SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 24, 2000
ONE LIBERTY PROPERTIES, INC.
---------------------------------------------------------------
(Exact name of registrant as specified in charter)
Maryland 0-11083 13-3147497
----------------------------------------------------------------
State or other (Commission File No.) (IRS Employer
Jurisdiction of I.D. No.)
Incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-466-3100
------------
<PAGE>
Item 5. Other Events.
On March 24, 2000, Registrant consummated a $15 million revolving
credit facility with European American Bank. The material terms of the
transaction are as follows:
Lender: European American Bank
Borrower: Registrant
Guarantors: Ten subsidiaries of Registrant signed as guarantors. These are
all subsidiaries whose properties are not encumbered by
mortgage debt. Subsidiaries of Registrant formed post-closing
are required to become guarantors so long as their properties
are not encumbered by mortgage debt. Subject to certain
conditions, a guarantor may be released from its guaranty when
it mortgages its property.
Amount: $15,000,000. As of the date hereof, the Registrant has not
drawn on the credit facility.
Loan Type: The credit facility is a revolvng facility (i.e. funds can be
borrowed, repaid and borrowed again). Advances must be in
minimum amount of $100,000 and then in multiples of $10,000.
Use of
Proceeds: (1) Acquisition of commercial real estate, and (2) repayment
of existing mortgage debt.
Term: March 24, 2002 with an option to extend through March 24,2003.
Option must be exercised on not less than 30 business days'
notice and not more than 60 business days' notice.
Rate: Prime rate of the Lender.
Fees: There was a 1% ($150,000) commitment fee paid in connection
with the credit facility. Registrant also paid the out of
pocket expenses of the Lender in connection with the trans-
action (including by way of example, legal fees).
In addition, there is an "unused fee" payable monthly, equal
to .25% per annum of the difference between the loan balance
and the maximum loan amount of $15,000,000.
Accounts: Borrower and affiliates are to maintain balances with Lender
in qualifying accounts of at least 10% of outstanding balance
due under credit facility.
Collateral: Loan is secured by pledge of stock in all subsidiaries.
<PAGE>
Financial
Covenants: The Loan Agreement contains various financial and other
covenants and restrictions. The most significant are that
(i) Total Secured Debt (principally mortgage debt) to Total
Secured Value (essentially the fair market value of
Registrant's or its subsidiaries' properties which are
encumbered by mortgage debt) shall not exceed .70 to 1.00;
(ii) Total Debt to Total Value shall not exceed .70 to 1.00;
(iii) Total Unsecured Debt (principally the new credit
facility) to Total Unsecured Value (essentially the fair
market value of Registrant's or its subsidiaries' properties
which are not encumbered by mortgage debt) shall not exceed
.65 to 1.00; (iv) Total Adjusted Net Operating Income to Debt
Service shall not exceed 1.65 to 1.00; and (v) Adjusted Net
Operating Income for unencumbered properties to Debt Service
on Registrant's unencumbered properties (principally debt
service on the credit facility) shall be no less than
2.00 to 1.00.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements - none.
(b) Pro Forma Financial Information - not applicable.
(c) Exhibits - Loan Agreement dated as of March 24, 2000 between One
Liberty Properties, Inc. and certain subsidiaries and European American
Bank.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONE LIBERTY PROPERTIES, INC.
By: s/
-------------------------------
Mark H. Lundy
Vice President and Secretary
<PAGE>
LOAN AGREEMENT
Dated as of March 24, 2000
ONE LIBERTY PROPERTIES, INC., a Maryland corporation, having its
principal place of business at 60 Cutter Mill Road, Suite 303, Great Neck, New
York 11021 (the "Borrower"), OLP ACTION INC., a Missouri corporation, having its
principal place of business at 60 Cutter Mill Road, Suite 303, Great Neck, New
York 11021 ("Action" or a "Guarantor"), OLP ARBY'S II, INC., a South Carolina
corporation, having its principal place of business at 60 Cutter Mill Road,
Suite 303, Great Neck, New York 11021 ("Arbys" or a "Guarantor"), OLP
CHATTANOOGA, INC., a Tennessee corporation, having its principal place of
business at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
("Chattanooga" or a "Guarantor"), OLP PALM BEACH, INC., a Florida corporation,
having its principal place of business at 60 Cutter Mill Road, Suite 303, Great
Neck, New York 11021 ("Palm Beach" or a "Guarantor"), OLP MIAMI, INC., a Florida
corporation, having its principal place of business at 60 Cutter Mill Road,
Suite 303, Great Neck, New York 11021 ("Miami" or a "Guarantor"), OLP AUGUSTA,
INC., a Georgia corporation, having its principal place of business at 60 Cutter
Mill Road, Suite 303, Great Neck, New York 11021 ("Augusta" or a "Guarantor"),
OLP BALTIMORE, INC., a Maryland corporation, having its principal place of
business at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
("Baltimore" or a "Guarantor"), OLP HAMILTON, INC., a New York corporation,
having its principal place of business at 60 Cutter Mill Road, Suite 303, Great
Neck, New York 11021 ("Hamilton" or a "Guarantor"), OLP WARSAW, INC., a Virginia
corporation, having its principal place of business at 60 Cutter Mill Road,
Suite 303, Great Neck, New York 11021 ("Warsaw" or a "Guarantor"), OLP PONCE,
INC., a Delaware corporation, having its principal place of business at 60
Cutter Mill Road, Suite 303, Great Neck, New York 11021 ("Ponce" or a
"Guarantor") and EUROPEAN AMERICAN BANK, a New York banking corporation, having
an office at One EAB Plaza, Uniondale, New York 11555 (the "Bank") hereby agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
<PAGE>
"Adjusted Net Operating Income" means the base rent of all properties
subject to the covenant being tested less an assumed three (3%) percent
management fee allowance.
"Affiliate" means, as to any Person: (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) percent or more of
the equity interest of which, is directly or indirectly beneficially owned or
held by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct, or cause the direction of, the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise. For the purposes of calculating the Required Balances
required in Section 2.04(b) hereof, executive officers of the Borrower and
Persons controlled by such executive officers shall be considered Affiliates.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Board of Governors" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City.
"Capital Lease" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Collateral" means all property which is subject or is to be subject to
the Lien granted by the Pledge Agreement(s).
"Commitment" means the Bank's obligation to make Revolving Credit Loans
to the Borrower pursuant to the terms and subject to the conditions of this
Agreement.
<PAGE>
"Debt" means, as to any Person: (i) all indebtedness or liability of
such Person for borrowed money; (ii) all indebtedness of such Person for the
deferred purchase price of property or services (including trade obligations);
(iii) all obligations of such Person as a lessee under Capital Leases; (iv) all
current liabilities of such Person in respect of unfunded vested benefits under
any Plan; (v) all obligations of such Person under letters of credit issued for
the account of such Person; (vi) all obligations of such Person arising under
acceptance facilities; (vii) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent
obligations to purchase, to provide funds for payment, to supply funds to invest
in any other Person, or otherwise to assure a creditor against loss; (viii) all
obligations secured by any Lien on property owned by such Person whether or not
the obligations have been assumed; (ix) liabilities of such Person under
interest rate protection and similar agreements; (x) liabilities of such Person
under any preferred stock or other preferred equity instrument which, at the
option of the holder or upon the occurrence of one or more events, is redeemable
by such holder, or which, at the option of such holder is convertible into Debt;
(xi) indebtedness of any partnership of which such Person is a general partner;
and (xii) all other liabilities recorded as such, or which should be recorded as
such, on such Person's financial statements in accordance with GAAP.
"Debt Service" means (i) all scheduled principal payments, and (ii) all
scheduled interest payments.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dividends" means, with respect to any Person, (i) any dividend
(whether payable in cash, stock, other equity or debt instrument or in assets),
(ii) the purchase, redemption, retirement or other acquisition for value of any
of such Person=s capital stock now or hereafter outstanding, (iii) the making of
any distribution of assets to such Person=s stockholders as such, whether in
cash, assets, or in obligations of such Person, (iv) the allocation or other
setting apart of any sum for the payment of any dividend or distribution on, or
for the purchase, redemption or retirement of any shares of such Person=s
capital stock or (v) the making of any other distribution by reduction of
capital or otherwise in respect of any share of such Person's capital stock.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
<PAGE>
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"Guarantor" or Guarantors" means each of, or all of, as the context
requires, those Guarantors named in the preamble to this Agreement, and any
other Person which is required to guarantee the obligations of the Borrower in
accordance with Section 5.01(l) of this Agreement.
"Guaranty" or "Guaranties" means a guaranty or guaranties required to
be executed and delivered by a Guarantor or Guarantors pursuant to Section
3.01(h) and Section 5.01(l) of this Agreement.
"Hazardous Materials" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 6901 et. seq.), and in the regulations
adopted and publications or interpretations promulgated pursuant thereto, or any
other federal, state or local environmental law, ordinance, rule or regulation.
"Interest Payment Date" means the first Business Day of each month.
<PAGE>
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and (i) any purchase
of any security of another Person or (ii) any business or undertaking of any
Person or any commitment or option to make any such purchase, or any other
investment.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or Loans" means one or more, as the context requires, of the
Revolving Credit Loans.
"Loan Documents" means this Agreement, the Note, the Guaranties, the
Pledge Agreements and any other document executed or delivered pursuant to this
Agreement.
"Material Adverse Change" means, as to any Person, (i) a material
adverse change in the financial condition, business, operations, properties,
prospects or results of operations of such Person or (ii) any event or
occurrence which could have a material adverse effect on the ability of such
Person to perform its obligations under the Loan Documents.
"Maturity Date" shall have the meaning assigned to such term in Section
2.08(a) of this Agreement.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
"Note" means the Revolving Credit Note.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
<PAGE>
"Permitted Investments" means: (i) direct obligations of the United
States of America or any governmental agency thereof, or obligations guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; (ii) time certificates of deposit
having a maturity of one year or less issued by any commercial bank organized
and existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Moody's Investor Services,
Inc. or Standard & Poor's Corporation, respectively; (v) tax exempt securities
rated Prime 2 or better by Moody's Investor Services, Inc. or A-1 or better by
Standard & Poor's Corporation; (vi) retail, office, industrial and other
commercial real estate located in the 48 contiguous United States; (vii)
investments by the Borrower in its Subsidiaries, and (viii) investments in stock
of real estate investment trusts listed on a nationally recognized stock
exchange in an aggregate amount not exceeding $5,000,000.00.
"Person" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a federal, state
or local government, or a political subdivision thereof, or any agency of such
government or subdivision.
"Plan" means any employee benefit plan established, maintained, or to
which contributions have been made by, the Borrower or any ERISA Affiliate.
"Pledge Agreement" or "Pledge Agreements" means one or more of the
security agreements to be executed and delivered pursuant to Section 3.01(i) and
Section 5.01(l) of this Agreement.
"Prime Rate" means the rate of interest stated by the Bank to be its
prime rate as in effect from time to time; each change in said rate shall be
effective as of the date of such change.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time.
"Regulation D" means Regulation D of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the
same may be amended and in effect from time to time.
<PAGE>
"Regulation X" means Regulation X of the Board of Governors, as the
same may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Revolving Credit Loans" shall have the meaning assigned to such term
in Section 2.01 of this Agreement.
"Revolving Credit Note" means a promissory note of the Borrower payable
to the order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
"SEC" means The United States Securities and Exchange Commission.
"Subsidiary" means, as to any Person, any corporation, partnership,
limited liability company or joint venture whether now existing or hereafter
organized or acquired (i) in the case of a corporation, of which a majority of
the securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, limited
liability company or joint venture, of which a majority of the partnership,
membership or other ownership interests are at the time owned by such Person
and/or one or more Subsidiaries of such Person.
"Total Debt" means Total Secured Debt plus Total Unsecured Debt.
"Total Secured Debt" means all Debt of the Borrower, the Guarantors and
their respective Subsidiaries attributable to their encumbered properties.
"Total Unsecured Debt" means all Debt of the Borrower, the Guarantors
and their respective Subsidiaries attributable to their unencumbered properties.
"Total Value" means Total Secured Value plus Total Unsecured Value.
<PAGE>
"Total Secured Value" means the value of the Borrower's, Guarantors'
and their respective Subsidiaries' encumbered properties, calculated by
capitalizing the Adjusted Net Operating Income thereof at a rate of 10.75%.
"Total Unsecured Value" means the value of the Borrower's, Guarantors'
and their respective Subsidiaries' unencumbered properties, calculated by
capitalizing the Adjusted Net Operating Income thereof at a rate of 10.75%.
"Unused Facility Fee" shall have the meaning set forth in Section 2.06
hereof.
"Year 2000 Issue" means the failure of computer software, hardware and
firmware systems and equipment containing embedded computer chips to properly
receive, transmit, process, manipulate, store, retrieve, re-transmit or in any
other way utilize data and information due to the occurrence of the year 2000 or
the inclusion of dates on or after January 1, 2000.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
SECTION 1.04. Construction. (a) All references in this Agreement to
"Sections" or "sub-sections" shall be deemed, unless otherwise noted, to be
references to the Sections or sub-sections of this Agreement.
(b) All references in this Agreement to an "Exhibit" or
"Exhibits" or to a "Schedule" or "Schedules" shall be deemed, unless otherwise
noted, to be references to the Exhibits and Schedules annexed to this Agreement.
(c) All references to a Subsidiary shall be deemed, unless
otherwise noted, to be references to a Subsidiary of the Borrower or a
Subsidiary of a Guarantor.
<PAGE>
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. The Bank agrees, on and after
---------------------------
the date of this Agreement, on the terms and conditions of this Agreement and in
reliance upon the representations and warranties set forth in this Agreement, to
lend to the Borrower prior to the Maturity Date such amounts as the Borrower may
request from time to time (individually, a "Revolving Credit Loan" or
collectively, the "Revolving Credit Loans"), which amounts may be borrowed,
repaid and reborrowed, provided, however, that the aggregate amount of such
Revolving Credit Loans outstanding at any one time shall not exceed Fifteen
Million ($15,000,000.00) Dollars or such other amount of the Commitment as it
may be reduced pursuant to Section 2.07 hereof.
SECTION 2.02. Notice of Revolving Credit Loans. The Borrower shall give
the Bank irrevocable written, telex, telephonic (immediately confirmed in
writing) or facsimile notice prior to 11:00 a.m. on the day of each Revolving
Credit Loan. Notices received after 11:00 a.m. on any Business Day shall be
deemed to have been given and received on the next Business Day. Such notice
shall specify the date of such borrowing and the amount thereof.
SECTION 2.03. Revolving Credit Note. Each Revolving Credit Loan shall
be in the minimum principal amount of $100,000.00 and in increased integral
multiples of $10,000.00. Each Revolving Credit Loan shall be evidenced by the
Revolving Credit Note of the Borrower. The Revolving Credit Note shall be dated
the date hereof and be in the principal amount of Fifteen Million
($15,000,000.00) Dollars, and shall mature on the Maturity Date, at which time
the entire outstanding principal balance and all interest thereon shall be due
and payable. The Revolving Credit Note shall be entitled to the benefits and
subject to the provisions of this Agreement.
At the time of the making of each Revolving Credit Loan and at the time
of each payment of principal thereon, the holder of the Revolving Credit Note is
hereby authorized by the Borrower to make a notation on the schedule annexed to
the Revolving Credit Note of the date and amount of the Revolving Credit Loan or
payment, as the case may be. Failure to make a notation with respect to any
Revolving Credit Loan shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the Revolving Credit Note with respect to such
Revolving Credit Loan, and any payment of principal on the Revolving Credit Note
by the Borrower shall not be affected by the failure to make a notation thereof
on said schedule.
<PAGE>
SECTION 2.04. Payment of Interest on the Revolving Credit Note;
-------------------------------------------------
Required Balances.
- ------------------
(a) Interest shall be payable at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal at
all times to the Prime Rate. Such interest shall be payable on each Interest
Payment Date, commencing with the first Interest Payment Date after the date of
such Loan and on the Maturity Date. Any change in the rate of interest on the
Revolving Credit Note due to a change in the Prime Rate shall take effect as of
the date of such change in the Prime Rate.
(b) The Borrower and/or Guarantors and/or their respective
Affiliates shall maintain at all times deposit balances of at least ten percent
(10%) of the average outstanding annual principal balance of the Note with the
Bank (the "Required Balances"). In the event that the Borrower and/or Guarantors
and/or their respective Affiliates maintain at least $300,000.00 in demand
deposit balances with the Bank, the remainder of the Required Balances
requirement may be met with money market accounts and certificates of deposit
(balances held in certificates of deposit will be calculated at 50% of their
face value). In the event that the Borrower and/or the Guarantors and/or their
respective Affiliates fail to maintain such Required Balances, as sole remedy
for such failure, the Borrower shall pay to the Bank a deficiency fee equal to
four percent (4%) per annum of the difference between the Required Balances and
the actual balances maintained by the Borrower and/or the Guarantors and/or
their respective Affiliates, payable on each anniversary of the date of this
Agreement in arrears.
SECTION 2.05. Use of Proceeds. The proceeds of the Revolving Credit
----------------
Loans shall be used to finance (i) the acquisition of commercial real estate by
the Borrower and/or the Guarantors, and (ii) the repayment of existing mortgage
debt on properties owned by the Borrower and/or the Guarantors. No part of the
proceeds of any Loan may be used for any purpose that directly or indirectly
violates or is inconsistent with, the provisions of Regulations T, U or X.
SECTION 2.06. Unused Facility Fee. The Borrower agrees to pay to the
---------------------
Bank from the date of this Agreement and for so long as the Commitment remains
outstanding, on the first Business Day of each month an unused facility fee
equal to one quarter of one percent (0.25%) per annum (computed on the basis of
the actual number of days elapsed over 360 days) on the average daily unused
amount of the Commitment (the "Unused Facility Fee"), such Unused Facility Fee
being payable for the calendar month, or part thereof, preceding the payment
date.
<PAGE>
SECTION 2.07. Reduction of Commitment. Upon at least three (3) Business
------------------------
Days' written notice to the Bank, the Borrower may irrevocably elect to have the
unused Commitment terminated in whole or reduced in part provided, however, that
any such partial reduction shall be in a minimum amount of $250,000.00 or whole
multiples thereof. The Commitment, once terminated or reduced, shall not be
reinstated without the express written approval of the Bank. The Borrower shall,
on the effective date of any such reduction, without any notice or demand from
the Bank, prepay any Revolving Credit Loans which exceed the Commitment, as so
reduced.
SECTION 2.08. Prepayment; Maturity. (a) Mandatory. (i) All Revolving
--------------------- ---------
Credit Loans shall be due and payable, if not required to be paid earlier
pursuant to this Agreement, on March 24, 2002 (the "Maturity Date"). If no Event
of Default has occurred, the Borrower, at its option, upon not less than 30
Business Days' (but not greater than 60 Business Days') prior written notice to
the Bank, may extend the Maturity Date to March 24, 2003.
(ii) (a) Upon the sale by the Borrower or any Guarantor of any
property for which the proceeds of the Revolving Credit Loans were used to
purchase or finance such property, the Borrower or Guarantor, as the case may
be, shall repay the full net proceeds of such sale, (b) upon the refinance of
any property acquired by the Borrower or any Guarantor after the date hereof for
which the proceeds of the Revolving Credit Loans were used, the Borrower shall
repay the net proceeds of such refinance, and (c) upon the remortgaging by the
Borrower or any Guarantor of any property for which the proceeds of the
Revolving Credit Loans were used to repay prior mortgages, the Borrower shall
repay the net proceeds of such remortgaging.
(b) Voluntary. (i) The Borrower shall have the right at any time and
---------
from time to time to prepay any Loan, in whole or in part, without premium or
penalty on one (1) Business Day's prior irrevocable written notice to the Bank
of such prepayment provided, however, that each such prepayment shall be on a
Business Day and shall be in a minimum principal amount of $50,000.00 and in
increased integral multiples of $10,000.00.
(ii) The notice of prepayment under this Section 2.08 shall
set forth the prepayment date and the principal amount of the Loan being prepaid
and shall be irrevocable and shall commit the Borrower to prepay such Loan by
the amount and on the date stated therein. All prepayments shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
prepayment. Each prepayment under this Section 2.08 shall be applied first
towards unpaid interest on the amount being prepaid and then towards the
principal in whole or partial prepayment of Loans by the Borrower.
<PAGE>
SECTION 2.09. Intentionally Omitted.
SECTION 2.10. Intentionally Omitted.
SECTION 2.11. Authorization to Debit Borrower's Account. The Bank is
-------------------------------------------
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Note, and (ii)
the Unused Facility Fee and all other fees and amounts due hereunder; all such
debits to be made on the days such payments are due in accordance with the terms
hereof.
SECTION 2.12. Late Charges, Default Interest. (a) If the Borrower shall
-------------------------------
default in the payment of any principal installment of or interest on any Loan
or any other amount becoming due hereunder, the Borrower shall pay a late
payment charge equal to four (4%) percent of such defaulted payment.
(b) Upon the occurrence and during the continuation of an
Event of Default, the Borrower shall pay interest on all amounts owing under the
Note and this Agreement (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the lower of (i) three (3%) percent in excess of the Prime Rate,
or (ii) the highest interest rate otherwise in effect with respect to any Loans
hereunder.
SECTION 2.13. Payments. All payments by the Borrower hereunder or under
---------
the Note shall be made in Dollars in immediately available funds at the office
of the Bank by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Notes shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full.
SECTION 2.14. Interest Adjustments. If the provisions of this Agreement
---------------------
or the Note would at any time require payment by the Borrower to the Bank of any
amount of interest in excess of the maximum amount then permitted by applicable
law, the interest payments shall be reduced to the extent necessary so that the
Bank shall not receive interest in excess of such maximum amount. To the extent
that, pursuant to the foregoing sentence, the Bank shall receive interest
payments hereunder or under the Note in an amount less than the amount otherwise
provided, such deficit (hereinafter called the "Interest Deficit") will cumulate
and will be carried forward (without interest) until the termination of this
Agreement. Interest otherwise payable to the Bank hereunder or under the Note
for any subsequent period shall be increased by such maximum amount of the
Interest Deficit that may be so added without causing the Bank to receive
interest in excess of the maximum amount then permitted by applicable law.
<PAGE>
SECTION 2.15. Participations, Etc. The Bank shall have the right at any
--------------------
time, with or without notice to the Borrower, to sell, assign, transfer or
negotiate all or any part of the Note or the Commitment or grant participations
therein to one or more banks (foreign or domestic, including an affiliate of the
Bank) having sufficient capital to honor the Commitment, insurance companies or
other financial institutions, pension funds or mutual funds. The Borrower and
each of the Guarantors agrees and consents to the Bank providing financial and
other information regarding its and their business and operations to prospective
purchasers or participants and further agree that to the extent that the Bank
should sell, assign, transfer or negotiate all or any part of the Note or the
Commitment, the Bank shall be forever released and discharged from its
obligations under the Note, the Commitment and this Agreement to the extent same
is sold, assigned, transferred or negotiated. Nothing herein shall be read or
construed as prohibiting or otherwise limiting the ability or right of the Bank
to pledge the Note to a Federal Reserve Bank.
<PAGE>
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial
-------------------------------------------------------
Revolving Credit Loan. The obligation of the Bank to make the initial Revolving
- ----------------------
Credit Loan contemplated by this Agreement is subject to the following
conditions precedent, all of which shall be performed or satisfied in a manner
in form and substance reasonably satisfactory to the Bank and its counsel:
(a) The Bank shall have received the Revolving Credit Note,
duly executed by the Borrower and payable to the order of the Bank.
(b) The Bank shall have received certified (as of the date of
this Agreement) copies of the resolutions of the board of directors of the
Borrower authorizing the Loans and authorizing and approving this Agreement and
the other Loan Documents and the execution, delivery and performance thereof and
certified copies of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement and such
other Loan Documents.
(c) The Bank shall have received certified (as of the date of
this Agreement) copies of the resolutions of the boards of directors and the
shareholders of each of the Guarantors, authorizing and approving this
Agreement, their Guaranties and any other Loan Document applicable to the
Guarantors, and the execution, delivery and performance thereof and certified
copies of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, their Guaranties
and such other Loan Documents.
(d) The Bank shall have received a certificate of the
Secretary (attested to by another officer) of the Borrower certifying: (i) the
names and true signatures of the officer or officers of the Borrower authorized
to sign this Agreement, the Note and the other Loan Documents to be delivered
hereunder on behalf of the Borrower; and (ii) a copy of the Borrower's by-laws
as complete and correct on the date of this Agreement.
(e) The Bank shall have received a certificate of the
Secretary (attested to by another officer) of each of the Guarantors certifying
(i) the names and true signatures of the officer or officers of the Guarantors
authorized to sign this Agreement, their Guaranties and any other Loan Documents
to be delivered hereunder on behalf of the Guarantors; (ii) a copy of each of
the Guarantors' by-laws as complete and correct on the date of this Agreement;
and (iii) the stock ownership of each Guarantor.
<PAGE>
(f) The Bank shall have received copies of the certificates of
incorporation and all amendments thereto of the Borrower and each of the
Guarantors, certified in each case by the Secretary of each such entity and a
certificate of existence and good standing with respect to the Borrower and each
Guarantor from the Secretary of State (or equivalent officer) of the state of
incorporation of the Borrower and each Guarantor and from the Secretary of State
(or equivalent officer) of any state in which the Borrower and each Guarantor is
authorized to do business.
(g) The Bank shall have received an opinion of Mark Lundy,
Esq., general counsel for the Borrower and the Guarantors as to certain matters
referred to in Article IV hereof and as to such other matters as the Bank or its
counsel may reasonably request.
(h) The Bank shall have received from each of the Guarantors,
an executed Guaranty.
(i) The Bank shall have received from the Borrower an executed
Pledge Agreement giving to the Bank a first priority security interest in its
ownership interest in each Guarantor (the "Collateral"), together with (i) all
outstanding stock certificates for each Guarantor, and (ii) stock power forms
executed in blank.
(j) The Bank shall have received from the Borrower UCC-1
filings which upon filing in the appropriate jurisdictions shall perfect the
Bank's security interests in the Collateral.
(k) The following statements shall be true and the Bank shall
have received a certificate signed by the President, Vice President or Chief
Financial Officer of the Borrower dated the date hereof, stating that:
(a) The representations and warranties contained in
Article IV of this Agreement and in the Loan Documents
are true and correct in all material respects on and as of such date;
(b) No Default or Event of Default has occurred and
is continuing, or would result from the making of the
initial Revolving Credit Loan;
(l) All schedules, documents, certificates and other
information provided to the Bank pursuant to or in connection with this
Agreement shall be satisfactory to the Bank and its counsel in all material
respects;
(m) The Borrower and/or the Guarantors and/or their respective
Affiliates shall have established a banking and depository relationship with the
Bank;
<PAGE>
(n) The Bank shall have received the Borrower's 10-Q financial
statement filed with the SEC for the period fiscal quarter ended September 30,
1999.
(o) All legal matters incident to this Agreement and the Loan
transactions contemplated hereby shall be reasonably satisfactory to Cullen and
Dykman, counsel to the Bank;
(p) The Bank shall have received such other approvals,
opinions or documents as the Bank or its counsel may reasonably request;
(q) The Bank shall have received payment of the reasonable
legal fees and expenses of the Bank's counsel; and
(r) The Bank shall have received payment of a commitment fee
in the amount of $150,000.00, which the Borrower and Guarantors acknowledge was
earned by the Bank in connection with the transactions contemplated hereby.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans. The
----------------------------------------------------
obligation of the Bank to make each Revolving Credit Loan (including the initial
Revolving Credit Loan) shall be subject to the further condition precedent that
on the date of such Loan:
(a) The following statements shall be true and each request
for a Revolving Credit Loan shall be deemed a certification by the Borrower
that:
(i) The representations and warranties contained in
Article IV of this Agreement and in the other Loan Documents are true and
correct on and as of such date as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and
is continuing, or would result from such Loan.
(b) The Bank shall have received a covenant compliance
certificate prepared by management of the Borrower, indicating that, after
giving effect to the requested Loan, the Borrower shall remain in compliance
with all of the financial requirements set forth in Section 5.03 hereof.
(c) The Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably request.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and on
-------------------------------
each date that the Borrower requests a Revolving Credit Loan, the Borrower and
each Guarantor represents and warrants to the Bank as follows:
(a) Subsidiaries. On the date hereof, the only Subsidiaries of
------------
the Borrower or any Guarantor are set forth on Schedule 4.01(a) annexed hereto.
All of the issued and outstanding shares of such Subsidiaries shown as owned by
the Borrower or any Guarantor on Schedule 4.01(a) are owned by the Borrower or
such Guarantor, free and clear of any mortgage, pledge, lien or encumbrance.
Except as set forth on Schedule 4.01(a), there are not outstanding any warrants,
options, contracts or commitments of any kind entitling any Person to purchase
or otherwise acquire any securities or other equity interest of any Subsidiary,
nor are there outstanding any instruments which are convertible into or
exchangeable for any securities or other equity interests of any Subsidiary.
(b) Organization. The Borrower and each Guarantor is a
-------------
corporation duly organized, validly existing and in good standing under the laws
of the states of their respective formation and the Borrower and each Guarantor
has the power to own its assets and to transact the business in which it is
presently engaged. The Borrower and each Guarantor is duly qualified and is in
good standing in all other jurisdictions where the failure to so qualify or be
in good standing would result in a Material Adverse Change in the Borrower or a
Guarantor.
<PAGE>
(c) Due Execution, etc. The execution, delivery and
-----------------------
performance by the Borrower and each Guarantor of this Agreement and the other
Loan Documents to which it is a party are within the Borrower's and each
Guarantor's corporate power and have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the stockholders of the Borrower or any Guarantor; (ii) contravene the
Borrower's or any Guarantor's certificate of incorporation or by-laws; (iii)
violate any provision of or any law, rule, regulation, contractual restriction,
order, writ, judgment, injunction, or decree, determination or award binding on
or affecting the Borrower or any Guarantor; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement, or any
other agreement, lease or instrument to which the Borrower or any Guarantor is a
party or by which it or its properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than the Lien of
the Loan Documents) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or any Guarantor.
(d) No Authorization, etc. No authorization or approval or
------------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower or any Guarantor of this Agreement or any other Loan Document to
which it is a party, except authorizations, approvals, actions, notices or
filings which have been obtained, taken or made, as the case may be.
(e) Validity of Loan Documents. The Loan Documents when
-----------------------------
delivered hereunder will have been duly executed and delivered on behalf of the
Borrower and each Guarantor and will be legal, valid and binding obligations of
the Borrower and each Guarantor, enforceable against the Borrower and each
Guarantor in accordance with their respective terms.
(f) Financial Statements. The management prepared consolidated
---------------------
financial statements of the Borrower and its Subsidiaries for the nine (9) month
fiscal period ended September 30, 1999, copies of each of which have been
furnished to the Bank, and the consolidated results of operations of the
Borrower and its Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, fairly present the consolidated financial condition of the
Borrower and its Subsidiaries as at such dates. Since such date there has been
(i) except as set forth in Schedule 4.01(f) hereto, no material increase in the
liabilities of the Borrower and its Subsidiaries or any Guarantor and (ii) no
Material Adverse Change in the Borrower, any Subsidiary or any Guarantor.
(g) No Litigation. There is no pending or threatened action,
--------------
proceeding or investigation affecting the Borrower or any Guarantor or any
Subsidiary before any court, governmental agency or arbitrator, which may either
in one case or in the aggregate, result in a Material Adverse Change in the
Borrower, such Guarantor or such Subsidiary.
(h) Tax Returns. The Borrower, each Guarantor and each
-------------
Subsidiary has filed all federal, state and local tax returns required to be
filed (subject to extensions granted) and has paid all taxes, assessments and
governmental charges and levies thereon to be due, including interest and
penalties.
<PAGE>
(i) Licenses, etc. The Borrower, each Guarantor and each
---------------
Subsidiary possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
neither the Borrower, any Guarantor nor any Subsidiary is in violation of any
similar rights of others.
(j) Intentionally Omitted.
(k) Margin Credit. Neither the Borrower, any Guarantor nor any
--------------
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T, U or
X), and no proceeds of any Loan will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock or in any other way which will cause the Borrower or any
Guarantor to violate the provisions of Regulations T, U or X.
(l) Compliance with Law. The Borrower, each Guarantor and each
-------------------
Subsidiary is in all material respects in compliance with all federal and state
laws and regulations in all jurisdictions where the failure to comply with such
laws or regulations could result in a Material Adverse Change in the Borrower,
such Guarantor or such subsidiary.
(m) ERISA. The Borrower, each Guarantor, each Subsidiary and
------
each ERISA Affiliate of the Borrower, a Guarantor or a Subsidiary are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan of the Borrower, a Guarantor or a
Subsidiary; no notice of intent to terminate a Plan of the Borrower, a Guarantor
or a Subsidiary has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan of the Borrower, a Guarantor or a Subsidiary, nor has
the PBGC instituted any such proceedings; neither the Borrower, any Guarantor,
any Subsidiary nor any ERISA Affiliate of the Borrower, any Guarantor or any
Subsidiary has completely or partially withdrawn under Sections 4201 or 4204 of
ERISA from a Multiemployer Plan; the Borrower, each Guarantor, each Subsidiary
and each ERISA Affiliate of the Borrower, any Guarantor or any Subsidiary have
met their minimum funding requirements under ERISA with respect to all of their
Plans and the present fair market value of all Plan assets exceeds the present
value of all vested benefits under each Plan, as determined on the most recent
valuation date of the Plan in accordance with the provisions of ERISA for
calculating the potential liability of the Borrower, any Guarantor, any
Subsidiary or any ERISA Affiliate of the Borrower, any Guarantor or any
Subsidiary to PBGC or the Plan under Title IV of ERISA; and neither the
Borrower, any Guarantor, or any Subsidiary nor any ERISA Affiliate of the
Borrower, a Guarantor or any Subsidiary has incurred any liability to the PBGC
under ERISA.
<PAGE>
(n) Hazardous Material. The Borrower, each Guarantor and each
-------------------
Subsidiary is, in all material respects, in compliance with all federal, state
or local laws, ordinances, rules, regulations or policies governing Hazardous
Materials; and neither the Borrower, any Guarantor nor any Subsidiary has used
Hazardous Materials on, from, or affecting any property now owned or occupied or
hereafter owned or occupied by the Borrower, any Guarantor or any Subsidiary in
any manner which violates federal, state or local laws, ordinances, rules,
regulations or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials; and to the best of the Borrower's and each Guarantor's knowledge, no
prior owner of any such property or any tenant, subtenant, prior tenant or prior
subtenant of any such property have used Hazardous Materials on, from or
affecting such property in any manner which violates federal, state or local
laws, ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials except as set forth in the Borrower's files
which have been made available to the Bank.
(o) Use of Proceeds. The proceeds of the Revolving Credit
-----------------
Loans shall be used exclusively for the purposes set forth in Section 2.05.
(p) Title to Assets. The Borrower, each Guarantor and each
----------------
Subsidiary has good and marketable title to all of its properties and assets.
The properties and assets of the Borrower and each Guarantor are not subject to
any mortgage, judgment or similar Lien other than those described in Section
5.02(a) hereof.
(q) Casualty. Neither the business nor the properties of the
---------
Borrower, any Guarantor or any Subsidiary are affected by any fire, explosion,
accident, strike, hail, earthquake, embargo, act of God or of the public enemy,
or other casualty (whether or not covered by insurance), which could result in a
Material Adverse Change in the Borrower, any Guarantor or any Subsidiary.
(r) Lien Priority. Except as disclosed on Schedule 4.01(r) or
--------------
as permitted by Section 5.02(a), the Lien(s) on the Collateral created by the
Pledge Agreement(s) constitute(s) valid first priority perfected security
interests in favor of the Bank.
<PAGE>
(s) Credit Agreements. Schedule 4.01(s) is a complete and
-------------------
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases, and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower or any Guarantor is in
any manner directly or contingently obligated, and the maximum principal or face
amounts of the credit in question, outstanding or to be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
(t) Solvency. The liability of each Guarantor as a result of
---------
the execution of its respective Guaranty and the execution of this Agreement
shall not cause the liabilities (including contingent liabilities) of such
Guarantor to exceed the fair saleable value of its assets.
(u) Financial or Other Advantage. Each Guarantor acknowledges
-----------------------------
that it has derived or expects to derive a financial or other advantage from the
Loans obtained by the Borrower from the Bank.
(w) Year 2000 Issue. The Borrower, each Guarantor and each Subsidiary
----------------
of the Borrower or any Guarantor has reviewed the effect of the Year 2000 Issue
on the computer software, hardware and firmware systems and equipment containing
embedded microchips owned or operated by or for the Borrower, the Guarantors or
such Subsidiaries or used or relied upon in the conduct of their business
(including systems and equipment supplied by others or with which such computer
systems of the Borrower, the Guarantors or such Subsidiaries interface). The
costs to the Borrower, the Guarantors or such Subsidiaries of any reprogramming
required as a result of the Year 2000 Issue to permit the proper functioning of
such systems and equipment and the proper processing of data, and the testing of
such reprogramming, and of the reasonably foreseeable consequences of the Year
2000 Issue to the Borrower, the Guarantors or such Subsidiaries (including
reprogramming errors and the failure of systems or equipment supplied by others)
are not reasonably expected to result in a Default or Event of Default or to
result in a Material Adverse Change in the Borrower, the Guarantors or such
Subsidiaries.
<PAGE>
ARTICLE V
COVENANTS OF THE BORROWER AND THE GUARANTORS
SECTION 5.01. Affirmative Covenants. So long as any amount shall remain
----------------------
outstanding under the Revolving Credit Note or so long as the Commitment shall
remain in effect, the Borrower and each Guarantor will, and will cause each
Subsidiary to, unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
--------------------------
with all applicable laws, rules, regulations and orders, where the failure to so
comply could result in a Material Adverse Change in the Borrower, any Guarantor
or any Subsidiary.
(b) Reporting Requirements. Furnish to the Bank: (i) Annual
------------------------
Financial Statements. As soon as available and in any event not later than the
earlier of (x) the date required to be filed with the SEC, or (y) 90 days after
the end of each fiscal year, a copy of the 10-K report of the Borrower and its
Subsidiaries for each fiscal year, including audited consolidated financial
statements with balance sheets with related statements of income and retained
earnings and statements of cash flows, all in reasonable detail and setting
forth in comparative form the figures for the previous fiscal year, together
with an unqualified opinion, prepared by management of the Borrower and
certified by independent certified public accountants selected by the Borrower
and reasonably satisfactory to the Bank, all such financial statements to be
prepared in accordance with GAAP, consistently applied;
(ii) Quarterly Financial Statements. As soon as
--------------------------------
available and in any event not later than the earlier of (x) the date required
to be filed with the SEC, or (y) 45 days after the end of each fiscal quarter,
a copy of the 10-Q report of the Borrower and its Subsidiaries for each fiscal
quarter, including consolidated financial statements for such quarter and for
year to date, including a balance sheet with related statements of income and
retained earnings and a statement of cash flows, all in reasonable detail and
setting forth in comparative form the figures for the comparable quarter and
comparable year to date period for the previous fiscal year, all such financial
statements to be prepared by management of the Borrower in accordance with GAAP,
consistently applied;
(iii) Management Letters. Promptly upon receipt
--------------------
thereof, copies of any reports submitted to the Borrower, any Guarantor or any
Subsidiary by independent certified public accountants in connection with the
examination of the financial statements of the Borrower, any Guarantor or any
Subsidiary made by such accountants;
<PAGE>
(iv) Accountant's Report. Simultaneously with the
---------------------
delivery of the annual financial statements referred to in Section 5.01(b)(i),
a certificate of the independent certified public accountants who audited such
statements to the effect that, in making the examination necessary for the audit
of such statements, they have obtained no knowledge of any condition or event
which constitutes a Default or Event of Default, or if such accountants shall
have obtained knowledge of any such condition or event, they shall specify in
such certificate each such condition or event of which they have knowledge and
the nature and status thereof;
(v) Certificate of No Default. Simultaneously with
--------------------------
the delivery of the financial statements referred to in Section 5.01(b)(i) and
ii), a certificate of the President, Vice President or the Chief Financial
Officer of the Borrower, (1) certifying that no Default or Event of Default has
occurred and is continuing, or if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (2) with computations demonstrat-
ing compliance with the covenants contained in Section 5.03;
(vi) Notice of Litigation. Promptly after the
------------------------
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency, or instru-
mentality, domestic or foreign, whether or not covered by insurance, affecting
the Borrower, any Guarantor or any Subsidiary which, if determined adversely to
the Borrower such Guarantor or such Subsidiary could result in a Material
Adverse Change in the Borrower, such Guarantor or such Subsidiary;
(vii) Notice of Defaults and Events of Default. As
-----------------------------------------
soon as possible and in any event within five (5) days after the occurrence of
each Default or Event of Default, a written notice setting forth the details of
such Default or Event of Default and the action which is proposed to be taken
by the Borrower with respect thereto;
<PAGE>
(viii) ERISA Reports. Promptly after the filing or
---------------
receiving thereof, copies of all reports, including annual reports, and notices
which the Borrower, any Guarantor or any Subsidiary files with or receives from
the PBGC, the Internal Revenue Service or the U.S. Department of Labor under
ERISA; and as soon as possible after the Borrower or any Guarantor knows or has
reason to know that any Reportable Event or Prohibited Transaction has occurred
with respect to any Plan of the Borrower, any Guarantor or any Subsidiary or
that the PBGC or the Borrower, any Guarantor or any Subsidiary has instituted
or will institute proceedings under Title IV of ERISA to terminate any Plan,
the Borrower will deliver to the Bank a certificate of the President, Vice
President or the Chief Financial Officer of the Borrower setting forth details
as to such Reportable Event, Prohibited Transaction or Plan termination and
the action the Borrower proposes to take with respect thereto;
(ix) Reports to Other Creditors. Promptly after the
---------------------------
furnishing thereof, copies of any statement or report furnished to any other
party pursuant to the terms of any indenture, loan, credit or similar agreement
and not otherwise required to be furnished to the Bank pursuant to any other
clause of this Section 5.01(b);
(x) Proxy Statements, Etc. Promptly after the sending
----------------------
or filing thereof, copies of all proxy statements, financial statements and
reports which the Borrower or any Guarantor sends to its public stockholders,
if any, and copies of all regular, periodic, and special reports, all
registration statements which the Borrower or any Guarantor files with the SEC
or any governmental authority which may be substituted therefor, or with any
national securities exchange and any press releases or other notices or
information publically disseminated;
(xi) Notice of Affiliates. Promptly after any Person
---------------------
becomes an Affiliate of the Borrower or any Guarantor, notice to the Bank of
such Affiliate;
(xii) Mortgage Financing. As soon as available and
--------------------
in any event not later than 30 days prior to the closing of any mortgage
financing against any unencumbered property, a certificate prepared by
management of the Borrower (i) advising the Bank of the proposed mortgage
financing, (ii) detailing the property or properties to be mortgaged, (iii)
setting forth the source and terms of such financing, and (iv) evidencing
compliance with all of the financial covenants set forth in Section 5.03 hereof
after giving effect to such mortgage financing;
(xiii) General Information. Such other information
---------------------
respecting the condition or operations, financial or otherwise, of the Borrower,
any Guarantor or any Subsidiary as the Bank may from time to time reasonably
request.
(c) Taxes. Pay and discharge all taxes, assessments and
------
governmental charges upon the Borrower, any Guarantor, any Subsidiary, its or
their income and its or their properties prior to the dates on which penalties
are attached thereto, unless and only to the extent that (i) such taxes shall be
contested in good faith and by appropriate proceedings by the Borrower, such
Guarantor or such Subsidiary, (ii) there be adequate reserves therefor in
accordance with GAAP entered on the books of the Borrower, such Guarantor or
such Subsidiary and (iii) no enforcement proceedings against the Borrower, such
Guarantor or such Subsidiary have been commenced.
<PAGE>
(d) Existence. Preserve and maintain the Borrower's, each
----------
Guarantor's and each Subsidiary's existence and good standing in the
jurisdiction of its formation and the rights, privileges and franchises of the
Borrower, each Guarantor and each Subsidiary in each case where failure to so
preserve or maintain could result in a Material Adverse Change in the Borrower,
the Guarantors and their respective Subsidiaries, taken as a whole.
(e) Maintenance of Properties and Insurance. (i) Keep the
-------------------------------------------
respective properties and assets (tangible or intangible) that are useful and
necessary in the Borrower's, each Guarantor's and each Subsidiary's business, in
good working order and condition, reasonable wear and tear excepted; and (ii)
maintain insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning properties doing business in
the same general areas in which the Borrower, each Guarantor and each Subsidiary
operates.
(f) Books of Record and Account. Keep adequate records and
-----------------------------
proper books of record and account in which complete entries will be made in a
manner to enable the preparation of financial statements in accordance with
GAAP, reflecting all financial transactions of the Borrower, each Guarantor and
each Subsidiary.
(g) Visitation. At any reasonable time, and from time to time,
-----------
permit the Bank or any agents or representatives thereof, to examine and make
copies of and abstracts from the books and records of, and, subject to the
requirements of all applicable leases, visit the properties of, the Borrower,
each Guarantor and each Subsidiary and to discuss the affairs, finances and
accounts of the Borrower, each Guarantor and each Subsidiary with any of their
respective officers or directors or the Borrower's, such Guarantor's or such
Subsidiary's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform
-------------------------------------------------
and comply with each of the provisions of each and every agreement the failure
to perform or comply with which could result in a Material Adverse Change in the
Borrower, any Guarantor or any Subsidiary.
(i) Continued Perfection of Liens and Security Interest.
--------------------------------------------------------
Record or file or rerecord or refile any of the Loan Documents or a financing
statement or any other filing or recording or refiling or rerecording in each
and every office where and when necessary to preserve, perfect and continue the
security interests of the Loan Documents.
(j) Pension Funding. Comply with the following and cause each
----------------
ERISA Affiliate of the Borrower, each Guarantor and each Subsidiary to comply
with the following:
<PAGE>
(i) engage solely in transactions which would not
subject any of such entities to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code in either case in an amount in excess of $25,000.00;
(ii) make full payment when due of all amounts which,
under the provisions of any Plan or ERISA, the Borrower, each Guarantor, each
Subsidiary or any ERISA Affiliate of any of same is required to pay as
contributions thereto;
(iii) all applicable provisions of the Internal
Revenue Code and the regulations promulgated thereunder, including but not
limited to Section 412 thereof, and all applicable rules, regulations and
interpretations of the Accounting Principles Board and the Financial Accounting
Standards Board;
(iv) not fail to make any payments in an aggregate
amount greater than $25,000.00 to any Multiemployer Plan that the Borrower, any
Guarantor, any Subsidiary or any ERISA Affiliate of the Borrower, any Guarantor
or any Subsidiary may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which
could result in the occurrence of a Prohibited Transaction.
(k) Licenses. Maintain at all times all licenses or permits
---------
necessary to the conduct of the business of the Borrower, each Guarantor and
each Subsidiary or as may be required by any governmental agency or
instrumentality thereof.
(l) New Subsidiaries. (i) Cause any Subsidiary of the Borrower
-----------------
formed after the date of this Agreement owning unencumbered properties to become
a Guarantor of all obligations of the Borrower to the Bank, whether incurred
under this Agreement or otherwise; and
(ii) Pledge to the Bank all of its ownership interest
on any new Subsidiary pursuant to a Pledge Agreement, and deliver to the Bank
(i) all stock certificates and other certificates evidencing such ownership,
and (ii) stock power forms executed in blank.
<PAGE>
(m) Year 2000 Issue. Any reprogramming or other corrective
----------------
modifications required to permit, on or after January 1, 2000, the proper
functioning of and receipt, transmission, processing, storage, manipulation or
other utilization of data by (i) the Borrower's and Guarantors' computer
systems, and (ii) equipment containing embedded microchips has been or will be
timely completed such that no material adverse effect will occur with respect to
the Borrower's or Guarantors' business or operations stemming from the failure
of the Borrower's or Guarantors' or their respective subsidiaries' computer
hardware or software to function at least as effectively following December 31,
1999 as it did at all time periods prior thereto.
(n) Maintenance of Real Estate Investment Trust Status. The
-----------------------------------------------------
Borrower shall maintain at all times its existence as a real estate investment
trust.
(o) Maintenance of Listing on National Stock Exchange. The
----------------------------------------------------
Borrower shall maintain at all times its listing on the American Stock Exchange
or another nationally recognized stock exchange.
(p) Granting of Mortgages to Bank. Upon the occurrence of an
------------------------------
Event of Default, the Borrower and/or the Guarantors shall grant to the Bank
first priority mortgage liens against such unencumbered properties of the
Borrower and/or the Guarantors as are satisfactory to the Bank in the maximum
amount of the Note, together with appropriate title insurance policies,
appraisals, environmentals, etc. as may be reasonably requested by the Bank.
SECTION 5.02. Negative Covenants. So long as any amount shall remain
--------------------
outstanding under the Note, or so long as the Commitment shall remain in effect,
neither the Borrower nor any Guarantor will, nor will the Borrower or any
Guarantor permit any Subsidiary to, without the written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any
-----------
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(i) Liens in favor of the Bank;
(ii) Liens for taxes or assessments or other
government charges or levies if not yet due and payable or if due and payable
if they are being contested in good faith by appropriate proceedings and
for which appropriate reserves are maintained in accordance with GAAP;
(iii) Liens imposed by law, such as mechanics',
materialmen's, landlords', warehousemen's, and carriers' Liens, and other
similar Liens, securing obligations incurred in the ordinary course of business
which are not past due or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained in accordance
with GAAP;
(iv) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
<PAGE>
(v) Liens, deposits, or pledges to secure the
performance of bids, tenders, contracts (other than contracts for the payment
of money), leases (permitted under the terms of this Agreement), public or
statutory obligations, surety, stay, appeal, indemnity, performance or other
similar bonds, or other similar obligations arising in the ordinary course
of business;
(vi) Liens described in Schedule 5.02(a), provided
that no such Liens or the Debt secured thereby shall be renewed, extended or
refinanced (other than Liens described in (ix) below);
(vii) Judgment and other similar Liens arising in
connection with court proceedings (other than those described in Section
6.01(f)), provided that the execution or other enforcement of such judgment or
Lien is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, and
other similar encumbrances with respect to real property which, either in one
case or in the aggregate, do not materially interfere with the Borrower's or a
Guarantor's or a Subsidiary's occupation, use and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
or
(ix) Liens resulting from direct mortgage debt for
the purchase or refinance of real estate, provided that:
(1) The obligation secured by any Lien so
created, assumed, or existing shall not exceed 75% of the lesser of cost or
appraised value of the property subject to such Lien;
(2) Each such Lien shall attach only to the
property so acquired or refinanced and the
improvements thereon; and
(3) In the event that such Lien is against a
Guarantor, if required by the lender secured by such Lien and no Event of
Default has occurred, the Guaranty of such Guarantor shall be released by the
Bank.
(b) Debt. Create, incur, assume, or suffer to exist, any Debt,
-----
except:
(i) Debt of the Borrower or a Guarantor under this
Agreement or the Note or any other Debt of the Borrower,
a Guarantor or a Subsidiary owing to the Bank;
(ii) Debt described in Schedule 5.02(b);
<PAGE>
(iii) Accounts payable to trade creditors for goods
or services and current operating liabilities (other than for borrowed money)
in each case incurred in the ordinary course of business and paid within
the specified time, unless contested in good faith and by appropriate
proceedings; or
(iv) Debt of the Borrower, a Guarantor or a
Subsidiary secured by Liens permitted by Section 5.02(a)(ix).
(c) Intentionally Omitted.
(d) Merger. Merge into, or consolidate with or into, or have
-------
merged into it, any Person; and, for the purpose of this subsection (d), the
acquisition or sale by the Borrower or a Guarantor by lease, purchase or
otherwise, of all, or substantially all, of the common stock or the assets of
any Person or of it shall be deemed a merger of such Person with the Borrower or
a Guarantor;
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or
---------------------
otherwise dispose of any of its assets, (including a saleleaseback transaction)
with or without recourse, other than in the ordinary course of its business.
(f) Investments, Etc. Make any Investment other than
-----------------
Permitted Investments.
(g) Transactions With Affiliates. Except in the ordinary
-------------------------------
course of business and pursuant to the reasonable requirements of the
Borrower's, a Guarantor's or Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower, such Guarantor or such Subsidiary than
would be obtained in a comparable arm's length transaction with a Person not an
Affiliate, enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate.
(h) Intentionally Omitted.
(i) Guarantees. Guaranty, or in any other way become directly
-----------
or contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; or (ii) guarantees existing on
the date hereof and set forth in Schedule 5.02(i) annexed hereto; or (iii)
hazardous material indemnities; or (iv) indemnities regarding intentional fraud
or misrepresentation, misappropriation of security deposits or insurance
proceeds, waste, abandonment of any property, misapplication of rents post
default and other similar items.
<PAGE>
(j) Change of Business. Materially alter the nature of its
--------------------
business.
(k) Fiscal Year. Change the ending date of its fiscal year
-------------
from December 31.
(l) Losses. Incur a consolidated net loss for any fiscal year.
-------
(m) Accounting Policies. Change any accounting policies,
---------------------
except as permitted by GAAP.
(n) Management. Fail to retain at least three (3) of Fredric
-----------
H. Gould, Jeffrey Fishman, Matthew Gould, David Kalish and Israel Rosenzweig in
the management of the Borrower.
(o) Hazardous Material. Cause or permit any property owned or
-------------------
occupied by the Borrower, a Guarantor or a Subsidiary to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce
or process Hazardous Materials, except in compliance with all applicable
federal, state and local laws or regulations; nor cause or permit, as a result
of any intentional or unintentional act or omission on the part of the Borrower,
a Guarantor, a Subsidiary or any tenant or subtenant, a release of Hazardous
Materials onto any property owned or occupied by the Borrower, a Guarantor, a
Subsidiary or onto any other property; fail to comply with all applicable
federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered; nor fail to obtain and comply with, any and all
approvals, registrations or permits required thereunder. The Borrower and the
Guarantors shall execute any documentation reasonably required by the Bank in
connection with the representations, warranties and covenants contained in this
sub-section and Section 4.01 of this Agreement.
(p) Dividends, Etc. Upon the occurrence of an Event of Default, the
----------------
Borrower shall not make distributions in excess of the sum necessary to permit
the Borrower to maintain its status as a real estate investment trust.
SECTION 5.03. Financial Requirements. So long as any amount shall
------------------------
remain outstanding under the Note, or so long as the Commitment shall remain in
effect:
(a) Total Secured Debt to Total Secured Value. The Borrower
--------------------------------------------
and the Guarantors will maintain at all times, on a consolidated basis, a ratio
of Total Secured Debt to Total Secured Value of not greater than 0.70 to 1.00,
such ratio to be tested quarterly.
<PAGE>
(b) Total Debt to Total Value. The Borrower and the Guarantors
--------------------------
will maintain at all times, on a consolidated basis, a ratio of Total Debt to
Total Value of not greater than 0.70 to 1.00, such ratio to be tested quarterly.
(c) Total Unsecured Debt to Total Unsecured Value. The
----------------------------------------------------
Borrower and the Guarantors will maintain at all times, on a consolidated basis,
a ratio of Total Unsecured Debt to Total Unsecured Value of not greater than
0.65 to 1.00, such ratio to be tested quarterly. Notwithstanding the foregoing,
during any one fiscal quarter during any calendar year, the ratio of Total
Unsecured Debt to Total Unsecured Value may be greater than 0.65 to 1.00,
provided that (i) for such quarter, the ratio of Total Unsecured Debt to Total
Unsecured Value shall not be greater than 1.00 to 1.00, and (ii) such ratio
shall not exceed 0.65 to 1.00 in two (2) consecutive quarters.
(d) Debt Service Coverage Ratio. The Borrower and the
--------------------------------
Guarantors will maintain at all times, on a consolidated basis, a Debt Service
Coverage Ratio, the ratio of (a) total Adjusted Net Operating Income, to (b)
Debt Service, of not less than 1.65 to 1.00, such ratio to be tested quarterly.
(e) Unsecured Debt Service Coverage Ratio. The Borrower and
----------------------------------------
the Guarantors will maintain at all times, on a consolidated basis, an Unsecured
Debt Service Coverage Ratio, the ratio of (a) total Adjusted Net Operating
Income for its unencumbered properties to (b) Debt Service for its unencumbered
properties, of not less than 2.00 to 1.00, such ratio to be tested quarterly.
<PAGE>
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
------------------
(each an "Event of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of
principal of, or interest on, the Note when due, or the Borrower shall fail to
pay any fees or other amounts owed in connection with this Agreement when due;
or
(b) Any representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any other Loan Document or which is contained
in any certificate, document, opinion, or financial or other statement furnished
at any time under or in connection with this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect when made;
or
(c) The Borrower, any Guarantor or any Subsidiary shall fail
to perform any covenant contained in Section 5.01 of this Agreement on its part
to be performed or observed within fifteen (15) days of the date required for
such performance; or
(d) The Borrower, any Guarantor or any Subsidiary shall fail
to perform or observe any other term, covenant or agreement contained in this
Agreement or in any other Loan Document (other than the Notes) on its part to be
performed or observed; or
(e) The Borrower, any Guarantor or any Subsidiary shall fail
to pay any Debt or Debts of the Borrower, any Guarantor or any Subsidiary in the
singular or aggregate principal amount of $50,000.00 or more (excluding Debt
evidenced by the Notes), or any installment, interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreements or instruments relating to such Debt or Debts;
or any other default under any agreements or instruments relating to any such
Debt or Debts, or any other event shall occur and shall continue after the
applicable grace period, if any, specified in such agreements or instruments, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Debt or Debts; or any such Debt or Debts
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof; or
<PAGE>
(f) The Borrower, any Guarantor or any Subsidiary shall
generally not pay its Debts as such Debts become due, or shall admit in writing
its inability to pay its Debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Borrower, any Guarantor or any Subsidiary seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its Debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and if instituted against the Borrower, any Guarantor or any
Subsidiary shall remain undismissed for a period of 30 days; or the Borrower,
any Guarantor or any Subsidiary shall take any action to authorize any of the
actions set forth above in this subsection (f); or
(g) Any judgment or order or combination of judgments or orders for
the payment of money, in the amount of $100,000.00 or more, singularly or in the
aggregate, which sum shall not be subject to full, complete and effective
insurance coverage, shall be rendered against the Borrower, any Guarantor or any
Subsidiary and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(h) Any of the following events occur or exist with respect to
the Borrower, any Guarantor, any Subsidiary or any ERISA Affiliate of the
Borrower, any Guarantor or any Subsidiary: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii)
the filing under Section 4041 of ERISA of a notice of intent to terminate any
Plan or the termination of any Plan; (iv) any event or circumstance that might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution of the PBGC of any such proceedings;
(v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, could in the opinion of the Bank
subject the Borrower, any Guarantor, any Subsidiary or any such ERISA Affiliate
to any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the
PBGC, or otherwise (or any combination thereof) which is either singularly or in
the aggregate $50,000.00 or more; or
(i) Any Guarantor shall fail, beyond any applicable grace or
cure period, to perform or observe any term or provision of its Guaranty or any
representation or warranty made by any Guarantor (or any of its officers or
partners) in connection with such Guarantor's Guaranty shall prove to have been
incorrect in any material respect when made; or
<PAGE>
(j) This Agreement or any other Loan Document, at any time
after its execution and delivery and for any reason, ceases to be in full force
and effect or shall be declared to be null and void, or the validity or
enforceability of any document or instrument delivered pursuant to this
Agreement shall be contested by the Borrower, any Guarantor or any other party
to such document or instrument or the Borrower, any Guarantor or any other party
to such document or instrument shall deny that it has any or further liability
or obligation under any such document or instrument; or
(k) An event of default beyond any applicable grace period
specified in any Loan Document other than this Agreement shall have occurred and
be continuing.
SECTION 6.02. Remedies on Default. Upon the occurrence and continuance
--------------------
of an Event of Default the Bank may by notice to the Borrower, (i) terminate the
Commitment, (ii) declare the Note, all interest thereon and all other amounts
payable under this Agreement to be due and payable, whereupon the Commitment
shall be terminated, the Note, all such interest and all such amounts shall
become and be due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower and
the Guarantors and (iv) proceed to enforce its rights whether by suit in equity
or by action at law, whether for specific performance of any covenant or
agreement contained in this Agreement or any other Loan Document, or in aid of
the exercise of any power granted in either this Agreement or any other Loan
Document or proceed to obtain judgment or any other relief whatsoever
appropriate to the enforcement of its rights, or proceed to enforce any other
legal or equitable right which the Bank may have by reason of the occurrence of
any Event of Default hereunder or under any other Loan Document, provided,
however, upon the occurrence of an Event of Default referred to in Section
6.01(e), the Commitment shall be immediately terminated, the Note, all interest
thereon and all other amounts payable under this Agreement shall be immediately
due and payable without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Guarantors. Any amounts collected pursuant to action taken under this Section
6.02 shall be applied to the payment of, first, any costs incurred by the Bank
in taking such action, including but without limitation reasonable attorneys
fees and expenses, second, to payment of the accrued interest on the Note, and
third, to payment of the unpaid principal of the Note, in the order determined
by the Bank.
<PAGE>
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved
--------------------
to the Bank hereunder or in any other Loan Document is intended to be exclusive
of any other available remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
any other Loan Document or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy reserved to it in this Article VI, it shall not be necessary
to give any notice, other than such notice as may be herein expressly required
in this Agreement or in any other Loan Document.
<PAGE>
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment, modification, termination
----------------
or waiver of any provision of any Loan Document to which the Borrower or any
Guarantor is a party, nor consent to any departure by the Borrower or any
Guarantor from any provision of any Loan Document to which it is a party, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications
--------------
provided for in this Agreement shall be in writing (including telegraphic
communication) and mailed, sent by nationally recognized overnight mail delivery
service, or delivered, if to the Borrower or any Guarantor, at the address of
the Borrower set forth at the beginning of this Agreement to the attention of
David Kalish (with a courtesy copy to Mark Lundy, Esq.) and if to the Bank, at
the address of the Bank set forth at the beginning of this Agreement to the
attention of Janet Knipfing, V.P., or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties
complying as to delivery with the terms of this Section 7.02. All such notices
and communications shall be effective when mailed, telegraphed or delivered,
except that notices to the Bank shall not be effective until actually received
by the Bank.
SECTION 7.03. No Waiver, Remedies. No failure on the part of the Bank
---------------------
to exercise, and no delay in exercising, any right, power or remedy under any
Loan Document, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
<PAGE>
SECTION 7.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
---------------------------
demand all reasonable costs and expenses of the Bank in connection with the
preparation, execution, delivery and administration of this Agreement, the Note
and any other Loan Documents, including, without limitation, the reasonable fees
and expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under this Agreement and
the other Loan Documents, and all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement of
this Agreement, the Note and any other Loan Documents. The Borrower and the
Guarantors shall at all times protect, indemnify, defend and save harmless the
Bank from and against any and all claims, actions, suits and other legal
proceedings, and liabilities, obligations, losses, damages, penalties,
judgments, costs, expenses or disbursements which the Bank may, at any time,
sustain or incur by reason of or in consequence of or arising out of the
execution and delivery of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby. The Borrower and the
Guarantors acknowledge that it is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby, all of which risks are hereby assumed by the Borrower and
the Guarantors, including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority, provided that the Borrower and the
Guarantors shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Bank's gross negligence or willful misconduct.
The provisions of this Section 7.04 shall survive the payment of the Note and
the termination of this Agreement.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
-----------------
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any affiliate of the Bank to or for the credit or the account of the Borrower or
any Guarantor against any and all of the obligations of the Borrower and the
Guarantors now or hereafter existing under this Agreement, the Note and the
other Loan Documents, irrespective of whether or not the Bank shall have made
any demand under this Agreement, the Note or such other Loan Documents and
although such obligations may be unmatured. The rights of the Bank under this
Section 7.05 are in addition to all other rights and remedies (including,
without limitation, other rights of set-off) which the Bank may have.
SECTION 7.06. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by the Borrower, the Guarantors and the Bank
and thereafter it shall be binding upon and inure to the benefit of the
Borrower, the Guarantors and the Bank and their respective successors and
assigns, except that the Borrower and the Guarantors shall not have any right to
assign its or their rights hereunder or any interest herein without the prior
written consent of the Bank.
<PAGE>
SECTION 7.07. Further Assurances. The Borrower and each Guarantor
--------------------
agrees at any time and from time to time at its expense, upon request of the
Bank or its counsel, to promptly execute, deliver, or obtain or cause to be
executed, delivered or obtained any and all further instruments and documents
and to take or cause to be taken all such other action the Bank may deem
desirable in obtaining the full benefits of, this Agreement or any other Loan
Document.
SECTION 7.08. Section Headings, Severability, Entire Agreement. Section
-------------------------------------------------
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each other Loan Document is intended to be severable; if any term or
provision of this Agreement, any other Loan Document, or any other document
delivered in connection herewith shall be invalid, illegal or unenforceable for
any reason whatsoever, the validity, legality and enforceability of the
remaining provisions hereof or thereof shall not in any way be affected or
impaired thereby. All exhibits and schedules annexed to this Agreement shall be
deemed to be part of this Agreement. This Agreement, the other Loan Documents
and the exhibits and schedules annexed hereto and thereto embody the entire
agreement and understanding among the Borrower, the Guarantors and the Bank with
respect to the transactions contemplated hereby and supersede all prior
agreements and understandings relating to the subject matter hereof.
SECTION 7.09. Governing Law. This Agreement, the Notes and all other
--------------
Loan Documents shall be governed by, and construed in accordance with, the laws
of the State of New York.
SECTION 7.10. Waiver of Jury Trial. The Borrower, each Guarantor and
---------------------
the Bank waive all rights to trial by jury in any action or proceeding
involving, directly or indirectly any matter (whether sounding in tort, contract
or otherwise) in any way, arising out of, relating to, or connected with this
Agreement, any other Loan Document or the transactions contemplated hereby.
SECTION 7.11. Execution in Counterparts. This Agreement may be executed
--------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ONE LIBERTY PROPERTIES, INC.
By:
-------------------------
Mark H. Lundy
Vice President
OLP ACTION INC.
By:
-------------------------
Mark H. Lundy
Vice President
OLP ARBY'S II, INC.
By:
--------------------------
Mark H. Lundy
Vice President
OLP CHATTANOOGA, INC.
By:
-------------------------
Mark H. Lundy
Vice President
OLP PALM BEACH, INC.
By:
------------------------
Mark H. Lundy
Vice President
OLP MIAMI, INC.
By:
------------------------
Mark H. Lundy
Vice President
OLP AUGUSTA, INC.
By:
------------------------
Mark H. Lundy
Vice President
<PAGE>
OLP BALTIMORE, INC.
By:
------------------------
Mark H. Lundy
Vice President
OLP HAMILTON, INC.
By:
-----------------------
Mark H. Lundy
Vice President
OLP WARSAW, INC.
By:
------------------------
Mark H. Lundy
Vice President
OLP PONCE, INC.
By:
------------------------
Mark H. Lundy
Vice President
EUROPEAN AMERICAN BANK
By:
-----------------------
Janet Knipfing
Vice President
<PAGE>
SCHEDULE 4.01(a)
----------------
Subsidiaries
Name Borrower Ownership
- ---- ------------------
OLP ACTION INC. 100%
OLP ARBY'S II, INC. 100%
OLP BATAVIA, INC. 100%
OLP IOWA, INC. 100%
OLP TEXAS, INC. 100%
OLP TSA GEORGIA, INC. 100%
OLP DIXIE DRIVE HOUSTON, INC. 100%
OLP GREENWOOD VILLAGE, COLORADO, INC. 100%
OLP FT. MEYERS, INC. 100%
47TH AVENUE ASSOCIATES, L.P. 100%
OLP RABRO DRIVE CORP. 100%
OLP CHATTANOOGA, INC. 100%
OLP COLUMBUS, INC. 100%
OLP MESQUITE, INC. 100%
OLP SOUTH HIGHWAY HOUSTON, INC. 100%
OLP SELDEN, INC. 100%
OLP PALM BEACH, INC. 100%
OLP MIAMI, INC. 100%
OLP NEW HYDE PARK, INC. 100%
OLP CHAMPAIGN, INC. 100%
OLP AUGUSTA, INC. 100%
OLP BALTIMORE, INC. 100%
OLP EL PASO, INC. 100%
OLP HAMILTON, INC. 100%
OLP WARSAW, INC. 100%
OLP PLANO, INC. 100%
OLP PONCE, INC. 100%
OLP HANOVER PA., INC. 100%
OLP GRAND RAPIDS, INC. 100%
ELPANS, LLC *
OLP EL PASO I, L.P. **
OLP EL PASO, LLC 100%
OLP PLANO I, L.P. ***
OLP PLANO, LLC 100%
*The Borrower owns a 95% interest and Melissa Fishman holds a 5% interest.
**OLP El Paso, Inc. is the general partner and owns a 1% interest. OLP El Paso,
LLC is the limited partner and owns a 99% interest
****OLP Plano, Inc. is the general partner and owns a 1% interest. OLP Plano,
LLC is the limited partner and owns a 99% interest
<PAGE>
SCHEDULE 4.01(f)
MATERIAL EVENTS
---------------
1. Arby's store in South Carolina sold by subsidiary for $725,000.
2. Acquisition by a subsidiary of a Golfsmith and Bassett Furniture in Plano,
Texas for $7.6 million with $5 million loan from GECC.
3. Acquisition by a subsidiary of Ames Department Store in Hamilton, New York
for $1.34 million. No loan.
4. Just For Feet, Inc. filed for bankruptcy. They are tenant in Lewisville,
Texas. Footstar, Inc. assumed lease.
5. Subsidiary under contract to acquire ESAB Welding Products factory and office
building in Hanover, Pennsylvania for $11.46 million including assumption of
$9,025,000 loan serviced by GMAC.
6. Subsidiary under contract to acquire a retail center with Best Buy, Barnes
and Noble, Comp USA and Mattress Firm in EL Paso, Texas for $14.1 million with
$10 million loan from GECC.
7. Subsidiary under contract to acquire two St. Mark's Hospital rehabilitation
centers/health clubs in Grand Rapids, Michigan for $7.1 million. May or may not
be financed.
Note: All numbers are approximate.
<PAGE>
SCHEDULE 4.01 (s)
-----------------
Credit Agreements, etc.
Nature of Amount of Liens Securing
Creditor Agreement Credit Credit
- -------- --------- ------ ------
None.
<PAGE>
SCHEDULE 5.02(a)
----------------
Liens
Creditor Amount Property Subject to Lien
- -------- ------ ------------------------
None.
<PAGE>
SCHEDULE 5.02(b)
----------------
Debt
Creditor Amount
-------- ------
None.
<PAGE>
SCHEDULE 5.02(i)
----------------
Guaranties
None
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
$15,000,000.00 Garden City, New York
March 24, 2000
FOR VALUE RECEIVED, on the Maturity Date, ONE LIBERTY PROPERTIES, INC.,
a Maryland corporation, having its principal place of business at 60 Cutter Mill
Road, Great Neck, New York 11021 (the "Borrower"), promises to pay to the order
of EUROPEAN AMERICAN BANK (the "Bank") at its office located at One EAB Plaza,
Uniondale, New York 11555, the principal sum of the lesser of: (a) Fifteen
Million ($15,000,000.00) Dollars; or (b) the aggregate unpaid principal amount
of all Revolving Credit Loans made by the Bank to the Borrower pursuant to the
Agreement (as defined below).
The Borrower hereby authorizes the Bank to enter from time to time the
amount of each Loan to the Borrower and the amount of each payment on a Loan on
the schedule annexed hereto and made a part hereof. Failure of the Bank to
record such information on such schedule shall not in any way affect the
obligation of the Borrower to pay any amount due under this Note.
The Borrower shall pay interest on the unpaid balance of this Note from
time to time outstanding at said office, at the rate of interest and at the
times set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is the Revolving Credit Note referred to in that certain Loan
Agreement among the Borrower, certain Guarantors and the Bank of even date
herewith (the "Agreement"), as such Agreement may be amended from time to time,
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in said Agreement. All capitalized terms used in this Note
and not defined herein shall have the meanings given them in the Agreement.
<PAGE>
If any action or proceeding be commenced to collect this Note or
enforce any of its provisions, the Borrower further agrees to pay all costs and
expenses of such action or proceeding and reasonable attorneys' fees and
expenses and further expressly waives any and every right to interpose any
counterclaim in any such action or proceeding. The Borrower hereby submits to
the jurisdiction of the Supreme Court of the State of New York and agrees with
the Bank that personal jurisdiction over the Borrower shall rest with the
Supreme Court of the State of New York for purposes of any action on or related
to this Note, the liabilities hereunder, or the enforcement of either or all of
the same. The Borrower hereby waives personal service by manual delivery and
agrees that service of process may be made by post-paid certified mail directed
to the Borrower at the Borrower's address designated in the Agreement or at such
other address as may be designated in writing by the Borrower to the Bank in
accordance with Section 7.02 of the Agreement, and that upon mailing of such
process such service be effective with the same effect as though personally
served.
The Borrower hereby expressly waives any and every right to a trial by
jury in any action on or related to this Note, the liabilities hereunder or the
enforcement of either or all of the same.
The Bank may transfer this Note (subject to Section 2.15 of the
Agreement) and may deliver the security or any part thereof to the transferee or
transferees, who shall thereupon become vested with all the powers and rights
above given to the Bank in respect thereto, and the Bank shall thereafter be
forever relieved and fully discharged from any liability or responsibility in
the matter. The failure of any holder of this Note to insist upon strict
performance of each and/or all of the terms and conditions hereof shall not be
construed or deemed to be a waiver of any such term or condition.
The Borrower and all endorsers and guarantors hereof waive presentment
and demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
ONE LIBERTY PROPERTIES, INC.
By:
-------------------------
Mark H. Lundy
Vice President
<PAGE>
Schedule of Revolving Credit Loans
----------------------------------
Amount of
Principal Unpaid Name of
Amount of Paid or Principal Person Making
Date Loan Prepaid Balance Notation
---- ---- ------- ------- --------
