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EXHIBIT 10.1
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CREDIT AGREEMENT
Dated as of January 8, 1998
by and among
ALLIED CAPITAL CORPORATION
and
ALLIED CAPITAL SBLC CORPORATION
as Borrowers,
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 12.5(a),
as Lenders,
RIGGS BANK N.A.,
as Managing Agent,
BANKBOSTON, N.A.,
as Disbursing Agent,
and
FIRST UNION NATIONAL BANK,
as Syndication Agent
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.............................................................................................1
Section 1.1. Definitions.................................................................................1
Section 1.2. General; References to Times...............................................................16
ARTICLE 2 CREDIT FACILITY........................................................................................17
Section 2.1. Loans......................................................................................17
Section 2.2. Rates and Payment of Interest on Loans.....................................................18
Section 2.3. Number of Interest Periods.................................................................19
Section 2.4. Repayment of Loans.........................................................................19
Section 2.5. Prepayments................................................................................19
Section 2.6. Continuation...............................................................................19
Section 2.7. Conversion.................................................................................20
Section 2.8. Note.......................................................................................20
Section 2.9. Voluntary Reductions of the Commitment.....................................................21
ARTICLE 3 PAYMENTS, FEES AND OTHER GENERAL PROVISIONS............................................................21
Section 3.1. Payments...................................................................................21
Section 3.2. Pro Rata Treatment.........................................................................21
Section 3.3. Sharing of Payments, Etc...................................................................22
Section 3.4. Several Obligations........................................................................23
Section 3.5. Minimum Amounts............................................................................23
Section 3.6. Fees.......................................................................................23
Section 3.7. Computations...............................................................................23
Section 3.8. Usury......................................................................................24
Section 3.9. Agreement Regarding Interest and Charges...................................................24
Section 3.10. Statements of Account.....................................................................24
Section 3.11. Defaulting Lenders........................................................................24
Section 3.12. Taxes.....................................................................................26
ARTICLE 4 YIELD PROTECTION, ETC..................................................................................27
Section 4.1. Additional Costs; Capital Adequacy.........................................................27
Section 4.2. Suspension of LIBOR Loans..................................................................28
Section 4.3. Illegality.................................................................................28
Section 4.4. Compensation...............................................................................29
Section 4.5. Treatment of Affected Loans................................................................29
Section 4.6. Change of Lending Office...................................................................30
Section 4.7. Assumptions Concerning Funding of LIBOR Loans..............................................30
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ARTICLE 5 CONDITIONS PRECEDENT...................................................................................30
Section 5.1. Initial Conditions Precedent...............................................................30
Section 5.2. Conditions Precedent to All Loans..........................................................32
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.........................................................................33
Section 6.1. Representations and Warranties.............................................................33
Section 6.2. Survival of Representations and Warranties, Etc............................................38
ARTICLE 7 AFFIRMATIVE COVENANTS..................................................................................39
Section 7.1. Preservation of Existence and Similar Matters..............................................39
Section 7.2. Compliance with Applicable Law and Material Contracts......................................39
Section 7.3. Maintenance of Property....................................................................39
Section 7.4. Conduct of Business........................................................................40
Section 7.5. Insurance..................................................................................40
Section 7.6. Payment of Taxes and Claims................................................................40
Section 7.7. Visits and Inspections.....................................................................40
Section 7.8. Use of Proceeds............................................................................41
Section 7.9. Environmental Matters......................................................................41
Section 7.10. Books and Records.........................................................................41
Section 7.11. Status of RIC and BDC.....................................................................41
Section 7.12. ERISA Exemptions..........................................................................41
Section 7.13. Further Assistance........................................................................42
Section 7.14. Borrowing Subsidiaries....................................................................42
Section 7.15. Consents and Waivers from Lenders.........................................................42
ARTICLE 8 INFORMATION............................................................................................42
Section 8.1. Quarterly Financial Statements.............................................................43
Section 8.2. Year-End Statements........................................................................43
Section 8.3. Compliance Certificate; Borrowing Base Certificate.........................................43
Section 8.4. Other Information..........................................................................44
ARTICLE 9 NEGATIVE COVENANTS.....................................................................................46
Section 9.1. Financial Covenants........................................................................46
Section 9.2. Indebtedness...............................................................................47
Section 9.3. Contingent Obligations.....................................................................48
Section 9.4. Investments................................................................................48
Section 9.5. Liens; Agreements Regarding Liens; Other Matters...........................................49
Section 9.6. Distributions to Shareholders..............................................................49
Section 9.7. Merger, Consolidation and Sales of Assets..................................................50
Section 9.8. Fiscal Year................................................................................50
Section 9.9. Modifications to Material Contracts........................................................50
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Section 9.10. Transactions with Affiliates..............................................................51
ARTICLE 10 DEFAULT...............................................................................................51
Section 10.1. Events of Default.........................................................................51
Section 10.2. Remedies Upon Event of Default............................................................54
Section 10.3. Remedies Upon Certain Defaults............................................................55
Section 10.4. Allocation of Proceeds....................................................................55
Section 10.5. Performance by Agent......................................................................56
Section 10.6. Rights Cumulative.........................................................................56
ARTICLE 11 THE AGENTS............................................................................................56
Section 11.1. Authorization and Action..................................................................56
Section 11.2. Agent's Reliance, Etc.....................................................................57
Section 11.3. Defaults..................................................................................57
Section 11.4. Agent as Lender...........................................................................58
Section 11.5. Approvals of Lenders......................................................................58
Section 11.6. Lender Credit Decision, Etc...............................................................58
Section 11.7. Indemnification of Agent..................................................................59
Section 11.8. Successor Agent...........................................................................60
Section 11.9. Syndication Agent.........................................................................60
ARTICLE 12 MISCELLANEOUS.........................................................................................61
Section 12.1. Notices...................................................................................61
Section 12.2. Expenses..................................................................................62
Section 12.3. Setoff....................................................................................63
Section 12.4. Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.........................63
Section 12.5. Successors and Assigns....................................................................64
Section 12.6. Removal of Lenders........................................................................66
Section 12.7. Amendments................................................................................67
Section 12.8. Nonliability of Agent and Lenders.........................................................68
Section 12.9. Confidentiality...........................................................................68
Section 12.10. Indemnification..........................................................................68
Section 12.11. Termination; Survival....................................................................70
Section 12.12. Severability of Provisions...............................................................70
Section 12.13. Governing Law............................................................................70
Section 12.14. Counterparts.............................................................................71
Section 12.15. Limitation of Liability..................................................................71
Section 12.16. Entire Agreement.........................................................................71
Section 12.17. Construction.............................................................................71
SCHEDULE 6.1(b) Ownership Structure
SCHEDULE 6.1(g) Indebtedness and Liens
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SCHEDULE 6.1(h) Material Contracts
SCHEDULE 9.3 Contingent Obligations
EXHIBIT A Form of Assignment and Acceptance Agreement
EXHIBIT B Form of Guaranty
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 Note
EXHIBIT G Form of Opinion of Counsel
EXHIBIT H Form of Compliance Certificate
EXHIBIT I-1 Form of Borrowing Base Certificate of Company
EXHIBIT I-2 Form of Borrowing Base Certificate of SBLC
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THIS CREDIT AGREEMENT dated as of January 8, 1998, by and among ALLIED
CAPITAL CORPORATION, a corporation organized under the laws of the State of
Maryland (the "Company"), ALLIED CAPITAL SBLC CORPORATION, a Maryland
corporation ("SBLC," and together with the Company, collectively, the
"Borrowers" and individually, a "Borrower"), each of the financial institutions
initially a signatory hereto together with their assignees pursuant to Section
12.5(d) (the "Lenders"), BANKBOSTON, N.A., a national banking association, as
Disbursing Agent (the "Disbursing Agent"), FIRST UNION NATIONAL BANK, a national
banking association, as Syndication Agent (the "Syndication Agent"), and RIGGS
BANK N.A., a national banking association, as Managing Agent (the "Managing
Agent").
WHEREAS, the Lenders desire to make available to the Company a
$150,000,000 revolving credit facility (which includes a $30,000,000
sub-facility for SBLC) on the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE 1
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:
"ADDITIONAL COSTS" has the meaning given that term in Section 4.1.
"ADJUSTED DEBT" means at any time on a consolidated basis for the
Company and its Subsidiaries, all Indebtedness other than non-recourse
Indebtedness of the Company or a Subsidiary arising out of an asset
securitization where the liability of the Company or the Subsidiary is limited
to breach of representations and warranties related to assets that are the
subject of such securitization.
"ADJUSTED EBIT" means, for any period with respect to the Company and
its Subsidiaries on a consolidated basis, income after deduction of all expenses
and other proper charges other than taxes and Interest Expense, including
realized gains and losses, but excluding gain income related to asset
securitization transactions, unrealized gains and losses on Investments and the
amortization of market discount income related to Investments acquired at less
than face value, all as determined in accordance with 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 one 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
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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).
"AFFILIATE" means any Person (other than an Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control with,
the Company; (b) directly or indirectly owning or holding five percent (5.0%) or
more of any equity interest in the Company; or (c) five percent (5.0%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by the Company. 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,
other than by investment advisory contracts entered into in the ordinary course
of business of the Company or a Subsidiary of the Company.
"AGENTS" means the Disbursing Agent, the Syndication Agent and the
Managing Agent, individually and collectively.
"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.
"ASSIGNEE" has the meaning given that term in Section l2.5(d).
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an Assignment and
Acceptance Agreement among a Lender, an Assignee and each Agent, substantially
in the form of Exhibit A or such other form as may be agreed to by such Lender,
such Assignee and each Agent.
"BANKBOSTON RATE" means the rate of interest per annum announced
publicly by the Disbursing Agent as its base rate from time to time. The
BankBoston Rate is not necessarily the best or the lowest rate of interest
offered by the Disbursing Agent or any Lender.
"BASE RATE" means the per annum rate of interest equal to the greater
of (a) the BankBoston 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
BankBoston 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 Disbursing Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged by
the Disbursing 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.
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"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.
"BORROWER" has the meaning set forth in the introductory paragraph
hereof and shall include each Borrower's successors and assigns.
"BORROWING BASE" means, at any time, with respect to a Borrower and
without duplication, (a) 100% of cash and Cash Equivalents owned by such
Borrower, free and clear of all Liens, plus (b) 50% of any other Eligible Assets
owned by such Borrower (or in the case of the Borrowing Base of the Company, the
Subordinated CMBS Tranches may be owned by the QRS), provided that: (1) not more
than 50% of the Borrowing Base of the Company shall be derived from Commercial
Mortgage Loans (excluding those made pursuant to Section 504 of the SBA Act)
owned by the Company; (2) not more than 50% of the Borrowing Base of the Company
shall be derived from Mezzanine Loans owned by the Company; (3) not more than
20% of the Borrowing Base of the Company shall be derived from Subordinated CMBS
Tranches owned by the QRS; (4) not more than 15% of the Borrowing Base of the
Company shall be derived from Equity Investments owned by the Company, and (5)
not more than 25% of the Borrowing Base of the Company shall be derived from
Loans made pursuant to Sections 7(a) and 504 of the SBA Act, minus (c) all
Unsecured Indebtedness and Contingent Obligations of such Borrower. For the
purpose of determining the Borrowing Base, the value of Eligible Assets shall be
determined in accordance with the market valuation method pursuant to GAAP,
provided that (i) in no event shall a debt security be valued at more than the
outstanding principal balance thereof, and (ii) the market valuation method used
by the Company and the corresponding values of Eligible Assets must be
acceptable to the Managing Agent in its reasonable discretion.
"BORROWING BASE ASSETS" means, at any time, Eligible Assets included in
the Borrowing Base with respect to which Loans are outstanding.
"BORROWING BASE CERTIFICATE" has the meaning given such term in Section
8.3.
"BUSINESS DAY" means (a) any day other than a Saturday, Sunday or other
day on which banks in New York City, New York, 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.
"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
shall be the capitalized amount of such obligations determined in accordance
with such principles.
"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
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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-1 or the equivalent by Standard & Poor's Rating Group, a division
of McGraw-Hill, Inc. ("S&P") or at least P-1 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-1 or the equivalent thereof by S&P or
at least P-1 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.
"CMBS" means any security that entitles the holder thereof to receive
all or a specified portion of, or to receive payments based upon payments
received on, the proceeds of Commercial Mortgage Loans, either fixed or
revolving.
"COMMERCIAL MORTGAGE LOAN" means a loan secured by a Lien on improved
real estate used for commercial purposes and occupied by the applicable Obligor.
"COMMITMENT" means, as to each Lender, such Lender's obligation to make
Loans pursuant to Section 2.1 in an amount up to, but not exceeding, the amount
set forth for such Lender on its signature page hereto as such Lender's "Initial
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 2.9
or as appropriate to reflect any assignments to or by such Lender effected in
accordance with Section 12.5.
"COMMITMENT PERCENTAGE" means, as to each Lender, the ratio, expressed
as a percentage, of (a) the amount of such Lender's Commitment to (b) the sum of
the aggregate amount of the 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
8.3.
"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
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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. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount so
guaranteed.
"CONTINUE," "CONTINUATION" AND "CONTINUED" each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest Period
pursuant to Section 2.6.
"CONVERT," "CONVERSION" AND "CONVERTED" each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.7.
"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, at any time as to any Person, the lowest rating
assigned by a Rating Agency to each series of rated senior unsecured long term
indebtedness of such Person.
"DEFAULT" means any of the events specified in Section 10.1, 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.l1.
"DISBURSING AGENT" means BankBoston, N.A., in its capacity as
contractual representative of the Lenders under the terms of this Agreement, and
any of its successors.
"DOLLARS" or "$" means the lawful currency of the United States of
America.
"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 5.1.
shall have been fulfilled.
"ELIGIBLE ASSETS" means any of the following Investments that satisfy
all of the Eligibility Requirements: (a) cash and Cash Equivalents, (b)
Commercial Mortgage Loans; (c) Subordinated CMBS Tranches; (d) Mezzanine Loans;
(e) Commercial Mortgage Loans made pursuant to Section 504 of the SBA Act; (f)
loans made pursuant to Section 7(a) of the SBA Act, and (g) Equity Investments.
"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
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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 acceptable to the Managing Agent.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing under Section 10.1.(a) or (b), the "Eligible Assignee" shall mean any
Person that is not an individual.
"ELIGIBILITY REQUIREMENTS" means, for any Eligible Asset, that at all
times the following statements are accurate and complete:
(a) No Obligor on the Eligible Asset is an Affiliate of a Borrower;
(b) The Eligible Asset is owned by a Borrower, or, in the case of
Subordinated CMBS Tranches, by the QRS;
(c) The Eligible Asset is a legal, valid and binding obligation of each
Obligor thereon, enforceable in accordance with its terms;
(d) No payment on the Eligible Asset is more than 45 days past due, nor
has such Eligible Asset been restructured during the most recently ended
12-month period in connection with the inability of the Obligor to perform its
obligations as they existed prior to such restructuring;
(e) The Eligible Asset is free and clear of all Liens, other than Liens
described in clause (a) of the definition of Permitted Liens;
(f) The Eligible Asset complies with all Applicable Laws;
(g) Each Obligor on the Eligible Asset is a United States citizen or
corporation, partnership, limited liability company or other entity organized
and existing under the laws of one of the states of the United States.;
(h) The Eligible Asset is not owned by SBIC or SSBIC;
(i) The Eligible Asset is not secured by real or personal property
located outside of the United States; and
(j) The Eligible Asset does not arise out of a sale and leaseback
transaction or a real estate equity participation.
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"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.
7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.; Solid
Waste Disposal Act, 42 U.S.C. 6901 et seq.; Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.; National
Environmental Policy Act, 42 U.S.C. 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 INVESTMENT" means an Investment by the Company in an Equity
Issuance of a Person that is an operating business that sells goods or services.
"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 Company, 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 Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"EVENT OF DEFAULT" means any of the events specified in Section 10.1,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward to the nearest l/l00th 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 for 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
Disbursing Agent by federal funds dealers selected by the Disbursing Agent on
such day on such transaction as determined by the Disbursing Agent.
"FEES" means the fees and commissions provided for or referred to in
Section 3.6 and any other fees payable by the Company hereunder or under any
other Loan Document.
"FOREIGN LENDER" means any Lender organized under the laws of a
jurisdiction other than the United States of America.
"GAAP" means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the
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Financial Accounting Standards Board and in such statements, opinions and
pronouncements of such other entities with respect to financial accounting of
for-profit entities as shall be accepted by a substantial segment of the
accounting profession in the United States.
"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.
"GUARANTOR" means any Subsidiary that is required to execute and
deliver a Guaranty.
"GUARANTY" means a Guaranty executed by any Subsidiary and
substantially in the form of Exhibit B.
"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,
"TLCP" toxicity, or "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; (d)
asbestos in any form; or (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, (iii) consisting of repurchase
agreements, whether on a recourse or a non-recourse basis, (iv) 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, or (v) arising out of an asset securitization where the liability of
such Person is limited to the breach of representations and warranties related
to the assets that are the subject of such securitization; (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 all obligations of such Person as the issuer of any
letters of credit or acceptances (whether or not the same have been presented
for payment); and (e) all Indebtedness
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of other Persons which (i) such Person has guaranteed or which is otherwise
recourse to such Person or (ii) are secured by a Lien on any property of such
Person.
"INTELLECTUAL PROPERTY" has the meaning given that term in Section
6.1(r).
"INTEREST EXPENSE" means, with respect to a Person and for any period,
the total consolidated interest expense (including, without limitation,
capitalized interest expense and interest expense attributable to Capitalized
Lease Obligations) of such Person and in any event shall include all interest
expense with respect to any Indebtedness in respect of which such Person 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, or third calendar month thereafter, as
the Company may select in a Notice of Borrowing, Notice of Continuation or
Notice of Conversion, as the case may be, except that each Interest Period for a
LIBOR Loan 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: (i) if any Interest
Period would otherwise end after the Termination Date, such Interest Period
shall end on the Termination Date, (ii) 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 (iii)
notwithstanding the immediately preceding clause (i), 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.
"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; (d)
any other investment in any other Person; and (e) any commitment or option to
make an Investment in any other Person.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
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"INVESTMENT GRADE RATING" means a Credit Rating of BBB- or higher by
S&P, Baa3 or higher by Moody's, or the equivalent or higher of either such
rating by another Rating Agency.
"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 Disbursing 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" 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 LOAN" means a Loan 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.
"LOAN" means a loan made by Lender to the Company pursuant to Section
2.1.
"LOAN DOCUMENT" means this Agreement, each Note, each Guaranty and each
other document or instrument now or hereafter executed and delivered by a
Borrower or any Subsidiary in connection with, pursuant to or relating to this
Agreement.
"MANAGING AGENT" means Riggs Bank N.A., in its capacity as contractual
representative of the Lenders under the terms of this Agreement, and any of its
successors.
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"MASS MUTUAL" means Massachusetts Mutual Life Insurance Company.
"MASS MUTUAL AGREEMENT" means the Note Agreement, dated as of April 30,
1992, as amended on September 1, 1992, among Mass Mutual, Allied Capital
Corporation, Allied Investment Corporation and Allied Financial Services
Corporation, which has been assumed by the Company in connection with the merger
described in the Proxy.
"MATERIAL ADVERSE EFFECT" means a materially adverse effect on (a) the
business, assets, liabilities, financial condition, results of operations or
business prospects of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company to perform its obligations under any Loan Document to
which it is a party which does not result from a material adverse effect on the
items described in the immediate preceding clause (a), (c) the validity or
enforceability of any of the Loan Documents, (d) the rights and remedies of the
Lenders and the Agents under any of such Loan Documents or (e) the timely
payment of the principal of or interest on the Loans or other amounts payable in
connection therewith. Except with respect to representations made or deemed made
by the Company or any Subsidiary in any of the other Loan Documents to which it
is a party, all determinations of materiality shall be made by the Requisite
Lenders in their reasonable judgment unless expressly provided otherwise.
"MATERIAL CONTRACT" means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Company or any Subsidiary
is a party as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto could have a Material Adverse Effect.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $5,000,000.
"MATERIAL SUBSIDIARY" means, as of the date of any determination
thereof, any Subsidiary which has total assets having a value (determined in
accordance with the market valuation method pursuant to GAAP) greater than or
equal to $20,000,000.
"MERRILL LYNCH" means Merrill Lynch Mortgage Capital, Inc.
"MERRILL LYNCH AGREEMENT" means, individually and collectively, (a) the
Amended and Restated Master Repurchase Agreement, dated as of March 22, 1996, as
amended on November 11, 1996, and July 30, 1997, among Merrill Lynch, Allied
Capital Commercial Corporation and Business Mortgage Investors, Inc., and (b)
the Master Repurchase Agreement, dated as of March 22, 1996, as amended on
November 11, 1996, between Merrill Lynch and Allied Capital Commercial
Corporation, each of which has been assumed by the Company in connection with
the merger described in the Proxy.
"MEZZANINE LOANS" means loans that are not loans made pursuant to the
SBA Act and that are made to businesses for acquisitions, growth, working
capital and other business purposes, which may be combined with rights to
acquire equity interests in such businesses.
"MOODY'S" means Moody's Investors Services, Inc.
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"MORGAN STANLEY" means Morgan Stanley Mortgage Capital, Inc.
"MORGAN STANLEY AGREEMENT" means the Master Loan and Security
Agreement, dated as of August 21, 1997, among Morgan Stanley, Allied Capital
Commercial Corporation and Business Mortgage Investors, Inc., which has been
assumed by the Company in connection with the merger described in the Proxy.
"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 PROCEEDS" means, with respect to an Equity Issuance by a Person,
the aggregate amount of all cash received by such Person in respect of such
Equity 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.
"NOTE" has the meaning given such term in Section 2.8.
"NOTICE OF BORROWING" means a notice in the form of Exhibit C to be
delivered to the Disbursing Agent pursuant to Section 2.1(b) evidencing a
Borrower's request for a borrowing of Loans.
"NOTICE OF CONTINUATION" means a notice in the form of Exhibit D to be
delivered to the Disbursing Agent pursuant to Section 2.6 evidencing a
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 Disbursing Agent pursuant to Section 2.7 evidencing a
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 and (b)
all other indebtedness, liabilities, obligations, covenants and duties of the
Borrowers owing to the Agents 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, all Fees and indemnification
obligations, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any promissory note.
"OBLIGOR" means each maker, endorser, guarantor and issuer of an
Eligible Asset.
"OPIC" means Overseas Private Investment Corporation.
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"OPIC AGREEMENT" means the Loan Agreement, dated as of April 10, 1995,
between OPIC and Allied Capital Corporation.
"OTHER RELEVANT SUBSIDIARY" means any Subsidiary, individually or
together with other Subsidiaries, the occurrence of any of the events described
in Sections 10.1(f) or 10.1(g) with respect to which could reasonably be
expected to have a Material Adverse Effect.
"PARTICIPANT" has the meaning given that term in Section 12.5(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 7.6;
(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)
Liens in favor of the Managing Agent for the benefit of the Lenders.
"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.
"PORTFOLIO INVESTMENT" means any Investment of a Borrower made or
acquired in the ordinary course of business in an eligible portfolio company
(within the meaning of the Investment Company Act) or in any other Person,
provided that, in each case, such Investment may be classified as a portfolio
Investment in accordance with GAAP and such classification is acceptable to the
Managing Agent in its reasonable discretion.
"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 two percent (2.0%) plus the Base Rate as in effect from time to
time.
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"PRINCIPAL OFFICE" means the office of the Disbursing Agent located at
100 Federal Street, Boston, Massachusetts, or such other office of the
Disbursing Agent as the Disbursing Agent may designate from time to time.
"PRO FORMA DEBT SERVICE" means at any time for the Company and its
Subsidiaries on a consolidated basis the sum of principal payments of
Indebtedness scheduled to be repaid during the next succeeding 12-month period
(excluding principal payments with respect to the Loans) plus estimated Interest
Expense for such 12-month period, as determined by the Managing Agent in good
faith using reasonable assumptions of outstanding Indebtedness and interest
rates applicable thereto.
"PROXY" means the Joint Proxy Statement/Prospectus, dated October 9,
1997, furnished to the stockholders of Allied Capital Corporation, Allied
Capital Corporation II, Allied Capital Commercial Corporation, Allied Capital
Lending Corporation and Allied Capital Advisers, Inc.
"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.
"QRS" means a Wholly Owned Subsidiary of REIT that is a qualified real
estate investment trust subsidiary within the meaning of the Internal Revenue
Code.
"RATING AGENCY" means S&P, Moody's or any other nationally recognized
securities rating agency selected by the Borrower and acceptable to the
Requisite Lenders.
"REGISTER" has the meaning given that term in Section 12.5(e).
"REGULATORY CHANGE" means, with respect to any Lender, any change
effective after the Agreement Date 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 made or issued after
the Agreement Date regarding capital adequacy.
"REIT" means Allied Capital REIT, Inc., a Maryland corporation.
"REQUISITE LENDERS" means, as of any date, (a) when there are three or
fewer Lenders, all Lenders, and (b) when there are more than three Lenders,
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.
"RIC" means a Person qualifying for treatment as a "regulated
investment company" under the Internal Revenue Code.
"SBA" means the Small Business Administration.
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"SBA ACT" means the Small Business Investment Act of 1958, as amended.
"SBIC" means Allied Investment Corporation, a Maryland corporation.
"SECURED INDEBTEDNESS" means, with respect to any Person, any
Indebtedness of such Person that is secured in any manner by any Lien, and shall
include such Person's pro rata share of the Secured Indebtedness of any of such
Person's Unconsolidated Affiliates.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, together with all rules and regulations issued thereunder.
"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.
"S&P" means Standard & Poor's Rating Group, a division of McGraw-Hill
Companies, Inc.
"SSBIC" means Allied Capital Financial Corporation, a Maryland
corporation.
"SUBORDINATED CMBS TRANCHE" means the series of a CMBS issuance that is
junior to all CMBS in such issuance that carry a rating of a Rating Agency and
is senior to any other CMBS of such issuance.
"SUBORDINATED DEBT" means Indebtedness of the Company or any of its
Subsidiaries that is subordinated in right of payment and otherwise to the Loans
and the other Obligations in a manner satisfactory to the Managing Agent and the
Requisite Lenders in their sole and absolute discretion.
"SUBSIDIARY" means, for any Person, any corporation, partnership,
limited liability company 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.
"MAJORITY OWNED SUBSIDIARY" means any such corporation, partnership, limited
liability company or other entity of which greater than 50% of the equity
securities or other ownership interests are so owned or controlled. "WHOLLY
OWNED SUBSIDIARY" means any such corporation, partnership, limited liability
company or other entity of which all of the equity securities or other ownership
interests (other than, in the case of a corporation, directors' qualifying
shares) are so owned or controlled. Notwithstanding the foregoing, a Portfolio
Investment of a Borrower or a Subsidiary shall not be a Subsidiary of such
Borrower or such Subsidiary.
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"SYNDICATION AGENT" means First Union National Bank, in its capacity as
contractual representative of the Lenders under this Agreement, and any of its
successors.
"TANGIBLE NET WORTH" means, for any Person and as of a given date, such
Person's total stockholder's equity minus (to the extent reflected in
determining stockholders' equity of such Person): (a) the amount of any net
write-up in the book value of any assets contained in any balance sheet of such
Person resulting from revaluation thereof or any net write-up 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 June 30, 1999.
"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.
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
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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 Company or a
Subsidiary of such Subsidiary and a reference to an "Affiliate" means a
reference to an Affiliate of the Company. 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 Boston, Massachusetts, time.
ARTICLE 2
CREDIT FACILITY
SECTION 2.1. 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 Loans to the Borrowers in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the amount of such Lender's Commitment, provided, however, that in no event
shall (1) the aggregate principal amount of all outstanding Loans to the Company
exceed the lesser of (i) the Borrowing Base of the Company, and (ii) the
aggregate amount of the Commitments as in effect from time to time, and (2) the
aggregate principal amount of Loans to SBLC exceed the lesser of (i) the
Borrowing Base of SBLC, and (ii) $30,000,000, and (3) the aggregate principal
amount of all outstanding Loans exceed the aggregate amount of the Commitments
as in effect from time to time. Subject to the terms and conditions of this
Agreement, during the period from the Effective Date to but excluding the
Termination Date, the Borrowers may borrow, repay and reborrow Loans hereunder.
(b ) Requesting Loans. The Company shall give the Disbursing Agent
notice pursuant to a Notice of Borrowing or telephonic notice of each borrowing
of Loans. Each Notice of Borrowing shall be delivered to the Disbursing Agent
before 12:00 noon (a) in the case of LIBOR Loans, on the date two Business Days
prior to the proposed date of such borrowing and (b) in the case of Base Rate
Loans, on 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 Company pursuant to a Notice of
Borrowing sent to the Disbursing Agent by telecopy on the same day of the giving
of such telephonic notice. The Disbursing 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 Disbursing Agent (but in any event
not later than 1:00 p.m. on the date of receipt thereof). Each Notice of
Borrowing or telephonic notice of each borrowing shall be irrevocable once given
and binding on the applicable Borrower specified therein.
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(c ) Disbursements of Loan Proceeds. No later than 3:00 p.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 Disbursing Agent at the
Principal Office, in immediately available funds, the proceeds of the Loan to be
made by such Lender. With respect to Loans to be made after the Effective Date,
unless the Disbursing 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 Disbursing Agent the Loan to be made by such Lender on such date, the
Disbursing Agent may assume that such Lender will make the proceeds of such Loan
available to the Disbursing Agent on the date of the requested borrowing as set
forth in the Notice of Borrowing and the Disbursing Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the
applicable Borrower the amount of such Loan to be provided by such Lender.
Subject to satisfaction of the applicable conditions set forth in Article 5 for
such borrowing, the Disbursing Agent will make the proceeds of such borrowing
available to the applicable Borrower no later than 4:00 p.m. on the date and at
the account specified by the Company in such Notice of Borrowing.
SECTION 2.2. RATES AND PAYMENT OF INTEREST ON LOANS.
(a ) Rates. Each Borrower severally promises to pay to the Disbursing
Agent for account of each Lender interest on the unpaid principal amount of each
Loan made by such Lender to such Borrower 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:
(1) during such periods as such Loan is a Base Rate Loan,
at the Base Rate (as in effect from time to time); and
(2) during such periods as such Loan is a LIBOR Loan, at
the Adjusted Eurodollar Rate for such Loan for the Interest Period
therefor, plus 1.25%.
Notwithstanding the foregoing, (i) during the continuance of an Event of
Default, and prior to maturity or acceleration of the Obligations, each Borrower
hereby promises to pay to the Disbursing Agent for account of each Lender
interest at 2% per annum in excess of the rates otherwise payable hereunder on
the aggregate outstanding principal of all Loans made by such Lender to such
Borrower and on any other amount payable by such Borrower hereunder or under the
Notes held by such Lender (including without limitation, overdue accrued but
unpaid interest to the extent permitted under Applicable Law), and (ii) upon the
maturity or acceleration of the Obligations in accordance with the terms hereof,
each Borrower promises to pay to the Disbursing Agent for the account of each
Lender interest at the Post-Default Rate on such amounts.
(b ) Payment of Interest. Accrued interest on each Loan shall be
payable as provided in each of the following clauses which apply to such Loan:
(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, (iii) in the case of a LIBOR 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),
and (iv) in the case of any Base Rate Loan, upon the payment or prepayment
thereof in full. Interest payable during the
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continuance of an Event of Default but prior to maturity or acceleration of the
Obligations shall be payable in accordance with the immediately preceding
sentence. 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 Disbursing Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Company. All determinations by the Disbursing Agent of an interest rate
hereunder shall be conclusive and binding on the Lenders and the Borrowers for
all purposes, absent manifest error.
SECTION 2.3. NUMBER OF INTEREST PERIODS.
There may be no more than five (5) different Interest Periods for LIBOR
Loans outstanding at the same time.
SECTION 2.4. REPAYMENT OF LOANS.
Each Borrower shall repay the entire outstanding principal amount of,
and all accrued but unpaid interest on, the Loans made to it on the Termination
Date.
SECTION 2.5. PREPAYMENTS.
(a ) Optional. Subject to Section 4.4, a Borrower may prepay any
Loan made to it at any time without premium or penalty.
(b ) Mandatory. If at any time either (i) the aggregate principal
amount of all outstanding Loans, exceeds the aggregate amount of the Commitments
in effect at such time, or (ii) the aggregate principal amount of all
outstanding Loans to the Company exceeds the Borrowing Base of the Company in
effect at such time, or (iii) the aggregate principal amount of all outstanding
Loans to SBLC exceeds the Borrowing Base of SBLC in effect at such time, then in
any such case the applicable Borrower shall immediately pay to the Disbursing
Agent for the accounts of the Lenders the amount of such excess. If the
applicable Borrower is required to pay any outstanding LIBOR Loans by reason of
this Section prior to the end of the applicable Interest Period therefor, such
Borrower shall pay all amounts due under Section 4.4.
SECTION 2.6. CONTINUATION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Company 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, as
applicable, by selecting a new Interest Period for such 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 Company giving to the Disbursing Agent a Notice of
Continuation not later than 12:00 noon on the second Business Day prior to the
date of any such Continuation. Such notice by the Company 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
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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 applicable Borrower once given. Promptly after receipt of a
Notice of Continuation (and in any event not later than 1:00 p.m. on the date of
receipt thereof), the Disbursing Agent shall notify each Lender by telex or
telecopy, or other similar form of transmission of the proposed Continuation. If
the Company 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.
SECTION 2.7. CONVERSION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Company may on any Business Day, upon the Company's giving of a
Notice of Conversion to the Disbursing 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. Each such Notice of Conversion shall be given by the
Company not later than 12:00 noon (a) on the Business Day prior to the date of
any proposed Conversion into Base Rate Loans or (b) on the second Business Day
prior to the date of any proposed Conversion into LIBOR Loans. Promptly upon
receipt of a Notice of Conversion (and in any event not later than 1:00 p.m. on
the date of receipt thereof), the Disbursing 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 or telecopy confirmed immediately in writing if by telephone, in
the form of a Notice of Conversion specifying (1) the requested date of such
Conversion, (2) the Type of Loan to be Converted, (3) the portion of such Type
of Loan to be Converted, (4) the Type of Loan such Loan is to be Converted into
and (5) 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 applicable Borrower once given.
SECTION 2.8. NOTE.
(a ) Note. The Loans made by each Lender shall, in addition to this
Agreement, also be evidenced by a promissory note of the applicable Borrower
substantially in the form of Exhibit F (each a "Note"), payable to the order of
such Lender. The Note issued by the Company to each Lender shall be in a
principal amount equal to the amount of such Lender's Commitment as originally
in effect. The Note issued by SBLC to each Lender shall be in a principal amount
equal to such Lender's pro rata share of $30,000,000.
(b ) Records; Endorsement on Transfer. The date, amount, interest
rate, Type and duration of Interest Periods (if applicable) of each Loan made by
each Lender to each 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
prima facie evidence of such matters. 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
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obligations of such 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 2.9. VOLUNTARY REDUCTIONS OF THE COMMITMENT.
The Company shall have the right to terminate or reduce the aggregate
unused amount of the Commitments at any time and from time to time without
penalty or premium upon not less than five Business Days prior written notice to
the Disbursing 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
Disbursing Agent. The Disbursing Agent will promptly transmit such notice to
each Lender. The Commitments, once terminated or reduced may not be increased or
reinstated.
ARTICLE 3
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 Borrowers 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 Disbursing
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 Company shall give the Disbursing Agent
notice of such payment. Subject to Sections 3.2 and 3.3, the Disbursing Agent,
or any Lender for whose account any such payment is made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time from any special or general deposit account of the applicable Borrower with
the Disbursing Agent or such Lender, as the case may be (with notice to the
Company, the other Lenders and the Disbursing Agent). The Company shall, at the
time of making each payment under this Agreement or any Note, specify to the
Disbursing Agent the amounts payable by the applicable Borrower hereunder to
which such payment is to be applied. Each payment received by the Disbursing
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 Disbursing Agent fails to pay such
amount to a Lender as provided in the previous sentence, the Disbursing 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 2.1(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
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amount of the Commitments under Section 2.9 shall be applied to the respective
Commitments of the Lenders, pro rata according to the amounts of their
respective Commitments; (b) each payment or prepayment of principal of Loans
shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans held by them, provided that if
immediately prior to giving effect to any such payment in respect of any Loans
the outstanding principal amount of the Loans shall not be held by the Lenders
pro rata in accordance with their respective Commitments in effect at the time
such Loans were made, then such payment shall be applied to the Loans in such
manner as shall result, as nearly as is practicable, in the outstanding
principal amount of the Loans being held by the Lenders pro rata in accordance
with their respective Commitments; (c) each payment of interest on Loans 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 (d)
the making, Conversion and Continuation of Loans of a particular Type (other
than Conversions provided for by Section 4.5) 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.
Each Borrower agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Lender or an Agent may
otherwise have, each Lender and each Agent shall be entitled, at its option, to
offset balances held by it for the account of such Borrower at any of such
Lender's (or an Agent's) offices, in Dollars or in any other currency, against
any principal of, or interest on, any of such Lender's Loans to such Borrower
hereunder (or other Obligations of such Borrower owing to such Lender or an
Agent hereunder) which is not paid when due (regardless of whether such balances
are then due to such Borrower), in which case such Lender shall promptly notify
the Company, all other Lenders and the each 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 a Borrower under this Agreement, or shall obtain payment
on any other Obligation owing by a Borrower 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 a 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 10.4, 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 10.4. 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 Borrowers.
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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 Base Rate Loans
shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess thereof. Each borrowing of LIBOR Loans, and each Conversion
of Loans to LIBOR Loans shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $1,000,000 in excess of that amount.
(b ) Prepayments. Each voluntary prepayment of Loans shall be in an
aggregate minimum amount of $1,000,000.
(c ) Reductions of Commitments. Each reduction of the Commitments
under Section 2.9 shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof.
SECTION 3.6. FEES.
(a ) Commitment Fee. The Company agrees to pay to the Disbursing
Agent for the account of the Lenders a commitment fee in respect of the
Commitments (whether or not utilized) at the rate of two-tenths of one percent
(0.20%) per annum for the period from and including the Agreement Date to but
excluding the Termination Date. Such commitment fee shall be payable quarterly
in arrears on each Quarterly Date and on the Termination Date.
(b ) Facility Fee. The Borrower agrees to pay to the Disbursing Agent
for the account of the Lenders on the Agreement Date a facility fee in the
amount of 0.15% of the aggregate Commitments.
(c ) Administrative and Other Fees. The Borrower agrees to pay the
administrative and other fees of each Agent as may be agreed to in writing from
time to time.
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.
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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 a Borrower or received by any Lender, then
such excess sum shall be credited as a payment of principal, unless such
Borrower shall notify the respective Lender in writing that such Borrower elects
to have such excess sum returned to it forthwith. It is the express intent of
the parties hereto that the Borrowers 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 Borrowers 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 Borrowers for the use of money in connection with this
Agreement is and shall be the interest specifically described in Section 2.2(a).
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
Disbursing Agent or any Lender to third parties or for damages incurred by the
Disbursing Agent or any Lender, are charges made to compensate the Disbursing
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
Disbursing Agent and the Lenders in connection with this Agreement and shall
under no circumstances be deemed to be charges for the use of money.
SECTION 3.10. STATEMENTS OF ACCOUNT.
The Disbursing Agent will account to the Company 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 Disbursing Agent shall be deemed prima facie evidence of such
matters. The failure of the Disbursing Agent to deliver such a statement of
accounts shall not relieve or discharge a 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 Disbursing Agent, then, in addition to the rights and remedies that may be
available to the Disbursing Agent or the Borrowers 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 Disbursing 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
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payment to the Disbursing Agent of any amount required to be paid to the
Disbursing Agent hereunder (without giving effect to any notice or cure
periods), in addition to other rights and remedies which the Disbursing Agent or
the Borrowers may have under the immediately preceding provisions or otherwise,
the Disbursing 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, and (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. Any
amounts received by the Disbursing Agent in respect of a Defaulting Lender's
Loans shall not be paid to such Defaulting Lender and shall be held uninvested
by the Disbursing 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. Neither Borrower shall have any
liability in respect of such action by the Disbursing Agent.
(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. Any Lender
desiring to exercise such right shall give written notice thereof to the
Disbursing 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 in proportion to the Commitments
of the other Lenders exercising such right. 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 appropriate
Assignment and Acceptance Agreement and, notwithstanding Section 12.5(d), shall
pay to the Syndication Agent an assignment fee in the amount of $3,000. The
purchase price for the Commitment of a Defaulting Lender shall be equal to the
amount of the principal balance of the Loans outstanding and owed by the
Borrowers to the Defaulting Lender. Prior to payment of such purchase price to a
Defaulting Lender, the Disbursing Agent shall apply against such purchase price
any amounts retained by the Disbursing 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 Borrowers 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 Disbursing Agent from or on behalf of the
Borrowers. There shall be no recourse against any Lender or the Disbursing 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 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.
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SECTION 3.12. TAXES.
(a ) Taxes Generally. All payments by each 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 in the United
States of America, but excluding (i) franchise taxes, (ii) any taxes (other than
withholding taxes that do not constitute back-up withholding taxes) that would
not be imposed but for a connection between the Disbursing Agent or a Lender and
the jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Disbursing 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 the Agreement Date, (iv) any taxes
imposed on or measured by any Lender's assets, net income, receipts or branch
profits and (v) any taxes arising after the Agreement Date solely as a result of
or attributable to a Lender changing its designated Lending Office after the
date such Lender becomes a party hereto (such non-excluded items being
collectively called "Taxes"). If any withholding or deduction from any payment
to be made by a Borrower hereunder is required in respect of any Taxes pursuant
to any Applicable Law, then such 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 Disbursing Agent an official
receipt or other documentation reasonably satisfactory to the
Disbursing Agent evidencing such payment to such Governmental
Authority; and
(iii) pay to the Disbursing 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 Disbursing Agent or such Lender will equal the
full amount that the Disbursing Agent or such Lender would have
received had no such withholding or deduction been required.
(b ) Tax Indemnification. If a Borrower fails to pay any Taxes when
due to the appropriate Governmental Authority or fails to remit to the
Disbursing Agent, for its account or the account of the respective Lender, as
the case may be, the receipts or other documentary evidence described in
subsection (a)(ii) above, such Borrower shall indemnify the Disbursing Agent and
the Lenders for any incremental Taxes, interest or penalties that may become
payable by the Disbursing Agent or any Lender as a result of any such failure.
For purposes of this Section, a distribution hereunder by the Disbursing Agent
or any Lender to or for the account of any Lender shall be deemed a payment by
the applicable 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 Company and the
Disbursing Agent such certificates, documents or other evidence, as required by
the Internal Revenue Code or Treasury Regulations issued pursuant
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thereto (including Internal Revenue Service Forms W-8, 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 and (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 or Participant is otherwise
exempt.
ARTICLE 4
YIELD PROTECTION, ETC.
SECTION 4.1. ADDITIONAL COSTS; CAPITAL ADEQUACY.
(a ) Additional Costs. Each Borrower shall promptly pay to the
Disbursing Agent for the account of a Lender from time to time such amounts
(without duplication of amounts payable under Section 3.12) 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 to such Borrower or its obligation to make any LIBOR Loans to
such Borrower 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 (other than those applying solely to a Lender by reason of
a formal determination by the applicable regulator to be in a financially
troubled condition) 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 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
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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 Company (with a copy to the
Disbursing Agent), the obligation of such Lender to make or Continue, or to
Convert any other Type of Loan into LIBOR Loans hereunder shall be suspended
until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 4.5 shall apply).
(c ) Notification and Determination of Additional Costs. Each of the
Disbursing Agent and each Lender agrees to notify the Company of any event
occurring after the Agreement Date entitling the Disbursing 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 Disbursing Agent
or any Lender to give such notice shall not release a Borrower from any of its
obligations hereunder. The Disbursing Agent and or such Lender agrees to furnish
to the Company a certificate setting forth the basis and amount of each request
by the Disbursing Agent or such Lender for compensation under this Section.
Determinations by the Disbursing 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 4.2. 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 Disbursing 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 Disbursing 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 Disbursing Agent shall give the Company 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, as the case may be, and each
Borrower shall, on the last day of each current Interest Period for each
affected outstanding LIBOR Loan, either repay such Loan or Convert such Loan
into a Base Rate Loan.
SECTION 4.3. 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 Company thereof (with a
copy to the Disbursing Agent) and such Lender's obligation to make or Continue,
or to Convert Loans of any other Type into, LIBOR
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Loans shall be suspended until such time as such Lender may again make and
maintain LIBOR Loans (in which case the provisions of Section 4.5 shall be
applicable).
SECTION 4.4. COMPENSATION.
Each Borrower shall pay to the Disbursing Agent for account of each
Lender, upon the request of such Lender through the Disbursing 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 to such Borrower
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 such Borrower for any reason (including, without
limitation, the failure of any of the applicable conditions precedent specified
in Article 5 to be satisfied) to borrow a LIBOR Loan from such Lender on the
date for such borrowing, or to Convert a Loan of another Type into a LIBOR Loan
or Continue a LIBOR Loan on the requested date of such Conversion or
Continuation.
SECTION 4.5. TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make LIBOR Loans or to Continue, or
to Convert Loans into, LIBOR Loans shall be suspended pursuant to Section
4.1(b), Section 4.2 or Section 4.3, then such Lender's affected LIBOR Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such LIBOR Loans (or, in the case of a
Conversion required by Section 4.1(b) or 4.3, on such earlier date as such
Lender may specify to the Company with a copy to the Disbursing Agent) and,
unless and until such Lender gives notice as provided below that the
circumstances specified in Section 4.1, 4.2 or 4.3 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 Company (with a copy to the Disbursing Agent)
that the circumstances specified in Section 4.1 or 4.3 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) for such outstanding LIBOR
Loans, to the
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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.
SECTION 4.6. 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, 4.l or 4.3 to reduce the
liability of the Borrowers 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 4.7. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS.
Calculation of all amounts payable to a Lender under this Article 4
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 4.
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1. INITIAL CONDITIONS PRECEDENT.
The obligation of the Lenders to effect the occurrence of the first
Credit Event hereunder is subject to the following conditions precedent:
(a ) The Managing Agent shall have received each of the following, in
form and substance satisfactory to the Lenders:
(i) Counterparts of this Agreement executed by each of the
parties hereto;
(ii) Notes executed by each Borrower, payable to each Lender
and complying with the terms of Section 2.8(a);
(iii) An opinion of Sutherland, Asbill & Brennan LLP, counsel
to the Borrower, addressed to the Managing Agent and the Lenders, in
substantially the form of Exhibit G;
(iv) The Articles of Incorporation of each Borrower
certified as of a recent date by the Secretary of State of the State of
Maryland;
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(v) A good standing certificate with respect to each
Borrower issued as of a recent date by the Secretary of State of the
State of Maryland;
(vi) A certificate of incumbency signed by the Secretary or
Assistant Secretary of each Borrower with respect to each of the
officers of such Borrower authorized to execute and deliver the Loan
Documents to which such Borrower is a party and the officers of such
Borrower then authorized to deliver Notices of Borrowing, Notices of
Continuation and Notices of Conversion;
(vii) Copies (certified by the Secretary or Assistant
Secretary of such Borrower) of the bylaws of such Borrower and of all
corporate action taken by such Borrower to authorize the execution,
delivery and performance of the Loan Documents to which it is a party;
(viii) The articles of incorporation, articles of
organization, certificate of limited partnership or other comparable
organizational instrument of each of SBIC and SSBIC certified as of a
recent date by the Secretary of State of the State of formation of such
Subsidiary;
(ix) A certificate of good standing or certificate of
similar meaning with respect to each of SBIC and SSBIC issued as of a
recent date by the Secretary of State of the State of formation of each
such Subsidiary;
(x) Copies certified by the Secretary or Assistant
Secretary of each of SBIC and SSBIC (or other individual performing
similar functions) of the by-laws of each of SBIC and SSBIC;
(xi) A copy of each of the documents, instruments and
agreements evidencing any of the Indebtedness described on Schedule
6.1(g) (other than the Indebtedness to Riggs Bank N.A.) and a copy of
each Material Contract, certified as true, correct and complete by the
chief financial officer of the Company;
(xii) Evidence that all insurance required to be maintained
by the Company and the Subsidiaries under the terms of the Loan
Documents is in effect, or a certificate of an officer of the Company
to such effect;
(xiii) The Fees then due under Section 3.6;
(xiv) Evidence that the merger described in the Proxy has
been completed as described in the Proxy without any change from the
description thereof contained in the Proxy, unless such change is
consented to by the Lenders;
(xv) Subordination agreements with respect to any
intercompany Indebtedness of a Borrower or a Guarantor permitted by
Section 9.2(a)(4);
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(xvi) A pro-forma Compliance Certificate and a pro-forma
Borrowing Base Certificate of each Borrower, each calculated as of the
fiscal quarter ending December 31, 1997; and
(xvii) Such other documents, agreements and instruments as the
Managing Agent on behalf of the Lenders may reasonably request; and
(b) All Indebtedness of the Company and its Subsidiaries to Riggs
Bank N.A. (other than under the Loan Documents) shall be simultaneously paid in
full and all commitments of Riggs Bank N.A. to extend such Indebtedness shall be
simultaneously terminated; and
(c ) In the good faith judgment of the Managing Agent and the
Lenders:
(i) There shall not have occurred or become known to the
Managing 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 Company and its Subsidiaries delivered to the Managing 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 a Borrower to fulfill its obligations under the Loan
Documents;
(iii) The Company 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 occurrence of any default
under, conflict with or violation of (1) any Applicable Law or (2) any
agreement, document or instrument to which the Company or any
Subsidiary 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 a Borrower to
fulfill its obligations under the Loan Documents; 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 5.2. CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of the Lenders to make any Loans is subject to the
further condition precedent that: (a) no Default or Event of Default shall have
occurred and be continuing as of
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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 Company and its Subsidiaries in the Loan Documents to which any of them is a
party, shall be true and correct 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; and (c) in
the case of the borrowing of Loans, the Disbursing Agent shall have received a
timely Notice of Borrowing. Each Credit Event shall constitute a certification
by the Company to the effect set forth in the preceding sentence (both as of the
date of the giving of notice relating to such Credit Event and, unless the
Company otherwise notifies the Managing Agent prior to the date of such Credit
Event, as of the date of the occurrence of such Credit Event). In addition, if
such Credit Event is the making of a Loan, the Company shall be deemed to have
represented to the Managing Agent and the Lenders at the time such Loan is made
that all conditions to the making of such Loan contained in Article 5 have been
satisfied.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. REPRESENTATIONS AND WARRANTIES.
In order to induce the Agents and each Lender to enter into this
Agreement and to make Loans, each Borrower represents and warrants to the Agents
and each Lender as follows:
(a ) Organization; Power; Qualification. Each of the Borrowers and
its Subsidiaries is a corporation, partnership or other legal entity, duly
organized or formed, validly existing and 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 (i) is duly qualified
and is in good standing as a foreign corporation, partnership 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 would have, in each instance a Material Adverse Effect, or (ii) in
the case of the Company, to the extent that it is not so qualified or authorized
on the Agreement Date in jurisdictions in which it is required to be so
qualified or authorized as a result of the merger described in the Proxy, it is
diligently pursuing such qualification and authorization.
(b ) Ownership Structure. As of the Agreement Date, Schedule 6.1(b)
correctly sets forth the corporate structure and ownership interests of the
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.
As of the Agreement Date, SBLC, SBIC and SSBIC are the only Material
Subsidiaries and REIT has not yet been capitalized, and the QRS has not yet been
formed. Except as set forth in such Schedule, and except for preferred stock of
REIT to be issued to approximately 125 shareholders:
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(i) no Subsidiary has issued to any third party any
securities convertible into such Subsidiary's capital stock or other
equity interests or any options, warrants or other rights to acquire
any securities convertible into such capital stock or other equity
interests, and
(ii) the outstanding capital stock of, or other equity
interests in, each such Subsidiary are owned by the Company and its
Subsidiaries indicated on such Schedule free and clear of all Liens,
warrants, options and rights of others of any kind whatsoever. All such
outstanding capital stock and other equity interests have been validly
issued and, in the case of capital stock, are fully paid and
nonassessable.
(c ) Authorization of Agreement, Notes, Loan Documents and
Borrowings. Each Borrower has the right and power, and has taken all necessary
action to authorize it, to borrow hereunder. Each Borrower 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 each Borrower is a party have been duly
executed and delivered by the duly authorized officers of such Borrower, as
applicable, and each is a legal, valid and binding obligation of such Borrower,
as applicable, enforceable against it in accordance with its respective terms.
(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 each Borrower 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 otherwise: (i)
require any Governmental Approval, other than such as have been obtained and are
in full force and effect, or violate any Applicable Law (including all
Environmental Laws) relating to such Borrower or any Subsidiary; (ii) conflict
with, result in a breach of or constitute a default under the articles of
incorporation or the bylaws of such Borrower or the organizational documents of
any Subsidiary, or any indenture, agreement or other instrument to which such
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 such Borrower or any Subsidiary.
(e ) Compliance with Law; Governmental Approvals. Each Borrower and
each Subsidiary is in compliance with each Governmental Approval applicable to
it and in compliance with all other Applicable Law relating to it, 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 ) Ownership of Assets; Liens. Each Borrower has (or in the case of
Subordinated CMBS Tranches, the QRS will have) good title to all of its Eligible
Assets. There are no Liens against any of such Eligible Assets except for
Permitted Liens described in clause (a) of the definition of such term.
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(g ) Indebtedness. Schedule 6.1(g) is, as of the Agreement Date, a
complete and correct listing of all Indebtedness of the Company and its
Subsidiaries, including all guaranties of the Company and its Subsidiaries and
all letters of credit and acceptance facilities extended to the Company or any
Subsidiary.
(h ) Material Contracts. Schedule 6.1(h) is a true, correct and
complete listing of all Material Contracts as of Agreement Date.
(i ) Litigation. There are no actions, suits or proceedings pending
(nor, to the knowledge of the Company or any Subsidiary, 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 Company 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 which is reasonably likely
to be adversely determined and result in a Material Adverse Effect, and there
are no strikes, slow downs, work stoppages or walkouts or other labor disputes
in progress or threatened relating to the Company or any Subsidiary.
(j ) Taxes. All federal, state and other tax returns of the Company
and its Subsidiaries 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 Company and any of its Subsidiaries and
their 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 7.6. None of the United States income tax returns of the
Company and its Subsidiaries are under audit as of Agreement Date. All charges,
accruals and reserves on the books of the Company and each of its Subsidiaries
in respect of any taxes or other governmental charges are in accordance with
GAAP.
(k ) Financial Statements: No Material Adverse Change. The Company
has furnished to each Lender copies of (i) the audited consolidated balance
sheets of the predecessors to the Company and its consolidated Subsidiaries for
the fiscal year ending December 31, 1996, and the related consolidated
statements of income, retained earnings and cash flow for the fiscal year ending
on such date, with the opinions thereon of Matthews, Carter & Boyce, P.C., and
Arthur Andersen, LLP, and (ii) the unaudited consolidated balance sheets of the
predecessors to the Company and its consolidated Subsidiaries for the fiscal
quarter ending September 30, 1997, and the related consolidated statements of
income, retained earnings and cash flow of such predecessors for the fiscal
quarter period ending on such date. Such balance sheets and statements
(including in each case related schedules and notes) present fairly, in
accordance with GAAP consistently applied throughout the periods involved, the
consolidated financial position of such predecessors as at their respective
dates and 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 Company 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. Since December 31, 1996, there has
been no material adverse change in the consolidated financial
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condition, results of operations, business or prospects of the Company and its
Subsidiaries taken as a whole. Each of the Company and its Subsidiaries is
Solvent.
(l ) ERISA. Each member of the ERISA Group has fulfilled 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 for noncompliances which would not, individually or in the
aggregate, cause a Default or an Event of Default or have a Material Adverse
Effect. 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.
(m ) Absence of Defaults. Except as described in Section 7.15 of this
Agreement, neither the Company nor any Material Subsidiary is in default under
its articles 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 Company or any Subsidiary under any Indebtedness,
Material Contract, any other agreement (other than this Agreement) or judgment,
decree or order to which the Company or any Subsidiary is a party or by which
the Company 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,
have a Material Adverse Effect.
(n ) Environmental Laws. The Company and its Subsidiaries have
obtained all Governmental Approvals which are required under Environmental Laws,
and are 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 Company 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 with which to comply
could have a Material Adverse Effect. Neither the Company nor any Subsidiary is
aware of, or has received notice of, any past, present, or future events,
conditions, circumstances, activities, practices, incidents, actions, or plans
which, with respect to the Company or any of 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 that
could be reasonably expected to
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have a Material Adverse Effect; and there is no civil, criminal, or
administrative action, suit, demand, claim, hearing, notice, or demand letter,
notice of violation, investigation, or proceeding pending or, to the knowledge
of the Company or any Subsidiary, after due inquiry, threatened, against the
Company or any of its Subsidiaries relating in any way to Environmental Laws
that could be reasonably expected to have a Material Adverse Effect.
(o ) Investment Company; Public Utility Holding Company. Each
Borrower is a "business development company" within the meaning of the
Investment Company Act. Neither the Company nor any Subsidiary is (i) 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
(ii) except for other Subsidiaries that are business development companies,
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.
(p ) Margin Stock. Neither the Company 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 Regulations G and U of the Board
of Governors of the Federal Reserve System.
(q ) Affiliate Transactions. Except as permitted by Section 9.10,
neither the Company nor any Subsidiary is a party to or bound by any agreement
or arrangement (whether oral or written) to which any Affiliate of the Company
or any Subsidiary is a party. Neither the Company 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
Company, except for SBA approval of dividends paid by SBIC and SSBIC, which the
Company has no reason to believe will not be granted by the SBA.
(r ) Intellectual Property. The Company and each Subsidiary owns or
has the right to use, under valid license agreements or otherwise, all patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights (collectively, "Intellectual Property")
used in the conduct of its businesses as now conducted and as contemplated by
the Loan Documents, which the failure to own or have the right to use could
reasonably be expected to have a Material Adverse Effect, without known conflict
with any patent, license, franchise, trademark, trade secret, trade name,
copyright, or other proprietary right of any other Person.
(s ) Accuracy and Completeness of Information. All written
information, reports and other papers and data furnished to the Managing Agent
or any Lender by, on behalf of, or at the direction of, the Company or any
Subsidiary were, at the time the same were so furnished, complete and correct in
all material respects, to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter, or, in the case of financial
statements, present fairly, 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
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such periods. As of the Agreement Date, no fact is known to the Company or any
Subsidiary which has had, or may in the future have (so far as the Company or
any Subsidiary can reasonably foresee), a Material Adverse Effect which has not
been set forth in the financial statements referred to in Section 6.1(k) or in
such information, reports or other papers or data or otherwise disclosed in
writing to the Managing Agent and the Lenders prior to the Effective Date. No
document furnished or written statement made to the Managing Agent or any Lender
in connection with the negotiation, preparation of execution of this Agreement
or any of the other Loan Documents contains or will contain any untrue statement
of a fact material to the creditworthiness of the Company or any Subsidiary or
omits or will omit to state a material fact necessary in order to make the
statements contained therein not misleading. Notwithstanding the first and third
sentences of this Section 6.1(s), as to projected financial information, each
Borrower represents and warrants only that such information, at the time
furnished to the Managing Agent or any Lender, was prepared in good faith based
on reasonable assumptions under the circumstances.
(t ) RIC Status. The Company is a RIC.
(u ) Not Plan Assets. The assets of the Company 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 Company and its
Subsidiaries are substantially engaged in the businesses described in the Proxy.
(w ) Borrowing Base Assets. At the time it is initially included in a
Borrowing Base, each Borrowing Base Asset:
(i) is owned by a Borrower, or in the case of Subordinated
CMBS Tranches, by the QRS, free and clear of all Liens;
(ii) represents the valid, binding and enforceable
obligation of each Obligor with respect thereto;
(iii) complies in all material aspects with all Applicable
Laws relating thereto;
(iv) is not subject to any restriction or prohibition on the
assignment, pledge or transfer thereof; and
(v) satisfies all Eligibility Requirements.
SECTION 6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All statements contained in any certificate, financial statement or
other instrument delivered by or on behalf of the Company or any Subsidiary to
an Agent or any Lender pursuant
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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 Company or SBLC
prior to the Agreement Date and delivered to an Agent or any Lender in
connection with closing the transactions contemplated hereby) shall constitute
representations and warranties made by the Borrowers 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 7
AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.7, all of the Lenders) shall
otherwise consent in the manner provided for in Section 12.7, each Borrower
shall:
SECTION 7.1. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.
Except as otherwise permitted under Section 9.7, preserve and maintain,
and the Company shall cause each Material 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 have
a Material Adverse Effect, and Company shall provide good standing and
qualification certificates for the Borrowers and the Material Subsidiaries
evidencing such qualification to the Managing Agent not later than January 31,
1998.
SECTION 7.2. COMPLIANCE WITH APPLICABLE LAW AND MATERIAL CONTRACTS.
Comply, and the Company shall cause each Material Subsidiary to comply,
with (a) all Applicable Law, including the obtaining of all Governmental
Approvals, the failure with which to comply could have a Material Adverse
Effect, and (b) all terms and conditions of all Material Contracts to which it
is a party.
SECTION 7.3. MAINTENANCE OF PROPERTY.
In addition to the requirements of any of the other Loan Documents, (a)
protect and preserve, and the Company shall cause each Material Subsidiary to
protect and preserve, all of its material properties, including, but not limited
to, all Intellectual Property, and maintain in good
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repair, working order and condition all tangible properties, 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, so
that the business carried on in connection therewith may be properly and
effectively conducted at all times.
SECTION 7.4. CONDUCT OF BUSINESS.
Together with its Subsidiaries, at all times carry on their business
described in the Proxy.
SECTION 7.5. INSURANCE.
In addition to the requirements of any of the other Loan Documents,
maintain, and the Company shall cause each Material Subsidiary 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.
SECTION 7.6. PAYMENT OF TAXES AND CLAIMS.
Pay or discharge, and the Company shall cause each Material Subsidiary
to pay and discharge, when due (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, 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;
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 which operate to suspend the collection
thereof and for which adequate reserves have been established on the books of
such Borrower or such Subsidiary, as applicable, in accordance with GAAP.
SECTION 7.7. VISITS AND INSPECTIONS.
Permit, and the Company shall cause each Material Subsidiary to permit,
representatives or agents of the Managing Agent or any Lender, from time to
time, as often as may be reasonably requested and at the expense of the Managing
Agent (unless an Event of Default shall be continuing in which case the exercise
by the Managing Agent of its rights under this Section shall be at the expense
of the Company) or such Lender, but only during normal business hours, to: (a)
visit and inspect all properties of such Borrower and each Material Subsidiary;
(b) inspect and make extracts from their respective 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, assets, liabilities, financial conditions, results of operations and
business prospects. If requested by the Managing Agent, the Company shall
execute an authorization letter addressed to its accountants authorizing the
Managing Agent or any Lender to discuss the financial affairs of the Company and
any Material Subsidiary with its accountants.
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SECTION 7.8. USE OF PROCEEDS.
Use the proceeds of Loans for working capital and general corporate
purposes, including without limitation, the origination and interim warehousing
of Eligible Assets. The Borrowers shall not, and the Company 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 Regulations U and X 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.
SECTION 7.9. ENVIRONMENTAL MATTERS.
Comply, and the Company shall cause all of its Subsidiaries to comply,
with all Environmental Laws, the failure with which to comply could have a
Material Adverse Effect. If a 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 a
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 a 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 have a Material
Adverse Effect, such Borrower shall provide the Managing Agent with a copy of
such notice within 10 days after the receipt thereof by such Borrower or any of
the Subsidiaries. The Borrowers and the Subsidiaries shall promptly take 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 7.10. BOOKS AND RECORDS.
Maintain, and the Company shall 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 7.11. STATUS OF RIC AND BDC.
At all times maintain its status as a RIC under the Internal Revenue
Code and as a "business development company" under the Investment Company Act.
SECTION 7.12. ERISA EXEMPTIONS.
Not, and the Company 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.
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SECTION 7.13. FURTHER ASSISTANCE.
At the Company's cost and expense, upon the request of the Managing
Agent, duly execute and deliver or cause to be duly executed and delivered, to
the Managing 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 opinion of the Managing Agent to carry out more
effectively the provisions and purposes of this Agreement and the other Loan
Documents.
SECTION 7.14. BORROWING SUBSIDIARIES.
If SBLC, SBIC or SSBIC obtains a loan or advance from the Company after
the Agreement Date (which loan or advance shall be in compliance with the
limitations set forth in Sections 9.2(a) or 9.2(b), as applicable), within three
Business Days after receiving such loan or advance (or in the case of a loan or
advance made to SBLC under Section 9.2(b)(4), within 60 days after the Effective
Date if such loan or advance has not been repaid within such period), deliver to
the Managing Agent each of the following in form and substance satisfactory to
the Managing Agent: (a) a Guaranty executed by such Subsidiary in the amount of
its borrowing from the Company and (b) the items that would have been delivered
under Sections 5.l(a)(iii) through (vii) if such Subsidiary had been a Borrower
on the Agreement Date.
SECTION 7.15. CONSENTS AND WAIVERS FROM LENDERS.
(a ) Use reasonable efforts to amend the Mass Mutual Agreement and
the OPIC Agrement to delete the negative pledge covenant contained therein or to
modify such covenant to reflect terms acceptable to the Requisite Lenders; and
(b ) Within 45 days after the Effective Date, deliver to the Lenders
copies of (1) written consents and waivers from Mass Mutual and OPIC with
respect to the merger described in the Proxy and the violations of the negative
pledge covenants contained in the Mass Mutual Agreement and the OPIC Agreement
arising out of the Company's assumption of the Merrill Lynch Agreement and the
Morgan Stanley Agreement, (2) the written waivers from Morgan Stanley and
Merrill Lynch with respect to any breach of the representations contained in
Section 6.04 of the Morgan Stanley Agreement and in Section 10 of each Merrill
Lynch Agreement arising out of the violations of the Mass Mutual Agreement and
the OPIC Agreement described in the preceding clause (2) of this Section
7.15(b), and (3) the written consent and waiver from Merrill Lynch with respect
to the merger described in the Proxy.
ARTICLE 8
INFORMATION
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.7, all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.7, the Company shall
furnish to each Lender (or to the Managing Agent if so provided below) at its
Lending Office:
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SECTION 8.1. 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 Company, the
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period and the related consolidated and
consolidating statements of income, retained earnings and cash flows of the
Company 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 Company, in his or her opinion, to present fairly, in accordance with GAAP,
the consolidated financial position of the Company and its Subsidiaries as at
the date thereof and the results of operations for such period (subject to
normal year-end audit adjustments).
SECTION 8.2. YEAR-END STATEMENTS.
As soon as available and in any event within 90 days after the end of
each fiscal year of the Company, the consolidated and consolidating balance
sheets of the Company and its Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income, retained
earnings and cash flows of the Company 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 Company, in his or her opinion, to present fairly, in accordance
with GAAP, the financial position of the Company 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 acceptable to the
Requisite Lenders, whose certificate shall be unqualified and in scope and
substance satisfactory to the Requisite Lenders and who shall have authorized
the Company to deliver such financial statements and certification thereof to
the Managing Agent and the Lenders pursuant to this Agreement.
SECTION 8.3. COMPLIANCE CERTIFICATE; BORROWING BASE CERTIFICATE.
(a ) At the time the financial statements are furnished pursuant to
Sections 8.1 and 8.2, a certificate in the form of Exhibit H (a "Compliance
Certificate") executed by the chief financial officer of the Company: (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 Company, and its Subsidiaries, were in compliance
with the covenants contained in Sections 9.1, 9.2(a)(4), 9.2(b)(3), 9.2(b)(4),
and 9.4(d), (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 and
whether it is continuing and the steps being taken by the Company with respect
to such event, condition or failure. At the time the financial statements are
furnished pursuant to Section 8.2, the Company will deliver to the Lenders a
certificate of the independent accountants performing the audit of such
financial statements to the effect that, in making such audit, nothing came to
their attention that caused them to believe that any Borrower or its
Subsidiaries failed to comply with any of the terms, covenants, provisions or
conditions contained in this Agreement insofar as they relate to financial
matters. Such
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accountants, however, shall not be liable to any Person by reason of their
failure to obtain knowledge of any Event of Default or Default which would not
be disclosed in the course of an audit conducted in accordance with GAAP.
(b ) Within 15 days after the end of each calendar month,
certificates of the Company and SBLC, in the forms of Exhibits I-1 and I-2,
respectively (each a "Borrowing Base Certificate"), executed by the chief
financial officer of the Company, and setting forth a calculation of the
Borrowing Base of each such Borrower as of the end of such calendar month, and
accompanied by an asset listing and a past due report with respect to the
Eligible Assets, in form and scope acceptable to the Requisite Lenders.
(c ) Within 45 days after the end of each fiscal quarter, a schedule
of gains and losses and a valuation report with respect to the Eligible Assets,
as of the end of such fiscal quarter, in form and scope acceptable to the
Requisite Lenders.
SECTION 8.4. OTHER INFORMATION.
(a ) Not later than 90 days prior to the last day of each fiscal year
of the Company, pro forma projected consolidated and consolidating financial
statements for the Company and its Subsidiaries reflecting the forecasted
financial condition and results of operations of the Company and its
Subsidiaries on a quarterly basis for the next succeeding year, accompanied by
calculations establishing whether or not the Company would be in compliance on a
pro forma basis with the covenants contained in Section 9.1, in each case in
form and detail reasonably acceptable to the Requisite Lenders;
(b ) promptly upon receipt thereof, copies of all reports, if any,
submitted to the Company or its Board of Directors by its independent public
accountants including, without limitation, any management report;
(c ) within five Business Days of the filing thereof, copies of all
registration statements (other than 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 Company shall
file with the Securities and Exchange Commission (or any Governmental Authority
substituted therefor) or any national securities exchange;
(d ) promptly upon the mailing thereof to the shareholders of the
Company 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 Company;
(e ) 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
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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 Company setting forth
details as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take;
(f ) to the extent the Company 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 Company or any Subsidiary or any of
their respective properties, assets or businesses which, if determined or
resolved adversely to such Person, could have a Material Adverse Effect, and
prompt notice of the receipt of notice that any United States income tax returns
of the Company or any of its Subsidiaries are being audited;
(g ) to the extent not previously delivered hereunder, a copy of the
articles of incorporation, bylaws, partnership agreement or other similar
organizational documents of the Company, REIT, the QRS, or any Material
Subsidiary, and any amendment thereto, in each case within five Business Days of
the effectiveness thereof;
(h ) prompt notice of any change in the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Company or any Subsidiary which has had or may have Material Adverse Effect,
(i ) prompt notice of the occurrence of any Default or Event of
Default or 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 Company 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;
(j ) prompt notice of any order, judgment or decree in excess of
$5,000,000 having been entered against the Company or any Subsidiary or any of
their respective properties or assets;
(k ) 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 and whether such Subsidiary is a Material
Subsidiary;
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(l ) notice of any Person becoming a Material Subsidiary within two
Business Days of the determination thereof;
(m ) prompt notice of any strikes, slow downs, work stoppages or
walkouts or other labor disputes in progress or threatened relating to the
Company or any Subsidiary;
(n ) promptly upon entering into any Material Contract after the
Agreement Date, a copy to the Managing Agent of such Material Contract; and
(o ) from time to time and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial condition,
results of operations or business prospects of the Company or any of its
Material Subsidiaries as the Managing Agent or any Lender may reasonably
request.
ARTICLE 9
NEGATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite
Lenders (or, if required pursuant to Section 12.7, all of the Lenders) shall
otherwise consent in the manner set forth in Section 12.7, the Borrowers shall
not, directly or indirectly:
SECTION 9.1. FINANCIAL COVENANTS.
Permit:
(a ) Ratio of Adjusted Debt to Tangible Net Worth. The ratio of (i)
the Adjusted Debt to (ii) Tangible Net Worth, to exceed 1.00 to 1.00 at the end
of any fiscal quarter.
(b ) Ratio of Indebtedness to Tangible Net Worth. The ratio of (i)
the Indebtedness of the Company and its Subsidiaries determined on a
consolidated basis to (ii) Tangible Net Worth, to exceed 2.00 to 1.00 at the end
of any fiscal quarter.
(c ) Minimum Tangible Net Worth. The Tangible Net Worth of the
Company and its Subsidiaries determined on a consolidated basis to be less than
(i) $375,000,000 plus (ii) 75% of the Net Proceeds of all Equity Issuance
effected by the Company or any of its Subsidiaries at any time after the
Agreement Date (excluding the Net Proceeds of any Equity Issuance by a
Subsidiary to a Subsidiary or to the Company).
(d ) Ratio of Adjusted EBIT to Interest Expense. The ratio of (i) the
Adjusted EBIT as of the end of each fiscal quarter to (ii) Interest Expense of
the Company and its Subsidiaries determined on a consolidated basis for such
fiscal quarter, to be less than 1.50 to 1.00 at the end of such fiscal quarter.
(e ) Ratio of Adjusted EBIT to Pro Forma Debt Service. The ratio of
(i) Adjusted EBIT of the Company and its Subsidiaries determined on a
consolidated basis for the 12-month period ending as of the fiscal quarter most
recently ending to (ii) Pro Forma Debt Service for the next succeeding 12-month
period, to be less than 1.25 to 1.00 at the end of such fiscal quarter.
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SECTION 9.2. INDEBTEDNESS.
(a) Create, incur, assume, or permit or suffer to exist, or permit
any Subsidiary other than SBLC or the REIT to create incur, assume, or permit or
suffer to exist, any Indebtedness other than the following:
(1) the Obligations;
(2) Indebtedness set forth on Schedule 6.1(g), provided
that the terms of any such Indebtedness shall not be amended to provide
for covenants or borrowing base limitations that are more restrictive
than those contained in this Agreement, except that Secured
Indebtedness may be subject to more restrictive covenants concerning
the collateral therefor;
(3) Subordinated Debt;
(4) intercompany Indebtedness among the Company and such
Subsidiaries; provided however, that (i) the obligations of each
Borrower and Guarantor with respect to such intercompany Indebtedness
shall be subordinate to the Obligations on terms acceptable to the
Requisite Lenders in their sole discretion; (ii) the obligations of
SBIC and SSBIC to the Company (excluding those set forth on Schedule
6.1(g)) shall not exceed $10,000,000 in the aggregate at any one time
outstanding; (iii) the Company shall comply with the provisions of
Section 7.14; and (iv) the obligations of any such Subsidiary other
than SBLC, SBIC, and SSBIC shall be evidenced by promissory notes,
which shall have been pledged to the Managing Agent, for the benefit of
the Lenders, as security for the Obligations;
(5) Indebtedness arising as a result of Contingent
Obligations permitted under Section 9.3 or purchase money Indebtedness
permitted under Section 9.5; and
(6) other Indebtedness incurred or assumed after the
Agreement Date in the ordinary course of business to purchase, carry,
acquire or refinance Investments so long as immediately prior to the
incurring or assumption thereof, and immediately thereafter and after
giving effect thereto, (i) 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 9.1, and (ii) such Indebtedness of a Borrower or a Guarantor
shall not be subject to any covenants or borrowing base limitations
that are more restrictive than those contained in this Agreement,
provided that Secured Indebtedness may be subject to more restrictive
covenants concerning the collateral therefor.
(b) Permit REIT or SBLC to create, incur, assume or permit to
suffer or exist any Indebtedness, other than (1) Indebtedness set forth on
Schedule 6.1(g), (2) Indebtedness under the Loan Documents, (3) loans or
advances from the Company to SBLC, for general corporate purposes, not to exceed
$10,000,000 in the aggregate at any time outstanding, subordinated to the
Obligations on terms acceptable to the Requisite Lenders, and the Company shall
comply
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with the provisions of Section 7.14 with regard to such loans or advances to
SBLC, (4) for a period of up to 60 days after the Effective Date, loans or
advances from the Company to SBLC, to provide funding for SBLC's obligations
under Section 2.5(b), not to exceed $10,000,000 in the aggregate at any time
outstanding, subordinated to the Obligations on terms acceptable to the
Requisite Lenders, and the Company shall comply with the provisions of Section
7.14 with respect to any such loans or advances that are not repaid within 60
days after the Effective Date, and (5) Indebtedness of the Company secured by
Commercial Mortgage Loans transferred by the Company to the REIT and assumed by
the REIT in contemplation of a securitization transaction, provided that such
Indebtedness is repaid within 21 days of such assumption with the proceeds of
such securitization transaction.
SECTION 9.3. 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:
(a ) Contingent Obligations in existence as of the Agreement Date and
set forth in Schedule 9.3;
(b ) Contingent Obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(c ) Contingent Obligations under Interest Rate Agreements (i) with
respect to the Loans and (ii) indexed to interest rates or yields on United
States Treasury Bills or Notes with respect to other Indebtedness incurred or
anticipated to be incurred by the Borrower or any of its Subsidiaries;
(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;
(e ) Contingent Obligations under letters of credit issued for
customers in the ordinary course of business; and
(f ) Contingent Obligations incurred in the ordinary course of
business under foreign currency swap agreements for net Investments in foreign
Persons.
SECTION 9.4. INVESTMENTS.
Acquire, make or purchase after the Agreement Date any Investment other
than the following:
(a ) intercompany Indebtedness among the Company and its
Subsidiaries provided that such Indebtedness is permitted by the terms
of Section 9.2;
(b ) the transfer of Commercial Mortgage Loans to REIT in
connection with a securitization transaction;
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(c ) Portfolio Investments; and
(d ) other Investments not to exceed $74,000,000 in the
aggregate at any one time outstanding.
SECTION 9.5. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS.
(a ) Create, assume, or incur, or permit or suffer to exist, or
permit any Material Subsidiary to create, incur, assume or permit or suffer to
exist, any Lien upon any of its assets, including, without limitation, the
equity interests of the Company in its Subsidiaries, other than:
(1) the Permitted Liens;
(2) Liens arising in connection with purchase money
Indebtedness, conditional sale agreements and Capitalized Lease
Obligations incurred for the acquisition of furniture, fixtures,
equipment or leasehold improvements in the ordinary course of business;
(3) Liens in existence on the date hereof and securing the
Indebtedness described as being secured on Schedule 6.1(g);
(4) Liens permitted by Section 9.2(b)(5); and
(5) Liens on assets other than the Borrowing Base Assets
and equity interests in Subsidiaries to secure Indebtedness permitted
by Section 9.2(a).
(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 the Loan Documents and the Mass Mutual Agreement) prohibiting the creation
or assumption of any Lien upon Borrowing Base Assets; or
(c ) Except for SBA consents that may be required for SBIC and SSBIC,
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 Company or any
other Subsidiary of the Company; (ii) pay any Indebtedness owed to the Company
or any other Subsidiary; (iii) make loans or advances to the Company or any
other Subsidiary; or (iv) transfer any of its property or assets to the Company
or any other Subsidiary.
SECTION 9.6. DISTRIBUTIONS TO SHAREHOLDERS.
If an Event of Default specified in Section 10.1(a) or Section 10.1(b)
occurs and is not cured within ten (10) Business Days thereafter, if a Default
or an Event of Default specified in Section 10.1(f) or Section 10.1(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
10.2(a), the Company shall not, and shall not permit any Borrower or Guarantor
to, make
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(a) any dividend or other distribution on account of any capital stock or other
equity interest of a Borrower or a Guarantor; (b) any acquisition for value of
any capital stock or other equity interest of a Borrower or a Guarantor; or (c)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire any capital stock or other equity
interest of a Borrower or a Guarantor.
SECTION 9.7. MERGER, CONSOLIDATION AND SALES OF ASSETS.
(a ) Enter into, or permit any Material 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 Material
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 Material Subsidiaries,
whether now owned or hereafter acquired or permit any Material Subsidiary to do
any of the foregoing; provided, however, that:
(i) any Subsidiary of the Company may merge or consolidate
with (A) the Company, so long as the Company shall be the surviving
entity or (B) a Subsidiary of the Company;
(ii) a Subsidiary may sell, transfer or dispose of its
assets to the Company or a Wholly Owned Subsidiary of the Company;
(iii) a 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) the Company or any Subsidiary may merge or consolidate
with any other corporation, provided that (A) the Company or such
Subsidiary shall be the continuing or surviving corporation and (B)
immediately prior to such merger or consolidation and immediately
thereafter and after giving effect thereto, no Default or Event of
Default is or would be in existence; and
(v) the Company may transfer Commercial Mortgage Loans to
REIT in connection with a securitization transaction, and such
Commercial Mortgage Loans may be transferred or sold to any direct or
indirect Wholly Owned Subsidiary of the REIT.
SECTION 9.8. FISCAL YEAR.
Change its fiscal year from that in effect as of the Agreement Date.
SECTION 9.9. MODIFICATIONS TO MATERIAL CONTRACTS.
Enter into, or permit any Subsidiary to enter into, any amendment or
modification to any Material Contract which could have a Material Adverse Effect
or default in the performance of
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any obligations of the Company or any Subsidiary under any Material Contract or
permit any Material Contract to be canceled or terminated prior to its stated
maturity.
SECTION 9.10. TRANSACTIONS WITH AFFILIATES.
Permit to exist or enter into, and will not permit any of its
Subsidiaries to permit to exist or enter into, any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company or with any director, officer or
employee of the Company, any Subsidiary or any other Affiliate, except (i)
transactions involving consideration in aggregate amount for all such
transactions not in excess of $5,000,000 per fiscal year, (ii) Investments
permitted by Section 9.4, and (iii) transactions in the ordinary course of, and
pursuant to the reasonable requirements of the, business of the Company or any
of its Subsidiaries and upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm's length transaction with a Person that is not an Affiliate.
ARTICLE 10
DEFAULT
SECTION 10.1. 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. A 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 Other Amounts. A Borrower shall fail to
pay when due any interest on any of the Loans or any of the other payment
Obligations (other than the principal of any Loan) owing by such Borrower under
this Agreement or any other Loan Document and such failure shall continue for a
period of three Business Days after the earlier of (i) the date upon which such
Borrower or any Subsidiary obtains knowledge of such failure or (ii) the date
upon which the Company has received written notice of such failure from the
Managing Agent.
(c ) Default in Performance. (i) A Borrower or any Subsidiary shall
fail to perform or observe any term, covenant, condition or agreement on its
part to be performed or observed contained in Sections 7.11, 7.12, 7.15(b) or
8.4(i) or in Article 9 or (ii) a 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 to which it is a party and not otherwise
mentioned in this Section and in the case of this clause (ii) such failure shall
continue for a period of 30 days after the earlier of (x) the date upon which a
Borrower obtains knowledge of such failure or (y) the date upon which the
Borrower has received written notice of such failure from the Managing Agent.
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(d ) Misrepresentations. Any written statement, representation or
warranty made or deemed made by or on behalf of a Borrower or any Subsidiary
under this Agreement or under any other Loan Document, 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 a Borrower or any Subsidiary to an Agent or
any Lender in connection with this Agreement or the other Loan Documents, shall
at any time prove to have been incorrect or misleading in any material respect
when furnished or made.
(e ) Indebtedness Cross-Default.
(i) A Borrower or any Subsidiary shall fail to pay when due
and payable the principal of, or interest on, any Indebtedness (other
than the Loans) or any Contingent Obligations having an aggregate
outstanding principal amount of $5,000,000 or more, or
(ii) the maturity of any Indebtedness (other than the Loans)
of a Borrower or any Subsidiary having an aggregate outstanding
principal amount of $5,000,000 or more 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
(iii) any other event (other than the events described in
Section 7.15(b)) shall have occurred and be continuing with respect to
any Indebtedness (other than the Loans) of a Borrower or any Subsidiary
having an aggregate outstanding principal amount of $10,000,000 or more
which, with or without the passage of time, the giving of notice, or
otherwise, would permit any holder or holders of such 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. A Borrower, any Material
Subsidiary or any Other Relevant 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; (vii) make a conveyance fraudulent as to creditors
under any Applicable Law; or (viii) take any corporate or similar action for the
purpose of effecting any of the foregoing.
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(g ) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against a Borrower, any Material Subsidiary or any Other
Relevant 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 is not dismissed within 60 days after it is commenced.
(h ) Contest of Loan Documents. A Borrower or any Subsidiary shall
disavow, revoke or terminate 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 a Borrower or any Subsidiary by any court or other tribunal
which exceeds, individually or together with all other such judgments or orders
entered against such Borrower and its Subsidiaries, $5,000,000 in amount (or
which shall otherwise have a Material Adverse Effect) and such judgment or order
shall continue unpaid for a period of 30 days without being stayed or dismissed
through appropriate appellate proceedings.
(j ) Attachment. A warrant, writ of attachment, execution or similar
process shall be issued against any property of a Borrower or any Subsidiary
which exceeds, individually or together with all other such warrants, writs,
executions and processes, $5,000,000 in amount and such warrant, writ, execution
or process shall not be discharged, vacated, stayed or bonded for a period of 30
days; provided, however, that if a bond has been issued in favor of the claimant
or other Person obtaining such warrant, writ, execution or process, the issuer
of such bond shall execute a waiver or subordination agreement in form and
substance satisfactory to the Managing Agent pursuant to which the issuer of
such bond subordinates its right of reimbursement, contribution or subrogation
to the Obligations and waives or subordinates any Lien it may have on the assets
of such Borrower or any of its Subsidiaries.
(k ) ERISA. Any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 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 $5,000,000.
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(l ) Loan Documents. An Event of Default (as defined therein) shall
occur under any of the other Loan Documents.
(m ) Change of Control.
(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")) 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 25% of the total voting power of the then
outstanding voting stock of the Company; or
(ii) During any twelve-month period (commencing on or after
the Agreement Date), a majority of the Board of Directors of the
Company shall no longer be composed of individuals (A) who were members
of such Board of Directors on the first date of such period, (B) whose
election or nomination to such Board of Directors was approved by
individuals referred to in clause (A) above constituting at the time of
such election or nomination at least a majority of such Board of
Directors or (C) whose election or nomination to such Board of
Directors was approved by individuals referred to in clauses (A) and
(B) above constituting at the time of such election or nomination at
least a majority of such Board of Directors.
(n ) Dissolution. Any order, judgment or decree is entered against a
Borrower, any Material Subsidiary or any Other Relevant Subsidiary decreeing the
dissolution or split up of such Person and such order remains undischarged or
unstayed for a period in excess of 30 days.
SECTION 10.2. REMEDIES UPON EVENT OF DEFAULT.
Upon the occurrence 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 10.1(f) or 10.1(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 Borrowers,
including, but not limited to, the other amounts owed to the Lenders
and the Managing Agent under this Agreement, the Notes or any of the
other Loan Documents shall become immediately and automatically due and
payable by the Borrowers without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived by the Borrowers
and (B) each of the Commitments and the obligation of the Lenders to
make Loans shall immediately and automatically terminate;
(ii) Optional. If any other Event of Default shall have
occurred and be continuing, the Managing Agent may, and at the
direction of the Requisite Lenders shall: (I) declare (l) the principal
of, and accrued interest on, the Loans and the Notes at the time
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outstanding and (2) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders and the Managing
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 Managing
Agent to, and the Managing 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 Managing
Agent to, and the Managing Agent if so directed shall, exercise all other rights
and remedies it may have under any Applicable Law.
SECTION 10.3. REMEDIES UPON CERTAIN DEFAULTS.
Upon the occurrence of a Default specified in Sections 10.1(f) or
10.1(g), the Commitments shall immediately and automatically terminate.
SECTION 10.4. ALLOCATION OF PROCEEDS.
If an Event of Default shall have occurred and be continuing and the
maturity of the Notes has been accelerated, all payments received by an 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 Borrowers hereunder or
thereunder, shall be applied by the Agents in the following order and priority:
(a ) amounts due to the Agents and the Lenders in respect of Fees and
expenses due under Section 12.2;
(b ) payments of interest on the 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 Agents and the Lenders pursuant to Section
12.10;
(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; and
(f ) any amount remaining after application as provided above, shall
be paid to the Borrower or whomever else may be legally entitled thereto.
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SECTION 10.5. PERFORMANCE BY AGENT.
If a Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, an Agent may perform or attempt to
perform such covenant, duty or agreement on behalf of such Borrower after the
expiration of any cure or grace periods set forth herein. In such event, such
Borrower shall, at the request of such Agent, promptly pay any amount reasonably
expended by such Agent in such performance or attempted performance to such
Agent, together with interest thereon at the applicable Post-Default Rate from
the date of such expenditure until paid. Notwithstanding the foregoing, neither
such Agent nor any Lender shall have any liability or responsibility whatsoever
for the performance of any obligation of the Borrowers under this Agreement or
any other Loan Document.
SECTION 10.6. RIGHTS CUMULATIVE.
The rights and remedies of the Agents 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 Agents
and the Lenders may be selective and no failure or delay by the Agents 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.
ARTICLE 11
THE AGENTS
SECTION 11.1. AUTHORIZATION AND ACTION.
Each Lender hereby appoints and authorizes each 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 such
Agent by the terms and thereof, together with such powers as are reasonably
incidental thereto. Each Agent shall administer the Loans in the same manner
that such Agent administers loans made for its own account. The relationship
between each Agent and the Lenders shall be that of principal and agent only and
nothing herein shall be construed to deem an 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, each Agent will
forward to each Lender copies or, where appropriate, originals of the documents
delivered to such Agent pursuant to this Agreement or the other Loan Documents.
Each Agent will also furnish to any Lender, upon the request of such Lender, a
copy of any certificate or notice furnished to such Agent by a Borrower or any
other Affiliate of a 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 Agents 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
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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 Agents shall not be required to take any action
which is contrary to this Agreement or any other Loan Document or Applicable
Law. Not in limitation of the foregoing, an 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 such Agent to exercise such right or remedy.
SECTION 11.2. AGENT'S RELIANCE, ETC.
Notwithstanding any other provision of any Loan Document, including
without limitation the second sentence of Section 11.1, neither an 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 for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, an Agent: (a) may
treat the payee of any Note as the holder thereof until such Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to such Agent; (b) may consult with legal counsel (including
its own counsel or counsel for the Borrowers), 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 Borrowers or other
Persons or inspect the property, books or records of the Borrowers 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 such 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.
SECTION 11.3. DEFAULTS.
An Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless such Agent has received
notice from a Lender or a 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 Managing Agent such a "notice of
default" Further, if an Agent receives such a "notice of default," such Agent
shall give prompt notice thereof to the Lenders.
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SECTION 11.4. AGENT AS LENDER.
Each Agent, 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 an Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include each Agent in each case in
its individual capacity. Each Agent 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 a 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, each Agent and any affiliate may accept fees and
other consideration from a Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the other
Lenders.
SECTION 11.5. APPROVALS OF LENDERS.
All communications from an 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 such Agent by a
Borrower in respect of the matter or issue to be resolved, and (d) shall include
such Agent's recommended course of action or determination in respect thereof.
Each Lender shall reply promptly, but in any event within ten Business Days (or
such lesser period as may be required under the Loan Documents for such Agent to
respond). Unless a Lender shall give written notice to such Agent that it
objects to the recommendation or determination of such 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 11.6. LENDER CREDIT DECISION, ETC.
Each Lender expressly acknowledges and agrees that neither an Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact or
other affiliates has made any representations or warranties as to the financial
condition, operations, creditworthiness, solvency or other information
concerning the business or affairs of the Borrowers, any Subsidiary or other
Person to such Lender and that no act by an Agent hereinafter taken, including
any review of the affairs of the Borrowers, shall be deemed to constitute any
such representation or warranty by such Agent to any Lender. Each Lender
acknowledges that it has, independently and without reliance upon the Agents,
any other Lender or counsel to the Agents, or any of their respective officers,
directors, employees and agents, and based on the financial statements of the
Borrowers, the Subsidiaries or any other Affiliate thereof, and inquiries of
such Persons, its independent due diligence of the business and affairs of the
Borrowers, the Subsidiaries and other Persons, its review of the Loan Documents,
the legal opinions required to be delivered to it hereunder, the
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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 an Agent, any
other Lender or counsel to an 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 an Agent under this Agreement or any of the other
Loan Documents, the Agents 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 Borrowers,
any Subsidiary or any other Affiliate thereof which may come into possession of
an Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or other affiliates. Each Lender acknowledges that the Managing Agent's legal
counsel in connection with the transactions contemplated by this Agreement is
only acting as counsel to the Managing Agent and is not acting as counsel to
such Lender.
SECTION 11.7. INDEMNIFICATION OF AGENT.
Each Lender agrees to indemnify each Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrowers
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 such 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
such 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 resulting from such Agent's gross negligence
or willful misconduct or if such Agent fails to follow the written direction of
the Requisite Lenders unless such failure is pursuant to the advice of counsel
that following such written direction would likely violate Applicable Law or the
terms of the Loan Documents and of which the Lenders have received notice.
Without limiting the generality of the foregoing, each Lender agrees to
reimburse each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees of the counsel(s) of
such Agent's own choosing) reasonably incurred by each 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 such Agent to enforce the terms of the
Loan Documents and/or collect any Obligations, any "lender liability" suit or
claim brought against such Agent and/or the Lenders, and any claim or suit
brought against such Agent and/or the Lenders arising under any Environmental
Laws, to the extent that such Agent is not reimbursed for such expenses by the
Borrowers. Such out-of-pocket expenses (including counsel fees) shall be
advanced by the Lenders on the request of such Agent notwithstanding any claim
or assertion that the Agent is not entitled to indemnification hereunder (other
than any claim or assertion that such Agent is not entitled to such
out-of-pocket expenses as a result of its gross
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negligence or willful misconduct or failure to follow the written direction of
the Requisite Lenders in the absence of the advice of counsel referred to above)
upon receipt of an undertaking by such Agent that such Agent will reimburse the
Lenders if it is actually and finally determined by a court of competent
jurisdiction that such 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 a Borrower shall reimburse an Agent for any Indemnifiable
Amount following payment by any Lender to such Agent in respect of such
Indemnifiable Amount pursuant to this Section, such Agent shall share such
reimbursement on a ratable basis with each Lender making any such payment.
SECTION 11.8. SUCCESSOR AGENT.
Each Agent may resign at any time as Agent under the Loan Documents by
giving at least 30 days' prior written notice thereof to the Lenders and the
Company. In the event of a material breach of its duties hereunder, an Agent may
be removed as Agent under the Loan Documents at any time by the Requisite
Lenders upon 30-days' 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 Company's approval, which approval shall
not be unreasonably withheld or delayed (except that Company 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 thirty 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 arising or accruing
thereafter. After any resigning Agent's resignation or removal hereunder as
Agent, the provisions of this Article 11 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.
SECTION 11.9. SYNDICATION AGENT.
The Syndication Agent in such capacity does not assume any
responsibility or obligation hereunder, including, without limitation, for
servicing, enforcement or collection of any of the Loans, nor any duties as an
agent hereunder for the Lenders, except for the maintenance of the Register in
accordance with Section 12.5(e). The title of "Syndication Agent" implies no
fiduciary responsibility on the part of the Syndication Agent, in its capacity
as such, to the Agents, the Borrowers or any Lender and the use of such titles
does not impose on the Syndication Agent any duties or obligations greater than
those of any other Lender or entitle the Syndication Agent to any rights other
than those to which any other Lender is entitled.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.1. NOTICES.
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
If to the Borrowers:
Allied Capital Corporation
1666 K Street, NW
9th Floor
Washington, DC 20006
Attention: Joan M. Sweeney, Managing Director
Telecopy Number: (202) 659-2053
Telephone Number: (202) 973-6381
If to the Disbursing Agent:
BankBoston, N.A.
100 Federal Street
Boston, MA 02110
Mail Code: 01-10-08
Attention: Deirdre M. Holland, Vice President
Telecopy Number: (617) 434-1537
Telephone Number: (617) 434-0419
If to the Managing Agent:
Riggs Bank N.A.
808 17th Street, N.W.
10th Floor
Washington, D.C. 20006
Attention: David H. Olson, Vice President
Telecopy Number: (202) 835-5977
Telephone Number: (202) 835-5105
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If to the Syndication Agent:
First Union Capital Markets Group
One First Union Center
Charlotte, NC 28288-0735
Attention: Allison C. Zollicoffer, Director
Telecopier: (704) 383-7611
Telephone: (704) 374-4891
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 12.1. 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 an Agent or any Lender under Article 2 shall be
effective only when actually received. Neither an Agent nor any Lender shall
incur any liability to the Borrowers (nor shall an Agent incur any liability to
the Lenders) for acting upon any telephonic notice referred to in this Agreement
which such 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, except in the case of gross negligence or
willful misconduct.
SECTION 12.2. EXPENSES.
The Company agrees (a) to pay or reimburse the Managing 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 due diligence expenses and
travel expenses relating to closing), and the consummation of the transactions
contemplated thereby, including the reasonable fees (not to exceed $30,000) and
disbursements (which are in addition to such fee limitation) of counsel to the
Managing Agent, (b) to pay or reimburse each Agent and the Lenders for all their
costs and expenses incurred in connection with the enforcement or preservation
of any rights under the Loan Documents, including the reasonable fees and
disbursements of their respective counsel (including the reasonably allocated
fees and expenses of in-house counsel) and any payments in indemnification or
otherwise payable by the Lenders to the Agents pursuant to the Loan Documents,
(c) to pay, indemnify and hold each 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
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already covered by any of the preceding subsections, to pay or reimburse the
Agents and the Lenders for all their costs and expenses incurred in connection
with any bankruptcy or other proceeding of the type described in Sections
10.1(f) or 10.1(g), including the reasonable fees and disbursements of counsel
to the Agents 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 12.3. 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,
each Agent, each Lender and each Participant is hereby authorized by each
Borrower, at any time or from time to time, without notice to such Borrower or
to any other Person, any such notice being hereby expressly waived, 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 such Agent, such Lender or any affiliate of such Agent or such
Lender, to or for the credit or the account of such Borrower against and on
account of any of the Obligations or such Borrower, irrespective of whether or
not any or all of the Loans and all other Obligations have been declared to be
due and payable as permitted by Section 10 2, and although such obligations
shall be contingent or unmatured.
SECTION 12.4. JURISDICTION; CONSENT TO SERVICE OF PROCESS; WAIVER OF JURY
TRIAL.
(a ) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Agent or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against a Borrower or its properties in the courts of any jurisdiction.
(b ) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
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(c ) Each Borrower and each other party hereto consents to service of
process in the manner provided for notices in Section 12.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
(d ) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (1)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 12.5. 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 no Borrower may 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 a
Borrower.
(c ) Any Lender may at any time grant to one or more banks or other
financial institutions (each such bank or financial institution, 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 $10,000,000, and (iii) after giving effect to any
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 $10,000,000. No Participant shall have any rights or benefits under
this Agreement or any other Loan Document, except (1) as provided in Section
12.3, and (2) a Participant shall be entitled to the benefits of the cost
protection provisions contained in Section 3.12 and Article 4 to the same extent
as if it were a Lender but not in excess of the cost protections to which the
Lender from which it purchased its participation would be entitled. 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 Borrowers and the Agents shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
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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 Borrowers
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 Agents
and the Company of the sale of any participation hereunder and the terms
thereof.
(d ) Any Lender may with the prior written consent of each Agent and,
so long as no Default or Event of Default shall have occurred and be continuing,
the Company (which consent, in the case of the Agents and the Company, 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 Company or the Agents shall be required in the case of any
assignment to another Lender or any affiliate of such Lender (subject to Section
12.5(b) above) or another Lender; (ii) any partial assignment shall be in an
amount at least equal to $10,000,000 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 $10,000,000; (iii) each such assignment shall be effected by means of an
Assignment and Acceptance Agreement; and (iv) each Agent, in its capacity as a
Lender, shall not effect any assignment of its Commitment, if after giving
effect thereto, the amount of such Commitment would be less than the amount of
any other Lender's Commitment. 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 Agents
and each Company 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 Syndication
Agent an administrative fee for processing such assignment in the amount of
$3,000 provided, however, such fee shall not be payable in connection with the
first assignment of all or any portion of the Commitment of any Lender initially
a party to this Agreement to an affiliate of such Lender.
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(e ) The Syndication 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
Syndication Agent shall give each Lender and the Company notice of the
assignment by any Lender of its rights as contemplated by this Section. The
Company, each 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 Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice to the Syndication Agent. Upon
its receipt of an Assignment and Acceptance Agreement executed by an assigning
Lender, together with each Note subject to such assignment (the "Surrendered
Note"), the Syndication Agent shall, if such Assignment and Acceptance Agreement
has been completed and if the Syndication 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 Company.
(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 a Borrower or
any Subsidiaries in the possession of such Lender from time to time to Assignees
and Participants (including prospective Assignees and Participants) subject to
compliance with Section 12.9.
(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 a Borrower or any Subsidiary or Affiliate of a Borrower.
(i ) Each Lender agrees that, without the prior written consent of
the Company and the Agents, 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 12.6. REMOVAL OF LENDERS.
If (a) a Lender or a Participant requests compensation pursuant to
Section 3.12 or Section 4.l 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 Loans into LIBOR Loans shall be suspended pursuant to Section 4.1(b),
Section 4.2 or Section 4.3 but the obligation of the Requisite Lenders shall not
have been suspended under such Sections, the Company may either (A) demand that
such Lender or Participant (the "Affected Lender"), and upon such demand the
Affected Lender
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shall promptly, assign its Commitment and all of its Loans to an Eligible
Assignee subject to and in accordance with the provisions of Section 12.5(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 4.4, 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 4.4, 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
Agents and the Affected Lender shall reasonably cooperate in effectuating the
replacement of an Affected Lender under this Section, but at no time shall the
Agents, 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 Company of its rights under this Section shall be
at the Company's sole cost and expenses and at no cost or expense to the Agents,
the Affected Lender or any of the other Lenders. The terms of this Section shall
not in any way limit each Borrower's obligation to pay to any Affected Lender
compensation owing to such Affected Lender pursuant to Section 3.12 or Section
4.1.
SECTION 12.7. 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 each
Borrower or any Subsidiary 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 Document, the written consent of
each Borrower). Notwithstanding the foregoing, no amendment, waiver or consent
shall, unless in writing, and signed by all of the Lenders (or the Managing
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 Subsidiary from its obligations under a Guaranty; (viii) 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; or (ix) amend the
definitions of "Borrowing Base" or "Eligible Assets." Further, no amendment,
waiver or consent unless in writing and signed by the Agents, in addition to the
Lenders required above to take such action, shall affect the rights or duties of
the Agents under this Agreement or any of the other Loan Documents. No waiver
shall extend to or affect any obligation not expressly waived or impair
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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 Agents 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 a Borrower
shall entitle such Borrower to other or further notice or demand in similar or
other circumstances.
SECTION 12.8. NONLIABILITY OF AGENT AND LENDERS.
The relationship between the Borrowers and the Lenders and the Agents
shall be solely that of borrower and lender. Neither the Agents nor any Lender
shall have any fiduciary responsibilities to a 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 Agents or any Lender to any Lender, a Borrower or
any Subsidiary. Neither the Agents nor any Lender undertakes any responsibility
to a Borrower to review or inform such Borrower of any matter in connection with
any phase of such Borrower's business or operations.
SECTION 12.9. CONFIDENTIALITY.
Except as otherwise provided by Applicable Law, each 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 Borrowers in accordance with its customary 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 such 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 Agents or the Lenders of rights hereunder or under any of the
other Loan Documents.
SECTION 12.10. INDEMNIFICATION.
(a ) Each Borrower shall and hereby agrees to indemnify, defend and
hold harmless each Agent, any affiliate of each 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
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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") arising out of: (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 a Borrower of the proceeds of the Loans;
(iv) an Agent's or any Lender's entering into this Agreement; (v) the fact that
the Agents and the Lenders have established the credit facility evidenced hereby
in favor of the Borrowers; (vi) the fact that the Agents and the Lenders are
creditors of the Borrowers and have or are alleged to have information regarding
the financial condition, strategic plans or business operations of the Borrowers
and the Subsidiaries; (vii) the fact that the Agents and the Lenders are
material creditors of the Borrowers and are alleged to influence directly or
indirectly the business decisions or affairs of the Borrowers and the
Subsidiaries or their financial condition; (viii) the exercise of any right or
remedy the Agents or the Lenders may have under this Agreement or the other Loan
Documents; 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 (viii) that constitute
gross negligence or willful misconduct; (ix) any violation or non-compliance by
a 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 a Borrower or its Subsidiaries (or its
respective properties) (or the Agents and/or the Lenders as successors to the
Borrower) to be in compliance with such Environmental Laws.
(b ) Each 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 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 a
Borrower or any Subsidiary, any shareholder of a Borrower or any Subsidiary
(whether such shareholder(s) are prosecuting such Indemnity Proceeding in their
individual capacity or derivatively on behalf of a Borrower), any account debtor
of a 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 a 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 Borrowers at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrowers 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 Borrowers if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
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(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 Borrowers.
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 Borrowers hereunder to indemnify and
hold harmless each such Indemnified Party, provided, however, that (i) if a
Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii)
such Borrower has provided evidence reasonably satisfactory to such Indemnified
Party that such 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
such Borrower (which consent shall not be unreasonably withheld or delayed).
(e ) If and to the extent that the obligations of a Borrower
hereunder are unenforceable for any reason, such Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under Applicable Law. Each 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.
SECTION 12.11. 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 Agents and the Lenders are
entitled under the provisions of Sections 11.7, 12.2 and 12.10 and any other
provision of this Agreement and the other Loan Documents, and the waivers of
jury trial and submission to jurisdiction contained in Section 12.4, shall
continue in full force and effect and shall protect the Agents and the Lenders
against events arising after such termination as well as before.
SECTION 12.12. 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 12.13. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
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CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE, AND WITHOUT
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES OR PROVISIONS.
SECTION 12.14. 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 12.15. LIMITATION OF LIABILITY.
Neither an Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of an Agent or any Lender shall have any liability
with respect to, and each 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 a 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. Each Borrower hereby waives, releases, and agrees
not to sue an Agent or any Lender or any of an 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.
SECTION 12.16. ENTIRE AGREEMENT.
This Agreement, the Notes, and the other Loan Documents 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 12.17. CONSTRUCTION.
The Agents, each 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 Agents, the Borrowers and each Lender.
[Signatures on Following Pages]
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77
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their authorized officers all as of the day and year
first above written.
BORROWERS:
ALLIED CAPITAL CORPORATION
By: /s/ Jon A. DeLuca
----------------------------------------------
Name: Jon A. DeLuca
--------------------------------------------
Title: Principal & Chief Financial Officer
-------------------------------------------
ALLIED CAPITAL SBLC CORPORATION
By: /s/ Jon A. DeLuca
----------------------------------------------
Name: Jon A. DeLuca
--------------------------------------------
Title: Principal & Chief Financial Officer
-------------------------------------------
[Signatures Continued on Next Page]
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78
[SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF
JANUARY 8, 1998, WITH ALLIED CAPITAL CORPORATION
AND ALLIED CAPITAL SBLC CORPORATION]
BANKBOSTON, N.A.,
AS DISBURSING AGENT AND AS A LENDER
By: /s/ Deirdre M. Holland
----------------------------------------------
Name: Deirdre H. Holland
--------------------------------------------
Title: Vice President
-------------------------------------------
INITIAL COMMITMENT AMOUNT:
$ 50,000,000.00
---------------------------------
LENDING OFFICE (ALL TYPES OF LOANS):
100 Federal Street 01-10-08
-------------------------------------------------
Boston, MA 02110
-------------------------------------------------
Attn: D. M. Holland
--------------------------------------------
Telecopier: (617) 434-1537
--------------------------------------
Telephone: (617) 434-0419
---------------------------------------
[Signatures Continued on Next Page]
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79
[SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF
JANUARY 8, 1998, WITH ALLIED CAPITAL CORPORATION
AND ALLIED CAPITAL SBLC CORPORATION]
RIGGS BANK N.A.,
AS MANAGING AGENT AND AS A LENDER
By: /s/ David H. Olson
----------------------------------------------
Name: David H. Olson
--------------------------------------------
Title: Vice President
-------------------------------------------
INITIAL COMMITMENT AMOUNT:
$ 50,000,000.00
-------------------------------------------------
LENDING OFFICE (ALL TYPES OF LOANS):
808 17th Street, NW, 10th floor
-------------------------------------------------
Washington, DC 20006
-------------------------------------------------
Attn: Dave Olson
--------------------------------------------
Telecopier: (202) 835-5977
--------------------------------------
Telephone: (202) 835-5105
---------------------------------------
[Signatures Continued on Next Page]
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80
[SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF
JANUARY 8, 1998, WITH ALLIED CAPITAL CORPORATION
AND ALLIED CAPITAL SBLC CORPORATION]
FIRST UNION NATIONAL BANK,
AS SYNDICATION AGENT AND AS A LENDER
By: /s/ Jane W. Workman
----------------------------------------------
Name: Jane W. Workman
--------------------------------------------
Title: Senior Vice President
-------------------------------------------
INITIAL COMMITMENT AMOUNT:
$ 50,000,000.00
-------------------------------------------------
LENDING OFFICE (ALL TYPES OF LOANS):
One First Union Center
-------------------------------------------------
Charlotte, NC 28288-0735
-------------------------------------------------
Attn: Lisa Mowery
--------------------------------------------
Telecopier: (704) 383-7611
--------------------------------------
Telephone: (704) 383-0558
---------------------------------------
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