NEGATIVE WORKING CAPITAL NOTE
U.S. $1,700,000 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
SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000.00), together with interest on the
principal balance outstanding hereunder, to the extent applicable, at a per
annum rate equal to 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) No interest if an Event of Default (as defined below) has
not occurred;
(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 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. 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 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 executed in connection with the Asset
Purchase Agreement (as defined below) (the "Purchase Documents") 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.
3. Payments. The entire principal balance of this Note shall be payable
in full over the first eleven weeks immediately following the Closing, in ten
installments of $170,000 each beginning at the end of the second week following
the Closing Date and continuing on the last day of each of the following ten
weeks in accordance with the Schedule of Payments attached as Exhibit A hereto.
4. 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 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.
5. 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.
6. 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;
(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 Promissory 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
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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.
7. 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.
8. Additional Sums. All fees, charges, goods, things in action or any
other sums or things of value, other than the interest resulting from 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 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.
9. 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.
10. 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
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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.
11. 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.
12. 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.
13. 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 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.
14. Time of Essence. Time is of the essence of this Note and each and
every provision hereof.
15. 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.
16. 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.
17. 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.
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18. 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.
19. 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.
20. 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.
21. 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.
22. 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 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.
23. 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.
24. 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.
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IN WITNESS WHEREOF, OHI has executed this Note as of the date first set
forth above.
/s/ Akinola Olajuwon
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By: Akinola Olajuwon
Its: President
Address of OHI:
10375 Richmond Avenue
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Suite 1105
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Houston, Texas 77042
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