UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 0-12989
COMMERCIAL NET LEASE REALTY, INC.
(exact name of registrant as specified in its charter)
Maryland 56-1431377
(State or other jurisdiction of (I.R.S. Employment Identification
incorporation or organization) No.)
450 South Orange Avenue, Orlando, Florida 32801
(Address of principal executive offices, including zip code)
(407) 265-7348
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
30,406,706 shares of Common Stock, $0.01 par value, outstanding as of November
8, 1999 .
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
CONTENTS
Part I
Item 1. Financial Statements: Page
Condensed Consolidated Balance Sheets...............................1
Condensed Consolidated Statements of Earnings.......................2
Condensed Consolidated Statements of Cash Flows.....................3
Notes to Condensed Consolidated Financial Statements................5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........21
Part II
Other Information..........................................................22
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
ASSETS September 30, December 31,
1999 1998
------------- -------------
Real estate:
Accounted for using the operating method, net
of accumulated depreciation $ 550,054 $ 519,948
Accounted for using the direct financing
method 125,963 138,809
Investment in unconsolidated subsidiary 4,770 -
Investment in unconsolidated partnership 3,846 3,850
Mortgages receivable 7,492 -
Mortgage receivable from unconsolidated
subsidiary 30,753 -
Cash and cash equivalents 1,595 1,442
Receivables 2,383 3,532
Accrued rental income 12,173 10,395
Debt costs, net of accumulated amortization of
$3,053 and $2,559 3,176 2,282
Other assets 1,781 5,337
------------- -------------
Total assets $ 743,986 $ 685,595
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit payable $ 89,800 $ 138,100
Mortgages payable 53,701 55,063
Notes payable, net of unamortized discount of
$614 and $256, respectively, and unamortized
interest rate hedge gain of $2,550 in 1999 201,936 99,744
Accrued interest payable 2,895 2,646
Accounts payable and accrued expenses 2,425 5,343
Rents received in advance 677 809
------------- -------------
Total liabilities 351,434 301,705
------------- -------------
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.01 par value. Authorized
15,000,000 shares at September 30, 1999 and
December 31, 1998; none issued or outstanding - -
Common stock, $0.01 par value. Authorized
90,000,000 shares; issued and outstanding
30,406,706 and 29,521,089 shares at September
30, 1999 and December 31, 1998, respectively 304 295
Excess stock, $0.01 par value. Authorized
105,000,000 shares at September 30, 1999 and
December 31, 1998; none issued or outstanding - -
Capital in excess of par value 397,716 386,755
Accumulated dividends in excess of net earnings (5,468) (3,160)
------------- -------------
Total stockholders' equity 392,552 383,890
------------- -------------
$ 743,986 $ 685,595
============= =============
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Revenues:
Rental income from
operating leases $ 14,552 $ 11,831 $ 42,811 $ 33,944
Earned income from direct
financing leases 3,366 3,127 10,504 9,427
Contingent rental income 238 211 671 653
Development and asset
management fees from
related parties 609 527 2,113 1,969
Interest and other 218 125 866 454
---------- ---------- ---------- ----------
18,983 15,821 56,965 46,447
---------- ---------- ---------- ----------
Expenses:
General operating and
administrative 1,202 2,149 5,406 5,009
Real estate expenses 92 85 268 343
Interest 5,663 3,307 15,797 9,175
Depreciation and
amortization 2,230 1,708 6,283 4,935
Expenses incurred in
acquiring advisor from
related party 794 - 8,961 4,692
---------- ---------- ---------- ----------
9,981 7,249 36,715 24,154
---------- ---------- ---------- ----------
Earnings before equity in
earnings of unconsolidated
partnership and
unconsolidated subsidiary,
and gain on sale of real
estate 9,002 8,572 20,250 22,293
Equity in earnings of
unconsolidated partnership 93 91 279 273
Equity in earnings of
unconsolidated subsidiary (299) - (552) -
Gain on sale of real estate - 1,288 5,784 1,288
---------- ---------- ---------- ----------
Net earnings $ 8,796 $ 9,951 $ 25,761 $ 23,854
========== ========== ========== ==========
Net earnings per share
of common stock:
Basic $ 0.29 $ 0.34 $ 0.85 $ 0.82
========== ========== ========== ==========
Diluted $ 0.29 $ 0.34 $ 0.85 $ 0.82
========== ========== ========== ==========
Weighted average number of
shares outstanding:
Basic 30,425,097 29,326,745 30,279,232 29,012,455
========== ========== ========== ==========
Diluted 30,448,811 29,463,035 30,367,306 29,202,262
========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Nine Months Ended
September 30,
1999 1998
---------- ----------
Cash flows from operating activities:
Net earnings $ 25,761 $ 23,854
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 6,283 4,935
Amortization of notes payable discount 34 10
Amortization of deferred interest rate hedge
gain (129) -
Gain on sale of real estate (5,784) (1,288)
Expenses incurred in acquiring advisor from
related party 8,961 4,692
Distributions from unconsolidated
partnership, net of equity in earnings 2 7
Equity in earnings of unconsolidated
subsidiary 552 -
Deferred intercompany profits 378 -
Decrease in real estate leased to others
using the direct financing method 1,333 996
Decrease in accrued mortgage interest
receivable 261 -
Decrease (increase) in receivables 1,162 (1,700)
Increase in accrued rental income (2,919) (2,340)
Increase in other assets (236) (229)
Increase in accrued interest payable 249 4
Increase in accounts payable and accrued
expenses 574 563
Decrease in rents received in advance (132) (669)
---------- ----------
Net cash provided by operating activities 36,350 28,835
---------- ----------
Cash flows from investing activities:
Proceeds from the sale of real estate 40,103 5,570
Additions to real estate accounted for using the
operating method (72,611) (66,038)
Additions to real estate accounted for using the
direct financing method (1,901) (4,889)
Increase in mortgages receivable (3,952) -
Mortgage payments received 101 -
Increase in mortgage receivable from
unconsolidated subsidiary (23,053) -
Increase in other assets (262) (2,316)
Other 377 10
---------- ----------
Net cash used in investing activities (61,198) (67,663)
---------- ----------
Cash flows from financing activities:
Proceeds from line of credit payable 61,100 69,400
Repayment of line of credit payable (109,400) (116,000)
Repayment of mortgages payable (1,362) (1,243)
Proceeds from notes payable 99,608 99,729
Proceeds from termination of interest rate hedge 2,679 -
Payment of debt costs (1,334) (1,164)
Proceeds from issuance of common stock 2,018 19,858
Payment of stock issuance costs 91 (1,103)
Payment of dividends (28,069) (26,570)
Other (330) (415)
---------- ----------
Net cash provided by financing activities 25,001 42,492
---------- ----------
Net increase in cash and cash equivalents 153 3,664
Cash and cash equivalents at beginning of period 1,442 2,160
---------- ----------
Cash and cash equivalents at end of period $ 1,595 $ 5,824
========== ==========
Supplemental schedule of non-cash investing
and financing activities:
Issued 720,476 and 220,000 shares of common stock
in 1999 and 1998, respectively, in connection
with the acquisition of the Company's advisor $ 8,961 $ 3,933
========== ==========
Net assets acquired in connection with the
acquisition of the Company's advisor $ - $ 12
========== ==========
Mortgage note accepted in connection with sale of
real estate $ 3,538 $ -
========== ==========
Real estate and other assets contributed to
unconsolidated subsidiary in exchange for:
Non-voting common stock $ 5,700 $ -
========== ==========
Mortgage receivable $ 8,064 $ -
========== ==========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
COMMERCIAL NET LEASE REALTY, INC.
and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended September 30, 1999 and 1998
1. Basis of Presentation:
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements reflect
all adjustments, consisting of normal recurring adjustments, which are, in
the opinion of management, necessary for a fair presentation of the
results for the interim periods presented. Operating results for the
quarter and nine months ended September 30, 1999, may not be indicative of
the results that may be expected for the year ending December 31, 1999.
Amounts as of December 31, 1998, included in the financial statements,
have been derived from the audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in the Form 10-K of
Commercial Net Lease Realty, Inc. for the year ended December 31, 1998.
The consolidated financial statements include the accounts of Commercial
Net Lease Realty, Inc. and its wholly-owned subsidiaries (the "Company").
All significant intercompany accounts and transactions have been
eliminated in consolidation.
Basic earnings per share are calculated based upon the weighted average
number of common shares outstanding during each period and diluted
earnings per share are calculated based upon weighted average number of
common shares outstanding plus dilutive potential common shares.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred
to as derivatives), and for hedging activities. The Statement requires
that an entity recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value. The
Company is currently reviewing the Statement to see what impact, if any,
it will have on the Company's consolidated financial statements.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133, an Amendment of FASB Statement No. 133." Statement
No. 137 defers the effective date of Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" for one year. Statement No.
133, as amended, is now effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000.
2. Leases:
------
The Company generally leases its real estate to operators of major retail
businesses. As of September 30, 1999, 185 of the leases have been
classified as operating leases and 84 leases have been classified as
direct financing leases. For the leases classified as direct financing
leases, the building portions of the property leases are accounted for as
direct financing leases while the land portions of 48 of these leases are
accounted for as operating leases. Substantially all leases have initial
terms of 10 to 20 years (expiring between 2000 and 2020) and provide for
minimum rentals. In addition, the majority of the leases provide for
contingent rentals and/or scheduled rent increases over the terms of the
leases. The tenant is also generally required to pay all property taxes
and assessments, substantially maintain the interior and exterior of the
building and carry insurance coverage for public liability, property
damage, fire and extended coverage. The lease options generally allow
tenants to renew the leases for two to four successive five-year periods
subject to substantially the same terms and conditions as the initial
lease.
3. Real Estate:
-----------
Accounted for Using the Operating Method - Real estate on operating leases
----------------------------------------
consisted of the following at (dollars in thousands):
September 30, December 31,
1999 1998
------------- -------------
Land $ 267,797 $ 258,545
Buildings and improvements 298,330 269,225
Leasehold interests 4,324 -
------------- -------------
570,451 527,770
Less accumulated depreciation
and amortization (20,469) (17,335)
------------- -------------
549,982 510,435
Construction in progress 72 9,513
------------- -------------
$ 550,054 $ 519,948
============= =============
Some leases provide for scheduled rent increases throughout the lease
term. Such amounts are recognized on a straight-line basis over the terms
of the leases. For the nine months ended September 30, 1999 and 1998, the
Company recognized $2,962,000 and $2,382,000, respectively, of such
income, $1,159,000 and $836,000 of which was recognized for the quarters
ended September 30, 1999 and 1998, respectively.
The following is a schedule of future minimum lease payments to be
received on non-cancelable operating leases at September 30, 1999 (dollars
in thousands):
1999 $ 13,691
2000 55,998
2001 56,913
2002 56,747
2003 56,880
Thereafter 575,653
----------
$ 815,882
==========
Since lease renewal periods are exercisable at the option of the tenant,
the above table only presents future minimum lease payments due during the
initial lease terms. In addition, this table does not include any amounts
for future contingent rentals which may be received on the leases based on
a percentage of the tenants' gross sales.
Accounted for Using the Direct Financing Method - The following lists the
------------------------------------------------
components of net investment in direct financing leases at (dollars in
thousands):
September 30, December 31,
1999 1998
------------ -------------
Minimum lease payments to be
received $ 249,132 $ 283,185
Estimated residual values 39,643 43,154
Less unearned income (162,812) (187,530)
------------- -------------
Real estate leased to others
using the direct financing
method $ 125,963 $ 138,809
============= =============
The following is a schedule of future minimum lease payments to be
received on direct financing leases at September 30, 1999 (dollars in
thousands):
1999 $ 3,826
2000 15,349
2001 15,382
2002 15,443
2003 15,456
Thereafter 183,676
---------
$ 249,132
=========
The above table does not include future minimum lease payments for renewal
periods or contingent rental payments that may become due in future
periods (see Real Estate: Accounted for Using the Operating Method).
4. Investment in Unconsolidated Subsidiary:
---------------------------------------
In May 1999, the Company transferred its build-to-suit development
operation to a 95%-owned, taxable unconsolidated subsidiary (the
"Subsidiary"). The Company contributed $5.7 million of real estate and
other assets to the Subsidiary in exchange for 5,700 shares of non-voting
common stock. The Company accounts for its investment in the Subsidiary
using the equity method. The Company also entered into a secured line of
credit agreement with the Subsidiary for a $30,000,000 revolving credit
facility. The credit facility is secured by a first mortgage on the
Subsidiary's properties. In addition, the Company entered into a loan
agreement with a wholly-owned subsidiary of the Subsidiary for a
$20,000,000 revolving credit facility.
5. Line of Credit Payable:
----------------------
In September 1999, the Company entered into an amended and restated loan
agreement for a $200,000,000 revolving credit facility (the "Credit
Facility") which amended certain provisions of the Company's existing loan
agreement and which expires on July 30, 2000. As of September 30, 1999 and
December 31, 1998, the outstanding principal balance was $89,800,000 and
$138,100,000, respectively, plus accrued interest of $181,000 and
$361,000, respectively.
For the nine months ended September 30, 1999 and 1998, interest cost
incurred on the Credit Facility was $6,088,000 and $3,121,000,
respectively, of which $487,000 and $779,000, respectively, was
capitalized, $5,242,000 and $2,342,000, respectively, was charged to
operations.
6. Notes Payable:
-------------
In June 1999, the Company filed a prospectus supplement to its
$300,000,000 shelf registration statement and issued $100,000,000 of
8.125% Notes due 2004 (the "Notes"). The Notes are senior, unsecured
obligations of the Company and are subordinated to all secured
indebtedness of the Company. The Notes were sold at a discount for an
aggregate purchase price of $99,608,000 with interest payable
semi-annually commencing on December 15, 1999. The discount of $392,000 is
being amortized as interest expense over the term of the debt obligation
using the effective interest method. In connection with the debt offering,
the Company entered into a treasury rate lock agreement which fixed a
treasury rate of 5.1854% on a notional amount of $92,000,000. Upon
issuance of the Notes, the Company terminated the treasury rate lock
agreement resulting in a gain of $2,679,000. The gain has been deferred
and is being amortized as an adjustment to interest expense over the term
of the Notes using the effective interest method. The effective rate of
the Notes, including the effects of the discount and the treasury rate
lock gain, is 7.547%.
The Notes are redeemable at the option of the Company, in whole or in
part, at a redemption price equal to the sum of (i) the principal amount
of the Notes being redeemed plus accrued interest thereon through the
redemption date and (ii) the make-whole amount, as defined in the
Supplemental Indenture No. 2 dated June 21, 1999 for the Notes.
In connection with the debt offering, the Company incurred debt issuance
costs totaling $970,000, consisting primarily of underwriting discounts
and commissions, legal and accounting fees, rating agency fees and
printing expenses. Debt issuance costs have been deferred and are being
amortized over the term of the Notes using the effective interest method.
The net proceeds of the debt offering were used to pay down outstanding
indebtedness of the Company's Credit Facility.
7. Earnings Per Share:
------------------
The following details the amounts used in computing earnings per share
for:
The quarter ended The nine months ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Basic Earnings
Per Share:
Net earnings $ 8,796,000 $ 9,951,000 $25,761,000 $23,854,000
=========== =========== =========== ===========
Weighted average
number of
shares
outstanding 29,680,089 29,312,599 29,646,606 29,007,688
Merger
contingent
shares 745,008 14,146 632,626 4,767
----------- ----------- ----------- -----------
Weighted average
number of
shares
outstanding
used in basic
earnings per
share 30,425,097 29,326,745 30,279,232 29,012,455
=========== =========== =========== ===========
Basic earnings
per share $ 0.29 $ 0.34 $ 0.85 $ 0.82
=========== =========== =========== ===========
Diluted Earnings Per
Share:
Net earnings $ 8,796,000 $ 9,951,000 $25,761,000 $23,854,000
=========== =========== =========== ===========
Weighted
average number
of shares
outstanding 29,680,089 29,312,599 29,646,606 29,007,688
Effect of
dilutive
securities:
Stock options 1,854 92,623 5,511 175,303
Merger
contingent
shares 766,868 57,813 715,189 19,271
----------- ----------- ----------- -----------
Weighted average
number of
shares
outstanding
used in
diluted
earnings per
share 30,448,811 29,463,035 30,367,306 29,202,262
=========== =========== =========== ===========
Diluted earnings
per share $ 0.29 $ 0.34 $ 0.85 $ 0.82
=========== =========== =========== ===========
For the quarter and nine months ended September 30, 1999 and 1998, options
on 1,642,159 and 859,000 shares of common stock, respectively, were not
included in computing diluted earnings per share because their effects
were antidilutive.
8. Merger Transaction:
------------------
On December 18, 1997, the Company's stockholders voted to approve an
agreement and plan of merger with CNL Realty Advisors, Inc. (the
"Advisor"), whereby the stockholders of the Advisor agreed to exchange 100
percent of the outstanding shares of common stock of the Advisor for up to
2,200,000 shares (the "Share Consideration") of the Company's common stock
(the "Merger"). As a result, the Company became a fully integrated,
self-administered real estate investment trust effective January 1, 1998.
Since the effective date of the Merger, the Company has issued 998,000
shares incurring expenses of $14,462,000, all of which were charged to
operations. In addition, in connection with the property acquisitions
during the quarter ended September 30, 1999, on October 1, 1999, 98,776
shares became issuable to the stockholders of the Advisor. The market
value of the issuable shares is $1,099,000, all of which will be charged
to operations during the quarter ended December 31, 1999.
9. Related Party Transactions:
--------------------------
During the nine months ended September 30, 1999 and 1998, the Company
provided certain development services for an affiliate of a member of the
board of directors. In connection therewith, the Company received
$1,351,000 and $1,806,000, respectively, in development fees relating to
these services.
In August 1999, the Company entered into an asset management agreement
with WXI/SMC Real Estate, LLC (the "LLC"), in which a wholly-owned
subsidiary of the Subsidiary holds a 33 1/3% equity interest. Pursuant to
the asset management agreement, the LLC paid the Company $506,000 in fees
during the quarter ended September 30, 1999.
In March 1999, the Company sold 38 of its properties to an affiliate of a
member of the board of directors for a total of $36,568,000 and received
net proceeds of $36,173,000, resulting in a gain of $5,363,000 for
financial reporting purposes.
10. Segment Information:
-------------------
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This Statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. While the Company does
not have more than one reportable segment as defined by the Statement, the
Company has identified two primary sources of revenue: (i) rental and
earned income from the triple net leases and (ii) fee income from
development, property management and asset management services.
The following tables represent the revenues, expenses and asset allocation
for the two segments and the Company's consolidated totals at (dollars in
thousands):
Rental and
Earned Fee Consolidated
Income Income Corporate Totals
------------ ------------ ------------ ------------
September 30,
1999 and for
the quarter
then ended
------------------
Revenues $ 18,390 $ 593 $ - $ 18,983
General
operating and
administrative
expenses 1,053 106 43 1,202
Real estate
expenses 92 - - 92
Interest expense 5,663 - - 5,663
Depreciation and
amortization 2,215 8 7 2,230
Expenses
incurred in
acquiring
advisor from
related party - - 794 794
Equity in
earnings of
unconsolidated
partnership 93 - - 93
Equity in
earnings of
unconsolidated
subsidiary - (299) - (299)
Gain on sale of
real estate - - - -
------------ ------------ ------------ ------------
Net earnings $ 9,460 $ 180 $ (844) $ 8,796
============ ============ ============ ============
Assets $ 743,814 $ 39 $ 133 $ 743,986
============ ============ ============ ============
Additions to
long-lived
assets:
Real estate $ 5,287 $ - $ - $ 5,287
============ ============ ============ ============
Other $ 4 $ - $ - $ 4
============ ============ ============ ============
September 30,
1998 and for
the quarter
then ended
------------------
Revenues $ 15,205 $ 616 $ - $ 15,821
General
operating and
administrative
expenses 1,593 476 80 2,149
Real estate
expenses 85 - - 85
Interest expense 3,307 - - 3,307
Depreciation and
amortization 1,704 2 2 1,708
Expenses
incurred in
acquiring
advisor from
related party - - - -
Equity in
earnings of
unconsolidated
partnership 91 - - 91
Equity in
earnings of
unconsolidated
subsidiary - - - -
Gain on sale of
real estate 1,288 - - 1,288
------------ ------------ ------------ ------------
Net earnings $ 9,895 $ 138 $ (82) $ 9,951
============ ============ ============ ============
Assets $ 611,901 $ 172 $ 25 $ 612,098
============ ============ ============ ============
Additions to
long-lived
assets:
Real estate $ 24,195 $ - $ - $ 24,195
============ ============ ============ ============
Other $ 20 $ 11 $ - $ 31
============ ============ ============ ============
September 30,
1999 and for
the nine months
then ended
------------------
Revenues $ 54,551 $ 2,414 $ - $ 56,965
General
operating and
administrative
expenses 4,109 823 474 5,406
Real estate
expenses 268 - - 268
Interest expense 15,797 - - 15,797
Depreciation and
amortization 6,221 43 19 6,283
Expenses
incurred in
acquiring
advisor from
related party - - 8,961 8,961
Equity in
earnings of
unconsolidated
partnership 279 - - 279
Equity in
earnings of
unconsolidated
subsidiary - (552) - (552)
Gain on sale of
real estate 5,784 - - 5,784
------------ ------------ ------------ ------------
Net earnings $ 34,219 $ 996 $ (9,454) $ 25,761
============ ============ ============ ============
Assets $ 743,814 $ 39 $ 133 $ 743,986
============ ============ ============ ============
Additions to
long-lived
assets:
Real estate $ 74,512 $ - $ - $ 74,512
============ ============ ============ ============
Other $ 131 $ 158 $ 78 $ 367
============ ============ ============ ============
September 30,
1998 and for
the nine
months then
ended
------------------
Revenues $ 44,203 $ 2,244 $ - $ 46,447
General
operating and
administrative
expenses 3,172 1,223 614 5,009
Real estate
expenses 343 - - 343
Interest expense 9,175 - - 9,175
Depreciation and
amortization 4,907 21 7 4,935
Expenses
incurred in
acquiring
advisor from
related party - - 4,692 4,692
Equity in
earnings of
unconsolidated
partnership 273 - - 273
Equity in
earnings of
unconsolidated
subsidiary - - - -
Gain on sale of
real estate 1,288 - - 1,288
------------ ------------ ------------ ------------
Net earnings $ 28,167 $ 1,000 $ (5,313) $ 23,854
============ ============ ============ ============
Assets $ 661,901 $ 172 $ 25 $ 612,098
============ ============ ============ ============
Additions to
long-lived
assets:
Real estate $ 70,927 $ - - $ 70,927
============ ============ ============ ============
Other $ 138 $ 172 $ 25 $ 335
============ ============ ============ ============
11. Commitments and Contingencies:
-----------------------------
As of September 30, 1999, the Company owned and leased two land parcels to
a tenant which is obligated to develop a building on the respective land
parcels. The Company has agreed to acquire the completed buildings for an
aggregate amount of up to $1,371,000, at which time rental income is to
increase for each of the properties.
As of September 30, 1999, the Company owned one land parcel on which the
Company has agreed to construct a building for a prospective tenant on the
land parcel for construction costs of approximately $2,525,000, of which
$72,000 of costs had been incurred at September 30, 1999.
During the nine months ended September 30, 1999, the Company entered into
a purchase and sale agreement whereby the Company acquired ten land
parcels leased to major retailers and has agreed to acquire the buildings
on each of the respective land parcels at the expiration of the initial
term of the ground lease for an aggregate amount of approximately $23
million. The seller of the buildings holds a security interest in each of
the land parcels which secures the Company's obligation to purchase the
buildings under the purchase and sale agreement.
12. Subsequent Event:
----------------
In October 1999, the Company declared dividends to its shareholders of
$9,426,000 or $0.31 per share of common stock, payable in November 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
- ------------
Commercial Net Lease Realty, Inc. (the "Company") is a fully integrated,
self-administrated real estate investment trust that acquires, owns, develops
and manages high-quality, freestanding properties leased to major retail
businesses under long-term commercial net leases. As of September 30, 1999, the
Company owned, either directly or through a partnership interest, 281 properties
(the "Properties") substantially all of which are leased to major retail
businesses.
Liquidity and Capital Resources
- --------------------------------
General. Historically, the Company's only demand for funds has been for the
payment of operating expenses and dividends, for property acquisitions and
development and for the payment of interest on its outstanding indebtedness.
Generally, cash needs for items other than property acquisitions and development
have been met from operations and property acquisitions and development have
been funded by equity and debt offerings, bank borrowings and, to a lesser
extent, from internally generated funds. Potential future sources of capital
include proceeds from the public or private offering of the Company's debt or
equity securities, secured or unsecured borrowings from banks or other lenders,
or the sale of Properties, as well as undistributed funds from operations. For
the nine months ended September 30, 1999 and 1998, the Company generated
$36,350,000 and $28,835,000 respectively, in net cash provided by operating
activities. The increase in cash from operations for the nine months ended
September 30, 1999, as compared to the nine months ended September 30, 1998, is
primarily the result of changes in revenues and expenses as discussed in
"Results of Operations."
The Company's leases typically provide that the tenant bears responsibility for
substantially all property costs and expenses associated with ongoing
maintenance and operation including utilities, property taxes and insurance. In
addition, the Company's leases generally provide that the tenant is responsible
for roof and structural repairs. Certain of the Company's Properties are subject
to leases under which the Company retains responsibility for certain costs and
expenses associated with the Property. Because many of the Properties which are
subject to leases that place these responsibilities on the Company are recently
constructed, management anticipates that capital demands to meet obligations
with respect to these Properties will be minimal for the foreseeable future and
can be met with funds from operations and working capital. The Company may be
required to use bank borrowings or other sources of capital in the event of
unforeseen significant capital expenditures.
Two of the Company's tenants, HomePlace and Luria's, each filed a voluntary
petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in January
1998 and August 1997, respectively. As a result, the tenants have the right to
reject or affirm their leases with the Company. In May 1998, HomePlace rejected
two of its five leases with the Company, at which time HomePlace was no longer
required to pay rent on these two leases. In September 1998, one of the
Properties was re-leased to Waccamaw Corporation. During the nine months ended
September 30, 1999, HomePlace emerged from bankruptcy and affirmed three of its
leases with the Company. The remaining Property is currently being marketed for
lease or sale. In March 1998, Luria's rejected its three leases with the
Company, at which time Luria's was no longer required to pay rent on these three
leases. Two of these Properties were re-leased in 1998 and one was sold in March
1999.
Indebtedness. In September 1999, the Company entered into an amended and
restated loan agreement for a $200,000,000 revolving credit facility (the
"Credit Facility") which amended certain provisions of the Company's existing
loan agreement and which expires on July 30, 2000. As of September 30, 1999,
$89,800,000 was outstanding and approximately $110,200,000 was available for
future borrowings under the Credit Facility. The Company expects to use the
Credit Facility to invest in freestanding retail properties.
Debt Securities. In June 1999, the Company filed a prospectus supplement to its
$300,000,000 shelf registration statement and issued $100,000,000 of 8.125%
Notes due 2004 (the "Notes"). The Notes are senior, unsecured obligations of the
Company and are subordinated to all secured indebtedness of the Company. The
Notes were sold at a discount for an aggregate purchase price of $99,608,000
with interest payable semi-annually commencing on December 15, 1999. The
discount of $392,000 is being amortized as interest expense over the term of the
debt obligation using the effective interest method. In connection with the debt
offering, the Company entered into a treasury rate lock agreement which fixed a
treasury rate of 5.1854% on a notional amount of $92,000,000. Upon issuance of
the Notes, the Company terminated the treasury rate lock agreement resulting in
a gain of $2,679,000. The gain has been deferred and is being amortized as an
adjustment to interest expense over the term of the Notes using the effective
interest method. The effective rate of the Notes, including the effects of the
discount and the treasury rate lock gain, is 7.547%.
The Notes are redeemable at the option of the Company, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Notes being
redeemed plus accrued interest thereon through the redemption date and (ii) the
make-whole amount, as defined in the Supplemental Indenture No. 2 dated June 21,
1999 for the Notes.
In connection with the debt offering, the Company incurred debt issuance costs
totaling $970,000, consisting primarily of underwriting discounts and
commissions, legal and accounting fees, rating agency fees and printing
expenses. Debt issuance costs have been deferred and are being amortized over
the term of the Notes using the effective interest method. The net proceeds of
the debt offering were used to pay down outstanding indebtedness of the
Company's Credit Facility.
Property Acquisitions and Commitments. During the nine months ended September
30, 1999, the Company borrowed $61,100,000 under its Credit Facility (i) to
acquire 35 properties, one of which is a land only parcel upon which a building
is currently under construction, (ii) to purchase three buildings constructed by
the tenants on land parcels owned by the Company and (iii) to complete
construction of ten buildings by the Company on previously acquired land
parcels.
As of September 30, 1999, the Company owned and leased two land parcels to a
tenant which is obligated to develop a building on the respective land parcels.
The Company has agreed to acquire the completed buildings for an aggregate
amount of up to $1,371,000, at which time rental income is to increase for each
of the Properties.
As of September 30, 1999, the Company owned one land parcel on which the Company
has agreed to construct a building for a prospective tenant on the land parcel
for an amount of approximately $2,525,000 of which $72,000 of costs had been
incurred at September 30, 1999.
In addition to the three buildings under construction as of September 30, 1999,
the Company may elect to acquire additional properties (or interests therein) in
the future. Such property acquisitions are expected to be the primary demand for
additional capital in the future. The Company anticipates that it may engage in
equity or debt financing, through either public or private offerings of its
securities for cash, issuance of such securities in exchange for assets, or a
combination of the foregoing. Subject to the constraints imposed by the
Company's Credit Facility and long-term, fixed rate financing, the Company may
enter into additional financing arrangements.
During the nine months ended September 30, 1999, the Company sold 42 of its
properties for a total of $44,231,000 and received net sales proceeds of
$43,641,000. The Company recognized a net gain on the sale of these 42
properties of $5,784,000 for financial reporting purposes. The Company
reinvested the proceeds from 41 of these properties to acquire additional
properties and leasehold interests and structured the transactions to qualify as
tax-free like-kind exchange transactions for federal income tax purposes.
Investment in Unconsolidated Subsidiary. In May 1999, the Company transferred
its build-to-suit development operation to a 95%-owned, taxable unconsolidated
subsidiary, (the "Subsidiary"). The Company contributed $5.7 million of real
estate and other assets to the Subsidiary in exchange for 5,700 shares of
non-voting common stock. The Company also entered into a secured line of credit
agreement with the Subsidiary for a $30,000,000 revolving credit facility. The
credit facility is secured by a first mortgage on the Subsidiary's properties.
In addition, the Company entered into a loan agreement with a wholly-owned
subsidiary of the Subsidiary for a $20,000,000 revolving credit facility.
Merger Transaction. On December 18, 1997, the Company's stockholders voted to
approve an agreement and plan of merger with CNL Realty Advisors, Inc. (the
"Advisor"), whereby the stockholders of the Advisor agreed to exchange 100
percent of the outstanding shares of common stock of the Advisor for up to
2,200,000 shares (the "Share Consideration") of the Company's common stock (the
"Merger"). As a result, the Company became a fully integrated, self-administered
real estate investment trust effective January 1, 1998. Since the effective date
of the Merger, the Company has issued 998,000 shares incurring expenses of
$14,462,000, all of which were charged to operations. In addition, in connection
with the property acquisitions during the quarter ended September 30, 1999, on
October 1, 1999, 98,776 shares became issuable to the stockholders of the
Advisor. The market value of the issuable shares is $1,099,000, all of which
will be charged to operations during the quarter ended December 31, 1999.
Management believes that the Company's current capital resources (including cash
on hand), coupled with the Company's borrowing capacity, are sufficient to meet
its liquidity needs for the foreseeable future.
Dividends. One of the Company's primary objectives, consistent with its policy
of retaining sufficient cash for reserves and working capital purposes and
maintaining its status as a real estate investment trust, is to distribute a
substantial portion of its funds available from operations to its stockholders
in the form of dividends. For the nine months ended September 30, 1999 and 1998,
the Company declared and paid dividends to its stockholders of $28,069,000 and
$26,570,000, respectively, or $0.93 and $0.92, respectively, per share of common
stock. In October 1999, the Company declared dividends to its shareholders of
$9,426,000 or $0.31 per share of common stock, payable in November 1999.
Results of Operations
- ---------------------
As of September 30, 1999 and 1998, the Company owned 272 and 254 wholly-owned
Properties, respectively, 269 and 251, respectively, of which were leased to
operators of major retail businesses. In addition, during the nine months ended
September 30, 1999, the Company sold 41 properties which were leased during 1999
and one property which was vacant. In connection therewith, during the nine
months ended September 30, 1999 and 1998, the Company earned $53,986,000 and
$44,024,000, respectively, in rental income from operating leases, earned income
from direct financing leases and contingent rental income ("Rental Income"),
$18,156,000 and $15,169,000 of which was earned during the quarters ended
September 30, 1999 and 1998, respectively. The increase in Rental Income during
the quarter and nine months ended September 30, 1999, is primarily a result of
the facts that (i) the 55 Properties acquired and 15 buildings upon which
construction was completed during 1998 were operational for a full quarter and
nine months in 1999 and (ii) the Company acquired 35 Properties and 13 buildings
upon which construction was completed during the nine months ended September 30,
1999. The increase in Rental Income was partially offset by a decrease in Rental
Income relating to 41 leased Properties which were sold during the nine months
ended September 30, 1999. Rental Income is expected to increase as the Company
acquires additional properties and due to the fact that the 35 Properties and 13
of the buildings acquired during the nine months ended September 30, 1999, will
contribute to the Company's income for a full fiscal quarter in future quarters.
During the nine months ended September 30, 1999 and 1998, the Company earned
$2,113,000 and $1,969,000, respectively, in development and asset management
fees, $609,000 and $527,000 of which were earned during the quarters ended
September 30, 1999 and 1998, respectively. The Company began providing
development and asset management services on January 1, 1998 in connection with
the Merger of the Company's Advisor. The increase in development and asset
management fees during the quarter and nine months ended September 30, 1999 is
attributable to an increase in asset management services provided.
During the nine months ended September 30, 1999 and 1998, operating expenses,
excluding interest and including depreciation and amortization, were $20,918,000
and $14,979,000, respectively, (36.7% and 32.2%, respectively, of total
revenues) $4,318,000 and $3,942,000 (22.7% and 24.9%, respectively, of total
revenues) of which was incurred during the quarters ended September 30, 1999 and
1998, respectively. The increase in the amount of operating expenses for the
quarter and nine months ended September 30, 1999, as compared to the quarter and
nine months ended September 30, 1998, is primarily attributable to the charges
related to the costs incurred in acquiring the Company's Advisor from a related
party. Operating expenses for the nine months ended September 30, 1999 and 1998,
excluding the costs relating to the acquisition of the Advisor were $11,957,000
and $10,287,000 (20.9% and 22.1%, respectively, of total revenues), $3,524,000
and $3,942,000 (18.6% and 24.9%, respectively, of total revenues) of which was
incurred during the quarters ended September 30, 1999 and 1998, respectively.
The increase in operating expenses for the nine months ended September 30, 1999,
as compared to the nine months ended September 30, 1998, is also attributable to
the increase in depreciation expense as a result of the additional Properties
acquired during the quarter ended September 30, 1999, and a full quarter of
depreciation expense relating to the 55 Properties and 15 buildings acquired
during 1998. The increase in depreciation expense was partially offset by a
decrease in depreciation expense related to the sale of 42 properties during the
nine months ended September 30, 1999. The decrease in operating expenses for the
quarter ended September 30, 1999 as compared to the quarter ended September 30,
1998 is primarily attributable to the transfer of the Company's build-to-suit
development operation to the Subsidiary.
The Company recognized $15,797,000 and $9,175,000 in interest expense for the
nine months ended September 30, 1999 and 1998, respectively, $5,663,000 and
$3,307,000 of which was incurred during the quarters ended September 30, 1999
and 1998, respectively. Interest expense increased during the quarter and nine
months ended September 30, 1999, primarily as a result of higher average
borrowing levels on the Company's Credit Facility and the issuance of the Notes
in March 1998 and in June 1999. However, the increase was partially offset by a
decrease in the average interest rates of the Company's Credit Facility.
Year 2000 Readiness Disclosure
Overview of Year 2000 Problem. The Year 2000 problem concerns the inability of
information and non-information technology systems to properly recognize and
process date sensitive information beyond January 1, 2000. The failure to
accurately recognize the year 2000 could result in a variety of problems from
data miscalculations to the failure of entire systems.
Information and Non-Information Technology Systems. The information technology
system of the Company consists of a network of personal computers and servers
built using hardware and software from mainstream suppliers. The non-information
technology systems of the Company are primarily facility related and include
building security systems, elevators, fire suppressions, HVAC, electrical
systems and other utilities. The Company has no internally generated programmed
software coding to correct, because substantially all of the software utilized
by the Company is purchased or licensed from external providers. The maintenance
of non-information technology systems at the Company's Properties is the
responsibility of the tenants of the Properties in accordance with the terms of
the Company's leases.
The Y2K Team. In early 1998, the Company formed a Year 2000 committee (the "Y2K
Team") for the purpose of identifying, understanding and addressing the various
issues associated with the Year 2000 problem. The Y2K Team consists of members
of the Company and its affiliates, including representatives from senior
management, information systems, telecommunications, legal, office management,
accounting and property management.
Assessing Year 2000 Readiness. The Y2K Team's initial step in assessing Year
2000 readiness consisted of identifying any systems that are date-sensitive and,
accordingly, could have potential Year 2000 problems. The Y2K Team has conducted
inspections, interviews and tests to identify which of the Company's systems
could have a potential Year 2000 problem.
The information system of the Company is comprised of hardware and software
applications from mainstream suppliers. Accordingly, the Y2K Team has contacted
and is evaluating documentation from the respective vendors and manufacturers to
verify the Year 2000 compliance of their products. The Y2K Team has also
requested and is evaluating documentation from the non-information technology
systems providers of the Company.
In addition, the Y2K Team has requested and is evaluating documentation of Y2K
readiness from other companies with which the Company has material third party
relationships. The third parties in addition to the providers of information and
non-information technology systems, consist of the Company's transfer agent and
financial institutions ("Third Parties"). The Company depends on its transfer
agent to maintain and track investor information and its financial institutions
for availability of cash.
As of September 30, 1999, the Y2K Team had received written responses from all
of the Third Parties indicating that they are currently Year 2000 compliant.
Although the Y2K Team has received positive responses from the companies with
which the Company has third party relationships regarding their Year 2000
compliance, the Company cannot be assured that the Third Parties have adequately
considered the impact of the Year 2000.
In addition, the Y2K Team has requested documentation of Y2K readiness from the
Company's tenants. As of September 30, 1999, all of the responses received from
the tenants indicate that they are currently Year 2000 compliant or will be Year
2000 compliant prior to the year 2000. The Company is in the process of
contacting all tenants which have not yet responded to the request for
documentation. The Company cannot be assured that the tenants have adequately
considered the impact of the Year 2000. The Company has also instituted a policy
of requiring all new tenants to indicate that their systems are Year 2000
compliant or are expected to be Year 2000 compliant prior to the year 2000.
Achieving Year 2000 Compliance. The Y2K Team has identified and completed
upgrades for its hardware equipment that was not Year 2000 compliant. In
addition, the Y2K Team has identified the software applications which will
require upgrades to become Year 2000 compliant. The Y2K Team expects all of
these upgrades, as well as any other necessary remedial measures on the
information technology systems and non-information technology systems used in
the business activities and operations of the Company, to be completed by
December 31, 1999, although, the Company cannot be assured that the upgrade
solutions provided by the vendors have addressed all possible Year 2000 issues.
As of September 30, 1999, the Company does not expect the aggregate cost of the
Year 2000 remedial measures to exceed $50,000 which will not have a material
impact on its results of operations.
Assessing the Risks to the Company of Non-Compliance and Developing
Contingency Plans
Risk of Failure of Information and Non-Information Technology Systems Used by
the Company. The Y2K Team believes that the reasonably likely worst case
scenario with regard to the information and non-information technology systems
used by the Company is the failure of one or more of these systems as a result
of Year 2000 problems. Because the Company's major source of income is rental
payments under long-term triple-net leases, any failure of information or
non-information technology systems used by the Company is not expected to have a
material impact on the Company's results of operations. Even if such systems
failed, the payments under the Company's leases would not be affected. In
addition, the Y2K Team is expected to correct any Y2K problems within its
control before the year 2000.
The Y2K Team has determined that a contingency plan to address this risk is not
necessary at this time. However, if the Y2K Team identifies additional risks
associated with the Year 2000 compliance of the information or non-information
technology systems used by the Company or if the progress of the Y2K Team in
remediating Year 2000 problems with such systems deviates from the anticipated
timeline, the Y2K Team will develop a contingency plan if deemed necessary at
that time.
Risk of Inability of Transfer Agent to Accurately Maintain Company Records. The
Y2K Team believes that the reasonably likely worst case scenario with regard to
the Company's transfer agent is that the transfer agent will fail to achieve
Year 2000 compliance of its systems and will not be able to accurately maintain
the records of the Company. This could result in the inability of the Company to
accurately identify its stockholders for purposes of dividend payments, delivery
of disclosure materials and transfers of common stock. The Y2K Team has received
certification from the Company's transfer agent of its Year 2000 compliance.
Despite the positive response from the transfer agent, the Company cannot be
assured that the transfer agent has addressed all possible Year 2000 issues.
Risk of Loss of Short-Term Liquidity from Failure of Financial Institutions to
Achieve Year 2000 Compliance. The Y2K Team believes that the reasonably likely
worst case scenario with regard to the Company's financial institutions is that
some or all of the Company's funds on deposit with such financial institutions
may be temporarily unavailable. The Y2K Team has received responses from all of
the Company's financial institutions indicating that their systems are currently
Year 2000 compliant. Despite the positive responses from the financial
institutions, the Company cannot be assured that the financial institutions have
addressed all possible Year 2000 issues. The loss of short-term liquidity could
affect the Company's ability to pay its expenses on a current basis. The Company
does not anticipate that a loss of short-term liquidity would have a material
impact on its results of operations.
Based upon the responses received from the Company's financial institutions and
the inability of the Y2K team to identify a suitable alternative for the deposit
of funds that is not subject to potential Year 2000 problems, the Y2K Team has
determined not to develop a contingency plan to address this risk.
Risks of Late Payment or Non-Payment by Tenants. The Y2K Team believes that the
reasonably likely worst case scenario with regard to the tenants under the
Company's leases is that some of the tenants may make payments late as the
result of the failure of the tenants to achieve Year 2000 compliance of their
systems used in the payment of rent, the failure of the tenants' financial
institutions to achieve Year 2000 compliance, or the temporary disruption of the
tenants' businesses. The Y2K Team is in the process of requesting responses from
the Company's tenants indicating the extent to which their systems are currently
Year 2000 compliant or are expected to be Year 2000 compliant prior to the year
2000. The Company cannot be assured that the tenants have addressed all possible
Year 2000 issues. The late payment by one or more tenants would affect the
Company's results of operations in the short-term. The Company is not able to
estimate the impact of late payments on its results of operations.
The Y2K Team is also aware of predictions that the Year 2000 problem, if
uncorrected, may result in a global economic crisis. The Y2K Team is not able to
determine if such predictions are true. A widespread disruption of the economy
could affect the ability of the Company's tenants to make rental payments and,
accordingly, could have a material impact on the Company's results of
operations.
Because rental payments are under the control of the Company's tenants, the Y2K
Team is not able to develop a contingency plan to address these risks. In the
event of late payment or non-payment of rental payments, the Company will assess
the remedies available to it under its lease agreements.
Investment Considerations. In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The Statement requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The Company is currently reviewing
the Statement to see what impact, if any, it will have on the Company's
consolidated financial statements.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133,
an Amendment of FASB Statement No. 133." Statement No. 137 defers the effective
date of Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" for one year. Statement No. 133, as amended, is now effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000.
This information contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
forth in the forward-looking statements. Certain factors that might cause a
difference include the following: changes in general economic conditions,
changes in real estate market conditions, continued availability of proceeds
from the Company's debt or equity capital, the ability of the Company to locate
suitable tenants for its Property and the ability of tenants to make payments
under their respective leases.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in quantitative and qualitative disclosures
about market risk as previously reported in the Form 10-K for the year ended
December 31, 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No material developments in legal proceedings as previously reported on
the Form 10-K for the year ended December 31, 1998.
Item 2. Changes in Securities and Use of Proceeds. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not
applicable.
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as a part of this report.
3.1 Articles of Incorporation of the Registrant (filed as
Exhibit 3.3 (i) to the Registrant's Registration
Statement No. 1-11290 on Form 8-B, and incorporated
herein by reference).
3.2 Bylaws of the Registrant (filed as Exhibit 3.3(ii) to
Amendment No. 2 to the Registrant's Registration
Statement No. 1-11290 on Form 8-B, and incorporated
herein by reference).
3.3 Articles of Amendment to the Articles of Incorporation of
Registrant (filed as Exhibit 3.3 to the Registrant's Form
10-Q for the quarter ended September 30, 1996, and
incorporated herein by reference).
3.4 Articles of Amendment to the Articles of Incorporation of
the Registrant (filed as Exhibit 3.4 to the Registrant's
Current Report on Form 8-K dated February 18, 1998, and
filed with the Securities and Exchange Commission on
February 19, 1998, and incorporated herein
by reference).
3.5 First Amended and Restated Articles of Incorporation of the
Registrant (filed as Exhibit 3.1 to the Registrant's
Registration Statement No. 333-64511 on Form S-3, and
incorporated herein by reference).
4.1 Specimen Certificate of Common stock, par value $0.01 per
share, of the Registrant (filed as Exhibit 3.4 to the
Registrant's Registration Statement No. 1-11290 on Form
8-B, and incorporated herein by reference).
4.2 Form of Indenture dated March 25, 1998, by and among
Registrant and First Union National Bank, Trustee, relating
to $100,000,000 of 7.125% Notes due 2008 and $100,000,000
of 8.125% Notes due 2004 (filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated March 20,
1998, and incorporated herein by reference).
4.3 Form of Supplemental Indenture No. 1 dated March 25, 1998,
by and among Registrant and First Union National Bank,
Trustee, relating to $100,000,000 of 7.125% Notes due 2008
(filed as Exhibit 4.2 to the Registrant's Current Report on
Form 8-K dated March 20, 1998, and incorporated herein by
reference).
4.4 Form of 7.125% Notes due 2008 (filed as Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated March 20,
1998, and incorporated herein by reference).
4.5 Form of Supplemental Indenture No. 2 dated June 21, 1999,
by and among Registrant and First Union National Bank,
Trustee, relating to $100,000,000 of 8.125% Notes due 2004
(filed as Exhibit 4.2 to the Registrant's Current Report on
Form 8-K dated June 17, 1999, and incorporated herein by
reference).
4.6 Form of 8.125% Notes due 2004 (filed as Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated June 17,
1999, and incorporated herein by reference).
10.1 Letter Agreement dated July 10, 1992, amending Stock
Purchase Agreement dated January 23, 1992 (filed as Exhibit
10.34 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1992, and incorporated
herein by reference).
10.2 Advisory Agreement between Registrant and CNL Realty
Advisors, Inc. effective as of April 1, 1993 (filed as
Exhibit 10.04 to Amendment No. 1 to the Registrant's
Registration Statement No. 33-61214 on Form S-2, and
incorporated herein by reference).
10.3 1992 Commercial Net Lease Realty, Inc. Stock Option Plan
(filed as Exhibit No. 10(x) to the Registrant's
Registration Statement No. 33-83110 on Form S-3, and
incorporated herein by reference).
10.4 Second Amended and Restated Line of Credit and Security
Agreement, dated December 7, 1995, among Registrant,
certain lenders listed therein and First Union National
Bank of Florida, as the Agent, relating to a $100,000,000
loan (filed as Exhibit 10.14 to the Registrant's Current
Report on Form 8-K dated January 18, 1996, and incorporated
herein by reference).
10.5 Secured Promissory Note, dated December 14, 1995, among
Registrant and Principal Mutual Life Insurance Company
relating to a $13,150,000 loan (filed as Exhibit 10.15 to
the Registrant's Current Report on Form 8-K dated January
18, 1996, and incorporated herein by reference).
10.6 Mortgage and Security Agreement, dated December 14, 1995,
among Registrant and Principal Mutual Life Insurance
Company relating to a $13,150,000 loan (filed as Exhibit
10.16 to the Registrant's Current Report on Form 8-K dated
January 18, 1996, and incorporated herein by reference).
10.7 Loan Agreement, dated January 19, 1996, among Registrant
and Principal Mutual Life Insurance Company relating to a
$39,450,000 loan (filed as Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference).
10.8 Secured Promissory Note, dated January 19, 1996 among
Registrant and Principal Mutual Life Insurance Company
relating to a $39,450,000 loan (filed as Exhibit 10.13 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995, and incorporated herein by
reference).
10.9 Third Amended and Restated Line of Credit and Security
Agreement, dated September 3, 1996, by and among
Registrant, certain lenders and First Union National Bank
Florida, as the Agent, relating to a $150,000,000 loan
(filed as Exhibit 10.11 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1996, and incorporated herein by reference).
10.10 Second Renewal and Modification Promissory Note, dated
September 3, 1996, by and among Registrant and First Union
National Bank Florida, as the Agent, relating to a
$150,000,000 loan (filed as Exhibit 10.12 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, and incorporated herein by
reference).
10.11 Agreement and Plan of Merger dated May 15, 1997, by and
among Commercial Net Lease Realty, Inc. and Net Lease
Realty II, Inc. and CNL Realty Advisors, Inc. and the
Stockholders of CNL Realty Advisors, Inc. (filed as Exhibit
10.1 to the Registrant's Current Report on Form 8-K dated
May 16, 1997, and incorporated herein by reference).
10.12 Fourth Amended and Restated Line of Credit and Security
Agreement, dated August 6, 1997, by and among Registrant,
certain lenders and First Union National Bank, as the
Agent, relating to a $200,000,000 loan (filed as Exhibit 10
to the Registrant's Current Report on Form 8-K dated
September 12, 1997, and incorporated herein by reference).
10.13 Fifth Amended and Restated Line of Credit and Security
Agreement, dated September 23, 1999, by and among
Registrant, certain lenders and First Union National Bank,
as the Agent, relating to a $200,000,000 loan
(filed herewith).
27 Financial Data Schedule (filed herewith).
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
<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.
DATED this 10th day of November, 1999.
COMMERCIAL NET LEASE REALTY, INC.
By: /s/ Gary M. Ralston
-------------------
Gary M. Ralston
President
By: /s/ Kevin B. Habicht
--------------------
Kevin B. Habicht
Chief Financial Officer
$200,000,000
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 23, 1999
by and among
COMMERCIAL NET LEASE REALTY, INC.,
NET LEASE FUNDING, INC.,
NET LEASE REALTY I, INC.,
NET LEASE REALTY II, INC.,
NET LEASE REALTY III, INC.,
NET LEASE REALTY IV, INC.,
as Borrowers,
The financial institutions party hereto
and their assignees under Section 11.3,
as Banks,
First Union Capital Markets Group
as Arranger,
and
First Union National Bank,
as Agent
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS........................................................3
1.1 Defined Terms...............................................3
1.2 Other Definitional Provisions..............................13
SECTION 2. THE CREDIT.......................................................14
2.1 The Revolving Credit Facility..............................14
2.2 Advance Requests and Funding Mechanics.....................16
2.3 Letters of Credit..........................................18
2.4 Use of Proceeds............................................19
2.5 Note.......................................................20
2.6 Interest...................................................20
2.7 Repayment..................................................21
2.8 Fees.......................................................21
2.9 Extension of Revolving Credit Maturity Date................22
2.10 Single Loan................................................23
2.11 Payments and Computations..................................23
2.12 Prepayments................................................24
2.13 LIBOR Rate Compensation....................................25
2.14 Sharing of Payments, Etc...................................26
2.15 Conversion and Continuation of Advances; Failure
to Select Interest Period..................................26
2.16 Increased Costs, Illegality, Etc...........................27
2.17 Letters of Credit Obligations..............................28
SECTION 3. [INTENTIONALLY OMITTED]..........................................30
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................30
4.1 Corporate Existence of Borrower; Compliance with Law.......30
4.2 Authorization..............................................31
4.3 Enforceable Obligations....................................31
4.4 Financial Condition of the Borrowers.......................31
4.5 No Litigation..............................................32
4.6 Disclosure and No Untrue Statements........................32
4.7 Title to Assets; Leases in Good Standing...................32
4.8 Payment of Taxes...........................................32
4.9 Agreement or Contract Restrictions.........................32
4.10 Patents, Trademarks, Etc...................................33
4.11 Racketeer Influenced and Corrupt Organization(s) Act.......33
4.12 Investment Company Act; Regulation.........................33
4.13 Labor Matters..............................................33
4.14 ERISA Requirement..........................................34
4.15 Compliance With Environmental Requirements.................34
4.16 Compliance with REIT Requirements..........................34
4.17 Principal Office/Corporate Name............................35
4.18 Use of Credit..............................................35
SECTION 5. CONDITIONS OF LENDING............................................35
5.1 Request for Borrowing; Information.........................35
5.2 Continuing Accuracy of Representations and Warranties......36
5.3 No Default.................................................36
5.4 Loan Documents.............................................36
5.5 Supporting Documents.......................................36
5.6 Opinion of the Borrowers'Counsel...........................37
SECTION 6. AFFIRMATIVE COVENANTS............................................37
6.1 Financial Reports and Other Data...........................37
6.2 Financial Covenants of the Borrowers.......................39
6.3 Payment and Performance of the Borrowers Obligations.......40
6.4 Depository Account.........................................40
6.5 Conduct of Business; Maintenance of Existence..............40
6.6 Right of Inspection; Discussions...........................40
6.7 Notices....................................................40
6.8 Payment of Taxes; Liens....................................41
6.9 Maintenance of Property, Leases............................41
6.10 ERISA Benefit Plans........................................41
6.11 Insurance of Property......................................42
6.12 True Books.................................................42
6.13 Observance of Laws.........................................42
6.14 Further Assurances.........................................42
6.15 Change of Name, Principal Place of Business, Office,
or the.....................................................43
6.16 Status.....................................................43
6.17 Syndication of Credit......................................43
6.18 Exchange Listing...........................................43
6.19 Ownership of RE-Stores.....................................43
SECTION 7. NEGATIVE COVENANTS...............................................43
7.1 Limitations on Unsecured Debt..............................43
7.2 Limitations on Dividends...................................44
7.3 Merger, Sale of Assets, Dissolution, Etc...................44
7.4 Limitations on Loans, Advances, and Investments............44
7.5 Regulation U...............................................45
7.6 Insider Transactions.......................................45
7.7 Changes in Governing Documents, Accounting Methods,
Fiscal ....................................................45
7.8 Certain Permitted Investments..............................46
SECTION 8. EVENTS OF DEFAULT................................................46
8.1 Payment of Obligations to the Banks........................46
8.2 Representation or Warranty.................................46
8.3 Covenants..................................................47
8.4 Any Borrower's Liquidation; Dissolution; Bankruptcy; Etc...47
8.5 Order of Dissolution.......................................47
8.6 Reports and Certificates...................................47
8.7 Judgments..................................................47
8.8 Liens Imposed by Law.......................................47
8.9 Corporate Existence........................................48
8.10 ERISA......................................................48
8.11 Cross-Default..............................................48
SECTION 9. THE AGENT........................................................49
9.1 Appointment, Authorization, and Action.....................49
9.2 Delegation of Duties.......................................50
9.3 Exculpatory Provisions.....................................50
9.4 Reliance by the Agent......................................50
9.5 Agent and Affiliates.......................................51
9.6 Notice of Default..........................................51
9.7 Non-Reliance on the Agent and Other Lenders................51
9.8 Enforcement by the Agent...................................52
9.9 Indemnification............................................52
9.10 Failure to Act.............................................52
9.11 Successor Agent............................................52
SECTION 10. INDEMNIFICATION BY BORROWERS....................................53
SECTION 11. MISCELLANEOUS...................................................53
11.1 Course of Dealing; Amendments..............................53
11.2 Payment of Expenses, Including Attorneys'Fees and Taxes....54
11.3 Successors and Assigns.....................................55
11.4 Assignments and Participations.............................55
11.5 Confidential Information...................................57
11.6 Liens; Set-Off.............................................58
11.7 Notices....................................................58
11.8 Waiver of Default..........................................58
11.9 No Waiver; Cumulative Remedies.............................59
11.10 Venue and Jurisdiction.....................................59
11.11 Governing Law..............................................59
11.12 Title and Headings; Table of Contents......................59
11.13 Complete Agreement.........................................59
11.14 Legal or Governmental Limitations..........................60
11.15 Counterparts...............................................60
11.16 WAIVER OF JURY TRIAL BY BORROWERS..........................60
11.17 BORROWERS JOINTLY AND SEVERALLY LIABLE.....................60
SCHEDULE I Encumbered Properties
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Promissory Note
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Notice of Prepayment
EXHIBIT E Form of Notice of Conversion/Continuation
<PAGE>
FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIFTH AMENDED AND RESTATED CREDIT AGREEMENT dated September 23,
1999, by and among COMMERCIAL NET LEASE REALTY, INC., a Maryland corporation
("CNLR"), NET LEASE REALTY I, INC., a Maryland corporation ("Net I"), NET LEASE
REALTY II, INC., a Maryland corporation ("Net II"), NET LEASE REALTY III, INC.,
a Maryland corporation ("Net III"), NET LEASE REALTY IV, INC., a Maryland
corporation ("Net IV") and NET LEASE FUNDING, INC., a Maryland corporation
("Funding"); CNLR, Net I, Net II, Net III, Net IV and Funding are hereinafter
sometimes individually referred to as a "Borrower" and collectively referred to
as the "Borrowers"), FIRST UNION NATIONAL BANK, a national banking association,
successor to First Union National Bank of Florida (individually, "First Union"),
as the Agent (the "Agent") and the financial institutions which are, or may from
time to time become, listed on the signature pages hereof (together with their
successors and assigns, individually a "Bank" and collectively the "Banks").
BACKGROUND
CNLR and First Union entered into a Revolving Line of Credit and
Security Agreement dated as of June 21, 1994 (the "Prior Credit Agreement"),
which provided for a revolving line of credit in the amount of $30,000,000.00 in
favor of CNLR (the "Prior Credit"), evidenced by a promissory note in the
principal amount of $30,000,000.00 (the "Prior Note"), Collateral Assignments of
Leases, Rents, and Profits and Security Agreements, Agreements Not to Encumber
or Transfer Property, and other related instruments (the "Prior Security
Documents").
Subsequently, CNLR, the Agent and certain Banks entered into a
Revolving Line of Credit and Security Agreement dated as of July 25, 1994 (the
"1994 Credit Agreement"), which provided for a revolving line of credit in the
amount of $100,000,000.00 in favor of CNLR pursuant to which First Union
assigned the Prior Credit (including but not limited to the Prior Note and the
Prior Security Documents) to the Banks and evidenced by a Promissory Note in the
principal amount of $100,000,000.00 (the "1994 Note"), Collateral Assignments of
Leases, Rents and Profits and Security Agreements, Agreements Not to Encumber or
Transfer Property, and other related instruments (the "1994 Security
Documents"). The 1994 Credit Agreement superseded and replaced the Prior Credit
Agreement and provided for an increased line of credit.
CNLR, the Agent and the Banks subsequently agreed to amend and restate
the 1994 Credit Agreement to reflect certain changes in the terms of the Credit
pursuant to the terms of an Amended and Restated Revolving Line of Credit and
Security Agreement dated as of April 13, 1995 (the "April, 1995 Agreement")
which superseded the 1994 Credit Agreement.
Subsequently, CNLR requested certain additional amendments to the
April, 1995 Agreement to permit (i) CNLR to incur mortgage loans from Principal
Mutual Life Insurance Company, or an affiliate thereof, in the total amount of
not more than $52,600,000.00 with respect to certain properties identified in
the 1994 Security Documents and (ii) to allow it to place certain properties to
be acquired in its wholly-owned subsidiaries, Net I and Net II.
The Agent and the Banks agreed to CNLR's request so long as Net I and
Net II agreed to become co-borrowers under the Credit and pursuant to the other
terms and conditions of the Second Amended and Restated Line of Credit and
Security Agreement dated as of December 7, 1995 (the "December, 1995 Agreement")
which superseded the April, 1995 Agreement and was evidenced by a Renewal and
Modification Promissory Note (the "Renewal Note") in the principal amount of
$100,000,000.00, which renewed and modified the Original Note and the 1994
Security Documents. The Borrowers subsequently requested certain waivers from
the terms of the December, 1995 Agreement for certain transactions to be entered
into by the Borrowers which were approved by the Banks pursuant to a Letter
Agreement dated June 12, 1996 (the "Letter Agreement").
CNLR, Net I and Net II subsequently requested certain additional
amendments to the December, 1995 Agreement and the Renewal Note to (i) increase
the amount of the Credit to $150,000,000.00 and (ii) extend the Revolving Credit
Maturity Date to June 30, 1998, as well as certain other revisions.
The Agent and the Banks agreed to Borrowers' request pursuant to the
terms and conditions of the Third Amended and Restated Revolving Line of Credit
and Security Agreement dated as of September 3, 1996 (the "September, 1996
Agreement"), which superseded the December, 1995 Agreement, and was evidenced by
a Second Renewal and Modification Promissory Note (the "Second Renewal Note") in
the principal amount of $150,000,000.00, which renewed and modified the Renewal
Note, and the Existing Security Documents.
CNLR, Net I and Net II, together with Net III and Net IV, as new
co-borrowers, subsequently requested certain additional amendments to the
September, 1996 Agreement and Second Renewal Note to (i) increase the amount of
the Credit to $200,000,000.00 and (ii) extend the Revolving Credit Maturity Date
to July 30, 1999, as well as certain other revisions. The Borrowers also
requested certain amendments to the Letter Agreement.
The Agent and the Banks agreed to Borrowers' requests pursuant to (i)
the terms and conditions of the Fourth Amended and Restated Revolving Line of
Credit and Security Agreement dated as of August 6, 1997 (as amended and in
effect immediately prior to the date hereof, the "Existing Agreement") which
superseded the September, 1996 Agreement, and which was evidenced by a Third
Renewal and Modification Promissory Note dated [as of] August 6, 1997 (as
amended and in effect immediately prior to the date hereof, the "Existing Note")
in the principal amount of $200,000,000.00 which renewed and modified the Second
Renewal Note, and the other Loan Documents and (ii) the terms and conditions of
a Letter Agreement dated as of August 6, 1997 (the "Existing Letter Agreement")
by and among the Borrowers, the Agent and the Banks which amended and restated
the Letter Agreement.
The parties hereto desire to enter into this Agreement to amend and
restate the terms of the Existing Agreement (a) to add Funding as a co-borrower;
(b) to add a new financial institution as a "bank"; (c) to amend certain of the
provisions of the Existing Agreement; (d) to incorporate the terms of the
Existing Letter Agreement into this Agreement; and (e) for the other purposes
provided for herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and conditions herein, the Existing Agreement is hereby
amended and restated in its entirety and the Borrowers, the Agent, and the Banks
agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. Except as otherwise expressly provided in this
Agreement, the following capitalized terms shall have the respective meanings
ascribed to them for all purposes of this Agreement:
"1994 Credit Agreement" has the meaning specified in the Background
section hereof.
"1994 Note" has the meaning specified in the Background section hereof.
"1994 Securit Documents" has the meaning specified in the Background
section hereof.
"Advance" means a Revolving Credit Advance.
"Advisor Acquisition Costs" means all costs and other charges directly
associated with the acquisition by CNLR of CNL Realty Advisors, Inc., a Florida
corporation.
"Agent" means First Union National Bank, acting as contractual
representative for the Banks hereunder, together with any successor agent
appointed pursuant to the provisions hereof.
"Agreement" means this Fifth Amended and Restated Credit Agreement
(which supersedes the Existing Agreement), as the same may be amended,
supplemented, restated, replaced, or otherwise modified from time to time.
"Aggregate Revolving Credit Commitment" shall mean the sum of the
Revolving Credit Commitment of each of the Banks at any time.
"Amended Letter Agreement" has the meaning specified in the Background
section hereof.
"Applicable Management Fee" means, with respect to a real property
asset leased by a Borrower as lessor and for a given period, the greater of (i)
the actual property management fee paid a Borrower during such period with
respect to such property and (ii) an imputed management fee in the amount of two
percent (2.0%) of the Gross Lease Revenues attributable to such real property
asset for such period.
"April, 1995 Agreement" has the meaning specified in the Background
section hereof.
"Assignment and Acceptance Agreement" means an Assignment and
Acceptance Agreement among a Bank, an Assignee and the Agent, substantially in
the form of Exhibit "C".
"Banks" means each financial institution from time to time party hereto
as a "Bank", together with its respective successors and assigns.
"Borrower" means each of CNLR, Net I, Net II, Net III, Net IV and
Funding.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina are open for the conduct of their
commercial banking business, and (b) with respect to all notices and interest on
any LIBOR Rate Advance, any day that is a Business Day described in clause (a)
and that is also a day for trading by and between banks in U.S. dollar deposits
in the London interbank market.
"Capital Lease Obligations" means Debt represented by obligations under
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of such Debt is the capitalized amount of
such obligations determined in accordance with GAAP.
"Closing Date" means the date this Agreement is executed by the
Borrowers, the Agent and the Banks.
"CNLR" means Commercial Net Lease Realty, Inc., a Maryland corporation,
and its successors.
"CNLRS" means Commercial Net Lease Realty Services, Inc., a Maryland
corporation, and its successors. For purposes of this Agreement, neither CNLRS
nor any subsidiary of CNLRS (including, but not limited to, RE-Stores, Inc.)
shall be deemed to be a subsidiary of CNLR.
"Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
current period are comparable in all material respects to those applied in the
preceding period.
"Construction Budget" means the fully budgeted costs associated with
the acquisition and construction of real property (including, but not limited
to, the cost of acquiring such real property) as reasonably determined by the
Borrowers in good faith.
"Continue," "Continuation," and "Continued" refer to a continuation of
Advances of the same Type from one Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Subsection 2.15
or 2.16 hereof.
"Credit" means the Revolving Credit Facility described in Section 2
below.
"Debt" means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication): (a) obligations of such
Person in respect of money borrowed; (b) obligations of such Person (other than
trade debt incurred in the ordinary course of business), whether or not for
money borrowed (i) represented by notes payable, or drafts accepted, in each
case representing extensions of credit, (ii) evidenced by bonds, debentures,
notes or similar instruments, or (iii) constituting purchase money indebtedness,
conditional sales contracts, title retention debt instruments or other similar
instruments, upon which interest charges are customarily paid or that are issued
or assumed as full or partial payment for property; (c) Capital Lease
Obligations of such Person; (d) all reimbursement obligations of such Person
under any letters of credit or acceptances (whether or not the same have been
presented for payment); and (e) all Debt of other Persons which (i) such Person
has guaranteed or is otherwise recourse to such Person or (ii) is secured by a
Lien on any property of such Person.
"December, 1995 Agreement" has the meaning specified in the Background
section hereof.
"Default Rate" has the meaning specified in Subsection 2.6(a)(iii)
hereof.
"EBITDA" shall mean the Borrowers' consolidated net income for any
accounting period plus (i) the amount of the provision for federal, state and
local income taxes for such period, plus (ii) the amount of interest expense
during such period for indebtedness for borrowed money, plus (iii) the amount of
the provision for depreciation and amortization for such period determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles,
plus (iv) Advisor Acquisition Costs and, in the case of amounts described in
clauses (i), (ii), (iii) and (iv), only to the extent deducted in determining
net income for such period.
"Effective Date" means the later of: (a) the Closing Date; and (b
the date on which all of the conditions precedent set forth in Sections 5.4.,
5.5. and 5.6. shall have been fulfilled.
"Eligible Assignee" means any Person who is: (i) currently a Lender;
(ii) a commercial bank, trust company, insurance company, savings and loan
association, savings bank, investment bank, pension fund or mutual fund
organized under the laws of the United States of America, or any state thereof,
and having total assets in excess of $5,000,000,000; or (iii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a political
subdivision of any such country, and having total assets in excess of
$10,000,000,000, provided that such bank is acting through a branch or agency
located in the United States of America. If such Person is not currently a
Lender, such Person's senior unsecured long term indebtedness must be rated BBB
or higher by S&P, Baa2 or higher by Moody's, or the equivalent or higher of
either such rating by another rating agency of national reputation and
reasonably acceptable to the Administrative Agent.
"Eligible Mortgage Income" means, for any given period, the aggregate
income of the Borrowers from Eligible Mortgage Notes Receivable during such
period.
"Eligible Mortgage Note Receivable" means a promissory note which
satisfies all of the following requirements: (a) such promissory note is owned
solely by the Borrowers; (b) such promissory note is secured by a Mortgage; (c)
neither such promissory note, nor any interest of any of the Borrowers therein,
is subject to (i) any Lien other than Permitted Liens of the types described in
clauses (a) through (c) of the definition thereof or (ii) any Negative Pledge;
(d) the real property subject to such Mortgage is not subject to any other Lien
other than Permitted Liens of the types described in clauses (a) through (c) of
the definition thereof; (e) the real property subject to such Mortgage is free
of all structural defects, environmental conditions or other adverse matters
except for defects, conditions or matters individually or collectively which are
not material to the profitable operation of such real property; (f) such real
property is occupied and is in operation; (g) any required principal, interest
or other payment due under such promissory not is not more than 60 days past
due; and (h) there exists no default or event of default under such promissory
note.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be supplemented or amended from time to time.
"ERISA Group" means the Borrowers, any other subsidiary of any of the
Borrowers and all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control which, together
with the Borrowers or any other subsidiary of any of the Borrowers, are treated
as a single employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 8
hereof.
"Existing Agreement" has the meaning specified in the Background
section hereof.
"Existing Note" has the meaning specified in the Background section
hereof.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates per annum, rounded upward to the nearest one-hundredth of one percent
(1/100%), on overnight federal funds transactions with members of the Federal
Reserve System, arranged by federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Board of Governors of the Federal Reserve System in Publication H.15 (519), or,
if such rate is not published for any day which is a Business Day, the average
of the quotations for such day for such transactions received by the Agent from
three (3) federal funds brokers of recognized standing selected by the Agent.
"Finance Lease" means a lease of a real property asset which would be
categorized as a capital lease under GAAP.
"Fixed Charges" means, for any accounting period, the sum of (a)
Interest Expense for such period plus (b) regularly scheduled principal payments
on Debt of the Borrowers and their subsidiaries during such period, including,
without limitation, the principal component of all payments made in respect of
Capital Lease Obligations, but excluding any scheduled balloon, bullet or
similar principal payment which repays such Debt in full plus (c) all Restricted
Payments paid or accrued during such period in respect of any shares of
preferred stock or other equity interest of any Borrower or any of their
respective subsidiaries which, in each instance, are entitled to preference or
priority in respect of the payment of dividends or distribution of assets upon
liquidation or both over any other capital stock or other equity interest in any
such Person, excluding, however, from this clause (c) any dividends,
distributions or payments payable to CNLR or any of its subsidiaries.
"Funding" means Net Lease Funding, Inc., a Maryland corporation, and
its successors.
"Funds Available for Distribution" means, for any accounting period,
(a) Funds From Operations for such period minus (b) the aggregate amount of
capital expenditures actually incurred by the Borrowers and their subsidiaries
during such period, excluding (i) any capital expenditures which directly result
in an aggregate increase in the square footage of real property assets owned by
the Borrowers and their subsidiaries which are available for lease, and (ii) any
capital expenditures made in connection with the acquisition of real property
assets, provided that such capital expenditures are fully reflected in the
budget relating to such acquisition, and provided further that such capital
expenditures are made within twelve months following consummation of such
acquisition of real property assets.
"Funds From Operations" means, for a given period, (i) net earnings of
the Borrowers and their subsidiaries (before minority interests, extraordinary
and non-recurring items and all Advisor Acquisition Costs) determined on a
consolidated basis for such period minus (or plus) (ii) gains (or losses) from
debt restructuring and sales of property during such period plus (iii)
depreciation and amortization of real property assets and the principal
component of all payments in respect of Finance Leases for such period, and
after adjustments for unconsolidated partnerships and joint ventures.
"Generally Accepted Accounting Principles" or "GAAP" means those
principles of accounting set forth in Opinions of the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or
which have other substantial authoritative support and are applicable in the
circumstances as of the date of any report required herein or as of the date of
an application of such principles as required herein.
"Governmental Acts" shall have the meaning specified in Section 2.17(b)
hereof.
"Governmental Authority" shall mean, as to any Person, any government
(or any political subdivision or jurisdiction thereof), court, bureau, agency or
other governmental authority having jurisdiction over such Person or any of its
business, operations or properties.
"Gross Lease Revenues" means, for a given period, the aggregate income
of the Borrowers from Finance Leases and from leases of real property assets
which are not Finance Leases, excluding (a) with respect to such leases that are
not Finance Leases, straight line rent adjustments (reported in the consolidated
financial statements of the Borrowers for purposes of GAAP) in respect of such
leases for such period, and (b) the principal component of all payments made in
respect of Finance Leases during such period.
"Interest Expense" means, for any period, the total consolidated
interest expense (including, without limitation, capitalized interest expense
and interest expense attributable to Capital Lease Obligations) of the Borrowers
and their subsidiaries determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis.
"Interest Period" means, for each LIBOR Rate Advance comprising part of
the same borrowing, the period commencing on the date such Advance is made,
Converted from an Advance of another Type, or Continued as an Advance of the
same Type, and ending on the numerically corresponding day one, two, three or
six months thereafter as the Borrowers may select, as provided in Subsections
2.2 or 2.15 hereof; provided however that:
(a) Interest Periods commencing on the same date for LIBOR
Rate Advances shall be of the same duration;
(b) If an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that if any Interest Period would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(c) Any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and
(d) No Interest Period shall extend beyond the Revolving
Credit Maturity Date.
"Investment Grade Rating" shall mean a rating of BBB- or better or the
equivalent thereof from two of the following four debt rating agencies: Standard
& Poor's, Moody's Investors Service, Duff & Phelps Credit Rating Company or
Fitch Investors Service; provided, however, that at least one such rating shall
be from either Standard & Poor's or Moody's Investor Service.
"Issuing Bank" means First Union National Bank, in its capacity as a
Bank hereunder, for so long as it remains the Agent hereunder. Upon the
appointment of a successor Agent, the "Issuing Bank" shall be the successor
Agent, in its capacity as a Bank hereunder, for the purposes of all new Letters
of Credit issued hereunder.
"Late Fee" has the meaning specified in Subsection 2.7(c) hereof.
"Lease" means all leases, rents, income, profits, and accounts
receivable arising from any and every lease, rental, or occupancy agreement
entered into with respect to property owned by any Borrower.
"Letter Agreement" has the meaning specified in the Background section
hereof.
"Letters of Credit" has the meaning specified in Subsection 2.3 hereof.
"Letter of Credit Contingent Obligation" and "Letters of Credit
Contingent Obligations" mean the amount available for drawings and remaining
undrawn under the Letter of Credit or Letters of Credit, respectively.
"LIBOR Rate Advance" means an Advance that bears interest at a rate
determined by reference to the Reserve Adjusted LIBOR Rate, as provided in
Subsection 2.6(a)(ii) hereof.
"LIBOR Reserve Requirement" means, for any day, the rate at which
reserves (including, without limitation, any marginal, supplemental, or
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System on such day against Eurocurrency liabilities, expressed as a
decimal.
"Lien" as applied to the property of any Person means: (a) any security
interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge,
lien, charge, Negative Pledge, conditional sale or other title retention
agreement, or other security title or encumbrance of any kind in respect of any
property of such Person, or upon the income or profits therefrom; (b) any
arrangement, express or implied, under which any property of such Person is
transferred, sequestered or otherwise identified for the purpose of subjecting
the same to the payment of Debt or performance of any other obligation in
priority to the payment of the general, unsecured creditors of such Person; (c)
the filing of any financing statement under the Uniform Commercial Code or its
equivalent in any jurisdiction; and (d) any agreement by such Person to grant,
give or otherwise convey any of the foregoing.
"Loan Documents" means the following documents: (a) this Agreement; (b)
the Notes; and (c) all other documents executed and delivered by any Borrower in
connection with the Credit closing, and thereafter from time to time as
contemplated by this Agreement, including any modifications, amendments, or
restatements of the foregoing.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt,
or a similar real property lien instrument including, without limitation, an
assignment of rents and leases.
"Negative Pledge" means a provision of any agreement (other than this
Agreement or any other Loan Document) that prohibits the creation of any lien on
any assets of a Person; provided, however, that an agreement that establishes a
maximum ratio of unsecured debt to unencumbered assets, or of secured debt to
total assets, or that otherwise conditions a Person's ability to encumber its
assets upon the maintenance of one or more specified ratios that limit such
Person's ability to encumber its assets but that do not generally prohibit the
encumbrance of its assets, or the encumbrance of specific assets, shall not
constitute a "Negative Pledge" for purposes of this Agreement.
"Net I" means Net Lease Realty I, Inc., a Maryland corporation, and its
successors.
"Net II" means Net Lease Realty II, Inc., a Maryland corporation, and
its successors.
"Net III" means Net Lease Realty III, Inc., a Maryland corporation, and
its successors.
"Net IV" means Net Lease Realty IV, Inc., a Maryland corporation, and
its successors.
"Note" has the meaning specified in Subsection 2.5 hereof.
"Notice of Borrowing" means a Notice of Borrowing substantially in the
form attached hereto as Exhibit "B".
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Permitted Lien" means, as to any Person: (a) Liens securing taxes,
assessments and other charges or levies imposed by any governmental authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business,
which are not at the time required to be paid or discharged under Section 4.8.
or which are being contested in good faith and in accordance with applicable
law; (b) Liens consisting of deposits or pledges made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or similar applicable laws; (c)
zoning restrictions, easements, rights-of-way, covenants, reservations and other
rights, restrictions or encumbrances of record on the use of real property,
which do not materially detract from the value of such property or materially
impair the use thereof in the business of such Person; (d) Liens in existence as
of the Closing Date and set forth in Schedule 4.7; and (e) Liens, if any, in
favor of the Administrative Agent for the benefit of the Banks.
"Person" means any natural person, corporation, unincorporated
organization, trust, joint venture, association, company, partnership, or
government, or any agency or political subdivision of any government.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means, for the purposes hereof, the rate of interest
announced by the Agent from time to time as its Prime Rate. The Agents' Prime
Rate is a reference rate used by the Agent in determining interest rates on
certain loans. The Agent loans at rates both above and below the Agent's Prime
Rate, and the Borrowers acknowledge that the Agent's Prime Rate is not
represented or intended to be the lowest or most favorable rate of interest
offered by the Agent.
"Prime Rate Advance" means an Advance that bears interest at a rate
determined with reference to the Prime Rate, as provided in Subsection 2.6(a)(i)
hereof.
"Prior Credit" has the meaning specified in the Background section
hereof.
"Prior Credit Agreement" has the meaning specified in the Background
section hereof.
"Prior Note" has the meaning specified in the Background section
hereof.
"Prior Security Documents" has the meaning specified in the Background
section hereof.
"Pro Rata Portion" means, with respect to any Bank, the quotient
obtained by dividing the Revolving Credit Commitment of the Bank by the
aggregate Revolving Credit Commitments of all of the Banks.
"Qualified REIT Subsidiary Status" means Net I's, Net II's, Net III's,
Net IV's and Funding's status as a qualified REIT subsidiary as defined in
ss.856(i) of the Internal Revenue Code, as amended.
"REIT Status" means CNLR's status as a real estate investment trust
as defined inss.856(a) of the Internal Revenue Code, as amended.
"Related Entities" means any "affiliated person" as defined under the
provisions of the United States Internal Revenue Code.
"Renewal Note" has the meaning specified in the Background section
hereof.
"Required Banks" means at any time the Banks owning or holding in the
aggregate at least 66-2/3% of the aggregate unpaid principal amount of the
Advances, or if the aggregate unpaid principal amount of the Advances is zero,
the Banks owning or holding in the aggregate at least 66-2/3% of the Revolving
Credit Commitments.
"Reserve Adjusted LIBOR Rate" means, for any Interest Period, an
interest rate per annum obtained by dividing (i) the rate quoted on the Telerate
page 3750 as of 11:00 a.m. London time, on the day that is two London banking
days prior to the first day of the Interest Period, in an amount substantially
equal to the LIBOR Rate Advance and with a term substantially equal to such
Interest Period, by (ii) an amount equal to 1 minus the LIBOR Reserve
Requirement for such Interest Period, the result of which shall be rounded up to
the nearest 1/100 of one percent (.01%). In the event the rate quoted by
Telerate is discontinued or the rate otherwise cannot be identified, the Agent
shall determine the LIBOR Rate on the basis of quotes by major banks in the
London interbank Eurodollar market for dollar deposits in an amount
substantially equal to the LIBOR Rate Advance for a term substantially equal to
the Interest Period selected.
"Restricted Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or other
equity interest of any Borrower or any of their subsidiaries now or hereafter
outstanding, except a dividend payable solely in shares of that class of stock
to the holders of that class; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock or other equity
interest of any Borrower or any of their subsidiaries now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of any Borrower or any of its respective subsidiaries now or hereafter
outstanding.
"Revolving Credit Advance" has the meaning specified in Subsection 2.1
(a) hereof.
"Revolving Credit Commitment" means, as to each Bank, such Bank's
obligation to make Revolving Credit Advances pursuant to Section 2.1. and to
issue (in the case of the Issuing Bank) or participate in (in the case of the
other Banks) Letters of Credit pursuant to Section 2.3, in an amount up to, but
not exceeding (but in the case of the Issuing Bank excluding the aggregate
amount of participations in Letters of Credit held by the other Banks), the
amount set forth for such Bank on its signature page hereto as such Bank's
"Revolving Credit Commitment" or as set forth in the applicable Assignment and
Acceptance Agreement, or as the same may be adjusted from time to time as
appropriate to reflect any assignments to or by such Bank effected in accordance
with Section 11.4.
"Revolving Credit Facility" means the commitments of the Banks to make
Revolving Credit Advances to and issue Letters of Credit in favor of the
Borrowers pursuant to Subsection 2.1 hereof.
"Revolving Credit Maturity Date" shall mean July 30, 2000 (as such date
may be extended pursuant to the provisions hereof) or if such date is not a
Business Day, the next succeeding Business Day, or such earlier date on which
the Credit shall be due and payable pursuant to the terms hereof.
"Second Renewal Note" has the meaning specified in the Background
section hereof.
"Secured Debt" means any Debt which is secured by a Mortgage.
"September, 1996 Agreement" has the meaning specified in the Background
section hereof.
"Tangible Net Worth" means total stockholder's equity of the Borrowers
and their subsidiaries determined on a consolidated basis in accordance with
GAAP, plus (i) accumulated depreciation and amortization to the extent reflected
in the determination of stockholder's equity of the Borrowers and their
subsidiaries, plus (ii) the accumulated principal component of all payments made
to the Borrowers and their respective subsidiaries in respect of Finance Leases
to the extent reflected in the determination of stockholder's equity of the
Borrowers and their subsidiaries, minus (iii) the aggregate value of all
intangible assets of the Borrowers and their subsidiaries.
"Total Assets" means the total assets of the Borrowers and their
subsidiaries determined on a consolidated basis excluding accumulated
depreciation, amortization and the principal component of all payments made to
the Borrowers and their respective subsidiaries in respect of Finance Leases,
all computed in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis; provided however, that with respect to assets owned by
any subsidiary which is not a wholly-owned subsidiary, only such subsidiary's
pro rata share (determined in proportion to the such Borrower's direct or
indirect ownership interest in such subsidiary) of such assets shall be included
for purposes of determining "Total Assets" hereunder.
"Total Intangible Assets" of the Borrowers shall be determined in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis, but in any event shall be deemed to include the excess of costs over the
assets of acquired businesses, formulae, trademarks, patents, patent rights, and
deferred expenses (including, but not limited to, unamortized debt discount
(offset by any unamortized debt premium) and expense, organization expense,
experimental and developmental expenses, but excluding prepaid expenses).
"Total Liabilities" means the total liabilities of the Borrowers
(including, without limitation, all obligations or indebtedness of any other
Person which the Borrowers have assumed, guaranteed, or endorsed or in
connection with which the Borrowers have otherwise become directly or
contingently liable and the amount of any outstanding Letters of Credit)
computed in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis; provided however, that with respect to the liabilities of
any non-wholly-owned subsidiary which the Borrowers have not otherwise assumed,
guaranteed, or endorsed or in connection with which the Borrowers have otherwise
become directly or contingently liable, only such subsidiary's pro rata share
(determined in proportion to the such Borrower's direct or indirect ownership
interest in such subsidiary) of such liabilities shall be included for purposes
of determining "Total Liabilities" hereunder.
"Type" refers to the distinction among Advances bearing interest based
on the Prime Rate and the Reserve Adjusted LIBOR Rate.
"Unencumbered Assets" means the sum of (a) the aggregate book value of
all assets of the Borrowers and their subsidiaries which are not encumbered by
one or more Liens, other than Permitted Liens plus (b) accumulated depreciation
and amortization of real property assets of the Borrowers and their subsidiaries
plus (c) the accumulated principal component of all payments made to the
Borrowers and their respective subsidiaries in respect of Finance Leases, all as
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Unsecured Debt" means all Debt of Borrowers which is not secured by
Mortgages on one or more properties of any Borrower.
1.2 Other Definitional Provisions.
(a) The terms "material" and "materially" shall have the
meanings ascribed to such terms under Generally Accepted Accounting Principles
as such would be applied to the business of the Borrowers, except as the context
shall clearly otherwise require;
(b) all of the terms defined in this Agreement shall have such
defined meanings when used in other documents issued under, or delivered
pursuant to, this Agreement unless the context shall otherwise require;
(c) all terms defined in this Agreement in the singular shall
have comparable meanings when used in the plural, and vice versa;
(d) accounting terms to the extent not otherwise defined shall
have the respective meanings given them under, and shall be construed in
accordance with, Generally Accepted Accounting Principles;
(e) terms defined in, or by reference to, Article 9 of the
Uniform Commercial Code as adopted in Florida to the extent not otherwise
defined herein shall have the respective meanings given to them in Article 9
with the exception of the word "document" unless the context clearly requires
such meaning;
(f) the words "hereby," "hereto," "hereof," "herein,"
"hereunder," and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement;
(g) the masculine and neuter genders are used herein and
whenever used shall include the masculine, feminine, and neuter as well; and
(h) wherever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such parties unless the context shall expressly provide otherwise.
SECTION 2. THE CREDIT
2.1 The Revolving Credit Facility.
(a) Subject to the terms and conditions of this Agreement,
each Bank severally and not jointly agrees, that during the period from the
Effective Date to but excluding the Revolving Credit Maturity Date and so long
as there exists no Event of Default or circumstance which with the giving of
notice or passage of time would become an Event of Default, it will make
advances to the Borrowers (all such advances and the Bank's Pro Rata Portion of
any unreimbursed amounts paid under Letters of Credit referred to herein as
"Revolving Credit Advances" and "Advances") in an aggregate amount which, when
aggregated with Advances comprised of such Bank's Pro Rata Portion of
unreimbursed amounts paid under Letters of Credit and with the Bank's Pro Rata
Portion of Letter of Credit Contingent Obligations, does not exceed at any time
such Bank's Revolving Credit Commitment. During the aforesaid period, the
Borrowers may borrow, repay, and reborrow, and request the issuance of Letters
of Credit in accordance with the terms hereof. The Borrowers acknowledge that
the amount outstanding at any time pursuant to the Credit is as reflected in the
books and records of the Agent and shall be conclusive and binding absent
manifest error. Agent will, upon request, furnish the Borrowers with a statement
of the amount outstanding pursuant to the Credit as reflected in the books and
records of the Agent at the time of any such request.
(b) If at any time the principal amounts outstanding under any
Bank's Revolving Credit Advances (including Advances in respect of unreimbursed
amounts paid under Letters of Credit), together with the aggregate amount of the
Bank's Pro Rata Portion of the Letter of Credit Contingent Obligations, exceed
such Bank's Revolving Credit Commitment, the Borrowers shall prepay the Bank's
Revolving Credit Advances so as to cause the aggregate outstanding amounts
thereunder to be equal to or less than such Bank's Revolving Credit Commitment.
(c) Subject to the further terms and limitations of this
Agreement, the Borrowers may designate Advances requested under the Revolving
Credit Facility and Advances made pursuant to draws under Letters of Credit
issued under the Revolving Credit Facility to be LIBOR Rate Advances or Prime
Rate Advances, and the Borrowers may Convert Advances of one Type into Advances
of another Type (as provided in Subsection 2.15 hereof), or Continue Advances of
one Type as Advances of the same Type (as provided in Subsection 2.15 hereof).
All Advances shall be made, Converted, or Continued by the Banks simultaneously
and proportionately to their Pro Rata Portion of the aggregate Commitments.
(d) On the Closing Date, the aggregate outstanding principal
amount under the Existing Agreement shall be automatically converted to an
equivalent principal amount of Revolving Credit Advances hereunder (which shall
be Prime Rate Advances unless otherwise specified by the Borrowers in accordance
with the procedures contained in Subsection 2.15 hereof), allocated to the then
existing Banks pro rata in accordance with their Pro Rata Portions, and shall be
deemed to be Revolving Credit Advances and Advances and included in the Banks'
Revolving Credit Commitments for all purposes hereof.
(e) The Borrowers shall have the right to request increases in
the aggregate amount of the Revolving Credit Commitments from time to time
(provided that after giving effect to any such increase the aggregate amount of
the Revolving Credit Commitments would not exceed $250,000,000) by providing
written notice to the Agent, which notice shall be irrevocable once given. The
Borrowers, prior to requesting an increase in the Revolving Credit Commitments
pursuant to this subsection must offer in writing each Bank the right to
increase its Revolving Credit Commitment by an amount so that such Bank's Pro
Rata Portion shall not be decreased as a result of such increase in the
Revolving Credit Commitments. If a Bank does not accept the Borrowers' offer to
increase its Revolving Credit Commitment as provided in the preceding sentence
within 10 Business Days of the receipt of such offer, such offer shall be deemed
rejected by such Bank. No Bank shall be required to increase its Revolving
Credit Commitment. In the event a new Bank or Banks become a party to this
Agreement, or if any existing Bank agrees to increase its Revolving Credit
Commitment, such Bank shall on the date it becomes a Bank hereunder (or
increases its Revolving Credit Commitment, in the case of an existing Bank) (and
as a condition thereto) purchase from the other Banks its Bank's Pro Rata
Portion (as determined after giving effect to the increase of Revolving Credit
Commitments) of any outstanding Revolving Credit Advances, by making available
to the Agent for the account of such other Banks at the Agent's principal
office, in same day funds, an amount equal to the sum of (A) the portion of the
outstanding principal amount of such Revolving Credit Advances to be purchased
by such Bank plus (B) the aggregate amount of payments previously made by such
Bank under Section 2.3.(f) which have not been repaid plus (C) interest accrued
and unpaid to and as of such date on such portion of the outstanding principal
amount of such Revolving Credit Advance. Upon any such assignment, the assigning
Bank shall be deemed to represent and warrant to such other Bank that such
assigning Bank is the legal and beneficial owner of such interest being assigned
by it, but makes no other representation or warranty and assumes no
responsibility with respect to any Revolving Credit Advance being assigned, the
Loan Documents or any party to this Agreement. No increase of the Revolving
Credit Commitments may be effected under this subsection if a default or Event
of Default shall be in existence on the effective date of such increase. In
connection with any increase in the aggregate amount of the Revolving Credit
Commitments pursuant to this subsection, the Borrowers shall make appropriate
arrangements so that each new Bank, and any existing Bank increasing its
Revolving Credit Commitment, receives a new or replacement Note, as appropriate,
in the amount of such Bank's Revolving Credit Commitment within 2 Business Days
of the effectiveness of the applicable increase in the aggregate amount of
Revolving Credit Commitments.
2.2 Advance Requests and Funding Mechanics.
(a) The Revolving Credit Advances (other than Advances made by
honoring a draft drawn under a Letter of Credit) shall be made upon irrevocable
notice from the Borrowers to the Agent (effective upon receipt) no later than
10:00 a.m. (Eastern Time) three (3) Business Days prior to the date of any
proposed LIBOR Rate Advances and no later than 10:00 a.m. (Eastern Time) one (1)
Business Day prior to the date of any proposed Prime Rate Advances. Each such
notice shall be in writing, or shall be by telephone or telecopier, confirmed
immediately in writing, specifying the proposed (i) date of borrowing, (ii)
aggregate amount of borrowing, (iii) Type of Advances, (iv) in the case of LIBOR
Rate Advances, the initial Interest Period for such Advances, and (v) manner of
receipt of the funds, and shall be evidenced by an executed Notice of Borrowing.
Each request for such Advances shall be in the aggregate minimum amount of
$100,000.00 or an integral multiple thereof, except that with respect to LIBOR
Rate Advances, each request shall be in the aggregate minimum amount of
$1,000,000.00 and in integral multiples of $100,000.00.
(b) Notwithstanding the foregoing, the Borrowers may not
select any LIBOR Rate Advances if (i) the obligation of any of the Banks to make
LIBOR Rate Advances is suspended pursuant to Subsections 2.15(b)(iii) or 2.16(c)
or (d) hereof, or (ii) after giving effect to the Advances, the aggregate number
of different Interest Periods for outstanding LIBOR Rate Advances from the Banks
is greater than ten (10) (for purposes of this clause, Interest Periods of the
same duration, but commencing on different dates, shall be treated as different
Interest Periods).
(c) Neither the Agent nor any Bank shall incur any liability
to the Borrowers in acting upon any telephonic notice referred to herein that
the Agent believes in good faith to have been given by a duly authorized officer
or other person authorized to borrow on behalf of the Borrowers or for otherwise
acting in good faith under this Subsection, and, upon funding of Advances by the
Banks in accordance with this Agreement pursuant to any telephonic notice, the
Borrowers shall be deemed to have received Advances hereunder.
(d) Each notice of a proposed borrowing shall be irrevocable
and binding on the Borrowers. In the case of LIBOR Rate Advances, the Borrowers
shall indemnify each Bank against any loss, costs, or expense incurred by such
Bank as a result of any failure of the Borrowers to fulfill on or before the
date specified for such Advance all conditions for such borrowing set forth in
Section 5 hereof, or as a result of any purported revocation of such Advance
request or any other reason for nonfunding of such Advance, including, without
limitation, any loss (including loss of anticipated profits), cost, or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Bank to fund the Advance, when such Advance is not made on such
date, as more fully described in Subsection 2.13 hereof.
(e) The Agent shall give each Bank notice of each request for
Advances in writing or by telephone or telecopier promptly after receipt of such
request, provided that if the request was not received prior to 10:00 a.m.
(Eastern Time), the Agent shall give such notice no later than 9:00 a.m.
(Eastern Time) on the following Business Day. Not later than 2:00 p.m. (Eastern
Time) on the date specified in such notice, each Bank shall make available to
the Agent, at its Lending Office, in immediately available funds, the Bank's Pro
Rata Portion of such borrowing. After the Agent's receipt of such funds, the
Agent will make such funds available to the Borrowers at the Agent's office
referred to above no later than 2:00 p.m. (Eastern Time) on the date specified
in the notice.
(f) Unless the Agent shall have received notice from a Bank
prior to the date of any proposed borrowing that such Bank will not make
available to the Agent such Bank's Pro Rata Portion of the borrowing, the Agent
may assume that such Bank has made such portion available to the Agent on the
date of such borrowing in accordance with the provisions hereof. The Agent may,
in reliance upon such assumption (but shall not be required to), make available
to the Borrowers a corresponding amount. If and to the extent that a Bank shall
not have so made such Bank's Pro Rata Portion of a borrowing available to the
Agent, such Bank and the Borrowers severally agree to repay to the Agent
forthwith upon demand, to the extent not collected from the other, such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Agent at (i) in the case of the Borrowers, the interest rate
applicable at the time to the Advances comprising the borrowing, and (ii) in the
case of the Bank, the Federal Funds Rate; provided, however, that the Borrowers
shall not be required to so repay such amount if and to the extent that the
Agent, in its capacity as a Bank, has availability therefor under its Revolving
Credit Commitment. In such circumstances, the Agent, in its capacity as a Bank,
may, but shall not be required to, make an Advance under its Revolving Credit
Commitment in respect of such amount. If the delinquent Bank shall repay to the
Agent (in its capacity as Agent or Bank, as appropriate) such amount (with
interest), the amount so repaid shall constitute the Bank's Advance as part of
such borrowing for purposes of this Agreement. If the Borrowers shall repay to
the Agent such corresponding amount, or if the Agent, in its capacity as a Bank,
makes an Advance therefor, such payment or Advance shall not relieve the
delinquent Bank of its obligations hereunder.
(g) The failure of any Bank to make an Advance to be made by
it as part of any borrowing, when required to do so by the provisions hereof,
shall not relieve any other Bank of its obligation hereunder to make its Advance
on the date of such borrowing, but no Bank shall be responsible for the failure
of any other Bank to make the Advance to be made by such other Bank. Nothing
herein shall prejudice any rights or remedies that the Borrowers may have
against any Bank as a result of any failure by such Bank to make an Advance
hereunder if such failure is in breach of its obligations hereunder.
2.3 Letters of Credit.
(a) Subject to the terms and conditions hereof, including but
not limited to the limitations set forth in Subsection 2.1(a) and 2.4 hereof,
the Revolving Credit Commitments may be utilized, upon the request of the
Borrowers, for the issuance of standby letters of credit by the Issuing Bank
("Letters of Credit"). Each Letter of Credit issued hereunder shall be in such
form, contain such terms, and support such transactions as shall be satisfactory
to the Issuing Bank in its sole discretion. No Letter of Credit shall have a
term extending beyond the earlier of (i) one year after the date of issuance or
(ii) the Revolving Credit Maturity Date.
(b) Each Letter of Credit shall be requested by the Borrowers
by irrevocable notice (effective upon receipt) from the Borrowers to the Issuing
Bank and the Agent (which shall promptly give notice thereof to the Banks) no
later than 10:00 a.m. (Eastern Time) three (3) Business Days prior to the date
of the proposed issuance of the Letter of Credit. Each such notice from the
Borrowers shall be in writing, or shall be by telephone or telecopier, confirmed
immediately in writing, specifying the proposed (i) date of issuance of such
Letter of Credit, (ii) maximum amount of such Letter of Credit, (iii) expiration
date of such Letter of Credit, (iv) name and address of the beneficiary of such
Letter of Credit, (v) form of such Letter of Credit, and (vi) description of
transaction supported by the Letter of Credit, and shall be evidenced by an
executed Notice of Borrowing. The request shall be accompanied by such other
applications, agreements, information, and documents as the Agent or the Issuing
Bank shall require, and the payment of the fees and commissions described in
Subsection 2.8 hereof.
(c) If the form of the Letter of Credit and transaction
supported by the Letter of Credit is satisfactory to the Issuing Bank in its
sole discretion, and subject to the other terms and conditions of this
Agreement, the Issuing Bank will make such Letter of Credit available to the
Borrowers designated in the Notice of Borrowing at the Issuing Bank's Lending
Office described in the signature pages hereof or as otherwise agreed with the
Borrowers in connection with such issuance.
(d) Upon the issuance of any Letter of Credit by the Issuing
Bank, the Issuing Bank shall be deemed, irrevocably and without further action
by any party hereto, to have sold to each Bank, and each Bank shall be deemed,
irrevocably and without further action by any party hereto, to have purchased
from the Issuing Bank, an undivided interest and participation in, to the extent
of such Bank's Pro Rata Portion, the Letter of Credit and the related Letter of
Credit Contingent Obligation. The Issuing Bank shall notify the Agent of the
issuance of any Letter of Credit, and the Agent shall promptly notify each Bank
of such Bank's Pro Rata Portion of the amount of the Letter of Credit and the
related Letter of Credit Contingent Obligation. Each Bank's Pro Rata Portion of
the Letter of Credit Contingent Obligation shall be deemed to utilize the Bank's
Revolving Credit Commitment and reduce the availability thereunder, until such
time as the Letter of Credit Contingent Obligation terminates by virtue of
expiration of or payment under the Letter of Credit.
(e) The payment by the Issuing Bank of a draft drawn under a
Letter of Credit shall constitute for all purposes hereunder the making by the
Issuing Bank of a Revolving Credit Advance (which shall be a Prime Rate Advance
unless otherwise specified by the Borrowers in accordance with the procedures
contained in Subsection 2.15 hereof), in the amount of such payment (but without
any requirement for compliance with the requirements for the making of a
Revolving Credit Advance contained in Subsections 2.1 and 2.2 and Section 5
hereof).
(f) The Issuing Bank shall give the Agent prompt notice of any
presentation of a draw under a Letter of Credit in writing or by telephone or
telecopier, and the Agent shall give prompt notice thereof to the Banks. Each
Bank shall, on the date of receipt of such notice, either (i) make a Revolving
Credit Advance (which shall be a Prime Rate Advance unless otherwise specified
by the Borrowers in accordance with the procedures contained in Subsection 2.15
hereof) in an amount equal to its Pro Rata Portion of the payment under the
Letter of Credit, subject to the requirements for the making of a Revolving
Credit Advance contained in Subsection 2.1 and 2.2 and Section 5 hereof), and
shall simultaneously make available to the Issuing Bank at its Lending Office
specified in the signature pages hereof, in immediately available funds, the
proceeds of such Revolving Credit Advance, or (ii) if for any reason Borrowers
is not entitled on such day to receive a Revolving Credit Advance each Bank
shall pay to the Issuing Bank such Bank's Pro Rata Portion of such draw,
whereupon such Bank shall acquire a participation, to the extent of such Pro
Rata Portion, in the claim of the Issuing Bank against Borrowers in respect of
such draw.
(g) If and to the extent that any Bank shall not have so made
the proceeds of such a Revolving Credit Advance available to the Issuing Bank,
the Bank and the Borrowers severally agree to repay to the Issuing Bank
forthwith upon demand, to the extent not collected from the other, such
corresponding amount together with interest thereon, for each day from the date
of receipt of notice of the draw until the date the Bank's Pro Rata Portion
thereof is paid to the Issuing Bank at (i) in the case of the Borrowers, the
interest rate applicable at the time to the Advances, and (ii) in the case of
the Bank, the Federal Funds Rate, provided, however, that the Borrowers shall
not be required to so repay such amount if and to the extent that the Agent, in
its capacity as a Bank, has availability therefor under its Revolving Credit
Commitment. In such circumstances, the Agent, in its capacity as a Bank, may,
but shall not be required to, make an Advance under its Revolving Credit
Commitment in respect of such amount. If the Borrowers shall repay to the Agent
such corresponding amount, or if the Agent, in its capacity as a Bank, makes an
Advance therefor, such payment or Advance shall not relieve the delinquent Bank
of its obligations hereunder.
2.4 Use of Proceeds. The Revolving Credit Facility and the proceeds
thereof shall be used by the Borrowers for general corporate purposes including,
but not limited to, the acquisition, renovation, and development of real estate
properties and for the repayment of indebtedness; provided, however, that
Borrowers may acquire income producing unsubordinated ground leases which are
intended to support income producing commercial restaurant and retail
properties, but only if after giving effect to any such acquisitions, the total
book value of the leasehold interests held under such ground leases does not
exceed five percent (5%) of the Total Assets of the Borrowers' at any time;
provided further, however, that the aggregate amount available for the issuance
and funding of standby Letters of Credit shall be limited to Fifteen Million
Dollars ($15,000,000.00). From time to time and upon the Agent's request, the
Borrowers shall furnish to the Agent evidence satisfactory to the Agent that
such proceeds are being used according to the terms of this Subsection.
2.5 Note. The aggregate indebtedness of the Borrowers to each Bank
resulting from the Revolving Credit Advances shall, in addition to this
Agreement, be evidenced by a promissory note of the Borrowers payable to such
Bank, in a principal amount equal to the amount of such Bank's Revolving Credit
Commitment and in substantially the form of Exhibit "A" hereto (as may be
amended, renewed, increased, restated, replaced, or otherwise modified from time
to time, a "Note"). The Notes collectively constitute a renewal and modification
of the Existing Note.
2.6 Interest.
(a) The Borrowers shall pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) during such periods as an Advance is a Prime Rate
Advance, a rate equivalent to the Prime Rate in effect from time to time, which
rate shall be adjusted daily to reflect changes in the Prime Rate, with each
adjustment to be effective on the day the change occurs;
(ii) during such periods as an Advance is a LIBOR
Rate Advance, a per annum rate equivalent to the Reserve Adjusted LIBOR Rate
for the Interest Period for such Advance plus the applicable margin determined
in accordance with the following table based on CNLR's credit rating; provided,
however, that such applicable margin shall be adjusted from time to time to
reflect changes in the ratings of CNLR such adjustments to take effect on the
date of any change in any such rating. CNLR shall give the Agent prompt written
notice of any change in any such rating. The highest rating received from any
two of the four rating agencies identified in the definition of Investment
Grade Rating shall determine such applicable margin. In the event no two
equivalent ratings are received by CNLR, the lowest of the two highest ratings
received shall determine such applicable margin.
Rating Received Applicable Margin
--------------- -----------------
A-/A3 1.00%
BBB+/Baa1 1.10%
BBB/Baa2 1.25%
BBB-/Baa3 1.40%
Not Investment Grade Rating 1.50%
(iii) after the maturity or due date of the Advance
(whether by acceleration or otherwise), a rate equivalent to five percent (5%)
per annum above the rate per annum required to be paid on such Advance pursuant
to paragraphs (i) or (ii) above (the "Default Rate").
(b) The Borrowers shall pay interest, on demand, on all other
amounts in respect of any other obligations of the Borrowers under the Loan
Documents not paid when due at a rate per annum equal to five (5%) per annum
above the Prime Rate in effect from time to time, which rate shall be adjusted
daily to reflect changes in the Prime Rate, with each adjustment to be effective
on the day the change occurs.
2.7 Repayment.
(a) Interest on the Revolving Credit Advances shall be paid
to the Agent for the account of the Banks as follows:
(i) Accrued interest on each Prime Rate Advance
shall be paid quarterly in arrears on the last Business Day of March, June,
September, and December of each year, and on the Revolving Credit Maturity Date.
(ii) In respect of any LIBOR Rate Advance, accrued
interest shall be payable in arrears on the last
Business Day of the applicable Interest Period, provided that interest on LIBOR
Rate Advances shall additionally be payable on the last day of each three month
period of any Interest Period that exceeds three months in duration, and on the
Revolving Credit Maturity Date.
(iii) In addition to the interest due and payable
under (i) and (ii) above, and as provided elsewhere in
the Agreement, all accrued interest shall be due and payable on each date when
all of the unpaid principal balance of the Credit shall be due (whether by
maturity, acceleration or otherwise).
(b) Principal under the Revolving Credit Advances, if not
sooner paid, shall be paid to the Agent on the Revolving Credit Maturity Date
for the account of the Banks.
(c) If any payment of principal or interest or both is more
than ten (10) days late, the Borrowers will pay to the Agent, for the account of
the Banks, a late charge equal to five percent (5%) of the payment (the "Late
Fee"). The provisions herein for a Late Fee shall not be deemed to extend the
time for any payment or to constitute a "grace period" giving the Borrowers a
right to cure such default.
2.8 Fees.
(a) As consideration for making the Revolving Credit Facility
available, the Borrowers shall pay to the Agent, for the pro rata account of the
Banks based on the amounts of the then existing Revolving Credit Commitments, a
fee from the Effective Date to the Revolving Credit Maturity Date (as may be
extended hereunder) equal to two-tenths of one percent (0.2%) per annum of the
unused portion of the aggregate Revolving Credit Commitments. Such fee shall be
computed on the basis of the average daily unused portion of the Banks' then
existing Revolving Credit Commitments and shall be payable quarterly in arrears
on the last Business Day of March, June, September and December of each year and
on the Revolving Credit Maturity Date. Notwithstanding the foregoing, no
additional fees shall be payable pursuant to this Subsection in the event (i)
the Banks cease to offer LIBOR Rate Advances pursuant to Subsection 2.16 hereof
and (ii) all borrowings hereunder have been repaid in full by the Borrowers.
(b) The Borrowers shall pay to the Agent, for the account of
the Issuing Bank and the other Banks, a letter of credit fee in an amount equal
to the product of (i) one percent (1%) per annum and (ii) the face amount of
each Letter of Credit on the date such fee is due. Such letter of credit fee
shall be payable quarterly in arrears (i) on the last Business Day of March,
June, September and December of each year, beginning with the first such day to
occur after the Closing Date and (ii) on the later of the Revolving Credit
Maturity Date and the date of termination of the last outstanding Letter of
Credit. One-eighth (0.125) of such fee shall be payable to the Issuing Bank as
issuing bank and the remaining seven-eighths (0.875) of such fee shall be
payable to and shared by the Banks (including the Issuing Bank) based on the Pro
Rata Portion of each. In addition to the foregoing fee, the Borrowers shall pay
or reimburse the Issuing Bank for such normal and customary costs and expenses
as are incurred or charged by the Issuing Bank in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit.
(c) If the Revolving Credit Maturity Date is extended pursuant
to Subsection 2.9 of this Agreement, the Borrowers shall pay to the Agent for
the account of the Banks an extension fee (such fee to be paid for the account
of the various Banks in accordance with the terms of a separate letter agreement
of even date herewith by and among the Agent and the Banks) in an amount as is
set forth in a letter agreement dated as of the date hereof between the
Borrowers and the Agent. Such fee shall be due and payable on the date which was
the previous Revolving Credit Maturity Date prior to such extension.
(d) The Borrowers shall also pay to the Agent such agency and
other fees as the Agent and the Borrowers shall separately agree in writing.
2.9 Extension of Revolving Credit Maturity Date. Upon the written
request of the Borrowers, which request must be received by the Agent at least
sixty (60) days, but not more than ninety (90) days, prior to the then existing
Revolving Credit Maturity Date, and subject to payment by Borrowers of the
extension fee referred to in Subsection 2.8(c) of this Agreement, the Revolving
Credit Maturity Date shall be extended for one additional twelve (12) month
period beyond the then existing Revolving Credit Maturity Date, provided that
the Borrowers have fully complied with all of the financial covenants pursuant
to Subsection 6.2 of this Agreement and materially complied with all other
covenants, terms, conditions and provisions of this Agreement for the six (6)
quarters preceding the then existing Revolving Credit Maturity Date. In such
event, the Borrowers may be required by the Agent, in its discretion, to execute
and deliver to the Banks, not later than the earlier Revolving Credit Maturity
Date, new Notes, with appropriate inserts therein as to date, date of payments,
and any appropriate recitals.
2.10 Single Loan. The Advances and all other obligations arising under
this Agreement and the other Loan Documents shall constitute one general
obligation of the Borrowers.
2.11 Payments and Computations.
(a) The Borrowers shall make each payment due under the Notes
or otherwise due hereunder not later than 12:00 p.m. (Eastern Time) on the day
when due to the Agent in immediately available funds. Any such payment received
later than 12:00 p.m. (Eastern Time) shall be deemed received by the Agent on
the following Business Day. In the event any such payment is received by the
Agent not later than 12:00 p.m. (Eastern Time), the Agent will thereafter on the
date such payment is received cause to be distributed like funds ratably to the
Banks, in each case to be applied in accordance with the terms of this
Agreement. If any such payment is received by the Agent after 12:00 p.m.
(Eastern Time), the Agent will thereafter on the following Business Day cause to
be distributed like funds ratably to the Banks, in each case to be applied in
accordance with the terms of this Agreement. In the event the Agent does not so
distribute such funds to the Banks, it shall pay interest thereon, for each day
from the Business Day following the date such amount is payable to the Banks to
the date the Agent repays such amount to the Banks, at the Federal Funds Rate.
(b) If the Agent receives funds for application to the
Advances under circumstances for which the Loan Documents or the Borrowers (to
the extent permitted by the Loan Documents) do not specify the Advances to
which, or the manner in which, such funds are to be applied, the Agent shall
distribute such funds for application to the Advances to each Bank ratably in
accordance with such Bank's Pro Rata Portion of all outstanding Advances, in
repayment or prepayment of such of the outstanding Advances of such Bank, and
for application to such principal installments or interest.
(c) Unless the Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to any Banks hereunder
that the Borrowers will not make such payment in full, the Agent may assume that
the Borrowers have made such payment in full to the Agent on such date. The
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on the Business Day following the date when due an amount equal to the
amount then due to such Bank. If and to the extent the Borrowers shall not have
made such payment in full to the Agent, each such Bank shall repay to the Agent
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Agent, at the Federal Funds
Rate.
(d) Each payment and prepayment by the Borrowers of principal
or interest shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debt. If any installment of principal or interest 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 (except as otherwise provided with
respect to LIBOR Advances in the definition of "Interest Period"), and, in the
case of principal, interest shall be payable during the extension at the
applicable interest rate.
(e) Unless otherwise specified herein, or unless otherwise
determined by the Required Banks in their sole discretion, all payments (other
than prepayments) of a particular Advance shall be applied pro rata among the
Banks first to interest and lawful charges then accrued and then to principal.
The Borrowers shall, at the time of making payments of Advances, specify to the
Agent (which shall so notify the Banks) of the Advances to be paid.
(f) Each Borrower hereby authorizes the Agent and each Bank,
if and to the extent that any payments owed hereunder are not made when due, to
charge such payments from time to time against any or all of such Borrower's
accounts with the Agent or the Bank, in which event the Agent or the Bank will
give prompt notice to such Borrower of such charge; provided, however, that the
failure to give such notice shall not affect the validity of such charge. Any
such Bank will give notice to the Agent thereof.
(g) Interest and any fees hereunder shall be computed on the
basis of a year of 360 days for LIBOR Rate calculations and fees and 365/366
days for Prime Rate calculations, but charged for the actual number of days
elapsed. Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(h) Notwithstanding anything contained herein to the contrary,
in no event shall any interest rate provided for herein exceed the maximum rate
of interest allowed by applicable law, as amended from time to time. Neither the
Banks nor the Agent intend to charge any amount of interest or other fees or
charges in the nature of interest that exceeds the maximum amount allowed by
applicable law. If any payment of interest or in the nature of interest would
cause the foregoing interest rate limitation to be exceeded, then such excess
payment shall be credited as a payment of principal, unless the Borrowers notify
the Agent in writing that the excess payment must be returned to the Borrowers,
together with interest at the rate specified in Section 687.04(2), Florida
Statutes, or any successor statute.
2.12 Prepayments under Revolving Credit Facility.
(a) The Borrowers shall be entitled to prepay Prime Rate
Advances in whole or in part, at any time, without premium or penalty, upon
notice to the Agent no later than 10:00 a.m. (Eastern Time) at least one
Business Day prior to the proposed date of the prepayment, each notice stating
the proposed date, Advances to be prepaid, and aggregate principal amount of the
prepayment in the form of the Notice of Prepayment attached hereto as Exhibit
"D".
(b) Notwithstanding the provisions of Subsection 2.13 hereof,
the Borrowers shall be entitled to pay LIBOR Rate Advances only on the last days
of the applicable Interest Periods, without premium or penalty, upon notice to
the Agent no later than 10:00 a.m. (Eastern Time) at least three (3) Business
Days prior to the proposed date of the prepayment, each notice stating the
proposed date, Advances to be paid, and aggregate principal amount of the
payment in the form of the Notice of Prepayment attached hereto as Exhibit "D".
(c) Any prepayment of Prime Rate Advances shall be in the
aggregate principal amount of $100,000.00 or an integral multiple thereof, and
any payment of LIBOR Rate Advances shall be in the full amount of the LIBOR Rate
Advances so paid.
(d) On or prior to the Revolving Credit Maturity Date, any
prepayment of Revolving Credit Advances (whether optional or required, but not
including any payment after default or acceleration) shall be applied first to
principal and then to interest and lawful charges, unless otherwise specified by
the Borrowers. In the event of a prepayment after default or acceleration, any
prepayment of Revolving Credit Advances shall be applied first to interest
accrued on the principal amount prepaid (to be allocated among the Advances
according to amount of interest accrued) and other lawful charges, and then to
principal. The Borrowers shall, at the time of making prepayments of Advances,
specify to the Agent (which shall so notify the Banks) of the Advances to be
prepaid.
2.13 LIBOR Rate Compensation. Notwithstanding the provisions of
Subsection 2.12(b) hereof, which prohibit prepayment of LIBOR Rate Advances
prior to the end of the applicable Interest Period, in the event that all or any
portion of any LIBOR Rate Advances are repaid, prepaid, or Converted prior to
the end of the applicable Interest Period, regardless of whether such payment or
Conversion is optional or obligatory, or in the event that any LIBOR Rate
Advances are not borrowed or Converted as specified in a notice given pursuant
to Subsection 2.2 or 2.15 hereof for any reason, including the failure of any
conditions precedent, the Borrowers shall be required to pay to the Agent, for
the account of the Banks, compensation as follows. The Borrowers shall be
required to pay an amount equal to the excess, if any, of (i) the amount of
interest which otherwise would have accrued on the portion of the LIBOR Rate
Advances repaid, prepaid, Converted, or not borrowed or Converted from and after
the date of such payment, prepayment, Conversion, failure to borrow, or failure
to Convert, to the last day of the applicable Interest Period (or, in the case
of a failure to borrow or Convert, to the last day of the Interest Period which
would have commenced) at the applicable rate of interest for such Advances
specified herein, minus (ii) the amount of interest which would have accrued on
such LIBOR Rate Advances or portion thereof from and after the date of such
payment, prepayment, Conversion, failure to borrow, or failure to Convert, to
the last day of the applicable Interest Period at the applicable rate of
interest for such Advances specified herein, but calculated with respect to a
LIBOR Rate based on an amount substantially equal to the amount paid, prepaid,
Converted, or not borrowed or Converted, and an Interest Period substantially
equal to the number of days remaining in the applicable Interest Period. Whether
or not the foregoing calculation results in a charge to be paid by the
Borrowers, the Borrowers shall also pay all actual out-of-pocket expenses other
than those taken into account in the foregoing calculation incurred by the Banks
and the Agent (excluding any internal expenses) and reasonably attributable to
such payment, prepayment, Conversion, or failure to borrow or Convert. The
Borrowers acknowledge that the Banks are relying in the LIBOR Rate Advances
remaining outstanding or being borrowed or Converted for the entire Interest
Periods selected, and that the foregoing compensation represents reasonable
liquidated damages and is not a penalty. The foregoing compensation shall apply
with respect to all payments, prepayments, and Conversions of LIBOR Rate Advance
and all failures to borrow and failures to Convert into LIBOR Rate Advances,
whether optional or obligatory (including any required principal installments
and any required Conversions pursuant to the provisions of Subsections 2.15 and
2.16 hereof), and shall include any prepayment, repayment, or Conversion after
default or acceleration of the Note.
2.14 Sharing of Payments, Etc.
(a) If any Bank shall obtain from any Borrower payment of any
principal of or interest on any Advance owing to it or payment of any other
amount under this Agreement or any other Loan Document through the exercise of
any right of set-off, banker's lien, counterclaim, similar right, or otherwise
(other than from the Agent as provided herein), and, as a result of such
payment, such Bank shall have received a greater percentage of the principal of
or interest on the Advances or other amounts then due hereunder by Borrowers to
such Bank than the percentage received by any other Banks, it shall promptly
purchase from such other Banks participations in (or, if, and to the extent
specified by such Bank, direct interests in) the Advances or such other amounts,
respectively, owing to such other Banks (or in interest due thereon, as the case
may be) in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Banks shall share the benefit of
such excess payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and interest on the Advances or such other amounts,
respectively, owing to each of the Banks. To such end all the Banks shall make
appropriate adjustments among themselves (by the resale of participations sole
or otherwise) if such payment is rescinded or must otherwise be restored.
(b) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Borrower. If, under any applicable bankruptcy,
insolvency, or other similar law, any Bank receives a secured claim in lieu of a
set-off to which this Subsection applies, such Bank shall, to the extent
practicable, exercise its rights in respect of such secured claim in a matter
consistent with the rights of the Banks entitled under this Subsection to share
in the benefits of any recovery on such secured claim.
2.15 Conversion and Continuation of Advances; Failure to Select
Interest Period.
(a) The Borrowers may, upon notice given to the Agent in the
form of the Notice of Conversion/Continuation attached hereto as Exhibit "E"
(effective upon receipt) no later than 10:00 a.m. (Eastern Time) at least three
(3) Business Days prior to the date of a proposed Conversion into or
Continuation of LIBOR Rate Advances and not later than 10:00 a.m. (Eastern Time)
at least one (1) Business Day prior to the date of a proposed Conversion into
Prime Rate Advances, and subject to the provisions hereof, Convert Advances of
one Type into Advances of the other Type or Continue Advances of one Type as
Advances of the same Type at any time and from time to time on any Business Day;
provided, however, that (i) any Conversion or Continuation of LIBOR Rate
Advances shall be made on, and only on, the last day of the Interest Period for
the LIBOR Rate Advances being Converted or Continued, (ii) any Conversion or
Continuation of any Advances into LIBOR Rate Advances shall be in amounts not
less than the minimum aggregate amounts specified in Section 2.2(a), and (iii)
no Conversion or Continuation of Advances shall result in a greater number of
different Interest Periods for LIBOR Rate Advances than is permitted under
Section 2.2(b). Each such notice of Conversion or Continuation shall be in
writing or shall be by telephone or telecopier, confirmed immediately in
writing, specifying, within the restrictions specified above, the date of such
Conversion or Continuation, the Advances to be Converted or Continued, the
portion thereof to be Converted or Continued, and the Type of Advances into
which they will be Converted or Continued and if such Conversion or Continuation
is into LIBOR Rate Advances, the duration of the Interest Periods for such
Advances. Each notice of Conversion or Continuation shall be irrevocable and
binding on the Borrowers.
(b) (i) Whenever the unpaid principal amount of LIBOR
Rate Advances comprising a borrowing shall be reduced, by payment or prepayment
or otherwise, to less than $1,000,000.00, such Advances shall automatically
Convert into Prime Rate Advances on the last day of the then current Interest
Period with respect to such Advances.
(ii) If the Borrowers shall fail to give a notice
of Conversion or Continuation in respect of LIBOR Rate Advances prior to the
end of the Interest Period applicable thereto as provided in paragraph
(a) hereof, or to select the duration of any Interest Period for any LIBOR Rate,
such LIBOR Rate Advances will automatically, on the last day of the then
existing Interest Period therefor, convert into Prime Rate Advances.
(iii) Upon the occurrence and during the continuance
of any Event of Default, (i) all LIBOR Rate Advances will automatically, on the
last days of the then existing Interest Periods therefor, Convert into Prime
Rate Advances and (ii) the obligation of the Banks to make, Continue, or Convert
Advances into LIBOR Rate Advances shall be suspended.
(iv) LIBOR Rate Advances may be subject to automatic
Conversion into Advances of other Types, as
provided in Section 2.16(c) and (d).
2.16 Increased Costs, Illegality, Etc.
(a) If either (i) the introduction of or any change in any law
or regulation or in the interpretation or administration of any law or
regulation by any court or administrative or governmental authority charged with
the interpretation of administration thereof from the date hereof or (ii) the
compliance with any guideline or request from any such governmental authority,
including, without limitation, any central bank (whether or not having the force
of law), (x) subjects any Bank or any corporation controlling any Bank to any
tax of any kind whatsoever with respect to this Agreement or any Advance, or
changes the basis of taxation of payments to such Bank or corporation of
principal, commissions, fees, interest, or any other amount payable hereunder
(except for (A) taxes on or measured by the overall net income of such Bank or
branch, office, or agency through which such Bank is acting for purposes of this
Agreement or (B) changes in the rate of such taxes); (y) imposes, modifies, or
holds applicable any reserve, special deposit, compulsory loan, or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit or commitment therefor
extended by, or any other acquisition of funds by, any office of such Bank which
are not otherwise included in any determination of the Reserve Adjusted LIBOR
Rate or other interest payable hereunder; or (z) imposes on any Bank or the
corporation controlling the Bank any other condition, and as a result there
shall be any increase in the cost to the Bank or the corporation of agreeing to
make or making, funding, or maintaining Advances by an amount deemed by the Bank
to be material, then the Borrowers shall from time to time, upon demand by the
Bank, pay directly to the Bank additional amounts sufficient to compensate the
Bank for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrowers by the Bank, shall be conclusive and binding
for all purposes, absent manifest error.
(b) If any Bank determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) concerning
capital adequacy or otherwise has or would have the effect of reducing the rate
of return on the capital of the Bank or the corporation controlling the Bank, as
a consequence of, or with reference to, the facilities hereunder, or its making
or funding or maintaining Advances below the rate which the Bank or such other
corporation could have achieved but for such compliance (taking into account the
policies of the Bank of such corporation with regard to capital) by an amount
deemed by the Bank to be material, the Borrowers shall from time to time, upon
demand by the Bank, pay to the Bank additional amounts sufficient to compensate
the Bank or such other corporation for such reduction. A certificate as to such
amounts, submitted to the Borrowers by the Bank, shall be conclusive and binding
for all purposes, absent manifest error.
(c) If, with respect to any LIBOR Rate Advances, the Required
Banks notify the Agent that the Reserve Adjusted LIBOR Rate for any Interest
Period for such Advances will not adequately reflect the cost to the Banks of
making, funding, or maintaining the LIBOR Rate Advances for such Interest
Period, the Agent shall forthwith so notify the Borrowers whereupon (i) each
such LIBOR Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Prime Rate Advance, and (ii) the
obligation of the Banks to make, Continue, or Convert Advances into LIBOR Rate
Advances shall be suspended until the Agent notifies Borrowers that the Required
Banks have determined that the circumstances causing such suspension no longer
exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful or any central bank or other governmental
authority shall assert that it is unlawful for any Bank to perform its
obligations hereunder to make LIBOR Rate Advances or to continue to fund or
maintain LIBOR Rate Advances hereunder, then, on notice thereof and demand
therefor by the Bank through the Agent, (i) each LIBOR Rate Advance of the Banks
will automatically, upon such demand, Convert into a Prime Rate Advance and (ii)
the obligation of the Banks to make, Continue, or Convert Advances into LIBOR
Rate Advances shall be suspended until the Agent shall notify the Borrowers that
the Bank has determined that the circumstances causing such suspension no longer
exist.
2.17 Letters of Credit Obligations.
(a) The payment obligations of the Borrowers under this
Agreement with respect to the Letters of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of the
Letters of Credit;
(ii) any amendment or waiver of or any consent to
departure from all or any of the Letters of Credit;
(iii) the existence of any claim, set-off, defense or
othe right which the Borrowers may have at any time against any beneficiary,
or any transferee, of the Letter of Credit (o any Person for whom any such
beneficiary or transferee may be acting), the Agent, the Issuing Bank, any
of the other Banks, or any other person or entity, whether in connection with
this Agreement, the transactions contemplated herein or in the Letters of
Credit, or any unrelated transaction;
(iv) any statement or any other document presented
under the Letters of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under the Letters of
Credit against presentation of a draft or certificate which does not comply
(other than on its face) with the terms of the Letters of Credit; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
(b) In addition to (but without duplication of) the amounts
payable as elsewhere provided in this Agreement, or any obligation arising out
of Letters of Credit, the Borrowers hereby agree to protect, indemnify, pay, and
save the Agent, the Issuing Bank, and each other Bank harmless from and against
any and all claims, demands, liabilities, damages, losses, costs, charges, and
expenses (including reasonable attorneys' fees) which such party may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of the
Letters of Credit, or (ii) the failure by the Issuing Bank to honor, or to make
payment on, a drawing under the Letters of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority (all such acts or omissions herein called
"Governmental Acts").
(c) As among the Borrowers, the Issuing Bank, the other Banks,
and the Agent, the Borrowers assume all risks of the acts and omissions of, or
misuse of the Letters of Credit. In furtherance, and not in limitation of the
foregoing, none of the Agent or the Banks shall be responsible: (A) for the
form, validity, sufficiency, accuracy, genuineness, or legal effect of any
document submitted by any party as beneficiary or transferee or otherwise in
connection with a drawing under the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent, or forged; (B) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign the Letters of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C) for
failure of the beneficiary or transferee to comply fully with conditions
required in order to draw upon the Letters of Credit, other than conditions
expressly stated in the Letters of Credit; (D) for errors, omissions,
interruptions, or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, or otherwise, whether or not they be in cipher; (E) for
errors in interpretation of technical terms; (F) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under the Letters of Credit or of the proceeds thereof; (G) for the
misapplication by the beneficiary of the Letters of Credit; and (H) for any
consequences arising from causes beyond the control of the Agent, the Issuing
Bank, or the other Banks including, without limitation, any Governmental Acts.
None of the above shall affect, impair, or prevent the vesting of any of the
Agent's, Issuing Bank's, or any other Bank's rights or powers hereunder.
(d) In furtherance and extension, and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Agent, the Issuing Bank, or any other Bank under or in connection with the
Letters of Credit or the related certificates, if taken or omitted in good
faith, shall not result in any liability of the Agent, the Issuing Bank, or any
other Bank to the Borrowers. The Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or any information to the contrary.
(e) Notwithstanding anything to the contrary contained in this
Subsection, the Borrowers shall have no obligation to indemnify the Issuing
Bank, any other Bank, or the Agent in respect of any liability incurred by the
Borrowers arising solely out of the bad faith, gross negligence or willful
misconduct of the Agent, the Issuing Bank, or any other Bank, as determined by a
court of competent jurisdiction.
(f) Without prejudice to the survival of any other obligation
of the Borrowers under this Agreement, the indemnities and obligations of the
Borrowers under this Subsection shall survive the payment in full of all other
amounts payable under this Agreement and the termination of the Letters of
Credit.
SECTION 3. [INTENTIONALLY OMITTED].
SECTION 4. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
establish the Credit provided for herein, each Borrower represents and warrants
to the Agent and Banks (which representations and warranties shall survive the
delivery of the documents mentioned herein and the establishment of the Credit
contemplated hereby) as follows:
4.1 Corporate Existence of Borrowers; Compliance with Law. Each of the
Borrowers is a corporation duly incorporated and organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation. Each
of the Borrowers has the corporate power to own its properties and assets, and
to carry on its business as now being conducted. Each of the Borrowers is in
compliance with all other requirements of law applicable to it and to its
business.
4.2 Authorization. Each of the Borrowers has the corporate power and
authority, and the legal right to execute, deliver, and perform the Loan
Documents, and to borrow thereunder, and has taken all action necessary to
authorize the execution, delivery, and performance of the Loan Documents, and to
authorize the borrowings contemplated thereby. The execution, delivery, and
performance of the Loan Documents by the Borrowers is made by individuals of
legal capacity; will not conflict with, result in the breach of, or constitute a
violation of or default under, any applicable law, rule, regulation, writ, or
decree or the charter or bylaws of any of the Borrowers, or any agreement or
instrument to which any of the Borrowers is a party; or result in the creation
of any Lien upon any property or assets of any of the Borrowers pursuant to any
indenture or other agreement or instrument to which any of the Borrowers is a
party, or by which any of the Borrowers or their respective properties may be
bound or affected. No consent, license, or authorization of, or filing with, any
Person or entity (including, without limitation, any Governmental Authority), is
required in connection with the execution, delivery, performance, validity, or
enforceability of the Loan Documents and the borrowings as contemplated
thereunder, except for consents, licenses, approvals, and filings referred to or
disclosed in the Loan Documents.
4.3 Enforceable Obligations. The Loan Documents when executed and
delivered to the Agent will constitute legal, valid, and binding agreements
enforceable against the respective parties thereto and any property described
therein in accordance with their respective terms, except (i) as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforceability of creditor's rights; and (ii) as
enforceability may be limited or qualified by general principles of equity,
whether raised in a proceeding at law or in equity.
4.4 Financial Condition of the Borrowers.
(a) The consolidated financial statements of the Borrowers as
of March 31, 1999, a copy of which has been furnished to the Agent, are
materially correct, complete, and fairly present the financial condition of the
Borrowers as at the date of the financial statements and fairly present the
results of the operations of the Borrowers for the period covered thereby.
(b) The Borrowers have no material direct or contingent
liabilities, liabilities for taxes, long-term leases, or unusual forward or
long-term commitments as of the date of the Agreement which are not disclosed
by, provided for, or reserved against in the financial statements or referred to
in notes thereto, and at such date there are no material unrealized or
anticipated losses from any unfavorable commitments of the Borrowers. The
financial statements furnished to the Agent have been prepared in accordance
with Generally Accepted Accounting Principles applied on a Consistent Basis
maintained throughout the period involved. There has been no material adverse
change in the business, properties or condition, financial or otherwise, of the
Borrowers since the date of such financial statements.
4.5 No Litigation. Except as disclosed in a Form 10-K or Form 10-Q
filed by the Borrowers with the Securities and Exchange Commission, there is no
suit or proceeding at law or in equity (including proceedings, by or before any
court, arbitrator, governmental or administrative commission, board or bureau,
or other administrative agency) pending, or to the knowledge of any of the
Borrowers threatened, by or against or involving any of the Borrowers or against
any of their respective properties, existence, or revenues which, if adversely
determined, would have a material adverse effect on the property, assets, or
business or on the condition, financial or otherwise, of the Borrowers or which
would be required to be disclosed in notes to any balance sheet as of the date
hereof of the Borrowers prepared in reasonable detail in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis.
4.6 Disclosure and No Untrue Statements. No representation or warranty
made by any of the Borrowers in the Loan Documents or which will be made by the
Borrowers from time to time in connection with the Loan Documents (a) contains
or will contain any misrepresentation or untrue statement of fact; or (b) omits
or will omit to state any material fact necessary to make the statements therein
not misleading, unless otherwise disclosed in writing to the Agent. There is no
fact known to any of the Borrowers or any of their respective executive
financial officers which adversely affects, or which might in the future
adversely affect, the business, assets, properties, or condition, financial or
otherwise, of the Borrowers.
4.7 Title to Assets; Leases in Good Standing. Each of the Borrowers has
good and marketable title to their respective properties and assets, including
the properties and assets reflected in the financial statements and notes
thereto described in Section 4.4 hereof, except for such assets as have been
disposed of in the ordinary course of business, and all such properties and
assets included in the determination of Unencumbered Assets are free and clear
of all Liens of any kind, except for Permitted Liens. Each of the Borrowers
enjoys peaceful and undisturbed possession under all leases under which it is
now operating, none of which contain any unusual provisions which may adversely
affect its operations, and all said leases are valid, subsisting, and in full
force and effect, and one of the Borrowers is in violation of any material term
of any such lease.
4.8 Payment of Taxes. Each of the Borrowers has filed or caused to be
filed all federal, state, and local tax returns which are required to be filed
by it and has paid or caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have become due,
except as otherwise permitted by the provisions hereof, and no controversy in
respect of additional income taxes of any of the Borrowers is pending, or, to
the knowledge of any such Borrower, threatened. Each of the Borrowers has set up
reserves which are believed by its officers to be adequate for the payment of
all taxes for which a notice of assessment has been received and for the payment
of such taxes for the years that have not been audited by the respective tax
authorities.
4.9 Agreement or Contract Restrictions. None of the Borrowers is a
party to, nor is any Borrower bound by, any agreement, contract, or instrument
or subject to any charter or other corporate or partnership restriction which
materially adversely affects the business, properties, assets, operations, or
condition, financial or otherwise, of such Borrower except as disclosed in the
financial statements and notes thereto described in Subsection 4.4 hereof. None
of the Borrowers is in default in the performance, observance, or fulfillment of
any obligations, covenants, or conditions contained in any agreement or
instrument to which it is a party, which would have a material adverse affect on
the Borrowers performing hereunder.
4.10 Patents, Trademarks, Etc. Each of the Borrowers owns, possesses,
or has the right to use all necessary patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights, and copyrights to
conduct its business as now conducted, without known conflict with any patent,
patent right, license, trademark, trademark right, trade name, trade name right,
or copyright of any other Person or entity.
4.11 Racketeer Influenced and Corrupt Organization(s) Act. None of the
Borrowers have ever been nor is any now engaged, nor will any of the Borrowers
engage, directly or indirectly, in any pattern of "racketeering activity" or in
any "collection of any unlawful debt," as each of the quoted terms or phrases is
defined or used by the Racketeer Influenced and Corrupt Organization(s) Act of
either the United States or the State of Florida, Title 18, United States Code,
Section 1961 et seq.; Chapter 895, Florida Statues, respectively, as each act
now exists or is hereafter amended (the "RICO Lien Acts"). No real property of
any of the Borrowers, no interest or interests of any kind, including beneficial
interest or interests, mortgages, and leases, in or on real property of any of
the Borrowers, and no personal property, including money, of any of the
Borrowers, has ever been, is now, or is in any way reasonably anticipated by any
of the Borrowers to become, subject to any Lien, notice, civil investigative
demand, action, suit, or any proceeding pursuant to the RICO Lien Acts.
4.12 Investment Company Act; Regulation.
(a) None of the Borrowers is an "investment company," an
"affiliated person" of any "investment company," or a company "controlled" by an
"investment company," and none of the Borrower is an "investment advisor" or an
"affiliated person" of an "investment advisor" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended).
(b) None of the Borrowers is not subject to regulation under
any state or local public utilities code or federal, state, or local statute or
regulation limiting the ability of any of the Borrowers to incur indebtedness
for money borrowed or to pledge assets of the type contemplated hereunder.
4.13 Labor Matters. There are no strikes or other labor disputes
against any of the Borrowers pending or, to any of the Borrowers' knowledge,
threatened. Hours worked by and payment made to employees of each of the
Borrowers has not been in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All payments due from any of the
Borrowers on account of employee health and welfare insurance have been paid or
accrued as a liability on such Borrower's books.
4.14 ERISA Requirement. Except as previously disclosed to Agent in
writing, none of the Borrowers has in force any written or oral bonus plan,
stock option plan, employee welfare, pension or profit sharing plan, or any
other employee benefit arrangement or understanding. In addition, no Borrower
nor any predecessor of any of the Borrowers is now or was formerly during the
five year period immediately preceding the effective date of this Agreement a
participating employer in any multi-employer or "multiple employer" plans within
the meaning of Sections 4001(1)(a)(3), 4063, and 4064 of ERISA. Each employee
benefit plan subject to the requirements of ERISA complies with all of the
requirements of ERISA and those plans which are subject to being "qualified"
under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as
amended from time to time, have since their adoption been "qualified" and have
received favorable determination letters from the Internal Revenue Service so
holding. There is no matter which would adversely affect the qualified tax
exempt status of any such trust or plan, and except as previously disclosed to
the Agent, there are no deficiencies or liabilities for any such plan or trust.
No employee benefit plan sponsored by any of the Borrowers has engaged in a
non-exempt "prohibited transaction" as defined in ERISA.
4.15 Compliance With Environmental Requirements. Each of the Borrowers
warrants and represents to the Agent and the Banks that to the best of its
knowledge, each of their respective real property assets is now and at all times
hereafter will continue to be in full compliance with all federal, state and
local environmental laws and regulations as they now exist or are hereafter
enacted and/or amended, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, and the Hazardous and Solid Waste Amendments of 1984, as amended. The
Borrowers shall indemnify and hold the Agent and the Banks harmless from and
against any and all damages, penalties, fines, claims, liens, suits,
liabilities, costs (including cleanup costs), judgments and expenses (including
attorneys', consultants' or experts' fees and expenses) of every kind and nature
suffered by or asserted against the Agent or the Banks as a direct or indirect
result of any warranty or representation made by the Borrowers in this paragraph
being false or untrue in any material respect or any requirement under any law,
regulation or ordinance, whether local, state or federal, which requires the
elimination or removal of any hazardous materials, substances, wastes or other
environmentally regulated substances. The Borrowers' obligations hereunder shall
not be limited to any extent by the term of the indebtedness hereunder, and, as
to any act or occurrence prior to payment in full and satisfaction of the
indebtedness which gives rise to liability hereunder, shall continue, survive
and remain in full force and effect notwithstanding payment in full and
satisfaction of the indebtedness hereunder.
4.16 Compliance with REIT Requirements. CNLR is in compliance with all
requirements applicable to a Real Estate Investment Trust imposed by the
Internal Revenue Code of 1986, as amended, and all applicable regulations
thereunder. Net I, Net II, Net III, Net IV and Funding are each in compliance
with all requirements applicable to a Qualified REIT Subsidiary imposed by the
Internal Revenue Code of 1986, as amended, and all applicable regulations
thereunder and each of the Borrowers is not aware of any fact that would
negatively impact such qualifications.
4.17 Principal Office/Corporate Name. The principal office, chief
executive office, and principal place of business of each of the Borrowers is at
455 South Orange Avenue, Suite 700, Orlando, Florida 32801. Each of the
Borrowers maintains its principal records and books at such address.
4.18 Use of Credit. The Revolving Credit Advances shall be used
exclusively for the purposes specified in Section 2.4 hereof. None of the
Borrowers is engaged in the business of extending credit for the purpose of
purchasing or carrying "margin stock" (within the meaning of Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Advance hereunder will be used to purchase or carry
any "margin stock," to extend credit to others for the purpose of purchasing or
carrying any "margin stock," or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of Regulation U or
Regulation X. Neither the Borrowers nor any Person acting on behalf of any of
the Borrowers has taken or will take any action which might cause any Note or
any other Loan Documents, including this Agreement, to violate Regulation U or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve system or violate Section 8 of the Securities Exchange Act of 1934 or
any rule or regulation thereunder, in each case as now in effect as the same may
hereinafter be in effect. None of the Borrowers owns "margin stock" except for
that described in the financial statements referred to in Section 4.4 hereof
and, as of the date hereof, the aggregate value of all "margin stock" owned by
each of the Borrowers does not exceed twenty-five percent (25%) of the value of
all of such Borrower's assets. In connection with the Credit, the Borrowers will
upon request of the Agent deliver to the Agent a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in said Regulation.
SECTION 5. CONDITIONS OF LENDING.
The obligation of the Agent and the Banks to establish the Credit or to
permit any borrowing or issue Letters of Credit hereunder is conditioned upon
the performance of all agreements by the Borrowers contained herein, as well as
satisfaction of the following conditions precedent:
5.1 Request for Borrowing; Information. Each request for a borrowing or
the issuance of a Letter of Credit hereunder shall be evidenced by a Notice of
Borrowing in substantially the form of Exhibit "B" hereto. At least five (5)
business days prior to requesting such Advance, the Borrower must deliver to the
Agent all of the information as may be reasonably requested by the Agent in
response to the Borrowers' request for a borrowing or the issuance of a Letter
of Credit. Any Advance of funds by the Banks without obtaining all such
information shall not constitute a waiver by the Agent or any Bank of its right
to receive such information and a failure of the Borrowers to deliver the same
to the Agent upon demand shall constitute a default hereunder.
5.2 Continuing Accuracy of Representations and Warranties. At the time
of each borrowing of Revolving Credit Advances or the issuance of a Letter of
Credit hereunder, the representations and warranties set forth in this Agreement
shall be true, correct, and complete on and as of the date of such borrowing of
Revolving Credit Advances or Letter of Credit issuance hereunder with the same
effect as though the representations and warranties had been made on and as of
the date of such borrowing of Revolving Credit Advances or Letter of Credit
issuance. Accordingly, the borrowing of Revolving Credit Advances and the
issuance of a Letter of Credit hereunder shall constitute a certification by the
Borrowers to the effect set forth in the preceding sentence.
5.3 No Default. At the time of each borrowing or issuance of a Letter
of Credit hereunder, the Borrowers shall be in compliance with all terms and
conditions set forth herein, and no Event of Default, nor any event which upon
notice or lapse of time or both would constitute an Event of Default, shall have
occurred and be continuing at the time of such borrowing or Letter of Credit
issuance. Accordingly, the borrowing of Revolving Credit Advances and the
issuance of a Letter of Credit hereunder shall constitute a certification by the
Borrowers to the effect set forth in the preceding sentence
5.4 Loan Documents. On or prior to the Closing Date, the Agent shall
have received, duly executed, this Agreement and the other Loan Documents, all
in form and substance satisfactory to the Agent and counsel for the Agent.
5.5 Supporting Documents. On or prior to the Closing Date, the Agent
shall have received the following documents satisfactory in form and substance
to the Agent and counsel for the Agent and, as requested by the Agent, certified
by appropriate corporate or governmental authorities:
(a) a certificate of good standing of each Borrower certified
by the Secretary of State, or other appropriate governmental authority, of their
respective jurisdictions of incorporation;
(b) a certificate of qualification of each Borrower to
transact business in the State of Florida certified by the Secretary of State
of the State of Florida;
(c) a copy of th articles of incorporation of each Borrower
certified by the Secretary of State, or other appropriate governmental
authority, of their respective jurisdictions of incorporation, accompanied by a
certificate from an appropriate officer of such Borrower that the copy is
complete and that the articles of incorporation have not been amended, annulled,
rescinded, or revoked since the date of the certificate of the Secretary of
State or other appropriate governmental authority;
(d) a copy of the bylaws of each Borrower in effect on the
date of this Agreement, accompanied by a certificate from an appropriate officer
of such Borrower that the copy is true and complete, and that the bylaws have
not been amended, annulled, rescinded, or revoked since the date of the bylaws
or the last amendment reflected in the copy, if any;
(e) a copy of resolutions of the Board of Directors of each
Borrower authorizing the execution, delivery, and performance of the Loan
Documents and the borrowing thereunder, and specifying the officer or officers
of such Borrower authorized to execute the Loan Documents, accompanied by a
certificate from an appropriate officer that the resolutions are true and
complete, were duly adopted at a duly called meeting in which a quorum was
present and acting throughout, or were duly adopted by written action, and have
not been amended, annulled, rescinded, or revoked in any respect and remain
in full force and effect on the date of the certificate;
(f) an incumbency certificate containing the names, titles,
and genuine signatures of all duly elected officers and directors of each
Borrower as of the date of this Agreement, accompanied by a certificate from an
appropriate officer of such Borrower that the information is true and complete;
(g) such additional supporting documents as the Agent may
request.
5.6 Opinion of the Borrowers' Counsel. On or prior to the Closing Date,
and to the extent required by the Agent at the time of any borrowing or Letter
of Credit issuance hereunder, the Agent shall have received the favorable
opinion of counsel for Borrowers, in form and substance satisfactory to the
Agent.
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrowers covenant and agree that, from the date of this Agreement
until payment in full and termination of the Credit and expiration of all
Letters of Credit issued thereunder, unless the Agent shall otherwise consent in
writing, the Borrowers will fully comply with the following provisions:
6.1 Financial Reports and Other Data.
(a) Quarterly Reports. The Borrowers shall deliver to the
Agent and the Banks withi sixty (60) days after the end of each of the
Borrower's fiscal quarters, including without limitation, the fourth quarter
of each fiscal year:
(i) The Borrowers' Profit and Loss Statement and Cash
Flow Statement for such quarter and the Borrower's Balance Sheet as at the last
day of such quarter, all in reasonable detail and satisfactory in scope to the
Agent and certified by each Borrower's chief financial officer as to the
fairness and accuracy of such financial statements and that the same have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis; and
(ii) a Quarterly Advance Compliance Certificate
including a listing of each Borrower's properties and information on leases,
stating that each Borrower is in compliance with all covenants made pursuant
to the Loan Documents and including a schedule of computations in reasonable
detail demonstrating compliance with the financial covenants contained in
Subsection 6.2 of this Agreement. Such certificate shall be executed by th
chief financial officer of each Borrower stating that to the best of the
officer's knowledge, such Borrower has kept, observed, performed, and fulfilled
each and every agreement binding on it contained in the Loan Documents, and is
not at the time, nor was at any time during the period covered by such
Quarterly Advance Compliance Certificate, in default of the keeping, observance,
performance, or fulfillment of any of the terms, provisions, and conditions
thereof, and that none of the Events of Default or events which upon notice or
the lapse of time or both would constitute Events of Default has occurred (or
specifying all such defaults and events of which officer may have knowledge and
what actions such Borrower is taking or proposes to take
with respect thereto).
(b) Annual Reports. The Borrowers shall annually furnish to
the Agent and the Banks within ninety (90) days after the end of each fiscal
year financial statements of the Borrowers which must be acceptable to the Agent
in the Agent's sole discretion. Such statements shall include, but not be
limited to, a statement of profit and loss, and reconciliation of surplus
statement for such year, and a balance sheet as of the end of such year, all in
reasonable detail and satisfactory in scope to the Agent. All financial
statements shall be prepared in accordance with Generally Accepted Accounting
Principles, applied on a Consistent Basis, accompanied by an unqualified opinion
of independent certified public accountants of recognized national standing
selected by the Borrowers and satisfactory to the Agent. Together with each
delivery of financial statements as required by this subsection 6.1(b), the
Borrowers shall deliver to the Agent a certificate of the independent certified
accountants stating that in making the examination necessary to said
certification of the financial statements, they obtained no knowledge of any
condition or event pertaining to financial or accounting matters, of the
Borrowers that constitutes an Event of Default or event which after notice by
the Agent or lapse of time, or both, would constitute an Event of Default; or if
the accountants have obtained knowledge of any Event of Default or other such
event, a statement specifying the nature and period of existence thereof. In
addition, such accountants' certificate shall state that with respect to the
fulfillment of any of the terms, covenants, provisions, or conditions of the
Loan Documents, other than those relating to financial or accounting matters,
they have obtained no knowledge of any default or Event of Default, or if the
accountants have obtained knowledge of any such default or Event of Default they
shall make disclosure thereof, but the accountants shall not be liable to the
Agent or the Banks for any failure to obtain knowledge of any default or Event
of Default referred to in this sentence.
(c) Additional Data. With reasonable promptness, the Borrowers
will deliver such additional information respecting the business, operations,
and financial condition of any Borrower as the Agent or any Bank may from time
to time reasonably request, including, without limitation, (i) any and all
correspondence with any auditors and/or regulatory agencies which request
changes in or require alterations in the procedures used in administering or
reporting in any Borrower's operations, (ii) any and all financial statements,
reports, notices, and proxy statements sent or made available by any Borrower to
its security holders, all regular and periodic reports, and all registration
statements and prospectuses filed by any Borrower with the Securities and
Exchange Commission or any governmental authority succeeding to any of its
functions, and (iii) all press releases and other statements made available
generally by any Borrower to the public concerning material developments in the
business of such Borrower.
(d) Sharing of Financial Information. The Agent and the Banks
are hereby authorized to deliver a copy of any financial statements or any other
information relating to the business operations or financial condition of any
Borrower which may be furnished to them or come to their attention pursuant to
the Loan Documents or otherwise, to any regulatory body or agency having
jurisdiction over Agent or any Bank or to any Person which shall, or shall have
the right or obligation to, succeed to all or any part of the Agent's or any
Bank's interest in the Loan Documents.
6.2 Financial Covenants of the Borrowers. During the term of the
Credit, the Borrowers will maintain the following financial covenants and such
computations shall be made on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis:
(a) the ratio of Total Liabilities to Tangible Net Worth of
the Borrower shall not be more than 1 to 1.
(b) the ratio of Secured Debt to Total Assets shall not be
more than .30 to 1.
(c) the ratio of Unencumbered Assets to Unsecured Debt shall
not be less than 1.75 to 1.
(d) the ratio of EBITDA for the fiscal quarter most recently
ending to Interest Expense for such fiscal quarter shall not be less than 1.90
to 1.
(e) the ratio of EBITDA for the fiscal quarter most recently
ending to Fixed Charges for such fiscal quarter shall not be less than 1.60 to
1.
(f) the ratio of (i) Gross Lease Revenues from assets which
comprise Unencumbered Assets for the fiscal quarter most recently ending minus
the Applicable Management Fees for such fiscal quarter plus Eligible Mortgage
Income for such fiscal quarter to (ii) Interest Expense on Unsecured Debt for
such fiscal quarter shall not be less than 2.00 to 1.
(g) the sum of (i) Tangible Net Worth plus (ii) 85% of the net
proceeds of all equity issuances effected by CNLR and any of its subsidiaries at
any time after June 30, 1999, shall not be less than $340,000,000 at any time.
6.3 Payment and Performance of the Borrowers Obligations. The Borrowers
will make full and timely payment of the principal of and interest on the
indebtedness owed hereunder. The Borrowers will duly comply with all the terms
and covenants contained in the Loan Documents.
6.4 Depository Account. Until the Note and the other Loan Documents are
paid in full, each Borrower shall maintain a depository account with the Agent.
6.5 Conduct of Business; Maintenance of Existence. Each Borrower will
do or cause to be done all things necessary to preserve and to keep in full
force and effect its corporate existence and rights and its franchises, trade
names, patents, trademarks, and permits which are necessary for the continuance
of its business; maintain management satisfactory to Required Banks; and
continue to engage principally in the business currently operated by such
Borrower.
6.6 Right of Inspection; Discussions. Each Borrower will permit any
person designated by the Agent or any Bank, at such Borrower's expense, to visit
and inspect any of the property, books, records, papers, and financial reports
of such Borrower, including the making of any copies thereof and abstracts
therefrom, and to discuss its affairs, finances, and accounts with its principal
officers, all at such reasonable times and as often as the Agent or any Bank may
reasonably request. Each Borrower will also permit the Agent or any Bank, or its
designated representative, to audit or appraise any of its assets or financial
and business records. Without limiting the foregoing in any way, each Borrower
also agrees to allow the Agent and any Bank or certified public accountants
satisfactory to the Agent or such Bank to review such Borrower's financial
statements, books, and records regarding depreciation and reserves accounting.
Each Borrower further agrees to permit the Agent and the Banks to review each
registration statement and any other offering documents (including any
amendments thereto) (collectively the "Offering Documents") prepared by such
Borrower or at the direction of such Borrower for the purpose of effecting an
offering of an equity interest in such Borrower. The Agent and each Bank shall
have the right to approve any reference to the Agent or such Bank and to the
Credit in such Offering Documents.
6.7 Notices. Each Borrower will promptly give notice to the Agent and
the Banks of:
(a) the occurrence of any default or Event of Default (or
event which would constitute a default or Event of Default but for the
requirement that notice be given or time elapse or both) hereunder or under any
other obligation of any Borrower, in which case such notice shall specify the
nature thereof, the period of existence thereof, and the action that the
Borrowers propose to take with respect thereto;
(b) the occurrence of any material casualty to any property of
any Borrower or any other force majeure (including, without limitation, any
strike or other labor disturbance) materially affecting the operation or value
of any Borrower (specifying whether or not such casualty or force majeure is
covered by insurance); and
(c) the occurrence of any material event of default pursuant
to any lease under which any Borrower is a Lessor, or the commencement of any
material litigation, dispute, investigation or proceeding that may involve a
claim for damages, injunctive relief, enforcement of other relief pending, being
instituted, or threatened by, against or involving a lessee under a lease under
which any Borrower is a Lessor, or any filing or commencement by or against any
such lessee of a petition, case, proceeding or other action seeking
reorganization, arrangement or readjustment of its Debt, or any relief under any
existing or future law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or any adverse change which might impair the conduct of such
lessee's business or might materially affect financially or otherwise its
business, operations, assets, properties, prospects or condition of which any
Borrower has notice or knowledge.
(d) the commencement or any material change in the nature or
status of any litigation, dispute, investigation, or proceeding that may involve
a claim for damages, injunctive relief, enforcement, or other relief pending,
being instituted, or threatened by, against or involving any Borrower, or any
attachment, levy, execution, or other process being instituted by or against any
assets of any Borrower, or any other adverse change which might impair the
conduct of the business of the Borrowers or might materially affect financially
or otherwise the business, operations, assets, properties, prospects, or
condition of the Borrowers.
6.8 Payment of Taxes; Liens. Each Borrower will promptly pay, or cause
to be paid, all taxes, assessments and other governmental charges which may
lawfully be levied or assessed (i) upon the income or profits of such Borrower,
(ii) upon any property, real, personal or mixed, belonging to such Borrower, or
upon any part thereof, or (iii) by reason of employee benefit plans sponsored by
such Borrower, and also any lawful claims for labor, material, and supplies
which, if unpaid, might become a Lien or charge against any such property;
provided, however, no Borrower shall be required to pay any such tax,
assessment, charge, levy, or claim so long as the validity thereof shall be
actively contested in good faith by proper proceedings; but provided further
that any such tax, assessment, charge, levy, or claim shall be paid forthwith
upon the commencement of proceedings to foreclose any Lien securing the same.
6.9 Maintenance of Property, Leases. Each Borrower will maintain its
property in good condition and repair and, from time to time, make all necessary
and proper repairs, renewals, replacements, additions and improvements thereto,
so that any business carried on may be properly and advantageously conducted at
all times in accordance with prudent business management. Each Borrower will
maintain all leases on its property and ground leases to which it is a party in
good standing, will perform all of its obligations thereunder when due.
6.10 ERISA Benefit Plans. Each Borrower will comply with all
requirements of ERISA applicable to it and will not materially increase its
liabilities under or violate the terms of any present or future benefit plans
maintained by it without the prior approval of the Agent. Each Borrower will
furnish to the Agent as soon as possible and in any event within 10 days after
the Borrower or a duly appointed administrator of a plan (as defined in ERISA)
knows or has reason to know that any reportable event, funding deficiency, or
prohibited transaction (as defined in ERISA) with respect to any plan has
occurred, a statement of the chief financial officer of such Borrower describing
in reasonable detail such reportable event, funding deficiency, or prohibited
transaction and any action which such Borrower proposes to take with respect
thereof, together with a copy of the notice of such event given to the Pension
Benefit Guaranty Corporation or the Internal Revenue Service or a statement that
said notice will be filed with the annual report of the United States Department
of Labor with respect to such plan if such filing has been authorized.
6.11 Insurance of Property. Each Borrower will keep its business and
its Unencumbered Assets insured at all times for full replacement value or
otherwise in amounts acceptable to Agent and all of its other assets insured in
commercially reasonable amounts, all by commercially reasonable insurance
companies against the risks for which provision for such insurance is usually
made by other Persons engaged in a similar business similarly situated
(including without limitation insurance for fire and other hazards and insurance
against liability on account of damage to persons or property and insurance
under all applicable workmen's compensation laws) and to the same extent thereto
and carry such other types and amounts of insurance as are usually carried by
Persons engaged in the same or a similar business similarly situated, and upon
request deliver to the Agent, on behalf of the Banks, a certificate from the
insurer setting forth the nature of the risks covered by such insurance, the
amount carried with respect to each risk, and the name of the insurer. Each
Borrower hereby agrees that any proceeds from such insurance coverage shall be
applied to either (i) repair or rebuild the property for which such proceeds are
being received, (ii) acquire a substantially equivalent property with a
substantially equivalent lease stream of similar credit quality or (iii) repay
any borrowings hereunder.
6.12 True Books. Each Borrower will keep proper and true books of
record and account, reasonably satisfactory to the Agent, in which full, true,
and correct entries will be made of all of its dealings and transactions, and
establish on its books such reserves as may be required by Generally Accepted
Accounting Principles with respect to all taxes, assessments, charges, levies,
and claims referred to in Section 6.8 hereof, and with respect to its business
in general, and will include such reserves in any interim as well as year-end
financial statements.
6.13 Observance of Laws. Each Borrower will conform to and duly observe
all laws, regulations, and other valid requirements of any Governmental
Authority with respect to the conduct of its business, including but not limited
to, applicable ERISA, environmental and transportation laws.
6.14 Further Assurances. At its cost and expense, upon request of the
Agent, each Borrower will duly execute and deliver or cause to be duly executed
and delivered to the Agent, such further instruments or documents and do and
cause to be done such further acts as may be reasonably necessary or proper in
the opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement.
6.15 Change of Name, Principal Place of Business, Office, or the Agent.
Each Borrower will notify the Agent of any change in the name of such Borrower,
the principal place of business of such Borrower, the office where the books and
records of such Borrower are kept, or any change in the registered agent of such
Borrower for the purposes of service of process. No Borrower will change the
chief executive office of such Borrower from Orange County, Florida, without
first notifying the Agent.
6.16 Status. CNLR shall at all times comply with all requirements of
applicable laws and regulations necessary to maintain REIT Status. Net I, Net
II, Net III, Net IV and Funding shall at all times comply with all requirements
of applicable laws and regulations necessary to maintain Qualified REIT
Subsidiary Status.
6.17 Syndication of Credit. Each Borrower agrees to cooperate with the
Agent in connection with its intended further syndication of the Credit, such
cooperation to include, but not be limited to, attendance by management
personnel of the Borrowers at meetings arranged by the Agent with
representatives of potentially participating commercial lending institutions,
provision of information regarding the Borrower's business operations and
financial condition, and response to questions and inquiries regarding the
Borrowers.
6.18 Exchange Listing. CNLR shall at all times maintain at least one
class of common shares of CNLR having trading privileges on the New York Stock
Exchange or the American Stock Exchange or which is subject to price quotations
on The NASDAQ Stock Market's National Market System.
6.19 Ownership of RE-Stores. The Borrowers and CNLRS, collectively,
shall at all times own 100% of the outstanding equity or other ownership
interests in RE-Stores, Inc.
SECTION 7. NEGATIVE COVENANTS.
The Borrowers covenant and agree that from the date of this Agreement
until payment in full and termination of the Credit and expiration of all
Letters of Credit issued thereunder, the Borrowers will fully comply with the
following provisions:
7.1 Limitations on Unsecured Debt. No Borrower shall create, incur,
assume, or permit or suffer to exist any Unsecured Debt other than the
following: (a) the Revolving Credit Advances and the other obligations owing
hereunder and under the other Loan Documents; (b) Unsecured Debt which is not
revolving debt and which matures by its terms on a date subsequent to the
Revolving Credit Maturity Date; (c) other Unsecured Debt which was incurred in
connection with an offering of Debt securities (i) made pursuant to an effective
registration statement filed with the Securities and Exchange Commission or (ii)
exempt from the registration requirements of the Securities Act pursuant to Rule
144A thereof so long as such Debt securities are required to be exchanged for
Debt securities referred to in the preceding clause (i); and (d) other Unsecured
Debt not to exceed $10,000,000 in aggregate outstanding principal amount at any
time. Notwithstanding the foregoing, the Borrowers shall not create, incur or
assume any Debt after the date hereof if immediately prior to the creation,
incurring or assumption thereof, or immediately thereafter and after giving
effect thereto, an Event of Default is or would be in existence, including
without limitation, an Event of Default resulting from a violation of any of the
covenants contained in Section 6.2.
7.2 Limitations on Dividends. The Borrowers will not declare or make
any Restricted Payments; provided, however, that (a) subsidiaries of CNLR may
make Restricted Payments to CNLR; (b) CNLR may declare or make cash
distributions to its shareholders during any period of four consecutive fiscal
quarters in an aggregate amount not to exceed 100% of Funds Available for
Distribution for such four quarter period; and (c) subject to the following
sentence, if an Event of Default (or event with the passage of time, the giving
of notice or both would become an Event of Default) shall have occurred and be
continuing, CNLR may only declare or make cash distributions to its shareholders
during any fiscal year in an aggregate amount not to exceed the lesser of (i)
the amount otherwise permitted to be declared or made under the immediately
preceding clause (b) and (ii) the minimum amount necessary for CNLR to remain in
compliance with Section 6.16. Notwithstanding the foregoing, if an Event of
Default (or event with the passage of time, the giving of notice or both would
become an Event of Default) specified in Section 8.1, Section 8.4 or 8.5 shall
have occurred and be continuing, or if as a result of the occurrence of any
other Event of Default the obligations of the Borrowers hereunder have been
accelerated pursuant to Section 8, no Borrower shall make any Restricted
Payments whatsoever.
7.3 Merger, Sale of Assets, Dissolution, Etc. No Borrower will,
directly or indirectly, (a) enter into any transaction of merger or
consolidation; or (b) allow any change in control of any Borrower; or (c)
transfer, sell, assign, lease, or otherwise dispose of all or a substantial part
of its properties or assets; or (d) transfer, sell, assign, lease, convey, or
otherwise dispose of any of its real property, except that a Borrower may, so
long as there exists no Event of Default or circumstance which with the giving
of notice or passage of time would become an Event of Default, sell real
property in the ordinary course of business to bona fide unrelated third
parties; or (e) change the nature of its business; or (f) except as otherwise
specifically contemplated by this Agreement, invest in, transfer any assets to,
or do business through any subsidiary except wholly-owned subsidiaries engaged
in the same business as the Borrower which agree to become borrowers hereunder
upon formation; or (g) wind up, liquidate, or dissolve itself or its business;
or (h) agree to any of the foregoing. Notwithstanding the foregoing, no consent
of Agent or the Banks shall be required for a merger between CNLR and CNLRS so
long as CNLR is the survivor of such merger and no Event of Default results from
such merger.
7.4 Limitations on Loans, Advances, and Investments. No Borrower will,
directly or indirectly, make or have outstanding a loan or advance to or an
investment in, all or a substantial part of the assets or properties of, or own
or acquire stock or other securities of, any Person, except (a) stock or other
securities received in settlement of a debt that was created in the ordinary
course of business, (b) travel advances in the ordinary course of business to
its officers and employees, (c) readily marketable securities issued by the
United States of America, and (d) certificates of deposit or repurchase
agreements of a Bank or of any other financial institution of comparable
standing; (e) investments in wholly owned subsidiaries engaged in the same
business as the Borrower which agree to become borrowers hereunder upon
formation; (f) notes and mortgages in favor of the Borrower which secure the
obligation of seller under a property acquisition contract to refund an earnest
money deposit or portion thereof; (g) stock or other equity interests in CNLRS,
provided, however that the aggregate amount of investments in CNLRS pursuant to
Section 7.3 and this clause (g) shall not exceed $6,000,000 at any time; (h)
intercompany loans to CNLRS for the sole purpose of financing the costs of new
construction in an aggregate amount not to exceed $50,000,000, provided, however
that the Borrowers may not make such intercompany loans to CNLRS unless at least
seventy-five percent (75%) of the total square footage under construction is the
subject of executed leases; (i) stock or other equity interests in RE-Stores,
Inc.; (j) intercompany loans to RE-Stores, Inc.; provided, however that the
aggregate amount of investments in RE-Stores, Inc. pursuant to Section 7.3, the
immediately preceding clause (i) and this clause (j) shall not exceed
$50,000,000 at any time; and (k) investments to the extent permitted under
Section 7.8.
7.5 Regulation U. No Borrower will permit any part of the proceeds of
the Credit to be used to purchase or carry or to reduce or retire any loan
incurred to purchase or carry, any margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock, or to be used for any other purpose which violates, or which would
be inconsistent with, the provisions of Regulation U or other applicable
regulation. Each Borrower covenants that it is not engaged and will not become
engaged as one of its principal or important activities in extending credit for
the purpose of purchasing or carrying such margin stock. If requested by the
Agent, each Borrower will furnish to the Agent in connection with any loan or
loans hereunder, a statement in conformity with the requirements of Federal
Reserve Form U-1 or G-3, as applicable, referred to in said Regulation. In
addition, each Borrower covenants that no part of the proceeds of the Credit
will be used for the purchase of commodity future contracts (or margins therefor
for short sales) for any commodity not required for the normal raw material
inventory of such Borrower.
7.6 Insider Transactions. No Borrower will, directly or indirectly,
purchase, acquire or lease any property or asset from, or sell, dispose of or
lease any property or assets to, or otherwise deal with, in the ordinary course
of business or otherwise, (i) any stockholder or (ii) any other related entity,
except upon terms and conditions not less favorable to such Borrower than if no
such relationship existed and upon approval thereof by the independent members
of such Borrower's board of directors, or except for transactions of which the
Agent has been notified in writing by such Borrower and Required Banks have
consented thereto, which consent will not be unreasonably withheld.
7.7 Changes in Governing Documents, Accounting Methods, Fiscal Year. No
Borrower will amend in any material respect its articles of incorporation or
bylaws from that in existence on the date of this Agreement or make any material
changes to its accounting methods or practices, its depreciation or amortization
policy or rates, or its fiscal year end from that in existence as of the date of
the financial statements provided to the Agent pursuant to Section 6.1 hereof,
except as required to comply with law or with Generally Accepted Accounting
Principles or except as consented to in writing by the Agent, which consent
shall not be unreasonably withheld.
7.8 Certain Permitted Investments. Except as otherwise permitted under
Section 7.4, the Borrowers shall not, and shall not permit any of their
subsidiaries to, make any investment in or otherwise own the following items
which would cause the aggregate value of such holdings of the Borrowers and
their subsidiaries to exceed the applicable percentage of Total Assets:
(a) common stock, preferred stock and any other capital stock
or other equity interests in unconsolidated affiliates, such that the aggregate
value of such interests, calculated on the basis of cost, exceeds 10.0% of Total
Assets;
(b) investments in general and limited partnerships, joint
ventures and other Persons which are not corporations and which investments are
accounted for on an equity basis in accordance with GAAP, such that the
aggregate book value of such Investments exceeds 10.0% of Total Assets;
(c) unimproved real estate which is not subject to a lease
under which any Borrower is the lessor, such that the aggregate book value of
all such unimproved real estate exceeds 5.0% of Total Assets;
(d) Real property under construction such that the aggregate
Construction Budget for all such real property exceeds 15.0% of Total Assets.
In addition to the foregoing limitations, the aggregate value of all of the
items subject to the limitations in the preceding clauses (a) through (d) shall
not exceed 25.0% of Total Assets.
SECTION 8. EVENTS OF DEFAULT.
It shall be an Event of Default under the Credit if:
8.1 Payment of Obligations to the Banks. Any Borrower fails to make
payment of any principal, interest, or other amount due on any indebtedness owed
the Agent or the Banks hereunder, or fails to make any other payment to the
Agent or the Banks as contemplated hereunder either by the terms hereof or
otherwise.
8.2 Representation or Warranty. Any representation or warranty made or
deemed made by any Borrower herein or in any writing furnished in connection
with or pursuant to the loan application and loan commitment for the Credit or
in connection with or pursuant to the Loan Documents shall be false in any
material adverse respect on the date when made or when deemed made.
8.3 Covenants. Any Borrower defaults in the performance or observance
of or breaches any agreement, covenant, term, or condition binding on it
contained in the Loan Documents.
8.4 Any Borrower's Liquidation; Dissolution; Bankruptcy; Etc. Any
liquidation or dissolution of any Borrower, suspension of the business of any
Borrower, or the filing or commencement by any Borrower of a voluntary petition,
case, proceeding, or other action seeking reorganization, arrangement,
readjustment of its debts; or commencement of an involuntary petition, case,
proceeding or other action against Borrowers seeking reorganization, arrangement
or readjustment of its debts, which is not vacated, discharged, stayed, bonded
or dismissed within 60 days of its commencement; or the entry of an order for
relief under any existing or future law of any jurisdiction, domestic or
foreign, state or federal, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or any other action of any Borrower indicating its consent
to, approval of, or acquiescence in, any such petition, case, proceeding, or
other action seeking to have an order for relief entered with respect to it or
its debts; the application by any Borrower for, or the appointment, by consent
or acquiescence of, a receiver, trustee, custodian, or other similar official
for any Borrower or for all or a substantial part of its property; the making by
any Borrower of an assignment for the benefit of creditors; or the inability of
any Borrower or the admission by any Borrower in writing of its inability to pay
its debts as they mature.
8.5 Order of Dissolution. Any order is entered in any proceedings
against any Borrower decreeing the dissolution or split-up of such Borrower, and
such order remains in effect for more than sixty (60) days.
8.6 Reports and Certificates. Any report, certificate, financial
statement, or other instrument delivered to the Agent or the Banks by any
Borrower is at any time false or misleading in any material adverse respect.
8.7 Judgments. The rendition of a final judgment against any Borrower
for the payment of damages or money in excess of Five Million Dollars
($5,000,000) if the same is not discharged, bonded off or transferred to other
security or if a writ of execution or similar process is issued with respect
thereto and is not stayed within the time allowed by law for filing notice of
appeal of the final judgment.
8.8 Liens Imposed by Law. The violation of any law or any act or
omission by any Borrower that results in the imposition of a Lien by operation
of law on any of its property, if the Lien is not discharged, bonded off or
transferred to other security within sixty (60) days after it has attached and
if the Lien relates to a claim for the payment of damages or money in excess of
Five Million Dollars ($5,000,000).
8.9 Corporate Existence. Any act or omission (formal or informal) of
any Borrower or its officers, directors, shareholders, or partners leading to,
or resulting in, the termination, invalidation (partial or total), revocation,
suspension, interruption, or unenforceability of its existence, or the transfer
or disposition (whether by sale, lease, or otherwise) to any Person of all or a
substantial part of its property.
8.10 ERISA. Any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $1,000,000.
8.11 Cross-Default.
(i) Any Borrower shall fail to pay when due and payable
(following the expiration of any applicable cure periods) the principal of, or
interest on, any Debt (other than the Loans) having an aggregate outstanding
principal amount of $10,000,000 or more ("Material Debt"); or
(ii) The maturity of any material Debt shall have (x) been
accelerated in accordance with the provisions of any indenture, contract or
instrument evidencing, providing for the creation of or otherwise concerning
such Debt or (y) been required to be prepaid prior to the stated maturity
thereof; or
(iii) Any other event shall have occurred and be continuing
which would permit any holder or holders of any Material Debt, any trustee or
agent acting on behalf of such holder or holders or any other Person, to
accelerate the maturity of any such Debt or require any such Debt to be prepaid
prior to its stated maturity.
THEN (i) upon the occurrence of any Event of Default described
in the foregoing Subsections 8.4 or 8.5, the unpaid principal amount of and
accrued interest on the Credit and all other obligations under the Loan
Documents shall automatically become immediately due and payable, without
presentment, demand, protest, or other requirement of any kind, all of which are
expressly waived by each Borrower and the commitments of each Bank to make
Advances hereunder and the obligation of the Issuing Bank to issue Letters of
Credit hereunder shall thereupon terminate; and (ii) upon the occurrence and
during the continuance of any other Event of Default: (a) the Agent shall, upon
the written request or with the written consent of the Required Banks take any
one or more of the following actions: (1) declare all or any portion of the
amounts described in (i) to be, and the same shall forthwith become, immediately
due and payable, without presentment, demand, protest, or other requirement of
any kind, all of which are expressly waived by each Borrower, and (2) declare
all commitments to make Advances hereunder and the obligation of the Issuing
Bank to issue Letters of Credit hereunder to be terminated, and (b) any Bank may
give notice to the Borrowers and the Agent terminating its commitment to make
further Advances hereunder. In any case the Borrowers shall be required to pay
to the Agent a sum equal to the maximum amount available under any Letters of
Credit, which sum the Agent will hold for reimbursement of any amounts drawn
under Letters of Credit and the Issuing Bank may terminate any Letters of Credit
providing for such termination by sending a notice of termination as provided
therein. The Agent may immediately proceed to do all other things provided for
by law or the Loan Documents to enforce the rights of the Agent, the Issuing
Bank, and the Banks hereunder and to collect all amounts owing to the Agent, the
Issuing Bank, and the Banks by the Borrowers. No right, power, or remedy
conferred upon the Agent, the Issuing Bank, or the Banks by the Loan Documents
shall be exclusive of any other right, power, or remedy referred to therein or
now or hereafter available at law or in equity. Notwithstanding the foregoing,
an Event of Default under subsection 8.3, 8.6 or 8.7 above shall not be deemed
to have occurred if the matter described therein is cured within thirty (30)
days after written notice thereof has been given by the Agent to the Borrowers,
an Event of Default under subsections 8.1 or 8.2 above shall not be deemed to
have occurred if the matter described therein is cured within five (5) days
after written notice thereof has been given by the Agent to the Borrowers;
provided however, that notwithstanding anything herein to the contrary, in the
case of an default in performance by the Borrowers of Section 7.1., (i) each
Bank's Revolving Credit Commitment shall automatically terminate immediately
upon such default in performance without the necessity of notice, vote or any
other action on the part of the Agent or the other Banks, (ii) an Event of
Default shall be deemed to have occurred if the Borrowers fail to repay all
outstanding Advances within thirty (30) days after such Debt was incurred, and
(iii) if the Borrowers fail to repay all Advances within such thirty (30) day
period, the Borrowers shall pay interest on all Advances outstanding from and
after the incurrence of the Debt which resulted in a violation of Section 7.1.
at the Default Rate.
SECTION 9. THE AGENT
9.1 Appointment, Authorization, and Action.
(a) Each Bank hereby irrevocably appoints and authorizes the
Agent to act as its contractual representative hereunder and take such action on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Nothing herein
or in any of the other Loan Documents shall be construed to constitute the Agent
a trustee for any Bank or to establish a fiduciary relationship with any Bank or
impose on the Agent any duties, responsibilities, or obligations other than
those expressly set forth in this Agreement or the other Loan Documents.
(b) The Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights or taking any
actions which may be vested in it or which it may be able to take under or in
respect of this Agreement and the other Loan Documents, unless this Agreement
expressly otherwise provides or unless the Agent shall have been instructed by
the Required Banks to exercise or refrain from exercising such rights or taking
such actions (in which case it shall be required to so act or refrain from
acting pursuant to the directions of the Required Banks); provided, however,
that the Agent shall not be required to take any action or refrain from acting
in any manner which in its judgment exposes the Agent to personal liability or
which is contrary to this Agreement or applicable law. The Agent agrees to give
to each Bank prompt notice of each notice given to it by any Borrower pursuant
to the terms of this Agreement.
9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Agent with reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact, subsidiaries or affiliates
shall be (a) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or the other Loan
Documents (except for actions occasioned solely by its or such Person's own bad
faith, gross negligence or willful misconduct), or (b) responsible in any manner
to any of the Banks for any recitals, statements, representations, or warranties
made by any Borrower or any officer thereof contained in this Agreement or the
other Loan Documents or in any certificate, report, statement, or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of this Agreement or
the other Loan Documents or for any failure of any Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books, or records of any Borrower.
9.4 Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex,
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct, and to have been signed, sent, or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including without limitation, counsel to any Borrower), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless such
Note shall have been transferred in accordance with Section 11.4 hereof. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement and the other Loan Documents unless it shall first receive such
advice or concurrence of the Required Banks (or, when expressly required hereby
or by the relevant other Loan Document, all the Banks) as it deems appropriate
and it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for liabilities arising solely from
its own gross negligence or willful misconduct. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required Banks
(or, when expressly required hereby, all the Banks), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks and all future holders of the Note.
9.5 Agent and Affiliates. With respect to its Revolving Credit
Commitment and the Advances made by it, the Agent shall have the same rights and
powers under the Loan Documents as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise indicated, include the Agent in its individual capacity. The Agent and
its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from, and generally engage in any kind of
business with, any Borrower, and any Person who may do business with or own
securities of any Borrower all as if it were not the Agent. The Agent and its
affiliates may accept fees and other consideration from any Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
9.6 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default hereunder unless it has
received written notice or telephonic notice confirmed immediately in writing
from a Bank or any Borrower referring to this Agreement, describing such Event
of Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, it shall promptly give notice thereof to
the Banks. The Agent shall take such action with respect to such Event of
Default as shall be reasonably directed by the Required Banks; provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable in the
best interests of the Banks.
9.7 Non-Reliance on the Agent and Other Lenders. Each Bank expressly
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact, subsidiaries or affiliates has
made any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of any Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any Bank.
Each Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers, and made its own decision to
enter into this Agreement. Each Bank also represents that it will, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals, and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports, and other documents expressly required
to be furnished to the Banks by the Agent hereunder or by the other Loan
Documents, the Agent shall not have any duty or responsibility to provide any
bank with any credit or other information concerning the business, operations,
property, financial, and other condition or creditworthiness of the Borrowers
which may come into the possession of the Agent or any of its respective
officers, directors, employees, agents, attorneys-in-fact, subsidiaries, or
affiliates.
9.8 Enforcement by the Agent. All rights of action under this Agreement
and the other Loan Documents may be enforced by the Agent and any suit or
proceeding instituted by the Agent in furtherance of such enforcement may be
brought in its name as the Agent without the necessity of joining any Banks as
plaintiffs or defendants, and the recovery of any judgment shall be for the
benefit of the Banks, subject to the expenses of the Agent. Unless otherwise
permitted by the Required Banks, no Bank (other than the Agent) shall attempt to
enforce any rights of action under this Agreement and the other Loan Documents.
9.9 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such and to the extent not promptly reimbursed by the Borrowers and
without limiting the obligations of the Borrowers to do so, ratably according to
the respective principal amounts of the Advances then owing to each of them (or
if no Advances are at the time outstanding, ratably according to the respective
amounts of their Revolving Credit Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements or any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any other Loan Documents or the transactions
contemplated thereby, or any action taken or omitted by the Agent in connection
therewith (including, without limitation, the costs and expenses payable by the
Borrowers under Subsection 11.2); provided, however, that no Bank shall be
liable for any of the foregoing to the extent they arise from the Agent's gross
negligence, bad faith or willful misconduct. Without limiting the foregoing,
each Bank agrees to reimburse the Agent promptly upon demand for such Bank's
ratable share of any costs and expenses payable by the Borrowers under Section
11.2, to the extent that the Agent is not promptly reimbursed for such costs and
expenses by the Borrowers. The agreements contained in this Subsection shall
survive the repayment of the Advances and termination of the facilities
hereunder.
9.10 Failure to Act. Except for actions expressly required of the Agent
hereunder and under the other Loan Documents, the Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from the Banks of their
indemnification obligations hereunder against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
9.11 Successor Agent. Subject to the appointment and acceptance of a
successor as provided below, the Agent may resign at any time by giving written
notice thereof to the Banks and the Borrowers. Upon any such resignation and
after consultation with the Borrowers, the Required Banks shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Required Banks and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Banks, and after consultation with the Borrowers,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000.00. Upon the acceptance of
any appointment as the Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any retiring Agent's resignation hereunder as the Agent, the provisions of
this Section shall inure to its benefit as to any actions taken or omitted to be
taken by its while it was the Agent under this Agreement.
SECTION 10. INDEMNIFICATION BY BORROWERS.
The Borrowers hereby jointly and severally agree to indemnify the
Agent, the Issuing Bank, and each Bank and their respective officers, directors,
employees, and agents (individually an "Indemnified Party" and collectively the
"Indemnified Parties") against and agrees to hold the Indemnified Parties
harmless from, any and all liabilities, losses, claims, damages, and expenses
(including reasonable counsel fees and expenses) of any kind whatsoever arising
out of, or in any way connected with, or as a result of (a) the transactions
contemplated in the Loan Documents, (b) the use of proceeds of the Credit, (c)
the execution and delivery of any subsequent credit documentation or other
document contemplated hereby or thereby by the parties hereto or the performance
of their respective obligations hereunder or thereunder or (d) any claim,
action, suit, investigation, or proceeding relating to the foregoing or to any
Borrower whether or not the Indemnified Party is a party thereto; provided that
in no event shall any Borrower be liable for indemnity hereunder by reason of
any act or omission caused by the bad faith, gross negligence, or willful
misconduct of any Indemnified Party. The foregoing indemnity shall be effective
regardless of any investigation made by or on behalf of the Agent, the Issuing
Bank, any Bank, or any Borrower.
SECTION 11. MISCELLANEOUS.
11.1 Course of Dealing; Amendments; Waiver. Except as otherwise
expressly provided in this Agreement, any consent or approval required or
permitted by this Agreement or in any Loan Document to be given by the Banks may
be given, and any term of this Agreement or of any other Loan Document may be
amended, and the performance or observance by the Borrowers of any terms of this
Agreement or such other Loan Document or the continuance of any default or Event
of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Required Banks (and, in the case of an amendment to any Loan Document,
the written consent of each Person that is a party to such Loan Document).
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in
writing, and signed by all of the Banks (or the Agent at the written direction
of all of the Banks), do any of the following: (i) increase the Revolving Credit
Commitments of the Banks (except as permitted under Section 2.1(e)) or subject
the Banks to any additional obligations; (ii) reduce the principal of, or
interest rates that have accrued or that will be charged on the outstanding
principal amount of, any Advances or other obligations; (iii) reduce the amount
of any fees payable hereunder; (iv) postpone any date fixed for any payment of
any principal of, interest on, or fees with respect to, any Advances or any
other obligations; (v) amend this Section or amend the definitions of the terms
used in this Agreement or the other Loan Documents insofar as such definitions
affect the substance of this Section; (vi) modify the definition of the term
"Required Banks" or modify in any other manner the number or percentage of the
Banks required to make any determinations or waive any rights hereunder or to
modify any provision hereof; and (vii) modify the terms of Section 6.2.(c). In
addition, the definitions of Unencumbered Assets and Unsecured Debt (and the
definitions used in such definitions and the percentages and rates used in the
calculation thereof) may not be amended without the written consent of all of
the Banks. Further, no amendment, waiver or consent unless in writing and signed
by the Agent, in addition to the Banks required hereinabove to take such action,
shall affect the rights or duties of the Agent under this Agreement or any of
the other Loan Documents. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon and any amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose set forth therein. No course of dealing or delay or omission on
the part of the Agent or any Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. Except as otherwise
explicitly provided for herein or in any other Loan Document, no notice to or
demand upon the Borrowers shall entitle the Borrowers to other or further notice
or demand in similar or other circumstances.
11.2 Payment of Expenses, Including Attorneys' Fees and Taxes. The
Borrowers agree (a) to pay or reimburse the Agent, the Issuing Bank, and each
Bank for all of their reasonable and customary out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation, execution, and
delivery of, and any amendment, supplement, or modification to, or waiver or
consent under, the Loan Documents, and the consummation of the transactions
contemplated thereby, including, without limitation, the reasonable and
customary fees and disbursements of counsel for the Agent, the Issuing Bank, and
each Bank, taxes, and all recording or filing fees, (b) to pay or reimburse the
Agent, the Issuing Bank, and each Bank for all of their costs and expenses
incurred in connection with the administration, supervision, collection, or
enforcement of, or the preservation of any rights under, the Loan Documents or
the Letters of Credit, including, without limitation, the fees and disbursements
of counsel for the Agent, the Issuing Bank, and the Banks, including attorneys'
fees out of court, in trial, on appeal, in bankruptcy proceedings, or otherwise,
(c) without limiting the generality of provision (a) hereof, to pay or reimburse
the Agent, the Issuing Bank, and the Banks for, and indemnify and hold the
Agent, the Issuing Bank, and the Banks harmless against liability for, any and
all documentary stamp taxes, annual and non-recurring intangible taxes, or other
taxes, together with any interest, penalties, or other liabilities in connection
therewith, that the Agent, the Issuing Bank, or any Bank now or hereafter
determines are payable with respect to the Loan Documents, the obligations
evidenced by the Loan Documents, any Advances, the Letters of Credit, and any
guaranties or mortgages or other security instruments, and (d) to pay,
indemnify, and hold the Agent, the Issuing Bank, and the Banks harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance, and administration of the Loan Documents or the Letters of Credit.
The agreements in this Subsection shall survive repayment of all other amounts
payable hereunder or pursuant hereto, now or in the future.
11.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Agent, each Bank, each Borrower, and their
respective successors and permitted assignees or transferees.
11.4 Assignments and Participations.
(a) No Borrower may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each Bank.
(b) Any Bank may with the prior written consent of the Agent
and the Borrowers (which consent, in each case, shall not be unreasonably
withheld) assign to one or more Eligible Assignees (each an "Assignee") all or a
portion of its Revolving Credit Commitment and its other rights and obligations
under this Agreement and the Notes; provided, however, (i) no such consent by
the Borrowers shall be required (x) in the case of any assignment to another
Bank or any affiliate of such Bank or another Bank or (y) if an Event of Default
or default shall then be existing; (ii) any partial assignment shall be in an
amount at least equal to $10,000,000 and after giving effect to such assignment
the assigning Bank retains a Revolving Credit Commitment, or if the Revolving
Credit Commitments have been terminated, holds Notes having an aggregate
outstanding principal balance, of $10,000,000 and integral multiples of
$5,000,000 in excess thereof; and (iii) each such assignment shall be effected
by means of an Assignment and Acceptance Agreement in the form attached hereto
as Exhibit C. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be deemed to
be a Bank party to this Agreement as of the effective date of the Assignment and
Acceptance Agreement and shall have all the rights and obligations of a Bank
with a Revolving Credit Commitment as set forth in such Assignment and
Acceptance Agreement, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection, the transferor Bank, the Agent and the Borrowers
shall make appropriate arrangements so that new Notes are issued to the Assignee
and such transferor Bank, as appropriate. In connection with any such
assignment, the transferor Bank (excluding the Agent in its capacity as a Bank)
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $2,500.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Bank thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows:
(i) other than the representation and warranty tha
it is the legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other instrument or document furnished pursuant
hereto;
(ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrowers or the performance or observance by any Borrower of any of
its obligations or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 6.1 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
(iv) such assignee will, independently and without
reliance upon the Agent, such assigning Bank or any other Bank, and based on
such document and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement;
(v) such assignee appoints and authorizes the Agent
to take such action as the Agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto; and
(vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank.
(d) Any Bank may at any time grant to one or more banks or
other financial institutions (each a "Participant") participating interests in
its Revolving Credit Commitment or the obligations owing to such Bank; provided,
however, (i) any such participating interest must be for a constant and not a
varying percentage interest, (ii) no Bank may grant a participating interest in
its Revolving Credit Commitment, or if the Revolving Credit Commitments have
been terminated, the aggregate outstanding principal balance of Notes held by
it, in an amount less than $10,000,000 and (iii) after giving effect to any such
participation by a Bank, the amount of its Revolving Credit Commitment, or if
the Revolving Credit Commitments have been terminated, the aggregate outstanding
principal balance of Notes held by it, in which it has not granted any
participating interests must be equal to $10,000,000 and integral multiples of
$5,000,000 in excess thereof. Except as otherwise provided herein, no
Participant shall have any rights or benefits under this Agreement or any other
Loan Document. In the event of any such grant by a Lender of a participating
interest to a Participant, such Lender shall remain responsible for the
performance of its obligations hereunder, and the Borrowers and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrowers hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided, however, such Bank may agree with the Participant that it will not,
without the consent of the Participant, agree to (i) increase the Revolving
Credit Commitments of the Banks (except as permitted under Section 2.1(e)) or
subject the Banks to any additional obligations; (ii) reduce the principal of,
or interest rates that have accrued or that will be charged on the outstanding
principal amount of, any Advances or other obligations; (iii) reduce the amount
of any fees payable hereunder; (iv) postpone any date fixed for any payment of
any principal of, interest on, or fees with respect to, any Advances or any
other obligations;; (v) amend Section 11.1. or amend the definitions of the
terms used in this Agreement or the other Loan Documents insofar as such
definitions affect the substance of Section 11.1.; (vi) modify the definition of
the term "Required Banks" or modify in any other manner the number or percentage
of the Banks required to make any determinations or waive any rights hereunder
or to modify any provision hereof; (vii) modify the terms of Section 6.2.(c);
and (viii) amend the definitions of Unencumbered Asset Value and Unsecured Debt
(and the definitions used in such definitions and the percentages and rates used
in the calculation thereof). An assignment or other transfer which is not
permitted by subsection (b) above shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this subsection. The selling Bank shall notify the Agent and the Borrowers
of the sale of any participation hereunder and the terms thereof.
(e) Notwithstanding any of the foregoing to the contrary,
nothing herein is intended to prohibit the assigning, discounting, or pledging
of all or any portion of a Bank's interest in the Advances or the Note to any
Federal Reserve Bank as collateral security pursuant to regulations of the Board
of Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, and such Advances or interest in the Note shall be
fully transferrable as provided therein. No such assignment shall release the
assigning Bank from its obligations hereunder.
(f) The Borrowers agree that any participants shall have the
same rights of set-off against the Borrowers as granted the Banks in Subsection
11.6 hereof. Upon the written request of the Borrowers, the Banks will advise
the Borrowers of the names of any participants and the extent of their interest
herein.
11.5 Confidential Information.
(a) The Agent and the Banks shall exercise their good faith
efforts not to make any public disclosure of confidential information obtained
pursuant to the Loan Documents; provided, that the foregoing shall not be
construed to, now or in the future, apply to any information reflected in any
recorded document, information obtained from sources other than the Borrowers,
or otherwise in the public domain nor shall it be construed to prevent the Agent
or any Bank from (i) making any disclosure of any information (A) if required to
do so by any applicable law or regulation or accepted banking practice, (B) to
any governmental agency or regulatory body having or claiming authority to
regulate or oversee any aspect of the Agent's or such Bank's business or any of
its subsidiaries or affiliates in connection with the exercise of such authority
or claimed authority, (C) pursuant to subpoena, (D) to the extent the Agent or
such Bank or their respective counsel deems necessary or appropriate to do so to
enforce any remedy provided for in the Loan Documents or otherwise available by
law, (ii) subject to the immediately succeeding sentence, making such
disclosures as such Bank reasonably deems necessary or appropriate to any bank
or financial institution (and/or counsel thereto) which is a prospective
assignee or participant under Subsection 11.4 (each such bank or financial
institution, a "Prospective Bank") or (iii) making, on a confidential basis,
such disclosures as the Agent or such Bank deems necessary or appropriate to the
Agent's or such Bank's counsel or accountants (including outside auditors).
(b) Each Bank agrees that prior to (a) disclosing to any
Prospective Bank any information which the Banks have agreed hereunder to hold
as confidential or (b) entering into an agreement granting to a Prospective Bank
an interest in the Advances, the applicable Bank shall make a good faith effort
to obtain an agreement executed by such Prospective Bank in form and substance
similar to the provisions of this Subsection; provided, that in no event shall
such Bank or the Agent be liable for any breach of such agreement by the
Prospective Bank.
11.6 Liens; Set-Off. Each Borrower hereby grants to the Agent and the
Banks (including any Banks added at a later time) a continuing lien to secure
all indebtedness of the Borrowers to the Agent and the Banks created hereunder
or pursuant to the Loan Documents upon any and all monies, securities, and other
property of such Borrower and the proceeds thereof, now or hereafter held or
received by or in transit to, the Agent or any Bank from or for the Borrowers,
and also upon any and all deposits (general or special) and credits of the
Borrowers, if any, at the Agent or any Bank, at any time existing. Upon the
occurrence of any Event of Default, the Agent, and the Banks are hereby
authorized at any time and from time to time, without notice to such Borrower,
to set off, appropriate, and apply any or all items hereinabove referred to
against indebtedness of the Borrowers owed to the Agent or the Banks under the
Loan Documents, whether now existing or hereafter arising. The Agent or any Bank
shall be deemed to have exercised such right of set-off and to have made a
charge against such items immediately upon the occurrence of such Event of
Default although made or entered on its books subsequent thereof.
Notwithstanding the foregoing, any Bank exercising any right to set-off
hereunder shall promptly thereafter deliver to the Agent and the Borrowers a
written notice thereof, provided that any failure to deliver such notice shall
not, in any event, limit such Bank's or any other Bank's right of set-off
hereunder.
11.7 Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, telexed, or sent by United
States mail or courier service and shall be deemed to have been given when
delivered in person, receipt of telecopy or telex or four Business Days after
depositing it in the United States mail, registered or certified, with postage
prepaid and properly addressed. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Subsection 11.6) shall be as set forth under each party's name on the
signature pages hereof, or in the case of any Bank becoming a party hereto after
the Closing Date, in the applicable Assignment and Acceptance Agreement.
11.8 Waiver of Default. The Banks may, in accordance with the
provisions of Subsection 11.1, by written notice to the Borrowers, at any time
and from time to time, waive any Event of Default and its consequences, or any
default in the performance or observance of any condition, covenant, or other
term hereof and its consequences. Any such waiver shall be for such period and
subject to such conditions as shall be specified in any such notice. In the case
of any such waiver, the Borrowers and the Banks shall be restored to their
former positions prior to such Event of Default or default and shall have the
same rights as they had thereto, and any Event of Default or default so waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Event of Default or default, or impair any right
consequent thereto.
11.9 No Waiver; Cumulative Remedies. No omission or failure of the
Agent or the Banks to exercise and no delay in exercising by the Agent or the
Banks of any power, or privilege, shall operate as a waiver thereof or be
construed to be a waiver thereof; nor shall any single or partial exercise of
any right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The rights and
remedies provided in the Loan Documents are cumulative and not exclusive of any
rights or remedies provided by law, and the warranties, representations,
covenants, and agreements made therein shall be cumulative, except in the case
of irreconcilable inconsistency, in which case the provisions of this Agreement
shall control.
11.10 Venue and Jurisdiction. In any litigation in connection with or
to enforce this Agreement or any of the other Loan Documents, each Borrower
irrevocably consents to and confers personal jurisdiction on the courts of the
State of Florida located in Orange County or the United States courts located
within the Middle District of the State of Florida, expressly waives any
objections as to venue in any of such courts, and agrees that service of process
may be made on such Borrower by mailing a copy of the summons and complaint by
registered or certified mail, return receipt requested, to the address set forth
herein below the name of the Borrower on the signature page hereto (or otherwise
expressly provided in writing). Nothing contained herein shall, however, prevent
the Agent from bringing any action or exercising any rights within any other
state or jurisdiction or from obtaining personal jurisdiction by any other means
available by applicable law.
11.11 Governing Law. The validity, interpretation, and enforcement of
this Agreement, of the rights and obligations of the parties hereto, and of the
other documents delivered in connection herewith shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Florida,
excluding those laws relating to the resolution of conflicts between laws of
different jurisdictions.
11.12 Title and Headings; Table of Contents. The titles and headings
preceding the text of the Sections and Subsections of this Agreement and the
Table of Contents have been inserted and included solely for convenience of
reference and shall neither constitute a part of this Agreement nor affect its
meaning, interpretation, or effect.
11.13 Complete Agreement. The Loan Documents contain the final,
complete, and exclusive expression of the understanding of the Borrowers, the
Agent, and the Banks with respect to the transactions contemplated by the Loan
Documents and supersede any prior or contemporaneous agreement or
representation, oral or written, by or between the parties related to the
subject matter hereof.
11.14 Legal or Governmental Limitations. Anything contained in this
Agreement to the contrary notwithstanding, the Banks shall not be obligated to
extend credit or make any loans to the Borrowers in an amount in violation of
any limitations or prohibitions provided by any applicable statute or
regulation.
11.15 Counterparts. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument.
11.16 WAIVER OF JURY TRIAL BY BORROWERS. EACH BORROWER HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RESPECTIVE RIGHTS IT MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THE LOAN
DOCUMENTS OR ARISING OUT OF, UNDER OR IN CONNECTION THEREWITH, OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY WITH RESPECT HERETO OR THERETO. FURTHERMORE, NO BORROWER SHALL SEEK TO
CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY ACTION IN
WHICH A JURY TRIAL CANNOT BE WAIVED. THIS WAIVER IS A MATERIAL INDUCEMENT FOR
THE BANKS ACCEPTING AND ENTERING INTO THE CREDIT CONTEMPLATED BY THE LOAN
DOCUMENTS (OR ANY AGREEMENT EXECUTED IN CONNECTION WITH THE LOAN DOCUMENTS)
FROM, OR WITH, THE BORROWERS.
11.17 BORROWERS JOINTLY AND SEVERALLY LIABLE. the obligationS of the
borrowers HEREUNDER SHALL BE joint and several, and ACCORDINGLY, each Guarantor
CONFIRMS THAT IT is liable for the full amount of ALL OF THE OBLIGATIONS AND
LIABILITIES OF EACH OF THE OTHER borrowers HEREUNDER.
[Signatures on Next Page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amended
and Restated Credit Agreement to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first above written.
BORROWERS:
COMMERCIAL NET LEASE REALTY, INC.
NET LEASE REALTY I, INC.
NET LEASE REALTY II, INC.
NET LEASE REALTY III, INC.
NET LEASE REALTY IV, INC.
NET LEASE FUNDING, INC.
By: /s/ Kevin B. Habicht
--------------------
Name: Kevin B. Habicht
Title: Executive Vice President and Chief Financial
Officer of each of the above-listed entities
on behalf of each such entity
Address for Notices:
455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
Attention: Kevin B. Habicht
TELECOPY NO. 407/648-8756
CONFIRMING TEL. NO. 407/265-7348
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
FIRST UNION NATIONAL BANK, individually, as Agent
and as Issuing Bank
By: /s/
--------------------------
Name:
Title:
Revolving Credit Commitment:
$60,000,000
Address for Notices:
First Union National Bank
First Union Capital Markets Group
One First Union Center, TW-6
301 South College Street
Mail Code: NC0166
Charlotte, North Carolina 28288-0166
Attention: Rex Rudy
Telecopy Number:(704) 383-6205
Telephone Number: (704) 383-6506
and
First Union Capital Markets Group
Real Estate Syndications
One First Union Center, DC-5
301 South College Street
Mail Code: NC0608
Charlotte, North Carolina 28288-0608
Attention: David Blackman
Telecopy Number: (704) 715-1964
Telephone Number: (704) 374-6272
[Signatures Continue on Next Page]
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/
--------------------------
Name:
Title:
Revolving Credit Commitment:
$20,000,000
Address for Notices:
150 Second Avenue North
Suite 470
St. Petersburg, Florida 33701
Attention: John Marian
Telecopy Number:(813) 898-5319
Telephone Number:(813) 226-0217
Lending Office:
420 N. 20th St.
Birmingham, Alabama 35203
Telecopy Number:(205) 254-4240
Telephone Number:(800) 239-2300 Ext. 5791
[Signatures Continue on Next Page]
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
COMERICA BANK
By: /s/
---------------------------
Name:
Title:
Revolving Credit Commitment:
$20,000,000
Address for Notices:
500 Woodward Avenue
Mail Code 3256
Detroit, Michigan 48226-3256
Attention: Leslie Vogel
Telecopy Number:(313) 222-9295
Telephone Number:(313) 222-9290
[Signatures Continue on Next Page]
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/
---------------------------
Name:
Title:
Revolving Credit Commitment:
$35,000,000
Address for Notices:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza, Second Floor
Greenwich, Connecticut 06830
Attention: Susan Flynn
Telecopy Number:(203) 861-6594
Telephone Number:(203) 861-6450
With copy to:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attention: Scott Kray
Telecopy Number:(770) 390-1851
Telephone Number:(770) 390-1850
[Signatures Continue on Next Page]
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
AMSOUTH BANK
By: /s/
---------------------------
Name:
Title:
Revolving Credit Commitment:
$35,000,000
Address for Notices:
AmSouth Bank
111 North Orange Avenue, Suite 1010
Orlando, Florida 32801
Attention: Melissa Ledbetter
Telecopy Number:(407) 835-3015
Telephone Number:(407) 649-8441
[Signatures Continue on Next Page]
<PAGE>
SIGNATURE PAGE
Fifth Amended and Restated Credit Agreement dated as of September 23,
1999 among Commercial Net Lease Realty, Inc., Net Lease Realty I, Inc., Net
Lease Realty II, Inc., Net Lease Realty III, Inc., Net Lease Realty IV, Inc.,
Net Lease Funding, Inc., First Union National Bank, as Agent and the Banks party
thereto from time to time.
BANK OF AMERICA, N.A.
By: /s/
--------------------------
Name:
Title:
Revolving Credit Commitment:
$30,000,000
Address for Notices:
Bank of America
600 Peachtree Street, 6th Floor
Atlanta, Georgia 30308-3318
Attention: Kevin M. Brown, Principal
Telecopy Number:(404) 607-4145
Telephone Number:(404) 607-4107
with copy to:
Bank of America
6610 Rockledge Drive
Bethesda, Maryland 20817-1811
Attention: Rossetti Law
Telecopy Number:(301) 493-2885
Telephone Number: (301) 571-9679
<PAGE>
<TABLE>
SCHEDULE I
Commercial Net Lease Realty, Inc.
Encumbered Properties - By Loan
June 30, 1999
<CAPTION>
Original Acquisition
Property City, State Encumbered 6/30/99 Balance Price
---------------- ------------------ -------------- --------------- -------------
Lender Principal Mutual Life Insurance Co.
<S> <C> <C> <C> <C> <C>
Best Buy Corpus Christi, TX $1,268,679.00 $1,268,679.00 $1,727,065.10
Food Lion Lynchburg, VA $1,333,443.00 $1,333,443.00 $1,802,383.38
Linens 'n Things Freehold, NJ $2,931,484.00 $2,931,484.00 $3,962,417.22
Marshall's Freehold, NJ $3,431,576.00 $3,431,576.00 $4,638,378.78
OfficeMax Corpus Christi, TX $1,439,600.00 $1,439,600.00 $1,948,277.49
Sears Clearwater, FL $2,745,218.00 $2,745,218.00 $3,721,200.00
------------- ------------- -------------
$13,150,000.00 $13,150,000.00 $17,799,721.97
============== ============== ==============
Lender Principal Mutual Life Insurance Co.
Barnes & Noble Brandon, FL $1,675,832.00 $1,484,600.64 $3,003,557.60
Barnes & Noble Denver, CO $0.00 $0.00 $5,966,872.00
Borders Books Richmond, VA $2,665,579.00 $2,361,406.33 $4,776,897.09
Borders Books Wilmington, DE $5,073,641.00 $4,494,681.25 $9,092,306.85
Computer City Miami, FL $2,555,634.00 $2,264,007.29 $4,579,868.00
Eckerd Alice, TX $554,571.00 $491,288.19 $994,149.12
Eckerd Amarillo, TX $643,467.00 $570,040.15 $1,178,302.00
Eckerd Amarillo, TX $836,290.00 $740,859.87 $1,520,710.00
Eckerd Amarillo, TX $546,540.00 $484,173.61 $1,014,199.00
Eckerd Arlington, Tx $560,824.00 $496,827.65 $1,005,034.00
Eckerd Colleyville, TX $1,021,469.00 $904,907.85 $1,832,537.94
Eckerd Dallas, Tx $658,556.00 $583,407.32 $1,180,177.00
Eckerd Garland, Tx $529,918.00 $469,448.37 $949,648.00
Eckerd Glassboro, nj $793,352.00 $702,821.58 $1,421,740.00
Eckerd Kissimmee, FL $924,215.00 $818,751.63 $1,649,332.00
Eckerd Mantua, nj $723,142.00 $640,623.33 $1,295,817.86
Eckerd Millville, nj $695,590.00 $616,215.32 $1,246,545.00
Eckerd San Antonio, TX $683,545.00 $605,544.79 $1,224,959.00
Eckerd Smyrna, ga $621,619.00 $550,685.25 $1,113,983.00
Eckerd Vineland, NJ $752,970.00 $667,047.62 $3,969,423.52
Food Lion Chattanooga, TN $1,136,988.00 $1,007,244.83 $2,037,560.05
Food Lion Keystone Heights, FL $1,079,531.00 $956,344.32 $1,934,591.85
Food Lion Martinsburg, WV $1,111,689.00 $984,832.73 $1,992,221.56
Int'l House of Pancakes Arlington, TX $565,070.00 $500,589.13 $1,012,644.55
Int'l House of Pancakes Ft. Worth, TX $588,447.00 $521,298.55 $1,054,536.83
Int'l House of Pancakes Las Vegas, NV $632,526.00 $560,347.64 $1,133,529.26
Int'l House of Pancakes Matthews, NC $577,942.00 $511,992.29 $1,035,711.16
Int'l House of Pancakes Phoenix, AZ $581,831.00 $515,437.51 $1,042,681.22
Int'l House of Pancakes Stafford, TX $532,299.00 $471,557.67 $903,588.01
Int'l House of Pancakes Sunset Hills, MO $562,589.00 $498,391.24 $1,008,198.28
Office Depot Arlington, TX $1,120,190.00 $992,363.67 $2,007,456.05
OfficeMax Cincinnatti, OH $1,181,897.00 $1,047,029.20 $2,118,039.80
OfficeMax Dallas, TX $1,578,284.00 $1,398,183.97 $2,828,391.53
OfficeMax Evanston, IL $2,023,054.00 $1,792,200.69 $3,625,448.88
Sears Orlando, FL $1,676,900.00 $1,485,546.77 $3,005,118.00
The Good Guys Stockton, CA $1,984,009.00 $1,757,611.16 $3,555,477.59
------------- ------------- -------------
$39,450,000.00 $34,948,309.41 $79,311,253.60
============== ============== ==============
Lender Indianapolis Life Insurance Company
Sears Pensacola, FL $1,885,393.70 $1,699,068.87 $2,228,530.25
------------- ------------- -------------
$1,885,393.70 $1,699,068.87 $2,228,530.25
============= ============= =============
Lender Indianapolis Life Insurance Company
Sears Raleigh, NC $2,357,254.75 $2,162,604.68 $3,601,661.26
------------- ------------- -------------
$2,357,254.75 $2,162,604.68 $3,601,661.26
============= ============= =============
Lender Modern Woodman of America
Sears Tampa, FL $2,511,524.68 $2,203,693.29 $3,500,741.61
------------- ------------- -------------
$2,511,524.68 $2,203,693.29 $3,500,741.61
============= ============= =============
</TABLE>
Lien Holder California Public Employees' Retirement System
Kash & Karry Palm Harbor, FL Performance Mortgage
Kash & Karry Gainesville, FL Performance Mortgage
Kash & Karry Brandon, FL Performance Mortgage
Kash & Karry Sarasota, FL Performance Mortgage
Target Chico, CA Performance Mortgage
Target Victorville, CA Performance Mortgage
Target Mira Mesa, CA Performance Mortgage
Lucky Watsonville, CA Performance Mortgage
Lucky Lodi, CA Performance Mortgage
Lucky Sonora, CA Performance Mortgage
<PAGE>
A-4
EXHIBIT "A"
NOTICE OF BORROWING
--------------------
Date
First Union National Bank
First Union Capital Markets Group
One First Union Center, TW-6
301 South College Street
Mail Code: NC0166
Charlotte, North Carolina 28288-0166
Attention: Syndication Agency Services
Ladies and Gentlemen:
Pursuant to the Fifth Amended and Restated Credit Agreement dated as of
September __, 1999, as amended, supplemented, restated, replaced, or otherwise
modified from time to time (the "Agreement"; capitalized terms used but not
defined herein shall have the meanings assigned in the Agreement); this
represents the undersigneds' request for a borrowing or the Issuance of a Letter
of Credit under the Revolving Credit Facility as follows:
ADVANCES
__________ Proposed Date of Advance
$__________ Aggregate Amount of Advance
__________ Prime Rate Advance or __________ LIBOR Rate Advance
If LIBOR Rate Advance: ___1, ___ 2, ___3 or ____6 month Interest Period
The proceeds of the Advances are to be deposited in
____________________'s account at Agent.
LETTER OF CREDIT
__________ Proposed Date of Issuance of Letter of Credit
$__________ Maximum Amount of Letter of Credit
__________ Expiration Date of Letter of Credit
The name and address of the beneficiary and the form of the Letter of
Credit are as stated in the accompanying application for Letter of Credit.
The Letter of Credit is to be made available to ___________________
at the Lending Office of the Issuing Bank, unless otherwise specified herein:
This Notice is given in order to induce the Banks to make the foregoing
Advances or issue the foregoing Letter of Credit. We understand that the Agent
and each of the Banks are relying on the truth and accuracy of the statements
made in this Notice.
1. If Advances are being requested, the proceed will be used solely
to: ___________________________________________________________________________
_______________________________________________________________________________.
2. If a Letter of Credit is being requested, the purpose of the Letter
of Credit or the transaction supported by the Letter of Credit is: _____________
_______________________________________________________________________________.
3. The anticipated takeout source for the requested borrowing is ______
_______________________________________________________________________________.
4. If a Letter of Credit is being requested, this Notice is accompanied
by an executed application for Letter of Credit and such other agreements,
information, and documents as the Agent or the Issuing Bank requires, and the
payment of fees and commissions described in the Agreement.
5. All of the representations and warranties of the undersigned
contained in the Agreement or in any of the other Loan Documents are true,
correct, and complete on and as of the date of this Notice, with the same effect
as though the representations and warranties had been made on and as of such
date.
6. Each of the undersigned is in compliance with all terms and
conditions of the Agreement, and no Event of Default, nor any event which, upon
notice or lapse of time or both, would constitute an Event of Default, has
occurred and is continuing, or would result from the borrowing or the issuance
or a draw under the Letter of Credit.
7. No liens, claims, encumbrances, transfers, or conveyances have been
made, asserted, delivered, filed, or recorded with respect to any property
purchased by the undersigned using loan proceeds, other than as permitted
pursuant to the Agreement.
8. After giving effect to the borrowing or the issuance of the Letter
of Credit requested herein, the aggregate amount of Advances outstanding under
the Revolving Credit Facility plus the aggregate amount of Letter of Credit
Contingent Obligations will not exceed the Banks' Revolving Credit Commitments.
Further, after giving effect to the borrowing or the issuance of the Letter of
Credit requested herein, the aggregate amount of Advances used for funding under
Letters of Credit plus the aggregate amount of Letter of Credit Contingent
Obligations will not exceed $15,000,000.00.
9. The undersigned have no setoffs or defenses under the Agreement or
any other Loan Document. The Agreement, the Note, and all other Loan Documents
are valid, binding, and enforceable in accordance with their terms.
COMMERCIAL NET LEASE REALTY, INC.
By: /s/
-----------------------------
Its:
NET LEASE REALTY I, INC.
By: /s/
-----------------------------
Its:
NET LEASE REALTY II, INC.
By: /s/
-----------------------------
Its:
NET LEASE REALTY III, INC.
By: /s/
-----------------------------
Its:
NET LEASE REALTY IV, INC.
By: /s/
-----------------------------
Its:
NET LEASE FUNDING, INC.
By: /s/
-----------------------------
Its:
<PAGE>
Init. ____
B-4
EXHIBIT "B"
PROMISSORY NOTE
As of September ___, 1999
Charlotte, North Carolina
FOR VALUE RECEIVED, the undersigned, COMMERCIAL NET LEASE REALTY, INC.,
a Maryland corporation ("CNLR"), NET LEASE REALTY I, INC., a Maryland
corporation ("NET I"), NET LEASE REALTY II, a Maryland corporation ("NET II"),
NET LEASE REALTY III, INC., a Maryland corporation ("NET III"), NET LEASE REALTY
IV, INC., a Maryland corporation ("NET IV"), and NET LEASE FUNDING, INC., a
Maryland corporation ("Funding"; CNLR, NET I, NET II, NET III, NET IV and
Funding are collectively referred to herein as the "Borrowers"), jointly and
severally promise to pay to the order of [BANK] (the "Lender"), in care of First
Union National Bank, as Agent (the "Agent") under that certain Fifth Amended and
Restated Credit Agreement of even date herewith as amended and in effect from
time to time (the "Agreement"), by and among the undersigned, the Banks and the
Agent, to First Union National Bank, One First Union Center, Charlotte, North
Carolina 28288, or at such other address as may be specified in writing by the
Agent to the Borrowers, the principal sum of [ ] ($_____________), or so much
thereof as may be advanced, and to pay interest on the principal amount
remaining from time to time outstanding from the date hereof until due at the
rate and at the times specified in the Agreement. Capitalized terms used but not
defined herein shall have the meanings assigned those terms in the Agreement.
In no event shall the interest rate applicable to principal outstanding
under this Note exceed the maximum rate of interest allowed by applicable law,
as amended from time to time. The Agent and the Lender do not intend to charge
any amount of interest or other fees or charges in the nature of interest that
exceeds the maximum rate allowed by applicable law. If any payment of interest
or in the nature of interest hereunder would cause the foregoing interest rate
limitation to be exceeded, then such excess payment shall be credited as a
payment of principal unless the undersigned notifies the Agent in writing that
the undersigned wishes to have such excess sum returned, together with interest
at the rate specified in Section 687.04(2), Florida Statutes, or any successor
statute.
Principal outstanding hereunder shall be due and payable in a single
payment at the Revolving Credit Maturity Date. Interest shall be payable
quarterly and at such other times specified in the Agreement, as long as any
principal amount remains outstanding hereunder, and at the Revolving Credit
Maturity Date.
This Note is issued pursuant to, and is subject to, the provisions of
the Agreement. Reference is made to such Loan Documents for a description of
additional rights and obligations of the undersigned, the Agent and the Lender,
including events of default, rights of prepayment and rights of acceleration of
maturity in the event of default.
The undersigned agree to pay or reimburse the Agent and the Lender for
all of their costs and expenses incurred in connection with administration,
supervision, collection, or enforcement, or preservation of any rights under
this Note and the Loan Documents, including, without limitation, the fees and
disbursements of counsel for the Agent and the Banks, including attorneys' fees
out of court, in trial, on appeal, in bankruptcy proceedings, or otherwise.
All persons now or at any time liable for payment of this Note hereby
waive presentment, protest, notice of protest, and notice of dishonor. The
undersigned expressly consent to any extensions and renewals of this Note, in
whole or in part, and all delays in time of payment or other performance under
this Note which may be granted at any time and from time to time, without
limitation and without any notice or further consent of the undersigned. All
notices, demands, and other communications required or permitted in connection
with this Note shall be given in the manner specified in the Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Agreement.
The remedies of the Agent and the Lender, as provided herein, or in any
other Loan Document are cumulative and concurrent (except as may be provided in
the Agreement) and may be pursued singularly, successively, or together, and may
be exercised as often as the occasion therefor shall arise.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Florida, excluding those laws relating
to the resolution of conflicts between the laws of different jurisdictions.
This Note together with each of those certain Promissory Notes of even
date herewith made by the Borrowers in favor the respective Banks as set forth
therein shall collectively constitute a modification and renewal of that certain
Third Renewal and Modification Promissory Note from CNLR, NET I NET II, NET III
and NET IV to Agent on behalf of Banks dated as of August 6, 1997.
IN WITNESS WHEREOF, the undersigned have caused this Note to be
executed as of the day and year first above written.
COMMERCIAL NET LEASE REALTY, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
NET LEASE REALTY I, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
NET LEASE REALTY II, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
NET LEASE REALTY III, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
NET LEASE REALTY IV, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
NET LEASE FUNDING, INC.,
a Maryland corporation
By:/s/ Kevin Habicht
-----------------
Kevin B. Habicht
Executive Vice President and
Chief Financial Officer
Address: 455 S. Orange Avenue, Suite 700
Orlando, Florida 32801
<PAGE>
C-4
EXHIBIT "C"
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of __________, 19__
Reference is made to the Fifth Amended and Restated Credit Agreement
dated as of September __, 1999 (as amended and in effect from time to time, the
"Agreement"), by and among Commercial Net Lease Realty, Inc., a Maryland
corporation, Net Lease Realty I, Inc., a Maryland corporation, Net Lease Realty
II, Inc., a Maryland corporation, Net Lease Realty III, Inc., a Maryland
corporation, Net Lease Realty IV, Inc., a Maryland corporation, and Net Lease
Funding, Inc., a Maryland corporation (collectively, the "Borrowers"), the
financial institutions listed from time to time on the signature pages thereof
(individually a "Bank" and collectively the "Banks") and First Union National
Bank, as agent (in such capacity, the "Agent") for the Banks. Terms defined in
the Agreement and used herein without definition shall have the respective
meanings herein assigned to such terms in the Agreement.
[Name of Assigning Lender] (the "Assignor") and [Name of Assignee] (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee and the
Assignee hereby purchases and assumes from the Assignor, a __________ percent
(_____%) undivided interest in all of the Assignor's rights and obligations
under the Agreement as of the Assignment Date (as defined in paragraph 4 below),
including, without limitation, (a) the Assignor's obligation to make Advances
thereunder and (b) the Assignor's interest in all unpaid interest and commitment
fees accrued as of the Assignment Date.
2. The Assignor (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) represents that as
of the date hereof, before giving effect to the assignment contemplated hereby,
its Revolving Credit Commitment is $__________ and the aggregate outstanding
principal balance of the Advances made by it equals $__________; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
furnished pursuant thereto, other than that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; and (iv) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of their obligations
under the other Loan Documents to any Borrower is a party or any other
instrument or document delivered or executed pursuant thereto.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Loan Documents, together with copies of the most
recent financial statements delivered pursuant to Section 6.1 of the Agreement
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, any other Bank, or the Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents; (d)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers as are reasonably incidental thereto pursuant to the
terms of the Loan Documents; and (e) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Loan Documents
are required to be performed by it as a Bank.
4. The effective date for this Assignment and Acceptance shall be
__________, 19__ (the "Assignment Date"). Following the execution of this
Assignment and Acceptance, each party hereto and each Person consenting hereto
shall deliver its duly executed counterpart hereof to the Agent for acceptance
by the Agent.
5. Upon such acceptance, from and after the Assignment Date (i) the
Assignee shall be a party to the Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Bank thereunder,
and (ii) the Assignor shall, with respect to that portion of its interest under
the Agreement assigned hereunder, relinquish its rights and be released from its
obligations under the Agreement.
6. Upon such acceptance and after the Assignment Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. On the Assignment Date, the Assignee will pay to the Agent for the
account of the Assignor an amount equal to the percentage of the Assignor's
interest assumed by the Assignee hereunder, times the aggregate outstanding
principal amount of the Advances made by the Assignor.
7. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
8. This Assignment and Acceptance may be executed in any number of
counterparts which shall together constitute but one and the same agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized as of the date first above
written.
[ASSIGNOR]
By: /s/
------------------------
Name:
Title:
[ASSIGNEE]
By: /s/
------------------------
Name:
Title:
CONSENTED TO:
FIRST UNION NATIONAL BANK
as Agent
By: /s/
-----------------------
Name:
Title:
COMMERCIAL NET LEASE REALTY, INC.
By /s/
------------------------
Name:
Title:
NET LEASE REALTY I, INC.
By /s/
------------------------
Name:
Title:
NET LEASE REALTY II, INC.
By /s/
------------------------
Name:
Title:
NET LEASE REALTY III, INC.
By /s/
------------------------
Name:
Title:
NET LEASE REALTY IV, INC.
By /s/
------------------------
Name:
Title:
NET LEASE FUNDING, INC.
By /s/
------------------------
Name:
Title:
<PAGE>
D-3
EXHIBIT D
to
Fifth Amended and Restated Credit
Agreement dated as of September 23, 1999
by and among
Commercial Net Lease Realty, Inc.,
Net Lease Realty I, Inc.,
Net Lease Realty II, Inc.,
Not Lease Realty III, Inc.,
Net Lease Realty IV, Inc., and
Net Lease Funding, Inc.
the Lenders listed on the signature pages thereof
and
FIRST UNION NATIONAL BANK,
as the Agent
NOTICE OF PREPAYMENT
First Union National Bank
First Union Capital Markets Group
One First Union Center, TW-6
301 South College Street
Mail Code: NC0166
Charlotte, North Carolina 28288-0166
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you by Commercial
Net Lease Realty, Inc., Net Lease Realty I, Inc., Net Lease Realty II, Inc., Net
Lease Realty III, Inc., Net Lease Realty IV, Inc., and Net Lease Funding, Inc.,
corporations organized under the laws of Maryland (collectively, the
"Borrowers"), under Section 2.12 of the Fifth Amended and Restated Credit
Agreement dated as of September __, 1999 (together with all amendments and other
modifications, if any, from time to time made thereto, the "Credit Agreement"),
by and among the Borrowers, the Lenders listed on the signature pages thereof,
and First Union National Bank, as the Agent.
1. The Borrowers hereby provide notice to the Agent that the Borrowers
shall repay the following Prime Rate Advances, Floating LIBOR Rate Advances
and/or LIBOR Rate Advances.
(Complete in accordance with Section 2.2 of the Credit Agreement.)
2. The Borrowers hereby provide notice that the Borrowers shall repay
the above-referenced Loans on the following Business Day:
(Complete in accordance with Section 2.2 of the Credit Agreement.)
3. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Prepayment this ____ day of __________, 19__.
COMMERCIAL NET LEASE REALTY, INC.
[CORPORATE SEAL]
By: /s/
--------------------
Name:
Title:
NET LEASE REALTY I, INC.
[CORPORATE SEAL]
--------------------
Name:
Title:
NET LEASE REALTY II, INC.
[CORPORATE SEAL]
By: /s/
--------------------
Name:
Title:
NET LEASE REALTY III, INC.
(CORPORATE SEAL)
By: /s/
--------------------
Name:
Title:
NET LEASE REALTY IV, INC.
[CORPORATE SEAL]
By: /s/
--------------------
Name:
Title:
NET LEASE FUNDING, INC.
[CORPORATE SEAL]
By: /s/
--------------------
Name:
Title:
<PAGE>
E-4
EXHIBIT E
to
Fifth Amended and Restated Credit
Agreement dated as of September 23, 1999
by and among
Commercial Net Lease Realty, Inc.,
Net Lease Realty I, Inc.,
Net Lease Realty II, Inc.,
Not Lease Realty III, Inc.,
Net Lease Realty IV, Inc., and
Net Lease Funding, Inc.
the Lenders listed on the signature pages thereof
and
FIRST UNION NATIONAL BANK,
as the Agent
NOTICE OF CONVERSION/CONTINUATION
First Union National Bank
First Union Capital Markets Group
One First Union Center, TW-6
301 South College Street
Mail Code: NC0166
Charlotte, North Carolina 28288-0166
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 2.15 of the Fifth Amended and Restated Credit
Agreement dated as of September __, 1999 (as amended, restated or otherwise
modified, the "Credit Agreement"), by and among Commercial Net Lease Realty,
Inc., Net Lease Realty I, Inc., Net Lease Realty II, Inc., Net Lease Realty III,
Inc., Net Lease Realty IV, Inc., and Net Lease Funding, Inc., corporations
organized under the laws of Maryland (collectively, the "Borrowers"), the
Lenders listed on the signature pages thereof (the "Lenders"), and First Union
National Bank, as the Agent.
1. This Notice of Conversion/Continuation is submitted for the purpose
of: (Complete applicable information)
(a) [Converting] [continuing] an _______________ Advance [into] [as]
an ____________________ Advance.1
(b) The aggregate outstanding principal balance of such Advance is
$__________.
(c) The last day of the current Interest Period for such Advance is
____________________.2
(d The principal amount of such Advance to be [converted]
[continued] is $__________.3
(e) The requested effective date of the [conversion]
[continuation] of such Advance is ____________________.4
2. No Default or Event of Default exists, and none will exist upon the
conversion or continuation of the Advance requested herein.
3. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation this ____ day of __________, 19__.
COMMERCIAL NET LEASE REALTY, INC.
By: /s/
-----------------------
Name:
Title:
NET LEASE REALTY I, INC.
By: /s/
-----------------------
Name:
Title:
NET LEASE REALTY II, INC.
By: /s/
-----------------------
Name:
Title:
NET LEASE REALTY III, INC.
By: /s/
-----------------------
Name:
Title:
NET LEASE REALTY IV, INC.
By: /s/
-----------------------
Name:
Title:
NET LEASE FUNDING, INC.
By: /s/
-----------------------
Name:
Title:
<PAGE>
1. Delete the bracketed language and insert "Prime Rate", or "LIBOR Rate", as
applicable, in each blank.
2. Insert applicable date for any LIBOR Rate Loan being converted or continued.
3. Complete with an amount in compliance with Section 2.2 of the Credit
Agreement.
4. Complete with a Business Day at least three (3) Business Days after the date
of this Notice.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet of Commercial Net Lease Realty, Inc. at September 30, 1999, and its
statement of earnings for the nine months ended and is qualified in its entirely
by reference to the Form 10-Q of Commercial Net Lease Realty, Inc. for the nine
months ended September 30, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,595,000
<SECURITIES> 2,383,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 570,523,000
<DEPRECIATION> 20,469,000
<TOTAL-ASSETS> 743,986,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 304,000
0
0
<OTHER-SE> 392,248,000
<TOTAL-LIABILITY-AND-EQUITY> 743,986,000
<SALES> 0
<TOTAL-REVENUES> 18,983,000
<CGS> 0
<TOTAL-COSTS> 4,418,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,663,000
<INCOME-PRETAX> 8,796,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,796,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,796,000
<EPS-BASIC> 0.29
<EPS-DILUTED> 0.29
<FN>
<F1> Due to the nature of its industry, Commercial Net Lease Realty, Inc. has an
unclassified balance sheet; therefore, no values are shown above for current
assets and current liabilities.
</FN>
</TABLE>
