Document:

Exhibit 10.12

 

LOAN AGREEMENT

between

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, f/k/a NORWEST

BANK MINNESOTA, NATIONAL ASSOCIATION, as Indenture Trustee under that

certain Indenture dated November 1, 1999

and

FRIENDCO RESTAURANTS, INC., a Maryland corporation,

DAVCO RESTAURANTS, INC., a Delaware corporation, and

DAVCO ACQUISITION HOLDING INC., a Delaware corporation

Dated as of July 12, 2001

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  PAYMENT OF PRINCIPAL AND INTEREST

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  FUNDS FOR TAXES, INSURANCE AND OTHER
  CHARGES

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  APPLICATION OF PAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  CHARGES; LIENS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PRESERVATION AND
  MAINTENANCE OF PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  PROTECTION OF LENDER’S
  SECURITY

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  BOOKS AND RECORDS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  CONDEMNATION

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  FORBEARANCE BY LENDER NOT A WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  ESTOPPEL CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LEASES OF THE PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  REMEDIES CUMULATIVE

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  ACCELERATION IN CASE OF
  BORROWER’S INSOLVENCY

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  TRANSFERS OF THE
  PROPERTY OR BENEFICIAL INTERESTS IN BORROWER; ASSUMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NOTICE

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  SUCCESSORS AND ASSIGNS BOUND;
  JOINT AND SEVERAL LIABILITY; AGENTS; CAPTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  GOVERNING LAW; SEVERABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  ASSIGNMENT OF LEASES AND
  RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  ACCELERATION:  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  SUBROGATION

  	
   

  

 

i

 

	
  23.

  	
  PARTIAL INVALIDITY

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  REPRESENTATIONS OF BORROWER

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  BORROWER’S ADDITIONAL
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  MAINTENANCE OF CASH FLOW

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  ASSIGNMENT BY LENDER

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  SECURITIZATION OPINIONS;
  FINANCIAL INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  INTENTIONALLY OMITTED

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  WAIVER OF JURY TRIAL

  	
   

  

 

ii

 

	
  32.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  ADDITIONAL
  NON-UNIFORM PROVISIONS

  	
   

  

 

iii

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (the “Agreement”) is made
as of July 12, 2001 between FRIENDCO RESTAURANTS, INC., a Maryland
corporation, DAVCO RESTAURANTS, INC., a Delaware corporation, and DAVCO
ACQUISITION HOLDING INC., a Delaware corporation, each of whose
address is 1657 Crofton Boulevard, Crofton, Maryland 21114 (herein,
collectively, “Borrower”) and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION f/k/a
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Indenture Trustee under that
certain Indenture dated November 1, 1999, whose address is c/o
Corporate Trust Services, 1015 10th Avenue SE, Minneapolis, MN 55414
(herein “Lender”).

 

WHEREAS, subject to and upon the terms and
conditions herein set forth, Lender’s predecessor-in-interest made a loan
available for the Borrower in the aggregate amount of THIRTEEN MILLION FORTY FIVE THOUSAND
FOUR HUNDRED TWENTY FIVE AND 74/100 ($13,045,425.74) (the “Loan’),
which indebtedness is evidenced by Borrower’s Consolidated, Amended and
Restated Promissory Note dated July 12, 2001 (the “Note”);

 

WHEREAS, the indebtedness evidenced by the
Note is secured by that certain Commercial Deed of Trust, Assignment of Rents
and Security Agreement dated as of the date hereof (the “Instrument”) granting
to Lender a security interest in Borrower’s Property (as such term is defined
therein), including without limitation, Borrower’s leasehold interest or fee
simple interests in the following described properties located in the counties
as indicated, State of Maryland:

 

	
  Lease:

  	
   

  	
  11818 Reiserstown Road,
  Reiserstown, Baltimore County, Maryland

  
	
  Lease:

  	
   

  	
  15400 Chrysler Drive,
  Upper Marlboro, Prince George’s County, Maryland

  
	
  Lease:

  	
   

  	
  403 Punkin Court,
  Salisbury, Wicomico County, Maryland

  
	
  Lease:

  	
   

  	
  498 Ritchie Highway,
  Severna Park, Anne Arundel County, Maryland

  
	
  Lease:

  	
   

  	
  30272 Triangle Drive,
  Charlotte Hall, St.  Mary’s County,
  Maryland

  
	
  Lease:

  	
   

  	
  1344 Eastern Boulevard,
  Baltimore, Baltimore County, Maryland

  
	
  Lease:

  	
   

  	
  6411 Eastern Avenue,
  Baltimore, Baltimore County, Maryland

  
	
  Lease:

  	
   

  	
  5801 Clarksville Square
  Road, Clarksville, Howard County, Maryland

  
	
   

  	
   

  	
   

  
	
  Lease:

  	
   

  	
  3620 Washington Boulevard,
  Baltimore, Baltimore County, Maryland

  
	
  Lease:

  	
   

  	
  8308 Annapolis Road, New
  Carrolton, Prince Georges County, Maryland

  
	
  Lease:

  	
   

  	
  1589 West Nursery Road,
  Linthicum, Anne Arundel County, Maryland

  
	
   

  	
   

  	
   

  
	
  Lease:

  	
   

  	
  8700 Belair Road,
  Baltimore, Baltimore County, Maryland

  
	
  Lease:

  	
   

  	
  1060 Joppa Farm Road,
  Joppatowne, Harford County, Maryland

  
	
   

  	
   

  	
   

  
	
  Fee:

  	
   

  	
  40804 Merchant Lane,
  Leonardtown, St.  Mary’s County,
  Maryland

  
	
  Fee:

  	
   

  	
  8715 Central Avenue,
  Capital Heights, Prince George’s County, Maryland

  

 

WHEREAS, to further secure Lender in respect
of the repayment of the indebtedness, Borrower has executed other documents
with or to or in favor of Lender in connection with the Loan (herein, together
with the Note, the Instrument, this Agreement and the guaranty of the
Guarantor, if any, guaranteeing the obligations of the Borrower, collectively
the “Loan Documents”).

 

 

NOW THEREFORE, for and in consideration of
Lender’s making the Loan to Borrower and other good and valuable consideration,
the sufficiency of which is hereby acknowledged, Borrower and Lender covenant
and agree as follows:

 

1.                                      PAYMENT OF PRINCIPAL AND INTEREST.  Borrower shall promptly pay when due the
principal of, interest on and all other sums accruing in respect of the
indebtedness evidenced by the Note, in accordance with the terms and conditions
thereof, hereof and as otherwise provided in the Loan Documents.

 

2.                                      CONDITIONS PRECEDENT.  INTENTIONALLY DELETED.

 

3.                                      FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES.  Upon a Borrower’s Default hereunder or
under the Instrument, or in the event Borrower is, or has been, delinquent, in
the timely payment of any services, taxes, assessments, insurance or rent
payment under the Lease, at Lender’s request, Borrower shall pay to Lender or
its loan servicer a sum (the “Initial Yearly Premium Payment”) equal to such
amount as is deemed necessary by Lender to be in position to pay the next
annual payment of taxes and insurance when due.  Thereafter, Borrower, shall pay to Lender or its loan servicer on
the day monthly installments of principal or interest are payable under the
Note (or on another day designated in writing by Lender), until the Note is
paid in full, a sum (herein, together with the Initial Yearly Premium Payment,
the “Funds”) equal to one-twelfth of (a) the yearly water and sewer rates and
taxes and assessments which maybe

 

2

 

levied on the Property, and (b) the yearly premium installments for
fire and other hazard insurance, rent loss insurance and such other insurance
covering the Property as Lender may require pursuant to paragraph 5 hereof (the
“Yearly Premium”), and (c) the yearly fixed rents, if any, under the Lease, all
as reasonably estimated initially and from time to time by Lender on the basis
of assessments and bills and reasonable estimates thereof.  Any waiver by Lender of a requirement that
Borrower pay such Funds may be revoked by Lender, in Lender’s sole discretion,
at any time upon notice in writing to Borrower.  Lender may require Borrower to pay to Lender, in advance, such
other Funds for other taxes, charges, premiums, assessments and impositions in
connection with Borrower or the Property which Lender shall reasonably deem
necessary to protect Lender’s interests (herein “Other Impositions”).  Lender may require the payment of Funds in
respect of Other Impositions at any time, whether or not a Borrower’s default
or payment delinquency has occurred. 
Unless otherwise provided by applicable law, Lender may require Funds
for Other Impositions to be paid by Borrower in a lump sum or in periodic
installments, at Lender’s option.

 

Lender shall apply the Funds to pay said
rates, rents, taxes, assessments, insurance premiums and Other Impositions so
long as Borrower is not in Default (as hereinafter defined) under the
Instrument, this Agreement, any of the other Instruments (as hereinafter
defined or under any of the Loan Documents). 
Lender shall make no charge for so holding and applying the Funds,
analyzing said account or for verifying and compiling said assessments and
bills.  No

 

3

 

interest shall be payable by Lender on monies so paid unless required
by applicable law, in which event all such interest shall be applied by Lender
to pay such taxes and insurance premiums so long as the Loan is not in
default.  Lender shall give to Borrower,
at Borrower’s expense, an annual accounting of the Funds in Lenders normal
format showing credits and debits to the Funds and the purpose for which each
debit to the Funds was made.  The Funds
are pledged as additional security for the sums secured by the Instrument, this
Agreement, any of the other instruments or in any of the Loan Documents.

 

If the amount of the Funds held by Lender at
the time of the annual accounting thereof shall exceed the amount deemed
necessary by Lender to provide for the payment of water and sewer rates, taxes,
assessments, insurance premiums, rents and Other Impositions, as they fall due
such excess shall be credited to Borrower on the next monthly installment or
installments of Funds due.  If at any
time the amount of the Funds held by Lender shall be less than the amount deemed
necessary by Lender to pay taxes, assessments, insurance premiums, rents and
Other Impositions, as they fall due, Borrower shall pay to Lender any amount
necessary to make up the deficiency within thirty (30) days after notice from
Lender to Borrower requesting payment thereof.

 

Upon Borrower’s Default under this Agreement,
the Instrument or any of the Loan Documents, Lender may apply, in any amount
and in any order as Lender shall determine in Lender’s sole discretion, any
Funds held by Lender at the time of application (i) to pay rates,

 

4

 

rents, taxes, assessments, insurance premiums and Other Impositions
which are now or will hereafter become due, or (ii) as a credit against sums
due under or accrued pursuant to the Instrument.  Upon the release of the Property secured by, the Instrument and
payment in full of the amounts secured hereby, Lender shall promptly refund to
Borrower any Funds held by Lender applicable to the Property.

 

4.                                      APPLICATION OF PAYMENTS. 
Unless applicable law provides otherwise, so long as Borrower is not
in Default under the Loan Documents, all payments received by Lender from
Borrower under the Note or the Loan Documents shall be applied by Lender in the
order of priority set forth in the Note. 
Upon Borrower’s Default under the Loan Documents, Lender may apply any
payments received by Lender in any amount and in any order as Lender shall
determine in Lender’s sole discretion.

 

5.                                      CHARGES; LIENS.  Borrower
shall pay all water and sewer rates, rents, taxes, assessments, premiums, and
Other Impositions attributable to the Property, by Borrower making payment,
within the applicable payment period directly to the payee thereof provided
that after a Borrower’s Default under this Agreement or the Instrument or after
one or more payment delinquencies in respect of such payments have occurred, at
Lender’s option, Borrower shall make such payments in the manner provided under
paragraph 3 hereof, or in such other manner as Lender may designate in
writing.  Borrower shall furnish to
Lender copies of paid receipts of taxes and assessments evidencing such
payments within thirty (30) days of the end of each

 

5

 

calendar year.  Borrower shall
promptly discharge any lien which has, or may have, priority over or equality
with, the lien of the Instrument, and Borrower shall pay, when due, the claims
of all persons supplying labor or materials to or in connection with the
Property.  Without Lender’s prior written
permission, Borrower shall not allow any lien inferior to the Instrument to
exist against the Property except for permitted Encumbrances and as otherwise
provided herein and in the Instrument.

 

6.                                      INSURANCE.  Borrower
shall keep the improvements now existing or hereafter erected on the Property
insured by Approved Carriers (as hereinafter defined) against loss by fire,
hazards included within an all-risk “extended coverage” endorsement and such
other hazards, casualties, liabilities and contingencies, including rent loss
and/or business interruption coverage, as applicable, as Lender and the Lease
shall require and in such amounts and for such periods provided in this
paragraph 6.  All premiums on insurance
policies shall be paid, at Lender’s option, in the manner provided under
paragraph 3 hereof, if applicable, or in the Note, or by Borrower making
payment, when due, directly to the carrier, or in such other manner as Lender
may reasonably designate in writing.

 

“Approved Carriers” shall mean insurance
carriers which have a long-term debt rating of claims paying in the category
“A-” or better as rated by Best’s Insurance Rating Service or otherwise
reasonably acceptable to Lender.

 

6

 

Borrower shall purchase a blanket or other
policies of insurance with respect to the Property with such Approved Carriers,
in such amounts and covering such risks including, but not limited to, (i) loss
or damage by fire, lightning, hail, windstorm, explosion, earthquake (if in a
high risk area), and such other hazards, casualties and contingencies insured
in an “all-risk” policy, all on an occurrence basis (including at least twelve
(l2) months rental or business interruption insurance and broad form boiler and
machinery insurance, if applicable); (ii) loss or damage by flood, if the
Property is in a 100-year flood hazard area as defined by the Federal Emergency
Management Agency under the National Flood Insurance Program, in an amount
equal to the greater of the replacement cost of the Property or the maximum
amount available through the National Flood Insurance Program, but, in no event
less than the maximum amount available under the Flood Disaster Protection Act
of 1973, and regulations issued pursuant thereof, as amended from time to time,
or such lesser standard as Lender may permit, in form complying with the
“insurance purchase requirement” of that Act; (iii) commercial general
liability (including, liquor liability if Borrower serves alcoholic beverages
on the Property) with limits equal to or greater than $1,000,000.00 per
occurrence, including product and liquor liability equal to or greater than
$2,000,000.00 aggregate, and employer’s liability and workers’ compensation in
amounts which are customary practice; (iv) an umbrella policy in the amount of
$5,000,000.00 per occurrence in excess of the above comprehensive general
liability, product and liquor liability, if applicable, and employer’s
liability requirements; and (v) such other insurance as Lender may reasonably
require from time to time or which is required by the Loan

 

7

 

Documents; provided, that each policy shall provide by way of
endorsement, rider or otherwise that no such insurance policy shall be canceled
or non-renewed, unless such insurer shall have first given Lender thirty (30)
days prior written notice thereof and ten (10) days notice in the case of
premium nonpayment, such property policy shall be on a replacement cost basis
(without coinsurance) and in amount not less than one hundred percent (100%) of
the insurable value (based upon replacement cost) of the Property and the
deductible clause, if any, property policy may not exceed the lesser of (x) one
percent (1%) of the face amount of the policy, (y) $25,000.00, and (z) unless
included in a blanket policy for all the Properties (if more than one (1)
restaurant operation secures the Loan), five percent (5%) of the gross annual
income of or revenue from the applicable Property.  Borrower shall cause all property insurance carried in accordance
with this paragraph 6 to be payable to Lender as a mortgagee and not as a
coinsured, and, in the case of all policies of insurance carried by each lessee
for the benefit of Borrower, if any, to cause all such policies to be payable
to Lender as Lender’s interest may appear. 
The Borrower shall also cause the Lender to be named as an Additional
Insured with respect to the commercial general liability and umbrella policies.

 

All insurance policies and renewals thereof
shall be in a form acceptable to Lender as provided in this paragraph 6 and all
property policies shall include a standard mortgagee clause in favor of and in
a form acceptable to Lender.  Lender
shall have the right to hold the policies, and Borrower shall promptly furnish
to Lender all renewal certificates, if

 

8

 

Lender requests all receipts of paid premiums.  At least ten (10) days prior to the
expiration date of a policy, Borrower shall deliver to Lender a renewal policy
insurance certificates) in form and substance satisfactory to Lender; together
with an outline of the material terms of such renewal policy.  If the Instrument is on a leasehold,
Borrower shall furnish Lender, upon request, a duplicate of all policies,
renewal notices, renewal policies and receipts of paid premiums if, by virtue
of the Lease, the originals thereof may not be supplied by Borrower to Lender.

 

In the event of loss, Borrower shall give
prompt written notice to the insurance carrier and to Lender.  In the event of a Major Casualty (as
hereinafter defined) or after a Default hereunder, or after Borrower fails to
do so, Borrower hereby irrevocably appoints, authorizes and empowers Lender
(which appointment is coupled with an interest), and/or its assigns with
respect to the Loan, as attorney-in-fact for Borrower to make proof of loss, to
adjust and compromise any claim under insurance policies, to appear in and
prosecute any action arising from such insurance policies, to collect and
receive insurance proceeds, and to deduct therefrom Lender’s reasonable
expenses incurred in the collection of such proceeds; provided however, that
nothing contained in this paragraph 6 shall require Lender to incur any expense
or take any action hereunder.  Borrower
agrees and covenants that in the event of a Major Casualty (unless waived by
Lender) or after a Default hereunder all property insurance proceeds for the
Property (except rent loss) shall be paid to Lender, and the insurance proceeds
shall be solely payable to Borrower if the casualty is less than a Major
Casualty, and Borrower is not in Default hereunder

 

9

 

(and no event exists which, with the passing of time or giving of
notice, would constitute a Default hereunder). 
Borrower, subject to the following sentence, further authorizes Lender,
at Lender’s option, (a) to hold the balance of such Major Casualty proceeds
provided they are used to reimburse Borrower or pay for the cost of reconstruction
or repair of the Property and (b) to apply the balance of such proceeds
remaining after restoration or repair to the payment of the sums secured by the
Instrument, whether or not then due, in the order of application set forth in
paragraph 4 hereof (subject, however, to the rights of Landlord under the
Lease, if the Instrument is on a leasehold). 
In the event of a Total Casualty (as hereinafter defined) for the
Property or in the event any Major Casualty (as hereinafter defined) for the
Property occurs within two (2) years of the Note Maturity Date, then at
Lender’s option, all insurance proceeds (except rent loss) shall be paid to
Lender and applied to the payment of sums secured by the Instrument, whether or
not then due, in the order of application set forth in paragraph 4 hereof, in
which event the Lender shall have the right to accelerate all amounts payable
hereunder, and Borrower shall have the right to prepay any remaining balance
due, without any prepayment premium. 
Borrower covenants that in no event shall Borrower use any insurance
proceeds from loss or damage to the Property or Condemnation Proceeds (as
hereinafter defined) to rebuild any buildings or improvements on any real
property other than the Property. 
Notwithstanding the foregoing, except in the event of a Total Casualty
(as hereinafter defined) for the Property or in the event of any Major Casualty
(as hereinafter defined) for the Property occurring within two (2) years of the
Note Maturity Date, so 

long as Borrower is not in Default hereunder (and no

 

10

 

event exists which, with the passing of time or giving of notice, would
constitute a Default hereunder), and Lender is satisfied that Lender is holding
sufficient funds for such restoration and repair, then the Lender shall not
unreasonably withhold its approval for the application of insurance proceeds
for the cost of restoration and repair of the Property as provided below.

 

If the insurance proceeds from a Major
Casualty are held by Lender to pay mechanics, material men and suppliers of
materials, including Borrower, for the cost of restoration and repair of the
Property, Borrower shall restore the Property to the equivalent of the type and
class of construction existing before such casualty, with new materials as
required by the current building codes or such other condition as Lender may
approve in writing.  If the insurance
proceeds from a Major Casualty are held by Lender, Lender shall disburse (no
more than once a month) such proceeds to Borrower for restoration and repair of
the Property, and Lender may, at Lender’s option, condition disbursement of
said proceeds on Lender’s approval of such plans and specifications of an
architect satisfactory to Lender, contractor’s cost estimates, architect’s
certificates, waivers of liens, sworn statements of mechanics and material men
and such other evidence of costs, percentage completion of construction,
application of payments, and satisfaction of liens as Lender may reasonably
require; provided, however, in the event of a Default, any or all such proceeds
shall be applied in the manner prescribed in paragraph 4 hereof.  If the insurance proceeds are applied to the
payment of the sums secured by the Instrument, any such application of proceeds
to principal shall not extend or postpone the due

 

11

 

dates of the monthly installments referred to in paragraphs I and 3
hereof or change the amounts of such installments unless Lender and Borrower
otherwise agree in writing.  Such
application of proceeds to principal shall be without penalty or premium.  If the Property is sold pursuant to
paragraph 21 hereof or if Lender acquires title to the Property, Lender shall
have all of the right, title and interest of Borrower in and to the proceeds
resulting from any damage to the Property prior to such sale or acquisition.

 

“Major Casualty” shall mean any damage,
injury or loss to the Property by fire, lightning, hail, windstorm, explosion,
flood or other hazard or casualty (collectively; a “Casualty”) for which the
cost to replace or repair would exceed the lesser of (x) $50,000.00 or (y)
twenty-five percent (25%) of the outstanding principal balance of the
Note.  “Total Casualty” shall mean any
Casualty for which the cost to replace or repair would exceed eighty percent
(80%) of the outstanding principal balance of the Note.

 

7.                                      PRESERVATION AND MAINTENANCE OF PROPERTY.  Borrower shall preserve and maintain the
Property in accordance with the provisions of paragraph 6 of the Instrument.

 

Borrower (i) shall comply with the provisions
of the Lease, (ii) shall give immediate written notice to Lender of any default
by Landlord under the Lease which is known to Borrower or of any notice
received by Borrower from Landlord of any default under the Lease

 

12

 

by Borrower, (iii) shall exercise any option to renew of extend the
Lease, which extension or renewal period includes a time period prior to the
Maturity Date, and give written confirmation thereof to Lender within thirty
(30) days after such option becomes exercisable and hereby irrevocably appoints
Lender as its attorney-in-fact which appointment is coupled with an interest,
and is applicable to this paragraph 7(iii), giving Lender full power and
authority to exercise any option to renew or extend the Lease sixty (60) days
prior to the termination of such option exercise period (if necessary to extend
the Lease to a date on or after the Maturity Date) in the event Borrower fails
to renew or extend the Lease in a timely manner, (iv) shall give immediate
written notice to Lender of the commencement of any remedial proceedings under
the Lease by any party thereto and, if during the continuance of a Default, or
after Lender reasonably determines that Borrower is not diligently pursuing
resolution of claims or prosecuting actions with respect to the lease and such
non-action could result in a material adverse affect on the value of the
Property, shall permit Lender as Borrower’s attorney-in-fact to control and act
for Borrower in any such remedial proceedings, and (v) shall use its reasonable
efforts within thirty (30) days after request by Lender to obtain from Landlord
under the Lease and deliver to Lender the lessor’s estoppel certificate
required thereunder, if any.  Borrower
hereby expressly transfers and assigns to Lender the benefit of all covenants
contained in the Lease, whether or not such covenants run with the land, but
Lender shall have no liability with respect to such covenants nor any other
covenants contained in the Lease. 
Borrower hereby irrevocably authorizes and empowers Lender as
attorney-in-fact for Borrower, at Borrower’s expense during the

 

13

 

continuance of a Default, or after Lender reasonably determines that
Borrower is not diligently pursuing resolution of claims or prosecuting actions
with respect to the lease and such non-action could result in a material
adverse affect on the value of the Property, to make proof of claim, to adjust
and compromise any claim under any such leases, to appear in and prosecute any
action arising from such leases, and otherwise to represent and act on behalf
of the Borrower in connection with any enforcement, arbitration, bankruptcy or
similar action or proceeding involving such leases, and to deduct therefrom
Lender’s expenses incurred in connection therewith, provided however, that
nothing contained in this paragraph 7 shall require Lender to incur any expense
or take any action hereunder.

 

Borrower shall not surrender the leasehold
estate and interests conveyed by the Instrument nor terminate or cancel the
Lease creating said estate and interests, and Borrower shall not, without the
express written consent of Lender, materially alter or amend said Lease.  Borrower covenants and agrees that there
shall not be a merger of the Lease, or of the leasehold estate created thereby,
with the fee estate covered by the Lease by reason of said leasehold estate or
said fee estate, or any part of either, coming into common ownership, unless
Lender shall consent in writing, to such merger; if Borrower shall acquire such
fee estate, then the Instrument shall simultaneously and without further action
be spread so as to become a lien on such fee estate.

 

14

 

8.                                      PROTECTION OF LENDER’S SECURITY.  If Borrower is in Default or if any
action or proceeding is commenced which affects the Property or title thereto
or the interest of Lender therein, including, but not limited to, eminent
domain, insolvency, code enforcement, or arrangements or proceedings involving
a bankrupt or decedent, then Lender at Lender’s option may make such
appearances, disburse such sums and take such action as Lender deems necessary,
in its sole discretion, to protect Lender’s interest, including, but not
limited to, (i) disbursement of attorneys’ fees, (ii) entry upon the Property
to make repairs, (iii) procurement of satisfactory insurance as provided in
paragraph 6 hereof, (iv) if the Instrument encumbers a leasehold interest,
exercise of any option to renew or extend the Lease on behalf of Borrower and
the curing of any default of Borrower in the terms and conditions of the Lease,
(v) the payment of any taxes and/or assessments levied against the Property and
then due and payable, and (vi) discharge (by payment, bonding or otherwise) of
any lien on the Property which is not a Permitted Encumbrance.  In addition, if any action or proceeding is
commenced which affects the Property or title thereto or the interest of Lender
therein, including, but not limited to, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankruptcy and Lender
determines in its reasonable discretion that Borrower is not diligently
pursuing available legal rights or remedies with respect to such actions or
proceedings and such non-action could result in a material adverse effect on
the value of the Property, then Lender, at Lenders option, may make such appearances,
disburse such sums (including reasonable attorneys’ fees) and take such actions
as Lender deems reasonably necessary to protect Lender’s

 

15

 

interest.  In addition, with
respect to an environmental condition which may affect the Property during the
term of the Loan or the interest of Lender therein, including, but not limited
to any actual or suspected on-site environmental pollution conditions which
are, or are believed to be, in violation of applicable environmental laws, then
Lender (or its agent, contractor or designee), at Lender’s option, shall have
the right to enter the Property to conduct tests and investigate any such
pollution conditions.  If the environmental
assessment reveals environmental pollution at or above actionable levels under
applicable law, and Lender reasonably determines that Borrower is not
diligently pursuing remediation with respect thereto, then Lender may, at
Lender’s sole option, engage third party providers to undertake such
remediation up to the limits of the Secured Creditor Pollution Policy relating
to the Property.

 

9.                                      BOOKS AND RECORDS.  Borrower
shall keep and maintain at all times at Borrower’s address stated below, or
such other place as Lender may approve in writing, complete and accurate books
of accounts and records adequate to reflect correctly Borrowers financial
condition and the results of the operation of the Property and copies of all
written contracts, leases and other instruments which affect the Property.  Such books, records, contracts, leases and
other instruments shall be in accordance with generally accepted accounting
principles consistently applied, and shall be subject to examination and
inspection by Lender at all times during normal business hours and Lender shall
have the right to make such copies or abstracts thereof as Lender may
desire.  Borrower shall furnish to
Lender, within one hundred twenty

 

16

 

(120) days after the end of each fiscal year of Borrower, its audited
current signed financial statements (including an annual balance sheet,
profit/loss statement, statement of cash flow and footnotes) of Borrower and
also an income and expense statement of the operation of the Property
(including the total rents and other income received from any tenant, total
gross receipts from operations and total expenses), each in reasonable detail
and certified by Borrower and, if Lender shall require, by an independent
certified public accountant, together with any restaurant reports required
under the Franchise Agreement, and, if the Property is subject to any leases,
Borrower shall furnish to Lender current signed rent rolls or lease digests
certified to be correct by Borrower. 
Borrower shall furnish to Lender, within forty-five (45) days after the
end of each fiscal quarter of Borrower, an unaudited financial statement of
Borrower and a statement of income and expenses of the Property (and a year-end
statement of income and expenses of the Property within forty-five (45) days
after the end of each fiscal year, in reasonable detail and certified by
Borrower to be true, correct and accurate to the best of his or her
knowledge.  Borrower shall furnish to
Lender, certified copies of all tax returns of the Borrower within forty-five
(45) days of filing; provided, that, if the Borrower has provided audited
current signed financial statements certified by an independent certified
public accountant, then no copies of the tax returns of the Borrower shall be
furnished to Lender and an annual statement disclosing all contingent
liabilities.  In addition, within ten
(10) days after the end of each calendar quarter, Borrower agrees to provide to
Lender a summary of all material communications and notices received from Franchisor
during the preceding quarter, provided that such disclosure does not

 

17

 

create a breach under the terms of any Franchise Agreement.  In addition, Borrower shall also furnish
such other interim statements of Borrower as Lender may reasonably require from
time to time.  Borrower shall advise
Lender of its fiscal year-end date and shall notify Lender, in writing, of any
change in such year-end date.

 

10.                               CONDEMNATION.  Borrower
shall promptly notify Lender of any action or proceeding known to Borrower
relating to any condemnation or other taking, whether direct or indirect, of
the Property, or part thereof, and Borrower shall appear in and prosecute any
such action or proceeding unless otherwise directed by Lender in writing.  During the continuance of a Default or, if
Lender has made the determination, in its reasonable discretion, that Borrower
is not diligently and effectively prosecuting such action or proceeding and,
such lack of prosecution could result in a materially adverse effect on the
value of the Property, then immediately upon written notice to Borrower
offender’s determination, Borrower authorizes Lender, at Lender’s option, as
attorney-in-fact for Borrower, to commence, appear in and prosecute, in
Lender’s or Borrower’s name, any action or proceeding relating to any
condemnation or other taking of the Property, whether direct or indirect, and
to settle or compromise any claim in connection with such condemnation or other
taking.  Borrower hereby irrevocably
appoints Lender as its attorney-in-fact (coupled with an interest) for the
purposes described in the immediately preceding sentence.  The proceeds of any award, payment or claim
for damages, direct or consequential, in connection with any Major Taking,
whether direct or indirect, of the Property,

 

18

 

or part thereof, or for conveyances in lieu of condemnation
(“Condemnation Proceeds”), are hereby assigned to and shall be paid to Lender
subject to the rights of Landlord under the Lease.

 

In the event such condemnation or other
taking involves either (a) less than fifty percent (50%) of the Property, the
condemnation or taking of which does not require the repair or restoration of
the remaining portion of the Property, or (b) fifty percent (50%) or more of
the Property, or to the extent that Condemnation Proceeds are not necessary for
feasible repair and restoration of the Property, or if Borrower is in Default
under the Loan Documents (or an event exists which, with the passing of time or
giving of notice, would constitute a Default), then the Condemnation Proceeds
shall, at Lender’s sole option, be assigned and paid to Lender and applied to
the payment of sums secured by the Instrument, whether or not due, in
accordance with paragraph 4 hereof without a prepayment premium.  In the event such condemnation or other
taking is not a Major Taking, involves less than fifty percent (50%) of the
Property, and requires the repair and restoration of the remaining portion of
the Property for use of the Property as contemplated by this Agreement, then,
provided Borrower is not in Default hereunder and Lender is not otherwise
authorized to apply Condemnation Proceeds to the payment of sums secured hereby
as aforesaid, the Condemnation Proceeds shall be paid to Borrower and Borrower
shall immediately undertake the renovation and repair of the remaining portions
of the Property.  In the event such
condemnation or other taking is a Major Taking, involves less than fifty
percent (50%) of the Property and requires the repair and restoration of the
remaining portion of

 

19

 

the Property for use of the Property as contemplated by this Agreement,
then the Condemnation Proceeds shall be assigned and paid to Lender, and
Borrower shall repair and restore the remaining portion of the Property and
Lender shall distribute the Condemnation Proceeds in the same manner as Lender
distributes insurance proceeds under paragraph 6 hereof.  If Borrower is in Default hereunder at the
time of such condemnation or other taking, Lender, at its sole option, shall
apply the Condemnation Proceeds as set forth in paragraph 4 hereof.  After application of the Condemnation
Proceeds as set forth herein, any excess proceeds shall, at Lender’s sole
option, be applied to the principal balance of the Note without penalty or
premium, or paid directly to Borrower. 
“Major Taking” shall mean any condemnation or other taking by eminent
domain, or conveyance in lieu thereof, of a portion of the Property for which a
claim for payment of an award for such taking and for damages in connection
therewith exceeds the lesser of (x) $50,000.00 or (y) twenty-five percent (25%)
of the outstanding principal balance of the Note.

 

The foregoing provisions providing for the
application of Condemnation Proceeds to the sums secured by the Instrument are
agreed to be necessary to prevent an impairment of Lender’s security resulting
from such taking.  In the event,
however, that any provision hereof providing for the application of any
Condemnation Proceeds to the indebtedness secured by the Instrument is held to
be unenforceable, in whole or in part, then all Condemnation Proceeds not
payable to Lender for immediate application to the sums secured by the
Instrument as the result of such invalidity, shall be applied by Borrower to
the restoration of the Property for use of the

 

20

 

Property as contemplated by this Agreement with the balance thereof, if
any, being deposited with Lender as additional amounts due under paragraph 3
hereof, which balance shall be held and applied as provided for therein.

 

Unless Borrower and Lender otherwise agree in
writing, any application of proceeds to principal shall not extend or postpone
the due date of the monthly installments referred to in paragraphs 1 and 3
hereof or change the amount of such installments.  Such application of proceeds to principal shall be without
penalty or premium Borrower agrees to execute such further evidence of
assignment of any awards, proceeds, damages or claims arising in connection
with such condemnation or taking as Lender may require.

 

11.                               FORBEARANCE BY LENDER NOT A WAIVER.  Any forbearance by Lender in exercising
any right or remedy hereunder or under the Instrument, or any of the other Loan
Documents or Instruments, or otherwise afforded by applicable law, shall not be
a waiver of or preclude the exercise of any right or remedy available to
Lender.  The acceptance by Lender of
payment of any sum secured by the Instrument after the due date of such payment
shall not be a waiver of Lender’s right to either require prompt payment when
due of all other sums so secured or to declare a default for failure to make
prompt payment.  The procurement of
insurance or the payment of taxes or other liens or charges by Lender shall not
be a waiver of Lender’s right to accelerate the maturity of the indebtedness
secured by the Instrument or by any of the other Instruments after notice of
such breach and failure of Borrower to cure as hereinafter provided,

 

21

 

nor shall Lender’s receipt of any awards, proceeds or damages under
paragraphs 6 and 10 hereof operate to cure or waive Borrower’s default in
payment of sums secured by the Instrument or by any of the other Instruments.

 

12.                               ESTOPPEL CERTIFICATE.  Borrower shall within ten (10) days of a written request from
Lender furnish Lender with a written statement, duly acknowledged, (a) setting
forth (i) the then outstanding principal balance of the Note and all other
sums, if any, then due and payable by Borrower to Lender under the provisions
of the Note or this Agreement or Loan Documents relating to the Property and
any right of set-off, counterclaim or other defense which exists against such
sums and the obligations under the Loan Documents; (ii) that no Default or
event which, with the passage of time or the giving of notice, would constitute
a Default exists; and (iii) other matters reasonably requested by Lender; and
(b) attaching true, correct and complete copies of the Note, and the Instrument
and any other Loan Documents and all modifications, amendments and
substitutions thereof.

 

13.                               LEASES OF THE PROPERTY.  As
used in this paragraph 13, the word “lease” shall mean “sublease” if the
Instrument encumbers a leasehold interest. 
Borrower shall comply with and observe Borrower’s obligations as
landlord under all leases of the Property or any part thereof.  Borrower will not lease any portion of the
Property except with the prior written approval of Lender.  Borrower, at Lender’s request, shall furnish
Lender with executed copies of all leases now existing or hereafter made of all
or any part of the Property, and all leases now or

 

22

 

hereafter entered into will be in form and substance subject to the
approval of Lender.  All leases of the
Property shall specifically provide that such leases are subordinate to the
Instrument; that the tenant will, upon request, attorn to Lender or any
purchaser of the Property at foreclosure or following issuance of a
deed-in-lieu of foreclosure; that the tenant agrees to execute such further
evidences of attornment as Lender may from time to time request, and that
Lender may, at Lender’s option, accept or reject such attornments; that the
leases shall not be modified without Lender’s prior written approval; that the
tenant shall pay rent to Lender after notification of a Default hereunder; and
that Lender, or its successors in the event of a foreclosure or deed-in-lieu of
foreclosure of the interest secured by the Instrument, shall not be liable for
(i) any default existing prior to the date upon which Lender or any such
successor obtains title to the Property, (ii) rents paid more than one month in
advance, or (iii) any offsets or defenses against any prior landlord.  Borrower shall not, without Lender’s written
consent, execute, modify, surrender or terminate, either orally or in writing,
any lease now existing or hereafter made of all or any part of the Property,
permit an assignment or sublease of such a lease without Lender’s written
consent or request or consent to the subordination of any lease of all or any
part of the Property to any lien subordinate to the Instrument.  If Borrower becomes aware that my tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) notify Lender thereof and of the amount of said set-offs, and (iii)
within ten (10) days after such accrual, reimburse the tenant who shall have
acquired such right to set-

 

23

 

off or take such other steps as shall effectively discharge such
set-off and as shall assure that rents thereafter due shall continue to be
payable without set-off or deduction.

 

Notwithstanding the general assignment of all
leases hereunder, upon written request of Lender, Borrower shall assign to
Lender, by written instrument satisfactory to Lender, all leases now existing
or hereafter made of all or any part of the Property and all security deposits
made by tenants in connection with such leases of the Property.  Upon assignment by Borrower to Lender of any
leases of the Property, Lender shall have all of the rights and powers
possessed by Borrower prior to such assignment and Lender shall have the right
to modify, extend or terminate such existing leases and to execute new leases,
in Lender’s sole discretion.

 

14.                               REMEDIES CUMULATIVE.  Each remedy provided in the Loan Documents is distinct and
cumulative to all other rights or remedies under the Loan Documents or afforded
by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.

 

15.                               ACCELERATION IN CASE OF BORROWER’S
INSOLVENCY.  If Borrower or any
Guarantor shall voluntarily file a petition under the Federal Bankruptcy Code
(the “Code”), as such Code may from time to time be amended, or under any
similar or successor Federal statute relating to bankruptcy, receivership,
insolvency, arrangements or reorganizations, or under any state bankruptcy or
insolvency act, or file an answer in an involuntary proceeding

 

24

 

admitting insolvency or inability to pay debts, or if Borrower or any
Guarantor shall fail to obtain a vacation or stay of involuntary proceedings
brought for the reorganization, dissolution or liquidation of Borrower or such
Guarantor respectively, within sixty (60) days of the filing of such
involuntary proceeding, or if Borrower or any Guarantor shall be adjudged a
bankrupt, or if a trustee or receiver shall be appointed for Borrower or any
Guarantor or for any of Borrower’s property or any Guarantor’s property, or if
the Property shall become subject to the jurisdiction of a Federal bankruptcy
court or similar state court, or if Borrower or any Guarantor shall make an
assignment for the benefit of Borrower’s or such Guarantor’s creditors, or if
there is an attachment, execution or other judicial seizure of any portion of
Borrower’s or such Guarantor’s assets and such seizure is not discharged within
ten (10) days, then Borrower shall be in Default under the Instrument and
Lender may, at Lender’s option, declare all of the sums secured by the
Instrument to be immediately due and payable without prior notice to Borrower,
and Lender may invoke any remedies permitted by paragraph 21 of this
Agreement.  Any attorneys’ fees and
other expenses incurred by Lender in connection with Borrower’s or any
Guarantor’s bankruptcy or any of the other aforesaid events shall be additional
indebtedness of Borrower secured by the instrument pursuant to paragraph 8
hereof and paragraph 8 of the instrument.

 

16.                               TRANSFERS OF THE PROPERTY OR BENEFICIAL
INTERESTS IN BORROWER; ASSUMPTION. 
Except as otherwise provided in this paragraph 16, on sale or transfer
of (i) all or any part of the Property, or any interest therein, or (ii)
beneficial interests in

 

25

 

Borrower (if Borrower is not a natural person or persons but is a
corporation, partnership, trust or other legal entity), Borrower shall be in
Default under the Instrument and this Agreement and Lender may, at Lender’s
option, declare all of the sums secured by the Instrument and due under the
provisions of this Agreement to be immediately due and payable, and Lender may
invoke any remedies permitted by paragraph 21 of this Agreement and applicable
law.  This option shall not apply in
case of:

 

(a)                                  transfers
by devise or descent or by operation of law upon the death of a joint tenant or
a partner;

 

(b)                                 sales
or transfers of beneficial interests in Borrower provided that such sales or,
transfers, together with any prior sales or transfers of beneficial interests
in Borrower, but excluding sales or transfers under subparagraph (a) above, do
not result in more than twenty-five percent (25%) of the beneficial interests
in Borrower having been sold or transferred since the date hereof;

 

(c)                                  sales
or transfers of fixtures or any personal property pursuant to the first
paragraph of paragraph 6 of the Instrument hereof; and

 

(d)                                 exercise
of rights under Defeasance Agreement.

 

26

 

Notwithstanding anything in this paragraph
16, Borrower shall be entitled to transfer the Property to any of the
following:  (i) the Franchisor, (ii) any
Affiliate of Borrower, or (iii) any other franchisee acceptable to Franchisor
whose financial condition, creditworthiness and ability to operate the Property
are satisfactory to Lender in its sole discretion, provided however, that in
each of such cases itemized as (i), (ii) or (iii) above:  (1) Borrower obtains Lender’s prior written
consent to such transfer; (2) the proposed transferee assumes in writing all
obligations of the Borrower under the Note, the Instrument and the Loan
Documents; (3) Lender receives a transfer fee in the amount of one percent (1%)
of the then outstanding principal balance of the Note and all accrued but
unpaid interest due thereunder; (4) Lender shall receive for its review and
approval copies of all transfer documents; and (5) Borrower or the transferee
shall pay all costs and expenses in connection with such transfer and
assumption, including without, limitation all fees and expenses incurred by
Lender.

 

17.                               NOTICE.  Except
for any notice required under applicable law to be given in another manner, any
notice to Borrower provided for in this Agreement or in the Note shall be given
by certified mail, return receipt requested, or by national receipted overnight
delivery service, to Borrower’s address as set forth above or as otherwise
specified in writing by Borrower, and shall be effective only upon delivery or
attempted delivery.  Notices to the
Lender shall be by certified mail, return receipt requested, or by national
receipted overnight delivery service, to the address of the Lender as set forth
above or as otherwise specified in writing by the Lender, with a copy

 

27

 

to:  Timothy J. Manor, Esquire,
Lowndes, Drosdick, Doster, Kantor & Reed, P.A., 215 North Eola Drive,
Orlando, Florida 32802; DavC0 Restaurants, Inc., 1657 Crofton Boulevard,
Crofton, Maryland, 21114, Attn:  Ronald
Kirstien, President; FriendCo Restaurants, Inc., 1657 Crofton Boulevard,
Crofton, Maryland, 21114, Attn:  David
Norman, General Counsel; DAVCO ACQUISITION HOLDING INC., 1657 Crofton Blvd., Crofton,
Maryland, 21114, Attn:  Harvey
Rothstein, Senior Executive Vice President; and Dechert Price & Rhodes,
4000 Bell Atlantic Tower, 1717 Arch Street, 40th Floor, Philadelphia, PA 29103,
Attn:  Daniel O’Donnell, Esquire, and
shall be effective only upon delivery or attempted delivery and shall be
effective only upon delivery or attempted delivery.

 

18.                               SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL
LIABILITY; AGENTS; CAPTIONS.  The
covenants and agreements herein contained shall bind, and the rights hereunder
shall inure to, the respective successors and assigns of Lender and Borrower,
subject to the provisions of paragraph 16, hereof.  All covenants and agreements of Borrower shall be joint and
several.  In exercising any rights
hereunder or taking any actions provided for herein, Lender may act through its
employees, agents or independent contractors as authorized by Lender.  The captions and headings of the paragraphs
of the Loan Documents are for convenience only and are not to be used to
interpret or define the provisions hereof.

 

19.                               GOVERNING LAW; SEVERABILITY.  This Agreement shall be governed by the
law of the jurisdiction in which the real estate that constitutes a portion of
the Property is located.

 

28

 

Borrower and Lender agree that any dispute arising out of this
Agreement shall be subject to the jurisdiction of both the state and federal
courts in Maryland.  For that purpose,
Borrower hereby submits to the jurisdiction of the state and federal courts of
Maryland.  Borrower further agrees to
accept service of process out of any of the aforesaid courts in any such
dispute by registered or certified mail addressed to the undersigned.  Nothing herein contained, however, shall
prevent Lender from bringing any action or exercising any rights against (i)
Borrower, (ii) any security, (iii) a Guarantor personally, or (iv) the assets
of Borrower or any Guarantor, within any other state or jurisdiction.  In the event that any provision of any of
this Agreement or the Note conflicts with applicable law, such conflict shall
not affect other provisions of this Agreement or the Note which can be given
effect without the conflicting provisions, and to this end the provisions of
any of this Agreement, the Note and the other Instruments and Loan Documents
are declared to be severable.  In the
event that any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower is interpreted so that any change
provided for this Agreement, in the Note, the other Instruments or Loan
Documents, whether considered separately or together with other charges levied
in connection with this Agreement and the Note, violates such law, and Borrower
is entitled to the benefit of such law, such charge is hereby reduced to the
extent necessary to eliminate such violation. 
The amounts, if any, previously paid to Lender in excess of the amounts
payable to Lender pursuant to such charges as reduced shall be applied by
Lender to reduce the principal of the indebtedness evidenced by the Note in
inverse order of maturity in which case such prepayment shall not be subject to
any

 

29

 

Prepayment Premium.  For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all indebtedness which is secured by the Instrument and any of the
other Instruments, or evidenced by the Note and which constitutes interest, as
well as all other charges levied in connection with such indebtedness which
constitute interest, shall be deemed to be allocated and spread over the stated
term of the Note.  Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest computed thereby is uniform throughout
the stated term of the Note.

 

20.                               ASSIGNMENT OF LEASES AND RENTS; APPOINTMENT OF
RECEIVER; LENDER IN POSSESSION.  As
part of the consideration for the indebtedness evidenced by the Note, Borrower,
under the provisions of paragraph 23 of the Instrument absolutely and
unconditionally assign and transfer to Lender the leases and all the rents and
revenues of the Property.

 

Borrower hereby covenants that Borrower has not
executed any prior assignment of said leases or rents, that Borrower has not
performed, and will not perform, any acts or has not executed, and will not
execute, any instrument which would prevent Lender from exercising its rights
under this paragraph 20, and that at the time of execution of this Agreement
there has been no anticipation or prepayment of any of the rents of the
Property for more than one (1) month prior to the due dates of such rents.  Borrower covenants that Borrower will not
hereafter collect

 

30

 

or accept payment of any rents of the Property more than one (1) month
prior to the due dates of such rents. 
Borrower further covenants that Borrower will execute and deliver to
Lender such further assignments of rents and revenues of the Property as Lender
may from time to time request.

 

Upon Borrower’s Default hereunder, under the
Instrument or under the Loan Documents, Lender shall be entitled to the
appointment of a receiver for the Property and Lender may in person, by agent
or by a court-appointed receiver, regardless of the adequacy of Lender’s
security, enter upon and take and maintain full control of the Property in
order to perform all acts necessary and appropriate for the operation and
maintenance thereof including, but not limited to, the execution, cancellation
or modification of leases, the collection of all rents and revenues of the
Property, the making of repairs to the Property and the execution or
termination of contracts providing for the management or maintenance of the
Property, all on such terms as are deemed best to protect the security of the
Instrument.  In the event Lender elects
to seek the appointment of a receiver for the Property upon Borrower’s breach
of any covenant or agreement of Borrower in the Loan Documents, Borrower hereby
expressly, consents to the appointment of such receiver.  Lender or the receiver shall be entitled to
receive a reasonable fee for so managing the Property.

 

All rents and revenues collected subsequent
to the Default by Borrower under the Loan Documents shall be applied first to
the costs, if any, of taking control of and managing the

 

31

 

Property and collecting the rents, including, but not limited to,
attorneys’ fees, receiver’s fees, premiums on receiver’s bonds, costs of
repairs to the Property, premiums on insurance policies, taxes, assessments and
other charges on the Property, and the costs of discharging any obligation or
liability of Borrower as lessor or landlord of the Property and then to the
sums secured by the Instrument.  Lender
or the receiver shall have access to the books and records used in the
operation and maintenance of the Property and shall be liable to account only
for those rents actually received. 
Lender shall not be liable to Borrower, anyone claiming under or through
Borrower or anyone having an interest in the Property by reason of anything
done or left undone by Lender under this paragraph 20.

 

If the rents of the Property are not
sufficient to meet the costs, if any, of taking control of and managing the
Property and collecting the rents, any funds expended by Lender for such
purposes shall become indebtedness of Borrower to Lender secured by the
Instrument pursuant to paragraph 8 hereof and paragraph 8 of the
Instrument.  Unless Lender and Borrower
agree in writing to other terms of payment, such amounts shall be payable upon
notice from Lender to Borrower requesting payment thereof and shall bear
interest from the date of disbursement at the rate stated in the Note which
applies in the event of Default unless payment of interest at such rate would
be contrary to applicable law, in which event such amounts shall bear interest
at the highest rate which may be collected from Borrower under applicable law.

 

32

 

Any entering upon and taking and maintaining
of control of the Property by Lender or the receiver and any application of
rents as provided herein shall not cure or waive any Default hereunder or
invalidate any other right or remedy of Lender under applicable law or provided
herein.  This assignment of rents of the
Property shall terminate at such time as the indebtedness and obligations
secured by this Instrument have been paid and performed in a complete and
irrevocable manner.

 

21.                               ACCELERATION REMEDIES.  Any one or more of the following shall
constitute a “Default” under the Instrument and this Agreement:

 

(a)                                  failure
of Borrower to make any payment due under the Note or under paragraph 1 of this
Agreement within ten (10) calendar days after Lender’s written demand for such
amount;

 

(b)                                 failure
of Borrower (except as set forth under clause (a) above) to pay any amount,
costs, expenses or fees (including attorneys’ fees) of Lender, as required by
any provision of the Note, this Agreement, the Instrument or any Loan Document
within ten (10) days after Lender’s written demand for such amount;

 

(c)                                  failure
of Borrower (except as set forth under clauses (a), (b), (d), (e), (f), (g),
(h), (i), (j) and (k) of this paragraph 21) to comply with or perform, or any
breach or

 

33

 

violation by Borrower of,
any warranty, representation, covenant, agreement, prohibition, restriction or
condition contained herein (except for those contained in paragraphs 15 and 16
hereof and paragraph 17 of the Instrument), in the Note, the Instrument or any
Loan Document, or in the Franchise Agreement, which failure or breach or
violation continues uncured to Lender’s reasonable satisfaction for thirty (30)
calendar days after the earlier of (i) the delivery by Lender of written notice
to Borrower describing such failure or breach or violation, or (ii) provided,
however, that if such failure or breach or violation shall be not be curable
within said thirty (30) calendar day period and Borrower is diligently
attempting to cure such failure or breach or violation within such thirty (30)
calendar day period, then such failure or breach or violation shall not
constitute a Default unless it shall continue uncured to Lender’s reasonable
satisfaction far ninety (90) calendar days after the delivery by Lender of such
notice to Borrower or by Borrower of such notice to Lender, or if Borrower is
diligently attempting to effect such cure, such longer period of time as may be
necessary in Lender’s reasonable judgment to effect such cure;

 

(d)                                 except
as provided in and permitted under the Note, the Instrument or any other Loan
Document, any sale, assignment, transfer, conveyance, mortgaging, encumbering
or other change in, or collateral assignment of, the legal title to or

 

34

 

beneficial interest in
the Property or Borrower, or any part thereof, or any interest therein,
including, without limitation, the granting of any subordinate lien, whether
voluntarily or involuntarily by operation, of law and whether or not of record
or for consideration;

 

(e)                                  the
occurrence of any event deemed to be a Default under either paragraph 15 or 16
hereof;

 

(f)                                    any
default shall occur under any Related Note, the Instrument or any Loan Document
which remains uncured after the expiration of any applicable notice and/or cure
period;

 

(g)                                 the
occurrence of any event deemed to be a default under any commitment and/or loan
trade by any lending institution (including, without limitation, Lender) to
Borrower with the amount in controversy in excess of $25,000.00 which remains
uncured after the expiration of any applicable notice and/or cure period and/or
the payment of the indebtedness outstanding pursuant thereto has been
accelerated shall, at the option of Lender, be and constitute a default under
all commitments and/or loans made to Borrower by Lender (including without
limitation, the Note, this Agreement, the Instrument or any other Instruments
and the Loan Documents);

 

35

 

(h)                                 a
material misrepresentation or material error or withholding of material
information by Borrower incident to the Loan or the Loan Documents;

 

(i)                                     the
ownership by Borrower or any Guarantor, or any of their Affiliates, of an
interest in, or the operation by the Borrower or any Guarantor or any of their
Affiliates of any WENDY’S restaurant within a three (3) mile radius of the
Property (excluding the WENDY’S restaurant located or to be located on the
Property);

 

(j)                                     the
termination of the Franchise Agreement; and

 

(k)                                  the
occurrence of any event deemed to be a default under the Lease, which remains
uncured after any applicable notice or cure period provided for therein.

 

In the event the Trustee or the Beneficiary
elects to institute foreclosure proceedings upon the occurrence of a Default,
the Borrower assents to the passage of a decree for the sale of the Property
and further authorizes the Trustee to sell the Property.  Any sale of the Property, whether by way of
the assent to decree or power of sale, shall be made in accordance with the
provisions of Section 7-105, Real Property Article, Annotated Code of
Maryland, as  amended and of Chapter 200 of Title 14 (Sales of
Property) of the Maryland Rules, as  amended, or other applicable
general or local laws of the State of Maryland or judicial rules of

 

36

 

procedure relating to the foreclosure of deeds of trust.  The terms of the sale may be cash upon
settlement of the sale or upon such other and additional terms as the Trustee
deem necessary, proper or convenient, except as specifically limited by
applicable law or court rule.  Such sale
may be of the entire Property as a unit or of such parts or parcels of the
entire Property as the Trustee and the Lender, in their sole and absolute
discretion, deem necessary, proper, or convenient.

 

Upon Borrower’s Default, in addition to
Lender’s right to appoint a receiver or enter upon and take and maintain
control of the Property as set forth in paragraph 23 of the Instrument and
paragraph 20 of this Agreement; Lender at Lender’s option may declare all of
the sums secured by the Instrument to be immediately due and payable without
further demand and may foreclose the interest secured by the Instrument by
judicial or non judicial proceeding and may invoke any other remedies permitted
by applicable law or provided herein. 
Borrower acknowledges that the power of sale herein granted may be
exercised by Lender without prior judicial hearing.  Borrower has the right to bring an action to assert the
non-existence of a Default or any other defense of Borrower to acceleration and
sale.  Lender shall be entitled to
collect all reasonable costs and expenses incurred in pursuing such remedies,
including, but not limited to, reasonable attorneys’ fees and costs of
documentary evidence, abstracts and title reports.  Nothing contained herein shall be deemed to require Lender to
provide Borrower with notice in the event a bankruptcy proceeding (whether
voluntary or involuntary) has been

 

37

 

instituted by or against Borrower or any Guarantor of Borrower’s
indebtedness under any of the other Instruments or Loan Documents.

 

If the Property is sold pursuant to this
paragraph 21, Borrower, or any person holding possession of the Property
through Borrower, shall immediately surrender possession of the Property to the
purchaser at such sale upon the purchaser’s written demand.  If possession is not surrendered upon the
purchaser’s written demand, Borrower or such person shall be a tenant at
sufferance and may be removed by writ of possession or by an action for
forcible entry and detainer.

 

If Lender invokes the power of sale, Lender
or Trustee shall give Borrower a copy of a notice of-sale in the manner
prescribed by applicable law and shall sell the Property in accordance with the
laws of Maryland.  Trustee, without
demand on Borrower, shall sell the Property at public auction to the highest
bidder at the time and place and under the terms designated in the notice of
sale in one or more parcels and in such order as Trustee may determine.  Trustee may postpone the sale of all or any
parcel of the Property by public announcement at the time and place of any
previously scheduled sale or by advertising in accordance with applicable
law.  Lender or Lender’s designee may
purchase the Property at any sale.

 

38

 

Trustee shall deliver to Purchaser a
Trustee’s deed conveying the Property so sold, without any covenant or
warranty, express or implied.  The
recitals in the Trustee’s deed shall be prima facie evidence of the truth of
the statements made therein.  If Trustee
is requested to cancel the Instrument, all notes evidencing indebtedness
secured by the Instrument shall be surrendered to Trustee.  Trustee shall apply the proceeds of the sale
in the following order:  (a) to all
costs and expenses of the sale, including, but not limited to, Trustee’s fees
of 5% of the gross sale price and costs of title evidence; (b) to the discharge
of all taxes, levies and assessments on the Property; if any, as provided by
applicable law; (c) to all sums secured by the Instrument in such order as
Lender, in Lender’s sole discretion, directs; and (d) the excess, if any, to
the person or persons legally entitled thereto, including, if any, holders of
liens inferior to the Instrument in order of their priority, provided that
Trustee has actual notice of such lien. 
Trustee shall not be required to take possession of the Property prior
to the sale thereof or to deliver possession of such Property to the purchaser
thereof.

 

In the event of a Default under this
Agreement, any other Instruments or any other Loan Document or upon a default
by the manager of the Property under its management agreement, Lender or any
receiver for the Property shall be entitled to terminate the management
agreement between Borrower and any manager of the Property.

 

Notwithstanding any provision to the contrary
herein, in the event that (i) Borrower’s interest in the Property is a
leasehold interest, (ii) the real estate portion of the

 

39

 

Property is not separately assessed for real estate taxation or
assessment purposes, (iii) Borrower is current in its payments, if any, to
lessor/owner in connection therewith, and (iv) the lessor/owner of such
Property is responsible for the payment of taxes and assessments therefor, then
such nonpayment of taxes and assessments by the lessor/owner shall not be a
Default under this Agreement and Borrower shall not be required to make
payments as set forth in paragraph 3 hereof as a result of said non-payment.

 

22.                               SUBROGATION.  Any of the proceeds of the Note
utilized to satisfy outstanding Liens against all or any part of the Property
have been advanced by Lender at Borrower’s request and upon Borrower’s
representation that such amounts are due and are secured by valid Liens against
the Property.  Lender shall be
subrogated to any and all rights, superior titles, Liens and equities owned or
claimed by any owner or holder of any outstanding Liens and debts, however
remote, regardless of whether said Liens or debts are acquired by Lender, by
assignment or are released by the holder thereof upon payment.

 

23.                               PARTIAL INVALIDITY. 
In the event any portion of the sums intended to be secured by the
Instrument cannot be lawfully secured thereby, payments in reduction of such
sums shall be applied first to those portions not secured thereby.

 

24.                               REPRESENTATIONS OF BORROWER.  The Borrower hereby represents and warrants
to Lender the following:

 

40

 

(a)                                  Borrower
(i) is a Borrower Entity duly organized, validly existing and in good standing
under the laws of the Borrower State and in all jurisdictions in which
qualification or licensing is required; and (ii) has the power and authority to
own, lease and operate the Property and conduct its business as it is now
conducted.  There are no proceedings or
actions pending, threatened or contemplated for the liquidation,
reorganization, termination or dissolution of Borrower.

 

(b)                                 There
have been no material adverse changes, financial or otherwise, in the condition
of Borrower from that disclosed to Lender in the loan application submitted to
Lender by Borrower, or in any supporting data submitted in connection with the
Loan, and all of the information contained therein was true and correct in all
material respects when submitted and is now substantially materially true and
correct on the date hereof.

 

(c)                                  No
proceedings in bankruptcy or insolvency have ever been instituted by or against
Borrower or any affiliate thereof, and no such proceeding is now pending or
contemplated.

 

(d)                                 Borrower,
and the general partner of Borrower if applicable, is solvent pursuant to the
laws of the United States and the state in which the Property is located, as

 

41

 

reflected by the entries
in Borrower’s books and records and as reflected by the actual facts.

 

(e)                                  The
Note, the Instrument, the other Instruments, the Loan Documents, and all other
notes and loan documents evidencing all other obligations of Borrower to
Lender, if any, and the Franchise Agreement have been duly authorized, executed
and delivered by Borrower and constitute valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.  No approval, consent, order or
authorization of any governmental authority and no designation, registration,
declaration or filing with any governmental authority is required in connection
with the execution and delivery of the Note, the Instrument or any of the other
Instruments or Loan Documents or the Franchise Agreement.

 

(f)                                    The
execution, delivery, and performance of the Loan Documents will not violate or
contravene in any way the organizational documents of Borrower (if Borrower is
a partnership, corporation or other entity) or any indenture, agreement or
Instrument to which Borrower is a party or by which it or its property may be
bound, or be in conflict with, result in a breach of or constitute a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any

 

42

 

of the property or assets
of Borrower, except as contemplated by the provisions of such instrument, and
no action or, approval with respect thereto by any third person is required.

 

(g)                                 The
proceeds of the Loan will be used by Borrower for its business and commercial
purposes, not to include the purchase of margin stock, and not for personal,
family, household or agricultural use. 
No part of the Property is all or part of Borrower’s homestead.

 

(h)                                 There
is no litigation, legal or administrative proceeding, investigation or other
action of any nature commenced, pending, or, to the knowledge of Borrower,
threatened against or affecting the Borrower, the Property or any interest or
right therein or any Guarantor which has not been disclosed in detail in
writing to Lender and which may involve the possibility of any judgment or
liability not fully covered by insurance, or materially or adversely affecting
any of the assets of the Borrower or Borrower’s right to carry on business as
now conducted, or affecting the continued employment of any officer, or
director of Borrower.

 

(i)                                     The
representations and warranties contained in paragraph 25 of the Instrument are
hereby confirmed.

 

43

 

25.                               BORROWER’S ADDITIONAL COVENANTS.  Borrower hereby covenants, agrees and
undertakes to:

 

(a)                                  from
time to time, at the reasonable request of Lender, (i) promptly correct any
defect, error or omission which may be discovered in the contents of this
Agreement, the instrument or any of the other Loan Documents or any of the
other Instruments or in the execution or acknowledgment thereof; (ii) execute,
acknowledge, deliver and record and/or file such further documents or
instruments (including, without limitation, further mortgages, security
agreements, financing statements, continuation statements, assignments of rents
or leases and environmental indemnity agreements) and perform such further acts
and provide such further assurances as may be necessary, desirable or proper,
in Lender’s reasonable opinion, to carry out more effectively the purposes of
this Agreement and such other instruments and to subject to the Liens and
security interests hereof and thereof any property intended by the terms hereof
or thereof to be covered hereby or thereby, including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property; and (iii) execute, acknowledge, deliver,
procure, and file and/or record any document or instrument (including
specifically, but without limitation, any financing statement) deemed advisable
by Lender to protect the Liens and the

 

44

 

security interests herein
granted against the rights or interests of third persons; provided that such
documents or instruments do not increase Borrower’s liability under the Loan
Documents.  Borrower will pay all
reasonable costs connected with any of the foregoing in this subparagraph (a);

 

(b)                                 continuously
maintain Borrower’s existence, if applicable, as a Borrower Entity, and the
right to do business, as applicable, in the State’ of Maryland and in the State
of Delaware;

 

(c)                                  at
any time any law shall be enacted imposing or authorizing the imposition of any
tax upon the Instrument or any of the other Loan Documents, or upon any rights,
title, Liens or security interests created hereby, or upon the obligations
secured hereby or any part thereof, pay all such taxes within the applicable
payment period; provided that, if such law as enacted makes it unlawful for
Borrower to pay such tax, Borrower shall not pay nor be obligated to pay such
tax, and in the alternative, Borrower may, in the event of the enactment of
such a law, and must, if it is unlawful for Borrower to pay such taxes, prepay
the obligations secured hereby in full within one hundred twenty (120) days after
demand therefor by Lender, without penalty or premium;

 

45

 

(d)                                 promptly
pay all reasonable and bona fide out-of-pocket costs, fees and expenses and
other expenditures, including, but not limited to, reasonable attorneys’ fees
and expenses, paid or incurred by Lender to third parties incident to this
Agreement, the Instrument or any of the other Loan Documents (including, but
not limited to, reasonable attorneys’ fees and expenses in connection with the
negotiation, preparation and execution hereof and of any other Loan Document
and any amendment hereto or thereto, any release hereof, any consent, approval
or waiver hereunder or under any other Loan Document, the making of any advance
under the Note, and any suit to which Lender is a party involving this
Agreement or the Property including any such fees incurred on appeal of such
suit) or incident to the enforcement of the obligations secured hereby or the
exercise of any right or remedy of the Lender under any Loan Document;

 

(e)                                  not
materially amend the constituent entity organizational documents of Borrower
without the prior written consent of Lender, which consent shall not be
unreasonably delayed or withheld;

 

(f)                                    at
its sole cost and expense, furnish Lender with such title endorsements or
updates to Lender’s title insurance policy as Lender may reasonably require,
from time to time, to insure Lender that no other matters of record affect the
condition of title or the priority of Lender’s Lien;

 

46

 

(g)                                 not
amend, modify or terminate the management agreement, if any, relating to the
management of the Property or the Restaurant without the Lender’s prior written
consent, and Borrower shall strictly enforce all the material terns of any such
management agreement.  (The existence
and identity of any manager of the Property and/or the restaurant, as well as
the terms and conditions of any management agreement relating thereto, shall be
subject to Lender’s prior written approval);

 

(h)                                 not
own an interest in, or operate, any other WENDY’S restaurant within a three (3)
mile radius of the Property (excluding the WENDY’S restaurant operated on the
Property);

 

(i)                                     without
limiting any other obligation of the Borrower hereunder, shall and does hereby
indemnify, hold harmless and insure the Lender of and from any and all claim,
liability, loss or damage whatsoever, including without limitation in-house and
outside counsel attorneys’ and paralegals’ fees and costs, arising from or in
any way relating to the Property this Agreement, the Instrument or any of the
other the Loan Documents, save only and except for any claim or loss caused
directly as a result of gross negligence or intentional breach or misconduct by
Lender;

 

47

 

(j)                                     promptly,
and in any event within three (3) business days after an officer of the
Borrower obtains actual knowledge of any failure or breach or violation or a
Default under this Agreement, to provide Lender with written notice
thereof.  “Actual knowledge” as used in
this clause (j) of paragraph 25 means the actual knowledge of an officer of
Borrower;

 

(k)                                  not
provide a guaranty of the obligations of any of its affiliates or a third party
which if exercised would result in a Default (or which but for the passage of
time would be a Default hereunder) with respect to the requirements set for
cash flow in paragraph 26 hereof; and

 

(l)                                     keep
the covenants set forth in paragraph 26 of the Instrument.

 

26.                               MAINTENANCE OF CASH FLOW.  During the term of this Instrument, the Borrower shall
maintain a Consolidated Fixed Charge Coverage Ratio for the Borrower and
Guarantors, if any, of not less than 1.2:1. 
All calculations of the Consolidated Fixed Charge Coverage Ratio shall
be based upon the financial information furnished by the Borrower hereunder for
the twelve (l2) month period ending on the last day of each fiscal year of
Borrower or more frequently as the Lender may from time to time reasonably
request.  The initial Consolidated Fixed
Charge Coverage Ratio shall be calculated for the twelve (12) month period
ending on the last day of the Borrower’s fiscal year.  Notwithstanding the foregoing, if the Loan proceeds are used to

 

48

 

construct or acquire new units, the first measurement of the FCCR shall
be made at the fiscal quarter end following one (1) year after the Loan closing
date.  If the Loan proceeds are used to
refinance existing units of the Borrower, the first measurement of the FCCR
shall be for the twelve (12) month period ending the last day of Borrower’s
fiscal year.  Failure by Borrower to
comply with the covenants set forth herein shall be deemed a Default under this
Agreement.

 

For the purposes of calculating the
Borrower’s Cash Flow, Rental Payments, Non-Recurring Expenses and Non-Recurring
Income, the term “Borrower” shall mean the Borrower and all Guarantors, if any,
and the term “financial statement” shall mean a consolidated financial
statement of the Borrower and such Guarantors.

 

27.                               ASSIGNMENT BY LENDER.  This Agreement (and unless a contrary intention is expressly
provided, each other Loan Document) is freely assignable, in whole or in part,
by the Lender and, to the extent of any such assignment, the Lender shall be
fully discharged from all liability under this Agreement (and each other Loan
Document) accruing from and after the date of such assignment.  The Lender’s assignee shall, to the extent
of the assignment, be vested with all the powers and rights of the Lender
hereunder and under the other Loan Documents, and to the extent of which
assignment the assignee may fully enforce such rights and powers as the holder
hereof and all references to the Lender shall mean and refer to such assignee.  The Lender shall retain all rights and
powers hereby given which are not so assigned, transferred and/or
delivered.  Without limiting the
foregoing, the Borrower understands and agrees that the Lender

 

49

 

intends to and may, from time to time, sell, pledge, grant a security
interest in and collaterally assign, transfer and deliver or otherwise encumber
or dispose of the Note, and the Loan Documents and its rights and powers
hereunder and thereunder, in whole or in part, in connection with the
Securitization or any other assignment or other disposition of the Note.  The Borrower may not, in whole or in part,
directly or indirectly, assign this Agreement, the Instrument or any Loan
Document or its rights hereunder or thereunder or delegate its duties
hereunder.

 

28.                               SECURITIZATION OPINIONS; FINANCIAL
INFORMATION.  In the event the Loan
is included as an asset of a Securitization by Lender or any of its Affiliates,
Borrower shall, within ten (10) days after Lender’s written request therefor,
deliver or cause to be delivered opinions and certifications in form and
substance and delivered by counsel reasonably acceptable to Lender and the
Rating Agency, as may be reasonably required by Lender and/or the Rating Agency
in connection with such Securitization. 
Borrower shall not be required to bear the cost of the delivery of such
opinions, if any.

 

Borrower shall, in the event the Loan is
included as an asset of a Securitization, (a) gather any environmental information
reasonably required by the Rating Agency in connection with such a
Securitization, at Lender’s request, (b) meet with representatives of the
Rating Agency to discuss the business and operations of the Property, and (c)
cooperate with the

 

50

 

reasonable requests of the Rating Agency and Lender in connection with
all of the foregoing and the preparation of any offering documents with respect
thereof.

 

Borrower shall, upon Lender’s written request
therefor in connection with a Securitization in which the Loan is to be
included as an asset, promptly deliver such financial statements and related
documentation prepared by an independent certified public accountant as may be
reasonably necessary and shall fully cooperate with the Lender in connection
with any assurances or other documents, which are deemed to be reasonably
necessary or convenient by Lender, requested from Borrower and consistent with
the Borrower’s obligations hereunder, in connection therewith.  Borrower shall not be required to bear the
costs of preparation of financial statements and related documentation prepared
by an independent certified public accountant in connection with a
Securitization (unless Borrower is otherwise having such financial statements
and related documents prepared).

 

29.                               DEFINITIONS. 
Borrower and Lender agree that, unless the context otherwise specifies
or requires, the following terms, as used herein or in any of the Loan
Documents, shall have the meanings herein specified, such definitions to be
applicable equally to the singular and the plural forms of such terms.

 

“Affiliate” means, with respect to any
designated Person, any Person that, directly or indirectly, controls or is
controlled by or is under common control with such designated

 

51

 

Person and, without limiting the generality of the foregoing, shall
include, (i) any Person who is a director or officer of, partner in, trustee
of, or blood or legal relative, guardian or representative of the designated
Person, or any Person who acts or serves in a similar capacity with respect to
the designated Person, (ii) any Person of which of whom the designated Person
is a director or officer, partner, trustee, or blood or legal relative,
guardian or representative, or with respect to which or whom, the designated
Person acts or serves in a similar capacity; and (iii) any Person, who,
directly or indirectly, is the legal or beneficial owner of or controls 10% or
more of any class of equity securities of the designated Person.  For the purposes of this definition,
“control” (including, with correlative meanings, the terms “controlled  by”
and “under  common  control  with”), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause to change the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.

 

“Actual knowledge” means the actual knowledge
of an officer of Borrower.

 

“Affiliate Guarantor” means any Affiliate of
the Borrower that is providing the Lender with a guarantee of the Note.

 

“Approved Carriers” has the meaning ascribed
to such term in paragraph 6 of this Agreement.

 

52

 

“Borrower” has the meaning ascribed to such
term in the first paragraph of the preamble of this Agreement:

 

“Borrower Entity” means, if applicable, the
entity form of Borrower which is a corporation.

 

“Borrower State” means, if applicable, the
state or other jurisdiction under which the Borrower was formed, which is
either the State of Delaware or the State of Maryland.

 

“Cash Flow” means, for any period, with
respect to any Person, an amount equal to (a) the sum of (i) pre-tax income,
(ii) interest expense, (iii) all non-cash amounts in respect of depreciation
and amortization, (iv) Non-Recurring Expenses, (v) discretionary management
fees, and (vi) Rental Payments less (b) Non-Recurring Income, all as reflected
on such Person’s financial statement for such period.

 

“Casualty” has the meaning ascribed to such
term in paragraph 6 of this Agreement.

 

“Chattel Paper” has the meaning ascribed to
such term under the Uniform Commercial Code.

 

53

 

“Code” has the meaning ascribed to such term
in paragraph 15 of this Agreement.

 

“Collateral Assignment Liquor License” means
that certain Collateral Assignment of Liquor License dated as of the date
hereof by Borrower to and in favor of Lender pledging as collateral the liquor
license, if any, relating to operation of the Restaurant located at the
Property.

 

“Commitment” means the commitment letter from
CNL Financial Services, Inc.  or CNL APF
Partners, LP to Borrower dated March 2, 1999.

 

“Condemnation Proceeds” has the meaning
ascribed to such term in paragraph 10 of this Agreement.

 

“Consolidated Fixed Charge Coverage Ratio”
means, for any period, the ratio of (a) the Borrower’s and Guarantor’s, if any,
Cash Flow for such period to (b) the sum of Borrower’s and Guarantor’s, if any,
Debt Service for such period.

 

“Contracts” means all contracts and
agreements to which the Borrower now is, or hereafter will be, bound, or a
party, beneficiary or assignee (other than rights evidenced by Chattel Paper,
Documents, the Instrument or other Instruments) including, without limitation
the Franchise Agreement and the License and all other agreements and documents
executed and

 

54

 

delivered with respect to such contracts, and all revenues, rentals and
other sums of money due and to become due thereunder from any of the foregoing.

 

“Copyrights” means all United States or other
registered and unregistered copyrights, all licenses thereto, and all applications
therefor, and all reissues, divisions, continuations, renewals, extensions,
modifications, supplements thereto or to any part thereof, and the right to sue
for past, present and future infringements of the foregoing, and all rights
corresponding to the foregoing throughout the world.

 

“Debt Service” means, for any period, with
respect to any Person all of such Person’s (i) interest payments, (ii) current
portion of the principal payments, (iii) Rental Payments and (iv) current
portion of capital lease obligations.

 

“Default” has the meaning ascribed to such
term in paragraph 21 of this Agreement.

 

“Document” has the meaning ascribed to such
term under the UCC.

 

“Equipment” means any “equipment,” as such
term is defined in the UCC, used or bought for use primarily in the Restaurant
and not included within Inventory, now or hereafter owned or leased by the
Borrower and, in any event, shall include, but shall not be limited to, all

 

55

 

machinery, tools, computer software, office equipment, furniture,
appliances, fixtures, vehicles, motor vehicles, and any manuals, instructions
and similar items which relate to the foregoing, and any and all additions,
substitutions and replacements of arty of the foregoing, wherever located,
together with all improvements thereon and all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.

 

“Franchise Agreement” means the Franchise
Agreement between the Franchisor, as franchisor, and the Borrower, as
franchisee.

 

“Franchisor” means WENDY’S INTERNATIONAL,
INC.

 

“Funds” has the meaning ascribed to such term
in paragraph 3 of this Agreement.

 

“Future Advances” has the meaning ascribed to
such term in the granting clause on page 2 of the Instrument.

 

“General Intangibles” has the meaning
ascribed to such tern under the UCC.

 

“Guarantor” means any guarantor of all or
part of Borrower’s obligations under the Note, this Agreement, the Instrument
or the other Loan Documents.

 

56

 

“Initial Yearly Premium Payment” has the
meaning ascribed to such term in paragraph 3 of this Agreement.

 

“Instrument” means the Commercial Deed of
Trust, Assignment of Rents and Security Agreement as defined in the second
WHEREAS clause on page I hereof.

 

“Instruments” means all documents granting a
security interest or assigning rights or otherwise pledging the assets of
Borrower (or Guarantor(s) or its or their respective affiliates) to Lender or
its Affiliates to secure the indebtedness evidenced by any Related Note.

 

“Inventory” means all inventory of the
Borrower of every type or description, including all “inventory” as such term
is defined in the UCC, now owned or hereafter acquired and wherever located,
whether raw, in process or finished, and all materials usable in processing the
same and all documents of title covering any inventory, including, without
limitation, work in process, materials used or consumed in the Restaurants, now
owned or hereafter acquired or manufactured by the Borrower and held for sale
in the ordinary course of its business; all present and future substitutions
thereof, parts and accessories thereof and all additions thereto; and all
proceeds thereof and products of such inventory in any form whatsoever.

 

“License” means the license to use the
Trademarks and other intellectual property of Franchisor under the Franchise
Agreement.

 

57

 

“Lien” means any mortgage, pledge, security
interest, hypothecation, collateral assignment, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the UCC).

 

“Loan” has the meaning ascribed to such term
in the first WHEREAS clause of this Agreement.

 

“Loan Documents” means the Loan Agreement,
Note, the Instrument, UCC-1 Financing Statement, any of the Related Notes
secured hereby from time to time, the Construction Loan Agreement, if any, and
all other instruments, guaranties, documents and agreements evidencing or
securing the same or the indebtedness and/or other obligations represented
thereby.

 

“Major Casualty” has the meaning ascribed to
such term in paragraph 6 of this Agreement.

 

“Major Taking” has the meaning ascribed to
such term in paragraph 10 of this Agreement.

 

58

 

“Maturity Date” has the meaning ascribed to
such term in the preamble of the Note.

 

“Non-Recurring Expenses” and “Non-Recurring
Income” mean expenses or income, as the case may be, that is extraordinary and
generally not reflected in any prior period or reasonably anticipated to be
incurred in any subsequent period.

 

“Note” has the meaning ascribed to such term
in the first WHEREAS clause of this Agreement.

 

“Other Impositions” has the meaning ascribed
to such term in paragraph 3 of this Agreement.

 

“Patents” means all United States or other
registered and unregistered patents, all licenses thereto, and all applications
therefor, and all reissues, divisions, continuations, renewals, extensions,
modifications, supplements thereto or to any part thereof, and the right to sue
for past, present and future infringements of the foregoing, and all rights
corresponding to the foregoing throughout the world.

 

“Payment Date” means the first day of each
month or, in the event that the first day of a month is not a Business Day (as
defined in the Note), the next Business Day (as

 

59

 

provided in the Note) during the term of the Loan in which a monthly
installment of principal and interest is due under the Note.

 

“Permitted Encumbrances” means (i) liens
created by the Loan Documents; (ii) liens for taxes not yet due and payable;
(iii) liens imposed by law incurred in the ordinary course of business, such as
warehousemen’s liens; (iv) liens for workers’ compensation, unemployment
insurance and similar payments arising in the ordinary course of business and
relating to payments which are not yet delinquent or are being contested; (y)
other easements, rights-of-way, restrictions, minor defects in title and
similar matters (including those which do not diminish, in any material
respect, the value of the Property or impair, in any material respect, the
priority of the liens created by the Loan Documents related to the Property;
and a security interest relating to purchase money (or lease) financing in
connection with the purchase (or lease) of Equipment to replace existing,
obsolete Equipment or to comply with the terms of the Franchise Agreements in
an amount not to exceed (i) $50,000.00 per restaurant site if the related
Property is owned or held by Borrower in fee simple or pursuant to a ground
lease or (ii) $25,000.00 per restaurant site if the Property is owned or held
by Borrower pursuant to a space lease; provided that Borrower has obtained the
prior written approval of the Lender for such purchase money (or lease)
financing.

 

“Person” means any individual, corporation,
partnership, unincorporated association, firm, trust, joint stock company,
joint venture or other entity of whatever nature.

 

60

 

“Prepayment Premium” has the meaning ascribed
to such term in the Note.

 

“Property” has the meaning ascribed to such
term in the description of collateral in the Instrument.

 

“Rating Agency” means any nationally
recognized statistical rating agency; provided, however, that at anytime during
which the Loan is an asset of a Securitization, “Rating Agency” shall mean the
rating agency or rating agencies that rate the securities issued in connection
with such Securitization.

 

“Receivables” means any “account” as such
term is defined in the UCC and in any event shall include, but not be limited
to, all of the Borrower’s rights to payment for goods sold or leased, or services
performed, by the Borrower, whether now in existence or arising from time to
time hereafter, including, without limitation, rights evidenced by an account,
note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by the Borrower to secure the foregoing, (b)
all the Borrower’s rights, title, and interest in and to any goods, the sale of
which gave rise thereto, (c) guarantees, endorsements and indemnifications on,
or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, correspondence, credit files, records, ledger cards,
invoices, and other papers relating thereto, including without

 

61

 

limitation all similar information stored on a magnet medium or other
similar storage device and other papers and documents in the possession or
under the control of the Borrower or any computer bureau from time to time
acting for the Borrower, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto, and (h) all
other writings related in anyway to the foregoing:

 

“Related Note” has the meaning ascribed to
such term in paragraph 27 of the Instrument.

 

“Rental Payments” means, for any period, with
respect to any Person, all of such Person’s operating lease or rent obligations
other than capital lease obligations.

 

“Restaurant” means a franchise restaurant
licensed by the Franchisor and operated by Borrower and pledged to Lender
hereunder.

 

“Securitization” means the sale, pledge,
grant of a security interest, collateral assignment, transfer and delivery or
other encumbrance or disposition of all or any portion of the Lender’s rights
and powers in the Note, this Agreement, the instrument and the other Loan
Documents by the Lender, from time to time, to one or more of its Affiliates or
to other Persons,

 

62

 

including the sale of the Note, this Agreement, the Instrument and the
other Loan Documents by the Lender to one or more Persons who will issue debt
instruments or equity certificates backed by such Note, this Agreement, the
Instrument and the other Loan Documents and the servicing of such instruments
by a Person appointed as servicer in connection therewith.

 

“Sublease” has the meaning ascribed to such
term in paragraph 13 of this Agreement.

 

“Tax Code” means the Internal Revenue Code of
1986, as amended.

 

“Trademarks” shall mean all United States or
other registered or unregistered trademarks together with the goodwill of the
business connected with the use thereof, and symbolized thereby, all licenses
thereto (including the License), and all applications therefor, and all
reissues, divisions, continuations, renewals, extensions, modifications,
supplements thereto or to any part thereof, and the right to sue for past,
present and future infringements of the foregoing, and all rights corresponding
to the foregoing throughout the world.

 

“UCC” shall mean the Uniform Commercial Code
as adopted in the State of Maryland and the State of Delaware.

 

30.                               INTENTIONALLY OMITTED.

 

63

 

31.                               WAIVER OF JURY TRIAL.  BORROWER AND LENDER BY ITS ACCEPTANCE HEREOF, FOR ITSELF AND FOR
EACH HOLDER HEREOF, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREE,
THAT:

 

(a)                                  NEITHER
BORROWER NOR LENDER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR LEGAL REPRESENTATIVE
OF ANY OF THE SAME SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON THE
NOTE, THIS AGREEMENT, THE INSTRUMENT OR ANY OTHER LOAN DOCUMENT EVIDENCING, SECURING
OR RELATING TO THE OBLIGATIONS OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR
AMONG THE PARTIES THERETO;

 

(b)                                 NEITHER
BORROWER NOR LENDER SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN
OR CANNOT BE WANED;

 

64

 

(c)                                  THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE BORROWER AND
LENDER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS;

 

(d)                                 NEITHER
BORROWER NOR LENDER HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES;

 

(e)                                  IN
NO EVENT SHALL LENDER BE RESPONSIBLE OR LIABLE FOR CONSEQUENTIAL OR PUNITIVE
DAMAGES; AND

 

(f)                                    THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS TRANSACTION
AND IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.

 

32.                               MISCELLANEOUS.

 

(a)                                  Time
shall be of the essence with respect to all of Borrower’s obligations under the
Note, this Agreement, the Instrument and the other Loan Documents.

 

65

 

(b)                                 In
the event that the Lender should become the owner of the Property, there shall
be no merger of the estate created by the Instrument with the estate or any
other interest in the Property.

 

(c)                                  The
Note, this Agreement, the Instrument, and the Loan Documents may not be
changed, amended or modified, except in a writing expressly intended for such
purpose and executed by the Lender.

 

(d)                                 The
Note, this Agreement, the Instrument and the other Loan Documents are intended
to and shall be deemed to create only the relationship of a borrower and a
lender between Borrower and Lender, and are not intended to nor shall they be
construed to create a joint venture or any relationship other than the
relationship of Borrower and Lender.

 

(e)                                  The
liability of each of the parties named as the Borrower hereunder, if more than
one, and every other party who or which is or may become liable hereunder is
and shall be joint and several in all respects.

 

(f)                                    Borrower
hereby appoints Lender as its attorney-in-fact to perform any action or execute
any document required to be taken or executed by Borrower under this Agreement,
the instrument or any of the other Loan Documents or otherwise

 

66

 

deemed necessary or
advisable by Lender in its sole discretion with respect to the Loan or the
Property; provided that Lender shall not so act as Borrower’s attorney-in-fact
prior to a Default under this Agreement or the Loan Documents related to the
Property unless Lender reasonably determines that such non-action could result
in a material adverse effect on the value of the Property.  Lender, in its sole discretion, shall have
the right, but not the obligation, to perform or refrain from performing any of
Borrower’s obligations described in the Loan Documents and such substituted
performance shall not relieve Borrower from its obligations or cure any default
under the Loan Documents.  The powers of
attorney described in this paragraph are coupled with an interest and
irrevocable, shall survive Borrower’s death, and shall not be affected by Borrower’s
disability in any manner.  As additional
security to Lender, Borrower hereby authorizes Lender to sign and file
financing statements at any time with respect to any and all items of
personally included as a portion of the Property, which maybe subject to a
security interest pursuant to the UCC, without the signature of Borrower.  Borrower will, however, at any time on
request of Lender, sign financing statements, trust receipts, security
agreements mother agreements with respect to such Property.  Upon the Borrower’s failure to do so, Lender
is authorized as the agent of Borrower to sign any such Agreement.  Borrower agrees to pay all filing

 

67

 

fees and to reimburse
Lender all reasonable costs and expenses of any kind incurred in any way in
connection with such Property.

 

(g)                                 Whenever
possible this Agreement and each provision hereof shall be interpreted in such
manner as to be effective, valid and enforceable under applicable law.  Any provisions of this Agreement which are
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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  In addition, any determination that the
application of any provision hereof to any person or under any circumstance is
illegal and unenforceable shall not affect the legality, validity and
enforceability of such provision as it may be applied to any other person or in
any other circumstance.

 

(h)                                 The
Powers of Attorney granted to Lender pursuant to this Agreement, or other
related Loan Document shall be automatically terminated upon the irrevocable
payment of the Note and release of the Instrument.

 

(i)                                     From
time to time, at the reasonable request of Borrower, Lender agrees to promptly
correct any defect, error or omission which may be discovered in the

 

68

 

contents of this
Agreement, the Instrument or in the other Loan Documents or in the execution or
acknowledgment thereof.

 

(j)                                     Borrower
shall take all action necessary to assure that Borrower’s computer-based
systems are able to operate and effectively process data including dates on and
after January l, 2000.  At the
request of Lender, Borrower shall provide Lender assurance acceptable to Lender
of Borrowers Year 2000 compatibility.

 

33.                               ADDITIONAL NON-UNIFORM PROVISIONS.

 

(a)                                  The
Borrower also waives any right under any statute heretofore or hereafter
enacted to redeem the Property so sold, or any part thereof, and the Borrower
hereby covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to the Trustee.

 

(b)                                 Notwithstanding
anything to the contrary herein, there are no Guarantors for the Loan and any
and all references to “Guarantor” or “Guarantors” are of no effect.

 

(c)                                  Notwithstanding
the provisions of paragraph 3 hereof to the contrary, if with respect to the
payment of Funds in respect of Other Impositions, Lender shall not require
Borrower to make such payments unless and until a Default has occurred,

 

69

 

or an event has occurred
which, upon the giving of notice or the passage of time, or both, would be a
Default hereunder.

 

(d)                                 The
initial paragraph of paragraph 3 is hereby amended to delete the following two
sentences:  “Lender may require the
payment of Funds in respect of Other Impositions at any time, whether or not a
Borrower’s default or payment delinquency has occurred.  Unless otherwise provided by applicable law,
Lender may require Funds for Other Impositions to be paid by Borrower in a lump
sum or in periodic installments, at Lender’s option.” and replace them with the
following:  “Lender may require the
payment of Funds in respect of Other Impositions in monthly installments, at
Lender’s option.”

 

(e)                                  (e)                                  Notwithstanding
the provisions of paragraph 5 to the contrary, the Borrower shall not be in
default so long as it provides Lender with copies of paid tax receipts of taxes
and assessments evidencing such payments within sixty (60) days of the end of
each calendar year.

 

(f)                                    Notwithstanding
the provisions of paragraphs 5, 16, 21(c) and 25 herein, it shall not be a
default under the Loan Documents for Borrower to obtain purchase money or lease
financing in connection with the purchase or lease of equipment to replace
obsolete or upgrade existing equipment or to comply with the terms of the

 

70

 

Franchise Agreements,
provided that Borrower has obtained prior approval of Lender.  Lender will cooperate with Borrower to
permit provider of such financing to obtain a first priority security interest,
provided that Lender shall retain a subordinate (or springing) security
interest in such new equipment.

 

(g)                                 Notwithstanding
the provisions of paragraph 6 to the contrary, the definition of “Major
Casualty” shall mean any damage, injury or loss to the Property by fire,
lightning, hail, windstorm, explosion, earthquake (if in a high risk area), and
such other hazards, casualties and contingencies insured in an “all-risk”
policy, for which the cost to replace or repair would exceed the lesser of
(x)$100,000.00 or (y) 25% of the outstanding principal balance of the Note.

 

(h)                                 The
provisions and requirements of paragraphs 6 and 10 concerning the handling and
distribution of insurance and condemnation proceeds are expressly subject to
the requirements and provisions set forth in the Master Insurance Trust and the
lease, if applicable.  In the event of a
conflict between the Master Insurance Trust and/or lease and the terms of
paragraphs 6 and 10, the Master Insurance Trust and/or lease shall prevail.

 

71

 

(i)                                     Notwithstanding
the provisions of paragraph 6 hereof to the contrary, Lender shall accept Fire
and Hazard insurance with a deductible clause of no more than $100,000.00.

 

(j)                                     Notwithstanding
the provisions of paragraph 9 hereof to the contrary, Borrower shall not be in
Default so long as, within forty-five (45) days after the end of each calendar
quarter, Borrower provides Lender a summary of all material communications and
notices received from Franchisor, during the preceding quarter, provided that
such disclosure does not create a breach under the terms of any Franchise
Agreements

 

(k)                                  Notwithstanding
the provisions of paragraph 10 to the contrary, the definition of “Major
Taking” shall mean any condemnation or other taking by eminent domain, or
conveyance in lieu thereof, of a portion of the Property for which a claim for
payment of an award for such taking and for damages in connection therewith
exceeds the lesser of (x) $100,000.00 or (y) twenty-five percent (25%) of the
outstanding principal balance of the Note.

 

(l)                                     The
provisions of paragraph 13 and 20 shall only apply in the event that the
Borrower becomes a landlord with respect to the Property or some portion
thereof.

 

72

 

(m)                               Notwithstanding
the provisions of paragraph 13 herein, Borrower may enter into ATM, pay phone
or video display leases without first obtaining Lender’s consent.

 

(n)                                 Notwithstanding
the provisions of paragraph 16 herein, Borrower shall not be required to pay a
1% transfer fee to Lender for any sale or transfer of the beneficial interest
in the Property or any Borrower to an Affiliate nor for any sale or transfer of
the beneficial interest in the Property or any Borrower to a company formed as
a result of any Borrower going public.

 

(o)                                 Notwithstanding
the provisions of paragraph 16 herein, Borrower shall not be in default for any
sales or transfers of beneficial interests in any Borrower, provided that such
sales or transfers, together with any prior sales (during the term of the loan)
or transfers of beneficial interests in any Borrower do not result in a change
in the controlling interests of the Borrower.

 

(p)                                 Notwithstanding
the provisions of paragraphs 21 and 25 herein, Lender agrees that existing
properties shall not be deemed a violation of these provisions.  Further, Lender agrees that it shall not be
a violation under the terms of paragraphs 21 and 25 for Borrower to operate a
Wendy’s restaurant within a three (3) mile radius of the Property, provided
that the restaurant locations are

 

73

 

consistent with the
requirements of the Borrower’s franchise agreement and territory.

 

(q)                                 Notwithstanding
the provisions of paragraph 21(c) herein, Borrower shall only be in default for
Borrower’s failure to comply with or perform, or any breach or violation of any
material warranty, material representation, material covenant, material
agreement, material prohibition, material restriction or material condition.

 

(r)                                    Paragraph
21 (g) is hereby deleted in its entirety and replaced with the following:  “the occurrence of any uncured event deemed
to be a default under any commitment and/or loan made by Lender to Borrower
with the amount in controversy being in excess of $25,000.00 which remains
uncured after the expiration of any applicable notice and/or cure period and
has not been paid off within thirty (30) days of entry, or appeal by Borrower
or covered by Borrower’s insurance, shall, at the option of Lender, be and
constitute a Default under all commitments and/or loans made to Borrower by
Lender (including, without limitation, the Note, this instrument, and the other
Loan Documents).

 

(s)                                  Paragraph
24(h) is deleted in its entirety and replaced as follows:  “There is no litigation, legal or
administrative proceeding, investigation or other action of any

 

74

 

nature commenced,
pending, or, to the knowledge of Borrower, threatened against or affecting the
Borrower, the Property or any interest or right therein or any Guarantor in
excess of $100,000.00 which has not been paid off within 30 days of entry, or
appealed by Borrower, or, is covered by Borrower’s insurance, which has not been
disclosed in detail in writing to Lender and which may involve the possibility
of any judgment or liability not fully covered by insurance, or materially or
adversely affecting any of the assets of the Borrower or Borrower’s right to
carry on business as now conducted, or affecting the continued employment of
any officer or director of Borrower.”

 

(t)                                    Notwithstanding,
the provisions of paragraph 25(a) herein, Borrower shall not be responsible for
paying any of the costs related therein when such costs relate to
securitization.

 

(u)                                 Notwithstanding
the provisions of paragraph 25(d) to the contrary Lender agrees that Borrower
shall not be required to pay Lender’s legal fees in excess of $3,500.  per site in connection with the negotiation,
preparation, and execution of the Loan Documents.

 

(v)                                 Notwithstanding
the provisions of paragraph 25(e), Lender will be deemed to have consented to
Borrower’s change in its organization documents unless Lender

 

75

 

objects in writing to
said proposed change within ten (10) business days or from receipt of Notice of
such proposed changes from Borrower.

 

(w)                               Paragraph
26 is hereby deleted in its entirety and replaced with the following:

 

“MAINTENANCE OF CASH FLOW.  During the term of this Instrument, the
Borrower shall maintain a Consolidated Fixed Charge Coverage Ratio for the
Borrower and Guarantors, if any, of not less than 1.2:1.  All calculations of the Consolidated Fixed
Charge Coverage Ratio shall be based upon the financial information furnished
by the Borrower hereunder for the twelve (12) month period ending on the last
day of each fiscal year of Borrower or more frequently as the Lender may from
time to time reasonably request.  The
initial Consolidated Fixed Charge Coverage Ratio shall be calculated for the
trailing twelve (12) month period. 
Failure by Borrower to comply with the covenants set forth herein shall
be deemed a Default under this Instrument.”

 

(x)                                   In
addition to the provisions of paragraph 28, Lender shall reimburse Borrower for
Borrower’s reasonable costs incurred by virtue of Borrower cooperating with the
securitization or participation process.

 

76

 

(y)                                 The
reference to “ten (10) days” in the second line of paragraph 28 is hereby
deleted and replaced with “ten (10) business days.”

 

(z)                                   Paragraph
29 is hereby amended as follows:

 

i.                                          The
definition of “Affiliate Guarantor” is hereby deleted in its entirety.

 

ii.             The definition of
“Cash Flow” is hereby deleted in its entirety and replaced with the
following:  “‘Cash Flow’ means, for any
period, with respect to any Obligor, an amount equal to (a) the sum of (i)
pre-tax income, (ii) interest expense, (iii) all non-cash amounts in respect of
depreciation and amortization and (iv) Non-Recurring Expenses, (v)
discretionary management fees, and (vi) Rental Payments less (b) Non-Recurring
Income, all as reflected on such Person’s financial statement for such period.”

 

iii.            The definition of
“Collateral Assignment of Liquor License” is hereby deleted in its entirety.

 

iv.            The definition of
“Consolidated Fixed Charge Coverage Ratio” is hereby deleted in its entirety
and replaced with the following: 
“‘Consolidated

 

77

 

Fixed Charge Coverage
Ratio’ means, for any period, the ratio of (a) the Borrower’s and Obligor’s, if
any, Cash Flow for such period to (b) the sum of Obligor’s Debt Service for
such period.”

 

v.                                      The
definition of “Debt Services” is hereby deleted’ in its entirety and replaced
with the following:  “`Debt Service’
means, for any period, with respect to any Obligor, all of such Obligor’s
interest payments, current portion of principal on any loans, Rental Payments
and capital lease obligations.”

 

vi.                                   The
definition of “Non-Recurring Expenses” and “Non-Recurring Income” are hereby
deleted in their entirety and replaced with the following:  “‘Non-Recurring Expenses’ and ‘Non-Recurring
Income’ mean expenses or income, as the case may be, that is unusual and
generally not reflected in any prior period or reasonably anticipated to be
incurred in any subsequent period.”

 

vii.                                The
following definition is added to paragraph 29: 
“‘Obligor” means Borrower and Guarantors on a consolidated basis.”

 

78

 

viii.                             The
definition of “Permitted Encumbrances” is hereby deleted in its entirety and
replaced with the following: 
“‘Permitted Encumbrances’ means (i) liens created by the Loan Documents;
(ii) liens for taxes not yet due and payable; (iii) liens imposed by law
incurred in the ordinary course of business, such as warehousemen’s liens; (iv)
liens for workers’ compensation, unemployment insurance and similar payments
arising in the ordinary course of business and relating to payments which are
not yet delinquent or are being contested; (v) other easements, rights-of-way,
restrictions, minor defects in title and similar matters (including those which
do not diminish, in any material respect, the value of the Property or impair,
in any material respect, the priority of the liens created by the Loan
Documents related to the Property; and a security interest relating to purchase
money (or lease) financing in connection with the purchase (or lease) of
Equipment to replace existing; obsolete Equipment or to comply with the term of
the Franchise Agreements, provided that Borrower has obtained the prior written
approval of the Lender for such purchase money (or lease) financing.”

 

79

 

(aa)                            Notwithstanding
anything contained herein to the contrary, Borrower shall be permitted to
created subordinated debt in its corporate financing without obtaining Lender’s
consent.

 

(bb)                          The Loan
is also subject to the terms and conditions of that certain Defeasance
Agreement by and between Lender and Borrower of even date herewith.

 

(Signatures
commence on following page]

 

80

 

IN WITNESS WHEREOF, the parties have executed
this Agreement or have caused the same to be executed by their respective
representatives thereunto duly authorized.

 

	
   

  	
   

  	
  BORROWER:

  
	
  Signed, sealed and delivered in the

  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
  FRIENDCO
  RESTAURANTS, INC., a Maryland corporation,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DAVID J. NORMAN

  	
   

  
	
  Name:

  	
    /s/ CHRISTINA L. DECICCO 

  	
   

  	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    /s/ JOHN RUFFIER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (CORPORATE SEAL)

  

 

81

 

	
   

  	
   

  	
  DAVCO RESTAURANTS,
  INC., a Delaware

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DAVID J. NORMAN

  	
   

  
	
  Name:

  	
    /s/ CHRISTINA L. DECICCO

  	
   

  	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    /s/ JOHN RUFFIER

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (CORPORATE SEAL)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DAVCO ACQUISITION
  HOLDING INC., a

  Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    /s/ CHRISTINA L. DECICCO

  	
   

  	
  By:

  	
  /s/ DAVID J. NORMAN

  	
   

  
	
   

  	
   

  	
   

  	
  David J. Norman, Secretary

  
	
  Name:

  	
    /s/ JOHN RUFFIER

  	
   

  	
   

  	
   

  

 

82

 

	
   

  	
   

  	
   

  	
  (CORPORATE SEAL)

  

 

83

 

ACKNOWLEDGMENT

 

STATE OF NEW YORK 

COUNTY OF NEW YORK

 

BEFORE ME, the undersigned, a Notary Public
in and for said County and State, on this day personally appeared David J.
Norman, Secretary of FRIENDCO RESTAURANTS, INC., a Maryland
corporation, who executed the foregoing instrument on behalf of FRIENDCO
RESTAURANTS, INC., a Maryland corporation, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of said corporation and that he
executed the same for the purposes and consideration therein expressed and in
the capacity therein stated for and on behalf of the corporation.

 

GIVEN UNDER MY HAND AND SEAL July 12,
2001.

 

	
   

  	
  /s/ CHRISTINA L. DECICCO

  
	
   

  	
  Notary Public - State of New York

  
	
   

  	
  Print Name:

  	
    /s/ CHRISTINA L. DECICCO

  
	
   

  	
  Commission Number:

  	
  01DE5083189

  
	
   

  	
  Commission Expires:

  	
  08/04/2001

  
					

 

84

 

ACKNOWLEDGMENT

 

STATE OF NEW YORK 

COUNTY OF NEW YORK

 

BEFORE ME, the undersigned, a Notary Public
in and for said County and State, on this day personally appeared David J.
Norman, Secretary of DAVCO RESTAURANTS, INC. and DAVCO
ACQUISITION HOLDING INC., both Delaware corporations, who executed
the foregoing instrument on behalf of DAVCO  RESTAURANTS, INC. and DAVCO ACQUISITION HOLDING INC.,
both Delaware corporations, known to me to be the person and officer whose name
is subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said corporations executed the same for the purposes and
consideration therein expressed and in the capacity therein stated for and on
behalf of the corporations.

 

GIVEN UNDER MY HAND AND SEAL July 12,
2001.

 

	
   

  	
  /s/ CHRISTINA L. DECICCO

  
	
   

  	
  Notary Public - State of New York

  

 

85

 

	
   

  	
  Print Name:

  	
    /s/CHRISTINA L. DECICCO

  
	
   

  	
  Commission Number:

  	
  01DE5083189

  
	
   

  	
  Commission Expires:

  	
  08/04/2001

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK
  MINNESOTA,

  NATIONAL ASSOCIATION f/k/a

  NORWEST BANK MINNESOTA,

  NATIONAL ASSOCIATION, as Indenture

  Trustee under that certain Indenture dated on

  November 1, 1999.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  CNL
  Financial Services, LP, a Delaware

  
	
  Name:

  	
    /s/  CATHERINE WALKER

  	
   

  	
   

  	
  general partnership, as Servicer

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    /s/  SUSAN K. TAYLOR

  	
   

  	
   

  	
  By CNL Financial Services GP Corp., a 

  
								

 

86

 

	
   

  	
   

  	
  Delaware corporation General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/  JOHN L.
  FARREN

  
	
   

  	
   

  	
  Name:

  	
    John L. Farren

  
	
   

  	
   

  	
  Title:

  	
    Senior Vice President

  
						

 

ACKNOWLEDGMENT

 

STATE OF FLORIDA

COUNTY OF ORANGE

 

The foregoing instrument was acknowledged
before me July 12, 2001, by John L. Farren as Senior Vice President
of CNL
Financial Services GP Corp., a Delaware corporation, as General
Partner of CNL Financial Services, LP, a Delaware limited partnership, as
Servicer for Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee under that certain Indenture dated November 1, 1999, on behalf of
the corporation and limited partnership. 
He is personally known to me and did not take an oath.

 

	
   

  	
  /s/  CARMEN BURGOS

  
	
   

  	
  Notary Public - State of Florida

  

 

87

 

	
   

  	
  Print Name:

  	
    Carmen Burgos

  
	
   

  	
  Commission Number:

  	
  CC781501

  
	
   

  	
  Commission Expires:

  	
  October 7, 2002

  
					

 

88Exhibit 10.13

 

AGREEMENT
MODIFYING LOAN TERMS

 

This AGREEMENT MODIFYING LOAN TERMS (“Agreement”) dated as
of the 12th day of July, 2001, by and among WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, f/k/a Norwest Bank N.A., as Indenture Trustee under
that certain Indenture dated as of November 1, 1999 (“Lender”), and DAVCO
RESTAURANTS, INC., a Delaware corporation (“DavCo”), DAVCO
ACQUISITION HOLDING INC., a Delaware corporation (“Holdings”),
FRIENDCO
RESTAURANTS, INC., a Maryland corporation (“FriendCo”), and HERON REALTY
CORPORATION, a Maryland corporation (“Heron”) (DavCo and
Holdings are hereinafter referred to individually as “Borrower” and
collectively as “Borrowers”; Borrowers, FriendCo and
Heron are hereinafter collectively referred to as “Loan Parties”).

 

RECITALS

 

WHEREAS, DavCo and Holdings are the owners and operators of certain
Wendy’s restaurants located in the State of Maryland; and

 

WHEREAS, FriendCo and Heron are the owners and operators of certain
Friendly’s restaurants located in the States of Maryland, Virginia and
Delaware; and

 

WHEREAS, Lender is the holder of those certain promissory notes made by
the Loan Parties and more particularly described on Exhibit “A” attached
hereto and by this reference made a part hereof (the “Promissory Notes”),
which Promissory Notes evidence certain Loans made by Lender’s predecessors in
interest to the Loan Parties (“Loans”); and

 

WHEREAS, the Promissory Notes are secured by those certain loan
documents more particularly described on Exhibit “B” attached hereto and,
together with all instruments, certificates and other ancillary agreements
delivered in connection therewith, by this reference made a part hereof (the “Loan
Documents”), which Loan Documents are currently held by
Collateral Agent; and

 

WHEREAS, the Loan Documents encumber and affect the Wendy’s Restaurant
Properties (“Restaurants”) more particularly described on Exhibit
“C” attached hereto and by this reference made a part hereof
(the “Collateral”),
and

 

WHEREAS, the Loan Parties are parties to (a) that certain Intercreditor
and Restructuring Agreement of even date herewith, (b) that certain Collateral
Exchange and Agency Agreement of even date herewith, and that certain
Collateral Agency Agreement Regarding Wendy’s Assets (collectively, the “Workout
Documents”); and

 

WHEREAS, the Lender has agreed to be bound by certain terms of the
Workout Documents in return for the exchange of its lien against certain
Friendly’s collateral for a lien against the Collateral; and

 

 

WHEREAS, pursuant to the terms of the Workout Documents, Lender and the
Loan Parties have agreed to modify the Loan Documents as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

1.             RECITALS.  The foregoing recitals are true and correct
and are incorporated herein.

 

2.             REPRESENTATIONS AND WARRANTIES.
In order to induce Lender and Collateral Agent to enter into this Agreement,
each Loan Party hereby acknowledges, represents and warrants to Lender as
follows:

 

(a)           It is a corporation duly formed,
validly existing and in good standing under the laws of the state of its
incorporation with powers adequate to own all property owned by it, to carry
out the business conducted by it, to enter into and perform this Agreement and
the other documents and instruments executed and delivered in connection
herewith, and to carry out the transactions contemplated hereby and thereby.

 

2

 

(b)           The execution and delivery of this
Agreement and the other documents executed in connection herewith by each
Borrower and the performance of the obligations of each Borrower hereunder and
thereunder have been duly authorized by proper corporate action.

 

(c)           This Agreement, the Workout
Documents, the Promissory Notes, the Loan Documents and all other documents
executed in connection herewith constitute legal, valid and binding obligations
of the Loan Parties, enforceable in accordance with their respective terms.
This Agreement, when executed and delivered to the Lender by the Loan Parties,
creates legal, valid and binding obligations of the Loan Parties, enforceable
in accordance with the terms of the Agreement.

 

(d)           No Loan Party has any defenses,
affirmative defenses, setoffs, claims, counterclaims, rights of recoupment,
actions or causes of action of any kind or nature whatsoever against Lender,
any predecessor in interest of Lender or any of their respective past, present
or future directors, officers, employees, agents, attorneys, legal
representatives, predecessors, affiliates, successors or assigns, directly or
indirectly, arising out of, based upon, or in any manner connected with any
transaction, event, circumstance, action, failure to act, or occurrence of any
type, which occurred, existed, was taken, permitted or begun

 

3

 

prior to the
execution of this Agreement, pursuant to or in connection with any Loan, or the
terms of any of the Loan Documents, or the administration or enforcement
thereof which relates to any Property.

 

(e)           All financial statements heretofore
delivered by the Loan Parties to Lender fairly present the financial condition and
results of operations of the Loan Parties as of the dates thereof in accordance
with generally accepted accounting principles.

 

(f)            None of the Borrowers have entered
into or is bound by any agreement to sell, transfer, encumber or convey any
Restaurant or Premises or any rights thereto or interest therein to any Person,
including, without limitation, any government or governmental agency, other
than such agreement as may be set forth in the initial Lease for such
Restaurant or Premises.

 

(g)           There is no litigation or proceeding,
at law or in equity, before any federal, state, or other court or governmental
or administrative agency or any arbitrator pending or, to the knowledge of any
Loan Party, threatened against any of the Loan Parties (i) affecting any
Restaurant, Premises or Collateral, which has not been disclosed to Lender in
writing, or (ii) which could reasonably be expected to have a Material Adverse
Effect.

 

4

 

(h)           Neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein contemplated,
nor compliance with the terms and provisions hereof, has constituted or
resulted in or will constitute or result in (i) a breach of the corporate
charter or by-laws of any of the Loan Parties, or the violation of any law,
order, writ, injunction, or decree of any court or governmental department,
commission, board, bureau, agency, or instrumentality applicable to any Loan
Party, or (ii) any breach (except for a breach that has been waived) of any of
the terms, covenants, conditions, or provisions of, or constitute a default
under, any indenture, mortgage, instrument, document, agreement, or contract of
any kind to which any Loan Party may be bound or subject.

 

(i)            Each Loan Party has derived and will
derive direct benefits from this Amendment and the transactions contemplated
hereby.

 

(j)            All documents, reports,
certificates, and statements furnished to Lender by or on behalf of the Loan
Parties in connection with the transactions contemplated hereby are true,
correct, and complete; do not contain any untrue statement of material fact;
and do not omit any fact necessary to make the information contained therein
not misleading.

 

5

 

(k)           All property taxes and other taxes,
assessments, levies, license fees, permit fees and all other charges heretofore
levied, assessed, confirmed, or imposed upon, or in respect of, or which might
become a lien upon, any Restaurant or Premises have been paid in full prior to
becoming delinquent.

 

(l)            After giving effect to the
amendments set forth herein, Borrowers are in compliance with all of their
duties, covenants and obligations contained in the Loan Documents, including
without limitation, all conditions precedent to the effectiveness of this
Agreement.

 

3.             DEFINITIONS.  Notwithstanding any definitions to the
contrary in the Loan Documents, the definitions that follow shall control for
the purposes of this Agreement and all modifications to the Loan Documents
effectuated by this Agreement. In the event of a conflict between definitions,
the definitions set forth in this Agreement shall supersede any definitions in
the Loan Documents.

 

“Borrowers”:
as defined in the preamble.

 

“Budgeted Cash
Needs Amount”: As indicated by a cash flow budget

 

6

 

“Budget”:
(i) for the fiscal year ending on or about September 30, 2001, the business
plan model including projections of the consolidated and consolidating operating
budget for DavCo, Holdings and FriendCo, as prepared by DavCo as of July 2,
2001, as previously submitted to and initialed by Global Alliance Finance
Company, L.L.C. (“GAFCO”), and (ii) for all subsequent
fiscal years, the business plan model including consolidated and consolidating
projections of the operating budget for DavCo, Holdings and FriendCo as updated
by DavCo for the current fiscal year and succeeding fiscal year and delivered
to GAFCO consistent with the terms of that certain Third Amendment to Credit
Agreement by and between DavCo, Holdings and GAFCO of even date herewith, which
business plan model shall become the Budget for the purposes hereof when the
total amounts of revenues and expenses projected therein have been approved by
GAFCO.

 

“Capital Assets”:
fixed assets, both tangible (such as land, buildings, fixtures, machinery and
equipment) and intangible (such as patents, copyrights, trademarks, franchises
and good will); provided that Capital Assets shall not include any item
customarily charged directly to expense or depreciated over a useful life of
twelve (12) months or less in accordance with GAAP.

 

“Capital
Expenditures”: amounts paid or indebtedness
incurred by any Loan Party or any of their subsidiaries in connection with the
purchase or lease by such Loan Party or

 

7

 

subsidiary of
Capital Assets that would be required to be capitalized and shown on the
balance sheet of such person in accordance with GAAP.

 

“CIT”:
The CIT Group/Equipment Financing, Inc.

 

“Collateral”:
as defined in the recitals.

 

“Collateral Agency
Agreement Regarding Wendy’s Assets”: The
Collateral Agency Agreement Regarding Certain Wendy’s Assets dated as of the
date hereof among the Loan Parties, Lender, CNL Financial VII, LP, GAFCO, CIT,
SunTrust, Wells Fargo Bank Minnesota, National Association, and the Global
Franchise Trust Trustee.

 

“Collateral
Exchange and Agency Agreement”: The Collateral
Exchange and Agency Agreement dated as of the date hereof among the Loan
Parties, Lender, CIT, CNL Financial VII, LP, Wells Fargo Bank Minnesota,
National Association, CNL Financial Services, LP as collateral agent, and
GAFCO.

 

“Collateral Agency
Agreements”: Collectively, the Collateral Agency
Agreement Regarding Wendy’s Assets and the Collateral Exchange and Agency
Agreement.

 

8

 

“Disposition”:
any sale, exchange, or other disposition of an asset and any loss, theft,
damage, destruction, or taking or other eminent domain action with respect to
such asset.

 

“EBITDA”:
of any Loan Party for any period, the sum of (i) Net Income of the Loan Party
for such period plus, to the extent any of the following were deducted
in determining Net Income of the Loan Party for such period, (ii) the sum of
(A) Interest Expense of the Loan Party for such period, (B) income taxes paid
or accrued by the Loan Party during such period, (C) depreciation of fixed or
capital assets of the Loan Party during such period (D) amortization of
intangible assets of the Loan Party during such period and (E) non-recurring
expenses allowed under GAAP, all on a consolidated basis where appropriate.

 

“Fixed Charges”:
with respect to DavCo, for any period, the sum (without duplication) of (a)
Interest Expense of DavCo for such period; (b) required amortization of
Indebtedness of DavCo for such period (including, without limitation, the
Loan), and (c) Lease Expense of DavCo for such period.

 

“Fixed Charge
Coverage Ratio”: for any period of four
consecutive fiscal quarters of the Loan Parties, the ratio of (i) the sum of
EBITDA for of the Applicable Parties for such period plus, without duplication,
to the extent included in the calculation of EBITDA of the Applicable Parties,
(w) the amount of any losses recorded from the disposition of assets as part of
the liquidation of FriendCo pursuant to the Workout Documents, and (x) solely
with respect to

 

9

 

the fiscal
year ending September 30, 2001, to the extent that any restructuring expenses
and/or restructuring fees paid during such year in connection with the
execution and delivery of the Workout Documents are deducted for the purpose of
calculating EBITDA, the amount of such restructuring expenses and restructuring
fees, provided that the amount added pursuant to this clause (x) shall not
exceed $4,000,000.00, plus (y) to the extent deducted for the purposes of
calculating EBITDA, Lease Expense of the Applicable Parties for such period, us
(z) to the extent deducted for the purposes of calculating EBITDA, Extension
Condition Payments (as defined in the GAFCO Third Amendment to Credit
Agreement) made during the applicable period, to (ii) Fixed Charges of the
Applicable Parties for such period. For the purposes of this definition, the “Applicable
Party” is (1) DavCo for the purpose of determining the Fixed
Charge Coverage Ratio of DavCo and (2) Holdings and all of its subsidiaries for
the purpose of determining the Fixed Charge Coverage Ratio of the Holdings on a
consolidated basis.

 

“Friendly’s
Collateral Agent”: The Collateral Agent under the
Collateral Exchange and Agency Agreement Regarding Friendly Assets.

 

“GAFCO”:
Global Alliance Finance Company, L.L.C.

 

“Intercreditor and
Restructuring Agreement”: The Intercreditor and Restructuring
Agreement dated as of the date hereof Date among the Loan Parties, Lender, CNL
Financial VII, LP, Wells Fargo Bank Minnesota, National Association, CNL
Financial Services,

 

10

 

LP, as
collateral agent, the Global Alliance Finance Company, U.S. Bank National
Association, CIT, and SunTrust.

 

“Interest Expense”:
with respect to DavCo for any period, the amount of interest expense, both
expensed and capitalized, of DavCo, determined in accordance with GAAP, for
such period on the aggregate principal amount of its Indebtedness (including,
without limitation, the Loan).

 

“Lease Expense”:
with respect to DavCo for any period, the aggregate amount of fixed and
contingent rentals payable by DavCo during such period with respect to leases
of real and personal property (including, without limitation, any such rentals
payable in respect of the Premises).

 

“Loan Parties”:
as defined in the preamble.

 

“Material Adverse
Change”: with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business or properties of DavCo, (b) the ability of
DavCo to perform its

 

11

 

obligations
under any of the Loan Documents, or (c) the legality, validity or
enforceability of this Agreement or any of the Loan Documents, the Collateral
Agency Agreements, the Intercreditor Agreement, or the New CNL Amendment.

 

“Permitted
Encumbrances”: (a) Liens for taxes not yet due and
payable or being actively contested as permitted by the Loan Documents; (b)
carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business, payment for which is not yet
due or which are being actively contested in good faith and by appropriate,
lawful proceedings; (c) pledges or deposits in connection with worker’s
compensation, unemployment insurance and other social security legislation; (d)
deposits to secure the performance of utilities, leases, statutory obligations
and surety and appeal bonds and other obligations of a like nature arising by
statute, in the ordinary course of business or under customary terms regarding
depositary relationships on deposits held by financial institutions with whom
Borrower has a banker-customer relationship; (e) typical restrictions imposed
by licenses and leases of software (including location and transfer
restrictions); (f) Liens in favor of Lender; (g) Liens existing and created
pursuant to the Restructuring Documents; (h) imperfections of title, none of
which, individually or in the aggregate, materially detracts from the value of
the affected property, or materially impairs the use of the affected property
in the manner such property is currently being used by the business, or
materially impairs the operation of the business; (i) zoning or land use
ordinances, none of which materially detracts from the value of

 

12

 

the affected
property, or impairs the use of the affected property in the manner such
property is currently being used by the affected Person, or which impairs the
operation of the business of the affected Person; (j) any exception to title,
acceptable to Lender, which are contained in the title insurance policies
delivered in connection herewith; (k) statutory Liens for the benefit of the
landlord and fee owner of the property, if different, and Liens permitted under
the applicable lease and sublease agreements; (1) Liens in existence on the
Closing Date (other than on the Property) and disclosed by the Borrower; (m)
Liens securing debt of a subsidiary to the Borrower (other than on the
Property) consisting of judgment or judicial attachment liens; provided that
the enforcement of such liens is effectively stayed or payment of which is
covered in full (subject to a customary deductible); (n) Liens securing
obligations in respect of operating and equipment leases; (o) Liens arising
pursuant to “build to suit” leases; and (p) Liens arising pursuant to the
acquisition of Property located in the Mills Mall in Anne Arundel County,
Maryland.

 

“Restructuring
Documents”: means the Intercreditor Agreement
dated as of July 3, 2001, along with each of the following agreements, as each
such agreement is defined in the Intercreditor Agreement: (a) the GAFCO Credit
Agreement; (b) the CIT Franchise Loan Agreement; (c) the SunTrust Loan
Agreement; (d) the CNL F7 FriendCo Loan Documents; (e) the CNL F7 DavCo Loan
Documents; (f) the CNL FLP DavCo Loan Documents; (g) the CNL 99-1 FriendCo Loan
Documents; (h) the Global Franchise Trust Loan Documents; (i) the

 

13

 

Collateral
Exchange and Agency Agreement; (j) the Collateral Exchange Agreement Regarding
Wendy’s Assets; and all documents required by the terms of any of the
Restructuring Documents to be executed or delivered on the date hereof.

 

“Security Document”:
the collective reference to (a) the Leasehold Mortgages, the Mortgages, the
Security Agreement and the Escrow Agreement, (b) all mortgages, deeds of trust,
security agreements and other documents pursuant to which collateral is granted
to the Wendy’s Collateral Agent, and (c) all mortgages, deeds of trust,
security agreements and other documents pursuant to which collateral is granted
to the Friendly’s Collateral Agent.

 

4.             REPORTING COVENANTS.  All provisions contained in the Loan
Documents relating to the provision of financial reports and/or reporting of
financial information by the Borrowers to the Lender are hereby deleted in
their entirety and replaced with the requirements set forth below. The Loan
Parties shall be responsible for providing the following information to Lender:

 

(a)           Financial Reporting.

 

(i)            As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of the
Borrowers, a copy of the consolidating balance sheet of Holdings and its “Consolidated

 

14

 

Subsidiaries”
(DavCo and FriendCo) as at the end of such year and the related consolidating
statements of income and retained earnings and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by Arthur Andersen LLP or
other independent certified public accountants of nationally recognized
standing; and

 

(ii)           As soon as available, but in any
event within forty-five (45) days after the end of the first three quarterly
periods of each fiscal year of the Borrowers, the unaudited consolidating
balance sheet of Holdings and its Consolidated Subsidiaries as at the end of
such quarter and the related consolidated statements of income of Holdings and
its Consolidated Subsidiaries and retained earnings and of cash flows of
Holdings and its Consolidated Subsidiaries for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer, as being fairly stated in all material respects (subject to normal
year-end audit adjustments);

 

15

 

(iii)          As soon as available, but in any event
within thirty (30) days after the end of each calendar month, the unaudited
consolidated and consolidating balance sheet of Holdings and its Consolidated
Subsidiaries as at the end of such month and the related unaudited consolidated
and consolidating statements of income and retained earnings and of cash flows
of Holdings and its Consolidated Subsidiaries for such quarter and the portion
of the fiscal year through the end of such month, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments);

 

(iv)          As soon as available, but in any event
not later than thirty (30) days after the end of each calendar month, an
unaudited statement, in form satisfactory to the Lender of the sales, gross
profits and losses during such month for each restaurant;

 

(v)           Within thirty (30) days after the end
of each September, December, March and June thereafter, the Borrower’s
auditors, Arthur Andersen LLP, shall deliver to Lender an expense and free cash
flow reconciliation for the immediately preceding fiscal quarter.;

 

16

 

All such financial statements shall be completed and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as the
case may be, and disclosed therein). The financial statements described above
(including, without limitation, the statements referred to in clause (iv))
shall be made available to the Lender on computer disk, or in other form
reasonably satisfactory to the Lender.

 

(b)           Certifications.

 

(i)            Concurrently with the delivery of
the financial statements referred to in Paragraph 7(a)(i) above, a certificate
of the independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefore no
knowledge was obtained of any Default or Event of Default under the Loan
Documents, Workout Documents’ or this Agreement, except as specified in such
certificate;

 

(ii)           Concurrently with the delivery of the
financial statements referred to in Paragraphs 7(a)(ii), 7(a)(iii) and 7(a)(iv)
above, a certificate of a Responsible Officer (i) stating that, to the best of
such Responsible

 

17

 

Officer’s
knowledge, the Borrowers during such period have observed or performed all of
their covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to be observed, performed or
satisfied by them, and that such Responsible Officer has obtained no knowledge
of any default or event of default under any Loan Documents except as specified
in such certificate, and (ii) showing in detail the calculations supporting
such Responsible Officer’s certification of the Borrowers’ compliance with the
requirements of this Paragraph 6;

 

(c)           Financial Projections and
Operating Budget.  Notwithstanding
anything contained in the Loan Documents to the contrary, not later than fifteen
(15) days prior to the end of each fiscal year of the Borrowers, a copy of the
projections by the Obligors of the operating budget and cash flow budget of
Holdings, DavCo and FriendCo for the succeeding fiscal year, such projections
to be accompanied by a certificate of a Responsible Officer to the effect that
such projections have been prepared on the basis of sound financial planning
practice and that such Responsible Officer has no reason to believe they are
incorrect or misleading in any material respect;

 

18

 

(d)           Investor Communications.  Within five (5) days after the same are
sent, copies of all financial statements and reports which Borrowers send to
their stockholders, and within five (5) days after the same are filed, copies
of all financial statements and reports which the Borrowers may make to, or
file with, the Securities and Exchange Commission or any successor or analogous
governmental authority;

 

(e)           Proof of Insurance.  During the month of October in each calendar
year, a report of a reputable insurance broker with respect to the insurance
maintained by the Borrowers in accordance with the requirements set forth in
the Loan Documents, and such supplemental reports as the Lender may from time
to time request; and

 

(f)            Additional Information.  Notwithstanding the foregoing, Borrowers
shall provide promptly to Lender such additional financial and other
information as the Lenders may from time to time reasonably request.

 

5.             FIXED-CHARGE COVERAGE RATIO.  Any current covenants or requirements
contained in the Loan Documents regarding the Loan Parties’ or the Borrowers’
duty to maintain a certain Fixed-Charge Coverage Ratio, or any other financial
covenants or maintenance tests, are hereby deleted in their entirety and
replaced with the following: “Loan

 

19

 

Parties agree, so long as
any amount remains owing to Lender under the Loan Documents, the Loan Parties
shall not:

 

(a)           Permit the Fixed Charge Coverage
Ratio of DavCo for (i) the five (5) consecutive fiscal quarters ending on the
last day of Borrowers’ 2002 fiscal year (i.e., approximately September 30,
2002) to be less that 1.1 to 1.0, and (ii) any period of four (4) consecutive
fiscal quarters ending (A) after the first day of Borrowers’ 2003 fiscal year
(i.e., approximately October 1, 2,002) and on and before the end of Borrowers’
2003 fiscal year (i.e., approximately September 30, 2003) to be less than 1.15
to 1:00, and (B) on and at all times and after the first day of Borrower’s 2004
fiscal year (i.e., approximately October l, 2003) to be less than 1.2 to 1:0.

 

(b)           Permit the Fixed Charge Coverage
Ratio of Holdings on a consolidated basis (i) for the three (3) consecutive
fiscal quarters ending on March 31, 2002 to be less than 1.0 to 1.0, and (ii)
for any period of four (4) consecutive fiscal quarters ending (A) after March
31, 2002 and on and before the last day of Borrowers’ 2002 fiscal year (i.e.,
approximately September 30, 2002) to be less than 1.05 to 1:0, (B) after the
last day of Borrowers’ 2002 fiscal year and on and before the last day of
Borrowers’ 2003 fiscal year (i.e., approximately September 30, 2003) to be less
than 1.1 to 1:0, (C) after the last day of Borrowers 2003 fiscal

 

20

 

year and on and
before the last day of Borrowers’ 2004 fiscal year (i.e., approximately
September 30, 2004) to be less than 1.15 to 1:0, and (D) on and at all times
after the first day of Borrowers’ 2005 fiscal year to be less than 1.2 to 1:0.”

 

6.             NEGATIVE PLEDGE.  Any provisions in any of the Loan Documents
prohibiting liens and encumbrances are hereby deleted in their entirety and
replaced with the following provision: “The Loan Parties shall not encumber or
otherwise place or allow the placement of any lien or encumbrance against the
Property, except for such liens and encumbrances as are contemplated by and
allowed under the definition of “Permitted Encumbrances” set forth above.

 

7.             EVENTS OF DEFAULT.  All Defaults, Events of Default or other
events giving rise to the right of Lender to accelerate the indebtedness due
under the Promissory Notes, the Instrument, or the other Loan Documents are
hereby deleted in their entirety and replaced with the matters set forth below.
It shall be an Event of Default under the Loan Documents if any of the
following events shall occur and be continuing:

 

(a)           Any Borrower shall fail to pay any
principal of any Loan when due in accordance with the terms thereof or hereof;
or any Borrower shall fail to pay any interest on any Loan, or any other amount
payable hereunder or under the

 

21

 

other Loan
Documents or the Commitment Letter, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or

 

(b)           Any representation or warranty made
or deemed made by any Borrower herein or in any of the Workout Documents or in
any of the Loan Documents or which is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement, the Workout Documents or any such other Loan Document
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made; or

 

(c)           Any Borrower shall default in the
observance or performance of any obligation, responsibility or duty set forth
in the Loan Documents to (a) continuously maintain its corporate existence in
good standing in each respective State in which it does business, (b) provide
notice to Lenders of events affecting the Collateral or the Borrowers’
corporate existence, or (c) refrain from taking any action at the corporate
level or with regard to the Collateral; or

 

(d)           Any Borrower shall default in the
observance or performance of any obligation, responsibility or duty contained
in this Agreement, the Workout

 

22

 

Documents, or any
other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days following notice or actual knowledge; or

 

(e)           Any Borrower shall fail to perform
any of its obligations under any Franchise Agreement or any other Franchise Document
and such failure shall not have been cured or waived on or before the first
date on which such Franchise Agreement or such other Franchise Document may be
terminated by reason of such failure; or (ii) Any Borrower shall fail to
perform any of its obligations under any lease or any other material
contractual obligation and such failure shall continue for thirty (30) days
after notice from the Lender; or

 

(f)            Any Borrower shall (i) default in
any payment of principal of or interest of any Indebtedness, including any
forward commitments entered into between the Lender and Borrowers and any loans
made pursuant thereto, (other than the Loans) or in the payment of any
Guarantee Obligation, beyond the period of grace (not to exceed 30 days), if
any, provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or defaults shall
have occurred is at least $1,000,000; or (ii) default in the observance or
performance of any other agreement or condition

 

23

 

relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable; or

 

(g)           Any Loan Party shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or any Borrower shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against any Borrower any
case, proceeding or other action of a nature referred to in clause (i) above
which (A)

 

24

 

results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against any Borrower any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Any Borrower shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or

 

(h)           Any Loan Party shall engage in any
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of any Borrower or any commonly controlled entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which

 

25

 

Reportable Event
or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Lenders, likely to result in the termination of such
Plan for purposes of Title N of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title N of ERISA, (v) DavCo or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Lender is likely
to, incur any liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multi-Employer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or

 

(i)            One or more judgments or decrees
shall be entered against any Borrower involving in the aggregate a liability
(not paid or fully covered by insurance) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or

 

(j)            Any of the Loan Documents or
Franchise Documents shall cease, for any reason, to be in full force and
effect, or any Borrower shall so assert or (ii)

 

26

 

the Lien created
by any of the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or

 

(k)           Borrowers shall fail to liquidate the
Collateral and deliver the Net Proceeds to CFS as set forth herein and in the
Workout Documents, and within the time set forth in Exhibit E.

 

(l)            Loan Parties shall fail to deposit
any Excess Cash Flow to the Excess Cash Flow Account as set forth herein and in
the Collateral Exchange Agreement Regarding Certain Wendy’s Assets.

 

(m)          Any Event of Default arising out of or
under the Workout Documents.

 

(n)           Any Material Adverse Change shall
occur.

 

(o)           DavCo shall default in any material
respect in the payment or performance of any Material Agreement, which default
entitles a party to such Material Agreement to terminate or repudiate such
contract, and such party does terminate or repudiate such contract.

 

27

 

8.             NO DISTRIBUTIONS OR INCREASE IN
PAYMENTS TO SHAREHOLDERS OR MANAGEMENT PRIOR TO PAYMENT OF LENDERS’ CLAIMS.  Until such time as all amounts due and owing
under any and all promissory notes currently existing and payable to Lender,
GAFCO, CIT, SunTrust and their successors and/or assigns have been repaid in
full to Lender, GAFCO, CIT, SunTrust and their successors and/or assigns,
Borrowers shall make no debt repayments to affiliates or owners, equity advance
loan repayments to affiliates or owners, or owner distributions (other than
repayments to DavCo for monies advanced to support FriendCo operations as
permitted under the Intercreditor Agreement and GAFCO Third Amendment to Credit
Agreement; for the purposes of this paragraph, any payment by DavCo of interest
on the CNL F7 DavCo Loans, CNL F7 FriendCo Loans, or the CNL FLP DavCo Loan,
will be deemed and advance by DavCo to FriendCo). The violation of this section
shall constitute a Default hereunder and under the Loan Documents.

 

9.             RELEASE OF CLAIMS BY LOAN
PARTIES.

 

(a)           Release of Lender. Each of the
Loan Parties, each for itself and its successors and assigns, hereby knowingly
and voluntarily RELEASES, DISCHARGES, and FOREVER WAIVES and RELINQUISHES any
and all claims, demands, obligations, liabilities, defenses, affirmative
defenses, setoffs, rights of recoupment, counterclaims, actions, and causes of
action of whatsoever kind or nature, whether known or unknown, which it has,
may have, or might

 

28

 

have or may assert
now or in the future against the Lender, its parents or subsidiaries,
predecessors in interest, or any of their past, present, or future directors,
officers, employees, agents, attorneys, legal representatives, predecessors,
affiliates, successors, or assigns, directly or indirectly, arising out of,
based upon, or in any manner connected with any transaction, event,
circumstance, action, failure to act, or occurrence of any sort or type,
whether known or unknown, which occurred, existed, was taken, permitted, or
begun prior to the execution of this Agreement, pursuant to or in connection
with any Loan, the administration or enforcement of the Loans or any of the
terms of any of the Loan Documents, or which was related or connected in any
manner, directly or indirectly, to any Restaurant or Collateral. Each of the
Loan Parties hereby acknowledges and agrees that the execution of this
Agreement by Lender shall not constitute an acknowledgment of or admission by
Lender of the existence of any such claims or of liability for any matter or
precedent upon which any liability may be asserted. Each of the Loan Parties
hereby further acknowledges and agrees that, to the extent that any such claims
may exist, they are of a speculative nature so as to be incapable of objective
valuation and that, in any event, the value to Loan Parties of the covenants
and obligations of Lender contained in this Agreement and the other documents
and instruments executed and delivered in

 

29

 

connection
herewith substantially and materially exceeds any and all value of any kind or
nature whatsoever of any such claims.

 

(b)           No Assignment. Each of the
Loan Parties warrants and represents to Lender that no Borrower has sold,
assigned, transferred, conveyed or otherwise disposed of any claims which are
the subject of this Section. The inclusion of this provision shall not be
deemed to be an admission by Lender that any such inclusion exist.

 

(c)           Discovery of Unknown or Different
Facts. Each of the Loan Parties acknowledges and agrees that the facts with
respect to which the release of claims contained in this Section is executed
may hereafter be found to be different from the facts now believed by Loan
Parties to be true, and each of the Loan Parties expressly accepts and assumes
the risks of such possible differences and agrees that the release of claims
contained in this Section shall be and remain effective notwithstanding such
differences in fact.

 

10.           WAIVER.  The Loan Parties acknowledge that they have
failed to meet various covenants and agreements under the Loan Documents, thus
causing Events of Default under each of the Loan Documents (the “Existing
Events of Default”). Subject to the terms and

 

30

 

provisions of this
Agreement and the Workout Documents, Lender hereby waives such Existing Events
of Default.

 

11.           OTHER LIENS.  Notwithstanding anything contained in the
Loan Documents (including, but not limited to, the definition of “Permitted
Encumbrances” contained in the Instrument) to the contrary, Lender expressly
acknowledges and permits the Loan Parties to obtain such financing and place
such liens against its properties as set forth in and contemplated by the
Restructuring Documents.

 

12.           NOTICES.  In addition to the parties to be provided
notice under the Loan Documents, copies of all notices shall also be provided
to: James H.M. Sprayregen, Kirkland & Ellis, 200 East Randolph Drive,
Chicago, IL 60601.

 

13.           REVIEW BY LOAN PARTIES WITH
INDEPENDENT COUNSEL.  EACH OF THE
LOAN PARTIES ACKNOWLEDGES AND AGREES THAT (A) IT HAS CAREFULLY READ AND
UNDERSTANDS ALL OF THE TERMS OF THIS AMENDMENT; (B) IT HAS EXECUTED THIS
AGREEMENT FREELY AND VOLUNTARILY, AFTER HAVING CONSULTED WITH ITS INDEPENDENT
LEGAL COUNSEL AND AFTER HAVING HAD ALL OF THE TERMS OF THIS AGREEMENT EXPLAINED
TO IT BY ITS INDEPENDENT LEGAL COUNSEL; (C) THE WAIVERS AND RELEASES CONTAINED
IN THIS AGREEMENT ARE REASONABLE, NOT CONTRARY

 

31

 

TO PUBLIC POLICY OR LAW,
AND HAVE BEEN INTENTIONALLY, INTELLIGENTLY, KNOWINGLY, AND VOLUNTARILY AGREED
TO BY IT; (D) THE WAIVERS AND RELEASES CONTAINED IN THIS AGREEMENT HAVE BEEN
AGREED TO BY EACH BORROWER WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE AND
CONSEQUENCES, INCLUDING FULL KNOWLEDGE OF THE SPECIFIC NATURE OF ANY RIGHTS OR
DEFENSES WHICH BORROWERS HAVE AGREED TO WAIVE OR RELEASE PURSUANT TO THIS
AGREEMENT; (E) IT HAS HAD A FULL AND ADEQUATE OPPORTUNITY TO NEGOTIATE THE
TERMS CONTAINED IN THIS AGREEMENT; (F) IT IS EXPERIENCED IN AND FAMILIAR WITH
LOAN TRANSACTIONS OF THE TYPE EVIDENCED BY THIS AGREEMENT; AND (G) THE WAIVERS
AND RELEASES CONTAINED IN THIS AGREEMENT ARE MATERIAL INDUCEMENTS TO THE
LENDER’S EXECUTION OF THIS AGREEMENT, AND THE LENDER HAS RELIED ON SUCH WAIVERS
AND RELEASES IN ENTERING INTO THIS AGREEMENT AND WILL CONTINUE TO RELY ON SUCH
WAIVERS AND RELEASES IN ANY RELATED FUTURE DEALINGS WITH BORROWERS.

 

14.           EXPENSES.  The Loan Parties shall reimburse the Lender
in immediately available funds on the date hereof for the fees and expenses
incurred by Lender (including, without limitation, reasonable attorneys’ and
paralegals’ fees and expenses) in connection with negotiating, executing and
completing this Agreement and the Workout Documents. Nothing

 

32

 

herein shall (a) diminish
or otherwise limit any obligation that the Loan Parties may have under the Loan
Documents with respect to payment of the Lender’s costs and expenses, or (b)
prevent the Lender from requiring the Loan Parties to pay all such costs and
expenses.

 

15.           COUNTERPARTS.  This Agreement may be executed by one or
more of the parties to this Agreement and any number of separate counterparts,
each of which when so executed, shall be deemed an original and all said counterparts
when taken together shall be deemed to constitute but one and the same
instrument.

 

16.           SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefit of each party hereto and their successors and assigns.

 

17.           SURVIVAL.  All covenants, agreements, representations,
and warranties made in this Agreement and in the Loan Documents shall survive
the execution of this Agreement and shall continue in full force and effect.

 

18.           FURTHER ASSURANCE.  The Loan Parties hereby agree from time to
time, as and when requested by the Lender, to execute and deliver or cause to
be executed and delivered, all such documents, instruments and agreements and
to take or cause to be taken such further or other action as the Lender may
reasonably deem necessary or desirable in order to

 

33

 

carry out the intent and
purposes of this Agreement, the Loan Documents, and the Workout Documents.

 

19.           WAIVER OF JURY TRIAL.  EACH PARTY TO THIS AGREEMENT AGREES THAT ANY
SUIT, ACTION, OR PROCEEDING BROUGHT OR INSTITUTED BY ANY PARTY HERETO OR ANY
SUCCESSOR OR ASSIGN OF ANY PARTY ON OR WITH RESPECT TO THIS AGREEMENT, ANY OF
THE DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT, ANY OF THE LOAN
DOCUMENTS OR WHICH IN ANY WAY RELATES, DIRECTLY OR INDIRECTLY TO THE
OBLIGATIONS UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY EVENT,
TRANSACTION OR OCCURRENCE ARISING OUT OF OR IN ANY WAY CONNECTED THEREWITH, OR
THE DEALINGS OF THE PARTIES WITH RESPECT THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT A JURY. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. LOAN PARTIES ACKNOWLEDGE AND
AGREE THAT THIS PROVISION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AMENDMENT
BETWEEN THE PARTIES HERETO AND THAT THE LENDER WOULD NOT AGREE TO THE
AGREEMENTS SET FORTH HEREIN IF THIS WAIVER OF JURY TRIAL PROVISION WERE NOT A
PART OF THIS AGREEMENT.

 

34

 

20.           GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF FLORIDA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

21.           FURTHER ASSURANCES COOPERATION.  Prior to and at all times following the execution
of this Agreement, each of the Loan Parties agrees to execute and deliver, or
to cause to be executed and delivered, such documents and to do, or cause to be
done, such other acts and things as might reasonably be requested by Lender to
assure that the benefits of this Agreement are realized.

 

22.           RELATIONSHIP OF PARTIES.  Nothing contained in this Amendment or the
other Loan Documents constitutes or shall be construed as the formation of a
partnership, joint venture, tenancy-in-common, or any other form of
co-ownership, between the Lender and Borrowers or any other person or the
creation of any confidential or fiduciary relationship of any kind between the
Lender and Loan Parties or any other person. The Lender shall not be deemed to
be a partner, joint venturer, co-tenant, trustee, or fiduciary with respect to
any Loan Party or any other person as a result of this Amendment, any of the
other Loan Documents, or any of the transactions contemplated by this Amendment
or any of the other Loan Documents. Loan Parties acknowledge and agree that the
Lender has at all times acted and shall at all times continue to be acting only
as a lender to Loan Parties within the normal and usual scope of activities of
a lender.

 

35

 

23.           MISCELLANEOUS.  This Agreement, the exhibits hereto and
other documents executed in connection herewith, constitute the entire
agreement concerning this subject matter and supersede any prior or
contemporaneous representations or agreements not contained herein concerning
the subject matter of this Agreement.    Section
headings used herein are for convenience only and shall not be used to
interpret any term hereof. Masculine, feminine, or neuter gender and the
singular and the plural number, shall each be considered to include the other
whenever the context so requires. If any Party consists of more than one
person, each such person shall be jointly and severally liable.

 

24.           SEVERABILITY.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.

 

25.           AMENDMENT.  Neither this Agreement nor any of the
provisions hereof may be changed, waived, discharged or terminated, except by
an instrument in writing and signed by each of the parties against whom
enforcement of the change, waiver, discharge or termination is sought.

 

36

 

26.           LIMITATION OF MODIFICATIONS.  The Loan Documents remain in full force and
effect and in accordance with their respective terms, remain valid and binding
obligations of Loan Parties and (except as previously modified or amended in
writing by the parties and as expressly modified and amended herein) have not
been modified or amended, and are hereby ratified by the parties hereto. The
liens, security interests and assignments created by the Loan Documents are and
continue to be valid, effective, properly perfected and enforceable and are
hereby ratified and confirmed in all respects. Notwithstanding the foregoing,
Lender agrees and covenants that, to the extent the terms of any of the Loan
Documents are inconsistent with the agreements contained herein, the Lender
shall not take any actions which are inconsistent with the provisions contained
herein. In the event of a conflict between the terms of this Agreement and any
Loan Document, the terms of this Agreement shall prevail.

 

[Signatures commence on the following page]

 

37

 

IN WITNESS WHEREOF, the patties have executed this Amendment as of the
date set forth above.

 

 

	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION f/k/a NORWEST

  BANK MINNESOTA, N.A., as Indenture Trustee

  under that certain Indenture and Servicing Agreement

  dated as of November l, 1999

  
	
   

  	
   

  
	
   

  	
  By: CNL
  FINANCIAL SERVICES, LP, a Delaware

  limited partnership, as attorney-in-fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  JOHN L. FARREN

  	
   

  
	
   

  	
   

  	
  Name:  John L. Farren

  
	
   

  	
   

  	
  Title:  Senior Vice President

  

 

38

 

	
   

  	
  DAVCO RESTAURANTS, INC.,
  a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
  /s/  DAVID J. NORMAN

  	
   

  
	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATE
  SEAL)

  
	
   

  	
   

  
	
   

  	
  DAVCO ACQUISITION HOLDING INC.,
  a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  /s/  DAVID J. NORMAN

  	
   

  
	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATE SEAL)

  
	
   

  	
   

  
	
   

  	
  FRIENDCO RESTAURANTS, INC., a
  Maryland

  
				

 

39

 

	
   

  	
  corporation

  
	
   

  	
   

  
	
   

  	
  /s/  DAVID J. NORMAN

  	
   

  
	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATE
  SEAL)

  
	
   

  	
   

  
	
   

  	
  HERON REALTY CORPORATION, a
  Maryland

  corporation

  
	
   

  	
   

  
	
   

  	
  /s/  DAVID J. NORMAN

  	
   

  
	
   

  	
  David J. Norman, Secretary

  
	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATE
  SEAL)

  
						

 

40

 

EXHIBIT “A”

 

(Promissory Notes)

 

Promissory Note from FriendCo Restaurants, Inc. to and in favor of CNL
Financial Services, Inc. in the amount of $1,288,000.00, dated May 11, 1999.

 

Promissory Note from FriendCo Restaurants, Inc. to and in favor of CNL
Financial Services, Inc. in the amount of $1,020,000.00, dated May 11, 1999.

 

Promissory Note from FriendCo Restaurants, Inc. to and in favor of CNL
Financial Services, Inc. in the amount of $972,000.00, dated May 17, 1999.

 

Promissory Note from FriendCo Restaurants, Inc. to and in favor of CNL
Financial Services, Inc. in the amount of $930,000.00, dated May 17, 1999.

 

Promissory Note from FriendCo Restaurants, Inc., DavCo Restaurants,
Inc., and DavCo Acquisition Holding, Inc. to and in favor of CNL APF Partners,
LP in the amount of $882,000.00, dated December 13, 1999.

 

41

 

Promissory Note from FriendCo Restaurants, Inc., DavCo Restaurants,
Inc., and DavCo Acquisition Holding; Inc. to and in favor of CNL APF Partners,
LP in the amount of $1,477,000.00, dated December 13, 1999.

 

Promissory Note from FriendCo Restaurants, Inc., DavCo Restaurants,
Inc., and DavCo Acquisition Holding, Inc. to and in favor of CNL APF Partners,
LP in the amount of $750,000.00, dated December 13, 1999.

 

Promissory Note from FriendCo Restaurants, Inc., DavCo Restaurants,
Inc., and DavCo Acquisition Holding, Inc. to and in favor of CNL APF Partners,
LP in the amount of $1,750,000.00, dated December 13, 1999.

 

Promissory Note from FriendCo Restaurants, Inc., DavCo Restaurants,
Inc., and DavCo Acquisition Holding, Inc. to and in favor of CNL APF Partners,
LP in the amount of $672,000.00, dated March 28, 2000.

 

42

 

EXHIBIT “B”

 

(Loan Documents)

 

1.             Loan Agreement by and between Wells
Fargo Bank Minnesota in its capacity as Indenture Trustee and the Loan Parties.

 

2.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Baltimore County,
Maryland.

 

3.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in the City of
Baltimore, Maryland.

 

4.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Prince George’s
County, Maryland.

 

43

 

5.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Howard County,
Maryland.

 

6.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in St. Mary’s County,
Maryland.

 

7.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Wicomoco County,
Maryland.

 

8.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Anne Arundel County,
Maryland.

 

9.             Commercial Deed of Trust to and in
favor of Wells Fargo Bank Minnesota in its capacity as Indenture Trustee from
Loan Parties dated as of July 12, 2001 for recordation in Harford County,
Maryland.

 

10.           Assignment of Warranties, Contracts
and Permits.

 

44

 

11.           Environmental Indemnity Agreement.

 

45

 

EXHIBIT “C”

 

(List of Wendy’s Restaurants-’Collateral”)

 

Unit 150-Wendy’s restaurant located at 3620 Washington Boulevard,
Baltimore, Baltimore County, MD

 

Unit 152-Wendy’s restaurant located at 8308 Annapolis Road, New
Carrollton, Prince George’s County, MD

 

Unit 153-Wendy’s restaurant located at 1589 West Nursery Road,
Linthicum, Anne Arundel County, MD

 

Unit 169-Wendy’s restaurant located at 40804 Merchant Lane, Leondardtown,
St. Mary’s County, MD

 

Unit 166-Wendy’s restaurant located at 6411 Eastern Avenue, Baltimore,
Baltimore County, MD

 

Unit 164-Wendy’s restaurant located at 5801 Clarksville Square Road,
Clarksville, Howard County, MD

 

46

 

Unit 160-Wendy’s restaurant located at 403 Punkin Court, Salisbury,
Wicomico County, MD

 

Unit 161-Wendy’s restaurant located at 498 Richie Highway, Severna,
Anne Arundel County, MD

 

Unit 159-Wendy’s restaurant located at 30272 Triangle Drive, Charlotte
Hall, Charles/St. Mary’s County, MD

 

Unit 162-Wendy’s restaurant located at 1344 Eastern Boulevard,
Baltimore, Baltimore County, MD

 

Unit 157-Wendy’s restaurant located at 11818 Reisterstown Road,
Reisterstown, Baltimore County, MD

 

Unit 158-Wendy’s restaurant located at 15400 Chrysler Drive, Upper
Marlboro, Prince George’s County, MD

 

Unit 85-Wendy’s restaurant located at 8700 Blair Road, Baltimore, MD

 

Unit 130-Wendy’s restaurant located at 1060 Joppa Farm Road,
Joppatowne, MD

 

47

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