LOAN AGREEMENT
BETWEEN
TIAS, INC.,
a Texas corporation
AND
MORRISON RESTAURANTS INC.
INDEX
Page
ARTICLE 1 The Loans. . . . . . . . . . . . . . . . . . . . . . . .
1.1 The Loans . . . . . . . . . . . . . . . . . . . . . . .
1.2 Over-advances . . . . . . . . . . . . . . . . . . . . .
1.3 Interest. . . . . . . . . . . . . . . . . . . . . . . .
1.4 Repayment and Prepayment. . . . . . . . . . . . . . . .
1.5 Note and Loan Account . . . . . . . . . . . . . . . . .
1.6 Manner of Payment . . . . . . . . . . . . . . . . . . .
ARTICLE 2 Conditions Precedent . . . . . . . . . . . . . . . . . .
2.1 Conditions Precedent to Closing . . . . . . . . . . . .
2.2 Conditions Precedent to Each Advance Subsequent
to the Agreement Date . . . . . . . . . . . . . . . . .
ARTICLE 3 Representations and Warranties . . . . . . . . . . . . .
3.1 Representations and Warranties. . . . . . . . . . . . .
3.2 Survival of Representations and Warranties. . . . . . .
ARTICLE 4 General Covenants. . . . . . . . . . . . . . . . . . . .
4.1 Preservation of Existence and Similar Matters . . . . .
4.2 Compliance with Applicable Law. . . . . . . . . . . . .
4.3 Maintenance of Properties . . . . . . . . . . . . . . .
4.4 Insurance . . . . . . . . . . . . . . . . . . . . . . .
4.5 Payment of Taxes and Claims . . . . . . . . . . . . . .
4.6 Visits and Inspections. . . . . . . . . . . . . . . . .
4.7 ERISA . . . . . . . . . . . . . . . . . . . . . . . . .
4.8 Further Assurances. . . . . . . . . . . . . . . . . . .
4.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . .
4.10 Additional Units. . . . . . . . . . . . . . . . . . . .
ARTICLE 5 Information Covenants. . . . . . . . . . . . . . . . . .
5.1 Audited Annual Financial Statements and
Information; Certificate of No Default. . . . . . . . .
5.2 Monthly Financial Statements and Information. . . . . .
5.3 Copies of Other Reports . . . . . . . . . . . . . . . .
5.4 Notice of Litigation and Other Matters. . . . . . . . .
ARTICLE 6 Negative Covenants . . . . . . . . . . . . . . . . . . .
6.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . .
6.2 Liquidation; Change in Ownership, Name, or Fiscal
Year; Disposition or Acquisition of Assets. . . . . . .
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . .
6.4 Guaranties. . . . . . . . . . . . . . . . . . . . . . .
6.5 Investments . . . . . . . . . . . . . . . . . . . . . .
6.6 Sales and Leasebacks. . . . . . . . . . . . . . . . . .
6.7 Payment of Wages. . . . . . . . . . . . . . . . . . . .
6.8 Material Events . . . . . . . . . . . . . . . . . . . .
ARTICLE 7 Default. . . . . . . . . . . . . . . . . . . . . . . . .
7.1 Events of Default . . . . . . . . . . . . . . . . . . .
7.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 8 Miscellaneous. . . . . . . . . . . . . . . . . . . . . .
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . .
8.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . .
8.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . .
8.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . .
8.5 Assignment. . . . . . . . . . . . . . . . . . . . . . .
8.6 Counterparts. . . . . . . . . . . . . . . . . . . . . .
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . .
8.8 Severability. . . . . . . . . . . . . . . . . . . . . .
8.9 Interest and Charges. . . . . . . . . . . . . . . . . .
8.10 Headings. . . . . . . . . . . . . . . . . . . . . . . .
8.11 Pronouns. . . . . . . . . . . . . . . . . . . . . . . .
8.12 Entire Agreement; Amendments. . . . . . . . . . . . . .
8.13 Termination . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 9 Definitions. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 10 Waiver of Jury Trial, Etc.. . . . . . . . . . . . . . .
10.1 Consent to Venue. . . . . . . . . . . . . . . . . . . .
10.2 Waiver of Jury Trial. . . . . . . . . . . . . . . . . .
LOAN AGREEMENT
Between
TIAS, INC., a Texas corporation
and
MORRISON RESTAURANTS INC.,
a Delaware corporation
Agree as follows as of the 19th day of November, 1993:
ARTICLE 1 The Loans.
Section 1.1 The Loans. The Lender agrees, upon the terms and
subject to the conditions of this Agreement, to lend to the Borrower, prior
to the Maturity Date, amounts which in the aggregate principal amount do not
exceed the Applicable Commitment.
Section 1.2 Over-advances. If at any time the Loans exceed the
Applicable Commitment, or any other applicable limitation set forth in this
Agreement, such Loans shall nevertheless constitute Obligations that are
secured by the Collateral and are entitled to all benefits thereof. In the
event that the Lender, in its sole and absolute discretion, shall make any
Loans which give rise to an Over-advance, Loans in an aggregate principal
amount equal to such Over-advance shall be payable on demand.
Section 1.3 Interest. The Borrower shall pay interest on the
outstanding unpaid principal amount of the Loans until the Loans shall be due
(whether at maturity, by reason of acceleration or otherwise) as provided in
the Note.
Section 1.4 Repayment and Prepayment. Subject to mandatory
repayment events set forth herein, the principal amount of the Loans shall
be repaid as provided in the Note. Loans may be repaid prior to the Maturity
Date at any time without penalty.
Section 1.5 Note and Loan Account.
(a) The Loans shall be evidenced by the Note. The Note shall
be issued by the Borrower to the Lender and shall be duly executed and
delivered by one of the Authorized Signatories.
(b) The Lender shall open and maintain on its books in the name
of the Borrower a loan account with respect to the Loans and interest
thereon. The Lender shall debit such loan account for accrued interest
on the Loans, and shall credit such loan account for each payment on
account of principal of or interest on the Loans.
Section 1.6 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans and any other
amount owed to the Lender under this Agreement or the Note shall be
made not later than 12:00 noon (Eastern time) on the date specified for
payment under this Agreement to the Lender in lawful money of the
United States of America in immediately available funds.
(b) If any payment under this Agreement or the Note shall be
specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, and such
extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees, and
all other amounts due hereunder or under the Note without set-off or
counterclaim or any deduction whatsoever.
(d) Prior to the acceleration of the Loans under Section 7.2
hereof, if some but less than all amounts due from the Borrower are
received by the Lender, the Lender shall apply such amounts to the
Obligations in the following order of priority: (i) to the costs and
expenses (including attorneys' fees and expenses), if any, incurred by
the Lender in the collection of such amounts under this Agreement or
any of the other Loan Documents; (ii) to the payment of interest then
due and payable on the Loans; (iii) to the payment of all other amounts
not otherwise referred to in this Section 1.6 then due and payable
hereunder or under the other Loan Documents; and (iv) to the payment
of principal then due and payable on the Obligations in such order as
the Lender shall determine. Subsequent to the acceleration of the
Obligations under Section 7.2 hereof, all amounts received from any
source whatsoever by the Lender with respect to the Borrower shall be
applied by the Lender to the Obligations in such manner as the Lender
in its sole discretion elects.
ARTICLE 2 Conditions Precedent.
Section 2.1 Conditions Precedent to Closing. The obligation of
the Lender to make the initial Advance of the Loans is subject to the
fulfillment of each of the following conditions prior to or contemporaneously
with the making of the initial Advance of the Loans:
(a) The Lender shall have received each of the following, in
form and substance satisfactory to the Lender: (i) copies of a
preliminary lien search and report conducted with respect to the
Borrower, which search and report shall include a review of all Uniform
Commercial Code indices, tax lien records, general execution dockets,
and plaintiff/defendant pending case tables as filed and recorded in
the records of the applicable public office in each jurisdiction in
which the Borrower may own assets or do business; (ii) a completed Loan
Certificate on behalf of the Borrower; (iii) the duly executed Note;
(iv) the duly executed Security Agreement; (v) the duly executed
Company Option Agreement; (vi) the duly executed Shareholder Option
Agreement; (vii) acknowledgment copies evidencing the appropriate
filing of all Uniform Commercial Code financing statements required to
be filed in connection with the perfection of the Lender's security
interest in the Collateral; (viii) copies of insurance binders or
certificates covering the Collateral, naming the Lender as loss payee
and meeting the requirements of Section 4.4 hereof; (ix) audited
financial statements for the Borrower for the fiscal year ended
December 31, 1992, and unaudited financial statements for the Borrower
for the period ended September 30, 1993; (x) the Opinion of Counsel;
(xi) the duly executed Trademark Security Agreement; (xii) the duly
executed Stock Pledge and Security Agreement, together with undated
stock powers relating to the shares pledged thereby and executed in
blank by the appropriate pledgor; (xiii) certified copy of the articles
of incorporation of the Borrower certified by the secretary of state
of the state of the Borrower's incorporation; (xiv) certified copy of
the By-Laws of the Borrower, certified by the secretary of the Borrower
to be true and correct and demonstrating the amendment of such By-Laws
as authorized by the resolution of the directors of the Borrower
attached as Schedule 11 hereto; (xv) a duly executed Request for
Advance; (xvi) a duly executed Intercreditor Agreement; (xvii) a duly
executed Right of First Refusal; and (xviii) the Lender shall have
received evidence reasonably satisfactory to it that all Necessary
Authorizations have been obtained or made, are in full force and
effect, and are not subject to any pending or threatened reversal or
cancellation;
(b) All of the representations and warranties of the Borrower
under this Agreement shall be true and correct in all material
respects, and the Lender shall have received a certificate to that
effect signed by an Authorized Signatory of the Borrower and dated the
Agreement Date;
(c) The Lender shall have received reasonable evidence, in
summary form, that any requested Advance relates to Approved Project
Expenses and all such other documents as the Lender may reasonably
request.
Section 2.2 Conditions Precedent to Each Advance Subsequent to
the Agreement Date. The obligation of the Lender to make each Advance is
subject to the fulfillment of each of the following conditions immediately
prior to or contemporaneously with such Advance:
(a) Approved Project Expenses shall be determined with respect
to the Unit or Units for which the Advance is requested.
(b) All of the representations and warranties of the Borrower
under this Agreement, which, pursuant to Section 3.2 hereof are made
at and as of the time of such Advance, shall be true and correct in all
material respects at such time, both before and after giving effect to
the Advance, and the Lender shall have received a certificate to that
effect from an Authorized Signatory of the Borrower;
(c) There shall not exist, as of the date of the making of the
Advance and after giving effect thereto, a Default or an Event of
Default hereunder, and the Lender shall have received a duly executed
Request for Advance so stating; and
(d) The Lender shall have received reasonable evidence, in
summary form, that the requested Advance relates to Approved Project
Expenses and such other documents or opinions in connection with the
Advance as the Lender may reasonably request.
ARTICLE 3 Representations and Warranties.
Section 3.1 Representations and Warranties. The Borrower hereby
represents and warrants as follows and agrees that the following
representations and warranties shall survive the execution and delivery
hereof by the Lender or the making of the Loans under this Agreement:
(a) Organization; Power; Qualification. The Borrower is a
corporation duly organized, validly existing, and in good standing
under the laws of the state of Texas, has the power and authority, to
own or lease and operate its properties and to carry on its business
as now being and hereafter proposed to be conducted, and is duly
qualified and is in good standing as a foreign corporation, and
authorized to do business, in each jurisdiction in which the character
of its properties or the nature of its business requires such
qualification or authorization.
(b) Authorization; Enforceability. The Borrower has the
corporate power and has taken all necessary corporate action to
authorize it to execute, deliver, and perform this Agreement and each
of the other Loan Documents to which it is a party in accordance with
the terms and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the
Borrower, and is, and each of the other Loan Documents to which
Borrower is a party is, a legal, valid, and binding obligation of the
Borrower, enforceable in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency and other laws
affecting creditors' rights generally, and except that the availability
of certain remedies may be limited by the effect of general principles
of equity, whether applied by a court of law or equity.
(c) Subsidiaries. The Borrower has no Subsidiaries other than
Tias Beverage Company, a Texas corporation, forty percent (40%) of the
outstanding common stock of which is owned by the Borrower and the
balance of which is owned by Lavine.
(d) Capital Stock and Related Matters. The authorized capital
stock of the Borrower consists of Nine Million Six Hundred Thousand Six
Hundred (9,600,600) shares of common stock, $0.01 par value per share,
of which Two Million Seven Hundred Twenty-Five Thousand (2,725,000)
shares are currently issued and outstanding as of the Agreement Date
and are fully paid and non-assessable and Five Million Six Hundred
Thousand and Six Hundred (5,600,600) shares of Series A Preferred
Stock, $0.01 par value per share, of which Two Million (2,000,000)
shares are currently issued and outstanding as of the Agreement Date
and are fully paid and non-assessable. All of such issued and
outstanding shares are owned or held of record as of the Agreement Date
as shown on Schedule 1 attached hereto, and are not subject to any
Liens or other rights except as set forth on Schedule 1. As of the
Agreement Date, except for the option granted to the Lender pursuant
to the Company Option Agreement and the Shareholder Option Agreement,
there are no options, warrants, purchase agreements, put agreements,
call agreements or any other agreements to which the Borrower is a
party which relate to or affect, the purchase or sale of the capital
stock of the Borrower, except as otherwise set forth on Schedule 2
hereto.
(e) Compliance with Laws, Other Loan Documents, and
Contemplated Transactions. The execution, delivery, and performance
of this Agreement and each of the other Loan Documents in accordance
with their respective terms and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) violate any
Applicable Law, (ii) conflict with, result in a breach of, or
constitute a default under the articles of incorporation or by-laws of
the Borrower or under any indenture, agreement, or other instrument to
which the Borrower or any Shareholder is a party or by which they or
any of their respective properties may be bound, or (iii) result in or
require the creation or imposition of any Lien upon or with respect to
any property now owned or hereafter acquired by the Borrower or any
Shareholder except Permitted Liens.
(f) Necessary Authorizations. The Borrower and each
Shareholder have secured all Necessary Authorizations, and all such
Necessary Authorizations are in full force and effect and not subject
to any pending attack or revocation.
(g) Title to Properties. The Borrower has good, marketable,
and legal title to, or a valid leasehold interest in, all of its
material properties and assets, and none of such properties or assets
is subject to any Liens other than Permitted Liens. Schedule 3
attached hereto sets forth each lease or rental agreement to which the
Borrower is a party as of the Agreement Date, identifying the title of
such documents, the parties thereto, the property to which such
document relates, the date of execution and referring to each material
amendment or waiver thereto.
(h) Taxes. All federal, state, and other tax returns of the
Borrower required by law to be filed have been duly filed, and all
federal, state, and other taxes, assessments, and other governmental
charges or levies upon the Borrower and any of its properties, income,
profits, and assets, which are due and payable, have been paid, except
any such the payment of which the Borrower is contesting in good faith
by appropriate proceedings and for which adequate reserves have been
provided on the books of the Borrower to the extent required by GAAP.
(i) Financial Statements. As of the Agreement Date, the
Borrower has furnished, or caused to be furnished, to the Lender
financial statements for the Borrower which present fairly in all
material respects in accordance with GAAP, except for notes and
disclosures and year-end adjustments, the financial position of the
Borrower as at September 30, 1993, and the results of operations for
the period then ended.
(j) No Adverse Change. Since September 30, 1993, there has
occurred no event which would have a Materially Adverse Effect.
(k) Liabilities, Litigation, etc. Except for liabilities
incurred in the normal course of business, the Borrower has no material
(individually or in the aggregate) liabilities, direct or contingent,
nor any litigation, to the knowledge of Borrower (pending or
threatened) as of the Agreement Date except as disclosed or referred
to in the financial statements referred to in Section 3.1(i) above or
Schedule 4 hereto.
(l) ERISA. The Borrower and each ERISA Affiliate and each of
their respective Plans are in material compliance with ERISA and the
Code, and neither the Borrower nor any of its ERISA Affiliates has
incurred any accumulated funding deficiency with respect to any such
Plan within the meaning of ERISA or the Code. Except as may be
otherwise disclosed in a signed letter by the Borrower to the Lender
dated as of the Agreement Date, the Borrower and each of its ERISA
Affiliates have complied in all material respects with all requirements
of ERISA Sections 601 through 608 and Code Section 4980B. Neither the
Borrower nor any of its ERISA Affiliates has made any promises of
retirement or other benefits to employees, except as set forth in the
Plans. The Borrower has not incurred any material liability to the
Pension Benefit Guaranty Corporation in connection with any such Plan.
The assets of each such Plan which is subject to Title IV of ERISA are
sufficient to provide the benefits under such Plan, the payment of
which the Pension Benefit Guaranty Corporation would guarantee if such
Plan were terminated, and such assets are also sufficient to provide
all other "benefit liabilities" (as defined in ERISA Section
4001(a)(16), due under the Plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such
Plan or trust created thereunder, or party in interest (as defined in
Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21)
of ERISA), has engaged in a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) which
would subject such Plan or any other Plan of the Borrower or any of its
ERISA Affiliates, any trust created thereunder, or any such party in
interest or fiduciary, or any party dealing with any such Plan or any
such trust to the penalty or tax on "prohibited transactions" imposed
by Section 502 of ERISA or Section 4975 of the Code. Neither the
Borrower nor any of its ERISA Affiliates is a participant in or is
obligated to make any payment to a Multiemployer Plan.
(m) Compliance with Regulations G, T, U, and X. The Borrower
is not engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying,
and the Borrower does not own or presently intend to acquire, any
"margin security" or "margin stock" as defined in Regulations G, T, U,
and X (12 C.F.R. Parts 221 and 224) of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). None of the
proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose
of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of
said Regulations G, T, U, and X.
(n) Solvency. The Borrower is Solvent.
(o) Name and Location of Chief Executive Office of Borrower.
The Borrower has not changed its name within the preceding five (5)
years from the Agreement Date, and has not transacted business under
any other name or trade name except as set forth on Schedule 5 hereto.
As of the Agreement Date, the Borrower's chief executive office and
Federal employer identification number are set forth in the Security
Agreement.
(p) Environmental Matters. Except as would not, individually
or in the aggregate, have a Materially Adverse Effect, and except as
is described on Schedule 6 attached hereto with respect to each of the
Properties:
(i) The Properties do not contain, in, on or under,
including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials in violation of
Environmental Laws or in amounts that have given or are
reasonably expected to give rise to liability under
Environmental Laws.
(ii) The Properties and all operations and facilities at
the Properties are in compliance in all material respects with
all Environmental Laws, and there is no contamination or
violation of any Environmental Law which has given or reasonably
is expected to interfere with the continued operation of any of
the Properties or impair the financial condition of the
Borrower.
(iii) The Borrower has not received from any governmental
authority any complaint, notice of violation, alleged violation,
investigation or advisory action or notice of potential
liability regarding matters of environmental protection or
permit compliance under applicable Environmental Laws with
regard to the Properties, nor is the Borrower aware that any
governmental authority is contemplating delivering to the
Borrower any such notice. To the knowledge of Borrower, there
has been no pending or threatened complaint, notice of
violation, alleged violation, investigation or notice of
potential liability under Environmental Laws with regard to any
of the Properties.
(iv) Hazardous Materials have not been generated,
treated, stored, disposed of, at, on or under any of the
Properties by the Borrower in violation of any Environmental
Laws or in a manner that has given or could reasonably be
expected to give rise to liability under Environmental Laws nor
have any Hazardous Materials been transported or disposed of
from any of the Properties by the Borrower to any other location
in violation of any Environmental Laws or in a manner that has
given or could reasonably be expected to give rise to liability
under Environmental Laws.
(v) There are no governmental administrative actions or
judicial proceedings pending under any Environmental Law to
which the Borrower is a party with respect to any of the
Properties obligating the Borrower, nor are there any consent
decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial
requirements obligating the Borrower outstanding under any
Environmental Law with respect to any of the Properties.
(vi) There has been no release or threat of release by
the Borrower of Hazardous Materials into the environment at or
from any of the Properties, or arising from or relating to the
operations of the Borrower, in violation of Environmental Laws
or in amounts that has given or could reasonably be expected to
give rise to liability under Environmental Laws.
(q) OSHA. All of the Borrower's operations are conducted in
substantial compliance with all applicable rules and regulations
promulgated by the Occupational Safety and Health Administration of the
United States Department of Labor.
(r) Representations and Warranties Relating to Equipment. With
respect to all Equipment, the Borrower hereby warrants and represents
that:
(i) The Equipment is in good operating condition and
repair, ordinary wear and tear excepted, and all necessary
replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment shall be
maintained and preserved, ordinary wear and tear excepted, and
except for items in repair and which are obsolete; and
(ii) The Borrower will not permit any of the Equipment to
become affixed to any real property leased to the Borrower so
that an interest arises therein under the real estate laws of
the applicable jurisdiction unless the landlord of such real
property has executed a landlord waiver or leasehold mortgage in
favor of the Lender, and the Borrower will not permit any of the
Equipment to become an accession to any personal property other
than Equipment subject to first priority Liens in favor of the
Lender or Permitted Liens.
(s) Banking Relationships. Except as set forth on Schedule 7
hereto, identifying the institution, account balance, account number
and type of account, the Borrower maintains no checking accounts,
deposit accounts, cash maintenance accounts or other banking
relationships as of the Agreement Date.
(t) Borrower's Operations. As of the Agreement Date, the
Borrower operates eleven (11) Units, the mailing address, county, state
and general manager of each of which are set forth on Schedule 8
hereto.
Section 3.2 Survival of Representations and Warranties. All
representations or warranties made under this Agreement shall be deemed to
be made, and shall be true and correct in all material respects, at and as
of the Agreement Date and (except to the extent a representation or warranty
is stated to be as of the Agreement Date) the date of each Advance.
ARTICLE 4 General Covenants.
So long as any of the Obligations is outstanding and unpaid or the
Lender has an obligation to make Advances hereunder, and unless the Lender
shall otherwise consent in writing:
Section 4.1 Preservation of Existence and Similar Matters. The
Borrower will (a) preserve and maintain its existence and all Necessary
Authorizations and (b) qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its businesses requires such qualification or authorization.
Section 4.2 Compliance with Applicable Law. The Borrower will
comply with the requirements of all Applicable Law, except where the non-
compliance with such would not have a Materially Adverse Effect.
Section 4.3 Maintenance of Properties. The Borrower will maintain
or cause to be maintained in the ordinary course of business consistent with
past practices, in good repair, working order, and condition all properties
(including, without limitation, the Equipment) used or useful in its business
(whether owned or held under lease), ordinary wear and tear excepted, and
from time to time to make or cause to be made all needed and appropriate
repairs, renewals, replacements, additions, betterments, and improvements
thereto.
Section 4.4 Insurance. The Borrower will:
(a) Maintain insurance including, but not limited to, public
liability insurance from responsible companies in such amounts and
against such risks as shall be reasonably acceptable to the Lender;
(b) Keep the Collateral insured by insurers on terms and in a
manner reasonably acceptable to the Lender against loss or damage by
fire, theft, burglary, pilferage, loss in transit, explosions, flood,
and hazards insured against by extended coverage, and, with respect to
any properties and assets located in a designated flood plain, flood
insurance, all in amounts reasonably satisfactory to the Lender and all
premiums thereon to be paid by the Borrower; and
(c) Require that each such insurance policy referred to in
Section 4.4(b) above shall be provided to the Lender, shall name the
Lender as additional loss payee to the extent of the Obligations, and
shall provide for at least thirty (30) days' prior written notice to
the Lender of any default under, termination of, or proposed
cancellation of such policy. All such amounts paid in respect of such
policy directly to the Lender shall be applied by it to the payment of
any of the Obligations at the time due and payable as set forth in
Section 1.6 hereof, or as otherwise required by law. If no Default or
Event of Default shall then exist or be outstanding, Borrower shall be
entitled to obtain and retain any insurance proceeds which are payable
by virtue of damage to or destruction of property, provided such
proceeds are used only to repair or replace such damaged or destroyed
property.
Section 4.5 Payment of Taxes and Claims. The Borrower will pay
and discharge all taxes, assessments, and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties
belonging to it, and all lawful claims for labor, materials, and supplies
which, if unpaid, would become a choate, vested or perfected Lien upon any
of its properties; except that, no such tax, assessment, charge, levy, or
claim need be paid which is being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books to the extent required by GAAP. The Borrower shall timely
file all information returns required by federal, state, or local tax
authorities.
Section 4.6 Visits and Inspections. The Borrower will permit
representatives of the Lender to visit and inspect the properties, books and
records of the Borrower during normal business hours, make copies of such
books and records and discuss with its principal officers its businesses,
financial positions, and results of operations.
Section 4.7 ERISA. The Borrower shall make, or cause to be made,
timely payment of contributions required to meet the minimum funding
standards set forth in ERISA with respect to its and its ERISA Affiliates'
Plans; promptly after the filing thereof, furnish to the Lender copies of any
annual report required to be filed pursuant to ERISA in connection with each
such Plan of it and its ERISA Affiliates; notify the Lender as soon as
practicable of any Reportable Event and of any additional act or condition
arising in connection with any such Plan which the Borrower believes would
constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan; and furnish to the
Lender, promptly upon the Lender's request therefor, such additional
information concerning any such Plan as may be reasonably requested by the
Lender.
Section 4.8 Further Assurances. Upon the reasonable request of
the Lender, the Borrower will promptly cure, or cause to be cured, defects
in the creation and issuance of the Note and the execution and delivery of
the Loan Documents resulting from any act or failure to act by the Borrower
or any employee or officer thereof, and the perfection of any Liens in favor
of the Lender, and shall execute any additional documents reasonably
requested by the Lender in order to maintain the Lender's first priority
perfected security interest in all of the Collateral, subject to Permitted
Liens, including any property, real or personal hereafter acquired by
Borrower.
Section 4.9 Use of Proceeds. The Borrower shall use the proceeds
of Advances hereunder for the payment of Approved Project Expenses and for
no other purpose without the prior written consent of Lender.
Section 4.10 Additional Units. With respect to (a) any real
property acquired in fee by the Borrower at any time following the Agreement
Date, the Borrower will execute such mortgages, deeds to secure debt or
similar documents as may be necessary, in the sole discretion of the Lender,
to convey to the Lender a first priority perfected security interest in such
real property, subject to Permitted Liens, and (b) any real property first
leased by the Borrower at any time following the Agreement Date, the Borrower
will execute such collateral assignments as may be necessary, in the sole
discretion of the Lender, to convey to the Lender a first priority perfected
security interest in such lease, subject to Permitted Liens.
ARTICLE 5 Information Covenants.
So long as any of the Obligations is outstanding and unpaid or so long
as the Lender has any obligation to make Advances hereunder, and unless the
Lender shall otherwise consent in writing, the Borrower will furnish or cause
to be furnished to the Lender:
Section 5.1 Audited Annual Financial Statements and Information;
Certificate of No Default. Within one hundred twenty (120) days after the
end of each fiscal year of the Borrower, the balance sheets of the Borrower
as of the end of such fiscal year and the related statements of income,
retained earnings, and cash flow of the Borrower for such fiscal year,
setting forth in comparative form the figures as of the end of and for the
previous fiscal year and certified without qualifications, or with only such
qualifications as shall be acceptable to the Lender, by Price Waterhouse or
other independent certified public accountants of recognized standing
reasonably satisfactory to the Lender, whose opinion shall include a
statement certifying that no Default or Event of Default was detected during
the examination of the Borrower, and who shall have authorized the Borrower
to deliver such financial statements and opinion thereon to the Lender
pursuant to this Agreement.
Section 5.2 Monthly Financial Statements and Information. Within
thirty (30) days after the last day of each month or similar fiscal period
in each fiscal year of the Borrower, the balance sheet of the Borrower as at
the end of such month or similar fiscal period and the related statements of
income, retained earnings, and cash flow of the Borrower for such month or
similar fiscal period and for the elapsed portion of the year ended with the
last day of such month or similar fiscal period and certified by the chief
financial officer of the Borrower, to, in his opinion, present fairly, in all
material respects in accordance with GAAP, such statements of the Borrower
as at the end of each period, subject only to normal year-end adjustments and
without notes.
Section 5.3 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower by the Borrower's independent public
accountants regarding the Borrower, including, without limitation, any
management report prepared in connection with the annual audit referred
to in Section 5.1 hereof; and
(b) From time to time and promptly upon each request, such
data, certificates, reports, plans, projections, statements, opinions
of counsel, documents, or further information regarding the Collateral
or the business, assets, liabilities, financial position, projections,
results of operations, or business prospects of the Borrower as the
Lender reasonably may request.
Section 5.4 Notice of Litigation and Other Matters. Prompt notice
of the following events after Borrower has received notice thereof:
(a) The commencement of all proceedings and investigations by
or before any governmental body and all actions and proceedings in any
court or before any arbitrator (i) against, or (ii) (to the extent
known to the Borrower) in any other way relating adversely to, the
Borrower or any of its assets or businesses;
(b) Any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations, or
business prospects of the Borrower other than changes in the ordinary
course of business the effects of which have not had a Materially
Adverse Effect;
(c) Any Default or Event of Default or the occurrence or non-
occurrence of any event which constitutes, or which with the passage
of time or giving of notice (or both) would constitute a default by the
Borrower under any material agreement other than this Agreement to
which the Borrower is a party or by which its properties may be bound,
giving in each case a reasonable description thereof and specifying the
action proposed to be taken with respect thereto;
(d) The occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan of the Borrower or
any of its ERISA Affiliates or the institution or threatened
institution by the Pension Benefit Guaranty Corporation of proceedings
under ERISA to terminate or to partially terminate any such Plan or the
commencement or threatened commencement of any litigation regarding any
such Plan or naming it or the Trustee of any such Plan with respect to
such Plan; and
(e) The occurrence of any event subsequent to the Agreement
Date which, if such event had occurred prior to the Agreement Date,
would have constituted an exception to the representation and warranty
in Sections 3.1(e), (g), (h), (l), (p) or (q) of this Agreement.
ARTICLE 6 Negative Covenants.
So long as any of the Obligations is outstanding and unpaid or the
Lender has any obligation to make Advances hereunder, and unless the Lender
shall otherwise consent in writing:
Section 6.1 Indebtedness. The Borrower will not create, assume,
incur, or otherwise become or remain obligated in respect of, or permit to
be outstanding, any Indebtedness or liability on account of deposits or
advances for borrowed money or for the deferred purchase price of any
property or services, except the following (collectively, the "Permitted
Indebtedness"):
(a) Indebtedness under this Agreement and the other Loan
Documents;
(b) Trade or accounts payable and/or similar obligations, and
accrued expenses, incurred in the ordinary course of business, other
than for borrowed money;
(c) Indebtedness expressly subordinated to the Indebtedness
owed to the Lender hereunder and under the other Loan Documents upon
terms approved in advance by the Lender, in writing;
(d) Indebtedness existing on the Agreement Date and all
renewals and extensions thereof which do not increase the principal
amount outstanding on the date hereof;
(e) Indebtedness consisting of accrued dividends with respect
to the Series A Preferred Stock;
(f) From and after the date on which the Approved Project
Expenses paid or committed shall be not less than $8,000,000, and
provided no Event of Default then exists or would be caused thereby,
the Borrower may incur additional Indebtedness, subject to the Right
of First Refusal, so long as such additional Indebtedness is incurred
solely for the purpose of Project Expenses; and
(g) With respect to any Permitted Indebtedness of the kind
described in Section 6.1(f) hereof, which Permitted Indebtedness is
secured by Permitted Liens, the Lender agrees to execute any releases
or similar documents reasonably requested to confirm such third party
lender's claim to such Permitted Liens.
Section 6.2 Liquidation; Change in Ownership, Name, or Fiscal
Year; Disposition or Acquisition of Assets. The Borrower shall not, at any
time:
(a) Liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, or sell, lease, abandon, transfer,
or otherwise dispose of all or any substantial part of its assets,
property or business;
(b) Become a partner or joint venturer with any third party
other than Tias Beverage Company;
(c) Acquire (i) all or any substantial part of the assets,
property or business of, or (ii) any assets that constitute a division
or operating unit of the business of, any other Person, except for
Approved Project Expenses or the assets or stock of Tias Beverage
Company;
(d) Merge or consolidate with any other Person;
(e) Change its corporate name;
(f) Create any Subsidiary;
(g) Change its fiscal year-end from December 31, except for a
year ending on the Sunday nearest December 31;
(h) Sell, issue or issue any warrants or options to obtain any
shares of capital stock of the Borrower, except (i) to the Lender
pursuant to the Company Option Agreement, (ii) as permitted by
Exhibit A to the Company Option Agreement, (iii) pursuant to a public
offering of any capital securities of the Borrower which public
offering shall result in net proceeds (after deducting from the gross
proceeds thereof all commissions, fees, discounts and expenses of such
offering) to the Borrower of not less than Twelve Million Dollars
($12,000,000), (iv) stock options to employees of the Borrower pursuant
to the Incentive Stock Option Plan, and (v) the issuance of common
stock upon the conversion of Series A Preferred Stock or the exercise
of outstanding options or warrants or options which may be granted
pursuant to the Incentive Stock Option Plan;
(i) Cease to operate the Units according to the Tia's Format
except for the closing of Units in the ordinary course of business; or
(j) Sell, lease or otherwise dispose of or transfer any of the
Equipment or any part thereof without the prior written consent of the
Lender; provided, however, that the foregoing restriction shall not
apply, for so long as no Default or Event of Default exists, to
(i) dispositions of Equipment which, in the aggregate during any
consecutive twelve-month period, has a fair market value or book value,
whichever is more, of $100,000 or less, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with
Equipment of like kind, function and value, provided that the
replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, and the
replacement Equipment shall be free and clear of Liens other than
Permitted Liens.
Section 6.3 Liens. The Borrower will not create, assume, incur,
or permit to exist or to be created, assumed, or permitted to exist, directly
or indirectly, any Lien on any of its property, real or personal, now owned
or hereafter acquired, except for Permitted Liens.
Section 6.4 Guaranties. The Borrower will not at any time enter
into or Guaranty, or assume, be obligated with respect to, or permit to be
outstanding, any Guaranty, other than (a) obligations under agreements to
indemnify persons or entities which have issued bid or performance bonds or
letters of credit in the ordinary course of business of the Borrower securing
performance by the Borrower of activities permissible hereunder,
(b) obligations under agreements of the Borrower entered into in connection
with the acquisition of services, supplies, and equipment by the Borrower in
the ordinary course of business of the Borrower, (c) any Guaranty in favor
of the Lender, and (d) the reimbursement of ordinary business expenses
incurred by employees.
Section 6.5 Investments. The Borrower will not make any loan,
advance, or otherwise acquire for consideration evidences of Indebtedness,
capital stock, partnership interests or other securities of or equity
interests in any third party, except that the Borrower may purchase or
otherwise acquire and own, (a) marketable, direct obligations of the United
States of America and its agencies maturing within three hundred sixty-
five (365) days of the date of purchase, (b) commercial paper issued by
corporations, each of which shall (i) have a consolidated net worth of at
least $250,000,000, and (ii) conduct substantially all of its business in the
United States of America, which commercial paper will mature within one
hundred eighty (180) days from the date of the original issue thereof and is
rated "P-1" or better by Moody's Investors Service, Inc., or "A-1+" or better
by Standard & Poor's Corporation, (c) certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase and issued by
a United States national or state bank having deposits totaling more than
$250,000,000, and whose short-term debt is rated "P-1" or better by Moody's
Investors Service, Inc. or "A-1+" or better by Standard & Poor's Corporation
and (d) up to $100,000 per institution and up to $1,000,000 in the aggregate
in (i) short-term obligations issued by any local commercial bank or trust
company located in those areas where the Borrower conducts its business,
whose deposits are insured by the Federal Deposit Insurance Corporation, or
(ii) commercial bank-insured money market funds, or any combination of
investments described in clauses (i) and (ii). Notwithstanding the
foregoing, however, the Borrower may repurchase the stock of employees
subject to the Incentive Stock Option Plan and advance funds to employees for
ordinary travel and business expenses.
Section 6.6 Sales and Leasebacks. The Borrower will not enter
into, any arrangement, directly or indirectly, with any third party whereby
the Borrower shall sell or transfer any property, real or personal, whether
now owned or hereafter acquired, and whereby the Borrower shall then or
thereafter rent or lease as lessee such property or any part thereof or other
property which the Borrower intends to use for substantially the same purpose
or purposes as the property sold or transferred.
Section 6.7 Payment of Wages. The Borrower shall at all times
comply, in all material respects, with the requirements of the Fair Labor
Standards Act, as amended, including, without limitation, the provision of
such Act relating to the payment of minimum and overtime wages as the same
may become due from time to time.
Section 6.8 Material Events. Except with the prior written
consent of the Lender, the Borrower will not:
(a) cause the annual salary of Larry Lavine to exceed the sum
of One Hundred Sixty-Seven Thousand Five Hundred and No/100 Dollars
($167,500.00);
(b) acquire or develop any additional restaurant units or
select any sites for Additional Units;
(c) acquire or dispose of any assets in a single transaction,
or in a series of related transactions, having a value, in the
aggregate, of more than $100,000;
(d) issue any shares of capital stock or any warrants, options
or other rights to acquire the same, other than pursuant to a public
offering of the kind described in Section 2(a)(ii) of the Shareholder
Option Agreement or as permitted by Section 6.2(h);
(e) declare or pay any dividend with respect to any class of
capital stock of the Borrower (other than with respect to the Series
A Preferred Stock), or repurchase or redeem any capital stock or other
securities of the Borrower, other than redemptions of stock issued upon
exercise of employee stock options granted pursuant to the Incentive
Stock Option Plan of the Borrower;
(f) incur any Indebtedness (other than any accrued dividends
with respect to the Series A Preferred Stock) in excess of $100,000,
except as otherwise permitted by Section 6.1;
(g) enter into any transaction with any Affiliate or
Shareholder of the Borrower, or any Affiliate of such Shareholder,
other than the Loan Documents and the agreements recited or permitted
therein and existing agreements with Affiliates;
(h) create any Subsidiary; or
(i) amend the Articles of Incorporation or Bylaws of the
Borrower.
ARTICLE 7 Default.
Section 7.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule, or
regulation of any governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement or
any other Loan Document shall prove incorrect or misleading in any
material respect when made;
(b) The Borrower shall default in (i) the payment of any
interest under the Note which default shall remain uncured after
10 days' notice or (ii) any payment of principal under the Note when
due;
(c) The Borrower shall default in the performance or observance
of any agreement or covenant contained in Article 6 hereof;
(d) The Borrower shall default in the performance or observance
of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 7.1, and such
Default shall not be cured to the Lender's reasonable satisfaction
within a period of thirty (30) days after notice thereof by the Lender
to the Borrower;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or breach of any representation
or warranty contained in any of the Loan Documents (other than this
Agreement), which shall not be cured within any applicable grace period
set forth therein, or the Borrower shall in any way challenge, or any
proceedings shall in any way be brought to challenge (and, in the case
of a proceeding brought by someone other than the Borrower, shall
continue unstayed for a period of thirty (30) days), the prior and
perfected status of the Lender's security interest with respect to the
Collateral subject to Permitted Liens or the validity or enforceability
of such security interest;
(f) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in
respect of the Borrower under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal
or state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or similar
official of the Borrower or of any substantial part of its properties,
or ordering the winding-up or liquidation of the affairs of the
Borrower and any such decree or order shall continue in effect for a
period of forty-five (45) consecutive days;
(g) The Borrower shall file a petition, answer, or consent
seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy law or other similar law, or the Borrower shall
consent to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment or taking of possession of
a receiver, liquidator, assignee, trustee, custodian, sequestrator, or
other similar official of the Borrower or of any substantial part of
its properties, or the Borrower shall fail generally to pay its debts
as such debts become due, or the Borrower shall take any corporate
action in furtherance of any such action;
(h) A final judgment shall be entered by any court against the
Borrower for the payment of money which exceeds $100,000, or a warrant
of attachment or execution or similar process shall be issued or levied
against property of the Borrower which, together with all other such
property of the Borrower subject to other such process, exceeds in
value $100,000 in the aggregate, and if, within thirty (30) days after
the entry, issue, or levy thereof, such judgment, warrant, or process
shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant, or
process shall not have been paid or discharged;
(i) Lavine shall terminate his employment with the Borrower or
Lavine shall die or become permanently disabled (provided, however,
that Borrower's termination of Lavine's employment shall not be deemed
to be a default hereunder);
(j) Any event shall occur which has a Materially Adverse
Effect;
(k) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with
respect to any Plan maintained by the Borrower or any of its ERISA
Affiliates, or to which the Borrower or any of its ERISA Affiliates has
any liabilities, or any trust created thereunder; or a trustee shall
be appointed by a United States District Court to administer any such
Plan; or the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any such Plan; or the Borrower or any of its
ERISA Affiliates shall incur any liability to the Pension Benefit
Guaranty Corporation in connection with the termination of any such
Plan; or any Plan or trust created under any Plan of the Borrower or
any of its ERISA Affiliates shall engage in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the
Code) which would subject any such Plan, any trust created thereunder,
any trustee or administrator thereof, or any party dealing with any
such Plan or trust to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code; or the
Borrower or any of its ERISA Affiliates shall enter into or become
obligated to contribute to a Multiemployer Plan;
(l) Any Loan Document or provision thereof shall at any time
and for any reason be declared by a court of competent jurisdiction to
be null and void, or a proceeding shall be commenced by the Borrower
or any of its Subsidiaries, or by any governmental authority having
jurisdiction over the Borrower, or any of its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or the Borrower
or any of its Subsidiaries, shall deny that it has any liability or any
obligation for the payment of principal or interest purported to be
created under any Loan Document; or
(m) Tias Beverage Company shall take any action which would
impair the ability of the Borrower to conduct its business.
Section 7.2 Remedies. If an Event of Default shall have occurred
and shall be continuing, the Lender shall have the right and option, in its
sole discretion, to do any one or more of the following:
(a) Terminate the Commitment, declare the principal of and
interest on the Loans and the Note, all other amounts owed under this
Agreement or the Note, and all other Obligations to be forthwith due
and payable whereupon all such amounts shall immediately become
absolute and due and payable, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived, anything
in this Agreement or in the Note to the contrary notwithstanding;
(b) Exercise all of the rights granted to it under the Loan
Documents upon the occurrence of any Default or Event of Default; and
(c) Exercise all rights and remedies available to it at law or
in equity.
ARTICLE 8 Miscellaneous.
Section 8.1 Notices.
(a) All notices and other communications required or permitted
under this Agreement shall be in writing and, if mailed by prepaid
first-class mail or certified mail, return receipt requested, at any
time other than during a general discontinuance of postal service due
to strike, lockout or otherwise, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business
Days after the postmarked date thereof and, if telecopied, shall be
followed forthwith by letter and shall be deemed to have been received
on the next Business Day following dispatch and acknowledgment of
receipt by the recipient's telecopy machine. In addition, notices
hereunder may be delivered by hand or overnight courier, in which event
the notice shall be deemed effective when delivered and received. All
notices and other communications under this Agreement shall be given
to the parties hereto at the following addresses:
(i) If to the Borrower, to it at:
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Attn: Mr. Frank Sbordone
Telecopy No.: (214) 739-5222
with a copy to:
Gardere & Wynne, L.L.P.
1601 Elm Street
Suite 3000
Dallas, Texas 75201
Attn: Richard A. Tulli, Esq.
Telecopy No.: (214) 999-4667
(ii) If to the Lender, to it at:
Morrison Restaurants Inc.
4721 Morrison Drive
P.O. Box 160266
Mobile, Alabama 36625-0001
Attn: Pfilip G. Hunt, Esq.
Senior Vice President,
General Counsel and Secretary
Telecopy No.: (205) 344-9513
with a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Attn: Thomas R. McNeill, Esq.
Telecopy No.: (404) 572-6999
Persons receiving copies of notices hereunder need only receive
copies of notices sent pursuant to Article 7 hereof.
(b) Any party hereto may change the address to which notices
shall be directed under this Section 8.1 by giving ten (10) days'
written notice of such change to the other parties.
Section 8.2 Expenses. The Borrower will promptly pay:
(a) Upon closing of this Agreement, fifty percent of all out-
of-pocket expenses of the Lender and the Borrower in connection with
the preparation, negotiation, execution, and delivery of this
Agreement, the Note, and the other Loan Documents, including all
post-closing matters, and the transactions contemplated hereunder and
thereunder and the making of the Loan hereunder including, but not
limited to, recording fees, and intangible, documentary stamp and other
taxes and the reasonable attorneys' fees and disbursements of counsel
for the Lender and the Borrower;
(b) All out-of-pocket expenses of the Lender in connection with
the administration of the Loan and the Loan Documents in accordance
with the provisions thereof, the restructuring, refinancing and "work-
out" of the transaction herein contemplated, and the preparation,
negotiation, execution, and delivery of any waiver, amendment, or
consent by the Lender relating to this Agreement or the other Loan
Documents, including, but not limited to, the reasonable attorneys'
fees and disbursements of counsel for the Lender, wire transfer fees
and post-closing filing fees; and
(c) All costs and out-of-pocket expenses of obtaining
performance under this Agreement or the other Loan Documents and all
costs and out-of-pocket expenses of collection if default is made in
the payment of the Note, which in each case shall include reasonable
fees and expenses of counsel for the Lender.
Section 8.3 Waivers. The rights and remedies of the Lender under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No
failure or delay by the Lender in exercising any right shall operate as a
waiver of it. Any waiver or indulgence granted by the Lender shall not
constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by
the Lender at variance with the terms of this Agreement such as to require
further notice by the Lender of the Lender's intent to require strict
adherence to the terms of this Agreement in the future.
Section 8.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, the Lender and any subsequent
holder of the Note are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower, or to any other Person, any
such notice being hereby expressly waived, to set-off, to appropriate and to
apply any other Indebtedness at any time held or owing by the Lender or such
holder to or for the credit or the account of the Borrower, as the case may
be, against and on account of the obligations and liabilities of the
Borrower, as the case may be, to the Lender or such holder under this
Agreement, the Note, and any other Loan Document, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Note, or any other Loan Document, irrespective of whether
or not (a) the Lender or the holder of the Note shall have made any demand
hereunder or (b) the Lender shall have declared the principal of and interest
on the Loan and the Note and other amounts due hereunder to be due and
payable as permitted by Section 7.2 hereof and although said obligations and
liabilities, or any of them, shall be contingent or unmatured.
Section 8.5 Assignment.
(a) Neither the Borrower nor the Lender may assign or transfer
any of their respective rights or obligations hereunder or under the
Note without prior written consent.
(b) Except as specifically set forth in Section 8.5(b) hereof,
nothing in this Agreement or the Note, expressed or implied, is
intended to or shall confer on any person other than the respective
parties hereto and thereto and their successors and assignees permitted
hereunder and thereunder any benefit or any legal or equitable right,
remedy, or other claim under this Agreement or the Note.
Section 8.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 8.7 Governing Law. The laws of the State of Alabama
(other than its conflict-of-laws principles) shall govern the validity or
enforceability and the interpretation or construction of all of the
provisions of this Agreement and the Note and all issues hereunder and
thereunder, including (without limitation) the determination of the maximum
lawful rate of interest that may be contracted for, charged or received with
respect to the Loans.
Section 8.8 Severability. Any provision of this Agreement which
is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of
such provision in any other jurisdiction.
Section 8.9 Interest and Charges. The Borrower and the Lender
hereby agree that (a) the only charge imposed by the Lender upon the Borrower
for the use of money in connection with the Loans is and shall be the
interest expressed herein, as provided in the Note and (b) all other charges
imposed by the Lender upon the Borrower in connection with the Loans,
including, without limitation, default and late charges, are and shall be
deemed to be charges made to compensate the Lender for administrative
services and costs, and other services and costs performed and incurred, and
to be performed and incurred, by the Lender in connection with the Loans, and
shall under no circumstances be deemed to be charges for the use of money.
All charges referred to in herein shall be fully earned when due and non-
refundable when paid.
Section 8.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation
of any provision hereof.
Section 8.11 Pronouns. The pronouns used herein shall include,
when appropriate, either gender and both singular and plural, and the
grammatical construction of sentences shall conform thereto.
Section 8.12 Entire Agreement; Amendments. This Agreement and the
other Loan Documents represent the entire agreement between the Borrower and
the Lender with respect to the subject matter of this transaction. No
amendment or modification of the terms and provisions of this Agreement shall
be effective unless in writing and signed by the Lender and the Borrower.
Section 8.13 Termination. This Agreement shall terminate upon the
satisfaction of all the Obligations of the Borrower (excluding any Obligation
arising under the Shareholder Option Agreement, the Company Option Agreement,
the Right of First Refusal Agreement, the Voting Agreement, and the Amended
and Restated Agreement to Defer Dividends).
ARTICLE 9 Definitions.
For the purposes of this Agreement:
"Additional Units" shall mean, collectively, those Units at any time
in operation, other than those Units in operation on the Agreement Date; and
"Additional Unit" shall refer to any one of the foregoing Additional Units.
"Advance" shall mean amounts of the Loans advanced by the Lender to the
Borrower pursuant to the terms hereof on the occasion of any borrowing.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Borrower.
"Agreement" shall mean this Agreement.
"Agreement Date" shall mean the date as of which this Agreement is
dated.
"Applicable Commitment" shall mean (a) from and after the Agreement
Date but before the Conversion Date the sum of Five Million and No/00 Dollars
($5,000,000.00) (the "Base Commitment") and (b) from and after the Conversion
Date, (i) if the financial performance of the Borrower shall have met or
exceeded the First Annual Goal as demonstrated by the applicable unaudited
financial statements and profit and loss statements for the fiscal year of
the Borrower then ended, certified by the chief financial officer of the
Borrower, (A) the sum of Eight Million and No/00 Dollars ($8,000,000.00) less
(B) from and after the Option Exercise Date (as defined in the Company Option
Agreement) the Option Exercise Price, (as defined in the Company Option
Agreement), as may be paid or credited to the Borrower upon such exercise,
and (ii) if the financial performance of the Borrower shall not have met or
exceeded the First Annual Goal as demonstrated by such financial statements,
the Base Commitment.
"Applicable Law" shall mean in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental
bodies or regulatory agencies applicable to such Person, and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it or its properties are bound.
"Approved Project Expenses" shall mean those Project Expenses which
(a) have been approved by each member of the board of directors of the
Borrower in a meeting duly held or by consent in lieu of a meeting and the
copies of which resolutions or written consent actions have been provided to
the Lender and (b) are acceptable to the Lender in the exercise of its
reasonable discretion.
"Authorized Signatory" shall mean such executive officers of the
Borrower as may be duly authorized and designated in writing by the Borrower
to execute documents, agreements, and instruments on behalf of the Borrower.
"Borrower" shall mean Tias, Inc., a Texas corporation.
"Business Day" shall mean a day on which the chief executive office of
the Lender is open for the transaction of business required for this
Agreement in Mobile, Alabama.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean and include all real and personal property of
the Borrower, whether now owned or hereafter acquired by the Borrower or in
which the Borrower has or hereafter acquires any interest with respect to
which the Lender has, or is entitled to have, a security interest,
assignment, lien, trust title, or security title pursuant to the terms of
this Agreement, the Security Agreement, or any other Security Document.
"Commitment" shall mean the obligation of the Lender to make Loans to
the Borrower in the aggregate sum not exceeding the Applicable Commitment
from time to time in effect.
"Company Option Agreement" shall mean that certain Company Option
Agreement of even date herewith between the Lender and the Borrower
substantially in form of Exhibit F hereto.
"Conversion Date" shall mean the date which is fourteen (14) days
following the Lender's receipt of unaudited financial statements, certified
by the chief financial officer of the Borrower with respect to the fiscal
year of the Borrower ending on the First Anniversary, unless such date is not
a Business Day, in which case the "Conversion Date" shall be the first
Business Day immediately following such date.
"Crosspoint" shall mean Crosspoint Venture Partners III, a California
limited partnership.
"Default" shall mean any of the events specified in Section 7.1 hereof,
regardless of whether there shall have occurred any passage of time or giving
of notice, or both, that would be necessary in order to constitute such event
an Event of Default.
"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any governmental authority regulating, relating
to or imposing liability or standards of conduct concerning environmental
protection matters, including without limitation, Hazardous Materials, as now
or may at any time hereafter be in effect.
"Equipment" shall mean all personal property, machinery, apparatus,
equipment, fittings, furniture, trade fixtures, motor vehicles and other
tangible personal property (other than Inventory) of every kind and
description owned by the Borrower or in which the Borrower has an interest,
whether now owned or hereafter acquire by the Borrower and wherever located,
and all parts, accessories and special tools and all increases and accessions
thereto and substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect on the Agreement Date and as such Act may be amended thereafter
from time to time.
"ERISA Affiliate" shall mean any Person whose employees together with
the employees of the Borrower are treated as employed by a single employer
for purposes of Section 414 of the Code.
"Event of Default" shall mean any of the events specified in Section
7.01 hereof, provided that any requirement for notice or lapse of time has
been satisfied.
"First Anniversary" shall mean January 1, 1995.
"First Annual Goal" shall mean, with respect to the Borrower, as of the
fiscal year ended nearest to the First Anniversary: (a) the profit and loss
statement of the Borrower shall demonstrate financial performance in respect
of revenues and pre-tax income not less than the projected results set forth
in the pro forma financial statement attached hereto as Schedule 9; provided,
however, that in measuring such financial performance, the Borrower and the
Lender shall disregard the effect of any amount paid by the Borrower to Dean
Witter Reynolds, Inc. not exceeding $350,000.00, and (b) the Borrower shall
have placed in operation not less than three (3) Additional Units with
respect to which either (i) the annualized gross revenues of each of the
first three (3) Additional Units then in operation shall equal or exceed Two
Million and No/00 Dollars ($2,000,000.00) or (ii) the annualized gross
revenues of the first three (3) Additional Units then in operation, on the
average, shall equal or exceed Two Million Two Hundred Fifty Thousand and
No/00 Dollars ($2,250,000.00).
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles consistently applied.
"Guaranty" or "Guarantee", as applied to an obligation of another
Person (each a "primary obligation"), shall mean and include (a) any
guaranty, direct or indirect, in any manner, of any part or all of such
primary obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of any
part or all of such primary obligation, including, without limiting the
foregoing, any reimbursement obligations as to amounts drawn down by
beneficiaries of outstanding letters of credit, and any obligation of such
Person (the "primary obligor"), whether or not contingent, (i) to purchase
any such primary obligation or any property or asset constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of such primary obligation or (2) to maintain working
capital, equity capital or the net worth, cash flow, solvency or other
balance sheet or income statement condition of any other Person, (iii) to
purchase property, assets, securities or services primarily for the purpose
of assuring the owner or holder of any primary obligation of the ability of
the primary obligor with respect to such primary obligation to make payment
thereof or (iv) otherwise to assure or hold harmless the owner or holder of
such primary obligation against loss in respect thereof.
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances, petroleum
products (including crude oil or any fraction thereof) defined or regulated
as such in or under any Environmental Law.
"Incentive Stock Option Plan" shall mean that certain Tias, Inc. 1990
Stock Option Plan adopted by the Board of Directors and Shareholders of the
Borrower on March 23, 1990 and as duly modified and amended from time to
time.
"Indebtedness" shall mean, with respect to any Person, (a) all items,
except items of partners' equity or capital stock or surplus or general
contingency or deferred tax reserves, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of
a balance sheet of such Person, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by such Person is
subject, whether or not the obligation secured thereby shall have been
assumed, (c) to the extent not otherwise included, all obligations of other
Persons which such Person has guaranteed, including but not limited to, all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, and (d) to
the extent not otherwise included, all capitalized lease obligations of such
Person and all obligations of such Person with respect to leases constituting
part of a sale and leaseback arrangement.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement of even date herewith among the Lender, Crosspoint and Lavine,
substantially in the form of Exhibit A hereto.
"Lavine" shall mean Mr. Larry Lavine, an individual resident of Dallas
County, Texas.
"Lavine Employment Agreement" shall mean that certain Employment
Agreement of even date herewith between the Borrower and Lavine substantially
in the form of Exhibit I hereto.
"Lease Obligation" shall mean any obligation of the Borrower as lessee
under a lease for property, whether real or personal, services of any kind
or any other lease of any kind.
"Lender" shall mean Morrison Restaurants Inc., a Delaware corporation.
"Lien" shall mean, with respect to any property, any security deed,
mortgage, deed to secure debt, deed of trust, lien, pledge, assignment,
charge, security interest, title retention agreement, levy, execution,
seizure, attachment, garnishment, or other encumbrance of any kind in respect
of such property, whether or not choate, vested, or perfected.
"Loans" shall mean and include any and all loans and advances made by
the Lender to or for the benefit of the Borrower hereunder or under any of
the Loan Documents.
"Loan Certificate" shall mean a corporate loan certificate of the
Borrower substantially in the form of Exhibit B attached hereto, including
applicable exhibits, schedules, and attachments thereto.
"Loan Documents" shall mean this Agreement, the Note, the Security
Agreement, the Company Option Agreement, the Shareholder Option Agreement,
the Intercreditor Agreement and all other documents, agreements,
certificates, reports, and instruments now or hereafter executed in
connection herewith or contemplated hereby.
"Materially Adverse Effect" shall mean any materially adverse effect
upon the business, assets, liabilities, financial condition or results of
operations of the Borrower or upon the ability of the Borrower to perform any
material obligations under this Agreement or any other Loan Document; in any
case, whether resulting from any single act, omission, situation, status,
event, or undertaking, or taken together with other such acts, omissions,
situations, statuses, events, or undertakings.
"Maturity Date" shall mean May 31, 1999 or such earlier date as payment
of the Loan shall be due (whether by acceleration or otherwise).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean all material authorizations,
consents, approvals, permits, licenses and exemptions of, filings and
registrations with, and reports to, all governmental and other regulatory
authorities, whether federal, state, or local, and all agencies thereof
(including, without limitation, any specific authorizations, licenses,
franchises, etc.) that may be required for the due operation of the business
of the Borrower and for the performance of the obligations of the Borrower
and the Shareholders of the Borrower contemplated hereby.
"Note" shall mean that certain promissory note of even date herewith
in the original principal amount of $8,000,000 issued to the Lender by the
Borrower, substantially in the form of Exhibit C attached hereto, and any
other notes executed and delivered by the Borrower to the Lender hereunder,
and any amendments, renewals or extensions of the foregoing.
"Obligations" shall mean all payment and performance duties,
liabilities, and obligations of the Borrower to the Lender, whether now
existing or hereafter created, incurred, or arising, and whether direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
including without limitation, all liabilities now or at any time or times
hereafter owing to the Lender.
"Opinion of Counsel" shall mean the legal opinion of Gardere & Wynne,
L.L.P., counsel to the Borrower, in the form and substance approved by the
Lender and its counsel.
"Over-advance" shall mean the extent to which Loans exceed the
Applicable Commitment.
"Permitted Indebtedness" is used herein as defined in Section 6.1
hereof.
"Permitted Liens" shall mean, as applied to any Person, (a) Liens
securing taxes, assessments, and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or
the claims of materialmen, mechanics, carriers, warehousemen, lessors or
landlords for labor, materials, supplies, or rentals incurred in the ordinary
course of business, but (i) in all cases only if payment shall not at the
time be required to be made or are being contested in good faith in
appropriate proceedings and (ii) in the case of warehousemen, lessors or
landlords (other than landlords or lessors existing on the Agreement Date),
only if such Liens are junior to the security interest and Liens granted and
conveyed by the Borrower to secure the Obligations; (b) Liens consisting of
deposits or pledges made in the ordinary course of business in connection
with, or to secure payment of, obligations under worker's compensation,
unemployment insurance, or similar legislation; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements, and rights or
restrictions of record on use of real property which do not materially
detract from the value of such property or impair the use thereof in the
business of the Borrower; (d) Liens as of the Agreement Date described on
Schedule 1 and Schedule 10 attached hereto; and (e) Liens in favor of the
Lender; (f) purchase money security interests which arise by operation of law
for a period of ten (10) days after the inception thereof and limited to
Liens on assets so purchased; and (g) Liens securing Permitted Indebtedness
of the kind described in Section 6.1(f) hereof, providing such Liens extend
only to assets of the Borrower pertaining to Additional Units not in
operation as of the Agreement Date.
"Person" shall mean an individual, corporation, partnership, trust, or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any Affiliate of such Person.
"Project Expenses" shall mean those charges and expenses proposed to
be incurred, and set forth in a detailed budget, by the Borrower in
connection with the construction, planning and commencement of operations of
any Additional Unit.
"Properties" shall mean, all parcels of real property owned or operated
by the Borrower; and "Property" shall mean any of the foregoing parcels.
"Reportable Event" shall have the meaning set forth in Title IV of
ERISA.
"Request for Advance" shall mean any certificate signed by an
Authorized Signatory requesting an Advance hereunder which will increase the
aggregate amount of the Loans outstanding, which certificate shall be
denominated a "Request for Advance," and shall be in substantially the form
of Exhibit D attached hereto. Each Request for Advance shall, among other
things, (a) specify the date of the Advance, which shall be a Business Day,
the amount of the Advance, (b) state that there shall not exist, on the date
of the requested Advance and after giving effect thereto, a Default or an
Event of Default and (c) state that the requested Advance shall be used for
the payment of Approved Project Expenses.
"Right of First Refusal" shall mean that certain Right of First Refusal
Agreement of even date herewith between the Borrower and the Lender.
"Security Agreement" shall mean that certain Security Agreement of even
date herewith between the Borrower and the Lender in the form of Exhibit E
hereto.
"Security Documents" shall mean any agreement or instrument whether now
or hereafter in existence, and any filings, instruments, agreements, and
other documents related thereto or to this Agreement, and providing the
Lender with Collateral for the Obligations, including, without limitation,
the Security Agreement and the Trademark Security Agreement.
"Shareholders" shall mean Lavine, Crosspoint and Jack Lavine, and
"shareholder" shall mean any one of the foregoing Shareholders, individually.
"Solvent" shall mean, as to any Person, that such Person has capital
reasonably sufficient to carry on its business and transactions in which it
is about to engage and is able to pay its debts as they mature and owns
property having a value, both at fair valuation and at present fair salable
value, greater than or equal to the amount required to pay its debts.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a
majority of its board of directors (or other governing body), regardless of
the existence at the time of a right of the holders of any class or classes
(however designated) of securities of such corporation to exercise such
voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding
partnership interests is, at the time, owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and
one or more Subsidiaries of such Person, and (b) any other entity which is
directly or indirectly controlled or capable of being controlled by such
Person, or by one or more Subsidiaries of such Person, or by such Person and
one or more Subsidiaries of such Person.
"Tia's Format" shall refer to the format used by the Borrower for
presenting and operating mid-market restaurants, using the name "Tia's," and
featuring a menu consisting primarily of Mexican foods.
"Trademark Security Agreement" shall mean that certain Trademark
Security Agreement between the Lender and the Borrower of even date herewith
substantially in the form of Exhibit H.
"Units" shall refer, collectively, to each sales location of the
Borrower in operation at any time in the Tia's Format; and "Unit" shall refer
to anyone of the foregoing Units.
"Voting Agreement" shall mean that certain Voting Agreement of even
date herewith among the Lender and the Shareholders substantially in the form
of Exhibit G hereto.
Each definition of a document in this Article 9 shall include such
document, as amended, modified, or supplemented from time to time with the
prior consent of the Lender and, except where the context otherwise requires,
definitions imparting the singular shall include the plural and vice versa.
Except where restricted, reference to a party to a Loan Document includes
that party and its successors and permitted assigns. All accounting terms
used herein without definitions shall be used as defined under GAAP.
ARTICLE 10 Waiver of Jury Trial, Etc.
Section 10.1 Consent to Venue. The Borrower hereby irrevocably
waives any objection it would make now or hereafter for the laying of venue
of any suit, action, or proceeding arising out of or relating to this
Agreement or any other Loan Document brought in the state court of general
jurisdiction in Mobile County, Alabama, or, at the election of the Lender,
in the Southern District of Alabama of the federal courts of the United
States of America, and hereby irrevocably waives any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
incorrect forum.
Section 10.2 Waiver of Jury Trial. THE BORROWER AND THE LENDER
HEREBY AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY
ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, THE LENDER, OR ANY
OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND
THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN
THIS ARTICLE 10.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: TIAS, INC.,
a Texas corporation
By: /s/ Frank B. Sbordone, Jr.
Title: Vice President
LENDER: MORRISON RESTAURANTS INC.,
a Delaware corporation
By: /s/ Pfilip G. Hunt
Title: Sr. Vice President
22680373.W51
A04319.0119
November 19, 1993
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Gentlemen:
The undersigned holder (the "Holder") of the Existing Indebtedness, as
described and defined in the second paragraph of the Promissory Note that is
Exhibit A hereto (the "Renewal Note"), of Tias, Inc., a Texas corporation
(the "Company"), hereby agrees with the Company as follows:
(a) The terms of the Original Note (as described and defined in the
second paragraph of the Renewal Note) are hereby modified,
renewed, and extended to be in accordance with the terms of the
Renewal Note. The Renewal Note amends, restates, and supersedes
in its entirety the Original Note.
(b) The modification, renewal, and extension of the Existing
Indebtedness do not constitute the cancellation or extinguishment
of any of the Existing Indebtedness or any of the liens or
security interests now securing the payment of the Existing
Indebtedness.
(c) Upon the substitution of the Renewal Note for the Original Note,
the Loan Papers, as defined and used in the Loan Agreement (which
is described and defined in the second paragraph of the Renewal
Note) shall consist, on the date hereof, of the Loan Agreement,
as amended hereby; the Renewal Note; the financing statement
filed with the Secretary of State of Texas on March 23, 1990, as
amended to reflect the assignment to the undersigned by the
previous lender by a financing statement amendment on Form UCC-3
filed with the Secretary of State of Texas on December 23, 1991;
and a financing statement on Form UCC-1 filed with the Secretary
of State of Texas on April 3, 1992. The Holder also acknowledges
that the Existing Indebtedness and his rights and remedies under
the Loan Papers shall also be subject to the terms of the
Intercreditor Agreement dated as of this date among the Company,
the Holder, Morrison Restaurants Inc. ("MRI"), and Crosspoint
Venture Partners III, which is being executed and delivered in
connection with the Loan Agreement dated as of this date between
the Company and MRI (the "MRI Loan Agreement").
(d) The references to the Loan and to the Note in the Loan Agreement
are hereby amended to be references to the Existing Indebtedness
evidenced by the Renewal Note and to the Renewal Note,
respectively.
(e) All references in the Loan Agreement, whether on behalf of the
Company or the Holder, to "4060 Greenville Avenue" are hereby
amended to be references to "4600 Greenville Avenue."
(f) All references in the Loan Agreement to the Operating Plan are
hereby deleted and of no further force and effect, though any
exceptions to covenants referring to the "ordinary course of
business" in connection with the Operating Plan shall continue to
the extent of the "ordinary course of business."
(g) Sections 4.H, 5.A, 5.F, 6.G, and 6.H of the Loan Agreement are
hereby terminated and of no further force and effect, and the
Holder hereby waives any Default under the terms of this Loan
Agreement which may now exist as the result of any noncompliance
by the Company of any of those Sections of the Loan Agreement.
(h) The Holder hereby (1) consents to the MRI Loan Agreement and the
Company's consummation of the various transactions, and
performance of its various obligations, contemplated by the MRI
Loan Agreement and (2) waives any Default under the terms of the
Loan Agreement which may exist or arise as the result of the
foregoing.
All references to the Holder in this letter agreement shall be deemed
to include his heirs, legal representatives, successors, and assigns, and all
covenants and agreements contained herein by the Holder shall be binding upon
his heirs, legal representatives, successors and assigns.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
/s/ Larry D. Lavine
LARRY D. LAVINE
Agreed to by the Company:
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
Exhibit A
PROMISSORY NOTE
$999,997.10 November 19, 1993
FOR VALUE RECEIVED, Tias, Inc., a Texas corporation ("Maker"), hereby
promises to pay to the order of Larry D. Lavine ("Payee"), at 4600 Greenville
Avenue, Suite 160, Dallas, Dallas County, Texas 75206, the principal amount
of Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Seven and 10/100
Dollars ($999,997.10), together with interest, as hereinafter described.
This Note is a modification, extension, and renewal of the outstanding
principal amount of the indebtedness of Maker to Payee (the "Existing
Indebtedness") evidenced by a Promissory Note of Maker in favor of Payee
dated September 20, 1991, in the original principal amount of Nine Hundred
Ninety-Nine Thousand Nine Hundred Ninety-Seven and 10/100 Dollars
($999,997.10) (the "Original Note"), that was executed and delivered pursuant
to a Loan Agreement between Maker and Payee dated as of September 20, 1991
(as now existing, and as may hereafter be amended, the "Loan Agreement").
Maker hereby affirms that the Existing Indebtedness is outstanding and that
it shall continue to be outstanding as modified, extended, and renewed in
accordance with the terms of this Note and the Loan Agreement (including the
amendments thereto set forth in a letter agreement dated November 19, 1993,
between Maker and Payee). This Note does not cancel or extinguish any of the
existing Indebtedness, but amends, restates and supersedes in its entirety
the Original Note evidencing the Existing Indebtedness.
The unpaid principal amount of this Note shall bear simple interest at
a rate per annum of nine and three-quarters percent (9-3/4%), calculated on
a basis of actual days elapsed and computed in accordance with the number of
days in each calendar year. Accrued interest on the unpaid principal amounts
of this Note shall be due and payable in monthly installments commencing on
December 31, 1993, and continuing on the last day of each month thereafter
until May 31, 1999, when all amounts under this Note shall be due and
payable. At each interest payment date and at maturity (stated or by
acceleration), the interest then payable shall be calculated from the date
thereof on the principal amount hereof from day to day unpaid at the interest
rate set forth above in this paragraph; provided, that (a) any interest
previously paid shall be deducted from the interest then payable, and (b) the
total interest payable through such date shall not exceed the Highest Lawful
Rate (as defined below) over the then elapsed term hereof. All of the
principal amount of this Note is due and payable on May 31, 1999. All of the
unpaid principal amount of this Note, together with all interest accrued
thereon, shall also be due and payable upon the sale of all or substantially
all of the capital stock of Maker, including (without limitation) any
consolidation or merger of Maker with and into any other entity.
Maker may prepay all or any part of the principal or accrued interest
at any time and from time to time, without premium or penalty. All partial
prepayments shall be applied first to accrued and unpaid interest and then
to principal.
The holder hereof may declare the entire unpaid principal of and
accrued interest on this Note immediately due and payable, without notice,
demand, or presentment, all of which are hereby waived, foreclose any liens
or security interests securing all or any part hereof, offset against this
Note any sum or sums owed by the holder hereof to Maker, or exercise any
other right or remedy to which the holder hereby may be entitled by agreement
at law, or in equity, upon a Default, as defined in the Loan Agreement. Each
right and remedy available to the holder hereof shall be cumulative of and
in addition to each other such right and remedy. No delay on the part of the
holder hereof in the exercise of any right or remedy available to the holder
hereof shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude other or further exercise thereof or exercise of
any other such right or remedy. At the option of the holder hereof, all
past-due principal and accrued interest shall, from maturity (stated or by
acceleration) until paid, bear simple interest at a rate per annum equal to
thirteen percent (13%).
If this Note is placed in the hands of an attorney for collection, or
if it is collected through any legal proceedings, Maker agrees to pay court
costs, reasonable attorneys' fees, and other costs of collection of the
holder hereof.
Regardless of any provision contained herein, the holder hereof shall
never be entitled to receive, collect, or apply, as interest on this Note,
any amount in excess of the Highest Lawful Rate, and, in the event the holder
hereof ever receives, collects, or applies as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment
of principal and treated hereunder as such; and, if the principal hereof is
paid in full, any remaining excess shall forthwith be paid to Maker. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, Maker and the holder hereof
shall, to the maximum extent permitted under applicable law, (a) treat all
advances hereunder as but a single extension of credit, (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(c) exclude voluntary prepayments and the effects thereof, and (d) "spread"
the total amount of interest throughout the entire contemplated term hereof;
provided, that if the principal hereof is paid in full prior to the end of
the full contemplated term hereof, and if the interest received for the
actual period of existence thereof exceeds the Highest Lawful Rate, the
holder hereof shall refund to Maker the amount of such excess, and, in such
event, the holder hereof shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving, or receiving
interest in excess of the Highest Lawful Rate. As used herein, the term the
"Highest Lawful Rate" means the maximum rate of interest (or, if the context
so requires, an amount calculated at such rate) which the holder hereof is
allowed to contract for, charge, take, reserve, or receive under applicable
law after taking into account, to the extent required by applicable law, any
and all relevant payments or charges made in connection with this Note. To
the extent the laws of the State of Texas are applicable for purposes of
determining the Highest Lawful Rate, such term shall mean the "indicated rate
ceiling" from time to time in effect under Article 1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended, or, if permitted by applicable law
and effective upon the giving of the notices required by such Article 1.04
(or effective upon any other date otherwise specified by applicable law), the
"monthly ceiling," the "quarterly ceiling," or the "annualized ceiling" from
time to time in effect under such Article 1.04, whichever the holder hereof
shall elect to substitute for the "indicated rate ceiling," and vice versa,
each such substitution to have the effect provided in such Article 1.04; and
the holder hereof shall be entitled to make such election from time to time
and one or more times and, without notice to Maker, to leave any such
substitute rate in effect for subsequent periods in accordance with
subsection (h)(1)g of such Article 1.04. Pursuant to Article 15.10(b) of
Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as amended,
Maker and the holder hereof expressly agree that such Chapter 15 shall not
govern or in any manner apply to this Note or to the indebtedness covered
hereby.
Maker and each surety, endorser, guarantor, and other party ever liable
for payment of any part hereof jointly and severally waive presentment and
demand for payment, protest, notice of intention to accelerate, and notice
of protest and nonpayment, and agree that their liability on this Note shall
not be affected by, and hereby consent to, any renewal or extension in the
time of payment hereof, any indulgences, or any release or change in any
security for the payment of this Note.
THE VALIDITY, CONSTRUCTION, AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742511.W51
November 19, 1993
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Gentlemen:
The undersigned holder (the "Holder") of the Existing Indebtedness, as
described and defined in Paragraph 1 of the Promissory Note that is Exhibit
A hereto (the "Renewal Note"), of Tias, Inc., a Texas corporation (the
"Company"), hereby agrees with the Company as follows:
(a) The Existing Indebtedness and all of its terms are hereby
modified, renewed, and extended to be in accordance with the
terms of the Renewal Note.
(b) The Renewal Note, with the Security Documents, as described and
defined in Paragraph 6 of the Renewal Note, are all of the
agreements between the Company and the Holder relating to the
Existing Indebtedness as modified, renewed, and extended.
(c) The documents referred to in the preceding clause (b) of this
letter agreement amend and restate in their entirety, and
supersede, all prior instruments and other documents evidencing
or governing the Existing Indebtedness as modified, renewed, and
extended. Without limiting the generality of the foregoing, the
Holder hereby acknowledges and agrees that the conversion rights
and subordination provisions of the prior instruments and other
documents evidencing or governing the Existing Indebtedness are
hereby terminated and of no further force and effect.
(d) The modification, renewal, and extension of the terms of the
Existing Indebtedness and all of its terms do not constitute the
cancellation or extinguishment of any of the Existing
Indebtedness or any of the liens or security interests now
securing the payment of the Existing Indebtedness; provided,
however, that the Holder hereby acknowledges that the Assignment
of Accounts by the Company in favor of the Holder and the
Assignment of Accounts by Larry Lavine in favor of the Holder,
both dated as of August 1, 1991, have previously been
terminated.
(e) The references to the Loan and to the Debenture in the Security
Agreement, as described and defined in Paragraph 6 of the
Renewal Note, are hereby amended to be references to the
indebtedness evidenced by the Renewal Note and to the Renewal
Note, respectively.
(f) In light of the termination of the subordination provisions
included in the prior instruments and other documents evidencing
or governing the Existing Indebtedness, Section H of the
Security Agreement is hereby deleted and of no further force and
effect, and all references to the Senior Lender and the Senior
Loan Documents in the Security Agreement are hereby deleted and
of no further force and effect. Nevertheless, the Holder hereby
acknowledges and agrees that the Existing Indebtedness and the
Holder's rights and remedies under the Renewal Note and the
Security Documents shall be subject to the terms of the
Intercreditor Agreement dated as of this date among the Company,
the Holder, Morrison Restaurants Inc. ("MRI"), and Larry Lavine,
which is being executed and delivered in connection with the
Loan Agreement dated as of this date between the Company and MRI
(the "MRI Loan Agreement").
(g) All references to Previous Security Interests in Section E.2 of the
Security Agreement are hereby amended to be references to Permitted
Liens as defined in the MRI Loan Agreement.
(h) The Company shall have no further obligations to the undersigned
under the Purchase Agreement, as described and defined in Paragraph
4(b) of the Renewal Note, except for the registration rights granted
to the undersigned by the Company in Section 9.03 of the Purchase
Agreement with respect to the Common Stock (as defined in the
Purchase Agreement) purchased by the undersigned pursuant to the
Purchase Agreement, but not with respect to the Conversion Shares or
the Conversion Common Shares (both as defined in the Purchase
Agreement), which have no further applicability because the Holder
has no further conversion rights with respect to any of the Existing
Indebtedness.
(i) The references in the Security Agreement to events of default set
forth in the Purchase Agreement are hereby modified to be references
to the Events of Default set forth in Paragraph 4 of the Renewal
Note.
(j) The Holder hereby (1) consents to the MRI Loan Agreement and the
Company's consummation of the various transactions, and performance
of its various obligations, contemplated by the MRI Loan Agreement
and (2) waives any Event of Default under the terms of the Renewal
Note and the Security Agreement which may exist or arise as the
result of the foregoing.
All references to the Holder in this letter agreement shall be deemed to
include its successors and assigns, and all covenants and agreements contained
herein by the Holder shall be binding upon its successors and assigns.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
Renewal Note shall be modified to reflect the average interest rate
currently earned on all Existing Indebtedness.
CROSSPOINT VENTURE PARTNERS III
By: /s/ John B. Muford
John B. Mumford
General Partner
Agreed to by the Company:
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742512.W51
PROMISSORY NOTE
November 19, 1993
TIAS, INC., a Texas corporation (the "Company"), for value received, hereby
promises to pay to the order of Crosspoint Venture Partners III, a California
limited partnership ("Crosspoint"), the principal amount of One Million Five
Hundred Twenty Thousand Five Hundred Three and 41/100 Dollars ($1,520,503.41)
and interest on the unpaid balance of such principal amount at the rate
specifiedbelow from the date hereof until the due date at the time or times and
in the manner hereinafter provided.
1. Modification and Renewal. This Note is a combination, modification,
extension, and renewal of outstanding indebtedness of the Company to Crosspoint
consisting of the following (collectively, the "Existing Indebtedness"): (a) the
principal amount of Nine Hundred Ninety-Seven Thousand One Hundred Seventy and
33/100 Dollars ($997,170.33) evidenced by a Convertible Subordinated Debenture
of the Company in favor of Crosspoint dated August 1, 1991, in the original
principal amount of One Million One Hundred Ninety-Nine Thousand Dollars
($1,199,000) (the "Debenture"), (b) the principal amount of Two Hundred
Seventy Thousand Three Hundred Six and 58/100 Dollars
($270,306.58) evidenced by a Subordinated Promissory Note of the Company in
favor of Crosspoint dated September 30, 1992, in the same principal amount (the
"1992 Note"), (c) One Hundred Thousand Dollars ($100,000) advanced by
Crosspoint to the Company on February 25, 1993, which is not evidenced by any
written payment instrument of the Company, but which has borne interest from
the date of advancement through the date of this Note at the rate of fourteen
percent (14%) per annum (the "Advance"), (d) all accrued interest payable
to Crosspoint under the Debenture from October 1, 1992, through the date
of this Note, (e) accrued interest payable to Crosspoint under the 1992 Note,
and (f) all accrued interest payable to Crosspoint on the Advance from the date
thereof through the date of this Note. The Company hereby affirms that the
Existing Indebtedness is outstanding and that it shall continue to be
outstanding as modified, extended, and renewed in accordance with
the terms of this Note. This Note does not cancel or extinguish any of
the Existing Indebtedness, but, with the Security Documents (as defined in
Paragraph 6 of this Note), amends, restates, and supersedes the Debenture, the
1992 Note, and any other instrument or document evidencing or governing the
Existing Indebtedness in their entirety.
2. Interest and Payments. The underpaid principal sum of this Note
shall bear simple interest at the rate of twelve and 61/100 percent (12.61%)
per annum. Accrued interest on the unpaid principal amount of this Note shall
be due and payable in monthly installments commencing December 31, 1993, and
continuing on the last day of each month thereafter until
May 31, 1999, when all amounts under this Note shall be due and payable. The
principal amount of this Note shall be due and payable on May 31,
1999. All of the unpaid principal amount of this Note, together with all
interest accrued thereon, shall also be due and payable upon the sale of all
or substantially all of the capital stock of the Company. The
principal of and interest on this Note shall be payable at the principal office
of Crosspoint at One First Street, Los Altos, California 94022, or at such other
address as Crosspoint or any other holder of this Note shall from time to time
designate. At the option of the holder hereof, all past due principal and
interest shall bear simple interest, from its due date or maturity (stated or by
acceleration) until paid, at the rate of thirteen percent (13%) per annum.
3. Prepayments. This Note may, at the option of the Company, be prepaid in
whole or in part prior to maturity on any date by the payment of the principal
amount of this Note to be prepaid, together with accrued interest to the
prepayment date. The Company shall give the holder of this Note at least ten
(10) days' prior written notice of the Company's intent to prepay this Note,
stating the prepayment date, the principal amount of this Note to be prepaid on
the prepayment date, and the amount of interest to be paid to such holder on the
prepayment date. The prepayment shall be in integral multiples of principal of
One Thousand Dollars ($1,000), or if this Note is prepaid in full, in the amount
of the unpaid principal balance hereof. The prepayment shall be applied
first to accrued interest, then to the principal amount of this Note.
4. Events of Default. If any of the following events (herein
collectively called "Events of Default") shall occur:
(a) the Company shall default in the payment of any principal of or
interest on this Note when due and payable, whether at any stated due date or
maturity or by acceleration or otherwise;
(b) the Company shall default in the performance of or compliance with any
covenant contained in the Security Agreement (as defined in Paragraph 6 of this
Note) or in Section 9.03 of the Debenture and Common Stock Purchase Agreement
dated as of August 1, 1991, between the Company and Crosspoint, as amended by
the First Amendment to Debenture and Common Stock Purchase Agreement dated as of
September 30, 1992, between the Company and Crosspoint (as so amended, the
"Purchase Agreement"), other than any covenant the performance of or compliance
with which has been waived in accordance with Paragraph 9 of this Note, and such
default shall not have been remedied within thirty (30) days after written
notice thereof shall have been given to the Company by Crosspoint or the other
holder hereof;
(c) the company shall (i) permit its Articles of Incorporation or its
Bylaws to be amended hereafter in a manner that materially affects the rights of
or the benefits to Crosspoint arising from this Note or the Security Documents;
(ii) consolidate or merge with any other corporation or other entity unless the
Company is the survivor thereof; or (iii) sell, lease, or otherwise dispose of
all or substantially all of the properties and assets of the Company;
(d) any material representation or warranty made by the Company in this
Note shall prove to have been false or incorrect in any material respect on the
date as of which made;
(e) the Company shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due; or an
order for relief is entered, or deemed entered, against the Company under any
provision of the U.S. Bankruptcy Code, as amended, pursuant to a petition filed
by or on behalf of the Company; or the Company shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the properties
of the Company; or the Company or its board of directors or shareholders
shall take any action looking to the dissolution or liquidation of the Company;
(f) within ninety (90) days after the commencement of any proceeding
against the Company seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed;
or, within ninety (90) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated;
then, and in any such event, the holder hereof may at any time at its option, by
written notice or notices to the Company, declare the entire unpaid principal
amount of and accrued interest on this Note to be due and payable, whereupon the
same shall forthwith mature and become due and payable without presentment,
demand, protest or notice, notice of intention to accelerate or notice of
acceleration, all of which are hereby waived.
5. Remedies on Default, etc. The holder hereof, upon the occurrence and
during the continuance of any Event of Default, may proceed to protect and
enforce its rights by a suit in equity, action at law or other appropriate
proceeding, including (but not limited to) the enforcement
of any rights under any of the Security Agreements (as hereinafter defined),
whether for the collection of amounts due under this Note (by acceleration
or otherwise), for the specific performance of any agreement contained
herein, or for an injunction against a violation of any of the terms or
provisions hereof or thereof or in aid of the exercise of any power granted
hereby or thereby or by law. No course of dealing and no delay on
the part of any holder of this Note in exercising any right shall operate
as a waiver thereof or otherwise prejudice such holder's rights. No
remedy conferred hereby upon any holder of this Note shall be exclusive of any
other remedy referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise. Upon the occurrence and during the
continuance of an Event of Default, if this Note is placed in the hands of an
attorney for collection (whether or not suit is filed) or if this Note is
collected by suit or legal proceedings or through bankruptcy proceedings, the
Company agrees to pay, in addition to all amounts then due hereunder, all
expenses of collection, including (without limitation) reasonable attorneys'
fees.
6. Collateral. The full and complete payment of any and all amounts due
under the terms of this Note shall be entitled to all of the benefits of the
security interests in certain properties made and granted by all documents
executed or used to create or evidence the liens and security interests in the
property securing the payment of the Existing Indebtedness, consisting (as of
this date) of the Security Agreement between the Company and Crosspoint dated
asof August 1, 1991 (the "Security Agreement"), as amended by the letter
agreement between the Company and Crosspoint dated as of November 19, 1993, and
the financing statement by the Company and Crosspoint filed with the Secretary
of State of Texas on April 27, 1992 (collectively with the Security Agreement
(as now amended), the "Security Documents").
7. Waivers of Demand, etc. The Company hereby waives presentment and
demand for payment, protest and notice of protest, nonpayment, acceleration and
intention to accelerate and agrees that liability hereunder or under any
guaranty of payment hereof shall not be affected by any renewal or extension in
time of payment hereof.
8. Usury Savings. It is the intention of the parties hereto to comply
with the usury laws of the State of Texas. Accordingly, it is agreed that,
notwithstanding any provisions to the contrary in this Note or in any of the
documents securing payment hereof or otherwise relating hereto, in no event
shall this Note or such documents require the payment or permit the collection
of interest in excess of the maximum amount permitted by such laws. If any such
excess of interest is contracted for, charged, or received under this Note or
under the terms of any of the documents securing payment hereof or otherwise
relating hereto, or in the event the maturity of the indebtedness evidenced by
this Note is accelerated in whole or in part, or in the event that all or part
of the principal or interest of this Note shall be prepaid, so that under any of
of such circumstances the amount of interest contracted for, charged, or
received under this Note or under any of the documents securing payment hereof
or otherwise relating hereto, on the amount of principal actually outstanding
from time to time under this Note shall exceed the maximum amount of interest
permitted by the usury laws of the State of Texas, then in any such event
(a) the provisions of this Paragraph 8 shall govern and control, (b)
neither the Company nor any other person or entity now or hereafter
liable for the payment hereof shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount
of interest permitted by the usury laws of the State of Texas, (c) any such
excess which may have been collected shall be either applied as a credit against
the then unpaid principal amount hereof or refunded to the Company, at the
holder's option, and (d) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest allowed under the usury laws of
the State of Texas as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged,
or received under this Note or under such other documents which are
made for the purpose of determining whether such rate exceeds the maximum
lawful rate of interest shall be made, to the extent permitted by the laws
of the State of Texas, by amortizing, prorating, allocating, and spreading in
equal parts during the period of the full stated term of the indebtedness
evidenced hereby all interest at any time contracted for, charged, or received
from the Company or otherwise by the holder or holders hereof in connection
with such indebtedness.
9. Waivers; Amendments. The Company's performance of or compliance with
any of the provisions, covenants, and conditions set forth in this Note may be
waived, or any of such provisions, covenants, or conditions may be modified or
amended, only upon the prior written consent of Crosspoint or the other holder
of this Note.
10 Modification of References. All references to the Loan and to the
Debenture in the Security Agreements are hereby modified or amended to be
references to the indebtedness evidenced by this Note and to this Note,
respectively. Further, the references in the Security Agreements to events of
default set forth in the Purchase Agreement are hereby modified to be references
to the Events of Default set forth in Paragraph 4 of this Note.
11. Successors and Assigns. All references to the Company herein shall,
and shall be deemed to, include its successors and assigns, and all covenants,
stipulations, promises, and agreements contained herein by or on behalf of the
Company shall be binding upon its successors and assigns, whether so expressed
or not.
12. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name and on its behalf by the officer designated below, and this Note
to be dated, issued, and delivered, all effective as of November 19, 1993, such
officer being thereunto duly authorized.
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742512.W51