1
EXHIBIT 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 1, 1998
by and among
CAPTEC NET LEASE REALTY, INC.,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 13.5.(a),
as Lenders
and
FIRST UNION NATIONAL BANK,
as Agent
2
TABLE OF CONTENTS*
Article I. Definitions.....................................................................................1
Section 1.1. Definitions..........................................................................1
Section 1.2. General; References to Times.........................................................21
Section 1.3. Treatment of Financial Attributes of Unconsolidated
Affiliates; Short Reporting Periods........................................................21
Article II. Credit Facility................................................................................21
Section 2.1. Amount of Existing Indebtedness; Agreement to Restructure............................21
Section 2.2. Revolving Loans......................................................................22
Section 2.3. Rates and Payment of Interest on Loans...............................................23
Section 2.4. Number of Interest Periods...........................................................23
Section 2.5. Repayment of Loans...................................................................23
Section 2.6. Prepayments..........................................................................24
Section 2.7. Continuation.........................................................................25
Section 2.8. Conversion...........................................................................25
Section 2.9. Notes................................................................................26
Section 2.10. Voluntary Reductions of the Revolving Commitments....................................26
Section 2.11. Extension of Termination Date........................................................27
Article III. Payments, Fees and Other General Provisions...................................................28
Section 3.1. Payments.............................................................................28
Section 3.2. Pro Rata Treatment...................................................................28
Section 3.3. Sharing of Payments, Etc.............................................................29
Section 3.4. Several Obligations..................................................................30
Section 3.5. Minimum Amounts......................................................................30
Section 3.6. Fees.................................................................................30
Section 3.7. Computations.........................................................................31
Section 3.8. Usury................................................................................31
Section 3.9. Agreement Regarding Interest and Charges.............................................31
Section 3.10. Statements of Account................................................................31
Section 3.11. Defaulting Lenders...................................................................32
Section 3.12. Taxes................................................................................33
Article IV. Collateral Pool Properties....................................................................34
Section 4.1. Admission of Collateral Pool Properties..............................................34
Section 4.2. Release of Collateral Pool Property..................................................37
Article V. Yield Protection, Etc...........................................................................38
Section 5.1. Additional Costs; Capital Adequacy...................................................38
Section 5.2. Suspension of LIBOR Loans............................................................39
Section 5.3. Illegality...........................................................................39
Section 5.4. Compensation.........................................................................40
- --------------------
* This Table of Contents is not part of the Credit Agreement and is provided as
a convenience only.
-i-
3
Section 5.5. Treatment of Affected Loans..........................................................40
Section 5.6. Change of Lending Office.............................................................41
Section 5.7. Treatment of Affected Lenders........................................................41
Section 5.8. Assumptions Concerning Funding of LIBOR Loans........................................41
Article VI. Conditions Precedent...........................................................................42
Section 6.1. Initial Conditions Precedent.........................................................42
Section 6.2. Conditions Precedent to All Loans....................................................44
Section 6.3. Conditions as Covenants..............................................................44
Article VII. Representations and Warranties................................................................45
Section 7.1. Representations and Warranties.......................................................45
Section 7.2. Survival of Representations and Warranties, Etc......................................51
Article VIII. Affirmative Covenants........................................................................51
Section 8.1. Preservation of Existence and Similar Matters........................................51
Section 8.2. Compliance with Applicable Law and Material Contracts................................51
Section 8.3. Maintenance of Property..............................................................52
Section 8.4. Conduct of Business..................................................................52
Section 8.5. Insurance............................................................................52
Section 8.6. Payment of Taxes and Claims..........................................................52
Section 8.7. Visits and Inspections...............................................................53
Section 8.8. Use of Proceeds......................................................................53
Section 8.9. Environmental Matters................................................................54
Section 8.10. Books and Records...................................................................54
Section 8.11. REIT Status.........................................................................54
Section 8.12. ERISA Exemptions....................................................................54
Section 8.13. Exchange Listing....................................................................54
Section 8.14. Advisor.............................................................................54
Section 8.15. Further Assurances..................................................................55
Article IX. Information....................................................................................55
Section 9.1. Quarterly Financial Statements.......................................................55
Section 9.2. Year-End Statements..................................................................55
Section 9.3. Compliance Certificate...............................................................56
Section 9.4. Other Information....................................................................56
Article X. Negative Covenants..............................................................................59
Section 10.1. Financial Covenants.................................................................59
Section 10.2. Development/Acquisition Limitations.................................................60
Section 10.3. Indebtedness........................................................................61
Section 10.4. Contingent Obligations..............................................................61
Section 10.5. Investments.........................................................................62
Section 10.6. Liens; Agreements Regarding Liens; Other Matters....................................63
Section 10.7. Restricted Payments.................................................................63
-ii-
4
Section 10.8. Merger, Consolidation, Sales of Assets and Other
Arrangements...............................................................................64
Section 10.9. Dispositions of Assets..............................................................64
Section 10.10. Fiscal Year........................................................................65
Section 10.11. Modifications to Material Contracts................................................65
Section 10.12. Transactions with Affiliates.......................................................65
Section 10.13. Distributions of Income to the Borrower............................................65
Article XI. Default........................................................................................66
Section 11.1. Events of Default...................................................................66
Section 11.2. Remedies Upon Event of Default......................................................69
Section 11.3. Remedies Upon Default...............................................................70
Section 11.4. Allocation of Proceeds..............................................................70
Section 11.5. Performance by Agent................................................................70
Section 11.6. Rights Cumulative...................................................................71
Section 11.7. Recission of Acceleration by Requisite Lenders......................................71
Article XII. The Agent.....................................................................................71
Section 12.1. Authorization and Action............................................................71
Section 12.2. Agent's Reliance, Etc...............................................................72
Section 12.3. Notice of Defaults..................................................................73
Section 12.4. First Union as Lender...............................................................73
Section 12.5. Approvals of Lenders................................................................73
Section 12.6. Lender Credit Decision, Etc.........................................................73
Section 12.7. Indemnification of Agent............................................................74
Section 12.8. Collateral Matters..................................................................75
Section 12.9. Successor Agent.....................................................................76
Article XIII. Miscellaneous................................................................................76
Section 13.1. Notices.............................................................................76
Section 13.2. Expenses............................................................................77
Section 13.3. Setoff..............................................................................78
Section 13.4. Waiver of Jury Trial; Arbitration...................................................78
Section 13.5. Successors and Assigns..............................................................80
Section 13.6. Amendments..........................................................................82
Section 13.7. Nonliability of Agent and Lenders...................................................83
Section 13.8. Confidentiality.....................................................................83
Section 13.9. Indemnification.....................................................................84
Section 13.10. Termination; Survival..............................................................86
Section 13.11. Severability of Provisions.........................................................86
Section 13.12. GOVERNING LAW......................................................................86
Section 13.13. Counterparts.......................................................................86
Section 13.14. Limitation of Liability............................................................86
Section 13.15. Entire Agreement...................................................................87
Section 13.16. Construction.......................................................................87
-iii-
5
SECTION 13.17. NO NOVATION; EFFECT OF AMENDMENT AND
RESTATEMENT................................................................................87
Section 13.18. Release............................................................................87
SCHEDULE 4.1 Collateral Pool Properties
SCHEDULE 7.1.(b) Ownership Structure
SCHEDULE 7.1.(f) Title to Properties; Liens
SCHEDULE 7.1.(g) Existing Indebtedness
SCHEDULE 7.1.(h) Material Contracts
SCHEDULE 7.1.(i) Litigation
SCHEDULE 10.4. Existing Contingent Obligations
SCHEDULE 10.5. Investments
SCHEDULE 10.12. Transactions With Affiliates
EXHIBIT A Form of Assignment and Acceptance Agreement
EXHIBIT B Form of Lease
EXHIBIT C Form of Notice of Borrowing
EXHIBIT D Form of Notice of Continuation
EXHIBIT E Form of Notice of Conversion
EXHIBIT F Form of Revolving Note
EXHIBIT G Form of Term Note
EXHIBIT H Form of Opinion of Counsel
EXHIBIT I Form of Compliance Certificate
EXHIBIT J Form of Guaranty
EXHIBIT K Form of Security Deed
-iv-
6
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 1,
1998 by and among CAPTEC NET LEASE REALTY, INC., a corporation organized under
the laws of the State of Delaware (the "Borrower"), each of the financial
institutions initially a signatory hereto together with their assignees pursuant
to Section 13.5.(d), and FIRST UNION NATIONAL BANK, as Agent.
WHEREAS, the Agent and the Lenders made available to the Borrower a
$175,000,000 revolving credit facility on the terms and conditions contained in
that certain Amended and Restated Credit Agreement dated as of February 26, 1998
(the "Existing Credit Agreement"), by and among the Borrower, the Lenders and
the Agent;
WHEREAS, the Borrower, the Lenders and the Agent desire to amend and
restate the terms of the Existing Credit Agreement, among other things, to
decrease the total amount of credit available thereunder to $125,000,000, to
separate such credit into a $75,000,000 revolving credit facility and a
$50,000,000 term loan facility, and for other purposes, all pursuant to the
terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree that the Existing Credit Agreement is amended and restated in its
entirety as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. DEFINITIONS.
In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement:
"ACCESSION AGREEMENT" means an Accession Agreement substantially in the
form of Annex I to the Guaranty.
"ADDITIONAL COSTS" has the meaning given that term in Section 5.1.
"ADJUSTED EBITDA" means, for any period, EBITDA for such period excluding
all straight line rent leveling adjustments (reported in the consolidated
financial statements of the Borrower and its Subsidiaries for purposes of GAAP).
"ADJUSTED EURODOLLAR RATE" means, with respect to each Interest Period
for any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
7
"AFFILIATE" means any Person (other than the Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control with,
the Borrower; (b) directly or indirectly owning or holding ten percent (10.0%)
or more of any equity interest in the Borrower; or (c) ten percent (10.0%) or
more of whose voting stock or other equity interest is directly or indirectly
owned or held by the Borrower. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or by contract or
otherwise. The Affiliates of a Person shall include any officer or director of
such Person.
"AGENT" means First Union National Bank, as contractual representative
for the Lenders under the terms of this Agreement, and any of its successors.
"AGREEMENT DATE" means the date as of which this Agreement is dated.
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"APPLICABLE MARGIN" means:
(a) during any period for which the Borrower has not received an
Investment Grade Rating from both Rating Agencies, the percentage rate set forth
below corresponding to the ratio of Total Liabilities to Gross Asset Value as
determined in accordance with Section 10.1.(c) in effect at such time:
-----------------------------------------------------------------------------------------------------------
RATIO OF TOTAL LIABILITIES TO GROSS APPLICABLE MARGIN APPLICABLE MARGIN
LEVEL ASSET VALUE FOR LIBOR LOANS FOR BASE RATE LOANS
-----------------------------------------------------------------------------------------------------------
4 Less than 0.60 to 1.00 but greater than or
equal to 0.50 to 1.00 1.75% 0.25%
-----------------------------------------------------------------------------------------------------------
3 Less than 0.50 to 1.00 but greater than
0.40 to 1.00 1.50% 0.00%
-----------------------------------------------------------------------------------------------------------
2 Less than or equal to 0.40 to 1.00 but
greater than 0.250 to 1.00 1.40% 0.00%
-----------------------------------------------------------------------------------------------------------
1 Less than or equal to 0.250 to 1.00 1.25% 0.00%
-----------------------------------------------------------------------------------------------------------
The Applicable Margin shall be determined by the Agent on a quarterly basis,
commencing with the fiscal quarter ending on December 31, 1998, based on the
ratio of Total Liabilities to Gross Asset Value as set forth in the Compliance
Certificate most recently delivered by the Borrower pursuant to Section 9.3. Any
adjustment to the Applicable Margin shall be effective as of the date 45 days
following the end of the last day of the fiscal period covered by the applicable
Compliance Certificate. Notwithstanding the foregoing, for the period from the
Effective Date through but excluding the date on which the Agent first
determines the Applicable Margin as set forth above, the Applicable Margin shall
equal 1.75%. Thereafter, the Applicable Margin shall be adjusted from time to
time as set forth above; or
-2-
8
(b) during any period for which the Borrower has received an
Investment Grade Rating from both Rating Agencies, the percentage per annum
determined, at any time, based on the range into which the Borrower's Credit
Rating then falls, in accordance with the table set forth below. Any change in
the Borrower's Credit Rating which would cause it to move to a different level
in the table shall effect a change in the Applicable Margin on the Business Day
immediately following the date on which such change occurs. During any period
that the Borrower has received Credit Ratings that are not equivalent, (i) if
such Credit Ratings differ by only one level, the Applicable Margin shall be
determined by the lower of such two Credit Ratings and (ii) otherwise the
Applicable Margin shall equal the average of the Applicable Margins as
determined in accordance each such Credit Rating.
-------------------------------------------------------------------------------------------------------
BORROWER'S CREDIT RATING APPLICABLE MARGIN APPLICABLE MARGIN
LEVEL (S&P/MOODY'S) FOR LIBOR LOANS FOR BASE RATE LOANS
-------------------------------------------------------------------------------------------------------
1 BBB+/Baa1 (or higher) 0.80% 0.00%
-------------------------------------------------------------------------------------------------------
2 BBB/Baa2 0.95% 0.00%
-------------------------------------------------------------------------------------------------------
3 BBB-/Baa3 1.10% 0.00%
-------------------------------------------------------------------------------------------------------
"ASSIGNEE" has the meaning given that term in Section 13.5.(d).
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an Assignment and Acceptance
Agreement among a Lender, an Assignee and the Agent, substantially in the form
of Exhibit A.
"ASSIGNMENT OF LEASES AND RENTS" means any Assignment of Leases and Rents
executed by the Borrower or a Subsidiary in favor of the Agent for the benefit
of the Lenders in form and substance satisfactory to the Agent. An Assignment of
Leases and Rents may be included in a Security Deed.
"BANKRUPTCY PROCEEDING" means a case, proceeding or condition of the
types described in Sections 11.1.(f) or (g).
"BASE RATE" means the per annum rate of interest equal to the greater of
(a) the Prime Rate or (b) the Federal Funds Rate plus one-half of one percent
(0.5%). Any change in the Base Rate resulting from a change in the Prime Rate or
the Federal Funds Rate shall become effective as of 12:01 a.m. on the Business
Day on which each such change occurs. The Base Rate is a reference rate used by
the Agent in determining interest rates on certain loans and is not intended to
be the lowest rate of interest charged by the Agent or any Lender on any
extension of credit to any debtor.
"BASE RATE LOAN" means a Loan bearing interest at a rate based on the
Base Rate.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
-3-
9
"BORROWER" has the meaning set forth in the introductory paragraph hereof
and shall include the Borrower's successors and assigns.
"BOSTON CHICKEN PROPERTY" means a Real Property Asset of which Boston
Chicken, Inc., any of its subsidiaries, or any of their successors, transferees
or assigns, is either the franchisor or licensor of the Concept applicable to,
or the tenant under the lease of, such Real Property Asset.
"BUSINESS DAY" means (a) any day other than a Saturday, Sunday or other
day on which banks in Charlotte, North Carolina are authorized or required to
close and (b) with reference to a LIBOR Loan, any such day that is also a day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
is the capitalized amount of such obligations determined in accordance with
GAAP.
"CAPITALIZED NET LEASE REVENUES" means (a) the aggregate amount of Net
Lease Revenues for the fiscal quarter most recently ended for all Real Property
Assets that satisfied the requirements contained in the following sentence at
all times during such fiscal quarter times (b) 4 divided by (c) 10.3%. For the
Net Lease Revenues of a Real Property Asset to be included when determining
Capitalized Net Lease Revenues, such Real Property Asset must satisfy the
requirement in each clause of the definition of Eligible Property except that:
(i) clauses (b), (c) and (h) of such definition need not be satisfied; (ii)
notwithstanding clause (g) of such definition, such Real Property Asset need not
be occupied so long as all payments of rent under the applicable lease remain
current and the tenant's obligations under such lease are guarantied in full by
a corporate affiliate of such tenant; and (iii) notwithstanding clause (a) of
such definition, the Borrower or a Subsidiary, as applicable, may hold a
leasehold estate in such Real Property Asset pursuant to a ground lease having a
remaining term of duration equal to or greater than the remaining term of the
lease by the Borrower or such Subsidiary to the tenant. In addition, if the
franchisor or licensor of a Concept applicable to, or the tenant under the lease
of, a Real Property Asset otherwise eligible hereunder is the subject of a
Bankruptcy Proceeding, then the Net Lease Revenues attributable to such Real
Property Asset shall be excluded in their entirety for purposes of determining
Capitalized Net Lease Revenues; provided, however, 50% of the Net Lease Revenues
attributable to such Real Property Asset shall be included in the aggregate
amount of Net Lease Revenues for purposes of determining Capitalized Net Lease
Revenues if (x) such Real Property Asset is occupied by the tenant and is in
operation and (y) if the tenant is the subject of such Bankruptcy Proceeding,
the tenant has not rejected the lease pursuant to 11 U.S.C. Section 365 or any
similar provision of Applicable Law. Notwithstanding the foregoing, not more
than (A) 10% of the amount Capitalized Net Lease Revenues can be attributable to
Real Property Assets of the
-4-
10
type referred to in the preceding clause (iii) at any time and (B) 5% of the
amount Capitalized Net Lease Revenues can be attributable to Real Property
Assets of the type referred to in the immediately preceding sentence (other than
Boston Chicken Properties) at any time. Notwithstanding the foregoing, the
amount of Capitalized Net Lease Revenues attributable to a Boston Chicken
Property shall be deemed to be equal to 35% of the Borrower's cost basis of such
Boston Chicken Property but any Boston Chicken Property that has been closed for
twelve or more consecutive months shall be excluded from determinations of
Capitalized Net Lease Revenues.
"CAPTEC ADVISORS" means Captec Net Lease Realty Advisors, Inc., a
Delaware corporation.
"CASH AVAILABLE FOR DISTRIBUTION" means, for the Borrower and its
Subsidiaries and with respect to a given period, Funds From Operations for such
period excluding all straight line rent leveling adjustments (reported in the
consolidated financial statements of the Borrower and its Subsidiaries for
purposes of GAAP) minus non-incremental revenue generating Capital Expenditures
for such period.
"CASH EQUIVALENTS" means: (a) securities issued, guaranteed or insured by
the United States of America or any of its agencies with maturities of not more
than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a United
States federal or state chartered commercial bank of recognized standing, which
has capital and unimpaired surplus in excess of $500,000,000.00 and which bank
or its holding company has a short-term commercial paper rating of at least A-2
or the equivalent by Standard & Poor's Rating Group, a division of McGraw-Hill,
Inc. ("S&P") or at least P-2 or the equivalent by Moody's Investors Services,
Inc. ("Moody's"); (c) reverse repurchase agreements with terms of not more than
seven days from the date acquired, for securities of the type described in
clause (a) above and entered into only with commercial banks having the
qualifications described in clause (b) above; (d) commercial paper issued by any
Person incorporated under the laws of the United States of America or any State
thereof and rated at least A-2 or the equivalent thereof by S&P or at least P-2
or the equivalent thereof by Moody's, in each case with maturities of not more
than one year from the date acquired; and (e) investments in money market funds
registered under the Investment Company Act of 1940, which have net assets of at
least $500,000,000.00 and at least 85% of whose assets consist of securities and
other obligations of the type described in clauses (a) through (d) above.
"COLLATERAL" means any real or personal property directly or indirectly
securing any of the Obligations and includes all "Collateral" as defined in each
Security Deed and all other property subject to a Lien created by any Loan
Document.
"COLLATERAL POOL CERTIFICATE" means a report, certified by the chief
financial officer of the Borrower, setting forth the calculations required to
establish the Collateral Pool Value as of a specified date, all in form and
detail reasonably satisfactory to the Agent.
-5-
11
"COLLATERAL POOL PROPERTIES" means those Eligible Properties (a) that
have been approved pursuant to Article IV. for inclusion when calculating the
Maximum Loan Availability and (b) in which the Agent holds a valid and perfected
first priority Lien for the benefit of the Lenders. If at any time a Real
Property Asset that has been deemed to be a Collateral Pool Property shall cease
to be an Eligible Property, or the Agent shall cease to hold such a Lien for any
reason (other than the failure of the Agent to take any action within its
control), then such Real Property Asset shall also cease to be a Collateral Pool
Property.
"COLLATERAL POOL VALUE" means, at any time, the sum of (a)(i) the
aggregate amount of Net Lease Revenues for the fiscal quarter most recently
ended for all Collateral Pool Properties times (ii) 4 divided by (iii) 10.3%
plus (b) the book value of all construction in progress as reported in the most
recent consolidated balance sheet of the Borrower and its Subsidiaries delivered
under Section 9.1. or 9.2. or otherwise delivered to the Agent and the Lenders.
Notwithstanding the foregoing, not more than 20% of the Collateral Pool Value
can be attributable to Eligible Properties owned by Wholly Owned Subsidiaries.
If the franchisor or licensor of a Concept applicable to, or the tenant under
the lease of, a Real Property Asset otherwise eligible hereunder is the subject
of a Bankruptcy Proceeding, then the Net Lease Revenues attributable to such
Real Property Asset shall be excluded in their entirety for purposes of
determining Collateral Pool Value; provided, however, 50% of the Net Lease
Revenues attributable to such Real Property Asset shall be included in the
aggregate amount of Net Lease Revenues for purposes of determining Collateral
Pool Value if (x) such Real Property Asset is occupied by the tenant and is in
operation and (y) if the tenant is the subject of such Bankruptcy Proceeding,
the tenant has not rejected the lease pursuant to 11 U.S.C. Section 365 or any
similar provision of Applicable Law. Notwithstanding the foregoing, not more
than 5% of the amount Collateral Pool Value can be attributable to Real Property
Assets of the type referred to in the immediately preceding sentence (other than
Boston Chicken Properties) at any time. Notwithstanding the foregoing, the
amount of the Collateral Pool Value attributable to a Boston Chicken Property
shall be deemed to be equal to 35% of the Borrower's cost basis of such Boston
Chicken Property but any Boston Chicken Property that has been closed for twelve
or more consecutive months shall be excluded from determinations of Collateral
Pool Value.
"COMMITMENT" means, as to each Lender, such Lender's Revolving Commitment
and its Term Loan Commitment.
"COMMITMENT PERCENTAGE" means, as to each Lender, the ratio, expressed as
a percentage, of (a) the amount of such Lender's Revolving Commitment to (b) the
sum of (i) the aggregate amount of the Revolving Commitments of all Lenders
hereunder; provided, however, that if at the time of determination the
Commitments have terminated or been reduced to zero, the "Commitment Percentage"
of each Lender shall be the Commitment Percentage of such Lender in effect
immediately prior to such termination or reduction.
"COMPLIANCE CERTIFICATE" has the meaning given such term in Section 9.3.
"CONCEPT" refers to any distinctive system for establishing and operating
restaurants, retail stores or other businesses which is the subject of a license
or franchise from a Person. Not in
-6-
12
limitation of the foregoing, and by way of example only, such systems would
include "Boston Markets," "Blockbuster Video/Music," "Golden Corral" and "Burger
King."
"CONTINGENT OBLIGATION" as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (a) with respect to
any Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (b) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (c) under
Interest Rate Agreements; or (d) under any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
that Person against fluctuations in currency values. Contingent Obligations
shall include (i) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), comaking, discounting
with recourse or sale with recourse by such Person of the obligation of another,
(ii) the obligation to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, and
(iii) any liability of such Person for the obligations of another through any
agreement to purchase, repurchase or otherwise acquire such obligation or any
property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency, financial condition or
any balance sheet item or level of income of another.
"CONTINUE", "CONTINUATION" and "CONTINUED" each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest Period
pursuant to Section 2.7.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to the conversion of
a Loan of one Type into a Loan of another Type pursuant to Section 2.8.
"CREDIT EVENT" means any of the following: (a) the making (or deemed
making) of any Loan and(b) the Conversion of a Loan.
"CREDIT RATING" means the lowest rating assigned by a Rating Agency to
each series of rated senior unsecured long term indebtedness of the Borrower.
"DEBT ISSUANCE" means any incurring by a Person of Indebtedness (other
than Indebtedness of the type described in clause (d) of the definition of such
term), whether as a result of the borrowing of money, the issuance of promissory
notes or other debt securities, or otherwise.
"DEFAULT" means any of the events specified in Section 11.1., whether or
not there has been satisfied any requirement for the giving of notice, the lapse
of time, or both.
"DEFAULTING LENDER" has the meaning set forth in Section 3.11.
-7-
13
"DOLLARS" or "$" means the lawful currency of the United States of
America.
"EBITDA" means, for any period and without duplication, net earnings
(loss) of the Borrower and its Subsidiaries determined on a consolidated basis
for such period (excluding equity in net earnings or net loss of Unconsolidated
Affiliates) plus the sum of the following amounts (but only to the extent
included in determining net income (loss) for such period): (a) depreciation and
amortization expense for such period plus (b) Interest Expense for such period
plus (c) income tax expense in respect of such period minus (d) extraordinary
gains and gains from sales of assets for such period plus (d) extraordinary
losses and losses from sales of assets for such period.
"EFFECTIVE DATE" means the later of: (a) the Agreement Date; and (b) the
date on which all of the conditions precedent set forth in Section 6.1. shall
have been fulfilled.
"ELIGIBLE ASSIGNEE" means any Person who is: (i) currently a Lender; (ii)
a commercial bank, trust company, insurance company, investment bank or pension
fund organized under the laws of the United States of America, or any state
thereof, and having total assets in excess of $5,000,000,000; (iii) a savings
and loan association or savings bank organized under the laws of the United
States of America, or any state thereof, and having a tangible net worth of at
least $500,000,000; or (iv) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development ("OECD"), or a political subdivision of any such country, and having
total assets in excess of $10,000,000,000, provided that such bank is acting
through a branch or agency located in the United States of America. If such
Person is not currently a Lender, such Person's senior unsecured long term
indebtedness must be rated BBB or higher by S&P, Baa2 or higher by Moody's, or
the equivalent or higher of either such rating by another rating agency of
national reputation and reasonably acceptable to the Agent. Notwithstanding the
foregoing, if an Event of Default shall have occurred and be continuing under
Section 11.1.(a) or (b), or if as a result of the occurrence of any other Event
of Default the Obligations have been accelerated pursuant to Section 11.2.(a),
the term "Eligible Assignee" shall mean any Person that is not an individual.
"ELIGIBLE PROPERTY" means a Real Property Asset which satisfies all of
the following requirements as reasonably determined by the Agent: (a) such Real
Property Asset is owned in fee simple by only the Borrower or a Wholly Owned
Subsidiary or, solely in the case of the four Real Property Assets currently
subleased by the Borrower to Sterling Jewelers, Inc. and operating under the
"Jared Jewelers" Concept, the Borrower holds a leasehold estate in such Real
Property Asset pursuant to a ground lease having a remaining term of duration
equal to or greater than the remaining term of the lease by the Borrower or such
Subsidiary to the tenant; (b) neither such Real Property Asset nor any interest
of the Borrower or such Wholly Owned Subsidiary therein, is subject to any Lien
other than Permitted Liens of the types described in clauses (a) through (c) of
the definition thereof, or to any agreement (other than this Agreement or any
other Loan Document) that prohibits the creation of any Lien thereon as
security for Indebtedness of the Borrower; (c) if such Real Property Asset is
owned by a Wholly Owned Subsidiary, none of the Borrower's direct or indirect
ownership interest in such Wholly Owned Subsidiary is subject to any Lien other
than Permitted Liens of the types described in clauses (a) through (c) of the
-8-
14
definition thereof, or to any agreement (other than this Agreement or any other
Loan Document) that prohibits the creation of any Lien thereon as security for
Indebtedness of the Borrower or such Wholly Owned Subsidiary; (d) such Real
Property Asset is free of all structural defects, environmental conditions or
other adverse matters except for defects, conditions or matters individually or
collectively which are not material to the profitable operation of such Real
Property Asset; (e) such Real Property Asset has been fully developed, or is in
the process of being constructed, for use as a restaurant or other retail
establishment; (f) such Real Property Asset has been leased to a tenant pursuant
to an executed lease (i) in the case of a Real Property Asset developed or being
developed for use as a restaurant, substantially in the form of Exhibit B or
such other form of lease as may be reasonably acceptable to the Agent or (ii) in
the case of a Real Property Asset developed or being developed for use as a
retail establishment and the lease of which, together with all other leases
between the applicable lessee and the Borrower or any Subsidiary, will account
for more than 5.0% of the total revenues of the Borrower and its Subsidiaries
determined on a consolidated basis, in form reasonably acceptable to the Agent;
(g) such Real Property Asset is occupied by such tenant and is in operation; (h)
the remaining term of such lease is at least one year; and (i) such tenant is
not in monetary or other material default (beyond any applicable cure period)
under such lease or any other lease between such tenant and the Borrower or any
Subsidiary (any such other lease a "Related Lease"). Notwithstanding the
preceding clause (i), a Real Property Asset leased to a Qualified Lessee shall
not be excluded as an Eligible Property solely because a monetary or other
material default exists under a Related Lease unless the Borrower has failed to
deliver to the Agent within 60 days of the occurrence of such default evidence
reasonably satisfactory to the Agent that such default has been cured or waived.
"ENVIRONMENTAL LAWS" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
Section 7401 et seq; Federal Water Pollution Control Act, 33 U.S.C. Section 1251
et seq.; Solid Waste Disposal Act, 42 U.S.C. Section 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq.; National Environmental Policy Act, 42 U.S.C. Section 4321 et seq.;
regulations of the Environmental Protection Agency and any applicable rule of
common law and any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials.
"EQUITY ISSUANCE" means any issuance or sale by a Person of its capital
stock or other similar equity security, or any warrants, options or similar
rights to acquire, or securities convertible into or exchangeable for, such
capital stock or other similar equity security.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
-9-
15
"EVENT OF DEFAULT" means any of the events specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"EXTENSION REQUEST" has the meaning given that term in Section 2.11.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward to the nearest 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 on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to the
Agent by federal funds dealers selected by the Agent on such day on such
transaction as determined by the Agent.
"FEES" means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder or under any
other Loan Document, or otherwise payable by the Borrower to the Agent or any
Lender in connection with the transactions relating to this Agreement.
"FIRST UNION" means First Union National Bank and its successors and
assigns.
"FIXED CHARGES" means, for any period, the sum of (a) Total Debt Service
for such period plus (b) all Capital Expenditures made by the Borrower and its
Subsidiaries during such period plus (c) all Restricted Payments paid or accrued
during such period in respect of any Preferred Stock issued by the Borrower or
any Subsidiary.
"FLOATING RATE DEBT" means any Indebtedness of the Borrower or any
Subsidiary which (a) bears interest at a fluctuating interest rate or (y) bears
interest at a fixed rate and has a remaining maturity of less than one year. The
term "Floating Rate Debt" shall not include any Indebtedness which by its terms
bears interest at a fluctuating rate, but in respect of which the Borrower or
such Subsidiary, as applicable, has obtained an Interest Rate Agreement which
effectively causes such fluctuating rate to become a fixed rate less than or
equal to a fixed interest rate which could be obtained by borrowers of
comparable creditworthiness as the Borrower on Indebtedness of comparable
duration and principal amount.
"FOREIGN LENDER" means any Lender organized under the laws of a
jurisdiction other than the United States of America.
"FUNDS FROM OPERATIONS" means, for a given period, (a) net income of the
Borrower and its Subsidiaries determined on a consolidated basis for such period
minus (or plus) (b) gains (or losses) from debt restructuring and sales of
property during such period plus (c) real estate related depreciation and
amortization for such period.
-10-
16
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, as in effect on the Agreement Date.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.
"GROSS ASSET VALUE" means, at a given time, the sum of (a) Capitalized
Net Lease Revenues, plus (b) all of cash and cash equivalents of the Borrower
and its Subsidiaries at such time (excluding tenant deposits and other cash and
cash equivalents the disposition of which is restricted in any way (excluding
restrictions in the nature of early withdrawal penalties)), plus (c) the book
value of all construction in progress as reported in the most recent
consolidated balance sheet of the Borrower and its Subsidiaries delivered under
Section 9.1. or 9.2. or otherwise delivered to the Agent and the Lenders, plus
(d) the book value of all loans held by the Borrower and its Subsidiaries as
reported in the most recent consolidated balance sheet of the Borrower and its
Subsidiaries delivered under Section 9.1. or 9.2. or otherwise delivered to the
Agent and the Lenders. For purposes of determining the Gross Asset Value, (i)
not more than 10% of the aggregate Gross Asset Value shall be attributable to
assets of the type described in the preceding clause (c) and (ii) not more than
5% of the aggregate Gross Asset Value shall be attributable to assets of the
type described in the preceding clause (d).
"GUARANTOR" means any Subsidiary that is a party to the Guaranty.
"GUARANTY" means the Guaranty to which various Subsidiaries of the
Borrower are from time to time parties and substantially in the form of Exhibit
J.
"HAZARDOUS MATERIALS" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances", "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or
-11-
17
(e) electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
"INDEBTEDNESS" means, with respect to a Person, at the time of
computation thereof, all of the following (without duplication): (a) obligations
of such Person in respect of money borrowed; (b) obligations of such Person
(other than trade debt incurred in the ordinary course of business), whether or
not for money borrowed (i) represented by notes payable, or drafts accepted, in
each case representing extensions of credit, (ii) evidenced by bonds,
debentures, notes or similar instruments, or (iii) constituting purchase money
indebtedness, conditional sales contracts, title retention debt instruments or
other similar instruments, upon which interest charges are customarily paid or
that are issued or assumed as full or partial payment for property; (c)
Capitalized Lease Obligations of such Person; (d) all reimbursement obligations
of such Person under any letters of credit or acceptances (whether or not the
same have been presented for payment); and (e) all Indebtedness of other Persons
which (i) such Person has guaranteed or is otherwise recourse to such Person or
(ii) is secured by a Lien on any property of such Person.
"INTELLECTUAL PROPERTY" has the meaning given that term in Section
7.1.(s).
"INTEREST EXPENSE" means, for any period, the total consolidated interest
expense (including, without limitation, capitalized interest expense and
interest expense attributable to Capitalized Lease Obligations) of the Borrower
and its Subsidiaries determined on a consolidated basis and in any event shall
include all interest expense with respect to any Indebtedness in respect of
which the Borrower or any Subsidiary is wholly or partially liable.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, each period
commencing on the date such LIBOR Loan is made or the last day of the next
preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select in a Notice of Borrowing, Notice of
Continuation or Notice of Conversion, as the case may be, except that each
Interest Period that commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) if any
Interest Period would otherwise end after the Termination Date, such Interest
Period shall end on the Termination Date; (b) each Interest Period that would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (c)
notwithstanding the immediately preceding clause (a), no Interest Period for any
LIBOR Loan shall have a duration of less than one month and, if the Interest
Period for any LIBOR Loan would otherwise be a shorter period, such Loan shall
not be available hereunder for such period.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
contractual agreement or arrangement entered into with a nationally recognized
financial institution then having an Investment Grade Rating for the purpose of
protecting against fluctuations in interest rates.
-12-
18
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"INVESTMENT" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person: (a) the purchase
or other acquisition of any share of capital stock, evidence of Indebtedness or
other security issued by any other Person; (b) any loan, advance or extension of
credit to, or contribution (in the form of money or goods) to the capital of,
any other Person; (c) any guaranty of the Indebtedness of any other Person; and
(d) any commitment or option to make an Investment in any other Person.
"INVESTMENT GRADE RATING" means a Credit Rating of BBB- or higher by S&P
or Baa3 or higher by Moody's.
"LENDER" means each financial institution from time to time party hereto
as a "Lender", together with its respective successors and assigns.
"LENDING OFFICE" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto or in the
applicable Assignment and Acceptance Agreement, or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.
"LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period. If for any
reason such rate is not available, the term "LIBOR Rate" shall mean, for any
LIBOR Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"LIBOR LOANS" means Loans bearing interest at a rate based on LIBOR.
"LIEN" as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge, ground lease or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person; (c) the filing of any financing
statement under the Uniform Commercial Code or its equivalent in any
jurisdiction; and (d) any agreement by such Person to grant, give or otherwise
convey any of the foregoing.
-13-
19
"LOAN" means a Revolving Loan or a Term Loan.
"LOAN DOCUMENT" means this Agreement, each Note, the Guaranty, each
Security Deed, each Assignment of Leases and Rents and each other document or
instrument now or hereafter executed and delivered by the Borrower in connection
with, pursuant to or relating to this Agreement.
"MATERIAL ADVERSE EFFECT" means a materially adverse effect on (a) the
business, properties, condition (financial or otherwise), results of operations
or performance of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower or any Guarantor to perform its obligations under any
Loan Document to which it is a party, (c) the validity or enforceability of any
of the Loan Documents, or (d) the rights and remedies of the Lenders and the
Agent under any of such Loan Documents.
"MATERIAL CONTRACT" means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Borrower or any
Subsidiary is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"MAXIMUM LOAN AVAILABILITY" means, at any time, the lesser of (a) an
amount equal to the Collateral Pool Value multiplied by (i) 0.6 at all times
prior to June 30, 2000 and (ii) 0.55 on and after such date and (b) the
aggregate amount of the Commitments at such time.
"MOODY'S" means Moody's Investors Services, Inc.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"NET LEASE REVENUES" means, with respect to a Real Property Asset for a
given period, (a) the aggregate amount of cash lease payments required to be
paid in the ordinary course to the Borrower or a Subsidiary during such period
under, and in accordance with the express terms of, a lease of such Real
Property Asset (excluding pre-paid rent and security deposits) minus (b) all
expenses, if any, paid during such period by the Borrower or any Subsidiary
related to the ownership, operation or maintenance of such Real Property Asset.
When determining aggregate Net Lease Revenues of the Borrower and its
Subsidiaries for a given period, the entire pro forma amount of Net Lease
Revenues of any Real Property Asset acquired (disposed of) during such period,
as if the Real Property Asset was acquired (disposed of) on first day of such
period and the applicable lease term commenced (ended) on the first day of such
period, shall be included in
-14-
20
(excluded from) such aggregate amount of Net Lease Revenues if such Real
Property Asset was acquired (disposed of) by the Borrower or a Subsidiary at any
time during such period.
"NET PROCEEDS" means (a) with respect to any Equity Issuance or Debt
Issuance by a Person, the aggregate amount of all cash received by such Person
in respect of such Equity Issuance or Debt Issuance net of investment banking
fees, legal fees, accountants fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred by such Person in connection
with such Equity Issuance or Debt Issuance and (b) with respect to any sale,
transfer or other disposition of any Collateral, the aggregate amount of all
cash received (including without limitation, all cash payments received by way
of deferred payment of principal or interest pursuant to a note or installment
receivable or otherwise, but only as and when received), directly or indirectly,
by the Borrower or any Subsidiary in connection with such sale, transfer or
other disposition net of (i) the amount of any out-of-pocket legal fees, title
and recording tax expenses, commissions and other customary fees and expenses
actually incurred by the Borrower or any Subsidiary in connection therewith and
(ii) any income taxes reasonably estimated in good faith by the Borrower to be
payable by the Borrower or such Subsidiary in connection with such sale,
transfer or other disposition and other taxes thereon to the extent such other
taxes are actually paid by the Borrower or such Subsidiary.
"NON-RECOURSE INDEBTEDNESS" means, with respect to any Person, Secured
Indebtedness of such Person in respect of which (a) the holder of such
Indebtedness has expressly limited its recourse for repayment to specifically
identified assets of such Person and (b) such Person has no general recourse or
other general personal liability (except for customary exceptions for fraud and
other similar exceptions reasonably acceptable to the Agent).
"NOTE" means a Revolving Note or a Term Note.
"NOTICE OF BORROWING" means a notice in the form of Exhibit C to be
delivered to the Agent pursuant to Section 2.2.(b) evidencing the Borrower's
request for a borrowing of Revolving Loans.
"NOTICE OF CONTINUATION" means a notice in the form of Exhibit D to be
delivered to the Agent pursuant to Section 2.7. evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"NOTICE OF CONVERSION" means a notice in the form of Exhibit E to be
delivered to the Agent pursuant to Section 2.8. evidencing the Borrower's
request for the Conversion of a Loan from one Type to another Type.
"OBLIGATIONS" means, individually and collectively: (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans; (b) all
other indebtedness, liabilities, obligations, covenants and duties of the
Borrower owing to the Agent or any Lender of every kind, nature and description,
under or in respect of this Agreement or any of the other Loan Documents,
including, without limitation, the Fees and indemnification obligations, whether
direct or indirect, absolute
-15-
21
or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any promissory note and (c) all
Swap Obligations owing to any Lender.
"PARTICIPANT" has the meaning given that term in Section 13.5.(c).
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"PERMITTED LIENS" means, as to any Person: (a) Liens securing taxes,
assessments and other charges or levies imposed by any Governmental Authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business,
which are not at the time required to be paid or discharged under Section 8.6.;
(b) Liens consisting of deposits or pledges made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or similar Applicable Laws; (c)
zoning restrictions, easements, rights-of-way, covenants, reservations and other
rights, restrictions or encumbrances of record on the use of real property,
which do not materially detract from the value of such property or materially
impair the use thereof in the business of such Person; (d) Liens in existence as
of the Agreement Date and set forth in Schedule 7.1.(f); (e) Liens, if any, in
favor of the Agent for the benefit of the Lenders and (f) any other "Permitted
Encumbrance" as defined in any Security Deed.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"POST-DEFAULT RATE" means, in respect of any principal of any Loan or any
other Obligation that is not paid when due (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum equal to three percent (3.0%) plus the Base Rate as in effect from time to
time.
"PREFERRED STOCK" means, with respect to any Person, shares of capital
stock of, or other equity interests in, such Person which are entitled to
preference or priority over any other capital stock of, or other equity interest
in, such Person in respect of the payment of dividends or distribution of assets
upon liquidation or both.
-16-
22
"PRIME RATE" means the rate of interest per annum announced publicly by
the Agent as its prime rate from time to time. The Prime Rate is not necessarily
the best or the lowest rate of interest offered by the Agent or any Lender.
"PRINCIPAL OFFICE" means the office of the Agent located at One First
Union Center, Charlotte, North Carolina, or such other office of the Agent as
the Agent may designate from time to time.
"PRO-FORMA CREDIT AGREEMENT DEBT SERVICE" means, as of a given date, the
greater of (a) all payments of interest and principal on the Loans actually made
(as opposed to accrued) by the Borrower and its Subsidiaries during the period
of two consecutive fiscal quarters most recently ended and (b) an amount equal
to the annual principal and interest payment sufficient to amortize in full
during a 25-year period the aggregate principal balance of Loans outstanding as
of such date calculated using an interest rate equal to the yield on a 10 year
United States Treasury Note at such time as determined by the Agent plus 2.0%.
"QUALIFIED LESSEE" means a lessee of a Real Property Asset that has at
the time in question, a net worth of a least $25,000,000 and in respect of which
the Borrower has delivered to the Agent annual audited financial statements
prepared in accordance with GAAP for a fiscal year ending not more than fifteen
calendar months prior to the time in question.
"QUARTERLY DATE" means the last Business Day of March, June, September
and December in each year, the first of which shall be March 31, 1998.
"RATING AGENCY" means S&P or Moody's.
"REAL PROPERTY ASSETS" means the real property assets owned in whole or
in part by the Borrower or any of its Subsidiaries, including without
limitation, those listed in Part I on Schedule 7.1.(f), as such Schedule may be
modified from time to time to reflect sales, transfers, assignments,
conveyances, development, acquisitions and purchases of real property assets.
"REGISTER" has the meaning given that term in Section 13.5.(e).
"REGULATORY CHANGE" means, with respect to any Lender, any change
effective after February 26, 1998 in Applicable Law (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks, including such Lender, of or
under any Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental Authority
or monetary authority charged with the interpretation or administration thereof
or compliance by any Lender with any request or directive regarding capital
adequacy.
"REIT" means a Person qualifying for treatment as a "real estate
investment trust" under the Internal Revenue Code.
-17-
23
"REJECTING LENDER" has the meaning given that term in Section 2.11.(b).
"REQUISITE LENDERS" means, as of any date, Lenders having at least
66-2/3% of the aggregate amount of the Commitments, or, if the Commitments have
been terminated or reduced to zero, Lenders holding at least 66-2/3% of the
principal amount of the Loans.
"RESTRICTED PAYMENT" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or other
equity interest of the Borrower or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock or other equity
interest of the Borrower or any of its Subsidiaries now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding.
"REVOLVING COMMITMENT" means, as to each Lender, such Lender's obligation
to make Revolving Loans pursuant to Section 2.2. in an amount up to, but not
exceeding, the amount set forth for such Lender on its signature page hereto as
such Lender's "Revolving Commitment Amount" or as set forth in the applicable
Assignment and Acceptance Agreement, as the same may be reduced from time to
time pursuant to Section 2.10. or as appropriate to reflect any assignments to
or by such Lender effected in accordance with Section 13.5.
"REVOLVING LOAN" means a loan made by a Lender to the Borrower pursuant
to Section 2.2.(a).
"REVOLVING NOTE" has the meaning given that term in Section 2.9.(a).
"SECURED INDEBTEDNESS" means, with respect to any Person, any
Indebtedness of such Person that is secured in any manner by any Lien.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.
"SECURITY DEED" means a Deed to Secure Debt, Deed of Trust, Mortgage or
other similar instrument creating a Lien on, among other things, any Real
Property Asset, executed by the Borrower or any Subsidiary in favor of the Agent
for the benefit of the Lenders and substantially in the form of Exhibit K or
otherwise in form and substance satisfactory to the Agent.
"SOLVENT" means, when used with respect to any Person, that (a) the fair
value and the fair salable value of its assets (excluding any Indebtedness due
from any affiliate of such Person) are each in excess of the fair valuation of
its total liabilities (including all contingent liabilities); and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) that the Person has capital not unreasonably small to carry
on its business and all business in which it proposes to be engaged.
-18-
24
"S&P" means Standard & Poor's Rating Services, a division of McGraw-Hill
Companies, Inc.
"SUBSIDIARY" means, for any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (without regard to the occurrence of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person. The parties agree that neither Captec
Franchise Capital Partners L.P. III nor Captec Franchise Capital Partners L.P.
IV constitute a Subsidiary given the securities and other ownership interests in
such Persons currently owned, directly or indirectly, by the Borrower.
"SWAP OBLIGATIONS" means all obligations, whether direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated or
unliquidated, owing by the Borrower to any Lender under (a) any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar contractual agreement or arrangement between the Borrower and such
Lender for the purpose of protecting against fluctuations in interest rates or
(b) any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement between the Borrower and such Lender designed to
protect the Borrower against fluctuations in currency values.
"TANGIBLE NET WORTH" means, as of a given date, total stockholder's
equity of the borrower and its Subsidiaries determined on a consolidated basis
minus (to the extent reflected in determining stockholders' equity of the
Borrower and its Subsidiaries): (a) the amount of any write-up, after February
26, 1998, in the book value of any assets contained in any balance sheet
resulting from revaluation thereof or any write-up, after February 26, 1998, in
excess of the cost of such assets acquired and (b) the aggregate of all amounts
appearing on the assets side of any such balance sheet for franchises, licenses,
permits, patents, patent applications, copyrights, trademarks, trade names,
goodwill, treasury stock, experimental or organizational expenses and other like
assets which would be properly classified as intangible assets under GAAP.
"TAXES" has the meaning given that term in Section 3.12.
"TERMINATION DATE" means February 26, 2001, or such later date to which
the Termination Date may be extended pursuant to Section 2.11.
"TERM LOAN COMMITMENT" means initially, as to each Lender, such Lender's
obligation to convert Revolving Loans outstanding under the Existing Credit
Agreement into a Term Loan as contemplated by Section 2.1. in an amount equal to
the amount set forth for such Lender on its signature page hereto as such
Lender's "Term Loan Commitment" (which equals such Lender's Commitment
Percentage of $50,000,000). Thereafter "Term Loan Commitment" means, as to each
Lender, the principal amount of the Term Loan owing to such Lender, as the same
may be reduced from time to time as appropriate to reflect any payments in
respect of the principal
-19-
25
balance thereof and any assignments to or by such Lender effected in accordance
with Section 13.5.
"TERM LOAN" has the meaning given that term in Section 2.1.
"TERM NOTE" has the meaning given that term in Section 2.9.(b).
"TOTAL DEBT SERVICE" means, for any period and without duplication, the
sum of (a) Interest Expense for such period plus (b) regularly scheduled
principal payments on Indebtedness of the Borrower and its Subsidiaries during
such period plus (c) the amount of amortization of deferred financing fees of
the Borrower and its Subsidiaries for such period.
"TOTAL LIABILITIES" means, as of a given date, all liabilities which
would, in conformity with GAAP, be properly classified as a liability on the
consolidated balance sheet of the Borrower and its Subsidiaries as at such date,
and in any event shall include (without duplication) all Indebtedness of the
Borrower and any of its Subsidiaries.
"TYPE" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
"UNCONSOLIDATED AFFILIATE" shall mean, with respect to any Person, any
other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"UNSECURED INDEBTEDNESS" means, with respect to a Person, all
Indebtedness of such Person that is not Secured Indebtedness.
"WHOLLY OWNED SUBSIDIARY" means, with respect to a Person, any Subsidiary
of such Person all of the equity securities or other ownership interests (other
than, in the case of a corporation, directors' qualifying shares) are at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
-20-
26
SECTION 1.2. GENERAL; REFERENCES TO TIMES.
Unless otherwise indicated, all accounting terms, ratios and measurements
shall be interpreted or determined in accordance with GAAP in effect as of the
Agreement Date. References in this Agreement to "Sections", "Articles",
"Exhibits" and "Schedules" are to sections, articles, exhibits and schedules
herein and hereto unless otherwise indicated. References in this Agreement to
any document, instrument or agreement (a) shall include all exhibits, schedules
and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, to the extent permitted
hereby and (c) shall mean such document, instrument or agreement, or replacement
or predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent permitted hereby and in effect at any given
time. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Unless explicitly set forth to the
contrary, a reference to "Subsidiary" means a Subsidiary of the Borrower or a
Subsidiary of such Subsidiary and a reference to an "Affiliate" means a
reference to an Affiliate of the Borrower. Titles and captions of Articles,
Sections, subsections and clauses in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement. Unless otherwise
indicated, all references to time are references to Charlotte, North Carolina
time.
SECTION 1.3. TREATMENT OF FINANCIAL ATTRIBUTES OF UNCONSOLIDATED AFFILIATES;
SHORT REPORTING PERIODS.
For purposes of calculating the amount of Adjusted EBITDA, Gross Asset
Value, EBITDA, Fixed Charges, Total Debt Service, and Total Liabilities (each a
"Financial Attribute") of the Borrower and its Subsidiaries, the pro rata share
of the amount of such Financial Attribute of each Unconsolidated Affiliate of
the Borrower or any Subsidiary (determined in a manner consistent with the
definition of such Financial Attribute set forth herein) shall be included in
such Financial Attribute of the Borrower and its Subsidiaries; provided,
however, the Financial Attributes of any Unconsolidated Affiliates in which
neither the Borrower nor any of its Subsidiaries has made (or has irrevocably
committed to make) any equity investment of cash or other property shall not be
included in any such calculations. If the determination of the Borrower's
compliance with any financial covenant contained in this Agreement requires
including financial matters relating to any time prior to January 1, 1998, such
covenant shall be calculated using the applicable pro forma financial
information of the Borrower taking into effect the initial public offering of
stock by the Borrower consummated on or about November 19, 1997 and assuming
such offering, the use of proceeds therefrom, and the related REIT election all
occurred prior to January 1, 1997.
ARTICLE II. CREDIT FACILITY
SECTION 2.1. AMOUNT OF EXISTING INDEBTEDNESS; AGREEMENT TO RESTRUCTURE.
The Borrower, the Agent and the Lenders agree that as of the date hereof
(without giving effect to the restructuring contemplated by this Section) the
outstanding principal balance of the
-21-
27
Revolving Loans (as defined under the Existing Credit Agreement) (the "Existing
Debt") is $109,984,988.00. Subject to the terms and conditions hereof, including
without limitation satisfaction of the conditions precedent set forth in Article
VI., the Lenders, the Agent and the Borrower agree that (a) $50,000,000 of the
Existing Debt shall be converted into term loans (each a "Term Loan") owing to
the Lenders, with the initial principal amount of the Term Loan owing to a given
Lender equal to such Lender's Term Loan Commitment and (b) the remaining balance
of the Existing Debt shall remain as Revolving Loans owing to the Lenders in
proportion to the amount of their Revolving Commitments. As of the Effective
Date, such Revolving Loans shall be allocated among Lenders in accordance with
their respective Commitment Percentages, and each Lender agrees to make such
payments to the other Lenders upon the Effective Date in such amounts as are
necessary to effect such allocation. All such payments shall be made to Agent
for the account of the Person to be paid and shall be made on a net basis.
SECTION 2.2. REVOLVING LOANS.
(a) Generally. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Termination Date, each
Lender severally and not jointly agrees to make Revolving Loans to the Borrower
in an aggregate principal amount at any one time outstanding up to, but not
exceeding, such Lender's Commitment Percentage of (i) the Maximum Loan
Availability minus (ii) the aggregate principal balance of Term Loans then
outstanding. Subject to the terms and conditions of this Agreement, during the
period from the Effective Date to but excluding the Termination Date, the
Borrower may borrow, repay and reborrow Revolving Loans hereunder.
(b) Requesting Revolving Loans. The Borrower shall give the Agent notice
pursuant to a Notice of Borrowing or telephonic notice of each borrowing of
Revolving Loans. Each Notice of Borrowing shall be delivered to the Agent before
12:00 noon (a) in the case of LIBOR Loans, on the date three Business Days prior
to the proposed date of such borrowing and (b) in the case of Base Rate Loans,
on the date one Business Day prior to the proposed date of such borrowing. Any
such telephonic notice shall include all information to be specified in a
written Notice of Borrowing and shall be promptly confirmed in writing by the
Borrower pursuant to a Notice of Borrowing sent to the Agent by telecopy on the
same day of the giving of such telephonic notice. The Agent will transmit by
telecopy the Notice of Borrowing (or the information contained in such Notice of
Borrowing) to each Lender promptly upon receipt by the Agent. Each Notice of
Borrowing or telephonic notice of each borrowing shall be irrevocable once given
and binding on the Borrower.
(c) Disbursements of Revolving Loan Proceeds. No later than 11:00 a.m. on
the date specified in the Notice of Borrowing, each Lender will make available
for the account of its applicable Lending Office to the Agent at the Principal
Office, in immediately available funds, the proceeds of the Revolving Loan to be
made by such Lender. With respect to Revolving Loans to be made after the
Effective Date, unless the Agent shall have been notified by any Lender prior to
the specified date of borrowing that such Lender does not intend to make
available to the Agent the Revolving Loan to be made by such Lender on such
date, the Agent may assume that such Lender will make the proceeds of such
Revolving Loan available to the Agent on the date of the requested borrowing as
set forth in the Notice of Borrowing and the Agent may (but shall not be
-22-
28
obligated to), in reliance upon such assumption, make available to the Borrower
the amount of such Revolving Loan to be provided by such Lender. Subject to
satisfaction of the applicable conditions set forth in Article VI. for such
borrowing, the Agent will make the proceeds of such borrowing available to the
Borrower no later than 12:00 noon on the date and at the account specified by
the Borrower in such Notice of Borrowing.
SECTION 2.3. RATES AND PAYMENT OF INTEREST ON LOANS.
(a) Rates. The Borrower promises to pay to the Agent for account of
each Lender interest on the unpaid principal amount of each Loan made by such
Lender for the period from and including the date of the making of such Loan
to but excluding the date such Loan shall be paid in full, at the following
per annum rates:
(i) during such periods as such Loan is a Base Rate Loan, at the
Base Rate (as in effect from time to time), plus the Applicable Margin;
and
(ii) during such periods as such Loan is a LIBOR Loan, at the
Adjusted Eurodollar Rate for such Loan for the Interest Period therefor,
plus the Applicable Margin.
Notwithstanding the foregoing, during the continuance of an Event of Default,
the Borrower shall pay to the Agent for account of each Lender interest at the
Post-Default Rate on the outstanding principal amount of any Loan made by such
Lender and on any other amount payable by the Borrower hereunder or under the
Notes held by such Lender (including without limitation, accrued but unpaid
interest to the extent permitted under Applicable Law).
(b) Payment of Interest. Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, monthly on the last Business Day
of each calendar month, (ii) in the case of a LIBOR Loan, on the last day of
each Interest Period therefor and, if such Interest Period is longer than three
months, at three-month intervals following the first day of such Interest
Period, and (iii) in the case of any Loan, upon the payment, prepayment or
Continuation thereof or the Conversion of such Loan to a Loan of another Type
(but only on the principal amount so paid, prepaid or Converted). Interest
payable at the Post-Default Rate shall be payable from time to time on demand.
Promptly after the determination of any interest rate provided for herein or
any change therein, the Agent shall give notice thereof to the Lenders to which
such interest is payable and to the Borrower. All determinations by the Agent
of an interest rate hereunder shall be conclusive and binding on the Lenders
and the Borrower for all purposes, absent manifest error.
SECTION 2.4. NUMBER OF INTEREST PERIODS.
There may be no more than 8 different Interest Periods outstanding at the
same time.
SECTION 2.5. REPAYMENT OF LOANS.
(a) Repayment of Term Loans. Subject to the last sentence of this
subsection, the Borrower shall repay the principal balance of the Term Loans in
consecutive monthly installments
-23-
29
due on the first day of each calendar month with the first such installment
being due on December 1, 1999. The amount of each such installment shall be as
follows: (i) the first through sixth principal installments shall each be in an
amount equal to the monthly principal and interest payment sufficient to
amortize in full during a 25-year period the initial aggregate principal balance
of the Term Loans calculated using an interest rate equal to the yield on a 10
year United States Treasury Note as of the due date of such first installment,
as determined by the Agent plus 2.0%; (ii) the seventh through twelfth principal
installments shall each be in an amount equal to the monthly principal and
interest payment sufficient to amortize in full during a 20-year period the
initial aggregate principal balance of the Term Loans calculated using an
interest rate equal to the yield on a 10 year United States Treasury Note as of
the due date of such seventh installment, as determined by the Agent plus 2.0%;
and (iii) all subsequent principal installments payable prior to the Termination
Date shall each be in an amount equal to the monthly principal and interest
payment sufficient to amortize in full during a 15-year period the initial
aggregate principal balance of the Term Loans calculated using an interest rate
equal to the yield on a 10 year United States Treasury Note as of the due date
of the initial installment due under this clause (iii), as determined by the
Agent plus 2.0%. At the time the aggregate amount of Net Proceeds from Equity
Issuances applied as prepayments or repayments of the Loans pursuant to Section
2.6.(c) first exceeds $30,000,000, then the requirement that the Borrower make
installments of principal under this subsection shall be suspended for a period
of twelve consecutive months, or if no installment has been required to be made
under this subsection, then the Borrower shall not be required to commence
making principal installments under this Section until December 1, 2000.
(b) Maturity. The Borrower shall repay the entire outstanding principal
amount of, and all accrued but unpaid interest on, the Revolving Loans and the
Term Loans on the Termination Date.
SECTION 2.6. PREPAYMENTS.
(a) Optional. Subject to Section 5.4., the Borrower may prepay Revolving
Loans and Terms Loan at any time without premium or penalty. The Borrower shall
give the Agent at least 3 Business Days prior written notice of the prepayment
of any LIBOR Loan and at least 1 Business Day prior written notice of the
prepayment of any Base Rate Loan. Term Loans, once repaid, may not be
reborrowed.
(b) Mandatory Prepayment Upon Exceeding Maximum Loan Availability. If at
any time the aggregate principal amount of all outstanding Loans exceeds the
Maximum Loan Availability at such time, the Borrower shall immediately pay to
the Agent for the accounts of the Lenders the amount of such excess. Such
payment shall be applied to pay all amounts of principal outstanding on the
Loans pro rata in accordance with subsection (d) below and as provided in
Section 3.2. If the Borrower is required to pay any outstanding LIBOR Loans by
reason of this Section prior to the end of the applicable Interest Period
therefor, the Borrower shall pay all amounts due under Section 5.4.
(c) Mandatory Prepayment Upon Equity or Debt Issuance or Sale. Upon any
Equity Issuance, any Debt Issuance or any sale, transfer or other disposition of
any Collateral, the Borrower shall apply an amount equal to 100% of the Net
Proceeds thereof to the prepayment of
-24-
30
Loans and other Obligations, to be applied as provided in the immediately
following subsection (d).
(d) Application. Prepayments of Loans required to be made pursuant to any
of the immediately preceding subsections shall be applied as follows (in each
case subject to Section 3.2.):
(i) first, to the prepayment of the aggregate outstanding
principal balance of the Revolving Loans (in each case with Base Rate
Loans being prepaid prior to LIBOR Loans);
(ii) second, to the repayment of the aggregate outstanding
principal balance of the Term Loans (in each case with Base Rate Loans
being prepaid prior to LIBOR Loans); and
(iii) third, as provided in Section 11.4.
SECTION 2.7. CONTINUATION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, with respect to any LIBOR
Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan
by selecting a new Interest Period for such LIBOR Loan. Each new Interest Period
selected under this Section shall commence on the last day of the immediately
preceding Interest Period. Each selection of a new Interest Period shall be made
by the Borrower giving to the Agent a Notice of Continuation not later than
12:00 noon on the third Business Day prior to the date of any such Continuation.
Such notice by the Borrower of a Continuation shall be by telephone or telecopy,
confirmed immediately in writing if by telephone, in the form of a Notice of
Continuation, specifying (a) the proposed date of such Continuation, (b) the
LIBOR Loan and portion thereof subject to such Continuation and (c) the duration
of the selected Interest Period, all of which shall be specified in such manner
as is necessary to comply with all limitations on Loans outstanding hereunder.
Each Notice of Continuation shall be irrevocable by and binding on the Borrower
once given. Promptly after receipt of a Notice of Continuation, the Agent shall
notify each Lender by telecopy or other similar form of transmission of the
proposed Continuation. If the Borrower shall fail to select in a timely manner a
new Interest Period for any LIBOR Loan in accordance with this Section, such
Loan will automatically, on the last day of the current Interest Period
therefor, Convert into a Base Rate Loan notwithstanding failure of the Borrower
to comply with Section 2.8.
SECTION 2.8. CONVERSION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower's giving of
a Notice of Conversion to the Agent, Convert all or a portion of a Loan of one
Type into a Loan of another Type. Any Conversion of a LIBOR Loan into a Base
Rate Loan shall be made on, and only on, the last day of an Interest Period for
such LIBOR Loan and, upon Conversion of a Base Rate Loan into a LIBOR Loan, the
Borrower shall pay accrued interest to the date of Conversion on the principal
-25-
31
amount so Converted. Each such Notice of Conversion shall be given not later
than 12:00 noon on the Business Day prior to the date of any proposed Conversion
into Base Rate Loans and on the third Business Day prior to the date of any
proposed Conversion into LIBOR Loans. Promptly after receipt of a Notice of
Conversion, the Agent shall notify each Lender by telecopy or other similar form
of transmission of the proposed Conversion. Subject to the restrictions
specified above, each Notice of Conversion shall be by telephone (confirmed
immediately in writing) or telecopy in the form of a Notice of Conversion
specifying (a) the requested date of such Conversion, (b) the Type of Loan to be
Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of
Loan such Loan is to be Converted into and (e) if such Conversion is into a
LIBOR Loan, the requested duration of the Interest Period of such Loan. Each
Notice of Conversion shall be irrevocable by and binding on the Borrower once
given.
SECTION 2.9. NOTES.
(a) Revolving Notes. The Revolving Loans made by each Lender shall, in
addition to this Agreement, also be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit F (each a "Revolving Note"),
payable to the order of such Lender in a principal amount equal to the amount of
its Revolving Commitment as originally in effect and otherwise duly completed.
(b) Term Notes. The Term Loan owing to each Lender shall, in addition to
this Agreement, also be evidenced by a promissory note of the Borrower
substantially in the form of Exhibit G (each a "Term Note"), payable to the
order of such Lender in a principal amount equal to such Lender's Term Loan
Commitment and otherwise duly completed.
(c) Records; Endorsement on Transfer. The date, amount of each Loan made
by each Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by such Lender on its books and such
entries shall be binding on the Borrower absent manifest error. Prior to the
transfer of any Note, the Lender shall endorse such items on such Note or any
allonge thereof; provided that the failure of such Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under such Note in
respect of the Loans evidenced by such Note.
SECTION 2.10. VOLUNTARY REDUCTIONS OF THE REVOLVING COMMITMENTS.
The Borrower shall have the right to terminate or reduce the aggregate
unused amount of the Revolving Commitments at any time and from time to time
without penalty or premium upon not less than 5 Business Days prior written
notice to the Agent of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction and
shall be irrevocable once given and effective only upon receipt by the Agent.
The Agent will promptly transmit such notice to each Lender. The Revolving
Commitments, once terminated or reduced may not be increased or reinstated.
-26-
32
SECTION 2.11. EXTENSION OF TERMINATION DATE.
(a) Generally. The Borrower may request that the Agent and the Lenders
extend the current Termination Date by one year by executing and delivering to
the Agent at least 90 days but no more than 120 days prior to the date one year
before the current Termination Date, a written request for such an extension (an
"Extension Request"). The Agent shall forward to each Lender a copy of each
Extension Request delivered to the Agent promptly after receipt thereof. The
Borrower understands and acknowledges that (a) this Section has been included in
this Agreement for the Borrower's convenience in requesting an extension of the
Termination Date; (b) none of the Lenders nor the Agent has promised (either
expressly or impliedly), nor has any obligation or commitment whatsoever, to
extend the Termination Date at any time and (c) the Lenders may condition any
such extension on such terms and conditions as the Lenders deem appropriate. If
all of the Lenders shall have notified the Agent in writing on or prior to the
date which is 30 days prior to the date (the "Current Anniversary Date") one
year before the current Termination Date that they accept such Extension
Request, then the Termination Date shall be extended to the date one year
following the current Termination Date. If any Lender shall not have notified
the Agent on or prior to the Current Anniversary Date that it accepts such
Extension Request, then the current Termination Date shall not be extended. The
Agent shall promptly notify the Borrower whether the Extension Request has been
accepted or rejected, and if rejected, the Agent shall also give the Borrower
notice of which Lenders rejected such Extension Request (each such Lender a
"Rejecting Lender").
(b) Rejecting Lenders. Notwithstanding the preceding subsection (a),
after notification from the Agent that an Extension Request has been rejected,
the Termination Date shall be extended as requested in such Extension Request if
(i) the Requisite Lenders have consented to such Extension Request, (ii) no
later than the date 30 days following the Current Anniversary Date, the Borrower
shall have given written notice to the Agent and each Lender that the Borrower
desires the Termination Date to be so extended notwithstanding such rejection
and (iii) the Borrower shall have, no later than 90 days prior to the
Termination Date at the time of the Extension Request in question, (x) caused
each Rejecting Lender to have assigned its respective Commitment and Loans owing
to it to an Eligible Assignee subject to and in accordance with the provisions
of Section 13.5.(d) for a purchase price equal to the aggregate principal
balance of Loans then owing to such Rejecting Lender plus any accrued but unpaid
interest thereon and accrued but unpaid fees and other amounts then owing to
such Rejecting Lender under the Loan Documents, and (y) to the extent the
Commitment of any Rejecting Lender is not so assigned by such date, paid to such
Rejecting Lender the aggregate principal balance of Loans then owing to such
Rejecting Lender plus any accrued but unpaid interest thereon and accrued but
unpaid fees and other amounts then owing to such Rejecting Lender under the Loan
Documents, whereupon such Rejecting Lender's Commitment shall terminate, such
Rejecting Lender shall no longer be a party hereto or have any rights or
obligations hereunder or under any of the other Loan Documents. In addition, in
connection with any such assignment by a Rejecting Lender or any such payment to
a Rejecting Lender, the Borrower shall pay the amounts, if any, due such
Rejecting Lender under Section 5.4. If the Borrower desires to cause any
Rejecting Lender to assign its Commitment and Loans owing to it pursuant to this
subsection, the Borrower shall so notify such Rejecting Lender, the Agent and
the other Lenders in writing no later than the date 120 days prior to the
current Termination Date. A Rejecting Lender shall be obligated to assign
-27-
33
its Commitment and Loans pursuant to this subsection if requested to do so by
the Borrower. Each Lender that is not a Rejecting Lender shall have the right
(but not the obligation) to acquire such Rejecting Lender's Commitment and Loans
and shall exercise such right by giving written notice thereof to the Agent no
later than 10 Business Days of receipt of the Borrower's notice. Any Lender who
has failed to so notify the Agent within such 10 Business Day period shall be
deemed to have declined to exercise such right. If more than one Lender
exercises its right to acquire a Rejecting Lender's Commitment and Loans, each
such Lender shall acquire an amount of such Rejecting Lender's Commitment and
Loans in proportion to the Commitments of the Lenders exercising such right.
After the expiration of such 10 Business Day period, the Borrower shall have the
right to attempt to cause an Eligible Assignee to accept an assignment of a
Rejecting Lender's Commitment and Loans. Neither the Agent nor any Lender shall
have any obligation whatsoever to assist the Borrower in finding any such
Eligible Assignee. If the Requisite Lenders do not consent to any Extension
Request or if the Borrower fails to comply with any provision of this
subsection, the Termination Date shall not be extended.
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
SECTION 3.1. PAYMENTS.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement or any other Loan Document shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Agent at its
Principal Office, not later than 2:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Prior to making
any such payment, the Borrower shall give the Agent notice of such payment. The
Borrower shall, at the time of making each payment under this Agreement or any
Note, specify to the Agent the amounts payable by the Borrower hereunder to
which such payment is to be applied. Each payment received by the Agent for the
account of a Lender under this Agreement or any Note shall be paid to such
Lender at the applicable Lending Office of such Lender no later than 5:00 p.m.
on the date of receipt. If the Agent fails to pay such amount to a Lender as
provided in the previous sentence, the Agent shall pay interest on such amount
until paid at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If the due date of any payment under this Agreement or any other Loan
Document would otherwise fall on a day which is not a Business Day such date
shall be extended to the next succeeding Business Day and interest shall be
payable for the period of such extension.
SECTION 3.2. PRO RATA TREATMENT.
Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section 2.2.(a) shall be made from the Lenders, each payment
of the Fees under Section 3.6.(a) shall be made for account of the Lenders, and
each termination or reduction of the amount of the Revolving Commitments under
Section 2.10. shall be applied to the respective Revolving Commitments of the
Lenders, pro rata according to the amounts of their respective Revolving
Commitments; (b) each payment or prepayment of principal of Revolving Loans by
the Borrower shall be made for account of the Lenders pro rata in accordance
with the respective
-28-
34
unpaid principal amounts of the Revolving Loans held by them, provided that if
immediately prior to giving effect to any such payment in respect of any
Revolving Loans the outstanding principal amount of the Revolving Loans shall
not be held by the Lenders pro rata in accordance with their respective
Revolving Commitments in effect at the time such Loans were made, then such
payment shall be applied to the Revolving Loans in such manner as shall result,
as nearly as is practicable, in the outstanding principal amount of the
Revolving Loans being held by the Lenders pro rata in accordance with their
respective Commitments; (c) each payment or prepayment of principal of Term
Loans by the Borrower shall be made for account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of the Term Loans held
by them; (d) each payment of interest on Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the amounts of interest on
such Loans then due and payable to the respective Lenders; and (e) the making,
Conversion and Continuation of Loans of a particular Type (other than
Conversions provided for by Section 5.5.) shall be made pro rata among the
Lenders according to the amounts of their respective Commitments (in the case of
making of Loans) or their respective Loans (in the case of Conversions and
Continuations of Loans) and the then current Interest Period for each Lender's
portion of each Loan of such Type shall be coterminous.
SECTION 3.3. SHARING OF PAYMENTS, ETC.
The Borrower agrees that, in addition to (and without limitation of) any
right of set-off, banker's lien or counterclaim a Lender or the Agent may
otherwise have, each Lender and the Agent shall be entitled during the
continuance of an Event of Default, at its option, and in the case of any Lender
subject to receipt of the Agent's prior written consent, to offset balances held
by it for the account of the Borrower at any of such Lender's (or the Agent's)
offices, in Dollars or in any other currency, against any principal of, or
interest on, any of such Lender's Loans hereunder (or other Obligations owing to
such Lender or the Agent hereunder) which is not paid when due (regardless of
whether such balances are then due to the Borrower), in which case such Lender
shall promptly notify the Borrower, all other Lenders and the Agent thereof;
provided, however, such Lender's failure to give such notice shall not affect
the validity of such offset. If a Lender shall obtain payment of any principal
of, or interest on, any Loan made by it to the Borrower under this Agreement, or
shall obtain payment on any other Obligation owing by the Borrower or a
Subsidiary through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise or through voluntary prepayments
directly to a Lender or other payments made by the Borrower to a Lender not in
accordance with the terms of this Agreement and such payment should be
distributed to the Lenders pro rata in accordance with Section 3.2. or Section
11.4., as applicable, such Lender shall promptly pay such amounts to the other
Lenders and make such other adjustments from time to time as shall be equitable,
to the end that all the Lenders shall share the benefit of such payment (net of
any reasonable expenses which may be incurred by such Lender in obtaining or
preserving such benefit) pro rata in accordance with Section 3.2. or Section
11.4. To such end, all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored. Nothing contained herein shall
require any Lender to exercise any such right or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower.
-29-
35
SECTION 3.4. SEVERAL OBLIGATIONS.
No Lender shall be responsible for the failure of any other Lender to
make a Loan or to perform any other obligation to be made or performed by such
other Lender hereunder, and the failure of any Lender to make a Loan or to
perform any other obligation to be made or performed by it hereunder shall not
relieve the obligation of any other Lender to make any Loan or to perform any
other obligation to be made or performed by such other Lender.
SECTION 3.5. MINIMUM AMOUNTS.
(a) Borrowings and Conversions. Each borrowing of Revolving Loans which
are to be Base Rate Loans shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $500,000 in excess thereof. Each borrowing of
Revolving Loans which are to be LIBOR Loans, and each Conversion of Base Rate
Loans into LIBOR Loans, shall be in an aggregate minimum amount of $2,000,000
and integral multiples of $500,000 in excess of that amount.
(b) Prepayments. Each voluntary prepayment of Loans shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess thereof.
(c) Reductions of Revolving Commitments. Each reduction of the Revolving
Commitments under Section 2.10. shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $5,000,000 in excess thereof (or such
lesser amount as may be the remaining aggregate amount of the Revolving
Commitments).
SECTION 3.6. FEES.
(a) Unused Commitment Fee. During the period commencing on the date
hereof to but excluding the Termination Date, the Borrower agrees to pay to the
Agent for the account of the Lenders an unused facility fee equal to (a)
one-eighth of one percent (0.125%) per annum of the daily aggregate unused
portion of the Lender's Commitments if such unused portion is less than or equal
to one half of the aggregate amount of the Lenders' Commitments on each such day
or (b) two-tenths of one percent (0.2%) per annum of the daily aggregate unused
portion of the Lender's Commitments if such unused portion is greater than
one-half of the aggregate amount of the Lenders' Commitments on each such day.
Such fee shall be payable quarterly in arrears on each Quarterly Date and on the
Termination Date.
(b) Extension Fee. If, pursuant to Section 2.11., the Termination Date is
extended, the Borrower agrees to pay to the Agent for the account of each Lender
consenting to such extension an extension fee equal to two-tenths of one percent
(0.2%) of such Lender's Commitment at such time. Such fee shall be due and
payable in full on the date on which such extension is granted.
(c) Administrative and Other Fees. The Borrower agrees to pay the
administrative and other fees of the Agent as may be agreed to in writing
between the Agent and the Borrower from time to time.
-30-
36
(d) Modification Fee. To induce the Lenders to enter into this Agreement,
the Borrower agrees to pay to each Lender a fee equal to seven-twentieths of one
percent (0.35%) of the initial amount of such Lender's Commitment. Such fees
shall be paid to the Lenders no later than the Effective Date.
SECTION 3.7. COMPUTATIONS.
Unless otherwise expressly set forth herein, any accrued interest on any
Loan, any Fees or other Obligations due hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed, except in the case
of interest on any Base Rate Loan which shall be computed on the basis of a year
of 365 or 366 days, as the case may be, and the actual number of days elapsed.
SECTION 3.8. USURY.
In no event shall the amount of interest due or payable on the Loans or
other Obligations exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the respective Lender in writing that the Borrower elects to have
such excess sum returned to it forthwith. It is the express intent of the
parties hereto that the Borrower not pay and the Lenders not receive, directly
or indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Borrower under Applicable Law.
SECTION 3.9. AGREEMENT REGARDING INTEREST AND CHARGES.
The parties hereto hereby agree and stipulate that the only charge
imposed upon the Borrower for the use of money in connection with this Agreement
is and shall be the interest specifically described in Section 2.3.(a)(i) and
(ii). Notwithstanding the foregoing, the parties hereto further agree and
stipulate that all agency fees, syndication fees, facility fees, underwriting
fees, default charges, late charges, funding or "breakage" charges, increased
cost charges, attorneys' fees and reimbursement for costs and expenses paid by
the Agent or any Lender to third parties or for damages incurred by the Agent or
any Lender, are charges made to compensate the Agent or any such Lender for
underwriting or administrative services and costs or losses performed or
incurred, and to be performed or incurred, by the Agent and the Lenders in
connection with this Agreement and shall under no circumstances be deemed to be
charges for the use of money. Except as expressly agreed otherwise in writing,
all charges other than charges for the use of money shall be fully earned and
nonrefundable when due.
SECTION 3.10. STATEMENTS OF ACCOUNT.
The Agent will account to the Borrower monthly with a statement of Loans,
accrued interest and Fees, charges and payments made pursuant to this Agreement
and the other Loan Documents, and such account rendered by the Agent shall be
prima facie evidence of the amounts
-31-
37
and other matters set forth therein. The failure of the Agent to deliver such a
statement of accounts shall not relieve or discharge the Borrower from any of
its obligations hereunder.
SECTION 3.11. DEFAULTING LENDERS.
(a) Generally. If for any reason any Lender (a "Defaulting Lender") shall
fail or refuse to perform any of its obligations under this Agreement or any
other Loan Document to which it is a party within the time period specified for
performance of such obligation or, if no time period is specified, if such
failure or refusal continues for a period of two Business Days after notice from
the Agent, then, in addition to the rights and remedies that may be available to
the Agent or the Borrower under this Agreement or Applicable Law, such
Defaulting Lender's right to participate in the administration of the Loans,
this Agreement and the other Loan Documents, including without limitation, any
right to vote in respect of, to consent to or to direct any action or inaction
of the Agent or to be taken into account in the calculation of the Requisite
Lenders, shall be suspended during the pendency of such failure or refusal. If a
Lender is a Defaulting Lender because it has failed to make timely payment to
the Agent of any amount required to be paid to the Agent hereunder (without
giving effect to any notice or cure periods), in addition to other rights and
remedies which the Agent or the Borrower may have under the immediately
preceding provisions or otherwise, the Agent shall be entitled (i) to collect
interest from such Defaulting Lender on such delinquent payment for the period
from the date on which the payment was due until the date on which the payment
is made at the Federal Funds Rate, (ii) to withhold or setoff and to apply in
satisfaction of the defaulted payment and any related interest, any amounts
otherwise payable to such Defaulting Lender under this Agreement or any other
Loan Document and (iii) to bring an action or suit against such Defaulting
Lender in a court of competent jurisdiction to recover the defaulted amount and
any related interest. Any amounts received by the Agent in respect of a
Defaulting Lender's Loans shall not be paid to such Defaulting Lender and shall
be held uninvested by the Agent and either applied against the purchase price of
such Loans under the following subsection (b) or paid to such Defaulting Lender
upon the Defaulting Lender's curing of its default.
(b) Purchase of Defaulting Lender's Commitment. Any Lender who is not a
Defaulting Lender shall have the right, but not the obligation, in its sole
discretion, to acquire all of a Defaulting Lender's Commitment and Loans. Any
Lender desiring to exercise such right shall give written notice thereof to the
Agent no sooner than 2 Business Days and not later than 10 Business Days after
such Defaulting Lender became a Defaulting Lender. If more than one Lender
exercises such right, each such Lender shall have the right to acquire an amount
of such Defaulting Lender's Commitment and Loans in proportion to the
Commitments of the other Lenders exercising such right. If after such 10th
Business Day, the Lenders have not elected to purchase all of the Commitment and
Loans of such Defaulting Lender, then any Eligible Assignee may purchase such
Commitment and Loans. Neither the Agent nor any Lender shall have any obligation
whatsoever to initiate any such replacement or to assist in finding an Eligible
Assignee. Upon any such purchase, the Defaulting Lender's interest in the Loans
and its rights hereunder (but not its liability in respect thereof or under the
Loan Documents or this Agreement to the extent the same relate to the period
prior to the effective date of the purchase) shall terminate on the date of
purchase, and the Defaulting Lender shall promptly execute all documents
reasonably requested to surrender and transfer such interest to the purchaser
thereof, including an
-32-
38
appropriate Assignment and Acceptance Agreement and, notwithstanding Section
13.5.(d), shall pay to the Agent an assignment fee in the amount of $6,000. The
purchase price for the Commitment and Loans of a Defaulting Lender shall be
equal to the amount of the principal balance of the Loans outstanding and owed
by the Borrower to the Defaulting Lender. Prior to payment of such purchase
price to a Defaulting Lender, the Agent shall apply against such purchase price
any amounts retained by the Agent pursuant to the last sentence of the
immediately preceding subsection (a). The Defaulting Lender shall be entitled to
receive amounts owed to it by the Borrower under the Loan Documents which
accrued prior to the date of the default by the Defaulting Lender, to the extent
the same are received by the Agent from or on behalf of the Borrower. There
shall be no recourse against any Lender or the Agent for the payment of such
sums except to the extent of the receipt of payments from any other party or in
respect of the Loans. If, prior to a Lender's acquisition of a Defaulting
Lender's Commitment and Loans pursuant to this subsection, such Defaulting
Lender shall cure the event or condition which caused it to become a Defaulting
Lender and shall have paid all amounts owing by it hereunder as a result
thereof, then such Lender shall no longer have the right to acquire such
Defaulting Lender's Commitment or Loans.
SECTION 3.12. TAXES.
(a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without deduction for any present or future excise, stamp or other taxes,
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Agent or a Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Agent or such Lender pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any withholding taxes
payable with respect to payments hereunder or under any other Loan Document
under Applicable Law in effect on February 26, 1998, (iv) any taxes imposed on
or measured by any Lender's assets, net income, receipts or branch profits, (v)
any taxes arising after February 26, 1998 solely as a result of or attributable
to a Lender changing its designated Lending Office after the date such Lender
becomes a party hereto and (vi) any interest, fees, additional taxes or
penalties relating to any of the items described in the preceding clauses (i)
through (v) (such non-excluded items being collectively called "Taxes"). If any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any Applicable Law, then the
Borrower will:
(i) pay directly to the relevant Governmental Authority the full
amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or amounts
as is necessary to ensure that the net amount actually received by the
Agent or such Lender will equal the full amount that the
-33-
39
Agent or such Lender would have received had no such withholding or
deduction been required.
(b) Tax Indemnification. If the Borrower fails to pay any Taxes when
due to the appropriate Governmental Authority or fails to remit to the Agent,
for its account or the account of the respective Lender, as the case may be,
the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental Taxes, interest
or penalties that may become payable by the Agent or any Lender as a result of
any such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
(c) Tax Forms. Prior to the date that any Lender or participant
organized under the laws of a jurisdiction outside the United States of America
becomes a party hereto, such Person shall deliver to the Borrower and the Agent
such certificates, documents or other evidence, as required by the Internal
Revenue Code or Treasury Regulations issued pursuant thereto (including
Internal Revenue Service Forms 4224 or 1001, as applicable, or appropriate
successor forms), properly completed, currently effective and duly executed by
such Lender or participant establishing that payments to it hereunder and under
the Notes are (i) not subject to United States Federal backup withholding tax
or (ii) not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the application
of the provisions of a treaty to which the United States is a party or such
Lender is otherwise exempt.
ARTICLE IV. COLLATERAL POOL PROPERTIES
SECTION 4.1. ADMISSION OF COLLATERAL POOL PROPERTIES.
(a) The Real Property Assets described on Schedule 4.1. constitute
all of the "Collateral Pool Properties" under the Existing Credit Agreement as
of the Agreement Date. The Lenders and the Agent agree that each such Real
Property Asset shall constitute a Collateral Pool Property under this Agreement
notwithstanding the requirement of clause (b) of the definition of Collateral
Pool Property, so long as the Borrower delivers to the Agent each of the
following no later than the indicated dates: (i) a Security Deed encumbering
such Real Property Asset and otherwise complying with the requirements of the
immediately following subsection (b)(vi) no later than December 31, 1998 and
(ii) all of the items required to be delivered with respect to a Real Property
Asset under clauses (iv), (v), (viii), (ix), (x), (xi) and (xvi) of the
immediately following subsection (b) no later than February 15, 1999.
(b) If the Borrower desires that an additional Real Estate Asset be
deemed to be a Collateral Pool Property, the Borrower shall deliver to the Agent
the following, in form and substance reasonably satisfactory to the Agent:
(i) A description of such Real Estate Asset, such description to
include the age, location, identity of the tenant, the identity of any
franchisor of such tenant, and the basic terms of the applicable lease
agreement;
-34-
40
(ii) A copy of the applicable lease agreement (including all
amendments, supplements and other modifications thereof);
(iii) A copy of the summary portion of a "Phase I" environmental
assessment of such Real Estate Asset prepared by an environmental
engineering firm reasonably acceptable to the Agent;
(iv) A copy of an appraisal of such Real Property Asset prepared
by a real estate appraiser reasonably acceptable to the Agent. Each
appraisal must satisfy the minimum qualifications required under
Applicable Law governing the Agent and the Lenders, including without
limitation, the Financial Institution Recovery, Reform and Enforcement
Act of 1989, as amended; provided, however, appraisals need not satisfy
such qualifications once the Agent and the Lenders have received the
minimum number of acceptable appraisals required under Applicable Law;
(v) An ALTA 1992 Form mortgagee's Policy of Title Insurance
(without any creditor's rights exclusion) or other current form of title
insurance policy acceptable to the Agent in favor of the Agent for the
benefit of the Lenders with respect to such Real Property Asset,
including endorsements with respect to such items of coverage as the
Agent may reasonably request (but excluding zoning and usury endorsements
unless obtainable for a nominal cost), providing for coverage in the
amount of the appraised value of such Real Property Asset or in such
other amount as may be reasonably acceptable to the Agent, issued by a
title insurance company acceptable to the Agent, showing the fee simple
title to (or if otherwise permitted, a valid leasehold interest in) the
land and improvements described in the applicable Security Deed as vested
in the Borrower or a Wholly Owned Subsidiary, and insuring that the Lien
granted by such Security Deed is a valid Lien against said property,
subject only to such restrictions, encumbrances, easements and
reservations as are reasonably acceptable to the Agent;
(vi) A Security Deed encumbering such Real Property Asset in
favor of the Agent for the benefit of the Lenders, the form of such
Security Deed to be modified as appropriate to conform to the
Applicable Laws of the jurisdiction in which such Real Property Asset
is located;
(vii) An Assignment of Leases and Rents (which may be included in
the applicable Security Deed), the form of such Assignment of Leases and
Rents to be modified as appropriate to conform to the Applicable Laws of
the jurisdiction in which such Real Property Asset is located;
(viii) A survey of such Real Property Asset certified by a
surveyor licensed in the applicable jurisdiction to have been prepared in
accordance with the then effective Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys; and
(ix) An estoppel certificate and a subordination,
non-disturbance and attornment agreement from the tenant leasing such
Real Property Asset;
-35-
41
(x) If such Real Property Asset is located in the State of
California, Colorado, Georgia, Illinois or Texas and no legal opinion has
been previously delivered under this subsection with respect to such
State, an opinion of counsel admitted to practice law in the jurisdiction
in which such Real Property Asset is located and acceptable to the Agent,
addressed to the Agent and each Lender covering such legal matters
relating to the transactions contemplated hereby as the Agent may
reasonably request;
(xi) A certificate of occupancy relating to such Real Property
Asset;
(xii) A copy of the materials relating to such Real Estate Asset,
if any, submitted by the Borrower to its board of directors for their
approval of such Real Estate Asset;
(xiii) A Collateral Pool Certificate setting forth on a pro forma
basis the Maximum Loan Availability assuming that such Real Estate Asset
is accepted as a Collateral Pool Property;
(xiv) If such Real Property Asset is owned by a Wholly Owned
Subsidiary that is not yet a party to the Guaranty, each of the
following:
(A) an Accession Agreement duly executed by such Subsidiary
(or if the Guaranty has not yet been executed by any Subsidiary,
the Guaranty executed by such Subsidiary);
(B) the articles or certificate of incorporation, articles
of organization, certificate of limited partnership or other
comparable organizational instrument (if any) of such Subsidiary
certified as of a recent date by the Secretary of State of the
State of formation of such Subsidiary;
(C) a certificate of good standing or certificate of
similar meaning with respect to such Subsidiary issued as of a
recent date by the Secretary of State of the State of formation of
such Subsidiary and certificates of qualification to transact
business or other comparable certificates issued by each Secretary
of State (and any state department of taxation, as applicable) of
each state in which such Subsidiary is required to be so
qualified;
(D) a certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar
functions) of such Subsidiary with respect to each of the officers
of such Subsidiary authorized to execute and deliver the Loan
Documents to which such Subsidiary is a party;
(E) copies certified by the Secretary or Assistant
Secretary of such Subsidiary (or other individual performing
similar functions) of (i) the bylaws of such Subsidiary, if a
corporation, the operating agreement, if a limited liability
company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other
form of legal entity and (ii) all
-36-
42
corporate, partnership, member or other necessary action taken by
such Subsidiary to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
(F) an opinion of counsel to such Subsidiary, addressed to
the Agent and the Lenders, similar in scope and coverage as the
opinions delivered under Section 6.1. and the last sentence of
Section 6.3.; and
(G) such other documents and instruments as Agent may
reasonably request;
(xvi) If not previously delivered under this subsection or Section
6.1.(a)(vi), a certificate of qualification to transact business or other
comparable certificate issued as of a recent date by the Secretary of
State (and any state department of taxation, as applicable) of the state
in which such Real Property Asset is located; and
(xvi) Such other information the Agent may reasonably request in
order to determine whether such Real Property Asset can be deemed to be a
Collateral Pool Property.
Upon receipt of all of the foregoing documents and information, the Agent shall
review them within 14 Business Days of such receipt. If, following such review,
the Agent has determined that such Real Property Asset constitutes an Eligible
Property and thus may be deemed to be a Collateral Pool Property, the Agent will
promptly so notify the Borrower and the Lenders, whereupon such Real Property
Asset shall become a Collateral Pool Property.
SECTION 4.2. RELEASE OF COLLATERAL POOL PROPERTY.
From time to time the Borrower may request, upon not less than 15 days
prior written notice to the Agent and the Lenders, that a Collateral Pool
Property cease to be a Collateral Pool Property because the Borrower desires to
sell such Collateral Pool Property or to incur Indebtedness to be secured by
such Collateral Pool Property. The Agent shall grant such request if all of the
following conditions are satisfied:
(a) no Default or Event of Default shall have occurred and be continuing
both at the time of such request and immediately after giving effect to such
request;
(b) the Borrower has made provisions satisfactory to the Agent for all
Net Proceeds resulting from the incurrence of such Indebtedness or from such
sale that are required to be applied to the Loans and other Obligations under
Section 2.6. to be paid to the Agent;
(c) all of the Lenders have given their prior written consent to the
release of such Collateral Pool Property; and
(d) the Borrower shall have delivered to the Agent a Collateral Pool
Certificate demonstrating on a pro forma basis, and the Agent shall have
determined, that the outstanding
-37-
43
principal balance of the Loans will not exceed the Maximum Loan Availability
after giving effect to such request and any prepayment to be made and/or the
acceptance of any Real Property Asset as an additional or replacement Collateral
Pool Property to be given concurrently with such request.
Each Lender agrees to give notice to the Agent within 10 days of receipt of any
notice from the Borrower under this Section whether such Lender consents to the
requested release. Failure of any Lender to so notify the Agent shall be deemed
to be a denial of such request. If a Guarantor no longer owns any Real Property
Asset that is a Collateral Pool Property nor any direct or indirect equity
interest in any Guarantor that does own a Collateral Pool Property, then upon
written request by such Guarantor, the Agent shall terminate such Guarantor's
Guaranty within 5 Business Days of receipt of the Borrower's written request for
such release. In connection with the release of any Collateral permitted
hereunder, the Agent agrees to execute and deliver such documents and
instruments of release as the Borrower may reasonably request at the sole cost
and expense of the Borrower.
ARTICLE V. YIELD PROTECTION, ETC.
SECTION 5.1. ADDITIONAL COSTS; CAPITAL ADEQUACY.
(a) Additional Costs. The Borrower shall promptly (and in any event
within 30 calendar days of request) pay to the Agent for the account of a Lender
from time to time such amounts as such Lender may determine to be necessary to
compensate such Lender for any costs incurred by such Lender that it determines
are attributable to its making or maintaining of any LIBOR Loans or its
obligation to make any LIBOR Loans hereunder, any reduction in any amount
receivable by such Lender under this Agreement or any of the other Loan
Documents in respect of any of such Loans or such obligation or the maintenance
by such Lender of capital in respect of its Loans or its Commitments (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change that: (i) changes the
basis of taxation of any amounts payable to such Lender under this Agreement or
any of the other Loan Documents in respect of any of such Loans or its
Commitments (other than taxes imposed on or measured by the overall net income
of such Lender or of its Lending Office for any of such Loans by the
jurisdiction in which such Lender has its principal office or such Lending
Office); or (ii) imposes or modifies any reserve, special deposit or similar
requirements (other than Regulation D of the Board of Governors of the Federal
Reserve System or other reserve requirement utilized in the determination of the
Adjusted Eurodollar Rate for such Loan) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender, or
any commitment of such Lender (including, without limitation, the Commitments of
such Lender hereunder); or (iii) has or would have the effect of reducing the
rate of return on capital of such Lender to a level below that which such Lender
could have achieved but for such Regulatory Change (taking into consideration
such Lender's policies with respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect of
the provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a
-38-
44
specified level of the amount of a category of deposits or other liabilities of
such Lender that includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender that includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets that it may hold, then, if such Lender so elects by notice
to the Borrower (with a copy to the Agent), the obligation of such Lender to
make or Continue, or to Convert any other Type of Loans into, LIBOR Loans
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case the provisions of Section 5.5. shall apply).
(c) Notification and Determination of Additional Costs. Each of the Agent
and each Lender agrees to notify the Borrower of any event occurring after the
Agreement Date entitling the Agent or such Lender to compensation under any of
the preceding subsections of this Section as promptly as practicable; provided,
however, the failure of the Agent or any Lender to give such notice shall not
release the Borrower from any of its obligations hereunder. The Agent and or
such Lender agrees to furnish to the Borrower a certificate setting forth the
basis and amount of each request by the Agent or such Lender for compensation
under this Section. Determinations by the Agent or any Lender of the effect of
any Regulatory Change shall be conclusive, provided that such determinations are
made on a reasonable basis and in good faith.
SECTION 5.2. SUSPENSION OF LIBOR LOANS.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:
(a) the Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Eurodollar Rate for such Interest Period, or
(b) the Agent reasonably determines (which determination shall be
conclusive) that the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lenders of making or maintaining LIBOR
Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of
each current Interest Period for each outstanding LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.
SECTION 5.3. ILLEGALITY.
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Borrower thereof (with a
copy to the Agent) and such Lender's obligation to make or Continue, or to
Convert Loans of any other Type into, LIBOR Loans shall
-39-
45
be suspended until such time as such Lender may again make and maintain LIBOR
Loans (in which case the provisions of Section 5.5. shall be applicable).
SECTION 5.4. COMPENSATION.
The Borrower shall pay to the Agent for account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense that such Lender determines is attributable to: (a) any
payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or
Conversion of a LIBOR Loan, made by such Lender for any reason (including,
without limitation, acceleration) on a date other than the last day of the
Interest Period for such Loan; or (b) any failure by the Borrower for any reason
(including, without limitation, the failure of any of the applicable conditions
precedent specified in Article VI. to be satisfied) to borrow a LIBOR Loan from
such Lender on the date for such borrowing, or to Convert a Base Rate Loan into
a LIBOR Loan or Continue a LIBOR Loan on the requested date of such Conversion
or Continuation.
SECTION 5.5. TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
5.1.(b), Section 5.2. or Section 5.3., then such Lender's LIBOR Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 5.1.(b) or Section 5.3., on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 5.1., Section 5.2. or Section 5.3. that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's LIBOR Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as LIBOR Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the Conversion
of such Lender's LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, then such Lender's
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s), if any, for such outstanding LIBOR Loans, to
the extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
-40-
46
SECTION 5.6. CHANGE OF LENDING OFFICE.
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12., 5.1. or 5.3. to reduce the
liability of the Borrower or avoid the results provided thereunder, so long as
such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion, except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.
SECTION 5.7. TREATMENT OF AFFECTED LENDERS.
If (a) a Lender requests compensation pursuant to Section 3.12. or
Section 5.1. and the Requisite Lenders are not also doing the same, or (b) the
obligation of a Lender to make LIBOR Loans or to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(b),
Section 5.2. or Section 5.3. but the obligation of the Requisite Lenders shall
not have been suspended under such Sections, the Borrower may either (A) demand
that such Lender (the "Affected Lender"), and upon such demand the Affected
Lender shall promptly, assign its Commitment and all of its Loans to an Eligible
Assignee subject to and in accordance with the provisions of Section 13.5.(d)
for a purchase price equal to the aggregate principal balance of Loans then
owing to the Affected Lender plus any accrued but unpaid interest thereon,
accrued but unpaid Fees owing to the Affected Lender and any amounts owing the
Affected Lender under Section 5.4., or (B) pay to the Affected Lender the
aggregate principal balance of Loans then owing to the Affected Lender plus any
accrued but unpaid interest thereon, accrued but unpaid Fees owing to the
Affected Lender and any amounts owing the Affected Lender under Section 5.4.,
whereupon the Affected Lender shall no longer be a party hereto or have any
rights or obligations hereunder or under any of the other Loan Documents. Each
of the Agent and the Affected Lender shall reasonably cooperate in effectuating
the replacement of an Affected Lender under this Section, but at no time shall
the Agent, the Affected Lender or any other Lender be obligated in any way
whatsoever to initiate any such replacement or to assist in finding an Eligible
Assignee. The exercise by the Borrower of its rights under this Section shall be
at the Borrower's sole cost and expenses and, except for the administrative fee
payable by an assigning Lender to the Agent under the last sentence of Section
13.5.(d), at no cost or expense to the Agent, the Affected Lender or any of the
other Lenders. The terms of this Section shall not in any way limit the
Borrower's obligation to pay to any Affected Lender compensation owing to such
Affected Lender pursuant to Section 3.12. or Section 5.1.
SECTION 5.8. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS.
Calculation of all amounts payable to a Lender under this Article V.
shall be made as though such Lender had actually funded LIBOR Loans through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR
Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article V.
-41-
47
ARTICLE VI. CONDITIONS PRECEDENT
SECTION 6.1. INITIAL CONDITIONS PRECEDENT.
The effectiveness of this Agreement is subject to satisfaction of the
following conditions precedent:
(a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
(i) Counterparts of this Agreement executed by each of the parties
hereto;
(ii) Revolving Notes and Term Notes executed by the Borrower,
payable to each Lender and complying with the terms of Sections 2.9.(a)
and (b);
(iii) An opinion of Baker & Hostetler LLP, counsel to the
Borrower, addressed to the Agent and the Lenders, in substantially the
form of Exhibit H;
(iv) An opinion of Kennedy Covington Lobdell & Hickman, L.L.P.,
counsel to the Borrower, addressed to the Agent and the Lenders,
regarding the enforceability of the Agreement and the other Loan
Documents under the laws of the State of North Carolina, and such other
matters of North Carolina law as the Agent may reasonably request;
(v) The Certificate of Incorporation of the Borrower certified as
of a recent date by the Secretary of State of the State of Delaware;
(vi) A long form good standing certificate with respect to the
Borrower issued as of a recent date by the Secretary of State of the
State of Delaware and either (x) certificates of qualification to
transact business or other comparable certificates issued by the
Secretary of State (and any state department of taxation, as applicable)
of each state in which the Borrower is required to be so qualified or (y)
other evidence satisfactory to the Agent as to the Borrower's
qualification to transact business in each such state;
(vii) A certificate of incumbency signed by the Secretary or
Assistant Secretary of the Borrower with respect to each of the officers
of the Borrower authorized to execute and deliver the Loan Documents to
which the Borrower is a party and the officers of the Borrower then
authorized to deliver Notices of Borrowing, Notices of Continuation and
Notices of Conversion;
(viii) Copies (certified by the Secretary or Assistant Secretary
of the Borrower) of the bylaws of the Borrower and of all corporate
action taken by the Borrower to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
-42-
48
(ix) A copy of (x) each of the documents, instruments and
agreements evidencing any of the Indebtedness described on Schedule
7.1.(g); (y) each Material Contract and (z) each of the documents,
instruments and agreements evidencing any of the transactions described
on Schedule 10.12., in each case certified as true, correct and complete
by the chief executive officer or chief financial officer of the
Borrower;
(x) Evidence that all insurance required to be maintained by the
Borrower and the Subsidiaries under the terms of the Loan Documents is in
effect;
(xi) The Fees, if any, then due under Section 3.6.;
(xii) All accrued but unpaid interest owing under the Existing
Credit Agreement;
(xiii) All accrued but unpaid fees owing under the Existing Credit
Agreement;
(xiv) A Compliance Certificate calculated on a pro forma basis as
of the Agreement Date based on financial information for the fiscal
quarter ending September 30, 1998, adjusted pro forma to November 6,
1998, giving pro forma effect to the consummation of the transactions
contemplated hereby;
(xv) a Collateral Pool Certificate calculated as of September 30,
1998, adjusted pro forma to November 6, 1998, giving pro forma effect to
the consummation of the transactions contemplated hereby;
(xvi) Such other documents, agreements and instruments as the
Agent on behalf of the Lenders may reasonably request; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) There shall not have occurred or become known to the Agent or
the Lenders any event, condition, situation or status since the date of
the information contained in the financial and business projections,
budgets, pro forma data and forecasts concerning the Borrower and its
Subsidiaries delivered to the Agent and the Lenders prior to the
Agreement Date that has had or could reasonably be expected to result in
a Material Adverse Effect;
(ii) No litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened
which could reasonably be expected to (1) result in a Material Adverse
Effect or (2) restrain or enjoin, impose materially burdensome conditions
on, or otherwise materially and adversely affect the ability of the
Borrower to fulfill its obligations under the Loan Documents to which it
is a party;
(iii) The Borrower and its Subsidiaries shall have received all
approvals, consents and waivers, and shall have made or given all
necessary filings and notices as shall be required to consummate the
transactions contemplated hereby without the
-43-
49
occurrence of any default under, conflict with or violation of (1) any
Applicable Law or (2) any agreement, document or instrument to which the
Borrower is a party or by which any of them or their respective
properties is bound, except for such approvals, consents, waivers,
filings and notices the receipt, making or giving of which would not
reasonably be likely to (A) have a Material Adverse Effect, or (B)
restrain or enjoin, impose materially burdensome conditions on, or
otherwise materially and adversely affect the ability of the Borrower to
fulfill its obligations under the Loan Documents to which it is a party;
and
(iv) There shall not have occurred or exist any other material
disruption of financial or capital markets that could reasonably be
expected to materially and adversely affect the transactions contemplated
by the Loan Documents.
SECTION 6.2. CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of the Lenders to make any Loans is subject to the further
conditions precedent that: (a) no Default or Event of Default shall have
occurred and be continuing as of the date of the making of such Loan or would
exist immediately after giving effect thereto; (b) the representations and
warranties made or deemed made by the Borrower and each Subsidiary in the Loan
Documents to which any is a party, shall be true and correct in all material
respects on and as of the date of the making of such Loan with the same force
and effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically and expressly permitted hereunder; (c) the Agent shall have
received a timely Notice of Borrowing; (d) in the case of a borrowing of Loans
in excess of $20,000,000 in aggregate principal amount, the Borrower shall have
delivered to the Agent a Compliance Certificate and a Collateral Pool
Certificate evidencing continued compliance with the applicable terms of this
Agreement; and (e) the Borrower shall have provided evidence satisfactory to the
Agent that the Borrower will be able to continue to be in compliance with the
requirements of the last sentence of Section 10.2. after giving effect to such
Loans. The making of each Loan shall constitute a certification by the Borrower
to the effect set forth in the preceding sentence (both as of the date of the
giving of notice relating to such Loan and, unless the Borrower otherwise
notifies the Agent prior to the date of the making of such Loan, as of the date
of the making of such Loan). In addition, the Borrower shall be deemed to have
represented to the Agent and the Lender at the time such Loan is made that all
conditions to the making of such Loan contained in Article VI. have been
satisfied.
SECTION 6.3. CONDITIONS AS COVENANTS.
If the Lenders make any Loans prior to the satisfaction of all conditions
precedent set forth in Sections 6.1. and 6.2., the Borrower shall nevertheless
cause such condition or conditions to be satisfied within 5 Business Days after
the date of the making of such Loans. Unless set forth in writing to the
contrary prior to the making of its initial Loan hereunder, the making of its
initial Loan by a Lender shall constitute a certification by such Lender to the
Agent and the other
-44-
50
Lenders that the Borrower has satisfied the conditions precedent for initial
Loans set forth in Sections 6.1. and 6.2.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
In order to induce the Agent and each Lender to enter into this Agreement
and to make Loans, the Borrower represents and warrants to the Agent and each
Lender as follows:
(a) Organization; Power; Qualification. Each of the Borrower and its
Subsidiaries is a corporation, partnership, limited liability company or other
legal entity, duly organized or formed, validly existing and, if applicable, in
good standing under the jurisdiction of its incorporation or formation, has the
power and authority to own or lease its respective properties and to carry on
its respective business as now being and hereafter proposed to be conducted and
is duly qualified and is in good standing as a foreign corporation, partnership,
limited liability company or other legal entity, and authorized to do business,
in each jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization and where the failure
to be so qualified or authorized could reasonably be expected to have, in each
instance, a Material Adverse Effect.
(b) Ownership Structure. As of the Agreement Date, Schedule 7.1.(b)
correctly sets forth the corporate structure and ownership interests of the
Borrower's Subsidiaries including the correct legal name of each Subsidiary, its
jurisdiction of formation, the Persons holding equity interests in such
Subsidiary, and their percentage equity or voting interest in such Subsidiary.
Except as set forth in such Schedule:
(i) no Subsidiary has issued to any third party any securities
convertible into any equity interest in such Subsidiary, or any options,
warrants or other rights to acquire any securities convertible into any
such equity interest, and
(ii) the outstanding stock and securities of or other equity
interests, as applicable, in each such Subsidiary are owned by the
Persons indicated on such Schedule, free and clear of all Liens,
warrants, options and rights of others of any kind whatsoever.
(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The
Borrower has the right and power, and has taken all necessary action to
authorize it, to borrow hereunder. The Borrower and each Subsidiary has the
right and power, and has taken all necessary action to authorize it, to execute,
deliver and perform each of the Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated hereby and thereby. The Loan Documents to which the Borrower or any
Subsidiary is a party have been duly executed and delivered by the duly
authorized officers of the Borrower or such Subsidiary and each is a legal,
valid and binding obligation of the Borrower or such Subsidiary enforceable
against such Person in accordance with its respective terms, except as the same
may be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of
-45-
51
creditors generally and the availability of equitable remedies for the
enforcement of certain obligations contained herein or therein may be limited by
equitable principles generally.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, etc. The execution, delivery and performance of this Agreement, the Notes
and the other Loan Documents to which the Borrower or any Subsidiary is a party
in accordance with their respective terms and the borrowings hereunder do not
and will not, by the passage of time, the giving of notice, or both: (i) require
any Governmental Approval or violate any Applicable Law (including all
Environmental Laws) relating to the Borrower or any Subsidiary; (ii) conflict
with, result in a breach of or constitute a default under the certificate of
incorporation or the bylaws of the Borrower or the organizational documents of
any Subsidiary, or any indenture, agreement or other instrument to which the
Borrower or any Subsidiary is a party or by which it or any of its respective
properties may be bound; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any Subsidiary other than in favor of the
Agent for the benefit of the Lenders.
(e) Compliance with Law; Governmental Approvals. The Borrower and each
Subsidiary is in compliance with each Governmental Approval applicable to it and
in compliance with all other Applicable Law relating to the Borrower or such
Subsidiary except for noncompliances which, and Governmental Approvals the
failure to possess which, would not, individually or in the aggregate, cause a
Default or Event of Default or have a Material Adverse Effect.
(f) Title to Properties; Liens. As of the Agreement Date, Part I of
Schedule 7.1.(f) sets forth all the real property owned or leased by the
Borrower, its Subsidiaries and any of their Unconsolidated Affiliates. The
Borrower and such Persons have good and insurable fee simple title (or leasehold
title if so designated on such Schedule) to all of such real property. As of the
Agreement Date, there are no mortgages, deeds of trust, indentures, debt
instruments or other agreements creating a Lien against any of the Borrower's or
any Subsidiary's right, title or interest in such real property or any other
property or assets of the Borrower or any of its Subsidiaries except for
Permitted Liens and except as set forth on Part II of Schedule 7.1.(f).
(g) Existing Indebtedness. Schedule 7.1.(g) is, as of the Agreement Date,
a complete and correct listing of all Indebtedness of each of the Borrower or
any of its Subsidiaries, including all guaranties of the Borrower or any
Subsidiary and all letters of credit and acceptance facilities extended to the
Borrower or any Subsidiary. As of the Agreement Date, no default or event of
default, or event or condition which with the giving of notice, the lapse of
time, or both, would constitute such a default or event of default, exists with
respect to any such Indebtedness.
(h) Material Contracts. Schedule 7.1.(h) is a true, correct and complete
listing of all Material Contracts as of the Agreement Date. No default or event
of default, or event or condition which with the giving of notice, the lapse of
time, a determination of materiality, the satisfaction of any other condition or
any combination of the foregoing, would constitute such a default or event of
default, exists with respect to any such Material Contract.
-46-
52
(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting the
Borrower or any Subsidiary or any of its respective property in any court or
before any arbitrator of any kind or before or by any other Governmental
Authority. None of such actions, suits or proceedings could reasonably be
expected to have a Material Adverse Effect. There are no strikes, slow downs,
work stoppages or walkouts or other labor disputes in progress or threatened
relating to the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower and
any Subsidiary required by Applicable Law to be filed have been duly filed, and
all federal, state and other taxes, assessments and other governmental charges
or levies upon the Borrower or any Subsidiary and its respective properties,
income, profits and assets which are due and payable have been paid, except any
such nonpayment which is at the time permitted under Section 8.6. As of the
Agreement Date, none of the United States income tax returns of the Borrower or
any Subsidiary is under audit. All charges, accruals and reserves on the books
of the Borrower and each of its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
(k) Financial Statements. The Borrower has furnished to each Lender
copies of (i) the audited consolidated balance sheet of Captec Net Lease Realty,
Inc., a Michigan corporation ("Net Lease Michigan"), which has merged with and
into the Borrower, for the fiscal year ending December 31, 1996, and the related
consolidated statements of operations, changes in stockholder's equity and cash
flows for the fiscal year ending on such date, with the opinion thereon of
Coopers & Lybrand LLP, (ii) the unaudited pro forma statement of operations of
the Borrower for the year ended December 31, 1996 and (iii) the audited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries for
the fiscal year ending December 31, 1997, and the related consolidated statement
of income of the Borrower and its consolidated Subsidiaries for the fiscal year
ending on such date, with the opinion thereon of Coopers & Lybrand LLP. Such
balance sheets and statements (including in each case related schedules and
notes) present fairly, in all material respects, in accordance with GAAP
consistently applied throughout the periods involved, the consolidated financial
position of the Borrower and its consolidated Subsidiaries, or Net Lease
Michigan, as the case may be, as at their respective dates and, if applicable,
the results of operations and the cash flow for such periods (subject, as to
interim statements, to changes resulting from normal year-end audit
adjustments). Neither the Borrower nor any of its Subsidiaries has on the
Agreement Date any material contingent liabilities, liabilities, liabilities for
taxes, unusual or long-term commitments or unrealized or forward anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in said financial statements.
(l) No Material Adverse Change. Since December 31, 1997, there has been
no material adverse change in the business, properties, condition (financial or
otherwise), results of operations or performance of the Borrower and its
consolidated Subsidiaries taken as a whole. Each of the Borrower and its
Subsidiaries is Solvent.
-47-
53
(m) ERISA. Each member of the ERISA Group is in compliance with its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan, except in each case for noncompliances which could not reasonably be
expected to have a Material Adverse Effect. As of the Agreement Date, no member
of the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
(n) Absence of Defaults. Neither the Borrower nor any Subsidiary is in
default under its articles or certificates of incorporation, bylaws, partnership
agreement or other similar organizational documents, and no event has occurred,
which has not been remedied, cured or waived: (i) which constitutes a Default or
an Event of Default; or (ii) which constitutes, or which with the passage of
time, the giving of notice, a determination of materiality, the satisfaction of
any condition, or any combination of the foregoing, would constitute, a default
or event of default by the Borrower or any Subsidiary under any agreement (other
than this Agreement) or judgment, decree or order to which the Borrower or any
Subsidiary is a party or by which the Borrower or any Subsidiary or any of their
respective properties may be bound where such default or event of default could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(o) Environmental Laws. In the ordinary course of business, each of the
Borrower and its Subsidiaries conducts reviews of the effect of Environmental
Laws on its respective business, operations and properties, including without
limitation, its respective Real Property Assets, in the course of which the
Borrower or such Subsidiary identifies and evaluates associated liabilities and
costs (including, without limitation, determining whether any capital or
operating expenditures are required for clean-up or closure of properties
presently or previously owned, determining whether any capital or operating
expenditures are required to achieve or maintain compliance with Environmental
Laws or required as a condition of any Governmental Approval, any contract, or
any related constraints on operating activities, determining whether any costs
or liabilities exist in connection with off-site disposal of wastes or Hazardous
Materials, and determining whether any actual or potential liabilities to third
parties, including employees, and any related costs and expenses exist). The
Borrower and its Subsidiaries each has obtained all Governmental Approvals which
are required under Environmental Laws and is in compliance with all terms and
conditions of such Governmental Approvals which the failure to obtain or to
comply with could reasonably be expected to have a Material Adverse Effect. Each
of the Borrower and its Subsidiaries is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in the Environmental Laws the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect. Except for any of the following matters that could not be
reasonably expected to have a Material Adverse Effect, the Borrower is not aware
of, and has not received notice of, any past, present, or future events,
conditions, circumstances, activities, practices, incidents, actions, or
-48-
54
plans which, with respect to the Borrower or its Subsidiaries, may interfere
with or prevent compliance or continued compliance with Environmental Laws, or
may give rise to any common-law or legal liability, or otherwise form the basis
of any claim, action, demand, suit, proceeding, hearing, study, or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic, or other Hazardous Material.
(p) Investment Company; Public Utility Holding Company. Neither the
Borrower nor any Subsidiary is (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
Applicable Law which purports to regulate or restrict its ability to borrow
money or to consummate the transactions contemplated by this Agreement or to
perform its obligations under any Loan Document to which it is a party.
(q) Margin Stock. Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System.
(r) Affiliate Transactions. Except as permitted by Section 10.12.,
neither the Borrower nor any Subsidiary is a party to or bound by any agreement
or arrangement (whether oral or written) to which any Affiliate of the Borrower
or any Subsidiary is a party. Neither the Borrower nor any Subsidiary is a party
to any agreement or arrangement which restricts or prohibits the payment of
dividends or the repayment of inter-company loans by a Subsidiary to the
Borrower.
(s) Intellectual Property. The Borrower and each Subsidiary owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights (collectively, "Intellectual
Property") necessary to the conduct of its businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, or other
proprietary right of any other Person. The Borrower has taken all commercially
reasonable measures to ensure that all such Intellectual Property is fully
protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filing or
issuances. No claim has been asserted by any Person with respect to the use of
any Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property, which could reasonably be expected
to have a Material Adverse Effect. The use of such Intellectual Property by the
Borrower and its Subsidiaries, does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the aggregate, give rise
to any liabilities on the part of the Borrower and its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
-49-
55
(t) REIT Status. The Borrower qualifies as a REIT.
(u) Not Plan Assets. The assets of the Borrower or any Subsidiary do not
and will not constitute "plan assets", within the meaning of ERISA, the Internal
Revenue Code and the respective regulations promulgated thereunder. The
execution, delivery and performance of this Agreement, and the borrowing and
repayment of amounts hereunder, do not and will not constitute "prohibited
transactions" under ERISA or the Internal Revenue Code.
(v) Business. As of the Agreement Date, the Borrower and its Subsidiaries
are engaged principally in the business of owning real estate assets which are
net leased to restaurant and retail operators and ancillary businesses that are
incidental to the foregoing.
(w) Accuracy and Completeness of Information. All written information,
reports and other papers and data (excluding financial projections) furnished to
the Agent or any Lender by, on behalf of, or at the direction of, the Borrower
or any Subsidiary were, at the time the same were so furnished, complete and
correct in all material respects, or, in the case of financial statements,
present fairly, in all material respects and in accordance with GAAP
consistently applied throughout the periods involved, the financial position of
the Persons involved as at the date thereof and the results of operations for
such periods. All financial projections prepared by or on behalf of the Borrower
that have been or may hereafter be made available to the Agent or any Lender
were or will be prepared in good faith based on reasonable assumptions. No fact
is known to the Borrower which has had, or may in the future have (so far as the
Borrower can reasonably foresee), a Material Adverse Effect which has not been
set forth in the financial statements referred to in Section 7.1.(k) or in such
information, reports or other papers or data or otherwise disclosed in writing
to the Agent and the Lenders prior to the Effective Date. No document furnished
or written statement made to the Agent or any Lender in connection with the
negotiation, preparation of execution of this Agreement or any of the other Loan
Documents, in light of the circumstances under which furnished or made, contains
or will contain any untrue statement of a fact material to the creditworthiness
of the Borrower or any Subsidiary or omits or will omit to state a fact
necessary in order to make the statements contained therein not materially
misleading.
(x) Year 2000. On the basis of a comprehensive review and assessment of
the systems and equipment of the Borrower and its Subsidiaries and inquiry made
and being made of the material suppliers, vendors and customers of the Borrower
and its Subsidiaries, the Borrower reasonably believes that the "Year 2000
Problem" (that is, the inability of computers, as well as embedded microchips in
non-computing devices, to perform properly, including performance of
date-sensitive functions with respect to certain dates prior to and after
December 31, 1999), including costs of remediation, could not reasonably be
expected to result in a Default or Event of Default or to have a Material
Adverse Effect. The Borrower has developed and is continuing to develop feasible
contingency plans adequately to ensure uninterrupted and unimpaired business
operation in the event of failure of its own or a third party's systems or
equipment due to the Year 2000 problem, including those of material vendors,
customers and suppliers, as well as a general failure of or interruption in its
communications and delivery infrastructure. Except for any reprogramming
referred to above, the computer systems of the Borrower and its Subsidiaries are
-50-
56
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be, sufficient for the conduct of their business as
currently conducted.
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower or any Subsidiary to the
Agent or any Lender pursuant to or in connection with this Agreement or any of
the other Loan Documents (including, but not limited to, any such statement made
in or in connection with any amendment thereto or any statement contained in any
certificate, financial statement or other instrument delivered by or on behalf
of the Borrower prior to the Agreement Date and delivered to the Agent or any
Lender in connection with closing the transactions contemplated hereby) shall
constitute representations and warranties made by the Borrower under this
Agreement. All representations and warranties made under this Agreement and the
other Loan Documents shall be deemed to be made at and as of the Agreement Date,
the Effective Date and at and as of the date of the occurrence of any Credit
Event, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties shall have been true and accurate on and as of such earlier date) and
except for changes in factual circumstances specifically permitted hereunder.
All such representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the Loan Documents and the making of
the Loans.
ARTICLE VIII. AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner provided for in Section 13.6., the Borrower shall:
SECTION 8.1. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.
Except as otherwise permitted under Section 10.8., preserve and maintain,
and cause each Subsidiary to preserve and maintain, its respective existence,
rights, franchises, licenses and privileges in the jurisdiction of its
incorporation or formation and qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization and where
the failure to be so authorized and qualified could reasonably be expected to
have a Material Adverse Effect.
SECTION 8.2. COMPLIANCE WITH APPLICABLE LAW AND MATERIAL CONTRACTS.
Comply, and cause each Subsidiary and to comply, with (a) all Applicable
Law, including the obtaining of all Governmental Approvals, if the failure with
which to comply could reasonably be expected to have a Material Adverse Effect,
and (b) all terms and conditions of all Material Contracts to which it is a
party.
-51-
57
SECTION 8.3. MAINTENANCE OF PROPERTY.
In addition to the requirements of any of the other Loan Documents, (a)
protect and preserve, and cause each Subsidiary, or with respect to any Real
Property Asset leased by the Borrower or a Subsidiary to a lessee, such lessee,
to protect and preserve, all of its material properties (or such Real Property
Asset in the case of any such lessee), and maintain in good repair, working
order and condition all tangible properties (or such Real Property Asset in the
case of any such lessee), ordinary wear and tear excepted, and (b) from time to
time make or cause to be made all needed and appropriate repairs, renewals,
replacements and additions to such properties (or such Real Property Asset in
the case of any such lessee), so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
SECTION 8.4. CONDUCT OF BUSINESS.
At all times carry on, and cause its Subsidiaries to carry on, its
respective businesses as described in Section 7.1.(v) and not enter, and
prohibit its Subsidiaries from entering, into any field of business not
otherwise described in such Section 7.1.(v).
SECTION 8.5. INSURANCE.
In addition to the requirements of any of the other Loan Documents,
maintain, and cause each Subsidiary, or with respect to any Real Property Asset
leased by the Borrower or a Subsidiary to a lessee, such lessee, to maintain,
insurance with financially sound and reputable insurance companies against such
risks and in such amounts as is customarily maintained by Persons engaged in
similar businesses or as may be required by Applicable Law, and the Borrower
will from time to time deliver to the Agent upon its request, or to any Lender
upon request through the Agent, a detailed list, together with copies of all
policies of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby. Not in limitation of the
foregoing, the Borrower shall, and shall cause its Subsidiaries to, or with
respect to any Real Property Asset leased by the Borrower or a Subsidiary to a
lessee, such lessee to, maintain builder's risk insurance during any period of
construction and, upon completion, "all risk" insurance in an amount equal to
100% of the replacement cost of the improvements, if any, on each of its Real
Property Assets, with insurers having an A.M. Best policyholder's rating of not
less than A- and financial size category of not less than X, which insurance
shall in any event not provide for materially less coverage than the insurance
in effect on the Agreement Date. The Borrower will deliver to the Lenders (i)
upon request of any Lender through the Agent from time to time full information
as to the insurance carried, (ii) within 10 days of receipt of notice from any
insurer a copy of any notice of cancellation or material change in coverage from
that existing on the Agreement Date and (iii) promptly upon receipt, notice of
any cancellation or nonrenewal of coverage by the Borrower or any Subsidiary.
SECTION 8.6. PAYMENT OF TAXES AND CLAIMS.
Pay or discharge, and cause each Subsidiary, or with respect to any Real
Property Asset leased by the Borrower or a Subsidiary to a lessee, such lessee,
to pay or discharge, when due
-52-
58
(a) all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it (or in the
case of any such lessee, such lessee or such Real Property Asset), and (b) all
lawful claims of materialmen, mechanics, carriers, warehousemen and landlords
for labor, materials, supplies and rentals which, if unpaid, might become a Lien
on any properties of such Person (or in the case of any such lessee, such lessee
or such Real Property Asset); provided, however, that this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings and for
which adequate reserves have been established on the books of the Borrower or
such Subsidiary, as applicable, in accordance with GAAP.
SECTION 8.7. VISITS AND INSPECTIONS.
Permit, and cause each Subsidiary to permit, representatives or agents of
any Lender or the Agent, from time to time after reasonable prior notice if no
Event of Default shall be in continuance, as often as may be reasonably
requested, but only during normal business hours, and at the expense of such
Lender or the Agent (unless an Event of Default shall be continuing in which
case the exercise by the Agent of its rights under this Section shall be at the
expense of the Borrower), as the case may be, to: (a) visit and inspect all
properties of the Borrower or such Subsidiary to the extent any such right to
visit or inspect is within the control of the Borrower or such Subsidiary; (b)
inspect and make extracts from their respective relevant books and records,
including but not limited to management letters prepared by independent
accountants; and (c) discuss with its principal officers, and its independent
accountants, its business, properties, condition (financial or otherwise),
results of operations and performance. If requested by the Agent, the Borrower
shall execute an authorization letter addressed to its accountants authorizing
the Agent or any Lender to discuss the financial affairs of the Borrower and any
Subsidiary with its accountants.
SECTION 8.8. USE OF PROCEEDS.
Use the proceeds of (a) all Term Loans to refinance an equal amount of
Revolving Loans owing under the Existing Credit Agreement as contemplated by
Section 2.1. and (b) all Revolving Loans (i) to finance costs associated
development and renovation projects in progress; (ii) to finance the acquisition
and development of retail and restaurant Real Property Assets to be leased by
the Borrower on a net lease basis, and (iii) for other general working capital
purposes; provided, however, the aggregate outstanding principal balance of
Revolving Loans used for such other general working capital purposes shall not
exceed $50,000,000 at any time. In addition to the foregoing limitations, the
Borrower's use of proceeds of Revolving Loans is subject to the limitations of
Section 10.2. The Borrower shall not, and shall not permit any Subsidiary to,
use any part of such proceeds to purchase or carry, or to reduce or retire or
refinance any credit incurred to purchase or carry, any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System)
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
-53-
59
SECTION 8.9. ENVIRONMENTAL MATTERS.
Comply, and cause all of its Subsidiaries to comply, with all
Environmental Laws the failure with which to comply could reasonably be expected
to have a Material Adverse Effect. If the Borrower or any Subsidiary shall (a)
receive notice that any violation of any Environmental Law may have been
committed or is about to be committed by such Person, (b) receive notice that
any administrative or judicial complaint or order has been filed or is about to
be filed against the Borrower or any Subsidiary alleging violations of any
Environmental Law or requiring the Borrower or any Subsidiary to take any action
in connection with the release of Hazardous Materials or (c) receive any notice
from a Governmental Authority or private party alleging that the Borrower or any
Subsidiary may be liable or responsible for costs associated with a response to
or cleanup of a release of a Hazardous Materials or any damages caused thereby,
and such notices, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, the Borrower shall provide the Agent with a
copy of such notice within 10 days after the receipt thereof by the Borrower or
any of the Subsidiaries. The Borrower shall, and shall cause its Subsidiaries
to, take promptly all actions necessary to prevent the imposition of any Liens
on any of their respective properties arising out of or related to any
Environmental Laws.
SECTION 8.10. BOOKS AND RECORDS.
Maintain, and cause each of the Subsidiaries to maintain, books and
records pertaining to its business operations in such detail, form and scope as
is consistent with good business practice in accordance with GAAP.
SECTION 8.11. REIT STATUS.
At all times maintain its status as a REIT.
SECTION 8.12. ERISA EXEMPTIONS.
Not, and shall not permit any Subsidiary to, permit any of its respective
assets to become or be deemed to be "plan assets" within the meaning of ERISA,
the Internal Revenue Code and the respective regulations promulgated thereunder.
SECTION 8.13. EXCHANGE LISTING.
Maintain at least one class of common shares of the Borrower having
trading privileges on the New York Stock Exchange or the American Stock Exchange
or which is listed on The NASDAQ Stock Market's National Market.
SECTION 8.14. ADVISOR.
Until such time as the Borrower becomes advised internally, the Borrower
may only engage Captec Advisors to advise the Borrower with respect to
management, investment and financial advisory services.
-54-
60
SECTION 8.15. FURTHER ASSURANCES.
And shall cause each of its Subsidiaries to, at the Borrower's cost and
expense, upon the request of the Agent, duly execute and deliver or cause to be
duly executed and delivered, to the Agent and the Lenders such further
instruments, documents and certificates, and do and cause to be done such
further acts that may be necessary or advisable in the reasonable opinion of the
Agent to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents.
ARTICLE IX. INFORMATION
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower shall furnish to
each Lender (or to the Agent if so provided below) at its Lending Office:
SECTION 9.1. QUARTERLY FINANCIAL STATEMENTS.
As soon as available and in any event within 45 days after the close of
each of the first, second and third fiscal quarters of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such period and the related consolidated statements of income, retained earnings
and cash flows of the Borrower and its Subsidiaries for such period, setting
forth in each case in comparative form the figures for the corresponding periods
of the previous fiscal year, all of which shall be certified by the chief
financial officer of the Borrower, in his or her opinion, to present fairly, in
all material respects and in accordance with GAAP, the consolidated financial
position of the Borrower and its Subsidiaries as at the date thereof and the
results of operations for such period (subject to normal year-end audit
adjustments).
SECTION 9.2. YEAR-END STATEMENTS.
As soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for such fiscal year, setting forth in comparative
form the figures as at the end of and for the previous fiscal year, all of which
shall be certified by (a) the chief financial officer of the Borrower, in his or
her opinion, to present fairly, in all material respects and in accordance with
GAAP, the financial position of the Borrower and its Subsidiaries as at the date
thereof and the result of operations for such period and (b) independent
certified public accountants of recognized national standing reasonably
acceptable to the Requisite Lenders, whose certificate shall be unqualified and
in scope and substance reasonably satisfactory to the Requisite Lenders and who
shall have authorized the Borrower to deliver such financial statements and
certification thereof to the Agent and the Lenders pursuant to this Agreement.
In addition, the Borrower shall deliver to each Lender at its Lending Office as
soon as available and in any event within 45 days after the end of each fiscal
year of the Borrower, all of such financial statements referred to in the first
sentence of this Section prepared on a preliminary basis and which shall be
certified by the chief financial officer of the Borrower, in his or her opinion,
to
-55-
61
present fairly, in all material respects and in accordance with GAAP, the
financial position of the Borrower and its Subsidiaries as at the date thereof
and the result of operations for such period.
SECTION 9.3. COMPLIANCE CERTIFICATE.
At the time the financial statements are furnished pursuant to Sections
9.1. and the preliminary financial statements are furnished pursuant to Section
9.2., a certificate in the form of Exhibit I (a "Compliance Certificate")
executed by the chief financial officer of the Borrower: (a) setting forth in
reasonable detail as at the end of such quarterly accounting period or fiscal
year, as the case may be, the calculations required to establish whether or not
the Borrower was in compliance with the covenants contained in Section 10.1.,
10.2., 10.3., 10.5.(f) and (g) and 10.,7.(b); and (b) stating that, to the best
of his or her knowledge, information and belief, no Default or Event of Default
exists, or, if such is not the case, specifying such Default or Event of Default
and its nature, when it occurred, whether it is continuing and the steps being
taken by the Borrower with respect to such event, condition or failure. In
addition to the foregoing, each Compliance Certificate must set forth the
principal amount of all Indebtedness of the Borrower and its Subsidiaries, the
identity of the holders of such Indebtedness, the interest rate, maturity date,
repayment schedule and other primary terms of such Indebtedness, whether such
Indebtedness is secured and if so a description of the collateral including its
location, cost of acquisition and the lease terms of any lease of such
collateral.
SECTION 9.4. OTHER INFORMATION.
(a) not later than 90 days prior to the last day of each fiscal year of
the Borrower, pro forma projected consolidated financial statements for the
Borrower and its Subsidiaries reflecting the forecasted financial condition and
results of operations of the Borrower and its Subsidiaries on a quarterly basis
for the next succeeding year and on an annual basis for the two succeeding
fiscal years thereafter, accompanied by calculations establishing whether or not
the Borrower would be in compliance on a pro forma basis with the covenants
contained in Section 10.1., in each case in form and detail reasonably
acceptable to the Requisite Lenders;
(b) within 45 days after the end of each fiscal quarter of the Borrower,
a Collateral Pool Certificate setting forth the information to be contained
therein as of the last day of such fiscal quarter;
(c) within 45 days after the end of each fiscal quarter of the Borrower,
calculations of the Borrower's taxable income for such quarter;
(d) promptly upon request by the Agent, evidence reasonably satisfactory
to the Agent that the Borrower continues to qualify as a REIT;
(e) within 30 days of the end of each calendar month, an agings report on
all lease payments in form and detail reasonably satisfactory to the Agent;
(f) within 5 days after the end of each calendar month, a report
detailing the Borrower's efforts regarding the leasing, retenanting and selling
of (i) the Boston Chicken
-56-
62
Properties; (ii) all developed Real Property Assets that are vacant and (iii)
all other Real Property Assets of which the franchisor or licensor of a Concept
applicable to, or the tenant under the lease of, such Real Property Asset is the
subject of a Bankruptcy Proceeding;
(g) within 60 days after the end of each fiscal quarter of the Borrower,
an operating summary of all Boston Chicken Properties that are open setting
forth, on a store by store basis, all sales and expense figures and a rent
coverage calculation, for the immediately preceding fiscal quarter;
(h) promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants including, without limitation, any management report;
(i) within 5 Business Days of the filing thereof, copies of all
registration statements (excluding the exhibits thereto and any registration
statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) and all other periodic reports which the Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
Governmental Authority substituted therefor) or any national securities
exchange;
(j) promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed and promptly upon the issuance thereof copies of all press releases
issued by the Borrower or any Subsidiary;
(k) if and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security, a certificate of the controller of the
Borrower setting forth details as to such occurrence and action, if any, which
the Borrower or applicable member of the ERISA Group is required or proposes to
take;
(l) within 45 days after the end of each fiscal quarter of the Borrower,
an updated Part I of Schedule 7.1.(f), certified by the chief financial officer
of the Borrower as true, correct and complete as of the date such updated
schedules are delivered;
-57-
63
(m) to the extent the Borrower or any Subsidiary is aware of the same,
prompt notice of the commencement of any proceeding or investigation by or
before any Governmental Authority and any action or proceeding in any court or
other tribunal or before any arbitrator against or in any other way relating
adversely to, or adversely affecting, the Borrower or any Subsidiary or any of
their respective properties, assets or businesses which, if determined or
resolved adversely to such Person, could reasonably be expected to have a
Material Adverse Effect, and prompt notice of the receipt of notice that any
United States income tax returns of the Borrower or any of its Subsidiaries are
being audited;
(n) a copy of any amendment to the articles or certificate of
incorporation, bylaws, partnership agreement or other similar organizational
documents of the Borrower or any Subsidiary within 5 Business Days of the
effectiveness thereof;
(o) prompt notice of (i) any change in the senior management of the
Borrower or any Subsidiary and (ii) any change in the business, properties,
condition (financial or otherwise), results of operations or performance of the
Borrower or any Subsidiary which has had or could reasonably be expected to have
Material Adverse Effect;
(p) prompt notice of the occurrence of (i) any Default or Event of
Default; (ii) any event which constitutes or which with the passage of time, the
giving of notice, or otherwise, would constitute a default or event of default
by the Borrower or any Subsidiary under any Material Contract to which any such
Person is a party or by which any such Person or any of its respective
properties may be bound; or (iii) any default or event of default, or event or
condition which with the giving of notice, the lapse of time, or both, would
constitute such a default or event of default, with respect to any Indebtedness
having an aggregate outstanding principal amount of $2,500,000 or more;
(q) prompt notice of any order, judgment or decree in excess of $250,000
having been entered against the Borrower or any Subsidiary or any of their
respective properties or assets;
(r) prompt notice of the acquisition, incorporation or other creation of
any Subsidiary, the purpose for such Subsidiary, the nature of the assets and
liabilities thereof;
(s) the proposed sale, transfer or other disposition of any material
assets of the Borrower or any Subsidiary to any other Subsidiary, Affiliate or
other Person;
(t) prompt notice of any strikes, slow downs, work stoppages or walkouts
or other labor disputes in progress or threatened relating to the Borrower or
any Subsidiary;
(u) promptly upon entering into any Material Contract after the Agreement
Date, a copy to the Agent of such Material Contract;
(v) Not later than 30 days following the adoption thereof, any business
plan adopted by the Borrower for itself and its Subsidiaries; and
-58-
64
(w) from time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, properties, condition (financial or otherwise), results of
operations or performance of the Borrower or any of its Subsidiaries as the
Agent or any Lender may reasonably request.
ARTICLE X. NEGATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower shall not,
directly or indirectly:
SECTION 10.1. FINANCIAL COVENANTS.
Permit:
(a) Ratio of EBITDA to Total Debt Service. The ratio of (i) EBITDA for
any period of two consecutive fiscal quarters ending during the term of this
Agreement to (ii) Total Debt Service for such period, to be less than or equal
to 2.25 to 1.00 at the end of such period.
(b) Ratio of Adjusted EBITDA to Fixed Charges. The ratio of (i) Adjusted
EBITDA for any period of two consecutive fiscal quarters ending during the term
of this Agreement to (ii) Fixed Charges for such period, to be less than or
equal to 1.75 to 1.00 at the end of such period.
(c) Ratio of Total Liabilities to Gross Asset Value. The ratio of (i)
Total Liabilities as of the end of any fiscal quarter ending during the term of
this Agreement to (ii) Gross Asset Value as of the end of such fiscal quarter,
to be greater than or equal to (x) 0.60 to 1.00 at the end of any fiscal quarter
ending on or before June 30, 2000 and (y) 0.55 to 1.00 at the and of any fiscal
quarter ending after such date.
(d) Tangible Net Worth. Tangible Net Worth as of the end of any fiscal
quarter ending during the term of this Agreement to be less than (i)
$125,000,000 plus (ii) 85% of the Net Proceeds of all Equity Issuances effected
by the Borrower or any of its Subsidiaries at any time after February 26, 1998.
(e) Ratio of Floating Rate Debt to Total Indebtedness. The ratio of (i)
all Floating Rate Debt of the Borrower and its Subsidiaries determined on a
consolidated basis to (ii) all Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis, to exceed 0.350 to 1.00 at any time.
(f) Ratio of Net Lease Revenues from Collateral Pool Properties to
Pro-Forma Credit Agreement Debt Service. The ratio of (i) the aggregate amount
of Net Lease Revenues for all Collateral Pool Properties for any fiscal quarter
ending during the term of this Agreement times 4 to (ii) Pro-Forma Credit
Agreement Debt Service determined as of the end of such fiscal quarter, to be
less than or equal to 2.0 to 1.0.
-59-
65
(g) Ratio of Collateral Pool Value to Outstanding Loans. The ratio of (i)
the aggregate principal balance of Loans outstanding at any time to (ii) the
Collateral Pool Value at such time, to be greater than or equal to (x) 0.60 to
1.0 at any time prior to June 30, 2000 and (ii) 0.55 to 1.00 at any time on and
after such date.
(h) Concept Concentration. More than 7.5% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter to be attributable to any one Concept.
(i) Lessee Concentration. More than 10% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter ending during the term of this Agreement to be attributable to any one
tenant (or group of affiliated tenants). Notwithstanding the foregoing, the
percentage of such total revenues attributable to S&A Properties, Inc. and its
affiliates may exceed 10% but cannot exceed 12.5% for any fiscal quarter.
(j) Asset Concentration. More than 3% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter to be attributable to any one Real Property Asset. For purposes of this
subsection only, the Real Property Asset commonly known as "Solano Mall," which
is leased to two tenants, Best Buy Co. and Edwards Brothers Theatres, shall be
deemed to be two separate Real Property Assets, one leased to Best Buy Co. and
the other leased to Edwards Brothers Theatres.
For purposes of calculating total revenues for the immediately preceding
subsections (h) through (j), the entire pro forma amount of revenues from any
Real Property Asset acquired (disposed of) during a given fiscal quarter, as if
such Real Property Asset were acquired (disposed of) on first day of such fiscal
quarter and the applicable lease term commenced (ended) on the first day of such
fiscal quarter, shall be included in (excluded from) such amount of total
revenues.
SECTION 10.2. DEVELOPMENT/ACQUISITION LIMITATIONS.
The Borrower shall not, and shall not permit any Subsidiary to, commence
the development or renovation of any Real Property Asset unless the Borrower or
such Subsidiary has entered into a binding lease agreement with a Person to
lease such Real Property Asset to such Person. Further, the Borrower shall not
permit the fully built out cost of Real Property Assets under development or
renovation at any time to exceed 15% of the sum of (a) the total assets of the
Borrower and its Subsidiaries at such time determined on a consolidated basis in
accordance with GAAP plus (b) the estimated total remaining costs to complete
all such development and renovation. In addition, the Borrower shall not, and
shall not permit any Subsidiary to, commence the development or renovation of
any Real Property Asset, or commit to acquire any additional Real Property
Asset, unless the Borrower has provided the Agent with evidence satisfactory to
the Agent that (x) the aggregate amount of all costs and other obligations
reasonably anticipated to be incurred by the Borrower and its Subsidiaries in
respect of such development, renovation or acquisition, together with the
aggregate amount of all costs and other obligations reasonably anticipated to be
incurred by the Borrower and its Subsidiaries in respect of all on-going
development and renovation projects and all other commitments in respect of
acquisitions of additional Real Property Asset, does not exceed (y) the sum of
(i) the aggregate
-60-
66
amount of Revolving Loans which could then be borrowed hereunder and (ii) the
aggregate amount of loans which could then be borrowed by the Borrower under all
closed and fully documented construction loan facilities (assuming the customary
completion and inspection conditions to each draw under such construction loan
facilities have been met) extended to the Borrower by Persons other than
Affiliates.
SECTION 10.3. INDEBTEDNESS.
Create, incur, assume, or permit or suffer to exist, or permit any
Subsidiary to create, incur, assume, or permit or suffer to exist, any
Indebtedness other than the following:
(a) the Obligations;
(b) Indebtedness in existence as of the Agreement Date and described on
Schedule 7.1.(g);
(c) intercompany Indebtedness owing by the Borrower to any of its
Subsidiaries; provided, however, that the obligations of the Borrower shall: (i)
be subordinated to the Obligations on terms acceptable to the Requisite Lenders
in their sole discretion; (ii) be evidenced by promissory notes, which shall
have been pledged to the Agent, for the benefit of the Lenders, as security for
the Obligations; and (iii) have such other terms and provisions as the Agent may
reasonably require;
(d) Indebtedness arising as a result of Contingent Obligations permitted
under Section 10.4.;
(e) other Indebtedness incurred after the Agreement Date which
Indebtedness either (x) has been assigned an Investment Grade Rating by both
Rating Agencies or (y) is Non-Recourse Indebtedness, so long as immediately
prior to the incurring thereof, and immediately thereafter and after giving
effect thereto, no Default or Event of Default is or would be in existence,
including without limitation, a Default or Event of Default resulting from a
violation of any of the covenants contained in Section 10.1.;
(f) other Indebtedness that is not Non-Recourse Indebtedness in an
aggregate outstanding principal amount not to exceed $10,000,000 at any time
(but in any event excluding Indebtedness of any Unconsolidated Affiliate (or any
partnership of which the Borrower or any Subsidiary is the general partner) that
is guaranteed by, or is otherwise recourse, to the Borrower or any Subsidiary);
and
(g) Indebtedness resulting from any guaranty of other Indebtedness of the
Borrower or any Subsidiary which other Indebtedness is permitted to be incurred
pursuant to this Section.
SECTION 10.4. CONTINGENT OBLIGATIONS.
Become or remain liable, or permit any Subsidiary to become or remain
liable, on or under any Contingent Obligation other than the following:
-61-
67
(a) Contingent Obligations in existence as of the Agreement Date and set
forth in Schedule 10.4.;
(b) Contingent Obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(c) Contingent Obligations under Interest Rate Agreements entered into by
the Borrower in connection with the incurrence of any Indebtedness permitted
under Section 10.3. and which were not entered into for speculative purposes;
(d) Contingent Obligations incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations; and
(e) Contingent Obligations resulting from guaranties of Indebtedness to
the extent permitted Section 10.3.(g).
SECTION 10.5. INVESTMENTS.
Acquire, make or purchase, or permit any Subsidiary to acquire, make or
purchase, after the Agreement Date, any Investment, or permit any Investment of
the Borrower or any Subsidiary to be outstanding on and after the Agreement
Date, other than the following:
(a) Investments in Subsidiaries in existence on the Agreement Date and
disclosed on Schedule 7.1.(b);
(b) Investments in Cash Equivalents;
(c) intercompany Indebtedness owing by the Borrower to any of its
Subsidiaries provided that such Indebtedness is permitted by the terms of
Section 10.3.;
(d) loans and advances to employees for moving, entertainment, travel and
other similar expenses in the ordinary course of business consistent with past
practices;
(e) Investments to acquire equity interests of a Subsidiary or any other
Person who after giving effect to such acquisition would be a Subsidiary so long
as (i) immediately prior to such acquisition or Investment, and after giving
effect thereto, no Default or Event of Default is or would be in existence and
(ii) such acquisition or Investment could not reasonably be expected to have a
Material Adverse Effect;
(f) Investments in Unconsolidated Affiliates (with the amount of any such
Investment being determined on an equity basis of accounting), including any
such Investments disclosed on Schedule 7.1.(b), not to exceed 10% of the total
assets of the Borrower and its Subsidiaries at such time determined on a
consolidated basis in accordance with GAAP; and
-62-
68
(g) Investments in the form of loans to other Persons (excluding
Subsidiaries) in an aggregate outstanding principal balance not to exceed at any
time an amount equal to 5% of the total assets of the Borrower and its
Subsidiaries at such time determined on a consolidated basis in accordance with
GAAP.
All of the Investments of the types described in the immediately preceding
subsections (f) and (g) held by the Borrower as of the Agreement Date are
described in Parts I and II, respectively, of Schedule 10.5.
SECTION 10.6. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS.
(a) Create, assume, or incur, or permit any Subsidiary to create, assume,
or incur, any Lien (other than Permitted Liens) upon (i) any Collateral Pool
Property or (ii) any of its other properties, assets, income or profits of any
character whether now owned or hereafter acquired if, in the case of this clause
(ii) only, immediately prior to the creation, assumption or incurring of such
Lien, or immediately thereafter, a Default or Event of Default is or would be in
existence, including without limitation, a Default or Event of Default resulting
from a violation of any of the covenants contained in Section 10.1.;
(b) Enter into, assume or otherwise be bound by, or permit any Subsidiary
to enter into, assume or otherwise be bound by, any agreement (other than any
Loan Document) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired; or
(c) Except as may be contained in any Loan Document, create or otherwise
cause or suffer to exist or become effective, or permit any Subsidiary to create
or otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to: (i)
pay dividends or make any other distribution on any of such Subsidiary's capital
stock or other equity interests owned by the Borrower or any Subsidiary of the
Borrower; (ii) pay any Indebtedness owed to the Borrower or any Subsidiary;
(iii) make loans or advances to the Borrower or any other Subsidiary; or (iv)
transfer any of its property or assets to the Borrower or any Subsidiary.
SECTION 10.7. RESTRICTED PAYMENTS.
Declare or make, or permit any Subsidiary to declare or make, any
Restricted Payment; provided, however, that (a) Subsidiaries may pay Restricted
Payments to the extent permitted to do so under Section 10.13.; (b) the Borrower
may declare or make cash distributions to its shareholders during any period of
four consecutive fiscal quarters in an aggregate amount not to exceed 100% of
Cash Available for Distribution for such four fiscal quarter period and (c)
subject to the following sentence, if a Default or Event of Default shall have
occurred and be continuing, the Borrower may declare or make cash distributions
to its shareholders during any period of four consecutive fiscal quarters in an
aggregate amount not to exceed the lesser of (i) 100% of Cash Available for
Distribution for such four fiscal quarter period and (ii) the minimum amount
necessary for the Borrower to remain in compliance with Section 8.11.
Notwithstanding the foregoing, if a Default or Event of Default specified in
Section 11.1.(a), Section 11.1.(b),
-63-
69
Section 11.1.(f) or Section 11.1.(g) shall have occurred and be continuing, or
if as a result of the occurrence of any other Event of Default the Obligations
have been accelerated pursuant to Section 11.2.(a), the Borrower shall not, and
shall not permit any Subsidiary to, make any Restricted Payments whatsoever.
SECTION 10.8. MERGER, CONSOLIDATION, SALES OF ASSETS AND OTHER ARRANGEMENTS.
(a) Enter into, or permit any Subsidiary to enter into, any transaction
of merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution) or permit any Subsidiary to do any of the
foregoing; or (c) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its business or assets, or the capital stock of or other equity interests in
any of its Subsidiaries, whether now owned or hereafter acquired or permit any
Subsidiary to do any of the foregoing; provided, however, that:
(i) Subsidiaries of the Borrower may merge or consolidate with the
Borrower or any Wholly Owned Subsidiary;
(ii) a Subsidiary may sell, transfer or dispose of its assets to
the Borrower or any Wholly Owned Subsidiary;
(iii) a Wholly Owned Subsidiary may liquidate provided that
immediately prior to such liquidation and immediately thereafter and
after giving effect thereto, no Default or Event of Default is or would
be in existence;
(iv) So long as immediately prior to any of the following
transactions, and immediately thereafter and after giving effect thereto,
no Default or Event of Default is or would be in existence, including
without limitation, a Default or Event of Default resulting from a
violation of Section 10.9., a Subsidiary that is not a Guarantor may:
(x) merge with and into another Person; and
(y) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or
any substantial part of its business or assets, or the capital
stock of or other equity interests in any of its respective
Subsidiaries that is not a Guarantor;
Further, neither the Borrower nor any Subsidiary shall enter into any
sale-leaseback transactions or other transaction by which the Borrower or a
Subsidiary shall remain liable as lessee (or the economic equivalent thereof) of
any real or personal property that it has sold or leased to another Person.
SECTION 10.9. DISPOSITIONS OF ASSETS.
Except as otherwise permitted in Section 10.8., sell, lease, transfer or
otherwise dispose of, and shall not permit any Subsidiary to sell, lease,
transfer or otherwise dispose of, assets
-64-
70
(including without limitation capital stock or similar ownership interests
transferred by way of merger or other consolidation) of the Borrower or any
Subsidiary during any fiscal year which have an aggregate book value in excess
of twenty-five percent (25%) of the total assets of the Borrower and its
Subsidiaries determined on a consolidated basis as of the end of the immediately
preceding fiscal year.
SECTION 10.10. FISCAL YEAR.
Change its fiscal year from that in effect as of the Agreement Date.
SECTION 10.11. MODIFICATIONS TO MATERIAL CONTRACTS.
Enter into, or permit any Subsidiary to enter into, any amendment or
modification to any Material Contract which could reasonably be expected to have
a Material Adverse Effect or default in the performance of any obligations of
the Borrower or any Subsidiary under any Material Contract or permit any
Material Contract to be canceled or terminated prior to its stated maturity.
SECTION 10.12. TRANSACTIONS WITH AFFILIATES.
Permit to exist or enter into, and will not permit any Subsidiary to
permit to exist or enter into, any transaction with any Affiliate except (a)
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of the Borrower or such Subsidiary and upon fair
and reasonable terms which are fully disclosed to the Agent and the Lenders and
are no less favorable to the Borrower or such Subsidiary than would be obtained
in a comparable arm's length transaction with a Person that is not an Affiliate
and (b) the transactions described in Schedule 10.12. Notwithstanding any other
provision of this Agreement, the Borrower shall not, and shall not permit any of
its Subsidiaries to, make any Investment in, or make any loan, advance funds or
otherwise transfer any assets to, Captec Advisors, Captec Financial Group, Inc.
or any other Affiliate of the Borrower other than payments of amounts owing by
the Borrower to Captec Advisors under the existing management agreement between
the Borrower and Captec Advisors.
SECTION 10.13. DISTRIBUTIONS OF INCOME TO THE BORROWER.
The Borrower shall cause all of its Subsidiaries to distribute promptly
to the Borrower (but not less frequently than once each fiscal quarter of the
Borrower, unless otherwise approved by the Agent), whether in the form of
dividends, distributions or otherwise, all profits, proceeds or other income
relating to or arising from its Subsidiaries' use, operation, financing,
refinancing, sale or other disposition of their respective assets and properties
after (a) the payment by each Subsidiary of its applicable portion of Total Debt
Service and operating expenses for such quarter and (b) the establishment of
reasonable reserves for the payment of operating expenses not paid on at least a
quarterly basis and capital improvements to be made to such Subsidiary's assets
and properties approved by such Subsidiary in the ordinary course of business
consistent with its past practices.
-65-
71
ARTICLE XI. DEFAULT
SECTION 11.1. EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
(a) Default in Payment of Principal. The Borrower shall fail to pay when
due (whether upon demand, at maturity, by reason of acceleration or otherwise)
the principal of any of the Loans.
(b) Default in Payment of Interest and Other Obligations. The Borrower
shall fail to pay when due any interest on any of the Loans or any other
Obligations owing by the Borrower under this Agreement or any other Loan
Document and such failure shall continue for a period of 5 Business Days after
the earlier of (i) the date upon which the Borrower obtains knowledge of such
failure or (ii) the date upon which the Borrower has received written notice of
such failure from the Agent.
(c) Default in Performance. (i) The Borrower shall fail to perform or
observe any term, covenant, condition or agreement on its part to be performed
or observed contained in Article X. or (ii) the Borrower or any Subsidiary shall
fail to perform or observe any term, covenant, condition or agreement contained
in this Agreement or any other Loan Document (other than any Security Deed) to
which it is a party and not otherwise mentioned in this Section and in the case
of this clause (ii) only, such failure shall continue for a period of 30 days
after the earlier of (x) the date upon which the Borrower obtains knowledge of
such failure or (y) the date upon which the Borrower has received written notice
of such failure from the Agent.
(d) Misrepresentations. Any written statement, representation or warranty
made or deemed made by or on behalf of the Borrower or any Subsidiary under this
Agreement or under any other Loan Document (other than any Security Deed), or
any amendment hereto or thereto, or in any other writing or statement at any
time furnished or made or deemed made by or on behalf of the Borrower or any
Subsidiary to the Agent or any Lender, shall at any time prove to have been
incorrect or misleading in any material respect when furnished or made.
(e) Indebtedness Cross-Default.
(i) The Borrower or any Subsidiary shall fail to pay when due and
payable the principal of, or interest on, any Indebtedness (other than
the Loans) having an aggregate outstanding principal amount of $5,000,000
or more ("Material Indebtedness"); or
(ii) the maturity of any Material Indebtedness shall have (x) been
accelerated in accordance with the provisions of any indenture, contract
or instrument evidencing, providing for the creation of or otherwise
concerning such Indebtedness or (y) been required to be prepaid prior to
the stated maturity thereof; or
-66-
72
(iii) any other event shall have occurred and be continuing which,
with or without the passage of time, the giving of notice, or both, would
permit any holder or holders of any Material Indebtedness, any trustee or
agent acting on behalf of such holder or holders or any other Person, to
accelerate the maturity of any such Indebtedness or require any such
Indebtedness to be prepaid prior to its stated maturity.
(f) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary
shall: (i) commence a voluntary case under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy laws (as now or hereafter in effect); (ii)
file a petition seeking to take advantage of any other Applicable Laws, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts; (iii) consent to, or fail to contest in a
timely and appropriate manner, any petition filed against it in an involuntary
case under such bankruptcy laws or other Applicable Laws or consent to any
proceeding or action described in the immediately following subsection; (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign; (v) admit in writing its inability to pay its debts as they
become due; (vi) make a general assignment for the benefit of creditors; or
(vii) take any corporate or similar action for the purpose of effecting any of
the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against the Borrower or any Subsidiary, in any court of competent
jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as amended
or other federal bankruptcy laws (as now or hereafter in effect) or under any
other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person, or of all or any substantial part of the assets, domestic or foreign, of
such Person, and such case or proceeding shall continue undismissed or unstayed
for a period of 60 consecutive calendar days, or an order granting the remedy or
other relief requested in such case or proceeding against the Borrower or such
Subsidiary (including, but not limited to, an order for relief under such
Bankruptcy Code or such other federal bankruptcy laws) shall be entered.
(h) Challenge of Loan Documents. The Borrower or any Subsidiary shall
disavow, revoke or terminate or attempt to do any of the foregoing with respect
to any Loan Document to which it is a party or shall otherwise challenge or
contest in any action, suit or proceeding in any court or before any
Governmental Authority the validity or enforceability of this Agreement, any
Note or any other Loan Document.
(i) Judgment. A judgment or order for the payment of money shall be
entered against the Borrower or any Subsidiary by any court or other tribunal
which exceeds, individually or together with all other such judgments or orders
entered against the Borrower and the Subsidiaries, $1,000,000 in amount (or
which shall otherwise have a Material Adverse Effect) and such judgment or order
shall continue for a period of 45 days without being stayed or dismissed through
appropriate appellate proceedings.
-67-
73
(j) Attachment. A warrant, writ of attachment, execution or similar
process shall be issued against any property of the Borrower or any Subsidiary
which exceeds, individually or together with all other such warrants, writs,
executions and processes, $1,000,000 in amount and such warrant, writ, execution
or process shall not be discharged, vacated, stayed or bonded for a period of 45
days.
(k) ERISA. Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $1,000,000.
(l) Loan Documents. An Event of Default (as defined therein) shall occur
under any of the other Loan Documents (other than any Security Deed).
(m) Change of Control/Change in Management.
(i) Any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (other than Patrick L. Beach, W. Ross Martin, H. Reid
Sherard, any member of any such individual's immediate family or any
trust for the benefit of such individual's family members of which such
individual owns the majority legal, beneficial or controlling interest)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person will be deemed to have
"beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 20% of the
total voting power of the then outstanding voting stock of the Borrower;
(ii) During any twelve-month period (commencing both before and
after the Agreement Date), a majority of the Board of Directors of the
Borrower shall no longer be composed of individuals (x) who were members
of such Board of Directors on the first date of such period, (y) whose
election or nomination to such Board of Directors was approved by
individuals referred to in clause (x) above constituting at the time of
such election or nomination at least a majority of such Board of
Directors or (z) whose election or nomination to such Board of Directors
was approved by individuals referred to in clauses (x) and (y) above
constituting at the time of such election or nomination at least a
majority of such Board of Directors;
-68-
74
(iii) If any two of Patrick L. Beach, W. Ross Martin and H. Reid
Sherard shall cease for any reason (including death or disability) to
occupy the positions of Chief Executive Officer of the Borrower and Chief
Financial Officer of the Borrower and Senior Vice President - Sales and
Marketing (or other more senior officer) of Captec Financial Group, Inc.,
respectively and (b) such individuals have not been replaced with other
individuals reasonably acceptable to the Requisite Lenders within 120
days.
SECTION 11.2. REMEDIES UPON EVENT OF DEFAULT.
Upon the occurrence and during the continuance of an Event of Default the
following provisions shall apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default
specified in Sections 11.1.(f) or 11.1.(g), (A)(i) the principal of, and
all accrued interest on, the Loans and the Notes at the time outstanding
and (ii) all of the other Obligations of the Borrower, including, but not
limited to, the other amounts owed to the Lenders and the Agent under
this Agreement, the Notes or any of the other Loan Documents shall become
immediately and automatically due and payable by the Borrower without
presentment, demand, protest, or other notice of any kind, all of which
are expressly waived by the Borrower and (B) the Commitments and the
obligation of the Lenders to make Loans hereunder shall immediately and
automatically terminate.
(ii) Optional. If any other Event of Default shall have occurred
and be continuing, the Agent may, and at the direction of the Requisite
Lenders shall: (I) declare (1) the principal of, and accrued interest on,
the Loans and the Notes at the time outstanding and (2) all of the other
Obligations, including, but not limited to, the other amounts owed to the
Lenders and the Agent under this Agreement, the Notes or any of the other
Loan Documents to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived by the
Borrower and (II) terminate the Commitments and the obligation of the
Lenders to make Loans hereunder.
(b) Loan Documents. The Requisite Lenders may direct the Agent to, and
the Agent if so directed shall, exercise any and all of its rights under any and
all of the other Loan Documents.
(c) Applicable Law. The Requisite Lenders may direct the Agent to, and
the Agent if so directed shall, exercise all other rights and remedies it may
have under any Applicable Law.
(d) Appointment of Receiver. To the extent permitted by Applicable Law,
the Agent and the Lenders shall be entitled to the appointment of a receiver for
the assets and properties of the Borrower and its Subsidiaries, without notice
of any kind whatsoever and without regard to the adequacy of any security for
the Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the Collateral and/or the business
operations
-69-
75
of the Borrower and its Subsidiaries and to exercise such power as the court
shall confer upon such receiver.
SECTION 11.3. REMEDIES UPON DEFAULT.
Upon the occurrence of a Default specified in Sections 11.1.(f) or
11.1.(g), the Commitments shall immediately and automatically terminate.
SECTION 11.4. ALLOCATION OF PROCEEDS.
Except as otherwise specifically provided in this Agreement, (a) all
proceeds from each sale or other disposition of, or other realization upon, all
or any part of the Collateral required to be paid to the Agent or the Lenders,
and (b) if an Event of Default shall have occurred and be continuing and
maturity of any of the Obligations has been accelerated, all payments received
by the Agent under any of the Loan Documents, in respect of any principal of or
interest on the Obligations or any other amounts payable by the Borrower
hereunder or thereunder, shall be applied in the following order and priority:
(a) amounts due to the Agent and the Lenders in respect of Fees
and expenses due under Section 13.2.;
(b) payments of interest on Loans, to be applied for the ratable
benefit of the Lenders;
(c) payments of principal of Loans, to be applied for the ratable
benefit of the Lenders;
(d) amounts due to the Agent and the Lenders pursuant to Sections
12.7. and 13.9.;
(e) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders
(f) amounts due Lenders in respect of Swap Obligations, to be
applied for the ratable benefit of such Lenders;
(g) any amount remaining after application as provided above,
shall be paid to the Borrower or whomever else may be legally entitled
thereto.
SECTION 11.5. PERFORMANCE BY AGENT.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may, upon notice to the
Borrower, perform or attempt to perform such covenant, duty or agreement on
behalf of the Borrower after the expiration of any cure or grace periods set
forth herein; provided, however, the Agent's failure to give any such notice
shall not effect the validity of any action taken by the Agent. In such event,
the Borrower
-70-
76
shall, at the request of the Agent, promptly pay any amount reasonably expended
by the Agent in such performance or attempted performance to the Agent, together
with interest thereon at the applicable Post-Default Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, neither the Agent nor any
Lender shall have any liability or responsibility whatsoever for the performance
of any obligation of the Borrower under this Agreement or any other Loan
Document.
SECTION 11.6. RIGHTS CUMULATIVE.
The rights and remedies of the Agent and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which any of them may otherwise have under Applicable
Law. In exercising their respective rights and remedies the Agent and the
Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
SECTION 11.7. RECISSION OF ACCELERATION BY REQUISITE LENDERS.
If at any time after acceleration of the maturity of the Obligations, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived to the satisfaction of the Requisite
Lenders, then by written notice to the Borrower, the Requisite Lenders may
elect, in the sole discretion of such Requisite Lenders, to rescind and annul
the acceleration and its consequences; but such action shall not affect any
subsequent Default or Event of Default or impair any right or remedy consequent
thereon. The provisions of the preceding sentence are intended merely to bind
the Lenders to a decision which may be made at the election of the Requisite
Lenders; they are not intended to benefit the Borrower and do not give the
Borrower the right to require the Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are satisfied.
ARTICLE XII. THE AGENT
SECTION 12.1. AUTHORIZATION AND ACTION.
Each Lender hereby appoints and authorizes the Agent to take such action
as agent on such Lender's behalf and to exercise such powers under this
Agreement and the other Loan Documents as are specifically delegated to the
Agent by the terms and thereof, together with such powers as are reasonably
incidental thereto. The relationship between the Agent and the Lenders shall be
that of principal and agent only and nothing herein shall be construed to deem
the Agent a trustee or fiduciary for any Lender nor to impose on the Agent
duties or obligations other than those expressly provided for herein. At the
request of a Lender, the Agent will forward to such Lender copies or, where
appropriate, originals of the documents delivered to the Agent pursuant
-71-
77
to this Agreement or the other Loan Documents. The Agent will also furnish to
any Lender, upon the request of such Lender, a copy of any certificate or notice
furnished to the Agent by the Borrower, any Subsidiary or any other Affiliate of
the Borrower, pursuant to this Agreement or any other Loan Document not already
delivered to such Lender pursuant to the terms of this Agreement or any such
other Loan Document. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of any of
the Obligations), the Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders (or all of the Lenders if explicitly
required under any other provision of this Agreement), and such instructions
shall be binding upon all Lenders and all holders of any of the Obligations;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, the Agent shall not be required to take any action which exposes the
Agent to personal liability or which is contrary to this Agreement or any other
Loan Document or Applicable Law. Not in limitation of the foregoing, the Agent
shall not exercise any right or remedy it or the Lenders may have under any Loan
Document upon the occurrence of a Default or an Event of Default unless the
Requisite Lenders have so directed the Agent to exercise such right or remedy.
SECTION 12.2. AGENT'S RELIANCE, ETC.
Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Agent nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement, except to the extent
found in a final, non-appealable judgment by a court of competent jurisdiction
to have resulted from its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent: (a) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (b) may consult with legal counsel (including its own
counsel or counsel for the Borrower or any Subsidiary), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender or any other Person and shall not be responsible to
any Lender or any other Person for any statements, warranties or representations
made by any Person in or in connection with this Agreement or any other Loan
Document; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any of
this Agreement or any other Loan Document or the satisfaction of any conditions
precedent under this Agreement or any Loan Document on the part of the Borrower
or other Persons or inspect the property, books or records of the Borrower or
any other Person; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document, any other instrument or document
furnished pursuant thereto or any Collateral covered thereby or the perfection
or priority of any Lien in favor of the Agent on behalf of the Lenders in any
such Collateral; and (f) shall incur no liability under or in respect of this
Agreement or any other Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telephone or
telecopy) believed by it to be genuine and signed, sent or given by the proper
party or parties.
-72-
78
SECTION 12.3. NOTICE OF DEFAULTS.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received notice
from a Lender or the Borrower referring to this Agreement, describing with
reasonable specificity such Default or Event of Default and stating that such
notice is a "notice of default." If any Lender becomes aware of any Default or
Event of Default, it shall promptly send to the Agent such a "notice of
default." Further, if the Agent receives such a "notice of default", the Agent
shall give prompt notice thereof to the Lenders.
SECTION 12.4. FIRST UNION AS LENDER.
First Union, as a Lender, shall have the same rights and powers under
this Agreement and any other Loan Document as any other Lender and may exercise
the same as though it were not the Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include First Union in each case in
its individual capacity. First Union and its affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with the Borrower, any Subsidiary or any other affiliate
thereof as if it were any other bank and without any duty to account therefor to
the other Lenders. Further, the Agent and any affiliate may accept fees and
other consideration from the Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the other
Lenders.
SECTION 12.5. APPROVALS OF LENDERS.
All communications from the Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or issue as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where information, if any,
regarding such matter or issue may be inspected, or shall otherwise describe the
matter or issue to be resolved, (c) shall include, if reasonably requested by
such Lender and to the extent not previously provided to such Lender, written
materials and a summary of all oral information provided to the Agent by the
Borrower in respect of the matter or issue to be resolved, and (d) shall include
the Agent's recommended course of action or determination in respect thereof.
Each Lender shall reply promptly, but in any event within 10 Business Days (or
such lesser period as may be required under the Loan Documents for the Agent to
respond). Unless a Lender shall give written notice to the Agent that it objects
to the recommendation or determination of the Agent (together with a written
explanation of the reasons behind such objection) within the applicable time
period for reply, such Lender shall be deemed to have conclusively approved of
or consented to such recommendation or determination.
SECTION 12.6. LENDER CREDIT DECISION, ETC.
Each Lender expressly acknowledges and agrees that neither the Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact or
other affiliates has made any
-73-
79
representations or warranties as to the financial condition, operations,
creditworthiness, solvency or other information concerning the business or
affairs of the Borrower, any Subsidiary or other Person to such Lender and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any such representation or warranty
by the Agent to any Lender. Each Lender acknowledges that it has, independently
and without reliance upon the Agent, any other Lender or counsel to the Agent,
or any of their respective officers, directors, employees and agents, and based
on the financial statements of the Borrower, the Subsidiaries or any other
Affiliate thereof, and inquiries of such Persons, its independent due diligence
of the business and affairs of the Borrower, the Subsidiaries and other Persons,
its review of the Loan Documents, the legal opinions required to be delivered to
it hereunder, the advice of its own counsel and such other documents and
information as it has deemed appropriate, made its own credit and legal analysis
and decision to enter into this Agreement and the transaction contemplated
hereby. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, any other Lender or counsel to the Agent or any of
their respective officers, directors, employees and agents, and based on such
review, advice, documents and information as it shall deem appropriate at the
time, continue to make its own decisions in taking or not taking action under
the Loan Documents. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent under
this Agreement or any of the other Loan Documents, the Agent shall have no duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any Subsidiary or any other Affiliate thereof
which may come into possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or other Affiliates. Each Lender
acknowledges that the Agent's legal counsel in connection with the transactions
contemplated by this Agreement is only acting as counsel to the Agent and is not
acting as counsel to such Lender.
SECTION 12.7. INDEMNIFICATION OF AGENT.
Each Lender agrees to indemnify the Agent (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so)
pro rata in accordance with such Lender's respective Commitment Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent (in its capacity as "Agent" but not as a "Lender") in any way
relating to or arising out of the Loan Documents, any transaction contemplated
hereby or thereby or any action taken or omitted by the Agent under the Loan
Documents (collectively, "Indemnifiable Amounts"); provided, however, that no
Lender shall be liable for any portion of such Indemnifiable Amounts to the
extent found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the Agent's gross negligence or willful
misconduct, or if the Agent fails to follow the written direction of the
Requisite Lenders unless such failure is pursuant to the advice of counsel of
which the Lenders have received notice. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees of the
counsel(s) of the Agent's own choosing) incurred by the Agent in connection with
the preparation, execution, administration, or enforcement of, or legal advice
with respect to the rights or responsibilities of the parties under, the Loan
Documents, any suit or action brought by the Agent to enforce the terms of the
Loan
-74-
80
Documents and/or collect any Obligations, any "lender liability" suit or claim
brought against the Agent and/or the Lenders, and any claim or suit brought
against the Agent and/or the Lenders arising under any Environmental Laws, to
the extent that the Agent is not reimbursed for such expenses by the Borrower.
Such out-of-pocket expenses (including counsel fees) shall be advanced by the
Lenders on the request of the Agent notwithstanding any claim or assertion that
the Agent is not entitled to indemnification hereunder upon receipt of an
undertaking by the Agent that the Agent will reimburse the Lenders if it is
actually and finally determined by a court of competent jurisdiction that the
Agent is not so entitled to indemnification. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder
or under the other Loan Documents and the termination of this Agreement. If the
Borrower shall reimburse the Agent for any Indemnifiable Amount following
payment by any Lender to the Agent in respect of such Indemnifiable Amount
pursuant to this Section, the Agent shall share such reimbursement on a ratable
basis with each Lender making any such payment.
SECTION 12.8. COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all of the Lenders, without the
necessity of any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any Collateral
or Loan Documents which may be necessary to perfect and maintain perfected the
Liens upon the Collateral granted pursuant to any of the Loan Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and satisfaction
of all of the Obligations at any time arising under or in respect of this
Agreement or the Loan Documents or the transactions contemplated hereby or
thereby; (ii) as required or permitted by Section 4.2. Upon request by the Agent
at any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this Section or any
other applicable provision of any of the Loan Documents.
(c) Upon any sale and transfer of Collateral which is expressly permitted
pursuant to the terms of this Agreement and upon at least 5 Business Days' prior
written request by the Borrower, the Agent shall (and is hereby irrevocably
authorized by all of the Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to the Agent for the benefit of the
Lenders herein or pursuant hereto upon the Collateral that was sold or
transferred; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to personal liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty;
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrower or any Loan Party
in respect of) all interests retained by the Borrower or any Subsidiary,
including (without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Agent shall be authorized to deduct all of the expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.
-75-
81
(d) The Agent shall have no obligation whatsoever to the Lenders or to
any other Person to assure that the Collateral exists or is owned by the
Borrower or any Subsidiary or is cared for, protected or insured or that the
Liens granted to the Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Agent in this
Section or in any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Agent's own interest in the Collateral as one of the Lenders and that
the Agent shall have no duty or liability whatsoever to the Lenders, except to
the extent found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from the Agent's gross negligence or willful
misconduct.
SECTION 12.9. SUCCESSOR AGENT.
The Agent may resign at any time as Agent under the Loan Documents by
giving written notice thereof to the Lenders and the Borrower. In the event of a
material breach of its duties hereunder, the Agent may be removed as Agent under
the Loan Documents at any time by the Requisite Lenders upon 30-day's prior
notice. Upon any such resignation or removal, the Requisite Lenders shall have
the right to appoint a successor Agent which appointment shall, provided no
Default or Event of Default shall have occurred and be continuing, be subject to
the Borrower's approval, which approval shall not be unreasonably withheld or
delayed (except that Borrower shall, in all events, be deemed to have approved
each Lender as a successor Agent). If no successor Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the resigning Agent's giving of notice of resignation or
the Requisite Lenders' removal of the resigning Agent, then the resigning or
removed Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a Lender, if any Lender shall be willing to serve, and otherwise shall
be a commercial bank having total combined assets of at least $50,000,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any resigning Agent's resignation or removal hereunder as
Agent, the provisions of this Article XII. shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
ARTICLE XIII. MISCELLANEOUS
SECTION 13.1. NOTICES.
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
-76-
82
If to the Borrower:
Captec Net Lease Realty, Inc.
24 Frank Lloyd Wright Drive
Ann Arbor, Michigan 48106
Attention: W. Ross Martin
Telecopy Number: (734) 994-1376
Telephone Number: (734) 994-5505
If to the Agent:
First Union Capital Markets Group
One First Union Center, DC-6
Charlotte, North Carolina 28288-0166
Attention: Daniel J. Sullivan
Telecopy Number: (704) 383-6205
Telephone Number: (704) 383-6441
If to a Lender:
To such Lender's address or telecopy number, as applicable,
set forth on its signature page hereto or in the applicable
Assignment and Acceptance Agreement.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered, when delivered. Notwithstanding the immediately preceding sentence,
all notices or communications to the Agent or any Lender under Article II. shall
be effective only when actually received. Neither the Agent nor any Lender shall
incur any liability to the Borrower (nor shall the Agent incur any liability to
the Lenders) for acting upon any telephonic notice referred to in this Agreement
which the Agent or such Lender, as the case may be, believes in good faith to
have been given by a Person authorized to deliver such notice or for otherwise
acting in good faith under hereunder.
SECTION 13.2. EXPENSES.
The Borrower agrees (a) to pay or reimburse the Agent for all of its
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including without limitation,
reasonable due diligence expenses, travel expenses relating to closing and all
costs and expenses of the Agent in connection with the review of Real Property
Assets for inclusion in calculations of the Collateral Pool Value and the
Agent's other activities under Section 4.1., including the reasonable fees and
disbursements of counsel to the Agent), and the consummation of the transactions
contemplated thereby, including the reasonable fees and disbursements of counsel
to the Agent, (b) to pay or reimburse the Agent and the Lenders for all their
costs and expenses incurred in connection with the enforcement or preservation
of any rights
-77-
83
under the Loan Documents, including the reasonable fees and disbursements of
their respective counsel (including the allocated fees and expenses of in-house
counsel) and any payments in indemnification or otherwise payable by the Lenders
to the Agent pursuant to the Loan Documents, (c) to pay, indemnify and hold the
Agent and the Lenders harmless from any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any failure to pay or
delay in paying, documentary, stamp, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of any of the Loan Documents, or consummation of any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, any Loan Document and (d) to the extent not already covered by any
of the preceding subsections, to pay or reimburse the Agent and the Lenders for
all their costs and expenses incurred in connection with any bankruptcy or other
proceeding of the type described in Sections 11.1.(e) or 11.1.(f), including the
reasonable fees and disbursements of counsel to the Agent and any Lender,
whether such fees and expenses are incurred prior to, during or after the
commencement of such proceeding or the confirmation or conclusion of any such
proceeding.
SECTION 13.3. SETOFF.
Subject to Section 3.3. and in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
the Agent, each Lender and each Participant is hereby authorized by the
Borrower, at any time or from time to time during the continuance of an Event of
Default, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, but subject to receipt of the Agent's prior
written consent, to set-off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Agent, such Lender or any
affiliate of such the Agent or such Lender, to or for the credit or the account
of the Borrower against and on account of any of the Obligations, irrespective
of whether or not any or all of the Loans and all other Obligations have been
declared to be, or have otherwise become, due and payable as permitted by
Section 11.2., and although such obligations shall be contingent or unmatured.
SECTION 13.4. WAIVER OF JURY TRIAL; ARBITRATION.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND
EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE LENDERS, THE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR
TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY
OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER,
THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.
-78-
84
(b) EACH OF THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREES THAT
ANY FEDERAL DISTRICT COURT IN NORTH CAROLINA OR, AT THE OPTION OF THE AGENT, ANY
STATE COURT LOCATED IN CHARLOTTE, NORTH CAROLINA, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE
AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER
ARISING HEREFROM OR THEREFROM. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND
EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN
THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE
AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY LENDER OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
(c) UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE BEFORE OR AFTER
INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CLAIM OR CONTROVERSY ARISING OUT OF,
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS ("DISPUTES") BETWEEN
OR AMONG ANY SUCH PARTIES SHALL BE RESOLVED BY BINDING ARBITRATION CONDUCTED
UNDER AND GOVERNED BY THE COMMERCIAL FINANCIAL DISPUTES ARBITRATION RULES (THE
"ARBITRATION RULES") OF THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") AND THE
FEDERAL ARBITRATION ACT. DISPUTES MAY INCLUDE, WITHOUT LIMITATION, TORT CLAIMS,
COUNTERCLAIMS, DISPUTES AS TO WHETHER A MATTER IS SUBJECT TO ARBITRATION, CLAIMS
BROUGHT AS CLASS ACTIONS, AND CLAIMS ARISING FROM LOAN DOCUMENTS EXECUTED IN THE
FUTURE. A JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. NOTWITHSTANDING THE FOREGOING, THIS ARBITRATION PROVISION DOES NOT
APPLY TO DISPUTES UNDER OR RELATED TO INTEREST RATE AGREEMENTS TO WHICH ANY
LENDER IS A PARTY. ALL ARBITRATION HEARINGS SHALL BE CONDUCTED IN CHARLOTTE,
NORTH CAROLINA. A HEARING SHALL BEGIN WITHIN 90 DAYS OF DEMAND FOR ARBITRATION
AND ALL HEARINGS SHALL CONCLUDED WITHIN 120 DAYS OF DEMAND FOR ARBITRATION.
THESE TIME LIMITATIONS MAY NOT BE EXTENDED UNLESS A PARTY SHOWS CAUSE FOR
EXTENSION AND THEN NO MORE THAN A TOTAL EXTENSION OF 60 DAYS. THE EXPEDITED
PROCEDURES SET FORTH IN RULE 51 ET. SEQ. OF THE ARBITRATION RULES SHALL BE
APPLICABLE TO CLAIMS OF LESS THAN $1,000,000. ARBITRATORS SHALL BE LICENSED
ATTORNEYS SELECTED FROM THE COMMERCIAL FINANCIAL DISPUTE ARBITRATION PANEL OF
THE AAA. THE PARTIES DO NOT WAIVE ANY APPLICABLE LAWS EXCEPT AS PROVIDED HEREIN.
NOTWITHSTANDING THE
-79-
85
PRECEDING BINDING ARBITRATION PROVISIONS, THE PARTIES AGREE TO PRESERVE, WITHOUT
DIMINUTION, THE FOLLOWING REMEDIES THAT THE AGENT OR THE LENDERS MAY EXERCISE
BEFORE OR AFTER AN ARBITRATION PROCEEDING IS BROUGHT. SUBJECT TO THE OTHER TERMS
HEREOF, THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO PROCEED IN ANY COURT
OF PROPER JURISDICTION OR BY SELF-HELP TO EXERCISE OR PROSECUTE THE FOLLOWING
REMEDIES, AS APPLICABLE: (I) ALL RIGHTS TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF SALE OR UNDER
APPLICABLE LAW BY JUDICIAL FORECLOSURE INCLUDING A PROCEEDING TO CONFIRM THE
SALE; (II) ALL RIGHTS OF SELF-HELP INCLUDING PEACEFUL OCCUPATION OF REAL
PROPERTY AND COLLECTION OF RENTS, SET-OFF, AND PEACEFUL POSSESSION OF PERSONAL
PROPERTY; (III) OBTAINING PROVISIONAL OR ANCILLARY REMEDIES INCLUDING INJUNCTIVE
RELIEF, SEQUESTRATION, GARNISHMENT, ATTACHMENT, APPOINTMENT OF RECEIVER AND
FILING AN INVOLUNTARY BANKRUPTCY PROCEEDING; AND (IV) WHEN APPLICABLE, A
JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY WITH REGARD TO
PARTIES ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE. THE PARTIES HERETO
ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED
ANY RIGHT THEY MAY HAVE TO A JURY TRIAL WITH REGARD TO A DISPUTE.
(d) THE PROVISION OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH
THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS
AGREEMENT.
SECTION 13.5. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, (i) any
such participating interest must be for a constant and not a varying percentage
interest, (ii) no Lender may grant a participating interest in its Commitment,
or if the Commitments have been terminated, the aggregate outstanding principal
balance of Notes held by it, in an amount less than $5,000,000 and (iii) after
giving effect to any
-80-
86
such participation by a Lender, the amount of its Commitment, or if the
Commitments have been terminated, the aggregate outstanding principal balance of
Notes held by it, in which it has not granted any participating interests must
be at least $5,000,000. Except as otherwise provided in Section 13.3., no
Participant shall have any rights or benefits under this Agreement or any other
Loan Document. In the event of any such grant by a Lender of a participating
interest to a Participant, such Lender shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement pursuant to
which any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided, however, such Lender may agree with the Participant that it will not,
without the consent of the Participant, agree to (i) increase, or extend the
term or extend the time or waive any requirement for the reduction or
termination of, such Lender's Commitment, (ii) extend the date fixed for the
payment of principal of or interest on the Loans or portions thereof owing to
such Lender, (iii) reduce the amount of any such payment of principal, or (iv)
reduce the rate at which interest is payable thereon. An assignment or other
transfer which is not permitted by subsection (d) or (e) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (c). The selling Lender
shall notify the Agent and the Borrower of the sale of any participation
hereunder and the terms thereof.
(d) Any Lender may with the prior written consent of the Agent and, so
long as no Default or Event of Default shall have occurred and be continuing,
the Borrower (which consent, in each case, shall not be unreasonably withheld)
assign to one or more Eligible Assignees (each an "Assignee") all or a portion
of its Commitment and its other rights and obligations under this Agreement and
the Notes; provided, however, (i) no such consent by the Borrower shall be
required in the case of any assignment to another Lender or any affiliate of
such Lender or another Lender; (ii) any partial assignment shall be in an amount
at least equal to $5,000,000 and after giving effect to such assignment the
assigning Lender retains a Commitment, or if the Commitments have been
terminated, holds Notes having an aggregate outstanding principal balance, of at
least $5,000,000; (iii) each such assignment shall be effected by means of an
Assignment and Acceptance Agreement and (iv) if, after giving effect to an
assignment by the Lender who is also the Agent, the amount of such Lender's
Commitment would be less than or equal to $25,000,000, such Lender shall offer
to resign as Agent. Upon execution and delivery of such instrument and payment
by such Assignee to such transferor Lender of an amount equal to the purchase
price agreed between such transferor Lender and such Assignee, such Assignee
shall be deemed to be a Lender party to this Agreement as of the effective date
of the Assignment and Acceptance Agreement and shall have all the rights and
obligations of a Lender with a Commitment as set forth in such Assignment and
Acceptance Agreement, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (d), the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that new Notes are issued to the
Assignee and such transferor Lender, as appropriate. In connection with any such
assignment, the transferor Lender shall pay to the Agent an administrative fee
for processing such assignment in the amount of $3,000.
-81-
87
(e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of each Lender from time to time (the "Register"). The Agent shall
give each Lender and the Borrower notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register and copies of each
Assignment and Acceptance Agreement shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Lender, together with each Note
subject to such assignment, the Agent shall, if such Assignment and Acceptance
Agreement has been completed and if the Agent receives the processing and
recording fee described in subsection (d) above, (i) accept such Assignment and
Acceptance Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(f) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank, and such Loans and Notes shall be fully transferable as
provided therein. No such assignment shall release the assigning Lender from its
obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower or any
Subsidiary in the possession of such Lender from time to time to Assignees and
Participants (including prospective Assignees and Participants) subject to
compliance with Section 13.8.
(h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan held by it hereunder to the
Borrower, any Subsidiary or any of their respective Affiliates.
(i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any other
securities laws United States of America or of any other jurisdiction.
SECTION 13.6. AMENDMENTS.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or in any Loan Document to be
given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower of any terms of this Agreement or such other Loan Document 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 Lenders (and, in the case of an
amendment to any Loan
-82-
88
Document, the written consent of the Borrower). Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing, and signed by all of
the Lenders (or the Agent at the written direction of all of the Lenders), do
any of the following: (i) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations; (ii) reduce the principal of, or interest
rates that have accrued or that will be charged on the outstanding principal
amount of, any Loans or other Obligations; (iii) reduce the amount of any Fees
payable hereunder; (iv) postpone any date fixed for any payment of any principal
of, interest on, or Fees with respect to, any Loans or any other Obligations;
(v) change the Commitment Percentages; (vi) amend this Section or amend the
definitions of the terms used in this Agreement or the other Loan Documents
insofar as such definitions affect the substance of this Section; (vii) release
any Guarantor from its obligations under the Guaranty (except as permitted by
the last sentence of Section 4.2.); (viii) release any of the Collateral; and
(ix) modify the definition of the term "Requisite Lenders" or modify in any
other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to modify any provision hereof.
In addition, the definitions of Maximum Loan Availability and Collateral Pool
Value (and the definitions used in either such definition and the percentages
and rates used in the calculation thereof) may not be amended without the
written consent of all of the Lenders and the Borrower. Also, the terms of
Sections 10.1.(a), (c), (f) and (g) may not be amended or otherwise modified,
and the Borrower's compliance therewith may not be waived, without the written
consent of all of the Lenders. Further, no amendment, waiver or consent unless
in writing and signed by the Agent, in addition to the Lenders required
hereinabove to take such action, shall affect the rights or duties of the Agent
under this Agreement or any of the other Loan Documents. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or in
any other Loan Document, no notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
SECTION 13.7. NONLIABILITY OF AGENT AND LENDERS.
The relationship between the Borrower and the Lenders and the Agent shall
be solely that of borrower and lender. Neither the Agent nor any Lender shall
have any fiduciary responsibilities to the Borrower and no provision in this
Agreement or in any of the other Loan Documents, and no course of dealing
between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower or
any Subsidiary. Neither the Agent nor any Lender undertakes any responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations.
SECTION 13.8. CONFIDENTIALITY.
Except as otherwise provided by Applicable Law, the Agent and each Lender
shall utilize all non-public information obtained pursuant to the requirements
of this Agreement which has been identified as confidential or proprietary by
the Borrower in accordance with its customary
-83-
89
procedure for handling confidential information of this nature and in accordance
with safe and sound banking practices but in any event may make disclosure: (a)
to any of their respective affiliates (provided they shall agree to keep such
information confidential in accordance with the terms of this Section); (b) as
reasonably required by any bona fide Assignee, Participant or other transferee
in connection with the contemplated transfer of any Commitment or participations
therein as permitted hereunder (provided they shall agree to keep such
information confidential in accordance with the terms of this Section); (c) as
required by any Governmental Authority or representative thereof or pursuant to
legal process; (d) to the Agent's or such Lender's independent auditors and
other professional advisors (provided they shall be notified of the confidential
nature of the information); and (e) after the happening and during the
continuance of an Event of Default, to any other Person, in connection with the
exercise by the Agent or the Lenders of rights hereunder or under any of the
other Loan Documents.
SECTION 13.9. INDEMNIFICATION.
(a) The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Agent, any affiliate of the Agent and each of the Lenders and their
respective directors, officers, shareholders, agents, employees and counsel
(each referred to herein as an "Indemnified Party") from and against any and all
losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses
of every kind and nature (including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any litigation, investigation, claim or proceeding or any advice
rendered in connection therewith) (the foregoing items referred to herein as
"Claims and Expenses") incurred by an Indemnified Party in connection with,
arising out of, or by reason of, any suit, cause of action, claim, arbitration,
investigation or settlement, consent decree or other proceeding (the foregoing
referred to herein as an "Indemnity Proceeding") which is in any way related
directly or indirectly to: (i) this Agreement or any other Loan Document or the
transactions contemplated thereby; (ii) the making of any Loans hereunder; (iii)
any actual or proposed use by the Borrower of the proceeds of the Loans; (iv)
the Agent's or any Lender's entering into this Agreement; (v) the fact that the
Agent and the Lenders have established the credit facility evidenced hereby in
favor of the Borrower; (vi) the fact that the Agent and the Lenders are
creditors of the Borrower and have or are alleged to have information regarding
the financial condition, strategic plans or business operations of the Borrower
and the Subsidiaries; (vii) the fact that the Agent and the Lenders are material
creditors of the Borrower and are alleged to influence directly or indirectly
the business decisions or affairs of the Borrower and the Subsidiaries or their
financial condition; (viii) the exercise of any right or remedy the Agent or the
Lenders may have under this Agreement or the other Loan Documents; (ix) any
violation or non-compliance by the Borrower or any Subsidiary of any Applicable
Law (including any Environmental Law) including, but not limited to, any
Indemnity Proceeding commenced by (A) the Internal Revenue Service or state
taxing authority or (B) any Governmental Authority or other Person under any
Environmental Law, including any Indemnity Proceeding commenced by a
Governmental Authority or other Person seeking remedial or other action to cause
the Borrower or its Subsidiaries (or its respective properties) (or the Agent
and/or the Lenders as successors to the Borrower) to be in compliance with such
Environmental Laws; provided, however, that the Borrower shall not be obligated
to indemnify any Indemnified Party for any acts or omissions of such Indemnified
Party in connection with matters described in this clause the immediately
preceding clause (i) or (viii) to the extent the same have been found in a final
non-appealable
-84-
90
judgment by a court of competent jurisdiction to constitute gross negligence or
willful misconduct.
(b) The Borrower's indemnification obligations under this Section shall
apply to all Indemnity Proceedings arising out of, or related to, the foregoing
whether or not an Indemnified Party is a named party in such Indemnity
Proceeding. In this connection, this indemnification shall cover all reasonable
costs and expenses of any Indemnified Party in connection with any deposition of
any Indemnified Party or compliance with any subpoena (including any subpoena
requesting the production of documents). This indemnification shall, among other
things, apply to any Indemnity Proceeding commenced by other creditors of the
Borrower or any Subsidiary, any shareholder of the Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of the Borrower), any account
debtor of the Borrower or any Subsidiary or by any Governmental Authority. This
indemnification shall apply to any Indemnity Proceeding arising during the
pendency of any bankruptcy proceeding filed by or against the Borrower and/or
any Subsidiary.
(c) All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(d) An Indemnified Party may conduct its own investigation and defense
of, and may formulate its own strategy with respect to, any Indemnified
Proceeding covered by this Section and, as provided above, all costs and
expenses incurred by the Indemnified Party shall be reimbursed by the Borrower.
No action taken by legal counsel chosen by an Indemnified Party in investigating
or defending against any such Indemnified Proceeding shall vitiate or in any way
impair the obligations and duties of the Borrower hereunder to indemnify and
hold harmless each such Indemnified Party; provided, however, that (i) if the
Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii)
the Borrower has provided evidence reasonably satisfactory to such Indemnified
Party that the Borrower has the financial wherewithal to reimburse such
Indemnified Party for any amount paid by such Indemnified Party with respect to
such Indemnified Proceeding, such Indemnified Party shall not settle or
compromise any such Indemnified Proceeding without the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed).
(e) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law. The Borrower's obligations hereunder shall
survive any termination of this Agreement and the other Loan Documents and the
payment in full of the Obligations, and are in addition to, and not in
substitution of, any other of their obligations set forth in this Agreement or
any other Loan Document to which it is a party.
-85-
91
SECTION 13.10. TERMINATION; SURVIVAL.
At such time as (a) all of the Commitments have been terminated, (b) none
of the Lenders is obligated any longer under this Agreement to make any Loans
and (c) all Obligations (other than obligations which survive as provided in the
following sentence) have been paid and satisfied in full, this Agreement shall
terminate. Notwithstanding any termination of this Agreement, or of the other
Loan Documents, the indemnities to which the Agent and the Lenders are entitled
under the provisions of Sections 12.7., 13.2. and 13.9. and any other provision
of this Agreement and the other Loan Documents, and the waivers of jury trial
and submission to jurisdictions contained in Section 13.4., shall continue in
full force and effect and shall protect the Agent and the Lenders against events
arising after such termination as well as before.
SECTION 13.11. SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.12. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE.
SECTION 13.13. COUNTERPARTS.
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.
SECTION 13.14. LIMITATION OF LIABILITY.
To the maximum extent permitted by Applicable Law, neither the Agent nor
any Lender, nor any affiliate, officer, director, employee, attorney, or agent
of the Agent or any Lender shall have any liability with respect to, and the
Borrower hereby waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by the Borrower in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
The Borrower hereby waives, releases, and agrees not to sue the Agent or any
Lender or any of the Agent's or any Lender's affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or financed hereby.
-86-
92
SECTION 13.15. ENTIRE AGREEMENT.
This Agreement, the Notes, and the other Loan Documents referred to
herein embody the final, entire agreement among the parties hereto and supersede
any and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties hereto.
SECTION 13.16. CONSTRUCTION.
The Agent, the Borrower and each Lender acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by the Agent, the Borrower and each Lender.
SECTION 13.17. NO NOVATION; EFFECT OF AMENDMENT AND RESTATEMENT.
THE PARTIES HERETO HAVE ENTERED INTO THIS AGREEMENT SOLELY TO AMEND AND
RESTATE THE TERMS OF THE EXISTING CREDIT AGREEMENT. THE PARTIES DO NOT INTEND
THIS AGREEMENT NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS
AGREEMENT AND THE TRANSACTION CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE,
A NOVATION OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN
CONNECTION WITH THE EXISTING CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
(AS DEFINED IN THE EXISTING CREDIT AGREEMENT). THE PARTIES AGREE THAT (A) ALL OF
THE LOAN DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT) CONSTITUTE AND
SHALL BE DEEMED TO BE LOAN DOCUMENTS (AS DEFINED IN THIS AGREEMENT); (B) ALL
SUCH LOAN DOCUMENTS REMAIN IN FULL FORCE AND EFFECT AND (C) ANY REFERENCE TO THE
EXISTING CREDIT AGREEMENT IN ANY SUCH LOAN DOCUMENTS SHALL BE DEEMED TO BE A
REFERENCE TO THIS AGREEMENT.
SECTION 13.18. RELEASE.
The Borrower hereby forever releases and forever discharges each of the
Agent and the Lenders and their respective predecessors, successors and assigns
and all past and present shareholders, directors, officers, agents, investors,
affiliates, subsidiaries, attorneys and accountants (collectively, the "Released
Parties") from any and all claims or causes of action the Borrower has or may
have against any Released Party arising out of or in connection with the
Existing Credit Agreement, any of the Loan Documents (as defined in the Existing
Credit Agreement) or any other document, instrument or agreement relating
thereto (collectively, "Released Claims"). Furthermore, the Borrower hereby
covenants and agrees not to bring, commence, prosecute, maintain, or cause or
permit to be brought, commenced, prosecuted or
-87-
93
maintained, any suit or action, either at law or in equity, in any court or
before any other administrative or judicial authority, against any Released
Party regarding any Released Claim.
[Signatures on Following Pages]
-88-
94
IN WITNESS WHEREOF, the parties hereto have caused this Second Amended
and Restated Credit Agreement to be executed by their authorized officers all as
of the day and year first above written.
BORROWER:
CAPTEC NET LEASE REALTY, INC.
By: /s/ W. ROSS MARTIN
---------------------------
Name: W. Ross Martin
----------------------
Title: Sr. Vice President
---------------------
[Signatures Continued on Next Page]
-89-
95
[Signature Page to Second Amended and Restated Credit Agreement dated as of
DECEMBER 1, 1998 with CAPTEC NET LEASE REALTY, INC.]
FIRST UNION NATIONAL BANK, as Agent and
as a Lender
By: /s/ DANIEL J. SULLIVAN
----------------------------------
Name: Daniel J. Sullivan
--------------------------------
Title: Director
-------------------------------
REVOLVING COMMITMENT AMOUNT:
$42,000,000
TERM LOAN COMMITMENT:
$28,000,000
LENDING OFFICE (all Types of Loans):
First Union National Bank
One First Union Center
Charlotte, North Carolina 28288-0166
Attn: Daniel J. Sullivan
Telecopier: (704) 383-6205
Telephone: (704) 383-6441
[Signatures Continued on Next Page]
-90-
96
[Signature Page to Amended and Restated Credit Agreement dated as of
DECEMBER 1, 1998 with CAPTEC NET LEASE REALTY, INC.]
MICHIGAN NATIONAL BANK
By: /s/ MARK S. ABEN
---------------------------------
Name: Mark S. Aben
-------------------------------
Title: Sr. R.M.
------------------------------
REVOLVING COMMITMENT AMOUNT:
$9,000,000
TERM LOAN COMMITMENT:
$6,000,000
LENDING OFFICE (all Types of Loans):
Michigan National Bank
201 South Main Street
Ann Arbor, Michigan 48104
Attn: Mark S. Aben
Telecopier: (734) 747-7637
Telephone: (734) 747-7623
[Signatures Continued on Next Page]
-91-
97
[Signature Page to Amended and Restated Credit Agreement dated as of
DECEMBER 1, 1998 with CAPTEC NET LEASE REALTY, INC.]
BANKBOSTON, N.A.
By: /s/ CHRISTOPHER M. HOLTZ
-------------------------------
Name: Christopher M. Holtz
--------------------------
Title: Vice President
-------------------------
REVOLVING COMMITMENT AMOUNT:
$9,000,000
TERM LOAN COMMITMENT:
$6,000,000
LENDING OFFICE (all Types of Loans):
BankBoston, N.A.
100 Federal Street, Mail Stop 01-09-04
Boston, Massachusetts 02100
Attn: Patricia M. Griffiths
Telecopier: (617) 434-0630
Telephone: (617) 434-3431
ADDRESS FOR NOTICES:
BankBoston, N.A.
100 Federal Street, Mail Stop 01-09-04
Boston, Massachusetts 02100
Attn: Thomas P. Tansi
Telecopier: (617) 434-0630
Telephone: (617) 434-5516
[Signatures Continued on Next Page]
-92-
98
[Signature Page to Amended and Restated Credit Agreement dated as of
DECEMBER 1, 1998 with CAPTEC NET LEASE REALTY, INC.]
FIRST AMERICAN BANK TEXAS, SSB
By: /s/ AMY HAWS
-------------------------------
Name: Amy Haws
--------------------------
Title: Assistant Vice President
-------------------------
REVOLVING COMMITMENT AMOUNT:
$8,571,429
TERM LOAN COMMITMENT:
$5,714,286
LENDING OFFICE (all Types of Loans):
First American Bank Texas, SSB
14561 Dallas Parkway, Suite 400
Dallas, Texas 75240
Attn: Sherry C. McInturf
Telecopier: (972) 419-3308
Telephone: (972) 419-3369
ADDRESS FOR NOTICES:
First American Bank Texas, SSB
14561 Dallas Parkway, Suite 400
Dallas, Texas 75240
Attn: Amy S. Haws
Telecopier: (972) 419-3308
Telephone: (972) 419-3342
[Signatures Continued on Next Page]
-93-
99
[Signature Page to Amended and Restated Credit Agreement dated as of
DECEMBER 1, 1998 with CAPTEC NET LEASE REALTY, INC.]
AMSOUTH BANK
By: /s/ KATHERINE MCDAVID
-----------------------------
Name: Katherine McDavid
------------------------
Title: AVP
-----------------------
REVOLVING COMMITMENT AMOUNT:
$6,428,571
TERM LOAN COMMITMENT:
$4,285,714
LENDING OFFICE (all Types of Loans):
AmSouth Bank
1900 Fifth Avenue, North, 9th Floor
Commercial Real Estate
Birmingham, Alabama 35203
Attn: Gina Booth
Telecopier: (205) 326-4075
Telephone: (205) 801-0239
ADDRESS FOR NOTICES:
AmSouth Bank
1900 Fifth Avenue, North, 9th Floor
Commercial Real Estate
Birmingham, Alabama 35203
Attn: Katherine McDavid
Telecopier: (205) 326-4075
Telephone: (205) 326-4783
-94-