Document:

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                                                                   EXHIBIT 10.01

                            ------------------------

                         FGIC SECURITIES PURCHASE, INC.

                                       AND

                      GENERAL ELECTRIC CAPITAL CORPORATION

                             STANDBY LOAN AGREEMENT

                          Dated as of __________, _____

                            ------------------------

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                                TABLE OF CONTENTS

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<S>      <C>          <C>                                                                                        <C>
ARTICLE I             DEFINITIONS................................................................................1
         SECTION 1.1           Definitions.......................................................................1

ARTICLE II            LOAN PROVISIONS............................................................................3

         SECTION 2.1           Commitment........................................................................3
         SECTION 2.2           Amount and Purpose of Loans.......................................................3
         SECTION 2.3           Borrowing Procedures..............................................................3
         SECTION 2.4           Disbursement of Funds.............................................................3

ARTICLE III           COMMITMENT.................................................................................4

         SECTION 3.1           Commitment Fees...................................................................4
         SECTION 3.2           Reduction or Termination of the Commitment........................................5

ARTICLE IV            PAYMENTS...................................................................................5

         SECTION 4.1           Voluntary Prepayments.............................................................5
         SECTION 4.2           Mandatory Prepayments.............................................................5
         SECTION 4.3           Repayment of Loans by Transfer of Tendered Bonds..................................5
         SECTION 4.4           Payments..........................................................................6

ARTICLE V             REPRESENTATIONS AND WARRANTIES.............................................................6

         SECTION 5.1           Representations and Warranties of the Borrower....................................6
         SECTION 5.2           Representations and Warranties of GE Capital......................................7

ARTICLE VI            COVENANTS..................................................................................8

         SECTION 6.1           Covenants of the Borrower.........................................................8
         SECTION 6.2           Covenants of GE Capital...........................................................9

ARTICLE VII           CONDITIONS PRECEDENT.......................................................................9

         SECTION 7.1           Conditions Precedent to Effectiveness.............................................9

ARTICLE VIII          EVENTS OF DEFAULT.........................................................................10

         SECTION 8.1           Events of Default................................................................10

ARTICLE IX            MISCELLANEOUS.............................................................................11

         SECTION 9.1           No Waiver; Modifications in Writing..............................................11
         SECTION 9.2           Payment on Non-Business Days.....................................................11
         SECTION 9.3           Further Assurances...............................................................11
         SECTION 9.4           Survival of Representations and Warranties.......................................11
         SECTION 9.5           Notices, etc.....................................................................11
         SECTION 9.6           Costs, Expenses and Taxes........................................................12

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<S>      <C>                   <C>                                                                             <C>
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         SECTION 9.7           No GE Capital Liability..........................................................12
         SECTION 9.8           Term of this Agreement...........................................................12
         SECTION 9.9           Execution in Counterparts........................................................12
         SECTION 9.10          Binding Effect; Assignment.......................................................12
         SECTION 9.11          Governing Law....................................................................13
         SECTION 9.12          Severability of Provisions.......................................................13
         SECTION 9.13          Headings.........................................................................13

EXHIBIT A - Form of Notice of Borrowing
EXHIBIT B - Form of Note
EXHIBIT C - Borrower's Opinion of Counsel
EXHIBIT D - GE Capital's Opinion of Counsel

</TABLE>

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                                                                  EXHIBIT 10.01

                             STANDBY LOAN AGREEMENT

                  STANDBY LOAN AGREEMENT dated as of __________, ____, between
FGIC Securities Purchase, Inc., a Delaware corporation (the "Borrower"), and
General Electric Capital Corporation, a New York corporation ("GE Capital").

                  WHEREAS, the Borrower desires to borrow amounts from GE
Capital from time to time for the purpose of paying the purchase price of
Tendered Bonds (as defined herein) and GE Capital is prepared to make such loans
upon the terms hereof;

                  NOW THEREFORE, in consideration of the respective agreements
contained herein, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.1 Definitions. The following terms as used in this Agreement
shall have the following meanings, unless the context otherwise requires:

                  "Agreement" shall mean this Standby Loan Agreement, as the
same may from time to time be amended or supplemented.

                  "Available Commitment" shall mean, at the time any
determination thereof is to be made, the amount of the Commitment adjusted as
follows: (i) downward by an amount equal to _________% of the aggregate
principal amount of all Tendered Bonds purchased by the Borrower with the
proceeds of Loans made under this Agreement and (ii) upward by an amount equal
to __________% of the aggregate principal amount of Tendered Bonds which have
been sold by the Borrower in a remarketing pursuant to Section 2.04 of the
Standby Bond Purchase Agreement, the proceeds of which have been delivered to GE
Capital as a prepayment of Loans as required by Section 4.2 of this Agreement.

                  "Base Rate" shall mean for any day the Prime Rate for such day
plus 1%; provided that the Base Rate shall at no time exceed the lesser of (a)
25% per annum and (b) the maximum rate permitted by applicable law.

                  "Bonds" shall mean the ______________________________________,
Series _____________, of the Issuer in an aggregate principal amount not to
exceed $_____________.

                  "Borrowing" shall mean the incurrence of a Loan by the
Borrower from GE Capital pursuant to Section 2.3 hereof.

                  "Borrowing Date" shall mean the date on which a Borrowing is,
or is to be, consummated, as the context may indicate; provided that in no event
shall the Borrowing Date be (i) on the same day the Notice of Borrowing is
received if the Notice of Borrowing is received by GE Capital later than 1:00
p.m. (New York City time), in which case the Borrowing Date shall be the next
succeeding Business Day or (ii) after the last day of the Commitment Period.

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                  "Business Day" shall mean a day other than a Saturday, Sunday
or other day on which the New York Stock Exchange or banks are authorized or
obligated by law or executive order to close in New York, New York or any city
in which is located the principal corporate trust officer of the Trustee or the
office of the Borrower at which demands for the payment with respect to Tendered
Bonds will be made.

                  "Commitment" shall mean, initially $___________, and
thereafter, at the time any determination thereof is to be made, such initial
amount reduced by the amount of any permanent reduction(s) in such amount made
pursuant to Section 3.2 hereof.

                  "Commitment Fee" shall have the meaning assigned to that term
in Section 3.1 hereof.

                  "Commitment Period" shall mean the period commencing with and
including the Effective Date and ending on and including the Commitment
Termination Date.

                  "Commitment Termination Date" shall mean the date which is
five years from the Effective Date; provided that if such date is not a Business
Day, the Business Day immediately succeeding such date.

                  "Default" shall mean an event, act or occurrence which with
the giving of notice or the lapse of time (or both) would become an Event of
Default.

                  "Effective Date" shall have the meaning assigned to such term
in Section 7.1 hereof.

                  "Event of Default" shall have the meaning assigned to that
term in Section 8.1 hereof.

                  "Issuer" shall mean the _________________________, a _______
of the _______________________________________________.

                  "Loan" or "Loans" shall have the meaning provided in Section
2.1.

                  "Note" shall have the meaning provided in Section 2.5.

                  "Notice of Borrowing" shall have the meaning provided in
Section 2.3.

                  "Person" shall mean an individual or a corporation,
partnership, trust, firm, incorporated or unincorporated association, joint
venture, joint stock company, unincorporated organization, government (or an
agency or political subdivision thereof) or other entity of any kind.

                  "Prime Rate" shall mean the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time as its
Prime Rate.

                  "Remarketing Agent" means the entity designated as such in the
Bonds and its permitted successors and assigns.

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                                                                         Page 3

                  "Remarketing Agreement" shall mean the Remarketing Agreement
between the Issuer and the Remarketing Agent relating to the Bonds.

                  "Standby Bond Purchase Agreement" shall mean the Standby Bond
Purchase Agreement, dated as of the date hereof, between the Borrower and the
Trustee.

                  "Tender Agent" shall mean the entity designated as such in the
Bonds and its permitted successors and assigns.

                  "Tendered Bonds" shall mean Bonds tendered or deemed tendered
to the Tender Agent for purchase pursuant to the terms of the Bonds and for
which the Borrower has received a notice of purchase pursuant to Section 2.02 of
the Standby Bond Purchase Agreement.

                  "Transfer Notice" shall have the meaning provided in Section
4.3.

                  "Trustee" shall mean Chase Manhattan Trust Company, National
Association, and its permitted successors and assigns.

                                   ARTICLE II

                                 LOAN PROVISIONS

     SECTION 2.1 Commitment. Upon the terms and subject to the conditions of
this Agreement, GE Capital will make loans (each a "Loan" and, collectively, the
"Loans") to the Borrower during the Commitment Period, in an aggregate principal
amount outstanding at any time up to but not exceeding the Commitment.

     SECTION 2.2 Amount and Purpose of Loans. Each Loan shall be in an amount
not exceeding the purchase price for Tendered Bonds which represents the
outstanding principal amount of such Tendered Bonds together with accrued
interest thereon to but excluding the Borrowing Date, and each Loan shall mature
on the Commitment Termination Date. The proceeds of each Loan shall be used only
for the purpose of paying such purchase price for Tendered Bonds.

     SECTION 2.3 Borrowing Procedures. Whenever the Borrower desires to make a
Borrowing hereunder, its duly authorized representative shall give GE Capital at
its office located at 201 High Ridge Road, Stamford, Connecticut 06927;
Attention: Senior Vice President - Corporate Treasury and Global Funding
Operation, Telecopy: 203-357-4975, prior written notice of such Borrowing by at
least 11:45 a.m., New York City time, on the proposed Borrowing Date. Each such
notice (each a "Notice of Borrowing") shall be substantially in the form of
Exhibit A attached hereto, and shall specify the aggregate principal amount the
Borrower desires to borrow hereunder, the aggregate principal amount of Tendered
Bonds being purchased with the proceeds of such Borrowing, the proposed
Borrowing Date (which shall be a Business Day), the place where the proceeds of
such Borrowing shall be made available and whether the Borrowing is to be made
available in immediately available or next-day funds.

     SECTION 2.4 Disbursement of Funds. No later than 2:15 p.m. (New York City
time) on each Borrowing Date (if the related Notice of Borrowing has been
received by 11:45

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a.m. (New York City time) on such date), GE Capital will make available the
amount of the Borrowing requested to be made on such date in U.S. dollars, in
the funds specified in the Notice of Borrowing and pursuant to the instructions
specified in the Notice of Borrowing.

     SECTION 2.5 Note. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans shall be evidenced by a single promissory note (the
"Note") substantially in the form of Exhibit B hereto with the blanks
appropriately completed in conformity herewith. The Note shall (i) be payable to
the order of GE Capital (ii) be dated the date of this Agreement, (iii) be in a
stated principal amount equal to the Commitment on the date of issuance, (iv) be
payable in the principal amount of the Loans evidenced thereby, (v) mature on
the Commitment Termination Date, (vi) bear interest as provided in Section 2.6
in respect of the Loans evidenced thereby, and (vii) be entitled to the benefits
of this Agreement.

         (b) The date and amount of each Loan made by GE Capital and of each
repayment of principal thereon received by GE Capital shall be recorded by GE
Capital on the Loan and Repayment Schedule attached to the Note, and the
aggregate unpaid principal amount shown on such Schedule shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note. The
failure to record or any error in recording any such amount on such Schedule
shall not, however, limit, increase or otherwise affect the obligations of the
Borrower hereunder or under the Note to repay the outstanding principal amount
of the Loans together with all interest accruing thereon.

     SECTION 2.6 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Loan at a rate per annum which shall be the
Base Rate in effect from time to time.

         (b) Interest shall be calculated on the basis of a year of 365 days (or
on 366 days in a leap year) and paid for the actual number of days elapsed to
the day of payment.

         (c) Overdue principal and overdue interest in respect of each Loan
shall bear interest at a rate per annum equal to the lesser of (i) 2% in excess
of the Base Rate in effect from time to time, (ii) 25% and (iii) the maximum
rate permitted by applicable law.

         (d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable on the
first day of each calendar month and on any prepayment or at maturity (whether
by acceleration or otherwise), and after such maturity, on demand.

                                   ARTICLE III

                                   COMMITMENT

     SECTION 3.1 Commitment Fees. (a) In consideration of the commitment of GE
Capital to make Loans to the Borrower under the terms hereof, the Borrower
hereby agrees to pay GE Capital a fee (herein called the "Commitment Fee") which
shall be in the amounts, and shall be payable on the dates, mutually agreed to
by the Borrower and GE Capital.

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         (b) In addition, the Borrower shall pay GE Capital on the Effective
Date an initial fee in an amount mutually agreed to by the Borrower and GE
Capital.

     SECTION 3.2 Reduction or Termination of the Commitment. (a) The Borrower
shall have the right at any time and from time to time, to permanently reduce in
part, or to terminate in whole, without penalty or premium, the Commitment upon
not less than one Business Day prior notice (by telex, telegram or telecopier)
received by GE Capital, designating the date (which shall be a Business Day) of
such reduction or termination and the amount of any partial reduction. Such
partial reduction or termination of the Commitment shall be effective on the
date specified in the Borrower's aforesaid notice.

         (b) GE Capital and the Borrower hereby agree that neither of them will
exercise any right to terminate this Agreement pursuant to Section 3.2(a) hereof
so long as any obligations pursuant to Section 2.01 of the Standby Bond Purchase
Agreement remain outstanding; provided, that if the Borrower exercises any
termination right under Section 2.03 of the Standby Bond Purchase Agreement, the
result of which is to terminate the Commitment thereunder (and as defined
therein), a termination hereof may be effected.

                                   ARTICLE IV

                                    PAYMENTS

     SECTION 4.1 Voluntary Prepayments. The Borrower shall have the right to
prepay the Loans in whole or in part, without premium or penalty, from time to
time upon at least one Business Day prior written notice (or telephonic notice
confirmed in writing).

     SECTION 4.2 Mandatory Prepayments. In the event any Tendered Bonds
purchased by the Borrower with the proceeds of Loans made available hereunder
are either (i) remarketed in accordance with the terms of the Remarketing
Agreement, (ii) sold by the Borrower (other than pursuant to a remarketing as
described in clause (i) above) to a party or parties other than GE Capital or
(iii) redeemed or otherwise paid by or on behalf of the Issuer, the Borrower
shall immediately (in no event later than the next Business Day) deliver, or
cause to be delivered, to GE Capital the purchase price for such Tendered Bonds.
Upon receipt of such payment GE Capital shall apply such payment as a prepayment
of the Loans, such amount to be applied first to reduce any interest accrued but
unpaid on the Loans and then applied to reduce the principal amount of any Loans
then outstanding. In connection with any prepayment made in accordance with
clause (i) above, the Borrower shall include with such prepayment a notice
specifying the aggregate principal amount of Tendered Bonds which were sold in
the remarketing giving rise to such prepayment.

     SECTION 4.3 Repayment of Loans by Transfer of Tendered Bonds. (a) GE
Capital shall have the right, in its sole discretion, at any time during the
term of this Agreement, to give written notice (each a "Transfer Notice") to the
Borrower requesting that the Borrower transfer to GE Capital, in satisfaction of
the payment of outstanding Loans, Tendered Bonds then held by the Borrower. Upon
receipt of such notice, the Borrower shall immediately (in no event

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later than the next Business Day) transfer, or cause to be transferred, to (or
at the direction of) GE Capital such Tendered Bonds at the address specified in
the Transfer Notice. GE Capital shall treat the receipt of the aggregate
principal amount of such Tendered Bonds plus accrued interest thereon as a
prepayment of the Loans, such amount to be applied first to reduce any interest
accrued but unpaid on the Loans and then applied to reduce the principal amount
of any Loans then outstanding.

         (b) On the Commitment Termination Date, the Borrower shall have the
right to deliver, or cause to be delivered, to (or at the direction of) GE
Capital all Tendered Bonds then held by the Borrower in payment for all or any
portion of the Loans outstanding on such date. GE Capital shall treat the
receipt of the aggregate principal amount of such Tendered Bonds plus accrued
interest thereon as a repayment of the Loans, such amount to be applied first to
reduce any interest accrued but unpaid on the Loans and then applied to reduce
the principal amount of the Loans then outstanding.

         (c) GE Capital expressly reserves the right to sell Tendered Bonds
received by it pursuant to this Section 4.3. Any Tendered Bonds sold by GE
Capital pursuant to this Section 4.3 shall bear interest at the same rate and be
subject to the same terms and conditions as applied prior to such Bonds'
becoming Tendered Bonds; provided, however, that Tendered Bonds shall not be
entitled to the benefits of tender and purchase under Sections 2.01 and 2.02 of
the Standby Bond Purchase Agreement.

         (d) For purposes of this Section 4.3, the aggregate principal amount of
Tendered Bonds shall mean the aggregate face amount of such Tendered Bonds.

     SECTION 4.4 Payments. All payments to be made by or on behalf of the
Borrower to GE Capital hereunder (other than as contemplated under Section 4.3
above), whether on account of principal or interest on the Loans, the Commitment
Fee or other amounts at any time owing hereunder or in connection herewith,
shall be made to GE Capital at Bankers Trust Company - New York, Account Number
50-001-677, in immediately available funds. All such payments shall be made to
GE Capital not later than noon, New York City time, on the date due; and funds
received by GE Capital as aforesaid after that hour shall be deemed to have been
received by GE Capital on the next succeeding Business Day.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     SECTION 5.1 Representations and Warranties of the Borrower. The Borrower
represents and warrants to GE Capital as follows:

         (a) Corporate Status. The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware. The
Borrower is duly qualified to transact business and is in good standing in the
jurisdictions in which the conduct of its business or the ownership of its
property requires such qualification.

         (b) Power and Authorization. The Borrower has the corporate power and
authority (i) to execute, deliver and perform this Agreement and the Note, (ii)
to issue the Note

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in the manner and for the purpose contemplated by this Agreement, and (iii) to
execute, deliver and perform all other agreements and instruments to be executed
and delivered by the Borrower pursuant to or in connection with this Agreement.

         (c) No Violation. The execution, delivery and performance by the
Borrower of this Agreement, the issuance of the Note in the manner and for the
purpose contemplated by this Agreement and the execution, delivery and
performance by the Borrower of all other agreements and instruments to be
executed and delivered by the Borrower pursuant hereto or thereto or in
connection herewith or therewith (i) will not violate any provision of the
Certificate of Incorporation or By-Laws of the Borrower or any applicable law or
regulation or any order, writ, judgment or decree of any court, arbitrator or
governmental authority, and (ii) will not violate any provision of, constitute a
default under, or result in the creation or imposition of any lien on any of the
assets of the Borrower pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking to which the Borrower is a party or
which purports to be binding upon the Borrower or upon any of its assets.

         (d) Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as will have been obtained or made prior to the Effective Date), or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with, (i) the
execution, delivery and performance by the Borrower of this Agreement or the
Note or (ii) the legality, validity, binding effect or enforceability against
the Borrower of this Agreement or the Note.

         (e) Enforceability. This Agreement has been duly authorized, executed
and delivered by the Borrower. This Agreement constitutes, and each other
agreement or instrument executed and delivered by the Borrower pursuant hereto
or in connection herewith will constitute, and the Note, when executed by the
Borrower, will be duly issued and will constitute, the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its respective terms, except as the enforcement thereof may be limited by
bankruptcy and other similar laws of general application relating to creditors'
rights or general principles of equity.

     SECTION 5.2 Representations and Warranties of GE Capital. GE Capital
represents and warrants to the Borrower as follows:

         (a) Corporate Status. GE Capital is a corporation duly organized and
validly existing in good standing under the laws of the State of New York.

         (b) Power and Authorization. GE Capital has the corporate power and
authority (i) to execute, deliver and perform this Agreement and (ii) to
execute, deliver and perform all other agreements and instruments to be executed
and delivered by GE Capital pursuant to or in connection with this Agreement.

         (c) No Violation. The execution, delivery and performance by GE Capital
of this Agreement and the execution, delivery and performance by GE Capital of
all other agreements and instruments to be executed and delivered by GE Capital
pursuant hereto or in

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connection herewith, (i) will not violate any provision of the Organization
Certificate or By-Laws of GE Capital or any applicable law or regulation or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority, and (ii) will not violate any provision of, or constitute a default
under, any mortgage, indenture, contract, agreement or other undertaking to
which GE Capital is a party or which purports to be binding upon GE Capital or
upon any of its assets.

         (d) Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of this Agreement by GE Capital or (ii) the legality,
validity, binding effect or enforceability of this Agreement against GE Capital.

         (e) Enforceability. This Agreement has been duly authorized, executed
and delivered by GE Capital. This Agreement constitutes, and each other
agreement or instrument executed and delivered by GE Capital pursuant hereto or
in connection herewith will constitute, the legal, valid and binding obligation
of GE Capital enforceable against GE Capital in accordance with its respective
terms, except as the enforcement thereof may be limited by bankruptcy and other
similar laws of general application relating to creditors' rights or general
principles of equity.

                                   ARTICLE VI

                                    COVENANTS

     SECTION 6.1 Covenants of the Borrower. The Borrower covenants and agrees
that so long as any Loans shall remain unpaid or GE Capital shall have any
Commitment hereunder:

         (a) Use of Proceeds. The Borrower will use the proceeds of the Loans
solely for the purposes set forth in Section 2.2.

         (b) Dividend Limitation. The Borrower will not declare or pay any
dividend in respect of, or make any distribution in respect of, or redemption
of, any shares of its capital stock.

         (c) Liens. The Borrower will not contract for, create, incur, assume or
suffer to exist any lien, security interest, charge or other encumbrance of any
nature upon any of its property or assets, whether now owned or hereafter
acquired.

         (d) Other Debt. The Borrower will not, without the prior written
consent of GE Capital, create, incur, assume or suffer to exist any
indebtedness, whether current or funded, or any other liability except
indebtedness owed to GE Capital.

         (e) Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Standby Bond Purchase Agreement, the Borrower will not,
without the prior written consent of GE Capital, make any loan or advance or
credit to, or guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on

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any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other Person.

         (f) Consolidation, Merger and Sale of Assets. The Borrower will not
enter into any merger, consolidation, joint venture, syndicate or other form of
combination with any Person, or sell, lease or transfer or otherwise dispose of
any of its assets (other than the sale of Tendered Bonds in a remarketing
permitted by Section 2.04(b) of the Standby Bond Purchase Agreement) or engage
in any other transaction which would result in a change of control of the
Borrower.

         (g) Capital Expenditures. The Borrower will not make any expenditure
(by long-term or operating lease or otherwise) for capital assets (both realty
and personalty).

         (h) Other Business. The Borrower will not, without the prior written
consent of GE Capital, engage in any business or enterprise or enter into any
material transaction which is of a type different than that which is
contemplated by this Agreement and the Standby Bond Purchase Agreement.

         (i) Amendment of Certificate of Incorporation or By-Laws. The Borrower
will not amend its Certificate of Incorporation or By-Laws without the prior
written consent of GE Capital.

         (j) Good Standing. The Borrower will maintain its corporate existence
as a corporation validly existing and in good standing under the laws of the
State of Delaware.

         (k) No Changes in Documents. The Borrower will not amend, supplement,
modify or waive any of the provisions of the Standby Bond Purchase Agreement or
consent to any amendment, supplement, modification or waiver of any Related
Document (as defined in the Standby Bond Purchase Agreement), unless the
Borrower shall have obtained the prior written consent of GE Capital.

     SECTION 6.2 Covenants of GE Capital. GE Capital covenants and agrees that,
prior to the date which is one year and one day after the Commitment hereunder
has been terminated, GE Capital will not institute against, or join any other
Person in instituting against, the Borrower any bankruptcy, reorganization
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States of America or any state of the United States
of America.

                                  ARTICLE VII

                              CONDITIONS PRECEDENT

     SECTION 7.1 Conditions Precedent to Effectiveness. This Agreement shall
become effective on the earliest date (the "Effective Date") on which each of
the following conditions shall have been satisfied; provided that the Effective
Date shall occur no later than _______________;

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         (a) Agreement. GE Capital and the Borrower each shall have signed and
delivered a counterpart of this Agreement.

         (b) The Note. The Borrower shall have executed and delivered to GE
Capital a Note in the form set forth in Exhibit B.

         (c) Opinion of Borrower's Counsel. GE Capital shall have received an
opinion of Managing Counsel of Financial Guaranty Insurance Company, an
affiliate of the Borrower, dated the Effective Date, to the effect set forth in
Exhibit C attached hereto.

         (d) Opinion of GE Capital's Counsel. The Borrower shall have received
an opinion of either the Senior Vice President, General Counsel and Secretary of
GE Capital or the Associate General Counsel, Treasury Operations and Assistant
Secretary of GE Capital, dated the Effective Date, to the effect set forth in
Exhibit D attached hereto.

         (e) Effectiveness of Standby Bond Purchase Agreement. The Standby Bond
Purchase Agreement shall have become effective.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     SECTION 8.1 Events of Default. If the following events, acts or occurrences
(each herein called an "Event of Default") shall occur:

     the Borrower shall commence a voluntary case concerning itself under Title
     11 of the United States Code entitled "Bankruptcy," as now or hereafter in
     effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
     case is commenced against the Borrower and the petition is not controverted
     within 10 days, or is not dismissed within 60 days, after commencement of
     the case; or a custodian (as defined in the Bankruptcy Code) is appointed
     for, or takes charge of, all or substantially all of the property of the
     Borrower, or the Borrower commences any other proceeding under any
     reorganization, arrangement, adjustment of debt, relief of debtors,
     dissolution, insolvency or liquidation or similar law of any jurisdiction
     whether now or hereafter in effect relating to the Borrower, or there is
     commenced against the Borrower any such proceeding which remains
     undismissed for a period of 60 days, or the Borrower is adjudicated
     insolvent or bankrupt; or any order of relief or other order approving any
     such case or proceeding is entered; or the Borrower suffers any appointment
     of any custodian or the like for it or any substantial part of its property
     to continue undischarged or unstayed for a period of 60 days; or the
     Borrower makes a general assignment for the benefit of creditors; or any
     corporate action is taken by the Borrower for the purpose of effecting any
     of the foregoing;

then all sums then owing by the Borrower hereunder and under the Note shall
automatically become and be immediately due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Borrower.

<PAGE>   14

                                                                        Page 11

                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.1 No Waiver; Modifications in Writing. No failure or delay on the
part of GE Capital in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to GE Capital at law or in equity or otherwise. No amendment,
modification, supplement, termination or waiver of or to any provision of this
Agreement, nor consent to any departure by the Borrower therefrom, shall be
effective unless the same shall be in writing and signed by or on behalf of GE
Capital. Any amendment, modification or supplement of or to any provision of
this Agreement, and any consent to any departure by the Borrower from the terms
of any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.

     SECTION 9.2 Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be due on a day which is not a Business Day, then such payment
shall be made on the next succeeding Business Day.

     SECTION 9.3 Further Assurances. The Borrower agrees to do such further acts
and things and to execute and deliver to GE Capital such additional assignments,
agreements, powers and instruments, as GE Capital may require or deem advisable
to carry into effect the purposes of this Agreement or to better assure and
confirm unto GE Capital its rights, powers and remedies hereunder.

     SECTION 9.4 Survival of Representations and Warranties. All agreements,
representations and warranties made in this Agreement and in any certificates
delivered pursuant hereto shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder, and the agreements contained in
Sections 9.3 and 9.6 hereof shall survive payment of the Note and the
termination of this Agreement.

     SECTION 9.5 Notices, etc. Except where telephonic instructions or notices
are authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or any other Person shall be in writing and shall be personally delivered
or sent by registered or certified mail or overnight courier, postage prepaid,
or by telecopy, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered to the intended recipient thereof in
accordance with the provisions of this Section. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of this
Section, notices, demands, instructions and other communications in writing
shall be given to or made upon the respective parties hereto at their respective
addresses (or to their respective telecopy numbers) indicated below, and, in the
case of telephonic instructions or notices, by calling the telephone number or
numbers indicated for such party below:

<PAGE>   15

                                                                        Page 12

                  If to the Borrower:

                  FGIC Securities Purchase, Inc.
                  c/o Financial Guaranty Insurance Company
                  115 Broadway
                  New York, New York  10006-4972
                  Attention:  Senior Counsel - Public Finance
                  Telecopy No.:  212-312-3093
                  Tel. No.:  212-312-3000

                  If to GE Capital:

                  General Electric Capital Corporation
                  201 High Ridge Road
                  Stamford, Connecticut  06927
                  Attention:  Senior Vice President - Corporate
                           Treasury and Global Funding Operation
                  Telecopy No.:  203-357-4975
                  Tel. No.:  203-357-4000

     SECTION 9.6 Costs, Expenses and Taxes. The Borrower agrees to pay promptly
all costs and expenses in connection with the preparation, issuance, delivery,
filing, recording, and administration of this Agreement, the Note, and any other
documents which may be delivered in connection with this Agreement, including,
without limitation, the reasonable out-of-pocket expenses of GE Capital and the
fees and expenses of its counsel, and all costs and expenses (including counsel
fees and expenses) in connection with (i) the modification, extension, change in
terms, maintenance, renewal or termination of the Commitment or (ii) the
enforcement of this Agreement or the Note.

     SECTION 9.7 No GE Capital Liability. This Agreement is not, and shall not
be construed to be, a guarantee by GE Capital of the Bonds or of the Borrower's
obligations under the Standby Bond Purchase Agreement. GE Capital shall not have
any responsibility for, or incur any liability in respect of, any act, or any
failure to act, by the Borrower which results in the failure of the Borrower to
effect the purchase for the account of the Borrower of Tendered Bonds with the
funds provided pursuant to this Agreement.

     SECTION 9.8 Term of this Agreement. Subject to Section 9.4 hereof, the term
of this Agreement shall be until the termination of the Commitment in its
entirety.

     SECTION 9.9 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.

     SECTION 9.10 Binding Effect; Assignment. This Agreement shall be binding
upon, and inure to the benefit of, the Borrower and GE Capital and their
respective successors and assigns; provided, however, that the Borrower may not
assign its rights or obligations hereunder without the prior written consent of
GE Capital. GE Capital may assign its rights or obligations

<PAGE>   16

                                                                        Page 13

hereunder without the prior written consent of the Borrower provided that the
assignment does not result in a reduction in the short term credit rating of the
liquidity obligation evidenced and contemplated by under the Standby Bond
Purchase Agreement, the proceeds of drawings under which enable the Borrower to
pay the purchase price of Bonds tendered for purchase. This Agreement shall not
be construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and permitted assigns.

     SECTION 9.11 Governing Law. This Agreement and the Note shall be deemed to
be a contract made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of said State.

     SECTION 9.12 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

     SECTION 9.13 Headings. Article and Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                FGIC SECURITIES PURCHASE, INC.

                                By____________________________
                                  Vice President

                                GENERAL ELECTRIC CAPITAL CORPORATION

                                By____________________________
                                  Name:
                                  Senior Vice President - Corporate
                                  Treasury and Global Funding Operation

<PAGE>   17

                                                                     EXHIBIT A

                           FORM OF NOTICE OF BORROWING

__________________, ______

General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut  06927

Attention:  Senior Vice President - Corporate Treasury
            and Global Funding Operation

Gentlemen:

                  Pursuant to Section 2.3 of the Standby Loan Agreement dated as
of January 20, 2000 (the "Standby Loan Agreement") between FGIC Securities
Purchase, Inc. (the "Borrower") and General Electric Capital Corporation ("GE
Capital"), the Borrower hereby confirms that on ________ __, 20__ it requested
that GE Capital make a Loan in the principal amount of $_______________ on
________ __, 20__, which is a Business Day.

                  The Loan requested hereby is for the sole purpose of paying
the purchase price for Tendered Bonds which represents the aggregate outstanding
principal amount of such Tendered Bonds in the amount of $__________ together
with accrued interest thereon.

                  You are hereby requested to disburse the Loan requested hereby
to account #__________ maintained at the office of [__________________________]
in immediately available funds.

                  Each capitalized term used herein shall have the meaning
ascribed thereto in the Standby Loan Agreement.

                                 Very truly yours,

                                 FGIC SECURITIES PURCHASE, INC.

                                 By____________________________

                                 Title_______________________

<PAGE>   18

                                                                      EXHIBIT B

                                  FORM OF NOTE

                  $______________                          _____________, 20__

                  FOR VALUE RECEIVED, FGIC SECURITIES PURCHASE, INC., a
corporation organized under the laws of the State of Delaware (the "Borrower"),
hereby promises to pay to the order of GENERAL ELECTRIC CAPITAL CORPORATION ("GE
Capital"), in lawful money of the United States of America in immediately
available funds on [Commitment Termination Date] (or, if such date is not a
Business Day, the Business Day immediately succeeding such date), the principal
sum of ________________________________, or, if less, the unpaid principal
amount of all Loans made by GE Capital pursuant to, and as defined in, the
Standby Loan Agreement referred to below. (All capitalized terms used herein
shall have the meanings set forth in such Standby Loan Agreement.)

                  The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money from the date hereof until paid at the
rates and at the times provided in the Standby Loan Agreement.

                  This Note is the Note referred to in the Standby Loan
Agreement dated as of ____________, 20__ between the Borrower and GE Capital (as
the same may from time to time be amended or supplemented, the "Standby Loan
Agreement") and is entitled to the benefits thereof and shall be subject to the
provisions thereof. As provided in the Standby Loan Agreement, this Note is
subject to prepayment in whole or in part.

                  In case an Event of Default (as defined in the Standby Loan
Agreement) shall occur and be continuing, the principal of and accrued interest
on this Note may be declared to be due and payable in the manner and with the
effect provided in the Standby Loan Agreement.

                  The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.

<PAGE>   19

                                                                      EXHIBIT B
                                                                         Page 2

                  This Note shall be construed in accordance with and be
governed by the laws of the State of New York.

                                FGIC SECURITIES PURCHASE, INC.

                                By____________________________

<PAGE>   20

                                                                      EXHIBIT B
                                                                         Page 3

                  Schedule attached to the Note, dated _____________, 20__, of
FGIC Securities Purchase, Inc.

<TABLE>
<CAPTION>

======================================================================================================================
                           LOAN AND REPAYMENT SCHEDULE
======================================================================================================================
------------------------- ---------------------- ----------------------- ---------------------- ======================
<S>       <C>              <C>                    <C>                      <C>                      <C>
          Date             Amount of Loan Made    Amount of Principal      Unpaid Principal        Name of Person
                                                         Repaid                 Balance            Making Notation
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================
------------------------- ---------------------- ----------------------- ---------------------- ======================

------------------------- ---------------------- ----------------------- ---------------------- ======================

</TABLE>

<PAGE>   21

                                                                     EXHIBIT C

                     [FORM OF BORROWER'S OPINION OF COUNSEL]

General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut  06927

Dear Sirs:

         I am [counsel] for FGIC Securities Purchase, Inc. (the "Borrower") and
in such capacity I have acted for the Borrower in connection with the Standby
Loan Agreement (the "Loan Agreement") dated as of January 20, 2000, between the
Borrower and General Electric Capital Corporation. Terms defined in the Loan
Agreement are used herein as therein defined. This opinion is being rendered to
you pursuant to Section 7.1(c) of the Loan Agreement.

         I have examined such documents, certificates, orders and proceedings
and have made such investigation as I have deemed necessary or appropriate for
purposes of this opinion.

         Upon the basis of the foregoing, I am of the opinion that:

                  1. The Borrower has been duly incorporated and is validly
         existing and in good standing under the laws of the State of Delaware.
         The Borrower is duly qualified to transact business and is in good
         standing in the jurisdictions in which the conduct of its business or
         the ownership of its property requires such qualification.

                  2. The execution, delivery and performance by the Borrower of
         the Loan Agreement and the Note are within the Borrower's corporate
         powers and have been duly authorized by all necessary corporate action.
         The execution, delivery and performance of the Loan Agreement and the
         Note by the Borrower will not contravene the Certificate of
         Incorporation or by-laws of the Borrower or result in any violation of
         any of the terms or provisions of any law or regulation or of any
         indenture, mortgage or other agreement or instrument known to me by
         which the Borrower is bound or, any judgment, order or decree of any
         governmental body, agency or court having jurisdiction over the
         Borrower.

                  3. Each of the Loan Agreement and the Note constitutes a
         legal, valid and binding agreement of the Borrower enforceable against
         the Borrower in accordance with its terms, except as the enforcement
         thereof may be limited by bankruptcy, insolvency, reorganization or
         other similar laws affecting the enforcement of creditors' rights
         generally against (or affecting) the Borrower and by general equitable
         principles (regardless of whether the issue of enforceability is
         considered in a proceeding in equity or at law).

<PAGE>   22

                                                                      EXHIBIT C
                                                                         Page 2

                  4. There is no action, suit or proceeding pending against, or
         to the best of my knowledge threatened against or affecting, the
         Borrower before any court or administrator or any governmental body,
         agency or official, in which there is a reasonable possibility of an
         adverse decision which could materially adversely affect the financial
         position of the Borrower or which in any manner draws into question the
         validity of the Loan Agreement or the Note.

         I am a member of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America.

         I understand that copies of this opinion are being delivered to
Standard & Poor's Corporation in connection with the issuance of the Bonds. Such
entities are authorized to rely upon this opinion as though this opinion were
addressed to them.

Very truly yours,

<PAGE>   23

                                                                     EXHIBIT D

                    [FORM OF GE CAPITAL'S OPINION OF COUNSEL]

                                                           _____________, 20__

FGIC Securities Purchase, Inc.
115 Broadway
New York, New York  10006-4972

Moody's Investors Service
99 Church Street
New York, NY  10007

Ladies and Gentlemen:

I am Associate General Counsel, Treasury Operations for General Electric Capital
Corporation ("GE Capital") and in such capacity I have acted for GE Capital in
connection with the Standby Loan Agreement (the "Loan Agreement") dated as of
_________, ____, between GE Capital and FGIC Securities Purchase, Inc. Terms
defined in the Loan Agreement are used herein as therein defined. This opinion
is being rendered to you pursuant to Section 7.1(d) of the Loan Agreement.

I have examined such documents, certificates, orders and proceedings and have
made such investigation as I have deemed necessary or appropriate for purposes
of this opinion.

Upon the basis of the foregoing, I am of the opinion that:

         1.       GE Capital has been duly incorporated and is validly existing
                  and in good standing under the laws of the State of New York.
                  GE Capital is duly qualified to transact business and is in
                  good standing in the jurisdictions in which the conduct of its
                  business or the ownership of its property requires such
                  qualification.

         2.       The execution, delivery and performance by GE Capital of the
                  Loan Agreement are within GE Capital's corporate powers and
                  have been duly authorized by all necessary corporate action on
                  the part of GE Capital. The execution, delivery and
                  performance of the Loan Agreement by GE Capital will not
                  contravene the Organization Certificate or by-laws of GE
                  Capital or result in any violation of any of the terms or
                  provisions of any law or regulation or of any indenture,
                  mortgage or other agreement or instrument known to me by which
                  GE Capital is bound or,

<PAGE>   24

                                                                      EXHIBIT D
                                                                        Page 2

                  any judgment, order or decree of any governmental body, agency
                  or court having jurisdiction over GE Capital.

         3.       The Loan Agreement constitutes a legal, valid and binding
                  agreement of GE Capital enforceable against GE Capital in
                  accordance with its terms, except as the enforcement thereof
                  may be limited by bankruptcy, insolvency, reorganization or
                  other similar laws affecting the enforcement of creditors'
                  rights as they would apply to the bankruptcy, insolvency or
                  reorganization of GE Capital and by general equitable
                  principles (regardless of whether the issue of enforceability
                  is considered in a proceeding in equity or at law).

My opinion is limited to the law of the State of New York and the federal laws
of the United States of America.

Very truly yours,<PAGE>   1

                                                                    Exhibit 10.1

                LINE OF CREDIT, TERM LOAN AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                       FLEET BUSINESS CREDIT CORPORATION,

                                   AS LENDER,

                                       AND

                          WM LIMITED PARTNERSHIP-1998,

                                   AS BORROWER

<PAGE>   2

                             I N T R O D U C T I O N
                             -----------------------

                                    To help better understand this Agreement,
                  the following is a summary of its contents and format:

         Section                                                           Page
         -------                                                           ----

         1.      SCHEDULES OF PARTIES, TERMS AND DEFINITIONS ..............  3

         2.      AGREEMENT TO LEND AND BORROW .............................  9

         3.      FEES ..................................................... 11

         4.      DISBURSEMENTS, PAYMENTS AND COSTS ........................ 11

         5.      SECURITY ................................................. 12

         6.      REPRESENTATIONS AND WARRANTIES ........................... 13

         7.      COVENANTS ................................................ 14

         8.      REMEDIES ................................................. 17

         9.      MISCELLANEOUS ............................................ 19

LIST OF EXHIBITS
----------------

Exhibit A               Unit Locations
Exhibit A-1             Initial Draw Documents
Exhibit A-2             Subsequent Draw Documents
Exhibit A-3             Term Loan Documents
Exhibit B               Insurance
Exhibit C               Form of Compliance Certificate

                                       3
<PAGE>   3

                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

                  The following Agreement sets forth the terms on which Fleet
         Business Credit Corporation will make available (a) a revolving line of
         credit in the maximum aggregate amount of $3,500,000 for Borrower's use
         for the purchase of corporate assets or to support general corporate
         purposes, and (b) upon the "Conversion Date," as hereinafter defined, a
         term loan in the maximum aggregate amount of $3,500,000 to refinance
         the line of credit. This Agreement covers the line of credit and the
         term loan financing.

         THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT") is made as of the
Effective Date by and between Lender and Borrower.

1. SCHEDULES OF PARTIES, TERMS AND DEFINITIONS. The following terms shall have
the following meanings:

         1.1.     SCHEDULE OF PARTIES.

"EFFECTIVE DATE":                      , 2000
                   --------------------

"LENDER":  Fleet Business Credit Corporation, a Delaware corporation

"LENDER'S ADDRESS":    One South Wacker Drive
                       Chicago, Illinois  60606
                       Attn:  Franchise Finance Division
                              Credit Manager

"BORROWER":  WM Limited Partnership-1998, a Michigan limited partnership

"BORROWER'S ADDRESS":  WM Limited Partnership-1998, dba
                       Wendy's of Michigan
                       40 Pearl Street, N.W., Suite 900
                       Grand Rapids, Michigan  49503
                       Attn:  Pauline Krywanski
                              Vice President, Treasurer and
                              Chief Financial Officer
                       Phone:  (616) 776-2600
                       Fax:  (616) 776-2776

"UNIT LOCATIONS": As set forth in EXHIBIT A attached hereto and made a part
hereof, and such new or additional location(s) at which the Business may be
operated and which are financed by Lender pursuant to this Agreement; each, a
Unit Location, and collectively, the Unit Locations.

         1.2.     SCHEDULE OF TERMS.

         (a)      LOAN AMOUNT.
                  ------------

                                       4
<PAGE>   4

"LINE OF CREDIT AMOUNT":  A maximum aggregate amount of $3,500,000.00.

"TERM LOAN AMOUNT":  A maximum aggregate amount of $3,500,000.00.

         (b)      INTEREST RATES.
                  ---------------

"LINE OF CREDIT INTEREST RATE":  LIBOR PLUS 2.50% per annum.

"TERM LOAN INTEREST RATE": The per annum fixed rate, equal to the comparable
term Treasury Bond Rate, plus (b) 2.25%, plus (c) the Swap Spread; or LIBOR PLUS
2.50% per annum.

         (c)      REPAYMENT.
                  ---------

"LINE OF CREDIT MATURITY DATE":  The Conversion Date.

"TERM LOAN MATURITY DATE": That date which is the 4th anniversary of the
Conversion Date.

         (d)      MISCELLANEOUS TERMS.
                  --------------------

"ANNUAL FEE": $17,500.00 payable on the Disbursement Date and each anniversary
thereof prior to the Conversion Date.

"FRANCHISE AGREEMENTS": The franchise agreements by and between Borrower and
Wendy's International, Inc. ("FRANCHISOR") for the Unit Locations.

"FINANCIAL STATEMENTS":

<TABLE>
<CAPTION>
Person                Quarterly                                  Annually
------                ---------                                  --------
<S>                   <C>                                        <C>
Borrower              Yes; unaudited; certified by the           Yes; compiled, certified by chief
                      chief financial officer; delivered         financial officer; for Borrower,
                      to Lender within 60 days following         delivered to Lender within 90 days
                      each quarter end                           following each fiscal year end and
                                                                 copies of signed federal tax
                                                                 returns within 15 days following
                                                                 the filing thereof; and audited
                                                                 statements for Borrower's parent,
                                                                 Meritage Hospitality Group,
                                                                 delivered within 120 days following
                                                                 each fiscal year end.
</TABLE>

"FINANCIAL COVENANTS": For Borrower, with respect to all of the Obligations as
evidenced by the Loan Documents, the following, determined as of the end of each
fiscal quarter:

                                       5
<PAGE>   5

                  (a) DEBT SERVICE COVERAGE AFTER DISTRIBUTION RATIO. A Debt
         Service Coverage Ratio of not less than 1.10 at any time during the
         term of this Agreement.

                  (b) LEVERAGE RATIO. A Leverage Ratio not to exceed 6.00 at any
         time during the term of this Agreement.

                  (c) DAYS PAYABLE. Days Payable not to exceed 45 at any time
         during the term of this Agreement

         1.3. SCHEDULE OF DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:

         "ADJUSTED EBITDA": For any period, (a) the sum of (i) net income before
taxes for such period, (ii) amortization and depreciation expense for such
period, (iii) total interest expense (whether paid or accrued and including the
interest component of payments under capital leases) for such period, (iv)
non-cash losses for such period, and (v) extraordinary losses for such period,
MINUS (b) the sum of (i) non-cash gains for such period, and (ii) extraordinary
gains for such period.

         "BANKING DAY": A day (other than a Saturday or a Sunday) on which
Lender and national banks are open for business in Chicago, Illinois.

         "BUSINESS": The operation by Borrower of Wendy's Old Fashioned
Hamburgers restaurants at the Unit Locations.

         "COLLATERAL": All of Borrower's right, title and interest in and to the
following, whether now owned by Borrower or, hereafter acquired or arising, and
wherever located:

         (a) accounts receivable, chattel paper, contract rights and general
intangibles of Borrower, in each case relating to the Business (including,
without limitation, all licenses) BUT excluding the Franchise Agreements;

         (b) all inventory of foods, beverages and other merchandise held for
sale by Borrower for use in connection with the Business;

         (c) all trade, store and other fixtures and all leasehold improvements
and all equipment and other personal property of Borrower used or useful in the
operation of the Business;

         (d) all sums deposited by Borrower with Lender;

         (e) all accessions to, substitutions for and all replacements, products
and proceeds of the items listed above, including, without limitation, proceeds
of condemnation and insurance policies insuring any of the items listed above.

         "COMPLIANCE CERTIFICATE": A certificate signed by Borrower's chief
financial officer in

                                       6
<PAGE>   6

the form shown on EXHIBIT C attached hereto and made a part hereof, (i) setting
forth the calculation of each of the Financial Covenants, if any; (ii) stating
that, to the best of his or her knowledge after diligent inquiry, no Event of
Default exists, or if any Event of Default exists, stating the nature and status
thereof; and (iii) certifying that the Financial Statements were prepared in
accordance with GAAP consistently applied and fairly and accurately present the
financial condition of the Borrower and the other Persons and operations to
which they relate.

         "CONVERSION DATE": The date which is the 3rd anniversary of the
Disbursement Date.

         "DEBT SERVICE": With respect to any period, the sum of (a) the
aggregate amount of all actual principal and interest debt payments due, whether
or not payment was made during the measurement period, and (b) the aggregate
amount of all actual payments due, whether or not payment was made during the
measurement period, under capital lease obligations (including the interest
component thereof).

         "DEBT SERVICE COVERAGE AFTER DISTRIBUTIONS RATIO": With respect to any
period, the ration of (i) Adjusted EBITDA after Distributions made minus cash
income taxes paid, to (ii) Debt Service.

         "DISBURSEMENT DATE": The date of initial disbursement of the proceeds
of the Line of Credit by Lender.

         "DISTRIBUTIONS": Any payments or other distributions of cash or other
assets in the form of management, development or other fees; net increase in
loans or advances (but in no event less than zero); dividends; distributions for
the payment of federal and state income taxes; stock repurchases or redemptions;
bonuses; principal payments on shareholder/affiliate indebtedness; or any other
payment to any shareholder, guarantor or other affiliate to the extent such
payments or other distributions are not already a reduction of net income before
taxes in calculating Adjusted EBITDA.

         "ENVIRONMENTAL LAWS": The Resource Conservation and Recovery Act of
1987, the Comprehensive Environmental Response, Compensation and Liability Act,
any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
or any other federal state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.

         "EVENT OF DEFAULT":  As defined in Section 8.1.

         "GAAP": For purposes of this Agreement, GAAP shall mean the "modified
income basis of accounting" in accordance with statements or standards of
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.

         "FUNDED DEBT": The sum of (i) the aggregate amount of revolving
indebtedness, (ii) the aggregate amount of all current and non-current
indebtedness for borrowed money including third party subordinated indebtedness,
and (iii) the aggregate amount of capital leases (including

                                       7
<PAGE>   7

the current portion thereof).

         "HAZARDOUS SUBSTANCE": Any substance which is or becomes designated a
hazardous substance, hazardous waste or hazardous material under any
Environmental Law and shall include, but not be limited to, petroleum, any
radioactive material, and asbestos in any form or condition.

         "LEVERAGE RATIO": The ratio of Funded Debt to Adjusted EBITDA for the
twelve month period (or such lesser period if the actual number of months
Borrower has been in business during the measurement period is less than twelve
months) immediately preceding the measurement date. In the case of stores opened
less than twelve months as of the measurement date, the Funded Debt related to
those stores shall be reduced by a fraction, the numerator of which is twelve
minus the number of months the store(s) was/were open during the measurement
period, and the denominator of which is twelve.

         "LEASES": All operating and capital leases of real and personal
property relating to the Unit Locations or to the operations of the Business.

         "LIBOR": The London Interbank Offered Rate (rounded upwards to the
nearest whole multiple of 1/16th of 1%) ("LIBOR") as quoted on page No. 3750 of
the Telerate Data Information Service, on the second Banking Day prior to the
LIBOR Reset Date, for obligations of U.S. dollars with maturities of 1 month. If
the Telerate System page is unavailable on the date which is two Banking Days
prior to the next LIBOR Reset Date due to technical malfunction or
discontinuation of such service, the LIBOR rate used shall be determined by
Lender to be the arithmetic mean (rounded upwards to the nearest whole multiple
of 1/16th of 1%) of the offered rates quoted in London, England through other
verifiable sources, for deposits in U.S. dollars in amounts substantially equal
to the maximum principal amount of the Loan having a 30 day maturity by prime
banks in the London inter-bank market at 11:00 a.m. London Time, two Banking
Days prior to the beginning of such month. As used herein, the "LIBOR Reset
Date" shall mean, from time to time, either the Disbursement Date, the
Conversion Date or the first day of each calendar month.

         "LOAN":  As defined in Section 2.

         "LINE OF CREDIT AVAILABILITY PERIOD": The period commencing on the
Disbursement Date and ending on the first to occur of (a) the Conversion Date,
(b) the date on which an Event of Default shall occur.

         "LOAN DOCUMENTS": This Agreement and all other agreements, documents,
instruments, notes, mortgages, assignments and certificates which evidence,
govern, secure (or perfect such securing) or guaranty any of the Obligations,
whether executed prior to, concurrent with, or after, the Effective Date.

         "MATURITY DATE": The later of the Line of Credit Maturity Date and the
Term Loan Maturity Date.

                                       8
<PAGE>   8

         "OBLIGATIONS": All presently existing or hereafter incurred, absolute
or contingent, direct or indirect liabilities, obligations, covenants,
agreements, representations and warranties owed by Borrower to Lender,
including, without limitation, all liabilities, obligations, covenants,
agreements, representations and warranties of Borrower arising under the Loan,
this Agreement or any of the Loan Documents.

         "OBLIGORS": Collectively, jointly and severally, Borrower and all
co-makers, endorsers, indorsers, sureties and guarantors of the Obligations from
time to time. Without limiting the generality of the foregoing, the term
"Obligor" shall include any Person that ever acts as Borrower, co-maker,
endorser, indorser, surety or guarantor even if such Person is subsequently
released from liability. Notwithstanding the forgoing, Robert E. Schermer, Jr.
and Ray Quada shall not be Obligors pursuant to this Agreement.

         "PERSON": Any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or
government, including, without limitation, any instrumentality, division,
agency, body or department thereof.

         "PREPAYMENT PREMIUM": The greater of the two amounts computed in
accordance with Alternative 1 and Alternative 2 below:

                  ALTERNATIVE 1: The Prepayment Premium will be equal to the
         principal amount prepaid multiplied by the applicable percentage
         determined below.

                                                   APPLICABLE PERCENTAGE OF
PERIOD OF PREPAYMENT, BASED ON                     AMOUNT OF
ANNIVERSARIES OF THE CONVERSION DATE               PRINCIPAL PREPAID
------------------------------------               -----------------

On or prior to the first anniversary               3%
After the first anniversary but on or prior to     2%
the second anniversary
After the second anniversary but on or prior to    1%
the third anniversary
After the third anniversary                        0%

                  ALTERNATIVE 2: The Prepayment Premium will be equal to (a)
         1.0% of the principal amount prepaid, PLUS (b) the difference between
         (i) the present value of the remaining unpaid principal and interest
         payments discounted at the yield for U.S. Treasury Notes having a
         maturity most similar to but not longer than the remaining term of the
         Loan quoted in Statistical Release H.15(519) published by the Board of
         Governors of the Federal Reserve System on the Friday preceding by at
         least 8, but not more than 14, days the date on which the prepayment is
         made, MINUS (ii) the present value of the remaining unpaid principal
         and interest payments discounted at the yield of U.S. Treasury Notes
         having a term most similar to but not longer than the original term of
         the Loan quoted in Statistical Release H.15(519) for the Friday
         preceding the Conversion Date.

         "SWAP SPREAD": The comparable term swap spread under $$$SWAP Index HP
published on the release date of the edition of Statistical Release H.15 most
recently published prior to 5 Banking Days before the Drop Lock election date,
by Bloomberg (rounded upwards to

                                       9
<PAGE>   9

the applicable integral year period) or, if such figure is no longer published,
such other comparable index as may be reasonably selected by Lender.

         "TANGIBLE COLLATERAL": That portion of the Collateral constituting
furniture, fixtures, equipment and/or inventory.

         "TREASURY BOND RATE": The per annum fixed rate for applicable year term
(as referenced in this Agreement) U.S. government securities, Treasury constant
maturities quoted for the "Week Ending" just prior to the release date of the
applicable edition of Statistical Release H. 15 (519) most recently published
prior to 5 Banking Days before the Conversion Date by the Board of Governors of
the Federal Reserve System.

2. AGREEMENT TO LEND AND BORROW. Lender agrees to make available, and Borrower
agrees to borrow, monies under the following loan facility or facilities
(collectively, the "LOAN"), all in accordance with the terms and conditions of
this Agreement.

         2.1. LINE OF CREDIT LOAN.

                  (a) AMOUNT AND AVAILABILITY. During the Line of Credit
         Availability Period Lender shall provide a revolving line of credit to
         Borrower up to the maximum amount of the Line of Credit Amount (the
         "LINE OF CREDIT LOAN"). Borrower may borrow, repay and reborrow under
         the Line of Credit Loan (each borrowing or reborrowing, a "draw"),
         provided, however, that the aggregate outstanding amount of the Line of
         Credit Loan advanced to Borrower pursuant to this Agreement may not
         exceed the Line of Credit Amount.

                  (b) PURPOSE. The proceeds of the Line of Credit Loan shall
         only be used by Borrower for: (x) the purchase of corporate assets; and
         (y) to support general corporate purposes. In no event shall the
         proceeds of the Line of Credit Loan be used by Borrower to fund
         Distributions.

                  (c) INTEREST RATE. The amount of the Line of Credit Loan
         outstanding from time to time shall bear interest at the Line of Credit
         Interest Rate.

                  (d) REPAYMENT.

                           (i) Prior to the Line of Credit Maturity Date,
                  Borrower shall pay to Lender on account of the Line of Credit
                  Amount outstanding from time to time, payments of interest
                  only commencing on the first day of the second calendar month
                  following the Disbursement Date, and on the first day of each
                  calendar month thereafter;

                           (ii) Upon the Line of Credit Maturity Date, Borrower
                  shall apply the proceeds of the Term Loan to the satisfaction
                  of all outstanding draws of the Line of Credit Loan advanced
                  to Borrower together with all accrued and unpaid interest
                  thereon; and

                                       10
<PAGE>   10

                           (iii) in any event, on the Line of Credit Maturity
                  Date, all Obligations relating to the Line of Credit Loan.

         2.2. TERM LOAN.

                  (a) AMOUNT AND AVAILABILITY. On the Conversion Date, Lender
         shall provide a loan to Borrower in the maximum amount of $3,500,000.00
         (the "TERM LOAN") to finance the outstanding balance of the draws
         advanced to Borrower under the Line of Credit Loan; provided, however,
         that the maximum amount of the loan advanced shall not exceed the Term
         Loan Amount.

                  (b) PURPOSE. The proceeds of the Term Loan shall only be used
         by Borrower for Borrower's repayment of draws advanced under the Line
         of Credit Loan in accordance with this Agreement.

                  (c) INTEREST RATE. The amount of the Term Loan outstanding
         from time to time shall bear interest at the Term Loan Interest Rate.

                  (d) REPAYMENT. Commencing on (A) the first day of the first
         calendar month occurring after the Conversion Date (if the Conversion
         Date is on or prior to the 15th day of the calendar month in which said
         Conversion Date occurs), or (B) the first day of the second calendar
         month following the Conversion Date (if the Conversion Date is after
         the 15th day of the calendar month in which said Conversion Date
         occurs), and on the first day of each calendar month thereafter until
         the Term Loan Maturity Date, Borrower shall pay to Lender on account of
         the Term Loan installments of principal and interest, as follows:

                           (i) accrued and unpaid interest on the Term Loan;
                  plus the applicable monthly installment of principal
                  determined by Lender, in its sole and absolute discretion, to
                  fully amortize (on a so-called mortgage style basis) the Term
                  Loan Amount as of the Conversion Date over a 48 month period,
                  commencing on the Conversion Date; Lender shall provided to
                  Borrower at Borrower's request a schedule of such monthly
                  installments on the Conversion Date; and

                           (iii) in any event, on the Term Loan Maturity Date,
                  all Obligations relating to the Term Loan.

         2.3. PLACE OF PAYMENT. All payments shall be made in lawful money of
the United States of America at Lender's Address, or at such other place as
Lender or the legal owner of the Loan may designate from time to time in
writing. No credit against the Loan shall be given to Borrower until Lender has
received collected funds.

         2.4. INTEREST CALCULATION. Interest shall be calculated daily on the
basis of a 360-day year for each day all or any part of the Loan remains
outstanding.

                                       11
<PAGE>   11

         2.5. PREPAYMENTS.

                  (a) NO PARTIAL PAYMENTS OF TERM LOAN. Except for the scheduled
         monthly payments of principal and interest due under the Term Loan, and
         payments of casualty or condemnation proceeds, no partial payments or
         prepayments of the Term Loan shall be permitted.

                  (b) PREPAYMENT PRIOR TO CONVERSION DATE. Prior to the
         Conversion Date, Borrower may (i) prepay the Line of Credit Loan in
         full, or (ii) make prepayments of principal due in connection with
         the Line of Credit Loan once per calendar month in a minimum amount of
         $100,000.00 per prepayment. Payments of casualty or condemnation
         proceeds shall also be permitted prior to the Conversion Date.

                  (c) FULL PREPAYMENT FROM AND AFTER CONVERSION DATE. From and
         after the Conversion Date, the Term Loan may be prepaid in full, but
         not in part; PROVIDED, HOWEVER, that any such prepayment shall be
         accompanied by the Prepayment Premium, except to the extent that such
         prepayment is made with condemnation or casualty proceeds.

                  (d) PREPAYMENT PREMIUM UPON ACCELERATION. The Prepayment
         Premium shall also become due and payable and shall be determined as of
         the date the Obligations are declared to be due and payable under
         Section 8.2. The Prepayment Premium is hereby acknowledged by Borrower
         to be additional consideration for the making of the Loans and not as a
         penalty or damages.

         2.6. BANKING DAYS. All payments which would be due on a day which is
not a Banking Day will be due on the next Banking Day. All payments received on
a day which is not a Banking Day will be applied on the next Banking Day.

         2.7. INTEREST ON LATE PAYMENTS. If any payment under this Agreement is
not made when due, whether at its stated maturity, by acceleration or otherwise,
Lender shall have the right to collect, on demand, a late charge equal to the
lesser of (i) 5% of the amount of such delinquent payment, or (ii) the maximum
amount of late charge permitted by applicable law.

         2.8. DEFAULT RATE. During the pendency of any Event of Default,
interest on the principal amount of the Loan shall accrue at a rate equal to the
then otherwise applicable rate plus 4% per annum.

         3. FEES. Borrower agrees to pay to Lender the Annual Fee payable on
the Disbursement Date and each anniversary thereof prior to the Line of Credit
Maturity Date.

4.       DISBURSEMENTS, PAYMENTS AND COSTS.

         4.1. REQUESTS FOR CREDIT. Each request by Borrower for an extension of
credit shall be made in a manner acceptable to Lender. Such requests shall be
certified by Borrower's Chief Financial Officer and accompanied by such
documents as Lender may require from time to time in

                                       12
<PAGE>   12

Lender's sole and absolute discretion. Without limiting the generality of the
foregoing:

                  (a) INITIAL DRAW. Before Lender is required to advance the
         initial draw of the Line of Credit Loan Lender shall have received
         those items set forth on EXHIBIT A-1;

                  (b) SUBSEQUENT DRAWS. Before Lender is required to advance
         each subsequent draw of the Line of Credit Loan Lender shall have
         received those items set forth on EXHIBIT A-2 with respect to each such
         draw; and

                  (c) DISBURSEMENT OF TERM LOAN PROCEEDS. Before Lender is
         required to advance the proceeds of the Term Loan Lender shall have
         received those items set forth on EXHIBIT A-3.

         4.2. AMOUNT OF DRAWS. Lender shall advance up to an aggregate amount
not to exceed the Line of Credit Amount through draws of not less than $100,000
each.

         4.3. NUMBER OF DRAW REQUESTS AND PAYMENT OF DRAWS. In no event shall
Borrower make more than 1 draw request per calendar month. No later than 5
Banking Days following Borrower's submission to Lender of all materials,
documents and instruments which Lender reasonably requires, Lender shall fund
the applicable draw.

5.       SECURITY.

         5.1. SECURITY INTEREST. In order to secure the prompt payment of the
principal of and interest on the Loan, and to secure the prompt payment and
performance of all other Obligations, Borrower does hereby grant, mortgage,
convey, transfer, assign, warrant and pledge to Lender all of the Collateral.

         5.2. OTHER COLLATERAL DOCUMENTS. Upon Lender's request, Borrower agrees
to deliver to Lender such financing statements and other documents and take such
actions, as Lender may consider necessary in order to establish and maintain
Lender's rights under this Agreement and valid and perfected security interests
in the Collateral, free of all other liens, claims and rights of other parties.
Borrower hereby appoints Lender as Borrower's attorney-in-fact to execute and
deliver in Borrower's stead any such financing statements and other documents,
which appointment is coupled with an interest and is accordingly irrevocable.

         5.3. INSURANCE AND CONDEMNATION PROCEEDS. Borrower hereby directs all
insurers under policies of property damage, and boiler and machinery insurance
to pay all proceeds payable directly to Lender. In the event of any taking of
any interest in the Unit Locations or any part thereof, in or by condemnation
or other eminent domain proceedings (each, a "Taking"), Borrower shall promptly
notify Lender thereof or commencement of proceedings therefor. All proceeds and
any award or payment in respect of any Taking are hereby assigned and shall be
paid to Lender; Borrower shall take all steps necessary to notify the
condemning authority of such assignment. Such award or payment, less the amount
of any expenses incurred in litigating, arbitrating, compromising or settling
any claim arising out of such Taking, shall be paid directly to the Lender.
Lender may elect to make such net proceeds available to Borrower to restore,

                                       13
<PAGE>   13

replace or rebuild the property damaged or destroyed or subject to a Taking in a
manner which results in substantially the same operating capacity at the Unit
Locations as existed prior to such damage, destruction or Taking, subject to
such terms and conditions as Lender may in its discretion impose or require. In
the event Lender elects to apply any such casualty or condemnation proceeds to
repayment of the Loan, no Prepayment Premium shall be assessed in connection
with such payment.

6. REPRESENTATIONS AND WARRANTIES. Having undertaken all appropriate research,
investigation and due diligence, Borrower hereby makes the following
representations and warranties to Lender (and each request for a draw of the
Loan shall constitute a renewal of each such representation and warranty):

         6.1. AUTHORIZATION; ENFORCEABLE AGREEMENT. This Agreement and the other
Loan Documents are within each Obligor's respective powers, have been duly
authorized, and do not conflict with any of each Obligor's organizational
papers. This Agreement is a legal, valid and binding agreement of Borrower,
enforceable against Borrower in accordance with its terms; and the other Loan
Documents, when executed and delivered, shall be similarly legal, valid, binding
and enforceable against each Obligor that is a party thereto.

         6.2. GOOD STANDING; NO CONFLICTS. In each state in which each Obligor
does business, it is duly formed, validly existing, properly licensed, in good
standing, and, where required, in compliance with fictitious name statutes. This
Agreement and the other Loan Documents do not conflict with any law, agreement
or obligation by which any Obligor is bound.

         6.3. INFORMATION. All financial and other information that has been or
will be supplied to Lender is: (a) sufficiently complete to give Lender accurate
knowledge of each Obligor's financial condition; and (b) in compliance with all
government regulations that apply thereto. Since the date of the financial
statements most recently delivered to Lender there has been no material adverse
change in the assets or the financial condition of any Obligor.

         6.4. LAWSUITS. There is no lawsuit, tax claim or other dispute pending
or threatened against any Obligor, which, if lost, would impair such Obligor's
financial condition or ability to satisfy its payment and performance
obligations under any of the Loan Documents.

         6.5. COLLATERAL. All of the Collateral is owned by the grantor thereof
free of any title defects or any liens or interests of others. All of the
Tangible Collateral is located at the Unit Locations.

         6.6. OTHER OBLIGATIONS. Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

         6.7. LOCATION OF BORROWER. Borrower's chief executive office is located
at Borrower's Address.

                                       14
<PAGE>   14

         6.8. BUSINESS PURPOSE. The proceeds of the Loan shall be used for
business purposes only.

         6.9. HAZARDOUS SUBSTANCES. Borrower represents and warrants that (a) to
the best of its knowledge, no Hazardous Substance has been disposed of or
released or otherwise exists in, on, under or onto the Unit Locations, except as
Borrower has disclosed to Lender in writing, (b) the operations of Borrower, any
other Obligor and each of Borrower's subsidiaries comply in all material
respects with all applicable Environmental Laws; (c) none of the operations of
Borrower, any other Obligor or any such subsidiary are subject to any judicial
or administrative proceeding alleging the violation of any Environmental Laws;
(d) none of the operations of Borrower, any other Obligor or any such subsidiary
is the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous Substance
into the environment; and (e) none of Borrower, any other Obligor or any such
subsidiary has any known contingent liability in connection with any release of
any Hazardous Substance into the environment.

         6.10. COMPLIANCE WITH LAW. Borrower has complied with all laws,
regulations and ordinances governing or applicable to Borrower or the Unit
Locations. Borrower has filed all required federal, state and local tax returns
and paid all taxes due pursuant to said returns or any assessments against
Borrower or the Unit Locations.

         6.11. FRANCHISE AGREEMENTS. The Franchise Agreements are in full force
and effect without amendment or modification; no default by any party exists
under the Franchise Agreements nor has any event occurred which, with the
passage of time or the giving of notice, or both, would constitute such a
default.

         6.12. LICENSES, PERMITS AND INTELLECTUAL PROPERTY. Borrower owns or
possesses all licenses, franchise rights, permits and other private and
governmental approvals and authorizations, patents, trademarks, service marks,
tradenames, copyrights, franchises, authorizations and other rights that are
necessary for the operation of the Unit Locations and the Business, without
conflict with the rights of any other Person with respect thereto.

7. COVENANTS. Borrower agrees, so long as any Obligations remain outstanding:

         7.1. INFORMATION. To provide the Financial Statements and such
additional information (including non-financial information) as requested by
Lender from time to time (including, without limitation, federal income tax
returns and store-level information). Lender will not be obligated to return to
Borrower any information delivered to Lender pursuant to this Agreement.

         7.2. FINANCIAL COVENANTS. From and after the Disbursement Date, to keep
at all times (a) the Financial Covenants, if any, and (b) all financial
covenants arising under any other Loan Documents, whether or not the particular
loan facilities outstanding pursuant thereto have been repaid.

         7.4. OTHER LIENS. Not to create, assume, or allow any security interest
or lien

                                       15
<PAGE>   15

(including judicial liens) on the Collateral, except: (a) liens in favor of
Lender; (b) liens for taxes not yet due; and (c) liens outstanding on the date
of this Agreement approved in writing by Lender.

         7.5. CHANGE OF OWNERSHIP AND PROHIBITED TRANSFERS. Not to cause,
permit, or suffer any change, direct or indirect, in Borrower's ownership or
control, from time to time without the prior written consent of Lender, which
consent shall not be unreasonably withheld; and not to (a) engage in any
business activities substantially different from Borrower's present business;
(b) liquidate or dissolve the Business; (c) enter into any consolidation,
merger, pool, joint venture, syndicate or other combination; (d) sell, transfer,
lease, hypothecate or dispose of all or a substantial part of the Business or
Borrower's assets; and (e) permit the creation of any subsidiaries.

         To cause each of Robert E. Schermer, Jr. and Ray E. Quada to (i) remain
the managing members and owners of the controlling membership interest of S & Q
Management, LLC, and (ii) maintain their current management positions as Chief
Executive Officer and Director of MHG Food Service, Inc., and Senior Vice
President and Chief Operating Officer of MHG Food Service, Inc., respectively,
unless otherwise authorized by Franchisor and approved by Lender, which approval
shall not be unreasonably withheld or delayed, so long as any of Borrower's
Obligations remain unsatisfied.

         7.6. REPRESENTATIONS AND WARRANTIES. To cause all of Borrower's
representations and warranties under the Loan Documents to remain true, complete
and correct in all material respects.

         7.7. NOTICES TO LENDER. To promptly notify Lender in writing of:

                  (a) any lawsuit or other claim over $10,000 in excess of
         applicable insurance coverage against any Borrower.

                  (b) any substantial dispute between any Borrower and any
         government authority.

                  (c) any casualty loss over $10,000 in excess of applicable
         insurance coverage.

                  (d) any failure to comply with this Agreement.

                  (e) any default, or any event which with the passage of time
         or the giving of notice or both would be a default, under the Franchise
         Agreements or the Leases.

                  (f) any material adverse change in any Borrower's or other
         Obligor's financial condition or operations.

                  (g) any change in any Borrower's name, legal structure, place
         of business or chief executive office.

                                       16
<PAGE>   16

                  (h) Borrower's receipt of any notice that (i) the operations
         of Borrower, any other Obligor or any subsidiary of Borrower are not in
         full compliance with requirements of applicable Environmental Laws;
         (ii) Borrower, any other Obligor or any such subsidiary is subject to
         any federal or state investigation evaluating whether any remedial
         action is needed to respond to the release of any Hazardous Substance
         into the environment; or (iii) any properties or assets of Borrower,
         any other Obligor or any such subsidiary are subject to a lien in favor
         of any governmental entity for (A) any liability under any
         Environmental Laws, or (B) damages arising from or costs incurred by
         such governmental entity in response to a release of a Hazardous
         Substance into the environment.

         7.8. BOOKS AND RECORDS.  To maintain adequate books and records.

         7.9. AUDITS, INSPECTIONS SITE VISITS, OBSERVATIONS AND TESTING. To
allow Lender or Lender's agents to inspect Borrower's properties and examine,
audit and make copies of books and records for any reason upon three (3) Banking
Days prior notice, and to allow Lender and Lender's agents the right at any
reasonable time to enter and visit the Unit Locations and to conduct tests on
any part of the Unit Locations. If any of Borrower's properties, books or
records are in the possession of a third party, Borrower authorizes that third
party to permit Lender or Lender's agents to have access to perform inspections
or audits and to respond to Lender's requests for information concerning such
properties, books and records.

         7.10. PRESERVATION OF RIGHTS. Subject to Section 7.14 hereof, (a) to
maintain and preserve all rights, privileges, and franchises Borrower now has,
including, without limitation, Borrower's rights under the Franchise Agreements;
and (b) not to suffer or permit any surrender, termination, amendment or
modification of any lease which constitutes a part of the Collateral (each, a
"LEASE"). Borrower further agrees that Borrower shall timely elect and exercise
all options to extend the term of or renew each Lease, unless Lender otherwise
agrees in writing, and upon failure of Borrower to so timely elect to extend or
renew such Lease as aforesaid, Borrower hereby appoints Lender as Borrower's
true and lawful attorney-in-fact to exercise such extension or renewal options
in the name, place and stead of Borrower for the purpose of effecting such
extension or renewal.

         7.11. MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or
replacements to keep Borrower's properties in good working condition.

         7.12. COOPERATION. To take any action requested by Lender to carry out
the intent of this Agreement, including, without limitation, to help Lender
perfect and protect its security interests and liens, and to reimburse Lender
for related costs Lender incurs to protect Lender's security interests and
liens.

         7.13. INSURANCE AND TAXES. To maintain the insurance policies and
coverages set forth on EXHIBIT B. Such insurance shall be issued by an insurance
company acceptable to Lender and must include a lender's loss payable
endorsement in favor of Lender in a form acceptable to Lender and/or list Lender
as an additional insured, as applicable; to pay, on or before all applicable due
dates, all taxes, assessments and charges due with respect to Borrower and all
of

                                       17
<PAGE>   17

Borrower's property. The insurance limits set forth on Exhibit B may be met and
attained through an umbrella policy.

         7.14. DISPOSITION OF COLLATERAL. Not to directly or indirectly, sell,
assign, transfer, mortgage, pledge, hypothecate or otherwise dispose of any of
the Collateral, or any interest therein, close the Unit Locations, or create,
assume or permit any lien or encumbrance of any kind whatsoever to exist with
respect thereto, except that Borrower may sell its inventory in the ordinary
course of the Business.

         Notwithstanding anything contained in this Agreement to the contrary,
provided no Event of Default is outstanding, Borrower may, upon 30 days prior
written notice to Lender, substitute an existing Wendy's Old Fashioned
Hamburgers franchise restaurant of equal value (the "Substitute Collateral") for
a Unit Location by granting to Lender a first priority perfected security
interest in such Substitution Collateral in accordance with the terms and
conditions of this Agreement. Upon the satisfactory completion of such
substitution, Lender will release its lien against the Unit Location as to which
such substitution relates (the "Replaced Collateral"). For the purposes hereof,
the Substitute Collateral shall not be considered of equal value to the Replaced
Collateral unless (i) the Substitute Collateral is an existing restaurant
subject to a franchise agreement with Wendy's International, Inc., (ii) if
applicable, the lease for the Unit Location constituting the Substitute
Collateral is of equal duration and rental rate to the Replaced Collateral,
(iii) the cash flows (store level Adjusted EBITDA before corporate overhead) and
sales of the Substitute Collateral as determined on a trailing 12 month basis
shall be equal to or greater than the cash flows (store level Adjusted EBITDA
before corporate overhead) and sales of the Replaced Collateral on the on a
trailing twelve month basis, (iv) the asset basis comprising the security
interest in the Substitute Collateral is equal or better than the replaced
Collateral, (v) the difference in age of the Substitute Collateral and the
Replaced Collateral is not more than 5 years and (vi) Borrower shall have
obtained landlord estoppel's and such security deposits (and in such form)
pledging the Substitute Collateral, as are then existing with respect to the
Replaced Collateral.

         In addition to the foregoing, Borrower shall have the right to close a
Unit Location or Unit Locations, without being in default of the covenant set
forth in this Section 7.14, provided that as a condition precedent to such
closure, the Line of Credit Amount shall be reduced by an amount equal to the
greater of (a) an amount equal to the total amount outstanding under this
Agreement, including principal, interest, fees and cost (the "Outstanding
Balance") multiplied by a fraction, the numerator of which shall be the number
of Unit Locations to be closed and the denominator of which shall be the number
of Unit Locations and (b) an amount equal to the Outstanding Balance multiplied
by a fraction, the numerator of which shall the Adjusted EBITDA of the Unit
Location(s) to be closed (as determined by Lender on a trailing twelve month
basis) and the denominator of which shall be the Adjusted EBITDA of the Unit
Locations (as determined by Lender on a trailing twelve month basis.

8. REMEDIES.

         8.1. EVENT OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default": (a) Borrower fails to make a
payment under this Agreement

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<PAGE>   18

when due; (b) Lender fails to have an enforceable first lien (except for any
prior liens to which Lender has consented in writing) on or security interest in
the Collateral; (c) any Obligors have given Lender false or materially
misleading information or representations; (d) any Obligor dies, becomes
incapacitated, dissolved or liquidated; (e) any Obligor or any general partner
of any Obligor files a bankruptcy petition, a bankruptcy petition is filed
against any Obligor or any general partner of any Obligor, or any Obligor or any
general partner of any Obligor makes a general assignment for the benefit of
creditors; (f) a receiver or similar official is appointed for any Borrower's
business, or such business is terminated; (g) any of the other Loan Documents is
violated or no longer in effect; (h) any Borrower fails to meet the conditions
of, or fails to perform any obligation under, any term of this Agreement; (i)
prior to the Conversion Date there shall be a material adverse change in
Borrower's financial condition, operations or prospects, as reasonably
determined by Lender; (j) any of the Unit Locations is abandoned, or operations
at any of the Unit Locations are halted, for more than 30 days; provided,
however, that in the event of cessation of operations at any Unit Location shall
be caused by fire or other casualty, Borrower shall have 180 days from the date
of such fire or other casualty to recommence operations at such Unit Location;
(k) there shall occur any default under the Franchise Agreements or the Leases,
or there shall occur or fail to occur any event which, with the passage of time
or the giving of notice or both, would give rise to a default under the
Franchise Agreements or the Leases; or (l) there shall be any revocation,
attempted revocation, repudiation or anticipatory repudiation of any of the
guaranties of the Obligations, or any of the guaranties of the Obligations shall
have been rendered invalid or unenforceable in any material respect, or there
shall occur the death or incapacity of any individual Obligor; PROVIDED,
HOWEVER, that the death or incapacity of an individual Obligor shall not
constitute an Event of Default if within ninety (90) days after such Obligor's
death or incapacity Borrower has demonstrated to Lender's satisfaction that the
death or incapacity of such Obligor has not had an adverse affect upon
Borrower's ability to pay and perform the Obligations.

         8.2. GENERAL REMEDIES. If an Event of Default occurs under Sections
8.1(e) or (f) the Obligations shall automatically be due immediately. If any
Event of Default occurs, Lender may do one or more of the following: (a) declare
all Obligations immediately due and payable; (b) decline to make any additional
advances to Borrower; (c) exercise all of the rights and remedies (x) of a
secured party under the Uniform Commercial Code, or (y) available under any of
the other Loan Documents; and (d) immediately take possession, with or without
legal process, of any or all of the Collateral wherever found and for that
purpose Lender may enter upon any premises where the Collateral is located and
remove the Collateral from such location, or Lender may require Borrower to
assemble the Collateral and deliver it to Lender at a location designated by
Lender.

         8.3. RIGHT TO PERFORM BORROWER'S OBLIGATIONS. Borrower hereby
constitutes and appoints Lender as its true and lawful attorney-in-fact with
full power of substitution for the purpose, upon the occurrence of any Event of
Default, of performing any of Borrower's obligations under the Loan Documents.
The foregoing appointment is coupled with an interest and is accordingly
irrevocable. Lender, as such attorney-in-fact, may, but shall not be obligated,
to take any and all steps reasonably necessary or appropriate, in Lender's sole
judgment to perform Borrower's obligations under the Loan Documents. All sums
expended by Lender pursuant to this Section shall be included as Obligations. In
no event shall (i) Lender have any

                                       19
<PAGE>   19

liability to Borrower on account of Lender's exercise of its rights under this
Section, absent gross negligence or willful and wanton misconduct; and (ii) any
other person be a third-party beneficiary hereof.

         8.4. REMEDIES CUMULATIVE; WAIVERS. Lender may enforce any one of its
remedies under this Agreement successively or concurrently, at its option. All
of the remedies set forth above are in addition to all other remedies available
to Lender at law and in equity. No delay or failure on the part of Lender to
exercise any right or remedy which it may become entitled to exercise on account
of an Event of Default will be held to be an abandonment of such right or
remedy, and Lender will be entitled to exercise such right or remedy at any time
during the continuance of an Event of Default. No waiver of a breach or default
will be regarded as a waiver of a later breach or default. All waivers under
this Agreement must be in writing.

9. MISCELLANEOUS.

         9.1. GAAP. Except as otherwise stated in this Agreement, all financial
information provided to Lender and all financial covenants will be prepared or
determined in accordance with generally accepted accounting principles,
consistently applied.

         9.2. ILLINOIS LAW; TIME OF ESSENCE. THIS AGREEMENT IS GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS. Time is of the essence of this
Agreement.

         9.3. SUCCESSORS AND ASSIGNS. This Agreement is binding on Borrower's
and Lender's successors and assignees. Borrower agrees that it shall not assign
this Agreement without Lender's prior consent. Lender may sell participations in
or assign the Loan, and may disclose any and all materials and information in
Lender's possession concerning the Borrower and its affiliates to any
prospective purchaser, participant, assignee or credit insurer, and also to
Franchisor and its affiliates, and their respective successors and assigns.

         9.4. INDEMNITY. Borrower shall indemnify, defend and hold Lender
harmless from and against all liabilities, claims, actions, foreseeable and
unforeseeable consequential damages, costs and expenses (including sums paid in
settlement of claims and all consultant, expert and legal fees and expenses of
Lender's counsel) or loss directly or indirectly arising out of or resulting
from (i) Lender making the Loan; (ii) Lender entering into this Agreement or the
other Loan Documents; (iii) Lender taking an interest in or realizing upon any
of the Collateral; (iv) Lender exercising its remedies from time to time; or (v)
any Obligor breaching any agreement, covenant, representation, warranty or
undertaking under this Agreement or any other Loan Document (including, without
limitation, any relating to Hazardous Substances). Without limiting the
generality of the foregoing, Borrower hereby indemnifies Lender, its successors
and assignees, and agrees to hold Lender harmless from and against any and all
losses, liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and attorneys'
fees) which at any time or from time to time may be paid, incurred or suffered
by, or asserted against, Lender for, with respect to, or as a direct or indirect
result of the violation by Borrower, any other Obligor or any of Borrower's
Subsidiaries, of any laws, including but not limited to, the Environmental Laws.

                                       20
<PAGE>   20

         9.5. LEGALITY. If any provision in this Agreement is found by a court
of competent jurisdiction to be unlawful, void or unenforceable as written, then
it is the intent of all parties that the remainder of this Agreement shall be
construed as if such unlawful, void or unenforceable provision were not
contained herein, and that the rights, obligations and interests of the parties
hereto under the remainder of this Agreement shall continue in full force and
effect. It being the intention of the parties hereto to comply with the laws of
the State of Illinois with regard to the rate of interest charged,
notwithstanding any provision to the contrary in this Agreement, or in any of
the other Loan Documents, no such provision shall require the payment or permit
the collection of any amount in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the Loan.

         9.6. APPLICATION OF PAYMENTS. All payments on account of the Loan
received by Lender (including, without limitation, casualty and condemnation
proceeds) may be applied in such order as Lender may determine in Lender's sole
and absolute discretion. Borrower acknowledges that Lender has the right to set
off against any monies or deposits owing by Lender to Borrower.

         9.7. EXPENSES AND ADMINISTRATION COSTS. Borrower agrees to reimburse
Lender upon demand, whether or not any loan is made under this Agreement, for
all expenses and reasonable attorneys' fees incurred by Lender in (a) the
preparation and execution of this Agreement and all other documents delivered in
connection with this Agreement; (b) performing Lender's due diligence,
including, without limitation, title searches, commitments and policies;
surveys; UCC, judgment, tax and litigation searches; recording fees; and
appraisals; (c) administering this Agreement and the other Loan Documents; (d)
enforcing Borrower's obligations and collecting Borrower's amounts due under
this Agreement or any other document delivered in connection with this
Agreement; and (e) participating in any proceeding (whether instituted by
Lender, Borrower or any other person and whether in bankruptcy or otherwise) or
responding to any claim in any way relating to this Agreement or any document
delivered in connection with this Agreement. Borrower further agrees to pay, and
save Lender harmless from all liability for, any stamp or other taxes which may
be payable with respect to the execution or delivery of this Agreement, which
obligations will survive any termination of this Agreement.

         9.8. ONE AGREEMENT. This Agreement and the other Loan Documents
collectively represent the sum of the understandings and agreements among Lender
and Borrowers concerning this credit, including, without limitations any
commitment letters. In the event of any conflict between this Agreement and the
other Loan Documents, this Agreement will prevail.

         9.9. NOTICES. All notices required under this Agreement will be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the Schedule of Parties, or to such other addresses as Lender and
Borrower may specify from time to time in writing. Such notices shall be deemed
received upon the first to occur of: (a) actual receipt by the addressee
thereof; (b) 3 days following deposit with the U.S. Mail if sent certified mail,
return receipt requested; or (c) 1 day following deposit with a recognized local
or national carrier for delivery no later than the next day.

                                       21
<PAGE>   21

         9.10. HEADINGS. Headings are for reference only and will not affect the
interpretation or meaning of any provisions of this Agreement.

         9.11. JOINT AND SEVERAL LIABILITY. If this Agreement is executed by
more than one party as Borrower, then all of the Obligations shall be the joint
and several obligations and liabilities of all such parties so executing as
Borrower.

         9.12. EXCLUSIVE JURISDICTION. EACH OF THE PARTIES HERETO AGREES THAT
ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT,
EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS
LOCATED IN COOK COUNTY, ILLINOIS, EXCEPT THAT BORROWER AGREES THAT LENDER SHALL
HAVE THE RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION.

         9.13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE.

         9.14. SURVIVAL. Borrower covenants, warrants and represents to Lender
that Borrower's representations and warranties contained in this Agreement shall
be true at the time of Borrower's execution of this Agreement, and, along with
Borrower's other agreements, covenants and indemnities, shall survive the
execution, delivery and acceptance thereof by the parties hereto and the making
of the Loans.

         9.15. WAIVER OF CERTAIN CLAIMS. BORROWER AGREES THAT BORROWER WILL NOT
ASSERT ANY CLAIM AGAINST LENDER OR ANY OTHER PERSON INDEMNIFIED UNDER THIS
AGREEMENT ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES.

         9.16. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall constitute one and the same
agreement.

                                       22
<PAGE>   22

         This Agreement is executed as of the Effective Date.

LENDER:                                     BORROWER:

FLEET BUSINESS CREDIT CORPORATION,          WM LIMITED PARTNERSHIP-1998, a
a Delaware corporation                      Michigan limited partnership

By:                                         By:  S & Q Management, LLC, its
   --------------------------------              General Partner
Name:
     ------------------------------
Title:
      -----------------------------

                                       23

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