EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of July 6, 1998
Among
HOME PROPERTIES OF NEW YORK, L.P.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Defined Terms 1
SECTION 1.02. Classification of Loans and Borrowings 19
SECTION 1.03. Terms Generally 19
SECTION 1.04. Accounting Terms; GAAP 20
ARTICLE II
The Credits
SECTION 2.01. Commitments; Extension of Maturity Date 20
SECTION 2.02. Loans and Borrowings 20
SECTION 2.03. Requests for Borrowings 21
SECTION 2.04. Letters of Credit 22
SECTION 2.05. Funding of Borrowings 25
SECTION 2.06. Interest Elections 25
SECTION 2.07. Termination and Reduction of Commitment 27
SECTION 2.08. Repayment of Loans; Evidence of Debt 27
SECTION 2.09. Prepayment of Loans 28
SECTION 2.10. Fees 29
SECTION 2.11. Interest 30
SECTION 2.12. Alternate Rate of Interest 31
SECTION 2.13. Increased Costs 32
SECTION 2.14. Break Funding Payments 33
SECTION 2.15. Taxes 33
SECTION 2.16. Payments Generally 34
SECTION 2.17. Mitigation Obligations; Replacement of Lenders 34
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers 35
SECTION 3.02. Authorization, Enforceability 35
SECTION 3.03. Governmental Approvals; No Conflicts 36
SECTION 3.04. Financial Condition; No Material Adverse Change 36
SECTION 3.05. Properties 37
SECTION 3.06. Intellectual Property 38
SECTION 3.07. Litigation and Environmental Matters 38
SECTION 3.08. Compliance with Laws and Agreements 39
SECTION 3.09. Investment and Holding Company Status 39
SECTION 3.10. Taxes 39
SECTION 3.11. ERISA 39
SECTION 3.12. Disclosure 40
SECTION 3.13. Insurance 40
SECTION 3.14. REIT Status 40
SECTION 3.15. Solvency 40
SECTION 3.16. Margin Regulations 41
SECTION 3.17. Representations and Warranties in this Agreement
and in the other Loan Documents 41
ARTICLE IV
Conditions
SECTION 4.01. Effective Date 41
SECTION 4.02. Each Credit Event 43
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information 44
SECTION 5.02. Notices of Material Events 47
SECTION 5.03. Existence; Conduct of Business 48
SECTION 5.04. Payment of Obligations 48
SECTION 5.05. Maintenance of Properties; Insurance; Management48
SECTION 5.06. Books and Records, Inspection Right 48
SECTION 5.07. Compliance with Laws 48
SECTION 5.08. Use of Proceeds and Letters of Credit 49
SECTION 5.09. Company Status 49
SECTION 5.10. Ownership of Projects and Property 49
SECTION 5.11. Shareholder Communication, Filings, etc 50
SECTION 5.12. Further Assurances 50
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness and Other Financial Covenants 50
SECTION 6.02. Liens 51
SECTION 6.03. Fundamental Change 52
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions 52
SECTION 6.05. Hedging Agreements 53
SECTION 6.06. Transactions with Affiliates 53
SECTION 6.07. Restriction on Fundamental Change 53
SECTION 6.08. Margin Regulations, Securities Laws 54
SECTION 6.09. Negative Covenants of the Company and the QRS
subsidiary 54
ARTICLE VII
Events of Default
Events of Default 55
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices 58
SECTION 8.02. Waivers; Amendments 58
SECTION 8.03. Expenses; Indemnity; Damage Waiver 59
SECTION 8.04. Successors and Assigns 60
SECTION 8.05. Survival 62
SECTION 8.06. Counterparts; Integration, Effectiveness 62
SECTION 8.07. Severability 62
SECTION 8.08. Right of Setoff 63
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service
of Process 63
SECTION 8.10. WAIVER OF JURY TRIAL 64
SECTION 8.11. Headings 64
SECTION 8.12. Confidentiality 64
SECTION 8.13. Interest Rate Limitation 65
SCHEDULES
SCHEDULE 2.04 List of Existing Letters of Credit
SCHEDULE 3.02 List of Ownership Structure
SCHEDULE 3.04 List of Indebtedness
SCHEDULE 3.07 List of Disclosed Matters
SCHEDULE 3.13 List of Insurance
EXHIBITS
EXHIBIT A Assignment and Acceptance (See definition of Assignment and
Acceptance)
EXHIBIT B Form of Company's Guaranty (See definition of
Guaranty)
EXHIBIT C Form of Borrower's $50,000,000.00 Note (See
definition of Note)
EXHIBIT D-1 Form of Borrowing Request and Compliance
Certificate for Borrowing (See Section 2.03)
EXHIBIT D-2 Form of Notice of Issuance and Compliance
Certificate for Letters of Credit
(See Section 2.04(b))
EXHIBIT E Form of Opinion (See Section 4.01(b))
EXHIBIT F Chase Consent (See Section 4.01(j))
EXHIBIT G Quarterly Compliance Certificate (See
Section 5.01(a)(iii))
CREDIT AGREEMENT, dated as of July 6, 1998, among HOME PROPERTIES
OF NEW YORK, L.P., as Borrower, a New York limited partnership,
and MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender.
The Borrower and Lender hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this
Agreement, the following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference
to the Alternate Base Rate.
"Adjusted EBITDA" means, for any period, EBITDA for
such period plus management, development and other income for
such period less the Capital Expenditure Reserve Amount for such
period.
"Adjusted NOI" means, for any period, NOI for such
period from Eligible Projects less the Capital Expenditure
Reserve Amount for such period.
"Adjusted Unencumbered NOI" means, for any period,
Adjusted NOI derived from Unencumbered Eligible Projects and
which Adjusted NOI is not subject to any Liens.
"Adjusted LIBO Rate" means, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
"Adjusted Recourse Secured Indebtedness" means Recourse
Secured Indebtedness where for the purposes of clause (b) of the
definition of Recourse Secured Indebtedness (i) the Secured
Indebtedness to Total Property Value of the Project is greater
than 60% or (ii) the ratio of Adjusted NOI to Debt Service of the
Project is less than 1.4 to 1.0.
"Affiliate" means, with respect to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
"Agreement" means this Credit Agreement as modified,
amended, extended or replaced from time to time.
"Alternate Base Rate" means, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. Any change in the Alternate Base Rate due to a change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of
such change in the Prime Rate, the Base CD Rate or the Federal
Funds Effective Rate, respectively.
"Annual Compliance Certificate" shall have the meaning
set forth in Section 5.01(b)(iii).
"Applicable Eurodollar Margin" means, for any day, 125
basis points.
"Assessment Rate" means, for any day, the annual
assessment rate in effect on such day that is payable by a member
of the Bank Insurance Fund classified as "well-capitalized" and
within supervisory subgroup "B" (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in
dollars at the offices of such member in the United States;
provided that if, as a result of any change in any law, rule or
regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Lender to be representative of
the cost of such insurance to the Lender.
"Assignment and Acceptance" means an assignment and
acceptance entered into by Lender and an assignee, in the form of
Exhibit A.
"Availability Period" means the period from and
including the Effective Date to but excluding the earlier of the
Maturity Date and the date of termination of the Commitment.
"Bankruptcy Code" shall have the meaning set forth in
Section 3.15.
"Base CD Rate" means the sum of (a) the Three-Month
Secondary CD Rate multiplied by the Statutory Reserve Rate plus
(b) the Assessment Rate.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Book Value" means the value at which a Property is
reported on the financial statements of the Company in accordance
with GAAP, less the amount of any Indebtedness or Liens related
to such Property.
2
"Borrower" means Home Properties of New York L.P., a
New York limited partnership.
"Borrowing" means Revolving Loans of the same Type,
made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in
effect.
"Borrowing Request" means a request by the Borrower for
a Revolving Loan in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday,
Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank
market.
"CAD" means "cash available for distribution" and shall
mean, for any period, FFO less an annual reserve for anticipated
recurring, nonrevenue generating capitalized costs, as reported
on the financial statements of the Company in accordance with
GAAP.
"Capital Expenditure Reserve Amount" means, for any
period, an amount equal to (i) $350 multiplied by the number of
apartment units contained in all Projects multiplied by (ii) a
fraction, the numerator of which is equal to the number of days
in such period and the denominator of which is equal to 365.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases
on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash and Cash Equivalents" means unrestricted (i)
cash; (ii) marketable direct obligations issued or
unconditionally guaranteed by the United States government and
backed by the full faith and credit of the United States
government; (iii) domestic and Eurodollar certificates of deposit
and time deposits, bankers' acceptances and floating rate
certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the
District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations), which,
at the time of acquisition, are rated A-1 (or better) by S&P or P-
1 (or better) by ▇▇▇▇▇'▇, provided that the maturities of such
Cash and Cash Equivalents shall not exceed one year; (iv)
publicly traded equity securities issued by a REIT that primarily
owns multi-family properties; and (iv) other marketable
securities acceptable to the Lender.
3
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
96011 et seq., any amendments thereto, any successor, statutes
and any regulations or guidance promulgated thereunder.
"Change in Control" means (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the
date hereof), of shares representing more than 25% of the
aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Company; (b) occupation of a
majority of the seats (other than vacant seats) on the board of
directors of the Company by Persons who were neither (i)
nominated by the board of directors of the Company nor (ii)
appointed by directors so nominated; or (c) the acquisition of
direct or indirect Control of the Borrower or the Company by any
Person or group.
"Change in Law" means (a) the adoption of any law, rule
or regulation after the date of this Agreement, (b) any change in
any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date
of this Agreement or (c) compliance by Lender (or, for purposes
of Section 2.13(b), by any lending office of Lender or by
Lender's holding company) with any request, guideline or
directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement.
"Chase Agreement" means an existing Credit Agreement
dated September 4, 1997, by and between Borrower, Lender as a
lender and co-agent, and The Chase Manhattan Bank ("Chase") as a
lender and administrative agent.
"Closing Date" shall mean the date this Agreement is
executed by the Borrower and the Lender.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" means, with respect to Lender, the
commitment of Lender to make Revolving Loans and to issue Letters
of Credit hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.07 and (b) reduced from time
to time pursuant to assignments by Lender pursuant to Section
9.04. The initial aggregate amount of the Lender's Commitment is
$50,000,000.
"Company" means Home Properties of New York, Inc., a
Maryland corporation licensed to do business in New York State.
"Consolidated Businesses" means the Company, the
Borrower, the Management Companies, and their wholly-owned
Subsidiaries.
4
"Contingent Obligation" as to any Person means, without
duplication, (i) any contingent obligation of such Person
required to be shown on such Person's balance sheet in accordance
with GAAP, and (ii) any obligation required to be disclosed in
the footnotes to such Person's financial statements in accordance
with GAAP, guaranteeing partially or in whole any non-recourse
Indebtedness, lease, dividend or other obligation, exclusive of
contractual indemnities (including, without limitation, any
indemnity or price-adjustment provision relating to the purchase
or sale of securities or other assets) and guarantees of non-
monetary obligations (other than guarantees of completion) which
have not yet been called on or quantified, of such Person or of
any other Person. The amount of any Contingent Obligation
described in clause (ii) shall be deemed to be (a) with respect
to a guaranty of interest or interest and principal, or operating
income guaranty, the sum of all payments required to be made
thereunder (which in the case of an operating income guaranty
shall be deemed to be equal to the debt service for the note
secured thereby), calculated at the interest rate applicable to
such Indebtedness, through (i) in the case of an interest or
interest and principal guaranty, the stated date of maturity of
the obligation (and commencing on the date interest could first
be payable thereunder), or (ii) in the case of an operating
income guaranty, the date through which such guaranty will remain
in effect, and (b) with respect to all guarantees not covered by
the preceding clause (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which
such guaranty is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as
recorded on the balance sheet and on the footnotes to the most
recent financial statements of the applicable Person required to
be delivered pursuant hereto. Notwithstanding anything contained
herein to the contrary (1) guarantees of completion shall not be
deemed to be Contingent Obligations unless and until a claim for
payment has been made thereunder, at which time any such guaranty
of completion shall be deemed to be a Contingent Obligation in an
amount equal to any such claim and (2) Low Income Housing Credit
Program Guarantees shall not be deemed to be Contingent
Obligations. Subject to the preceding sentence, (i) in the case
of a joint and several guaranty given by such Person and another
Person (but only to the extent such guaranty is recourse,
directly or indirectly to the Borrower), the amount of the
guaranty shall be deemed to be 100% thereof unless and only to
the extent that (X) such other Person has delivered Cash or Cash
Equivalents to secure all or any part of such Person's guaranteed
obligations or (Y) such other Person holds an Investment Grade
Credit Rating from either ▇▇▇▇▇'▇ or S&P, and (ii) in the case of
a guaranty, (whether or not joint and several) of an obligation
otherwise constituting Debt of such Person, the amount of such
guaranty shall be deemed to be only that amount in excess of the
amount of the obligation constituting Indebtedness of such
Person.
"Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto.
5
"Default" means any event or condition which
constitutes an Event of Default or which upon notice, lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Disclosed Matters" means the actions, suits and
proceedings and the environmental matters disclosed in Schedule
3.07.
"Dollars" or "$" refers to lawful money of the United
States of America.
"Debt Service" means for any period the sum of (i) all
interest obligations accrued on all Indebtedness with respect to
a Project, (ii) all payments of principal required to be made
(other than payments of any principal balance remaining to be
paid by the terms of the applicable Indebtedness at the maturity
thereof) with respect to any Indebtedness on a Project and (iii)
the amortization of loan fees, original issue discount, non-cash
interest payments, the interest component of Capital Lease
Obligations and hedging costs (but excluding extraordinary
interest expense, and net or amortization of deferred costs
associated with new financings or refinancings of existing
Indebtedness) during such period.
"EBITDA" means, for any period, NOI for such period,
less allocated corporate marketing, general and administrative
expenses for such period.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance
with Section 9.02).
"Eligible Project" means any Project that (i) is 100%
owned by a Consolidated Business, free of all title defects and
material structural defects, (ii) has achieved an occupancy rate
of not less than 80%, (iii) is managed by the Borrower, either
Management Company or other Subsidiary of the Borrower, (iv) is
free of all Hazardous Materials as verified by an environmental
assessment report in form and substance satisfactory to the
Lender.
"Eligible Assignee" means (i) Lender or any Affiliate
thereof; (ii) a commercial bank having total assets in excess of
$5,000,000,000; (iii) the central bank of any country which is a
member of the Organization for Economic Cooperation and
Development having total assets in excess of $10,000,000,000; or
(iv) a finance company or other financial institution reasonably
acceptable to the Lender, which is regularly engaged in making,
purchasing or investing in loans and having total assets in
excess of $1,000,000,000 or is otherwise reasonably acceptable to
the Lender.
"Encumbered Eligible Project" means any Eligible
Project all or any portion of which is encumbered by a Lien.
"Environmental Laws" means any and all present and
future federal, state or local laws, rules, regulations, statutes
or codes and any and all ordinances, orders, decrees,
6
judgments, injunctions, notices or binding agreements issued, promulgated
or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any
Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability,
contingent or otherwise (including any liability for damages,
costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary of the Borrower
directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the presence, generation, use,
handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d)
the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
"Equity Value" means Total Value less Total Outstanding
Indebtedness.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) that, together with the Borrower, is treated
as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of
the code.
"ERISA Event" means (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which
the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d)
of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates
of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or
to appoint a trustee to administer any Plan; (f) the incurrence
by Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or
a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title
IV of ERISA.
7
"Eurodollar", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such
term in Article VII.
"Excluded Taxes" means, with respect to the Lender or
any other Person who is a recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a)
income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction
under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in
which its applicable lending office is located, (b) any branch
profits taxes imposed by the United states of America or any
similar tax imposed by any other jurisdiction in which the
Borrower is located and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower
under Section 2.17(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.15(e), except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.15(a).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the
Lender from three Federal funds brokers of recognized standing
selected by it.
"FFO" means "funds from operations" as defined in the
National Association of Real Estate Investment Trusts ("NAREIT")
White Paper on Funds From Operations as approved by the NAREIT
Board of Governors on March 3, 1995.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the
Borrower.
"Fixed Charges" means, with respect to any fiscal
period, the sum of (a) Total Interest Expense and (b) the
aggregate of all scheduled principal payments on Indebtedness
made or required to be made during such fiscal period for the
Consolidated Businesses (but excluding balloon payments of
principal due upon the stated maturity of an Indebtedness) and
(c) the aggregate of all dividends declared and payable on the
Company's, the Borrower's or any of their Subsidiaries' preferred
stock or preferred partnership units, as the case may be,
provided, however, that the distributions payable on the currently
8
outstanding Class A Limited Partnership Interests of
the Borrower shall not be included in this clause (c).
"Foreign Lender" means any Lender that is organized
under the laws of a jurisdiction other than that in which the
Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principals
in the United States of America.
"General Partner" means the Company and any successor
general partner(s) of the Borrower.
"Governmental Authority" means the government of the
United States of America, any other nation or any political
subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means
any obligation, contingent or otherwise, of the guarantor
guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation
or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purposes of
assuring the owner of such Indebtedness or other obligation of
the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued
to support such Indebtedness or obligation; provided, that the
term Guarantee shall not include (i) endorsements for collection
or deposit in the ordinary course of business, (ii) guarantees of
completion unless and until a claim for payment has been made
thereunder, at which time any such guaranty of completion shall
be deemed to be a Guaranty in an amount equal to any such claim
and (iii) Low Income Housing Credit Program Guarantees.
"Guaranty" means the Guaranty Agreement of even date
herewith made by the Company for the benefit of the Lender in the
form attached hereto as Exhibit B.
"Hazardous Materials" means toxic substances, hazardous
waste, hazardous materials or hazardous substances, as such terms
are defined in the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 9601 et seq.), the Comprehensive
Environmental, Response, Compensation and Liability Act, as amended
9
(42 U.S. C. Sections 9610 and 9657 et seq.)
and/or the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801 et seq.), and the regulations promulgated
pursuant to any such laws, any asbestos or asbestos related
products and any oils, petroleum-derived compounds or pesticides;
provided that "Hazardous Materials" shall not include (a)
materials which exist in quantities or in a compounded non-
hazardous form in compliance with all applicable Federal, state
and local laws, ordinances, rules and regulations such as asphalt
contained in road surfacing materials and (b) materials
customarily used in the day-to-day operation and maintenance of
the Properties which are stored, used and disposed of in
accordance with all applicable Federal, state and local laws,
ordinances, rules and regulations such as cleaning fluids.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.
"Improvements" means all buildings, fixtures,
structures, parking areas, landscaping and all other improvements
whether existing now or hereafter constructed, together with all
machinery and mechanical, electrical, HVAC and plumbing systems
presently located thereon and used in the operation thereof,
excluding (a) any such items owned by utility service providers,
(b) any such items owned by tenants or other third-parties
unaffiliated with the Borrower and (c) any items of personal
property.
"Indebtedness" of any Person means, without
duplication, (a) all obligations (including, without limitation,
Contingent Obligations) of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations
(including, without limitation, Contingent Obligations) of such
Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations (including, without limitation,
Contingent Obligations) of such Person upon which interest
charges are customarily paid, (d) all obligations (including,
without limitation, Contingent Obligations) of such Person under
conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such
Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien on property owned or acquired by such Person, whether or not
the Indebtedness secured thereby has been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations (including, without limitation,
Contingent Obligations) of such Person, (i) all obligations
(including, without limitation, Contingent Obligations) of such
Person as an account party in respect of letters of credit and
letters of guaranty and 0) all obligations (including, without
limitation, Contingent Obligations) of such Person in respect of
bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other Person (including any
partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such
Person, except to the extent the terms of such Indebtedness
provide that such Person is not liable therefor.
10
"Indemnified Taxes" means Taxes other than Excluded
Taxes.
"Interest Election Request " means a request by the
Borrower to convert or continue a Revolving Loan in accordance
with Section 2.06.
"Interest Payment Date" means the first day of each
calendar month.
"Interest Period" means the period commencing on the
date of any Eurodollar Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three
or six months thereafter, as the Borrower may elect, provided
that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day
of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such
Borrowing is made and, in the case of a Revolving Loan,
thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"LC Disbursement" means a payment made by the Lender
pursuant to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower
at such time.
"Lease" means a lease, license, concession agreement or
other agreement providing for the use or occupancy of any portion
of any Project, including all amendments, supplements,
modifications and assignments thereof and all side letters or
side agreements relating thereto.
"Lender" means Manufacturers and Traders Trust Company
and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such
Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance.
"Lender Questionnaire" means a Lender Questionnaire in
a form supplied by the Lender.
"Letter of Credit" means any letter of credit issued
pursuant to this Agreement.
11
"LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Page
3750 of the Telerate Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the
Lender from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period,
as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with
respect to such Eurodollar Borrowing for such Interest Period
shall be the rate (rounded upwards, if necessary, to the next
1/16 of 1%) at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the
principal London office of a bank or other financial institution
selected by Lender in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset,
(b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the
case of securities, any purchase option, call or similar right of
a third party with respect to such securities.
"Loans" means the loans made by the Lender to the
Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Note, the
Guaranty and all other instruments, agreements and written
obligations between the Borrower and the Lender pursuant to or in
connection with the transactions contemplated by this Agreement.
"Low Income Housing Credit Program Guarantees" means
the assurance by the Borrower to limited partners of certain
Affiliates of the Borrower, of which the Borrower or a Subsidiary
of the Borrower is the general partner, that the real properties
developed and operated by such Affiliates under the Low Income
Housing Tax Credit program established under the Code will be
kept in compliance with applicable requirements to avoid loss of,
or recapture of, low income housing tax credits.
"Management Company" means either, (i) Home Properties
Management, Inc., a Maryland corporation, 99% of the issued and
outstanding capital stock of which is and shall continue to be
owned, beneficially and of record, by the Borrower, and (ii)
Conifer Realty Corporation, a Maryland corporation, 99% of the
issued and outstanding capital stock of which is and shall
continue to be owned, beneficially and of record, by the
Borrower.
"Margin Stock" means "margin stock" as such term is
defined in Regulation U and Regulation G of the Federal Reserve
Board as in effect from time to time.
12
"Material Adverse Effect" means a material adverse
effect on (a) the business, assets, operations or condition
(financial or otherwise) of the Borrower and its wholly-owned
Subsidiaries, taken as a whole, (b) the ability of the Company,
the Borrower or any of their Subsidiaries to perform any of their
obligations under this Agreement or under the other Loan
Documents or (c) the rights of or benefits available to the
Lender under this Agreement or under the other Loan Documents.
"Material Indebtedness" means Indebtedness (other than
the Loans and Letters of Credit), or obligations in respect of
one or more Hedging Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount
exceeding $7,500,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the
Borrower or any Subsidiary of the Borrower in respect of any
Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.
"Maturity Date" means September 4, 1999, as the same
may be extended as provided in Section 2.01(b).
"Maximum Availability" means the lesser of (a)
$50,000,000 and (b) the sum of (i) 60% of the Total Property
Value of Unencumbered Eligible Projects plus (ii) 60% of the
Total Property Value of Encumbered Eligible Projects minus the
amount of any Secured Indebtedness affecting such Projects,
provided that such amount in this clause (ii) shall not be less
than zero.
"Money Market", when used in reference to any Loan or
Borrowing, refers to whether such Loan or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Money Market Rate.
"Money Market Loan Maturity Date" means, with respect
to any Money Market Loan, the maturity date requested by the
Borrower in connection therewith (which date shall in no event be
later than the earlier of (a) 29 days after the date of such
Borrowing thereof and (b) the Maturity Date).
"Money Market Rate" means, with respect to any proposed
Money Market Loan, the quoted rate per annum offered by the
Lender to Borrower no later than 10:00 a.m., Rochester, New York
time, two Business Days prior to the requested date of Borrowing
(or, in the case of Money Market Loans having a Money Market
Maturity Date of six days or less from the relevant date of
Borrowing, the quoted rate per annum offered by the Lender to
Borrower no later than one hour after the quote is requested by
Borrower, which quote shall in no event be requested by Borrower
later than 12:00 noon, Rochester, New York time, on the relevant
date of Borrowing).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
13
"Multiemployer Plan" means a multi-employer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means all cash when and as received
in connection with the sale or refinancing of any Real Property,
less the amount of Secured Indebtedness required to be repaid in
connection with the sale or refinancing of such Real Property,
real estate transfer taxes payable in connection with the sale of
such Real Property and reasonable costs and expenses paid by the
Borrower or its Subsidiaries in connection with such sale or
refinancing.
"Net Offering Proceeds" means all cash received by the
Company as a result of the sale of common shares, preferred
shares, partnership interests, limited liability company
interests, convertible securities or other ownership or equity
interests in the Company, less customary costs and discounts of
issuance paid by the Company.
"NOI" means net operating income derived from Projects
determined in accordance with GAAP, adjusted, however, to exclude
accrued rent with respect to tenants that are more than 90 days
in arrears in the payment of rent, and further adjusted to
account for the actual management fee, if any, paid with respect
to the Projects
"Note" means a promissory note in the form attached
hereto as Exhibit C payable to Lender, evidencing certain of the
Obligations of the Borrower to Lender and executed by the
Borrower, as the same may be amended, supplemented, modified or
restated from time to time; "Notes" means, collectively, all of
such Notes outstanding at any given time.
"Other Taxes" means any and all present or future stamp
or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA and any successor entity
performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed by law,
arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are
being contested in compliance with Section 5.04;
14
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature,
in each case in the ordinary course of business; and
(e) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising
in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value
of the affected property or interfere with the ordinary conduct
of business of the Borrower or any Subsidiary of the Borrower;
provided that the term "Permitted Encumbrances" shall not include
any Lien securing Indebtedness.
"Permitted Investments" means:
(a) Cash and Cash Equivalents;
(b) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the
United States of America), in each case maturing within one year
from the date of acquisition thereof,
(c) investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such
date of acquisition, the highest credit rating obtainable from
S&P or from Moody's;
(d) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the
date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a
combined capital and surplus and undivided profits of not less
than $500,000,000; and
(e) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause
(b) above and entered into with a financial institution
satisfying the criteria described in clause (d) above.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company,
partnership (general, limited or registered limited liability
partnership or other partnership of any nature or kind),
Governmental Authority or other entity of any nature or kind.
15
"Plan" means any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV
of ERISA or Section 412 of the Code or Section 302 of ERISA, and
in respect of which the Borrower or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prime Rate" means the rate of interest per annum
publicly announced from time to time by Lender as its prime rate
in effect at its principal office in Buffalo, New York. Each
change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective,
without notice to Borrower.
"Project" means any residential housing building,
related group of buildings or community owned 100%, directly or
indirectly, by any of the Consolidated Businesses.
"Property" means any Real Property or personal
property, plant, building, facility, structure, equipment,
general intangible, receivable, or other asset owned or leased by
any Consolidated Business.
"QRS Subsidiary" means the Company's wholly-owned
Subsidiary that after the date hereof owns limited partnership
interests in the Borrower.
"Qualified Community Reinvestment Projects" means those
Projects that comply with the Community Reinvestment Act or other
applicable federal and state laws.
"Quarterly Compliance Certificate" shall have the
meaning set forth in Section 5.01(a)(iii).
"Real Property" means all of the Borrower's present and
future right, title and interest (including, without limitation,
any leasehold estate) in (i) any plots, pieces or parcels of
land, (ii) any Improvements of every nature whatsoever (the
rights and interests described in clauses (i) and (ii) above
being the "Premises"), (iii) all easements, rights of way, gores
of land or any lands occupied by streets, ways, alleys, passages,
sewer rights, water courses, water rights and powers, and public
places adjoining such land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter
shall in any way belong, relate or be appurtenant thereto, (iv)
all hereditaments, gas, oil, minerals (with the right to extract,
sever and remove such gas, oil and minerals), and easements, of
every nature whatsoever, located in, on or benefiting the
Premises and (v) all other rights and privileges thereunto
belonging or appertaining and all extensions, additions,
improvements, betterments, renewals, substitutions and
replacements to or of any of the rights and interests described
in clauses (iii) and (iv) above.
"Recourse Secured Indebtedness" means (a) Guarantees of
the Company, the Borrower and their Subsidiaries and (b) Secured
Indebtedness affecting any Project that is recourse to the
Borrower or its Subsidiaries.
16
"Register" has the meaning set forth in Section 9.04.
"REIT" means a domestic trust or corporation that
qualifies as a real estate investment trust under the provisions
of Sections 856, et seq. of the Code.
"Related Parties" means, with respect to any specified
Person, such Person's Affiliates and the respective directors,
officers, employees, agents and advisors of such Person and such
Person's Affiliates.
"Restricted Payment" is defined in Section 6.01 hereof.
"Revolving Credit Exposure" means the sum of the
outstanding principal amount of the Lender's Revolving Loans and
its LC Exposure at such time.
"Revolving Loan" means a Loan made pursuant to Section
2.03.
"S&P" means Standard & Poor's.
"Secured Indebtedness" means any Indebtedness secured
by a Lien.
"Statutory Reserve Rate" means a fraction (expressed as
a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Lender is subject (a) with
respect to the Base CD Rate, for new negotiable non-personal time
deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proratio,
exemptions or offsets that may be available from time to time to
Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage,
without notice to Borrower.
"Subsidiary" means, with respect to any Person (the
"parent") at any date, any corporation, limited liability
company, partnership, association or other Person the accounts of
which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date.
"Taxes" means any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.
17
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day is not a
Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve
Statistical Release H. 15(519) during the week following such
day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money
center banks in New York City received at approximately 10:00
a.m., New York City time, on such day (or, if such day is not a
Business Day, on the next preceding Business Day) by the Lender
from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Interest Expense" means, for any period, the sum
of (i) interest expense of the Consolidated Businesses paid
during such period and (ii) interest expense of the Consolidated
Businesses accrued and/or capitalized for such period in each
case including participating interest expense, the amortization
of loan fees, original issue discount, non-cash interest payment,
the interest component of Capital Lease Obligations and hedging
costs but excluding extraordinary interest expense, and net of
amortization of deferred costs associated with new financings or
refinancings of existing Indebtedness.
"Total Outstanding Indebtedness" means, as of any date,
the sum of (i) all Indebtedness of the Consolidated Businesses
and (ii) without duplication, all Contingent Obligations of the
Consolidated Businesses which are recourse to the Borrower.
"Total Outstanding Indebtedness" shall not be deemed to include
(a) completion guarantees of construction loans or (b) Low Income
Housing Tax Credit Program Guarantees.
"Total Property Value" means, as of any date, the sum
of (i) with respect to all Eligible Projects which have been
owned by the Borrower for not less than four full consecutive
calendar quarters, as of the first day of each fiscal quarter for
the immediately preceding consecutive four calendar quarters, an
amount equal to Adjusted NOI relating to such Eligible Project
for such period divided by an annual interest rate equal to 9.5%,
and (ii) with respect to all Eligible Projects which have been
owned by the Borrower for less than four full consecutive
calendar quarters, an amount equal to the cost of acquiring such
Eligible Projects less reasonable and customary transaction costs
incurred in connection with such acquisition,
"Total Value" means, as of any date, the sum of (i)
Total Property Value for all Eligible Projects; (ii) an amount
equal to 500% of the EBITDA derived from management and
development activities of the Consolidated Businesses as of the
first day of each fiscal quarter for the immediately preceding
consecutive four calendar quarters; (iii) unrestricted Permitted
Investments of the Consolidated Businesses; (iv) an amount equal
to 50% of Book Value of undeveloped land and Projects on which
construction is in progress, up to a maximum of 10% of Total
Value before including the amount of Total Value derived from
this clause (iv); (v) an amount equal to 75% of all (1)investments in
notes secured by mortgages on the Property of any Person (including
Affiliates) and (2) obligations of Affiliates and directors,
18
officers and employees of the Company, the
Borrower, the Borrower's Subsidiaries, the Borrower's Affiliates
and the Management Companies to repay any loans and advances; and
(vi) Borrower's pro rata share of investments in Real Property
not constituting Eligible Projects, valued at the lower of cost
or the value specified in clauses (i) through (vi) above.
"Transactions" means the execution, delivery and
performance by the Borrower of this Agreement, the borrowing of
Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.
"Type", when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan,
or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate, the Alternate Base Rate or
the Money Market Rate.
"Unencumbered Eligible Project" means any Eligible
Project with is not an Encumbered Eligible Project.
"Unsecured Interest Expense" means the interest expense
paid, accrued or capitalized on all Total Outstanding
Indebtedness that is not Secured Indebtedness for the applicable
period.
"Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings.
For purposes of this Agreement, Loans may be classified and
referred to by Type (e.g., a "Eurodollar Loan"). Borrowings also
may be classified and referred to by Type (e.g., a "Eurodollar
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms. The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation". The
word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument
or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c)
the words "herein", "hereof' and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities,
accounts and contract rights.
19
SECTION 1.04. Accounting Terms; GAAP. Except as
otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP,
as in effect from time to time; provided that, if the Borrower
notifies the Lender that the Borrower requests an amendment to
any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Lender
notifies the Borrower that the Lender requests an amendment to
any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in
the application thereof, then such provision shall be interpreted
on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall
have been withdrawn or such provision amended in accordance
herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments; Extension of Maturity Date.
(a) Subject to the terms and conditions set forth herein, Lender
agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will
not result in the sum of the total Revolving Credit Exposure
exceeding the total Maximum Availability. Within the foregoing
limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Loans.
(b) At the option of the Borrower and subject to the
terms and conditions set forth herein, the Borrower may request
that the Maturity Date be extended by one year to September 4,
2000. If the Borrower desires to so extend the Maturity Date, it
shall deliver written notice of such desire (the "Extension
Notice") to the Lender not later than the date which is ninety
(90) days prior to the Maturity Date, together with (i) a
certificate of a Financial Officer of the Borrower certifying
that (A) the representations and warranties of the Borrower set
forth in this Agreement are true and correct on and as of the
date of certification, (B) no Default has occurred and is
continuing and (C) no event has occurred since the date of this
Agreement which has had, and continues to have, or is reasonably
likely to have, a Material Adverse Effect; and (ii) the payment
of any fee provided for in Section 2.10(c). Upon receipt of the
foregoing, the Maturity Date then in effect shall be extended
until September 4, 2000, but the Borrower shall have no further
right to extend the Maturity Date.
SECTION 2.02. Loans and Borrowings. (a) Subject to
Section 2.12, each Borrowing shall be comprised entirely of ABR
Loans, Money Market Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. The Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of the Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms
of this Agreement.
20
(b) At the commencement of each Interest Period for any
Eurodollar Loan, such Loan shall be in an aggregate amount that
is an integral multiple of $100,000 and not less than $1,000,000.
At the time that each ABR Loan is made, such Borrowing shall be
in an aggregate amount that is an integral multiple of $100,000
and not less than $1,000,000; provided that an ABR Loan may be in
an aggregate amount that is equal to the entire unused balance of
the total Commitment or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type may be outstanding at
the same time; provided that there shall not at any time be more
than a total of five Eurodollar Loans outstanding.
(c) Notwithstanding anything herein to the contrary, at
no time shall the aggregate Revolving Credit Exposure be greater
than the Maximum Availability.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to
elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the
Maturity Date.
(e) Notwithstanding any other provision of this
Agreement, no Loans with interest accruing at the Money Market
Rate shall be made unless the Borrower accepts the quoted Money
Market Rate offered by the Lender in Lender's sole discretion.
SECTION 2.03. Requests for Borrowings. To request a
Borrowing, the Borrower shall notify the Lender of such request
by telephone (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., Rochester, New York time, three Business Days
before the date of the proposed Borrowing, (b) in the case of a
Money Market Borrowing, not later than 11:00 a.m., Rochester, New
York time, two Business Days before the date of the proposed
Borrowing (or, in the case of Money Market Loans having a Money
Market Maturity Date of six days or less from the relevant date
of Borrowing, not later than 11:00 a.m., Rochester, New York
time, on the date of the proposed Borrowing), or (c) in the case
of an ABR Borrowing, not later than 11:00 a.m., Rochester, New
York time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Borrowing to
finance the reimbursement of an LC Disbursement as contemplated
by Section 2.04(e) may be given not later than 10:00 a.m.,
Rochester, New York time, on the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the
Lender of a written Borrowing Request in the form of Exhibit D-1
attached hereto, or such other forms approved by the Lender, and
signed by the Borrower. Each such telephonic and written
Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
21
mPAGE>
(iii)whether such Borrowing is to be an ABR
Borrowing, a Eurodollar Borrowing or a Money
Market Borrowing;
(iv) in the case of a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto,
which shall be a period contemplated by the
definition of the term "Interest Period";
(v) in the case of a Money Market Borrowing, the Money
Market Loan Maturity Date to be applicable
thereto, which shall be a date contemplated by the
definition of the term "Money Market Maturity
Date"; and
(vi) the location and number of the Borrower's
account to which funds are to be disbursed, which
shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be a Eurodollar Borrowing with an
Interest Period of one month's duration. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. If no Money Market Maturity Date
is specified with respect to any requested Money Market
Borrowing, then the Borrower shall be deemed to have selected a
Money Market Maturity Date that is seven days after the date of
such Borrowing.
SECTION 2.04. Letters of Credit. (a) General. Subject
to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account, in
a form reasonably acceptable to the Lender, at any time and from
time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit
application, reimbursement agreement or other agreement submitted
by the Borrower to, or entered into by the Borrower with, the
Lender relating to any Letter of Credit, the terms and conditions
of this Agreement shall control. In connection with the issuance
of a Letter of Credit, Borrower shall execute such letter of
credit applications, reimbursement agreements and other
agreements as Lender shall deem appropriate.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing
so have been approved by the Lender) to the Lender (reasonably in
advance of the requested date of issuance, amendment, renewal or
extension) a notice in the form of Exhibit D-2 attached hereto,
or such other form approved by the Lender, and signed by the
Borrower requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended,
the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of
22
Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by the
Lender, the Borrower also shall submit a letter of credit
application on the Lender's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed an amount equal to 10% of
the Maximum Availability and (ii) the sum of the total Revolving
Credit Exposures shall not exceed the Maximum Availability.
(c) Expiration Date. Each Letter of Credit shall expire
at or prior to the close of business on the earlier of (i) the
date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one
year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.
(d) Reimbursement. If the Lender shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall
reimburse such LC Disbursement by paying to the Lender an amount
equal to such LC Disbursement not later than 12:00 noon,
Rochester, New York time, on the date that such LC Disbursement
is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Rochester, New York time, on
such date, or, if such notice has not been received by the
Borrower prior to such time on such date, then not later than
12:00 noon, Rochester, New York time, on (i) the Business Day
that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., Rochester, New York time, on the
day of receipt, or (ii) the Business Day immediately following
the day that the Borrower receives such notice, if such notice is
not received prior to such time on the day of receipt; provided
that, if such LC Disbursement is not less than $ 1,000,000, the
Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment
be financed with an ABR Revolving Loan in an equivalent amount
and, to the extent so financed, the Borrower's obligation to make
such payment shall be discharged and replaced by the resulting
ABR Revolving Loan.
(e) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (d) of this
Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this
Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision
therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in
any respect or any statement therein being untrue or inaccurate
in any respect, (iii) payment by the Lender under a Letter of
Credit against presentation of a draft or other document that
does not comply with the terms of such Letter of Credit, or (iv)
any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder. Neither the Lender nor any of
its Related Parties, shall have any liability or
23
responsibility by reason of or in connection with the issuance or
transfer of any Letter of Credit or any payment or failure to make any
payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control
of the Lender; provided that the foregoing shall not be construed
to excuse the Lender from liability to the Borrower to the extent
of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to
the fullest extent permitted by applicable law) suffered by the
Borrower that are caused by the Lender's failure to exercise care
when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. In
furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Lender may,
in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such
Letter of Credit.
(f) Disbursement Procedures. The Lender shall, promptly
following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The
Lender shall promptly notify the Borrower by telephone (confirmed
by telecopy) of such demand for payment and whether the Lender
has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Lender
with respect to any such LC Disbursement.
(g) Interim Interest. If the Lender shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made,
the unpaid amount thereof shall bear interest, for each day from
and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR
Revolving Loans; provided that, if the Borrower fails to
reimburse such LC Disbursement when due pursuant to paragraph (d)
of this Section, then Section 2.11 (e) shall apply.
(h) Cash Collateralization. If any Event of Default
shall occur and be continuing, on the Business Day that the
Borrower receives notice from the Lender demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall
deposit in an account with the Lender, in the name of the Lender,
an amount in cash equal to the LC Exposure as of such date plus
any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the
occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article VII. Such deposit shall
be held by the Lender as
24
collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Lender shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole
discretion of the Lender and at the Borrower's risk and expense,
such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys
in such account shall be applied by the Lender to reimburse
itself for LC Disbursements for which it has not been reimbursed
and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has
been accelerated, be applied to satisfy other obligations of the
Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured
or waived to the satisfaction of the Lender.
(i) Existing Letters of Credit. Heretofore, on the
dates indicated in Schedule 2.04, Lender, at the request of
Borrower, issued the letters of credit specified therein
("Existing Letters of Credit"). On and after the Closing Date,
the Existing Letters of Credit shall not constitute Letters of
Credit issued under this Agreement. If either or both of the
Existing Letters of Credit are extended or renewed ("Renewal
LCs"), the aggregate face amount of the Renewal LCs shall
constitute LC Exposure of Lender and shall reduce the Maximum
Availability under this Agreement and Borrower shall pay to
Lender the Letter of Credit fees provided in Section 2.10(c) for
the Renewal LCs.
SECTION 2.05. Funding of Borrowings. (a) Lender shall
make each Loan to be made by it hereunder on the proposed date
thereof by deposit of immediately available funds by 12:00 noon,
Rochester, New York time, to the account of the Borrower
maintained with Lender, or as otherwise agreed by Borrower and
Lender. ABR Revolving Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.04(d) shall be
retained by the Lender to satisfy the reimbursement of the LC
Disbursement.
SECTION 2.06. Interest Elections. (a) Each Loan
initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Loan, shall
have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrower may elect to convert such Loan
to a different Type or to continue such Loan and, in the case of
a Eurodollar Loan, may elect Interest Periods therefor, all as
provided in this Section. The Borrower may elect different
options with respect to different portions of the affected
Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.
(b) To make an election pursuant to this Section, the
Borrower shall notify the Lender of such election by telephone by
the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of
such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by
25
hand delivery or telecopy to the Lender of a written Interest Election
Request in a form approved by the Lender and signed by the
Borrower.
(c) Each telephonic and written Interest Election
Request shall specify the following information in compliance
with Section 2.02:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are
being elected with respect to different
portions thereof, the portions thereof to be
allocated to each resulting Borrowing (in
which case the information to be specified
pursuant to clauses (iii) and (iv) below
shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made
pursuant to such Interest Election Request,
which shall be a Business Day;
(iii) whether the resulting Borrowing is to be
an ABR Borrowing, a Eurodollar Borrowing or a
Money Market Borrowing;
(iv) if the resulting Borrowing is a
Eurodollar Borrowing, the Interest Period to
be applicable thereto after giving effect to
such election, which shall be a period
contemplated by the definition of the term
"Interest Period"; and
(v) if the resulting Borrowing is a Money Market
Borrowing, the Money Market Loan Maturity
Date to be applicable thereto, which shall be
a date contemplated by the definition of the
term "Money Market Maturity Date."
If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the
Borrower shall be deemed to have selected an Interest Period of
one month's duration, and if any such Interest Election Request
requests a Money Market Borrowing but does not specify a Money
Market Maturity Date, then the Borrower shall be deemed to have
selected a Money Market Maturity Date that is seven days after
the date of such Borrowing.
(d) If the Borrower fails to deliver a timely Interest
Election Request with respect to (i) a Eurodollar Loan prior to
the end of the Interest Period applicable thereto, then, unless
such Borrowing is repaid as provided herein, at the end of such
Interest Period, such Loan shall be converted to a Eurodollar
Loan with an Interest Period of one month's duration and (ii) a
Money Market Loan prior to the Money Market Maturity Date
applicable thereto, then, unless such Borrowing is repaid as
provided herein, on the Money Market Maturity Date such Loan
shall be converted to an ABR Loan. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is
continuing and the Lender so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Loan may be
26
converted to or continued as a Eurodollar Loan and (ii) unless
repaid, each Eurodollar Loan shall be converted to an ABR Loan at
the end of the Interest Period applicable thereto and each Money
Market Loan shall be converted to an ABR Loan on the Money Market
Maturity Date applicable thereto.
SECTION 2.07. Termination and Reduction of Commitment.
(a) Unless previously terminated, the Commitment shall terminate
on the Maturity Date.
(b) The Borrower may at any time terminate, or from
time to time reduce, the Commitment; provided that (i) each
reduction of the Commitment shall be in an amount that is an
integral multiple of $100,000 and not less than $1,000,000 and
(ii) the Borrower shall not terminate or reduce the Commitment
if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.09, the Revolving Credit Exposure
would exceed the total Commitment.
(c) The Borrower shall notify the Lender of any
election to terminate or reduce the Commitment under paragraph
(b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such
election and the effective date thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitment delivered
by the Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities, in which case such
notice may be revoked by the Borrower (by notice to the Lender on
or prior to the specified effective date) if such condition is
not satisfied. Any termination or reduction of the Commitment
shall be permanent.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a)
The Borrower hereby unconditionally promises to pay to the Lender
the then unpaid principal amount of each Revolving Loan on the
Maturity Date.
(b) The Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness
of the Borrower to the Lender resulting from each Loan made by
the Lender, including the amounts of principal and interest
payable and paid to the Lender from time to time hereunder.
(c) The Lender shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type
thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become
due and payable from the Borrower to the Lender hereunder and
(iii) the amount of any sum received by the Lender from the
Borrower.
(d) The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of Lender to maintain
such accounts or any error therein shall not in any manner affect
the obligation of the Borrower to repay the Loans in accordance
with the terms of this Agreement.
27
SECTION 2.09. Prepayment of Loans. (a) The Borrower
shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Lender by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the
case of prepayment of a Eurodollar Loan, not later than 11:00
a.m., New York City time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Loan, not
later than 11:00 a.m., New York City time, one Business Day
before the date of prepayment, or (iii) in the case of prepayment
of a Money Market Loan, not later than 11:00 a.m., New York City
time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date
and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in
connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.07, then such notice of
prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. Each partial prepayment
of any Loan shall be in an amount that would be permitted in the
case of an advance of a Loan of the same Type as provided in
Section 2.02. Each prepayment of a Loan shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall
be accompanied by accrued interest to the extent required by
Section 2.11.
(c) If at any time the Borrower or any of its
Subsidiaries receives proceeds from the sale, transfer,
assignment, conveyance or refinancing of any Real Property or any
interest in any Real Property, the Borrower shall be required to
prepay Indebtedness owed to Chase and Lender under the Chase
Agreement and under the Chase Documents, as specified in
Section 2.09(c) of the Chase Agreement in an amount equal to the
Net Cash Proceeds unless the Borrower shall have obtained prior
written consent from Chase and the Lender to retain the Net Cash
Proceeds. If there is no Indebtedness outstanding under the
Chase Agreement and under the Chase Documents at the time
Borrower receives the Net Cash Proceeds (or such Indebtedness
under the Chase Agreement and under the Chase Documents is less
than the Net Cash Proceeds), then the Net Cash Proceeds (or the
remaining balance thereof after payment of all amounts owed
under the Chase Agreement and Chase Documents) shall be prepaid
by Borrower to the Lender as a prepayment of principal on the
Loans outstanding under this Agreement, unless the Borrower shall
have received the prior written consent of the Lender to retain
the Net Cash Proceeds or a specified portion thereof. In the
event of a required prepayment in accordance with this clause
(c), the Borrower shall simultaneously with the receipt of such
Net Cash Proceeds make such prepayment together with the interest
accrued to the date of the prepayment on the principal amount
prepaid. In connection with the prepayment of any Loan prior to
the maturity thereof, the Borrower shall also pay any applicable
expenses pursuant to Section 2.14 hereof. Each such prepayment
shall be applied to prepay ratably the Loans of the Lender. As
used in this clause (c) only, the phrase "sale, transfer,
assignment, conveyance or refinancing" shall not include sales or
conveyances among Borrower and any of its Subsidiaries.
28
(d) If at any time the Revolving Credit Exposure
exceeds the Maximum Availability, the Borrower shall be required
to prepay a portion of the Loan in an amount equal to such
excess. In the event of a required prepayment in accordance with
this clause (d), the Borrower shall immediately make such
prepayment together with the interest accrued to the date of the
prepayment on the principal amount prepaid and shall, to the
extent necessary, return or cause to be returned to the Lender
such Letters of Credit so that immediately following such
prepayment and return of such Letters of Credit the Revolving
Credit Exposure shall not exceed the Maximum Availability;
provided that in lieu of returning any such Letters of Credit,
the Borrower may deposit with the Lender cash collateral in
accordance with Section 2.04(h). In connection with the
prepayment of any Loan prior to the maturity thereof, the
Borrower shall also pay any applicable expenses pursuant to
Section 2.14 hereof. Each such prepayment shall be applied to
prepay ratably the Loans of the Lender.
(e) If at any time (i) the Company or the Borrower
merges or consolidates with another Person and the Company or the
Borrower, as the case may be, is not the surviving entity, or
(ii) the Company, the Borrower, any of its Subsidiaries or either
Management Company, individually or collectively, ceases to
provide property management and leasing services to at least 80%
of the total number of Projects in which the Borrower has an
ownership interest (the date any such event shall occur being the
"Prepayment Date"), the Borrower shall be required to prepay the
Loans in their entirety as if the Prepayment Date were the
Maturity Date, and the Commitment shall be terminated as of the
Prepayment Date, without further notice to the Borrower. In the
event of a required prepayment in accordance with this clause
(e), the Borrower shall on the Prepayment Date make such
prepayment together with the interest accrued to the date of the
prepayment on the principal amount prepaid and shall return or
cause to be returned all Letters of Credit to the Lender. In
connection with the prepayment of any Loan prior to the maturity
thereof, the Borrower shall also pay any applicable expenses
pursuant to Section 2.14 hereof. Each such prepayment shall be
applied to prepay ratably the Loans of the Lender. Amounts
prepaid pursuant to this paragraph (e) of Section 2.09 may not be
reborrowed.
SECTION 2.10. Fees. (a) On the Closing Date Borrower
shall pay to Lender a commitment fee of $187,500.00, which shall
be fully earned and non-refundable.
(b) The Borrower agrees to pay to the Lender an unused
facility fee, which shall accrue at a rate of 22.5 basis points
per annum on the daily amount of the unused Commitment of the
Lender during the period from and including the date hereof to
but excluding the date on which the Commitment terminates;
provided that, if such Lender continues to have any Revolving
Credit Exposure after the Commitment terminates, then such unused
facility fee shall continue to accrue on the daily amount of the
Lender's unused Commitment from and including the date on which
the Commitment terminates to but excluding the date on which the
Lender ceases to have any Revolving Credit Exposure. Accrued
unused facility fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the
date on which the Commitment terminates, commencing on September
30, 1998; provided that any unused facility fees
29
accruing after the date on which the Commitment terminates shall be payable
on demand. All unused facility fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number
of days elapsed (including the first day but excluding the last
day).
(c) Upon the issuance of each Letter of Credit, the
Borrower agrees to pay to the Lender an annual issuance fee equal
to 1% of the face amount of the Letter of Credit, which Letter of
Credit fee shall also be due and payable on each anniversary date
of the issuance of the Letter of Credit (or any extension or
renewal thereof), so long as the Letter of Credit (or any
extension or renewal thereof), remains outstanding. Upon the
issuance of each Letter of Credit (and upon each anniversary
thereof so long as the Letter of Credit remains outstanding), the
annual issuance fee shall be fully earned and non-refundable.
Each annual Letter of Credit Fee shall be payable quarterly in
arrears, with one-quarter of the annual issuance fee due three
months from the issuance of the Letter of Credit (and also three
months from each anniversary of the issuance of the Letter of
Credit), one quarter of the annual issuance fee due six months
from the issuance of the Letter of Credit (and also six months
from each anniversary of the issuance of the Letter of Credit),
one quarter of the annual issuance fee due nine months from the
date of issuance of the Letter of Credit (and also nine months
from each anniversary of the issuance of the Letter of Credit),
and one quarter of the annual issuance fee due on the anniversary
of the issuance of the Letter of Credit (and twelve months from
each anniversary of the issuance of the Letter of Credit).
Borrower shall also pay to the Lender the Lender's standard fees
with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder.
(d) In the event that the Borrower exercises its option
to extend the Maturity Date in accordance with Section 2.01(b),
the Borrower shall pay to the Lender an aggregate amount equal to
15 basis points on the then amount of the Commitment.
(e) The Borrower agrees to pay to the Lender additional
fees payable in the amounts and at the times separately agreed
upon between the Borrower and the Lender.
(f) All fees payable hereunder shall be paid on the
dates due, in immediately available funds, to the Lender.
SECTION 2.11. Interest. (a) The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate,
which rates are subject to change without notice to the Borrower
as in the definition of Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable
Eurodollar Margin.
(c) The Loans comprising each Money Market Borrowing
shall bear interest at the Money Market Rate.
30
(d) Notwithstanding the foregoing, if any principal of
or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated
maturity, upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any
Loan, 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount, 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for the immediately
preceding calendar month and upon termination of the Commitment;
provided that (i) interest accrued pursuant to paragraph (d) of
this Section 2.11 shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan, accrued interest on
the principal amount repaid or prepaid shall be payable on the
date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan
shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the
basis of a year of 360 days, except that interest computed by
reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate and Money
Market Rate shall be determined by the Lender, and such
determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to
the commencement of any Interest Period for a Eurodollar
Borrowing:
(a) the Lender determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for
such Interest Period; or
(b) the Lender determines that that the Adjusted LIBO
Rate for such Interest Period will not adequately and fairly
reflect the cost to the Lender of making or maintaining Loans
included in such Borrowing for such Interest Period; then the
Lender shall give notice thereof to the Borrower by telephone or
telecopy as promptly as practicable thereafter and, until the
Lender notifies the Borrower that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request
that requests the conversion of any Loan to, or continuation of
any Loan as, a Eurodollar Loan shall be ineffective and (ii) if
any Borrowing Request requests a Eurodollar Loan, such Borrowing
shall be made as a Money Market Loan with a Money Market Maturity
Date of seven days from the date of such Borrowing, provided that
if the circumstances giving rise to such notice affect only one
Interest Period or one Type of Borrowings, then the other
Interest Periods and Type of Borrowings shall be permitted.
31
SECTION 2.13. Increased Costs. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any
reserve, special deposit or similar
requirement against assets of, deposits with
or for the account of, or credit extended by
the Lender (except any such reserve
requirement reflected in the Adjusted LIBO
Rate); or
(ii) impose on the Lender or the London
interbank market any other condition
affecting this Agreement or Eurodollar Loans
made by the Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the
cost to the Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to
increase the cost to the Lender of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any
sum received or receivable by the Lender (whether of principal,
interest or otherwise), then the Borrower will pay to the Lender
such additional amount or amounts as will compensate the Lender
for such additional costs incurred or reduction suffered.
(b) If the Lender determines that any Change in Law
regarding capital requirements has or would have the effect of
reducing the rate of return on the Lender's capital or on the
capital of the Lender's holding company, as a consequence of this
Agreement or the Loans made by, or participations in Letters of
Credit held by, the Lender, to a level below that which the
Lender or the Lender's holding company could have achieved but
for such Change in Law (taking into consideration the Lender's
policies and the policies of the Lender's holding company with
respect to capital adequacy), then from time to time the Borrower
will pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender's holding company for any
such reduction suffered.
(c) A certificate of the Lender setting forth the
amount or amounts necessary to compensate the Lender or its
holding company, as the case may be, as specified in paragraph
(a) or (b) of this Section 2.13 shall be delivered to the
Borrower and shall be conclusive absent manifest error. The
Borrower shall pay the Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of the Lender to
demand compensation pursuant to this Section shall not constitute
a waiver of the Lender's right to demand such compensation;
provided that the Borrower shall not be required to compensate
the Lender pursuant to this Section 2.13 for any increased costs
or reductions incurred more than 270 days prior to the date that
the Lender notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of the Lender's
intention to claim compensation therefor; provided, further,
that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to
above shall be extended to include the period of retroactive
effect thereof.
32
SECTION 2.14. Break Funding Payments. In the event of
(a) the payment of any principal of any Eurodollar Loan other
than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Revolving Loan on the
date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section
2.09(b) and is revoked in accordance therewith) or (d) the
assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.17, then, in any such
event, the Borrower shall compensate the Lender for the loss,
cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to the Lender shall
be deemed to include an amount determined by the Lender to be the
excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest
rate which the Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. A
certificate of the Lender setting forth any amount or amounts
that the Lender is entitled to receive pursuant to this Section
shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay the Lender the amount
shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made
to the Lender free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower
shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this Section) the Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes
to the relevant Governmental Authority in accordance with
applicable law.
(c) The Borrower hereby indemnifies the Lender for the
full amount of any Indemnified Taxes or Other Taxes paid by the
Lender on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto,
33
whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by the Lender
shall be conclusive absent manifest error. This indemnification
obligation and all Borrower's other indemnification obligations
under this Agreement shall survive the termination of the
Commitment and the termination of this Agreement, and the payment
of all Indebtedness of Borrower to the Lender, whenever arising.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the Lender
the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment
reasonably satisfactory to the Lender.
(e) Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments
under this Agreement shall deliver to the Borrower (with a copy
to the Lender), at the time or times prescribed by applicable
law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without
withholding or at a reduced rate.
SECTION 2.16. Payments Generally. (a) The Borrower
shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, Rochester, New York
time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such
time on any date may, in the discretion of the Lender, be deemed
to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall
be made to the Lender at its offices at ▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇. If any payment hereunder shall be due on a day
that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of
any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be
made in dollars.
SECTION 2.17. Mitigation Obligations; Replacement of
Lenders. (a) If Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to
any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.15, then Lender shall use reasonable
efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of the Lender, such designation
or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject the Lender to any unreimbursed
cost or expense and would not otherwise be
34
disadvantageous to the Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by the Lender in connection with
any such designation or assignment.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lender that:
SECTION 3.01. Organization; Powers. Each of the
Borrower, the Company and their Affiliates is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except
where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing
in, every jurisdiction where it owns property or where the
conduct of its business or the ownership of its property or
assets (including, without limitation, the Projects) requires
such qualification. Neither the Borrower, the Company nor any of
their Affiliates are "foreign persons" within the meaning of
Section 1445 of the Code.
SECTION 3.02. Authorization, Enforceability. (a) The
Transactions have been duly authorized by all necessary
partnership action of the Borrower and the General Partner has
the requisite power and authority to execute, deliver and perform
this Agreement and the other Loan Documents on behalf of the
Borrower. The Guaranty has been duly authorized by all necessary
action of the Company and the Company has the requisite power and
authority to execute, deliver and perform the Guaranty and the
other Loan Documents to which it is a party. This Agreement and
each other Loan Document to which it is a party has been duly
executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in
equity or at law. The Guaranty and each other Loan Document to
which it is a party has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
(b) Schedule 3.02 contains a diagram indicating the
ownership structure of the Company, the Borrower and their
respective Subsidiaries, indicating the nature of such interest
with respect to each Person included in such diagram and
accurately sets forth (1) the correct legal name of such Person,
the jurisdiction of its incorporation or organization and the
jurisdictions in which it is qualified to transact business as a
foreign corporation, or otherwise, and (2) the authorized, issued
and outstanding shares or interests of each class of securities of the
Company. None of such issued and outstanding securities is subject to any
35
vesting, redemption, or repurchase agreement, and
there are no warrants or options outstanding with respect to such
securities, except as noted on such Schedule. The outstanding
capital stock of the Company is duly authorized, validly issued,
fully paid and nonassessable. The Company has no Subsidiaries
other than as set forth on such Schedule 3.02.
SECTION 3.03. Governmental Approvals; No Conflicts.
Neither the Transactions nor the execution, delivery and
performance of the Loan Documents by the Borrower or the Company,
as the case may be, (a) requires any consent or approval of,
registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made
and are in full force and effect and except as may be required
under applicable federal securities laws, (b) violates any
applicable law or regulation or the charter, by-laws, partnership
agreement or other organizational documents of the Company, the
Borrower or any of their Subsidiaries, or any order of any
Governmental Authority, (c) violates or results in a default
under any indenture, agreement or other instrument binding upon
the Company, the Borrower or any of their Subsidiaries or their
assets, or give rise to a right thereunder to require any payment
to be made by the Borrower or any of its Subsidiaries including
but not limited to the Chase Agreement and all agreements
executed by Borrower and/or by any other Person under the Chase
Agreement (collectively, the "Chase Documents") or (d) results in
the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries. Neither Borrower nor
Guarantor, nor any other Person is in default under the Chase
Agreement and/or under any Chase Document and no condition
exists, which, with notice, lapse of time or both (including but
not limited to the Borrower's execution of this Agreement and the
full borrowing by Borrower to the extent of the Maximum
Availability), would constitute a default under the Chase
Agreement and/or under any Chase Document.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) The Borrower has heretofore furnished to the Lenders
(i) its annual audited financial statements for the fiscal year
ended December 31, 1997, reported on by Coopers & ▇▇▇▇▇▇▇ LLP,
independent public accountants, and (ii) quarterly financial
statements for the quarter ended March 31, 1998, certified by its
chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its
Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause
(ii) above.
(b) Since March 31, 1998, there has been no change,
event or circumstance which has had or is reasonably likely to
have a Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries
has any Contingent Obligation or liability for any taxes,
long-term leases or commitments, not reflected in its audited
financial statements delivered to the Lender on or prior to the
Effective Date or otherwise disclosed to the Lender in writing,
which will have or is reasonably likely to have a Material
Adverse Effect.
36
(d) Schedule 3.04 sets forth, as of the date hereof,
all Indebtedness of the Borrower and its Subsidiaries and there
are no defaults in the payment of principal or interest on any
such Indebtedness and no payments thereunder have been deferred
or extended beyond their stated maturity.
SECTION 3.05. Properties. (a) Each of the Borrower and
its Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its Property material to its
business, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted
or to utilize such properties for their intended purposes.
Ownership of all wholly owned Projects and other Property of the
Consolidated Businesses is held by the Borrower and its
Subsidiaries and is not held directly by the Company.
(b) There are no pending or, to the best knowledge of
the Borrower, threatened proceedings or actions to revoke,
attack, invalidate, rescind or modify in any material respect (i)
the zoning of any Projects, or any part thereof, or (ii) any
building or other permits issued heretofore issued with respect
to any Project, or asserting that any such zoning or permits do
not allow the operation of any such Project or any part thereof
or that any improvements located on such Project cannot be
operated in accordance with its intended use or is in violation
of applicable law. There are no pending or, to the best knowledge
of the Borrower, threatened or contemplated proceedings relating
to any (A) taking by eminent domain or other condemnation of any
portion of any Project, (B) condemnation or relocation of any
roadways abutting any Project and (C) denial of access to any
Project from any point of access to such Project. Each Project
has adequate and permanent legal access to water, gas and
electrical public utilities, storm, and sanitary sewerage
facilities, other required public utilities (with respect to each
of the aforementioned items by means of either a direct
connection to the source of such utilities or through connections
available on publicly dedicated roadways directly abutting such
Project), parking and means of access between such Project and
public highways over recognized curb cuts; and all of the
foregoing comply with all applicable laws, rules and regulations
of Governmental Authorities.
(c) Neither the existence of any Improvements upon a
Project or the present use or condition of any Project violate in
any material respect any applicable laws, rules and regulations
of any Governmental Authority. Each Project may be operated in
its current fashion and the Borrower has received no notices from
any Governmental Authority alleging any violation by any Project
of any applicable laws, rules or regulations. All of the
Improvements located on the Projects and the use of such
Improvements are covered by existing valid certificates of
occupancy and all other certificates and permits required by
applicable laws, rules, regulations, and ordinances or in
connection with the use, occupancy, and operation thereof. No
material portion of any Projects, nor any Improvements located on
such Projects that are material to the operation, use, or value
thereof, have been damaged in any respect as a result of any
fire, explosion, accident, flood, or other casualty, except to
the extent that the same have been restored to their condition
prior thereto. No written notices of violation of any federal,
state, or local law or ordinance or order or requirement have
been received with respect to any Projects.
37
(d) There are no pending or,. to the best of Borrower's
knowledge, proposed special or other assessments for public
improvements or otherwise affecting any Project, nor, to the best
of Borrower's knowledge, are there any contemplated improvements
to any Projects that may result in such special or other
assessments.
(e) Each Project is free of material structural defects
and all building systems contained therein are in good working
order subject to ordinary wear and tear.
(f) Each Project is being operated and maintained in
accordance with the Borrower's usual and customary business
practices.
SECTION 3.06. Intellectual Property. The Company, the
Borrower and their Subsidiaries own, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use
thereof by the Company, the Borrower and their Subsidiaries does
not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.07. Litigation and Environmental Matters. (a)
There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the
best knowledge of the Borrower, threatened against or affecting
the Company, the Borrower or any of its Subsidiaries (i) as to
which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with
respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a
Material Adverse Effect, neither the Company, the Borrower nor
any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any
pen-nit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) There has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
(d) Except as may be disclosed in detail by the
Borrower to the Lender in writing from time to time, no Hazardous
Materials are located on or about any of the Properties, and the
Properties do not contain any underground tanks for the storage
or disposal of Hazardous Materials except for storage tanks which
are in full compliance with all federal, state and local
Environmental Laws; provided that notwithstanding the delivery of
any such notice, the Borrower and each of its Subsidiaries shall
at all times be in compliance
38
with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its
Properties except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. Further, (i) the Borrower has not, and
to the knowledge of the Borrower no other Person has, (A) stored
or treated Hazardous Materials, (B) disposed of Hazardous
Materials or incorporated Hazardous Materials into, on or around
any of the Properties, and (C) permitted any underground storage
tanks to exist on any of the Properties, (ii) no complaint,
order, citation or notice with regard to air emissions, water
discharges, noise emissions, or Hazardous Materials, if any, or
any other environmental, health, or safety matters affecting any
of the Properties or any portion thereof, from any person,
government or entity, has been issued to the Borrower which has
not been remedied or cured, and (iii) the Borrower has complied
with all applicable laws, rules or regulations affecting the
Properties.
SECTION 3.08. Compliance with Laws and Agreements. Each
of the Company, the Borrower and its Subsidiaries is in
compliance with all laws, regulations and orders of all
Governmental Authorities applicable to it or its property and all
indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.09. Investment and Holding Company Status.
Neither the Company, the Borrower nor any of its Subsidiaries is
(a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.10. Taxes. Each of the Company, Borrower and
its Subsidiaries has timely filed or caused to be filed all tax
returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all
other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $250,000
the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts,
exceed by more than $250,000 the fair market value of the assets
of all such underfunded Plans.
39
SECTION 3.12. Disclosure. The Borrower has disclosed to
the Lender all agreements, instruments and corporate or other
restrictions to which the Company, the Borrower or any of its
Subsidiaries is subject, and all other matters known to the
Borrower, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
None of the reports, financial statements, certificates or other
information furnished by or on behalf of the Borrower to the
Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of
fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only
that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
SECTION 3.13. Insurance. Schedule 3.13 accurately sets
forth as of the Effective Date all insurance policies and
programs currently in effect with respect to the Properties,
assets and business of the Company, the Borrower and its
Subsidiaries, specifying for each such policy and program, (i)
the amount thereof, (ii) the risks insured against thereby, (iii)
the name of the insurer and each insured party thereunder, (iv)
the policy or other identification number thereof, and (v) the
expiration date thereof. The Borrower has delivered to the Lender
copies of all insurance policies set forth on Schedule 3.13. Such
insurance policies and programs are currently in full force and
effect, and, together with payment by the insured of scheduled
deductible payments, are in amounts sufficient to cover the
replacement value of the respective Properties and assets of the
Borrower and its Subsidiaries.
SECTION 3.14. REIT Status. The Company qualifies as a
REIT under the Code.
SECTION 3.15. Solvency. Within the meaning of Section
548 of Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"), the Uniform Fraudulent Transfer Act and the
Uniform Fraudulent Conveyance Act as in effect in any relevant
jurisdiction, and any similar laws or statutes, and after giving
effect to the transactions contemplated hereby: the fair saleable
value of the Borrower's assets exceeds and will, immediately
following the making of the Loans, exceed the Borrower's total
liabilities including, without limitation, subordinated,
unliquidated, disputed, and contingent liabilities; the fair
saleable value of the Borrower's assets is and will, immediately
following the making of each Loan, be greater than the Borrower's
probable liabilities, including the maximum amount of its
contingent liabilities on its debts as such debts become absolute
and matured; the Borrower's assets do not and, immediately
following the making of the Loans will not, constitute
unreasonably small capital to carry out its business as conducted
or as proposed to be conducted; and the Borrower does not intend
to, and does not believe that it will, incur debts and
liabilities (including without limitation contingent liabilities
and other commitments) beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of
40
cash to be received by the Borrower and the amounts to be payable on
or in respect of obligations of the Borrower).
SECTION 3.16. Margin Regulations. The Borrower is not
engaged in the business of extending credit for the purpose of
purchasing or carrying any margin stock or margin securities
(within the meaning of Regulations G, T, U and X issued by the
Board of Governors of the Federal Reserve System), and no
proceeds of any Loan will be used, directly or indirectly, to
purchase or carry any margin stock or margin securities or to
extend credit to others for the purpose of purchasing or carrying
any margin stock or margin securities. None of the transactions
contemplated by this Agreement will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as
amended.
SECTION 3.17. Representations and Warranties in this
Agreement and in the other Loan Documents. The representations
and warranties of the Borrower and of the Company, as the case
may be, in this Agreement and in the other Loan Documents
(collectively, the "Representations") are true, complete and
correct in all material respects, and the Borrower hereby
confirms each such representation and warranty as being true,
complete and correct in all material respects as of the relevant
dates with the same effect as if set forth in its entirety
herein. The Representations shall be deemed to be made to Lender
on a continuing basis, until the Maturity Date, and Borrower
agrees to promptly notify Lender at any time that any
Representation becomes untrue or misleading.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the
Lender to make Loans and to issue Letters of Credit hereunder
shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with
Section 9.02):
(a) The Lender (or its counsel) shall have received
from the Borrower and Company and all other Persons who are
parties to any Loan Document a counterpart of this Agreement and
all other Loan Documents to which it is a party, signed on behalf
of such party including, without limitation, the Guaranty.
(b) The Lender shall have received a favorable opinion
(addressed to the Lender and dated the Closing Date) of ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Borrower and the
Company, substantially in the form of Exhibit E, and covering
such other matters relating to the Borrower, the Company, this
Agreement or the Transactions as the Lender shall reasonably
request. The Borrower hereby requests such counsel to deliver
such opinion.
(c) The Lender shall have received such documents and
certificates as the Lender or its counsel may reasonably request
relating to the organization, existence and good standing of the
Borrower, the Company and their Affiliates, the authorization of the
41
Transactions and any other legal matters relating to the
Borrower, the Company and their Affiliates, this Agreement or the
Transactions, all in form and substance satisfactory to the
Lender and its counsel.
(d) The Lender shall have received a certificate, dated
the Closing Date and signed by the President, an Executive Vice
President or a Financial Officer of the General Partner,
confirming compliance with the conditions set forth in paragraphs
(a) and (b) of Section 4.02.
(e) No change in the business, assets, management,
operations, financial condition or prospects of the Borrower or
any of its Properties shall have occurred since March 31, 1998
which change, in the judgment of the Lender, will have or is
reasonably likely to have a Material Adverse Effect.
(f) Except as disclosed to the Lender in a letter from
Borrower dated July 6, 1998, since March 31, 1998, neither the
Borrower nor the Company shall have (i) entered into any (as
determined in good faith by the Lender) commitment or
transaction, including, without limitation, transactions for
borrowings and capital expenditures, which are not in the
ordinary course of the Borrower's or the Company's business, (ii)
declared or paid any dividends or other distributions other than
dividends paid to the shareholders of the Company for the quarter
ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) established compensation or employee
benefit plans or (iv) redeemed or issued any equity Securities
other than shares of common stock, par value $.01 per share, of
the Company (1) issued from time to time pursuant to the terms
and conditions of the Company's Dividend Reinvestment and Stock
Purchase, Resident Stock Purchase and Employee Stock Purchase
Plan and (2) issued in exchange for limited partnership interests
in the Borrower.
(g) Since March 31, 1998, no agreement or license
relating to the business, operations or employee relations of the
Borrower or any of its Properties shall have been terminated,
modified, revoked, breached or declared to be in default, the
termination, modification, revocation, breach or default under
which, in the reasonable judgment of the Lender, would result in
a Material Adverse Effect.
(h) Since March 31, 1998, no material adverse change
shall have occurred in the conditions in the capital markets or
the market for loan syndications generally.
(i) The Lender shall have received all fees and other
amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by
the Borrower hereunder including but not limited to the Lender's
attorneys' fees and disbursements.
(j) Chase, in its capacity as a lender and
administrative agent under the Chase Agreement, shall give its
written consent to Borrower's and Lender's execution of this
Agreement and the other Loan Documents ("Chase Consent"), which
Chase consents shall
42
be in the form of Exhibit F, with blanks appropriately completed.
The Lender shall notify the Borrower of the Effective Date, and such
notice shall be conclusive and binding.
(k) Borrower shall deliver to Lender pro-forma covenant
compliance statement showing that with an aggregate of
$50,000,00.00 in outstanding borrowings under this Agreement or
under the Chase Agreement, Borrower will be in full compliance
with all financial covenants contained in this Agreement and in
the Chase Agreement ("Pro-Forma"). Lender acknowledges receipt
of a satisfactory Pro-Forma.
SECTION 4.02. Each Credit Event. The obligation of
Lender to make a Loan on the occasion of any Borrowing, and of
the Lender to issue, amend, renew or extend any Letter of Credit,
is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower
set forth in this Agreement shall be true and correct on and as
of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect
to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, no Default
shall have occurred and be continuing.
(c) The Borrower has not received written notice from
the Lender that an event has occurred since the date of this
Agreement which has had, and continues to have, or is reasonably
likely to have, a Material Adverse Effect.
(d) The Borrower shall have delivered to Lender a
certificate in the form of Exhibit D-1 or D-2, as applicable,
attached hereto, signed by a Financial Officer of the Borrower,
(1) representing and certifying that immediately prior to and
immediately after the requested Borrowing or the issuance,
amendment or extension of a Letter of Credit, the Company, the
Borrower and their Subsidiaries are in compliance with the
Representations and covenants contained in this Agreement and (2)
including the calculations set forth therein.
Each Borrowing and each issuance, amendment, renewal or extension
of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof
as to the matters specified in paragraphs (a) through (d) of this
Section 4.02.
ARTICLE V
Affirmative Covenants
Until the Commitment has expired or been terminated and
the principal of and interest on each Loan and all fees payable
hereunder shall have been paid in full and all Letters of Credit
shall have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the
Lender that:
43
SECTION 5.01. Financial Statements and Other
Information. The Borrower will furnish to the Lender:
(a) Quarterly Reports.
(i) Borrower Quarterly Financial Reports. As soon
as practicable, and in any event within forty-five (45) days
after the end of each fiscal quarter in each fiscal year
(other than the last fiscal quarter in each fiscal year), a
consolidated balance sheet and the related consolidated
statement of operations of the Borrower and its Subsidiaries
(to be prepared and delivered quarterly in conjunction with
the other reports delivered hereunder) for each such fiscal
quarter, in each case in form and substance used in the
preparation of the consolidating financial statements of the
Company and, with respect to the statement of operations, in
comparative form, the corresponding figures for the
corresponding periods of the previous fiscal year, certified
by a Financial Officer of the Borrower as fairly presenting
the consolidated financial position of the Borrower as of
the dates indicated and the results of their operations for
the months indicated in accordance with GAAP, subject to
normal quarterly adjustments but without certain footnote
disclosures required by GAAP.
(ii) Company Quarterly Financial Reports. As soon
as practicable, and in any event within forty-five (45) days
after the end of each fiscal quarter in each fiscal year
(other than the last fiscal quarter in each fiscal year), a
consolidated balance sheet and the related consolidated
statements of operations and cash flow of the Company, the
Borrower and its Subsidiaries on Form 10-Q as at the end of
such period and, with respect to the statements of
operations and cash flow, setting forth in comparative form
the corresponding figures for the corresponding period of
the previous fiscal year, certified by a Financial Officer
of the Company as fairly presenting the consolidated and
consolidating financial position of the Company, the
Borrower and its Subsidiaries as at the date indicated and
the results of their operations and cash flow for the period
indicated in accordance with GAAP, subject to normal
adjustments but without certain footnote disclosures
required by GAAP (as permitted by the requirements for
reporting on Form 10-Q).
(iii) Quarterly Compliance Certificates. Together
with each delivery of any quarterly report pursuant to
clauses (i) and (ii) of this Section 5.01 (a), the Borrower
shall deliver a certificate of the Borrower and the Company
in the form of Exhibit G attached hereto (the "Quarterly
Compliance Certificate"), signed by the Borrower's and the
Company's respective Financial Officers, representing and
certifying (1) that the Financial Officer signatory thereto
has reviewed the terms of this Agreement and the other Loan
Documents, and has made, or caused to be made under his/her
supervision, a review in reasonable detail of the
Transactions and consolidated and consolidating financial
condition of the Company, the Borrower and its Subsidiaries,
during the fiscal quarter covered by such reports, that such
review has not disclosed the existence during or at the end
of such fiscal quarter, and that such
44
officer does not have knowledge of the existence as at the date of
such Quarterly Compliance Certificate, of any condition or event which
constitutes an Event of Default or Default or mandatory
prepayment event, or, if any such condition or event existed
or exists, and specifying the nature and period of existence
thereof and what action the Company and/or the Borrower or
any of its Subsidiaries has taken, is taking and proposes to
take with respect thereto; and (2) the calculations
evidencing compliance with each of the financial covenants
set forth in Article VI hereof.
(b) Annual Reports.
(i) Borrower Financial Statements. As soon as
practicable, and in any event within ninety (90) days after
the end of each fiscal year, a consolidated balance sheet
and the related consolidated statement of operations of the
Borrower and its Subsidiaries as at the end of such fiscal
year, in each case in form and substance used in the
preparation of the consolidating financial statements of the
Company and, with respect to the statement of operations, in
comparative form, the corresponding figures for the
corresponding periods of the previous fiscal year, certified
by a Financial Officer of the Borrower as fairly presenting
the consolidated financial position of the Borrower as of
the dates indicated and the results of their operations for
the months indicated in accordance with GAAP, subject to
normal year-end adjustments but without certain footnote
disclosures required by GAAP.
(ii) Company Financial Statements. As soon as
practicable, and in any event within ninety (90) days after
the end of each fiscal year, (i) an audited consolidated
balance sheet and the related consolidated statements of
operations and cash flow of the Company and its Subsidiaries
on Form 10-K as at the end of such fiscal year and a report
setting forth in comparative form the corresponding figures
from the consolidated financial statements of the Company
and its Subsidiaries for the prior fiscal year; (ii) a
report with respect thereto of Coopers & ▇▇▇▇▇▇▇ LLP or
other nationally recognized independent certified public
accountants acceptable to the Lender, which report shall be
unqualified and shall state that such financial statements
fairly present the consolidated financial position of the
Company and its Subsidiaries as at the dates indicated and
the consolidated results of its operations and cash flow for
the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except for changes with
which Coopers & ▇▇▇▇▇▇▇ LLP or any such other independent
certified public accountants, if applicable, shall concur
and which shall have been disclosed in the notes to the
financial statements) (which report shall be subject to the
confidentiality limitations set forth herein); and (iii) in
the event that the report referred to in clause (ii) above
is qualified, a copy of the management letter or any similar
report delivered to the Company or to any officer or
employee thereof by such independent certified public
accountants in connection with such financial statements.
The Lender may, with the consent of the Company (which
consent shall not be unreasonably withheld), communicate
directly with such accountants, with any such communication
to occur together with a representative of the Company, at the
45
expense of the Lender, upon reasonable notice and at
reasonable times during normal business hours.
(iii) Annual Compliance Certificates. Together
with each delivery of any annual report pursuant to clauses
(i) and (ii) of this Section 5.01(b), the Borrower shall
deliver a certificate of the Borrower and the Company in the
form of Exhibit G attached hereto (the "Annual Compliance
Certificate"), signed by the Borrower's and the Company's
respective Financial Officers, representing and certifying
(1) that the officer signatory thereto has reviewed the
terms of this Agreement and the other Loan Documents, and
has made, or caused to be made under his/her supervision, a
review in reasonable detail of the transactions and
consolidated and consolidating financial condition of the
Company, the Borrower and its Subsidiaries, during the
accounting period covered by such reports, that such review
has not disclosed the existence during or at the end of such
accounting period, and that such officer does not have
knowledge of the existence as at the date of such Annual
Compliance Certificate, of any condition or event which
constitutes an Event of Default or Default or mandatory
prepayment event, or, if any such condition or event existed
or exists, and specifying the nature and period of existence
thereof and what action the Company and/or the Borrower or
any of its Subsidiaries has taken, is taking and proposes to
take with respect thereto; and (2) the calculations
evidencing compliance with each of the financial covenants
set forth in Article VI hereof.
(c) Accountant's Certificate. Concurrently with any
delivery of financial statements under clause 5.01(b) above, a
certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge
during the course of their examination of such financial
statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines).
(d) Property Reports. When requested by the Lender, a
rent roll and income statement with respect to any Project.
(e) Community Reinvestment Act. Promptly following any
request therefor, such other information regarding the Loans and
the use thereof, Qualified Community Reinvestment Projects and
the Company, the Borrower and its Subsidiaries as any Lender may
request to determine compliance by the Projects with the
Community Reinvestment Act or other applicable federal or state
law; provided that the Borrower shall have no obligation
hereunder to deliver any such information to the Lender more than
one time in any calendar quarter.
(f) Additional Information. Promptly following any
request therefor, such other information regarding the
operations, business affairs and financial condition of the
Company, the Borrower or any Subsidiary of the Borrower, or
compliance with the terms of this Agreement, as the Lender may
reasonably request.
46
SECTION 5.02. Notices of Material Events. (a) The
Borrower will furnish to the Lender prompt written notice of the
following:
(i) the occurrence of any Default;
(ii) the filing or commencement of any judicial
action or suit or proceeding by or before any arbitrator or
by any Governmental Authority against or affecting the
Borrower, the Company or any Affiliate or Subsidiary thereof
that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect;
(iii) the occurrence of any ERISA Event that,
alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an
aggregate amount exceeding $250,000; and
(iv) any other development that results in, or
could reasonably be expected to result in a Material Adverse
Effect.
Each notice delivered under this Section shall be
accompanied by a certificate of a Financial Officer or other
executive officer of the Borrower setting forth the details of
the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
(b) The Borrower shall deliver to the Lender written
notice of each of the following not less than ten (10) Business
Days prior to the occurrence thereof- (i) a sale, transfer or
other disposition of assets, in a single transaction or series of
related transactions, for consideration in excess of an amount
equal to 10% of the Total Value, (ii) an acquisition of assets,
in a single transaction or series of related transactions, for
consideration in excess of 10% of the Total Value, and (iii) the
grant of a Lien with respect to assets, in a single transaction
or series of related transactions, in connection with
Indebtedness aggregating an amount in excess of 10% of the Total
Value. In addition, simultaneously with delivery of any such
notice, the Borrower shall deliver to the Lender a certificate of
the Borrower and its Chief Financial Officer certifying that
Borrower is in compliance with this Agreement and the other Loan
Documents both on a historical basis and on a pro forma basis,
exclusive of the property sold, transferred and/or encumbered and
inclusive of the property to be acquired or the indebtedness to
be incurred, together with calculations, in the form of Schedule
B to Exhibit G attached hereto, evidencing compliance with each
of the financial covenants set forth in Article VI hereof.
To the extent such proposed transaction, after giving
effect to the prepayment required to be made pursuant to Section
2.09(c), would result in a failure to comply with the financial
covenants set forth herein, the Borrower shall prepay outstanding
Loans in such amount, as determined by the Lender, as may be
required to reduce the Obligations so that
47
the Borrower will be in compliance with the covenants set forth herein
upon the consummation of the contemplated transaction.
SECTION 5.03. Existence; Conduct of Business. The
Borrower will, and will cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the
conduct of its business.
SECTION 5.04. Payment of Obligations. The Borrower
will, and will cause each of its Subsidiaries to, pay its
obligations, including Tax liabilities, that, if not paid, could
result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance;
Management. (a) The Borrower will, and will cause each of its
Subsidiaries to, (i) keep and maintain all Property useful and
necessary to the conduct of its business in good working order
and condition, ordinary wear and tear excepted, and (ii)
maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as
are described in Section 3.13 or substantially similar policies
and programs as are acceptable to the Lender.
(b) The Borrower, its wholly-owned Subsidiaries and
either Management Company, individually or collectively, shall at
all times manage Projects constituting the greater of (i) 80% of
Total Value or (ii) 80% of the total number of apartment units
comprising the Projects.
SECTION 5.06. Books and Records, Inspection Right . The
Borrower will, and will cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any
representatives designated by the Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent
accountants, all at such reasonable times and as often as
reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will,
and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do
so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
48
SECTION 5.08. Use of Proceeds and Letters of Credit. No
part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of
the Regulations of the Board, including Regulations G, T, U and
X. The proceeds of the Loans will be used only for the purposes
of:
(a) acquisition of residential housing Projects similar
to and consistent with the types of Projects owned and/or
operated by the Borrower on the Effective Date (including
Qualified Community Reinvestment Projects), located in the
Northeast, Mid-Atlantic and Midwest regions of the United
States;
(b) renovation of Projects owned and operated by the
Borrower;
(c) Redemptions by the Borrower of interests of limited
partnership units in the Borrower issued in connection with
the acquisition from time to time of Projects;
(d) financing expansions, renovations and new
construction related to Properties owned and operated by the
Borrower or its Subsidiaries and Affiliates; provided,
however, that in no event, shall more than 50% of aggregate
amount of the Loans be used for the construction of any new
Projects;
(e) refinancing of existing Indebtedness for borrowed
money secured by Projects;
(f) payment by the Borrower of distributions to its
partners (including the Company); and
(g) working capital needs of the Borrower, provided,
however, in no event shall the LC Exposure and the amount of
the Loans used by the Borrower for working capital purposes
exceed 10% of the Maximum Availability in the aggregate.
Promptly upon the utilization of any proceeds of the
Loans in connection with the acquisition, expansion, renovation
or construction of a Qualified Community Reinvestment Project,
the Borrower shall deliver to the Lender a certificate of a
Financial Officer or other executive officer of the Borrower
setting for the details of each such utilization.
SECTION 5.09. Company Status. The Company shall at all
times (a) remain a publicly traded company listed on the New York
Stock Exchange, (b) maintain its status as a REIT under Sections
856-860 of the Code and (c) retain direct or indirect management
and control of the Borrower.
SECTION 5.10. Ownership of Projects and Property.
Unencumbered ownership of substantially all wholly owned Projects
and other Property of the Consolidated
49
Businesses shall be held by the Borrower and its Subsidiaries and shall
not be held directly by the Company.
SECTION 5.11. Shareholder Communication, Filings, etc.
Promptly upon the mailing or filing thereof, the Borrower shall
deliver to the Lender copies of all financial statements, reports
and proxy statements mailed to the Company's shareholders, and
copies of all of the Company's final registration statements and
other final documents filed with the Securities and Exchange
Commission (or any successor thereto) or any national securities
exchange.
SECTION 5.12. Further Assurances. The Borrower agrees
upon demand of the Lender to do any act or execute any additional
documents as may be reasonably required by the Lender to exercise
or enforce its rights under this Agreement, the Note or the other
Loan Documents and to realize thereon. This covenant shall
survive the termination of this Agreement until payment in full
of all amounts due hereunder or under the Note and the other Loan
Documents, provided that the covenant shall be reinstated if any
payment of all amounts due hereunder or under the Note and the
other Loan Documents is required to be returned to the payor or
any other party under any applicable bankruptcy and/or other law.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees payable
hereunder have been paid in full and all Letters of Credit have
expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lender
that:
SECTION 6.01. (a) Indebtedness and Other Financial
Covenants. Neither the Borrower nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or otherwise become
or remain directly or indirectly liable with respect to any
Indebtedness, except that the Borrower and/or its Subsidiaries
may create, incur, assume or otherwise become or remain directly
or indirectly liable with respect to any Indebtedness to the
extent that Total Outstanding Indebtedness, would not exceed (i)
55% of Total Value, or (ii) in the case of Secured Indebtedness
of the Consolidated Businesses, 50% of Total Value, or (iii) in
the case of Recourse Secured Indebtedness of the Consolidated
Businesses, 35% of Total Value, or (iv) in the case of Adjusted
Recourse Secured Indebtedness, 12.5% of Total Value.
Notwithstanding anything to the contrary herein contained, in no
event shall (x) the aggregate amount of completion guarantees
with respect to Projects at any time exceed 15% of Total Value
and (y) the aggregate amount of Low Income Housing Credit Program
Guarantees at any time exceed 15% of Total Value.
(b) Minimum Equity Value. The Equity Value shall at no
time be less than $270,800.00 plus an amount equal to 85% of all
Net Offering Proceeds received by the Company after the date
hereof.
50
(c) Minimum Consolidated Interest Coverage Ratio . As
of the first day of each calendar quarter for the immediately
preceding four consecutive calendar quarters, the ratio of
Adjusted EBITDA to Total Interest Expense for such period shall
not be less than 2.15 to 1.0.
(d) Minimum Unsecured Interest Coverage Ratio. As of
the first day of each calendar quarter for the immediately
preceding four consecutive calendar quarters, the ratio of
Adjusted Unencumbered NOI to Unsecured Interest Expense shall not
be less than 1.65 to 1.0.
(e) Minimum Unencumbered Total Property Value. The
Total Property Value of Unencumbered Eligible Projects shall at
no time be less than the greater of (a) 120% of the sum of the
Revolving Credit Exposure and Lender's and Chase's revolving
credit exposure under the Chase Agreement at such time and (b)
$100,000,000. Unencumbered Eligible Projects shall consist at all
times of not less than ten Eligible Projects.
(f) Minimum Fixed Charge Coverage Ratio. As of the
first day of each calendar quarter for the immediately preceding
four consecutive calendar quarters, the ratio of Adjusted NOI to
Fixed Charges shall not be less than 1.8 to 1.0.
(g) Maximum Dividend Payout Ratio. The Company shall
not make any Restricted Payment during any of its fiscal
quarters, which, when added to all Restricted Payments made
during the three immediately preceding fiscal quarters, exceeds
the greater of (i) 90% of FFO, and 110% of CAD, and (ii) the
amounts required to maintain its status as a REIT under the Code.
For purposes of this provision, "Restricted Payment" means (i)
any dividend or other distribution on any shares of the Company's
capital stock (except dividends payable solely in shares of its
capital stock or in rights to subscribe for or purchase shares of
its capital stock), or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares
of the Company's capital stock or (b) any option, warrant or
other right to acquire shares of the Company's capital stock.
(h) Maximum Availability . The Revolving Credit
Exposure shall not at any time exceed the Maximum Availability.
If at any time the Revolving Credit Exposure exceeds the Maximum
Availability, the Borrower shall immediately prepay a portion of
the Loan in an amount equal to such excess as provided for in
Section 2.09(d).
SECTION 6.02. Liens. The Borrower will not, and will
not permit any of its Subsidiaries to, create, incur, assume or
permit to exist any Lien on any Property now owned or hereafter
acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any
thereof, except:
(a) Permitted Encumbrances; and
51
(b) Liens securing permitted Secured Indebtedness,
provided that a maximum Secured Indebtedness in an amount
equal to not more than 15% of Total Value may be secured by
any one Project or several cross collateralized Projects.
▇▇▇▇▇▇▇ ▇.▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ . (▇) The Borrower
will not, and will not permit any of its Subsidiaries to, merge
into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series
of transactions) all or substantially all of its assets, or all
or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), or liquidate
or dissolve, except (i) in connection with the issuance transfer,
conversion or repurchase of limited partnership interests in
Borrower, and (ii) if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be
continuing any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving entity and any
Subsidiary of the Borrower may merge into the Borrower in a
transaction in which the Borrower is the surviving entity.
(b) The Borrower will not, and will not permit any of
its Subsidiaries to, engage to any material extent in any
business other than businesses of the type conducted by the
Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees
and Acquisitions. The Borrower will not, and will not permit any
of its Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly
owned Subsidiary of the Borrower prior to such merger) any
capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of
the foregoing) of, make or permit to exist any loans or advances
to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a
business unit, except:
(a) Permitted Investments;
(b) investments in Real Property;
(c) investments (including loans) in the Borrower's
Subsidiaries, the Borrower's Affiliates and the Management
Company;
(d) loans to directors, officers and employees of the
Company, the Borrower, the Borrower's Subsidiaries, the
Borrower's Affiliates and either Management Company;
(e) investments in notes secured by mortgages on any
Real Property of any Person;
52
(f) investments in Real Property under development or
construction; and
(g) investments in equity securities issued by a REIT
that primarily owns multi-family properties.
Notwithstanding the foregoing, the investments set
forth above shall be limited in the following manner: (i) the
aggregate amount of investments in land and/or Real Property
under development or construction shall not exceed 10% of Total
Value; (ii) the aggregate amount of investments in partnerships,
joint ventures, corporations, limited liability companies or
other entities which are not wholly-owned by the Borrower or its
Subsidiaries shall not exceed 10% of Total Value; (iii) the
aggregate amount of investments by the Borrower and its
Subsidiaries in Properties which are not residential in nature
shall not exceed 5% of Total Value; (iv) the aggregate
outstanding principal amount of such loans to directors, officers
and employees shall not exceed $10,000,000; and (v) the aggregate
amount of investments in equity securities issued by REITs that
primarily own multi-family properties shall not exceed 10% of
Total Value.
SECTION 6.05. Hedging Agreements. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into
any Hedging Agreement, other than Hedging Agreements entered into
in the ordinary course of business to hedge or mitigate risks to
which the Borrower or any Subsidiary of the Borrower is exposed
in the conduct of its business or the management of its
liabilities.
SECTION 6.06. Transactions with Affiliates. Neither the
Borrower nor any of its Subsidiaries shall directly or indirectly
enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property
or the rendering of any service) with any holder or holders of
more than 5% of any class of equity securities of the Borrower,
or with any Affiliate of the Borrower which is not its
Subsidiary, on terms that determined by the respective Boards of
Directors of the Company to be less favorable to the Borrower or
any of its Subsidiaries, as applicable, than those that might be
obtained in an arm's length transaction at the time from Persons
who are not such a holder or Affiliate. Nothing contained in this
Section 6.06 shall prohibit (a) increases in compensation and
benefits for officers and employees of the Borrower or any of its
Subsidiaries which are customary in the industry or consistent
with the past business practice of the Borrower or such
Subsidiary, provided that no Event of Default or Default has
occurred and is continuing; (b) payment of customary partners'
indemnities; or (c) performance of any obligations arising under
the Loan Documents.
SECTION 6.07. Restriction on Fundamental Change .
Neither the Borrower nor any of its Subsidiaries shall enter into
any merger or consolidation, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), or convey, lease,
sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or substantially all of the
Borrower's or any such Subsidiary's business or Property, whether
now or hereafter acquired, except in connection with issuance,
transfer, conversion or repurchase of limited partnership
interests in Borrower. Notwithstanding the foregoing, the
Borrower shall be permitted to
53
merge with another Person so long as the Borrower is the surviving Person
following such merger.
SECTION 6.08. Margin Regulations, Securities Laws.
Neither the Borrower nor any of its Subsidiaries, shall use all
or any portion of the proceeds of any credit extended under this
Agreement to purchase or carry Margin Stock.
SECTION 6.09. Negative Covenants of the Company and the
QRS subsidiary. (a) The Company will not acquire any assets of
any nature whatsoever, other than (i) additional partnership
units in the Borrower and (ii) its interest in the QRS Subsidiary
and other Subsidiaries of the Company. The QRS Subsidiary will
not acquire any assets of any nature whatsoever, other than its
limited partnership interests in the Borrower and interests in
other Subsidiaries of the Company.
(b) From and after the date hereof, the Company will
not incur any Indebtedness or any other obligations or
liabilities or any Liens on its assets or any part thereof except
(i) as the general partner of the Borrower in connection with
trade payable incurred in the ordinary course of business, (ii)
Indebtedness, the net proceeds of which are contributed to the
QRS Subsidiary or the Borrower, as the case may be,
simultaneously with the incurrence thereof by the Company, (iii)
Guaranties of Indebtedness of any Affiliate of the Company
incurred in the ordinary course of such Affiliate's business and
(iv) the obligation to pay dividends when and if declared by the
Company. From and after the date hereof, the QRS Subsidiary will
not incur any Indebtedness or any other obligations or
liabilities or any Liens on its assets or any part thereof.
(c) From and after the date hereof, (i) the Company
will not retain any Net Offering Proceeds, and the same will be
contributed by the Company to the Borrower, or if the QRS
Subsidiary is a limited partner in the Borrower, to the QRS
Subsidiary simultaneously with receipt thereof by the Company and
(ii) the QRS Subsidiary will not retain any Net Offering Proceeds
so contributed to it by the Company, and the same will be
contributed by the QRS Subsidiary to the Borrower simultaneously
with receipt thereof by the QRS Subsidiary.
(d) The Company shall not enter into any merger or
consolidation, or liquidate, windup or dissolve (or suffer any
liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of
transactions, any of its business or assets, including its
interests in the Borrower or in the QRS Subsidiary.
Notwithstanding the foregoing, the Company shall be permitted to
merge with another Person so long as the Company is the surviving
Person following such merger. The QRS Subsidiary shall not enter
into any merger or consolidation, or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction
or series of transactions, any of its business or assets,
including its interests in the Borrower.
54
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay (i) any principal of
any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise or (ii) any reimbursement
obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or
otherwise, and such failure shall continue unremedied for a
period of three days after notice;
(b) the Borrower shall fail to pay any interest on any
Loan or any fee or any dollar amount (other than an amount
referred to in clause (a) of this Article) payable under
this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a
period of five Business Days;
(c) any Representation made or deemed made by or on
behalf of Borrower or any of its Subsidiaries in or in
connection with this Agreement or any amendment or
modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, shall
prove to have been incorrect when made or deemed made.
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Article V or
in Article VI;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement
(other than those specified in clause (a), (b) or (d) of
this Article), and such failure shall continue unremedied
for a period of 15 days after notice thereof from the Lender
to the Borrower;
(f) The Company, the Borrower or any Subsidiary of
the Borrower shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall
become due and payable. Company acknowledges that failure
to make any payment due under the Chase Agreement, and/or
under any Chase Document shall constitute an Event of
Default under this paragraph (f) of this Article VII, and
that all amounts owed under the Chase Agreement and/or under
notes or other agreements executed in connection with the
Chase Agreement shall constitute Material Indebtedness;
(g) any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or
55
without the giving of notice, the lapse of time or both) the holder or
holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to
secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets
securing such Indebtedness unless prohibited by this
Agreement;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Company,
the Borrower or any Subsidiary of the Borrower or its debts,
or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company, the
Borrower or any Subsidiary of the Borrower or for a
substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) the Company, the Borrower or any Subsidiary of the
Borrower shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding
or petition described in clause (h) of this Article, (iii)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Company, the Borrower or any Subsidiary of
the Borrower or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take
any action for the purpose of effecting any of the
foregoing;
(j) the Company, the Borrower or any Subsidiary of the
Borrower shall become unable, admit in writing or fail
generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in
an aggregate amount in excess of $1,000,000 shall be
rendered against the Company, the Borrower, any Subsidiary
of the Borrower or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of the Company, the
Borrower or any Subsidiary of the Borrower to enforce any
such judgment;
56
(1) an ERISA Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with
all other ERISA Events that have occurred, could reasonably
be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $250,000;
(m) a Change in Control shall occur;
(n) an event shall occur which has a Material Adverse
Effect;
(o) the Company shall fail to (i) maintain its status
as a REIT for federal income tax purposes, or (ii) continue
as a general partner of the Borrower, or (iii) comply with
all Requirements of Law applicable to it and its businesses
and Properties, in each case where the failure to so comply
individually or in the aggregate will have or is reasonably
likely to have a Material Adverse Effect, or (iv) remain
listed on the New York Stock Exchange, or (v) file all tax
returns and reports required to be filed by it with any
Governmental Authority as and when required to be filed or
to pay any taxes, assessments, fees or other governmental
charges upon it or its Property, assets, receipts, sales,
use, payroll, employment, licenses, income, or franchises
which are shown in such returns, reports or similar
statements to be due and payable as and when due and
payable, except for taxes, assessments, fees and other
governmental charges (A) that are being contested by the
Company in good faith by an appropriate proceeding
diligently pursued, (B) for which adequate reserves have
been made on its books and records, and (C) the amounts the
nonpayment of which would not, individually or in the
aggregate, result in a Material Adverse Effect;
(p) the Company shall merge or liquidate with or into
any other Person and, as a result thereof and after giving
effect thereto, (i) the Company is not the surviving Person
or (ii) such merger or liquidation would effect an
acquisition of or investment in any Person not otherwise
permitted under the terms of this Agreement. The Borrower
shall merge or liquidate with or into any other Person and,
as a result thereof and after giving effect thereto, (i) the
Borrower is not the surviving Person or (ii) such merger or
liquidation would effect an acquisition of or Investment in
any Person not otherwise permitted under the terms of this
Agreement; or
(q) the Guaranty shall at any time and for any reason
other than pursuant to the terms thereof, 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 Company or the Company shall deny it has any further
liability or obligation thereunder;
(r) the occurrence of any Event of Default under the
Chase Agreement;
then, and in every such event (other than an event with respect
to the Borrower described in clause (h) or (i) of this Article),
and at any time thereafter during the continuance of such event,
the Lender, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate
the Commitment, and thereupon the Commitment
57
shall terminate immediately, and (ii) declare the Loans then outstanding
to be due and payable in whole (or in part, in which case any principal
not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans
so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of
any event with respect to the Borrower described in clause (h) or
(i) of this Article, the Commitment shall automatically terminate
and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. Except in the case of
notices and other communications expressly permitted to be given
by telephone, all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered
mail, return receipt requested, or sent by telecopy, as follows:
(a) if to the Borrower, to it at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (Telecopy No. 716-546-5433), with a copy to the
Borrower at the same address, Attention: ▇▇▇ ▇. ▇▇▇▇
(Telecopy No. 716-546-5433);
(b) if to Lender, to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Vice
President (Telecopy No. 716-546-5363).
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
SECTION 8.02. Waivers; Amendments. (a) No failure or
delay by the Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Lender
hereunder are cumulative and are not exclusive of any rights or
remedies that the Lender would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the
58
specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether the Lender may have had
notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the
Lender.
SECTION 8.03. Expenses; Indemnity; Damage Waiver. (a)
The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Lender and its Affiliates, including the
reasonable fees, charges and disbursements of outside and
in-house counsel for the Lender, in connection with the
preparation, negotiation, execution and administration of this
Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby
shall be consummated and also in connection with any subsequent
assignment, participation and/or syndication by Lender of all or
any portion of its rights and obligations under this Agreement)
and under the Loan Documents, (ii) all reasonable out-of-pocket
expenses incurred by Lender in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder; and (iii) all out-of-pocket
expenses incurred by the Lender, including the fees, charges and
disbursements of any counsel for the Lender, in connection with
the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, and the
other Loan Documents including, without limitation, the Note, or
in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of
such Loans or Letters of Credit.
(b) The Borrower hereby indemnifies the Lender, and
each Related Party of the Lender (each such Person being called
an "Indemnitee") against, and holds each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or
any other Loan Document contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or
the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Lender to
honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii)
any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by the Borrower or any
of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee,
59
be available to the extent that such losses, claims, damages, liabilities
or related expenses resulted from the negligence of such Indemnitee proven
by clear and convincing evidence (and not merely a preponderance of the
evidence) or willful misconduct of such Indemnitee. All
obligations under this subsection shall survive the Maturity
Date.
(c) To the extent permitted by applicable law, the
Borrower shall not assert, and hereby waives, any claim against
any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of
Credit or the use of the proceeds thereof.
(d) All amounts due under this Section shall be payable
not later than ten Business Days after written demand therefor.
SECTION 8.04. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns permitted hereby, except that the Borrower may not
assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender (and
any attempted assignment or transfer by the Borrower without such
consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Related Parties of the Lender)
any legal or equitable right, remedy or claim under or by reason
of this Agreement.
(b) Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at
the time owing to it); provided that (i) except in the case of an
assignment to an Affiliate of the Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment, the
amount of the Commitment of the Lender subject to each such
assignment shall not be less than $5,000,000 unless the Borrower
otherwise consents, and (ii) each partial assignment shall be
made as an assignment of a proportionate part of all the Lender's
rights and obligations under this Agreement. From and after the
effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.14, 2.15 and 8.03). Any
assignment or transfer by the Lender of rights or obligations
under this Agreement that does not comply with this paragraph
shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
60
(c) The Lender, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in Rochester
or Buffalo, New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and
the Borrower and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by Lender and an assignee, the assignee's
completed Administrative Questionnaire, the assignment fee, if
any, and any written consent to such assignment required by
paragraph (b) of this Section, the Lender shall accept such
Assignment and Acceptance and record the information contained
therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(e) Lender may, without the consent of the Borrower,
sell participations to one or more banks or other Persons (a
"Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of
its Commitment and the Loans owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged,
(ii) Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the
Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under this Agreement. Any agreement or instrument pursuant to
which the Lender sells such a participation shall provide that
the Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement or
instrument may provide that the Lender will not, without the
consent of the Participant, agree to any amendment, modification
or waiver described in the first proviso to Section 8.02(b) that
affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the
same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the
extent permitted by law, each Participant also shall be entitled
to the benefits of Section 8.08 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.16(c)
as though it were a Lender.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.13 or 2.15 than the Lender would
have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written
consent. A Participant that would be a Foreign Lender if it were
a Lender shall not be entitled to the benefits of Section 2.17 unless the
61
Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.15(e) as though it were a
Lender.
(g) Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement
to secure obligations of the Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of
a security interest; provided that no such pledge or assignment
of a security interest shall release the Lender from any of its
obligations hereunder or substitute any such pledgee or assignee
for such Lender as a party hereto.
SECTION 8.05. Survival. All covenants, agreements,
Representations and warranties made by the Borrower herein and in
the certificates or other instruments delivered in connection
with or pursuant to this Agreement shall be considered to have
been relied upon by the Lender and shall survive the execution
and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any
investigation made by the Lender or on its behalf and
notwithstanding that the Lender may have had notice or knowledge
of any Default or incorrect Representation at the time any credit
is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement
is outstanding and unpaid or any Letter of Credit is outstanding
and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.13, 2.14, 2.15 and 8.03 shall
survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the
Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 8.06. Counterparts; Integration, Effectiveness.
This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the
Lender constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the
subject matter hereof. This Agreement shall become effective when
it shall have been executed by the Borrower and the Lender and
when the Lender shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 8.07. Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a
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particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION 8.08. Right of Setoff. If an Event of Default
shall have occurred and be continuing, the Lender and each of its
Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may
have.
SECTION 8.09. Governing Law; Jurisdiction; Consent to
Service of Process. (a) This Agreement and all the other Loan
Documents shall be construed in accordance with and governed by
the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York
sitting in Monroe County and of the United States District Court
of the Western District of New York, and any appellate court from
any thereof, or such other jurisdiction or venue as the Lender
may determine, in any action or proceeding arising out of or
relating to this Agreement and/or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be
heard and determined in New York State or, to the extent
permitted by law, in Federal court, or in such other jurisdiction
or venue as the Lender may so determine. Each of the parties
hereto agrees that a final judgment 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. Nothing in this Agreement shall affect any right
that the Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement in any court referred to in
paragraph (b) of this Section. The Borrower and the Lender
hereby irrevocably waive, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) The Borrower and the Lender to this Agreement
irrevocably consent to service of process in the manner provided
for written notices in Section 8.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
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SECTION 8.10. WAIVER OF JURY TRIAL. THE BORROWER
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND/OR RELATING TO ANY OTHER LOAN DOCUMENTS AND/OR TO
THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.11. Headings. Article and Section headings
and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in
interpreting, this Agreement.
SECTION 8.12. Confidentiality. The Lender agrees to
maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and
its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will
be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrower or (h)
to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii)
becomes available to the Lender on a nonconfidential basis from a
source other than the Borrower. For the purposes of this Section,
"Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such
information that is available to the Lender on a nonconfidential
basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date
hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord
to its own confidential information.
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SECTION 8.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate
applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under
applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by the Lender holding
such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in
respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such
Lender.
IN WITNESS WHEREOF, Borrower and Lender have executed
and unconditionally delivered this Agreement to the other on the
Closing Date.
HOME PROPERTIES OF NEW YORK, L.P.
By: Home Properties of New York, Inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
COUNTY OF MONROE ) ss.:
On July 6, 1998, before me personally appeared ▇▇▇ ▇. ▇▇▇▇,
to me known, who, being duly sworn, did depose and say that she
is the Executive Vice President of Home Properties of New York,
Inc. ("General Partner"), which is the sole General Partner of
HOME PROPERTIES OF NEW YORK, L.P. ("Borrower"), the limited
partnership which executed this Agreement and she acknowledged to
me that she executed this Agreement at the direction of the Board
of Directors of the General Partner, and on behalf of Borrower,
as the sole General Partner of the Borrower.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE) ss.:
On the 6th day of July, 1998, before me personally came ▇▇▇▇
▇▇▇▇▇▇▇, who being by me duly sworn did depose and say that she
resides in Rochester, New York, that she is a Vice President of
MANUFACTURERS AND TRADERS TRUST COMPANY, the corporation
described in and which executed the foregoing instrument, and
that she signed her name thereto by order of the Board of
Directors.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Notary Public
