freeedgar.com
Item 5. Other events
On April 15, 1999 Restaurant Teams International, Inc. (`the Company") entered
into an agreement (the "Loan") with LJB Holdings (the "Lender") which Loan was
later acquired by Oxford Commercial Funding in September, 1999. The loan was
obtained by the Company for the purpose of securing an additional $500,000 down
payment and extension of closing (the "Closing") for the Fatburger transaction.
The Company had been in negotiations with the Lender to finance a portion of the
remaining amounts owed to FB Holdings in order to close on the Fatburger
corporation acquisition. The Loan provided by Lender to the Company was intended
by the Company to be rolled into more permanent financing by Lender upon the
Closing. Due to circumstances which are currently being disputed by the Company
and wherein the Company is contemplating a counter suit against the Lender, the
Lender backed out of their participation in the funding for the Closing. The
Company subsequently reduced their obligation to Lender by paying all interest,
attorney fees, and one hundred thousand dollars ($100,000) in principal through
September 28, 1999. The Lender has since declared a default of the Loan and
demanded that the Company immediately pay all amounts due under the loan
agreements or the Lender would attempt to liquidate certain shares of RTIN
common stock and additionally certain shares of Stanley L. and Carole A.
Swanson's personal RTIN holdings, to repay the obligation. The shares of stock
currently held by Lender bear a restrictive legend and cannot be sold on the
open market in the absence of an effective registration statement or an
exemption from registration. Although the Company received notice from Oxford on
March 3, 2000 of its demand for registration, the Company does not intend to
allow these shares to be sold. On December 16, 1999 the Lender filed suit in the
Northern District of Illinois against Curtis Swanson, Stanley Swanson, and
Carole Swanson, guarantors of the note seeking to enforce their rights under the
guaranty agreements, the action bears case number 99C8200. On February 22, 2000,
Oxford brought suit against the Company, also in the Northern District of
Illinois, the action bears case number 00C1048. The Company vigorously contests
the claims made by Lender in it's suit and intends to fully defend its position
and file a counter claim for failure to fulfill their commitment to fund their
committed portion of the Closing proceeds.
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