Exhibit 4.1
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AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of July 9, 1999,
by and among
CORNERSTONE REALTY INCOME TRUST, INC.,
CRIT-NC, LLC,
CORNERSTONE REIT LIMITED PARTNERSHIP,
and any Additional Borrowers party hereto,
as Borrowers,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
and
FLEET NATIONAL BANK,
as Syndication Agent
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
SECTION 1.1 Definitions.......................................................................... 1
SECTION 1.2 General.............................................................................. 15
SECTION 1.3 Other Definitions and Provisions..................................................... 16
ARTICLE II REVOLVING CREDIT FACILITY..................................................................... 16
SECTION 2.1 Revolving Credit Loans............................................................... 16
SECTION 2.2 Procedure for Advances of Loans...................................................... 17
SECTION 2.3 Repayment of Loans................................................................... 17
SECTION 2.4 Revolving Credit Notes............................................................... 18
SECTION 2.5 Permanent Reduction of the Aggregate Commitment...................................... 18
SECTION 2.6 Termination of the Credit Facility................................................... 19
SECTION 2.7 Optional Increase In Commitments..................................................... 19
SECTION 2.8 Use of Proceeds...................................................................... 21
ARTICLE III LETTER OF CREDIT FACILITY.................................................................... 21
SECTION 3.1 L/C Commitment....................................................................... 21
SECTION 3.2 Procedure for Issuance of Letters of Credit.......................................... 21
SECTION 3.3 Commissions and Other Charges........................................................ 22
SECTION 3.4 L/C Participations................................................................... 22
SECTION 3.5 Reimbursement Obligation of the Borrower............................................. 23
SECTION 3.6 Obligations Absolute................................................................. 23
SECTION 3.7 Effect of Application................................................................ 24
ARTICLE IV GENERAL LOAN PROVISIONS....................................................................... 24
SECTION 4.1 Interest............................................................................. 24
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans............................. 27
SECTION 4.3 Fees................................................................................. 28
SECTION 4.4 Manner of Payment.................................................................... 28
SECTION 4.5 Crediting of Payments and Proceeds................................................... 28
SECTION 4.6 Adjustments.......................................................................... 29
SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by
the Administrative Agent............................................................. 29
SECTION 4.8 Changed Circumstances................................................................ 30
SECTION 4.9 Indemnity............................................................................ 31
SECTION 4.10 Capital Requirements................................................................. 32
SECTION 4.11 Taxes................................................................................ 32
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING.................................................. 34
SECTION 5.1 Closing.............................................................................. 34
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit............................... 34
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SECTION 5.3 Conditions to All Loans and Letters of Credit........................................ 37
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.............................................. 37
SECTION 6.1 Representations and Warranties....................................................... 37
SECTION 6.2 Survival of Representations and Warranties, Etc...................................... 45
ARTICLE VII FINANCIAL INFORMATION AND NOTICES............................................................ 45
SECTION 7.1 Financial Statements and Projections................................................. 46
SECTION 7.2 Officer's Compliance Certificate..................................................... 47
SECTION 7.3 Other Reports........................................................................ 47
SECTION 7.4 Notice of Litigation and Other Matters............................................... 47
SECTION 7.5 Accuracy of Information.............................................................. 48
ARTICLE VIII AFFIRMATIVE COVENANTS....................................................................... 49
SECTION 8.1 Preservation of Corporate Existence and Related Matters.............................. 49
SECTION 8.2 Maintenance of Property.............................................................. 49
SECTION 8.3 Insurance............................................................................ 49
SECTION 8.4 Accounting Methods and Financial Records............................................. 49
SECTION 8.5 Payment and Performance of Obligations............................................... 49
SECTION 8.6 Compliance With Laws and Approvals................................................... 50
SECTION 8.7 Environmental Laws................................................................... 50
SECTION 8.8 Compliance with ERISA................................................................ 50
SECTION 8.9 Compliance With Agreements........................................................... 50
SECTION 8.10 Conduct of Business.................................................................. 50
SECTION 8.11 Visits and Inspections............................................................... 51
SECTION 8.12 Year 2000 Compatibility.............................................................. 51
SECTION 8.13 Surveys.............................................................................. 51
SECTION 8.14 Title Insurance...................................................................... 51
SECTION 8.15 Equity Issuance...................................................................... 51
SECTION 8.16 Upstream of Dividends................................................................ 51
SECTION 8.17 Additional Borrowers................................................................. 51
SECTION 8.18 Securities Exchange Listing.......................................................... 52
SECTION 8.19 Further Assurances................................................................... 52
ARTICLE IX FINANCIAL COVENANTS......................................................................... 52
SECTION 9.1 Leverage Ratio....................................................................... 52
SECTION 9.2 Fixed Charge Coverage Ratio.......................................................... 52
SECTION 9.3 Minimum Shareholder's Equity......................................................... 52
SECTION 9.4 Ratios of Total Secured Debt to Total Implied Capitalization Value................... 53
SECTION 9.5 Ratio of Adjusted Unencumbered Asset Value to Total Unsecured Debt................... 53
SECTION 9.6 Adjusted Unencumbered Asset Cash Flow Ratio.......................................... 53
SECTION 9.7 Ratio of Total Construction in Progress Value to Total Implied Capitalization
Value................................................................................ 53
SECTION 9.8 Ratio of Dividends to Funds from Operations.......................................... 53
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ARTICLE X NEGATIVE COVENANTS
SECTION 10.1 Limitations on Debt.................................................................. 53
SECTION 10.2 Limitations on Contingent Obligations................................................ 54
SECTION 10.3 Limitations on Liens................................................................. 54
SECTION 10.4 Limitations on Loans, Advances, Investments and Acquisitions......................... 55
SECTION 10.5 Limitations on Mergers and Liquidation............................................... 56
SECTION 10.6 Limitations on Sale of Assets........................................................ 57
SECTION 10.7 Limitations on Dividends and Distributions........................................... 57
SECTION 10.8 Limitations on Exchange and Issuance of Capital Stock................................ 57
SECTION 10.9 Transactions with Affiliates......................................................... 58
SECTION 10.10 Certain Accounting Changes........................................................... 58
SECTION 10.11 Amendments; Payments and Prepayments of Subordinated Debt............................ 58
SECTION 10.12 Status as REIT....................................................................... 58
SECTION 10.13 Property Acquisition Policy.......................................................... 58
SECTION 10.14 Restrictive Agreements............................................................... 59
ARTICLE XI DEFAULT AND REMEDIES.......................................................................... 59
SECTION 11.1 Events of Default.................................................................... 59
SECTION 11.2 Remedies............................................................................. 61
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc...................................... 62
ARTICLE XII THE ADMINISTRATIVE AGENT..................................................................... 63
SECTION 12.1 Appointment.......................................................................... 63
SECTION 12.2 Delegation of Duties................................................................. 63
SECTION 12.3 Exculpatory Provisions............................................................... 63
SECTION 12.4 Reliance by the Administrative Agent................................................. 63
SECTION 12.5 Notice of Default.................................................................... 64
SECTION 12.6 Non-Reliance on the Administrative Agent and Other Lenders........................... 64
SECTION 12.7 Indemnification...................................................................... 65
SECTION 12.8 The Administrative Agent in Its Individual Capacity.................................. 65
SECTION 12.9 Resignation of the Administrative Agent; Successor Administrative Agent.............. 65
ARTICLE XIII MISCELLANEOUS............................................................................... 66
SECTION 13.1 Notices.............................................................................. 66
SECTION 13.2 Expenses; Indemnity.................................................................. 67
SECTION 13.3 Set-off.............................................................................. 68
SECTION 13.4 Governing Law........................................................................ 68
SECTION 13.5 Consent to Jurisdiction.............................................................. 68
SECTION 13.6 Binding Arbitration; Waiver of Jury Trial............................................ 69
SECTION 13.7 Reversal of Payments................................................................. 70
SECTION 13.8 Injunctive Relief; Punitive Damages.................................................. 70
SECTION 13.9 Accounting Matters................................................................... 71
SECTION 13.10 Successors and Assigns; Participations............................................... 71
SECTION 13.11 Amendments, Waivers and Consents..................................................... 74
SECTION 13.12 Performance of Duties................................................................ 75
SECTION 13.13 All Powers Coupled with Interest..................................................... 75
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SECTION 13.14 Survival of Indemnities.............................................................. 75
SECTION 13.15 Titles and Captions.................................................................. 75
SECTION 13.16 Severability of Provisions........................................................... 75
SECTION 13.17 Counterparts......................................................................... 75
SECTION 13.18 Joint and Several Liability.......................................................... 75
SECTION 13.19 Cornerstone as Administrative Agent for Borrowers.................................... 75
SECTION 13.20 Term of Agreement.................................................................... 76
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Exhibits and Schedules
Exhibits
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Prepayment
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Officer's Compliance Certificate
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Form of Notice of Account Designation
Exhibit H - Form of Lender Addition and Acknowledgement Agreement
Exhibit I - Form of Joinder Agreement
Schedules
Schedule 1.1(a) - Lenders and Commitments
Schedule 6.1(a) - Jurisdictions of Organization and Qualification
Schedule 6.1(b) - Subsidiaries and Capitalization
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(m) - Labor and Collective Bargaining Agreements
Schedule 6.1(r) - Debt and Contingent Obligations
Schedule 6.1(s) - Litigation
Schedule 10.3 - Existing Liens
Schedule 10.4 - Existing Loans, Advances and Investments
AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement"), dated as of the
9th day of July, 1999 by and among CORNERSTONE REALTY INCOME TRUST, INC., a
Virginia corporation ("Cornerstone"), CRIT-NC, LLC, a Virginia limited liability
company and a Subsidiary of Cornerstone ("CRIT-NC"), CORNERSTONE REIT LIMITED
PARTNERSHIP, a Virginia limited partnership and a Subsidiary of Cornerstone
("Cornerstone REIT L.P."), each Additional Borrower that may become party to
this Agreement pursuant to the terms hereof (the "Additional Borrowers", and
collectively with Cornerstone, CRIT-NC and Cornerstone REIT L.P., the
"Borrowers"), the Lenders who are or may become a party to this Agreement (the
"Lenders"), FIRST UNION NATIONAL BANK, as Administrative Agent for the Lenders
(the "Administrative Agent") and FLEET NATIONAL BANK, as Syndication Agent (the
"Syndication Agent").
STATEMENT OF PURPOSE
The Borrowers, the Lenders, and the Administrative Agent are parties to
that certain credit agreement dated as of October 30, 1997 (as previously
supplemented, amended, restated and otherwise modified, the "Original
Agreement") whereby the Borrowers requested and the Lenders agreed to extend
certain credit facilities to the Borrowers on the terms and conditions of the
Original Agreement.
The Borrowers, the Lenders, and the Administrative Agent desire to make
certain revisions to the Original Agreement and to amend and restate same.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree to amend and restate the Original Agreement as follows and agree
that from and after the date hereof, this Agreement constitutes the entire
agreement of the parties respecting the matters set forth herein and supercedes
the Original Agreement in all respects:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Additional Borrower" means each Subsidiary which hereafter becomes a
Borrower pursuant to Section 8.17.
"Adjusted EBITDA" means, with respect to the Borrowers and their
Subsidiaries for any period, the following calculated without duplication for
such period on a Consolidated basis in accordance with GAAP: (a) EBITDA for such
period less (b) the Unit Capital Expense Charge for such period.
"Adjusted NOI" means, with respect the Borrowers and their Subsidiaries
for any period, the amount equal to (a) the sum of all revenues and income
received by the Borrowers and their Subsidiaries with respect to the relevant
Property or Properties less (b) the sum of all reasonable and customary expenses
incurred by the Borrowers and their Subsidiaries in the operation of such
Property or Properties, including, without limitation, utility expenses,
property taxes, insurance premiums, management fees and Capital Expenditures
(but excluding depreciation, amortization and income taxes).
"Adjusted Unencumbered Asset Cash Flow" means, with respect to the
Borrowers and their Wholly-Owned Subsidiaries for any period, the following
calculated without duplication for such period on a Consolidated basis in
accordance with GAAP: (a) the aggregate Net Operating Income derived from all
Unencumbered Assets for such period less (b) the Unit Capital Expense Charge for
such period.
"Adjusted Unencumbered Asset Value" means, with respect to the
Borrowers and their Wholly-Owned Subsidiaries for any period, the quotient of
the following calculated without duplication for such period on a Consolidated
basis in accordance with GAAP: (a) (i) the aggregate Net Operating Income
derived from all Unencumbered Assets for such period less (ii) the Unit Capital
Expense Charge for such period divided by (b) ten percent (10%); provided that
(i) for the purposes hereof, Net Operating Income as used in this definition
shall be calculated on a pro forma basis (based upon Cornerstone's best good
faith estimate as to the applicable fiscal quarter and in form and substance
satisfactory to the Administrative Agent) to include as of the first day of such
period all Unencumbered Assets acquired during such period and (ii) for the
purposes of Section 9.5 hereof, Net Operating Income as used in this definition
shall be calculated for the applicable fiscal quarter on an Annualized basis.
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 12.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1.
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means (a) the
power to vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof or increased at any time or from
time to time pursuant to the terms hereof. On the Closing Date, the Aggregate
Commitment shall be One Hundred Seventy-Five Million Dollars ($175,000,000). At
no time shall the Aggregate Commitment, as increased pursuant to Section 2.7
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hereof, exceed Two Hundred Million Dollars ($200,000,000).
"Agreement" means this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Annualized" means, with respect any financial term calculated for the
Borrowers and their Subsidiaries for the applicable fiscal quarter, the
calculation of such financial term for such fiscal quarter times four (4).
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.10.
"Available Commitment" means, as to any Lender at any time, an amount
equal to (a) such Lender's Commitment less (b) such Lender's Extensions of
Credit.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon
the Base Rate as provided in Section 4.1(a).
"Borrowers" means the collective reference to Cornerstone, CRIT-NC,
Cornerstone REIT L.P. and any Additional Borrowers in their capacity as
borrowers hereunder.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrowers and their
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the
Borrowers and their Subsidiaries.
"Capital Expenditures" means, with respect to the Borrowers and their
Subsidiaries for any period, the aggregate cost of all expenditures required for
the leasing of space within the Properties
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owned and previously leased by the Borrowers and their Subsidiaries, including,
without limitation, upfit expenses and leasing commissions, together with
expenses for the renovation or improvement of existing Properties that are
classified as capital expenditures in accordance with GAAP.
"Capital Lease" means, with respect to the Borrowers and their
Subsidiaries, any lease of any property that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a Consolidated balance sheet
of the Borrowers and their Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in Section
11.1(i).
"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in Article V shall be satisfied or
waived in all respects in a manner acceptable to the Administrative Agent, in
its sole discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to and issue or participate in Letters of Credit issued for the
account of the Borrowers hereunder in an aggregate principal amount at any time
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule 1.1(a) 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.
"Consenting Lender" shall have the meaning assigned thereto in Section
2.6.
"Consolidated" means, when used with reference to financial statements
or financial statement items of the Borrowers and their Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrowers and their
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Contingent
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.
"Cornerstone" shall have the meaning assigned thereto in the preamble
to this Agreement.
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"Cornerstone REIT L.P." shall have the meaning assigned thereto in the
preamble to this Agreement.
"Credit Facility" means the collective reference to the Revolving
Credit Facility and the L/C Facility.
"CRIT-NC" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Debt" means, with respect to the Borrowers and their Subsidiaries at
any date and without duplication, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and indebtedness for
borrowed money including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such Person, (b) all
obligations to pay the deferred purchase price of property or services of any
such Person, (c) all obligations of any such Person as lessee under Capital
Leases, (d) all Debt of any other Person secured by a Lien on any asset of any
such Person, (e) all Contingent Obligations of any such Person, (f) all
obligations, contingent or otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn, including, without
limitation, any Reimbursement Obligation, and banker's acceptances issued for
the account of any such Person (provided that the letter of credit in the face
amount of $5,500,000 issued for the account of Cornerstone on June 21, 1996 by
First Union shall not be accounted for under this clause (f) to the extent the
underlying indebtedness related thereto is accounted for under clause (a) above)
(g) all obligations incurred by any such Person pursuant to Hedging Agreements
and (h) the Borrowers' and their Subsidiaries' Proportionate Share of the Debt
(as defined in the foregoing clauses) of all Ventures.
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dividends" means, with respect to the Borrowers and their Subsidiaries
for any period, all dividends or distributions paid by any such Person with
respect to its capital stock.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, with respect to the Borrowers and their Subsidiaries
for any period, the following, calculated without duplication for such period on
a Consolidated basis in accordance with GAAP: (a) Net Income for such period
plus (b) to the extent deducted in determining Net Income, (i) income and
franchise taxes for such period, (ii) Interest Expense for such period, (iii)
depreciation, amortization and other non-operating, non-cash charges (consisting
of amortization of goodwill, transaction expenses, covenants not to compete and
other intangible assets) and (iv) extraordinary or other non-recurring losses or
expenses less (c) (i) extraordinary or other non-recurring gains or income and
(ii) equity in earnings of Affiliates of the Borrowers and their Subsidiaries
(plus equity in losses of such Persons), plus (d) the Borrowers' and their
Subsidiaries' Proportionate Share of EBITDA (as defined in the foregoing
clauses) of all Ventures.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and
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obligations of a Lender hereunder, a Person that is at the time of such
assignment (a) a commercial bank organized under the laws of the United States
or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total assets in excess of $1,000,000,000, (c)
already a Lender hereunder (whether as an original party to this Agreement or as
the assignee of another Lender), (d) the successor (whether by transfer of
assets, merger or otherwise) to all or substantially all of the commercial
lending business of the assigning Lender, or (e) any other Person that has been
approved in writing as an Eligible Assignee by the Borrowers and the
Administrative Agent (except that such approval shall not be required upon the
occurrence and during the continuance of any Event of Default Sections 11.1(a),
(b), (j) or (k)).
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Borrower any ERISA Affiliate or (b) has at any time within the preceding six (6)
years been maintained for the employees of any Borrower or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"Equity Issuance" means any issuance by any Borrower or any of its
Subsidiaries of (a) shares of its capital stock or other equity interests
(including, without limitation, participation units), (b) shares of its capital
stock or other equity interests (including, without limitation, participation
units) pursuant to the exercise of options or warrants, or (c) 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, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with any Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"Event of Default" means any of the events specified in Section 11.1,
provided that any
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requirement for passage of time, giving of notice, or any other condition, has
been satisfied.
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) the aggregate principal amount of such Lender's
Commitment Percentage of the L/C Obligations then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a daily rate
which is determined, in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors.
"Fiscal Year" means the fiscal year of the Borrowers and their
Subsidiaries ending on December 31.
"Fixed Charges" means, with respect to the Borrowers and their
Subsidiaries for any period, the sum of the following for such period calculated
on a Consolidated basis in accordance with GAAP: (a) Interest Expense paid or
payable during such period, (b) income and franchise taxes paid or payable
during such period, (c) the scheduled principal payments during such period with
respect to any Debt including the Borrowers' and Subsidiaries' Proportionate
Share of Debt of all Ventures (regardless of whether such amounts are actually
paid), and (d) the total amount of Dividends paid or accrued with respect to
preferred stock (to the extent such Dividends are permitted by this Agreement)
during such period, and (e) the Borrowers' and their Subsidiaries' Proportionate
Share of the total amount of any distributions which are paid, payable or
accrued with respect to all Ventures and which has a preference over
distributions paid, payable or accruing in favor of the applicable Borrower or
Subsidiary.
"Funds from Operations" means, with respect to the Borrowers and their
Subsidiaries for any period, all Funds from Operations (as defined as of the
date of such determination by the Board of Governors of the National Association
of Real Estate Investment Trusts).
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Borrowers and their Subsidiaries throughout the period indicated
and consistent with the prior financial practice of the Borrowers and their
Subsidiaries.
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"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass
or pose a health or safety hazard to persons or neighboring properties, (f)
which are materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of any Borrower under this Agreement, and any
confirming letter executed pursuant to such hedging agreement, all as amended,
restated, supplemented or otherwise modified.
"Interest Expense" means, with respect to the Borrowers and their
Subsidiaries for any period, the gross interest expense (including, without
limitation, capitalized and accrued interest expense and interest expense
attributable to Capital Leases and all net obligations pursuant to Hedging
Agreements and interest expense attributable to the Borrowers' and their
Subsidiaries' Proportionate Share of Debt of all Ventures) of the Borrowers and
their Subsidiaries, determined for such period on a Consolidated basis in
accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Investment Grade" shall have the meaning assigned thereto in section
4.1(c).
"Issuing Lender" means First Union, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"Joinder Agreement" means each Joinder Agreement executed by an
Additional Borrower pursuant to Section 8.17, substantially in the form of
Exhibit I attached hereto, as amended, supplemented or otherwise modified from
time to time.
8
"L/C Commitment" means Fifteen Million Dollars ($15,000,000.)
"L/C Facility" means the letter of credit facility established pursuant
to Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.10.
"Lender Addition and Acknowledgment Agreement" means each agreement
executed pursuant to Section 2.7 hereof by the Borrowers and an existing Lender
or a lender not theretofore a Lender, as applicable, and acknowledged by the
Administrative Agent, substantially in the form attached hereto as Exhibit H,
providing for an increase in the Aggregate Commitment hereunder, acknowledging
that any lender not theretofore a Lender shall be a party hereto and have the
rights and obligations of a Lender hereunder, and setting forth the Commitment
of each Lender.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in Section
3.1(a).
"Leverage Ratio" means the ratio determined pursuant to Section 9.1.
"LIBOR" means the rate for deposits in Dollars for a period equal to
the Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 a.m. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period. If, for any reason, such rate is
not available, then "LIBOR" shall mean the rate per annum at which, as
determined by the Administrative Agent, Dollars in the amount of $5,000,000 are
being offered to leading banks at approximately 11:00 a.m. London time, two (2)
Business Days prior to the commencement of the applicable Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon
the LIBOR Rate
9
as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, any asset which a Person has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset shall be deemed to be subject to a Lien.
"Loan" means any revolving loan made to any Borrower pursuant to
Section 2.1, and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Applications, any Hedging Agreement executed by any Lender, and each other
document, instrument and agreement executed and delivered by any Borrower, any
Subsidiary thereof or their counsel in connection with this Agreement, all as
may be amended, restated, supplemented or otherwise modified.
"Material Adverse Effect" means, with respect to any Borrower or any of
its Subsidiaries, a material adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise) of any such Person,
the ability of any such Person to perform its obligations under the Loan
Documents or Material Contracts, in each case to which it is a party, or the
ability of the Administrative Agent or any Lender to enforce its respective
rights and remedies under the Loan Documents.
"Material Contract" means (a) any single contract or other agreement,
written or oral, of any Borrower or any of its Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $1,000,000 per
annum, or (b) any other single contract or agreement, written or oral, of any
Borrower or any of its Subsidiaries the failure to comply with which could
reasonably be expected to have a Material Adverse Effect.
"Maturity Date" means July 9, 2002.
"Moody's" means Moody's Investors Service, Inc., and its successors and
assigns.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"Multifamily Properties" means (i) any apartment Project of any
Borrower or any Subsidiary thereof comprised of no less than fifty (50)
individual units which Project can be operated as a single residential rental
facility without necessity for sharing amenities (i.e., leasing offices, tennis
courts, swimming pools and the like) with any other residential rental facility
and (ii) any apartment Project of any Borrower or any Subsidiary thereof which
Project can be operated as a single residential rental facility as a result of
the sharing of amenities (i.e., leasing offices, tennis courts, swimming pools
and the like) with any other adjoining apartment Project of any Borrower or any
Subsidiary thereof.
10
"Net Equity Proceeds" means, with respect to any Equity Issuance, the
gross cash proceeds received by any Borrower or any Subsidiary thereof less all
legal, underwriting and other reasonable fees and expenses incurred in
connection therewith.
"Net Income" means, with respect to the Borrowers and their
Subsidiaries for any period, the net income (or loss) for such period determined
on a Consolidated basis in accordance with GAAP; provided that there shall be
excluded from net income (or loss): (a) the income (or loss) of any Person
(other than a Subsidiary of such Person) in which such Person has an ownership
interest unless received by such Person in a cash distribution and (b) the
income (or loss) of any such Person accrued prior to the date it became a
Subsidiary or is merged into or consolidated with such first Person.
"Net Operating Income" means, with respect to the Borrowers and their
Wholly-Owned Subsidiaries for any period, the following calculated in accordance
with GAAP: (a) the gross revenues of the Borrowers and their Wholly-Owned
Subsidiaries derived from Multifamily Properties less (b) operating expenses
(including, without limitation, property taxes and insurance expenses) of the
Borrowers and their Wholly-Owned Subsidiaries attributable to Multifamily
Properties less (c) management fees of the Borrowers and their Wholly-Owned
Subsidiaries attributable to Multifamily Properties.
"Non-Consenting Lender" shall have the meaning assigned thereto in
Section 2.6.
"Notes" means the separate Replacement Revolving Credit Notes made by
the Borrowers payable to the order of each Lender, substantially in the form of
Exhibit A hereto, evidencing the Revolving Credit Facility, and any amendments
and modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Note" means
any of such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto
in Section 2.2(b).
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.3(c).
"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, (b)
the L/C Obligations, (c) all payment and other obligations owing by any Borrower
to any Lender or the Administrative Agent under any Hedging Agreement executed
pursuant to Section 10.1(b) to which a Lender is a party and (d) all other fees
and commissions (including attorneys' fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by any Borrower to the Lenders or the Administrative Agent, of every kind,
nature and description, direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated, and whether or
not evidenced by any
11
note, and whether or not for the payment of money under or in respect of this
Agreement, any Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of any
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of any Borrower or any of their current
or former ERISA Affiliates.
"Person" means an individual, corporation, partnership, association,
trust, business trust, joint venture, joint stock company, pool, syndicate, sole
proprietorship, unincorporated organization, Governmental Authority or any other
form of entity or group thereof.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its Prime Rate is an index or base
rate and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"Projects" or "Properties" means all real property, together with all
improvements thereon, owned by the Borrowers or any of their Subsidiaries;
"Project" or "Property" means any of such Projects or Properties.
"Proportionate Share" means with respect to the allocation of any item
to a Borrower or a Subsidiary from a Venture, the amount of such item for the
period in question so allocated to such Borrower or Subsidiary under the
governing documents of such Venture, or if such documents are silent or are
overridden by Applicable Law then the amount so allocated pursuant to Applicable
Law.
"Register" shall have the meaning assigned thereto in Section 13.10(d).
"Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid
principal amount of the Notes, or if no amounts are outstanding under the Notes,
any combination of Lenders whose Commitment Percentages aggregate at least
sixty-six and two-thirds percent (66-2/3%).
"Revolving Credit Facility" means the revolving credit facility
continued pursuant to Article
12
II hereof.
"Senior Unsecured Debt Rating" means the rating, as determined by
either Standard & Poor's or Moody's, of Cornerstone's senior unsecured
non-credit enhanced long term Debt.
"Shareholder's Equity" means, with respect to the Borrowers and their
Subsidiaries, at any date, the shareholders' equity (including capital stock,
additional paid-in capital and retained earnings, after deducting treasury
stock) of such Persons on such date determined in accordance with GAAP.
"Solvent" means, as to any Borrower or any Subsidiary thereof on a
particular date, that any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Standard & Poor's" means Standard & Poor's Ratings Group, a Division
of McGraw-Hill Corporation, and its successors and assigns.
"Subordinated Debt" means the collective reference to Debt on Schedule
6.1(r) hereof designated as Subordinated Debt and any other Debt of any Borrower
or any Subsidiary subordinated in right and time of payment to the Obligations
on terms satisfactory to the Required Lenders.
"Subsidiary" means as to any Person, any corporation, partnership or
other entity of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity is at the time, directly or indirectly, owned by or
the management is otherwise controlled by such Person (irrespective of whether,
at the time, capital stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency). Unless otherwise qualified references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of the Borrowers.
"Syndication Agent" means Fleet National Bank in its capacity as
Syndication Agent hereunder.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
"Termination Date" means the earliest of the dates referred to in
Section 2.6.
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of any Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the
13
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC, or (e) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or (f) the partial or complete withdrawal of any Borrower or any ERISA Affiliate
from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to Section
412 of the Code or Section 302 of ERISA, or (h) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Total Construction in Progress Value" means, with respect to the
Borrowers and their Subsidiaries on any date of determination, the aggregate,
good faith estimated cost of construction (including, without limitation,
acquisition costs for the applicable Properties) for Properties during the time
period from the date which site work has been initiated to the date which is
three (3) months after a certificate of occupancy has been issued. The Total
Construction in Progress Value shall include for purposes hereof the foregoing
items with respect to apartment projects owned by Ventures multiplied by the
same percentage used in determining the applicable Borrower's or Subsidiary's
Proportionate Share of EBITDA of such Venture but shall not include
rehabilitation/redevelopment costs associated with existing Properties which
have an average occupancy rate during the applicable period of greater than
sixty percent (60%).
"Total Funded Debt" means, with respect to the Borrowers and their
Subsidiaries at any date and without duplication, the sum of the following
calculated in accordance with GAAP: (a) all liabilities, obligations and
indebtedness for borrowed money including, but not limited to, obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of property or
services of any such Person, except trade payables arising in the ordinary
course of business not more than ninety (90) days past due, accrued expenses
arising in the ordinary course of business, security deposits and rents received
in advance, (c) all obligations of any such Person as lessee under Capital
Leases, (d) all Debt of any other Person secured by a Lien on any asset of any
such Person, (e) all Contingent Obligations of any such Person, (f) all
obligations, contingent or otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn and banker's acceptances
issued for the account of any such Person (provided that the letter of credit in
the face amount of $5,500,000 issued for the account of Cornerstone on June 21,
1996 by First Union shall not be accounted for under this clause (f) to the
extent the underlying indebtedness related thereto is accounted for under clause
(a) above), and (g) the Borrowers' and their Subsidiaries' Proportionate Share
of the foregoing items of all Ventures.
"Total Implied Capitalization Value" means, with respect to the
Borrowers and their Subsidiaries for any fiscal quarter, an amount equal to (a)
the EBITDA of the Borrowers and their Subsidiaries for such period (calculated
on an Annualized basis) less the Unit Capital Expense Charge for such fiscal
quarter divided by (b) ten percent (10%); provided that for the purposes hereof,
EBITDA shall be calculated on a pro forma basis (based upon Cornerstone's best
good faith estimate as to the applicable fiscal quarter and in form and
substance satisfactory to the Administrative Agent) to include as of the first
day of such period all Properties acquired during
14
such period.
"Total Secured Debt" means the aggregate principal amount of Total
Funded Debt secured by a Lien on any assets of any Borrower or any Subsidiary
thereof or any Venture.
"Total Unsecured Debt" means the aggregate principal amount of Total
Funded Debt not secured by a Lien on any asset of any Borrower or any Subsidiary
thereof.
"Uniform Customs" the Uniform Customs and Practice for Documentary
Credits (1994 Revision), International Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
"Unencumbered Assets" means, with respect to the Borrowers and their
Wholly-Owned Subsidiaries, all Properties which (i) are wholly owned by any
Borrower or any of its Wholly-Owned Subsidiaries, (ii) are not secured or
otherwise encumbered by any Lien, and (iii) are at least eighty percent (80%)
occupied (provided that, for the purpose of this clause (iii), (A) Properties
shall be required to be only sixty percent (60%) occupied if such Properties
have been acquired within the six (6) month period prior to the applicable date
of determination and (B) Properties shall be required to be only seventy percent
(70%) occupied if such Properties have been acquired within the six (6) month to
twelve (12) month period prior to the applicable date of determination).
"Unit" means each individual rental residential apartment within a
Multifamily Property.
"Unit Capital Expense Charge" means, with respect to the Borrowers and
their Subsidiaries for any period, an annual recurring capital expense charge of
$250 per Unit based on the average number of Units held in each such Person's
portfolio during such period. With respect to any calculation for a period less
than one (1) year, such expense charge of $250 per Unit shall be calculated on a
pro rata basis based upon the applicable time period.
"United States" means the United States of America.
"Venture" means any entity in which any Borrower or Subsidiary of a
Borrower owns a beneficial interest and such entity is accounted for in the
financial statements of such Borrower or Subsidiary on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of any Borrower or Subsidiary of Borrower on the
consolidated financial statements of any Borrower or Subsidiary of Borrower.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all of
the shares of capital stock or other ownership interests of which are, directly
or indirectly, owned or controlled by any Borrower and/or one or more of its
Wholly-Owned Subsidiaries.
SECTION 1.2 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
15
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter. Any reference herein to "Charlotte time" shall
refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. 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.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions
of this Agreement, each Lender severally agrees to continue the Loans currently
outstanding under the Original Agreement as Loans outstanding under this
Agreement and to make Loans to the Borrowers on a joint and several basis from
time to time from the Closing Date through the Termination Date as requested by
Cornerstone on behalf of the Borrowers in accordance with the terms of Section
2.2; provided, that (a) the aggregate principal amount of all outstanding Loans
(after giving effect to any amount requested) shall not exceed the Aggregate
Commitment less the L/C Obligations and (b) the principal amount of outstanding
Loans from any Lender to the Borrowers shall not at any time exceed such
Lender's Commitment less the aggregate principal amount of such Lender's
Commitment Percentage of the L/C Obligations. Each Loan by a Lender shall be in
a principal amount equal to such Lender's Commitment Percentage of the aggregate
principal amount of Loans requested on such occasion. Subject to the terms and
conditions hereof, the Borrowers may borrow, repay and reborrow Loans hereunder
until the Termination Date.
16
SECTION 2.2 Procedure for Advances of Loans.
(a) Requests for Borrowing. Cornerstone, on behalf of the Borrowers,
shall give the Administrative Agent irrevocable prior written notice in the form
attached hereto as Exhibit B (a "Notice of Borrowing") not later than 11:00 a.m.
(Charlotte time) (i) at least one (1) Business Day before each Base Rate Loan
and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its
intention to borrow, specifying (A) the date of such borrowing, which shall be a
Business Day, (B) the amount of such borrowing, which shall be (x) with respect
to Base Rate Loans in an aggregate principal amount of $2,000,000 or a whole
multiple of $100,000 in excess thereof and (y) with respect to LIBOR Rate Loans
in an aggregate principal amount of $2,000,000 or a whole multiple of $100,000
in excess thereof, (C) whether the Loans are to be LIBOR Rate Loans or Base Rate
Loans, and (D) in the case of a LIBOR Rate Loan, the duration of the Interest
Period applicable thereto. Notices received after 11:00 a.m. (Charlotte time)
shall be deemed received on the next Business Day. The Administrative Agent
shall notify the Lenders of each Notice of Borrowing not later than 5:00 p.m.
(Charlotte time) on the Business Day the Administrative Agent receives such
Notice of Borrowing.
(b) Disbursement of Loans. Not later than 2:00 p.m. (Charlotte time) on
the proposed borrowing date, each Lender will make available to the
Administrative Agent, for the account of the Borrowers, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
such Lender's Commitment Percentage of the Loans to be made on such borrowing
date. The Borrowers hereby irrevocably authorize the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant to this Section 2.2
in immediately available funds by crediting or wiring such proceeds to the
deposit account of the Borrowers identified in the most recent Notice of Account
Designation substantially in the form of Exhibit G hereto (a "Notice of Account
Designation") delivered by the Borrowers to the Administrative Agent or may be
otherwise agreed upon by the Borrowers and the Administrative Agent from time to
time. Subject to Section 4.7 hereof, the Administrative Agent shall not be
obligated to disburse the portion of the proceeds of any Loan requested pursuant
to this Section 2.2 to the extent that any Lender has not made available to the
Administrative Agent its Commitment Percentage of such Loan.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. The Borrowers shall repay the
outstanding principal amount of all Loans in full, together with all accrued but
unpaid interest thereon, on the Termination Date.
(b) Mandatory Repayment of Excess Loans. If at any time the outstanding
principal amount of all Loans exceeds the Aggregate Commitment less the L/C
Obligations, the Borrowers shall repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Lenders, the Loans in an amount equal to such excess. Each such repayment
shall be accompanied by any amount required to be paid pursuant to Section 4.9
hereof.
(c) Optional Repayments. The Borrowers may at any time and from time to
time repay the Loans, in whole or in part, upon at least three (3) Business
Days' irrevocable notice to the
17
Administrative Agent with respect to LIBOR Rate Loans and one (1) Business Day
irrevocable notice with respect to Base Rate Loans, in the form attached hereto
as Exhibit C (a "Notice of Prepayment") specifying the date and amount of
repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans, or
a combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof with respect to Base Rate Loans and $1,000,000 or a
whole multiple of $100,000 in excess thereof with respect to LIBOR Rate Loans.
Each such repayment shall be accompanied by any amount required to be paid
pursuant to Section 4.9 hereof.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may not
repay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.9 hereof.
SECTION 2.4 Revolving Credit Notes. Each Lender's Loans and the
obligation of the Borrowers to repay such Loans shall be evidenced by a Note
executed by the Borrowers payable to the order of such Lender representing the
Borrowers' obligation to pay such Lender's Commitment or, if less, the aggregate
unpaid principal amount of all Loans made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other amounts
due thereon. Each Note shall bear interest on the unpaid principal amount
thereof at the applicable interest rate per annum specified in Section 4.1.
SECTION 2.5 Permanent Reduction of the Aggregate Commitment.
(a) The Borrowers shall have the right at any time and from time to
time, upon at least five (5) Business Days prior written notice to the
Administrative Agent, to permanently reduce, in whole at any time or in part
from time to time, without premium or penalty, the Aggregate Commitment in an
aggregate principal amount not less than $1,000,000 or any whole multiple of
$1,000,000 in excess thereof.
(b) Each permanent reduction permitted or required pursuant to this
Section 2.5 shall be accompanied by a payment of principal sufficient to reduce
the aggregate outstanding Extensions of Credit of the Lenders after such
reduction to the Aggregate Commitment as so reduced. The Commitment of each
Lender shall be reduced by the amount of the applicable reduction on a pro rata
basis in accordance with the Lenders' respective Commitment Percentages. Any
reduction of the Aggregate Commitment to zero shall be accompanied by payment of
all outstanding Obligations (and furnishing of cash collateral satisfactory to
the Administrative Agent for all L/C Obligations) and, if such reduction is
permanent, termination of the Commitments and the Credit Facility. If the
reduction of the Aggregate Commitment requires the repayment of any LIBOR Rate
Loan, such reduction may be made only on the last day of the then current
Interest Period applicable thereto unless such repayment is accompanied by any
amount required to be paid pursuant to Section 4.9 hereof. Such cash collateral
shall be applied in accordance with Section 11.2(b).
18
SECTION 2.6 Termination of the Credit Facility. The Credit Facility
shall terminate on the earliest of (a) the Maturity Date, (b) the date of
termination by the Borrowers pursuant to Section 2.5(a), and (c) the date of
termination by the Administrative Agent on behalf of the Lenders pursuant to
Section 11.2(a). Notwithstanding anything to the contrary set forth above, the
Borrowers may request a one (1) year extension of the Termination Date by
delivering and written request to the Administrative Agent (on behalf of the
Lenders) not less than one hundred twenty (120) days prior to the existing
Termination Date, which request shall be promptly forwarded by the
Administrative Agent to each of the Lenders. No Lender shall be under any
obligation or commitment to extend the Termination Date, and failure on the part
of any Lender to respond to any such request shall be deemed to be a denial of
such request. The terms and conditions of any such request to extend the
Termination Date shall be agreed upon by the mutual consent of the Lenders, the
Administrative Agent and the Borrowers at the time of any such request.
SECTION 2.7 Optional Increase In Commitments.
(a) Subject to the conditions set forth below, the Borrowers may, upon
at least sixty (60) days prior written notice to the Administrative Agent (on
behalf of the Lenders), except as otherwise permitted under Section 2.7(e)
below, increase the Aggregate Commitment, either by designating a lender not
theretofore a Lender to become a Lender or by agreeing with an existing Lender
that such Lender's Commitment shall be increased (such designation or agreement
to be effective only with the prior written consent of the Administrative Agent,
which consent shall not be unreasonably withheld); provided that:
(i) no Default or Event of Default shall have occurred and be
continuing hereunder as of the effective date;
(ii) any lender not theretofore a Lender shall meet the criteria
set forth in the definition of Eligible Assignee;
(iii) the representations and warranties made by the Borrowers
and contained in Article VI shall be true and correct on and
as of the effective date with the same effect as if made on
and as of such date (other than those representations and
warranties that by their terms speak as of a particular
date, which representations and warranties shall be true and
correct as of such particular date);
(iv) the amount of such increase in the Aggregate Commitment
shall not be less than $25,000,000 except as otherwise
permitted under Section 2.7(e) below, and, together with all
other increases in the Aggregate Commitment pursuant to this
Section 2.7 since the date of this Agreement, shall not
cause the Aggregate Commitment to exceed $200,000,000;
(v) the Borrowers and the Lender or lender not theretofore a
Lender, shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, a
Lender Addition and Acknowledgement Agreement, in form and
substance satisfactory to the Administrative Agent and
acknowledged by the Administrative Agent;
19
(vi) no existing Lender shall be obligated in any way to increase
its Commitment;
(vii) the Borrowers shall pay any amount required to be paid
pursuant to Section 4.9 hereof resulting from the
reallocation of the Extensions of Credit pursuant to the
increase in the Aggregate Commitment; and
(viii) the Administrative Agent may request any other documents
or information in its reasonable discretion.
(b) Upon the execution, delivery, acceptance and recording of the
Lender Addition and Acknowledgement Agreement, from and after the effective date
specified in a Lender Addition and Acknowledgement Agreement, which effective
date shall be five (5) Business Days after the execution thereof, such existing
Lender shall have a Commitment as therein set forth or such other lender shall
become a Lender with a Commitment as therein set forth and all the rights and
obligations of a Lender with such a Commitment hereunder.
(c) The Administrative Agent shall maintain a copy of each Lender
Addition and Acknowledgement Agreement delivered to it with the Register. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a Lender Addition and Acknowledgement Agreement
together with any Note or Notes subject to such addition and assumption and the
written consent to such addition and assumption, the Administrative Agent shall,
if such Lender Addition and Acknowledgement Agreement has been completed and is
substantially in the form of Exhibit H:
(i) accept such Lender Addition and Acknowledgement Agreement;
(ii) record the information contained therein in the Register;
and
(iii) give prompt notice thereof to the Lenders and the
Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes of any existing Lender or with respect to any Lender not
theretofore a Lender, a new Note or Notes to the order of the applicable Lenders
in amounts equal to the Commitment of such Lenders pursuant to the Lender
Addition and Acknowledgement Agreement. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
Commitments, shall be dated the effective date of such Lender Addition and
Acknowledgement Agreement and shall otherwise be in substantially the form of
the existing Notes. The Lenders shall promptly cancel and return each
surrendered Note or Notes to the Borrowers.
20
(e) Notwithstanding the foregoing, the parties hereto acknowledge that
the Aggregate Commitment may be increased by $10,000,000 without the requirement
of sixty (60) days prior written notice in connection with the admission of one
additional Lender in connection with the anticipated merger of a Subsidiary of
Cornerstone with Apple Residential Income Trust, Inc.
SECTION 2.8. Use of Proceeds. The Borrowers shall use the proceeds of
the Loans (a) to refinance certain existing Debt of the Borrowers, including,
without limitation, the Refinanced Debt, (b) to finance the acquisition and the
rehabilitation of Multifamily Properties, and (c) for working capital and
general corporate requirements of the Borrowers and their Subsidiaries,
including the payment of certain fees and expenses incurred in connection with
the transactions contemplated hereby.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1. L/C Commitment. Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Lenders
set forth in Section 3.4(a), agrees to issue standby letters of credit ("Letters
of Credit") for the account of the Borrowers on any Business Day from the
Closing Date through but not including the Termination Date in such form as may
be approved from time to time by the Issuing Lender; provided, that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment
or (b) the Available Commitment of any Lender would be less than zero. Each
Letter of Credit shall (i) be denominated in Dollars in a minimum amount of
$100,000, (ii) be a standby letter of credit issued to support obligations of
any Borrower or any Subsidiary thereof, contingent or otherwise, incurred in the
ordinary course of business, (iii) expire on a date satisfactory to the Issuing
Lender, which date shall be no later than the Termination Date and (iv) be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. The Issuing Lender shall not at any
time be obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.
SECTION 3.2. Procedure for Issuance of Letters of Credit. Cornerstone,
on behalf of the Borrowers, may from time to time request that the Issuing
Lender issue a Letter of Credit by delivering to the Issuing Lender at the
Administrative Agent's Office an Application therefor, completed to the
satisfaction of the Issuing Lender, and such other certificates, documents and
other papers and information as the Issuing Lender may request. Upon receipt of
any Application, the Issuing Lender shall process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article V hereof, promptly issue the Letter of Credit
requested thereby (but in no event shall the Issuing Lender be required to issue
any Letter of Credit earlier than three (3) Business Days after its receipt of
the Application
21
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender
and the Borrowers. The Issuing Lender shall furnish to the Borrowers a copy of
such Letter of Credit and furnish to each Lender a copy of such Letter of Credit
and the amount of each Lender's participation in such Letter of Credit, all
promptly following the issuance of such Letter of Credit.
SECTION 3.3 Commissions and Other Charges.
(a) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, an annual letter of
credit commission with respect to each Letter of Credit in an amount equal to
the product of (i) the Applicable Margin with respect to LIBOR Rate Loans and
(ii) the face amount of such Letter of Credit. Such commission shall be payable
quarterly in arrears on the last Business Day of each fiscal quarter of the
Borrowers and on the Termination Date.
(b) In addition to the foregoing commission, the Borrowers shall pay
the Issuing Lender an issuance fee of $150 with respect to each Letter of
Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all
commissions received by the Administrative Agent in accordance with their
respective Commitment Percentages.
SECTION 3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrowers in accordance with the terms
of this Agreement, such L/C Participant shall pay to the Issuing Lender upon
demand at the Issuing Lender's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the
22
the daily average Federal Funds Rate as determined by the Administrative Agent
during the period from and including the date such payment is due to the date on
which such payment is immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. A certificate of the Issuing Lender
with respect to any amounts owing under this Section 3.4 shall be conclusive in
the absence of manifest error. With respect to payment to the Issuing Lender of
the unreimbursed amounts described in this Section 3.4(b), if the L/C
Participants receive notice that any such payment is due (A) prior to 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due that Business
Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment
shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 3.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrowers or otherwise), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro rata
share thereof; provided, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. The Borrowers
agree to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies Cornerstone, on behalf of the Borrowers, of the date and amount of a
draft paid under any Letter of Credit for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its address for notices specified herein in lawful
money of the United States and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrowers under this
Article III from the date such amounts become payable (whether at stated
maturity, by acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Base Rate Loans which were then overdue. If
the Borrowers fail to timely reimburse the Issuing Lender on the date
Cornerstone, on behalf of the Borrowers, receives the notice referred to in this
Section 3.5, Cornerstone, on behalf of the Borrowers, shall be deemed to have
timely given a Notice of Borrowing hereunder to the Administrative Agent
requesting the Lenders to make a Base Rate Loan to the Borrowers on such date in
an amount equal to the amount of such drawing and, subject to the satisfaction
or waiver of the conditions precedent specified in Article V, the Lenders shall
make Base Rate Loans in such amount, the proceeds of which shall be applied to
reimburse the Issuing Lender for the amount of the related drawing and costs and
expenses.
SECTION 3.6 Obligations Absolute. The Borrowers' obligations under this
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrowers may have or
have had against the Issuing Lender or any beneficiary of a Letter of Credit.
The Borrowers also agree with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrowers' Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of
23
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrowers and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrowers against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct. The Borrowers agree that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Customs and,
to the extent not inconsistent therewith, the UCC shall be binding on the
Borrowers and shall not result in any liability of the Issuing Lender to the
Borrowers. The responsibility of the Issuing Lender to the Borrowers in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
SECTION 3.7 Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of Cornerstone, on behalf of the Borrowers, the aggregate
principal balance of the Notes or any portion thereof shall bear interest at the
Base Rate or the LIBOR Rate plus, in each case, the Applicable Margin as set
forth below; provided that the LIBOR Rate shall not be available until three (3)
Business Days after the Closing Date for Loans which were not already
outstanding under the Original Agreement as of the Closing Date. Cornerstone, on
behalf of the Borrowers shall select the interest rate index noted above (i.e.,
the Base Rate or the LIBOR Rate) and Interest Period, if any, applicable to any
Loan at the time a Notice of Borrowing is given pursuant to Section 2.2 or at
the time a Notice of Conversion/Continuation is given pursuant to Section 4.2.
Each Loan or portion thereof bearing interest based on the Base Rate shall be a
"Base Rate Loan", each Loan or portion thereof bearing interest based on the
LIBOR Rate shall be a "LIBOR Rate Loan". Any Loan or any portion thereof as to
which Cornerstone, on behalf of the Borrowers, has not duly specified an
interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan,
Cornerstone, on behalf of the Borrowers, by giving notice at the times described
in Section 4.1(a), shall elect an interest period (each, an "Interest Period")
to be applicable to such Loan, which Interest Period shall be a
24
period of one (1), two (2), three (3), or six (6) months with respect to each
LIBOR Rate Loan; provided that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period with
respect to a LIBOR Rate Loan would otherwise expire on a day that is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the relevant calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Termination Date;
and
(v) there shall be no more than five (5) Interest Periods
outstanding at any time.
(c) Applicable Margin.
(i) Senior Unsecured Debt Rating. The Applicable Margin provided
for in Section 4.1(a) with respect to the Loans (the "Applicable
Margin") shall (i) on the Closing Date equal the percentages set forth
in the certificate delivered pursuant to Section 5.2(d)(iv) and (ii)
for each fiscal quarter thereafter be determined by reference to the
Senior Unsecured Debt Rating announced by Standard & Poor's or
Moody's, as applicable, as follows:
Senior
Unsecured Applicable Margin Per Annum
Level Debt Rating Base Rate + LIBOR Rate +
----- ----------- ---------------------------------
I BBB-/Baa3 0.000% 1.200%
II BBB/Baa2 or higher 0.000% 1.100%
; provided that, at all times when the Senior Unsecured Debt Rating is
unavailable or is less than Investment Grade the Leverage Ratio set forth
below shall control. In the event that Cornerstone's Senior Unsecured Debt
Rating, as determined by Moody's and Standard & Poor's, is Investment Grade
according to one rating agency but is not according to the other rating
agency, then the Leverage Ratio set forth below shall control. In the event
that
25
Cornerstone has obtained Investment Grade ratings by both Standard & Poor's
and Moody's and such ratings are not equivalent, then the Applicable Margin
shall equal the Applicable Margin for the average of the two levels unless
both ratings are equal to or higher than BBB/Baa2, in which case the
Applicable Margin for the Base Rate shall be 0.000% and the Applicable
Margin for the LIBOR Rate shall be 1.100%. For purposes hereof, "Investment
Grade" shall mean a rating of BBB- or higher by Standard & Poor's and a
rating of Baa3 or higher by Moody's.
In the event Cornerstone fails to notify the Administrative Agent of a
change in the Senior Unsecured Debt Rating within the time required by
Section 7.4 hereof, the Applicable Margin until the delivery of such notice
shall be the Applicable Margin as determined pursuant to the Leverage Ratio
set forth below. In the event that the above-referenced rating designations
are replaced by Standard & Poor's or Moody's, as applicable, the equivalent
replacement rating designation shall be deemed automatically substituted
therefor.
(ii) Leverage Ratio. If the Senior Unsecured Debt Rating is
unavailable or is below Investment Grade, the Applicable Margin shall (i)
on the Closing Date equal the percentages set forth in the certificate
delivered pursuant to Section 5.2(d)(iv) and (ii) for each fiscal quarter
thereafter be determined by reference to the Leverage Ratio as of the end
of the fiscal quarter immediately preceding the delivery of the applicable
Officer's Compliance Certificate as follows:
Applicable Margin Per Annum
Leverage Ratio Base Rate + LIBOR Rate +
-------------- -----------------------------------
Less than 0.30 to 1.00 0.000% 1.200%
Equal to or Greater than 0.30 to 1.00 0.000% 1.350%
but less than 0.40 to 1.00
Equal to or greater than 0.40 to 1.00 0.000% 1.450%
Adjustments, if any, in the Applicable Margin as determined herein shall be
made by the Administrative Agent on the tenth (10th) Business Day after
receipt by the Administrative Agent of quarterly financial statements for
the Borrowers and their Subsidiaries and the accompanying Officer's
Compliance Certificate setting forth the Leverage Ratio of the Borrowers
and their Subsidiaries as of the most recent fiscal quarter end. Subject to
Section 4.1(d), in the event the Borrowers fail to deliver such financial
statements and certificate within the time required by Section 7.2 hereof,
the Applicable Margin shall be the highest Applicable Margin set forth
above until the delivery of such financial statements and certificate.
(d) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrowers shall no longer have the option to request
LIBOR Rate Loans, (ii) all
26
outstanding LIBOR Rate Loans shall bear interest at a rate per annum two percent
(2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of
the applicable Interest Period and thereafter at a rate equal to two percent
(2%) in excess of the rate then applicable to Base Rate Loans, and (iii) all
outstanding Base Rate Loans shall bear interest at a rate per annum equal to two
percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest
shall continue to accrue on the Notes after the filing by or against any
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.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
shall be payable in arrears with respect to each calendar month on the first
Business Day of the following calendar month commencing August 1, 1999; interest
on each LIBOR Rate Loan shall be payable on the last day of each Interest Period
applicable thereto, and if such Interest Period extends over three (3) months,
at the end of each three (3) month interval during such Interest Period. All
interest rates, fees and commissions provided hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable 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 Applicable Law and the Lenders shall at the Administrative
Agent's option promptly refund to the Borrowers any interest received by 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 Borrowers not pay
or contract to pay, and that neither the Administrative Agent nor any Lender
receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrowers under Applicable
Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to (a) convert at any time all or any portion of
its outstanding Base Rate Loans in a principal amount equal to $2,000,000 or any
whole multiple of $100,000 in excess thereof into one or more LIBOR Rate Loans
or (b) upon the expiration of any Interest Period, (i) convert all or any part
of its outstanding LIBOR Rate Loans in a principal amount equal to $2,000,000 or
a whole multiple of $100,000 in excess thereof into Base Rate Loans or (ii)
continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers
desire to convert or continue Loans as provided above, the Borrowers shall give
the Administrative Agent irrevocable prior written notice in the form attached
as Exhibit D (a "Notice of Conversion/Continuation") not later than 11:00 a.m.
(Charlotte time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Loan is to be effective specifying (A) the
Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to
be converted or continued, the last day of the Interest Period therefor, (B) the
effective date of such conversion or continuation (which shall be a Business
Day), (C) the principal amount of such Loans to be
27
converted or continued, and (D) the Interest Period to be applicable to such
converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly
notify the Lenders of such Notice of Conversion/Continuation.
SECTION 4.3 Fees.
(a) Commitment Fee. Commencing on the Closing Date, the Borrowers shall
pay to the Administrative Agent, for the account of the Lenders, a
non-refundable commitment fee at a rate per annum equal to 0.200% on the average
daily unused portion of the Aggregate Commitment. The commitment fee shall be
payable in arrears on the last Business Day of each calendar quarter during the
term of this Agreement commencing September 30, 1999, and on the Termination
Date. Such commitment fee shall be distributed by the Administrative Agent to
the Lenders pro rata in accordance with the Lenders' respective Commitment
Percentages.
(b) Administrative Agent's and Other Fees. In order to compensate the
Administrative Agent for structuring and syndicating the Loans and for its
obligations hereunder, the Borrowers agree to pay to the Administrative Agent,
for its account, the fees set forth in the separate fee letter agreement
executed by Cornerstone and the Administrative Agent. In addition, the Borrowers
agree to pay to the Administrative Agent, for its account or for the ratable
benefit of the Lenders (as applicable), any other fees, including, without
limitation, any upfront fees, which the Borrowers have agreed to pay to such
Persons.
SECTION 4.4 Manner of Payment. Each payment by the Borrowers on account
of the principal of or interest on the Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement or any Note shall be made not later than 1:00 p.m. (Charlotte
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Lenders (other than as set forth below) pro rata in accordance with their
respective Commitment Percentages, in Dollars, in immediately available funds
and shall be made without any set-off, counterclaim or deduction whatsoever. Any
payment received after such time but before 2:00 p.m. (Charlotte time) on such
day shall be deemed a payment on such date for the purposes of Section 11.1, but
for all other purposes shall be deemed to have been made on the next succeeding
Business Day. Any payment received after 2:00 p.m. (Charlotte time) shall be
deemed to have been made on the next succeeding Business Day for all purposes.
Upon receipt by the Administrative Agent of each such payment, the
Administrative Agent shall distribute in a timely manner to each Lender at its
address for notices set forth herein its pro rata share of such payment in
accordance with such Lender's Commitment Percentage and shall wire advice of the
amount of such credit to each Lender. Each payment to the Administrative Agent
of the Issuing Lender's fees or L/C Participant's commissions shall be made in
like manner, but for the account of the Issuing Lender or the L/C Participants,
as the case may be. Each payment to the Administrative Agent of Administrative
Agent's fees or expenses shall be made for the account of the Administrative
Agent and any amount payable to any Lender under Sections 4.8, 4.9, 4.10, 4.11
or 13.2 shall be paid to the Administrative Agent for the account of the
applicable Lender.
SECTION 4.5 Crediting of Payments and Proceeds. In the event that the
Borrowers shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant
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to Section 11.2, all payments received by the Lenders upon the Notes and the
other Obligations and all net proceeds from the enforcement of the Obligations
shall be applied first to all expenses then due and payable by the Borrowers
hereunder, then to all indemnity obligations then due and payable by the
Borrowers hereunder, then to all of the Administrative Agent's and the Issuing
Lender's fees then due and payable, then to all commitment and other fees and
commissions then due and payable, then to accrued and unpaid interest on the
Notes and the Reimbursement Obligation (pro rata in accordance with all such
amounts due), then to the principal amount of the Notes and Reimbursement
Obligation, then to the cash collateral account described in Section 11.2(b)
hereof to the extent of any L/C Obligations then outstanding, and then to any
termination payments due in respect of a Hedging Agreement with any Lender
executed pursuant to Section 10.1(b), in that order.
SECTION 4.6 Adjustments. If any Lender (a "Benefited Lender") shall at
any time receive any payment of all or part of its Extensions of Credit, or
interest thereon, or if any Lender shall at any time receive any collateral in
respect to its Extensions of Credit (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Extensions of Credit, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Extensions of Credit, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefited Lender, such purchase shall be rescinded, and the purchase price
and benefits returned to the extent of such recovery, but without interest. The
Borrowers agree that each Lender so purchasing a portion of another Lender's
Extensions of Credit may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
under this Agreement to make the Loans and issue or participate in Letters of
Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.2(b) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrowers on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount of such Lender's Commitment Percentage of such borrowing, times
(b) the daily average Federal Funds Rate during such period as determined by the
Administrative Agent, times (c) a fraction the numerator of which is the number
of days that elapse from and including such borrowing date to the date on which
such Lender's Commitment Percentage of such borrowing shall have become
immediately available to the Administrative Agent and the denominator of which
29
is 360. A certificate of the Administrative Agent with respect to any amounts
owing under this Section 4.7 shall be conclusive, absent manifest error. If such
Lender's Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrowers. The failure of any Lender to make its Commitment Percentage of any
Loan available shall not relieve it or any other Lender of its obligation, if
any, hereunder to make its Commitment Percentage of such Loan available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the borrowing
date.
SECTION 4.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with respect to
any Interest Period the Administrative Agent or any Lender (after consultation
with Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars in the applicable amounts are not being quoted via Telerate Page
3750 or offered to the Administrative Agent or such Lender for such Interest
Period, then the Administrative Agent shall forthwith give notice thereof to the
Borrowers. Thereafter, until the Administrative Agent notifies Cornerstone, on
behalf of the Borrowers, that such circumstances no longer exist, the obligation
of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to
convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be
suspended, and the Borrowers shall repay in full (or cause to be repaid in full)
the then outstanding principal amount of each such LIBOR Rate Loans together
with accrued interest thereon, on the last day of the then current Interest
Period applicable to such LIBOR Rate Loan or convert the then outstanding
principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last
day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give notice
to Cornerstone, on behalf of the Borrowers, and the other Lenders. Thereafter,
until the Administrative Agent notifies Cornerstone, on behalf of the Borrowers,
that such circumstances no longer exist, (i) the obligations of the Lenders to
make LIBOR Rate Loans and the right of the Borrowers to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the
Borrowers may select only Base Rate Loans hereunder, and (ii) if any of the
Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of
the then current Interest Period applicable thereto as a LIBOR Rate Loan, the
applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan
for the remainder of such Interest Period.
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(c) Increased Costs. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any
Note, Letter of Credit or Application or shall change the basis of
taxation of payments to any of the Lenders (or any of their respective
Lending Offices) of the principal of or interest on any Note, Letter
of Credit or Application or any other amounts due under this Agreement
in respect thereof (except for changes in the rate of tax on the
overall net income of any of the Lenders or any of their respective
Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit, insurance or capital
or similar requirement against assets of, deposits with or for the
account of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the Lenders (or
any of their respective Lending Offices) or the foreign exchange and
interbank markets any other condition affecting any Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify Cornerstone, on behalf of the Borrowers, of such
fact and demand compensation therefor and, within fifteen (15) days after such
notice by the Administrative Agent, the Borrowers shall pay to such Lender such
additional amount or amounts as will compensate such Lender or Lenders for such
increased cost or reduction. The Administrative Agent will promptly notify
Cornerstone, on behalf of the Borrowers, of any event of which it has knowledge
which will entitle such Lender to compensation pursuant to this Section 4.8(c);
provided, that the Administrative Agent shall incur no liability whatsoever to
the Lenders or the Borrowers in the event it fails to do so. The amount of such
compensation shall be determined, in the applicable Lender's reasonable
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the LIBOR Rate Loans in the London interbank and using any
reasonable attribution or averaging methods which such Lender deems appropriate
and practical. A certificate of such Lender setting forth the basis for
determining such amount or amounts necessary to compensate such Lender shall be
forwarded to Cornerstone, on behalf of the Borrowers, through the Administrative
Agent and shall be conclusively presumed to be correct save for manifest error.
SECTION 4.9 Indemnity. Each Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan
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(a) as a consequence of any failure by any Borrower to make any payment when due
of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any
failure of any Borrower to borrow on a date specified therefor in a Notice of
Borrowing or Notice of Continuation/Conversion or (c) due to any payment,
prepayment or conversion of any LIBOR Rate Loan on a date other than the last
day of the Interest Period therefor. The amount of such loss or expense shall be
determined, in the applicable Lender's reasonable discretion, based upon the
assumption that such Lender funded its Commitment Percentage of the LIBOR Rate
Loans in the London interbank and using any reasonable attribution or averaging
methods which such Lender deems appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts necessary
to compensate such Lender shall be forwarded to Cornerstone, on behalf of the
Borrowers, through the Administrative Agent and shall be conclusively presumed
to be correct save for manifest error.
SECTION 4.10 Capital Requirements. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within fifteen (15) days after
written demand by any such Lender, the Borrowers shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to Cornerstone, on behalf of the Borrowers, and the
Administrative Agent by such Lender, shall, in the absence of manifest error, be
presumed to be correct and binding for all purposes.
SECTION 4.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.11) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the amount
such party would have received had no such deductions been made, (B) such
Borrower shall make such deductions, (C) such Borrower shall pay the full
32
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (D) such Borrower shall deliver to the
Administrative Agent evidence of such payment to the relevant taxing authority
or other authority in the manner provided in Section 4.11(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. Each Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrowers shall furnish to the
Administrative Agent, at its address referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
Cornerstone, on behalf of the Borrowers, with a copy to the Administrative
Agent, on the Closing Date or concurrently with the delivery of the relevant
Assignment and Acceptance, as applicable, (i) two United States Internal Revenue
Service Forms 4224 or Forms 1001, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a complete
exemption from withholding or deduction for or on account of any United States
federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes. Each such Lender further agrees to
deliver to Cornerstone, on behalf of the Borrowers, with a copy to the
Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms or manner of certification, as the case may be, on or before
the date that any such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form previously delivered by
it to Cornerstone, on behalf of the Borrowers, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders such forms inapplicable or
the exemption to which such forms relate unavailable and such Lender notifies
Cornerstone, on behalf of the Borrowers, and the Administrative Agent that it is
not entitled to receive payments without
33
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 4.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, LLC effective as of the date of this
Agreement.
SECTION 5.2 Conditions to Closing and Initial Extensions of Credit. The
obligation of the Lenders to close this Agreement and to continue Loans
outstanding under the Original Agreement as Loans outstanding under this
Agreement and to make the initial Loan or issue the initial Letter of Credit is
subject to the satisfaction of each of the following conditions:
(a) Executed Loan Documents. The following Loan Documents, in form and
substance satisfactory to Administrative Agent and each Lender:
(i) this Agreement;
(ii) the Notes; and
(iii) each other document and certificate reasonably requested by
the Administrative Agent;
shall have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no default
shall exist thereunder, and the Borrowers shall have delivered original
counterparts thereof to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of Cornerstone on behalf of each
Borrower. The Administrative Agent shall have received a certificate
from the chief executive officer or chief financial officer of
Cornerstone, on behalf of the Borrowers, in form and substance
satisfactory to the Administrative Agent, to the effect that all
representations and warranties of the Borrowers contained in this
Agreement and the other Loan Documents are true, correct and complete;
that the Borrowers are not in violation of any of the covenants
contained in this Agreement and the other Loan Documents; that, after
giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing; and that
the Borrowers have satisfied each of the closing conditions.
34
(ii) Certificate of Secretary of each Borrower. The
Administrative Agent shall have received a certificate of the
secretary or assistant secretary of each Borrower certifying that
attached thereto is a true and complete copy of the articles of
incorporation of such Borrower and all amendments thereto, certified
as of a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation; that attached thereto is a true and
complete copy of the bylaws of such Borrower as in effect on the date
of such certification; that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of such
Borrower authorizing the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party; and as to the incumbency and
genuineness of the signature of each officer of such Borrower
executing Loan Documents to which it is a party.
(iii) Certificates of Good Standing. The Administrative Agent
shall have received long-form certificates as of a recent date of the
good standing of each Borrower under the laws of its jurisdiction of
organization and each other jurisdiction where each Borrower is
qualified to do business.
(iv) Opinions of Counsel. The Administrative Agent shall have
received favorable opinions of counsel to the Borrowers addressed to
the Administrative Agent and the Lenders with respect to the
Borrowers, the Loan Documents and such other matters as the Lenders
shall request.
(v) Tax Forms. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by
Section 4.11(e) hereof.
(c) Consents; Defaults.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any
Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained.
(ii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the other Loan Documents
or the consummation of the transactions contemplated hereby or
thereby, or which, in the Administrative Agent's discretion, would
make it inadvisable to consummate the transactions contemplated by
this Agreement and such other Loan Documents.
(iii) No Event of Default. No Default or Event of Default shall
have occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Administrative Agent shall have
received the
35
most recent audited Consolidated financial statements of the Borrowers and their
Subsidiaries, all in form and substance satisfactory to the Administrative
Agent.
(ii) Financial Condition Certificate. Cornerstone, on behalf of
the Borrowers, shall have delivered to the Administrative Agent a
certificate, in form and substance satisfactory to the Administrative
Agent, and certified as accurate by the chief executive officer or
chief financial officer of Cornerstone, that (A) each Borrower and
each of its Subsidiaries are each Solvent, (B) each Borrower's
payables are current and not past due, (C) attached thereto is a pro
forma balance sheet of the Borrowers and their Subsidiaries setting
forth on a pro forma basis the financial condition of the Borrowers
and their Subsidiaries on a Consolidated basis as of that date,
reflecting a pro forma basis the effect of the transactions
contemplated herein, including all fees and expenses in connection
therewith, and evidencing compliance on a pro forma basis with the
covenants contained in Articles IX and X hereof and (D) attached
thereto are the financial projections previously delivered to the
Administrative Agent representing the good faith opinions of the
Borrowers and senior management thereof as to the projected results
contained therein.
(iii) Payment at Closing; Fee Letters. There shall have been paid
by the Borrowers to the Administrative Agent and the Lenders the fees
set forth or referenced in Section 4.3 and any other accrued and
unpaid fees or commissions due hereunder (including, without
limitation, legal fees and expenses), and to any other Person such
amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents. The Administrative Agent
shall have received duly authorized and executed copies of the fee
letter agreement referred to in Section 4.3(c).
(iv) Applicable Margin Certificate. If Section 4.1(c)(ii) is
being used to determine the Applicable Margin, Cornerstone, on behalf
of the Borrowers, shall have delivered to the Administrative Agent a
certificate executed by the chief financial officer or treasurer of
Cornerstone setting forth the calculation of the Applicable Margin
pursuant to Section 4.1(c).
(e) [Intentionally Omitted]
(f) Miscellaneous.
(i) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing from Cornerstone, on behalf of the
Borrowers, in accordance with Section 2.2(a), and a Notice of Account
Designation specifying the account or accounts to which the proceeds
of any loans made after the Closing Date are to be disbursed.
(ii) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Lenders. The Lenders shall have received
copies of all other instruments and other evidence as the Lender may
36
reasonably request, in form and substance satisfactory to the Lenders,
with respect to the transactions contemplated by this Agreement and
the taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. Each Borrower shall have
delivered to the Administrative Agent such other documents,
certificates and opinions as the Administrative Agent reasonably
requests, including, without limitation, copies of any document
evidencing or governing any Subordinated Debt, certified by a
secretary or assistant secretary of such Borrower as a true and
correct copy thereof.
SECTION 5.3 Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make any Loan or issue any Letter of Credit is
subject to the satisfaction of the following conditions precedent on the
relevant borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The representations
and warranties contained in Article VI shall be true and correct on and as of
such borrowing or issuance date with the same effect as if made on and as of
such date, except to the extent the failure of any schedule to be true and
correct on and as of such borrowing or issuance date would not have or would not
be reasonably expected to have a Material Adverse Effect.
(b) No Existing Default. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii) on
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date.
(c) Officer's Compliance Certificate; Additional Documents. The
Administrative Agent shall have received the current Officer's Compliance
Certificate and each additional document, instrument, legal opinion or other
item of information reasonably requested by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
SECTION 6.1 Representations and Warranties. To induce the
Administrative Agent to enter into this Agreement and the Lenders to make the
Loans and to issue or participate in the Letters of Credit, the Borrowers hereby
represent and warrant to the Administrative Agent and Lenders that:
(a) Organization; Power; Qualification. Each Borrower and each
Subsidiary thereof is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation, has the
power and authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization except to the extent the failure to be so qualified and authorized
to do business would not have or would not be reasonably expected to have
37
a Material Adverse Effect. The jurisdictions in which each Borrower and each
Subsidiary thereof is organized and qualified to do business are described on
Schedule 6.1(a).
(b) Ownership. Each Subsidiary of each Borrower is listed on Schedule
6.1(b). The capitalization of the Borrowers and their Subsidiaries consists of
the number of shares, authorized, issued and outstanding, of such classes and
series, with or without par value, described on Schedule 6.1(b). All outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable. The shareholders of the Subsidiaries of the Borrowers and the
number of shares owned by each are described on Schedule 6.1(b). There are no
outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of any Borrower or any Subsidiary thereof, except as
described on Schedule 6.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each
Borrower and each Subsidiary thereof has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This Agreement
and each of the other Loan Documents have been duly executed and delivered by
the duly authorized officers of each Borrower and each of its Subsidiaries party
thereto, and each such document constitutes the legal, valid and binding
obligation of each Borrower or its Subsidiary party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance by the Borrowers and their
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to any Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws or other organizational documents of any
Borrower or any of its Subsidiaries, (iii) conflict with, result in a breach of
or constitute a default under any indenture, agreement or other instrument to
which any Borrower or any of its Subsidiaries is a party or by which any of its
properties may be bound or any Governmental Approval relating to such Person,
except where such conflict with, breach of or default under would not have or
would not be reasonably expected to have a Material Adverse Effect, or (iv)
result in or require the creation or imposition of any Lien upon or with respect
to any property now owned or hereafter acquired by any Borrower or any of its
Subsidiaries other than Liens arising under the Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each Borrower and each
Subsidiary thereof (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental Approval
38
applicable to it and in compliance with all other Applicable Laws relating to it
or any of its respective properties, except where the failure to be in such
compliance would not have or would not be reasonably expected to have a Material
Adverse Effect.
(f) Tax Returns and Payments. Each Borrower and Subsidiary thereof has
duly filed or caused to be filed all federal, state, local and other tax returns
required by Applicable Law to be filed, and has paid, or made adequate provision
for the payment of, all federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable. No Governmental Authority has asserted any
Lien or other claim against any Borrower or any Subsidiary thereof with respect
to unpaid taxes which has not been discharged or resolved. The charges, accruals
and reserves on the books of each Borrower and any of its Subsidiaries in
respect of federal, state, local and other taxes for all Fiscal Years and
portions thereof since the organization of such Borrower and any of its
Subsidiaries are in the judgment of such Borrower adequate, and such Borrower
does not anticipate any additional taxes or assessments for any of such years.
(g) Intellectual Property Matters. Each Borrower and each Subsidiary
thereof owns or possesses rights to use all franchises, licenses, copyrights,
copyright applications, patents, patent rights or licenses, patent applications,
trademarks, trademark rights, trade names, trade name rights, copyrights and
rights with respect to the foregoing which are required to conduct its business,
except where the failure own or possess such rights would not have or would not
be reasonably expected to have a Material Adverse Effect. No event has occurred
which permits, or after notice or lapse of time or both would permit, the
revocation or termination of any such rights, and no Borrower nor any Subsidiary
thereof is liable to any Person for infringement under Applicable Law with
respect to any such rights as a result of its business operations.
(h) Environmental Matters. Except as would not have or would not be
reasonably expected to have a Material Adverse Effect, to the best of the
knowledge of the Borrowers and their Subsidiaries,
(i) The properties of the Borrowers and their Subsidiaries do not
contain, and have not previously contained, any Hazardous Materials in
amounts or concentrations which (A) constitute or constituted a
violation of, or (B) could give rise to liability under, applicable
Environmental Laws;
(ii) Such properties and all operations conducted in connection
therewith are in compliance, and have been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under
or about such properties or such operations which could interfere with
the continued operation of such properties or impair the fair saleable
value thereof;
(iii) No Borrower nor any Subsidiary thereof has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the
operations conducted in connection therewith, nor does any Borrower or
any Subsidiary thereof have knowledge or reason to believe that any
such notice will be
39
received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of
from the properties of any Borrower or any of its Subsidiaries in
violation of, or in a manner or to a location which could give rise to
liability under, Environmental Laws, nor have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of
such properties in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending or threatened under any Environmental Law to which
any Borrower or any Subsidiary thereof is or will be named as a party
with respect to such properties or operations conducted in connection
therewith, 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 such properties or such operations; and
(vi) There has been no release or the threat of release of
Hazardous Materials at or from such properties, in violation of or in
amounts or in a manner that could give rise to liability under
Environmental Laws.
(i) ERISA. Except as would not have or would not be reasonably expected
to have a Material Adverse Effect,
(i) No Borrower nor any ERISA Affiliate maintains or contributes
to, or has any obligation under, any Employee Benefit Plans other than
those identified on Schedule 6.1(i);
(ii) Each Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet expired.
Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the Code. No
liability has been incurred by any Borrower or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to
any Employee Benefit Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has any Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412
40
of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of
ERISA with respect to any Pension Plan;
(iv) No Borrower nor any ERISA Affiliate has: (A) engaged in a
nonexempt prohibited transaction described in Section 406 of the ERISA
or Section 4975 of the Code, (B) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums and there
are no premium payments which are due and unpaid, (C) failed to make a
required contribution or payment to a Multiemployer Plan, or (D)
failed to make a required installment or other required payment under
Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected
to occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of any Borrower after due inquiry,
threatened concerning or involving any (A) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by any Borrower or any ERISA Affiliate, (B) Pension
Plan or (C) Multiemployer Plan.
(j) Margin Stock. No Borrower nor any Subsidiary thereof is engaged
principally or as one of its activities in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as each such term
is defined or used in Regulations G and U of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the Loans or Letters
of Credit will be used for purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation G, T, U or X of such Board of Governors.
(k) Government Regulation. No Borrower nor any Subsidiary thereof is an
"investment company" or a company "controlled" by an "investment company" (as
each such term is defined or used in the Investment Company Act of 1940, as
amended) and no Borrower nor any Subsidiary thereof is, or after giving effect
to any Extension of Credit will be, subject to regulation under the Public
Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as
amended, or any other Applicable Law which limits its ability to incur or
consummate the transactions contemplated hereby.
(l) Material Contracts. Each Material Contract is, and after giving
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof.
(m) Employee Relations. Each Borrower and each Subsidiary thereof has a
stable work force in place and is not, except as set forth on Schedule 6.1(m),
party to any collective bargaining agreement nor has any labor union been
recognized as the representative of its employees. The Borrowers and their
Subsidiaries do not know of any pending, threatened or contemplated strikes,
work stoppage or other collective labor disputes involving its employees or
those of its Subsidiaries.
(n) Burdensome Provisions. No Borrower nor any Subsidiary thereof is a
party to any
41
indenture, agreement, lease or other instrument, or subject to any corporate or
partnership restriction, Governmental Approval or Applicable Law which could be
reasonably expected to have a Material Adverse Effect. The Borrowers and their
Subsidiaries do not presently anticipate that future expenditures needed to meet
the provisions of any statutes, orders, rules or regulations of a Governmental
Authority will be so burdensome as to have a Material Adverse Effect.
(o) Financial Statements. The (i) Consolidated balance sheets of the
Borrowers and their Subsidiaries as of December 31, 1998 and the related
statements of income and retained earnings and cash flows for the Fiscal Years
then ended and (ii) unaudited Consolidated balance sheet of the Borrowers and
their Subsidiaries as of March 31, 1999 and related unaudited interim statements
of revenue and retained earnings, copies of which have been furnished to the
Administrative Agent and each Lender, are complete and correct and fairly
present the assets, liabilities and financial position of the Borrowers and
their Subsidiaries as at such dates, and the results of the operations and
changes of financial position for the periods then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP. The Borrowers and their Subsidiaries have no
Debt, obligation or other unusual forward or long-term commitment which is not
fairly reflected in the foregoing financial statements or in the notes thereto.
(p) No Material Adverse Change. Since December 31, 1998, there has been
no material adverse change in the properties, business, operations, prospects,
or condition (financial or otherwise) of the Borrowers and their Subsidiaries
and no event has occurred or condition arisen that could reasonably be expected
to have a Material Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, each Borrower and each Subsidiary thereof
will be Solvent.
(r) Debt and Contingent Obligations. Schedule 6.1(r) is a complete and
correct listing of all Debt and Contingent Obligations of the Borrowers and
their Subsidiaries in excess of $500,000 as of the Closing Date. The Borrowers
and their Subsidiaries have performed and are in compliance with all of the
terms of such Debt and Contingent Obligations and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with notice or lapse of time or both would constitute such a default or
event of default on the part of any Borrower or any of its Subsidiaries exists
with respect to any such Debt or Contingent Obligation.
(s) Litigation. Except as set forth on Schedule 6.1(s), there are no
actions, suits or proceedings pending nor, to the knowledge of any Borrower,
threatened against or in any other way relating adversely to or affecting any
Borrower or any Subsidiary thereof or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority which could have or could be reasonably expected to have a Material
Adverse Effect.
(t) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by any Borrower or any Subsidiary thereof under any Material
Contract or judgment, decree or order to which any Borrower or any Subsidiary
thereof is a party or by which any Borrower or any Subsidiary thereof or any of
their
42
respective properties may be bound or which would require any Borrower or any
Subsidiary thereof to make any payment thereunder prior to the scheduled
maturity date therefor.
(u) Status of Cornerstone as REIT. Cornerstone is and has been for each
of Cornerstone's tax years from and including 1993 a "real estate investment
trust" within the meaning of Section 856 of the Code and is being operated in
accordance with the rules for qualification as a "real estate investment trust"
under Sections 856 through 860 of the Code.
(v) Other Property Matters. With respect to each Property owned or
operated by each Borrower and each Subsidiary thereof:
(i) Titles to Properties. Each Borrower and each Subsidiary
thereof has such title to each such Property owned by it as is
necessary or desirable to the conduct of its business and valid and
legal title to all of its personal property and assets, including, but
not limited to, those reflected on the balance sheets of the Borrowers
and their Subsidiaries delivered pursuant to Section 6.1(o), except
those which have been disposed of by the Borrowers or their
Subsidiaries subsequent to such date which dispositions have been in
the ordinary course of business or as otherwise expressly permitted
hereunder.
(ii) Liens. None of the properties and assets of any Borrower or
any Subsidiary thereof is subject to any Lien, except Liens permitted
pursuant to Section 10.3. No financing statement under the Uniform
Commercial Code of any state which names any Borrower or any
Subsidiary thereof or any of their respective trade names or divisions
as debtor and which has not been terminated, has been filed in any
state or other jurisdiction and no Borrower nor any Subsidiary thereof
has signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 10.3
hereof.
(iii) Title Insurance. (A) On the date of purchase of each such
Property, either (1) a title insurance policy was issued to the
applicable Borrower or one of its Subsidiaries in an amount not less
than the purchase price paid by such Borrower or such Subsidiary, or
(2) the applicable Borrower or one of its Subsidiaries had obtained a
commitment from a title insurance company to issue such title
insurance policy following such purchase date, had complied as of such
purchase date with each other condition precedent to the issuance of
such title policy and had paid the premium in respect of such policy,
and in each case neither the applicable Borrower nor any of its
Subsidiaries has taken any action that would cause such title
insurance policy not to be valid and in full force and effect or (B)
with respect to such Property, there exists an attorney's opinion of
title favorable to the applicable Borrower or one of its Subsidiaries,
given by an attorney licensed to practice law in the jurisdiction
where such Property is located.
(iv) Taxes, etc. Current. All material taxes, governmental
assessments, insurance premiums, and water, sewer and municipal
charges which previously became due and owing in respect of such real
property have been paid, or an escrow of funds in an amount sufficient
to cover such payments has been established.
43
(v) Hazard Insurance. Such Property is covered by hazard
insurance (and, if applicable, federal flood insurance) in an amount
at least equal to the greater of (i) one hundred percent (100%) of the
replacement cost of the improvements on such Property, and (ii) an
amount sufficient to avoid the application of any coinsurance clause
contained in the related insurance policy; such insurance requires
prior notice to the applicable Borrower of termination or
cancellation, and no such notice has been received.
(vi) Mechanics' Liens. Such Property is free and clear of any
material mechanics' and materialmen's liens or liens in the nature
thereof, except to the extent such liens would not have or would not
be reasonably expected to have a Material Adverse Effect, and no
rights are outstanding that under law could give rise to any such
liens, except those which are insured against by the title insurance
policies referred to in Section 6.2(v)(iii) above, or for work
conducted by the applicable Borrower or any of its Subsidiaries for
which payment is not yet due (or is being contested in good faith).
(vii) Improvements. None of the improvements in respect of such
Property lies outside of the boundaries and building restriction lines
of such Property in such a manner as to materially affect the value of
such improvements, no improvements on adjoining properties materially
encroach upon such Property, and no improvement located on or forming
part of such Property is in material violation of any applicable
zoning laws or ordinances.
(viii) Inspections and Physical Condition. As of the Closing
Date, such Property and any improvement or fixtures thereon are free
of structural defects or damage materially affecting their value, and
all building systems necessary for normal use of such Property are in
good working order subject to ordinary wear and tear.
(ix) Licenses and Permits. The Borrowers and their Subsidiaries
are in possession of all material certificates of occupancy or other
similar licenses, permits and other authorizations necessary and
required by Applicable Law for the use of such Property; and all such
certificates of occupancy or other similar licenses, permits and
authorizations are valid and in full force and effect.
(x) Condemnation Proceedings. As of the Closing Date, there is no
material proceeding pending or threatened for the total or partial
condemnation of such Property, or for the relocation of roadways
providing access to such Property.
(xi) Purchase Options. There are no outstanding options or rights
of first refusal materially affecting such Property.
(xii) Separate Lots. Such Property is a separate tax parcel,
assessed for real estate tax purposes separately from property owned
by any other Person, with such exceptions as would not have or would
not be reasonably expected to have a Material Adverse Effect.
(xiii) Ground Leases. Where the interest of any Borrower or any
Subsidiary
44
thereof in such Property exists under a ground lease, such ground
lease is in full force and effect and no material default has occurred
under such ground lease, nor is there any existing condition which,
but for the passage of time or the giving of notice (other than rent,
or other payments due but not yet delinquent), would result in a
material default under the terms of such ground lease.
(w) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of any Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter. No
document furnished or written statement made to the Administrative Agent or the
Lenders by any Borrower or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of any Borrower or any Subsidiary thereof or omits or will
omit to state a fact necessary in order to make the statements contained therein
not misleading. No Borrower is aware of any facts which it has not disclosed in
writing to the Administrative Agent having a Material Adverse Effect, or insofar
as any Borrower can now foresee, could reasonably be expected to have a Material
Adverse Effect.
SECTION 6.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VI 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 Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers will
furnish or cause to be furnished to the Administrative Agent and to the Lenders
at their respective addresses as set forth on Schedule 1.1(a), or such other
office as may be designated by the Administrative Agent and Lenders from time to
time:
45
SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Reports.
(i) Quarterly Financial Statements. As soon as practicable and in
any event within sixty (60) days after the end of each fiscal quarter,
an unaudited Consolidated balance sheet of the Borrowers and their
Subsidiaries as of the close of such fiscal quarter and unaudited
Consolidated statements of income, retained earnings and cash flows
for the fiscal quarter then ended and that portion of the Fiscal Year
then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and prepared by the Borrowers in accordance with
GAAP and, if applicable, containing disclosure of the effect on the
financial position or results of operations of any change in the
application of accounting principles and practices during the period,
and certified by the chief financial officer of Cornerstone, on behalf
of the Borrowers, to present fairly in all material respects the
financial condition of the Borrowers and their Subsidiaries as of
their respective dates and the results of operations of the Borrowers
and their Subsidiaries for the respective periods then ended, subject
to normal year end adjustments.
(ii) Quarterly Operating Information. As soon as practicable and
in any event within sixty (60) days after the end of each fiscal
quarter, (A) a schedule of the Properties summarizing total revenues,
expenses, Net Operating Income as to the Properties, Adjusted NOI as
to the Properties, and occupancy rates as of the last day of the
applicable fiscal quarter, (B) a listing of all Properties under
development showing the total capital obligation of the Borrowers and
their Subsidiaries and funds expended to date and showing the Total
Construction in Progress Value with respect thereto and (C) a summary
of purchases, sales or other dispositions by the Borrowers and their
Subsidiaries for the prior fiscal quarter.
(b) Annual Financial Reports.
(i) Annual Financial Statements. As soon as practicable and in
any event within one hundred and twenty (120) days after the end of
each Fiscal Year, an audited Consolidated balance sheet of the
Borrowers and their Subsidiaries as of the close of such Fiscal Year
and audited Consolidated statements of income, retained earnings and
cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form
the corresponding figures for the preceding Fiscal Year and prepared
by an independent certified public accounting firm acceptable to the
Administrative Agent in accordance with GAAP and, if applicable,
containing disclosure of the effect on the financial position or
results of operation of any change in the application of accounting
principles and practices during the year, and accompanied by a report
thereon by such certified public accountants that is not qualified
with respect to scope limitations imposed by any Borrower or any
Subsidiary thereof or with respect to accounting principles followed
by any Borrower or any Subsidiary thereof not in accordance with GAAP.
(ii) Annual Operating Information. As soon as practicable and in
any event
46
within one hundred and twenty (120) days after the end of each Fiscal
Year, (A) a detailed schedule for the Properties, including, without
limitation, project names and locations, leasing status, Net Operating
Income as to the Properties, Adjusted NOI as to the Properties, the
source of cash necessary to cover any operating deficit, the amount of
and the beneficiary of any cash distributions, and the amount invested
in or received from the properties, (B) a projected income statement
(including projected Capital Expenditures) for the next Fiscal Year
(four (4) fiscal quarter period) of the Borrowers and their
Subsidiaries for each Property, and (C) the annual report of the
Borrowers and their Subsidiaries.
(c) Annual Business Plan and Financial Projections. To the extent
prepared by the Borrowers and their Subsidiaries at any time, any business plan
or financial projections respecting the Borrowers and their Subsidiaries for any
ensuing time period, and including, without limitation, any of the following
information: any quarterly operating and capital budget, any projected income
statement, any statement of cash flows and balance sheet and/or any report
containing management's discussion and analysis of such projections.
(d) Securities Filings. Promptly upon any other transmission thereof,
copies of each periodic report (including the special reports on Form 8-K, the
annual reports on Form 10-K and the quarterly reports on Form 10-Q), proxy
statement or prospectus relating to any Borrower, any of its Subsidiaries or any
of their respective securities as shall be delivered to shareholders, any
securities exchange or the Commission.
SECTION 7.2 Officer's Compliance Certificate. As soon as practicable
and in any event within forty-five (45) days after the end of each fiscal
quarter, within one hundred and twenty (120) days after the end of each Fiscal
Year and at such other times as the Administrative Agent shall reasonably
request, a certificate of the chief financial officer or the treasurer of
Cornerstone, on behalf of the Borrowers, in the form of Exhibit E attached
hereto (an "Officer's Compliance Certificate").
SECTION 7.3 Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to any Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto; and
(b) Such other information regarding the operations, business affairs
and financial condition of any Borrower or any of its Subsidiaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.4 Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator
47
against or involving any Borrower or any Subsidiary thereof or any of their
respective properties, assets or businesses;
(b) any notice of any violation received by any Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such case
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result
in, a strike or other work action against any Borrower or any Subsidiary
thereof;
(d) any attachment, judgment, lien, levy or order exceeding $50,000
individually or $100,000 in the aggregate that may be assessed against or
threatened against any Borrower or any Subsidiary thereof;
(e) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any Material Contract to which any Borrower or
any Subsidiary thereof is a party or by which any Borrower or any Subsidiary
thereof or any of their respective properties may be bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by any
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by any Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) any Borrower obtaining knowledge or
reason to know that any Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA;
(g) any change in the Senior Unsecured Debt Rating of Cornerstone; and
(h) any event which makes any of the representations set forth in
Section 6.1 inaccurate in any respect.
SECTION 7.5 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of any Borrower
to the Administrative Agent or any Lender (other than financial forecasts)
whether pursuant to this Article VII or any other provision of this Agreement,
or any of the Security Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Administrative Agent or any Lender complete, true and accurate
knowledge of the subject matter based on the Borrowers' knowledge thereof.
48
ARTICLE III
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.11, the Borrowers will, and
will cause each of their Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 10.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction and
maintain the qualification of Cornerstone and each of its Subsidiaries, as
applicable, as "real estate investment trust" under Sections 856 through 860 of
the Code.
SECTION 8.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 8.3 Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter deliver
to the Administrative Agent upon its request a detailed list of the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the properties
and risks covered thereby.
SECTION 8.4 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that such Borrower or such Subsidiary may contest any item
described in Section 8.5(a) and (b) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP.
49
SECTION 8.6 Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without limiting the
generality of Section 8.6, (a) comply with, and ensure such compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws, and promptly comply with all lawful orders and directives of
any Governmental Authority regarding Environmental Laws, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of such Borrower or such Subsidiary, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, 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 8.8 Compliance with ERISA. In addition to and without limiting
the generality of Section 8.6, (a) comply with all applicable provisions of
ERISA and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans, (b) not take any action or fail to take action
the result of which could be a liability to the PBGC or to a Multiemployer Plan,
(c) not participate in any prohibited transaction that could result in any civil
penalty under ERISA or tax under the Code, (d) operate each Employee Benefit
Plan in such a manner that will not incur any tax liability under Section 4980B
of the Code or any liability to any qualified beneficiary as defined in Section
4980B of the Code and (e) furnish to the Administrative Agent upon the
Administrative Agent's request such additional information about any Employee
Benefit Plan as may be reasonably requested by the Administrative Agent.
SECTION 8.9 Compliance With Agreements. Comply in all respects with
each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business including, without
limitation, any Material Contract; provided, that such Borrower or such
Subsidiary may contest any such lease, agreement or other instrument in good
faith through applicable proceedings so long as adequate reserves are maintained
in accordance with GAAP.
SECTION 8.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date
(specifically the ownership and operation of Multifamily Properties).
50
SECTION 8.11 Visits and Inspections.
(a) Upon reasonable prior notice, permit representatives of the
Administrative Agent or any Lender, from time to time, to visit and inspect its
properties;
(b) Upon reasonable prior notice, permit representatives of the
Administrative Agent (on behalf of the Lenders), from time to time, to inspect,
audit and make extracts from its books, records and files, including, but not
limited to, management letters prepared by independent accountants; and
(c) Upon reasonable prior notice, permit representatives of the
Administrative Agent (on behalf of the Lenders), from time to time, to discuss
with its principal officers, and, together with representatives of the
Borrowers, its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.
SECTION 8.12 Year 2000 Compatibility. Take all action necessary to
ensure that key operational software of the computer based systems of such
Borrower and its Subsidiaries are able to operate and effectively process data
including dates on and after January 1, 2000. At the request of the
Administrative Agent, each Borrower shall provide to the Administrative Agent
assurance acceptable to the Administrative Agent of the Year 2000 compatibility
of such Borrower and its Subsidiaries.
SECTION 8.13 Surveys. Obtain for each Project acquired by any Borrower
or any Subsidiary thereof after the Closing Date a current survey prepared by a
certified land surveyor showing the location of actual improvements as of the
date of acquisition of the Project, containing only those matters acceptable to
the Administrative Agent and containing a certification that the Project to be
financed with the Loans is not located in a flood hazard area.
SECTION 8.14 Title Insurance. Obtain for all Projects acquired by any
Borrower or any Subsidiary thereof after the Closing Date paid title insurance
policies in accordance with the applicable title insurance commitment approved
by the Administrative Agent in connection with the requisition of the Loans.
SECTION 8.15 Equity Issuance. Promptly report to the Administrative
Agent all Net Equity Proceeds received from any Equity Issuance by any Borrower
or any of its Subsidiaries and verify to the satisfaction of the Administrative
Agent the amount of such Net Equity Proceeds.
SECTION 8.16 Upstream of Dividends. Cause all Dividends payable by any
Subsidiary of any Borrower to be transferred to such Borrower as promptly as
possible.
SECTION 8.17 Additional Borrowers. Upon the creation of any Subsidiary
of any Borrower that is permitted by this Agreement, cause to be executed and
delivered to the Administrative Agent (a) a Joinder Agreement duly executed by
such Subsidiary and each other document and agreement referred to therein such
that such Subsidiary shall become a borrower hereunder and be bound by all of
the terms and conditions hereof, (b) replacement Notes duly
51
executed by such Subsidiary and each other Borrower then party hereto, (c) such
closing documents and certificates required of each of the Borrowers pursuant to
Section 5.2(b) and (d) such other documents reasonably requested by the
Administrative Agent consistent with the terms of this Agreement in order that
such Subsidiary shall become bound by all of the terms, covenants and agreements
contained in the Loan Documents. Upon satisfaction of the conditions set forth
in this Section 8.17, each Subsidiary shall become a Borrower hereunder and the
other Loan Documents on a joint and several basis to the same extent as if such
Subsidiary had been a party hereto and thereto on the Closing Date.
SECTION 8.18 Securities Exchange Listing. Take all action necessary to
ensure that Cornerstone maintains a listing (including, without limitation, all
authorizations required in order to be listed) on the New York Stock Exchange,
the American Stock Exchange, the National Market System of the Nasdaq Stock
Market or any other national securities exchange that has listing standards
determined by the Administrative Agent to be substantially similar to the
listing standards applicable to the aforementioned exchanges.
SECTION 8.19 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the
Administrative Agent and the Lenders their respective rights under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers and
their Subsidiaries (or, as applicable, their Wholly-Owned Subsidiaries) on a
Consolidated basis will not:
SECTION 9.1 Leverage Ratio. As of any fiscal quarter end, permit the
ratio of (a) Total Funded Debt as of such date to (b) Total Implied
Capitalization Value for such fiscal quarter to exceed 0.45 to 1.0.
SECTION 9.2 Fixed Charge Coverage Ratio. As of any fiscal quarter end,
permit the ratio of (a) Adjusted EBITDA for the period of four (4) consecutive
fiscal quarters ending on such fiscal quarter end to (b) Fixed Charges for such
period of four (4) consecutive fiscal quarters, to be less than 2.00 to 1.00.
SECTION 9.3 Minimum Shareholder's Equity. As of any fiscal quarter end,
permit Shareholder's Equity to be less than the sum of (a) $200,000,000 plus (b)
seventy-five percent (75%) of the Net Equity Proceeds from any equity offering
after March 1, 1997.
52
SECTION 9.4 Ratios of Total Secured Debt to Total Implied
Capitalization Value. As of any fiscal quarter end, permit the ratio of (a)
Total Secured Debt as of such date to (b) Total Implied Capitalization Value for
such fiscal quarter to exceed 0.20 to 1.0; provided that the percentage of Total
Secured Debt permitted hereunder which is recourse to any Borrower or any
Subsidiary thereof shall at no time exceed fifty percent (50%) of the maximum
allowable amount of Total Secured Debt.
SECTION 9.5 Ratio of Adjusted Unencumbered Asset Value to Total
Unsecured Debt. As of any fiscal quarter end, permit the ratio of (a) the
Adjusted Unencumbered Asset Value for such fiscal quarter to (b) Total Unsecured
Debt as of such date to be less than 2.00 to 1.0.
SECTION 9.6 Adjusted Unencumbered Asset Cash Flow Ratio. As of any
fiscal quarter end, permit the ratio of (a) the Adjusted Unencumbered Asset Cash
Flow for the period of four (4) consecutive fiscal quarters as of such fiscal
quarter end to (b) Interest Expense on Total Unsecured Debt for such period of
four (4) consecutive fiscal quarters to be less than 2.00 to 1.0.
SECTION 9.7 Ratio of Total Construction in Progress Value to Total
Implied Capitalization Value. As of any fiscal quarter end, permit the ratio of
(a) Total Construction in Progress Value as of such date to (b) Total Implied
Capitalization Value for such fiscal quarter to exceed 0.10 to 1.0.
SECTION 9.8 Ratio of Dividends to Funds from Operations. As of any
fiscal quarter end, permit the ratio of (a) Dividends paid during the period of
four (4) consecutive fiscal quarters as of such fiscal quarter end to (b) Funds
from Operations for such period of four (4) consecutive fiscal quarters to
exceed 0.95 to 1.0.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers have not
and will not, and will not permit any of their Subsidiaries to:
SECTION 10.1 Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to the
Administrative Agent;
(c) Debt existing on the Closing Date and not otherwise permitted under
this Section 10.1, as set forth on Schedule 6.1(r) and the renewal and
refinancing (but not the increase) thereof;
53
(d) Debt consisting of Contingent Obligations permitted by Section
10.2;
(e) Debt incurred in connection with trade payables arising in the
ordinary course of business;
(f) Debt incurred in connection with the $5,000,000 cash management
facility between Cornerstone and First Union;
(g) purchase money Debt of Cornerstone in connection with the Lexington
Apartments in Richmond, Virginia (including the letter of credit issued by First
Union with respect thereto);
(h) Debt not otherwise permitted by this Section 10.1; provided that
(i) no Default or Event of Default shall then have occurred and be continuing or
occasioned thereby, (ii) for all such Debt with a scheduled maturity date prior
to the Maturity Date the aggregate principal balance thereof shall not exceed
$30,000,000, (iii) for all such Debt with a scheduled maturity date on or after
the Maturity Date, all such Debt will bear interest at a fixed rate and not at a
variable rate, and (iv) such Debt shall not be incurred pursuant to a revolving
credit facility or any other revolving line of credit;
provided, that none of the Debt permitted to be incurred by this Section 10.1
shall restrict, limit or otherwise encumber (by covenant or otherwise) the
ability of any Subsidiary of any Borrower to make any payment to such Borrower
or any of its Subsidiaries (in the form of Dividends, intercompany advances or
otherwise) for the purpose of enabling such Borrower to pay the Obligations.
SECTION 10.2 Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except Contingent
Obligations in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders.
SECTION 10.3 Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in
54
connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) Liens securing Debt permitted under Section 10.1(g) of this
Agreement;
(g) Liens arising under mortgages securing Debt permitted under Section
10.1 of this Agreement; and
(h) Liens not otherwise permitted by this Section 10.3 and in existence
on the Closing Date and described on Schedule 10.3.
SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including, without limitation, the creation or capitalization of any
Subsidiary), evidence of Debt or other obligation or security, substantially all
or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of credit
(which shall not be deemed to include delinquent rental payments being
diligently pursued by the Borrowers in the ordinary course of business) to, or
any investment in cash or by delivery of property in, any Person, or enter into,
directly or indirectly, any commitment or option in respect of the foregoing
except:
(a) investments in Subsidiaries existing on the Closing Date and the
other existing loans, advances and investments described on Schedule 10.4;
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 120 days from the date of acquisition thereof, (ii) commercial
paper maturing no more than 120 days from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's or
Moody's, (iii) certificates of deposit maturing no more than 120 days from the
date of creation thereof issued by commercial banks incorporated under the laws
of the United States of America, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency; provided, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, or (iv) time deposits maturing no more than 30 days from the date of
creation thereof with commercial banks or savings banks or savings and loan
associations each having membership either in the FDIC or the deposits of which
are insured by the FDIC and in amounts not exceeding the maximum amounts of
55
insurance thereunder;
(c) investments by any Borrower or any Subsidiary in the form of
acquisitions of all or substantially all of the business or a line of business
(whether by the acquisition of capital stock, assets or any combination thereof)
of any other Person if such acquisition has been previously approved in writing
by the Required Lenders;
(d) investments by any Borrower or any Subsidiary in joint ventures or
partnerships in an aggregate amount not to exceed five percent (5%) of the Total
Implied Capitalization Value on any date of determination; and
(e) investments by any Borrower or any Subsidiary in Properties (other
than Multifamily Properties as permitted hereunder) and in an aggregate amount
(including, without limitation, the aggregate amount of any investments incurred
under Section 10.4(d) and (f)) not to exceed ten percent (10%) of the Total
Implied Capitalization Value on any date of determination;
(f) investments by Cornerstone in Apple Residential Income Trust, Inc.
in an aggregate amount (including, without limitation, the aggregate amount of
any investments incurred under Sections 10.4(d) and (e)) not to exceed ten
percent (10%) of the Total Implied Capitalization Value on any date of
determination.
Notwithstanding the foregoing, to the extent Cornerstone has received equity
proceeds which it reasonably determines it cannot immediately reinvest in
Multifamily Properties, Cornerstone may make temporary investments not otherwise
permitted by this Section 10.4 upon the approval of the Administrative Agent and
all of the Lenders. The approval of such investment, the amount of such
investment and the permitted time period related thereto shall be determined in
discretion of the Administrative Agent and all of the Lenders.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except:
(a) any Borrower may merge with any other Borrower;
(b) any Borrower may merge into the Person such Borrower was formed to
acquire in connection with an acquisition permitted by Section 10.4(c);
(c) any Borrower may wind-up into any other Borrower; and
(d) A Subsidiary of Cornerstone may merge with its Affiliate, Apple
Residential Income Trust, at any time within sixty (60) days following the
Closing Date, provided that (i) said Cornerstone Subsidiary shall be the
surviving entity following such merger, (ii) said surviving entity and each
Subsidiary of Apple Residential Income Trust in existence on the date of such
merger shall become an Additional Borrower and shall execute and deliver to the
Administrative Agent all documents, instruments and agreements required to be
executed and delivered pursuant to the provisions of Section 8.17 above to
evidence its inclusion as a Borrower under this Agreement, and
56
(iii) the consummation of such merger and the existence of such merged entity
shall not cause an Event of Default to occur or exist, including without
limitation by reason of a default under any covenant, condition or agreement
contained in this Agreement.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of obsolete assets no longer used or usable in the
business of any Borrower or any of its Subsidiaries;
(b) the transfer of assets to any Borrower pursuant to Section 10.5(c);
(c) the transfer of assets from any Borrower to any other Borrower; and
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof.
SECTION 10.7 Limitations on Dividends and Distributions. Declare or pay
any Dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares of
its capital stock, or make any change in its capital structure; provided that:
(a) any Borrower or any Subsidiary may pay Dividends in shares of its
own capital stock (provided that no Default or Event of Default under Sections
11.1(a), (b), (j) or (k) shall then have occurred and be continuing or
occasioned thereby);
(b) any Borrower which is a real estate investment trust may pay such
Dividends as are necessary to maintain its status as a real estate investment
trust (provided that no Default or Event of Default under Sections 11.1(a), (b),
(j) or (k) shall then have occurred and be continuing or occasioned thereby);
(c) any Borrower which is a real estate investment trust may pay
Dividends in addition to those Dividends permitted by Section 10.7(b) to the
extent not prohibited by Section 9.8 hereof (provided that no Default or Event
of Default under Sections 11.1(a), (b), (j) or (k) shall then have occurred and
be continuing or occasioned thereby); and
(d) any Subsidiary may pay cash Dividends to any Borrower.
SECTION 10.8 Limitations on Exchange and Issuance of Capital Stock.
Issue, sell or otherwise dispose of any class or series of capital stock that,
by its terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would be,
(a) convertible or exchangeable into Debt or (b) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or
57
upon the happening of an event or passage of time would have, a redemption or
similar payment due.
SECTION 10.9 Transactions with Affiliates. Directly or indirectly: (a)
make any loan or advance to, or purchase or assume any note or other obligation
to or from, any of its officers, directors, shareholders or other Affiliates, or
to or from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates, or subcontract any operations to any of its
Affiliates (except loans or advances to any of its officers, directors or other
employees approved by the Board of Directors in the ordinary course of
business), or (b) enter into, or be a party to, any transaction with any of its
Affiliates, except pursuant to the reasonable requirements of its business and
upon fair and reasonable terms that are fully disclosed to and approved in
writing by the Required Lenders and are no less favorable to it than it would
obtain in a comparable arm's length transaction with a Person not its Affiliate.
SECTION 10.10 Certain Accounting Changes. Change its Fiscal Year end,
or make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.11 Amendments; Payments and Prepayments of Subordinated
Debt. Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or redeem or acquire for value
(including without limitation by way of depositing with any trustee with respect
thereto money or securities before due for the purpose of paying when due) any
Subordinated Debt, except where any such amendment, modification, cancellation
or payment would not cause a Default or Event of Default.
SECTION 10.12 Status as REIT. (a) Revoke its election to be a "real
estate investment trust" within the meaning of Section 856 of the Code, (b) take
or fail to take any action that will cause such election to be terminated or to
cease to be valid at any time, (c) incur liability for any excise tax under
Section 4981 of the Code or (d) incur liability for any prohibited transaction
under Section 857(b)(6) of the Code.
SECTION 10.13 Property Acquisition Policy.
(a) Acquire any Property unless the representations contained in
Section 6.1(v) hereof, if given as of the date of such acquisition, would be
true and correct with respect to such Property.
(b) Purchase any new Property unless for each such Property it shall
first:
(i) conduct such investigations and examinations with respect to
such Property as are customarily made by the Borrowers as of the date
hereof; and
(ii) conduct a Phase I environmental review (a "Phase I") of such
Property and the surrounding area and perform and document in writing
all further investigation necessary or appropriate in light of the
findings of such Phase I and determine that no Hazardous Materials
exist in such area that has the potential to result in any material
adverse effect on the condition (financial or otherwise), operations,
assets, businesses, properties or
58
prospects of any Borrower; provided that if a Phase I cannot feasibly
be conducted due to time constraints dictated by the terms of the
proposed Property, the Borrowers shall perform computer database
searches to confirm the absence of any Environmental Condition, and
shall perform as much of the investigation and analysis which would be
part of a Phase I as is possible prior to the closing of the
transaction related to the Property, and will obtain a full Phase I
within sixty (60) days after the purchase of the Property has been
effected. Each Phase I will be available for inspection by the
Administrative Agent or any Lender. At no time shall the aggregate
book value of all Properties with respect to which there existed at
the time of purchase a Hazardous Material on such Property as
described above exceed five percent (5%) of the aggregate book value
of all the Properties owned by the Borrowers and their Subsidiaries.
SECTION 10.14 Restrictive Agreements. Enter into any Debt which
contains any negative pledge on assets or any covenants more restrictive than
the provisions of Articles VIII, IX and X hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligation. Any Borrower shall default in any payment of principal of any Loan,
Note or Reimbursement Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).
(b) Other Payment Default. Any Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation 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 any Borrower or any Subsidiary thereof 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 Certain Covenants. Any Borrower shall
default in the performance or observance of any covenant or agreement contained
in Sections 7.4(e) or Articles IX or X of this Agreement.
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(e) Default in Performance of Other Covenants and Conditions. Any
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
11.1) 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 Cornerstone, on
behalf of the Borrowers, by the Administrative Agent.
(f) Hedging Agreement. Any termination payment shall be due by any
Borrower under any Hedging Agreement and such amount is not paid within ten (10)
Business Days of the due date thereof.
(g) Debt Cross-Default. Any Borrower or any Subsidiary thereof shall
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which Debt is in
excess of $100,000 beyond the period of grace if any, provided in the instrument
or agreement under which such Debt was created, or (ii) default in the
observance or performance of any other agreement or condition relating to any
Debt (other than the Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $100,000 or contained in any
instrument or agreement evidencing, securing or relating thereto or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
(h) Other Cross-Defaults. Any Borrower or any Subsidiary thereof shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract unless, but only as long as,
the existence of any such default is being contested by such Borrower or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of such Borrower or such
Subsidiary to the extent required by GAAP.
(i) Change in Control. (i) Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended)
shall obtain ownership or control in one or more series of transactions of more
than ten percent (10%) of the common stock or ten percent (10%) of the voting
power of Cornerstone entitled to vote in the election of members of the board of
directors of Cornerstone or (ii) Glade M. Knight, S.J. Olander or Debra Jones
ceases to continue to hold his or her current office or continue with management
responsibilities substantially similar to those existing on the Closing Date and
a replacement for such Person reasonably satisfactory to the Administrative
Agent and possessing substantially similar qualifications and reputation to the
Person being replaced is not employed by the Borrowers within three (3) months
after such Person ceases to hold such office or continue to have such management
responsibilities (any such event, a "Change in Control").
(j) Voluntary Bankruptcy Proceeding. Any Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii)
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consent to or fail to contest in a timely and appropriate manner any petition
filed against it in an involuntary case under such bankruptcy laws or other
laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against any Borrower or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for any Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any provision of this Agreement or of any
other Loan Document shall for any reason cease to be valid and binding on any
Borrower or any Subsidiary party thereto or any such Person shall so state in
writing, or this Agreement or any other Loan Document shall for any reason cease
to create a valid and perfected first priority Lien on, or security interest in,
any of the collateral purported to be covered thereby, in each case other than
in accordance with the express terms hereof or thereof.
(m) Termination Event. The occurrence of any of the following events:
(i) any Borrower or any ERISA Affiliate fails to make full payment when due of
all amounts which, under the provisions of any Pension Plan or Section 412 of
the Code, any Borrower or any ERISA Affiliate is required to pay as
contributions thereto, (ii) an accumulated funding deficiency in excess of
$100,000 occurs or exists, whether or not waived, with respect to any Pension
Plan, (iii) a Termination Event or (iv) any Borrower or any ERISA Affiliate as
employers under one or more Multiemployer Plan makes a complete or partial
withdrawal from any such Multiemployer Plan and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding
$100,000.
(n) Judgment. A judgment or order for the payment of money which causes
the aggregate amount of all such judgments to exceed $100,000 in any Fiscal Year
shall be entered against any Borrower or any Subsidiary thereof by any court and
such judgment or order shall continue undischarged or unstayed for a period of
thirty (30) days.
SECTION 11.2 Remedies. Upon the occurrence of an Event of Default, with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
Cornerstone, on behalf of the Borrowers:
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(a) Acceleration; Termination of Facilities. Declare the principal of
and interest on the Loans, the Notes and the Reimbursement Obligation at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(including, without limitation, all L/C Obligations, whether or not the
beneficiaries of the outstanding Letters of Credit shall have presented the
documents required thereunder) and all other Obligations, to be forthwith due
and payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding, and terminate the Credit Facility and any right of any
Borrower to request borrowings or Letters of Credit thereunder; provided, that
upon the occurrence of an Event of Default specified in Section 11.1(j) or (k),
the Credit Facility shall be automatically terminated and all Obligations shall
automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, require the Borrowers at such
time to deposit in a cash collateral account opened by the Administrative Agent
an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrowers.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
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ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents and each such Lender irrevocably
authorizes First Union as Administrative Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and such
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent shall administer the Loans in the
same manner that the Administrative Agent administers loans made for its own
account. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Administrative 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 Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent.
SECTION 12.2 Delegation of Duties. The Administrative Agent may execute
any of its respective duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.
SECTION 12.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries 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 with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Borrower or any Subsidiary thereof or
any officer thereof contained in this Agreement or the other Loan Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of any Borrower or any Subsidiary
thereof to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
any Borrower or any Subsidiary thereof (except as the Administrative Agent (on
behalf of the Lenders) may be directed by the Required Lenders to take those
actions permitted under Section 8.11(b) or (c)).
SECTION 12.4 Reliance by the Administrative Agent. The Administrative
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
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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 the Borrowers), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless such
Note shall have been transferred in accordance with Section 13.10 hereof. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders (or, when expressly
required hereby or by the relevant other Loan Document, all the 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 except for its own gross
negligence or willful misconduct. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all the Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
SECTION 12.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
SECTION 12.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of any Borrower or any Subsidiary thereof,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
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, operations, property, financial and other condition and
creditworthiness of the Borrowers and their Subsidiaries and made its own
decision to make its Loans and issue or participate in Letter of Credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative 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 Agreement and the other
Loan Documents, and to make
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such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers and their Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of any Borrower or
any Subsidiary thereof which may come into the possession of the Administrative
Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to the respective amounts of their Commitment Percentages,
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 the payment of the Notes or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan 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 the
Administrative 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 resulting solely from the Administrative
Agent's bad faith, gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.
SECTION 12.8 The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrowers as though the Administrative Agent were not an Administrative
Agent hereunder. With respect to any Loans made or renewed by it and any Note
issued to it and with respect to any Letter of Credit issued by it or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
SECTION 12.9 Resignation of the Administrative Agent; Successor
Administrative Agent. Subject to the appointment and acceptance of a successor
as provided below, (i) the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and Cornerstone, on behalf of the Borrowers, and
(ii) in the event of a judicial determination of gross negligence or willful
misconduct with respect to the manner in which the Administrative Agent has
carried out its duties hereunder, the Administrative Agent may be removed as
Administrative Agent under the Loan Documents at any time after such
determination by the Required Lenders upon at least thirty (30) Business Days'
prior notice. Upon any such resignation or removal, the Required Lenders, with
the consent of the Borrowers
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(such consent not to be unreasonably withheld) unless there then exists a
Default or Event of Default, shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the Administrative Agent's giving of notice of
resignation or the removal of the Administrative Agent by the Required Lenders,
then the Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 12.9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to any Borrower: Cornerstone Realty Income Trust, Inc.
306 East Main Street
Richmond, Virginia 23219
Attention: S.J. Olander
Telephone No.: (804) 643-1761
Telecopy No.: (804) 782-9302
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With copies to: McGuire Woods Battle & Boothe, LLP
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
Attention: Martin Richards
Telephone No.: (804) 775-1029
Telecopy No.: (804) 775-1061
If to First Union First Union National Bank
as Administrative Agent: One First Union Center, DC-6
301 South College Street
Charlotte, North Carolina 28288-0166
Attention: Donna Hemenway
Telephone No.: (704) 383-8763
Telecopy No.: (704) 383-7989
With copies to: First Union National Bank
Real Estate Capital Markets Group
One First Union Center, DC-6
301 S. College Street
Charlotte, NC 28288-0735
Attention: John A. Schissel
Telephone No.: (704) 383-1967
Telecopy No.: (704) 383-6205
If to any Lender: To the Address set forth on Schedule 1.1(a) hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrowers and the Lenders, as the Administrative Agent's Office referred to
herein, to which payments due are to be made and at which Loans will be
disbursed and Letters of Credit issued.
SECTION 13.2 Expenses; Indemnity. The Borrowers will (a) pay all
out-of-pocket expenses of the Administrative Agent 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 syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent, (ii)
the preparation, execution and delivery of any waiver, amendment or consent by
the Administrative Agent or the Lenders relating to this Agreement or any other
Loan Document, including without limitation reasonable fees and disbursements of
counsel for the Administrative Agent, and (iii) the exercise and enforcement of
any rights and remedies of the Administrative Agent and the Lenders under the
Credit Facility, including consulting with appraisers, accountants, engineers,
attorneys and other Persons concerning the nature, scope or value of any right
or remedy of the Administrative Agent or any Lender 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, (b) pay all out-of-pocket expenses each Lender in connection with the
enforcement of any rights and remedies of the Administrative Agent and the
Lenders under the Credit Facility, including consulting with appraisers,
accountants, engineers, attorneys and other Persons concerning the nature, scope
or value of any right or remedy of the Administrative Agent or any Lender
hereunder or under any other Loan Document or any factual matters in connection
therewith, which expenses shall include, without limitation, the reasonable
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fees and disbursements of such Persons, and (c) defend, indemnify and hold
harmless the Administrative Agent and the Lenders, and their respective 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 Administrative
Agent or any Lender is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with the Agreement, any other Loan
Document or the Loans, including without limitation reasonable attorney's and
consultant's 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 13.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 13.10 are hereby authorized by the Borrowers at any time or from
time to time, without notice to any 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
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrowers against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2 and although such Obligations shall be contingent or unmatured.
SECTION 13.4 Governing Law. This Agreement, the Notes 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 State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 13.5 Consent to Jurisdiction. Each Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. Each Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf
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of itself or its property, in the manner specified in Section 13.1. Nothing in
this Section 13.5 shall affect the right of the Administrative Agent or any
Lender to serve legal process in any other manner permitted by Applicable Law or
affect the right of the Administrative Agent or any Lender to bring any action
or proceeding against any Borrower or its properties in the courts of any other
jurisdictions.
SECTION 13.6 Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any other
Loan Documents ("Disputes"), between or among parties to the Notes or any other
Loan Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
Loan Documents executed in the future, or claims concerning any aspect of the
past, present or future relationships arising out of or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE ADMINISTRATIVE
AGENT, EACH LENDER AND EACH BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a
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judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.
SECTION 13.7 Reversal of Payments. To the extent any Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 13.8 Injunctive Relief; Punitive Damages.
(a) Each Borrower recognizes that, in the event any Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, each Borrower agrees that the Lenders, at the Lenders' option, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(b) The Administrative Agent, the Lenders and each Borrower (on behalf
of itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
(c) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
70
SECTION 13.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by any
Borrower or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent and the
Required Lenders to the contrary agreed to by Cornerstone, on behalf of the
Borrowers, be performed in accordance with GAAP as in effect on the Closing
Date. In the event that changes in GAAP shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrowers' certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrowers and
the Lenders shall have amended this Agreement to the extent necessary to reflect
any such changes in the financial covenants and other terms and conditions of
this Agreement.
SECTION 13.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrowers shall not assign or transfer any of their rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of the
Administrative Agent, which consent shall not be unreasonably withheld, assign
to one or more Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Extensions of Credit at the time owing to it and the Notes held
by it); provided that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Commitment is to
be assigned, (A) the Commitment of the Assigning Lender after any such
assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000 (or a whole multiple of
$5,000,000 in excess thereof) and (B) the Commitment so assigned shall
not be less than $10,000,000 (or a whole multiple of $5,000,000 in
excess thereof);
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance in the form of Exhibit F
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
Borrowers, require any Borrower to file a registration statement with
the Securities and Exchange Commission
71
or apply to or qualify the Loans or the Notes under the blue sky laws
of any state;
(v) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $3,000 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon any assignment by a Lender to an Affiliate thereof permitted
hereunder;
(vi) no Lender may assign all or a portion of its interests,
rights and obligations under this Agreement to more than one (1)
Affiliate of such Lender; and
(vii) the Administrative Agent, in its capacity as a Lender,
shall not effect any assignment of its Commitment if, after giving
effect thereto, the amount of its Commitment would be less than the
amount of the Commitment of any other Lender.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Cornerstone, on behalf of the Borrowers, or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit F:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and Cornerstone,
on behalf of the Borrowers; and
72
(vi) promptly deliver a copy of such Assignment and Acceptance to
Cornerstone, on behalf of the Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to Cornerstone, on behalf of the
Borrowers.
(f) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less than
$10,000,000 (or a whole multiple of $5,000,000 in excess thereof);
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement;
(v) the Borrowers, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan or Reimbursement Obligation, extend the term or increase
the amount of the Commitment, reduce the amount of any fees to which
such participant is entitled, extend any scheduled payment date for
principal of any Loan or, except as expressly contemplated hereby or
thereby, release substantially all of any collateral securing the
Credit Facility; and
(vii) any such disposition shall not, without the consent of the
Borrowers, require any Borrower to file a registration statement with
the Securities and Exchange Commission to apply to qualify the Loans
or the Notes under the blue sky law of any state.
73
(g) Disclosure of Information; Confidentiality. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrowers obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.10, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, that prior to any such disclosure, each such assignee, proposed
assignee, participant or proposed participant shall agree with the Borrowers or
such Lender to preserve the confidentiality of any confidential information
relating to the Borrowers received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.11 Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and delivered to the Administrative
Agent and, in the case of an amendment, signed by each Borrower; provided that,
no amendment, waiver or consent shall (a) increase the amount or extend the time
of the obligation of the Lenders to make Loans or issue or participate in
Letters of Credit (including, without limitation, pursuant to Section 2.6 except
as otherwise set forth in such Section 2.6), (b) extend the originally scheduled
time or times of payment of the principal of any Loan or Reimbursement
Obligation or the time or times of payment of interest on any Loan or
Reimbursement Obligation, (c) reduce the rate of interest or fees payable on any
Loan or Reimbursement Obligation (except as the rate of interest may fluctuate
pursuant to the provisions of Section 4.1), (d) permit any subordination of the
principal or interest on any Loan or Reimbursement Obligation, (e) release any
material portion of any collateral securing the Credit Facility, (f) amend or
waive the provisions of Section 8.17, (g) amend or waive the provisions of
Section 9.1, (h) amend or waive the provisions of Section 10.5, (i) amend the
provisions of Section 11.1 or the definition of Default or Event of Default, (j)
amend the provisions of the last sentence of Section 10.4 or (k) amend the
provisions of this Section 13.11 or the definition of Required Lenders, without
the prior written consent of each Lender; provided, further, that the Borrowers
may, subject to the terms and conditions of Section 2.7 and upon the consent of
the Administrative Agent (which consent shall not be unreasonably withheld),
increase the Aggregate Commitment either by designating a lender not theretofore
an existing Lender to become a Lender or by agreeing with an existing Lender
that such Lender's Commitment shall be increased, without the further consent of
each other Lender (such consent being hereby deemed to be granted by each other
such Lender upon execution of this Agreement). In addition, no amendment, waiver
or consent to the provisions of (a) Article XII shall be made without the
written consent of the Administrative Agent and (b) Article III without the
written consent of the Issuing Lender.
74
SECTION 13.12 Performance of Duties. The Borrowers' obligations under
this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense.
SECTION 13.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any 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 Credit Facility has not been
terminated.
SECTION 13.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 13.15 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 13.16 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 13.17 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 13.18 Joint and Several Liability. The Obligations of the
Borrowers under this Agreement and the Notes shall be joint and several.
References to the Borrowers with respect to the Obligations or any portion
thereof shall mean each Borrower on a joint and several basis.
SECTION 13.19 Cornerstone as Administrative Agent for Borrowers. Each
Borrower hereby irrevocably appoints and authorizes Cornerstone (i) to provide
the Administrative Agent with all notices with respect to Loans obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action on behalf of the Borrowers as Cornerstone
deems appropriate on its behalf to obtain Loans and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement.
75
SECTION 13.20 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.
[Signature pages to follow]
76
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.
BORROWERS:
CORNERSTONE REALTY INCOME TRUST, INC.
By: /s/ S. J. Olander, Jr.
-----------------------
Name: Stanley J. Olander, Jr.
-----------------------
Title: Chief Financial Officer
-----------------------
CRIT-NC, LLC
By: CORNERSTONE REALTY INCOME TRUST, INC.,
its sole Member/Manager
By: /s/ S. J. Olander, Jr.
-----------------------
Name: Stanley J. Olander, Jr.
-----------------------
Title: Chief Financial Officer
-----------------------
CORNERSTONE REIT LIMITED PARTNERSHIP
By: CORNERSTONE REALTY INCOME TRUST, INC.,
its General Partner
By: /s/ S. J. Olander, Jr.
-----------------------
Name: Stanley J. Olander, Jr.
-----------------------
Title: Chief Financial Officer
-----------------------
ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: /s/ John A. Schissel
-----------------------
Name: John A. Schissel
-----------------------
Title: Director
-----------------------
SYNDICATION AGENT:
FLEET NATIONAL BANK, as Syndication Agent
By: /s/ James B. McLaughlin
-----------------------
Name: James B. McLaughlin
-----------------------
Title: Vice President
-----------------------
LENDERS:
FIRST UNION NATIONAL BANK, as Lender
By: /s/ John A. Schissel
-----------------------
Name: John A. Schissel
-----------------------
Title: Director
-----------------------
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ Richard V. Thompson
-----------------------
Name: Richard V. Thompson
-----------------------
Title: Senior Vice President
-----------------------
CRESTAR BANK
By: /s/ Nancy B. Richards
-----------------------
Name: Nancy B. Richards
-----------------------
Title: Vice President
-----------------------
FLEET NATIONAL BANK
By: /s/ James B. McLaughlin
-----------------------
Name: James B. McLaughlin
-----------------------
Title: Vice President
-----------------------
SCHEDULE 1.1(a): LENDERS AND COMMITMENTS
COMMITMENT
AND COMMITMENT
LENDER PERCENTAGE
- ------ ------------
First Union National Bank $85,000,000
One First Union Center, DC-6 48.57%
301 South College Street
Charlotte, North Carolina 28288-0166
Attention: John Schissel
Telephone No.: (704) 383-8763
Telecopy No.: (704) 383-7989
Crestar Bank $25,000,000
8245 Boone Boulevard, Ste. 820 14.29%
Vienna, VA 22182
Attention: Nancy B. Richards
Telephone No.: (703) 902-9039
Telecopy No.: (703) 902-9245
Fleet National Bank $35,000,000
111 Westminster Street, RI MO 215 20.00%
8th Floor
Providence, RI 02903
Attention: Jim McLaughlin
Vice President
Telephone No.: (401) 278-3247
Telecopy No.: (401) 278-5166
Guaranty Federal Bank, F.S.B. $30,000,000
8333 Douglas Avenue, Suite 1000 17.14%
Dallas, TX 75225
Attention: Roger Davis
Telephone No.: (214) 360-2849
Telecopy No.: (214) 360-1661
LIST OF EXHIBITS
Exhibit A Revolving Credit Note
Exhibit B Notice of Borrowing
Exhibit C Notice of Prepayment
Exhibit D Notice of Conversion/Continuation
Exhibit E Officer's Compliance Certificate
Schedule 1
Exhibit F Assignment and Acceptance
Schedule I
Exhibit G Notice of Account Designation
Exhibit H Form of Lender Addition and Acknowledgement Agreement
Schedule A-1
Schedule A-2
Schedule 1
Exhibit I Form of Joinder Agreement
EXHIBIT A
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank
as Syndication Agent
REPLACEMENT REVOLVING CREDIT NOTE
$___________ __________, ____
FOR VALUE RECEIVED, the undersigned, CORNERSTONE REALTY INCOME TRUST,
INC., a corporation organized under the laws of Virginia ("Cornerstone"),
CRIT-NC, LLC, a Virginia limited liability company and a Subsidiary of
Cornerstone ("CRIT-NC"), CORNERSTONE REIT LIMITED PARTNERSHIP, a Virginia
limited partnership and a Subsidiary of Cornerstone ("Cornerstone REIT L.P.",
and together with CRIT-NC and Cornerstone, the "Borrowers"), hereby jointly and
severally promise to pay to the order of ____________________ (the "Bank"), at
the times, at the place and in the manner provided in the Credit Agreement
hereinafter referred to, the principal sum of up to ____________________ Dollars
($__________), or, if less, the aggregate unpaid principal amount of all Loans
disbursed by the Bank under the 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 IV of the Credit Agreement.
This Note is the Note referred to in, and is entitled to the benefits
of that certain Amended and Restated Credit Agreement dated as of July ____,
1999, as amended, restated, supplemented or otherwise modified ("Credit
Agreement"), by and among the Borrowers, each Additional Borrower that may
become party thereto, the lenders (including the Bank) party thereto (the
"Lenders"), First Union National Bank, as Administrative Agent (the
"Administrative Agent") and Fleet National Bank, as Syndication Agent (the
"Syndication Agent") . The 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.
A-1
The Borrowers agree to pay on demand all 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 is being given in renewal, extension and replacement (but not
extinguishment) of that certain Revolving Credit Note made by Cornerstone,
CRIT-NC and Cornerstone REIT L.P. to the order of Bank dated April 22, 1999. All
advances made under such Note and not previously repaid shall be deemed to be
advances hereunder. This Note shall not be construed as a novation of said Note
in any way as this Note evidences the same indebtedness.
THIS NOTE IS MADE AND DELIVERED IN THE STATE OF NORTH CAROLINA AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NORTH CAROLINA.
The Debt evidenced by this Note is senior in right of payment to all
Subordinated Debt referred to in the Credit Agreement.
[Signature Page Follows]
A-2
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.
CORNERSTONE REALTY INCOME TRUST, INC.
[CORPORATE SEAL]
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
CRIT-NC, LLC
By: CORNERSTONE REALTY INCOME TRUST, INC.,
its sole Member/Manager
[CORPORATE SEAL]
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
CORNERSTONE REIT LIMITED PARTNERSHIP,
[CORPORATE SEAL] By: CORNERSTONE REALTY INCOME TRUST, INC.,
its General Partner
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
A-3
EXHIBIT B
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank
as Syndication Agent
NOTICE OF BORROWING
---------------------
First Union National Bank, as Administrative Agent
One First Union Center, DC-6
301 South College Street
Charlotte, North Carolina 28288-0166
Attn: Donna Hemenway
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you under Section
2.2(a) of the Amended and Restated Credit Agreement dated as of ____________,
1999, (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), by and among Cornerstone Realty Income Trust, Inc. ("Cornerstone"),
CRIT-NC, LLC ("CRIT-NC"), Cornerstone REIT Limited Partnership ("Cornerstone
REIT L.P."), and each Additional Borrower who may become party thereto
(collectively, with Cornerstone, CRIT-NC, and Cornerstone REIT L.P., "the
Borrowers"), the lenders party thereto (the "Lenders"), First Union National
Bank, as Administrative Agent (the "Administrative Agent") and Fleet National
Bank, as Syndication Agent (the "Syndication Agent").
1. Cornerstone, on behalf of the Borrowers, hereby requests that the
Lenders make a Loan in the aggregate principal amount of $___________ (the
"Loan).1
2. Cornerstone, on behalf of the Borrowers, hereby requests that the
Loan be made on the following Business Day: _____________________.2
________________
1 Complete with an amount in accordance with Section 2.2 of the Credit
Agreement.
2 Complete with a Business Day in accordance with Section 2.2 of the Credit
Agreement.
B-1
3. Cornerstone, on behalf of the Borrowers, hereby requests that the
Loan bear interest at the following interest rate, plus the Applicable Margin,
as set forth below:
Termination Date for
Principal Component Interest Period Interest Period
of Loan Interest Rate (if applicable) (if applicable)
- ---------------------- ------------------------- ------------------------ ------------------------
4. The principal amount of all Loans and L/C Obligations outstanding as
of the date hereof (including the requested Loan) does not exceed the maximum
amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
5. All of the conditions applicable to the Loan requested herein as set
forth in the Credit Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of such Loan.
6. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
[Signature Page Follows]
B-2
IN WITNESS WHEREOF, the undersigned, on behalf of the Borrowers, has executed
this Notice of Borrowing this ____ day of _______, ____.
CORNERSTONE REALTY INCOME TRUST, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
B-3
EXHIBIT C
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank
as Syndication Agent
NOTICE OF PREPAYMENT
--------------------
First Union National Bank, as Administrative Agent
One First Union Center
301 South College Street, DC-6
Charlotte, North Carolina 28288-0166
Attention: Donna Hemenway
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you by
Cornerstone Realty Income Trust, Inc., a corporation organized under the laws of
Virginia ("Cornerstone"), on behalf of itself and each Borrower party to the
Credit Agreement referred to below (collectively, with Cornerstone, the
"Borrowers"), under Section 2.3(c) of the Amended and Restated Credit Agreement
dated as of ________________, 1999 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), by and among Cornerstone, CRIT-NC,
LLC, a Virginia limited liability company, and Cornerstone REIT Limited
Partnership, a Virginia limited partnership, the Lenders party thereto, First
Union National Bank, as Administrative Agent, and Fleet National Bank, as
Syndication Agent.
1. Cornerstone, on behalf of the Borrowers, hereby provides notice to
the Administrative Agent that the Borrowers shall repay the following [Base Rate
Loans] and/or [LIBOR Rate Loans]: ____________________.1
2. The Borrowers shall repay the above referenced Loans on the
following Business
____________
1 Complete with an amount in accordance with Section 2.3 of the Credit
Agreement.
C-1
Day: _______________.2
3. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned, on behalf of the Borrowers, has
executed this Notice of Prepayment this ____ day of _______, ____.
CORNERSTONE REALTY INCOME TRUST, INC.
[CORPORATE SEAL]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
____________
2 Complete with a Business Day in accordance with Section 2.3 of the Credit
Agreement.
C-2
EXHIBIT D
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank
as Syndication Agent
NOTICE OF CONVERSION/CONTINUATION
----------------------------------
First Union National Bank, as Administrative Agent
One First Union Center, DC-6
301 South College Street
Charlotte, North Carolina 28288-0166
Attn: Donna Hemenway
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 4.2 of the Amended and Restated Credit Agreement
dated as of ____________, 1999 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), by and among Cornerstone Realty Income Trust,
Inc. ("Cornerstone"), CRIT-NC, LLC ("CRIT-NC"), Cornerstone REIT Limited
Partnership ("Cornerstone REIT L.P.") and each Additional Borrower who may
become party thereto (collectively, with Cornerstone, CRIT-NC, and Cornerstone
REIT L.P., the "Borrowers"), the lenders party thereto (the "Lenders"), First
Union National Bank, as Administrative Agent (the "Administrative Agent") and
Fleet National Bank, as Syndication Agent (the "Syndication Agent").
1. This Notice of Conversion/Continuation is submitted for the purpose
of: (Complete applicable information.)
(a) [Converting] [continuing] a Loan [into] [as] a Loan.1
(b) The aggregate outstanding principal balance of such Loan is
$_______________.
- --------------
1 Delete the bracketed language and insert "Base Rate" or "LIBOR Rate", as
applicable, in each blank.
D-1
(c) The last day of the current Interest Period for such Loan is
_______________.2
(d) The principal amount of such Loan to be [converted] [continued] is
$_______________.3
(e) The requested effective date of the [conversion] [continuation] of
such Loan is _______________.4
(f) The requested Interest Period applicable to the [converted]
[continued] Loan is _______________.5
2. No Default or Event of Default exists, and no Default or Event of
Default will exist upon the conversion or continuation of the Loan requested
herein.
3. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
[Signature Page Follows]
____________________
2 Insert applicable date for any LIBOR Rate Loan being converted or continued.
3 Complete with an amount in compliance with Section 3.2 of the Credit
Agreement.
4 Complete with a Business Day at least three (3) Business Days after the days
of this Notice.
5 Complete for any LIBOR Rate Loan with an Interest Period in compliance with
Section 3.1(b) of the Credit Agreement.
D-2
IN WITNESS WHEREOF, the undersigned, on behalf of the Borrowers, has
executed this Notice of Conversion/Continuation this ____ day of __________,
_______________.
CORNERSTONE REALTY INCOME TRUST, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
D-3
EXHIBIT E
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank
as Syndication Agent
OFFICER'S COMPLIANCE CERTIFICATE
---------------------------------
The undersigned, on behalf of Cornerstone Realty Income Trust, Inc., a
corporation organized under the laws of Virginia ("Cornerstone"), and each
Borrower party to the Credit Agreement referred to below, hereby certifies to
First Union National Bank, as Administrative Agent ("First Union" or the
"Administrative Agent"), as follows:
1. This Certificate is delivered to you pursuant to Section 7.2 of the
Amended and Restated Credit Agreement dated as of __________________, 1999 (as
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
by and among Cornerstone, CRIT-NC, LLC, Cornerstone REIT Limited Partnership,
and each Additional Borrower party to the Credit Agreement (collectively, the
"Borrowers"), the lenders party thereto (the "Lenders"), the Administrative
Agent, and Fleet National Bank, as Syndication Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned thereto in the
Credit Agreement.
2. I have reviewed the financial statements of the Borrowers and their
Subsidiaries dated as of _______________ and for the _______________ period[s]
then ended and such statements fairly present the financial condition of the
Borrowers and their Subsidiaries as of the dates indicated and the results of
its operations and cash flows for the period[s] indicated.
3. I have reviewed the terms of the Credit Agreement, the Notes and the
related Loan Documents and have made, or caused to be made under my supervision,
a review in reasonable detail of the transactions and the condition of the
Borrowers and their Subsidiaries during the accounting period covered by the
financial statements referred to in Paragraph 2 above. Such review has not
disclosed the existence during or at the end of such accounting period of any
condition or event that constitutes a Default or an Event of Default, nor do I
have any knowledge of the existence of any such condition or event as at the
date of this Certificate [except, [if such condition or event existed or exists,
describe the nature and period of existence thereof and what
E-1
action the Borrowers have taken, are taking and propose to take with respect
thereto]].
4. The Senior Unsecured Debt Rating as announced by Standard & Poor's
and Moody's is set forth on the attached Schedule 1, the Applicable Margin and
calculations determining such figure are set forth on such Schedule 1, the
Borrowers and their Subsidiaries are in compliance with the covenants contained
in Article IX of the Credit Agreement as shown on such Schedule 1 and the
Borrowers and their Subsidiaries are in compliance with the other covenants and
restrictions contained in Articles VIII and X of the Credit Agreement.
[Signature Page Follows]
E-2
WITNESS the following signatures as of the _____ day of _________,
________________.
CORNERSTONE REALTY INCOME TRUST, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
E-3
Schedule 1
to
Officer's Compliance Certificate
I. Applicable Margin.
(a) Senior Unsecured Debt Rating:
(1) Standard & Poor's: __________
(2) Moody's: __________
(b) Leverage Ratio:
II. Covenant Compliance.
DETAILED FORM RESPECTING EACH INDIVIDUAL COVENANT TO BE ATTACHED
HERETO BY THE ADMINISTRATIVE AGENT.
E-4
EXHIBIT F
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank,
as Syndication Agent
ASSIGNMENT AND ACCEPTANCE
--------------------------
Dated _________
Reference is made to the Amended and Restated Credit Agreement dated as
of _____________, 1999 (as amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), by and among Cornerstone Realty Income Trust,
Inc. ("Cornerstone"), CRIT-NC, LLC ("CRIT-NC"), Cornerstone REIT Limited
Partnership ("Cornerstone REIT L.P."), each Additional Borrower who may become
party thereto (collectively, with Cornerstone, CRIT-NC, and Cornerstone REIT
L.P., "the Borrowers"), the lenders party thereto (the "Lenders"), First Union
National Bank, as Administrative Agent (the "Administrative Agent"), and Fleet
National Bank, as Syndication Agent (the "Syndication Agent"). Capitalized terms
which are defined in the Credit Agreement and which are used herein without
definition shall have the same meanings herein as in the Credit Agreement.
______________________________________ (the "Assignor") and
________________________________________________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, as of the Effective
Date (as defined below), a ____% interest (the "Assigned Interest") in and to
all of the Assignor's interests, rights and obligations under the Credit
Agreement and the Assignor thereby retains ____% of its interest therein (the
"Retained Interest"). This Assignment and Acceptance is entered pursuant to, and
authorized by, Section 13.10 of the Credit Agreement.
2. The Assignor (a) represents that, as of the date hereof, (i) its
Commitment Percentage (without giving effect to assignments thereof which have
not yet become effective) under the Credit Agreement, (ii) the outstanding
balance of its Loans (unreduced by any assignments thereof which have not yet
become effective) under the Credit Agreement and (iii) the
F-1
outstanding balance of its Commitment Percentage of the L/C Obligations
(unreduced by any assignments thereof which have not yet become effective), are
each set forth in Section 2 of Schedule I hereto; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto, other than that the Assignor
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or their Subsidiaries or the performance or
observance by the Borrowers or their Subsidiaries of any of their obligations
under the Credit Agreement or any other Loan Document; and (d) attaches the
Revolving Credit Note delivered to it under the Credit Agreement and requests
that the Borrowers exchange such Note for new Notes payable to each of the
Assignor and the Assignee as follows:
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
________________________ _________________________
________________________ $____________________
________________________ $____________________
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (c)
agrees that it will, independently and without reliance upon the Assignor or any
other Lender or the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (d)
confirms that it is an Eligible Assignee; (e) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (f) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it as a
Lender; and (g) agrees that it will keep confidential all non-public information
with respect to the Borrowers obtained pursuant to the Loan Documents in
accordance with Section 13.10(g) of the Credit Agreement.
4. The effective date for this Assignment and Acceptance shall be as
set forth in Section 1 of Schedule I hereto (the "Effective Date"). Following
the execution of this Assignment and Acceptance, it will be delivered to the
Administrative Agent for consent thereby and acceptance and recording in the
Register.
5. Upon such consents, acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and
the other Loan Documents to which
F-2
Lenders are parties and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender under each such
agreement, and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Loan Documents.
6. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT
UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
ASSIGNOR
Commitment Percentage ____%
___________________________________________
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
ASSIGNEE
Commitment Percentage ____%
__________________________________________
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
F-3
Acknowledged and Consented to:
CORNERSTONE REALTY INCOME TRUST,
INC.
[CORPORATE SEAL]
By: _________________________________
Name: _________________________________
Title: _________________________________
CRIT-NC, LLC
By: Cornerstone Realty Income Trust, Inc.,
Sole Member-Manager
[CORPORATE SEAL]
By: _______________________________
Name: _____________________________
Title: ______________________________
CORNERSTONE REIT LIMITED PARTNERSHIP
By: Cornerstone Realty Income Trust, Inc.,
General Partner
[CORPORATE SEAL]
By: _______________________________
Name: _____________________________
Title: ______________________________
Consented to and Accepted:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: _________________________________
Name: _________________________________
Title: _________________________________
F-4
Schedule I
to
Assignment and Acceptance
1. Effective Date ________________,____
2. Assignor's Interest
Prior to Assignment
(a) Commitment Percentage of Assignor ________________%
(b) Outstanding balance of Assignor's Loans $ ________________
(c) Outstanding balance of
Assignor's Commitment Percentage
of the L/C Obligations $ ________________
3. Assigned Interest
(from Section 1) ________________%
4. Assignee's Extensions of Credit
After Effective Date
(a) Outstanding balance of
Assignee's Loans
(line 2(b) times line 3) $ ________________
-----
(b) Outstanding balance of Assignee's
Commitment Percentage of L/C
Obligations (line 2(c) times line 3) $ ________________
------
(c) Assignee's Extensions of Credit
After Effective Date $ ________________
5. Retained Interest of Assignor after
Effective Date
(a) Retained Interest (from Section 1) ________________%
(b) Outstanding balance of Assignor's
Loans (line 2(b) times line 5(a)) $ ________________
-----
(c) Outstanding balance of Assignor's
Commitment Percentage of L/C
Obligations (line 2(c) times line 5(a)) $ ________________
-----
F-5
6. Payment Amounts
(a) Payable by Assignee to Assignor $ ________________
(b) Payable by Assignor to Assignee $ ________________
7. Payment Instructions
(a) If payable to Assignor,
to the account of Assignor to:
__________________________________________
__________________________________________
Routing No.: _____________________________
Account No.: _____________________________
Attn: ____________________________________
Reference: _______________________________
(b) If payable to Assignee, to the account of Assignee to:
__________________________________________
__________________________________________
Routing No.: _____________________________
Account No.: _____________________________
Attn: ____________________________________
Reference: _______________________________
F-6
EXHIBIT G
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank,
as Syndication Agent
NOTICE OF ACCOUNT DESIGNATION
--------------------------------
Dated _________
First Union National Bank
One First Union Center, DC-6
301 South College Street
Charlotte, North Carolina 28288-0166
Attn: Donna Hemenway
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you by Cornerstone
Realty Income Trust, Inc., a corporation organized under the laws of Virginia
("Cornerstone"), on behalf of itself, CRIT-NC, LLC ("CRIT-NC"), a Virginia
limited liability company, and Cornerstone REIT Limited Partnership, a Virginia
limited partnership ("Cornerstone REIT L.P."), under Section 2.2(b) of the
Credit Agreement dated as of ______________, 1999 (as amended, restated,
supplemented or otherwise modified, the "Credit Agreement") by and among
Cornerstone, CRIT-NC, Cornerstone REIT L.P., each Additional Borrower who may
become party thereto (collectively, with Cornerstone, the "Borrowers"), the
Lenders party thereto (the "Lenders"), First Union National Bank, as
Administrative Agent (the "Administrative Agent"), and Fleet National Bank, as
Syndication Agent (the "Syndication Agent").
The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
[Insert name of bank/
ABA Routing Number/and Account Number]
G-1
IN WITNESS WHEREOF, the undersigned, on behalf of the Borrowers, has
executed this Notice of Account Designation this _____ day of _______, ________.
[CORPORATE SEAL] CORNERSTONE REALTY INCOME TRUST, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
G-2
EXHIBIT H
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank,
as Syndication Agent
Form of Lender Addition
and Acknowledgment Agreement
Dated _________
Reference is made to the Credit Agreement dated as of ______________,
1999 (as amended, restated, supplemented, or otherwise modified, the "Credit
Agreement") by and among Cornerstone Realty Income Trust, Inc., a corporation
organized under the laws of Virginia ("Cornerstone"), CRIT-NC, LLC, a Virginia
limited liability company ("CRIT-NC"), Cornerstone REIT Limited Partnership, a
Virginia limited partnership ("Cornerstone REIT L.P."), each Additional Borrower
who may become party thereto (collectively, with Cornerstone, CRIT-NC, and
Cornerstone REIT L.P., the "Borrowers"), the Lenders who are or may become party
thereto (collectively, the "Lenders"), First Union National Bank, as
Administrative Agent ("First Union" or the "Administrative Agent") and Fleet
National Bank, as Syndication Agent (the "Syndication Agent"). Capitalized terms
defined in the Credit Agreement and used herein without definition shall have
the same meanings herein as in the Credit Agreement.
The Borrowers and (the "[New or Current] Lender") agree as follows:
1. Subject to Section 2.7 of the Credit Agreement and this Lender
Addition and Acknowledgement Agreement, the Borrowers hereby increase the
Aggregate Commitment from $__________ to $__________ (such increased amount not
to exceed $200,000,000). This Lender Addition and Acknowledgement Agreement is
entered into pursuant to, and authorized by, Section 2.7 of the Credit
Agreement.
2. The parties hereto acknowledge and agree that, as of the date
hereof, (a) the Commitment Percentage under the Credit Agreement (without giving
effect to increases in the Aggregate Commitment which have not yet become
effective) of each Lender, including, without
H-1
limitation, the [New or Current] Lender, (b) the Commitment under the Credit
Agreement (without giving effect to increases in the Aggregate Commitment which
have not yet become effective) of each Lender, including, without limitation,
the [New or Current] Lender, and (c) the outstanding balances of the Loans (and
the exposure under Letters of Credit) under the Credit Agreement (without giving
effect to increases in the Aggregate Commitment which have not yet become
effective) made by each Lender, including, without limitation, the [New or
Current] Lender, are each set forth on Schedule A-1 hereto.
3. The parties hereto acknowledge and agree that, as of the Effective
Date (as defined below), (a) the Commitment Percentage under the Credit
Agreement of each Lender, including, without limitation, the [New or Current]
Lender, (b) the Commitment under the Credit Agreement of each Lender, including,
without limitation, the [New or Current] Lender, and (c) the outstanding
balances of the Loans (and the exposure under Letters of Credit) under the
Credit Agreement made by each Lender, including, without limitation, the [New or
Current] Lender, are each set forth on Schedule A-2 hereto.
4. Attached hereto is a revised Schedule 1 to the Credit Agreement,
revised to reflect the Commitment and the Commitment Percentage of each Lender
as of the Effective Date of this Lender Addition and Acknowledgement Agreement.
5. The Borrowers acknowledge that the amount of the increase in the
Aggregate Commitment, together with all other increases in the Aggregate
Commitment pursuant to Section 2.7 of the Credit Agreement since the Closing
Date of the Credit Agreement, shall not cause the Aggregate Commitment (as
increased hereby and by any other increase in the Aggregate Commitment pursuant
to Section 2.7) to exceed $200,000,000.
6. [The Current Lender attaches the Revolving Credit Note delivered to
it under the Credit Agreement and requests that the Borrowers exchange such
Revolving Credit Note for a new Revolving Credit Note payable to the Current
Lender as follows:
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
------------------------ -------------------------
________________________ $________________________
OR
The New Lender requests that the Borrowers issue a new Revolving Credit
Note payable to the New Lender as follows:
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
------------------------ -------------------------
________________________ $________________________]
7. The [New or Current] Lender (i) represents and warrants that it is
legally authorized
H-2
to enter into this Lender Addition and Acknowledgement Agreement; (ii) confirms
that it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 7.1 thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Lender Addition and
Acknowledgement Agreement; (iii) agrees that it will, independently and without
reliance upon any other Lender or Administrative Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) confirms that it is meets the criteria set forth in the
definition of Eligible Assignee; (v) appoints and authorizes Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement and the other Loan Documents as are delegated to such
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender; and
(vii) agrees that it will keep confidential all the information with respect to
the Borrowers or any guarantors furnished to it by the Borrowers or any
guarantors (other than information required or requested to be disclosed by it
pursuant to regulatory requirements or legal process); information requested by
and disclosed to its auditors, accountants and attorneys, provided that the [New
or Current] Lender shall use commercially reasonable efforts to have such
Persons enter into a confidentiality agreement with respect to such information;
and information generally available to the public or otherwise available to the
[New or Current] Lender on a nonconfidential basis).
8. The Borrowers represent and warrant that each term and condition of
Section 2.7 of the Credit Agreement has been satisfied in the manner set forth
in such Section 2.7.
9. The effective date for this Lender Addition and Acknowledgement
Agreement shall be __________ (the "Effective Date"). Following the execution of
this Lender Addition and Acknowledgement Agreement, it will be delivered to the
Administrative Agent for the consent of the Administrative Agent and acceptance
and recording in the Register.
10. Upon such consents, acceptance and recording, from and after the
Effective Date, the [New or Current] Lender shall be a party to the Credit
Agreement and the other Loan Documents to which Lenders are parties and, to the
extent provided in this Lender Addition and Acknowledgement Agreement, have the
rights and obligations of a Lender under each such agreement.
11. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the [New or Current] Lender.
12. The representations and warranties of the Borrowers under the
Credit Agreement and the other Loan Documents are true and correct in all
material respects as of the date hereof, both before and after giving effect
this Lender Addition and Acknowledgement Agreement.
H-3
13. THIS LENDER ADDITION AND ACKNOWLEDGEMENT AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
BORROWERS:
CORNERSTONE REALTY INCOME TRUST, INC.
[CORPORATE SEAL]
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
CRIT-NC, LLC
By: CORNERSTONE REALTY INCOME TRUST, INC.,
its sole Member/Manager
[CORPORATE SEAL]
By: ______________________________________
Name: ______________________________________
Title:______________________________________
CORNERSTONE REIT LIMITED PARTNERSHIP,
[CORPORATE SEAL] By: CORNERSTONE REALTY INCOME TRUST, INC.,
its General Partner
By: ______________________________________
Name: ______________________________________
Title:______________________________________
[OTHER BORROWERS]
[CORPORATE SEAL]
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
H-4
[NEW OR CURRENT] LENDER:
[NAME OF CURRENT LENDER OR NEW LENDER]
Commitment $__________
Commitment Percentage ____%
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
H-5
Acknowledged and Consented to:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
H-6
Schedule A-1
to
Lender Addition and Acknowledgement Agreement
Lenders and Commitments
(as of the date hereof)
A. Commitment Percentage of Each Lender.
1. First Union National Bank __________%
2. AmSouth Bank __________%
3. Crestar Bank __________%
4. Fleet National Bank __________%
5. Guaranty Federal Bank __________%
A-1-1
B. Commitment of Each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-1-2
C. Outstanding Balance of the Loans of Each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-1-3
D. Letter of Credit Exposure of each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-1-4
Schedule A-2
to
Lender Addition and Acknowledgement Agreement
Lenders and Commitments
(as of the Effective Date)
A. Commitment Percentage of Each Lender.
1. First Union National Bank __________%
2. AmSouth Bank __________%
3. Crestar Bank __________%
4. Fleet National Bank __________%
5. Guaranty Federal Bank __________%
A-2-1
B. Commitment of Each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-2-2
C. Outstanding Balance of the Loans of Each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-2-3
D. Letter of Credit Exposure of each Lender.
1. First Union National Bank $__________
2. AmSouth Bank $__________
3. Crestar Bank $__________
4. Fleet National Bank $__________
5. Guaranty Federal Bank $__________
A-2-4
Schedule 1
to
Amended and Restated
Credit Agreement
Lenders and Commitments
Commitment
Commitment Percentage
---------- -------------
1. First Union National Bank $_________ _________%
One First Union Center, DC-6
301 South College Street
Charlotte, NC 28288-0166
Attention: Donna Hemenway
Telephone No.: (704) 383-0281
Telecopy No.: (704) 382-0288
2. AmSouth Bank $_________ _________%
1900 5th Avenue North
Birmingham, AL 35203
Attention: Jim Miller
Telephone No.: (205) 581-7647
Telecopy No.: (205) 326-4075
3. Crestar Bank $_________ _________%
8245 Boone Boulevard, Ste. 820
Vienna, VA 22182
Attention: Nancy B. Richards
Telephone No.: (703) 902-9039
Telecopy No.: (703) 902-9245
4. Fleet National Bank $_________ _________%
111 Westminster Street, RI MO 215
Providence, RI 02903
Attention: Jim McLaughlin
Vice President
Telephone No.: (401) 278-3247
Telecopy No.: (401) 278-5166
5. Guaranty Federal Bank $_________ _________%
8333 Douglas Avenue, Suite 1000
Dallas, TX 75225
Attention: Roger Davis
Telephone No.: (214) 360-2849
Telecopy No.: (214) 360-1661
S-1
EXHIBIT I
to
Amended and Restated
Credit Agreement
dated as of ____________, 1999,
by and among
Cornerstone Realty Income Trust, Inc.,
CRIT-NC, LLC,
Cornerstone REIT Limited Partnership,
each Additional Borrower party thereto,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent
and
Fleet National Bank,
as Syndication Agent
Form of Joinder Agreement
--------------------------
THIS JOINDER AGREEMENT, dated as of the ____ day of __________, ____
(the "Agreement), to the Amended and Restated Credit Agreement referred to below
is entered into by and among Cornerstone Realty Income Trust, Inc., a
corporation organized under the laws of Virginia ("Cornerstone"), CRIT-NC, LLC,
a Virginia limited liability company ("CRIT-NC"), Cornerstone REIT Limited
Partnership ("Cornerstone REIT L.P."), each Additional Borrower party thereto
(collectively, with Cornerstone, CRIT-NC, and Cornerstone REIT L.P., the
"Borrowers"), ___________, a corporation organized under the laws of _________
and a Subsidiary of Cornerstone (the "Company"), such lenders party thereto (the
"Lenders"), FIRST UNION NATIONAL BANK, a national banking association, as
Administrative Agent (the "Administrative Agent") and Fleet National Bank, as
Syndication Agent (the "Syndication Agent").
Statement of Purpose
The Borrowers, the Lenders, the Administrative Agent and the
Syndication Agent are parties to the Credit Agreement dated as of
________________, 1999 (as supplemented hereby and as further amended, restated,
supplemented or otherwise modified, the "Credit Agreement").
Pursuant to [insert description of agreement or transaction relating to
creation of New Subsidiary]. In connection therewith, the Company is required to
execute, among other documents, a joinder agreement in order to become a
Borrower under the Credit Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1.01 Joinder of Company.
(a) Joinder. Pursuant to Section 8.17 of the Credit Agreement, the
Company hereby
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agrees that it is a Borrower under the Credit Agreement as if a signatory
thereof on the Closing Date, and the Company shall comply with and be subject to
and have the benefit of all of the terms, conditions, covenants, agreements and
obligations set forth therein. The Company hereby agrees that each reference to
a "Borrower" or the "Borrowers" in the Credit Agreement and other Loan Documents
shall include the Company. The Company acknowledges that it has received a copy
of the Credit Agreement and that it has read and understands the terms thereof.
(b) Schedules. Attached hereto are updated copies of each Schedule
referenced in the Credit Agreement revised to include all information required
to be provided therein with respect to (and only with respect to) the Company.
2.01 Effectiveness. This Agreement shall become effective upon receipt
by the Administrative Agent of (i) an originally executed Note for each Lender
jointly executed by each Borrower and the Company in exchange for the Notes
issued on the Closing Date or the date of the most recent Joinder Agreement, as
applicable, (ii) an originally executed counterpart hereof and (iii) any other
agreement or document delivered in accordance with Section 8.17 (including,
without limitation, any Security Document required to be executed thereunder).
3.01 General Provisions.
(a) Representations and Warranties. Each Borrower hereby confirms that
each representation and warranty made by it under the Loan Documents is true and
correct in all material respects as of the date hereof and that no Default or
Event of Default has occurred or is continuing under the Credit Agreement,
except for any deviations from such representations and warranties expressly
permitted by the Credit Agreement and except for any waivers of such
representations and warranties granted by the Required Lenders in writing. Each
such Borrower hereby represents and warrants that as of the date hereof there
are no claims or offsets against or defenses or counterclaims to their
respective obligations under the Credit Agreement or any other Loan Document.
(b) Limited Effect. Except as supplemented hereby, the Credit Agreement
and each other Loan Document shall continue to be, and shall remain, in full
force and effect. This Agreement shall not be deemed (i) to be a waiver of, or
consent to, or a modification or amendment of, any other term or condition of
the Credit Agreement or (ii) to prejudice any right or rights which the
Administrative Agent or Lenders may now have or may have in the future under or
in connection with the Credit Agreement or the Loan Documents or any of the
instruments or agreements referred to therein, as the same may be amended or
modified from time to time.
(c) Costs and Expenses. The Borrowers hereby jointly and severally
agree to pay or reimburse the Administrative Agent for all of its reasonable and
customary out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and execution of this Agreement including, without
limitation, the reasonable fees and disbursements of counsel.
(d) Counterparts. This Agreement may be executed by one or more of the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
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(e) Definitions. All capitalized terms used and not defined herein
shall have the meanings given thereto in the Credit Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[Signature Page Follows]
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IN WITNESS WHEREOF the undersigned hereby causes this Agreement to be
executed and delivered as of the date first above written.
BORROWERS:
[CORPORATE SEAL] CORNERSTONE REALTY INCOME TRUST, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
CRIT-NC, LLC
By: CORNERSTONE REALTY INCOME TRUST, INC.,
its sole Member/Manager
[CORPORATE SEAL]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
CORNERSTONE REIT LIMITED PARTNERSHIP,
[CORPORATE SEAL] By: CORNERSTONE REALTY INCOME TRUST, INC.,
its General Partner
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[CORPORATE SEAL] [OTHER BORROWERS]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
[CORPORATE SEAL] [COMPANY]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK, as Administrative Agent
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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LENDERS:
FIRST UNION NATIONAL BANK, as Lender
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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[ADDITIONAL LENDERS]
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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