FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: February 28, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission file number: 0-27068
BAB Holdings, Inc.
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(Name of small business issuer in its charter)
Illinois 36-3857339
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8501 West Higgins Road, Suite 320, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (773) 380-6100
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(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 8,521,706 shares of Common
Stock, as of April 9, 1999.
TABLE OF CONTENTS
PART I
Item 1. Financial Statements ...................................
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation ..................
PART II
Item 1. Legal Proceedings.......................................
Item 2. Changes in Securities...................................
Item 3. Defaults Upon Senior Securities.........................
Item 4. Submission of Matters to a Vote of Security Holders.....
Item 5. Other Information.......................................
Item 6. Exhibits and Reports on Form 8-K........................
SIGNATURE ........................................................
PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BAB Holdings, Inc.
Condensed Consolidated Balance Sheet
February 28, 1999
(Unaudited)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents, including
restricted cash of $134,102 $ 303,500
Other current assets 3,230,759
------------
Total current assets 3,534,259
Property and equipment, net of
accumulated depreciation of $1,963,063 4,527,419
Notes receivable 1,075,473
Goodwill, net of accumulated amortization of $182,033 3,794,288
Franchise contract rights, net of accumulated
amortization of $189,959 1,894,006
Other assets and intangible assets, net of
accumulated amortization of $356,356 839,233
------------
$ 15,664,678
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,056,818
Deferred franchise fee revenue 260,000
Current portion of long-term debt 1,893,961
Other current liabilities 499,836
------------
Total current liabilities 4,710,615
Noncurrent liabilities:
Long-term debt, net of portion included
in current liabilities 987,332
Other noncurrent liabilities 472,185
-----------
Total noncurrent liabilities 1,459,517
-----------
Stockholders' equity:
Common stock 11,570,452
Additional paid-in capital 1,452,402
Preferred stock 1,594,430
Treasury stock (36,067)
Accumulated deficit (5,086,671)
------------
Total stockholders' equity 9,494,546
------------
$ 15,664,678
============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
BAB Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
THREE MONTHS ENDED
FEBRUARY 28,
1999 1998
--------------------------
REVENUES
<S> <C> <C>
Net sales by Company-owned stores $ 2,086,087 $ 2,427,150
Royalty fees from franchised stores 815,080 787,527
Licensing fees and other income 237,273 303,163
Franchise and area development fees 130,500 212,000
-------------------------
3,268,940 3,729,840
OPERATING COSTS AND EXPENSES
Food, beverage, and paper costs 704,807 820,614
Store payroll and other operating expenses 1,196,353 1,513,552
Selling, general, and administrative expenses 1,433,263 1,501,148
--------------------------
3,334,423 3,835,314
--------------------------
Loss before interest ( 65,483) (105,474)
Interest expense ( 39,022) ( 46,581)
Interest income 31,099 19,096
--------------------------
Net loss (73,406) (132,959)
Preferred stock divideds accumulated (45,699) ( 50,696)
--------------------------
Net loss attributable to
common shareholders $ (119,105) $ (183,655)
==========================
Basic and diluted loss
per common share $ (0.01) $ (0.02)
==========================
Average number of shares outstanding-
basic and diluted 8,365,262 7,723,610
==========================
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
BAB Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
THREE MONTHS ENDED
FEBRUARY 28,
1999 1998
-----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash used for operating activities $ (248,293) $ (369,970)
INVESTING ACTIVITIES
Purchases of property and equipment (184,745) (36,438)
Note repayments 4,647 122,727
Other 34,901 4,171
-----------------------
Net cash (used for) provided by
investing activities (145,197) 90,460
FINANCING ACTIVITIES
Borrowings 257,000 337,500
Repayment of long-term debt (260,172) (9,598)
------------------------
Net cash (used for) provided by
financing activities (3,172) 327,902
------------------------
Net (decrease)increase in
cash and cash equivalents (396,662) 48,392
Cash and cash equivalents at beginning of period 700,162 389,896
----------------------
Cash and cash equivalents at end of period $ 303,500 $ 438,288
======================
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
BAB Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
represent the financial activity of BAB Holdings, Inc. (the "Company" or
"Holdings"), an Illinois corporation incorporated on November 25, 1992, and
its four wholly-owned subsidiaries, BAB Operations, Inc. ("Operations"), BAB
Systems, Inc. ("Systems"), Brewster's Franchise Corporation ("BFC") and My
Favorite Muffin Too, Inc. ("MFM"). Systems was incorporated on December 2,
1992, and was primarily established to franchise "Big Apple Bagels" specialty
bagel retail stores. Operations was formed on August 30, 1995, primarily to
operate Company-owned stores, including one which currently serves as the
franchise training facility. BFC was established on February 15, 1996, to
franchise "Brewster's Coffee" concept retail coffee stores. MFM was acquired
on May 13, 1997. MFM franchises and operates "My Favorite Muffin" specialty
muffin retail stores.
The accompanying condensed consolidated financial statements are unaudited.
These financial statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statement prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. In the opinion of the
Company's management, the condensed consolidated financial statements for the
unaudited interim periods presented include all adjustments necessary to
fairly present the results of such interim periods and the financial position
as of the end of said period. These adjustments were of a normal recurring
nature and did not have a material impact on the financial statements
presented.
2. Stores Open
Stores which have been opened at February 28, 1999 are as follows:
Stores opened:
Company-owned 27
Franchisee-owned 193
Licensed 73
---
Total 293
===
3. Acquisitions and Dipositions
In January 1998, the Company sold one store located in Lincoln, Nebraska to a
franchisee in exchange for $30,000 and a $177,000 note receivable which bears
interest at a rate of 8.5% per annum. Principal and interest payments are
payable monthly until March 1, 2003 when the remaining unpaid principal
balance is due in full.
On February 1, 1999 the Company acquired certain assets of a group of related
entities doing business as Jacobs Bros. Bagels (Jacobs Bros.) which include
eight retail bagel stores and a central commissary facility in exchange for
$950,000 in cash and warrants for the purchase of an aggregate of 500,000
shares of common stock at an exercise price of $1.25 per share as to 275,000
shares and $1.50 per share as to 225,000 shares. These warrants are first
exercisable on February 1, 2000 and expire on January 31, 2006. On February
26, 1999 the Company issued a total of 160,000 shares of common stock to the
investment bankers who provided services in connection with this acquisition.
Further, the Company entered into noncompetition agreements with two former
principals of Jacobs Bros. totaling $210,000 to be paid over varying periods.
As the cash portion of the purchase price was financed pursuant to a loan
commitment, this has been presented as a non-cash transaction. See Note 6.
4. Preferred Stock - Series A Convertible Preferred Stock
In April 1997, the Company completed the sale of 87,710 shares of $25.00
Series A Convertible Preferred Stock (the "Preferred Stock") in a private
placement to institutional investors. The Preferred Stock carries an 8% annual
dividend payable in cash or, at the option of the Company, in shares of common
stock. However, during a Conversion Suspension Period (defined below),
dividends accrue at a rate of 15% per annum. Dividends are payable only when
shares are converted to shares of common stock. The holders have no voting
rights and have a liquidation preference of $25.00, plus accrued dividends,
out of assets of the Company available for distribution to shareholders.
Commencing August 1, 1997 through July 31, 1999, which date shall be extended
by the number of days in all Conversion Suspension Periods, the shareholders
may elect to convert each share of Preferred Stock into that number of shares
of common stock determined by dividing the $25 purchase price by the lesser of
$5.64 or 85% of the average closing bid price of the common stock for the 30
trading days immediately preceding the conversion date. In addition, if the
Company engages in an underwritten public offering, for any holder who has
given notice of participation in such offering, the conversion rate shall be
85% of the public offering price, if less than the amount calculated in the
immediately preceding sentence.
A Conversion Suspension Period takes effect if the closing bid price of the
common stock is less than $2.325 for 30 consecutive trading days. The
Conversion Suspension Period continues until the first trading day thereafter
that the closing bid price for the common stock has exceeded $2.325 for 30
consecutive trading days; provided, however, that a Conversion Suspension
Period shall not continue for more than sixty (60) days in any period of 365
days. The Company is not required to recognize or accept any conversion of
Preferred Stock during a Conversion Suspension Period. During any Conversion
Suspension Period, the Company, at its option, may redeem any or all of the
Preferred Stock by payment to the holders of $28.75 per share, plus all
accrued and unpaid dividends. The Company entered into a Conversion
Suspension Period during January 1999. Preferred dividends accumulated
during the three months ended February 28, 1999 and 1998 were $45,699 and
$50,696, respectively.
During fiscal 1998, holders elected to convert 18,710 shares of Preferred
Stock plus dividends accrued thereon into 673,376 shares of common stock. No
shares of Preferred Stock were converted during the three months ended
February 28, 1999 and 60,000 share of the Preferred Stock remain issued and
outstanding.
5. Line of Credit Agreement
In December 1998, the Company repaid $127,465 on a line of credit facility
which expired on December 31, 1998 and replaced it with a $1.75 million line-
of-credit facility which expires December 31, 1999 (the Line). Maximum
borrowing under the Line is limited to 75% of accounts receivable under 90
days and 40% of the original cost of equipment, furniture and fixtures.
Interest is payable monthly at prime plus 1% (8.75% as of February 28, 1999),
with principal due upon maturity on December 31, 1999. The Line is secured by
substantially all of the assets of the Company and requires, among other
things, that the Company maintain minimum net worth of $8 million and a
compensating cash balance of $250,000. At February 28, 1999, the Company had
borrowed $1,750,000 on the Line, all of which is classified as a current
liability. The Company is currently in the process of replacing the Line with
a long-term credit facility.
6. Notes Payable
In January 1999, the Company received a commitment from a finance
company for secured loans totaling $1,350,000 to be used to acquire the Jacobs
Bros. assets and refurbish and convert the units acquired to Big Apple
Bagels concept stores. In February 1999, the Company borrowed $1,100,000
pursuant to this commitment. Principal and interest are payable
monthly over a period of seven years and are secured by the assets acquired
and all improvements made thereon. The loans bear interest at an annual
percentage rate of 11.3 percent.
7. Loss per Share
The following tables sets forth the computation of basic and diluted loss per
share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FEBRUARY 28,
1999 1998
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<S> <C> <C>
Numerator:
Net loss $ (73,406) $(132,952)
Preferred stock dividend accumulated (45,699) (50,696)
---------- ----------
Numerator for basic and diluted loss
per share- loss attributable to common
shareholders $ (119,105) $(183,655)
========== ==========
Denominator:
Denominator for basic and diluted
loss per share--weighted
average shares 8,365,262 7,723,610
========== ==========
Basic and diluted loss per share $ (0.01) $ (0.02)
========== ==========
</TABLE>
Options to purchase 435,240 shares of common stock at varying prices are
outstanding at February 28, 1999 under the Company's 1995 Long-Term Incentive
and Stock Option Plan (the Incentive Plan) and the 1995 Outside Directors
Stock Option Plan (the Directors' Plan). Also outstanding during the period
ended February 28, 1999 was a warrant sold in connection with the Company's
initial public offering to the underwriter to purchase 255,000 shares of
common stock at $3.20 per share. Additionally, in connection with various
acquisitions, the Company issued options to purchase 1,054,500 shares of
common stock issuable at varying exercise prices ranging from $1.25 per share
to $6.17 per share. Further, warrants issued to each holder of Preferred
Stock and the placement agent of the Preferred Stock were outstanding to
purchase 175,320 and 13,315 shares of common stock at $2.35 and $3.29 per
share, respectively. Finally, shares of common stock are issuable pursuant
to the terms of the Company's convertible Preferred Stock (see Note 4).
The exercise of outstanding options and warrants and the conversion of
convertible securities outstanding during the three months ended February 28,
1999 and 1998 is not assumed as the result is antidilutive to the reported
loss per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations, including statements regarding
the development of the Company's business, the markets for the Company's
products, anticipated capital expenditures, and the effects of completed and
proposed acquisitions, and other statements contained herein regarding matters
that are not historical facts, are forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995). Because such
statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Certain risks and uncertainties are outside the control of the Company and its
management including its ability to attract new franchisees; the continued
success of current franchisees; the effects of competition on franchisee and
Company-owned store results; consumer acceptance of the Company's products in
new and existing markets; fluctuation in development and operating costs;
brand awareness; availability and terms of capital; adverse publicity;
acceptance of new product offerings; availability of locations and terms of
sites for store development; food, labor and employee benefit costs; changes
in government regulation (including increases in the minimum wage law);
regional economic and weather conditions; the hiring, training, and retention
of skilled corporate and restaurant management; and the integration and
assimilation of acquired concepts. Some of these risks and uncertainties are
wholly outside of the control of the Company. Accordingly, readers are
cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly release the results of any revision to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
General:
From its inception in November of 1992, the Company has grown to 27 Company-
owned stores and 266 franchised and licensed units as of February 28, 1999.
Systemwide revenues for the three months ended February 28, 1999 were $19.9
million, a $291,000 increase from the year-ago period.
The Company continues to derive a substantial portion of its revenue from
sales generated at its Company-owned stores - Company-owned store sales
accounted for 64% of total revenues during the current year quarter. The
eight units acquired in February 1999 which were formerly owned by
Jacobs Bros. are anticipated to contribute approximately $3.3 million in
additional revenues in fiscal 1999. Ongoing royalty revenues and franchise
fees recognized upon the opening of a franchised unit also represent a
significant source of revenue to the Company, totaling 29% of total revenues
in the current year quarter. Management anticipates that the current
infrastructure is adequate to support the growth in the number of franchised
units which are anticipated to open during fiscal 1999. Further, additional
revenues generated from the sale of international master franchise agreements
are anticipated in fiscal 1999. In the first quarter of 1999, four
franchised units opened in Lima, Peru and are now contributing to ongoing
franchise fees as a result of an international master franchise agreement
sold in the prior fiscal year. Finally, licensing fees continue to be a
source of increasing revenues to the Company as it continually seeks to
develop additional methods of distribution for its brands. Management
anticipates that the commissary which was recently acquired in the Jacobs
Bros. acquisition will provide opportunities for increased profitability on
product sold via non-traditional sources of distribution.
Product sales are also generated through the Company's Web site. Web site
customers can order My Favorite Muffin gift baskets; select offerings of
Brewster's Coffee and branded merchandise; access investor, franchise and
financial information; search for store locations and send comments directly
to the corporate offices.
During the first quarter of 1999 the Company began test marketing a new line
of artisan breads and a complete line of sandwiches, soups and salads. This
test is now being expanded from 3 locations to additional company-owned units
and franchise units. If successful, this program will be rolled out in mid to
late 1999.
During the fourth quarter of fiscal 1997, management identified certain under-
performing stores which were operating at a loss and which, based on the
estimated future cash flows, were considered to be impaired. Four of the
seven stores which were considered to be impaired were located in the Southern
California market. In accordance with the Financial Accounting Standards
Board Standard No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" and the Emerging Issues Task
Force Issue No. 94-3, "Liability Recognition of Costs to Exit an Activity",
management recorded in November 1997 a provision for impairment of assets and
store closures which totaled approximately $1,837,000. One store was closed
during fiscal 1997 and the remaining units were closed during the first
quarter of 1998. The six stores incurred operating losses of approximately
$90,000 during the three months ended February 28, 1998. As of February 1999
management has terminated its obligations under all the non-cancelable lease
obligations and paid all lease obligations in full.
Results of Operations
Three Months Ended February 28, 1999 versus Three Months Ended February 28,
1998.
Total revenues decreased 12% to $3,269,000 in the first quarter 1999 from
$3,730,000 in the prior year quarter. This decrease is substantially
explained by the difference in the number of Company stores in operation in
each of the periods. In the three months ended February 28, 1998 there were
27 stores in operation for the full three months and six additional stores
open for varying portions of the three month period. For the three months
ended February 28, 1999 there were 18 stores owned and operated for 2 months
and 27 stores owned and operated for one month. In addition, severe weather
in the Midwest during the month of January 1999 greatly decreased sales in
both Company owned and franchise stores, which resulted in both lower
company store revenue which resulted in a lower royalties than would
otherwise have been earned.
There was a 4% increase in royalty revenues, which were $28,000 greater than
that generated in the year-ago quarter. This increase is attributed to the
overall increase in the number of franchised units open during the current
year period. Licensing fees and other income in total decreased $66,000 to
$237,000 from the year-ago period. Approximately $20,000 of the decrease can
be attributed to the sale of a Company-owned store that occurred in the three
months ended February 28, 1998 with no similar transaction in the current year
period. An additional $38,000 of the decrease was due to the sale of
promotional material which was produced in-house and shipped during the first
quarter of 1998 with no similar transaction in the current period. Finally,
franchise and area development fee revenue decreased 39% to $130,500 from the
year-ago period.
Costs associated with Company-owned store operations as a percentage of sales
decreased 5% in the first quarter 1999 versus 1998. This improvement resulted
in Company-owned store operations contributing an additional $92,000 to
profitability in the 1999 quarter despite the 14% decrease in associated
revenues. Management attributes the improved profitability to the 1998
closure of under-performing units and improvements in training and management
techniques to improve store-related costs by over 5%.
Selling, general and administrative expenses remained relatively flat-
$1,149,000 compared to $1,185,000 in the year ago quarter. Management
anticipates that the current infrastructure will continue to be able to
support increased growth in franchised and licensed operations with moderate
additions in field personnel and other support services.
Loss from operations was $65,000 in the first quarter of fiscal 1999 versus
a loss of $105,000 generated in the prior year period. Interest expense
decreased slightly to $39,000 in the three months ended February 28, 1999.
This was due to a combination of a lower outstanding balance during the 1999
period and also lower interest rates during the 1999 quarter. Interest income
increased 63% to $31,000 from $19,000 in the 1998 quarter.
Net loss was $73,000 in the quarter ended February 28, 1999 versus a loss of
$133,000 in the year-ago quarter. Dividends on the Preferred Stock of $46,000
were accumulated during the current year period versus $51,000 in the prior
year period.
Net loss per share for the quarter ended February 28, 1999 was $0.01 versus a
net loss per share for the year-ago quarter of $0.02 on both a basic and
diluted basis. Average shares outstanding increased due to the conversion
of 17,710 shares of Preferred Stock to 640,704 shares of Common Stock since
February 28, 1998.
Liquidity and Capital Resources
The net cash used by operating activities totaled $248,000 during the first
quarter of fiscal 1999. Cash used represents the net loss, adjusted for
depreciation and amortization of $292,000, and is offset principally by an
increase in accounts receivable of $207,000, an increase in prepaid and other
current assets of $135,000 and a decrease in deferred franchise fee revenue
of $101,000. The net cash used in operating activities in the year-ago
quarter totaled $370,000.
Investing activities used $145,000 during the three months ended February
28, 1999, and consisted primarily of the purchase of property and equipment
used to refurbish and convert units acquired from Jacobs Bros.
Cash used in financing activities totaled $3,000 during the three months
ended February 28, 1999 and was provided by borrowings under the line of
credit offset by the repayment of long-term debt. For the three months ended
February 28, 1998 cash provided by financing activities was $328,000. This
consisted primarily of borrowings on the Company's line of credit which
expired December 31, 1998.
In January 1999, the Company obtained loan commitments totaling $1,350,000
from a finance company whereby the Company could borrow $950,000 to purchase
certain assets of Jacobs Bros. and up to $400,000 to purchase equipment and
fund remodeling required for the units acquired in the purchase. In February
1999, the Company borrowed $1,100,000 pursuant to these commitments.
At February 28, 1999, the Company had borrowed $1,750,000 on its new credit
facility which is due on December 31, 1999. This outstanding balance is
classified as a current liability. Management is currently in the process of
seeking long-term financing to replace this credit facility.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs written to
identify the applicable year with two digits rather than four. As
written, these programs may identify the year "00" as 1900 rather than
2000, which could result in system miscalculations or systems failure
leading to potentially substantial business disruptions.
The Year 2000 problem could affect computers, software and other
equipment used, operated or maintained by the Company. Accordingly, the
Company has adopted a Year 2000 plan which consists of identifying all
of its internal computer programs, systems and hardware and contacting
its vendors to obtain assurance that each product is Year 2000-
compliant. During this process, one exception was identified in the
Company's point of sale hardware and software for certain restaurant
units. The Company expects to incur capital costs totaling
approximately $10,000 to purchase Year 2000-compliant hardware and
software for those units. The Company presently believes that all of
its information technology systems will be Year 2000 compliant in a
timely manner. Costs related to the Year 2000, other than the cost
related to the point of sale system, are not expected to be material.
In addition, the Company is currently in the process of identifying all
significant third party vendors, including the Company's landlords,
equipment vendors, service providers, banks and utility companies and
assessing the impact on the Company if those vendors are not Year 2000-
compliant. To date, the Company is not aware of any third party vendors
whose malfunctions would materially disrupt the Company's business.
However, third party compliance efforts are outside the Company's
control. To the extent that the Company determines that a significant
vendor is not likely to be Year 2000 compliant, the Company intends to
develop contingency plans which include obtaining alternative sources
for any product or service material to the business. There can be no
assurance that all of the Company's material third party vendors will be
Year 2000 compliant or that the Company will successfully develop and
implement satisfactory contingency plans on a timely basis. The
occurrence of any such event could materially impact the financial
condition or results of operations of the Company.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On February 1, 1999 the Company issued warrants for purchase of an
aggregate of 500,000 shares of the Company's Common Stock in connection
with the acquisition of certain assets of Jacobs Bros. These warrants
are exercisable at an exercise price of $1.25 per share as to 275,000
shares and $1.50 per share as to 225,000 shares commencing February 1,
2000 and ending on January 31, 2006. The warrants were offered and sold
without registration under the Act in reliance upon Section 4(2) of the
Act.
On February 26, 1999 the Company issued a total of 160,000 shares of
Common Stock in connection with services rendered in the Jacobs Bros.
acquisition, including 65,000 shares which may be deemed to be
beneficially owned by David Epstein, a member of the Board of Directors
of the Company. Such securities were offered and sold without
registration under the Act in reliance upon Section 4(2) of the Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the first quarter of the fiscal year ending November 30, 1999, no
matter was submitted to a vote of security holders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
EXHIBITS
The following exhibits are filed herewith.
Exhibit No. Description of Exhibit
- ----------- -------------------------------------------------------------
[i] 2.1 Asset Purchase Agreement dated February 2, 1996
between the Company, Brewster's Coffee Company, Inc.
and Peter D. Grumhaus
[ii] 2.2a Asset Purchase Agreement by and among BAB Systems,
Inc., Bagels Unlimited, Inc.("BUI"), and Donald Nelson
and Mary Ann Varichak dated May 1, 1996
[ii] 2.2b Non-Competition Agreement by and among the Company and
Donald Nelson and Mary Ann Varichak dated May 1, 1996
[ii] 2.2c Stock Option Agreement between the Company and BUI
dated May 1, 1996
[ii] 2.2d Registration Rights Agreement between the Company
and BUI dated May 1, 1996
[iii] 2.3a Asset Purchase Agreement by and between the Company
and Strathmore Bagels Franchise
Corp. ("Strathmore") dated May 21, 1996
[iii] 2.3b Stock Option Agreement dated May 21, 1996 between
the Company and Strathmore
[iii] 2.3c Registration Rights Agreement dated May 21, 1996
between the Company and Strathmore
[iii] 2.3d Non-Competition Agreement dated May 21, 1996 among
the Company, Strathmore, Jack Freedman and Glen Steuerman
[iii] 2.3e Memorandum of Understanding Regarding Form of
License Agreement effective November 30, 1995,
between Strathmore and Host International, Inc.
[iii] 2.3f Consent to Assignment between Strathmore and Host
International, Inc., dated March 13, 1996,
as amended May 21, 1996
[iv] 2.4a Acquisition Agreement dated May 1, 1997 by and among
BAB Holdings, Inc., BAB Acquisition Corp., My
Favorite Muffin Too, Inc., Muffin Holdings of
Pennsylvania, a limited partnership, Ruth Stern,
Owen Stern, and Ilona Stern
[iv] 2.4b Registration Rights Agreement dated as of May 1,
1997 between BAB Holdings, Inc., and
Owen Stern, Ruth Stern, Ilona Stern and Pierce W.
Hance.
[v] 3.1a Amended Articles of Incorporation of the Company
[vii] 3.1b Amended and Restated Statement of Designation,
Number, Voting Powers, Preferences and Rights of
Series A Convertible Preferred Stock as filed with
the Secretary of State of Illinois on March 26, 1997
[v] 3.2 Bylaws of the Company, as amended
[v] 4.1 Form of Stock Certificate evidencing Common Stock,
no par value
[v] 4.2 Subscription Agreement with the Aladdin
International, Inc. dated August 31, 1995
[v] 4.3 Amended Form of Warrant Issued to Aladdin
International, Inc.
[v] 10.1 Form of Franchise Agreement
[v] 10.2 Form of Franchise Agreement-Satellite
[v] 10.3 Form of Franchise Agreement-Wholesale
[v] 10.4 Form of Area Development Agreement
[v] 10.5 Confidentiality and Non-Competition Agreement with
Franchisees
[v] 10.6 Form of Confidentiality Agreement with Employees
[v] 10.7 Licensing Agreement dated November 20, 1992 between
the Company and Big Apple Bagels, Inc.
[v] 10.8 Assignment of Royalty Mark & Trademark to the
Company by Big Apple Bagels, Inc. dated November 20, 1992
[v] 10.9 Agreement dated September 14, 1995 among the
Company, Big Apple Bagels, Inc. and Paul C. Stolzer
[i] 10.10 Consulting agreement dated February 16, 1996 between
Paul C. Stolzer and BAB Holdings, Inc.
[v] 10.11 Leases dated November 2, 1994 and February 14, 1995
for principal executive office
[v] 10.12 1995 Long-Term Incentive and Stock Option Plan
[v] 10.13 1995 Outside Directors Stock Option Plan
[v] 10.14 Settlement Agreement with Timothy Williams d/b/a Big
Apple Deli and Stipulated Dismissal with Prejudice
[i] 10.15 Program Agreement dated February 10, 1997 between
BAB Systems, Inc. a wholly owned subsidiary of
the Company, and Franchise Mortgage Acceptance
Company LLC
[iv] 10.16 Employment agreement between the Company and Owen
Stern dated May 8, 1997
10.17 Loan document-CIB line of credit dated 12/31/98.
10.18 Loan document-CIB line of credit date 02/01/99.
27.1 Financial data schedule
[i] Incorporated by reference to the Company's Report on Form 10-KSB for
the fiscal year ended November 30, 1995
[ii] Incorporated by reference to the Company's Report on Form 8-K dated
May 1, 1996
[iii] Incorporated by reference to the Company's Report on Form 8-K
dated May 21, 1996
[iv] Incorporated by reference to the Company's Report on Form 8-K dated
May 13, 1997
[v] Incorporated by reference to the Company's Registration Statement on
Form SB-2, effective November 27, 1995 (Commission File No. 33-98060C)
[vi] Incorporated by reference to the Company's Report on Form 10-KSB for
the fiscal year ended November 30, 1996
[vii] Incorporated by reference to the Company's Report on Form 10-QSB
for the quarter ended February 28, 1997
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BAB HOLDINGS, INC.
Dated: April 14, 1999 By: /s/ JOSEPH M. MERKIN
--------------------
Joseph M. Merkin
Chief Financial Officer
(Principal financial and
accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF BAB HOLDINGS, INC. FOR THE
THREE MONTH PERIOD ENDED FEBRUARY 28, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> FEB-28-1999
<CASH> 303,500
<SECURITIES> 0
<RECEIVABLES> 2,002,467
<ALLOWANCES> (264,069)
<INVENTORY> 320,703
<CURRENT-ASSETS> 3,534,259
<PP&E> 6,490,482
<DEPRECIATION> (1,963,063)
<TOTAL-ASSETS> 15,664,678
<CURRENT-LIABILITIES> 4,710,615
<BONDS> 987,332
1,594,430
0
<COMMON> 11,570,452
<OTHER-SE> (3,670,336)
<TOTAL-LIABILITY-AND-EQUITY> 15,664,678
<SALES> 2,086,087
<TOTAL-REVENUES> 3,268,940
<CGS> 704,807
<TOTAL-COSTS> 3,334,423
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,022
<INCOME-PRETAX> (73,406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (73,406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,105)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
LOAN AGREEMENT
Borrower: BAB Holdings, Inc.
8501 W. Higgins Road, Suite 320
Chicago, Illinois 60631
Lender: CIB Bank
900 East Higgins Road
Elk Grove Village, IL 60007
THIS LOAN AGREEMENT between BAB Holdings, Inc. ("Borrower") and CIB BANK
("Lender") is made and executed on the following terms and conditions.
Borrower has received prior commercial loans from Lender or has applied to
Lender for a commercial loan or loans and other financial accommodations,
including those which may be described on any exhibit or schedule attached to
this Agreement. All such loans and financial accommodations, together with
all future loans and financial accommodations from Lender to Borrower, are
referred to in the Agreement individually as the "Loan" and collectively as
the "Loans." Borrower understands and agrees that: (a) in granting, renewing,
or extending any Loan, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in this Agreement; (b) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to
Lender's sole judgment and discretion; and (c) all such Loans shall be and
shall remain subject to the following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of December 31, 1998, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms In the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time together with all
exhibits and schedules attached to this Loan Agreement from time to time.
Account. The word "Account" means a trade account, account receivable, or
other right to payment for goods sold or services rendered owing to Borrower
(or to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity
obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan funds under this
Agreement.
Borrower. The word "Borrower" means BAB Holdings, Inc. The word "Borrower"
also Includes, as applicable, all subsidiaries and affiliates of Borrower as
provided below in the paragraph titled "Subsidiaries and Affiliates."
Borrowing Base. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $1,750,000.00; or (b) the sum of (i)
75.000% of the aggregate amount of Eligible Accounts, plus (ii) 40.000% of
the aggregate amount of Eligible Equipment.
Business Day. The words "Business Day" mean a day on which commercial banks
are open for business in the State of Illinois.
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and income, plus depreciation an amortization.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever whether created by
law, contract, or otherwise. The word "Collateral" Includes without
limitation all collateral described below in the section titled "COLLATERAL."
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
Eligible Accounts. The words "Eligible Accounts" mean, at any time, all of
Borrower's Accounts which contain selling terms and condition acceptable to
Lender. The net amount of any Eligible Account against which Borrower may
borrow shall exclude all returns, discounts, credit and offsets of any
nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do
not include:
(a) Accounts with respect to which the Account Debtor Is an officer, an
employee or agent of Borrower.
(b) Accounts with respect to which the Account Debtor is a subsidiary of, or
affiliated with or related to Borrower or its shareholders, officers or
directors.
(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the Account
Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a resident of
the United States, except to the extent such Accounts are supported by
insurance, bonds or other assurances satisfactory to Lender.
(e) Accounts with respect to which Borrower is or may become liable to the
Account Debtor for goods sold or services rendered by the Account Debtor to
Borrower.
(f) Accounts which are subject to dispute, counterclaim, or setoff.
(g) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account Debtor.
(h) Accounts with respect to which Lender, in its sole discretion, deems the
creditworthiness or financial condition of the Account Debtor be
unsatisfactory.
(i) Accounts of any Account Debtor who has filed or has had filed against it
a petition in bankruptcy or an application for relief under any provision of
any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who
has had appointed a trustee, custodian, or receiver for the assets of such
Account Debtor; or who has made an assignment for the benefit of creditors or
has become insolvent or fails general to pay its debts (including its
payrolls) as such debts become due.
(j) Accounts with respect to which the Account Debtor is the United States
government or any department or agency of the United States.
(k) Accounts which have not been paid in full within 90 days from the invoice
date.
Eligible Equipment. The words "Eligible Equipment" mean, at any time, all of
Borrower's Equipment as defined below except:
(a) Equipment which is not owned by Borrower free and clear of all security
interests, liens, encumbrances, and claims of third parties.
(b) Equipment which Lender, in its sole discretion, deems to be obsolete,
unsalable, damaged, defective, or unfit for operation.
(c) Any equipment financed by others.
Equipment. The word "Equipment" means all of Borrower's goods used or bought
for use primarily in Borrower's business and which are not included in
inventory, whether now or hereafter existing.
ERISA. The word 'ERISA" means the Employee Retirement income Security Act of
1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
Expiration Date. The words "Expiration Date" mean the date of termination of
Lender's commitment to lend under this Agreement.
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security interest in any Collateral
for the indebtedness, including without limitation all Borrowers granting
such a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any indebtedness.
Indebtedness. The word "indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor,
surety, or otherwise; whether recovery upon such indebtedness may be or
hereafter may become barred by any statute of limitations; and whether such
indebtedness may be or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means CIB BANK, its successors and assigns.
Line of Credit. The words "Line of Credit" mean the credit facility
described in the section titled "LINE OF CREDIT" below.
Liquid Assets. The words "Liquid Assets" mean Borrower's cash on hand plus
Borrower's readily marketable securities.
Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced, including
without limitation those loans and financial accommodations described herein
or described on any exhibit or schedule attached to this Agreement from time
to time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (c) liens of material men, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (d) purchase money liens
or purchase money security interests upon or in any property acquired or held
by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraph of this Agreement titled "Indebtedness and Liens"; (e) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of Borrower's
assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement to
indebtedness owed by Borrower to Lender in form and substance acceptable to
Lender.
Net Worth. The words "Net Worth" mean Borrower's total assets excluding all
intangible assets (i.e., goodwill, trademarks, patents, copyrights,
organizational expenses, and similar intangible items, but including
leaseholds and leasehold improvements) less total Debt.
Working Capital. The words "Working Capital" mean Borrower's current assets,
excluding prepaid expenses, less Borrower's current liabilities.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the
aggregate amount of such Advances outstanding at any time does not exceed the
Borrowing Base. Within the foregoing limits, Borrower may borrow, partially
or wholly prepay, and reborrow under this Agreement as follows.
Conditions Precedent to Each Advance. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject to
the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(a) Lender shall have received evidence that this Agreement and all Related
Documents have been duly authorized, executed, and delivered by Borrower to
Lender.
(b) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Lender may request.
(c) The security interests in the Collateral shall have been duly authorized,
created, and perfected with first lien priority and shall be in full force
and effect.
(d) All guaranties required by Lender for the Line of Credit shall have been
executed by each Guarantor, delivered to Lender, and be in full force and
effect.
(e) Lender, at its option and for its sole benefit, shall have conducted an
audit of Borrower's Accounts, Equipment, books, records, and operations, and
Lender shall be satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due and
payable.
(g) There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement, and Borrower shall have
delivered to Lender the compliance certificate called for in the paragraph
below titled "Compliance Certificate."
Making Loan Advances. Advances under the Line of Credit may be requested
orally by authorized persons. Lender may, but need not, require that all oral
requests be confirmed in writing. Each Advance shall be conclusively deemed
to have been made at the request of and for the benefit of Borrower (a) when
credited to any deposit account of Borrower maintained with Lender or (b)
when advanced in accordance with the instructions of an authorized person.
Lender, at its option, may set a cutoff time, after which all requests for
Advances will be treated as having been requested on the next succeeding
Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal amount of
the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount of
all Advances then outstanding and all accrued unpaid interest, together with
all other applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in which
Lender shall make entries for each Advance and such other debits and credits
as shall be appropriate in connection with the credit facility. Lender shall
provide Borrower with periodic statements of Borrower's account, which
statements shall be considered to be correct and conclusively binding on
Borrower unless Borrower notifies Lender to the contrary within thirty (30)
days after Borrower's receipt of any such statement which Borrower deems to
be incorrect.
COLLATERAL. To secure payment of the Line of Credit and performance of all
other Loans, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such
property and assets as Lender may require (the "Collateral"). Lender's
Security interests in the Collateral shall be continuing liens and shall
include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral,
Borrower agrees and represents and warrants to Lender:
Perfection of Security Interests. Borrower agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's Security Interests in the Collateral. Upon
request of Lender, Borrower will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Borrower will note
Lender's interest upon any and all chattel paper if not delivered the Lender
for possession by Lender. Contemporaneous with the execution of this
Agreement, Borrower will execute one or more UCC financing statements and any
similar statements as may be required by applicable law, and will file such
financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue any Security Interest. Lender may at any time, and
without further authorization from Borrower, file a carbon, photograph,
facsimile, or other reproduction of any financing statement for use as a
financing statement Borrower will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of Lender's
Security Interest in the Collateral Borrower promptly will notify Lender of
any change in Borrower's name including any change to the assumed business
names of Borrower. Borrower also promptly will notify Lender of any change in
Borrower's Social Security Number or Employer identification Number. Borrower
further agrees to notify Lender in writing prior to any change in address or
location of Borrower's principal governance office or should Borrower merge
or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which record
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the Accounts,
Borrower agrees to keep and maintain such records as Lender may require,
including without limitation information concerning Eligibility Accounts and
Account balances and agings. With respect to the Equipment, Borrower agrees
to keep and maintain such records as Lender may require, including without
limitation information concerning Eligible Equipment and records itemizing
and describing the kind, type, quality, and quantity of Equipment, Borrower's
Equipment costs, and the daily withdrawals and additions to Equipment.
Collateral Schedules. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of Accounts
and Equipment and schedules of Eligible Accounts and Eligible Equipment, in
form and substance satisfactory to the Lender. Thereafter Supplemental
schedules shall be delivered according to the following schedule: With each
advance request when borrowing, but no later than twenty (20) days from the
end of the month, when there is a balance outstanding.
Representations and Warranties Concerning Accounts. With respect to the
Accounts, Borrower represents and warrants to Lender: (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (b) All Account information listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; and (c) Lender, its
assigns, or agents shall have the right at any time and at Borrower's expense
to inspect, examine, and audit Borrower's records and to confirm with Account
Debtors the accuracy of such Accounts.
Representations and Warranties Concerning Equipment. With respect to the
Equipment, Borrower represents and warrants to Lender: (a) All Equipment
represented by Borrower to be Eligible Equipment for purposes of this
Agreement conforms to the requirements of the definition Eligible Equipment;
(b) All Equipment values listed on schedules delivered to Lender will be true
and correct, subject to immaterial variance; (c) The value of the Equipment
will be determined on a consistent accounting basis; (d) Except as agreed to
the contrary by Lender in writing, all Eligible Equipment is now and at all
times hereafter will be in Borrower's physical possession; (e) Except as
reflected in the Equipment schedule delivered to Lender, all Eligible
Equipment is now and at all times hereafter will be of good and merchantable
quality, free from defects; (f) Eligible Equipment is not now and will not at
any time hereafter be stored with a bailee, warehouseman, or similar party
without Lender's prior written consent, and, in such event, Borrower will
concurrently at the time of bailment cause any such bailee, warehouseman, or
similar party to issue and deliver to Lender, in form acceptable to Lender,
warehouse receipts in Lender's name evidencing the storage of Equipment; and
(g) Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect and examine the Equipment and to check and test
the same as to quality, quantity, value, and condition.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender,
as of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any
Loan, and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Illinois and is
validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as foreign
corporation and is in good standing in all states in which the failure to so
quality would have a material adverse effect on its businesses financial
condition.
Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person,
regulatory authority or governmental body; and do not conflict with, result
in a violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower. Financial
Information. Each financial statement of Borrower supplied to Lender truly
and completely disclosed Borrower's financial condition as of the date of the
statement, and there has been no material adverse change in Borrower's
financial condition subsequent to the date of the most recent financial
statement supplied to Lender. Borrower has no material contingent obligations
except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
Properties. Except for Permitted Liens, Borrower owns and has good title to
all of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or Federal laws, rules, or regulations adopted
pursuant to any of the foregoing. Except as disclosed to and acknowledged by
Lender in writing, Borrower represents and warrants that: (a) During the
period of Borrower's ownership of the properties, there has been no use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under, about or
from any of the properties. (b) Borrower has no knowledge of, or reason to
believe that there has been (i) any use, generation, manufacture, storage,
treatment, disposal, release, or threatened release of any hazardous waste or
substance on, under, about or from the properties by any prior owners or
occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (c)
Neither Borrower nor any tenant, contractor, agent or other authorized user
of any of the properties shall use, generate, manufacture, store, treat,
dispose of, or release any hazardous waste or substance on, under, about or
from any of the properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations,
and ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents to
enter upon the properties to make such inspections and tests as Lender may
deem appropriate to determine compliance of the properties with this section
of the Agreement any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be construed
to create any responsibility or liability on the part of Lender to Borrower
or to any other person. The representations and warranties contained herein
are based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnity or contribution in the
event Borrower becomes liable for cleanup or other costs under any such laws,
and (b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a hazardous
waste or substance on the properties. The provisions of this section of the
Agreement, including the obligation to Indemnify, shall survive the payment
of the indebtedness and the termination or expiration of this Agreement and
shall not be affected by Lender's acquisition of any interest in any of the
properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves have been
provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or affecting
any of the Collateral directly or indirectly securing repayment of Borrower's
Loan and Note, that would be prior or that may in any way be superior to
Lender's Security interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors,' representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to any
such plan, (ii) Borrower has not withdrawn from any such plan or Initiated
steps to do so, (iii) no steps have been taken to terminate any such plan,
and (iv) there are no unfunded liabilities other than those previously
disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business, or
Borrower's chief executive office, if Borrower has more than one place of
business, is located at 8501 West Higgins Road, Suite 320, Chicago, IL 60631.
Unless Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the Collateral
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all information
hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information
is dated or certified; and none of such information is or will be incomplete
by omitting to state any material fact necessary to make such information not
misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect until
such time as Borrower's indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender and, as soon
as available, but in no event later than thirty (30) days after the end of
each month, Borrower's balance sheet and profit and loss, statement for the
period ended, prepared and certified as correct to the best knowledge and
belief by Borrower's chief financial officer or other officer or person
acceptable to Lender. All financial reports required to be provided under
this Agreement shall be prepared in accordance with generally accepted
accounting principles, applied on a consistent basis, and certified by
Borrower as being true and correct.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations Lender may
request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios:
Net Worth. Maintain a minimum Net Worth of not less than $8,000,000.00.
Except as provided above, all computations made to determine compliance with
the requirements contained in this paragraph shall be made in accordance with
generally accepted accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
Borrower's properties and operations, in form, amounts, coverages and with
Insurance companies reasonably acceptable to Lender Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form satisfactory Lender, including stipulations that
coverages will not be canceled or diminished without at least ten (10) days
prior written notice to Lender each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be Impaired
in any way by an act, omission or default of Borrower or any other person. in
connection with all policies covering assets in which Lender holds or is
offered security interest for the Loans, Borrower will provide Lender with
such loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing Insurance policy showing such information as Lender may reasonably
request, Including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy (d) the
properties insured; (e) the then current property values on the basis of
which Insurance has been obtained, and the manner determining those values;
and (f) the expiration date of the policy. In addition, upon request of
Lender (however not more often than annual) Borrower will have an independent
appraiser satisfactory to Lender determine, as applicable, the actual cash
value or replacement cost of any Collateral. The cost of such appraisal shall
be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors named
below, on Lender's forms, and in the amounts and under the conditions spelled
out in those guaranties.
Guarantors Amounts
Brewster's Franchise Corporation Unlimited
My Favorite Muffin, Too, Inc. Unlimited
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessment taxes,
governmental charges, levies and liens, of every kind and nature, Imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties income, or profits.
Provided however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (a) the legality of
the same shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with respect to
such contested assessment, tax, charge, levy, lien, or claim in accordance
with generally accepted accounting practices. Borrower, upon demand of
Lender, will furnish to Lender evidence of payment of the assessments, taxes,
charges, levies liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written statement of
any assessment taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely manner,
and promptly notify Lender if Borrower learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of
the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting Its
properties, charters, businesses and operations, Including without
limitation, compliance with the Americans With Disabilities Act and with all
minimum funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all collateral for the Loan or Loans and Borrower other
properties and to examine or audit Borrower's books, accounts, and records and
to make copies and memoranda of Borrower's book accounts, and records. If
Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit Lender
free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender at
least annually and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other officer
or person acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the date of
the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local law statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or of the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions
of a permit issued by the appropriate federal state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien,
citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional action
or omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
Instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loan and to perfect all
Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money, including capital
leases, (b) except as allowed as a Permitted Lien, sell transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any Borrower's accounts, except
to Lender.
Continuity of Operations. (a) Engage in any business activities substantially
different than those in which Borrower is presently engaged, (b) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock provided, however
that notwithstanding the foregoing, but only so long as no Event of Default
has occurred and is continuing or would result from the payment of dividends,
if Borrower is a "Subchapter S Corporation" (as defined In the Internal
Revenue Code of 1986, as amended), borrower may pay cash dividends on its
stock to its shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated Income tax payments to
satisfy their liabilities under federal and state law which arise solely from
their status as Shareholder of a Subchapter S Corporation because of their
ownership of shares of stock of Borrower, or (d) purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest In any other enterprise
or entity, or (c) incur any obligation as surety or guarantor other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (b) Borrower of any Guarantor
becomes insolvent, files a petition in bankruptcy or similar proceedings, or
is adjudged a bankrupt; (c) there occurs a material adverse change in
Borrower's financial condition, in the financial condition of any Guarantor,
or in the value of any Collateral securing any Loan; (d) any Guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such Guarantor's
guaranty of the Loan or any other loan with Lender; or (e) Lender in good
faith deems itself insecure, even though no Event of Default shall have
occurred.
ADDITIONAL REPORTING REQUIREMENTS. Accounts Receivable Aging Report is due
within 20 days after month end.
ADDITIONAL AFFIRMATIVE COVENANTS PROVISION. The word "promptly" under the
"Litigation" covenant described in section titled "AFFIRMATIVE COVENANTS"
shall be defined as within 30 days of such actions occurring which could
materially affect the financial condition of Borrower or the financial
condition of any Guaranty as detailed in the "Litigation" covenant.
ADDITIONAL FINANCIAL REQUIREMENTS. Furnish Lender with copies of annual tax
returns within 30 days of filing as well as other financial and credit
information, in a form acceptable to Lender, as may be required form time to
time.
ADDITIONAL NEGATIVE COVENANT. Borrower is prohibited from paying dividends,
however, Borrower is authorized to meet existing preferred dividend payment
requirements provided Borrower is not in default under the lean documents at
the time of dividend payment.
PRIOR LOAN AGREEMENT. Loan Agreement dated December 31, 1998 supersedes Loan
Agreement dated April 14, 1997.
COMMITMENT LETTER. Terms and conditions of commitment letter dated November
16, 1998, accepted by Borrower on November 20, 1998 hereby included by
reference.
EQUIPMENT BORROWING BASE. Reductions on the borrowing base from equipment
cost will be made as follows:
1) January 1, 1999 Reduction of $10,000.00 for total of $10,0000.00
2) February 1, 1999 Reduction of $10,000.00 for total of $20,000.00
3) March 1, 1999 Reduction of $10,000.00 for total of $30,000.00
4) April 1, 1999 Reduction of $20,000.00 for total of $50,000.00
5) May 3, 1999 Reduction of $20,000.00 for total of $70,000.00
6) June 1, 1999 Reduction of $20,000.00 for total of $90,000.00
7) July 1, 1999 Reduction of $20,000.00 for a total of $110,000.00
8) August 2, 1999 Reduction of $20,000.00 for a total of $130,000.00
9) September 1, 1999 Reduction of $20,000.00 for a total of $150,000.00
10) October 1, 1999 Reduction of $20,000.00 for a total of $170,000.00
11) November 1, 1999 Reduction of $20,000.00 for a total of $190,000.00
12) December 1,1999 Reduction of $20,000.00 for a total of $210,000.00.
COMPENSATING BALANCES. During each calendar quarter, the Borrower will
maintain minimum compensating available balances with the Lender in the
amount of $250,000.00. This is calculated by taking closing available
balances from information provided by Lender for a calendar quarter period and
dividing by the number of days in the calendar quarter. On a quarterly basis,
Lender reserves the right to charge an additional amount of interest to
Borrower at an annual rate of Wall Street Journal Prime plus four (4) percent
on the insufficient balance for the duration of the default period. The
payment of this additional interest computation will constitute a cure for
the default of not maintaining the required average of $250,000.00 minimum
compensating available balance calculated on a quarterly basis.
CORPORATE ACCOUNTS. Borrower will maintain all corporate accounts with CIB
Bank with the exception of store depository accounts which are swept five days
a week.
ADDITIONAL ELIGIIBLE ACCOUNTS. Eligible Receivables do not include account
receivables to any obligor which also obligated to BAB Holdings, Inc. under a
Note Receivable (or similar obligation that was created by the conversion of
a trade account receivable) a prompt payment record under the Note Receivable
(or similar obligation) has not been established. Prompt payment shall be
defined, for this purpose only, as a minimum of six (6) monthly payments made
with no payment being made later than 30 days from due date.
BUSINESS LOAN AGREEMENT ADDENDUM. An exhibit, titled "BUSINESS LOAN
AGREEMENT ADDENDUM," is attached to this Agreement and by this reference is
made a part of this Agreement just as if all the provisions, terms and
conditions of the Exhibit had been fully set forth in this Agreement.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including, without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts. and, at Lender's option,
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided on this paragraph.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition contained
in this Agreement or in any of the Related Documents, or failure of Borrower
to comply with or to perform any other term, obligation, covenant or
condition contained in any other agreement between Lender and Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the related Documents.
False Statements. Any warranty, representation or statement made or furnished
to Lender by or on behalf of Borrower or any Grantor under the Agreement or
the Related Documents is false or misleading in any material respect at the
time made or furnished, or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and
for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver for
any part of Borrower's property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help repossession
or any other method, by any creditor of Borrower, any creditor of any Grantor
against any collateral securing the indebtedness, or to any governmental
agency. This includes a garnishment, attachment, or levy on or of any of
Borrower's accounts, including deposit accounts, with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment performance of the
indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that in the case of an Event of Default of the
type described in the "insolvency" subsection above, such acceleration shall
be automatic and not optional. In addition, Lender shall have all the rights
and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender's
rights and remedies should be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right declare a default and to exercise its rights and
remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.
Applicable Law. this Agreement has been delivered to Lender and accepted by
Lender in the State of Illinois. If there is a lawsuit Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Cook County,
the State of Illinois. Lender and Borrower hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Borrower against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement Multiple Parties; Corporate Authority. All obligations of
Borrower under this Agreement shall be joint and several, and all references
to Borrow shall mean each and every Borrower. This means that each of the
persons signing below is responsible for all obligations in this Agreement
Consent to Loan Participation. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under the
Loans Irrespective of the failure Insolvency of any holder of any interest in
the Loans. Borrower further agrees that the purchaser of any such
participation interests may enforce Interests irrespective of any personal
claims or defenses that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred connection
with the preparation, execution, enforcement, modification and collection of
this Agreement or in connection with the Loans made pursuant to this
Agreement Lender may pay someone else to help collect the Loans and to
enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses, whether or not there is lawsuit, including
attorneys' fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, or any anticipated post-
judgment collection services. Borrower also will pay any court costs, in
addition to all other sums provided by law.
Notices. All notices required to be given under this Agreement shall be given
in writing, may be sent by telefacsimile (unless otherwise required by law),
and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States
mail, first class, postage prepaid, addressed to the party to whom the notice
is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
the notice to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower will
keep Lender informed at all times of Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person circumstance,
such finding shall not render that provision invalid or unenforceable as to
any other persons or circumstances. if feasible, any such offending provision
shall be deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Agreement in all other respects
shall remain valid and enforceable. Subsidiaries and Affiliates of Borrower.
To the extent the context of any provisions of this Agreement makes it
appropriate, including without limitation any representation, warranty or
covenant, the word "Borrower" as used herein shall include all subsidiaries
and affiliates of Borrower notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to make any
Loan or other financial accommodation to any subsidiary or affiliate of
Borrower.
Successors and Assigns. All covenants and agreements contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the
benefit of Lender, its successors and assigns. Borrower shall not, however,
have the right to assign its rights under this Agreement any interest
therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement shall be considered to have been relied upon by
Lender and will survive the making of the Loan and delivery to Lender of the
Related Documents, regardless of any investigation made by Lender or on
Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent in subsequent instances where such consent is required, and in all
cases such consent may be granted withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT,
AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF DECEMBER
31,1998.
BORROWER:
BAB Holdings, Inc.
By:
Joseph Merkin, Chief Financial Officer
LENDER:
CIB BANK
By:
Authorized Officer
BUSINESS LOAN AGREEMENT ADDENDUM
Borrower: BAB Holdings, Inc.
8501 West Higgins Road, Suite 320
Chicago, IL 60631
Lender: CIB Bank
900 N. Higgins Road
Elk Grove village, IL 60007
Date of Addendum: 12-31-98
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender,
as of the date of this (Note/Loan Agreement), as of the date of each
disbursement of Loan proceeds, as of the date of any renewal, extension or
modification of any Loan, and at all times any indebtedness exists:
Borrower's Business is Year 2000 Compliant. All the computers, hardware,
microchips, software, and additional software applications utilized by
Borrower in the conduct of Borrower's business records, stores, processes,
and presents calendar dates falling on or after January 1, 2000, and all
information pertaining to such calendar dates, in the same manner and with
the same functionality as the Software does respecting calendar dates falling
on or before December 31, 1999. Borrower further represents and warrants that
the computers, hardware, microchips, software, and additional software
applications shall have all appropriate capabilities and compatibility for
operation and for handling century-aware or Year 2000 compliant data.
Borrower also represents and warrants that the data-related user interface
functions, data-fields, and data-related program instructions and functions
of the computers, hardware, microchips, software, and additional software
applications include the correct indication or calculation of the century and
are Year 2000 Compliant.
Borrower's Key Suppliers, Vendors, and Customers are Year 2000 Compliant. The
key suppliers, vendors and customers which are material to Borrower's business
operations are Year 2000 Compliant.
Borrower's Goods and Services. Any computers, hardware, microchips, software
and additional software applications good and services which will be sold or
leased by Borrower's business to Borrower's customers are Year 2000 Compliant.
Required Notices. Borrower has and will provide Lender any communication,
written or oral, from any individual, entity or consultant, indicating that
Borrower's business key suppliers, vendors or customers have newly discovered
Year 2000 problems or compliance issues and warrants that Borrower has not
received any communication, written or oral, from any material suppliers,
vendors or customers with Year 2000 problems or compliance issues which affect
Borrower's business.
BORROWER:
BAB Holdings, Inc.
By:
Joseph Merkin, Chief Financial Officer
PROMISSORY NOTE
Borrower: BAB Holdings, Inc.
8501 West Higgins Road, Suite 320
Chicago, IL 60631
Lender: CIB BANK
900 East Higgins Road
Elk Grove Village, IL 60007
Principal Amount: $1,750,000.00 Initial Rate: 8.750% Date of
Note: December 31,1998
PROMISE TO PAY. BAB Holdings, Inc. ("Borrower"') promises to pay to CIB BANK
("Lender"), or order, in lawful money of the United States of America, the
principal amount of One Million Seven Hundred Fifty Thousand & 00/100 Dollars
($1,750,000.00) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on December 31, 1999. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest
beginning January 31, 1999, and all subsequent interest. Payments are due on
the same day of each month after that. The annual interest rate for this Note
is computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed
or required by applicable law, payments will be applied first to accrued
unpaid interest, then to principal, and any remaining amount to any unpaid
collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent Index which is the prime
rate as published in the Wall Street Journal. When a range of rates has been
published, the higher of the rates will be used. (the "Index"). The Index is
not necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each day. The index currently is 7.750% per annum. The
Interest rate to be applied to the unpaid principal balance of this Note will
be at a rate of 1.000 percentage point over the Index, resulting in an initial
rate of 8.750% per annum. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. Except for the foregoing, Borrower may
pay without penalty all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments of accrued
unpaid interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of Borrower's accounts,
including deposit accounts, with Lender. (g) Any guarantor dies or any of the
other even described In this default section occurs with respect to any
guarantor of this Note. (h) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired. (i) Lender in good faith deems itself
insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediate due, without
notice, and then Borrower will pay that amount. Upon default, including
failure to pay upon final maturity, Lender, at its option, may also, permitted
under applicable law, increase the variable interest rate on this Note to
4.000 percentage points over the Index. The interest rate will not exceed the
maximum rate permitted by applicable law. Lender may hire or pay someone else
to help collect this Note if Borrower does not pay. Borrower also will pay
Lender that amount. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses whether or not there
is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
If not prohibited by applicable law, Borrower also will pay any court costs,
in addition to all other sums provided by law. This Note has been delivered
to Lender and accepted by Lender in the State of Illinois. if there is a
lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction
of the courts of Cook County, the State of Illinois. Lender and Borrower
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other. This
Note shall be governed by and construed in accordance with the laws of the
State of Illinois.
CONFESSION OF JUDGMENT. Borrower hereby irrevocably authorizes and empowers
any attorney-at-law to appear in any court of record and to confess judgment
against Borrower for the unpaid amount of this Note as evidenced by an
affidavit signed by an officer of Lender setting forth the amount then due,
plus attorneys' fees as provided in this Note, plus costs of suit, and to
release all errors, and waive all rights of appeal. If a copy this Note,
verified by an affidavit, shall have been filed in the proceeding, it will not
be necessary to file the original as a warrant of attorney. Borrower waives
the right to any stay of execution and the benefit of all exemption laws now
or hereafter in effect. No single exercise of the foregoing warrant and power
to confess judgment will be deemed to exhaust the power, whether or not any
such exercise shall be held by any court to be invalid, voidable, or void; but
the power will continue undiminished and may be exercised from time to time as
Lender may elect until all amounts owing on the Note have been paid in full.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's accounts with
Lender (whether checking, savings, or some other account), including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this Note
against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided on this paragraph.
COLLATERAL. This Note is secured by all prior Security Agreements, including
but not limited to three (3) Security Agreements dated December 3,1998
covering all business assets for BAB Holdings, Inc., My Favorite Muffin Too,
Inc. and Brewster's Franchise Corporation.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or by an authorize person.
Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line
of credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: Joseph Merkin, Chief
Financial Officer; Michael K. Murtaugh, Vice President and Michael W. Evans,
President. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to
any of Borrower's accounts with Lender. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsements on this Note or by
Lender's internal records, including daily computer printouts. Lender will
have no obligation to advance funds under this Note if: (a) Borrower or any
guarantor is in default under the terms of this Note or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of
this Note or any other loan with Lender; (d) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith deems itself insecure under this Note or
any other agreement between Lender and Borrower.
PRIOR NOTE. A Promissory Note from BAB Holdings, Inc. to Lender, dated April
14, 1997 in the principal amount of $2,000,000.00.
GENERAL PROVISIONS. Lender may delay or forego enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing,
no party who signs this Note, whether as make guarantor, accommodation maker
or endorser, shall be released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length of time) this loan,
or release any party or guarantor or collateral; or impair, fail to realize
upon or perfect Lender's security interest in the collateral; and take any
other action deemed necessary by Lender without the consent of or notice to
anyone. All such parties also agree that Lender may modify this loan without
the consent of or notice to anyone other than the party with whom the
modification is made.
ILLINOIS INSURANCE NOTICE. Unless Borrower provides Lender with evidence of
the insurance coverage required by Borrower's agreement with Lender, Lender
may purchase insurance at Borrower's expense to protect Lender's interests in
the collateral. This insurance may, but need not, protect Borrower's
interests. The coverage that Lender purchases may not pay any claim that
Borrower makes or any claim that is made against Borrower in connection with
the collateral. Borrower may later cancel any insurance purchased by Lender,
but only after providing Lender with evidence that Borrower has obtained
insurance as required by their agreement. If Lender purchases insurance for
the collateral, Borrower will be responsible for the costs of that insurance,
including interest and any other charges Lender may impose in connection with
the placement of the insurance, until the effective date of the cancellation
or expiration of the insurance. The costs of the insurance may be added to
Borrower's total outstanding balance or obligation. The costs of the insurance
may be more than the cost of insurance Borrower may be able to obtain on
Borrower's own.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES
TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
BAB Holdings, Inc.
By:
Joseph Merkin, Chief Financial Officer
SECURED PROMISSORY NOTE #13416-107
[Aurora]
$176,200.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of One Hundred Seventy Six
Thousand Two Hundred and 50/100 Dollars ($176,200.50) inclusive of interest
(the "Obligation") in Eighty four (84) equal and successive monthly
installments each in the amount of $2,097.63 beginning with the payment due on
February 1, 1999 ("First Payment Date") and continuing on the same day of
each and every month thereafter until all monies due hereunder and under the
Loan Documents (as hereinafter defined) are paid in full.. Maker agrees to
pay to Holder, at the time of funding of this Note, additional interest from
the date of funding up to thirty (30) days preceding First Payment Date (each
an "Additional Day") a sum equal to one-thirtieth (1/30th) of the monthly
installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(a) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # 36-404042
SCHEDULE A
To Secured Promissory Note No. 13416-107
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
2616 EOLA & OGDEN AVENUES, AURORA, IL 60504
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-107, DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address:8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SCHEDULE A
To Secured Promissory Note No. 13416-107
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
2616 EOLA & OGDEN AVENUES, AURORA, IL 60504
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-107, DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631
SECURED PROMISSORY NOTE #13416-108
[Bensenville]
$363,300.00 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of Three Hundred Sixty Three
Thousand Three Hundred and 00/100 Dollars ($363,300.00) inclusive of interest
(the "Obligation") in Eighty four (84) equal and successive monthly
installments each in the amount of $4,325.00 beginning with the payment due
on February 1, 1999 ("First Payment Date") and continuing on the same day of
each and every month thereafter until all monies due hereunder and under the
Loan Documents (as hereinafter defined) are paid in full.. Maker agrees to
pay to Holder, at the time of funding of this Note, additional interest from
the date of funding up to thirty (30) days preceding First Payment Date (each
an "Additional Day") a sum equal to one-thirtieth (1/30th) of the monthly
installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(b) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # 36-4040424
SCHEDULE A
To Secured Promissory Note No. 13416-108
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
COMMISSARY, 1152 N. TOWER LANE, BENSENVILLE, IL 60106
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-108, DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-103
[Elmhurst]
$234,328.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of Two Hundred Thirty Four
Thousand Three Hundred Twenty Eight and 50/100 Dollars ($234,328.50) inclusive
of interest (the "Obligation") in Eighty four (84) equal and successive
monthly installments each in the amount of $2,789.63 beginning with the
payment due on February 1, 1999 ("First Payment Date") and continuing on the
same day of each and every month thereafter until all monies due hereunder and
under the Loan Documents (as hereinafter defined) are paid in full.. Maker
agrees to pay to Holder, at the time of funding of this Note, additional
interest from the date of funding up to thirty (30) days preceding First
Payment Date (each an "Additional Day") a sum equal to one-thirtieth (1/30th)
of the monthly installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(c) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # 36-404042
SCHEDULE A
To Secured Promissory Note No. 13416-103
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
139-141 YORK ROAD, ELMHURST, IL 60126
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-103 , DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-106
[Hillside]
$190,732.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of One Hundred Ninety
Thousand Seven Hundred Thirsty Two and 50/100 Dollars ($190,732.50) inclusive
of interest (the "Obligation") in Eighty four (84) equal and successive
monthly installments each in the amount of $2,270.63 beginning with the
payment due on February 1, 1999 ("First Payment Date") and continuing on the
same day of each and every month thereafter until all monies due hereunder and
under the Loan Documents (as hereinafter defined) are paid in full.. Maker
agrees to pay to Holder, at the time of funding of this Note, additional
interest from the date of funding up to thirty (30) days preceding First
Payment Date (each an "Additional Day") a sum equal to one-thirtieth (1/30th)
of the monthly installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(d) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID #36-4040424
SCHEDULE A
To Secured Promissory Note No. 13416-106
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
2211 S. WOLF, HILLSIDE, IL 60162
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-106, DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-101
[Hyde Park]
$241,594.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of Two Hundred Forty One
Thousand Five Hundred Ninety Four and 50/100 Dollars ($241,594.50) inclusive
of interest (the "Obligation") in Eighty four (84) equal and successive
monthly installments each in the amount of $2,876.13 beginning with the
payment due on February 1, 1999 ("First Payment Date") and continuing on the
same day of each and every month thereafter until all monies due hereunder and
under the Loan Documents (as hereinafter defined) are paid in full.. Maker
agrees to pay to Holder, at the time of funding of this Note, additional
interest from the date of funding up to thirty (30) days preceding First
Payment Date (each an "Additional Day") a sum equal to one-thirtieth (1/30th)
of the monthly installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(e) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # or Social Security #: 36-404042
SCHEDULE A
To Secured Promissory Note No. 13416-101
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
1301 EAST 53RD STREET, CHICAGO, IL 60611
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-102 , DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-100
[Jackson]
$285,190.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of Two Hundred Eighty-Five
Thousand One Hundred Ninety and 50/100 Dollars ($285,190.50) inclusive of
interest (the "Obligation") in Eighty four (84) equal and successive monthly
installments each in the amount of $3,395.13 beginning with the payment due
on February 1, 1999 ("First Payment Date") and continuing on the same day of
each and every month thereafter until all monies due hereunder and under the
Loan Documents (as hereinafter defined) are paid in full.. Maker agrees to
pay to Holder, at the time of funding of this Note, additional interest from
the date of funding up to thirty (30) days preceding First Payment Date (each
an "Additional Day") a sum equal to one-thirtieth (1/30th) of the monthly
installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(f) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # or Social Security #:36-4040424
SCHEDULE A
To Secured Promissory Note No. 13416-100
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
53 WEST JACKSON, CHICAGO, IL 60615
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-100 , DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: _____________________________ Title: _____________________________
Address: 8501 W. Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-102
[McClurg]
$118,072.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of One Hundred Eighteen
Thousand Seventy Two and 50/100 Dollars ($118,072.50) inclusive of interest
(the "Obligation") in Eighty four (84) equal and successive monthly
installments each in the amount of $1,405.63 beginning with the payment due
on February 2, 1999 ("First Payment Date") and continuing on the same day
of each and every month thereafter until all monies due hereunder and under
the Loan Documents (as hereinafter defined) are paid in full.. Maker agrees
to pay to Holder, at the time of funding of this Note, additional interest
from the date of funding up to thirty (30) days preceding First Payment Date
(each an "Additional Day") a sum equal to one-thirtieth (1/30th) of the
monthly installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(g) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # or Social Security #: 36-4040424
SCHEDULE A
To Secured Promissory Note No. 13416-102
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
401 EAST ONTARIO, CHICAGO, IL 60611
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-102 , DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: _____________________________ Title: _____________________________
Address: 8501 W. Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #13416-105
[Lake Zurich]
$234,328.50 January 25 , 1999
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of Two Hundred Thirty Four
Thousand Three Hundred Twenty Eight and 50/100 Dollars ($234,328.50) inclusive
of interest (the "Obligation") in Eighty four (84) equal and successive
monthly installments each in the amount of $2,789.63 beginning with the
payment due on February 1, 1999 ("First Payment Date") and continuing on the
same day of each and every month thereafter until all monies due hereunder and
under the Loan Documents (as hereinafter defined) are paid in full.. Maker
agrees to pay to Holder, at the time of funding of this Note, additional
interest from the date of funding up to thirty (30) days preceding First
Payment Date (each an "Additional Day") a sum equal to one-thirtieth (1/30th)
of the monthly installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. 13416, dated January 25, 1999 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which shall not be unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(h) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 West Higgins Road, Suite 320
Chicago, IL 60631
Federal ID # 36-4040424
SCHEDULE A
To Secured Promissory Note No. 13416-105
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
800 W. MAIN STREET, LAKE ZURICH, IL 60645
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-105, DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 West Higgins Road, Suite 320 Three American Lane
Chicago, IL 60631 Greenwich, CT 06831
SECURED PROMISSORY NOTE #104
[Glenview]
$118,072.50 January 25, 1998
For value received, the undersigned, jointly and severally if more than one,
(the "Maker") promises to pay to the order of Franchise Mortgage Acceptance
Company, or assigns (the "Holder"), at its offices at Three American Lane,
Greenwich, Connecticut 06831, the aggregate sum of One Thousand Eighteen
Thousand Seventy Two and 50/100 ($118,072.50) inclusive of interest (the
"Obligation") in eighty four (84) equal and successive monthly installments
each in the amount of $1,405.63 beginning with the payment due on February 1,
1999 ("First Payment Date") and continuing on the same day of each and every
month thereafter until all monies due hereunder and under the Loan Documents
(as hereinafter defined) are paid in full.. Maker agrees to pay to Holder,
at the time of funding of this Note, additional interest from the date of
funding up to thirty (30) days preceding First Payment Date (each an
"Additional Day") a sum equal to one-thirtieth (1/30th) of the monthly
installment for each and every Additional Day.
Interest shall be computed on the basis of a year consisting of three
hundred sixty (360) days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which it is payable. All
payments of principal and interest on this Note and any other amounts due
hereunder shall be made in lawful money of the United States of America and
shall be credited first, to costs and expenses, if any, incurred by Holder in
collecting amounts due hereunder, second, to any late payment fee; third, to
interest; and fourth to principal and any other amounts due hereunder or under
the Loan Documents (as hereinafter defined).
This Note is issued pursuant to the terms of the Master Security
Agreement No. , dated , 199 (the "Security Agreement") which
is incorporated herein by reference. The payment of this Note and all
interest, fees and charges herein are secured by (a) the Equipment and other
collateral listed on Supplement A hereto and made a part hereof, (b) the
Security Agreement, and (c) such other instruments and documents executed in
connection with the Obligation (all hereinafter referred to as "Loan
Documents").
If any payment of principal and interest is not paid on the due date
thereof, in addition to any other permitted charges, Maker shall pay Holder a
late payment fee in the amount of ten percent (10%) of the amount past due.
Holder shall have no obligation to accept any payments hereunder not
accompanied by all outstanding late payment fees. This provision is not
intended to create any grace period by Holder with respect to the punctual
payment by Maker. Maker acknowledges that the late payment fee is not imposed
as a charge for the use of money, but to permit Holder to offset its
administrative expenses and other costs in dealing with loans not paid on
time. The late payment fee shall in no way be deemed an interest charge.
If any payment due hereunder is not paid on or before its due date,
whether or not by reason of acceleration, or if a default occurs under any of
the Loan Documents which is not cured within the applicable notice and/or
grace period, if any, such failure shall constitute a default hereunder, and
the Loan shall bear interest from the date of, and during the continuance of
the default, at the rate of eighteen percent (18%) per annum ("Default Rate");
provided, however, the Default Rate shall not accrue on any late payment fee.
All interest at the Default Rate shall be paid at the time of, and as a
condition precedent to, the curing of any default should Holder, in its sole
discretion, allow such default to be cured.
The Loan may not be prepaid in whole or in part without the prior
written consent of Lender which is not unreasonably withheld.
In no event whatsoever, whether by reason of acceleration of the Loan or
otherwise, shall the amount paid or agreed to be paid by Maker to Holder for
the use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate under applicable usury laws. If Maker pays or Holder
receives a sum of money which would result in the loan exceeding the highest
lawful rate then such excess payment shall be deemed additional principal and
the Obligation and final payment shall be reduced accordingly.
If Maker defaults in its payment and performance hereunder or if an Event of
Default as set forth in the Security Agreement shall occur, Holder may
exercise any of the rights and remedies set forth in the Security Agreement,
including, without limitation, the right to declare all of the indebtedness
evidenced hereby to be immediately due and payable.
If interest, principal or any other sum owing under this Note is not
paid when due, whether at maturity or by acceleration, Maker will pay all
costs of collection including, but not limited to, reasonable attorneys' fees
and all expenses incurred by the Holder in connection with the protection or
realization of the collateral and enforcement of any guaranty, whether or not
suit is filed hereon.
Maker and all others liable for all or any part of this obligation,
severally waive presentment for payment, demand and protest and notice of
protest, acceleration or dishonor and non-payment of this Note, and expressly
consent to any extension of time or payment hereof or of any installment
hereof, to the release of any party liable for this obligation, to the
release, change or modification of any collateral posted as security for the
payment of this Note, and any such extension, modification or release may be
made without notice to any of said parties and without in any way affecting or
discharging this liability.
If any of the provisions of this Note are held to be invalid, illegal,
or unenforceable, such invalidity, illegality or unenforceability shall not
affect any other provision, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
THIS NOTE IS INTENDED TO BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAW PROVISIONS. ANY ACTION BROUGHT TO ENFORCE THIS NOTE MAY
BE BROUGHT IN CONNECTICUT. TO THE EXTENT ALLOWED BY LAW, MAKER AND EACH
ENDORSER HEREBY CONSENT TO THE JURISDICTION OF ANY COURT LOCATED IN
CONNECTICUT HAVING SUBJECT MATTER JURISDICTION AND WAIVE ANY OBJECTIONS EITHER
MAY HAVE TO THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTHING CONTAINED HEREIN
IS INTENDED TO PRECLUDE THE HOLDER FROM COMMENCING ANY ACTION HEREUNDER IN ANY
COURT HAVING JURISDICTION THEREOF. SERVICE OF PROCESS IN ANY SUCH ACTION
SHALL BE SUFFICIENT IF SERVED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED TO
THE ADDRESS OF MAKER OR ENDORSER SET FORTH HEREIN. MAKER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE OR THE LOAN DOCUMENTS.
(i) This Note may not be waived, changed, modified or discharged
orally, except by an agreement in writing signed by the party against whom the
enforcement of waiver, change, modification or discharge is sought. Wherever
possible, each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or be invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of this Note.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective heirs, successors, legal representatives and assigns,
whether voluntary by action of the parties or involuntary by operation of law.
Maker: BAB OPERATIONS, INC.
By: ___________________________________
Title: __________________________________
Address: 8501 W. Higgins Road, Suite 320
Chicago, Illinois 60631
Federal ID # or Social Security # 36-4040424
SCHEDULE A
To Secured Promissory Note No. 104
to Master Security Agreement No. 13416, dated January 25, 1999
between Franchise Mortgage Acceptance Company as Lender
and
BAB OPERATIONS, INC. as Borrower
ALL FURNITURE, FIXTURES AND EQUIPMENT NOW OWNED OR HEREAFTER ACQUIRED, HELD OR
USED BY BORROWER IN ITS OPERATION OF THE BIG APPLE BAGEL STORE(S) AT THE
LOCATION(S) SHOWN BELOW, TOGETHER WITH ALL ADDITIONS TO, SUBSTITUTIONS FOR AND
REPLACEMENTS OF, AND ALL PROCEEDS OF THE FOREGOING, CASH AND NON-CASH,
INCLUDING, WITHOUT LIMITATION, INSURANCE PROCEEDS AND GENERAL INTANGIBLES.
EQUIPMENT LOCATION(S):
2743 PFINGSTEN ROAD, GLENVIEW, IL 60025
PAYMENT TERMS: SEE SECURED PROMISSORY NOTE NO. 13416-104 , DATED JANUARY
25 , 1999
ADDITIONAL PROVISIONS:
Borrower acknowledges that this Schedule A to the above referenced Secured
Promissory Note is entered into pursuant to the terms of the Master Security
Agreement referenced above.
Borrower: BAB OPERATIONS, INC. Lender: Franchise Mortgage
Acceptance Company
By:________________________________ By: ______________________________
Title: ____________________ Title: _____________________________
Address: 8501 W. Higgins Road, Suite 320
Chicago, Illinois 60631 Three American Lane
Greenwich, CT 06831
MASTER SECURITY AGREEMENT # 13416
MASTER SECURITY AGREEMENT, made this 25TH day of January, 1999 by
and between BAB OPERATIONS, INC. an ILLINOIS corporation having an office
at 8501 W. Higgins Road, Suite 320, Chicago, IL 60631 (the "Borrower"), and
FRANCHISE MORTGAGE ACCEPTANCE COMPANY, a Delaware corporation, having an office
at Three American Lane, Greenwich, Connecticut 06831 (the "Lender").
W I T N E S S E T H :
WHEREAS, Lender intends to make one or more loans (individually "Loan" and
collectively "Loans") to Borrower in such sums as may be evidenced by a
promissory note or notes (individually the "Note" and collectively the
"Notes"); and
WHEREAS, in order to induce Lender to make the Loan and any such future loans
or financial accommodations to Borrower, Borrower has agreed to execute and
deliver this Master Security Agreement (the "Agreement") .
NOW, THEREFORE, in consideration of the foregoing, and of any extension of
credit heretofore, now or hereafter made by Lender to Borrower, the parties
hereto hereby agree as follows:
1. Security Interest. To secure the due payment and performance by
Borrower of all indebtedness and other liabilities and obligations, whether
now existing or hereafter arising, of Borrower to Lender under, arising out of
or in any way connected with this Agreement, the Note(s) and all agreements,
guaranties, instruments and other documents executed and delivered in
connection herewith or therewith, or otherwise, and to secure any other
indebtedness, liabilities and obligations of Borrower to Lender, whether now
existing or hereafter arising (all hereinafter referred to collectively as
the "Obligations"), Borrower hereby assigns, grants, mortgages, pledges,
hypothecates, transfers and sets over to Lender, a first priority lien on and
security interest in (i) the property of Borrower set forth in the Schedule
to the Note(s) (the "Equipment"), together with all accessories,
attachments and accessions now or hereafter affixed thereto and all
substitutions and replacements of, and proceeds of the foregoing, , plus any
and all chattel paper, accounts, contract rights and general intangibles
arising from the sale, lease or other disposition thereof, including but not
limited to insurance proceeds and general intangibles, (ii) any cash or cash
equivalents held by Lender on Borrower's behalf, including, without
limitation, any refunds, security deposits or undisbursed advances or proceeds
arising in connection with any loan or equipment lease (whether given
hereunder or otherwise), (iii) in all property, tangible or intangible, in
which Lender has or may acquire hereafter a security interest (all the
foregoing are at time hereinafter referred to as the "Collateral"). Lender
shall not be obligated to release its security interest in any of the
Collateral until all Obligations of Borrower to Lender are paid and performed
in full. Any security deposit made by Borrower to Lender, and not subject to
a separate Security Deposit Agreement, shall be held by Lender to secure the
payment and performance of the Obligations and may not be used by Borrower for
any payments due under the Note(s) or this Agreement or any other loan
documents. Lender may, but is not obligated to, apply the security deposit to
cure any monetary default, and Borrower agrees to immediately restore the
security deposit to its full amount. Except as may otherwise be required by
applicable law, the security deposit may be commingled with Lender's other
funds and any unapplied portion of the security deposit will be refunded to
Borrower without interest only upon full payment and performance of the
Obligations.
2. Term and Repayment: The term of each Note shall commence on the date
specified in such Note and shall continue for the number of months, and the
proration thereof, specified in the Note. Payments shall be in the amounts
and shall be due and payable as set forth in the applicable Note(s). No Note
may be prepaid, in whole or in part, without the written consent of Lender.
Borrower agrees that any monies received by Lender for application to the
payments due under the Note(s), may be applied by Lender in such amounts and
to such Notes as Lender, in its sole discretion, determines. If Lender
receives excess monies to be applied to a particular Note, such monies will be
applied to the payments due under such Note in the reverse order of
maturities. Borrower agrees that any original Note and a copy of this
Agreement constitute separately enforceable and assignable contract which
incorporates all of the terms and conditions set forth in this Agreement. If
any payment due under this Agreement or under any Note is not paid when due,
Borrower agrees to pay, in addition to any other permitted charges a late fee
equal to ten percent (10%) of the amount past due, but in no event shall any
late fee exceed the maximum amount allowed by applicable law. Lender shall
have no obligation to accept any payments hereunder not accompanied by all
outstanding late payment fees. This provision is not intended to create any
grace period by Lender with respect to the punctual payment by Borrower.
Borrower acknowledges that the late payment fee is not imposed as a charge for
the use the use of money, but to permit Lender to offset its administrative
expenses and other costs in deals with loans not paid on time. The late
payment fee shall in no way be deemed an interest charge.
3. Financing Statements. At Lender's request, Borrower shall execute and
deliver to Lender, at any time or times hereafter, all Uniform Commercial Code
financing statements and amendments and all other agreements, documents and
instruments requested by Lender to perfect and maintain Lender's first
priority lien on and security interest in the Collateral. Borrower agrees
that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
To the extent permitted by law, Borrower hereby appoints Lender (and any
officer of Lender) as Borrower's attorney-in-fact, coupled with an interest,
to do all things necessary to carry out the provisions of this paragraph,
including, but not limited to, signing Borrower's name to, and filing, any
financing statements, amendments and other documents to preserve, protect and
perfect the priority of Lender's lien and security interest in any and all of
the Collateral.
4. Location Of Collateral. Borrower warrants that it owns and has
possession of the Collateral and keeps and will keep the Equipment and other
individual items of Collateral at the locations specified in the applicable
Note and if no location is specified, then at the Borrower's principal office
(the "Location(s)"), and Borrower shall not remove the any items of Collateral
from such Location(s) without Lender's prior written consent.
5. Lender's Payment Of Claims Asserted Against The Collateral. Lender may,
but shall have no obligation to, pay, acquire, discharge and/or accept an
assignment of any security interest, lien, claim or encumbrance asserted by
any person against the Collateral, provided that Lender shall first give
Borrower written notice of Lender's intent to do the same, and Borrower does
not, within ten (10) days of such notice, pay such claim or tax and/or obtain
to Lender's reasonable satisfaction the release of the security interests,
liens, claims or encumbrances to which such notice relates. All sums paid by
Lender in respect thereof and all costs, fees and expenses, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, which are incurred by Lender on account thereof, shall be payable, on
demand, by Borrower to Lender and shall be additional Obligations hereunder
secured by the Collateral.
6. Representations And Warranties. Borrower represents and warrants as of
each Closing Date (but only with respect to the Loan being made as of such
date) that:
(a) If an entity, Borrower is duly organized and existing under the
laws of the State of its organization or formation (as the case may be), and
is duly authorized to do business and in good standing wherever the ownership
of its property or the conduct of its business requires such authorization.
Borrower represents and warrants that the Loans are not consumer loans, and
that proceeds of any Loan shall be used only for business or commercial
purposes.
(b) Borrower has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and any
other agreement or instrument referred to herein, and this Agreement and all
such other agreements and instruments are valid and binding upon and
enforceable against Borrower in accordance with their respective terms.
Borrower has taken all action required to authorize the execution, delivery
and performance of this Agreement and all other agreements or documents
required hereunder and the transactions contemplated hereby.
(c) The execution, delivery and/or performance by Borrower of this
Agreement and any other agreement or instrument referred to herein shall not,
by the lapse of time, the giving of notice or otherwise, constitute a
violation of, or result in the breach of or accelerate or permit the
acceleration of, the performance required by the terms of any applicable law,
rule or regulation of any governmental body, or any provision contained in
Borrower's certificate of incorporation or organization and by-laws,
partnership agreement or operating agreement (as appropriate) or contained in
any agreement, instrument or document to which Borrower is now a party or by
which it or its assets are bound, or result in the creation of any claim,
lien, charge or encumbrance upon any of the property or assets of Borrower
(except those granted to Lender pursuant hereto). No consent, approval,
authorization or declaration of, designation by or filing with any
governmental authority or other person or entity on the part of Borrower is
required in connection with the valid execution, delivery or performance of
this Agreement and the consummation of the transactions contemplated hereby,
except as have been obtained prior to the date hereof or are necessary to
perfect Lender's security interest in the Collateral.
(d) Borrower has good, indefeasible and merchantable title to and
ownership of the Collateral, free and clear of all liens, claims, security
interests and encumbrances except those of Lender.
(e) Borrower is not in violation of any applicable law, statute,
regulation or ordinance of any governmental entity or authority, including,
without limitation, the United States of America, any state, city, town,
municipality, county or of any other Jurisdiction, or of any agency thereof,
which could in any respect adversely affect the Collateral or Borrower's
business, property, assets, operations or condition, financial or otherwise.
(f) Borrower is not in default, and there is no event which, with the
lapse of time or the giving of notice or both, would constitute a default
under any indenture, loan agreement, mortgage, lease, deed or other similar
agreement relating to the borrowing of monies to which Borrower is a party, or
by which Borrower or Borrower's assets may be bound. Borrower is not in
default and there is no event which, with the lapse of time, the giving of
notice or both, would constitute a default under the terms of any of the
franchise agreement(s) for the Locations ("License").
(g) Borrower has delivered to Lender Borrower's financial statements
as part of Lender's credit review (the "Financial Statements"). Such
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fully and fairly present the
assets, liabilities and financial condition of Borrower as of the respective
dates thereof and for the periods covered thereby; there are no omissions of
other facts or circumstances which are or may be material in Lender's sole
discretion, and there has been no adverse change in the financial condition of
Borrower or any guarantor of the Obligations ("Guarantor") or other owners
since the date of such Financial Statements.
(h) There are no actions or proceedings which are pending or
threatened in any court or before any governmental agency or instrumentality
against Borrower, its assets, or the Collateral or any Guarantor which may
adversely affect Borrower or the Collateral or the Guarantor.
(i) Borrower has filed or has obtained extensions for the filing of
all federal, state and local tax returns and other reports it is required by
law to file and has paid all taxes, assessments and charges reflected thereon
that are due and payable and has reserved funds or made adequate provision for
the payment of such taxes, assessments and charges accruing but not yet
payable.
(j) The security interest granted by Borrower to Lender in the
Collateral constitutes a valid first perfected lien and security interest in
the Collateral. There are no other liens or security interests covering the
Collateral.
(k) Borrower has not, within the six (6) year period immediately
preceding the date of this Agreement, (i) changed its name, been the surviving
entity of a merger or consolidation, or acquired all or substantially all of
the assets of any person or entity, or (ii) been known as or used any other
corporate or fictitious name, trade name, division name or other name.
(l) No representation or warranty by Borrower contained herein or in
any certificate or other document furnished by Borrower pursuant hereto, in
connection with the transactions contemplated hereby, contains any untrue or
misleading statement of fact, or omits to state a act necessary to make it not
misleading, or necessary to provide Lender with proper information as to
Borrower and Borrower's affairs.
(m) All representations and warranties of Borrower are true at the
time of Borrower's execution of this Agreement, and shall survive the
execution, delivery and acceptance hereof, and shall continue until all
Obligations of Borrower to Lender are paid and performed in full.
7. 7. Covenants Of Borrower. Borrower covenants that:
(a) Preservation of Existence. If Borrower is a partnership, a
corporation or limited liability company, it will preserve and maintain its
partnership, corporate or limited liability company existence and status and
good standing in each State where it conducts business.
(b) Personal Property; Liens. The Collateral is and shall remain
personal property at all times regardless of how attached or installed at or
to the Location(s). Borrower will not create nor permit to exist any mortgage,
pledge, title retention lien, or other lien, encumbrance or security interest
with respect to the Collateral or permit any financing statement to be filed
with respect thereto, other than liens to which Lender shall have given its
prior written consent, and encumbrances in favor of Lender. Borrower will
defend Borrower's title to the Collateral and Lender's first priority
security interest therein against the claims and demand of all Persons.
Borrower shall obtain and deliver to Lender any and all landlord's and
mortgagee's waivers, estoppel certificates and other similar documents to
confirm, among other things, that the Collateral shall remain personal
property and that such persons have no interest in the Collateral. Borrower
shall also deliver, or cause to be delivered, such Uniform Commercial Code
termination and partial releases and/or lien waivers or subordinations with
respect to the Collateral as Lender may request.
(c) Franchise. If Borrower is a franchisee, Borrower will maintain
its Licenses and will give Lender notice of any threat or action to terminate
or withdraw or fail to renew any License.
(d) Insurance. From and after the date hereof, Borrower shall bear
the entire risk of loss of, damage to, or destruction of the Collateral.
Borrower will, at its own expense, keep all of the Collateral insured to the
full replacement value thereof against all risks of loss and damage by
policies of insurance issued by companies approved by Lender. The policies
evidencing such insurance shall be duly endorsed in favor of Lender with such
loss payable rider as Lender may designate and such policies shall be
delivered to Lender and shall provide for at least thirty (30) days prior
written notice to Lender of the exercise of any right of cancellation or
reduction of coverage and right to cure monetary defaults. Borrower shall
also maintain at its cost such liability insurance with such insurance
companies as Lender shall request and Lender shall be named as additional
insured with respect thereto. Should Borrower fail to furnish Lender with
such insurance, Lender shall have the right to effect same and charge the cost
thereof to Borrower, together with interest thereon at the rate of eighteen
percent (18%) per annum (but not to exceed the maximum rate permitted by
applicable law). Such cost, including interest, shall be additional
Obligations hereunder and secured by the Collateral. Lender's sole obligation
hereunder shall be to credit Borrower's account with the net proceeds of any
insurance payments received on account of any loss and Lender shall have no
liability with respect to any loss. Borrower hereby appoints Lender as
Borrower's attorney in-fact, coupled with an interest, to file, adjust or
settle all insurance claims and endorse in Borrower's name all checks and
drafts in settlement thereof and to execute release and to cancel any
insurance coverage.
(e) Books and Records; Inspection.. Borrower shall keep accurate and
complete books of accounts and records and books covering Borrower's business
operations and covering the Collateral . Lender and its employees and agents
shall have the right to review such books and records and to copy them and to
make extracts therefrom, all at such reasonable times upon reasonable notice
and as often as Lender may reasonably require. Borrower will permit Lender,
its officers, employees and/or agents, at all times, during normal business
hours to enter into and upon any premises where the Collateral is located for
the purpose of inspecting the Collateral, observing the Collateral's use or
otherwise protecting the interests of Lender therein.
(f) Financial Statements. Borrower agrees that during the term of
this Agreement, Borrower shall provide Lender, within 120 days of Borrower's
fiscal year-end with annual financial statements prepared with Generally
Accepted Accounting Principles, consistently applied, and certified by
independent public accountants or by Borrower's chief financial officer and
such quarterly financial statements and such other data and information
(financial and otherwise) as Lender may, from time to time, reasonably
request, bearing upon or related to the Collateral and/or Borrower's financial
condition, sales volumes and/or results of operations. :
(g) Litigation. Borrower will notify Lender in writing, promptly upon
learning thereof, of the institution of any suit or administrative proceeding
against Borrower with respect to the Collateral, or directly against the
Collateral, whether or not the claim is considered by Borrower to be covered
by insurance, and of the institution of any suit or administrative proceeding
which may adversely affect the operations, financial condition or business of
Borrower or Lender's security interest in the Collateral.
(h) Payment of Taxes and Claims. Borrower will duly pay and discharge
when due and payable, all taxes, assessments and governmental and other
charges, levies or claims levied or imposed, which are, or which if unpaid
might become, a lien or charge upon the Collateral, or the properties, assets,
franchises, earnings or business of Borrower, provided, however, that nothing
contained in this paragraph shall require Borrower to pay and discharge, or
cause to be paid and discharged, any such tax, assessment, charge, levy or
claim so long as Borrower in good faith shall contest the validity thereof and
shall set aside on its books adequate reserves with respect thereto.
(i) Maintenance And Use of Collateral. Borrower will maintain the
Collateral in good condition and repair (normal wear and tear excepted) and
pay and discharge, or cause to be paid and discharged, when due, the cost of
repairs or maintenance, and pay or cause to be paid all rent due on the
Locations where any Collateral is or may be held. If the vendor or
manufacturer of the Collateral has provided Borrower with a standard
maintenance schedule, such schedule will constitute minimum maintenance
compliance, and Borrower, upon request, will supply Lender with evidence of
such compliance. Borrower shall use the Collateral solely for business or
commercial purposes, in compliance with all applicable laws, ordinances,
regulations, and the conditions of all insurance policies required to be
maintained by Borrower pursuant to this Agreement. Any alteration,
modification, additions or improvements to any items of the Collateral shall
forthwith upon the making thereof become subject to the security interest of
Lender granted herein. Borrower agrees that the Collateral shall be used and
operated only by trained and competent operators in accordance with the
manufacturer's instructions, any insurance requirement and any governmental
rules and/or regulations..
(j) Principal Place of Business. Borrower shall maintain and keep its
principal place of business and its chief executive office at the address set
forth above, and at no other location without giving Lender at least thirty
(30) days prior written notice of any move. Borrower shall maintain and keep
its records concerning the Collateral at that address and at no other location
without giving Lender at least thirty (30) days prior written notice of any
move.
(k) Guarantees and Contingent Liabilities. Borrower shall not at any
time without Lender's prior written consent which will not be unreasonably
withheld, directly or indirectly assume, guarantee, endorse or otherwise
agree, become or remain directly or contingently liable upon or with respect
to any obligations or liability of any other person or entity.
(l) Dispositions of Assets. Borrower shall not sell, convey, assign,
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, the Collateral or all or a substantial portion of its assets.
8. Events Of Default, Rights And Remedies On Default.
(a) Event of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(i) Borrower fails to pay any of the Note(s) or any of the
installment(s) thereunder on the due date thereof; or Borrower fails to
make any other payment due to Lender however arising on the due date
thereof and such default continues for five (5) days; or
(ii) Borrower fails or neglects to perform or observe any other term,
covenant, warranty or representation contained in this Agreement or any
other Loan Document, which is required to be performed or observed by
Borrower (other than for the payment of money) and the same is not cured
to Lender's reasonable satisfaction within ten (10) days after the giving
of notice by Lender to Borrower of such failure; or
(iii) The Collateral or a significant part of Borrower's other assets
are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors and the same is not cured within
ten (10) days thereafter; or
(iv) Any guarantor of the Obligations defaults under or otherwise
breaches any of the terms of his/her/its guaranty of the Obligations or
any guarantor of the Obligations fails or neglects to perform or observe
any other term, covenant, warranty or representation contained in any Loan
Document executed by a guarantor, which is required to be performed or
observed by a guarantor (other than a guaranty) and the same is not cured
to Lender's reasonable satisfaction within ten (10) days after the giving
of notice by Lender to such guarantor of such failure; or
(v) Borrower breaches or defaults under the terms of any other
agreement, instrument or document with or for the benefit of Lender,
including, without limitation, promissory notes, guaranties, equipment
leases and security documents (including security agreements and deeds of
trust); or
(vi) Any guarantor of the Obligations breaches or defaults under the
terms of any other agreement, instrument or document with or for the
benefit of Lender, including, without limitation, promissory notes,
guaranties, equipment leases and security documents (including security
agreements and deeds of trust); or
(vii) An application is made by Borrower or by any person other than
Borrower for the appointment of a receiver, trustee or custodian for the
Collateral or any other of Borrower's assets and in the case of an
application made by a third party, the same is not dismissed within sixty
(60) days after the application therefor; or
(viii) A petition under any section or chapter of the Bankruptcy Code or
any similar law or regulation shall be filed by or against Borrower, and
in the case of any petition filed by any third party, such petition is not
dismissed within sixty (60) days of such filing, or Borrower makes an
assignment for the benefit of its creditors or any case or proceeding is
filed by or against Borrower for its dissolution, liquidation, or
termination; or
(ix) The indictment or threatened indictment of Borrower or any
guarantor of Borrower's Obligations under any criminal statute, or
commencement or threatened commencement of criminal or civil proceedings
against Borrower or any guarantor of Borrower's Obligations pursuant to
which the proceedings, penalties or remedies sought or available include
forfeiture of any of the property of Borrower or each guarantor; or
(x) Borrower sells, leases, assigns, conveys, abandons or otherwise
transfers or disposes of all or substantially all of its assets; or
(xi) Borrower ceases to conduct its business or is enjoined, restrained
or in any way prevented by court order from conducting all or any material
part of its business affairs, and/or Borrower dies or is declared
incompetent if Borrower is an individual; or
(xii) Lender in good faith believes that either (i) the prospect of
payment or performance of the Obligations is impaired, or (ii) the
Collateral is not sufficient to secure fully any of the Obligations; or
(xiii) There is an adverse change in the Collateral or in the business of
Borrower; or
(xiv) If any representations or warranties made or given either
heretofore or hereafter by Borrower in connection with this Agreement or
the extension of credit by Lender hereunder is false or misleading.
(b) Remedies. Upon and after an Event of Default, Lender shall have the
following rights and remedies:
(i) All of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law, all of which rights and
remedies shall be cumulative, and nonexclusive, in addition to any other
rights and remedies contained in this Agreement or in any Loan Document or
available to Lender in law or in equity.
(ii) All of the Obligations may, at the option of Lender and without
presentment, demand, notice, protest or legal process of any kind, be
declared, and immediately shall become, due and payable.
(iii) Recover from Borrower, for loss of a bargain and not as a
penalty, all accrued but unpaid payments, interest and other monies due
under the Note(s), this Agreement and under any loan documents to the date
Lender declares Borrower in default under this Agreement with respect to
each Note, plus the present value of all future payments to be paid by
Borrower under the Note(s) discounted at the rate of five and one-half
percent (5.5%) plus all other monies owing hereunder, under each of the
Notes or under any other loan documents, whether then due or not.
(iv) The right to enter upon the Location(s) and any other premises of
Borrower, or any other place or places where the Collateral is located and
kept, without any obligation to pay rent to Borrower, through self-help and
without Judicial or other legal process, without first obtaining a final
judgment or giving Borrower notice and opportunity for a hearing on the
validity of Lender's claim, and remove the Collateral therefrom to the
premises of Lender or any agent of Lender, for such time as Lender may
desire in order to effectively collect or liquidate the Collateral. At
Lender's request Borrower shall assemble the Collateral and make it
available to Lender at a place to be designated by Lender, in its sole
discretion.
(v) The right to sell or otherwise dispose of all or any Collateral in
its then condition or after any further manufacturing or processing thereof
at public or private sale or sales, with such notice as may be required by
law, in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable; such sales may be adjourned from time to
time with or without notice. Lender shall have the right to conduct such
sales on Borrower's premises or elsewhere and shall have the right to use
Borrower's premises without charge for such sales for such time or times as
Lender may see fit. Lender is hereby granted license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use
of any matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall
inure to Lender's benefit. Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private, sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any
Collateral shall be applied first to the reasonable costs, expenses and
attorney's fees and expenses incurred by Lender for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of
the Collateral, second to interest due upon any of the Obligations, and
third to the principal of the Obligations. If any deficiency shall arise,
Borrower shall remain liable to Lender therefor. If any excess shall
arise, it shall be paid over to Borrower.
(c) Notice. Any notice required to be given by Lender of a sale, lease,
other disposition of the Collateral or any other intended action by Lender,
may be given in any manner provided for delivery of notices in this Agreement,
five (5) days prior to such proposed action, and, if so given, shall
constitute commercially reasonable and fair notice thereof to Borrower.
(d) No Duty. Lender shall have no duty to collect or protect the Collateral
or any part thereof beyond exercising reasonable care in the custody of any
Collateral actually in the possession of Lender.
9. Miscellaneous
(j) Payments. All payments under this Agreement and the Note(s) shall be
made by Borrower to Lender without defense, setoff or counterclaim and without
deduction for any present or future income, stamp or other taxes, levies,
imposts, deductions, charges or withholdings whatsoever imposed, assessed,
levied or collected by or for the benefit of any jurisdiction or taxing
authority. In addition, Borrower shall pay any and all taxes (stamp or
otherwise) payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Note(s) and the other loan
documents to be delivered hereunder, and on all payments to be made by
Borrower hereunder and under the Note(s) (other than Lender's income taxes)
and all taxes payable in connection with or related to the Collateral.
Borrower shall pay Lender a transaction initiation fee equal to one-half of
one percent (.05%) of the Loan but not less than $100.00 nor more than
$750.00. Borrower shall also pay Lender a fee equal to the greater of (i)
$25.00 or (ii) the actual bank charges to Lender for each check of Borrower
that is returned unpaid for any reason. All payments due under this
Agreement, any Note(s) or any other loan documents shall be paid to Lender
without notice or demand at its address set forth herein or such other place
as Lender directs in writing.
(k) Further Assurances. Borrower shall at any time and from time to time
upon the written request of Lender, execute and deliver such further
agreements, instruments and documents and do such further acts and things as
Lender may reasonably request in order to effect the purposes of this
Agreement.
(l) Costs and Expenses. Borrower shall pay (or at Lender's option,
reimburse Lender for) all of Lender's fees, costs and expenses (including
attorneys' fees and costs) incurred in connection with the drafting,
negotiation, closing and enforcement of this Agreement, the Note(s) and the
other loan documents. Borrower shall also pay (or at Lender's option,
reimburse Lender for) all recording and filing fees and other costs and
expenses incurred in connection with the transactions contemplated by this
Agreement.
(m) Modification of Agreement; Sale of Interest. . This Agreement, the
Note(s) and the other loan documents are the complete agreement of the
parties with respect to the subject matter hereof and thereof. This Agreement
may not be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Borrower may not sell, assign or transfer this
Agreement, or any portion hereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers, and/or duties hereunder. . ALL
ORAL NEGOTIATIONS ARE MERGED HEREIN. THERE ARE NO ORAL COVENANTS OR
AGREEMENTS MADE BY EITHER PARTY HERETO EXCEPT AS REDUCED TO WRITING HERETO
Borrower hereby consents to Lender's sale, assignment, mortgaging, transfer or
other disposition without notice at any time or times hereafter of this
Agreement, the Note(s) and/or other loan documents or any portion hereof or
thereof, including, without limitation, Lender's rights, title, interests,
remedies, powers, and/or duties hereunder or thereunder. Borrower agrees that
any assignee shall have all of the rights, but none of the obligations, of
Lender under the transferred documents.
(n) Waiver by Lender. Lender's failure, at any time or times hereafter, to
require strict performance by Borrower of any provision of this Agreement
shall not waive, affect or diminish any right of Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by
Lender of any Event of Default by Borrower under this Agreement shall not
suspend, waive or affect any other Event of Default by Borrower under this
Agreement, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in this
Agreement and no Event of Default by Borrower under this Agreement shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
signed by an officer or other authorized person of Lender and directed to
Borrower.
(o) Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or be
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of
this Agreement.
(p) Parties. This Agreement shall be binding upon Borrower and the heirs,
administrator, personal representative, successor and assigns of Borrower,
and shall inure to the benefit of Lender and its the successors and assigns
of.
(q) Governing Law; Personal Jurisdiction,; Service of Process. THIS
AGREEMENT SHALL BE DEEMED TO HAVE BEEN DELIVERED AT AND SHALL BE INTERPRETED,
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CONNECTICUT. BORROWER HEREBY IRREVOCABLY
CONSENTS TO PERSONAL JURISDICTION AND VENUE IN ANY COURT OF THE STATE OF
CONNECTICUT OR ANY FEDERAL COURT SITTING IN THE STATE OF CONNECTICUT, AND
HEREBY WAIVES ANY CLAIM BORROWER MAY HAVE THAT SUCH COURT IS AN INCONVENIENT
FORUM FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
THIS AGREEMENT, THE NOTE(S), ANY OTHER INSTRUMENT OR ANY OF THE AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, WHICH IS BROUGHT AGAINST
BORROWER, AND HEREBY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN ANY SUCH COURT. BORROWER
FURTHER CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH ABOVE, SUCH SERVICE TO
BECOME EFFECTIVE THREE (3) DAYS AFTER SUCH MAILING.
(r) Waiver of Jury Trial. BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE
NOTE(S) OR ANY AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN
CONNECTION HEREWITH OR THEREWITH.
(s) Notice. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served
if delivered by overnight courier, such as Federal Express, with proper
postage prepaid, or by hand or certified mail, return receipt requested, and
addressed to the party to be notified at the address of such party set forth
in this Agreement or to such other address as each party may designate for
itself by like notice. Such notice shall be deemed received, if sent by
overnight courier, the next day, if sent by hand, upon delivery and if sent by
certified mail, three (3) days after deposit with the U.S. Postal Service.
(t) Section Titles, Definitions. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
"Closing Date" shall mean the date on which the Loan proceeds are disbursed
to Borrower by Lender.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
LENDER: FRANCHISE MORTGAGE ACCEPTANCE COMPANY
By: ____________________________________________
Title: ____________________________________________
BORROWER: BAB OPERATIONS, INC.
By: ___________________________________________
Title: ___________________________________________
