Loan Agreement - FFCA Acquisition Corp. and NERC LP
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of August 6, 1997, by
and between FFCA ACQUISITION CORPORATION, a Delaware corporation ("FFCA"), whose
address is 17207 North Perimeter Drive, Scottsdale, Arizona 85255, and NERC
LIMITED PARTNERSHIP, a Delaware limited partnership ("Debtor"), whose address is
300 Pond Street, Randolph, Massachusetts 02368.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined terms used in this
Agreement shall have the meanings set forth in Section 1. Debtor has requested
from FFCA, and applied for, the Loans to provide long-term financing for the
Premises, and for no other purpose whatsoever. Each Loan will be evidenced by a
Note and secured by a first priority security interest in the corresponding
Premises pursuant to a Mortgage. FFCA has committed to make the Loans pursuant
to the terms and conditions of the Commitment, this Agreement and the other Loan
Documents.
AGREEMENT:
In consideration of the mutual covenants and provisions of this Agreement,
the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings for
all purposes of this Agreement:
"ACTION" has the meaning set forth in Section 10.A(4).
"ADDITIONAL ENTERPRISE VALUE FINANCING" means the additional enterprise
value financing (or a modification of existing enterprise value financing) in an
amount not less than $20,000,000 to Lessee from BankBoston, N.A. or any other
lender acceptable to Debtor or Lessee.
"AFFILIATE" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls," "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities or otherwise.
"ASSIGNMENT OF RENTS AND LEASES" or "ASSIGNMENTS OF RENTS AND LEASES"
means, as the context may require, the assignment of rents and leases or
assignments of rents and leases to be executed by Debtor in favor of FFCA, as
the same may be amended from time to time. An Assignment of Rents and Leases
will be executed for each Premises.
"CHILI'S RESTAURANTS" means all of the Premises other than the On the
Border Restaurant.
"CLOSING" shall have the meaning set forth in Section 4.
"CLOSING DATE" means the date specified as the closing date in Section 4.
"CODE" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 ET SEQ.,
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as amended.
"COMMITMENT" means that certain Commitment Letter dated May 21, 1997
between FFCA and Lessee with respect to the transaction described in this
Agreement, and any amendments or supplements thereto.
"COUNSEL" means legal counsel to Debtor and Lessee, licensed in the
state(s) in which (i) the Premises are located, (ii) Lessee is incorporated or
formed and (iii) Debtor and/or Lessee maintain principal places of business, as
applicable, as selected by Debtor and Lessee, as the case may be, and approved
by FFCA.
"DE MINIMIS AMOUNTS" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any form
or combination of forms which does not constitute a violation of any
Environmental Laws and is customarily employed in, or associated with, similar
businesses located in the state in which the Premises is located.
"DISCLOSURES" has the meaning set forth in Section 13.P.
"ENVIRONMENTAL CONDITION" means any condition with respect to soil, surface
waters, groundwaters, land, stream sediments, surface or subsurface strata,
ambient air and any environmental medium comprising or surrounding the Premises,
whether or not yet discovered, which could or does result in any damage, loss,
cost, expense, claim, demand, order or liability to or against Debtor, Lessee or
FFCA by any third party (including, without limitation, any Governmental
Authority), including, without limitation, any condition resulting from the
operation of Debtor's or Lessee's business and/or the operation of the business
of any other property owner or operator in the vicinity of the Premises and/or
any activity or operation formerly conducted by any person or entity on or off
the Premises.
"ENVIRONMENTAL INDEMNITY AGREEMENT" or "ENVIRONMENTAL INDEMNITY AGREEMENTS"
means, as the context may require, the environmental indemnity agreement or
environmental indemnity agreements dated as of the date of this Agreement
executed by Debtor for the benefit of FFCA, as the same may be amended from time
to time. An Environmental Indemnity Agreement will be executed for each
Premises.
"ENVIRONMENTAL LAWS" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common
law, relating to Hazardous Materials and/or the protection of human health or
the environment by reason of a Release or a Threatened Release of Hazardous
Materials or relating to liability for or costs of Remediation or prevention of
Releases. "Environmental Laws" includes, but is not limited to, the following
statutes, as amended, any successor thereto, and any regulations promulgated
pursuant thereto, and any state or local statutes, ordinances, rules,
regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the
Resource Conservation and Recovery Act (including but not limited to Subtitle I
relating to underground storage tanks); the Solid Waste Disposal Act; the Clean
Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe
Drinking Water Act; the Occupational Safety and Health Act; the Federal Water
Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Endangered Species Act; the National Environmental Policy Act; and the River
and Harbors Appropriation Act. "Environmental Laws" also includes, but is not
limited to, any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law: conditioning
transfer of property upon a negative declaration or other approval of a
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Governmental Authority with respect to Hazardous Materials; requiring
notification or disclosure of Releases or other environmental condition of the
Premises to any Governmental Authority or other person or entity, whether or not
in connection with transfer of title to or interest in property; imposing
conditions or requirements relating to Hazardous Materials in connection with
permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to Hazardous Materials; and relating
to wrongful death, personal injury, or property or other damage in connection
with the physical condition or use of the Premises by reason of the presence of
Hazardous Materials in, on, under or above the Premises.
"EVENT OF DEFAULT" has the meaning set forth in Section 10.
"EXISTING LEASES" means, collectively, all ground leases, building leases,
subleases and overleases which are in existence as of the date hereof relating
to the Leased Premises and all modifications, amendments and supplements thereto
disclosed in the Lease Estoppel Certificate and Consents delivered with respect
thereto, and all modifications, amendments and supplements consented to by FFCA
pursuant to the terms of the Mortgages. The term "Existing Leases" does not
include the Operating Leases.
"EXISTING LESSORS" means the lessors under the Existing Leases.
"FCCR AMOUNT" has the meaning set forth in Section 10.A(7).
"FEE" means an underwriting, site assessment, valuation, processing and
commitment fee equal to 1% of the sum of the Loan Amounts for all of the
Premises, which Fee shall be payable as set forth in Section 3.
"FRANCHISOR" means Brinker International, Inc., a Delaware corporation, and
its successors.
"FRANCHISOR CERTIFICATE" has the meaning set forth in Section 9.L.
"FRANCHISOR RESTAURANT" means (i) with respect to the Chili's Restaurants,
a Chili's restaurant, and (ii) with respect to the On the Border Restaurant, an
On the Border restaurant.
"GOVERNMENTAL AUTHORITY" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the states where the Premises
are located or any political subdivision thereof.
"HAZARDOUS MATERIALS" means (a) any toxic substance or hazardous waste,
substance, solid waste or related material, or any pollutant or contaminant; (b)
radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contains
dielectric fluid containing levels of polychlorinated biphenyls in excess of
federal, state or local safety guidelines, whichever are more stringent, or any
petroleum product; (c) any substance, gas, material or chemical which is or may
be defined as or included in the definition of "hazardous substances, " "toxic
substances, " "hazardous materials, " hazardous wastes" or words of similar
import under any Environmental Laws; and (d) any other chemical, material, gas
or substance the exposure to or release of which is or may be prohibited,
limited or regulated by any Governmental Authority that asserts or may assert
jurisdiction over the Premises or the operations or activity at the Premises, or
any chemical, material, gas or substance that does or may pose a hazard to the
health and/or safety of the occupants of the Premises or the owners and/or
occupants of property adjacent to or surrounding the Premises.
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"INDEMNIFIED PARTIES" has the meaning set forth in Section 12.
"LEASED PREMISES" means those Premises identified on SCHEDULE I hereto.
"LEASE ESTOPPEL CERTIFICATE AND CONSENTS" has the meaning set forth in
Section 9.M.
"LEASES" means those certain Leases dated as of the date of this Agreement
between Debtor and Lessee with respect to the Premises.
"LESSEE" means NE Restaurant Company, Inc., a Delaware corporation, and its
successors and permitted assigns.
"LOAN" or "LOANS" means, as the context may require, the loan for each
Premises, or the loans for all of the Premises, described in Section 2. Each
Loan will be evidenced by a Note and secured by a Mortgage.
"LOAN AMOUNT" or "LOAN AMOUNTS" means, as the context may require, the
aggregate amount set forth in Section 2 or, with respect to each Premises, the
individual amount set forth in EXHIBIT A.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Mortgages, the Environmental Indemnity Agreements, the Assignments of Rents and
Leases, the UCC-1 Financing Statements and all other documents executed in
connection therewith or contemplated thereby.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) a
Premises, including, without limitation, its operation as a Franchisor
Restaurant and/or its value, (ii) Debtor's ability to perform under any of the
Loan Documents, or (iii) Lessee's ability to perform under any of the Leases.
"MORTGAGE" OR "MORTGAGES" means, as the context may require, the mortgage
or mortgages dated as of the date of this Agreement to be executed by Debtor for
the benefit of FFCA, as the same may be amended from time to time. A Mortgage
will be executed for each Premises.
"NONDISTURBANCE AGREEMENTS" has the meaning set forth in Section 9.M.
"NOTE" or "NOTES" means, as the context may require, the promissory note or
notes dated as of the date of this Agreement to be executed by Debtor in favor
of FFCA, as such Note or Notes may be amended from time to time, including,
without limitation, as a result of the payment of the FCCR Amount pursuant to
Section 10. A Note in the corresponding Loan Amount will be executed for each
Premises.
"ON THE BORDER RESTAURANT" means the Premises located at 19 Commerce Way,
Woburn, Massachusetts.
"OPERATING LEASE" or "OPERATING LEASES" means, as the context may require,
the lease or leases to be executed by Debtor, as lessor, and Lessee, as lessee,
for the lease or sublease, as the case may be, of the Premises. An Operating
Lease will be executed for each of the Premises.
"PARTICIPATION" has the meaning set forth in Section 13.P.
"PERMITTED EXCEPTIONS" means those recorded easements, restrictions, liens
and encumbrances set forth as exceptions in the title insurance policies issued
by Title Company to FFCA and approved by FFCA in connection with the Loans.
"PERSON" shall mean any individual, corporation, partnership, limited
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liability company, trust, unincorporated organization, Governmental Authority or
any other form of entity.
"PREMISES" means the parcel or parcels of real estate corresponding to the
FFCA File Numbers, NERC PC Numbers and addresses identified on EXHIBIT A
attached hereto, together with all rights, privileges and appurtenances
associated therewith and all buildings, fixtures, and tangible personal property
(including, without limitation, restaurant equipment) and other improvements now
or hereafter located thereon (whether or not affixed to such parcels),
including, without limitation, parking areas. As used herein, the term
"Premises" shall mean either a singular property or all of the properties
collectively, as the context may require.
"RELEASE" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.
"REMEDIATION" means any response, remedial, removal, or corrective action,
any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate
any Hazardous Material, any actions to prevent, cure or mitigate any Release,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or any evaluation
relating to any Hazardous Materials.
"SECURITIZATION" has the meaning set forth in Section 13.P.
"THREATENED RELEASE" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding the Premises which
may result from such Release.
"TITLE COMPANY" means the title insurance company described in Section 4.
"TRANSFER" has the meaning set forth in Section 13.P.
"UCC-1 FINANCING STATEMENTS" means such UCC-I Financing Statements as FFCA
shall require to be executed and delivered by Debtor and Lessee with respect to
the Premises.
2. TRANSACTION. On the terms and subject to the conditions set forth in the
Loan Documents, FFCA shall make the Loans. The Loans will be evidenced by the
Notes and secured by the Mortgages. Debtor shall repay the outstanding principal
amount of the Loans together with interest thereon in the manner and in
accordance with the terms and conditions of the Notes and the other Loan
Documents. The aggregate Loan Amount shall be $22,400,000.00 allocated among the
Premises as set forth on the attached Exhibit A. The Loans shall be advanced at
the Closing in cash or otherwise immediately available funds subject to any
prorations and adjustments required by this Agreement. Each Premises will be
leased to Lessee pursuant to an Operating Lease and Debtor will assign each
Operating Lease to FFCA pursuant to a Mortgage and an Assignment of Rents and
Leases.
3. UNDERWRITING, SITE ASSESSMENT, VALUATION, PROCESSING AND COMMITMENT FEE.
Lessee paid FFCA one-half of the Fee pursuant to the Commitment, and such
portion was deemed fully earned when received. The remainder of the Fee shall be
paid at the Closing and shall be deemed nonrefundable and fully earned upon the
Closing. The Fee constitutes FFCA's underwriting, site assessment, valuation,
processing and commitment fee.
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4. CLOSING. (a) The Loan shall be closed (the "Closing") within 10 days
following the satisfaction of all of the terms and conditions contained in this
Agreement, but no later than August 29, 1997 (the date on which the Closing is
scheduled to occur is referred to herein as the "Closing Date"). Notwithstanding
anything to the contrary contained in this Agreement, Debtor's obligation to
close the transaction contemplated hereunder is conditioned on the closing of
the Additional Enterprise Value Financing occurring simultaneously with or prior
to the Closing.
(b) Debtor has ordered a title insurance commitment for each Premises from
Lawyers Title Insurance Corporation ("Title Company"). On or prior to the
Closing Date, the parties hereto shall deposit with Title Company all documents
and moneys necessary to comply with their obligations under this Agreement.
Title Company shall not cause the transaction to close unless and until it has
received written instructions from FFCA to do so. All costs of such transaction
shall be borne by Debtor, including, without limitation, the cost of title
insurance and endorsements, the attorneys' fees of Debtor, attorneys' fees and
expenses of FFCA (provided that FFCA shall advise Debtor prior to the
commencement of any legal work for which extraordinary fees would be payable
(i.e., in excess of $80,000) and discuss with Debtor the most cost effective
means to proceed), the cost of the surveys, the cost of the environmental
reports to be delivered pursuant to Section 9.E, FFCA's in-house site inspection
costs and fees, stamp taxes, mortgage taxes, transfer taxes, and escrow, filing
and recording fees. All real and personal property and other applicable taxes
and assessments and other charges relating to the Premises which are due and
payable on or prior to the Closing Date as well as taxes and assessments due and
payable subsequent to the Closing Date but which Title Company requires to be
paid at Closing as a condition to the issuance of the title insurance policy
described in Section 9.C, shall be paid by Debtor at or prior to the Closing.
The Closing documents shall be dated as of the Closing Date.
Debtor and FFCA hereby employ Title Company to act as escrow agent in
connection with this transaction. Debtor and FFCA will deliver to Title Company
all documents, pay to Title Company all sums and do or cause to be done all
other things necessary or required by this Agreement, in the reasonable judgment
of Title Company, to enable Title Company to comply herewith and to enable any
title insurance policy provided for herein to be issued. Title Company is
authorized to pay, from any funds held by it for FFCA's or Debtor's respective
credit all amounts necessary to procure the delivery of such documents and to
pay, on behalf of FFCA and Debtor, all charges and obligations payable by them,
respectively. Debtor will pay all charges payable by it to Title Company. Title
Company is authorized, in the event any conflicting demand is made upon it
concerning these instructions or the escrow, at its election, to hold any
documents and/or funds deposited hereunder until an action shall be brought in a
court of competent jurisdiction to determine the rights of Debtor and FFCA or to
interplead such documents and/or funds in an action brought in any such court.
Deposit by Title Company of such documents and funds, after deducting therefrom
its charges and its expenses and attorneys' fees incurred in connection with any
such court action, shall relieve Title Company of all further liability and
responsibility for such documents and funds. Title Company's receipt of this
Agreement and opening of an escrow pursuant to this Agreement shall be deemed to
constitute conclusive evidence of Title Company's agreement to be bound by the
terms and conditions of this Agreement pertaining to Title Company. Disbursement
of any funds shall be made by check, certified check or wire transfer, as
directed by FFCA. Title Company shall be under no obligation to disburse any
funds represented by check or draft, and no check or draft shall be payment to
Title Company in compliance with any of the requirements hereof, until it is
advised by the bank in which such check or draft is deposited that such check or
draft has been honored. Title Company is authorized to act upon any statement
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furnished by the holder or payee, or a collection agent for the holder or payee,
of any lien on or charge or assessment in connection with the Premises,
concerning the amount of such charge or assessment or the amount secured by such
lien, without liability or responsibility for the accuracy of such statement.
The employment of Title Company as escrow agent shall not affect any rights of
subrogation under the terms of any title insurance policy issued pursuant to the
provisions thereof.
5. REPRESENTATIONS AND WARRANTIES OF FFCA. The representations and
warranties of FFCA contained in this Section are being made by FFCA as of the
date of this Agreement and the Closing Date to induce Debtor to enter into this
Agreement and consummate the transactions contemplated herein, and Debtor has
relied, and will continue to rely, upon such representations and warranties from
and after the execution of this Agreement and the Closing. FFCA represents and
warrants to Debtor as follows:
A. ORGANIZATION OF FFCA. FFCA has been duly formed, is validly
existing and has taken all necessary action to authorize the execution,
delivery and performance by FFCA of this Agreement.
B. AUTHORITY OF FFCA. The person who has executed this Agreement on
behalf of FFCA is duly authorized so to do.
C. ENFORCEABILITY. Upon execution by FFCA, this Agreement shall
constitute the legal, valid and binding obligation of FFCA, enforceable
against FFCA in accordance with its terms.
All representations and warranties of FFCA made in this Agreement shall
survive the Closing.
6. REPRESENTATIONS AND WARRANTIES OF DEBTOR. The representations and
warranties of Debtor contained in this Section are being made by Debtor as of
the date of this Agreement and the Closing Date to induce FFCA to enter into
this Agreement and consummate the transactions contemplated herein, and FFCA has
relied, and will continue to rely, upon such representations and warranties from
and after the execution of this Agreement and the Closing. Debtor represents and
warrants to FFCA as follows:
A. INFORMATION AND FINANCIAL STATEMENTS. Debtor has delivered to FFCA
Lessee's financial statements (either audited financial statements or, if
Debtor does not have audited financial statements, certified financial
statements) and certain other information concerning Lessee, which
financial statements and other information are true, correct and complete
in all material respects; and no material adverse change has occurred with
respect to any such financial statements and other information provided to
FFCA since the date such financial statements and other information were
prepared or delivered to FFCA. Debtor understands that FFCA is relying upon
such financial statements and information and Debtor represents that such
reliance is reasonable. All such financial statements were prepared in
accordance with generally accepted accounting principles consistently
applied and accurately reflect as of the date of this Agreement and the
Closing Date, the financial condition of each individual or entity to which
they pertain.
B. ORGANIZATION AND AUTHORITY OF DEBTOR AND LESSEE. (1) Each of Debtor
and Lessee is duly organized or formed, validly existing and in good
standing under the laws of its state of organization or formation, and
qualified as a foreign corporation or limited partnership, as applicable,
to do business in each of the states where the Premises are located. All
necessary corporate or limited partnership action has been taken to
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authorize the execution, delivery and performance of this Agreement and of
the other documents, instruments and agreements provided for herein.
(2) The person(s) who have executed this Agreement on behalf of the
general partner of Debtor are duly authorized so to do.
C. ENFORCEABILITY OF DOCUMENTS. Upon execution by Debtor or Lessee, as
applicable, this Agreement and the other documents, instruments and
agreements to be executed in connection with this Agreement, shall
constitute the legal, valid and binding obligations of Debtor and Lessee,
respectively, enforceable against Debtor and Lessee in accordance with
their respective terms.
D. LITIGATION. There are no suits, actions, proceedings or
investigations pending or, to the best of Debtor's knowledge, threatened
against or involving Debtor, Lessee or the Premises before any court,
arbitrator, or Governmental Authority which might reasonably result in any
material adverse change in the contemplated business, condition, worth or
operations of Debtor, Lessee or the Premises.
E. ABSENCE OF BREACHES OR DEFAULTS. Debtor and/or Lessee are not, and
the authorization, execution, delivery and performance of this Agreement
and the documents, instruments and agreements provided for herein will not
result, in any breach or default under any other document, instrument or
agreement to which Debtor and/or Lessee are a party or by which Debtor,
Lessee, the Premises or any of the property of Debtor or Lessee is subject
or bound, except such breach or default which would not have a Material
Adverse Effect. The authorization, execution, delivery and performance of
this Agreement and the documents, instruments and agreements provided for
herein will not violate any applicable law, statute, regulation, rule,
ordinance, code, rule or order.
F. UTILITIES. The Premises are served by ample public utilities to
permit full utilization of the Premises for their intended purpose and all
utility connection fees and use charges will have been paid in full.
G. INTENDED USE AND ZONING; COMPLIANCE WITH LAWS. Debtor intends that
Lessee will use the Premises solely for the operation of Franchisor
Restaurants, and related ingress, egress and parking, and for no other
purposes, other than as may be contemplated by the Mortgages. Each of the
Premises are in material compliance with all applicable zoning
requirements. Debtor has no actual knowledge that the use of any of the
Premises as a Franchisor Restaurant constitutes a nonconforming use under
applicable zoning requirements which would prevent a Franchisor Restaurant
from being re-built and operated on such Premises in the event that the
existing Franchisor Restaurant is subject to a casualty. The Premises
comply with all applicable statutes, regulations, rules, ordinances, codes,
licenses, permits, orders and approvals of each Governmental Authority
having jurisdiction over the Premises, including, without limitation, all
health, building, fire, safety and other codes, ordinances and
requirements, all applicable standards of the National Board of Fire
Underwriters and the Americans With Disabilities Act of 1990 and all
policies or rules of common law, in each case, as amended, and any judicial
or administrative interpretation thereof, including any judicial order,
consent, decree or judgment applicable to Debtor or Lessee, except to the
extent the failure with which to comply would not have a Material Adverse
Effect.
H. AREA DEVELOPMENT; WETLANDS. No condemnation or eminent domain
proceedings affecting the Premises have been commenced or, to the best of
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Debtor's knowledge, are contemplated. To the best of Debtor's knowledge,
the areas where the Premises are located have not been declared blighted by
any Governmental Authority. The Premises and/or the real property bordering
the Premises are not designated by any applicable Governmental Authority as
a wetlands.
I. LICENSES AND PERMITS; ACCESS. Debtor or Lessee has all required
licenses and permits, both governmental and private, to use and operate the
Premises in the intended manner. There are adequate rights of access to
public roads and ways available to the Premises to permit full utilization
of the Premises for their intended purposes and all such public roads and
ways have been completed and dedicated to public use.
J. CONDITION OF PREMISES. The Premises, including the equipment
located thereon, are of good workmanship and materials, fully equipped and
operational, in good condition and repair, free from known structural
defects, clean, orderly and sanitary, safe, well-lit, landscaped,
decorated, attractive and well-maintained.
K. ENVIRONMENTAL. Debtor is fully familiar with the present use of the
Premises, and, to the extent that Debtor or Lessee has previously obtained
a Phase I environmental report with respect to any of the Premises, Debtor
has become generally familiar with the prior uses of such Premises. During
the period in which Debtor or Lessee has had a fee or leasehold interest in
the Premises, and except as disclosed in the reports delivered pursuant to
Section 9.E (the "Reports"), (i) no Hazardous Materials have been used,
handled, manufactured, generated, produced, stored, treated, processed,
transferred or disposed of at or on the Premises, except in De Minimis
Amounts and in compliance with all applicable Environmental Laws, and (ii)
no Release or Threatened Release has occurred at or on the Premises.
Furthermore, Debtor has no actual knowledge that, during the period prior
to Lessee's acquisition of a fee or leasehold interest in the Premises, and
except as disclosed in the Reports, (i) any Hazardous Materials have been
used, handled, manufactured, generated, produced, stored, treated,
processed, transferred or disposed of at or on the Premises, except in De
Minimis Amounts and in compliance with all applicable Environmental Laws,
or (ii) any Release or Threatened Release has occurred at or on the
Premises. The activities, operations and business undertaken on, at or
about the Premises during the period in which Debtor or Lessee has had a
fee or leasehold interest in the Premises, including, but not limited to,
any past or ongoing alterations or improvements at the Premises, are and
have been in compliance with all Environmental Laws, except such
noncompliance as would not have a Material Adverse Effect and except as
disclosed in the Reports, and Debtor has no actual knowledge that any such
activities, operations or business undertaken on, at or about the Premises
during the period prior to Lessee's acquisition of a fee or leasehold
interest in the Premises were not in compliance with all Environmental Laws
except such noncompliance as would not have a Material Adverse Effect and
except as disclosed in the Reports. No further action is required to remedy
any Environmental Condition or violation of, or to be in full compliance
with, any Environmental Laws, and no lien has been imposed on the Premises
by any Governmental Authority in connection with any Environmental
Condition, the violation or threatened violation of any Environmental Laws
or the presence of any Hazardous Materials on or off the Premises during
the period in which Debtor or Lessee has had a fee or leasehold interest in
the Premises or, to Debtor's actual knowledge, during the period prior to
Lessee's acquisition of a fee or leasehold interest in the Premises.
There is no pending or, to the best of Debtor's knowledge, threatened
litigation or proceeding before any court, administrative agency or
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Governmental Authority in which any person or entity alleges the violation
or threatened violation of any Environmental Laws or the presence, Release,
Threatened Release or placement on or at the Premises of any Hazardous
Materials, or of any facts which would give rise to any such action, nor
has Debtor (a) received any notice (and Debtor has no actual knowledge)
that any Governmental Authority or any employee or agent thereof has
determined, threatens to determine or requires an investigation to
determine that there has been a violation of any Environmental Laws at, on
or in connection with the Premises or that there exists a presence,
Release, Threatened Release or placement of any Hazardous Materials on or
at the Premises, or the use, handling, manufacturing, generation,
production, storage, treatment, processing, transportation or disposal of
any Hazardous Materials at or on the Premises; (b) received any notice
under the citizen suit provision of any Environmental Law in connection
with the Premises or any facilities, operations or activities conducted
thereon, or any business conducted in connection therewith; or (c) received
any request for inspection, request for information, notice, demand,
administrative inquiry or any formal or informal complaint or claim with
respect to or in connection with the violation or threatened violation of
any Environmental Laws or existence of Hazardous Materials relating to the
Premises or any facilities, operations or activities conducted thereon or
any business conducted in connection therewith.
L. TITLE TO PREMISES; FIRST PRIORITY LIEN. Fee title to each of the
Premises is vested in Debtor, free and clear of all hens, encumbrances,
charges and security interests of any nature whatsoever, except the
Permitted Exceptions, provided that, with respect to the Leased Premises,
Debtor is the holder of a leasehold interest in the land relating thereto
and the holder of either a fee or leasehold interest in the buildings and
improvements relating thereto, as indicated in the Lease Estoppel
Certificate and Consent relating thereto. Upon Closing, FFCA shall have a
first priority lien upon and security interest in Debtor's right, title and
interest in and to each of the Premises pursuant to the Mortgages and the
UCC-1 Financing Statements.
M. NO OTHER AGREEMENTS AND OPTIONS. Neither Debtor, Lessee nor the
Premises are subject to any commitment, obligation, or agreement,
including, without limitation, any right of first refusal, option to
purchase or lease granted to a third party, which could or would prevent or
hinder FFCA in making the Loans or prevent or hinder Debtor from fulfilling
its obligations under this Agreement or the other Loan Documents, other
than those agreements with Existing Lessors for which FFCA shall have
received a Lease Estoppel Certificate and Consent prior to Closing and the
franchise, license and/or area development agreements with Franchisor for
which FFCA shall have received a Franchisor Certificate prior to Closing.
N. NO MECHANICS' LIENS. There are no outstanding accounts payable,
mechanics' liens, or rights to claim a mechanics' lien in favor of any
materialman, laborer, or any other person or entity in connection with
labor or materials furnished to or performed on any portion of the
Premises; no work has been performed or is in progress nor have materials
been supplied to the Premises or agreements entered into for work to be
performed or materials to be supplied to the Premises prior to the date
hereof, which will not have been fully paid for on or before the Closing
Date or which might provide the basis for the filing of such liens against
the Premises or any portion thereof; Debtor shall be responsible for any
and all claims for mechanics' liens and accounts payable that have arisen
or may subsequently arise due to agreements entered into for and/or any
work performed on, or materials supplied to the Premises prior to the
Closing Date; Debtor has made no contract or arrangement of any kind the
<PAGE>
performance of which by the other party thereto would give rise to a lien
on the Premises; and Debtor shall and does hereby agree to defend,
indemnify and forever hold FFCA and FFCA's designees harmless from and
against any and an such mechanics' lien claims, accounts payable or other
commitments relating to the Premises.
O. NO RELIANCE. Debtor acknowledges that FFCA is not affiliated with,
and has no business relationship with, Franchisor, other than
landlord/tenant and/or creditor/debtor relationships unrelated to the
transaction set forth in this Agreement, and that FFCA did not prepare or
assist in the preparation of any of the projected financial information
used by Debtor in analyzing the economic viability and feasibility of the
transaction contemplated by this Agreement. Furthermore, Debtor
acknowledges that it has not relied upon, nor may it hereafter rely upon,
the analysis undertaken by FFCA in determining the Loan Amounts, and such
analysis will not be made available to Debtor.
P. FRANCHISOR PROVISIONS. Lessee has entered into franchise, license
and/or area development agreements with Franchisor for the conduct of
business at the Premises. Such franchise, license and/or area development
agreements will be in full force and effect, will permit Lessee to operate
the Premises as Franchisor Restaurants, and will have terms which, together
with renewal options, will not expire before the scheduled maturity date of
the Notes.
Q. EXISTING LEASES. Debtor has delivered to FFCA a certified true,
correct and complete copy of the Existing Leases. The Existing Leases have
not been modified, amended, supplemented or otherwise revised. The Existing
Leases to which Lessee is a party (which Existing Leases shall be assigned
by Lessee to Debtor prior to the Closing) are the only leases or agreements
between the Existing Lessors and Debtor or Lessee with respect to the
Leased Premises. The Existing Leases to which Lessee is a party are in full
force and effect and constitute the legal, valid and binding obligations of
Lessee, enforceable against Lessee in accordance with their terms and, at
Closing, such Existing Leases shall constitute the legal, valid and binding
obligations of Debtor enforceable against Debtor in accordance with their
terms. Debtor and Lessee have not assigned, transferred, mortgaged or
hypothecated any of the Existing Leases or any interest therein, except for
liens that will be released at Closing, and Debtor and Lessee have not
received any notice that any of the Existing Lessors have made any
assignment, pledge or hypothecation of all or any part of their interests
in any of the Existing Leases. No event has occurred and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default by any of the Existing Lessors, Debtor or Lessee under
those Existing Leases which will be assigned to Debtor prior to Closing,
except such default as would not have a Material Adverse Effect.
R. NONCONSOLIDATION. (1) Debtor maintains correct and complete books
and records of account separate from all other Persons. Where necessary or
appropriate, Debtor has disclosed the nature of the transaction
contemplated by the Loan Documents and Debtor's independent status to its
creditors. The Premises and related restaurant equipment represent all of
the assets owned or leased by Debtor as of the date hereof, and Debtor has
not commingled its assets and its liabilities with those of any other
Person.
(2) Debtor maintains its own checking account or accounts with
commercial banking institutions separate from other Persons.
(3) To the extent that Debtor shares the same employees with other
<PAGE>
Persons, the salaries of and the expenses related to providing benefits to
such employees have been fairly and nonarbitrarily allocated among such
Persons, with the result that each such Person bears its fair share of the
salary and benefit costs associated with all such common employees.
(4) To the extent that Debtor jointly contracts with other Persons to
do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing are, and at all times shall be,
fairly and nonarbitrarily allocated among such Persons, with the result
that each such Person bears its fair share of such costs. To the extent
that Debtor contracts or does business with vendors or service providers
where the goods or services provided are or shall be partially for the
benefit of other Persons, the costs incurred in so doing are fairly and
nonarbitrarily allocated to or among such Persons for whose benefit the
goods or services are provided, with the result that each such Person bears
its fair share of such costs.
(5) To the extent that Debtor or other Persons have offices in the
same location, there is a fair, appropriate and nonarbitrary allocation of
overhead among them, with the result that each such Person bears its fair
share of such expenses.
(6) Debtor has not incurred any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent, including, without limitation,
liability for the debts of any other Person (and Debtor has not held itself
out as being liable for the debts of any other Person), other than the
Loans and trade and operational debt incurred in the ordinary course of
business with trade creditors and in amounts as are normal and reasonable
under the circumstances. Debtor is not a guarantor of any obligations.
(7) Other than is contemplated herein, Debtor is not presently a party
to a pledge of its assets for the benefit of other Persons. Debtor has not
made any loans or advances to any third party (including any Affiliate or
constituent party of Debtor).
(8) Debtor has conducted its affairs strictly in accordance with its
organizational documents including Debtor's corporate general partner's
organizational documents and has observed all necessary, appropriate and
customary formalities.
(9) Debtor does not hold itself out to the public or to any of its
individual creditors as being a unified entity with assets and liabilities
in common with any other Person.
(10) Debtor (i) is solvent, (ii) is able to pay its obligations as
they become due and (iii) is not and shall not be engaged in any business
or transaction for which its remaining capital is or may be unreasonably
small.
(11) Debtor has no actual intent to hinder, delay or defraud creditors
in connection with any of the transactions contemplated herein or intent to
incur (or belief that it is incurring) debts beyond its ability to pay the
same as they mature.
(12) Debtor has not, as to itself or as to other Persons, (a)
commenced any case, proceeding or other action under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to Debtor or other Persons or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
<PAGE>
dissolution, composition or other relief with respect to Debtor or its
debts or other Persons or their debts or (b) sought appointment of a
receiver, trustee, custodian or other similar official for Debtor or for
all or any substantial part of its or other Person's assets or made a
general assignment for the benefit of Debtor's creditors.
All representations and warranties of Debtor made in this Agreement shall
survive the Closing.
7. COVENANTS. Debtor covenants to FFCA from and after the Closing Date as
follows:
A. INSPECTIONS. Debtor shall, and Debtor shall cause Lessee to, at all
reasonable times and upon reasonable prior notice from FFCA (except in the
event of an emergency), (i) provide FFCA and FFCA's officers, employees,
agents, advisors, attorneys, accountants, architects, and engineers with
access to the Premises, all drawings, plans, and specifications for the
Premises in possession of Debtor and Lessee, all engineering reports
relating to the Premises in the possession of Debtor and Lessee, the files
and correspondence relating to the Premises, and the financial books and
records, including lists of delinquencies, relating to the ownership,
operation, and maintenance of the Premises, and (ii) allow such persons to
make such inspections, tests, copies and verifications as FFCA considers
necessary; provided that such access, inspections, tests, copies and
verifications shall not unreasonably interfere with Lessee's business
operations at the Premises.
B. FIXED CHARGE COVERAGE RATIO. Until such time as all of Debtor's
obligations under the Notes and the other Loan Documents are paid,
satisfied and discharged in full, Debtor shall cause to be maintained a
Fixed Charge Coverage Ratio at each of the Premises of at least 1.25:1, as
determined on each December 31. For purposes of this Section, the term
"Fixed Charge Coverage Ratio" shall mean with respect to the twelve month
period of time immediately preceding the date of determination, the ratio
calculated for such period of time of (a) the sum of Net Income,
Depreciation and Amortization, Interest Expense and Operating Lease
Expense, less a corporate overhead allocation in an amount equal to 5% of
Gross Sales, to (b) the sum of the FFCA Payments, the Equipment Payment
Amount and the Ground Lease Expense.
For purposes of this Section, the following terms shall be defined as set
forth below:
"CAPITAL LEASE" shall mean any lease of any property (whether real,
personal or mixed) by Lessee with respect to the subject Premises which
lease would, in conformity with generally accepted accounting principles
consistently applied, be required to be accounted for as a capital lease on
the balance sheet of Lessee. The term "Capital Lease" shall not include any
operating lease, including, without limitation, the Operating Leases.
"DEBT" shall mean as directly related to the subject Premises and the
period of determination (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds., indentures, notes or similar instruments,
(iii) obligations to pay the deferred purchase price of property or
services, (iv) obligations under leases which should be, in accordance with
generally accepted accounting principles consistently applied, recorded as
Capital Leases, and (v) obligations under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to
<PAGE>
in clauses (i) through (iv) above.
"DEPRECIATION AND AMORTIZATION" shall mean with respect to the subject
Premises the depreciation and amortization accruing during any period of
determination with respect to Debtor as determined in accordance with
generally accepted accounting principles consistently applied.
"EQUIPMENT PAYMENT AMOUNT" shall mean for any period of determination
the sum of all amounts payable during such period of determination under
all (i) leases for equipment located at the subject Premises and (ii) all
loans secured by equipment located at the subject Premises.
"FFCA PAYMENTS" shall mean with respect to the period of
determination, the sum of all amounts payable under the Note corresponding
to the subject Premises.
"GROSS SALES" shall mean the sales (less any discounts) or other
income arising from all business conducted at the subject Premises during
the period of determination, less sales tax and any amounts received from
not-for-profit sales of all non-food items approved for use in connection
with promotional campaigns, if any, pursuant to the franchise, license
and/or area development agreements with Franchisor for the subject
Premises.
"GROUND LEASE EXPENSE" shall mean, for any period of determination,
the sum of all amounts payable by Debtor under any Existing Lease with
respect to the subject Premises.
"INTEREST EXPENSE" shall mean for any period of determination, the sum
of all interest accrued or which should be accrued in respect of all Debt
of Lessee allocable to the subject Premises and all business operations
thereon during such period (including interest attributable to Capital
Leases), as determined in accordance with generally accepted accounting
principles consistently applied.
"NET INCOME" shall mean with respect to the period of determination,
the net income or net loss of Lessee allocable to the subject Premises. In
determining the amount of Net Income, (i) adjustments shall be made for
nonrecurring gains and losses allocable to the period of determination,
(ii) deductions shall be made for, among other things, Depreciation and
Amortization, Interest Expense and Operating Lease Expense allocable to the
period of determination, and (iii) no deductions shall be made for (x)
income taxes or charges equivalent to income taxes allocable to the period
of determination, as determined in accordance with generally accepted
accounting principles consistently applied, or (y) corporate overhead
expense allocable to the period of determination.
"OPERATING LEASE EXPENSE" shall mean the expenses incurred by Lessee
under any Operating Lease with respect to the subject Premises and the
business operations thereon during the period of determination, as
determined in accordance with generally accepted accounting principles
consistently applied.
Notwithstanding the foregoing, FFCA shall have the option at any time
while any of the Notes are outstanding, upon notice to Debtor, to require
that Debtor cause to be maintained an aggregate Fixed Charge Coverage Ratio
of at least 1.25:1 at all of the Premises relating to the Loans which have
been or are about to be the subject of a Securitization (the "Securitized
Loans"), instead of a Fixed Charge Coverage Ratio of at least 1.25:1 at
each of such Premises. If FFCA exercises such option, the definitions
<PAGE>
relating to the Fixed Charge Coverage Ratio for such Securitized Loans
shall be deemed to be modified as applicable to provide for the calculation
of the aggregate Fixed Charge Coverage Ratio for all of the Premises
relating to the Securitized Loans.
C. LOST NOTE. Debtor shall, if any Note is mutilated, destroyed, lost
or stolen (a "Lost Note"), promptly deliver to FFCA, upon receipt of an
affidavit from FFCA stipulating that such Note has been mutilated,
destroyed, lost or stolen, in substitution therefor, a new promissory note
containing the same terms and conditions as such Lost Note with a notation
thereon of the unpaid principal and accrued and unpaid interest. Debtor
shall provide fifteen (15) days' prior notice to FFCA before making any
payments to third parties in connection with a Lost Note. Except as a
result of the gross negligence or intentional misconduct of Debtor, FFCA
shall indemnify Debtor for all reasonable costs, expenses, damages, claims
and liabilities incurred by Debtor as a result of a Lost Note.
D. NONCONSOLIDATION. (1) Debtor shall at all times maintain correct
and complete books and records of account separate from all other Persons.
Where necessary or appropriate, Debtor will disclose the nature of the
transaction contemplated by the Loan Documents and Debtor's independent
status to its creditors. Debtor shall not own or lease any assets other
than the Premises and related restaurant equipment, nor engage in any
business other than owning and leasing the Premises and related restaurant
equipment, including financing the Premises with FFCA. Debtor shall not
commingle its assets and its liabilities with those of any other Person.
(2) Debtor shall maintain its own checking account or accounts with
commercial banking institutions separate from other Persons.
(3) To the extent that Debtor shares the same employees with other
Persons, the salaries of and the expenses related to providing benefits to
such employees, at all times shall be, fairly and nonarbitrarily allocated
among such Persons, with the result that each such Person shall bear its
fair share of the salary and benefit costs associated with all such common
employees.
(4) To the extent that Debtor jointly contracts with other Persons to
do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing at all times shall be, fairly and
nonarbitrarily allocated among such Persons, with the result that each such
Person shall bear its fair share of such costs. To the extent that Debtor
contracts or does business with vendors or service providers where the
goods or services provided are or shall be partially for the benefit of
other Persons, the costs incurred in so doing at all times shall be, fairly
and nonarbitrarily allocated to or among such Persons for whose benefit the
goods or services are provided, with the result that each such Person shall
bear its fair share of such costs. All transactions between Debtor and
other Persons shall be only on an arm's-length basis.
(5) To the extent that Debtor or other Persons have offices in the
same location, there shall be a fair, appropriate and nonarbitrary
allocation of overhead among them, with the result that each such Person
shall bear its fair share of such expenses.
(6) Debtor will not incur any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation or assuming liability for the debts of any other Person (and
Debtor will not hold itself out as being liable for the debts of any other
Person), other than the Loans and trade and operational debt incurred in
<PAGE>
the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than
the Loans may be secured (subordinate or pari passu) by the Premises.
(7) Debtor shall not enter into any contract or agreement with any
Affiliate of Debtor, any constituent party of Debtor or any Affiliate of
any constituent party of Debtor except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any such
party.
(8) Except with respect to the Loan Documents, Debtor shall not pledge
its assets for the benefit of other Persons.
(9) Debtor shall issue separate financial statements prepared not less
frequently than annually and prepared according to generally accepted
accounting principles consistently applied.
(10) Debtor shall maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character in light of
its contemplated business operations.
(11) Debtor shall conduct its affairs strictly in accordance with its
organizational documents, including Debtor's corporate general partner's
organizational documents and shall observe all necessary, appropriate and
customary formalities. The books, records and accounts of Debtor shall at
all times be maintained in a manner permitting the assets and liabilities
of Debtor to be easily separated and readily ascertained from those of any
other Person and Debtor shall file its own tax returns.
(12) Debtor shall not hold itself out to the public or to any of its
individual creditors as being a unified entity with assets and liabilities
in common with any other Person. Debtor shall maintain and utilize separate
stationery, invoices and checks.
(13) Debtor shall not make any loans or advances to any third party
(including any Affiliate of Debtor or constituent party of Debtor).
(14) Debtor shall not, as to itself or as to other Persons, (i)
commence any case, proceeding or other action under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to Debtor or other Persons or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to Debtor or its
debts or other Persons or their debts or (ii) seek appointment of a
receiver, trustee, custodian or other similar official for Debtor or for
all or any substantial part of its or other Person's assets or make a
general assignment for the benefit of Debtor's creditors. Debtor shall not
take any action in furtherance of, or indicating its consents to, approval
of or acquiescence in, any of the acts set forth above. Debtor shall not be
unable to, or admit in writing its inability to, pay its debts.
E. EXISTING LEASE MODIFICATIONS. The Existing Leases which will be
assigned to Debtor prior to Closing shall not be modified, amended,
terminated, cancelled or surrendered without FFCA's prior consent, which
consent shall not be unreasonably withheld or delayed with respect to
modifications or amendments as long as the proposed modification or
amendment does not shorten the term of the Existing Lease or increase the
amount of rent to be paid thereunder.
<PAGE>
8. TRANSACTION CHARACTERIZATION. This Agreement is a contract to extend a
financial accommodation (as such term is used in the Code) for the benefit of
Debtor. It is the intent of the parties hereto that the business relationship
created by this Agreement, the Notes, the Mortgages and the other Loan Documents
is solely that of creditor and debtor and has been entered into by both parties
in reliance upon the economic and legal bargains contained in the Loan
Documents. None of the agreements contained in the Loan Documents is intended,
nor shall the same be deemed or construed, to create a partnership between
Debtor and FFCA, to make them joint venturers, to make Debtor an agent, legal
representative, partner, subsidiary or employee of FFCA, nor to make FFCA in any
way responsible for the debts, obligations or losses of Debtor.
9. CONDITIONS OF CLOSING. The obligation of FFCA to consummate the
transaction contemplated by this Agreement is subject to the fulfillment or
waiver of each of the following conditions:
A. TITLE. Fee title to each of the Premises shall be vested in Debtor,
free of all liens, encumbrances, restrictions, encroachments and easements,
except the Permitted Exceptions and the liens created by the Mortgages and
the UCC-1 Financing Statements, provided that, with respect to the Leased
Premises, Debtor shall be the holder of a leasehold interest in the land
relating thereto and the holder of either a fee or leasehold interest in
the buildings and improvements relating thereto, as indicated in the Lease
Estoppel Certificate and Consent relating thereto. Upon Closing, FFCA will
obtain a valid and perfected first priority lien upon and security interest
in Debtor's right, title and interest in and to each of the Premises.
B. CONDITION OF PREMISES. FFCA shall have inspected and approved the
Premises, the Premises and the equipment located thereon shall be in good
condition and repair and of good workmanship and materials, and the
Premises shall be fully equipped and operational, clean, orderly, sanitary,
safe, well-lit, landscaped, decorated, attractive and with a suitable
layout, physical plant, traffic pattern and location, all as determined by
FFCA in its sole discretion.
C. EVIDENCE OF TITLE. FFCA shall have received for each of the
Premises a preliminary title report and irrevocable commitment to insure
title by means of a mortgagee's, ALTA extended coverage policy of title
insurance (or its equivalent, in the event such form is not issued in the
jurisdiction where the Premises is located) issued by Title Company showing
good and marketable fee or leasehold title, as the case may be, in such
Premises in Debtor, committing to insure FFCA's first priority lien upon
and security interest in such Premises subject only to liens, encumbrances,
restrictions and easements approved by FFCA, and containing such
endorsements as FFCA may require.
D. SURVEY. FFCA shall have received a current ALTA survey of each of
the Premises, the form and substance of which shall be satisfactory to FFCA
in its sole discretion. Debtor shall have provided FFCA with evidence
satisfactory to FFCA that the location of each of the Premises is not
within the 100-year flood plain or identified as a special flood hazard
area as defined by the Federal Insurance Administration, or if any Premises
is in such a flood plain or special flood hazard area, Debtor shall provide
FFCA with evidence of flood insurance maintained on such Premises in
amounts and on terms and conditions satisfactory to FFCA.
E. ENVIRONMENTAL. FFCA shall have received a Phase I environmental
report (and a Phase II environmental report, if necessary, as determined by
FFCA in its sole discretion) for each of the Premises, the form, substance
<PAGE>
and conclusions of which shall be satisfactory to FFCA in its sole
discretion.
F. ZONING. Debtor shall have provided FFCA with evidence satisfactory
to FFCA that each of the Premises is properly zoned for its use as a
Franchisor Restaurant, including evidence that the use of any of the
Premises as a Franchisor Restaurant would not constitute a nonconforming
use under applicable zoning requirements which would prevent a Franchisor
Restaurant from being re-built and operated on such Premises in the event
that the existing Franchisor Restaurant is subject to a casualty.
G. COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. ALL
obligations of Debtor under this Agreement shall have been fully performed
and complied with, and no event shall have occurred or condition shall
exist which would, upon the Closing Date, or, upon the giving of notice
and/or passage of time, constitute a breach or default hereunder or under
the Loan Documents, the franchise, license and/or area development
agreements with Franchisor for the Premises or any other agreement between
or among FFCA, Debtor, Lessee or Franchisor pertaining to the subject
matter hereof, and no event shall have occurred or condition shall exist or
information shall have been disclosed by Debtor or discovered by FFCA which
has had or would have a material adverse effect on the Premises, Debtor or
Lessee, and accordingly, FFCA's willingness to consummate the transaction
contemplated by this Agreement, as determined by FFCA in its sole and
absolute discretion.
H. PROOF OF INSURANCE. Debtor shall have delivered to FFCA copies of
insurance policies showing that all insurance required by the Loan
Documents and providing coverage and limits satisfactory to FFCA are in
full force and effect.
I. OPINION OF COUNSEL TO DEBTOR AND LESSEE. Debtor and Lessee shall
have caused Counsel to prepare and deliver an opinion in form and substance
satisfactory to FFCA and its counsel.
J. ASSIGNMENTS OF RENTS AND LEASES. Debtor shall have executed and
delivered an Assignment of Rents and Leases for each Premises.
K. AVAILABILITY OF FUNDS. FFCA presently has sufficient funds to
discharge its obligations under this Agreement. In the event that the
transaction contemplated by this Agreement does not close on or before the
date established for Closing under Section 4(a) hereof, FFCA does not
warrant that it will thereafter have sufficient funds to consummate the
transaction contemplated by this Agreement.
L. FRANCHISE AGREEMENT. FFCA shall have received a certificate,
consent and agreement from Franchisor in form and substance acceptable to
FFCA in its sole discretion with respect to the Premises, the Existing
Leases and the franchise, license and/or area development agreements
between Lessee and Franchisor relating to the Premises (the "Franchisor
Certificate").
M. EXISTING LEASES. Each of the Existing Leases shall be in full force
and effect and Debtor shall be entitled to occupy the Premises
corresponding thereto. FFCA shall have approved each Existing Lease in its
sole discretion and Debtor shall have delivered to FFCA an estoppel
certificate and consent from each Existing Lessor, the form and substance
of which shall be satisfactory to FFCA in its sole discretion (the "Lease
Estoppel Certificate and Consents"). If any mortgages or deeds of trust (or
other similar security agreements) encumber fee simple title to any Leased
<PAGE>
Premises, the holders of such instruments shall have delivered
nondisturbance agreements to Debtor and FFCA with respect to the Existing
Leases in form and substance acceptable to FFCA in its reasonable
discretion (the "Nondisturbance Agreements").
N. CLOSING DOCUMENTS. At or prior to the Closing Date, FFCA and/or
Debtor and/or Lessee, as may be appropriate, shall execute and deliver or
cause to be executed and delivered to Title Company or FFCA, as may be
appropriate, all documents required to be delivered by this Agreement, and
such other documents, payments, instruments and certificates, as FFCA may
require in form acceptable to FFCA, including, without limitation, the
following:
(1) Notes
(2) Mortgages;
(3) Operating Leases;
(4) Assignments of Rents and Leases;
(5) Franchisor Certificate;
(6) Proof of Insurance;
(7) Opinion of Counsel to Debtor and Lessee;
(8) Evidence of satisfactory zoning;
(9) UCC-1 Financing Statements;
(10) Environmental Indemnity Agreements;
(11) Lease Estoppel Certificate and Consents; and
(12) Nondisturbance Agreements, as applicable.
O. ADDITIONAL ENTERPRISE VALUE FINANCING. FFCA shall have received and
approved the terms and conditions of the Additional Enterprise Value
Financing.
P. DUE DILIGENCE. FFCA shall have completed its due diligence of
Debtor and Lessee to FFCA's satisfaction in its sole and absolute
discretion.
Upon fulfillment or waiver of all of the above conditions, FFCA shall deposit
funds necessary to close this transaction with the Title Company and this
transaction shall close in accordance with the terms and conditions of this
Agreement.
10. DEFAULT AND REMEDIES
A. Each of the following shall be deemed an event of default by Debtor
(each, an "Event of Default"):
(1) If any representation or warranty of Debtor set forth in any of
the Loan Documents is false in any material respect, or if Debtor renders
any intentionally false statement or account.
(2) If any principal, interest or other monetary sum due under the
Notes, the Mortgages or any other Loan Document is not paid within five
days after the date when due; provided, however, notwithstanding the
occurrence of such an Event of Default, FFCA shall not be entitled to
exercise its rights and remedies set forth below unless and until FFCA
shall have given Debtor notice thereof and a period of five days from the
delivery of such notice shall have elapsed without such Event of Default
being cured.
(3) If Debtor fails to observe or perform any of the other covenants
(except with respect to a breach of the Fixed Charge Coverage Ratio, which
breach is addressed in subitem (7) below), conditions, or obligations of
<PAGE>
this Agreement; provided, however, if any such failure does not involve the
payment of any monetary sum to FFCA, is not willful, does not place any
rights or property of FFCA in immediate jeopardy, and is within the
reasonable power of Debtor to promptly cure after receipt of notice
thereof, all as determined by FFCA in its reasonable discretion, then such
failure shall not constitute an Event of Default hereunder, unless
otherwise expressly provided herein, unless and until FFCA shall have given
Debtor notice thereof and a period of 30 days shall have elapsed, during
which period Debtor may correct or cure such failure, upon failure of which
an Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind. If such failure cannot reasonably be
cured within such 30-day period, as determined by FFCA in its reasonable
discretion, and Debtor is diligently pursuing a cure of such failure, then
Debtor shall have a reasonable period to cure such failure beyond such
30-day period, which shall not exceed 90 days after receiving notice of
such failure from FFCA. If Debtor shall fail to correct or cure such
failure within such 90-day period, an Event of Default shall be deemed to
have occurred hereunder without further notice or demand of any kind being
required.
(4) If Debtor or Lessee becomes insolvent within the meaning of the
Code, files or notifies FFCA that it intends to file a petition under the
Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either an involuntary
Action or petition under the Code without such involuntary Action or
petition being dismissed within 90 days of filing, or is not generally
paying its debts as the same become due.
(5) If there is an "Event of Default" under any Operating Lease or any
other Loan Document, or if there is a breach or default, after the passage
of all applicable notice and cure or grace periods, under any other
agreement or instrument, including, without limitation, promissory notes
and guaranties, between, among or by (1) Debtor, Lessee and/or any
subsidiary or Affiliate of Debtor or Lessee, and, or for the benefit of,
(2) FFCA and/or any subsidiary or Affiliate of FFCA or Franchise Finance
Corporation of America, a Delaware corporation; provided, however, that (x)
a breach or default, after the passage of all applicable notice and cure or
grace periods, under any such Operating Lease, Loan Document, agreement or
instrument which relates to a loan or sale/leaseback transaction which has
not been the subject of a Securitization shall not constitute an Event of
Default under any such Operating Lease, Loan Document, agreement or
instrument which relates to a loan or sale/leaseback transaction which has
been the subject of a Securitization, and (y) a breach or default, after
the passage of all applicable notice and cure or grace periods, under any
such Operating Lease, Loan Document, agreement or instrument which relates
to a loan or sale/leaseback transaction which has been the subject of a
Securitization transaction shall not constitute an Event of Default under
any such Operating Lease, Loan Document, agreement or instrument which
relates to a loan or sale/leaseback transaction which has been the subject
of a different Securitization transaction.
(6) If there is a breach or default, after the passage of any
applicable notice and grace period, under an), franchise, license and/or
area development agreement with Franchisor with respect to any of the
Premises which breach or default would have a Material Adverse Effect, or
if such franchise, license and/or area development agreement terminates or
expires prior to the payment in full of the Note corresponding to such
Premises in accordance with its terms and a substitute agreement for the
terminated or expired agreement is not entered into prior to such
<PAGE>
expiration or termination, which substitute agreement shall be in form and
substance reasonably satisfactory to FFCA.
(7) If there is a breach of the Fixed Charge Coverage Ratio and FFCA
shall have given Debtor notice thereof and Debtor shall have failed within
a period of 30 days from the delivery of such notice to pay to FFCA the
FCCR Amount (without premium or penalty) with respect to each of those
Premises for which the Fixed Charge Coverage Ratio is below 1.25:1 (each, a
"Subject Premises").
For purposes of this subsection, "FCCR Amount" means that sum of money
which, when subtracted from the outstanding principal amount of the Note
corresponding to a Subject Premises, and assuming the resulting principal
balance is reamortized over the remaining term of such Note, will result in
an adjusted Fixed Charge Coverage Ratio for such Subject Premises of at
least 1.25:1 based on the prior year's operations. Promptly after Debtor's
payment of the FCCR Amount, Debtor and FFCA agree to execute an amendment
to each such Note in form and substance reasonably acceptable to FFCA
reducing the principal amount payable to FFCA under such Note and
reamortizing the principal amount of such Note over the then remaining term
of such Note.
Notwithstanding the foregoing, if FFCA shall have exercised its option
to require that Debtor cause to be maintained an aggregate Fixed Charge
Coverage Ratio of at least 1.25:1 at all of the Premises relating to the
Securitized Loans, then, in order to prevent an Event of Default from
occurring by reason of a breach of such Fixed Charge Coverage Ratio, Debtor
must pay to FFCA the Aggregate FCCR Amount (without premium or penalty)
within the aforesaid 30 day period with respect to such of the Premises (as
selected by Debtor) necessary to cure the breach of such Fixed Charge
Coverage Ratio and for which a Fixed Charge Coverage Ratio of at least
1.25:1 is not being maintained (with the definitions relating to the Fixed
Charge Coverage Ratio being modified as applicable to provide for a
calculation of the Fixed Charge Coverage Ratio on an individual basis for
each such Premises) (each a "Selected Premises"). For purposes of the
preceding sentence, "Aggregate FCCR Amount" means that sum of money which,
when subtracted from the aggregate outstanding principal balance of each
Note relating to the Securitized Loans and corresponding to a Selected
Premises, and assuming the resulting principal balance is reamortized over
the remaining term of such Note, will result in an adjusted aggregate Fixed
Charge Coverage Ratio for all of the Premises relating to the Securitized
Loans of at least 1.25:1 based on the prior year's operations.
(8) If an Existing Lease terminates or expires prior to the scheduled
maturity date of the Note corresponding to the Premises to which the
Existing Lease relates.
B. Upon and during the continuance of an Event of Default, subject to
the limitations set forth in subsection A, FFCA may declare all or any part
of the obligations of Debtor under the Notes, this Agreement and any other
Loan Document to be due and payable, and the same shall thereupon become
due and payable without any presentment, demand, protest or notice of any
kind except as otherwise expressly provided herein, and Debtor hereby
waives notice of intent to accelerate the obligations secured by the
Mortgages. Thereafter, FFCA may exercise, at its option, concurrently,
successively or in any combination, all remedies available at law or in
equity, including without limitation any one or more of the remedies
available under the Notes, the Mortgages or any other Loan Document.
Neither the acceptance of this Agreement nor its enforcement shall
prejudice or in any manner affect FFCA's right to realize upon or enforce
<PAGE>
any other security now or hereafter held by FFCA, it being agreed that FFCA
shall be entitled to enforce this Agreement and any other security now or
hereafter held by FFCA in such order and manner as it may in its absolute
discretion determine. No remedy herein conferred upon or reserved to FFCA
is intended to be exclusive of any other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. Every power or remedy
given by any of the Loan Documents to FFCA, or to which FFCA may be
otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by FFCA.
11. ASSIGNMENTS.
A. Subsequent to the funding of the Loans by FFCA, FFCA may assign in
whole or in part its rights under this Agreement, including, without
limitation, in connection with any Transfer, Participation and/or
Securitization. Upon any unconditional assignment of FFCA's entire right
and interest hereunder, FFCA shall automatically be relieved, from and
after the date of such assignment, of liability for the performance of any
obligation of FFCA contained herein.
B. Debtor shall not, without the prior written consent of FFCA, sell,
assign, transfer, mortgage, convey, encumber or grant any easements or
other rights or interests of any kind in the Premises, any of Debtor's
rights under this Agreement or any interest in Debtor, whether voluntarily,
involuntarily or by operation of law or otherwise, including, without
limitation, by merger, consolidation, dissolution or otherwise, except,
subsequent to the Closing, as expressly permitted by the Mortgage.
12. INDEMNITY. Debtor agrees to indemnify, hold harmless and defend
FFCA and its directors, officers, shareholders, employees, successors,
assigns, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, lenders, mortgagees, trustees and invitees, as
applicable (collectively, the "Indemnified Parties"), from and against any
and all losses, costs, claims, liabilities, damages and expenses,
including, without limitation, reasonable attorneys' fees (collectively,
"Losses"), arising as the result of an Environmental Condition and/or a
breach of any of the representations, warranties, covenants, agreements or
obligations of Debtor set forth in this Agreement. Without limiting the
generality of the foregoing, such indemnity shall include, without
limitation, any engineering, governmental inspection and reasonable
attorneys' fees and expenses that the Indemnified Parties may incur by
reason of any representation set forth in this Agreement being false, or by
reason of any investigation or claim of any Governmental Authority in
connection therewith. Notwithstanding the foregoing, Debtor shall not be
obligated to indemnify, hold harmless and defend the Indemnified Parties
with respect to those Losses caused by an Environmental Condition which
directly resulted from affirmative acts taken with respect to a Premises by
any Person (other than Debtor, Lessee or an Affiliate of Debtor or Lessee)
after the completion of a foreclosure of the Mortgage corresponding to such
Premises by FFCA or the acceptance by FFCA of a deed-in-lieu thereof, it
being expressly understood and agreed that Debtor shall be obligated to
indemnify, hold harmless and defend the Indemnified Parties with respect to
any Environmental Condition arising or accruing prior to the completion of
the foreclosure of such Mortgage by FFCA or the acceptance by FFCA of a
deed-in-lieu thereof even if such Environmental Condition is not discovered
until after the completion of such foreclosure or acceptance of a
deed-in-lieu thereof.
13. MISCELLANEOUS PROVISIONS.
<PAGE>
A. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this
Agreement shall be in writing and given by (i) hand delivery, (ii)
facsimile, (iii) express overnight delivery service or (iv) certified or
registered mail, return receipt requested, and shall be deemed to have been
delivered upon (a) receipt, if hand delivered, (b) transmission, if
delivered by facsimile, (c) the next business day, if delivered by express
overnight delivery service, or (d) the third business day following the day
of deposit of such notice with the United States Postal Service, if sent by
certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Debtor: 300 Pond Street
Randolph, MA 02368
Attention: Mr. Paul Hoagland
Telephone: (617) 986-4600
Telecopy: (617) 986-0358
with a copy to: Brown, Rudnick, Freed and Gesmer
One Financial Center
Boston, MA 02111
Attention: Carl E. Axelrod,
Esq.
Telephone: (617) 856-8200
Telecopy: (617) 856-8201
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and
General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
B. REAL ESTATE COMMISSION. FFCA and Debtor represent and warrant to
each other that they have dealt with no real estate or mortgage broker,
agent, finder or other intermediary in connection with the transactions
contemplated by this Agreement. FFCA and Debtor shall indemnify and hold
each other harmless from and against any costs, claims or expenses,
including attorneys' fees, arising out of the breach of their respective
representations and warranties contained within this Section.
C. WAIVER AND AMENDMENT. No provisions of this Agreement shall be
deemed waived or amended except by a written instrument unambiguously
setting forth the matter waived or amended and signed by the party against
which enforcement of such waiver or amendment is sought. Waiver of any
matter shall not be deemed a waiver of the same or any other matter on any
future occasion.
D. CAPTIONS. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in any manner in
the construction or interpretation hereof.
E. FFCA'S LIABILITY. Notwithstanding anything to the contrary provided
in this Agreement, it is specifically understood and agreed, such agreement
being a primary consideration for the execution of this Agreement by FFCA,
that (i) there shall be absolutely no personal liability on the part of any
shareholder, director, officer or employee of FFCA, with respect to any of
<PAGE>
the terms, covenants and conditions of this Agreement or the other Loan
Documents, (ii) Debtor waives all claims, demands and causes of action
against FFCA's officers, directors, employees and agents in the event of
any breach by FFCA of any of the terms, covenants and conditions of this
Agreement or the other Loan Documents to be performed by FFCA and (iii)
Debtor shall look solely to the assets of FFCA for the satisfaction of each
and every remedy of Debtor in the event of any breach by FFCA of any of the
terms, covenants and conditions of this Agreement or the other Loan
Documents to be performed by FFCA, such exculpation of liability to be
absolute and without any exception whatsoever.
F. SEVERABILITY. The provisions of this Agreement shall be deemed
severable. If any part of this Agreement shall be held unenforceable, the
remainder shall remain in full force and effect, and such unenforceable
provision shall be reformed by such court so as to give maximum legal
effect to the intention of the parties as expressed therein.
G. CONSTRUCTION GENERALLY. This is an agreement between parties who
are experienced in sophisticated and complex matters similar to the
transaction contemplated by this Agreement and is entered into by both
parties in reliance upon the economic and legal bargains contained herein
and shall be interpreted and construed in a fair and impartial manner
without regard to such factors as the party which prepared the instrument,
the relative bargaining powers of the parties or the domicile of any party.
Debtor and FFCA were each represented by legal counsel competent in
advising them of their obligations and liabilities hereunder.
H. OTHER DOCUMENTS. Each of the parties agrees to sign such other and
further documents as may be appropriate to carry out the intentions
expressed in this Agreement.
I. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Agreement, the prevailing
party shall be entitled to recover its reasonable attorneys' fees and other
costs in addition to any other relief to which it may be entitled.
References in this Agreement to the attorneys' fees and/or costs of FFCA
shall mean both the reasonable fees and costs of independent outside
counsel retained by FFCA with respect to this transaction and the costs
(but not the fees) of FFCA's in-house counsel incurred in connection with
this transaction.
J. ENTIRE AGREEMENT. This Agreement and the other Loan Documents,
together with any other certificates, instruments or agreements to be
delivered in connection therewith, constitute the entire agreement between
the parties with respect to the subject matter hereof, and there are no
other representations, warranties or agreements, written or oral, between
Debtor and FFCA with respect to the subject matter of this Agreement.
Notwithstanding anything in this Agreement to the contrary, upon the
execution and delivery of this Agreement by Debtor and FFCA, the terms and
conditions of this Agreement shall control over the terms and conditions of
the Commitment notwithstanding that such terms and conditions may be
inconsistent with or vary from those set forth in the Commitment.
K. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Debtor
acknowledges that this Agreement was substantially negotiated in the State
of Arizona, the Agreement was signed by FFCA in the State of Arizona and
delivered by Debtor in the State of Arizona, all payments under the Notes
will be delivered in the State of Arizona and there are substantial
contacts between the parties and the transactions contemplated herein and
the State of Arizona. For purposes of any action or proceeding arising out
<PAGE>
of this Agreement, the parties hereto hereby expressly submit to the
jurisdiction of all federal and state courts located in the State of
Arizona and Debtor consents that it may be served with any process or paper
by registered mail or by personal service within or without the State of
Arizona in accordance with applicable law. Furthermore, Debtor waives and
agrees not to assert in any such action, suit or proceeding that it is not
personally subject to the jurisdiction of such courts, that the action,
suit or proceeding is brought in an inconvenient forum or that venue of the
action, suit or proceeding is improper. It is the intent of the parties
hereto that all provisions of this Agreement shall be governed by and
construed under the laws of the State of Arizona. To the extent that a
court of competent jurisdiction finds Arizona law inapplicable with respect
to any provisions hereof, then, as to those provisions only, the laws of
the states where the Premises are located shall be deemed to apply. Nothing
in this Section shall limit or restrict the right of FFCA to commence any
proceeding in the federal or state courts located in the states in which
the Premises are located to the extent FFCA deems such proceeding necessary
or advisable to exercise remedies available under this Agreement or the
other Loan Documents.
L. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
M. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of Debtor and FFCA and their respective successors and
permitted assigns, including, without limitation, any United States
trustee, any debtor in possession or any trustee appointed from a private
panel.
N. SURVIVAL. Except for the conditions of Closing set forth in
Sections 2 and 9, which shall be satisfied or waived as of the Closing
Date, all representations, warranties, agreements, obligations and
indemnities of Debtor and FFCA set forth in this Agreement shall survive
the Closing.
O. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. DEBTOR AND FFCA HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR
ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO.
THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL
BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT
DAMAGES FROM FFCA WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR AGAINST FFCA OR
ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO.
THE WAIVER BY DEBTOR OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
P. TRANSFERS, PARTICIPATIONS AND SECURITIZATION. A material inducement
to FFCA's willingness to complete the transactions contemplated by the Loan
Documents is Debtor's agreement that FFCA may, at any time after the
funding of each of the Loans, sell, transfer or assign any Note, Mortgage
and any of the other Loan Documents, and any or all servicing rights with
respect thereto (each, a "Transfer"), or grant participations therein
<PAGE>
(each, a "Participation"), or complete an asset securitization vehicle
selected by FFCA, in accordance with all requirements which may be imposed
by the investors or the rating agencies involved in such securitized
financing transaction, as selected by FFCA, or which may be imposed by
applicable securities, tax or other laws or regulations, including, without
limitation, laws relating to FFCA's status as a real estate investment
trust (each, a "Securitization").
Debtor agrees to cooperate in good faith with FFCA in connection with
any Transfer, Participation and/or Securitization, including, without
limitation, (i) providing such documents, financial and other data, and
other information and materials (the "Disclosures") which would typically
and reasonably be required with respect to Debtor and Lessee by a
purchaser, transferee, assignee, servicer, participant, investor or rating
agency involved with respect to such Transfer, Participation and/or the
Securitization, as applicable; provided, however, Debtor and Lessee shall
not be required to make Disclosures of any confidential information or any
information which has not previously been made public unless required by
applicable federal or state securities laws; and (ii) amending the terms of
the transactions evidenced by the Loan Documents and the Operating Leases
to the extent necessary so as to satisfy the requirements of purchasers,
transferees, assignees, servicers, participants, investors or selected
rating agencies involved in any such Transfers, Participations or
Securitization, so long as such amendments would not have a material
adverse effect upon Debtor, Lessee or the transactions contemplated
hereunder.
Debtor consents to FFCA providing the Disclosures, as well as any
other information which FFCA may now have or hereafter acquire with respect
to the Premises or the financial condition of Debtor and Lessee, to each
purchaser, transferee, assignee, servicer, participant, investor or rating
agency involved with respect to each Transfer, Participation and/or
Securitization, as applicable; provided that, to the extent that any of
such Disclosures or other information include confidential information,
FFCA shall take reasonable steps to advise all Persons to whom confidential
information is disclosed by FFCA that the information being disclosed is
confidential. FFCA and Debtor (and their respective Affiliates) shall each
pay their own attorneys fees and other out-of-pocket expenses incurred in
connection with the performance of their respective obligations under this
Section.
Notwithstanding anything to the contrary contained herein, Debtor
shall not be required to: (i) amend or change any documents evidencing or
securing any Loan which would modify (A) the interest rate payable under
any Note, (B) the stated maturity of any Note, (C) the amortization of
principal or prepayment rights with respect to any Note, (D) the recourse
provisions of any Loan, or (E) any other material economic term of any Loan
which would have a material adverse effect on Debtor or the transactions
contemplated by this Agreement; or (ii) bear any cost or expense (other
than nominal costs or expenses) for updated title insurance endorsements,
surveys, environmental reports, legal opinions or any other similar cost or
expense relating to such Transfers, Participations or Securitizations
except for its own attorney's fees in reviewing documents drafted or
proposed by FFCA or its counsel with respect thereto.
Q. STATE SPECIFIC PROVISIONS. DEBTOR ACKNOWLEDGES THAT THE TRANSACTION
CONTEMPLATED HEREIN IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF
SECTION 52-278a OF THE CONNECTICUT GENERAL STATUTES, AND THAT IN ANY ACTION
UPON THIS TRANSACTION, FFCA MAY AVAIL ITSELF OF AND PURSUE ITS RIGHTS TO
OBTAIN A PREJUDGMENT REMEDY IN ACCORDANCE WITH SECTION 52-278f OF THE
<PAGE>
CONNECTICUT GENERAL STATUTES. DEBTOR HAS BEEN ADVISED BY COUNSEL OF ITS
RIGHTS WITH RESPECT TO PREJUDGMENT REMEDIES UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, INCLUDING SECTIONS 52-278a TO
52-278g. DEBTOR HEREBY KNOWINGLY AND WILLING WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW ALL RIGHTS OF NOTICE, JUDICIAL HEARING OR PRIOR COURT
ORDER IN CONNECTION WITH THE OBTAINING BY FFCA OF ANY PREJUDGMENT REMEDY
WITH RESPECT TO THIS AGREEMENT, OR PURSUANT TO ANY OTHER DOCUMENT EXECUTED
BY DEBTOR IN CONNECTION WITH THIS TRANSACTION, INCLUDING ANY AMENDMENTS OR
EXTENSIONS HEREOF OR THEREOF. FURTHER, DEBTOR WAIVES ANY REQUIREMENT OF
FFCA TO POST A BOND OR ANY OTHER SECURITY, OR TO SHOW SOME EXIGENCY, IN
CONNECTION WITH THE OBTAINING BY FFCA OF ANY SUCH PREJUDGMENT REMEDY.
IN WITNESS WHEREOF, Debtor and FFCA have entered into this Agreement as of
the date first above written.
FFCA:
FFCA ACQUISITION CORPORATION,
a Delaware corporation
By /s/ Stephen G. Schmitz
Printed STEPHEN G. SCHMITZ
Its EXECUTIVE VICE PRESIDENT AND
Chief Investment Officer
DEBTOR:
NERC LIMITED PARTNERSHIP,
a Delaware limited partnership
By NERC SPE INC.,
a Delaware corporation,
its general partner
By /s/ Paul V. Hoagland
Paul V. Hoagland
Vice President, Finance and
Assistant Treasurer
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on August 4, 1997
by Stephen G. Schmitz, EVP and CIO of FFCA Acquisition Corporation,
a Delaware corporation, on behalf of the corporation.
/s/ Michelle Stewart
Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS ]
] SS.
<PAGE>
COUNTY OF SUFFOLK ]
On this, the 5th day of August, 1997, before me, the undersigned officer,
personally appeared Paul V. Hoagland, who acknowledged himself to be Vice
President, Finance and Assistant Treasurer of NERC SPE, Inc., a Delaware
corporation, the general partner of NERC Limited Partnership, a Delaware limited
partnership, and that he as such Vice President, Finance and Assistant
Treasurer, being authorized to do so, executed the foregoing for the purposes
therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Paul L. Bauer
Notary Public
My Commission Expires:
EXHIBIT A
------------------------------------------------------------------------------------------------------------------------------------
FFCA PC PROPERTY LOAN
NO. No. ADDRESS CITY STATE AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
8000-5408 22 11 Spring Street Southington CT $ 2,550,000.00
8000-5409 17 285 Daniel Webster Highway Nashua NH $ 2,550,000.00
8000-5410 19 845 West Main Road Middletown RI $ 2,550,000.00
8000-5411 2 Airport Rotary; 545 Route 132 Hyannis MA $ 1,950,000.00
8000-5412 29 81 Newton Road Danbury CT $ 2,150,000.00
8000-5416 15 Shaws Plaza; 255 Collyer Street Providence RI $ 900,000.00
8000-5419 4 6 Whiting Street Hingham MA $ 900,000.00
8000-5420 24 930 Providence Highway Dedham MA $ 500,000.00
8000-5423 23 1175 Riverdale Street W. Springfield MA $ 900,000.00
8000-5424 21 2100 Dixwell Avenue Hamden CT $ 950,000.00
8000-5425 26 297 South Broadway Salem NH $ 900,000.00
8000-5426 28 3 New Rochester Road Dover NH $ 900,000.00
8000-5427 32 1071 South Willow Street Manchester NH $ 950,000.00
8000-5428 31 426 Russell Street, Route 9 Hadley MA $ 950,000.00
8000-5429 34 Ivory Plaza, 170 Pearl Street Braintree MA $ 900,000.00
8000-5430 201 19 Commerce Way Woburn MA $ 950,000.00
8000-5529 20 465 Maine Mall Road S. Portland ME $ 950.000.00
===============
$22,440,000.99
------------------------------------------------------------------------------------------------------------------------------------
FFCA STREET ADDRESS CITY STATE
8000-5408 11 Spring Street Southington CT
8000-5413 3107 Berlin Turnpike & Newington CT
Pascone Avenue
8000-5415 2855 Main Street Glastonbury CT
<PAGE>
FFCA STREET ADDRESS CITY STATE
8000-5416 Shaws Plaza; 255 Collyer Providence RI
Street
8000-5419 6 Whiting Street Hingham MA
8000-5420 930 Providence Highway Dedham MA
8000-5421 108 Middlesex Turnpike Burlington MA
8000-5422 291 Boston Turnpike Shrewsbury MA
8000-5423 1175 Riverdale Street West MA
Springfield
8000-5424 2100 Dixwell Avenue Hamden CT
8000-5425 297 South Broadway Salem NH
8000-5426 Weeks Traffic Circle Dover NH
8000-5427 1071 South Willow Street Manchester NH
8000-5428 426 Russell Street; Route 9 Hadley MA
8000-5429 Ivory Plaza, 170 Pearl Street Braintree MA
8000-5430 19 Commerce Way Woburn MA
8000-5529 Maine Mall Road South ME
Portland