<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
--------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ ----------------------------
Commission file number: 1045281
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CAPTEC NET LEASE REALTY, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 38-3368333
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
</TABLE>
<TABLE>
<S> <C>
24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106
------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
</TABLE>
(313) 994-5505
--------------
(Registrant's telephone number)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's classes
of common equity, as of May 15, 1998 (the latest practicable date).
<TABLE>
<S> <C>
Common Stock, $.01 par value 9,508,108
- ---------------------------- ---------
(Class) (Number of shares)
</TABLE>
<PAGE> 2
CAPTEC NET LEASE REALTY, INC.
CONTENTS
<TABLE>
<CAPTION>
Item No. Page
- -------- ----
<S> <C> <C>
PART I FINANCIAL INFORMATION
1 Financial Statements:
Balance Sheet 3
Statement of Operations 4
Statement of Changes in Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7 - 9
2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 12
3 Quantitative and Qualitative Disclosures about Market Risk 12
PART II OTHER INFORMATION
Other Information 13
</TABLE>
2
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CAPTEC NET LEASE REALTY, INC.
(A DELAWARE CORPORATION)
BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
---- ----
ASSETS (unaudited)
- ------
<S> <C> <C>
Cash and cash equivalents $ 1,211,120 $ 3,528,129
Investments:
Properties subject to operating leases, net 173,795,215 151,491,551
Loans to affiliates, collateralized by mortgage loans 13,113,787 13,061,845
Other loans 703,505 703,950
Other loans, related party 416,360 421,920
Financing leases, net 1,321,925 1,274,044
------------- -------------
Total investments 189,350,792 166,953,310
Short-term loans to affiliates 7,397,563 7,449,505
Unbilled rent 2,674,563 2,271,043
Accounts receivable 557,429 651,481
Due from affiliates 401,808 186,625
Other assets 1,864,097 661,875
------------- -------------
Total assets $ 203,457,372 $ 181,701,968
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Notes payable $ 63,984,988 $ 42,746,189
Accounts payable 511,945 1,434,668
Dividends payable 3,565,540 1,854,082
Federal income tax payable 719,000 719,000
Security deposits held on leases 194,406 141,892
------------- -------------
Total liabilities 68,975,879 46,895,831
------------- -------------
Stockholders' Equity:
Common stock, ($.01 par value) authorized: 40,000,000
shares; issued and outstanding: 9,508,108 95,081 95,081
Paid in capital 134,711,056 134,711,056
Accumulated dividends in excess of net earnings (324,644) -
------------- -------------
Total stockholders' equity 134,481,493 134,806,137
------------- -------------
Total liabilities and stockholders' equity $ 203,457,372 $ 181,701,968
============= =============
</TABLE>
3
<PAGE> 4
CAPTEC NET LEASE REALTY, INC.
(A DELAWARE CORPORATION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
PREDECESSOR
1998 1997
---- ----
(unaudited)
<S> <C> <C>
Revenue:
Rental income $ 4,819,470 $ 2,265,329
Interest income on loans to affiliates 296,410 260,490
Interest income on short-term loans to affiliates 159,466 141,237
Interest and other income 348,255 43,836
----------- -----------
Total revenue 5,623,601 2,710,892
----------- -----------
Expenses:
Interest 1,070,321 1,187,707
Management fees, affiliates 253,315 250,000
General and administrative 350,362 84,766
Depreciation and amortization 661,119 313,169
----------- -----------
Total expenses 2,335,117 1,835,642
----------- -----------
Income before gain (loss) on sale of
properties and income tax 3,288,484 875,250
Gain (loss) on sale of properties (47,588) (58,687)
----------- -----------
Income before income tax 3,240,896 816,563
Provision for income tax - -
----------- -----------
Net income $ 3,240,896 816,563
===========
Redeemable preferred stock dividend requirements 1,125,000
-----------
Loss attributable to common stock $ (308,437)
===========
Income (Loss) per common share:
Basic $ 0.34 $ (0.31)
=========== ===========
Diluted $ 0.34
===========
Weighted average number of common shares
outstanding 9,508,108 980,330
=========== ===========
</TABLE>
4
<PAGE> 5
CAPTEC NET LEASE REALTY, INC.
(A DELAWARE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Accumulated
Dividends in Total
Common Paid-In Excess of Stockholders'
Stock Capital Earnings Equity
----- ------- -------- ------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 $ 95,081 $ 134,711,056 $ - $ 134,806,137
Net income - - 3,240,896 3,240,896
Common stock dividends ($0.375 per share) - - (3,565,540) (3,565,540)
-------- ------------- ----------- -------------
BALANCE, MARCH 31, 1998 $ 95,081 $ 134,711,056 $ (324,644) $ 134,481,493
======== ============= =========== =============
</TABLE>
5
<PAGE> 6
CAPTEC NET LEASE REALTY, INC.
(A DELAWARE CORPORATION)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
Predecessor
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,240,896 $ 816,563
Adjustments to net income:
Depreciation and amortization 661,119 313,169
Amortization of debt issuance costs 138,611 131,250
Loss on sale of property 47,588 56,687
Increase in unbilled rent (403,520) (450,624)
Increase in receivables and other assets (194,937) (360,291)
Increase (decrease) in payables (922,723) 214,276
-------------- -----------
Net cash provided by operating activities 2,567,034 721,030
-------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of properties (24,015,896) (9,307,623)
Advances on loans to affiliates, collateralized by
mortgage loans (51,942) (3,073,663)
Acquisition of financing leases - (398,774)
Advances on short-term loans to affiliates - (68,525)
Collections on short-term loans to affiliates 51,942 -
Proceeds from the sale of property 1,046,025 200,522
Collection of principal on other loans 6,005 10,152
Change in lease security deposits 52,514 21,333
-------------- -----------
Net cash used in investing activities (22,911,352) (12,616,578)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on common stock (1,854,082)
Proceeds from the issuance of notes payable 63,984,988 10,619,844
Debt issuance costs (1,357,408) -
Principal payments of notes payable (42,746,189) -
Dividends paid on redeemable preferred stock - (1,125,000)
-------------- ------------
Net cash provided by financing activities 18,027,309 9,494,844
-------------- -----------
NET CASH FLOWS (2,317,009) (2,400,704)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,528,129 3,862,159
-------------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,211,120 $ 1,461,455
============= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,122,681 $ 1,007,528
============= ===========
</TABLE>
6
<PAGE> 7
CAPTEC NET LEASE REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:
a. MERGER: Captec Net Lease Realty, Inc., a Delaware corporation ("Captec"
or the "Company") was formed in August 1997 to continue and expand the
acquisition and investment activities of Captec Net Lease Realty, Inc., a
Michigan corporation ("Net Lease Michigan"), and Captec Net Lease Realty
Advisors, Inc., a Michigan corporation ("Advisors Michigan"). Net Lease
Michigan was formed in October 1994 for the purpose of investing in
long-term net leased restaurant and retail real estate and commenced
operations in February 1995. Net Lease Michigan was formed in October 1994
for the purpose of providing certain advisory services to Net Lease
Michigan and also commenced operations in February 1995. The Company
completed its initial public offering (the "Offering") in November 1997
and has subsequently operated as a real estate investment trust ("REIT").
In connection with the Offering, Net Lease Michigan and Advisors Michigan
were merged into the Company effective September 30, 1997 in exchange for
1,315,440 shares of the Company's common stock, par value $.01 (the
"Common Stock") and 50,000 shares of redeemable preferred stock.
Subsequently, a reverse split of .745249 shares for each share of Common
Stock was effected, resulting in 980,330 shares outstanding. The
accompanying financial statements account for the merger as a purchase of
Net Lease Michigan by Advisors Michigan in accordance with Accounting
Principles Board Opinion No. 16. Accordingly, the cost of the acquisition
was $5,161,000 (318,607 split adjusted shares issued to the shareholders
of Advisors Michigan at an assumed fair value of $16.20) and the assets
acquired and liabilities assumed of Net Lease Michigan were recorded at
their estimated fair values (resulting in an increase to historical
recorded value of properties subject to operating leases of $5,161,000).
In addition, as the principal business activities of the Company consist
of the activities performed by Net Lease Michigan, Net Lease Michigan is
deemed to be the "predecessor" company for financial reporting purposes
and the accompanying statements of operations and cash flows for the
period ended March 31, 1997 are of Net Lease Michigan.
b. UNAUDITED INTERIM FINANCIAL INFORMATION: The balance sheet as of March
31, 1998 and the statements of operations and cash flows for the three
months ended March 31, 1998 and 1997 have not been audited. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been reflected therein.
Results of operations for the interim periods are not necessarily
indicative of results for the full year.
7
<PAGE> 8
CAPTEC NET LEASE REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
2. PROPERTIES SUBJECT TO OPERATING LEASES:
The Company's real estate portfolio is leased to tenants under long-term
net operating leases. The lease agreements generally provide for monthly
rents based upon a percentage of the property's cost. The initial term of
the leases typically ranges from 15 to 20 years, although the Company in
certain cases will enter into leases with terms that are shorter or longer
terms. Most leases also provide for one or more five year renewal options.
In addition, certain leases provide the tenant one or more options to
purchase the properties at a predetermined price, generally only during
stated window periods during the fifth to seventh lease years.
The Company's investment in real estate includes capitalized acquisition
and interest costs, which have been allocated between land and buildings
and improvements on a pro rata basis. The net investment in properties
subject to operating leases as of March 31, 1998 is comprised of the
following:
<TABLE>
<S> <C>
Land $ 65,320,670
Buildings and improvements 100,967,757
Construction draws on properties 10,020,181
------------
176,308,608
Less accumulated depreciation (2,513,393)
------------
Total $173,795,215
============
</TABLE>
The Company periodically invests in properties under construction. All
construction draws are subject to the terms of a standard lease agreement
with the Company which fully obligates the tenant to the long-term lease
for all amounts advanced under construction draws.
3. NOTES PAYABLE:
In February 1998, the Company entered into a credit facility (the "Credit
Facility"), which is used to provide funds for the acquisition of
properties and working capital, and repaid all amounts outstanding under
the Company's prior credit facility. Under the Credit Facility, which has
a three year term, the Company may borrow up to $175.0 million subject to
certain borrowing base restrictions that are dependent on cash basis
lease revenue. At March 31, 1998, the Company had borrowing capacity
under the borrowing base formula of approximately $90.0 million, $64.0
million of which was drawn upon. The Credit Facility contains covenants
which, among other restrictions, require the Company to maintain a minimum
net worth, a maximum leverage ratio, and specified interest coverage and
fixed charge coverage ratios. The Credit Facility bears interest at an
annual rate of LIBOR plus a spread ranging from 1.25% to 1.50%, set
quarterly depending on the Company's leverage ratio. Commitment fees and
closing expenses paid in conjunction with the Credit Facility have been
capitalized in other assets and are being amortized and classified as
interest expense over the initial term of the Credit Facility.
8
<PAGE> 9
CAPTEC NET LEASE REALTY, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
4. INCOME TAX:
The Company has elected to be taxed as a REIT effective for its taxable
period beginning September 1, 1997 and ending December 31, 1997 under the
Internal Revenue Code of 1986, as amended (the "Code"). As a result, the
Company generally will not be subject to federal income taxation at the
corporate level to the extent it distributes annually at least 95.0% of
its REIT taxable income, as defined in the Code, to its stockholders and
satisfies certain other requirements.
5. EARNINGS PER SHARE:
Stock options currently outstanding under the Company's Long-Term
Incentive Plan were excluded from the computation of diluted earnings per
share because their exercise price was in excess of the average market
price of the Company's Common Stock during the three months ended March
31, 1998.
9
<PAGE> 10
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company acquires, develops and owns freestanding properties which are leased
on a long-term triple-net basis to operators of national and regional chain
restaurants and retailers. Triple-net leases generally impose on the lessee all
of the obligations of repairs, maintenance, real property taxes, assessments,
utilities and insurance. The Company's leases typically provide for minimum rent
plus specified fixed periodic rent increases or, in certain limited
circumstances, indexation to CPI and/or percentage rent.
As of March 31, 1998, Captec owned 130 properties, located in 29 states, with a
cost basis of $176 million. The properties are leased to 42 operators of 26
distinct restaurant concepts such as Applebee's, Boston Market and Denny's; 10
retailers such as Athlete's Foot, Blockbuster Video and Office Depot; and 2
automotive dealers operating under the BMW and Nissan brands. The restaurant,
retail and automobile dealership markets represent 71%, 23%, and 6%,
respectively, of current annual rent from the aggregate portfolio as of March
31, 1998.
The Company completed the Offering in November 1997. Subsequent to the Offering,
the Company has operated and elected to be taxed as a REIT.
RESULTS OF OPERATIONS
During the three months ended March 31, 1998 (the "Quarter"), total revenue
increased 107% to $5.6 million as compared to $2.7 million for the three months
ended March 31, 1997 (the "1997 Quarter"). Rental revenue increased 113% to $4.8
million for the Quarter as compared to $2.3 million for the 1997 Quarter. The
increase in rental revenue resulted principally from the acquisition of 19 net
leased properties for the Quarter and the benefit of a full period of rental
revenue from properties acquired and leased in preceding periods. Interest and
other income on investments, including interest income on loans to affiliates,
increased by 80% to $804,000 for the Quarter as compared to $446,000 for the
1997 Quarter, primarily as a result of fee income earned from affiliates.
Interest expense decreased by 10% to $1.1 million for the Quarter as compared to
$1.2 million for the 1997 Quarter. The decrease was primarily due to the
reduction of debt in the fourth quarter of 1997 related to the Offering, offset
by interest on $21.2 million of additional debt used to fund the acquisition of
properties during the Quarter. General and administrative expenses, including
management fees to affiliates, increased 80% to $604,000 for the Quarter as
compared to $335,000 for the 1997 Quarter, primarily due to the commencement of
salaries and benefits and other incremental costs related to operating as a
public REIT. Depreciation and amortization increased 111% to $661,000 for the
Quarter as compared to $313,000 for the 1997 Quarter, primarily due to the
continued acquisition of net leased properties and the effect of a full period
of depreciation of properties acquired and leased in the preceding periods.
10
<PAGE> 11
As a result of the foregoing, the Company's net income increased 297% to $3.2
million for the Quarter as compared to $817,000 for the 1997 Quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal use of funds is for property development and
acquisition, payment of interest on its outstanding indebtedness, and payment of
operating expenses and dividends. Historically, interest expense, operating
expenses and dividends have been paid out of cash flows from operations.
Property acquisitions have typically been funded out of proceeds from equity
offerings and borrowings. The Company expects to meet its liquidity requirements
(principally property development and acquisition) through a variety of future
sources of capital, including long-term secured and unsecured indebtedness and
the issuance of additional equity or debt securities.
The Company's leases generally provide for specified periodic rent increases
including fixed increase amounts, and in limited circumstances indexation to CPI
and/or percentage rent. In addition, most of the Company's leases require the
lessee to pay all operating costs and expenses including repairs, maintenance,
real property taxes, assessments, utilities and insurance, thereby substantially
reducing the Company's exposure to increases in costs and operating expenses.
Based upon these factors, the Company does not anticipate significant capital
demands related to the management of its properties.
At March 31, 1998, the Company had cash and cash equivalents of $1.2 million.
For the Quarter, the Company generated cash from operations of $2.5 million as
compared to $719,000 for the 1997 Quarter. Cash generated from operations
provides funds for distributions to shareholders in the form of quarterly
dividends. Any excess cash from operations may also be used for investment in
properties.
CREDIT FACILITY. On February 26, 1998 the Company entered into the Credit
Facility, which is used to provide funds for the acquisition of properties and
working capital, and repaid all amounts outstanding under the prior credit
facility.
The Credit Facility has a three year term and borrowings are subject to
borrowing base restrictions that are dependent on cash basis lease revenue. At
March 31, 1998, the Company had borrowing capacity under the borrowing base
formula of approximately $90.0 million, $64.0 million of which was drawn upon.
The Credit Facility contains covenants which, among other restrictions, require
the Company to maintain a minimum net worth, a maximum leverage ratio, and
specified interest and fixed charge coverage ratios.
The Credit Facility bears interest at an annual rate of LIBOR plus a spread
ranging from 1.25% to 1.50%, set quarterly depending on the Company's leverage
ratio, or at the Company's option, the bank's base rate. At March 31, 1998, the
spread over LIBOR was 1.40%. In connection with the Credit Facility, the Company
paid an initial commitment fee and is also required to pay an unused commitment
fee ranging from .125% to .200% per annum on the unused amount of the
commitment.
The Credit Facility will expire in February 2001 and may be renewed annually
thereafter, one year in advance of maturity subject to the consent of the
lender. Upon expiration, the entire outstanding balance of the Credit Facility
will mature and become immediately due and
11
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payable. At that time, the Company expects to refinance such debt either
through additional debt financings secured by individual properties or groups of
properties, by unsecured private or public debt offerings or by additional
equity offerings.
PROPERTY ACQUISITIONS AND COMMITMENTS. During the Quarter, the Company acquired
$17.5 million of completed properties and the balance of investments in
properties under construction increased $6.5 million, resulting in a net
increase in investments in properties of $24.0 million.
As of March 31, 1998 the Company had entered into commitments to acquire 68
properties totaling $122 million. The commitments are subject to various
conditions to closing which are described in the contracts or letters of intent
relating to these properties. The Company expects to finance its
acquisition commitments through a variety of future sources of capital,
including borrowings under the Credit Facility, other long-term secured and
unsecured indebtedness and the issuance of additional equity or debt securities.
In addition, in the ordinary course of business the Company is in negotiations
regarding the proposed acquisition of other properties and related
co-development opportunities. The Company may enter into commitments to acquire
some of these prospective properties in the future. Property acquisition
commitments arising out of these negotiations are expected to generate the
primary demand for additional capital in the future.
DIVIDENDS. The Company intends to pay a regular quarterly dividend on its common
stock of $.375 per share (which if annualized would be $1.50 per share). Total
dividends of $3,565,540 were paid on April 16, 1998 related to the first quarter
declared dividend. The Company expects to pay future dividends from cash
available for distributions, which the Company believes will exceed historical
cash available for distributions due to the reduction in debt service and
preferred stock dividend requirements, the decrease in advisory fee rates and
the anticipated growth of the portfolio of net leased properties. The Company
believes that cash from operations will be sufficient to allow the Company to
make distributions necessary to enable the Company to continue to qualify as a
REIT.
The Company declared a fourth quarter dividend on its common stock in the amount
of $0.195 per share or $1,854,081. The dividend was payable to shareholders of
record on December 29, 1997 and was paid on January 20, 1998. This was a partial
dividend for the portion of the quarter that the Company was publicly traded.
The Company historically has paid quarterly dividends on its redeemable
preferred stock. After payment of the accrued preferred stock dividends and the
redemption and exchange of the Company's outstanding redeemable preferred stock
from the proceeds of the Offering, the Company's preferred stock dividend
requirement has been eliminated.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
12
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES. None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its annual meeting of stockholders ( the "Meeting") on May 8,
1998. The Company's stockholders elected Patrick L. Beach, W. Ross Martin, H.
Reid Sherard, Richard J. Peters, Creed L. Ford, III, William H. Krul, II and
Lee C. Howley (collectively, the "Nominees") to the Company's Board of
Directors. The following lists the number of shares of Common Stock voted for
and withheld from each of the Nominees.
<TABLE>
<CAPTION>
Nominees Votes for Votes Withheld
- -------- --------- --------------
<S> <C> <C>
Patrick L. Beach 6,447,776 100,590
W. Ross Martin 6,446,626 101,740
H. Reid Sherard 6,446,626 101,740
Richard J. Peters 6,447,776 100,590
Creed L. Ford, II 6,447,476 100,890
William H. Krul, II 6,447,776 100,590
Lee C. Howley 6,447,776 100,590
</TABLE>
ITEM 5. OTHER INFORMATION. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C>
Exhibit 10.1 February 28, 1998 Amended and Restated Credit Agreement.
Exhibit 27.1 Financial Data Schedule.
</TABLE>
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain "forward looking statements" which represent the
Company's expectations or beliefs, including, but not limited to, statements
concerning industry performance and the Company's operations, performance,
financial condition, plans, growth and strategies. Any statements contained in
this Form 10-Q which are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "anticipate," intent," "could," estimate"
or continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond the Company's control, and actual results may differ
materially depending on a variety of important factors many of which are beyond
the control of the Company.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPTEC NET LEASE REALTY, INC.
May 15, 1998 By: /s/ Patrick L. Beach
--------------------------------
Patrick L. Beach
Chief Executive Officer and President
May 15, 1998 By: /s/ W. Ross Martin
--------------------------------
W. Ross Martin
Chief Financial Officer and
Executive Vice President
14
<PAGE> 1
EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 26, 1998
by and among
CAPTEC NET LEASE REALTY, INC.,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 13.5.(a),
as Lenders
and
FIRST UNION NATIONAL BANK,
as Agent
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<S> <C>
Article I. Definitions .......................... 1
Section 1.1. Definitions. ................... 1
Section 1.2. General; References to Times. .. 18
Section 1.3. Treatment of Financial Attributes of
Unconsolidated Affiliates; Short Reporting Periods. 19
Article II. Credit Facility ................................................. 19
Section 2.1. Revolving Loans. ........................................ 19
Section 2.2. Rates and Payment of Interest on Loans. ................. 20
Section 2.3. Number of Interest Periods. ............................. 20
Section 2.4. Repayment of Loans. ..................................... 21
Section 2.5. Prepayments. ............................................ 21
Section 2.6. Continuation. ........................................... 21
Section 2.7. Conversion. ............................................. 21
Section 2.8. Notes. .................................................. 22
Section 2.9. Voluntary Reductions of the Commitment. ................. 22
Section 2.10. Extension of Termination Date. ......................... 22
Article III. Payments, Fees and Other General Provisions .................... 24
Section 3.1. Payments. ............................................... 24
Section 3.2. Pro Rata Treatment. ..................................... 24
Section 3.3. Sharing of Payments, Etc. ............................... 25
Section 3.4. Several Obligations. .................................... 25
Section 3.5. Minimum Amounts. ........................................ 26
Section 3.6. Fees. ................................................... 26
Section 3.7. Computations. ........................................... 26
Section 3.8. Usury. .................................................. 27
Section 3.9. Agreement Regarding Interest and Charges. ............... 27
Section 3.10. Statements of Account. ................................. 27
Section 3.11. Defaulting Lenders. .................................... 27
Section 3.12. Taxes. ................................................. 29
Article IV. Unencumbered Pool Properties ................................... 30
Section 4.1. Admission of Unencumbered Pool Properties. .............. 30
Section 4.2. Termination of Designation as Unencumbered Pool Property. 32
Article V. Yield Protection, Etc. ........................................... 32
Section 5.1. Additional Costs; Capital Adequacy. ..................... 32
Section 5.2. Suspension of LIBOR Loans. .............................. 33
Section 5.3. Illegality. ............................................. 34
Section 5.4. Compensation. ........................................... 34
Section 5.5. Treatment of Affected Loans. ............................ 34
*This Table of Contents is not part of the Credit Agreement and is provided as
a convenience only.
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
Section 5.6. Change of Lending Office. ............................... 35
Section 5.7. Treatment of Affected Lenders. .......................... 35
Section 5.8. Assumptions Concerning Funding of LIBOR Loans. .......... 36
Article VI. Conditions Precedent ............................................ 36
Section 6.1. Initial Conditions Precedent. ........................... 36
Section 6.2. Conditions Precedent to All Loans. ...................... 38
Section 6.3. Conditions as Covenants; North Carolina Opinion. ........ 39
Article VII. Representations and Warranties ................................. 39
Section 7.1. Representations and Warranties. ......................... 39
Section 7.2. Survival of Representations and Warranties, Etc. ........ 45
Article VIII. Affirmative Covenants ......................................... 45
Section 8.1. Preservation of Existence and Similar Matters. .......... 45
Section 8.2. Compliance with Applicable Law and Material Contracts. .. 46
Section 8.3. Maintenance of Property. ................................ 46
Section 8.4. Conduct of Business. .................................... 46
Section 8.5. Insurance. .............................................. 46
Section 8.6. Payment of Taxes and Claims. ............................ 47
Section 8.7. Visits and Inspections. ................................. 47
Section 8.8. Use of Proceeds. ........................................ 47
Section 8.9. Environmental Matters. .................................. 48
Section 8.10. Books and Records. ..................................... 48
Section 8.11. REIT Status. ........................................... 48
Section 8.12. ERISA Exemptions. ...................................... 48
Section 8.13. Exchange Listing. ...................................... 48
Section 8.14. Advisor. ............................................... 48
Section 8.15. Further Assurances. .................................... 49
Article IX. Information ..................................................... 49
Section 9.1. Quarterly Financial Statements. ......................... 49
Section 9.2. Year-End Statements. .................................... 49
Section 9.3. Compliance Certificate. ................................. 50
Section 9.4. Other Information. ...................................... 50
Article X. Negative Covenants ............................................... 52
Section 10.1. Financial Covenants. ................................... 53
Section 10.2. Development Limitations. ............................... 54
Section 10.3. Indebtedness. .......................................... 54
Section 10.4. Contingent Obligations. ................................ 55
Section 10.5. Investments. ........................................... 56
Section 10.6. Liens; Agreements Regarding Liens; Other Matters. ...... 56
Section 10.7. Restricted Payments. ................................... 57
Section 10.8. Merger, Consolidation, Sales of Assets and Other Arrangements. 57
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
Section 10.9. Dispositions of Assets. ................................ 58
Section 10.10. Fiscal Year. .......................................... 59
Section 10.11. Modifications to Material Contracts. .................. 59
Section 10.12. Transactions with Affiliates. ......................... 59
Section 10.13. Distributions of Income to the Borrower. .............. 59
Article XI. Default ......................................................... 60
Section 11.1. Events of Default. ..................................... 60
Section 11.2. Remedies Upon Event of Default. ........................ 63
Section 11.3. Remedies Upon Default. ................................. 64
Section 11.4. Allocation of Proceeds. ................................ 64
Section 11.5. Performance by Agent. .................................. 64
Section 11.6. Rights Cumulative. ..................................... 65
Section 11.7. Recision of Acceleration by Requisite Lenders. ......... 65
Article XII. The Agent ...................................................... 65
Section 12.1. Authorization and Action. .............................. 65
Section 12.2. Agent's Reliance, Etc. ................................. 66
Section 12.3. Notice of Defaults. .................................... 67
Section 12.4. First Union as Lender. ................................. 67
Section 12.5. Approvals of Lenders. .................................. 67
Section 12.6. Lender Credit Decision, Etc. ........................... 67
Section 12.7. Indemnification of Agent. .............................. 68
Section 12.8. Successor Agent. ....................................... 69
Article XIII. Miscellaneous ................................................. 69
Section 13.1. Notices. ............................................... 69
Section 13.2. Expenses. .............................................. 70
Section 13.3. Setoff. ................................................ 71
Section 13.4. Waiver of Jury Trial; Arbitration. ..................... 71
Section 13.5. Successors and Assigns. ................................ 73
Section 13.6. Amendments. ............................................ 75
Section 13.7. Nonliability of Agent and Lenders. ..................... 76
Section 13.8. Confidentiality. ....................................... 77
Section 13.9. Indemnification. ....................................... 77
Section 13.10. Termination; Survival. ................................ 79
Section 13.11. Severability of Provisions. ........................... 79
Section 13.12. GOVERNING LAW. ........................................ 79
Section 13.13. Counterparts. ......................................... 79
Section 13.14. Limitation of Liability. .............................. 79
Section 13.15. Entire Agreement. ..................................... 80
Section 13.16. Construction. ......................................... 80
</TABLE>
SECTION 13.17. NO NOVATION; EFFECT OF AMENDMENT AND
RESTATEMENT. 80
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<PAGE> 5
<TABLE>
<S> <C>
SCHEDULE 4.1.Unencumbered Pool Properties
SCHEDULE 7.1.(b)Ownership Structure
SCHEDULE 7.1.(f)Title to Properties; Liens
SCHEDULE 7.1.(g)Existing Indebtedness
SCHEDULE 7.1.(h)Material Contracts
SCHEDULE 7.1.(i)Litigation
SCHEDULE 10.4.Existing Contingent Obligations
SCHEDULE 10.5.Investments
SCHEDULE 10.12.Transactions With Affiliates
EXHIBIT A Form of Assignment and Acceptance Agreement
EXHIBIT B Form of Lease
EXHIBIT C Form of Notice of Borrowing
EXHIBIT D Form of Notice of Continuation
EXHIBIT E Form of Notice of Conversion
EXHIBIT F [Intentionally Omitted]
EXHIBIT G Form of Revolving Note
EXHIBIT H Form of Opinion of Counsel
EXHIBIT I Form of Compliance Certificate
EXHIBIT J Form of Guaranty
</TABLE>
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<PAGE> 6
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 26, 1998
by and among CAPTEC NET LEASE REALTY, INC., a corporation organized under the
laws of the State of Delaware (the "Borrower"), each of the financial
institutions initially a signatory hereto together with their assignees
pursuant to Section 13.5.(d), and FIRST UNION NATIONAL BANK, as Agent.
WHEREAS, the Agent and the Lenders made available to the Borrower a
$175,000,000 revolving credit facility on the terms and conditions contained in
that certain Credit Agreement dated as of February 26, 1998 (the "Existing
Credit Agreement"), by and among the Borrower, the Lenders and the Agent;
WHEREAS, the Borrower, the Lenders and the Agent desire to amend and
restate the terms of the Existing Credit Agreement all pursuant to the terms
hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree that the Existing Credit Agreement is amended and restated as
follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. DEFINITIONS.
In addition to terms defined elsewhere herein, the following terms shall
have the following meanings for the purposes of this Agreement:
"ACCESSION AGREEMENT" means an Accession Agreement substantially in the
form of Annex I to the Guaranty.
"ADDITIONAL COSTS" has the meaning given that term in Section 5.1.
"ADJUSTED EBITDA" means, for any period, EBITDA for such period excluding
all straight line rent leveling adjustments (reported in the consolidated
financial statements of the Borrower and its Subsidiaries for purposes of
GAAP).
"ADJUSTED EURODOLLAR RATE" means, with respect to each Interest Period for
any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated as
a decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
"AFFILIATE" means any Person (other than the Agent or any Lender): (a)
directly or indirectly controlling, controlled by, or under common control
with, the Borrower; (b) directly or
<PAGE> 7
indirectly owning or holding ten percent (10.0%) or more of any equity interest
in the Borrower; or (c) ten percent (10.0%) or more of whose voting stock or
other equity interest is directly or indirectly owned or held by the Borrower.
For purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with") means the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities or by contract or otherwise. The Affiliates
of a Person shall include any officer or director of such Person.
"AGENT" means First Union National Bank, as contractual representative for
the Lenders under the terms of this Agreement, and any of its successors.
"AGREEMENT DATE" means the date as of which this Agreement is dated.
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"APPLICABLE MARGIN" means:
(a) during any period for which the Borrower has not received an
Investment Grade Rating from both Rating Agencies, the percentage rate set
forth below corresponding to the ratio of Total Liabilities to Gross Asset
Value as determined in accordance with Section 10.1.(c) in effect at such time:
<TABLE>
<S> <C> <C>
LEVEL RATIO OF TOTAL LIABILITIES TO GROSS ASSET VALUE APPLICABLE MARGIN
- ----- ------------------------------------------------------
3 Less than 0.50 to 1.00 but greater than 0.40 to 1.00 1.50%
- ----- ----------------------------------------------------
Less than or equal to 0.40 to 1.00 but greater than
2 0.250 to 1.00 1.40%
- ----- ------------------------------------------------------
1 Less than or equal to 0.250 to 1.00 1.25%
- -----
</TABLE>
The Applicable Margin shall be determined by the Agent on a quarterly basis,
commencing with the fiscal quarter ending on March 31, 1998, based on the ratio
of Total Liabilities to Gross Asset Value as set forth in the Compliance
Certificate most recently delivered by the Borrower pursuant to Section 9.3.
Any adjustment to the Applicable Margin shall be effective as of the date 45
days following the end of the last day of the fiscal period covered by the
applicable Compliance Certificate. Notwithstanding the foregoing, for the
period from the Effective Date through but excluding the date on which the
Agent first determines the Applicable Margin as set forth above, the Applicable
Margin shall equal 1.40%. Thereafter, the Applicable Margin shall be adjusted
from time to time as set forth above; or
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<PAGE> 8
(b) during any period for which the Borrower has received an Investment
Grade Rating from both Rating Agencies, the percentage per annum determined, at
any time, based on the range into which the Borrower's Credit Rating then
falls, in accordance with the table set forth below. Any change in the
Borrower's Credit Rating which would cause it to move to a different level in
the table shall effect a change in the Applicable Margin on the Business Day
immediately following the date on which such change occurs. During any period
that the Borrower has received Credit Ratings that are not equivalent, (i) if
such Credit Ratings differ by only one level, the Applicable Margin shall be
determined by the lower of such two Credit Ratings and (ii) otherwise the
Applicable Margin shall equal the average of the Applicable Margins as
determined in accordance each such Credit Rating.
<TABLE>
<S> <C> <C>
BORROWER'S CREDIT RATING
LEVEL (S&P/MOODY'S) APPLICABLE MARGIN
-----------------
1 BBB+/Baa1 (or higher) 0.80%
- ----- --------------------- ----------------
2 BBB/Baa2 0.95%
- ----- -------- ----------------
3 BBB-/Baa3 1.10%
- ----- --------- ----------------
</TABLE>
"ASSIGNEE" has the meaning given that term in Section 13.5.(d).
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" means an Assignment and Acceptance
Agreement among a Lender, an Assignee and the Agent, substantially in the form
of Exhibit A.
"BASE RATE" means the per annum rate of interest equal to the greater of
(a) the Prime Rate or (b) the Federal Funds Rate plus one-half of one percent
(0.5%). Any change in the Base Rate resulting from a change in the Prime Rate
or the Federal Funds Rate shall become effective as of 12:01 a.m. on the
Business Day on which each such change occurs. The Base Rate is a reference
rate used by the Agent in determining interest rates on certain loans and is
not intended to be the lowest rate of interest charged by the Agent or any
Lender on any extension of credit to any debtor.
"BASE RATE LOAN" means a Loan bearing interest at a rate based on the Base
Rate.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"BORROWER" has the meaning set forth in the introductory paragraph hereof
and shall include the Borrower's successors and assigns.
"BUSINESS DAY" means (a) any day other than a Saturday, Sunday or other
day on which banks in Charlotte, North Carolina are authorized or required to
close and (b) with reference to a LIBOR Loan, any such day that is also a day
on which dealings in Dollar deposits are carried out in the London interbank
market.
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<PAGE> 9
"CAPITAL EXPENDITURES" means, with respect to any Person, all expenditures
made and liabilities incurred for the acquisition of assets which are not, in
accordance with GAAP, treated as expense items for such Person in the year made
or incurred or as a prepaid expense applicable to a future year or years.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
is the capitalized amount of such obligations determined in accordance with
GAAP.
"CAPITALIZED NET LEASE REVENUES" means (a) the aggregate amount of Net
Lease Revenues for the fiscal quarter most recently ended for all Real Property
Assets that satisfied the requirements contained in the following sentence at
all times during such fiscal quarter times (b) 4 divided by (c) 10.3%. For the
Net Lease Revenues of a Real Property Asset to be included when determining
Capitalized Net Lease Revenues, such Real Property Asset must satisfy the
requirement in each clause of the definition of Eligible Property except that:
(i) clauses (b), (c) and (h) of such definition need not be satisfied; (ii)
notwithstanding clause (g) of such definition, such Real Property Asset need
not be occupied so long as all payments of rent under the applicable lease
remain current and the tenant's obligations under such lease are guarantied in
full by a corporate affiliate of such tenant; and (iii) notwithstanding clause
(a) of such definition, the Borrower or a Subsidiary, as applicable, may hold a
leasehold estate in such Real Property Asset pursuant to a ground lease having
a remaining term of duration equal to or greater than the remaining term of the
lease by the Borrower or such Subsidiary to the tenant. Notwithstanding the
foregoing, not more than 10% of the amount Capitalized Net Lease Revenues can
be attributable to Real Property Assets of the type referred to in the
preceding clause (iii) at any time.
"CAPTEC ADVISORS" means Captec Net Lease Realty Advisors, Inc., a Delaware
corporation.
"CASH AVAILABLE FOR DISTRIBUTION" means, for the Borrower and its
Subsidiaries and with respect to a given period, Funds From Operations for such
period excluding all straight line rent leveling adjustments (reported in the
consolidated financial statements of the Borrower and its Subsidiaries for
purposes of GAAP) minus non-incremental revenue generating Capital Expenditures
for such period.
"CASH EQUIVALENTS" means: (a) securities issued, guaranteed or insured by
the United States of America or any of its agencies with maturities of not more
than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a United
States federal or state chartered commercial bank of recognized standing, which
has capital and unimpaired surplus in excess of $500,000,000.00 and which bank
or its holding company has a short-term commercial paper rating of at least A-2
or the equivalent by Standard & Poor's Rating Group, a division of McGraw-Hill,
Inc. ("S&P") or at least P-2 or the equivalent by Moody's Investors Services,
Inc. ("Moody's"); (c) reverse repurchase agreements with terms of not more than
seven days from the date acquired, for securities of the
- 4 -
<PAGE> 10
type described in clause (a) above and entered into only with commercial banks
having the qualifications described in clause (b) above; (d) commercial paper
issued by any Person incorporated under the laws of the United States of
America or any State thereof and rated at least A-2 or the equivalent thereof
by S&P or at least P-2 or the equivalent thereof by Moody's, in each case with
maturities of not more than one year from the date acquired; and (e)
investments in money market funds registered under the Investment Company Act
of 1940, which have net assets of at least $500,000,000.00 and at least 85% of
whose assets consist of securities and other obligations of the type described
in clauses (a) through (d) above.
"COMMITMENT" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. in an amount up to, but not exceeding,
the amount set forth for such Lender on its signature page hereto as such
Lender's "Commitment Amount" or as set forth in the applicable Assignment and
Acceptance Agreement, as the same may be reduced from time to time pursuant to
Section 2.9. or as appropriate to reflect any assignments to or by such Lender
effected in accordance with Section 13.5.
"COMMITMENT PERCENTAGE" means, as to each Lender, the ratio, expressed as
a percentage, of (a) the amount of such Lender's Commitment to (b) the sum of
(i) the aggregate amount of the Commitments of all Lenders hereunder; provided,
however, that if at the time of determination the Commitments have terminated
or been reduced to zero, the "Commitment Percentage" of each Lender shall be
the Commitment Percentage of such Lender in effect immediately prior to such
termination or reduction.
"COMPLIANCE CERTIFICATE" has the meaning given such term in Section 9.3.
"CONCEPT" refers to any distinctive system for establishing and operating
restaurants, retail stores or other businesses which is the subject of a
license or franchise from a Person. Not in limitation of the foregoing, and by
way of example only, such systems would include "Boston Markets," "Blockbuster
Video/Music," "Golden Corral" and "Burger King."
"CONTINGENT OBLIGATION" as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (a) with respect
to any Indebtedness, lease, dividend or other obligation of another Person if
the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; (b) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (c) under Interest Rate Agreements; or (d) under any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect that Person against fluctuations in currency values.
Contingent Obligations shall include (i) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), comaking, discounting with recourse or sale with recourse by such
Person of the obligation of another, (ii) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (iii) any liability of such Person for the
obligations of
- 5 -
<PAGE> 11
another through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another.
"CONTINUE", "CONTINUATION" and "CONTINUED" each refers to the continuation
of a LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.6.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to the conversion of a
Loan of one Type into a Loan of another Type pursuant to Section 2.7.
"CREDIT EVENT" means any of the following: (a) the making (or deemed
making) of any Loan and(b) the Conversion of a Loan.
"CREDIT RATING" means the lowest rating assigned by a Rating Agency to
each series of rated senior unsecured long term indebtedness of the Borrower.
"DEFAULT" means any of the events specified in Section 11.1., whether or
not there has been satisfied any requirement for the giving of notice, the
lapse of time, or both.
"DEFAULTING LENDER" has the meaning set forth in Section 3.11.
"DOLLARS" or "$" means the lawful currency of the United States of
America.
"EBITDA" means, for any period and without duplication, net earnings
(loss) of the Borrower and its Subsidiaries determined on a consolidated basis
for such period (excluding equity in net earnings or net loss of Unconsolidated
Affiliates) plus the sum of the following amounts (but only to the extent
included in determining net income (loss) for such period): (a) depreciation
and amortization expense for such period plus (b) Interest Expense for such
period plus (c) income tax expense in respect of such period minus (d)
extraordinary gains and gains from sales of assets for such period plus (d)
extraordinary losses and losses from sales of assets for such period.
"EFFECTIVE DATE" means the later of: (a) the Agreement Date; and (b) the
date on which all of the conditions precedent set forth in Section 6.1. shall
have been fulfilled.
"ELIGIBLE ASSIGNEE" means any Person who is: (i) currently a Lender; (ii)
a commercial bank, trust company, insurance company, investment bank or pension
fund organized under the laws of the United States of America, or any state
thereof, and having total assets in excess of $5,000,000,000; (iii) a savings
and loan association or savings bank organized under the laws of the United
States of America, or any state thereof, and having a tangible net worth of at
least $500,000,000; or (iv) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation
and Development ("OECD"), or a political subdivision of any such country, and
having total assets in excess of $10,000,000,000, provided that such bank is
acting through a branch or agency located in the United States of
- 6 -
<PAGE> 12
America. If such Person is not currently a Lender, such Person's senior
unsecured long term indebtedness must be rated BBB or higher by S&P, Baa2 or
higher by Moody's, or the equivalent or higher of either such rating by another
rating agency of national reputation and reasonably acceptable to the Agent.
Notwithstanding the foregoing, if an Event of Default shall have occurred and
be continuing under Section 11.1.(a) or (b), or if as a result of the
occurrence of any other Event of Default the Obligations have been accelerated
pursuant to Section 11.2.(a), the term "Eligible Assignee" shall mean any
Person that is not an individual.
"ELIGIBLE PROPERTY" means a Real Property Asset which satisfies all of the
following requirements as reasonably determined by the Agent: (a) such Real
Property Asset is owned in fee simple by only the Borrower or a Wholly Owned
Subsidiary; (b) neither such Real Property Asset nor any interest of the
Borrower or such Wholly Owned Subsidiary therein, is subject to any Lien other
than Permitted Liens of the types described in clauses (a) through (c) of the
definition thereof, or to any agreement (other than this Agreement or any other
Loan Document) that prohibits the creation of any Lien thereon as security for
Indebtedness of the Borrower; (c) if such Real Property Asset is owned by a
Wholly Owned Subsidiary, none of the Borrower's direct or indirect ownership
interest in such Wholly Owned Subsidiary is subject to any Lien other than
Permitted Liens of the types described in clauses (a) through (c) of the
definition thereof, or to any agreement (other than this Agreement or any other
Loan Document) that prohibits the creation of any Lien thereon as security for
Indebtedness of the Borrower or such Wholly Owned Subsidiary; (d) such Real
Property Asset is free of all structural defects, environmental conditions or
other adverse matters except for defects, conditions or matters individually or
collectively which are not material to the profitable operation of such Real
Property Asset; (e) such Real Property Asset has been fully developed for use
as a restaurant or other retail establishment; (f) such Real Property Asset has
been leased to a tenant pursuant to a lease (i) in the case of a Real Property
Asset developed for use as a restaurant, substantially in the form of Exhibit B
or such other form of lease as may be reasonably acceptable to the Agent or
(ii) in the case of a Real Property Asset developed for use as a retail
establishment and the lease of which, together with all other leases between
the applicable lessee and the Borrower or any Subsidiary, will account for more
than 5.0% of the total revenues of the Borrower and its Subsidiaries determined
on a consolidated basis, in form reasonably acceptable to the Agent; (g) such
Real Property Asset is occupied by such tenant and is in operation; (h) the
remaining term of such lease is at least one year; (i) such tenant is not in
monetary or other material default (beyond any applicable cure period) under
such lease or any other lease between such tenant and the Borrower or any
Subsidiary (any such other lease a "Related Lease"); and (j) neither the
tenant, nor any Person that is the franchisor or licensor of any Concept (if
any) applicable to such Real Property Asset, is the subject of any case,
proceeding or condition of the types described in Sections 11.1.(f) or (g).
Notwithstanding the preceding clause (i), a Real Property Asset leased to a
Qualified Lessee shall not be excluded as an Eligible Property solely because a
monetary or other material default exists under a Related Lease unless the
Borrower has failed to deliver to the Agent within 60 days of the occurrence of
such default evidence reasonably satisfactory to the Agent that such default
has been cured or waived.
"ENVIRONMENTAL LAWS" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without
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<PAGE> 13
limitation, the following: Clean Air Act, 42 U.S.C. Section 7401 et seq;
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; Solid
Waste Disposal Act, 42 U.S.C. Section 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq.; National Environmental Policy Act, 42 U.S.C. Section 4321 et seq.;
regulations of the Environmental Protection Agency and any applicable rule of
common law and any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials.
"EQUITY ISSUANCE" means any issuance or sale by a Person of its capital
stock or other similar equity security, or any warrants, options or similar
rights to acquire, or securities convertible into or exchangeable for, such
capital stock or other similar equity security.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"ERISA GROUP" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"EVENT OF DEFAULT" means any of the events specified in Section 11.1.,
provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"EXTENSION REQUEST" has the meaning given that term in Section 2.10.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward to the nearest 1/100th of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
the Agent by federal funds dealers selected by the Agent on such day on such
transaction as determined by the Agent.
"FEES" means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder or under any
other Loan Document, or otherwise payable by the Borrower to the Agent or any
Lender in connection with the transactions relating to this Agreement.
"FIRST UNION" means First Union National Bank and its successors and
assigns.
"FIXED CHARGES" means, for any period, the sum of (a) Total Debt Service
for such period plus (b) all Capital Expenditures made by the Borrower and its
Subsidiaries during such period plus (c) all Restricted Payments paid or
accrued during such period in respect of any Preferred Stock issued by the
Borrower or any Subsidiary.
- 8 -
<PAGE> 14
"FLOATING RATE DEBT" means any Indebtedness of the Borrower or any
Subsidiary which (a) bears interest at a fluctuating interest rate or (y) bears
interest at a fixed rate and has a remaining maturity of less than one year.
The term "Floating Rate Debt" shall not include any Indebtedness which by its
terms bears interest at a fluctuating rate, but in respect of which the
Borrower or such Subsidiary, as applicable, has obtained an Interest Rate
Agreement which effectively causes such fluctuating rate to become a fixed rate
less than or equal to a fixed interest rate which could be obtained by
borrowers of comparable creditworthiness as the Borrower on Indebtedness of
comparable duration and principal amount.
"FOREIGN LENDER" means any Lender organized under the laws of a
jurisdiction other than the United States of America.
"FUNDS FROM OPERATIONS" means, for a given period, (a) net income of the
Borrower and its Subsidiaries determined on a consolidated basis for such
period minus (or plus) (b) gains (or losses) from debt restructuring and sales
of property during such period plus (c) real estate related depreciation and
amortization for such period.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, as in effect on the Agreement Date.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity (including, without
limitation, the Federal Deposit Insurance Corporation, the Comptroller of the
Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.
"GROSS ASSET VALUE" means, at a given time, the sum of (a) Capitalized Net
Lease Revenues, plus (b) all of cash and cash equivalents of the Borrower and
its Subsidiaries at such time (excluding tenant deposits and other cash and
cash equivalents the disposition of which is restricted in any way (excluding
restrictions in the nature of early withdrawal penalties)), plus (c) the book
value of all loans and leases held by the Borrower and its Subsidiaries as
reported in the most recent consolidated balance sheet of the Borrower and its
Subsidiaries required to be delivered under Section 9.1. or 9.2., as
applicable. For purposes of determining the Gross Asset Value, not more than
10% (or 5% at any time after December 31, 1998) of the aggregate Gross Asset
Value shall be attributable to assets of the type described in the preceding
clause (c).
"GUARANTOR" means any Subsidiary that is a party to the Guaranty.
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<PAGE> 15
"GUARANTY" means the Guaranty to which various Subsidiaries of the
Borrower are from time to time parties and substantially in the form of Exhibit
J.
"HAZARDOUS MATERIALS" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances", "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity
or "TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(c) any flammable substances or explosives or any radioactive materials; and
(d) asbestos in any form or (e) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million.
"INDEBTEDNESS" means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication): (a) obligations of such
Person in respect of money borrowed; (b) obligations of such Person (other than
trade debt incurred in the ordinary course of business), whether or not for
money borrowed (i) represented by notes payable, or drafts accepted, in each
case representing extensions of credit, (ii) evidenced by bonds, debentures,
notes or similar instruments, or (iii) constituting purchase money
indebtedness, conditional sales contracts, title retention debt instruments or
other similar instruments, upon which interest charges are customarily paid or
that are issued or assumed as full or partial payment for property; (c)
Capitalized Lease Obligations of such Person; (d) all reimbursement obligations
of such Person under any letters of credit or acceptances (whether or not the
same have been presented for payment); and (e) all Indebtedness of other
Persons which (i) such Person has Guaranteed or is otherwise recourse to such
Person or (ii) is secured by a Lien on any property of such Person.
"INTELLECTUAL PROPERTY" has the meaning given that term in Section
7.1.(s).
"INTEREST EXPENSE" means, for any period, the total consolidated interest
expense (including, without limitation, capitalized interest expense and
interest expense attributable to Capitalized Lease Obligations) of the Borrower
and its Subsidiaries determined on a consolidated basis and in any event shall
include all interest expense with respect to any Indebtedness in respect of
which the Borrower or any Subsidiary is wholly or partially liable.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, each period
commencing on the date such LIBOR Loan is made or the last day of the next
preceding Interest Period for such Loan and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select in a Notice of Borrowing, Notice of
Continuation or Notice of Conversion, as the case may be, except that each
Interest Period that commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing: (a)
if any
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<PAGE> 16
Interest Period would otherwise end after the Termination Date, such Interest
Period shall end on the Termination Date; (b) each Interest Period that would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (c)
notwithstanding the immediately preceding clause (a), no Interest Period for
any LIBOR Loan shall have a duration of less than one month and, if the
Interest Period for any LIBOR Loan would otherwise be a shorter period, such
Loan shall not be available hereunder for such period.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar contractual
agreement or arrangement entered into with a nationally recognized financial
institution then having an Investment Grade Rating for the purpose of
protecting against fluctuations in interest rates.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"INVESTMENT" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person: (a) the purchase
or other acquisition of any share of capital stock, evidence of Indebtedness or
other security issued by any other Person; (b) any loan, advance or extension
of credit to, or contribution (in the form of money or goods) to the capital
of, any other Person; (c) any guaranty of the Indebtedness of any other Person;
and (d) any commitment or option to make an Investment in any other Person.
"INVESTMENT GRADE RATING" means a Credit Rating of BBB- or higher by S&P
or Baa3 or higher by Moody's.
"LENDER" means each financial institution from time to time party hereto
as a "Lender", together with its respective successors and assigns.
"LENDING OFFICE" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto or in the
applicable Assignment and Acceptance Agreement, or such other office of such
Lender as such Lender may notify the Agent in writing from time to time.
"LIBOR" means, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period. If for any
reason such rate is not available, the term "LIBOR Rate" shall mean, for any
LIBOR Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
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<PAGE> 17
"LIBOR LOANS" means Loans bearing interest at a rate based on LIBOR.
"LIEN" as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge, ground lease or lease constituting a Capitalized Lease
Obligation, conditional sale or other title retention agreement, or other
security title or encumbrance of any kind in respect of any property of such
Person, or upon the income or profits therefrom; (b) any arrangement, express
or implied, under which any property of such Person is transferred, sequestered
or otherwise identified for the purpose of subjecting the same to the payment
of Indebtedness or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person; (c) the filing of
any financing statement under the Uniform Commercial Code or its equivalent in
any jurisdiction; and (d) any agreement by such Person to grant, give or
otherwise convey any of the foregoing.
"LOAN" means a Revolving Loan.
"LOAN DOCUMENT" means this Agreement, each Note, the Guaranty and each
other document or instrument now or hereafter executed and delivered by the
Borrower in connection with, pursuant to or relating to this Agreement.
"MATERIAL ADVERSE EFFECT" means a materially adverse effect on (a) the
business, properties, condition (financial or otherwise), results of operations
or performance of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower or any Guarantor to perform its obligations under any
Loan Document to which it is a party, (c) the validity or enforceability of any
of the Loan Documents, or (d) the rights and remedies of the Lenders and the
Agent under any of such Loan Documents.
"MATERIAL CONTRACT" means any contract or other arrangement (other than
Loan Documents), whether written or oral, to which the Borrower or any
Subsidiary is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"MAXIMUM LOAN AVAILABILITY" means, at any time, the lesser of (a) an
amount equal to the positive difference, if any, of (i) the Unencumbered Pool
Value divided by 1.75, minus (ii) the aggregate amount of Unsecured
Indebtedness (other than the Loans) of the Borrower and its Subsidiaries
determined on a consolidated basis at such time and (b) the aggregate amount of
the Commitments at such time.
"MOODY'S" means Moody's Investors Services, Inc.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then
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<PAGE> 18
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these purposes any
Person which ceased to be a member of the ERISA Group during such five year
period.
"NET LEASE REVENUES" means, with respect to a Real Property Asset for a
given period, (a) the aggregate amount of cash lease payments required to be
paid in the ordinary course to the Borrower or a Subsidiary during such period
under, and in accordance with the express terms of, a lease of such Real
Property Asset (excluding pre-paid rent and security deposits) minus (b) all
expenses, if any, paid during such period by the Borrower or any Subsidiary
related to the ownership, operation or maintenance of such Real Property Asset.
When determining aggregate Net Lease Revenues of the Borrower and its
Subsidiaries for a given period, the entire pro forma amount of Net Lease
Revenues of any Real Property Asset acquired (disposed of) during such period,
as if the Real Property Asset was acquired (disposed of) on first day of such
period and the applicable lease term commenced (ended) on the first day of such
period, shall be included in (excluded from) such aggregate amount of Net Lease
Revenues if such Real Property Asset was acquired (disposed of) by the Borrower
or a Subsidiary at any time during such period.
"NET PROCEEDS" means with respect to any Equity Issuance by a Person, the
aggregate amount of all cash received by such Person in respect of such Equity
Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.
"NON-RECOURSE INDEBTEDNESS" means, with respect to any Person, Secured
Indebtedness of such Person in respect of which (a) the holder of such
Indebtedness has expressly limited its recourse for repayment to specifically
identified assets of such Person and (b) such Person has no general recourse or
other general personal liability.
"NOTE" means a Revolving Note.
"NOTICE OF BORROWING" means a notice in the form of Exhibit C to be
delivered to the Agent pursuant to Section 2.1.(b) evidencing the Borrower's
request for a borrowing of Revolving Loans.
"NOTICE OF CONTINUATION" means a notice in the form of Exhibit D to be
delivered to the Agent pursuant to Section 2.6. evidencing the Borrower's
request for the Continuation of a LIBOR Loan.
"NOTICE OF CONVERSION" means a notice in the form of Exhibit E to be
delivered to the Agent pursuant to Section 2.7. evidencing the Borrower's
request for the Conversion of a Loan from one Type to another Type.
"OBLIGATIONS" means, individually and collectively: (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans and (b)
all other indebtedness, liabilities, obligations, covenants and duties of the
Borrower owing to the Agent or any Lender of every
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<PAGE> 19
kind, nature and description, under or in respect of this Agreement or any of
the other Loan Documents, including, without limitation, the Fees and
indemnification obligations, whether direct or indirect, absolute or
contingent, due or not due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any promissory note.
"PARTICIPANT" has the meaning given that term in Section 13.5.(c).
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"PERMITTED LIENS" means, as to any Person: (a) Liens securing taxes,
assessments and other charges or levies imposed by any Governmental Authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, which are not at the time required to be paid or discharged under
Section 8.6.; (b) Liens consisting of deposits or pledges made, in the ordinary
course of business, in connection with, or to secure payment of, obligations
under workmen's compensation, unemployment insurance or similar Applicable
Laws; (c) zoning restrictions, easements, rights-of-way, covenants,
reservations and other rights, restrictions or encumbrances of record on the
use of real property, which do not materially detract from the value of such
property or materially impair the use thereof in the business of such Person;
(d) Liens in existence as of the Agreement Date and set forth in Schedule
7.1.(f); and (e) Liens, if any, in favor of the Agent for the benefit of the
Lenders.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"POST-DEFAULT RATE" means, in respect of any principal of any Loan or any
other Obligation that is not paid when due (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum equal to three percent (3.0%) plus the Base Rate as in effect from time
to time.
"PREFERRED STOCK" means, with respect to any Person, shares of capital
stock of, or other equity interests in, such Person which are entitled to
preference or priority over any other capital stock of, or other equity
interest in, such Person in respect of the payment of dividends or distribution
of assets upon liquidation or both.
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<PAGE> 20
"PRIME RATE" means the rate of interest per annum announced publicly by
the Agent as its prime rate from time to time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the Agent or any
Lender.
"PRINCIPAL OFFICE" means the office of the Agent located at One First
Union Center, Charlotte, North Carolina, or such other office of the Agent as
the Agent may designate from time to time.
"PRO-FORMA UNSECURED DEBT SERVICE" means, as of a given date, the greater
of (a) all payments of interest and principal on Unsecured Indebtedness
actually made (as opposed to accrued) by the Borrower and its Subsidiaries
during the period of four consecutive fiscal quarters most recently ended and
(b) an amount equal to the annual principal and interest payment sufficient to
amortize in full during a 25-year period the aggregate principal amount of
Unsecured Indebtedness of the Borrower and its Subsidiaries determined on a
consolidated basis as of such date calculated using an interest rate equal to
the yield on a 10 year United States Treasury Note at such time as determined
by the Agent plus 1.75%.
"QUALIFIED LESSEE" means a lessee of a Real Property Asset that has at the
time in question, a net worth of a least $25,000,000 and in respect of which
the Borrower has delivered to the Agent annual audited financial statements
prepared in accordance with GAAP for a fiscal year ending not more than fifteen
calendar months prior to the time in question.
"QUARTERLY DATE" means the last Business Day of March, June, September and
December in each year, the first of which shall be March 31, 1998.
"RATING AGENCY" means S&P or Moody's.
"REAL PROPERTY ASSETS" means the real property assets owned in whole or in
part by the Borrower or any of its Subsidiaries and listed in Part I on
Schedule 7.1.(f), as such Schedule may be modified from time to time to reflect
sales, transfers, assignments, conveyances, development, acquisitions and
purchases of real property assets.
"REGISTER" has the meaning given that term in Section 13.5.(e).
"REGULATORY CHANGE" means, with respect to any Lender, any change
effective after the Agreement Date in Applicable Law (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks, including such Lender, of or
under any Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental
Authority or monetary authority charged with the interpretation or
administration thereof or compliance by any Lender with any request or
directive regarding capital adequacy.
"REIT" means a Person qualifying for treatment as a "real estate
investment trust" under the Internal Revenue Code.
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<PAGE> 21
"REJECTING LENDER" has the meaning given that term in Section 2.10.(b).
"REQUISITE LENDERS" means, as of any date, Lenders having at least 66-2/3%
of the aggregate amount of the Commitments, or, if the Commitments have been
terminated or reduced to zero, Lenders holding at least 66-2/3% of the
principal amount of the Loans.
"RESTRICTED PAYMENT" means: (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock or other equity
interest of the Borrower or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock or other equity
interest of the Borrower or any of its Subsidiaries now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any
class of stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding.
"REVOLVING LOAN" means a loan made by a Lender to the Borrower pursuant to
Section 2.1.(a).
"REVOLVING NOTE" has the meaning given that term in Section 2.8.(a).
"SECURED INDEBTEDNESS" means, with respect to any Person, any Indebtedness
of such Person that is secured in any manner by any Lien.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, together with all rules and regulations issued thereunder.
"SOLVENT" means, when used with respect to any Person, that (a) the fair
value and the fair salable value of its assets (excluding any Indebtedness due
from any affiliate of such Person) are each in excess of the fair valuation of
its total liabilities (including all contingent liabilities); and (b) such
Person is able to pay its debts or other obligations in the ordinary course as
they mature and (c) that the Person has capital not unreasonably small to carry
on its business and all business in which it proposes to be engaged.
"S&P" means Standard & Poor's Rating Services, a division of McGraw-Hill
Companies, Inc.
"SUBSIDIARY" means, for any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (without regard to the occurrence of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
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<PAGE> 22
"TANGIBLE NET WORTH" means, as of a given date, total stockholder's equity
of the borrower and its Subsidiaries determined on a consolidated basis minus
(to the extent reflected in determining stockholders' equity of the Borrower
and its Subsidiaries): (a) the amount of any write-up, after the Agreement
Date, in the book value of any assets contained in any balance sheet resulting
from revaluation thereof or any write-up, after the Agreement Date, in excess
of the cost of such assets acquired and (b) the aggregate of all amounts
appearing on the assets side of any such balance sheet for franchises,
licenses, permits, patents, patent applications, copyrights, trademarks, trade
names, goodwill, treasury stock, experimental or organizational expenses and
other like assets which would be properly classified as intangible assets under
GAAP.
"TAXES" has the meaning given that term in Section 3.12.
"TERMINATION DATE" means February 26, 2001, or such later date to which
the Termination Date may be extended pursuant to Section 2.10.
"TOTAL DEBT SERVICE" means, for any period and without duplication, the
sum of (a) Interest Expense for such period plus (b) regularly scheduled
principal payments on Indebtedness of the Borrower and its Subsidiaries during
such period plus (c) the amount of amortization of deferred financing fees of
the Borrower and its Subsidiaries for such period.
"TOTAL LIABILITIES" means, as of a given date, all liabilities which
would, in conformity with GAAP, be properly classified as a liability on the
consolidated balance sheet of the Borrower and its Subsidiaries as at such
date, and in any event shall include (without duplication) all Indebtedness of
the Borrower and any of its Subsidiaries.
"TYPE" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or Base Rate Loan.
"UNCONSOLIDATED AFFILIATE" shall mean, with respect to any Person, any
other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP
with the financial results of such Person on the consolidated financial
statements of such Person.
"UNENCUMBERED POOL CERTIFICATE" means a report, certified by the chief
financial officer of the Borrower, setting forth the calculations required to
establish the Unencumbered Pool Value as of a specified date, all in form and
detail reasonably satisfactory to the Agent.
"UNENCUMBERED POOL PROPERTIES" means those Eligible Properties that have
been approved pursuant to Article IV. for inclusion when calculating the
Maximum Loan Availability. If at any time a Real Property Asset that has been
deemed to be an Unencumbered Pool Property shall cease to be an Eligible
Property, then such Real Property Asset shall also cease to be an Unencumbered
Pool Property.
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<PAGE> 23
"UNENCUMBERED POOL VALUE" means, at any time, (a) the aggregate amount of
Net Lease Revenues for the fiscal quarter most recently ended for all
Unencumbered Pool Properties times (b) 4 divided by (c) 10.3%. Notwithstanding
the foregoing, not more than 20% of the Unencumbered Pool Value can be
attributable to Eligible Properties owned by Wholly Owned Subsidiaries.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"UNSECURED INDEBTEDNESS" means, with respect to a Person, all Indebtedness
of such Person that is not Secured Indebtedness.
"WHOLLY OWNED SUBSIDIARY" means, with respect to a Person, any Subsidiary
of such Person all of the equity securities or other ownership interests (other
than, in the case of a corporation, directors' qualifying shares) are at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
SECTION 1.2. GENERAL; REFERENCES TO TIMES.
Unless otherwise indicated, all accounting terms, ratios and measurements
shall be interpreted or determined in accordance with GAAP in effect as of the
Agreement Date. References in this Agreement to "Sections", "Articles",
"Exhibits" and "Schedules" are to sections, articles, exhibits and schedules
herein and hereto unless otherwise indicated. References in this Agreement to
any document, instrument or agreement (a) shall include all exhibits, schedules
and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, to the extent permitted
hereby and (c) shall mean such document, instrument or agreement, or
replacement or predecessor thereto, as amended, supplemented, restated or
otherwise modified from time to time to the extent permitted hereby and in
effect at any given time. Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular
and plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter. Unless explicitly
set forth to the contrary, a reference to "Subsidiary" means a Subsidiary of
the Borrower or a Subsidiary of such Subsidiary and a reference to an
"Affiliate" means a reference to an Affiliate of the Borrower. Titles and
captions of Articles, Sections, subsections and clauses in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement. Unless otherwise indicated, all references to time are references
to Charlotte, North Carolina time.
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<PAGE> 24
SECTION 1.3. TREATMENT OF FINANCIAL ATTRIBUTES OF UNCONSOLIDATED
AFFILIATES; SHORT REPORTING PERIODS.
For purposes of calculating the amount of Adjusted EBITDA, Gross Asset
Value, EBITDA, Fixed Charges, Total Debt Service, Total Liabilities (each a
"Financial Attribute") of the Borrower and its Subsidiaries, the pro rata share
of the amount of such Financial Attribute of each Unconsolidated Affiliate of
the Borrower or any Subsidiary (determined in a manner consistent with the
definition of such Financial Attribute set forth herein) shall be included in
such Financial Attribute of the Borrower and its Subsidiaries. If the
determination of the Borrower's compliance with any financial covenant
contained in this Agreement requires including financial matters relating to
any time prior to January 1, 1998, such covenant shall be calculated using the
applicable pro forma financial information of the Borrower taking into effect
the initial public offering of stock by the Borrower consummated on or about
November 19, 1997 and assuming such offering, the use of proceeds therefrom,
and the related REIT election all occurred prior to January 1, 1997.
ARTICLE II. CREDIT FACILITY
SECTION 2.1. REVOLVING LOANS.
(a) Generally. Subject to the terms and conditions hereof, during the
period from the Effective Date to but excluding the Termination Date, each
Lender severally and not jointly agrees to make Revolving Loans to the Borrower
in an aggregate principal amount at any one time outstanding up to, but not
exceeding, such Lender's Commitment Percentage of the Maximum Loan
Availability. Subject to the terms and conditions of this Agreement, during
the period from the Effective Date to but excluding the Termination Date, the
Borrower may borrow, repay and reborrow Revolving Loans hereunder.
(b) Requesting Revolving Loans. The Borrower shall give the Agent notice
pursuant to a Notice of Borrowing or telephonic notice of each borrowing of
Revolving Loans. Each Notice of Borrowing shall be delivered to the Agent
before 12:00 noon (a) in the case of LIBOR Loans, on the date three Business
Days prior to the proposed date of such borrowing and (b) in the case of Base
Rate Loans, on the date one Business Day prior to the proposed date of such
borrowing. Any such telephonic notice shall include all information to be
specified in a written Notice of Borrowing and shall be promptly confirmed in
writing by the Borrower pursuant to a Notice of Borrowing sent to the Agent by
telecopy on the same day of the giving of such telephonic notice. The Agent
will transmit by telecopy the Notice of Borrowing (or the information contained
in such Notice of Borrowing) to each Lender promptly upon receipt by the Agent.
Each Notice of Borrowing or telephonic notice of each borrowing shall be
irrevocable once given and binding on the Borrower.
(c) Disbursements of Revolving Loan Proceeds. No later than 11:00 a.m. on
the date specified in the Notice of Borrowing, each Lender will make available
for the account of its applicable Lending Office to the Agent at the Principal
Office, in immediately available funds, the proceeds of the Revolving Loan to
be made by such Lender. With respect to Revolving Loans to be made after the
Effective Date, unless the Agent shall have been notified by any Lender prior
to
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the specified date of borrowing that such Lender does not intend to make
available to the Agent the Revolving Loan to be made by such Lender on such
date, the Agent may assume that such Lender will make the proceeds of such
Revolving Loan available to the Agent on the date of the requested borrowing as
set forth in the Notice of Borrowing and the Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the Borrower
the amount of such Revolving Loan to be provided by such Lender. Subject to
satisfaction of the applicable conditions set forth in Article VI. for such
borrowing, the Agent will make the proceeds of such borrowing available to the
Borrower no later than 12:00 noon on the date and at the account specified by
the Borrower in such Notice of Borrowing.
SECTION 2.2. RATES AND PAYMENT OF INTEREST ON LOANS.
(a) Rates. The Borrower promises to pay to the Agent for account of each
Lender interest on the unpaid principal amount of each Loan made by such Lender
for the period from and including the date of the making of such Loan to but
excluding the date such Loan shall be paid in full, at the following per annum
rates:
(i) during such periods as such Loan is a Base Rate Loan, at the
Base Rate (as in effect from time to time); and
(ii) during such periods as such Loan is a LIBOR Loan, at the
Adjusted Eurodollar Rate for such Loan for the Interest Period therefor,
plus the Applicable Margin.
Notwithstanding the foregoing, during the continuance of an Event of Default,
the Borrower shall pay to the Agent for account of each Lender interest at the
Post-Default Rate on the outstanding principal amount of any Loan made by such
Lender and on any other amount payable by the Borrower hereunder or under the
Notes held by such Lender (including without limitation, accrued but unpaid
interest to the extent permitted under Applicable Law).
(b) Payment of Interest. Accrued interest on each Loan shall be payable
(i) in the case of a Base Rate Loan, monthly on the last Business Day of each
calendar month, (ii) in the case of a LIBOR Loan, on the last day of each
Interest Period therefor and, if such Interest Period is longer than three
months, at three-month intervals following the first day of such Interest
Period, and (iii) in the case of any Loan, upon the payment, prepayment or
Continuation thereof or the Conversion of such Loan to a Loan of another Type
(but only on the principal amount so paid, prepaid or Converted). Interest
payable at the Post-Default Rate shall be payable from time to time on demand.
Promptly after the determination of any interest rate provided for herein or
any change therein, the Agent shall give notice thereof to the Lenders to which
such interest is payable and to the Borrower. All determinations by the Agent
of an interest rate hereunder shall be conclusive and binding on the Lenders
and the Borrower for all purposes, absent manifest error.
SECTION 2.3. NUMBER OF INTEREST PERIODS.
There may be no more than 8 different Interest Periods outstanding at the
same time.
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SECTION 2.4. REPAYMENT OF LOANS.
The Borrower shall repay the entire outstanding principal amount of, and
all accrued but unpaid interest on, the Revolving Loans on the Termination
Date.
SECTION 2.5. PREPAYMENTS.
(a) Optional. Subject to Section 5.4., the Borrower may prepay any Loan
at any time without premium or penalty. The Borrower shall give the Agent at
least 3 Business Days prior written notice of the prepayment of any LIBOR Loan
and at least 1 Business Day prior written notice of the prepayment of any Base
Rate Loan.
(b) Mandatory. If at any time the aggregate principal amount of all
outstanding Revolving Loans exceeds the Maximum Loan Availability at such time,
the Borrower shall immediately pay to the Agent for the accounts of the Lenders
the amount of such excess. Such payment shall be applied to pay all amounts of
principal outstanding on the Loans pro rata in accordance with Section 3.2. If
the Borrower is required to pay any outstanding LIBOR Loans by reason of this
Section prior to the end of the applicable Interest Period therefor, the
Borrower shall pay all amounts due under Section 5.4.
SECTION 2.6. CONTINUATION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, with respect to any LIBOR
Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan
by selecting a new Interest Period for such LIBOR Loan. Each new Interest
Period selected under this Section shall commence on the last day of the
immediately preceding Interest Period. Each selection of a new Interest Period
shall be made by the Borrower giving to the Agent a Notice of Continuation not
later than 12:00 noon on the third Business Day prior to the date of any such
Continuation. Such notice by the Borrower of a Continuation shall be by
telephone or telecopy, confirmed immediately in writing if by telephone, in the
form of a Notice of Continuation, specifying (a) the proposed date of such
Continuation, (b) the LIBOR Loan and portion thereof subject to such
Continuation and (c) the duration of the selected Interest Period, all of which
shall be specified in such manner as is necessary to comply with all
limitations on Loans outstanding hereunder. Each Notice of Continuation shall
be irrevocable by and binding on the Borrower once given. Promptly after
receipt of a Notice of Continuation, the Agent shall notify each Lender by
telecopy or other similar form of transmission of the proposed Continuation.
If the Borrower shall fail to select in a timely manner a new Interest Period
for any LIBOR Loan in accordance with this Section, such Loan will
automatically, on the last day of the current Interest Period therefor, Convert
into a Base Rate Loan notwithstanding failure of the Borrower to comply with
Section 2.7.
SECTION 2.7. CONVERSION.
So long as no Default or Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day, upon the Borrower's giving of
a Notice of Conversion to the Agent, Convert all or a portion of a Loan of one
Type into a Loan of another Type. Any
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Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only on,
the last day of an Interest Period for such LIBOR Loan and, upon Conversion of
a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued interest to
the date of Conversion on the principal amount so Converted. Each such Notice
of Conversion shall be given not later than 12:00 noon on the Business Day
prior to the date of any proposed Conversion into Base Rate Loans and on the
third Business Day prior to the date of any proposed Conversion into LIBOR
Loans. Promptly after receipt of a Notice of Conversion, the Agent shall
notify each Lender by telecopy or other similar form of transmission of the
proposed Conversion. Subject to the restrictions specified above, each Notice
of Conversion shall be by telephone (confirmed immediately in writing) or
telecopy in the form of a Notice of Conversion specifying (a) the requested
date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion
of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be
Converted into and (e) if such Conversion is into a LIBOR Loan, the requested
duration of the Interest Period of such Loan. Each Notice of Conversion shall
be irrevocable by and binding on the Borrower once given.
SECTION 2.8. NOTES.
(a) Revolving Note. The Revolving Loans made by each Lender shall, in
addition to this Agreement, also be evidenced by a promissory note of the
Borrower substantially in the form of Exhibit G (each a "Revolving Note"),
payable to the order of such Lender in a principal amount equal to the amount
of its Commitment as originally in effect and otherwise duly completed.
(b) Records; Endorsement on Transfer. The date, amount of each Loan made
by each Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by such Lender on its books and such
entries shall be binding on the Borrower absent manifest error. Prior to the
transfer of any Note, the Lender shall endorse such items on such Note or any
allonge thereof; provided that the failure of such Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under such Note in
respect of the Loans evidenced by such Note.
SECTION 2.9. VOLUNTARY REDUCTIONS OF THE COMMITMENT.
The Borrower shall have the right to terminate or reduce the aggregate
unused amount of the Commitments at any time and from time to time without
penalty or premium upon not less than 5 Business Days prior written notice to
the Agent of each such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction and shall be
irrevocable once given and effective only upon receipt by the Agent. The Agent
will promptly transmit such notice to each Lender. The Commitments, once
terminated or reduced may not be increased or reinstated.
SECTION 2.10. EXTENSION OF TERMINATION DATE.
(a) Generally. The Borrower may request that the Agent and the Lenders
extend the current Termination Date by one year by executing and delivering to
the Agent at least 90 days but no more than 120 days prior to the date one year
before the current Termination Date, a
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written request for such an extension (an "Extension Request"). The Agent
shall forward to each Lender a copy of each Extension Request delivered to the
Agent promptly after receipt thereof. The Borrower understands and
acknowledges that (a) this Section has been included in this Agreement for the
Borrower's convenience in requesting an extension of the Termination Date; (b)
none of the Lenders nor the Agent has promised (either expressly or impliedly),
nor has any obligation or commitment whatsoever, to extend the Termination Date
at any time and (c) the Lenders may condition any such extension on such terms
and conditions as the Lenders deem appropriate. If all of the Lenders shall
have notified the Agent in writing on or prior to the date which is 30 days
prior to the date (the "Current Anniversary Date") one year before the current
Termination Date that they accept such Extension Request, then the Termination
Date shall be extended to the date one year following the current Termination
Date. If any Lender shall not have notified the Agent on or prior to the
Current Anniversary Date that it accepts such Extension Request, then the
current Termination Date shall not be extended. The Agent shall promptly
notify the Borrower whether the Extension Request has been accepted or
rejected, and if rejected, the Agent shall also give the Borrower notice of
which Lenders rejected such Extension Request (each such Lender a "Rejecting
Lender").
(b) Rejecting Lenders. Notwithstanding the preceding subsection (a),
after notification from the Agent that an Extension Request has been rejected,
the Termination Date shall be extended as requested in such Extension Request
if (i) Lenders holding Commitments equal to or greater than $125,000,000 in
aggregate amount consented to such Extension Request, (ii) no later than the
date 30 days following the Current Anniversary Date, the Borrower shall have
given written notice to the Agent and each Lender that the Borrower desires the
Termination Date to be so extended notwithstanding such rejection and (iii) the
Borrower shall have, no later than 90 days prior to the Termination Date at the
time of the Extension Request in question, (x) caused each Rejecting Lender to
have assigned its respective Commitment to an Eligible Assignee subject to and
in accordance with the provisions of Section 13.5.(d) for a purchase price
equal to the aggregate principal balance of Loans then owing to such Rejecting
Lender plus any accrued but unpaid interest thereon and accrued but unpaid fees
and other amounts then owing to such Rejecting Lender under the Loan Documents,
and (y) to the extent the Commitment of any Rejecting Lender is not so assigned
by such date, paid to such Rejecting Lender the aggregate principal balance of
Loans then owing to such Rejecting Lender plus any accrued but unpaid interest
thereon and accrued but unpaid fees and other amounts then owing to such
Rejecting Lender under the Loan Documents, whereupon such Rejecting Lender's
Commitment shall terminate, such Rejecting Lender shall no longer be a party
hereto or have any rights or obligations hereunder or under any of the other
Loan Documents. In addition, in connection with any such assignment by a
Rejecting Lender or any such payment to a Rejecting Lender, the Borrower shall
pay the amounts, if any, due such Rejecting Lender under Section 5.4. If the
Borrower desires to cause any Rejecting Lender to assign its Commitment
pursuant to this subsection, the Borrower shall so notify such Rejecting
Lender, the Agent and the other Lenders in writing no later than the date 120
days prior to the current Termination Date. A Rejecting Lender shall be
obligated to assign its Commitment pursuant to this subsection if requested to
do so by the Borrower. Each Lender that is not a Rejecting Lender shall have
the right (but not the obligation) to acquire such Rejecting Lender's
Commitment and shall exercise such right by giving written notice thereof to
the Agent no later than 10 Business Days of receipt of the Borrower's
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notice. Any Lender who has failed to so notify the Agent within such 10
Business Day period shall be deemed to have declined to exercise such right.
If more than one Lender exercises its right to acquire a Rejecting Lender's
Commitment, each such Lender shall acquire an amount of such Rejecting Lender's
Commitment in proportion to the Commitments of the Lenders exercising such
right. After the expiration of such 10 Business Day period, the Borrower shall
have the right to attempt to cause an Eligible Assignee to accept an assignment
of a Rejecting Lender's Commitment. Neither the Agent nor any Lender shall
have any obligation whatsoever to assist the Borrower in finding any such
Eligible Assignee. If Lenders holding Commitments equal to or greater than
$125,000,000 in aggregate amount do not consent to any Extension Request or if
the Borrower fails to comply with any provision of this subsection, the
Termination Date shall not be extended.
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
SECTION 3.1. PAYMENTS.
Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement or
any other Loan Document shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Agent at its
Principal Office, not later than 2:00 p.m. on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Prior to making
any such payment, the Borrower shall give the Agent notice of such payment.
The Borrower shall, at the time of making each payment under this Agreement or
any Note, specify to the Agent the amounts payable by the Borrower hereunder to
which such payment is to be applied. Each payment received by the Agent for
the account of a Lender under this Agreement or any Note shall be paid to such
Lender at the applicable Lending Office of such Lender no later than 5:00 p.m.
on the date of receipt. If the Agent fails to pay such amount to a Lender as
provided in the previous sentence, the Agent shall pay interest on such amount
until paid at a rate per annum equal to the Federal Funds Rate from time to
time in effect. If the due date of any payment under this Agreement or any
other Loan Document would otherwise fall on a day which is not a Business Day
such date shall be extended to the next succeeding Business Day and interest
shall be payable for the period of such extension.
SECTION 3.2. PRO RATA TREATMENT.
Except to the extent otherwise provided herein: (a) each borrowing from
the Lenders under Section 2.1.(a) shall be made from the Lenders, each payment
of the Fees under Section 3.6.(a) shall be made for account of the Lenders, and
each termination or reduction of the amount of the Commitments under Section
2.9. shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (b) each payment or
prepayment of principal of Revolving Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the respective unpaid
principal amounts of the Revolving Loans held by them, provided that if
immediately prior to giving effect to any such payment in respect of any
Revolving Loans the outstanding principal amount of the Revolving Loans shall
not be held by the Lenders pro rata in accordance with their respective
Commitments
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in effect at the time such Loans were made, then such payment shall be applied
to the Revolving Loans in such manner as shall result, as nearly as is
practicable, in the outstanding principal amount of the Revolving Loans being
held by the Lenders pro rata in accordance with their respective Commitments;
(c) each payment of interest on Revolving Loans by the Borrower shall be made
for account of the Lenders pro rata in accordance with the amounts of interest
on such Loans then due and payable to the respective Lenders; and (d) the
making, Conversion and Continuation of Revolving Loans of a particular Type
(other than Conversions provided for by Section 5.5.) shall be made pro rata
among the Lenders according to the amounts of their respective Commitments (in
the case of making of Loans) or their respective Loans (in the case of
Conversions and Continuations of Loans) and the then current Interest Period
for each Lender's portion of each Loan of such Type shall be coterminous.
SECTION 3.3. SHARING OF PAYMENTS, ETC.
The Borrower agrees that, in addition to (and without limitation of) any
right of set-off, banker's lien or counterclaim a Lender or the Agent may
otherwise have, each Lender and the Agent shall be entitled during the
continuance of an Event of Default, at its option, and in the case of any
Lender subject to receipt of the Agent's prior written consent, to offset
balances held by it for the account of the Borrower at any of such Lender's (or
the Agent's) offices, in Dollars or in any other currency, against any
principal of, or interest on, any of such Lender's Loans hereunder (or other
Obligations owing to such Lender or the Agent hereunder) which is not paid when
due (regardless of whether such balances are then due to the Borrower), in
which case such Lender shall promptly notify the Borrower, all other Lenders
and the Agent thereof; provided, however, such Lender's failure to give such
notice shall not affect the validity of such offset. If a Lender shall obtain
payment of any principal of, or interest on, any Loan made by it to the
Borrower under this Agreement, or shall obtain payment on any other Obligation
owing by the Borrower or a Subsidiary through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise or through
voluntary prepayments directly to a Lender or other payments made by the
Borrower to a Lender not in accordance with the terms of this Agreement and
such payment should be distributed to the Lenders pro rata in accordance with
Section 3.2. or Section 11.4., as applicable, such Lender shall promptly pay
such amounts to the other Lenders and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders shall share the
benefit of such payment (net of any reasonable expenses which may be incurred
by such Lender in obtaining or preserving such benefit) pro rata in accordance
with Section 3.2. or Section 11.4. To such end, all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
SECTION 3.4. SEVERAL OBLIGATIONS.
No Lender shall be responsible for the failure of any other Lender to make
a Loan or to perform any other obligation to be made or performed by such other
Lender hereunder, and the failure of any Lender to make a Loan or to perform
any other obligation to be made or performed
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by it hereunder shall not relieve the obligation of any other Lender to make
any Loan or to perform any other obligation to be made or performed by such
other Lender.
SECTION 3.5. MINIMUM AMOUNTS.
(a) Borrowings and Conversions. Each borrowing of Base Rate Loans shall
be in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess thereof. Each borrowing of LIBOR Loans, and each Conversion
of Base Rate Loans into LIBOR Loans, shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount.
(b) Prepayments. Each voluntary prepayment of Revolving Loans shall be in
an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess thereof.
(c) Reductions of Commitments. Each reduction of the Commitments under
Section 2.9. shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $5,000,000 in excess thereof (or such lesser amount as may be the
remaining aggregate amount of the Commitments).
SECTION 3.6. FEES.
(a) Unused Commitment Fee. During the period commencing on the date
hereof to but excluding the Termination Date, the Borrower agrees to pay to the
Agent for the account of the Lenders an unused facility fee equal to (a)
one-eighth of one percent (0.125%) per annum of the daily aggregate unused
portion of the Lender's Commitments if such unused portion is less than or
equal to one half of the aggregate amount of the Lenders' Commitments on each
such day or (b) two-tenths of one percent (0.2%) per annum of the daily
aggregate unused portion of the Lender's Commitments if such unused portion is
greater than one-half of the aggregate amount of the Lenders' Commitments on
each such day. Such fee shall be payable quarterly in arrears on each
Quarterly Date and on the Termination Date.
(b) If, pursuant to Section 2.10., the Termination Date is extended, the
Borrower agrees to pay to the Agent for the account of each Lender consenting
to such extension an extension fee equal to two-tenths of one percent (0.2%) of
such Lender's Commitment at such time. Such fee shall be due and payable in
full on the date on which such extension is granted.
(c) Administrative and Other Fees. The Borrower agrees to pay the
administrative and other fees of the Agent as may be agreed to in writing
between the Agent and the Borrower from time to time.
SECTION 3.7. COMPUTATIONS.
Unless otherwise expressly set forth herein, any accrued interest on any
Loan, any Fees or other Obligations due hereunder shall be computed on the
basis of a year of 360 days and the actual number of days elapsed, except in
the case of interest on any Base Rate Loan which shall
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be computed on the basis of a year of 365 or 366 days, as the case may be, and
the actual number of days elapsed.
SECTION 3.8. USURY.
In no event shall the amount of interest due or payable on the Loans or
other Obligations exceed the maximum rate of interest allowed by Applicable Law
and, if any such payment is paid by the Borrower or received by any Lender,
then such excess sum shall be credited as a payment of principal, unless the
Borrower shall notify the respective Lender in writing that the Borrower elects
to have such excess sum returned to it forthwith. It is the express intent of
the parties hereto that the Borrower not pay and the Lenders not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by the Borrower under Applicable Law.
SECTION 3.9. AGREEMENT REGARDING INTEREST AND CHARGES.
The parties hereto hereby agree and stipulate that the only charge imposed
upon the Borrower for the use of money in connection with this Agreement is and
shall be the interest specifically described in Section 2.2.(a)(i) and (ii).
Notwithstanding the foregoing, the parties hereto further agree and stipulate
that all agency fees, syndication fees, facility fees, underwriting fees,
default charges, late charges, funding or "breakage" charges, increased cost
charges, attorneys' fees and reimbursement for costs and expenses paid by the
Agent or any Lender to third parties or for damages incurred by the Agent or
any Lender, are charges made to compensate the Agent or any such Lender for
underwriting or administrative services and costs or losses performed or
incurred, and to be performed or incurred, by the Agent and the Lenders in
connection with this Agreement and shall under no circumstances be deemed to be
charges for the use of money. Except as expressly agreed otherwise in writing,
all charges other than charges for the use of money shall be fully earned and
nonrefundable when due.
SECTION 3.10. STATEMENTS OF ACCOUNT.
The Agent will account to the Borrower monthly with a statement of Loans,
accrued interest and Fees, charges and payments made pursuant to this Agreement
and the other Loan Documents, and such account rendered by the Agent shall be
prima facie evidence of the amounts and other matters set forth therein. The
failure of the Agent to deliver such a statement of accounts shall not relieve
or discharge the Borrower from any of its obligations hereunder.
SECTION 3.11. DEFAULTING LENDERS.
(a) Generally. If for any reason any Lender (a "Defaulting Lender") shall
fail or refuse to perform any of its obligations under this Agreement or any
other Loan Document to which it is a party within the time period specified for
performance of such obligation or, if no time period is specified, if such
failure or refusal continues for a period of two Business Days after notice
from the Agent, then, in addition to the rights and remedies that may be
available to the Agent or the Borrower under this Agreement or Applicable Law,
such Defaulting Lender's right to participate in the administration of the
Loans, this Agreement and the other Loan Documents, including
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without limitation, any right to vote in respect of, to consent to or to direct
any action or inaction of the Agent or to be taken into account in the
calculation of the Requisite Lenders, shall be suspended during the pendency of
such failure or refusal. If a Lender is a Defaulting Lender because it has
failed to make timely payment to the Agent of any amount required to be paid to
the Agent hereunder (without giving effect to any notice or cure periods), in
addition to other rights and remedies which the Agent or the Borrower may have
under the immediately preceding provisions or otherwise, the Agent shall be
entitled (i) to collect interest from such Defaulting Lender on such delinquent
payment for the period from the date on which the payment was due until the
date on which the payment is made at the Federal Funds Rate, (ii) to withhold
or setoff and to apply in satisfaction of the defaulted payment and any related
interest, any amounts otherwise payable to such Defaulting Lender under this
Agreement or any other Loan Document and (iii) to bring an action or suit
against such Defaulting Lender in a court of competent jurisdiction to recover
the defaulted amount and any related interest. Any amounts received by the
Agent in respect of a Defaulting Lender's Loans shall not be paid to such
Defaulting Lender and shall be held uninvested by the Agent and either applied
against the purchase price of such Loans under the following subsection (b) or
paid to such Defaulting Lender upon the Defaulting Lender's curing of its
default.
(b) Purchase of Defaulting Lender's Commitment. Any Lender who is not a
Defaulting Lender shall have the right, but not the obligation, in its sole
discretion, to acquire all of a Defaulting Lender's Commitment. Any Lender
desiring to exercise such right shall give written notice thereof to the Agent
no sooner than 2 Business Days and not later than 10 Business Days after such
Defaulting Lender became a Defaulting Lender. If more than one Lender
exercises such right, each such Lender shall have the right to acquire an
amount of such Defaulting Lender's Commitment in proportion to the Commitments
of the other Lenders exercising such right. If after such 10th Business Day,
the Lenders have not elected to purchase all of the Commitment of such
Defaulting Lender, then any Eligible Assignee may purchase such Commitment.
Neither the Agent nor any Lender shall have any obligation whatsoever to
initiate any such replacement or to assist in finding an Eligible Assignee.
Upon any such purchase, the Defaulting Lender's interest in the Loans and its
rights hereunder (but not its liability in respect thereof or under the Loan
Documents or this Agreement to the extent the same relate to the period prior
to the effective date of the purchase) shall terminate on the date of purchase,
and the Defaulting Lender shall promptly execute all documents reasonably
requested to surrender and transfer such interest to the purchaser thereof,
including an appropriate Assignment and Acceptance Agreement and,
notwithstanding Section 13.5.(d), shall pay to the Agent an assignment fee in
the amount of $6,000. The purchase price for the Commitment of a Defaulting
Lender shall be equal to the amount of the principal balance of the Loans
outstanding and owed by the Borrower to the Defaulting Lender. Prior to
payment of such purchase price to a Defaulting Lender, the Agent shall apply
against such purchase price any amounts retained by the Agent pursuant to the
last sentence of the immediately preceding subsection (a). The Defaulting
Lender shall be entitled to receive amounts owed to it by the Borrower under
the Loan Documents which accrued prior to the date of the default by the
Defaulting Lender, to the extent the same are received by the Agent from or on
behalf of the Borrower. There shall be no recourse against any Lender or the
Agent for the payment of such sums except to the extent of the receipt of
payments from any other party or in respect of the Loans. If, prior to a
Lender's
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acquisition of a Defaulting Lender's Commitment pursuant to this subsection,
such Defaulting Lender shall cure the event or condition which caused it to
become a Defaulting Lender and shall have paid all amounts owing by it
hereunder as a result thereof, then such Lender shall no longer have the right
to acquire such Defaulting Lender's Commitment.
SECTION 3.12. TAXES.
(a) Taxes Generally. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear
of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes)
that would not be imposed but for a connection between the Agent or a Lender
and the jurisdiction imposing such taxes (other than a connection arising
solely by virtue of the activities of the Agent or such Lender pursuant to or
in respect of this Agreement or any other Loan Document), (iii) any withholding
taxes payable with respect to payments hereunder or under any other Loan
Document under Applicable Law in effect on the Agreement Date, (iv) any taxes
imposed on or measured by any Lender's assets, net income, receipts or branch
profits, (v) any taxes arising after the Agreement Date solely as a result of
or attributable to a Lender changing its designated Lending Office after the
date such Lender becomes a party hereto and (vi) any interest, fees, additional
taxes or penalties relating to any of the items described in the preceding
clauses (i) through (v) (such non-excluded items being collectively called
"Taxes"). If any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
Applicable Law, then the Borrower will:
(i) pay directly to the relevant Governmental Authority the full
amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
Governmental Authority; and
(iii) pay to the Agent for its account or the account of the
applicable Lender, as the case may be, such additional amount or amounts
as is necessary to ensure that the net amount actually received by the
Agent or such Lender will equal the full amount that the Agent or such
Lender would have received had no such withholding or deduction been
required.
(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due
to the appropriate Governmental Authority or fails to remit to the Agent, for
its account or the account of the respective Lender, as the case may be, the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental Taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
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(c) Tax Forms. Prior to the date that any Lender or participant organized
under the laws of a jurisdiction outside the United States of America becomes a
party hereto, such Person shall deliver to the Borrower and the Agent such
certificates, documents or other evidence, as required by the Internal Revenue
Code or Treasury Regulations issued pursuant thereto (including Internal
Revenue Service Forms 4224 or 1001, as applicable, or appropriate successor
forms), properly completed, currently effective and duly executed by such
Lender or participant establishing that payments to it hereunder and under the
Notes are (i) not subject to United States Federal backup withholding tax or
(ii) not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the application
of the provisions of a treaty to which the United States is a party or such
Lender is otherwise exempt.
ARTICLE IV. UNENCUMBERED POOL PROPERTIES
SECTION 4.1. ADMISSION OF UNENCUMBERED POOL PROPERTIES.
(a) The Real Property Assets described on Schedule 4.1. constitute all of
the Unencumbered Pool Properties as of the Agreement Date. If the Borrower
desires that an additional Real Estate Asset be deemed to be an Unencumbered
Pool Property, the Borrower shall deliver to the Agent the following, in form
and substance reasonably satisfactory to the Agent:
(i) A description of such Real Estate Asset, such description to
include the age, location, identity of the tenant, the identity of any
franchisor of such tenant, and the basic terms of the applicable lease
agreement, and to otherwise be in form and substance reasonably
satisfactory to the Agent;
(ii) A copy of the applicable lease agreement (including all
amendments, supplements and other modifications thereof);
(iii) A copy of the summary portion of a "Phase I" environmental
assessment of such Real Estate Asset not more than 12 months old and
prepared by an environmental engineering firm reasonably acceptable to
the Agent;
(iv) A copy of an appraisal of such Real Property Asset not more
than 12 months old and prepared by a real estate appraiser reasonably
acceptable to the Agent;
(v) A copy of the most recent ALTA Owner's Policy of Title Insurance
(or commitment to issue such a policy to the Borrower or Subsidiary
owning such Real Property Asset) relating to such Real Property Asset
showing the Borrower as the fee titleholder thereto and identifying all
matters of record;
(vi) A copy of the materials relating to such Real Estate Asset, if
any, submitted by the Borrower to its board of directors for their
approval of such Real Estate Asset;
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(vii) An Unencumbered Pool Certificate setting forth on a pro forma
basis the Maximum Loan Availability assuming that such Real Estate Asset
is accepted as an Unencumbered Pool Property;
(viii) If such Real Property Asset is owned by a Wholly Owned
Subsidiary that is not yet a party to the Guaranty, each of the
following:
(A) an Accession Agreement duly executed by such Subsidiary
(or if the Guaranty has not yet been executed by any Subsidiary,
the Guaranty executed by such Subsidiary);
(B) the articles or certificate of incorporation, articles of
organization, certificate of limited partnership or other
comparable organizational instrument (if any) of such Subsidiary
certified as of a recent date by the Secretary of State of the
State of formation of such Subsidiary;
(C) a certificate of good standing or certificate of similar
meaning with respect to such Subsidiary issued as of a recent date
by the Secretary of State of the State of formation of such
Subsidiary and certificates of qualification to transact business
or other comparable certificates issued by each Secretary of State
(and any state department of taxation, as applicable) of each state
in which such Subsidiary is required to be so qualified;
(D) a certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar
functions) of such Subsidiary with respect to each of the officers
of such Subsidiary authorized to execute and deliver the Loan
Documents to which such Subsidiary is a party;
(E) copies certified by the Secretary or Assistant Secretary
of such Subsidiary (or other individual performing similar
functions) of (i) the bylaws of such Subsidiary, if a corporation,
the operating agreement, if a limited liability company, the
partnership agreement, if a limited or general partnership, or
other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other
necessary action taken by such Subsidiary to authorize the
execution, delivery and performance of the Loan Documents to which
it is a party;
(F) an opinion of counsel to such Subsidiary, addressed to the
Agent and the Lenders, similar in scope and coverage as the
opinions delivered under Section 6.1. and the last sentence of
Section 6.3.;
(G) such other documents and instruments as Agent may
reasonably request; and
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(ix) Such other information the Agent may reasonably request in
order to determine whether such Real Property Asset can be deemed to be
an Unencumbered Pool Property.
Upon receipt of all of the foregoing documents and information, the Agent shall
review them within 3 Business Days of such receipt. If, following such review,
the Agent has determined that such Real Property Asset constitutes an Eligible
Property and thus may be deemed to be an Unencumbered Pool Property, the Agent
will promptly so notify the Borrower and the Lenders, whereupon such Real
Property Asset shall become an Unencumbered Pool Property.
SECTION 4.2. TERMINATION OF DESIGNATION AS UNENCUMBERED POOL PROPERTY.
From time to time the Borrower may request, upon not less than 5 days
prior written notice to the Agent and the Lenders, that an Unencumbered Pool
Property cease to be an Unencumbered Pool Property. The Agent shall grant such
request if all of the following conditions are satisfied:
(a) no Default or Event of Default shall have occurred and be continuing
both at the time of such request and immediately after giving effect to such
request; and
(b) the Borrower shall have delivered to the Agent an Unencumbered Pool
Certificate demonstrating on a pro forma basis, and the Agent shall have
determined, that the outstanding principal balance of the Loans will not exceed
the Maximum Loan Availability after giving effect to such request and any
prepayment to be made and/or the acceptance of any Real Estate Asset as an
additional or replacement Unencumbered Pool Property to be given concurrently
with such request.
If a Guarantor no longer owns any Real Property Asset that is an Unencumbered
Pool Property nor any direct or indirect equity interest in any Guarantor that
does own an Unencumbered Pool Property, then upon written request by such
Guarantor, the Agent shall terminate such Guarantor's Guaranty within 5
Business Days of receipt of the Borrower's written request for such release.
ARTICLE V. YIELD PROTECTION, ETC.
SECTION 5.1. ADDITIONAL COSTS; CAPITAL ADEQUACY.
(a) Additional Costs. The Borrower shall promptly (and in any event
within 30 calendar days of request) pay to the Agent for the account of a
Lender from time to time such amounts as such Lender may determine to be
necessary to compensate such Lender for any costs incurred by such Lender that
it determines are attributable to its making or maintaining of any LIBOR Loans
or its obligation to make any LIBOR Loans hereunder, any reduction in any
amount receivable by such Lender under this Agreement or any of the other Loan
Documents in respect of any of such Loans or such obligation or the maintenance
by such Lender of capital in respect of its Loans or its Commitments (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change that:
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(i) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any of the other Loan Documents in respect of any of such
Loans or its Commitments (other than taxes imposed on or measured by the
overall net income of such Lender or of its Lending Office for any of such
Loans by the jurisdiction in which such Lender has its principal office or such
Lending Office); or (ii) imposes or modifies any reserve, special deposit or
similar requirements (other than Regulation D of the Board of Governors of the
Federal Reserve System or other reserve requirement utilized in the
determination of the Adjusted Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender, or any commitment of such Lender (including,
without limitation, the Commitments of such Lender hereunder); or (iii) has or
would have the effect of reducing the rate of return on capital of such Lender
to a level below that which such Lender could have achieved but for such
Regulatory Change (taking into consideration such Lender's policies with
respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect of
the provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by
reference to which the interest rate on LIBOR Loans is determined as provided
in this Agreement or a category of extensions of credit or other assets of such
Lender that includes LIBOR Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Lender so elects by notice to the Borrower (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert any other Type of
Loans into, LIBOR Loans hereunder shall be suspended until such Regulatory
Change ceases to be in effect (in which case the provisions of Section 5.5.
shall apply).
(c) Notification and Determination of Additional Costs. Each of the Agent
and each Lender agrees to notify the Borrower of any event occurring after the
Agreement Date entitling the Agent or such Lender to compensation under any of
the preceding subsections of this Section as promptly as practicable; provided,
however, the failure of the Agent or any Lender to give such notice shall not
release the Borrower from any of its obligations hereunder. The Agent and or
such Lender agrees to furnish to the Borrower a certificate setting forth the
basis and amount of each request by the Agent or such Lender for compensation
under this Section. Determinations by the Agent or any Lender of the effect of
any Regulatory Change shall be conclusive, provided that such determinations
are made on a reasonable basis and in good faith.
SECTION 5.2. SUSPENSION OF LIBOR LOANS.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any Adjusted Eurodollar Rate for any Interest Period:
(a) the Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable
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means do not exist for ascertaining the Adjusted Eurodollar Rate for
such Interest Period, or
(b) the Agent reasonably determines (which determination shall be
conclusive) that the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to the Lenders of making or maintaining LIBOR
Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of
each current Interest Period for each outstanding LIBOR Loan, either repay such
Loan or Convert such Loan into a Base Rate Loan.
SECTION 5.3. ILLEGALITY.
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof
(with a copy to the Agent) and such Lender's obligation to make or Continue, or
to Convert Loans of any other Type into, LIBOR Loans shall be suspended until
such time as such Lender may again make and maintain LIBOR Loans (in which case
the provisions of Section 5.5. shall be applicable).
SECTION 5.4. COMPENSATION.
The Borrower shall pay to the Agent for account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense that such Lender determines is attributable to: (a) any
payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or
Conversion of a LIBOR Loan, made by such Lender for any reason (including,
without limitation, acceleration) on a date other than the last day of the
Interest Period for such Loan; or (b) any failure by the Borrower for any
reason (including, without limitation, the failure of any of the applicable
conditions precedent specified in Article VI. to be satisfied) to borrow a
LIBOR Loan from such Lender on the date for such borrowing, or to Convert a
Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date
of such Conversion or Continuation.
SECTION 5.5. TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 5.1.(b), Section 5.2. or Section 5.3., then such Lender's LIBOR Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for LIBOR Loans (or, in the case of a
Conversion required by Section 5.1.(b) or Section 5.3., on such earlier date as
such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 5.1., Section 5.2. or Section 5.3. that gave rise to such
Conversion no longer exist:
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(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's LIBOR Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as LIBOR Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1. or 5.3. that gave rise to the
Conversion of such Lender's LIBOR Loans pursuant to this Section no longer
exist (which such Lender agrees to do promptly upon such circumstances ceasing
to exist) at a time when LIBOR Loans made by other Lenders are outstanding,
then such Lender's Base Rate Loans shall be automatically Converted, on the
first day(s) of the next succeeding Interest Period(s), if any, for such
outstanding LIBOR Loans, to the extent necessary so that, after giving effect
thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender
are held pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments.
SECTION 5.6. CHANGE OF LENDING OFFICE.
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12., 5.1. or 5.3. to reduce
the liability of the Borrower or avoid the results provided thereunder, so long
as such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion, except that such Lender shall have no obligation
to designate a Lending Office located in the United States of America.
SECTION 5.7. TREATMENT OF AFFECTED LENDERS.
If (a) a Lender requests compensation pursuant to Section 3.12. or Section
5.1. and the Requisite Lenders are not also doing the same, or (b) the
obligation of a Lender to make LIBOR Loans or to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(b),
Section 5.2. or Section 5.3. but the obligation of the Requisite Lenders shall
not have been suspended under such Sections, the Borrower may either (A) demand
that such Lender (the "Affected Lender"), and upon such demand the Affected
Lender shall promptly, assign its Commitment and all of its Loans to an
Eligible Assignee subject to and in accordance with the provisions of Section
13.5.(d) for a purchase price equal to the aggregate principal balance of Loans
then owing to the Affected Lender plus any accrued but unpaid interest thereon,
accrued but unpaid Fees owing to the Affected Lender and any amounts owing the
Affected Lender under Section 5.4., or (B) pay to the Affected Lender the
aggregate principal balance of Loans then owing to the Affected Lender plus any
accrued but unpaid interest thereon, accrued but unpaid Fees owing to the
Affected Lender and any amounts owing the Affected Lender under Section 5.4.,
whereupon the Affected Lender shall no longer be a party hereto or have any
rights or obligations hereunder or under any of the other Loan Documents. Each
of the
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Agent and the Affected Lender shall reasonably cooperate in effectuating the
replacement of an Affected Lender under this Section, but at no time shall the
Agent, the Affected Lender or any other Lender be obligated in any way
whatsoever to initiate any such replacement or to assist in finding an Eligible
Assignee. The exercise by the Borrower of its rights under this Section shall
be at the Borrower's sole cost and expenses and, except for the administrative
fee payable by an assigning Lender to the Agent under the last sentence of
Section 13.5.(d), at no cost or expense to the Agent, the Affected Lender or
any of the other Lenders. The terms of this Section shall not in any way limit
the Borrower's obligation to pay to any Affected Lender compensation owing to
such Affected Lender pursuant to Section 3.12. or Section 5.1.
SECTION 5.8. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS.
Calculation of all amounts payable to a Lender under this Article V. shall
be made as though such Lender had actually funded LIBOR Loans through the
purchase of deposits in the relevant market bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR
Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under this Article V.
ARTICLE VI. CONDITIONS PRECEDENT
SECTION 6.1. INITIAL CONDITIONS PRECEDENT.
The obligation of any Lender to make its first Loan hereunder is subject
to the following conditions precedent:
(a) The Agent shall have received each of the following, in form and
substance satisfactory to the Agent:
(i) Counterparts of this Agreement executed by each of the parties
hereto;
(ii) Notes executed by the Borrower, payable to each Lender and
complying with the terms of Section 2.8.(a);
(iii) An opinion of Baker & Hostetler LLP, counsel to the Borrower,
addressed to the Agent and the Lenders, in substantially the form of
Exhibit H;
(iv) The Certificate of Incorporation of the Borrower certified as
of a recent date by the Secretary of State of the State of Delaware;
(v) A long form good standing certificate with respect to the
Borrower issued as of a recent date by the Secretary of State of the
State of Delaware and certificates of qualification to transact business
or other comparable certificates issued by the Secretary of State (and
any state department of taxation, as applicable) of each state in which
the Borrower is required to be so qualified;
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(vi) A certificate of incumbency signed by the Secretary or
Assistant Secretary of the Borrower with respect to each of the officers
of the Borrower authorized to execute and deliver the Loan Documents to
which the Borrower is a party and the officers of the Borrower then
authorized to deliver Notices of Borrowing, Notices of Continuation and
Notices of Conversion;
(vii) Copies (certified by the Secretary or Assistant Secretary of
the Borrower) of the bylaws of the Borrower and of all corporate action
taken by the Borrower to authorize the execution, delivery and
performance of the Loan Documents to which it is a party;
(viii) A copy of (x) each of the documents, instruments and
agreements evidencing any of the Indebtedness described on Schedule
7.1.(g); (y) each Material Contract and (z) each of the documents,
instruments and agreements evidencing any of the transactions described
on Schedule 10.12., in each case certified as true, correct and complete
by the chief executive officer or chief financial officer of the
Borrower;
(ix) Evidence that all insurance required to be maintained by the
Borrower and the Subsidiaries under the terms of the Loan Documents is in
effect;
(x) The Fees, if any, then due under Section 3.6.;
(xi) A Compliance Certificate calculated on a pro forma basis as of
the Agreement Date based on financial information for the fiscal quarter
ending December 31, 1997;
(xii) An Unencumbered Pool Certificate calculated as of January 31,
1998 giving pro forma effect to the consummation of the transactions
contemplated hereby (including the payment in full of any Indebtedness
referred to in the following subsection);
(xiii) A pay-out letter from each holder of any Indebtedness being
paid in full with the proceeds of the initial borrowing of Loans
hereunder, setting forth, among other things, the total amount of
Indebtedness owing by the Borrower to such holder, such holder's
confirmation that effective upon payment in full of such Indebtedness
that all Liens securing such Indebtedness will be automatically
terminated, and appropriate wire transfer instructions to effect the
payment in full of such Indebtedness; and
(xiv) Such other documents, agreements and instruments as the Agent
on behalf of the Lenders may reasonably request; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) There shall not have occurred or become known to the Agent or
the Lenders any event, condition, situation or status since the date of
the information
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contained in the financial and business projections, budgets, pro forma
data and forecasts concerning the Borrower and its Subsidiaries delivered
to the Agent and the Lenders prior to the Agreement Date that has had or
could reasonably be expected to result in a Material Adverse Effect;
(ii) No litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened
which could reasonably be expected to (1) result in a Material Adverse
Effect or (2) restrain or enjoin, impose materially burdensome conditions
on, or otherwise materially and adversely affect the ability of the
Borrower to fulfill its obligations under the Loan Documents to which it
is a party;
(iii) The Borrower and its Subsidiaries shall have received all
approvals, consents and waivers, and shall have made or given all
necessary filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any default
under, conflict with or violation of (1) any Applicable Law or (2) any
agreement, document or instrument to which the Borrower is a party or by
which any of them or their respective properties is bound, except for
such approvals, consents, waivers, filings and notices the receipt,
making or giving of which would not reasonably be likely to (A) have a
Material Adverse Effect, or (B) restrain or enjoin, impose materially
burdensome conditions on, or otherwise materially and adversely affect
the ability of the Borrower to fulfill its obligations under the Loan
Documents to which it is a party; and
(iv) There shall not have occurred or exist any other material
disruption of financial or capital markets that could reasonably be
expected to materially and adversely affect the transactions contemplated
by the Loan Documents.
SECTION 6.2. CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of the Lenders to make any Loans is subject to the further
conditions precedent that: (a) no Default or Event of Default shall have
occurred and be continuing as of the date of the making of such Loan or would
exist immediately after giving effect thereto; (b) the representations and
warranties made or deemed made by the Borrower and each Subsidiary in the Loan
Documents to which any is a party, shall be true and correct in all material
respects on and as of the date of the making of such Loan with the same force
and effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and except for changes in factual
circumstances specifically and expressly permitted hereunder; (c) the Agent
shall have received a timely Notice of Borrowing; and (d) in the case of a
borrowing of Loans in excess of $20,000,000 in aggregate principal amount, the
Borrower shall have delivered to the Agent a Compliance Certificate and an
Unencumbered Pool Certificate evidencing continued compliance with the
applicable terms of this Agreement. The making of each Loan shall constitute a
certification by the Borrower to the effect set forth in the preceding sentence
(both as of the date of the giving of notice relating to such Loan and, unless
the Borrower otherwise notifies the Agent prior to the date of the making
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of such Loan, as of the date of the making of such Loan). In addition, the
Borrower shall be deemed to have represented to the Agent and the Lender at the
time such Loan is made that all conditions to the making of such Loan contained
in Article VI. have been satisfied.
SECTION 6.3. CONDITIONS AS COVENANTS; NORTH CAROLINA OPINION.
If the Lenders make any Loans prior to the satisfaction of all conditions
precedent set forth in Sections 6.1. and 6.2., the Borrower shall nevertheless
cause such condition or conditions to be satisfied within 5 Business Days after
the date of the making of such Loans. Unless set forth in writing to the
contrary prior to the making of its initial Loan hereunder, the making of its
initial Loan by a Lender shall constitute a certification by such Lender to the
Agent and the other Lenders that the Borrower has satisfied the conditions
precedent for initial Loans set forth in Sections 6.1. and 6.2. The Borrower
shall deliver to the Agent no later than the date 45 days following the
Effective Date, an opinion of the Borrower's special North Carolina counsel,
addressed to the Agent and the Lenders, regarding the enforceability of the
Loan Documents under North Carolina, and in form and substance reasonably
satisfactory to the Agent.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
In order to induce the Agent and each Lender to enter into this Agreement
and to make Loans, the Borrower represents and warrants to the Agent and each
Lender as follows:
(a) Organization; Power; Qualification. Each of the Borrower and its
Subsidiaries is a corporation, partnership, limited liability company or other
legal entity, duly organized or formed, validly existing and, if applicable, in
good standing under the jurisdiction of its incorporation or formation, has the
power and authority to own or lease its respective properties and to carry on
its respective business as now being and hereafter proposed to be conducted and
is duly qualified and is in good standing as a foreign corporation,
partnership, limited liability company or other legal entity, and authorized to
do business, in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification or authorization and
where the failure to be so qualified or authorized could reasonably be expected
to have, in each instance, a Material Adverse Effect.
(b) Ownership Structure. As of the Agreement Date, Schedule 7.1.(b)
correctly sets forth the corporate structure and ownership interests of the
Borrower's Subsidiaries including the correct legal name of each Subsidiary,
its jurisdiction of formation, the Persons holding equity interests in such
Subsidiary, and their percentage equity or voting interest in such Subsidiary.
Except as set forth in such Schedule:
(i) no Subsidiary has issued to any third party any securities
convertible into any equity interest in such Subsidiary, or any options,
warrants or other rights to acquire any securities convertible into any
such equity interest, and
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(ii) the outstanding stock and securities of or other equity
interests, as applicable, in each such Subsidiary are owned by the
Persons indicated on such Schedule, free and clear of all Liens,
warrants, options and rights of others of any kind whatsoever.
(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The
Borrower has the right and power, and has taken all necessary action to
authorize it, to borrow hereunder. The Borrower and each Subsidiary has the
right and power, and has taken all necessary action to authorize it, to
execute, deliver and perform each of the Loan Documents to which it is a party
in accordance with their respective terms and to consummate the transactions
contemplated hereby and thereby. The Loan Documents to which the Borrower or
any Subsidiary is a party have been duly executed and delivered by the duly
authorized officers of the Borrower or such Subsidiary and each is a legal,
valid and binding obligation of the Borrower or such Subsidiary enforceable
against such Person in accordance with its respective terms, except as the same
may be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally and the availability of equitable remedies for
the enforcement of certain obligations contained herein or therein may be
limited by equitable principles generally.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with
Laws, etc. The execution, delivery and performance of this Agreement, the
Notes and the other Loan Documents to which the Borrower or any Subsidiary is a
party in accordance with their respective terms and the borrowings hereunder do
not and will not, by the passage of time, the giving of notice, or both: (i)
require any Governmental Approval or violate any Applicable Law (including all
Environmental Laws) relating to the Borrower or any Subsidiary; (ii) conflict
with, result in a breach of or constitute a default under the certificate of
incorporation or the bylaws of the Borrower or the organizational documents of
any Subsidiary, or any indenture, agreement or other instrument to which the
Borrower or any Subsidiary is a party or by which it or any of its respective
properties may be bound; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Borrower or any Subsidiary other than in favor of the
Agent for the benefit of the Lenders.
(e) Compliance with Law; Governmental Approvals. The Borrower and each
Subsidiary is in compliance with each Governmental Approval applicable to it
and in compliance with all other Applicable Law relating to the Borrower or
such Subsidiary except for noncompliances which, and Governmental Approvals the
failure to possess which, would not, individually or in the aggregate, cause a
Default or Event of Default or have a Material Adverse Effect.
(f) Title to Properties; Liens. As of the Agreement Date, Part I of
Schedule 7.1.(f) sets forth all the real property owned or leased by the
Borrower, its Subsidiaries and any of their Unconsolidated Affiliates. The
Borrower and such Persons have good and insurable fee simple title (or
leasehold title if so designated on such Schedule) to all of such real
property. As of the Agreement Date, there are no mortgages, deeds of trust,
indentures, debt instruments or other agreements creating a Lien against any of
the Borrower's or any Subsidiary's right, title or interest in such real
property or any other property or assets of the Borrower or any of its
Subsidiaries except for Permitted Liens and except as set forth on Part II of
Schedule 7.1.(f).
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(g) Existing Indebtedness. Schedule 7.1.(g) is, as of the Agreement Date,
a complete and correct listing of all Indebtedness of each of the Borrower or
any of its Subsidiaries, including all guaranties of the Borrower or any
Subsidiary and all letters of credit and acceptance facilities extended to the
Borrower or any Subsidiary. As of the Agreement Date, no default or event of
default, or event or condition which with the giving of notice, the lapse of
time, or both, would constitute such a default or event of default, exists with
respect to any such Indebtedness.
(h) Material Contracts. Schedule 7.1.(h) is a true, correct and complete
listing of all Material Contracts as of the Agreement Date. No default or
event of default, or event or condition which with the giving of notice, the
lapse of time, a determination of materiality, the satisfaction of any other
condition or any combination of the foregoing, would constitute such a default
or event of default, exists with respect to any such Material Contract.
(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting the
Borrower or any Subsidiary or any of its respective property in any court or
before any arbitrator of any kind or before or by any other Governmental
Authority. None of such actions, suits or proceedings could reasonably be
expected to have a Material Adverse Effect. There are no strikes, slow downs,
work stoppages or walkouts or other labor disputes in progress or threatened
relating to the Borrower or any Subsidiary which could reasonably be expected
to have a Material Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower and
any Subsidiary required by Applicable Law to be filed have been duly filed, and
all federal, state and other taxes, assessments and other governmental charges
or levies upon the Borrower or any Subsidiary and its respective properties,
income, profits and assets which are due and payable have been paid, except any
such nonpayment which is at the time permitted under Section 8.6. As of the
Agreement Date, none of the United States income tax returns of the Borrower or
any Subsidiary is under audit. All charges, accruals and reserves on the books
of the Borrower and each of its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
(k) Financial Statements. The Borrower has furnished to each Lender
copies of (i) the audited consolidated balance sheet of Captec Net Lease
Realty, Inc., a Michigan corporation ("Net Lease Michigan"), which has merged
with and into the Borrower, for the fiscal year ending December 31, 1996, and
the related consolidated statements of operations, changes in stockholder's
equity and cash flows for the fiscal year ending on such date, with the opinion
thereon of Coopers & Lybrand LLP, (ii) the unaudited pro forma statement of
operations of the Borrower for the year ended December 31, 1996 and (iii) the
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries for the fiscal year ending December 31, 1997, and the related
consolidated statement of income of the Borrower and its consolidated
Subsidiaries for the fiscal year ending on such date. Such balance sheets and
statements (including in each case related schedules and notes) present fairly,
in all material respects, in accordance with GAAP consistently applied
throughout the periods involved, the consolidated
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financial position of the Borrower and its consolidated Subsidiaries, or Net
Lease Michigan, as the case may be, as at their respective dates and, if
applicable, the results of operations and the cash flow for such periods
(subject, as to interim statements, to changes resulting from normal year-end
audit adjustments). Neither the Borrower nor any of its Subsidiaries has on
the Agreement Date any material contingent liabilities, liabilities,
liabilities for taxes, unusual or long-term commitments or unrealized or
forward anticipated losses from any unfavorable commitments, except as referred
to or reflected or provided for in said financial statements.
(l) No Material Adverse Change. Since December 31, 1997, there has been
no material adverse change in the business, properties, condition (financial or
otherwise), results of operations or performance of the Borrower and its
consolidated Subsidiaries taken as a whole. Each of the Borrower and its
Subsidiaries is Solvent.
(m) ERISA. Each member of the ERISA Group is in compliance with its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan, except in each case for noncompliances which could not reasonably be
expected to have a Material Adverse Effect. As of the Agreement Date, no
member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made any amendment to any
Plan or Benefit Arrangement, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Internal Revenue Code or (iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA.
(n) Absence of Defaults. Neither the Borrower nor any Subsidiary is in
default under its articles or certificates of incorporation, bylaws,
partnership agreement or other similar organizational documents, and no event
has occurred, which has not been remedied, cured or waived: (i) which
constitutes a Default or an Event of Default; or (ii) which constitutes, or
which with the passage of time, the giving of notice, a determination of
materiality, the satisfaction of any condition, or any combination of the
foregoing, would constitute, a default or event of default by the Borrower or
any Subsidiary under any agreement (other than this Agreement) or judgment,
decree or order to which the Borrower or any Subsidiary is a party or by which
the Borrower or any Subsidiary or any of their respective properties may be
bound where such default or event of default could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(o) Environmental Laws. In the ordinary course of business, each of the
Borrower and its Subsidiaries conducts reviews of the effect of Environmental
Laws on its respective business, operations and properties, including without
limitation, its respective Real Property Assets, in the course of which the
Borrower or such Subsidiary identifies and evaluates associated liabilities and
costs (including, without limitation, determining whether any capital or
operating expenditures are required for clean-up or closure of properties
presently or previously owned, determining whether any capital or operating
expenditures are required to achieve or maintain
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compliance with Environmental Laws or required as a condition of any
Governmental Approval, any contract, or any related constraints on operating
activities, determining whether any costs or liabilities exist in connection
with off-site disposal of wastes or Hazardous Materials, and determining
whether any actual or potential liabilities to third parties, including
employees, and any related costs and expenses exist). The Borrower and its
Subsidiaries each has obtained all Governmental Approvals which are required
under Environmental Laws and is in compliance with all terms and conditions of
such Governmental Approvals which the failure to obtain or to comply with could
reasonably be expected to have a Material Adverse Effect. Each of the Borrower
and its Subsidiaries is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in the Environmental Laws the failure to
comply with which could reasonably be expected to have a Material Adverse
Effect. Except for any of the following matters that could not be reasonably
expected to have a Material Adverse Effect, the Borrower is not aware of, and
has not received notice of, any past, present, or future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which, with
respect to the Borrower or its Subsidiaries, may interfere with or prevent
compliance or continued compliance with Environmental Laws, or may give rise to
any common-law or legal liability, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing, study, or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial, toxic, or other Hazardous Material.
(p) Investment Company; Public Utility Holding Company. Neither the
Borrower nor any Subsidiary is (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
Applicable Law which purports to regulate or restrict its ability to borrow
money or to consummate the transactions contemplated by this Agreement or to
perform its obligations under any Loan Document to which it is a party.
(q) Margin Stock. Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying "margin stock" within the meaning of Regulations G and U of
the Board of Governors of the Federal Reserve System.
(r) Affiliate Transactions. Except as permitted by Section 10.12.,
neither the Borrower nor any Subsidiary is a party to or bound by any agreement
or arrangement (whether oral or written) to which any Affiliate of the Borrower
or any Subsidiary is a party. Neither the Borrower nor any Subsidiary is a
party to any agreement or arrangement which restricts or prohibits the payment
of dividends or the repayment of inter-company loans by a Subsidiary to the
Borrower.
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(s) Intellectual Property. The Borrower and each Subsidiary owns or has
the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights (collectively, "Intellectual
Property") necessary to the conduct of its businesses as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, trade name, copyright, or other
proprietary right of any other Person. The Borrower has taken all commercially
reasonable measures to ensure that all such Intellectual Property is fully
protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filing or
issuances. No claim has been asserted by any Person with respect to the use of
any Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property, which could reasonably be expected
to have a Material Adverse Effect. The use of such Intellectual Property by
the Borrower and its Subsidiaries, does not infringe on the rights of any
Person, subject to such claims and infringements as do not, in the aggregate,
give rise to any liabilities on the part of the Borrower and its Subsidiaries
that could reasonably be expected to have a Material Adverse Effect.
(t) REIT Status. The Borrower qualifies as a REIT.
(u) Not Plan Assets. The assets of the Borrower or any Subsidiary do not
and will not constitute "plan assets", within the meaning of ERISA, the
Internal Revenue Code and the respective regulations promulgated thereunder.
The execution, delivery and performance of this Agreement, and the borrowing
and repayment of amounts hereunder, do not and will not constitute "prohibited
transactions" under ERISA or the Internal Revenue Code.
(v) Business. As of the Agreement Date, the Borrower and its Subsidiaries
are engaged principally in the business of owning real estate assets which are
net leased to restaurant and retail operators and ancillary businesses that are
incidental to the foregoing.
(w) Accuracy and Completeness of Information. All written information,
reports and other papers and data (excluding financial projections) furnished
to the Agent or any Lender by, on behalf of, or at the direction of, the
Borrower or any Subsidiary were, at the time the same were so furnished,
complete and correct in all material respects, or, in the case of financial
statements, present fairly, in all material respects and in accordance with
GAAP consistently applied throughout the periods involved, the financial
position of the Persons involved as at the date thereof and the results of
operations for such periods. All financial projections prepared by or on
behalf of the Borrower that have been or may hereafter be made available to the
Agent or any Lender were or will be prepared in good faith based on reasonable
assumptions. No fact is known to the Borrower which has had, or may in the
future have (so far as the Borrower can reasonably foresee), a Material Adverse
Effect which has not been set forth in the financial statements referred to in
Section 7.1.(k) or in such information, reports or other papers or data or
otherwise disclosed in writing to the Agent and the Lenders prior to the
Effective Date. No document furnished or written statement made to the Agent
or any Lender in connection with the negotiation, preparation of execution of
this Agreement or any of the other Loan Documents, in light of the
circumstances under which furnished or made, contains or will contain any
untrue
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statement of a fact material to the creditworthiness of the Borrower or any
Subsidiary or omits or will omit to state a fact necessary in order to make the
statements contained therein not materially misleading.
(x) Year 2000. The Borrower is conducting a comprehensive review and
assessment of the computer applications of the Borrower and its Subsidiaries,
and is making inquiry of the key suppliers, vendors and customers of the
Borrower and its Subsidiaries with respect to the "year 2000 problem" (that is,
the risk that computer applications may not be able to properly perform
date-sensitive functions after December 31, 1999) and, based on preliminary
indications, the Borrower does not expect that the year 2000 problem could
reasonably be expected to have a Materially Adverse Effect.
SECTION 7.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower or any Subsidiary to the
Agent or any Lender pursuant to or in connection with this Agreement or any of
the other Loan Documents (including, but not limited to, any such statement
made in or in connection with any amendment thereto or any statement contained
in any certificate, financial statement or other instrument delivered by or on
behalf of the Borrower prior to the Agreement Date and delivered to the Agent
or any Lender in connection with closing the transactions contemplated hereby)
shall constitute representations and warranties made by the Borrower under this
Agreement. All representations and warranties made under this Agreement and
the other Loan Documents shall be deemed to be made at and as of the Agreement
Date, the Effective Date and at and as of the date of the occurrence of any
Credit Event, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier
date) and except for changes in factual circumstances specifically permitted
hereunder. All such representations and warranties shall survive the
effectiveness of this Agreement, the execution and delivery of the Loan
Documents and the making of the Loans.
ARTICLE VIII. AFFIRMATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner provided for in Section 13.6., the Borrower shall:
SECTION 8.1. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.
Except as otherwise permitted under Section 10.8., preserve and maintain,
and cause each Subsidiary to preserve and maintain, its respective existence,
rights, franchises, licenses and privileges in the jurisdiction of its
incorporation or formation and qualify and remain qualified and authorized to
do business in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification and authorization and
where the failure to be so authorized and qualified could reasonably be
expected to have a Material Adverse Effect.
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SECTION 8.2. COMPLIANCE WITH APPLICABLE LAW AND MATERIAL CONTRACTS.
Comply, and cause each Subsidiary and to comply, with (a) all Applicable
Law, including the obtaining of all Governmental Approvals, if the failure with
which to comply could reasonably be expected to have a Material Adverse Effect,
and (b) all terms and conditions of all Material Contracts to which it is a
party.
SECTION 8.3. MAINTENANCE OF PROPERTY.
In addition to the requirements of any of the other Loan Documents, (a)
protect and preserve, and cause each Subsidiary, or with respect to any Real
Property Asset leased by the Borrower or a Subsidiary to a lessee, such lessee,
to protect and preserve, all of its material properties (or such Real Property
Asset in the case of any such lessee), and maintain in good repair, working
order and condition all tangible properties (or such Real Property Asset in the
case of any such lessee), ordinary wear and tear excepted, and (b) from time to
time make or cause to be made all needed and appropriate repairs, renewals,
replacements and additions to such properties (or such Real Property Asset in
the case of any such lessee), so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
SECTION 8.4. CONDUCT OF BUSINESS.
At all times carry on, and cause its Subsidiaries to carry on, its
respective businesses as described in Section 7.1.(v) and not enter, and
prohibit its Subsidiaries from entering, into any field of business not
otherwise described in such Section 7.1.(v).
SECTION 8.5. INSURANCE.
In addition to the requirements of any of the other Loan Documents,
maintain, and cause each Subsidiary, or with respect to any Real Property Asset
leased by the Borrower or a Subsidiary to a lessee, such lessee, to maintain,
insurance with financially sound and reputable insurance companies against such
risks and in such amounts as is customarily maintained by Persons engaged in
similar businesses or as may be required by Applicable Law, and the Borrower
will from time to time deliver to the Agent upon its request, or to any Lender
upon request through the Agent, a detailed list, together with copies of all
policies of the insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby. Not in limitation of the
foregoing, the Borrower shall, and shall cause its Subsidiaries to, or with
respect to any Real Property Asset leased by the Borrower or a Subsidiary to a
lessee, such lessee to, maintain builder's risk insurance during any period of
construction and, upon completion, "all risk" insurance in an amount equal to
100% of the replacement cost of the improvements, if any, on each of its Real
Property Assets, with insurers having an A.M. Best policyholder's rating of not
less than A- and financial size category of not less than X, which insurance
shall in any event not provide for materially less coverage than the insurance
in effect on the Agreement Date. The Borrower will deliver to the Lenders (i)
upon request of any Lender through the Agent from time to time full information
as to the insurance carried, (ii) within 10 days of receipt of notice from any
insurer a copy of any notice of cancellation or material change in coverage
from that existing
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on the Agreement Date and (iii) promptly upon receipt, notice of any
cancellation or nonrenewal of coverage by the Borrower or any Subsidiary.
SECTION 8.6. PAYMENT OF TAXES AND CLAIMS.
Pay or discharge, and cause each Subsidiary, or with respect to any Real
Property Asset leased by the Borrower or a Subsidiary to a lessee, such lessee,
to pay or discharge, when due (a) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any
properties belonging to it (or in the case of any such lessee, such lessee or
such Real Property Asset), and (b) all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor, materials, supplies and rentals
which, if unpaid, might become a Lien on any properties of such Person (or in
the case of any such lessee, such lessee or such Real Property Asset);
provided, however, that this Section shall not require the payment or discharge
of any such tax, assessment, charge, levy or claim which is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established on the books of the Borrower or such Subsidiary, as applicable, in
accordance with GAAP.
SECTION 8.7. VISITS AND INSPECTIONS.
Permit, and cause each Subsidiary to permit, representatives or agents of
any Lender or the Agent, from time to time after reasonable prior notice if no
Event of Default shall be in continuance, as often as may be reasonably
requested, but only during normal business hours, and at the expense of such
Lender or the Agent (unless an Event of Default shall be continuing in which
case the exercise by the Agent of its rights under this Section shall be at the
expense of the Borrower), as the case may be, to: (a) visit and inspect all
properties of the Borrower or such Subsidiary to the extent any such right to
visit or inspect is within the control of the Borrower or such Subsidiary; (b)
inspect and make extracts from their respective relevant books and records,
including but not limited to management letters prepared by independent
accountants; and (c) discuss with its principal officers, and its independent
accountants, its business, properties, condition (financial or otherwise),
results of operations and performance. If requested by the Agent, the Borrower
shall execute an authorization letter addressed to its accountants authorizing
the Agent or any Lender to discuss the financial affairs of the Borrower and
any Subsidiary with its accountants.
SECTION 8.8. USE OF PROCEEDS.
Use the proceeds of all Revolving Loans to finance the acquisition of
retail and restaurant Real Property Assets to be leased by the Borrower on a
net lease basis, and for other general working capital purposes; provided,
however, the aggregate outstanding principal balance of Revolving Loans used
for such other general working capital purposes shall not exceed $50,000,000 at
any time. The Borrower shall not, and shall not permit any Subsidiary to, use
any part of such proceeds to purchase or carry, or to reduce or retire or
refinance any credit incurred to purchase or carry, any margin stock (within
the meaning of Regulations G and U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
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SECTION 8.9. ENVIRONMENTAL MATTERS.
Comply, and cause all of its Subsidiaries to comply, with all
Environmental Laws the failure with which to comply could reasonably be
expected to have a Material Adverse Effect. If the Borrower or any Subsidiary
shall (a) receive notice that any violation of any Environmental Law may have
been committed or is about to be committed by such Person, (b) receive notice
that any administrative or judicial complaint or order has been filed or is
about to be filed against the Borrower or any Subsidiary alleging violations of
any Environmental Law or requiring the Borrower or any Subsidiary to take any
action in connection with the release of Hazardous Materials or (c) receive any
notice from a Governmental Authority or private party alleging that the
Borrower or any Subsidiary may be liable or responsible for costs associated
with a response to or cleanup of a release of a Hazardous Materials or any
damages caused thereby, and such notices, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, the Borrower
shall provide the Agent with a copy of such notice within 10 days after the
receipt thereof by the Borrower or any of the Subsidiaries. The Borrower
shall, and shall cause its Subsidiaries to, take promptly all actions necessary
to prevent the imposition of any Liens on any of their respective properties
arising out of or related to any Environmental Laws.
SECTION 8.10. BOOKS AND RECORDS.
Maintain, and cause each of the Subsidiaries to maintain, books and
records pertaining to its business operations in such detail, form and scope as
is consistent with good business practice in accordance with GAAP.
SECTION 8.11. REIT STATUS.
At all times maintain its status as a REIT.
SECTION 8.12. ERISA EXEMPTIONS.
Not, and shall not permit any Subsidiary to, permit any of its respective
assets to become or be deemed to be "plan assets" within the meaning of ERISA,
the Internal Revenue Code and the respective regulations promulgated
thereunder.
SECTION 8.13. EXCHANGE LISTING.
Maintain at least one class of common shares of the Borrower having
trading privileges on the New York Stock Exchange or the American Stock
Exchange or which is listed on The NASDAQ Stock Market's National Market.
SECTION 8.14. ADVISOR.
Until such time as the Borrower becomes advised internally, the Borrower
may only engage Captec Advisors to advise the Borrower with respect to
management, investment and financial advisory services.
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SECTION 8.15. FURTHER ASSURANCES.
And shall cause each of its Subsidiaries to, at the Borrower's cost and
expense, upon the request of the Agent, duly execute and deliver or cause to be
duly executed and delivered, to the Agent and the Lenders such further
instruments, documents and certificates, and do and cause to be done such
further acts that may be necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents.
ARTICLE IX. INFORMATION
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower shall furnish to
each Lender (or to the Agent if so provided below) at its Lending Office:
SECTION 9.1. QUARTERLY FINANCIAL STATEMENTS.
As soon as available and in any event within 45 days after the close of
each of the first, second and third fiscal quarters of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such period and the related consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for such period,
setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, all of which shall be
certified by the chief financial officer of the Borrower, in his or her
opinion, to present fairly, in all material respects and in accordance with
GAAP, the consolidated financial position of the Borrower and its Subsidiaries
as at the date thereof and the results of operations for such period (subject
to normal year-end audit adjustments).
SECTION 9.2. YEAR-END STATEMENTS.
As soon as available and in any event within 90 days after the end of each
fiscal year of the Borrower, the consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for such fiscal year, setting forth in comparative form the
figures as at the end of and for the previous fiscal year, all of which shall
be certified by (a) the chief financial officer of the Borrower, in his or her
opinion, to present fairly, in all material respects and in accordance with
GAAP, the financial position of the Borrower and its Subsidiaries as at the
date thereof and the result of operations for such period and (b) independent
certified public accountants of recognized national standing reasonably
acceptable to the Requisite Lenders, whose certificate shall be unqualified and
in scope and substance reasonably satisfactory to the Requisite Lenders and who
shall have authorized the Borrower to deliver such financial statements and
certification thereof to the Agent and the Lenders pursuant to this Agreement.
In addition, the Borrower shall deliver to each Lender at its Lending Office as
soon as available and in any event within 45 days after the end of each fiscal
year of the Borrower, all of such financial statements referred to in the first
sentence of this Section prepared on a preliminary basis and which shall be
certified by the chief financial officer of the Borrower, in his or her
opinion, to
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present fairly, in all material respects and in accordance with GAAP, the
financial position of the Borrower and its Subsidiaries as at the date thereof
and the result of operations for such period.
SECTION 9.3. COMPLIANCE CERTIFICATE.
At the time the financial statements are furnished pursuant to Sections
9.1. and the preliminary financial statements are furnished pursuant to Section
9.2., a certificate in the form of Exhibit I (a "Compliance Certificate")
executed by the chief financial officer of the Borrower: (a) setting forth in
reasonable detail as at the end of such quarterly accounting period or fiscal
year, as the case may be, the calculations required to establish whether or not
the Borrower was in compliance with the covenants contained in Section 10.1.,
10.2., 10.3.(f), 10.5.(f) and (g) and 10.,7.(b); and (b) stating that, to the
best of his or her knowledge, information and belief, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event
of Default and its nature, when it occurred, whether it is continuing and the
steps being taken by the Borrower with respect to such event, condition or
failure.
SECTION 9.4. OTHER INFORMATION.
(a) not later than 90 days prior to the last day of each fiscal year of
the Borrower, pro forma projected consolidated financial statements for the
Borrower and its Subsidiaries reflecting the forecasted financial condition and
results of operations of the Borrower and its Subsidiaries on a quarterly basis
for the next succeeding year and on an annual basis for the two succeeding
fiscal years thereafter, accompanied by calculations establishing whether or
not the Borrower would be in compliance on a pro forma basis with the covenants
contained in Section 10.1., in each case in form and detail reasonably
acceptable to the Requisite Lenders;
(b) within 45 days after the end of each fiscal quarter of the Borrower,
an Unencumbered Pool Certificate setting forth the information to be contained
therein as of the last day of such fiscal quarter;
(c) within 45 days after the end of each fiscal quarter of the Borrower,
calculations of the Borrower's taxable income for such quarter;
(d) promptly upon request by the Agent, evidence reasonably satisfactory
to the Agent that the Borrower continues to qualify as a REIT;
(e) within 30 days of the end of each calendar month, an agings report on
all lease payments in form and detail reasonably satisfactory to the Agent;
(f) promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants including, without limitation, any management report;
(g) within 5 Business Days of the filing thereof, copies of all
registration statements (excluding the exhibits thereto and any registration
statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) and all other periodic reports which
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the Borrower or any Subsidiary shall file with the Securities and Exchange
Commission (or any Governmental Authority substituted therefor) or any national
securities exchange;
(h) promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed and promptly upon the issuance thereof copies of all press releases
issued by the Borrower or any Subsidiary;
(i) if and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the controller of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take;
(j) within 45 days after the end of each fiscal quarter of the Borrower,
an updated Part I of Schedule 7.1.(f), certified by the chief financial officer
of the Borrower as true, correct and complete as of the date such updated
schedules are delivered;
(k) to the extent the Borrower or any Subsidiary is aware of the same,
prompt notice of the commencement of any proceeding or investigation by or
before any Governmental Authority and any action or proceeding in any court or
other tribunal or before any arbitrator against or in any other way relating
adversely to, or adversely affecting, the Borrower or any Subsidiary or any of
their respective properties, assets or businesses which, if determined or
resolved adversely to such Person, could reasonably be expected to have a
Material Adverse Effect, and prompt notice of the receipt of notice that any
United States income tax returns of the Borrower or any of its Subsidiaries are
being audited;
(l) a copy of any amendment to the articles or certificate of
incorporation, bylaws, partnership agreement or other similar organizational
documents of the Borrower or any Subsidiary within 5 Business Days of the
effectiveness thereof;
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(m) prompt notice of (i) any change in the senior management of the
Borrower or any Subsidiary and (ii) any change in the business, properties,
condition (financial or otherwise), results of operations or performance of the
Borrower or any Subsidiary which has had or could reasonably be expected to
have Material Adverse Effect;
(n) prompt notice of the occurrence of (i) any Default or Event of
Default; (ii) any event which constitutes or which with the passage of time,
the giving of notice, or otherwise, would constitute a default or event of
default by the Borrower or any Subsidiary under any Material Contract to which
any such Person is a party or by which any such Person or any of its respective
properties may be bound; or (iii) any default or event of default, or event or
condition which with the giving of notice, the lapse of time, or both, would
constitute such a default or event of default, with respect to any Indebtedness
having an aggregate outstanding principal amount of $2,500,000 or more;
(o) prompt notice of any order, judgment or decree in excess of $250,000
having been entered against the Borrower or any Subsidiary or any of their
respective properties or assets;
(p) prompt notice of the acquisition, incorporation or other creation of
any Subsidiary, the purpose for such Subsidiary, the nature of the assets and
liabilities thereof;
(q) the proposed sale, transfer or other disposition of any material
assets of the Borrower or any Subsidiary to any other Subsidiary, Affiliate or
other Person;
(r) prompt notice of any strikes, slow downs, work stoppages or walkouts
or other labor disputes in progress or threatened relating to the Borrower or
any Subsidiary;
(s) promptly upon entering into any Material Contract after the Agreement
Date, a copy to the Agent of such Material Contract;
(t) Not later than 30 days following the adoption thereof, any business
plan adopted by the Borrower for itself and its Subsidiaries; and
(u) from time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, properties, condition (financial or otherwise), results of
operations or performance of the Borrower or any of its Subsidiaries as the
Agent or any Lender may reasonably request.
ARTICLE X. NEGATIVE COVENANTS
For so long as this Agreement is in effect, unless the Requisite Lenders
(or, if required pursuant to Section 13.6., all of the Lenders) shall otherwise
consent in the manner set forth in Section 13.6., the Borrower shall not,
directly or indirectly:
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SECTION 10.1. FINANCIAL COVENANTS.
Permit:
(a) Ratio of EBITDA to Total Debt Service. The ratio of (i) EBITDA for
any period of four consecutive fiscal quarters ending during the term of this
Agreement to (ii) Total Debt Service for such period, to be less than or equal
to 2.25 to 1.00 at the end of such period.
(b) Ratio of Adjusted EBITDA to Fixed Charges. The ratio of (i) Adjusted
EBITDA for any period of four consecutive fiscal quarters ending during the
term of this Agreement to (ii) Fixed Charges for such period, to be less than
or equal to 1.75 to 1.00 at the end of such period.
(c) Ratio of Total Liabilities to Gross Asset Value. The ratio of (i)
Total Liabilities as of the end of any fiscal quarter ending during the term of
this Agreement to (ii) Gross Asset Value as of the end of such fiscal quarter,
to be greater than or equal to 0.50 to 1.00 at the end of such fiscal quarter.
(d) Ratio of Secured Indebtedness to Gross Asset Value. The ratio of (i)
the aggregate amount of Secured Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis as of the end of any fiscal
quarter ending during the term of this Agreement to (ii) Gross Asset Value as
of the end of such fiscal quarter, to be greater than or equal to 0.10 to 1.00
at the end of such fiscal quarter.
(e) Tangible Net Worth. Tangible Net Worth as of the end of any fiscal
quarter ending during the term of this Agreement to be less than (i)
$125,000,000 plus (ii) 85% of the Net Proceeds of all Equity Issuances
effected by the Borrower or any of its Subsidiaries at any time after the
Agreement Date.
(f) Ratio of Floating Rate Debt to Total Indebtedness. The ratio of (i)
all Floating Rate Debt of the Borrower and its Subsidiaries determined on a
consolidated basis to (ii) all Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis, to exceed 0.350 to 1.00 at any
time.
(g) Ratio of Net Lease Revenues from Unencumbered Pool Properties to
Pro-Forma Unsecured Debt Service. The ratio of (i) the aggregate amount of Net
Lease Revenues for all Unencumbered Pool Properties for any fiscal quarter
ending during the term of this Agreement times 4 to (ii) Pro-Forma Unsecured
Debt Service determined as of the end of such fiscal quarter, to be less than
or equal to 2.0 to 1.0.
(h) Ratio of Unencumbered Pool Value to Total Unsecured Indebtedness. The
ratio of (i) the Unencumbered Pool Value at any time to (ii) the aggregate
amount of all Unsecured Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis at such time, to be less than or equal to
1.750 to 1.00.
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(i) Concept Concentration. More than 15% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter to be attributable to any one Concept. Notwithstanding the foregoing,
the percentage of such total revenues attributable to the "Boston Market"
Concept cannot exceed (i) 12.5% for any fiscal quarter ending after March 31,
1998 but on or before December 31, 1998 and (iii) 10% for any fiscal quarter
ending after December 31, 1998.
(j) Lessee Concentration. More than 10% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter ending during the term of this Agreement to be attributable to any one
tenant (or group of affiliated tenants). Notwithstanding the foregoing, the
percentage of such total revenues attributable to S&A Properties, Inc. and its
affiliates (i) may exceed 10% but cannot exceed 15% for any fiscal quarter
ending on or before September 30, 1998 and (ii) cannot exceed 12.5% for any
fiscal quarter ending after September 30, 1998 but on or before December 31,
1999.
(k) Asset Concentration. More than 5% of the total revenues of the
Borrower and its Subsidiaries determined on a consolidated basis for any fiscal
quarter to be attributable to any one Real Property Asset.
For purposes of calculating total revenues for the immediately preceding
subsections (i) through (k), the entire pro forma amount of revenues from any
Real Property Asset acquired (disposed of) during a given fiscal quarter, as if
such Real Property Asset were acquired (disposed of) on first day of such
fiscal quarter and the applicable lease term commenced (ended) on the first day
of such fiscal quarter, shall be included in (excluded from) such amount of
total revenues.
SECTION 10.2. DEVELOPMENT LIMITATIONS.
The Borrower shall not, and shall not permit any Subsidiary to, commence
the development or renovation of any Real Property Asset unless the Borrower or
such Subsidiary has entered into a binding lease agreement with a Person to
lease such Real Property Asset to such Person. Further, the Borrower shall not
permit the fully built out cost of Real Property Assets under development or
renovation at any time to exceed 15% of the sum of (a) the total assets of the
Borrower and its Subsidiaries at such time determined on a consolidated basis
in accordance with GAAP plus (b) the estimated total remaining costs to
complete all such development and renovation.
SECTION 10.3. INDEBTEDNESS.
Create, incur, assume, or permit or suffer to exist, or permit any
Subsidiary to create, incur, assume, or permit or suffer to exist, any
Indebtedness other than the following:
(a) the Obligations;
(b) Indebtedness in existence as of the Agreement Date and described on
Schedule 7.1.(g);
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(c) intercompany Indebtedness among the Borrower and its Subsidiaries;
provided, however, that the obligations of each obligor of such Indebtedness
shall: (i) be subordinated to the Obligations on terms acceptable to the
Requisite Lenders in their sole discretion; (ii) be evidenced by promissory
notes, which shall have been pledged to the Agent, for the benefit of the
Lenders, as security for the Obligations; and (iii) have such other terms and
provisions as the Agent may reasonably require;
(d) Indebtedness arising as a result of Contingent Obligations permitted
under Section 10.4.;
(e) other Indebtedness incurred after the Agreement Date which
Indebtedness either (x) has been assigned an Investment Grade Rating by both
Rating Agencies or (y) is Non-Recourse Indebtedness, so long as immediately
prior to the incurring thereof, and immediately thereafter and after giving
effect thereto, no Default or Event of Default is or would be in existence,
including without limitation, a Default or Event of Default resulting from a
violation of any of the covenants contained in Section 10.1.;
(f) other Indebtedness that is not Non-Recourse Indebtedness in an
aggregate outstanding principal amount not to exceed $50,000,000 at any time;
and
(g) Indebtedness resulting from any guaranty of other Indebtedness of the
Borrower or any Subsidiary which other Indebtedness is permitted to be incurred
pursuant to this Section.
SECTION 10.4. CONTINGENT OBLIGATIONS.
Become or remain liable, or permit any Subsidiary to become or remain
liable, on or under any Contingent Obligation other than the following:
(a) Contingent Obligations in existence as of the Agreement Date and set
forth in Schedule 10.4.;
(b) Contingent Obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(c) Contingent Obligations under Interest Rate Agreements entered into by
the Borrower in connection with the incurrence of any Indebtedness permitted
under Section 10.3. and which were not entered into for speculative purposes;
(d) Contingent Obligations incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations; and
(e) Contingent Obligations resulting from guaranties of Indebtedness to
the extent permitted Section 10.3.(g).
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SECTION 10.5. INVESTMENTS.
Acquire, make or purchase, or permit any Subsidiary to acquire, make or
purchase, after the Agreement Date, any Investment, or permit any Investment of
the Borrower or any Subsidiary to be outstanding on and after the Agreement
Date, other than the following:
(a) Investments in Subsidiaries in existence on the Agreement Date and
disclosed on Schedule 7.1.(b);
(b) Investments in Cash Equivalents;
(c) intercompany Indebtedness among the Borrower and its Subsidiaries
provided that such Indebtedness is permitted by the terms of Section 10.3. and
10.4.(e); and
(d) loans and advances to employees for moving, entertainment, travel and
other similar expenses in the ordinary course of business consistent with past
practices;
(e) Investments to acquire equity interests of a Subsidiary or any other
Person who after giving effect to such acquisition would be a Subsidiary so
long as (i) immediately prior to such acquisition or Investment, and after
giving effect thereto, no Default or Event of Default is or would be in
existence and (ii) such acquisition or Investment could not reasonably be
expected to have a Material Adverse Effect;
(f) Investments in Unconsolidated Affiliates (with the amount of any such
Investment being determined on an equity basis of accounting) not to exceed 10%
of the total assets of the Borrower and its Subsidiaries at such time
determined on a consolidated basis in accordance with GAAP; and
(g) Investments in the form of loans to other Persons (excluding
Subsidiaries) in an aggregate outstanding principal balance not to exceed at
any time an amount equal to 12.7% at any time prior to June 30, 1998, and 10%
at all times thereafter, of the total assets of the Borrower and its
Subsidiaries at such time determined on a consolidated basis in accordance with
GAAP.
All of the Investments of the types described in the immediately preceding
subsections (f) and (g) held by the Borrower as of the Agreement Date are
described in Parts I and II, respectively, of Schedule 10.5.
SECTION 10.6. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS.
(a) Create, assume, or incur, or permit any Subsidiary to create, assume,
or incur, any Lien (other than Permitted Liens) upon (i) any Unencumbered Pool
Property or (ii) any of its other properties, assets, income or profits of any
character whether now owned or hereafter acquired if, in the case of this
clause (ii) only, immediately prior to the creation, assumption or incurring of
such Lien, or immediately thereafter, a Default or Event of Default is or would
be in
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existence, including without limitation, a Default or Event of Default
resulting from a violation of any of the covenants contained in Section 10.1.;
(b) Enter into, assume or otherwise be bound by, or permit any Subsidiary
to enter into, assume or otherwise be bound by, any agreement (other than any
Loan Document) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired; or
(c) Except as may be contained in any Loan Document, create or otherwise
cause or suffer to exist or become effective, or permit any Subsidiary to
create or otherwise cause or suffer to exist or become effective, any
consensual encumbrance or restriction of any kind on the ability of any
Subsidiary to: (i) pay dividends or make any other distribution on any of such
Subsidiary's capital stock or other equity interests owned by the Borrower or
any Subsidiary of the Borrower; (ii) pay any Indebtedness owed to the Borrower
or any Subsidiary; (iii) make loans or advances to the Borrower or any other
Subsidiary; or (iv) transfer any of its property or assets to the Borrower or
any Subsidiary.
SECTION 10.7. RESTRICTED PAYMENTS.
Declare or make, or permit any Subsidiary to declare or make, any
Restricted Payment; provided, however, that (a) Subsidiaries may pay Restricted
Payments to the extent permitted to do so under Section 10.13.; (b) the
Borrower may declare or make cash distributions to its shareholders during any
period of four consecutive fiscal quarters in an aggregate amount not to exceed
100% of Cash Available for Distribution for such four fiscal quarter period and
(c) subject to the following sentence, if a Default or Event of Default shall
have occurred and be continuing, the Borrower may declare or make cash
distributions to its shareholders during any period of four consecutive fiscal
quarters in an aggregate amount not to exceed the lesser of (i) 100% of Cash
Available for Distribution for such four fiscal quarter period and (ii) the
minimum amount necessary for the Borrower to remain in compliance with Section
8.11. Notwithstanding the foregoing, if a Default or Event of Default
specified in Section 11.1.(a), Section 11.1.(b), Section 11.1.(f) or Section
11.1.(g) shall have occurred and be continuing, or if as a result of the
occurrence of any other Event of Default the Obligations have been accelerated
pursuant to Section 11.2.(a), the Borrower shall not, and shall not permit any
Subsidiary to, make any Restricted Payments whatsoever.
SECTION 10.8. MERGER, CONSOLIDATION, SALES OF ASSETS AND OTHER ARRANGEMENTS.
(a) Enter into, or permit any Subsidiary to enter into, any transaction of
merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution) or permit any Subsidiary to do any of the
foregoing; or (c) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its business or assets, or the capital stock of or other equity interests in
any of its Subsidiaries, whether now owned or hereafter acquired or permit any
Subsidiary to do any of the foregoing; provided, however, that:
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(i) Subsidiaries of the Borrower may merge or consolidate with the
Borrower or any Wholly Owned Subsidiary;
(ii) a Subsidiary may sell, transfer or dispose of its assets to the
Borrower or any Wholly Owned Subsidiary;
(iii) a Wholly Owned Subsidiary may liquidate provided that
immediately prior to such liquidation and immediately thereafter and
after giving effect thereto, no Default or Event of Default is or would
be in existence;
(iv) So long as immediately prior to any of the following
transactions, and immediately thereafter and after giving effect thereto,
no Default or Event of Default is or would be in existence, including
without limitation, a Default or Event of Default resulting from a
violation of Section 10.9., a Subsidiary that is not a Guarantor may:
(x) merge with and into another Person; and
(y) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or
any substantial part of its business or assets, or the capital
stock of or other equity interests in any of its respective
Subsidiaries that is not a Guarantor; and
(v) So long as immediately prior to any of the following
transactions, and immediately thereafter and after giving effect thereto,
no Default or Event of Default is or would be in existence, including
without limitation, a Default or Event of Default resulting from a
violation of Section 10.9., the Borrower may:
(x) merge with another Person so long as the Borrower is the
survivor of such merger; and
(y) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, its
assets (other than assets constituting all or any substantial part
of its business or assets), or the capital stock of or other equity
interests in any of its respective Subsidiaries (other than any
Subsidiary that is a Guarantor);
Further, neither the Borrower nor any Subsidiary shall enter into any
sale-leaseback transactions or other transaction by which the Borrower or a
Subsidiary shall remain liable as lessee (or the economic equivalent thereof)
of any real or personal property that it has sold or leased to another Person.
SECTION 10.9. DISPOSITIONS OF ASSETS.
Except as otherwise permitted in Section 10.8., sell, lease, transfer or
otherwise dispose of, and shall not permit any Subsidiary to sell, lease,
transfer or otherwise dispose of, assets
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(including without limitation capital stock or similar ownership interests
transferred by way of merger or other consolidation) of the Borrower or any
Subsidiary during any fiscal year which have an aggregate book value in excess
of twenty-five percent (25%) of the total assets of the Borrower and its
Subsidiaries determined on a consolidated basis as of the end of the
immediately preceeding fiscal year.
SECTION 10.10. FISCAL YEAR.
Change its fiscal year from that in effect as of the Agreement Date.
SECTION 10.11. MODIFICATIONS TO MATERIAL CONTRACTS.
Enter into, or permit any Subsidiary to enter into, any amendment or
modification to any Material Contract which could reasonably be expected to
have a Material Adverse Effect or default in the performance of any obligations
of the Borrower or any Subsidiary under any Material Contract or permit any
Material Contract to be canceled or terminated prior to its stated maturity.
SECTION 10.12. TRANSACTIONS WITH AFFILIATES.
Permit to exist or enter into, and will not permit any Subsidiary to
permit to exist or enter into, any transaction with any Affiliate except (a)
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of the Borrower or such Subsidiary and upon fair
and reasonable terms which are fully disclosed to the Agent and the Lenders and
are no less favorable to the Borrower or such Subsidiary than would be obtained
in a comparable arm's length transaction with a Person that is not an Affiliate
and (b) the transactions described in Schedule 10.12.
SECTION 10.13. DISTRIBUTIONS OF INCOME TO THE BORROWER.
The Borrower shall cause all of its Subsidiaries to distribute promptly to
the Borrower (but not less frequently than once each fiscal quarter of the
Borrower, unless otherwise approved by the Agent), whether in the form of
dividends, distributions or otherwise, all profits, proceeds or other income
relating to or arising from its Subsidiaries' use, operation, financing,
refinancing, sale or other disposition of their respective assets and
properties after (a) the payment by each Subsidiary of its applicable portion
of Total Debt Service and operating expenses for such quarter and (b) the
establishment of reasonable reserves for the payment of operating expenses not
paid on at least a quarterly basis and capital improvements to be made to such
Subsidiary's assets and properties approved by such Subsidiary in the ordinary
course of business consistent with its past practices.
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ARTICLE XI. DEFAULT
SECTION 11.1. EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of Applicable Law or pursuant to any judgment or order of
any Governmental Authority:
(a) Default in Payment of Principal. The Borrower shall fail to pay when
due (whether upon demand, at maturity, by reason of acceleration or otherwise)
the principal of any of the Loans.
(b) Default in Payment of Interest and Other Obligations. The Borrower
shall fail to pay when due any interest on any of the Loans or any other
Obligations owing by the Borrower under this Agreement or any other Loan
Document and such failure shall continue for a period of 5 Business Days after
the earlier of (i) the date upon which the Borrower obtains knowledge of such
failure or (ii) the date upon which the Borrower has received written notice of
such failure from the Agent.
(c) Default in Performance. (i) The Borrower shall fail to perform or
observe any term, covenant, condition or agreement on its part to be performed
or observed contained in Article X. or (ii) the Borrower or any Subsidiary
shall fail to perform or observe any term, covenant, condition or agreement
contained in this Agreement or any other Loan Document to which it is a party
and not otherwise mentioned in this Section and in the case of this clause (ii)
only, such failure shall continue for a period of 30 days after the earlier of
(x) the date upon which the Borrower obtains knowledge of such failure or (y)
the date upon which the Borrower has received written notice of such failure
from the Agent.
(d) Misrepresentations. Any written statement, representation or warranty
made or deemed made by or on behalf of the Borrower or any Subsidiary under
this Agreement or under any other Loan Document, or any amendment hereto or
thereto, or in any other writing or statement at any time furnished or made or
deemed made by or on behalf of the Borrower or any Subsidiary to the Agent or
any Lender, shall at any time prove to have been incorrect or misleading in any
material respect when furnished or made.
(e) Indebtedness Cross-Default.
(i) The Borrower or any Subsidiary shall fail to pay when due and
payable the principal of, or interest on, any Indebtedness (other than
the Loans) having an aggregate outstanding principal amount of $5,000,000
or more ("Material Indebtedness"); or
(ii) the maturity of any Material Indebtedness shall have (x) been
accelerated in accordance with the provisions of any indenture, contract
or instrument evidencing, providing for the creation of or otherwise
concerning such Indebtedness or (y) been required to be prepaid prior to
the stated maturity thereof; or
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(iii) any other event shall have occurred and be continuing which,
with or without the passage of time, the giving of notice, or both, would
permit any holder or holders of any Material Indebtedness, any trustee or
agent acting on behalf of such holder or holders or any other Person, to
accelerate the maturity of any such Indebtedness or require any such
Indebtedness to be prepaid prior to its stated maturity.
(f) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary
shall: (i) commence a voluntary case under the Bankruptcy Code of 1978, as
amended or other federal bankruptcy laws (as now or hereafter in effect); (ii)
file a petition seeking to take advantage of any other Applicable Laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; (iii) consent to, or fail to
contest in a timely and appropriate manner, any petition filed against it in an
involuntary case under such bankruptcy laws or other Applicable Laws or consent
to any proceeding or action described in the immediately following subsection;
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign; (v) admit in writing its inability to pay its
debts as they become due; (vi) make a general assignment for the benefit of
creditors; or (vii) take any corporate or similar action for the purpose of
effecting any of the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against the Borrower or any Subsidiary, in any court of competent
jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as amended
or other federal bankruptcy laws (as now or hereafter in effect) or under any
other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person, or of all or any substantial part of the assets, domestic or foreign,
of such Person, and such case or proceeding shall continue undismissed or
unstayed for a period of 60 consecutive calendar days, or an order granting the
remedy or other relief requested in such case or proceeding against the
Borrower or such Subsidiary (including, but not limited to, an order for relief
under such Bankruptcy Code or such other federal bankruptcy laws) shall be
entered.
(h) Challenge of Loan Documents. The Borrower or any Subsidiary shall
disavow, revoke or terminate or attempt to do any of the foregoing with respect
to any Loan Document to which it is a party or shall otherwise challenge or
contest in any action, suit or proceeding in any court or before any
Governmental Authority the validity or enforceability of this Agreement, any
Note or any other Loan Document.
(i) Judgment. A judgment or order for the payment of money shall be
entered against the Borrower or any Subsidiary by any court or other tribunal
which exceeds, individually or together with all other such judgments or orders
entered against the Borrower and the Subsidiaries, $1,000,000 in amount (or
which shall otherwise have a Material Adverse Effect) and such judgment or
order shall continue for a period of 45 days without being stayed or dismissed
through appropriate appellate proceedings.
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(j) Attachment. A warrant, writ of attachment, execution or similar
process shall be issued against any property of the Borrower or any Subsidiary
which exceeds, individually or together with all other such warrants, writs,
executions and processes, $1,000,000 in amount and such warrant, writ,
execution or process shall not be discharged, vacated, stayed or bonded for a
period of 45 days.
(k) ERISA. Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to terminate
a Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group to
incur a current payment obligation in excess of $1,000,000.
(l) Loan Documents. An Event of Default (as defined therein) shall occur
under any of the other Loan Documents.
(m) Change of Control/Change in Management.
(i) Any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (other than Patrick L. Beach, W. Ross Martin, H. Reid
Sherard, any member of any such individual's immediate family or any
trust for the benefit of such individual's family members of which such
individual owns the majority legal, beneficial or controlling interest)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person will be deemed to have
"beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 20% of the
total voting power of the then outstanding voting stock of the Borrower;
(ii) During any twelve-month period (commencing both before and
after the Agreement Date), a majority of the Board of Directors of the
Borrower shall no longer be composed of individuals (x) who were members
of such Board of Directors on the first date of such period, (y) whose
election or nomination to such Board of Directors was approved by
individuals referred to in clause (x) above constituting at the time of
such election or nomination at least a majority of such Board of
Directors or (z) whose election or nomination to such Board of Directors
was approved by individuals referred to in clauses (x) and (y) above
constituting at the time of such election or nomination at least a
majority of such Board of Directors;
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<PAGE> 68
(iii) If any two of Patrick L. Beach, W. Ross Martin and H. Reid
Sherard shall cease for any reason (including death or disability) to
occupy the positions of Chief Executive Officer of the Borrower and Chief
Financial Officer of the Borrower and Senior Vice President - Sales and
Marketing (or other more senior officer) of Captec Financial Group, Inc.
, respectively and (b) such individuals have not been replaced with other
individuals reasonably acceptable to the Requisite Lenders within 120
days.
SECTION 11.2. REMEDIES UPON EVENT OF DEFAULT.
Upon the occurrence and during the continuance of an Event of Default the
following provisions shall apply:
(a) Acceleration; Termination of Facilities.
(i) Automatic. Upon the occurrence of an Event of Default specified
in Sections 11.1.(f) or 11.1.(g), (A)(i) the principal of, and all
accrued interest on, the Loans and the Notes at the time outstanding and
(ii) all of the other Obligations of the Borrower, including, but not
limited to, the other amounts owed to the Lenders and the Agent under
this Agreement, the Notes or any of the other Loan Documents shall become
immediately and automatically due and payable by the Borrower without
presentment, demand, protest, or other notice of any kind, all of which
are expressly waived by the Borrower and (B) the Commitments and the
obligation of the Lenders to make Loans hereunder shall immediately and
automatically terminate.
(ii) Optional. If any other Event of Default shall have occurred
and be continuing, the Agent may, and at the direction of the Requisite
Lenders shall: (I) declare (1) the principal of, and accrued interest
on, the Loans and the Notes at the time outstanding and (2) all of the
other Obligations, including, but not limited to, the other amounts owed
to the Lenders and the Agent under this Agreement, the Notes or any of
the other Loan Documents to be forthwith due and payable, whereupon the
same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived by the Borrower and (II) terminate the Commitments and the
obligation of the Lenders to make Loans hereunder.
(b) Loan Documents. The Requisite Lenders may direct the Agent to, and
the Agent if so directed shall, exercise any and all of its rights under any
and all of the other Loan Documents.
(c) Applicable Law. The Requisite Lenders may direct the Agent to, and
the Agent if so directed shall, exercise all other rights and remedies it may
have under any Applicable Law.
(d) Appointment of Receiver. To the extent permitted by Applicable Law,
the Agent and the Lenders shall be entitled to the appointment of a receiver
for the assets and properties of the Borrower and its Subsidiaries, without
notice of any kind whatsoever and without regard to the adequacy of any
security for the Obligations or the solvency of any party bound for its
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payment, to take possession of all or any portion of the business operations of
the Borrower and its Subsidiaries and to exercise such power as the court shall
confer upon such receiver.
SECTION 11.3. REMEDIES UPON DEFAULT.
Upon the occurrence of a Default specified in Sections 11.1.(f) or
11.1.(g), the Commitments shall immediately and automatically terminate.
SECTION 11.4. ALLOCATION OF PROCEEDS.
If an Event of Default shall have occurred and be continuing and maturity
of any of the Obligations has been accelerated, all payments received by the
Agent under any of the Loan Documents, in respect of any principal of or
interest on the Obligations or any other amounts payable by the Borrower
hereunder or thereunder, shall be applied in the following order and priority:
(a) amounts due to the Agent and the Lenders in respect of Fees and
expenses due under Section 13.2.;
(b) payments of interest on Loans, to be applied for the ratable
benefit of the Lenders;
(c) payments of principal of Loans, to be applied for the ratable
benefit of the Lenders;
(d) amounts due to the Agent and the Lenders pursuant to Sections
12.7. and 13.9.;
(e) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
and
(f) any amount remaining after application as provided above, shall
be paid to the Borrower or whomever else may be legally entitled thereto.
SECTION 11.5. PERFORMANCE BY AGENT.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may, upon notice to the
Borrower, perform or attempt to perform such covenant, duty or agreement on
behalf of the Borrower after the expiration of any cure or grace periods set
forth herein; provided, however, the Agent's failure to give any such notice
shall not effect the validity of any action taken by the Agent. In such event,
the Borrower shall, at the request of the Agent, promptly pay any amount
reasonably expended by the Agent in such performance or attempted performance
to the Agent, together with interest thereon at the applicable Post-Default
Rate from the date of such expenditure until paid. Notwithstanding the
foregoing, neither the Agent nor any Lender shall have any liability or
responsibility whatsoever
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for the performance of any obligation of the Borrower under this Agreement or
any other Loan Document.
SECTION 11.6. RIGHTS CUMULATIVE.
The rights and remedies of the Agent and the Lenders under this Agreement
and each of the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which any of them may otherwise have under Applicable
Law. In exercising their respective rights and remedies the Agent and the
Lenders may be selective and no failure or delay by the Agent or any of the
Lenders in exercising any right shall operate as a waiver of it, nor shall any
single or partial exercise of any power or right preclude its other or further
exercise or the exercise of any other power or right.
SECTION 11.7. RECISION OF ACCELERATION BY REQUISITE LENDERS.
If at any time after acceleration of the maturity of the Obligations, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived to the satisfaction of the Requisite
Lenders, then by written notice to the Borrower, the Requisite Lenders may
elect, in the sole discretion of such Requisite Lenders, to rescind and annul
the acceleration and its consequences; but such action shall not affect any
subsequent Default or Event of Default or impair any right or remedy consequent
thereon. The provisions of the preceding sentence are intended merely to bind
the Lenders to a decision which may be made at the election of the Requisite
Lenders; they are not intended to benefit the Borrower and do not give the
Borrower the right to require the Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are satisfied.
ARTICLE XII. THE AGENT
SECTION 12.1. AUTHORIZATION AND ACTION.
Each Lender hereby appoints and authorizes the Agent to take such action
as agent on such Lender's behalf and to exercise such powers under this
Agreement and the other Loan Documents as are specifically delegated to the
Agent by the terms and thereof, together with such powers as are reasonably
incidental thereto. The relationship between the Agent and the Lenders shall
be that of principal and agent only and nothing herein shall be construed to
deem the Agent a trustee or fiduciary for any Lender nor to impose on the Agent
duties or obligations other than those expressly provided for herein. At the
request of a Lender, the Agent will forward to such Lender copies or, where
appropriate, originals of the documents delivered to the Agent pursuant to this
Agreement or the other Loan Documents. The Agent will also furnish to any
Lender, upon the request of such Lender, a copy of any certificate or notice
furnished to the Agent by the Borrower, any Subsidiary or any other Affiliate
of the Borrower, pursuant to this Agreement or any other Loan Document not
already delivered to such Lender pursuant to the terms of this
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Agreement or any such other Loan Document. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of any of the Obligations), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders (or all of the
Lenders if explicitly required under any other provision of this Agreement),
and such instructions shall be binding upon all Lenders and all holders of any
of the Obligations; provided, however, that, notwithstanding anything in this
Agreement to the contrary, the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or Applicable Law. Not in limitation of
the foregoing, the Agent shall not exercise any right or remedy it or the
Lenders may have under any Loan Document upon the occurrence of a Default or an
Event of Default unless the Requisite Lenders have so directed the Agent to
exercise such right or remedy.
SECTION 12.2. AGENT'S RELIANCE, ETC.
Notwithstanding any other provisions of this Agreement or any other Loan
Documents, neither the Agent nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement, except to the
extent found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent: (a)
may treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Agent; (b) may consult with legal counsel
(including its own counsel or counsel for the Borrower or any Subsidiary),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes
no warranty or representation to any Lender or any other Person and shall not
be responsible to any Lender or any other Person for any statements, warranties
or representations made by any Person in or in connection with this Agreement
or any other Loan Document; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of any of this Agreement or any other Loan Document or the
satisfaction of any conditions precedent under this Agreement or any Loan
Document on the part of the Borrower or other Persons or inspect the property,
books or records of the Borrower or any other Person; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document, any other instrument or document furnished pursuant
thereto or any Collateral covered thereby or the perfection or priority of any
Lien in favor of the Agent on behalf of the Lenders in any such Collateral; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telephone or telecopy) believed by it to
be genuine and signed, sent or given by the proper party or parties.
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SECTION 12.3. NOTICE OF DEFAULTS.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received
notice from a Lender or the Borrower referring to this Agreement, describing
with reasonable specificity such Default or Event of Default and stating that
such notice is a "notice of default." If any Lender becomes aware of any
Default or Event of Default, it shall promptly send to the Agent such a "notice
of default." Further, if the Agent receives such a "notice of default", the
Agent shall give prompt notice thereof to the Lenders.
SECTION 12.4. FIRST UNION AS LENDER.
First Union, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include First Union in each case in its
individual capacity. First Union and its affiliates may each accept deposits
from, maintain deposits or credit balances for, invest in, lend money to, act
as trustee under indentures of, serve as financial advisor to, and generally
engage in any kind of business with the Borrower, any Subsidiary or any other
affiliate thereof as if it were any other bank and without any duty to account
therefor to the other Lenders. Further, the Agent and any affiliate may accept
fees and other consideration from the Borrower for services in connection with
this Agreement and otherwise without having to account for the same to the
other Lenders.
SECTION 12.5. APPROVALS OF LENDERS.
All communications from the Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description
of the matter or issue as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where information, if
any, regarding such matter or issue may be inspected, or shall otherwise
describe the matter or issue to be resolved, (c) shall include, if reasonably
requested by such Lender and to the extent not previously provided to such
Lender, written materials and a summary of all oral information provided to the
Agent by the Borrower in respect of the matter or issue to be resolved, and (d)
shall include the Agent's recommended course of action or determination in
respect thereof. Each Lender shall reply promptly, but in any event within 10
Business Days (or such lesser period as may be required under the Loan
Documents for the Agent to respond). Unless a Lender shall give written notice
to the Agent that it objects to the recommendation or determination of the
Agent (together with a written explanation of the reasons behind such
objection) within the applicable time period for reply, such Lender shall be
deemed to have conclusively approved of or consented to such recommendation or
determination.
SECTION 12.6. LENDER CREDIT DECISION, ETC.
Each Lender expressly acknowledges and agrees that neither the Agent nor
any of its officers, directors, employees, agents, counsel, attorneys-in-fact
or other affiliates has made any representations or warranties as to the
financial condition, operations, creditworthiness, solvency
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or other information concerning the business or affairs of the Borrower, any
Subsidiary or other Person to such Lender and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrower, shall
be deemed to constitute any such representation or warranty by the Agent to any
Lender. Each Lender acknowledges that it has, independently and without
reliance upon the Agent, any other Lender or counsel to the Agent, or any of
their respective officers, directors, employees and agents, and based on the
financial statements of the Borrower, the Subsidiaries or any other Affiliate
thereof, and inquiries of such Persons, its independent due diligence of the
business and affairs of the Borrower, the Subsidiaries and other Persons, its
review of the Loan Documents, the legal opinions required to be delivered to it
hereunder, the advice of its own counsel and such other documents and
information as it has deemed appropriate, made its own credit and legal
analysis and decision to enter into this Agreement and the transaction
contemplated hereby. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent, any other Lender or counsel to the Agent
or any of their respective officers, directors, employees and agents, and based
on such review, advice, documents and information as it shall deem appropriate
at the time, continue to make its own decisions in taking or not taking action
under the Loan Documents. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
under this Agreement or any of the other Loan Documents, the Agent shall have
no duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrower, any Subsidiary or any other
Affiliate thereof which may come into possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or other Affiliates.
Each Lender acknowledges that the Agent's legal counsel in connection with the
transactions contemplated by this Agreement is only acting as counsel to the
Agent and is not acting as counsel to such Lender.
SECTION 12.7. INDEMNIFICATION OF AGENT.
Each Lender agrees to indemnify the Agent (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so) pro
rata in accordance with such Lender's respective Commitment Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent (in its capacity as "Agent" but not as a "Lender") in any way
relating to or arising out of the Loan Documents, any transaction contemplated
hereby or thereby or any action taken or omitted by the Agent under the Loan
Documents (collectively, "Indemnifiable Amounts"); provided, however, that no
Lender shall be liable for any portion of such Indemnifiable Amounts to the
extent found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the Agent's gross negligence or willful
misconduct, or if the Agent fails to follow the written direction of the
Requisite Lenders unless such failure is pursuant to the advice of counsel of
which the Lenders have received notice. Without limiting the generality of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees of the
counsel(s) of the Agent's own choosing) incurred by the Agent in connection
with the preparation, execution, administration, or enforcement of, or legal
advice with respect to the rights or responsibilities of the parties under, the
Loan Documents, any suit or action brought by the Agent to enforce the terms of
the Loan
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Documents and/or collect any Obligations, any "lender liability" suit or claim
brought against the Agent and/or the Lenders, and any claim or suit brought
against the Agent and/or the Lenders arising under any Environmental Laws, to
the extent that the Agent is not reimbursed for such expenses by the Borrower.
Such out-of-pocket expenses (including counsel fees) shall be advanced by the
Lenders on the request of the Agent notwithstanding any claim or assertion that
the Agent is not entitled to indemnification hereunder upon receipt of an
undertaking by the Agent that the Agent will reimburse the Lenders if it is
actually and finally determined by a court of competent jurisdiction that the
Agent is not so entitled to indemnification. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder
or under the other Loan Documents and the termination of this Agreement. If
the Borrower shall reimburse the Agent for any Indemnifiable Amount following
payment by any Lender to the Agent in respect of such Indemnifiable Amount
pursuant to this Section, the Agent shall share such reimbursement on a ratable
basis with each Lender making any such payment.
SECTION 12.8. SUCCESSOR AGENT.
The Agent may resign at any time as Agent under the Loan Documents by
giving written notice thereof to the Lenders and the Borrower. In the event of
a material breach of its duties hereunder, the Agent may be removed as Agent
under the Loan Documents at any time by the Requisite Lenders upon 30-day's
prior notice. Upon any such resignation or removal, the Requisite Lenders
shall have the right to appoint a successor Agent which appointment shall,
provided no Default or Event of Default shall have occurred and be continuing,
be subject to the Borrower's approval, which approval shall not be unreasonably
withheld or delayed (except that Borrower shall, in all events, be deemed to
have approved each Lender as a successor Agent). If no successor Agent shall
have been so appointed by the Requisite Lenders, and shall have accepted such
appointment, within 30 days after the resigning Agent's giving of notice of
resignation or the Requisite Lenders' removal of the resigning Agent, then the
resigning or removed Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a Lender, if any Lender shall be willing to serve, and
otherwise shall be a commercial bank having total combined assets of at least
$50,000,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any resigning Agent's resignation
or removal hereunder as Agent, the provisions of this Article XII. shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent under the Loan Documents.
ARTICLE XIII. MISCELLANEOUS
SECTION 13.1. NOTICES.
Unless otherwise provided herein, communications provided for hereunder
shall be in writing and shall be mailed, telecopied or delivered as follows:
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If to the Borrower:
<TABLE>
<S> <C>
Captec Net Lease Realty, Inc.
24 Frank Lloyd Wright Drive
Ann Arbor, Michigan 48106
Attention:W. Ross Martin
Telecopy Number: (734) 994-1376
Telephone Number: (734) 994-5505
If to the Agent:
</TABLE>
<TABLE>
<S> <C>
First Union Capital Markets Group
One First Union Center, DC-6
Charlotte, North Carolina 28288-0166
Attention: Daniel J. Sullivan
Telecopy Number: (704) 383-6205
Telephone Number: (704) 383-6441
If to a Lender:
</TABLE>
To such Lender's address or telecopy number, as applicable, set
forth on its signature page hereto or in the applicable Assignment
and Acceptance Agreement.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered, when delivered. Notwithstanding the immediately preceding sentence,
all notices or communications to the Agent or any Lender under Article II.
shall be effective only when actually received. Neither the Agent nor any
Lender shall incur any liability to the Borrower (nor shall the Agent incur any
liability to the Lenders) for acting upon any telephonic notice referred to in
this Agreement which the Agent or such Lender, as the case may be, believes in
good faith to have been given by a Person authorized to deliver such notice or
for otherwise acting in good faith under hereunder.
SECTION 13.2. EXPENSES.
The Borrower agrees (a) to pay or reimburse the Agent for all of its
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation and execution of, and any amendment, supplement or
modification to, any of the Loan Documents (including reasonable due diligence
expenses and travel expenses relating to closing), and the consummation of the
transactions contemplated thereby, including the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and
the Lenders for all their costs and expenses incurred in connection with the
enforcement or preservation of any rights under the Loan Documents, including
the reasonable fees and disbursements of their respective counsel (including
the allocated fees and expenses of in-house counsel) and any payments in
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indemnification or otherwise payable by the Lenders to the Agent pursuant to
the Loan Documents, (c) to pay, indemnify and hold the Agent and the Lenders
harmless from any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any failure to pay or delay in paying,
documentary, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of any of the Loan Documents, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Loan Document and (d) to the extent not already covered by any of the
preceding subsections, to pay or reimburse the Agent and the Lenders for all
their costs and expenses incurred in connection with any bankruptcy or other
proceeding of the type described in Sections 11.1.(e) or 11.1.(f), including
the reasonable fees and disbursements of counsel to the Agent and any Lender,
whether such fees and expenses are incurred prior to, during or after the
commencement of such proceeding or the confirmation or conclusion of any such
proceeding.
SECTION 13.3. SETOFF.
Subject to Section 3.3. and in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
the Agent, each Lender and each Participant is hereby authorized by the
Borrower, at any time or from time to time during the continuance of an Event
of Default, without notice to the Borrower or to any other Person, any such
notice being hereby expressly waived, but subject to receipt of the Agent's
prior written consent, to set-off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Agent, such Lender or any
affiliate of such the Agent or such Lender, to or for the credit or the account
of the Borrower against and on account of any of the Obligations, irrespective
of whether or not any or all of the Loans and all other Obligations have been
declared to be, or have otherwise become, due and payable as permitted by
Section 11.2., and although such obligations shall be contingent or unmatured.
SECTION 13.4. WAIVER OF JURY TRIAL; ARBITRATION.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG THE BORROWER, THE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON
DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND
EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE LENDERS, THE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT
OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY
OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE
BORROWER, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.
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(b) EACH OF THE BORROWER, THE AGENT AND EACH LENDER HEREBY AGREES THAT ANY
FEDERAL DISTRICT COURT IN NORTH CAROLINA OR, AT THE OPTION OF THE AGENT, ANY
STATE COURT LOCATED IN CHARLOTTE, NORTH CAROLINA, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE
AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER
ARISING HEREFROM OR THEREFROM. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS. EACH PARTY FURTHER WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE
OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING
OF ANY ACTION BY THE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT OR ANY
LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE
JURISDICTION.
(c) UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE BEFORE OR AFTER
INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CLAIM OR CONTROVERSY ARISING OUT
OF, OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS ("DISPUTES")
BETWEEN OR AMONG ANY SUCH PARTIES SHALL BE RESOLVED BY BINDING ARBITRATION
CONDUCTED UNDER AND GOVERNED BY THE COMMERCIAL FINANCIAL DISPUTES ARBITRATION
RULES (THE "ARBITRATION RULES") OF THE AMERICAN ARBITRATION ASSOCIATION (THE
"AAA") AND THE FEDERAL ARBITRATION ACT. DISPUTES MAY INCLUDE, WITHOUT
LIMITATION, TORT CLAIMS, COUNTERCLAIMS, DISPUTES AS TO WHETHER A MATTER IS
SUBJECT TO ARBITRATION, CLAIMS BROUGHT AS CLASS ACTIONS, AND CLAIMS ARISING
FROM LOAN DOCUMENTS EXECUTED IN THE FUTURE. A JUDGMENT UPON THE AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. NOTWITHSTANDING THE FOREGOING, THIS
ARBITRATION PROVISION DOES NOT APPLY TO DISPUTES UNDER OR RELATED TO INTEREST
RATE AGREEMENTS TO WHICH ANY LENDER IS A PARTY. ALL ARBITRATION HEARINGS SHALL
BE CONDUCTED IN CHARLOTTE, NORTH CAROLINA. A HEARING SHALL BEGIN WITHIN 90
DAYS OF DEMAND FOR ARBITRATION AND ALL HEARINGS SHALL CONCLUDED WITHIN 120 DAYS
OF DEMAND FOR ARBITRATION. THESE TIME LIMITATIONS MAY NOT BE EXTENDED UNLESS A
PARTY SHOWS CAUSE FOR EXTENSION AND THEN NO MORE THAN A TOTAL EXTENSION OF 60
DAYS. THE EXPEDITED PROCEDURES SET FORTH IN RULE 51 ET. SEQ. OF THE
ARBITRATION RULES SHALL BE APPLICABLE TO CLAIMS OF LESS THAN $1,000,000.
ARBITRATORS SHALL BE LICENSED ATTORNEYS SELECTED FROM THE COMMERCIAL FINANCIAL
DISPUTE ARBITRATION PANEL OF THE AAA. THE PARTIES DO NOT WAIVE ANY APPLICABLE
LAWS EXCEPT AS PROVIDED HEREIN. NOTWITHSTANDING THE
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PRECEDING BINDING ARBITRATION PROVISIONS, THE PARTIES AGREE TO PRESERVE,
WITHOUT DIMINUTION, THE FOLLOWING REMEDIES THAT THE AGENT OR THE LENDERS MAY
EXERCISE BEFORE OR AFTER AN ARBITRATION PROCEEDING IS BROUGHT. SUBJECT TO THE
OTHER TERMS HEREOF, THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO PROCEED
IN ANY COURT OF PROPER JURISDICTION OR BY SELF-HELP TO EXERCISE OR PROSECUTE
THE FOLLOWING REMEDIES, AS APPLICABLE: (I) ALL RIGHTS TO FORECLOSE AGAINST ANY
REAL OR PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF SALE OR
UNDER APPLICABLE LAW BY JUDICIAL FORECLOSURE INCLUDING A PROCEEDING TO CONFIRM
THE SALE; (II) ALL RIGHTS OF SELF-HELP INCLUDING PEACEFUL OCCUPATION OF REAL
PROPERTY AND COLLECTION OF RENTS, SET-OFF, AND PEACEFUL POSSESSION OF PERSONAL
PROPERTY; (III) OBTAINING PROVISIONAL OR ANCILLARY REMEDIES INCLUDING
INJUNCTIVE RELIEF, SEQUESTRATION, GARNISHMENT, ATTACHMENT, APPOINTMENT OF
RECEIVER AND FILING AN INVOLUNTARY BANKRUPTCY PROCEEDING; AND (IV) WHEN
APPLICABLE, A JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY
WITH REGARD TO PARTIES ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE. THE PARTIES
HERETO ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO A JURY TRIAL WITH REGARD TO A
DISPUTE.
(d) THE PROVISION OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH
THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS
AGREEMENT.
SECTION 13.5. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an affiliate of such Lender
except to the extent such transfer would result in increased costs to the
Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, (i) any
such participating interest must be for a constant and not a varying percentage
interest, (ii) no Lender may grant a participating interest in its Commitment,
or if the Commitments have been terminated, the aggregate outstanding principal
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balance of Notes held by it, in an amount less than $10,000,000 and (iii) after
giving effect to any such participation by a Lender, the amount of its
Commitment, or if the Commitments have been terminated, the aggregate
outstanding principal balance of Notes held by it, in which it has not granted
any participating interests must be at least $10,000,000. Except as otherwise
provided in Section 13.3., no Participant shall have any rights or benefits
under this Agreement or any other Loan Document. In the event of any such
grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided, however, such Lender
may agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase, or extend the term or extend the time or
waive any requirement for the reduction or termination of, such Lender's
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the Loans or portions thereof owing to such Lender, (iii) reduce
the amount of any such payment of principal, or (iv) reduce the rate at which
interest is payable thereon. An assignment or other transfer which is not
permitted by subsection (d) or (e) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this subsection (c). The selling Lender shall notify the Agent
and the Borrower of the sale of any participation hereunder and the terms
thereof.
(d) Any Lender may with the prior written consent of the Agent and, so
long as no Default or Event of Default shall have occurred and be continuing,
the Borrower (which consent, in each case, shall not be unreasonably withheld)
assign to one or more Eligible Assignees (each an "Assignee") all or a portion
of its Commitment and its other rights and obligations under this Agreement and
the Notes; provided, however, (i) no such consent by the Borrower shall be
required in the case of any assignment to another Lender or any affiliate of
such Lender or another Lender; (ii) any partial assignment shall be in an
amount at least equal to $10,000,000 and after giving effect to such assignment
the assigning Lender retains a Commitment, or if the Commitments have been
terminated, holds Notes having an aggregate outstanding principal balance, of
at least $10,000,000; (iii) each such assignment shall be effected by means of
an Assignment and Acceptance Agreement and (iv) if, after giving effect to an
assignment by the Lender who is also the Agent, the amount of such Lender's
Commitment would be less than or equal to $25,000,000, such Lender shall offer
to resign as Agent. Upon execution and delivery of such instrument and payment
by such Assignee to such transferor Lender of an amount equal to the purchase
price agreed between such transferor Lender and such Assignee, such Assignee
shall be deemed to be a Lender party to this Agreement as of the effective date
of the Assignment and Acceptance Agreement and shall have all the rights and
obligations of a Lender with a Commitment as set forth in such Assignment and
Acceptance Agreement, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (d), the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that new Notes are issued to
the Assignee and such transferor
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Lender, as appropriate. In connection with any such assignment, the transferor
Lender shall pay to the Agent an administrative fee for processing such
assignment in the amount of $3,000.
(e) The Agent shall maintain at the Principal Office a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of each Lender from time to time (the "Register"). The Agent shall
give each Lender and the Borrower notice of the assignment by any Lender of its
rights as contemplated by this Section. The Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register and copies
of each Assignment and Acceptance Agreement shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice to the Agent. Upon its receipt of an Assignment and
Acceptance Agreement executed by an assigning Lender, together with each Note
subject to such assignment (the "Surrendered Note"), the Agent shall, if such
Assignment and Acceptance Agreement has been completed and if the Agent
receives the processing and recording fee described in subsection (d) above,
(i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.
(f) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the
assigning Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower or any
Subsidiary in the possession of such Lender from time to time to Assignees and
Participants (including prospective Assignees and Participants) subject to
compliance with Section 13.8.
(h) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan held by it hereunder to the
Borrower, any Subsidiary or any of their respective Affiliates.
(i) Each Lender agrees that, without the prior written consent of the
Borrower and the Agent, it will not make any assignment hereunder in any manner
or under any circumstances that would require registration or qualification of,
or filings in respect of, any Loan or Note under the Securities Act or any
other securities laws United States of America or of any other jurisdiction.
SECTION 13.6. AMENDMENTS.
Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or in any Loan Document to be
given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended,
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and the performance or observance by the Borrower of any terms of this
Agreement or such other Loan Document or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Requisite Lenders (and, in the case of an amendment to any Loan
Document, the written consent of the Borrower). Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing, and signed by all of
the Lenders (or the Agent at the written direction of all of the Lenders), do
any of the following: (i) increase the Commitments of the Lenders or subject
the Lenders to any additional obligations; (ii) reduce the principal of, or
interest rates that have accrued or that will be charged on the outstanding
principal amount of, any Loans or other Obligations; (iii) reduce the amount of
any Fees payable hereunder; (iv) postpone any date fixed for any payment of any
principal of, interest on, or Fees with respect to, any Loans or any other
Obligations; (v) change the Commitment Percentages; (vi) amend this Section or
amend the definitions of the terms used in this Agreement or the other Loan
Documents insofar as such definitions affect the substance of this Section;
(vii) release any Guarantor from its obligations under the Guaranty (except as
permitted by the last sentence of Section 4.2.) and (viii) modify the
definition of the term "Requisite Lenders" or modify in any other manner the
number or percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof. In addition, the
definitions of Maximum Loan Availability and Unencumbered Pool Value (and the
definitions used in either such definition and the percentages and rates used
in the calculation thereof) may not be amended without the written consent of
all of the Lenders and the Borrower. Also, the terms of Sections 10.1.(a),
(c), (g) and (h) may not be amended or otherwise modified, and the Borrower's
compliance therewith may not be waived, without the written consent of all of
the Lenders. Further, no amendment, waiver or consent unless in writing and
signed by the Agent, in addition to the Lenders required hereinabove to take
such action, shall affect the rights or duties of the Agent under this
Agreement or any of the other Loan Documents. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon and any amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose set forth therein. No course of
dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. Except as otherwise explicitly provided for herein or in
any other Loan Document, no notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
SECTION 13.7. NONLIABILITY OF AGENT AND LENDERS.
The relationship between the Borrower and the Lenders and the Agent shall
be solely that of borrower and lender. Neither the Agent nor any Lender shall
have any fiduciary responsibilities to the Borrower and no provision in this
Agreement or in any of the other Loan Documents, and no course of dealing
between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Agent or any Lender to any Lender, the Borrower or
any Subsidiary. Neither the Agent nor any Lender undertakes any responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations.
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SECTION 13.8. CONFIDENTIALITY.
Except as otherwise provided by Applicable Law, the Agent and each Lender
shall utilize all non-public information obtained pursuant to the requirements
of this Agreement which has been identified as confidential or proprietary by
the Borrower in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and sound
banking practices but in any event may make disclosure: (a) to any of their
respective affiliates (provided they shall agree to keep such information
confidential in accordance with the terms of this Section); (b) as reasonably
required by any bona fide Assignee, Participant or other transferee in
connection with the contemplated transfer of any Commitment or participations
therein as permitted hereunder (provided they shall agree to keep such
information confidential in accordance with the terms of this Section); (c) as
required by any Governmental Authority or representative thereof or pursuant to
legal process; (d) to the Agent's or such Lender's independent auditors and
other professional advisors (provided they shall be notified of the
confidential nature of the information); and (e) after the happening and during
the continuance of an Event of Default, to any other Person, in connection with
the exercise by the Agent or the Lenders of rights hereunder or under any of
the other Loan Documents.
SECTION 13.9. INDEMNIFICATION.
(a) The Borrower shall and hereby agrees to indemnify, defend and hold
harmless the Agent, any affiliate of the Agent and each of the Lenders and
their respective directors, officers, shareholders, agents, employees and
counsel (each referred to herein as an "Indemnified Party") from and against
any and all losses, costs, claims, damages, liabilities, deficiencies,
judgments or expenses of every kind and nature (including, without limitation,
amounts paid in settlement, court costs and the fees and disbursements of
counsel incurred in connection with any litigation, investigation, claim or
proceeding or any advice rendered in connection therewith) (the foregoing items
referred to herein as "Claims and Expenses") incurred by an Indemnified Party
in connection with, arising out of, or by reason of, any suit, cause of action,
claim, arbitration, investigation or settlement, consent decree or other
proceeding (the foregoing referred to herein as an "Indemnity Proceeding")
which is in any way related directly or indirectly to: (i) this Agreement or
any other Loan Document or the transactions contemplated thereby; (ii) the
making of any Loans hereunder; (iii) any actual or proposed use by the Borrower
of the proceeds of the Loans; (iv) the Agent's or any Lender's entering into
this Agreement; (v) the fact that the Agent and the Lenders have established
the credit facility evidenced hereby in favor of the Borrower; (vi) the fact
that the Agent and the Lenders are creditors of the Borrower and have or are
alleged to have information regarding the financial condition, strategic plans
or business operations of the Borrower and the Subsidiaries; (vii) the fact
that the Agent and the Lenders are material creditors of the Borrower and are
alleged to influence directly or indirectly the business decisions or affairs
of the Borrower and the Subsidiaries or their financial condition; (viii) the
exercise of any right or remedy the Agent or the Lenders may have under this
Agreement or the other Loan Documents; (ix) any violation or non-compliance by
the Borrower or any Subsidiary of any Applicable Law (including any
Environmental Law) including, but not limited to, any Indemnity Proceeding
commenced by (A) the Internal Revenue Service or state taxing authority or (B)
any Governmental Authority or other Person under any Environmental Law,
including any Indemnity Proceeding commenced by a Governmental Authority or
other Person seeking remedial or other action to cause the Borrower
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or its Subsidiaries (or its respective properties) (or the Agent and/or the
Lenders as successors to the Borrower) to be in compliance with such
Environmental Laws; provided, however, that the Borrower shall not be obligated
to indemnify any Indemnified Party for any acts or omissions of such
Indemnified Party in connection with matters described in this clause the
immediately preceding clause (i) or (viii) to the extent the same have been
found in a final non-appealable judgment by a court of competent jurisdiction
to constitute gross negligence or willful misconduct.
(b) The Borrower's indemnification obligations under this Section shall
apply to all Indemnity Proceedings arising out of, or related to, the foregoing
whether or not an Indemnified Party is a named party in such Indemnity
Proceeding. In this connection, this indemnification shall cover all
reasonable costs and expenses of any Indemnified Party in connection with any
deposition of any Indemnified Party or compliance with any subpoena (including
any subpoena requesting the production of documents). This indemnification
shall, among other things, apply to any Indemnity Proceeding commenced by other
creditors of the Borrower or any Subsidiary, any shareholder of the Borrower or
any Subsidiary (whether such shareholder(s) are prosecuting such Indemnity
Proceeding in their individual capacity or derivatively on behalf of the
Borrower), any account debtor of the Borrower or any Subsidiary or by any
Governmental Authority. This indemnification shall apply to any Indemnity
Proceeding arising during the pendency of any bankruptcy proceeding filed by or
against the Borrower and/or any Subsidiary.
(c) All out-of-pocket fees and expenses of, and all amounts paid to
third-persons by, an Indemnified Party shall be advanced by the Borrower at the
request of such Indemnified Party notwithstanding any claim or assertion by the
Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(d) An Indemnified Party may conduct its own investigation and defense of,
and may formulate its own strategy with respect to, any Indemnified Proceeding
covered by this Section and, as provided above, all costs and expenses incurred
by the Indemnified Party shall be reimbursed by the Borrower. No action taken
by legal counsel chosen by an Indemnified Party in investigating or defending
against any such Indemnified Proceeding shall vitiate or in any way impair the
obligations and duties of the Borrower hereunder to indemnify and hold harmless
each such Indemnified Party; provided, however, that (i) if the Borrower is
required to indemnify an Indemnified Party pursuant hereto and (ii) the
Borrower has provided evidence reasonably satisfactory to such Indemnified
Party that the Borrower has the financial wherewithal to reimburse such
Indemnified Party for any amount paid by such Indemnified Party with respect to
such Indemnified Proceeding, such Indemnified Party shall not settle or
compromise any such Indemnified Proceeding without the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed).
(e) If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under Applicable Law. The
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Borrower's obligations hereunder shall survive any termination of this
Agreement and the other Loan Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any other of
their obligations set forth in this Agreement or any other Loan Document to
which it is a party.
SECTION 13.10. TERMINATION; SURVIVAL.
At such time as (a) all of the Commitments have been terminated, (b) none
of the Lenders is obligated any longer under this Agreement to make any Loans
and (c) all Obligations (other than obligations which survive as provided in
the following sentence) have been paid and satisfied in full, this Agreement
shall terminate. Notwithstanding any termination of this Agreement, or of the
other Loan Documents, the indemnities to which the Agent and the Lenders are
entitled under the provisions of Sections 12.7., 13.2. and 13.9. and any other
provision of this Agreement and the other Loan Documents, and the waivers of
jury trial and submission to jurisdictions contained in Section 13.4., shall
continue in full force and effect and shall protect the Agent and the Lenders
against events arising after such termination as well as before.
SECTION 13.11. SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.12. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE
FULLY PERFORMED, IN SUCH STATE.
SECTION 13.13. COUNTERPARTS.
This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.
SECTION 13.14. LIMITATION OF LIABILITY.
To the maximum extent permitted by Applicable Law, neither the Agent nor
any Lender, nor any affiliate, officer, director, employee, attorney, or agent
of the Agent or any Lender shall have any liability with respect to, and the
Borrower hereby waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by the Borrower in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by
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this Agreement or any of the other Loan Documents. The Borrower hereby waives,
releases, and agrees not to sue the Agent or any Lender or any of the Agent's
or any Lender's affiliates, officers, directors, employees, attorneys, or
agents for punitive damages in respect of any claim in connection with, arising
out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or
financed hereby.
SECTION 13.15. ENTIRE AGREEMENT.
This Agreement, the Notes, and the other Loan Documents referred to herein
embody the final, entire agreement among the parties hereto and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent
oral agreements or discussions of the parties hereto.
SECTION 13.16. CONSTRUCTION.
The Agent, the Borrower and each Lender acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by the Agent, the Borrower and each Lender.
SECTION 13.17. NO NOVATION; EFFECT OF AMENDMENT AND RESTATEMENT.
THE PARTIES HERETO HAVE ENTERED INTO THIS AGREEMENT SOLELY TO AMEND AND
RESTATE THE TERMS OF THE EXISTING CREDIT AGREEMENT. THE PARTIES DO NOT INTEND
THIS AGREEMENT NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS
AGREEMENT AND THE TRANSACTION CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE,
A NOVATION OF ANY OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN
CONNECTION WITH THE EXISTING CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT AGREEMENT). THE PARTIES AGREE
THAT (A) ALL OF THE LOAN DOCUMENTS (AS DEFINED IN THE EXISTING CREDIT
AGREEMENT) CONSTITUTE AND SHALL BE DEEMED TO BE LOAN DOCUMENTS (AS DEFINED IN
THIS AGREEMENT); (B) ALL SUCH LOAN DOCUMENTS REMAIN IN FULL FORCE AND EFFECT
AND (C) ANY REFERENCE TO THE EXISTING CREDIT AGREEMENT IN ANY SUCH LOAN
DOCUMENTS SHALL BE DEEMED TO BE A REFERENCE TO THIS AGREEMENT.
[Signatures on Following Pages]
- 80 -
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be executed by their authorized officers all as of
the day and year first above written.
BORROWER:
CAPTEC NET LEASE REALTY, INC.
By: /s/ W. ROSS MARTIN
Name: W. Ross Martin
Title: Executive Vice President and
Chief Financial Officer
[Signatures Continued on Next Page]
- 81 -
<PAGE> 87
[Signature Page to Amended and Restated Credit Agreement dated as of
FEBRUARY 26, 1998 with CAPTEC NET LEASE REALTY, INC.]
FIRST UNION
NATIONAL BANK, as Agent and as a
Lender
By: /s/ DANIEL J. SULLIVAN
Name: Daniel J. Sullivan
Title: Director
COMMITMENT AMOUNT:
$175,000,000
LENDING OFFICE (all Types of Loans):
<TABLE>
<S> <C>
First Union National Bank
One First Union Center
Charlotte, North Carolina 28288-0166
Attn: Daniel J. Sullivan
Telecopier: (704) 383-6205
Telephone: (704) 383-6441
</TABLE>
- 82 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOOLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,211,120
<SECURITIES> 0
<RECEIVABLES> 22,590,452
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,681,707
<PP&E> 176,308,608
<DEPRECIATION> (2,513,393)
<TOTAL-ASSETS> 203,457,372
<CURRENT-LIABILITIES> 4,271,891
<BONDS> 63,984,988
0
0
<COMMON> 95,081
<OTHER-SE> 134,386,412
<TOTAL-LIABILITY-AND-EQUITY> 203,457,372
<SALES> 0
<TOTAL-REVENUES> 5,623,601
<CGS> 0
<TOTAL-COSTS> 1,264,796
<OTHER-EXPENSES> 47,588
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,070,321
<INCOME-PRETAX> 3,240,896
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,240,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,240,896
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
