore or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease.
36. SUCCESSORS BOUND. Except as otherwise specifically provided herein,
the terms, covenants and conditions contained in this Lease shall bind and inure
to the benefit of the respective heirs, successors, executors, administrators
and assigns of each of the parties hereto.
37. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original.
38. FFCA AS THIRD PARTY BENEFICIARY. Lessor and Lessee expressly intend
for FFCA to be an intended third party beneficiary of this Lease.
39. OPTION TO PURCHASE EQUIPMENT. After such time as all of the
obligations evidenced by the Note and the other Loan Operative Documents shall
have been paid and satisfied in full, Lessee shall have the option to purchase
the Equipment for its fair market value, which fair market value shall be
determined in the manner set forth below, at the expiration of the Lease Term.
Lessee shall notify Lessor in writing no later than 45 days prior to the
expiration of the Lease Term of Lessee's exercise of the option to purchase. The
consummation of the purchase of the Equipment by Lessee must occur no later than
the last day of the Lease Term (the "Purchase Period"). After Lessee notifies
Lessor of Lessee's election to purchase the Equipment, Lessor shall, at Lessee's
sole expense, retain an independent appraiser to prepare
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<PAGE> 21
an appraisal of the fair market value of the Equipment. At or before the
consummation of the purchase of the Equipment, Lessor shall deliver to Lessee
its special warranty bill of sale transferring to Lessee all of Lessor's right,
title and interest in the Equipment free and clear of all liens and encumbrances
except liens for taxes and assessments and any liens which are attached to the
Equipment during the Lease Term through Lessee's action or inaction, and any
liens which have been granted by Lessor in lieu of a taking by the power of
eminent domain or the like, or which have been approved by Lessee. In the event
Lessor is unable to transfer title as required, Lessee shall have the right to
accept such title as Lessor can convey or elect not to consummate its exercise
of the option, in which case the option for such time period shall lapse and
this Lease shall terminate; provided, however, that Lessor shall remove any
monetary lien or encumbrance against the Equipment created by Lessor. Both
Lessor and Lessee agree to execute a purchase agreement and such other
instruments as may be necessary or appropriate to consummate the sale of the
Equipment in the manner herein provided. All cost of exercise of the option,
including, but not limited to, filing or recording costs or fees, reasonable
attorneys' fees (including those of Lessor), appraisal fees, stamp taxes and
transfer fees shall be borne by Lessee. Lessee shall continue to pay and perform
all of its obligations under this Lease until the consummation of the purchase
of the Equipment which in no event shall occur after the date of the expiration
of the Lease Term. The purchase price paid by Lessee in exercising this option
shall be paid to Lessor or to such person or entity as Lessor may direct at the
time of Lessor's delivery of the special warranty bill of sale in immediately
available funds.
In the event Lessor fails to perform its duties and obligations under
this Section within thirty (30) days after receiving notice from Lessee to so
perform, and provided Lessee shall have performed its duties and obligations
hereunder, Lessee shall be entitled to exercise any remedies available to Lessee
at law or in equity against Lessor arising out of Lessor's failure to so
perform, including the right to seek specific performance of Lessor's
obligations under this Section. The consummation of the purchase of the
Equipment shall close within the Purchase Period, but may be extended for a
reasonable period of time to permit Lessor to cure title defects or to permit
either party to cure any other defects or defaults provided each party is
diligently seeking to cure such defect or default and Lessee continues to
perform its obligation hereunder.
Except as otherwise specifically provided in Section 21, Lessee may not
sell, assign, transfer, hypothecate or otherwise dispose of the option granted
herein or any interest therein, except in conjunction with a permitted
assignment of Lessee's entire interest herein and then only to the assignee
thereof. Any attempted assignment of this option which is contrary to the terms
of this paragraph shall be deemed to be a default under this Lease and the
option granted herein shall be void. Notwithstanding the foregoing, Lessee shall
have the right to designate the person or entity to whom title to the Equipment
will be transferred pursuant to Lessor's special warranty bill of sale.
40. Quiet Enjoyment. So long as Lessee shall pay the rental and other
sums herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have the right to the
quiet use and enjoyment of the Equipment.
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<PAGE> 22
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as
of the date first above written.
LESSOR:
LH LEASING COMPANY, INC., an Arizona
corporation
By:_________________________________________
Printed Name:_______________________________
Its:________________________________________
LESSEE:
DENAMERICA CORP., a Georgia corporation
By:_________________________________________
Printed Name: Todd S. Brown
Its: Vice President
Witness
In accordance with the requirements of Arizona Revised Statutes Section
14-5503, the undersigned has executed this Lease solely for the purpose of
witnessing the grant of the powers of attorney by Lessee to Lessor, as described
in this Lease.
___________________________
Printed Name of Witness
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<PAGE> 23
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___, 1996,
by _____________________________________, the ______________________________ of
LH LEASING COMPANY, INC., an Arizona corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on July ___, 1996,
by TODD S. BROWN, the Vice President of DENAMERICA CORP., a Georgia corporation,
on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
-23-
<PAGE> 1
EXHIBIT 10.106
EQUIPMENT SUBLEASE
THIS EQUIPMENT SUBLEASE is made and entered into as of the ____ day of
July, 1996, by and between DENAMERICA CORP., a Georgia corporation
("Sublessor"), and BLACK-EYED PEA U.S.A., INC., a Texas corporation
("Sublessee").
RECITALS
A. Sublessor has entered into a certain Equipment Lease of even date
herewith (the "Base Equipment Lease"), with respect to certain appliances,
furniture, fixtures, equipment and other personal property (collectively, the
"Equipment") owned by LH Leasing Company, Inc., an Arizona corporation, and
located on or at the property or properties, the addresses and store numbers of
which are set forth on Exhibit A attached hereto (collectively, the
"Properties").
B. Sublessee desires to sublease the Equipment from Sublessor, and
Sublessor desires to sublease the Equipment to Sublessee, on the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sublessor and Sublessee hereby
agree as follows:
1. GRANT. Sublessor hereby subleases the Equipment to Sublessee, and
Sublessee hereby subleases the Equipment from Sublessor, on the terms and
conditions herein set forth.
2. INCORPORATION OF BASE EQUIPMENT LEASE; EXCEPTIONS. Each and every
provision of the Base Equipment Lease is incorporated herein by this reference.
Sublessor shall sublet the Equipment to Sublessee under the same rental, terms
and conditions to which Sublessor agreed as the "Lessee" in the Base Equipment
Lease, except as otherwise herein provided. Wherever the term "Lessor" appears,
it shall be deemed to refer to Sublessor and wherever the term "Lessee" appears,
it shall be deemed to refer to Sublessee. Sublessee shall render performance to
Sublessor as required under all of the terms of the Base Equipment Lease.
Sublessee shall be entitled under this Sublease to all of the rights and
benefits that the Sublessor, as Lessee, enjoys under the Base Equipment Lease.
(a) TERM. Sublessee's right to use the Equipment shall
commence as of the date set forth above and shall expire one day prior to the
end of the term of the Base Equipment Lease.
(b) BASE RENT AND OTHER CHARGES. Sublessee shall pay to
Sublessor base monthly rent in the amount of $ , and shall further pay to
Sublessor at the times and as provided in the Base Equipment Lease any and all
property taxes and assessments, insurance costs and other charges which
Sublessor incurs as Lessee as set forth in the Base Equipment Lease with respect
to the Equipment located on or at the Properties.
<PAGE> 2
(c) NOTICES. The initial notice addresses of the parties
hereto, for purposes of the notice provision of the Base Equipment Lease, shall
be as set forth below.
3. REAFFIRMATION OF BASE EQUIPMENT LEASE. All of the terms, conditions
and provisions of the Base Lease are reaffirmed by Sublessor and Sublessee.
4. TERMINATION. In the event of the termination of the Base Equipment
Lease under its own terms or under any provision thereof that authorizes such
termination, this Sublease shall simultaneously and automatically terminate
(without being deemed, however, to be a waiver by Sublessee of any other rights
or remedies it may have under this Sublease).
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS SUBLEASE AS OF THE
DATE FIRST ABOVE WRITTEN.
SUBLESSOR:
ADDRESS: DENAMERICA CORP., a Georgia corporation
7373 N. Scottsdale Road By:_____________________________________________
Suite D-120 Name: Todd S. Brown
Scottsdale, Arizona 85253 Title: Vice President
SUBLESSEE:
ADDRESS: BLACK-EYED PEA U.S.A., INC., a Texas corporation
7373 N. Scottsdale Road By:_____________________________________________
Suite D-120 Name:___________________________________________
Scottsdale, Arizona 85253 Title:__________________________________________
2
<PAGE> 3
ACKNOWLEDGEMENT AND CONSENT
FFCA Acquisition Corporation, a Delaware corporation ("FFCA"), as
Lessor under the Lease, hereby acknowledges and consents to this Equipment
Sublease, provided that FFCA shall not be deemed to have assumed any obligation,
liability or duty by virtue of acknowledging and consenting to this Equipment
Sublease.
FFCA ACQUISITION CORPORATION, a Delaware
corporation
By:_______________________________________
Name: Stephen Y. Schwanz
Title: Vice President, Corporate Finance
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia
corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
3
<PAGE> 4
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by ___________________ , the_________________ of Black-eyed Pea
U.S.A., Inc., a Texas corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Stephen Y. Schwanz, Vice President, Corporate Finance of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
4
<PAGE> 1
EXHIBIT 10.107
EQUIPMENT SUBLEASE
THIS EQUIPMENT SUBLEASE is made and entered into as of the ___ day of
July, 1996, by and between DENAMERICA CORP., a Georgia corporation
("Sublessor"), and TEXAS BEP, L.P., a Texas limited partnership ("Sublessee").
RECITALS
A. Sublessor has entered into a certain Equipment Lease of even date
herewith (the "Base Equipment Lease"), with respect to certain appliances,
furniture, fixtures, equipment and other personal property (collectively, the
"Equipment") owned by LH Leasing Company, Inc., an Arizona corporation, and
located on or at the property or properties, the addresses and store numbers of
which are set forth on Exhibit A attached hereto (collectively, the
"Properties").
B. Sublessee desires to sublease the Equipment from Sublessor, and
Sublessor desires to sublease the Equipment to Sublessee, on the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sublessor and Sublessee hereby
agree as follows:
1. GRANT. Sublessor hereby subleases the Equipment to Sublessee, and
Sublessee hereby subleases the Equipment from Sublessor, on the terms and
conditions herein set forth.
2. INCORPORATION OF BASE EQUIPMENT LEASE; EXCEPTIONS. Each and every
provision of the Base Equipment Lease is incorporated herein by this reference.
Sublessor shall sublet the Equipment to Sublessee under the same rental, terms
and conditions to which Sublessor agreed as the "Lessee" in the Base Equipment
Lease, except as otherwise herein provided. Wherever the term "Lessor" appears,
it shall be deemed to refer to Sublessor and wherever the term "Lessee" appears,
it shall be deemed to refer to Sublessee. Sublessee shall render performance to
Sublessor as required under all of the terms of the Base Equipment Lease.
Sublessee shall be entitled under this Sublease to all of the rights and
benefits that the Sublessor, as Lessee, enjoys under the Base Equipment Lease.
(a) TERM. Sublessee's right to use the Equipment shall
commence as of the date set forth above and shall expire one day prior to the
end of the term of the Base Equipment Lease.
(b) BASE RENT AND OTHER CHARGES. Sublessee shall pay to
Sublessor base monthly rent in the amount of $ , and shall further pay to
Sublessor at the times and as provided in the Base Equipment Lease any and all
property taxes and assessments, insurance costs and other charges which
Sublessor incurs as Lessee as set forth in the Base Equipment Lease with respect
to the Equipment located on or at the Properties.
<PAGE> 2
(c) NOTICES. The initial notice addresses of the parties
hereto, for purposes of the notice provision of the Base Equipment Lease, shall
be as set forth below.
3. REAFFIRMATION OF BASE EQUIPMENT LEASE. All of the terms, conditions
and provisions of the Base Lease are reaffirmed by Sublessor and Sublessee.
4. TERMINATION. In the event of the termination of the Base Equipment
Lease under its own terms or under any provision thereof that authorizes such
termination, this Sublease shall simultaneously and automatically terminate
(without being deemed, however, to be a waiver by Sublessee of any other rights
or remedies it may have under this Sublease).
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS SUBLEASE AS OF THE
DATE FIRST ABOVE WRITTEN.
SUBLESSOR:
ADDRESS: DENAMERICA CORP., a Georgia corporation
7373 N.Scottsdale Road By:__________________________________________________
Suite D-120 Name: Todd S. Brown
Scottsdale, Arizona 85253 Title: Vice President
SUBLESSEE:
TEXAS BEP, L.P., a Texas limited partnership
7373 N. Scottsdale Road By: Black-eyed Pea U.S.A., Inc., a Texas corporation
Suite D-120 Its: General Partner
Scottsdale, Arizona 85253
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
2
<PAGE> 3
ACKNOWLEDGEMENT AND CONSENT
FFCA Acquisition Corporation, a Delaware corporation ("FFCA"), as
Lessor under the Lease, hereby acknowledges and consents to this Equipment
Sublease, provided that FFCA shall not be deemed to have assumed any obligation,
liability or duty by virtue of acknowledging and consenting to this Equipment
Sublease.
FFCA ACQUISITION CORPORATION, a Delaware
corporation
By:_____________________________________
Name: Stephen Y. Schwanz
Title: Vice President, Corporate Finance
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Todd S. Brown, the Vice President of DenAmerica Corp., a Georgia
corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
3
<PAGE> 4
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Black-eyed Pea U.S.A., Inc., a Texas corporation, General Partner
of Texas BEP, L.P., a Texas limited partnership, on behalf of the limited
partnership.
___________________________
Notary Public
My commission expires:
_______________________
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this _____ day of
July, 1996, by Stephen Y. Schwanz, Vice President, Corporate Finance of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the corporation.
___________________________
Notary Public
My commission expires:
_______________________
4
<PAGE> 1
EXHIBIT 10.108
ASSET PURCHASE AGREEMENT
AMONG
MID-AMERICAN RESTAURANTS, INC.,
HAIG V. ANTRANIKIAN,
AND
DENAMERICA CORP.
EFFECTIVE AS OF JULY 3, 1996
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Section 1. Sale and Purchase................................................. 1
1.1 Assets and Properties to be Sold and Purchased.................... 1
(a) Leased Properties and Improvements. .................... 1
(b) Personal Property. ..................................... 2
(c) Trademarks............................................... 2
(d) Telephone Numbers........................................ 2
(e) Ancillary Assets. ...................................... 2
1.2 Assets and Properties Not to Be Purchased and Sold................ 3
Section 2. Liabilities....................................................... 3
Section 3. Purchase Price and Security....................................... 3
3.1 Amount of Purchase Price. ........................................ 3
3.2 Payment of Purchase Price; Security............................... 3
Section 4. Seller's Representations and Warranties........................... 4
4.1 Corporate Status and Authority.................................... 4
4.2 Ownership of Assets and Properties................................ 4
4.3 Statements and Other Documents Not Misleading..................... 4
Section 5. Buyer's Representations and Warranties. .......................... 4
5.1 Corporate Status and Authority.................................... 4
5.2 Knowledge Regarding the Business.................................. 4
5.3 Condition of Assets............................................... 5
5.4 Agreement Not in Breach of Other Instruments. ................... 5
5.5 Statements and Other Documents Not Misleading..................... 5
Section 6. Further Representations and Warranties of Shareholder............. 5
Section 7. Continuation and Survival of Representations and Warranties....... 5
Section 8. Seller's Covenants................................................ 5
Section 9. Buyer's and Shareholder's Covenants
Regarding Confidential Information and Non-Solicitation........ 6
9.1 Interests to be Protected......................................... 6
9.2 Non-Solicitation of Buyer and Shareholder......................... 6
9.3 Non-Solicitation of Seller........................................ 6
9.4 Equitable Relief.................................................. 6
9.5 Restrictions Separable............................................ 7
Section 10. Buyer's and Shareholder's Conditions
Precedent to the Closing....................................... 7
10.1 Compliance With Agreements and Covenants. ....................... 7
10.2 Accuracy of Representations and Warranties........................ 7
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
10.3 Real Estate Matters............................................... 7
10.4 Delivery of Documents............................................. 7
Section 11. Seller's Conditions Precedent to the Closing...................... 7
11.1 Compliance with Agreements and Covenants. ....................... 7
11.2 Accuracy of Representations and Warranties. ..................... 8
11.3 Repayment of Indebtedness......................................... 8
11.4 Consents and Approvals............................................ 8
11.5 Termination Agreement............................................. 8
11.6 Delivery of Documents............................................. 8
Section 12. The Closing....................................................... 8
12.1 Deliveries by Seller. ........................................... 8
12.2 Deliveries by Buyer and Shareholder. ............................ 9
Section 13. Further Assurances................................................ 9
Section 14. Indemnification................................................... 10
14.1 Indemnification by Seller......................................... 10
14.2 Indemnification by Buyer and Shareholder.......................... 10
14.3 Certain Limitations............................................... 10
Section 15. Brokers and Finders............................................... 10
Section 16. Post Closing Obligations of Buyer and Shareholder................. 11
16.1 Transfer of Obligations and Liabilities. ........................ 11
16.2 Employees......................................................... 11
16.3 Maintenance of Purchased Assets and Leased Properties............. 11
16.4 Covenants in Security Agreement................................... 11
16.5 Maintenance of Shareholder's Control of Buyer;
Transfer of Assets....................................... 11
16.6 New Leases........................................................ 12
Section 17. Post Closing Obligations of Seller................................ 12
17.1 Release of Shareholder Guarantees................................. 12
17.2 Release of Banque Paribas Liens................................... 12
Section 18. Termination....................................................... 12
18.1 Right to Terminate................................................ 12
18.2 Remedies.......................................................... 12
(a) Proceed to Close......................................... 12
(b) Decline to Close......................................... 13
18.3 Right to Damages.................................................. 13
18.4 Return of Documents on Termination................................ 13
Section 19. General Provisions................................................ 13
19.1 Definition of Knowledge........................................... 13
19.2 Notices. ........................................................ 13
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
19.3 Public Announcements............................................ 14
19.4 Binding Nature of Agreement; Assignment......................... 14
19.5 Entire Agreement................................................ 14
19.6 Controlling Law................................................. 14
19.7 Schedules and Exhibits.......................................... 15
19.8 Indulgences, Not Waivers.,,..................................... 15
19.9 Attorney's Fees................................................. 15
19.10 Costs and Expenses.............................................. 15
19.11 Execution in Counterparts....................................... 15
19.12 Provisions Separable............................................ 15
19.13 Number of Days.................................................. 15
19.14 Construction.................................................... 15
</TABLE>
4
<PAGE> 5
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into and effective as of 3:00 p.m. Eastern Daylight Time on July 3, 1996 (the
"Effective Date") by and among MID-AMERICAN RESTAURANTS, INC., a Georgia
corporation ("Buyer"), HAIG V. ANTRANIKIAN ("Shareholder") and DENAMERICA CORP.,
a Georgia corporation ("Seller").
A. Seller conducts the business of the ownership and operation of
restaurants, including those 23 restaurants operated under the trade names of
"Ike's" and "Jerry's," which 23 restaurants are more particularly described on
Schedule A hereto (the "Restaurants").
B. From 1983 to 1986, Shareholder was employed by the prior owner of
certain of the Restaurants and performed duties and activities associated with
the management and operation of those Restaurants. Since 1986, Shareholder has
served as an officer and director of Seller and has performed certain duties and
activities associated with the Seller's business, including duties and
activities associated with the management and operation of the Restaurants.
Accordingly, Shareholder is intimately familiar with the Restaurants, the
Purchased Assets and the Liabilities, as those terms are defined below.
C. Shareholder is the sole shareholder and a director and officer of
Buyer.
D. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Restaurants and certain of the assets associated with the
Restaurants, on an "as is" basis, and desires to assume certain lease
obligations associated with the Restaurants, all upon the terms and conditions
set forth in this Agreement.
E. Shareholder desires to cause Buyer to perform its obligations under
this Agreement and to make certain representations to Seller in connection with
the transactions contemplated by this Agreement.
F. To induce Seller to enter into this Agreement, and as a condition
precedent to Seller's obligations hereunder, Seller requires Shareholder and his
wife, jointly and severally, to guaranty payment in full by Buyer of the Note
(as defined below).
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE.
1.1 ASSETS AND PROPERTIES TO BE SOLD AND PURCHASED.
At the Closing (as defined herein), Seller shall sell to Buyer and Buyer shall
purchase from Seller, subject to all the terms and conditions of this Agreement,
as of the Effective Date, the following assets and properties of Seller with
respect to the Restaurants (the "Purchased Assets") free and clear of all liens,
claims, and encumbrances, except as set forth in Schedule 4.2 hereto:
(a) LEASED PROPERTIES AND IMPROVEMENTS. All
of the right, title and interest of Seller in and to the use of the real
property parcels and buildings associated with the
1
<PAGE> 6
Restaurants (the "Leased Properties") and all other improvements, fixtures, and
structures (collectively, the "Improvements") located on, affixed to and/or
appurtenant to the Restaurants or the Leased Properties, except to the extent
the foregoing are the property of landlords and are subject to the Leases (as
defined herein).
(b) PERSONAL PROPERTY. All of the right,
title and interest of Seller in and to any and all personal property utilized in
connection with the businesses conducted in the Restaurants, including, but not
limited to the (i) mechanical systems, fixtures and equipment comprising a part
of or attached to or located at the Restaurants; (ii) pylons and other signs,
silverware, glassware, and other utensils and dishes, tables, chairs,
chandeliers, lamps, stained or leaded glass, marble tops, fans, televisions,
clocks, carpets, drapes, art work, memorabilia, paintings, posters, graphics and
other furnishings owned by Seller and comprising a part of or attached to or
located in the Restaurants including without limitation, any furnishings located
in business offices or party rooms; (iii) maintenance equipment and tools owned
by Seller and used in connection with the Restaurants; (iv) stoves, ovens,
refrigerators, walk-in cold storage boxes and other kitchen equipment and other
machinery, equipment, fixtures, keys, inventory and personal property of every
kind and character owned by Seller and held at the Restaurants including food,
beverages, spirits, china, silver, glassware, paper goods, food preparation
items, uniforms, guest checks and other inventory and supplies in such quantity
and quality as is customarily maintained at the Restaurants by Seller, and which
are presently located in, on or used in connection with the Restaurants, the
Leased Properties or the Improvements or the operations thereon or hereafter
acquired in the ordinary course of business, and replacements of inventory or
consumables used in the ordinary course of business (collectively, the "Personal
Property"); and (v) certain other office equipment listed on Schedule B hereto.
Nothing in this section shall be deemed to imply that Seller is transferring any
interest in any of Seller's proprietary marks except to the extent set forth in
Section 1.1(c) hereof.
(c) TRADEMARKS. All right, title and
interest of Seller in, to and under those of Seller's trademarks, service marks,
trade names and copyrights as set forth on Schedule C.1 hereto, as used in
connection with the Restaurants, and any variation thereof or name similar
thereto now or heretofore at any time used by Seller in connection with the
Restaurants, provided, however, that Seller reserves unto itself and its
successors or assigns the right to use those trademarks, service marks, trade
names and copyrights as set forth on Schedule C.2 hereto (the "Jerry's Marks"),
including the goodwill associated with the Jerry's Marks and including the right
to sublicense Seller's rights to use the Jerry's Marks to third parties.
Seller's rights to use the Jerry's Marks pursuant to this Section 1.1(c) shall
be on a non-exclusive, non-fee basis, and shall remain in effect until cancelled
by Seller giving written notice of Seller's intent to cancel its rights to use
the Jerry's Marks pursuant to this Section 1.1(c) to Buyer or its successors or
assigns.
(d) TELEPHONE NUMBERS. All of Seller's
telephone and facsimile numbers presently used by the Restaurants.
(e) ANCILLARY ASSETS. All permits, licenses,
equipment warranties, certificates of occupancy, governmental approvals, site
plans, surveys, plans and specifications, marketing materials and floor plans in
the possession of Seller that specifically and only relate to the Restaurants,
the Leased Properties, the Improvements or the Personal Property, to the extent
transferable.
2
<PAGE> 7
1.2 ASSETS AND PROPERTIES NOT TO BE PURCHASED AND
SOLD. Notwithstanding anything to the contrary contained in this Agreement,
there is excluded from the assets and properties to be transferred pursuant to
this Agreement the following:
(a) All cash, bank accounts, notes
receivable, loans receivable, certificates of deposit, investment securities,
credit card accounts receivable from sales generated from the Restaurants prior
to the Effective Date, deposits and prepaid expenses, and allowances or credits
due from vendors, suppliers, or service providers accrued prior to the Effective
Date.
(b) Any assets or properties of Seller used
in or with respect to Seller's business that are not explicitly to be
transferred to Buyer pursuant to Section 1.1 of this Agreement, including all of
Seller's trademarks, service marks, trade names and copyrights as used in
Seller's business as now conducted and all licenses pursuant to which Seller may
be entitled to use any of the foregoing, except as set forth in Section 1.1(c)
of this Agreement.
SECTION 2. LIABILITIES. Seller shall be responsible for and
shall promptly pay or satisfy all liabilities, obligations, or accruals relating
to the operation of the Restaurants prior to the Effective Date, whether such
liabilities, obligations or accruals are known or discovered prior to or after
the Effective Date. Upon the conveyance, transfer and assignment of the
Purchased Assets to Buyer in accordance with this Agreement, Buyer shall assume,
and shall thereafter pay or satisfy, as they become due, all liabilities,
obligations, or accruals relating to the operation of the Restaurants after the
Effective Date (the "Liabilities"). Buyer shall pay, perform or otherwise
dispose of all non-delinquent liabilities and obligations of Seller in respect
of the Restaurants accruing or relating to the period on or after the Effective
Date pursuant to the terms and provisions of all operating contracts,
commitments, leases and other agreements. At the Closing Date and/or within a
reasonable period of time after the Closing Date (as defined herein), as the
case may be, and effective as of the Effective Date, to the extent not otherwise
provided for by any other provision of this Agreement, Buyer and Seller shall
allocate any obligations or liabilities relating to the Restaurants (such as
equipment and other operating lease payments, property tax payments, and the
like) consistent with the belief by Buyer and Seller that the obligations,
liabilities, or accruals arising from the operation of the Restaurants by Seller
prior to the Effective Date are borne by Seller and the obligations,
liabilities, or accruals arising from the operation of the Restaurants by Buyer
after the Effective Date are borne by Buyer.
SECTION 3. PURCHASE PRICE AND SECURITY.
3.1 AMOUNT OF PURCHASE PRICE. As full and complete
payment for the Purchased Assets, Buyer shall pay Seller the aggregate sum of
$4,600,000.00 (the "Purchase Price"), payable as set forth in Section 3.2.
3.2 PAYMENT OF PURCHASE PRICE; SECURITY. At the
Closing, Buyer shall execute and deliver to Seller Buyer's promissory note in
the form set forth in Exhibit 1 (the "Note") for the Purchase Price, in the
original principal amount of $4,600,000.00. The Note and the Subleases (as
defined below) will contain cross default provisions, and will not permit Buyer
to set off amounts, if any, owed by Seller to Buyer pursuant to the terms of
this Agreement. Payment of the Note shall be secured by (i) a security agreement
by and between Seller and Buyer executed contemporaneously with the execution
and delivery of the Note (the "Security Agreement"), in the form set forth in
Exhibit 2; (ii) a Collateral Assignment of Trademarks (the "Collateral
Assignment") in the form set forth in Exhibit 3;
3
<PAGE> 8
and (iii) a guaranty executed by Shareholder and Shareholder's wife (the
"Guaranty") in the form set forth in Exhibit 4, together with a stock pledge
agreement executed by Shareholder securing Shareholder's obligations under the
Guaranty (the "Stock Pledge Agreement") in the form set forth as Exhibit 5.
SECTION 4. SELLER'S REPRESENTATIONS AND WARRANTIES. To induce
Buyer and Shareholder to enter into this Agreement and for the benefit of Buyer
and Shareholder, Seller represents and warrants as follows:
4.1 CORPORATE STATUS AND AUTHORITY. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia, has the requisite corporate power and authority to own,
operate and lease its assets and properties and to carry on its business as now
being conducted. The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby and the fulfillment of the terms hereof
have been validly authorized by all necessary corporate action of Seller and
this Agreement constitutes the valid, legal and binding obligation of Seller
enforceable in accordance with its terms.
4.2 OWNERSHIP OF ASSETS AND PROPERTIES. Except as set
forth in and Schedule 4.2, Seller has good title to all of the Purchased Assets.
Except as set forth in and Schedule 4.2, all of the Purchased Assets are owned
free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims.
4.3 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING.
Neither this Agreement, nor any schedule or exhibit hereto, contains any untrue
statement of material fact with respect to Seller or the Restaurants or omits to
state a material fact with respect to Seller or the Restaurants required to be
stated in order to make such statement, document or other instrument not
materially misleading.
SECTION 5. BUYER'S REPRESENTATIONS AND WARRANTIES. To induce
Seller to enter into this Agreement, Buyer and Shareholder, jointly and
severally, each represents and warrants as follows:
5.1 CORPORATE STATUS AND AUTHORITY. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia, has the requisite corporate power and authority to own,
operate and lease the Restaurants and the Purchased Assets, and is duly
qualified to conduct the business of operating the Restaurants in all
jurisdictions where the Restaurants are located. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been validly authorized by all appropriate corporate action of Buyer, and this
Agreement constitutes the valid and binding obligation of Buyer enforceable in
accordance with its terms.
5.2 KNOWLEDGE REGARDING THE BUSINESS. Each of Buyer
and Shareholder hereby acknowledges that Shareholder (i) through his association
with the prior owner of certain of the Restaurants, performed duties and
activities associated with the management of those Restaurants from 1983 to
1986, and (ii) through his association as an officer and director of Seller, has
performed certain duties and activities for and on behalf of Seller since 1986,
including duties and activities associated with the management and operation of
the Restaurants, and therefore is intimately familiar with the Restaurants, the
Purchased Assets, and the Liabilities, and that as a result each of Buyer and
Shareholder possesses sufficient knowledge of and information pertaining to the
Restaurants to enable each of them to make an informed decision regarding the
purchase of the Purchased Assets pursuant to this Agreement.
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5.3 CONDITION OF ASSETS. Each of Buyer and
Shareholder hereby acknowledges that Shareholder (i) through his association
with the prior owner of certain of the Restaurants, performed duties and
activities associated with the management of those Restaurants from 1983 to
1986, and (ii) through his association as an officer and director of Seller, has
performed certain duties and for and on behalf of Seller since 1986, including
duties and activities associated with the management and operation of the
Restaurants, and therefore is intimately familiar with the Restaurants, the
Purchased Assets, and the Liabilities, and that as a result each of Buyer and
Shareholder has had an opportunity to conduct its or his own physical
inspections of the Purchased Assets. Each of Buyer and Shareholder understands
that, except to the extent explicitly set forth herein, Seller makes no
representations or warranties regarding the Purchased Assets, and Buyer and
Shareholder each hereby acknowledges that the Purchased Assets are being sold on
an "AS IS, WHERE IS" basis.
5.4 AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof, will not violate
any provision of the articles of incorporation and by-laws of Buyer nor will
they result in the breach of any term or provision of, or constitute a default
under, or conflict with, or cause the acceleration of any obligation under, any
loan agreement, note, debenture, indenture, mortgage, deed of trust, lease,
contract, agreement or other obligation of any description to which Buyer is a
party or by which it is bound, or any judgment, decree, order, or award of any
court, governmental body or arbitrator, or any applicable law, rule or
regulation.
5.5 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING.
Neither this Agreement, nor any schedule or exhibit hereto, contains any untrue
statement of material fact with respect to Buyer and Shareholder or omits to
state a material fact with respect to Buyer and Shareholder required to be
stated in order to make such statement, document or other instrument not
materially misleading.
SECTION 6. FURTHER REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER.
To induce Seller to enter into this Agreement, and
for the benefit of Seller, Shareholder further represents and warrants that (i)
Shareholder owns all of the shares of common stock of Buyer, constituting all of
the issued and outstanding capital stock of Buyer, (ii) Shareholder has full
power and authority to execute, deliver and perform this Agreement, and (iii)
this Agreement is a legal, valid and binding obligation of Shareholder,
enforceable against him in accordance with its terms.
SECTION 7. CONTINUATION AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.
Each of the representations and warranties contained
in this Agreement shall be true and correct on the date hereof and as of the
Effective Date with the same force and effect as if made on and as of that date,
except to the extent, if any, that such representations and warranties shall be
affected by transactions contemplated by this Agreement. All such
representations and warranties shall survive the consummation of the
transactions contemplated by this Agreement for a period of one year.
SECTION 8. SELLER'S COVENANTS.
Seller agrees that, between the date hereof and the
Closing Date, Seller shall operate the Restaurants only in the regular, ordinary
and usual course and manner of Seller's general
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business practices and will maintain all supplies, inventory and consumables at
levels reasonably commensurate with those customarily maintained by Seller in
its ordinary course of business.
SECTION 9. BUYER'S AND SHAREHOLDER'S COVENANTS REGARDING
CONFIDENTIAL INFORMATION AND NON-SOLICITATION;
SELLER'S COVENANTS REGARDING NON-SOLICITATION
9.1 INTERESTS TO BE PROTECTED. The parties
acknowledge that during the term of Shareholder's employment with Seller,
Shareholder has performed essential services for Seller, its employees and
shareholder. The parties also expressly recognize and acknowledge that (i) the
personnel of Seller have been trained by and are valuable to Seller and that if
Seller must hire new personnel or retrain existing personnel to fill vacancies
it will incur substantial expense in recruiting and training such personnel, and
(ii) the personnel employed at the Restaurants will be valuable to Buyer and
that if Buyer must hire new personnel or retrain existing personnel to fill
vacancies it will incur substantial expense in recruiting and training such
personnel. The parties expressly recognize that should either (a) Buyer and
Shareholder or (b) Seller violate the terms of this Section 9 in any manner
whatsoever, such violation could seriously impair the goodwill and diminish the
value of Seller's or Buyer's respective business. The parties acknowledge that
this covenant has an extended duration; however, they agree that this covenant
is reasonable and it is necessary for the protection of Seller, Buyer, and their
respective shareholder and employees. For these and other reasons, and the fact
that there are many other qualified employees available to Buyer to enable it to
operate the Restaurants and to Seller to enable it to operate its business, the
parties are in full and complete agreement that the following restrictive
covenants are fair and reasonable and are freely, voluntarily and knowingly
entered into. Furthermore, each party was given the opportunity to consult with
independent legal counsel before entering into this Agreement.
9.2 NON-SOLICITATION OF BUYER AND SHAREHOLDER. Except
for the current employees at the Restaurants and Curt Scalf, Penny Davilla, and
Herman Hatfield (collectively, the "Designated Employees"), prior to the Closing
and for a period of 12 months after the Closing Date, regardless of the reason
therefor, Buyer and Shareholder shall not directly or indirectly, on behalf of
Buyer, or on behalf of, or in conjunction with, any other person(s), company,
partnership, corporation, or governmental entity, seek to hire any of Seller's
personnel or employees for the purpose of having such employee engage in
services that are the same, similar or related to the services that such
employee provided for Seller.
9.3 NON-SOLICITATION OF SELLER. Prior to the Closing
and for a period of 12 months after the Closing Date, regardless of the reason
therefor, Seller shall not directly or indirectly, on behalf of Seller, or on
behalf of, or in conjunction with, any other person(s), company, partnership,
corporation, or governmental entity, seek to hire any of the Designated
Employees or any of Buyer's other employees for the purpose of having such
person or persons engage in services that are the same, similar or related to
the services that such person or persons provide for Buyer.
9.4 EQUITABLE RELIEF. In the event a violation of any
of the restrictions contained in this Section 9 is established, Seller or Buyer,
as the case may be, shall be entitled to preliminary and permanent injunctive
relief as well as damages and an equitable accounting of all earnings, profits
and other benefits arising from such violation, which right shall be cumulative
and in addition to any other rights or remedies to which Seller may be entitled.
In the event of a violation of any provision of Section 9.2 or Section 9.3, the
period for which those provisions would remain in effect
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shall be extended for a period of time equal to that period beginning when such
violation commenced and ending when the activities constituting such violation
shall have been finally terminated in good faith.
9.5 RESTRICTIONS SEPARABLE. If the scope of any
provision of this Section 9 is found by a Court to be too broad to permit
enforcement to its full extent, then such provision shall be enforced to the
maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. Each and every restriction set forth in this Section 9
is independent and severable from the others, and no such restriction shall be
rendered unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part.
SECTION 10. BUYER'S AND SHAREHOLDER'S CONDITIONS PRECEDENT TO
THE CLOSING.
The obligations of Buyer and Shareholder hereunder
and their obligations to consummate the Closing provided for herein shall be
subject to the following conditions precedent, any one or more of which may be
waived in writing by Buyer:
10.1 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Seller
shall have performed and complied with each of its agreements, covenants and
obligations to be performed on or prior to the Closing Date except those calling
for performance after the Closing Date.
10.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall be
true and correct at the Closing Date, with the same force and effect as if made
on and as of that date.
10.3 REAL ESTATE MATTERS. At the Closing, Buyer and
Seller shall have entered into a master sublease agreement in the form attached
hereto as Exhibit 6 (the "Sublease") with respect to each of the Leased
Properties. The terms of the Sublease with respect to each of the Leased
Properties shall be substantially the same as the terms of the lease between
Seller and the respective landlord for each such Leased Property as in effect as
of the Closing Date (the "Leases"). Seller shall, to the extent required, have
obtained landlord consents to the sublease of the Leased Properties to Buyer,
and Buyer shall cooperate with Seller in connection with obtaining all required
landlord consents. Buyer's obligations under the Sublease shall be secured by a
guaranty executed by Shareholder (the "Sublease Guaranty"), in the form attached
as Exhibit 7 hereto.
10.4 DELIVERY OF DOCUMENTS. All documents required to
be delivered at the Closing by Seller under Section 12.1 shall have been
delivered or tendered at the Closing.
SECTION 11. SELLER'S CONDITIONS PRECEDENT TO THE CLOSING.
The obligations of Seller hereunder and its
obligations to consummate the Closing provided for herein shall be subject to
the following conditions precedent, any one or more of which may be waived in
writing by Seller:
11.1 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Buyer
and Shareholder shall have performed and complied with each of their respective
agreements, covenants and obligations
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to be performed hereunder on or prior to the Closing Date except those calling
for performance after the Closing Date.
11.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer and Shareholder contained in this
Agreement shall have been true and correct at the Closing Date, with the same
force and effect as if made on and as of that date.
11.3 REPAYMENT OF INDEBTEDNESS. Prior to or at the
Closing, Buyer or Shareholder shall have repaid in full all of Shareholder's
indebtedness to Seller, together with accrued but unpaid interest thereon
through the date of such repayment, under that certain loan by Seller to
Shareholder on April 15, 1996, in the initial principal amount of $117,000.
11.4 CONSENTS AND APPROVALS. Seller shall have
obtained all necessary consents and approvals from Banque Paribas and any of
Seller's other lenders or creditors whose consent or approval is necessary to
the performance by Seller of the transactions under this Agreement.
11.5 TERMINATION AGREEMENT. At the Closing,
Shareholder and Seller shall have entered into an agreement in the form attached
hereto as Exhibit 8 (the "Termination Agreement") whereby (i) the First Amended
and Restated Employment Agreement dated July 12, 1995, between Shareholder and
Seller shall be terminated, and (ii) all unvested options to purchase Seller's
common stock currently held by Shareholder shall be terminated and of no further
force and effect.
11.6 DELIVERY OF DOCUMENTS. All documents required to
be delivered by Buyer or Shareholder at the Closing under Section 12.2 shall
have been delivered or shall be tendered at the Closing.
SECTION 12. THE CLOSING.
The closing under this Agreement (the "Closing")
shall take place at the offices of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, P.A., One East Camelback Road, Suite 1100, Phoenix, Arizona
85012-1656, no later than 5:00 p.m. Mountain Standard Time, on July 10, 1996
(subject to the right of either Buyer or Seller, if it has satisfied all of its
conditions precedent to the Closing, to extend the Closing for up to 30 days in
the event that the other party has not satisfied all of its conditions precedent
to the Closing), or at such other date, time and place as may be agreed upon by
Seller and Buyer (the "Closing Date").
12.1 DELIVERIES BY SELLER. At the Closing, Seller
shall deliver:
(a) Such deeds, bills of sale, instruments
of assignment, and other instruments and documents as may be necessary to convey
to Buyer title to all the applicable assets and properties to be transferred
hereunder, including a Bill of Sale, Assignment and Assumption Agreement (the
"Bill of Sale") in the form attached as Exhibit 9 hereto.
(b) The certificate of the Secretary of
Seller certifying to the resolutions constituting all necessary corporate action
by the board of directors of Seller to authorize or ratify the consummation of
the transactions provided for herein.
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(c) The Sublease.
(d) The Termination Agreement.
(e) The Security Agreement.
(f) Copies of all consents or approvals
described in Section 11.4.
All certificates and other documents delivered by Seller shall be in form
reasonably satisfactory to Buyer and counsel for Buyer.
12.2 DELIVERIES BY BUYER AND SHAREHOLDER. At the
Closing, Buyer and Shareholder shall deliver:
(a) The Note, the Security Agreement, the
Guaranty, and the Stock Pledge Agreement, together with certificates
representing all of the outstanding shares of capital stock of Buyer.
(b) UCC financing statements, documents to
be filed with the United States Patent and Trademark Office, including the
Collateral Assignment, and such other documents as may be necessary to perfect
Seller's security interests granted pursuant to the Security Agreement.
(c) The Certificate of Buyer's Secretary
certifying to the resolutions constituting all necessary action by the board of
directors and by the shareholder of Buyer to authorize the consummation of the
transactions provided for herein.
(d) The Sublease and Sublease Guaranty.
(e) The Termination Agreement.
(f) The Bill of Sale.
(g) A Certificate of Good Standing (or
Qualification) from the Secretary of State of the State of Georgia and of each
other state in which the Restaurants are located where the Buyer is required to
be qualified, each such certificate dated within 5 days prior to the Closing, or
other evidence of such qualification that shall be satisfactory to Seller in its
sole discretion.
All certificates and other documents delivered by Buyer and Shareholder shall be
in form reasonably satisfactory to Seller and counsel for Seller.
SECTION 13. FURTHER ASSURANCES.
Seller, Buyer, and Shareholder shall execute and
deliver all such other instruments and take all such other action as any party
may reasonably request from time to time, before or after the Closing, in order
to effectuate the transactions provided for herein. The parties shall cooperate
with each other and with their respective counsel and accountants in connection
with any steps to be taken as a part of their respective obligations under this
Agreement, including the preparation of financial statements.
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Buyer and Seller shall use their respective best efforts to obtain any approvals
or consents of third parties that may be required in order to consummate the
transactions contemplated by this Agreement. To the extent that the terms of any
contract, commitment, lease, or other agreement to which Seller is a party and
that is to be assigned or transferred to Buyer pursuant to this Agreement (each,
an "Other Agreement") requires the consent of any other party to such assignment
or transfer, Seller and Buyer shall use their respective best efforts to obtain
such consent, except that, notwithstanding the failure of Seller to obtain any
one or more consents to any Other Agreement as of the Effective Date (a) Buyer
shall be responsible for all payments, obligations, and other liabilities
arising under each Other Agreement after the Effective Date, and (b) Seller's
failure to obtain any of such consents shall not constitute a breach by Seller
of any representation, warranty or covenant made by Seller in this Agreement.
SECTION 14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY SELLER. If at any time
hereafter it is determined that any representation, warranty or covenant of
Seller contained in this Agreement or in any schedule, exhibit or document
delivered pursuant hereto was materially incomplete, incorrect or untrue, or
that Seller breached any covenant or agreement contained in this Agreement,
Seller shall promptly pay Buyer the amount of the loss, expense or damage
suffered or incurred by Buyer that would not have been suffered or incurred if
the facts set forth in those representations or warranties had been correct or
those covenants and agreements had not been breached. Seller shall indemnify and
hold Buyer and its employees, agents, and representatives harmless for, from and
against all liabilities, suits, actions, proceedings, claims, demands, losses,
damages, fees, costs, taxes, penalties and expenses (including, but not limited
to, reasonable attorneys' and accountants' fees) caused by, arising out of or
otherwise related to the ownership of the Purchased Assets and the operation of
the Restaurants prior to the Effective Date.
14.2 INDEMNIFICATION BY BUYER AND SHAREHOLDER. If at
any time hereafter it is determined that any representation, warranty or
covenant of Buyer or Shareholder (or either of them) contained in this Agreement
or in any certificate, schedule, exhibit or document delivered pursuant hereto
was materially incomplete, incorrect or untrue, or that Buyer or Shareholder (or
either of them) breached any covenant or agreement contained in this Agreement,
Buyer and Shareholder, jointly and severally, shall promptly pay Seller the
amount of the loss, expense or damage suffered or incurred by Seller that would
not have been suffered or incurred if the facts set forth in those
representations or warranties had been correct or those covenants and agreements
had not been breached. Buyer and Shareholder, jointly and severally, shall
indemnify and hold Seller, and its employees, agents, and representatives
harmless for, from and against all liabilities, suits, actions, proceedings,
claims, demands, losses, damages, fees, costs, taxes, penalties and expenses
(including, but not limited to, reasonable attorneys' and accountants' fees)
caused by, arising out of or otherwise related to the ownership of the Purchased
Assets and operation of the Restaurants subsequent to the Effective Date.
14.3 CERTAIN LIMITATIONS. The rights of
indemnification provided for under this Section 14 are intended to be and shall
constitute the sole and exclusive remedy of any party hereto for any breach of
any representation, warranty, or covenant contained in this Agreement or the
operation of the Restaurants. The obligations of a party to indemnify any other
party under Sections 14.1 and 14.2 shall survive until the first anniversary of
the Closing Date, except that an indemnifying party's obligations shall continue
as to any matter to which a claim identified as a claim for indemnification
pursuant to this Agreement is submitted in writing to the indemnifying party
prior to the first anniversary of the Closing Date.
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SECTION 15. BROKERS AND FINDERS.
Each of the parties hereto represents and warrants to
the other that it has not employed or retained any broker or finder in
connection with the transactions contemplated by this Agreement nor has it had
any dealings with any person which may entitle that person to a fee or
commission from any other party hereto. Each of the parties shall indemnify and
hold the other harmless for, from and against any claim, demand or damages
whatsoever by virtue of any arrangement or commitment made by it with or to any
person that may entitle such person to any fee or commission from the other
parties to this Agreement.
SECTION 16. POST CLOSING OBLIGATIONS OF BUYER AND SHAREHOLDER.
16.1 TRANSFER OF OBLIGATIONS AND LIABILITIES. Within
seven days after the Closing Date, Buyer shall have made such arrangements as
may be necessary to transfer any obligations or liabilities relating to the
Restaurants, including, but not limited to, telephone bills and utility charges.
16.2 EMPLOYEES. Buyer shall offer employment to all
employees employed at the Restaurants by Seller immediately prior to the Closing
(the "Continuing Employees") at a comparable rate of pay or salary existing
immediately prior to the Closing Date. Nothing in this Agreement shall limit in
any way the right of Buyer to change such rate of pay or salary or to terminate
the employment of such Continuing Employees after the Closing Date. Seller shall
be responsible for all obligations and liabilities of Seller with respect to the
Continuing Employees prior to the Closing Date, including all such obligations
of Seller for salaries, vacation and holiday pay, severance payments, bonuses,
retirement benefits, welfare benefits and other forms of compensation, benefits
or other payments or liabilities of Seller arising under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1986.
16.3 MAINTENANCE OF PURCHASED ASSETS AND LEASED
PROPERTIES. At all times subsequent to the date of this Agreement during which
any of the Purchased Assets serve as collateral or security under the Security
Agreement for any outstanding amount of principal or accrued but unpaid interest
under the Note, Buyer shall keep the Purchased Assets in the same operating
condition as of the date hereof, normal wear and tear excepted, and Buyer shall
perform, at Buyer's sole cost and expense, all customary repairs and maintenance
necessary to maintain the Purchased Assets in such condition.
16.4 COVENANTS IN SECURITY AGREEMENT. At all such
times as any amount of principal or accrued but unpaid interest under the Note
shall remain outstanding, Buyer shall, and Shareholder shall cause Buyer to,
comply with all of Buyer's covenants set forth in the Security Agreement.
16.5 MAINTENANCE OF SHAREHOLDER'S CONTROL OF BUYER;
TRANSFER OF ASSETS. So long as any principal or accrued but unpaid interest
remains outstanding under the Note, (i) Buyer shall not (and shall not permit
any subsidiary to) make or declare any distributions or dividends to shareholder
(other than year-end distributions to Shareholder and/or his wife in an amount
not to exceed their respective income tax liability arising as a result of
Buyer's status as a S corporation, if applicable) or issue any shares of its
capital stock or grant any option, warrant or other right to purchase or to
convert any obligation into shares of Buyer's capital stock in an amount that,
in the aggregate, would reduce Shareholder's ownership of the combined voting
power of Buyer's equity securities to an amount
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less than 51% of Buyer's voting stock on a fully diluted basis; (ii) Shareholder
shall not, directly or indirectly, sell, offer to sell, pledge, transfer, assign
or otherwise dispose of or grant any option or other right to acquire
Shareholder's shares of Buyer's capital stock in an amount that, in the
aggregate, would reduce Shareholder's ownership of the combined voting power of
Buyer's equity securities to less than 51% of Buyer's voting stock on a fully
diluted basis; and (iii) without the prior written consent of Seller, Buyer
shall not (and shall not permit any subsidiary to), and Shareholder shall not
cause or permit Buyer or any of its subsidiaries to, directly or indirectly,
sell, offer to sell, pledge, transfer, assign or otherwise dispose of or grant
any option or other right to acquire any of the Restaurants, the Purchased
Assets, or any other assets of Buyer or any of its subsidiaries, other than
assets disposed of in the ordinary course of business associated with the
operation of the Restaurants.
16.6 NEW LEASES. Subject to the terms of the
Sublease, as soon as practicable after the Closing Date, Buyer and Shareholder
shall use their best efforts to enter into a new lease (a "New Lease") for each
of the Leased Properties, such that Seller's Lease with respect to each of the
Leased Properties shall be cancelled or terminated and Seller shall be released
from all of its duties and obligations under such Lease immediately upon the
effectiveness of the New Lease for such Leased Property. So long as any amount
of principal, interest or any other obligation remains outstanding under the
Note, each New Lease shall contain provisions, satisfactory to Seller,
permitting any of Seller's secured creditors to place a leasehold mortgage upon
all of Buyer's leasehold interests under such New Lease.
SECTION 17. POST CLOSING OBLIGATIONS OF SELLER.
17.1 RELEASE OF SHAREHOLDER GUARANTEES. As soon as
practicable after the Closing, Seller shall use its best efforts to obtain the
termination of or the release of Shareholder from any and all guarantees of
Seller's indebtedness or other obligations to third parties.
17.2 RELEASE OF BANQUE PARIBAS LIENS. As soon as
practicable after the Closing, Seller shall use its best efforts to obtain from
Banque Paribas (i) a release of all UCC financing statements filed by Banque
Paribas with respect to any of the Purchased Assets or Restaurants; and (ii)
agreements relating to non-disturbance and attornment with respect to any of the
Leased Properties that are subject to Banque Paribas' leasehold mortgages in the
event of a default by Seller under its existing credit facility with Banque
Paribas, as such may be amended from time to time.
SECTION 18. TERMINATION
18.1 RIGHT TO TERMINATE. Notwithstanding anything to
the contrary contained herein, this Agreement and the transactions contemplated
hereby may be terminated at any time after July 31, 1996 (a) by Seller if the
conditions precedent set forth in Section 8 are not satisfied or waived in
writing by Seller; or (b) by Buyer if the conditions precedent set forth in
Section 9 are not satisfied or waived in writing by Buyer.
18.2 REMEDIES. No party shall be limited to the
termination right granted in Section 18.1 hereof by reason of the nonfulfillment
of any condition precedent to such party's closing obligations or a breach of
another party's representations and warranties, but may, in the alternative,
elect to do one of the following:
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(a) PROCEED TO CLOSE. Proceed to Closing
despite the nonfulfillment of any condition precedent to its obligation to
proceed to Closing, it being understood that consummation of the transactions
contemplated herein shall not be deemed a waiver of a breach of any
representation, warranty or covenant or of any party's rights and remedies with
respect thereto.
(b) DECLINE TO CLOSE. Decline to proceed to
Closing, terminate this Agreement as provided in Section 18.1 hereof, and
thereafter seek damages as limited by, and only to the extent permitted in,
Section 18.3 hereof.
18.3 RIGHT TO DAMAGES. If this Agreement is
terminated pursuant to this Section 18, no party hereto shall have any liability
or obligation to the other; provided, however, that each party shall remain
liable for (a) any willful breach of any of such party's representations,
warranties and covenants contained in this Agreement, and (b) any willful
failure by the party to perform any of its or their obligations or agreements
contained in this Agreement, in which case the party shall be liable for all of
the other parties' out-of-pocket costs and expenses which were incurred in
connection with the negotiations and preparation of this Agreement and all of
the other documents related to this transaction and those costs and expenses
which are incurred by the other party in pursuing such rights and remedies
(including reasonable attorneys' fees), in an amount not to exceed $25,000.00.
18.4 RETURN OF DOCUMENTS ON TERMINATION. In the event
of a termination, (i) Buyer and Shareholder agree to return to Seller any and
all documents and copies and extracts therefrom that Buyer or Shareholder
obtained pursuant to this Agreement, and (ii) Seller agrees to return to Buyer
or Shareholder any and all documents and copies and extracts therefrom that
Seller obtained pursuant to this Agreement.
SECTION 19. GENERAL PROVISIONS.
19.1 DEFINITION OF KNOWLEDGE. As used in this
Agreement, (i) the term "knowledge" with respect to any natural person shall
mean such person's actual knowledge, without inquiry, and (ii) the term
"knowledge" with respect to any corporation shall mean the actual knowledge,
without inquiry, of such corporation's executive officers.
19.2 NOTICES. All notices, requests, demands and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received when
delivered against receipt or upon actual receipt of a facsimile or of registered
or certified mail, postage prepaid, return receipt requested, addressed as set
forth below:
(a) If to Buyer or Shareholder:
Mid-American Restaurants, Inc.
1650 Gladewood Drive
Alpharetta, Georgia 30202
Attention: President
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with a copy to:
Cashin, Morton & Mullins
Two Midtown Plaza, Suite 1900
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309-3214
Attention: D. Tully Hazell, Esq.
(404) 877-9217
(404) 870-1529 (fax)
(b) If to Seller:
DenAmerica Corp.
7373 N. Scottsdale Road
Suite D-120
Scottsdale, Arizona 85253
Attention: President
with a copy to:
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
Suite 1100
One East Camelback
Phoenix, Arizona 85012
Attention: Robert S. Kant, Esq.
(602) 263-2606
(602) 263-2900 (fax)
Any party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this paragraph for the giving of
notice.
19.3 PUBLIC ANNOUNCEMENTS. Any public announcement or
similar publicity with respect to this Agreement or the transactions
contemplated hereby will be issued, if at all, at such time and in such manner
as Seller and Buyer mutually agree upon. Notwithstanding the foregoing, prior to
the Closing, unless consented to by Seller in advance, each of the parties to
this Agreement shall, and shall cause their officers, directors, shareholder,
managers, employees, partners and affiliates to, keep this Agreement strictly
confidential and shall not make any disclosure of this Agreement to any person
except to the extent required to comply with the terms of this Agreement;
provided, however, that Seller may make any public disclosure that it believes
in its good faith to be required by applicable law or the regulations of the
Securities and Exchange Commission or the American Stock Exchange.
19.4 BINDING NATURE OF AGREEMENT; ASSIGNMENT. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns,
except that no party may assign or transfer its or his rights or
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obligations under this Agreement without the prior written consent of the other
parties hereto. Nothing in this Agreement is intended to confer any rights or
benefits to any third party.
19.5 ENTIRE AGREEMENT. This Agreement together with
the exhibits and schedules hereto contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.
19.6 CONTROLLING LAW. This Agreement and all
questions relating to its validity, interpretation, performance and enforcement,
shall be governed by and construed, interpreted and enforced in accordance with
the laws of the State of Arizona, notwithstanding any Arizona or other
conflict-of-law provisions to the contrary.
19.7 SCHEDULES AND EXHIBITS. All Schedules and
Exhibits referred to herein or attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.
19.8 INDULGENCES, NOT WAIVERS. Neither the failure
nor any delay on the part of a party to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy, power
or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
19.9 ATTORNEY'S FEES. The party prevailing in any
legal proceeding hereunder shall be entitled to recover from the other party or
parties all costs, expenses and attorney's fees incurred in connection with the
enforcement of its rights and remedies. For the purpose of this Section 19.9 the
"prevailing party" shall mean, in the case of the claimant, one who is
successful in obtaining substantially all of the relief sought, and in the case
of a defendant or respondent, one who is successful in denying substantially all
of the relief sought by a claimant.
19.10 COSTS AND EXPENSES. Except for sales taxes
incurred as a result of the transfer of the Purchased Assets to Buyer, which
shall be borne by Seller, and except as set forth in Section 18, each party
shall bear its own costs and expenses (including the fees and disbursements of
counsel and accountants) incurred in connection with the negotiation and
preparation of this Agreement and the Closing under this Agreement and all
matters incident thereto.
19.11 EXECUTION IN COUNTERPARTS. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. Any photographic or xerographic copy of this Agreement, with
all signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as of it were an executed counterpart of this
Agreement.
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19.12 PROVISIONS SEPARABLE. The provisions of this
Agreement are independent and separable from each other, and no provision shall
be affected or rendered invalid or unenforceable by virtue of the fact that for
any reason any other or others of them may be invalid or unenforceable in whole
or in part.
19.13 NUMBER OF DAYS. In computing the number of days
for purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and bank holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or bank holiday, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or bank holiday.
19.14 CONSTRUCTION. The parties hereto acknowledge
that each party was represented by legal counsel (or had the opportunity to be
represented by legal counsel) in connection with this Agreement and that each of
them and its counsel have reviewed and revised this Agreement, or have had an
opportunity to do so, and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or any exhibits or
schedules hereto or thereto.
[THE REMAINDER OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
BUYER:
MID-AMERICAN RESTAURANTS, INC.,
a Georgia corporation
By:__________________________________________
Its:_________________________________________
SHAREHOLDER:
_____________________________________________
Haig V. Antranikian
SELLER:
DENAMERICA CORP., a Georgia corporation
By:__________________________________________
Its:_________________________________________
17
<PAGE> 22
SCHEDULE "A"
RESTAURANTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
23 Ike's 403 Ike's
180 Mansfield Road 2996 W. Park Dr.
Shelby, Ohio Hunington, Indiana
30 Ike's 408 Ike's
R.D. 4 Box 163 SR 59 & 42 S
Willard, Ohio Brazil, Indiana
47 Ike's 453 Ike's
11 Koogle Road I-70 & Rt. 1.S.
Mansfield, Ohio Marshall, Illinois
57 Ike's 707 Ike's Diner
2228 Shawnee Road 283 Benedick Ave.
Lima, Ohio Norwalk, Ohio
76 Ike's 710 Ike's
325 S. Whitewoman St. 846 Coshocton Rd.
Coshocton, Ohio Mt. Vernon, Ohio
78 Ike's 1012 Jerry's
900 S. Vance Street 4710 E. National Rd.
Carey, Ohio Richmond, Indiana
79 Ike's 1018 Jerry's
100 E. McCauley Dr. 4832 Dixie Hwy
Uhrichsville, Ohio Louisville, Kentucky
90 Ike's 1024 Jerry's
308 N. Main St. 660 Interstate Dr.
Bellefontaine, Ohio Bowling Green, Kentucky
96 Ike's 1025 Jerry's
1137 Buck Road 5265 Athens Boonesboro Rd
Rossford, Ohio Lexington, Kentucky
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
1040 Jerry's
8408 Preston Hwy
Louisville, Kentucky
1044 Jerry's
240 N. Dixie Rd.
Radcliffe, Kentucky
1045 Jerry's
654 E. Dixie Ave.
Elizabethtown, Kentucky
1046 Jerry's
1415 Broadway
Clarksville, Indiana
1055 Jerry's
1309 W. Lexington Ave.
Winchester, Kentucky
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
SCHEDULE C.1
TRADEMARKS
FEDERAL REGISTRATION
REGISTRATION EXPIRATION
MARK NUMBER DATE
---- ------------ ------------
<S> <C> <C>
Jerry's 1,145,937 01-13-2001
J-Boy 0,811,443 07-19-2006
Jerry's Drive-In 0,660,436 04-08-1998
Jerry's Restaurant 0,743,137 01-01-2003
Ike's Great American Restaurants Not registered
Ike's Great American Diner Not registered
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
SCHEDULE C.2
JERRY'S MARKS
FEDERAL REGISTRATION
REGISTRATION EXPIRATION
MARK NUMBER DATE
---- ------------ ------------
<S> <C> <C>
Jerry's 1,145,937 01-13-2001
J-Boy 0,811,443 07-19-2006
Jerry's Drive-In 0,660,436 04-08-1998
Jerry's Restaurant 0,743,137 01-01-2003
</TABLE>
<PAGE> 1
EXHIBIT 21.2
SUBSIDIARIES OF DENAMERICA CORP.
STATE OF INCORPORATION
SUBSIDIARY OR ORGANIZATION
- ----------------------------------- ----------------------
Phoenix Foods, Inc. Florida
Denwest Joint Venture (partnership) Florida
Denwest II Joint Venture (partnership) Florida
Densouth Restaurants II Joint Venture
(partnership) Florida
Black-eyed Pea U.S.A., Inc.(1) Texas
- --------
(1)Black-eyed Pea U.S.A., Inc. has complete or majority ownership of eight
subsidiaries that operate in the United States.
