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Exhibit 10.1
June 24, 1998
Regency Affiliates, Inc.
729 South Federal Highway
Suite 307
Stuart, Florida 34994
Ladies and Gentlemen:
We are pleased to inform you that our Grand Cayman Branch will make
available to you a term loan in the principal amount of US$9,383,319.77.
The terms and conditions of this loan are as follows:
1. DEFINITIONS. Unless otherwise defined in this letter, terms used as
defined terms have the meanings given to them on Exhibit A hereto.
2. THE LOAN. Subject to the terms and conditions hereof, on June 24,
1998, we will lend to you, and you will borrow from us, a term loan in the
principal amount of Nine Million Three Hundred Eighty-Three Thousand Three
Hundred Nineteen and 77/100 Dollars (US$9,383,319.77) (the "Loan"). The
Loan shall be evidenced by the Term Note in the form attached hereto as
Exhibit B (the "Note"), which you shall execute and deliver to us prior to
or simultaneously with your receipt of the proceeds of the Loan.
3. DISBURSEMENT OF LOAN. We will disburse the proceeds of the Loan to
you as set forth in your separate written instructions to us.
4. INTEREST.
(a) You shall pay interest on the outstanding principal balance of the
Loan until fully paid at a rate per annum equal to 7.5% (the "Interest
Rate"). Interest shall be computed on a daily basis for the actual number
of days elapsed over a year of 360 days, and shall be compounded
semiannually on each June 1 and December 1, commencing June 1, 1998.
Accrued interest shall be due and payable in arrears on the Loan Due Date
(as defined in Section 5(a)).
(b) Except as provided in the next succeeding sentence, in the event
the principal balance of the Loan and accrued interest thereon is not paid
in full on the Loan Due Date, then all such principal balance and accrued
interest shall bear interest from the Loan Due Date until fully paid at a
rate per annum (the "Default Rate") equal to the Interest Rate plus two
percentage points, which interest shall be payable on demand.
Notwithstanding the foregoing to the contrary, during the period between
the Scheduled Maturity Date (as defined in Section 5(a)) and the expiration
or termination of the Escrow Forbearance Period, the unpaid principal
balance of and all accrued but unpaid interest on the Loan shall bear
interest at a fluctuating rate per annum equal to LIBOR for each Interest
Period during such period plus two percent (2%), which
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interest shall be due and payable at the end of the Escrow Forbearance
Period or the earlier payment in full of the then unpaid principal balance
of the Loan.
5. PAYMENTS AND PREPAYMENTS.
(a) You shall repay the outstanding principal balance of the Loan on
the earlier of (i) November 30, 2003 (the "Scheduled Maturity Date"), in
accordance with the terms of the Note or (ii) the acceleration of the Loan
upon an Event of Default hereunder (the earlier of (i) and (ii) being
referred to herein as the "Loan Due Date").
(b) Subject to Section 7(a) of the Security Agreement, you shall
prepay the outstanding principal balance of the Loan, plus accrued interest
thereon, immediately upon receipt of any and all Partnership Distributions,
in the amount of each such Partnership Distribution. Such prepayment shall
be applied to accrued interest on and the principal balance of the Loan in
such order as we determine in our discretion.
(c) You may voluntarily prepay the Loan upon 30-day's prior written
notice to us and upon payment of the entire unpaid principal balance of the
Loan, plus accrued and unpaid interest thereon, plus the Make-Whole
Premium, if any.
(d) All payments and prepayments to be made by you of principal,
interest and other amounts due hereunder shall be made without setoff,
defense or counterclaim in lawful money of the United States of America and
in immediately available funds and at our Grand Cayman Branch, c/o KBC Bank
N.V., 125 West 55th Street, New York, New York 10019 or such other address
as we shall advise you in writing.
6. TAXES. All payments made by you hereunder or under the Note shall be
made free and clear of, and without reduction for or on account of, any
present or future income, stamp or other taxes, levies, imports, duties,
charges, fees, deduction, or withholding, now or hereafter imposed, levied,
collected, withheld or assessed by any country (or by any political
subdivision, or taxing authority thereof or therein), excluding income and
franchise taxes, if any, imposed on our overall net income from all
operations by the United States of America or any political subdivision or
taxing authority thereof or therein including Puerto Rico (such
non-excluded taxes being called "Foreign Taxes"). If any Foreign Taxes are
required to be withheld from any amounts payable to us hereunder or under
the Note, then, the amounts so payable to us shall be increased to the
extent necessary to yield to us (after payment of all Foreign Taxes)
interest or any such other amounts payable hereunder or thereunder at the
rates or the amounts specified herein and in the Note. Whenever any Foreign
Tax is payable by you, as promptly as possible thereafter, you shall send
us a certified copy of an original official receipt showing payment
thereof. If you fail to pay any Foreign Taxes when due to the appropriate
taxing authority or fail to remit to us the required receipts or other
required documentary evidence, you shall indemnify us for any incremental
Foreign Taxes, interest or penalties that may become payable by us as a
result of such failure.
7. REQUIREMENT OF LAW. In the event that any law, regulation, treaty or
directive or any change therein or in the interpretation or application
thereof or compliance by us with any
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request or directive (whether or not having the force of law) from any
central bank or other governmental authority, agency or instrumentality:
(a) does or shall subject us to any tax of any kind whatsoever with respect
to the Loan, or change the basis of taxation of payments to us of
principal, interest or any other amount payable in respect of the Loan or
Note (except for changes in the rate of tax on our overall net income); (b)
does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of advances or loans
by, other credit extended by, or any other acquisition of funds by, any of
our offices involved in making or maintaining the Loan and which were not
otherwise included in the determination of the rate of interest under this
agreement; or (c) does or shall impose on us any other condition with
respect to making or maintaining the Loan; and the result of any of the
foregoing is to increase the cost to us of making or maintaining the Loan
or to reduce any amount receivable in respect of the Loan, then, in any
such case, you shall promptly pay us, upon our demand, any additional
amounts necessary to compensate us for such additional cost or reduced
amount receivable. We shall notify you of the event by reason of which we
have become entitled as promptly as practicable after we learn of such
event, which notice shall set forth a reasonable description of the facts
and circumstances of such event and its effect on the Loan. Such notice as
to any additional amounts payable pursuant to the foregoing sentence
submitted by us to you shall be conclusive and binding on you absent
manifest error.
8. CAPITAL ADEQUACY COSTS. If the introduction of or any change in (a)
the judicial, administrative, or other governmental interpretation of any
law or regulation or (b) compliance by us or any corporation controlling us
with any guideline or request from any central bank or other governmental
authority, agency or instrumentality (whether or not having the force of
law) has the effect of requiring an increase in the amount of capital
required or expected to be maintained by us or any corporation controlling
us, and we determine that such increase is based upon making or maintaining
the Loan or upon our obligations hereunder, then, you shall pay us such
additional amount as we shall certify to be the amount allocable to our
transaction with you hereunder. We will notify you of any event occurring
after the date of this letter that will entitle us to compensation pursuant
to this Section as promptly as practicable after we obtain knowledge
thereof and determine to request such compensation. Our determination for
purposes of this Section of the effect of any increase in the amount of
capital required to be maintained by us and of the amount allocable to our
obligations to you hereunder shall be conclusive and binding on you,
provided that such determination is made on a reasonable basis.
9. [INTENTIONALLY OMITTED.]
10. CONDITIONS PRECEDENT TO THE LOAN. Our obligation to make the Loan
is subject to satisfaction of the following conditions precedent: (i) we
shall have received the Note conforming to the requirements hereof,
executed by your duly authorized officers; (ii) we shall have received
certified copies of your Articles of Incorporation and By-Laws and of all
corporate action by you to authorize the execution, delivery and
performance of the Loan Documents, together with such other documents as we
shall reasonably require; (iii) we shall have received certificates as to
the incumbency and signatures of your officers authorized to sign the Loan
Documents; (iv) we shall have received the Security Agreement, and the
other Loan Documents executed by your duly authorized officer; (v) we shall
have received, in form and substance
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satisfactory to us, all releases, terminations and such other documents as
we may request to evidence and effectuate the termination of your financing
arrangements with SIPI under the SIPI Loan Agreement and the SIPI Security
Agreement, the repayment of all your obligations to SIPI, and the
termination and release by them of any interest in and to any of your
assets and property, including, but not limited to, UCC termination
statements; (vi) we have received evidence, in form and substance
satisfactory to us, that we have a valid perfected, first priority security
interest in and lien upon the Collateral; (vii) we have received, in form
and substance satisfactory to us, all consents, waivers, acknowledgements
and other agreements from third parties when we may deem necessary or
desirable in order to permit, protect and perfect our security interest in
the Collateral; (viii) we have received an appraisal of the Property by
Marshall & Stevens, in form and substance acceptable to us; (ix) we have
received an environmental survey by E. Langan Engineering and Environmental
Services, Inc., in form and substance acceptable to us; (x) we have
received an engineer's report of E. Langan Engineering and Environmental
Services, Inc., in form and substance acceptable to us; (xi) the Residual
Value Insurance shall have been issued and shall be in full force and
effect and we shall have been named as a loss payee with respect thereto;
(xii) all of your representations and warranties in this letter and the
other Loan Documents are complete and correct as of the date of the Loan
and after giving effect thereto as if made on and as of such date; (xiii)
on the date of the Loan and after giving effect thereto, you shall have
complied and then be in compliance in all respects with all of the terms,
covenants, and conditions of this letter and the other Loan Documents that
bind or apply to you; (xiv) no Event of Default, or event which would be an
Event of Default after notice or passage of time or the happening of any
other contingency, shall have occurred and be continuing as of the date of
the Loan or after giving affect thereto; (xv) we shall have received the
legal opinion of Graham & James LLP, covering such matters as we reasonably
request, in form and substance satisfactory to us and our counsel; (xvi) no
event of default, or any event which would be an event of default after
notice or passage of time or the happening of any other contingency, shall
have occurred and be continuing as of the date of the Loan under any
Project Document; (xvii) the Seventh Amendment shall have been duly
executed by each partner of the Partnership and shall be in full force and
effect, and we shall have received a duly executed copy thereof; (xviii)
the Escrow Agreement shall have been duly executed and delivered by each of
the parties thereto in addition to us and shall be in full force and
effect; we shall have received a duly executed copy thereof; and all
documents constituting the "Escrowed Documents" thereunder shall have been
delivered to and shall be held by the escrow agent thereunder; (xix) we
shall have received correct and complete copies of the Partnership
Agreement and the Project Documents as in effect on the date the Loan is
made; and (xx) all other documents and legal matters in connection with the
transactions contemplated by this agreement shall be reasonably
satisfactory in form and substance to us and our counsel.
11. REPRESENTATIONS AND WARRANTIES. You hereby represent and warrant to
us as follows:
11.1 ORGANIZATION, QUALIFICATION, POWER AND AUTHORITY. (a) You are
duly organized, validly existing and in good standing as a corporation
under the laws of the State of Delaware; (b) you are qualified to do
business and in good standing in all jurisdictions in which the failure to
be so qualified and in good standing would have a material adverse effect
on your
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business, properties, or financial condition; and (c) you have all
requisite power and authority to conduct your business as now conducted and
own your property.
11.2 EXECUTION, DELIVERY AND PERFORMANCE OF LOAN DOCUMENTS. You have
the full power, authority and legal right to execute, deliver, and perform
the Loan Documents. You have taken all required corporate and other action,
to authorize the borrowing evidenced hereby and to authorize the execution,
delivery, and performance of the Loan Documents. Each Loan Document has
been duly authorized by you by all required corporate action, has been duly
executed and delivered by you, and constitutes your legal, valid and
binding agreement and obligation enforceable against you in accordance with
its terms without setoff, defense or counterclaim. The execution and
delivery of the Loan Documents and the carrying out of their terms and
provisions do not and will not: (i) require any action or consent of or any
registration or filing with, any governmental authority, bureau or agency,
or any party to any agreement or other undertaking, or under any order or
decree applicable to you or, to the best of your knowledge, the
Partnership; or (ii) conflict with, or constitute a default under, or
result in the creation or imposition of any lien on your properties and
assets or the property or assets of, to the best of your knowledge, the
Partnership, by reason of the terms of (1) any contract, mortgage, lien,
lease, agreement, indenture, instrument, or judgement to which you or, to
the best of your knowledge, the Partnership are a party or which is or
purports to be binding you, (2) any judgment, law, statute, rule or
governmental regulation applicable to you or, to the best of your
knowledge, the Partnership, or (3) your Articles of Incorporation and
By-Laws or the Partnership Agreement.
11.3 COMPLIANCE. At the date hereof, you are not in violation of or in
default in any material respect with respect to any judgment, decree, order
or any federal, state or local law, rule, regulation, statute, or ordinance
applicable to your business or properties (including, without limitation,
those relating to environmental protection and pollution control), or any
contract, mortgage, lien, lease, indenture, instrument, agreement, or
document to which you are a party or bound. Without limiting the foregoing,
you have complied with all the requirements of the Residual Value Insurance
applicable to you with which compliance was required on or prior to the
date hereof and have not taken any action, or failed to take any action,
which could cause the Residual Value Insurance or any coverage of such
insurance to cease to be in full force and effect in all respects with
regard to the insured, any additional insured or loss payee named therein.
11.4 LITIGATION. There are no pending, or to your knowledge,
threatened suits, actions, proceeding, or counterclaims by any Person, or
investigation by any Public Authority, or any basis for any of the
foregoing, which challenge the validity or enforceability of any of the
Loan Documents, or which could materially and adversely affect your
financial condition, business or operation.
11.5 USE OF PROCEEDS. The loan proceeds will be used solely for the
purpose of repaying all debts, obligations and other liabilities
outstanding under or in respect of the SIPI Loan Agreement, paying the
costs and expenses incurred in connection with the transactions under the
Loan Documents, financing acquisitions of businesses, and other general
corporate purposes.
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11.6 MARGIN SECURITIES. The proceeds of the Loan will not be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or returning any indebtedness
which was originally incurred to purchase or carry any margin security or
for any other purpose which might cause the Loan to be considered a
"purpose credit" within the meaning of, or otherwise to violate, Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System.
11.7 FINANCIAL STATEMENT. Your audited financial statements for the
fiscal year ended December 31, 1996, which you have delivered to us, have
been prepared in accordance with generally accepted accounting principles
and fairly present, your financial condition and results of operation as at
such date and for the period then ended. No material adverse change has
occurred in your financial condition, business, or operations since
December 31, 1996.
11.8 TAXES. At the date hereof, you have filed all tax and information
returns and other reports that you required by law to have filed, and you
have paid all taxes, assessments, fees, and other governmental charges, and
all penalties and interest, if any, against you or your property or income,
or franchise, that have become due and payable.
11.9 PARTNERSHIP DOCUMENTS. You have delivered to us accurate and
complete copies of the Partnership Agreement and the Project Documents.
There are no modifications of or supplements to the Partnership Agreement
or the Project Documents other than as contemplated hereby, and, except for
the Partnership Agreement, there are no agreements or documents relating to
the organization and management of the Partnership, or the partners of the
Partnership and the rights and obligations thereof. You and, to the best of
your knowledge, each of the other partners of the Partnership is in
compliance with the terms of the Partnership Agreement.
All of the foregoing representations and warranties shall survive the
execution and delivery of this letter.
12. COVENANTS. You covenant that, at all times during the term hereof
and so long as the Obligations remain outstanding you will perform and
comply with the following covenants:
12.1 CORPORATE EXISTENCE AND GOOD STANDING. You shall preserve and
maintain your corporate existence and good standing in all jurisdictions
necessary to conduct your business and own or lease your property, and
maintain all licenses, permits, franchises, and governmental authorizations
necessary to conduct your business and own or lease your property.
12.2 COMPLIANCE WITH LAW AND AGREEMENTS. You shall comply with
each order, ordinance, law, rule, decree, judgement, governmental
regulation and statute applicable to you (including, without limitation,
those relating to environmental protection and pollution control) and each
contract, mortgage, lien, lease, indenture, order, instrument, agreement
or document to which you are a party or bound.
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12.3 MAINTENANCE OF BOOKS AND RECORDS. You shall keep adequate books
and records of accounts, in which complete entries will be made in
accordance with generally accepted accounting principles consistently
applied, reflecting all your or its financial transactions.
12.4 TAXES AND OTHER OBLIGATIONS. You shall file when due all tax and
information returns and other reports which you are required to file; pay
or provide for the payment of, when due, all taxes, fees, assessments and
other governmental charges against or upon your property, income or
franchises; make all required withholding and other tax deposits; establish
adequate reserves for the payment of all such items; provide to us, upon
request, satisfactory evidence of your timely compliance with the
foregoing; and pay when due all Indebtedness for Borrowed Money owed by you
and perform and discharge in a timely manner all other obligations
undertaken by you.
12.5 FINANCIAL STATEMENTS. You shall furnish to us (i) no later than
90 days after the end of each of your fiscal years, an audited consolidated
balance sheet, statement of income, and statement of cash flow and uses of
funds for you and your consolidated subsidiaries, if any, as at the end of
such year and for the fiscal year then ended; and (ii) no later than 45
days after the end of each of your fiscal quarters, other than the last
fiscal quarter of a fiscal year, an unaudited consolidated balance sheet,
statement of income and statement of cash flow for you and your
consolidated subsidiaries, if any, as at the end of such quarter and for
the period from the beginning of the fiscal year until the end of such
quarter. All such financial statements shall be prepared in accordance with
generally accepted accounting principles and shall present fairly the
financial position and results of operations for you and your consolidated
subsidiaries, if any, as at the dates thereof and for the period then
ended. All annual financial statements shall be examined by and accompanied
by the unqualified report of independent certified public accountants
reasonably acceptable to us. All quarterly financial statements shall be
certified to be correct by your chief financial or accounting officer,
subject to year-end adjustments. You shall furnish to us copies of all
financial statements, tax or information returns, operating reports, and
other written communication received from the Partnership, promptly after
your receipt.
12.6 MERGERS, CONSOLIDATIONS OR SALES. You shall not enter into any
transaction of merger or consolidation with, or transfer, sell, assign,
lease or otherwise dispose of all or substantially all of your properties
or assets to, any Person (except a merger in which you are the surviving
entity and after giving effect to which you are in compliance with all of
your other covenants in the Loan Documents and no Event of Default, or
event or circumstance that with the passage of time or the giving of notice
or both would constitute an Event of Default, exists), or wind up,
liquidate or dissolve or agree to do any of the foregoing.
12.7 NOTICES. You shall notify us in writing of the following matters
at the following times:
(a) Immediately after becoming aware thereof, any Event of
Default, or event of default or default under any Project Document,
and
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(b) Immediately after becoming aware thereof, any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened investigation by a Public Authority, which
may materially and adversely affect the Project Documents, the
repayment of the Obligations, our rights under the Loan Documents or
your or the Partnership's property, business, operations or condition
(financial or otherwise).
12.8 INDEBTEDNESS. You shall not have outstanding any Indebtedness for
Borrowed Money in excess of $80,000,000 in aggregate principal amount at
any time.
12.9 NEGATIVE PLEDGE. You shall not create, incur, assume or suffer to
exist any Lien in or upon the Collateral except in our favor.
12.10 FINANCIAL COVENANTS. You shall maintain a ratio of total
Indebtedness for Borrowed Money to total equity of no greater than
1.25:1.00.
12.11 DISPOSAL OF PARTNERSHIP INTEREST. You will not sell, transfer,
assign or otherwise convey your interest in the Partnership or any portion
thereof, or grant any options or rights to purchase such interest or any
portion thereof except pursuant to the Loan Documents or under Article XIV
of the Partnership Agreement, as amended by the Seventh Amendment.
12.12 ACTION UNDER PARTNERSHIP AGREEMENT. You shall not cast any vote,
make any election, give or withhold any consent or approval, waive any
provision, or take any other action under the Partnership Agreement which
you may be permitted or required to cast, take, give, take or withhold,
waive or make pursuant to the terms of the Partnership Agreement without
our prior written consent:
(a) if such vote, election, consent, approval, waiver, or other action
is with respect to (i) the dissolution or winding-up of the Partnership,
(ii) any amendment, modification, or supplement to or waiver or consent
under the Project Documents, (iii) any voluntary or involuntary petition
for relief or similar filing or action under the United States Bankruptcy
Code or any other statute, law or proceeding for the relief of debtors, or
any assignment for the benefit of creditors, or any appointment of a
custodian, receiver or trustee, (iv) any incurrence of Indebtedness for
Borrowed Money, (v) the imposition of any Lien on the Property, (vi) any
sale or other disposition of the Property or any interest therein or of all
or substantially all of the assets and property of the Partnership, or any
merger or combination of the Partnership with or into any other Person, or
(vii) any amendment, modification, or supplement to the Partnership
Agreement; or
(b) without at least 10 days prior written notice to us in the case of
any other vote, election, consent, approval, waiver, or other action.
12.13 TRANSACTIONS WITH AFFILIATES. You will not enter into or permit
to exist any transaction or series of transactions with any affiliate other
than in the ordinary course of business and on an arm's length basis,
except transactions disclosed in your Annual Report on Form 10-K for the
year ended December 31, 1996, your Quarterly Report on Form 10-Q/A for
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the quarter ended September 30, 1997, your Current Report on Form 8-K,
dated June 13, 1997, and the Project Documents.
12.14 YEAR 2000. You shall take all action necessary to assure that
your computer based systems are able to process effectively data including
dates on and after January 1, 2000. At our request, you shall provide us
with assurance reasonably acceptable to us of your year 2000 capability.
12.15 FURTHER ASSURANCES. You shall execute and deliver to us, upon
request, such documents and agreements and do such other acts, as we may,
from time to time, reasonably request to carry out the terms and conditions
of this letter.
13. DEFAULT AND REMEDIES.
13.1 DEFAULTS. Each of the following constitutes an event of default
("Event of Default"):
(a) you fail to pay any principal of or accrued interest on the Note
when due or fail to pay when due any of the other Obligations;
(b) any representation or warranty made by you herein, in the Loan
Documents, in any written statement or certificate furnished or deemed
furnished by you to us at any time, or in any agreement, instrument, or
document now or hereafter in effect evidencing, securing, guaranteeing, or
relating in any way to your Obligations to us shall have been untrue in any
material respect when made;
(c) you default in the observance or performance of, or breach, any
covenant or agreement herein, in the Loan Documents, or in any other
agreement, instrument, or documents now or hereafter in effect evidencing,
securing, guaranteeing, or relating in any way to your Obligations to us,
or an event of default otherwise occurs under any such other agreement,
instrument, or document, and in the case of a breach of Section 12.2, 12.3,
12.4, 12.5, 12.7 or 12.14, such breach continues for ten (10) days
unremedied or uncured;
(d) the holder of any other of your Indebtedness for Borrowed Money in
an outstanding principal amount in excess of $100,000 declares that a
default exists with respect to such Indebtedness for Borrowed Money or
under any agreement relating thereto;
(e) you or the Partnership commence, have commenced against you or it,
or acquiesce in the commencement or any action or proceeding in bankruptcy
or seeking reorganization, arrangement, readjustment of debts, or any other
relief under the United States Bankruptcy Code, as amended, or under any
other bankruptcy or insolvency law, state or federal, now or hereafter
existing, whether or not an order for relief has been entered therein, and
in the event of an action or proceeding commenced against you, such action
or proceeding, is not withdrawn or dismissed within forty-five (45) days
after it is commenced;
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(f) you or the Partnership apply for or acquiesce in the appointment
of, or have appointed against you or it, a receiver, custodian, trustee,
sequestrator, or similar officer for you or it or all or any part of your
or its property;
(g) you or the Partnership make an assignment for the benefit of
creditors;
(h) you or the Partnership file a certificate of dissolution under
applicable state law, are liquidated, or take any action or have any action
taken against you or it in furtherance of dissolution or liquidation;
(i) one or more final judgements for the payment of money aggregating
$100,000 or more are rendered against you which remains undischarged,
unvacated, unbonded or unstayed for a period of thirty (30) days;
(j) any Lien, other than in our favor or pursuant to the Project Loan
Documents, is filed or recorded with respect to or otherwise imposed upon
the Collateral or the Property;
(k) you are or the Partnership is enjoined, restrained or in any way
prevented by order of any Public Authority from conducting all or any
material part of your or its business and such order continues for more
than fifteen (15) days;
(l) we do not have or cease to have a valid and perfected first
priority security interest in the Collateral for any reason other than the
failure to take any action within our control;
(m) any of the Loan Documents for any reason, other than a payment in
full of the Obligations, ceases to be in full force and effect or is
declared to be null and void or you deny that you have any further
liability under any Loan Document to which you are a party, or give notice
to such effect;
(n) any material damage to, or loss, theft or destruction of, the
Collateral or the Property, whether or not insured, or any Condemnation,
act of force majeure or other casualty occurs which causes, for more than
sixty (60) consecutive days, the cessation or substantial curtailment of
revenue producing activities at any of your facilities or those of the
Partnership if any such event or circumstances could reasonably be expected
to have a Material Adverse Effect unless, within such sixty (60) day
period, you have either (i) commenced and pursued diligently all action
available to you under the Lease Agreement or (ii) provided to us a plan
(acceptable to us in our discretion), and in the case of a casualty, work
has commenced and is being diligently pursued under such plan, in each case
for the purpose of returning your property or the Property to a revenue
production state similar to the state of your property or the Property
prior to the occurrence of such casualty or other event;
(o) the Partnership engages in any type of business activity other
than the ownership, lease and operation of the Property in accordance with
past practices; or
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(p) the General Partner or any limited partner of the Partnership
defaults in the observance or performance of, or breaches, any covenant or
agreement in Article XIV, Section 9.01(d) or Section 22.07 of the
Partnership Agreement or any representation or warranty made by it therein
shall have been untrue in any material respect when made; or
(q) the Partnership defaults in the observance or performance of, or
breaches, any covenant or agreement contained in any Project Document, or
any default or event of default otherwise occurs thereunder.
13.2 REMEDIES. (a) If an Event of Default occurs, then, in addition to
any other rights and remedies that we may have under law or agreement
(including, without limitation, our rights and remedies under the Escrow
Agreement and the Partnership Agreement, which are subject to the terms and
conditions thereof), but subject to subsection (b) of this Section, we may,
without notice to or demand on you, declare the unpaid principal balance of
the Loan, together with accrued but unpaid interest thereon and all other
Obligations, to be and all such sums shall thereupon become immediately due
and payable. You waive presentment or payment, demand, protest, notice of
protest and demand or dishonor hereof, and all other notices to which you
may be entitled.
(b) If you fail to pay the principal balance of and accrued but unpaid
interest on the Loan at the Scheduled Maturity Date, and no other Event of
Default is then continuing and we have not theretofore declared the
principal balance of the Loan due and payable pursuant to Section 13.2(a),
then, during the General Forbearance Period (as hereinafter defined), we
will forbear from enforcing our remedies arising from such failure of
payment. For the purposes hereof, the "General Forbearance Period" shall
mean the period commencing on the Scheduled Maturity Date and ending on the
earliest to occur of: (x) April 30, 2005; (y) the closing of a Qualifying
Financing (as defined below) or a Qualifying Sale (as defined below); or
(z) the earlier termination of the General Forbearance Period in accordance
with this subsection. We may terminate the General Forbearance Period at
any time that either of the following events or circumstances shall exist
or occur:
(i) any Event of Default (other than your failure to pay the
Obligations on the Scheduled Maturity Date) shall occur and be
continuing; or
(ii) after the repayment in full of the Partnership's
obligations pursuant to the Project Loan Agreement, any of the
following conditions are not satisfied:
(A) the Government is the tenant of the Property and is
paying rent for the use and occupancy of the Property; you
are receiving distributions of your share of such rent under
the Partnership Agreement (as "Net Cash Flow" or otherwise)
within thirty days after each rental payment is received;
each of such distributions is in an amount
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which on an annualized basis is not less than $6,000,000 per
annum; and such distributions are being remitted by the
Partnership directly to us without reduction for application
to the Obligations; and
(B) either (1) the Partnership is engaged in and is
diligently pursuing good faith negotiation for (a) a new
lease for the Property, or an extension of the Lease
Agreement, providing for a rent and on other terms that will
enable the Partnership to obtain financing in an amount such
that the proceeds thereof that are to be distributed to you
under the Partnership Agreement will be sufficient to repay
the Loan and all accrued interest thereon (such financing
being referred to hereinafter as a "Qualifying Financing")
and (b) Qualifying Financing; or (2) the Partnership is
engaged in and is diligently pursuing good faith
negotiations for the sale of the Property at a price and on
terms such that the amount of cash to be distributed to you
under the Partnership Agreement from the proceeds of such
sale will be sufficient to repay the Loan and all accrued
interest thereon (such sale being referred to as a
"Qualifying Sale").
Upon the expiration or termination of the General Forbearance Period,
unless the Loan and all accrued interest thereon have been fully and
finally paid, we shall be entitled at such time and at any time thereafter
to enforce all of our rights and remedies for payment of the Obligations,
to the same extent as if we had not agreed to forbear from doing so during
the General Forbearance Period; provided, however, that we shall not be
entitled at such time to enforce our rights and remedies under the Escrow
Agreement unless the Escrow Forbearance Period (as defined in
Section13.2(c)) has also expired or been terminated.
(c) If you fail to pay the principal balance of and accrued but unpaid
interest on the Loan at the Loan Due Date, then, whether or not another
Event of Default is then continuing, during the Escrow Forbearance Period
(as hereinafter defined), we will forbear from enforcing our rights and
remedies under the Escrow Agreement arising from such failure of payment.
For the purposes hereof, the "Escrow Forbearance Period" shall mean the
period commencing on the Loan Due Date and ending on the earlier to occur
of: (x) April 30, 2005; or (y) the earlier termination of the Escrow
Forbearance Period in accordance with this subsection. We may terminate the
Escrow Forbearance Period at any time that either of the following events
or circumstances shall exist or occur:
(i) there shall occur and be continuing an event described
in Section 13.1, subsection (e), (f), (g), (h), or (p), with
respect to the Partnership or the General Partner, which, in the
case of an event described in
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Section 13.1(p), continues uncured for more than 10 days after
the General Partner's receipt of written notice from us of such
occurrence; or
(ii) after the repayment in full of the Partnership's
obligations pursuant to the Project Loan Agreement, any of the
conditions set forth in subsections (b)(ii)(A) or (b)(ii)(B) of
this Section are not satisfied.
Upon the expiration or termination of the Escrow Forbearance Period, unless
the Loan and all accrued interest thereon have been fully and finally paid,
we shall be entitled at such time and at any time thereafter to enforce all
or our rights and remedies under the Escrow Agreement, to the same extent
as if we had not agreed to forbear from doing so during the Escrow
Forbearance Period.
(d) Our forbearance as provided hereunder shall not be construed as a
waiver of any of our rights or remedies, nor shall it be the basis to deem
us estopped from taking any action at a later date. All statutes of
limitations applicable to actions that we may be entitled to bring to
enforce our rights and remedies shall be tolled during the General
Forbearance Period or the Escrow Forbearance Period, as the case may be,
and each time period provided in each such statute of limitations shall be
extended by a period of time equal to the duration of the General
Forbearance Period or the Escrow Forbearance Period.
(e) We acknowledge that the rights and remedies granted to us in
Article XIV of the Partnership Agreement are subject to the terms,
conditions, and limitations therein and that we are bound thereby to the
same extent as if we were a party to the Partnership Agreement.
14. OBLIGATIONS UNCONDITIONAL; CUMULATIVE REMEDIES; NO PRIOR RECOURSE.
Your obligations under the Loan Documents, except as otherwise expressly
set forth therein, are absolute and unconditional and shall not be
released, discharged, or otherwise affected by any action or inaction on
our part in enforcing our rights hereunder, by a bankruptcy, insolvency, or
similar proceeding, or by any other matter which might vary your risk or
operate to discharge you as a matter of law. Our rights and remedies under
the Loan Documents are cumulative and not exclusive of other rights and
remedies provided by law. We may proceed directly against you for payment
and performance of your obligations without prior recourse to any
collateral or to any other person liable therefor.
15. COMPLETE AGREEMENT; MODIFICATIONS AND WAIVERS. This Agreement and
the other Loan Documents are the complete agreement between you and us
regarding the transactions described herein and supersede any and all oral
or other written agreements relating to such transactions. In entering into
the agreements embodied in the Loan Documents, you have not relied on any
agreements, representations, warranties, or statements by us that are not
expressly set forth in this letter. The Loan Documents may not be modified,
supplemented, or amended, or any of their provisions waived, except by a
writing signed by you and us; provided, however, that you and we shall not
amend Section 13.2 (c) or Section 13.1, subsections (e), (f), (g), (h), or
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14
(p) (insofar as such subsections apply to the Partnership and the General
Partner), without the prior written consent of the General Partner. No
waiver by us of a breach or Event of Default by you shall be deemed a
waiver of any other previous, concurrent, or subsequent breach or Event of
Default.
16. REINSTATEMENT. If after receipt of any payment pursuant to the Loan
Documents, we are for any reason compelled to surrender such payment to any
person or entity, because such payment is determined to be void or voidable
as a preference, impermissible set off, or a diversion of trust funds, or
for any other reason, then the Loan Documents and your obligations intended
to be paid by such payment shall be reinstated, if necessary, and shall
continue in full force notwithstanding any contrary action which we may
have taken in reliance upon such payment. Any such contrary action so taken
shall be without prejudice to our rights under the Loan Documents and shall
be deemed to have been conditioned upon such payment having become final
and irrevocable.
17. COSTS AND EXPENSES. You will pay or reimburse to us on demand any
and all charges, costs, and taxes incurred in preparing, negotiating,
documenting, implementing, and enforcing the Loan Documents and collecting
Obligations, including without limitation, fees and disbursements of legal
counsel, and all amounts payable by us under the Escrow Agreement.
18. GOVERNING LAW; BINDING EFFECT. Unless otherwise expressly stated
therein, the Loan Documents shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without
giving effect to any conflicts of laws or principles thereof. The terms and
provisions of the Loan Documents shall inure to the benefit of and be
binding upon each of us and our respective successors and assigns;
provided, however, that you may not assign any of your interests therein or
obligations thereunder without our prior written consent. We may assign or
grant participations in all or any of our rights and obligations under this
letter, the Note and the other Loan Documents to one or more Persons, so
long as the assignee or participant is not at the time of the assignment or
sale of the participation entitled to demand a payment under Sections 6,7,
or 8 that you are not then entitled to demand.
19. SEVERABILITY. If any clause or provision of the Loan Documents
shall be held invalid or unenforceable, in whole or in part, in any
jurisdiction, such invalidity or unenforceability shall attach only to such
clause or provisions, or part thereof, and shall not in any manner affect
any other clause or provision in any jurisdiction.
20. ADMISSIBILITY OF BOOKS AND RECORDS. You agree that our books and
records showing the transactions contemplated by the Loan Documents shall
be admissible in any action or proceeding arising therefrom and shall
constitute prima facie proof thereof.
21. CONSENT TO JURISDICTION. You agree that, in addition to any other
courts that may have jurisdiction under applicable law and rules, the
Supreme Court of the State of New York, in the County of New York, and the
United States District Court for the Southern District of New York shall
have jurisdiction to hear and determine any claims or disputes pertaining
directly or indirectly to the Loan Documents or to any matter arising
therefrom. You expressly submit and consent, in advance, to such
jurisdiction in any action or proceeding in such courts, agree that
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15
venue will be proper in such courts for all such matters and waive personal
service of the summons and complaint or other process or papers issued
therein. You agree that service of such summons or complaint or other
process or papers may be made by registered or certified mail (return
receipt requested) addressed to you at the address set forth in Section 22.
22. NOTICES. Any notice or other communication given hereunder shall be
in writing, shall be delivered against receipt, or mailed by registered or
certified mail, return receipt requested, postage prepaid, and addressed to
the party to be notified as follows, or to such other address as such party
may designate by like notice:
If to us, to: KBC Bank N.V.
Grand Cayman Branch
c/o 125 West 55th Street
New York, New York 10019
Attn: Edward Sproull
Telephone No.: (212) 541-0600
Telecopy No.: (212) 956-5580
If to you, to: Regency Affiliates, Inc.
729 South Federal Highway, Suite 307
Stuart, Florida 34994
Attn: William R. Ponsoldt
Telephone No.: (561) 220-7662
Telecopy No.: (561) 220-2974
23. SETOFF. Whenever an Event of Default exists, we, without notice to
or demand on you, may elect in our sole discretion to setoff against the
amount due and all moneys then or thereafter owed to you by us or an
affiliate, including, without limitation, all of your deposit and other
accounts and funds in our or such affiliate's possession or control. We
shall be deemed to have exercised this right immediately at the time of our
election even though any charge therefor is made or entered on our records
subsequent to that time. All costs and expenses, including, without
limitation, attorney's fees, paid or incurred by us in connection with any
such setoff shall be paid by you on demand and shall bear interest at the
rate then applicable to the Loan from the date paid or incurred.
24. WAIVER OF JURY TRIAL, ETC. YOU HEREBY WAIVE TRIAL BY JURY, AND YOU
HEREBY WAIVE RIGHT OF SETOFF AND THE RIGHT TO IMPOSE COUNTERCLAIMS (OTHER
THAN COMPULSORY COUNTERCLAIMS), IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF THE LOAN DOCUMENTS, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN US. YOU CONFIRM THAT THE
FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
25. SECURITY AND GUARANTEES. We may, without notice or demand and
without affecting your Obligations, from time to time:
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(a) take from any Person and hold collateral for the payment of all or
any part of your Obligations hereunder and exchange, enforce or release
such collateral or any part thereof; and
(b) accept and hold any endorsement or guarantee of payment of
all or any part of the Obligations and release or substitute any such
endorser or guarantors, or any Person who has given any Lien in any
collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any
part of the Obligations.
Please countersign below to indicate your acceptance of the terms
hereof.
[Signatures on Following Page]
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KBC BANK N.V.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Agreed and Accepted:
REGENCY AFFILIATES, INC.
By:
------------------------------
William R. Ponsoldt, Sr.
President
[LOAN AGREEMENT]
18
EXHIBIT A
DEFINITIONS
When used in the letter to which this is attached:
"Accreted Interest" means in respect of each interest compounding
period in connection with the Loan, the total amount of interest accrued,
but unpaid, as of the end of such period for such period, on the Total
Amount of the Loan.
"Accreted Interest Balance" means as of any date of determination in
respect of the Loan, the aggregate of all Accreted Interest in respect of
all interest compounding periods ending on or before such date of
determination less all payments, if any, made on account of such Accreted
Interest.
"Business Day" means any day other than a Saturday, Sunday or other day
on which our New York Branch is authorized or required by law to close.
"Collateral" means the Collateral, under and as defined in the Security
Agreement, and any other property in which we are granted a lien, charge,
or security interest as security for the Obligations.
"Condemnation" means any taking of or damage to any property or any
part thereof by reason of any public improvement or condemnation
proceeding, or in any other similar manner.
"Deed of Trust" means the Amended and Restated Deed of Trust, dated as
of November 1, 1994, for the benefit of the Trustee.
"Dollars" or "$" means United States Dollars.
"Escrow Agreement" means the Escrow Agreement dated June 24, 1998 by
and among the Partnership, us, R.V.I America Insurance Company, and State
Street Bank and Trust Company, as escrow agent and as trustee.
"General Partner" means 1500 Woodlawn Limited Partnership, a Delaware
limited partnership, which is the General Partner of the Partnership.
"Guarantee" by any Person means all obligations of such Person which in
any manner directly or indirectly guaranty the payment or performance of
any indebtedness, dividend or other obligation of any other Person (the
"guaranteed obligations"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement: (a) to
purchase the guaranteed obligations or any property constituting security
therefor or (b) to advance or supply funds for the purchase
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or payment of the guaranteed obligations or to maintain working capital or
other balance sheet condition.
"Government" means the United States of America, acting by and through
the General Services Administration.
"Indebtedness for Borrowed Money" of any Person means all of such
Person's liabilities, obligations and indebtedness to any Person, of any
kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, in respect of: (a) the
Obligations, (b) all other liabilities, obligations, and indebtedness for
borrowed money or evidenced by a note, debenture, or other instrument for
the payment of money, (c) all obligations and liabilities of any Person
secured by any Lien on your property even though you have not assume or
become liable for the payment thereof, provided that all such obligations
and liabilities which are limited in recourse to such property shall be
included in Indebtedness only to the extent of the book value of such
property that would be shown on your balance sheet prepared in accordance
with generally accepted accounting principles, (d) all obligations or
liabilities created or arising under any capitalized lease or conditional
sale or other title retention agreement with respect to property used or
acquired by you, even if the rights and remedies of the lessor, seller or
lender thereunder are limited to repossession of such property, provided,
however, that all such obligations and liabilities which are limited in
recourse to such property shall be included in Indebtedness only to the
extent of the book value of such property that would be shown on your
balance sheet prepared in accordance with generally accepted accounting
principles, and (e) all obligations and liabilities under any Guarantee of
another Person's Indebtedness for Borrowed Money.
"Interest Period" means each period commencing on the Scheduled
Maturity Date or the last day of the next preceding Interest Period and
ending on the numerically corresponding day which is one month thereafter;
provided, however, that if an Interest Period would end on a day which is
not a LIBOR Business Day, then such Interest Period shall be extended and
shall end on the next succeeding LIBOR Business Day.
"Lease Agreement" means the U.S. Government Lease for Real Property No.
gs-03B-40131, between the Government and the Partnership.
"LIBOR" means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate
Page 3570 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period. If for any
reason Telerate Page 3570 is not available, the term "LIBOR Rate" shall
mean, for any Interest Period, 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 (2) 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 sum of the arithmetic
mean of all such rates.
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"LIBOR Business Day" means a Business Day on which dealings in U.S.
Dollar deposits are carried out in the London interbank market.
"Lien" means: (a) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and
including, without limitation, a security interest, charge, claim, or lien
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes; or
(b) any condition, restriction, lease or other title exception or
encumbrance affecting property.
"Loan Documents" means this letter, the Note, the Pledge and Security
Agreement, the Seventh Amendment, the Escrow Agreement, and all other
documents, agreements and instruments heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations
arising from or with respect to the transaction contemplated hereby, and
all amendments, additions, extensions and substitutions.
"Make-Whole Premium" means the excess, if any, of (1) the sum of the
respective Payment Values (as such term is defined below) of (x) each
prospective Accreted Interest amount the would be added to the portion of
the Total Amount of the Loan being prepaid on or after the date of
prepayment if the prepayment were not made and (y) the portion of the Total
Amount of the Loan to be prepaid (the amount of each such payment being
herein referred to as a "Payment"), over (2) the portion of the Total
Amount of the Loan being prepaid. The "Payment Value" of each Payment shall
be determined by discounting such Payment at the Reinvestment Rate (as such
term is defined below), for, in the case of Accreted Interest amounts, the
period from the relevant prospective compounding date on which such payment
would have compounded to the Scheduled Maturity Date and, in the case of
the Total Amount of the Loan, the period from the prepayment date to the
Scheduled Maturity Date. The "Reinvestment Rate" is the yield which shall
be imputed from the yields of those actively traded U.S. Treasury
securities, having a maturity equal to the Weighted Average Life to Final
Maturity (as such term is defined below) of the Loan, provided that, if
such Weighted Average Life to Final Maturity is not equal to the maturity
of actively traded U.S. Treasury securities (calculated to the nearest
one-twelfth (1/12) of a year), such yield shall be obtained by linear
interpretation from the yields of actively traded U.S. Treasury securities
having the greater maturity closest to and the lesser maturity closest to
such Weighted Average Life to Final Maturity. The yields of such U.S.
Treasury securities shall be determined by us as of 10 a.m. New York City
time on the fifth (5th) Business Day prior to the prepayment date.
"Weighted Average Life to Final Maturity" of the Loan as of the time of
determination thereof means the number of years (rounded to the nearest
one-twelfth (1/12)) obtained by dividing the then Remaining Dollar-Years
(as such term is defined below) of the Loan by the then outstanding Total
Amount of the Loan. "Remaining Dollar Years" means the sum of the amounts
obtained by multiplying the amount of each then prospective Accreted
Interest amount that would have compounded on the Total Amount of the Loan
being prepaid, or the Total Amount of the Loan being prepaid, as the case
may be, by the number of years (calculated to the nearest one-twelfth
(1/12)) which will elapse between the prepayment date and the relevant
prospective interest compounding date or Scheduled Maturity Date, as the
case may be.
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"Material Adverse Effect" means (a) a material adverse effect upon your
business, operations, properties, assets or condition (financial or
otherwise) or that of the Partnership on an individual basis, (b) the
impairment of your ability to perform your obligations under any Loan
Document to which you are a party or our ability to enforce any Loan
Document or collect any of the Obligations or (c) the impairment of the
Partnership's ability to perform its obligations under any Project Document
to which it is a party. In determining whether any individual event would
result in such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other then existing
events would result in a Material Adverse Effect.
"Obligations" means any and all of your present and future loans,
advances, debts, liabilities, obligations, covenants, duties and
indebtedness owing by you to us, whether or not arising under this letter,
whether or not evidenced by any note, or other instrument or document,
whether arising from an extension of credit, opening of a letter of credit,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment from others
and any participation by us in your debts owing to others), absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all loans, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable
to you hereunder, under another Loan Document or under any other agreement
or instrument with us.
"Partnership" means Security Land and Development Company Limited
Partnership, a Maryland limited partnership.
"Partnership Agreement" means the Security Land and Development Company
Limited Partnership Amended and Restated Limited Partnership Agreement and
Amended and Restated Certificate of Limited Partnership, dated as of
November 25, 1986, as amended by the First Amendment, dated as of November
25, 1986, the Second Amendment, dated as of November 22, 1988, the Third
Amendment, dated as of January 1, 1989, the Fourth Amendment, dated as of
August 20, 1990, the Fifth Amendment, dated as of November 17, 1994, the
Sixth Amendment, dated as of November 17, 1994, and the Seventh Amendment,
among, you, the General Partner and the other limited partners from time to
time.
"Partnership Distributions" means all proceeds of all distributions
received by you from the Partnership, whether in the nature of insurance or
Condemnation proceeds, refinancing proceeds, proceeds from the disposition
of any assets of the Partnership or from any other Partnership source
whatsoever or of any kind, except as provided in Section 7(a) of the
Security Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
governmental body, agency or bureau, or any other entity.
"Project Documents" shall mean the Lease, the Project Loan Agreement,
the Trust Agreement, and the Deed of Trust.
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"Project Loan Agreement" means the Project Loan Agreement, dated as of
November 1, 1994, between the Partnership and the Trustee.
"Property" means the land described on Exhibit D hereto, and the
buildings, improvements, and fixtures thereon, located at 1500 Woodlawn
Drive, Baltimore, Maryland.
"Public Authority" means any nation, government, governmental
department, commission, board, bureau, agency, regulatory authority,
instrumentality, judicial or administrative body, domestic or foreign,
federal, national, state or local having or claiming jurisdiction over the
matter or matters in question.
"Residual Value Insurance" means a Residual Value Insurance Policy in
form and substance acceptable to us issued by R.V.I. America Insurance
Company, or other insurer acceptable to us, in the amount of Fourteen
Million Dollars ($14,000,000), which names us as a loss payee.
"Security Agreement" means the Pledge and Security Agreement, dated as
of June 24, 1998, between you and us.
"Seventh Amendment" means the Seventh Amendment to the Partnership
Agreement, dated as of June 24, 1998, in the form of Exhibit C to this
letter.
"SIPI" means Southern Indiana Properties, Inc.
"SIPI Agreement" means the Credit Agreement, dated June 21, 1996,
between you and SIPI.
"SIPI Security Agreement" means the Collateral Assignment, Pledge and
Security Agreement, dated June 21, 1996, between you and SIPI.
"Total Amount" means as of any date, the sum of the unpaid principal
balance and the Accreted Interest Balance of the Note.
"Trust Agreement" means the Trust Agreement, dated as of November 1,
1994, between the Partnership and the Trustee.
"Trustee" means State Street Bank and Trust Company, successor trustee
to Shawmut Bank, N.A., not in its individual capacity, but solely as
trustee under the Trust Agreement, or any substitute pursuant to the terms
thereof.
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EXHIBIT B
TERM NOTE
US$ New York, New York
------- Date: June___, 1998
FOR VALUE RECEIVED, REGENCY AFFILIATES, INC., a Delaware corporation
(the "Borrower"), hereby unconditionally promises to pay to the order of KBC
BANK N.V., Grand Cayman Branch (the "Bank"), at 125 West 55th Street, New York,
New York 10019, or such other place as the holder hereof may hereafter designate
in writing, the principal sum of ____ Million ____ Hundred Thousand Dollars
(US$________) in lawful money of the United States of America and in
immediately available funds on November 30, 2003.
The Borrower shall also pay interest to the Bank, in like money, on the
unpaid principal balance of this Note outstanding from time to time until such
principal is fully paid at the rate per annum equal to ___% (the "Interest
Rate"). Interest shall be computed on a daily basis for the actual number of
days elapsed over a year of 360 days, shall be compounded semiannually on each
June 1 and December 1, commencing June 1, 1998, and shall be due and payable in
arrears on the earlier of (a) November 30, 2003 or (b) the earlier acceleration
of the Loan upon an Event of Default. Any amount of principal or interest hereof
which is not paid when due, whether at stated maturity, by acceleration or
otherwise, shall bear interest from the date when due until said principal
amount is paid in full, at the applicable rate per annum set forth in the
Agreement. In no event shall the rate of interest and other charges exceed the
maximum rate permitted by laws governing this Note. If the interest and other
charges collected exceed the maximum amount permitted by such laws, such excess
shall be deemed received on the account of, and shall automatically be applied
to reduce the principal balance of this Note.
The Borrower shall pay to the holder of this Note all reasonable
attorneys' fees and disbursements and all out-of-pocket costs and expenses
incurred by the holder in collecting upon or enforcing this Note.
The Borrower waives presentment for payment, demand, protest, notice of
dishonor hereof, and all other notices to which it may be entitled.
Unless otherwise defined herein, all defined terms used in this Note
shall be the meanings given to them in the letter dated the date hereof between
the Borrower and the Bank pursuant to which this Note has been delivered (the
"Agreement").
24
This Note is issued under and is subject to the terms of the Agreement,
which terms are hereby incorporated herein by reference. This Note is secured
pursuant to and the holder is entitled to the benefits of the Pledge and
Security Agreement, dated as of June 24, 1998, between and Borrower and the Bank
(the "Security Agreement").
The Borrower may prepay the principal of this Note only upon prior
written notice to the Bank and subject to the terms and provisions of the
Agreement.
If any Event of Default shall occur and be continuing, then the entire
outstanding principal balance of and all accrued but unpaid interest on this
Note may become or be declared immediately due and payable, as provided in the
Agreement.
This Note may not be modified, changed, or terminated orally, but only
by an agreement in writing signed by the party to be bound by it. No act,
failure, or delay by the Bank shall constitute a waiver of any of its rights and
remedies. Any written waiver shall be applicable only in the specific instance
for which it is given.
The holder of this Note at its option may extend the time for payment
of this Note, postpone the enforcement hereof, or grant any other indulgences,
without affecting or diminishing the holder's right to recourse against the
Borrower or any endorser, sureties, or guarantors, which right is expressly
reserved.
The terms and provisions hereof shall inure to the benefit of, and be
binding upon, the respective successors and assigns of the Bank and the
Borrower; provided, however, that the Borrower may not assign any of its
interests herein or obligations hereunder without the prior written consent of
the Bank.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of laws principles of such State.
The Borrower agrees that, in addition to any other courts that may have
jurisdiction under applicable law and rules, the Supreme Court of the State of
New York, County of New York, and the United States District Court for the
Southern District of New York shall have jurisdiction to hear and determine any
claims or disputes pertaining directly or indirectly to this Promissory Note or
to any matter arising herefrom. The Borrower expressly submits and consents in
advance to such jurisdiction in any action or proceeding in such courts, agrees
that venue will be proper in such courts for all such matters and waives
personal service of the summons and complaint or other process or papers issued
therein. The Borrower agrees that service of such summons and complaint or other
process of paper may be made by registered or certified mail (return receipt
requested) addressed to the Borrower at the address set forth below.
THE BORROWER AND THE BANK WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING IN ANY COURT ARISING ON, OUT OF, UNDER, BY VIRTUE OF, OR IN ANY WAY
RELATING TO THE NOTE, OR THE TRANSACTIONS OCCURRING IN CONNECTION HEREWITH. THE
BORROWER AND THE BANK CONFIRM THAT THE FOREGOING WAIVER IS INFORMED AND
VOLUNTARY.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by
its duly authorized officers on the date first above written.
REGENCY AFFILIATES, INC.
By:
----------------------------
William R. Ponsoldt, Sr.
President
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EXHIBIT C
7th Amendment to Partnership Agreement