Exhibit 10.1
Execution Version
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 26th day of July, 2007,
by and among AMERICAN CHURCH MORTGAGE COMPANY, a Minnesota corporation (the
"Borrower"), KEYBANK NATIONAL ASSOCIATION, a national banking association
("KeyBank"), the other lending institutions which may become parties hereto
pursuant to ss.18 (collectively, the "Banks"), and KEYBANK NATIONAL ASSOCIATION,
a national banking association, as Agent for the Banks (the "Agent").
RECITALS
WHEREAS, the Borrower has requested that the Banks make available to it a
revolving credit facility; and
WHEREAS, the Banks are willing to make such revolving credit facility
available to Borrower upon the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the terms and conditions herein, the
parties hereto hereby agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1 Definitions.
The following terms shall have the meanings set forth in this ss.1 or
elsewhere in the provisions of this Agreement referred to below:
Actual Loan Loss Reserve Balance. The actual loan loss reserve determined
in accordance with generally accepted accounting principles reported on the
Borrower's balance sheet.
Adjusted EBITDA. With respect to the Borrower on a Consolidated basis with
its Subsidiaries for any period, Net Income for such period, plus Interest
Expense, federal, state and local income taxes, and depreciation and
amortization expense for such period (in each case to the extent deducted in
calculating Net Income), less the Loan Loss Reserve for such period, to the
extent not already deducted in determining Net Income. Adjusted EBITDA shall
also exclude, without duplication, any gains or losses relating to OREO and any
gains or losses resulting from the sale of real property.
Affiliate. An Affiliate, as applied to any Person, shall mean any other
Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means (a) the possession, directly or indirectly, of the power to
vote ten percent (10%) or more of the stock, shares, voting trust certificates,
beneficial interest, partnership interests, member interests or other interests
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
or (b) the ownership of (i) a general partnership interest, (ii) a managing
member's interest in a limited liability company or (iii) a limited partnership
interest or preferred stock (or other ownership interest) representing ten
percent (10%) or more of the outstanding limited partnership interests,
preferred stock or other ownership interests of such Person. Without limiting
the generality of the foregoing portion of this definition, as of the Agreement
Date, AIGI, CLA, Apostle Holdings, Corp., Philip J. Myers, Charter Oak American
Church Holdings, LLC and Charter Oak Capital Partners, L.P. are each deemed to
be Affiliates of the Borrower.
Agent. KeyBank, acting as agent for the Banks, its successors and assigns.
Agent's Head Office. The Agent's head office located at 127 Public Square,
Cleveland, Ohio 44114, or at such other location as the Agent may designate from
time to time by notice to the Borrower and the Banks.
Agent's Special Counsel. Powell Goldstein LLP or such other counsel as may
be approved by the Agent.
Agreement. This Revolving Credit Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. The letter agreement dated July 16, 2007,
executed and delivered by the Agent and the Borrower, amending and restating the
March 21, 2007 letter agreement between such parties regarding certain fees
payable by the Borrower in connection with this Agreement.
AIGI. American Investors Group, Inc., a Minnesota corporation.
Applicable Margin. With respect to any Loan, a rate per annum determined in
accordance with this definition. The initial "Applicable Margin" shall be a rate
per Per Annum Per Annum annum equal to Percentage for Percentage 1.875% for
LIBOR Loans for Base LIBOR Loans and Rate Loans a rate per annum of 0.50% for
Base Rate Loans. As of the end of each fiscal quarter of the Borrower
(commencing June 30, 2007), the Applicable Margin shall be adjusted upward or
downward, as applicable, to the respective amounts shown in the schedule below
based on the Consolidated Total Leverage Ratio, tested on an average daily basis
for the most recent fiscal quarter of the Borrower and its Subsidiaries. For
purposes hereof, any such adjustment in the respective amounts of the Applicable
Margin, whether upward or downward, shall be effective ten (10) Business Days
after the Borrowing Base Certificate of the Borrower and its Subsidiaries with
respect to the final month of such fiscal quarter has been delivered to and
received by the Agent in accordance with the terms of 7.4(f) hereof; provided,
however, if any such Borrowing Base Certificate is not delivered in a timely
manner as required under the terms of said Section, the Applicable Margin from
the date such Borrowing Base Certificate was
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due until ten (10) Business Days after Agent and Lenders receive the same will
be the highest level set forth below for the Applicable Margin.
Total Leverage Ratio Per Annum Percentage for Per Annum Percentage for Base
LIBOR Loans Rate Loans
- ------------------------------------- ------------------------------------- ----------------------------------------
Greater than or equal to 60% 1.875% 0.50%
- ------------------------------------- ------------------------------------- ----------------------------------------
- ------------------------------------- ------------------------------------- ----------------------------------------
Less than 60% but greater than or
equal to 55% 1.50% 0.25%
- ------------------------------------- ------------------------------------- ----------------------------------------
- ------------------------------------- ------------------------------------- ----------------------------------------
Less than 55% 1.35% 0.00%
===================================== ===================================== ========================================
Appraisal. With respect to each Mortgage Loan, an appraisal of the value of
the Mortgage Loan Collateral therefor, determined on a fair value basis,
performed by an independent appraiser approved by the Borrower who is not an
employee of the Mortgage Loan Obligor, the Agent or a Bank, the form and
substance of such appraisal and the identity of the appraiser to be in
compliance with all regulatory laws and policies (both regulatory and internal)
applicable to the Borrower and otherwise acceptable to the Agent.
Appraised Value. The fair value of a parcel of Mortgage Loan Collateral
determined by the most recent Appraisal of such parcel or update obtained
pursuant to ss.7.16(e), subject, however, to such changes or adjustments to the
value determined thereby as may be required by the appraisal department of the
Borrower or the Agent.
Arranger. KeyBanc Capital Markets.
Assignment and Acceptance Agreement. See ss.18.1.
Assignment of Hedge. An Assignment of Hedge Agreement, made by the Borrower
to the Agent for the benefit of the Banks pursuant to which the Interest Rate
Contract described in ss.7.13 is pledged as security for the Obligations, as the
same may be modified or amended, such assignment to be in form and substance
satisfactory to the Agent, and any consents, acknowledgments or financing
statements that may be delivered in connection therewith as required by Agent.
Average Invested Assets. For any period, the average of the aggregate book
values of the assets of the Borrower invested, directly or indirectly, in the
Mortgage Loans (or an interest in the Mortgage Loans) and the Excluded Mortgage
Loans, before reserves for depreciation or bad debts or other similar non-cash
reserves, computed by taking the average of such values at the end of each month
during such period.
Balance Sheet Date. December 31, 2006.
Banks. KeyBank, the other Banks which are a party to this Agreement and any
other Person who becomes an assignee of any rights of a Bank pursuant to ss.18.
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Base Rate. The greater of (a) the variable annual rate of interest
announced from time to time by Agent at Agent's Head Office as its "prime rate"
or (b) one-half of one percent (0.5%) above the Federal Funds Effective Rate
(rounded upwards, if necessary, to the next one-eighth of one percent). The Base
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer. Any change in the rate of interest payable
hereunder resulting from a change in the Base Rate shall become effective as of
the opening of business on the day on which such change in the Base Rate becomes
effective, without notice or demand of any kind.
Base Rate Loans. Those Loans bearing interest calculated by reference to
the Base Rate.
Beacon Bank. As defined in the Lockbox Agreement.
Bond Payors. With respect to any Bonds, all trustees, paying agents, escrow
agents and other persons (other than the applicable Mortgage Loan Obligors)
making payments to or for the account of Borrower in connection with such Bonds.
Bonds. The first mortgage serial bonds of a Mortgage Loan Obligor issued
pursuant to a First Mortgage Indenture, or in the case of the Initial Interim
Loan, first mortgage serial bonds of a Mortgage Loan Obligor, the repayment of
which is secured by a first priority lien on or security title to the real
property owned by such Mortgage Loan Obligor, granted in favor of the trustee
for such bonds, for the pari passu benefit of all holders of such Bonds,
including any Bonds pledged to secure the Initial Interim Loan.
Borrower. As defined in the preamble hereto.
Borrower Party. See ss.12.1(p).
Borrowing Base. At any time with respect to the Borrower, the Borrowing
Base shall be the sum of the book values of the Qualifying Mortgage Loans. To
the extent a Mortgage Loan ceases to be a Qualifying Mortgage Loan or there is a
violation of any of the Borrowing Base limitations described in ss.9.1(c) below,
the non-compliant Mortgage Loan shall be automatically removed from the
Borrowing Base and the Borrowing Base Availability will be recalculated.
Borrowing Base Adjusted EBITDA. For any period, the Adjusted EBITDA
calculated only with respect to Qualifying Mortgage Loans included in the
Borrowing Base. For purposes of calculating the Borrowing Base Adjusted EBITDA,
the Management Fee and the Loan Loss Reserve shall be allocated to Qualified
Mortgage Loans pro rata, in proportion to the respective outstanding principal
balances thereof as of the relevant date of determination.
Borrowing Base Availability. At any time with respect to the Borrower, the
Borrowing Base Availability shall be the lesser of (i) the Total Commitment and
(ii) sixty-five percent (65%) of the Borrowing Base.
Borrowing Base Certificate. See ss. 7.4(f).
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Business Day. Any day on which banking institutions located in the same
city and state as the Agent's Head Office are open for the transaction of
banking business and, in the case of LIBOR Rate Loans, which also is a LIBOR
Business Day.
Change of Control. A Change of Control shall exist upon the occurrence of
one or more of the following:
(a) the Manager shall cease to be the sole manager of Borrower, or the
Management Agreement shall be terminated or not renewed; or
(b) Philip J. Myers shall cease to hold the position of President of the
Borrower or the Manager, or both; or
(c) Philip J. Myers shall cease to own, directly or indirectly, at least
twenty percent (20%) of the issued and outstanding voting shares of
CLA; or
(d) the occurrence of a "Change of Control" as defined in either of the
Indentures.
CLA. Church Loan Advisors, Inc., a Minnesota corporation.
Closing Date. The first date on which all of the conditions set forth in
ss.10 and ss.11 have been satisfied.
Code. The Internal Revenue Code of 1986, as amended, or any successor
federal tax statute. Any reference to any provision of the Code shall also
include the income tax regulations promulgated thereunder, whether final,
temporary or proposed.
Collateral. All of the property, rights and interests of the Borrower or
any of its Subsidiaries (other than Securitization Subsidiaries) which are or
are intended to be subject to the security interests, liens and collateral
assignments created by the Security Documents, including, without limitation,
the Mortgage Loans, but specifically excluding the Excluded Mortgage Loan
Collateral.
Collateral Agency Agreement. That certain Collateral Agency Agreement dated
of even date herewith by and among Borrower, Agent for the benefit of the Banks,
and the Collateral Agent, as subsequently modified or amended, such agreement to
be in form and substance satisfactory to Agent.
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Collateral Agent. Herring Bank, a Texas state banking institution, or any
successor thereto appointed by Agent.
Collateral Assignment. The Collateral Assignment of Documents, Rights and
Claims dated of even date herewith, made by Borrower in favor of Agent for the
benefit of the Banks, pursuant to which all of the Mortgage Loans shall be
collaterally assigned as security for repayment of the Obligations, as
subsequently supplemented, modified or amended, such collateral assignment to be
in form and substance satisfactory to Agent, and any consents, acknowledgements
or financing statements that may be delivered in connection therewith, as
required by Agent.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
hereto as the amount of such Bank's Commitment to make or maintain Loans to the
Borrower, as the same may be changed from time to time in accordance with the
terms of this Agreement.
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks.
Compliance Certificate. See ss.7.4(e).
Compound Bond. A Bond which accrues interest rather than makes periodic
interest payments, and the face amount of which Bond at its maturity is greater
than the face amount at its issuance.
Consolidated or combined. With reference to any term defined herein, that
term as applied to the accounts of a Person and its Subsidiaries, consolidated
or combined in accordance with generally accepted accounting principles.
Consolidated Tangible Net Worth. The amount by which Consolidated Total
Adjusted Tangible Asset Value exceeds Consolidated Total Liabilities, and less
the sum of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as good will, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to the
foregoing; plus
(b) all amounts representing any write-up in the book value of any assets
of the Borrower or its Subsidiaries resulting from a revaluation
thereof subsequent to the Balance Sheet Date; plus
(c) all amounts representing minority interests which are applicable to
third parties.
Consolidated Total Adjusted Asset Value. The sum of all assets of the
Borrower and its Subsidiaries determined on a Consolidated basis. The assets of
the Borrower and its Subsidiaries on the consolidated financial statements of
the Borrower and its Subsidiaries shall be adjusted to reflect the Borrower's
allocable share of such asset, for the relevant period or as of the date of
determination, taking into account (a) the relative proportion of each such item
derived from assets directly owned by the Borrower and from assets owned by its
Subsidiaries, and (b) the Borrower's respective ownership interest in its
Subsidiaries.
Consolidated Total Adjusted Tangible Asset Value. Consolidated Total
Adjusted Asset Value less intangible assets, goodwill and OREO.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a Consolidated basis and all Indebtedness of the
Borrower and its Subsidiaries, whether or not so classified.
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Construction Loan. Shall mean a short-term loan (12 to 18 months maturity)
made to, a Mortgage Loan Obligor to finance new construction of improvements,
typically payable on an interest-only basis with principal due in full at
maturity.
Conversion Request. A notice given by the Borrower to the Agent of its
election to convert or continue a Loan in accordance with ss.4.1.
Debt Certificates. Series A secured investor certificates and Series B
secured investor certificates issued from time to time by the Borrower pursuant
to the Indentures, as the same may be renewed from time to time in accordance
with the provisions of the applicable Indenture (which for purposes of this
Section shall be deemed to include rolling a maturing Series A Debt Certificate
into a Series B Debt Certificate of equal or lesser amount, in accordance with
the terms, and subject to the limitations, of the Indenture pursuant to which
the Series B Debt Certificates were issued).
Default. See ss.12.1
Delinquent Bank. See ss.14.5(c).
Deposit Account Control Agreement. That certain Deposit Account Control
Agreement dated of even date herewith, by and among Beacon Bank, the Borrower
and the Agent, as the same may be modified or amended hereafter.
Directions. See ss.27(b).
Distribution. With respect to any Person, the declaration or payment of any
cash, cash flow, dividend or distribution on or in respect of any shares of any
class of capital stock or other beneficial interest of such Person other than
dividends or distributions payable solely in equity securities of such Person;
the purchase, redemption, exchange or other retirement of any shares of any
class of capital stock or other beneficial interest of such Person, directly or
indirectly through a Subsidiary of such Person or otherwise; the return of
capital by such Person to its shareholders, partners or other owners as such; or
any other distribution on or in respect of any shares of any class of capital
stock or other beneficial interest of such Person.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and the
date on which any Loan which is made prior to the Maturity Date is converted or
combined in accordance with ss.4.1.
Eligible Assignee: (i) Any Bank; (ii) any commercial bank, savings bank,
savings and loan association or similar financial institution which (A) has
total assets of Five Billion Dollars ($5,000,000,000) or more, (B) is "well
capitalized" within the meaning of such term under the regulations promulgated
under the auspices of the Federal Deposit Insurance Corporation
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Improvement Act of 1991, (C) in the sole judgment of the Agent, is engaged in
the business of lending money and extending credit, and buying loans or
participations in loans under credit facilities substantially similar to those
extended under this Agreement, and (D) in the sole judgment of the Agent, is
operationally and procedurally able to meet the obligations of a Bank hereunder
to the same degree as a commercial bank; (iii) any insurance company in the
business of writing insurance which (A) has total assets of Five Billion Dollars
($5,000,000,000) or more (B) is "best capitalized" within the meaning of such
term under the applicable regulations of the National Association of Insurance
Commissioners, and (C) meets the requirements set forth in subclauses (C) and
(D) of clause (ii) above; and (iv) any other financial institution having total
assets of Five Billion Dollars ($5,000,000,000) or more (including a mutual fund
or other fund under management of any investment manager having under its
management total assets of Five Billion Dollars ($5,000,000,000) or more) which
meets the requirement set forth in subclauses (C) and (D) of clause (ii) above;
provided that each Eligible Assignee must (w) be organized under the Laws of the
United States of America, any state thereof or the District of Columbia, or, if
a commercial bank, be organized under the Laws of the United States of America,
any state thereof or the District of Columbia, the Cayman Islands or any country
which is a member of the Organization for Economic Cooperation and Development,
or a political subdivision of such a country, (x) act under the Loan Documents
through a branch, agency or funding office located in the United States of
America, (y) be exempt from withholding of tax on interest and deliver the
documents related thereto pursuant to the Internal Revenue Code as in effect
from time to time and (z) not be the Borrower or an Affiliate of the Borrower.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. Collectively, the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control, or any state or local statute,
regulation, ordinance, order or decree relating to the environment.
Equity Offering. The issuance and sale by the Borrower of any equity
securities of the Borrower.
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under ss.414 of the Code.
Event of Default. See ss.12.1.
Excluded Mortgage Loans. The loans described on Schedule 1.1 attached
hereto and by this reference incorporated herein and any other loans or Bonds
that have been pledged by the Borrower or a Subsidiary to secure Permitted
Indebtedness; provided, however, that in no event
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shall Excluded Mortgage Loans securing outstanding Debt Certificates exceed the
minimum collateralization levels specified in the related Indentures by more
than $200,000 for any series of Debt Certificates.
Excluded Mortgage Loan Collateral. Any and all Collateral securing the
Excluded Mortgage Loans.
Executive Order. See ss.6.25(e)(i).
Existing Indenture Defaults. Any and all defaults and events of default
occurring under the Indentures prior to the Closing Date arising from the fact
that the Borrower's outstanding Indebtedness exceeded or exceeds the limitations
set forth in the financial covenant contained in Section 4.7(ii) of the
respective Indentures, which originally limited the Borrower's outstanding
Indebtedness to an amount not exceeding the Borrower's shareholders' equity.
Facility Interest Expense. For any period, Interest Expense with respect to
the Loans only.
Federal Funds Effective Rate. For any day, the rate per annum (rounded
upward to the nearest one one-hundredth of one percent (1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding 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 of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent. Any change
in the Federal Funds Effective Rate shall become effective as of the opening of
business on the day on which such change in the Federal Funds Effective Rate
becomes effective, without notice or demand of any kind.
First Mortgage Indenture. Any trust indenture now or hereafter executed and
delivered by a Mortgage Loan Obligor pursuant to which Bonds are or are to be
issued, which indenture (i) contains, or is otherwise secured by, a Mortgage on
the Real Property of the Mortgage Loan Obligor for the benefit of the holders of
such Bonds and, if the Borrower has made an Interim Loan to such Mortgage Loan
Obligor, then also for the benefit of the Borrower in its capacity as the
Interim Loan lender; (ii) provides that the related Bonds and any such Interim
Loan shall be treated on a parity basis for all purposes under such indenture
(including application and use of trust moneys collected by the trustee under
such indenture in the exercise of its rights and remedies under the First
Mortgage Indenture); (iii) if an Interim Loan is made, requires the Mortgage
Loan Obligor to instruct such trustee to pay interest on, and the principal of,
such Interim Loan as and when due (whether at scheduled maturity, by prepayment
or upon acceleration) to the Borrower from the Mortgage Loan Obligor's sinking
fund and from the Bond proceeds account established under such indenture; and
(iv) if an Interim Loan is made, accords to the Borrower (as Interim Loan
lender) on a pro rata basis all rights and privileges accorded to the
Bondholders, including the right to direct, remove or terminate the Trustee and
direct the Trustee's conduct.
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Funds Available for Distribution. Consolidated net income (loss) of the
Borrower and its Subsidiaries before extraordinary items, computed in accordance
with generally accepted accounting principles, plus, to the extent deducted in
determining taxable income (loss) and without duplication, (i) gains (or losses)
from debt restructuring and sales of Mortgage Loans, (ii) non-recurring charges,
(iii) real estate related depreciation, amortization and other non-cash charges,
and (iv) amortization of organizational expenses.
generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time
and (b) consistently applied with past financial statements of the Person
adopting the same principles; provided that a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. Collectively, any hazardous waste, as defined by 42
U.S.C. ss.9601(5), any hazardous substances as defined by 42 U.S.C. ss.9601(14),
any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws.
ICA Account. As defined in the Securities Account Control Agreement.
Increasing Bank. See ss.2.7.
Indebtedness. All obligations, contingent and otherwise that in accordance
with generally accepted accounting principles should be classified upon the
obligor's balance sheet as liabilities, or to which reference should be made by
footnotes thereto, but without any double counting, including in any event and
whether or not so classified: (a) all debt and similar monetary obligations,
whether direct or indirect (including, without limitation, any obligations
evidenced by bonds, debentures, notes or similar debt instruments); (b) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (c) all
guarantees, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest directly or indirectly in a Person,
to purchase indebtedness, or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the purpose of
enabling the debtor to make payment of the indebtedness held by such owner,
through indemnity or otherwise, and the obligation to reimburse the issuer in
respect of any letter of credit; (d) all obligations with respect to letters of
credit or similar instruments issued by a Person; (e) all subordinated debt; (f)
all indebtedness, obligations or other liabilities under or with respect to (i)
interest rate swap, collar, cap or similar agreements providing interest rate
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protection and (ii) foreign currency exchange agreements; (g) current
liabilities of a Person incurred in the ordinary course of business including
credit on an open account basis customarily extended and in fact extended in
connection with normal purchases of goods and services; and (h) unfunded loan
commitments.
Indemnification Agreement. That certain Indemnification Agreement dated as
of the Closing Date from Borrower and the Manager, jointly and severally as
indemnitors, in favor of the Agent and the Banks, indemnifying the Agent and the
Banks against certain claims or liabilities relating to, among other things, the
Existing Indenture Defaults and the Indenture Amendments.
Indenture Amendments. Collectively, (a) that certain First Supplemental
Indenture dated as of July 2, 2007, between Borrower and Herring Bank, a Texas
banking corporation (formerly The Herring National Bank, a national banking
association), as trustee, amending the Series A Indenture, and (b) that certain
First Supplemental Indenture dated as of July 2, 2007, between Borrower and
Herring Bank, a Texas banking corporation (formerly The Herring National Bank, a
national banking association), as trustee, amending the Series B Indenture.
Indentures. Collectively, (i) that certain Indenture dated as of April 26,
2002 (the "Series A Indenture"), between Borrower and Herring Bank, a Texas
banking corporation (formerly The Herring National Bank, a national banking
association), as trustee, pursuant to which Borrower has issued its Series A
secured investor certificates outstanding on the Closing Date in the aggregate
principal amount of $9,353,000, and (ii) that certain Indenture dated as of
September 28, 2004 (the "Series B Indenture"), between Borrower and Herring
Bank, a Texas banking corporation (formerly The Herring National Bank, a
national banking association), as trustee, pursuant to which Borrower has issued
its Series B secured investor certificates outstanding on the Closing Date in
the aggregate principal amount of $16,023,000.
Initial Interim Loan. The Mortgage Loan described on Schedule 1.4 attached
hereto and by this reference incorporated herein, which shall be pledged to
Agent for the benefit of the Banks as of the Closing Date pursuant to the
Collateral Assignment.
Initial Mortgage Loans. The Mortgage Loans described on Schedule 1.2
attached hereto and by this reference incorporated herein, which shall be
pledged to Agent for the benefit of the Banks as of the Closing Date pursuant to
the Collateral Assignment.
Interest Expense. For any period, the sum of all interest due and payable
by Borrower and its Subsidiaries on a consolidated basis during such period
(including the amortization of debt discounts and the amortization of all fees
payable in connection with the incurrence of such Indebtedness).
Interest Hedging Ratio. As of the last day of any fiscal quarter of
Borrower, the ratio equal to (1) the sum of (a) Adjusted EBITDA for the period
of four (4) consecutive fiscal quarters ending on such determination date, plus
(b) the product of (i) the aggregate principal amount of Variable Rate Debt
outstanding on such date of determination, multiplied by (ii) one-half of one
percent (0.50%) per annum, divided by (2) the sum of (a) Interest Expense for
such rolling four (4) fiscal quarter period plus (b) the product of (i) Unhedged
Variable Rate Debt multiplied by (ii) one-half of one percent (0.50%) per annum.
To the extent Variable Rate Debt
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is hedged through an interest rate cap, the multiplier for that portion shall be
the lesser of one-half of one percent (0.50%) or the amount until which the
interest rate cap becomes effective.
Interest Income. For any period, the gross interest income and fees
received by Borrower from Mortgage Loans.
Interest Payment Date. As to each Base Rate Loan, the first day of each
calendar month during the term of such Base Rate Loan, and as to each LIBOR Rate
Loan, the first day of each calendar month during the term of such LIBOR Rate
Loan and the last day of the Interest Period relating thereto.
Interest Period. With respect to each LIBOR Rate Loan (a) initially, the
period commencing on the Drawdown Date of such Loan (which shall be a LIBOR
Business Day) and ending one, two or three months thereafter, to the extent
deposits with such maturities are available to Agent, and (b) thereafter, each
period commencing on the day following the last day of the next preceding
Interest Period applicable to such Loan and ending on the last day of one of the
periods set forth above, as selected by the Borrower in a Conversion Request;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period with respect to a LIBOR Rate Loan would
otherwise end on a day that is not a LIBOR Business Day, that Interest
Period shall end and the next Interest Period shall commence on the
next succeeding LIBOR Business Day as determined conclusively by the
Agent in accordance with the then current bank practice in the London
Interbank Market, unless the result would be that such Interest Period
would be extended to the next succeeding calendar month, in which case
such Interest Period shall end on the next preceding LIBOR Business
Day;
(2) if any Interest Period which begins on a day for which there is no
numerically corresponding date in the calendar month in which such
Interest Period would otherwise end shall instead end on the last
LIBOR Business Day of such calendar month;
(3) if the Borrower shall fail to give notice as provided in ss.4.1, the
Borrower shall be deemed to have requested a conversion of the
affected LIBOR Rate Loan to a Base Rate Loan on the last day of the
then current Interest Period with respect thereto; and
(4) no Interest Period relating to any LIBOR Rate Loan shall extend beyond
the Maturity Date.
Interest Rate Contracts. Interest rate swap, collar, cap or similar
agreements providing interest rate protection.
Interest Rate Hedging Cap. With respect to any Interest Rate Contract, as
of the trade date therefor, the amount which, when added to the aggregate
notional amount of all other Interest Rate Contracts then in effect, equals the
lesser of (a) the aggregate principal amount of
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Loans then outstanding under this Agreement, and (b) an amount equal to fifty
percent (50%) of the Total Commitment.
Interim Loans. The Initial Interim Loan and any other loan or line of
credit having a maturity date not later than one year from the initial advance
thereunder (or such longer term as the Agent may approve in its sole
discretion), made by the Borrower to a Mortgage Loan Obligor to provide interim
financing pending the issuance and sale of Bonds by such Mortgage Loan Obligor,
which loan or line of credit is to be repaid and retired with net proceeds from
the sale of such Bonds and which is secured by a First Mortgage Indenture (or,
in the case of the Initial Interim Loan, which is secured by the pledge of Bonds
registered in the name of the Mortgage Loan Obligor and issued under an
indenture secured by a first priority Mortgage for the benefit of all holders of
Bonds issued under such indenture).
Investments. With respect to any Person, all shares of capital stock,
evidences of Indebtedness and other securities issued by any other Person, all
loans, advances, or extensions of credit to, or contributions to the capital of,
any other Person, all purchases of the securities or business or integral part
of the business of any other Person and commitments and options to make such
purchases, all interests in real property, and all other investments; provided,
however, that the term "Investment" shall not include (i) equipment, inventory
and other tangible personal property acquired in the ordinary course of
business, or (ii) current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms. In determining the aggregate amount of Investments
outstanding at any particular time: (a) the amount of any Investment represented
as a guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be included as an
Investment all interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall be deducted
in respect of each such Investment any amount received as a return of capital
(but only by repurchase, redemption, retirement, repayment, liquidating dividend
or liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Key Man Insurance Trigger Event. With respect to any policy of "key man"
insurance collaterally assigned as security for a Mortgage Loan, the lapse,
surrender or other termination of such policy.
KeyBank. KeyBank National Association.
KeyBank Lockbox Account. As defined in the Lockbox Agreement.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London.
LIBOR Lending Office. Initially, the office of each Bank designated as such
in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that
shall be making or maintaining LIBOR Rate Loans.
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LIBOR Rate. As applicable to any Interest Period for any LIBOR Rate Loan,
the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of one
percent) as determined on the basis of the offered rates for deposits in Dollars
as shown on Reuters Screen LIBOR01 Page as of 11:00 a.m. London time on the day
that is two (2) LIBOR Business Days preceding the first day of such Interest
Period, with a maturity approximately equal to such Interest Period and in an
amount approximately equal to the amount of such LIBOR Rate Loan to which such
Interest Period relates, adjusted for reserves and taxes if required by future
regulations. If Reuters no longer reports such rate or Agent determines in good
faith that the rate so reported no longer accurately reflects the rate available
to Agent in the London Interbank Market, Agent may select a replacement index.
In the event that Agent is unable to obtain any such quotation as provided
above, it will be deemed that the LIBOR Rate pursuant to a LIBOR Rate Loan
cannot be determined and the provisions of ss.4.6 shall apply. In the event that
the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of Agent, then for any period during
which such Reserve Percentage shall apply, the LIBOR Rate shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.
LIBOR Rate Loans. Loans bearing interest calculated by reference to a LIBOR
Rate.
Loan Documents. This Agreement, the Notes, the Security Documents, the
Collateral Agency Agreement, the Indemnification Agreement, and all other
documents, instruments or agreements now or hereafter executed or delivered by
or on behalf of the Borrower or any of its Subsidiaries in connection with the
Loans, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
Loan Loss Reserve. With regard to the Borrower for any period, a reserve in
the amount of one percent (1%) of the sum of the following amounts shown on the
Borrower's balance sheet for such period: (i) "Loans Receivable" plus (ii)
"Held-to-Maturity Securities" plus (iii) OREO held by the Borrower for sale;
provided, however, that if the Requisite Banks shall determine that the
Borrower's practices regarding the establishment and maintenance of loan loss
reserves with respect to items (i), (ii) and (iii) are adequate without the
mandated reserve otherwise required by this definition, the amount of the Loan
Loss Reserve shall be zero; provided, further, that nothing contained herein
shall preclude the Agent, at the direction of the Requisite Banks, from
requiring or re-instituting the requirement (as the case may be) of the one
percent (1%) Loan Loss Reserve hereinabove provided.
Loan Request. See ss.2.5.
Loans. See ss.2.1.
Lockbox Account. As defined in the Lockbox Agreement.
Lockbox Agreement. That certain Lockbox Account Agreement dated of even
date herewith by and between Borrower and Agent for the benefit of the Banks, as
subsequently modified or amended, pursuant to which Interest Income and other
payments on the Mortgage Loans shall be deposited by the Mortgage Loan Obligors
in the Lockbox Account and subsequently disbursed to the Borrower, subject to
the limitations set forth therein.
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Management Agreement. That certain Amended and Restated Advisory Agreement
dated as of January 22, 2004, between the Borrower and the Manager.
Management Fee. The monthly or other periodic management fee, and any other
fees, commissions or similar compensation for its services paid or payable to
the Manager by the Borrower pursuant to the Management Agreement.
Manager. Church Loan Advisors, Inc., a Minnesota corporation.
Maturity Date. July 26, 2010, or such earlier date on which the Loans shall
become due and payable pursuant to the terms hereof.
Mortgage. With respect to each Mortgage Loan, each mortgage, deed of trust
or deed to secure debt, as applicable in the particular jurisdiction, which
creates the first priority lien on the Mortgage Loan Collateral in favor of
Borrower as security for the repayment of such Mortgage Loan or, with respect to
an Interim Loan or Bonds, in favor of the trustee under the related indenture,
as security for repayment of (i) the Bonds, or (ii) the Mortgage Note evidencing
the Interim Loan or (iii) in the case of the Initial Interim Loan, the Bonds
pledged to secure the Initial Interim Loan.
Mortgage Assignment. With respect to each Mortgage Loan (excluding Bonds
and Interim Loans), a transfer and assignment of the Mortgage with respect
thereto from Borrower executed in blank, in recordable form for the applicable
jurisdiction.
Mortgage Loan. Each Construction Loan, permanent loan, Interim Loan, line
of credit loan or other real property secured loan made by, or Bond purchased
by, Borrower to a Mortgage Loan Obligor, but excluding any Excluded Mortgage
Loan.
Mortgage Loan Collateral. With respect to each Mortgage Loan, the real
property, improvements, fixtures, personalty, insurance policies, accounts,
escrows and any other collateral pledged by the Mortgage Loan Obligor (and, if
applicable, by any guarantor of such Mortgage Loan) to (i) Borrower as security
for such Mortgage Loan (or applicable guaranty) pursuant to the applicable
Mortgage and other Mortgage Loan Collateral Documents, (ii) in the case of Bonds
and Interim Loans (other than the Initial Interim Loan), to the trustee under
the related First Mortgage Indenture as pari passu security for such Mortgage
Loans (or applicable guaranty) and the Bonds issued under the applicable First
Mortgage Indenture, and (iii) in the case of the Initial Interim Loan, to the
trustee under the indenture pursuant to which the Bonds pledged to secure the
Initial Interim Loan have been issued, as pari passu security for all Bonds
issued under such indenture. Mortgage Loan Collateral shall not include Excluded
Mortgage Loan Collateral.
Mortgage Loan Collateral Documents. With respect to:
(i) each Mortgage Loan (other than Bonds owned by the Borrower), the
original Mortgage Loan Note, an original allonge to each Mortgage Loan
Note duly executed in blank by Borrower, the original Mortgage and the
original Mortgage Assignment;
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(ii) the Initial Interim Loan, an original assignment of the loan, pledge
and security agreement and the control agreement for the pledged Bonds
as well as an endorsement duly executed in blank by Borrower, and a
copy of the indenture pursuant to which such pledged Bonds were
issued;
(iii) each Mortgage Loan consisting of Bonds owned by the Borrower and
issued in certificated form, the original Bonds and an endorsement
duly executed in blank by the Borrower, and a copy of the related
First Mortgage Indenture; and
(iv) each Mortgage Loan consisting of Bonds issued in book-entry form
(except for those Bonds held in the ICA Account subject to the
Securities Account Control Agreement), the control agreement executed
by the trustee under the applicable First Mortgage Indenture, and a
copy of the First Mortgage Indenture pursuant to which such Bonds were
issued.
The Mortgage Loan Collateral Documents shall be delivered to the Collateral
Agent as provided in ss.11.7.
Mortgage Loan Documents. With respect to each Mortgage Loan, collectively,
all of the documents evidencing, guaranteeing, securing or otherwise relating to
such Mortgage Loan, as any of the foregoing may be modified, amended,
supplemented, restated or renewed from time to time, including, without
limitation, the following documents:
(i) Mortgage Loan Note (or the Bond, if such Mortgage Loan is evidenced by
a certificated Bond);
(ii) Mortgage and related security agreement, fixture filing and financing
statement;
(iii) With respect to the Initial Interim Loan, the loan, pledge and
security agreement with respect to the Bonds, and the control
agreement, and the indenture pursuant to which such Bonds were issued;
(iv) With respect to each Bond owned by the Borrower and issued in
book-entry form (except for those Bonds held in the ICA Account
subject to the Securities Account Control Agreement),, the control
agreement executed by the trustee under the applicable First Mortgage
Indenture, and such First Mortgage Indenture.
Mortgage Loan Note. With respect to each Mortgage Loan, the negotiable
promissory note, bond or other debt instrument made by the Mortgage Loan Obligor
in favor of Borrower.
Mortgage Loan Obligor. With respect to each Mortgage Loan, the church,
school, other non-profit organization or other Person obligated to make the
scheduled payments of principal, interest and other amounts due under the
Mortgage Loan Documents, including, without limitation, any guarantor of such
Mortgage Loan.
Mortgage Loan Qualification Documents. With respect to each Mortgage Loan,
each of the following items:
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(i) the original Mortgage Loan Note, together with an original allonge to
such Mortgage Loan Note duly executed in blank by the Borrower; or for
Mortgage Loans evidenced by certificated Bonds owned by the Borrower,
the original of such Bond, together with an original endorsement
thereof duly executed in blank by the Borrower; or for Bonds issued in
book-entry form (except for those Bonds held in the ICA Account
subject to the Securities Account Control Agreement), the control
agreement executed by the trustee under the applicable First Mortgage
Indenture;
(ii) for any Mortgage Loan evidenced by Bonds and for Interim Loans (other
than the Initial Interim Loan), a copy of the related First Mortgage
Indenture;
(iii) the Collateral Assignment, or with respect to the Mortgage Loans
closed by the Borrower after the Closing Date, a duly executed and
delivered modification to the Collateral Assignment adding such
Mortgage Loan to the Collateral;
(iv) a duly executed and delivered Mortgage Assignment, if applicable;
(v) the original counterparts of the other Mortgage Loan Documents, or the
original recorded counterpart upon return from recording or filing;
(vi) with respect to each Mortgage Loan, other than the Initial Interim
Loan, a favorable legal opinion of counsel to the Mortgage Loan
Obligor qualified to practice in the State in which the Mortgage Loan
Collateral is located, addressed to the Borrower, as to the
enforceability of the Mortgage Loan Documents; provided, however, that
for Mortgage Loans outstanding on the Closing Date, no legal opinions
of counsel shall be required if they were not obtained by Borrower in
connection with closing such Mortgage Loans;
(vii) the Appraisal or estimate of value, Survey, Surveyor Certification
and Title Policy for the Mortgage Loan Collateral, as required by
Borrower's internal policies; provided, however, that for Mortgage
Loans outstanding on the Closing Date, no Survey, Surveyor
Certification or Title Policy shall be required if they were not
obtained by Borrower in connection with closing such Mortgage Loans;
(viii) for Mortgage Loans made subsequent to the date of this Agreement,
(a) if such Mortgage Loan is equal to or greater than $2,000,000, a
Phase I environmental site assessment report concerning Hazardous
Substances and asbestos on the Mortgage Loan Collateral dated or
updated not more than six (6) months prior to the inclusion of such
Mortgage Loan in the Collateral, from an environmental engineer
acceptable to the Borrower, such report to contain no material
qualifications, and (b) if such Mortgage Loan is less than $2,000,000,
an environmental database review as requested by the Agent; and
(ix) for Mortgage Loans that are secured or required to be secured by "key
man" insurance insuring the life of the senior pastor of the Mortgage
Loan Obligor, or a pledge or collateral assignment thereof, a
collateral assignment or other pledge of
17
such "key man insurance" to the Agent in form and substance
satisfactory to the Agent, plus the original policy if available, but
a copy thereof in any event.
MSA. A "Metropolitan Statistical Area" as identified by the United States
Bureau of the Census.
Multiemployer Plan. Any multiemployer plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Income. With respect to any Person for any period, net income of such
Person for the applicable calculation period determined in accordance with
generally accepted accounting principles; provided, that there shall not be
included in such calculation of net income (a) any gains or losses from
dispositions of property or assets in connection with a securitization
transaction permitted under ss.7.17 of this Agreement, (b) the net income or
loss of any other Person that is not a Subsidiary of such Person for whom net
income is being calculated (or is accounted for by such Person by the equity
method of accounting), (c) the net income (or loss) of any other Person acquired
by, or merged with, such Person for whom net income is being calculated or any
of its Subsidiaries for any period prior to the date of such acquisition, and
(d) the net income of any Subsidiary of such Person for whom net income is being
calculated to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of such net income is not at the time permitted
by operation of the terms of its charter, certificate of incorporation or
formation or other constituent document or any agreement or instrument or legal
requirement applicable to such Subsidiary, all as determined in accordance with
generally accepted accounting principles.
Net Offering Proceeds. The gross cash proceeds received by the Borrower as
a result of an Equity Offering less the customary and reasonable costs, fees,
expenses, underwriting commissions and discounts incurred by the Borrower in
connection therewith.
Non-Consenting Bank. See ss.27(c).
Non-Indemnitor Bank. See ss.14.12(f).
Non-Performing Assets. All Non-Performing Mortgage Loans and OREO.
Non-Performing Mortgage Loan. A Mortgage Loan that does not constitute a
Performing Mortgage Loan, is more than ninety (90) days past due, or is on a
non-accrual basis.
Notes. See ss.2.3.
Notice. See ss.19.
Obligations. All indebtedness, obligations and liabilities of the Borrower
to any of the Banks and the Agent, individually or collectively, under this
Agreement, under any of the other Loan Documents, under any Interest Rate
Contract with a Bank (including, without limitation, with respect to an Interest
Rate Contract, obligations owed thereunder to any Person who was a Bank or an
Affiliate of a Bank at the time such Interest Rate Contract was entered into),
or in respect of any of the Loans or the Notes, or other instruments at any time
evidencing any of the
18
foregoing, whether existing on the date of this Agreement or arising or incurred
hereafter, direct or indirect, joint or several, absolute or contingent, matured
or unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, whether for principal, interest
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to the Borrower, would have accrued on any
Obligation, whether or not a claim is allowed against the Borrower for such
interest in the related bankruptcy proceeding), payments for early termination
of Interest Rate Contracts, fees, expenses, indemnification or otherwise. OFAC.
See ss.6.25(e)(iii)
OFAC List. See ss.6.25(e)(iii).
OREO. Mortgage Loan Collateral acquired by the Borrower pursuant to
foreclosure proceedings, deed in lieu of conveyance of foreclosure or a similar
conveyance transaction as the result of a defaulted Mortgage Loan.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PATRIOT Act. The Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may
be amended from time to time and corresponding provisions of future laws.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
Performing Mortgage Loan. A Mortgage Loan with respect to which the
Mortgage Loan Obligor has met all of the material terms and conditions set forth
in the Mortgage Loan Documents and no default or event, which with the passage
of time or giving of notice, or both, might constitute a default, exists and has
continued for more than 60 days under such Mortgage Loan Documents.
Permitted Indebtedness. Collectively, (a) the Debt Certificates of the
Borrower outstanding on the Closing Date, in the aggregate face principal amount
of up to $25,376,000, less any Debt Certificates redeemed by the Borrower
pursuant to ss.7.18 hereof, and (b) Permitted Securitization Indebtedness.
Permitted Liens. Liens, security interests and other encumbrances permitted
by ss.8.2.
Permitted Securitization Indebtedness. With respect to the Borrower and its
Subsidiaries and Securitization Subsidiaries on a consolidated basis, as of any
date of determination, the aggregate outstanding amount of Indebtedness
evidenced by certificates of participation, notes or other interests sold or
issued to third Persons in connection with a securitization program pursuant to
which the Borrower or any Securitization Subsidiary receives proceeds arising
out of a pledge, financing, sale, transfer or other encumbrance of Mortgage
Loans ("Securitization Assets") transferred by the Borrower to a Securitization
Subsidiary; provided, that (i) such
19
Indebtedness is non-recourse to the Borrower and its Subsidiaries other than any
Securitization Subsidiary (except with respect to breaches of certain
representations and warranties made by the Borrower or its Subsidiaries in
connection with the transfer of the Securitization Assets, provided that such
recourse is not related to the creditworthiness of the Mortgage Loan Obligors
under the Securitization Assets), and (ii) such Indebtedness is incurred in
compliance with the provisions of Section 7.17.
Permitted Subordinate Mortgage Loan. Any Mortgage Loan outstanding on the
Closing Date and identified on Schedule 1.1, that is subordinate in rank, time
of payments, priority of lien or any other respect to any other indebtedness of
the Mortgage Loan Obligors, provided that (i) the Borrower or an Affiliate is
and continues to be the holder of both such subordinated Mortgage Loan and the
first priority Mortgage Loan made by the Borrower or an Affiliate to the same
Mortgage Loan Obligor, and (ii) both the subordinated Mortgage Loan and the
senior Mortgage Loan to which it is subordinated otherwise meet all applicable
requirements of this Agreement for Qualified Mortgage Loans.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision thereof.
Qualifying Mortgage Loan. A Mortgage Loan with respect to which each and
all of the following conditions and requirements have been met as evidenced by
written certification delivered by Borrower to Agent:
(i) Collateral Agent shall have received the Mortgage Loan Collateral
Documents, all of which remain in full force and effect.
(ii) Each of the Mortgage Loan Documents evidencing, securing or otherwise
relating to the Mortgage Loan shall have been executed by the Mortgage
Loan Obligor and shall be legal, valid and binding on and enforceable
against the Mortgage Loan Obligor.
(iii) The making of such Mortgage Loan by Borrower was in all material
respects in compliance with and was not in violation of Borrower's
standard underwriting guidelines and criteria, as approved by Agent,
and any applicable law.
(iv) Based on the Appraised Value of the Mortgage Loan Collateral for such
Mortgage Loan, the loan to value ratio of such Mortgage Loan shall not
be greater than seventy-five percent (75%), unless such Mortgage Loan
is guaranteed by a credit party acceptable to the Requisite Banks, and
the Mortgage Loan Collateral shall not have any material title,
survey, environmental, entitlement/zoning issues or other defects.
(v) The Mortgage Loan is a Performing Mortgage Loan.
(vi) The representations and warranties in ss.6.24 shall be true and
correct with respect to such Mortgage Loan .
20
(vii) The Mortgage Loan Documents shall be free and clear of all Liens
other than the lien in favor of Agent pursuant to the Collateral
Assignment.
Agent and the Banks acknowledge and agree that all of the Initial Mortgage Loans
(other than the Permitted Subordinate Mortgage Loans, if any) shall constitute
Qualifying Mortgage Loans on the Closing Date. In addition, a Key Man Insurance
Trigger Event occurs with respect to any Qualifying Mortgage Loan secured by a
"key man" insurance policy, or by a collateral assignment or pledge thereof, and
such "key man" insurance policy shall not be reinstated or replaced to the
satisfaction of the Agent within sixty (60) days, together with the delivery of
all documentation required by the Agent to reaffirm or establish the perfection
of the collateral assignment of such policy, then and in such event the Agent
shall be entitled, in its sole discretion, to either (A) declare by written
notice to the Borrower that such Mortgage Loan is no longer a Qualifying
Mortgage Loan, (B) to otherwise reduce the Borrowing Base up to the amount of
the Borrowing Base represented by such Mortgage Loan immediately prior to the
Agent's taking such action, or (C) to take other action with regard thereto as
the Agent may deem appropriate under the circumstances.
Record. The grid attached to any Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by Agent with
respect to any Loan referred to in such Note.
Register. See ss.18.2.
REIT Status. With respect to the Borrower, its status as a real estate
investment trust as defined in ss.856(a) of the Code.
Related Parties. With respect to any Person, such Person's Affiliates and
the partners, directors, officers, employees, agents and advisors of such Person
and of such Person's Affiliates.
Requisite Banks. As of any date, any Bank or collection of Banks whose
aggregate Commitment Percentage is greater than or equal to sixty-six and
two-thirds percent (66 2/3%); provided, that, in determining said percentage at
any given time, all then existing Delinquent Banks will be disregarded and
excluded and the Commitment Percentages of the Banks shall be redetermined for
voting purposes only, to exclude the Commitment Percentages of such Delinquent
Banks.
Reserve Percentage. For any day with respect to a LIBOR Rate Loan, the
maximum rate (expressed as a decimal) at which any Bank subject thereto would be
required to maintain reserves (including, without limitation, all base,
supplemental, marginal and other reserves) under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Eurocurrency Liabilities" (as
that term is used in Regulation D or any successor or similar regulation), if
such liabilities were outstanding. The Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Percentage.
SEC. The federal Securities and Exchange Commission.
22
Securities Account Control Agreement. That certain Securities Account
Control Agreement dated of even date herewith, by and among Herring Bank, the
Borrower and the Agent, as the same may be modified or amended hereafter.
Securitization Subsidiary. Any corporation, association, partnership,
limited liability company, trust, or other business entity that is directly or
indirectly wholly-owned by the Borrower created solely for the purpose of, and
which engages in no activities other than activities in connection with or
incidental to, the incurrence of Permitted Securitization Indebtedness, so long
as it: (a) has no other Indebtedness; (b) is not a party to any agreement,
contract, arrangement or understanding with the Borrower or any other Subsidiary
of the Borrower (other than another Securitization Subsidiary in connection with
the same securitization program) unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Borrower or
such Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Borrower; (c) is a Person with respect to which
neither the Borrower nor any of its other Subsidiaries has any direct obligation
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (d) has not
guaranteed or otherwise directly provided credit support for any Indebtedness of
the Borrower or any of its other Subsidiaries other than such Permitted
Securitization Indebtedness.
Security Agreement. That certain Security Agreement dated of even date
herewith, made by Borrower in favor of Agent, as the same may be modified or
amended hereafter.
Security Documents. The Collateral Assignment, the Security Agreement, the
Lockbox Agreement, the Subordination of Management Agreement, the Assignment of
Hedge Agreement, the Deposit Account Control Agreement, the Securities Account
Control Agreement, any other blocked account agreement and any further
collateral assignments or security agreements to the Agent for the benefit of
the Banks, including, without limitation, UCC-1 financing statements authorized
and delivered in connection therewith.
Short-term Investments. Investments described in subsections (a)(i) through
(vii), inclusive, of ss.8.3.
State. A state of the United States of America.
Subordination of Management Agreement. That certain Subordination of
Management Agreement dated as of the date hereof, from Borrower and Manager in
favor of Agent, as the same may be modified or amended from time to time,
pursuant to which Borrower and Manager shall consent to the subordination of the
Manager's rights to the rights of Agent.
Subsequent Bank. Seess.2.7.
Subsidiary. (a) Any corporation, association, partnership, limited
liability company, trust, or other business entity of which the designated
parent shall at any time own directly or indirectly through a Subsidiary or
Subsidiaries at least a majority (by number of votes or controlling interests)
of the outstanding Voting Interests, and (b) any Securitization Subsidiary.
22
Survey. An instrument survey of the real property Mortgage Loan Collateral
prepared by a registered land surveyor duly licensed in the State in which such
real property Mortgage Loan Collateral is located which shall show the location
of all buildings, structures, easements and utility lines on such property,
shall be sufficient to remove the standard survey exception from the
corresponding Title Policy for such Mortgage Loan Collateral, shall show that
all buildings and structures are within the lot lines and shall not show any
material encroachments by others, shall show rights of way, adjoining sites,
establish building lines and street lines, the distance to, and names of the
nearest intersecting streets and such other details as Borrower may require;
shall show the zoning district or districts in which the Mortgage Loan
Collateral is located and shall show whether or not the real property Mortgage
Loan Collateral is located in a flood hazard district as established by the
Federal Emergency Management Agency or any successor agency or is located in any
flood plain, flood hazard or wetland protection district established under
federal, state or local law, and shall otherwise be in form and substance
satisfactory to the Borrower.
Surveyor Certification. With respect to each parcel of Mortgage Loan
Collateral, a certificate executed by the surveyor who prepared the Survey with
respect thereto, dated within six (6) months of the closing date of the Mortgage
Loan or such longer period of time as the Title Insurance Company may permit
(provided that the Title Insurance Company issuing the Title Policy with respect
to such Mortgage Loan insures title to the Mortgage without exception for any
survey matters arising after the date of such Surveyor Certification), and
containing such information relating to such parcel as the Borrower or the Title
Insurance Company may reasonably require, such certificate to be satisfactory to
Borrower in form and substance.
Title Insurance Company. A nationally recognized title insurance company or
companies approved by the Borrower to issue Title Policies with respect to the
Mortgage Loans.
Title Policy. With respect to each parcel of Mortgage Loan Collateral, an
ALTA standard form title insurance policy (or, if such form is not available, an
equivalent form of or legally promulgated form of mortgagee title insurance
policy acceptable to the Borrower) issued by a Title Insurance Company (with
such reinsurance or coinsurance as the Borrower may require, any such
reinsurance to be with direct access endorsements to the extent available under
applicable law) in such amount as the Borrower may require insuring the first
priority position of the applicable Mortgage and that the Mortgage Loan Obligor
holds marketable fee simple title to such parcel, subject only to the
encumbrances permitted by the applicable Mortgage and which shall not contain
standard exceptions for mechanics liens, persons in occupancy (other than
tenants as tenants only under leases) or matters which would be shown by a
survey, shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to Borrower, and shall contain such
endorsements and affirmative insurance as the Borrower reasonably may require
and are available in the State in which the Mortgage Loan Collateral is located.
Total Commitment. The sum of the Commitments to the Banks, as in effect
from time to time. As of the Closing Date, the Total Commitment is Fifteen
Million and No/100 Dollars ($15,000,000).
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Total Leverage Ratio. As of any date of determination, Consolidated Total
Liabilities divided by Consolidated Total Adjusted Tangible Asset Value.
Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.
Unhedged Variable Rate Debt. As of any date of determination, the aggregate
principal amount of Variable Rate Debt then outstanding less the aggregate
notional amount of all floating-to-fixed Interest Rate Contracts then in effect.
Variable Rate Debt. Indebtedness of the Borrower and its Consolidated
Subsidiaries bearing interest at a rate which may fluctuate or be re-determined
prior to maturity from time to time, whether or not the subject of an Interest
Rate Contract.
Voting Interests. Stock or similar ownership interests, of any class or
classes (however designated), the holders of which are at the time entitled, as
such holders, (a) to vote for the election of a majority of the directors (or
persons performing similar functions) of the corporation, association,
partnership, trust, limited liability company or other business entity involved,
or (b) to control, manage, or conduct the business of the corporation,
partnership, association, trust or other business entity involved.
1.2 Rules of Interpretation.
(a) Unless otherwise expressly provided to the contrary, a reference to any
document or agreement shall include such document or agreement as amended,
extended, renewed, modified supplemented or restated from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) The words "approval" and "approved", as the context so determines,
means an approval in writing given to the party seeking approval after full and
fair disclosure to the party giving approval of all material facts necessary in
order to determine whether approval should be granted.
(h) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in effect in the State of Georgia, have the meanings assigned to them therein.
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(i) Reference to a particular "ss.", refers to that section of this
Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
1.3 Pro Forma Calculations. Pro forma compliance with financial covenants
as required in this Agreement shall be calculated as if the subject transaction
(including the application of any proceeds thereof) had occurred on the first
day of the most recently completed period of four (4) trailing fiscal quarters.
2. THE REVOLVING CREDIT FACILITY.
2.1 Commitment to Lend.
Subject to the terms and conditions set forth in this Agreement, each of
the Banks severally agrees to lend to the Borrower (the "Loans"), and the
Borrower may borrow (and repay and reborrow) from time to time between the
Closing Date and the Maturity Date upon notice by the Borrower to the Agent
given in accordance with ss.2.5, such sums as are requested by the Borrower for
the purposes set forth in ss.7.10 up to a maximum aggregate principal amount
Outstanding at any one time equal to the lesser of (a) such Bank's Commitment
and (b) an amount equal to the Borrowing Base Availability multiplied by such
Bank's Commitment Percentage; provided, that, in all events no Default or Event
of Default shall have occurred and be continuing; and provided, further that the
Outstanding Loans (after giving effect to all amounts requested) shall not at
anytime exceed the Total Commitment. The Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. Each request for a Loan
hereunder shall constitute a representation and warranty by the Borrower that
all of the conditions set forth in ss.10 and ss.11, in the case of the initial
Loan, and ss.11, in the case of all other Loans, have been satisfied on the date
of such request.
2.2 Unused Facility Fee.
The Borrower agrees to pay to the Agent for the account of the Banks in
accordance with their respective Commitment Percentages a facility fee
calculated at the rate per annum as set forth below on the average daily amount
by which the Total Commitment exceeds the Outstanding Loans during each calendar
quarter or portion thereof commencing on the date three (3) months after the
Closing Date and ending on the Maturity Date, with the first payment being due
on October 18, 2007. The facility fee shall be calculated based on the ratio
(expressed as a percentage) of (a) the average daily amount of the Outstanding
Loans during such quarter to (b) the Total Commitment as follows:
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Ratio of Outstanding Principal Balance to Total Per Annum Rate
Commitment
1st Quartile (0% - 25% outstanding) 0.40%
2nd Quartile 0.30%
3rd Quartile 0.20%
4th Quartile 0.10%
The unused facility fee shall be calculated by working through the fee tiers
from the top quartile to the bottom quartile. For illustrative purposes only, if
the Borrower were to draw down thirty percent (30%) of the Total Commitment,
zero percent of the Total Commitment (0%) would be subject to a 0.40% fee,
twenty percent (20%) of the Total Commitment (i.e., $3,000,000) would be subject
to a 0.30% fee, twenty-five percent (25%) of the Total Commitment (i.e.,
$3,750,000) would be subject to a 0.20% fee, and twenty-five percent (25%) of
the Total Commitment (i.e., $3,750,000) would be subject to a 0.10% fee. The
facility fee shall be payable quarterly in arrears on the first Business Day of
each calendar quarter for the immediately preceding calendar quarter or portion
thereof (on a prorated basis), or on any earlier date on which the Commitments
shall be reduced or terminated as provided in ss.12.3, with a final payment on
the Maturity Date and shall be fully earned when due and non refundable when
paid.
2.3 Notes.
The Loans shall be evidenced by separate promissory notes of the Borrower
in substantially the form of Exhibit A hereto (collectively, the "Notes"), dated
as of even date as this Agreement or dated as of even date of any Assignment and
Acceptance Agreement and completed with appropriate insertions. Each Note shall
be payable to the order of the relevant Bank in the principal amount equal to
such Bank's Commitment, plus interest accrued thereon as set forth below. The
Borrower irrevocably authorizes Agent to make or cause to be made, at or about
the time of the Drawdown Date of any Loan or at the time of receipt of any
payment of principal thereof, an appropriate notation on Agent's Record
reflecting the making of such Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Loans set forth on Agent's Record shall
be prima facie evidence of the principal amount thereof owing and unpaid to each
Bank, but the failure to record, or any error in so recording, any such amount
on Agent's Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Note to make payments of principal of or
interest on any Note when due.
2.4 Interest on Loans.
(a) Each Base Rate Loan shall bear interest, for the period commencing with
the Drawdown Date thereof and ending on the date on which such Base Rate Loan is
repaid or is converted to a LIBOR Rate Loan, at the per annum rate equal to the
sum of the Base Rate plus the Applicable Margin.
(b) Each LIBOR Rate Loan shall bear interest, for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest Period
with respect thereto,
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at the rate per annum equal to the sum of the LIBOR Rate determined for such
Interest Period plus the Applicable Margin.
(c) The Borrower promises to pay interest on each Loan in arrears on each
Interest Payment Date with respect thereto, or on any earlier date on which the
Commitments shall terminate as provided in ss.12.3.
(d) Base Rate Loans and LIBOR Rate Loans may be converted to Loans of the
other Type as provided in ss.4.1.
2.5 Requests for Loans.
The Borrower (i) shall notify the Agent of a potential request for a Loan
as soon as possible prior to the Borrower's proposed Drawdown Date, and (ii)
shall give to the Agent written notice in the form of Exhibit B hereto (or
telephonic notice confirmed in writing in the form of Exhibit B hereto) of each
Loan requested hereunder (a "Loan Request") no less than three (3) Business Days
prior to the proposed Drawdown Date with respect to LIBOR Rate Loans, provided
that such advance notice period may be reduced by Agent in its discretion with
respect to any LIBOR Rate Loan made on the Closing Date and by 2:00 p.m.
(Cleveland time) on the Business Day preceding the proposed Drawdown Date with
respect to Base Rate Loans. Each such notice shall specify with respect to the
requested Loan the proposed principal amount, Drawdown Date, Interest Period (if
applicable) and Type. Each such notice shall also contain (i) a statement as to
the purpose for which such advance shall be or has been used (which purpose
shall be in accordance with the terms of ss.7.10), and (ii) a certification by
the chief financial or chief accounting officer of the Borrower that the
Borrower is and will be in compliance with all covenants under the Loan
Documents after giving effect to the making of such Loan. Promptly upon receipt
of any such notice, the Agent shall notify each of the Banks thereof. Except as
provided in this ss.2.5, each such Loan Request shall be irrevocable and binding
on the Borrower and shall obligate the Borrower to accept the Loan requested
from the Banks on the proposed Drawdown Date, provided that, in addition to the
Borrower's other remedies against any Bank which fails to advance its
proportionate share of a requested Loan, such Loan Request may be revoked by the
Borrower by notice received by the Agent no later than the Drawdown Date if any
Bank fails to advance its proportionate share of the requested Loan in
accordance with the terms of this Agreement, provided further, that the Borrower
shall be liable in accordance with the terms of this Agreement to any Bank which
is prepared to advance its proportionate share of the requested Loan for any
costs, expenses or damages actually incurred by such Bank as a result of the
Borrower's election to revoke such Loan Request. Nothing herein shall prevent
the Borrower from seeking recourse against any Bank that fails to advance its
proportionate share of a requested Loan as required by this Agreement. The
Borrower may without cost or penalty revoke a Loan Request by delivering notice
thereof to each of the Banks no later than two (2) Business Days prior to the
Drawdown Date. Each Loan Request shall be (a) for a Base Rate Loan in the
minimum aggregate amount of $250,000 or an integral multiple of $10,000 in
excess thereof, or (b) for a LIBOR Rate Loan in a minimum aggregate amount of
$250,000 or an integral multiple of $10,000 in excess thereof; provided,
however, that there shall be no more than five (5) LIBOR Rate Loans outstanding
at any one time.
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2.6 Funds for Loans.
(a) Not later than 11:00 a.m. (Cleveland time) on the proposed Drawdown
Date of any Loans, each of the Banks will make available to the Agent, at the
Agent's Head Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Loans which may be
disbursed pursuant to ss.2.1. Upon receipt from each Bank of such amount, and
upon receipt of the documents required by ss.10 and ss.11 and the satisfaction
of the other conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such Loans made
available to the Agent by the Banks by crediting such amount to the account of
the Borrower maintained at the Agent's Head Office. The failure or refusal of
any Bank to make available to the Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Bank from its several obligation hereunder to make
available to the Agent the amount of such other Bank's Commitment Percentage of
any requested Loans, including any additional Loans that may be requested
subject to the terms and conditions hereof to provide funds to replace those not
advanced by the Bank so failing or refusing, provided that the Borrower may by
notice received by the Agent no later than the Drawdown Date refuse to accept
any Loan which is not fully funded in accordance with the Borrower's Loan
Request subject to the terms of ss.2.5. In the event of any such failure or
refusal, the Banks not so failing or refusing shall be entitled to a priority
secured position as against the Bank or Banks so failing or refusing for such
Loans as provided in ss.12.5.
(b) Unless the Agent shall have been notified by any Bank prior to the
applicable Drawdown Date that such Bank will not make available to the Agent
such Bank's pro rata share of a proposed Loan, the Agent may in its discretion
assume that such Bank has made such share of the proposed Loan available to
Agent in accordance with the provisions of this Agreement and the Agent may, if
it chooses, in reliance upon such assumption make such Loan available to
Borrower, and such Bank shall be liable to the Agent for the amount of such
advance. If such Bank does not pay such corresponding amount upon the Agent's
demand therefor, the Agent will promptly notify the Borrower, and the Borrower
shall promptly pay such corresponding amount to the Agent. The Agent shall also
be entitled to recover from the Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such corresponding amount is recovered by the Agent at a per annum rate equal to
(i) from the Borrower at the applicable rate for such Loan or (ii) from a Bank
at the Federal Funds Effective Rate.
2.7 Increase in Total Commitment. At any time and from time to time prior
to the second anniversary of the Closing Date, the Agent may, at the written
request of the Borrower, increase the Total Commitment by (i) increasing the
Commitment of any Bank (each, an "Increasing Bank"), or (ii) admitting
additional Banks hereunder (each, a "Subsequent Bank"), subject to the following
conditions:
(a) Each Subsequent Bank shall meet the conditions for an Eligible Assignee
under Section 18.1 hereof;
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(b) The Borrower shall execute new Notes, payable to the order of each
Subsequent Bank (if any), and a replacement Note payable to the order of each
Increasing Bank (if any), as applicable;
(c) Each Subsequent Bank shall execute and deliver to the Agent a joinder
to this Agreement in form and substance satisfactory to the Agent;
(d) The Borrower and the Agent shall have executed modifications of the
Security Documents and other Loan Documents to reflect the increase in the Total
Commitment and the Borrower shall have paid to the Agent any and all documentary
stamp tax, non-recurring intangible tax or other taxes imposed in connection
with the recording of such modifications of the Security Documents and other
Loan Documents or increase in the Total Commitment;
(e) After giving effect to the admission of any Subsequent Bank or the
increase in the Commitment of any Increasing Bank, the Total Commitment does not
exceed $25,000,000;
(f) Each increase in the Total Commitment shall be in the amount of at
least $5,000,000, or a greater integral multiple of $1,000,000;
(g) No admission of any Subsequent Bank shall increase the Total Commitment
of any existing Bank without the written consent of such Bank;
(h) All of the representations and warranties of the Borrower in the Loan
Documents shall be true and correct as of the effective date of the increase in
the Total Commitment (or if such representations and warranties by their terms
relate solely to an earlier date, then as of such earlier date);
(i) No Default or Event of Default exists;
(j) No Bank shall be an Increasing Bank without the written consent of such
Bank;
(k) No increase in the Total Commitment, if applicable, will be implemented
unless Subsequent Bank or Banks or a combination thereof commit to fund each
such increase in accordance with the terms and conditions of this Agreement; and
(l) The Borrower shall have executed such other modifications and documents
and made such other deliveries as the Agent may require and shall pay or
reimburse the Agent and the Agent's Special Counsel for all fees, expenses and
costs in connection with the foregoing and the Borrower shall also pay such Loan
fees and placement fees, if any, as may be required for such increase in the
Total Commitment.
In the case of a new Commitment for any Increasing Bank or Subsequent Bank,
the Agent shall promptly provide each Bank and the Borrower with a new Schedule
1 to this Agreement (and each Bank acknowledges that its Commitment Percentage
under Schedule 1 and allocated portion of the outstanding Loan will change in
accordance with its pro rata share of the increased Total Commitment). From and
after the effective date of an increase in the Total Commitment, such new amount
shall for all purposes under this Agreement be deemed to be the
29
"Total Commitment," as that term is used in herein, notwithstanding anything to
the contrary contained in this Agreement except that the Total Commitment shall
in no event exceed Twenty-Five Million Dollars ($25,000,000).
3. REPAYMENT OF THE LOANS.
3.1 Stated Maturity.
The Borrower promises to pay on the Maturity Date and there shall become
absolutely due and payable on the Maturity Date all of the Loans outstanding on
such date, together with any and all accrued and unpaid interest thereon.
3.2 Mandatory Prepayments.
(a) If at any time there shall occur, whether voluntarily, involuntarily or
by operation of law, any repayment (including, without limitation, principal
amortization on the Mortgage Loans), redemption, sale, transfer, assignment,
conveyance, option or other disposition of, or any mortgage, hypothecation,
encumbrance, financing or refinancing of any of the Collateral (whether
individually or through a securitization transaction), then Borrower shall
immediately pay to Agent for the respective account of the Banks for application
to the Loans together with any and all accrued interest thereon, the proceeds
received therefrom; provided, however, that principal amortization on the
Mortgage Loans shall be aggregated through the end of the prior calendar month,
reduced by Mortgage Loans made during the prior calendar month, and the balance
paid to Agent on the tenth (10th) day of each calendar month rather than as each
payment is received by the Borrower. In connection with such payment of the
Loans, Borrower shall pay to Agent for the account of the Banks any sums that
may be due under ss.4.8.
(b) Without limiting the terms of this Agreement, in the event that a
Change of Control shall occur, then Borrower shall immediately pay to Agent for
the respective accounts of the Banks for application to the Loans, all of the
Loans outstanding on such date, together with any and all accrued and unpaid
interest thereon. In connection with such payment of the Loans, Borrower shall
pay to Agent for the account of the Banks any sums that may be due under ss.4.8.
(c) If at any time the sum of the aggregate outstanding principal amount of
the Loans exceeds the lesser of (i) the Total Commitment, or (ii) the Borrowing
Base Availability, then Borrower shall immediately pay the amount of such excess
to Agent for the respective accounts of the Banks, as applicable, for
application to the Loans as provided in ss.3.4, together with any additional
amounts payable pursuant to ss.4.8. Until such time as Borrower has paid such
amount to Agent for the respective accounts of the Banks pursuant to the
preceding clause (and without limiting the other rights or remedies of the Agent
and the Banks), the Banks shall have no obligation to make additional funds
available to Borrower pursuant to this Agreement.
3.3 Optional Prepayments.
The Borrower shall have the right, at its election, to prepay the
outstanding amount of the applicable Loans, as a whole or in part, at any time
without penalty or premium; provided, that the full or partial prepayment of the
outstanding amount of any LIBOR Rate Loans pursuant to this ss.3.3 may be made
only on the last day of the Interest Period relating thereto except
30
as otherwise required pursuant to ss.4.7. The Borrower shall give the Agent, no
later than 10:00 a.m., Cleveland time, at least three (3) Business Days' prior
written notice of any prepayment pursuant to this ss.3.3, in each case
specifying the proposed date of payment of Loans and the principal amount to be
paid.
3.4 Partial Prepayments.
Each partial prepayment of the Loans pursuant to ss.3.3 with respect to
LIBOR Rate Loans shall be in the minimum amount of $1,000,000 or an integral
multiple of $100,000 in excess thereof. There shall be no minimum amount
requirement for prepayments of Base Rate Loans. Each partial prepayment shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of payment and, after payment of such interest, shall be applied, in the
absence of instruction by the Borrower, first to the principal of Base Rate
Loans and then to the principal of LIBOR Rate Loans.
3.5 Effect of Prepayments.
Amounts of the Loans prepaid pursuant to ss.3.2 and ss.3.3 prior to the
Maturity Date may be reborrowed as provided in ss.2. Except as otherwise
expressly provided herein, all payments shall first be applied to accrued but
unpaid interest and then to principal as provided in ss.3.4 above.
4. CERTAIN GENERAL PROVISIONS.
4.1 Conversion Options.
(a) The Borrower may elect from time to time to convert any of its
outstanding Loans to a Loan of another Type and such Loan shall thereafter bear
interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that
(i) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate
Loan, the Borrower shall give the Agent at least three (3) Business Days' prior
written notice of such election, and such conversion shall only be made on the
last day of the Interest Period with respect to such LIBOR Rate Loan; (ii) with
respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan the
Borrower shall give the Agent at least three (3) LIBOR Business Days' prior
written notice of such election and the Interest Period requested for such Loan,
the principal amount of the Loan so converted shall be in a minimum aggregate
amount of $250,000 or an integral multiple of $10,000 in excess thereof and,
after giving effect to the making of such Loan there shall be no more than five
(5) LIBOR Rate Loans outstanding at any one time; and (iii) no Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default has
occurred and is continuing. All or any part of the outstanding Loans of any Type
may be converted as provided herein, provided that no partial conversion shall
result in a Loan in an aggregate principal amount of less than $250,000, and
that the aggregate principal amount of each Loan shall be in an integral
multiple of $10,000. On the date on which such conversion is being made, each
Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Loans to its Domestic Lending Office or its LIBOR Lending
Office, as the case may be. Each Conversion Request relating to the conversion
of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower.
31
(b) Any Loan may be continued as such Type upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
terms of ss.4.1(a); provided that no LIBOR Rate Loan may be continued as such
when any Default or Event of Default has occurred and is continuing, but shall
be automatically converted to a Base Rate Loan on the last day of the Interest
Period relating thereto ending during the continuance of any Default or Event of
Default.
(c) In the event that the Borrower does not notify the Agent of its
election hereunder with respect to any Loan to it, such Loan shall be
automatically converted to a Base Rate Loan at the end of the applicable
Interest Period.
4.2 Syndication, Underwriting and Accordion Fees.
The Borrower shall pay to KeyBank certain fees for services rendered or to
be rendered in connection with the Loan as provided pursuant to the Agreement
Regarding Fees.
4.3 Agent's Fee.
If and so long as there shall be at least three (3) Banks, the Borrower
will pay to the Agent, for the Agent's own account, an annual Agent's fee in the
amount and payable at such times as shall be set forth in a supplement or
amendment to the Agreement Regarding Fees executed or to be executed by the
Agent and the Borrower.
4.4 Funds for Payments.
(a) All payments of principal, interest, unused facility fees, Agent's
fees, closing fees and any other amounts due hereunder or under any of the other
Loan Documents shall be made to the Agent, for the respective accounts of the
Banks and the Agent, as the case may be, at the Agent's Head Office, not later
than 11:00 a.m. (Cleveland time) on the day when due, in each case in lawful
money of the United States in immediately available funds. The Agent is hereby
authorized to charge the accounts of the Borrower with KeyBank designated by the
Borrower, on the dates when the amount thereof shall become due and payable,
with the amounts of the principal of and interest on the Loans and all fees,
charges, expenses and other amounts owing to the Agent and/or the Banks under
the Loan Documents.
(b) All payments by the Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Borrower with respect to any amount payable by them
hereunder or under any of the other Loan Documents, the Borrower will pay to the
Agent, for the account of the Banks or (as the case may be) the Agent, on the
date on which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to enable the
Banks or the Agent to receive the same net amount which the Banks or the Agent
would have received on such due date had no such obligation been imposed upon
the Borrower. The Borrower will deliver promptly to the Agent certificates or
other valid vouchers
32
for all taxes or other charges deducted from or paid with respect to payments
made by the Borrower hereunder or under such other Loan Document.
(c) Each Bank organized under the laws of a jurisdiction outside the United
States, if requested in writing by the Borrower (but only so long as such Bank
remains lawfully able to do so), shall provide the Borrower with such duly
executed form(s) or statement(s) which may, from time to time, be prescribed by
law and, which, pursuant to applicable provisions of (i) an income tax treaty
between the United States and the country of residence of such Bank, (ii) the
Code, or (iii) any applicable rules or regulations in effect under (i) or (ii)
above, indicates the withholding status of such Bank; provided that nothing
herein (including without limitation the failure or inability to provide such
form or statement) shall relieve the Borrower of its obligations under
ss.4.4(b). In the event that the Borrower shall have delivered the certificates
or vouchers described above for any payments made by the Borrower and such Bank
receives a refund of any taxes paid by Borrower pursuant to ss.4.4(b), such Bank
will pay to the Borrower the amount of such refund promptly upon receipt
thereof; provided that if at any time thereafter such Bank is required to return
such refund, the Borrower shall promptly repay to such Bank the amount of such
refund.
4.5 Computations.
All computations of interest on the Loans and of other fees to the extent
applicable shall be based on a 360-day year and paid for the actual number of
days elapsed. Except as otherwise provided in the definition of the term
"Interest Period" with respect to LIBOR Rate Loans, whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the records of the Agent from
time to time shall be considered prima facie evidence of such amount.
4.6 Inability to Determine LIBOR Rate.
In the event that, prior to the commencement of any Interest Period
relating to any LIBOR Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the LIBOR Rate for such
Interest Period, the Agent shall forthwith give notice of such determination
(which shall be conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (a) any Loan Request with respect to LIBOR
Rate Loans shall be automatically withdrawn and shall be deemed a request for
Base Rate Loans and (b) each LIBOR Rate Loan will automatically, on the last day
of the then current Interest Period thereof, become a Base Rate Loan, and the
obligations of the Banks to make LIBOR Rate Loans shall be suspended until the
Agent determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent shall so notify the Borrower and the Banks.
4.7 Illegality.
Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or the interpretation or application thereof
shall make it unlawful, or any central bank or other governmental authority
having jurisdiction over a Bank or its LIBOR
33
Lending Office shall assert that it is unlawful, for any Bank to make or
maintain LIBOR Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Agent and the Borrower and thereupon (a) the commitment of
the Banks to make LIBOR Rate Loans or convert Loans of another type to LIBOR
Rate Loans shall forthwith be suspended and (b) the LIBOR Rate Loans then
outstanding shall be converted automatically to Base Rate Loans on the last day
of each Interest Period applicable to such LIBOR Rate Loans or within such
earlier period as may be required by law.
4.8 Additional Interest.
If any LIBOR Rate Loan or any portion thereof is repaid or is converted to
a Base Rate Loan for any reason on a date which is prior to the last day of the
Interest Period applicable to such LIBOR Rate Loan, or if repayment of the Loans
has been accelerated as provided in ss.12.1, the Borrower will pay to the Agent
upon demand for the account of the Banks in accordance with their respective
Commitment Percentages, in addition to any amounts of interest otherwise payable
hereunder, any amounts required to compensate the Banks for any losses, costs or
expenses which may be incurred as a result of such payment or conversion,
including, without limitation, an amount equal to daily interest for the
unexpired portion of such Interest Period on the LIBOR Rate Loan or portion
thereof so repaid or converted at a per annum rate equal to the excess, if any,
of (a) the interest rate calculated on the basis of the LIBOR Rate applicable to
such LIBOR Rate Loan (including any spread over such LIBOR Rate) minus (b) the
yield obtainable by the Agent upon the purchase of debt securities customarily
issued by the Treasury of the United States of America which have a maturity
date most closely approximating the last day of such Interest Period (it being
understood that the purchase of such securities shall not be required in order
for such amounts to be payable and that a Bank shall not be obligated or
required to have actually obtained funds at the LIBOR Rate or to have actually
reinvested such amounts as described above).
4.9 Additional Costs, Etc.
Notwithstanding anything herein to the contrary, if any present or future
applicable law, which expression, as used herein, includes statutes, rules and
regulations thereunder and legally binding interpretations thereof by any
competent court or by any governmental or other regulatory body or official with
appropriate jurisdiction charged with the administration or the interpretation
thereof and requests, directives, instructions and notices at any time or from
time to time hereafter made upon or otherwise issued to any Bank or the Agent by
any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this Agreement, the
other Loan Documents, such Bank's Commitment or the Loans (other than taxes
based upon or measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in taxes on
income or profits) of payments to any Bank of the principal of or the interest
on any Loans or any other amounts payable to any Bank under this Agreement or
the other Loan Documents, or
34
(c) impose or increase or render applicable any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements (whether
or not having the force of law) against assets held by, or deposits in or for
the account of, or loans by, or commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans, such Bank's
Commitment, or any class of loans or commitments of which any of the Loans or
such Bank's Commitment forms a part; and the result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding, issuing, renewing,
extending or maintaining any of the Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or other amount payable to
such Bank or the Agent hereunder on account of such Bank's Commitment or any of
the Loans, or
(iii) to require such Bank or the Agent to make any payment or to forego
any interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Bank or the Agent from the
Borrower hereunder,
then, and in each such case, the Borrower, upon demand made by such Bank or (as
the case may be) the Agent at any time and from time to time and as often as the
occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as such Bank or the Agent shall determine in good faith to be sufficient
to compensate such Bank or the Agent for such additional cost, reduction,
payment or foregone interest or other sum. Each Bank and the Agent in
determining such amounts may use any reasonable averaging and attribution
methods, generally applied by such Bank or the Agent.
4.10 Capital Adequacy.
If after the date hereof any Bank determines that (a) the adoption of or
change in any law, rule, regulation, guideline, directive or request (whether or
not having the force of law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or application thereof by
any governmental authority, central bank or comparable agency charged with the
administration thereof, or (b) compliance by such Bank or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy or any amendment or change in interpretation of any
existing guideline, request or directive (whether or not having the force of
law), has the effect of reducing the return on such Bank's or such holding
company's capital as a consequence of such Bank's commitment to make Loans
hereunder to a level below that which such Bank or holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital) by
any amount deemed by such Bank to be material, then such Bank may notify the
Borrower thereof. The Borrower agrees to pay to such Bank the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by such Bank of a statement of the amount and setting forth
such Bank's calculation
35
thereof. In determining such amount, such Bank may use any reasonable averaging
and attribution methods. Notwithstanding the foregoing, the Borrower shall have
the right, in lieu of making the payment referred to in this ss.4.10, to prepay
the Loans of the applicable Bank within fifteen (15) days of such demand and
avoid the payment of the amounts otherwise due under this ss.4.10, provided,
however, that the Borrower shall be required to pay together with such
prepayment of the Loan all other costs, damages and expenses otherwise due under
this Agreement as a result of such prepayment.
4.11 Indemnity of Borrower.
The Borrower agrees to indemnify each Bank and to hold each Bank harmless
from and against any loss, cost or expense that such Bank may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or any interest on any LIBOR Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain its LIBOR Rate
Loans, (b) default by the Borrower in making a borrowing or conversion after the
Borrower has given (or is deemed to have given) a Loan Request or a Conversion
Request, or (c) default by Borrower in making the payments or performing their
obligations under ss.ss.4.9, 4.10 or 4.12.
4.12 Interest on Overdue Amounts; Late Charge.
Following the occurrence and during the continuance of any Event of
Default, and regardless of whether or not the Banks shall have accelerated the
maturity of the Loans, all Loans shall bear interest payable on demand at a rate
per annum equal to two percent (2%) above the rate that would otherwise be
applicable at such time, until such amount shall be paid in full (after as well
as before judgment), or if such rate shall exceed the maximum rate permitted by
law, then at the maximum rate permitted by law. In addition, Borrower shall pay
a late charge equal to five percent (5%) of any amount of interest and/or
principal payable on the Loans or any other amounts payable hereunder or under
the Loan Documents, which is not paid within ten (10) days of the date when due.
4.13 Certificate.
A certificate setting forth any amounts payable pursuant to ss.4.8, ss.4.9,
ss.4.10, ss.4.11 or ss.4.12 and a brief explanation of such amounts which are
due, submitted by any Bank or the Agent to the Borrower, shall be conclusive in
the absence of manifest error.
4.14 Limitation on Interest.
Notwithstanding anything in this Agreement to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of any of the
Obligations or otherwise, shall the interest contracted for, charged or received
by the Banks exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever, interest would otherwise be payable to the
Banks in excess of the maximum lawful amount, the interest payable to the Banks
shall be reduced to the maximum amount permitted under applicable law; and if
from any circumstance the Banks shall ever
36
receive anything of value deemed interest by applicable law in excess of the
maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance of the Obligations of the
Borrower and to the payment of interest or, if such excessive interest exceeds
the unpaid balance of principal of the Obligations of the Borrower, such excess
shall be refunded to the Borrower. All interest paid or agreed to be paid to the
Banks shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of the
principal of the Obligations of the Borrower (including the period of any
renewal or extension thereof) so that the interest thereon for such full period
shall not exceed the maximum amount permitted by applicable law. This section
shall control all agreements between the Borrower and the Banks and the Agent.
5. COLLATERAL SECURITY.
5.1 Collateral.
The Obligations of the Borrower shall be secured by a perfected first
priority lien or security interest to be held by the Agent for the benefit of
the Banks in (i) all Mortgage Loans held pursuant to the terms of the Collateral
Assignment, (ii) any Interest Rate Contract pursuant to the Assignment of Hedge,
(iii) the Lockbox Account pursuant to the Lockbox Agreement, and (iv) any other
assets of the Borrower pursuant to the terms of any other Security Document.
5.2 Release of Collateral.
(a) Upon termination of this Agreement and the Commitment of the Banks to
make Loans hereunder and the payment in full of all of the Obligations, the
Agent, on behalf of the Banks, shall promptly release the Collateral and shall
execute such instruments of release as the Borrower and its counsel may
reasonably request.
(b) So long as no Event of Default has occurred and is then continuing, the
Collateral Agent shall be authorized to release each Mortgage Loan from the lien
of the Collateral Assignment as it is repaid in full or sold so that the
Borrower may in turn release the Mortgage and return the original Mortgage Loan
Note to the Mortgage Loan Obligor or deliver the Mortgage Loan Note and Mortgage
Loan Documents to the purchaser of such Mortgage Loan, as more particularly
described in the Collateral Agency Agreement. Upon the occurrence and during the
continuance of an Event of Default, one hundred percent (100%) of the loan
repayment proceeds of each Mortgage Loan or other proceeds from the sale or
other realization upon the Mortgage Loan Collateral or Bonds shall be applied to
payment of the Outstanding Loans, as more particularly provided in the Lockbox
Agreement and upon receipt of such proceeds in the Lockbox with respect to a
Mortgage Loan, the Agent shall instruct the Collateral Agent to execute a
partial release from the lien of the Collateral Assignment with respect to such
Mortgage Loan.
(c) In addition to the circumstances outlined in ss.5.2(a) and (b) above,
and provided no Default or Event of Default shall have occurred and be
continuing hereunder (or would exist immediately after giving effect to the
transactions contemplated by this ss.5.2), the Collateral Agent shall release a
Mortgage Loan from the lien or security interest in the Collateral Assignment,
upon the written direction of the Agent (or the written direction of the
Borrower,
37
consented to in writing by the Agent), which direction or consent shall be given
or withheld at the Agent's sole discretion (other than in connection with a
securitization transaction permitted by ss.7.17 hereof, in which case such
consent of the Agent shall not be withheld so long as all other terms and
conditions of this ss.5.2(c) are satisfied), subject to and upon the following
terms and conditions:
(i) the Borrower shall deliver to the Agent and the Collateral Agent
written notice of its desire to obtain such release no later than three (3)
Business Days prior to the date on which such release is to be effected;
(ii) the Borrower shall pay all reasonable administrative costs and
expenses of the Agent in connection with such release, including without
limitation, reasonable attorney's fees; and
(iii) the Borrower shall pay to the Agent for the account of the Banks a
release price in an amount necessary to reduce the outstanding principal balance
of the Loans so that no Event of Default shall exist under ss.12 following such
release.
The Agent agrees under such circumstances to consent to the release of any
Mortgage Loan specifically requested in writing by the Borrower for the purpose
of enabling the Borrower to pledge such Mortgage Loan to secure Debt
Certificates to the extent such pledge is required to maintain the minimum
required collateralization level under the relevant Indenture, and the Borrower
will pledge such Mortgage Loan for such purpose.
5.3 Addition of Collateral; Guarantors.
The Borrower shall grant a first priority security interest in and to all
Mortgage Loans entered into by the Borrower after the date hereof. Such addition
to the Collateral shall be effected by the completion and delivery within thirty
(30) calendar days of the actual closing of the Mortgage Loan to the Collateral
Agent for the benefit of the Agent and the Banks of each of the Mortgage Loan
Collateral Documents with respect to Mortgage Loans made during the preceding
calendar month and the delivery to the Agent by the tenth (10th) day of each
calendar month of a certification by the Borrower that each of the other
Mortgage Loan Qualification Documents are in the possession and/or control of
the Borrower. In addition, to the extent the Borrower desires to form a
Subsidiary to originate or hold any Mortgage Loans after the Closing Date, the
Borrower shall obtain the prior written consent of the Agent to the formation of
such Subsidiary. If approved by the Agent, each such Subsidiary other than a
Securitization Subsidiary shall execute a guaranty of the Obligations in form
and substance satisfactory to the Agent and such other documents as required by
the Agent and shall be subject to all of the terms and provisions of this
Agreement relating to Subsidiaries.
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6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants to the Agent and the Banks as follows.
6.1 Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a Minnesota corporation
duly incorporated pursuant to its articles of incorporation filed with the
Minnesota Secretary of State on May 27, 1994, and is validly existing and in
good standing under the laws of the State of Minnesota. The Manager is a
Minnesota corporation duly incorporated pursuant to its articles of
incorporation filed with the Minnesota Secretary of State on May 27, 1994, and
is validly existing and in good standing under the laws of the State of
Minnesota. Each of Borrower and the Manager (i) has all requisite power to own
its property and conduct its business as now conducted and as presently
contemplated, and (ii) is in good standing as a foreign entity and is duly
authorized to do business in the jurisdictions where the Mortgage Loans are
solicited and made and in each other jurisdiction where such Person is legally
required to be so qualified. The Borrower is a real estate investment trust in
full compliance with and entitled to the benefits of ss.856 of the Code.
(b) Subsidiaries. Each of the Subsidiaries of the Borrower (i) is a
corporation, limited partnership, limited liability company or trust duly
incorporated, formed or organized (as applicable) under the laws of its State of
incorporation, formation or organization and is validly existing and in good
standing under the laws thereof, (ii) has all requisite power to own its
property and conduct its business as now conducted and as presently contemplated
and (iii) is in good standing and is duly authorized to do business in each
jurisdiction where Mortgage Loans held by it are solicited and made and in each
other jurisdiction where such Person is legally required to be so qualified. The
Subsidiaries other than Securitization Subsidiaries are wholly-owned direct
Subsidiaries of the Borrower.
(c) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party and the transactions contemplated hereby
and thereby (i) are within the power and authority of such Person, (ii) have
been duly authorized by all necessary proceedings on the part of such Person,
(iii) do not and will not conflict with or result in any breach or contravention
of any provision of law, statute, rule or regulation to which such Person is
subject or any judgment, order, writ, injunction, license or permit applicable
to such Person, (iv) do not and will not conflict with or constitute a default
(whether with the passage of time or the giving of notice, or both) under any
provision of the articles of incorporation, partnership agreement, declaration
of trust or other charter documents, operating agreement or bylaws of, or any
mortgage, indenture, agreement, contract or other instrument binding upon, such
Person or any of its properties or to which such person is subject, and (v) do
not and will not result in or require the imposition of any lien or other
encumbrance on any of the properties, assets or rights of such Person except for
the Liens and security title granted by the Loan Documents.
(d) Enforceability. The execution and delivery of this Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries is or is
to become a party are valid and legally binding obligations of such Person
enforceable in accordance with the
39
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
6.2 Governmental Approvals.
The execution, delivery and performance of this Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and the filing of the Security
Documents in the appropriate records office with respect thereto.
6.3 Title to Properties; Lease.
The Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and the Subsidiaries as of the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
6.4 Financial Statements.
The Borrower has delivered to each of the Banks: (a) the consolidated
balance sheet of the Borrower and its Subsidiaries as of the Balance Sheet Date,
(b) the most recent 10KSB and 10QSB of the Borrower, (c) the Schedules of the
Initial Mortgage Loans, the Excluded Mortgage Loans, the OREO and the
Non-Performing Mortgage Loans attached to this Agreement, and (d) certain other
financial information relating to the Borrower and the Mortgage Loans. Such
balance sheet and statements have been prepared in accordance with generally
accepted accounting principles and fairly present the financial condition of the
Borrower and its Subsidiaries as of such dates and the results of the operations
of the Borrower for such periods. There are no liabilities, contingent or
otherwise, of the Borrower or any of its Subsidiaries involving material amounts
not disclosed in said financial statements and the related notes thereto.
6.5 No Material Changes.
Since the Balance Sheet Date, there has occurred no materially adverse
change in the financial condition or business of the Borrower or any of its
Subsidiaries as shown on or reflected in the consolidated balance sheet of the
Borrower and its Subsidiaries as of the Balance Sheet Date, or its consolidated
statement of income or cash flows for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of such Person.
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6.6 Franchises, Patents, Copyrights, Etc.
The Borrower and its Subsidiaries possess all franchises, patents,
copyrights, trademarks, trade names, servicemarks, licenses and permits, and
rights in respect of the foregoing, adequate for the conduct of their business
substantially as now conducted without known conflict with any rights of others.
6.7 Litigation.
There are no actions, suits, proceedings or investigations of any kind
pending or to the knowledge of such person threatened against the Borrower or
any of its Subsidiaries before any court, tribunal, arbitrator, mediator or
administrative agency or board that, if adversely determined, might, either in
any case or in, the aggregate, materially adversely affect the properties,
assets, financial condition or business of such Person or materially impair the
right of such Person to carry on business substantially as now conducted by it,
or result in any liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the balance sheet of such Person, or
which question the validity of this Agreement or any of the other Loan
Documents, any action taken or to be taken pursuant hereto or thereto or any
lien or security interest created or intended to be created pursuant hereto or
thereto, or which will adversely affect the ability of the Borrower to pay and
perform the Obligations in the manner contemplated by this Agreement and the
other Loan Documents.
6.8 No Materially Adverse Contracts, Etc.
None of the Borrower or any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a materially adverse
effect on the business, assets or financial condition of such Person. None of
the Borrower nor any of its Subsidiaries is a party to any contract or agreement
that has or is expected, in the judgment of the partners or officers of such
Person, to have any materially adverse effect on the business of any of them.
6.9 Compliance with Other Instruments, Laws, Etc.
None of the Borrower or any of its Subsidiaries is in violation of any
provision of its charter or other organizational documents, bylaws, the
Indentures or any other agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation.
6.10 Tax Status.
The Borrower and each its Subsidiaries (a) has made or filed all federal
and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, (b) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings, and (c) has set aside on its books provisions
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes
claimed to be due by the taxing authority of any jurisdiction, and the partners
or officers of such Person know of no basis for any such claim.
41
6.11 No Event of Default.
No Default has occurred and is continuing and no Event of Default exists.
6.12 Holding Company and Investment Company Acts.
None of the Borrower or any of its Subsidiaries is or after giving effect
to any Loan will be, subject to regulation under the Public Utility Holding
Company Act of 2005, the Federal Power Act or the Investment Company Act of 1940
or to any federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.
6.13 Absence of UCC Financing Statements, Etc.
Except with respect to Permitted Liens, there is no financing statement,
security agreement, chattel mortgage, real estate mortgage or other document
filed or recorded with any filing records, registry, or other public office,
that purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any property of the Borrower
or any of its Subsidiaries or rights thereunder.
6.14 Certain Transactions.
Except as set forth on Schedule 6.14, none of the officers, trustees,
directors, or employees of the Borrower or any of its Subsidiaries is a party to
any transaction with Borrower or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, trustee, director or such employee
or, to the knowledge of the Borrower, any corporation, partnership, limited
liability company, trust or other entity in which any officer, trustee,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
6.15 Employee Benefit Plans.
The Borrower has no employees and thus no Employee Benefit Plans,
Multiemployer Plans or Guaranteed Pension Plans.
6.16 Regulations T, U and X.
No portion of any Loan is to be used for the purpose of purchasing or
carrying any "margin security" or "margin stock" as such terms are used in
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R. Parts 220, 221 and 224.
6.17 Subsidiaries.
Schedule 6.17 sets forth all of the Subsidiaries of the Borrower, the form
and jurisdiction of organization of each of the Subsidiaries, and the Borrower's
ownership interest therein.
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6.18 Loan Documents.
All of the representations and warranties made by or on behalf of the
Borrower and its Subsidiaries in this Agreement and the other Loan Documents or
any document or instrument delivered to the Agent or the Banks pursuant to or in
connection with any of such Loan Documents are true and correct in all material
respects, and neither the Borrower nor any of its Subsidiaries has failed to
disclose such information as is necessary to make such representations and
warranties not misleading in any material respects.
6.19 Brokers.
None of the Borrower nor any of its Subsidiaries nor the Manager has
engaged or otherwise dealt with any broker, finder or similar entity in
connection with this Agreement or the Loans contemplated hereunder.
6.20 Other Debt.
None of the Borrower or any of its Subsidiaries is in default of the
payment of any Indebtedness or any other agreement, mortgage, deed of trust,
deed to secure debt, security agreement, financing agreement, indenture or lease
to which any of them is a party. The Borrower is not a party to or bound by any
agreement, instrument or indenture that may require the subordination in right
or time or payment of any of the Obligations to any other indebtedness or
obligation of the Borrower. The Borrower has provided to the Agent a schedule,
and upon the request of the Agent will provide copies, of all agreements,
mortgages, deeds of trust, deeds to secure debt, financing agreements or other
material agreements binding upon the Borrower and any of its Subsidiaries or
their respective properties, and entered into by the Borrower or its
Subsidiaries as of the date of this Agreement with respect to any Indebtedness
of the Borrower permitted under this Agreement.
6.21 Solvency.
As of the Closing Date and after giving effect to the transactions
contemplated by this Agreement and the other Loan Documents, including all Loans
made or to be made hereunder, neither the Borrower nor any of its Subsidiaries
is insolvent on a balance sheet basis such that the sum of such Person's assets
exceeds the sum of such Person's liabilities, such Person is able to pay its
debts as they become due, and such Person has sufficient capital to carry on its
business.
6.22 No Fraudulent Intent.
Neither the execution and delivery of this Agreement or any of the other
Loan Documents nor the performance of any actions required hereunder or
thereunder is being undertaken by the Borrower or any of its Subsidiaries with
or as a result of any actual intent by any of such Persons to hinder, delay or
defraud any entity to which any of such Persons is now or will hereafter become
indebted.
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6.23 Transaction in Best Interests of Borrower; Consideration.
The transaction evidenced by this Agreement and the other Loan Documents is
in the best interests of the Borrower, each of its Subsidiaries and the
creditors of such Persons. The direct and indirect benefits to inure to the
Borrower and each of its Subsidiaries pursuant to this Agreement and the other
Loan Documents constitute substantially more than "reasonably equivalent value"
(as such term is used in Section 548 of the Bankruptcy Code) and "valuable
consideration," "fair value," and "fair consideration," (as such terms are used
in any applicable state fraudulent conveyance law), in exchange for the benefits
to be provided by the Borrower and each of its Subsidiaries pursuant to this
Agreement and the other Loan Documents.
6.24 Mortgage Loans.
(a) Delivery of Mortgage Loan Qualification Documents. The Mortgage Loan
Collateral Documents have been delivered to Agent, or Collateral Agent, as
applicable, with respect to each Mortgage Loan made by the Borrower and the
Borrower has delivered certification to Agent that all other Mortgage Loan
Qualification Documents are in the possession and/or control of Borrower. The
names of the Mortgage Loan Obligors, amounts owing, interest rates, due dates
and other facts furnished to Agent with respect to any of the Mortgage Loans
have been and will be correctly stated in all material respects. As of the
Closing Date (i) all of the Excluded Mortgage Loans are accurately described on
Schedule 1.1 hereto; (ii) all of the Initial Mortgage Loans held by the Borrower
are accurately described on Schedule 1.2 hereto; (iii) all of the OREO and
Non-Performing Mortgage Loans are accurately described on Schedule 1.3 hereto;
and (iv) the sole Initial Interim Loan is accurately described on Schedule 1.4
hereto.
(b) Good Title. Borrower is the sole, lawful and beneficial owner of the
Mortgage Loans free and clear of all liens, restrictions, claims, pledges and
encumbrances whatsoever and has the full and complete right, power and authority
to create a security interest in the Mortgage Loans in favor of Agent in
accordance with the terms and provisions of the Collateral Assignment. The
security interest in the Mortgage Loans created by the Collateral Assignment
constitutes and will at all times continue to constitute a valid and enforceable
first priority perfected security interest in the Mortgage Loans in favor of
Agent, free and clear of all liens, claims, encumbrances and rights of others.
Borrower has made no contract or arrangement of any kind or type whatsoever
(whether oral or written, formal or informal), the performance of which by the
other party thereto could give rise to a lien on the Mortgage Loans.
(c) Status of the Mortgage Loans. The Mortgage Loans are valid and
enforceable in accordance with the terms of the Mortgage Loan Documents, subject
to insolvency, bankruptcy, moratorium and other laws affecting creditors' rights
generally, and are in compliance with all applicable laws. The Mortgage Loan
Documents create a valid, enforceable and perfected lien and security interest
in all Bonds and Mortgage Loan Collateral covered thereby. The Mortgage Loan
Documents provided to the Agent or Collateral Agent are true and correct copies
or originals, as applicable, thereof. With respect to the Mortgage Loan
Collateral, there are no title, survey, environmental, entitlement/zoning issues
or defects which could have a material adverse effect on the repayment of the
Mortgage Loans.
44
(d) No Offset or Defenses. The Mortgage Loan Notes evidence bona fide
indebtedness owing to Borrower by the Mortgage Loan Obligors, and the Mortgage
Loan Obligors have no rights to setoff, counterclaim or defenses with respect to
the payment or performance of any obligations under the Mortgage Loan Documents,
including, without limitation, laws relating to usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws relating to the Mortgage Loans.
6.25 PATRIOT Act Provisions.
(a) Neither Borrower nor, to Borrower's knowledge, (i) any of Borrower's
directors, officers, shareholders, members, managers, partners, or employees,
(ii) any guarantor or indemnitor, (iii) any manager, (iv) any Mortgage Loan
Obligor, or (iv) any director, officer, shareholder, member, manager, partner,
employee, affiliate, or subsidiary of any of the foregoing is:
(i) a Prohibited Person or is owned or controlled by, or acting on behalf
of, a Prohibited Person; or
(ii) in violation of any applicable law relating to money laundering,
anti-terrorism, trade embargoes or economic sanctions, including the
Executive Order (as hereinafter defined) and the PATRIOT Act.
(b) Without limiting the foregoing: (i) none of the funds or other assets
of Borrower or any guarantor or indemnitor constitute property of, or are
beneficially owned (directly or indirectly) by any Prohibited Person; (ii) no
Prohibited Person has any interest of any nature whatsoever (directly or
indirectly) in Borrower or any guarantor or indemnitor; and (iii) none of the
funds or other assets of Borrower or any guarantor or indemnitor have been
derived from any unlawful activity.
(c) No portion of any of real property or, to Borrower's knowledge, the
Mortgage Loan Collateral has been or will be purchased, improved, equipped or
furnished with proceeds of any unlawful activity.
(d) Borrower has implemented procedures, and will consistently apply those
procedures throughout the term of the Loan, to ensure that the foregoing
representations and warranties remain true and correct during the term of the
Loan.
(e) For purposes of this provision a "Prohibited Person" means any person:
(i) that is listed in the Annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224 - Blocking Property and
Prohibiting Transactions with Persons who Commit, Threaten to Commit,
or Support Terrorism, effective September 24, 2001 (the "Executive
Order"), including any person that commits, threatens or conspires to
commit or supports "terrorism" as defined in the Executive Order;
(ii) with whom the Agent or any Bank is prohibited from dealing or
otherwise engaging in any transaction by any applicable law relating
to money
45
laundering, anti-terrorism, trade embargoes or economic sanctions,
including the Executive Order, the Patriot Act, the International
Emergency Economic Powers Act, 50 U.S.C. ss.ss. 1701 et seq., the
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
executive orders or regulations promulgated thereunder;
(iii) that is named as a "specifically designated national (SDN) and
blocked person" on the most recent list of specially designated
nationals and blocked persons subject to financial sanctions that is
maintained by the U.S. Treasury Department, Office of Foreign Assets
Control ("OFAC") and any other similar list maintained by OFAC
pursuant to any applicable law (or if such list does not exist, the
similar list then being maintained by the United States), including,
without limitation, trade embargo, economic sanctions or other
prohibitions imposed by any executive order of the President of the
United States (the "OFAC List"); or
(iv) that is an affiliate (including any principal, director, officer,
shareholder, member, manager, partner, employee, agent, affiliate,
subsidiary, participant, immediate family member or close associate)
of a person described in one or more of clauses (i) through (iii) of
this definition.
7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
7.1 Punctual Payment.
The Borrower will duly and punctually pay or cause to be paid the principal
and interest due on all of its Indebtedness outstanding from time to time (other
than the Loans), including any fees provided for in the underlying agreements
evidencing such Indebtedness, all in accordance with the terms of such
agreements.
7.2 Maintenance of Office.
The Borrower and the Manager will maintain their chief executive office at
10237 Yellow Circle Drive, Minnetonka, Minnesota 55343, or at such other place
in the United States of America as the Borrower or the Manager shall designate
upon prior written notice to the Agent and the Banks, where notices,
presentations and demands to or upon the Borrower or the Manager in respect of
the Loan Documents may be given or made.
7.3 Records and Accounts.
The Borrower will (a) keep, and cause each of its Subsidiaries to keep,
true and accurate records and books of account in which full, true and correct
entries will be made in accordance with generally accepted accounting principles
and (b) maintain adequate accounts and reserves for all taxes (including income
taxes), depreciation and amortization of its properties and the properties of
its Subsidiaries, contingencies and other reserves. Neither the Borrower nor any
of its Subsidiaries shall, without the prior written consent of the Agent, (x)
make any material
46
changes to the accounting principles used by such Person in preparing the
financial statements and other information described in ss.6.4 or (y) change its
fiscal year.
7.4 Financial Statements, Certificates and Information.
The Borrower will deliver or cause to be delivered to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of the Borrower, the audited Consolidated
balance sheet of the Borrower and its Subsidiaries at the end of such year, and
the related audited Consolidated statements of income, changes in shareholder's
equity and cash flows for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with generally accepted accounting principles,
and accompanied by an auditor's report prepared without qualification by Boulay,
Heutmaker & Zibell & Co. P.L.L.P., or by a "Big Four" accounting firm, any Form
10-KSB filed with the SEC (unless the SEC has approved an extension, in which
event the Borrower will deliver to the Agent and each of the Banks a copy of the
Form 10-KSB simultaneously with delivery to the SEC), a statement of the
Borrower's taxable net income for the prior fiscal year, and any other
information the Banks may need to complete a financial analysis of the Borrower
and its Subsidiaries;
(b) as soon as practicable, but in any event not later than thirty (30)
days after the end of each calendar month, copies of the internally prepared,
unaudited Consolidated balance sheet of the Borrower and its Subsidiaries, as at
the end of such month, and the related unaudited Consolidated statements of
income, changes in shareholder's equity and cash flows for the portion of the
Borrower's fiscal year then elapsed, and a statement showing the aging of the
receivables and payables for the Mortgage Loans, all in reasonable detail,
together with a certification by the principal financial or accounting officer
of the Borrower that the information contained in such financial statements
fairly presents the financial position of the Borrower and its Subsidiaries on
the date thereof (subject to year-end adjustments and adjustments that would be
required under generally accepted accounting principles applicable to
accrual-based accounting).
(c) as soon as practicable, but in any event not later than forty-five (45)
days after the end of each of the first three (3) fiscal quarters of the
Borrower in each year, copies of any Form 10-QSB filed with the SEC (unless the
SEC has approved an extension in which event the Borrower will deliver such
copies of the Form 10-QSB to the Agent and each of the Banks simultaneously with
delivery to the SEC);
(d) as soon as practicable, but in any event not later than forty-five (45)
days after each fiscal quarter of the Borrower, copies of a Consolidated
statement of Adjusted EBITDA for such fiscal quarter for the Borrower and its
Subsidiaries and a Consolidated statement of Borrowing Base Adjusted EBITDA for
such fiscal quarter for the Borrower and its Subsidiaries, prepared on a basis
consistent with the statement furnished pursuant to ss.6.4(c) together with a
certification by the principal financial or accounting officer of the Borrower
that the information contained in such statement fairly presents the Adjusted
EBITDA and Borrowing Base Adjusted EBITDA of the Borrower and its Subsidiaries
for such period;
47
(e) simultaneously with the delivery of the financial statements referred
to in subsections (a) and (c) above, a statement (a "Compliance Certificate")
certified by the principal financial or accounting officer of the Borrower in
the form of Exhibit C hereto (or in such other form as the Agent may approve
from time to time) setting forth in reasonable detail computations evidencing
compliance with the covenants contained in ss.9 and the other covenants
described therein, and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(f) Borrower shall submit not later than the fifteenth (15th) day of each
calendar month and with each Draw request, a Borrowing Base Certificate in the
form of Exhibit D attached hereto pursuant to which Borrower shall calculate the
amount of the Borrowing Base as of the end of the immediately preceding calendar
month.
(g) contemporaneously with the filing or mailing thereof, copies of all
material of a financial nature filed with the SEC or sent to the stockholders of
the Borrower as a group;
(h) as soon as practicable but in any event not later than thirty (30) days
after the end of each calendar month, a spreadsheet with respect to the Mortgage
Loans with respect to such calendar month, showing outstanding principal
balances, principal amortizations, prepayments, interest earned, delinquencies
and any other information regarding the Mortgage Loans as the Agent shall
request, such spreadsheet to be in form satisfactory to the Agent, and certified
by the principal financial or accounting officer of the Borrower;
(i) promptly after they are filed with the Internal Revenue Service, copies
of all annual federal income tax returns and amendments thereto of the Borrower
and its Subsidiaries;
(j) not later than thirty (30) days prior to the end of each fiscal year of
the Borrower, a budget and business plan for the next fiscal year;
(k) contemporaneously with the provision of the same to the trustees under
the Indentures, true and correct copies of all compliance certificates required
to be provided by Borrower under the terms of the Indentures; and
(l) from time to time such other financial data and information in the
possession of the Borrower or its Subsidiaries (including without limitation
auditors' management letters, and information as to legal and regulatory changes
affecting the Borrower) as the Agent may request.
7.5 Notices.
(a) Defaults. The Borrower will promptly notify the Agent in writing of the
occurrence of any Default or Event of Default. If any Person shall give any
notice or take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or under any note,
evidence of indebtedness, indenture or other obligation to which or with respect
to which the Borrower or any of its Subsidiaries is a party or obligor, whether
as principal or surety, and such default would permit the holder of such note or
obligation or other evidence of indebtedness to accelerate the maturity thereof,
the Borrower
48
shall forthwith give written notice thereof to the Agent and each of the Banks,
describing the notice or action and the nature of the claimed default.
(b) Notification of Claims Against Collateral. By the tenth (10th) day of
each calendar month, Borrower will, or will cause Manager to, notify the Agent
in writing of (i) any setoff, claims (including, with respect to any Mortgage
Loan Collateral, environmental claims), withholdings or other defenses to which
any of the Collateral, or the rights of the Agent or the Banks with respect to
the Collateral, are subject, or (ii) the occurrence of a default or event of
default under any of the Mortgage Loans.
(c) Notice of Litigation and Judgments. The Borrower and the Manager will
give notice to the Agent in writing within five (5) Business Days of becoming
aware of any litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its Subsidiaries or
to which the Borrower or any of its Subsidiaries is or is to become a party
involving an uninsured claim against the Borrower or any of its Subsidiaries
that could reasonably be expected to have a materially adverse effect on the
Borrower and stating the nature and status of such litigation or proceedings.
The Borrower and the Manager will give notice to the Agent, in writing, in form
and detail satisfactory to the Agent and each of the Banks, within five (5)
Business Days of any judgment not covered by insurance, whether final or
otherwise, against the Borrower or any of its Subsidiaries in an amount in
excess of $100,000.
(d) Key Man Insurance Trigger Events. The Borrower will promptly notify the
Agent in writing of the occurrence of any Key Man Insurance Trigger Event, and
of the action the Borrower proposes to take with respect thereto.
7.6 Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a Minnesota
corporation. The Borrower will cause each of its Subsidiaries to do or cause to
be done all things necessary to preserve and keep in full force and effect their
respective legal existences and good standing in their respective jurisdictions
of incorporation, organization or formation (as the case may be). The Borrower
will do or cause to be done all things necessary to preserve or establish its,
and each of its Subsidiaries', good standing as a foreign entity and due
authorization to do business in the jurisdictions described in Section
6.1(a)(ii) hereof. The Borrower shall continue to own directly and indirectly
one hundred percent (100%) of the Voting Interests and economic interests in its
Subsidiaries other than Securitization Subsidiaries. The Borrower will do or
cause to be done all things necessary to preserve and keep in full force and
effect all of its rights and franchises and those of its Subsidiaries. The
Borrower will, and will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by it and in related businesses.
(b) The Borrower (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof in all cases in which the
failure
49
so to do would have a material adverse effect on the financial condition, assets
or operations of the Borrower or any of its Subsidiaries.
7.7 Taxes.
The Borrower and each Subsidiary will duly pay and discharge, or cause to
be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon it and upon its Mortgage
Loans, or any part thereof, or upon the income or profits therefrom as well as
all claims for labor, materials, or supplies that if unpaid might by law become
a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Borrower or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and provided, further that forthwith
upon the commencement of proceedings to foreclose any lien that may have
attached as security therefor, the Borrower and each such Subsidiary of the
Borrower either (i) will provide a bond issued by a surety acceptable to the
Agent and sufficient to stay all such proceedings or (ii) if no such bond is
provided, will pay each such tax, assessment, charge, levy or claim.
7.8 Inspection of Properties and Books.
The Borrower shall permit and/or shall cause Manager to permit the Banks,
through the Agent or any representative designated by the Agent, at the
Borrower's expense, to visit and inspect any of the properties of the Borrower
or any of its Subsidiaries, to examine the books of account of the Borrower and
its Subsidiaries (and to make copies thereof and extracts therefrom) and to
discuss the affairs, finances and accounts of the Borrower and its Subsidiaries
with, and to be advised as to the same by, its officers, all at such times and
intervals as the Agent or any Bank may request. Banks shall also have the right
to contact Mortgage Loan Obligors to verify the status of Mortgage Loans that
are Collateral for the Loans.
7.9 Compliance with Laws, Contracts, Licenses, and Permits.
The Borrower will comply with, and will cause each of its Subsidiaries to
comply in all respects with, (i) all applicable laws and regulations now or
hereafter in effect wherever its business is conducted, (ii) the provisions of
its corporate, limited liability company or other charter (as applicable) and
other charter documents, operating agreements, and bylaws, (iii) all agreements
and instruments to which it is a party or by which it or any of its properties
may be bound, (iv) all applicable decrees, orders, and judgments, and (v) all
licenses and permits required by applicable laws and regulations for the conduct
of its business or the ownership, use or operation of its properties. If at any
time while any Loan or Note is outstanding or the Banks have any obligation to
make Loans hereunder, any authorization, consent, approval, permit or license
from any officer, agency or instrumentality of any government shall become
necessary or required in order that the Borrower may fulfill any of its
obligations hereunder, the Borrower will, or will cause Manager to, immediately
take or cause to be taken all steps necessary to obtain such authorization,
consent, approval, permit or license and furnish the Agent and the Banks with
evidence thereof.
50
7.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans solely to provide financing
(a) for the making of Qualifying Mortgage Loans, (b) to repay outstanding
Indebtedness, (c) for working capital (not to exceed an amount outstanding at
any one time of $1,000,000), and (d) for such other lawful purposes as the
Requisite Banks in their discretion from time to time may agree to in writing.
7.11 Further Assurances.
The Borrower will cooperate with, and will cause each of its Subsidiaries
and the Manager to cooperate with the Agent and the Banks and execute such
further instruments and documents as the Banks or the Agent shall request to
carry out to their satisfaction the transactions contemplated by this Agreement
and the other Loan Documents.
7.12 Compliance.
The Borrower shall operate its business, and shall cause each of its
Subsidiaries and the Manager to operate its business, in compliance with the
terms and conditions of this Agreement and the other Loan Documents. The
Borrower shall at all times comply with all requirements of applicable laws
necessary to maintain REIT Status and shall operate its business in compliance
with the terms and conditions of this Agreement and the other Loan Documents.
7.13 Interest Rate Contract.
If the Interest Hedging Ratio as of the end of any fiscal quarter of the
Borrower shall be less than 1.50 to 1.0, as set forth in the Compliance
Certificate delivered by the Borrower with respect to such quarter pursuant to
Section 7.4(d), then on or before the date that is three (3) months after the
end of such fiscal quarter, the Borrower shall obtain and thereafter maintain in
full force and effect an Interest Rate Contract in form and substance
satisfactory to Agent on a notional amount of Unhedged Variable Rate Debt at
least equal to the lesser of (a) the Interest Rate Hedging Cap and (b) that
amount which would have to be subtracted from Variable Rate Debt in calculating
the Interest Hedging Ratio such that the Interest Hedging Ratio, if
re-calculated immediately after giving effect to such Interest Rate Contract,
would equal or exceed 1.50 to 1.0. Each Interest Rate Contract would be required
to have a term ending no sooner than the earliest of (i) the Maturity Date, (ii)
the date which is the second anniversary of the effective date of such Interest
Rate Contract, and (iii) such earlier date as the Agent may approve in its sole
discretion (provided, however, that the approval by the Agent of a shorter
duration for any particular Interest Rate Contract shall not obligate the Agent
to approve such shorter duration for any other Interest Rate Contract). Promptly
following the effectiveness of each Interest Rate Contract, the Borrower shall
assign such Interest Rate Contract to the Agent as additional security for the
Obligations pursuant to the Assignment of Hedge. Each Interest Rate Contract
shall be provided by any Bank which is a party to this Agreement or by a bank or
other financial institution that has unsecured, uninsured and unguaranteed
long-term debt which is rated at least A-3 by Moody's Investor Service, Inc. or
at least A by Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc. The Borrower shall, upon the request of the
51
Agent, provide to the Agent evidence that the Interest Rate Contract is in
effect, or that no Interest Rate Contract is then required under the terms of
this Agreement.
7.14 More Restrictive Agreements.
Should the Borrower or any of its Subsidiaries enter into or modify any
agreements or documents pertaining to any existing or future Indebtedness or
Equity Offering permitted hereunder, which agreements or documents include
covenants, whether affirmative or negative (or any other provision which may
have the same practical effect as any of the foregoing), which are individually
or in the aggregate more restrictive against the Borrower or its Subsidiaries
(other than Securitization Subsidiaries) than those set forth in ss.8 and ss.9
of this Agreement, the Borrower shall promptly notify the Agent and, if
requested by the Requisite Banks, the Borrower, the Agent, and the Requisite
Banks shall promptly amend this Agreement and the other Loan Documents to
include some or all of such more restrictive provisions as determined by the
Requisite Banks in their sole discretion. The Borrower agrees to deliver to the
Agent copies of any agreements or documents (or modifications thereof)
pertaining to existing or future Indebtedness or Equity Offering of the Borrower
or any of its Subsidiaries as the Agent from time to time may request.
7.15 Lockbox Account.
The Beacon Lockbox Account shall at all times be maintained with Beacon
Bank, and the KeyBank Lockbox Account shall at all times be maintained with the
Agent, in each case in the name of the Borrower bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Agent for the benefit of the Banks, and shall be subject to the Lockbox
Agreement. The Borrower shall request in writing and otherwise take such steps
to ensure that all Mortgage Loans Obligors forward all payments directly to the
appropriate Lockbox Account, as provided in the Lockbox Agreement. At any time
after an Event of Default has occurred, the Agent, with the consent of the
Requisite Banks, shall do any or all of the following: (i) exercise exclusive
dominion and control over the funds deposited in the Lockbox Account, (ii) have
collections that are sent to the Lockbox Account redirected pursuant to its
instruction, (iii) apply the balance in the Lockbox Account against the
Obligations in such order and manner as the Agent may deem desirable, and (iv)
take any or all other actions the Agent is permitted to take hereunder or
pursuant to the Lockbox Agreement. The Agent shall at all times have a first
priority perfected security interest in the Lockbox Account as more particularly
described in the Lockbox Agreement.
7.16 Mortgage Loans.
(a) No Termination or Release. Except in the ordinary course of the
Borrower's lending business and in accordance with the provisions of the
Mortgage Loan Documents, the Borrower shall not abandon, cancel, release,
relinquish or terminate any of the Mortgage Loans or any part thereof or any
interest therein or any Bonds or Mortgage Loan Collateral, and any attempt to do
so without the prior written consent of the Agent shall be void and ineffective.
(b) Information About Mortgage Loans. On a monthly basis, the Borrower
shall execute and deliver to the Agent a sworn affidavit setting forth in detail
any and all amounts or
52
payments received by Borrower with respect to the Mortgage Loans or any portion
thereof during any period specified by Agent.
(c) No Future Encumbrance or Transfer. The Borrower shall not encumber,
pledge, anticipate, borrow against, or create any right of offset against the
Mortgage Loans, and except for the sale of Mortgage Loans as part of a
securitization, the net proceeds of which sale are paid to the Agent to reduce
the Outstanding Loans, shall not transfer, assign, sell, or convey all or any
portion of the Mortgage Loans.
(d) Mortgage Loans Compliance and Defense. The Borrower shall comply with
all obligations of the lender under the Mortgage Loans. The Borrower, at its
sole cost and expense, shall diligently and in good faith do all things and take
all actions, including, without limitation, bringing appropriate actions against
the Mortgage Loan Obligors which are necessary or desirable to enforce the
obligations of the Mortgage Loan Obligors to make all payments under the
Mortgage Loan Documents, and to protect and preserve the interest of the Agent
under the Collateral Assignment.
(e) Appraisals. The Agent may require the Borrower to obtain updated
Appraisals with respect to any of the Mortgage Loan Collateral, where the Agent
reasonably believes that the value of the Mortgage Loan Collateral with respect
to a Mortgage Loan has been materially and adversely affected, or may perform
internal studies updating and revising prior Appraisals for the Mortgage Loan
Collateral for the purpose of determining current Appraised Value and compliance
with the requirements of this Agreement. The Borrower shall cooperate with the
Agent in regard to such efforts and shall bear the cost and expense of all such
Appraisals and updates performed pursuant to this ss.7.16(e).
7.17 Securitization Transactions.
(a) Within a reasonable time prior to the consummation of each
securitization transaction (whether or not giving rise to Permitted
Securitization Indebtedness), the Borrower shall deliver to the Agent
substantially final drafts of the operative documents, all organizational
documents of the applicable Securitization Subsidiaries, and all legal opinions
to be delivered by counsel for the Borrower or any Securitization Subsidiary
(including, without limitation, the "true sale" and "non-consolidation"
opinions, if any), in connection with such securitization transaction. The
Borrower will obtain the prior written consent and approval of the Agent to the
terms, provisions and structure of such securitization transaction (including
the legal and organizational structure of all Securitization Subsidiaries and
the restrictions imposed thereon) prior to consummating such securitization
transaction, which consent and approval shall not unreasonably be withheld,
delayed or conditioned. After such consent and approval is granted, no
modifications shall be made to the approved documents or opinions without the
further written consent of the Agent, which consent and approval shall not
unreasonably be withheld, delayed or conditioned. Contemporaneously with the
consummation of each securitization transaction (whether or not giving rise to
Permitted Securitization Indebtedness), the Borrower shall deliver or cause to
be delivered to the Agent each of the following:
(i) Evidence satisfactory to the Agent that (i) the related securitization
transaction has been consummated, and (ii) the proceeds from such securitization
53
transaction (net of transaction costs and expenses incurred by the Borrower and
the applicable Securitization Subsidiary) are substantially contemporaneously
being used to reduce the aggregate principal amount outstanding under the Loans
and to satisfy other Obligations;
(ii) True, correct and complete copies of certificates of existence and
good standing issued as of a recent date with respect to such Subsidiaries by
the Secretary of State of the Subsidiaries' respective jurisdictions of
incorporation;
(iii) A certificate signed by the principal financial or accounting officer
of the Borrower (i) stating that (1) all representations and warranties of the
Borrower herein and all representations and warranties of the documents executed
and delivered in connection with such securitization transaction are true and
correct as of the date given, (2) no Default or Event of Default exists, and (3)
after giving pro forma effect to such securitization transaction no Default or
Event of Default would result therefrom, including, without limitation, under
any of the covenants set forth in ss. 9 of this Agreement (which certificate
will contain calculations of such covenants in accordance with ss. 1.3 of this
Agreement, in form and substance satisfactory to the Agent), (ii) setting forth
the new Borrowing Base, and (iii) certifying that the aggregate principal amount
of the Outstanding Loans does not exceed the Borrowing Base Availability, in
each case after giving pro forma effect to such securitization transaction; and
(iv) Evidence satisfactory to the Agent that the Borrower has obtained all
necessary third party consents to such securitization transaction.
(b) Within sixty (60) days following the consummation of each
securitization transaction (whether or not giving rise to Permitted
Securitization Indebtedness), or such later time as Agent in its sole discretion
may agree to, the Borrower shall deliver true, correct and complete copies of
all executed operative documents in connection with such securitization
transaction, all organizational documents of the Securitization Subsidiaries
involved in such transaction and all legal opinions delivered in connection with
such transaction.
7.18 Redemption of Certain Debt Certificates.
Prior to August 1, 2007, the Borrower shall redeem $1,956,000 in aggregate
principal amount of the Debt Certificates issued and outstanding under the
Series A Indenture.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:
8.1 Restrictions on Indebtedness.
The Borrower will not, and will not permit any of its Subsidiaries to,
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
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(a) Indebtedness to the Banks arising under any of the Loan Documents, and
Indebtedness and obligations in respect of the Interest Rate Contract required
pursuant to ss.7.13;
(b) current liabilities of the Borrower or its Subsidiaries incurred in the
ordinary course of business but not incurred through (i) the borrowing of money,
or (ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental charges or
levies and claims for labor, materials and supplies to the extent that payment
therefor shall not at the time be required to be made in accordance with the
provisions of ss.7.7;
(d) Indebtedness in respect of judgments or awards that have been in force
for less than the applicable period for taking an appeal so long as execution is
not levied thereunder or in respect of which the Borrower shall at the time in
good faith be prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
(f) Permitted Indebtedness; and
(g) Indebtedness in respect of reverse repurchase agreements having a term
of not more than 180 days with respect to Investments described in ss.8.3(a)(iv)
or (v).
8.2 Restrictions on Liens Etc.
The Borrower will not, nor will it permit any of its Subsidiaries to, (a)
create or incur or suffer to be created or incurred or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest of
any kind upon any of its property or assets of any character whether now owned
or hereafter acquired, or upon the income or profits therefrom; (b) transfer any
of its property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; (c) acquire, or
agree or have an option to acquire, any property or assets upon conditional sale
or other title retention or purchase money security agreement, device or
arrangement; (d) suffer to exist for a period of more than 30 days after the
same shall have been incurred any Indebtedness or claim or demand against it
that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be
given any priority whatsoever over its general creditors; or (e) sell, assign,
pledge or otherwise transfer any accounts, contract rights, general intangibles,
chattel paper or instruments, with or without recourse; provided that the
Borrower and any of its Subsidiaries may create or incur or suffer to be created
or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower (other than Collateral) securing Indebtedness owing
by Subsidiaries of the Borrower to the Borrower;
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(b) liens on properties and assets to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies in respect of
obligations not overdue;
(c) deposits or pledges made in connection with, or to secure payment of,
workers' compensation, unemployment insurance, old age pensions or other social
security obligations;
(d) liens on assets of the Borrower other than the Collateral or any
interest therein in respect of judgments, awards or indebtedness, the
Indebtedness with respect to which is permitted by ss.8.1(d);
(e) liens on the Excluded Mortgage Loans securing the repayment of the
Permitted Indebtedness (other than Permitted Securitization Indebtedness);
(f) liens on assets of any Securitization Subsidiary securing Permitted
Securitization Indebtedness; and
(g) liens in favor of the Agent and the Banks under the Loan Documents.
8.3 Restrictions on Investments.
(a) the Borrower will not, and will not permit any of its Subsidiaries to,
make or permit to exist or to remain outstanding any Investment except
Investments in:
(i) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase by the
Borrower or its Subsidiary;
(ii) marketable direct obligations of any of the following: Federal Home
Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan
Banks, Federal National Mortgage Association, Government National Mortgage
Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or
any other agency or instrumentality of the United States of America;
(iii) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$100,000,000; provided, however, that the aggregate amount at any time so
invested with any single bank having total assets of less than $1,000,000,000
will not exceed $1,000,000;
(iv) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any State which at the time of purchase are rated by Moody's
Investors Service, Inc. or by Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., at not less than "P1" if then rated by Moody's
Investors Service, Inc., and not less than "A1", if then rated by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.;
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(v) mortgage-backed securities guaranteed by the Government National
Mortgage Association, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation and other mortgage-backed bonds which at the time
of purchase are rated by Moody's Investors Service, Inc. or by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc., at not less
than "Aa" if then rated by Moody's Investors Service, Inc. and not less than
"AA" if then rated by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.;
(vi) repurchase agreements having a term not greater than ninety (90) days
and fully secured by securities described in the foregoing subsection (i), (ii)
or (v) with banks described in the foregoing subsection (iii) or with financial
institutions or other corporations having total assets in excess of
$500,000,000;
(vii) shares of so-called "money market funds" registered with the SEC
under the Investment Company Act of 1940 which maintain a level per-share value,
invest principally in investments described in the foregoing subsections (i)
through (vi) and have total assets in excess of $50,000,000;
(viii) Investments in Mortgage Loans, subject to the following limitations:
1. no more than twenty percent (20%) of Borrower's Consolidated Total Asset
Value may be invested in Mortgage Loans consisting of Construction Loans;
2. no Mortgage Loans shall be subordinate in rank, time of payments,
priority of lien or any other respect to any other indebtedness of the Mortgage
Loan Obligors, except for Permitted Subordinate Mortgage Loans;
3. the aggregate principal balance of all Interim Loans at any time
outstanding shall not exceed $3,000,000; and
4. no Investments may be made in Compound Bonds;
(ix) Investments in "Unimproved Real Property" (as such term is defined in
the Borrower's 2006 Annual Report), provided that in no event shall such
Investments exceed in the aggregate five percent (5%) of the Borrower's
Consolidated Total Asset Value; and
(x) commercial mortgage backed securities issued by a Securitization
Subsidiary;
(xi) OREO;
(xii) First mortgage serial bonds of a church, church school or other
nonprofit organization the repayment of which is secured by a first priority
lien on or security title to the real property owned by such organization,
provided that the aggregate principal amount of such bonds at any time
outstanding shall not exceed thirty percent (30%) of Borrower's Consolidated
Total Asset Value; and
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(xiii) Membership interests or other equity interests in any Permitted
Securitization Subsidiary.
(b) The sum of the Investments described in ss.8.3(a)(viii)(1) and
ss.8.3(a)(ix) above shall not exceed twenty percent (20%) of the Borrower's
Consolidated Total Asset Value at any time outstanding.
(c) The Borrower will not create or open any investment or similar accounts
to hold any Mortgage Loan Collateral without an account control agreement, in
form and substance acceptable to the Agent covering such account.
8.4 Merger, Consolidation.
The Borrower will not and will not permit any of its Subsidiaries to,
become a party to any merger or consolidation nor dissolution except (a) the
merger or consolidation of one or more of the Subsidiaries of the Borrower
(other than a Securitization Subsidiary) with and into the Borrower or (b) the
merger or consolidation of two or more Subsidiaries of the Borrower (other than
a Securitization Subsidiary).
8.5 Conduct of Business.
The Borrower will not conduct any of its business operations other than
through the Borrower and its Subsidiaries or the Manager; provided that the
Borrower shall not acquire, form or otherwise create a Subsidiary (other than a
Securitization Subsidiary) without the prior written approval of the Agent.
8.6 Distributions.
The Borrower shall not make any Distributions which would cause it to
violate any of the following covenants:
(a) The Borrower will not permit Distributions made by Borrower to exceed
one hundred percent (100%) of Borrower's Funds Available for Distribution in any
fiscal quarter; provided, however, that the amount distributed for any quarter
may be more or less than the Funds Available for Distribution for such quarter,
so long as the total amount distributed does not exceed Funds Available for
Distribution for the applicable year-to-date;
(b) The Borrower shall not make, or permit any Subsidiary to make (other
than to the Borrower, or to Borrower's Subsidiaries necessary as intermediate
distributions prior to making such Distribution to the Borrower), any
Distributions directly or indirectly from proceeds of any securitization
transaction;
(c) In the event that an Event of Default shall have occurred and be
continuing, the Borrower shall not make any Distributions other than the minimum
Distributions required under the Code to maintain the REIT Status of the
Borrower, as evidenced by a certification of the principal financial or
accounting officer of the Borrower containing calculations in reasonable detail
satisfactory in form and substance to Agent; provided, however, that Borrower
shall not be entitled to make any Distributions in connection with the
repurchase of common or
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preferred stock of the Borrower at any time a Default or an Event of Default
shall have occurred and be continuing; and
(d) Notwithstanding the foregoing, at any time when an Event of Default
shall have occurred and the maturity of the Obligations has been accelerated,
the Borrower shall not make any Distributions whatsoever, directly or
indirectly.
8.7 Asset Sales.
Subject to the provisions of ss.5.2, neither the Borrower nor any
Subsidiary thereof shall sell, transfer or otherwise dispose of any of its
assets unless there shall have been delivered to the Agent a statement that no
Default or Event of Default exists immediately prior to such sale, transfer or
other disposition or would exist after giving effect to such sale, transfer or
other disposition.
8.8 Management.
There shall not occur, without the prior written consent of the Agent, any
change in the identity of the Manager or any termination, amendment,
modification or supplementation of the Management Agreement. In no event shall
the Management Fee exceed the sum of 1.25% of Average Invested Assets up to
$35,000,000, 1.00% of Average Invested Assets between $35,000,000 and
$50,000,000, and 0.75% of Average Invested Assets in excess of $50,000,000, nor
shall the Manager retain, or be entitled to retain, more than fifty percent
(50%) of the origination fees charged to Mortgage Loan Obligors in connection
with the Mortgage Loans, or any renewals thereof.
8.9 Debt Certificates.
Borrower shall not issue any additional Debt Certificates after the Closing
Date, other than Debt Certificates solely evidencing the renewal of Debt
Certificates outstanding immediately prior to such renewal, such that the
aggregate principal amount of all Debt Certificates at any time outstanding
shall not exceed (a) $25,376,000, less (b) the aggregate principal amount of
Debt Certificates redeemed, repaid or otherwise retired since the Closing Date
and not renewed as permitted herein. Borrower shall not supplement or amend the
Indentures, or either of them, without the prior consent of the Agent in each
instance. The Agent hereby consents to the Indenture Amendments.
9. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans, it will comply
with the following:
9.1 Borrowing Base.
(a) The Borrower will not at any time permit the Outstanding Loans as of
the date of determination to be greater than the Borrowing Base Availability as
determined as of the same date.
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(b) Borrower will not, as of the end of any fiscal quarter of Borrower,
permit Borrowing Base Adjusted EBITDA for the period covered by the four (4)
previous consecutive fiscal quarters (treated as a single accounting period) to
be less than 1.60 times the Facility Interest Expense for such period.
(c) The Borrower will at all times comply with the following limitations
regarding the Borrowing Base and the Qualifying Mortgage Loans included in the
Borrowing Base, unless the Agent shall have given its prior written approval to
the contrary in each instance:
(i) The book value of any one Qualifying Mortgage Loan shall not exceed
$2,000,000;
(ii) The book value of Qualifying Mortgage Loans made to all Mortgage Loan
Obligors affiliated with one religious denomination (as denominated separately
in the Handbook of Denominations in the United States, New Tenth Edition, by
Frank S. Mead, Revised by Samuel S. Hill, published by Abington Press,
Nashville) shall not account for more than thirty percent (30%) of the Borrowing
Base; provided, however, that "independent churches" (i.e., those not
financially or organizationally owned or controlled by one of the larger
denominations) shall not count toward any denomination concentration limit;
(iii) The aggregate outstanding principal balance of Qualifying Mortgage
Loans secured by Mortgage Loan Collateral located in any one (1) State (other
than New York and Texas) shall not exceed twenty percent (20%) of the Borrowing
Base;
(iv) The aggregate outstanding principal balance of Qualifying Mortgage
Loans secured by Mortgage Loan Collateral located in New York and Texas shall
not exceed sixty percent (60%) of the Borrowing Base on a combined basis and
forty percent (40%) on an individual State basis;
(v) The aggregate outstanding principal balance of Qualifying Mortgage
Loans secured by Mortgage Loan Collateral located in any one (1) MSA shall not
exceed twenty percent (20%) of the Borrowing Base;
(vi) The weighted average loan to value ratio of all of the Qualifying
Mortgage Loans included in the Borrowing Base (based on the most recent
Appraised Value of the Mortgage Loan Collateral securing the Qualifying Mortgage
Loans) shall not exceed seventy-five percent (75%) (an example of the
calculation contained in this ss.9.1(c)(vi) is attached hereto as Schedule 9.1
and by this reference incorporated herein); and
(vii) No Qualifying Mortgage Loan included in the Borrowing Base shall have
a loan to value ratio (based on the most recent Appraised Value of the Mortgage
Loan Collateral securing such Qualifying Mortgage Loan) exceeding eighty percent
(80%).
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9.2 Liabilities to Assets Ratio.
The Borrower will not at any time permit the ratio of Consolidated Total
Liabilities to Consolidated Total Adjusted Tangible Asset Value to exceed 0.70
to 1.
9.3 Cash Flow Coverage.
The Borrower will not, as of the end of any fiscal quarter of the Borrower,
permit the Borrower's Adjusted EBITDA for the period covered by the four (4)
previous consecutive fiscal quarters (treated as a single accounting period) to
be less than 1.60 times the Interest Expense of the Borrower for such period.
9.4 Consolidated Tangible Net Worth.
The Borrower will not at any time permit its Consolidated Tangible Net
Worth to be less than $17,000,000 plus seventy-five percent (75%) of any Net
Offering Proceeds received by the Borrower after the date of this Agreement.
9.5 Non-Performing Assets.
The Borrower will not at any time permit the aggregate outstanding
principal balances of all Non-Performing Assets to exceed an amount equal to
twenty percent (20%) of the sum of its Consolidated Tangible Net Worth plus
Actual Loan Loss Reserve Balance.
10. CLOSING CONDITIONS.
The obligation of the Agent and the Banks to make the Loans to the Borrower
is subject to the satisfaction of the following conditions precedent on or prior
to the Closing Date:
10.1 Loan Documents.
The Borrower and its Subsidiaries and the Manager, as applicable, shall
have duly executed and delivered to the Agent each of the Loan Documents to
which such Person is a party (except that each Bank shall have received a fully
executed counterpart of its Note), each of which shall be in full force and
effect and shall be in form and substance satisfactory to the Agent.
10.2 Resolutions.
All action on the part of the Borrower, any of its Subsidiaries and the
Manager, as applicable, necessary for the valid execution, delivery and
performance by such Person of this Agreement and the other Loan Documents to
which such Person is or is to become a party shall have been duly and
effectively taken, and evidence thereof satisfactory to the Agent shall have
been provided to the Agent. The Agent shall have received from the Borrower true
copies of the resolutions adopted by its board of directors authorizing the
transactions described herein, certified by its secretary or assistant secretary
as of a recent date to be true and complete.
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10.3 Incumbency Certificate; Authorized Signers.
The Agent shall have received incumbency certificates, dated as of the date
of this Agreement, signed by a duly authorized officer of the Borrower and
giving the name and bearing a specimen signature of each individual who shall be
authorized to sign, in the name and on behalf of such Person, each of the Loan
Documents to which such Person is or is to become a party. The Agent shall have
also received from the Borrower a certificate, dated as of the date of this
Agreement, signed by a duly authorized officer of the Borrower and giving the
name and specimen signature of each individual who shall be authorized to make
Loan and Conversion Requests and to give notices and to take other action on
behalf of the Borrower under the Loan Documents.
10.4 Opinions of Counsel.
(a) The Agent shall have received a favorable opinion addressed to the
Banks and the Agent and dated as of the date of this Agreement, in form and
substance satisfactory to the Banks and the Agent, from counsel of the Borrower,
the Manager and AIGI (including, without limitation, such local counsel as the
Agent may require) as to such matters as the Agent shall request, including,
without limitation, the creation and perfection of the security interests in the
Collateral by the Security Documents.
(b) The Agent shall have received a favorable opinion addressed to the
Banks and the Agent and dated as of the date of this Agreement, in form and
substance satisfactory to the Agent, from counsel to the Borrower as to such
matters relating to the Indenture Amendments as the Agent shall request,
including, without limitation, the satisfaction of the applicable requirements
under the Indentures for the Indenture Amendments and the due authorization,
execution, delivery and enforceability of the Indenture Amendments .
10.5 Performance; No Default.
The Borrower shall have performed and complied with all terms and
conditions herein required to be performed or complied with by it on or prior to
the Closing Date, and on the Closing Date there shall exist no Default or Event
of Default.
10.6 Representations and Warranties.
The representations and warranties made by the Borrower, any of its
Subsidiaries or the Manager in the Loan Documents or otherwise made by or on
behalf of the Borrower, any of its Subsidiaries or the Manager in connection
therewith or after the date thereof shall have been true and correct in all
respects when made and shall also be true and correct in all respects on the
Closing Date.
10.7 Actions, Proceedings and Documents.
All actions have been performed and all documents authenticated, filed
or both in order to perfect Agent's security interest in and to all Collateral.
All proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be satisfactory to the Agent and
the Agent's Special Counsel in form and substance, and the Agent
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shall have received all information and such counterpart originals or certified
copies of such documents and such other certificates, opinions or documents as
the Agent and the Agent's Special Counsel may require.
10.8 Compliance Certificate.
A Compliance Certificate and a Borrowing Base Certificate calculated as of
the most recent month-end and dated as of the date of this Agreement
demonstrating compliance with each of the covenants calculated therein as of the
most recent fiscal quarter end for which the Borrower has provided financial
statements under ss.6.4 shall have been delivered to the Agent.
10.9 Mortgage Loan Qualification Documents.
The Collateral Agent shall have received the Mortgage Loan Collateral
Documents for all of the Initial Mortgage Loans and Borrower shall have
certified to the Agent and the Banks that the remaining Mortgage Loan
Qualification Documents are in Borrower's possession and control.
10.10 Management Agreement.
The Agent shall have received a true and correct copy of the Management
Agreement in form and substance satisfactory to the Agent and the Subordination
of Management Agreement duly executed and delivered by the Manager.
10.11 Other Documents.
To the extent requested by the Agent, the Agent shall have received
executed copies of all material agreements of any nature whatsoever to which the
Borrower or any Subsidiary is a party affecting or relating to the origination,
closing or servicing of the Mortgage Loans.
10.12 Payment of Fees.
The Borrower shall have paid to the Agent and KeyBank the fees required by
ss.4.2 and ss.4.3.
10.13 UCC Searches.
Agent's Special Counsel shall have received the results of completed UCC,
tax and judgment lien searches for the jurisdictions of incorporation of
Borrower certified by a nationally recognized search firm and dated within two
(2) Business Days before the Closing Date (none of which shall indicate filings
covering any of the Collateral).
10.14 Lockbox Account.
Evidence that each Lockbox Account has been established in accordance with
ss.7.15, and that notice has been given to all Mortgage Loan Obligors regarding
the making of payments on the Mortgage Loans to the appropriate Lockbox Account,
as provided in the Lockbox
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Agreement, or that provision for such notice to be given immediately after the
Closing Date has been duly made to the Agent's satisfaction.
10.15 Indenture Amendments.
Evidence that the Indenture Amendments have been approved by any requisite
consent of the holders of the related Debt Certificates, that the Indenture
Amendments have been duly authorized, executed and delivered by all parties
thereto and are in effect, and that all Existing Indenture Defaults have been
waived in accordance with the applicable terms of the respective Indentures.
10.16 Other.
The Agent shall have reviewed such other documents, instruments,
certificates, opinions, assurances, consents and approvals as the Agent or the
Agent's Special Counsel may have requested.
11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or after the date
of this Agreement, shall also be subject to the satisfaction of the following
conditions precedent:
11.1 Prior Conditions Satisfied.
All conditions set forth in ss.10 shall continue to be satisfied as of the
date upon which any Loan is to be made.
11.2 Representations True; No Default.
Each of the representations and warranties made by or on behalf of the
Borrower or any of its Subsidiaries or the Manager contained in this Agreement,
the other Loan Documents or in any document or instrument delivered pursuant to
or in connection with this Agreement shall be true as of the date as of which
they were made and shall also be true at and as of the time of the making of
such Loan, with the same effect as if made at and as of that time (except to the
extent that such representations and warranties relate expressly to an earlier
date), and no Default or Event of Default shall have occurred and be continuing.
The Agent shall have received a certificate of the Borrower signed by an
authorized officer of the Borrower to such effect.
11.3 No Legal Impediment.
There shall be no law or regulations thereunder or interpretations thereof
that in the reasonable opinion of any Bank would make it illegal for such Bank
to make such Loan.
11.4 Governmental Regulation.
Each Bank shall have received such statements in substance and form
satisfactory to such Bank as such Bank shall require for the purpose of
compliance with any applicable regulations of the Comptroller of the Currency or
the Board of Governors of the Federal Reserve System.
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11.5 Proceedings and Documents.
All proceedings in connection with the Loan shall be satisfactory in
substance and in form to the Agent, and the Agent shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agent may request.
11.6 Borrowing Documents.
In the case of any request for a Loan, the Agent shall have received the
Loan Request required by ss.2.5 in the form of Exhibit B hereto, fully
completed.
11.7 Mortgage Loan Qualification Documents.
The Collateral Agent shall have received the Mortgage Loan Collateral
Documents for each Mortgage Loan and the Borrower shall have certified to the
Agent and the Banks that the remaining Mortgage Loan Qualification Documents for
each such Mortgage Loan are in Borrower's possession and control. For any
Mortgage Loan made after the Closing Date, delivery to Agent of (i) the
certification of possession of the Mortgage Loan Qualification Documents on or
prior to the tenth (10th) day of each calendar month for all Mortgage Loans
closed during the immediately preceding calendar month, and (ii) a copy of the
title certificate or "marked" title binder for each such Mortgage Loan within
fifteen (15) days after the closing date of such Mortgage Loan, and delivery to
the Collateral Agent on or before the tenth (10th) day of each calendar month of
the Mortgage Loan Collateral Documents for all Mortgage Loans closed during the
immediately preceding calendar month, shall constitute compliance with this
Section.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1 Events of Default and Acceleration.
If any of the following events ("Events of Default" or, if the giving of
notice or the lapse of time or both is required, then, prior to such notice or
lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans after the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans or any other
fees or sums due hereunder or under any of the other Loan Documents when the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(c) Borrower shall fail to comply with any covenant contained in ss.7.18,
ss.8 or ss.9 hereof;
(d) the Borrower or any of its Subsidiaries shall fail to perform any other
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified above in this ss.12.1);
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(e) any representation or warranty made by or on behalf of the Borrower or
any of its Subsidiaries in this Agreement or any other Loan Document, or in any
report, certificate, financial statement, request for a Loan, or in any other
document or instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan Documents shall prove
to have been false or misleading in any respect upon the date when made or
deemed to have been made or repeated;
(f) (i) the Borrower or any of its Subsidiaries shall (A) fail to pay at
maturity, or within any applicable period of grace, any obligation for borrowed
money or credit received or other Indebtedness (other than the Obligations), or
(B) fail to observe or perform any term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing any such borrowed money
or credit received or other Indebtedness for such period of time, as in the case
of either clause (i)(A) or (i)(B) would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity of, or otherwise seek
immediate repayment in full of, Indebtedness exceeding $1,000,000, or (ii) an
"event of default" shall occur and be continuing under either or both of the
Indentures;
(g) the Borrower or any of its Subsidiaries, (i) shall make an assignment
for the benefit of creditors, or admit in writing its general inability to pay
or generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of any such Person or of any substantial part of the
assets of any thereof, (ii) shall commence any case or other proceeding relating
to any such Person under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or (iii) shall take any action to
authorize or in furtherance of any of the foregoing;
(h) a petition or application shall be filed for the appointment of a
trustee or other custodian, liquidator or receiver of any of the Borrower or any
of its Subsidiaries or any substantial part of the assets of any thereof, or a
case or other proceeding shall be commenced against any such Person under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect, and any such Person shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition, application, case or
proceeding shall not have been dismissed within ninety (90) days following the
filing or commencement thereof;
(i) a decree or order is entered appointing any trustee, custodian,
liquidator or receiver or adjudicating any of the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in respect of any
such Person in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(j) there shall remain in force, undischarged, unsatisfied and unstayed,
for more than thirty (30) days, whether or not consecutive, any final judgment
against any of the Borrower or any of its Subsidiaries that, undischarged,
either alone or in the aggregate with other outstanding final judgments, exceeds
$200,000;
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(k) any of the Loan Documents shall be canceled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any action
at law, suit in equity or other legal proceeding to cancel, revoke or rescind
any of the Loan Documents shall be commenced by or on behalf of the Borrower,
any of its Subsidiaries, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination that,
or issue a judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof;
(l) any suit or proceeding shall be filed against the Borrower or any of
its Subsidiaries or any of the Collateral which in the good faith business
judgment of the Requisite Banks after giving consideration to the likelihood of
success of such suit or proceeding and the availability of insurance to cover
any judgment with respect thereto and based on the information available to them
if adversely determined, would have a materially adverse effect on the ability
of the Borrower or any of its Subsidiaries to perform each and every one of its
obligations under and by virtue of the Loan Documents and such suit or
proceeding is not dismissed within one hundred twenty (120) days following the
filing or commencement thereof;
(m) the Borrower or the Manager, shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of such Person,
including the Collateral;
(n) without the prior written consent of all of the Banks, a Change of
Control shall occur;
(o) any Event of Default, as defined in any of the other Loan Documents,
shall occur (it being understood that, for avoidance of doubt, the mere
occurrence of a default or event of default under any Mortgage Loan Document, in
and of itself, does not constitute an Event of Default hereunder, except if and
to the extent such default or event of default results in a violation of the
covenants contained in ss.8 or ss.9 hereof, or any of them); or
(p) any amendment to or termination of a financing statement naming the
Borrower as debtor and the Agent as secured party, or any correction statement
with respect thereto, is filed in any jurisdiction by, or caused by, or at the
instance of the Borrower or by, or caused by, or at the instance of any
principal, member, general partner or officer of the Borrower (collectively,
"Borrower Party") without the prior written consent of the Agent; or any
amendment to or termination of a financing statement naming the Borrower as
debtor and the Agent as secured party, or any correction statement with respect
thereto, is filed in any jurisdiction by any party other than a Borrower Party
or the Agent or the Agent's Special Counsel without the prior written consent of
the Agent and the Borrower fails to use its best efforts to cause the effect of
such filing to be completely nullified to the satisfaction of the Agent within
thirty (30) days after notice to the Borrower thereof;
then, and in any such event, the Agent may, and upon the request of the
Requisite Banks shall, by notice in writing to the Borrower declare all amounts
owing with respect to this Agreement, the Notes and the other Loan Documents to
be, and they shall thereupon forthwith become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; provided that in the event of any
Event of Default specified in ss.12.l(g), ss.12.1(h) or ss.12.1(i), all such
amounts shall become immediately due and payable automatically without any
requirement of notice from any of the Banks or the Agent.
12.2 Limitation of Cure Periods.
(a) Notwithstanding anything contained in ss.12.1 to the contrary, (i) no
Event of Default shall exist hereunder upon the occurrence of any failure
described in ss.12.1(b) in the event that Borrower cures such Default within
five (5) Business Days from the date the same shall be due and payable,
provided, however, that Borrower shall not be entitled to receive more than two
(2) cure periods in the aggregate pursuant to this clause (i) in any period of
365 days ending on the date of any such occurrence of Default, and provided
further that no such cure period shall apply to any payments due upon the
maturity of any of the Notes, and (ii) no Event of Default shall exist hereunder
upon the occurrence of any failure described in ss.12.1(d) in the event that
Borrower cures such Default within thirty (30) days following the earlier of (A)
its receipt of written notice of such Default or (B) any officer of the Borrower
obtaining actual knowledge of the existence of such Default. The provisions of
clause (ii) shall not pertain to Defaults excluded from any provision of cure of
Defaults contained in any other of the Loan Documents.
(b) Notwithstanding anything in this Agreement or any other Loan Document
to the contrary, any reference in this Agreement or any other Loan Document to
"the continuance of a default" or "the continuance of an Event of Default" or
any similar phrase shall not create or be deemed to create any right on the part
of Borrower or any other party to cure any Default following the expiration of
any applicable grace or notice and cure period.
12.3 Termination of Commitments.
If any one or more Events of Default specified in ss.12.1(g), ss.12.1(h) or
ss.12.1(i) shall occur, then immediately and without any action on the part of
the Agent or any Bank any unused portion of the credit hereunder shall terminate
and the Banks shall be relieved of all obligations to make Loans to the
Borrower. If any other Event of Default shall have occurred, the Agent, upon the
election of the Requisite Banks, shall by notice to the Borrower terminate the
obligation to make Loans to the Borrower. No termination under this ss.12.3
shall relieve the Borrower of its obligations to the Banks arising under this
Agreement or the other Loan Documents.
12.4 Remedies.
In case any one or more of the Events of Default shall have occurred and be
continuing, and whether or not the Banks shall have accelerated the maturity of
the Loans pursuant to ss.12.1, the Agent on behalf of the Banks shall, with the
consent and at the direction of the Requisite Banks but not otherwise, proceed
to protect and enforce their rights and remedies under this Agreement, the Notes
or any of the other Loan Documents by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations are evidenced, including to the
full extent permitted by applicable law the
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obtaining of the ex parte appointment of a receiver, and, if such amount shall
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right. No remedy herein conferred upon
the Agent or the holder of any Note is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law. In the event that all or any
portion of the Obligations is collected by or through an attorney-at-law, the
Borrower shall pay all costs of collection including, but not limited to,
reasonable attorneys' fees.
12.5 Distribution of Collateral Proceeds.
In the event that, following the occurrence or during the continuance of
any Event of Default, any monies are received in connection with the enforcement
of any of the Security Documents, or otherwise with respect to the realization
upon any of the Collateral, such monies shall be distributed for application as
follows:
(a) First, to the payment of, or (as the case may be) the reimbursement of,
the Agent for or in respect of all costs, expenses, disbursements and losses
which shall have been incurred or sustained by the Agent to protect or preserve
the Collateral or in connection with the collection of such monies by the Agent,
for the exercise, protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Agreement or any
of the other Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Agent against any taxes or liens which by
law shall have, or may have, priority over the rights of the Agent to such
monies;
(b) Second, to all other Obligations in such order or preference as the
Requisite Banks shall determine; provided, however, that (i) distributions in
respect of such Obligations shall be made pari passu among Obligations with
respect to the Agent's fee payable pursuant to ss.4.3 and all other Obligations,
(ii) in the event that any Bank shall have wrongfully failed or refused to make
an advance under ss.2.6 and such failure or refusal shall be continuing,
advances made by other Banks during the pendency of such failure or refusal
shall be entitled to be repaid as to principal and accrued interest in priority
to the other Obligations described in this subsection (b), (iii) payment of
Obligations owing to the Banks with respect to each type of Obligation such as
interest, principal, fees and expenses, shall be made among the Banks pro rata,
and (iv) amounts received or realized from the Borrower shall be applied against
the Obligations of the Borrower; and provided, further that the Requisite Banks
may in their discretion make proper allowance to take into account any
Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the Borrower or to such
other Persons as are entitled thereto.
13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits (general or specific, time or demand, provisional
or final, regardless of currency, maturity, or the branch of where such deposits
are held) or other sums credited by or
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due from any of the Banks to the Borrower or any Guarantor and any securities or
other property of the Borrower or any Guarantor in the possession of such Bank
may be applied to or set off against the payment of Obligations of such Person
and any and all other liabilities, direct, or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of such Person to such
Bank. Each of the Banks agrees with each other Bank that if such Bank shall
receive from the Borrower or any Guarantor, whether by voluntary payment,
exercise of the right of setoff, or otherwise, and shall retain and apply to the
payment of the Note or Notes held by such Bank any amount in excess of its
ratable portion of the payments received by all of the Banks with respect to the
Notes held by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Bank receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
14. THE AGENT AND THE BANKS.
14.1 Authorization.
Each of the Banks hereby irrevocably appoints KeyBank to act on its behalf
as Agent hereunder and under the other Loan Documents and authorizes the Agent
to take such actions on its behalf and to exercise such powers as are delegated
to the Agent by the terms hereof or thereof, together with such actions and
powers as are reasonably incidental thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent. The obligations of the Agent hereunder are
primarily administrative in nature, and nothing contained in this Agreement or
any of the other Loan Documents shall be construed to constitute the Agent as a
trustee for any Bank or to create a fiduciary relationship. The Agent shall act
as the contractual representative of Banks hereunder, and notwithstanding the
use of the term "Agent", it is understood and agreed that the Agent shall not
have any fiduciary duties or responsibilities to any Bank by reason of this
Agreement or any other Loan Document and is acting as an independent contractor,
the duties and responsibilities of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. The Borrower and any other
Person shall be entitled to conclusively rely on a statement from the Agent that
it has the authority to act for and bind the Banks pursuant to this Agreement
and the other Loan Documents.
14.2 Employees and Agents.
The Agent may exercise its rights and powers and execute any and all of its
duties hereunder or under any other Loan Document by or through employees or
agents and shall be entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties under this Agreement
and the other Loan Documents. The Agent and any such agent may perform any and
all of its duties and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of this ss. shall apply
to any such agent and to the Related Parties of the Agent and any such agent,
and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as
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activities as the Agent. The Agent may utilize the services of such Persons as
the Agent may determine, and all reasonable fees and expenses of any such
Persons shall be paid by the Borrower.
14.3 No Liability.
Neither the Agent nor any of its shareholders, directors, officers or
employees nor any other Person assisting them in their duties nor any agent, or
employee thereof, shall be liable to any of the Banks for any waiver, consent or
approval given or any action taken, or omitted to be taken, in good faith by it
or them hereunder or under any of the other Loan Documents, or in connection
herewith or therewith, or be responsible for the consequences of any oversight
or error of judgment whatsoever, except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence as determine by a court of competent jurisdiction after the
exhaustion of all applicable appeal periods. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) reasonably believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Agent also may rely
upon any statement made to it orally or by telephone and reasonably believed by
it to have been made by the proper Person, and shall not incur any liability for
relying thereon. In determining compliance with any condition hereunder to the
making of a Loan, that by its terms must be fulfilled to the satisfaction of a
Bank, the Agent may presume that such condition is satisfactory to such Bank
unless the Agent shall have received notice to the contrary from such Bank prior
to the making of such Loan. The Agent may consult with legal counsel (who may be
counsel for Borrower), independent accountants and other experts selected by it,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.
14.4 No Representations.
The Agent shall not have any duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, the Agent:
(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Agent is required to
exercise as directed in writing by the Requisite Banks (or such other number or
percentage of Banks as shall be expressly provided for herein or in the other
Loan Documents), provided that the Agent shall not be required to take any
action that, in its opinion or the opinion of its Special Counsel, may expose
the Agent to liability or that is contrary to any Loan Document or applicable
law; and
(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any
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information relating to Borrower or any of its Affiliates that is communicated
to or obtained by the Person serving as the Agent or any of its Affiliates in
any capacity.
The Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Requisite Banks (or such other number
or percentage of the Banks as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances as provided in ss.27
and ss.12.4) or (ii) in the absence of its own gross negligence or willful
misconduct. The Agent shall be deemed not to have knowledge of any Default
unless and until notice describing such Default is given to the Agent by the
Borrower or any Bank.
The Agent shall not be responsible for the execution or validity or
enforceability of this Agreement, the Notes, any of the other Loan Documents or
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral security or for
the validity, enforceability or collectability of any such amounts owing with
respect to the Notes, or for any recitals or statements, warranties or
representations made herein, or any agreement, instrument or certificate
delivered in connection therewith or in any of the other Loan Documents or in
any certificate or instrument hereafter furnished to it by or on behalf of the
Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any other of the Loan Documents.
The Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in ss.10 or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Agent. The Agent has not made nor does
it now make any representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the creditworthiness or
financial condition of the Borrower or any of its Subsidiaries or the value of
the Collateral or any of the assets of the Borrower or its Subsidiaries.
Each Bank acknowledges that it has, independently and without reliance upon
the Agent or any other Bank or any of their Related Parties, and based upon such
information and documents as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank or any of their Related Parties, based upon such information and documents
as it deems appropriate at the time, continue to make its own credit analysis
and decisions in taking or not taking action or based upon this Agreement, any
other Loan Document or any related agreement or any document furnished hereunder
or thereunder.
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14.5 Payments.
(a) A payment by the Borrower to the Agent hereunder or under any of the
other Loan Documents for the account of any Bank shall constitute a payment to
such Bank. The Agent agrees to distribute to each Bank not later than one (1)
Business Day after the Agent's receipt of good funds, determined in accordance
with the Agent's customary practices, such Bank's pro rata share of payments
received by the Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents; provided, however, if
Agent receives a Borrower payment prior to 1:00 pm on a Business Day, Agent
shall disburse Bank's pro rata share of such payment on the same Business Day as
received.
(b) If in the opinion of the Agent the distribution of any amount received
by it in such capacity hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making distribution
until its right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to the Agent
its proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such manner and to such Persons as shall be determined by such
court.
(c) Notwithstanding anything to the contrary contained in this Agreement or
any of the other Loan Documents, any Bank that fails (i) to make available to
the Agent its pro rata share of any Loan or (ii) to comply with the provisions
of ss.13 with respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by setoff or
otherwise, is in excess of its pro rata share of such payments due and payable
to all of the Banks, in each case as, when and to the full extent required by
the provisions of this Agreement, shall be deemed delinquent (a "Delinquent
Bank") and shall be deemed a Delinquent Bank until such time as such delinquency
is satisfied. A Delinquent Bank shall be deemed to have assigned any and all
payments due to it from the Borrower, whether on account of outstanding Loans,
interest, fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro rata shares of all
outstanding Loans in accordance with the terms of this Agreement. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective pro rata shares of all
outstanding Loans. A Delinquent Bank shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned payments to
all outstanding Loans of the nondelinquent Banks or as a result of other
payments by the Delinquent Banks to the nondelinquent Banks, the Banks'
respective pro rata shares of all outstanding Loans have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
14.6 Holders of Notes.
Subject to the terms of ss.18, the Agent may deem and treat the payee of
any Note as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
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14.7 Indemnity.
The Banks ratably hereby agree to indemnify and hold harmless the Agent
from and against any and all claims, actions and suits (whether groundless or
otherwise), losses, damages, costs, expenses (including any expenses for which
the Agent has not been reimbursed by the Borrower as required by ss.15), and
liabilities of every nature and character arising out of or related to this
Agreement, the Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
14.8 Agent as Bank.
In its capacity as a Bank, KeyBank shall have the same obligations and the
same rights, powers and privileges in respect to its Commitment and the Loans
made by it, and as the holder of any of the Notes as it would have were it not
also the Agent and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as the Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial advisor
or in any other advisory capacity for and generally engage in any kind of
business with Borrower or any Subsidiary or other Affiliate thereof as if such
Person were not the Agent hereunder and without any duty to account therefor to
Banks.
14.9 Resignation.
The Agent may at any time give notice of its resignation to the Banks and
the Borrower. Upon receipt of any such notice of resignation, the Requisite
Banks shall have the right, in consultation with the Borrower, to appoint a
successor Agent any Bank or any bank whose senior debt obligations are rated not
less than "A" or its equivalent by Moody's Investors Service, Inc. or not less
than "A" or its equivalent by Standard & Poor's Rating Group Inc. and which has
a net worth of not less than $500,000,000. Unless a Default shall have occurred
and be continuing, such successor Agent shall be reasonably acceptable to the
Borrower. If no successor Agent shall have been so appointed by the Requisite
Banks and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, meeting the qualifications set forth
above provided that if the Agent shall notify the Borrower and the Banks that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (a) the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by the Agent on behalf of the Banks under any of the Loan Documents, the
retiring Agent shall continue to hold such collateral security until such time
as a successor Agent is appointed) and (b) all payments, communications and
determinations provided to be made by, to or through the Agent shall instead be
made by or to each Bank directly, until such time as the Requisite Banks appoint
a successor Agent as provided for above in this paragraph. Upon the acceptance
of a successor's appointment as Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and
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obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this paragraph). The fees payable by
the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the retiring Agent's resignation hereunder and under the other Loan
Documents, the provisions of this Agreement and this ss. shall continue in
effect for the benefit of such retiring Agent, its sub agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent.
14.10 Duties in the Case of Enforcement.
In case one or more Events of Default have occurred and shall be
continuing, and whether or not acceleration of the Obligations shall have
occurred, the Agent shall, if (a) so requested by the Requisite Banks and (b)
the Banks have provided to the Agent such additional indemnities and assurances
against expenses and liabilities as the Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such Collateral. The Requisite Banks may direct the Agent in writing as to
the method and the extent of any such sale or other disposition, the Banks
hereby agreeing to indemnify and hold the Agent harmless from all liabilities
incurred in respect of all actions taken or omitted in accordance with such
directions, provided that the Agent need not comply with any such direction to
the extent that the Agent reasonably believes the Agent's compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction. Notwithstanding the foregoing, the Agent shall not be required to
obtain the consent of the Banks to its taking any action with respect to the
Loans if immediate action is required to be taken in the best interest of the
Banks to preserve or protect the Collateral or the continued perfection or
priority of the Agent's security title and lien on the Collateral or the
continued enforceability of the Loan Documents; provided however, that the Agent
shall endeavor to notify the Banks of any such actions as soon as practicable.
14.11 Intentionally Omitted.
14.12 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within the
meaning of the Code and such Bank claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with
and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms
1098 W8-BEN or Form 1098 W8-ECI before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Bank claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected
with a United States trade or business of such Bank, two (2) properly
completed and executed
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copies of IRS Form 4224 before the payment of any interest is due in
the first taxable year of such Bank and in each succeeding taxable
year of such Bank during which interest may be paid under this
Agreement, and IRS Form W-9;
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax; and
(iv) in the case of any Bank claiming exemption from U.S. Withholding Tax
under Section 871(b) or 881(c) of the Code, with respect to payments
of "Portfolio Interest", a Form W-8, or any subsequent versions
thereof or successors thereto and if the Bank delivers a Form W-8, a
certificate representing that such Bank is not a bank for purposes of
Section 881(c) of the Code, is not a ten percent (10%) shareholder
(within the meaning of Section 871(h)(3)(b) of the Code) of Borrower,
and is not a controlled foreign corporation related to Borrower
(within the meaning of Section 864(d)(4) of the Code).
Each such certificate and form shall be properly completed and duly
executed by such Bank claiming complete exemption from a reduced rate of U.S.
Withholding Tax on payments by Borrower under this Agreement and other Loan
Documents. Each Bank agrees to promptly notify Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form 1098 W8-BEN or Form 1098
W8-ECI and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Bank, such Bank
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Bank. To the extent of such
percentage amount, the Agent will treat such Bank's IRS Form 1098 W8-BEN or Form
1098 W8-ECI as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Agent sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of Borrower to such Bank,
such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Bank an amount
equivalent to the applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by ss.14.12(a) above are
not delivered to the Agent, then the Agent may withhold from any interest
payment to such Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other governmental authority of the United States or
other jurisdiction asserts a claim that the Agent did not properly withhold tax
from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered, was not properly
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executed, or because such Bank failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this ss.14.12,
together with all costs and expenses (including reasonable attorney's fees and
legal expenses). The obligation of the Banks under this ss.14.12 shall survive
the payment of all Obligations and the resignation or replacement of the Agent.
(f) The indemnity provision of ss.14.12(e) above may be suspended or waived
by the Agent with respect to any Bank at its sole election ("Non-Indemnitor
Bank"). In addition to any other rights of offset contained in this Agreement or
under any applicable law, or so long as a Non-Indemnitor Bank is a Bank, in the
event that any amounts would otherwise be covered by an indemnity under
ss.14.12(e) of this Agreement from a Non-Indemnitor Bank, such as U.S.
Withholding Tax due and payable and any penalties or interest with respect
thereto and fees and expenses of collection, then in such event, the Agent shall
be authorized to offset any such amounts against the amounts payable to a
Non-Indemnitor Bank hereunder until otherwise indemnified amounts are fully
paid. The right of offset contained herein shall be in addition to and shall not
limit or otherwise waive or diminish any right or remedy that the Agent may have
against a Non-Indemnitor Bank under any applicable law.
14.13 Bankruptcy.
In the event a bankruptcy or other insolvency proceeding is commenced by or
against the Borrower, the Agent shall have the sole and exclusive right and duty
to file and pursue a joint proof of claim on behalf of all Banks. Each Bank
irrevocably waives its right to file or pursue a separate proof of claim in any
such proceedings.
14.14 Notice of Event of Default.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the Banks, unless the Agent has received notice from a Bank or a
Borrower referring to the Loan Documents and describing with reasonable
specificity such Default or Event of Default and stating that such notice is a
"notice of default".
15. EXPENSES.
The Borrower agrees to pay (a) the costs of producing and reproducing this
Agreement, the other Loan Documents and the other agreements and instruments
mentioned herein, (b) any taxes (including any interest and penalties in respect
thereto) payable by the Agent or any of the Banks (other than taxes based upon
the Agent's or any Bank's gross or net income, except that the Agent and the
Banks shall be entitled to indemnification for any and all amounts paid by them
in respect of taxes based on income or other taxes assessed by any State in
which Collateral is located, such indemnification to be limited to taxes due
solely on account of the granting of Collateral under the Security Documents and
to be net of any credit allowed to the indemnified
77
party from any other State on account of the payment or incurrence of such tax
by such indemnified party), including any recording, mortgage, documentary or
intangibles taxes in connection with the Collateral Assignment and other Loan
Documents, or other taxes payable on or with respect to the transactions
contemplated by this Agreement, including any such taxes payable by the Agent or
any of the Banks after the Closing Date (the Borrower hereby agreeing to
indemnify the Agent and each Bank with respect thereto), (c) all title insurance
premiums, appraisal fees, engineer's fees, internal charges of the Agent
(determined in good faith and in accordance with the Agent's internal policies
applicable generally to its customers) for commercial finance exams and
engineering and environmental reviews and the fees, expenses and disbursements
of the Agent Special Counsel and any local counsel to the Agent actually
incurred in connection with the preparation, administration or interpretation of
the Loan Documents and other instruments mentioned herein, each closing
hereunder, and amendments, modifications, approvals, consents or waivers hereto
or hereunder, (d) the fees, expenses and disbursements of the Agent incurred by
the Agent in connection with the preparation or interpretation of the Loan
Documents and other instruments mentioned herein, and the making of each advance
hereunder, (e) all out-of-pocket expenses (including reasonable attorneys' fees
and costs, which attorneys may be employees of any Bank or the Agent and the
fees and costs of appraisers, engineers, investment bankers or other experts
retained by any Bank or the Agent) incurred by any Bank or the Agent in
connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrower or the administration thereof after the
occurrence of a Default or Event of Default and (ii) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to the
Agent's or any of the Bank's relationship with the Borrower, and (f) all fees,
expenses and disbursements of the Agent incurred in connection with UCC
searches, UCC filings, title rundowns, title searches or document recordings.
The covenants of this ss.15 shall survive payment or satisfaction of payment of
amounts owing with respect to the Notes.
16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent, the Banks and
the Arranger and each director, officer, employee, agent and Person who controls
the Agent or any Bank from and against any and all claims, actions and suits,
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of or
relating to this Agreement or any of the other Loan Documents or the
transactions contemplated hereby and thereby including, without limitation, (a)
any leasing fees and any brokerage, finders or similar fees asserted against any
Person indemnified under this ss.16 based upon any agreement, arrangement or
action made or taken, or alleged to have been made or taken, by the Borrower or
any of its Subsidiaries, (b) any condition of the Collateral, (c) any actual or
proposed use by the Borrower of the proceeds of any of the Loans, (d) any actual
or alleged infringement of any patent, copyright, trademark, service mark or
similar right of any of the Borrower or any of its Subsidiaries comprised in the
Collateral, (e) the Borrower entering into or performing this Agreement or any
of the other Loan Documents, or (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation, approval, consent, permit or license
relating to the Collateral, in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel actually incurred in connection with any such investigation, litigation
or other proceeding; provided, however, that the Borrower shall not be obligated
under this ss.16 to indemnify any Person for liabilities arising
78
from such Person's own gross negligence or willful misconduct. If, and to the
extent that the obligations of the Borrower under this ss.16 are unenforceable
for any reason, the Borrower hereby agrees to make the maximum contribution to
the payment in satisfaction of such obligations which is permissible under
applicable law. The provisions of this ss.16 shall survive the repayment of the
Loans and the termination of the obligations of the Banks hereunder.
17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto or thereto shall be deemed to have been relied upon by the Banks
and the Agent, notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of any of the Loans, as
herein contemplated, and shall continue in full force and effect so long as any
amount due under this Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Loans. The
indemnification obligations of the Borrower provided herein and the other Loan
Documents shall survive the full repayment of amounts due and the termination of
the obligations of the Banks hereunder and thereunder to the extent provided
herein and therein. All statements contained in any certificate or other paper
delivered to any Bank or the Agent at any time by or on behalf of the Borrower
or any of its Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by such Person hereunder.
18. ASSIGNMENT AND PARTICIPATION.
18.1 Conditions to Assignment by Banks.
Except as provided herein, each Bank may assign to any Eligible Assignee
all or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Loans at the time owing to it, and the Notes held by it);
provided that (a) the Agent shall have given its prior written consent to such
assignment (provided that such consent shall not be required for any assignment
to another Bank, to a bank which is under common control with the assigning Bank
or to a wholly-owned Subsidiary of such Bank provided that such assignee shall
remain a wholly-owned Subsidiary of such Bank), (b) each such assignment shall
be of a constant, and not a varying, percentage of all the assigning Bank's
rights and obligations under this Agreement, (c) the parties to such assignment
shall execute and deliver to the Agent, for recording in the Register (as
hereinafter defined), a notice of such assignment in the form reasonably
required by Agent, together with any Notes subject to such assignment (in the
event that any of the original Notes have been lost or destroyed, a lost-note
affidavit shall be delivered in place of such lost or destroyed Notes), (d) such
assignee shall acquire an interest in the Loans of not less than $2,000,000, (e)
the assignor shall assign its entire interest in the Loans or retain an interest
in the Loans of not less than $2,000,000, and (f) the assignee and assignor
shall execute and deliver to Agent an Assignment and Acceptance Agreement in the
form of Exhibit E attached hereto and made a part hereof. Upon such execution,
delivery, acceptance and recording, of such notice of assignment, (i) the
assignee thereunder shall be a party hereto and all other Loan Documents
executed by the Banks and, to the extent provided in such assignment, have the
rights and
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obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in ss.18.2, be released from its obligations under
this Agreement. In connection with each assignment, the assignee shall represent
and warrant to the Agent, the assignor and each other Bank as to whether such
assignee is controlling, controlled by, under common control with or is not
otherwise free from influence or control by, the Borrower. Upon any such
assignment, the Agent may unilaterally amend Schedule 1 to reflect any such
assignment.
18.2 Register.
The Agent shall maintain a copy of each assignment delivered to it and a
register or similar list (the "Register") for the recordation of the names and
addresses of the Banks and the Commitment Percentages of, and principal amount
of the Loans owing to the Banks from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Agent and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and the Banks at any time and from time
to time upon reasonable prior notice. Upon each such recordation, the assigning
Bank agrees to pay to the Agent a registration fee in the sum of $3,500.
18.3 New Notes.
Upon its receipt of an assignment executed by the parties to such
assignment, together with each Note subject to such assignment, the Agent shall
(a) record the information contained therein in the Register, and (b) give
prompt notice thereof to the Borrower and the Banks (other than the assigning
Bank). Within five (5) Business Days after receipt of such notice, the Borrower
shall execute and deliver to the Agent, in exchange for each surrendered Note, a
new Note to the order of such assignee in an amount equal to the amount assumed
by such assignee pursuant to such assignment and, if the assigning Bank has
retained some portion of its obligations hereunder, a new Note to the order of
the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such assignment and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be canceled and returned to the Borrower.
18.4 Participations.
Each Bank may sell participations to one or more banks or other entities in
all or a portion of such Bank's rights and obligations under this Agreement and
the other Loan Documents; provided that (a) any such sale or participation shall
not affect the rights and duties of the selling Bank hereunder to the Borrower,
(b) such participation shall not entitle such participant to any rights or
privileges under this Agreement or any Loan Documents, including without
limitation, the right to approve waivers, amendments or modifications, (c) such
participant shall have no direct rights against the Borrower except the rights
granted to the Banks pursuant to ss.13, (d) such sale is effected in accordance
with all applicable laws, and (e) such participant shall not be a Person
controlling, controlled by or under common control with, or
80
which is not otherwise free from influence or control by the Borrower. Any Bank
which sells a participation shall promptly notify the Agent of such sale and the
identity of the purchaser of such interest.
18.5 Pledge by Bank.
Any Bank may at any time pledge all or any portion of its interest and
rights under this Agreement (including all or any portion of its Note) to any of
the twelve Federal Reserve Banks organized under ss.4 of the Federal Reserve
Act, 12 U.S.C. ss.341 or, with Agent's prior written approval, to another
Person. No such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.
18.6 No Assignment by Borrower.
The Borrower shall not assign or transfer any of its rights or obligations
under any of the Loan Documents without the prior written consent of each of the
Banks.
18.7 Cooperation; Disclosure.
At no cost or expense to the Borrower, the Borrower agrees to promptly
cooperate with any Bank in connection with any proposed assignment or
participation of all or any portion of its Commitment. The Borrower agrees that,
in addition to disclosures made in accordance with standard lending practices,
any Bank may disclose information obtained by such Bank pursuant to this
Agreement to assignees or participants and potential assignees or participants
hereunder. Notwithstanding anything herein to the contrary, the Agent and each
Bank may disclose to any and all Persons, without limitation of any kind, any
information with respect to the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or any Bank
relating to such tax treatment and tax structure; provided that with respect to
any document or similar item that in either case contains information concerning
the tax treatment or tax structure of the transaction as well as other
information, this sentence shall only apply to such portions of the document or
similar item that relate to the tax treatment or tax structure of the Loans and
transactions contemplated hereby.
18.8 Amendments to Loan Documents.
Upon any such assignment or participation, the Borrower shall, upon the
request of the Agent, enter into such documents as may be required by the Agent
to modify the Loan Documents to reflect such assignment or participation.
18.9 Co-Agents.
The Arranger shall not have any additional rights or obligations under the
Loan Documents, except for those rights and obligations, if any, as a Bank.
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18.10 Treatment of Certain Information; Confidentiality.
Each of Agent and Banks agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates' respective partners, directors,
officers, employees, agents, advisors and other representatives (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 purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or participant in, or, with Borrower's consent, any prospective
assignee of or participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to Borrower and its obligations, (g)
with the consent of Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y)
becomes available to the Agent, any Bank, or any of their respective Affiliates
on a nonconfidential basis from a source other than the Borrower.
For purposes of this Section, "Information" means all information received
from the Borrower or any of its Subsidiaries relating to the Borrower or any of
its Subsidiaries or any of its businesses, other than any such information that
is available to the Agent or any Bank on a nonconfidential basis prior to
disclosure by the Borrower or any of its Subsidiaries, provided that, in the
case of information received from the Borrower or any of its Subsidiaries 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.
19. NOTICES.
Each notice, demand, election or request provided for or permitted to be
given pursuant to this Agreement (hereinafter in this ss.19 referred to as
"Notice"), but specifically excluding to the maximum extent permitted by law any
notices of the institution or commencement of foreclosure proceedings, must be
in writing and shall be deemed to have been properly given or served by personal
delivery or by sending same by overnight courier or by depositing same in the
United States Mail, postpaid and registered or certified, return receipt
requested, or as expressly permitted herein, by telecopy or telefax, and
addressed as follows:
If to Agent or any Bank, at the address set forth on the signature page for
Agent or such Bank, with a copy to Agent's Special Counsel:
Powell Goldstein LLP
One Atlantic Center, Fourteenth Floor
1201 W. Peachtree Street, NW
Atlanta, Georgia 30309-3488
Attention: Julian D. Nealy
Facsimile: (404) 572-6999
If to the Borrower:
American Church Mortgage Company
10237 Yellow Circle Drive
Minnetonka, Minnesota 55343
Attn: Philip J. Myers, President
Facsimile: (952) 945-9433
With a copy to:
Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, Minnesota 55402-4629
Attention: Philip T. Colton, Esq.
Facsimile: (612) 604-6929
to each other Bank a party hereto at the address for such party set forth on the
signature page for such Bank, and to each other Bank which may hereafter become
a party to this Agreement at such address as may be designated by such Bank.
Each Notice shall be effective upon being personally delivered or upon being
sent by overnight courier, upon being deposited in the United States Mail or
upon being faxed as aforesaid, except that no Notice to the Agent shall be
effective unless and until actually received by the Agent. The time period in
which a response to such Notice must be given or any action taken with respect
thereto (if any), however, shall commence to run from the date of receipt if
personally delivered or sent by overnight courier, or if so deposited in the
United States Mail, the earlier of three (3) Business Days following such
deposit or the date of receipt as disclosed on the return receipt. Rejection or
other refusal to accept or the inability to deliver because of changed address
for which no notice was given shall be deemed to be receipt of the Notice sent.
By giving at least fifteen (15) days prior Notice thereof, the Borrower, a Bank
or the Agent shall have the right from time to time and at any time during the
term of this Agreement to change their respective addresses and each shall have
the right to specify as its address any other address within the United States
of America.
20. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to the Borrower or it Subsidiaries arising out of or in
connection with this Agreement or the other
83
Loan Documents or the transactions contemplated hereunder and thereunder, and
the relationship between each Bank and the Borrower is solely that of a lender
and borrower, and nothing contained herein or in any of the other Loan Documents
shall in any manner be construed as making the parties hereto partners, joint
venturers or any other relationship other than lender and borrower. In addition,
the Borrower agrees that notwithstanding any other relationship that KeyBank or
any affiliate thereof may have with the Borrower, in any proceeding relating to
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or similar proceeding, the
Borrower will not challenge the Banks' right to receive payment of the
Obligations as a creditor of the Borrower on the grounds of the equitable
subordination principles contained in ss.510 of the United States Bankruptcy
Code (11 U.S.C. ss.101 et seq.), as from time to time amended, or any similar
provision under any applicable law. The covenants contained in this ss.20 are a
material consideration and inducement to the Banks to enter into the Agreement.
21. GOVERNING LAW: CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
GEORGIA AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN ss.19. THE BORROWER HEREBY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
22. HEADINGS.
The captions in this Agreement are for convenience of reference only and shall
not define or limit the provisions hereof.
23. COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION.
(a) Counterparts; Integration; Effectiveness. This Agreement and any
amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In proving
this Agreement it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought. This
Agreement and the other Loan Documents, and any separate letter agreements with
respect to fees payable to the Agent, constitute the entire contract among the
parties relating to
84
the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in ss.10, this Agreement shall become effective when it shall have
been executed by the Agent and when the Agent shall have received counterparts
hereof that, when taken together, bear the signatures of each of the other
parties hereto. 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.
(b) Electronic Execution of Assignments. The words "execution," "signed,"
"signature," and words of like import in any Assignment and Assumption Agreement
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
(c) Electronic Communication. Notices and other communications to the Agent
and the Banks hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Agent, provided that the foregoing shall not apply to
notices to any Bank pursuant to Article 4 if such Bank has notified the Agent
that it is incapable of receiving notices under such Article by electronic
communication. The Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such procedures
may be limited to particular notices or communications. Unless the Agent
otherwise prescribes, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender's receipt of an acknowledgment
from the intended recipient (such as by the "return receipt requested" function,
as available, return e-mail or other written acknowledgment), provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next business day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.
24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated, except as provided in ss.27.
25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS
85
AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE
AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS ss.25. THE BORROWER ACKNOWLEDGES THAT IT HAS
HAD AN OPPORTUNITY TO REVIEW THIS ss.25 WITH ITS LEGAL COUNSEL AND THAT THE
BORROWER AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.
26. DEALINGS WITH THE BORROWER.
The Banks and their Affiliates may accept deposits from, extend credit to
and generally engage in any kind of banking, trust or other business with the
Borrower and its Subsidiaries or any of their Affiliates regardless of the
capacity of the Bank hereunder.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
(a) Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement may be given and any term of
this Agreement or of any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrower of any terms of
this Agreement or such other instrument or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Requisite Banks; provided, however, that the consent of the Requisite
Banks shall be required to modify or amend or waive the performance or
observance by the Borrower of any of the provisions of ss.ss.8.1, 8.3, 8.4 or
Article 9. Notwithstanding the foregoing, none of the following may occur
without the written consent of each Bank: (i) a decrease in the rate of interest
on the Notes; (ii) a change in the term of the Notes; (iii) an increase in the
amount of the Commitments of the Banks except pursuant to ss.18.1; (iv) a change
in the manner of determining the Borrowing Base; (v) a change in the definition
of Qualifying Mortgage Loans or the manner of determining same; (vi) a
forgiveness, reduction or waiver of the principal of any unpaid Loan or any
interest thereon; (vii) the postponement of any date fixed for any payment of
principal of or interest on the Loans; (viii) a decrease of the amount of any
fee (other than late fees) payable to a Bank hereunder; (ix) the release of the
Borrower or any Collateral except as otherwise provided herein; (x) a change in
the manner of distribution of any payments to the Banks or the Agent; (xi) an
amendment of the definition of Requisite Banks or Requisite Banks or of any
requirement for consent by all of the Banks; (xii) a Change in Control; (xiii)
an
86
increase in the Total Commitment; or an amendment of this ss.27. The amount of
the Agent's fee payable for the Agent's account and the provisions of ss.14 may
not be amended without the written consent of the Agent. The Borrower agrees to
enter into such modifications or amendments of this Agreement or the other Loan
Documents as may be requested by KeyBank or the Agent in connection with the
syndication of the Loan, provided that no such amendment or modification
materially affects or increases any of the obligations of the Borrower
hereunder. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrower shall entitle the Borrower to other or further notice
or demand in similar or other circumstances.
(b) If written consent is required for some action under this ss.27 or
otherwise under this Agreement, each Bank agrees to give Agent or the other
Banks, within fifteen (15) Business Days of receipt of the request for action
together with all reasonably requested information related thereto (or such
lesser period of time required by the terms of the Loan Documents), notice in
writing of its approval or disapproval (collectively "Directions") in respect of
any action requested or proposed in writing pursuant to the terms hereof. Each
Bank shall be entitled to assume that any officer of the other Banks delivering
any notice, consent, certificate or other writing is authorized to give such
notice, consent, certificate or other writing unless such Bank has otherwise
been notified.
(c) If written consent is required for the requested action, any Bank that
fails to respond to a request for Directions within the required time period
shall be deemed to be a "Non-Consenting Bank". Within thirty (30) days after the
date for delivery of the consent to the Direction, the Agent, by written notice
to the Non-Consenting Bank, shall have the right to elect to purchase such
Non-Consenting Bank's Commitment. The purchase price for such Commitment shall
be an amount equal to any and all amounts outstanding and owned by the Borrower
to such Non-Consenting Bank including principal, accrued interest and any fees.
Upon payment of the purchase price, the Non-Consenting Bank's interest in the
Obligations and under this Agreement shall terminate and the Non-Consenting Bank
shall deliver to the Agent such documents as are reasonably necessary to effect
the transfer of its Commitment to the Agent.
28. SEVERABILITY.
The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
29. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant, agreement
and obligation of the Borrower under this Agreement and the other Loan
Documents.
87
30. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. ANY ADDITIONAL TERMS OF THE AGREEMENT BETWEEN
THE PARTIES ARE SET FORTH BELOW.
31. REPLACEMENT OF NOTES.
Upon receipt of evidence reasonably satisfactory to the Borrower of the
loss, theft, destruction or mutilation of any Note, and in the case of any such
loss, theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory to the Borrower or, in the case of any such mutilation, upon
surrender and cancellation of the applicable Note, the Borrower will execute and
deliver, in lieu thereof, a replacement Note, identical in form and substance to
the applicable Note and dated as of the date of the applicable Note and upon
such execution and delivery all references in the Loan Documents to such Note
shall be deemed to refer to such replacement Note.
32. RIGHTS OF THIRD PARTIES.
This Agreement and the other Loan Documents are made and entered into for
the sole protection and legal benefit of the Borrower, the Banks and the Agent,
and their permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the other Loan
Documents. All conditions to the performance of the obligations of the Agent and
the Banks under this Agreement, including the obligation to make Loans, are
imposed solely and exclusively for the benefit of the Agent and the Banks and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that the Agent and the
Banks will refuse to make Loans in the absence of strict compliance with any or
all thereof and no other Person shall, under any circumstances, be deemed to be
a beneficiary of such conditions, any and all of which may be freely waived in
whole or in part by the Agent and the Banks at any time if in their sole
discretion they deem it desirable to do so.
[The remainder of this page is intentionally left blank.]
88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date and year
first above written.
BORROWER:
AMERICAN CHURCH MORTGAGE
COMPANY, a Minnesota corporation
By: /s/ Philip J. Myers
----------------------------
Philip J. Myers
President
[Signatures Continued on Following Page]
KEYBANK NATIONAL ASSOCIATION,
as a Bank and as the Agent
By: /s/ Tayven R. Hike
---------------------
Tayven R. Hike
Vice President
EXHIBIT A
FORM OF NOTE
$_________________ __________, 20__
FOR VALUE RECEIVED, the undersigned AMERICAN CHURCH MORTGAGE COMPANY, a
Minnesota corporation (the "Borrower"), hereby promises to pay to
______________________________________________________________(the "Payee") or
order, in accordance with the terms of that certain Revolving Credit Agreement
dated as of July 26, 2007 (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, KeyBank
National Association ("KeyBank"), for itself and as the Agent, and such other
Banks as may be from time to time named therein, to the extent not sooner paid,
on or before the Maturity Date, the principal sum of
_______________________________________ and ____/100 Dollars ($______________),
or such amount as may be advanced by the Payee under the Credit Agreement, with
daily interest from the date hereof computed as provided in the Credit
Agreement, on the principal amount hereof from time to time unpaid, at a rate
per annum on each portion of the principal amount which shall at all times be
equal to the rate of interest applicable to such portion in accordance with the
Credit Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges, at the rates provided in the Credit Agreement (this "Note"). Interest
shall be payable on the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated maturity hereof or
upon the prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
Payments hereunder shall be made to KeyBank, as the Agent for the Payee, at
127 Public Square, Cleveland, Ohio 44114, or at such other address as the Agent
may designate from time to time.
This Note is one of one or more Notes evidencing borrowings under and is
entitled to the benefits and subject to the provisions of the Credit Agreement.
The principal of this Note may be due and payable in whole or in part prior to
the Maturity Date and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Credit Agreement, and may be prepaid in
whole or from time to time in part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the undersigned Borrower and the Banks and the Agent, whether now
existing or hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of the maturity of any
of the Obligations or otherwise, shall the interest contracted for, charged or
received by the Banks exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest would otherwise be payable
to the Banks in excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the
maximum amount permitted under applicable law; and if from any circumstance the
Banks shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive interest
shall be applied to the reduction of the principal balance of the Obligations of
the undersigned Borrower and to the payment of interest or, if such excessive
interest exceeds the unpaid balance of principal of the Obligations of the
undersigned Borrower, such excess shall be refunded to the undersigned Borrower.
All interest paid or agreed to be paid to the Banks shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations of the undersigned Borrower (including the period of any renewal or
extension thereof) so that the interest thereon for such full period shall not
exceed the maximum amount permitted by applicable law. This paragraph shall
control all agreements between the undersigned Borrower and the Banks and the
Agent.
In case an Event of Default shall occur, the entire principal amount of
this Note may become or be declared due and payable in the manner and with the
effect provided in said Credit Agreement. In addition to and not in limitation
of the foregoing and the provisions of the Credit Agreement, the undersigned
further agrees, subject only to any limitation imposed by applicable law, to pay
all expenses, including reasonable attorneys' fees and legal expenses, incurred
by the holder of this Note in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
This Note shall be governed by and construed in accordance with the laws of
the State of Georgia (without giving effect to the conflict of laws rules of any
jurisdiction). Time is of the essence of this Note.
The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without notice.
IN WITNESS WHEREOF the undersigned has by its duly authorized officer,
executed this Note under seal as of the day and year first above written.
AMERICAN CHURCH MORTGAGE
COMPANY, a Minnesota corporation
By:_______________________________
Name: _________________________
Title: _________________________
[CORPORATE SEAL]
EXHIBIT B
FORM OF REQUEST FOR LOAN
KeyBank National Association, as Agent
1200 Abernathy Road, N.E., Suite 1550
Atlanta, Georgia 30328
Attn: Tayven Hike
Ladies and Gentlemen:
Pursuant to the provisions of ss.2.5 of the Revolving Credit Agreement
dated as of July 26, 2007, (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among American Church
Mortgage Company (the "Borrower"), KeyBank National Association, for itself and
as the Agent, and the other Banks from time to time party thereto, the
undersigned Borrower hereby requests and certifies as follows:
1. Loan. The undersigned Borrower hereby requests a Loan under ss.2.1 of
the Credit Agreement:
Principal Amount: $
-------------------------
Type (LIBOR, Base Rate):
-------------------
Drawdown Date__________, 20__
Interest Period:
---------------------------
by credit to the general account of the undersigned Borrower with the Agent at
the Agent's Head Office.
2. Use of Proceeds. Such Loan shall be used for the following purposes
permitted by ss.7.10 of the Credit Agreement:
[Describe]
3. No Default. The undersigned chief financial or chief accounting officer of
the Borrower certifies that the Borrower is and will be in compliance with
all covenants under the Loan Documents after giving effect to the making of
the Loan requested hereby.
4. Representations True. Each of the representations and warranties made by or
on behalf of the Borrower and its Subsidiaries contained in the Credit
Agreement, in the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with the Credit Agreement was true
as of the date as of which it was made and shall also be true at and as of
the Drawdown Date for the Loan requested hereby, with the same effect as if
made at and as of such Drawdown Date (except to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default has occurred and is continuing.
5. Other Conditions. All other conditions to the making of the Loan requested
hereby set forth in ss.11 of the Credit Agreement have been satisfied.
6. Drawdown Date. Except to the extent, if any, specified by notice actually
received by the Agent prior to the Drawdown Date specified above, the
foregoing representations and warranties shall be deemed to have been made
by the Borrower on and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are used herein with the
meanings so defined.
IN WITNESS WHEREOF, we have hereunto set our hands this ___ day of
_____________, 20__.
AMERICAN CHURCH MORTGAGE
COMPANY, a Minnesota corporation
By:_________________________________
Name: __________________________
Title: __________________________
[CORPORATE SEAL]
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
KeyBank National Association, as Agent
1200 Abernathy Road, N.E., Suite 1550
Atlanta, Georgia 30328
Attn: Tayven Hike
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement dated as of July 26,
2007 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") by and among American Church Mortgage Company (the
"Borrower"), KeyBank National Association, for itself and as the Agent, and the
other Banks from time to time party thereto. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein as defined in the
Credit Agreement.
Pursuant to the Credit Agreement, the Borrower is furnishing to you
herewith (or has most recently furnished to you) the financial statements of the
Borrower and its Subsidiaries for the fiscal period ended _____________________
(the "Balance Sheet Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles and present fairly the
financial position of the Borrower and the Subsidiaries covered thereby at the
date thereof and the results of their operations for the periods covered
thereby, subject in the case of interim statements only to normal year-end audit
adjustments.
This certificate is submitted in compliance with requirements of ss.7.4(e)
or ss.10.8 of the Credit Agreement. If this certificate is provided under a
provision other than ss.7.4(e), the calculations set forth on Appendix A
attached hereto and made a part hereof are made using the financial statements
of the Borrower and its Subsidiaries as of the Balance Sheet Date adjusted in
the best good-faith estimate of the Borrower to give effect to the making of a
Loan, acquisition or disposition of property or other event that occasions the
preparation of this certificate; and the nature of such event and the Borrower's
estimate of its effects are set forth in reasonable detail in Appendix A
attached hereto and by this reference made a part hereof. The undersigned
officer is the chief financial or chief accounting officer of the Borrower.
The undersigned officer has caused the provisions of the Loan Documents to
be reviewed and has no knowledge of any Default or Event of Default. [Note: If
the signer does have knowledge of any Default or Event of Default, the form of
certificate should be revised to specify the Default or Event of Default, the
nature thereof and the actions taken, being taken or proposed to be taken by the
Borrower with respect thereto.]
The Borrower is providing the attached information to demonstrate
compliance as of the date hereof with the covenants described in Appendix A
hereto.
IN WITNESS WHEREOF, we have hereunto set our hand this ____ day of
_____________, 20_.
AMERICAN CHURCH MORTGAGE
COMPANY, a Minnesota corporation
By: ______________________________
Name:_________________________
Title:_________________________
[CORPORATE SEAL]
APPENDIX A
to
COMPLIANCE CERTIFICATE
EXHIBIT D
FORM OF BORROWING BASE CERTIFICATE
The undersigned, being the [ ] of AMERICAN CHURCH MORTGAGE COMPANY, a
Minnesota corporation (the "Borrower"), hereby certifies, pursuant to ss.7.4(f)
of the Revolving Credit Agreement dated as of July 26, 2007, (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") by and among the Borrower, the Banks (as defined in the Credit
Agreement), and KeyBank National Association, as the Agent (as defined in the
Credit Agreement):
1. Attached hereto as Schedule 1, and incorporated herein by reference, are
calculations performed by the Borrower or under the Borrower's supervision
demonstrating that the Borrower is in compliance with the Borrowing Base at and
as of the end of the (month/quarter) ending _________ __, 20__. The calculations
set forth on Schedule 1 are true, complete and correct.
2. The Borrower is in compliance with the Borrowing Base requirements under
Section 9.1 at and as of the end of the (month/quarter) ending _________ __,
20__.
3. The information in this Borrowing Base Certificate complies with the
representations and warranties in the Credit Agreement in every respect.
Capitalized terms used herein and not otherwise defined are used as defined
in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has signed this Borrowing Base
Certificate as of the ________ day of ______________, 20__.
AMERICAN CHURCH MORTGAGE
COMPANY, a Minnesota corporation
By:_____________________________
Name:_________________________
Title:________________________
SCHEDULE 1
Calculations Demonstrating Borrowers' Compliance with the Borrowing Base
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE
This Assignment and Acceptance (the "Assignment and Acceptance") is dated
as of the Effective Date set forth below and is entered into by and between
[the][each] Assignor identified in item 1 below ([the][each, an] "Assignor") and
[the][each] Assignee identified in item 2 below ([the][each, an] "Assignee"). It
is understood and agreed that the rights and obligations of the Assignors and
the Assignees hereunder are several and not joint. Capitalized terms used but
not defined herein shall have the meanings given to them in the Credit Agreement
identified in items below (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by [the][each] Assignee. The Standard Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Acceptance as if set forth
herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells
and assigns to [the Assignee][the respective Assignees], and [the][each]
Assignee hereby irrevocably purchases and assumes from [the Assignor][the
respective Assignors], subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Agent as contemplated below (i) all of [the Assignor's][the respective
Assignors'] rights and obligations in [its capacity as a Bank][their respective
capacities as Banks] under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of [the Assignor][the respective Assignors] under the respective
facilities identified below (including without limitation any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of [the Assignor (in its capacity as a Bank)][the
respective Assignors (in their respective capacities as Banks)] against any
Person, whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned by [the][any] Assignor to
[the][any] Assignee pursuant to clauses (i) and (ii) above being referred to
herein collectively as [the][an] "Assigned Interest"). Each such sale and
assignment is without recourse to [the][any] Assignor and, except as expressly
provided in this Assignment and Acceptance, without representation or warranty
by [the][any] Assignor.
1. Assignor[s]: ________________________________
________________________________
2. Assignee[s]: ______________________________
______________________________
[for each Assignee, indicate [Affiliate] of [identify Bank]
3. Borrower: American Church Mortgage Company
4. Agent: KeyBank National Association, as the agent under the Credit
Agreement
5. Credit Agreement: That certain $15,000,000 Revolving Credit Agreement dated
as of July 26, 2007 among American Church Mortgage Company, as borrower,
the Banks parties thereto, and KeyBank National Association, as the Agent.
6. Assigned Interest[s]:
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
Assignor[s] Assignee[s] Facility Aggregate Amount of Percentage CUSIP
Assigned Amount of Commitment/ Assigned of Number
Commitment/ Loans Assigned Commitment/
Loans for all Loans
Banks
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
$ $
%
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
$ $
%
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
$ $
%
- ----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
[7. Trade Date: ______________]
[Signature page follows]
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY THE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Acceptance are hereby agreed to:
ASSIGNOR[S] [NAME
OF ASSIGNOR]
By:___________________________
Title:
[NAME OF ASSIGNOR]
By:___________________________
Title:
ASSIGNEE[S] [NAME
OF ASSIGNEE]
By:___________________________
Title:
[NAME OF ASSIGNEE]
By:___________________________
Title:
[Consented to and] Accepted:
KeyBank National Association, a
national banking association, as
Agent
By:__________________________________
Name:________________________________
Title:_______________________________
ANNEX 1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
1. Representations and Warranties.
1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i)
it is the legal and beneficial owner of [the][the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.
1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i)
it has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under ss. 18 of the Credit
Agreement (subject to such consents, if any, as may be required under ss. 27 of
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Bank thereunder and, to the
extent of [the][the relevant] Assigned Interest, shall have the obligations of a
Bank thereunder, (iv) it is sophisticated with respect to decisions to acquire
assets of the type represented by the Assigned Interest and either it, or the
person exercising discretion in making its decision to acquire the Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received a
copy of the Credit Agreement, and has received or has been accorded the
opportunity to receive copies of the most recent financial statements delivered
pursuant to ss. 7.4 thereof, as applicable, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance and to purchase [the][such]
Assigned Interest, (vi) it has, independently and without reliance upon the
Agent or any other Bank and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase [the][such] Assigned Interest, and
(vii) if it is a foreign lender (as contemplated by ss. 14.12 of the Credit
Agreement), attached to the Assignment and Acceptance is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it
will, independently and without reliance on the Agent, [the][any] Assignor or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking
action under the Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Bank.
2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignor for
amounts which have accrued to but excluding the Effective Date and to [the][the
relevant] Assignee for amounts which have accrued from and after the Effective
Date.
3. General Provisions. This Assignment and Acceptance shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Acceptance may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Acceptance
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be governed
by, and construed in accordance with, the law of the State of Georgia, without
regard to the conflict of laws principles thereof.
SCHEDULE 1
Banks and Commitments
Commitment Commitment
Percentage
Key Bank National Association $ 15,000,000 100%
1200 Abernathy Road, NE
Suite 1550
Atlanta, Georgia 30328
Attn: Tayven Hike
Facsimile: 770-510-2195
SCHEDULE 1.1
Excluded Mortgage Loans
See Attached Schedule
SCHEDULE 1.2
Initial Mortgage Loans
See Attached Schedule
SCHEDULE 1.3
OREO and Non-Performing Mortgage Loans
See Attached Schedule
SCHEDULE 1.4
Initial Interim Loan
See Attached Schedule
SCHEDULE 6.14
Affiliate Transactions
None
SCHEDULE 6.17
Subsidiaries of the Borrower
None
TABLE OF CONTENTS
Page
1. DEFINITIONS AND RULES OF INTERPRETATION.................................................................1
1.1 Definitions....................................................................................1
1.2 Rules of Interpretation.......................................................................24
1.3 Pro Forma Calculations........................................................................25
2. THE REVOLVING CREDIT FACILITY..........................................................................25
2.1 Commitment to Lend............................................................................25
2.2 Unused Facility Fee...........................................................................25
2.3 Notes.........................................................................................26
2.4 Interest on Loans.............................................................................26
2.5 Requests for Loans............................................................................27
2.6 Funds for Loans...............................................................................28
3. REPAYMENT OF THE LOANS.................................................................................30
3.1 Stated Maturity...............................................................................30
3.2 Mandatory Prepayments.........................................................................30
3.3 Optional Prepayments..........................................................................30
3.4 Partial Prepayments...........................................................................31
4. CERTAIN GENERAL PROVISIONS.............................................................................31
4.1 Conversion Options............................................................................31
4.2 Syndication, Underwriting and Accordion Fees..................................................32
4.3 Agent's Fee...................................................................................32
4.4 Funds for Payments............................................................................32
4.5 Computations..................................................................................33
4.6 Inability to Determine LIBOR Rate.............................................................33
4.7 Illegality....................................................................................33
4.8 Additional Interest...........................................................................34
4.9 Additional Costs, Etc.........................................................................34
4.10 Capital Adequacy..............................................................................35
4.11 Indemnity of Borrower.........................................................................36
4.12 Interest on Overdue Amounts; Late Charge......................................................36
-i-
TABLE OF CONTENTS
(continued)
4.13 Certificate...................................................................................36
4.14 Limitation on Interest........................................................................36
5. COLLATERAL SECURITY....................................................................................37
5.1 Collateral....................................................................................37
5.2 Release of Collateral.........................................................................37
5.3 Addition of Collateral; Guarantors............................................................38
6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.........................................................39
6.1 Corporate Authority, Etc......................................................................39
6.2 Governmental Approvals........................................................................40
6.3 Title to Properties; Lease....................................................................40
6.4 Financial Statements..........................................................................40
6.5 No Material Changes...........................................................................40
6.6 Franchises, Patents, Copyrights, Etc..........................................................41
6.7 Litigation....................................................................................41
6.8 No Materially Adverse Contracts, Etc..........................................................41
6.9 Compliance with Other Instruments, Laws, Etc..................................................41
6.10 Tax Status....................................................................................41
6.11 No Event of Default...........................................................................42
6.12 Holding Company and Investment Company Acts...................................................42
6.13 Absence of UCC Financing Statements, Etc......................................................42
6.14 Certain Transactions..........................................................................42
6.15 Employee Benefit Plans........................................................................42
6.16 Regulations T, U and X........................................................................42
6.17 Subsidiaries..................................................................................42
6.18 Loan Documents................................................................................43
6.19 Brokers.......................................................................................43
6.20 Other Debt....................................................................................43
6.21 Solvency......................................................................................43
6.22 No Fraudulent Intent..........................................................................43
6.23 Transaction in Best Interests of Borrower; Consideration......................................44
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(continued)
6.24 Mortgage Loans................................................................................44
6.25 PATRIOT Act Provisions........................................................................45
7. AFFIRMATIVE COVENANTS OF THE BORROWER..................................................................46
7.1 Punctual Payment..............................................................................46
7.2 Maintenance of Office.........................................................................46
7.3 Records and Accounts..........................................................................46
7.4 Financial Statements, Certificates and Information............................................47
7.5 Notices.......................................................................................48
7.6 Existence; Maintenance of Properties..........................................................49
7.7 Taxes.........................................................................................50
7.8 Inspection of Properties and Books............................................................50
7.9 Compliance with Laws, Contracts, Licenses, and Permits........................................50
7.10 Use of Proceeds...............................................................................51
7.11 Further Assurances............................................................................51
7.12 Compliance....................................................................................51
7.13 Interest Rate Contract........................................................................51
7.14 More Restrictive Agreements...................................................................52
7.15 Lockbox Account...............................................................................52
7.16 Mortgage Loans................................................................................52
7.17 Securitization Transactions...................................................................53
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.............................................................54
8.1 Restrictions on Indebtedness..................................................................54
8.2 Restrictions on Liens Etc.....................................................................55
8.3 Restrictions on Investments...................................................................56
8.4 Merger, Consolidation.........................................................................58
8.5 Conduct of Business...........................................................................58
8.6 Distributions.................................................................................58
8.7 Asset Sales...................................................................................59
8.8 Management....................................................................................59
8.9 Debt Certificates.............................................................................59
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(continued)
9. FINANCIAL COVENANTS OF THE BORROWER....................................................................59
9.1 Borrowing Base................................................................................59
9.2 Liabilities to Assets Ratio...................................................................61
9.3 Cash Flow Coverage............................................................................61
9.4 Consolidated Tangible Net Worth...............................................................61
9.5 Non-Performing Assets.........................................................................61
10. CLOSING CONDITIONS.....................................................................................61
10.1 Loan Documents................................................................................61
10.2 Resolutions...................................................................................61
10.3 Incumbency Certificate; Authorized Signers....................................................62
10.4 Opinions of Counsel...........................................................................62
10.5 Performance; No Default.......................................................................62
10.6 Representations and Warranties................................................................62
10.7 Actions, Proceedings and Documents............................................................62
10.8 Compliance Certificate........................................................................63
10.9 Mortgage Loan Qualification Documents.........................................................63
10.10 Management Agreement..........................................................................63
10.11 Other Documents...............................................................................63
10.12 Payment of Fees...............................................................................63
10.13 UCC Searches..................................................................................63
10.14 Lockbox Account...............................................................................63
10.15 Indenture Amendments..........................................................................64
10.16 Other. 64
11. CONDITIONS TO ALL BORROWINGS...........................................................................64
11.1 Prior Conditions Satisfied....................................................................64
11.2 Representations True; No Default..............................................................64
11.3 No Legal Impediment...........................................................................64
11.4 Governmental Regulation.......................................................................64
11.5 Proceedings and Documents.....................................................................65
11.6 Borrowing Documents...........................................................................65
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11.7 Mortgage Loan Qualification Documents.........................................................65
12. EVENTS OF DEFAULT; ACCELERATION; ETC...................................................................65
12.1 Events of Default and Acceleration............................................................65
12.2 Limitation of Cure Periods....................................................................68
12.3 Termination of Commitments....................................................................68
12.4 Remedies......................................................................................68
12.5 Distribution of Collateral Proceeds...........................................................69
13. SETOFF.................................................................................................69
14. THE AGENT AND THE BANKS................................................................................70
14.1 Authorization.................................................................................70
14.2 Employees and Agents..........................................................................70
14.3 No Liability..................................................................................71
14.4 No Representations............................................................................71
14.5 Payments......................................................................................73
14.6 Holders of Notes..............................................................................73
14.7 Indemnity.....................................................................................74
14.8 Agent as Bank.................................................................................74
14.9 Resignation...................................................................................74
14.10 Duties in the Case of Enforcement.............................................................75
14.11 Intentionally Omitted.........................................................................75
14.12 Withholding Tax...............................................................................75
14.13 Bankruptcy....................................................................................77
14.14 Notice of Event of Default....................................................................77
15. EXPENSES...............................................................................................77
16. INDEMNIFICATION........................................................................................78
17. SURVIVAL OF COVENANTS, ETC.............................................................................79
18. ASSIGNMENT AND PARTICIPATION...........................................................................79
18.1 Conditions to Assignment by Banks.............................................................79
18.2 Register......................................................................................80
18.3 New Notes.....................................................................................80
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18.4 Participations................................................................................80
18.5 Pledge by Bank................................................................................81
18.6 No Assignment by Borrower.....................................................................81
18.7 Cooperation; Disclosure.......................................................................81
18.8 Amendments to Loan Documents..................................................................81
18.9 Co-Agents.....................................................................................81
18.10 Treatment of Certain Information; Confidentiality.............................................82
19. NOTICES................................................................................................82
20. RELATIONSHIP...........................................................................................83
21. GOVERNING LAW: CONSENT TO JURISDICTION AND SERVICE....................................................84
22. HEADINGS...............................................................................................84
23. COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION.........................................84
24. ENTIRE AGREEMENT, ETC..................................................................................85
25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.........................................................85
26. DEALINGS WITH THE BORROWER.............................................................................86
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.....................................................................86
28. SEVERABILITY...........................................................................................87
29. TIME OF THE ESSENCE....................................................................................87
30. NO UNWRITTEN AGREEMENTS................................................................................88
31. REPLACEMENT OF NOTES...................................................................................88
32. RIGHTS OF THIRD PARTIES................................................................................88
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EXHIBITS AND SCHEDULES
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF REQUEST FOR LOAN
EXHIBIT C - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT D - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT E - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1 - BANKS AND COMMITMENTS
SCHEDULE 1.1 - EXCLUDED MORTGAGE LOANS
SCHEDULE 1.2 - INITIAL MORTGAGE LOANS
SCHEDULE 1.3 - OREO AND NON-PERFORMING MORTGAGE LOANS
SCHEDULE 1.4 - INITIAL INTERIM LOAN
SCHEDULE 6.14 - AFFILIATE TRANSACTIONS
SCHEDULE 6.17 - SUBSIDIARIES OF THE BORROWER
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