PROMISSORY NOTE
U.S. $1,800,000 March 25, 1998
FOR VALUE RECEIVED, OLAJUWON HOLDINGS, INC., a Texas corporation
("OHI"), hereby promises to pay to the order of DENAMERICA CORP., a Georgia
corporation ("DAC"), at the office of DAC located at 7373 N. Scottsdale Road,
Suite D-120, Scottsdale, Arizona 85253, the principal amount of ONE MILLION
EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000.00), together with interest on the
principal balance outstanding hereunder, at a per annum rate equal to the Stated
Interest Rate specified below or, to the extent applicable, the Default Interest
Rate specified below, in accordance with the following terms and conditions:
1. Contracted For Rate of Interest. The contracted for rate of interest
of the indebtedness evidenced hereby, without limitation, shall consist of the
following:
(a) The Stated Interest Rate (as hereinafter defined), as from
time to time in effect, calculated daily on the basis of actual days elapsed
over a 360-day year, applied to the principal balance from time to time
outstanding hereunder;
(b) The Default Interest Rate (as hereinafter defined), as
from time to time in effect, calculated daily on the basis of actual days
elapsed over a 360-day year, applied to the principal balance from time to time
outstanding hereunder; and
(c) All Additional Sums (as hereinafter defined), if any.
OHI agrees to pay an effective contracted for rate of interest which is the sum
of the Stated Interest Rate referred to in Subsection 1(a) above, plus any
additional rate of interest resulting from the application of the Default
Interest Rate referred to in Sub-section 1(b) above, and the Additional Sums, if
any, referred to in Subsection 1(c) above.
2. Stated Interest Rate. Except as provided in Section 3 below, the
principal balance outstanding hereunder from time to time shall bear interest at
the Stated Interest Rate. The Stated Interest Rate shall be equal to 10% per
annum until the first anniversary of the date of this Note and, if this Note is
extended pursuant to Section 4(b), 11% per annum thereafter.
3. Default Interest Rate. The Default Interest Rate shall be 12% per
annum. The principal balance outstanding hereunder from time to time shall bear
interest at the Default Interest Rate from the date of the occurrence of an
Event of Default (as hereinafter defined) hereunder until the earlier of: (a)
the date on which the principal balance outstanding hereunder, together with all
accrued interest and other amounts payable hereunder, are paid in full; or (b)
the date on which such Event of Default is timely cured in a manner satisfactory
to DAC, (i) if OHI is specifically granted a right to cure such Event of Default
in any of the agreements, instruments
or documents (collectively, the "Purchase Documents") entered into in connection
with the Asset Purchase Agreement (as defined below) or (ii) if no such right to
cure is specifically granted, then DAC, in its sole and absolute discretion,
permits such Event of Default to be cured.
4. Payments. This Note shall be payable as follows:
(a) Interest. Any and all interest that has accrued under this
Note shall be paid on the dates that are six months and twelve months after the
date hereof and, if the Note term is extended pursuant to Section 4(b), on the
dates that are eighteen and twenty-four months after the date hereof; provided,
however, that any and all accrued interest shall be paid in full on or before
the date that the principal balance of this Note is paid.
(b) Principal. The entire principal balance of this Note shall
be paid on the date that is twelve months after the date hereof; provided,
however, that if an Event of Default (as defined below) has not occurred on or
before such date, OHI shall be entitled to defer the payment of principal for up
to an additional twelve months by providing DAC with written notice thereof at
least thirty days prior to the one-year anniversary of the date hereof.
5. Application and Place of Payments. Payments received by DAC with
respect to the indebtedness evidenced hereby shall be applied in such order and
manner as DAC in its sole and absolute discretion may elect. Unless otherwise
elected by DAC, all such payments shall first be applied to accrued and unpaid
interest at the Stated Interest Rate and, to the extent applicable, the Default
Interest Rate, next to the principal balance then outstanding hereunder, and the
remainder to any Additional Sums or other costs or added charges provided for
herein or in any of the Purchase Documents. Payments hereunder shall be made at
the address for DAC first set forth above, or at such other address as DAC may
specify to OHI in writing.
6. Prepayments. Payments of principal hereof may be made at any time,
or from time to time, in whole or in part, without penalty, provided that all
previously matured interest and other charges accrued to the date of prepayment
are also paid in full. Notwithstanding any partial prepayment of principal
hereof, there will be no change in the due date or amount of scheduled payments
due hereunder unless DAC, in its sole and absolute discretion, agrees in writing
to such change. At the option of DAC, partial prepayments shall be applied in
the inverse order of maturity.
7. Events of Default; Acceleration. The occurrence of any one or more
of the following events shall constitute an "Event of Default" hereunder, and
upon such Event of Default, the entire principal balance outstanding hereunder,
together with all accrued interest and other amounts payable hereunder, at the
election of DAC, shall become immediately due and payable, without any notice to
OHI:
(a) Nonpayment of principal, interest or other amounts when
the same shall become due and payable hereunder and such principal, interest or
other amount shall remain unpaid for five or more days;
2
(b) The failure of OHI to comply with any provision of this
Note and OHI's failure to cure such noncompliance within ten (10) days after
receipt of written notice thereof from DAC;
(c) The failure of OHI or Akinola Olajuwon ("Olajuwon") to
comply subsequent to the date hereof with any provision of the Negative Working
Capital Note, Second Mortgage or Guaranty and OHI's failure to cure such
noncompliance within ten (10) days after receipt of written notice thereof from
DAC or such other time to cure as is expressly permitted in such document,
instrument or agreement;
(d) The dissolution, winding-up or termination of the
existence of OHI;
(e) The making by OHI or any other person or entity who is or
may become liable hereunder of an assignment for the benefit of its creditors;
(f) The appointment of (or application for appointment of) a
receiver of OHI or any other person or entity who is or may become liable
hereunder, or the involuntary filing against or voluntary filing by OHI, or any
other person or entity who is or may become liable hereunder, of a petition or
application for relief under federal bankruptcy law or any similar state or
federal law, or the issuance of any writ of garnishment, execution or attachment
for service with respect to OHI or any person or entity who is or may become
liable hereunder, or any property of OHI or property of any person or entity who
is or may become liable hereunder; or
(g) OHI transfers any right or obligation under this Note
without DAC's prior written consent.
8. Guaranty/Collateral. OHI's obligations under this Note are
guaranteed by Olajuwon under the Guaranty and additionally secured by the
property described in the Second Mortgage.
9. Additional Sums. All fees, charges, goods, things in action or any
other sums or things of value, other than the interest resulting from the Stated
Interest Rate and the Default Interest Rate, as applicable, paid or payable by
OHI (collectively, the "Additional Sums"), whether pursuant to this Note, the
Purchase Documents or any other document or instrument in any way pertaining to
this transaction, or otherwise with respect to this transaction, that, under the
laws of the State of Arizona, may be deemed to be interest with respect to this
transaction, for the purpose of any laws of the State of Arizona that may limit
the maximum amount of interest to be charged with respect to this transaction,
shall be payable by OHI as, and shall be deemed to be, additional interest, and
for such purposes only, the agreed upon and "contracted for rate of interest" of
this transaction shall be deemed to be increased by the rate of interest
resulting from the Additional Sums. OHI understands and believes that this
transaction complies with the usury laws of the State of Arizona; however, if
any interest or other charges in connection with this transaction are ever
determined to exceed the maximum amount permitted by law, then OHI agrees that:
(a) the amount of interest or charges payable pursuant to this transaction shall
be reduced to the maximum amount permitted by law; and (b) any excess amount
previously
3
collected from OHI in connection with this transaction that exceeded the maximum
amount permitted by law, will be credited against the principal balance then
outstanding hereunder. If the outstanding principal balance hereunder has been
paid in full, the excess amount paid will be refunded to OHI.
10. Waivers. Except as set forth in this Note or the Purchase
Documents, to the extent permitted by applicable law, OHI, and each person who
is or may become liable hereunder, severally waive and agree not to assert: (a)
demand, diligence, grace, presentment for payment, protest, notice of
nonpayment, nonperformance, extension, dishonor, maturity, protest and default;
and (b) recourse to guaranty or suretyship defenses (including, without
limitation, the right to require the DAC to bring an action on this Note). DAC
may extend the time for payment of or renew this Note, release collateral as
security for the indebtedness evidenced hereby or release any party from
liability hereunder, and any such extension, renewal, release or other
indulgence shall not alter or diminish the liability of OHI or any other person
or entity who is or may become liable on this Note except to the extent
expressly set forth in a writing evidencing or constituting such extension,
renewal, release or other indulgence.
11. Costs of Collection. OHI agrees to pay all costs of collection,
including, without limitation, attorneys' fees, whether or not suit is filed,
and all costs of suit and preparation for suit (whether at trial or appellate
level), in the event any payment of principal, interest or other amount is not
paid when due, or in case it becomes necessary to protect the collateral which
is security for the indebtedness evidenced hereby, or to exercise any other
right or remedy hereunder or in the Purchase Documents, or in the event DAC is
made party to any litigation because of the existence of the indebtedness
evidenced hereby, or if at any time DAC should incur any attorneys' fees in any
proceeding under any federal bankruptcy law (or any similar state or federal
law) in connection with the indebtedness evidenced hereby. In the event of any
court proceeding, attorneys' fees shall be set by the court and not by the jury
and shall be included in any judgment obtained by DAC.
12. No Waiver by DAC. No delay or failure of DAC in exercising any
right hereunder shall affect such right, nor shall any single or partial
exercise of any right preclude further exercise thereof.
13. Governing Law. This Note shall be construed in accordance with and
governed by the laws of the State of Arizona, without regard to the choice of
law rules of the State of Arizona.
14. Jurisdiction and Venue. OHI hereby expressly agrees that in the
event any actions or other legal proceedings are initiated by or against OHI or
DAC involving any alleged breach or failure by any party to pay, perform or
observe any sums, obligations or covenants to be paid, performed or observed by
it under this Note or the Purchase Documents, or involving any other claims or
allegations arising out of the transactions evidenced or contemplated by this
Note or the Purchase Documents, regardless of whether such actions or
proceedings shall be for damages, specific performance or declaratory relief or
otherwise, such actions, in the sole and absolute discretion of DAC, may be
required to be brought in Maricopa County, Arizona; and
4
OHI hereby submits to the jurisdiction of the State of Arizona for such purposes
and agrees that the venue of such actions or proceedings shall properly lie in
Maricopa County, Arizona; and OHI hereby waives any and all defenses in such
jurisdiction and venue.
15. Time of Essence. Time is of the essence of this Note and each and
every provision hereof.
16. Conflicts; Inconsistency. In the event of any conflict or
inconsistency between the provisions of this Note and the provisions of any one
or more of the Purchase Documents, the provisions of this Note shall govern and
control to the extent necessary to resolve such conflict or inconsistency.
17. Amendments. No amendment, modification, change, waiver, release or
discharge hereof and hereunder shall be effective unless evidenced by an
instrument in writing and signed by the party against whom enforcement is
sought.
18. Severability. If any provision hereof is invalid or unenforceable,
the other provisions hereof shall remain in full force and effect and shall be
liberally construed in favor of DAC in order to effectuate the other provisions
hereof.
19. Binding Nature. The provisions of this Note shall be binding upon
OHI and the successors and assigns of OHI, and shall inure to the benefit of DAC
and any subsequent holder of all or any portion of this Note, and their
respective successors and assigns. DAC may from time to time transfer all or any
part of its interest in this Note without notice to OHI.
20. Notice. Any notice or other communication with respect to this Note
shall: (a) be in writing; (b) be effective on the day of hand-delivery thereof
to the party to whom directed, one day following the day of deposit thereof with
delivery charges prepaid, with a national overnight delivery service, or two
days following the day of deposit thereof with postage prepaid, with the United
States Postal Service, by regular first class, certified or registered mail; (c)
if directed to DAC, be addressed to DAC at the office of DAC set forth above, or
to such other address as DAC shall have specified to OHI by like notice; and (d)
if directed to OHI, be addressed to OHI at the address for OHI set forth below
OHI's name, or to such other address as OHI shall have specified by like notice.
21. Section Headings. The section headings set forth in this Note are
for convenience only and shall not have substantive meaning hereunder or be
deemed part of this Note.
22. Construction. This Note shall be construed as a whole, in
accordance with its fair meaning, and without regard to or taking into account
any presumption or other rule of law requiring construction against the party
preparing this Note.
23. Subordination. All indebtedness evidenced by this Note is
subordinated to other indebtedness pursuant to, and to the extent provided in,
and is otherwise subject to the
5
terms of, the Intercreditor and Subordination Agreement, dated March 25, 1998
(the "Subordination Agreement"), as the same may be amended, modified or
otherwise supplemented from time to time, by and among Olajuwon Holdings, Inc.
and Akinola Olajuwon, as debtors and Global Alliance Finance Company, L.L.C., as
Senior Lender, and the holders from time to time of the obligations arising
under the Subordinated Notes referred to in the Subordination Agreement,
including, without limitation, this Note.
24. Definitions. Unless otherwise deferred herein, all capitalized
terms shall have the meanings assigned to such terms in the Asset Purchase
Agreement, dated as of January 27, 1998 (the "Asset Purchase Agreement"), by and
between DAC, OHI and Akinola Olajuwon.
25. Post-Closing Agreement. This Note shall be subject to the terms
contained in the Post-Closing Agreement between DAC and OHI dated as of the date
hereof.
IN WITNESS WHEREOF, OHI has executed this Note as of the date first set
forth above.
OLAJUWON HOLDINGS, INC.
/s/ Akinola Olajuwon
-------------------------
By: Akinola Olajuwon
Its: President
Address of OHI:
10375 Richmond Avenue
-------------------------
Suite 1105
-------------------------
Houston, Texas 77042
-------------------------
6