EXHIBIT-4A
Loan No. Loan_No
BORROWER: BORROWER, Borrower_Entity
BORROWER ADDRESS: Borrower_Street,
Borrower_City,
Borrower_State
Borrower_Zip
BORROWER FAX NO.: Borrower_Fax_
RESTAURANT NO.: FranchiseType Restaurant No. RestaurantNo
RESTAURANT ADDRESS: Premises_Street,
Premises_City,
Premises_State
Premises_Zip
LOAN AMOUNT: Loan_Amt
MORTGAGE, ASSIGNMENT OF RENTS, FIXTURE
FILING AND SECURITY AGREEMENT
THIS MORTGAGE, ASSIGNMENT OF RENTS,
FIXTURE FILING AND SECURITY AGREEMENT
("Mortgage") is made by the Borrower whose
name and address is set forth above
("Borrower"), for the benefit of LENDER,
Lender_Entity, whose address is
Lender_Street, Lender_City,
Lender_State Lender_Zip (together with
its successors, assigns and transferees,
"Lender"). This instrument is dated as of
the date the signatures hereto were
acknowledged or notarized but shall become
effective on the Closing Date set forth on
Schedule A attached hereto (the "Closing
Date").
PRELIMINARY STATEMENT
This Mortgage is made to secure (1)
performance by Borrower of the covenants
and obligations of Borrower under that
certain Promissory Note ("Note") in the
Loan Amount set forth above, made as of
the date of this Mortgage by Borrower to
Lender, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; (2)
the performance by Borrower of the
covenants and obligations of Borrower
under this Mortgage; (3) the performance
by Borrower of the covenants and
obligations of Borrower under any other
promissory notes ("Other Notes") made as
of the date of this Mortgage by Borrower
to Lender, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; (4)
the performance by Borrower of the
covenants and obligations of Borrower
under any other documents securing payment
of all amounts due under the Note and the
Other Notes, and any agreements or
amendments relating thereto or executed in
connection therewith (collectively,
together with the Note, the Other Notes
and this Mortgage, the "Loan Documents");
(5) all obligations of Borrower for sums
that may be advanced by Lender, whether or
not evidenced by the Note or the Other
Notes; and (6) such Trust Obligations and
Retained Obligations described in the
following two paragraphs. Such covenants
and obligations of Borrower are sometimes
collectively referred to herein as the
"Indebtedness." The original principal
amount of the loan evidenced by the Note
is the Loan Amount set forth above (the
"Loan Amount").
If the Note, this Mortgage and the Loan
Documents are assigned to a trust
sponsored by Lender or any of Lender's
affiliates to securitize its loan
receivables (the "Trust"), "Indebtedness"
shall also include the payment of all
other sums (together with interest and costs thereon)
concurrently or subsequently loaned to
Borrower by Lender or any of Lender's
affiliates (each an "Originator"), as
evidenced and/or secured by certain notes
and other documents of Borrower with
respect to such amounts and which notes
and other documents are assigned to the
Trust, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; and
the performance of the covenants and
obligations of Borrower due or to become
due under such notes and other documents
assigned to the Trust, and the repayment
of all sums expended in connection with
performance of those covenants and
obligations (collectively, the "Trust
Obligations").
If the Note, this Mortgage and the Loan
Documents are not assigned to the Trust,
"Indebtedness" shall also include the
payment of all other sums (together with
interest thereon) concurrently or
subsequently loaned to Borrower by an
Originator, as evidenced and/or secured by
certain notes and other documents of
Borrower which are not assigned to the
Trust, together with any and all
extensions, renewals, modifications,
substitutions or replacements thereof; and
the performance of the covenants and
obligations of Borrower due or to become
due under such notes and other documents,
and the repayment of all sums expended in
connection with performance of those
covenants and obligations (collectively,
the "Retained Obligations").
1. GRANTING CLAUSE. To secure the
Indebtedness and as security for the
purposes stated elsewhere in this
Mortgage, Borrower mortgages, grants and
conveys to Lender, its successors and
assigns, with power of sale and right of
entry and possession, all of its present
and future estate, right, title and
interest in and to that certain real
property more particularly described in
Schedule B attached hereto (the "Real
Estate") and all rights to the Real Estate
which may be acquired by the Borrower at
any time, including all rights,
privileges, options, elections and other
benefits of every name and nature;
together with all present and future
easements and rights used in connection
therewith or as a means of access thereto;
together:
1.1. All right, title and interest of the
Borrower in, to, under or derived from all
buildings, structures, facilities and
other improvements of every kind and
description now or hereafter located on
the Real Estate, including all parking
areas, roads, driveways, walks, fences,
walls, drainage facilities and other site
improvements, all water, sanitary and
storm sewer, drainage, electricity, steam,
gas, telephone and other utility equipment
and facilities, all plumbing, lighting,
heating, ventilating, air-conditioning,
refrigerating, incinerating, compacting,
fire protection and sprinkler,
surveillance and security, public address
and communications equipment and systems,
all awnings, floor coverings, partitions,
elevators, escalators, motors, machinery,
pipes, fittings and other items of
equipment and personal property of every
kind and description, excluding inventory
of the Franchised Operation (as defined
herein) and proceeds thereof, leased
furniture, fixtures and equipment at the
Franchised Operation, any signage or other
proprietary tangible property at the
Franchised Operation, and furniture,
fixtures and equipment subsequently
acquired for use at the Franchised
Operation and subject to a purchase money
security interest in favor of a third
party not to exceed the value of $75,000
at any time (collectively, the "Excluded
Collateral"), now or hereafter located on
the Real Estate, as defined herein, or
attached to the improvements which by the
nature of their location thereon or
attachment thereto are real property under
applicable law; and including all
materials intended for the construction,
reconstruction, repair, replacement, alteration, addition or
improvement of or to such buildings,
equipment, fixtures, structures and
improvements, all of which materials shall
be deemed to be part of the Real Estate
immediately upon delivery thereof on the
Real Estate and to be part of the
improvements immediately upon their
incorporation therein (the foregoing other
than Excluded Collateral being
collectively the "Improvements");
1.2. All estate, right, title and interest
of the Borrower in, to, under or derived
from all machinery, equipment, furniture,
furnishings, vehicles, fixtures and any
accessions, parts, attachments,
accessories, tools, dies, additions,
substitutions, renewals, replacements and
appurtenances thereto and their related
rights thereof, and other customary
franchise restaurant equipment and other
tangible property of every kind and nature
whatsoever, other than the Excluded
Collateral, acquired, owned or held by the
Borrower, or in which the Borrower has or
shall have an interest, now or hereafter
located upon the Real Estate, or
appurtenant thereto, or usable exclusively
in connection with the present or future
operation and occupancy of the Real Estate
or the Improvements, including the
operation of the franchised restaurant
located on the Real Estate at the
Restaurant Address set forth above (the
"Franchised Operation") (hereinafter
collectively called the "Equipment");
1.3. All estate, right, title and interest
of the Borrower in, to, under or derived
from all tenements, hereditaments and
appurtenances now or hereafter relating to
the Real Estate; the streets, roads,
sidewalks and alleys abutting the Real
Estate; all air space and rights to use
air space above the Real Estate; all
development, operating or similar rights
appurtenant to the Real Estate (including,
without limitation, all rights arising
from reciprocal access agreements, joint
occupancy, use or development agreements,
and parking agreements); all rights of ingress and
egress now or hereafter appertaining to
the Real Estate; and all easements,
licenses and rights of way now or
hereafter appertaining to the Real Estate;
1.4. All estate, right, title and interest
of the Borrower in, to, under and derived
from all leases of or relating to the Real
Estate, the Franchised Operation, the
Improvements or the Equipment (together
with all amendments, supplements,
consolidations, replacements,
restatements, extensions, renewals and
other modifications thereof), if any, now
or hereafter in effect, whether or not of
record, including without limitation that
certain Lease described on Schedule C
attached hereto (the "Property Lease")
(collectively, the "Leases"); and the
right to bring actions and proceedings
under the Leases or for the enforcement
thereof and to do anything which the
Borrower or any lessor is or may become
entitled to do under the Leases;
1.5. All estate, right, title and interest
of the Borrower in, to, under or derived
from all contract rights, chattel paper,
instruments, general intangibles, computer
hardware, software and intellectual
property, accounts, guaranties and
warranties, letters of credit, documents
or any kind of negotiable instrument or
security as those terms are defined in the
Uniform Commercial Code of the state where
the Real Estate is located, or any other
writing which evidences a right to payment
of money and is of a type which is, in the
ordinary course of business, transferred
by delivery alone or by delivery with any
necessary endorsement or assignment, in
each case relating to the Franchised
Operation, the Improvements or the
Equipment or to the present or future
operation or occupancy of the Real Estate,
and all plans, specifications, maps,
surveys, studies, books of account,
records, files, insurance policies,
guarantees and warranties, all relating to
the Franchised Operation, the Improvements
or the Equipment or to the present or
future operation or occupancy of the Real
Estate, all architectural, engineering,
construction and management contracts, all
supply and service contracts for water,
sanitary and storm sewer, drainage,
electricity, steam, gas, telephone and
other utilities relating to the Real
Estate and all other agreements affecting
or relating to the use, enjoyment or
occupancy of the Real Estate, the
Franchised Operation or the Improvements,
excluding any rights of the Borrower or
its affiliates under franchise agreements
relating to the Franchised Operation
except to the extent such rights are
affected by the Consent to Collateral
Assignment dated September 11, 1998 with
Brinker International, Inc. and the
Intercreditor Agreement dated on or about
the date hereof with Burger King
Corporation and by that certain
Intercreditor Agreement of even date
herewith and any subsequent Intercreditor
Agreement with Chase Bank of Texas,
National Association, as Administrative
Agent, or any subsequent senior lender of the Borrower
or its affiliates (the "Excluded Franchise
Rights").
1.6. All estate, right, title and interest
of the Borrower in, to, under or derived
from all rents, royalties, issues,
profits, receipts, revenue, income,
earnings and other benefits now or
hereafter accruing with respect to all or
any portion of the Real Estate; sums now
or hereafter payable pursuant to the
Leases; all other sums now or hereafter
payable with respect to the use,
occupancy, management, operation or
control of the Real Estate; and all other
claims, rights and remedies now or
hereafter belonging or accruing with
respect to the Real Estate, including oil,
gas and mineral royalties (collectively,
"Rents"), refunds of taxes, assessments or
other charges levied or imposed upon the
Real Estate or of utility or tenant
deposits, all of which the Borrower hereby
irrevocably directs to be paid to the
Lender, subject to the license, if any,
granted to the Borrower herein, to be
held, applied and disbursed, as provided
in this Mortgage;
1.7. All estate, right, title and interest
of the Borrower in, to, under or derived
from all licenses, authorizations,
certificates, variances, consents,
approvals and other permits now or
hereafter pertaining to the Real Estate
and all estate, right, title and interest
of the Borrower in, to, under or derived
from all tradenames or business names
relating to the Real Estate, the
Franchised Operation or the Improvements
or the present or future operation or
occupancy of the Real Estate excluding,
however, from the grant under this Section
1.7 any franchise rights and any permits
which cannot be transferred or encumbered
by the Borrower without causing a default
thereunder or a termination thereof
including the Excluded Franchise Rights.
1.8. All estate, right, title and interest
of the Borrower in, to, under or derived
from all amounts deposited with the
Lender, including all insurance proceeds
and awards and including all notes,
certificates of deposit, securities and
other investments relating thereto and all
interest, dividends and other income
thereon, proceeds thereof and rights
relating thereto;
1.9. All estate, right, title and interest
of the Borrower in, to, under or derived
from all proceeds of any sale, rent,
lease, casualty, loss, transfer, taking by
condemnation (or any proceeding or
purchase in lieu thereof), financing,
refinancing or a conversion into cash or
liquidated claims, whether voluntary or
involuntary, of any of the Property (as
hereinafter defined), including all
insurance proceeds and awards and title
insurance proceeds under any title
insurance policy now or hereafter held by
the Borrower, and all rights, dividends
and other claims of any kind whatsoever
(including damage, secured, unsecured,
priority and bankruptcy claims) now or
hereafter relating to any of the Property,
including all stock rights, subscription
rights, dividends, stock dividends, stock
splits or liquidating dividends, and all
cash, accounts, chattel paper and general
intangibles arising from the sale, rent,
lease, casualty, loss or other disposition
of the Property, all of which the Borrower
hereby irrevocably directs be paid to the
Lender to the extent provided hereunder,
to be held, applied and disbursed as
provided in this Mortgage;
1.10. All estate, right, title and
interest of the Borrower as seller in, to
or under any agreement, contract,
understanding or arrangement pursuant to
which the Borrower has obtained the
agreement of any person to purchase any of
the Property or any interest therein and
all income, profits, benefits, avails,
advantages and claims against guarantors
under any thereof;
1.11. All estate, right, title and
interest of the Borrower in, to, under or
derived from any right to payment for
goods sold or leased or for services
rendered which is not evidenced by an
instrument or chattel paper, whether or
not it has been earned by performance,
related to the Real Estate, the Franchised
Operation or the Improvements or the
present or future operation and occupancy
of the Real Estate (collectively, "Accounts").
1.12. All estate, right, title and
interest of the Borrower in, to, under or
derived from the Real Estate hereafter
acquired by the Borrower, and all right,
title and interest of the Borrower in, to,
under or derived from all extensions,
improvements, betterment, renewal
substitutions and replacements of, and
additions and appurtenances to, any of the
Real Estate hereafter acquired by or
released to the Borrower or constructed or
located on, or attached to, the Real Estate; and
1.13. All substitutions, replacements, extensions, renewals,
additions and accessories for or to any of the foregoing.
1.14. All proceeds and products of any
and all of the items described in Section
1.1 through 1.13 inclusive (all such items
being sometimes collectively referred to
herein as the "Property);
2. ADDITIONAL SECURITY.
2.1. Security Interest.
This Mortgage, as to any Equipment,
Accounts, fixtures, instruments, general
intangibles and other personal property
included within the definition of Property
(collectively, "Personal Property"), shall
constitute a security agreement within the
meaning of the Uniform Commercial Code and
Borrower grants to Lender a security
interest in the Personal Property.
Borrower shall, upon request of Lender,
promptly furnish a list of Personal
Property owned by Borrower and subject to
this Mortgage and, upon request by Lender,
immediately execute, deliver and/or file
any amendments to this Mortgage, any
separate security agreement and any
financing statements to evidence and
perfect the security interest in such
Personal Property contemplated by this
Section. Lender or any of its employees
are each irrevocably appointed attorney-in-
fact and are authorized to execute,
deliver and/or file any of such amendments
to this Mortgage, any separate security
agreement and any financing statements.
2.2. Certain Remedies.
Upon the occurrence of any Event of
Default under this Mortgage, Lender shall
have all of the rights and remedies of a
secured party under the Uniform Commercial
Code or otherwise provided by law or by
this Mortgage including without limitation
the right to require Borrower to assemble
the Personal Property and make it
available to Lender at a place to be
designated by Lender which is reasonably
convenient to Lender, the right to collect
all accounts receivable, the right to take
possession of the Personal Property with
or without demand and with or without
process of law and the right to sell and
dispose of it and distribute the proceeds
according to law. Any requirement
regarding the giving of reasonable notice
shall be satisfied if Lender sends notice
to Borrower at least five (5) days prior
to the date of sale, disposition or other
event giving rise to the required notice.
The proceeds of any disposition of the
Personal Property may be applied by Lender
first to Lender's reasonable expenses in
connection with the disposition including
without limitation reasonable attorneys'
fees and legal expenses, and then to
payment of the Indebtedness.
2.3. Licenses and Permits.
As additional security for the
Indebtedness and to the extent permitted
by their terms, Borrower assigns to Lender
all of Borrower's rights and interest in
all licenses or permits affecting the
Property except the Excluded Franchise
Rights. This Mortgage shall not impose
upon Lender any obligations with respect
to any license or permit. Borrower shall
not cancel or amend, where such amendment
would adversely affect Borrower's ability
to operate the Franchised Operation, any
of the licenses or permits assigned (nor
permit any of them to terminate if they
are necessary or desirable for the
operation of the Property) without first
obtaining the written approval of Lender.
2.4. Effective as a Financing Statement.
This Mortgage shall be effective as a
financing statement filed as a fixture
filing with respect to all fixtures
included with the Property and is to be
filed for record in the real estate
records of each county where any part of
the Property (including said fixtures) is
situated. This Mortgage shall also be
effective as a financing statement
covering any other Property and may be
filed in any other appropriate filing or
recording office. The mailing address of
Borrower is the address of Borrower set
forth at the beginning of this Mortgage
and the address of Lender from which
information concerning the security
interests hereunder may be obtained is the
address of Lender set forth at the
beginning of this Mortgage. A carbon,
photographic or other reproduction of this
Mortgage or of any financing statement
relating to this Mortgage shall be
sufficient as a financing statement for
any of the purposes referred to in this
Section.
2.5 Assignment of Leases and Rents.
2.5.1 As additional security for the
payment of the Indebtedness and
performance of this Mortgage, Borrower
assigns to Lender all of Borrower's right,
title and interest in and to all Leases,
now or later existing, covering the
Property or any part of it (but without an
assumption by Lender of liabilities of
Borrower under any of these Leases by
virtue of this assignment), and Borrower
assigns to Lender the rents, issues and
profits of the Property.
2.5.2 At least annually, and more
frequently if requested by Lender, Borrower shall
provide Lender with a certified rent roll
and such other information regarding the
Leases as Lender may reasonably require.
2.5.3 If an Event of Default occurs under
this Mortgage, Lender may receive and
collect the rents, issues and profits
personally, or through a receiver, so long
as the Event of Default exists and during
the pendency of any foreclosure
proceedings and during any redemption
period. Borrower consents to the
appointment of a receiver.
2.5.4 Lender shall at no time have any
obligation whatever to attempt to collect
rent or other amounts from any tenant of
the Property. Further, Lender shall have
no obligation to enforce any other
obligations owed by tenants of the
Property. No action taken by Lender under
this Mortgage shall make Lender a "party
or mortgagee in possession."
2.5.5 Borrower shall not collect advance
rent under any Lease pertaining to the Property
in excess of one month (other than as a
security deposit) and Lender shall not be
bound by any rent prepayment made or
received in violation of this prohibition.
2.6 Substitution of Enhanced Properties.
The Borrower may offer to substitute an
enhanced property ("Enhanced Property")
for the Property hereunder and the Lender
shall release from the lien of this
Mortgage such Property upon the
satisfaction of all of the following
conditions:
2.6.1Borrower shall give Lender written
notice ninety (90) days in advance of the
date of any proposed substitution of an
Enhanced Property for the Property;
2.6.2 No monetary Event of Default has
occurred and is continuing under any of
the Loan Documents or will occur as a
result of the substitution of an Enhanced
Property for the Property;
2.6.3 The appraised value of the Enhanced
Property is equal to or greater than (a)
the original appraised value of the
Property as of the date hereof, as
evidenced by an appraisal of Deloitte &
Touche, LLP, and (b) the then current
appraised value of the Property as of the
date of Borrower's notice of the proposed
substitution, as evidenced by a then
current appraisal of Deloitte & Touche,
LLP (or its successors or another
accounting firm approved by Lender)
utilizing a valuation methodology
consistent with the Deloitte & Touche, LLP
appraisal as of the date hereof, and with
such values including in all respects the
value of cash flows and the personal and
real property related to each of the
Enhanced Property and the Property to be
released;
2.6.4 The unit level Fixed Charge Coverage
Ratio of the Enhanced Property, calculated
for the trailing 12 month period
immediately preceding Borrower's notice of
the proposed substitution is equal to or
greater than (a) the unit level Fixed
Charge Coverage Ratio of the Property,
calculated for the trailing four (4)
fiscal quarters immediately preceding the
date hereof, and (b) the unit level Fixed
Charge Coverage Ratio of the Property,
calculated for the trailing four (4)
fiscal quarters immediately preceding
Borrower's notice of the proposed
substitution, and (c) 1.3 to 1.0;
2.6.5 The Enhanced Property shall become
subject to all of the representations,
warranties, terms, conditions and
provisions of the Loan Documents as if
originally the Property hereunder, and the
Borrower shall execute and/or cause to be
executed and delivered to Lender all such
agreements, documents and instruments in
such form and substance as requested by
the Lender and its counsel in their
reasonable discretion, including without
limitation a lease for the Enhanced
Property in the form of the Property
Lease;
2.6.6 The Lender shall be granted a
first priority security interest in and
lien upon all personal and real property
(fee interest or leasehold interest, as
applicable), except the Excluded
Collateral and the Excluded Franchise
Rights, related to such Enhanced Property
as if the Property originally the subject
of this Mortgage;
2.6.7 The Borrower shall cause to be
delivered to Lender mortgage title
insurance (or leasehold mortgage title
insurance as the case may be) insuring
Lender a first priority fee mortgage lien
(or leasehold mortgage lien as the case
may be) against the Enhanced Property and
in such form and substance acceptable to
Lender and its counsel in their reasonable
discretion;
2.6.8 The Lender shall neither incur,
nor shall it be reasonably likely that the
Lender would incur the payment of any
incremental tax of any kind or nature
(income, profit or otherwise), nor shall
the Lender be reasonably likely to suffer
any incremental tax consequence of any
kind or nature (nor shall any person
claiming any payment in respect of the
Loan Documents, in whole or in part, as a
result of any securitization or transfer
of the Loan Documents be reasonably likely
to suffer any incremental tax consequence
of any kind or nature), arising from or
related in any manner to any substitution
hereunder;
2.6.9 Borrower shall furnish all
information as required by Lender in
connection with evaluating the Enhanced
Property including, without limitation,
financial information, title insurance
commitment, lien reports, appraisal
report, site inspection report, ALTA as-
built survey, environmental insurance
policy (or a satisfactory Phase I
environmental report if environmental
insurance is no longer available, as
determined by Lender in its sole
discretion), evidence of casualty and
liability insurance coverage and evidence
of the Permitted Use of the Enhanced
Property, all of which shall be subject to
the Lender's satisfactory review in its
reasonable discretion;
2.6.10 From the date of this Mortgage
through the date of Borrower's notice of
the proposed substitution, Borrower and
its affiliates shall not have substituted
more than five (5) Enhanced Properties in
the aggregate (specifically including the
Enhanced Property subject to Borrower's
notice of a proposed substitution) in
connection with the Loan Documents and all
other promissory notes, mortgages, and
other instruments and agreements of even
date herewith between Borrower and any of
its affiliates and Lender, its
affiliates, successors or assigns; and
2.6.11 The Borrower shall pay all fees,
costs and expenses of Lender (including
reasonable attorneys' fees) incident to
any of the foregoing matters or otherwise
related to the substitution and release of
the Property, including, without
limitation, document preparation and
drafting, title insurance, filing fees for
UCC statements and termination statements,
mortgage registry or other similar taxes,
and filing fees in respect of the release
or partial release of any lien under this
Mortgage.
3. COVENANTS AND WARRANTIES.
Borrower represents, warrants and covenants to
Lender as follows:
3.1. Authority.
Borrower has the power and authority to
execute, deliver and perform its
obligations under the Loan Documents.
Borrower is duly organized and in good
standing under the laws of the state of
its organization. Borrower is validly
existing and qualified to do business in
the state where the Real Estate is located
(the "Subject State"). The execution,
delivery and performance of the Loan
Documents by Borrower does not, and shall
not, violate or conflict with any
provision of the organizational or charter
documents of Borrower and has been duly
authorized by all necessary action of
Borrower.
3.2. Legal Obligation.
The Loan Documents are the legal, valid
and binding obligations of Borrower,
enforceable in accordance with their
terms. Borrower will pay and perform the
Indebtedness when due, whether by
maturity, acceleration or otherwise.
3.3 Consents, Approvals.
All consents, approvals and authorizations
of any governmental body, subdivision,
agency, board or authority in the Subject
State, if any, required on the part of
Borrower in connection with the execution
and delivery of the Loan Documents have
been obtained and are in full force and
effect.
3.4. No Conflict.
The execution, delivery and
performance of the Loan Documents does not
violate or conflict with any agreement,
court order or consent decree to which
Borrower is a party or by which Borrower
may be bound. There are no disputes,
litigation or other proceedings pending
against Borrower or the Property which
will have a material adverse effect on the
Borrower's ability to perform its
obligations under the Loan Documents.
3.5. Existing Defaults.
There are no circumstances, state of facts
or other matters which, with the passage
of time or the giving of notice, or both,
would constitute an Event of Default under
this Mortgage or the other Loan Documents.
3.6. Title to Property.
Except for the Excluded Collateral,
Borrower is the owner and is lawfully
seized and possessed of the Property.
Borrower has good right, full power and
authority to mortgage and grant a security
interest in the Property in accordance
with the terms of this Mortgage. Borrower
has and shall maintain good and marketable
title to the Real Estate free and clear of
any liens, encumbrances or security
interests excepting only those liens,
encumbrances or security interests, if
any, shown on a loan policy of title
insurance, if any, and approved in writing
by Lender. Notwithstanding the foregoing,
Borrower shall be entitled to enter into
such easements and other agreements with
respect to the Real Estate as
Borrower shall deem reasonably necessary
or appropriate in the operation of the
Franchised Operation subject to Lender's
consent, which shall not be unreasonably
withheld, delayed or conditioned.
Borrower has and shall maintain good and
marketable title to the Personal Property,
free and clear of any liens and
encumbrances, excepting only those
disclosed to and accepted by Lender in
writing. Borrower will defend the
Property against all claims and demands of
all persons any time claiming any interest
in the Property.
3.7. Intentionally Omitted.
3.8 Priority of Security Interest.
The execution and delivery of this
Mortgage creates a valid security interest
in the Personal Property, and upon the
filing of a UCC-1 financing statement with
the secretary of state of the Subject
State, Lender will have a first priority
perfected security interest in the
Personal Property, subject to no other
security interest, except as otherwise
approved by Lender in writing.
3.9. Financing Statements.
Except as disclosed to and accepted by
Lender in writing, no financing statement
covering all or any part of the Property
is on file in any public office. Unless
delivered to Lender or its designee on or
before the Closing Date, Borrower shall
cause partial releases of all financing
statements currently of record covering
all or part of the Property in favor of
Chase Bank of Texas, National Association,
as Agent, to be delivered to Lender or its
designee within thirty (30) days after the
date of this Mortgage. Borrower will
execute financing statements in form
acceptable to Lender and will pay the cost
of filing financing statements in
all public offices whenever filing is
deemed desirable by Lender.
3.10. Fixed Charge Coverage Ratio.
Borrower shall maintain a Fixed Charge
Coverage Ratio (as hereinafter defined) of
not less than the Composite FCCR set forth
on Schedule A attached hereto for
Borrower's business operations generally.
"Composite FCCR" for Borrower shall be
based upon the restaurant operations of
the tenant under the Property Lease on a
consolidated basis as to all Franchised
Operations included within the Loan
Documents ("Composite Properties") and
shall mean such tenant's Operating Cash
Flow divided by its Fixed Charges (each as
defined below). The Composite FCCR shall
be calculated by Borrower from time to
time and dates as determined by Lender,
and Borrower shall submit such information
as Lender may require to confirm and
approve Borrower's calculation of the
Composite FCCR.
3.10.1. "Fixed Charges" shall mean the
sum of the following items set forth on a
pro forma basis for the Composite
Properties for the applicable twelve (12)
month operating period:
(a) current portion of long-term debt
(defined as the current portion of long-
term debt due to mature during the next
twelve (12) month operating period, as
stated in the applicable financial
statement, plus, if not already included
therein, the current portion of principal
payments imputed on all capital leases),
plus
(b) interest expense (defined as the
interest expense as stated on the
applicable financial statement, plus, if
not already included therein, the interest
expense imputed on all capital leases),
plus
(c) the current portion of operating
leases (defined as the amount of rent due
under operating leases for the next twelve
(12) month operating period).
3.10.2. "Operating Cash Flow" shall mean
the sum or subtraction of the following
items for the Composite Properties for the
applicable prior twelve (12) month
operating period:
(a) net income (defined as the net income
stated on the applicable financial
statement), plus
(b) depreciation and amortization
(defined as the depreciation and
amortization expense as stated on the
applicable financial statement), plus
(c) interest expense (as defined above),
plus
(d) operating lease expense (defined as
the amount of rental expense paid under
operating leases, as stated on the
applicable financial statements), plus or
minus
(e) non-recurring items (defined as items
which, are extraordinary and generally not
reflected in any prior period or
reasonably anticipated to be incurred in
any period).
3.11. Maintenance of Property; Waste.
Borrower shall preserve and maintain the
Property in good repair, working order and
condition, excepting ordinary wear and
tear, and shall not commit or permit the
commission of waste against the Property.
Borrower will promptly inform Lender of
any loss or diminution in value of the
Property. Except as otherwise provided in
this Mortgage, Borrower shall make or
permit no modification, compromise or
substitution for the Property without the
prior consent of Lender.
3.12. Payment of Taxes; Discharge of Liens.
3.12.1. Borrower shall pay when due,
and before any interest, collection fees
or penalties accrue, all taxes,
assessments, encumbrances, liens,
mortgages, water or sewer charges and
other charges and impositions
(collectively, "Impositions") levied,
assessed or existing with respect to the
Property, or any part of it, and Borrower
shall deliver to Lender receipts showing
payment of the Impositions. If Borrower
fails to pay any of the Impositions,
Lender, at its option, may pay such
Impositions and the monies paid shall be a
lien upon the Property, added to the
amount secured by this Mortgage, and
payable immediately by Borrower to Lender
with interest at the higher of (i) the
interest rate, if any, charged by the
particular entity levying or assessing the
Impositions, or (ii) the highest rate
charged by Lender on any of the
Indebtedness (but in either case not to
exceed the maximum interest rate permitted
by law). Notwithstanding the foregoing,
Borrower shall have the right and ability
to contest any Impositions and no Event of
Default hereunder shall be deemed to have
occurred so long as Borrower is contesting
such Impositions in good faith and by
appropriate proceedings and has
effectively stayed enforcement of such
Impositions.
3.12.2. Following Borrower's failure to
pay any such Impositions on two (2) or
more occasions during the term of the
Note, at the option of Lender, Borrower
shall pay to Lender, in advance on the
first day of each month, a pro rata
portion (as determined by Lender) of all
Impositions levied, assessed or existing
on the Property. In the event that sufficient funds have
been deposited with Lender to cover the
amount of these Impositions when they
become due and payable, Lender shall pay
them. In the event that sufficient funds
have not been deposited to cover the
amount of these Impositions at least
thirty (30) days prior to the time when
they become due and payable, Borrower
shall immediately pay the amount of the
deficiency to Lender. Lender shall not be
required to keep a separate account or to
pay Borrower any interest on the funds
held by Lender for the payment of the
Impositions pursuant to this Section 3.10
or for the payment of insurance premiums
under Section 3.14 below, or on any other
funds deposited with Lender in connection
with this Mortgage. The funds on deposit
with Lender are further security for the
Indebtedness and if an Event of Default
occurs under this Mortgage, any funds
remaining on deposit with Lender may be
applied against the Indebtedness at any
time after the Event of Default occurs,
and without notice to Borrower.
3.13. Sale or Transfer.
3.13.1 Borrower shall not transfer,
sell, assign, or modify all or any
interest in the Property, or any part
thereof, or any substantial portion of
Borrower's other assets or property.
Notwithstanding the foregoing, the tenant
under the Property Lease may enter into a
collateral assignment or other agreement
regarding the Property Lease or such
tenant's interest thereunder with Chase
Bank of Texas, National Association, as
Administrative Agent; provided, that any
such collateral assignment or other
agreement (i) has been approved in writing
by Lender in its reasonable discretion,
(ii) is expressly subordinate to Lender
pursuant to and in accordance with the terms and
conditions of the Intercreditor Agreement of even
date herewith between Lender and Chase Bank of
Texas, National Association, as
Administrative Agent, and (iii) shall
not at any time be recorded, nor shall
a memorandum thereof at any time be recorded without
the prior written consent of Lender.
3.13.2 0.2 Sale or TransferBorrower
shall be, directly or indirectly, wholly
owned by Quality Dining, Inc., an
Indiana corporation ("Guarantor") until
the earlier of (i) the satisfaction of
this Mortgage, or (ii) consummation of a
Transfer Event in accordance with
Section 3.13.3 below.
3.13.3 Except as provided below,
Borrower shall not consummate a Transfer
Event without the prior written consent
of Lender (the "Transaction Consent").
As used herein, "Transfer Event" means
(i) the sale or transfer of all or
substantially all of the assets of
Borrower, (ii) a merger or consolidation
of Borrower into another corporation or
entity or (iii) the sale or transfer of
fifty percent (50%) or more of
Borrower's stock.
3.13.3.1 "Transfer Event" shall not
include any sale, transfer, merger,
consolidation or other event or
circumstance if, after consummation
thereof, Borrower is wholly owned,
directly or indirectly, by Guarantor.
3.13.3.2 The Transaction Consent shall
not be required if all of the following
conditions (the "Transfer Requirements")
are met: (i) the Property shall be used
only as it was used prior to such
Transfer Event; (ii) the combined net
worth of Borrower, the acquiring
corporation (or entity) or surviving
corporation (or entity) (as the case may
be) of such Transfer Event (the
"Transferee"), the Guarantor (unless the
Guarantor has been or will be released
from its Guaranty of the Property Lease
upon consummation of the Transfer Event
in accordance with Section 3.13.3.3
below) and any other substitute or
additional guarantors of the Property
Lease, if any, immediately after the
Transfer Event is not less than Fifty
Million Dollars ($50,000,000) determined
on a pro forma basis assuming
consummation of the Transfer Event;
(iii) the Transferee shall guarantee the
Property Lease and all other leases
between the tenant under the Property
Lease and Borrower; (iv) the Transfer
Event shall not result in a withdrawal,
downgrade, or qualification in the
rating of any securities issued in
connection with any securitization
involving the Note or the Loan Documents
as confirmed in writing by an
appropriate rating agency reasonably
acceptable to the Lender, (v) the
Transferee and Borrower shall be,
directly or indirectly, under common
ownership immediately upon consummation
of the Transfer Event,
(vi) Borrower shall have provided
written notice of the Transfer Event to
Lender not less than sixty (60) days
prior to the consummation of the
Transfer Event which notice shall be
accompanied by such documentation and
information reasonably necessary to
facilitate Lender's determination that
the Transfer Requirements have been
satisfied (and Borrower shall furnish
such supplemental information and
documentation reasonably requested by
Lender), and(vii) Borrower agrees to pay
for all reasonable costs and expenses
(including attorney's fees) in
connection with Lender's review of the
proposed Transfer Event (including the
cost, if any, of confirmation by the
rating agency).
3.13.3.3 If all the requirements of
Section 3.13.3.2 above are satisfied and
if the minimum net worth requirement
specified in clause (ii) thereof is
satisfied without reference to
Guarantor's net worth, then Guarantor
shall be released from its obligations
under the Guaranty with respect to the
Property Lease upon consummation of the
Transfer Event.
3.13.3.4 Borrower, Lender and Guarantor
agree to execute and deliver, without
additional consideration, any and all
documents, amendments, confirmations and
agreements reasonably necessary to
effectuate the intent of Section 3.13
above.
3.14. Insurance.
3.14.1. Borrower's Insurance.
From and after taking possession of the
Property, Borrower shall carry and
maintain, at its sole cost and expense,
the following types and amounts of
insurance:
Insurance Type Amount of Coverage Risk Coverage
- -------------- ------------------ -------------
Commercial $1,000,000 per bodily injury
General occurrence and (including
Liability $2,000,000 per site liquor
in the aggregate liability
coverage)
property damage and
contractual liability
Property Full replacement "all risk",
Damage value including
fire, earthquake,
sprinkler damage, with
inflation-guard,vandalism
and malicious mischief
endorsements
Business Not less than 6 loss of
Interruption installments of earnings by
Minimum Monthly Rent, at least the
if applicable, perils
and 6 loan payments of fire and
under the Note lightning,
extended coverage,
vandalism,
malicious
mischief and sprinkler
leakage
Worker's as required by law
compensation
Flood to the extent of damage caused
Insurance current coverage by flooding
3.14.2. Policy Form.
Borrower shall obtain all policies of
insurance required by Section 3.14.1
from insurance companies having an A.M.
Best rating of A- or better which are
qualified to do business in the
jurisdiction where the Property is
situated. All such policies shall be
issued in the names of Landlord and
Borrower, Lender as additional insured
and loss payee, and if requested by
Lender, any mortgagee or beneficiary of
Lender, as additional insureds. In
addition, all such policies providing
coverage for physical damage include
loss payee and mortgagee endorsement in
favor of Lender and Lender's mortgagee
or beneficiary, respectively and as
applicable. The Borrower shall cause
copies of such policies of insurance or
originally executed certificates thereof
to be delivered to Lender prior to
Borrower's execution of this Mortgage,
and not less than 30 days prior to any
renewal thereof. As often as any such
policy shall expire or terminate,
Borrower shall procure and maintain
renewal or additional policies with like
terms. None of such policies shall
contain any co-insurance requirements
and all such policies shall provide for
written notice to Lender and any
mortgagee or beneficiary of Lender not
less than 10 days prior to any
modification, cancellation, lapse, or
reduction in the amounts of insurance,
and shall further provide that any loss
otherwise payable thereunder shall be
payable notwithstanding any act or
negligence of Lender or Borrower which
might, absent such provision, result in
a forfeiture of all or part of the
payment of such loss. All general
liability, property damage, and other
casualty policies shall be written on an
occurrence basis as primary policies,
not contributing with or in excess of
coverage which Lender may carry.
3.14.3. Borrower's obligations to
carry the insurance provided for above
may be brought within the coverage of an
"umbrella" policy or policies of
insurance carried and maintained by
Borrower; provided, however, that such
policy or policies shall (i) have limits
of not less than $5,000,000, (ii) name
Lender and any mortgage or beneficiary
of Lender as additional insureds as
their interests may appear, and (iii)
provide that the coverage afforded
Lender will not be reduced or diminished
by reason of the use of such blanket
policies. Borrower agrees to permit
Lender at all reasonable times to
inspect any policies of insurance of
Borrower which Borrower has not
delivered to Lender.
3.14.4. Should Borrower fail to insure
or fail to pay the premiums on any
required insurance or fail to deliver
the policies or renewals as provided
above, Lender may have the insurance
issued or renewed (and pay the premiums
on it for the account of Borrower) in
amounts and with companies and at
premiums as Lender deems appropriate. If
Lender elects to have insurance issued
or renewed to insure Lender's interest,
Lender shall have no duty or obligation
of any kind to also insure Borrower's
interest or to notify Borrower of
Lender's actions. Any sums paid by
Lender for insurance, as provided above,
shall be a lien upon the Property, added to the amount
secured by this Mortgage, and payable
immediately by Borrower to Lender, as
the case may be, with interest on those
sums at the highest rate charged by
Lender on any of the Indebtedness (but
not to exceed the maximum interest rate
permitted by law).
3.14.5. In the event of loss or damage
to the Property equal to or in excess of
$100,000, the proceeds of all required
insurance shall be paid to Lender. In
the event of loss or damage to the
Property in an amount less than
$100,000, the proceeds of all required
insurance shall be paid to Borrower. No
loss or damage shall itself reduce the
Indebtedness. Lender or any of its
employees is each irrevocably appointed
attorney-in-fact for Borrower and is
authorized to adjust and compromise each
loss without the consent of Borrower, to
collect, receive and receipt for the
insurance proceeds in the name of Lender
and Borrower and to endorse Borrower's
name upon any check in payment of the
loss.
3.14.6. Borrower and Lender shall
apply such proceeds to the repair and
restoration of the Property subject to
the following conditions:
(a) there shall be no Event of Default
existing hereunder;
(b) plans for repair and restoration shall
be reviewed and approved by Lender, which
approval shall not be unreasonably withheld
or delayed;
(c) repair and restoration of the Property
to a viable, economic unit (as determined
by Lender) can practicably be completed
prior to the Due Date set forth in the
Note;
(d) Borrower shall have deposited with
Lender funds equal to the
positive difference, if any, between the
cost of repair, restoration and completion,
and the amount of the insurance
proceeds; and
(e) disbursements will be made by Lender
or, at Lender's option, a title insurance
company acceptable to Lender, pursuant to
procedures necessary or appropriate to keep
the Property free of mechanics' liens and
to ensure that funds are properly applied.
Notwithstanding the foregoing, in the event
that any loss or damage to the Property exceeds
fifty percent (50%) of the then
appraised value of the Property,
Borrower may elect to repair and restore
the Property as set forth above or to
prepay all amounts owing to Lender under
the Note, without prepayment premium.
Provided that no Event of Default
exists, if there are insurance proceeds
in the amount of Twenty-Five Thousand
Dollars ($25,000) or less remaining
after the repair and restoration of the
Property as required hereunder, such
proceeds shall be paid to Borrower.
Provided that no Event of Default
exists, if there are insurance proceeds
in excess of $25,000 but less than the
greater of (i) Fifty Thousand Dollars
($50,000), or (ii) ten percent (10%) of
the then remaining unpaid principal
balance of the Note, remaining after the
repair and restoration of the Property
as required hereunder, such proceeds
shall be applied toward payment of the
principal of the Indebtedness so that no
prepayment premium or other charges
shall be payable with respect to such
amounts; provided, that such application
of proceeds shall not excuse Borrower
from making the regular scheduled
installment payments nor shall such
application extend or reduce the amount
of any of these payments but rather
shall reduce the number of these
payments in reverse order of maturity.
Provided that no Event of Default
exists, if there are insurance proceeds
equal to or in excess of the greater of
(i) Fifty Thousand Dollars ($50,000), or
(ii) ten percent (10%) of the then
remaining unpaid principal balance of
the Note, remaining after the repair and
restoration of the Property as required
hereunder, such proceeds shall be
applied toward payment of the
Indebtedness so that no prepayment
premium or other charges shall be
payable with respect to such amounts and
each monthly installment thereafter
shall be reduced to an amount which will
amortize the then unpaid principal
balance of the Note at the nondefault
rate over the then remaining term of the
Note.
3.14.7. Notwithstanding Section 3.14.6
above, if a substantial portion (fifty
percent [50%] or more) of the Property
is damaged or destroyed during the last
twenty-four (24) months of the term of
the Note, and provided that no Event of
Default then exists hereunder, either
Borrower or Lender may elect not to
rebuild and to apply the insurance
proceeds toward payment of the
Indebtedness (or any portion thereof)
without premium, whether or not then due
and payable, in reverse order of
maturity. Application of proceeds by
Lender toward later maturing
installments of the Indebtedness shall
not excuse Borrower from making the
regularly scheduled installment payments
nor shall such application extend or
reduce the amount of any of these
payments. Any proceeds in excess of the
Indebtedness shall be promptly paid to
Borrower.
3.14.8. In the event of a foreclosure
of this Mortgage, or the giving of a
deed in lieu of foreclosure, the
purchaser or grantee of the Property
shall succeed to all of the rights of
Borrower under the insurance policies
including, without limit, any right to
unearned premiums and to receive the
proceeds.
3.14.9. Upon the occurrence of an
Event of Default hereunder, at the
option of Lender, Borrower shall pay to
Lender, in advance on the first day of
each month, a pro rata portion of the
annual premiums due (as estimated by
Lender) on the required insurance. In
the event that sufficient funds have
been deposited with Lender to cover the
amount of the insurance premiums when
the premiums become due and payable,
Lender shall pay the premiums. In the
event that sufficient funds have not
been deposited with Lender to pay the
insurance premiums at least thirty (30)
days prior to the time when they become
due and payable, Borrower shall
immediately pay the amount of the
deficiency to Lender.
3.15. Compliance With Law and Other Matters.
Borrower shall, in all material
respects, comply with all federal, state
and local laws, ordinances, rules,
regulations and restrictions relating to
the ownership, use, occupancy and
operation of the Property. Borrower
shall be solely responsible to apply for
and secure any building permit or
permission of any duly constituted
authority for the purpose of doing any
of the things which Borrower is required
or permitted to do under the provisions
of this Mortgage. Borrower shall comply
with, perform Borrower's obligations
under, and enforce the obligations of
all other parties to all building and
use restrictions, ground leases, leases,
reservation and/or purchase agreements,
condominium documents and/or other
instruments affecting or relating to the
use and/or occupancy of the Property.
Borrower has not received any written
notice of, and, to the knowledge of
Borrower, neither Borrower nor the
Property are in material violation of
any law, municipal ordinance or other
requirement of any governmental
authority. The Property is legally
occupied by Borrower, and all required
certificates of occupancy, building
permits, certificates of environmental
impact approval, all zoning, building,
housing, safety, fire and health
approvals and all permits and licenses
required by any governmental authority
and necessary to operate, occupy or use
the Property for the purposes permitted
under this Mortgage have been issued,
are unexpired, and, without cost or risk
to Lender, are hereby collaterally
assigned, to the extent assignable, to
Lender.
3.16. Alteration of Improvements.
3.16.1. Without the prior written
consent of Lender, Borrower shall not
remove any building, structure or other
improvement forming a material part of
the Property.
3.16.2. Borrower may from time to time
make alterations, replacements,
additions, changes and improvements
(collectively, "Alterations") in and to
the Property as Borrower may find
necessary or convenient for its purposes; provided,
however, that no such Alterations shall
decrease the value of the Property or
impair the structural integrity of any
building comprising a part of the
Property. All work with respect to any
Alteration shall be done in a good and
workmanlike manner by properly qualified
and licensed personnel, and such work
shall be diligently prosecuted to
completion.
3.16.3. Borrower shall pay the costs
of any Alterations done on the Property.
Borrower shall indemnify and defend
Lender from and against any liability,
loss, damage, costs, attorneys' fees and
any other expense incurred as a result
of claims of lien by any person
performing work or furnishing materials
or supplies for Borrower or any person
claiming under Borrower.
3.16.4. No Alterations shall be
undertaken until Borrower shall have
procured and paid for all required
permits and authorizations of all
governmental authorities having
jurisdiction. Any Alterations where the
applicable building codes require the
submission of architectural plans shall
be conducted under the supervision of a
licensed architect or engineer selected
by Borrower and reasonably satisfactory
to Lender and shall be made in
accordance with detailed plans and
specifications and cost estimates
prepared by such architect or engineer
and approved in writing in advance by
Lender, which approval shall not be
unreasonably withheld, delayed or
conditioned. Any Alterations involving
an estimated cost in excess of One
Hundred Thousand and 00/100 Dollars
($100,000) shall be made in accordance
with reasonable plans and specifications
and cost estimates prepared by Borrower
and approved in writing in advance by
Lender, which approval shall not be
unreasonably withheld, delayed or
conditioned. Any Alterations shall be
made promptly and in a good workmanlike
manner and in compliance with all
applicable permits and authorizations
and building, zoning and other laws and
in accordance with the orders, rules and
regulations of the Board of Fire
Insurance Underwriters and any other
body hereafter exercising similar
functions.
3.17. Obligation to Rebuild.
3.17.1.If any portion of the Property is
damaged or destroyed by fire or other
casualty, subject to Section 3.14 above,
Borrower shall, at its sole cost and
expense, forthwith repair, restore,
rebuild or replace the damaged or
destroyed improvements, fixtures or
equipment, and complete the same as soon
as reasonably possible, to the condition
they were in prior to such damage or
destruction, except for such changes in
design or materials as may then be
required by law or the franchisor of the
Franchised Operation, or are approved by
Lender in Lender's reasonable
discretion. Lender, in such event,
shall, to the extent the proceeds of the
insurance are made available to Lender,
reimburse Borrower for the costs of
making such repairs, restoration,
rebuilding and replacements on such
terms as Lender may reasonably require.
To the extent, if any, that the proceeds of
insurance made available to Borrower are
insufficient to pay the entire cost of
making such repairs, restoration,
rebuilding and replacements, Borrower
shall pay the amount by which such costs
exceed the insurance proceeds made
available to Borrower.
3.17.2.In the event that Borrower fails
to commence the repair or restoration of
the Property pursuant to this Section
3.17 within sixty (60) days after the
casualty, or if Borrower abandons or
fails to diligently pursue completion of
such repair or restoration, then Lender
shall be entitled to apply the insurance
proceeds first towards reimbursement of
all costs and expenses of Lender in
collecting the proceeds (including,
without limit, court costs and
reasonable attorneys' fees), and then
toward any payment of the Indebtedness
or any portion of it, whether or not
then due or payable.
3.18. Covenants Regarding Environmental Compliance.
3.18.1.Borrower shall, at its sole cost
and expense at all times comply in all
respects with the Environmental Laws (as
defined below) in its use and operation
of the Property.
3.18.2.Borrower shall not use the
Property for the purpose of storing Hazardous
Materials (as defined below) except in
full compliance with the Environmental
Laws and other applicable laws, and
shall not cause the release of any
Hazardous Material.
3.18.3.Borrower shall notify Lender
promptly and in reasonable detail in the event
that Borrower becomes aware of or
suspects (i) the presence of any
Hazardous Material on the Property
(other than any Permitted Hazardous
Materials, as defined below), or (ii) a
violation of the Environmental Laws on
the Property.
3.18.4.If Borrower uses or permits the
Property to be used so as to subject Borrower,
Lender or any occupant of the Property
to a claim of violation of the
Environmental Laws (unless contested in
good faith by appropriate proceedings),
Borrower shall, at its sole cost and
expense, immediately cease or cause
cessation of such use or operations and
shall remedy and fully cure any
conditions arising therefrom.
3.18.5.At its sole cost and expense,
Borrower shall (i) immediately pay, when due, the
cost of compliance with the
Environmental Laws within the Property,
and(ii) keep the Property free of any
liens imposed pursuant to the
Environmental Laws. Borrower shall, at
all times, use, handle and dispose of
any Permitted Hazardous Material in a
commercially reasonable manner and in
compliance with the Environmental Laws
and applicable industry standards.
Borrower shall cooperate with Lender in
any program between Lender and any
governmental entity for proper disposal
and/or recovery of any
Permitted Hazardous Material.
3.18.6. Borrower shall indemnify, save
and hold Lender harmless from and
against any claim, liability, loss,
damage or expense (including, without
limitation, reasonable attorneys' fees
and disbursements) arising out of any
violation of the covenants of Borrower
contained in this Section by Borrower,
or out of any violation of the
Environmental Laws by Borrower, its
owners, employees, agents, contractors,
customers, guests and invitees, which
indemnity obligation shall survive the
expiration or termination of this Mortgage.
3.18.7. In the event that Borrower
fails to comply with any of the
foregoing requirements of this Section,
after the expiration of the cure period
permitted under the Environmental Laws,
if any, Lender may, but shall not be
obligated to (i) elect that such failure
constitutes an Event of Default under
this Mortgage; and/or (ii) take any and
all actions, at Borrower's sole cost and
expense, that Lender deems necessary or
desirable to cure any such
noncompliance. Borrower shall reimburse
Lender for any costs incurred by Lender
in exercising its options under this
subsection within fifteen (15) days
after receipt of a bill therefor.
3.18.8. The provisions of this Section
shall survive the expiration or
termination of this Mortgage.
Capitalized terms used in this Section
and not otherwise defined herein shall
have the following meanings:
(a) "Hazardous Materials" shall mean
any of the following as defined by the
Environmental Laws: solid wastes;
medical or nuclear waste or materials;
toxic or hazardous substances; natural
gas, liquified natural gas or synthetic
fuel gas; petroleum products or
derivatives, wastes or contaminants
(including, without limitation,
polychlorinated biphenyls); paint
containing lead; urea-formaldehyde foam
insulation; asbestos (including, without
limitation, fibers and friable
asbestos); explosives, and discharges of
sewage or effluent.
(b) "Environmental Laws" shall mean all
requirements of environmental,
ecological, health, or industrial
hygiene laws or regulations or rules of
common law related to the Property,
including all requirements imposed by
any law, rule, order, or regulation of
any federal, state, or local executive,
legislative, judicial, regulatory, or
administrative agency, board, or
authority, which relate to (i) noise;
(ii) pollution or protection of the air,
surface water, ground water, or land;
(iii) solid, gaseous, or liquid waste
generation, treatment, storage,
disposal, or transportation; (iv)
exposure to Hazardous Materials; or (v)
regulation of the manufacture,
processing, distribution and commerce,
use, or storage of Hazardous Materials.
(c) "Permitted Hazardous Material"
shall mean any Hazardous Material which is necessary
and commercially reasonable for the
provision of any good or service related
to the current use of the Property.
3.19. Financial Condition; Reporting Requirements.
Guarantor has furnished to Lender its
most recent annual and quarterly
financial statements, which statements
completely and accurately present the
financial condition of Guarantor on the
dates thereof. There has been no
material adverse change in the business,
property or condition of Guarantor or
any of its affiliates since the date of
the most recent financial statements
furnished to Lender. Neither Borrower
nor Guarantor is insolvent within the
meaning of Section 548(a)(2)(B) of the
United States Bankruptcy Code or any
other federal or state law using or
defining such term, and will not be
rendered insolvent by the transactions
contemplated by this Mortgage.
Borrower shall at all times maintain
accurate and complete books and records
and copies of all building and use
restrictions, ground leases, leases,
reservation and/or purchase agreements,
contracts and/or other instruments with
respect to the Property. Lender may
inspect and make copies of those books
and records and any other data relating
to the Property at reasonable times.
Lender may inspect the Property at such
reasonable times as Lender shall
determine. Borrower shall deliver or
cause to be delivered to Lender the
following:
3.19.1. Management prepared and
certified quarterly financial statements
for Borrower, within sixty (60) days
after the end of each fiscal quarter of
Borrower;
3.19.2. If and to the extent not
consolidated in the Guarantor's
financial statements delivered pursuant
to Section 3.19.4 below, annual
financial statements for Borrower
prepared by an independent certified
public accountant within one hundred
twenty (120) days after the end of each
fiscal year of Borrower, which financial
statements shall be audited, reviewed or
compiled as Lender shall direct;
3.19.3. Management prepared and
certified annual financial statements
for each tenant under a lease of the
Composite Properties within one hundred
twenty (120) days after the end of each
fiscal year of Borrower, and profit and
loss statements from each such tenant
for each of the Composite Properties
within sixty (60) days after the end of
each fiscal year of Borrower; and
3.19.4. Annual consolidated financial
statements for Guarantor audited by an
independent certified public accountant
reasonably acceptable to Lender within
one hundred twenty (120) days after the
end of each fiscal year of Guarantor.
Such financial statements shall be true
and correct in all respects, shall be
prepared in accordance with
generally accepted accounting
principles, and shall fairly represent
the respective financial conditions of
the subjects thereof as of the
respective dates thereof. At the
request of Lender, Borrower shall
cooperate with Lender, at Lender's
expense, to request the consent of
Borrower's accountant(s) to the
inclusion of Borrower's most recent
financial statement in any regulatory
filing or report to be filed by Lender.
3.20. Indemnification.
Borrower shall appear in and defend any
suit, action or proceeding that might in
any way and in the reasonable judgment
of Lender affect the value of the
Property, the validity, enforceability
and priority of this Mortgage or the
rights and powers of Lender. Borrower
shall, at all times, indemnify, defend,
hold harmless and on demand, reimburse
Lender for any and all loss, damage,
expense or cost, including cost of
evidence of title and attorneys' fees,
arising out of or incurred in connection
with any such suit, action or
proceeding, and the sum of such
expenditures shall be secured by this
Mortgage and shall bear interest at the
highest rate accruing on the
Indebtedness, not to exceed the maximum
rate permitted by law, and shall be due
and payable on demand. Borrower shall
pay cost of suit, cost of evidence of
title and reasonable attorneys' fees in
any proceeding or suit, including
appellate proceedings, brought by Lender
to foreclose or otherwise enforce this
Mortgage. Borrower shall reimburse
Lender, upon demand, any costs incurred
in connection with the recording or
filing of this Mortgage, any financing
statements or memorandum of lease
including without limitation any
mortgage tax, transfer tax, recording
fees or filing fees.
3.21. Estoppel Certificates.
Borrower shall, within ten (10) days
after written request therefor from
Lender, furnish to Lender, or such other
persons or entities as Lender shall
designate, a duly acknowledged written
statement setting forth the amount of
the debt secured by this Mortgage, and
stating either that to the best of
Borrower's knowledge no setoffs or
defenses exist against such debt, or, if
such set-offs or defenses are alleged to
exist, the nature thereof, that to the
best of Borrower's knowledge no Event of
Default then exists, and no event has
occurred, which with notice or the
passage of time, or both, would
constitute an Event of Default.
3.22. Prohibition on Change of Name,Organization.
Except as otherwise expressly provided
in Section 3.13 of this Mortgage,
Borrower shall not assume a different
name, merge, consolidate, change or
reorganize its organizational structure
nor change the location of any of the
Property without, in each instance,
obtaining the prior written consent of
Lender thirty (30) days prior to any
such event. Borrower acknowledges and
agrees that it is a special purpose
entity formed specifically for the
purpose of owning the Composite
Properties and that its Articles of
Organization and other organizational documents
(collectively,"Organizational Documents") contain
certain special purpose and separateness
covenants required by Lender as a
condition to entering into the Loan
Documents. Borrower covenants and
agrees that it will not amend, modify,
restate or otherwise change its
Organizational Documents. During the
term of the Loan Documents, Borrower
shall comply with all terms, covenants
and conditions contained in its
Organizational Documents.
3.23. Right of Setoff.
Borrower hereby grants Lender the right,
exercisable at any time, after an Event
of Default, to set off or apply against
the Indebtedness any account or deposit
with Lender in which Borrower has an
interest or against any other amounts
which may be in the possession of Lender
and to the credit of Borrower.
3.24. Examination of Records and Property.
Borrower shall keep full and accurate
records of Borrower's business,
including, without limit, records
related to the Property, and such
records shall be open to inspection and
duplication by Lender at all reasonable
times. Lender may enter upon any
property owned by or in the possession
of Borrower to examine and inspect the
Property. Borrower shall promptly
provide Lender with any information
concerning the Property as Lender may
reasonably request at any time.
3.25. Reimbursement of Expenses.
Borrower shall reimburse Lender for all
reasonable costs and expenses, including
attorneys' fees, incurred by Lender in
enforcing the rights of Lender under
this Mortgage. All costs and expenses
shall be included in the Indebtedness
and shall be immediately due and payable
together with interest at the maximum
legal rate. Such costs and expenses
shall include, without limitation, costs
or expenses incurred by Lender in any
bankruptcy, reorganization, insolvency
or other similar proceeding.
3.26. Name; Address; Location of Property.
Borrower's name and address and the
location of the Property are accurately
set forth on the first page of this
Mortgage.
3.27. Property Lease.
Borrower has delivered to Lender a duly
executed true, correct and complete copy
of the Property Lease. Borrower
represents that the Property Lease is in
full force and effect and has not been
amended, supplemented or modified as of
the date hereof. Borrower covenants and
agrees that during the term of the Loan
Documents, (i) the Property Lease shall
not be amended, supplemented or modified
in any manner, (ii) Borrower shall not
accept a voluntary surrender from, or voluntary
termination by, the tenant under the
Property Lease, and (iii) Borrower shall
not sell, assign, transfer, hypothecate
or otherwise encumber its interest in
the Property Lease (except to Lender)
and shall not consent to the sale,
assignment, transfer, hypothecation or
encumbrance by tenant of its interest in
the Property Lease except as expressly
permitted in the Property Lease.
3.28. Use of Property.
Borrower shall not permit the Property
to be used for any purpose other than
the operation of a FranchiseType
restaurant.
4. APPLICATION OF CONDEMNATION AWARDS.
4.1. Condemnation Award.
Any eminent domain or condemnation
proceeds ("Proceeds") shall be paid to
Lender, and in the event that Borrower
determines that the Property can be
rebuilt or restored to a viable economic
unit, the Proceeds shall be applied
toward such restoration. In the event
Borrower determines that the Property
cannot be rebuilt or restored to a
viable economic unit, such Proceeds
shall be applied toward the payment of
all amounts owing to Lender under the
Note, without prepayment premium, and if
the Proceeds are insufficient to pay all
such amounts to Lender, Borrower shall
pay to Lender the difference between the
Proceeds and any remaining amounts owing
to Lender under the Note.
4.2. Condemnation Proceeding.
Subject to any Ground Lessor's rights
under a Ground Lease, Borrower shall, on
behalf of Borrower and Lender, defend
any condemnation proceeding and/or
negotiate with the condemning authority
to obtain a satisfactory payment for any
taking. Borrower shall notify Lender of
the status of any such condemnation
proceeding on a monthly basis and shall
provide Lender with copies of all
pleadings filed.
4.3 Restoration.
In the event the Property is to be
rebuilt or restored, restoration shall
proceed as in the manner set forth in
Section 3.14.6 (a), (b), (c), (d), and
(e) of this Mortgage.
4.4 Excess Proceeds.
If there are Proceeds remaining after
such rebuilding or restoration in excess
of an amount equal to the greater of (i)
Fifty Thousand Dollars ($50,000.00) or
(ii) ten percent (10%) of the then
outstanding principal balance of the
Note, then such excess proceeds shall be
applied toward the payment of the
Indebtedness so that no prepayment
premium or other charges shall be
payable with respect to such amounts,
and each monthly installment due under
the Note thereafter shall be reduced to
an amount which will amortize the then
unpaid principal balance on the Note at
the non-default rate over the then
remaining term of the Note. In the
event that such excess Proceeds are less
than described in the immediately
preceding sentence, such excess Proceeds
shall be paid to Borrower within ten
(10) days after the completion of the
rebuilding or restoration of the
Property.
5. EVENTS OF DEFAULT AND REMEDIES.
5.1. Events of Default.
Any of the following events shall, for
purposes of this Mortgage, constitute an
"Event of Default":
5.1.1. Any failure by Borrower to pay
any amount owing on or with respect to this
Mortgage, the Note or the other Loan
Documents when due, whether by maturity,
acceleration or otherwise, which failure
continues for five (5) business days.
5.1.2. Any failure by Borrower to
comply with any of the non-monetary terms, provisions,
warranties or covenants of this
Mortgage, the Note or the other Loan
Documents, which failure continues for
fifteen (15) days after the date of
written notice to Borrower from Lender
of such default; provided that if the
nature of Borrower's noncompliance is
such that more than fifteen (15) days
are reasonably required for its cure,
then Borrower shall not be deemed to be
in default if Borrower commences such
cure within such fifteen (15) day period
and thereafter diligently prosecutes
such cure to completion.
5.1.3. Any statement, representation
or information made or furnished by or on
behalf of Borrower to Lender in
connection herewith shall prove to be
materially false or misleading when made
or furnished.
5.1.4. Institution of remedial
proceedings or other exercise of rights and remedies by
the holder of any security interest or
other lien against the Property or any
portion thereof.
5.1.5. Insolvency of Borrower, or the
admission in writing of Borrower's inability to
pay debts as they mature, institution of
bankruptcy, reorganization, insolvency
or other similar proceedings by or
against Borrower, unless, in the case of
a petition filed against Borrower, the
same is dismissed within sixty (60) days
of the date of filing.
5.1.6. The issuance or filing of any
judgment, attachment, levy or garnishment against
Borrower or all or substantially all of
the assets of Borrower in excess of
$250,000 which is not covered by
insurance, the issuance or filing of any
judgment, attachment, levy or
garnishment against any guarantor or all
or substantially all of the assets of
any guarantor in excess of $500,000
which is not covered by insurance, or
the issuance or filing of any judgment,
attachment, levy or garnishment against
the Property in excess of $100,000 which
is not covered by insurance, unless any
such judgment, attachment, levy or
garnishment is dismissed or
enforcement is effectively stayed within
sixty (60) days or such longer period,
if any, permitted by the local rules of
the applicable jurisdiction for such
dismissal or stay.
5.1.7.If the Borrower occupies the Real
Estate pursuant to the Ground Lease, any
event or condition occurs or exists
which would entitle the Ground Lessor
under such Ground Lease immediately or
following the giving of notice or lapse
of any applicable grace period to
terminate such Ground Lease, which
default is not cured within any
applicable cure period set forth in such
Ground Lease.
5.1.8.If Borrower shall fail to provide
to Lender any agreement or instrument
appropriate or necessary to create or
maintain a perfected, first priority
security interest in the Property.
5.1.9.Any default by Borrower under any
promissory note, deed of trust,
mortgage, security agreement or other
instrument or agreement between Borrower
and Lender, or by Borrower in favor of
Lender.
5.1.10.Any Event of Default by the
tenant under the Property Lease.
5.1.11.Sale or other disposition by
Borrower of the Property or any of Borrower's other
assets unless such assets are replaced
by items of like kind and quality or are
no longer used or useful in the business
of the Franchised Operation.
5.1.12.Dissolution, merger,
consolidation, termination of existence,
insolvency, business failure or
assignment for the benefit of creditors
of or by Borrower.
5.1.13. Failure by Borrower to pay when
due any indebtedness (other than to
Lender) or in the observance or
performance of any term, covenant or
condition in any document evidencing,
securing or relating to such
indebtedness, which failure continues
beyond any applicable cure period.
5.2. Remedies Upon Event of Default.
Upon the occurrence of any Event of
Default, Lender shall have the following
rights:
5.2.1.Declare all or part of the Indebtedness immediately due and
payable.
5.2.2.Foreclose the interest of Borrower
in the Property by action pursuant to
applicable law. Commencement of such an
action shall be deemed a declaration of
acceleration pursuant to Section 5.2.1
above. Lender is authorized and
empowered to sell the Property and to
convey the same to the purchaser
thereof. In the event Lender invokes
such power of sale, Lender shall give
written notice to Borrower of the
occurrence of an Event of Default and of
Lender's election to cause the Property
to be sold. Lender shall record a
notice of sale in each
county in which any part of the Property
is located, cause the same to be
published in a newspaper of general
circulation in each such county in the
manner prescribed by applicable law, and
mail copies of the notice in the manner
prescribed by applicable law to Borrower
and to the other persons prescribed by
applicable law. After the time required
by applicable law and after publication
and posting of the notice of sale,
Lender, without demand on Borrower,
shall sell the Property at public
auction to the highest bidder for cash
at the time and place designated in the
notice of sale. Lender may direct the
sale of the Property to be in one parcel
or several parcels and in any order as
Lender may elect in their sole
discretion. Lender may postpone the
sale of the Property by public
announcement at the time and place of
any previously scheduled sale. Lender
or their respective designees may
purchase all or any portion of the
Property at any such sale. Lender shall
deliver to each purchaser at any sale of
the Property by Lender a deed conveying
that portion of the Property purchased
without any covenant or warranty,
expressed or implied. The recitals in
such deed shall be prima facie evidence
of the truth of the statements made
therein.
5.2.3. Collect and receive all rents,
profits and other amounts that are due
or shall subsequently become due under
the terms of any leases, land contract,
or other agreements by which Borrower is
leasing or selling the Property or any
interest in the Property. Lender may
also exercise any other rights or remedy
of Borrower under any such lease, land
contract or other agreement. However,
Lender shall have no obligation to make
any demand or inquiry as to the nature
or sufficiency of any payment received
or to present or file any claim or take
any other action to collect or enforce
the payment of any amounts to which
Lender may become entitled under this
Mortgage. Similarly, Lender shall not be
liable for any of Borrower's obligations
under any such lease, land contract or
other agreement.
5.2.4. Exercise all rights, remedies
and privileges afforded a "secured
party" under Article 9 of the Uniform
Commercial Code.
5.2.5. Borrower agrees, upon request
of Lender, to assemble the Personal
Property and make it available to Lender
at any place which is reasonably
convenient for Borrower and Lender.
Borrower grants Lender permission to
enter upon any premises owned or
occupied by Borrower for the purpose of
taking possession of the Personal
Property.
5.2.6. Lender shall have the right to
take possession of the Personal
Property, with or without demand, and
with or without process of law. Lender
shall have the right to sell and dispose
of the Personal Property and to
distribute the proceeds according to
law. In connection with the right of
Lender to take possession of the
Personal Property, Lender may take
possession of any other items of
property in or on the Real Estate at the
time of taking possession, and hold them for
Borrower without liability on the part
of Lender except for any damage to the
Real Estate caused by Lender in the
course of taking possession of the
Personal Property. If there is any
statutory requirement for notice, that
requirement shall be met if Lender shall
send notice to Borrower at least five
(5) days prior to the date of sale,
disposition or other event giving rise
to the required notice. Borrower shall
be liable for any deficiency remaining
after disposition of the Property.
5.2.7. Enter upon the Real Estate and
take other actions as Lender deems
appropriate to perform Borrower's
obligations under this Mortgage to
inspect, repair, protect or preserve the
Property, to investigate or test for the
presence of any Hazardous Materials
and/or to appraise the Property.
5.2.8. Pursue any other available
remedy under the UCC or at law or equity
to enforce the payment of the Indebtedness.
5.3. Remedies Generally..3. Remedies
Generally.
5.3.1. All remedies provided for in
Section 5.2 shall be available to the
extent not prohibited by law and Lender
shall have the unrestricted right to
exercise any summary proceeding
available at law or in equity in
connection therewith. Each remedy shall
be cumulative and additional to any
other remedy of Lender at law, in equity
or by statute. No delay or omission to exercise any
right or power accruing upon any default
or Event of Default shall impair any
such right or power or shall be
construed to be a waiver of, or
acquiescence in, any such default or
Event of Default.
5.3.2. Lender may waive any Event of
Default and may rescind any declaration
of maturity of payments on the
Indebtedness. In case of such waiver or
recision, Borrower and Lender shall be
restored to their respective former
positions and rights under this
Mortgage. Any waiver by Lender of any
default or Event of Default shall be in
writing and shall be limited to the
particular default waived and shall not
be deemed to waive any other default.
5.4. Application of Proceeds. Any
proceeds received by Lender from the
exercise of remedies pursuant to Section
5.2 of this Mortgage shall be applied as
follows:
(a) First, to pay all costs and
expenses incidental to the leasing,
foreclosure, sale or other disposition
of the Property. These costs and
expenses shall include, without limit,
any costs and expenses incurred by
Lender (including, without limit,
attorneys' fees and disbursements), and
any taxes and assessments or other liens
and encumbrances prior to the lien of
this Mortgage.
(b) Second, to all sums expended or
incurred by Lender directly or
indirectly in carrying out any term,
covenant or agreement under this
Mortgage or
any related document, together with
interest as provided in this Mortgage.
(c) Third, to the payment of the
Indebtedness. If the proceeds are
insufficient to fully pay the
Indebtedness, then application shall be
made first to late charges and interest
accrued and unpaid, then to any
applicable prepayment premiums, then to
unpaid fees and other charges and then
to the outstanding principal balance.
(d) Fourth, any surplus remaining shall
be paid to Borrower or to whomsoever may
be lawfully entitled.
5.5. Receivers.
Upon an Event of Default and
commencement of foreclosure proceedings
to enforce the rights of Lender under
this Mortgage, or upon the commission of
waste against the Property, Lender shall
be entitled to the appointment of a
receiver or receivers of the Property
and of the rents, issues and profits of
the Property.
5.6. Marshalling. In the event of
foreclosure of this Mortgage or the
enforcement by Lender of any other
rights and remedies under this Mortgage,
Borrower waives any right in respect to
marshalling of assets which secure the
Indebtedness or to require Lender to
pursue its remedies against any other
assets or any other party which may be
liable for any of the Indebtedness.
5.7. Further Actions.
Promptly upon the request of Lender,
Borrower shall execute, acknowledge and
deliver any and all further conveyances,
documents, mortgages, deeds of trust,
security agreements, financing
statements and assurances, and do or
cause to be done all further acts as
Lender may require to confirm and
protect the lien of this Mortgage or
otherwise to accomplish the purposes of
this Mortgage.
5.8. Fees, etc.
All costs, expenses and fees of any
nature for which Borrower is obligated
to reimburse or indemnify Lender are
part of the Indebtedness secured by this
Mortgage and are payable upon demand,
unless expressly provided otherwise,
with interest until repaid at the
highest rate charged on any of the
Indebtedness (but not to exceed the
maximum rate permitted by law).
5.9. Attorneys Fees.
Any reference in this Mortgage to
attorneys' fees shall refer to fees,
charges, costs and expenses of in-house
and outside attorneys and paralegals,
whether or not a suit or proceeding is
instituted, and whether incurred at the
trial court level, on appeal, in a
bankruptcy, administrative or probate
proceeding, in consultation with
counsel, or otherwise. All costs,
expenses and fees of any nature for
which Borrower is obligated to reimburse
or indemnify Lender are part of the
Indebtedness secured by this Mortgage
and are payable upon demand, unless
expressly provided otherwise, with
interest until repaid at the highest
rate charged on any of the Indebtedness
(but not to exceed the maximum rate
permitted by law).
6. MISCELLANEOUS.
6.1. Governing Law.
This Mortgage shall be construed in
accordance with the laws of the Subject
State.
6.2. Successors and Assigns.
This Mortgage shall be binding upon the
successors and assigns of Borrower
including, without limit, any debtor in
possession or trustee in bankruptcy for
Borrower, and the rights and privileges
of Lender under this Mortgage shall
inure to the benefit of its successors
and assigns. This shall not be deemed a
consent by Lender to a conveyance by
Borrower of all or any part of the
Property or of any ownership interest in
Borrower.
6.3. Notices.
Notice from one party to another
relating to this Mortgage shall be
deemed effective if made in writing
(including telecommunications) and
delivered to the recipient's address,
telex number or telecopier number set
forth in this Mortgage by any of the
following means: (i) hand delivery,
(ii) registered or certified mail,
postage prepaid, (iii) express mail or
other overnight courier service, or (iv)
telecopy, telex or other wire
transmission with request for assurance
of receipt in a manner typical with
respect to communications of that type.
Notice made in accordance with these
provisions shall be deemed delivered on
receipt if delivered by hand or wire
transmission, on the third business day
after mailing if mailed by registered or
certified mail, or on the next business
day after mailing or deposit with the
postal service or an overnight courier
service if delivered by express mail or
overnight courier.
6.4. Entire Agreement; Amendments.
This Mortgage and any agreement to which
it refers state all rights and
obligations of the parties and supersede
all other agreements (oral or written)
with respect to the lien granted by this
Mortgage. Any amendment of this Mortgage
shall be in writing and shall require
the signature of Borrower and Lender.
6.5. Partial Invalidity.
The invalidity or unenforceability of
any provision of this Mortgage shall not
affect the validity or enforceability of
the remaining provisions of this
Mortgage.
6.6. Inspections.
Any inspection, audit, appraisal or
examination by Lender or its agents of
the Property or of information or
documents pertaining to the Property is
for the sole purpose of protecting
Lender's interests under this Agreement
and is not for the benefit or protection
of Borrower or any third party.
6.7. Joint and Several Liability.
In the event that more than one party
executes this Mortgage, the obligations
of each party shall be joint and
several.
6.8. Automatic Reinstatement.
Notwithstanding any prior revocation,
termination, surrender or discharge of
this Mortgage, the effectiveness of this
Mortgage shall automatically continue or
be reinstated, as the case may be, in
the event that:
(a) Any payment received or credit
given by Lender in respect of the
Indebtedness is determined to be a
preference, impermissible setoff,
fraudulent conveyance, diversion of
trust funds, or otherwise required to be
returned to Borrower or any third party
under any applicable state or federal
law, including, without limit, laws
pertaining to bankruptcy or insolvency,
in which case this Mortgage shall be
enforceable as if any such payment or
credit had not been received or given,
whether or not Lender relied upon this
payment or credit or changed its
position as a consequence of it.
(b) In the event of continuation or
reinstatement of this Mortgage, Borrower
agrees upon demand by Lender to execute
and deliver to Lender those documents
which Lender determines are appropriate
to further evidence (in the public
records or otherwise) this continuation
or reinstatement, although the failure
of Borrower to do so shall not affect in
any way the reinstatement or
continuation. If Borrower does not
execute and deliver to Lender such
documents upon demand, Lender and each
officer of Lender is irrevocably
appointed (which appointment is coupled
with an interest) the true and lawful
attorney of Borrower (with full power of
substitution) to execute and deliver
such documents in the name and on behalf
of Borrower.
6.9. WAIVER OF JURY TRIAL.
EACH PARTY, AFTER CONSULTING (OR HAVING
HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND
VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT, WAIVES ANY RIGHT TO TRIAL BY
JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT
OF, OR IN ANY WAY RELATED TO, THIS
MORTGAGE OR THE INDEBTEDNESS.
6.10. Assignment.
This Mortgage is freely assignable, in
whole or in part, by Lender with reasonable notice
to Borrower but without the necessity of
obtaining the consent of Borrower.
Lender shall be fully discharged from
all responsibility accruing hereunder
from and after the effective date of any
such assignment. Lender's assignee
shall, to the extent of the assignment,
be vested with all the powers and rights
of Lender hereunder (including those
granted under Section 4 hereof or
otherwise with respect to the Property),
and to the extent of such assignment the
assignee may fully enforce such rights
and powers, and all references to Lender
shall mean and refer to such assignee.
Lender shall retain all rights and
powers hereby given not so assigned,
transferred and/or delivered. Borrower
hereby waives all defenses which
Borrower may be entitled to assert
against Lender's assignee with respect
to liability accruing hereunder prior to
the effective date of any assignment of
Lender's interest herein. Borrower may
not, in whole or in part, directly or
indirectly, assign this Mortgage or its
rights hereunder or delegate its duties
hereunder without, in each instance, the
specific prior written consent of
Lender, which consent may be withheld or
delayed in Lender's sole discretion.
6.11. Securitization.
Borrower understands and agrees that
Lender may, from time to time, assign
its rights and powers under the Note,
this Mortgage and any other Loan
Documents, in whole or in part, in
connection with a securitization
program. Borrower agrees to enter into
an amendment to the Note, this Mortgage
and any other Loan Documents if such
amendments are required by a nationally
recognized rating agency in connection
with a securitization program sponsored
by Lender and in which the Note, this
Mortgage and any other Loan Documents
are to be included so long as such
amendment or amendmens do not adversely
affect Borrower's rights, privileges,
liabilities or obligations.
In the event this Mortgage, the Note,
and any other Loan Documents are
included as an asset of a securitization
by Lender, Borrower shall, within ten
(10) days after Lender's written request
therefor, deliver or cause to be
delivered opinions and certifications in
form and substance and delivered by
counsel reasonably acceptable to Lender
and the rating agency, as may be
reasonably required by Lender and/or
such rating agency in connection with
such securitization. Borrower shall not
be required to bear the cost of the
preparation and delivery of such
opinions, if any.
Borrower shall, in the event this
Mortgage, the Note, and any other Loan
Documents are included as an asset of a
securitization, (a) gather any
environmental information, if any, in
the possession of Borrower, not already
delivered to Lender and reasonably
required by the rating agency in
connection with such securitization, at
Lender's request, (b) meet at reasonable
times, on reasonable notice and at
Lender's expense, with representatives
of the rating agency to discuss the
business and operations of the Borrower, and (c)
cooperate at reasonable times, on
reasonable notice and at Lender's
expense, with the reasonable request of
the rating agency and Lender in
connection with all of the foregoing and
the preparation of any offering
documents with respect thereto.
Borrower shall, upon Lender's written
request therefor in connection with a
securitization in which this Mortgage,
the Note, and any other Loan Documents
are included as an asset promptly
deliver such financial statements and
related documentation prepared by an
independent certified public accountant
as may be necessary and shall fully
cooperate with the Lender in connection
with any assurances or other documents,
which are deemed to be necessary or
convenient by Lender, requested from
Borrower and in all cases consistent
with and not in addition to the
Borrower's express obligations set forth
in the Loan Documents. Borrower shall
not be required to bear the cost of
preparation of financial statements and
related documentation prepared by an
independent certified public accountant
in connection with a securitization
(unless Borrower is otherwise having
such financial statements and related
documents prepared).
For purposes of this Mortgage, the term
"securitization" means the sale, pledge,
grant of a security interest, collateral
assignment, transfer and delivery or
other encumbrance or disposition of all
or any portion of the Lender's rights
and powers in this Mortgage by the
Lender, from time to time, to one or
more of its affiliates or to other
persons, including the sale of this
Mortgage by the Lender to one or more
persons who will issue debt instruments
or equity certificates backed by such
Mortgage and the servicing of such
Mortgage by a person appointed as
servicer in connection therewith.
For purposes of this Mortgage, the term
"rating agency" means any nationally
recognized statistical rating agency;
provided, however, that at any time
during which this Mortgage is an asset
of a securitization, "rating agency"
shall mean the rating agency or rating
agencies that from time to time rate the
securities issued in connection with
such securitization..8. Securitization.
Borrower understands and agrees that
Lender may, from time to time, assign
its rights and powers under the Note,
this Mortgage and any other Loan
Documents, in whole or in part, in
connection with a securitization
program. Borrower agrees to enter into
an amendment to the Note, this Mortgage
and any other Loan Documents if such
amendments are required by a nationally
recognized rating agency in connection
with a securitization program sponsored
by Lender and in which the Note, this
Mortgage and any other Loan Documents
are to be included.
6.12. Counterparts.
This Mortgage may be executed in one or
more counterparts, each of which shall
constitute an original, and all of which
together shall constitute one and the
same instrument.
7. STATE LAW PROVISIONS.
7.1 Scope of Remedies.
Anything herein to the contrary
notwithstanding, upon the occurrence of
an Event of Default, Lender shall have
the right to foreclose this Mortgage in
the manner provided under the laws of
Indiana and to exercise all remedies
available under Indiana law. In the
event a foreclosure action is commenced,
as aforesaid, and a receiver is
appointed as to the Property, said
receiver shall possess all rights and
powers granted to Lender to the extent
said receiver may possess and exercise
said rights and powers under Indiana
law.
7.2 Indiana Responsible Property
Transfer Law. Borrower represents and
warrants that (a) either (1) none of the
Property is within the definition of the
term "property" as defined in Indiana
Code Section 13-11-2-174 and no person
is required as a result of the execution
and delivery of this Mortgage to furnish
to any other person the disclosure
documents described in and provided for
in the Indiana Responsible Property
Transfer Law (I.C. 13-25-3) or (2) all
required disclosure documents have been
timely delivered to all persons
specified in the Indiana Responsible
Property Transfer Law and, (b) except as
disclosed in any environmental audits
and reports delivered to Lender, the
Property does not, to the actual
knowledge of Borrower, contain any
environmental defect as defined in I.C.
1311-2-70.
7.3 Prepayment.
Borrower has specifically agreed to pay
to Lender the Prepayment Premium
specified in the Note in the event of,
and notwithstanding, the acceleration of
the Indebtedness prior to the stated Due
Date as the consequence of the
occurrence of an Event of Default,
including (without limitation but with
recognition of the negotiated nature
thereof) an Event of Default under
Section 5.1 of this Mortgage.
7.4 Future Advances.
Notwithstanding anything contained in
this Mortgage or the other Loan
Documents to the contrary, this Mortgage
shall secure: (i) one hundred and ten
percent (110%) of the face amount of the
Note, exclusive of any items described
in (ii) below, including any additional
advances made from time to time after
the date hereof pursuant to the Note and
other Loan Documents whether made as
part of the Indebtedness secured hereby,
made at the option of Lender, made after
a reduction to a zero (0) or other
balance, or made otherwise, (ii) all
other amounts payable by Borrower, or
advanced by Lender for the account, or
on behalf, of Borrower or the Property,
pursuant to the Loan Documents,
including amounts advanced with respect
to the property for the payment of taxes, assessments,
insurance premiums and other costs and
impositions incurred for the protection
of the Property to the same extent as if
the future obligations and advances were
made on the date of execution of this
Mortgage; and (iii) future modifications,
extensions, and renewals of any Indebtedness
secured by this Mortgage. Pursuant to I.C. 32-8-11-9,
the lien of this Mortgage with respect
to any future advances, modifications,
extensions, and renewals referred to
herein and made from time to time shall
have the same priority to which this
Mortgage otherwise would be entitled as
of the date this Mortgage is executed
and recorded without regard to the fact
that any such future advance,
modification, extension, or renewals may
occur after this Mortgage is executed.
7.5 After Acquired Property.
If, after the date of this Mortgage,
Borrower acquires any property located
on and used in connection with the
Property and that by the terms of the
Loan Documents is required or intended
to be encumbered by this Mortgage, such
property shall become subject to the
lien and security interest of this
Mortgage immediately upon its
acquisition by Borrower and without any
further mortgage, conveyance, assignment
or transfer. Nevertheless, upon
Lender's request at any time Borrower
shall execute, acknowledge and deliver
any additional instruments and
assurances of title and will do or cause
to be done anything further that is
reasonably necessary for carrying out
the intent of this Mortgage.
7.6 Maturity Date.
The maturity date of the Note is Maturity_Date.
7.7 No Limitation on Remedies.
Each of the remedies set forth herein,
including without limitation the
remedies involving a power of sale on
the part of Borrower and the right of
Lender to exercise self-help in
connection with the enforcement of the
terms of this Mortgage, shall be
exercisable if, and to the extent,
permitted by the laws of the State of
Indiana in force at the time of the
exercise of such remedies
without regard to the enforceability of
such remedies at the time of the
execution and delivery of this Mortgage.
7.8 Valuation and Appraisement.
All payments due under the Loan
Documents shall be made without relief
from valuation and appraisement laws."
[signature page follows]
IN WITNESS WHEREOF, Borrower and Lender have executed this Mortgage,
Assignment of Rents, Fixture Filing and Security Agreement.
WITNESSES: BORROWER,
Borrower_Entity
By:INDEPENDENT_MEMBER,
Independent_Member_Entity
Its:Managing Member
----------------------------
JOHN C. FIRTH Executive Vice
President and Secretary
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
Before me, a Notary Public in and for said County and State, personally
appeared JOHN C. FIRTH the Executive Vice President and Secretary of
Independent_Member, Independent_Member_Entity, the Managing Member of
Borrower, Borrower_Entity, who acknowledged execution of the foregoing
Mortgage, Assignment of Rents, Fixture Filing and Security Agreement for
and on behalf of said limited liability company and stated that the
representations therein contained are true.
Witness my hand and Notarial Seal this _____ day of July,1999.
-----------------------
Notary Public Residing in
------------------------County
(SEAL)
-------------------------
(printed signature)
Commission Expires: January 31, 2000
WITNESSES: LENDER,
Lender_Entity
ROBERT V. SCHRADER Vice
President, Operations
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
Before me, a Notary Public in and for said County and State, personally
appeared ROBERT V. SCHRADER, Vice President, Operations of Lender,
Lender_Entity, who acknowledged execution of the foregoing Agreement for
and on behalf of said entity and stated that the representations therein
contained are true.
Witness my hand and Notarial Seal this________________day of July, 1999.
-------------------------
Notary Public
Residing in
(SEAL) ____________________County
My Commission Expires: January 31, 2000
_______________________
Printed Name
This instrument was prepared by and
when recorded return to:
Randy B. Evans, Esq.
KRASS MONROE, P.A.
1100 Southpoint Office Center 1650 West
82nd Street Bloomington, MN 55431-1447
(612) 885-5999
SCHEDULE A TO MORTGAGE
(certain defined terms)
Closing Date: Closing_Date
Composite FCCR: 1.3 to 1.0
SCHEDULE B TO MORTGAGE
(legal description of real property)
SCHEDULE C TO MORTGAGE
Lease dated Closing_Date, by and between Borrower, Borrower_Entity,
as landlord, and Opsub, Opsub_Entity, as tenant, relating to
the Franchised Operation located at Premises_Street, Premises_City,
Premises_State Premises_Zip.