Exhibit 4.1
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LINE OF CREDIT
AGREEMENT
DATED AS OF AUGUST 28, 1997
BY AND AMONG
CORNERSTONE REALTY INCOME TRUST, INC.
AS BORROWER,
AND
FIRST UNION NATIONAL BANK
AS AGENT FOR THE LENDERS
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................... 1
SECTION 1.1 Definitions......................................... 1
SECTION 1.2 Miscellaneous....................................... 3
ARTICLE II CREDIT FACILITY............................... 3
SECTION 2.1 Loans............................................... 3
SECTION 2.2 Interest............................................ 3
SECTION 2.3 Requests for Advances............................... 3
SECTION 2.4 Payment of Principal................................ 4
SECTION 2.5 Notes............................................... 4
SECTION 2.6 Use of Proceeds..................................... 4
SECTION 2.7 Default Rate........................................ 4
SECTION 2.8 Maximum Rate........................................ 4
SECTION 2.9 Date for Payments................................... 4
SECTION 2.10 Changed Circumstances............................... 5
SECTION 2.11 Indemnity as to Eurodollar Loans.................... 6
SECTION 2.12 Capital Adequacy.................................... 7
SECTION 2.13 Taxes............................................... 7
ARTICLE III CLOSING; CONDITIONS OF CLOSING................ 9
SECTION 3.1. Closing............................................. 9
SECTION 3.2. Conditions to Closing and Initial Loans............. 9
SECTION 3.3. Conditions to All Loans............................. 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
BORROWER...................................... 10
SECTION 4.1. Representations and Warranties...................... 10
SECTION 4.2. Survival of Representations and Warranties, Etc..... 10
ARTICLE V FINANCIAL INFORMATION AND NOTICES................... 10
ARTICLE VI COVENANTS..................................... 11
ARTICLE VII DEFAULT AND REMEDIES................................ 11
SECTION 7.1 Events of Default................................... 11
SECTION 7.2 Remedies............................................ 11
ARTICLE VIII MISCELLANEOUS....................................... 12
SECTION 8.1 Notices............................................. 12
SECTION 8.2 Expenses; Indemnity................................. 12
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SECTION 8.3 Set-off............................................. 12
SECTION 8.4 Governing Law....................................... 13
SECTION 8.5 Arbitration......................................... 13
SECTION 8.5 Successors and Assigns. ........................... 14
SECTION 8.6 Performance of Duties............................... 14
SECTION 8.7 All Powers Coupled with Interest.................... 14
SECTION 8.8 Survival of Indemnities............................. 14
SECTION 8.9 Titles and Captions................................. 14
SECTION 8.10 Severability of Provisions.......................... 14
SECTION 8.11 Counterparts........................................ 14
SECTION 8.12 Term of Agreement................................... 15
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Credit Agreement
ii
LINE OF CREDIT AGREEMENT, dated as of the 28th day of August, 1997, by
and among CORNERSTONE REALTY INCOME TRUST, INC., a corporation organized under
the laws of Virginia ("Cornerstone" or the "Borrower"), and FIRST UNION NATIONAL
BANK (formerly known as First Union National Bank of Virginia, "First Union" or
the "Agent"), as Agent for the Lenders.
STATEMENT OF PURPOSE
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The Borrower has requested, and the Lenders have agreed to extend,
certain Loans to the Borrower on the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Definitions. Capitalized terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement. In
addition, the following terms when used in this Agreement shall have the
meanings assigned to them below:
"Agreement" means this Line of Credit Agreement, as amended, restated,
or otherwise modified.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder. On the Closing Date, the Aggregate Commitment shall be
Thirty Million Dollars ($30,000,000).
"Borrower" means Cornerstone Realty Income Trust, Inc., in its capacity
as borrower hereunder.
"Closing Date" means the date of this Agreement.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to the Borrower hereunder in an aggregate principal or face amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1 hereto, as the same may be reduced or modified at any time or
from time to time pursuant to the terms hereof.
"Commitment Percentage" means, as to any Lender at any time, the ratio
of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all of the Lenders.
"Credit Agreement" means the Credit Agreement dated as of February 14,
1997, by and among Cornerstone Realty Income Trust, Inc., as Borrower, the
lenders referred to therein, and First Union National Bank (formerly known as
First Union National Bank of Virginia), as Agent for the lenders.
"Credit Facility" means the credit facility established pursuant to
Article II hereof.
"Default" means any of the events specified in Section 7.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Event of Default" means any of the events specified in Section 7.1;
provided, that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Interest Payment Date" means the first Business Day following the last
day of each applicable Interest Period and on the Termination Date.
"Interest Period" means, as to any loan, a period of one month's
duration, commencing, in each case, on the first day of each calendar month and
ending on the last day of such month; provided, however, (a) no Interest Period
shall extend beyond the Termination Date, and (b) when a loan is funded on a day
which is not the first day of a calendar month the Interest Period for purposes
for calculation of accrued interest shall begin on the date of funding, but for
purposes of calculation of the London Interbank Offered Rate for such Interest
Period shall be the first day of such calendar month.
"Loan" means any loan made to the Borrower pursuant to Section 2.1, and
all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, and
each other document, instrument and agreement executed and delivered by the
Borrower in connection with this Agreement or otherwise referred to herein or
contemplated hereby, all as may be amended, restated or otherwise modified from
time to time.
"Notes" means each separate Note made by the Borrower payable to the
order of each Lender, substantially in the form of Exhibit A hereto, evidencing
the Credit Facility, and any amendments and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or extensions
thereof, in whole or in part.
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans and
(b) all other fees and commissions (including attorneys' fees), charges,
indebtedness, loans, liabilities, financial accommodations, obligations,
covenants and duties owing by the Borrower to the Lenders of every kind, nature
and description, direct or indirect, absolute or contingent, due or to become
due, contractual or tortious, liquidated or
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unliquidated, and whether or not evidenced by any note, and whether or not for
the payment of money, but only to the extent owing under or in respect of this
Agreement, the Notes or any of the other Loan Documents.
"Termination Date" means November 12, 1997.
SECTION 1.2 Miscellaneous.
(a) General. Unless otherwise specified, a reference in this Agreement
to a particular section, subsection, Schedule or Exhibit is a reference to that
section, subsection, schedule or Exhibit of this Agreement. 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. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) Credit Agreement. The terms and conditions of the Credit Agreement,
a copy of which is attached hereto as Exhibit B, are hereby incorporated herein
by this reference to the extent not in conflict with the terms hereof, as if
fully set forth herein and such terms and conditions shall continue irrespective
of any termination thereof.
ARTICLE II
CREDIT FACILITY
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SECTION 2.1 Loans. Subject to the terms and conditions of this
Agreement, the Lenders agree to make Loans to the Borrower from time to time
from the Closing Date through the Termination Date as requested by the Borrower
in accordance with the terms of Section 2.3; provided, that the aggregate
principal amount of all outstanding Loans (after giving effect to any amount
requested) shall not exceed the Aggregate Commitment.
SECTION 2.2 Interest. Subject to Section 2.7, the Loans shall bear
interest on the unpaid principal balance outstanding from time to time at the
LIBOR Rate plus 1.60%. Interest shall be payable in arrears on each Interest
Payment Date. If an Interest Payment Date falls on a date which is not a
Business Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day, except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day. Interest shall be paid pursuant to the terms of Section 3.2 of the Credit
Agreement and shall be calculated on the basis of a year of 360 days and actual
days elapsed.
SECTION 2.3 Requests for Advances; Disbursements. Loans shall be
requested and advanced pursuant to the terms and conditions of the Credit
Agreement. Each Loan will
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be advanced in the minimum principal amount of $500,000 or a whole multiple of
$25,000 in excess thereof or the remaining amount of the Aggregate Commitment,
if less.
SECTION 2.4 Payment of Principal. Principal shall be paid in the manner
provided in Sections 3.2 and 3.3 of the Credit Agreement (except that the
reference in Section 3.2 of the Credit Agreement to "Richmond, Virginia" shall
be deemed to refer to "Charlotte, North Carolina") without setoff, deduction or
counterclaim; provided, that all such amounts paid shall be applied first to
late charges outstanding under this Agreement, second to any fees due hereunder,
third to interest outstanding hereunder, fourth to the principal outstanding
under the Loans as determined by the Agent, and finally, to sums due under the
Credit Agreement pursuant to the terms and conditions of the Credit Agreement.
Unless sooner paid pursuant to the provisions hereof or the provisions of the
Credit Agreement, the principal of the Loans shall be paid in full together with
accrued interest thereon on the Termination Date.
SECTION 2.5 Notes. The Lenders' Loans and the obligation of the
Borrower to repay such Loans shall be evidenced by separate Notes executed by
the Borrower payable to the order of each Lender representing the Borrower's
obligation to pay the Commitment or, if less, the aggregate unpaid principal
amount of all Loans made by each Lender to the Borrower hereunder, plus interest
and all other fees, charges and other amounts due thereon. Each Note shall be
dated the date hereof and shall bear interest on the unpaid principal amount
thereof at the applicable interest rate per annum specified in Section 2.2.
SECTION 2.6 Use of Proceeds. The Borrower shall use the proceeds of
the Loans for the acquisition of new Projects.
SECTION 2.7 Default Rate. Upon the occurrence and during the
continuance of an Event of Default, all outstanding Loans shall bear interest at
a rate per annum two percent (2%) in excess of the rate then applicable.
Interest shall continue to accrue on the Notes after the filing by or against
the Borrower of any petition seeking any relief in bankruptcy or under any act
or law pertaining to insolvency or debtor relief, whether state, federal or
foreign.
SECTION 2.8 Maximum Rate. In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to the
Notes exceed the highest rate permissible under any Requirement of Law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that the Lenders have charged
or received interest hereunder in excess of the highest applicable rate, the
rate in effect hereunder shall automatically be reduced to the maximum rate
permitted by Requirement of Law and the Lenders shall promptly refund to the
Borrower any interest received by the Lenders in excess of the maximum lawful
rate or shall apply such excess to the principal balance of the Obligations. It
is the intent hereof that the Borrower not pay nor contract to pay, and that the
Lenders not receive nor contract to receive, directly or indirectly in any
manner whatsoever, interest in excess of that which may be paid by the Borrower
under Requirement of Law.
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SECTION 2.9 Date for Payments. Except as provided in Section 2.2 of
this Agreement with respect to interest, whenever any payment hereunder,
including, without limitation, payment of principal or interest, shall be due on
a day which is not a Business Day, the date for payment thereof shall be
extended to the next Business Day and interest shall continue to accrue on any
principal amount for which the payment date is so extended.
ARTICLE III
CLOSING; CONDITIONS OF CLOSING
SECTION 3.1. Closing. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, Charlotte,
North Carolina at 10:00 a.m. on August 28, 1997, or on such other date as the
parties hereto shall mutually agree.
SECTION 3.2. Conditions to Closing and Initial Loans. The obligation of
the Lenders to close this Agreement and to extend the initial Loan is subject to
the satisfaction of each of the conditions set forth in Sections 4.1(b), (d),
(g), (h), (i) and (j) and 4.2 of the Credit Agreement.
SECTION 3.3. Conditions to All Loans. The obligations of the Lender to
extend any Loan is subject to the satisfaction of the following conditions
precedent on the relevant borrowing date:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article IV shall be true and correct
in all material respects on and as of such borrowing date with the same effect
as if made on and as of such date except to the extent that such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date).
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 4.1. Representations and Warranties. To induce the Lender to
enter into this Agreement and to extend the Loans, the Borrower hereby
represents and warrants to the Lender that each and every representation and
warranty of the Borrower set forth in Section 5 of the Credit Agreement is true,
correct and complete in all material respects.
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SECTION 4.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article IV and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Agent or any Lender or any borrowing hereunder.
ARTICLE V
FINANCIAL INFORMATION AND NOTICES
Until all the Loans have been finally and indefeasibly paid and
satisfied in full and the Commitment terminated, the Borrower will furnish or
cause to be furnished to the Agent and the Lenders each and every financial
statement, certificate or other document or instrument required to be delivered
to the Lenders pursuant to Section 6.1 of the Credit Agreement. The Borrower
shall deliver to the Agent hereunder all such financial statements, certificates
and other documents or instruments which are required to be delivered to the
Agent under the Credit Agreement.
ARTICLE VI
COVENANTS
Until all of the Loans have been finally and indefeasibly paid and
satisfied in full and the Commitment terminated, the Borrower will, and will
cause each of its Subsidiaries to comply with each and every covenant and
agreement set forth in Sections 6 and 7 of the Credit Agreement.
ARTICLE VII
DEFAULT AND REMEDIES
SECTION 7.1 Events of Default. Each of the events specified in Section
8.1 of the Credit Agreement shall constitute an Event of Default, and each of
the following shall also constitute an Event of Default:
(a) Default in Payment of Principal of Loans. The Borrower
shall default in any payment of principal of any Loan or the Notes when and as
due (whether at maturity, by reason of acceleration or otherwise) and such
default shall continue unremedied for five (5) Business Days.
(b) Other Payment Default. The Borrower shall default in the
payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on
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any Loan or the Notes or the payment of any other Obligation, and such default
shall continue unremedied for five (5) Business Days.
(c) Misrepresentation. Any representation or warranty made or
deemed to be made by the Borrower under this Agreement, any Loan Document or any
amendment hereto or thereto, shall at any time prove to have been incorrect or
misleading in any material respect when made or deemed made.
(d) Default in Performance of Other Covenants and Conditions.
The Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
7.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to the Borrower by
the Agent.
(e) Cross-Default to Credit Agreement. An Event of Default
shall have occurred under the Credit Agreement.
SECTION 7.2 Remedies. The Agent and Lenders hereunder shall continue to
have available to them the remedies specified in Section 8.2 of the Credit
Agreement and may exercise such remedies in accordance with the terms and
conditions of Section 8.2 of the Credit Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices.
Except as otherwise provided in this Agreement, all notices
and communications hereunder shall be made in accordance with the terms and
conditions of Section 10.1 of the Credit Agreement.
SECTION 8.2 Expenses; Indemnity. The Borrower will (a) pay all
reasonable out-of-pocket expenses of the Agent actually incurred in connection
with: (i) the preparation, execution and delivery of this Agreement and each
other Loan Document, whenever the same shall be executed and delivered,
including without limitation all out-of-pocket due diligence expenses and
reasonable fees and disbursements of counsel for the Agent, (ii) the
preparation, execution and delivery of any waiver, amendment or consent by the
Agent relating to this Agreement or any other Loan Document, including without
limitation reasonable fees and disbursements of counsel for the Agent and (iii)
the enforcement of any rights and remedies of the Agent hereunder and under the
Loan Documents, including consulting with appraisers, accountants, engineers,
attorneys and other Persons concerning the nature, scope or value of
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any right or remedy of the Agent hereunder or under any other Loan Document or
any factual matters in connection therewith, which expenses shall include
without limitation the reasonable fees and disbursements of such Persons, and
(b) defend, indemnify and hold harmless the Agent, and its parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and
against any losses, penalties, fines, liabilities, settlements, damages, costs
and expenses, suffered by any such Person in connection with any claim,
investigation, litigation or other proceeding (whether or not the Lender is a
party thereto) and the prosecution and defense thereof, arising out of or in any
way connected with this Agreement, any other Loan Document or the Loans,
including without limitation reasonable attorneys' and consultants' fees, except
to the extent that any of the foregoing directly result from the gross
negligence or willful misconduct of the party seeking indemnification therefor.
SECTION 8.3 Set-off. In addition to any rights now or hereafter granted
under Requirement of Law and not by way of limitation of any such rights, upon
and during the continuance of any Event of Default, each Lender is hereby
authorized by the Borrower at any time or from time to time, without notice to
the 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, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Lender to or for the credit
or the account of the Borrower against and on account of the obligations
irrespective of whether or not (a) the Lender shall have made any demand under
this Agreement or any of the other Loan Documents or (b) the Lender shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 7.2 and although such Obligations shall be contingent or unmatured. If
the Lender shall exercise any of the rights referred to in this Section, the
Lender shall promptly notify the Borrower; provided, that the failure to give
such notice shall not result in any liability to the Lender or in any way affect
the validity of the exercise of such right.
SECTION 8.4 Governing Law. This Agreement, the Note and the other Loan
Documents, unless otherwise expressly set forth therein, shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Virginia, without reference to the conflicts or choice of law principles
thereof.
SECTION 8.5 Arbitration.
(a) General. Any controversy or claim between or among the parties
hereto including, but not limited to, those arising out of or relating to this
Agreement or any related agreements or instruments, including any claim based
upon or arising from an alleged tort, shall be determined by binding arbitration
in accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Rules of Practice and Procedure for the Arbitration
of Commercial Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "Special Rules" set forth below. In the event of any
inconsistency, the
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Special Rules shall control. Judgment upon any arbitration award may be entered
in any court having jurisdiction. Any party to this Agreement may bring an
action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this Agreement applies in any court having
jurisdiction over such action.
(b) Special Rules. The arbitration shall be conducted in the city of
the Borrower's domicile at time of this Agreement's execution and administered
by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within ninety
(90) days of the demand for arbitration; further, the arbitrator shall only,
upon a showing of cause, be permitted to extend the commencement of such hearing
for up to an additional sixty (60) days.
(c) Reservations of Rights. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; (ii) be a
waiver by the Lenders of the protection afforded to it by 12 U.S.C. Section 91
or any substantially equivalent state law; or (iii) limit the right of the
Lenders to (A) o exercise self help remedies such as (but not limited to)
setoff, (B) foreclose against any real or personal property collateral, or (C)
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief or the appointment of a receiver. The Lenders may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At the Lenders' option, any
foreclosure available under this Agreement or the other Credit Documents may be
accomplished by the exercise of a power of sale or a judicial sale under the
Credit Documents or by judicial foreclosure. Neither the exercise of self help
remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
SECTION 8.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrower and the Lender, all future holders
of any of the Notes, and their respective successors and assigns, except that
the Borrower shall not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Lender.
SECTION 8.6 Performance of Duties. The Borrower's obligations under
this Agreement and each of the Loan Documents shall be performed by the Borrower
at its sole cost and expense.
SECTION 8.7 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the other Loan
Documents shall be deemed coupled with an interest and shall be irrevocable so
long as any of the Obligations remain unpaid or unsatisfied or the Commitment
has not been terminated.
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SECTION 8.8 Survival of Indemnities. Notwithstanding any termination of
this Agreement, the indemnities to which the Lender is entitled under the
provisions of this Article VIII and any other provision of this Agreement and
the Loan Documents shall continue in full force and effect and shall protect the
Lender against events arising after such termination as well as before.
SECTION 8.9 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 8.10 Severability of Provisions. Any provision of this
Agreement or any other Loan Document 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 hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 8.11 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
SECTION 8.12 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
[CORPORATE SEAL] CORNERSTONE REALTY INCOME
TRUST, INC.
By: /s/ Glade M. Knight
----------------------------------------
Name: Glade M. Knight
--------------------------------------
Title:Chief Executive Officer and President
-------------------------------------
FIRST UNION NATIONAL BANK,
as Agent and Lender
By: /s/ Christoper C. Finlay
----------------------------------------
Name: Christopher C. Finlay
--------------------------------------
Title: Assistant Vice President
-------------------------------------
SCHEDULE 1
LENDERS AND COMMITMENTS
LENDER
PERCENTAGE COMMITMENT COMMITMENT
- ---------- ---------- ----------
First Union National Bank $30,000,000 100%
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
Attention:
Telephone:
Telecopy:
EXHIBIT A
NOTE
$_______________ ________ __, 1997
FOR VALUE RECEIVED, the undersigned, CORNERSTONE REALTY INCOME TRUST,
INC., a corporation organized under the laws of Virginia (the "Borrower") hereby
promises to pay to the order of ________________________________ (the "Lender"),
at the times, at the place and in the manner provided in the Line of Credit
Agreement hereinafter referred to, the principal sum of up to
__________________________________ Dollars ($____________), or, if less, the
aggregate unpaid principal amount of all Loans disbursed by the Lender under the
Line of Credit Agreement referred to below, together with interest at the rates
as in effect from time to time with respect to each portion of the principal
amount hereof, determined and payable as provided in Article II of the Line of
Credit Agreement.
This Note is a Note referred to in, and is entitled to the benefits of,
the Line of Credit Agreement dated as of _____________ __, 1997 (as amended,
restated or otherwise modified, the "Line of Credit Agreement") between
Borrower, the lenders party thereto and First Union National Bank as Agent for
the Lenders. The Line of Credit Agreement contains, among other things,
provisions for the time, place and manner of payment of this Note, the
determination of the interest rate borne by and fees payable in respect of this
Note, acceleration of the payment of this Note upon the happening of certain
stated events and the mandatory repayment of this Note under certain
circumstances.
The Borrower agrees to pay on demand all actual costs of collection,
including reasonable attorneys' fees, if any part of this Note, principal or
interest, is collected after maturity with the aid of an attorney.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF VIRGINIA.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
under seal by a duly authorized officer as of the day and year first above
written.
[CORPORATE SEAL] CORNERSTONE REALTY INCOME TRUST, INC.
By:______________________________
Name:____________________________
Title:___________________________
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Exhibit B
Credit Agreement
CREDIT AGREEMENT
AMONG
CORNERSTONE REALTY INCOME TRUST, INC.,
AS BORROWER
AND
THE LENDERS IDENTIFIED HEREIN
AND
FIRST UNION NATIONAL BANK OF VIRGINIA
AS AGENT
DATED AS OF FEBRUARY 14, 1997
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 14, 1997 (this "Credit" Agreement"),
is entered into by and among CORNERSTONE REALTY INCOME TRUST, INC., a Virginia
corporation (the "Borrower"), the LENDERS (as defined herein), FIRST UNION
NATIONAL BANK OF VIRGINIA, as Agent for the Lenders.
RECITALS
WHEREAS, the Borrower has requested that the Lenders provide a $100 million
credit facility for the purposes hereinafter set forth, and
WHEREAS, the Lenders have agreed to make the requested credit facility available
to the Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined terms herein
shall include in the singular number the plural and in the plural the singular:
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable
Percentage.
"Adjusted NOI" means, with respect to the applicable time period the amount
equal to (a) the sum of all revenues and income received by the Borrower with
respect to the relevant Property or Properties minus (b) the sum of all
reasonable and customary expenses incurred by the Borrower in the operation of
such Property or Properties, including, but not limited to, utility expenses,
property taxes, insurance premiums, management fees and Capital Expenditures
(but excluding interest depreciation, amortization and income taxes).
"Affiliate" means a Person: (a) which directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control of, the
Borrower; or (b) which beneficially owns or holds five percent (5 %) or more of
any class of the voting stock of the
2
Borrower; or (c) of which five percent (5%) or more of the voting stock (or in
the case of a Person which is not a corporation, five percent (5%) or more of
the equity interest) is beneficially owned or held by the Borrower.
"Agency Services Address" means First Union National Bank of Virginia, 901 East
Cary Street, Richmond Virginia 23219, Attention: Chris B. Troutman, Vice
President or such other address as may be identified by written notice from the
Agent to the Borrower.
"Agent" means First Union National Bank of Virginia (or any successor thereto)
or any successor Agent appointed pursuant to Section 9.9.
"Applicable Percentage" means one and 60/100 percent (1.60%).
"Authorized Officer" means the President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Secretary or Chairman of the Board
of the Borrower.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.
"Borrower" means Cornerstone Realty Income Trust, Inc., a Virginia corporation.
"Business Day" means any day other than a Saturday or Sunday or a legal holiday
in Richmond, Virginia, or a day on which banking institutions are authorized by
law or other governmental action to close; provided; however, if the applicable
day relates to the determination of the Eurodollar Rate, such day must also be a
day upon which banks are open for the transaction of business in London, England
and dealings in U.S. dollar deposits are carried on in the London interbank
market.
"Capital Expenditures" means all expenditures required for the leasing of space
within Properties owned and previously leased by the Borrower, including upfit
expenses and leasing commissions, together with expenses for renovation or
improvement of existing properties that are classified as capital expenditures
under GAAP. Leasing and tenant improvements expenditures with respect to space
not previously leased shall not be included in any calculation of Capital
Expenditures, but must be reported to the Agent on a quarterly basis as set
forth in Section 6.11.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of the Borrower.
"Cash Available for Distribution" means all Funds from Operations (as defined
as of the Closing Date by the Board of Governors of the National Association of
Real Estate Investment Trusts).
3
"Cash Management Note" shall have the meaning provided therefor in Section
7.1(c).
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, as amended, modified, succeeded or replaced from time to
time.
"Commitments" means the commitment of each Lender with respect to the Revolving
Committed Amount.
"Credit Documents" means this Credit Agreement, the Notes and all other related
agreements and documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto.
"Borrower Obligations" means all of the obligations of the Borrower to the
Lenders and the Agent, whenever arising, under this Credit Agreement, the Notes
or any of the other Credit Documents to which the Borrower or any Guarantor is a
party.
"Default" means any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, (a) has failed to make
a Loan required pursuant to the terms of this Credit Agreement, (b) has failed
to pay to the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement (but only for so long as such amount has not been
repaid) or (c) has been deemed insolvent or has become subject to a bankruptcy
or insolvency proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" means dollars in lawful currency of the United States of
America.
"EBITDA" means, for any period, with respect to the Borrower on a consolidated
basis, the sum of (a) Net Income for such period (excluding the effect of any
extraordinary or other non-recurring gains or non-cash losses outside of the
ordinary course of business) plus (b) an amount which, in the determination of
Net Income for such period, has been deducted for (i) Interest Expense for such
period, (ii) total Federal, state, foreign or other income taxes of the Borrower
for such period and (iii) all depreciation and amortization of the Borrower for
such period, all as determined in accordance with GAAP.
"Effective Date" means the date on which the conditions set forth in Section 5.1
shall have been fulfilled (or waived in the sole discretion of the Lenders) and
on which the initial Loans shall have been made.
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"Eligible Assignee" means (a) any Lender or Affiliate or subsidiary of a Lender
and (b) any other commercial bank, financial institutions institutional lender
or its "accredited investor" (as defined in Regulation D of the Securities and
Exchange Commission) with total assets of at least $10 billion and with a rating
on their long term unsecured debt of at least BBB with S&P or its equivalent and
with an office in the United States.
"Environmental Claim" means any investigation, written notice, violation,
written demand, written allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or written claim whether
administrative, judicial, or private in nature arising (a) pursuant to, or in
connection with, an actual or alleged violation of, any Environmental Law, (b)
in connection with any Hazardous Material, (c) from any assessment, abatement,
removal, remedial, corrective, or other response action in connection with an
Environmental Law or other order of a Governmental Authority or (d) from any
actual or alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.
"Environmental Laws" means any current or future legal requirement of any
Governmental Authority pertaining to (a) the protection of health, safety, and
the indoor or outdoor environment, (b) the conservation, management, or use of
natural resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any
hazardous or toxic substance or material or (e) pollution (including any release
to land surface water and groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC
9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC
6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401
et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990,
33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986,
42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et
seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any
analogous implementing or successor law, and any amendment, rule, regulation,
order, or directive issued thereunder.
"Equity Issuance" means any issuance by Borrower to any Person of (a) shares of
its capital stock or other equity interests (including, without limitation,
participation units), (b) any shares of its capital stock or other equity
interests (including without limitation, participation units) pursuant to the
exercise of options or warrants, or (c) any shares of its capital stock or other
equity interests (including, without limitation, participation units) pursuant
to the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto, as interpreted by the rules and regulations
thereunder, all as the same may be in effect from time to time. References to
sections of ERISA shall be construed also to
5
refer to any successor sections.
"ERISA Affiliate" means an entity, whether or not incorporated, (a) which is
under common control with Borrower within the meaning of Section 4001(a)(14) of
ERISA, or (b) is a member of a group which includes Borrower, or any of its
Subsidiaries and which is treated as a single employer under Sections 414(b),
(c), (m), or (o) of the Code.
"Eurodollar Rate" means, for any applicable Interest Period, a per annum
interest rate determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate divided by
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage (expressed as
a decimal) which is in effect from time to time under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor), as such
regulation may be amended from time to time or any successor regulation, as the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not a Lender
has any Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be available from time to
time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances described in Section
8.1.
"Existing First Union Letter of Credit" shall have the meaning provided therefor
in Section 7.1(d).
"Existing Loan Agreement" has the meaning set forth in Section 4.1 (k).
"Extension of Credit" means, as to any Lender, the making of a Loan by such
Lender (or a participation therein by a Lender).
"Federal Funds Rates" means for any day the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) equal to the weighed average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds rate
for such day shall be such rate on such transactions on the next preceding
Business Day and (b)
6
if no such rate is s published on such next preceding Business Day, the Federal
Funds Rates for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent.
"GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis and subject to Section 1.3.
"Governmental Authority" means any Federal, state, local, provincial or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Hazardous Materials" means any substance, material or waste defined or
regulated in or under any Environmental Laws.
"Indebtedness" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person to the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (d) all obligations, other than
intercompany items, of such Person issued or assumed as the deferred purchase
price of property or services purchased by such Person which would appear as
liabilities on a balance sheet of such Person, (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (f) all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or intended
to guarantee the Indebtedness of any other Person in any manner, whether direct
or indirect, (g) the principal portion of all obligations of such Person under
(i) Capital Leases and (ii) any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product of such
Person where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP, (h)
all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, or other interest or exchange
rate or commodity price hedging agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred stock
issued by such Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due, by a fixed date and (k) the
aggregate amount of uncollected accounts receivable of such Person subject at
such time to a sale of receivables (or similar transaction) regardless of
whether such transaction is effected without recourse to such Person or in a
manner that would not be reflected on the balance sheet of such Person in
accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or unincorporated joint venture in
7
which such Person is legally obligated or has a reasonable expectation of being
liable with respect thereto.
"Interest Expense" means, for any period, with respect to the Borrower, on a
consolidated basis, all net interest expense, including the interest component
under Capital Leases, as determined in accordance with GAAP.
"Interest Payment Date" means the first Business Day following the last day of
each applicable Interest Period and on the Revolving Loan Maturity Date.
"Interest Period" means, as to any Loan, a period of one month's duration,
commencing, in each case, on the first day of each calendar month and ending on
the last day of such month; provided, however, (a) no Interest Period shall
extend beyond the Revolving Loan Maturity Date and (b) when a loan is funded on
a day which is not the first day of a calendar month the Interest Period for
purposes of calculation of accrued interest shall begin on the date of funding,
but for purposes of calculation of the London Interbank Offered Rate for such
Interest Period shall be the first day of such calendar month.
"Lender" means any of the Persons identified as a "Lender" on the signature
pages hereto, and any Person which may become a Lender by way of assignment in
accordance with the terms hereof, together with their successors and permitted
assigns.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind, including, without limitation any
agreement to give any of the foregoing any conditional sale or other title
retention agreement, and any lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a portion of any Revolving
Loan), individually or collectively, as appropriate.
"London Interbank Offered Rate" means, with respect to the Interest Period
applicable thereto, the rate of interest 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 for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page 3750, the
applicable rate shall be the arithmetic mean of all such rates. If, for any
reason, such rate is not available, the term "London Interbank Offered Rate"
shall mean, with respect to any Eurodollar Loan for the Interest Period
applicable thereto, the rate of interest 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
8
applicable rate shall be the arithmetic mean of all such rates.
"Material Adverse Effect" means a material adverse effect on (a) the operations,
financial condition, business or prospects of the Borrower; (b) the ability of
the Borrower to perform its respective obligations under this Credit Agreement
or any of the other Credit Documents; or (c) the validity or enforceability of
this Credit Agreement, any of the other Credit Documents, or the rights and
remedies of the Lenders hereunder or thereunder taken as a whole.
"Multiemployer Plan" means a Plan covered by Title IV of ERISA which is a
multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title IV of ERISA, other than a
Multiemployer Plan, which Borrower or any of its Subsidiaries or any ERISA
Affiliate and at least one employer other than Borrower or any of its
Subsidiaries or any ERISA Affiliate are contributing sponsors.
"Net Cash Proceeds" means the gross cash proceeds received from an Equity
Issuance net of (a) transaction costs payable to third parties and (b) a good
faith estimate of the taxes payable with respect to such proceeds.
"Net Income" means, for any period, the net income after taxes for such period
of the Borrower on a consolidated basis, as determined in accordance with GAAP.
"Non-Excluded Taxes" has the meaning set forth in Section 3.13.
"Note" or "Notes" means the Revolving Loan Notes, individually or collectively,
as appropriate.
"Notice of Borrowing" means a request by the Borrower for a Revolving Loan, in
the form of Exhibit 2.1(b).
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA and any successor thereto.
"Person" means any individual, partnership, joint venture, firm, corporation,
limited liability company, association, trust or other enterprise (whether or
not incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA)
which is covered by ERISA and with respect to which Borrower or any of its
Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" within
the meaning of Section 3(5) of ERISA.
"Prime Rate" means the per annum rate of interest established from time to time
by the Agent at
9
its principal office in Richmond, Virginia (or such other principal office of
the Agent as communicated in writing to the Borrower and the Lenders) as its
Prime Rate. Any change in the interest rate resulting from a change in the Prime
Rate shall become effective as of 12:01 a.m. of the Business Day on which each
change in the Prime Rate is announced by the Agent. The Prime Rate is a
reference rate used by the Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any extension
of credit to any debtor.
"Projects" or "Properties" means all real property, together with all
improvements thereon, owned by the Borrower and oProjecto or "Property" means
any one of them.
"Regulation D, G, U, or X" means Regulation D, G, U or X, respectively, of the
Board of Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof.
"REIT" means a real estate investment trust as defined in Sections 856-860 of
the Code.
"Reportable Event" means a "reportable event" as defined in Section 4043 of
ERISA with respect to which the notice requirements to the PBGC have not been
waived.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as hereinafter
defined) constitutes at least 65% of the Credit Exposure of all Lenders at such
time: provided, however, that if any Lender shall be a Defaulting Lender at such
time then there shall be excluded from the determination of Required Lenders the
aggregate principal amount of Credit Exposure of such Lender at such time. For
purposes of the preceding sentence, the term "Credit Exposure" as applied to
each Lender shall mean (a) at any time prior to the termination of the
Commitments, the sum of the Revolving Loan Commitment Percentage of such Lender
multiplied by the Revolving Committed Amount and (b) at any time after the
termination of the Commitments, the sum of the principal balance of the
outstanding Loans of such Lender.
"Requirement of Law" means, as to any Person, the articles or certificate of
incorporation and by-laws or other or organizational or governing documents of
such Person, and any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or to which any of its
material property is subject.
"Revolving Committed Amount" means ONE HUNDRED MILLION DOLLARS
($100,000,000).
"Revolving Loan Commitment Percentage" means, for each Lender, the percentage
identified as its Revolving Loan Commitment Percentage on Schedule 1.1 (a), as
such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
10
"Revolving Loan Maturity Date" means March 31, 1998.
"Revolving Loans" means the Revolving Loans made to the Borrower pursuant to
Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes of the Borrower
in favor of each of the Lenders evidencing the Revolving Loans provided pursuant
to Section 2.1, individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed or replaced from
time to time and as evidenced in the form of Exhibit 2.1 (g).
"Securities Act" means the Securities Act of 1933, as amended, modified,
succeeded or replaced from time to time, and the rules and regulations
promulgated thereunder.
"Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a particular date, that on
such date (a) such Person is able to pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (b) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature in their ordinary course, (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's assets would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair value of
the assets of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and (e)
the present fair saleable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subsidiary" means, as to any Person, (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50% equity
interest at any time.
"Termination Event" means (a) with respect to any Single Employer Plan, the
occurrence of a Reportable Event or the substantial cessation of operations
(within the meaning of Section 4062(e) of ERISA); (b) the withdrawal of Borrower
or any ERISA Affiliate from a Multiple
11
Employer Plan during a plan year in which it was a substantial employer (as such
term is defined in Section 4001(a)(2) of ERISA), or the termination of a
Multiple Employer Plan; (c) the distribution of a notice of intent to terminate
or the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041 A of
ERISA; (d) the institution of proceedings to terminate or the actual termination
of a Plan by the PBGC under Section 4042 of ERISA; (e) any event or condition
which might reasonably constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; or (f)
the complete or partial withdrawal of Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"Unused Commitment" means, for any period, the amount by which (a) the then
applicable aggregate Revolving Committed Amount exceeds (b) the daily average
sum for such period of the outstanding aggregate principal amount of all
Revolving Loans.
"Unused Fee Percentage" means one quarter of one percent (.25%) per annum.
1.2 Computation of Time Periods and Other Definitional Provisions. For purposes
of computation of periods of time hereunder, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
References in this Agreement to "Articles", "Sections", "Schedules" or
"Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this
Agreement unless otherwise specifically provided.
1.3 Accounting Terms. Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All financial statements delivered to the Lenders hereunder
shall be accompanied by a statement from the Borrower that GAAP has not changed
since the most recent financial statements delivered by the Borrower to the
Lenders or if GAAP has changed describing such changes in detail and explaining
how such changes affect the financial statements. All calculations made for the
purposes of determining a compliance with this Credit Agreement shall (except as
otherwise expressly provided herein) be made by application of GAAP applied on a
basis consistent with the most recent annual or quarterly financial statements
delivered pursuant to Section 6.1 (or, prior to the delivery of the first
financial statements pursuant to Section 6.1, consistent with the financial
statements described in Section 4.1(c)); provided, however, if (a) the Borrower
shall object to determining such compliance on such basis at the time of
delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) either Agent or the Required Lenders
shall so object in writing within 60 days after delivery of such financial
statements (or after the Lenders have been informed of the change in GAAP
affecting such financial statements, if later), then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
SECTION 2
12
CREDIT FACILITY
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and conditions set forth
herein, each Lender severally agrees to make revolving loans (each a "Revolving
Loan" or "Loan" and collectively the "Revolving Loans" or "Loans") to the
Borrower, in Dollars, at any time and from time to time as requested by Borrower
in accordance with Section 2.1 (b), during the period from and including the
Effective Date to but not including the Revolving Loan Maturity Date (or such
earlier date if the Revolving Committed Amount has been terminated as provided
herein): provided, however, that (i) the sum of the aggregate amount of
Revolving Loans outstanding shall not exceed the Revolving Committed Amount and
(ii) with respect to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans shall not exceed such Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount. Subject to the
provisions of Section 4, the amount of each advance shall be subject to the
review and approval by Agent of such requisition. All advances are to be made at
the principal office of Agent or at such other place as Agent may designate.
Subject to the terms of this Credit Agreement the Borrower may borrow, repay and
reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no later than 10:00 a.m. three
Business Days prior to the requested borrowing of Revolving Loans, the Borrower
shall submit a written Notice of Borrowing in the form of Exhibit 2.1 (b) to the
Agent (which notice may be by telecopy with the original to follow) setting
forth (A) the amount requested, (B) the portion of the purchase price of a
Project (not to exceed 100%) of such purchase price for which such Revolving
Loans will be used, (C) a basic "underwriting" package for each such Project
which at a minimum shall include property description, title reports, operating
statements, anticipated capital expenditure budgets and such other items
required by Agent as set forth in Sections 4.2(f) hereof and (D) certification
that the Borrower has complied in all respects with Section 4.2.
(c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing, the Agent
shall promptly inform the Lenders as to the terms thereof. Each Lender shall
make its Revolving Loan Commitment Percentage of the requested Revolving Loans
available to the Agent by 11:00 a.m. on the date specified in the Notice of
Borrowing by deposit, in Dollars, of immediately available funds at the offices
of the Agent at its office in Richmond, Virginia or at such other address as the
Agent may designate in writing. The amount of the requested Revolving Loans will
then be made available to the Borrower by the Agent by crediting the account of
the Borrower on the books of such office of the Agent, to the extent the amount
of such Revolving Loans are made available to the Agent.
No Lender shall be responsible for the failure or delay by any other Lender in
its obligation to make Revolving Loans hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Agent shall have been
notified by any Lender prior to the date of any such Revolving Loan that
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such Lender does not intend to make available to the Agent its portion of the
Revolving Loans to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such Revolving Loans,
and the Agent in reliance upon such assumption, may (in its sole discretion but
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent,
the Agent shall be able to recover such corresponding amount from such Lender.
(d) Minimum Amounts. Each request for a borrowing, conversion or continuation
shall be subject to the requirements that each Loan shall be in a minimum amount
of the lesser of $500,000 (and integral multiples of $25,000 in excess thereof)
or the remaining amount available under the Revolving Committed Amount.
(e) Notes. The Revolving Loans made by each Lender shall be evidenced by a duly
executed promissory note of the Borrower to each applicable Lender in the face
amount of its Revolving Loan Commitment Percentage of the Revolving Committed
Amount in substantially the form of Exhibit 2.1(e).
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 Interest.
(a) Interest Rate. All Revolving Loans shall accrue interest at the Adjusted
Eurodollar Rate except as provided in Sections 3.10 and 3.11.
(b) Default Rate of Interest. Upon the occurrence, and during the continuance,
of an Event of Default, the principal of and, to the extent permitted by law,
interest on the Loans and any other amounts owing hereunder or under the other
Credit Documents (including without limitation fees and expenses) shall bear
interest, payable on demand, at a per annum rate equal to four percent (4%) plus
the rate which would otherwise be applicable (or if no rate is applicable, then
the rate for Revolving Loans shall be the Prime Rate plus four percent (4%) per
annum).
(c) Late Charges. In the event any payment of interest or principal is
delinquent more than seven (7) days, the Borrower will pay to the Agent for the
benefit of the Lenders a late charge of five percent (5%) of the amount of the
overdue payment. This provision for late charges shall not be deemed to extend
the time for payment or be a "grace period" or "cure period" that gives the
Borrower a right to cure a Default or Event of Default. Imposition of such late
charges is not contingent upon giving of any notice or the lapse of any cure
period provided for in the Credit Agreement.
(d) Interest Payments. Interest on Loans shall be due and payable in arrears on
each Interest
14
Payment Date. If an Interest Payment Date falls on a date which is not a
Business Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day, except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day.
3.2 Place and Manner of Payments. All payments of principal, interest, fees,
expenses and other amounts to be made by Borrower under this Agreement shall be
received not later than 12:00 noon on the date when due, in Dollars and in
immediately available funds, by the Agent at its offices in Richmond, Virginia.
Payments received after such time shall be deemed to have been received on the
next Business Day. The Borrower shall, at the time it makes any payment under
this Agreement, specify to the Agent the Loans, fees or other amounts payable by
the Borrower hereunder to which such payment is to be applied (and in the event
that it fails to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall, subject to Section 3.7, distribute such payment
to the Lenders in such manner as the Agent may deem appropriate). The Agent will
distribute such payments to the Lenders on the date received if any such payment
is received prior to 12:00 p.m. otherwise the Agent will distribute such payment
to the Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and fees for the period of such extension), provided
that, if the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next preceding
Business Day. If the Agent fails to timely forward payment to a Lender it shall
pay such Lender interest at the Federal Funds Rate until such payment is made.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans in
whole or in part from time to time without premium or penalty, provided,
however, that Loans may only be prepaid on two Business Days' prior written
notice to the Agent and any prepayment of Loans will be subject to Section 3.14.
(b) Mandatory Prepayments. If at any time the sum of the aggregate amount of
Revolving Loans outstanding exceeds the Revolving Committed Amount, the Borrower
shall immediately make a principal payment to the Agent in the manner and in an
amount necessary to be in compliance with Section 2.1.
(c) Application of Prepayments. All amounts required to be paid pursuant to
Section 3.3(b) shall be applied first to late charges outstanding, second to any
fees due hereunder, third to interest outstanding and finally to the principal
outstanding under the Revolving Loans as determined by the Agent. All
prepayments hereunder shall be subject to Section 3.14.
3.4 Fees.
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(a) Unused Fees. In consideration of the Revolving Committed Amount being made
available by the Lenders hereunder, the Borrower agrees to pay to the Agent
quarterly, for the pro rata benefit of each applicable Lender (based on each
Lender's Revolving Loan Percentage of the Revolving Committed Amount), a fee
equal to the Unused Fee Percentage on the Unused Commitment (the "Unused Fees").
The Unused Fees shall commence to accrue on April 1, 1997, shall be calculated
as of the last day of each March, June, September and December and shall be due
and payable in arrears on each April 15, July 15, October 15 and January 15 (as
well as on the Revolving Loan Maturity Date for the immediately preceding
calendar quarter (or portion thereof), beginning July 15, 1997.
(b) Commitment Fee. In addition to the Unused Fees payable pursuant to
subsection (1) above, the Borrower shall pay to the Agent on the Closing Date,
for the pro rata benefit of each applicable Lender (based on each Lender's
Revolving Loan Percentage of the Revolving Committed Amount), a fee equal to Two
Hundred Fifty Thousand Dollars ($250,000) (the "Commitment Fee").
(c) Administrative Fees. Each of the Lenders (other than First Union National
Bank of Virginia) agree to pay to the Agent quarterly, for its own account,
without sharing by the other Lenders, an administrative fee (the oAdministrative
Feeo) equal to its pro rata share of one eighth of one percent (.125%) of the
Unused Committed Amount. Such fee shall be paid by the Lenders other than First
Union National Bank of Virginia pro rata based on each Lender's Revolving Loan
Percentage of the Revolving Committed Amount. For example, if the Unused
Committed Amount for a calendar quarter is $10,000,000 and a Lenders Revolving
Loan Percentage of the Revolving Committed Amount is 15%, then the
Administrative Fee payable by such Lender for such calendar quarter would be
$1,875 (i.e. $10,000,000 x .00125 x .15 = $1,875). Such fee shall commence to
accrue on April 1, 1997, shall be calculated as of the last day of each March,
June, September and December and shall be due and payable in arrears on each
April 15, July 15, October 15 and January 15 (as well as on the Revolving Loan
Maturity Date for the immediately preceding calendar quarter (or portion
thereof), beginning July 15, 1997.
This Section shall not in any way obligate any of the Lenders to pay any fees
except from such Lender's prorata share of the Unused Fees collected by such
Lender.
3.5 Payment in Full at Maturity. On the Revolving Loan Maturity Date, the entire
outstanding principal balance of all Revolving Loans, together with accrued but
unpaid interest and all other sums owing with respect thereto, shall be due and
payable in full, unless accelerated sooner pursuant to Section 8.
3.6 Computations of Interest and Fees.
(a) All computations of interest and fees hereunder shall be made on the basis
of the actual number of days elapsed over a year of 360 days. Interest shall
accrue from and include the date of borrowing (or continuation or conversion)
but exclude the date of payment.
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(b) It is the intent of the Lenders and the Borrower to conform to and contract
in strict compliance with applicable usury law from time to time in effect. All
agreements between the Lenders and the Borrower are hereby limited by the
provisions of this paragraph which shall override and control all such
agreements, whether now existing or hereafter arising and whether written or
oral. In no way, nor in any event or contingency (including but not limited to
prepayment or acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount
permissible under applicable law. If, from any possible construction of the
Credit Documents or any other document, interest would otherwise be payable in
excess of the maximum nonusurious amount, any such construction shall be subject
to the provisions of this paragraph and such documents shall be automatically
reduced to the maximum nonusurious amount permitted under applicable law,
without the necessity of execution of any amendment or new document. If any
Lender shall ever receive anything of value which is characterized as interest
on the Loans under applicable law and which would, apart from this provision, be
in excess of the maximum lawful amount, an amount equal to the amount which
would have been excessive interest shall, without penalty, be applied to the
reduction of the principal amount owing on the Loans and not to the payment of
interest, or refunded to the Borrower or the other payor thereof if and to the
extent such amount which would have been excessive exceeds such principal amount
of the Loans. The right to demand payment of the Loans or any other indebtedness
evidenced by any of the Credit Documents does not include the right to receive
any interest which has not otherwise accrued on the date of such demand and the
Lenders do not intend to charge or receive any unearned interest in the event of
such demand. All interest paid or agreed to be paid to the Lenders with respect
to the Loans shall, to the extent permitted by applicable law, be amortized,
prorated allocated, and spread throughout the full stated term (including any
renewal or extension) of the Loans so that the amount of interest on account of
such indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.
3.7 Pro Rata Treatment. Except to the extent otherwise provided herein each
Revolving Loan borrowing each payment or prepayment of principal and/or interest
of any Loan, each payment of fees (other than the Administrative Fees retained
by the Agent for its own account), each reduction of the Revolving Committed
Amount, and each conversion or continuation of any Loan, shall (except as
otherwise provided in Section 3.11) be allocated pro rata among the relevant
Lenders in accordance with the respective Revolving Loan Commitment Percentages
of such Lenders (or, if the Commitments of such Lenders have expired or been
terminated, in accordance with the respective principal amounts of the
outstanding Loans of such Lenders); provided that, if any Lender shall have
failed to pay its applicable pro rata share of any Revolving Loan, then any
amount to which such Lender would otherwise be entitled pursuant to this
subsection (a) shall instead be payable to the Agent until the share of such
Loan not funded by such Lender has been repaid; provided further, that in the
event any amount paid to any Lender pursuant to this subsection (a) is rescinded
or must otherwise be returned by the Agent, each Lender shall, upon the request
of the Agent, repay to the Agent the amount so paid to such Lender, with
interest for the period commencing on the date such payment is returned by the
17
Agent until the date the Agent receives such repayment at a rate per annum equal
to, during the period to but excluding the date two Business Days after such
request, the Federal Funds Rate, and thereafter, the Prime Rate plus two percent
(2%) per annum.
3.8 Sharing of Payments. The Lenders agree among themselves that except to the
extent otherwise provided herein, in the event that any Lender shall obtain
payment in respect of any Loan or any other obligation owing to such Lender
under this Credit Agreement through the exercise of a right of setoff, banker's
lien or counterclaim, or pursuant to a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall promptly pay in cash or purchase from the other Lenders a
participation in such Loans and other obligations in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan or other obligation in the
amount of such participation. Except as otherwise expressly provided in this
Credit Agreement, if any Lender or Agent shall fail to remit to Agent or any
other Lender an amount payable by such Lender to such other Lender or Agent
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to such Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders under this Section
3.8 to share in the benefits of any recovery on such secured claim.
3.9 Capital Adequacy. If, after the date hereof, any Lender has determined that
the adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender, or its parent corporation, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on
18
such Lender's (or parent corporation's) capital or assets specifically as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender, or its parent corporation, could have achieved but for such
adoption, effectiveness, change or compliance, then, upon notice from such
Lender to the Borrower, the Borrower shall be obligated to pay to such Lender
such additional amount or amounts as will compensate such Lender on an after-tax
basis (after taking into account applicable deductions and credits in respect of
the amount indemnified) for such reduction effective from the effective date of
such adoption, effectiveness, change or compliance. Each determination by any
such Lender of amounts owing under this Section shall, absent manifest error, be
conclusive and binding on the parties hereto.
3.10 Inability To Determine Eurodollar Rate. If prior to the first day of any
Interest Period, the Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, the
Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter, and will also give prompt written
notice to the Borrower when such conditions no longer exist. If such notice is
given (a) any Loans requested to be made on the first day of such Interest
Period shall be made at the Prime Rate (the "Base Rate") and (b) any outstanding
Loans shall be converted, on the first day of such Interest Period, to the Base
Rate.
3.11 Illegality to Make Eurodollar Loans. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Closing Date shall
make it unlawful for any Lender to make or maintain Loans based on the Adjusted
Eurodollar Rate as contemplated by this Credit Agreement, (a) such Lender shall
promptly give written notice of such circumstances to the Borrower and the Agent
(which notice shall be withdrawn whenever such circumstances no longer exist),
(b) the commitment of such Lender hereunder to continue to make Loans based on
the Adjusted Eurodollar Rate shall forthwith be canceled and until such time as
it shall no longer be unlawful for such Lender to make or maintain Loans based
on the Adjusted Eurodollar Rate, such Lender shall then have a commitment only
to make a Loan at the Base Rate when a Loan is requested and (c) such LenderAEs
Loans then outstanding, if any, shall be converted automatically to a Loan at
the Base Rate on the respective last days or the then current Interest Periods
with respect to such Loans or within such earlier period as required by law. If
any such conversion of a Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.
3.12 Changes in Requirements of Law. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
a Lender, or compliance by any Lender with an request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
19
(a) shall subject such Lender to any tax of any kind whatsoever or change the
basis of taxation of payments to such Lender with respect to the Loans [except
for Non-Excluded Taxes covered by Section 3.13 and changes in taxes measured by
or imposed upon the overall net income or franchise tax (imposed in lieu of such
net income tax), of such Lender or its applicable lending office, branch, or any
affiliate thereof];
(b) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender which
is not otherwise included in the determination of the Eurodollar Rate hereunder;
or
(c) shall impose on such Lender any other condition (excluding any tax of any
kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, continuing or
maintaining the Loans or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified) for such
increased cost or reduced amount receivable effective from the effective date of
such adoption of or change in Requirement of Law or interpretation or
application thereof. If any Lender becomes entitled to claim any additional
amounts pursuant to this Section 3.12, it shall provide prompt notice thereof to
the Borrower through the Agent, certifying (x) that one of the events described
in this Section 3.12 has occurred and describing, in reasonable detail the
nature of such event, (y) as to the increased cost or reduced amount resulting
from such event and (z) as to the additional amount demanded by such Lender and
a reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this Section 3.12 submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and binding
on the parties hereto in the absence of manifest error.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all payments made by the
Borrower under this Credit Agreement and any Notes shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the overall net income of
any Lender or its
20
applicable lending office, or any branch or affiliate thereof, and all franchise
taxes, branch taxes, taxes on doing business or taxes on the overall capital or
net worth of any Lender or its applicable lending office, or any branch or
affiliate thereof, in each case imposed in lieu of net income taxes: (i) by the
jurisdiction under the laws of which such Lender, applicable lending office,
branch or affiliate is organized or is located, or in which its principal
executive office is located, or any nation within which such jurisdiction is
located or any political subdivision thereof; or (ii) by reason of any
connection between the jurisdiction imposing such tax and such Lender,
applicable lending office, branch or affiliate other than a connection arising
solely from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or any Notes. If
any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or withholdings ("Non-Excluded Taxes") under applicable law or regulation of a
Governmental Authority are required to be withheld from any amounts payable to
Agent or any Lender hereunder or under any Notes the Borrower may withhold such
amounts, provided, however, (A) the amounts so payable to Agent or such Lender
shall be increased to the extent necessary to yield to Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Credit
Agreement and any Notes, provided, however, that the Borrower shall be entitled
to deduct and withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as possible
after requested the Borrower shall send to Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and any Lender for
any incremental taxes, interest or penalties that may become payable by Agent or
any Lender as a result of any such failure.
(b) Each Lender (by way of permitted assignment or otherwise) that is not
incorporated under the laws of the United States of America or a state thereof
shall:
(i)(A) on or before the date of any payment by the Borrower under this Credit
Agreement or Notes to such Lender, deliver to the Borrower and the Agent (x) two
duly completed copies of United States Internal Revenue Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is entitled to
receive payments under this Credit Agreement and any Notes without deduction or
withholding of any United States federal income taxes and (y) an Internal
Revenue Service From W-8 or W-9, or successor applicable form, as the case may
be, certifying that it is entitled to an exemption from United States backup
withholding tax;
(B) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
21
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and complete such forms
or certifications as may reasonably be requested by the Borrower or the Agent;
or
(ii) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (A) represent to
the Borrower (for the benefit of the Borrower and the Agent) that it is not a
bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code,
(B) agree to furnish to the Borrower, on or before the date of any payment by
the Borrower, with a copy to the Agent, two accurate and complete original
signed copies of Internal Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of such certificate to
an exemption from U.S. withholding tax under the provisions of Section 881(c) of
the Internal Revenue Code with respect to payments to be made under this Credit
Agreement and any Notes (and to deliver to the Borrower and the Agent two
further copies of such form on or before the date it expires or becomes obsolete
and after the occurrence of any event requiring a change in most recently
provided form and, if necessary, obtain any extensions of time reasonably
requested by the Borrower or the Agent for filing and completing such forms),
and (C) agree, to the extent legally entitled to do so, upon reasonable request
by the Borrower, to provide to the Borrower (for the benefit of the Borrower and
the Agent) such other forms as may be reasonably required in order to establish
the legal entitlement of such Lender to an exemption from withholding with
respect to payments under this Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which renders all
such forms inapplicable or which would prevent such Lender from so advising the
Borrower and the Agent then such Lender shall be exempt from such requirements.
Each Person that shall become a Lender or a participant of a Lender pursuant to
Section 10.3 shall, upon the effectiveness of the related transfer, be required
to provide all of the forms, certifications and statements required pursuant to
this subsection (b); provided that in the case of a participant of a Lender, the
obligations of such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a Lender except that
such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related participation
shall have been purchased.
3.14 Indemnity as to Eurodollar Loans. The Borrower promises to indemnify each
Lender and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of any Loans after the Borrower has given a notice requesting
the same in accordance with the provisions of this Credit Agreement, (b) default
by the Borrower in making any prepayment of a Loan after the Borrower has given
a notice thereof in accordance with the provisions of this Credit Agreement and
(c) the making of a prepayment of Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to (i) the
22
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrower,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Percentage included
therein, if any) minus (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market. The agreements in this Section shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
SECTION 4
CONDITIONS PRECEDENT
4.1 Closing Conditions. The obligation of the Lenders to enter into this Credit
Agreement and make the initial Extension of Credit is subject to satisfaction of
the following conditions:
(a) Executed Credit Documents. Receipt by the Agent of duly executed copies of:
(1) this Credit Agreement; (ii) the Notes; and (iii) all other Credit Documents,
each in form and substance reasonably acceptable to the Agent in their sole
discretion.
(b) Corporate Documents. Receipt by the Agent of the following:
(i) Charter Documents. Copies of the articles or certificates of incorporation
or other charter documents of the Borrower certified to be true and complete as
of a recent date by the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or assistant
secretary of Borrower to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of the Borrower certified by a secretary or
assistant secretary of Borrower to be true and correct as of the Effective Date.
(iii) Resolutions. Copies of resolutions of the Board of Directors of Borrower
approving and adopting the Credit Documents to which it is a party, the
transactions contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of Borrower to be true
and correct and in force and effect as of the Effective Date.
(iv) Good Standing. Copies of (A) certificates of good standing, existence or
its equivalent with respect to Borrower certified as of a recent date by the
appropriate Governmental Authorities of the state or other jurisdiction of
incorporation and each other jurisdiction in which
23
the failure to so qualify and be in good standing could have a Material Adverse
Effect and (B) to the extent available, a certificate indicating payment of all
corporate franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of Borrower certified by a secretary
or assistant secretary to be true and correct as of the Effective Date.
(c) Financial Statements. Receipt by the Agent and the Lenders of the audited
consolidated financial statements of the Borrower, dated as of December 31,
1995, and the unaudited consolidated financial statements of the Borrower dated
as of September 30, 1996.
(d) Opinion of Counsel. Receipt by the Agent of an opinion, or opinions (which
shall cover, among other things, authority, legality, validity, binding effect,
and enforceability), reasonably satisfactory to the Agent, addressed to the
Agent on behalf of the Lenders and dated as of the Effective Date, from legal
counsel to the Borrower.
(e) Evidence of Insurance. Receipt by the Agent of copies of insurance policies
or certificates of insurance of the Borrower evidencing liability and casualty
insurance meeting the requirements set forth in the Credit Documents, including,
but not limited to, naming the Agent as sole loss payee on behalf of the
Lenders.
(f) Material Adverse Effect. There shall not have occurred a change since
December 31, 1995 that has had or could reasonably be expected to have a
Material Adverse Effect.
(g) Litigation. There shall not exist any pending or threatened action, suit,
investigation or proceeding against Borrower that would have or would reasonably
be expected to have a Material Adverse Effect.
(h) Officer's Certificates. The Agent shall have received a certificate or
certificates executed by the chief financial officer of the Borrower as of the
Effective Date stating that (i) the Borrower is in compliance with all existing
material financial obligations, (ii) no action, suit, investigation or
proceeding is pending or, to the best of such officer's knowledge, threatened in
any court or before any arbitrator or governmental instrumentality that purports
to affect Borrower or any transaction contemplated by the Credit Documents, if
such action, suit, investigation or proceeding could have or could be reasonably
expected to have a Material Adverse Effect, (iii) the financial statements and
information delivered pursuant to Section 4.1(c) are true and accurate in all
material respects and (iv) immediately after giving effect to this Credit
Agreement, the other Credit Documents and all the transactions contemplated
therein to occur on such date, (A) Borrower is Solvent, (B) no Default or Event
of Default exists, (C) all representations and warranties contained herein and
in the other Credit Documents are true and correct in all material respects, and
(D) the Borrower is in compliance with each of the financial covenants set forth
in Section 6.2 with evidence to support such compliance in a manner satisfactory
to the Agent.
24
(i) Fees and Expenses. Payment by the Borrower of all fees and expenses owed by
them to the Lenders and the Agent.
(j) Project Information. With respect to each Project the acquisition of which
is to be financed by the Loan, Agent shall have received and approved, in form
and substance, and in its discretion, executed copies of the purchase contract,
operating statements and anticipated capital expenditure budgets, and such other
information about each Project that Agent may reasonably request from Borrower.
(k) Existing Indebtedness. Evidence of payment in full (which may be paid with
proceeds of the Loan) and termination of (i) that certain Loan Agreement, dated
as of March 1, 1995, among the Borrower and First Union National Bank of
Virginia, as amended (the "Existing Loan Agreement") and (ii) that certain
Promissory Note dated January 1, 1997 executed by the Borrower in favor of First
Union National Bank of Virginia in the face amount of $85,000,000 (the "Existing
Note") and all documents and instruments executed and/or delivered in connection
with the Existing Loan Agreement and the Existing Note.
(l) Other. Receipt by the Agent or Lenders of such other documents, instruments,
agreements or information as reasonable and timely requested by Agent or any
Lender, including, but not limited to, information regarding litigation, tax,
accounting, labor, insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property ownership and
contingent liabilities of the Borrower.
4.2 Conditions to All Loans. In addition to the conditions precedent stated
elsewhere herein, the Lenders shall not be obligated to make Loans unless:
(a) Notice. The Borrower shall have delivered a Notice of Borrowing, duly
executed and completed, by the time specified in Section 2.1;
(b) Representations and Warranties. The representations and warranties made by
the Borrower in any Credit Document are true and correct in all material
respects at and as if made as of such date except to the extent they expressly
relate to an earlier date;
(c) No Default. No Default or Event of Default shall exist or be continuing;
(d) No Material Adverse Effect. There shall not have occurred any Material
Adverse Effect;
(e) Availability. Immediately after giving effect to the making of a Revolving
Loan (and the application of the proceeds thereof) the Loans outstanding shall
not exceed the Revolving Commitment Amount; and
(f) Project Information. With respect to each Project the acquisition of which
is to be financed by the Loan, Agent shall have received and approved, in form
and substance, and in its
25
discretion, true, accurate and complete copies of the purchase contract,
operating statements and anticipated capital expenditure budgets, and such other
information about each Project that Lender may reasonably request from Borrower.
The delivery of each Notice of Borrowing shall constitute a representation and
warranty by the Borrower of the correctness of the matters specified in
subsections (b), (c), (d), (e) and (f) above.
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents to the Agent and each Lender that:
5.1 Financial Condition. The financial statements delivered to the Lenders
pursuant to Section 4.1 (c) and Section 6.1 (a) and (b): (a) have been prepared
in accordance with GAAP and (b) present fairly the consolidated financial
condition, results of operations and cash flows of the Borrower as of such date
and for such periods of such financial statements. Since September 30, 1996,
there has been no sale, transfer or other disposition by Borrower of any
material part of the business or property of Borrower and no purchase or other
acquisition by Borrower of any business or property (including any capital stock
of any other Person) material in relation to the financial condition of Borrower
in each case, which, is not (i) reflected in the most recent financial
statements delivered to the Lenders pursuant to Section 6.1 or in the notes
thereto or (ii) otherwise communicated to the Agent.
5.2 Organization and Good Standing. Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation. Borrower (a) is duly qualified and in good standing and
authorized to do business in every other jurisdiction where ownership of its
properties or the conduct of its business requires it to be so and (b) has the
requisite corporate power and authority to own its properties and to carry on
its business as now conducted and as proposed to be conducted.
5.3 Due Authorization. Borrower (a) has the requisite corporate power and
authority to execute, deliver and perform this Credit Agreement and the other
Credit Documents to which it is a party and to incur the obligations herein and
therein provided for, and (b) is duly authorized to, and has been authorized by
all necessary corporate action, to execute, deliver and perform its obligations
under this Credit Agreement and the other Credit Documents to which it is a
party.
5.4 No Conflicts. Neither the execution and delivery of the Credit Documents,
nor the consummation of the transactions contemplated therein, nor performance
of and compliance with the terms and provisions thereof by Borrower will (a)
violate or conflict with any provision
26
of, as applicable, its articles or certificate of incorporation or bylaws, (b)
violate, contravene or materially conflict with any Requirement of Law or any
other law, regulation (including, without limitation, Regulation U or Regulation
X), order, writ, judgment, injunction, decree or permit applicable to it, (c)
violate, contravene or conflict with contractual provisions of, or cause an
event of default under, any indenture, loan agreement, mortgage, deed of trust,
contract or other agreement or instrument to which it is a party or by which it
may be bound, the violation of which could have or might be reasonably expected
to have a Material Adverse Effect, or (d) result in or require the creation of
any Lien upon or with respect to its properties.
5.5 Consents. No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party in respect of Borrower is required in connection with the execution,
delivery or performance of this Credit Agreement or any of the other Credit
Documents by such Borrower.
5.6 Enforceable Obligations. This Credit Agreement and the other Credit
Documents have been duly executed and delivered and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, except as may be limited by bankruptcy or insolvency
laws or similar laws affecting creditors' rights generally or by general
equitable principles.
5.7 No Default. Borrower is not in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default would have or would be reasonably expected to have a
Material Adverse Effect. No Default or Event of Default has occurred or exists.
5.8 Ownership. Borrower is the owner of, and has good and marketable title to,
all of its respective assets.
5.9 Indebtedness. Borrower has no Indebtedness except ordinary trade debt
disclosed in the financial statements referenced in Section 6.1 and debt under
the Cash Management Note and the Existing First Union Letter of Credit.
5.10 Litigation. There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of Borrower, threatened
against Borrower which could have or might be reasonably expected to have a
Material Adverse Effect.
5.11 Taxes. Borrower has filed, or caused to be filed, all tax returns (federal,
state, local and foreign) required to be filed and paid (a) all amounts of taxes
shown thereon to be due (including interest and penalties) and (b) all other
taxes, fees, assessments and other governmental charges owing by it, except for
such taxes (i) which are not yet delinquent or (ii) that are being, contested in
good faith and by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. Borrower is not aware of any proposed
tax
27
assessments against it.
5.12 Compliance with Law. Borrower is in compliance with all Requirements of Law
and all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply would not have or would not be reasonably expected to
have a Material Adverse Effect.
5.13 ERISA. Except as would not result or be reasonably expected to result in a
Material Adverse Effect:
(a) During the five-year period prior to the date on which this representation
is made or deemed made: (i) no Termination Event has occurred, and no event or
condition has occurred or exists as a result of which any Termination Event
could reasonably be expected to occur, with respect to any Plan, (ii) no
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, has occurred with
respect to any Plan; (iii) each Plan has been maintained, operated, and funded
in compliance with its own terms and in material compliance with the provisions
of ERISA, the Code, and any other applicable federal or state laws; and (iv) no
lien in favor or the PBGC or a Plan has arisen or is reasonably likely to arise
on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" under each Single
Employer Plan (determined within the meaning of Section 401(a)(2) of the Code,
utilizing the actuarial assumptions used to fund such Plans), whether or not
vested, did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the current value of the
assets of such Plan allocable to such accrued liabilities.
(c) Neither Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Borrower, are reasonably expected to incur, any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower, any of its Subsidiaries nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the
Borrower, reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility has occurred
with respect to a Plan which has subjected or is reasonably likely to subject
the Borrower or any of its Subsidiaries or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code,
or under any agreement or other instrument pursuant to which Borrower or any
ERISA Affiliate has agreed or is required to indemnify any person against any
such liability.
(e) The present value (determined using actuarial and other assumptions which
are
28
reasonable with respect to the benefits provided and the employees
participating) of the liability of the Borrower and each ERISA Affiliate for
post-retirement welfare benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(l) of ERISA), net of all assets under all such Plans allocable to such
benefits, are reflected on the Financial Statements in accordance with FASB 106.
(f) Each Plan which is a welfare plan (as defined in Section 3(l) of ERISA) to
which Sections 601-609 of ERISA and Section 4980B of the Code apply has been
administered in compliance in all material respects with such sections.
5.14 Subsidiaries. Set forth on Schedule 5.14 is a complete list of all
Subsidiaries of the Borrower and the type and amount of ownership of each.
5.15 Use of Proceeds, Margin Stock. The proceeds of the Loans hereunder will be
used solely for repayment of the Existing Indebtedness and the acquisition of
Projects by the Borrower as approved by Agent. None of the proceeds of the Loans
will be used for the purpose of purchasing or carrying any "margin stock" as
defined in Regulation U, Regulation X or Regulation G, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry "margin stock" or any "margin security" or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of
Regulation U, Regulation X, Regulation G or Regulation T. The Borrower does not
own any "margin stock".
5.16 Government Regulation. Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 or the Interstate Commerce Act, each as amended.
In addition, Borrower is not (a) an investment company" registered or required
to be registered under the Investment Company Act of 1940, as amended, or
controlled by such a company, or (b) a "holding company" or a "Subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "Subsidiary" or a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. No director, executive officer or
principal shareholder of the Borrower or any of its Subsidiaries is a director,
executive officer or principal shareholder of any Lender. For the purposes
hereof the terms "director", "executive officer" and "principal shareholder"
(when used with reference to any Lender) have the respective meanings assigned
thereto in Regulation 0 issued by the Board of Governors of the Federal Reserve
System.
5.17 Environmental Matters.
(a) Except as would not cause or be reasonably expected to cause a Material
Adverse Effect:
(i) Each of the Properties and all operations at the Properties are in
compliance with all applicable Environmental Laws, and there is no violation of
any Environmental Law with respect to the Properties or the businesses operated
by Borrower (the oBusinesses"), and there are no conditions relating to the
Businesses or Properties that would be reasonably expected to
29
give rise to liability under any applicable Environmental Laws.
(ii) Borrower has not received any written notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding Hazardous Materials
or compliance with Environmental Laws with regard to any of the Properties or
the Businesses, nor does Borrower have knowledge that any such notice is being
threatened.
(iii) Hazardous Materials have not been transported or disposed at or from any
of the Properties, or generated, treated, stored or disposed of at, on or under
any of the Properties or any other location, in each case by, or on behalf, of
Borrower, the Properties or the Businesses in any amount reportable under the
federal Comprehensive Environmental Response, Compensation and Liability Act or
any analogous state law, except releases in compliance with any Environmental
Laws.
(iv) No judicial proceeding or governmental or administrative action is pending
or, to the knowledge of Borrower, threatened, under any Environmental Law to
which Borrower is or will be named as a party, nor are there any consent decrees
or other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to Borrower, the Properties or the Businesses.
(v) There has been no release or threat of release of Hazardous Materials at or
from the Properties, or arising from or related to the operations (including,
without limitation, disposal) of Borrower in connection with the Properties or
otherwise in connection with the Businesses, except releases in compliance with
any Environmental Laws.
(vi) None of the Properties contains, or has previously contained, any Hazardous
Materials at, on or under the Properties in amounts or concentrations that, if
released, constitute or constituted a violation of, or could give rise to
liability under, Environmental Laws.
(vii) No Borrower has assumed any liability of any Person under any
Environmental Law.
(b) Borrower has adopted procedures that are designed to (i) ensure that
Borrower, all of its operations and each of the Properties remains in compliance
with applicable Environmental Laws and (ii) minimize any liabilities or
potential liabilities that Borrower, any of its operations and each of the
Properties may have under applicable Environmental Laws.
5.18 Intellectual Property. Borrower owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for Borrower to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use would not have or be reasonably expected to have a Material Adverse
Effect.
30
5.19 Solvency. Borrower is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
5.20 Disclosure. Neither this Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of Borrower in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein or herein not misleading.
5.21 Licenses, etc. The Borrower has obtained and holds in full force and
effect, all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the operation of its Businesses
as presently conducted, except where the failure to obtain same would not have a
Material Adverse Effect.
5.22 No Burdensome Restrictions. Borrower is not a party to any agreement or
instrument or subject to any other obligation or any charter or corporate
restriction or any provision of any applicable law, rule or regulation which,
individually or in the aggregate, would have or be reasonably expected to have a
Material Adverse Effect.
SECTION 6
AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Credit Agreement is in
effect and until the Loans, together with interest and fees and other
obligations hereunder, have been paid in full and the Commitments hereunder
shall have terminated:
6.1 Information Covenants. The Borrower will furnish, or cause to be furnished,
to the Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any event within
90 days after the close of each fiscal year of the Borrower, (i) a consolidated
balance sheet and income statement of the Borrower, as of the end of such fiscal
year, together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal year, setting forth in comparative
form consolidated figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and audited by
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect that
such financial statements have been prepared in accordance with GAAP (except for
changes with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified in any manner, (ii) a detailed schedule for the
Properties to include, without limitation, project names and locations, leasing
status, net
31
operating income, Adjusted NOI as to the Properties, the source of cash
necessary to cover any operating deficit, the amount of and beneficiary of any
cash distributions, and the amount of cash invested in or received from the
Properties and (iii) a projected income statement (including projected Capital
Expenditures) for the next fiscal year (twelve month period) for each Property.
(b) Quarterly Financial Statements. As soon as available, and in any event
within 45 days after the close of each fiscal quarter of the Borrower, (i) a
consolidated balance sheet and income statement of the Borrower, as of the end
of such fiscal quarter, together with related consolidated statements of
operations and retained earnings and of cash flows for such fiscal quarter in
each case setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and reasonably
acceptable to the Agent, and accompanied by a certificate of an Authorized
Officer of the Borrower to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of the Borrower
and have been prepared in accordance with GAAP, subject to chances resulting
from normal year-end audit adjustments, (ii) a schedule of the Properties
summarizing total revenues, expenses, net operating income, Adjusted NOI, and
occupancy rates as of the last day of the applicable quarter, (iii) a listing of
all Properties under development showing the total capital obligation of the
Borrower and funds expended to date, (iv) a summary of purchases by the Borrower
for the prior quarter and (v) an accounting of all Revolving Loans.
(c) Officer's Certificate. At the time of delivery of the financial statements
provided for in Sections 6.1 (b) above, a certificate of an Authorized Officer
of the Borrower substantially in the form of Exhibit 6.1(c) stating that no
Default or Event of Default exists, or if any Default or Event of Default does
exist, specifying the nature and extent thereof and what action the Borrower
proposes to take with respect thereto.
(d) Compliance With Certain Provisions of the Credit Agreement. Within 120 days
after the end of each fiscal year of the Borrower, a certificate of an
Authorized Officer of the Borrower containing information regarding the amount
of any Equity Issuances that were made during the prior fiscal year.
(e) Accountant's Certificate. Within the period for delivery of the annual
financial statements provided in Section 6.l (a), a certificate of the
accountants conducting the annual audit stating that they have reviewed this
Credit Agreement and stating further whether, in the course of their audit, they
have become aware of any Default or Event of Default and, if any such Default or
Event of Default exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof, a copy of any "management
letter" submitted by independent accountants to the Borrower in connection with
any annual, interim or special audit of the books of Borrower.
(g) Reports. Promptly upon transmission or receipt thereof, (a) copies of any
filings and
32
registrations with, and reports to or from, the Securities and Exchange
Commission (including, without limitation, 10-K and 10-Q reports), or any
successor agency, and copies of all financial statements, proxy statements,
notices and reports as Borrower shall send to its shareholders generally and (b)
upon the written request of Agent, all reports and written information to and
from the United States Environmental Protection Agency, or any state or local
agency responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency responsible for
health and safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters.
(h) Notices. Upon Borrower obtaining knowledge thereof, Borrower will give
written notice to the Agent immediately of (a) the occurrence of an event or
condition consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Borrower proposes to take with respect
thereto, and (b) the occurrence of any of the following with respect to
Borrower: (i) the pendency or commencement of any litigation, arbitral or
governmental proceeding against Borrower which if adversely determined would
have or would be reasonably expected to have a Material Adverse Effect, or (ii)
the institution of any proceedings against Borrower with respect to, or the
receipt of notice by such Person of potential liability or responsibility for
violation, or alleged violation of any federal, state or local law, rule or
regulation, including but not limited to, Environmental Laws, the violation of
which would have or would be reasonably expected to have a Material Adverse
Effect.
(i) ERISA. Upon the Borrower or any ERISA Affiliate obtaining knowledge thereof,
Borrower will give written notice to the Agent and each of the Lenders promptly
(and in any event within five Business Days) of: (1) any event or condition,
including, but not limited to, any Reportable Event, that constitutes, or might
reasonably lead to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise of any
withdrawal liability assessed against Borrower or any ERISA Affiliate, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (iii) the failure to make full
payment on or before the due date (including extensions) thereof of all amounts
which Borrower or any ERISA Affiliate is required to contribute to each Plan
pursuant to its terms and as required to meet the minimum funding standard set
forth in ERISA and the Code with respect thereto; or (iv) any change in the
funding status of any Plan that could have a Material Adverse Effect, together
with a description of any such event or condition or a copy of any such notice
and a statement by an Authorized Officer of the Borrower briefly setting forth
the details regarding such event, condition, or notice, and the action, if any,
which has been or is being taken or is proposed to be taken by the Borrower with
respect thereto. Promptly upon request, the Borrower shall furnish the Agent and
each of the Lenders with such additional information concerning any Plan as may
be reasonably requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and attachments
thereto required to be filed with the Department of Labor and/or the Internal
Revenue Service pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
33
(j) Environmental.
(i) Subsequent to a notice from any Governmental Authority that would
reasponably cause concern or during the existence of an Event of Default, and
upon the written request of Agent, the Borrower will furnish or cause to be
furnished to the Agent, at the Borrower's expense, a report of an environmental
assessment of reasonable scope, form and depth, including where appropriate,
invasive soil or groundwater sampling, by a consultant reasonably acceptable to
the Agent as to the nature and extent of the presence of any Hazardous Materials
on any property owned, or leased or operated by Borrower and as to the
compliance by the Borrower with Environmental Laws. If the Borrower fails to
delivery such an environmental report within sixty (60) days after receipt of
such written request then the Agent may arrange for same, and the Borrower
hereby grants to the Agent and their representatives access to the Properties
and a license of a scope reasonably necessary to undertake such an assessment
(including, where appropriate, invasive soil or groundwater sampling).
(ii) Borrower will conduct and complete all investigations, studies, sampling,
and testing and all remedial, removal, and other actions necessary to address
all Hazardous Materials on, from, or affecting any real property owned or leased
by Borrower to the extent necessary to be in compliance with all Environmental
Laws and all other applicable federal, state, and local laws, regulations, rules
and policies and with the orders and directives of all Governmental Authorities
exercising jurisdiction over such real property to the extent any failure would
have or be reasonably expected to have a Material Adverse Effect.
(k) Other Information. With reasonable promptness upon any such request, such
other information regarding the business, properties or financial condition of
the Borrower as Agent may reasonably request, including, but not limited to,
rent rolls for each Property.
6.2 Financial Covenants. At the end of each fiscal quarter of the Borrower, the
ratio of EBITDA for the prior 12 months to Indebtedness shall be greater than or
equal to .18 to 1.0.
6.3 Preservation of Existence, Franchises and REIT Status. The Borrower will do
all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority. Borrower will maintain its status
as a REIT.
6.4 Books and Records. The Borrower will keep complete and accurate books and
records of its transactions in accordance with good accounting practices on the
basis of GAAP (including the establishment and maintenance of appropriate
reserves).
6.5 Compliance with Law. Borrower will comply with all material laws, rules,
regulations and orders, and all applicable material restrictions imposed by all
Governmental Authorities having jurisdiction over the Borrower, its Business
and/or the Projects. Without limiting the foregoing, it will operate all
Projects in compliance with all applicable zoning ordinances, regulations and
restrictive covenants.
34
6.6 Insurance. Borrower will provide casualty insurance for each Project to be
financed with the Loans, the form, amount, and issuing company of which are to
be satisfactory to Agent. Borrower will provide adequate public liability
insurance for each Project to be financed with the Loans the form, amounts and
terms thereof are to be satisfactory to Agent.
6.7 Surveys. Borrower will obtain for each Project to be financed with the Loans
a current survey prepared by a certified land surveyor showing location of
actual improvements as of the date of acquisition of the Project, containing
only those matters acceptable to the Agent and containing a certification that
the Project to be financed with the Loans is not located in a flood hazard area.
6.8 Title Insurance. Borrower will obtain for all Projects financed with the
Loans paid title insurance policies in accordance with the applicable title
insurance commitment approved by the Agent in connection with the requisition of
the Loan.
6.9 Audits/Inspections. Upon reasonable notice and during normal business hours
and in a manner that will not unreasonably interfere with its business
operations, Borrower will permit representatives appointed by Agent, including,
without limitation, independent accountants, agents, attorneys and appraisers to
visit and inspect Borrower's property, including its books and records, its
accounts receivable and inventory, its facilities and its other business assets,
and to make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders, including, without limitation, to discuss all such matters with
the officers, employees and representatives of the Borrower.
6.10 Capital Expenditures. Upon the request of the Agent, the Borrower shall
provide an annual capital expenditure budget of the Borrower which shall be
acceptable to the Agent in its reasonable discretion.
6.11 Principal Office. Borrower will maintain its principal office in Richmond,
Virginia.
6.12 Management. Each of Glade M. Knight and S. J. Olander shall remain active
in the management of the Borrower; provided that upon the death or disability of
any of the above-referenced individuals, the Borrower shall have six months to
provide the Agent with substitute personnel as replacement; such substitute
personnel to be acceptable to the Agent in its sole reasonable discretion.
6.13 Additional Borrower. At the time any Person becomes a Subsidiary of
Borrower with the approval of the Agent as provided above, Borrower shall cause
such Person to execute and deliver a joinder agreement in form and substance
approved by Agent pursuant to which such Subsidiary shall agree to be bound by
the provisions of this Credit Agreement and guarantee the obligations of the
Borrower hereunder.
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6.14 Equity Issuance. All Net Cash Proceeds received from an Equity Issuance by
Borrower shall be promptly reported to the Agent and the amount of such Net Cash
Proceeds shall be verified to the satisfaction of the Agent.
6.15 Upstream of Dividends. Borrower shall cause all dividends payable to
Borrower by any Subsidiary to be transferred to Borrower as promptly as
possible.
6.16 Use of Loan Proceeds. Borrower will receive all advances of the Loans as a
trust fund to be applied solely for the purpose of repaying the Existing
Indebtedness and paying the costs of acquisition of a Project, but nothing
herein shall impose upon Agent or any Lender any obligation to see to the proper
application of such advances by Borrower.
SECTION 7
NEGATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Credit Agreement is in
effect and until the Loans, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments hereunder shall have
terminated:
7.1 Indebtedness. Borrower will not, nor will it permit any of its Subsidiaries
to, contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness in respect of current accounts payable and accrued
expenses incurred in the ordinary course of business including, to the extent
not current, accounts payable and accrued expenses that are subject to bona fide
dispute;
(c) Indebtedness arising under a promissory note of the Borrower in the
principal amount not to exceed $7,500,000 payable to the order of First Union
National Bank of Virginia related to the Borrower's cash management system with
First Union National Bank of Virginia (the "Cash Management Note").
(d) Indebtedness arising in connection with the issuance of a
$5,500,000 letter of credit by First Union National Bank of Virginia to
Lexington Tower Associates for the account of Borrower (the "Existing First
Union Letter of Credit").
7.2 Nature of Business. Borrower will not alter the character of its business
from that conducted as of the Closing Date or engage in any business other than
the business conducted as of the Closing Date.
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7.3 Consolidation, Merger, Liquidation. Borrower will not enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution) or sell or agree to sell all or
substantially all its assets unless approved by the Required Lenders in their
sole discretion.
7.4 Restrictions on Loans. Borrower will not make any loans or engage in any
lending activity.
7.5 Dividends. Other than as set forth below, Borrower will not, directly or
indirectly, declare or pay any dividends or make any other distribution upon any
shares of its capital stock of any class or make any distributions to
stockholders; provided that (i) the Borrower may make distributions, in the
aggregate, in an amount not to exceed in any calendar year one hundred percent
(100%) of Cash Available for Distribution; (ii) Borrower may pay such dividends
as are necessary to retain its status as a REIT and (iii) Subsidiaries of the
Borrower may make distributions to the Borrower.
7.6 Transactions with Affiliates. Borrower will not enter into any transaction
or series of transactions, whether or not in the ordinary course of business,
with any officer, director, shareholder, Subsidiary or Affiliate other than on
terms and conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
7.7 Fiscal Year, Organizational Documents. Borrower will not (a) change its
fiscal year or (b) change its articles of incorporation or by-laws.
7.8 Negative Pledges. Borrower will not enter into, assume or become subject to
any agreement prohibiting or otherwise restricting the creation or assumption of
any Lien upon its properties or assets, whether now owned or hereafter acquired,
or requiring the grant of any security for any obligation.
7.9 Subsidiaries. Notwithstanding any other provision of this Agreement, the
Borrower shall not create or acquire beneficial interests in any Subsidiary
other than Apple Realty Management, Inc. and Apple Realty Advisors, Inc. and
shall prohibit any Subsidiary from (a) forming or acquiring any new Subsidiary,
(b) incurring any new Indebtedness other than Indebtedness in respect of current
accounts payable and accrued expenses incurred in the ordinary course of
business, (c) purchasing or acquiring any new assets or (d) incurring any change
in its ownership.
7.10 Investments. Borrower will not make (a) any deposit with or advance, loan
or other extension of credit to any Subsidiary or (b) any capital contribution
to or investment in any Subsidiary, including, without limitation, any guaranty
on behalf of, or for the benefit of, a Subsidiary.
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7.11 Liens. Borrower will not shall allow or permit any lien, encumbrance,
assignment, security interest, preference or priority of any kind, including,
without limitation, any agreement to give any of the foregoing, on its ownership
interest in a Subsidiary.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default. An Event of Default shall exist upon the occurrence of
any of the following specified events (each an "Event of Default"):
(a) Payment. Borrower shall default in the payment within five (5) days
of when due of (i) any principal of any of the Loans or (ii) any interest on the
Loans or (iii) any fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith.
(b) Representations. Any representation, warranty or statement made or
deemed to be made by Borrower herein, in any of the other Credit Documents, or
in any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on the date as of
which it was made or deemed to have been made.
(c) Covenants. Borrower shall:
(i) default in the due performance or observance of any term, covenant or
agreement contained in Section 6.3, Section 6.16 or Section 7; or
(ii) default in the due performance or observance by it of any term, covenant or
agreement contained in Sections 6.1 or 6.2 and such default shall continue
unremedied for a period of ten (10) days after the earlier of an Authorized
Officer becoming aware of such default or notice thereof given by Agent; or
(iii) default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in subsections (a), (b) or (c)(i) or
(ii) of this Section 8.1) contained in this Credit Agreement and such default
shall continue unremedied for a period of at least 30 days after the earlier of
an Authorized Officer becoming aware of such default or notice thereof given by
Agent.
(d) Other Credit Documents. (i) Borrower shall default in the due
performance or observance of any term, covenant or agreement in any of the other
Credit Documents and such default shall continue unremedied for a period of at
least 30 days after the earlier of an Authorized Officer becoming aware of such
default or notice thereof given by the
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Agent, or (ii) any Credit Document shall fail to be in full force and effect or
Borrower shall so assert or any Credit Document shall fail to give the Agent
and/or the Lenders the rights, powers and privileges purported to be created
thereby.
(e) Bankruptcy, etc. If (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for relief in respect
of Borrower in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
Borrower or for any substantial part of its property or ordering the winding up
or liquidation of its affairs; or (ii) an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect is
commenced against Borrower and such petition remains unstayed and in effect for
a period of 60 consecutive days; or (iii) Borrower shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of Borrower or any substantial part of its property or make
any general assignment for the benefit of creditors, or (iv) Borrower shall
admit in writing its inability to pay its debts generally as they become due or
any action shall be taken by Borrower in furtherance of any of the aforesaid
purposes.
(f) Defaults Under Other Agreements. With respect to any Indebtedness
(other than Indebtedness outstanding under this Credit Agreement) of Borrower
(i) Borrower shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such Indebtedness, or
(B) default (after giving effect to any applicable grace period) in the
observance or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event or condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, or permit, the holder or holders of
such Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is required)
any such Indebtedness to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment prior to the stated
maturity thereof; or (iii) any such Indebtedness shall mature and remain unpaid.
(g) Judgments. One or more judgments, orders, or decrees shall be
entered against any one or more of the Borrower involving a liability of
$100,000 or more, in the aggregate, (to the extent not paid or covered by
insurance provided by a carrier who has acknowledged coverage) and such
judgments, orders or decrees (i) are the subject of any enforcement proceedings
commenced by any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day on which
such judgment order or decree becomes final and unappealable or (B) 60 days.
(h) ERISA. The occurrence of any of the following events or conditions:
(A)
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any "accumulated funding deficiency, " as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of the Borrower or
any of its Subsidiaries or any ERISA Affiliate in favor of the PBGC or a Plan,
(B) a Termination Event shall occur with respect to a Single Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (C) a Termination
Event shall occur with respect to a Multiemployer Plan or Multiple Employer
Plan, which is, in the reasonable opinion of the Agent, likely to result in (i)
the termination of such Plan for purposes of Title IV of ERISA, or (ii) the
Borrower or any of its Subsidiaries or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency (within the meaning of Section
4245 of ERISA) of such Plan; or (D) any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject the Borrower or any of
its Subsidiaries or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to indemnify any
person against any such liability.
8.2 Acceleration; Remedies. Upon the occurrence of an Event of Default, and at
any time thereafter unless and until such Event of Default has been waived in
writing by the Required Lenders (or the Lenders as may be required hereunder),
the Agent shall, upon the request and direction of the Required Lenders, (or if
in the reasonable judgment of the Agent there is not sufficient time to obtain
the consent of the Required Lenders then on its own) by written notice to the
Borrower, take any of the following actions without prejudice to the rights of
the Agent or any Lender to enforce its claims against the Borrower, except as
otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any
accrued interest in respect of all Loans, and any and all other indebtedness or
obligations of any and every kind owing by Borrower to any of the Lenders
hereunder to be due whereupon the same shall be immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.
(c) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without limitation,
all rights and remedies against the Borrower and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section 8.1
(e) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders
40
hereunder shall immediately become due and payable without the giving of any
notice or other action by the Agent or the Lenders, which notice or other action
is expressly waived by the Borrower.
Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate "creditor" holding a separate "claim"
within the meaning of Section 101(5) of the Bankruptcy Code or any other
insolvency statute.
8.3 Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Credit Agreement, after the occurrence and during the
continuance of an Event of Default, all amounts collected or received by Agent
or any Lender on account of amounts outstanding under any of the Credit
Documents shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the Agent
in connection with enforcing the rights of the Lenders under the Credit
Documents;
SECOND, to payment of any fees owed to Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses, (including, without limitation, reasonable attorneys' fees) of each of
the Lenders in connection with enforcing its rights under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest payable to the
Lenders hereunder;
FIFTH, to the payment of the outstanding principal amount of the Loans,
pro rata, as set forth below;
SIXTH, to all other obligations which shall have become due and payable
under the Credit Documents and not repaid pursuant to clauses "FIRST" through
"FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (b) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding Loans
held by such Lender bears to the aggregate then outstanding Loans) of amounts
available to be applied pursuant to clauses "THIRD," "FOURTH," "FIFTH," and
"SIXTH" above.
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SECTION 9
AGENCY PROVISIONS
9.1 Appointment. Each Lender hereby designates and appoints First Union National
Bank of Virginia as agent of such Lender to act as specified herein and the
other Credit Documents, and each such Lender hereby authorizes the Agent, as the
agent for such Lender, to take such action on its behalf under the provisions of
this Credit Agreement and the other Credit Documents and to exercise such powers
and perform such duties as are expressly delegated by the terms hereof and of
the other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and Borrower shall have no rights as a third party
beneficiary of the provisions hereof. In performing its functions and duties
under this Credit Agreement and the other Credit Documents, Agent shall act
solely as Agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation or relationship of agency or trust with or for
Borrower.
9.2 Delegation of Duties. Agent may execute any of its duties hereunder or under
the other Credit Documents by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or misconduct of any
agent or attorneys-in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Lenders for recitals,
statements, representations or warranties made by the Borrower contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by Agent under or in connection herewith or in connection
with the other Credit Documents, or enforceability or sufficiency therefor of
any of the other Credit Documents, or for any failure of the Borrower to perform
its obligations hereunder or thereunder. The Agent shall not be responsible to
any Lender for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Credit Agreement, or any of the other
Credit Documents or for any representations, warranties, recitals or statements
made herein or therein or made by the Borrower in any written or oral statement
or in any financial or other statements, instruments, reports, certificates or
any other documents in connection herewith or therewith furnished or made by
Agent to the Lenders or by or on behalf of the Borrower to the Agent or any
Lender or be required to ascertain or inquire as to the
42
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default or to inspect the properties, books or records of the Borrower. The
Agent is not trustee for the Lenders and owes no fiduciary duty to the Lenders.
The Agent shall administer the facility evidenced by the Credit Documents
similar to other credits in which the Agent holds 100% of the credit exposure.
9.4 Reliance on Communications. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any of the Borrower, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may deem
and treat the Lenders as the owner of its interests hereunder for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent in accordance with Section 10.3(b). The Agent
shall be fully justified in failing or refusing to take any action under this
Credit Agreement or under any of the other Credit Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or under any
of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 10.6, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
9.5 Notice of Default. Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder (other than Section
8.l (a)) unless such Agent has received notice from a Lender or Borrower
referring to the Credit Document describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges
that neither the Agent, nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent or any affiliate thereof hereinafter taken,
including any review of the affairs of Borrower, shall be deemed to constitute
any representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial
43
and other conditions, prospects and creditworthiness of the Borrower and made
its own decision to make its Loans hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower. The Agent
shall promptly provide to the Lenders (a) copies of all notices of Defaults or
Events of Default it receives regarding the Borrower and (d) such other
documents or notices received by the Agent pursuant to this Agreement and
requested in writing by a Lender. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Borrower which may come into the possession of the Agent, or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify Agent in its capacity as
such but not in its capacity as a Lender (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective Commitments (or if the Commitments have expired or
been terminated, in accordance with the respective principal amounts of
outstanding Loans of the Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following payment in full of the
Borrower Obligations) be imposed on, incurred by or asserted against Agent in
its capacity as such in any way relating to or arising out of this Credit
Agreement or the other Credit Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by Agent under or in connection with any of the
foregoing, provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (i) resulting from the gross
negligence or willful misconduct of Agent, (ii) arising solely from an internal
or regulatory matter relating only to the Agent (i.e. a legal lending limit
violation by the Agent) or (iii) resulting from and related solely to a dispute
between the Agent and one or more Lenders in which it is reasonably determined
that the Agent did not prevail, and provided further in any arbitration or
litigation involving a dispute between the Agent and one or more Lenders in
which it is reasonably determined that one of the parties has prevailed the
prevailing party shall be entitled to recover its reasonable attorneysAE fees
from the adverse parties. If any indemnity furnished to Agent for any purpose
shall, in the reasonable judgment of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section shall survive the payment of the
Borrower Obligations and all other amounts payable hereunder and under the other
Credit Documents.
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9.8 Agent and Lenders in Individual Capacity. Agent, Lenders and their
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower or any Affiliate of Borrower as though Agent
or Lenders were not Agent or Lenders hereunder. With respect to the Loans made
and all obligations owing to it, Agent shall have the same rights and powers
under this Credit Agreement as any Lender and may exercise the same as though
they were not Agent, and the terms "Lender" and "Lenders" shall include Agent in
its individual capacity as Lender.
9.9 Successor Agent. Agent may, at any time resign upon 20 days written notice
to the Lenders. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Agent; provided that if no successor Agent shall
have been appointed by the Required Lenders, and shall have accepted such
appointment, within 45 days after the notice of resignation, then the retiring
Agent shall select a successor Agent. In either case, whether selected by the
Required Lenders or the retiring Agent, the successor Agent must be either an
existing Lender hereunder or a commercial bank organized under the laws of the
United States of America or of any State thereof and have total assets of at
least $10 billion and a long term unsecured debt rating of at least BBB+ with
S&P or its equivalent. Upon the acceptance of any appointment as Agent hereunder
by a successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations as
Agent, as appropriate, under this Credit Agreement and the other Credit
Documents and the provisions of this Section 9.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Credit Agreement.
SECTION 10
MISCELLANEOUS
10.1 Notices. Except as otherwise expressly provided herein, all notices and
other communications shall have been duly given and shall be effective (a) when
delivered by hand, (b) when transmitted via telecopy (or other facsimile device)
to the number set out below, (c) the Business Day following the day on which the
same has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth on Schedule 10.1
or at such other address as such party may specify by written notice to the
other parties hereto.
10.2 Right of Set-Off. In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and the commencement of remedies
described in Section 8.2, each Lender is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply
45
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation, branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of Borrower against obligations and liabilities of such Borrower to the
Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Agent or the Lenders shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of such Lender subsequent thereto.
The Borrower hereby agrees that any Person purchasing a participation in the
Loans and Commitments hereunder pursuant to Section 10.3(c) or 3.8 may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder.
10.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that the Borrower may not assign and transfer any
of its interests without the prior written consent of the Lenders; and provided
further that the rights of each Lender to transfer, assign or grant
participation in its rights and/or obligations hereunder shall be limited as set
forth below in subsections (b) and (c) of this Section 10.3. Notwithstanding the
above (including anything set forth in subsections (b) and (c) of this Section
10.3), nothing herein shall restrict, prevent or prohibit any Lender from (A)
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank, or (B) granting assignments
or participation in such Lender's Loans and/or Commitments hereunder to its
parent company and/or to any Affiliate of such Lender or to any existing Lender
or Affiliate thereof. No action permitted by this Section 10.3(a) shall require
a fee to be paid to the Agent.
(b) Assignments. In addition to the assignments permitted in Section
10.3(a), each Lender may, with the prior written consent of the Agent which
shall not be unreasonably withheld, assign all or a portion of its rights and
obligations hereunder pursuant to an assignment agreement substantially in the
form of Exhibit 10.3 to one or more Eligible Assignees, provided that (i) any
such assignment shall be in a minimum aggregate amount of $5,000,000 of the
Commitments in integral multiples of $1,000,000 above such amount (or the
remaining, amount of Commitments held by such Lender), (ii) each such assignment
shall be of a constant, not varying, percentage of all of the assigning Lender's
rights and obligations under the Commitment being assigned, and (iii) First
Union National Bank of VirginiaAEs Revolving Loan Commitment Percentage shall
not be reduced below thirty-five percent (35%) as a result of assignments
permitted under this Section 10.3(b) without the prior written consent of the
other Lenders. Any assignment hereunder shall be effective upon satisfaction of
the conditions set forth above and delivery to the Agent (other than assignments
by Agent) of a duly executed assignment agreement together with a transfer fee
of $3,500 payable to the Agent for its own account, provided that such transfer
fee shall not apply to assignments occurring during the
46
initial syndication of the Commitments, as determined by the Agent. Upon the
effectiveness of any such assignment, the assignee shall become a "Lender" for
all purposes of this Credit Agreement and the other Credit Documents and, to the
extent of such assignment, the assigning Lender shall be relieved of its
obligations hereunder to the extent of the Loans and Commitment components being
assigned. Borrower agrees that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the assigning
Lender and to the assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original Note or Notes
(but with notation thereon that it is given in substitution for and replacement
of the original Note or Notes or any replacement notes thereto).
By executing, and delivering an assignment agreement in accordance with this
Section 10.3(b), the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim and the assignee warrants that it is an Eligible Assignee; (ii)
except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency of value of this Credit
Agreement, any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto or the financial condition of Borrower or
the performance or observance by Borrower of any of its obligations under this
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of this
Credit Agreement, the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the statements of such assigning Lender
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Credit Agreement or
any other Credit Document as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Credit Agreement and the other
Credit Documents are required to be performed by it as a Lender.
10.4 No Waiver: Remedies Cumulative. No failure or delay on the part of Agent or
any Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower or Borrower
and the Agent or any Lender shall operate as a waiver thereof; nor shall any
single or partial exercise of any right,
47
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided herein are
cumulative and not exclusive of any rights or remedies which the Agent or any
Lender would otherwise have. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Lenders to any other or further action in any circumstances without notice or
demand.
10.5 Payment of Expenses; Indemnification. The Borrower agrees to: (a) pay all
reasonable out-of-pocket costs and expenses of (i) the Agent and the Lenders
involved in the initial syndication of the Commitments as determined by the
Agent in connection with (A) the negotiation, preparation, execution and
delivery and administration of this Credit Agreement and the other Credit
Documents and the documents and instruments referred to therein including,
without limitation, the reasonable fees and expenses of LeClair Ryan, special
counsel to the Agent, and (B) any amendment, waiver or consent relating hereto
and thereto including, but not limited to, any such amendments, waivers or
consents resulting from or related to any work-out, renegotiation or restructure
relating to the performance by the Borrower under this Credit Agreement and (ii)
the Agent and the Lenders in connection with (A) enforcement of the Credit
Documents and the documents and instruments referred to therein, including,
without limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Agent and each of the Lenders, and (B) any
bankruptcy or insolvency proceeding of Borrower; and (b) indemnify each Agent
and each Lender, its officers, directors, employees, representatives and Agent
from and hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of, any investigation, litigation
or other proceeding (whether or not any Agent or Lender is a party thereto)
related to (i) the entering into and/or performance of any Credit Document or
the use of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of gross negligence
or willful misconduct on the part of the Person to be indemnified), (ii) any
Environmental Claim and (iii) any claims for Non-Excluded Taxes.
10.6 Amendments, Waivers and Consents. Neither this Credit Agreement nor any
other Credit Document nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing, and signed by the Required Lenders and
the Borrower; provided that no such amendment, change, waiver, discharge or
termination shall without the consent of each Lender affected thereby:
(a) extend the final maturity of any Loan or any portion thereof or postpone any
other date fixed for any payment of principal;
48
(b) reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase the Commitment of a Lender over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or Event of Default or
a waiver of any mandatory reduction in the Commitments shall not constitute a
change in the terms of any Commitment of any Lender);
(e) release the Borrower or any Guarantor from its obligations under the Credit
Documents;
(f) amend, modify or waive any provision of this Section 10.6 or Section 3.4(a),
3.4(b), 3.4(c), 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 8.1, 8.2, 10.2,
10.3, 10.5 or 10.10;
(g) reduce any percentage specified in, or otherwise modify, the definition of
Required Lenders;
(h) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under (or in respect of) the Credit Documents; or
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans, and each
Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and (y) the
Required Lenders may consent to allow Borrower to use cash collateral in the
context of a bankruptcy or insolvency proceeding.
10.7 Counterparts. This Credit Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Credit Agreement to produce or
account for more than one such counterpart.
10.8 Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Credit Agreement.
10.9 Defaulting Lender. Each Lender understands and agrees that if such Lender
is a defaulting, Lender then notwithstanding the provisions of Section 10.6 it
shall not be entitled to vote on any matter requiring the consent of the
Required Lenders or to object to any matter requiring the consent of all the
Lenders; provided, however, that all other benefits and obligations under the
Credit Documents shall apply to such Defaulting Lender.
49
10.10. Survival of Indemnification and Representation and Warranties. All
indemnities set forth herein and all representations and warranties made herein
shall survive the execution and delivery of this Credit Agreement, the making of
the Loans and other obligations and the termination of the Commitments
hereunder.
10.11 Governing Law.
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
10.12 Arbitration. Any controversy or claim between or among the parties hereto
including, but not limited to, those arising out of or relating to this
Agreement or any related agreements or instruments, including any claim based on
or arising from an alleged tort, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Rules of Practice and Procedure for the Arbitration
of Commercial Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "Special Rules" set forth below. In the event of any
inconsistency, the Special Rules shall control. Judgment upon any arbitration
award may be entered in any court having jurisdiction. Any party to this
Agreement may bring an action, including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to which this Agreement applies
in any court having jurisdiction over such action.
(a) Special Rules. The arbitration shall be conducted in the city of
the Borrower's domicile at time of this Agreement's execution and administered
by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within ninety
(90) days of the demand for arbitration; further, the arbitrator shall only,
upon a showing of cause, be permitted to extend the commencement of such hearing
for up to an additional sixty (60) days.
(b) Reservations of Rights. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) be a
waiver by the Lenders of the protection afforded to it by 12 U.S.C. Section 91
or any substantially equivalent state law; or (ii) limit the right of the
Lenders (A) to exercise self help remedies such as (but not limited to) setoff,
or (B) to foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief or the appointment of a receiver. The Lenders may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At the Lenders' option, any
foreclosure available under the Credit Documents may be accomplished by the
exercise of a
50
power of sale or a judicial sale under the Credit Documents or by judicial
foreclosure. Neither the exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary remedies
shall constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
10.13 Time. All references to time herein shall be references to Eastern
Standard Time or Eastern Daylight time, as the case may be, unless specified
otherwise.
10.14 Severability. If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
10.15 Entirety. This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
[remainder of page intentionally left blank]
51
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written
BORROWER:.
CORNERSTONE REALTY INCOME TRUST, INC.,
a Virginia corporation
By: /s/ Glade M. Knight
---------------------------------
Title:
ATTEST:
By: /s/ Stanley J. Olander, Jr.
---------------------------
Title: Secretary
[CORPORATE SEAL]
52
LENDERS:
FIRST UNION NATIONAL BANK OF VIRGINIA,
individually in its capacity as Agent and in its capacity as Lender
By: /s/ Chris B. Troutman
---------------------
Title: Vice President
53
AMSOUTH BANK OF ALABAMA
By: /s/ Arthur J. Sharbell, III
---------------------------
Title: Vice President
54
SIGNET BANK
By: /s/ John A. Schissel
--------------------
Title: Vice President
55
SCHEDULE 1.1 (a)
COMMITMENT PERCENTAGES
Revolving Revolving
Commitment Commitment
Lender Amount Percentage
First Union National
Bank of Virginia $50,000,000 50%
AmSouth Bank of Alabama $35,000,000 35%
Signet Bank $15,000,000 15%
56
Exhibit 2.1(b)
to
Credit Agreement
FORM OF NOTICE BORROWING
------------------------
TO: FIRST UNION NATIONAL BANK OF VIRGINIA, as Agent
901 EAST CARY STREET
RICHMOND, VIRGINIA 23219
RE: Credit Agreement dated as of _________ ____
1997 among Cornerstone Realty Income Trust, Inc. (the "Borrower"),
First Union National Bank of Virginia, as Agent, and the Lenders party
thereto (as the same may be amended, modified, extended or restated
from time to time, the "Credit Agreement")
DATE: ____________,199__
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that the Borrower is requesting Revolving Loans in
the amount of $_______ to be funded on _______, 199__. Subsequent to
the funding of the requested Revolving Loans, the aggregate amount of
outstanding Revolving Loans will be $_____, which is less than or equal
to the Revolving Committed Amount.
3. The proceeds from the Revolving Loans shall be used for
_____________________________________________which is in compliance
with Section 6.16 of the Credit Agreement.
4. Enclosed is the documentation required under Section 4.2(b) of the
Credit Agreement which the undersigned represents to be accurate and
complete.
5. The representations and warranties made by the Borrower in the Credit
Documents are true and correct in all material respects at and as if
made on the date hereof except to the extent they expressly relate to
an earlier date.
6. As of the date hereof, all of the conditions of Section 4.2 of the
Credit Agreement have been compiled with and no Default or Event of
Default has occurred and is continuing, or would be caused b this
Notice of Borrowing.
7. No Material Adverse Effect has occurred since the Closing
Date.
CORNERSTONE REALTY INCOME TRUST, INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Exhibit 2. 1 (e)
to
Credit Agreement
FORM OF
REVOLVING NOTE
--------------
$__________ __________ __, 1997
FOR VALUE Received Cornerstone Realty Income Trust, Inc., a Virginia
corporation (the "Borrower"), hereby promises to pay to the order of (the
"Lender"), at the office of First Union National Bank of Virginia (the "Agent")
as set forth in that certain Credit Agreement dated as of 1997 between the
Borrower, the Lenders named therein (including the Lender) and Agent (as
modified and supplemented and in effect from time to time, the "Credit
Agreement"); the principal sum of $______ (or such lesser amount as shall equal
the aggregate unpaid principal amount of the Revolving Loans made by the Lender
to the Borrower under the Credit Agreement), in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Revolving Loan, at such office, in like
money and funds, for the period commencing on the date of such Revolving Loan
until such Revolving Loan shall be paid in full, at the rates per annum and on
the dates provided in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of
the Revolving Loans evidenced by this Revolving Note upon the occurrence of
certain events (and for payment of collection costs in connection therewith) and
for prepayments of Revolving Loans upon the terms and conditions specified
therein. In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, interest rate and duration of Interest Period of each
Revolving Loan made by the Lander to the Borrower, and each payment made on
account of the principal thereof, shall be recorded by the Lender on its books;
provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be prima facie evidence of such information.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
CORNERSTONE REALTY INCOME TRUST, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Exhibit 6.1(c)
to
Credit Agreement
FORM OF OFFICER'S CERTIFICATE
-----------------------------
For the fiscal quarter ended ________________, 19___.
I, ____________, chief financial officer of Cornerstone Realty Income
Trust, Inc. (the "Borrower") hereby certify on behalf of the Borrower that, with
respect to that certain Credit Agreement dated as of , 1997 (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"; all of the capitalized terms herein shall have the meanings set
forth in the Credit Agreement) among the Borrower, the Lenders party thereto and
First Union National Bank of Virginia, as Agent:
a. Attached hereto as Schedule I are calculations demonstrating
compliance by the Credit Parties with the financial covenants contained in
Section 6.2 of the Credit Agreement as of the end of the fiscal period referred
to above.
b. No Default or Event of Default has occurred under the Credit
Agreement.1
c. The quarterly financial statements which accompany this certificate
fairly present in all material respects the financial condition of the Borrower,
on a consolidated basis, and have been prepared in accordance with GAAP,
subject to changes resulting from normal year-end audit.
This _________day of ____________,19__.
CORNERSTONE REALTY INCOME TRUST, INC.
By:
---------------------------------
Name:
-------------------------------
Title: Chief Financial Officer
- ----------
1 If a Default or Event of Default shall have occurred an explanation of such
Default or Event of Default shall be provided on a separate page together with
an explanation of the action taken or proposed to be taken by the Credit Parties
with respect thereto.
Exhibit 10.1
to
Credit Agreement
NOTICE INFORMATION
------------------
FIRST UNION NATIONAL BANK OF VIRGINIA
- -------------------------------------
Chris B. Troutman
Vice President
First Union National of Virginia
901 East Cary Street
Richmond, Virginia 23219
(804)788-9656 Phone
(804)697-5439 Fax
WITH COPIES TO:
- --------------
Steven D. Delaney
LeClair Ryan
707 East Main Street
11th Floor
Richmond, Virginia 23219
(804)782-2003 Phone
(804)782-2294 Fax
SIGNET BANK
- -----------
John A. Schissel
Vice President
Signet Bank
7799 Leesburg Pike
Falls Church, Virginia 22043
(703)714-5145 Phone
(703)506-0284 Fax
AMSOUTH BANK OF ALABAMA
- -----------------------
Arthur J. Sharbell, III
Vice President
AmSouth Bank
Commercial Real Estate
1900 Fifth Avenue, North
9th Floor
Birmingham, AL 35203
(205)581-7647 Phone
(205)326-4075 Fax
CORNERSTONE REALTY INCOME TRUST, INC.
- -------------------------------------
S. Jay Olander
Cornerstone Realty Group, Inc.
306 East Main Street
Richmond, Virginia 23219
(804)643-1761 Phone
(804)782-9302 Fax
WITH COPIES TO:
- ---------------
Russell T. Aaronson, III, Esq.
McGuire, Woods, Battle & Boothe
901 East Cary Street
Richmond, Virginia 23. 19
(804)775-4342 Phone
(804)775-1061 Fax
Exhibit 10.3
to
Credit Agreement
FORM OF
ASSIGNMENT AGREEMENT
--------------------
Reference is made to that certain Credit Agreement dated as of
________________, 1997 (as the same may be amended, modified, extended or
restated from time to time, the "Credit Agreement") among Cornerstone Realty
Income Trust, Inc., the Lenders identified therein, and First Union National
Bank of Virginia, as Agent. All capitalized terms used therein and not otherwise
defined shall have the meanings set forth in the Agreement.
1. The Assignor (as defined below) hereby sells and assigns, without
recourse, to the Assignee (as defined below), and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective as of effective date
of the assignment as designated below (the "Effective Date"), the interests set
forth below (the "Assigned Interest") in the Assignor's rights and obligations
under the Credit Agreement, including, without limitation, (a) the interests set
forth below in the Revolving Loan Commitment Percentage of the Assignor on the
Effective Date, and (b) the Loans owing to the Assignor in connection with the
Assigned Interest which are outstanding on the Effective Date. The purchase of
the Assigned Interest shall be at par and periodic payments made with respect to
the Assigned Interest which (i) accrued prior to the Effective Date shall be
remitted to the Assignor and (ii) accrue from and after the Effective Date shall
be remitted to the Assignee. From and after the Effective Date, the Assignee, if
it is not already a Lender under the Credit Agreement, shall become a "Lender"
for all purposes of the Credit Agreement and the other Credit Documents and, to
the extent of such assignment, the assigning Lender shall be relieved of its
obligations under the Credit Agreement.
2. The Assignor represents and warrants to the Assignee that it is the
holder of the Assigned Interest, and the Loans, and it has not previously
transferred or encumbered such Assigned Interest or Loans.
3. The Assignee represents and warrants to the Assignor that it is an
Eligible Assignee.
4. This Assignment shall be effective only upon (a) to the extent
required, the consent of the Agent under Section 10.3(b) of the Credit Agreement
and (b) delivery to the Agent of this Assignment Agreement together with the
transfer fees, if applicable, set forth in Section 10.3(b) of the Credit
Agreement.
5. The Assignor and the Assignee confirm to and agree with each other
and the other parties to the Credit Agreement as to the terms set forth in
Section 10.3(b) of the Credit Agreement.
6. This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia.
7. Terms of Assignment
(a) Date of Assignment
------------------------
(b) Legal Name of Assignor
------------------------
(c) Legal Name of Assignee
------------------------
(d) Effective Date of Assignment
------------------------
(e) Revolving Loan Commitment
Percentage Assigned
-----------------------%
(f) Total Revolving Loans
outstanding as Of Effective Date $
------------------------
(g) Principal Amount of Revolving
Loans assigned on Effective
Date (the amount set forth in (f)
multiplied by the percentage set
forth in (e)) $
------------------------
(h) Revolving Command Amount $
------------------------
(i) Principal Amount of Revolving,
Committed Amount Assigned on
the Effective Date (the amount set
forth in (h) multiplied by the
percentage set forth in (e)) $
------------------------
The terms Set forth above are hereby to:
__________________________, as Assignor
By:_______________________
Name:_____________________
Title: _________________________
___________________, as Assignee
By:_______________________
Name:_____________________
Title:___________________
CONSENTED TO (if applicable):
FIRST UNION NATIONAL BANK OF
VIRGINIA., as Agent
By: ______________________________
Name: ____________________________
Title: ___________________________