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EQUIPMENT REVOLVING LOAN AGREEMENT
by and between
FRANCHISE FINANCE CORPORATION OF AMERICA,
as Lender
and
FFCA MORTGAGE CORPORATION,
as Borrower
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Dated effective as of September 1, 1996
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TABLE OF CONTENTS
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Page
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BACKGROUND.......................................................................................... 1
AGREEMENT........................................................................................... 1
ARTICLE I
DEFINITIONS.................................................................. 1
Section 1.01. Definitions.......................................................................... 1
Section 1.02. Accounting and Other Terms........................................................... 12
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES........................................................ 13
Section 2.01. Revolving Advances................................................................... 13
Section 2.02. Making Advances Under the Revolving Loan............................................. 13
Section 2.03. Evidence of Indebtedness............................................................. 14
Section 2.04. Lender's Right to Reduce Commitment.................................................. 14
Section 2.05. Prepayments.......................................................................... 15
Section 2.06. Repayment............................................................................ 15
Section 2.07. Interest............................................................................. 15
Section 2.08. Payment Dates........................................................................ 16
Section 2.09. Default Interest..................................................................... 16
Section 2.10. Continuation and Conversion Elections................................................ 16
Section 2.11. Draw Fee............................................................................. 17
Section 2.12. Funding Losses....................................................................... 17
Section 2.13. Computations and Manner of Payments.................................................. 17
Section 2.14. Yield Protection..................................................................... 18
Section 2.15. Use of Proceeds; Fair Market Value of Equipment...................................... 21
ARTICLE III
CONDITIONS PRECEDENT............................................................. 21
Section 3.01. Conditions Precedent to the Initial Advance.......................................... 21
Section 3.02. Conditions Precedent to All Advances................................................. 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES....................................................... 24
Section 4.01. Organization and Qualification....................................................... 24
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Section 4.02. Due Authorization; Validity.......................................................... 24
Section 4.03. Conflicting Agreements and Other Matters............................................. 24
Section 4.04. Litigation........................................................................... 24
Section 4.05. Compliance with Laws Regulating the Incurrence of Indebtedness....................... 24
Section 4.06. Authorizations, Title to Properties and Related Matters.............................. 25
Section 4.07. Taxes................................................................................ 25
Section 4.08. Environmental Reports................................................................ 25
Section 4.09. Certain Fees......................................................................... 26
Section 4.10. Intellectual Property................................................................ 26
Section 4.11. Investment Company Act............................................................... 26
Section 4.12. Survival of Representations and Warranties, Etc...................................... 26
ARTICLE V
AFFIRMATIVE COVENANTS............................................................. 27
Section 5.01. Compliance with Laws and Payment of Debt............................................. 27
Section 5.02. Insurance............................................................................ 27
Section 5.03. Inspection Rights.................................................................... 27
Section 5.04. Records and Books of Account; Changes in GAAP........................................ 27
Section 5.05. Reporting Requirements............................................................... 28
Section 5.06. Use of Proceeds...................................................................... 29
Section 5.07. Maintenance of Existence and Assets.................................................. 29
Section 5.08. Payment of Taxes..................................................................... 29
Section 5.09. Indemnity............................................................................ 29
Section 5.10. Authorizations and Material Agreements............................................... 30
Section 5.11. Further Assurances................................................................... 30
Section 5.12. Subordination Agreement.............................................................. 30
Section 5.13. Underwriting Standards............................................................... 31
ARTICLE VI
LIMITED RECOURSE; ADDITIONAL COLLATERAL.................................................. 31
Section 6.01. Limited Recourse..................................................................... 31
Section 6.02. Additional Collateral; Covenant to Give Security..................................... 31
ARTICLE VII
EVENTS OF DEFAULT............................................................... 32
Section 7.01. Events of Default.................................................................... 32
Section 7.02. Remedies Upon Default................................................................ 33
Section 7.03. Cumulative Rights.................................................................... 33
Section 7.04. Waivers.............................................................................. 33
Section 7.05. Performance by Lender................................................................ 33
Section 7.06. Expenditures......................................................................... 33
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Section 7.07. Control............................................................................. 33
ARTICLE VIII
MISCELLANEOUS................................................................ 34
Section 8.01. Amendments and Waivers.............................................................. 34
Section 8.02. Notices............................................................................. 34
Section 8.03. Parties in Interest................................................................. 36
Section 8.04. Right of Set-off.................................................................... 36
Section 8.05. Costs, Expenses, and Taxes.......................................................... 36
Section 8.06. Rate Provision...................................................................... 37
Section 8.07. Severability........................................................................ 38
Section 8.08. Exceptions to Covenants............................................................. 38
Section 8.09. Counterparts........................................................................ 38
Section 8.10. Governing Law; Waiver of Jury Trial................................................. 38
Section 8.11. Entire Agreement.................................................................... 39
EXHIBIT A-Note (Evidencing Revolving Loan)......................................................... A-1
EXHIBIT B-Pledge and Security Agreement............................................................ B-1
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EQUIPMENT REVOLVING LOAN AGREEMENT
THIS EQUIPMENT REVOLVING LOAN AGREEMENT (the "Agreement") is dated
effective as of September 1, 1996, by FRANCHISE FINANCE CORPORATION OF AMERICA,
a Delaware corporation ("Lender"), and FFCA MORTGAGE CORPORATION, a Delaware
corporation (the "Borrower").
BACKGROUND
The Borrower has requested that the Lender provide, subject to the
provisions of this Agreement, a revolving loan to the Borrower in the maximum
principal amount of $25,000,000. The Lender has agreed to do so, subject to the
terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms have the respective meanings indicated below (such meanings to be
applicable equally to both the singular and plural forms of such terms):
"Advance" means an advance made by the Lender to the Borrower pursuant
to Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is Under Common Control
with another Person.
"Agreement" means this Equipment Revolving Loan Agreement, as hereafter
amended, modified or supplemented from time to time.
"Applicable Law" means (a) in respect of any Person, all provisions of
Laws applicable to such Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts made or performed in the State of
Arizona, the laws of the United States of America, including, without limiting
the foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as
the same may be amended at any time and from time to time hereafter, and any
other statute of the United States of America now or at any time hereafter
prescribing the maximum rates of interest on
loans and extensions of credit, and the laws of the State of Arizona, now or at
any time hereafter prescribing maximum rates of interest on loans and extensions
of credit.
"Applicable Margin" means 300 basis points.
"Auditor" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or other independent certified
public accountants selected by the Borrower and acceptable to the Lender.
"Authorizations" means all filings, recordings and registrations with,
and all validations or exemptions, consents and Licenses from, any Tribunal.
"Authorized Officer" means the chief executive officer, an executive
vice president or senior vice president of the Borrower or any other executive
officer of the Borrower authorized by the Borrower from time to time of which
the Lender has been notified in writing.
"Base Rate Advance" means an Advance bearing interest at the Base Rate.
"Base Rate" means a fluctuating rate per annum as shall be in effect
from time to time equal to the sum of the Applicable Margin plus the rate of
interest as then in effect under the Credit Agreement.
"Borrower" means FFCA Mortgage Corporation, a Delaware corporation.
"Borrowing" means a borrowing under the facility of the same Type made
on the same day.
"Borrowing Notice" has the meaning set forth in Section 2.02(a) hereof.
"Business Day" means a day of the year on which the Lender is open for
business in Scottsdale, Arizona.
"Cash Equivalents" means investments (directly or through a money
market fund) in (a) certificates of deposit and other interest bearing deposits
or accounts with United States commercial banks having a combined capital and
surplus of at least $300,000,000, which certificates, deposits and accounts
mature within one year from the date of investment and are fully insured as to
principal by the Federal Deposit Insurance Corporation or any successor agency,
(b) obligations issued or unconditionally guaranteed by the United States
government, or issued by an agency thereof and backed by the full faith and
credit of the United States government, which obligations mature within one year
from the date of investment, (c) direct obligations issued by any state or
political subdivision of the United States, which mature within one year from
the date of investment and have the highest rating obtainable from S&P or
▇▇▇▇▇'▇ on the date of investment, and (d) commercial paper which has one of the
three highest ratings obtainable from Standard & Poor's, Inc. or ▇▇▇▇▇'▇.
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"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations issued thereunder, as from time to time in effect.
"Collateral" has the meaning assigned to that term in the Pledge and
Security Agreement.
"Commitment" means, with respect to the Revolving Loan, $25,000,000, as
such amount may be reduced from time to time in accordance with the terms of
Section 2.04 hereof.
"Compliance Certificate" means the annual certificate of an Authorized
Officer of Borrower acceptable to the Lender, setting forth the information
required in Section 5.05(d) hereof, certifying that such individual has no
knowledge that a Default or Event of Default has occurred and is continuing, or
if a Default or Event of Default has occurred and is continuing, a statement as
to the nature thereof and the action being taken or proposed to be taken with
respect thereto.
"Consensual Lien" means any Lien of the type described in clauses (g)
and (h) of the definition of Permitted Liens.
"Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any indebtedness or obligation of any other Person in any
manner, whether directly or indirectly, including without limitation any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such indebtedness, (b) to purchase Property or services for the
purpose of assuring the owner of such indebtedness of its payment, or (c) to
maintain the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as to
enable the primary obligor to pay any indebtedness or to comply with any
agreement relating to any indebtedness or obligation, and shall, in any event,
include any contingent obligation under any letter of credit, application for
any letter of credit or other related documentation.
"Continue," "Continuation" and "Continued" each refer to the
continuation pursuant to Section 2.10 hereof of a LIBOR Advance from one
Interest Period to the next Interest Period.
"Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided that in any event (a) it shall include any director (or
Person holding the equivalent position) or executive officer (or Person holding
the equivalent position) of such Person or of any Affiliate of such Person, (b)
any Person which beneficially owns 5% or more (in number of votes) of the
securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation, (c) any
general partner of any partnership shall be
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conclusively presumed to control such partnership, (d) any other Person who is a
member of the immediate family (including parents, spouse, siblings and
children) of any general partner of a partnership, and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust, or is the
executor, administrator or other personal representative of such Person, shall
be conclusively presumed to control such Person, and (e) no Person shall be
deemed to be an Affiliate of a corporation solely by reason of his being an
officer or director of such corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Conversion Notice" has the meaning set forth in Section 2.10 hereof.
"Credit Agreement" means the Credit Agreement dated as of December 27,
1995, as amended by the First Amendment to the Credit Agreement dated as of
February 23, 1996, as further amended by the Second Amendment to the Credit
Agreement dated June 24, 1996, among Lender, NationsBank of Texas, N.A., as
administrative lender, certain lenders identified therein, as such Agreement is
amended, modified or supplemented from time to time or the provisions of any
successor agreement to such Agreement when designated in writing by the Lender
to the Borrower.
"Debtor Relief Laws" means applicable bankruptcy, reorganization,
insolvency, receivership, liquidation, arrangement, conservatorship, moratorium
or similar Laws, or principles of equity affecting the enforcement of creditors'
rights generally.
"Default" means any event specified in Section 7.01 hereof, whether or
not any requirement in connection with such event for the giving of notice,
lapse of time or happening of any further condition has been satisfied.
"Defective Loan" has the meaning set forth in Section 6.02 hereof.
"Draw Fee" means the fee described in Section 2.11 hereof.
"Environmental Claim" means any written notice by any Tribunal alleging
potential liability for damage to the environment, or by any Person alleging
potential liability for personal injury (including sickness, disease or death),
resulting from or based upon (a) the presence or release (including sudden or
non-sudden, accidental or non-accidental, leaks or spills) of any Hazardous
Material at, in or from property, whether or not owned by the Borrower, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
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"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C ss.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.)
("OSHA"), as such laws have been or hereafter may be amended or supplemented,
and any and all similar present or future federal, state and local Laws.
"Equipment" means all equipment, goods and other Property in which the
Borrower holds a security interest pursuant to an Equipment Security Agreement.
"Equipment Loan" means an obligation of the debtor under an Equipment
Security Agreement that is evidenced by the related Promissory Note and such
Equipment Security Agreement pledged by the Borrower to the Lender pursuant to
the Pledge and Security Agreement and constituting a Pledged Loan.
"Equipment Security Agreement" means a security agreement pursuant to
which a security interest is granted in Equipment.
"Event of Default" means any of the events specified in Section 7.01
hereof, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Dallas or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such date on such
transactions received by the Lender from three federal funds brokers of
recognized standing selected by it.
"Funded Equipment Loans" means promissory notes secured by duly
perfected, first priority security interests in Equipment granted by purchasers
or owners of such Equipment pursuant to Equipment Security Agreements in favor
of the Borrower, or a trustee acting for the benefit of the Borrower, relating
to loans made by the Borrower to unaffiliated third parties secured by such
Equipment, the principal amount of which was or will be funded from proceeds of
Advances or Intercompany Loans.
"Funding Date" means the date on which any Advance is made.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current
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period are comparable in all material respects to those applied in a preceding
period, except for new developments or statements promulgated by the Financial
Accounting Standards Board.
"Hazardous Materials" means all materials subject to any Environmental
Law, including, without limitation, materials listed in 49 C.F.R. ss. 172.101,
Hazardous Substances, explosive or radioactive materials, hazardous or toxic
wastes or substances, petroleum or petroleum distillates, asbestos or material
containing asbestos.
"Hazardous Substances" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. ss. 1251 et seq., the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. ss. 9601 et seq., the Resource Conservation
Recovery Act, 42 U.S.C. ss. 6901 et seq., and the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, Lender is then permitted
to charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, Lender is permitted to charge on the Obligations shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each change in the Highest Lawful Rate without notice to Borrower.
"Increased Advance Costs" has the meaning specified in Section 2.14(e)
hereof.
"Increased Advance Costs Retroactive Effective Date" has the meaning
specified in Section 2.14(e) hereof.
"Increased Advance Costs Set Date" has the meaning specified in Section
2.14(e) hereof.
"Indemnities" has the meaning ascribed thereto in Section 5.09 hereof.
"Initial Advance" means the initial Advance made in accordance with the
terms hereof, which shall only be after Borrower has satisfied each of the
conditions set forth in Section 3.01 and Section 3.02 hereof (or any such
condition shall have been waived by the Lender).
"Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date an Advance is made or continued as or converted into a
LIBOR Advance and ending one, three or six months thereafter (as the Borrower,
in its sole discretion, shall select) provided, however, that:
(a) the Borrower may not select any Interest Period that ends
after any principal repayment date unless, after giving effect to such
selection, the aggregate principal amount of LIBOR Advances having
Interest Periods that end on or prior to such principal repayment date,
shall be at least equal to the principal amount of Advances due and
payable on and prior to such date;
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(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day; provided, however, that if such extension would cause the
last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other Person,
or any direct or indirect loan, extension of credit, advance (other than
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), or capital
contribution to or investment in any other Person, including without limitation
the incurrence or sufferance of Debt or accounts receivable of any other Person
that are not current assets or do not arise from sales to that other Person in
the ordinary course of business.
"Law" means any constitution, statute, law, ordinance, regulation,
rule, order, writ, injunction or decree of any Tribunal.
"Lender" means Franchise Finance Corporation of America, a Delaware
corporation.
"Lending Office" means, with respect to the Lender or affiliate, (a)
initially, the office of the Lender or affiliates identified as such on the
signature pages hereof, and (b) subsequently, such other office of the Lender or
affiliate as the Lender may designate in writing to the Borrower as the office
from which the Advances of the Lender will be made and maintained and for the
account of which all payments of principal and interest on the Advances and the
Commitment Fee will thereafter be made. Lender may have more than one Lending
Office for the purpose of making Base Rate Advances and LIBOR Advances.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.
"LIBOR Rate" means a simple per annum interest rate equal to the lesser
of (a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate Basis plus the
Applicable Margin. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements, be subject to premiums assessed therefor by
the Lender, which are payable directly to the Lender. Once determined, the LIBOR
Rate shall remain unchanged during the applicable Interest Period.
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"LIBOR Rate Basis" means the applicable LIBOR Rate charged to the
Lender under the Credit Agreement.
"License" means, as to any Person, any license, permit, certificate of
need, authorization, orders, certification, accreditation, franchise, approval
or grant of rights by any Tribunal or third person necessary or appropriate for
such Person to own, maintain or operate its business or Property, unless the
failure to obtain, retain or comply with same would not constitute a Material
Adverse Change.
"Lien" means any mortgage, pledge security interest, encumbrance, lien
or charge of any kind, including without limitation any agreement to give or not
to give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under any
Laws (except for the filing of a financing statement or notice in connection
with an operating lease).
"Litigation" means any proceeding, claim, lawsuit, arbitration and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax or other Law, or under or pursuant to any
contract, agreement or other instrument.
"Loan Papers" means this Agreement; the Note; the Pledge and Security
Agreement; all promissory notes evidencing any portion of the Obligations; and
all other documents, instruments, agreements or certificates executed or
delivered by Borrower as security for Borrower's obligations hereunder, in
connection with the loans to the Borrower or otherwise; as each such document
shall, with the consent of the Lender pursuant to the terms hereof, be amended,
revised, renewed, extended, substituted or replaced from time to time.
"Material Adverse Change" or "Material Adverse Effect" means any
circumstance or event that (a) can reasonably be expected to cause a Default or
an Event of Default, (b) otherwise can reasonably be expected to (i) be material
and adverse to the continued operation of the Borrower, or (ii) be material and
adverse to the financial condition, business operations, prospects or Properties
of the Borrower, or (c) in any manner whatsoever does or can reasonably be
expected to (i) materially and adversely affect the validity or enforceability
of any material provision of any of the Loan Papers or (ii) materially and
adversely affect the ability of the Borrower to perform its obligations under
the Loan Papers executed by it.
"Maturity Date" means the date on which the loan of the Lender under
the Credit Agreement becomes due and payable, but in no event later than
December 31, 1998.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Lender is permitted to charge on the Obligations.
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"Note" means that certain [Second Amended and Restated] Intercompany
Note between the Borrower and the Lender of even date herewith, as such note may
be amended, extended, restated, renewed, substituted or replaced from time to
time.
"Obligations" means all present and future obligations, indebtedness
and liabilities, and all renewals and extensions of all or any part thereof, of
the Borrower to the Lender arising from, by virtue of, or pursuant to this
Agreement, any of the other Loan Papers and any and all renewals and extensions
thereof or any part thereof, or future amendments thereto, all interest accruing
on all or any part thereof and reasonable attorneys' fees incurred by the Lender
for the administration, execution of waivers, amendments and consents, and in
connection with any restructuring, workouts or in the enforcement or the
collection of all or any part thereof, whether such obligations, indebtedness
and liabilities are direct, indirect, fixed, contingent, joint, several or joint
and several. Without limiting the generality of the foregoing, "Obligations"
includes all amounts which would be owed by the Borrower and any other Person to
the Lender under any Loan Paper, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower or any other Person (including all such
amounts which would become due but for the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding of the
Borrower or any other Person under any Debtor Relief Law).
"Permitted Liens" means:
(a) those imposed by the Loan Papers;
(b) Liens in connection with workers' compensation,
unemployment insurance or other social security obligations (which
phrase shall not be construed to refer to ERISA);
(c) deposits, pledges or liens to secure the performance of
bids, tenders, contracts (other than contracts for the payment of
borrowed money), leases, statutory obligations, surety, customs,
appeal, performance and payment bonds and other obligations of like
nature arising in the ordinary course of business;
(d) mechanics', workmen's, carriers', warehousemen's,
materialmen's, landlords' or other like Liens arising in the ordinary
course of business with respect to obligations which are not due or
which are either (i) being contested in good faith and by appropriate
proceedings diligently conducted (including, if applicable, by a tenant
of a Property as required under the lease relating thereto, by a debtor
under a Funded Equipment Loan as required thereby or by a mortgagor
under any mortgage loan held by the Borrower as required thereby) and
in respect of which adequate reserves shall have been established in
accordance with GAAP on the books of the Borrower or (ii) the
obligation of a tenant of a Property under its lease, of a debtor under
a Funded Equipment Loan or of a mortgagor under any mortgage loan held
by the Borrower and the Borrower has made a demand upon such tenant,
debtor or mortgagor to pay amounts
9
owed in order to remove such Liens; provided that if such tenant,
debtor or mortgagor fails to pay such amounts then Borrower shall
promptly take all necessary action to remove such Liens;
(e) Liens for taxes, assessments, fees, governmental charges
or levies not delinquent or to the extent that payment hereof is either
(i) being contested in good faith and by appropriate proceedings
diligently conducted (including, if applicable, by a tenant of a
Property as required under the lease relating thereto, by a debtor
under a Funded Equipment Loan as required thereby or by a mortgagor
under any mortgage loan held by the Borrower as required thereby), and
in respect of which adequate reserves shall have been established in
accordance with GAAP on the books of the Borrower or (ii) the
obligation of a tenant of a Property under its lease, of a debtor under
a Funded Equipment Loan or of a mortgagor under any mortgage loan held
by the Borrower and the Borrower or has made a demand upon such tenant,
debtor or mortgagor to pay amounts owed in order to remove such Liens;
provided that if such tenant, debtor or mortgagor fails to pay such
amounts then the Borrower shall promptly take all necessary action to
remove such Liens;
(f) easements, rights of way, restrictions, leases of Property
to others, easements for installations of public utilities, title
imperfections and restrictions, zoning ordinances and other similar
encumbrances affecting Property which in the aggregate do not
materially adversely affect the value of such Property or materially
impair its use for the operation of the business of the Borrower;
(g) Liens on Property acquired by the Borrower in the ordinary
course of business, securing indebtedness of the Borrower incurred or
assumed for the purpose of financing all or part of the cost of
acquiring such Property; provided that (i) such Lien attaches solely to
the Property so acquired in such transaction, (ii) such Lien attaches
to such Property concurrently with or within 30 days after the
acquisition thereof, (iii) such Property is used in the business of the
Borrower, (iv) the amount of indebtedness secured by Lien shall not
exceed 100% of the cost of such Property, and (v) such indebtedness is
permitted to be incurred hereunder and would not otherwise result in a
Default or Event of Default hereunder; and
(h) Liens on the Property constituting the Borrower's
executive offices located in Scottsdale, Arizona, securing indebtedness
for the acquisition, construction or improvement thereof.
"Person" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization and government, or any department,
agency or political subdivision thereof.
"Pledge and Security Agreement" means the Equipment Pledge and Security
Agreement of the Borrower in the form of Exhibit B hereto.
10
"Pledged Loans" has the meaning assigned to that term in the Pledge and
Security Agreement.
"Promissory Note" means a promissory note evidencing an Equipment Loan
which is secured by an Equipment Security Agreement.
"Property" means all types of real, personal, tangible, intangible or
mixed property, whether owned in fee simple or leased.
"Quarterly Date" means the last Business Day of each March, June,
September and December during the term of this Agreement, commencing on December
31, 1996.
"Refinancing Advance" means an Advance that is used to pay the
principal amount of an existing Advance (or any performance thereof) at the end
of its Interest Period and which, after giving effect to such application, does
not result in an increase in the aggregate amount of outstanding Advances.
"Regulatory Change" means any change after the date hereof in federal,
state or foreign Laws (including the introduction of any new Law) or the
adoption or making after such date of any interpretations, directives or
requests of or under any federal, state or foreign Laws (whether or not having
the force of Law) by any Tribunal charged with the interpretation or
administration thereof, applying to a class of financial institutions that
includes the Lender.
"Restricted Payments" means (a) any direct or indirect distribution,
distribution or other payment on account of any general or limited partnership
interest in (or the setting aside of funds for, or the establishment of a
sinking fund or analogous fund with respect to), or shares of capital stock or
other securities of, the Borrower; (b) any payments of principal of, or interest
on, or fees related to, or any other payments and prepayments with respect to,
or the establishment of, or any payment to, any sinking fund or analogous fund
for the purpose of making any such payments on, indebtedness of the Borrower
(excluding the Obligations); (c) any Management Fee or any management,
consulting or other similar fees, or any interest thereon, payable by the
Borrower to any Affiliate of the Borrower; and (d) any administration fee or any
administration, consulting or other similar fees, or any interest thereon,
payable by the Borrower to any Affiliate of the Borrower or to any other Person.
"Revolving Loan" means that certain Revolving Loan made to the Borrower
on the Closing Date until the Maturity Date in accordance with Section 2.01(a)
hereof.
"Rights" means rights, remedies, powers and privileges.
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including, without limitation, Contingent Liabilities of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
11
such Person on its debts as they become absolute and matured, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
Property would constitute an unreasonably small capital.
"Subsidiary" of any Person means:
(a) any corporation, partnership, joint venture, trust or
estate of which (or in which) more than 50% of:
(i) the outstanding capital stock having voting power
to elect a majority of the Board of Directors of such
corporation (or other Persons performing similar functions of
such entity, and irrespective of whether at the time capital
stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any
contingency),
(ii) the interest in the capital or profits of such
partnership or joint venture, or
(iii) the beneficial interest of such trust or
estate,
is at the time directly or indirectly owned by (A) such Person, (B)
such Person and one or more of its Subsidiaries or (C) one or more of
such Person's Subsidiaries, and
(b) any corporation which is a non-qualified REIT Subsidiary
under the Code of which more than 50% of the non-voting preferred
capital stock is at the time directly or indirectly owned by (i) such
Person, (ii) such Person and one or more of its Subsidiaries or (iii)
one or more of such Person's Subsidiaries.
"Taxes" means all taxes, assessments, imposts, fees or other charges at
any time imposed by any Laws or Tribunal.
"Tribunal" means any state, commonwealth, federal, foreign, territorial
or other court or government or regulatory body, subdivision, agency,
department, commission, board, bureau or instrumentality of a governmental body.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate or LIBOR Rate.
"UCC" means the Uniform Commercial Code as adopted in the State of
Arizona.
Section 1.02. Accounting and Other Terms. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP
12
consistently applied for the Borrower, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other genders.
Except where the context otherwise requires, all references to time are deemed
to be Scottsdale, Arizona time.
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
Section 2.01. Revolving Advances. The Lender agrees, on the terms and
subject to the conditions hereinafter set forth, from the Closing Date until the
Maturity Date, to make Advances under the Revolving Loan to the Borrower on any
Business Day during the period from the Funding Date until the Maturity Date, in
an aggregate principal amount not to exceed at any time outstanding the
Commitment. Subject to the terms and conditions of this Agreement, until the
Maturity Date, the Borrower may borrow, repay and reborrow the Advances under
the Revolving Loan.
Section 2.02. Making Advances Under the Revolving Loan.
(a) Each Borrowing of Advances shall be made upon the written
notice of Borrower, received by the Lender not later than (i) 12:00
noon three Business Days prior to the proposed date of the Borrowing,
in the case of LIBOR Advances and (ii) not later than 10:00 a.m. on the
date of such Borrowing, in the case of Base Rate Advances. Each such
notice of a Borrowing (a "Borrowing Notice") shall be by telecopy,
promptly confirmed by letter, with the following information.
(i) the date of such proposed Borrowing, which shall
be a Business Day;
(ii) the amount of such proposed Borrowing which,
shall not exceed the Commitment, shall, in the case of a
Borrowing of LIBOR Advances, be in an amount of not less than
$250,000 or an integral multiple of $50,000 in excess thereof
and, in the case of a Borrowing of Base Rate Advances, be in
an amount of not less than $50,000 or an integral multiple of
$50,000 in excess thereof;
(iii) the Type of Advances of which the Borrowing is
to be comprised; and
(iv) if the Borrowing is to be comprised of LIBOR
Advances, the duration of the initial Interest Period
applicable to such Advances.
If the Borrowing Notice fails to specify the duration of the
initial Interest Period for any Borrowing comprised of LIBOR Advances,
such Interest Period shall be one month. The Lender shall, before 1:00
p.m. on the date of each Advance hereunder
13
(other than a Refinancing Advance), make available to the Borrower
Advances to be made on that day in immediately available funds.
(b) Unless any applicable condition specified in Article IV
hereof has not been satisfied, Lender will make the funds on Advances
under the Revolving Loan promptly available to the Borrower (other than
with respect to a Refinancing Advance) by wiring Norwest Bank
Minnesota, Minneapolis, Minnesota, ABA #▇▇▇▇▇▇▇▇▇, Beneficiary Bank:
Norwest Bank Arizona, Beneficiary Account: 4608001886, Beneficiary
Name: FFCA Mortgage Corporation, or such other account as shall have
been specified by the Borrower.
(c) With respect to each Advance, Borrower shall deliver to
the Lender, no later than three Business Days after the applicable
Funding Date, the documents and instruments listed in the Pledge and
Security Agreement in respect of the Pledged Loans constituting part of
the Collateral. Borrower shall take all reasonable steps necessary to
assist the Lender in perfecting its security interest in the Pledged
Loans.
(d) After giving effect to any Borrowing, (i) there shall not
be more than 5 different Interest Periods in effect and (ii) the
aggregate principal of outstanding Advances, shall not exceed the
Commitment.
(e) No Interest Period for a Borrowing under the Revolving
Loan shall extend beyond the Maturity Date.
(f) The Borrower shall indemnify the Lender against any loss
incurred by the Lender as a result of (i) any failure to fulfill, on or
before the date specified in the Borrowing Notice for the Advance, the
conditions to the Advance set forth herein or (ii) Borrower's
requesting that an Advance not be made on the date specified in the
Borrowing Notice.
Section 2.03. Evidence of Indebtedness.
(a) The obligations of Borrower with respect to all Advances
under the Revolving Loan made by Lender shall be evidenced by a Note in
the form of Exhibit A hereto and in the amount of $25,000,000.
(b) Absent demonstrable error, Lender's records shall be
conclusive as to amounts owed Lender under the Notes and this
Agreement.
Section 2.04. Lender's Right to Reduce Commitment. Lender shall have
the right from time to time upon notice by Lender to Borrower to reduce the
Commitment, in whole or in part. Such notice shall specify the amount of
reduction and the proposed date of such reduction. In the event all or any
portions of Advances under the Revolving Loan exceed such reduced Commitment,
such excess shall be payable by Borrower on or before the Maturity Date.
14
Section 2.05. Prepayments.
(a) Optional Prepayments. Borrower may, upon at least three
Business Days' prior written notice to Lender stating the proposed date
and aggregate principal amount of the prepayment, prepay the
outstanding principal amount of any Advances in whole or in part,
together with accrued interest to the date of such prepayment on the
principal amount prepaid without premium or penalty; provided, however,
that in the case of a prepayment of a Base Rate Advance, the notice of
prepayment may be given by telephone by 11:00 a.m. on the date of
prepayment. Each partial prepayment, other than prepayments pursuant to
Section 6.02 hereof, shall, in the case of Base Rate Advances, be in an
aggregate principal amount of not less than $100,000 or a larger
integral multiple of $50,000 in excess thereof and, in the case of
LIBOR Advances, be in an aggregate principal amount of not less than
$250,000 or a larger integral multiple of $100,000 in excess thereof.
If any notice of prepayment is given, the principal amount stated
therein, together with accrued interest on the amount prepaid and the
amount, if any, due under Sections 2.11 and 2.13 hereof, shall be due
and payable on the date specified in such notice.
(b) Prepayments, Generally. No prepayments of Advances under
the Revolving Loan made solely pursuant to this Section 2.05 shall
cause the Commitment to be reduced. Any prepayment of Advances pursuant
to this Section 2.05 shall be applied pro rata to all Advances
outstanding as of the date of such payment.
Section 2.06. Repayment.
(a) The Revolving Loan. (i) On the date of a reduction of the
Commitment pursuant to Section 2.04 hereof, to the extent the aggregate
outstanding Advances under the Revolving Loan on the date of reduction
exceed the Commitment as reduced, such excess amounts shall be
immediately due and payable.
(b) Other Obligations. All Obligations not otherwise due and
payable under Section 2.06(a) above shall be due and payable in full on
the Maturity Date.
Section 2.07. Interest. Subject to Section 2.09 below, Borrower shall
pay interest at the following rates:
(a) Base Rate Advances. Base Rate Advances shall bear interest
at a rate per annum equal to the lesser of (i) the Base Rate as in
effect from time to time and (ii) the Highest Lawful Rate. If the
amount of interest payable in respect of any interest computation
period is reduced to the Highest Lawful Rate pursuant to the
immediately preceding sentence and the amount of interest payable in
respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable in respect
of such subsequent interest computation period shall be automatically
increased to Maximum Amount; provided that at no time shall the
15
aggregate amount by which interest paid has been increased pursuant to
this sentence exceed the aggregate amount by which interest has been
reduced pursuant to the immediately preceding sentence.
(b) LIBOR Advances. LIBOR Advances shall bear interest at the
rate per annum equal to the LIBOR Rate applicable to such Advance,
which at no time shall exceed the Highest Lawful Rate.
Section 2.08. Payment Dates. Accrued and unpaid interest on Base Rate
Advances shall be paid quarterly in arrears on each Quarterly Date and on the
appropriate maturity, repayment or prepayment date. Accrued and unpaid interest
on LIBOR Advances shall be paid on the last day of the appropriate Interest
Period and on the date of any prepayment or repayment of such Advance; provided,
however, that if any Interest Period for a LIBOR Advance exceeds three months,
interest shall also be paid on each date occurring during the Interest Period
which is the three-month anniversary date of the first day of the Interest
Period.
Section 2.09. Default Interest. During the continuation of any Event of
Default, Borrower shall pay, on demand, interest (after as well as before
judgment to the extent permitted by Law) on the principal amount of all Advances
outstanding and on all other Obligations due and unpaid hereunder for each
Advance equal to the lesser of the (a) the Highest Lawful Rate and (b) the Base
Rate (whether or not in effect) plus 3.00%.
Section 2.10. Continuation and Conversion Elections.
(a) Lender may upon irrevocable written notice to Borrower and
subject to the terms of this Agreement:
(i) require the Borrower to convert, on any Business
Day, all or any portion of outstanding Base Rate Advances (in
an aggregate amount not less than $250,000 or a larger
integral multiple of $100,000 in excess thereof) into LIBOR
Advances;
(ii) require the Borrower to convert at the end of
any Interest Period therefor, all or any portion of
outstanding LIBOR Advances comprised of the same Borrowing (in
an aggregate amount not less than $100,000 or a larger
integral multiple of $50,000 in excess thereof) into Base Rate
Advances; or
(iii) require the Borrower to continue, at the end of
any Interest Period therefor, any LIBOR Advances;
provided, however, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a
result of any payment, prepayment or conversion of part thereof to an
amount less than $250,000, the LIBOR
16
Advances comprised in such Borrowing shall automatically convert into
Base Rate Advances at the end of each respective Interest Period.
(b) Lender shall deliver a notice of conversion (a "Notice of
Conversion"), to the Borrower not later than (i) 12:00 noon three
Business Days prior to the proposed date of conversion, if the Advances
or any portion thereof are to be converted into or continued as LIBOR
Advances; and (ii) not later than 10:00 a.m. on the proposed date of
conversion, if the Advances or any portion thereof are to be converted
into Base Rate Advances.
Each such Notice of Conversion/Continuation shall be by
telecopy or telephone, promptly confirmed in writing, specifying
therein:
(i) the proposed date of conversion;
(ii) the aggregate amount of Advances to be
converted;
(iii) the nature of the proposed conversion; and
(iv) the duration of the applicable Interest
Period.
Section 2.11. Draw Fee. In connection with the funding of each Advance
under the Revolving Loan, the Borrower shall pay to the Lender, by way of
deduction from the proceeds of such Advance, on the date of such funding, a
non-refundable draw fee. The draw fee shall be equal to 1.00% of the amount of
such Advance.
Section 2.12. Funding Losses. If Borrower makes any payment or
prepayment of principal with respect to any LIBOR Advance (including payments
made after any acceleration thereof) or converts any Advance from a LIBOR
Advance on any day other than the last day of an Interest Period applicable
thereto or if Borrower fails to prepay, borrow, convert or continue any LIBOR
Advance after a notice or prepayment, borrowing, conversion or continuation has
been given (or is deemed to have been given) to Lender, Borrower shall pay to
Lender on demand (subject to Section 8.07 hereof) any actual loss.
Section 2.13. Computations and Manner of Payments.
(a) Borrower shall make each payment hereunder and under the
other Loan Papers not later than 1:00 p.m. on the day when due in
immediately available funds to Lender, unless otherwise specifically
provided herein, at:
Franchise Finance Corporation of America
The Perimeter Center
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
17
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇,
Executive Vice President and
Chief Financial Officer
for credit to the account of FFCA Mortgage Corporation. No later than
the end of each day when each payment hereunder is made, Borrower shall
notify the above person or such other Person as Lender may from time to
time specify.
(b) Subject to Section 8.07 hereof, interest on Advances, and
other amounts due under the Loan Papers shall be calculated on the
basis of actual days elapsed but computed as if each year consisted of
360 days. Such computations shall be made including the first day but
excluding the last day occurring in the period for which such interest
or other amounts are payable. Each determination by Lender of an
interest rate, fee or commission hereunder shall be conclusive and
binding for all purposes, absent demonstrable error. All payments under
the Loan Papers shall be made in United States dollars, and without
setoff, counterclaim or other defense.
(c) Reference to any particular index or reference rate for
determining any applicable interest rate under this Agreement is for
purposes of calculating the interest due and is not intended as and
shall not be construed as requiring the Lender to actually fund any
Advance at any particular index or reference rate.
Section 2.14. Yield Protection.
(a) If the lender under the Credit Agreement (the "Credit
Agreement Lender"), determines that either (i) the adoption, after the
date hereof, of any Applicable Law, rule, regulation or guideline
regarding capital adequacy and applicable to commercial banks or
financial institutions generally or any change therein, or any change,
after the date hereof, in the interpretation or administration thereof
by any Tribunal, central bank or comparable agency charged with the
interpretation or administration thereof, or (ii) compliance by the
Credit Agreement Lenders with any request or directive made after the
date hereof applicable to commercial banks or financial institutions
generally regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency has
the effect of reducing the rate of return on the Credit Agreement
Lender's capital as a consequence of its obligations to the Lender to a
level below that which the Lender could have achieved but for such
adoption, change or compliance (taking into consideration NationsBank's
policies with respect to capital adequacy (but excluding consequences
of the Lender's negligence or intentional disregard of law or
regulation)) by an amount reasonably deemed by the Lender to be
material, then from time to time, within 15 days after demand by the
Lender, Borrower shall, subject to Section 8.08 hereof, pay to the
Lender such additional amount or amounts as will adequately compensate
for such
18
reduction. The Lender will notify Borrower of any event occurring after
the date of this Agreement which will entitle the Lender to
compensation pursuant to this Section 2.14(a) as promptly as
practicable after the Lender obtains actual knowledge of such event;
provided, Lender shall not be liable for its failure to provide such
notification. A certificate of the Lender claiming compensation under
this Section 2.14(a), setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to it
hereunder and certifying that such claim is consistent with the
Lender's treatment of similar customers having similar provisions
generally in their agreements with the Lender shall be conclusive in
the absence of demonstrable error. The Lender shall use reasonable
efforts to mitigate the effect upon Borrower of any such increased
costs payable to the Lender under this Section 2.14(a).
(b) If, after the date hereof, any Tribunal, central bank or
other comparable authority, at any time imposes, modifies or deems
applicable any reserve (including, without limitation, any imposed by
the Board of Governors of the Federal Reserve System), special deposit
or similar requirement against assets of, deposits with or for the
amount of, or credit extended by, the Lender, or imposes on the Lender
any other condition affecting a LIBOR Advance, the Notes, or its
obligation to make a LIBOR Advance; and the result of any of the
foregoing is to increase the cost to the Lender of making or
maintaining its LIBOR Advances, or to reduce the amount of any sum
received or receivable by the Lender under this Agreement or under the
Notes or reimbursement obligations by an amount deemed by the Lender to
be material, then, within five days after demand by the Lender,
Borrower shall, subject to Section 8.08 hereof, pay to the Lender such
additional amount or amounts as will compensate the Lender for such
increased cost or reduction. The Lender will (i) notify Borrower and
Lender of any event occurring after the date of this Agreement that
entitles the Lender to compensation pursuant to this Section 2.14(b),
as promptly as practicable after the Lender obtains actual knowledge of
the event; provided, Lender shall not be liable for its failure to
provide such notification and (ii) use good faith and reasonable
efforts to designate a different Lending Office for LIBOR Advances of
the Lender if the designation will avoid the need for, or reduce the
amount of, the compensation and will not, in the sole opinion of the
Lender, be disadvantageous to the Lender. A certificate of the Lender
claiming compensation under this Section 2.14(b), setting forth in
reasonable detail the computation of the additional amount or amounts
to be paid to it hereunder and certifying that such claim is consistent
with the Lender's treatment of similar customers having similar
provisions generally in their agreements with the Lender shall be
conclusive in the absence of demonstrable error. If the Lender demands
compensation under this Section 2.13(b), Borrower may at any time, on
at least five Business Days' prior notice to the Lender (A) repay in
full the then outstanding principal amount of LIBOR Advances, of the
Lender, together with accrued interest thereon, or (B) convert the
LIBOR Advances to Base Rate Advances in accordance with the provisions
of this Agreement; provided, however, that the Borrower shall be liable
for the actual loss arising pursuant to those actions.
19
(c) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation or
administration of any Law shall make it unlawful, or any central bank
or other Tribunal shall assert that it is unlawful, for the Lender to
perform its obligations hereunder to make LIBOR Advances or to continue
to fund or maintain LIBOR Advances hereunder, then, on notice thereof
and demand therefor by the Lender to Borrower, (i) each LIBOR Advance
will automatically, upon such demand, convert into a Base Rate Advance
and (ii) the obligation of the Lender to make, or to convert Advances
into, LIBOR Advances shall be suspended until the Lender notifies the
Borrower that the Lender has determined that the circumstances causing
such suspension no longer exist.
(d) Upon the occurrence and during the continuance of any
Default or Event of Default, (i) each LIBOR Advance will automatically,
on the last day of the then existing Interest Period therefor, convert
into a Base Rate Advance and (ii) the obligation of the Lender to make,
or to convert Advances into, LIBOR Advances shall be suspended.
(e) Failure on the part of the Lender to demand compensation
for any increased costs, increased capital or reduction in amounts
received or receivable or reduction in return on capital pursuant to
this Section 2.14 (collectively, "Increased Advance Costs") with
respect to any period shall not constitute a waiver of the Lender's
right to demand compensation with respect to such period or any other
period, subject, however, to the limitations set forth in this Section
2.14. Notwithstanding the foregoing, the Lender's demand for Increased
Advance Costs shall not include any Increased Advance Costs with
respect to any period more than two years prior to the date that the
Lender gives notice to Borrower of such Increased Advance Costs unless
the effective date of the condition which results in the right to
receive Increased Advance Costs is retroactive (the "Increased Advance
Costs Retroactive Effective Date"). If any Increased Advance Costs has
an Increased Advance Costs Retroactive Effective Date and the Lender
demands compensation within two years after the date setting the
Increased Advance Costs Retroactive Effective Date (the "Increased
Advance Costs Set Date"), the Lender shall have the right to receive
such Increased Advance Costs from the Increased Advance Costs
Retroactive Effective Date. If the Lender does not demand such
Increased Advance Costs within two years after the Increased Advance
Costs Set Date, the Lender may not receive payment of Increased Advance
Costs with respect to any period more than two years prior to such
demand.
(f) The obligations of Borrower under this Section 2.14 shall
survive any termination of this Agreement, subject, however, to the
limitations set forth in Section 2.14(e) above.
(g) Determinations by the Lender for purposes of this Section
2.14 shall be conclusive, absent demonstrable error. Any certificate
delivered to Borrower by the Lender pursuant to this Section 2.14 shall
include in reasonable detail the basis for the
20
Lender's demand for additional compensation and a certification that
the claim for compensation is consistent with the Lender's treatment of
similar customers having similar provisions generally in their
agreements with the Lender.
(h) If, in the Lender's reasonable determination, the LIBOR
Rate for any Interest Period for any LIBOR Advances will not adequately
reflect the cost to the Lender of making, funding or maintaining LIBOR
Advances for such Interest Period, Lender shall promptly so notify
Borrower, whereupon (i) each such LIBOR Advance will automatically, on
the last day of the then existing Interest Period therefor, convert
into a Base Rate Advance and (ii) the obligation of the Lender to make,
or to convert Advances into, LIBOR Advances shall be suspended until
the Lender notifies the Borrower that the Lender has determined that
the circumstances causing such suspension no longer exist.
Section 2.15. Use of Proceeds; Fair Market Value of Equipment. The
proceeds of the Advances shall be available (and Borrower shall use such
proceeds) to finance or refinance loans for Equipment and for use for other
general working capital purposes. At the time each Pledged Loan is acquired or
made by Borrower, the fair market value of the Equipment securing each Pledged
Loan shall be at least equal to the outstanding principal amount of such Pledged
Loan.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to the Initial Advance. The
obligations of the Lender under this Agreement and the obligation of the Lender
to make any Advance shall be subject to the following conditions precedent on
the Closing Date and on the date of such Advance:
(a) All terms, conditions and documentation in connection with
this amendment and restatement shall be acceptable to the Lender.
(b) The making of the Commitment shall not contravene any Law
applicable to the Lender.
(c) Lender shall have received a Certificate from an
Authorized Officer stating that no material adverse change in the
business, assets, prospects or financial condition of Borrower since
the June 30, 1996 financial statements provided to the Lender. The
Lender shall have received financial information regarding Borrower
requested by it.
(d) The Lender shall have received an executed copy of this
Agreement and the Note duly completed and correct.
21
(e) Borrower shall have delivered to the Lender a Certificate,
dated the Closing Date, executed by an Authorized Officer, certifying
that, to such Authorized Officer's knowledge, (i) no Default or Event
of Default has occurred and is continuing, (ii) the representations and
warranties set forth in Article IV hereof are true and correct in all
material respects, and (iii) Borrower has complied with all agreements
and conditions to be complied with by it in all material respects under
the Loan Papers by such date.
(f) Borrower shall have each delivered to the Lender a
Secretary's Certificate, dated the Closing Date, certifying (i) that
attached copies of the certificates of organization certified by the
Secretary of States of the appropriate states, and bylaws are true and
complete, and in full force and effect, without amendment except as
shown, (ii) that a copy of the resolutions authorizing execution and
delivery of this Agreement and any Loan Papers, as appropriate, are
true and complete, and that such resolutions are in full force and
effect, were duly adopted, have not been amended, modified or revoked,
and constitute all resolutions adopted with respect to this loan
transaction, and (iii) copies of certificates of good standing and
certificates of existence for the States of Delaware and Arizona. The
Lender may conclusively rely on the certificate delivered pursuant to
this subsection until it receives notice in writing to the contrary.
(g) The Lender shall have received an opinion or opinions of
counsel to Borrower, dated the Closing Date, acceptable to Lender and
otherwise in form and substance satisfactory to Lender and its counsel,
with respect to this loan transaction and otherwise, including, without
limitation, opinions (i) to the valid and binding nature of the Loan
Papers, (ii) to the power, authorization and corporate matters of each
such Person taken in connection with the transactions contemplated by
the Loan Papers, (iii) that the execution, delivery and performance by
Borrower of the respective Loan Papers does not violate any of the
terms of Borrower's agreements, and (iv) to such other matters as are
reasonably requested by Lender's counsel.
(h) The Lender shall have received each of the following, in
form and substance satisfactory to the Lender and its counsel:
(i) the results of UCC and other Lien searches
against the assets of Borrower;
(ii) evidence that all proceedings of Borrower taken
in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and
substance to the Lender and its counsel; and Lender shall have
received copies of all documents or other evidence which
Lender or its counsel may reasonably request in connection
with this facility, including without limitation the
resolutions of the Board of Directors of Borrower and the
requisite authorizations of all other Persons necessary to
authorize the transactions contemplated herein, certified to
be true and correct by an Authorized Officer;
22
(iii) payment of all fees, costs and expenses
(including, without limitation, attorneys' fees of Lender's
counsel and the fees set forth in the Fee Letter due to be
paid through the Closing Date);
(iv) a Compliance Certificate computed after giving
effect to the Initial Advance;
(v) the Pledge and Security Agreement, properly
executed on behalf of the Borrower.
(i) All corporate proceedings of Borrower taken in connection
with the transactions contemplated hereby, and all documents incidental
thereto, shall be satisfactory in form and substance to the Lender. The
Lender shall have received copies of all documents or other evidence
that it may reasonably request in connection with such transactions.
Section 3.02. Conditions Precedent to All Advances. The obligation of
the Lender to make each Advance (including the Initial Advance) shall be subject
to the further conditions precedent that on the date of such Advance (a) the
following statements shall be true (and the delivery of each Borrowing Notice
under Section 2.02(a) or each Conversion Notice under Section 2.10 shall
constitute a representation that on the disbursement date (except as to
representations and warranties which (i) refer to a specific date, (ii) have
been modified by transactions permitted pursuant to this Agreement or any other
Loan Paper or (iii) have been specifically waived in writing by the Lender) are
true:
(A) the representations and warranties contained in Article IV
hereof are true and correct on such date, as though made on and as of
such date;
(B) no event has occurred and is continuing, or would result
from such Advance (including the intended application of the proceeds
of such Advance), that does or could constitute a Default or Event of
Default;
(C) there shall have occurred no Material Adverse Change, and
the making of such Advance, shall not cause or result in a Material
Adverse Change;
(D) after giving effect to each such Advance, the aggregate
outstanding Advances do not exceed the Commitment; and
(E) after giving effect to each such Advance, the aggregate
principal balance of the Pledged Loans, excluding any Defective Loans,
as hereinafter defined, shall equal at least 105% of the aggregate
Advances under this Agreement.
23
and (b) the Lender shall have received, in form and substance acceptable to it,
such other approvals, documents, certificates, opinions, and information as it
may deem necessary or appropriate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that the following are true and
correct:
Section 4.01. Organization and Qualification. Borrower is a corporation
duly organized, validly existing, and in good standing under the Laws of its
state of incorporation. Borrower is qualified to do business in all
jurisdictions where the nature of its business or Properties require such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
Section 4.02. Due Authorization; Validity. The board of directors of
Borrower have duly authorized the execution, delivery and performance of the
Loan Papers to be executed by Borrower. Borrower has full legal right, power and
authority to execute, deliver and perform under the Loan Papers to be executed
and delivered by it. The Loan Papers constitute the legal, valid and binding
obligations of Borrower, enforceable in accordance with their terms (subject as
to enforcement of remedies to any applicable Debtor Relief Laws).
Section 4.03. Conflicting Agreements and Other Matters. The execution
or delivery of any Loan Papers, and performance thereunder, does not conflict
with, or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien (other than in favor of the Lender) upon any Properties of
Borrower under, or require any consent, approval, or other action by, notice to,
or filing with, any Tribunal or Person pursuant to, the certificate of
incorporation or bylaws of Borrower, any award of any arbitrator, or any
agreement, instrument, or Law to which Borrower, or any of its Properties is
subject.
Section 4.04. Litigation. As of the Closing Date, Schedule 4.5 lists
all Litigation that is pending, and to Borrower's best knowledge, threatened by
written demand against Borrower or any of its Properties or assets on the
Closing Date in which an adverse determination with respect thereto could
reasonably be expected to result in an uninsured liability of Borrower in excess
of $500,000. Except as set forth on Schedule 4.5, there is no pending or, to
Borrower's best knowledge, threatened Litigation against Borrower or any of its
Properties that could reasonably be expected to result in a Material Adverse
Change.
Section 4.05. Compliance with Laws Regulating the Incurrence of
Indebtedness. No proceeds of any Advance will be used directly or indirectly to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended. Borrower is not engaged in
the business of extending credit for the purpose of
24
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Following
Borrower's intended use of the proceeds of each Advance, not more than 25% of
the value of the assets of Borrower will be "margin stock" within the meaning of
Regulation U. Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, the Interstate Commerce Act (as any of the preceding acts have been
amended), or any other Law that the incurring of indebtedness by Borrower would
violate, including without limitation Laws relating to common or contract
carriers or the sale of electricity, gas, steam, water or other public utility
services.
Section 4.06. Authorizations, Title to Properties and Related Matters.
Borrower possess all material Authorizations necessary and appropriate to own
and operate its business and is not in violation thereof in any material
respect. All such Authorizations are in full force and effect, and no event has
occurred that permits, or after notice or lapse of time could permit, the
revocation, termination or material and adverse modification of any such
Authorization, except those which in the aggregate could not reasonably be
expected to cause a Material Adverse Change. Borrower has requisite corporate
power (as applicable) and legal right to own and operate its Property and to
conduct its business. Borrower has good and indefeasible title (fee or
leasehold, as applicable) to its Property, subject to no Lien of any kind,
except Permitted Liens and first Liens for the benefit of Borrower. Borrower is
not in violation of its certificates or articles of incorporation or bylaws.
Borrower is not in violation of any Law, or material agreement or instrument
binding on or affecting it or any of its Properties, the effect of which could
reasonably be expected to cause a Material Adverse Change. No business or
Properties of Borrower is affected by any drought, storm, earthquake, embargo,
act of God or public enemy, or other casualty, the effect of which could
reasonably be expected to cause a Material Adverse Change.
Section 4.07. Taxes. Borrower has filed all federal, state, and other
Tax returns (or extensions related thereto) which are required to be filed, and
has paid all Taxes as shown on said returns, as well as all other Taxes, to the
extent due and payable, except to the extent payment is contested in good faith
and for which adequate reserves have been established therefor in accordance
with GAAP. All Tax liabilities of Borrower are adequately provided for on its
books, including interest and penalties, and adequate reserves have been
established therefor in accordance with GAAP. No income Tax liability of a
material nature has been asserted by taxing authorities for Taxes in excess of
those already paid, and no taxing authority has notified Borrower of any
deficiency in any Tax return.
Section 4.08. Environmental Reports. Borrower has obtained all material
environmental, health and safety Authorizations required under all Applicable
Environmental Laws to carry on its business as being conducted, except where the
failure to obtain such Authorizations could not reasonably be expected to have a
Material Adverse Effect. Each of such Authorizations is in full force and effect
and Borrower is in compliance with the terms and
25
conditions thereof, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
the failure to have such Authorizations or comply with any of the terms and
conditions thereof could not reasonably be expected to have a Material Adverse
Effect. In addition, no written notice, notification, demand, request for
information, citation, summons or order has been issued, no written complaint
has been filed, no penalty has been assessed and no investigation or review is
pending or, to the best knowledge of Borrower, threatened, by any Tribunal or
other entity with respect to any alleged failure by Borrower to have any
environmental, health or safety Authorization required under any Applicable
Environmental Law in connection with the conduct of the business of Borrower or
with respect to any generation, treatment, storage, recycling, transportation,
discharge, disposal or release of any Hazardous Materials by Borrower, the
effect of which could reasonably be expected to have a Material Adverse Effect.
There are no environmental liabilities of Borrower which could reasonably be
expected to cause a Material Adverse Change. Mortgagors of Property in which
Borrower holds a mortgage or similar lien and tenants under leases of Properties
owned by Borrower are contractually (a) prohibited from generating or producing
Hazardous Materials at or in connection with the Properties of Borrower and
disposing of any Hazardous Materials on or to any Property of Borrower, except
in compliance with Applicable Environmental Laws or (b) obligated to maintain
and occupy the Properties of Borrower in compliance with all applicable Laws.
Section 4.09. Certain Fees. No broker's, finder's, management fee or
other fee or commission will be payable by Borrower with respect to the making
of Commitment or Advances hereunder (other than to Lender), or the offering,
issuance or sale of the capital stock of Borrower. Borrower hereby agrees to
indemnify and hold harmless Lender from and against any claims, demands,
liabilities, proceedings, costs or expenses asserted with respect to or arising
in connection with any such fees or commissions.
Section 4.10. Intellectual Property. Borrower has obtained all patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights,
free from material restrictions, which are necessary for the operation of their
respective businesses as presently conducted and as proposed to be conducted.
Section 4.11. Investment Company Act. Borrower is not an "investment
company," "promoter," "principal under" or "controlled by" an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
The making of the Advances by Lender, the application of the proceeds and
repayment thereof by Borrower and the consummation of the transactions
contemplated by the Loan Papers will not violate any such Act or any rule,
regulation or order thereunder issued by the Securities and Exchange Commission.
Section 4.12. Survival of Representations and Warranties, Etc. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the Closing Date
26
and at and as of the date of each Advance, and each shall be true and correct
when made, except to the extent (a) previously fulfilled in accordance with the
terms hereof, (b) subsequently inapplicable or (c) previously waived in writing
by the Lender with respect to any particular factual circumstance. The
representations and warranties made under this Agreement shall be deemed
applicable to each Subsidiary as of the formation or acquisition of such
Subsidiary and at and as of each date the representations and warranties are
remade pursuant to this provision. All representations and warranties made under
this Agreement shall survive, and not be waived by, the execution hereof by the
Lender, any investigation or inquiry by the Lender, or by the making of any
Advance under this Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Commitment, any Advance or any portion of the
Obligations is outstanding, or Borrower owes any other amount hereunder or under
any other Loan Paper:
Section 5.01. Compliance with Laws and Payment of Debt. Borrower shall
comply with all Applicable Laws, including without limitation compliance with
all applicable federal and state securities Laws. Borrower shall pay its
indebtedness as and when due (or within any applicable grace period).
Section 5.02. Insurance. Borrower (a) shall cause the debtors under
Funded Equipment Loans to keep the applicable Equipment adequately insured at
all times by reputable insurers to such extent and against such risks, including
fire and other risks insured against by extended coverage, as what is customary
with companies similarly situated and in the same or similar businesses, (b)
shall maintain in full force and effect public liability (including liability
insurance for all vehicles and other insurable Property) and worker's
compensation insurance, in amounts customary for such similar companies to cover
normal risks, by insurers satisfactory to the Lender, and (c) shall maintain
other insurance as may be required by Law or reasonably requested by the Lender.
Borrower shall from time to time deliver to the Lender, upon demand,
evidence of the maintenance of such insurance.
Section 5.03. Inspection Rights. Borrower shall permit the Lender, upon
reasonable notice (provided that no advance notice is required after the
occurrence and during the continuance of an Event of Default), to examine and
make copies of and abstracts from its records and books of account, to visit and
inspect its Properties and to discuss their affairs, finances and accounts with
any of its directors, officers, employees, accountants, attorneys and other
representatives, all as the Lender may reasonably request.
Section 5.04. Records and Books of Account; Changes in GAAP. Borrower
shall keep adequate records and books of account in conformity with GAAP.
Borrower shall make such valuations of its assets as may be required by the
terms of Section 856(c)(5) of the Code. Borrower shall not change its Fiscal
Year, nor change its method of financial accounting except
27
in accordance with GAAP. In connection with any such change after the date
hereof, Borrower and Lender shall negotiate in good faith to make appropriate
alterations to the covenants set forth in Section 6.01 hereof, reflecting such
change.
Section 5.05. Reporting Requirements. Borrower shall furnish to the
Lender:
(a) as soon as available and in any event within 45 days after
the end of Borrower's fiscal quarters, consolidated balance sheets of
Borrower as of the end of such quarter, and statements of income, and
statements of changes in cash flow of Borrower for the portion of the
fiscal year ending with such quarter, setting forth, in comparative
form, figures for the corresponding periods in the previous fiscal
year, all in reasonable detail, and certified by an Authorized Officer
as prepared in accordance with GAAP, and fairly presenting the
financial condition and results of operations of Borrower (subject to
normal, year-end audit adjustments);
(b) as soon as available and in any event within 90 days after
the end of each fiscal year, balance sheets of Borrower as of the end
of such fiscal year, and statements of income and changes in cash flow
of Borrower for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the
Auditor, which opinion shall state that such financial statements were
prepared in accordance with GAAP, that the examination by the Auditor
in connection with such financial statements was made in accordance
with generally accepted auditing standards, and that such financial
statements present fairly the financial condition and results of
operations of Borrower;
(c) promptly upon receipt thereof, copies of all material
reports or letters submitted to Borrower by the Auditor or any other
accountants in connection with any annual, interim or special audit,
including without limitation the comment letter submitted to management
in connection with any such audit;
(d) together with the annual financial statements delivered
pursuant to subsection (b) above, a Compliance Certificate executed by
an Authorized Officer, which such Compliance Certificate must (i)
certify that there has occurred no Default or Event of Default, (ii)
compute the Applicable Margin, and (iii) set forth the detailed
calculations with respect to the Sections 6.01(a), (b), (c), (d), (e),
6.03 and 6.06 hereof;
(e) as soon as available and in any event not later than 30
days after the beginning of each fiscal year of Borrower, the annual
operating budgets of Borrower for such fiscal year;
(f) promptly upon knowledge by Borrower of the occurrence of
any Default or Event of Default, a notice from an Authorized Officer,
setting forth the details of such Default or Event of Default, and the
action being taken or proposed to be taken with respect thereto; and
28
(g) from time to time, such other information regarding the
business, affairs or financial condition of Borrower as the Lender may
reasonably request, including consolidating financial statements of
Borrower pursuant to subsections (a) and (b) above.
Section 5.06. Use of Proceeds. The proceeds of the Advances shall be
available (and Borrower shall use such proceeds) (a) to finance or refinance
loans for Equipment, and (b) for use for other general working capital purposes;
provided that the Lender shall not have any responsibility as to use by Borrower
of any such proceeds.
Section 5.07. Maintenance of Existence and Assets. Borrower shall
maintain its corporate existence, authority to do business in the jurisdictions
in which it is necessary for Borrower to do so, and all Authorizations necessary
for the operation of any of its business. Borrower shall maintain the assets
necessary for use in its business in good repair, working order and condition,
and make all such repairs, renewals and replacements thereof as may be
reasonably required by Borrower.
Section 5.08. Payment of Taxes. Borrower will promptly pay and
discharge all lawful Taxes imposed upon it or upon its income or profit or upon
any Property belonging to it, unless such Tax shall not at the time be due and
payable, or if the validity thereof shall currently be contested on a timely
basis in good faith by appropriate proceedings (provided that the enforcement of
any Liens arising out of any such nonpayment shall be stayed or bonded during
the proceedings) and adequate reserves with respect to such Tax shall have been
established in accordance with GAAP.
Section 5.09. Indemnity.
(a) Borrower agrees to defend, protect, indemnify and hold
harmless Lender, and each of its respective Affiliates other than the
Borrower and each of its (including such Affiliates') officers,
directors, employees, agents, attorneys, shareholders and consultants
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set
forth herein) of each of the foregoing (collectively, "Indemnities")
from and against any and all 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 counsel for such
Indemnities in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnities shall be
designated a party thereto or such proceeding shall have actually been
instituted), imposed on, incurred by, or asserted against such
Indemnitees (whether direct, indirect or consequential and whether
based on any federal, state or local laws and regulations, under common
law or at equitable cause, or on contract, tort or otherwise), arising
from or connected with the past, present or future operations of
Borrower, any such Affiliate of Borrower or any predecessors in
interest, or the past, present or future environmental condition of
Property of Borrower, any such Affiliate of Borrower or any
predecessors in interest, in each case relating to or arising out of
this Agreement, the Loan Papers,
29
or any act, event or transaction or alleged act, event or transaction
relating or attendant thereto and the management of the Advances by the
Lender, expressly including in connection with, or as a result, in
whole or in part, of the ordinary or mere negligence of the Lender, or
the use or intended use of the proceeds of the Advances hereunder, or
in connection with any investigation of any potential matter covered
hereby, but excluding any claim or liability that arises as the result
of the gross negligence or willful misconduct of any Indemnitee, as
finally judicially determined by a court of competent jurisdiction
(collectively, "Indemnified Matters").
(b) In addition, Borrower shall periodically, upon request,
reimburse each Indemnitee for its reasonable legal and other actual
reasonable expenses (including the cost of any investigation and
preparation) incurred in connection with any Indemnified Matter. If for
any reason the foregoing indemnification is unavailable to any
Indemnitee or insufficient to hold any Indemnitee harmless with respect
to Indemnified Matters, then Borrower shall contribute to the amount
paid or payable by such Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by Borrower and the holders of the
capital stock of Borrower on the one hand and such Indemnitee on the
other hand but also the relative fault of Borrower and such Indemnitee,
as well as any other relevant equitable considerations. The
reimbursement, indemnity and contribution obligations under this
Section shall be in addition to any liability which Borrower may
otherwise have, shall extend upon the same terms and conditions to each
Indemnitee, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of Borrower,
Lender and all other Indemnities. The obligations of Borrower under
this Section 5.09 shall survive (i) the execution of this Agreement and
(ii) any termination of this Agreement and payment of the Obligations.
Section 5.10. Authorizations and Material Agreements. Borrower shall
obtain, maintain and comply in all material respects with all Authorizations and
agreements necessary or appropriate for it to own, maintain or operate its
business or Properties.
Section 5.11. Further Assurances. Borrower will execute all such
additional agreements and take any and all such other action, as Lender may,
from time to time, deem reasonably necessary or proper in connection with the
obligations of Borrower under any of the Loan Papers.
Section 5.12. Subordination Agreement. Borrower shall cause the Note to
be subject to a subordination agreement in form and substance reasonably
acceptable to the Lender and subject to the provisions of the Credit Agreement.
Except as otherwise required under the terms of the Credit Agreement, Borrower
and Lender agree that the obligations hereunder shall not be subordinated to any
other obligation. Anything contained in this Agreement, the Note or any other
Loan Paper to the contrary notwithstanding, in the event the Borrower shall make
any payment (each being a "Credit Agreement Payment") to the administrative
lender under the Credit Agreement either (i) pursuant to that certain
Subordination Agreement dated as of the date
30
of this Agreement, among the Lender, the Borrower and such administrative lender
in respect of the Obligations evidenced by the Note, or (ii) pursuant to that
certain Guaranty Agreement dated as of September 1, 1996 executed by the
Borrower in favor of such administrative lender pursuant to which the Borrower
has guaranteed the obligations of the Lender under the Credit Agreement and the
documents relating thereto, the Borrower shall be entitled to a credit toward
its obligations under this Agreement and the Note in the amount of such Credit
Agreement Payment and shall be deemed to have made a payment on the Note in the
amount of such Credit Agreement Payment upon receipt by such administrative
lender of such Credit Agreement Payment.
Section 5.13. Underwriting Standards. Borrower shall use its customary
underwriting procedures and standards in effect as of the date of this Agreement
for the Equipment Loans funded pursuant to this Agreement. Prior to any Advance,
Borrower shall give Lender written notice of any material change in such
procedures and standards. Lender shall approve any Equipment Loan of the
Borrower.
ARTICLE VI
RECOURSE; ADDITIONAL COLLATERAL
Section 6.01. Recourse. Notwithstanding anything set forth in this
Agreement or in any document delivered by the Borrower in connection herewith,
the Borrower (but not any shareholder, director, officer or employee thereof)
shall be personally liable for the payment of all amounts and the performance of
all obligations owing under this Agreement or the Note, and in the event of a
default under any of the Loan Papers, the Lender shall have available to it all
remedies which may exist at law, in equity or under this Agreement, including
but not limited to the foreclosure of the Pledged Loans.
Section 6.02. Additional Collateral; Covenant to Give Security. The
Borrower will, upon the written request of the Lender, upon the failure of the
Borrower to receive, with respect to any Equipment Loan, the payment of
principal or interest thereon when due and which results in an event of default
under the Equipment Loan after notice and the expiration of any applicable cure
period, Borrower will deliver to Lender duly executed and delivered Pledged
Loans, assignments and other security interests as specified by and in form and
substance satisfactory to the Lender, securing payment for, and all obligations
with respect to, all obligations of the Borrower under this Agreement and the
Note. The principal amount of the Pledged Loans delivered hereunder shall be
reasonably determined by Lender, taking into account the principal balance of
the Defective Loans to which such Pledged Loan relates. All such mortgages,
pledges, assignments and other security interests will be (i)
31
described in writing in sufficient detail acceptable to the Lender, and (ii)
filed, perfected or such other action is taken so that such documents are legal,
valid, binding and enforceable against all third parties in accordance with
their terms. Upon request of Lender, Borrower will from time to time promptly
execute and deliver any and all further instruments, documents and opinions of
counsel and take any and all such other action as the Lender may deem desirable
in protecting its interests under this Agreement and the Note. In lieu of
delivering additional Pledged Loans under the Section 6.02, the Borrower may
prepay Advances hereunder in an amount equal to the principal amount of the
Defective Loans.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. Any one or more of the following
shall, after five days written notice thereof shall have been given to the
Borrower by Lender, be an "Event of Default" hereunder, if the same shall occur
for any reason whatsoever, whether voluntary or involuntary, by operation of
Law, or otherwise:
(a) Borrower shall fail to pay within 30 days after written
notice thereof shall have been given to Borrower by the Lender, any (i)
principal under any Loan Paper when due or (ii) any interest, fees or
other amounts under any Loan Paper.
(b) Any material representation or warranty made or deemed
made by Borrower (or any of its officers or representatives) under or
in connection with any Loan Papers shall prove to have been incorrect
or misleading in any material respect when made or deemed made.
(c) Borrower shall fail to perform or observe any term or
condition contained in Article V, Article VI or any Loan Paper, other
than those described in Sections 8.01(a), (b), (c) and (d), and such
failure shall not be remedied within 60 days after written notice
thereof shall have been given to Borrower by the Lender.
(d) Any of the following shall occur: (i) Borrower shall make
an assignment for the benefit of creditors or be unable to pay its
debts generally as they become due; (ii) Borrower shall petition or
apply to any Tribunal for the appointment of a trustee, receiver or
liquidator of it, or of any substantial part of its assets, or shall
commence any proceedings relating to Borrower under any Debtor Relief
Law, whether now or hereafter in effect; (iii) any such petition or
application shall be filed, or any such proceedings shall be commenced,
against Borrower, or an order, judgment or decree shall be entered
appointing any such trustee, receiver or liquidator, or approving the
petition in any such proceedings; (iv) any final order, judgment or
decree shall be entered in any proceedings against Borrower decreeing
its dissolution; (v) any final order, judgment or decree shall be
entered in any proceedings against Borrower decreeing its split-up
which requires the divestiture of a substantial part of its assets; or
(vi) Borrower shall petition or apply to
32
any Tribunal for the appointment of a trustee, receiver or liquidator
of it, or of any substantial part of its assets, or shall commence any
proceedings relating to Borrower under any Debtor Relief Law, whether
now or hereafter in effect.
Section 7.02. Remedies Upon Default. If an Event of Default described
in Section 7.01 shall occur, the Commitment shall be immediately terminated and
the aggregate unpaid principal balance of and accrued interest on all Advances
shall, to the extent permitted by Applicable Law, thereupon become due and
payable concurrently therewith, without any action by the Lender, and without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby expressly
waived. Subject to the foregoing sentence, if any Event of Default shall occur
and be continuing, then no LIBOR Advances shall be available to Borrower and
Lender may at its election, do any one or more of the following. Lender's
remedies upon default will be restricted as provided in Article VI of this
Agreement.
Section 7.03. Cumulative Rights. All Rights available to Lender under
the Loan Papers shall be cumulative of and in addition to all other Rights
granted thereto at Law or in equity, whether or not amounts owing thereunder
shall be due and payable, and whether or not Lender shall have instituted any
suit for collection or other action in connection with the Loan Papers.
Section 7.04. Waivers. The acceptance by Lender at any time and from
time to time of partial payment of any amount owing under any Loan Papers shall
not be deemed to be a waiver of any Default or Event of Default then existing.
No waiver by Lender of any Default or Event of Default shall be deemed to be a
waiver of any Default or Event of Default other than such Default or Event of
Default. No delay or omission by Lender in exercising any Right under the Loan
Papers shall impair such Right or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such Right
preclude other or further exercise thereof, or the exercise of any other Right
under the Loan Papers or otherwise.
Section 7.05. Performance by Lender. Should any covenant of Borrower
fail to be performed in accordance with the terms of the Loan Papers, Lender
may, at its option, perform or attempt to perform such covenant on behalf of
Borrower. Notwithstanding the foregoing, it is expressly understood that Lender
does not assume, and shall not ever have, except by express written consent of
Lender, any liability or responsibility for the performance of any duties or
covenants of Borrower.
Section 7.06. Expenditures. Borrower shall reimburse Lender for any
reasonable sums spent by it in connection with the exercise of any Right
provided herein. Such sums shall bear interest at the lesser of (a) the Base
Rate in effect from time to time, plus 3.0% and (b) the Highest Lawful Rate,
from the date spent until the date of repayment by Borrower.
Section 7.07. Control. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give Lender any Rights
to exercise control over the
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affairs and/or management of Borrower, the power of Lender being limited to the
Rights to exercise the remedies provided in this Article.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Papers, nor consent to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by Lender, and any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver, or consent shall (and the result
of action or failure to take action shall not) unless in writing and signed by
the Lender, (a) increase the Commitment, (b) reduce any principal, interest,
fees or other amounts payable hereunder, or waive or result in the waiver of any
Event of Default under Section 7.01(a), (c) extend the Maturity Date or
otherwise postpone any date fixed for any payment of principal, interest, fees
or other amounts payable hereunder, or (e) amend this Section 8.01. No
amendment, waiver or consent shall affect the Rights or duties of the Lender
under any Loan Papers, unless it is in writing and signed by the Lender.
Section 8.02. Notices.
(a) Manner of Delivery. All notices, communications and other
materials to be given or delivered under the Loan Papers shall, except
in those cases where giving notice by telephone is expressly permitted,
be given or delivered in writing. All written notices, communications
and materials shall be sent by registered or certified mail, postage
prepaid, return receipt requested, by telecopier, or delivered by hand.
In the event of a discrepancy between any telephonic notice and any
written confirmation thereof, such written confirmation shall be deemed
the effective notice except to the extent the Lender or Borrower has
acted in reliance on such telephonic notice.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or
delivered at the following respective addresses and telecopier and
telephone numbers and to the attention of the following individuals or
departments:
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If to Lender: Franchise Finance Corporation of America
The Perimeter Center
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇,
Executive Vice President and
Chief Financial Officer
With a copy to: Franchise Finance Corporation of America
The Perimeter Center
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Senior Vice President and General
Counsel
If to Borrower: FFCA Mortgage Corporation
The Perimeter Center
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
President
or at such other address or, telecopier or telephone number or to the
attention of such other individual or department as the party to which
such information pertains may hereafter specify for the purpose in a
notice to the other specifically captioned "Notice of Change of
Address."
(d) Effectiveness. Each notice, communication and any material
to be given or delivered to any party pursuant to this Agreement shall
be effective or deemed delivered or furnished (i) if sent by mail, on
the fifth day after such notice, communication or material is deposited
in the mail, addressed as above provided, (ii) if sent by telecopier,
when such notice, communication or material is transmitted to the
appropriate number determined as above provided in this Section 9.02
and the appropriate receipt is received or otherwise acknowledged,
(iii) if sent by hand delivery or overnight courier, when left at the
address of the addressee addressed as above provided, and (iv) if given
by telephone, when communicated to the individual or any member of the
department specified as the individual or department to whose attention
notices, communications and materials are to be given or delivered
except that notices
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of a change of address, telecopier or telephone number or individual or
department to whose attention notices, communications and materials are
to be given or delivered shall not be effective until received;
provided, however, that notices to the Lender pursuant to Article II
shall be effective when received. Borrower agrees that Lender shall
have no duty or obligation to verify or otherwise confirm telephonic
notices given pursuant to Article II, and agrees to indemnify and hold
harmless Lender for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs and
expenses resulting, directly or indirectly, from acting upon any such
notice.
Section 8.03. Parties in Interest. All covenants and agreements
contained in this Agreement and all other Loan Papers shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto. The
Lender may from time to time assign or transfer its interests hereunder pursuant
to Section 8.04 hereof. Borrower may not assign or transfer its Rights or
obligations under any Loan Paper without the prior written consent of the
Lender.
Section 8.04. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by Law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of Borrower against any and all of the
obligations of Borrower now or hereafter existing under this Agreement and the
other Loan Papers, whether or not Lender shall have made any demand under this
Agreement or the other Loan Papers, and even if such obligations are unmatured.
Lender shall promptly notify Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The Rights of Lender under this Section 8.04 are
in addition to other Rights (including, without limitation, other Rights of
set-off) which the Lender may have.
Section 8.05. Costs, Expenses, and Taxes.
(a) Borrower agrees to pay on demand (i) all reasonable costs
and expenses of Lender and its Affiliates in connection with the
preparation and negotiation of all Loan Papers, including without
limitation the reasonable fees and out-of-pocket expenses of Lender's
counsel, and the reasonable costs and expenses of Lender and its
Affiliates in connection with the syndication of the Commitment and
(ii) all costs and expenses (including reasonable attorneys' fees and
expenses) of Lender in connection with administration, interpretation,
modification, amendment, waiver or release of any Loan Papers and any
restructuring, work-out, or collection of any portion of the
Obligations or the enforcement of any Loan Papers.
(b) In addition, Borrower shall pay any and all stamp, debt
and other Taxes payable or determined to be payable in connection with
any payment hereunder (other than Taxes on the overall net income of
Lender or franchise Taxes or Taxes on capital
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or capital receipts of Lender), or the execution, delivery or
recordation of any Loan Papers, and agrees to save Lender harmless from
and against any and all liabilities with respect to, or resulting from
any delay in paying or omission to pay any Taxes in accordance with
this Section 8.06, including any penalty, interest, and expenses
relating thereto. All payments by Borrower under any Loan Papers shall
be made free and clear of and without deduction for any present or
future Taxes (other than Taxes on the overall net income of Lender of
any nature now or hereafter existing, levied or withheld, or franchise
Taxes or Taxes on capital or capital receipts of Lender), including all
interest, penalties or similar liabilities relating thereto. If
Borrower shall be required by Law to deduct or to withhold any Taxes
from or in respect of any amount payable hereunder, (i) the amount so
payable shall be increased to the extent necessary so that, after
making all required deductions and withholdings (including Taxes on
amounts payable to Lender pursuant to this sentence), Lender receives
an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) Borrower shall make such
deductions or withholdings and (iii) Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority in accordance
with Applicable Law. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 8.06 shall survive the execution of
this Agreement, termination of the Commitment, repayment of the
Obligations, satisfaction of each agreement securing or assuring the
Obligations and termination of this Agreement and each other Loan
Paper.
(c) Within 30 days after the date of any payment of Taxes,
Borrower will furnish to the Lender the original or a certified copy of
a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment hereunder, Borrower will furnish to the Lender a
certificate from each appropriate taxing authority, or an opinion of
counsel acceptable to Lender, in either case stating that such payment
is exempt from or not subject to Taxes; provided, however, that such
certificate or opinion need only be given if: (i) Borrower makes any
payment from any account located outside the United States; or (ii) the
payment is made by a payor that is not a United States Person. For
purposes of this Section 8.06, the terms "United States" and "United
States Person" shall have the meanings set forth in Section 7701 of the
Code.
Section 8.06. Rate Provision. It is not the intention of any party to
any Loan Papers to make an agreement violative of the Laws of any applicable
jurisdiction relating to usury. In no event shall Borrower or any other Person
be obligated to pay any amount in excess of the Maximum Amount. If the Lender
ever receives, collects or applies, as interest, any such excess, such amount
which would be excessive interest shall be deemed a partial repayment of
principal and treated hereunder as such; and if principal is paid in full, any
remaining excess shall be paid to Borrower or the other Person entitled thereto.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, Borrower and Lender shall, to the
maximum extent permitted under Applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and
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spread in equal parts, the total amount of interest throughout the entire
contemplated term of the Obligations so that the interest rate is uniform
throughout the entire term of the Obligations; provided that, if the Obligations
are paid and performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Amount, Lender shall refund to Borrower the amount of such
excess or credit the amount of such excess against the total principal amount
owing, and, in such event, Lender shall not be subject to any penalties provided
by any Laws for contracting for, charging or receiving interest in excess of the
Maximum Amount. This Section 9.08 shall control every other provision of all
agreements among the parties to the Loan Papers pertaining to the transactions
contemplated by or contained in the Loan Papers.
Section 8.07. Severability. If any provision of any Loan Papers is held
to be illegal, invalid or unenforceable under present or future Laws during the
term thereof, such provision shall be fully severable, the appropriate Loan
Paper shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of such Loan Paper a
legal, valid, and enforceable provision as similar in terms to the illegal,
invalid or unenforceable provision as may be possible.
Section 8.08. Exceptions to Covenants. Borrower shall not be deemed to
be permitted to take any action or to fail to take any action that is permitted
as an exception to any covenant in any Loan Papers, or that is within the
permissible limits of any covenant, if such action or omission would result in a
violation of any other covenant in any Loan Papers.
Section 8.09. Counterparts. This Agreement and the other Loan Papers
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
Section 8.10. Governing Law; Waiver of Jury Trial.
(a) This Agreement and all other loan papers shall be deemed
to be contracts made and performable in Scottsdale, Arizona, and shall
be governed by and construed in accordance with the laws of the State
of Arizona (without giving effect to conflict of laws) and the United
States of America. Without excluding any other jurisdiction, Borrower
agrees that the state and federal courts of Arizona located in Phoenix,
Arizona, will have jurisdiction over proceedings in connection
herewith. To the maximum extent permitted by law, the Borrower hereby
waives any right that it may have to a trial by jury of any dispute
(whether a claim in tort, contract, equity or otherwise) arising under
or relating to this Agreement, the other loan papers, or any related
matters, and agrees that any such dispute shall be tried before a judge
sitting without a jury.
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(b) Borrower hereby waives personal service of any legal
process upon it. Borrower agrees that service of process may be made
upon it by registered mail (return receipt requested) directed to
Borrower at its address designated for notice under this Agreement and
service so made shall be deemed to be completed five days after deposit
in the United States Mail. Nothing in this Section 8.12 shall affect
the right of the Lender to serve legal process in any other manner
permitted by law.
Section 8.11. Entire Agreement. This Agreement and the other loan
papers represent the final agreement between the parties regarding the subject
matter herein and therein and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreement of the parties. There are no
unwritten oral agreements between the parties.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
LENDER: FRANCHISE FINANCE CORPORATION OF
AMERICA, a Delaware corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
BORROWER: FFCA MORTGAGE CORPORATION, a Delaware
corporation
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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