AMENDED AND RESTATED LOAN AGREEMENT
by and between
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.,
as Lender
and
WILD BILLS CALIFORNIA, INC.,
KING HENRY'S, INC., FORT LIBERTY, INC.,
ON STAGE THEATERS NORTH MYRTLE BEACH, INC. AND
ON STAGE THEATERS SURFSIDE BEACH, INC.
as Borrowers
Date: As of June __, 1998
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement is made as of this ___ day of
June, 1998, by and between WILD BILLS CALIFORNIA, INC., a Nevada corporation,
KING HENRY'S, INC., a Nevada corporation, FORT LIBERTY, INC., a Nevada
corporation, ON STAGE THEATERS NORTH MYRTLE BEACH, INC., a Nevada corporation,
and ON STAGE THEATERS SURFSIDE BEACH, INC. a Nevada corporation (collectively,
"Borrowers"), and IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP., a
Maryland corporation ("Lender").
RECITALS
A. Wild Bills California, Inc., King Henry's, Inc., Fort Liberty, Inc. and
Lender entered into that certain Loan Agreement dated March 11, 1998 (the
"Original Loan Agreement"), pursuant to which Lender made loans
(collectively, the "Original Loans") on the terms and conditions contained
therein in the following principal amounts:
Borrower Loan Amount
--------------------------- -----------
King Henry's Inc. $5,000,000
Fort Liberty, Inc. $6,600,000
Wild Bills California, Inc. $900,000
Each Original Loan is evidenced by a note and secured by a mortgage or
deed of trust encumbering certain real and other property in California
and Florida and legally described in Exhibits ▇-▇, ▇-▇ ▇▇▇ ▇-▇.
▇. ▇▇▇▇▇▇▇▇▇▇▇▇ herewith, On Stage Theaters North Myrtle Beach, Inc. and On
Stage Theaters Surfside Beach, Inc. are acquiring a leasehold and fee
interest respectively in certain properties located in Horry County, South
Carolina and legally described in Exhibits A-4 and A-5.
C. On Stage Theaters North Myrtle Beach, Inc. and On Stage Theaters Surfside
Beach, Inc. have applied to Lender for loans (each, an "Additional Loan"
and collectively, the "Additional Loans") in the following maximum
amounts, and Lender has agreed to make the Additional Loans on the terms
and conditions contained herein:
Borrower Loan Amount
------------------------------------------ -----------
On Stage Theaters North Myrtle Beach, Inc. $ 25,000
On Stage Theaters Surfside Beach, Inc. $1,075,000
D. Borrowers and Lender desire to make the Additional Loans subject to the
terms and conditions of the Original Loan Agreement (as amended and
restated hereby) and in connection therewith they agree that the Original
Loan Agreement is superseded in its entirety and this Amended and Restated
Loan Agreement is hereby substituted in its place. Each Original Loan or
Additional Loan is referred to herein as a "Loan" and the Original Loans
and Additional Loans are collectively referred to herein as the "Loans".
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. The following terms as used herein shall have the following
meanings:
Affiliated Party: (i) With respect to any Person, any other Person (x) in
which such first Person, directly or indirectly, owns greater than a
twenty percent (20%) interest (whether economic or voting), (y) which
directly or indirectly owns greater than a twenty percent (20%) interest
(whether voting or economic) in such first Person or (z) which, directly
or indirectly, is in control of, is controlled by, or is under common
control with such first Person; (ii) without limiting clause (i) hereof,
with respect to any Person that is a partnership, each of its constituent
general or limited partners; and (iii) without limiting clause (i) hereof,
with respect to any Person that is a corporation, each of its officers,
directors and, unless its stock is publicly traded on the New York Stock
Exchange or American Stock Exchange or through the network of the National
Association of Securities Dealers, shareholders. For the purposes of this
definition, "control" and "controlled" with respect to a Person means the
power, directly or indirectly, either to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of voting securities or equity interests, by contract or otherwise.
Agreement: This Amended and Restated Loan Agreement, as originally
executed or as may be hereafter supplemented or amended from time to time
in writing.
Appraisal: An appraisal report prepared by a member of a national
appraisal organization that is certified in the state in which the
property being appraised by it is located and that has adopted the Uniform
Standards of Professional Appraisal Practice (USPAP) established by the
Appraisal Standards Board of the Appraisal Foundation. The appraiser shall
use assumptions and limiting conditions established by Lender, and the
appraisal shall be in conformity with Lender's appraisal guidelines.
Unless specifically provided in this Agreement, no Appraisal shall include
any "going concern value" or goodwill relating to the business conducted
from the applicable Project.
Assignment of Leases: The assignments of leases and rents described in
Section 2.2(c) of this Agreement and executed by the applicable Borrower,
as assignor, and recorded or to be recorded in the Official Records of the
county where the applicable Real Property is located, contemporaneously
with the recordation of the applicable Deed of Trust or Mortgage, as
originally executed or as may be hereafter supplemented or amended from
time to time in writing.
Blazing Piano's Security Agreement: That certain Security Agreement dated
March 11, 1998 executed by Blazing Piano's, Inc., a Nevada corporation
which is an affiliate of Borrowers, granting Lender a security interest in
certain personal property as additional security for the Loans, as
originally executed or as may be hereafter supplemented or amended from
time to time in writing.
Building Laws: All federal, state and local laws, regulations, ordinances
and requirements applicable to the development and operation of a Project,
including without limitation all access, building, zoning, planning,
subdivision, fire, traffic, safety, health, labor, discrimination,
environmental, air quality, wetlands, shoreline, and flood plain laws,
regulations and ordinances, including, without limitation, all applicable
requirements of the Fair Housing Amendments Act of 1988 (as amended), the
Americans with Disabilities Act of 1991, and all orders or decrees of any
court adopted or enacted with respect thereto applicable to such Project.
California Lease: That certain Master Ground Lease dated as of January 1,
1990 by and between Spiegel Enterprises, a California general partnership,
and Mecca Leisure (CAL), Inc. (Wild Bills California, Inc.'s predecessor
in interest).
Debt Service Coverage Ratio: For any calendar quarter, the ratio of (i)
25% of the EBITDA for the four immediately prior calendar quarters
(excluding from EBITDA, for this purpose only, all nonrecurring items
occurring on or before December 31, 1997 as set forth in Schedule 1
attached hereto and made part hereof), to (ii) the aggregate amount of
principal and interest payable under all the Loans for such quarter.
Deed of Trust: The leasehold deed of trust, security agreement and fixture
filing described in Section 2.2(b) of this Agreement, executed by Wild
Bills California, Inc., as trustor, and recorded on April 27, 1998 as
Instrument No. 19980250317 in the Official Records of Orange County,
California, as originally executed or as may be hereafter supplemented or
amended from time to time in writing.
Default: Any event which, if it were to continue uncured, would, with
notice or lapse of time or both, constitute an Event of Default.
Default Rate: The default interest rate specified in a Note.
EBITDA: For a given period, the sum of the following for On Stage
Entertainment, Inc. ("OSE"): (a) Net Income for such period, (b) the
amount deducted by OSE in determining Net Income for such period,
representing (i) Interest Expense of OSE; plus (ii) the amount deducted,
in determining Net Income for such period, of all federal, state and local
income taxes (whether paid in cash or deferred) of OSE; plus (iii)
depreciation of assets of OSE, plus (iv) amortization.
Environmental Indemnity: Each indemnity agreement delivered by a Borrower
to Lender with respect to a given Project and described in Section 2.2(h)
of this Agreement, as originally executed or as may be hereafter
supplemented or amended from time to time in writing.
ERISA: Employee Retirement Income Security Act of 1974, as amended, and
the regulations promulgated thereunder from time to time.
Event of Default: The meaning set forth in Section 7.1.
Fort Liberty Improvements: The Improvements associated with the Fort
Liberty Project.
Fort Liberty Real Property: The real property described on Exhibit A-3.
Fort Liberty Tenant Leases: All leases, licenses or other occupancy
arrangements for premises in or portions of the Fort Liberty Real Property
other than the On Stage Lease for the Fort Liberty Real Property.
GAAP: Generally accepted accounting principles according to U.S.
accounting (FASB) standards, consistently applied.
Governmental Approvals: The meaning set forth in Section 4.11 of this
Agreement.
Governmental Authority: Any federal, state, county or municipal
government, or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, or public body, or any court, administrative
tribunal, or public utility.
Ground Lessor: The ground lessor under the California Lease (currently
Spiegel Enterprises, a California general partnership).
Guarantee(s): Collectively, the Guarantees dated March 11, 1998 previously
executed in favor of Lender by King Henry's Inc., Fort Liberty, Inc.,
Blazing Piano's, Inc., Wild Bills California, Inc. and OSE and the
Guarantees being executed concurrently herewith by On Stage Theaters North
Myrtle Beach, Inc. and On Stage Theaters Surfside Beach, Inc., as
originally executed and as may be hereafter supplemented or amended from
time to time in writing.
Impound Account: The meaning set forth in Section 3.1.
Improvements: The buildings, parking and other structures, other permanent
improvements and Personal Property located on each respective parcel of
Land.
include or including: Including but not limited to.
Indemnitor: On Stage Entertainment, Inc. and the Borrowers
collectively.
Internal Revenue Code: The Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder from time to time.
knowledge: When used to modify a representation or warranty, actual
knowledge or such knowledge as a reasonable person under the circumstances
should have, including such inquiry and investigation as a reasonable and
diligent person would conduct. Lender acknowledges Borrowers recently
purchased the Projects, and that the knowledge of each Borrower may be
less extensive than if such Borrower had owned the applicable Project for
a longer period of time.
Land: The land legally described in Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-5
attached hereto.
Laws: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.
Loan Documents: This Agreement, the documents and instruments listed in
Section 2.2 of this Agreement, and all the documents given to Lender from
time to time to evidence, secure or guarantee the Loan.
Loan Maturity: With respect to the Original Loans, March 31, 2008. With
respect to the Additional Loans, May 31, 2008.
Loan Opening Date: The date of the initial disbursement of the Loan.
Mortgage: Each mortgage, security agreement and fixture filing described
in Section 2.2 of this Agreement, executed by a Borrower as mortgagor in
favor of Lender as mortgagee and recorded or to be recorded in the county
where the applicable Land is located, as originally executed or as may be
hereafter supplemented or amended from time to time in writing.
Myrtle Beach Lease: That certain Lease Agreement dated as of March 3, 1989
between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and The Dixie Corporation (On Stage Theaters
North Myrtle Beach, Inc.'s predecessor in interest).
Myrtle Beach Sublease: That certain Sublease Agreement dated as of August
22, 1996, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Productions, Inc. (On Stage
Theaters North Myrtle Beach, Inc.'s predecessor in interest) and ▇▇▇▇▇
▇▇▇▇▇ Entertainment, Inc.
Net Income: For any period, the aggregate of all amounts which, in
accordance with GAAP, would be included in determining net income on the
financial statements of OSE for such period (excluding, however, all
amounts in respect of any extraordinary items and all items of revenue to
the extent that cash with respect thereto is not expected to be received
within one year of the date on which such revenue is included in income).
Note: Collectively, the notes dated March 11, 1998 previously executed and
delivered by Wild Bills California Inc., ▇▇▇▇ ▇▇▇▇▇'▇, Inc. and Fort
Liberty, Inc. contemporaneuously with the Original Loan Agreement, and the
notes being executed and delivered by On Stage Theaters North Myrtle
Beach, Inc. and On Stage Theaters Surfside Beach, Inc. concurrently
herewith, each as originally executed and delivered and as may be
hereafter supplemented or amended from time to time in writing.
On Stage Lease: For each Project, a lease to On Stage Theaters, Inc. in
form and substance satisfactory to Lender.
OSE: On Stage Entertainment, Inc.
Permitted Exceptions: Those matters listed in Exhibit B hereto to which
the respective interests of each Borrower in the respective Real Property
may be subject and any such other title exceptions or objections, if any,
as Lender, or its counsel, may approve in advance in writing.
Person: Any person or entity, including an individual, trustee,
corporation, partnership, trust, limited liability company, unincorporated
organization, governmental agency or otherwise.
Personal Property: All goods, materials, supplies, chattels, furniture,
fixtures, equipment and machinery now or later to be attached to, placed
in or on, or used in connection with the use, enjoyment, occupancy or
operation of all or any part of the Land and Improvements, whether stored
on the Land or elsewhere, including all costumes, props, sets, stage
lighting, sound equipment, tables, chairs, plates, silverware, glasses,
mugs, cups, serving bowls, kitchen equipment, bar equipment, inventory and
articles of personal property and accessions thereof and renewals,
replacements thereof and substitutions therefor.
Project: The Land, Improvements and Personal Property associated with each
separate real property described in Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-5.
Rating Agency: Each of Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff and
▇▇▇▇▇▇ Credit Rating Co. and Fitch Investors Service, L.P., or any other
nationally-recognized credit rating agency which has been approved by
Lender.
Real Property: That portion of a Project constituting real property
(including that portion of the Land in which a Borrower has a leasehold
estate).
Secondary Market Transaction: The meaning set forth in Section 10.14.
Servicer: The entity, if any, selected by Lender to service the Loans.
Survey: Each certain ALTA/ACSM survey of the Land and Improvements
associated with a given Project.
Term: The term of the Loans.
Title Insurer: First American Title Insurance Company, Commonwealth Land
Title Insurance Company, or for each Project such other title insurance
company licensed in the State where the Project is located as may be
approved by Lender in connection with the Loan.
Warrant Agreement: That certain Warrant Agreement dated March 11, 1998
between Lender and OSE.
Defined terms may be used in the singular or the plural. When used in the
singular preceded by "a", "an", or "any", such term shall be taken to indicate
one or more members of the relevant class. When used in the plural, such term
shall be taken to indicate all members of the relevant class.
2. TERMS OF LOAN AND DOCUMENTS.
2.1 Agreement to Borrow and Lend. Subject to all of the terms, provisions
and conditions set forth in this Agreement, Lender agrees to make and
each Borrower agrees to accept the applicable Loan described in the
Recitals of this Agreement. Each Borrower agrees to pay all
indebtedness evidenced and secured by the Loan Documents for the Loan
to such Borrower in accordance with the terms thereof.
2.2 Loan Documents . In consideration of Lender's entry into this
Agreement and Lender's agreement to make the Loans, Borrowers have
executed and delivered or agree that they will, in sufficient time
for review by Lender and its counsel prior to the Loan Opening Date,
execute and deliver or cause to be executed and delivered to Lender
the following documents and instruments in form and substance
acceptable to Lender:
(a) A promissory note payable to the order of Lender in the following
original principal amounts:
Borrower Loan Amount
------------------------------------------- -----------
King Henry's Inc. $ 5,000,000
Fort Liberty, Inc. $ 6,600,000
Wild Bills California, Inc. $ 900,000
On Stage Theaters North Myrtle Beach, Inc. $ 25,000
On Stage Theaters Surfside Beach, Inc. $ 1,075,000
Total of Loans: $13,600,000
(b) A first mortgage or deed of trust, security agreement and fixture
filing on Borrower's fee or leasehold, as applicable, estate in
the property securing the applicable Loan, subject only to the
Permitted Exceptions;
(c) An assignment of leases and rents that together provide for the
assignment to Lender of all rents and all leases, licenses,
concessions and other similar agreements relating to or connected
with the Project, each of which shall be a present first priority
absolute assignment of all present and future leases of all or
any part of the Project described therein, all lease guarantees
and all rents and other sums payable thereunder (provided the
applicable Borrower may collect and retain rents until an Event
of Default has occurred);
(d) A security agreement granting Lender a security interest in all
personal property, tangible and intangible, owned or hereafter
acquired by the applicable Borrower including bank accounts,
accounts receivable, all impound or reserve accounts required in
the Loan Documents, and all books, records, computer tapes, discs
and memory storage facilities, information stored by electronic
media, trademarks, tradenames and other intangible property,
which agreement may be combined with or incorporated into the
Deed of Trust or Mortgage;
(e) Uniform Commercial Code financing statements, in duplicate,
executed by the applicable Borrower as debtor with respect to all
of the Personal Property;
(f) The Blazing Piano's Security Agreement, along with uniform
commercial code financing statement(s) with respect to the
property described therein;
(g) An assignment to Lender of all of the right, title and interest
of such Borrower in and to all agreements and other documents
relating to the ownership, development, operation, construction,
or use of the Project, including any management agreements,
franchise agreements, reservation agreements, concession
agreements, contracts, leases, licenses, warranties and
guaranties relating to such Project, together with consents
thereto from those third parties to such agreements as Lender may
require;
(h) An indemnity agreement with respect to certain matters including
environmental covenants;
(i) A repayment guaranty executed by On Stage Entertainment, Inc. and
each other Borrower;
(j) Any other documents required by this Agreement; and
(k) Such other papers and documents as Lender may reasonably require.
2.3 2.3 Terms of the Loans. The Loans will bear interest for the period
and at the rate set forth in the Notes. The unpaid principal balance,
all accrued and unpaid interest and all other sums due and payable
under the Notes or other Loan Documents, if not sooner paid, shall be
paid in full at Loan Maturity.
2.4 Prepayments . No Borrower shall have the right to make prepayments of
the Loan in whole or in part except in accordance with the terms of
the Notes.
2.5 Sources and Uses. Each Borrower shall use the proceeds of the
respective Loan solely for the purposes set forth in Exhibit C. 3.
BORROWERS' COVENANTS. Borrowers further covenant and agree with
Lender as folloBORROWERS' COVENANTS. Borrowers further covenant and
agree with Lender as follows:
3.1 Impound Accounts and Reserves. With respect to each Project, the
Borrower shall deposit for the benefit of Lender into separate
interest-bearing accounts at a financial institution selected by
Lender (collectively, the "Reserves"):
3.1.1 Impound Account. On the first day of each calendar month, a sum equal
to one twelfth (1/12) of the amount estimated by Lender or its
Servicer to be required to pay, at least thirty (30) days prior to
their respective due dates, annual taxes, assessments, ground rent
and insurance premiums (for any Policy if the premiums therefor are
not paid on a monthly basis) for each Project (the "Impound
Account"). On the Loan Opening Date, Such Borrower shall make an
initial deposit of a sum equal to one-twelfth (1/12) of the yearly
property taxes and assessments plus a sum equal to one-twelfth (1/12)
of the annual insurance premiums (for any Policy if the premiums
therefor are not paid on a monthly basis), each as estimated by
Lender, multiplied by the number of months elapsed in the respective
billing periods. The Servicer shall manage the disbursements out of
the Impound Account.
3.1.2 Additional Security; Control by Borrower Until released as above
provided, the Reserves shall constitute additional security for the
Loan relating to such Project. Each Borrower shall, from time to
time, upon Lender's request, execute, deliver, record and furnish
such documents and notices as Lender may reasonably deem necessary or
desirable to create, perfect and maintain perfected security
interests in the Reserves. Subject to Lender's security interests
therein, until an Event of Default has occurred, the Reserves shall
remain in the name of Borrower. Upon the occurrence of an Event of
Default, Lender may require that any sums then present in any Reserve
be applied to the payment of the applicable Loan in any order in its
sole discretion.
3.2 Payment of Taxes. Each Borrower shall pay all special assessments and
all real estate taxes, assessments and charges of every kind upon
such Borrower's Project before the same become delinquent; provided,
however, that such Borrower shall have the right to pay any such tax
under protest or to otherwise contest any such tax, assessment or
charge but only if (i) such contest has the effect of preventing the
collection of such taxes so contested and also prevent the
commencement of sale or foreclosure proceedings with respect to, or
forfeiture of, such Project or any part thereof or any interest
therein, (ii) such Borrower has notified Lender in writing in advance
of its intent to contest such taxes, and (iii) such Borrower has
deposited security in form and amount satisfactory to Lender, in its
sole judgment, and increases the amount of such security so deposited
promptly after Lender's request therefor. If such Borrower fails to
commence such contest or, having commenced to contest the same, and
having deposited such security required by Lender for its full
amount, Borrower shall thereafter fail to prosecute such contest
vigorously, in good faith, with due diligence and by appropriate
proceedings, or, upon adverse conclusion of any such contest, shall
fail to pay such tax, assessment or charge, Lender may at its
election (but shall not be required to), pay and discharge any such
tax, assessment or charge, and any interest or penalty thereon, and
any amounts so expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total
amount of disbursements would exceed the face amount of the
applicable Note). Lender in making any payment hereby authorized
relating to taxes and assessments, may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office
without inquiry into the accuracy of such ▇▇▇▇, statement or estimate
or into the validity of any tax, assessment, sale, forfeiture, tax
lien or title or claim thereof.
3.3 Maintenance of Insurance.
3.3.1 All Risk Insurance. Each Borrower, at its sole cost and expense, for
the mutual benefit of such Borrower and Lender, shall obtain and
maintain during the entire Term (or if later, until all amounts
payable under such Loan are paid in full) policies of insurance
against loss or damage by fire, lightning, wind and such other perils
as are included in a standard "all-risk" or "special causes of loss"
form, and against loss or damage by all other risks and hazards
covered by a standard extended coverage insurance policy including,
without limitation, riot and civil commotion, vandalism, malicious
mischief, burglary and theft. Such insurance shall be in an amount
equal to the greater of (i) the then full replacement cost of the
Improvements, without deduction for physical depreciation, and (ii)
such amount as would cause the insurer to not deem such Borrower a
co-insurer under said policies. The policies of insurance carried in
accordance with this paragraph shall be paid monthly in advance and
shall contain a "Replacement Cost Endorsement" with a waiver of
depreciation and an "Agreed Amount Endorsement". The policies shall
have a deductible no greater than $25,000 unless agreed to by Lender.
3.3.2 Additional Insurance. Each Borrower, at its sole cost and expense,
for the mutual benefit of such Borrower and Lender, shall also obtain
and maintain during the Term the following policies of insurance for
each Project:
(a) Flood insurance if any part of the applicable Project is located
in an area identified by the Federal Emergency Management Agency
as an area having special flood hazards and in which flood
insurance has been made available under the National Flood
Insurance Program in an amount at least equal to the outstanding
principal amount of the applicable Loan or the maximum limit of
coverage available with respect to the Improvements under said
Program, whichever is less.
(b) Comprehensive General Liability or Commercial General Liability
insurance, including a broad form comprehensive general liability
endorsement and coverage for broad form property damage,
contractual damages, personal injuries (including death resulting
therefrom) and a liquor liability endorsement if liquor is sold
on such Project containing minimum limits per occurrence of
$1,000,000.00 and $2,000,000.00 in the aggregate for any policy
year. In addition, at least $10,000,000.00 excess and/or umbrella
liability insurance shall be obtained and maintained for any and
all claims, including all legal liability imposed upon such
Borrower and all court costs and attorneys' fee incurred in
connection with the ownership, operation and maintenance of the
relevant Project.
(c) Rental loss and/or business interruption insurance from all
perils (including earthquake insurance if readily available and
if not unreasonable for a lender to require) for a period of 12
months in an amount equal to the estimated gross revenues from
the operations of the Project over 12 months. The amount of such
insurance shall be increased from time to time during the Term as
the annual estimate of (or the actual) gross revenue, as may be
applicable, increases.
(d) Insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment,
pressure vessels or similar apparatus now or hereafter installed
in the Improvements (without exclusion for explosions), in an
amount at least equal to the outstanding principal amount of the
relevant Note or $2,000,000.00, whichever is more.
(e) Worker's compensation insurance with respect to any employees of
such Borrower, as required by any governmental authority or
applicable Laws.
(f) During any period of renovation, repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full
insurable value of such Project against such risks (including,
without limitation, fire and extended coverage and collapse of
the Project Improvements to agreed limits) as Lender may request,
in form and substance acceptable to Lender.
(g) Earthquake insurance in an amount equal to the lesser of the
original principal balance of the relevant Loan and the maximum
amount permitted by law, if readily available and if not
unreasonable for a lender to require.
(h) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests.
3.3.3 Additional Requirements. All policies of insurance (the "Policies")
required pursuant to this Section 3.3: (i) shall be issued by
companies approved by Lender and licensed to do business in the state
where the Project is located, with a claims paying ability rating of
"BBB" or better by Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and a rating of "A:X" or better in the
current Best's Insurance Reports; (ii) shall name as additional
insureds Lender and its successors and/or assigns as their interest
may appear; (iii) shall contain a Non-Contributory Standard Mortgagee
Clause and a Lender's Loss Payable Endorsement, or their equivalents,
naming Lender as the Person to which all payments made by the
insurance company issuing the Policies shall be paid; (iv) shall
contain a waiver of subrogation against Lender; (v) shall be
maintained throughout the Term without cost to Lender; (vi) shall be
assigned and the originals delivered to Lender (including certified
copies of the Policies in effect on the date hereof within thirty
(30) days after the closing of the Loan); (vii) shall contain such
provisions as Lender deems reasonably necessary or desirable to
protect its interest including, without limitation, endorsements
providing that neither any Borrower, Lender nor any other Person
shall be a co-insurer under said Policies and that Lender shall
receive at least thirty (30) days prior written notice of any
modification, reduction or cancellation for any reason, including
nonpayment of premiums; and (viii) shall be satisfactory in form and
substance to Lender and shall be approved by Lender as to amounts,
form, risk coverage, deductibles, loss payees and insureds. Lender
may elect to close even though the Policies and related certificate
do not meet the requirements recited above, provided Lender may
subsequently require that duplicate original Policies meeting such
requirements be obtained and submitted to Lender within 30 days after
written notice to Borrowers. The applicable Borrower shall pay the
premiums (except to the extent Impounds therefor have been funded and
funds in such Impounds allocable thereto have not been otherwise
applied) for such Policies (the "Insurance Premiums") as the same
become due and payable and shall furnish to Lender evidence of the
renewal of each of the Policies with receipts for the payment of the
Insurance Premiums or other evidence of such payment reasonably
satisfactory to Lender. If the applicable Borrower does not furnish
such evidence and receipts at least thirty (30) days prior to the
expiration of any Policy, then Lender may procure, but shall not be
obligated to procure, such insurance and pay the Insurance Premiums
therefor, and such Borrower shall reimburse Lender for the cost of
such Insurance Premiums promptly on demand. Within thirty (30) days
after request by Lender, such Borrower shall obtain such increases in
the amounts of coverage required hereunder as may be reasonably
requested by Lender, taking into consideration inflation, changes in
the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like.
3.4 Mechanics' Liens and Contest Thereof . Each Borrower will not suffer
or permit any mechanics' lien claims to be filed or otherwise
asserted against the Borrower's Project and will promptly discharge
the same if any claims for lien or any proceedings for the
enforcement thereof are filed or commenced; provided, however, that
such Borrower shall have the right to contest in good faith and with
due diligence the validity of any such lien or claim upon furnishing
to the Title Insurer such security or indemnity as it may require to
induce the Title Insurer to insure against all such claims, liens or
proceedings; and provided further that Lender will not be required to
make any further disbursements of the Loan proceeds unless (x) all
mechanics' lien claims shown by any title insurance commitments or
interim binders or certifications, and all stop notices delivered to
it with respect to the Loan, have been released or insured against by
the Title Insurer or (y) such Borrower shall have provided Lender
with such other security with respect to such claim or stop notice as
may be acceptable to Lender, in its sole discretion. Such Borrower
shall properly post, deliver to Lender and (if legally required)
record notices of nonresponsibility in appropriate form with respect
to any contemplated work of improvement relating to the Borrower's
Project.
3.5 Settlement of Mechanics' Lien Claims . If a Borrower shall fail
promptly to discharge any mechanics' lien claim filed or otherwise
asserted or to contest any such claims and give security or indemnity
in the manner provided in Section 3.4 hereof (except for mechanics'
lien claims of less than $10,000 for which no proceedings have
commenced which could lead to foreclosure of the lien), or, having
commenced to contest the same, and having given such security or
indemnity, shall thereafter fail to prosecute such contest
vigorously, in good faith and with due diligence and by appropriate
proceeding, or fail to maintain such indemnity or security so
required by the Title Insurer for its full amount, or, upon adverse
conclusion of any such contest, shall fail to cause any judgment or
decree to be satisfied and lien to be promptly released, then, and in
any such event, Lender may, at its election (but shall not be
required to) and in addition to its remedies set forth in Section 8
(i) procure the release and discharge of any such claim and any
judgment or decree thereon, without inquiring into or investigating
the amount, validity or enforceability of such lien or claim and (ii)
effect any settlement or compromise of the same, or may furnish such
security or indemnity to the Title Insurer, and any amounts so
expended by Lender, including premiums paid or security furnished in
connection with the issuance of any surety company bonds, shall be
deemed to constitute disbursements of the Loan proceeds hereunder
(even if the total amount of disbursements would exceed the face
amount of the Note).
3.6 Maintenance, Repair and Restoration of Improvements . Each Borrower
shall (i) promptly repair, restore or rebuild any of such Borrower's
Improvements which may become damaged or be destroyed; and (ii) keep
such Improvements and each portion or component thereof in good
condition and repair, without waste. Notwithstanding (i) in the
preceding sentence, in the event of condemnation of or damage or
destruction to a Project for which the repair or restoration will
exceed 75% of the original principal amount of the applicable Loan,
based on reasonable and detailed estimates, the applicable Borrower
may elect to prepay the relevant Loan in full, provided the
applicable Deed of Trust or Mortgage shall remain in place in order
to secure the Guarantee executed by such Borrower.
3.7 Leases and Lease Reports . (i) No Borrower shall enter into any new
lease of space in the Borrower's Project without Lender's prior
written consent, except for leases of premises at Fort Liberty (other
than the On Stage Lease) at market value entered into with bona fide
third parties for a term not to exceed five years on a form
previously approved in writing by Lender; (ii) no Borrower shall
modify, amend, waive any material provision of, terminate or cancel
(a) any On Stage Lease, or (b) any existing leases of space in the
applicable Project that would cause the term of any lease to exceed
five years or the rentable payable thereunder to be other than market
rates without the prior written consent of Lender (and the applicable
Borrower shall be required at Lender's election to use its reasonable
best efforts to cause each lessee to execute estoppel certificates
and subordination, non-disturbance and attornment agreements in form
and substance satisfactory to Lender); and (c) if there are any
leases of space in such Project generating or expected to generate
annual rents of $60,000 or more, within fifteen (15) days following
the end of each month, such Borrower shall deliver to Lender a report
showing the status of such leases in the Project as of the end of
such month certified by such Borrower. Such report shall include
information on the amount of space covered by any letters of intent,
leases out for execution, and fully executed leases; the rental under
each lease agreement or proposed lease agreement; the term of each
lease agreement; and a summary of any terms which vary from the
standard form of lease previously approved by Lender.
3.8 Compliance With Laws . Each Borrower shall promptly comply with all
applicable Laws and all requirements of any Governmental Authority
having jurisdiction over such Borrower or the applicable Project, and
shall take all actions necessary to bring such Project into material
compliance with all applicable Laws, including without limitation all
Building Laws (whether now existing or hereafter enacted).
3.9 Alterations . Without the prior written consent of Lender, no
Borrower shall make any material alterations to the Borrower's
Project other than those that both (i) do not affect any structural
component, element or aspect of the Project and (ii) do not cost in
any 24 month period in excess of $50,000 in each case or $100,000 in
the aggregate (other than completion of tenant work required in
accordance with the Fort Liberty Tenant Leases entered into in
accordance with the terms of this Agreement).
3.10 Personal Property . (i) All of a Borrower's Personal Property,
fixtures, furnishings, furniture, attachments, equipment, books and
records located on or used or useful in connection with the
Borrower's Project or its operation, shall always be located at such
Project or at the corporate offices of OSE in Las Vegas, Nevada, or
the corporate offices of On Stage Theaters, Inc. in Florida, and
shall also be kept free and clear of all chattel mortgages,
conditional vendor's liens and all other liens, encumbrances and
security interests of any kind whatever, (ii) such Borrower will be
the absolute owner of said Personal Property, fixtures, attachments,
equipment, books and records, except for additional equipment
acquired after the date hereof which a Borrower elects to lease up to
a maximum value of $50,000 per Project, and (iii) such Borrower
shall, from time to time, furnish Lender with evidence of such
ownership satisfactory to Lender, including searches of applicable
public records. Notwithstanding (i) above, Personal Property used in
theater productions may be moved to and used in other Projects or
venues owned by On Stage Theaters, Inc. or OSE, provided such
relocated Personal Property shall be replaced by other personal
property of equal or greater value. Notwithstanding item (ii) above,
a Borrower may lease Personal Property at a Project having an
aggregate value in excess of $50,000 if at all times during the term
of such lease such Borrower also owns Personal Property located at
that Project and in good order and repair having a value at least
equal to the value of the Personal Property located at that Project
on the date hereof.
3.11 Inspection by Lender; Appraisals. Each Borrower will cooperate (and
will cause the managing agent to cooperate) with Lender in arranging
for inspections of such Borrower's Project from time to time by
Lender and its agents and representatives. Within thirty (30) days
after written request, such Borrower will cause an Appraisal to be
performed and the report thereof submitted to Lender; provided that
one time per 12 month period per Project Lender shall have the right
to order independently an Appraisal and the cost thereof shall be
paid by such Borrower within twenty (20) days after presentation of
written invoice.
3.12 Financial Reporting.
3.12.1 Books and Records. Each Borrower will keep and maintain or will cause
to be kept and maintained on a fiscal year basis, in accordance with
GAAP (or such other accounting basis reasonably acceptable to Lender)
consistently applied, proper and accurate books, records and accounts
reflecting all of the financial affairs of such Borrower and all
items of income and expense in connection with the operation of the
applicable Project or in connection with any services, equipment or
furnishings provided in connection with the operation thereof. Lender
shall have the right from time to time at all times during normal
business hours upon reasonable notice to examine such books, records
and accounts at the office of any Borrower or other person
maintaining such books, records and accounts and to make such copies
or extracts thereof as Lender shall desire. After the occurrence of
an Event of Default, the Borrower which is in default shall pay any
costs and expenses incurred by Lender to examine such Borrower's
books and accounting and other records with respect to the Project,
as Lender shall determine to be necessary or appropriate in the
protection of Lender's interest.
3.12.2 Annual Statements. Each Borrower will cause OSE to furnish to Lender,
within thirty (30) business days after Lender's request therefor (but
no sooner than March 31 for the year ending the preceding December
31), with a complete copy of OSE's most recent consolidated financial
statements, including a consolidating schedule setting forth such
Borrower's financial condition, audited and certified without
qualification by a nationally-recognized independent certified public
accountant that is reasonably acceptable to Lender (in accordance
with GAAP except as disclosed and in accordance with generally
accepted auditing standards consistently applied as in effect as of
the end of such fiscal year) containing (for OSE and, in such
consolidating schedule, for such Borrower) a statement of revenues
and expenses, a statement of assets and liabilities and a statement
of OSE's and such Borrower's equity. BDO ▇▇▇▇▇▇▇ is acceptable to
Lender. Each such statement shall indicate compliance with any
financial covenant relating to OSE and such Borrower contained in the
Loan Documents. Together with such financial statements, such
Borrower shall furnish to Lender an officer's certificate certifying
as of the date thereof (A) that the annual financial statements
accurately represent the results of operations and financial
condition of such entity all in accordance with GAAP (except as
disclosed) and in accordance with generally accepted auditing
standards consistently applied, and (B) whether there exists an event
or circumstance which constitutes, or which upon notice or lapse of
time or both would constitute, an Event of Default under this
Agreement, the applicable Note or any other Loan Document executed
and delivered by such Borrower or OSE and, if such event or
circumstance exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy such event or
circumstances.
3.12.3 Quarterly Statements. Each Borrower will furnish Lender quarterly,
within forty-five (45) days following the end of each quarter, with a
complete copy of OSE's Form 10-Q for such quarter as filed with the
Securities and Exchange Commission, including a consolidating
schedule setting forth such Borrower's financial condition,
unaudited, containing a statement of revenues and expenses for the
Project. Together with such consolidating schedule, such Borrower
shall furnish to Lender an officer's certificate certifying as of the
date thereof that such consolidating schedule accurately represents
the results of operation of the applicable Project for such quarter.
3.12.4 Other Information Requested by Lender. Each Borrower shall furnish to
Lender, within thirty (30) days after Lender's request therefor, such
further detailed information with respect to the operation of the
Borrower's Project and the financial affairs of such Borrower as may
be reasonably requested by Lender.
3.13 Documents of Further Assurance . Each Borrower shall, from time to
time, upon Lender's request, execute, deliver, record and furnish
such documents as Lender may reasonably deem necessary or desirable
to (i) perfect and maintain perfected as valid liens upon the
Borrower's Project, the liens granted by such Borrower to Lender
under the Deed of Trust or Mortgage and the collateral assignments
and other security interests under the other Loan Documents as
contemplated by this Agreement, (ii) correct any errors of a
typographical nature or inconsistencies which may be contained in any
of the Loan Documents, and (iii) consummate fully the transactions
contemplated under this Agreement.
3.14 Furnishing Reports. Each Borrower shall provide Lender promptly after
receipt with copies of all material inspections, reports, test
results and other information received by such Borrower from time to
time from its employees, agents, representatives, architects and
engineers, which in any way relate to its Project, any part thereof
or the businesses conducted by such Borrower or any Affiliated Party
therein.
3.15 Operation of Project and Zoning . As long as any portion of a Loan
remains outstanding, the applicable Borrower shall maintain and
operate its Project in a first class manner. Each Borrower shall
fully and faithfully perform all of its covenants, agreements and
obligations under each of the leases of space in the Borrower's
Project and each contract relating to operation as a dinner theater,
piano bar or restaurant, as applicable. No Borrower shall initiate or
acquiesce in a zoning variation or reclassification without Lender's
consent.
3.16 Intentionally Deleted .
3.17 Furnishing Notices . Each Borrower shall deliver to Lender copies of
all material notices received or given by such Borrower (or its
agents or representatives) in connection with the Borrower's Project.
3.18 Indemnification . Each Borrower shall indemnify, defend and hold
harmless Lender, and its officers, directors, employees,
shareholders, advisers, and agents (collectively, "Indemnified
Parties") from and against all claims, injury, damage, loss, costs
(including attorneys' fees and costs) and liability of any and every
kind incurred by Indemnified Parties by reason of (i) the operation
or maintenance of the Borrower's Project or any construction or
business conducted at such Project; (ii) the payment of any and all
brokerage commissions or fees of any kind with respect to the
applicable Loan, and for any and all legal or other fees or expenses
paid or incurred by Lender in connection with any claims for such
commissions or fees; (iii) any and all other action or inaction by,
or matter which is the responsibility of, or is otherwise related to,
such Borrower; (iv) the transfer of the applicable Project to
Borrower on the date hereof, and any failure to obtain any consent or
approval required therefor from any Person; and (v) the breach of any
representation or warranty or failure to fulfill any of such
Borrower's obligations under this Agreement or any other Loan
Document. The foregoing indemnity shall include the cost of all
alterations, repairs and replacements to the applicable Project
(including without limitation architectural, engineering, legal and
accounting costs), all fines, fees and penalties, and all legal and
other expenses (including attorneys' fees), incurred in connection
with such Project being in violation of Laws and for the cost of
collection of the sums due under this indemnity, whether or not
Borrower is in possession of such Project. Notwithstanding the
preceding, however, no Borrower shall be obligated to indemnify
Indemnified Parties for injuries to natural sed by the gross
negligence or willful misconduct of Lender.
3.19 Corporate Documents; Redemption; Capital Structure . Without the
prior written consent of Lender, no Borrower shall:
(a) Permit or suffer any amendment or modification of its bylaws,
articles, shareholder's agreement or other organizational
documents, and no Borrower shall permit or suffer the admission
of any new shareholder, except as permitted pursuant to Section
6.2;
(b) Redeem any stock of such Borrower;
(c) Issue any shares of common stock of such Borrower except in
exchange for the cash payment of the fair market value of such
stock; or
(d) Issue any preferred shares of stock or otherwise change its
capital structure.
3.20 Replacement or Division of Note .
3.20.1 Each Borrower shall, if the applicable Note is mutilated, destroyed,
lost, or stolen, promptly deliver to Lender, in substitution
therefor, a new promissory note containing the same terms and
conditions as the applicable Note with a notation thereon of the
unpaid principal accrued and unpaid interest. In the case of the
replacement of a lost Note, Lender shall indemnify the applicable
Borrower for damages arising out of a claim for payment under the
lost Note (as opposed to the replacement Note).
3.20.2 At Lender's election, each Borrower shall execute two or more
promissory notes replacing the applicable Note and ancillary Loan
Documents, provided the principal balance, and payment terms (in the
aggregate) shall not be changed, provided that different notes may
have different interest rates provided that the aggregate interest on
the aggregate principal balance shall not be in excess of the
interest rate provided under the relevant Note.
3.21 Publicity . During the term of the Loan, Lender may issue or publish
releases or announcements stating that the financing for one or more
Projects is being provided by Lender to one or more Borrowers, and
each Borrower hereby consents thereto.
3.22 Access to Leased Premises and Right to Cure Defaults Under the Ground
Lease and Easement Agreements . In the event of a material default by
a Borrower under a ground lease or easement agreement, each Borrower
agrees that Lender shall have the right (but not the obligation), to
cure or cause the cure of such default and, in the event the cure of
such default by its nature requires that Lender enter upon and/or
take possession of the demised premises, each Borrower hereby agrees
that Lender may, and each Borrower hereby grants Lender the right to,
enter in and upon and take possession of the relevant Real Property
to the extent necessary to cause the cure of such default; provided,
however, Lender shall not be entitled to exercise its rights under
this Section until the expiration of applicable grace periods under
such agreements, so long as Lender shall be afforded an independent
cure right and grace period of not less than 30 days (subject to
extension if Lender commences such cure within such 30 day cure
period and diligently prosecutes the same to completion) following
the expiration of applicable grace periods under such agreements. Any
costs incurred by Lender in curing such default shall constitute
additional indebtedness evidenced by the Note for such Real Property
and shall be secured by the Deed of Trust or Mortgage and other Loan
Documents to the same extent and effect as if the terms and
provisions of this Agreement were set forth therein, whether or not
the aggregate of such indebtedness shall exceed the aggregate face
amount of the applicable Note.
3.23 Lender's Attorneys' Fees and Expenses . If at any time prior to
repayment of the Loan in full, Lender employs counsel for advice or
other representation (whether or not any suit has been or shall be
filed and whether or not other legal proceedings have been or shall
be instituted and, if such suit is filed or legal proceedings
instituted, through all administrative, trial, and appellate levels)
with respect to a Loan, a Project or any part thereof, this Agreement
or any of the Loan Documents, including any proposed or actual
restructuring of a Loan, or to protect, collect, lease, sell, take
possession of, or liquidate any of such Project, or to attempt to
enforce any security interest or lien on any of such Project, or to
enforce any rights of Lender or any of the relevant Borrower's
obligations hereunder or those of any other person, firm or entity
which may be obligated to Lender by virtue of this Agreement or any
other agreement, instrument or document heretofore or hereafter
delivered to Lender by or for the benefit of such Borrower, or to
analyze and respond to any request for consent or approval made by
such Borrower, then, in any such event, such Borrower shall pay upon
demand all of the reasonable attorneys' fees and expenses arising
from such services, and all expenses, costs and charges relating
thereto, and if such Borrower fails to pay such fees, costs and
expenses payment thereof by Lender shall be deemed to constitute
disbursement of additional Loan proceeds hereunder (even if the total
amount of disbursements would exceed the face amount of the
applicable Note) and shall constitute additional indebtedness of such
Borrower to Lender, payable on demand and secured by the Deed of
Trust or Mortgage and other Loan Documents.
3.24 Loan Expenses. Each Borrower agrees to pay all reasonable expenses of
or related to the applicable Loan, including all amounts payable
pursuant to Sections 3.25 and 3.26 of this Agreement, and also
including all recording charges, title insurance charges, costs of
surveys, costs for certified copies of instruments, escrow charges,
fees, expenses and charges of architectural/engineering consultants
of Lender, fees and expenses (including word processing and
photocopying expenses) of Lender's attorneys, and all costs and
expenses incurred by Lender in connection with the determination of
whether such Borrower has performed the obligations undertaken by
such Borrower under this Agreement or has satisfied any conditions
precedent to the obligations of Lender under this Agreement. Each
Borrower shall be obligated to pay, and shall pay, all such expenses,
charges, costs and fees regardless of whether the applicable Loan is
disbursed in whole or in part unless such failure to disburse is due
to Lender's wrongful failure to disburse hereunder. Any and all
advances or payments made by Lender under this Agreement from time to
time, or for fees of architectural and engineering consultants and
attorneys' fees and expenses, if any, and all other Loan expenses
shall, as and when advanced or incurred by Lender, constitute
additional indebtedness evidenced by the applicable Note and secured
by the Deed of Trust or Mortgage and the other Loan Documents. Lender
acknowledges prior receipt of $150,000 for expenses previously
incurred by Lender in originating the Original Loans, provided that
Lender's receipt of the foregoing amount shall in no way impair each
Borrower's obligation to pay any additional expenses incurred by
Lender in connection with the Original Loans.
3.25 Loan Fees . Lender acknowledges prior receipt of a loan origination
fee and, on behalf of Imperial Credit Capital, LLC, a loan
arrangement fee in the aggregate amount of Seven Hundred Thousand
Dollars ($700,000). No additional loan origination fee or loan
arrangement fee shall be payable with respect to the Subsequent Loans
(as defined in Section 11).
3.26 Deferred Maintenance 3.26 Deferred Maintenance . All deferred
maintenance listed on Schedule 3.26 attached hereto and made a part
hereof shall be completed on or before July 31, 1998.
3.27 No Additional Debt. No Borrower shall, without the prior written
consent of Lender, incur any indebtedness (whether personal or
nonrecourse, secured or unsecured) other than customary trade
payables.
3.28 Single Purpose Entity/Separateness. Each Borrower does not own and
will not own any asset or property other than (i) the applicable
Project, and (ii) incidental Personal Property necessary for the
ownership or operation of the applicable Project. Each Borrower will
not engage in any business other than the ownership, management and
operation of the applicable Project and such Borrower will continue
to conduct and operate its business (i.e., renting its Project to On
Stage Theaters, Inc. for the purpose of operating a dinner theater
live production show) as presently conducted and operated. Other than
the applicable On Stage Lease, no Borrower will enter into any
contract or agreement with any Affiliated Parties of Borrower except
if such Affiliated Parties have the requisite skills therefor, and
then only upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an
arms-length basis with third parties other than any such party. No
Borrower has made and will not make any loans or advances to any
third party (including any Affiliated Parties), and shall not acquire
obligations or securities of its Affiliated Parties. Each Borrower is
and will remain solvent, and each Borrower will pay its debts and
liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due. Each Borrower
will maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliated Parties and each
Borrower will file its own tax returns, unless such Borrower is
included within the consolidated tax returns of OSE. Each Borrower
shall maintain its books, records, resolutions and agreements as
official records. Each Borrower will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct
from ncluding any Affiliated Parties of such Borrower) shall correct
any known misunderstanding regarding its status as a separate entity,
shall conduct business in its own name, shall not identify itself or
any of its Affiliated Parties as a division or part of the other
(except as subsidiaries of OSE) and shall maintain and utilize a
separate telephone number and separate invoices and checks. Each
Borrower will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations. Neither any Borrower
nor any Affiliated Parties of any Borrower will seek the dissolution,
winding up, liquidation, consolidation or merger in whole or in part,
of such Borrower. No Borrower will commingle the funds and other
assets of such Borrower with those of any Affiliated Parties or any
other person. Each Borrower has and will maintain its assets in such
a manner that it will not be costly or difficult to segregate,
ascertain or identify its individual assets from those of any
Affiliatd Parties or any other person. Each Borrower does not and
will not hold itself out to be responsible for the debts or
obligations of any other person.
3.29 Changes in Laws Regarding Taxation. If any law is enacted or adopted
or amended after the date of this Agreement which deducts the
outstanding balance of the applicable Loan from the value of the
applicable Project for the purpose of taxation or which imposes a
tax, either directly or indirectly, on such Loan or Lender's interest
in such Project, such Borrower will pay such tax, with interest and
penalties thereon, if any. In the event Lender is advised by counsel
chosen by it that the payment of such tax or interest and penalties
by a Borrower would be unlawful or taxable to Lender or unenforceable
or provide the basis for a defense of usury, then in any such event,
Lender shall have the option, by written notice of not less than
ninety (90) days, to declare the applicable Loan immediately due and
payable.
3.30 ERISA. Each Borrower covenants and agrees that during the Term,
unless Lender shall have previously consented in writing, (a) such
Borrower will take no action that would cause it to become an
"employee benefit plan" as defined in 29 C.F.R. Section 2510.3-101,
or "assets of a governmental plan" subject to regulation under the
state statutes, and (b) such Borrower will not sell, assign or
transfer the applicable Project, or any portion thereof or interest
therein, to any transferee that does not execute and deliver to
Lender its written assumption of the obligations of this covenant.
Each Borrower further covenants and agrees to protect, defend,
indemnify and hold Lender harmless from and against all loss, cost,
damage and expense (including without limitation, all attorneys' fees
and excise taxes, costs of correcting any prohibited transaction or
obtaining an appropriate exemption) that Lender may incur as a result
of such Borrower's breach of this covenant. This covenant and
indemnity shall survive the extinguishment of the lien of the Deed of
Trust or Mortgage by foreclosure or action in lieu thereof;
furthermore, the foregoing indemnity shall supersede any limitations
on such Borrower's liability under any of the Loan Documents.
3.31 No Dividends. No Borrower shall make distributions, pay dividends or
repay loans to an Affiliated Party at any time when the Debt Service
Coverage Ratio is less than 2.0:1.
3.32 Lease Option Exercise. If the Loans have not theretofore been paid in
full, Wild Bills California, Inc. and On Stage Theaters North Myrtle
Beach, Inc. shall exercise the option to extend the term of the
California Lease and the Myrtle Beach Lease, respectively, at least
180 days prior to the last date such option may be exercised pursuant
to the California Lease and the Myrtle Beach Lease and shall provide
Lender with a copy of such exercise notice. If either of such options
has not been exercised by the date so specified as to it, Lender may
exercise such option to extend in the name of the then lessee under
the California Lease and the Myrtle Beach Lease, respectively.
3.33 On Stage Leases. Concurrently with or prior to the execution of this
Agreement, each Borrower shall enter into the On Stage Lease for such
Borrower's Project having a triple net rent of at least 150% of the
monthly payments due under the Loan relating to applicable Projects
and shall not amend, modify or terminate such Lease without Lender's
prior written consent, which may be withheld in Lender's sole and
absolute discretion.
3.34 Relocation of Drainage Easement. King Henry's, Inc. shall cooperate
with First American Title Insurance Company in relocating the
drainage easement in favor of the Florida Department of
Transportation described in Book 131, Page 313 of the Official
Records of Orange County, Florida to a location not under any
buildings, and shall use its best efforts to have such easement
relocated on or before September 30, 1998.
4. REPRESENTATIONS AND WARRANTIES. To induce Lender to execute this
Agreement and perform the obligations of Lender hereunder, Borrowers
jointly and severally hereby represent and warrant to Lender as
follows:
4.1 Organization. Each Borrower is duly organized and in good standing as
a corporation under the laws of the State of Nevada.
4.2 Title. On the Loan Opening Date and thereafter, each Borrower had and
will continue to have (with respect to the Original Loans) or will
have (with respect to the Additional Loans) good and marketable title
to the Land on which such Borrower's Project is located (or in the
case of the Wild Bills Real Property, a valid leasehold interest) and
fee simple title to the Improvements, subject only to the Permitted
Exceptions.
4.3 No Litigation. Except for claims fully covered by insurance, where
the insurance company is defending such claims and such defense is
not being provided under a reservation of rights, and except as
disclosed in writing to Lender prior to the date hereof, there is no
pending litigation (i.e., litigation which has been filed and served)
or unsatisfied judgment entered of record, or to Borrowers'
knowledge, any filed but unserved litigation or threatened
litigation, against Borrowers or any Project. No litigation or
proceedings are pending or to Borrowers' knowledge are threatened,
against any Affiliated Party (i) which might affect the validity or
priority of the lien of the Deed of Trust or Mortgage, (ii) which
might affect the ability of any Borrower or any Indemnitor to perform
their respective obligations pursuant to and as contemplated by the
terms and provisions of this Agreement and the other Loan Documents,
or (iii) which could materially affect the operations or financial
condition of any Project, Borrower, or any Affiliated Party.
4.4 No Breach. No Borrower is in breach of any obligation, nor has any
breach of any obligation of any Borrower been alleged (i) which might
affect the validity or priority of the lien of the Deed of Trust or
Mortgage, (ii) which might affect the ability of any Borrower or any
Indemnitor to perform their respective obligations pursuant to and as
contemplated by the terms and provisions of this Agreement and the
other Loan Documents, or (iii) which could materially affect the
operations or financial condition of any Project, Borrower, or any
Affiliated Party.
4.5 Due Authorization. The execution and delivery of the Loan Documents
and all other documents executed or delivered by or on behalf of each
Borrower and pertaining to the Loan have been duly authorized or
approved by such Borrower and when executed and delivered by such
Borrower or when caused to be executed and delivered on behalf of
such Borrower, will constitute the legal, valid and binding
obligations of such Borrower, enforceable in accordance with their
respective terms except as limited by bankruptcy, insolvency, or
other laws of general application relating to the enforcement of
creditor's rights, and the payment or performance thereof will be
subject to no offsets, claims or defenses of any kind or nature
whatsoever.
4.6 Breach of Laws or Agreements. The execution, delivery and performance
of this Agreement and the other Loan Documents have not constituted
(and will not, upon the giving of notice or lapse of time or both,
constitute) a breach or default under any other agreement to which
any Borrower or Indemnitor is a party or may be bound or affected, or
a violation of any Law which may affect any Project, any part
thereof, any interest therein, or the use thereof. No notice to,
approval or consent from any party is required in connection with the
execution and delivery by any Borrower or any Indemnitor of the Loan
Documents or in connection with the performance or consummation of
any of the transactions contemplated thereby, or if required, such
consent or approval has been obtained.
4.7 Leases. Neither any Borrower or its respective agents have entered
into any leases or other arrangements for occupancy of space within
the applicable Project, except for the On Stage Leases for the Fort
Liberty, King Henry's and Wild Bills California Properties, the
Myrtle Beach Sublease and the Fort Liberty Tenant Leases shown on
Exhibit D. The On Stage Leases for the Fort Liberty, King Henry's and
Wild Bills California Properties, the Myrtle Beach Sublease and each
lease listed on Exhibit D are in full force and effect, and there is
no default, breach or violation existing thereunder by any party
thereto and no event has occurred that, with the passage of time or
the giving of notice, or both, would constitute a default, breach,
violation by and party thereunder.
4.8 Condemnation. (i) No condemnation of any portion of any Project, (ii)
no condemnation or relocation of any roadways abutting any Project,
and (iii) no denial of access to any Project from any point of access
to such Project, has commenced or, to such Borrower's knowledge, is
contemplated by any Governmental Authority.
4.9 Condition of Improvements. Except as disclosed to Lender in writing
prior to the date of this Agreement, to each Borrower's knowledge,
the foundations and structure of such Borrower's Improvements are
structurally sound and the various mechanical systems have adequate
capacities and are in good working condition. Such Improvements were
built in substantial compliance with applicable plans and
specifications furnished to the Lender's engineering consultant, and
such Improvements are in full compliance with all applicable Building
Laws. Certificates of occupancy with respect to such Improvements and
each portion thereof, and any other certificates which may be
required to evidence compliance with building codes and permits and
approval for full occupancy and use of such Improvements and all
installations therein have been issued by all appropriate
authorities. Each Borrower has no knowledge of required capital
expenditures or deferred maintenance other than those that would be
normally expected for a building of similar age and type. No Borrower
has received any notice of violation at any Project of any Building
Law.
4.10 Mechanic's Liens. No mechanic's liens claims are currently pending or
to any Borrower's knowledge threatened against any Borrower's
Project.
4.11 Information Correct. All financial statements furnished to Lender by
any Borrower or any Affiliated Party fairly present the financial
condition of such Persons and were prepared in accordance with a
method of preparation approved by Lender, consistently applied, and
all other information previously furnished by any Borrower or any
Affiliated Party to Lender in connection with the Loan or the
financial capacity of Borrowers and/or Indemnitor are true, complete
and correct in all respects except as otherwise disclosed to Lender
in writing and do not fail to state any material fact necessary to
make the statements made not misleading. Neither any Borrower nor
Indemnitor has misstated or failed to disclose to Lender any material
fact relating to: (i) the condition, use or operation of any Project,
(ii) the status or any material condition of any tenant or lease at
any Project known to it, (iii) any Borrower, (iv) Indemnitor; or (v)
the litigation disclosure provided by any Borrower and Indemnitor,
except as disclosed in writing to Lender prior to the date hereof.
All projections of economic performance of the Projects have been
prepared by Borrowers based on information believed accurate from the
current owners of such Projects and are not intentionally misleading.
4.12 Solvency. Neither any Borrower nor Indemnitor is (a) currently
insolvent on a balance sheet basis, or (b) currently unable to pay
its debts as they come due; and no bankruptcy or receivership
proceedings are contemplated or pending as to either of them.
4.13 Zoning. The use of each Project (including contemplated accessory
uses) does not violate (i) any Law (including subdivision, zoning,
building, environmental protection and wetlands protection Laws), or
(ii) any codes, covenants or restrictions of record, or any agreement
affecting such Project or any part thereof. Without limiting the
generality of the foregoing, all consents, licenses and permits and
all other authorizations or approvals (collectively, "Governmental
Approvals") required for the operation of such Project as a dinner
theater-live production show (and the balance of the Fort Liberty
Project as a retail center) (collectively, the "Licenses") have been
obtained and are in full force and effect (including without
limitation any applicable liquor license.
4.14 Utilities. Each Project has adequate water, gas and electrical
supply, storm and sanitary sewerage facilities, other required public
utilities, fire and police protection, and means of appropriate
access between such Project and public highways.
4.15 Brokerage Fees. Except as previously disclosed and agreed to by
Lender in writing, and/or to Imperial Capital, LLC no brokerage fees
or commissions are payable by or to any person in connection with
this Agreement or any Loan to be disbursed hereunder.
4.16 Encroachments. Except as disclosed in any Survey, no building or
other improvement in any Project encroaches upon any building line,
setback line, side yard line, or any recorded or visible easement (or
other easement of which any Borrower has knowledge of with respect to
such Project) and no neighboring buildings or improvements encroach
upon the Land related to such Project.
4.17 Separate Parcel. Each Project's Real Property is taxed separately
without regard to any other property and for all purposes such Real
Property may be mortgaged, conveyed, and otherwise dealt with as an
independent parcel.
4.18 No Default. No Default or Event of Default has occurred and is
continuing.
4.19 FIRPTA. No Borrower is a "foreign person" within the meaning of
Sections 1445 or 7701 of the Internal Revenue Code.
4.20 RICO. No Borrower has been charged with nor, to its knowledge, is it
under investigation for, possible violations of the Racketeer
Influenced and Corrupt Organizations Act ("RICO"), the Continuing
Criminal Enterprise Act ("CCE"), the Controlled Substance Act of
1978, or similar laws providing for the possible forfeiture of any of
its respective assets or properties.
4.21 No Casualty. No part of any Project has been damaged by fire or other
casualty except as disclosed in writing to Lender.
4.22 Liabilities. No Borrower has liability, contingent or otherwise,
which is not disclosed in the financial statements provided to
Lender.
4.23 Truth of Recitals. All statements set forth in the Recitals are true
and correct.
4.24 No Breach. Neither the execution and delivery of the Loan Documents,
each Borrower's performance thereunder, the recordation of any of the
Mortgages or Deed of Trust, nor the exercise of any remedies by
Lender, will adversely affect any Borrower's rights under any
franchise agreement or any leases.
4.25 Liquor License. A validly issued liquor license is in effect for the
each Project's operations, allowing on-site consumption of all lawful
alcoholic beverages. Each license is in the name of the applicable
Borrower (or leased by the applicable Borrower from the former owner
of the Projects) and all required fees have been paid in connection
therewith.
4.26 California Ground Lease.
4.26.1 The California Lease or a memorandum thereof has been duly recorded,
the California Lease permits the interest of the ground lessee
thereunder to be encumbered by the Deed of Trust, and there has not
been a material change in the terms of the California Lease since its
recordation.
4.26.2 Except for the Permitted Exceptions, Wild Bills California, Inc.'s
interest in the California Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, the Deed of
Trust.
4.26.3 Wild Bills California, Inc.'s interest in the California Lease is
assignable to Lender upon notice to, but without the consent of,
Ground Lessor (or, if any such consent is required, it has been
obtained on or prior to the date hereof) and it is further assignable
by Lender and its successors and assigns upon notice to, but without
a need to obtain the consent of, Ground Lessor.
4.26.4 The California Lease is in full force and effect and no default has
occurred under the California Lease and no event has occurred and
there is no existing condition which, but for the passage of time or
the giving of notice, would result in a default under the terms of
the California Lease.
4.26.5 The California Lease requires Ground Lessor to give notice of any
default by Wild Bills California, Inc. to any holder of a lien
against or an assignment of the California Lease, notice of which has
been served upon the lessor (each such party being referred to herein
as a "Leasehold Mortgagee"); or the California Lease provides that
notice of termination given under the California Lease is not
effective against any Leasehold Mortgagee unless a copy of the notice
has been delivered to such Leasehold Mortgagee in the manner
described in the California Lease.
4.26.6 The California Lease permits a Leasehold Mortgagee an opportunity
(including, where necessary, sufficient time to gain possession of
the interest of Wild Bills California, Inc. under the California
Lease) to cure any default under the California Lease, which is
curable after the receipt of notice of any the default before Ground
Lessor may terminate the California Lease. 4.26.7 The California
Lease has a term which, with options to renew, extends not less than
10 years beyond the Maturity Date.
4.26.8 The California Lease requires Ground Lessor to enter into a new lease
with a Leasehold Mortgagee upon termination of the California Lease
for any reason, including rejection of the California Lease in a
bankruptcy proceeding.
4.26.9 Under the terms of the California Lease any insurance proceeds
related to Wild Bills California, Inc.'s Project will be applied
either to the repair or restoration of all or part of such Project,
or to the payment of the outstanding principal balance of the
applicable Loan together with any accrued interest thereon.
4.26.10 The California Lease does not impose any material restrictions on
subletting of portions of Wild Bills California, Inc.'s Improvements.
5. CASUALTY AND CONDEMNATION.
5.1 Borrower's Obligation to Restore. If any Project shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a
"Casualty"), the relevant Borrower shall give prompt notice thereof
to Lender. Following the occurrence of a Casualty, such Borrower,
regardless of whether insurance proceeds are available, shall
promptly proceed to restore, repair, replace or rebuild the same to
be of at least equal value and of substantially the same character as
prior to such damage or destruction, all to be effected in accordance
with applicable law. The expenses incurred by Lender in the
adjustment and collection of insurance proceeds shall become part of
the amounts owing in connection with the respective Loan and shall be
secured by the Deed of Trust or Mortgage and shall be reimbursed to
Lender upon demand.
5.2 Insured Losses; Condemnation Proceeds. In case of loss or damages
covered by any of the Policies or a condemnation or taking under
power of eminent domain of any portion of or interest in the Project,
the following provisions shall apply:
5.2.1 In the event of a Casualty or condemnation proceeding that does not
exceed twenty-five percent (25%) of the original principal amount of
the Note signed by Wild Bills California, Inc., twenty percent (20%)
of the original principal amount of the Notes signed by other
Borrowers, the applicable Borrower may settle and adjust any claim
without the consent of Lender and agree with the insurance company or
companies on the amount to be paid upon the loss; provided that such
adjustment is carried out in a competent and timely manner. In such
case, such Borrower is hereby authorized to collect and receipt for
any such condemnation or insurance proceeds.
5.2.2 In the event a Casualty or condemnation proceeding shall exceed
twenty-five percent (25%) of the original principal amount of the
Note signed by Wild Bills California, Inc., twenty percent (20%) of
the original principal amount of the Notes signed by other Borrowers,
then and in that event, Lender may settle and adjust any claim
without the consent of the applicable Borrower and agree with the
insurance company or companies on the amount to be paid on the loss
and the proceeds of any such policy shall be due and payable solely
to Lender and held in escrow by Lender in accordance with the terms
of this Agreement.
5.2.3 In the event of a Casualty or condemnation proceeding where the loss
is in an aggregate amount less than thirty-three and one-third (33
1/3%) of the original principal balance of the Note signed by Wild
Bills California, Inc. and twenty-five percent (25%) of the original
principal balance of the other Notes, and if, in the reasonable
judgment of Lender, the applicable Project can be restored within six
(6) months and prior to maturity of such Note to an economic unit not
less valuable (including an assessment of the impact of the
termination of any Leases due to such Casualty or condemnation) and
not less useful than the same was prior to the Casualty or
condemnation, and after such restoration will adequately secure the
outstanding balance of the applicable Loan, and if the applicable
Borrower has deposited with Lender in an amount equal to the
difference between the total cost of restoration/rebuild and net
dollar proceeds actually received by Lender, and if no Event of
Default (as hereinafter defined) shall have occurred and be then
continuing, the proceeds (after reimbursement of any expenses
incurred by Lender and after application of any funds deposited by
such Borrower with Lender) shall be applied to reimburse the
applicable Borrower for the cost of restoring, repairing, replacing
or rebuilding such Project or part thereof subject to the Casualty,
in the manner set forth below. Each Borrower hereby covenants and
agrees to commence and diligently to prosecute such restoring,
repairing, replacing or rebuilding; provided always, that such
Borrower shall pay all costs (and if required by Lender, such
Borrower shall deposit the total thereof with Lender in advance), as
estimated by Lender, of completing such restoration, repair,
replacement or rebuilding in excess of the net proceeds made
available pursuant to the terms hereof.
5.2.4 Except as provided above or in Section 3.6, the proceeds collected
upon any Casualty or condemnation shall, at the option of Lender in
its sole discretion, be applied to the payment of the applicable Loan
or applied to reimburse such Borrower for the cost of restoring,
repairing, replacing or rebuilding such Project or part thereof
subject to the Casualty or condemnation, in the manner set forth
below. Any such application to the relevant Loan shall be without any
prepayment consideration except that if an Event of Default, or an
event which with notice and/or the passage of time would constitute
an Event of Default, has occurred then the such Borrower shall pay to
Lender any prepayment penalty provided for in the relevant Note. Any
such application to the relevant Loan shall (A) be applied to those
payments of principal and interest last due under such Note but shall
not postpone any payments otherwise required pursuant to such Note
other than such last due payments and (B) cause such Note to be
re-amortized in accordance with its terms and conditions.
5.2.5 In the event a Borrower is entitled to reimbursement out of insurance
or condemnation proceeds held by Lender, such proceeds shall be
disbursed from time to time upon Lender being furnished with (i)
evidence satisfactory to it of the estimated cost of completion of
the restoration, repair, replacement and rebuilding, (ii) funds or,
at Lender's option, assurances satisfactory to Lender that such funds
are available, sufficient in addition to the insurance or
condemnation proceeds to complete the proposed restoration, repair,
replacement and rebuilding, and (iii) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Lender may reasonably require and
approve. Lender may, in any event, require that all plans and
specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Lender prior to
commencement of work. No payment made prior to the final completion
of the restoration, repair, replacement and rebuilding shall exceed
ninety percent (90%) of the value of the work performed from time to
time; funds other than proceeds of insurance or condemnation shall be
disbursed prior to disbursement of such proceeds; and at all times,
the undisbursed balance of such proceeds remaining in the hands of
Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of such
Borrower for that purpose, shall be at least sufficient in the
reasonable judgment of Lender to pay for the cost of completion of
the restoration, repair, replacement or rebuilding, free and clear of
all liens or claims for lien. Any surplus which may remain out of
insurance or condemnation proceeds held by Lender after payment of
such costs of restoration, repair, replacement or rebuilding shall be
paid to any party entitled thereto.
6. ASSIGNMENTS.
6.1 Lender's Right to Assign 6.1 Lender's Right to Assign . Lender shall
have the right to assign, transfer, sell, negotiate, pledge or
otherwise hypothecate this Agreement and any of its rights and
security hereunder, including any Note, Deed of Trust, Mortgage, and
any other Loan Documents, provided Lender shall not assign any of the
Notes, Deed of Trust, Mortgage or other Loan Documents to an entity
known to Lender to be in the on-stage entertainment business (but
such proviso shall not apply to any participation or assignment of
part of any such Loan). Each Borrower hereby agrees that all of the
rights and remedies of Lender in connection with the interest so
assigned shall be enforceable against a Borrower by such assignee
with the same force and effect and to the same extent as the same
would have been enforceable by Lender but for such assignment. Each
Borrower agrees that Lender shall have the right to sell
participations in the applicable Loan or to include such Note in a
securitized pool of indebtedness without the consent of such
Borrower.
6.2 Transfer or Encumbrance of the Project.
6.2.1 Prohibition on Transfer or Encumbrance. Each Borrower acknowledges
that Lender has examined and relied on the creditworthiness and
experience of such Borrower in owning and operating properties such
as the applicable Project in agreeing to make such Loan, and that
Lender will continue to rely on such Borrower's ownership of such
Project as a means of maintaining the value of such Project as
security for repayment of such Loan. Each Borrower acknowledges that
Lender has a valid interest in maintaining the value of such Project
so as to ensure that, should such Borrower default in the repayment
of the such Loan, Lender can recover such Loan by a sale of the
relevant Project. No Borrower shall, without the prior written
consent of Lender, sell, assign, convey, alienate, mortgage,
encumber, pledge or otherwise transfer any Project, the California
Lease, the Myrtle Beach Lease, the Myrtle Beach Sublease or any part
or component of any of them, or permit any Project or any part or
component thereof to be sold, conveyed, alienated, mortgaged,
encumbered, pledged or otherwise transferred (or, in the case of a
leasehold interest, permit the relevant lease to expire or otherwise
terminate). No assignment, sale, conveyance or other transfer of a
Project, the California Lease, the Myrtle Beach Lease, the Myrtle
Beach Sublease or any portion or component of any of them, shall
release any Borrower from its obligations under the Loan Documents.
6.2.2 Transfer Defined. A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this Section
6.2 shall be deemed to include (i) an installment sales agreement
wherein a Borrower agrees to sell a Project or any part thereof for a
price to be paid in installments; (ii) an agreement by Wild Bills
California, Inc. to subordinate its interest in the California Lease,
except to the Permitted Exceptions, (iii) an agreement by On Stage
Theaters North Myrtle Beach, Inc. to subordinate its interest in the
Myrtle Beach Lease, except to the Permitted Exceptions, (iv) except
for the relevant On Stage Lease, an agreement by a Borrower leasing
all or a substantial part of any Project for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, a Borrower's
right, title and interest in and to any ground lease or any leases or
rents at such Project; (v) if a Borrower or any member of a Borrower
is a corporation, the voluntary or involuntary sale, conveyance or
transfer of such corporation's stock (or the stock of any corporation
directly or indirectly controlling such corporation by operation of
law or otherwise) or the creation or issuance of new stock in one or
a series of transactions by which an aggregate of more than 10% of
such corporation's stock shall be vested in a party or parties who
are not now stockholders or any change in the control of such
corporation; (vi) if a Borrower or any member of a Borrower is a
limited or general partnership, joint venture or limited liability
company, the change, removal, resignation or addition of a general
partner, managing partner, limited partner, joint venturer or member
or the transfer of the partnership interest of any general partner,
managing partner or limited partner or the transfer of the interest
of any joint venturer or member; and (vii) any pledge, hypothecation,
assignment, transfer or other encumbrance of any ownership interest
in a Borrower. 6.2.3 No Showing of Impairment Required. Lender shall
not be required to demonstrate any actual impairment of its security
or any increased risk of default hereunder in order to declare a Loan
immediately due and payable upon the applicable Borrower's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of
such Project, the California Lease or Myrtle Beach Lease without
Lender's consent. This provision shall apply to every sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of
a Project, the California Lease or Myrtle Beach Lease regardless of
whether voluntary or not, or whether or not Lender has consented to
any previous sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of such Project, the California Lease or the
Myrtle Beach Lease.
6.2.4 No Waiver. Lender's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of a Project, the
California Lease, the Myrtle Beach Lease or the Myrtle Beach Sublease
shall not be deemed to be a waiver of Lender's right to require such
consent to any future occurrence of same. Any sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Project,
the California Lease, the Myrtle Beach Lease or the Myrtle Beach
Sublease made in contravention of this paragraph shall be null and
void and of no force and effect.
6.2.5 Reimbursement of Lender's Expenses. Each Borrower agrees to bear and
shall pay or reimburse Lender on demand for all reasonable expenses
(including, without limitation, reasonable attorneys' fees and
disbursements, title search costs and title insurance endorsement
premiums) incurred by Lender in connection with the review, approval
and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
6.3 Successors and Assigns . Subject to the foregoing restrictions on
transfer and assignment contained in this Article 6, this Agreement
shall inure to the benefit of and shall be binding on the parties
hereto and their respective successors and assigns.
7. EVENTS OF DEFAULT.
7.1 The occurrence of any one or more of the following shall constitute
an "Event of Default," as such term is used herein:
(a) If any Borrower fails to pay principal or interest under a Note
and such failure shall continue for ten (10) days after the due
date therefor, without any requirement to give such Borrower
notice of such failure;
(b) If any Borrower defaults in the performance of any of its other
covenants, agreements and obligations under this Agreement
involving the payment of money and such failure shall continue
for ten (10) days after the due date therefor, without and
requirement to give such Borrower notice of such failure;
(c) If any Borrower defaults in the performance of any of its
non-monetary covenants, agreements and obligations under this
Agreement and fails to cure such default within thirty (30) days
after written notice thereof from Lender; provided, however, that
if such default can not be cured within such thirty (30) day
period but is reasonably susceptible of cure within thirty (30)
days after the end of such thirty (30) day period, then so long
as such Borrower promptly commences cure following notice of such
default from Lender and thereafter diligently and continuously
pursues such cure to completion, the cure period shall be
extended for an additional thirty (30) days, within which such
Borrower may complete such cure;
(d) If at any time or times hereafter any representation or warranty
(including the representations and warranties of any Borrower or
Indemnitor set forth in any Loan Document), or any statement,
report or certificate furnished to Lender in connection with a
Loan which was certified by a Borrower is not true and correct in
any material respect as of the time when made;
(e) If any petition is filed by or against any Borrower or any
Affiliated Party under the Federal Bankruptcy Code or any similar
state or federal Law, whether now or hereafter existing (and, in
the case of involuntary proceedings, failure to cause the same to
be vacated, stayed or set aside within ninety (90) days after
filing);
(f) If any assignment, pledge, encumbrance, transfer, hypothecation
or other disposition is made in violation of Section 6.2 of this
Agreement;
(g) If any Borrower or Indemnitor shall fail to pay any debt in
excess of $20,000 owed by it or is in default under any agreement
with Lender and such failure or default continues after any
applicable grace period specified in the instrument or agreement
relating thereto;
(h) If Wild Bill's California, Inc. materially defaults under the
California Lease or if the California Lease ceases to be in full
force and effect;
(i) If On Stage Theaters North Myrtle Beach, Inc. materially defaults
under the Myrtle Beach Lease, or if the Myrtle Beach Lease ceases
to be in full force and effect;
(j) If a default occurs under any of the Loan Documents and continues
beyond the applicable grace period, if any, contained therein;
(k) If any Borrower ceases to carry on its business (i.e., renting
its Project to On Stage Theaters, Inc. for the purpose of
operating a dinner theater live production show) as presently
conducted (other than during periods of repair of casualty loss
or reconfiguration due to condemnation);
(l) Any Project has a fair market value as shown by an Appraisal
(which for the purpose of this item (l) shall include the going
concern value of the business conducted by On Stage Theaters,
Inc.) less than 1.25 times the principal balance of the
applicable Loan at any time, and the Borrower fails to post,
within thirty (30) days after Lender notifies any Borrower or OSE
of such shortfall in value, additional collateral that is
satisfactory to Lender in all respects and the value of which,
when added to the value of such Project, will be sufficient in
Lender's judgment to equal or exceed 1.25 times the principal
balance of such Loan.
(m) If the Debt Service Coverage Ratio is less than or equal to the
following ratios:
Calendar Quarter Ending Date Debt Service Coverage Ratio
June 30, 1998 1.50:1
September 30, 1998 1.50:1
December 31, 1998 1.75:1
March 31, 1999 1.75:1
June 30, 1999 and all
subsequent quarters 2.00:1
(n) If there is a material default by OSE past any express cure
period under the Warrant Agreement.
8. REMEDIES.
8.1 Remedies Conferred Upon Lender 8.1 Remedies Conferred Upon Lender .
Upon the occurrence of any Event of Default and until Lender
commences any remedy (including those described in Subparagraphs (a),
(b) or (c) below), Lender shall have the right (but not the
obligation) to pursue any one or more of the following remedies
concurrently or successively, it being the intent hereof that all
such remedies shall be cumulative and that no such remedy shall be to
the exclusion of any other:
(a) Declare all Notes to be immediately due and payable;
(b) Use and apply any monies deposited by a Borrower with Lender or
any monies in which Lender has a security interest, including
amounts in the Impound Account, regardless of the purpose for
which the same was deposited, to cure any such default or to
apply on account of any indebtedness under this Agreement which
is due and owing to Lender; and
(c) Exercise or pursue any other right or remedy permitted under this
Agreement or any of the Loan Documents or conferred upon Lender
by operation of Law.
Lender shall accept complete cure of any Event of Default if such
complete cure is accomplished prior to Lender commencing any remedy
(including without limitation any of the non-exclusive remedies
described above).
8.2 Non-Waiver of Remedies 8.2 Non-Waiver of Remedies . No waiver of any
breach or default hereunder shall constitute or be construed as a
waiver by Lender of any subsequent breach or default or of any breach
or default of any other provision of this Agreement.
8.3 Cash Collateral Account 8.3 Cash Collateral Account . Upon the
occurrence of an Event of Default, the defaulting Borrower shall
deposit all revenues from the operation of the applicable Project
(including all businesses conducted by such Borrower or any
Affiliated Party therein) into an account in the name of Lender or
such Borrower (as elected by Lender) and pledged to Lender in the
manner required by Lender as additional security for the applicable
Loan ("Cash Collateral Account"). Lender shall not pay interest on
any amounts held on deposit in the Cash Collateral Account, unless
required to do so under applicable law. Such Borrower shall execute
such documents as Lender, in its sole discretion, deems necessary to
perfect its interest in the Cash Collateral Account.
9. ENVIRONMENTAL PROVISIONS.
9.1 Hazardous Substances. Each Borrower hereby represents and warrants to
Lender that, to such Borrower's knowledge: (a) the Borrower's Project
is not in direct or indirect violation of any local, state, federal
or other governmental authority, statute, ordinance, code, order,
decree, law, rule or regulation pertaining to or imposing liability
or standards of conduct concerning environmental regulation,
contamination or clean-up including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act,
as amended ("CERCLA"), the Resource Conservation and Recovery Act, as
amended ("RCRA"), the Emergency Planning and Community Right-to-Know
Act of 1986, as amended, the Hazardous Substances Transportation Act,
as amended, the Solid Waste Disposal Act, as amended, the Clean Water
Act, as amended, the Clean Air Act, as amended, the Toxic Substance
Control Act, as amended, the Safe Drinking Water Act, as amended, the
Occupational Safety and Health Act, as amended, any state super-lien
and environmental clean-up statutes and all regulations adopted in
respect to the foregoing laws (collectively, "Environmental Laws");
(b) such Project is not subject to any private or governmental lien
or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous and/or toxic, dangerous
and/or regulated, substances, wastes, materials, raw materials which
include hazardous constituents, pollutants or contaminants including
without limitation, petroleum, tremolite, anthlophylie, actinolite or
polychlorinated biphenyls and any other substances or materials which
are included under or regulated by Environmental Laws or which are
considered by scientific opinion to be otherwise dangerous in terms
of the health, safety and welfare of humans (collectively, "Hazardous
Substances"); (c) except for lawfully used cleaning fluids and/or
copier toner or other substances typically used in offices or non-dry
cleaning retail establishments ("Permitted Substances"), no Hazardous
Substances are or have been (including the period prior to such
Borrower's acquisition of such Project) discharged, generated,
treated, disposed of or stored on, incorporated in, or removed or
transported from such Project other than in compliance with all
Environmental Laws; (d) no Hazardous Substances are present in, on or
under any nearby real property which could migrate to or otherwise
affect such Project; and (e) no underground storage tanks exist on
any of such Project. So long as such Borrower owns or is in
possession of such Project, such Borrower (i) shall keep or cause
such Project to be kept free from Hazardous Substances (except for
Permitted Substances) and in compliance with all Environmental Laws,
(ii) shall promptly notify Lender if such Borrower shall become aware
of any Hazardous Substances (except for Permitted Substances) on or
near such Project and/or if such Borrower shall become aware that
such Project is in direct or indirect violation of any Environmental
Laws and/or if such Borrower shall become aware of any condition on
or near such Project which shall pose a threat to the health, safety
or welfare of humans, (iii) such Borrower shall remove such Hazardous
Substances (except for Permitted Substances) and/or cure such
violations and/or remove such threats, as applicable, as required by
law (or as shall be required by Lender in the case of removal which
is not required by law, but in response to the opinion of a licensed
hydrogeologist, licensed environmental engineer or other qualified
consultant engaged by Lender ("Lender's Consultant")), promptly after
such Borrower becomes aware of same, at such Borrower's sole expense
and (iv) shall comply with all of the recommendations contained in
the environmental report which was delivered to Lender in connection
with the origination of the applicable Loan. Nothing herein shall
prevent a Borrower from recovering such expenses from any other party
that may be liable for such removal or cure. The obligations and
liabilities of a Borrower under this Section 9.1 shall survive any
termination, satisfaction, or assignment of the Deed of Trust or
Mortgage and the exercise by Lender of any of its rights or remedies
thereunder, including, without limitation, the acquisition of a
Project by foreclosure or a conveyance in lieu of foreclosure.
9.2 Asbestos. Each Borrower represents and warrants that, to such
Borrower's knowledge, no asbestos or any substance or material
containing asbestos ("Asbestos") is located on any Project except as
may have been disclosed in an environmental report delivered to
Lender prior to the date of this Agreement. No Borrower shall install
in a Project, nor permit to be installed in a Project, Asbestos and
shall remove any Asbestos promptly upon discovery to the satisfaction
of Lender, at such Borrower's sole expense. Each Borrower shall in
all instances comply with, and ensure compliance by all occupants of
the applicable Project with, all applicable federal, state and local
laws, ordinances, rules and regulations with respect to Asbestos, and
shall keep such Project free and clear of any liens imposed pursuant
to such laws, ordinances, rules or regulations. In the event that a
Borrower receives any notice or advice from any governmental agency
or any source whatsoever with respect to Asbestos on, affecting or
installed on the applicable Project, such Borrower shall immediately
notify Lender. The obligations and liabilities of each Borrower under
this Section 9.2 shall survive any termination, satisfaction, or
assignment of the Deed of Trust or Mortgage and the exercise by
Lender of any of its rights or remedies thereunder, including but not
limited to, the acquisition of a Project by foreclosure or a
conveyance in lieu of foreclosure.
9.3 Environmental Remediation.
9.3.1 Borrower's Obligation to Perform Remedial Work. If any investigation,
site monitoring, containment, cleanup, removal, restoration or other
remedial work of any kind or nature (collectively, "Remedial Work")
is required on a Project pursuant to an order or directive of any
Governmental Authority or under any applicable Environmental Law, or
in Lender's opinion, based upon recommendations of a qualified
environmental engineer reasonably acceptable to Lender, after notice
to the applicable Borrower, is reasonably necessary to prevent future
liability under any applicable Environmental Law, because of or in
connection with the current or future presence, suspected presence,
release, or suspected release of a Hazardous Substance into the air,
soil, ground water, surface water, or soil vapor on, under or from
such Project or any portion thereof, such Borrower shall (at such
Borrower's sole cost and expense), or shall cause such responsible
third parties to promptly commence and diligently prosecute to
completion (or cause to be commenced and diligently prosecuted to
completion) all such Remedial Work. In all events, such Remedial Work
shall be commenced within thirty (30) days after any demand therefor
by Lender or such shorter period as may be required under any
applicable Environmental Law; however, such Borrower shall not be
required to commence such Remedial Work within the above specified
time periods if prevented from doing so by any Governmental
Authority, or if commencing such Remedial Work within such time
periods would result in such Borrower or such Remedial Work violating
any Environmental Law. All such Remedial Work shall be commenced
within thirty (30) days after any demand therefor by Lender or such
shorter period as may be required under any applicable Environmental
Law; however, such Borrower shall not be required to commence such
Remedial Work within the from doing so by any Governmental Authority,
(y) commencing such Remedial Work within such time periods would
result in such Borrower or such Remedial Work violating any
Environmental Law or (z) such Borrower is contesting in good faith
and by appropriate proceedings the applicability of the relevant
Environmental Laws; provided that such contest shall not (i) create
or materially increase the risk of any civil or criminal liability of
any kind whatsoever on the part of Lender or (ii) permit or
materially increase the risk of the spread, release or suspected
release of any Hazardous Substance into the air, soil, ground water,
surface water, or soil vapor on, under or emanating from such Project
or any portion thereof during the pendency of such contest.
9.3.2 Contractors; Reimbursement of Lender's Costs and Expenses. All
Remedial Work shall be performed by contractors, and under the
supervision of a consulting engineer, each approved in advance by
Lender (which approval shall not be unreasonably withheld or
delayed). All costs and expenses reasonably incurred in connection
with such Remedial Work and Lender's reasonable monitoring or review
of such Remedial Work (including reasonable attorneys' fees and
disbursements, but excluding internal overhead, administrative and
similar costs of Lender) shall be paid by the applicable Borrower. If
such Borrower does not timely commence and diligently prosecute to
completion the Remedial Work, then Lender may (but shall not be
obligated to) cause such Remedial Work to be performed. Such Borrower
agrees to bear and shall pay or reimburse Lender on demand for all
Advances and expenses (including reasonable attorneys' fees and
disbursements, but excluding internal overhead, administrative and
similar costs of Lender) reasonably relating to or incurred by Lender
in connection with monitoring, reviewing or performing any such
Remedial Work.
9.3.3 No Impairment of Lender's Security. Except with Lender's prior
written consent, no Borrower shall commence any Remedial Work or
enter into any settlement agreement, consent decree or other
compromise relating to any Hazardous Substances or Environmental Laws
which might, in Lender's sole judgment, impair the value of Lender's
security hereunder to a material degree. Lender's prior written
consent shall not be required, however, if the presence or threatened
presence of Hazardous Substances on, under or about a Project poses
an immediate threat to the health, safety or welfare of any person or
is of such a nature that an immediate remedial response is necessary,
or if Lender fails to respond to any notification by a Borrower
hereunder within twenty (20) Business Days from the date of such
notification. In such events, such Borrower shall notify Lender as
soon as practicable of any action taken.
9.4 Inspection.
9.4.1 Lender's Right to Inspect. Upon reasonable prior notice, Lender and
its agents, representatives and employees shall have the right at all
reasonable times and during normal business hours, except to the
extent such access is limited by applicable Law, to enter upon and
inspect all or any portion of any Project, provided that such
inspections shall not unreasonably interfere with the operation
thereof. At its sole expense, except as provided in Section 9.4.2.
hereof, (y) Lender may retain an environmental consultant to conduct
and prepare reports of such inspections and (z) the applicable
Borrower shall be given a reasonable opportunity to review any and
all reports, data and other documents or materials reviewed or
prepared by the consultant, and to submit comments and suggested
revisions or rebuttals to same. The inspection rights granted to
Lender in this Section 9.4 shall be in addition to, and not in
limitation of, any other inspection rights granted to Lender in this
Agreement, and shall expressly include the right to conduct soil
borings and other customary environmental tests, assessments and
audits in compliance with applicable Legal Requirements: provided,
that, except as set forth in clause (ii) below, Lender shall repair
any damage caused by borings, tests, assessments or audits.
9.4.2 Reimbursement of Lender's Costs and Expenses. Each Borrower agrees to
bear and shall pay or reimburse Lender on demand for all costs and
expenses (including reasonable attorneys' fees and disbursements, but
excluding internal overhead, administrative and similar costs of
Lender) reasonably relating to or incurred by Lender in connection
with the inspections, tests and reports described in this Section 9.4
in the following situations:
(a) If Lender has reasonable grounds to believe at the time any such
inspection is ordered, that there exists a violation of any
Environmental Law or that a Hazardous Substance is present on,
under or emanating from the Real Property, or is migrating to or
from adjoining property, except under conditions permitted by
applicable Environmental Laws and not prohibited by any Loan
Document;
(b) If any such inspection reveals a violation of any Environmental
Law or that a Hazardous Substance is present on, under or
emanating to or from a Project or is migrating from adjoining
property, except under conditions permitted by applicable
Environmental Laws and not prohibited by any Loan Document; or
(c) If an Event of Default exists at the time any such inspection is
ordered.
9.5 Notices. To the extent that a Borrower has knowledge thereof, such
Borrower shall promptly provide notice to Lender of:
(a) any proceeding or investigation commenced or threatened by any
Governmental Authority with respect to the presence of any
Hazardous Substance on, under or emanating from a Project;
(b) any proceedings or investigation commenced or threatened by any
Governmental Authority, against such Borrower, with respect to
the presence, suspected presence, release or threatened release
of Hazardous Substances from any property not owned by such
Borrower, including, but not limited to, proceedings under the
Federal Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss. 9601 et seq.;
(c) all claims made or any lawsuit or other legal action or
proceeding against (i)such Borrower or such Project or any
portion thereof, or (ii) any other party occupying such Project
or any portion thereof, in any such case relating to any loss or
injury allegedly resulting from any Hazardous Substance or
relating to any violation or alleged violation of Environmental
Law;
(d) the discovery of any occurrence or condition on such Project or
on any real property adjoining or in the vicinity of such
Project, of which the applicable Borrower becomes aware, which
reasonably could be expected to lead to such Project or any
portion thereof being in violation of any Environmental Law or
subject to any restriction on ownership, occupancy,
transferability or use under any Environmental Law; and
(e) the commencement and completion of any Remedial Work.
9.6 Copies of Notices. Each Borrower will transmit to Lender copies of
any citations, orders, notices or other communications received by
such Borrower with respect to the notices described in Section 9.5
hereof.
9.7 Environmental Claims. Lender may join and participate in, as a party
if Lender so determines, any legal or administrative proceeding or
action concerning a Project or any portion thereof under any
Environmental Law, if, in Lender's reasonable judgment, the interests
of Lender will not be adequately protected by Borrowers. Borrowers
agree to bear and shall pay or reimburse Lender on demand for all
costs and expenses (including reasonable attorneys' fees and
disbursements, but excluding internal overhead, administrative and
similar costs of Lender) relating to or incurred by Lender in
connection with any such action or proceeding.
9.8 Indemnification. Each Borrower agrees to indemnify, reimburse, defend
(with counsel reasonably approved by Lender), and hold harmless the
Indemnified Parties for, from, and against all demands, claims,
actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation,
interest, penalties, punitive and consequential damages, reasonable
attorneys' fees, disbursements and expenses, and reasonable
consultants' fees, disbursements and expenses asserted against,
resulting to, imposed on, or incurred by the Indemnified Parties,
directly or indirectly, in connection with any of the following:
(a) the events, circumstances, or conditions which are alleged to, or
do, (i) relate to the presence, or release into the environment,
of any Hazardous Substance at any location owned, leased or
operated by any Borrower or relate to circumstances forming the
basis of any violation, or alleged violation, of any
Environmental Law by a Borrower or with respect to any such
locations, and in either case, result in Environmental Claims, or
(ii) constitute a violation of any Environmental Law;
(b) any pollution or threat to human health or the environment that
is related in any way to a Borrower's or any previous owner's or
operator's management, use, control, ownership or operation of a
Project, including, without limitation, all onsite and offsite
activities involving Hazardous Substances, and whether occurring,
existing or arising prior to or from and after the date hereof,
and whether or not the pollution or threat to human health or the
environment is described in the Environmental Report;
(c) any Remedial Work under Section 9.3 hereof, required to be
performed pursuant to any Environmental Law of the terms hereof;
or
(e) the breach of any environmental representation, warranty or
covenant set forth in this Agreement;
except to the extent any of the foregoing result solely from the
negligence or willful misconduct of the Indemnified Parties.
The indemnity provided in this Section 9.8 shall not be included in
any exculpation of Borrowers from personal liability provided in this
Agreement or in any of the other Loan Documents and shall survive the
repayment in full of the Loan, any foreclosure of any Project and the
satisfaction and release of the Deed of Trust or Mortgage or
reconveyance. Nothing in this Section 9.8 shall be deemed to deprive
Lender of any rights or remedies provided to it elsewhere in this
Agreement or the other Loan Documents. Notwithstanding anything to
the contrary set forth herein, if title to a Project is transferred
to Lender or its nominee pursuant to a foreclosure, then (i) in the
event that Lender's willful misconduct or gross negligence with
respect to Hazardous Substances existing on, at or under such Project
prior to such transfer of title causes additional liability with
respect to such Hazardous Substance, such Borrower shall have no
obligation to indemnify the Lender Parties for the cost, if any, of
such additional liability, and (ii) such Borrower shall have no
obligation to indemnify the Indemnified Parties for liability arising
from Hazardous Substances placed, released or disposed on, at or
under such Project after the date of such transfer of title solely
through the willful misconduct or negligence of Lender.
10. GENERAL PROVISIONS.
10.1 Captions. The captions and headings of various Articles and Sections
of this Agreement and Exhibits pertaining hereto are for convenience
only and are not to be considered as defining or limiting in any way,
the scope or intent of the provisions hereof.
10.2 Merger. This Agreement and the Loan Documents and instruments
delivered in connection herewith, as may be amended from time to time
in writing, constitute the entire agreement of the parties with
respect to the Projects and the Loans, and all prior discussions,
negotiations and document drafts are merged herein and therein. If
there are any inconsistencies between this Agreement and any other
Loan Document, the terms contained in this Agreement shall prevail.
Neither Lender nor any employee of Lender has made or is authorized
to make any representation or agreement upon which Borrowers may rely
unless such matter is made for the benefit of Borrowers and is in
writing signed by an authorized officer of Lender. Borrowers agree
that they have not and will not rely on any custom or practice of
Lender, or on any course of dealing with Lender, in connection with
the Loans unless such matters are set forth in this Agreement or the
Loan Documents or in an instrument made for the benefit of Borrowers
and in a writing signed by an authorized officer of Lender.
10.3 Notices. Any notice, demand, request or other communication which any
party hereto may be required or may desire to give hereunder shall be
in writing, addressed as follows and shall be deemed to have been
properly given if hand delivered, if sent by reputable overnight
courier (effective the business day following delivery to such
courier), by telecopier (provided electronic confirmation is
received) (provided delivery shall be effective only on the next
business day following electronic receipt) or by messenger:
If to Borrowers:
c/o On Stage Entertainment, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender:
Imperial Credit Commercial Mortgage Investment Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the party to be served with notice may
have furnished in writing to the party seeking or desiring to serve
notice as a place for the service of notice. Notices given in any
other fashion shall be deemed effective only upon receipt.
10.4 Modification; Waiver. No modification, waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in
writing and signed by the party against which the enforcement of such
modification, waiver, amendment, discharge or change is sought.
10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE
STATE OF FLORIDA.
10.6 Acquiescence Not to Constitute Waiver of Lender's Requirements. Each
and every covenant and condition for the benefit of Lender contained
in this Agreement may be waived by Lender.
10.7 Disclaimer by Lender. (a) This Agreement is made for the sole benefit
of Borrowers and Lender (and Lender's successors, assigns and
participants, if any), and no other Person shall have any benefits,
rights or remedies under or by reason of this Agreement, or by reason
of any actions taken by Lender pursuant to this Agreement. Lender
shall not be liable for any debts or claims accruing in favor of any
third parties against Borrowers or others or against any Project.
Borrowers are not and shall not be an agent of Lender for any
purposes. Except as expressly set forth in the Loan Documents, Lender
is not and shall not be an agent of any Borrower for any purposes.
Lender, by making the Loan or taking any action pursuant to any of
the Loan Documents, shall not be deemed a partner or a joint venturer
with any Borrower or fiduciary of any Borrower.
(b) Any review, investigation or inspection conducted by Lender, any
architectural or engineering consultants retained by Lender or
any agent or representative of Lender in order to verify
independently any Borrower's satisfaction of any conditions
precedent to the disbursement of the Loan, any Borrower's
performance of any of the covenants, agreements and obligations
of any Borrower under this Agreement, or the truth of any
representations and warranties made by any Borrower hereunder
(regardless of whether or not the party conducting such review,
investigation or inspection should have discovered that any of
such conditions precedent were not satisfied or that any such
covenants, agreements or obligations were not performed or that
any such representations or warranties were not true), shall not
affect (or constitute a waiver by Lender of) (i) any of any
Borrower's representations and warranties under this Agreement or
Lender's reliance thereon, or (ii) Lender's reliance upon any
certifications required under this Agreement or any other facts,
information or reports furnished Lender by any Borrower
hereunder.
(c) By accepting or approving anything required to be observed,
performed, fulfilled or given to Lender pursuant to the Loan
Documents, including any certificate, statement of profit and
loss or other financial statement, survey, appraisal, lease or
insurance policy, Lender shall not be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal
effect of the same, or of any term provision or condition
thereof, and such acceptance or approval thereof shall not
constitute a warranty or representation to anyone with respect
thereto by Lender.
10.8 Right of Lender to Make Advances to Cure Borrower's Defaults. If a
Borrower shall fail to perform in a timely fashion any of such
Borrower's covenants, agreements or obligations contained in this
Agreement or the Loan Documents, Lender may (but shall not be
required to) perform any of such covenants, agreements and
obligations. Any funds advanced by Lender in the exercise of its
judgment that the same are needed to protect its security for a Loan
are deemed to be obligatory advances hereunder and any amounts
expended (whether by disbursement of undisbursed Loan proceeds or
otherwise) by Lender in so doing, shall constitute additional
indebtedness evidenced and secured by the Notes, the Deed of Trust,
the Mortgages and the other Loan Documents.
10.9 Definitions Include Amendments. Definitions contained in this
Agreement which identify documents, including the Loan Documents,
shall be deemed to include all amendments and supplements to such
documents from the date hereof, and all future amendments and
supplements thereto entered into from time to time to satisfy the
requirements of this Agreement or otherwise with the consent of the
Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements
to this Agreement.
10.10 Time Is of the Essence. Time is hereby declared to be of the essence
of this Agreement and of every part hereof.
10.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
10.12 Waiver of Consequential Damages. In no event shall Lender be liable
to any Borrower for consequential damages, whatever the nature of a
breach by Lender of its obligations under this Loan Agreement, or any
of the Loan Documents, and each Borrower for itself and all
Affiliated Parties hereby waives all claims for consequential
damages.
10.13 Claims Against Lender. Lender shall not be in default under this
Agreement, or under any other Loan Documents, unless a written notice
specifically setting forth the claim of a Borrower shall have been
given to Lender within 60 days after such Borrower first had
knowledge of the occurrence of the event which such Borrower alleges
gave rise to such claim and Lender does not remedy or cure the
default, if any there be, promptly thereafter. If it is determined in
any proceedings that Lender has improperly failed to grant its
consent or approval, where such consent or approval is required by
this Loan Agreement or any other Loan Documents, such Borrower's sole
remedy shall be to obtain declaratory relief determining such
withholding to have been improper, and for itself and all Affiliated
Parties each Borrower hereby waives all claims for damages or set-off
against Lender resulting from any withholding of consent or approval
by Lender.
10.14 Secondary Sales. Each Borrower acknowledges that Lender and its
successors and assigns may (i) sell this Loan Agreement, the Deed of
Trust, the Mortgages, the Notes and other Loan Documents to one or
more investors as a whole loan, (ii) participate one or more Loans to
one or more investors, (iii) deposit this Loan Agreement, the Deed of
Trust, the Mortgages, the Notes and other Loan Documents with a
trust, which trust may sell certificates to investors evidencing an
ownership interest in the trust assets, or (iv) otherwise sell one or
more of the Loans or interest therein to investors (the transactions
referred to in clauses (i) through (iv) are hereinafter each referred
to as "Secondary Market Transaction"). Each Borrower shall cooperate
with Lender in effecting any such Secondary Market Transaction and
shall cooperate to implement all requirements imposed by any Rating
Agency involved in any Secondary Market Transaction. Each Borrower
shall provide such information, legal opinions and documents relating
to such Borrower, the applicable Project and any tenants of the
Improvements as Lender may reasonably request in connection with such
Secondary Market Transaction. In addition, each Borrower shall make
available to Lender all information concerning its business and
operations that Lender may reasonably request. Lender shall be
permitted to share all such information with the investment banking
firms, Rating Agencies, accounting firms, law firms and other
third-party advisory firms involved with the Loan and the Loan
Documents or the applicable Secondary Market Transaction. It is
understood that the information provided by Borrowers to Lender may
ultimately be incorporated into the offering documents for the
Secondary Market Transaction and thus various investors may also see
some or all of the information. Lender and all of the aforesaid
third-party advisors and professional firms shall be entitled to rely
on the information supplied by, or on behalf of, each Borrower and
each Borrower indemnifies Lender as to any losses, claims, damages or
liabilities that arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such
information or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in
such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were
made, not misleading. Lender may publicize the existence of the Loans
in connection with its marketing for a Secondary Market Transaction
or otherwise as part of its business development.
10.15 Jurisdiction and Venue. With respect to any suit, action or
proceedings relating to this agreement, any Project, or any of the
Loan Documents ("Proceedings") each party irrevocably (i) submits to
the non-exclusive jurisdiction of the state and federal courts
located in [the State where such Project is located], and (ii) waives
any objection which it may have at any time to the laying of venue of
any proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that
such court does not have jurisdiction over such party. Nothing in
this agreement shall preclude either party from bringing Proceedings
in any other jurisdiction nor will the bringing of Proceedings in any
one or more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.
10.16 Severability. The parties hereto intend and believe that each
provision in this Agreement comports with all applicable local, state
and federal laws and judicial decisions. However, if any provision or
provisions, or if any portion of any provision or provisions, in this
Agreement is found by a court of law to be in violation of any
applicable local, state, or federal law, statute, ordinance,
administrative or judicial decision, or public policy, and if such
courts declare such portion, provision, or provisions of this
Agreement to be illegal, invalid, unlawful, void or unenforceable as
written, then it is the intent of all parties hereto that such
portion, provision, or provisions shall be given force to the fullest
possible extent that they are legal, valid and enforceable, and that
the remainder of this Agreement shall be construed as if such
illegal, invalid, unlawful, void, or unenforceable portion,
provision, or provisions were not contained therein, and that the
rights, obligations, and interests of Borrower and Lender under the
remainder of this Agreement shall continue in full force and effect.
10.17 Incorporation of Recitals. The Recitals set forth herein and the
Exhibits attached hereto are incorporated herein and expressly made a
part hereof.
10.18 WAIVER OF JURY TRIAL. BORROWERS AND LENDER EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS
THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
11. SUBSEQUENT LOANS. Upon fulfillment of each and every precondition set
forth below, Lender shall make one or more additional loans (each, an
"Subsequent Loan") in the aggregate amount of not less than
$1,000,000 and not more than $6,500,000.
11.1 Preconditions. Prior to making any Subsequent Loan, the following
preconditions must be fulfilled to Lender's satisfaction:
(a) Each borrower for an Subsequent Loan (each, an "Subsequent Loan
Borrower") shall be a newly formed Nevada corporation, wholly
owned by On Stage Theaters, Inc., and otherwise meeting Lender's
requirements as to capital structure.
(b) The proceeds of the Subsequent Loans shall be used solely for the
payment of the purchase price for the acquisition of additional
projects (including a fee or leasehold estate in the related real
estate) to be used for on-stage live production entertainment.
Each such project shall be leased to On Stage Theaters, Inc.
pursuant to an On Stage Lease providing triple net rent equal to
at least 150% of the debt service for the relevant applicable
Subsequent Loan and subject to a lease guarantee executed by OSE
in form acceptable to Lender. Borrowers have previously
identified the acquisition of the assets of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Productions, Inc., a Delaware corporation, as a prospective
project which would serve as security for the Subsequent Loans.
Lender's obligation to make any Subsequent Loans is subject to
Lender's being satisfied that the value (net of liabilities) of
the real estate components that are a part of each such
Subsequent Loan project shall be in excess of 166.7% for the
first $3,000,000 of Subsequent Loans, thereafter 133.3% (both
exclusive of any going concern value or good will) of the amount
of the Subsequent Loan.
(c) The Subsequent Loans shall be funded on or before March 31, 1999,
and if such funding does not occur for any reason other than
Lender's breach of its obligations under this Section 11, then
Lender's obligation to make any or all of the Subsequent Loans
shall expire March 31, 1999 and be of no further force or effect.
(d) Each Subsequent Loan Borrower shall execute loan documents in
substantially the same form as the Loan Documents required for
the Loans, subject to such changes as shall be required by
Lender's counsel. Such Loan Documents shall include repayment
guarantees by each Subsequent Loan Borrower of the other
Subsequent Loans and the Loans. In addition, each Borrower and
OSE shall be required to execute an additional or restated
Guarantee guaranteeing the repayment of the Subsequent Loans, and
each such modified or restated Guarantee (other than OSE's
Guarantee) shall be secured by the Deed of Trust or Mortgage
encumbering each Borrower's Project or, as applicable, each
Subsequent Loan Borrower's project.
(e) All aspects of the Subsequent Loan projects shall meet Lender's
reasonable requirements, including without limitation
requirements as to permitted exceptions to clean title, title
insurance and endorsements, zoning, completeness of associated
personal property, building permit and other entitlements,
structural integrity, surveys, and similar due diligence items,
and all aspects of the Subsequent Loan project shall be
satisfactory to Lender in its reasonable judgment (including
operating history, management team, actual prior and projected
EBITDA, and other factors).
(f) Each Subsequent Loan Borrower shall be required to make each and
every one of the representations, warranties and covenants
contained in this Agreement (which shall be expanded to include
the Subsequent Loan Borrower's project), either by becoming a
party hereto or by executing an additional loan agreement, as
required by Lender.
(g) No Event of Default shall have occurred and be continuing past
any express cure period.
(h) Borrowers shall have paid all of Lender's costs and expenses
related to each proposed Subsequent Loan within 10 days after
request therefor.
(i) There shall have been no material adverse change in the financial
condition of OSE.
11.2 Minimum Subsequent Loan. No Subsequent Loan shall be for an original
principal balance of less than $1,000,000.
IN WITNESS WHEREOF, Borrowers and Lender have executed this Agreement as of the
day and year first set forth above.
BORROWERS:
WILD BILLS CALIFORNIA, INC.,
a Nevada corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
KING HENRY'S, INC.,
a Nevada corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
FORT LIBERTY, INC.,
a Nevada corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
ON STAGE THEATERS NORTH MYRTLE
BEACH, INC., a Nevada corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
ON STAGE THEATERS SURFSIDE BEACH,
INC., a Nevada corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
LENDER:
IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP., a
Maryland corporation
By:_______________________________
Name:_____________________________
Title:_____________________________
EXHIBIT AEXHIBIT A
LEGAL DESCRIPTION
EXHIBIT A-1
LEGAL DESCRIPTION
King Henry's Real Property
EXHIBIT A-2
LEGAL DESCRIPTION
Wild Bills Real Property
EXHIBIT A-3
LEGAL DESCRIPTION
Fort Liberty Real Property
EXHIBIT A-4
LEGAL DESCRIPTION
Myrtle Beach Real Property
EXHIBIT A-5
LEGAL DESCRIPTION
Surfside Real Property
EXHIBIT BEXHIBIT B
PERMITTED EXCEPTIONS
EXHIBIT C
SOURCES AND USES OF FUNDS
[Revise to Include Additional Loans]
SOURCES OF FUNDS
Loan Proceeds from Borrower ....................................... $12,500,000
Borrower's Funds .................................................. 212,500
TOTAL SOURCES OF FUNDS ................................... $12,712,350
USES OF FUNDS
Cash Portion of Acquisition Price ................................. $10,250,000
Funds Being Deposited into Escrow per Section ___ of
the Asset Purchase Agreement ............................. 1,250,000
Financing Fees and Expenses:
Lender Out of Pocket Costs not previously paid by Borrower 50,000
Loan Origination and Arrangement Fees .................... 700,000
Borrower Legal ........................................... $ 50,000
-----------
Total Financing Fees and Expenses ................................. 800,000
Appraisal ......................................................... 45,000
Environmental ..................................................... 7,000
Structural ........................................................ 12,000
Document Stamps ................................................... 53,350
Title/Survey ...................................................... 45,000
Accounting & Legal Fees Associated w/Due Diligence ................ 250,000
-----------
Total transaction costs (other than financing fees and expenses: .. 412,350
Total Financing Fees and Expenses and Transaction Costs: .......... $ 1,212,350
TOTAL USES OF FUNDS ...................................... $12,712,350
EXHIBIT D
FORT LIBERTY LEASES
Schedule 1
Non-Recurring Items For Periods Ended Prior to December 31, 1997
Items on balance sheet charged off
Pre-Opening costs-Miami ............................... $ 3,880
Pre-Opening costs-Branson ............................. 168,174
Pre-Opening costs-Toronto ............................. 76,181
Pre-Opening costs-Valley Forge ........................ 118
Pre-Opening costs-Cancun .............................. 2,297
Developmental ......................................... 71,760
Pre-Opening-Myrtle Beach .............................. 17,864
Subtotal
$ 340,274
Other Items
Direct operating expenses
physical inventory adjustments ............... 62,608
Indirect operating expenses
physical inventory adjustment ................ 9,391
Selling, general & administrative
adjustments .................................. 266,371
Discontinued operation-Daytona ........................ 1,925,711
CFO stock grant ....................................... 162,128
Principal stockholder debt foregiveness ............... 221,521
Interest expense-bridge loan underwriter .............. 444,000
Interest expense-debenture conversion ................. 194,228
Subtotal $3,285,958
----------
Total non recurring items ...................................... $3,626,232
Schedule 3.26
Deferred Maintenance at Fort Liberty to Be Completed By July 31, 1998
Repair the missing portion of the exterior wall of the in-line retail premises
closest to (but not a part of) the Wild Bills Theater/Retail Courtyard portion
of the property, and repair the roof and water damage to ceiling and interior
walls of that retail premises and adjacent premises.