1
Exhibit 10.12
TERM LOAN AND SECURITY AGREEMENT
THIS TERM LOAN AND SECURITY AGREEMENT, made, entered into and
effective as of the 12th day of March, 1997, by and between ▇▇▇▇▇-▇▇▇▇
CONVENIENCE STORES, INC., a Colorado corporation ("Borrower"), and ▇▇▇▇▇▇
FINANCIAL, INC., a Delaware corporation ("Lender");
W I T N E S S E T H :
WHEREAS, Borrower has applied to Lender for a term loan facility in
the aggregate principal amount of up to Eight Million Dollars ($8,000,000.00),
the proceeds of which will be used by Borrower to finance the acquisition of
eight convenience store locations in the State of Colorado from Diamond
Shamrock Refining and Market Company, a Delaware corporation ("DS"), such
locations as more particularly described on Exhibit A hereto (the "Acquired
Locations");
WHEREAS, Lender has considered Borrower's request for such financing
and is willing to extend such financing to Borrower for such purpose in
accordance with the terms of this Agreement upon the execution of this
Agreement by Borrower, compliance by Borrower with all of the terms and
provisions of this Agreement and fulfillment by Borrower of all conditions
precedent to Lender's obligations herein contained;
WHEREAS, prior to the consummation of the transactions contemplated
hereby, ▇▇▇▇▇-▇▇▇▇ Corp., Montrose, Inc., a Colorado corporation ("Petro-▇▇▇▇
▇▇▇▇▇▇▇▇"), and Westec Fruita, Inc., a Delaware corporation ("Westec Fruita"),
transferred the five convenience store locations in the State of Colorado more
particularly described on Exhibit B hereto (the "Existing Locations") to
Borrower in exchange for two subordinated promissory notes;
WHEREAS, each of Wescourt Group, Inc., a Delaware corporation
("Wescourt"), Portfield Investments, Inc., a Colorado corporation
("Portfield"), and Wesfrac, Inc., a Colorado corporation ("Wesfrac"), have
agreed to unconditionally guarantee Borrower's Obligations (as defined below)
hereunder and under the Loan Documents (as defined below) pursuant to the
Guaranty (as defined below); and
WHEREAS, Borrower has agreed to cause Wesfrac to grant Lender a
security interest in a certain fractionator located in Fruita, Colorado (the
"Fractionator") as additional collateral for the term loan facility.
NOW, THEREFORE, in consideration of the foregoing premises, to induce
Lender to extend the financing provided for herein, and for other good and
valuable consideration, the sufficiency and receipt of all of which are
acknowledged by Borrower, Lender and Borrower agree as follows:
1. DEFINITIONS, TERMS AND REFERENCES.
1.1. CERTAIN DEFINITIONS. In addition to such other terms as are
elsewhere defined herein, as used in this Agreement and in any Exhibits, the
following terms shall have the following meanings, unless the context requires
otherwise:
"Acquired Locations" shall have the meaning ascribed thereto in the
initial recitals to this Agreement.
"Acquisition Agreement" shall mean that certain Asset Purchase and
Branding Agreement dated October 29, 1996 between DS and Wescourt, as amended
from time in accordance with the terms thereof, which agreement has been
assigned to Borrower as of March 5, 1997.
"Acquisition Agreement Assignment" shall mean that certain Assignment
of Representations, Warranties, Covenants, Indemnities and Rights dated as of
the date hereof by and between Borrower and Lender with an acknowledgment
thereof by DS.
2
"Affiliate", in relation to any particular Person, shall mean any
other Person which, directly or indirectly, controls, or is controlled by, or
is under common control with, such Person. For purposes of this definition,
"control" shall mean the power, directly or indirectly, to (a) vote ten percent
(10%) or more of the outstanding stock having ordinary voting power for the
election of directors of such Person or (b) direct the management or policies
of such Person, whether by contract or otherwise. The term "Affiliate" shall
include, without limitation, and in any event, in respect of Borrower, (i) each
shareholder, and each officer and director of Borrower; and (ii) any
subsidiaries of Borrower that are at least 51% owned or controlled (by contract
or otherwise) by Borrower.
"Agreement" shall mean this Term Loan and Security Agreement, as
amended or supplemented from time to time.
"Applicable Rate" shall mean the One Month LIBOR Rate or the Default
Rate, as made applicable to the Term Loan, pursuant to Section 2.4 hereof.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended from time to time.
"Borrower" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the States of Illinois or
Colorado or is a day on which banking institutions located in such States are
closed.
"Closed Store" shall mean any Acquired Location that closes and
remains closed in excess of one hundred eighty (180) days in any three hundred
sixty five (365) day period for a reason other than an insured casualty loss or
condemnation.
"Closing Date" shall mean the date of this Agreement.
"Collateral" shall mean, collectively, the Acquisition Agreement
(subject to the terms of the Acquisition Agreement Assignment), the Equipment
Collateral, the Fractionator, the shares subject to the Pledge covered by the
Wescourt Pledge Agreement, all of Borrower's existing and after-acquired liquor
licenses and lottery licenses, any real property owned or leased by Borrower
and subject to a Mortgage, the Condemnation Proceeds, and all other property of
Borrower described in Article 3, or any part thereof, or elsewhere herein or in
any Loan Document, all as the context shall require, in which Lender has, or is
to have, or hereafter may obtain, a security interest, lien or encumbrance
pursuant thereto, as security for payment of the Obligations, together with all
books and records related to the foregoing and the proceeds of all or any of
the above described property, including without limitation proceeds of any
insurance.
"Compliance Certificate" shall mean a certificate of Borrower executed
by chief financial officer of Borrower, on Borrower's behalf, stating that no
Event of Default or Default Condition has occurred or exists, or if an Event of
Default or Default Condition has occurred or exists, specifying the nature and
period of existence thereof and what action Borrower has taken or proposes to
take with respect thereto.
"Condemnation Proceeds" shall mean all compensation, awards, damages,
rights of action and proceeds due Borrower arising from any taking by any
lawful power or authority by exercise of the rights of condemnation or eminent
domain with respect to any of the Collateral.
"Contaminant" shall mean those substances which are regulated by or
form the basis of liability under federal, state or local environmental, health
and safety statutes or regulations including, without limitation, asbestos,
polychlorinated biphenyls ("PCBs"), radioactive substances, petroleum,
petroleum products or any other material or substance which constitutes a
material health, safety or environmental hazard to any Person or Property.
"Default Condition" shall mean the occurrence of any event which,
after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
-2-
3
"Default Rate" shall mean that simple interest rate equal to three
percent (3%) per annum in excess of the One Month LIBOR Rate.
"DS" shall have the meaning ascribed thereto in the initial recitals
to this Agreement.
"Environmental Claim" shall mean any notice of violation, claim, suit,
demand, abatement or other order or direction (conditional or otherwise) by any
Governmental Authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to the
environment, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon (i) the existence, or the continuation of the existence, of a Release
(including, without limitation, sudden or non-sudden, accidental or
non-accidental Releases) of, or exposure to, any Contaminant, or other release
or emission in, into or onto the environment (including, without limitation,
the air, ground, surface water, ground water or any surface) in, by, from, or
related to any Property, (ii) the environmental aspects of the transportation,
storage, treatment or disposal of materials, in connection with the operation
of any Property or (iii) the violation, or alleged violation, of any statutes,
ordinances, orders, rules, regulations, Permits, licenses, registrations or
approvals of or from any Governmental Authority relating to environmental
matters connected with any Property.
"Environmental Laws" shall mean all laws relating to the
environmental, safety, health and the regulation of Contaminants, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Superfund Amendments and
Reauthorization Act of 1986, Public Law ▇▇. ▇▇-▇▇▇, ▇▇▇ ▇▇▇▇. ▇▇▇, the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C.
Section 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), as such laws have been and hereafter may be
amended or supplemented, and any analogous future federal, or present or future
state or local laws and all rules and regulations promulgated pursuant thereto.
"Equipment Collateral" shall mean all equipment, machinery, furniture,
furnishings and fixtures owned or leased by Borrower located on, or used or
useful in the operation of a convenience store business at any Financed
Convenience Store Location, including, without limitation, the convenience
store, together with all furniture, fixtures, equipment in the convenience
store, any and all lighting (including without limitation any and all lighting
fixtures, lighting pedestals, and flood lights), removable signage of all
varieties (to the extent owned and not leased, except as provided in the
Acquisition Assignment Agreement), sprinkler controls, sprinkler solenoids,
sprinkler heads, exterior menu boards and exterior intercom ordering systems,
exterior music speakers and pedestals, and any and all personal property of any
kind or nature contained in, on, or around and/or associated with in any manner
the operation of the convenience store, and all building and construction
materials, supplies and equipment incorporated in the convenience store and all
machinery, appliances, pipes, conduits, generators, engines, pumps, motors,
compressors, boilers, condensing units, disposals, sprinklers, wiring, and
furnishings of every kind and description which may be used or useful in
connection with the operation of and located inside the convenience store; and
any and all gasoline or petroleum equipment for use with gasoline or petroleum
products, utensils, parts and spare parts therefor; all outside removable items
and any and all ice machines, ice cream machines, warmers, refrigerators,
freezers, ovens, and toasters; all security, fire, smoke and other alarm
systems; Borrower's interests in all cash registers and point-of-sale
terminals; all computers (hardware and software); all in-store communication
devices; together with any and all extensions, additions, improvements,
betterments, after-acquired property that constitutes Equipment Collateral of
the nature described herein, renewals, replacements and substitutions or
proceeds from a voluntary or involuntary sale, liquidation or conversion of any
of the foregoing; and all attachments, additions and accessions thereto, all
whether now or hereafter existing or acquired; provided, that notwithstanding
anything herein to the contrary, Equipment Collateral shall not include
inventory, accounts receivable or proceeds therefrom.
"Event of Default" shall mean any of the events or conditions
described in Article 7, provided that any requirement for the giving of notice
or the lapse of time, or both, has been satisfied.
-3-
4
"Existing Locations" shall have the meaning ascribed thereto in the
initial recitals to this Agreement.
"Financed Convenience Store Location" shall mean each parcel of real
property, either owned or leased by Borrower, on which Borrower is conducting
or is to conduct, a convenience store business with financing provided by
Lender, in whole or in part, at the Acquired Locations and the Existing
Locations, and any and all improvements thereto.
"Fractionator" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
"GAAP" shall mean generally accepted accounting principles which are
(a) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors as in effect from time to time,
(b) such that a certified public accountant would, insofar as the use of
accounting principles is pertinent, be in a position to deliver an unqualified
opinion as to financial statements in which such principles have been properly
applied and (c) applied on a basis consistent with prior periods; provided that
any changes in GAAP after the date hereof that would adversely affect Borrower
in the calculation of the covenants set forth in Section 6 shall be excluded in
making such calculations unless Borrower or any Affiliate has entered into any
agreement or contract which contains a more restrictive definition or
interpretation of GAAP, in which case Borrower shall apply such more
restrictive definition or interpretation of GAAP in calculating the covenants
set forth in Section 6.
"Governmental Authority" shall mean any nation or government, federal,
state, city, town, municipality, county, local or political subdivision thereof
or thereto and any department, commission, instrumentality or agency exercising
executive, legislative, judicial, regulatory or administrative functions on
behalf thereof.
"Guarantors" shall mean Portfield, Wescourt and Wesfrac, collectively
(each individually, a "Guarantor").
"Guaranty" shall mean that certain Guaranty dated the date hereof
executed and delivered by each of the Guarantors in favor of Lender, which
Guaranty shall be in form and substance reasonably satisfactory to Lender.
"Hazardous Materials" shall include Hazardous Substances, as defined
by the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., any petroleum or petroleum products (excluding a
small quantity of gasoline and oil used in maintenance equipment on the
Property), asbestos or asbestos containing material, or any other hazardous
substances, hazardous wastes or hazardous materials as defined by other
Environmental Laws.
"Headquarters" shall mean the address of Borrower located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇ & ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Indebtedness" shall mean, without duplication, all obligations,
contingent and otherwise, which in accordance with GAAP should be classified
upon an obligor's consolidated balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including, without limitation,
in any event and whether or not so classified: (a) all debt and similar
monetary obligations, whether direct or indirect; (b) all liabilities secured
by any mortgage, pledge, security interest, lien, charge, or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (c) all guarantees,
endorsements and other contingent obligations, whether direct or indirect, in
respect of Indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of
credit, except that Indebtedness shall not include the amount of Borrower's
obligations under guaranties for the benefit of financial institutions lending
to dealers that enter into long-term exclusive supply contracts with an
Affiliate of Borrower.
"Independent Accountants" shall mean a firm of independent public
accountants selected on behalf of Borrower by the Board of Directors of
Borrower and reasonably acceptable to Lender, it being acknowledged by Lender
that Coopers & ▇▇▇▇▇▇▇ is so acceptable.
-4-
5
"Intercreditor Agreement" shall mean that certain Intercreditor and
Subordination Agreement dated as of the date hereof among Borrower, Lender,
Wesfrac, NCFC, The WLD Trust, Portfield, Wescourt and the other parties
thereto.
"Lender" shall have the meaning ascribed thereto in the initial
recitals to this Agreement. The term "Lender" shall also include any
Participant to whom Lender shall assign, in whole or in part, its right, title
and interest in and to the Obligations and hereunder subsequent to the Closing
Date.
"Loan Documents" shall mean this Agreement, the Term Note, each
Mortgage, each financing statement, the Guaranty, the Wesfrac Security
Agreement, the Intercreditor Agreement, the Wescourt Pledge Agreement, and each
and every other document, instrument, certificate and agreement executed and/or
delivered by Borrower, Wescourt or Wesfrac in connection herewith, or any one,
more, or all of the foregoing, all as the context shall require.
"Loan Year" means each period of twelve (12) consecutive months
commencing on the Closing Date and on each anniversary thereof.
"Material Adverse Change" shall mean any change occurring in the
business, operations, prospects, properties or condition (financial or
otherwise) of Borrower or any guarantor of the Obligations, which materially
and adversely affects (i) the ability of Borrower to own or operate its assets
or conduct its business as a going concern, (ii) the ability of Borrower to pay
the Obligations as and when due and payable or otherwise perform its
obligations hereunder or under the other Loan Documents; or (iii) the failure
or inability, of Borrower or any guarantor of the Obligations to pay or perform
its obligations to its creditors generally.
"Material Adverse Effect" shall mean an effect that has resulted in,
will result in, or is reasonably likely to result in, a Material Adverse
Change.
"Material Agreements" shall mean all franchise and distribution rights
agreements with any petroleum companies; all real property leases with respect
to any Financed Convenience Store Location; all loan and other debt instruments
and agreements; all management, employment and labor agreements; and any and
all other agreements, not specified hereinabove; provided, that in all cases
cited above, the loss, diminution or impairment of any such other agreement
would have, or would reasonably be expected to have, a Material Adverse Effect.
"Mortgage" shall mean any mortgage, deed of trust or similar
instrument pursuant to which Lender shall obtain a mortgage lien, security
interest or security title on or in any right, title and ownership of Borrower,
as owner, lessee or otherwise, in and to any Financed Convenience Store
Location.
"NCFC" means National Canada Finance Corp.
"NCFC Lien" means NCFC's security interests in any assets pledged to
NCFC from time to time pursuant to the NCFC Loan Agreement other than security
interests in any Collateral.
"NCFC Loan Agreement" means that certain Loan and Security Agreement
dated as of October 6, 1995 among NCFC, Portfield, Wesfrac, Wescourt, Petro-
▇▇▇▇ ▇▇▇▇▇▇▇▇, Wesfrac Fruita and certain other borrowers (as such agreement
has been or will be amended from time to time) and each of the agreements
related thereto, or any replacement or similar credit facility.
"Net Worth" shall mean, at any time, the total of shareholders' equity
(including capital stock, additional paid-in capital, and retained earnings)
less intangible assets (including goodwill of Borrower) plus debt subordinated
to the Obligations calculated in accordance with GAAP.
-5-
6
"Obligations" shall mean and include any and all indebtedness,
liabilities and obligations of Borrower to Lender arising hereunder or as a
result hereof or under any other Loan Document, whether evidenced by the Term
Note or otherwise, and any and all extensions or renewals thereof in whole or
in part.
"One Month LIBOR Rate" shall mean, for each calendar month, a rate of
interest equal to:
(a) the rate of interest determined by Lender at which
deposits in U.S. Dollars are offered for the one (1) month interest period
based on information presented on the Reuters Screen LIBO Page as of 11:00 A.M.
(London time) on the day which is two (2) Business Days prior to the first day
of each calendar month; provided that if at least two (2) such offered rates
appear on the Reuters Screen LIBO Page in respect of such interest period, the
arithmetic mean of all such rates (as determined by Lender) will be the rate
used; provided further that if there are fewer than two (2) offered rates or
Reuters ceases to provide LIBOR quotations, such rate shall be the arithmetic
mean rate of interest determined by Lender at which deposits in U.S. Dollars
are offered for the one (1) month interest period by Bankers Trust Company and
Chase Bank, N.A. (or their respective successors) to banks with combined
capital and surplus in excess of five hundred million dollars ($500,000,000) in
the London interbank market as of 11:00 A.M. (London time) on the applicable
interest rate determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of each calendar month (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto, as now and from time to
time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) which are required to
be maintained by a member bank of the Federal Reserve System; plus
(c) three and one-quarter percent (3.25%);
(such rate to be adjusted to the nearest one sixteenth of one percent
(1/16 of 1%) or, if there is no nearest one sixteenth of one percent (1/16 of
1%), to the next higher one sixteenth of one percent (1/16 of 1%)).
For purposes of the initial funding on the Closing Date, the
Applicable Rate shall be the One Month LIBOR Rate in effect on the Closing
Date, with interest payable in arrears and calculated daily on the basis of a
365 day year for the actual number of days elapsed during such calendar month.
"Participant" shall mean any Person to whom, now or hereafter, Lender
sells a participation interest in, or makes an assignment of, its right, title
or interest hereunder and in the Obligations (whether in whole or in part).
"Permit" shall mean any permit, approval, authorization, license,
variance, or permission required from a Governmental Authority having
jurisdiction under an applicable Environmental Law.
"Permitted Encumbrances" shall mean:
(1) liens for taxes, assessments or other
governmental charges not yet due and payable;
(2) statutory liens incurred by Borrower or its
subsidiaries of landlords, carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred
in the ordinary course of business for sums not more than thirty (30)
days delinquent or which are being contested in good faith; provided
that a reserve or other appropriate provision shall have been made
therefor if required by GAAP and the aggregate amount of such liens is
less than $50,000;
(3) liens (other than any lien imposed by the
Employee Retirement Income Security Act of 1974 or any rule or
regulation promulgated thereunder) incurred or deposits made
-6-
7
in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(4) liens incurred by Borrower or its
subsidiaries for purchase money obligations in an aggregate amount not
to exceed $500,000 at any time, provided any such lien encumbers only
the asset so purchased or leased and secures only Indebtedness
incurred for the purchase of such asset;
(5) any attachment or judgment lien not
constituting an Event of Default under Section 7;
(6) easements, rights of way, restrictions, and
other similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of Borrower or any
of its subsidiaries;
(7) the NCFC Lien;
(8) the Portfield Lien;
(9) involuntary liens incurred in the ordinary
course of Borrower's business (other than in connection with
Indebtedness) in an aggregate principal amount not to exceed $50,000
at any time at any Financed Convenience Store Location;
(10) liens in favor of Lender; and
(11) the liens set forth on Schedule 1.1.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated association, business trust, sole proprietorship, or joint
venture, a government or any department, agency, political subdivision or
instrumentality thereof, or any other entity or organization.
"Petromark Montrose" shall have the meaning ascribed thereto in the
initial recitals to this Agreement.
"Portfield" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
"Portfield Lien" shall mean Portfield's security interest in those
assets of Borrower pledged to Portfield to secure performance of Borrower's
obligations under a certain subordinated promissory note issued by Borrower to
Portfield in the principal amount of $2,000,000, together with the assignment
of such security interest to The WLD Trust pursuant to a certain WLD Assignment
and Security Agreement dated as of the date hereof among Portfield, The WLD
Trust, Borrower and the other parties named therein, which promissory note and
lien are subject to the terms of the Intercreditor Agreement.
"Property" shall mean any real or personal property owned, leased or
operated by Borrower.
"Qualified Initial Public Offering" means an initial underwritten
public offering and sale for cash by Portfield or its successors of the common
stock of Portfield or its successors to an underwriter or underwriters pursuant
to a "firm commitment" underwriting agreement and registration statement
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, in which the Company receives gross
proceeds of at least $10,000,000.
-7-
8
"Release" shall mean any actual or threatened release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of Contaminants into the indoor or outdoor environment or
into or out of any Property, through or into the air, soil, subsurface strata,
surface water or ground water.
"Remedial Action" shall mean all actions required to (1) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (2) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(3) perform pre-remedial studies and investigations and post-remedial
monitoring and care in respect of actions contemplated in the preceding clauses
(1) and (2), in each instance in compliance with Environmental Laws.
"Term Loan" shall mean the term loan made by Lender to Borrower
pursuant to Section 2.1 below.
"Term Loan Facility" shall mean the term loan facility in the maximum
amount of Eight Million Dollars ($8,000,000) established by Lender in favor of
Borrower pursuant to Section 2.1.
"Term Note" shall mean the Term Note issued by Borrower to Lender to
evidence the repayment obligation associated with the Term Loan, together with
any extensions or renewals thereof, in whole or in part.
"UCC" shall mean the Uniform Commercial Code of Illinois, as in effect
from time to time.
"Wesfrac" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
"Wesfrac Security Agreement" shall mean that certain Security
Agreement dated the date hereof executed and delivered by Wesfrac in favor of
Lender, which Security Agreement shall be in form and substance reasonably
satisfactory to Lender.
"Wescourt" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
"Wescourt Pledge Agreement" shall mean that certain Pledge Agreement
dated the date hereof executed and delivered by Wescourt in favor of Lender
pledging all of the shares of Wesfrac, which Pledge Agreement shall be in form
and substance reasonably satisfactory to Lender.
"Westec Fruita" shall have the meaning ascribed thereto in the initial
recitals to this Agreement.
1.2. USE OF DEFINED TERMS. All terms defined in this Agreement and
the Exhibits shall have the same defined meanings when used in any other Loan
Documents, unless the context shall require otherwise.
1.3. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall have the meanings generally attributed to such terms under GAAP.
1.4. UCC TERMS. The terms "equipment", "proceeds" and "products", as
and when used in the Loan Documents, together with any other or similar terms
not specifically defined herein but which are defined in the UCC shall have the
same meanings as given to such terms therein.
1.5. TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses or Exhibits shall refer to the
corresponding Article, Section, Subsection, paragraph, clause, subclause of, or
Exhibit attached to, this Agreement, unless specific reference is made to the
articles, sections or other subdivisions divisions of, or Exhibit to, another
document or instrument.
-8-
9
1.6. EXHIBITS. All Exhibits attached hereto are by reference made a
part hereof as fully as if the contents thereof were set forth expressly
herein.
2. THE FINANCING.
2.1. TERM LOAN FACILITY. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
set forth herein and in the Loan Documents, Lender agrees to lend Borrower, on
the Closing Date, an amount not to exceed Eight Million Dollars
($8,000,000.00), for the purpose of financing the Acquired Locations. The
amount of the Term Loan Facility shall be reduced dollar for dollar to the
extent the purchase price for the Acquired Locations is reduced below Ten
Million Dollars $10,000,000. The Term Loan shall be funded in one drawing and
no amount of the Term Loan may be reborrowed once disbursed, notwithstanding
its repayment. Borrower shall make principal and interest payments on the
dates and in the amounts as set forth in Sections 2.3 and 2.4.
2.2. TERM NOTE. The indebtedness represented by the Term Loan shall
be evidenced by a Term Note. The Term Note shall be executed by Borrower and
delivered to Lender coincident with the disbursement of the Term Loan on the
Closing Date.
2.3. AMORTIZATION. The principal amount of the Term Loan shall be
repaid in eighty-five (85) consecutive monthly installments based upon an the
amortization schedule set forth in Exhibit C hereto, with a final balloon
payment being equal to the then unpaid principal on such Term Loan, plus any
accrued and outstanding interest thereon. The final balloon payment shall be
due and payable on the anniversary of the eighty-fifth (85th) month after the
Closing Date.
2.4. INTEREST. The Term Note shall bear interest at the One Month
LIBOR Rate. Interest shall be computed on the unpaid daily outstanding
principal balance of the Term Note on the day which is two (2) Business Days
prior to the first day of each calendar month on the basis of a 365 day year
for the actual number of days elapsed during such calendar month. Interest on
the Term Loan shall be payable monthly in arrears, commencing on April 1, 1997,
to be collected for the preceding calendar month (or, in the case of the first
such payment, from the Closing Date through the end of such calendar month),
and thereafter interest payments shall be made on the first Business Day of
each succeeding calendar month and upon payment or prepayment in full (or in
part to the extent permitted herein) of the Term Note. Notwithstanding the
foregoing, however, from and after the occurrence of any Event of Default, and
continuing for so long thereafter as such Event of Default shall be continuing,
Lender shall have the right to increase the interest rate payable on the Term
Note to the Default Rate applicable thereto upon giving Borrower written notice
thereof, and Borrower shall be responsible for the payment of the additional
interest resulting therefrom in addition to the regularly scheduled principal
amortization of the Term Note, as described more particularly in Section 2.3,
and accrued interest thereon.
2.5. SECURITY DEPOSIT/FEE. The Fifty Thousand Dollar ($50,000)
security deposit presently held by Lender will be refunded to Borrower, less
Lender's expenses, within thirty (30) days from the Closing Date. If the Term
Loan is not funded, other than as a result of a breach by Lender under this
Agreement, then Lender may retain the deposit as liquidated damages and not as
a penalty, without in any way reducing Borrower's liabilities with respect to
Lender's expenses.
2.6. LATE CHARGE. If payment of any principal of, or interest on,
the Term Note or any other sum payable hereunder or under any other Loan
Document is not received within ten (10) calendar days after its due date,
Lender shall have the right to impose a late charge relative to such payment in
an amount equal to up to five percent (5%) of the amount of such past due
payment, which charge, if imposed by Lender, shall be due and payable by
Borrower immediately upon receipt of notice thereof.
2.7. VOLUNTARY AND MANDATORY PREPAYMENT.
-9-
10
(a) The Term Note may be prepaid in whole, but not in part, by
Borrower at any time after the first Loan Year, provided, however, that any
such prepayment must be preceded by at least thirty (30) calendar days prior
written notice thereof to Lender; and, provided, further, that any such
prepayment must be accompanied by the payment of all then accrued, but unpaid,
interest on the principal amount to be prepaid together with a prepayment
premium, representing liquidated damages to Lender for the loss of its bargain
and not a penalty, equal in amount to the amount calculated as follows:
Two (2%) percent of the principal amount prepaid if such prepayment
occurs in the second Loan Year; one (1%) percent of the principal
amount prepaid if such prepayment occurs in the third Loan Year; one-
half of one percent (0.5%) of the principal amount prepaid if such
prepayment occurs in the fourth Loan Year, and without premium at all
times thereafter.
(b) Borrower will within 10 days of occurrence report to Lender any
loss, damage, fire, theft or other casualty to any Collateral that is equal to
or greater than $250,000 in the aggregate, and whether Borrower has repaired
(or caused to be repaired) or replaced, or intends to repair (or cause to be
repaired) or replace, such Collateral. Lender is authorized and empowered to
make or file proofs of loss or damage (in each case, so long as no Event of
Default shall have occurred and be continuing, only so long as such loss or
damages is equal to or greater than $500,000) and to settle and adjust any
claim under insurance policies which insure against such risks, or to direct
Borrower, in writing, to agree with the insurance carrier(s) on the amount to
be paid in regard to such loss. All insurance proceeds and other amounts
receivable as a result of any such casualty shall at Lender's option, be
immediately paid to Lender or made available to Borrower for the repair,
replacement or restoration of the subject Collateral as set forth in this
subsection 2.7(c). So long as an Event of Default shall have occurred and be
continuing, all insurance proceeds, regardless of amount, shall be payable
directly to Lender.
Borrower shall immediately notify Lender of any action or proceeding
relating to any condemnation or other taking, whether direct or indirect, with
respect to any Financed Convenience Store Location, or part thereof, and
Borrower shall appear in and prosecute any such action or proceeding unless
otherwise directed by Lender in writing. Borrower authorizes Lender, at
Lender's option, as attorney-in-fact for Borrower, to commence, appear in and
prosecute, in Lender's or Borrower's name, any action or proceeding relating to
any condemnation or other taking of any Financed Convenience Store Location,
whether direct or indirect, and to settle or compromise any claim in connection
with such condemnation or other taking, provided such claim is for an amount
equal to or greater than $500,000. The proceeds of any award, payment or claim
for damages, direct or consequential, in connection with any such condemnation
or other taking, whether direct or indirect, of any Financed Convenience Store
Location, or part thereof, or for conveyances in lieu of condemnation, are
hereby assigned to and shall be paid to Lender as further security for the
payment and performance of the Obligations. So long as an Event of Default
shall have occurred and be continuing, all condemnation or similar proceeds,
regardless of amount, shall be payable directly to Lender.
Provided no Event of Default then exists hereunder, the net insurance
proceeds and net proceeds of any condemnation award (in each case after
deduction only of Lender's reasonable costs and expenses, if any, in collecting
the same) in amounts greater than $500,000 shall be made available for the
restoration or repair of the Financed Convenience Store Location if, in
Lender's sole judgment (i) restoration or repair and the continued operation of
the Financed Convenience Store Location is economically feasible, (ii) the
value of Lender's security is not materially reduced, (iii) the loss or
condemnation, as applicable, does not occur in the six (6) month period
preceding the stated maturity date and Lender's independent consultant
certifies that the restoration of the Financed Convenience Store Location can
be completed at least 90 days prior to the maturity date. Notwithstanding the
foregoing, it shall be a condition precedent to any disbursement of insurance
proceeds held by Lender hereunder that Lender shall have approved (x) all plans
and specifications for any proposed repair or restoration, (y) the construction
schedule and (z) the architect's and general contractor's contract for all
restoration that exceeds $500,000.00 in the aggregate. Lender may establish
other conditions it deems reasonably necessary to assure the work is fully
completed in a good and workmanlike manner free of all liens or claims by
reason thereof. If the net insurance proceeds or net proceeds of any
condemnation award, as applicable, are made available for restoration or
repair, such work shall be completed by Borrower in an expeditious and diligent
fashion, and in compliance with all applicable laws, rules and regulations. At
Lender's option, the net insurance proceeds or net proceeds of any condemnation
award equal to or greater than $500,000, as applicable, shall be disbursed
pursuant to a construction escrow acceptable to Lender. If following the
-10-
11
final payments for the completion of such restoration or repair there are any
net insurance proceeds or net proceeds of any condemnation award, as
applicable, remaining, such proceeds shall be paid (I) to Lender to be applied
to the Obligations, whether or not due and payable until paid in full, and (II)
then to Borrower. If an Event of Default then exists, or any of the conditions
set forth in subparagraphs (i) through (iii) of this subsection 2.7(b) have not
been met or satisfied, the net insurance proceeds or net proceeds of any
condemnation award, as applicable, shall be applied to repay the Obligations,
whether or not due and payable, with any excess paid to Borrower.
2.8. NATURE OF CHARGES IMPOSED. Lender and Borrower hereby agree
that (i) the only charges imposed by Lender upon Borrower for the use of money
in connection with the Term Loan Facility are and shall be interest at the
rates per annum expressed in Section 2.4 hereinabove and (ii) all other charges
imposed by Lender upon Borrower in connection with the Term Loan Facility,
including, without limitation, the deposit heretofore made by Borrower, as
described in Section 2.5, the late charge provided for in Section 2.6, and any
prepayment premium hereafter paid by Borrower pursuant to Section 2.7, are and
shall be deemed to be charges made to compensate Lender for underwriting and
administrative services and costs, and other services and costs performed and
incurred, and to be performed and incurred, by Lender in connection with the
creation and administration of the Term Loan Facility, and shall under no
circumstances be deemed to be charges for the use of money for purposes of
Illinois law.
2.9. SAVINGS CLAUSE. Notwithstanding the foregoing or any provision
contained in this Agreement, the Term Note or any other Loan Document to the
contrary, if at any time the amount of interest computed with respect to the
Term Note on the basis of the Applicable Rate would exceed the amount of such
interest computed upon the basis of the maximum rate of interest permitted by
applicable state or federal law in effect from time to time hereafter, after
taking into account, to the extent required by applicable law, any and all
fees, payments, charges and calculations provided for in this Agreement or in
any other agreement between Borrower and Lender (the "Maximum Legal Rate"), the
interest payable under this Agreement shall be computed upon the basis of the
Maximum Legal Rate, but any subsequent reduction in the Applicable Rate shall
not reduce such interest thereafter payable hereunder below the amount computed
on the basis of the Maximum Legal Rate until the aggregate amount of such
interest accrued and payable under this Agreement equals the total amount of
interest which would have accrued if such interest had been at all times
computed solely on the basis of the Applicable Rate. No agreements,
conditions, provisions or stipulations contained in this Agreement, the Term
Note or any other Loan Document or default of the Borrower, or the exercise by
the Lender of the right to accelerate the payment of the maturity of principal
and interest, or to exercise any option whatsoever contained in this Agreement
or any other Loan Document, or arising of any contingency whatsoever, shall
entitle Lender to collect, in any event, interest exceeding the Maximum Legal
Rate and in no event shall the Borrower be obligated to pay interest exceeding
such Maximum Legal Rate and all agreements, conditions or stipulations, if any,
which may in any event or contingency whatsoever operate to bind, obligate or
compel the Borrower to pay a rate of interest exceeding the Maximum Legal Rate,
shall be without binding force or effect, at law or in equity, to the extent
only of the excess of interest over such Maximum Legal Rate. In the event any
interest is charged in excess of the Maximum Legal Rate ("Excess Interest"),
Borrower acknowledges and stipulates that any such charge shall be the result
of an accidental and bona fide error, and such Excess Interest shall be, first,
applied to reduce the principal then unpaid hereunder; second, applied to
reduce any other Obligations, until paid in full; and third, returned to the
Borrower, it being the intention of the parties hereto not to enter at any time
into a usurious or otherwise illegal relationship. The Borrower recognizes
that, with fluctuations in the interest rate and the Maximum Legal Rate, such
an unintentional result could inadvertently occur. By the execution of this
Agreement, the Borrower covenants that (i) the credit or return of any Excess
Interest shall constitute the acceptance by the Borrower of such Excess
Interest, and (ii) the Borrower shall not seek or pursue any other remedy,
legal or equitable, against Lender, based in whole or in part upon the charging
or receiving of any interest in excess of the maximum authorized by applicable
law. For the purpose of determining whether or not any Excess Interest has been
contracted for, charged or received by Lender, all interest at any time
contracted for, charged or received by the Lender in connection with this
Agreement shall be amortized, prorated, allocated and spread in equal parts
during the entire term of this Agreement. The provisions of this Section shall
be deemed to be incorporated into each and every Term Note and other Loan
Document or communication relating to the Obligations which sets forth or
prescribes any account, right or claim or alleged account, right or claim of
the Lender with respect to the Borrower (or any other obligor in respect of
Obligations), whether or not any provision of this Section is referred to
therein. All such documents and communications and all
-11-
12
figures set forth therein shall, for the sole purpose of computing the extent
of the liabilities and obligations of the Borrower (or other obligor) asserted
by the Lender thereunder, be automatically recomputed by any Borrower or
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by this Section. If the applicable state or
federal law is amended in the future to allow a greater rate of interest to be
charged under this Agreement or any other Loan Documents than is presently
allowed by applicable state or federal law, then the limitation of interest
under this Section shall be increased to the maximum rate of interest allowed
by applicable state or federal law as amended, which increase shall be
effective hereunder on the effective date of such amendment, and all interest
charges owing to the Lender by reason thereof shall be payable upon demand.
2.10 BORROWER'S LOAN ACCOUNT. Lender will maintain on its books
and records all loans and payments made to Lender by Borrower. This loan
account will be maintained in accordance with Lender's customary accounting
practices. Borrower promises to pay such amounts as may become or declare due
pursuant to the terms of this Agreement. The balance of the loan account
recorded on Lender's books and records shall absent manifest error be
presumptive evidence of the amounts due and owing to Lender by Borrower,
provided that any failure by Lender to such record or error in recording shall
not limit or otherwise affect Borrower's obligations to pay Borrower's
Obligations.
3. SECURITY INTEREST -- COLLATERAL. As security for the payment of
the Term Note and all other Obligations, Borrower hereby grants to Lender a
continuing, general lien upon, security interest in, and security title to the
Collateral. With respect to the Collateral, Borrower hereby, represents,
warrants and covenants to Lender as set forth in Sections 3.1 through 3.9,
inclusive.
3.1. GOOD TITLE; NO EXISTING ENCUMBRANCES. Borrower owns the
Collateral free and clear of any prior security interest, lien or encumbrance
thereon other than in favor of Lender other than Permitted Encumbrances, and no
financing statements, registration statements, certificates of title or other
evidences of the grant of a security interest respecting the Collateral exist
on any public records as of the date hereof, other than any in favor of Lender.
3.2. RIGHT TO GRANT SECURITY INTEREST; NO FURTHER ENCUMBRANCES.
Borrower has the right to grant the security interest in the Collateral
described in Section 3.1; Borrower will pay all sales, use, franchise and other
taxes and other charges against the Collateral; Borrower will not use the
Collateral illegally or allow the Collateral to be encumbered except for the
security interest in favor of Lender granted herein and Permitted Encumbrances;
provided that Borrower makes no representations or warranties concerning its
right to grant the security interest in the liquor licenses or lottery
licenses.
3.3. CONDITION OF COLLATERAL. To the best knowledge of Borrower, all
Equipment Collateral is in good working order and repair as of the Closing
Date, subject to normal wear and tear. Borrower will maintain the Equipment
Collateral in good working order and repair, in accordance with prudent
business judgment, subsequent to the Closing Date, subject to ordinary wear and
tear. Borrower further will take such actions subsequent to the Closing Date
as may be reasonably necessary to keep any manufacturer's warranty in effect
with respect to the Equipment Collateral.
3.4. NO SALE OF COLLATERAL. Subject to the following sentence,
Borrower will not sell, assign, lease, license, exchange, or otherwise dispose
of its right, title or interest in any of the Collateral, without in each case
first obtaining the prior written consent of Lender thereto, which shall not be
unreasonably withheld or delayed. Borrower will be permitted to substitute for
the existing Equipment Collateral, equipment of equal or greater value
(determined as of the time of substitution) without the prior written consent
of Lender, provided Lender maintains or is granted a first priority perfected
security interest in the substituted Collateral. Notwithstanding the
foregoing, Borrower may convert its existing leasehold interest in any Financed
Convenience Store Location to ownership in fee simple by Borrower provided
Borrower shall have first caused to be delivered to Lender (i) a deed of trust
or mortgage deed to secure debt or other similar instrument pursuant to which
Borrower shall convey to Lender or to a trustee for the benefit of Lender the
entirety of Borrower's right, title and interest in and to such Financed
Convenience Store Location, and (ii) an ALTA mortgagee's title insurance
policy, issued at Borrower's expense, by a title insurer selected by Borrower,
but reasonably acceptable to Lender insuring Lender's security interest in such
-12-
13
Financed Convenience Store Location in such amount, and containing only such
conditions, limitations and exceptions as shall be acceptable to Lender.
3.5. WAIVERS. Borrower agrees to obtain, on Lender's behalf, such
waivers or consents from third parties, including, without limitation, any
lessor, licensor, operator, servicer or vendor, as Lender may reasonably
request at any time, in order to assure Lender in regard to the perfection and
priority of its security interest in, and ability to realize on, the
Collateral, other than parties having priority over Lender, in Lender's
reasonable opinion, as a matter of law .
3.6. FURTHER ASSURANCES. Borrower further shall duly execute and/or
deliver (or cause to be duly executed and/or delivered) to Lender any
instrument, invoice, registration certificate, certificate of title,
application, document, document of title, dock warrant, dock receipt, warehouse
receipt, ▇▇▇▇ of lading, order, financing statement, assignment, waiver,
consent or other writing which may be necessary to Lender to reasonably carry
out the terms of this Agreement and any of the other Loan Documents and to
perfect its security interest in and facilitate its realization on the
Collateral. Borrower shall perform or cause to be performed such acts as
Lender may reasonably request to establish and maintain for Lender a valid and
perfected first priority security interest in the Collateral, free and clear of
any liens, encumbrances or security interests other than in favor of Lender and
other than Permitted Encumbrances.
3.7. RIGHT TO INSPECT. Lender or any Participant have the right to
call at the Headquarters or at any Financed Convenience Store Location at any
reasonable time, and, without hindrance or delay, inspect, audit and check the
Collateral and make extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to the transactions
contemplated herein and to the Collateral, provided that unless an Event of
Default shall have occurred and be continuing such right shall be limited to
regular business hours upon one Business Day's prior notice.
3.8. CHANGE OF NAME. Borrower hereby acknowledges and agrees that
if, at any time hereafter, Borrower elects to move its chief executive office
and principal place of business from the Headquarters, or if Borrower elects to
change its name, identity or its structure to other than a corporate structure
Borrower will notify Lender in writing at least thirty (30) days prior thereto
(provided that the foregoing shall not be deemed a consent to any action
otherwise prohibited by the terms of this Agreement or any of the other Loan
Documents) and execute (or cause to be executed) such financing statements, or
amendments thereto, or other documents as Lender then may reasonably require in
response to such changed condition in accordance with Sections 3.5 and 3.6.
3.9. CHANGE OF LOCATION. Borrower further agrees not to remove any
Equipment Collateral from any Financed Convenience Store Location to any other
location without giving fifteen (15) days prior written notice to Lender.
4. GENERAL REPRESENTATIONS AND WARRANTIES. In order to induce Lender
to enter into this Agreement and to make the Term Loan, Borrower hereby,
represents and warrants to Lender as set forth in Sections 4.1 through 4.7,
inclusive.
4.1. EXISTENCE. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado operating
in accordance with its articles of incorporation and by-laws. Borrower is duly
qualified to transact business in the jurisdiction where any Financed
Convenience Store Location is located. The principal place of business and
chief executive office of Borrower is located at the Headquarters. Borrower
keeps its books and records concerning the Collateral at the Headquarters.
Schedule 4.1 attached hereto sets forth all of the locations of the Collateral.
Borrower was organized on November 20, 1996 and has conducted no business other
than operation of the Existing Locations (which operation commenced March 1,
1997) and the Acquisition of the Acquired Locations.
4.2. AUTHORITY. Borrower has the power to make, deliver and perform
under the Acquisition Agreement, this Agreement, the Term Note and the other
Loan Documents, and to borrow hereunder, and has taken all necessary and
appropriate action to authorize the execution, delivery and performance of the
Loan Documents and
-13-
14
the Acquisition Agreement. The Acquisition Agreement and this Agreement
constitutes, and the Term Note and the remainder of the Loan Documents to which
Borrower is a party, when executed and delivered for value received, will
constitute, the valid obligations of Borrower, legally binding upon it and
enforceable against it in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency or other similar
creditors rights generally and equitable remedies may be limited by equitable
principles of law. The officers of Borrower whose names are inscribed below are
duly authorized and empowered to execute, attest and deliver the Acquisition
Agreement and related documents, this Agreement, the Term Note and the
remainder of the Loan Documents to which Borrower is a party for and on behalf
of Borrower, and to bind Borrower accordingly thereby.
4.3. NO MATERIAL LITIGATION. There are no proceedings pending or, so
far as Borrower knows, threatened, before any court, arbitration panel or
administrative agency, no material disputes with any contract party and no
pending or threatened labor action which, in each case, if decided adversely to
Borrower, would have a Material Adverse Effect.
4.4. PAYMENT OF TAXES. Borrower has filed or caused to be filed any
federal income tax returns required to be filed by it, and, to the best of its
knowledge following diligent inquiry, all other tax returns required to be
filed by it, and has paid all taxes not yet delinquent and any assessments made
against it. Borrower has not participated in any "prohibited transaction" (as
defined in Section 4975 of the Internal Revenue Code of 1986) that could
subject Borrower to any tax or penalty.
4.5. NO VIOLATIONS, GENERALLY. The execution, delivery and
performance by Borrower of the Acquisition Agreement, this Agreement, the Term
Note and the other Loan Documents to which it is a party do not and will not
require any consent or approval of any Person, except to the extent obtained by
Borrower on or prior to the Closing Date; or violate any material provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to Borrower; or
result in a breach of or constitute a default under any Material Agreement;
and, to the best of Borrower's knowledge following diligent inquiry, Borrower
is not in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any Material Agreement, which
default or violation, in any such case, would result in a Material Adverse
Effect.
4.6. FINANCIAL STATEMENTS; LIABILITIES. The audited consolidated
financial statements of Portfield and its subsidiaries for its fiscal year
ending February 28, 1996 and the unaudited consolidated financial statements of
Portfield for its interim period ending on December 31, 1996 accurately and
fairly represent the financial condition of Portfield and the transactions in
its equity accounts as of the dates referred to therein, and have been prepared
in accordance with GAAP. There are no material liabilities, direct or
indirect, fixed or contingent, of Portfield or its subsidiaries as of the date
hereof which are not reflected in such financial statements or in the notes
thereto. There has been no Material Adverse Change since December 31, 1996 in
the business, operations, prospects, properties, condition (financial or
otherwise) of Portfield or its subsidiaries. No financial statements of
Borrower currently exist.
4.7. POLLUTION AND ENVIRONMENTAL CONTROL. Except as disclosed on
Schedule 4.7, with respect to each Financed Convenience Store Location (i) the
business operations of Borrower comply in all material respects with all
applicable Environmental Laws; (ii) Borrower has obtained all environmental,
health and safety Permits necessary for the operation of Borrower's business;
and all such Permits are valid, and in good standing and Borrower is in
compliance in all respects with all terms and conditions of such Permits; (iii)
Borrower is not subject to any outstanding written order or agreement with any
Governmental Authority or with any private Person respecting (a) any
Environmental Laws, (b) any Remedial Actions, or (c) any Environmental Claims
arising from the Release of a Contaminant into the environment; (iv) none of
the operations of Borrower is subject to any judicial or administrative
proceeding alleging a violation of any Environmental Law; (v) none of the
operations of Borrower is the subject of any federal or state investigation
evaluating whether any Remedial Action is needed to respond to a Release of any
Contaminant into the environment under any applicable law; (vi) except as
disclosed on environmental reports delivered to Borrower and/or Lender, neither
Borrower nor to the best of Borrower's knowledge, any predecessor of Borrower
has filed any notice under any federal or state law indicating past or present
treatment, storage, or disposal of a hazardous waste or reporting a spill or
Release of a Contaminant into the
-14-
15
environment under any applicable law; (vii) Borrower has no known contingent
liability in connection with any Release of any Contaminant into the
environment; (viii) Borrower's operations do not involve the generation,
transportation, treatment or disposal of any hazardous waste, as defined under
40 C.F.R. Parts 260-270 or any state equivalent (other than any done in
compliance with all Environmental Laws); (ix) Borrower has not disposed of any
Contaminant by placing it in or on the ground, ground water or surface water,
and, to the best of Borrower's knowledge, neither has any lessee, prior owner,
or other Person; and (x) no Lien in favor of any Governmental Authority for (A)
any liability under Environmental Laws or regulations, or (B) damages arising
from or costs incurred by such Governmental Authority in response to a Release
of a Contaminant into the environment, has been filed or attached.
5. AFFIRMATIVE COVENANTS. Borrower agrees that, so long as any
Obligations are outstanding and this Agreement has not been terminated in
writing by Lender, Borrower will comply with the covenants set forth in the
following Sections 5.1 through 5.10.
5.1. BOOKS AND RECORDS. Borrower shall maintain, at all times, true
and complete books, records and accounts in which true and correct entries are
made of its transactions in accordance with GAAP.
5.2. PERIODIC FINANCIAL STATEMENTS. Borrower shall, as soon as
practicable, and in any event within sixty (60) days after the end of each
fiscal quarter, furnish to Lender and each Participant unaudited financial
statements of Borrower and Portfield, including, in each instance, balance
sheets and income statements, on a consolidated and consolidating basis, as
appropriate, and individual profit and loss statements on each Financed
Convenience Store Location as of and for the quarterly period then ended and
for its fiscal year to date, prepared in accordance with GAAP, certified by its
chief financial officer in a certificate substantially in the form of Exhibit D
attached hereto, and accompanied by a report of Borrower's performance or
condition as of or for the corresponding date or period in the preceding fiscal
year, displayed on a comparative basis.
5.3. ANNUAL FINANCIAL STATEMENTS. Borrower shall, as soon as
practicable, and in any event within one hundred twenty (120) days after the
end of each fiscal year of Borrower, furnish to Lender and each Participant,
individual profit and loss statements on each Financed Convenience Store
Location and annual audited financial statements of Borrower, including balance
sheets, income statements and cash flow statements for the fiscal year then
ended, on a consolidated and consolidating basis, as appropriate, which have
been prepared by its Independent Accountants. Such audited financial
statements will be required to be accompanied by the Independent Accountant's
opinion, which opinion shall be in form generally recognized as "unqualified".
5.4. COMPLIANCE CERTIFICATES. Together with each of the financial
statements described in Sections 5.2 and 5.3 above, and more frequently, if
requested by Lender, Borrower shall deliver a Compliance Certificate to Lender
(together with calculation worksheets, including covenant calculations
contained in Section 7.13) signed by the chief financial officer of Borrower,
provided however that as long as no Event of Default has occurred and is
continuing, Borrower shall not be required to deliver a Compliance Certificate
more often than once per month.
5.5. PAYMENT OF TAXES. Borrower shall pay and discharge all taxes,
assessments and governmental charges upon it, its income and its properties
prior to the date on which penalties attach thereto, unless and to the extent
only that (x) such taxes, assessments and governmental charges are being
contested in good faith and by appropriate proceedings by Borrower and (y)
Borrower maintains reasonable reserves on its books therefor.
5.6. MAINTENANCE OF INSURANCE. Borrower shall insure the Collateral
against fire, theft and such other risks as Lender shall require from time to
time at the full replacement cost thereof, with Lender named as loss payee and
mortgagee thereof, with St. ▇▇▇▇ Insurance or other responsible insurance
companies rated "A-" or better by A.M. Best Company. As to other Property and
risks, including, without limitation, liability coverage, Borrower shall
maintain such insurance, with such insurers (having the minimum qualifications
described above) on such Property, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity;
provided that such insurance shall not be less, in terms of insurers, amounts,
coverages or limitations, then the insurance being maintained by Borrower on
the Closing Date; and provided, further, that such insurance shall include, in
any event, at all times, automobile and comprehensive general liability
(inclusive of products
-15-
16
liability coverage) of at least Five Million Dollars ($5,000,000), in aggregate
combined single limit coverage; that Lender shall be shown by endorsement as
"additional insured" thereon and with breach of warranty endorsement favoring
Lender. All such insurance in existence on the Closing Date shall not be
cancelable or modifiable by Borrower, thereafter, unless with the prior written
consent of Lender, or by Borrower's insurer, unless with at least thirty (30)
days advance written notice to Lender thereof (except as may be necessary to
bring such insurance into compliance herewith from time to time). Borrower
shall file with Lender on the Closing Date and at least annually thereafter or,
at Lender's request at any time from and after the occurrence of, and during
the continuance of, any Event of Default, upon its request a detailed list of
such insurance then in effect stating the names of the insurance companies, the
amounts and rates of insurance, the dates of expiration thereof, the properties
and risks covered thereby and the insured with respect thereto, together with
copies of all such policies and the insurer's certificate in regard thereto.
5.7. PRESERVATION OF EXISTENCE. Borrower shall preserve and maintain
its corporate existence, rights, franchises and privileges in the State of
Colorado and in the other jurisdiction where the nature of the convenience
store business conducted therein or the location of any Property therein
requires that such rights, franchises and privileges be preserved and
maintained; and obtain and maintain for itself all Permits, licenses,
certificates of convenience and necessity, operating rights, authorizations and
consents as shall be necessary or advisable to permit it to continue to operate
its business in the manner contemplated to be conducted by it on the Closing
Date.
5.8. COMPLIANCE WITH LAWS. Borrower shall comply with the
requirements of all applicable laws, rules, regulations, permits, hearings,
approvals and clearances and orders of any Governmental Authority, including
particularly, but without limitation, in respect of Environmental Laws.
5.9. ENVIRONMENTAL LAW COMPLIANCE.
(a) On or before the Closing Date, Borrower will provide Lender with
copies of any environmental assessments or similar reports made by or on behalf
of Borrower with respect to any Financed Convenience Store Location within the
preceding five (5) years and, subsequent to the Closing Date, Borrower will
provide Lender with copies of any such assessments or reports thereafter made
by or on behalf of Borrower with respect to any Financed Convenience Store
Location, promptly as and when made or received by Borrower, but not later than
thirty (30) days thereafter. The foregoing shall be cumulative with, and in
addition to, any similar requirements made applicable to any Financed
Convenience Store Location in Section 10.1.
(b) Borrower will notify Lender in writing of any Environmental Claim
or an accusation or allegation which may give rise to an Environmental Claim
hereafter made against it or received by it which would or would reasonably be
expected to have a Material Adverse Effect if determined adversely to Borrower
within ten (10) days after it first obtains knowledge or notice thereof. Each
such notice to Lender shall include a copy of any claim, citation, order,
notice or other communication (to the extent in writing) received by Borrower
from the Person making such Environmental Claim, allegation or accusation, a
description of the nature of such Environmental Claim, allegation or
accusation, the name of the Person making such Environmental Claim, allegation
or accusation, Borrower's anticipated defense to such Environmental Claim,
allegation or accusation or the action Borrower proposes to take in respect of
such Environmental Claim, allegation or accusation and the anticipated costs to
be incurred by Borrower in connection with such Environmental Claim, allegation
or accusation (including, without limitation, the amount of any anticipated
damages, the costs of defending such Environmental Claim and the costs of any
cleanup or corrective action).
(c) Borrower covenants and agrees that it (i) shall not use,
generate, store, or allow to be generated, stored or used, any Hazardous
Materials, except in the ordinary course of Borrower's business and in
accordance with all Environmental Laws, and (ii) shall at all times maintain
the Property in full compliance with all applicable Environmental Laws,
including timely remediation if and when required.
-16-
17
(d) Borrower shall, with due care, in a safe manner, detain the
spread of, ameliorate and remove from the any real property owned or leased by
Borrower (and from any other Property as required by any Environmental Law) any
Hazardous Materials contamination located on, under or about any such Property
and monitor or cause to be monitored the levels of Hazardous Materials on,
under or about any such Property or in the ground water in accordance with the
terms and procedures required by any federal, state or local governmental
agency having jurisdiction including, without limitation, any Regional Water
Quality Control Board and the Environmental Protection Agency.
(e) Lender may require Borrower from time to time to perform or cause
to be performed, such studies or assessments of the Property owned or leased by
Borrower, as Lender may reasonably deem necessary, appropriate or desirable, to
determine the status of environmental conditions on, under and about such
Property, which studies and assessments shall be for the benefit of Lender and
shall be prepared in accordance with the reasonable specifications established
by Lender.
(f) In addition, Borrower will promptly notify Lender of any Release
or material change in the nature or extent of any Contaminants used,
transported or stored by Borrower or any Subsidiary at any Financed Convenience
Store Location, and allow no material change in the use thereof or Borrower's
operations that would increase in any material amount the risk of violation of
the Environmental Laws without the express prior written approval of Lender.
(g) Borrower further agrees to indemnify and hold Lender, each
Participant and the officers, directors, agents, employees, Affiliates and
representatives of Lender and each Participant (individually an "Indemnified
Party" and collectively the "Indemnified Parties") harmless from and against
any and all damages, penalties, fines, claims, liens, suits, liabilities, costs
(including necessary and actual clean-up and response costs), judgments, and
expenses (including reasonable attorneys' fees and any consultants' or other
experts' fees and expenses) of every kind and nature suffered by or asserted
against any Indemnified Party (i) under or on account of the Environmental
Laws, including, without limitation, as a result of the past, present or future
institution of any suits, claims, actions, or proceedings by any Person against
Borrower or Lender in respect of any alleged violation of the Environmental
Laws by Borrower or Borrower's use, storage or disposition of Contaminants,
(ii) with respect to any past, present or future Release or Contaminant
affecting any Property, whether or not the same originates or emanates from any
Property or any contiguous real estate, (iii) with respect to any other past,
present or future matters affecting any Property within the jurisdiction of any
Governmental Authority administering the Environmental Laws or (iv) with
respect to any past, present or future requirement under the Environmental Laws
which requires the elimination or removal of any Contaminants or other
substances regulated pursuant to any Environmental Laws, rules, or regulations
of any Governmental Authority having jurisdiction over Borrower, whether
attributable to events occurring before or after the Closing Date; provided,
however, that Borrower shall not be liable for any of the foregoing arising
directly from Lender's gross negligence or willful misconduct. Any payments
required to be made hereunder shall be due and payable on demand.
(h) The agreements contained in the preceding clause (d) of this
Section 5.9 shall survive the termination of this Agreement and shall continue
in full force and effect for so long as the prospect of any loss or liability
covered by the indemnity contained in such clause (d) exists.
5.10. LITIGATION; EVENTS OF DEFAULT, ETC. Promptly, after receipt of
notice or knowledge thereof, but not later than ten (10) days thereafter,
Borrower will report to Lender: (i) any lawsuit or administrative proceeding
or arbitration proceeding in which Borrower is a defendant wherein the amount
of damages claimed against Borrower exceeds Two Hundred Thousand Dollars
($200,000) of uninsured potential liability (in Lender's reasonable opinion),
or in which the validity of this Agreement or any Loan Document or any action
taken or to be taken pursuant hereto or thereto is questioned; (ii) any strike,
walkout, lockout or other related legal action, whether pending or threatened
pertaining to Borrower; or (iii) the existence and nature of any Default
Condition or Event of Default.
-17-
18
6. NEGATIVE COVENANTS. Borrower further agrees that, so long as
any Obligations are outstanding and this Agreement has not been terminated in
writing by Lender, Borrower or Portfield, as applicable, will NOT do any of the
acts described in Section 6.
6.1. EXPANSION. Engage in any business activities other than
operation of the Existing Locations and the Acquired Locations and other
substantially similar stores.
6.2 LEVERAGE RATIO. Portfield shall not permit its ratio,
calculated on a consolidated basis, of total liabilities calculated in
accordance with GAAP to total Net Worth to exceed 4.75 to 1.0; provided that
such ratio shall increase to 5.00 to 1.0 at such time as NCFC raises the
similar ratio contained in the NCFC Loan Agreement to at least 5.00 to 1.0.
6.3 EBIDTA TO INDEBTEDNESS RATIO. Portfield shall not permit its
ratio, calculated on a consolidated basis, of cumulative net income (exclusive
of any extraordinary income, non-operating gains, loss carryforwards, or gains
due to changes in accounting) plus depreciation and amortization for the four
(4) most recent fiscal quarters to the sum of the current maturities of
Portfield's long-term consolidated indebtedness for the applicable period (all
of the foregoing determined in accordance with GAAP) to be less than 1.25 to
1.0 at the end of any fiscal quarter.
Borrower shall cause Portfield to provide Lender with a written report
of such ratios on a quarterly basis, such report to be in a form reasonably
acceptable to Lender.
7. EVENTS OF DEFAULT. The occurrence of any events or conditions
described in Sections 7.1 through 7.11 shall constitute an Event of Default
hereunder, provided that any requirement for the giving of notice or the lapse
of time, or both, has been satisfied.
7.1. TERM NOTE. Borrower shall fail to make any payments of
principal of, or interest on the Term Note, after the same shall become due
and payable and such failure continues for a period five Business Days.
7.2. OTHER OBLIGATIONS. Borrower shall fail to pay any Obligations
(other than as evidenced by the Term Note) to Lender, within fifteen (15)
calendar days after the same shall become due and payable (unless a longer or
▇▇▇▇▇▇▇ ▇▇▇▇▇ period is provided therefor in any document, instrument or
agreement evidencing, pertaining to or securing the repayment of such other
Obligations, in which event such other grace period shall apply).
7.3. MISREPRESENTATIONS. Borrower shall make any representation or
warranty in this Agreement or Borrower or any other party thereto shall make
any representation or warranty in any of the other Loan Documents or in any
certificate or statement furnished at any time hereunder or in connection with
this Agreement or any of the Loan Documents which proves to have been untrue or
misleading in any material respect when made or furnished.
7.4. COVENANTS. Borrower shall default in the observance or
performance of any covenant or agreement contained in either Section 5 or 6; or
Borrower shall default in the observance or performance of any other covenant
or agreement contained in this Agreement or any of the Loan Documents, to the
extent it is a party thereto, except for any default of the types described in
Sections 7.1, 7.2 or 7.3 above, and such default shall continue for a period of
thirty (30) calendar days from the date of receipt by Borrower of written
notice from Lender specifying such default (unless a longer or shorter cure
period is provided therefor in any such Loan Document, in which case such other
grace period shall apply), without such default being waived or cured provided,
however, in the case of such defaults which cannot be cured within said thirty
(30) day (or longer or shorter) period, that same shall not be deemed an Event
of Default so long as Borrower is diligently pursuing cure of same and same are
cured within ninety (90) days of the expiration of the applicable period.
7.5. VOLUNTARY BANKRUPTCY. Borrower or any Guarantor shall file a
voluntary petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization, arrangement, readjustment of its debts, or for
any other relief under the Bankruptcy Code, or under any other act or law
pertaining to insolvency or debtor relief, whether state, Federal, or foreign,
now or hereafter existing; Borrower or any Guarantor shall enter into any
agreement indicating its consent to, approval of, or acquiescence in, any such
petition or proceeding; Borrower or any
-18-
19
Guarantor shall apply for or permit the appointment by consent or acquiescence
of a receiver, custodian or trustee for all or a substantial part of its
Property; Borrower or any Guarantor shall make an assignment for the benefit of
creditors; Borrower or any Guarantor shall be unable or shall fail to pay its
debts generally as such debts become due; or Borrower or any Guarantor shall
admit, in writing, its inability or failure to pay its debts generally as such
debts become due.
7.6. INVOLUNTARY BANKRUPTCY. There shall have been filed against
Borrower or any Guarantor an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts or for
any other relief under the Bankruptcy Code, or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing; Borrower or any Guarantor shall suffer or permit the
involuntary appointment of a receiver, custodian or trustee or for all or a
substantial part of its Property; or Borrower or any Guarantor shall suffer or
permit the issuance of a warrant of attachment, execution or similar process
against all or any substantial part of its Property; unless, in each other
case, such petition, appointment or process is fully bonded against, vacated or
dismissed within sixty (60) days from its effective date, but not later than
ten (10) days prior to any proposed disposition of any assets pursuant to any
such proceeding.
7.7. JUDGMENTS. If one or more final, nonappealable judgments or
decrees shall be entered against Borrower or any Guarantor involving in the
aggregate a personal liability of Two Hundred Thousand Dollars ($200,000) or
more (or in the event such party fails to pursue the appeal of such judgment or
any rights to appeal any such judgment have been revoked or have expired) and
all such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within sixty (60) days from the date such judgment
becomes nonappealable.
7.8. CHANGE OF CONTROL. If: (i) Portfield shall cease to own and
control, directly or indirectly, one hundred percent (100%) of the issued and
outstanding capital stock of Borrower; or (ii) prior to a Qualified Initial
Public Offering, ▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to be President and Chief Executive
Officer of Portfield, or (iii) Borrower shall merge with, or consolidate into,
any other corporation (unless Borrower shall be the surviving corporation in
such merger); or (iv) Borrower shall sell all, or substantially all, of its
assets.
7.9. LOSS OF COLLATERAL. If all or any material portion of the
Collateral: (i) suffers any loss, damage, theft or other casualty, in a single
occurrence or series of related occurrences; or (ii) becomes subject to any
lien, claim or encumbrance other than a Permitted Encumbrance; or (iii) is made
the subject of any proceeding in which the existence, scope, coverage, or
priority of the security interest of Lender therein is disputed.
7.10. DEFAULT UNDER OTHER LOAN DOCUMENTS. A default by any party
has occurred under any other Loan Document (following any required notice or
passage of time or both).
7.11. CLOSED STORE. In the event any Acquired Location becomes a
Closed Store.
7.12. CROSS DEFAULT TO NCFC LOAN AGREEMENT. In the event any default
(following passage of any applicable time period or giving of any required
notice or both) by any borrower under the NCFC Loan Agreement shall occur.
Notwithstanding the foregoing, so long as the NCFC Loan Agreement is with NCFC,
in the event there is an Event of Default hereunder as a result of a violation
of a covenant contained in Section 6 (financial covenants) of the NCFC Loan
Agreement as in effect on the date of this Agreement and NCFC waives such
violation in writing, then Lender shall waive the similar Event of Default
arising under Section 6 hereof to the same extent as NCFC waived such default
under the NCFC Loan Agreement.
7.13. DELIVERY OF TITLE POLICIES. In the event Borrower fails to
deliver to Lender by March 31, 1997 an ALTA mortgagee's title insurance policy,
issued at Borrower's expense, by a title insurer selected by Borrower, but
acceptable to Lender insuring Lender's security interest in each Existing
Location (including leasehold mortgages) in such amount, and containing only
such conditions, limitations and exceptions as shall be reasonably acceptable
to Lender.
-19-
20
8. REMEDIES. Upon the occurrence or existence of any Event of
Default, or at any time thereafter, without prejudice to the rights of Lender
to enforce its claims against Borrower for damages for failure by Borrower to
fulfill any of its obligations hereunder, subject only to prior receipt by
Lender of payment in full of all Obligations then outstanding in a form
acceptable to Lender, Lender shall have all of the rights and remedies
described in Sections 8.1 through 8.4, inclusive, and it may exercise any one,
more, or all of such remedies, in its sole discretion, without thereby waiving
any of the others.
8.1. ACCELERATION OF THE OBLIGATIONS. Lender, at its option, may
declare all of the Obligations (including but not limited to that portion
thereof evidenced by the Term Note) to be immediately due and payable,
whereupon the same shall become immediately due and payable without
presentment, demand, protest, notice of nonpayment or any other notice required
by law relative thereto, all of which are hereby expressly waived by Borrower,
anything contained herein to the contrary notwithstanding and, in connection
therewith, if Lender so elects, by further written notice to Borrower, Lender
may increase the rate of interest charged on the Term Note for so long
thereafter as Lender further shall elect to charge the Default Rate.
Thereafter, Lender, at its option, may, but shall not be obligated to, accept
less than the entire amount of Obligations due, if tendered, provided, however,
that unless then agreed to in writing by Lender, no such acceptance shall or
shall be deemed to constitute a waiver of any Event of Default or a
reinstatement of any commitments of Lender hereunder.
8.2. REMEDIES OF A SECURED PARTY. Lender shall thereupon have the
rights and remedies of a secured party under the UCC in effect on the date
thereof (regardless of whether the same has been enacted in the jurisdiction
where the rights or remedies are asserted), including, without limitation, the
right to take possession of any of the Collateral or the proceeds thereof, to
sell or otherwise dispose of the same, to apply the proceeds therefrom to any
of the Obligations in such order as Lender, in its sole discretion, may elect.
Lender shall give Borrower written notice of the time and place of any public
sale of the Collateral or the time after which any other intended disposition
thereof is to be made. The requirement of sending reasonable notice shall be
met if such notice is given to Borrower pursuant to Section 9.9 at least ten
(10) days before such disposition. Expenses of retaking, holding, insuring,
preserving, protecting, preparing for sale or selling or the like with respect
to the Collateral shall include, in any event, reasonable attorneys' fees and
other legally recoverable collection expenses, all of which shall constitute
Obligations.
8.3. REPOSSESSION OF THE COLLATERAL. Lender may take the Collateral
or any portion thereof into its possession, by such means (without breach of
the peace) and through agents or otherwise as it may elect (and, in connection
therewith, demand that Borrower assemble the Collateral at a place or places
and in such manner as Lender shall prescribe), and sell, lease or otherwise
dispose of the Collateral or any portion thereof in its then condition or
following any commercially reasonable preparation or processing, which
disposition may be by public or private proceedings, by one or more contracts,
as a unit or in parcels, at any time and place and on any terms, so long as the
same are commercially reasonable. To facilitate the foregoing, Borrower agrees
to make available to Lender the Headquarters or any other premises then owned
or leased by Borrower on which Collateral then may be situated for such
purposes, without charge or undue delay, and on such terms as Lender then may
reasonably request (including, without limitation, if Lender so requests, the
temporary or permanent vacation by Borrower of any leased premises).
8.4. OTHER REMEDIES. Unless and except to the extent expressly
provided for to the contrary herein, the rights of Lender specified herein
shall be in addition to, and not in limitation of, Lender's rights under the
UCC, as amended from time to time, or any other statute or rule of law or
equity, or under any other provision of any of the Loan Documents, or under the
provisions of any other document, instrument or other writing executed by
Borrower or any third party in favor of Lender, all of which may be exercised
successively or concurrently.
9. MISCELLANEOUS.
9.1. WAIVER. Each and every right granted to Lender under this
Agreement, or any of the other Loan Documents, or any other document delivered
hereunder or in connection herewith or allowed it by law or in equity, shall be
cumulative and may be exercised from time to time. No failure on the part of
Lender to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise by Lender of
-20-
21
any right preclude any other or future exercise thereof or the exercise of any
other right. No waiver by Lender of any Default Condition or Event of Default
shall constitute a waiver of any subsequent Default Condition or Event of
Default.
9.2. GOVERNING LAW. THIS AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY
PROVIDED THEREIN, THE TERM NOTES AND THE OTHER LOAN DOCUMENTS, AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
9.3. SURVIVAL. All representations, warranties and covenants made
herein and in the other Loan Documents shall survive the execution and delivery
of this Agreement and such other Loan Documents. On the Closing Date, Borrower
shall be deemed to have restated, renewed and reaffirmed all of such
representations, warranties and covenants. The terms and provisions of this
Agreement shall continue in full force and effect, notwithstanding the payment
of the Term Note, until all of the Obligations have been paid in full and
Lender has terminated this Agreement in writing.
9.4. NO ASSIGNMENT BY BORROWER; LENDER MAY ASSIGN. No assignment
hereof shall be made by Borrower without the prior written consent of Lender.
Lender may assign, or sell participations in, its right, title and interest
herein and in the Loan Documents at any time hereafter without notice to or
consent of Borrower to any Participant. Upon any assignment by Lender, the
assignee shall be entitled to all the rights, powers, privileges and remedies
of Lender to the extent assigned, and the obligations of Borrower shall not be
subject, as against any such assignee, to any defense, set-off or counterclaim
available to Borrower against Lender and any such defense, set-off or
counterclaim may be asserted only against Lender. Notwithstanding the
foregoing, Lender may not assign any of its interest in the Loan Documents to
any Person which does not have total assets of at least $1,000,000,000. Lender
agrees to provide Borrower with written notice of assignment following an
assignment of any interest herein or in the Loan Documents.
9.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all
of said counterparts taken together shall be deemed to constitute one and the
same agreement.
9.6. REIMBURSEMENT. In connection with the documentation and funding
for the Term Loan, Borrower agrees to pay or reimburse Lender for all
reasonable costs, fees, and expenses incurred by Lender, including, but not
limited to, all costs of recording and filing of liens and/or mortgages, record
searches, title registration, appraisals, surveys, engineering, and any other
fees incidental to documentation or inspection.
9.7 AFTER DEFAULT. After an Event of Default, Borrower agrees to
reimburse Lender for its out-of-pocket expenses incurred by Lender, including,
but not limited to, all costs for expenses, including reasonable attorneys'
fees and any other incidental fees or charges related to the Term Loan, and
should all or any portion of the Obligations be collected by or through an
attorney-at-law, Lender shall be entitled to collect from Borrower reasonable
attorneys' fees and all costs of collection. If any taxes, fees or other costs
shall be payable on account of the execution, issuance, delivery or recording
of any of the Loan Documents, by reason of any existing or hereafter enacted
federal or state statute, Borrower agrees to pay all such taxes, reasonable
fees or other costs, including any applicable interest and penalty, and to
indemnify and hold Lender harmless from and against liability in connection
therewith.
9.8. SUCCESSORS AND ASSIGNS. This Agreement and every Loan Document
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto and thereto. The foregoing shall expressly
include, without limitation, in the case of Lender, any Participant.
9.9. SEVERABILITY. If any provision of this Agreement or of the Loan
Documents or the application thereof to any party thereto or circumstances
shall be invalid or unenforceable to any extent, the remainder of such Loan
-21-
22
Documents and the application of such provisions to any other party thereto or
circumstance shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
9.10. NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made (i) when
personally delivered, (ii) three Business Days following deposit in the mail,
registered or certified mail, postage prepaid, or (iii) one Business Day
following delivery of said notice, request or demand to an overnight courier,
addressed as follows or to such other address as may be designated hereafter in
writing by the respective parties hereto (which, in the case of Lender, may
include the name and address of each Participant) except in cases where it is
expressly provided herein or by applicable law that such notice, demand to
request is not effective until received by the party to whom it is addressed:
Borrower:
▇▇▇▇▇-▇▇▇▇ CONVENIENCE STORES, INC.
c/o Portfield Investments, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇ & ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, CFO
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & FORESTER LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
Lender:
▇▇▇▇▇▇ FINANCIAL, INC.
Commercial Equipment Finance Division
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
-22-
23
with copy to:
▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
9.11. ENTIRE AGREEMENT - AMENDMENT. This Agreement, together with
the Term Note and the other Loan Documents, constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof and supersedes any agreement or understanding, oral or written,
heretofore made in regard thereto, including that certain Commitment Letter
dated January 16, 1997 issued by Lender to Portfield. Neither this Agreement,
the Term Note nor any other Loan Document may be changed, waived, discharged,
modified or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement is sought.
9.12. TIME OF THE ESSENCE. Time is of the essence in this Agreement,
the Term Note and the other Loan Documents.
9.13. INTERPRETATION. No provision of this Agreement or any Loan
Document shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
9.14. LENDER NOT A JOINT VENTURER. Neither this Agreement nor any
agreements, instruments, documents or transactions contemplated hereby
(including the Loan Documents) shall in any respect be interpreted, deemed or
construed as making Lender a partner or joint venturer with Borrower or as
creating any similar relationship or entity, and Borrower agrees that it will
not make any contrary assertion, contention, claim or counterclaim in any
action, suit or other legal proceeding involving Lender and Borrower.
9.15. JURISDICTION. BORROWER AGREES THAT ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE TERM NOTE OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS, COUNTY OF ▇▇▇▇
OR THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, CHICAGO
DIVISION, ALL AS LENDER MAY ELECT. BY EXECUTION OF THIS AGREEMENT, BORROWER
HEREBY SUBMITS TO EACH SUCH JURISDICTION, HEREBY EXPRESSLY WAIVING WHATEVER
RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS PRESENT OR FUTURE DOMICILE AND
CONSENTS TO SERVICE OF PROCESS BY WRITTEN NOTICE GIVEN IN THE MANNER SPECIFIED
FOR THE GIVING OF NOTICES IN SECTION 9.10 ABOVE; PROVIDED, HOWEVER, THAT
NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR TO SERVE
PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.
9.16. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under the Term Note shall be stated to be due on a Saturday,
Sunday or a public holiday under the laws of the State of Illinois, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest
hereunder or under the Term Notes.
9.17. WAIVER OF RIGHTS. AFTER THE OCCURRENCE OF A DEFAULT CONDITION
OR EVENT OF DEFAULT, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS, IF ANY, WHICH
BORROWER OTHERWISE HAS OR MAY HAVE UNDER AND BY VIRTUE OF ANY LAW, WITH RESPECT
TO THE RIGHT OF BORROWER TO NOTICE AND TO A JUDICIAL OR ADMINISTRATIVE HEARING
PRIOR TO SEIZURE OF ANY COLLATERAL BY LENDER. EACH OF LENDER AND BORROWER
WAIVES ANY OBJECTION TO IMPROPER VENUE, FORUM NON CONVENIENS OR RIGHT TO A
TRIAL BY JURY IN ANY CLAIM, CAUSE OF ACTION OR PROCEEDING, BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR THE LOAN
-23-
24
DOCUMENTS. THESE WAIVERS ARE KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND FREELY
MADE BY BORROWER AND LENDER, AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR
ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO
INDUCE THESE WAIVERS OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY THEIR EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THESE WAIVERS ARE A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND
LENDER HAVE ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS AGREEMENT AND
THE LOAN DOCUMENTS AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THESE WAIVERS
IN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER FURTHER WARRANT AND
REPRESENT THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) BY INDEPENDENT LEGAL COUNSEL IN THE SIGNING OF THIS AGREEMENT AND
THE LOAN DOCUMENTS AND IN THE MAKING OF THESE WAIVERS AND THAT THEY KNOWINGLY
AND VOLUNTARILY WAIVE THEIR RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
9.18. CURE OF DEFAULTS BY LENDER. If, hereafter, Borrower defaults
in the performance of any duty or obligation to Lender hereunder, Lender may,
at its option, but without obligation, cure such default and any costs, fees
and expenses incurred by Lender in connection therewith including, without
limitation, for the purchase of insurance, the payment of taxes and the removal
or settlement of liens and claims, shall constitute Obligations, be payable on
demand and bear interest until paid at the Default Rate applicable to the Term
Note.
9.19. RECITALS. All recitals contained herein are hereby
incorporated by reference into this Agreement and made part thereof.
9.20. ATTORNEY-IN-FACT. Upon the occurrence of an Event of Default
and for so long as such Event of Default is continuing, Borrower hereby
designates, appoints and empowers Lender irrevocably to act as its
attorney-in-fact, at Borrower's cost and expense, to do in the name of Borrower
any and all actions which Lender may deem necessary or advisable to carry out
the terms hereof, upon the failure, refusal or inability of Borrower to do so,
and Borrower hereby agrees to indemnify and hold Lender harmless from any
costs, damages, expenses or liabilities arising against or incurred by Lender
in connection therewith.
9.21. SOLE BENEFIT. The rights and benefits set forth in this
Agreement and in all the other Loan Documents are for the sole and exclusive
benefit of Lender, its Participants (if any) and Borrower and may be relied
upon only by them.
9.22. REMEDIES. AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY, LENDER MAY ENFORCE ITS RIGHTS UNDER THIS
AGREEMENT AND ALL OTHER LOAN DOCUMENTS WITHOUT RESORT TO PRIOR JUDICIAL PROCESS
OR JUDICIAL HEARING, AND BORROWER EXPRESSLY WAIVES, RENOUNCES AND KNOWINGLY
RELINQUISHES ANY LEGAL RIGHT WHICH MIGHT OTHERWISE REQUIRE LENDER TO ENFORCE
ITS RIGHTS BY JUDICIAL PROCESS. IN SO PROVIDING FOR A NON-JUDICIAL REMEDY,
BORROWER RECOGNIZES AND CONCEDES THAT SUCH A REMEDY IS CONSISTENT WITH THE
USAGE OF THE TRADE, IS RESPONSIVE TO COMMERCIAL NECESSITY AND IS THE RESULT OF
BARGAINING AT ARM'S LENGTH. NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT
BORROWER OR LENDER FROM RESORTING TO JUDICIAL PROCESS AT EITHER PARTY'S OPTION.
EACH OF LENDER AND BORROWER FURTHER AGREES THAT NEITHER SHALL BE LIABLE TO THE
OTHER FOR CONSEQUENTIAL OR SPECIAL DAMAGES ARISING FROM BREACH OF CONTRACT,
TORT OR OTHER WRONG OR CLAIM RELATING TO THE ESTABLISHMENT, ADMINISTRATION OR
COLLECTION OF ANY OBLIGATIONS HEREUNDER OR UNDER ANY LOAN DOCUMENT OR ANY
ACTION (OR INACTION) BY EITHER PARTY HEREUNDER OR THEREUNDER.
9.23. INDEMNITY. Without limiting any provisions of Sections 5.9 or
9.6, Borrower agrees to save, indemnify and hold harmless Lender from and
against any and all debts, liabilities, obligations, damages, costs,
-24-
25
expenses or other claims incurred by Lender as a result of its entry into, and
performance under, this Agreement or any other Loan Documents except for any of
same arising directly from Lender's gross negligence or willful misconduct.
9.24. ACCEPTANCE. THIS AGREEMENT, TOGETHER WITH THE TERM NOTES AND
ALL OTHER LOAN DOCUMENTS, SHALL NOT BECOME EFFECTIVE UNLESS AND UNTIL (I) DULY
EXECUTED BY BORROWER, (II) DELIVERED TO LENDER FOR ACCEPTANCE IN CHICAGO,
ILLINOIS, (III) ACCEPTED BY LENDER IN CHICAGO, ILLINOIS AND (IV) DULY EXECUTED
AND DELIVERED BY LENDER, AS APPROPRIATE, IN CHICAGO, ILLINOIS. THE
DISBURSEMENT OF THE PROCEEDS OF THE TERM LOANS BY LENDER FROM CHICAGO, ILLINOIS
SHALL BE EVIDENCE THAT THE FOREGOING CONDITIONS HAVE BEEN FULFILLED.
10. CONDITIONS PRECEDENT.
10.1. CONDITIONS PRECEDENT TO LENDER'S ENTRY INTO THIS AGREEMENT.
Unless waived in by Lender at or prior to the execution and delivery of this
Agreement, the conditions set forth below shall constitute express conditions
precedent to any obligation of Lender hereunder:
(a) NO INJUNCTION; ETC. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to
enjoin, restrain, or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of this Agreement, or the consummation of
the transactions contemplated hereby, or which Lender determines would make it
inadvisable to consummate the transactions contemplated hereby.
(b) NO DEFAULT. No Default Condition or Event of Default
shall have occurred and be continuing.
(c) COMPLIANCE WITH LAWS GENERALLY; ENVIRONMENTAL LAW
COMPLIANCE. Lender shall be satisfied in all respects that Borrower is in
material compliance with all applicable federal, state and local laws and
regulations, including particularly, but without limitation, all Environmental
Laws.
(d) MATERIAL AGREEMENTS. Lender shall have reviewed all of
Borrower's Material Agreements, and all of the foregoing shall be satisfactory
to Lender.
(e) LITIGATION. Lender shall have reviewed all existing
litigation, injunctions and proceedings, if any, pending or threatened against
Borrower and the results of such review shall be satisfactory to Lender.
(f) DOCUMENTATION. Lender shall have received the following
documents of general application to the Term Loan Facility, each to be in form
and substance satisfactory to Lender and its counsel, and duly executed and
delivered by the party or parties thereto:
(1) LOAN DOCUMENTS. This Agreement and all other Loan
Documents to be executed and delivered by Borrower or its Affiliates hereunder
and under the Loan Documents on the Closing Date, to the extent not otherwise
specified below;
(2) INSURANCE CERTIFICATES. Receipt by Lender of a
certificate from Borrower's insurer (or an authorized agent thereof) respecting
all insurance required hereunder, together with copies of all insurance
policies evidencing such insurance in each case in form and substance
acceptable to Lender;
(3) OPINION OF BORROWER'S COUNSEL. Receipt by Lender of
a satisfactory opinion of counsel from Borrower's legal counsel;
(4) SECRETARY'S AND OFFICER'S CERTIFICATE. Receipt by
Lender of a secretary's certificate and an officer's certificate from Borrower;
-25-
26
(5) TERM NOTE. A Term Note in a principal amount equal
to such requested Term Loan;
(6) FINANCING STATEMENTS. Copies of all filing receipts
or acknowledgments issued by any Governmental Authority to evidence any filing
or recordation necessary to perfect the security interests of Lender in all
Collateral relating to the Term Loan and evidence in a form acceptable to
Lender that such security interests constitute value and perfected first
priority security interests in Lender's favor;
(7) ENVIRONMENTAL ASSESSMENT. An environmental
assessment prepared at Borrower's expense by an independent environmental
engineer selected by Borrower, but acceptable to Lender, the scope and
substance of which shall be satisfactory to Lender;
(8) SURVEY/SITE INSPECTION. A current "as-built"
boundary survey prepared in accordance with the standards established by the
American Land Title Association ("ALTA") for each Financed Convenience Store
Location owned by Borrower, together with a surveyor's certificate prepared at
Borrower's expense from a registered land surveyor and, if requested by Lender,
a physical site inspection report;
(9) MORTGAGE. A deed of trust or mortgage deed to secure
debt or other similar instrument pursuant to which Borrower shall convey to
Lender or to a trustee for the benefit of Lender the entirety of Borrower's
right, title and interest in and to (including leasehold mortgages) each
Financed Convenience Store Location;
(10) MORTGAGE'S TITLE INSURANCE POLICY. An ALTA
mortgagee's title insurance policy, issued at Borrower's expense, by a title
insurer selected by Borrower, but acceptable to Lender insuring Lender's
security interest in each Financed Convenience Store Location (including
leasehold mortgages) in such amount, and containing only such conditions,
limitations and exceptions as shall be acceptable to Lender;
(11) INTERCREDITOR AGREEMENT. Negotiation, execution and
delivery of the Intercreditor Agreement, such Intercreditor Agreement to be in
form and substance satisfactory to Lender.
(12) LIST OF EQUIPMENT. Borrower shall have delivered to
Lender a complete list of all Equipment Collateral, and with respect to the
Acquired Locations, as delivered to Borrower by DS.
(13) WESCOURT PLEDGE AGREEMENT. Borrower shall have
caused Wescourt to execute and deliver the Wescourt Pledge Agreement, together
with related documents and instruments reasonably requested by Lender.
(14) WESFRAC SECURITY AGREEMENT. Borrower shall have
caused Wesfrac to execute deliver the Wesfrac Security Agreement, together with
related documents and instruments reasonably requested by Lender.
(15) ACQUISITION AGREEMENT ASSIGNMENT. Borrower shall
execute and deliver, and cause DS to acknowledge in writing, to Lender the
Acquisition Agreement Assignment in form and substance reasonably satisfactory
to Lender.
(16) OTHER DOCUMENTS AND INSTRUMENTS. Such other
documents and instruments as Lender may reasonably request.
(g) ACQUISITION OF ACQUIRED LOCATIONS. Borrower shall
have consummated the acquisition of the Acquired Locations pursuant to the
Acquisition Agreement for an amount not in excess of $10,000,000, all in form
and substance satisfactory to Lender.
(h) SUBORDINATED DEBT. Borrower's Affiliates shall have
provided at least $2,000,000 of subordinated debt financing to Borrower to
partially finance acquisition of the Acquired Locations.
-26-
27
(i) CLOSING FEE. Borrower shall have paid to Lender a
closing fee of $40,000 in immediately available funds.
(j) FRACTIONATOR. Wesfrac shall have granted to Lender a
valid and perfected second security interest in the Fractionator.
(k) MATERIAL ADVERSE CHANGE. No Material Adverse Change
shall have occurred.
(l) TRANSFER OF EXISTING LOCATIONS. Borrower shall have
caused Petro-▇▇▇▇ ▇▇▇▇▇▇▇▇ and Westec Fruita to have transferred the Existing
Locations to Borrower, in a manner reasonably satisfactory to Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and Borrower has caused its seal to be affixed hereto, all as of
the day and year first above written.
"BORROWER"
▇▇▇▇▇-▇▇▇▇ CONVENIENCE STORES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
"LENDER"
▇▇▇▇▇▇ FINANCIAL, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
-27-
