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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended September 30, 1996 Commission File Number 1-6249
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First Union Real Estate Equity and Mortgage Investments
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(Exact name of registrant as specified in its charter)
Ohio 34-6513657
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
Suite 1900, 55 Public Square
Cleveland, Ohio 44113-1937
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 781-4030
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Former name, former address and former fiscal year, if changed since last
report.
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 such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
17,459,144 Shares of Beneficial Interest outstanding as of September 30, 1996
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Total number of pages contained in this report: 13
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements.
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The combined financial statements included herein have been prepared by
the registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the registrant believes that the disclosures
contained herein are adequate to make the information presented not misleading.
It is suggested that these combined financial statements be read in conjunction
with the combined financial statements and the notes thereto included in the
registrant's latest annual report on Form 10-K.
The unaudited "Combined Balance Sheets" as of September 30, 1996 and
December 31, 1995 and "Combined Statements of Income and Combined Statements of
Changes in Cash" for the periods ended September 30, 1996 and 1995, of the
registrant, and "Notes to Combined Financial Statements," are included herein.
These financial statements reflect, in the opinion of the registrant, all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the combined financial position and results of operations for the
respective periods in conformity with generally accepted accounting principles
consistently applied.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations.
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Financial Condition
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In February 1996, the registrant sold two office buildings and a
parking garage in Cleveland, OH for $1.8 million in cash and a $7 million, 8%
note secured by the properties. This sale resulted in a capital loss of $5.6
million which was previously provided for by the registrant as part of a $14
million noncash unrealized loss on the carrying value of certain assets recorded
in December 1995.
The registrant obtained a $12.5 million mortgage loan in January 1996.
The mortgage loan is secured by an apartment complex in Durham, NC and is at an
interest rate of 6.875%. In April 1996, the registrant obtained two mortgage
loans secured by apartment complexes in Indianapolis, IN and Cincinnati, OH. The
loans for $15 million and $9 million are at interest rates of 7.65% and 7.395%,
respectively. In late September 1996, the registrant obtained a $12 million
mortgage loan at 7.75% secured by the Woodland Commons Shopping Center in
Buffalo Grove, Ill. Proceeds from these four mortgage loans totaling $48.5
million were used to repay short-term bank loans.
In June 1996, the registrant received repayment of its $7 million
mortgage investment. The mortgage investment had been part of the consideration
received in the registrant's sale in February 1996, of the two office buildings
and a parking garage discussed above. The proceeds of this mortgage investment
were used to repay short-term bank loans and the $5 million, 8.6% medium term
note which was due in July 1996.
The registrant, in September 1996, renegotiated, restructured, and
expanded its revolving credit agreements. The new $96 million credit agreement
is secured by the same collateral that secured the former $80 million
facilities. The new agreement is at a variable interest rate and requires
defined levels of funds from operations, net worth and interest coverage. The
term of the $96 million credit agreement is two years and can be extended
thereafter each year upon request of the registrant and consent of the bank
group.
Also in late September 1996, the registrant invested $30 million, from
its bank credit facility, in a joint venture. The joint venture acquired nine
regional shopping malls totaling 5,800,000 square feet of gross leasable area.
These shopping malls are the dominant retail facilities located primarily in
regional markets in Louisiana, Arkansas, Texas, Oklahoma and New Mexico. The
purchase price paid by the joint venture was $311.7 million which includes the
assumption of $50 million in existing mortgage debt. The registrant's property
management affiliate will manage the properties for the joint venture. The
registrant has recorded this joint venture investment using the equity method
of accounting, as the registrant owns 26% of the joint venture. The joint
venture had no effect on net income during the third quarter of 1996 since the
transaction occurred at the end of the quarter.
Except as noted above, there has been no material change in the
registrant's financial condition from December 31, 1995.
2
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Liquidity and Capital Resources
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Net cash provided by operations for the nine months ended September 30,
1996 of $14 million was approximately $2 million greater than the same period in
the prior year. This increase in cash provided by operations during 1996 is
primarily attributed to the increase in accrued liabilities when comparing the
nine months ended September 30, 1996 to the same period in the prior year.
Dividends paid in 1996 of $5.9 million represented 42% of net cash from
operating activities.
Net cash used for investing of $38 million for the first nine months of
1996 included $8.8 million in proceeds received from the sale of two office
buildings and a parking garage, which was offset by upgrading and reinvesting
$16.6 million in building and tenant improvements and a $30 million investment
in a joint venture as discussed previously. The capital expenditures and tenant
improvements were primarily made to complete the renovations of two retail
properties and a retail anchor tenant expansion which began in 1995. Also, a
56,500 square foot office space was built for a tenant that took occupancy in
April 1996 at North Valley Center which is being converted from a retail mall
to a business and commerce center.
Net cash provided by financing of $22 million during the first nine
months of 1996 included $48.5 million from four new mortgage loans secured by
three apartment complexes and a shopping mall. Also, the registrant purchased
950,000 of its shares of beneficial interest for $7.1 million using funds
available under its bank credit facilities. This purchase was part of a
settlement agreement with a minority shareholder. The registrant purchased the
shares at the average share price for the time period beginning January 1, 1995
and ending December 8, 1995. Additionally, in July 1996 the registrant repaid
the $5 million, 8.6% medium term note with cash received from the repayment of a
mortgage investment.
During the remaining three months of 1996, the registrant has
approximately $1 million in mortgage principal payments due and an estimated $4
million in tenant and building improvements. The registrant intends to fund the
debt repayments and investments in capital expenditures through its residual
funds from operations and credit facility.
Results of Operations
- ---------------------
Net income was $1 million and $.3 million for the three months ended
September 30, 1996 and 1995, respectively. Net income for the three months ended
September 30, 1995 included $.3 million in litigation and proxy expenses.
Net income for the first nine months of 1996 was $1.1 million as
compared to $27.7 million in 1995. Net income for 1995 included a capital gain
of $29.9 million, a $4.3 million non-cash charge for the cumulative effect of a
change in accounting method and $1.4 million of litigation and proxy expenses.
Net income for 1996 included two non-recurring, non-cash charges totaling $1.3
million for the write-off of a tenant allowance and the termination of an
employment contract.
The $29.9 million capital gain in 1995 resulted from the sale of the
registrant's 50% interests in two malls in Wilkes-Barre, PA and Fairmount, WV
for $29.5 million in cash, a $6 million mortgage at an interest rate of 9%
secured by one of the malls and also secured by partnership units of Crown
American Properties L.P., and the assumption by the purchaser of $4.7 million of
mortgage debt. The proceeds from this sale were invested in short-term
securities until properties were acquired in 1995 in a tax-free exchange.
In 1995, the registrant recorded a non-cash charge of $4.3 million for
the cumulative effect of the change in accounting method for leasing costs.
Previously, the registrant deferred internal leasing costs and amortized these
costs over the lives of the consummated leases. This practice is the normal
method used in the industry, however the registrant exercised prudence in
adopting a more conservative expensing practive. This change in the method of
accounting was made retroactive to January 1995 and, consequently, 1995 amounts
have been restated to reflect this change.
Income before capital gains and cumulative effect of accounting change
was $1.0 million for the three months ended September 30, 1996 as compared to
$.3 million for the same period in 1995. For the nine months of 1996, income
before capital gains and cumulative effect of accounting change was $1.1 million
compared to $2.2 million in 1995.
Property net operating income, which is calculated as revenue generated
from rents and mortgage investment interest less property operating expenses and
real estate taxes, was $11.3 million and $10.8 million for the three months
ended September 30, 1996 and 1995, respectively. Property net operating income
for properties in the portfolio for both 1996 and 1995 increased by $.8 million
over 1995. This increase is partially offset by the loss of property net
operating income from three office buildings and a parking garage that were sold
in December 1995 and February 1996, thereby resulting in a net increase of $.4
million for the entire portfolio.
3
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Property net operating income was $33.3 million and $32.6 when
comparing the first nine months of 1996 to 1995. However, property net operating
income when comparing the first nine months of 1996 to the same period of 1995
increased by $.9 million for properties in the portfolio for both 1996 and 1995.
The portfolio included non-comparable properties and mortgage investments during
1996 and 1995 due to the acquisition of a shopping mall and an apartment complex
in 1995, and the sale of two shopping malls, three office buildings and a
parking garage in 1995 and 1996.
During the first half of 1995, the registrant had an average of $13
million in short-term investments from the proceeds of the January 1995 sale of
its 50% interest in two malls. These funds were used to purchase a shopping mall
and an apartment complex in April and June of 1995, respectively.
Mortgage interest expense increased when comparing 1996 to 1995 due to
the three new mortgage loans totaling $36.5 million obtained in January and
April of 1996. However, the registrant's refinancing in the fourth quarter of
1995 of four mortgage loans at an average interest rate of 9.25% for one
mortgage loan at 7.49% partially offsets the full effect of the increase in
mortgage interest expense from the addition of the three mortgage loans in 1996.
Bank loans increased when comparing 1996 to 1995 due to increased
borrowings on the bank credit facilities during the last half of 1995 and first
nine months of 1996. The borrowings were used to fund in part the registrant's
investment in its capital improvement program, to purchase 950,000 shares of
beneficial interest in January 1996, and to invest $30 million in a joint
venture to acquire nine shopping malls. For the nine months ended September 30,
1996, the registrant had an average of $56 million of bank lines of credit
outstanding as compared to an average of $46 million in 1995.
Depreciation and amortization expense for the first nine months of 1996
increased over the same period in 1995 by approximately $1.2 million. This
increase was caused by a non-recurring, non-cash $680,000 write-off of a tenant
allowance due to the registrant replacing an anchor tenant at one of its malls.
Additionally, the remaining increase in depreciation expense, when comparing
1996 to 1995, was attributable to the registrant's capital improvement program
during the last half of 1995 and continuing in 1996.
General and administrative expenses in the first nine months of 1996
included a non-recurring, non-cash charge of $650,000 for the termination of an
employment contract of a former executive. Additionally, litigation and proxy
expenses of $.3 million and $1.4 million were included in general and
administrative expenses in the third quarter and nine months ended September
1995, respectively.
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings.
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None.
Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities.
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None.
Item 4. Submission of Matters to a Vote of Security Holders.
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None.
Item 5. Other Information.
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None.
4
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Item 6. Exhibits and Reports on Form 8-K and Form 8-K/A.
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(a) Exhibits:
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Exhibit (10a) - Bank Credit Agreement dated September 19,
1996.
Exhibit (10b) - First Union Management, Inc. Declaration of
Trust dated October 1, 1996.
Exhibit (11) - Statements Re: Computation of Per Share
Earnings.
Exhibit (12) - Statements Re: Ratios of Combined Income
from Operations and Combined Net Income to
Fixed Charges
Exhibit (20) - Financial Statements (Unaudited)
Combined Balance Sheets as of
September 30, 1996 and December 31,
1995
Combined Statements of Income for the
Three and Nine Months ended
September 30, 1996 and 1995
Combined Statements of Changes in Cash
for the Three and Nine Months ended
September 30, 1996 and 1995
Notes to Combined Financial Statements
Exhibit (27) - Financial Data Schedule
(b) Reports on Form 8-K and Form 8-K/A.
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(1) Form 8-K
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None.
(2) Form 8-K/A
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Report dated June 12, 1996 regarding investment in retail
properties through a joint venture and filed on October 7,
1996.
5
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SIGNATURES
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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.
First Union Real Estate Equity and
Mortgage Investments
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(Registrant)
Date: October 7, 1996 By: /s/ James C. Mastandrea
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James C. Mastandrea, Chairman
President, Chief Executive Officer
and Chief Financial Officer
Date: October 7, 1996 By: /s/ John J. Dee
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John J. Dee, Senior Vice
President, Chief Accounting
Officer
6
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Index to Exhibits
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<TABLE>
<CAPTION>
Page
Number
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<S> <C>
Exhibit (10a) - Bank Credit Agreement dated September 19, 1996................. 8
Exhibit (10b) - First Union Management, Inc. Declaration of
Trust dated October 1, 1996.................................... 9
Exhibit (11) - Statements Re: Computation of Per Share
Earnings .............................................. 10
Exhibit (12) - Statements Re: Ratios of Combined Income from Operations
and Combined Net Income to Fixed Charges............... 11
Exhibit (20) - Financial Statements (unaudited)............................... 12
Combined Balance Sheets as of September 30, 1996
and December 31, 1995
Combined Statements of Income for the Three and Nine
Months ended September 30, 1996 and 1995
Combined Statements of Changes in Cash for the
Three and Nine Months ended September 30, 1996 and
1995
Notes to Combined Financial Statements
Exhibit (27) - Financial Data Schedule........................................ 13
</TABLE>
7
<PAGE> 1
Exhibit 10(a)
U.S.$96,000,000
CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 19, 1996
AMONG
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
AS BORROWER
FIRST UNION MANAGEMENT, INC.
AS MANAGEMENT COMPANY
THE LENDING INSTITUTIONS NAMED THEREIN
AS LENDERS
AND
NATIONAL CITY BANK
AS ADMINISTRATIVE AGENT
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
SECTION 1. AMOUNT AND TERMS OF CREDIT................................... 1
1.1. COMMITMENTS............................................ 1
1.2. MINIMUM BORROWING AMOUNTS, ETC......................... 2
1.3. NOTICE OF BORROWING.................................... 2
1.4. DISBURSEMENT OF FUNDS.................................. 3
1.5. NOTES.................................................. 3
1.6. CONVERSIONS............................................ 4
1.7. PRO RATA BORROWINGS.................................... 4
1.8. INTEREST............................................... 4
1.9. INTEREST PERIODS....................................... 4
1.10. INCREASED COSTS, ILLEGALITY, ETC....................... 5
1.11. COMPENSATION........................................... 7
1.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS....... 7
SECTION 2. LETTERS OF CREDIT...................................... 8
2.1. LETTERS OF CREDIT...................................... 8
2.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE......... 8
2.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS........... 9
2.4. LETTER OF CREDIT PARTICIPATIONS........................ 9
2.5. INCREASED COSTS........................................ 11
2.6. OBLIGATIONS ABSOLUTE................................... 11
SECTION 3. FEES; COMMITMENTS...................................... 12
3.1. FEES................................................... 12
3.2. VOLUNTARY REDUCTION OF COMMITMENTS..................... 13
3.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC.............. 13
3.4. EXTENSION OF MATURITY DATES............................ 13
SECTION 4. PAYMENTS............................................... 14
4.1. VOLUNTARY PREPAYMENTS.................................. 14
4.2. MANDATORY PREPAYMENTS.................................. 14
4.3. METHOD AND PLACE OF PAYMENT............................ 16
4.4. NET PAYMENTS........................................... 16
SECTION 5. CONDITIONS PRECEDENT................................... 18
5.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE......... 18
5.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS.............. 22
SECTION 6. REPRESENTATIONS AND WARRANTIES......................... 22
6.1. ORGANIZATION, EXISTENCE................................ 23
6.2. DUE AUTHORIZATION...................................... 23
6.3. ENFORCEABILITY OF DOCUMENTS............................ 24
6.4. NO DEFAULT............................................. 24
6.5. FINANCIAL STATEMENTS................................... 25
6.6. NO ADVERSE CHANGES..................................... 25
6.7. TITLE TO ASSETS........................................ 25
6.8. LITIGATION............................................. 25
6.9. NO MATERIALLY ADVERSE CONTRACTS........................ 25
6.10. TAX RETURNS............................................ 25
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Page
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6.11. CONTRACTS WITH AFFILIATES OR SUBSIDIARIES................. 26
6.12. EMPLOYEE BENEFIT PLANS.................................... 26
6.13. GOVERNMENTAL REGULATION................................... 26
6.14. MARGIN STOCK; USE OF PROCEEDS............................. 26
6.15. DISCLOSURE................................................ 26
6.16. NO MATERIAL DEFAULT....................................... 26
6.17. ENVIRONMENTAL CONDITIONS.................................. 27
6.18. LICENSES AND PERMITS...................................... 27
SECTION 7. AFFIRMATIVE COVENANTS..................................... 28
7.1. REPORTS AND OTHER INFORMATION............................. 28
7.2. MAINTENANCE OF PROPERTY; INSURANCE........................ 29
7.3. PRIORITY OF MORTGAGES..................................... 29
7.4. SECURITY INTERESTS........................................ 30
7.5. MAINTENANCE OF EXISTENCE.................................. 30
7.6. COMPLIANCE WITH LAWS...................................... 30
7.7. NOTICE OF LITIGATION; JUDGMENTS........................... 31
7.8. NOTICE OF OTHER EVENTS.................................... 31
7.9. INSPECTIONS............................................... 31
7.10. PAYMENT OF TAXES AND OTHER CLAIMS......................... 32
7.11. PAYMENT OF INDEBTEDNESS................................... 32
7.12. PERFORMANCE OF OBLIGATIONS UNDER THE LOAN DOCUMENTS....... 32
7.13. GOVERNMENTAL CONSENTS AND APPROVALS....................... 32
7.14. EMPLOYEE BENEFIT PLANS AND GUARANTEED PENSION PLANS....... 32
7.15. FURTHER ASSURANCES........................................ 33
7.16. FINANCIAL COVENANTS....................................... 33
7.17. ADDITIONAL MORTGAGED PROPERTIES; SUBSTITUTE
MORTGAGED PROPERTIES...................................... 34
7.18. INTEREST RATE HEDGING..................................... 36
SECTION 8. NEGATIVE COVENANTS........................................ 37
8.1. LIMITATION ON NATURE OF BUSINESS.......................... 37
8.2. LIMITATION ON CONSOLIDATION AND MERGER.................... 37
8.3. LIMITATION ON DISTRIBUTIONS, DIVIDENDS AND RETURN
OF CAPITAL................................................ 38
8.4. ACQUISITION OF MARGIN SECURITIES.......................... 38
8.5. LIMITATION ON INDEBTEDNESS................................ 39
8.6. GUARANTEES................................................ 41
8.7. LIENS..................................................... 41
8.8. SALES OF ASSETS, ETC...................................... 42
8.9. LEASING OF ELIGIBLE REAL ESTATE........................... 43
8.10. TRANSACTIONS WITH AFFILIATES.............................. 43
8.11. LIMITATION ON CERTAIN ACTIONS............................. 43
SECTION 9. EVENTS OF DEFAULT......................................... 44
9.1. EVENTS OF DEFAULT......................................... 44
9.2. ACCELERATION, ETC......................................... 45
9.3. REMEDIES.................................................. 46
9.4. APPLICATION OF LIQUIDATION PROCEEDS....................... 46
SECTION 10. DEFINITIONS............................................... 47
SECTION 11. THE ADMINISTRATIVE AGENT.................................. 61
ii
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Page
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11.1. APPOINTMENT............................................... 61
11.2. DELEGATION OF DUTIES...................................... 61
11.3. EXCULPATORY PROVISIONS.................................... 61
11.4. RELIANCE BY ADMINISTRATIVE AGENT.......................... 61
11.5. NOTICE OF DEFAULT......................................... 62
11.6. NON-RELIANCE.............................................. 62
11.7. INDEMNIFICATION........................................... 62
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY........... 63
11.9. SUCCESSOR ADMINISTRATIVE AGENT............................ 63
11.10. OTHER AGENTS.............................................. 63
SECTION 12. MISCELLANEOUS............................................. 63
12.1. PAYMENT OF EXPENSES ETC................................... 63
12.2. RIGHT OF SETOFF........................................... 64
12.3. NOTICES................................................... 64
12.4. BENEFIT OF AGREEMENT...................................... 64
12.5. NO WAIVER: REMEDIES CUMULATIVE............................ 65
12.6. PAYMENTS PRO RATA......................................... 66
12.7. CALCULATIONS: COMPUTATIONS................................ 66
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL...................................... 66
12.9. COUNTERPARTS.............................................. 67
12.10. EFFECTIVENESS............................................. 67
12.11. HEADINGS DESCRIPTIVE...................................... 67
12.12. AMENDMENT OR WAIVER....................................... 67
12.13. SURVIVAL.................................................. 68
12.14. DOMICILE OF LOANS......................................... 68
12.15. CONFIDENTIALITY........................................... 68
12.16. LENDER REGISTER........................................... 68
12.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT
ISSUERS................................................... 68
12.18. GENERAL LIMITATION OF LIABILITY........................... 69
12.19. NO DUTY................................................... 69
12.20. LENDERS AND AGENT NOT FIDUCIARY TO CREDIT PARTIES,
ETC....................................................... 69
12.21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................ 69
12.22. LIMITATION ON ENFORCEMENT OF SECURITY DOCUMENTS........... 69
12.23. LIABILITY OF BORROWER'S TRUSTEES, ETC..................... 69
iii
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ANNEX I - INFORMATION AS TO LENDERS
ANNEX II - INFORMATION AS TO SUBSIDIARIES
ANNEX III - LIST OF INITIAL MORTGAGED PROPERTIES, MARKET CONSTANTS
AND COVERAGE FACTORS
ANNEX IV - DESCRIPTION OF CERTAIN PROPERTY DISPOSITIONS
ANNEX V - DESCRIPTION OF CERTAIN LITIGATION
ANNEX VI - LIST OF CERTAIN EMPLOYEE BENEFIT PLANS AND
GUARANTEED PENSION PLANS
ANNEX VII - DESCRIPTION OF CERTAIN MATERIAL AGREEMENTS
ANNEX VIII - DESCRIPTION OF INDEBTEDNESS FOR BORROWED MONEY,
INCLUDING THAT OWED TO THE BORROWER BY AFFILIATES
EXHIBIT A-1 - FORM OF NOTICE OF BORROWING
EXHIBIT A-2 - FORM OF LETTER OF CREDIT REQUEST
EXHIBIT B - FORM OF NOTE
EXHIBIT C - FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER
EXHIBIT D-1 - FORM OF MORTGAGE (READING MALL, READING, PENNSYLVANIA)
EXHIBIT D-2 - FORM OF MORTGAGE (55 PUBLIC SQUARE, CLEVELAND, OHIO)
EXHIBIT D-3 - FORM OF MORTGAGE (KANDI MALL, WILLMAR, MINNESOTA)
EXHIBIT D-4 - FORM OF MORTGAGE (CROSSROADS MALL, FT. DODGE, IOWA)
EXHIBIT D-5 - FORM OF MORTGAGE (WALDEN VILLAGE APARTMENTS, CLARKSTON,
GEORGIA)
EXHIBIT D-6 - FORM OF MORTGAGE (BRIARWOOD APARTMENTS, FAYETTVILLE,
NORTH CAROLINA)
EXHIBIT E-1 - FORM OF LEASE ASSIGNMENT (READING MALL, READING,
PENNSYLVANIA)
EXHIBIT E-2 - FORM OF LEASE ASSIGNMENT (55 PUBLIC SQUARE, CLEVELAND,
OHIO)
EXHIBIT E-3 - FORM OF LEASE ASSIGNMENT (KANDI MALL, WILLMAR, MINNESOTA)
EXHIBIT E-4 - FORM OF LEASE ASSIGNMENT (CROSSROADS MALL, FT. DODGE,
IOWA)
EXHIBIT E-5 - FORM OF LEASE ASSIGNMENT (WALDEN VILLAGE APARTMENTS,
CLARKSTON, GEORGIA)
EXHIBIT E-6 - FORM OF LEASE ASSIGNMENT (BRIARWOOD APARTMENTS,
FAYETTVILLE, NORTH CAROLINA)
EXHIBIT F - FORM OF PLEDGE AGREEMENT
EXHIBIT G - FORM OF ENVIRONMENTAL INDEMNITY AGREEMENT
EXHIBIT H - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT I - FORM OF SOLVENCY CERTIFICATE
EXHIBIT J - FORM OF SECTION 4.4(B)(II) CERTIFICATE
EXHIBIT K - FORM OF COMPLIANCE CERTIFICATE
iv
<PAGE> 6
CREDIT AGREEMENT, dated as of September 19, 1996, among the following:
(i) FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS, a
real estate investment trust organized under the laws of the State of
Ohio (herein, together with its successors and assigns, the
"BORROWER");
(ii) FIRST UNION MANAGEMENT, INC., a Delaware corporation
(herein, together with its successors and assigns, the "MANAGEMENT
COMPANY");
(iii) the lending institutions listed in Annex I hereto (each a
"LENDER" and collectively, the "LENDERS"); and
(iv) NATIONAL CITY BANK, a national banking association, as
administrative agent (the "ADMINISTRATIVE AGENT"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 10 are used herein as so defined.
(2) The Borrower has applied to the Lenders for credit facilities in
order to refinance certain indebtedness of the Borrower and in order to provide
working capital and funds for acquisitions and other lawful purposes.
(3) The Management Company acts as manager of the properties and
investments of the Borrower.
(4) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facilities
provided for herein.
NOW, THEREFORE, it is agreed:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.1. COMMITMENTS. Subject to and upon the terms and conditions herein
set forth, each Lender severally agrees to make a loan or loans (each a "LOAN"
and, collectively, the "LOANS") to the Borrower, which Loans shall be drawn, to
the extent such Lender has a commitment under such Facility, under the Primary
Facility or the Secondary Facility, as set forth below:
(a) Loans under the Primary Facility (each a "PF LOAN" and,
collectively, the "PF LOANS"): (i) may be made at any time and from
time to time on and after the Initial Borrowing Date and prior to the
PF Maturity Date; (ii) except as hereinafter provided, may, at the
option of the Borrower, be incurred and maintained as, and/or converted
into, PF Loans which are Base Rate Loans or Eurodollar Loans, PROVIDED
that all PF Loans made as part of the same Borrowing shall, unless
otherwise specifically provided herein, consist of PF Loans of the same
Type; (iii) may be repaid and reborrowed in accordance with the
provisions hereof; and (iv) shall not for any Lender at any time
outstanding exceed that aggregate principal amount which, when added to
the product at such time of (A) such Lender's PF Percentage and (B) the
sum of the Letter of Credit Outstandings, equals the PF Commitment of
such Lender at such time. In addition, no PF Loans shall be made at any
time if after giving effect thereto the sum of the aggregate
outstanding principal amount of the PF Loans and the SF Loans, PLUS the
Letter of Credit Outstandings, PLUS the Aggregate Measured Swap Credit
Risk (if any) of all Designated Interest Rate Agreements,
<PAGE> 7
would exceed the lesser of (I) the sum of (x) 65% of the fair market
value of the Eligible Real Estate constituting a part of the Mortgaged
Property hereunder on the Initial Borrowing Date, as determined on the
basis of the appraisals referred to in section 5.1(v), and (y) 65% of
the Appraised Value of any Additional Property or Substitute Property,
determined for any such Property as of the date such Property becomes a
Mortgaged Property hereunder in compliance with section 7.17, as
determined on the basis of the appraisal with respect thereto referred
to in section 7.17, and (II) the Aggregate Borrowing Base as of the
most recently completed fiscal quarter for which financial information
necessary to determine the Aggregate Borrowing Base shall have been
furnished by the Borrower as contemplated by this Agreement.
(b) Loans under the Secondary Facility (each an "SF LOAN" and,
collectively, the "SF LOANS"): (i) may be made at any time and from
time to time on and after the Initial Borrowing Date and prior to the
SF Maturity Date, but only if at such time and after giving effect
thereto not less than $80,000,000 aggregate principal amount of PF
Loans are outstanding (EXPLANATORY NOTE: this number has been
determined as a rough method of determining full usage of the Total PF
Commitment for PF Loans, leaving $10,000,000 of the Total PF Commitment
available for Letters of Credit issued or which may be issued pursuant
to section 2 hereof); (ii) except as hereinafter provided, may, at the
option of the Borrower, be incurred and maintained as, and/or converted
into, SF Loans which are Base Rate Loans or Eurodollar Loans, PROVIDED
that all SF Loans made as part of the same Borrowing shall, unless
otherwise specifically provided herein, consist of SF Loans of the same
Type; (iii) may be repaid and reborrowed in accordance with the
provisions hereof; and (iv) shall not for any Lender at any time
outstanding exceed the SF Commitment of such Lender at such time. In
addition, no SF Loans shall be made at any time if after giving effect
thereto the sum of the aggregate outstanding principal amount of the PF
Loans and the SF Loans, PLUS the Letter of Credit Outstandings, PLUS
the Aggregate Measured Swap Credit Risk (if any) of all Designated
Interest Rate Agreements, would exceed the lesser of (I) the sum of (x)
65% of the fair market value of the Eligible Real Estate constituting a
part of the Mortgaged Property hereunder on the Initial Borrowing Date,
as determined on the basis of the appraisals referred to in section
5.1(v), and (y) 65% of the Appraised Value of any Additional Property
or Substitute Property, determined for any such Property as of the date
such Property becomes a Mortgaged Property hereunder in compliance with
section 7.17, as determined on the basis of the appraisal with respect
thereto referred to in section 7.17, and (II) the Aggregate Borrowing
Base as of the most recently completed fiscal quarter for which
financial information necessary to determine the Aggregate Borrowing
Base shall have been furnished by the Borrower as contemplated by this
Agreement.
1.2. MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount of
each Borrowing shall not be less than the Minimum Borrowing Amount for such
Borrowing. More than one Borrowing may be incurred on any day, PROVIDED that at
no time shall there be outstanding more than six Borrowings of Eurodollar Loans.
1.3. NOTICE OF BORROWING. (a) Whenever the Borrower desires to incur
Loans, it shall give the Administrative Agent at its Notice Office, prior to
1:00 P.M. (Cleveland, Ohio time), at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each such notice, a "NOTICE OF
BORROWING") (or the written confirmation) shall be in the form of Exhibit A-1
and shall be irrevocable and shall specify: (i) the Facility pursuant to which
such Borrowing is to be made; (ii) the aggregate principal amount of the Loans
to be made pursuant to such Borrowing; (iii) the date of Borrowing (which shall
be a Business Day); and (iv) whether the respective Borrowing shall consist of
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Administrative Agent shall
promptly give each Lender written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing, of such Lender's proportionate
share thereof and of the other matters covered by the Notice of Borrowing.
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<PAGE> 8
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower entitled to give telephonic notices under this Agreement on behalf of
the Borrower. In each such case, the Administrative Agent's record of the terms
of such telephonic notice shall be conclusive absent manifest error.
1.4. DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (Cleveland,
Ohio time) on the date specified in each Notice of Borrowing, each Lender will
make available its PRO RATA share, if any, of each Borrowing requested to be
made on such date in the manner provided below. All amounts shall be made
available to the Administrative Agent in U.S. dollars and immediately available
funds at the Payment Office and the Administrative Agent promptly will make
available to the Borrower by depositing to its account at the Payment Office the
aggregate of the amounts so made available in the type of funds received. Unless
the Administrative Agent shall have been notified by any Lender prior to the
date of Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
available same to the Borrower, the Administrative Agent shall be entitled to
recover such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from such
Lender or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Lender, the overnight Federal Funds Effective
Rate or (y) if paid by the Borrower, the then applicable rate of interest,
calculated in accordance with section 1.8, for the respective Loans (but without
any requirement to pay any amounts in respect thereof pursuant to section 1.11).
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
1.5. NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Lender shall be evidenced by a
promissory note substantially in the form of Exhibit B with blanks appropriately
completed in conformity herewith (each a "NOTE" and, collectively, the "NOTES").
(b) The Note issued to a Lender shall: (i) be executed by the Borrower;
(ii) be payable to the order of such Lender and be dated on or prior to the
Initial Borrowing Date; (iii) be in a stated principal amount equal to the
Commitment of such Lender and be payable in the principal amount of Loans
evidenced thereby; (iv) mature, in the case of PF Loans, on the PF Maturity
Date, and in the case of SF Loans, on the SF Maturity Date; (v) bear interest as
provided in the appropriate clause of section 1.8 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby; (vi) be
subject to mandatory prepayment as provided in section 4.2: and (vii) be
entitled to the benefits of this Agreement and the other Loan Documents.
(c) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of its Note, endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation shall not affect the Borrower's obligations in
respect of such Loans.
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<PAGE> 9
1.6. CONVERSIONS. The Borrower shall have the option to convert on any
Business Day all or a portion at least equal to the applicable Minimum Borrowing
Amount of the outstanding principal amount of the Loans owing pursuant to a
single Facility into a Borrowing or Borrowings pursuant to such Facility of the
other Type of Loan, PROVIDED that: (i) no conversion of PF Loans into SF Loans,
or vice versa, may be made; (ii) no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the Eurodollar
Loans made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto; (iii) Base Rate Loans may only be converted into Eurodollar
Loans if no Default under section 9.1(a) or Event of Default is in existence on
the date of the conversion unless the Required Lenders otherwise agree; and (iv)
Borrowings of Eurodollar Loans resulting from this section 1.6 shall be limited
in numbers as provided in section 1.2. Each such conversion shall be effected by
the Borrower giving the Administrative Agent at its Notice Office, prior to 1:00
P.M. (Cleveland, Ohio time), at least three Business Days' (or one Business
Day's, in the case of a conversion into Base Rate Loans) prior written notice
(or telephonic notice promptly confirmed in writing) (each a "NOTICE OF
CONVERSION") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Lender prompt notice of any such proposed conversion affecting
any of its Loans.
1.7. PRO RATA BORROWINGS. All Borrowings of PF Loans or SF Loans shall
be made by the Lenders PRO RATA on the basis of their PF Commitments or SF
Commitments, as the case may be. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder.
1.8. INTEREST. (a) The unpaid principal amount of each Loan which is a
Base Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a fluctuating rate per annum
equal to the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Loan which is a Eurodollar Loan
shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Percentage PLUS the relevant Eurodollar Rate.
(c) Notwithstanding the above provisions, if a Default under section
9.1(a) or Event of Default is in existence, all outstanding amounts of principal
and, to the extent permitted by law, all overdue interest, in respect of each
Loan shall bear interest at a rate per annum equal to the Base Rate in effect
from time to time PLUS 2.25% per annum.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, monthly in arrears on the last Business Day of
each month, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on the dates which are successively three months after
the commencement of such Interest Period, and (iii) in respect of each Loan, on
any prepayment or conversion (on the amount prepaid or converted), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with section 12.7(b).
(f) The Administrative Agent upon determining the interest rate for any
Borrowing shall promptly notify the Borrower and the Lenders thereof.
1.9. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 1:00 P.M. (Cleveland, Ohio time) on the
third Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of
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<PAGE> 10
the Interest Period applicable to such Borrowing, which Interest Period shall,
at the option of the Borrower, be a one, two, three, six, nine or twelve month
period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Base Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period may be elected at any time when a
Default under section 9.1(a) or an Event of Default is then in
existence unless the Required Lenders otherwise agree; and
(v) in order to facilitate a possible assignment by National
City Bank of a portion of its PF Commitment, during the two week period
commencing on the date of the initial Borrowing hereunder the Borrower
will not elect any Interest Period for any Borrowing of Eurodollar
Loans which exceeds one month.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing to Base Rate Loans effective
as of the expiration date of such current Interest Period.
1.10. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender, shall have determined on a reasonable
basis (which determination shall, absent manifest error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the
Effective Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which such Lender deems material with respect to any Eurodollar
Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in
the rate of taxes or similar charges) because of (x) any change since
the Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurodollar Rate pursuant
to the definition thereof) and/or (y) other circumstances adversely
affecting the interbank Eurodollar market or the position of such
Lender in such market; or
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<PAGE> 11
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in
good faith with any change since the Effective Date in any law,
governmental rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict with any
thereof not having the force of law but with which such Lender
customarily complies or has become impracticable as a result of a
contingency occurring after the Effective Date which materially
adversely affects the interbank Eurodollar market;
THEN, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within 10 Business Days
of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred shall be
deemed rescinded by the Borrower or, in the case of a Notice of Borrowing,
shall, at the option of the Borrower, be deemed converted into a Notice of
Borrowing for Base Rate Loans to be made on the date of Borrowing contained in
such Notice of Borrowing, (y) in the case of clause (ii) above, the Borrower
shall pay to such Lender, upon written demand therefor, such additional amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender shall determine) as shall be required to
compensate such Lender, for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Lender, showing the basis for the calculation thereof, which basis must be
reasonable, submitted to the Borrower by such Lender shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in section 1.10(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to section 1.10(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Base Rate Loans or require the affected Lender to make its
requested Loan as a Base Rate Loan, or (ii) if the affected Eurodollar Loan is
then outstanding, upon at least one Business Day's notice to the Administrative
Agent, require the affected Lender to convert each such Eurodollar Loan into a
Base Rate Loan, PROVIDED that if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to this section
1.10(b).
(c) If any Lender shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Lender or its parent corporation with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing by an
amount reasonably deemed by such Lender to be material the rate of return on
such Lender's or its parent corporation's capital or assets as a consequence of
such Lender's commitments or obligations hereunder to a level below that which
such Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent corporation for
such reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this section 1.10(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth, in
reasonable detail, the basis of the calculation of such additional amounts,
which basis must be reasonable, although the failure to give any such notice
shall not release or diminish any of
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<PAGE> 12
the Borrower's obligations to pay additional amounts pursuant to this section
1.10(c) upon the subsequent receipt of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i) no
Lender shall be entitled to compensation or payment or reimbursement of other
amounts under section 1.10, 2.5 or 4.4 for any amounts incurred or accruing more
than 120 days prior to the giving of notice to the Borrower of additional costs
or other amounts of the nature described in such sections, and (ii) no Lender
shall demand compensation for any reduction referred to in section 1.10(c) or
payment or reimbursement of other amounts under section 2.5 or 4.4 if it shall
not at the time be the general policy or practice of such Lender to demand such
compensation, payment or reimbursement in similar circumstances under comparable
provisions of other credit agreements.
1.11. COMPENSATION. The Borrower shall compensate each Lender, upon its
written request (which request shall set forth the detailed basis for requesting
and the method of calculating such compensation), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment of deposits or
other funds required by such Lender to fund its Eurodollar Loans) which such
Lender may sustain: (i) if for any reason (other than a default by such Lender
or the Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to
section 1.10(a)); (ii) if any repayment, prepayment or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto (other than any repayment or prepayment pursuant to
the last two sentences of section 1.4 hereof); (iii) if any prepayment of any of
its Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to section 1.10(b).
1.12. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
section 1.10(a)(ii) or (iii), 1.10(c), 2.5 or 4.4 with respect to such Lender,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans or Commitment affected by such event, PROVIDED that such
designation is made on such terms that such Lender and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of any such section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 1.10(a)(ii) or (iii), 1.10(c) or 2.5 with respect to such
Lender, or if the Borrower is required to pay any additional amount to any
Lender or Governmental Authority pursuant to section 4.4, or if any Lender is a
Defaulting Lender, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with the restrictions
contained in section 12.4(b)), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); PROVIDED that (i)
the Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts),
and (iii) in the case of any such assignment resulting from a claim for
compensation, reimbursement or other payments required to be made under section
1.10(a)(ii) or (iii), 1.10(c) or 2.5 with respect to such Lender, or resulting
from any required payments to any Lender or Governmental Authority pursuant to
section 4.4, such assignment will result in a reduction in such compensation,
reimbursement or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
(c) Nothing in this section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in section 1.10,
2.5 or 4.4.
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SECTION 2. LETTERS OF CREDIT.
2.1. LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the PF Maturity Date to issue, for the account of the Borrower and in
support of (x) trade obligations, worker's compensation and other obligations of
the Borrower incurred in the ordinary course of its business and/or (y) such
other obligations of the Borrower to any other person that are acceptable to the
Administrative Agent and such Letter of Credit Issuer, and subject to and upon
the terms and conditions herein set forth such Letter of Credit Issuer agrees to
issue from time to time, irrevocable letters of credit in such form as may be
approved by such Letter of Credit Issuer and the Administrative Agent (each such
letter of credit, a "LETTER OF CREDIT" and collectively, the "LETTERS OF
CREDIT").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $10,000,000 or (y) when added
to the aggregate principal amount of all PF Loans then outstanding, an amount
equal to the Total PF Commitment at such time, and (ii) each Letter of Credit
shall have an expiry date occurring not later than one year after such Letter of
Credit's date of issuance, although any Letter of Credit may be renewable for
successive periods of up to 12 months, but not beyond the Business Day next
preceding the PF Maturity Date, on terms acceptable to the Administrative Agent
and the relevant Letter of Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless such Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Lender or Lenders, including by cash collateralizing such Defaulting Lender's or
Lenders' Percentage of the Letter of Credit Outstandings.
(d) The only Letter of Credit Issuer hereunder will be NCB.
2.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written notice (including
by way of telecopier) in the form of Exhibit A-2 hereto prior to 1:00 P.M.
(Cleveland, Ohio time) at least five Business Days (or such shorter period as
may be acceptable to the relevant Letter of Credit Issuer) prior to the proposed
date of issuance (which shall be a Business Day) (each a "LETTER OF CREDIT
REQUEST"), which Letter of Credit Request shall include such supporting
documents that such Letter of Credit Issuer customarily requires in connection
therewith (including, in the case of a Letter of Credit for an account party
other than the Borrower, an application for, and if applicable, a reimbursement
agreement with respect to, such Letter of Credit). Any such documents executed
in connection with the issuance of a Letter of Credit, including the Letter of
Credit itself, are herein referred to as "LETTER OF CREDIT DOCUMENTS". In the
event of any inconsistency between any of the terms or provisions of any Letter
of Credit Document and the terms and provisions of this Agreement respecting
Letters of Credit, the terms and provisions of this Agreement shall control. The
Administrative Agent shall promptly notify each Lender of each Letter of Credit
Request.
(b) Each Letter of Credit Issuer shall, on the date of each issuance of
a Letter of Credit by it, give the Administrative Agent, each Lender and the
Borrower written notice of the issuance of such Letter of Credit, accompanied by
a copy to the Administrative Agent of the Letter of Credit or Letters of Credit
issued by it. Each Letter of Credit Issuer shall provide to the Administrative
Agent a monthly summary describing each Letter of Credit issued by such Letter
of Credit Issuer and then outstanding.
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2.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse each Letter of Credit Issuer, by making payment to
the Administrative Agent in immediately available funds at the Payment Office,
for any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit (each such amount so paid or disbursed until reimbursed, an
"UNPAID DRAWING") immediately after, and in any event on the date on which, such
Letter of Credit Issuer notifies the Administrative Agent and the Borrower of
such payment or disbursement (which notice to the Borrower shall be delivered
reasonably promptly after any such payment or disbursement), with interest on
the amount so paid or disbursed by such Letter of Credit Issuer, to the extent
not reimbursed prior to 1:00 P.M. (Cleveland, Ohio time) on the date of such
payment or disbursement, from and including the date paid or disbursed to but
not including the date such Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be the rate then applicable to Base Rate Loans (plus
an additional 2.25% per annum if not reimbursed by the third Business Day after
the date of such payment or disbursement), such interest also to be payable on
demand.
(b) The Borrower's obligation under this section 2.3 to reimburse each
Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against such Letter of Credit Issuer,
the Administrative Agent, any other Letter of Credit Issuer or any Lender,
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
drawing, PROVIDED, HOWEVER that the Borrower shall not be obligated to reimburse
a Letter of Credit Issuer for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer.
2.4. LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance
by a Letter of Credit Issuer of any Letter of Credit, such Letter of Credit
Issuer shall be deemed to have sold and transferred to each Lender, and each
Lender (each a "PARTICIPANT") shall be deemed irrevocably and unconditionally to
have purchased and received from such Letter of Credit Issuer, without recourse
or warranty, an undivided interest and participation, to the extent of such
Lender's PF Percentage, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto (although Letter of Credit Fees shall be
payable directly to the Administrative Agent for the account of the Lenders as
provided in section 3.1(b) and the Participants shall have no right to receive
any portion of any Facing Fees) and any security therefor or guaranty pertaining
thereto. Upon any change in the PF Commitments of the Lenders pursuant to
section 12.4(b), it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this section 2.4 to reflect the new PF
Percentages of the assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, a Letter
of Credit Issuer shall not have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by a Letter of Credit Issuer under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Letter of Credit Issuer any resulting
liability.
(c) In the event that a Letter of Credit Issuer makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Letter of Credit Issuer pursuant to section 2.3(a), such Letter of
Credit Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of such Letter of Credit Issuer, the amount of such
Participant's PF Percentage of such payment in U.S. dollars and in same day
funds, PROVIDED, HOWEVER, that no Participant shall be obligated to pay to the
Administrative Agent its Percentage of such unreimbursed amount for any wrongful
payment made by such Letter of Credit Issuer under a Letter of Credit as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of such Letter of Credit Issuer. If the Administrative Agent so
notifies any Participant required to fund a payment under a Letter of Credit
prior to 11:00 A.M. (Cleveland, Ohio time) on any Business Day, such Participant
shall make available to the Administrative Agent for the account of the
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relevant Letter of Credit Issuer such Participant's PF Percentage of the amount
of such payment on such Business Day in same day funds. If and to the extent
such Participant shall not have so made its PF Percentage of the amount of such
payment available to the Administrative Agent for the account of the relevant
Letter of Credit Issuer, such Participant agrees to pay to the Administrative
Agent for the account of such Letter of Credit Issuer, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Administrative Agent for the account of such
Letter of Credit Issuer at the Federal Funds Effective Rate. The failure of any
Participant to make available to the Administrative Agent for the account of the
relevant Letter of Credit Issuer its PF Percentage of any payment under any
Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to the Administrative Agent for the account of such
Letter of Credit Issuer its PF Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Administrative Agent for the account of such Letter of Credit Issuer such other
Participant's PF Percentage of any such payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to section 2.4(c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its PF Percentage thereof, in U.S. dollars and in
same day funds, an amount equal to such Participant's PF Percentage of the
principal amount thereof and interest thereon accruing after the purchase of the
respective participations, as and to the extent so received.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit (or
any person for whom any such transferee may be acting), the
Administrative Agent, any Letter of Credit Issuer, any Lender, or other
person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
and the beneficiary named in any such Letter of Credit), other than any
claim which the Borrower (or any Subsidiary which is the account party
with respect to a Letter of Credit) may have against any applicable
Letter of Credit Issuer for gross negligence or wilful misconduct of
such Letter of Credit Issuer in making payment under any applicable
Letter of Credit;
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents: or
(v) the occurrence of any Default or Event of Default.
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2.5. INCREASED COSTS. If after the Effective Date, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Letter of Credit Issuer or any Lender with any
request or directive (whether or not having the force of law) by any such
authority, central bank or comparable agency (in each case made subsequent to
the Effective Date) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Lender's participation
therein, or (ii) shall impose on such Letter of Credit Issuer or any Lender any
other conditions affecting this Agreement, any Letter of Credit or such Lender's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Lender hereunder
(other than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or similar
charges), then, upon demand to the Borrower by such Letter of Credit Issuer or
such Lender (a copy of which notice shall be sent by such Letter of Credit
Issuer or such Lender to the Administrative Agent), the Borrower shall pay to
such Letter of Credit Issuer or such Lender such additional amount or amounts as
will compensate any such Letter of Credit Issuer or such Lender for such
increased cost or reduction. A certificate submitted to the Borrower by any
Letter of Credit Issuer or any Lender, as the case may be (a copy of which
certificate shall be sent by such Letter of Credit Issuer or such Lender to the
Administrative Agent), setting forth, in reasonable detail, the basis for the
determination of such additional amount or amounts necessary to compensate any
Letter of Credit Issuer or such Lender as aforesaid shall be conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this section 2.5. Reference is
hereby made to the provisions of section 1.10(d) for certain limitations upon
the rights of a Letter of Credit Issuer or Lender under this section.
2.6. OBLIGATIONS ABSOLUTE. The obligations of the Borrower under this
Agreement in respect of any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement (as the same may be amended from time to time) under all
circumstances, including, without limitation, to the extent permitted by law,
the following circumstances:
(i) any lack of validity or enforceability of any agreement
or instrument the obligations under which are supported by a Letter of
Credit;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of the Letters of Credit or any other amendment or waiver of or
any consent to departure from all or any of the Letter of Credit
Documents or any other Loan Document;
(iii) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the obligations of the
Borrower in respect of the Letters of Credit;
(iv) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any persons for whom any such
beneficiary or any such transferee may be acting), the Letter of Credit
Issuer, or any other person, whether in connection with the Loan
Documents, the transactions contemplated hereby or by the Letter of
Credit Documents or any unrelated transaction, other than any claim
which the Borrower (or any Subsidiary which is the account party with
respect to a Letter of Credit) may have against any applicable Letter
of Credit Issuer for gross negligence or wilful misconduct of such
Letter of Credit Issuer in making payment under any applicable Letter
of Credit;
(v) any statement or any other document presented under or in
connection with any Letter of Credit or other Loan Document proving to
be forged, fraudulent, invalid or insufficient
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in any respect or any statement therein being untrue or inaccurate in
any respect, PROVIDED that payment by a Letter of Credit Issuer under
such Letter of Credit against presentation of such statement or
document shall not have constituted gross negligence or willful
misconduct;
(vi) payment by a Letter of Credit Issuer under a Letter of
Credit against presentation of a draft or certificate that does not
comply with the terms of the Letter or Credit, except any such payment
resulting solely from the gross negligence or willful misconduct of the
Letter of Credit Issuer; and
(vii) any other circumstance or happening whatsoever other
than the payment in full of all obligations hereunder in respect of any
Letter of Credit or any agreement or instrument relating to any Letter
of Credit, whether or not similar to any of the foregoing, that might
otherwise constitute a defense available to, or a discharge of, the
Borrower, other than any claim which the Borrower (or any Subsidiary
which is the account party with respect to a Letter of Credit) may have
against any applicable Letter of Credit Issuer for gross negligence or
wilful misconduct of such Letter of Credit Issuer in making payment
under any applicable Letter of Credit.
SECTION 3. FEES; COMMITMENTS.
3.1. FEES. (a) The Borrower agrees to pay to the Administrative Agent a
Commitment Commission ("COMMITMENT COMMISSION") for the account of each
Non-Defaulting Lender for the period from and including the Effective Date to
but not including, in the case of the PF Commitments, the date the Total PF
Commitment has been terminated, and in the case of the SF Commitments, the date
the Total SF Commitment has been terminated, computed at a rate equal to 3/8 of
1% per annum on the average daily Unutilized Commitment of such Lender under the
Primary Facility and/or the Secondary Facility, as the case may be . Such
Commitment Commission shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December of each year,
commencing September, 1996, and on the date upon which the Total Commitment is
terminated.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Non-Defaulting Lender, PRO RATA on the basis of its PF
Percentage, a fee in respect of each Letter of Credit (the "LETTER OF CREDIT
FEE") computed at the rate of 2.00% per annum on the average daily Stated Amount
of such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year, commencing September, 1996, and on the date upon which
the Total PF Commitment is terminated.
(c) The Borrower agrees to pay to the Administrative Agent for the
account of each Letter of Credit Issuer a fee in respect of each Letter of
Credit issued by it (the "FACING FEE") computed at the rate of 1/4 of 1% per
annum on the average daily Stated Amount of such Letter of Credit. Accrued
Facing Fees shall be due and payable quarterly in arrears on the last Business
Day of each March, June, September and December of each year, commencing
September, 1996, and on the date upon which the Total PF Commitment is
terminated.
(d) The Borrower agrees to pay directly to each Letter of Credit Issuer
upon each drawing under and/or amendment of a Letter of Credit issued by it such
amount as shall at the time of such drawing or amendment be the administrative
charge which such Letter of Credit Issuer is customarily charging for drawings
under or amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent on the Initial
Borrowing Date and thereafter for its own account and/or for distribution to the
Lenders such fees as heretofore agreed by the Borrower and the Administrative
Agent.
(f) All computations of Fees shall be made in accordance with section
12.7(b).
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3.2. VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three Business
Days' prior written notice (or telephonic notice confirmed in writing) to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Lenders), the Borrower shall have the
right, without premium or penalty, to terminate or partially reduce the
Unutilized Total PF Commitment or the Unutilized Total SF Commitment, PROVIDED
that (i) no such reduction of the Unutilized Total PF Commitment shall be made
prior to the termination of the Total SF Commitment, (ii) any such termination
shall apply to proportionately and permanently reduce the PF Commitment or SF
Commitment, as the case may be, if any, of each of the Lenders, and (iii) any
partial reduction pursuant to this section 3.2 shall be in the amount of at
least $10,000,000 (or, if greater, in integral multiples of $1,000,000), in the
case of the Primary Facility, or in the amount of at least $5,000,000 (or, if
greater, in integral multiples of $1,000,000), in the case of the Secondary
Facility.
3.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Commitment of
each Lender shall terminate on the Expiration Date unless the Initial Borrowing
Date has occurred on or before such date.
(b) On each date upon which a mandatory prepayment of SF Loans pursuant
to section 4.2(c) or (d) is required, or would be required if SF Loans were
outstanding in an amount in excess of the prepayment which is called for by such
provisions, the Total SF Commitment shall be permanently reduced by an amount
equivalent to the principal amount of the SF Loans so required, or which would
be so required, to be prepaid.
(c) The Total PF Commitment (and the PF Commitment of each Lender)
shall terminate on the earlier of (x) the PF Maturity Date and (y) the date on
which a Change of Control occurs.
(d) The Total SF Commitment (and the SF Commitment of each Lender)
shall terminate on the earlier of (x) the SF Maturity Date and (y) the date on
which a Change of Control occurs.
(e) Each partial reduction of the PF Total Commitment or the SF Total
Commitment provided for in this section 3.3 shall apply PRO RATA to the PF
Commitment or SF Commitment of each Lender, as the case may be.
3.4. EXTENSION OF MATURITY DATES; EXPANSION OF PRIMARY FACILITY. (a) At
any time during the 30 day period following delivery by the Borrower pursuant to
section 7.1(b) of its combined financial statements for its fiscal year then
most recently ended after the date hereof, and annually thereafter during the 30
day period following delivery by the Borrower of its combined financial
statements pursuant to section 7.1(b), the Borrower may, by written notice to
the Administrative Agent, request the Administrative Agent to determine if all
of the Lenders are then willing to extend the PF Maturity Date and (if the Total
SF Commitment has not previously been terminated) the SF Maturity Date for an
additional year. If the Borrower so requests, the Administrative Agent will so
advise the Lenders. If the Lenders in their sole discretion are all willing to
so extend the PF Maturity Date and (if the Total SF Commitment has not
previously been terminated) the SF Maturity Date, the Borrower, the
Administrative Agent and all of the Lenders (including each Letter of Credit
Issuer) shall execute and deliver a definitive written instrument so extending
the PF Maturity Date and (if the Total SF Commitment has not previously been
terminated) the SF Maturity Date. No such extension of the PF Maturity Date or
the SF Maturity Date shall be valid or effective for any purpose unless such
definitive written instrument is so signed and delivered within 60 days
following the giving by the Administrative Agent of notice to the Lenders that
the Borrower has requested such an extension.
(b) If following the termination of the Total SF Commitment the Total
PF Commitment remains in effect without any reduction in the original amount
thereof, the Borrower may propose in writing to the Administrative Agent that
the Total PF Commitment be increased by $6,000,000, with such increase to be
provided by an additional lending institution identified by the Borrower and
acceptable to the Administrative Agent. At the time of and as a condition to the
right of the Borrower to make any such proposal, the Borrower shall provide to
the Administrative Agent current appraisals setting forth the Appraised Value of
all Eligible Real Estate. Any such increase shall be effected only pursuant to
(i) a definitive amendment to this Agreement executed by the Borrower, the
Management Company, all of the Lenders and the Administrative Agent (each of
such parties hereby agreeing to enter into such an amendment provided the same
is satisfactory in form and substance to the Borrower and the
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Administrative Agent), and (ii) such assignments by the Lenders to the new
lending institution, effected in accordance with section 12.4(b) hereof (but
without compliance with the $5,000,000 minimum amount provided therein), of
portions of their outstanding Loans and Commitments, effective upon payment by
the new lending institution to the assigning Lenders of a cash purchase price,
payable in immediately available funds, equal to 100% of the principal of and
all interest and Fees accrued in respect of the assigned Loans, as may be
necessary to give effect to the PRO RATA participation of the new lending
institution in the increased Total PF Commitment (each Lender with a PF
Commitment hereby agreeing to enter into an appropriate assignment necessary to
accomplish such participation by the new lending institution). The
Administrative Agent agrees to waive the assignment fee provided in section
12.4(b) in connection with any such assignments.
SECTION 4. PAYMENTS.
4.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
Loans, in whole or in part, without premium or penalty, from time to time on the
following terms and conditions: (i) no PF Loans may be prepaid at any time if
after giving effect thereto any SF Loans are outstanding; (ii) the Borrower
shall give the Administrative Agent at the Payment Office written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay the
Loans, whether such Loans are PF Loans or SF Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be received by the Administrative
Agent by 1:00 P.M. (Cleveland, Ohio time) one Business Day prior to the date of
such prepayment (and which notice shall promptly be transmitted by the
Administrative Agent to each of the Lenders); (iii) each partial prepayment of
any Borrowing shall be in an aggregate principal of at least $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, in the case of a Borrowing
consisting of Eurodollar Loans, and at least $500,000 or an integral multiple of
$100,000 in excess thereof, in the case of a Borrowing consisting of Base Rate
Loans, PROVIDED that no partial prepayment of Eurodollar Loans made pursuant to
a Borrowing shall reduce the aggregate principal amount of the Loans outstanding
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto; (iv) each prepayment in respect of any Loans made pursuant
to a Borrowing shall be applied PRO RATA among such Loans; and (v) each
prepayment of Eurodollar Loans pursuant to this section 4.1 on any date other
than the last day of the Interest period applicable thereto shall be accompanied
by any amounts payable in respect thereof under section 1.11.
4.2. MANDATORY PREPAYMENTS. (a) If on any date (after giving effect to
any other payments on such date) the sum of (i) the aggregate outstanding
principal amount of PF Loans PLUS (ii) the aggregate amount of Letter of Credit
Outstandings, exceeds the Total PF Commitment as then in effect, the Borrower
shall prepay on such date that principal amount of PF Loans and, after PF Loans
have been paid in full, Unpaid Drawings, in an aggregate amount equal to such
excess. If, after giving effect to the prepayment of PF Loans and Unpaid
Drawings, the aggregate amount of Letter of Credit Outstandings exceeds the
Total PF Commitment as then in effect, the Borrower shall pay to the
Administrative Agent an amount in cash and/or Cash Equivalents equal to such
excess and the Administrative Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower (which shall permit certain investments in
Cash Equivalents satisfactory to the Administrative Agent and the Borrower until
the proceeds are applied to the secured obligations).
(b) If on any date (after giving effect to any other payments on such
date) the sum of (i) the aggregate outstanding principal amount of Loans, PLUS
(ii) the Letter of Credit Outstandings, PLUS (iii) the Aggregate Measured Swap
Credit Risk (if any) of all Designated Interest Rate Agreements, EXCEEDS the
lesser of (A) the Aggregate Borrowing Base then in effect, or (B) the sum of (x)
65% of the fair market value of the Eligible Real Estate constituting a part of
the Mortgaged Property hereunder on the Initial Borrowing Date, as determined on
the basis of the appraisals referred to in section 5.1(v), and (y) 65% of the
Appraised Value of any Additional Property or Substitute Property, determined
for any such Property as of the date such Property becomes a Mortgaged Property
hereunder in compliance with section 7.17, as determined on the basis of the
appraisal with respect thereto referred to in section 7.17, the Borrower shall
prepay on such date that principal amount of Loans and, after all Loans have
been paid in full, Unpaid Drawings, in an aggregate amount equal to such excess.
Any such prepayment of Loans shall be so applied as a mandatory prepayment of
principal of (x) FIRST, the then outstanding SF Loans and (y)
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SECOND, once no SF Loans remain outstanding, the then outstanding PF Loans. If,
after giving effect to the prepayment of Loans and Unpaid Drawings, the
aggregate amount of Letter of Credit Outstandings exceeds the Total PF
Commitment as then in effect, the Borrower shall pay to the Administrative Agent
an amount in cash and/or Cash Equivalents equal to such excess and the
Administrative Agent shall hold such payment as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agreement to be entered
into in form and substance reasonably satisfactory to the Administrative Agent
and the Borrower (which shall permit certain investments in Cash Equivalents
satisfactory to the Administrative Agent and the Borrower until the proceeds are
applied to the secured obligations).
(c) Promptly, and in any event not later than the third Business Day
following the date of receipt thereof by the Borrower of the cash proceeds from
any payment or prepayment of the principal of, or other realization upon the
principal of, the Pledged Note, an amount not in excess of the amount so
received, up to a cumulative aggregate amount of $6,000,000, shall be applied as
a mandatory prepayment of principal of the then outstanding SF Loans. After the
SF Loans are no longer outstanding and the Total SF Commitment has been
terminated, the Borrower may retain any such amounts so received if the Pledge
Agreement has been terminated in accordance with its terms.
(d) On the date of the receipt thereof by the Borrower, the Borrower
shall apply, as a mandatory prepayment of principal of the then outstanding SF
Loans, such portion (but not in excess of 100%) of each amount of the cash
proceeds received by the Borrower (net of underwriting discounts and
commissions, placement and advisory fees, and other customary fees, costs and
expenses associated therewith) from any sale or issuance of equity by the
Borrower after the Initial Borrowing Date in an underwritten public offering or
private placement with investors (other than any sale or issuance to management
or employees). After the SF Loans are no longer outstanding and the Total SF
Commitment has been terminated, the Borrower may retain any such amounts so
received.
(e) On the date of which a Change of Control occurs the then
outstanding principal amount of all Loans, if any, shall become due and payable
and shall be prepaid in full, and the Borrower shall contemporaneously either
(i) cause all outstanding Letters of Credit to be surrendered for cancellation
(any such Letters of Credit to be replaced by letters of credit issued by other
financial institutions), or (ii) the Borrower shall pay to the Administrative
Agent an amount in cash and/or Cash Equivalents equal to 100% of the Letter of
Credit Outstandings and the Administrative Agent shall hold such payment as
security for the obligations of the Borrower hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower (which shall permit
certain investments in Cash Equivalents satisfactory to the Administrative Agent
and the Borrower until the proceeds are applied to the secured obligations).
(f) With respect to each prepayment of Loans required by this section
4.2, the Borrower shall designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which such prepayment is to be made,
PROVIDED that (i) the Borrower shall first so designate all Loans that are Base
Rate Loans and Eurodollar Loans with Interest Periods ending on the date of
prepayment prior to designating any other Eurodollar Loans for prepayment, (ii)
if the outstanding principal amount of Eurodollar Loans made pursuant to a
Borrowing is reduced below the applicable Minimum Borrowing Amount as a result
of any such prepayment, then all the Loans outstanding pursuant to such
Borrowing shall be converted into Base Rate Loans, and (iii) each prepayment of
any Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under section 1.11.
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4.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its PRO RATA share) account of
the Lenders entitled thereto, not later than 1:00 P.M. (Cleveland, Ohio time) on
the date when due and shall be made in immediately available funds and in lawful
money of the United States of America at the Payment Office, it being understood
that written notice by the Borrower to the Administrative Agent to make a
payment from the funds in the Borrower's account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than 1:00 P.M.
(Cleveland, Ohio time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Loan Document, will be made without setoff,
counterclaim or other defense. Except as provided for in section 4.4(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax, imposed on or measured by the net income or
net profits of a Lender pursuant to the laws of the jurisdiction under which
such Lender is organized or the jurisdiction in which the principal office or
applicable lending office of such Lender is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect to
such non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges (all such nonexcluded taxes levies, imposts, duties, fees assessments or
other charges being referred to collectively as "TAXES"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes and
such additional amounts as may be necessary so that every payment of all amounts
due hereunder, under any Note or under any other Loan Document, after
withholding or deduction for or on account of any Taxes will not be less than
the amount provided for herein or in such Note or in such other Loan Document.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrower agrees to reimburse each Lender, upon the written request
of such Lender for taxes imposed on or measured by the net income or profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or applicable lending office of such
Lender is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Lender is located and for any withholding of income or
similar taxes imposed by the United States of America as such Lender shall
determine are payable by, or withheld from, such Lender in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence, which request shall be accompanied by a statement
from such Lender setting forth, in reasonable detail, the computations used in
determining such amounts. The Borrower will furnish to the Administrative Agent
within 45 days after the date the payment of any Taxes, or any withholding or
deduction on account thereof, is due pursuant to applicable law certified copies
of tax receipts, or other evidence satisfactory to the Lender, evidencing such
payment by the Borrower. The Borrower will indemnify and hold harmless the
Administrative Agent and each Lender, and reimburse the Administrative Agent or
such Lender upon its written request, for the amount of any Taxes so levied or
imposed and paid or withheld by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the cases of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to section 12.4 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer and such Lender is in compliance with the provisions of
this section 4.4(b)), on the date of such assignment or transfer to such Lender,
(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement, any Note or any other Loan Document,
or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A)
of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit J (any such certificate, a "SECTION 4.4(B)(II) CERTIFICATE") and (y)
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two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
of interest to be made under this Agreement, any Note or any other Loan
Document. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a section 4.4(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement, any Note or any
other Loan Document, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or Certificate,
in which case such Lender shall not be required to deliver any such Form or
Certificate pursuant to this section 4.4(b). Notwithstanding anything to the
contrary contained in section 4.4(a), but subject to section 12.4(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder for the account of any Lender which is not a United States
person (as such term is defined in section 7701(a)(30) of the Code) for United
States federal income tax purposes and which has not provided to the Borrower
such forms that establish a complete exemption from such deduction or
withholding and (y) the Borrower shall not be obligated pursuant to section
4.4(a) hereof to gross-up payments to be made to a Lender in respect of income
or similar taxes imposed by the United States or any additional amounts with
respect thereto (I) if such Lender has not provided to the Borrower the Internal
Revenue Service forms required to be provided to the Borrower pursuant to this
section 4.4(b) or (II) in the case of a payment other than interest, to a Lender
described in clause (ii) above, to the extent that such forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this section
4.4 and except as specifically provided for in section 12.4(b), the Borrower
agrees to pay additional amounts and indemnify each Lender in the manner set
forth in section 4.4(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any Taxes deducted or
withheld by it as described in the previous sentence as a result of any changes
after the Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
(c) If any Lender, in its sole opinion, determines that it has finally
and irrevocably received or been granted a refund in respect of any Taxes paid
as to which indemnification has been paid by the Borrower pursuant to this
section, it shall promptly remit such refund (including any interest received in
respect thereof), net of all out-of-pocket costs and expenses; provided, that
the Borrower agrees to promptly return any such refund (plus interest) to such
Lender in the event such Lender is required to repay such refund to the relevant
taxing authority. Any such Lender shall provide the Borrower with a copy of any
notice of assessment from the relevant taxing authority (redacting any unrelated
confidential information contained therein) requiring repayment of such refund.
Nothing contained herein shall impose an obligation on any Lender to apply for
any such refund.
(d) Reference is hereby made to the provisions of section 1.10(d) for
certain limitations upon the rights of a Lender under this section.
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SECTION 5. CONDITIONS PRECEDENT.
5.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE. The obligation of
the Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters
of Credit, is subject to the satisfaction of each of the following conditions on
or prior to the Initial Borrowing Date as indicated below:
(A) EFFECTIVENESS; NOTES. On or prior to the Initial Borrowing
Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each
Lender the appropriate Note executed by the Borrower, in each case, in
the amount, maturity and as otherwise provided herein.
(B) OPINIONS OF COUNSEL. On or prior to the Initial Borrowing
Date, the Administrative Agent shall have received opinions, addressed
to the Administrative Agent and each of the Lenders and dated the
Initial Borrowing Date, from (i) Thompson Hine & Flory P.L.L., special
counsel to the Borrower and the Management Company, substantially in
the form of Exhibit C hereto and covering such other matters incident
to the transactions contemplated hereby as the Administrative Agent may
reasonably request, and (ii) local counsel to the Borrower in
Pennsylvania, Minnesota, Iowa, Georgia and North Carolina, covering
such matters in such jurisdictions incident to the transactions
contemplated hereby as the Administrative Agent may reasonably request,
all such opinions to be in form and substance satisfactory to the
Administrative Agent.
(C) CERTIFIED COPIES OF CHARTER DOCUMENTS AND BYLAWS. On or
prior to the Initial Borrowing Date the Administrative Agent shall have
received from the Borrower, in sufficient quantities for the Lenders,
(i) a copy, certified by a duly authorized officer of the Borrower to
be true and complete on and as of the Initial Borrowing Date, of the
Borrower's Declaration of Trust and by-laws or code of regulations as
in effect on the Initial Borrowing Date (together with any and all
amendments thereto); (ii) a copy, certified by a duly authorized
officer of the Management Company, of the Management Company's Articles
of Incorporation and by-laws as in effect on the Initial Borrowing Date
(together with any and all amendments thereto); (iii) the charter or
other organizational documents of the Management Company, certified by
the Delaware Secretary of State, together with a certificate of good
standing for the Management Company issued by the Delaware Secretary of
State as of a recent date; (iv) the organizational documents of the
Borrower, certified as of a recent date by the Ohio Secretary of State
as being validly registered and in full force and effect; (v) a
Certificate of Good Standing for each of the Borrower and the
Management Company, each issued by the Ohio Secretary of State as of a
recent date; and (vi) certificates, issued by the Secretary of State in
each other jurisdiction in which a Mortgaged Property is located and
the Borrower or the Management Company is qualified to do business,
each dated as of a recent date, confirming that the Borrower and the
Management Company are duly qualified and in good standing in each such
jurisdiction.
(D) AUTHORIZATION. On or prior to the Initial Borrowing Date
the Administrative Agent shall have received from the Borrower, in
sufficient quantities for the Lenders, copies, certified by a duly
authorized officer of each such party to be true and complete on and as
of the date thereof, of records of all organizational action taken by
the Borrower and the Management Company, respectively, to authorize (i)
the execution and delivery of this Agreement and the other Loan
Documents to which it is or is to become a party as contemplated or
required by this Agreement; (ii) its performance of all of its
obligations under each of such documents; and (iii) the making by the
Borrower of the borrowings contemplated hereby.
(E) INCUMBENCY CERTIFICATES. On or prior to the Initial
Borrowing Date the Administrative Agent shall have received from each
of the Borrower and the Management Company, in sufficient quantities
for the Lenders, an incumbency certificate, dated the date of delivery
thereof, signed by a duly authorized officer of such respective party
and giving the name
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and bearing a specimen signature of each individual who shall be
authorized (i) to sign, in the name and on behalf of each such party,
each of the Loan Documents to which it is to become a party on or prior
to the Initial Borrowing Date; and (ii) to give notices and to take
other action on behalf of the Borrower or the Management Company, as
the case may be, under the Loan Documents.
(F) LOAN DOCUMENTS. The Notes and all of the other Loan
Documents and Security Documents shall have been duly and properly
authorized, executed and delivered by the Borrower and, where
appropriate, by the Management Company, and all such documents shall be
in full force and effect on and as of the Initial Borrowing Date.
Executed originals of each of the Loan Documents (other than the Notes,
which shall have been delivered as provided above) shall have been
delivered to the Administrative Agent in sufficient quantities for the
Lenders.
(G) PLEDGED NOTE. The Pledged Note, accompanied by an
instrument of assignment in favor of the Administrative Agent, shall
have been delivered to the Administrative Agent to be held as part of
the Collateral pursuant to the Pledge Agreement. All such other actions
shall have been taken as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the security interest
purported to be created by the Pledge Agreement in the Pledged Note and
the security therefor, and the Administrative Agent shall have received
(i) an original loan policy of title insurance (ALTA 1970 Form B)
issued by a title insurance company satisfactory to the Administrative
Agent, insuring that the mortgage securing the Pledged Note has been
assigned to the Administrative Agent and creates the lien it purports
to create, (ii) assignments of all notes or other securities securing
the Pledged Note, and (iii) such other evidence as it may reasonably
require to confirm that this condition has been satisfied.
(H) MORTGAGED PROPERTIES. The Borrower and the Management Company
shall have taken and completed all of the following actions with
respect to each location which is a Mortgaged Property as of the
Initial Borrowing Date:
(i) duly executed and caused to be filed for record
in the real property records of the county in which the
affected real property encumbered thereby is located its
Mortgage, its Lease Assignment and such Uniform Commercial
Code financing statements as the Administrative Agent may deem
necessary or appropriate to create and/or to perfect the first
and paramount lien and security interest in favor of the
Administrative Agent in the real and personal property
described therein;
(ii) furnished to the Administrative Agent an
original loan policy of title insurance (ALTA 1970 Form B)
issued by a title insurance company satisfactory to the
Administrative Agent (the "TITLE COMPANY"), insuring, in
amounts (taking into account the Appraised Values of the
respective Mortgaged Properties and the terms of the Mortgage
covering the Kandi Mall), on terms and with such affirmative
coverages or endorsements as the Administrative Agent may
require (including but not limited to the so-called "revolving
credit" and "variable rate" endorsements and such facultative
direct-access reinsurance treaties as the Administrative Agent
may require), that each such Mortgage is a valid first lien
upon the real property encumbered thereby, subject only to
such exceptions or matters affecting title as the
Administrative Agent may approve in writing;
(iii) furnished to the Administrative Agent a current
as-built survey showing such matters as may be required by the
Administrative Agent, which survey shall be: (A) acceptable in
form and content to the Administrative Agent; (B) certified to
the Administrative Agent and the Title Company; and (C)
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prepared by a registered surveyor acceptable to the
Administrative Agent in accordance with the minimum standard
detail requirements for ALTA/ACSM Title Surveys, so as to
eliminate any and all "survey exceptions" from the title
insurance policies described above, and containing (1) a note
as to the zoning classification of the subject property; and
(2) a statement of whether the subject property is located in
a flood hazard zone and, if applicable, the Flood Map panel
number, suffix, map date and zone for the subject property;
(iv) provided to the Administrative Agent such
estoppel certificates and tenant subordination agreements,
acceptable in form and content to the Administrative Agent, as
the Administrative Agent may require with respect to any
tenant whose lease of any portion of any of the Mortgaged
Properties exceeds 40,000 square feet; and
(v) provided to the Administrative Agent a current
rent-roll for each Mortgaged Property.
In addition, the Borrower shall have paid all costs and expenses
payable in connection with all of the actions taken pursuant to this
section 5.1(h), including but not limited to (x) all mortgage,
intangibles or similar taxes or fees, however characterized, payable in
respect of this Agreement, the execution and delivery of the Notes, any
of the Mortgages or any of the other Loan Documents or the recording of
any of the same; and (y) all expenses and premiums of the Title Company
in connection with the issuance of such policies of title insurance and
to all costs and expenses required for the recording of the Mortgages
or any other Loan Documents in the appropriate public records.
(I) LEGALITY OF TRANSACTIONS. No change in applicable law
shall have occurred as a consequence of which it shall have become and
continue to be unlawful (i) for the Administrative Agent or any Lender
to perform any of its agreements or obligations under any of the Loan
Documents to which it is a party on the Initial Borrowing Date; or (ii)
for the Borrower or the Management Company to perform any of its
agreements or obligations under any of the Loan Documents to which it
is a party on the Initial Borrowing Date.
(J) COMPLIANCE WITH LAWS. All of the borrowings made or to be
made, and the other financial accommodations to be provided, under this
Agreement are and shall be in compliance with the requirements of all
applicable laws, regulations, rules and orders, including without
limitation the Environmental Laws and the requirements imposed by the
SEC or by the Board of Governors of the Federal Reserve System under
Regulations U, G and X.
(K) FEES AND EXPENSES. The Borrower shall have paid all fees
required under this Agreement to be paid by the Borrower on or prior to
the Initial Borrowing Date; and the Borrower shall have reimbursed the
Administrative Agent for all reasonable out-of-pocket costs and
expenses, including without limitation all appraisal, environmental and
other fees incurred by the Administrative Agent, and all fees and
disbursements of special counsel to the Administrative Agent, in each
case to the extent invoiced on or prior to the Initial Borrowing Date.
(L) EXISTING CREDIT AGREEMENTS. The Borrower shall have,
contemporaneously with the making of the initial Borrowing hereunder,
(i) paid or prepaid all outstanding borrowings under its Credit
Agreement, dated as of December 5, 1994, with National City Bank, and
its Credit Agreement, dated as of March 4, 1996, with KeyBank National
Association, each as heretofore in effect, (ii) arranged, as
contemplated hereby, for all letters of credit issued for the account
of the Borrower pursuant thereto, to be deemed issued hereunder, and
(iii) terminated the commitment of the lender or lenders thereunder.
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(M) CHANGES; NONE ADVERSE. From the date of the most recent
balance sheets referred to in section 6.5 of this Agreement to the
Initial Borrowing Date, no changes shall have occurred in the assets,
liabilities, financial condition, business, operations or prospects of
the Borrower or the Borrower and its Subsidiaries taken as a whole
which, individually or in the aggregate, are materially adverse to the
Borrower or the Borrower and its Subsidiaries taken as a whole.
(N) OFFICER'S CERTIFICATES. The Administrative Agent shall
have received from each of the Borrower and the Management Company, in
sufficient quantities for the Lenders, a certificate, dated the date of
delivery thereof, signed by such party's respective duly authorized
officers and certifying, on terms acceptable to the Administrative
Agent and the Lenders, that each of the representations and warranties
of such party in this Agreement and in the other Loan Documents was
true and correct when made, and is true and correct on and as of the
date thereof.
(O) COMPLIANCE CERTIFICATE. The Administrative Agent shall
have received, in sufficient quantities for the Lenders, a Compliance
Certificate, dated as of a recent date on or prior to the Initial
Borrowing Date, the required calculations under which shall demonstrate
the compliance by the Borrower with the covenants of this Agreement
required to be measured in such Certificate.
(P) FINANCIAL STATEMENTS. The Administrative Agent and the
Lenders shall have received the financial statements referred to in
section 6.5, certified by an officer of the Borrower, and shall have
been satisfied that such financial statements accurately reflect the
financial status and condition of the Borrower and its Subsidiaries and
the Management Company.
(Q) OTHER APPROVALS, ETC. The Administrative Agent shall have
received, in sufficient quantities for the Lenders, copies of such
other approvals, opinions, certificates, instruments and documents with
respect to the Mortgaged Properties or the transactions described
herein as it may reasonably request.
(R) INSURANCE POLICIES. The Administrative Agent shall have
received evidence of insurance complying with the requirements of the
Mortgages, in form and substance satisfactory to the Administrative
Agent and with respect to all casualty insurance, naming the
Administrative Agent as an additional insured and loss payee.
(S) SOLVENCY. The Administrative Agent shall have received
from the chief financial officer of the Borrower a certificate in the
form of Exhibit I hereto, expressing opinions of value and other
appropriate facts or information regarding the solvency of the Borrower
and its Subsidiaries taken as a whole.
(T) ENVIRONMENTAL REPORTS. The Administrative Agent shall have
received Phase I environmental assessments from PSI (or such other firm
satisfactory to the Administrative Agent) and in form and substance
satisfactory to the Administrative Agent, and covering each of the
Mortgaged Properties.
(U) APPRAISALS. The Administrative Agent shall have received
appraisals, satisfactory in form and substance to the Administrative
Agent, dated not more than 60 days prior to the Initial Borrowing Date,
from one or more nationally recognized appraisal firms, satisfactory to
the Administrative Agent, covering each of the Mortgaged Properties,
which appraisals shall set forth for each Mortgaged Property the "fair
market value" thereof (i.e., the amount at which such Mortgaged
Property would equitably exchange between a willing buyer and a willing
seller, neither being under a compulsion and both having reasonable
knowledge of all relevant facts on the premise that such Mortgaged
Property will continue in its present use as part of an ongoing
business enterprise), in each case as determined in accordance with
sound appraisal standards.
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(V) PROCEEDINGS AND DOCUMENTS. All corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received
all information and copies of all certificates, documents, and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the
Administrative Agent or any Lender may have reasonably requested in
connection therewith, such documents and papers, where appropriate, to
be certified by proper corporate or Governmental Authorities.
5.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligations of the
Lenders to make each Loan and/or of a Letter of Credit Issuer to issue each
Letter of Credit is subject, at the time thereof, to the satisfaction of the
following conditions:
(A) NOTICE OF BORROWING, ETC. The Administrative Agent shall
have received a Notice of Borrowing meeting the requirements of section
1.3 with respect to the incurrence of Loans or a Letter of Credit
Request meeting the requirement of section 2.2 with respect to the
issuance of a Letter of Credit.
(B) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
each Credit Event and also after giving effect thereto, (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Loan Documents shall be
true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of
the date of such Credit Event, except to the extent that such
representations and warranties expressly relate to an earlier date.
(C) BORROWING BASE LIMIT MATTERS. At the time of such Credit
Event, the Administrative Agent shall have received such Compliance
Certificates and rent rolls referred to in section 7.1(e) as are
required to be delivered to the Administrative Agent on or prior to the
date of such Credit Event, and such other evidence as the
Administrative Agent may reasonably require, in order for the
Administrative Agent to establish that such Credit Event complies with
the Aggregate Borrowing Base limitations contained herein.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to each of the Lenders that all of
the applicable conditions specified in section 5.1 and/or 5.2, as the case may
be, are satisfied as of that time. All of the certificates, legal opinions and
other documents and papers referred to in this section 5, unless otherwise
specified, shall be delivered to the Administrative Agent for the account of
each of the Lenders and, except for the Notes, in sufficient counterparts for
each of the Lenders.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans, and/or to issue and/or to participate in the Letters of Credit
provided for herein, the Borrower and the Management Company, each as to itself,
each makes the following representations and warranties to, and agreements with,
the Lenders, all of which shall survive the execution and delivery of this
Agreement and each Credit Event:
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6.1. ORGANIZATION, EXISTENCE.
(a) The Borrower is duly organized, validly existing and in good
standing as a real estate investment trust organized under Chapter 1747 of the
Ohio Revised Code, has full power and authority and full legal right to own or
to hold under lease its Property and to carry on its businesses and is qualified
and self-administered as a REIT under sections 856 through 860 of the Code. The
Management Company is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware, and has full corporate
power and authority and full legal right to own or hold under lease its Property
and to carry on its business. Each of the Borrower and the Management Company is
qualified and licensed, admitted or approved to do business in each jurisdiction
wherein the character of its Property or the nature of its business make such
qualification necessary or advisable and where the failure so to qualify would
have a material and adverse effect on the Borrower.
(b) Each of the Borrower and the Management Company has the requisite
power and authority, and full legal right, to enter into this Agreement and each
of the other Loan Documents to which it is a party, and to perform, observe and
comply with all of its agreements and obligations hereunder and under each and
all of the Loan Documents to which it is a party.
(c) Except as set forth on Annex II, the Borrower does not, as of the
date hereof, own or hold of record (whether directly or indirectly) more than
one percent (1.0%) of any shares of any class in the capital of any corporation,
nor does the Borrower own or hold (whether directly or indirectly) more than one
percent (1.0%) of any legal and/or beneficial equity interest in any
partnership, business trust or joint venture or in any other unincorporated
trade or business enterprise. The representation and warranty set forth in this
section 6.1(c) is made upon and as of the date hereof, and shall not
(notwithstanding any other provision of this Agreement to the contrary) be
deemed to be repeated on any other date.
(d) The Borrower is duly qualified as a REIT under the Code, and has
not incurred any liability for excise taxes pursuant to section 4981 of the
Code.
6.2. DUE AUTHORIZATION.
(a) The execution and delivery by the Borrower of each of the Loan
Documents, the performance by the Borrower of all of its agreements and
obligations under such Loan Documents, and the making by the Borrower of the
borrowings contemplated by this Agreement have been duly authorized by all
appropriate action on the part of the Borrower and do not and will not (i)
contravene any provision of its Declaration of Trust or any other organizational
or constituent document of the Borrower as in effect from time to time; (ii)
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or (except as expressly contemplated by the terms
of this Agreement with respect to the liens and interests to be created in favor
of the Administrative Agent under the Security Documents) result in the creation
of any Lien upon any of the Property of the Borrower under any agreement, trust
deed, indenture, mortgage or other instrument to which the Borrower is a party
or by which the Borrower or any other Property of the Borrower is bound or
affected; (iii) violate or contravene any provision of any law, rule or
regulation (including, without limitation, Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System) or any order, ruling or
interpretation thereunder or any decree, order or judgment of any court or
governmental or regulatory authority, bureau, agency or official (all as from
time to time in effect and applicable to the Borrower); or (iv) require any
waivers, consents or approvals by any of the creditors or trustees for creditors
of the Borrower or any other person.
(b) The execution and delivery by the Management Company of each of the
Loan Documents to which it is a party and the performance by the Management
Company of all of its agreements and obligations under such Loan Documents has
been duly authorized by all corporate action on the part of the Management
Company, and do not and will not (i) contravene the Articles of Incorporation or
any other organizational or constituent document of the Management Company as in
effect from time to time; (ii) conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or (except as
contemplated by this Agreement) result in the creation of a Lien upon any
Property of the Management Company under any agreement, trust deed, indenture,
mortgage or other instrument to which the Management Company is a party or by
which its Property is bound or
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affected; (iii) violate or contravene any provision of any law, rule or
regulation or any order, ruling or interpretation thereunder or any decree,
order or judgment of any court or governmental or regulatory authority, bureau,
agency or official (all from time to time in effect and applicable to the
Management Company); or (iv) require any waivers, consents or approvals of any
other person.
(c) Except as to matters which the Borrower has procured, obtained or
performed prior to or concurrently with its execution and delivery of this
Agreement, no approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any governmental or
regulatory authority or agency is required under any provision of any applicable
law:
(i) for the execution and delivery by the Borrower or
the Management Company, as the case may be, of this Agreement,
the Notes, and the other Loan Documents, for the performance
by the Borrower or the Management Company of any of the
agreements and obligations hereunder or thereunder or for the
making by the Borrower of the borrowings contemplated by this
Agreement, or for the conduct by the Borrower of its business;
or
(ii) to ensure the continuing legality, validity,
binding effect, enforceability or admissibility in evidence
of this Agreement, the Notes and the other Loan Documents;
other than the filings and recordings to which reference is made in
section 5.1(h).
6.3. ENFORCEABILITY OF DOCUMENTS.
(a) On or before the Initial Borrowing Date, the Borrower and the
Management Company will have duly executed and delivered each of the Loan
Documents required of it by this Agreement, and each such Loan Document will be
in full force and effect. Each Loan Document shall constitute the legal, valid
and binding obligation of the Borrower and/or the Management Company, as the
case may be, enforceable against the Borrower or the Management Company, as the
case may be, in accordance with its respective terms.
(b) The representations and warranties made by the Borrower and the
Management Company in this section 6.3 are subject to the following
qualifications:
(i) the enforceability of any rights and remedies
provided in any of the Loan Documents or against any
particular party thereto is subject to applicable bankruptcy,
reorganization, moratorium or other similar laws affecting
generally the enforcement of creditors' rights; and
(ii) the availability of equitable remedies for the
enforcement of any provision of any of the Loan Documents may
be subject to the discretion of the court before which any
proceeding for the enforcement of any provision may be
brought.
6.4. NO DEFAULT.
(a) No event has occurred and is continuing, and no condition exists,
which constitutes a Default or an Event of Default.
(b) No default by the Borrower or the Management Company and no accrued
right of rescission, cancellation or termination on the part of the Borrower or
the Management Company, exists under this Agreement or any of the other Loan
Documents.
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6.5. FINANCIAL STATEMENTS. The Borrower has furnished the Lenders with
true, correct and complete copies of (a) the combined annual financial
statements for the Borrower and the Management Company for the most recent
fiscal year of the Borrower, including the combined balance sheet of the
Borrower and the Management Company as of the end of such fiscal year and
combined statements of income and changes in cash for the Borrower and the
Management Company and a statement of shareholder's equity, prepared on a
consistent basis in accordance with GAAP (except as specifically disclosed
therein) and in the form included with the Borrower's Form 10-K as filed with
the SEC for such fiscal year, certified without qualification by the Borrower's
Accountants; (b) the combined quarterly financial statements for the Borrower
and the Management Company for each fiscal quarter elapsed since the expiration
of the Borrower's most recent fiscal year, including a combined balance sheet
and combined statements of income and change in cash of the Borrower and the
Management Company, prepared on a consistent basis with the prior fiscal year's
financial statements in accordance with GAAP (except as specifically disclosed
therein), and in the form included with the Borrower's Form 10-Q, as filed with
the SEC for any such fiscal quarter; and (c) a certificate of the chief
financial officer, principal accounting officer or chief executive officer of
the Borrower, stating that to his best knowledge after due inquiry the foregoing
statements present fairly in all material respects the combined financial
position of the Borrower and the Management Company and the results of their
combined operations, subject, solely with respect to the materials described in
clause (b), to routine year-end audit adjustments.
6.6. NO ADVERSE CHANGES. No changes have occurred in the assets,
liabilities or financial condition of the Borrower or the Management Company
from those reflected in the most recent balance sheets referred to in section
6.5 which, individually or in the aggregate, have been materially adverse. Since
the date of such most recent balance sheet, there has been no material and
adverse development in the business or in the operations or prospects of the
Borrower or the Management Company.
6.7. TITLE TO ASSETS. Except as set forth in Annex IV, the Borrower and
its Subsidiaries have good, sufficient and legal title to, or a valid and
subsisting ground leasehold interest in, all the Property and assets reflected
in the most recent balance sheet referred to in section 6.5, except for assets
disposed of since the date of such balance sheet in the ordinary course of
business. As of the Initial Borrowing Date, the Borrower is the owner of the
Pledged Note, the unpaid principal amount of the Pledged Note is $6,000,000, and
the Pledged Note is secured by the security identified in the Pledge Agreement.
6.8. LITIGATION. Except as disclosed in Annex V, or (with respect to
subsequent reiterations of this warranty and representation) as disclosed in
documents filed with the SEC and provided to the Lenders as required by this
Agreement, there is no pending action, suit, proceeding or investigation
pending, or, to Borrower's knowledge, threatened, before any court, governmental
or regulatory authority, agency, commission or official, board of arbitration or
arbitrator against the Borrower or the Management Company in which Borrower or
the Management Company is a participant which could, if determined adversely to
the Borrower or the Management Company, reasonably be expected to affect, in any
material or adverse way, the financial position, assets, business, operations or
prospects of the Borrower. There are no proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or the Management Company
which call into question the validity or enforceability of any of the Loan
Documents.
6.9. NO MATERIALLY ADVERSE CONTRACTS. The Borrower is not a party to or
bound by any contracts, agreements or instruments (whether written or oral)
which, either individually or in the aggregate, materially and adversely affect
the financial position, business, operations or prospects of the Borrower.
6.10. TAX RETURNS. The Borrower has filed all federal, state and other
tax returns required to be filed by it and has made reasonable provisions, in
accordance with GAAP, for the payment of all taxes (if any) which have or may
become due and payable pursuant to any of the said returns, pursuant to any
matters raised by audits or for other reasons. In addition, the Borrower has
paid or caused to be paid all real and personal property taxes and assessments
and other governmental charges lawfully levied or imposed on or against it or
its Property, other than those presently payable without payment of interest or
penalty and those which are subject to contests initiated by the Borrower in
good faith and diligently prosecuted, in each case as permitted by and subject
to the requirements of, section 7.10 below.
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6.11. CONTRACTS WITH AFFILIATES OR SUBSIDIARIES.
(a) Except as permitted by section 8.6 hereof and as otherwise set
forth on Annex VII hereto, the Borrower is not a party to or otherwise bound by
any material agreements, instruments or contracts (whether written or oral) with
any Affiliate or Subsidiary.
(b) Except as permitted by section 8.6 below, and as otherwise set
forth on Annex VIII hereto, there is no Indebtedness for Borrowed Money owing by
the Borrower to any Affiliate nor is there Indebtedness for Borrowed Money owing
by any Affiliate to the Borrower.
6.12. EMPLOYEE BENEFIT PLANS. Except as shown on Annex VI hereto, the
Borrower does not maintain any Employee Benefit Plans or Guaranteed Pension
Plans.
6.13. GOVERNMENTAL REGULATION. The Borrower is not a "public utility
company", a "holding company" or a "subsidiary" or an "affiliate" of a "holding
company," as such terms are defined in the federal Public Utility Holding
Company Act of 1935, as amended. The Borrower is not an "investment company" or
a company "controlled" by an "investment company," as such terms are defined in
the federal Investment Company Act of 1940, as amended. The Borrower is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or the Investment Company Act of
1940 or under any federal or state statute or regulation limiting its ability to
incur Indebtedness for Borrowed Money.
6.14. MARGIN STOCK; USE OF PROCEEDS. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock. At no time would more than 25% of the value of the assets of the
Borrower or of the Borrower and its combined Subsidiaries that are subject to
any "arrangement" (as such term is used in section 221.2(g) of such Regulation
U) hereunder be represented by Margin Stock. The proceeds of all Loans shall be
utilized (i) to finance the acquisition of a minority interest in a joint
venture to be formed to acquire nine regional shopping malls from Marathon U.S.
Realties, Inc., the principal terms of which joint venture, acquisition
transaction and associated financing have previously been disclosed to the
Lenders, (ii) to finance other acquisitions and investments, (iii) to retire the
Indebtedness referred to in section 5.1(l), and (iv) for general corporate
purposes, in each case in a manner not inconsistent with the requirements of
this Agreement.
6.15. DISCLOSURE. Neither this Agreement nor any other Loan Document,
or any other document, certificate or written statement furnished to the Lenders
by or on behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein not misleading as of the date of such document, certificate or
other statement.
6.16. NO MATERIAL DEFAULT. The Borrower is not in default under any
order, writ, judgment, injunction, decree, statute or governmental rule,
indenture, agreement, contract, lease or other instrument or contract applicable
to it, which default would have a material and adverse effect on the business,
assets, Properties or conditions, financial or otherwise, of the Borrower or in
the performance of any covenants or conditions respecting any of its
Indebtedness, and no holder of any Indebtedness of the Borrower has given notice
of any asserted default thereunder, and no liquidation or dissolution of
Borrower and no receivership, insolvency, bankruptcy, reorganization or other
similar proceedings relative to the Borrower or its Property is pending or
threatened.
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6.17. ENVIRONMENTAL CONDITIONS.
(a) The Borrower has obtained all necessary permits, licenses,
variances, satisfactory clearances and all other necessary approvals
(collectively the "EPA PERMITS") in respect of its Property and for the
operation and conduct of the Borrower's business, from all applicable federal,
state, and local Governmental Authorities, utility companies or
development-related entities including, but not limited to, any and all
appropriate Federal or State environmental protection agencies and other
departments, public water works and public utilities in regard to the use of all
such real property and the operation and conduct of its business, and for any
handling, transporting, treating, storage, disposal, discharge, or Release (as
defined in CERCLA) of Hazardous Substances or any wastes, liquids or other
emissions, if any, into, on or from the environment (including, but not limited
to, any air, water, or soil). All EPA Permits are in full force and effect; no
such EPA Permit has expired or been suspended, denied or revoked, or is under
challenge by any person. The Borrower is in compliance with each EPA Permit, and
has no knowledge or information concerning any condition or fact which might or
could cause a suspension, denial or revocation of any of the Borrower's EPA
Permits.
(b) Neither the Borrower, the Mortgaged Property, nor any other
Property owned by or leased to the Borrower is (i) subject to any material
private or governmental litigation, Lien or judicial or administrative notice,
order or action, or, to the Borrower's knowledge, threatened litigation or
administration action, relating to Hazardous Substances or environmental
problems, impairments or liabilities; or (ii) with any applicable notice or
lapse of time (or both), and/or failure to take certain curative or remedial
actions, in direct or indirect violation of any Environmental Laws.
(c) To the best of the Borrower's knowledge, there has been no Release
(as defined in CERCLA) into, on or from any Mortgaged Property or any other
Property owned by or leased to the Borrower, and no Hazardous Substances (except
for (x) "Household Waste" as that term is defined at 40 C.F.R. 261.4(b)(l)
(1990), and (y) DE MINIMIS amounts of Hazardous Substances which neither violate
any Environmental Laws nor require any affirmative remediation or corrective
action) are located on or have been treated, stored, processed, disposed of,
handled, transported to or from, disposed of upon or into, upon or from any such
Property including, but not limited to, any air, water, or soil. The Borrower
shall not allow any Hazardous Substance to exist or be treated, stored,
disposed, Released, located, discharged, possessed, managed, processed, or
otherwise handled on any Mortgaged Property or any other Property owned by or
leased to the Borrower except in compliance with all applicable requirements of
all or in the operation or conduct of its business Environmental Laws, and shall
comply with all Environmental Laws affecting all of the Borrower's Property.
(d) The Borrower and its Affiliates do not and shall not transport or
engage in the business of transporting, in any manner, any Hazardous Substances.
(e) The Borrower is not aware of any circumstances which would result
in any material obligation under any Environmental Law to investigate or
remediate any Hazardous Substances in, on or under the Mortgaged Properties or
in, on or under any other Property owned by or leased to the Borrower.
(f) Reference is hereby made to the Environmental Indemnity Agreement,
dated of even date herewith, executed and delivered by the Borrower to the
Administrative Agent as one of the Loan Documents. The parties acknowledge and
agree that it is their intention that this section 6.17 and the Environmental
Indemnity Agreement be interpreted as being consistent and harmonious.
Nevertheless, the parties further agree that, solely with respect to matters
which are covered both by this section 6.17 and by the Environmental Indemnity
Agreement, the latter shall govern in the event of any inconsistency.
6.18. LICENSES AND PERMITS. The Borrower owns or possesses all material
Licenses and Permits and rights with respect thereto necessary for the lawful
and proper conduct of its business as presently conducted and proposed to be
conducted, without any known conflict with the rights of others, free of any
Lien not permitted by this Agreement. All such Licenses and Permits are in full
force and effect, and the Borrower is in compliance with the requirements
imposed by, or in respect of, all such Licenses and Permits without any known
conflict with the valid rights of others which could affect or impair in any
material manner the business, assets or condition, financial
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or otherwise, of the Borrower or the Collateral. No event has occurred and is
continuing which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such License or Permit, or would conversely
affect the rights of the Borrower thereunder. There is no litigation or other
proceeding or dispute with respect to any such Licenses and Permits which has,
or is reasonably likely to have, any material adverse effect on the validity or
continued availability of any such Licenses and Permits.
SECTION 7. AFFIRMATIVE COVENANTS.
The Borrower and the Management Company each hereby covenants and
agrees that so long as this Agreement is in effect and until such time as the
Total PF Commitment and the Total SF Commitment have been terminated, no Notes
are outstanding and the Loans, together with interest, Fees and all other
Obligations hereunder, have been paid in full, it shall comply with, observe,
perform or fulfill all of the covenants set forth below in this section 7 which
are to be performed by the Borrower or the Management Company, as the case may
be, as follows:
7.1. REPORTS AND OTHER INFORMATION. (a) The Borrower shall provide to
the Lenders, as soon as the same are available, and in any event within 45 days
after the close of each of the first three quarters of each fiscal year of the
Borrower, a combined balance sheet of the Borrower and the Management Company
and any Subsidiaries of the Borrower as of the end of such quarter, together
with combined statements of income, changes in cash and shareholders' equity for
the Borrower and the Management Company and such Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter. All such statements shall be prepared on a consistent basis with
the prior year's statements, in accordance with GAAP (except as may be expressly
disclosed therein) in the form included in the Borrower's Form 10-Q as filed
with the SEC, shall be certified by the Borrower's chief financial officer,
principal accounting officer or chief executive officer, and shall be
accompanied by a certificate of such officer stating that as of the date of such
certificate and to the best of his knowledge, after reasonable inquiry: (i) such
financial statements present fairly, in all material respects, the combined
financial position of the Borrower and the Management Company and the results of
their combined operations for such quarter and for the Borrower's fiscal
year-to-date in accordance with GAAP, subject to routine year-end audit
adjustments; and (ii) no event has occurred which constitutes an Event of
Default or would constitute an Event of Default with the giving of notice or the
lapse of time or both, or, if an Event of Default or such an event has occurred
and is continuing, a statement as to the nature thereof and the action which the
Borrower has taken or proposes to take with respect thereto. Concurrently with
the delivery of the foregoing materials, the Borrower shall furnish, in such
detail as is reasonably required by the Administrative Agent (x) a Compliance
Certificate, documenting the Borrower's compliance with the requirements of
sections 7.16 and section 8 of this Agreement, (y) a borrowing report, certified
by a duly authorized officer of the Borrower, and (z) such other information as
may reasonably be requested by the Administrative Agent with respect to the
Borrower or the Borrower's business or Property.
(b) The Borrower shall provide to the Lenders, as soon as the same are
available and in any event within 90 days after the end of each fiscal year of
the Borrower, a copy of the combined annual financial statements of the Borrower
and the Management Company and any Subsidiaries of the Borrower for such year,
including therein a copy of the combined balance sheet of the Borrower and the
Management Company and any such Subsidiaries as of the end of such fiscal year
and combined statements of income and changes in cash and statements of
shareholders' equity. All of the foregoing shall be prepared on a consistent
basis with the prior year's statements, in accordance with GAAP (except as may
be expressly disclosed therein) in the form included in the Borrower's Form 10-K
as filed with the SEC. The foregoing statements shall be certified without
qualification by Borrower's Accountants, and shall be accompanied by a
certificate of the chief financial officer, principal accounting officer or
chief executive officer of the Borrower stating that, as of the date of such
certificate, to the best of his knowledge, after reasonable inquiry: (i) such
financial statements reflect all adjustments (consisting of normal, recurring
accruals) necessary to present fairly the combined financial position of the
Borrower and the Management Company for such fiscal year in accordance with
GAAP, and (ii) no event has occurred which constitutes an Event of Default or
would constitute an Event of Default with the giving of notice or the lapse of
time or both, or, if an Event of Default or such an event has occurred and is
continuing, a statement as to the nature thereof and the action which the
Borrower has taken or proposes to take with respect thereto. Concurrently with
the delivery of the
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foregoing materials, the Borrower shall furnish, in such detail as is reasonably
required by the Administrative Agent (x) a Compliance Certificate, (y) a
borrowing report, certified by a duly authorized officer of the Borrower, and
(z) such other information as may be reasonably requested by the Administrative
Agent with respect to the Borrower or the Borrower's business or Property.
(c) The Borrower shall provide to the Lenders, promptly after sending
or filing thereof, copies of all reports which the Borrower sends to holders of
beneficial interests in the Borrower, and copies of all reports and registration
statements which the Borrower files with the SEC.
(d) The Borrower shall provide to the Lenders, concurrently with its
delivery to the Lenders of the Borrower's quarterly financial reports in
accordance with section 7.1(a), above, and in any event within 45 days after the
end of each calendar quarter of the Borrower, a report as to each Mortgaged
Property setting forth for such Mortgaged Property a statement showing, in such
detail as the Administrative Agent may reasonably request, the Property NOI for
such Mortgaged Property for such quarter.
(e) The Borrower shall also provide the Lenders with such other
information relating to the Borrower (including, without limitation, any
business plan of the Borrower) as any Lender may from time to time reasonably
request. Without limiting the generality of the foregoing, the Borrower shall
provide the Lenders, semi-annually, within 45 days after the end of the second
and fourth fiscal quarters of the Borrower in each fiscal year during the
pendency of this Agreement, a current rent-roll for each Mortgaged Property.
7.2. MAINTENANCE OF PROPERTY; INSURANCE. (a) The Borrower covenants and
agrees to keep and maintain all of its Property in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time to make,
or use all reasonable legal remedies to cause to be made, all proper repairs,
renewals or replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
(b) The Borrower covenants and agrees to keep all of its Property
insured against loss or damage by theft, fire, smoke, sprinklers, riot and
explosion, such insurance (the "INSURANCE") to be in such form, in such amounts
and against such other risks and hazards as are currently carried by the
Borrower or are customarily maintained by other persons operating similar
businesses and having similar properties in the same general areas, including
but not limited to liability coverage and to flood insurance for real property
or real property interests located in an area designated as flood-prone, with an
insurer or insurers which are financially sound and reputable and which have
been accorded a rating by A.M. Best Company, Inc. (or any successor rating
agency) of A-/X (or any replacement rating of equivalent stature) or better (or
A-/VII or better in the case of insurers whose parent companies are rated A-/X
or better); insurance companies satisfying the foregoing requirements are
referred to herein as "QUALIFIED INSURERS". In the event that an insurer ceases
to be a Qualified Insurer during the term of any Insurance policy, the Borrower
shall replace such coverage, at the end of the then current policy term, by a
policy issued by a Qualified Insurer. The specific requirements for the
insurance to be maintained in respect of the Mortgaged Properties shall be set
forth in the respective Mortgages; to the extent that the requirements set forth
in the respective Mortgages shall conflict with those which are contained in
this Agreement, the requirements of the respective Mortgages shall govern. The
Borrower shall, in addition, require that the insurer with respect to each such
Insurance policy provide for at least 30 days' advance written notice to the
Administrative Agent of any cancellation or termination of, or other change of
any nature whatsoever in, the coverage provided under any such policy, PROVIDED,
that if the Borrower's insurers will not provide more than 10 days' prior notice
of cancellation for nonpayment of premiums, such notice will be adequate in such
event.
7.3. PRIORITY OF MORTGAGES. The Borrower shall at all times maintain
and preserve the first and best priority of the Mortgages with respect to each
of the Mortgaged Properties, and shall not at any time create or suffer to be
created any other Lien or security interest in any of the Collateral, excepting
only Liens securing the payment of current and non-delinquent taxes and
assessments, both general and special, the effect of building, land use and
zoning laws, Permitted Encumbrances and other matters affecting title to the
Mortgaged Properties or any of the other Collateral as may be approved or
accepted by the Administrative Agent.
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7.4. SECURITY INTERESTS. The Borrower will defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein. The Borrower shall comply with the requirements of all
applicable laws and regulations in order to grant to the Administrative Agent
valid and perfected first mortgage liens encumbering all of the Mortgaged
Properties and first priority, perfected security interests in the balance of
the Collateral. The Administrative Agent is hereby authorized by the Borrower
(and the Management Company, as appropriate) to file any financing statements
covering the Collateral, whether or not the Borrower's (or the Management
Company's) signature appears thereon. The Borrower and the Management Company
each agrees to do whatever the Administrative Agent may reasonably request, from
time to time, by way of: (i) filing notices of liens, financing statements,
fixture filings and amendments, renewals and continuations thereof; (ii)
cooperating with the Administrative Agent's representatives; (iii) keeping stock
records; (iv) obtaining waivers from landlords and mortgagees and from
warehousemen and their landlords and mortgagees; (v) paying claims which might,
if unpaid, become a Lien on the Collateral or any portion or component thereof;
and (vi) performing such further acts as the Administrative Agent may reasonably
require in order to effect the purposes of this Agreement and the other Loan
Documents (excluding, however, any such matters as to which the Borrower or the
Management Company shall have caused to be bonded or otherwise discharged, or
shall have properly initiated and duly prosecuted a dispute with the claimant or
the party seeking to compel the Borrower's or the Management Company's
performance, all subject to and in compliance with the provisions of the
applicable Mortgage relative to the prosecution of the contests and disputes
permitted thereunder). Any and all fees, costs and expenses (including any
taxes, reasonable attorneys' fees, or costs for insurance of any kind), which
the Administrative Agent may incur with respect to the Collateral or the
Obligations; in filing public notices; in preparing or filing documents; making
title examinations or rendering opinions; in protecting, maintaining, or
preserving the Collateral or its interest therein; in enforcing or foreclosing
the Liens under any of the Loan Documents, whether through judicial procedures
or otherwise; or in defending or prosecuting any actions or proceedings arising
out of or relating to its transactions with the Borrower and/or the Management
Company under this Agreement or any other Loan Document, shall be borne and paid
by the Borrower promptly after the Administrative Agent's written demand
therefor. If any such costs or expenses are not promptly paid by the Borrower,
the Administrative Agent may pay the same on the Borrower's behalf, and the
amount so paid shall thereupon comprise Obligations hereunder, evidenced by the
Notes and secured by the other Loan Documents, and shall bear interest from the
date of such payment until the date the same are paid in full, at the interest
rate provided in section 1.8(c).
7.5. MAINTENANCE OF EXISTENCE. (a) The Borrower shall make all filings
under the Code necessary to preserve and maintain (i) its qualifications as a
REIT under the Code and (ii) the applicability to the Borrower and its
shareholders of the method of taxation provided for in section 857(b) of the
Code (and any successor provision thereto).
(b) The Borrower shall preserve and maintain its existence and all of
its rights, franchises and privileges as an Ohio real estate investment trust,
and its qualification to do business in each jurisdiction in which the character
of the Borrower's Property or the nature of the Borrower's business makes such
qualification necessary.
(c) The Management Company will preserve and maintain its existence and
all of its rights, franchises and privileges as a Delaware corporation, and its
qualification to do business in any other jurisdiction in which the character of
its Property or the nature of its business makes such qualification necessary.
7.6. COMPLIANCE WITH LAWS. (a) The Borrower and the Management Company
shall, and each hereby covenants and agrees to, comply with all acts, rules,
regulations, orders, directions and ordinances of any legislative,
administrative or judicial body or official (including, without limitation, all
Environmental Laws and the Americans with Disabilities Act (the "ADA"))
applicable to the Borrower's Property or any part thereof, or to the operation
of the Borrower's business.
(b) The Borrower will promptly notify the Lenders in the event that the
Borrower receives any notice, claim or demand from any governmental agency which
alleges that the Borrower or the Management Company is in violation of any of
the terms of, or has failed to comply with any applicable order issued pursuant
to any Federal,
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state or local statute regulating its operation and business with respect to any
Mortgaged Property, including, but not limited to, the Occupational Safety and
Health Act, the ADA and all Environmental Laws.
7.7. NOTICE OF LITIGATION; JUDGMENTS. The Borrower shall furnish or
cause to be furnished to the Lenders, promptly (and, in any event, within five
Business Days) after the Borrower shall have first become aware of the same, a
written notice describing, in detail acceptable to the Required Lenders: (a) any
final judgment in an amount exceeding $500,000 rendered against the Borrower or
any Affiliate of the Borrower; (b) the commencement or institution of any legal
or administrative action, suit, proceeding or investigation by or against the
Borrower or any Affiliate of the Borrower in or before any court, governmental
or regulatory body, agency, commission or official, board of arbitration or
arbitrator, the outcome of which could materially and adversely affect the
Borrower's current or future financial position, assets, business, operations or
prospects, or could prevent or impede the implementation or completion,
observance or performance of any of the arrangements or transactions
contemplated by any of the Loan Documents; or (c) the occurrence of any adverse
development, not previously disclosed by the Borrower to the Lenders in writing,
in any such action, suit, proceeding or investigation. In addition, as promptly
as possible after sending the notice of any such event or events, the Borrower
shall provide the Lenders with a supplemental notice relating to the event
described in such initial notice. Such supplemental notice shall include the
Borrower's description of the action that the Borrower has taken or proposed to
take with respect to such event.
7.8. NOTICE OF OTHER EVENTS. (a) If (and on each occasion that) any
event shall occur or any condition shall develop which constitutes a Default or
an Event of Default, then, promptly (and, in any event, within five Business
Days) after the Borrower shall have first become aware of the same, the Borrower
will furnish or cause to be furnished to the Lenders a written notice specifying
the nature and the date of the occurrence of such event or (as the case may be),
the nature and the period of existence of such condition and what action the
Borrower is taking or proposes to take with respect thereto.
(b) Immediately upon the Borrower's first becoming aware of any of the
following occurrences, the Borrower will furnish or cause to be furnished to the
Lenders written notice with full particulars of (i) the business failure,
insolvency or bankruptcy of the Borrower; and (ii) any defaults or events of
default under any material agreement of the Borrower or any material violations
of any laws, regulations, rules or ordinances of any governmental or regulatory
body by the Borrower with respect to any Mortgaged Property.
(c) If (and on each occasion that) any of the following events shall
occur:
(i) the Declaration of Trust or other organizational
documents of the Borrower shall at any time be modified or
amended in any respect whatever; or
(ii) the by-laws or code of regulations of the Borrower
shall at any time be modified or amended in any respect whatever;
then promptly (and, in any event, within five Business Days) after the
occurrence of any such event, the Borrower shall furnish the Lenders with a true
and complete copy of each such modification, amendment or supplement.
7.9. INSPECTIONS. The Borrower and the Management Company shall permit
any officer, employee, consultant or other representative or agent of the
Administrative Agent or any Lender to visit and inspect, from time to time and
at any reasonable time, after prior notice to the Borrower, any of the assets or
Property owned or held under lease by the Borrower or the Management Company and
to examine the books of account, records, reports and the papers (and to make
copies thereof and to take extracts therefrom) of the Borrower and the
Management Company and to discuss the affairs, finances and accounts of the
Borrower with the trustees and executive officers of the Borrower and the
executive officers of the Management Company, and with the Borrower's
independent accountants.
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7.10. PAYMENT OF TAXES AND OTHER CLAIMS. The Borrower and the
Management Company shall pay and discharge promptly all taxes, assessments and
other governmental charges or levies at any time imposed upon it or upon its
income, revenues or Property, as well as all claims of any kind (including
claims for labor, material or supplies) which, if unpaid, might by law become a
Lien or charge upon all or any part of its income, revenues or Property.
Notwithstanding the foregoing to the contrary, the Borrower or the Management
Company may, PROVIDED that there is not then an Event of Default hereunder,
contest the propriety or amount of any such taxes, assessments or governmental
charges, or of any such claims, if (a) such contest is instituted in good faith
and prosecuted with reasonable diligence; (b) such contest shall preclude the
sale or forfeiture of the affected Property (or the Borrower or the Management
Company shall discharge, by bonding or otherwise, the claim giving rise to the
contest or shall provide the Administrative Agent with such reasonable security
or other assurances as may be requested by the Administrative Agent in
connection with such contest); and (c) the Borrower shall indemnify the
Administrative Agent and the Lenders of and from any and all liability, loss,
cost or expense incurred by or asserted against the Administrative Agent or any
of the Lenders in connection with, or in consequence of, any such contest.
7.11. PAYMENT OF INDEBTEDNESS. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all draws and
disbursements under the Letters of Credit and all fees and other amounts payable
hereunder or under the Loan Documents promptly as and when required by this
Agreement and/or the other Loan Documents. The Borrower shall pay all other
Indebtedness (whether existing on the date hereof or arising at any time
thereafter) promptly as and when the same is due and payable.
7.12. PERFORMANCE OF OBLIGATIONS UNDER THE LOAN DOCUMENTS. The Borrower
and the Management Company each will duly and properly perform, observe and
comply with all of its agreements, covenants and obligations under this
Agreement and each of the other Loan Documents.
7.13. GOVERNMENTAL CONSENTS AND APPROVALS. (a) The Borrower or the
Management Company, as the case may be, will obtain or cause to be obtained all
such approvals, consents, orders, authorizations and licenses from, give all
such notices promptly to, register, enroll or file all such agreements,
instruments or documents promptly with, and promptly take all such other action
with respect to, any governmental or regulatory authority, agency or official,
or any central bank or other fiscal or monetary authority, agency or official,
as may be required from time to time under any provision of any applicable law:
(i) for the performance by the Borrower or the
Management Company of any of its agreements or obligations
under the Notes, this Agreement or any of the other Loan
Documents or for the payment by the Borrower to the
Administrative Agent or any Lender or Letter of Credit Issuer
of any sums which shall become due and payable by the Borrower
hereunder or thereunder;
(ii) to ensure the continuing legality, validity,
binding effect or enforceability of the Notes or any of the
other Loan Documents or of any of the agreements or
obligations thereunder of the Borrower or the Management
Company; or
(iii) to continue the proper operation of the
business and operations of the Borrower or the Management
Company, as the case may be.
(b) The Borrower or the Management Company, as the case may be, shall
duly perform and comply with the terms and conditions of all such approvals,
consents, orders, authorizations and Licenses and Permits from time to time
granted to or made upon the Borrower or the Management Company, as the case may
be.
7.14. EMPLOYEE BENEFIT PLANS AND GUARANTEED PENSION PLANS. The Borrower
(a) will not establish any Guaranteed Pension Plans or Employee Benefit Plans
without the prior written consent of the Required Lenders (which will not be
unreasonably withheld or delayed), (b) will make full payment when due of all
amounts which, under the provisions of Employee Benefit Plans or under
applicable law, are required to be paid as contributions
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thereto, (c) will not permit to exist any accumulated funding deficiency,
whether or not waived, (d) will file on a timely basis all reports, notices and
other filings required by any governmental agency with respect to any of its
Employee Benefit Plans, (e) will make any payments to Multiemployer Plans
required to be made under any agreement relating to such Multiemployer Plans, or
under any law pertaining thereto, (f) will not permit any amount of unfunded
guarantied benefits to occur with respect to any Guaranteed Pension Plan, (g)
will furnish to all participants, beneficiaries and employees under any of the
Employee Benefit Plans, within the periods prescribed by law, all reports,
notices and other information to which they are entitled under applicable law,
and (h) will take no action which would cause any of the Employee Benefit Plans
to fail to meet any qualification requirement imposed by the Code, as amended.
As used in this section, the term "ACCUMULATED FUNDING DEFICIENCY" has the
meaning specified in section 302 of ERISA and section 412 of the Code, and the
term "UNFUNDED GUARANTIED BENEFITS" has the meaning specified in section 4001 of
ERISA.
7.15. FURTHER ASSURANCES. The Borrower and the Management Company, as
the case may be, will each execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any and all such further assurances and
other agreements or instruments, and take or cause to be taken all such other
action, as shall be reasonably requested by the Administrative Agent from time
to time in order to give full effect to any of the Loan Documents.
7.16. FINANCIAL COVENANTS. The Borrower will at all times comply with
the following financial covenants:
(A) LEVERAGE RATIO. The Borrower shall at all times maintain a
ratio, determined as of the most recently ended fiscal quarter of the
Borrower, of (i) Total Liabilities TO (ii) EBITDA for the four
consecutive fiscal quarters of the Borrower ended with such fiscal
quarter, of not more than 8.00 to 1.00.
(B) DEBT SERVICE COVERAGE RATIO. The Borrower shall at all
times maintain a ratio, on a combined basis for the Borrower, its
Subsidiaries and the Management Company, determined as of the most
recently ended fiscal quarter of the Borrower, of (i) EBITDA for such
fiscal quarter TO (ii) the aggregate amount of all regularly scheduled
payments of principal (other than balloon payments) and interest on
Indebtedness for Borrowed Money for such fiscal quarter, of not less
than (A) 1.30 to 1.00 for any fiscal quarter ending on or prior to
September 30, 1997, and (B) 1.50 to 1.00 for any fiscal quarter
thereafter.
(C) INTEREST COVERAGE RATIO. The Borrower shall at all times
maintain a ratio, on a combined basis for the Borrower, its
Subsidiaries and the Management Company, determined as of the most
recently ended fiscal quarter of the Borrower, of (i) EBITDA for such
fiscal quarter TO (ii) the aggregate amount of all interest for such
fiscal quarter on Indebtedness for Borrowed Money, of not less than
1.50 to 1.00.
(D) ADJUSTED NET WORTH. The Borrower shall at all times
maintain an Adjusted Net Worth of at least $90,000,000; PROVIDED that
the foregoing amount (as it may be increased from time to time as
provided herein) shall be increased by (i) an amount equal to 100% of
the net cash proceeds (i.e., net of underwriting discounts and
commissions, placement and advisory fees, and other customary fees,
costs and expenses associated therewith) from the sale or issuance by
the Borrower, any of its Subsidiaries or the Management Company of its
equity securities to any person other than an Affiliate in an
underwritten public offering or private placement with investors which
is completed after June 30, 1996 (specifically excluding from this
clause (i) any sale or issuance to management or employees pursuant to
a stock option plan, stock savings plan or similar employee benefit
arrangement); (ii) an amount equal to 100% of the increase in
shareholders' equity attributable to other issuances of equity by the
Borrower, any of its Subsidiaries or the Management Company
(specifically excluding from this clause (ii) any sale or issuance to
management or employees pursuant to a stock option plan, stock savings
plan or similar employee benefit arrangement); and (iii) all capital
gains recognized by the Borrower, its
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Subsidiaries and the Management Company, on a combined basis, for
financial reporting purposes, subsequent to June 30, 1996, on any
transaction involving the sale or other disposition of assets or
investments (other than dispositions of obsolete or surplus equipment,
made in the ordinary course of business), net of any capital losses on
any items comprising a portion of any such transaction, except to the
extent such capital gains are distributed by the Borrower to the
holders of shares of beneficial interest in the Borrower, and except to
the extent that during the period ending on June 30, 1997 any such
capital gains are offset by aggregate capital losses not in excess of
$7,000,000 on transactions involving the sale or other disposition of
assets or investments (other than dispositions of obsolete or surplus
equipment, made in the ordinary course of business).
(E) FUNDS FROM OPERATIONS. The Borrower shall at all times
maintain its Funds from Operations, determined as of the most recently
ended fiscal quarter of the Borrower, of not less than (i) $15,000,000
for any four consecutive fiscal quarter period ending on or prior to
September 30, 1997, (ii) $4,750,000 for the fiscal quarter ended
December 31, 1997, (iii) $9,500,000 for the two consecutive fiscal
quarter period ending March 31, 1998, (iv) $14,250,000 for the three
consecutive fiscal quarter period ending June 30, 1998, and (v)
$19,000,000 for any four consecutive fiscal quarter period ending
thereafter.
(F) MINIMUM AGGREGATE BORROWING BASE. The Borrower shall at
all times maintain an Aggregate Borrowing Base not less than the sum of
the aggregate outstanding principal amount of Loans, PLUS the Letter of
Credit Outstandings, PLUS the Aggregate Measured Swap Credit Risk (if
any) of all Designated Interest Rate Agreements.
(G) TOTAL COMMITMENT TO APPRAISED LOAN VALUE RATIO. The
Borrower shall at all times maintain a ratio of (i) the Total
Commitment, PLUS the Aggregate Measured Swap Credit Risk (if any) of
all Designated Interest Rate Agreements, TO (ii) the Appraised Loan
Value of the Eligible Real Estate, expressed as a percentage, of not
more than 65%. As used herein, the term "APPRAISED LOAN VALUE OF THE
ELIGIBLE REAL ESTATE" means the sum of (A) the fair market value of the
Eligible Real Estate constituting a part of the Mortgaged Property
hereunder on the Initial Borrowing Date, as determined on the basis of
the appraisals referred to in section 5.1(v), and (B) the Appraised
Value of any Additional Property or Substitute Property, determined for
any such Property as of the date such Property becomes a Mortgaged
Property hereunder in compliance with section 7.17.
For the purpose of determining compliance with the foregoing financial
covenants, the Borrower's interest in the joint venture referred to in section
6.14 shall be accounted for using the equity method of accounting, regardless of
the Borrower's ownership interest in such joint venture.
7.17. ADDITIONAL MORTGAGED PROPERTIES; SUBSTITUTE MORTGAGED PROPERTIES.
Subject to the terms and conditions set forth in this section 7.17, the Borrower
may, from time to time, supplement the collateral for the Loans by causing
certain real property owned by the Borrower to become additional Mortgaged
Properties, in accordance with the following provisions:
(a) If the Borrower shall desire to cause certain real
property owned by the Borrower to become a Mortgaged Property
hereunder, the Borrower shall so notify the Administrative Agent and
the Lenders. Such notice shall include: (i) a description of the
property which the Borrower would propose to become a Mortgaged
Property (the "ADDITIONAL PROPERTY"), including historical operating
results and occupancy levels of such Additional Property; (ii) an
appraisal establishing the fair market value of such Additional
Property, prepared by an appraiser who is a Member of the American
Institute of Real Estate Appraisers (or has a corresponding
professional designation acceptable to the Administrative Agent),
conforming to all requirements applicable to the Lenders with respect
to real estate collateral, and otherwise acceptable to the
Administrative Agent and the Required Lenders; (iii) a commitment for
the issuance of a loan
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policy of title insurance (ALTA Form B, 1970 Form), issued by a title
insurer acceptable to the Administrative Agent and showing that (A)
such Additional Property is owned by the Borrower (or will be, prior to
the execution and delivery of the Mortgage encumbering such Additional
Property), and (B) that, if such Additional Property were to become a
Mortgaged Property, the Mortgage encumbering such Additional Property
would be the first and best lien upon such property, subject only to
Permitted Encumbrances and the Lien of taxes and assessments, both
general and special, which are a Lien but are not then delinquent or
due and payable; (iv) a survey, prepared and certified to the
Administrative Agent (and the title company providing the loan policy
referred to below) in accordance with ALTA/ACSM standards, showing the
boundaries of the Additional Property, the location of all
improvements, required set-backs and such other information as may be
required pursuant to the foregoing standards, acceptable to the
Administrative Agent and sufficient to permit the issuance of a loan
policy of title insurance without exception for any matter which would
be revealed by a survey and physical inspection of the Additional
Property; (v) a Phase I environmental report, addressed to the
Administrative Agent and the Lenders (or accompanied by a letter of
reliance for their benefit) and acceptable to the Administrative Agent
and the Required Lenders, showing that such Additional Property is free
of Hazardous Substances and from violations of Environmental Laws, and
otherwise in compliance with the requirements set forth in this
Agreement with respect to the Mortgaged Properties and (vi) a
statement, showing in detail and with substantiating information
reasonably acceptable to the Required Lenders, the Property NOI for the
Additional Property for not less than one full calendar year prior to
the date of the notice with which such information is furnished. If the
Administrative Agent and the Required Lenders shall approve the
addition of the Additional Property as a Mortgaged Property, the
Administrative Agent shall so notify the Borrower, shall assign a
Coverage Factor and an initial Market Constant to such Additional
Property and shall, on the basis of the same, determine the Borrowing
Base for such property. Promptly after its receipt of such notice, the
Borrower will execute a Mortgage and such other Security Documents with
respect to such Additional Property as the Administrative Agent may
require in order to cause such Additional Property to comply with the
requirements of this Agreement and the other Loan Documents as
Collateral for the Obligations, shall cause all such Security Documents
to be duly delivered to the Administrative Agent and recorded in the
appropriate public records, and will cause the title company which
issued the title commitment described above to issue a loan policy of
title insurance to the Administrative Agent, containing such coverages
and endorsements as the Administrative Agent may require. Concurrently
therewith, the Borrower will, if so required by the Administrative
Agent or the Required Lenders, enter into an amendment or supplement to
this Agreement to reflect inclusion of such Additional Property as a
Mortgaged Property and a component of the Eligible Real Estate, to
reflect the resulting changes in the Borrowing Base and to make such
other changes to this Agreement as may be necessary or appropriate in
view of the addition of such Additional Property to the Collateral.
(b) If the Borrower shall desire to cause certain real
property owned by the Borrower to become a Mortgaged Property in
substitution for a property which is then a Mortgaged Property
hereunder, the Borrower shall so notify the Administrative Agent and
the Lenders. Such notice shall include: (i) the identity of the
Mortgaged Property for which the Borrower intends to make such
substitution, and a description of the property which the Borrower
would propose to become a Mortgaged Property (the "SUBSTITUTE
PROPERTY"), including historical operating results and occupancy levels
of such Substitute Property; (ii) an appraisal establishing the fair
market value of such Substitute Property, prepared by an appraiser who
is a Member of the American Institute of Real Estate Appraisers (or has
a corresponding professional designation acceptable to the
Administrative Agent), conforming to all requirements applicable to the
Lenders with respect to real estate collateral and otherwise acceptable
to the Administrative Agent and the Required Lenders; (iii) a
commitment for the issuance of a loan policy of title insurance (ALTA
Form B, 1970 Form), issued by a title insurer acceptable to the
Administrative Agent and showing that (A) the Substitute Property is
owned by the Borrower (or will be, prior to the execution and delivery
of the Mortgage encumbering such Substitute Property), and (B) that, if
such Substitute
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Property were to become a Substitute Property, the Mortgage encumbering
such Substitute Property would be the first and best lien upon such
property, subject only to Permitted Encumbrances and the Lien of taxes
and assessments, both general and special, which are a Lien but are not
then delinquent or due and payable; (iv) a survey, prepared and
certified to the Administrative Agent (and the title company providing
the loan policy referred to below) in accordance with ALTA/ACSM
standards, showing the boundaries of the Substitute Property, the
location of all improvements, required set-backs and such other
information as may be required pursuant to the foregoing standards,
acceptable to the Administrative Agent and sufficient to permit the
issuance of a loan policy of title insurance without exception for any
matter which would be revealed by a survey and physical inspection of
the Substitute Property; (v) a Phase I environmental report, addressed
to the Administrative Agent and the Lenders (or accompanied by a letter
of reliance for their benefit) and acceptable to the Administrative
Agent and the Required Lenders, showing that such Substitute Property
is free of Hazardous Substances and from violations of Environmental
Laws, and is otherwise in compliance with the requirements set forth in
this Agreement with respect to the Mortgaged Properties and (vi) a
statement, showing in detail and with substantiating information
reasonably acceptable to the Required Lenders, the Property NOI for the
Substitute Property for not less than one full calendar year prior to
the date of the notice with which such information is furnished. If the
Administrative Agent and the Required Lenders shall approve the
proposed substitution of the Substitute Property as a Mortgaged
Property, the Administrative Agent shall so notify the Borrower, shall
assign a Coverage Factor and an initial Market Constant to such
Substitute Property and shall, on the basis of the same, determine the
Borrowing Base for such property. Promptly after its receipt of such
notice, the Borrower shall execute a Mortgage and such other Security
Documents with respect to such Substitute Property as the
Administrative Agent may require in order to cause such property to
comply with the requirements of this Agreement and the other Loan
Documents as Collateral for the Obligations, shall cause all such
Security Documents to be duly delivered to the Administrative Agent and
or recorded in the appropriate public records, and will cause the title
company which issued the title commitment described above to issue a
loan policy of title insurance to the Administrative Agent, containing
such coverages and endorsements as the Administrative Agent may
require. Concurrently therewith, the Administrative Agent shall execute
and deliver to the Borrower a release of the Mortgage encumbering the
Mortgaged Property for which such substitution was made, together with
a release of all other Security Documents in favor of the
Administrative Agent which pertain to such property (without thereby
releasing or affecting any Mortgage or Security Document affecting any
other Mortgaged Property), and the Borrower will, if so required by the
Administrative Agent or the Required Lenders, enter into an amendment
or supplement to this Agreement to reflect the inclusion of such
Substitute Property as a Mortgaged Property and a component of the
Eligible Real Estate, to reflect the resulting changes in the Aggregate
Borrowing Base and to make such other changes to this Agreement as may
be necessary or appropriate to reflect the transactions effected
pursuant to this section 7.17(b).
(c) All costs and expenses incurred or payable by the
Administrative Agent or any Lender with respect to or in connection
with the Borrower's exercise of its options under this section 7.17
(including, without limitation, reasonable attorney's fees and further
including any and all taxes, costs, fees and recording expenses in
connection with the implementation of the rights set forth in this
provision) shall be paid by the Borrower on demand.
7.18. INTEREST RATE HEDGING. Within 60 days following the Initial
Borrowing Date, the Borrower will enter into one or more Interest Rate
Agreements which shall, collectively, have the effect of fixing or "capping" the
rate of interest on a notional amount of debt of at least $45,000,000 for a
period of at least two years, and which, collectively, shall not under any
circumstances involve an actual or potential Aggregate Measured Swap Credit Risk
in excess of $3,000,000. Each such Interest Rate Agreement shall (i) be embodied
in a standard ISDA form of agreement which is acceptable to the Administrative
Agent with respect to any intercreditor issues, and (ii) involve a counterparty
who is a Lender or another financial institution acceptable to the
Administrative Agent. The Borrower will promptly provide to the Administrative
Agent a true and complete copy of each such Interest Rate
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Agreement. At or following the effective date of any such Interest Rate
Agreement which involves any Aggregate Measured Swap Credit Risk, the
Administrative Agent may, upon written notification to the Borrower, the Lenders
and such counterparty, designate the credit exposure of such counterparty under
such Interest Rate Agreement as an obligation entitled to share, PARI PASSU with
the Obligations, in respect of the benefits provided by the Collateral under the
Security Documents, in accordance with the applicable provisions of this
Agreement and the Security Documents, and if the Administrative Agent so
designates such credit exposure, the applicable Interest Rate Agreement of such
counterparty shall be considered a "DESIGNATED INTEREST RATE AGREEMENT";
PROVIDED that the Administrative Agent shall not so designate any Interest Rate
Agreement except pursuant to instructions from, or with the consent of, the
Required Lenders, unless the counterparty is a Lender or an Affiliate of a
Lender.
SECTION 8. NEGATIVE COVENANTS.
The Borrower and the Management Company each hereby covenants and
agrees that so long as this Agreement is in effect and until such time as the
Total PF Commitment and the Total SF Commitment have been terminated, no Notes
are outstanding and the Loans, together with interest, Fees and all other
Obligations hereunder, have been paid in full, it shall comply with, observe,
perform or fulfill all of the covenants set forth below in this section 8 which
are to be performed by the Borrower or the Management Company, as the case may
be, as follows:
8.1. LIMITATION ON NATURE OF BUSINESS. Neither the Borrower nor the
Management Company nor any Subsidiary of the Borrower will at any time make any
material alterations in the nature or character of the business of the Borrower,
the Management Company and any such Subsidiaries, taken as a whole, as carried
on at the date hereof, or undertake, conduct or transact any business in a
manner prohibited by applicable law.
8.2. LIMITATION ON CONSOLIDATION AND MERGER. The Borrower shall not
merge or consolidate with or into (unless the Borrower is the surviving person
of such merger or consolidation), or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to,
any person, or permit any of its Subsidiaries to do so, and the Management
Company will not do so, EXCEPT THAT, if no Change of Control would result
therefrom, (i) any person may merge with and into the Borrower, (ii) the
Management Company or any Subsidiary of the Borrower may merge into the
Borrower, (iii) any Subsidiary of the Borrower may merge with or into any other
person and (iv) any Subsidiary of the Borrower may sell or otherwise dispose of
all or substantially all of its assets, PROVIDED that (A) immediately after
giving effect to any such merger or sale or other disposition of assets referred
to in clause (i), (ii), (iii) or (iv), no Default (including, without
limitation, any Default under section 8.8) would exist, (B) the surviving
corporation of any such merger referred to in clause (i) is, immediately after
giving effect to such merger, the Borrower, (C) if the surviving corporation of
any merger referred to in clause (iii) is not, immediately after giving effect
to such merger, a Subsidiary of the Borrower, the Borrower and/or its
Subsidiaries shall have received as consideration for such merger cash, property
or securities representing the fair market value of the Borrower's and its
Subsidiaries' interest in such Subsidiary immediately prior to such merger (as
determined by the trustees of the Borrower), and (D) in the case of any sale or
other disposition referred to in clause (iv), the Borrower and/or its
Subsidiaries shall have (except as otherwise permitted under section 8.8 hereof)
received as consideration for such sale or other disposition cash, property or
securities representing the fair market value of such assets immediately prior
to such sale or other disposition (as determined by the trustees of the
Borrower).
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8.3. LIMITATION ON DISTRIBUTIONS, DIVIDENDS AND RETURN OF CAPITAL. (a)
The Borrower shall not, after the occurrence and during the continuance of an
Event of Default hereunder or under any Loan Document, or if after giving effect
thereto there would exist any Default or Event of Default involving section
7.16(d) hereof: (i) declare or pay any Distribution or cash dividends of any
kind on any Securities of any class in its capital; or (ii) make any payments on
account of the purchase or other acquisition or redemption or other retirement
of any Securities of any class in its capital.
(b) The Borrower shall not, directly or indirectly, at any time while
any Default or Event of Default exists hereunder, make any voluntary prepayment
or voluntary redemption of any kind on any Indebtedness for Borrowed Money
(other than the Obligations), or purchase or otherwise acquire any such
Indebtedness for Borrowed Money.
(c) The Borrower shall not at any time make (whether directly or
indirectly) any payments or other distributions of any kind to any Affiliate, or
transfer or assign (whether directly or indirectly) any Property or assets of
any kind to any Affiliate; EXCLUDING, HOWEVER, from the operation of the
foregoing provisions of this provision:
(i) capital contributions or payments to any Subsidiary or
to the joint venture referred to in section 6.14 hereof, which
are used to purchase from GMAC or other persons not controlled by
the Borrower equity interests in such joint venture pursuant to
put, call or other contractual provisions applicable to the
formation and continuation of the Borrower's direct or indirect
participation in such joint venture;
(ii) payments on other transactions or contracts which are
not prohibited by section 8.6;
(iii) remuneration payable by the Borrower to its employees,
trustees or officers in amounts approved by its board of
trustees;
(iv) reimbursements by the Borrower of the reasonable
business expenses of its employees, trustees and officers
incurred in the ordinary course of business; and
(v) payments, distributions or transfers which are
consolidated or combined on the Borrower's financial statements
and are not prohibited by any other provision of this Agreement.
(d) Notwithstanding any provision of this section 8.3 to the contrary,
the Borrower may make such Distributions as may be necessary to preserve the
Borrower's status and qualification as a REIT, PROVIDED that if, but for this
section 8.3(d) such Distribution would otherwise be prohibited by the terms of
this Agreement, the Borrower shall, prior to making any such Distribution,
provide the Administrative Agent with an opinion of counsel or other evidence
acceptable to the Administrative Agent confirming the necessity of such
Distribution to the preservation of the Borrower's status and qualification as a
REIT. The making of any Distribution under the circumstances described in this
section 8.3(d) shall not excuse any Default or Event of Default hereunder, or
constitute a waiver by the Administrative Agent or any Lender of any rights or
remedies which may be available to it hereunder or under any of the Loan
Documents in the event of a Default or an Event of Default hereunder.
8.4. ACQUISITION OF MARGIN SECURITIES. The Borrower shall not own,
purchase or acquire (or enter into any contract to purchase or acquire) any
"margin security" as defined by any regulation of the Federal Reserve Board as
now in effect or as the same may hereafter be in effect UNLESS, prior to any
such purchase or acquisition, the Administrative Agent shall have received a
satisfactory opinion of counsel to the effect that such purchase or acquisition
will not cause this Agreement or the Notes to be in violation of Regulations G,
T, U, X or any other regulation of the Federal Reserve Board then in effect.
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8.5. LIMITATION ON INDEBTEDNESS. (a) The Borrower will not, and will
not permit any Subsidiary of the Borrower to, and the Management Company will
not, create, assume or have outstanding at any time any Indebtedness for
Borrowed Money, OTHER THAN:
(i) Indebtedness under the Loan Documents;
(ii) the existing Indebtedness described on Annex VIII hereto
(other than any such Indebtedness refinanced hereunder as contemplated
by section 5.1(l)), and any refinancing, extension, renewal or
refunding of any such existing Indebtedness not involving an increase
in the aggregate outstanding principal amount of the Indebtedness so
refinanced, extended, renewed or refunded;
(iii) if at the time of the creation or assumption thereof no
Event of Default shall have occurred and be continuing, or would result
therefrom, additional Indebtedness of the Borrower not otherwise
permitted pursuant to the other clauses of this section 8.5(a),
consisting of short term unsecured borrowings obtained by the Borrower
from a bank or other institutional lender, or in the commercial paper
market, PROVIDED that (A) the outstanding principal balance of all such
borrowings shall not exceed $100,000,000 at any time, and (B) the
aggregate outstanding balance of the Borrower's borrowings in the
commercial paper market shall not exceed at any time the aggregate
unused portions of lines of credit made available to the Borrower for
the purpose of supporting such commercial paper borrowings by banks and
other institutional lenders, together with the amount of any unused
balance of the Total Commitment available hereunder and any unused
portion of any other credit facility otherwise permitted hereunder
which may then be available to the Borrower;
(iv) if at the time of the creation or assumption thereof no
Event of Default shall have occurred and be continuing, or would result
therefrom, additional Indebtedness of the Borrower, any Subsidiary or
the Management Company not otherwise permitted pursuant to the other
clauses of this section 8.5(a), consisting of Indebtedness
("NON-RECOURSE DEBT"), without limitation as to aggregate principal
amount, incurred to finance or refinance the ownership or acquisition
of real property or interests in real property; PROVIDED (A) such
Non-Recourse Debt is secured by mortgages, deeds of trust or deeds to
secure debt encumbering only the real property or real property
interests financed or refinanced thereby, (B) such Non-Recourse Debt is
not guaranteed or otherwise supported, directly or indirectly by the
Borrower or any Subsidiary of the Borrower or the Management Company
(subject to customary guaranties and indemnities for fraud, misuse of
proceeds and environmental matters or such other matters as are
reasonably acceptable to the Administrative Agent under the
circumstances), and (C) the recourse of the applicable lender or
lenders in connection with any such Non-Recourse Debt is limited to the
real property or interests in real property financed or refinanced
thereby (subject to customary exceptions for fraud, misuse of proceeds
and environmental matters or such other matters as are reasonably
acceptable to the Administrative Agent under the circumstances);
(v) if at the time of the creation or assumption thereof no
Event of Default shall have occurred and be continuing, or would result
therefrom, additional Indebtedness of the Borrower not otherwise
permitted pursuant to the other clauses of this section 8.5(a),
consisting of Indebtedness incurred to finance or refinance the
ownership or acquisition of real property or interests in real
property; PROVIDED (A) such Indebtedness is secured by mortgages, deeds
of trust or deeds to secure debt encumbering only the real property or
interests in real property interests so financed or refinanced, (B) the
Indebtedness secured by any such real property or real property
interests does not exceed 100% of the fair value thereof (as determined
by the Borrower in good faith), and (C) the aggregate principal amount
of all Indebtedness referred to in this clause (v) outstanding at any
time does not exceed $40,000,000 (the foregoing amount shall be
increased, but not above $65,000,000, to the extent the proceeds of any
Indebtedness referred to in this clause (v) are used to purchase from
GMAC or other persons (other than the Borrower and
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persons controlled by the Borrower) equity interests in the joint
venture referred to in section 6.14 hereof, or are used to make capital
contributions to such joint venture to fund any such purchase by the
joint venture);
(vi) if the joint venture referred to in section 6.14 ever
becomes a Subsidiary of the Borrower, the Indebtedness of such joint
venture outstanding at the time it becomes a Subsidiary of the
Borrower, and any refinancing, extension, renewal or refunding of any
such Indebtedness not involving an increase in the aggregate
outstanding principal amount of the Indebtedness so refinanced,
extended, renewed or refunded, PROVIDED that such Indebtedness is not
guaranteed or otherwise supported, directly or indirectly by the
Borrower or any other Subsidiary of the Borrower or the Management
Company (subject to customary guaranties and indemnities for fraud,
misuse of proceeds and environmental matters or such other matters as
are reasonably acceptable to the Administrative Agent under the
circumstances);
(vii) Indebtedness of any Subsidiary of the Borrower owed to
the Borrower or to another Subsidiary of the Borrower; any Indebtedness
owed by the Management Company to the Borrower and its Subsidiaries and
arising out of normal working capital requirements of the Management
Company incident to its management activities relating to Property of
the Borrower and its Subsidiaries; and Indebtedness of the Borrower
owed to its Subsidiaries and the management Company, PROVIDED such
Indebtedness has been subordinated to the Obligations pursuant to
subordination provisions satisfactory in form and substance to the
Required Lenders;
(viii) Indebtedness under Interest Rate Agreements not
constituting Loan Documents, entered into as contemplated by section
7.18 hereof;
(ix) if at the time of the creation or assumption thereof no
Event of Default shall have occurred and be continuing, or would result
therefrom, additional Indebtedness of the Borrower not otherwise
permitted pursuant to the other clauses of this section 8.5(a),
consisting of Indebtedness secured by Liens permitted by clause (k) of
section 8.7 hereof, PROVIDED that the aggregate outstanding principal
amount thereof does not exceed $1,000,000 at any time;
(x) if approved in writing by the Required Lenders prior to
the time of the creation or assumption thereof, additional Indebtedness
of the Borrower and its Subsidiaries not otherwise permitted pursuant
to the other clauses of this section 8.5(a), consisting of Capitalized
Lease Obligations or other Contingent Obligations; and
(xi) if at the time of the creation or assumption thereof no
Event of Default shall have occurred and be continuing, or would result
therefrom, additional unsecured Indebtedness of the Borrower not
otherwise permitted pursuant to the foregoing clauses of this section
8.5(a), consisting of Subordinated Indebtedness;
PROVIDED, that if any such Indebtedness referred to in clause (iv), (v) or (vi)
above is incurred, created, assumed or becomes outstanding in connection with
the acquisition of any Property having a fair value in excess of $10,000,000,
the Borrower shall have delivered to the Administrative Agent at least two
Business Days prior to such incurrence, creation or assumption a certificate of
a responsible financial officer of the Borrower demonstrating that the
Borrower's PRO FORMA projected ratios to which reference is made in section
7.16(a), (b) and (c), for the succeeding four fiscal quarters and giving effect
to such acquisition and such Indebtedness and assuming an occupancy rate with
respect to rental property equal to the lesser of 90% occupancy or the actual
rate of occupancy, will, based on the assumptions contained in such PRO FORMA
projections (which shall in all events be reasonable), meet the requirements of
such section 7.16(a), (b) and (c) as of the end of each of such fiscal quarters.
(b) The Borrower shall provide the Lenders with written notice,
quarterly within 45 days after the end of each fiscal quarter of the Borrower
during the pendency of this Agreement, showing in detail acceptable to the
Required Lenders the amount, nature, purpose and material terms of the
Borrower's Indebtedness for Borrowed
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Money (other than the Indebtedness represented by the Loan Documents). Such
notice shall be accompanied by a statement in detail and content acceptable to
the Required Lenders demonstrating compliance with all of the requirements
established by this Agreement, including without limitation those which are
contained in section 8.5(a), and in section 7.16.
8.6. GUARANTEES. The Borrower shall not, or permit any of its
Subsidiaries to, and the Management Company shall not, guarantee, directly or
indirectly, any Indebtedness for Borrowed Money of any other person, except by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business; PROVIDED that nothing in this covenant shall be deemed to
restrict the Borrower, any Subsidiary or the Management Company from entering
into any customary guaranty or indemnity for fraud, misuse of proceeds or
environmental or other matters of the nature referred to in clause (iv) of
section 8.5(a) hereof.
8.7. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, and the Management Company will not, create, incur, assume or
suffer to exist any Lien upon or with respect to any Property or assets of any
kind (real or personal, tangible or intangible) of the Borrower or any such
Subsidiary or the Management Company whether now owned or hereafter acquired, or
sell any such Property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property or assets (including sales
of accounts or rents receivable or notes with recourse to the Borrower or any of
its Subsidiaries or the Management Company, other than for purposes of
collection in the ordinary course of business) or assign any right to receive
income, or file or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute,
EXCEPT:
(a) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(b) Liens in respect of Property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate materially detract from the value of such Property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any Subsidiary or the Management Company;
(c) Liens created by this Agreement or the other Loan
Documents;
(d) Liens securing Indebtedness permitted by clause (ii),
(iv), (v) or (vi) of section 8.5(a), PROVIDED any such Lien attaches
only to the Property or assets financed or refinanced by such
Indebtedness;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under
section 9.1(j);
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money);
(g) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and not otherwise prohibited by the terms of any Loan
Document;
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(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from financing statements regarding leases
not in violation of this Agreement;
(j) Liens created by virtue of Capitalized Lease Obligations
or other lease obligations not prohibited by the terms of this
Agreement, PROVIDED that such Liens are only in respect of the Property
or assets subject to, and secure only, the respective Capital Lease or
other lease obligation;
(k) Liens (i) placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any Subsidiary at the
time of (or within 180 days after) the acquisition thereof by the
Borrower or any such Subsidiary to secure Indebtedness incurred to pay
all or a portion of the purchase price thereof, PROVIDED that the Lien
encumbering the equipment or machinery so acquired does not encumber
any other asset of the Borrower or any Subsidiary; or (ii) existing on
specific tangible assets at the time acquired by the Borrower or any
such Subsidiary or on assets of a person at the time such person first
becomes a Subsidiary of the Borrower, PROVIDED that (A) any such Liens
were not created at the time of or in contemplation of the acquisition
of such assets or person by the Borrower or any of its Subsidiaries,
(B) in the case of any such acquisition of a person, any such Lien
attaches only to specific tangible assets of such person and not assets
of such person generally, (C) the Indebtedness secured by any such Lien
does not exceed 100% of the fair market value of the asset to which
such lien attaches, determined at the time of the acquisition of such
asset or the time at which such person becomes a Subsidiary of the
Borrower (except in the circumstances described in clause (ii) above to
the extent such Liens constituted customary purchase money Liens at the
time of incurrence entered into in the ordinary course of business),
and (D) the Indebtedness secured thereby is permitted by section
8.5(a);
(l) Liens on the Property of any person at the time such
person becomes a Subsidiary of the Borrower, PROVIDED that no such Lien
is created in anticipation of such person becoming a Subsidiary of the
Borrower; and Liens securing any Indebtedness incurred to refinance any
Indebtedness secured by any such Lien, PROVIDED any such Lien attaches
only to the Property or assets secured by the Indebtedness which is so
refinanced;
(m) Liens, not securing Indebtedness for Borrowed Money,
granted to (i) partners or participants in joint venture arrangements
(or any of their Affiliates), securing performance by the Borrower or a
Subsidiary of obligations to make capital contributions or perform
other obligations associated with participation in such partnership or
joint venture, or (ii) persons with whom the Borrower or a Subsidiary
has agreed to exchange any Property, to secure the Borrower's or such
Subsidiary's obligations in connection therewith; and
(n) Permitted Encumbrances.
8.8. SALES OF ASSETS, ETC. The Borrower shall not sell or otherwise
transfer, or permit any Subsidiary to sell or otherwise transfer, directly or
indirectly (by merger or otherwise), any assets or other Property (including,
without limitation, any shares of capital stock of any Subsidiary) outside of
the ordinary course of business, EXCEPT THAT (i) the foregoing restriction shall
not apply to transfers by a Subsidiary of the Borrower to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower, or by the Borrower to a Wholly-Owned
Subsidiary of the Borrower; (ii) if no Event of Default shall have occurred and
be continuing or would result therefrom, the Borrower or any Subsidiary may sell
or otherwise transfer, outside of the ordinary course of business, any Mortgaged
Property for consideration consisting of cash, stock, securities or other
Property having a fair value at least equal to the Mortgaged Property so sold or
otherwise transferred, in connection with the addition or substitution of an
Additional
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Property or Substitute Property in compliance with the requirements of section
7.17; and (iii) if no Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower or any Subsidiary may sell or otherwise
transfer, outside of the ordinary course of business, assets or other Property,
other than any Mortgaged Property, for consideration consisting of cash, stock,
securities or other Property having a fair value at least equal to the assets or
other Property so sold or otherwise transferred (as determined by the Borrower
in good faith), PROVIDED that the net cash proceeds of any such sale or transfer
are (A) reinvested in the business of the Borrower and its Subsidiaries within
six months following receipt thereof, or (B) applied to the repayment,
prepayment or other retirement of Indebtedness for Borrowed Money, or (C) to the
extent not so reinvested or applied, are paid as a Distribution in accordance
with section 8.3 hereof. Notwithstanding the foregoing, any sale or other
transfer of equity interests in the joint venture referred to in section 6.14
hereof which is made for nominal or below market value consideration pursuant to
contractual provisions governing the formation or operation of such joint
venture as a consequence of the failure to make capital contributions to such
joint venture, shall not be prohibited by the terms of this section 8.8.
8.9. LEASING OF ELIGIBLE REAL ESTATE. Neither the Borrower nor the
Management Company will enter into, or permit to exist, any lease of all or any
portion of any of the Eligible Real Estate, OTHER THAN:
(a) presently existing occupancy leases of portions of any
Property constituting a Mortgaged Property, and renewals of any thereof
entered into in the ordinary course of business at lease rates and
other terms which are consistent with prevailing market conditions in
the area at the time of execution or renewal thereof, PROVIDED any such
lease which covers more than 40,000 square feet is subject and
subordinate to the Lien of the Mortgage covering such Mortgaged
Property or the tenant has entered into a subordination and
non-disturbance agreement with respect thereto which is satisfactory in
form and substance to the Administrative Agent;
(b) occupancy leases of portions of any Property constituting
a Mortgaged Property, entered into or renewed after the Initial
Borrowing Date in the ordinary course of business at lease rates and
other terms which are consistent with prevailing market conditions in
the area at the time of execution or renewal thereof, PROVIDED any such
lease is subject and subordinate to the Lien of the Mortgage covering
such Mortgaged Property or the tenant has entered into a subordination
and non-disturbance agreement with respect thereto which is
satisfactory in form and substance to the Administrative Agent, and,
PROVIDED, FURTHER, that in the case of any such lease which (i) covers
more than 40,000 square feet of space, or (ii) has a basic term,
including any renewals at the option of the tenant at fixed rental
rates, in excess of 15 years, the Borrower shall have provided to the
Administrative Agent at least 10 days prior to the execution of any
commitment therefor a notice describing in reasonable detail the
principal terms thereof.
8.10. TRANSACTIONS WITH AFFILIATES. The Borrower shall not enter into
or participate in any agreements or transactions of any kind with any Affiliates
of the Borrower, EXCEPT: (i) agreements or transactions that individually
produce annual payments of less than $50,000; (ii) agreements or transactions
entered into in the ordinary course of business on an arms-length basis; or
(iii) agreements, including but not limited to net-lease arrangements with the
Management Company which are permitted pursuant to section 8.3(c)(v).
8.11. LIMITATION ON CERTAIN ACTIONS. In the event of any conflict
between the provisions of this section 8 and the financial covenants set forth
in section 7.16, the latter shall control. The Borrower shall not take any
action otherwise permitted by any provision of this section 8 if such action
would result in a violation of any one or more, or all, of the financial
covenants set forth in section 7.16.
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SECTION 9. EVENTS OF DEFAULT; REMEDIES.
9.1. EVENTS OF DEFAULT. The occurrence of any of the following
specified events (each an "EVENT OF DEFAULT") shall constitute an Event of
Default:
(A) PRINCIPAL AND INTEREST: any principal, interest or any other
sum payable under this Agreement or the Notes shall not be paid within
five days of when due;
(B) REPRESENTATION AND WARRANTIES: any representation or warranty
at any time made by or on behalf of the Borrower or the Management
Company in this Agreement, any Loan Document or in any certificate,
written report or statement furnished to the Administrative Agent or
the Lenders in connection therewith shall prove to have been untrue,
incorrect or breached in any material respect on or as of the date on
which the same was made or was deemed to have been made or repeated;
(C) CERTAIN COVENANTS: the Borrower or the Management Company
shall fail to comply with any of the covenants set forth in sections
7.2(b), 7.5(a), 7.8(a), 7.16, 8.2, 8.3, 8.5, 8.6, 8.7, 8.8 or 8.9;
(D) OTHER COVENANTS: the Borrower or the Management Company shall
fail to perform, comply with or observe any other covenant or
agreement contained in this Agreement and such failure or breach shall
continue for more than 30 days after the earlier of the date on which
the Borrower shall have first become aware of such failure or breach
or the Administrative Agent or any Lender shall have first notified
the Borrower of such failure or breach (PROVIDED, HOWEVER, that solely
with respect to defaults of the nature described in this section
9.1(d) which cannot be cured by the payment of money and cannot using
appropriate diligence be cured within such 30-day period, the Borrower
shall not be deemed to have defaulted hereunder, PROVIDED that the
Borrower shall commence reasonable curative action with respect to
such matter within such 30-day period and shall thereafter diligently
and continuously prosecute the same to a timely completion);
(E) LOAN DOCUMENTS: the Borrower or the Management Company shall
fail to observe or perform in any material fashion any of its
obligations or undertakings under any Loan Document other than this
Agreement, and such failure shall continue beyond the applicable
period of grace (if any) provided therein, or any Loan Document shall
cease, except as specifically provided herein, to be legal, valid,
binding or enforceable in accordance with its terms;
(F) LITIGATION: any action at law, suit in equity or other legal
or administrative proceeding to amend, cancel, revoke or rescind any
Loan Document shall be commenced by or on behalf of the Borrower or
the Management Company or by any court or any other Governmental
Authority, or any court or any other Governmental Authority shall make
a determination, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the covenants, agreements or
obligations of the Borrower or the Management Company hereunder or
under any one or more of the other Loan Documents are illegal, invalid
or unenforceable in accordance with the terms thereof;
(G) ACCELERATION OF OTHER INDEBTEDNESS: the Borrower or any
Subsidiary shall default under any agreement, instrument or contract
relating to any Indebtedness of the Borrower or any such Subsidiary or
by which any of its assets or Property is bound, other than any Non-
Recourse Debt, and such default shall result in any such Indebtedness
of the Borrower or any such Subsidiary having an outstanding principal
balance, immediately prior to the occurrence of such default, of
$1,000,000 or more becoming or being declared due and payable prior to
the date on which such Indebtedness or any part thereof would
otherwise have become due and payable;
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(H) INSOLVENCY-VOLUNTARY: if the Borrower or the Management
Company shall: (1) take any action for the termination, winding up,
liquidation or dissolution of the Borrower or the Management Company,
as the case may be; (2) make a general assignment for the benefit of
creditors, become insolvent or be unable to pay its debts as they
mature; (3) file a petition in voluntary liquidation or bankruptcy; (4)
file a petition or answer or consent seeking the reorganization of the
Borrower or the Management Company, as the case may be, or the
readjustment of any of the Indebtedness of the Borrower or the
Management Company, as the case may be; (5) commence any case or
proceeding under applicable insolvency or bankruptcy laws now or
hereafter existing; (6) consent to the appointment of any receiver,
administrator, custodian, liquidator or trustee of all or any part of
its assets or Property; (7) take any corporate or other organizational
action for the purpose of effecting any of the foregoing; or (8) be
adjudicated as bankrupt or insolvent;
(I) INSOLVENCY-INVOLUNTARY: if any petition for any
proceedings in bankruptcy or liquidation or for the reorganization or
readjustment of Indebtedness of the Borrower or the Management Company,
as the case may be, shall be filed, or any case or proceeding shall be
commenced, under any applicable bankruptcy or insolvency laws now or
hereafter existing, against the Borrower or the Management Company, as
the case may be, or any receiver, administrator, custodian, liquidator
or trustee shall be appointed for the Borrower or the Management
Company, as the case may be, or for all or any part of the Borrower's
or the Management Company's, as the case may be, assets or Property, or
any order for relief shall be entered in a proceeding with respect to
the Borrower or the Management Company, as the case may be, under the
provisions of the United States Bankruptcy Code, as amended, and such
proceeding or such appointment shall not be dismissed or discharged, as
the case may be, within 45 days after the filing or appointment
thereof;
(J) JUDGMENTS, ETC.: any final and non-appealable judgment,
order or decree for the payment of money in excess of $500,000 shall be
rendered against the Borrower or the Management Company, as the case
may be, and shall not be discharged within 30 days after the date of
the entry thereof;
(K) ERISA: any Termination Event shall occur and, as of the
date thereof or any subsequent date, the sum of the various liabilities
of the Borrower and its ERISA Affiliates including, without limitation,
any liability to the Pension Benefit Guaranty Corporation or its
successor or to any other party under sections 4062, 4063, or 4064 of
ERISA or any other provision of law resulting from or otherwise
associated with such event exceeds $50,000; or the Borrower or any of
its ERISA Affiliates as an employer under any Multiemployer Plan shall
have made a complete or partial withdrawal from such Multiemployer
Plans and the plan sponsors of such Multiemployer Plans shall have
notified such withdrawing employer that such employer has incurred a
withdrawal liability requiring a payment in an amount exceeding
$50,000; or
(L) LOSS OF LICENSES OR PERMITS: any of the Licenses and
Permits now held or hereafter acquired by the Borrower shall be revoked
or terminated and not renewed and the absence of any such Licenses and
Permits would have a material adverse impact on the business, Property,
prospects, profits or condition (financial or otherwise) of the
Borrower.
9.2. ACCELERATION, ETC. Upon the occurrence of any Event of Default,
and at any time thereafter, if any Event of Default shall then be continuing,
the Administrative Agent shall, upon the written request of the Required
Lenders, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Administrative Agent or any
Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (PROVIDED that, if an Event of
Default specified in section 9.1(h) or (i) shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall
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forthwith terminate immediately and any Commitment Commission shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans, all Unpaid
Drawings and all obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) enforce, as Administrative Agent (or direct the Administrative
Agent to enforce), any or all of the Liens and security interests created
pursuant to the Security Documents; (iv) terminate any Letter of Credit which
may be terminated in accordance with its terms; and (v) direct the Borrower to
pay (and the Borrower hereby agrees that on receipt of such notice or upon the
occurrence of an Event of Default with respect to the Borrower under section
9.1(e), it will pay) to the Administrative Agent an amount of cash equal to the
aggregate Stated Amount of all Letters of Credit then outstanding (such amount
to be held as security after the Borrower's reimbursement obligations in respect
thereof).
9.3. REMEDIES. Upon and during the continuance of an Event of Default,
the Administrative Agent and each Lender may proceed to protect and enforce all
or any of its rights, remedies, powers and privileges under this Agreement, the
Notes or any of the other Loan Documents by action at law, suit in equity or
other appropriate proceedings, whether for specific performance of any covenant
contained in this Agreement, the Notes or any of the other Loan Documents, or in
aid of the exercise of any power granted to the Administrative Agent or any
Lender herein or therein.
9.4. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the Security Documents, the other Loan Documents or under any other
documents relating to this Agreement shall, unless otherwise required by the
terms of the Security Documents, the other Loan Documents or by applicable law,
be applied as follows:
(I) FIRST, to the payment of all expenses (to the extent not paid
by the Borrower) incurred by the Administrative Agent and the Lenders
in connection with the exercise of such remedies, including, without
limitation, all costs and expenses of collection, reasonable
attorneys' fees, court costs and foreclosure expenses;
(II) SECOND, to the payment PRO RATA of interest then accrued on
the outstanding Loans;
(III) THIRD, to the payment PRO RATA of any fees then accrued and
payable to the Administrative Agent, any Letter of Credit Issuer or
any Lender under this Agreement in respect of the Loans or the Letter
of Credit Outstandings;
(IV) FOURTH, to the payment PRO RATA of (A) the principal balance
then owing on the outstanding Loans, (B) the Stated Amount of the
Letter of Credit Outstandings (to be held and applied by the
Administrative Agent as security for the reimbursement obligations in
respect thereof), and (C) the amounts owing in respect of any
termination of any of the Designated Interest Rate Agreements;
(V) FIFTH, to the payment to the Lenders of any amounts then
accrued and unpaid under sections 1.10, 1.11, 2.5 and 4.4 hereof, and
if such proceeds are insufficient to pay such amounts in full, to the
payment of such amounts PRO RATA;
(VI) SIXTH, to the payment PRO RATA of all other amounts owed by
the Borrower or the Management Company to the Administrative Agent, to
any Letter of Credit Issuer or any Lender under this Agreement, any
Security Document, or any other Loan Document, and if such proceeds
are insufficient to pay such amounts in full, to the payment of such
amounts PRO RATA; and
(VII) FINALLY, any remaining surplus after all of the Obligations
have been paid in full, to the Borrower or to whomsoever shall be
entitled thereto.
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SECTION 10. DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular:
"ACCOUNTANTS" means Arthur Andersen LLP, or another "Big Six"
firm of certified public accountants selected by the Borrower from time
to time as its auditing and accounting firm.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to
the Administrative Agent appointed pursuant to section 11.9.
"ADJUSTED NET WORTH" means combined shareholders' equity, as
determined for the Borrower and its Subsidiaries and the Management
Company on a combined basis in accordance with GAAP, REDUCED by the sum
of (i) any revaluation in the book value of any asset resulting in the
write-up thereof which is reflected in the financial statements of the
Borrower subsequent to June 30, 1996, other than write-ups permitted
under GAAP, (ii) goodwill, (iii) organizational expenses and other
items treated as intangibles in accordance with GAAP, to the extent in
excess of the aggregate amount thereof at June 30, 1996 (which was
$9,008,000), as such aggregate amount may be amortized in accordance
with GAAP, (iv) all unamortized debt discount and expense (exclusive of
$3,926,000 thereof as of June 30, 1996, as such amount is amortized in
accordance with GAAP), and (v) the aggregate amount of all deferred
charges (exclusive of $5,082,000 thereof as of June 30, 1996, as such
amount is amortized in accordance with GAAP).
"AFFILIATE" means, in relation to any person (herein, an
"AFFILIATED PERSON"), any person (other than a Subsidiary) which
(directly or indirectly) controls or is controlled by or is under
common control with such Affiliated Person. For the purposes of this
definition, the term "control" shall mean the possession (directly or
indirectly) of the power to direct or to cause the direction of the
management or the policies of a person, whether through the ownership
of shares of any class in the capital or any other voting securities of
such person, by contract or otherwise.
"AGGREGATE BORROWING BASE" means, as at any time during the
pendency of this Agreement, the sum of the Borrowing Bases for each
Mortgaged Property then included in the Eligible Real Estate.
"AGGREGATE MEASURED SWAP CREDIT RISK" means, as at any time
during the pendency of this Agreement that an Interest Rate Agreement
is in effect, the amount determined by the Administrative Agent in
accordance with the terms of such Interest Rate Agreement as being the
Borrower's measured credit risk thereunder to the counterparty at such
time.
"AGREEMENT" shall mean this Credit Agreement, including all
the Schedules and Exhibits hereto, as the same may be from time to time
further modified, amended and/or supplemented.
"APPLICABLE PERCENTAGE" shall mean in the case of Loans
maintained as Eurodollar Loans, 215 basis points per annum; PROVIDED
that if the Borrower does not receive net cash proceeds (i.e., net of
underwriting discounts and commissions, placement and advisory fees,
and other customary fees, costs and expenses associated therewith) of
at least $45,000,000 from the sale or issuance of its shares of
beneficial interest (or its preferred equity securities not subject to
mandatory redemption, other than as a result of a change of control,
prior to the PF Maturity Date) in an underwritten public offering or
private placement with investors (other than any sale or issuance to
management or employees) which is completed after the Initial Borrowing
Date and on or prior to October 1, 1997, the Applicable Percentage
shall increase to 240 basis points per
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annum, effective October 1, 1997; and, PROVIDED, FURTHER, that if after
the Initial Borrowing Date the Borrower receives net cash proceeds of
at least $45,000,000 from such an underwritten equity offering or
private placement of such shares of beneficial interest or such
preferred equity securities, and so notifies the Administrative Agent
thereof in writing, the Applicable Margin will decrease to 200 basis
points per annum, effective on the first Business Day of the month next
succeeding the month in which such net cash proceeds are so received
and the Administrative Agent is so notified thereof.
"APPRAISED VALUE" means, as to each Additional Property or
Substitute Property, the fair market value of such property as
determined by an appraiser who is a member of the American Institute of
Real Estate Appraisers (or has a corresponding professional designation
acceptable to the Administrative Agent), pursuant to an appraisal
acceptable to the Administrative Agent and the Required Lenders
prepared and delivered in conformity with any and all regulations and
legal requirements applicable to the Lenders with respect to real
property collateral.
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement
substantially in the form of Exhibit H hereto.
"AUTHORIZED OFFICER" shall mean any executive officer or
employee of the Borrower or the Management Company designated as such
in writing to the Administrative Agent by the Borrower or the
Management Company.
"BASE RATE" shall mean, for any period, a fluctuating interest
rate per annum as shall be in effect from time to time which rate per
annum shall at all times be equal to the greater of (i) the rate of
interest established by National City Bank in Cleveland, Ohio, from
time to time, as its prime rate, whether or not publicly announced,
which interest rate may or may not be the lowest rate charged by it for
commercial loans or other extensions of credit; and (ii) the Federal
Funds Effective Rate in effect from time to time PLUS 1/2 of 1% per
annum.
"BASE RATE LOAN" shall mean each Loan bearing interest at the
rates provided in section 1.8(a).
"BORROWER" shall have the meaning provided in the first
paragraph of this Agreement.
"BORROWING" shall mean the incurrence of PF Loans or SF Loans,
as the case may be, consisting of one Type of Loan, by the Borrower
from all of the Lenders having Commitments in respect of the Primary
Facility or the Secondary Facility, as the case may be, on a PRO RATA
basis on a given date (or resulting from conversions on a given date),
having in the case of Eurodollar Loans the same Interest Period.
"BORROWING BASE" shall mean, with respect to each Mortgaged
Property comprised within the Eligible Real Estate, the value ascribed
to such Mortgaged Property for certain purposes in respect of the
transactions contemplated by this Agreement, and shall be calculated
and reported, quarterly, by dividing such Mortgaged Property's Property
NOI by the product resulting from the multiplication of such Mortgaged
Property's Coverage Factor by its Market Constant, to-wit:
Property NOI
-------------------------------------
Borrowing Base = (Coverage Factor) x (Market Constant)
As of the date hereof, the initial Borrowing Base has been determined
to be $90,500,000.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and
any day which shall be in Cleveland, Ohio a legal
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holiday or a day on which banking institutions are authorized by law or
other governmental actions to close and (ii) with respect to all
notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for
trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"CAPITAL LEASE" as applied to any person shall mean any lease
of any property (whether real, personal or mixed) by that person as
lessee which, in conformity with GAAP, is accounted for as a capital
lease on the balance sheet of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations
under Capital Leases of the Borrower or any of its Subsidiaries in each
case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"CASH EQUIVALENTS" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (PROVIDED that the
full faith and credit of the United States of America is pledged in
support thereof) having maturities of not more than one year from the
date of acquisition, (ii) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (x) any Lender or
(y) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank, an "APPROVED LENDER"), in each
case with maturities of not more than one year from the date of
acquisition, (iii) commercial paper issued by any Lender or Approved
Lender or by the parent company of any Lender or Approved Lender and
commercial paper issued by, or guaranteed by, any industrial or
financial company with a short-term commercial paper rating of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or guaranteed by any industrial company
with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within one year after the date of acquisition
and (iv) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses
(i) through (iii) above.
"CHANGE OF CONTROL" shall mean and include (i) during any
period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Borrower's trustees (together
with any new trustees whose election by the Borrower's trustees or
whose nomination for election by the Borrower's shareholders was
approved by a vote of at least two-thirds of the trustees then still in
office who either were trustees at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the trustees then in
office; (ii) any person or group (as such term is defined in section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934
ACT")), shall acquire, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more
than 35%, on a fully diluted basis, of the economic or voting interest
in the Borrower's shares of beneficial interest (or other equity
securities equivalent thereto); and/or (iii) any "change in control" or
any similar term as defined in any of the indentures, credit agreements
or other instruments governing any Indebtedness of the Borrower or any
of its Subsidiaries, in circumstances where the holders of such
securities or indebtedness (or an agent or trustee therefor) exercise
rights upon the occurrence of a "change in control" to require
prepayment, redemption or repurchase by the Borrower involving an
aggregate payment by the Borrower in excess of $1,000,000, or the
Borrower otherwise becomes obligated upon the occurrence of such a
"change in control" to make any such payment.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to the Code are to the
Code, as in effect at the Effective Date and any subsequent provisions
of the Code, amendatory thereof, supplemental thereto or substituted
therefor.
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"COLLATERAL" means any and all rights and interests in or to
property now or hereafter pledged, given or granted as security for the
Obligations pursuant to any of the Loan Documents, including, without
limitation, those Mortgaged Properties which are more particularly
described in the forms of Mortgages attached as Exhibits hereto.
"COMMITMENT" shall mean for each Lender its PF Commitment or
its SF Commitment, or both if such Lender shall have both a PF
Commitment and an SF Commitment.
"COMMITMENT COMMISSION" shall have the meaning provided in
section 3.1(a).
"CREDIT EVENT" shall mean the making of any Loans and/or the
issuance of any Letter of Credit.
"COMPLIANCE CERTIFICATE" means a certificate, substantially in
the form of Exhibit K, evidencing the Borrower's compliance with the
requirements imposed upon it by this Agreement, to be furnished to the
Lenders quarterly.
"CONTINGENT OBLIGATION" means any direct or indirect
liability, contingent or otherwise, with respect to any Indebtedness,
lease, dividend, letter of credit, banker's acceptance or other
obligation of another person incurred to provide assurance to the
obligee of such obligation that such obligation will be paid or
discharged, that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected (in whole or
in part) against loss in respect thereof. Contingent Obligations shall
include, without limitation, (i) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with
recourse by any person of the obligation of another person; (ii) any
liability for the obligations of another person through any agreement
(contingent or otherwise) (A) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise),
(B) to maintain the solvency of any balance sheet item, level of income
or financial condition of another, or (C) to make take-or-pay,
pay-or-play or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, if in the
case of any agreement described under subclauses (A), (B) or (C) of
this sentence the purpose or intent thereof is to provide the assurance
described above. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guaranteed or otherwise supported.
"COVERAGE FACTOR" shall mean the factor, determined by the
Administrative Agent from time to time on not less than 30 days' prior
written notice to the Borrower and the Lenders, with respect to each
respective Mortgaged Property included as Eligible Real Estate, by
which the Market Constant for such Mortgaged Property shall be
multiplied to determine the denominator used to calculate the Borrowing
Base attributable to such Mortgaged Property. In determining any
Coverage Factor for any Mortgaged Property or any changes therein (i)
the Administrative Agent shall make such determinations (other than the
initial determinations set forth on Annex III) only pursuant to
instructions from, or with the consent of, the Required Lenders, and
(ii) no Coverage Factor shall ever be less than 1.2X nor greater than
1.3X. The initial Coverage Factor for each initial Mortgaged Property
is set forth on Annex III.
"CREDIT PARTY" means the Borrower, the Management Company and
any Affiliate of either which shall have executed and delivered any
Loan Document.
"DECLARATION OF TRUST" means the Borrower's Amended
Declaration of Trust, dated July 25, 1986, as the same may hereafter be
amended from time to time.
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"DEFAULT" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with respect to
which a Lender Default is in effect.
"DISTRIBUTION" means:
(i) the declaration or payment of any dividends or
other distributions on or in respect of capital stock or other
equity interests, including but not limited to certificates of
beneficial interest (except distributions in such equity
interests); or
(ii) the redemption, acquisition or other retirement
of Securities, except such redemptions, acquisitions or other
retirements made as a part of the same transaction from the
net proceeds of the sale of such Securities.
"EBITDA" means, for any fiscal quarter or other fiscal period
of the Borrower, on a combined basis for the Borrower and its
Subsidiaries and the Management Company, the Borrower's Net Income for
such fiscal quarter or other fiscal period, increased by the sum for
such quarter or period of interest expense, income and franchise tax
expense, and amortization and depreciation (in each case as determined
in accordance with GAAP) deducted in determining Net Income for such
quarter or period.
"EFFECTIVE DATE" shall have the meaning provided in section
12.10.
"ELIGIBLE REAL ESTATE" means all of the Mortgaged Properties.
"ELIGIBLE TRANSFEREE" shall mean and include a commercial
bank, financial institution or other "accredited investor" (as defined
in SEC Regulation D), in each case which is not a direct competitor of
the Borrower or engaged in the same or similar business as the
Borrower, or any of its respective Subsidiaries or is not an Affiliate
of any such competitors of the Borrower or any of its respective
Subsidiaries.
"EMPLOYEE BENEFIT PLAN" means an "employee benefit plan" as
defined in Section 3(3) of ERISA.
"ENVIRONMENTAL INDEMNITY AGREEMENTS" means the environmental
indemnity agreements now or hereafter executed and delivered by the
Borrower to the Administrative Agent, substantially in the form of
Exhibit G hereto.
"ENVIRONMENTAL LAWS" means all present and future laws,
statutes, ordinances, rules, regulations, orders, and determinations of
any Federal, state or local governmental authority pertaining to
health, protection of the environment, natural resources, conservation,
wildlife, waste management, regulation of activities involving
Hazardous Substances, and pollution, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
("SUPERFUND" or "CERCLA"), 42 U.S.C. sec. 9601 ET SEQ., the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. sec.
9601(20)(D), the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. sec. 6901 ET SEQ., the Federal Water Pollution Control Act, as
amended by the Clean Water Act (the "CLEAN WATER ACT"), 33 U.S.C. sec.
1251 ET SEQ., the Clean Air Act ("CAA"), 42 U.S.C. sec. 7401 ET SEQ.,
and the Toxic Substances Control Act, 15 U.S.C. sec. 2601 ET SEQ.,
together with any and all applicable licenses, permits or governmental
approvals pertaining to, or establishing standards with respect to, any
of the foregoing matters, as any of the foregoing may be amended or
supplemented.
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"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
Liens, notices of non-compliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit
issued under any such law (hereafter "CLAIMS"), including, without
limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law,
and (b) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the storage, treatment or Release (as
defined in CERCLA) of any Hazardous Substances or arising from alleged
injury or threat of injury to health, safety or the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974 and the rules and regulations issued thereunder, as the same may
be amended from time to time, and including any successor statute.
"ERISA AFFILIATE" means, in relation to any person, any trade
or business (whether or not incorporated) which is a member of a group
of which that person is a member and which is under common control with
such person within the meaning of the regulations promulgated under
Section 414 of the Code, as amended.
"ERISA LIABILITIES" means the aggregate of all unfunded vested
benefits under any plan of the Borrower or any ERISA Affiliate of the
Borrower under any Plan covered by ERISA that is not a Multi-employer
Plan, and all potential withdrawal liabilities of any thereof under all
Multiemployer Plans.
"EURODOLLAR LOANS" shall mean each Loan bearing interest at
the rates provided in section 1.8(b).
"EURODOLLAR RATE" shall mean with respect to each Interest
Period for a Eurodollar Loan, (A) the offered quotation to first-class
banks in the interbank Eurodollar market, as determined by the
Administrative Agent for dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan
of the Administrative Agent for which an interest rate is then being
determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loan, determined as of 11:00 A.M. (London
time) on the date which is two Business Days prior to the commencement
of such Interest Period, in each case divided (and rounded upward to
the next whole multiple of 1/16 of 1%) by (B) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation
D).
"EVENT OF DEFAULT" shall have the meaning provided in section
9.1.
"EXPIRATION DATE" shall mean September 30, 1996.
"FACILITY" shall mean either the Primary Facility or the
Secondary Facility, or both if the context so requires.
"FACING FEE" shall have the meaning provided in section 3.1(c)
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds transactions
with members of the Federal Reserve System arranged by Federal Funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding
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Business Day) by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the
Administrative Agent from three Federal Funds brokers of recognized
standing selected by the Administrative Agent.
"FEES" shall mean all amounts payable pursuant to, or referred
to in, section 3.1.
"FUNDS FROM OPERATIONS" means, for any fiscal period of the
Borrower, on a combined basis for the Borrower and its Subsidiaries and
the Management Company, the Borrower's Net Income PLUS depreciation and
amortization expenses for such period.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means
generally accepted accounting principles in effect from time to time in
the United States, consistently applied as regards any specific fiscal
period.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEED PENSION PLAN" means any pension plan maintained by
the Borrower or any ERISA Affiliate of the Borrower, or to which the
Borrower or any ERISA Affiliate contributes, some or all of the
benefits under which are guaranteed by the Pension Benefit Guaranty
Corporation within the U.S. Department of Labor.
"HAZARDOUS SUBSTANCES" means (i) any hazardous wastes and/or
toxic chemicals, materials, substances or wastes as defined by or for
the purposes of any of the Environmental Laws; (ii) any "oil", as
defined by the Clean Water Act, as amended from time to time, and
regulations promulgated thereunder (including crude oil or any fraction
thereof and any petroleum products or derivatives thereof); (iii) any
substance, the presence of which is prohibited, regulated or controlled
by any other applicable federal or state or local laws, regulations,
statutes or ordinances now in force or hereafter enacted relating to
waste disposal or environmental protection with respect to the exposure
to, or manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, emission, discharge, disposal,
abatement, cleanup, removal, remediation or handling of any such
substances; (iv) any asbestos or asbestos-containing materials,
polychlorinated biphenyls ("PCBs") in the form of electrical equipment,
fluorescent light fixtures with ballasts, cooling oils or any other
form, urea formaldehyde, atmospheric radon at levels over four
picocuries per cubic liter; (v) any solid, liquid, gaseous or thermal
irritant or contaminant, such as smoke, vapor, soot, fumes, alkalis,
acids, chemicals, pesticides, herbicides, sewage, industrial sludge or
other similar wastes; (iv) industrial, nuclear or medical by-products;
and (vii) any underground storage tank(s).
"INDEBTEDNESS" means, in relation to any person, at any
particular time, all of the obligations of such person which, in
accordance with GAAP, would be classified as indebtedness upon a
balance sheet (including any footnote thereto) of such person prepared
at such time, and in any event shall include, without limitation:
(i) all indebtedness of such person arising or
incurred under or in respect of (A) any guaranties (whether
direct or indirect) by such person of the indebtedness,
obligations or liabilities of any other person, or (B) any
endorsement by such person of any of the indebtedness,
obligations or liabilities of any other person (otherwise than
as an endorser of negotiable instruments received in the
ordinary course of business and presented to commercial banks
for collection of deposit), or (C) the discount by such
person, with recourse to
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such person, of any of the indebtedness, obligations or
liabilities of any other person;
(ii) all indebtedness of such person arising or
incurred under or in respect of any agreement, contingent or
otherwise made by such person (A) to purchase any indebtedness
of any other person or to advance or supply funds for the
payment or purchase of any indebtedness of any other person or
(B) to purchase, sell or lease (as lessee or lessor) any
property, products, materials or supplies or to purchase or
sell transportation or services, primarily for the purpose of
enabling any other person to make payment of any indebtedness
of such other person or to assure the owner or holder of such
other person's indebtedness against loss, regardless of the
delivery or non-delivery of the property, products, materials
or supplies or the furnishing or non-furnishing of the
transportation or services, or (C) to make any loan, advance,
capital contribution or other investment in any other person
for the purpose of assuring a minimum equity, asset base,
working capital or other balance sheet condition for or as at
any date, or to provide funds for the payment of any
liability, dividend or stock liquidation payment, or otherwise
to supply funds to or in any manner invest in any other
person;
(iii) all indebtedness, obligations and liabilities
secured by or arising under or in respect of any Lien, upon or
in Property owned by such person, even though such person has
not assumed or become liable for the payment of such
indebtedness, obligations and liabilities;
(iv) all indebtedness created or arising under any
conditional sale or other title retention agreement with
respect to Property acquired by such person, even though the
rights and remedies of the seller or lender (or lessor) under
such agreement in the event of default are limited to
repossession or sale of such Property; and
(v) all indebtedness arising or incurred under or
in respect of any Contingent Obligation.
"INDEBTEDNESS FOR BORROWED MONEY" means at any particular
time, all Indebtedness (i) in respect of any money borrowed (including
pursuant to this Agreement); (ii) under or in respect of any Contingent
Obligation (whether direct or indirect) of any money borrowed; (iii)
evidenced by any loan or credit agreement, promissory note, debenture,
bond, guaranty or other similar written obligation to pay money; or
(iv) arising under leases which, in accordance with GAAP, should be
reflected as indebtedness on a balance sheet.
"INTEREST EXPENSE" means, for any period, the aggregate
interest expense of the Borrower and all of the Borrower's Subsidiaries
and the Management Company during such period, determined on a combined
basis in accordance with GAAP.
"INITIAL BORROWING DATE" shall mean the date, on or after the
Effective Date, upon which the conditions specified in section 5.1 are
satisfied.
"INTEREST PERIOD" with respect to any Loan shall mean the
interest period applicable thereto, as determined pursuant to section
1.9.
"INTEREST RATE AGREEMENT" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar
agreement or other similar agreement or arrangement
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designed to protect against fluctuations in interest rates, and all
amendments, extensions, renewals and modifications thereof and any
agreements in replacement thereof or in substitution therefor.
"INVESTMENT" means any investment in any other person by stock
purchase, capital contribution, loan, advance, guaranty of any
Indebtedness or creation or assumption of any other liability in
respect of any Indebtedness of such person (including, without
limitation, any liability of any kind described in clause (i) or (ii)
of the definition of the term "Indebtedness" set forth in this
section), or the transfer or sale of Property (otherwise than in the
ordinary course of the business) to any other person for less than
payment in full in cash of the transfer or sale price or the fair value
thereof (whichever of such price or value is higher).
"LEASE ASSIGNMENTS" mean, collectively, the Assignments of
Rents and Leases now or hereafter executed and delivered by the
Borrower and the Management Company to the Administrative Agent,
substantially in the form of Exhibits E-1 through E-6 hereto.
"LEGAL REQUIREMENTS" means all applicable laws, rules,
regulations, ordinances, judgments, orders, decrees, injunctions,
arbitral awards, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions, boards,
courts, authorities, agencies, and officials and officers thereof, that
are in effect now or at any time in the future.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not
been retracted) of a Lender, in violation of the requirements of this
Agreement, to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payment under section 2.4(c) or
(ii) a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under
section 1.1 and/or section 2.4(c), in the case of either (i) or (ii) as
a result of the appointment of a receiver or conservator with respect
to such Lender at the direction or request of any regulatory agency or
authority.
"LETTER OF CREDIT" shall have the meaning provided in section
2.1(a).
"LETTER OF CREDIT FEE" shall have the meaning provided in
section 3.1(b).
"LETTER OF CREDIT ISSUER" shall mean (i) NCB and/or (ii) such
other Lender that is requested, and agrees, to so act by the Borrower
and is acceptable to the Administrative Agent.
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at anytime, the
sum, without duplication, of (i) the aggregate Stated Amount of all
outstanding Letters of Credit and (ii) the aggregate amount of all
Unpaid Drawings.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in
section 2.2(a).
"LIABILITIES" means, on a combined basis, all indebtedness,
obligations and other liabilities of the Borrower and the Borrower's
Subsidiaries and the Management Company, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent,
joint or several, secured or unsecured, arising by contract, operation
of law or otherwise, which are classified as liabilities in accordance
with GAAP on a combined balance sheet of the Borrower and its
Subsidiaries and the Management Company.
"LICENSES AND PERMITS" means all licenses, permits,
registrations and recordings thereof and all applications for such
licenses, permits and registrations now owned or hereafter acquired by
the Borrower and required or necessary for the business operations of
the Borrower.
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"LIEN" means any lien, mortgage, pledge, security interest,
charge or other encumbrance of any kind, including any conditional sale
or other title retention agreement, any lease in the nature thereof,
and any agreement to give any security interest.
"LOAN" shall have the meaning provided in section 1.1. Loans
shall be classified as either PF Loans or SF Loans and may be Base Rate
Loans or Eurodollar Loans.
"LOAN DOCUMENTS" mean this Agreement, the Notes, the Lease
Assignments, the Mortgages, the Pledge Agreement, the Environmental
Indemnity Agreement, any Designated Interest Rate Agreement and any
other agreement, instrument, certificate or document now or hereafter
executed in connection with or pursuant to this Agreement.
"MARGIN STOCK" shall have the meaning provided in Regulation
U.
"MARKET CONSTANT" means the factor, determined by the
Administrative Agent from time to time on not less than 30 days' prior
written notice to the Borrower and the Lenders, by reference to a
standard level constant payment table for a fully amortizing loan with
a maturity of at least 20 years' (but not more than 25 years')
duration, for use in calculating the Borrowing Base with reference to
Eligible Real Estate. In determining any Market Constant for any
Mortgaged Property or any changes therein (i) the Administrative Agent
shall make such determinations (other than the initial determinations
set forth on Annex III) only pursuant to instructions from, or with the
consent of, the Required Lenders, and (ii) no Market Constant shall
ever be less than 8% nor greater than 12%. The initial Market Constant
factors for the respective Mortgaged Properties comprising the Eligible
Real Estate as of the date hereof are set forth on Annex III. Market
Constant factors for the respective Mortgaged Properties comprising
Eligible Real Estate may be redetermined as of May 1 and as of November
1 of each subsequent full or partial calendar year during the pendency
of this Agreement.
"MINIMUM BORROWING AMOUNT" shall mean (i) for Base Rate Loans,
$500,000, with minimum increments thereafter of $100,000 and (ii) for
Eurodollar Loans, $5,000,000, with minimum increments thereafter of
$1,000,000.
"MOODY'S" shall mean Moody's Investors Service, Inc. and its
successors.
"MORTGAGE" means each of the mortgages in the form of Exhibit
D-1 through D-6 hereto, dated as of the date hereof or such later date
as the property subject thereto becomes a Mortgaged Property and part
of the Collateral, granted by the Borrower and the Management Company
to the Administrative Agent, and any other mortgages which may
hereafter be granted to the Administrative Agent to secure the
Obligations together with any and all amendments, modifications or
supplements thereto.
"MORTGAGED PROPERTIES" means those properties which are now or
hereafter encumbered by Mortgages, but only during the period in which
such properties are so encumbered. The Mortgaged Properties which exist
as of the date of this Agreement are identified on Annex III.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 4001(a) (3) of ERISA which is maintained for employees of
the Borrower, or any ERISA Affiliate of the Borrower.
"NCB" means National City Bank, a national banking
association, and its successors and assigns.
"NET INCOME" or the "BORROWER'S NET INCOME" means the net
income of the Borrower and the Borrower's Subsidiaries and the
Management Company, as computed on a combined basis
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in accordance with GAAP, as reported in the Borrower's most recent
combined financial statements included in the report on Form 10-Q or
10-K, as filed with the SEC; PROVIDED that there shall be excluded from
such net income all items of gain or loss which are properly classified
as extraordinary in accordance with GAAP.
"NON-DEFAULTING LENDER" shall mean each Lender other than a
Defaulting Lender.
"NON-RECOURSE DEBT" shall have the meaning provided in section
8.5(a)(iv).
"NOTE" shall have the meaning provided in section 1.5(a).
"NOTICE OF BORROWING" shall have the meaning provided in
section 1.3(a).
"NOTICE OF CONVERSION" shall have the meaning provided in
section 1.6.
"NOTICE OFFICE" shall mean the office of the Administrative
Agent at National City Center, 1900 East Ninth Street, Cleveland, Ohio
44114, or such other office as the Administrative Agent may designate
to the Borrower from time to time.
"OBLIGATIONS" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to the Administrative Agent or any Lender pursuant to
the terms of this Agreement or any other Loan Document.
"PARTICIPANT" shall have the meaning provided in section
2.4(a).
"PAYMENT OFFICE" shall mean the office of the Administrative
Agent at National City Center, 1900 East Ninth Street, Cleveland, Ohio
44114, or such other office as the Administrative Agent may designate
to the Borrower from time to time.
"PERCENTAGE" shall mean, at any time for each Lender with a
Commitment, the percentage obtained by dividing such Lender's
Commitment by the Total Commitment, PROVIDED that if the Total
Commitment has been terminated, the Percentage of each Lender shall be
determined by dividing such Lender's Commitment immediately prior to
such termination by the Total Commitment immediately prior to such
termination.
"PERMITTED ENCUMBRANCES" means those encumbrances affecting
any Mortgaged Property which are permitted by the Mortgage pertaining
thereto.
"PERSON" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PF COMMITMENT" shall mean, with respect to each Lender, the
amount set forth opposite such Lender's name in Annex I as its "Primary
Facility Commitment" as the same may be reduced from time to time
pursuant to section 3.2, 3.3 and/or 9 or adjusted from time to time as
a result of assignments to or from such Lender pursuant to section
12.4.
"PF LOAN" shall have the meaning provided in section 1.1.
"PF MATURITY DATE" means the second anniversary of the Initial
Borrowing Date, unless extended as provided in section 3.4, or sooner
terminated as herein provided.
"PF PERCENTAGE" shall mean at any time for any Lender with a
PF Commitment, the percentage obtained by dividing such Lender's PF
Commitment by the Total PF Commitment,
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PROVIDED, that if the Total PF Commitment has been terminated, the PF
Percentage for each Lender shall be determined by dividing such
Lender's PF Commitment immediately prior to such termination by the
Total PF Commitment immediately prior to such termination.
"PLEDGED NOTE" means the Promissory Note dated January 27,
1995 in the original principal amount of $6,000,000, made by Crown
Investments Trust and Crown American Investment Company, to the order
of the Borrower, and any promissory notes or other securities issued in
exchange therefor or in replacement thereof.
"PRIMARY FACILITY" means the Facility evidenced by the Total
PF Commitment.
"PROPERTY" means all types of real, personal, tangible,
intangible or mixed property.
"PROPERTY NOI" means, as to each Mortgaged Property included
within the Eligible Real Estate, the annual income produced by the
operation of such Mortgaged Property, LESS normal operating expenses
for such Mortgaged Property for such period. For the purposes of
calculating Property NOI, amortization, depreciation and capital
expenditures for property improvements or tenant alterations for any
Mortgaged Property shall not be considered to be "normal operating
expenses" in respect of such Mortgaged Property.
"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof establishing reserve
requirements.
"REGULATION U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof establishing margin
requirements.
"REIT" means a qualified real estate investment trust, as
defined in the Code.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose
outstanding Loans and Unutilized Commitments constitute at least 75% of
the sum of the total outstanding Loans and Unutilized Commitments of
Non-Defaulting Lenders.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange
Commission or any successor agency.
"SECONDARY FACILITY" means the Facility evidenced by the Total
SF Commitment.
"SEC REGULATION D" shall mean Regulation D as promulgated
under the Securities Act of 1933, as amended, as the same may be in
effect from time to time.
"SECTION 4.4(B)(II) CERTIFICATE" shall have the meaning
provided in section 4.4(b)(ii).
"SECURITIES" means any stock, shares, voting trust
certificates, certificates of beneficial interest bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares
or participation in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
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"SECURITY DOCUMENTS" shall mean, collectively, any Lease
Assignments, any Mortgages, the Environmental Indemnity Agreement, the
Pledge Agreement and each other agreement, assignment or instrument
creating or purporting to create a Lien or establish or create any
rights in favor of the Administrative Agent as security for the
Obligations.
"SF COMMITMENT" shall mean, with respect to each Lender, the
amount set forth opposite such Lender's name in Annex I as its
"Secondary Facility Commitment" as the same may be reduced from time to
time pursuant to section 3.2, 3.3 and/or 9 or adjusted from time to
time as a result of assignments to or from such Lender pursuant to
section 12.4.
"SF LOAN" shall have the meaning provided in section 1.1.
"SF MATURITY DATE" means the second anniversary of the Initial
Borrowing Date, unless extended as provided in section 3.4, or sooner
terminated as herein provided.
"SF PERCENTAGE" shall mean at any time for any Lender with a
SF Commitment, the percentage obtained by dividing such Lender's SF
Commitment by the Total SF Commitment, PROVIDED, that if the Total SF
Commitment has been terminated, the SF Percentage for each Lender shall
be determined by dividing such Lender's SF Commitment immediately prior
to such termination by the Total SF Commitment immediately prior to
such termination.
"STATED AMOUNT" of each Letter of Credit shall mean the
maximum available to be drawn thereunder (regardless of whether any
conditions or other requirements for drawing could then be met).
"SUBSIDIARY" of any person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time owned by such person directly or indirectly through
Subsidiaries and (ii) any partnership, association, joint venture or
other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless
otherwise expressly provided, all references herein to "Subsidiary"
shall mean a Subsidiary of the Borrower.
"SUBORDINATED INDEBTEDNESS" means Indebtedness which has been
subordinated to the prior payment in full of the Obligations pursuant
to subordination provisions satisfactory in form and substance to the
Required Lenders.
"TAXES" shall have the meaning provided in section 4.4.
"TOTAL COMMITMENT" shall mean the sum of the Commitments of
the Lenders.
"TOTAL INTEREST EXPENSE" shall mean, for any period, total
interest expense (including that which is capitalized and that which is
attributable to Capital Leases, in accordance with GAAP) of the
Borrower and its Subsidiaries and the Management Company on a combined
basis with respect to all outstanding Indebtedness of the Borrower and
its Subsidiaries and the Management Company including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and net costs under Interest Rate
Agreements, but excluding, however, any amortization of deferred
financing costs, all as determined in accordance with GAAP.
"TOTAL PF COMMITMENT" means the sum of the PF Commitments of
each of the Lenders.
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"TOTAL SF COMMITMENT" means the sum of the SF Commitments of each
of the Lenders.
"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or
Eurodollar Loan.
"UNPAID DRAWING" shall have the meaning provided in section
2.3(a).
"UNUTILIZED COMMITMENT" for any Lender at any time shall mean the
excess of (i) such Lender's Commitment at such time over (ii) the sum
of (x) the principal amount of Loans made by such Lender and
outstanding at such time and (y) such Lender's Percentage of Letter of
Credit Outstandings at such time.
"UNUTILIZED TOTAL COMMITMENT" shall mean, at any time, the excess
of (i) the Total Commitment at such time over (ii) the sum of (x) the
aggregate principal amount of all Loans then outstanding plus (y) the
aggregate Letter of Credit Outstandings at such time.
"UNUTILIZED TOTAL PF COMMITMENT" shall mean, at any time, the
excess of (i) the Total PF Commitment at such time over (ii) the sum
of (x) the aggregate principal amount of all PF Loans then outstanding
plus (y) the aggregate Letter of Credit Outstandings at such time.
"UNUTILIZED TOTAL SF COMMITMENT" shall mean, at any time, the
excess of (i) the Total SF Commitment at such time over (ii) the
aggregate principal amount of all SF Loans then outstanding.
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the
Borrower all of whose capital stock, equity interests and partnership
interests are owned directly or indirectly by the Borrower, its
officers, stockholders and affiliates but excluding any Subsidiary
primarily engaged in the business of issuing insurance and/or
insurance policies.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of
written communication or a communication by means of telex, facsimile
transmission, telegraph or cable.
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SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent to act as specified herein and in the other
Loan Documents, and each such Lender hereby irrevocably authorizes NCB as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such upon the express conditions
contained in this section 11. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Loan Documents, nor any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this section 11 are solely for the benefit of the
Administrative Agent, and the Lenders, and no Credit Party shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, the Administrative Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation or relationship of agency or trust with or for any
Credit Party.
11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care except to the extent otherwise required by
section 11.3.
11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any other Credit Party or
any of their respective officers contained in this Agreement, any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for any failure of
the Borrower or any other Credit Party or any of their respective officers to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower or any other Credit Party. The Administrative Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Loan
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Lenders or by or on behalf of the Borrower or any other Credit
Party to the Administrative Agent or any Lender or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or of the existence or possible existence of any
Default or Event of Default.
11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper person or persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any other Credit Party), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all
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liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower or any other Credit Party referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders,
PROVIDED that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or other Credit Party, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and the other Credit Parties and made its own
decision to make its Loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and the other Credit
Parties. The Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any other Credit Party which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
11.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective Loans and unutilized Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Loan Document, or any documents contemplated
by or referred to herein or the transactions contemplated hereby or any action
taken or omitted to be taken by the Administrative Agent under or in connection
with any of the foregoing, but only to the extent that any of the foregoing is
not paid by the Borrower or another Credit Party, PROVIDED that no Lender shall
be liable to the Administrative Agent for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting solely from the
Administrative Agent's gross negligence or willful misconduct. If any indemnity
furnished to the Administrative Agent for any purpose shall, in the opinion of
the Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this section 11.7 shall survive the payment of all Obligations.
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11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, the other Credit
Parties and their Affiliates as though not acting as Administrative Agent
hereunder. With respect to the Loans made by it and all Obligations owing to it,
the Administrative Agent shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as the Administrative Agent upon 20 days' notice to the Lenders and the
Borrower. The Required Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders subject to prior approval by the Borrowers
(such approval not to be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall include such
successor agent effective upon its appointment, and the resigning Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
11.10. OTHER AGENTS. Any Lender identified herein as a Documentation
Agent, Managing Agent, Co-Agent, Syndication Agent or any other corresponding
title, other than "Administrative Agent", shall have no right, power,
obligation, liability, responsibility or duty under this Agreement or any other
Loan Document except those applicable to all Lenders as such. Each Lender
acknowledges that it has not relied, and will not rely, on any Lender so
identified in deciding to enter into this Agreement or in taking or not taking
any action hereunder.
SECTION 12. MISCELLANEOUS.
12.1. PAYMENT OF EXPENSES ETC. The Borrower agrees to: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Loan Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Jones, Day, Reavis & Pogue, in connection with the preparation
of the Loan Documents and the consummation of the transactions contemplated
hereby, and of the Administrative Agent and each of the Lenders in connection
with the enforcement of the Loan Documents and the documents and instruments
referred to therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Administrative Agent and for each of the
Lenders); (ii) in the event (x) that any of the Mortgages are foreclosed in
whole or in part or that any of the Mortgages are put into the hands of an
attorney for collection, suit, action or foreclosure, (y) of the foreclosure of
any mortgage prior to or subsequent to any of the Mortgages in which proceeding
the Administrative Agent is made a party, or (z) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of the Borrower or any of
its Subsidiaries, pay all costs of collection and defense, including reasonable
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes; (iii) pay and hold the
Administrative Agent and each of the Lenders harmless from and against any and
all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against any and
all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Lender) to pay such taxes; and (iv)
indemnify each Lender and the Administrative Agent, its officers, directors,
employees, representatives and agents (collectively, "INDEMNITEES") from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of (a) any Environmental Claims, as
provided in the Environmental Indemnity Agreement, (b) any investigation,
litigation or other proceeding (whether or not the Administrative Agent or any
Lender is a party thereto) related to the entering into and/or performance of
any Loan Document or the use of the proceeds of any Loans hereunder or the
consummation of any transactions contemplated in any Loan Document, including,
in each case, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses,
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liabilities, claims, damages or expenses to the extent incurred by reason of the
gross negligence or willful misconduct of the person to be indemnified or of any
other Indemnitee who is such person or an Affiliate of such person). To the
extent that the undertaking to indemnify, pay or hold harmless any person set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
12.2. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations and
liabilities of the Borrower to such Lender under this Agreement or under any of
the other Loan Documents, including, without limitation, all interests in
Obligations the Borrower purchased by such Lender pursuant to section 12.4(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Loan Document, irrespective of whether or not
such Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
12.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the
Borrower, at Suite 1900, 55 Public Square, Cleveland, Ohio 44113, attention:
Senior Vice President & Treasurer (facsimile: (216) 781-7467); if to any Lender
at its address specified for such Lender on Annex I hereto; if to the
Administrative Agent, at its Notice Address; or, at such other address as shall
be designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, and shall be effective when
received.
12.4. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, PROVIDED that no Credit Party may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of all the Lenders. Each Lender may at any time grant participations in
any of its rights hereunder or under any of the Notes to another financial
institution, PROVIDED that in the case of any such participation, (i) the
participant shall not have any rights under this Agreement or any of the other
Loan Documents, including rights of consent, approval or waiver (the
participant's rights against such Lender in respect of such participation to be
those set forth in the agreement executed by such Lender in favor of the
participant relating thereto), (ii) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) shall remain
unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) such Lender shall
remain the holder of any Note for all purposes of this Agreement and (v) the
Borrower, the Administrative Agent, and the other Lenders shall continue to deal
solely and directly with the selling Lender in connection with such Lender's
rights and obligations under this Agreement, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
sections 1.10, 1.11 and 4.4 of this Agreement to the extent that such Lender
would be entitled to such benefits if the participation had not been entered
into or sold, and, PROVIDED FURTHER, that no Lender shall transfer, grant or
sell any participation under which the participant shall have rights to approve
any amendment to or waiver of this Agreement or any other Loan Document except
to the extent such amendment or waiver would (x) extend the final scheduled
maturity of the Loans in which such participant is participating (it being
understood that any waiver of the making of, or the application of any
amortization payment or other prepayment or the method of any application of any
prepayment to the amortization of the Loans shall not constitute an extension of
the final maturity date thereof), or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of any mandatory prepayment
or a mandatory
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reduction in the Total Commitment, or a mandatory prepayment, shall not
constitute a change in the terms of any Commitment), (y) release all or
substantially all of the Collateral (in each case except as expressly provided
in the Loan Documents) or (z) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (x) any Lender may assign all or a
portion of its Loans and/or Commitment, and its rights and obligations hereunder
to an Affiliate of such Lender or to another Lender that is not a Defaulting
Lender, and (y) any Lender may assign all, or if less than all, a portion equal
to at least $5,000,000 in the aggregate for the assigning Lender or assigning
Lenders, of its Loans and/or Commitment and its rights and obligations
hereunder, to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment
Agreement, PROVIDED that, (i) at such time Annex I shall be deemed modified to
reflect the Commitment of such new Lender and of the existing Lenders, (ii) upon
surrender of the old Notes, new Notes will be issued, at the Borrower's expense
for the cost of preparation thereof, to such new Lender and to the assigning
Lender, such new Notes to be in conformity with the requirements of section 1.5
(with appropriate modifications) to the extent needed to reflect the revised
Commitments, (iii) in the case of clause (y) only, the consent of the
Administrative Agent shall be required in connection with any such assignment,
and (iv) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $2,000 and, PROVIDED FURTHER, that such
transfer or assignment will not be effective until notice thereof is given to
the Borrower and such transfer or assignment is recorded by the Administrative
Agent on the Lender Register (as hereinafter defined in section 12.16)
maintained by it. To the extent of any assignment pursuant to this section
12.4(b) the assigning Lender shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this section 12.4(b) to a person which is not already a Lender hereunder and
which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a section
4.04(b)(ii) Certificate) described in section 4.4(b). To the extent that an
assignment of all or any portion of a Lender's Commitment and related
outstanding Obligations pursuant to this section 12.4(b) would, at the time of
such assignment, result in increased costs under section 1.10 from those (if
any) being charged by the respective assigning bank prior to such assignment,
then the Borrower shall not be obligated to pay such increased costs (although
the Borrower shall be obligated to any other increased costs of the type
described above resulting from changes after the date of the respective
assignment). Nothing in this section 12.4(b) shall prevent or prohibit any
Lender from pledging its Notes or Loans to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this section 12.4, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Lender initially party to this Agreement hereby represents,
and each person that became a Lender pursuant to an assignment permitted by this
section 12.4 will, upon its becoming party to this Agreement, represent that it
is a commercial lender, other financial institution or other "accredited"
investor (as defined in SEC Regulation D) which makes or acquires loans in the
ordinary course of its business and that it will make or acquire Loans for its
own account in the ordinary course of such business, PROVIDED that subject to
the preceding sections 12.4(a) and (b), the disposition of any promissory notes
or other evidences of or interests in Indebtedness held by such Lender shall at
all times be within its exclusive control.
12.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Loan Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or
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demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
12.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Lenders
(other than any Lender that has expressly waived its right to receive its PRO
RATA share thereof) PRO RATA based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Loans or Fees, of a sum which with respect to the related sum or sums received
by other Lenders is in a greater proportion than the total of such Obligation
then owed and due to such Lender bears to the total of such Obligation then owed
and due to all of the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations to such Lenders
in such amount as shall result in a proportional participation by all of the
Lenders in such amount, PROVIDED that if all or any portion of such excess
amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
12.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); PROVIDED, that except as otherwise specifically
provided herein, all computations determining compliance with sections 4.2, 7.16
and 8, including definitions used therein, shall utilize accounting principles
and policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the December 31, 1995 financial statements delivered to
the Lenders pursuant to section 6.5.
(b) All computations of interest on Base Rate Loans hereunder shall be
made on the actual number of days elapsed over a year of 365 or 366 days, as
applicable, and all computations of interest on Eurodollar Loans and Fees
hereunder shall be made on the actual number of days elapsed over a year of 360
days.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO, EXCEPT THAT THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED
PURSUANT TO THE MORTGAGES SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE
LAW OF THE STATE IN WHICH THE APPLICABLE REAL PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF OHIO SHALL GOVERN THE VALIDITY AND ENFORCEABILITY OF ALL
LOAN DOCUMENTS, INCLUDING ALL MORTGAGES, AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW
OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO GOVERNS THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, EXCEPT TO THE EXTENT AFORESAID WITH RESPECT TO THE
LIENS CREATED BY THE MORTGAGES. Any legal action or proceeding with respect to
this Agreement or any other Loan Document may be brought in the courts of the
State of Ohio or of the United States for the Northern District of Ohio, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its Property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address for notices pursuant to section 12.3, such service to become effective
30 days after such mailing or at such
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earlier time as may be provided under applicable law. Nothing herein shall
affect the right of the Administrative Agent or any Lender to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts specifically referred to in section 12.8(a)
above and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby.
12.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10. EFFECTIVENESS. This Agreement shall become effective on the date
(the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at the Notice Office of the
Administrative Agent or, in the case of the Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
12.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated UNLESS such change,
waiver, discharge or termination is in writing signed by the Borrower and the
Required Lenders, PROVIDED that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender)
affected thereby, (i) extend the final maturity date applicable to a Loan or a
Commitment (it being understood that any waiver of the making of, or application
of any prepayment of or the method of application of any amortization payment or
other prepayment to, the amortization of, the Loans shall not constitute an
extension of such final maturity thereof), reduce the rate or extend the time of
payment of interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Commitment of any Lender over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of any mandatory prepayment or a mandatory reduction in
the Total Commitment shall not constitute a change in the terms of any
Commitment of any Lender), (ii) release all or substantially all of the
Collateral (in each case except as expressly provided in the Loan Documents),
(iii) change the definition of the term "Change of Control", (iv) amend, modify
or waive any provision of this section 12.12, or section 11.7, 12.1, 12.4, 12.6
or 12.7(b), (v) reduce the percentage specified in, or otherwise modify, the
definition of Required Lenders, or (vi) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement. No
provision of section 2 or 11 may be amended without the consent of (x) any
Letter of Credit Issuer adversely affected thereby or (y) the Administrative
Agent, respectively.
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12.13. SURVIVAL. All indemnities set forth herein including, without
limitation, in section 1.10, 1.11, 2.5, 4.4, 11.7 or 12.1 shall survive the
execution and delivery of this Agreement and the making and repayment of Loans.
12.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, PROVIDED that the Borrower shall not be responsible for costs arising
under section 1.10 or 4.4 resulting from any such transfer (other than a
transfer pursuant to section 1.12) to the extent not otherwise applicable to
such Lender prior to such transfer.
12.15. CONFIDENTIALITY. Subject to section 12.4, the Lenders shall hold
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such 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 and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or Commitment or
participation therein (PROVIDED that each such prospective transferee and/or
participant shall execute an agreement for the benefit of the Borrower with such
prospective transferor Lender containing provisions substantially identical to
those contained in this section 12.15), to its auditors, attorneys or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process, PROVIDED that, unless specifically prohibited by
applicable law or court order, each Lender shall notify the Borrower of any
request by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information, and PROVIDED FURTHER that
in no event shall any Lender be obligated or required to return any materials
furnished by or on behalf of the Borrower or any other Credit Party. The
Borrower hereby agrees that the failure of a Lender to comply with the
provisions of this section 12.15 shall not relieve the Borrower of any of the
obligations to such Lender under this Agreement and the other Loan Documents.
12.16. LENDER REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
12.16, to maintain a register (the "LENDER REGISTER") on which it will record
the Commitments from time to time of each of the Lenders, the Loans made by each
of the Lenders and each repayment in respect of the principal amount of the
Loans of each Lender. Failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Lender, the transfer of the Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitments shall not be effective until such transfer is
recorded on the Lender Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Lender Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment Agreement
pursuant to section 12.4(b). The Borrower agrees to indemnify the Administrative
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this section 12.16.
12.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letters of
Credit. Neither any Letter of Credit Issuer nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by a
Letter of Credit Issuer against presentation of documents that do not comply
with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, EXCEPT that such Borrower shall have a claim against a Letter of
Credit Issuer, and a Letter of Credit Issuer shall be liable to the Borrower, to
the extent of any direct, but not consequential, damages suffered by the
Borrower which the Borrower proves were caused by (i) such Letter of Credit
Issuer's willful misconduct or gross negligence
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or (ii) such Letter of Credit Issuer's willful failure to make lawful payment
under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, a Letter of Credit Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
12.18. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or
any other person against the Administrative Agent, any Letter of Credit Issuer,
or any other Lender or the Affiliates, directors, officers, employees, attorneys
or agents of any of them for any special, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any of the other Loan Documents, or any act, omission or event occurring in
connection therewith; and each of the Borrower, each Lender, the Administrative
Agent and each Letter of Credit Issuer hereby waives, releases and agrees not to
sue or counterclaim upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
12.19. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Loan Documents shall
have the right to act exclusively in the interest of the Administrative Agent or
such Lender, as the case may be, and shall have no duty of disclosure, duty of
loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of the other Credit Parties, to any of their
Subsidiaries, or to any other person, with respect to any matters within the
scope of such representation or related to their activities in connection with
such representation.
12.20. LENDERS AND AGENT NOT FIDUCIARY TO CREDIT PARTIES, ETC. The
relationship among the Credit Parties and their Subsidiaries, on the one hand,
and the Administrative Agent, each Letter of Credit Issuer and the Lenders, on
the other hand, is solely that of debtor and creditor, and the Administrative
Agent, each Letter of Credit Issuer and the Lenders have no fiduciary or other
special relationship with the Credit Parties and their Subsidiaries, and no term
or provision of any Loan Document, no course of dealing, no written or oral
communication, or other action, shall be construed so as to deem such
relationship to be other than that of debtor and creditor.
12.21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans and the issuance of
Letters of Credit hereunder, the execution and delivery of this Agreement and
the other documents the forms of which are attached as Exhibits hereto, the
issue and delivery of the Notes, any disposition thereof by any holder thereof,
and any investigation made by the Administrative Agent or any Lender or any
other holder of any of the Notes or on its behalf. All statements contained in
any certificate or other document delivered to the Administrative Agent or any
Lender or any holder of any Notes by or on behalf of the Borrower or any other
Credit Party pursuant hereto or otherwise specifically for use in connection
with the transactions contemplated hereby shall constitute representations and
warranties by the Borrower hereunder, made as of the respective dates specified
therein or, if no date is specified, as of the respective dates furnished to the
Administrative Agent or any Lender.
12.22. LIMITATION ON ENFORCEMENT OF SECURITY DOCUMENTS. The Lenders
agree that the Security Documents may be enforced by the action of the
Administrative Agent, in each case acting upon the instructions of the Required
Lenders and that no Lender shall have any right individually to seek to enforce
or to enforce any Security Document or to realize upon the security to be
granted by any Security Document, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent for the benefit
of the Lenders upon the terms of this Agreement and any Security Document.
12.23. LIABILITY OF BORROWER'S TRUSTEES, ETC. Notwithstanding any
provision of this Agreement to the contrary, this Agreement has been executed
and delivered by a duly authorized officer of the Borrower, for and on behalf of
the Borrower's trustees. The Administrative Agent and each Lender each
acknowledges that neither the trustees of the Borrower, nor any additional or
successor trustees of the Borrower, nor any beneficiary, officer, employee or
agent of the Borrower, shall have any personal, individual liability hereunder
or under any of the Loan
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Documents. The Administrative Agent and each Lender agrees to look solely to the
Property and assets of the Borrower (and, where so provided herein or in any of
the Loan Documents, to the Property and assets of the Management Company) for
the satisfaction of all claims of any nature arising under or in connection with
this Agreement.
[The balance of this page is intentionally blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS
BY: /S/ THOMAS KMIECIK
---------------------------------------
SENIOR VICE PRESIDENT & TREASURER
FIRST UNION MANAGEMENT, INC.
BY: /S/ LANA TIESZEN
---------------------------------------
VICE PRESIDENT
NATIONAL CITY BANK,
INDIVIDUALLY AND AS
ADMINISTRATIVE AGENT
BY: /S/ ANTHONY DIMARE
---------------------------------------
VICE PRESIDENT
KEYBANK NATIONAL ASSOCIATION
BY: /S/ MARK MAZZOLINI
---------------------------------------
VICE PRESIDENT
THE HUNTINGTON NATIONAL BANK
BY: /S/ GERALD BUCK
---------------------------------------
VICE PRESIDENT
FIRST MERIT BANK
BY: /S/ JOHN NEUMANN
---------------------------------------
VICE PRESIDENT
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Exhibit 10(b)
AMENDED AND RESTATED DECLARATION OF TRUST
Amending and Restating Amended and Restated Declaration of Trust
DATED AS OF JUNE 5, 1980
THIS AMENDED AND RESTATED DECLARATION OF TRUST made as of this first
day of October, 1996, at Cleveland, Ohio, by Adolph Posnick, Trustee, and
hereafter by such persons as may from time to time be appointed additional
Trustees and successors to such Trustees; the person or persons from time to
time constituting Trustees hereunder being referred to as the "Trustees" where
the context so permits,
W I T N E S S E T H:
WHEREAS, the Trustees desire to confirm the creation of a trust for the
purposes hereinafter mentioned and to clarify certain provisions relating to
beneficial interests hereunder,
NOW, THEREFORE, the Trustees hereby confirm the declaration of
themselves to be Trustees hereunder of One Hundred (100) shares of common stock
of First Union Management, Inc., a Delaware corporation, and of all property
which they may hereafter acquire as such Trustees, together with the proceeds
thereof and the dividends and other income therefrom, IN TRUST, on the terms and
conditions set forth in this Declaration.
ARTICLE I
DISTRIBUTION OF INCOME
The net income of the trust estate shall be paid at such time or times
as the Trustees in their discretion shall determine to the holders of record of
certificates representing shares of beneficial interest in First Union Real
Estate Equity and Mortgage Investments, a business trust organized as of October
1, 1961 (hereinafter referred to as "First Union"), as of a date designated by
the Trustees (hereinafter referred to as the "Record Date") not earlier than
sixty (60) days preceding the date fixed by the Trustees for payment, and each
such holder shall be entitled to receive the same proportion of such net income
as the number of shares of First Union held by him bears to the total number of
shares of First Union outstanding on the Record Date whose holders are entitled
to participate in the distribution; provided, however, that such payment to each
holder is contingent upon such holder demonstrating by certification to the
Trustees, or otherwise, to the Trustees' satisfaction, that the total shares of
First Union owned by him together with shares
9
<PAGE> 2
of First Union, ownership of which is attributed to him pursuant to Section
318(a) of the Internal Revenue Code, do not exceed 5% of the then outstanding
shares of First Union. No person shall have any beneficial interest in the Trust
so long as such person owns, directly or indirectly by attribution pursuant to
the Internal Revenue Code or otherwise, more than 5% of the then outstanding
shares of First Union; however, upon such person's transfer of any shares of
First Union, any transferee who becomes a holder of record of such shares shall
become a beneficiary of the Trust to the extent provided herein.
ARTICLE II
DURATION OF THE TRUST - TERMINATION
Section 2.01. DURATION OF THE TRUST. This Trust shall continue without
limitation of time except that, in the event that any applicable statute or rule
of law shall require that this trust not continue perpetually, then the trust
shall continue for the longest period of time permitted by law, and, to the
extent that measuring lives in being are required to determine the term of the
trust, such measuring lives in being shall be the persons designated in Section
12.1 of the Declaration of Trust of First Union.
Section 2.02. EFFECT OF TERMINATION. Upon termination of this trust,
the Trustees shall make provision for the payment of all outstanding
obligations, taxes and other liabilities, accrued or contingent of the trust
estate, shall sell the remaining assets of the trust estate and shall, at such
time or times as the Trustees in their discretion shall determine, distribute
the proceeds derived from the sale of such remaining assets to the holders of
record of certificates representing shares of beneficial interest in First Union
as of a date fixed by the Trustee (the Record Date) not earlier than 60 days
preceding the date fixed by the Trustees for the distribution, and each such
holder shall be entitled to receive the same proportion of such proceeds as the
number of shares held by him on the Record Date bears to the total number of
shares of First Union outstanding on the Record Date whose holders are entitled
to participate in the distribution; provided, however, that such payment to each
holder is contingent upon such holder demonstrating by certification to the
Trustees, or otherwise, to the Trustees' satisfaction, that the total shares of
First Union owned by him together with shares of First Union, ownership of which
is attributed to him pursuant to Section 318(a) of the Internal Revenue Code, do
not exceed 5% of the then outstanding shares of First Union. For purposes of
such distribution on termination and for all other purposes, no person shall
have any beneficial interest in the Trust so long as such person owns, directly
or indirectly by attribution pursuant
-2-
<PAGE> 3
to the Internal Revenue Code or otherwise, more than 5% of the then outstanding
shares of First Union; however, upon such person's transfer of any shares of
First Union, any transferee who becomes a holder of record of such shares shall
become a beneficiary of the Trust to the extent provided herein.
ARTICLE III
POWERS AND DUTIES OF TRUSTEES - COMPENSATION
Section 3.01. POWERS AND DUTIES. The Trustees shall have the following
powers, in addition to any powers conferred upon the Trustees by law or other
Articles of this Declaration of Trust, all of which powers shall be exercised in
a fiduciary capacity:
(a) To retain the assets initially comprising the trust estate
and any share dividends and distributions (subject to
Section 2.01 above) in respect of such assets, regardless of
the proportionate value any investment or any class or type
of investment may bear to the total value of the trust
estate, and without being limited to the classes of
investment which a trustee is authorized by law or any rule
of court to make;
(b) To receive and retain additions to the trust estate from any
source whatsoever, such additions to be held hereunder as
though the same had initially constituted a part of the
trust estate;
(c) To exercise voting rights and issue proxies upon or in
connection with any stock or other securities in the trust
estate as the Trustee shall determine;
(d) To participate in reorganizations, recapitalizations,
reincorporations, consolidations, mergers, exchanges,
liquidations and creditors' and bondholders' agreements;
(e) To compromise, compound, release and discharge all debts and
claims of every kind, nature or description owing to or by
the trust estate;
(f) To employ accountants, agents and attorneys; and
(g) To dispose of the assets of the trust estate upon the
termination of this trust and to distribute
-3-
<PAGE> 4
the proceeds derived therefrom in accordance with the
provisions of Article II hereof.
The approval of a majority of the Trustees shall be necessary for the
exercise of any power granted hereunder. The powers of the Trustees hereunder
may be exercised without order of any court, but the Trustees are authorized, in
the event they deem it advisable, to apply to any court of competent
jurisdiction for any interpretation of any of the provisions of this instrument
or for instructions with respect to their administration of the trust created
hereunder. Notwithstanding anything to the contrary herein contained, the
Trustees by virtue of their status as Trustees hereunder shall have no power to
issue certificates representing shares of beneficial interest in the trust
estate or to direct the affairs of First Union Management, Inc.
Section 3.02. COMPENSATION. Each person serving as a Trustee hereunder
shall receive such compensation as shall be reasonable and adequate for the
services rendered as determined by Arthur Andersen & Co. or any other national
accounting firm chosen by the Directors of First Union Management, Inc. All
compensation for ordinary services provided for hereunder shall be charged
against and paid from income at such times as the Trustees may determine.
Section 3.03. TRUST RECORDS. The Trustees shall at all times keep, or
cause to be kept, accurate books with respect to the trust, and shall render at
least annually to each beneficiary who received income during the year of the
account a statement of account which shall include all the information necessary
to enable such beneficiary to prepare federal and state tax returns.
Section 3.04. TRUSTEE LIABILITY. No Trustee shall be personally liable
for any act or omission of any other Trustee (including without limitation the
failure to compel in any way any former or acting or future Trustee to redress
any breach of Trust), and no Trustee shall be personally liable to any
beneficiary, except for such of his own acts as constitute bad faith, wilful
misfeasance, gross negligence, or wilful disregard of his duties. Except as
aforesaid, each Trustee shall be entitled to reimbursement out of the trust
estate for his reasonable expenses and outlays and to be exonerated and
indemnified from time to time from or against any and all loss, expense and
liability arising out of or in connection with the management of the trust
estate or which he may suffer because he is or becomes or consented to become a
Trustee.
ARTICLE IV
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<PAGE> 5
SUCCESSOR AND ADDITIONAL TRUSTEES - RESIGNATION - QUALIFICATION
Section 4.01. QUALIFICATION OF TRUSTEES. No person may be designated as
Trustee, and no person may continue to serve as Trustee, if such designation or
service would be contrary to the terms of the Internal Revenue Service Ruling,
dated February 8, 1971, a copy of which is attached hereto as Exhibit A, or if
he, or any affiliate of his, is or becomes a trustee, officer, employee, or the
beneficial owner of shares of First Union.
Section 4.02. RESIGNATION. Any Trustee may resign by written notice to
the Directors of First Union Management, Inc.
Section 4.03. ADDITIONAL AND SUCCESSOR TRUSTEES. The Trustees may at
any time and from time to time designate additional Trustees to serve hereunder.
In the event of the death, resignation, disqualification, or incapacity of a
Trustee, a successor Trustee shall be designated by the remaining Trustees and,
in the event there are no remaining Trustees, such successor Trustee shall be as
designated by the last remaining Trustee in writing filed with the Secretary of
First Union Management, Inc. at or before the termination of his trusteeship. In
the event the trusteeship is vacant and no successor Trustee shall have been
designated pursuant to the foregoing, the trusteeship shall be filled by the
Probate Court of Cuyahoga County, Ohio. Any additional or successor Trustee
designated as hereinbefore provided shall have and enjoy all of the powers,
duties, discretions and immunities herein conferred upon the Trustees hereunder
and shall not be required to furnish bond.
ARTICLE V
AMENDMENT
The Trustees may amend this Declaration of Trust with the approval of a
majority of the then members of the Board of Directors of First Union
Management, Inc. in writing; provided, however, that the Trustees shall not
exercise such power of amendment without prior written advice from counsel for
First Union Management, Inc. that in such counsel's opinion the proposed
exercise would not be contrary to the terms of the Internal Revenue Service
Ruling attached hereto as Exhibit A.
-5-
<PAGE> 6
ARTICLE VI
RECORD DATE
In determining the holders of shares of First Union as of any Record
Date or as of the Termination Date and their addresses, the Trustees shall rely
conclusively upon the records of First Union's Cleveland Transfer Agent.
ARTICLE VII
GOVERNING LAW
The trust created hereby is an Ohio trust and is to be governed,
construed and administered according to the laws of Ohio and shall continue to
be so governed, construed and administered, even though the situs of the trust
is elsewhere in the United States or abroad.
ARTICLE VIII
GENERAL
Anything herein to the contrary notwithstanding, the shareholders of
First Union shall have no rights to become the owners of the shares of First
Union Management, Inc., nor shall they have any right to control the vote of
such shares by the Trustees and their sole interest will consist of the rights
to income from, and proceeds of liquidation of, the trust estate provided in
Article I and Section 2.02, which rights are contingent on satisfying the
provisos in said Article I and said Section 2.02 above.
The Trustees will act independently in exercising the rights as
shareholders of First Union Management, Inc., and in particular will exercise
independent control of the selection of the directors, officers and policies of
First Union Management, Inc.
In exercising their rights and powers as shareholders of First Union
Management, Inc., the Trustees shall act only in a manner consistent with the
provisions of the Internal Revenue Service Ruling attached hereto as Exhibit A.
Anything herein to the contrary notwithstanding, for all purposes of
this Declaration of Trust the term "shares of beneficial interest" or "shares"
in or with reference to First Union and all of the references to "shares of
First Union" shall refer only to shares of beneficial interest, $1 par value, of
-6-
<PAGE> 7
First Union and to no other kind, type or class of shares or securities of First
Union (whether common, preferred or otherwise).
IN WITNESS WHEREOF, Adolph Posnick has hereunto set his hand as of the
day and year first above written.
Executed in the presence of:
/S/ ADOLPH POSNICK
- ----------------------------- ---------------------------
Adolph Posnick
- -----------------------------
Witnesses
-7-
<PAGE> 8
APPROVAL
The undersigned does hereby certify that he is a Director of First
Union Management, Inc. and does hereby grant his approval of amendments to the
Amended and Restated Declaration of Trust dated June 5, 1980 by adoption by the
sole trustee thereunder of an Amended and Restated Declaration of Trust
substantially in the form attached hereto as Exhibit A. This approval shall be
effective upon receipt by such sole trustee of approvals from a majority of the
Directors of First Union Management, Inc. duly elected, qualified and serving at
the time of such adoption.
Executed in Cleveland, Ohio, this 16th of July, 1996.
/S/ HENRY G. PIPER
---------------------------
Henry G. Piper
<PAGE> 9
APPROVAL
The undersigned does hereby certify that he is a Director of First
Union Management, Inc. and does hereby grant his approval of amendments to the
Amended and Restated Declaration of Trust dated June 5, 1980 by adoption by the
sole trustee thereunder of an Amended and Restated Declaration of Trust
substantially in the form attached hereto as Exhibit A. This approval shall be
effective upon receipt by such sole trustee of approvals from a majority of the
Directors of First Union Management, Inc. duly elected, qualified and serving at
the time of such adoption.
Executed in Cleveland, Ohio, this 16th of July, 1996.
/S/ ADOLPH POSNICK
-------------------------------
Adolph Posnick
<PAGE> 10
APPROVAL
The undersigned does hereby certify that he is a Director of First
Union Management, Inc. and does hereby grant his approval of amendments to the
Amended and Restated Declaration of Trust dated June 5, 1980 by adoption by the
sole trustee thereunder of an Amended and Restated Declaration of Trust
substantially in the form attached hereto as Exhibit A. This approval shall be
effective upon receipt by such sole trustee of approvals from a majority of the
Directors of First Union Management, Inc. duly elected, qualified and serving at
the time of such adoption.
Executed in Cleveland, Ohio, this 16th of July, 1996.
/S/ RENOLD D. THOMPSON
-----------------------------
Renold D. Thompson
<PAGE> 1
EXHIBIT 11
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
-------------------------------------------------------
Statements Re: Computation of Per Share Earnings
------------------------------------------------
(In thousands, except per share data)
-------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares Outstanding
For computation of primary net
income per share -
Weighted average 17,224 18,163 17,237 18,160
====== ====== ====== ======
For computation of fully diluted
net income per share -
Weighted average, without
regard to exercise of shares
under share option, restricted
stock or employee incentive
plans 17,168 18,110 17,160 18,100
Weighted average of outstanding
shares issued under restricted
stock plan 56 53 69 52
Weighted average of shares issued
under employee incentive plan -- -- 8 8
------ ------ ------ ------
Adjusted shares outstanding 17,224 18,163 17,237 18,160
====== ====== ====== ======
Net income(1)
Net income applicable to shares of
beneficial interest (used for computing
primary and fully diluted net income per
share) $ 1,044 $ 325 $ 1,140 $ 27,749
======== ======== ======== ========
Net income per share of beneficial
interest -- primary and fully diluted:
Income before cumulative effect of
accounting change .06 .02 .07 1.76
Cumulative effect of change in accounting
for internal leasing costs -- -- -- (.24)
-------- -------- -------- --------
Net income $ .06 $ .02 $ .07 $ 1.52
======== ======== ======== ========
<FN>
(1) Net income for 1995 has been restated to reflect the change in accounting
method for internal leasing costs which was adopted retroactively to the
first quarter of 1995.
</TABLE>
10
<PAGE> 1
EXHIBIT 12
FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
-------------------------------------------------------
Statements of Ratios of Combined Income from Operations
-------------------------------------------------------
and Combined Net Income to Fixed Charges
----------------------------------------
(In thousands, except ratios)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
------------- ------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income before capital gain or
loss, extraordinary loss and
cumulative effect of accounting
change $ 1,140 $ 2,204 $ 3,256 $ 6,485 $10,276 $12,657 $13,330
Add fixed charges, exclusive of
construction interest capitalized 17,997 17,064 22,987 21,865 19,103 19,469 21,513
------ ------ ------ ------ ------ ------ ------
Income from operations, as defined 19,137 19,268 26,243 28,350 29,379 32,126 34,843
Capital gains --- 29,870 29,870 --- 4,948 5,775 4,906
Reduction for unrealized loss on
carrying value of assets identified
for disposition --- --- 14,000 --- --- --- ---
------- -------- ------- ------- ------- ------- -------
Net income, as defined $19,137 $ 49,138 $42,113 $28,350 $34,327 $37,901 $39,749
======= ======== ======= ======= ======= ======= =======
Fixed charges:
Interest
- Mortgage loans $ 6,368 $ 5,836 $ 7,670 $ 7,335 $ 5,777 $ 6,182 $ 6,493
- Senior notes 6,871 6,979 9,305 9,305 5,779 4,199 4,199
- 10.25% debentures --- --- --- --- 3,214 3,858 3,858
- Bank loans and other 4,274 3,810 5,422 4,640 3,747 4,694 6,221
- Capitalized interest 107 51 169 --- --- --- ---
Amortization of debt issue costs 148 137 184 168 162 122 95
Rents (1) 336 302 406 417 424 414 647
-------- -------- ------- ------- ------- ------- -------
Fixed charges, as defined $ 18,104 $ 17,115 $23,156 $21,865 $19,103 $19,469 $21,513
======== ======== ======= ======= ======= ======= =======
Ratio of income from operations, as
defined, to fixed charges 1.06 1.13 1.13 1.30 1.54 1.65 1.62
======== ======== ======= ======= ======= ======= =======
Ratio of net income, as defined,
to fixed charges 1.06 2.87 1.82 1.30 1.80 1.95 1.85
======= ======== ======= ====== ======= ======= =======
- --------------------------------
<FN>
(1) The interest portion of rentals is assumed to be one-third of all ground
rental and net lease payments.
</TABLE>
11
<PAGE> 1
<TABLE>
<CAPTION>
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS Exhibit 20
- ------------------------------------------------------- ----------------
Combined Balance Sheets
Unaudited (In thousands, except shares) September 30, December 31,
1996 1995
------------- ----------
<S> <C> <C>
ASSETS
Investments in real estate
Land $ 51,772 $ 54,403
Buildings and improvements 398,616 395,157
--------- ---------
450,388 449,560
Less - Accumulated depreciation (109,673) (107,701)
--------- ---------
Total investments in real estate 340,715 341,859
Investment in joint venture 30,000
Mortgage loans receivable 42,206 42,042
Other assets
Cash and cash equivalents 1,852 3,402
Accounts receivable and prepayments 5,917 4,536
Deferred charges and other, net 5,251 4,873
Unamortized debt issue costs 4,326 4,287
--------- ---------
$ 430,267 $ 400,999
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans $ 129,985 $ 83,854
Senior notes 100,000 105,000
Bank loans 63,940 69,600
Accounts payable and accrued liabilities 19,828 21,779
Deferred obligations 10,796 10,670
Deferred capital gains and other deferred income 7,737 7,741
Shareholders' equity, including shares of beneficial interest,
$1 par, unlimited authorization, outstanding 1996--17,459,144;
1995--17,485,057 97,981 102,355
--------- ---------
$ 430,267 $ 400,999
========= =========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS Exhibit 20
- ------------------------------------------------------- ------------
Combined Statements of Income
Unaudited (In thousands, except per share data) Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
1996 1995 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Revenues
Rents $ 18,606 $ 18,745 $ 55,386 $ 55,068
Interest - Mortgage loans 1,129 1,126 3,600 3,319
- Short-term investments 9 407
-------- -------- -------- --------
19,735 19,871 58,995 58,794
-------- -------- -------- --------
Expenses
Property operating 6,341 6,845 19,517 19,402
Real estate taxes 2,132 2,216 6,198 6,344
Depreciation and amortization 3,092 3,022 9,858 8,688
Interest - Mortgage loans 2,303 1,922 6,368 5,836
- Senior notes 2,219 2,326 6,871 6,979
- Bank loans and other 1,358 1,408 4,274 3,810
General and administrative 1,246 1,807 4,769 5,531
-------- -------- -------- --------
18,691 19,546 57,855 56,590
-------- -------- -------- --------
Income before capital gains and cumulative effect of accounting change 1,044 325 1,140 2,204
Capital gains 29,870
-------- -------- -------- --------
Income before cumulative effect of accounting change for internal leasing costs 1,044 325 1,140 32,074
Cumulative effect of change in accounting for internal leasing costs (4,325)
-------- -------- -------- --------
Net income $ 1,044 $ 325 $ 1,140 $ 27,749
======== ======== ======== ========
Per share
Income before cumulative effect of accounting change $ .06 $ .02 $ .07 $ 1.76
Cumulative effect of change in accounting
for internal leasing costs (.24)
-------- -------- -------- --------
Net income $ .06 $ .02 $ .07 $ 1.52
======== ======== ======== ========
Adjusted shares of beneficial interest 17,224 18,163 17,237 18,160
====== ====== ====== ======
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS Exhibit 20
- ------------------------------------------------------- ----------
Combined Statements of Changes in Cash
Unaudited (In thousands) Three Months Nine Months
Ended September 30, Ended September 30,
------------------------- -----------------------
1996 1995 1996 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Cash provided by (used for) operations
Net Income $ 1,044 $ 325 $ 1,140 $ 27,749
Adjustments to reconcile net income to net
cash provided by operations --
Depreciation and amortization 3,092 3,022 9,858 8,688
Cumulative effect of change in accounting
for internal leasing costs 4,325
Capital gains (29,870)
Increase in deferred charges, net (280) (386) (854) (1,595)
Increase in deferred interest on
mortgage investments, net (102) (103) (295) (289)
Increase in deferred obligations 44 37 126 108
Net changes in other assets and liabilities 7,772 1,167 3,833 2,522
-------- -------- -------- --------
Net cash provided by operations 11,570 4,062 13,808 11,638
-------- -------- -------- --------
Cash provided by (used for) investing
Repayment of mortgage investment 7,000
Principal received from mortgage investments 45 41 131 119
Proceeds from sale of properties 1,825 27,500
Investment in joint venture (30,000) (30,000)
Investment in properties (664) (33,508)
Investment in capital and tenant improvements (3,132) (8,184) (16,578) (15,615)
-------- -------- -------- --------
Net cash used for investing (33,087) (8,807) (37,622) (21,504)
-------- -------- -------- --------
Cash provided by (used for) financing
Increase in mortgage loans 12,000 48,500
Increase (decrease) in short-term loans 12,270 7,480 (5,660) 16,050
Repayment of mortgage loans (847) (919) (2,369) (2,764)
Sale of First Union shares 81 75
Dividends paid (1,921) (1,843) (5,869) (5,497)
Debt issue costs paid (536) (128) (1,313) (166)
Purchase of First Union shares (7,125)
Sale of interest rate protection agreement 1,025
Repayment of Medium Term Notes (5,000) (5,000)
Other (6) (6) (10)
-------- -------- -------- --------
Net cash provided by financing 15,966 4,584 22,264 7,688
-------- -------- -------- --------
Decrease in cash and cash equivalents (5,551) (161) (1,550) (2,178)
Cash and cash equivalents at beginning of period 7,403 958 3,402 2,975
-------- -------- -------- --------
Cash and cash equivalents at end of period $ 1,852 $ 797 $ 1,852 $ 797
======== ======== ======== ========
</TABLE>
Notes to Combined Financial Statements
1. Income per share of beneficial interest has been computed on weighted
average shares and share equivalents outstanding for the applicable
periods.
2. In 1995, the Trust changed its accounting method to directly expense
internal leasing costs and recorded a $4.3 million charge for the
cumulative effect of the accounting change retroactive to January 1, 1995.
Previously, the Trust deferred and amortized these costs over the lives of
consummated lease transactions. Depreciation and amortization, general and
administrative expenses, income before capital gains and cumulative effect
of accounting change, net income and earnings per share on the 1995
Combined Statements of Income and investment in properties on the 1995
Combined Statements of Changes in Cash have been restated to reflect the
change in accounting.
3. In February 1996, the Trust sold two office buildings in Cleveland, Ohio
for $1.8 million in cash and a $7 million mortgage note resulting in a loss
of $5.6 million. This loss had been previously recognized during the fourth
quarter of 1995. In January 1995, the Trust sold its 50% interests in two
malls in Wilkes-Barre, Pennsylvania and Fairmount, West Virginia for a $2
million payment which was received in 1994, a tax-free exchange of these
properties for $27.5 million of cash that was deposited into a tax
intermediary escrow account, a $6 million mortgage note receivable and the
assumption by the purchaser of $4.7 million in mortgage debt, resulting in
a capital gain for financial reporting purposes of approximately $29.9
million.
4. In late September 1996, the Trust invested $30 million in a joint venture
which acquired nine regional shopping malls located in Louisiana, Arkansas,
Texas, Oklahoma and New Mexico. The purchase price paid by the joint
venture was $311.7 million which included the assumption of $50 million in
existing mortgage debt. The Trust owns 26% of the joint venture and is
recording this investment using the equity method of accounting. The joint
venture had no effect on net income during the third quarter of 1996 since
the transaction occurred at the end of the quarter.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>5
<CIK>0000037008
<NAME>FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
<MULTIPLIER>1
<CURRENCY>DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,852,000
<SECURITIES> 0
<RECEIVABLES> 5,917,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,769,000
<PP&E> 450,388,000
<DEPRECIATION> (109,673,000)
<TOTAL-ASSETS> 430,267,000
<CURRENT-LIABILITIES> 19,828,000
<BONDS> 293,925,000
<COMMON> 97,981,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 430,267,000
<SALES>
<TOTAL-REVENUES> 58,995,000
<CGS> 0
<TOTAL-COSTS> 25,715,000
<OTHER-EXPENSES> 14,627,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,513,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,140,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,140,000
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
