EXHIBIT 10.6
AMENDED AND RESTATED
SENIOR SUBORDINATED CREDIT AGREEMENT
AMONG
CB COMMERCIAL REAL ESTATE GROUP, INC.
and
CB COMMERCIAL HOLDINGS, INC.,
CB COMMERCIAL REAL ESTATE GROUP OF IOWA, INC.,
CB COMMERCIAL PARTNERS, INC.
CB COMMERCIAL REALTY ADVISORS, INC.,
CB COMMERCIAL BROKERAGE, INC.,
▇▇▇▇▇▇ FREMONT PROPERTY SERVICES, INC.,
CB COMMERCIAL REAL ESTATE GROUP OF HAWAII, INC.
CB COMMERCIAL REAL ESTATE FUND MANAGEMENT, INC.,
CB COMMERCIAL REAL ESTATE MANAGEMENT SERVICES, INC.,
CB COMMERCIAL ▇▇▇▇▇▇ & ▇▇▇▇▇, INC.,
▇▇▇▇▇▇ FREMONT REAL ESTATE MERCHANT CAPITAL CORPORATION,
▇▇▇▇▇▇ & ▇▇▇▇▇ N.J., INC.,
▇▇▇▇▇▇ FREMONT, INC.,
CB COMMERCIAL WAREHOUSE PROPERTY CORP.,
▇.▇. ▇▇▇▇▇▇ INVESTMENTS, INC.
▇.▇. MELODY & COMPANY, and
▇.▇. ▇▇▇▇▇▇ & COMPANY OF CALIFORNIA
as Guarantors
and
SUMITOMO FINANCE (DUBLIN) LIMITED
Dated as of November 25, 1996
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AMENDED AND RESTATED
SENIOR SUBORDINATED CREDIT AGREEMENT
This Amended and Restated Senior Subordinated Credit Agreement is
dated as of November 25, 1996 (this "Agreement"), and entered into by and among
CB Commercial Real Estate Group, Inc. (formerly known as "Coldwell Banker
Commercial Group, Inc."), a Delaware corporation ("Company"), CB Commercial
Holdings, Inc., a Delaware corporation ("CB Holdings"), and the other parties
listed on the signature pages hereto (collectively with CB Holdings, the
"Guarantors"), and Sumitomo Finance (Dublin) Limited, a limited liability
company organized and existing under the laws of the Republic of Ireland (the
"Lender").
RECITALS
WHEREAS, the Company and the Lender desire to amend and restate the
terms and provisions of the Senior Subordinated Credit Agreement dated as of
July 20, 1990, as amended to the date hereof, between the Company and the Lender
upon the terms and conditions set forth in this Agreement; and
WHEREAS, as of the date hereof, there are outstanding $62,000,000
representing original principal amount and $ 8,916,216.37 representing Deferred
Interest (as hereinafter defined); and
WHEREAS, the Guarantors have agreed to guarantee the Obligations (as
hereinafter defined) pursuant to the Guarantee set forth in Article X hereof;
and
WHEREAS, CB Holdings pledged the Collateral (as hereinafter defined)
to secure its Guarantee.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company and the Lender agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
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Except as otherwise expressly provided or unless the context otherwise
requires, the terms defined in this Section 1.1 shall, for all purposes of this
Agreement, have the meanings herein specified, the following definitions to be
equally applicable to both the singular and plural forms of any of the terms
herein defined:
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"ADJUSTED CONSOLIDATED NET WORTH" means, at any date, Consolidated Net
Worth at such date, plus $236,000,000.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise. Notwithstanding the foregoing, in no
event shall the Lender or any of its Affiliates be deemed to be an Affiliate of
CB Holdings, the Company or any subsidiary of the Company.
"AGENT" means any agent appointed by the Lender to administer the Loan
pursuant to Section 9.20 of this Agreement.
"AGENCY AGREEMENT" has the meaning ascribed to such term in Section
9.20 of this Agreement.
"AGREEMENT" means this Amended and Restated Senior Subordinated Credit
Agreement dated as of November 25, 1996, as it may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"APPLICABLE LIBOR BASED RATE" means (i) during the period from the
date hereof to and including December 31, 1996, (a) LIBOR plus (b) one-quarter
----
of a percentage point (0.25%) and (ii) during the period from and including
January 1, 1997 and thereafter, (x) LIBOR plus (y) one and one-quarter
----
percentage points (1.25%).
"APPLICABLE LIBOR MARGIN" means (i) during the period from June 30,
1994 to and including December 31, 1996, one-quarter of a percentage point
(0.25%); (ii) during the period from and including January 1, 1997 to and
including December 31, 1998, one and one-quarter percentage points (1.25%);
(iii) during the period from and including January 1, 1999 to and including
December 31, 1999, two percentage points (2.00%); (iv) during the period from
and including January 1, 2000 to and including December 31, 2000, three
percentage points (3.00%); and (v) during the period from and including January
1, 2001 and thereafter, four percentage points (4.00%).
"ASSET SALE" means the sale, transfer or other disposition by the
Company or any of its Subsidiaries to any Person other than the Company or any
of its Subsidiaries of (i) any of the stock of any of the Company's
Subsidiaries, (ii) substantially all of the assets of any geographic or other
division or line of business of the Company or any of its Subsidiaries, or (iii)
any other assets (including, without limitation, any assets which do not
constitute substantially all of the assets of any geographic or other division
or line of business but excluding any assets purchased for sale to others (other
than Warehoused Real Property) in the ordinary course of business consistent
with the past practices of the Company and its Subsidiaries), in the case of
each of clauses (i), (ii) and (iii), having a value in excess of
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$250,000; provided that any asset sale described in clause (i), (ii) or (iii)
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shall be deemed not to be an "Asset Sale" until the aggregate amount of all such
sales by the Company and its Subsidiaries occurring in any fiscal year equals or
exceeds $1,000,000; provided, further, that an Asset Sale shall not include (A)
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inventory sales in the ordinary course of business; (B) sales or other
dispositions of obsolete equipment or other operating assets which are either no
longer needed for the ordinary course of business of the Company or its
Subsidiaries or are being replaced by equipment or other operating assets of at
least comparable value and utility; and (C) sales, transfers and other
dispositions of assets between the Company and its Subsidiaries and between the
Company's Subsidiaries; and provided, further, that the sale, assignment,
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transfer, lease or other disposition of Warehoused Real Property to an
investment partnership or another pooled investment entity sponsored or managed
by the Company or a wholly-owned Subsidiary of the Company or to a third party
for consideration in excess of the sum of (A) the Company's or such wholly-owned
Subsidiary's Investment therein, (B) the outstanding amount of any Non-Recourse
Debt secured thereby, to the extent that such amount is repaid in connection
with such sale or otherwise is not assumed by the transferee of such Warehoused
Real Property, and (C) the Company's or its Subsidiary's Carrying Cost with
respect thereto, shall be deemed to be an Asset Sale only to the extent of such
excess.
"BAILEE" means The Sumitomo Bank, Limited, acting as agent for the
Lender, and any successor thereto as provided in the Intercreditor Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"BOARD OF DIRECTORS" means the Board of Directors of CB Holdings, the
Company or a Subsidiary of the Company, as applicable, or any duly authorized
committee of that Board.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a day on which banking institutions located in Dublin, London, New York
or California are authorized or required by law or other government action to
close.
"CAPITAL EXPENDITURE" means any expenditure (other than capitalized
interest) by any Person which would be capitalized in accordance with GAAP,
except that the acquisition of Warehoused Real Property by the Company or any
Subsidiary shall not constitute a Capital Expenditure until the date that is
eight months after the date of the acquisition thereof if such Warehoused Real
Property has not been sold, assigned, transferred or otherwise disposed of by
such date and in any such event shall, notwithstanding GAAP, be treated as a
Capital Expenditure incurred on the date that such eight-month period expires to
the extent of the Company's or such Subsidiary's Investment in such Warehoused
Real Property.
"CAPITAL LEASE," as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person; provided, however, that leases of computer and related equipment
of the type treated by the Company as Operating
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Leases for its fiscal year 1993 and prior periods shall be treated, after
September 30, 1994, as Operating Leases and not Capital Leases, notwithstanding
the classification thereof under GAAP.
"CAPITAL STOCK" of any person means any and all shares, interests,
participations, or other equivalents (however designated) of capital stock and
any rights (other than debt securities convertible into capital stock), warrants
or options to acquire such capital stock or other equity interests.
"CARRYING COST" means, as to any Warehoused Real Property, the sum of
(without duplication) (i) the amount of any payment of principal of Non-Recourse
Debt secured thereby actually made by CB Holdings, the Company or any of their
respective Subsidiaries, (ii) interest on such Non-Recourse Debt accrued and
actually paid by CB Holdings, the Company or any of their respective
Subsidiaries (net of rental and other income actually received by CB Holdings,
the Company or any such Subsidiary in respect of such Warehoused Real Property
from the date of direct or indirect acquisition thereof by CB Holdings, the
Company or such Subsidiary in respect of such Warehoused Real Property from the
date of acquisition thereof by CB Holdings, the Company or such Subsidiary to
the date of sale or other disposition), and (iii) any and all fees, costs,
expenses and transfer taxes incurred by CB Holdings, the Company or any of their
respective Subsidiaries in connection with the purchase or other acquisition of
such Warehoused Real Property (including, without limitation, any fees, costs
and expenses incurred in connection with financing such purchase or other
acquisition) and the holding and the subsequent sale or other disposition
thereof.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from Standard & Poor's Corporation, ▇▇▇▇▇'▇ Investors Service, Inc.
or other nationally recognized rating agency; (iii) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from Standard &
Poor's Corporation, ▇▇▇▇▇'▇ Investors Service, Inc. or other nationally
recognized rating agency; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by the
Lender or any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having combined capital
and surplus of not less than $250,000,000; (v) Eurodollar time deposits having a
maturity of less than one year purchased from the Lender or other financial
institutions approved by the Lender; and (vi) repurchase agreements and reverse
repurchase agreements with the Lender or other financial institutions approved
by the Lender relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof;
provided that the terms of such agreements comply with the guidelines set forth
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in the Federal Financial Institutions Examination
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Council Supervisory Policy--Repurchase Agreements of Depository Institutions
With Securities Dealers and Others, as adopted by the Comptroller of the
Currency on October 31, 1985.
"CASH PROCEEDS" means, with respect to any Asset Sale, cash payments
received from such Asset Sale (including any cash received by way of deferred
payment pursuant to a note receivable or otherwise, but only as and when so
received, other than the portion of such deferred payment constituting interest,
which shall be deemed not to constitute Cash Proceeds).
"CB HOLDINGS" means CB Commercial Holdings, Inc., a Delaware
corporation.
"CB CANADA" means Coldwell Banker Canada, Inc., a corporation
organized under the laws of the Province of Ontario, Canada.
"CERTIFICATE OF INCORPORATION" means CB Holdings's Restated
Certificate of Incorporation as in effect on the Effective Date.
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any treaty, law, regulation
or ruling relating to any Tax (or in the application or interpretation of any
treaty, law, regulation or ruling relating to any Tax) that occurs on or after
the Effective Date.
"CHANGE OF CONTROL" shall be deemed to have occurred (a) with respect
to CB Holdings, (i) at such time as any person (as defined in Section 13(d)(3)
of the Exchange Act) (other than the Holdings Capital Accumulation Plan) at any
time shall directly or indirectly acquire more than twenty-five percent (25%) of
the total voting power of all classes of Capital Stock of CB Holdings (provided,
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however, that the acquisition of voting stock of CB Holdings by underwriters in
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the IPO named in the prospectus relating thereto shall not be deemed to be a
Change of Control pursuant to this clause (a)(i)), or (ii) at such time as
during any one year period, individuals who at the beginning of such period
constitute the Company's Board of Directors cease to be a majority of the Board
of Directors and (b) with respect to the Company, at such time as CB Holdings
ceases to own 100% of the issued and outstanding Capital Stock of the Company.
"CHIEF FINANCIAL OFFICER" means the highest ranking officer of any
company then in charge of the financial matters of such company.
"COLLATERAL" means the capital stock of the Company.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of CB Holdings, par value $.01
per share.
"COMPANY" means CB Commercial Real Estate Group, Inc., formerly known
as Coldwell Banker Commercial Group, Inc.
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"COMPANY SECURITIES" means, collectively, any senior subordinated or
subordinated indebtedness and any Capital Stock of the Company or any Capital
Stock of CB Holdings.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
annexed hereto as Exhibit II delivered to the Lender by the Company pursuant to
subsection 5.1(c) of this Agreement.
"CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES" means, for any
period, the sum of the amounts for such period of (i) Consolidated Net Operating
Income, (ii) Consolidated Interest Expense (less that portion allocable to
Capital Leases), (iii) provisions for taxes based on income, (iv) depreciation
expense, (v) amortization expense, (vi) Consolidated Rental Payments and (vii)
all other non-cash items (other than working capital) reducing Consolidated Net
Operating Income, minus all non-cash items (other than working capital)
increasing Consolidated Net Operating Income, all as determined on a
consolidated basis for any Person and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED FIXED CHARGE RATIO" means the ratio, on a pro forma
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basis, giving effect to any Indebtedness to be incurred as if it had been
incurred on the first day of the four-fiscal-quarter period referred to in
clause (i), of (i) the aggregate amount of Consolidated Cash Flow Available for
Fixed Charges of any Person for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Ratio (the "Transaction Date") to (ii) the aggregate Consolidated Fixed Charges
of such Person during such four fiscal quarters; provided that in making such
computation, Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being incurred) computed on a pro forma basis
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and bearing a floating interest rate shall be computed as if the rate in effect
on the date of computation had been the applicable rate for the entire period.
"CONSOLIDATED FIXED CHARGES" of any Person means, for any period, the
sum of the amounts for such period of (i) Consolidated Interest Expense (less
that portion allocable to Capital Leases) and (ii) Consolidated Rental Payments,
all as determined on a consolidated basis for such Person and its Subsidiaries
in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period,
the aggregate Interest Expense of such Person and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period taken as one
accounting period, the net income (or loss) of any Person and its Subsidiaries
on a consolidated basis for such period determined in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any Person
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(other than a Subsidiary of such Person) in which any other Person (other than
such Person or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to such
Person or any of its Subsidiaries by such other Person during such period, (ii)
except to the extent includable pursuant to the foregoing clause (i), the income
(or loss) of any Person accrued prior to the date
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it becomes a Subsidiary of such Person or is merged into or consolidated with
such Person or any of its Subsidiaries or that Person's assets are acquired by
such Person or any of its Subsidiaries, (iii) the income of any Subsidiary
(other than Westmark and its Subsidiaries) to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary and (iv) any gains or losses
attributable to Asset Sales. In determining the Consolidated Net Income of the
Company, provision for tax payments by the Company shall be assumed to be made
at the then effective corporate statutory tax rate.
"CONSOLIDATED NET OPERATING INCOME" of any Person means, for any
period taken as one accounting period, the aggregate Consolidated Net Income of
such Person and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, adjusted by excluding (to the extent not otherwise
excluded in calculating Consolidated Net Income) any net extraordinary gains and
losses during such period except that no adjustment shall be made for
extraordinary items consisting of income tax effects associated with net
operating loss carry forwards incurred by such Person after the Funding Date.
"CONSOLIDATED NET WORTH" means, as at any date of determination, the
sum of the Capital Stock (excluding any mandatorily redeemable preferred stock)
and additional paid-in capital plus retained earnings (or minus accumulated
deficit) of the Company and its Subsidiaries on a consolidated basis calculated
in conformity with GAAP.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of the interest component of all rents paid under all Capital Leases and
the interest component of all rents paid under all Operating Leases of the
Company and its Subsidiaries as lessee (net of sublease income) that are not
cancelable upon 30 days' or less notice by the lessee thereunder, all as
determined on a consolidated basis in conformity with GAAP.
"CONTESTED CLAIM" means any Tax, Indebtedness, Contingent Liability or
other claim or liability, (i) the validity or amount of which is being contested
in good faith by appropriate proceedings, (ii) which has been bonded or for
which adequate reserves, as required by GAAP, have been established and (iii)
with respect to which any right to execute upon or sell any assets of the
Company or its Subsidiaries has not matured or has been and continues to be
effectively enjoined, superseded or stayed.
"CONTINGENT LIABILITIES" means, as applied to any Person, any
guaranties, endorsements, agreements to purchase or provide funds for the
payment of obligations of others, or other liabilities which would be classified
as contingent in accordance with GAAP.
"CONTINGENT OBLIGATION" means, as to any Person, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) with respect to
any Indebtedness or other obligation or liability of another Person, including
without limitation any direct or indirect guarantee of such Indebtedness,
obligation or liability, endorsement (other than for collection or deposit in
the ordinary course of business) thereof or discount or sale thereof by such
Person with recourse to such Person, or any other direct or indirect obligation,
by agreement or
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otherwise, to purchase or repurchase any such Indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge of any such Indebtedness, obligation or liability (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise), (ii)
to provide funds to maintain working capital or equity capital of another Person
or otherwise to maintain the net worth, solvency or financial condition of the
other Person, (iii) to make payment for any products, property, securities or
services regardless of non-delivery thereof, if the purpose of any agreement so
to do is to provide assurance that another Person's Indebtedness, obligation or
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of another Person's Indebtedness,
obligation or liability will be protected (in whole or in part) against loss in
respect thereof, or (iv) otherwise to assure or hold harmless the holders of
Indebtedness or other obligation or liability or another Person against loss in
respect thereof; provided, that indemnities given by the Company or its
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Subsidiaries to employees or independent contractors in the ordinary course of
business and consistent with past practices shall not be considered Contingent
Obligations; provided, further, that the provisions in the By-laws of the
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Company, its Subsidiaries or CB Holdings holding harmless and indemnifying their
respective officers and directors shall not be considered Contingent Obligations
so long as such provisions are not materially different from such provisions in
the Company's By-laws in effect on the Effective Date; and provided, further,
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that the term "Contingent Obligation" shall not include any obligation of the
Company under any guaranty made by it with respect to obligations of a Mortgage
Banking Subsidiary (as defined below) relating to unfunded mortgage loans, or
any obligation of the Company or a Mortgage Banking Subsidiary under any
indemnity made by the Company or a Mortgage Banking Subsidiary in a purchase and
sale agreement with respect to any mortgage loan, which guaranty or indemnity is
made, and which obligations are incurred, in connection with Mortgage Banking
Activities (as defined below). The amount of any Contingent Obligation shall be
an amount equal to the amount of the indebtedness, obligation or liability
guaranteed or otherwise supported thereby. For purposes hereof, (x) "MORTGAGE
BANKING ACTIVITIES" means the origination by the Company or a Mortgage Banking
Subsidiary of mortgage loans in respect of commercial and multi-family
residential real property, and the sale or assignment of such mortgage loans and
the related mortgages to another Person (other than the Company or another of
its Subsidiaries) within 60 days after the origination thereof, provided,
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however, that in each case prior to origination of any mortgage loan, the
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Company or a Mortgage Banking Subsidiary, as the case may be, shall have entered
into a legally binding and enforceable purchase and sale agreement, with respect
to such mortgage loan with a Person that purchases such loans in the ordinary
course of its business; and (y) "MORTGAGE BANKING SUBSIDIARY" means any Wholly-
owned Subsidiary of the Company that is engaged in Mortgage Banking Activities.
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any
provision of any security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement, or other written instrument to
which that Person is a party or by which it or any of its owned properties is
bound or to which it or any of its owned properties is subject.
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"DEFERRED INTEREST" means all accrued and deferred interest under this
Agreement and the Notes, of which $8,916,216.37 remains outstanding as of the
date hereof, and any and all interest which shall hereafter accrue and be
deferred under this Agreement and the Notes.
"DOLLARS" or the sign "$" means the lawful money of the United States
of America.
"EARN-OUT PAYMENT OBLIGATIONS" means, with respect to any Permitted
Acquisition, the Westmark Acquisition and the Melody Acquisition, any and all
deferred payment obligations (other than Permitted Seller Indebtedness) of the
Company or any of its Subsidiaries incurred in connection therewith (including
non-competition payments).
"EFFECTIVE DATE" shall have the meaning set forth in Section 9.21.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA AFFILIATE" means any trade or business (whether or not
unincorporated) which is a member of a group of which the Company is a member
and which is under common control within the meaning of Section 414 of the
Internal Revenue Code and the regulations thereunder.
"ESTIMATED NET CASH PROCEEDS" means with respect to any Asset Sale, an
amount equal to 90% of the amount estimated in good faith by the Company to be
Net Cash Proceeds of Sale of such Asset Sale.
"EVENT OF DEFAULT" means each of the events set forth in Section 7.1
of this Agreement.
"EVENT OF ILLEGALITY" means that due to the adoption of, or any
changes in, any applicable treaty, law, rule or regulation after the Effective
Date or due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of any
applicable treaty, law, rule or regulation after the Effective Date, it becomes
unlawful for the Lender to receive a payment in respect of this Agreement or any
Note or to maintain the Loan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXCLUDED JOINT VENTURE" means any Joint Venture in which the Company
and its Subsidiaries, together, own 1% or less of the equity interests and any
Joint Venture designated as an "Excluded Joint Venture" by the Company (which
designation shall be made by written notice to the Lender at least 30 days prior
to the proposed effective date of such designation) with the written consent of
the Lender, which consent may be given or withheld in the sole discretion of the
Lender.
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"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries listed on Schedule B annexed hereto.
"FULLY DILUTED BASIS" means the aggregate number of outstanding shares
of Common Stock (assuming, for this purpose, exercise or conversion, or both, of
all outstanding securities of CB Holdings that are exercisable or convertible
into shares of Common Stock).
"FUNDING DATE" means July 23, 1990.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial conditions, and the results
of operations and cash flows, of the Company and its Subsidiaries, except that
any accounting principle or practice required to be changed by the Accounting
Principles Board or Financial Accounting Standards Board (or other appropriate
board or committee of such boards) in order to continue as a generally accepted
accounting principle or practice may so be changed.
"GUARANTEE" means the guarantee by the Guarantors of the Obligations
pursuant to Article X of this Agreement.
"GUARANTORS" means CB Commercial Holdings, Inc., CB Commercial Real
Estate Group of Iowa, Inc., CB Commercial Partners, Inc., CB Commercial Realty
Advisors, Inc., CB Commercial Brokerage, Inc., ▇▇▇▇▇▇ Fremont Property Services,
Inc., CB Commercial Real Estate Group of Hawaii, Inc., CB Commercial Real Estate
Fund Management, Inc., CB Commercial Real Estate Management Services, Inc., CB
Commercial ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇▇▇▇ Fremont Real Estate Merchant Capital
Corporation, ▇▇▇▇▇▇ & ▇▇▇▇▇ N.J., Inc., ▇▇▇▇▇▇ Fremont, Inc., CB Commercial
Warehouse Property Corp., ▇.▇. ▇▇▇▇▇▇ Investments, Inc., ▇.▇. Melody & Company,
and ▇.▇. ▇▇▇▇▇▇ & Company of California.
"GUARANTY" means, with respect to any Person, any contract, agreement
or understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without limitation:
(a) agreements to purchase such Indebtedness or any property
constituting security therefor;
(b) agreements to advance or supply funds (i) for the purchase or
payment of such Indebtedness, or (ii) to maintain working
capital, equity capital or other balance sheet conditions;
(c) agreements to purchase property, securities or services primarily
for the purpose of assuring the holder of such Indebtedness of
the ability of the primary obligor to make payment of the
Indebtedness;
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(d) letters or agreements commonly known as "comfort" or "keepwell"
letters or agreements; or
(e) any other agreements to assure the holder of the Indebtedness of
the primary obligor against loss in respect thereof;
except that "guaranty" shall not include (i) the endorsement by a Person in the
ordinary course of business of negotiable instruments or documents for deposit
or collection or (ii) indemnities given by the Company or its Subsidiaries in
brokerage, management and other agreements in the ordinary course of business
substantially consistent with past practices.
"HOLDINGS CAPITAL ACCUMULATION PLAN" means the CB Commercial Holdings,
Inc. Capital Accumulation Plan, a plan intended to be qualified under Section
401(a) of the Internal Revenue Code, as in effect on the Effective Date.
"INDEBTEDNESS" means, with respect to any Person, the aggregate amount
of, without duplication, the following:
(a) all obligations for borrowed money;
(b) all obligations evidenced by bonds, debentures, notes or other
similar instruments;
(c) all obligations to pay the deferred purchase price of property or
services, except Trade Payables, accrued commissions and other
similar accrued current liabilities in respect of such
obligations, in any case, not overdue, arising in the ordinary
course of business;
(d) all Capital Lease obligations;
(e) all obligations or liabilities of others secured by a lien on any
asset owned by such Person or Persons whether or not such
obligation or liability is assumed;
(f) all obligations of such Person or Persons, contingent or
otherwise, in respect of any letters of credit or bankers'
acceptances; and
(g) all guaranties and other Contingent Obligations.
"INSOLVENCY OR LIQUIDATION PROCEEDING" means (i) any insolvency or
bankruptcy case or proceeding (including any case under the Bankruptcy Code), or
any receivership, liquidation, reorganization or other similar case or
proceeding, relative to CB Holdings, the Company or any Guarantor or to their
respective creditors, as such, or to their respective assets, or (ii) any
liquidation, dissolution, reorganization or winding up of CB Holdings, the
Company or any Guarantor, whether voluntary or involuntary and whether or not
involving insolvency or
11
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of CB Holdings, the Company or any
Guarantor.
"INTERCOMPANY INDEBTEDNESS" means any Indebtedness of the Company or
any Subsidiary of the Company which, in the case of the Company, is owing to any
Subsidiary of the Company and which, in the case of any such Subsidiary, is
owing to the Company or any other Subsidiary of the Company.
"INTERCREDITOR AGREEMENT" means the Amended and Restated Intercreditor
Agreement dated as of November 25, 1996 among the Lender, The Sumitomo Bank,
Limited, as agent, CB Holdings and the Company as such agreement may hereafter
may be amended, restated, supplemented or otherwise modified from time to time.
"INTEREST EXPENSE" means, for any period, the consolidated interest
charges paid or accrued by the Company or any of its Subsidiaries during such
period (including imputed interest on Capital Lease obligations, but excluding
amortization or write-off of debt discount and expense) on Indebtedness of the
Company or any of its Subsidiaries.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time hereafter, and any successor code or statute.
"INVESTMENT" means, with respect to any Person, any direct, indirect
or beneficial investment (other than Cash Equivalents), whether by means of
share purchase, loan, advance, extension of credit (other than accounts
receivable and trade credits arising in the ordinary course of business),
capital contribution or otherwise, in or to such Person, the guaranty of any
Indebtedness of such Person or the subordination of any claim against such
Person to other Indebtedness of such Person or any direct or indirect purchase
or other acquisition by that Person of Warehoused Real Property, through
purchase or exchange for cash, securities or other property (including, without
limitation, any distribution, upon liquidation or otherwise, of Warehoused Real
Property to such Person by any partnership or other investment entity). The
amount of any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment together with, in the case of a Permitted Acquisition, any related
Earn-out Payment Obligations (in an amount equal to the maximum amount thereof,
or if there is no prescribed maximum amount, then the greater of (x) the
Company's reasonable estimate of its future liability with respect thereto
(estimated on the basis of reasonable financial projections at the time of
consummation of such Permitted Acquisition) and (y) the aggregate amount of
payments actually made with respect thereto), but excluding any amounts
capitalized in accordance with GAAP to reflect probable severance, office
closing and similar payments and expenses, less in the case of the Warehoused
----
Real Property, the amount of any Non-Recourse Debt incurred by such Person in
connection therewith and (to the extent included in the cost thereof) Non-
Recourse Debt to which such Warehoused Real Property is subject at the time of
the acquisition thereof. Notwithstanding the foregoing, any promissory note
issued by the Company or any of its Subsidiaries to fund the general partner's
capital contribution in an investment partnership or other pooled investment
vehicle of which the Company or any of its Subsidiaries is the general partner
and which
12
partnership or other investment vehicle is engaged solely in the business of
acquiring, holding and disposing of Real Property shall not be deemed to be an
Investment unless and until the aggregate amount of principal and interest
payments made under such promissory note by such general partner exceeds the
aggregate amount of such general partner's partnership distributions and
management fees received as of the date of determination. In such event, the
entire principal amount of such promissory note shall be deemed an Investment
for purposes of Section 6.11 and shall remain an Investment until the aggregate
amount of partnership distributions and management fees received by such general
partner exceeds the aggregate amount of principal and interest paid by such
general partner on such promissory note for 18 consecutive months; provided,
--------
that an Event of Default shall not be deemed to have resulted from a violation
of Section 6.11 solely from the operation of the immediately preceding sentence.
The term "Investment" shall not include (i) customary loans or advances
(including draw payments) to employees of the Company or its Subsidiaries, (ii)
notes for deferred sales or leasing commissions received by the Company or its
Subsidiaries in the ordinary course of business and substantially consistent
with past practices or (iii) any investment by the Company in or with respect to
C.B. Commercial Acquisition Associates, Inc. in an aggregate amount not in
excess of $187,000.
"IPO" means the initial public offering of Common Stock of CB Holdings
underwritten by ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇▇▇▇ Securities and as further
described in the prospectus of CB Holdings dated as of November 25, 1996.
"IPO NET PROCEEDS" shall mean the cash proceeds received by or for the
account of the CB Holdings or any of its Subsidiaries attributable to the IPO
minus amounts expended in connection with the IPO for (a) underwriters'
discounts and commissions, (b) prospectus and stock certificate printing and
distribution fees, (c) fees and reimbursed expenses of the Company's counsel and
independent public accountants, (d) fees and reimbursed expenses of the
underwriters' counsel relating to compliance with the blue sky laws of the
various states, (e) fees and reimbursed expenses of counsel to the Senior Agent,
(f) fees payable to the Commission, and minus the Revolving Credit Facility A
-----
Extension Fee, the Revolving Credit Facility B Extension Fee and the Term Loan
Extension Fee (such terms as defined in the Senior Credit Agreement).
"JOINT VENTURE" means a joint venture partnership or other similar
arrangement between or among the Company or any of its Subsidiaries on one hand,
and another Person or Persons that is or are not Affiliates with the Company or
any of its Subsidiaries, on the other hand, whether in corporate, partnership or
other legal form; provided that, as to any such arrangement in corporate form,
--------
such corporation shall not, as to any Person of which such corporation is a
Subsidiary, be considered to be a Joint Venture to which such Person is a party.
"LAWS" means all applicable statutes, laws, ordinances, regulations,
orders, judgments, writs, injunctions or decrees of any state, commonwealth,
nation, territory, possession, province, county, parish, town, township,
village, municipality or Tribunal, and "Law" means each of the foregoing.
13
"LENDER" means Sumitomo Finance (Dublin) Limited, a limited liability
company organized and existing under the Laws of the Republic of Ireland or its
successors and assigns pursuant to the provisions of this Agreement.
"LETTER AGREEMENT" has the meaning ascribed to such term in Section
2.4 of this Agreement.
"LIBOR" means, for any LIBOR Interest Period, the rate at which
deposits in Dollars are offered by the Reference Bank at approximately 11:00
A.M., London Time, on the day which is two London Banking Days preceding the
first day of such LIBOR Interest Period to prime banks in the London interbank
market for a period equal to such LIBOR Interest Period and in the same or
approximately the same amount as the Loan. For the purposes of this definition,
the term "London Banking Day" shall mean any day on which dealings in deposits
in Dollars are transacted in the London interbank market.
"LIBOR INTEREST PERIOD" means the period commencing as of June 30,
1994 and having a duration of three months, and, thereafter, each subsequent
period commencing on the last day of the then current LIBOR Interest Period and
having a duration of three months, except that (i) each LIBOR Interest Period
------
which would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day or, if such next succeeding Business Day would fall
in a succeeding calendar month, the next preceding Business Day, (ii) if any
LIBOR Interest Period commences on the last day of a calendar month and there is
no corresponding day in the month in which such LIBOR Interest Period would
otherwise end, such LIBOR Interest Period shall end on the last day of such
succeeding calendar month and (iii) if any LIBOR Interest Period would otherwise
end after the date on which the principal of the Loan is to be repaid pursuant
to Section 2.2 of this Agreement, such LIBOR Interest Period shall end on such
principal repayment date. Notwithstanding the foregoing, the duration of LIBOR
Interest Periods for purposes of determining the Post-Default Rate for the Loan
or interest thereon shall be selected by the Lender at the commencement of each
such LIBOR Interest Period.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest).
"LITIGATION" means any proceeding, claim, lawsuit and/or investigation
conducted or overtly threatened by or before any Tribunal.
"LOAN" shall have the meaning ascribed to such term in Section 2.1 of
this Agreement.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letter
Agreement, the Stock Pledge Agreement and all schedules and exhibits hereto and
thereto.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
14
"MATERIAL ADVERSE EFFECT" means any circumstance or event which (i)
could have any material adverse effect whatsoever upon the validity, performance
by the Company, perfection or enforceability of any Loan Document, (ii) is
material and adverse to the financial condition or business operations of the
Company and its Subsidiaries, taken as a whole, or (iii) could materially impair
the ability of the Company to fulfill its obligations under the Loan Documents.
"MATERIAL SUBSIDIARY" means each Subsidiary of the Company now
existing or hereafter acquired or formed by the Company which (x) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company, or (y) as at the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of the Company.
"MELODY" means ▇.▇. ▇▇▇▇▇▇ & Company, a Texas corporation that is a
Wholly-owned Subsidiary of the Company.
"MELODY ACQUISITION" means, collectively, (i) the purchase by CB
Commercial Mortgage Company, Inc., a California corporation that is a Wholly-
owned Subsidiary of the Company ("CB Mortgage"), of (x) all of the issued and
outstanding capital stock of Melody pursuant to and in accordance with the terms
of the Melody Stock Purchase Agreement and (y) all of the issued and outstanding
capital stock of Melody California pursuant to and in accordance with the terms
of the Melody California Stock Purchase Agreement, and (ii) consummation of the
merger (the "Melody Merger") of CB Mortgage with and into Melody, pursuant to
and in accordance with the terms of the Melody Merger Agreement and the
subsequent merger of Melody California with and into Melody.
"MELODY ACQUISITION DOCUMENTS" means, collectively, the Melody Stock
Purchase Agreement, the Melody California Stock Purchase Agreement, the Melody
Merger Agreement and each agreement, document and instrument ancillary thereto
entered into in connection therewith, in each case together with all schedules
and exhibits thereto.
"MELODY CALIFORNIA" means ▇.▇. ▇▇▇▇▇▇ & Company of California, a Texas
corporation that is a wholly-owned subsidiary of Melody.
"MELODY CALIFORNIA STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of June 27, 1996, among the Company, CB Mortgage and the
Melody Stockholders party thereto, and all schedules and exhibits thereto, as in
effect on the Amendment Effective Date (as defined in Amendment No. 4 to Senior
Subordinated Credit Agreement dated as of June 30, 1996 (the "FOURTH
AMENDMENT")).
"MELODY LOAN ARBITRAGE FACILITY" means a credit facility provided to
Melody by any depository bank in which Melody deposits payments made on mortgage
loans for which Melody is servicer prior to distribution of such payments to or
for the benefit of the holders of such loans, so long as (i) Melody applies all
proceeds of loans made under such credit facility to purchase Permitted
Investments, and (ii) all Permitted Investments purchased by Melody with the
proceeds of loans thereunder (and proceeds thereof and distribution thereon) are
pledged to
15
the depository bank providing such credit facility, and such bank has a first
priority perfected security interest therein, to secure loans made under such
credit facility.
"MELODY MERGER AGREEMENT" means the Agreement and Plan of Merger
between CB Mortgage and Melody providing for the merger of CB Mortgage with and
into Melody, and the articles or certificate of merger, if any, required to be
in the office of the secretary of state, or other public official, in any
jurisdiction in order to effect the Melody Merger.
"MELODY MORTGAGE WAREHOUSING FACILITY" means the credit facility
provided by Residential Funding Corporation ("RFC") or any substantially similar
facility, pursuant to which RFC or another lender makes loans to Melody, the
proceeds of which loans are applied by Melody to fund commercial mortgage loans
originated and owned by Melody subject to an unconditional, irrevocable
commitment to purchase such mortgage loans by the Federal Home Loan Mortgage
Corporation so long as loans made by RFC or such other Lender to Melody
thereunder are secured by a pledge of commercial mortgage loans made by Melody
with the proceeds of such loans, and RFC or such other lender has a perfected
first priority security interest therein, to secure loans made under such credit
facility.
"MELODY PERMITTED INDEBTEDNESS" means Indebtedness of Melody under the
Melody Loan Arbitrage Facility, the Melody Mortgage Warehousing Facility and the
Melody Working Capital Facility, and in respect of the Melody Seller Senior
Notes and the Melody Seller Contingent Notes.
"MELODY SELLER CONTINGENT NOTES" means the Contingent Promissory Notes
due July 1, 2001 issued by CB Mortgage to the Melody Stockholders, in
substantially the form attached as Exhibit B to the Melody Stock Purchase
Agreement, in an aggregate principal amount not in excess, at any time, of
$3,000,000 less the aggregate amount of payments of principal thereof required
----
to be made in respect thereof at or prior to such time in accordance with the
terms thereof.
"MELODY SELLER SENIOR NOTES" means the Senior Promissory Notes due
July 1, 1998 issued by CB Mortgage to the Melody Stockholders, in substantially
the form attached as Exhibit A to the Melody Stock Purchase Agreement, in an
aggregate principal amount not in excess, at any time, of $3,000,00 less the
----
aggregate amount of payments of principal required to be made in respect thereof
at or prior to such time in accordance with the terms thereof.
"MELODY STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement
dated as of June 27, 1996 among the Company, CB Mortgage and the Melody
Stockholders party thereto, and all schedules and exhibits thereto, as in effect
on the Amendment Effective Date (as defined in the Fourth Amendment).
"MELODY STOCKHOLDERS" means, together, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
16
"MELODY WORKING CAPITAL FACILITY" means a credit facility provided by
a financial institution to Melody, so long as (i) the proceeds of loans
thereunder are applied only to provide working capital to Melody, (ii) loans
under such credit facility are unsecured, and (iii) the aggregate principal
amount of loans outstanding under such credit facility at no time exceeds
$1,000,000.
"MULTI-EMPLOYER PLAN" means a Pension Plan which is a "multi-employer
plan" as defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS OF SALE" means cash payments (including Cash
Equivalents and any cash received by way of deferred payment pursuant to a note
receivable or otherwise (other than the portion of such deferred payment
constituting interest, which shall be deemed not to constitute Net Cash Proceeds
of Sale), but only as and when so received) received from an Asset Sale, net of
costs of sale (including payment of the outstanding principal amount of, premium
or penalty, if any, and interest on any Indebtedness other than the Loan
required to be repaid under the terms thereof as a result of such Asset Sale),
taxes to be paid as a result thereof and any amount required to be paid to any
Person (other than the Company or any of its Subsidiaries) owning a beneficial
interest in the assets disposed of in such Asset Sale.
"NON-RECOURSE DEBT" means Indebtedness which is incurred in connection
with the acquisition of Warehoused Real Property as to which, subject to
customary exceptions, (i) the creditor's sole recourse is to the land,
improvements, fixtures and any personal property attached to or used in
connection with such land, improvements and fixtures which secure such
Indebtedness and not to any other assets owned by CB Holdings, the Company or
its Subsidiaries and (ii) the failure to pay or acceleration thereof would not
give rise to the right of cross-default or cross-acceleration on the part of
holders of other Indebtedness in an amount in excess of $2,500,000 created on or
after April 18, 1989; provided, however, Non-Recourse Debt within this
-------- -------
definition shall not cease to be Non-Recourse Debt if the amount of such other
Indebtedness is in excess of $2,500,000, so long as such Indebtedness, at least
to the extent of such excess, is paid or otherwise discharged or the agreement
or instrument evidencing such Indebtedness is amended to eliminate such right of
cross-default or cross-acceleration within 30 days after the incurrence of such
Indebtedness.
"NOTES" means the promissory notes of the Company evidencing the Loan
(including any Deferred Interest).
"OBLIGATIONS" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents.
"OFFERING CLOSING DATE" the date on which the IPO is consummated and
the IPO raises at least $65,000,000 of IPO Net Proceeds.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer; provided that every Officers' Certificate
--------
with respect to the compliance with the conditions
17
precedent or the terms hereunder shall include (i) a statement that the officer
or officers making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the signers, they have made or
have caused to be made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not such condition
has been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the Lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"PENSION PLAN" means an employee pension benefit plan as defined in
Section 3(2) of ERISA maintained or contributed to by one or more of the Company
or its Subsidiaries for employees of one or more of the Company or its
Subsidiaries or ERISA Affiliates, and which is subject to the provisions of
Title IV of ERISA.
"PERMITTED ACQUISITIONS" means the acquisition by the Company or any
of its Subsidiaries after the Effective Date of assets constituting an entire
business or division of any Person that is not already a Subsidiary of the
Company or any of its Subsidiaries, or the acquisition by Company or any of its
Subsidiaries of 100% of the Capital Stock (except for directors' qualifying
shares) of any such Person, including by any merger or consolidation permitted
under Section 6.6 of this Agreement, so long as (i) such acquisition and all
transactions related thereto are consummated in accordance with applicable law;
(ii) such acquisition, in the case of a Permitted Acquisition of capital stock,
results in such domestic corporation becoming a Wholly-Owned Subsidiary; (iii)
if required by the Senior Agent, the Company shall have delivered to the Senior
Agent (and a copy to the Lender) a certificate demonstrating in reasonable
detail compliance with Sections 6.01, 6.02, 6.03, 6.04, 6.05 and 6.06 of the
Senior Credit Agreement (and if no loan under the Senior Credit Agreement is
outstanding, then the Company shall have delivered a certificate to Lender
demonstrating in reasonable detail compliance with Article 6 hereof) that
immediately after giving effect to such acquisition and giving pro forma effect
thereto as if such acquisition had been consummated, and any Indebtedness
incurred in connection therewith had been incurred, on the first day of the
period of four consecutive fiscal quarters most recently ended prior to the date
on which such acquisition is completed (iv) no Capital Stock or other assets
acquired in connection with such acquisition shall be subject to any lien (other
than liens permitted by Section 6.5 of this Agreement); and (v) no Default or
Event of Default shall have occurred and be continuing on the date such
acquisition is completed or shall result therefrom.
18
"PERMITTED ENCUMBRANCES" means the following types of Liens:
(i) Liens granted to the lender or lenders, or an agent on their
behalf, securing any Senior Credit Agreement Obligations, (ii) Liens granted
pursuant to the Stock Pledge Agreement, (iii) Liens in existence on the date
hereof described on Schedule C annexed hereto and renewals and extensions
thereof so long as the Indebtedness secured thereby and the interest rate
payable thereon is not increased or the maturity shortened (except to the extent
set forth on such Schedule C), (iv) Liens imposed by mandatory provisions of Law
such as carrier's, materialmen's, mechanics', warehousemen's, landlord's and
other like Liens arising in the ordinary course of business, securing
Indebtedness not yet due or which arise out of or in connection with a Contested
Claim or Liens or exceptions which arise under any real property leases, (v)
Liens for Taxes, if the same are not yet due and payable or qualify as a
Contested Claim, (vi) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance, pensions and other types of social
security, or to secure the performance of statutory obligations, surety and
appeal bonds, bids, the payment of taxes, leases, government contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of Indebtedness), (vii) title exceptions consisting of zoning restrictions,
easements or other restrictions on the use of real property, provided that such
items do not materially impair the use of such property for the purposes
intended, and none of which are materially violated by existing or proposed
structures or land use, (viii) title exceptions which would customarily be shown
on an ALTA/ACSM land title "as-built" survey, (ix) Permitted Purchase Money
Liens, (x) Liens and exceptions on mortgage title policies, (xi) Liens securing
Senior Debt, including Liens granted to qualify Indebtedness as Senior Debt,
(xii) non-consensual Liens not otherwise permitted hereby that are removed,
bonded or stayed within 60 days after attachment thereof, (xiii) other Liens
permitted under Section 6.01 of the Senior Credit Agreement as in effect on the
date hereof, and (xiv) in addition to Liens permitted by clauses (i) through
(xiii), Liens in an aggregate amount not to exceed $100,000 at any time
outstanding.
"PERMITTED INVESTMENTS" means (i) marketable direct obligations issued
by the United States Government and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof, (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and having, at the time of acquisition, the highest rating
obtainable from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc., (iii) commercial paper having, at the time of acquisition, the
highest rating obtainable from either Standard & Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc., (iv) certificates of deposit, other time deposits, and
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any bank operating under the laws of the United States of
America or any state thereof or the District of Columbia which has combined
capital and surplus of not less than $500,000,000, (v) institutional money
market funds organized under the laws of the United States of America or any
state thereof that invest solely in any of the Investments permitted under
clauses (i), (ii), (iii) and (iv) hereof, or (vi) repurchase agreements with
respect to Investments permitted under clause (i) or (ii) with counterparties
acceptable to the Lender.
19
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means (i) purchase money
Indebtedness (other than Indebtedness pursuant to Permitted Acquisitions)
created after the date hereof secured by a Permitted Purchase Money Lien and
Capital Leases, not to exceed $3,000,000 in the aggregate for the Company and
all its Subsidiaries at any time outstanding, and (ii) purchase money
Indebtedness existing on the date hereof described on Schedule B annexed hereto.
"PERMITTED PURCHASE MONEY LIEN" means any purchase money Lien on real
estate, motor vehicles, equipment and other assets acquired or built by the
Company or any of its Subsidiaries (a "Purchase Money Lien"); provided, however,
-------- -------
that: (i) the transaction in which any Purchase Money Lien is proposed to be
created is not then prohibited by this Agreement; (ii) any Purchase Money Lien
shall attach only to the asset acquired or built in such transaction and shall
not extend to or cover any other assets of the Company or any of its
Subsidiaries; (iii) the Indebtedness secured or covered by any Purchase Money
Lien shall not exceed the cost to the Company or any of its Subsidiaries of the
asset acquired or built; (iv) the aggregate outstanding principal amount of all
Indebtedness created after the date hereof secured by Purchase Money Liens
(other than pursuant to Permitted Acquisitions) shall not at any time exceed
$3,000,000; and (v) such Indebtedness is either (x) incurred within 12 months
following the date of the acquisition or completion of the property or asset so
acquired or (y) incurred for the purpose of refinancing or refunding any
Indebtedness secured by a Permitted Purchase Money Lien provided the unpaid
balance is not increased.
"PERMITTED REFINANCING INDEBTEDNESS" means Indebtedness of the Company
all the proceeds of which are used to repay or prepay the Senior Credit
Agreement Obligations and other Indebtedness (which other Indebtedness shall not
exceed $20,000,000 in the aggregate at any time outstanding) then permitted
under Section 6.1(xvi). In addition to the foregoing, Permitted Refinancing
Indebtedness shall also include Indebtedness in an amount equal to the amount
then available under the Revolving Credit Commitment (as such term is defined in
the Senior Credit Agreement) whether under the Senior Credit Agreement or any
other agreement which replaces such agreement at the time such Indebtedness is
incurred and any amount then available under Section 6.1(ii) of this Agreement.
"PERMITTED SELLER INDEBTEDNESS" means Indebtedness of the Company or
a Subsidiary of the Company incurred to finance, a Permitted Acquisition, owing
to the Seller therein and constituting a portion of the aggregate consideration
paid with respect to such Permitted Acquisition; provided, that (x) such
Indebtedness shall not be guaranteed by any other Subsidiary of the Company, and
(y) unless (i) such Permitted Acquisition consists of an acquisition of a
business or assets directly by the Company, or (ii) the acquired Subsidiary (or,
in the case of a Permitted Acquisition involving the acquisition of assets, the
acquiring Subsidiary) has executed and delivered to the Lender the Guarantee,
any such Indebtedness shall constitute the obligation only of the Subsidiary of
the Company acquired or formed in connection with the related Permitted
Acquisition, and shall not be guaranteed by the Company.
"PERMITTED TAX PAYMENT" means for any taxable year of the Company in
which it joins in filing a consolidated federal income tax return with CB
Holdings, a payment by the Company to CB Holdings in an amount not in excess of
the lesser of (i) the separate return
20
federal income tax liability (if any) of the affiliated group (within the
meaning of Section 1504 of the Code) of which the Company would be the parent
(the "Company Group") if it were not a member of another affiliated group for
that or any other taxable year, and (ii) the portion of the actual tax liability
(if any) of the affiliated group of which the Company is actually a member (the
"CB Holdings Group") for such year allocable to the Company Group under the
rules set forth in Section 1552(a)(1) of the Code and the Treasury Regulations
promulgated thereunder; provided that such payment can be made by the Company no
--------
earlier than the date on which the CB Holdings Group is required to make federal
income tax payments for such year to the Internal Revenue Service; and provided,
--------
further, that for purposes of clause (ii) above, actual tax liability of the CB
-------
Holdings Group shall be computed without regard to any income, gain, loss,
deduction or credit generated by a corporation other than CB Holdings, the
Company or a Subsidiary of the Company. In the event that CB Holdings and any
member of the Company Group join in filing any combined or consolidated (or
similar) state or local income or franchise tax returns, then "Permitted Tax
Payment" shall include payments with respect to such state or local income or
franchise taxes determined in a manner as similar as possible to that provided
in the preceding sentence for federal income taxes.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"PLAN" means an employee benefit plan as defined in Section 3(3) of
ERISA maintained or contributed to by the Company or any of its Subsidiaries for
employees of the Company or any of its Subsidiaries.
"POST DEFAULT RATE" means in respect of any amount payable hereunder
or under the Notes not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum for each day during the period (the
"Default Period") commencing on the due date of such amount until such amount
shall be paid in full equal to two percentage points (2%) above the Applicable
LIBOR Margin plus LIBOR for such LIBOR Interest Periods during the Default
Period of up to three months' duration as the Lender shall select for the Loan
(the interest rate to be recalculated as aforesaid and adjusted at the end of
each such LIBOR Interest Period for the next succeeding such LIBOR Interest
Period selected by the Lender).
"POTENTIAL EVENT OF DEFAULT" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"PREFERRED STOCK" means the preferred stock of CB Holdings.
"REAL PROPERTY" means, with respect to any Person, each of those
parcels (or portions thereof) of real property, improvements and fixtures
thereon and appurtenances thereto now or hereafter owned or leased by such
Person.
21
"REFERENCE BANK" means the principal London branch of The Sumitomo
Bank, Limited, or such other leading bank as shall be designated from time to
time by the Lender and which shall be reasonably satisfactory to the Company.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as in effect on the date hereof.
"REGULATORY CHANGE" shall have the meaning ascribed to it in Section
2.12 of this Agreement.
"REPORTABLE EVENT" has the meaning set forth in Section 4043 of ERISA,
but excluding any event for which the 30-day notice requirement has been waived
by applicable regulations of the PBGC.
"REPORTING SUBSIDIARY" means any Subsidiary of the Company that has,
on any date of determination, total assets in excess of $25,000 or total
liabilities in excess of $50,000, as determined in accordance with GAAP.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of Capital Stock of
the Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) loans or
advances by the Company to the holders of its Capital Stock, (iii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any Capital Stock of
the Company now or hereafter outstanding, and (iv) any prepayment of principal,
optional redemption, purchase, retirement prior to stated maturity, defeasance,
or similar optional payment with respect to, any Subordinated Indebtedness.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SENIOR AGENT" means The Sumitomo Bank, Limited, as agent or lender
under the Senior Credit Agreement, or any successor agent thereunder or under
any agreement governing Permitted Refinancing Indebtedness or, in the absence of
such agent, the lender holding all or the greatest portion of the Indebtedness
thereunder.
"SENIOR CREDIT AGREEMENT" means the Third Amended and Restated Senior
Secured Credit Agreement dated as of November 25, 1996, and originally entered
into as of April 18, 1989, as amended and restated in its entirety as of October
10, 1991, as further amended and restated in its entirety as of June 30, 1994,
between the Company and The Sumitomo Bank, Limited, as lender, and the Loan
Documents (as defined therein), and as such agreement may hereafter be amended,
restated, supplemented or otherwise modified from time to time.
"SENIOR CREDIT AGREEMENT NOTES" means the Company's promissory notes
issued pursuant to the Senior Credit Agreement.
22
"SENIOR CREDIT AGREEMENT OBLIGATIONS" means the "Obligations" as
defined in the Senior Credit Agreement and all Permitted Refinancing
Indebtedness.
"SENIOR DEBT" or "SENIOR INDEBTEDNESS" means collectively, Senior Debt
of the Company and Senior Debt of the Guarantors. All interest accrued on any
Senior Indebtedness, in accordance with and at the contract rate specified in
the agreement or instrument creating, evidencing or governing such Senior
Indebtedness, shall constitute Senior Indebtedness for periods both before and
after the commencement of any Insolvency or Liquidation Proceeding, even if the
claim for such interest is not allowed pursuant to applicable law. To the
extent any payment of Senior Indebtedness (whether by or on behalf of the
Company or the Guarantors, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set aside
or required to be paid to a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law, then if such payment is
recovered by, or paid over to, such trustee, receiver or other similar party,
the Senior Indebtedness or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
"SENIOR DEBT OF THE COMPANY" means all Indebtedness and other
obligations specified below payable directly or indirectly by the Company from
time to time outstanding, whether now existing or hereafter arising, fixed or
contingent, due or not due, liquidated or not liquidated, determined or
undetermined:
(1) the principal of and interest on all loans and other extensions of
credit under the Senior Credit Agreement and any other agreement or
instrument providing for, evidencing or securing any Permitted Refinancing
Indebtedness or any other loans or extensions of credit by the lender or
lenders thereunder which are permitted to be incurred under Section 6.1
(including in each case any amendment, renewal, supplement, extension,
refinancing, restructuring, refunding or other modification thereof) and
all premiums, expenses, fees, reimbursements, indemnities and other amounts
owing by the Company pursuant to the Senior Credit Agreement and any such
other agreement or instrument;
(2) any other Indebtedness of the Company permitted to be incurred
under Section 6.1 (except to the extent excluded below); provided, however,
-------- -------
that the Indebtedness under this clause (2) shall constitute Senior Debt of
the Company only to the extent such Indebtedness is fully and adequately
secured; provided, further, however, that such Indebtedness shall not cease
-------- ------- -------
to be fully and adequately secured merely because of the occurrence of an
unanticipated diminution in value of the collateral; and provided, further,
-------- -------
that such collateral shall be deemed fully and adequately secured if the
Company delivers an Officers' Certificate certifying that such Indebtedness
is fully and adequately secured. "Senior Debt of the Company" shall not
include (a) any Indebtedness of the Company to a Subsidiary of the Company
or to any other Affiliate (which shall not include The Sumitomo Bank,
Limited or any other financial institution that may be a lender under the
Senior Credit Agreement or under any agreement or instrument governing,
evidencing or securing any Permitted Refinancing Indebtedness) of the
Company or any of its Subsidiaries (or an Affiliate of any Affiliate of the
Company or
23
any of its Subsidiaries); (b) any Trade Payable, even if overdue; (c) any
Indebtedness of the Company that by its terms or by the terms of the
instrument creating, governing or evidencing such Indebtedness expressly
provides that such Indebtedness is pari passu or subordinated in right of
---- -----
payment to the Notes or any Indebtedness which by its terms is subordinated
to any other Indebtedness of the Company; (d) any obligation of the Company
arising from redeemable Capital Stock of the Company; (e) any amounts or
other obligations under or relating to any Operating Lease; (f) any
liability for federal, state, local or other taxes, or other governmental
charges or claims of whatever nature, owed or owing by the Company; (g) any
Indebtedness or other obligations (x) owing, directly or indirectly, to any
Person under or in respect of any employee benefit plan, whether pursuant
to ERISA, or otherwise, or (y) owing, directly or indirectly, to employees;
(h) any amounts owing under any promissory note issued by the Company or
any of its Subsidiaries to fund the general partner's capital contribution
in an investment partnership or other pooled investment vehicle of which
the Company or any such Subsidiary is the general partner and which
partnership or other investment vehicle is engaged solely in the business
of acquiring, holding and disposing of Real Property; and (i) any
Indebtedness with respect to which recourse to the Company or its assets is
limited in any manner; provided, however, that in no event shall any
-------- -------
Indebtedness or obligations described in clause (1) be excluded from Senior
Indebtedness pursuant to this sentence; and
(3) to the extent not subject to (2) above, Indebtedness to finance
Permitted Acquisitions under Section 6.1(xv); provided that the aggregate
principal amount of such Indebtedness to finance Permitted Acquisitions
under clause (2) and this clause (3) shall not exceed $50,000,000 at any
time outstanding.
"SENIOR DEBT OF THE GUARANTORS" means all Indebtedness and other
monetary obligations under a guarantee, security agreement, mortgage, deed of
trust or other agreement or instrument executed by a Guarantor (or any other
Subsidiary or Affiliate of the Company) from time to time outstanding in respect
of the payment or performance of Indebtedness or other obligations included in
Senior Debt of the Company, whether now existing or hereafter arising, fixed or
contingent, due or not due, liquidated or not liquidated, determined or
undetermined, including in each case any amendment, renewal, supplement,
extension, refinancing, restructuring, refunding or modification thereof.
"STOCK PLEDGE AGREEMENT" means the Amended and Restated Stock Pledge
Agreement dated as of November 25, 1996 between CB Holdings and the Lender, in
the form of Exhibit V hereto, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company which is
subordinated in right of payment to the Loan and the Notes at least to the same
extent as the Loan and the Notes are subordinated to Senior Debt.
"SUBSIDIARY" means any corporation or other entity (i) of which more
than fifty percent (50%) of the total voting power of the shares of capital
stock or other securities or other
24
ownership interests entitled to vote in the election of the Board of Directors
or other persons performing similar functions are at any time directly or
indirectly owned by the Company or (ii) of which more than fifty percent (50%)
of the outstanding shares of stock of any class (or of any other class of
ownership interests), is owned, beneficially or of record, directly or
indirectly, by the Company or any of its Subsidiaries; provided, however, that
-------- -------
the term "Subsidiary" shall not include any of the Persons set forth on Schedule
1.01(c) to the Senior Credit Agreement (as in effect on the date hereof).
"TAXES" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, withholdings or other charges of any nature whatsoever
from time to time or at any time imposed by any Law or any Tribunal.
"TRADEMARKS" means trademarks, servicemarks and trade names, all
registrations and applications to register such trademarks, servicemarks and
trade names and all renewals thereof, and the goodwill of the business
associated with or relating to such trademarks, servicemarks and trade names,
including, without limitation, any and all licenses and rights granted to use
any trademark, servicemark or trade name owned by any other person.
"TRADE PAYABLES" of any Person means accounts payable and other
similar accrued current liabilities in respect of such obligations or any other
indebtedness or monetary obligations to trade creditors created, assumed or
guaranteed by such Person or any of its Subsidiaries in the ordinary course of
business in connection with the obtaining of materials or services.
"TRIBUNAL" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any other jurisdiction or any
state, province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter constituted
and/or existing or political subdivision thereof.
"UNITED STATES" means the United States of America and its territories
and possessions.
"UNITED STATES PERSON" means any citizen or resident of the United
States, any corporation or partnership created or organized in or under the laws
of the United States or any political subdivision thereof, and any estate or
trust which is subject to United States Federal income taxation regardless of
the source of its income.
"WAREHOUSED REAL PROPERTY" means Real Property acquired by the Company
or any of its Wholly-owned Subsidiaries with the intention of selling or
transferring such Real Property to any Person, including, but not limited to, a
partnership of which the Company or one of its Wholly-owned Subsidiaries is a
general or limited partner or other investment entity in which the Company or
any of its Subsidiaries has an interest or which is managed by the Company or
any of its Subsidiaries. Warehoused Real Property shall also include the Real
Property identified in Schedule A hereto.
25
"WESTMARK" means Westmark Realty Advisors L.L.C., a Delaware limited
liability company.
"WESTMARK ACQUISITION AGREEMENT" means the Purchase Agreement dated as
of May 15, 1995 among Westmark Acquisition Partnership, the Company, and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and certain other individuals (together the "WESTMARK SELLERS"), and all
schedules and exhibits thereto, as in effect on the Amendment Effective Date
(as defined in the Limited Waiver, Consent and Amendment No. 3 hereto dated as
of June 30, 1995 (the "THIRD AMENDMENT")).
"WESTMARK ACQUISITION DOCUMENTS" means, collectively, the Westmark
Acquisition Partnership Agreement, the Westmark Acquisition Agreement, the
Realty Advisors Management Agreement, and the Westmark Subordinated Credit
Agreement and each agreement ancillary thereto entered into in connection with
the Closing (as defined in the Westmark Acquisition Agreement), in each case
together with all schedules and exhibits thereto.
"WESTMARK ACQUISITION PARTNERSHIP" means Westmark Real Estate
Acquisition Partnership, L.P., a Delaware limited partnership formed pursuant
to the Agreement of Limited Partnership of Westmark Real Estate Acquisition
Partnership, L.P. dated as of May 15, 1995 (the "WESTMARK ACQUISITION
PARTNERSHIP AGREEMENT") between the Company, as sole general partner, and the
Citicorp Affiliate, as limited partner.
"WESTMARK EARN-OUT PAYMENTS" means payments of the Supplemental
Purchase Price (as defined in the Westmark Acquisition Agreement) made or
required to be made by Westmark Acquisition Partnership pursuant to the Westmark
Acquisition Agreement and payments under the Incentive Compensation Plan
established pursuant to Section 9.17 of the Westmark Acquisition Agreement and
as in effect on the Closing Date (as defined in the Westmark Acquisition
Agreement).
"WESTMARK SELLER FINANCING" means the aggregate portion of the Initial
Purchase Price deferred by the Westmark Sellers pursuant to Sections 2.6(a) and
2.7(a) of the Westmark Acquisition Agreement.
"WESTMARK SUBORDINATED DEBT" means Indebtedness of Westmark
Acquisition Partnership to the Citicorp Affiliate in an amount not in excess of
$10,000,000 in aggregate principal amount, together with accrued and unpaid
interest thereon (including any such interest that is capitalized or paid-in-
kind by issuance of additional promissory notes), incurred by Westmark
Acquisition Partnership pursuant to the Senior Subordinated Credit Agreement
dated as of June 30, 1995 (the "WESTMARK SUBORDINATED CREDIT AGREEMENT") between
Westmark Acquisition Partnership and the Citicorp Affiliate, as in effect on the
Amendment Effective Date (as defined in the Third Amendment).
"WHOLLY-OWNED SUBSIDIARY" means any corporation, association or other
business entity of which 100% of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof
26
is at the time owned or controlled, directly or indirectly, by any Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
Section 1.2 Accounting Terms
----------------
For the purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
Section 1.3 Other Definitional Provisions; Anniversaries
--------------------------------------------
Reference to "Sections" and "Subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. For purposes of this Agreement, a monthly anniversary of the Funding
Date shall occur on the same day of the applicable month as the day of the month
on which the Funding Date occurred; provided that if the applicable month has no
--------
such day (i.e., 29, 30 or 31), the monthly anniversary shall be deemed to occur
----
on the last day of the applicable month.
ARTICLE II
LOAN AND NOTES
Section 2.1 Loan and Notes.
--------------
The Lender made a loan to the Company on the Funding Date in the
original principal amount of $62,000,000, the entire principal amount of which
remains outstanding as of the date hereof, and the Company has Deferred Interest
on such principal amount owing to the Lender in the aggregate amount of
$8,916,216.37, which remains outstanding as of the date hereof (together with
any Deferred Interest hereafter arising hereunder, collectively, the "Loan").
The Loan shall be evidenced by a promissory note of the Company such
note to be substantially in the form of Exhibit I-A hereto (the "Term Note"),
dated as of the Effective Date, payable to the order of the Lender and in the
principal amount of $62,000,000 and by a note of the Company such note to be
substantially in form of Exhibit I-B hereto (the "Payment-in-Kind Note") dated
as of the Effective Date. Such notes shall be payable to the order of the
Lender, duly completed, executed and delivered by the Company, as borrower.
27
Section 2.2 Payment of Loan.
---------------
The Loan and all other amounts owed hereunder with respect to the Loan
shall be paid in full by July 23, 2002, unless earlier paid in accordance with
the terms of this Agreement.
In addition to the prepayment or repayment of the obligations under
the Payment-In-Kind Note required as a condition precedent under Article III
hereof, all remaining obligations of the Company represented by the Payment-In-
Kind Note (including any interest accrued to date thereon) shall be paid in cash
on the earlier of (i) the 91st day after the Senior Loan Repayment Date (as
defined below) and (ii) any day on which any principal on the Loan is payable
hereunder (whether at stated maturity, by acceleration, prepayment or offer to
purchase or otherwise, any such day being a "Principal Paying Day").
Section 2.3 Interest on the Loan
--------------------
(a) The Company hereby promises to pay to the Lender interest on the
unpaid principal amount of the Loan, as provided in clauses (i), (ii) and (iii)
below, until all principal (including compounded interest pursuant to clause
(ii) below) shall have been paid in full, at a rate equal to LIBOR for the
relevant LIBOR Interest Period plus the Applicable LIBOR Margin for such period.
(i) All interest on the Loan (including interest on any
Deferred Interest) which becomes due and payable (i.e. on the last day
----
of each LIBOR Interest Period) on or after the earlier of (x) the
Offering Closing Date and (y) January 1, 1997, shall be paid in cash
at the Applicable LIBOR Based Rate on the last day of each LIBOR
Interest Period.
(ii) All interest on the Loan (including interest on any
Deferred Interest) accrued and payable in excess of the interest
computed at the Applicable LIBOR Based Rate shall (x) until the Senior
Loan Repayment Date (as defined below), not be paid in cash and shall
be compounded quarterly on the last day of each LIBOR Interest Period,
and all such accrued and deferred interest (including any Deferred
Interest thereon) shall be paid in cash on the 91st day after the
Senior Loan Repayment Date and on any Principal Paying Day; and (y)
for periods from and after the Senior Loan Repayment Date, be fully
paid in cash on the last day of each LIBOR Interest Period and on any
Principal Paying Day. As used herein, "Senior Loan Repayment Date"
means the date of repayment in full in cash of all amounts of
principal and interest under the Loans (as defined in the Senior
Credit Agreement) under the Senior Credit Agreement (whether at stated
maturity, by acceleration, prepayment or offer to purchase or
otherwise).
(iii) Notwithstanding the foregoing, to the fullest extent
permitted by law, interest shall be payable at the Post-Default Rate
on the amounts payable under this Agreement which shall not be paid in
full when due (whether at stated maturity, by acceleration, prepayment
or offer to purchase or otherwise) for the period commencing on the
due date thereof until the same is
28
paid in full, and such interest at the Post-Default Rate shall be paid
in cash, on and after the 91st day after the Senior Loan Repayment
Date and on any Principal Paying Day, from time to time on demand of
the Lender.
Interest on the Loan shall be computed on the basis of a 360-day year and the
actual days elapsed in the period during which it accrues. In computing
interest on the Loan, interest shall accrue from and including the first day of
a LIBOR Interest Period to but excluding the last day of such LIBOR Interest
Period.
The obligation of the Company to pay interest in kind and/or cash
interest accrued but not paid currently under clause (ii) above shall be
additionally evidenced by an additional promissory note in the form attached
hereto as Exhibit I-C (the "Second Payment-In-Kind Note"). The Second Payment-
In-Kind Note shall be in addition to the Term Note and the Payment-In-Kind Note.
(b) If on or before the commencement of any LIBOR Interest Period, the
Lender shall have determined either (i) adequate and reasonable means do not
exist for ascertaining LIBOR as herein provided or (ii) U.S. Dollar deposits in
an amount comparable to the outstanding principal amount of the Loan are not
generally available at such time in the London Interbank Eurodollar market for
such LIBOR Interest Period, the Lender shall so notify the Company and both
shall attempt to reach a mutually satisfactory alternative rate. If no such
mutually satisfactory alternative rate has been agreed upon by the Lender and
the Company before the date which is two Business Days prior to the commencement
of the next succeeding LIBOR Interest Period, the rate for such LIBOR Interest
Period shall be equal to a rate which fairly reflects the cost to the Lender
(and, if applicable, any participant holding a funded participation in the Loan)
of obtaining funds in an amount equal to the outstanding principal of the Loan
plus the Applicable LIBOR Margin. The Lender shall use reasonable efforts to
acquire funds from an interbank dollar market other than the London Interbank
Eurodollar market with respect to any LIBOR Interest Period affected by the
circumstances described in this subsection (b) if the use of such other market
will avoid such circumstances without prejudicing the interests of the Lender.
Section 2.4 Loan Extension and Amendment Fees.
---------------------------------
The Company agrees to pay to the Lender certain fees and costs as
separately set forth in a letter agreement dated as of the date hereof between
the Company and the Lender (the "Letter Agreement"). Such fees and costs shall
be paid within three Business Days of the Offering Closing Date or as otherwise
set forth in the Letter Agreement. Such fees and costs shall for all purposes
be deemed amounts payable hereunder.
Section 2.5 Voluntary Prepayments.
---------------------
The Company may, at any time and from time to time, prepay the Loan,
without premium, in whole or in part; provided, that (i) so long as any Senior
--------
Credit Agreement Obligation is outstanding, such prepayment shall only be
accepted by the Lender if accompanied by a certificate of the Senior Agent
stating that such prepayment is not a violation of the Senior
29
Credit Agreement or the agreement governing Permitted Refinancing Indebtedness,
(ii) the Company shall give the Lender at least five Business Days' prior notice
of each prepayment in accordance with the provisions of Section 9.9 hereof
specifying the principal amount to be prepaid and the date of prepayment (which
shall be a Business Day), (iii) each partial prepayment of the Loan shall be in
an aggregate principal amount of at least equal to $100,000 and in a multiple of
$100,000, (iv) interest on the principal prepaid, accrued to the prepayment
date, shall be paid on the prepayment date and (v) amounts prepaid may not be
reborrowed. Notice of prepayment once given shall be irrevocable and, in
connection with any prepayments, the Company shall comply with the provisions of
Section 2.13 of this Agreement. Voluntary prepayments shall be credited against
the outstanding principal amount of the Loan.
If the Offering Closing Date shall occur on or after December 28, 1996
but before March 31, 1997 and if the Company is required to pay $10,000,000 out
of IPO Net Proceeds to Lender in accordance with Article III hereof, the Company
shall repay any then outstanding Deferred Interest, up to $15,664, within three
Business Days of the Offering Closing Date
Section 2.6 Mandatory Prepayments from Asset Sales.
--------------------------------------
In the event of any Asset Sale not permitted by Section 6.7(a) to the
extent not (1) required by the Senior Credit Agreement or any agreement
governing Permitted Refinancing Indebtedness to prepay Senior Credit Agreement
Obligations, (2) voluntarily used by the Company to prepay or repay the Senior
Credit Agreement Obligations and in the case of a repayment of a revolving loan,
a permanent reduction in the commitment in an amount equal to such payment, (3)
prohibited by the Senior Credit Agreement or any agreement governing Permitted
Refinancing Indebtedness or (4) used by the Company to make Capital
Expenditures, in each case within 60 days after receipt by the Company or any
Subsidiary of the Company of Cash Proceeds of any Asset Sales occurring after
the Funding Date, the Company shall (i) prepay the Loan in an amount equal to
the Estimated Net Cash Proceeds of such Asset Sale, but only to the extent that
the Company has actually received Net Cash Proceeds of such Asset Sale (and
subject to the provisions of the next sentence) or (ii) if applicable, within 60
days after any Asset Sale, the Company shall deliver to the Lender an Officers'
Certificate evidencing the extent to which the Cash Proceeds of such Asset Sale
were used or will be used for Capital Expenditures. On the 90th day after
receipt of Cash Proceeds of an Asset Sale in respect of which a prepayment based
on Estimated Net Cash Proceeds has been made, the Company shall make an
additional prepayment of the Loan in an amount equal to the excess ("Proceeds
Adjustment"), if any, of (1) Net Cash Proceeds of such Asset Sale over (2)
Estimated Net Cash Proceeds of such Asset Sale, provided that if either
--------
Estimated Net Cash Proceeds or the Proceeds Adjustments from an Asset Sale is
less than $1,000,000, such amount shall not be applied to the prepayment of the
Loan until the sum of such amounts and all other Estimated Net Cash Proceeds or
Proceeds Adjustments payable by the Company but not previously paid is equal to
or greater than $1,000,000. Concurrently with the making of any prepayment
pursuant to this Section 2.6, the Company shall deliver to the Lender an
Officers' Certificate demonstrating the derivation of Net Cash Proceeds of Sale
from the gross sales price of any correlative Asset Sale.
30
All mandatory prepayments shall include payment of accrued interest on
the principal amount so prepaid and shall be applied to payment of interest
before application to principal and shall be subject to the provisions of
Section 2.13 of this Agreement.
Section 2.7 Lender's Optional Right of Prepayment.
-------------------------------------
Upon the occurrence of a Change of Control, the Lender shall have the
right to require the prepayment of the Loan provided that prior to any exercise
-------------
by the Lender of such prepayment rights, the Company shall have (i) repaid in
full all Indebtedness under the Senior Credit Agreement and any agreement
governing Permitted Refinancing Indebtedness or (ii) offered to repay in full
all such Indebtedness and repaid the Indebtedness of each lender under the
Senior Credit Agreement or such other agreement who has accepted such offer or
(iii) obtained the requisite consent under the Senior Credit Agreement or such
other agreement to permit the prepayment of the Loan as provided for in this
Section 2.7. The conditions set forth in the foregoing (i)-(iii) shall have
been satisfied before the Company shall be required to prepay the Loan pursuant
to this Section 2.7.
Section 2.8 Manner and Time of Payment.
--------------------------
All payments of principal and interest and loan fees hereunder and
under the Notes by the Company shall be made without defense, set off or
counterclaim and in same day funds and delivered to the Lender not later than
2:00 P.M., New York Time on the date due at its current account number 283 883
at The Sumitomo Bank, Limited New York Branch, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (or such other account as the Lender shall give the Company at least
5 Business Days notice given in accordance with the provisions of Section 9.9
hereof). Funds received by the Lender after that time shall be deemed to have
been paid by the Company on the next succeeding Business Day.
Any payments made to the Lender shall be applied in the following
order of priority: (a) first, against costs, expenses and indemnities due
hereunder, (b) second, against default interest, if any, (c) third, against
interest due on the Loan and (d) thereafter against the principal of the Loan.
The Lender shall open and maintain on its books a loan account in the Company's
name. Such loan account shall show the Loan, all repayments, the computation,
compounding, accrual and payments of interest and other amounts due and sums
paid hereunder. Such loan account shall be available for inspection by the
Company at reasonable times. The notations in such loan account shall be
conclusive and binding upon the Company as to the amount at any time due from
the Company, absent manifest error.
Whenever any payment to be made hereunder or under the Notes shall be
stated to be due on a day which is not a Business Day, the payment shall be made
on the next succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the Notes;
provided, that if any extension would result in such payment being made in a
--------
succeeding calendar month, the payment shall instead be made on the immediately
preceding Business Day.
31
Section 2.9 Notation of Payment.
-------------------
The Lender agrees that it will make a notation on each Note of all
principal and interest payments made thereon and will notify the Company of the
name and address of the transferee of each Note; provided that the failure to
--------
make (or any error in the making of) a notation of any such payments on any Note
or to notify the Company of the name and address of such transferee shall not
limit or otherwise affect the obligation of the Company hereunder or under such
Note.
Section 2.10 Notice to Senior Credit Agreement Senior Agent.
----------------------------------------------
If the Lender receives any payment or prepayment other than its
payment of accrued interest, the Lender will send notice in writing to the
Senior Agent and if, within five Business Days after notice shall have been
given, the Senior Agent notifies the Lender that such payment or prepayment
constitutes an event of default under the Senior Credit Agreement or any
agreement governing Permitted Refinancing Indebtedness or any payment is due and
owing on any Senior Credit Agreement Obligations, the Lender shall immediately
remit any such payment or prepayment to the Senior Agent for application to the
Senior Credit Agreement Obligations.
Section 2.11 Use of Proceeds.
---------------
No portion of the proceeds of the Loan shall be used by the Company in
any manner which might cause the borrowing or the application of such proceeds
to violate Regulation G, Regulation U, Regulation T or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of the Board
or to violate the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
Section 2.12 Increased Costs.
---------------
(a) Except in respect of an event subject to subsection (c) of this
Section 2.12, which event shall be governed by the provisions of that section,
if, after the Effective Date, the adoption of, or any change in, any law, rule
or regulation (including Regulation D), or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Lender with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency (a "Regulatory
Change") shall impose, modify or deem applicable any reserve (including, without
limitation any reserve imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of credit extended by the Lender or shall impose on the
Lender or the London interbank market any other conditions affecting the Loan,
and the result of any of the foregoing is to increase the cost to the Lender of
maintaining the Loan, or to reduce the amount of any sum received or receivable
by the Lender under this Agreement, then, within 15 days after written request
by the Lender, the Company shall pay to the Lender such additional amount or
amounts as may be necessary to compensate it for such increased cost. As soon
as practicable, the Lender will notify the Company of any event of which it has
knowledge, occurring after the Effective Date, which will entitle it to
compensation
32
pursuant to this Section 2.12 and will use reasonable efforts to take such
action as will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable opinion of the Lender, be otherwise
disadvantageous to it.
(b) Without limiting the effect of the foregoing, the Company will pay
to the Lender if it requests compensation under this subsection (b) by written
notice to the Company, on the last day of each LIBOR Interest Period and on any
other day on which interest is payable hereunder, so long as the Lender shall be
required to maintain reserves against "Eurocurrency liabilities" under
Regulation D (or, so long as it may be required, by reason of any Regulatory
Change, to maintain reserves against any other category of liabilities which
includes deposits by reference to which the interest rate on the Loan is
determined as provided in this Agreement) an additional amount (determined by
the Lender and communicated in writing to the Company) equal to the product of
the following for each day for which the Lender may be required to maintain any
such reserves during such LIBOR Interest Period: (i) the principal amount of
the Loan which is outstanding on such day; and (ii) the amount by which (x) a
fraction the numerator of which is the rate (expressed as a decimal) at which
interest accrues on the Loan for such LIBOR Interest Period as provided in this
Agreement (less the Applicable LIBOR Margin) and the denominator of which is one
minus the rate (expressed as a decimal) at which such reserve requirements are
imposed on the Lender against such "Eurocurrency liabilities" or such other
category of liabilities on such date exceeds (y) such numerator; and (iii)
1/360. A certificate of the Lender claiming compensation under this Section
2.12 and setting forth the additional amount or amounts to be paid to it
hereunder and setting forth in reasonable detail the calculations thereof shall
be conclusive in the absence of manifest error.
(c) If the Lender shall reasonably determine that subsequent to the
Effective Date, there shall have occurred the adoption of or any change in any
law, rule or regulation concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, other than a change subsequent to the Effective Date
implementing the capital adequacy proposals of the Bank for International
Settlements - Committee on Banking Regulations and Supervisory Practices
published in July 1988 under the title "International Convergency of Capital
Measurement and Capital Standards", which has the effect of increasing, by an
amount deemed material by the Lender, the amount of capital required to be
maintained by the Lender as a result of the existence of the Loan compared to
the amount of capital which would otherwise be required to be maintained by the
Lender in the absence of the Loan and the Lender desires to obtain compensation
therefor from the Company, the Lender will promptly notify the Company thereof.
Thereafter, subject to the later provisions of this subsection (c), the Company
will pay to the Lender upon written demand such amounts as shall be necessary to
compensate for the increased cost incurred or any resulting reduction in return
on capital suffered by the Lender as a result of an actual increase in the
Lenders' capital due to an event described in the first sentence of this
subsection (c) for the period from the date of any previous payment to the
Lender in relation thereto to the date of receipt of such demand by the Company.
In determining such amount, the Lender will act reasonably and in good faith.
Any demand by the Lender for any payment under this subsection (c) shall be
accompanied by a statement setting forth in reasonable detail the basis for
calculation of such increased costs. As soon as practicable after becoming
aware of the same, the Lender shall notify the Company of any event occurring
after the Effective Date which
33
will entitle it to compensation pursuant to this subsection (c) and will use
reasonable efforts (determined in its absolute discretion exercised in good
faith) to take such action which in its reasonable opinion will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
opinion of the Lender be otherwise disadvantageous to it.
Section 2.13 Funding Losses.
--------------
The Company shall pay to the Lender, upon its written request (which
request shall set forth in reasonable detail the basis for requesting such
amounts), such amount or amounts as shall compensate the Lender for any loss,
cost or expense incurred by it as a result of:
(a) any prepayment of the Loan or a portion thereof on a date
other than the last day of the LIBOR Interest Period or
(b) any failure by the Company to prepay the Loan or any portion
thereof on the date specified in a notice of prepayment given pursuant to
Section 2.5 of this Agreement or
(c) any Event of Default relating to nonpayment of the Loan
whether at maturity or upon acceleration.
For purposes of this Section 2.13, the costs and losses of the Lender shall
include any funding or carrying costs and/or losses in connection with the
acquisition or liquidation of deposits acquired by the Lender to make or
maintain the Loan and any funding or carrying costs and/or losses in connection
with the re-employment of funds during the remainder of the then current LIBOR
Interest Period, including any loss arising from the re-employment of funds at
rates lower than the cost to the Lender of such funds and any related costs.
The Lender shall certify such costs and losses (including a reasonably detailed
description thereof) to the Company. The Lender shall act in good faith to
minimize its costs and losses otherwise payable by the Company hereunder.
Section 2.14 Deduction or Withholding for Taxes.
----------------------------------
(a) All sums payable by the Company or any Guarantor hereunder,
whether of principal, interest, fees, expenses or otherwise, shall be paid in
full, without set-off or counterclaim for any reason whatsoever, and free of any
deductions or withholdings for any and all taxes, levies, imposts, deductions,
charges, withholdings and all liabilities with respect thereto excluding taxes
on net income, net worth or shareholders' capital imposed by the jurisdiction of
the Lender's incorporation or the jurisdiction of its lending office (and in
each case any political subdivision or taxing authority thereof or therein). In
the event that the Company or any Guarantor is prohibited by law from making
payments hereunder free of such deductions or withholdings, then the Company or
such Guarantor shall pay such additional amounts to the Lender as may be
necessary in order that the actual amount received after such deduction or
withholding (and after deduction of an amount equal to any additional taxes or
other charges payable as a consequence of the payment of such additional amount)
shall equal the
34
amount that would have been received if such deduction or withholding were not
required; provided, that, if the Lender fails to comply with the provisions of
--------
paragraph (d) of this Section 2.14, then all such payments to the Lender shall
be net of any amount the Company or such Guarantor is required to withhold under
applicable law.
(b) The Company shall pay directly to the appropriate taxing
authorities any and all present and future taxes, levies, imposts, stamp and
other duties, and other fees or charges and all liabilities with respect thereto
imposed on or with regard to any aspect of the transactions contemplated by this
Agreement or the execution and delivery of this Agreement or the other Loan
Documents. The Company shall hold the Lender harmless from any liability with
respect to the delay or failure by the Company to pay any such taxes or charges,
and shall reimburse the Lender upon demand for any such taxes paid by the Lender
in connection herewith whether or not such taxes shall be correctly or legally
asserted or otherwise contested or contestable together with any interest,
penalties and expenses in connection therewith, provided, if such taxes result
--------
from the failure of the Lender to comply with subsection (d) of this Section
2.14, the Company shall not have any obligation to reimburse the Lender under
this subsection (b).
(c) If the Company or any Guarantor shall pay any tax or charge as
provided herein or shall make any deductions or withholdings from amounts paid
hereunder, the Company or such Guarantor shall forthwith forward to the Lender
copies of official receipts or other evidence acceptable to the Lender to
establish any tax credit to which the Lender may be entitled.
(d) The Lender agrees promptly to deliver, to the extent that it may
lawfully do so, to the Company on the Funding Date and each year thereafter that
the Loan remains outstanding, such forms (including Internal Revenue Service
Form 1001), duly completed and executed by the Lender, sufficient to establish
that all payments under this Agreement by the Company may be paid without
deduction or withholding for or on account of any taxes, levies, imposts,
duties, fees, assessments or other charges of any nature imposed by any
government or any political subdivision or taxing authority thereof. Upon
request of the Lender, the Company shall provide the Lender with the appropriate
forms in order to enable it to comply with this provision.
(e) The Lender agrees to use reasonable efforts to take such action to
avoid the imposition of withholding liability hereunder or reduce the amount
thereof which in the reasonable opinion of the Lender would not otherwise be
disadvantageous to it.
Section 2.15 Event of Illegality.
-------------------
Upon the occurrence of an Event of Illegality, then the Lender shall
promptly notify the Company and the Senior Agent thereof and, unless such
prepayment is a violation of the Senior Credit Agreement or any agreement
governing Permitted Refinancing Indebtedness, the Company shall prepay the
outstanding Loan together with interest accrued to the date of prepayment within
30 days after such notice and consent shall have been received by the Company.
Such notice shall include evidence certified by the Lender as to such Event of
35
Illegality. As soon as practicable, the Lender will notify the Company and the
Senior Agent of any event of which it has knowledge, occurring after the Funding
Date which will or is likely to become an Event of Illegality. The Lender will
take such reasonable action as will avoid such Event of Illegality.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effective Date.
--------------------------------------
The occurrence of the Effective Date shall be subject to satisfaction
of all of the following conditions precedent all in form and substance
satisfactory to the Lender:
A. Effective Date. The Effective Date shall have occurred on or
--------------
before March 31, 1997.
B. Public Offering. The IPO shall have been completed and such
---------------
completion shall have occurred on or before March 31, 1997, and the IPO Net
Proceeds shall be at least $65,000,000.
C. Distribution of IPO Net Proceeds.
--------------------------------
(1) The total amount of IPO Net Proceeds up to $69,350,000 shall
have been paid to the Senior Agent, for the account of the lenders
under the Senior Credit Agreement.
(2) The amount of IPO Net Proceeds, if any, in excess of
$69,350,000 shall have been paid as follows: (x) 50% of the amount of
IPO Net Proceeds, if any, in excess of $69,350,000 shall have been
paid to the Senior Agent and (y) 50% of such amount of IPO Net
Proceeds in excess of $69,350,000 shall be paid to Lender, up to the
amount of all accrued and deferred interest or $10,000,000, whichever
is less, as payment of Deferred Interest.
D. On or before the Effective Date, the Lender shall have received
the following, each of which, unless otherwise noted, shall be dated the
Effective Date:
(1) a certified copy of the charter of each of the Guarantors and
the Company, certified by the Secretary or one of the Assistant
Secretaries of each of the Guarantors and the Company, respectively,
together with a good standing certificate from the Secretary of State
of the state of incorporation of each of the Guarantors and the
Company, each to be dated a recent date on or prior to the Effective
Date;
36
(2) a copy of the By-laws of each of the Guarantors and the
Company, certified as of the Effective Date, in each case, by the
Secretary or one of the Assistant Secretaries of each of the
Guarantors and the Company, respectively;
(3) (a) Resolutions of the Company's Board of Directors
approving and authorizing the execution, delivery and performance of
this Agreement and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
approving and authorizing the execution, delivery and payment of the
Notes, each certified as of the Effective Date by the Company's
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(b) Resolutions of CB Holdings's Board of Directors
approving and authorizing the execution, delivery and performance of
this Agreement and certified as of the Effective Date by CB Holdings's
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification; and
(c) Resolutions of the Board of Directors of each Guarantor
approving and authorizing the execution, delivery and performance of
the Guarantee, certified as of the Effective Date by each of the
Guarantors' Secretaries or one of its Assistant Secretaries as being
in full force and effect without modification.
(4) (i) Signature and incumbency certificates of the Company's
and the Guarantors' officers executing this Agreement, and the
Company's officers executing the Notes;
(5) Fully executed copies of this Agreement, the Third Amended
and Restated Senior Credit Agreement, the Letter Agreement, the Notes
and the schedules and exhibits hereto and thereto; and
(6) Such other documents as the Lender may reasonably request.
E. On or before the Effective Date, the Company shall have paid all
fees and expenses that are due and payable on or before the Effective Date.
F. On or before the Effective Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Lender, shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received all such counterpart originals
or certified copies of such documents as the Lender may reasonably request.
G. The Lender shall have received originally executed copies of
opinions of Pillsbury, Madison & Sutro LLP, counsel for CB Holdings, the
Subsidiaries and the Company and of general counsel of the Company, in
substantially the forms of Exhibits III and IV annexed hereto, respectively,
dated as of the Effective Date.
37
H. The Company and CB Holdings shall have performed in all material
respects all agreements which this Agreement provides shall be performed on or
before the Effective Date except as otherwise disclosed to and agreed to in
writing by the Lender.
I. No event shall have occurred and be continuing or would result
from the consummation of the transactions contemplated hereunder or under the
Senior Credit Agreement or IPO Documents which would constitute an Event of
Default or Potential Event of Default.
J. No order, judgment or decree of any court, arbitrator or
governmental authority shall enjoin or restrain the Lender from entering into
this Agreement or consummating the transactions contemplated hereby.
K. There shall not be existing, or to the knowledge of the Company
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Company or any of its Subsidiaries or any
property of the Company or any of its Subsidiaries, which has not been disclosed
by the Company in writing pursuant to Section 4.11 of this Agreement, and there
shall have occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed, which, in
the opinion of the Lender, could reasonably be expected to materially and
adversely affect the business, operations, properties, assets or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or to impair the ability or obligation of the Company to perform or of the
Lender to enforce the Obligations. No injunction or other restraining order
shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of this
Agreement.
L. The use of proceeds of the Loan by the Company shall not violate
Regulation U of the Federal Reserve Board.
M. No material adverse change shall have occurred since December 31,
1995 in the business, assets, prospects, results of operations or financial
condition (i) of the Company or the Company and its Subsidiaries, taken as a
whole or (ii) CB Holdings and its consolidated subsidiaries, taken as a whole.
N. On or before the Effective Date, all required approvals, consents
and waivers under the Senior Credit Agreement to this Agreement and the
transactions contemplated hereby shall have been obtained.
O. On the Offering Closing Date and the Effective Date the Company
shall provide the Lender with an Officer's Certificate (A) that all of the
Company's representations set forth in this Agreement are true and correct on
such date as if made on and as of such date, and (B) that no Default or Event of
Default has occurred and is existing under this Agreement and (C) that the Third
Amended and Restated Senior Credit Agreement will concurrently be in full force
and effect as of the Effective Date.
38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 General.
-------
In order to induce the Lender to enter into this Agreement and to
extend the maturity of the Loan, each of CB Holdings and the Company, as the
case may be, represents and warrants to the Lender that, at the time of the
Offering Closing Date and the Effective Date and after consummation of the
transactions contemplated hereby and by the Senior Credit Agreement, the
statements set forth in this Article IV are true, correct and complete.
Section 4.2 Organization and Good Standing.
------------------------------
Each of CB Holdings, the Company and its United States Subsidiaries is
a corporation or other business entity, duly organized and existing in good
standing under the laws of its jurisdiction of incorporation or formation. Each
of CB Holdings, the Company and its United States Subsidiaries has the
corporate power and authority to own its properties and assets and to transact
the business in which it is engaged and is duly qualified as a foreign
corporation and in good standing in all states in which it is doing business,
except where failure to be so qualified will not have a Material Adverse Effect.
Section 4.3 Authorization and Power.
-----------------------
Each of CB Holdings, the Company and its Subsidiaries has the
corporate power and requisite authority, and has taken all action necessary, to
execute, deliver and perform the Loan Documents, the Senior Credit Agreement and
the Senior Credit Agreement Notes executed or to be executed by it and to issue
the Notes and the Senior Credit Agreement Notes and to grant the security
interest in the Collateral pursuant to the Stock Pledge Agreement.
Section 4.4 No Conflicts or Consents.
------------------------
Except as disclosed in Schedule F, to the knowledge of CB Holdings and
the Company, the execution and delivery of the Loan Documents, the Senior Credit
Agreement, the Senior Credit Agreement Notes, the consummation of any of the
transactions herein or therein contemplated, and compliance with the terms and
provisions hereof or thereof, the issuance, delivery and performance of the
Notes, the Senior Credit Agreement Notes and the grant of the security interest
in the Collateral pursuant to the Stock Pledge Agreement, will not contravene or
materially conflict with any provision of Law to which CB Holdings, the Company
or any of its Subsidiaries is subject or any material judgment, license, order
or permit applicable to CB Holdings, the Company or any of its Subsidiaries, or
any material contract, lease, indenture, loan agreement, mortgage, deed of trust
or other agreement or instrument to which CB Holdings, the Company or any of its
Subsidiaries is a party or by which CB Holdings, the Company or any of its
Subsidiaries may be bound, or to which CB Holdings, the Company or any of its
Subsidiaries may be subject, or violate any provision of the charters or bylaws
of CB
39
Holdings, the Company or any of its Subsidiaries, which would in any case have a
Material Adverse Effect. Except as disclosed in Schedule 4.02 to the Senior
Credit Agreement, no consent, approval, authorization or order of any Tribunal
or other Person is required in connection with the execution and delivery by CB
Holdings, the Company or any of its Subsidiaries of the Loan Documents, the
Senior Credit Agreement, the Senior Credit Agreement Notes, the grant of the
security interest in the Collateral pursuant to the Stock Pledge Agreement or
the consummation of the transactions contemplated hereby or thereby, all of
which required consents, approvals and authorizations have been obtained by the
Company or waived in writing by the Lender, except with respect to which the
failure to obtain would not have a Material Adverse Effect.
Section 4.5 Enforceable Obligations.
-----------------------
The Loan Documents, the Senior Credit Agreement, the Senior Credit
Agreement Notes have been duly executed and delivered by CB Holdings, the
Company and each of its Subsidiaries party thereto and are, or will be, the
legal and binding obligations of CB Holdings, the Company and each such
Subsidiary, enforceable in accordance with their respective terms, except to the
extent that their enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 4.6 Title to Properties; Liens.
--------------------------
Except for Permitted Encumbrances and except as disclosed in Schedule
C, all of the material assets owned or leased by CB Holdings and the Company and
its Subsidiaries are free and clear of all Liens and other adverse claims of any
nature, each of CB Holdings, the Company and its Subsidiaries has good and
indefeasible title to, or valid and subsisting interests in, all Real Property
included in such assets and good and marketable title to, or valid and
subsisting interests in, all personal property included in such assets, and, to
the knowledge of CB Holdings and the Company and its Subsidiaries, except for
financing statements with respect to Permitted Encumbrances, there are no
presently effective financing statements of record in any jurisdiction covering
any material tangible or intangible assets of CB Holdings, the Company or its
Subsidiaries.
Section 4.7 Financial Condition.
-------------------
(a) The consolidated balance sheet of CB Holdings and its consolidated
subsidiaries at December 31, 1995, and the consolidated statements of income,
retained earnings and cash flows of CB Holdings and its consolidated
subsidiaries for the fiscal year then ended, copies of which have been
delivered to the Lender, were prepared in accordance with GAAP consistently
applied and fairly present the consolidated financial position of CB Holdings
and its consolidated subsidiaries, as at the date thereof and the results of
operations and cash flows of CB Holdings and its consolidated subsidiaries for
the periods then ended. Neither CB Holdings nor the Company or any of its
Subsidiaries, as the case may be, had on such dates any material Contingent
Liabilities, liabilities for Taxes or long-term leases, unusual forward or long-
term
40
commitments or unrealized or unanticipated losses from any unfavorable
commitments which are not reflected or reserved against in the foregoing
statements or in the notes thereto. Other than changes disclosed to the Lender
in writing prior to the Effective Date, no changes having a Material Adverse
Effect have occurred since the date of such financial information.
(b) CB Holding's unaudited consolidated balance sheets as at September
30, 1996, and related statements of income and retained earnings for the periods
then ended certified by the Chief Financial Officer, copies of which have been
delivered to the Lender, were prepared in accordance with GAAP consistently
applied (except to the extent noted therein) and fairly present the financial
position of CB Holdings and its consolidated subsidiaries as of such dates and
the results of operations for the periods covered thereby, subject to normal
year-end audit adjustments. CB Holdings, the Company or any of its Subsidiaries
did not have on such date any material Contingent Liability, liabilities for
Taxes or long-term leases, unusual forward or long-term commitment or unrealized
or unanticipated losses from any commitment or unrealized or unanticipated
losses from any unfavorable commitments which are not reflected or reserved
against in the foregoing statements or in the notes thereto.
(c) Solvency. Upon giving effect to the consummation of the
--------
transactions contemplated hereby and by the Senior Credit Agreement, the
following are true and correct to the best knowledge of the Company, after
reasonable investigation:
(i) The fair salable value of the Company and each of its
Subsidiaries exceeds the amount that will be required to be paid on or
in respect of the existing debts and other liabilities (including
Contingent Liabilities) of the Company or its Subsidiaries, as they
mature.
(ii) The assets of the Company and its Subsidiaries do not
constitute unreasonably small capital for each such company to carry
out its business as now conducted and as proposed to be conducted,
including the capital needs of each such company, taking into account
the particular capital requirements of the business conducted by such
company, and the projected capital requirements and capital
availability thereof.
(iii) The Company does not intend to, and will not permit
any of its Subsidiaries to, incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts or
cash to be payable on or in respect of debt of each of the Company and
it Subsidiaries). The cash flow of the Company and each of its
Subsidiaries, after taking into account all anticipated uses of the
cash of each such company, will at all times be sufficient to pay all
amounts on or in respect of debt of each such company when such
amounts are required to be paid.
(iv) The Company does not believe that final judgments
against any of the Company or its Subsidiaries in currently pending
actions for money damages will be rendered at a time when, or in an
amount such that, any such company will be unable to satisfy any such
judgments promptly in accordance
41
with their terms (taking into account the maximum reasonable amount of
such judgments in any such actions and the earliest reasonable time at
which such judgments might be rendered). The cash flow of the Company
and each of its Subsidiaries, after taking into account all other
anticipated uses of the cash of the Company and each of its
Subsidiaries (including the payments on or in respect of debt referred
to in paragraph (iii) of this Section 4.7(c)), will at all times be
sufficient to pay all such judgments promptly in accordance with their
terms.
Section 4.8 Accurate Information.
--------------------
All information previously furnished or delivered to Lender in
connection with this Agreement or the transactions contemplated hereunder or
under the Senior Credit Agreement is true and complete in all material respects.
Section 4.9 No Default.
----------
No event has occurred and is continuing which constitutes a Potential
Event of Default or an Event of Default.
Section 4.10 Material Agreements.
-------------------
(a) Neither the Company nor any of its Subsidiaries, is in default
under any Contractual Obligations to which it is a party or by which its
property is bound, where such default could have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries, is a party to or
bound by any unusual or unduly burdensome Contractual Obligation (excluding the
Senior Credit Agreement) which materially and adversely affects the business,
assets, prospects, results of operations or financial condition of the Company
and its Subsidiaries taken as a whole.
Section 4.11 No Litigation.
-------------
Except for the Litigation described in Schedule D hereto, there is no
material Litigation existing, or to the knowledge of CB Holdings or the Company
threatened, by or against CB Holdings, the Company or any of its Subsidiaries,
and in the opinion of the Company as of the date hereof and as of the date on
which such representation is deemed to have been made, no existing or threatened
Litigation will have a Material Adverse Effect. There are no outstanding
injunctions or restraining orders prohibiting consummation of any of the
transactions contemplated by the Loan Documents. For purposes of this
representation "material Litigation" shall mean any litigation which the Company
has determined could result in a judgment in excess of $1,000,000.
Section 4.12 Use of Proceeds; Margin Stock.
-----------------------------
The proceeds of the Loan will be used solely for the purposes
specified herein. None of such proceeds will be used for the purpose of
Regulation G, T, U or X, or for the
42
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry a Margin Stock or for any other purpose which might
constitute a "purpose credit" within the meaning of Regulation G, T, U or X.
Neither the Company nor any of its Subsidiaries has taken or will take any
action which might cause any of the Loan Documents to violate Regulation G, T, U
or X, or any other regulations of the Board of Governors of the Federal Reserve
System or to violate Section 8 of the Exchange Act or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter be in
effect.
Section 4.13 No Financing of Regulated Corporate Takeovers.
---------------------------------------------
No proceeds of the Loan will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Exchange Act, including
particularly (but without limitation) Sections 13(d) and 14(d) thereof.
Section 4.14 Taxes.
-----
All tax returns required to be filed by CB Holdings have been filed,
and all Taxes upon CB Holdings or upon any of its properties, income, franchises
or Plans have been paid prior to the time that such Taxes could give rise to a
Lien thereon, except for Contested Claims. There is no material proposed Tax
assessment against CB Holdings and, to CB Holdings's knowledge, there is no
basis for such assessment.
Section 4.15 ERISA.
-----
Except as disclosed in Schedule E hereto, (i) neither the Company nor
any ERISA Affiliate has sponsored, maintained or contributed to any
Multiemployer Plan or any Pension Plan during the past six years; (ii) no
material liability has been incurred by the Company or any of its Subsidiaries
which remains unsatisfied for any taxes or penalties (A) with respect to any
Plan that is not a Multiemployer Plan and (B) to the best of the Company's
knowledge and belief, with respect to any Multiemployer Plan; (iii) except as
described in Schedule D, no material Litigation is existing or, to the Company's
best knowledge, threatened concerning or involving any Plan; (iv) except as
shown in Schedule E with respect to the date and using the assumptions described
therein, and to the best of the Company's knowledge and belief, no unfunded or
unreserved liability exists for benefits under any Pension Plan; (v) except as
set forth in Schedule E and to the best of the Company's knowledge and belief,
neither the Company nor any of its Subsidiaries contributes to or, within the
prior six-year period contributed to any Multiemployer Plan; (vi) with respect
to each Multiemployer Plan set forth in Schedule E, neither the Company nor any
of its Subsidiaries has suffered or caused to occur a "complete withdrawal" or
"partial withdrawal" (as such terms are respectively defined in Sections 4203
and 4205 of ERISA); and in each of the cases described in any of clauses (i)
through (vi) preceding, an event described therein involving a Multiemployer
Plan shall be disregarded unless the aggregate of all such events and any
liabilities otherwise incurred with respect to a Multiemployer Plan have a
Material Adverse Effect.
43
Section 4.16 Compliance with Law.
-------------------
To the knowledge of CB Holdings and the Company, CB Holdings, the
Company and each of its Subsidiaries is in compliance with all Laws, except
where failure to comply will not have a Material Adverse Effect.
Section 4.17 Government Regulation.
---------------------
Neither CB Holdings, the Company, nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940 (as any of the preceding
acts have been amended) or other Law which regulates the incurring by the
Company or any of its Subsidiaries of Indebtedness, including, but not limited
to, Laws relating to common contract carriers or the sale of electricity, gas,
steam, water or other public utility services.
Section 4.18 Capital Structure and Subsidiaries.
----------------------------------
(a) As of the Effective Date, CB Holdings owns 100% of all classes of
stock of the Company. The authorized Capital Stock of the Company consists of
1,000 shares of common stock, par value $.01 per share, of which 100 shares are
issued and outstanding. All such outstanding shares of such common stock were
duly authorized and validly issued and, as of such time, are fully paid and
nonassessable and are owned beneficially and of record by CB Holdings free and
clear of all liens and encumbrances whatsoever, except for a first priority Lien
securing CB Holdings's obligations under its guaranty pursuant to the Senior
Credit Agreement and the second priority Lien securing CB Holdings's Guarantee.
(b) There are no outstanding subscriptions, options, warrants, calls,
rights (including preemptive rights) or other agreements or commitments of any
nature relating to any Capital Stock of the Company or any of its Subsidiaries.
(c) The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
Capital Stock.
Section 4.19 Licenses, Trademarks, etc.
-------------------------
The Company and its Subsidiaries own or hold valid licenses in all
necessary Trademarks, copyrights, patents, patent rights and licenses to conduct
their respective businesses as heretofore operated and as proposed to be
conducted. All of the Company's and its Subsidiaries' Trademarks, copyrights,
patents, patent rights, licenses or other similar rights owned or used by the
Company or any of its Subsidiaries are listed in Schedule 4.15 to the Senior
Credit Agreement, showing for each item the owner thereof, and the date (except
with respect to tradenames) and place of registration thereof. Neither the
Company nor any of its Subsidiaries has been charged or, to the knowledge of CB
Holdings and the Company, threatened to be charged with any infringement of,
nor, to their knowledge, has any of them infringed on, any unexpired Trademark,
patent, patent registration, copyright, copyright registration or other
proprietary right of any Person.
44
Section 4.20 Permits and Licenses.
--------------------
All material permits, licenses and other governmental authorizations
("Permits") needed by the Company or any of its Subsidiaries to carry on its
business have been obtained and are in full force and effect and have not been
modified or amended. Neither the Company nor any of its Subsidiaries is in
material breach of any such Permits except for breaches which, considered singly
or in the aggregate, would not have a Material Adverse Effect.
Section 4.21 Survival of Representations and Warranties.
------------------------------------------
Subject to Section 9.10, all representations and warranties in the
Loan Documents shall survive the delivery of the Notes, the making of the Loan
and the Effective Date hereof and shall continue until one year after repayment
of the Notes and the Obligations, and any investigation at any time made by or
on behalf of the Lender shall not diminish the Lender's right to rely thereon.
Section 4.22 Environmental Condition.
-----------------------
(a) To CB Holdings's and the Company's knowledge, all Real Property
that the Company or any of its Subsidiaries owns is free from contamination from
any Hazardous Materials (as such term is defined in the Senior Credit
Agreement). Neither the Company nor any of its Subsidiaries has caused or
suffered any Environmental Damage (as such term is defined in the Senior Credit
Agreement) that would have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries or, to CB
Holdings's and the Company's knowledge, any prior owner or occupant of the Real
Property owned by the Company or any of its Subsidiaries has received notice of
any alleged violation of Environmental Requirements (as defined in the Senior
Credit Agreement) of the type set forth in clause (i) of such definition or, to
the Company's knowledge, of the type set forth in clause (ii) of such
definition, or notice of any alleged liability for Environmental Damages in
connection with the Real Property, and there exists no writ, injunction, decree,
order or judgment outstanding, nor, to the knowledge of CB Holdings and the
Company, any claim, suit, proceeding, citation, directive, summons or
investigation, pending or threatened, relating to the ownership, use,
maintenance or operation of the Real Property by any Person, or from alleged
violation of Environmental Requirements, or from the suspected presence of
Hazardous Material thereon, nor, to the knowledge of CB Holdings and the
Company, does there exist any basis for such claim, suit, proceeding, citation,
directive, summons or investigation being instituted or filed.
(c) To CB Holdings's and the Company's knowledge, there is not
constructed, placed, deposited, stored, disposed of nor located on the Real
Property owned by the Company any polychlorinated biphenyls (PCBs) nor
transformers, capacitors, ballasts, or other equipment which contains dielectric
fluid containing PCBs, or any asbestos that would have a Material Adverse
Effect.
45
Section 4.23 Subsidiaries
------------
On the date hereof, the Company has no Subsidiaries other than those
identified in Schedule 4.01 to the Senior Credit Agreement. Except as set forth
on such schedule, on the date hereof neither the Company nor any of its
Subsidiaries owns or holds, directly or indirectly, any Capital Stock or equity
security of, or any equity interest in, any corporation or business other than
the Company's Subsidiaries.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1 Financial Statements and Other Reports.
--------------------------------------
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to the Lender:
(a) as soon as practicable and in any event within ninety (90) days
after the end of each fiscal year of the Company, the consolidated balance sheet
of the CB Holdings and its Subsidiaries as of the end of such year and the
related consolidated statements of income, stockholders' equity and cash flow
of CB Holdings and its Subsidiaries for such fiscal year, setting forth in each
case in comparative form the consolidated figures for the previous fiscal year,
all in reasonable detail, accompanied by an unqualified report thereon of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or other independent certified public accountants of recognized
national standing selected by CB Holdings and satisfactory to the Lender, which
report shall state that such consolidated financial statements fairly present
the financial position of CB Holdings and its Subsidiaries as at the date
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP (except as otherwise stated therein) and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards.
(b) as soon as practicable and in any event within forty five (45)
days after the end of each fiscal quarter a consolidated balance sheet of CB
Holdings and its Subsidiaries as at the end of such quarter and the related
consolidated statement of income of CB Holdings and its Subsidiaries for such
quarter and the portion of CB Holdings' fiscal year ended at the end of such
quarter, setting forth in each case in comparative form the consolidated figures
for the corresponding periods of the prior fiscal year, all in reasonable detail
and certified by the Company's Chief Financial Officer as fairly presenting the
financial condition of CB Holdings and its Subsidiaries as at the date indicated
and the results of their operations and cash flows for the periods indicated,
subject to normal year-end adjustment;
46
(c) together with each delivery of financial statements of CB Holdings
and its Subsidiaries pursuant to clauses (a) and (b) above, a Compliance
Certificate of the Company (i) stating that the signers have reviewed the terms
of the Agreement and the Notes and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
the Company and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence during
or at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of the Compliance Certificate, of any
condition or event which constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Company has taken, is
taking and proposes to take with respect thereto and (ii) demonstrating in
reasonable detail compliance (as determined in accordance with GAAP) during and
at the end of such accounting periods with the restrictions contained in Section
6.3;
(d) together with each delivery of consolidated financial statements
pursuant to clause (a) above, and so long as and to the extent not contrary to
the then current recommendations of the American Institute of Certified Public
Accountants, a written statement by the independent certified public accountants
giving the report thereon (i) stating that their audit examination has included
a review of the terms of this Agreement and the Notes as they relate to
accounting matters, (ii) stating whether in connection with their audit
examination, any Event of Default or Potential Event of Default has come to
their attention and if so, specifying the nature and period of existence
thereof, and (iii) confirming the calculations set forth in the Compliance
Certificate delivered simultaneously therewith pursuant to clause (c) above;
(e) promptly after the occurrence of any Event of Default or Potential
Event of Default, an Officers' Certificate of the Company setting forth the
details thereof and the action which the Company is taking or proposes to take
with respect thereto;
(f) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available by CB
Holdings to its security holders, all registration statements (other than the
exhibits thereto) and annual, quarterly or monthly reports, if any, filed by CB
Holdings with the Commission;
(g) promptly, to the extent delivered under the Senior Credit
Agreement or any agreement governing Permitted Refinancing Indebtedness, upon
becoming aware of the occurrence of (i) any Reportable Event involving any
Pension Plan, (ii) any "prohibited transaction," as such term is defined in
Section 4975 of the Internal Revenue Code (which prohibited transaction could
subject any ERISA Affiliate) to a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in
connection with any Plan (or any trust created thereunder), (iii) any assertion
of withdrawal liability of any Multiemployer Plan, (iv) any partial or complete
withdrawal (by the Company or an ERISA Affiliate) from any Multiemployer Plan
under Title IV of ERISA (or assertion thereof), (v) any cessation of operations
(by the Company or an ERISA Affiliate) at a facility in the circumstances
described in Section 4068(f) of ERISA, (vi) the withdrawal by the Company or an
ERISA Affiliate from a Pension Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA, (vii) the
failure by the Company or any
47
ERISA Affiliate to make a payment to a Plan required under Section 302(f)(1) of
ERISA, which Section imposes a lien for failure to make required payments,
(viii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA;
(h) promptly, to the extent delivered under the Senior Credit
Agreement or any agreement governing Permitted Refinancing Indebtedness, copies
of (i) all notices received by any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan administered or maintained by the Company or its
ERISA Affiliates or to have a trustee appointed to administer any such Pension
Plan; (ii) at the request of the Lender each annual report (IRS Form 5500
Series) and all accompanying schedules, the most recent actuarial reports, the
most recent financial information concerning the financial status of each Plan
administered or maintained by the Company or its ERISA Affiliates, and schedules
showing the amounts contributed to each such Plan by or on behalf of the Company
or its Subsidiaries in which any of their personnel participate or from which
such personnel may derive a benefit, and each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) filed by any ERISA Affiliate with the
Revenue Service with respect to each such Plan;
(i) promptly after the Company obtains knowledge thereof, notice of
all litigation or proceedings commenced or threatened affecting the Company in
which there is a reasonable possibility of an adverse decision and (i) which
involves alleged liability in excess of $1,000,000 (in the aggregate), (ii) in
which injunctive or similar relief is sought which if obtained could have a
material adverse effect on the business, assets, prospects, results of operation
or financial condition of the Company and its Subsidiaries taken as a whole or
(iii) which questions the validity or enforceability of any Loan Document;
(j) promptly upon receipt thereof, copies of all final reports or
letters submitted to the Company by its independent certified public accountants
in connection with each annual, interim or special audit of the financial
statements of the Company or its Subsidiaries made by such accountants,
including, without limitation, any management report, and the Company agrees to
obtain such a report in connection with each of its annual audits to the extent
required under the Senior Credit Agreement or any agreement governing Permitted
Refinancing Indebtedness;
(k) promptly after the availability thereof, copies of all material
amendments to the certificate of incorporation or By-laws of the Company and any
of its Subsidiaries;
(l) promptly after the receipt thereof, a copy of any notice, summons,
citation, letter or other communication concerning any actual, alleged,
suspected or threatened violation of Environmental Requirements (as defined in
the Senior Credit Agreement), or liability of the Company or any of its
Subsidiaries for Environmental Damages (as defined in the Senior Credit
Agreement) in connection with its real property or past or present activities of
any Person thereon;
48
(m) with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as from time to time may be
reasonably requested by the Lender;
(n) prior written notice of the amount, recipient and time of each
payment or allocation (or other reservation or segregation of funds) of "Excess
Proceeds of Issuance of Stock" (as defined in the Senior Credit Agreement) for
the benefit of the lender under the Senior Credit Agreement or the Company; and
(o) promptly after the Lender's request, such other information
pertaining to the Senior Credit Agreement, collateral therefor or payments or
performance thereunder as the Lender may from time to time request.
Section 5.2 Corporate Existence, etc.
------------------------
The Company will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises to its business and,
those of each of its Subsidiaries, except when failure to so preserve or keep
will not have a material adverse effect on the financial condition, properties
or business operations of the Company and its Subsidiaries, taken as a whole.
The Company and any permitted successor thereto shall at all times be a
"qualified person" within the meaning of the Finance Act of the Republic of
Ireland.
Section 5.3 Payment of Taxes; Tax Consolidation.
-----------------------------------
A. CB Holdings and the Company will, and will cause each of its
Subsidiaries to, pay all Taxes imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or property
prior to the time when any material penalty or fine shall be incurred with
respect thereto; provided that no such Tax need be paid if being contested in
--------
good faith by appropriate proceedings and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor.
B. The Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person other than CB Holdings, the Company or any of the Company's Subsidiaries
or such other Person as may be reasonably acceptable to the Lender.
Section 5.4 Maintenance of Properties; Insurance.
------------------------------------
The Company will maintain or cause to be maintained in good repair,
working order and condition all material properties used or useful in the
business of the Company and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
The Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such types
and in such amounts as are customarily
49
carried under similar circumstances by such other corporations and which is
available at a cost which the Company considers to be reasonable and may self-
insure to the extent, and only to the extent, reasonably prudent and in cases in
which the cost of insurance is considered by the Company to be unreasonable.
Section 5.5 Inspection.
----------
The Company shall permit any authorized representatives designated by
the Lender to visit and inspect any of the properties of the Company or any of
its Subsidiaries, including its and their financial and accounting records, and
to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested.
Section 5.6 Equal Security for Loan and Notes; No Further Negative
------------------------------------------------------
Pledges.
-------
A. If the Company or any of its Subsidiaries shall create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of Section 6.5 (unless
prior written consent to the creation or assumption thereof shall have been
obtained from the Lender), it shall, at the request of the Lender, make or cause
to be made effective provision whereby the Obligations will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured as
long as any such Indebtedness shall be secured; provided that this covenant
--------
shall not be construed as consent by the Lender to any violation by the Company
of the provisions of Section 6.5; and provided, further, that the Company shall
-------- -------
under no circumstances be required to make or cause to be made effective
provision whereby the Obligations will be secured, directly or indirectly, by
Margin Stock; and provided, further, that any such Lien granted to the Lender
-------- -------
pursuant to this Section 5.6A shall be subject to the provisions of the
Intercreditor Agreement.
B. Except (i) as otherwise permitted by this Agreement, the Senior
Credit Agreement or any other agreement governing Senior Debt of the Company,
(ii) with respect to specific property encumbered to secure payment of
particular Indebtedness and (iii) with respect to Margin Stock, neither the
Company nor any of its Subsidiaries shall enter into any agreement prohibiting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired.
Section 5.7 Compliance with Laws, etc.
-------------------------
The Company and each of its Subsidiaries shall exercise all due
diligence in order to comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, noncompliance with
which might have a Material Adverse Effect.
Section 5.8 Maintenance of Accurate Records, etc.
------------------------------------
The Company shall keep, and will cause each of its Subsidiaries to
keep, true books and records and accounts in which full and correct entries will
be made of all its
50
respective business transactions, and will reflect, and cause each of its
Subsidiaries to reflect, in its respective financial statements adequate
accruals and appropriations to reserves.
Section 5.9 Lender Meeting.
--------------
The Company will participate in a meeting with the Lender once during
each fiscal year to be held at a location and a time selected by the Company.
Section 5.10 ERISA Compliance.
----------------
The Company and each of its Subsidiaries and ERISA Affiliates will
make prompt payment of all contributions which it is obligated to make under all
Pension Plans and which are required to meet the minimum funding standard set
forth in ERISA with respect to each of the Pension Plans.
Section 5.11 Ownership of the Company; No Merger.
-----------------------------------
CB Holdings shall at all times own 100% of the total voting power
entitled to vote in the election of directors of the Company. CB Holdings shall
not merge with or into the Company.
Section 5.12 Subsidiaries of the Company.
---------------------------
The Company shall cause any of its Subsidiaries which guarantee Senior
Debt at any time in the future to also guarantee the Obligations on
substantially similar terms as the Guarantee.
Section 5.13 General.
-------
The Company covenants and agrees that, until payment in full of the
Loan and Notes and all other amounts due under this Agreement have been made
indefeasibly paid in full unless the Lender shall otherwise give prior written
consent, the Company shall perform all covenants in this Article V.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1 Indebtedness.
------------
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume, extend the maturity of, or
otherwise become directly or indirectly liable with respect to, any
Indebtedness; provided the Company may become liable for Indebtedness if after
--------
giving effect to the incurrence of such Indebtedness and all other
51
Indebtedness incurred subsequent to the four fiscal quarters referred to herein,
the Consolidated Fixed Charge Ratio of the Company for the four fiscal quarters
(taken as a whole) for which financial statements of the Company are available
(provided that the immediately preceding fiscal quarter shall be included in any
---------
such determination pursuant to this Section 6.1 made more than 45 days after the
end of such fiscal quarter) immediately preceding the fiscal quarter in which
such Indebtedness is to be created, incurred, issued, assumed, guaranteed or for
which the Company is otherwise to become liable, determined on a pro forma basis
--- -----
as if such Indebtedness has been created, incurred, issued, assumed, guaranteed
or for which the Company had otherwise become liable at the beginning of such
four fiscal quarter period (and, in the event the proceeds of such Indebtedness
are applied to the acquisition or to refinance the acquisition of a business
(within the meaning of Rule 11-01(d) of Regulation S-X (17 C.F.R. 210, 11-01(d))
of the Commission as in effect on the date hereof), after giving effect to the
earnings from continuing operations of such business during such four fiscal
quarters (determined in good faith by the Company in accordance with the rules
and regulations of the Commission, including Rule 11-02 of Regulation S-X (17
C.F.R. 210, 11-02) of the Commission as in effect on the date hereof) would be
greater than 2 to 1.
Notwithstanding the foregoing, the Company may, and may permit any of
its Subsidiaries to, become directly or indirectly liable for the following:
(i) the Company and its Subsidiaries may become liable with
respect to the Obligations and the Guarantee;
(ii) the Company may become and remain liable with respect
to the Indebtedness pursuant to the Senior Credit Agreement and its
Subsidiaries may become and remain liable with respect to their
guarantees of such Indebtedness; provided that the aggregate principal
--------
amount of borrowings outstanding under the Senior Credit Agreement
shall not exceed $210,000,000 less the sum of (a) the aggregate amount
of scheduled amortization payments of the principal amount of Senior
Credit Agreement Obligations to the extent actually made, (b) the
aggregate amount of mandatory prepayments of the principal amount of
Senior Credit Agreement Obligations actually made (including any
amounts paid in accordance with Section 3.01 of the Third Amended and
Restated Senior Secured Credit Agreement to the lenders thereunder)
and (c) each permanent reduction of commitments to extend credit under
the Senior Credit Agreement not otherwise caused pursuant to clause
(a) or (b);
(iii) the Company and its Subsidiaries may remain and may
become and remain liable with respect to Intercompany Indebtedness;
(iv) the Company and its Subsidiaries may remain liable with
respect to, and may refinance, the Indebtedness which is described on
Schedule B annexed hereto;
52
(v) current liabilities for taxes and assessments incurred
in the ordinary course of business;
(vi) Indebtedness incurred by the Company under an interest
rate swap, cap or similar arrangement entered into in respect of any
Indebtedness permitted hereunder;
(vii) Permitted Purchase Money Indebtedness and
refinancings thereof;
(viii) Indebtedness with respect to letters of credit not
to exceed in the aggregate at any time the sum of $1,000,000;
(ix) Permitted Refinancing Indebtedness;
(x) Non-Recourse Debt incurred in connection with the
acquisition (directly or indirectly) of the Warehoused Real Property
and secured by Liens permitted by Section 6.5(ii) and refinancings
thereof which remain Non-Recourse Debt;
(xi) any promissory note issued by the Company or any of its
Wholly-owned Subsidiaries to fund the general partner's capital
contribution in an investment partnership or other pooled investment
vehicle of which the Company or any of its Subsidiaries is the general
partner and which partnership or other investment vehicle is engaged
solely in the business of acquiring, holding and disposing of Real
Property;
(xii) the Company and any Mortgage Banking Subsidiary may
become and remain liable with respect to Indebtedness of the Company
or such Mortgage Banking Subsidiary comprised of such entity's
obligation to repurchase mortgage loans pursuant to mortgage loan
purchase and sale agreements entered into in connection with Mortgage
Banking Activities;
(xiii) Melody Permitted Indebtedness and refinancings
thereof;
(xiv) Indebtedness of the Company comprised of a guarantee
by Company of the Melody Seller Senior Notes and the Melody Seller
Contingent Notes;
(xv) Indebtedness incurred in connection with Permitted
Acquisitions (including without limitation, (x) existing Indebtedness
of any Person that becomes a Subsidiary and (y) Indebtedness assumed
by the Company or any Subsidiary or that is secured by any asset
acquired by the
53
Company or any Subsidiary, in each case upon consummation of such
Permitted Acquisition) and refinancings thereof, in an aggregate
amount not to exceed $50,000,000 at any time outstanding, provided
--------
that (i) at the time of incurrence of any such Indebtedness, the Pro
Forma Fixed Charges Coverage Ratio (as defined in the Senior Credit
Agreement) shall not be less than 1.0:1.0, (ii) no Default or Event of
Default shall have occurred and be continuing or shall result from the
Permitted Acquisition (including by reason of any Indebtedness
incurred in connection with such Permitted Acquisition), and (iii) not
more than $25,000,000 of such Indebtedness at any time outstanding
shall be Indebtedness that is not Permitted Seller Indebtedness; and
(xvi) in addition to the Indebtedness permitted by clauses
(i)-(xv), the Company and its Subsidiaries may become and remain
liable with respect to Indebtedness other than indebtedness for
borrowed money (the proceeds of which are not used to buy assets or
make Capital Expenditures) not exceeding $20,000,000 in the aggregate
at any time outstanding.
Section 6.2 Transactions with Shareholders and Affiliates.
---------------------------------------------
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity securities of the Company (including, but not limited to, CB
Holdings) or with any Affiliate of the Company or of any such holder, on terms
that are less favorable to the Company or that Subsidiary, as the case may be,
than those which might be obtained at the time from Persons who are not such a
holder or Affiliate; provided, that the foregoing restriction shall not apply to
--------
(i) any transaction between the Company and any of its Wholly-owned Subsidiaries
or between any of its Wholly-owned Subsidiaries, (ii) customary fees paid to
members of the Board of Directors of the Company and its Subsidiaries, (iii) any
transaction between the Company or any of its Subsidiaries and any employee of
the Company or any of its Subsidiaries that is approved by the Company's Board
of Directors (provided, that such approval shall not be required with respect to
--------
normal compensation arrangements involving any such employee), (iv) transactions
pursuant to written agreements in effect prior to the Effective Date which have
previously been consented to by the Lender in writing, and (v) the sale,
assignment, transfer, lease or other disposition of Warehoused Real Property to
a partnership in which the Company or a Wholly-owned Subsidiary of the Company
is a general or limited partner or another pooled investment vehicle in which
the Company or any of its Subsidiaries has an interest or which is managed by
the Company or any of its Subsidiaries; and provided, further, that the
-------- -------
transactions referred to in clauses (i) through (v) above are otherwise
permitted by this Agreement.
54
Section 6.3 Maintenance of Adjusted Consolidated Net Worth.
----------------------------------------------
If the Company's Adjusted Consolidated Net Worth at the end of any two
consecutive fiscal quarters on or after the Senior Loan Repayment Date is less
than $30,000,000, the Company shall make an offer to purchase (an "Offer") on
the last Business Day of the then current LIBOR Interest Period (or, if there is
less than 60 days remaining in the current LIBOR Interest Period, on the last
day of the next following LIBOR Interest Period) (the "Purchase Date") 10% of
the aggregate principal amount of the Loan then outstanding at a purchase price
of 100% of the principal amount plus interest accrued and unpaid to the Purchase
Date. In no event shall the failure to meet the minimum Adjusted Consolidated
Net Worth requirement stated above at the end of any fiscal quarter be counted
toward the making of more than one Offer hereunder.
Notice of an Offer shall be mailed by the Company not less than 25
days before the Purchase Date to the Lender. The Offer shall remain open from
the time of mailing until the fifth Business Day preceding the Purchase Date.
If less than 60 days remain in the current LIBOR Interest Period, the Company
shall select a one month LIBOR Interest Period as the next LIBOR Interest
Period, and the Purchase Date shall be the last day of such one-month period.
The notice shall contain all instructions and materials necessary to
enable the Lender to accept the Offer. If the Lender elects to accept the
Offer, it will notify the Company at the address specified in the notice five
Business Days prior to the Purchase Date. If the Lender makes timely acceptance
of an Offer then the Company shall pay, as the purchase price, an amount equal
to 10% of the aggregate principal amount of the Loan then outstanding on the
Purchase Date, together with interest accrued on the amount so paid through the
Purchase Date.
Section 6.4 Restricted Junior Payments.
--------------------------
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any Restricted
Junior Payment, except (i) dividends, distributions or payments by any
------
Subsidiary to the Company or a Wholly Owned Subsidiary of the Company, (ii) so
long as no Default or Event of Default has occurred and is continuing, dividends
or distributions by any Subsidiary to the Company and any other Person that is a
stockholder or owner of another equity interest in such Subsidiary, so long as,
in the case of each such dividend and distribution, the amounts thereof paid to
the Company and such other Person are in the same proportion as the respective
contributions to the capital of such Subsidiary made by the Company and such
other Person, and (iii) if no Default or Event of Default shall exist, or as a
result of the proposed declaration, payment or other event would exist:
A. the Company may declare and pay dividends on its Capital Stock to
the extent necessary to enable Holdings to pay expenses of its operations in the
ordinary course of business, in an amount not to exceed $50,000 in any year;
55
B. the Company may declare and pay dividends on its Capital Stock as
follows:
(1) prior to December 31, 1999, the Company may declare and
pay dividends on its Capital Stock to the extent necessary to permit
CB Holdings to pay dividends accrued on its outstanding Series A-1,
Series A-2 and Series A-3 Preferred Stock in the period from October
1, 1996 through the fiscal quarter last ended prior to the date of
such payment by the Company (and not dividends accrued on such
Preferred Stock in any period prior to October 1, 1996), or interest
with respect to such accrued but unpaid dividends all in accordance
with the certificates of designation with respect thereto in effect on
the Effective Date; and
(2) after December 31, 1999, the Company may declare and pay
dividends on its Capital Stock to the extent necessary to permit CB
Holdings to pay dividends accrued on its outstanding Series A-1,
Series A-2 and Series A-3 Preferred Stock in the period of four fiscal
quarters ended immediately prior to the date of such payment by the
Company (and not dividends accrued on such Preferred Stock in any
prior period) that may be declared by the Board of Directors of
Holdings, or interest with respect to such accrued but unpaid
dividends, all in accordance with the certificates of designation with
respect thereto in effect on the Effective Date;
provided, however, that the total amount of dividend and interest
-------- -------
payments made by Company pursuant to clauses B.(1) and B.(2) does not exceed 50%
of Consolidated Net Income (as defined in the Senior Credit Agreement) for the
period commencing on the first day of the fiscal quarter within which the
Effective Date occurs and ending on the last day of the last fiscal quarter
ending prior to the date of declaration, taken as a single accounting period.
Section 6.5 Liens.
-----
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, create, incur, assume or permit to exist any Lien upon or with
respect to any of the property or assets of the Company or any of its
Subsidiaries whether now owned or hereafter acquired, or on any income or
profits therefrom, or assign or otherwise convey any right to receive income to
secure any Indebtedness which is pari passu or junior in right of payment to the
---- -----
Loan, unless, contemporaneously therewith, effective provision shall be made
whereby the Loan is secured equally and ratably with such other Indebtedness
which is pari passu or junior in right of payment to the Loan and secured by a
---- -----
Lien, pursuant to documentation providing that the Lender shall be entitled to
vote as its interests appear in connection with the release of or enforcement
against any property or assets subject to such Lien; provided that the
--------
restrictions of this Section 6.5 shall not prohibit the creation or incurrence
of (i) Permitted Encumbrances, (ii) Liens on assets securing Non-Recourse Debt
incurred in connection with the acquisition of Warehoused Real Property so long
as any such Lien does not encumber any property other than assets constructed or
acquired with the proceeds of such Indebtedness, (iii) Liens on Permitted
Investments owned by Melody, to secure Indebtedness under the Melody Loan
Arbitrage
56
Facility, if such Permitted Investments were acquired by Melody with the
proceeds of incurrence of such Indebtedness, and (iv) Liens on commercial
mortgage loans originated and owned by Melody subject to an irrevocable,
unconditional commitment to purchase such commercial mortgage loans made by the
Federal Home Loan Mortgage Corporation, to secure Indebtedness of Melody under
the Melody Warehousing Facility; provided further that any Liens granted
--------
pursuant to this Section 6.5 shall be subject to the provisions of the
Intercreditor Agreement.
Section 6.6 Mergers.
-------
A. The Company shall not consolidate or merge with, or sell, assign,
transfer or lease all or substantially all of its assets in a single transaction
or a series of related transactions to, any person unless:
(i) the person formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale,
assignment, transfer or lease or conveyance shall have been made, is a
corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia;
(ii) the corporation formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
sale or conveyance shall have been made, assumes by written agreement
all the obligations of the Company under the Loan and this Agreement;
(iii) immediately after giving effect to such transaction
no Event of Default or Potential Event of Default exists and
immediately after such transaction, the Company (or the corporation
formed by or surviving such consolidation or merger if other than the
Company) could incur $1.00 of Indebtedness under the first paragraph
of Section 6.1;
(iv) the Company or any corporation formed by or surviving
any such consolidation or merger, or to which such sale or conveyance
shall have been made shall have Consolidated Net Worth at least equal
to the Consolidated Net Worth of the Company immediately prior to such
transaction; and
(v) the Company has delivered to the Lender an Officers'
Certificate (attaching the arithmetic computations to demonstrate
compliance with clause (iv)) and an Opinion of Counsel, each stating
that such consolidation, merger or transfer complies with this
subsection 6.6A and that all conditions precedent set forth in this
subsection 6.6A relating to such transactions have been complied with
provided that with respect to factual information included in the
foregoing (including, without limitation, matters contained in
subparagraphs (iii) and (iv)),
57
counsel may rely upon a certificate of an officer of the Company as to
such matters.
B. Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with subsection
6.6A, the successor person formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, and shall perform
every obligation of the Company under this Agreement with the same effect as if
such successor person had been named as the Company herein, and all the
obligations of the Company hereunder and under the Notes shall terminate.
Section 6.7 Limitation on Sale of Less Than Substantially All Assets.
--------------------------------------------------------
Neither the Company nor any of its Subsidiaries will make any Asset
Sale, unless (a) at the time thereof and after giving pro forma effect thereto
--- -----
(after application of proceeds), the Company's Consolidated Fixed Charge Ratio
for the four fiscal quarters (taken as a whole) for which financial statements
of the Company are available (provided, that the immediately preceding fiscal
--------
quarter shall be included in any such determination pursuant to this Section 6.7
made more than 45 days after the end of such fiscal quarter) immediately
preceding the fiscal quarter in which such Asset Sale is to occur, determined on
a pro forma basis as if such Asset Sale had occurred at the beginning of such
--- -----
four-fiscal quarter period, is greater than 2.5 to 1 or (b)(i) the Company or
its Subsidiary receives consideration at the time of and for such Asset Sale at
least equal to the fair value (which, if greater than $2,500,000, shall be as
determined in good faith by the Board of Directors, including valuation of all
non-cash consideration) of the assets disposed of in such Asset Sale as of the
date of such Asset Sale and (ii) the Company complies with Section 2.6;
provided, however, that so long as any loans under the Senior Credit Agreement
-------- -------
remain outstanding, this Section 6.7 shall not prohibit any Asset Sale which
would be permitted under Section 6.08 of the Senior Credit Agreement.
Notwithstanding the foregoing, nothing contained herein shall prevent the
Company from selling all or any part of its ownership interest in CB Canada.
Section 6.8 Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Subsidiaries.
----------------------
The Company will not, and will not permit any Subsidiary of the
Company to, directly or indirectly, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction on the ability of
any Subsidiary of the Company to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, its profits owned by, or pay any Indebtedness owed to, the Company
or a Subsidiary of the Company, (b) make loans or advances to the Company or a
Subsidiary of the Company or (c) transfer any of its properties or assets to the
Company or to any Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reasons of (i) any restrictions existing under
or contemplated by agreements in effect on the date hereof, (ii) any
restrictions existing under or contemplated by the Senior Credit Agreement;
(iii) any restrictions, with respect to a Subsidiary of the Company that is not
a Subsidiary of the Company on the date hereof, in existence at the time such
Person becomes a Subsidiary of the
58
Company and (iv) any restrictions existing under any agreement that refinances
or replaces the agreements containing the restrictions in clauses (i) and (ii);
provided that the terms and conditions of any such restrictions are not
--------
materially less favorable to the Lender than those under or pursuant to the
agreement evidencing the Indebtedness refinanced. Nothing contained in this
Section 6.8 shall prevent the Company or any of its Subsidiaries from entering
into any agreement (i) imposing any such restrictions or limitations upon
Westmark, Westmark Acquisition Partnership, or any Subsidiary pursuant to any
Permitted Acquisition, (ii) permitting or providing for the incurrence of Liens
otherwise permitted by Section 6.5 or (iii) restricting the sale or other
disposition of property securing Indebtedness.
Section 6.9 Certain Tax Payments.
--------------------
If the Company Group (as such term is defined in the definition of
"Permitted Tax Payment" in Section 1.1 of this Agreement) would, assuming it has
filed a separate federal consolidated income tax return for each taxable year
ending after April 18, 1989, be entitled to a refund of federal income tax,
together with interest thereon, for a taxable year (whether resulting from a tax
attribute carryback or otherwise) (a "Refund"), then CB Holdings shall pay (at
the time a Refund is received by CB Holdings from the Internal Revenue Service
or a final determination is otherwise made with respect to items resulting in a
Refund) an amount equal to the Refund to the Company; provided that the amount
--------
of such payment shall not exceed the amount paid by the Company as a Permitted
Tax Payment for such taxable year plus interest on such amount at the rate
specified in Section 6621 of the Code for overpayments of tax. In the event
that CB Holdings and any member of the Company Group join in filing any combined
or consolidated (or similar) state or local income or franchise tax returns for
a taxable year and a member of the Company Group is entitled to a refund of
state or local income or franchise taxes with respect to such taxable year, then
CB Holdings shall pay (at the time it receives such refund from such taxing
authority) an amount to the Company determined in a manner as similar as
possible to that provided in the preceding sentence for federal income taxes.
Any refund (together with interest actually received thereon) of taxes
paid by a member of the Company Group for a taxable year ending prior to such
member's becoming a member of the CB Holdings Group (whether such refund arises
from a tax attribute carryback from the CB Holdings Group or otherwise) shall be
the property of such member.
Section 6.10 Limitation on Creation of Senior Debt.
-------------------------------------
The Company will not incur or agree or attempt to incur any Senior
Debt (including Permitted Refinancing Indebtedness) which is not fully and
adequately secured, and the Company will not affirmatively cause any Senior Debt
to become other than fully and adequately secured; provided, however, that this
-------- -------
covenant shall be deemed satisfied if the Company delivers an Officers'
Certificate certifying that such Senior Debt is fully and adequately secured;
and provided, further, that no such Officers' Certificate shall be required and
-------- -------
this Section 6.10 shall be satisfied to the extent that Permitted Refinancing
Indebtedness is secured by the same collateral that secures the Senior Credit
Agreement Obligations at the time of any such refinancing thereof.
59
Section 6.11 Restrictions on Investments in Warehoused Real Property.
-------------------------------------------------------
The Company or any of its Subsidiaries may make Investments in
Warehoused Real Property so long as at the time any such Investment is made (A)
the aggregate amount of all such Investments then outstanding in connection with
the purchase or other acquisition of all Warehoused Real Property does not
exceed twenty percent (20%) of the Company's Adjusted Consolidated Net Worth as
of the most recent quarter (less the amount by which aggregate losses exceed
aggregate gains realized from all Investments made pursuant to this Section
6.11) and (B) the amount of any such single Investment made by the Company or
any of its Subsidiaries does not exceed ten percent (10%) of the Company's
Adjusted Consolidated Net Worth as of the most recent fiscal quarter.
Section 6.12 General.
-------
The Company covenants and agrees that until payment in full of the
Loan and the Notes and all amounts due under this Agreement at the time of such
termination or payment have been indefeasibly paid in full, unless the Lender
shall otherwise give prior written consent, the Company will perform all
covenants in this Article VI.
Section 6.13 Certain Financial Covenants in Senior Credit Agreement.
------------------------------------------------------
On and after the Senior Loan Repayment Date, each of the covenants and
agreements of the Company set forth in Section 6.05 and 6.06 of the Third
Amended and Restated Senior Secured Credit Agreement dated as of November 25,
1996 (the "Surviving Financial Covenants") shall be deemed to be included and
-----------------------------
incorporated by reference in this Article VI, mutatis mutandis, for the benefit
of the Lender, without regard to the continuing effectiveness or, or any
amendments of, such Senior Secured Credit Agreement; and the Company covenants
and agrees to perform each and all of the Surviving Financial Covenants as if
expressly contained herein and made in favor of the Lender hereunder; provided,
however, that each requirement established by such Surviving Financial Covenants
shall continue to apply until all amounts owing to the Lender in connection with
the Loan or otherwise hereunder are paid in full; and provided, further, that
for purposes of the calculation of "Consolidated Interest Expense" as used in
the Surviving Financial Covenants shall include all interest payable in kind or
in cash accrued hereunder.
60
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default.
-----------------
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
A. Failure to Make Payments When Due.
---------------------------------
Failure to pay any installment of principal of the Loan when due,
whether at stated maturity, by acceleration, by notice of prepayment, by
operation of Section 2.5 or otherwise; or failure to pay any interest on the
Loan within 15 days after the date due (in each case whether or not such payment
is prohibited by Article VIII); or
B. Default in Other Agreements.
---------------------------
Failure of the Company or any of its Subsidiaries to pay principal of
Indebtedness (other than Indebtedness referred to in subsection A of this
Section 7.1 and Non-Recourse Debt) in an aggregate amount of $2,500,000 or more
at its stated maturity, or breach or default of the Company or any of its
Subsidiaries with respect to any other material term of (x) any evidence of
Indebtedness with an aggregate principal amount of $2,500,000 or more or (y) any
loan agreement, mortgage, indenture or other agreement relating thereto, if the
effect of such failure, default or breach is to cause the holder or holders of
that Indebtedness (or a trustee on behalf of such holder or holders) of the
Company or any of its Subsidiaries then to cause that Indebtedness to be
declared due prior to its stated maturity; or
C. Breach of Certain Covenants.
---------------------------
Failure of the Company to perform or comply with any term or condition
contained in Sections 2.11, 5.2 (in so far as it requires preservation of the
corporate existence of the Company), 5.11 or Article VI; or
D. Breach of Warranty.
------------------
Any representation or warranty made by the Company in any Loan
Document or in any statement or certificate at any time given by the Company in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
E. Other Defaults Under Agreement or Loan Documents.
------------------------------------------------
(a) The Company shall default in the performance of or compliance with
any material term contained in this Agreement or the other Loan Documents, other
than
61
those referred to above in Subsection A, C or D of this Section 7.1 (b) CB
Holdings shall default in the performance of or compliance with any material
covenant contained in the Stock Pledge Agreement or (c) the Guarantors shall
default in the performance of or compliance with any material covenant contained
in the Guarantee, and, in each case, such default shall not have been remedied
or waived within 30 days after receipt of written notice from the Lender of such
default; or
F. Involuntary Bankruptcy; Appointment of Receiver, Etc.
-----------------------------------------------------
(1) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of CB Holdings, the Company or any Material
Subsidiary in an involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief shall be granted
under any applicable federal or state law; or (2) an involuntary case is
commenced against CB Holdings, the Company or any Material Subsidiary under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over CB Holdings, the Company, or any
Material Subsidiary, or over all or a substantial part of any of their
respective properties, shall have been entered; or an interim receiver, trustee
or other custodian of CB Holdings, the Company or any Material Subsidiary for
all or a substantial part of the property of CB Holdings, the Company or any
Material Subsidiary is involuntarily appointed; or a warrant of attachment,
execution or similar process is issued against any substantial part of the
property of CB Holdings, the Company or any Material Subsidiary, and the
continuance of any such events in subpart (2) for 60 days unless dismissed,
bonded or discharged; or
G. Voluntary Bankruptcy; Appointment of Receiver, Etc.
--------------------------------------------------
CB Holdings, the Company or any Material Subsidiary shall have an
order for relief entered with respect to it or commence a voluntary case under
the Bankruptcy Code or any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; the making by CB Holdings, the Company, or any
Material Subsidiary of any assignment for the benefit of creditors; the
admission by CB Holdings, the Company or any of Material Subsidiaries in writing
of its inability to pay its debts as such debts become due; or the Board of
Directors of CB Holdings, the Company or any Material Subsidiary (or any
committee thereof) adopts any resolution or otherwise authorizes action to
approve any of the foregoing; or
H. Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment, or similar process
involving in any individual case or in the aggregate at any time an amount in
excess of $2,500,000 shall be entered or filed against CB Holdings, the Company,
or any Material Subsidiary or any of
62
their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 30 days or in any event later than ten days prior to
the date of any proposed sale thereunder; or
I. Dissolution.
-----------
Any order, judgment or decree shall be entered against CB Holdings,
the Company or any Material Subsidiary decreeing the dissolution or split up of
CB Holdings, the Company or any Material Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
J. Foreclosure Under Senior Credit Agreement.
-----------------------------------------
The lenders party to the Senior Credit Agreement or Permitted
Refinancing Indebtedness acting together, directly or indirectly, after any
event of default under, and as defined in, the Senior Credit Agreement or other
documents has occurred shall commence judicial proceedings to foreclose upon any
material portion of the collateral subject to the security documents delivered
in connection with the Senior Credit Agreement or shall have exercised any right
under law or such security documents to take ownership of any such material
portion in lieu of foreclosure.
THEN (i) upon the occurrence of any Event of Default described in the
foregoing subsections F or G of Section 7.1 the unpaid principal amount of and
accrued interest on the Loan shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company, and the obligation of
the Lender hereunder shall thereupon terminate, and (ii) upon the occurrence of
any other Event of Default, the Lender may, by written notice to the Company and
the Senior Agent, if applicable declare the Loan to be, and the same shall
forthwith become, due and payable, together with accrued interest thereon and
the obligations of the Lender hereunder shall thereupon terminate; provided,
--------
however, that if any declaration of acceleration under this Agreement occurs
-------
because an Event of Default set forth in subsection B of this Section 7.1 has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if the holders of the Indebtedness which is the subject
of such Event of Default have rescinded their acceleration in respect of such
Indebtedness within 30 days thereof and no other Event of Default has occurred
during such 30-day period which has not been cured or waived. Nevertheless, if
any time within 60 days after acceleration of the maturity of the Loan, the
Company shall pay all arrears of interest and all payments on account of the
principal which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest,
at the rates specified in this Agreement or the Notes) and all Events of Default
and Potential Events of Default (other than non-payment of principal of and
accrued interest on the Loan due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 9.6, then the Lender by written
notice to the Company may rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon.
Notwithstanding anything in this Section 7.1 to the contrary, the Lender shall
not accept any payment or prepayment from the Company until five Business Days
after
63
notice shall have been given to the Senior Agent, if applicable, and the Lender
will be entitled to receive payment or prepayment only to the extent permissible
under the provisions of Article VIII of this Agreement.
ARTICLE VIII
SUBORDINATION
Section 8.1 Obligations Subordinated to Senior Debt.
---------------------------------------
The Company and the Guarantors covenant and agree, and the Lender
likewise covenants and agrees, that:
(a) to the extent and in the manner hereinafter set forth in this
Article VIII, the Obligations are hereby expressly made subordinate and subject
in right of payment to the prior payment in full in cash of all Senior
Indebtedness;
(b) the subordination is for the benefit of the lender under the
Senior Credit Agreement and other holders of Senior Indebtedness; and
(c) each holder of Senior Indebtedness whether now outstanding or
hereafter created, incurred, assumed or guaranteed shall be deemed to have
extended or acquired such Senior Indebtedness in reliance upon the covenants and
provisions contained in this Agreement.
Section 8.2 Subordination Upon Insolvency or Liquidation Proceedings.
--------------------------------------------------------
In the event of any Insolvency or Liquidation Proceeding:
(a) Upon any payment or distribution of assets or securities of any
kind or character, whether in cash, securities or other property, all Senior
Indebtedness shall first be paid in full in cash or in a manner satisfactory to
the holders of Senior Indebtedness before the Lender is entitled to receive any
payment or distribution of any cash, securities or other property on account of
principal of or interest on or other amounts constituting Obligations.
(b) The holders of Senior Indebtedness shall be entitled to receive
directly (pro rata on the basis of the respective amounts of Senior Indebtedness
--- ----
held by them), for application to the payment thereof (to the extent necessary
to pay all such Senior Indebtedness in full after giving effect to any
substantially concurrent payment to the holders of such Senior Indebtedness),
any payment or distribution of any kind or character, whether in cash,
securities or other property (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company or the Guarantors being subordinated to the payment of the Obligations)
which may be payable or deliverable in respect of the Obligations in any such
Insolvency or Liquidation Proceeding.
64
(c) In the event that, notwithstanding the foregoing provisions of
this Section 8.2, the Lender shall have received any payment from or
distribution of assets or securities of the Company or the Guarantors or the
estate created by the commencement of any such Insolvency or Liquidation
Proceeding, of any kind or character in respect of the Obligations, whether in
cash, securities or other property (including any payment or distribution which
may be payable or deliverable by reason of the payment of any other Indebtedness
of the Company or the Guarantors being subordinated to the payment of the
Obligations) before all Senior Indebtedness is paid in full, then and in such
event such payment or distribution shall be received and held in trust for and
shall be paid over or delivered to the holders of the Senior Indebtedness
remaining unpaid (pro rata on the basis of the respective amounts of such Senior
--------
Indebtedness held by them), to the extent necessary to pay all such Senior
Indebtedness in full after giving effect to any substantially concurrent payment
to the holders of such Senior Indebtedness, for application to the payment in
full of such Senior Indebtedness.
Section 8.3 No Payment on Obligations in Certain Circumstances.
--------------------------------------------------
(a) Upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration or otherwise (including the time of due payment (including any
mandatory prepayment) of any principal or interest), all principal thereof and
interest thereon and other amounts constituting Senior Indebtedness shall first
be paid in full in cash or in a manner satisfactory to the holders of Senior
Indebtedness before any payment or distribution is made by or on behalf of the
Company or the Guarantors on account of principal of or interest on or other
amounts constituting Obligations.
(b) Upon the happening and continuing of any default in respect of the
payment of any Senior Indebtedness (a "Payment Default"), no direct or indirect
payment or distribution shall be made by the Company or the Guarantors on
account of the principal of or interest on or other amounts constituting
Obligations, unless and until (i) such Payment Default shall have been cured or
waived by the holders of the respective Senior Indebtedness or shall have ceased
to exist or (ii) the holder or holders of the respective Senior Indebtedness
shall have waived in writing the application of this Section 8.3(b) to such
Payment Default.
(c) Without limiting the effect of Section 8.3(b), upon the happening
and continuing of any default or event of default (other than a Payment Default)
with respect to any Senior Indebtedness, as such default or event of default is
defined in the Senior Credit Agreement or in any instrument, agreement or other
document under which such Senior Indebtedness is outstanding (a "Non-Payment
Default"), then upon written notice thereof given to the Company by the Senior
Agent, by holders of a majority in principal amount of the Indebtedness under
the Senior Credit Agreement or the agreement governing Permitted Refinancing
Indebtedness, or by the holders of a majority in principal amount of all Senior
Indebtedness ("Payment Blockage Notice"), no direct or indirect payment or
distribution shall be made by the Company or the Guarantors on account of the
principal of or interest on or other amounts constituting Obligations unless and
until (i) such Non-Payment Default shall have been cured or waived by the holder
or holders of the respective Senior Indebtedness or shall have ceased to exist
or (ii) the holder or holders of the respective Senior Indebtedness shall have
waived in writing the application of this Section 8.3(c) to such Non-Payment
Default; provided,
--------
65
however, that (A) this Section 8.3(c) shall not prevent the making of any
-------
payment for more than 179 days after a Payment Blockage Notice shall have been
given or deemed to have been given ("Payment Blockage Period") unless the Senior
Indebtedness in respect of which such default or event of default exists has
been declared due and payable in its entirety, in which case no payment or
distribution may be made until such acceleration has been rescinded or annulled
and (B) not more than one effective Payment Blockage Notice shall be given
within a period of 360 consecutive days and there shall be a period of at least
181 consecutive days in each 360-day period when no Payment Blockage Period is
in effect.
(d) In the event that, notwithstanding the foregoing provisions of
Section 8.3(a), (b) or (c), the Lender shall have received any payment or
distribution at a time when such payment was prohibited by the provisions of
Section 8.3(a), (b) or (c) then and in such event such payment or distribution
shall be received and held in trust for and shall be paid over to the holders of
Senior Indebtedness (pro rata, on the basis of the respective amounts of such
--- ----
Senior Indebtedness held by them), to the extent necessary to pay all such
Senior Indebtedness in full after giving effect to any substantially concurrent
payment to the holders of such Senior Indebtedness, for application to the
payment in full of Senior Indebtedness.
(e) The provisions of this Section 8.3 shall not modify or limit
in any way the application of Section 8.2.
Section 8.4 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
After all amounts payable under or in respect of Senior Indebtedness
are paid in full, the Lender shall be subrogated to the extent of the payments
or distributions made to the holders of, or otherwise applied to payment of,
such Senior Indebtedness pursuant to the provisions of this Article VIII, to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, securities and other property applicable to the Senior
Indebtedness until the principal of and interest on the Obligations shall be
paid in full. For purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, securities or other property
to which the Lender would be entitled except for the provisions of this Article
VIII, and no payments over pursuant to the provisions of this Article VIII to
the holders of the Senior Indebtedness by the Lender shall be deemed to be a
payment or distribution by the Company or the Guarantors to or on account of the
Senior Indebtedness, it being understood that the provisions of this Article
VIII are solely for the purpose of defining the relative rights of the Lender,
on the one hand, and the holders of Senior Indebtedness on the other hand. A
release of any claim by any holder of Senior Debt shall not, as between the
Company, the Guarantors and the Lender, limit the Lender's rights of subrogation
under this Section 8.4.
Section 8.5 Rights of Holders Not to be Impaired.
------------------------------------
Nothing contained in this Article VIII is intended to or shall:
(a) impair, as among the Company or the Guarantors, their respective
creditors other than holders of Senior Indebtedness and the Lender, the
obligation of the
66
Company or the Guarantors, which is absolute and unconditional, to pay to the
Lender the principal of and interest on the Obligations as and when the same
shall become due and payable in accordance with its terms; or
(b) affect the relative rights against the Company or the Guarantors
of the Lender and creditors of the Company or the Guarantors other than the
Senior Indebtedness; or
(c) prevent the Lender from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Agreement of the holders of Senior Indebtedness to
receive payments or distributions otherwise payable or deliverable to, or
received by, such holder upon the exercise of any such remedy and subject to the
restrictions with respect to Liens set forth in Article III of the Intercreditor
Agreement.
Section 8.6 Effectuation of Subordination.
-----------------------------
In the event of any Insolvency or Liquidation Proceeding, the Senior
Agent is irrevocably authorized and empowered, in its discretion, to make and
present for and on behalf of the Lender such proofs of claims against the
Company or the Guarantors on account of the Obligations or other motions or
pleadings as the Senior Agent may deem expedient or proper; provided, however,
-------- -------
the Senior Agent may make and present such proofs of claims only if the Lender
has not filed such proofs of claims by the thirtieth day prior to the date on
which such claims are required to be filed. After such thirty-day period, if
the Lender has not filed such proofs of claims, the Lender irrevocably
authorizes and empowers the Senior Agent to file claims and take such other
actions (other than vote such proof of claims in such proceedings), in the name
of the Senior Agent or the Lender or otherwise, as the Senior Agent may deem
necessary or advisable for the enforcement of this Agreement. In such event,
the Lender will execute and deliver to the Senior Agent such powers of attorney,
assignments and other instruments or documents as may be requested by the Senior
Agent in order to enable such Senior Agent to enforce any and all claims upon or
with respect to the Obligations.
Section 8.7 No Waiver of Subordination Provisions.
-------------------------------------
No right of the Senior Agent under the Senior Credit Agreement or any
other holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or the Guarantors or by any act or
failure to act by the Senior Agent under the Senior Credit Agreement or any such
holder or by any noncompliance by the Company or the Guarantors with the terms,
provisions and covenants of this Agreement or the Senior Credit Agreement
regardless of any knowledge thereof which the Senior Agent or such other holder
thereof may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the Senior Agent under the Senior Credit Agreement and any other holders of
Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to the Lender, without
67
incurring responsibility to the Lender and without impairing or releasing the
subordination and other benefits provided in this Agreement or the obligations
hereunder of the Lender to the holders of Senior Indebtedness, do any one or
more of the following even if any right to reimbursement or subrogation or other
right or remedy of the Lender is affected, impaired or extinguished thereby:
(a) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend or alter, the terms of any
Senior Indebtedness, any security therefor or guaranty thereof or any liability
of the Company, the Guarantors or any other guarantor to such holder, or any
liability incurred directly or indirectly in respect thereof, or otherwise
amend, renew, exchange, modify or supplement in any manner Senior Indebtedness
or any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and any order any property pledged, mortgaged
or otherwise securing Senior Indebtedness or any liability of the Company or the
Guarantors or any other guarantor to such holder, or any liability incurred
directly or indirectly in respect thereof;
(c) settle or compromise any Senior Indebtedness or any other
liability of the Company or the Guarantors or any other guarantor of the Senior
Indebtedness to such holder or any security therefor or any liability incurred
directly or indirectly in respect thereof and apply any sums by whomsoever paid
and however realized to any liability (including, without limitation, Senior
Indebtedness) in any manner or order; and
(d) fail to take or to record or otherwise perfect, for any reason or
for no reason, any Lien securing Senior Indebtedness by whomsoever granted,
exercise or delay in or refrain from exercising any right or remedy against the
Company or the Guarantors or any security or any other guarantor or any other
Person, elect any remedy and otherwise deal freely with the Company or the
Guarantors and security and any other guarantor of the Senior Indebtedness or
any liability of the Company or the Guarantors or any other guarantor to such
holder or any liability incurred directly or indirectly in respect thereof.
The Lender by purchasing or accepting the Note waives any and all
notice of the creation, modification, renewal, extension or accrual of any
Senior Indebtedness and notice of or proof of reliance by any holder of Senior
Indebtedness upon this Agreement and the Senior Indebtedness shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
Agreement, and all dealings between the Company or the Guarantors and the
holders of Senior Indebtedness shall be deemed to have been consummated in
reliance upon this Agreement.
Section 8.8 Reliance on Court Orders; Evidence of Status.
--------------------------------------------
Upon any payment or distribution of assets of the Company or the
Guarantors referred to in Section 8.2, the Lender shall be entitled to rely upon
a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or
68
distribution delivered to the Lender for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company or the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or this Article VIII.
Section 8.9 Payment.
-------
A payment with respect to principal of or interest on the Obligations
shall include, without limitation, payment of principal of and interest on the
Loan, any depositing of funds for the defeasance of the Obligations, any sinking
fund and any payment on account of mandatory prepayment or optional redemption
provisions.
Section 8.10 Section Not to Prevent Events of Default.
----------------------------------------
The failure to make a payment on account of principal of or interest
on or other amounts constituting Obligations by reason of any provision of this
Article VIII shall not be construed as preventing the occurrence of an Event of
Default under Article VII.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Representation of the Lender.
----------------------------
The Lender hereby represents that it is a limited liability company
engaged in finance.
Section 9.2 Assignment.
----------
(a) This Agreement shall be binding upon and shall be enforceable by
the Company, the Lender and their respective successors and assigns, provided
--------
that, except as provided in Section 6.6 the Company shall have no right to
----
assign or otherwise transfer its rights or obligations hereunder without the
prior written consent of the Lender. The Lender may assign, grant
participations in or otherwise transfer all or any portion of its rights and
obligations hereunder, and any such assignment, participation or other transfer
shall be effective and binding upon the Company as of the date of such
assignment, participation or other transfer subject to the Lender and the
Company having complied with the requirements of subsection (b) of this Section
9.2 hereof. Upon any such assignment or transfer by the Lender, the assignee or
transferee shall be (i) entitled, to the extent of the interest transferred, to
the benefit of the indemnities, the covenants and the yield protection
provisions pursuant to the provisions of this Agreement (including without
limitation the provisions of Section 2.3, 2.12, 2.13, 2.14, 2.15 and 9.4) as
fully as if a party hereto and (ii) subject to all of the obligations of the
Lender hereunder (including without limitation the provisions of Section 2.14
and this Section 9.2) as
69
fully as if a party hereto. Upon any such participation by the Lender, the
participant shall be (i) entitled, to the extent of the interest transferred, to
the benefit of the indemnities, the covenants and the yield protection
provisions pursuant to the provisions of this Agreement (including without
limitation the provisions of Section 2.3, 2.12, 2.15, 2.14, 2.15 and 9.4) as
fully as if a party hereto and (ii) subject to all of the obligations of the
Lender under the provisions of Section 2.14 and this Section 9.2 as fully as if
a party hereto.
(b) The Company shall, during the term of this Agreement, maintain on
its books a record of the beneficial interests held in this Agreement based upon
the information which the Lender is required to provide pursuant to this Section
9.2. Upon any assignment, participation or other transfer by the Lender of any
of its interests hereunder, the Lender shall provide, or cause to be provided,
to the Company, a statement or certificate signed under penalty of perjury by
each person which is a participant, assignee or transferee setting forth such
person's name and address and, with respect to any person which is not a United
States Person, certifying that (i) such person is not a United States Person,
(ii) such person is not licensed to conduct a banking business or to accept
deposits from members of the public and, in fact, does not accept such deposits,
(iii) such person is not a 10% shareholder of the Company or any Guarantor
within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code of 1986,
as amended and (iv) such person undertakes with the Lender for the benefit of
the Lender and the Company, to provide to the Lender and the Company such tax
forms as may reasonably be requested from time to time by the Lender or the
Company to ensure the availability to the Company of an exemption from United
States withholding tax on interest pursuant to Sections 871(h) and 881(c) of the
Internal Revenue Code of 1986, as amended. Such statements or certificates
given by a person that is not a United States Person shall be accompanied by a
copy of a Certificate of Foreign Status (Internal Revenue Code Form W-8) duly
executed by each person named in such statements or certificates. The Lender
shall also provide or cause to be provided to the Company from time to time any
other documentation or information required by Temporary Treasury Regulation
Section 35a.9999-5(b) or any successor provision, or by any other provision of
law, with respect to any such applicable exemption from United States
withholding tax on interest with respect to payments to be made hereunder. The
Company shall promptly record the beneficial interest of each such assignee,
participant or transferee upon the Lender's compliance with the requirements of
subsection (a) hereof and this subsection (b), and the Company shall, upon the
request of the Lender or any such assignee, participant or transferee, provide a
certification of the beneficial interest of such assignee, participant or
transferee (which certification shall be provided at no cost to the Lender or
such assignee, participant or transferee). The Company shall have no liability
to the Lender or any such assignee, participant or transferee for any error in
the recordation of such information on its books other than an error arising
from the Company's gross negligence or willful misconduct.
(c) In connection with any sales, assignments or transfers referred to
in subsection (a) of this Section 9.2, the Lender shall obtain agreements from
the purchasers, assignees and transferees, as the case may be, reasonably
satisfactory to the Company, that all information given to such parties will be
held in strict confidence subject to customary exceptions.
70
Section 9.3 Expenses.
--------
Whether or not the Effective Date occurs or the transactions
contemplated hereby shall be consummated, the Company agrees to promptly pay to
Lender (i) all the actual and reasonable costs and expenses of preparation of
the Loan Documents (including, without limitation, any opinions requested by the
Lender as to any legal matters arising hereunder) and of the Company's
performance of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with; (ii) the reasonable fees,
expenses and disbursements of counsel (including allocated costs of internal
counsel) and other professional advisors (including financial advisors) in
connection with the negotiation, preparation, execution, performance and
administration of the Loan Documents, and the Loan hereunder, and any amendments
and waivers hereto or thereto; and (iii) after the occurrence of an Event of
Default, all costs and expenses (including reasonable attorneys' fees, including
allocated costs of internal counsel, fees of other professional advisors
including financial advisors and costs of settlement) incurred by the Lender in
enforcing any Obligations of or in collecting any payments due from the Company
hereunder or under the Notes issued hereunder by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings. The Lender agrees to deliver to the
Company, as soon as reasonably practicable, a certificate setting forth in
reasonable detail a computation of amounts owing under this Section 9.3;
provided, however, the delivery of such certificate is not a condition of
-------- -------
payment under this Section 9.3.
Section 9.4 Indemnity.
---------
In addition to the payment of expenses pursuant to Section 9.3,
whether or not the Effective Date occurs or the transactions contemplated hereby
shall be consummated, the Company agrees to indemnify, pay and hold the Lender
and any holder of the Notes, and the officers, directors, employees, agents, and
affiliates of the Lender and such holders (collectively called the
"Indemnitees") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of one counsel for
such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of
this Agreement, the other Loan Documents, the Lender's agreement to extend the
maturity of the Loan or the use or intended use of the proceeds of any of the
Loan hereunder (the "indemnified liabilities"); provided that the Company shall
--------
have no obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of that
Indemnitee. The Company will not be liable to any Indemnitee for any settlement
of any claim pursuant to this Section 9.4 that is effected without the Company's
prior written consent. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the
71
payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.
Section 9.5 Set-Off.
-------
Subject to the provisions of Section 2.10, the last sentence of
Section 7.1 and of Article VIII of this Agreement and to any waivers of set-off
that may be required in the exhibits to the Security Agreements (as defined in
the Senior Credit Agreement), in addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Lender and each subsequent holder of any
Notes is hereby authorized by the Company at any time or from time to time,
without notice to the Company, or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured but not
including trust accounts) and any other Indebtedness at any time held or owing
by the Lender or that subsequent holder to or for the credit or the account of
the Company against and on account of the obligations and liabilities of the
Company to the Lender or that subsequent holder under this Agreement and the
Notes, including, but not limited to, all claims of any nature or description
arising out of or connected with this Agreement or the Notes, irrespective of
whether or not (a) the Lender or that subsequent holder shall have made any
demand hereunder or (b) the Lender or that subsequent holder shall have declared
the principal or the interest on the Loan and Notes, and other amounts due
hereunder to be due and payable as permitted by Article VII hereof and although
said obligations and liabilities, or any of them, may be contingent or
unmatured.
Section 9.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
the Lender and the Company and an opinion of counsel of the Company to the
effect that such amendment, modification, termination, or waiver does not
violate the Senior Credit Agreement or any agreements or documents evidencing
any Senior Indebtedness. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. No
notice to or demand on the Company in any case shall entitle the Company to any
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 9.6 shall be binding upon each holder of the Notes, each future holder
of the Notes, and, if signed by the Company, on the Company.
Section 9.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
72
Section 9.8 Change in Federal Tax Laws.
--------------------------
If there is a material change in federal tax laws which materially
affects the Company's ability to comply with the financial covenants, standards
or terms found in Articles I, V or VI, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably reflect such
changes with the desired result that the criteria for evaluating the Company's
financial condition shall be the same after such changes as if such changes had
not been made.
Section 9.9 Notices.
-------
Any notice or other communication herein required or permitted to be
given shall be in writing electronically communicated or hand delivered or
delivered by courier, addressed to the party hereto as provided in this Section
9.9.
All communications intended for the Company shall be sent to:.
CB Commercial Real Estate Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Fax Numbers: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
All communications intended for CB Holdings shall be sent to:
CB Commercial Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Fax Numbers: (▇▇▇) ▇▇▇-▇▇▇▇ or
(▇▇▇) ▇▇▇-▇▇▇▇
All communications intended for the Lender shall be sent to:
Sumitomo Finance (Dublin) Limited.
La Touche House
I.F.S.C.
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Telex Number: 91909
Fax Number: 353-1-67 003 53
All notices shall be sent as aforesaid or at any other address of
which any of the foregoing shall have notified the others in any manner
prescribed in this Section 9.9.
73
For all purposes of this Agreement, a notice or communication will be
deemed effective:
(a) if delivered by hand or sent by courier, on the day it is
delivered unless (i) that day is not a day upon which commercial banks are open
for business in the city specified (a "Local Business Day") in the address for
notice provided by the recipient or (ii) if delivered after the close of
business on a Local Business Day, then on the next succeeding Local Business
Day,
(b) if sent by telex, on the day the recipient's answerback is
received unless that day is not a Local Business Day or the answerback is
received after the close of business on such day, in which case on the next
succeeding Local Business Day,
(c) if sent by facsimile transmission, on the date transmitted,
provided oral or written confirmation of receipt is obtained by the sender,
unless the transmission and confirmation date is not a Local Business Day, in
which case on the next succeeding Local Business Day.
provided, that notices to the Lender shall only be effective upon receipt
--------
thereof by the Lender.
Section 9.10 Survival of Warranties and Certain Agreements.
----------------------------------------------
(a) All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, the Effective Date
hereunder and the execution and delivery of the Notes.
(b) Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Company set forth in Sections 2.12, 2.13,
2.14, 9.3 and 9.4, shall survive the payment of the Loan and the Notes and the
termination of this Agreement.
Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of the Lender or any holder of any
Notes in the exercise of any power, right or privilege hereunder or under the
Notes shall impair such power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege. All rights and remedies existing
under this Agreement or the Notes are cumulative to and not exclusive of, any
rights or remedies otherwise available.
Section 9.12 Severability; Partial Invalidity.
--------------------------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
74
Section 9.13 Article and Section Headings.
----------------------------
The headings or titles of the several Articles and Sections in this
Agreement and any table of contents appended to copies hereof shall be solely
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
Section 9.14 Applicable Law.
--------------
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 9.15 Successors and Assigns; Subsequent Holders of the Notes.
-------------------------------------------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lender. The terms and provisions
of this Agreement and all other certificates and opinions delivered pursuant to
Section 3.1 shall inure to the benefit of any assignee, participant or
transferee of the Notes pursuant to Section 9.2, and in the event of such
transfer, participation or assignment, the rights and privileges herein
conferred upon the Lender shall automatically extend to and be vested in such
participant, transferee or assignee, all subject to the terms and conditions
hereof. The Company's rights or any interest therein hereunder may not be
assigned without the written consent of the Lender.
Section 9.16 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR ANY GUARANTOR
WITH RESPECT TO THIS AGREEMENT OR THE NOTES MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT THE COMPANY AND EACH GUARANTOR ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST
THE COMPANY OR ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. THE
COMPANY AND EACH GUARANTOR RESPECTIVELY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID.
Section 9.17 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts,
75
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument.
This Agreement shall be deemed executed and delivered upon the execution of a
counterpart hereof by each of the parties hereto, and written or telephonic
notification of such execution and authorization of delivery thereof has been
received by the Company and the Lender.
Section 9.18 Highest Lawful Rate.
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The rate of interest payable on the Loan shall in no event exceed the
maximum rate permissible under applicable law. If the rate of interest payable
on the Loan is ever reduced as a result of this Section 9.18 and at any time
thereafter the maximum rate permitted by applicable law shall exceed the rate of
interest provided for in this Agreement, then the rate of interest provided for
in this Agreement shall be increased to the maximum rate provided by applicable
law for such period as is required so that the total amount of interest received
by the Lender is that which would have been received by the Lender but for the
operation of the first sentence of this Section 9.18.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal or interest on the Loan or the Notes wherever enacted, or at
any time hereafter in force. The Company (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede, by resort to any such law,
the execution of any power herein granted to the Lender, but will suffer and
permit the execution of every such power as though no such law had been enacted.
Section 9.19 Entire Agreement.
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The Loan Documents embody the entire agreement among the parties and
supersede all prior agreements, oral statements and understandings, if any,
relating to the subject matter hereof and thereof.
Section 9.20 Relationship of the Lender to Participants; Appointment
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of an Agent.
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The Company and each of the Guarantors acknowledge and agree that the
Lender may sell interests in the Loan and the Notes to various institutions (the
"Participants") pursuant to participation agreements. The Lender shall have no
liability for any action taken or omitted to be taken pursuant to the
instructions of Participants having direct or indirect interests in the Loan
(including by way of "risk" participations) in excess of fifty percent (50%).
Further, should any such participation be converted to an assignment of the
Lender's interest, the Lender shall have no further rights or obligations with
respect to the Loan or the Company to the extent of the interest transferred
provided, that the indemnities in favor of the Lender, including without
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limitation those contained in Sections 2.12, 2.13 and 2.14, shall continue to
enure to the benefit of the Lender.
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The Lender may, at any time, appoint an Agent to act as agent under
this Agreement pursuant to agency provisions substantially in the form of
Exhibit VI (the "Agency Agreement") provided that no such appointment shall
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subject the Company to any increased liability or costs under Section 2.12 or
2.14 of this Agreement. Any Agent so appointed shall be a bank or financial
institution having capital and surplus in excess of $500,000,000. The parties
agree to execute the Agency Agreement and such other documentation and
amendments hereto as may be necessary to appoint the Agent. Upon such
appointment all notices hereunder to be given to the Lender shall be given to
the Agent and all actions or consents to be taken or given by the Lender shall
be thereafter taken or given by the Agent acting pursuant to the directions of
the appropriate instructing group under the terms of the Agency Agreement.
Section 9.21 Effective Date.
--------------
This Agreement shall be effective (the "Effective Date") as of the
Offering Closing Date, provided that all conditions precedent set forth in
Section 3.1 are satisfied to the satisfaction of Lender or waived in writing by
the Lender as notified by the Lender and provided that the Offering Closing Date
shall have occurred by not later than March 31, 1997.
ARTICLE X
GUARANTEES
Section 10.1 Guarantees.
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Each Guarantor hereby unconditionally guarantees, on a joint and
several basis, to the Lender the due and the punctual payment of the principal
of and interest on the Loan and the Notes, when and as the same shall become due
and payable, whether at stated maturity, by acceleration, by notice of
prepayment or otherwise, the due and punctual payment of interest on the overdue
principal of and interest, if any, on the Loan and the Notes, to the extent
lawful, and the due and punctual performance of all other Obligations of the
Company to the Lender all in accordance with the terms of this Agreement. The
obligations of the Guarantors hereunder constitute a guarantee of payment and
not merely of collection. The Guarantors hereby agree that their respective
obligations under the Guarantees shall be absolute and unconditional and shall
remain in full force and effect until the entire Obligations shall have been
paid and such Guarantee obligations shall not be affected, modified or impaired
upon the happening from time to time of any event, including without limitation
any of the following, whether or not with notice to, or the consent of, any of
the Guarantors:
(a) the waiver, surrender, compromise, settlement, release or
termination of any or all of the obligations, covenants or agreements of the
Company under this Agreement or the Notes;
(b) the failure to give notice to any Guarantor of the occurrence
of an Event of Default under this Agreement;
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(c) the waiver, compromise or release of the payment, performance or
observance by the Company or by any Guarantor, respectively, of any or all of
the obligations, covenants or agreements contained in this Agreement;
(d) the extension of the time for payment of any Obligation or of the
time for performance of any other obligations, covenants or agreements under or
arising out of this Agreement;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in this Agreement;
(f) the taking or the omission of any of the actions referred to in
this Agreement including any acceleration of sums owing hereunder;
(g) any failure, omission, delay or lack on the part of the Lender to
enforce, assert or exercise any right, power or remedy conferred on the Lender
in this Agreement;
(h) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting any Guarantor or the
Company or any of the respective assets of either of them, or any allegation or
contest of the validity of this Guarantee in any such proceeding;
(i) any defense based upon any legal disability of the Company or any
other party or, to the extent permitted by law, any release, discharge,
reduction or limitation of or with respect to any sums owing the Company or any
other liability of the Company to the Lender;
(j) to the extent permitted by law, the release or discharge by
operation of law of any Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Guarantee;
(k) the default or failure of any Guarantor fully to perform any of
its obligations set forth in this Guarantee; or
(l) the invalidity of this Agreement or any part hereof or any defense
which the Company may have against the Lender or any other circumstances which
might constitute a legal or equitable discharge or defense of a surety or
guarantor.
If any payment by the Company to the Lender is rescinded or must be
returned by the Lender, the obligations of the Guarantors hereunder shall be
reinstated with respect to such payment.
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Each Guarantor waives demand for payment, protest and notice of
nonpayment and all other notices and demands whatsoever relating to the
Obligations.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which any Guarantor has or may have against
the Lender shall be available hereunder against the Lender to reduce the
payments to the Lender under the Guarantee.
Each Guarantor assumes responsibility for being and remaining informed
of the financial condition of the Company and of all other circumstances bearing
upon the risk of nonpayment of amounts owing under this Agreement which diligent
inquiry would reveal and agrees that the Lender shall have no duty to advise
such Guarantor of information known to it regarding such condition or any such
circumstances.
In the event of a default in the payment of any Obligation when and as
the same shall become due, the Lender shall have the right to proceed first and
directly against any Guarantor without proceeding against the Company or
exhausting any other remedies which it may have. The obligations of each
Guarantor under this Agreement shall be joint and several and are subject to
Article VIII.
The Guarantors shall have no right of subrogation, and hereby waive
and release any right of subrogation (or other right as a creditor) which they
might otherwise have now or in the future vis-a-vis the Company. The Guarantors
waive any and all right to enforce any remedy and to participate in any security
which any Guarantor may now or hereafter have against the Company, any other
Guarantor or any other party.
Demands against any Guarantor hereunder shall be conclusive as to the
amount due from such Guarantor (absent manifest error), and each Guarantor
agrees to pay any amount so demanded on the date of demand to the account
specified in Section 2.8 of this Agreement.
Section 10.2 Contribution.
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In order to provide for just and equitable contribution among the
Guarantors, the Guarantors (other than CB Holdings), shall promptly enter into a
contribution agreement providing that such Guarantors agree, inter se, that in
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the event any payment or distribution is made by such Guarantor (a "Funding
Guarantor") under this Guarantee, that Funding Guarantor shall be entitled to a
contribution from all other Guarantors for all payments, damages and expenses
incurred by that Funding Guarantor in discharging the Company's Obligations or
any other Guarantor's obligations with respect to the Loan as set forth in such
contribution agreement.
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WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
CB COMMERCIAL REAL ESTATE GROUP, INC.
By
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Executive Vice President
GUARANTORS:
CB COMMERCIAL HOLDINGS, INC.
By
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Executive Vice President
CB COMMERCIAL HOLDINGS, INC., CB COMMERCIAL
REAL ESTATE GROUP OF IOWA, INC., CB COMMERCIAL
PARTNERS, INC., CB COMMERCIAL REALTY ADVISORS,
INC., CB COMMERCIAL BROKERAGE, INC., ▇▇▇▇▇▇
FREMONT PROPERTY SERVICES, INC., CB COMMERCIAL
REAL ESTATE GROUP OF HAWAII, INC., CB
COMMERCIAL REAL ESTATE FUND MANAGEMENT, INC.,
CB COMMERCIAL REAL ESTATE MANAGEMENT SERVICES,
INC., CB COMMERCIAL ▇▇▇▇▇▇ & ▇▇▇▇▇, INC.,
▇▇▇▇▇▇ FREMONT REAL ESTATE MERCHANT CAPITAL
CORPORATION, ▇▇▇▇▇▇ & ▇▇▇▇▇ N.J., INC., ▇▇▇▇▇▇
FREMONT, INC., CB COMMERCIAL WAREHOUSE
PROPERTY CORP., ▇.▇. ▇▇▇▇▇▇ INVESTMENTS, INC.
▇.▇. MELODY & COMPANY, and ▇.▇. ▇▇▇▇▇▇ &
COMPANY OF CALIFORNIA
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Executive Vice President/
Treasurer
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary/Assistant Secretary
SUMITOMO FINANCE (DUBLIN) LIMITED
By:
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Shinchi Nishikiori
Managing Director
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