$40,000,000
REVOLVING CREDIT AGREEMENT
dated as of January 15, 1997
among
UNITED CAPITAL CORP., as Borrower,
and
THE CHASE MANHATTAN BANK and
FLEET BANK, NATIONAL ASSOCIATION, as Banks
and
THE CHASE MANHATTAN BANK, as Administrative Agent
and
FLEET BANK, NATIONAL ASSOCIATION, as Syndication Agent
LIST OF EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF ENVIRONMENTAL INDEMNITY
EXHIBIT D FORM OF GUARANTY
EXHIBIT E FORM OF SECURITY AGREEMENT
EXHIBIT F FORM OF OPINION
Page
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS 1
Section 1.1. Definitions 1
Section 1.2. Accounting Terms 13
ARTICLE 2. CREDIT FACILITY 13
Section 2.1. Loans 13
Section 2.2. The Notes 13
Section 2.3. Use of Proceeds 13
Section 2.4. Borrowing Procedure for Loans; Rate
and Interest Period Selection; Conversions 14
Section 2.5. Minimum Amounts of Loan 15
Section 2.6. Reduction of Commitments 15
ARTICLE 3. GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS 16
Section 3.1. Certain Notices 16
Section 3.2. Prepayments 16
Section 3.3. Interest on Loans 17
Section 3.4. Commitment Fee 18
Section 3.5. Administrative Fee 18
Section 3.6. Syndication Fee 18
Section 3.7. Payments Generally 18
Section 3.8. Interim Adjustments to Borrowing Base. 19
ARTICLE 4. YIELD PROTECTION, ETC. 20
Section 4.1. Certain Compensation 20
Section 4.2. Additional Costs 21
Section 4.3. Limitation on Types of Loans 23
i
Section 4.4. Illegality 23
Section 4.5. Certain LIBOR Loans
Pursuant To Sections 4.2. 4.3 and 4.4 23
Section 4.6. Survival 24
ARTICLE 5. CONDITIONS PRECEDENT 24
Section 5.1. Documentary Conditions Precedent 24
Section 5.2. Additional Conditions Precedent 27
ARTICLE 6. REPRESENTATIONS AND WARRANTIES 28
Section 6.1. Incorporation, Good Standing and Due
Qualifications; Compliance with Law 28
Section 6.2. Power and Authority; No Conflicts 28
Section 6.3. Legally Enforceable Agreements 29
Section 6.4. Litigation 29
Section 6.5. Financial Statements; Other Liabilities 29
Section 6.6. Ownership and Liens 30
Section 6.7. Taxes 30
Section 6.8. ERISA 30
Section 6.9. Subsidiaries 30
Section 6.10. Credit Arrangements 30
Section 6.11. Operation of Business 30
Section 6.12. Hazardous Substances. 31
Section 6.13. No Default on Outstanding Judgments or Orders 31
Section 6.14. Labor Disputes and Acts of God 31
Section 6.15. Governmental Regulation 31
Section 6.16. Partnership, Etc. 31
Section 6.17. No Forfeiture Proceedings 31
Section 6.18. No Default or Event of Default 32
Section 6.19. Solvency 32
ii
Section 6.20. Name 32
Section 6.21. Other Agreements 32
Section 6.22. Eligible Properties 32
Section 6.23. Title Insurance 32
ARTICLE 7. AFFIRMATIVE COVENANTS 32
Section 7.1. Maintenance of Existence 33
Section 7.2. Conduct of Business 33
Section 7.3. Maintenance of Properties 33
Section 7.4. Maintenance of Records 33
Section 7.5. Maintenance of Insurance 33
Section 7.6. Compliance with Laws 33
Section 7.7. Right of Inspection 33
Section 7.8. Reporting Requirements 34
Section 7.9. Payment of Obligations 37
Section 7.12. Condemnation. 39
Section 7.13. Subsidiaries 39
ARTICLE 8. NEGATIVE COVENANTS 39
Section 8.1. Indebtedness 39
Section 8.2. Liens 40
Section 8.3. Investments 41
Section 8.4. Sale of Assets 41
Section 8.5. Transactions with Affiliates 42
Section 8.6. Mergers, Etc. 42
Section 8.7. Acquisitions 42
Section 8.8. No Activities Leading to Forfeiture 42
Section 8.9. Corporate Documents; Fiscal Year 42
iii
Section 8.10. Hazardous Substances; Use of Real Property 42
Section 8.11. Dividends, etc. 43
Section 8.12. Other Material Adverse Change 43
Section 8.13. Sales of Receivables; Sale-Leasebacks 43
Section 8.14. Leases of Eligible Properties 43
Section 8.15. Maintenance of Real Estate Assets. 43
ARTICLE 9. FINANCIAL COVENANTS 43
Section 9.1. Limitation on Indebtedness. 44
Section 9.2. Minimum Equity Value 44
Section 9.3. Minimum Interest Coverage Ratio 44
Section 9.4. Minimum Debt Service Coverage Ratio 44
Section 9.5. Minimum Eligible Properties Debt Service Coverage Ratio 44
Section 9.6. Limitation of Capital Expenditures 44
Section 9.7. Limitation on Operating Leases 44
ARTICLE 10. EVENTS OF DEFAULT 44
Section 10.1. Events of Default 44
Section 10.2. Remedies 46
ARTICLE 11. THE AGENT; RELATIONS AMONG BANKS 47
Section 11.1. Appointment, Powers and Immunities of Agent 47
Section 11.2. Reliance by Agent 47
Section 11.3. Defaults 48
Section 11.4. Rights of Agent as a Bank 48
Section 11.5. Indemnification of Agent 48
Section 11.6. Documents 49
Section 11.7. Non-Reliance on Agent and Other Banks 49
Section 11.8. Failure of Agent to Act 49
iv
Section 11.9. Resignation or Removal of Agent 49
Section 11.10. Amendments Concerning Agency Function 50
Section 11.11. Liability of Agent 50
Section 11.12. Transfer of Agency Function 50
Section 11.13. Non-Receipt of Funds by the Agent 50
Section 11.14. Withholding Taxes 50
Section 11.15. Several Obligations and Rights of Banks 51
Section 11.16. Pro Rata Treatment of Loans, Etc. 51
Section 11.17. Sharing of Payments Among Banks 51
ARTICLE 12. MISCELLANEOUS 52
Section 12.1. Amendments and Waivers 52
Section 12.2. Usury 52
Section 12.3. Expenses and Indemnification 53
Section 12.4. Special Provisions Regarding Collateral. 53
Section 12.5. Survival 54
Section 12.6. Assignment; Participation 54
Section 12.7. Notices 54
Section 12.8. Setoff 55
Section 12.9. Jurisdiction; Immunities 55
Section 12.10. Table of Contents; Headings 56
Section 12.11. Severability 56
Section 12.12. Counterparts 56
Section 12.13. Integration 56
Section 12.14. Governing Law 56
Section 12.15. Relief from Bankruptcy Stay 56
v
REVOLVING CREDIT AGREEMENT (the "Agreement") dated as of January 15,
1997 among UNITED CAPITAL CORP., a corporation organized under the laws of the
State of Delaware (the "Borrower") and THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase") and FLEET BANK, NATIONAL ASSOCIATION, a national
bank association organized under the laws of the United States of America
("FLEET"; collectively with Chase, the "Banks"); THE CHASE MANHATTAN BANK, as
administrative agent for the Banks (in such capacity, the "Agent") and FLEET
BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent').
The Borrower desires each of the Banks to extend credit to the Borrower
and the Banks are willing to extend such credit on the terms and conditions set
forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS; ACCOUNTING TERMS.
Section 1.1. Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Acquisition" means any transaction pursuant to which the Borrower or
any of the Guarantors, (a) acquires, or enters into an agreement to acquire,
equity securities (or warrants, options or other rights to acquire such
securities) of any Person which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing, or (b) makes, or enters into any agreement
to make, any Person not then a Subsidiary of the Borrower a Subsidiary of the
Borrower, or causes any such Person to be merged into the Borrower or any of the
Guarantors, or vice versa in any case pursuant to a merger, purchase of assets
or any reorganization providing for the delivery or issuance to the holders of
such Person's then outstanding securities, in exchange for such securities, of
cash or securities of the Borrower or any of the Guarantors, or a combination
thereof, or (c) purchases, or enters into an agreement to purchase, all or
substantially all of the business or assets of any Person. For purposes hereof,
the term "Acquisition" shall include any transaction in which the Borrower or
any of its Subsidiaries makes a loan or otherwise extends credit secured by an
interest in real property. For purposes hereof, the term "Acquisition" shall not
include the formation by the Borrower or any of the Guarantors of a new
Subsidiary that does not involve any of the transactions referred to in the
immediately preceding sentence.
"Additional Costs" shall have the meaning given to such term in Section
4.2 hereof.
"Adjusted Real Estate Borrowing Base" means, at the time of
calculation, 80% of the annualized and normalized actual year-to-date Net
Operating Income of Eligible Properties,
1
other than Eligible Properties which are operated as day care facilities,
divided by eleven and one-half percent (11.5%).
"Administrative Fee" means the agency fee payable by the Borrower to
the Agent pursuant to Section 3.5 hereof.
"Affiliate" means, with respect to any Person, any Person: (a) which
directly or indirectly controls, or is controlled by, or is under common control
with, such Person; (b) which directly or indirectly beneficially owns or holds
25% or more of any class of voting stock of such Person; (c) 25% or more of the
voting stock or other voting interests of which is directly or indirectly
beneficially owned or held by such Person; (d) which is a partnership in which
such Person is a general partner (e) which is a limited liability company in
which such Person is a member and in which such Person owns, directly or
indirectly, 25% of the equity of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Aggregate Outstandings" means, at a particular time, the aggregate
outstanding principal amount of the Loans at such time.
"Agreement" means this Agreement, as amended or supplemented from time
to time pursuant to the terms hereof. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
"Amortization" means amortization as determined or calculated in
accordance with GAAP.
"Assignment" means each Assignment of Leases and Rents dated the date
hereof and executed by the Borrower or a Guarantor in favor of the Banks
hereunder.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City, provided that whenever such
day relates to a LIBOR Loan or notice with respect to any LIBOR Loan, such term
shall mean any such day on which dealings in Dollar deposits are also carried
out in the London interbank market.
"Base Rate" means the rate of interest determined by the Agent to be
the higher of (i) the Federal Funds Rate plus 1/2 of 1% per annum or (ii) the
Prime Rate.
"Base Rate Loan" means any Loan when and to the extent that the
interest rate for such Loan is determined on the basis of the Base Rate.
"Borrowing Base" means, at any time, the sum of (i) the lesser of the
Real Estate Borrowing Base or the Adjusted Real Estate Borrowing Base plus (ii)
the Non-Real Estate Borrowing Base.
2
"Borrowing Base Certificate" means a certificate signed by the Chief
Executive Officer or the Chief Financial Officer of the Borrower in the form of
Exhibit "B" annexed hereto with such changes as the Banks may require from time
to time.
"Capital Expenditures" means the sum of (a) expenditures for any fixed
assets or improvements, replacements, substitutions, or additions thereto which
would be treated as capital expenditures in accordance with GAAP and (b) the
portion of all payments with respect to Capital Leases which are required to be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Capitalization Value" means, at the time of calculation, (i)
annualized and normalized actual year to date Consolidated EBITDA capitalized at
10% plus (ii) cash and cash equivalents on a consolidated basis and (iii)
aggregate acquisition costs for real properties of the Borrower and the
Guarantors subject to the provisions of the last sentence hereof. For purposes
hereof, "acquisition costs" for any real property shall mean the contractual
purchase price for such property and such closing costs as are customarily paid
by purchasers in real estate transactions. For purposes hereof, clause (iii)
shall include acquisition costs for any property only until such property has
been owned by the Borrower or any Guarantor for one full fiscal quarter.
"Capital Lease" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP.
"Change in Control" means any event or condition which results in any
Person or "group" other than a Person or group that is actively involved in the
day to day management of the Borrower and the Guarantors on the date of this
Agreement: (i) having acquired beneficial ownership of 35% or more of any
outstanding class of capital stock of the Borrower or any Guarantor having
ordinary voting power in the election of directors of the Borrower or such
Guarantor or (ii) obtaining the power (whether or not exercised) to elect a
majority of the directors of the Borrower or any Guarantor; provided, however,
that any transfer from any Person that is actively involved in the day to day
management of the Borrower and the Guarantors to any Person in his or her
immediate family shall not constitute a "Change in Control" if the Bank
continues to be satisfied in its sole discretion, with the management of the
Borrower and the Guarantors after such transfer.
"Closing Date" means the date this Agreement has been executed by the
Borrower and each of the Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means with respect to each Bank, the obligation of such
Bank to extend credit to the Borrower hereunder and, subject to the terms
hereof, in the following aggregate amounts as such amounts may be reduced in
accordance with the terms of this Agreement:
3
Chase $20,000,000
Fleet $20,000,000
"Commitment Fee" means the commitment fee payable by the Borrower to
each of the Banks pursuant to Section 3.4 hereof
"Commitment Proportion" means, with respect to each Bank at the time of
determination, that proportion that its Commitment bears to the Total
Commitment.
"Consolidated Debt Service" means, for any fiscal period, interest
expense (accrued, paid or capitalized) plus scheduled principal amortization
(excluding balloon payments due at maturity) on all (a) Indebtedness of the
Borrower and the Guarantors, on a consolidated basis, and (b) the Borrower's and
the Guarantor's pro rata share of Indebtedness from unconsolidated joint
ventures other than non-recourse Indebtedness on properties owned by such
ventures.
"Consolidated EBITDA" means, for any fiscal period, Consolidated Net
Income of the Borrower and the Guarantors, before provision for federal and
state income taxes, minus all extraordinary gains; plus (i) Consolidated
Interest Expense; plus (ii) Depreciation and Amortization plus (iii) cash
distributions (after debt service) from unconsolidated joint ventures to the
Borrower and the Guarantors, all on a consolidated basis, and all as determined
in accordance with GAAP.
"Consolidated Interest Expense" means, for a particular period, the
consolidated interest expense (accrued, paid or capitalized) of the Borrower and
the Guarantor as reflected in the Borrower's consolidated financial statements
for such period and calculated in accordance with GAAP and shall in any event
include, without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incidence of
Indebtedness, and (iii) the portion of any Capital Lease obligation allocable to
interest expense plus the Borrower's and the Guarantors' pro rata share of
interest expense on Indebtedness from unconsolidated joint ventures, other than
non-recourse Indebtedness on properties owned by such ventures.
"Consolidated Net Income" means, for a particular period, the
consolidated net income of the Borrower and the Guarantors for such period
determined in accordance with GAAP.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
4
"Default Rate" means a rate per annum equal to 2% above the rate of
interest that would then be applicable to Base Rate Loans under this Agreement.
"Depreciation" means depreciation as determined or calculated in
accordance with GAAP.
"Dividends" means, for any period, dividends paid by the applicable
Person.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Eligible Inventory" means, on a combined basis for the Operating
Companies the gross amount of the inventory less the following items: any
packaging materials and supplies, supplies (other than supplies held for sale),
damaged or unsalable goods, damaged or unsalable goods returned or rejected by
such entities' customers; obsolete goods; goods to be returned to such entities'
suppliers; goods in transit to third parties; consigned inventory.
"Eligible Properties" means, at any time, those properties of the
Borrower and of the Guarantors which are leased to non-affiliated third parties
and which are unencumbered or are encumbered by Liens securing debt of less than
10% of the annualized and normalized year-to-date Net Operating Income for such
property capitalized at 11.5%, together with the property located in Dallas,
Texas which is leased to the estate of ▇▇ ▇▇▇▇▇▇▇▇ and subleased to a discount
store and the ▇▇▇▇'▇ Home Centers property in North Charleston, South Carolina.
In addition, Eligible Properties shall include such additional properties as may
in the discretion of the Banks be included on Schedule 1.1 from time to time.
The Agent shall have the right to conduct a site inspection of any property
before such property is included as an "Eligible Property" hereunder. As of the
date hereof, "Eligible Properties" shall mean those properties listed on
Schedule 1.1(a) hereto. In no event will mortgage loans or any similar
transactions between the Borrower or any Guarantor and any third party
constitute an "Eligible Property".
"Eligible Property EBITDA" means, for any fiscal period, net income, on
a combined basis, for the Eligible Properties before provision for federal or
state income taxes minus all extraordinary gains; plus interest expense for the
Eligible Properties, plus Depreciation and Amortization attributable to the
Eligible Properties, all on a combined basis and all as determined in accordance
with GAAP. For purposes hereof, Eligible Properties with EBITDA of less than $0
will be assigned a value of $0.
"Eligible Receivables" means, on a combined basis, the amount of the
accounts receivable of the Operating Companies arising out of sales in the
ordinary course of business of the Operating Companies net of any credits,
rebates or off-sets owed by the Operating Companies to the respective account
debtor and net of any commissions payable by the Operating Companies to third
parties, which accounts receivable are not in dispute or subject to credit,
allowance, defense, off-set, counterclaim or adjustment and for which records
are maintained at a location of the Operating Companies in the United States;
provided, however, that the following items shall not be deemed Eligible
Receivables: credit balances over 90 days' from invoice date; contra accounts
receivable; receivables owing from account debtors determined by the Agent in
its sole discretion to be unacceptable for credit reasons; receivables from
Affiliates; accounts receivable with respect to which the account debtor is
subject to any bankruptcy or insolvency proceeding; accounts receivable where
the account debtor's obligation
5
to pay is conditional or subject to a repurchase obligation or right of return;
and all current receivables due from account debtors of which more than 50% of
the total accounts receivable from such debtors is more than 90 days from
invoice date.
"Environmental Indemnity Agreement" means that certain environmental
indemnity agreement substantially in the form of Exhibit C annexed hereto, dated
the date hereof, and executed by the Borrower and each of the Guarantors in
favor of the Banks and their respective directors, officers, employees,
affiliates, agents or other representatives.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or industrial, toxic substances or
Hazardous Substances or wastes.
"Equity Value" means Capitalization Value less Total Adjusted
Outstanding Funded Indebtedness.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" shall have the meaning given such term in Section
10.01 hereof.
"Eurocurrency Reserve Requirements" means, with respect to each
Interest Period for each LIBOR Loan, the aggregate (without duplication) of the
maximum rates (expressed as a percentage and rounded upward, if necessary, to
the nearest 1/100 of 1%) of reserve requirements current on the date two Banking
Days prior to the beginning of such Interest Period (including, without
limitation, basic, supplemental, marginal and emergency reserves under
Regulation D or any other regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with respect
thereto), as now and/or from time to time hereafter in effect, dealing with
reserve requirements prescribed for eurocurrency funding maintained by a member
bank of such system.
"Existing Bank Debt" means Indebtedness of the Borrower to Fleet,
existing on the date hereof and arising pursuant to the terms of that certain
line letter dated as of August 2,
6
1995 between Fleet and Metex Corporation and that certain line letter, dated as
of August 4, 1995 between Fleet and the Borrower, as each of such documents may
have been amended, supplemented or modified through the date hereof.
"Facility Documents" means this Agreement, the Notes, the Guarantees,
the Assignments, the Security Agreements and all other agreements, documents and
instruments executed in connection herewith or therewith including, but not
limited to, all documents and instruments executed by the Borrower or any
Guarantor, at any time, in favor of any Bank in connection with this Agreement
and the Loans made hereunder.
"Federal Funds Rate" means, for any day, the rate per annum equal 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 Banking Day, for the next
preceding Banking Day) by the Federal Reserve Bank of New York, or, if such rate
is not so announced or published for any day which is a Banking Day, the average
of quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
"Forfeiture Proceeding" means the commencement of any action or
proceeding affecting the Borrower or any of the Guarantors before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign which would result in the seizure or forfeiture of any of
their property which would cause a material adverse effect upon the operations,
business, properties or financial condition of the Borrower or any Operating
Company or of the Borrower and the Guarantors, taken as a whole.
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect from time to time, consistently applied with
respect to the financial statements of the Borrower, the Guarantors, and
Affiliates or any Guarantor which are the subject of Section 6.5 hereof.
"Guarantees" means the guarantees to be delivered on the Closing Date
to the Banks by each of the Guarantors and the guarantees to be delivered to the
Banks from time to time hereafter by Persons that become Guarantors subsequent
to the Closing Date, all in the form(s) attached hereto as Exhibit D.
"Guarantors" means each of the parties listed on Schedule 5.1(a) hereto
and all Post-Closing Guarantors.
"Hazardous Substance" or "Hazardous Substances" means any material,
including, without limitation, raw, processed or waste by-product materials,
which in itself or as found or used, is toxic, noxious or harmful to the health
or safety of human or animal life or vegetation, regardless of whether such
material be found on or below the surface of the ground, in any surface or
underground water, or airborne in ambient air or in the air inside of any
structure built or located upon or below the surface of the ground, or in any
machinery, equipment or inventory located or used in any such structure,
including, but in no event limited
7
to, all hazardous materials, hazardous wastes, toxic substances, infectious
wastes, pollutants and contaminants from time to time defined or classified as
such under any Environmental Law, regardless of the quantity found, used,
manufactured or removed from a given location.
"Indebtedness" means, without duplication, with respect to any Person,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances made to it of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person for the deferred purchase price of property or
services, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all payment obligations of such Person with respect to interest rate or currency
protection agreements, (f) all obligations of such Person as an account party
under any letter of credit or in respect of bankers' acceptances, (g) all
obligations of any third party secured by property or assets of such Person
(regardless of whether or not such Person is liable for repayment of such
obligations), (h) all guarantees of such Person and (i) the redemption price of
all redeemable preferred stock of such Person, but only to the extent that such
stock is redeemable at the option of the holder or requires sinking fund or
similar payments at any time prior to the Termination Date.
"Interest Period" means the period commencing on the date of making,
renewal or conversion of a Loan to a LIBOR Loan and expiring one, two, three or
six months (as available) thereafter, as designated by the Borrower in the
notice given to the Agent under Section 2.4 hereof; provided that:
(a) the initial Interest Period for any LIBOR Loan shall commence on
the date of the making of such Loan (including the date of any conversion from a
Base Rate Loan) and each Interest Period occurring thereafter in respect of such
Loan shall commence on the date on which the next preceding Interest Period
expires;
(b) if any Interest Period would otherwise expire on a day which is not
a Banking Day, such Interest Period shall expire on the next succeeding Banking
Day, provided, however, that if any Interest Period would otherwise expire on a
day which is not a Banking Day but is a day of a calendar month after which no
further Banking Day occurs (in such month), such Interest Period shall expire on
the next preceding Banking Day;
(c) no Loan shall be continued as or converted to a LIBOR Loan if at
the time of any such continuation or conversion a Default or an Event of Default
exists; and
(d) no Interest Period for a Loan shall extend beyond the Termination
Date.
"Lending Office" means, for each Bank, the lending office of such Bank
(or of an affiliate of such Bank) designated as such on its signature page
hereof or such other office of such Bank (or of an affiliate of such Bank) as
such Bank may from time to time specify to the Borrower as the office by which
its Loans are to be made and maintained.
8
"LIBOR" means, for any LIBOR Loan, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16 of 1%) at which Dollar deposits approximately
equal in principal amount to the requested LIBOR Loan and for a maturity equal
to the requested Interest Period are offered in immediately available funds to
the principal London branch of the Agent by leading banks in the London
interbank market for Dollar deposits at approximately 10:00 a.m. London time two
Banking Days prior to the first day of the Interest Period for such Loan.
"LIBOR Loan" means any Loan when and to the extent the interest rate
therefor is determined on the basis of Reserve Adjusted LIBOR Rate.
"Lien" means any mortgage, pledge, security interest, hypothecation,
assignment, deposit arrangement, encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Loan" means any extension of credit made by the Banks pursuant to
Section 2.1 hereof.
"Margin" means, with respect to LIBOR Loans, one and three-quarters
percent (1.75%) per annum.
"Multiemployer Plan" means a Plan defined as such in Section 400(a)(3)
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Net Operating Income" means, with respect to any parcel of real
property, the rents received by the Borrower or any Guarantor with respect
thereto less any expenses of such Borrower or Guarantor with respect to such
property which are ordinary expenses and are not capitalized expenses, excluding
Depreciation, Amortization, income taxes and debt service.
"Non-Real Estate Borrowing Base" means, at any time, the lesser of (i)
$12,000,000 and (ii) the sum of 75% of Eligible Receivables and 50% of Eligible
Inventory.
"Notes" means collectively the promissory notes of the Borrower in the
form of Exhibit A hereto evidencing the Loans made by a Bank hereunder.
"Obligations" means all of the obligations of the Borrower or any
Guarantor to the Banks under or in relation to this Agreement, the Notes, any
Loans, or any of the other Facility Documents, as such agreements, documents and
instruments are originally executed or as modified, amended, restated,
supplemented or extended from time to time, and all obligations of the Borrower
or any Guarantor to the Banks arising out of any extension, refinancing or
refunding of any of the foregoing obligations, whether such obligations are now
existing or hereafter acquired or arising, direct or indirect, joint or several,
absolute or contingent, due or to
9
become due, matured or unmatured, liquidated or unliquidated, arising by
contract, operation of law or otherwise.
"Operating Companies" means the Borrower's subsidiaries, (i) Metex
Corporation, a Delaware corporation, (ii) AFP Transformers, Inc., a Delaware
corporation; (iii) Dorne & ▇▇▇▇▇▇▇▇, Inc., a Delaware Corporation, and (iv) any
Subsidiary of the Borrower which is or may hereafter be engaged in any business
other than holding Real Estate Assets and which has assets having a value in
excess of $100,000. Notwithstanding the foregoing, the term "Operating
Companies" shall not include the following entities provided that they continue
to engage in substantially the same business as they are engaged in on the date
hereof: Metex International Sales Corp., Metex Enviroco Corp., Ancom
Electromagnetique Ltd. and Metex Europe S.A.R.L.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means any of the following investments: (I)
obligations issued or guaranteed by states or municipalities within the United
States of America; (ii) obligations issued or guaranteed by the United States of
America or any agency or subdivision thereof; (iii) certificates of deposit,
time deposits, Eurodollar certificates of deposit, bankers acceptances and other
"money market instruments" issued by any bank, trust company or financial
institution organized under the laws of the United States of America or any
state thereof (or, in the case of Eurodollar certificates of deposit, a branch
of any such bank, trust company or financial institution) having capital and
surplus in an aggregate amount not less than $1,000,000,000; (iv) commercial
paper rated at least Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. or A-1 by
Standard & Poors Corporation; (v) securities issued by money market funds with
asset of $2,500,000,000 or more, and (vi) repurchase agreements with a term of
not more than seven days entered into with any bank, trust company or financial
institution organized under the laws of the United States of America or any
state thereof having capital and surplus in an aggregate amount not less than
$1,000,000,000 and relating to any of the obligations referred to in clauses
(i), (ii), (iii) above; in each case maturing or being due or payable in full
not more than one year after the acquisition thereof such entity.
"Permitted Liens" means those certain Liens defined in Section 8.2
hereof.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies provided that such term shall not include plans
terminated prior to the date hereof.
10
"Post-Closing Guarantor" means each Subsidiary of the Borrower or of
any Guarantor which is created after the date of this Agreement and which shall,
simultaneously with its creation, become a Guarantor hereunder in accordance
with Section 7.13 hereof.
"Prime Rate" means the rate of interest from time to time announced by
the Agent at its Principal Office as its prime commercial lending rate.
"Principal Office" means, with respect to the Agent and each Bank, its
principal office as announced by such entity from time to time.
"Real Estate Assets" means, with respect to any entity, such entity's
real properties for which the fee interests or, with the prior consent of the
Banks, ground lease interests, are wholly-owned plus all loans and other forms
of indebtedness owing to such entity which are secured by first liens upon real
property.
"Real Estate Borrowing Base" means, at the time of calculation, 50% of
the aggregate annualized and normalized actual year-to-date Net Operating
Incomes of the Eligible Properties capitalized at 11.5%.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the Closing Date in United States federal, state, municipal or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including such Bank under any United States, federal, state, municipal or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA as to which events the PBGC by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event.
"Required Banks" means, at any time, with respect to any decisions to
be made by the Banks hereunder, Banks having at least 66 2/3% of the sum of
aggregate of the Commitments hereunder.
"Reserve Adjusted LIBOR Rate" means, with respect to the Interest
Period for each LIBOR Loan, the rate per annum (rounded upwards to the nearest
whole multiple of 1/100th of one percent) equal to the following:
11
LIBOR
-------------------------------
1.00 - Eurocurrency Reserve Requirements.
"Revolving Credit Loan Debt Service" means, for any period, the
interest paid or accrued hereunder for such period.
"Security Agreement" means each security agreement, substantially in
the form of Exhibit E, to be dated the date hereof and delivered by each of the
Operating Companies to the Bank.
"Solvent" means when used with respect to any Person on a particular
date, that on such date: (a) the fair saleable value of its assets is in excess
of the total amount of its liabilities, including, without limitation, the
reasonably expected amount of such Persons obligations with respect to
contingent liabilities, (b) the present fair saleable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its Indebtedness as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur Indebtedness or liabilities beyond such Person's ability to pay as
such Indebtedness and liabilities mature and (d) such Person is not engaged in
business or a transaction for which such Person's property would constitute an
unreasonably small capital.
"Subsidiary," with respect to any Person, means any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are, at the
relevant time, owned directly or indirectly by such Person.
"Syndication Fee" means the syndication fee payable by the Borrower to
the Syndication Agent for the benefit of the Banks pursuant to Section 3.6
hereof.
"Taxes" means any and all levies due and payable to any federal, state,
municipality or other governmental authority under the laws of the United States
of America, any state of the United States and any municipality or other
governmental authority thereof.
"Termination Date" means the earlier to occur of (a) the date on which
the Commitments shall terminate hereunder and (b) January 15, 2000.
"Total Adjusted Outstanding Funded Indebtedness" means, at any time,
the sum of (i) all outstanding secured and unsecured funded Indebtedness of the
Borrower and the Guarantors on a consolidated basis plus (ii) the Borrower's and
the Guarantor's pro rata share of Indebtedness from unconsolidated joint venture
properties, other than non-recourse indebtedness on such properties.
"Total Commitments" means, at any time, the aggregate of the
Commitments in effect at such time.
12
"Unfunded Vested Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.
Section 1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2.
CREDIT FACILITY.
Section 2.1. Loans. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make revolving credit loans in Dollars
(the "Loans"), and all Loans shall be made by the Banks, on a pro-rata basis in
accordance with their respective Commitment Proportions, to the Borrower from
time to time, from and including the date hereof to but excluding the
Termination Date, up to but not exceeding at any one time outstanding the amount
of its Commitment; provided, that no Loan shall be made if after giving effect
to such Loan the Aggregate Outstandings at the time of such Loan would exceed
the lesser of (i) the Total Commitments or (ii) the Borrowing Base in effect on
such date. The Loans may be outstanding as Base Rate Loans or LIBOR Loans;
provided, however, that during the occurrence and continuance of an Event of
Default, the Borrower may not elect and the Banks shall have no obligation to
make LIBOR Loans. Subject to the foregoing limits, the Borrower may borrow,
repay and reborrow, on or after the date hereof and prior to the Termination
Date, all or a portion of the Total Commitments as Loans hereunder. Any amount
of any Loan not paid when due (at maturity, on acceleration or otherwise) shall
bear interest thereafter until paid at the rate set forth in Section 3.3(c)
hereof.
Section 2.2. The Notes. The Loans of each Bank shall be evidenced by a
single promissory note in favor of such Bank substantially in the form of
Exhibit A hereto with appropriate insertions, duly executed and completed by the
Borrower. Each Bank is hereby authorized to record the date, type and amount of
each Loan, the date and amount of each payment of principal thereof, and the
principal amount subject thereto and interest rate with respect thereto in such
Banks' records and/or on the schedules annexed to and constituting a part of its
Note, and, absent manifest error, any such recordation shall constitute
conclusive evidence of the information so recorded; provided that the failure to
make any such recordation shall not in any way affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this Agreement
(without giving effect to any such error made in the Note). Each Note (a) shall
be dated the date hereof, (b) be stated to mature on the Termination Date and
(c) shall bear interest on the unpaid principal amount thereof from time to time
outstanding as provided herein.
Section 2.3. Use of Proceeds.
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(a) The Borrower shall use the proceeds of the Loans on the date of
this Agreement to repay in full Existing Bank Debt and may use the proceeds of
the Loans on the date of this Agreement and from time to time thereafter prior
to the Termination Date (i) for general corporate and working capital purposes;
(ii) to finance the acquisition of Real Estate Assets or to make mortgage loans
or similar loans that constitute Real Estate Assets; (iii) to repurchase stock
of the Borrower in an amount not to exceed $2,000,000 in any fiscal year or
$5,000,000 during the term of this Agreement; and (iv) to make advances to the
Operating Companies in an aggregate amount not to exceed $10,000,000 at any
time. No part of the proceeds of any of the Loans will be used (i) for any
purpose which violates the provisions of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System as in effect on the date of making
such Loans or (ii) to permit the Borrower or any Guarantor to acquire equity
securities in any third party except as permitted pursuant to the provisions of
Section 8.7 hereof.
(b) The Borrower agrees to indemnify the Banks and their respective
directors, officers, employees, affiliates, agents or other representatives and
hold the Banks and their respective directors, officers, employees, affiliates,
agents or other representatives, harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and expenses of counsel for any such Person in
connection with any investigative, administrative, judicial proceeding, whether
or not such Person shall be designated a party thereto) which may be incurred by
any such Person, relating to or arising out of this Agreement or any actual or
proposed use of any proceeds of Loans hereunder.
Section 2.4. Borrowing Procedure for Loans; Rate and Interest Period
Selection; Conversions.
(a) The Borrower may request a borrowing under the Commitments
hereunder as provided in Section 3.1. Each Bank will make its share of such
borrowing available to Fleet at Fleet's office located at 1133 Avenue of the
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ not later than 2:00 p.m. New York
City time on the date of such borrowing in immediately available funds. Unless
any applicable condition specified in Article 5 has not been satisfied, not
later than 3:00 p.m. New York City time on the date of such borrowing, Fleet
shall, through its Lending Office and subject to the conditions of this
Agreement, make the amount of the Loan to be made on such date available to the
Borrower, in immediately available funds, by crediting an account of the
Borrower designated by the Borrower and maintained with Fleet.
(b) In the case of each Loan which is a LIBOR Loan, the Borrower shall
select an Interest Period of any duration in accordance with the definition of
Interest Period in Section 1. 1, subject to the limitations that no Interest
Period for a LIBOR Loan shall have a duration less that one month, and if any
such proposed Interest Period would otherwise be for a shorter period, such
Interest Period shall not be available.
14
(c) Upon the expiration of an Interest Period for any Loan, or any
portion thereof, such Loan or portion thereof shall be automatically continued
as a Base Rate Loan except to the extent that such Loan shall be repaid
hereunder or unless the Borrower shall have notified the Banks, as provided in
Section 3.1 hereof, of its intention to select a different interest rate option
with respect to such Loan or any portion thereof. Subject to the following
conditions and to the terms and conditions of this Agreement, the Borrower shall
have the right to convert any Loan or portion thereof to a different type of
Loan (i.e., from a Base Rate Loan to a LIBOR Loan or vice versa):
(i) if less than all Loans at the time outstanding shall be
converted, the notice given by the Borrower to the Banks shall specify
the aggregate amount of Loans in each case to be converted and such
conversion shall be made ratably among the Banks in accordance with
their respective Commitment Proportions;
(ii) in the case of a conversion of less than all outstanding
Loans, the aggregate principal amount of Loans to be converted shall
not be less than (1) $200,000 (and if greater in integral multiples of
$50,000) in the case of conversions to or into LIBOR Loans or (2)
$200,000 (and if greater in integral multiples of $50,000) in the case
of conversions to or into Base Rate Loans;
(iii) no Loan may be converted to a LIBOR Loan less than one
month before the Termination Date;
(iv) a LIBOR Loan may be converted to a different type of
Loan only on the last day of the then applicable Interest Period with
respect thereto; and
(v) no Loan or portion thereof may be converted to a LIBOR
Loan during the occurrence and continuance of an Event of Default.
Notwithstanding anything to the contrary herein, after giving effect to
any Loan, unless consented to by the Required Banks in their sole discretion,
there shall not be more than six (6) different Interest Periods in effect in
respect of all Loans then outstanding.
Section 2.5. Minimum Amounts of Loan. Except for borrowings which
involve or utilize the full remaining amount of the Commitments and payments
which result in the prepayment of all Base Rate Loans, each borrowing and
payment of a Base Rate Loan shall be in an amount at least equal to $200,000
and, if greater, integral multiples of $50,000 in excess thereof. Each borrowing
and payment of a LIBOR Loan shall be in an amount at least equal to $200,000
and, if greater, in integral multiples of $ 50,000 in excess thereof.
Section 2.6. Reduction of Commitments.
(a) The Borrower shall have the right to reduce or terminate the amount
of the unused Commitments at any time and from time to time provided that: (i)
the Borrower shall give notice of each such reduction or termination to the
Banks as provided in Section 3.1, and (ii)
15
each partial reduction shall be allocated pro rata between the Commitments of
each Bank in accordance with their respective Commitment Proportions and shall
be in an aggregate amount at least equal to $3,000,000 or, if greater, in
integral multiples of $1,000,000.
(b) The Commitments, once reduced or terminated may not be reinstated.
ARTICLE 3.
GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.
Section 3.1. Certain Notices. Except as otherwise provided in this
Agreement, notices by the Borrower to the Banks of each borrowing pursuant to
Sections 2.4, each prepayment pursuant to Section 3.2, each reduction or
termination of the Commitments pursuant to Section 2.6 and each conversion of
Loans pursuant to Sections 2.4 shall be irrevocable and shall be effective on
the date of receipt only if received by the Banks by not later than 11:00 a.m.,
New York City time, and (a) in the case of borrowings and prepayments of (i)
Base Rate Loans, if given the date thereof and (ii) LIBOR Loans, if given three
(3) Banking Days prior thereto; (b) in the case of reductions or terminations of
the Commitments, given five (5) Banking Days prior thereto; and (c) in the case
of conversions or continuations pursuant to Sections 2.4, if given three (3)
Banking Days prior thereto in the case of conversions to or continuations of
LIBOR Loans and if given on the date thereof in the case of conversions to Base
Rate Loans. Each such notification which relates to a borrowing, continuation or
conversion shall specify the amount and the type of Loan (i.e., Base Rate Loan
or LIBOR Loan), the date of the proposed borrowing, whether such Loan represents
an additional borrowing, a continuation or a conversion, and in the case of a
LIBOR Loan, the Interest Period to be used in the computation of interest with
respect thereto. Each such notice relating to a reduction or termination of the
Commitments shall specify the amount of the Commitments to be reduced or
terminated.
Section 3.2. Prepayments.
(a) The Borrower shall have the right at any time and from time to time
to prepay any Base Rate Loan, in whole or in part; provided, however, that each
such partial prepayment of a Base Rate Loan shall be in a minimum aggregate
principal amount of $200,000 or, if greater in amounts which are integral
multiples of $50,000. Except as required by paragraph (b) or (c) below or on the
last day of an Interest Period with respect thereto, the Borrower shall not be
permitted to prepay LIBOR Loans.
(b) In the event that the Aggregate Outstandings exceed the lesser of
the Total Commitments or the then applicable Borrowing Base at any time prior to
the Termination Date, the Borrower shall promptly pay or prepay so much of the
Loans outstanding as shall be necessary in order that the Aggregate Outstandings
will not exceed the lesser of Total Commitments or the Borrowing Base then in
effect. All prepayments under this subparagraph shall be subject to Section 4.1.
(c) Unless otherwise agreed by the Banks in writing, the Borrower shall
be required to pay or prepay Loans outstanding with (i) 80% of the proceeds of
the issuance by the
16
Borrower or any Guarantor of additional equity; (ii) 100% of the net proceeds of
the sale by the Borrower or any Guarantor of any Real Estate Assets; (iii) 100%
of the net proceeds resulting from the repayment of mortgages constituting Real
Estate Assets or (iv) such proceeds as may be paid as a result of a casualty or
condemnation, all in accord with Sections 7.11 or 7.12 of this Agreement;
provided, however, that the Borrower shall have no obligation under clause (i)
above until the aggregate net proceeds of any and all additional equity
issuances during the term of this Agreement shall equal or exceed $1,000,000.00.
All prepayments under this paragraph shall be subject to Section 4.1.
(d) All payments required by paragraphs (b) or (c) above shall be made
to the Banks pro rata in accordance with their respective Commitment Proportions
and shall be applied as follows: first, to outstanding Base Rate Loans up to the
full amount thereof and second, to outstanding LIBOR Loans up to the full amount
thereof.
(e) All prepayments made pursuant to this Section 3.2 shall be
accompanied by the payment of all accrued interest on the amount so prepaid and
by all amounts required to be paid pursuant to Section 4.1 in connection
therewith.
Section 3.3. Interest on Loans.
(a) Base Rate Loans. The Borrower shall pay interest on the outstanding
and unpaid principal amount of each Base Rate Loan made under this Agreement at
a fluctuating rate per annum equal to the Base Rate from time to time in effect.
Each change in the interest rate shall take effect simultaneously with the
corresponding change in the Prime Rate or the Federal Funds Rate, as the case
may be. Interest shall be calculated on the basis of the actual number of days
elapsed divided by a year of three hundred sixty (360) days and shall be paid to
the Agent for the account of the Banks quarterly, in arrears, on March 31, June
30, September 30 and December 31 in each year and on the Termination Date.
(b) LIBOR Loans The Borrower shall pay interest on the outstanding and
unpaid principal amount of each LIBOR Loan made under this Agreement for each
Interest Period applicable to such LIBOR Loan at a rate per annum equal to the
Reserve Adjusted LIBOR Rate in effect with respect thereto, plus the Margin.
Interest shall be calculated on the basis of the actual number of days elapsed
divided by a year of three hundred sixty (360) days and shall be paid to the
Banks, in arrears on the last day of the Interest Period applicable to such
LIBOR Loan; provided, however, that if such Interest Period is longer than three
months, interest shall be paid on the last day of each three-month period
following the commencement of such Interest Period and on the last day of such
Interest Period.
(c) Post-Default. If any Default or Event of Default has occurred and
is continuing hereunder, all Loans, and all interest, fees or other amounts due
hereunder, to the extent permitted by applicable law, shall bear interest
(payable on demand, and in any event on the last day of each month, and computed
daily on the basis of a 360-day year for actual days elapsed) (i) in all cases
other than LIBOR Loans, at the Default Rate until paid and (ii) in the case of
LIBOR Loans, at a rate which shall be the greater of (x) the Default Rate or (y)
2% per
17
annum in excess of the rate applicable to such LIBOR Loan, until the expiration
of the Interest Period applicable to such Loan, at which time the Loan will
automatically be converted into a Base Rate Loan, and until paid, shall bear
interest at the Default Rate. In no event, however, shall interest payable
hereunder be in excess of the maximum rate of interest permitted under
applicable law. The obligation to so pay interest upon any reimbursement
obligation of the Borrower to the Banks shall not be construed so as to waive
the requirement for reimbursement on the same date that payment is made by the
Banks as set forth in this Agreement.
Section 3.4. Commitment Fee. The Borrower shall pay to the Agent for
the ratable benefit of the Banks a commitment fee for the period from and
including the date hereof to and excluding the Termination Date equal to 1/4 of
1% of the average daily unused portion of the Total Commitment during the
applicable period. The commitment fee shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed. The commitment fee shall be
due and payable quarterly in arrears on the last day of each calendar quarter
and on the Termination Date.
Section 3.5. Administrative Fee. The Borrower shall pay to the Agent
for its own account an annual fee of $25,000. The administrative fee shall be
due and payable quarterly in advance on or before the date hereof and on each
April 1, July 1, October 1, January 1 thereafter during the term of this
Agreement. Any payment made on or before the date hereof shall be pro rated for
the number of days from the date hereof through March 31, 1997.
Section 3.6. Syndication Fee.. The Borrower shall pay to the Agent, for
the ratable benefit of the Banks, a syndication fee of $100,000. This fee shall
be due and payable on the Closing Date.
Section 3.7. Payments Generally.
(a) All payments under this Agreement or the Notes, shall be made in
Dollars in immediately available funds to the Banks, in accordance with the
respective obligations of the Borrower then due and payable to each of them not
later than 1:00 p.m. New York City time on the relevant dates specified above
(each such payment made after such time on such due date is to be deemed to have
been made on the next succeeding Banking Day), to the Bank's Lending Office. The
Borrower will notify the Banks of any payment pursuant to the provisions of this
Section at the same time it makes any such payment. Each Bank may (but shall not
be obligated to) debit the amount of any such payment to any ordinary deposit
account of the Borrower with such Bank; provided, however, that the Banks shall
not be permitted to debit any funds which are not available to the Borrower
other than on an overdraft basis. The Borrower shall, at the time of making each
payment under this Agreement or the Notes, specify to the Banks the principal or
other amount payable by the Borrower under this Agreement or the Notes to which
such payment is to be applied; provided, however, that in the event that the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Banks shall apply such payment as they may elect in their sole
discretion. If the due date of any payment under this Agreement or the Notes
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the
18
period of such extension. Except to the extent otherwise provided herein, it is
the intention of the parties that all payments hereunder be made to the Banks
pro rata in accordance with their respective Commitment Proportions.
(b) All payments made by the Borrower under this Agreement, the Notes
or the other Facility Documents shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any governmental or taxing authority of any jurisdiction located outside of
the United States, excluding, (x) in the case of each Bank, income taxes and
franchise taxes (imposed in lieu of income taxes) imposed on such Bank as a
result of a present or former connection between the jurisdiction of the
government or the taxing authority imposing such tax and such Bank (excluding a
connection arising solely from such Bank having executed, delivered, or
performed its obligations or received a payment under, or enforced, this
Agreement, the Notes or the other Facility Documents) or any political
subdivision or taxing authority thereof or therein, and (y) taxes (including
withholding taxes) imposed by reason of the failure of the Agent or any Bank, in
either case that is organized outside the United States, to comply with Section
3.7(c) hereof (or the inaccuracy at any time of the certificates, documents and
other evidence delivered thereunder) (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called "Taxes"). If any Taxes are withheld from any amounts payable to any Bank
hereunder or under the Facility Documents, the amounts so payable to such Bank
shall be increased to the extent necessary to yield to such Bank (after payment
of all Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, the Notes and the other Facility
Documents. Whenever any Taxes are payable by the Borrower, the Borrower shall
send to such Bank within 30 days after the date of any payment, a certified copy
of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Banks the required receipts or other
required documentary evidence, the Borrower shall indemnify the Banks for any
incremental taxes, interest or penalties that may become payable by any Bank as
a result of any such failure. This indemnification shall be made within 30 days
from the date such Bank or the Agent (as the case may be) makes written demand
therefor. If any Bank receives a refund in respect of any Taxes for which such
Bank has received payment from the Borrower hereunder, such Bank shall promptly
notify the Borrower of such refund and such Bank shall, within 30 days of
receipt of a request by the Borrower repay such refund to the Borrower, provided
that the Borrower, upon the request of such Bank, agrees to return such refund
(plus any penalties, interest or other charges) to such Bank in the event such
Bank is required to repay such refund. The agreements in this subsection shall
survive the termination of this Agreement and the Facility Documents and the
payment of the Notes and all other amounts payable hereunder or thereunder.
Section 3.8. Interim Adjustments to Borrowing Base.
(a) The Borrowing Base shall be adjusted periodically as follows:
The Borrowing Base shall be increased to include:
19
(A) Real Estate Assets that are acquired by the Borrower
and/or the Guarantors and that satisfy the definition of "Eligible Properties"
hereunder; and
(B) Real Estate Assets that do not qualify as "Eligible
Properties" but subsequently satisfy the requirements of "Eligible Properties";
provided, however, that in either case with respect to any such property, the
Agent, on behalf of the Banks, shall be permitted to conduct such due diligence
investigations as the Banks deem appropriate prior to including such property as
an "Eligible Property" and the Banks shall be satisfied in all respects with the
results of such investigation.
(ii) Conversely, the Borrowing Base shall be decreased to exclude:
(A) Real Estate Assets that are sold by the Borrower or any
Guarantor or that become subject to liens securing Indebtedness which exceed 10%
of the annualized and normalized actual year-to-date Net Operating Income for
such property capitalized at 11.5%; and
(B) Any Real Estate Asset that satisfies the definition of
"Eligible Property," (i) if the tenant at such property has delivered a
termination notice, or (ii) 60 days prior to the termination of the lease with
respect to such property or (iii) if the tenant otherwise ceases paying rent
with respect to such property.
(b) Upon the happening of any of the events described above, the
Borrower shall deliver to the Banks a notice thereof as required pursuant to
Section 7.8 hereof. In addition, the Borrower shall deliver to the banks a new
Borrowing Base Certificate within five (5) Banking Days after the happening of
any such event; provided, however, that in the case of clause (i) above, the
Borrower shall not deliver a new Borrowing Base Certificate including any such
property until the Agent shall have completed its due diligence investigation
and the Banks shall have been satisfied with the results thereof. The Agent
agrees to use all reasonable efforts to complete any such due diligence
investigation within 20 Business Days of receiving notice from the Borrower
thereof.
ARTICLE 4.
YIELD PROTECTION, ETC.
Section 4.1. Certain Compensation.
(a) The Borrower hereby agrees to indemnify the Banks against any loss
or expense which the Banks or any one of them may sustain or incur as a
consequence of any of the following:
20
(i) the receipt or recovery by a Bank, whether by voluntary
prepayment, acceleration or otherwise, of all or any part of a LIBOR
Loan prior to the last day of an Interest Period applicable thereto;
(ii) the conversion, prior to the last day of an applicable
Interest Period, of a LIBOR Loan into a Base Rate Loan;
(iii) the failure by the Borrower to borrow any LIBOR Loan,
convert any Base Rate Loan to a LIBOR Loan or continue any LIBOR Loan
on the date of borrowing, conversion or continuation set forth in the
notice delivered by the Borrower pursuant to the provisions hereof,
unless such failure to borrow results from the Banks' failure to fund
such borrowing when the Banks are required to do so under the terms of
this Agreement; or
(iv) the failure by the Borrower to pay, punctually on the
due date thereof, any amount payable by the Borrower with respect to or
on account of any LIBOR Loan.
Without limiting the effect of the foregoing, the amount to be paid by
the Borrower to any Bank in order to so indemnify such Bank for any loss
occasioned by any of the events described in the preceding paragraph, and as
liquidated damages therefor, shall be equal to the excess, discounted to its
present value as of the date paid to such Bank, of (i) the amount of interest
which otherwise would have accrued on the principal amount so received,
recovered, converted or not borrowed during the period (the "Indemnity Period")
commencing with the date of such receipt, recovery, conversion, or failure to
borrow to the last day of the applicable Interest Period for such LIBOR Loan at
the rate of interest applicable to such LIBOR Loan (or the rate of interest
agreed to in the case of a failure to borrow) provided for herein (prior to
default) over (ii) the amount of interest which would be earned by such Bank
during the Indemnity Period if it invested the principal amount so received,
recovered, converted or not borrowed at the rate per annum approximately equal
to LIBOR, as the case may be, on an amount approximately equal to such principal
amount for a period of time comparable to such Indemnity Period.
Any Bank requesting indemnification pursuant to this Section 4.1 shall
deliver to Agent and to the Borrower a certificate as to any additional amounts
payable pursuant to this Section 4.1 setting forth the basis and method of
determining such amounts shall be conclusive, absent manifest error, as to the
determination by each Bank set forth therein if made reasonably and in good
faith. The Borrower shall pay to each Bank any amounts so certified by such Bank
within 10 days of receipt of any such certificate. For purposes of this Section
4.1, all references to the "Bank" shall be deemed to include any participant in
this Agreement and/or the Loans.
Section 4.2. Additional Costs.
21
(a) The Borrower shall pay to each Bank, from time to time, on demand
of any such Bank, such amounts as such Bank may reasonably determine to be
necessary to compensate it for any costs which Bank reasonably determines are
attributable to its obligation to make any Loan hereunder, or any reduction in
any amount receivable by such Bank hereunder in respect of any such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), resulting from any Regulatory Change
which: (i) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or its Note in respect of any such obligations (other than
taxes imposed on the overall net income of such Bank for any of such obligations
by the jurisdiction in which such Bank has its principal office or Lending
Office or franchise taxes imposed in lieu of income taxes); or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Bank (including any of such Loans or any deposits referred to in the definitions
of "LIBOR Loans"); or (iii) imposes any other condition affecting this
Agreement, or its Note (or any of such extensions of credit or liabilities) and
such Bank's obligations with respect thereto. Each Bank will notify the Agent
and the Borrower of any event occurring after the date of this Agreement which
will entitle such Bank to compensation pursuant to this Section 4.2(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Notwithstanding anything herein to the contrary, no
provision of this Section 4.2(a) shall be deemed to require the Borrower to make
any payment of any amount to the extent that such payment would duplicate any
payment made by the Borrower pursuant to Section 3.7 hereof.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.2, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects by notice
to the Borrower, the obligation of such Bank to make LIBOR Loans hereunder shall
be suspended until the date such Regulatory Change ceases to be in effect (in
which case the provisions of Section 4.5 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 4.2 (but without duplication), the Borrower shall pay to each Bank from
time to time on request such amounts as such Bank may reasonably determine to be
necessary to compensate such Bank for any costs which it reasonably determines
are attributable to the maintenance by it or any of its Affiliates pursuant to
any law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or monetary
authority, of capital in respect of its Loans or other obligations hereunder
(such compensation to include, without limitation, an amount equal to any
reduction in return on assets or equity of such Bank to a level below that which
it could have achieved but for such law, regulation, interpretation, directive
or request). Each Bank will notify the Agent and the Borrower if it is entitled
to compensation
22
pursuant to this Section 4.2(c) as promptly as practicable after it determines
to request such compensation.
(d) A statement of any Bank setting forth such amount or amounts,
supported by calculations in reasonable detail, as shall be necessary to
compensate such Bank as specified in paragraphs (a), (b) and (c) above shall be
delivered to the Borrower and shall be conclusive absent demonstrable error. The
Borrower shall pay each such Bank the amount shown as due on any such statement
within ten (10) days after its receipt of the same.
(e) Any Bank claiming any additional amounts payable pursuant to this
Section 4.2 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, any
such additional amounts and would not, in the reasonable judgment of such Bank,
be otherwise disadvantageous to such Bank.
Section 4.3. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) any Bank determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "LIBOR Loans" in Section 1.1 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for any LIBOR Loans as provided in this Agreement; or
(b) any Bank determines (which determination shall be conclusive) and
notifies the Agent and the Borrower that the relevant rates of interest referred
to in the definition of "LIBOR Loans" in Section 1.1 upon the basis of which the
rate of interest for any type of LIBOR Loans is to be determined do not
adequately cover the cost to such Bank of making or maintaining such Loans,
then, such Bank shall as soon as practicable thereafter give written notice (or
facsimile notice promptly confirmed in writing) of such determination to the
Agent and the Borrower, and any request by the Borrower for the making of a
LIBOR Loan or conversion or continuation of any Loan into a LIBOR Loan, in each
case, pursuant to the provisions hereof shall, until the circumstances giving
rise to such notice no longer exist, be deemed to be a request for a Base Rate
Loan. Each determination by a Bank made hereunder shall be conclusive absent
manifest error.
Section 4.4. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to honor its obligation to make or maintain LIBOR Loans hereunder, then
such Bank shall promptly notify the Agent and the Borrower thereof and such
Bank's obligation to make or maintain LIBOR Loans hereunder shall be suspended
until such time as such Bank may again make and maintain such affected Loans (in
which case the provisions of Section 4.5 shall be applicable).
Section 4.5. Certain LIBOR Loans Pursuant To Sections 4.2. 4.3 and 4.4.
If an event referred to in Section 4.2, 4.3 or 4.4 has occurred, the affected
Bank shall be required to
23
make Base Rate Loans in accordance with this Agreement, and all LIBOR Loans of
such Bank then outstanding shall be automatically converted into Base Rate Loans
on the date specified by such Bank in such notice (which shall be, for each
LIBOR Loan, the last day of the Interest Period applicable thereto unless such
Bank determines that it is required by law to convert such LIBOR Loan on an
earlier date in which case such earlier date shall be the date of conversion),
and, to the extent that LIBOR Loans are so made as (or converted into) Base Rate
Loans, all payments of principal which would otherwise be applied to such Bank's
LIBOR Loans shall be applied instead to its Base Rate Loans. In the event of any
conversion of any LIBOR Loan to a Base Rate Loan pursuant to Section 4.5 prior
to the maturity date with respect to such LIBOR Loan the Borrower shall pay to
the relevant Bank all amounts required to be paid pursuant to Section 4.1
hereof.
Section 4.6. Survival. The indemnities and other obligations set forth
in this Article 4 shall survive payment in full of all Loans or extensions of
credit made pursuant to this Agreement and the Termination Date.
ARTICLE 5.
CONDITIONS PRECEDENT.
Section 5.1. Documentary Conditions Precedent. The obligations of the
Banks to make the Loans on or after the date hereof are subject to the
conditions precedent that:
(a) each Bank shall have received on or before the date hereof each of
the following, in form and substance reasonably satisfactory to such Bank and
its counsel:
(i) this Agreement and the Note executed in favor of such
Bank duly executed by the Borrower;
(ii) a certificate of the Secretary of the Borrower and each
of the Guarantors listed on Schedule 5.1A, dated the Closing Date,
attesting to all corporate action taken by such entity, including
resolutions of its Board of Directors authorizing the execution,
delivery and performance of the Facility Documents and each other
document to be delivered pursuant to this Agreement, together with
certified copies of the certificate or articles of incorporation and
the by-laws of the Borrower and each of such Guarantors; and, such
certificate shall state that the resolutions and corporate documents
thereby certified have not been amended, modified, revoked or rescinded
as of the date of such certificate;
(iii) a certificate of the Secretary of the Borrower and each
of the Guarantors (which in the case of Guarantors may be in the form
of an omnibus certificate), dated the Closing Date, certifying the
names and true signatures of the officers of such entity authorized to
sign the Facility Documents and the other documents to be delivered by
such entity under this Agreement;
24
(iv) a certificate of a duly authorized officer of the
Borrower, dated the Closing Date, stating that the representations and
warranties in Article 6 are true and correct on such date as though
made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(v) Guarantees, duly executed by each Guarantor;
(vi) Security Agreements, duly executed by each of the
Operating Companies, together with fully executed and completed
financing statements on form UCC-1, in proper form for filing in all
jurisdictions necessary or, in the reasonable discretion of the Agent,
desirable to perfect the security interests granted under the Security
Agreements;
(vii) UCC search results identifying all financing statements
on file with respect to the Borrower or the Guarantor in such
jurisdictions as the Agent requires indicating that no party claims any
interest in the property of the Borrower or the Guarantors other than
the holders of Permitted Liens;
(viii) results of title searches with respect to such
properties of the Borrower and the Guarantor as the Agent requires
which shall be satisfactory to the Banks in all respects;
(ix) the Assignments, duly executed by each of the Borrower
and the Guarantors in proper form for filing in all jurisdictions
necessary or in the reasonable discretion of the Agent, desirable to
record the Banks' interest in the leases on the Real Estate Assets;
(x) the Environmental Indemnity Agreement, duly executed by
the Borrower and each Guarantor;
(xi) an opinion of counsel for the Borrower and Guarantors,
dated the Closing Date, in substantially the form of Exhibit F;
(xii) satisfactory evidence that the Borrower and the
Guarantors listed on Schedule 5.1A are duly organized, validly existing
and in good standing under the laws of their respective jurisdictions
of incorporation;
(xiii) audited consolidated balance sheets of the Borrower
and the Guarantors as of December 31, 1995, and consolidated income
statements and statements of cash flows of the Borrower and the
Guarantors for the fiscal year then ended, all prepared in accordance
with GAAP, together with the unqualified opinion thereon of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP, independent certified public accountants, together with
management prepared consolidating balance sheets, income statements and
statements of cash flows as of the same date and covering the same
fiscal period, and unaudited consolidated and consolidating balance
25
sheet of the Borrower and the Guarantors as at September 30, 1996,
together with income statements and statements of cash flows of the
Borrower and the Guarantors for the fiscal quarter ended September 30,
1996 and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, each prepared by or under
the supervision of the chief financial officer of the Borrower in
accordance with GAAP;
(xiv) evidence that the Borrower and the Guarantors maintain
such insurance with respect to their business and properties as would
customarily be maintained by similar businesses which are similarly
situated;
(xv) satisfactory evidence that neither the Borrower nor any
Guarantor is in default with respect to any contractual obligations to
which it is a party, the effect of which may be material and adverse to
the Borrower or any Operating Company, or the Borrower and the
Guarantors, taken as a whole, or to the ability of the Borrower or any
Guarantor to perform its obligations hereunder or under the other
Facility Documents;
(xvi) a duly executed Borrowing Base Certificate containing
information as of September 30, 1996, in form and substance
satisfactory to the Banks;
(xvii) a property cash flow analysis in the form of the
property cash flow analysis previously delivered to the Banks
confirming information as of June 1, 1996, which shall in all respects
be satisfactory to the Banks, together with a certification of a duly
authorized officer of the Borrower (A) that no event or circumstance
has occurred since June 1, 1996 which would have a material adverse
effect on the information contained in such analysis or (B) describing
all material changes in such analysis from the date thereof through the
date hereof;
(xviii) such other documents, instruments, approvals,
opinions and evidence as the Banks may reasonably require.
(b) the Borrower shall have paid or caused to be paid to the Banks in
full all fees and expenses required to be paid hereunder or in connection
herewith, and including all fees and expenses of the Banks incurred in
connection with the preparation, execution and delivery of this Agreement and
the other Facility Documents and the consummation of the transactions
contemplated thereby and all expenses incurred by the Agent pursuant to
Subparagraph (g) below;
(c) the Borrower and the Guarantors shall have obtained all consents,
permits and approvals required in connection with the execution, delivery and
performance by the Borrower and the Guarantors of their obligations hereunder
and such consents, permits and approvals shall continue in full force and
effect;
26
(d) the Banks shall be satisfied that the proceeds of the initial Loans
hereunder shall be applied to pay the Borrower's Existing Bank Debt in full on
the date hereof, that all UCC-1 financing statements filed to secure the
Borrower's obligations with respect to the Existing Bank Debt shall have been
terminated, and that all existing lines of credit in demand facilities of the
Borrower and the Guarantor shall be terminated;
(e) the Agent shall have been provided with copies of all credit
agreements, loan agreements, indentures, mortgages and other documents relating
to the extension of credit to the Borrower and shall be satisfied with its
review of the foregoing;
(f) the Banks shall be satisfied with the form and content of all
Schedules delivered by the Borrower pursuant to this Agreement or any document
delivered in connection herewith;
(g) the Agent shall have conducted a physical inspection of no fewer
than twenty (20) Eligible Properties and shall be satisfied that such properties
are occupied as represented by the Borrower, are in good and workmanlike
condition and are otherwise in conformance with the Agent's minimal lending
requirements;
(h) the Agent shall have received copies of owner's title insurance
policies on each of the properties referred to in subparagraph (g) above;
(i) the Agent shall have verified the nine month Net Operating Income
at September 30, 1996 (which shall be annualized and normalized) for each of the
properties referred to in subparagraph (g) above, including analysis of future
contractual income stream and verification of revenues and expenses;
(j) the Agent shall have completed a review of all leases relating to
each of the properties referred to in subparagraph (g) above;
(k) all legal matters in connection with this financing shall be
reasonably satisfactory to the Banks and their counsel.
Section 5.2. Additional Conditions Precedent. The obligations of the
Banks to make any Loan shall be subject to the further conditions precedent
(which shall be in addition to, and shall not be deemed to limit or modify, any
of the other terms and conditions hereunder) that on the date of such Loan the
Banks shall have received the following:
(a) a certificate executed by the Chief Financial Officer or the Chief
Executive Officer of the Borrower dated as of such date, stating that (i) the
representations and warranties contained in Article 6 hereof, which for purposes
of this Section, shall be deemed to relate to the Borrower and to each Guarantor
as if each Person where the subject of each such representation and warranty,
are true and correct in all material respects on and as of the date of such Loan
as though made on and as of such date (except when such representation or
warranty by its terms relates to the date hereof or another specific date; (ii)
no Default or Event of Default has occurred
27
and is continuing or would result from any such Loan, (iii) since the date of
the most recent Borrowing Base Certificate there has been no material adverse
change in the Borrowing Base; and (iv) since the date of the most recent
financial statements delivered hereunder there has been no material adverse
change in the business, properties, prospects, financial or other condition of
the Borrower or any Guarantor;
(b) a certificate executed by the Chief Financial Officer or the Chief
Executive Officer of the Borrower, dated as of such date, in form and substance
satisfactory to the Banks stating that after giving effect to the proposed
borrowing, Aggregate Outstandings, will not exceed the lesser of (i) the total
Commitments or (ii) the Borrowing Base then in effect; and
(c) a copy of the Borrower's most recent Borrowing Base Certificate
delivered pursuant to Section 7.8 hereof.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES.
The Borrower and, where applicable, each Guarantor, hereby represents
and warrants that:
Section 6.1. Incorporation, Good Standing and Due Qualifications;
Compliance with Law. Each of the Borrower and the Guarantors is duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, has the corporate power and authority
to own its assets and to transact the business in which it is now engaged or
presently proposes to be engaged, and is duly qualified as a foreign corporation
and in good standing under the laws of each other jurisdiction in which such
qualification is required except where the failure to so qualify would not cause
a material adverse effect upon the operations, business, properties or financial
condition of the Borrower or any Operating Company or of the Borrower and the
Guarantors, taken as a whole. In addition, the Borrower and each of the
Guarantors is in compliance in all material respects with all laws, treaties,
rules or regulations, and determinations or orders of or with respect to all
arbitrators, courts or other governmental authorities applicable to it.
Section 6.2. Power and Authority; No Conflicts. The execution, delivery
and performance by the Borrower and the Guarantors of each of the Facility
Documents to which it is a party have been duly authorized by all necessary
corporate action and do not and will not: (a) require any consent or approval of
the stockholders of the Borrower or any of the Guarantors; (b) contravene the
charter or by-laws of the Borrower or any of the Guarantors; (c) violate any
provision of, or require any filing, registration, consent or approval under,
any law, rule, regulation (including, without limitation, the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve system
as in effect from time to time), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower;
(d) result in a breach of or constitute a default or require any consent under
any indenture or loan agreement or any other agreement, lease or instrument to
which the Borrower or any of the Guarantors is a party or by which properties of
the Borrower or any of the
28
Guarantors may be bound or affected; (e) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties now owned
or hereafter acquired by the Borrower or any of the Guarantors except in favor
of the Banks as herein provided; or (f) cause the Borrower or any of the
Guarantors to be in default under any such rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
Section 6.3. Legally Enforceable Agreements. Each Facility Document is,
or when delivered under this Agreement will be, a legal, valid and binding
obligation of the Borrower and each Guarantor (if such entity or Person is a
party thereto) enforceable against such entities or Person in accordance with
its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance and other similar laws
affecting creditors' rights generally or by the effect of general principles of
equity which may limit the availability of equitable remedies (whether in a
proceeding at law or in equity).
Section 6.4. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of the Guarantors before any court, governmental agency or
arbitrator, which would, in any one case or in the aggregate, materially
adversely affect the financial condition, operations, properties or business of
the Borrower or any of the Guarantors, or the ability of the Borrower or any
Guarantor to perform its obligations hereunder.
Section 6.5. Financial Statements; Other Liabilities. The consolidated
balance sheet of the Borrower and the Guarantors as at December 31, 1995, and
the related income statements and statements of cash flow of the Borrower and
the Guarantors for the fiscal year then ended, and the accompanying notes,
together with the unqualified opinion thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP,
independent certified public accountants, and the interim financial statements
of the Borrower and the Guarantors as at and as of (as the case may be)
September 30, 1996, copies of which have been furnished to each of the Banks,
fairly present the financial condition of the Borrower and the Guarantors as at
such dates and the results of the operations of the Borrower and the Guarantors
for the periods covered by such statements, all in accordance with GAAP
consistently applied (subject, in the case of interim financial statements, to
year-end adjustments and except, in the case of such interim financial
statements, for the absence of notes thereto prepared in accordance with GAAP).
As of the date hereof, there are no liabilities or obligations of the Borrower
or any of the Guarantors , whether direct or indirect, absolute or contingent,
or matured or unmatured, other than (a) as disclosed or provided for in the
financial statements and notes thereto which are referred to above or which are
not required to be so disclosed, or (b) which are disclosed elsewhere in this
Agreement or in the Schedules hereto or which are not required to be so
disclosed, or (c) arising in the ordinary course of business since December 31,
1995 or (d) created by this Agreement. The written information, exhibits and
reports furnished by the Borrower to the Banks in connection with the
negotiation of this Agreement are complete and correct in all material respects.
No event has occurred which would constitute a material adverse change in the
business, financial or other condition or prospects of the Borrower and the
Guarantors taken as a whole.
29
Section 6.6. Ownership and Liens. The Borrower and the Guarantors have
title to, or valid leasehold interests in, all of its properties and assets,
real and personal, including the properties and assets, and leasehold interests
reflected in the financial statements referred to in Section 6.5, and none of
the properties and assets owned by the Borrower or the Guarantors, and none of
their respective leasehold interests is subject to any Lien, except for
Permitted Liens.
Section 6.7. Taxes. The Borrower and each of the Guarantors have filed
all tax returns (foreign, federal, state and local) required to be filed
(including, without limitation, with respect to payroll and sales taxes) and the
Borrower and each of the Guarantors have paid all taxes (including, without
limitation, all payroll and sales taxes), assessments and governmental charges
and levies shown thereon to be due, including interest and penalties, other than
taxes, assessments and governmental charges and levies being contested in good
faith by appropriate proceedings and with respect to which adequate reserves in
conformity with GAAP shall have been provided on the books of the Borrower and
the Guarantors.
Section 6.8. ERISA. As of the date hereof, the Borrower and its ERISA
Affiliates are in compliance in all material respects with all applicable
provisions of ERISA. No Reportable Event has occurred with respect to any Plan;
no notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstance exists which constitutes grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the
Borrower and each of its ERISA Affiliates have met their minimum funding
requirements under ERISA with respect to all of their Plans and there are no
Unfunded Vested Liabilities, and neither the Borrower nor any ERISA Affiliate
has incurred any material liability to the PBGC under ERISA.
Section 6.9. Subsidiaries. As of the date hereof, Schedule 6.9 is a
complete and correct list of all Subsidiaries of the Borrower.
Section 6.10. Credit Arrangements. Schedule 6.10 is a complete and
correct list of all agreements, indentures, purchase agreements, guaranties,
Capital Leases and other investments, agreements and arrangements in effect on
the date of this Agreement providing for or relating to extensions of credit in
the aggregate amounts of $250,000 or more to the Borrower or any of the
Guarantors for borrowed money (including agreements and arrangements for the
issuance of letters of credit or for acceptance financing but excluding
indebtedness which is non-recourse to the Borrower or the Guarantors) in respect
of which the Borrower or any of the Guarantors is in any manner directly or
contingently obligated; and the maximum principal or face amounts of the credit
in question, outstanding and which can be outstanding, are correctly stated, and
all Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule.
Section 6.11. Operation of Business. The Borrower and the Guarantors
possess all licenses, permits, franchises, patents, copyrights, trademarks and
trade names, or rights thereto, to conduct their respective businesses
substantially as now conducted and as presently
30
proposed to be conducted except where the failure to obtain any of the foregoing
would not result in a material adverse effect upon the operations, business,
properties, or financial condition of the Borrower or any Operating Company or
of the Borrower and the Guarantors, taken as a whole.
Section 6.12. Hazardous Substances. Except as disclosed in the
Borrower's most recent report on Form 10-K (a copy of which has been provided to
the Banks), (i) the Borrower and the Guarantors are in material compliance with
all applicable Environmental Laws, and have obtained all necessary licenses and
permits required to be issued pursuant to any applicable Environmental Law and
(ii) as of the date hereof, neither the Borrower nor any of the Guarantors has
received any notice or communication from any governmental agency with respect
to (a) any Hazardous Substance relative to its operations, property or acts, or
(b) any investigation, demand or request pursuant to or enforcing any
Environmental Law relating to it or its operations, properties or acts, and no
such investigation is pending or, to the knowledge of the Borrower or any
Guarantor, threatened.
Section 6.13. No Default on Outstanding Judgments or Orders. Each of
the Borrower and the Guarantors has satisfied all judgments, orders, notices of
violation and decrees and neither the Borrower nor any of the Guarantors is in
default with respect to any judgment, writ, injunction, decree, notice of
violation, rule or regulation of any court, arbitrator or federal, state,
municipal or other governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign applicable to it.
Section 6.14. Labor Disputes and Acts of God. As of the date hereof,
neither the business nor the properties of the Borrower or any of the Guarantors
are affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), materially and
adversely affecting such business or properties or the operations of the
Borrower and the Guarantors taken as a whole, or the ability of the Borrower or
any Guarantor to perform its obligations hereunder (in each case, after giving
effect to insurance).
Section 6.15. Governmental Regulation. Neither the Borrower nor any of
the Guarantors is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940 or any other statute or
regulation limiting its ability to incur indebtedness for money borrowed as
contemplated hereby.
Section 6.16. Partnership, Etc. Except as disclosed in Schedule 6.16,
neither the Borrower nor any Guarantor is a partner in any partnership or a
member in any limited liability partnership or company.
Section 6.17. No Forfeiture Proceedings. Neither the Borrower nor any
of the Guarantors is engaged in or proposes to be engaged in the conduct of any
business or activity which is likely to result in a Forfeiture Proceeding, and
no Forfeiture Proceeding against any of them is pending or, to the best
knowledge of the Borrower and the Guarantors as of the date hereof, threatened.
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Section 6.18. No Default or Event of Default. No Default or Event of
Default has occurred and is continuing under this Agreement.
Section 6.19. Solvency. Without giving effect to any Guarantee executed
in connection with this Agreement, each of the Borrower and the Guarantors is
Solvent. After giving effect to any such Guarantee, the Borrower and the
Guarantors, taken as a whole, are Solvent.
Section 6.20. Name. Except as set forth on Schedule 6.20, during the
five years prior to the making of this Agreement, neither the Borrower nor any
Guarantor has been known under, or transacted business using, any name or trade
style except for the name set forth above such entity's signature on this
Agreement.
Section 6.21. Other Agreements. Neither the Borrower nor any Guarantor,
is a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction which
would, in any case or in the aggregate have a material adverse effect on its
ability to carry out its obligations hereunder or under the Facility Documents.
Neither the Borrower, nor any of the Guarantors, is in default in any respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument material to its business
to which it is a party.
Section 6.22. Eligible Properties. The Borrower and the Guarantors own
each of the Eligible Properties free and clear of all liens or encumbrances
other than liens or encumbrances that secure indebtedness aggregating, in the
case of any such Eligible Property, less than 10% of the annualized and
normalized year-to-date Net Operating Income for such property capitalized at
11.5% at the time of determination. The Borrower has provided to the Banks true,
correct and complete copies of all leases applicable to the Eligible Properties
and neither the Borrower, nor any Guarantor, knows of any present default
(whether monetary or non-monetary) under or with respect to any of such leases.
Each of such leases is in full force and effect and has not been modified or
otherwise amended.
Section 6.23. Title Insurance. The Borrower and the Guarantors have
with respect to each Real Property Asset that is an owned property a fully paid
owner's title insurance policy and with respect to each Real Property Asset that
is a loan secured by a mortgage on real property a fully paid owner's title
insurance policy and with respect to each Real Property Asset that is a loan
secured by a mortgage on real property a fully paid mortgagee's title insurance
policy.
ARTICLE 7.
AFFIRMATIVE COVENANTS
So long as any of the Notes or any other Obligations shall remain
unpaid or any Bank shall have any Commitment hereunder, the Borrower and each
Guarantor shall:
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Section 7.1. Maintenance of Existence. Except as otherwise provided in
this Agreement, preserve and maintain its corporate existence and remain in good
standing in the jurisdiction of its organization, and qualify and remain
qualified, as a foreign corporation in each jurisdiction in which such
qualification is required.
Section 7.2. Conduct of Business. Continue to engage principally in the
principal businesses conducted by it on the date hereof.
Section 7.3. Maintenance of Properties. Maintain, keep and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear and tear excepted.
Section 7.4. Maintenance of Records. Keep, adequate records and books
of account, in which complete entries, reflecting all financial transactions of
such Person, will be made.
Section 7.5. Maintenance of Insurance.
(a) With respect to each Operating Company, maintain insurance covering
its assets and its business with financially sound and reputable insurance
companies or associations properly licensed to do business in New York and in
the other jurisdictions where inventory is located in such amounts and covering
such risks (including, without limitation, products liability) as are usually
carried by companies engaged in the same or a similar business and similarly
situated and as are required by the Facility Documents. The Borrower shall
provide the Banks notice that such policies have been paid in full and shall
deliver certified copies of the policy or policies of such insurance or
certificates of insurance to the Banks if the Banks so request.
(b) With respect to the Borrower or any Guarantor that is not an
Operating Company, provide copies of evidence of insurance provided by any
tenant of a Real Estate Asset as required by the lease relating to such property
and, if any tenant is in default of its obligation to maintain insurance or if
any Real Estate Asset becomes vacant, the Borrower or the Guarantor, as the case
may be, shall maintain such insurance as is required by Section 7.11 hereof.
Section 7.6. Compliance with Laws. Comply and cause each tenant of the
Eligible Properties to comply with all applicable laws, rules, regulations and
orders.
Section 7.7. Right of Inspection. (a) Subject to the terms of any lease
relating to any Real Estate Asset, at any reasonable time upon reasonable notice
during normal business hours and from time to time, permit any Agent or any
agent or representative thereof, to make physical inspections of each Real
Estate Asset and to examine and make copies and abstracts from the records and
books of account of, and visit the properties of, such Person and to discuss the
affairs, finances and accounts of such Person with any of its officers and
directors and such entity's independent accountants. In addition, if during the
course of any such examination hereunder, anything comes to the Agent's
attention which causes the Agent to be concerned that there may be an
environmental condition at any Real Estate Asset that is an Eligible Property,
the
33
Agent may require the Borrower to permit the Agent to conduct such environmental
inspections as the Agent shall deem necessary with respect to such property at
the Borrower's expense; provided, however that the Borrower may, within 10 days
of receipt of notice from the Agent of its intention to so inspect such Eligible
Property, elect not to permit the Agent to conduct such examination in which
event such Real Estate Asset shall no longer be considered an Eligible Property
for purposes of calculating the Borrowing Base;
(b) In addition to the inspection rights of the Agent pursuant to
subparagraph (a) of this Section, the Agent shall be permitted to conduct annual
due diligence investigations (which may include site inspections) of the
Eligible Properties. The scope of such investigations shall be determined by the
Agent and the costs of such investigations up to $15,000 per year, shall be
borne by the Borrower and shall be paid out of the Administrative Fee.
Section 7.8. Reporting Requirements. Furnish directly to each of the
Banks:
(a) (1) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, audited, consolidated financial
statements of the Borrower and the Guarantors, which shall include consolidated
balance sheets of the Borrower and the Guarantors as of the end of such fiscal
year, together with consolidated income statements and statements of cash flows
of the Borrower and the Guarantors for such fiscal year and as of the end of and
for the prior fiscal year, all prepared in accordance with GAAP and accompanied
by an unqualified opinion on such consolidated financial statements by a
nationally recognized independent certified public accountants reasonably
acceptable to the Banks, together with management prepared corresponding
consolidating financial statements, all prepared by or under the supervision of
the Chief Financial Officer of the Borrower in accordance with GAAP;
(b) as soon as available and in any event within 45 days after the end
of each of the first, second and third quarters of each fiscal year of the
Borrower, Consolidated and Consolidating financial statements of the Borrower
and the Guarantors, which shall include consolidated and consolidating balance
sheets of the Borrower and the Guarantors as of the end of each such quarter,
together with consolidated and consolidating income statements and statements of
cash flows of the Borrower and the Guarantors for each such quarterly period and
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year and all prepared by or under the supervision of the chief
financial officer of the Borrower in accordance with GAAP (subject to year-end
adjustments and except for the absence of notes thereto prepared in accordance
with GAAP);
(c) simultaneously with the delivery of the financial reporting
statements referred to in (a) and (b) above, a certificate of the Chief
Executive Officer or the Chief Financial Officer of the Borrower, certifying
that to the best of his knowledge (i) no 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 which is
proposed to be taken with respect thereto, with computations demonstrating
compliance (or non-compliance, as the case
34
may be) with the covenants contained in Article 9, and (ii) such financial
statements have been prepared in accordance with GAAP (subject, in the case of
interim statements, to year end adjustments and except for the absence of notes
thereto prepared in accordance with GAAP);
(d) simultaneously with the delivery of the annual financial statements
referred to in Section 7.8(a) above, a certificate of the independent public
accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(e) Quarterly, as soon as available and, in any event, not later than
the dates financial statements are required to be delivered pursuant to (a) and
(b) above, a Borrowing Base Certificate;
(f) Annually, not later than February 15 of each year, the Borrower's
business plan and projections of financial statements for the immediately
succeeding year illustrating the projected income statements, balance sheets and
statement of cash flows, each in form and substance satisfactory to the Banks;
(g) Quarterly, as soon as available and, in any event, not later than
the dates financial statements are required to be delivered pursuant to (a) and
(b) above, a report detailing the performance of all operations of the Borrower
and the Guarantors by business segment, in form and substance satisfactory to
the Banks;
(h) Property financial information in a form consistent with the form
of information provided on Schedule 7.8(h) hereto;
(i) promptly after the Borrower or any Guarantor becomes aware of the
commencement thereof, notice of (a) all actions, suits, and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any Guarantor,
including, without limitation, any such proceeding relating to any alleged
violation of any Environmental Law and including any proceedings relating to any
matter if a determination adverse to the Borrower and the Guarantors in such
proceeding would have a material adverse effect upon the operations, business,
properties or financial condition of the Borrower or any Operating Company or of
the Borrower and the Guarantors, taken as a whole or (b) default under any lease
or mortgage with respect to any Real Estate Asset which would have a material
adverse effect upon the operations, business, properties or financial condition
of the Borrower or any Operating Company or on the Borrower and the Guarantors,
taken as a whole;
(j) immediately after the Borrower or any Guarantor has knowledge of
any Default or Event of Default has occurred, a written notice setting forth the
details of such Default
35
or Event of Default and the action which is proposed to be taken by the Borrower
with respect thereto;
(k) as soon as possible and in any event within five Banking Days after
the Borrower knows that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan have occurred or exist, a statement
signed by a Chief Executive Officer or the Chief Financial Officer of the
Borrower setting forth details respecting such event or condition and the
action, if any, which the Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by the Borrower or an ERISA Affiliate with respect to such event
or condition):
(i) any Reportable Event;
(ii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) receipt by the Borrower or ERISA Affiliate of notice
from a Multiemployer Plan of the complete or partial withdrawal by the
Borrower or any ERISA Affiliate under Section 4201 or 4204 of ERISA
from a Multiemployer Plan imposing withdrawal liability (as of the date
of such notification) exceeding $250,000 or requiring payments
exceeding $250,000 per annum;
(v) receipt by the Borrower or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA if the
aggregate annual contributions of the Borrower and all ERISA Affiliates
to all Multiemployer Plans which are then in reorganization or being
terminated have been increased by over amounts contributed to such
Multiemployer Plans for the plan year immediately preceding the plan
year in which the reorganization or termination occurs by an amount
exceeding $250,000; and
(vi) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA for delinquent contributions in excess of
$100,000 which proceeding is not dismissed within 30 days;
(l) annually, not later than June 1 of each year, a property cash flow
analysis for the Borrower and the Guarantors, which shall be in form and
substance satisfactory to the Banks;
36
(m) upon the request of the Banks, promptly after the furnishing
thereof, copies of any reports or records required to be filed with or furnished
to any insurance carriers or governmental authorities relating to Hazardous
Substances located on any of real properties owned or occupied by the Borrower
or any Guarantor ;
(n) promptly after the Borrower or any Guarantor knows of the
commencement or threat thereof, notice of any Forfeiture Proceeding;
(o) promptly after such judgment, decree or order is entered, notice of
any judgment, decree or order entered against the Borrower or any of the
Guarantors;
(p) promptly and, in any event, within 5 Banking Days, notice of any
event which would (i) require an interim adjustment of $500,000 or more to the
Borrowing Base in accordance with the provisions of Section 3.8 hereof or (ii)
would require an interim adjustment of the Borrowing Base, regardless of amount,
if as a result of such adjustment Aggregate Outstandings would exceed the
Borrowing Base; and
(q) such other information respecting the condition or operations,
financial or otherwise of the Borrower or any of the Guarantors or ERISA
Affiliates, including copies of other reports filed from time to time within the
Securities and Exchange Commission, as the Banks may from time to time
reasonably request.
Section 7.9. Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all material Indebtedness and other material obligations of whatever nature.
Section 7.10. Payment of Taxes.
(a) From time to time when the same shall become due and payable, pay
and discharge all taxes of every kind and nature, all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, and all other public charges whether of a like or different
nature, imposed upon or assessed against the Eligible Properties, or any part
thereof, or upon the revenues, rents, issues, income and profits of the Eligible
Properties, or any part thereof, or arising in respect of the occupancy, use of
possession thereof unless such claims are being contested in good faith by
appropriate proceedings provided that adequate reserves in conformity with GAAP
shall have been provided on the books of the Borrower and/or such Guarantor(s).
Borrower and each Guarantor shall, upon the request of the Agent, deliver to the
Agent receipts evidencing the payment of all such taxes, assessments, levies,
fees, rents and other public charges imposed upon or assessed against the
Eligible Properties or any part thereof, or the revenues, rents, issues, income
or profits thereof.
(b) Pay from time to time when the same shall become due, all lawful
claims and demands of mechanics, materialmen, laborers and others, which claims
and demands, if unpaid, might result in, or permit the creation of, a lien on
the Eligible Properties or any part
37
thereof, or on the revenues, rents, issues, income and profits arising
therefrom, unless such claims are being contested in good faith by appropriate
proceedings provided that adequate reserves in conformity in the GAAP shall have
been provided on the books of the Borrower and/or the Guarantors.
Section 7.11. Insurance
(a) Keep or enforce the obligation of tenants to keep, the Real Estate
Assets insured against damage by fire and other hazards covered by the standard
extended coverage insurance policy. Subject to the terms of the applicable
leases, all insurance policies and endorsements required pursuant to this
Section shall be fully paid for, nonassessable and contain such provisions and
expiration dates and be in such form and amounts and issued by such insurance
companies satisfactory to the Banks. In addition, after the occurrence of an
Event of Default hereunder, the Banks may require the Borrower and the
Guarantors to carry or to require their respective tenants to carry such other
insurance on the Real Estate Assets including oil storage tank insurance, in
such amounts as may from time to time be required by institutional lenders,
against insurable casualties which at the time are commonly insured against in
the case of premises similarly situated.
(b) Subject to the terms of the applicable leases, if any Eligible
Property or any part thereof, is located in an area which has been identified by
the Secretary of housing and Urban Development as a flood hazard area, the
Borrower and the Guarantors shall keep, or cause their respective tenants to
keep, for as long as any Indebtedness remains unpaid, such Eligible Property
covered by flood insurance in an amount at least equal to the value assigned to
such Eligible Property in the Borrowing Base.
(c) The Borrower shall give the Agent prompt notice of any loss to any
Real Estate Asset covered by insurance if such loss would decrease the value of
such Real Estate Asset by $500,000 or more or (ii) would have a material adverse
affect on the Borrowing Base or upon the Borrower and its Subsidiaries on a
consolidated basis. For so long as no Event of Default has occurred and is
continuing, (i) the Borrower shall have the sole right to adjust losses covered
by insurance, (ii) the proceeds from any adjusted insurance claim shall be paid
to the Borrower, which proceeds shall be used by the Borrower for the
restoration, rebuilding, renovation and/or repair of the property so requiring
same. If, at the time of any loss, an Event of Default has occurred and is
continuing, (i) the Borrower shall not adjust said loss without the prior
written consent of the Banks; and (ii) any and all insurance proceeds shall be
paid to the Agent and the Agent, with the consent of the Required Banks, in its
sole discretion, may use such proceeds to either (i) repay all or any portion of
the Loans or (ii) restore, rebuild, renovate and/or repair the damaged property.
In the event the Agent makes the insurance proceeds available to the Borrower,
the Borrower agrees to promptly commence and diligently continue to perform the
repairs, restoration, renovation or rebuilding of the damaged property so as to
restore such property to be in full compliance with all laws and so that such
property shall be at least equal in value and general utility as prior to such
damage or destruction. All provisions of this Section 7.11(c) and the Banks
rights and remedies hereunder are subject to the insurance provisions of the
applicable leases on the Real Estate Assets.
38
Section 7.12. Condemnation. The Borrower, immediately upon obtaining
knowledge of the institution of any proceedings for the condemnation of any of
the Real Estate Assets or any part of any Real state Assets that may materially
effect the value of the Borrowing Base or that may materially adversely effect
the Borrower and its Subsidiaries, on a consolidated basis, will notify the
Agent of the pendency of such proceeding. Subject to the provisions of the
applicable leases, after the occurrence of an Event of Default hereunder, the
Agent may participate in any such proceeding and the Borrower, from time to
time, will deliver to the Agent all instruments requested by it to permit such
participation. In the event of such condemnation proceeding after the occurrence
of an Event of Default hereunder, the award or compensation payable is hereby
assigned to and shall be paid to the Agent. The Agent shall be under no
obligation to question the amount of any such award or compensation. In any such
condemnation proceedings after the occurrence of an Event of Default hereunder,
the Agent may be represented by counsel selected by the Agent. The Borrower,
upon request by the Agent, shall make, execute and deliver any and all
instruments requested for the purpose of confirming the assignment of the
aforesaid awards and compensation to the Agent free and clear of any liens,
charges or encumbrances of any kind or nature whatsoever. All provisions of this
Section 7.12 and the Banks rights and remedies hereunder are subject to the
condemnation provisions of the applicable leases on the Real Estate Assets.
Section 7.13. Subsidiaries. Simultaneously with their creation, cause
all Subsidiaries to become Guarantors hereunder and, in connection therewith to
execute and deliver to the Banks, Guarantees.
ARTICLE 8.
NEGATIVE COVENANTS.
So long as any of the Notes or other Obligations shall remain unpaid or
any Bank shall have any Commitment hereunder, neither the Borrower nor any
Guarantor shall:
Section 8.1. Indebtedness. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist any
Indebtedness, except for any of the following types of Indebtedness:
(a) Indebtedness of the Borrower under this Agreement or the Notes;
(b) Indebtedness described in Schedule 8.1 and any other existing
Indebtedness of any Guarantor relating to extensions of credit of less than
$250,000 that is non-recourse to the Borrower or any other Guarantor and any
refinancing of any such Indebtedness secured by a mortgage on any real property
of the Borrower or any Guarantor provided that such refinancing does not
increase the principal amount of such Indebtedness;
(c) Provided that no Event of Default then exists or would result
therefrom, Indebtedness of the Borrower, or any such Guarantor, secured by
purchase money Liens permitted by Section 8.2 provided that the maximum amount
of such Indebtedness incurred
39
during any fiscal year (excluding non-recourse indebtedness secured by real
property) shall not exceed $500,000 provided, however, that no provision of this
Section 8.1(c) shall prohibit the Borrower from entering into an operating lease
for computer equipment having a value of up to $1,500,000 during 1997 and
provided that the obligations of the Borrower under such lease shall be
permitted in addition to the $500,000 annual limit provided for in this
subsection;
(d) unsecured trade indebtedness and customer deposits incurred in the
ordinary course of business;
(e) in the case of the Guarantors the guarantees of the Obligations
pursuant to the Guarantees; and
(f) Indebtedness of any Post-Closing Guarantor provided that such
Indebtedness is non-recourse to the Borrower or to any other Guarantor.
Section 8.2. Liens. Create, incur, assume or suffer to exist or permit
any Subsidiary to create, incur or suffer to exist, any Lien upon or with
respect to any of its properties, now owned or hereafter acquired, or grant to
any third party any rights to enforce a "negative pledge" with respect to its
properties or assets, except the following liens ("Permitted Liens"):
(a) Liens in favor of the Banks securing the Obligations pursuant to
the provisions hereof;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained in conformity with GAAP;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves in accordance with
GAAP have been established, including, without limitation, any landlord's lien
which is being contested in good faith by appropriate proceedings and for which
appropriate reserves in accordance with GAAP have been established;
(d) Liens under workers' compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases,
public or statutory obligations, surety, stay, appeal, indemnity, performance or
other similar bonds, or other similar obligations arising in the ordinary course
of business;
40
easements, rights-of-way, restrictions and other similar encumbrances which, in
the aggregate, do not materially interfere with the occupation, use and
enjoyment by the Borrower of the property or assets encumbered thereby in the
normal course of its business or materially impair the value of the property
subject thereto;
(g) judgment and other similar Liens securing claims aggregating not
more than $250,000 arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(h) subject to the provisions of Section 8.1(c) hereof, (i) purchase
money Liens on any property heretofore or hereafter acquired or the assumption
of any Lien on any property existing at the time of such acquisition, or (ii) a
Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided, that in the case of any of (i)-(ii)
above, (i) the creation or occurrence of any such Lien shall not otherwise
result in a Default or Event of Default with respect to any of the other
provisions of this Agreement, (ii) the Indebtedness secured by such Lien shall
not exceed 100% of the fair market value of the property encumbered by such
Lien, and (iii) such Lien shall not encumber any property of the Borrower and
their Subsidiaries other than the property so acquired;
(i) Liens arising by virtue of any statutory or common law provision
relating to banker's liens, rights of set off or similar rights with respect to
deposit accounts of the Borrower or any Subsidiary; and
(j) Liens securing Indebtedness permitted by Section 8.1 hereof.
Section 8.3. Investments. Make or permit any Subsidiary to make any
loan or advance to any Person or purchase or otherwise acquire or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, obligations or
other securities of, make any capital contribution to, or otherwise invest in,
or acquire any interest in any Person (each of the foregoing, an "Investment"),
except (i) Permitted Investments; (ii) Investments permitted under Section 8.7
hereof; the Borrower may make loans or advances to the Operating Companies
provided that the outstanding principal balance of such loans or advances may
not exceed $10,000,000 at any one time; and (iii) subject to the provisions of
Section 8.7 hereof, the Borrower or any Subsidiary may make loans secured by
mortgages on real property in the ordinary course of their business consistent
with past practices.
Section 8.4. Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of or permit any Subsidiary to sell, lease, assign, transfer or
otherwise dispose of any of its now owned or hereafter acquired assets (except
to the Borrower), except for: (a) assets disposed of in the ordinary course of
business (it being understood that the Borrower and the Guarantors sell Real
Estate Assets in the ordinary course of business); or (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business.
41
Section 8.5. Transactions with Affiliates. Enter into or permit any
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except (unless elsewhere restricted hereunder) (a) for transactions
between the Borrower and any Subsidiary or any Subsidiary with any other
Subsidiary, (b) upon fair and reasonable terms, in the ordinary course of and
pursuant to the reasonable requirements of, the relevant Person's business and
upon fair and reasonable terms no less favorable to the relevant Person than
would obtain in a comparable arm's length transaction with a Person not an
Affiliate; provided that, after giving effect to any such transaction (i.e., any
of the transactions referred to in any of (a)-(b) above), no Default or Event of
Default shall have occurred.
Section 8.6. Mergers, Etc. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of or permit any Subsidiary to merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, or acquire, all or
substantially all of the assets or the business of any Person, except that any
Guarantor may merge with or into any other Guarantor or the Borrower hereunder,
provided that, in the case of a transaction that involves the Borrower, the
Borrower is the surviving entity, and provided further that, after giving effect
to any such transaction, no Default or Event of Default shall have occurred.
Section 8.7. Acquisitions. Make an Acquisition or permit any Subsidiary
to make an Acquisition, except that (i) the Borrower or any Guarantor may
acquire Real Estate Assets provided that the aggregate consideration paid or to
be paid (in the case of a purchase), including all indebtedness assumed by the
Borrower or any Guarantor in connection with such Acquisition, or advanced (in
the case of a loan) in connection with any such transaction, shall not exceed
$15,000,000; and (ii) the Borrower or any Guarantor may acquire property or
assets other than Real Estate Assets provided that the aggregate consideration
paid in connection with any such transaction shall not exceed $5,000,000 and the
aggregate consideration paid in connection with all such transactions permitted
by this clause (ii) during the term hereof shall not exceed $10,000,000.
Section 8.8. No Activities Leading to Forfeiture. Engage or permit any
Subsidiary to engage in the conduct of any business or activity which would be
reasonably likely to result in a Forfeiture Proceeding.
Section 8.9. Corporate Documents; Fiscal Year. Amend, modify or
supplement or permit any Subsidiary to amend, modify or supplement its
certificate or articles of incorporation or by-laws or, in the case of any
partnership, its partnership agreement, in any way which would materially
adversely affect the ability of the Borrower or any Subsidiary to perform its
obligations hereunder or change its fiscal year.
Section 8.10. Hazardous Substances; Use of Real Property. Use, or
permit the use of, or permit any Subsidiary to use or permit the use of any of
its real properties for conducting any manufacturing, industrial, commercial or
retail business which involves in any
42
way the introduction, manufacture, generation, processing or storage of any
Hazardous Substance in violation, in any material respect, of any applicable
Environmental Law.
Section 8.11. Dividends, etc. Declare or pay any dividends on its
capital stock or purchase, redeem, retire or otherwise acquire any of its
capital stock at any time outstanding, except that any Subsidiary wholly owned
by the Borrower may declare and pay dividends to the Borrower, and except that
the Borrower may repurchase its capital stock in amounts not to exceed
$2,000,000 in any fiscal year or $5,000,000 during the term of this Agreement.
Section 8.12. Other Material Adverse Change. Suffer or permit any other
material adverse change in the business, properties, financial condition,
prospects or operations of the Borrower or any Subsidiary; in the business,
properties, financial condition, prospects or operations of the Borrower and the
Guarantors taken as a whole; or in the ability of the Borrower or any Guarantor
to perform its obligations under this Agreement or under any of the Facility
Documents.
Section 8.13. Sales of Receivables; Sale-Leasebacks. Sell, discount or
otherwise dispose of or permit any Subsidiary to sell, discount or otherwise
dispose of notes, accounts receivable or other obligations owing to such entity,
with or without recourse, except for purposes of collection in the ordinary
course of business; or sell or permit any Subsidiary to sell any asset pursuant
to an arrangement to thereafter lease such asset from the purchaser thereof.
Section 8.14. Leases of Eligible Properties. Enter into leases with
respect to Eligible Properties on terms and conditions which are not
commercially reasonable within the markets in which such properties are located.
Section 8.15. Maintenance of Real Estate Assets. Subject to the terms
of any leases with respect to any Real Estate Assets, commit any waste, or
permit any tenant to commit any waste on the Real Estate Assets, or any part
thereof, or make any change, or permit any tenant to make any change, in the use
of the Real Estate Assets or any part thereof, which shall in any way increase
any ordinary fire or other hazard arising out of construction or operation. The
Borrower and the Guarantors shall, at all times, maintain or cause any tenants
to maintain the Real Estate Assets in good operating order and condition and
shall promptly make or cause any tenants to make, from time to time, all
repairs, renewals, replacements, additions and improvements in connection
therewith which are needful or desirable to such end.
ARTICLE 9.
FINANCIAL COVENANTS.
So long as any of the Notes or other Obligations shall remain unpaid,
or any Bank shall have any Commitment under this Agreement, the Borrower and the
Guarantors shall:
43
Section 9.1. Limitation on Indebtedness. Not permit Total Adjusted
Outstanding Funded Indebtedness of the Borrower and the Guarantors, on a
consolidated basis, to exceed 50% of the Capitalization Value of the Borrower
and the Guarantors, on a consolidated basis.
Section 9.2. Minimum Equity Value. Maintain, on a consolidated basis, a
minimum Equity Value of $60,000,000.
Section 9.3. Minimum Interest Coverage Ratio. Maintain quarterly, on a
consolidated basis, a ratio of (i) annualized and normalized Consolidated EBITDA
to (ii) annualized and normalized Consolidated Interest Expense of not less than
2.00:1.00.
Section 9.4. Minimum Debt Service Coverage Ratio. Maintain quarterly,
on a consolidated basis, a ratio of (i) annualized and normalized Consolidated
EBITDA less gains from the sale of properties and other non-recurring income to
(ii) annualized an normalized Consolidated Debt Service of not less than
1.10:1.00.
Section 9.5. Minimum Eligible Properties Debt Service Coverage Ratio.
Maintain quarterly, on a consolidated basis, a ratio of (i) annualized and
normalized Eligible Property EBITDA to (ii) Revolving Credit Loan Debt Service
of not less than 2.25:1.00.
Section 9.6. Limitation of Capital Expenditures. Not make Capital
Expenditures, excluding expenditures for the acquisition of Real Estate Assets,
in excess of $3,000,000 in any fiscal year on a consolidated basis.
Section 9.7. Limitation on Operating Leases Not enter into operating
leases requiring the Borrower and the Guarantors to make more than $500,000 in
lease payments in any calendar year, on a consolidated basis.
ARTICLE 10.
EVENTS OF DEFAULT.
Section 10.1. Events of Default. Any of the following events shall be
an "Event of Default":
(a) The Borrower shall (A)(i) fail to pay the principal of or interest
on any Loan or Note as and when due and payable fail to pay any fee or other
amount due hereunder as and when due and payable; or (B) fail to make any
required prepayment as and when due and payable in accordance with the terms of
this Agreement;
(b) Any representation or warranty made or deemed made by the Borrower
or by any Guarantor in this Agreement or in any other Facility Document or which
is contained in any certificate, document, opinion, financial or other statement
furnished to the Banks at any
44
time pursuant to any Facility Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;
(c) The Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.3, in Articles 4, 8 or 9 or
Sections 7.7 (subject to the provisions of the leases relating to the Real
Estate Assets), 7.8 or 12.3; or (ii) fail to perform any other term, covenant or
agreement on its part to be performed or observed (other than obligations
specifically referred to in Section 10.1(a)) in any Facility Document and, in
the case of this clause (ii) only, such failure shall continue for 10
consecutive business days;
(d) The Borrower or any of the Guarantors shall: (i) fail to make when
due any payments with respect to any Indebtedness, including but not limited to
indebtedness for borrowed money (other than the payment obligations described in
Section 10.1 (a) above), of the Borrower or such Subsidiary, as the case may be,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) or, if such Indebtedness
has no stated due date, before an action for collection is commenced; or (ii)
fail to perform or observe any term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any
Indebtedness when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
Indebtedness, whether or not such failure to perform or observe shall be waived
by the holder of such Indebtedness (unless such waiver shall be absolute and
unconditional); or (iii) any Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; provided, however that it
shall not constitute an Event of Default hereunder unless the aggregate
principal amount of the Indebtedness referred to in clauses (i), (ii) and (iii)
above equals or exceeds (x) $500,000 in the case of recourse Indebtedness of the
Borrower or in the case of Indebtedness relating to Eligible Properties or (y)
$1,000,000 in the case of Indebtedness of any Guarantors that is non-recourse to
the Borrower or any other Guarantor which relates to assets other than Eligible
Properties; provided, however, that it shall not constitute an Event of Default
hereunder if any of the events described above occurs with respect to that
certain promissory note of D&M/▇▇▇▇ Technology, Inc. (the "Maker") dated as of
May 7, 1992 and payable to ▇▇▇▇ ▇. ▇▇▇▇▇▇, as representative for so long (x) as
the Maker is contesting its obligations with respect to such note by appropriate
proceedings (y) adequate reserves in conformity with GAAP shall be provided in
the books of the Maker and (z) no judgment has been entered in favor of the
holder of such note;
(e) The Borrower or any of the Guarantors (i) shall generally not, or
be unable to, or shall admit in writing its or their inability to, pay its or
their debts as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any court or otherwise for the
appointment of a custodian, receiver or trustee for it or a substantial part of
its assets; or (iii) shall, as debtor, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it or them, in which an
adjudication or appointment is made or order for relief is entered, or which
petition, application or proceeding
45
remains undismissed for a period of 30 days or more; or (v) by any act or
omission shall indicate its or their consent to, approval of or acquiescence in
any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any substantial part
of its property; (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of 30 days or more; or (vii)
on a consolidated basis, shall cease to be Solvent;
(f) One or more judgments, decrees or orders for the payment of money
in excess of $250,000 in the aggregate in respect of uninsured or unbonded
claims shall be rendered against the Borrower, or any of the Guarantors and such
judgments, decrees or orders shall continue unsatisfied and in effect for a
period of 30 consecutive days without being vacated, discharged, satisfied or
stayed or bonded pending appeal;
(g) An event or condition specified in Section 7.8(k) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or conditions,
the Borrower or any ERISA Affiliate shall incur or in the opinion of the Bank
shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan
or PBGC (or any combination of the foregoing) which is, in the determination of
the Bank, material in relation to the financial condition, operations, business
or prospects of the Borrower or any Subsidiary;
(h) Any Forfeiture Proceeding shall have been commenced with respect to
the Borrower or any Subsidiary;
(i) Any of the Assignments, the Security Agreements or Guarantees shall
at any time after its execution and delivery and for any reason, cease to be in
full force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower or the Guarantors or
any of them, or any of the Borrower or the Guarantors shall deny that it has any
further liability or obligation under an Assignment, a Security Agreement or a
Guarantee to which it is a party, or any of such parties shall fail to perform
any of its material obligations under any such document; or
(j) a Change in Control shall occur.
Section 10.2. Remedies. Upon the occurrence of any Event of Default
hereunder, the Required Banks may, by notice to the Borrower, (i) declare the
Commitments to be terminated, whereupon the same shall forthwith terminate, and
(ii) declare the outstanding principal of the Notes, all interest thereon and
all other Obligations to be forthwith due and payable, whereupon the Notes, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided that, in the case
of an Event of Default referred to in Section 10.1(e) or Section 10.1(h) above,
the Commitments shall be immediately terminated, and the Notes, all interest
thereon and all other amounts payable under this Agreement or the Notes shall be
immediately due and payable without notice, presentment,
46
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE 11.
THE AGENT; RELATIONS AMONG BANKS.
Section 11.1. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably (but subject to removal by the Required Banks pursuant to
Section 11.9) appoints and authorizes the Agent to act as its agent hereunder
and under any other Facility Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Facility
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Facility Document, and shall not by reason
of this Agreement be a trustee for any Bank. The Agent shall not be responsible
to the Banks for any recitals, statements, representations or warranties made by
the Borrower, or any officer or official of the Borrower, or any other Person
contained in this Agreement or any other Facility Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Facility Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility Document or any other
document or instrument referred to or provided for herein or therein, or for the
failure by the Borrower to perform any of its obligations hereunder or
thereunder. The Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any other Facility
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed to
by the Borrower and the Agent with respect to the Agent's services hereunder.
Section 11.2. Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telefax, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Bank as the holder of the Loans made by it for all purposes hereof
unless and until a notice of the assignment or transfer thereof satisfactory to
the Agent signed by such Bank shall have been furnished to the Agent but the
Agent shall not be required to deal with any Person who has acquired a
participation in any Loan from a Bank. As to any matters not expressly provided
for by this Agreement or any other Facility Document, the Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Banks, and such instructions
of the Required Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks and any other holder of all or any portion
of any Loan.
47
Section 11.3. Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default (other than the non-payment
of principal of or interest or fees on the Loans to the extent the same is
required to be paid to the Agent for the account of the Banks) unless the Agent
has received notice from a Bank or the Borrower specifying such Default or Event
of Default. In the event that the Agent receives such a notice of the occurrence
of a Default or Event of Default, the Agent shall give prompt notice thereof to
the Banks (and shall give each Bank prompt notice of each such non-payment). The
Agent shall (subject to Section 11.8) take such action with respect to such
Default or Event of Default which is continuing as shall be directed by the
Required Banks; provided that, unless and until the Agent shall have received
such directions, the Agent may take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Banks; and provided further that the Agent
shall not be required to take any such action which it determines to be contrary
to law.
Section 11.4. Rights of Agent as a Bank. With respect to its Commitment
and the Loans made by it, the Agent in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its capacity
as a Bank. The Agent or any Bank and their respective Affiliates may (without
having to account therefor to any other Bank) accept deposits from, lend money
to (on a secured or unsecured basis as otherwise permitted hereunder), and
generally engage in any kind of banking, trust or other business with, the
Borrower or any of the Guarantors (and any of their Affiliates). In the case of
the Agent, it may do so as if it were not acting as the Agent, and the Agent may
accept fees and other consideration from the Borrower or any of the Guarantors
for services in connection with this Agreement or otherwise without having to
account for the same to the Banks. Although the Agent or a Bank or their
respective Affiliates may in the course of such relationships and relationships
with other Persons acquire information about the Borrower or any of the
Guarantors or Affiliates and such other Persons, neither the Agent nor such Bank
shall have any duty to disclose such information to the other Banks except as
otherwise required pursuant to Facility Documents.
Section 11.5. Indemnification of Agent. The Banks agree to indemnify
the Agent (to the extent not reimbursed under Section 12.3 or under the
applicable provisions of any other Facility Document, but without limiting the
obligations of the Borrower under Section 12.3 or such provisions), ratably in
accordance with the respective Obligations of the Borrower then due and payable
to each of them (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement, any other Facility Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which the
Borrower is obligated to pay under Section 12.3 or under the applicable
provisions of any other Facility Document but excluding, unless a Default or
Event of Default has occurred, normal administrative costs and expenses
incidental to the performance of its agency duties hereunder) or the enforcement
of any
48
of the terms hereof or thereof or of any such other documents or instruments;
provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the party to be
indemnified.
Section 11.6. Documents. The Agent will forward to each Bank, promptly
after the Agent's receipt thereof, a copy of each report, notice or other
document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
Section 11.7. Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and the Guarantors and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other
Facility Document. The Agent shall not be required to keep itself informed as to
the performance or observance by the Borrower of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any Subsidiary (or any of their Affiliates) which may come into the
possession of the Agent or of its Affiliates. The Agent shall not be required to
file this Agreement, any other Facility Document or any document or instrument
referred to herein or therein, for record or give notice of this Agreement, any
other Facility Document or any document or instrument referred to herein or
therein, to anyone.
Section 11.8. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 11.5 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 11.9. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof at least thirty Banking Days
prior thereto to the Banks and the Borrower, the Agent may be removed at any
time with cause by the Required Banks and the Agent may be removed at any time
without cause by the Required Banks if with the prior written consent of the
Borrower; provided that the Borrower and the other Banks shall be promptly
notified thereof. Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank. The
Required Banks or
49
the retiring Agent, as the case may be, shall upon the appointment of a
Successor Agent promptly so notify the Borrower and the other Banks. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. The
retiring Agent shall execute all documents or instruments of assignment as shall
be necessary to vest in the successor Agent all rights of the retiring Agent
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 11.10. Amendments Concerning Agency Function. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 11.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Facility Document.
Section 11.12. Transfer of Agency Function. Without the consent of the
Borrower or any Bank, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrower and the Banks
thereof.
Section 11.13. Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (either one as appropriate
being the "Payor") prior to the date on which such Bank is to make payment
hereunder to the Agent of the proceeds of a Loan or the Borrower is to make
Payment to the Agent, as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, repay to
the Agent the amount made available to it together with interest thereon for the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate for such day (when the Agent recovers such amount from a
Bank) or equal to the rate of interest applicable to such Loan (when the Agent
recovers such amount from the Borrower) and, if such recipient shall fail to
make such payment promptly, the Agent shall be entitled to recover such amount,
on demand, from the Payor, with interest as aforesaid.
Section 11.14. Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will
50
furnish to the Agent such forms, certifications, statements and other documents
as the Agent may request from time to time to evidence such Bank's exemption
from the withholding of any tax imposed by any jurisdiction or to enable the
Agent to comply with any applicable laws or regulations relating thereto.
Without limiting the effect of the foregoing, if any Bank is not created or
organized under the laws of the United States of America or any state thereof,
in the event that the payment of interest by the Borrower is treated for U.S.
income tax purposes as derived in whole or in part from sources from within the
U.S., such Bank will furnish to the Agent, no less frequently than annually,
Form 4224 or Form 1001 of the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and completed by such
Bank as evidence of such Bank's exemption from the withholding of U.S. tax with
respect thereto. The Agent shall not be obligated to make any payments hereunder
to such Bank in respect of any Loan or such Bank's Commitment until such Bank
shall have furnished to the Agent the requested form, certification, statement
or document.
Section 11.15. Several Obligations and Rights of Banks. The failure of
any Bank to make any Loan to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Loan on such date, but
no Bank shall be responsible for the failure of any other Bank to make a Loan to
be made by such other Bank. The amounts payable at any time hereunder to each
Bank shall be a separate and independent debt, and each Bank shall be entitled
to protect and enforce its rights arising out of this Agreement, and it shall
not be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
Section 11.16. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided: (a) each borrowing under Section 2.4 or Section 3.1 shall be
made from the Banks, each reduction or termination of the amount of the
Commitments under Section 2.8 shall be applied to the Commitments of the Banks,
and each payment of the fees referenced in Article 3, shall be made by and held
for the account of the Banks, pro rata in accordance with their respective
Commitment Proportions; (b) each prepayment and payment of principal of or
interest on Loans of a particular type and a particular Interest Period shall be
made to the Agent for the account of the Banks holding Loans of such type and
Interest Period pro rata in accordance with the respective unpaid principal
amounts of such Loans of such Interest Period held by such Banks.
Section 11.17. Sharing of Payments Among Banks. If a Bank shall obtain
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means, it shall promptly purchase from the other Banks a participation in the
Loans made by the other Banks in such amounts, and make such other adjustments
from time to time as shall be equitable to the end that all the Banks shall
share the benefit of such payment (net of any expenses which may be incurred by
such Bank in obtaining or preserving such benefit) pro rata in accordance with
the unpaid principal and interest on the Loans held by each of them. To such end
the Banks shall make appropriate adjustments among themselves (by the resale of
any such participation sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation in the Loans made by other Banks may exercise all rights of
setoff, banker's lien,
51
counterclaim or similar rights with respect to such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of the Borrower.
ARTICLE 12.
MISCELLANEOUS.
Section 12.1. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower and the
Required Banks, and any provision of this Agreement may be waived by the
Borrower and by an instrument signed by the Required Banks (if such provision
requires performance by the Borrower), including, but not limited to, any Event
of Default; provided that no amendment, modification or waiver shall, unless by
an instrument signed by all of the Banks: (a) increase or extend the term, or
extend the time or waive any requirement for the reduction or termination of or
otherwise change the Commitment or the obligation to make Term Loans of any
Bank, (b) extend the date fixed for the payment of principal of or interest on
any Loan, (c) reduce the amount of any payment of principal thereof or the rate
at which interest is payable thereon or any fee payable hereunder, (d) alter the
terms of this Section 12.1, (e) change the fees payable to any Bank except as
expressly otherwise provided herein, (f) permit the Borrower, or any of the
Guarantors, to transfer or assign any of its obligations hereunder or under the
Facility Documents, (g) release the security interest in and Lien on or the
right to a security interest in and Lien, any collateral securing the Borrower's
obligations thereunder, or (h) change the definition of the term "Required
Banks." No failure on the part of any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 12.2. Usury. Anything herein to the contrary notwithstanding,
the Obligations shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of law applicable to a Bank limiting rates of interest which may be
charged or collected by such Bank. If any of the above-referenced payments of
interest, together with any other charges or fees deemed in the nature of
interest, exceed the maximum legal rate, then the Banks shall have the right to
make such adjustments as are necessary to reduce any such aggregate interest
rate (based on the foregoing aggregate amount) to the maximum legal rate, and if
any Bank ever receives, collects or applies any such excess, it shall be deemed
a partial repayment of principal and treated as such; and if principal is paid
in full, any remaining excess shall be refunded to the Borrower. The Borrower
waives any right to prior notice of such adjustment and further agrees that any
such adjustment may be made by the Banks subsequent to notification from the
Borrower that such aggregate interest charged exceeds the maximum legal rate.
52
Section 12.3. Expenses and Indemnification. The Borrower shall
reimburse each of the Banks on demand for all reasonable costs, expenses and
charges (including, without limitation, reasonable fees and charges of such
Banks' special counsel, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ up to a cap of $45,000, plus
disbursements of such counsel up to a cap of $15,000, incurred by such Bank in
connection with the preparation, review, execution and delivery of this
Agreement and the Facility Documents. Without limiting the generality of the
foregoing, the Borrower shall pay all recording fees and charges and recording
taxes incurred by any of the Banks hereunder or in connection herewith. In
addition, the Borrower shall reimburse each Bank for all of its reasonable costs
and expenses incurred from and after the occurrence of an Event of Default in
connection with the perfection, protection, enforcement or preservation of any
rights under this Agreement, the Notes or the other Facility Documents. The
Borrower agrees to indemnify each Bank and their respective directors, officers,
employees, representatives and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or expenses of any
kind (including, without limitation, the reasonable fees and expenses of counsel
for such Person in connection with any investigative, administrative or judicial
proceeding, whether or not such Person shall be designated a party thereto)
incurred by any of them arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to or arising out of this Agreement,
any actual or proposed use by the Borrower of the proceeds of the Loans, or to
the failure of the Borrower to perform or observe any of the terms, covenants or
conditions on its part to be performed or observed under this Agreement or under
any of the Facility Documents. The indemnity provided in this Section shall not
extend to any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence, willful misconduct or bad faith of the Person to
be indemnified.
Section 12.4. Special Provisions Regarding Collateral. Simultaneously
with the execution and delivery of this Agreement, the Borrower and the
Guarantors have deposited with the Agent, for the benefit of the Banks, the
Assignments duly executed and in proper form for recording in each of the
jurisdictions where Eligible Properties are located. In addition, the Operating
Companies have deposited with the Agent for the benefit of the Banks the
Security Agreements, together with UCC-1 financing statements, each duly
executed and in proper form for recording in each of the jurisdictions in which
the Operating Companies maintain assets. The Agent agrees to hold such documents
and not to file or record such documents unless and until any Event of Default
shall occur hereunder. The Agent further agrees that upon the happening of an
Event of Default hereunder, other than an Event of Default referred to in
Section 10.1 (e) hereof (in which case no notice shall be required), the Agent
shall give the Borrower fourteen (14) days' prior written notice before
recording any of such documents. The costs incurred after the occurrence of an
Event of Default in connection with recording any such document shall be borne
by the Borrower whether or not any such document is recorded by the Agent. If
any of the Assignments or financing statements require amendment, re-execution
or any revision prior to being in a form acceptable to be recorded, the Borrower
shall be responsible for all costs incurred from and after the occurrence of an
Event of Default in connection with such amendment, re-execution or revision and
the Borrower shall do all things necessary at the request of the Agent in order
to permit such documents to be filed or recorded whether or not any such
documents are
53
filed or recorded. To the extent that the Agent or any Bank incurs any of such
costs directly, such costs shall be reimbursed by the Borrower on demand.
Section 12.5. Survival. The obligations of the Borrower under Section
2.3(b), Article 4 and Section 12.3 shall survive the repayment of the Loans and
the Termination Date for a period corresponding to the maximum applicable
statute of limitations in effect in the State of New York from time to time.
Section 12.6. Assignment; Participation. This Agreement shall be
binding upon, and shall inure to the benefit of Borrower, the Banks and their
respective successors and assigns, except that the Borrower may not assign or
transfer its rights or obligations hereunder. Each Bank may sell participations
in or, with the prior written consent of the Borrower which shall not be
unreasonably withheld and which shall not be required during the occurrence and
continuance of an Event of Default, assign all or any part of any Loan to
another bank or other entity, in which event (a) in the case of an assignment,
upon notice thereof by the Bank to the Borrower, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations (including, without limitation, a ratable assumption of
the assigning Bank's Commitment and Commitment Proportion hereunder) as it would
have if it were a Bank hereunder; and (b) in the case of a participation, the
participant shall have no rights under the Facility Documents and all amounts
payable by the Borrower under Articles 2 and 3 shall be determined as if such
Bank had not sold such participation. Such Bank may furnish any information
concerning the Borrower in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants);
provided that such Bank shall require any such prospective assignee or such
participant (prospective or otherwise) to agree in writing to maintain the
confidentiality of such information. There shall be no limit on the number of
assignments or participants that may be granted by any Bank. Notwithstanding any
such assignment, any rights and remedies available to the Borrower for any
breaches by an assigning Bank of its obligations hereunder while a Bank shall be
preserved after such assignment and such Bank shall not be relieved of any
liability to the Borrower due to such breach. Each Bank will have the right to
pledge and assign as collateral to a Federal Reserve Bank all or a portion of
its interests hereunder.
Section 12.7. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Borrower by
certified or registered mail or by recognized overnight delivery services to
such party at its address on the signature page of this Agreement. In addition,
notices of borrowing pursuant to Section 2.4 may be delivered by telecopier,
provided that such telecopied notices shall be confirmed by sending the original
signed copy of such notice to the Banks by certified or registered mail or by
recognized overnight delivery services. Initially, notice shall be delivered to
each party hereto at the addresses set forth on the signature page hereof.
Notices shall be effective: (a) if given by registered or certified mail, 72
hours after deposit in the mails with postage prepaid, addressed as aforesaid;
or (b) if given by recognized overnight delivery service, on the Banking Day
following deposit with such service addressed as aforesaid; or (c) if given by
telecopy, when the telecopy is transmitted to the telecopy number as aforesaid
and confirmed with a confirmation receipt.
54
Section 12.8. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option without any prior
notice to the Borrower (any such notice being expressly waived by the Borrower
to the extent permitted by applicable law), to offset balances (general or
special, time or demand, provisional or final) held by it for the account of the
Borrower at any offices of such Bank or any of its Affiliates, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due (regardless
of whether such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower thereof; provided that such Bank's failure to give
such notice shall not affect the validity thereof. Payments by the Borrower
thereof hereunder shall be made without setoff or counterclaim.
Section 12.9. Jurisdiction; Immunities.
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK, NASSAU OR
SUFFOLK COUNTIES OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE NOTES, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
(BY CERTIFIED OR REGISTERED MAIL) OF COPIES OF SUCH PROCESS TO THE BORROWER AT
THE ADDRESS SPECIFIED IN SECTION 12.6. THE BORROWER AGREES THAT A FINAL JUDGMENT
(INCLUDING ANY APPLICABLE APPEALS) IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES ANY OBJECTION
TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH
STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY
ACTION OR PROCEEDING BROUGHT AGAINST ANY BANK SHALL BE BROUGHT ONLY IN NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK, NASSAU OR SUFFOLK
COUNTY. EACH OF THE BANKS AND THE BORROWER WAIVE ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH RESPECT TO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS.
(b) NOTHING IN THIS SECTION 12.8 SHALL AFFECT THE RIGHT OF ANY BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER, OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTIONS.
55
(c) TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE NOTES.
Section 12.10. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 12.11. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 12.13. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
Section 12.14. Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York.
Section 12.15. Relief from Bankruptcy Stay. The Borrower agrees that,
in the event that such Borrower, any Guarantor or any of the persons or parties
constituting the Borrower or a Guarantor shall (i) file with any bankruptcy
court of competent jurisdiction or be the subject of any petition under Title 11
of the U.S. Code, as amended ("Bankruptcy Code"), (ii) be the subject of any
order for relief issued under the Bankruptcy Code, (iii) file or be the subject
of any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or other
relief for debtors, (iv) have sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator, or liquidator, or (v) be the
subject of any order, judgment, or decree entered by any court of competent
jurisdiction approving a petition filed against such readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or relief for debtors, the Banks
shall thereupon be entitled and the Borrower irrevocably consents to immediate
and unconditional relief from automatic stay by Section 362 of the Bankruptcy
Code, or otherwise available to the Banks as provided for herein, in the Notes,
other Facility Documents delivered in connection herewith and as otherwise
provided by law, and the Borrower hereby irrevocably
56
waives any right to object to such relief and will not contest any motion by the
Banks seeking relief from the automatic stay and the Borrower will cooperate
with the Banks, in any manner requested by the Banks, in their efforts to obtain
relief from any such stay or other prohibition.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
UNITED CAPITAL CORP.
By: _______________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notices: _______________
United Capital Corp.
United Capital Building
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
BANKS:
THE CHASE MANHATTAN BANK
By: _____________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Assistant Vice President
Lending Office and Address for Notices:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
57
FLEET BANK, NATIONAL ASSOCIATION
By: _____________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Lending Office and Address for Notices:
Fleet Bank, National Association
1133 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
Vice President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
AMENDMENT, WAIVER AND RELEASE
This Agreement (this "Agreement") is made the __ day of December, 1997
by and among:
UNITED CAPITAL, CORP., a corporation organized under the laws of the
State of Delaware (the "Borrower"), and
THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase") and
FLEET BANK, N.A., a national banking association organized under the laws of the
United States of America ("Fleet" collectively with Fleet, the "Banks"), on the
other hand.
RECITALS:
(A) The Borrower and the Banks are parties to a Revolving Credit
Agreement dated as of January 15, 1997 (the "Credit Agreement");
(B) The Borrower has entered into a Stock Purchase Agreement, dated as
of November 20, 1997 and executed by and among AIL Systems, Inc. and the
Borrower and Metex Corporation (the "Stock Purchase Agreement");
(C) The Borrower has requested the Banks to consent to the transactions
contemplated by the Stock Purchase Agreement pursuant to which, among other
things, the stock of the Borrower's subsidiary, Dorne & ▇▇▇▇▇▇▇▇, Inc. will be
sold to AIL Systems, Inc. for a cash purchase price of $16,000,000;
(D) In addition, the Borrower has requested that the Credit Agreement
and the Facility Documents be amended to release Dorne & ▇▇▇▇▇▇▇▇, Inc. and
Ancom Electromagnetique, Ltd. from their respective obligations thereunder;
(E) The Banks are willing to consent to such transactions and are
willing to amend the Credit Agreement as set forth herein.
(F) Any capitalized terms not defined herein shall have the meanings
ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1.
Amendments to Revolving Credit Agreement.
This Agreement shall be deemed to be an amendment to the Credit
Agreement and shall not be construed in any way as a replacement or substitute
therefore. All of the terms and provisions of this Agreement are hereby
incorporated by reference into the Credit Agreement as if such terms and
provisions were set forth in full herein.
Section 1.1. Subject to the provisions of Section 1.2, the Credit
Agreement is hereby amended by deleting all references to "Dorne & ▇▇▇▇▇▇▇▇,
Inc., a Delaware corporation," to "Dorne & ▇▇▇▇▇▇▇▇, Inc" or to "Ancom
Electromagnetique Ltd."
Section 1.2. The amendment provided for in Section 1.1 hereof shall
become effective in consummation of the transactions contemplated by the Stock
Purchase Agreement.
ARTICLE 2.
Release.
Section 2.1. Subject to the provisions of Section 2.2 hereof, the Banks
hereby release each of Dorne & ▇▇▇▇▇▇▇▇, Inc. and Ancom Electromagnetique, Ltd.
from all of their obligations under the Credit Agreement and each other Facility
Document to which it is a party.
Section 2.2. The release provided for in Section 2.1 hereof shall
become effective upon consummation of the transactions contemplated by the Stock
Purchase Agreement.
ARTICLE 3.
Waiver.
Section 3.1. The Banks hereby waive compliance with the provisions of
Section 8.4 and Section 8.6 of the Credit Agreement only to the extent necessary
to permit the sale of the stock of Dorne & ▇▇▇▇▇▇▇▇, Inc. pursuant to the terms
of the Stock Purchase Agreement
Section 3.2. This Waiver does not constitute a waiver of any other
provision of the Credit Agreement or a waiver of any other right, power or
privilege of the Banks or of any future or other present breach of the Credit
Agreement. Furthermore, this Waiver shall not entitle the Borrower to any future
waiver, whether similar in nature to the waiver granted herein or otherwise and
the Banks specifically reserve the right to withhold any such waivers that may
be requested in the future.
2
ARTICLE 4.
Representations and Warranties.
The Borrower hereby represents and warrants to the Banks that:
Section 4.1. Each and every one of the representations and warranties
set forth in the Credit Agreement is true as of the date hereof with respect to
the Borrower with the same effect as though made on the date hereof, and is
hereby incorporated herein in full by reference as if fully restated herein in
its entirety.
Section 4.2. No Default or Event of Default, as defined in the Credit
Agreement now exists.
Section 4.3. The Borrower is not in default with respect to any
agreement to which it is a party or by which it is bound.
Section 4.4. No representation, warranty or statement by the Borrower
contained herein or in any other document to be furnished by the Borrower in
connection herewith contains, or at the time of delivery shall contain, any
untrue statement of material fact, or omits or at the time of delivery shall
omit to state a material fact necessary to make such representation, warranty or
statement not misleading.
Section 4.5. Except as explicitly terminated hereby, each of the
Facility Documents, including, without limitation, the Security Agreements and
the Guarantees, continue to be in full force and effect and secure all payment
and other obligations of the Borrower under the Agreement. The Borrower has not
located assets in any new locations since the execution and delivery of the
Security Agreements.
ARTICLE 5.
Miscellaneous.
Section 5.1. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the undersigned has executed or caused to
be duly executed this Amendment, Waiver and Release as of the date first above
written.
UNITED CAPITAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: VP & CEO
3
THE CHASE MANHATTAN BANK
By:________________________________
Name:
Title: Vice President
FLEET BANK, N.A.
By:________________________________
Name:
Title: Vice President
4
THE CHASE MANHATTAN BANK
-with-
UNITED CAPITAL CORP.
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Respectfully Submitted,
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
EAB Plaza
Uniondale, New York
INDEX TO DOCUMENTATION
----------------------
I. FINANCING DOCUMENTATION DOCUMENT
----------------------- NUMBER
------
Amendment No. 1 to Credit Agreement with
Exhibits attached thereto...................................................1
$20,000,000 Substitute Revolving Credit
Note - The Chase Manhattan Bank.............................................2
$3,500,000 Term Promissory Note - The
Chase Manhattan Bank........................................................3
$20,000,000 Substitute Revolving Credit
Note - The Fleet Bank, N.A..................................................4
$3,500,000 Term Promissory Note - Fleet
Bank, N.A...................................................................5
Guarantor's Affirmation and Ratification....................................6
Security Agreement Affirmation of Metex
Corporation.................................................................7
Security Agreement of AFP Transformers,
Inc.........................................................................8
Security Agreement Affirmation of Dorne &
▇▇▇▇▇▇▇▇, Inc...............................................................9
II. MISCELLANEOUS DOCUMENTATION
---------------------------
Secretary's Certificate together with Board of
Director's Resolution of United Capital
Corp.......................................................................10
Opinion Letter of ▇▇▇▇ & Priest LLP........................................11
i
AMENDMENT NO. 1 TO REVOLVING CREDIT AGREEMENT
This Agreement (this "Agreement") is made the 5th day of September,
1997 by and among:
UNITED CAPITAL CORP., a corporation organized under the laws of the
State of Delaware (the "Borrower"); and
THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase") and
FLEET BANK, N.A., a national banking association organized under the laws of the
United States ("Fleet"); collectively with Chase, the "Banks").
(A) The Borrower and the Banks are parties to a Revolving Credit
Agreement dated as of January 15, 1997 (the "Credit Agreement");
(B) The Borrower has requested that the Banks extend a $7,000,000 Term
Loan to the Borrower and that Credit Agreement be amended to incorporate such
Term Loan and in certain other respects as provided herein and the Banks are
willing to extend such Term Loan amend the Credit Agreement as set forth herein;
(C) Any capitalized terms not defined herein shall have the meanings
ascribed thereto in the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. AMENDMENTS TO REVOLVING CREDIT AGREEMENT.
This Agreement shall be deemed to be an amendment to the Credit
Agreement and shall not be construed in any way as a replacement or substitute
therefore. All of the terms and provisions of this Agreement are hereby
incorporated by reference into the Credit Agreement as if such terms and
provisions were set forth in full herein.
SECTION 1.1. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following definitions therein in alphabetical order:
"Aggregate Revolving Credit Outstandings" means, at a particular time,
the aggregate outstanding principal amount of Revolving Credit Loans at such
time.
"Aggregate Term Loan Outstandings" means, at a particular time, the
aggregate outstanding principal amount of Term Loans at such time.
"Revolving Credit Loan" means any extension of credit made by the Banks
pursuant to Section 2.1 hereof.
"Revolving Credit Notes" means, collectively, the promissory notes of
the Borrower in the form of Exhibit A hereto evidencing the Revolving Credit
Loans made by a Bank hereunder.
"Revolving Credit Termination Date" means the earlier to occur of (a)
the date on which the commitments shall terminate hereunder; and (b) January 15,
2000.
"Term Loan" means the $7,000,000 Term Loan advanced by the Banks to the
Borrower pursuant to the provisions of Section 2-A.1 hereof.
"Term Loan Maturity Date" means September 30, 2002 or such earlier date
on which the Borrower's obligations pursuant to Article 2-A hereof have been
paid in full.
"Term Note" means each promissory note of the Borrower, substantially
in the form of Exhibit A-1 hereto, evidencing the Term Loan made by each Bank
hereunder.
SECTION 1.2. The definition of the term "Aggregate Outstandings"
contained in Section 1.1 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Aggregate Outstandings" means the sum of Aggregate Revolving Credit
Outstandings and Aggregate Term Loan Outstandings.
SECTION 1.3. The definition of the term "Commitment" is hereby amended
by deleting the phrase "the obligation of such Bank to extend credit to the
Borrower hereunder" therefrom and substituting the following in its place: "the
obligation of such Bank to extend Revolving Credit Loans to the Borrower
pursuant to Article 2 hereof".
SECTION 1.4. The definition of the term "Loan" contained in Section 1.1
of the Credit Agreement is hereby amended to read in its entirety as follows:
"Loan" means any Revolving Credit Loan or any Term Loan.
SECTION 1.5. The definition of the term "Margin" contained in Section
1.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Margin" means (i) with respect to LIBOR Loans that are Revolving
Credit Loans, one and three quarters percent (1.75%) per annum and (ii)
with respect to LIBOR Loans that are Term Loans, 1.40% per annum.
SECTION 1.6. The definition of the term "Notes" contained in Section
1.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Notes" means, collectively, the Revolving Credit Notes and the Term
Notes.
2
SECTION 1.7. Article 2 of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:
ARTICLE 2. REVOLVING CREDIT FACILITY.
SECTION 2.1. REVOLVING CREDIT LOANS. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make
revolving credit loans in Dollars (the "Revolving Credit Loans"), and
all Revolving Credit Loans shall be made by the Banks, on a pro-rata
basis in accordance with their respective Commitment Proportions, to
the Borrower from time to time, from and including the date hereof to
but excluding the Revolving Credit Termination Date, up to but not
exceeding at any one time outstanding the amount of its Commitment;
PROVIDED, that no Revolving Credit Loan shall be made if after giving
effect to such Loan the Aggregate Revolving Credit Outstandings at the
time of such Revolving Credit Loan would exceed the Total Commitments
or if the Aggregate Outstandings would exceed the Borrowing Base in
effect on such date. The Revolving Credit Loans may be outstanding as
Base Rate Loans or LIBOR Loans; provided, however, that during the
occurrence and continuance of an Event of Default, the Borrower may not
elect and the Banks shall have no obligation to make LIBOR Loans.
Subject to the foregoing limits, the Borrower may borrow, repay and
reborrow, on or after the date hereof and prior to the Revolving Credit
Termination Date, all or a portion of the Total Commitments as
Revolving Credit Loans hereunder. Any amount of any Revolving Credit
Loan not paid when due (at maturity, on acceleration or otherwise)
shall bear interest thereafter until paid at the rate set forth in
Section 3.3(c) hereof.
SECTION 2.2. THE REVOLVING CREDIT NOTES. The Revolving Credit
Loans of each Bank shall be evidenced by a single promissory note in
favor of such Bank substantially in the form of Exhibit A hereto with
appropriate insertions, duly executed and completed by the Borrower.
Each Bank is hereby authorized to record the date, type and amount of
each Revolving Credit Loan, the date and amount of each payment of
principal thereof, and the principal amount subject thereto and
interest rate with respect thereto in such Banks' records and/or on the
schedules annexed to and constituting a part of its Revolving Credit
Note, and, absent manifest error, any such recordation shall constitute
conclusive evidence of the information so recorded; provided that the
failure to make any such recordation shall not in any way affect the
obligation of the Borrower to repay the Revolving Credit Loans in
accordance with the terms of this Agreement (without giving effect to
any such error made in the Revolving Credit Note). Each Revolving
Credit Note (a) be stated to mature on the Revolving Credit Termination
Date and (b) shall bear interest on the unpaid principal amount thereof
from time to time outstanding as provided herein.
3
SECTION 2.3. USE OF PROCEEDS.
(a) The Borrower shall use the proceeds of the Revolving
Credit Loans on the date of this Agreement to repay in full Existing
Bank Debt and may use the proceeds of the Revolving Credit Loans on the
date of this Agreement and from time to time thereafter prior to the
Revolving Credit Termination Date (i) for general corporate and working
capital purposes; (ii) to finance the acquisition of Real Estate Assets
or to make mortgage loans or similar loans that constitute Real Estate
Assets; (iii) to repurchase stock of the Borrower in an amount not to
exceed $2,000,000 in any fiscal year or $5,000,000 during the term of
this Agreement; and (iv) to make advances to the Operating Companies in
an aggregate amount not to exceed $10,000,000 at any time. No part of
the proceeds of any of the Revolving Credit Loans will be used (i) for
any purpose which violates the provisions of Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System as in effect on
the date of making such Loans or (ii) to permit the Borrower or any
Guarantor to acquire equity securities in any third party except as
permitted pursuant to the provisions of Section 8.7 hereof.
(b) The Borrower agrees to indemnify the Banks and their
respective directors, officers, employees, affiliates, agents or other
representatives and hold the Banks and their respective directors,
officers, employees, affiliates, agents or other representatives,
harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind (including, without limitation, the
reasonable fees and expenses of counsel for any such Person in
connection with any investigative, administrative, judicial proceeding,
whether or not such Person shall be designated a party thereto) which
may be incurred by any such Person, relating to or arising out of this
Agreement or any actual or proposed use of any proceeds of Revolving
Credit Loans hereunder.
SECTION 2.4. BORROWING PROCEDURE FOR REVOLVING CREDIT LOANS; RATE
AND INTEREST PERIOD SELECTION; CONVERSIONS.
(c) The Borrower may request a borrowing under the Commitments
hereunder as provided in Section 3.1. Each Bank will make its share of
such borrowing available to Fleet at Fleet's office located at 1185
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ not later
than 2:00 p.m. New York City time on the date of such borrowing in
immediately available funds. Unless any applicable condition specified
in Article 5 has not been satisfied, not later than 3:00 p.m. New York
City time on the date of such borrowing, Fleet shall, through its
Lending Office and subject to the conditions of this Agreement, make
the amount of the Loan to be made on such date available to the
Borrower, in immediately available funds, by crediting an account of
the Borrower designated by the Borrower and maintained with Fleet.
4
(d) In the case of each Revolving Credit Loan which is a LIBOR
Loan, the Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in Section 1. 1,
subject to the limitations that no Interest Period for a LIBOR Loan
shall have a duration less that one month, and if any such proposed
Interest Period would otherwise be for a shorter period, such Interest
Period shall not be available.
(e) Upon the expiration of an Interest Period for any
Revolving Credit Loan, or any portion thereof, such Revolving Credit
Loan or portion thereof shall be automatically continued as a Base Rate
Loan except to the extent that such Revolving Credit Loan shall be
repaid hereunder or unless the Borrower shall have notified the Banks,
as provided in Section 3.1 hereof, of its intention to select a
different interest rate option with respect to such Revolving Credit
Loan or any portion thereof. Subject to the following conditions and to
the terms and conditions of this Agreement, the Borrower shall have the
right to convert any Revolving Credit Loan or portion thereof to a
different type of Loan (i.e., from a Base Rate Loan to a LIBOR Loan or
VICE VERSA):
(i) if less than all Revolving Credit Loans at the
time outstanding shall be converted, the notice given by the
Borrower to the Banks shall specify the aggregate amount of
Loans in each case to be converted and such conversion shall
be made ratably among the Banks in accordance with their
respective Commitment Proportions;
(ii) in the case of a conversion of less than all
outstanding Revolving Credit Loans, the aggregate principal
amount of Revolving Credit Loans to be converted shall not be
less than (1) $200,000 (and if greater in integral multiples
of $50,000) in the case of conversions to or into LIBOR Loans
or (2) $200,000 (and if greater in integral multiples of
$50,000) in the case of conversions to or into Base Rate
Loans;
(iii) no Loan may be converted to a LIBOR Loan less
than one month before the Revolving Credit Termination Date;
(iv) a LIBOR Loan may be converted to a different
type of Loan only on the last day of the then applicable
Interest Period with respect thereto; and
(v) no Loan or portion thereof may be converted to a
LIBOR Loan during the occurrence and continuance of an Event
of Default.
5
Notwithstanding anything to the contrary herein, after giving
effect to any Revolving Credit Loan, unless consented to by the
Required Banks in their sole discretion, there shall not be more than
six (6) different Interest Periods in effect in respect of all
Revolving Credit Loans then outstanding.
SECTION 2.5. MINIMUM AMOUNTS OF REVOLVING CREDIT LOAN.
Except for borrowings which involve or utilize the full
remaining amount of the Commitments and payments which result in the
prepayment of all Base Rate Loans, each borrowing and payment of a Base
Rate Loan shall be in an amount at least equal to $200,000 and, if
greater, integral multiples of $50,000 in excess thereof. Each
borrowing and payment of a LIBOR Loan shall be in an amount at least
equal to $200,000 and, if greater, in integral multiples of $ 50,000 in
excess thereof.
SECTION 2.6. REDUCTION OF COMMITMENTS.
(f) The Borrower shall have the right to reduce or terminate
the amount of the unused Commitments at any time and from time to time
provided that: (i) the Borrower shall give notice of each such
reduction or termination to the Banks as provided in Section 3.1, and
(ii) each partial reduction shall be allocated PRO RATA between the
Commitments of each Bank in accordance with their respective Commitment
Proportions and shall be in an aggregate amount at least equal to
$3,000,000 or, if greater, in integral multiples of $1,000,000.
(g) The Commitments, once reduced or terminated may not be
reinstated.
SECTION 1.8. The Credit Agreement is hereby amended by inserting the
following Article 2-A therein immediately before Article 3 thereof:
ARTICLE 2-A. THE TERM LOAN.
SECTION 2-A.1. THE TERM LOAN.
Subject to the terms and conditions hereof, each Bank agrees
to make the Term Loan to the Borrower on September 30, 1997 and the
Term Loan shall be made by the Banks on a pro-rata basis in accordance
with their respective Commitment Proportions.
SECTION 2-A.2. THE TERM NOTES
The Term Loan made by each Bank hereunder shall be evidenced
by a single promissory note substantially in the form of Exhibit A-1
hereto, with appropriate insertions, payable to the order of such Bank
and representing the obligation of the Borrower to pay the unpaid
principal balance of such Term
6
Loan, with interest thereon as provided herein. Each Bank is hereby
authorized to record the date or amount of each payment or prepayment
of principal thereof and the date and amount of each payment of
interest thereon in the Bank's records and/or on a schedule annexed to
its Term Note and, absent manifest error, any such recordation shall
constitute conclusive evidence of the accuracy of the information so
recorded; PROVIDED, however, that the failure to record such
information shall not affect the Borrower's obligations to repay the
Term Loans. Each Term Note (a) shall be dated the date such Term Loan
is made (b) shall be stated to mature on the Term Loan Maturity Date,
(c) shall bear interest for a period from the date such Loan is made
until it is paid in full on the unpaid principal amount thereof at the
applicable rates per annum specified herein.
SECTION 2-A.3. USE OF PROCEEDS.
(a) The Borrower shall use the proceeds of the Term Loan to
repay existing indebtedness owing to the Banks under Article 2 of this
Agreement and for general working capital purposes. No part of the
proceeds of any of the Term Loans will be used for any purpose which
violates the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System as in effect on the date of
making such Loans.
(b) The Borrower agrees to indemnify the Banks and their
respective directors, officers, employees, affiliates, agents or other
representatives and hold the Banks and their respective directors,
officers, employees, affiliates, agents and other representatives,
harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind (including, without limitation, the
reasonable fees and expenses of counsel for any such Person in
connection with any investigative, administrative, or judicial
proceeding, whether or not such Person shall be designated a party
thereto) which may be incurred by any such Person, relating to or
arising out of this Agreement or any actual or proposed use of any
proceeds of Term Loan hereunder.
SECTION 2-A.4. AMORTIZATION OF TERM LOANS.
The Term Loan made hereunder shall have a term of five (5)
years. The principal balance of the Term Loan shall be paid in equal
consecutive quarterly installments of $350,000 commencing on the last
day of December 1997 and continuing on the last day of each March,
June, September, and December thereafter with the final installment
thereof being due on the Term Loan Maturity Date. All installments of
principal on the Term Loan shall be paid to the Agent for the ratable
benefit the Banks in accordance with their respective Commitment
Proportions.
7
SECTION 2-A.5. BORROWING PROCEDURE FOR TERM LOANS; INTEREST RATE AND
INTEREST PERIOD SELECTION.
(a) Each Bank shall make its share of the Term Loan available
to Fleet at Fleet's office located at 1185 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, not later than 2:00 p.m. New York City
time on September 30, 1997 in immediately available funds. Unless any
applicable condition specified in Article 5 has not been satisfied, not
later than 3:00 p.m. New York City time on such date, Fleet shall,
through its lending officer and subject to the conditions of this
Agreement, make the amount of the Term Loan available to the Borrower
in immediately available funds by crediting on account of the Borrower
designated by the Borrower and maintained with Fleet.
(b) The Term Loan shall initially be made as a LIBOR Loan
having an Interest Period of three (3) months. Upon expiration of any
Interest Period applicable to the Term Loan, the Borrower shall pay the
next installment of principal on the Term Loan, and the balance of the
Term Loan shall be continued as a LIBOR Loan having a three (3) month
Interest Period. Notwithstanding the foregoing, the Term Loan may not
be continued as a LIBOR Loan during the occurrence and continuance of
an Event of Default.
SECTION 1.9. Article 3 of the Agreement is hereby amended and restated
in its entirety to provide as follows:
ARTICLE 3. GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.
SECTION 3.1. CERTAIN NOTICES.
Except as otherwise provided in this Agreement, notices by the
Borrower to the Banks of each borrowing pursuant to Sections 2.4, each
prepayment pursuant to Section 3.2, each reduction or termination of
the Commitments pursuant to Section 2.6 and each conversion of
Revolving Credit Loans pursuant to Sections 2.4 shall be irrevocable
and shall be effective on the date of receipt only if received by the
Banks by not later than 11:00 a.m., New York City time, and (a) in the
case of borrowings and prepayments of (i) Base Rate Loans, if given the
date thereof and (ii) LIBOR Loans, if given three (3) Banking Days
prior thereto; (b) in the case of reductions or terminations of the
Commitments, given five (5) Banking Days prior thereto; and (c) in the
case of conversions or continuations pursuant to Sections 2.4, if given
three (3) Banking Days prior thereto in the case of conversions to or
continuations of LIBOR Loans and if given on the date thereof in the
case of conversions to Base Rate Loans. Each such notification which
relates to a borrowing, continuation or conversion shall specify the
amount and the type of Revolving Credit Loan (i.e., Base Rate Loan or
LIBOR Loan), the date of the proposed borrowing, whether such Revolving
Credit Loan represents an additional borrowing, a continuation or a
conversion,
8
and in the case of a LIBOR Loan, the Interest Period to be used in the
computation of interest with respect thereto. Each such notice relating
to a reduction or termination of the Commitments shall specify the
amount of the Commitments to be reduced or terminated.
SECTION 3.2. PREPAYMENTS.
(a) The Borrower shall have the right at any time and from
time to time to prepay any Base Rate Loan, in whole or in part;
PROVIDED, however, that each such partial prepayment of a Base Rate
Loan shall be in a minimum aggregate principal amount of $200,000 or,
if greater in amounts which are integral multiples of $50,000. Except
as required by paragraph (b) or (c) below or on the last day of an
Interest Period with respect thereto, the Borrower shall not be
permitted to prepay LIBOR Loans.
(b) In the event that the Aggregate Outstandings exceed the
then applicable Borrowing Base or the Aggregate Revolving Credit
Outstandings exceed the Total Commitments at any time prior to the
Revolving Credit Termination Date, the Borrower shall promptly pay or
prepay so much of the Revolving Credit Loans outstanding as shall be
necessary in order that the Aggregate Outstandings will not exceed the
Borrowing Base then in effect and Aggregate Revolving Credit
Outstandings will not exceed the Total Commitment. All prepayments
under this subparagraph shall be subject to Section 4.1.
(c) Unless otherwise agreed by the Banks in writing, the
Borrower shall be required to pay or prepay Revolving Credit Loans
outstanding with (i) 80% of the proceeds of the issuance by the
Borrower or any Guarantor of additional equity; (ii) 100% of the net
proceeds of the sale by the Borrower or any Guarantor of any Real
Estate Assets; (iii) 100% of the net proceeds resulting from the
repayment of mortgages constituting Real Estate Assets or (iv) such
proceeds as may be paid as a result of a casualty or condemnation, all
in accord with Sections 7.11 or 7.12 of this Agreement; provided,
however, that the Borrower shall have no obligation under clause (i)
above until the aggregate net proceeds of any and all additional equity
issuances during the term of this Agreement shall equal or exceed
$1,000,000.00. All prepayments under this paragraph shall be subject to
Section 4.1.
(d) All payments required by paragraphs (b) or (c) above shall
be made to the Banks PRO RATA in accordance with their respective
Commitment Proportions and shall be applied as follows: first, to
outstanding Revolving Credit Loans that are Base Rate Loans up to the
full amount thereof; second, to outstanding Revolving Credit Loans that
are LIBOR Loans up to the full amount thereof; and, third, to Term
Loans.
9
(e) All prepayments made pursuant to this Section 3.2 shall be
accompanied by the payment of all accrued interest on the amount so
prepaid and by all amounts required to be paid pursuant to Section 4.1
in connection therewith.
SECTION 3.3. INTEREST OF LOANS.
(f) BASE RATE LOANS. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Base Rate Loan made
under this Agreement at a fluctuating rate per annum equal to the Base
Rate from time to time in effect. Each change in the interest rate
shall take effect simultaneously with the corresponding change in the
Prime Rate or the Federal Funds Rate, as the case may be. Interest
shall be calculated on the basis of the actual number of days elapsed
divided by a year of three hundred sixty (360) days and shall be paid
to the Agent for the account of the Banks quarterly, in arrears, on
March 31, June 30, September 30 and December 31 in each year and on the
Termination Date.
(g) LIBOR LOANS The Borrower shall pay interest on the
outstanding and unpaid principal amount of each LIBOR Loan made under
this Agreement for each Interest Period applicable to such LIBOR Loan
at a rate per annum equal to the Reserve Adjusted LIBOR Rate in effect
with respect thereto, plus the Margin. Interest shall be calculated on
the basis of the actual number of days elapsed divided by a year of
three hundred sixty (360) days and shall be paid to the Banks, in
arrears on the last day of the Interest Period applicable to such LIBOR
Loan; PROVIDED, however, that if such Interest Period is longer than
three months, interest shall be paid on the last day of each
three-month period following the commencement of such Interest Period
and on the last day of such Interest Period.
(h) POST-DEFAULT. If any Default or Event of Default has
occurred and is continuing hereunder, all Loans, and all interest, fees
or other amounts due hereunder, to the extent permitted by applicable
law, shall bear interest (payable on demand, and in any event on the
last day of each month, and computed daily on the basis of a 360-day
year for actual days elapsed) (i) in all cases other than LIBOR Loans,
at the Default Rate until paid and (ii) in the case of LIBOR Loans, at
a rate which shall be the greater of (x) the Default Rate or (y) 2% per
annum in excess of the rate applicable to such LIBOR Loan, until the
expiration of the Interest Period applicable to such Loan, at which
time the Loan will automatically be converted into a Base Rate Loan,
and until paid, shall bear interest at the Default Rate. In no event,
however, shall interest payable hereunder be in excess of the maximum
rate of interest permitted under applicable law. The obligation to so
pay interest upon any reimbursement obligation of the Borrower to the
Banks shall not be construed so as to waive the requirement for
reimbursement on the same date that payment is made by the Banks as set
forth in this Agreement.
10
SECTION 3.4. COMMITMENT FEE.
The Borrower shall pay to the Agent for the ratable benefit of
the Banks a commitment fee for the period from and including the date
hereof to and excluding the Revolving Credit Termination Date equal to
1/4 of 1% of the average daily unused portion of the Total Commitment
during the applicable period. The commitment fee shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed.
The commitment fee shall be due and payable quarterly in arrears on the
last day of each calendar quarter and on the Revolving Credit
Termination Date.
SECTION 3.5. ADMINISTRATIVE FEE.
The Borrower shall pay to the Agent for its own account an
annual fee of $25,000. The administrative fee shall be due and payable
quarterly in advance on or before the date hereof and on each April 1,
July 1, October 1, January 1 thereafter during the term of this
Agreement. Any payment made on or before the date hereof shall be pro
rated for the number of days from the date hereof through March 31,
1997.
SECTION 3.6. SYNDICATION FEE.
The Borrower shall pay to the Agent, for the ratable benefit
of the Banks, a syndication fee of $100,000. This fee shall be due and
payable on the Closing Date.
SECTION 3.7. PAYMENTS GENERALLY.
(a) All payments under this Agreement or the Notes, shall be
made in Dollars in immediately available funds to the Banks, in
accordance with the respective obligations of the Borrower then due and
payable to each of them not later than 1:00 p.m. New York City time on
the relevant dates specified above (each such payment made after such
time on such due date is to be deemed to have been made on the next
succeeding Banking Day), to the Bank's Lending Office. The Borrower
will notify the Banks of any payment pursuant to the provisions of this
Section at the same time it makes any such payment. Each Bank may (but
shall not be obligated to) debit the amount of any such payment to any
ordinary deposit account of the Borrower with such Bank; provided,
however, that the Banks shall not be permitted to debit any funds which
are not available to the Borrower other than on an overdraft basis. The
Borrower shall, at the time of making each payment under this Agreement
or the Notes, specify to the Banks the principal or other amount
payable by the Borrower under this Agreement or the Notes to which such
payment is to be applied; provided, however, that in the event that the
Borrower fails to so specify, or if an Event of Default has occurred
and is continuing, the Banks shall apply such payment as they may elect
in their
11
sole discretion. If the due date of any payment under this Agreement or
the Notes would otherwise fall on a day which is not a Banking Day,
such date shall be extended to the next succeeding Banking Day and
interest shall be payable for any principal so extended for the period
of such extension. Except to the extent otherwise provided herein, it
is the intention of the parties that all payments hereunder be made to
the Banks PRO RATA in accordance with their respective Commitment
Proportions.
(b) All payments made by the Borrower under this Agreement,
the Notes or the other Facility Documents shall be made free and clear
of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any governmental or
taxing authority of any jurisdiction located outside of the United
States, excluding, (x) in the case of each Bank, income taxes and
franchise taxes (imposed in lieu of income taxes) imposed on such Bank
as a result of a present or former connection between the jurisdiction
of the government or the taxing authority imposing such tax and such
Bank (excluding a connection arising solely from such Bank having
executed, delivered, or performed its obligations or received a payment
under, or enforced, this Agreement, the Notes or the other Facility
Documents) or any political subdivision or taxing authority thereof or
therein, and (y) taxes (including withholding taxes) imposed by reason
of the failure of the Agent or any Bank, in either case that is
organized outside the United States, to comply with Section 3.7(c)
hereof (or the inaccuracy at any time of the certificates, documents
and other evidence delivered thereunder) (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "Taxes"). If any Taxes are withheld from any
amounts payable to any Bank hereunder or under the Facility Documents,
the amounts so payable to such Bank shall be increased to the extent
necessary to yield to such Bank (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, the Notes and the other Facility
Documents. Whenever any Taxes are payable by the Borrower, the Borrower
shall send to such Bank within 30 days after the date of any payment, a
certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the Banks
the required receipts or other required documentary evidence, the
Borrower shall indemnify the Banks for any incremental taxes, interest
or penalties that may become payable by any Bank as a result of any
such failure. This indemnification shall be made within 30 days from
the date such Bank or the Agent (as the case may be) makes written
demand therefor. If any Bank receives a refund in respect of any Taxes
for which such Bank has received payment from the Borrower hereunder,
such Bank shall promptly notify the Borrower of such refund and such
Bank shall, within 30 days of receipt of a request by the Borrower
repay such refund to the Borrower, provided that the Borrower, upon the
request of such Bank, agrees to
12
return such refund (plus any penalties, interest or other charges) to
such Bank in the event such Bank is required to repay such refund. The
agreements in this subsection shall survive the termination of this
Agreement and the Facility Documents and the payment of the Notes and
all other amounts payable hereunder or thereunder.
SECTION 3.8. INTERIM ADJUSTMENTS TO BORROWING BASE.
(a) The Borrowing Base shall be adjusted periodically as
follows:
(i) The Borrowing Base shall be increased to include:
(A) Real Estate Assets that are acquired by
the Borrower and/or the Guarantors and that satisfy the definition of
"Eligible Properties" hereunder; and
(B) Real Estate Assets that do not qualify
as "Eligible Properties" but subsequently satisfy the requirements of
"Eligible Properties";
PROVIDED, HOWEVER, that in either case with respect to any such
property, the Agent, on behalf of the Banks, shall be permitted to
conduct such due diligence investigations as the Banks deem appropriate
prior to including such property as an "Eligible Property" and the
Banks shall be satisfied in all respects with the results of such
investigation.
(i) Conversely, the Borrowing Base shall be decreased
to exclude:
(A) Real Estate Assets that are sold by the
Borrower or any Guarantor or that become subject to liens securing
Indebtedness which exceed 10% of the annualized and normalized actual
year-to-date Net Operating Income for such property capitalized at
11.5%; and
(B) Any Real Estate Asset that satisfies the
definition of "Eligible Property," (i) if the tenant at such property
has delivered a termination notice, or (ii) 60 days prior to the
termination of the lease with respect to such property or (iii) if the
tenant otherwise ceases paying rent with respect to such property.
Upon the happening of any of the events described above, the Borrower
shall deliver to the Banks a notice thereof as required pursuant to
Section 7.8 hereof. In addition, the Borrower shall deliver to the
banks a new Borrowing Base Certificate within five (5) Banking Days
after the happening of any such event; PROVIDED, HOWEVER, that in the
case of clause (i) above, the Borrower shall not deliver a new
Borrowing Base Certificate including any such property until the Agent
shall have completed its due diligence investigation and the Banks
shall
13
have been satisfied with the results thereof. The Agent agrees to use
all reasonable efforts to complete any such due diligence investigation
within 20 Business Days of receiving notice from the Borrower thereof.
SECTION 1.10. The Agreement is hereby amended (i) by deleting Exhibit A
therefrom and by substituting Exhibit A hereto in its place and (ii) by
inserting Exhibit A-1 hereto as a new Exhibit A-1 to the Agreement.
ARTICLE 2. CONDITIONS PRECEDENT.
SECTION 2.1. CONDITIONS TO EFFECTIVENESS.
The amendments to the Credit Agreement described in Article 1 above are
subject to the following conditions precedent and shall have no force or effect
until the following conditions are satisfied:
(a) each Bank shall have received each of the following, in form and
substance reasonably satisfactory to such Bank and its counsel:
(i) its Substitute Revolving Credit Note substantially in
the form of Exhibit A hereto, duly executed by the
Borrower;
(ii) its Term Note, duly executed by the Borrower;
(iii) a certificate of the Secretary of the Borrower
attesting to all corporate action taken by such
entity, including resolutions of its Board of
Directors authorizing the execution, delivery and
performance of this Amendment and each other document
to be executed by such entity, together with a
certification that copies of the certificate or
articles of incorporation and the by-laws of such
entity that were delivered to the Banks on the
Closing Date have not been amended, modified, revoked
or rescinded as of the date of such certificate;
(iv) a certificate of the Secretary of the Borrower
certifying the names and true signatures of the
officers of such entity authorized to sign this
Amendment and other documents to be signed by such
entity hereunder;
(v) satisfactory evidence that the Borrower is duly
organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation
and each other jurisdiction where qualification is
necessary;
(vi) Guarantee Affirmations, duly executed by each
Guarantor;
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(vii) Security Agreement Affirmations, duly executed by
each of the operating companies;
(viii) an opinion of counsel for the Borrower and the
Guarantors as to such matters as the Banks deem
necessary; and
(ix) such other documents instruments, approvals, opinions
and evidence as the Banks reasonably require.
ARTICLE 3. REPRESENTATION AND WARRANTIES.
The Borrower hereby represents and warrants to the Banks that:
SECTION 3.1. Each and every one of the representations and warranties
set forth in the Credit Agreement is true as of the date hereof with respect to
the Borrower and the Guarantors with the same effect as though made on the date
hereof, and is hereby incorporated herein in full by reference as if fully
restated herein in its entirety.
SECTION 3.2. No Default or Event of Default, as defined in the Credit
Agreement now exists.
SECTION 3.3. No representation, warranty or statement by the Borrower
or the Guarantors contained herein or in any other document to be furnished by
the Borrower or the Guarantors in connection herewith contains, or at the time
of delivery shall contain, any untrue statement of material fact, or omits or at
the time of delivery shall omit to state a material fact necessary to make such
representation, warranty or statement not misleading.
SECTION 3.4. Each of the Facility Documents continues to be in full
force and effect and secure all payment and other obligations of the Borrower
under the Credit Agreement.
ARTICLE 4. MISCELLANEOUS.
SECTION 4.1. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 4.2. Except as specifically amended hereby, the Credit
Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, each of the undersigned has executed or caused to
be duly executed this Amendment as of the date first above written.
UNITED CAPITAL CORP.
By: /s/____________________
Name: _______________________
Title: _______________________
THE CHASE MANHATTAN BANK
By: /s/_____________________
Name: ________________________
Title: Vice President
FLEET BANK, N.A.
By: /s/_____________________
Name: ________________________
Title: Vice President