SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BANYAN STRATEGIC REALTY TRUST
(Name of Issuer)
SHARES OF BENEFICIAL INTEREST, NO PAR VALUE
(Title of Class of Securities)
06683M102
(CUSIP Number)
JOHN C. WATERFALL
10 EAST 50TH STREET
NEW YORK, NEW YORK 10022
(212) 705-0500
(Name, address and telephone number of person
authorized to receive notices and communications)
October 10, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
___________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Morgens Waterfall Income Partners, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
New York
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
83,315
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
83,315
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
83,315
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
0.6%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Restart Partners, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
0
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
418,768
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
418,768
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
418,768
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
3.2%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
_____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Restart Partners II, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
692,830
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
692,830
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
692,830
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
5.2%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Restart Partners III, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
482,350
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
482,350
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
482,350
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
3.7%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Restart Partners IV, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
304,758
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
304,758
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
304,758
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
2.3%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Restart Partners V, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
100,855
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
100,855
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
100,855
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
.8%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Endowment Restart, L.L.C.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
WC, 00
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
109,625
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
109,625
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
109,625
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
0.8%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
CO
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 8 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Morgens, Waterfall, Vintiadis & Company, Inc.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
New York
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
109,625
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
109,625
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
109,625
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
.8%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
CO
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 9 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
MW Capital, L.L.C.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
83,315
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
83,315
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
83,315
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
0.6%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
CO
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 10 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime Group, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
418,768
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
418,768
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
418,768
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
3.2%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 11 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime Group II, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
692,830
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
692,830
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
692,830
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
5.2%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 12 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime Group III, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
482,350
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
482,350
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
482,350
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
3.7%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 13 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime Group IV, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
304,758
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
304,758
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
304,758
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
2.3%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 14 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime Group V, L.P.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
100,855
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
100,855
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
100,855
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
0.8%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 15 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Prime, Inc.
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
1,999,561
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
1,999,561
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
1,999,561
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
15.1%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
CO
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 16 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
John C. "Bruce" Waterfall
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0-
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
2,192,501
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0-
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
2,192,501
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
2,192,501
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
16.6%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
IN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 17 of 208 pages
<PAGE>
13D
CUSIP No. 06683M102
____________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON
Edwin H. Morgens
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [x]
(b) [ ]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS **
AF
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
- 0 -
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
2,192,501
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
- 0 -
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
2,192,501
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
2,192,501
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
16.6%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
IN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 18 of 208 pages
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (the "Statement") filed with the
Securities and Exchange Commission (the "SEC") by persons named in Item 2
below relating to the shares of beneficial interest, no par value ("Shares"),
of Banyan Strategic Realty Trust, a Massachusetts Business Trust (the
"Issuer"). The principal executive offices of the Issuer are located at 150
South Wacker Drive, Chicago, Illinois 60606.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed jointly by (a) Morgens Waterfall Income
Partners, L.P. ("MWIP"); (b) Restart Partners, L.P. ("Restart"); (c) Restart
Partners II, L.P. ("Restart II"); (d) Restart Partners III, L.P. ("Restart
III"); (e) Restart Partners IV, L.P. ("Restart IV"); (f) Restart Partners V,
L.P. ("Restart V"); (g) Endowment Restart, L.L.C. ("Endowment"); (h) Morgens,
Waterfall, Vintiadis & Company, Inc. ("Morgens Waterfall"); (i) MW Capital,
L.L.C. ("MW Capital"); (j) Prime Group, L.P. ("Prime"); (k) Prime Group II,
L.P. ("Prime II"); (l) Prime Group III, L.P. ("Prime III"); (m) Prime Group
IV, L.P. ("Prime IV"); (n) Prime Group V, L.P. ("Prime V"); (o) Prime, Inc.;
(p) John C. "Bruce" Waterfall ("Waterfall"); and (q) Edwin H. Morgens
("Morgens", and together with the persons listed in clauses (a) through (q)
above, the "Reporting Persons").
MWIP is a New York limited partnership whose principal business is to
invest in securities of U.S. issuers. MW Capital, a Delaware limited
liability company, is the general partner of MWIP. MWIP and MW Capital have
their principal address at 10 East 50th Street, New York, New York 10022.
Morgens and Waterfall are the managing members of MW Capital. All of the
information concerning Morgens and Waterfall is set forth below.
Restart, Restart II, Restart III, Restart IV and Restart V are Delaware
limited partnerships having their principal addresses at 10 East 50th Street,
New York, New York 10022. The principal businesses of Restart, Restart II,
Restart III, Restart IV and Restart V are to invest in securities of
financially troubled companies.
Prime, Prime II, Prime III, Prime IV and Prime V, Delaware limited
partnerships having their principal addresses at 10 East 50th Street, New
York, New York 10022, are the general partners of Restart, Restart II, Restart
III, Restart IV and Restart V, respectively. The principal businesses of
Prime, Prime II, Prime III, Prime IV and Prime V are to act as the general
partners of Restart, Restart II, Restart III, Restart IV and Restart V,
respectively.
Prime, Inc., the general partner of Prime, Prime II, Prime III, Prime
IV and Prime V, is a Delaware corporation having its principal address at 10
East 50th Street, New York, New York 10022. The principal business of Prime,
Inc. is to act as general partner of Prime, Prime II, Prime III, Prime IV and
Prime V. Waterfall is the President and a Director of Prime, Inc. Morgens is
the Chairman of the Board of Directors and the Secretary of Prime, Inc. All
of the information concerning Morgens and Waterfall is set forth below.
Page 19 of 208 pages
<PAGE>
Endowment is a Delaware limited liability company having its principal
office c/o Morgens, Waterfall, Vintiadis & Company, Inc. located at 10 East
50th Street, New York, New York 10022. The principal business of The Common
Fund is to invest in securities of various issuers. Morgens Waterfall serves
as an investment advisor to Endowment as discussed below.
Morgens Waterfall is a New York corporation having its principal
address at 10 East 50th Street, New York, New York 10022. The principal
business of Morgens Waterfall is the rendering of financial services.
Waterfall is the President and a Director of Morgens Waterfall.
Morgens is the Chairman of the Board of Directors and the Secretary of Morgens
Waterfall. The primary occupations of Morgens and Waterfall are to act as the
principals in the business of Morgens Waterfall. The business address of
Morgens and Waterfall, each of whom is a United States citizen, is at the
office of Morgens Waterfall, 10 East 50th Street, New York, New York 10022.
Morgens Waterfall has no other officers or directors.
During the past five years, none of the persons described in this Item
2 have been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). During the last five years, none of such persons
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Shares acquired by each of the Reporting Persons named above were
purchased from the Issuer in a private placement transaction pursuant to a
share purchase agreement dated October 10, 1997, a copy of which is attached
hereto as Exhibit 3. The source of funds used for each purchase was the
working capital of the respective Reporting Person.
Aggregate Number of
Shares of Common
Reporting Person Stock Purchase Price
MWIP 83,315 $ 416,575
Restart 418,768 2,093,840
Restart II 692,830 3,464,150
Restart III 482,350 2,411,750
Restart IV 304,758 1,523,790
Restart V 100,855 504,275
Endowment 109,625 548,125
Total 2,192,501 $10,962,505
Page 20 of 208 pages
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
MWIP, Restart, Restart II, Restart III, Restart IV, Restart V, and
Endowment acquired the Shares as investments. The Reporting Persons have no
present plans or proposals that relate to or would result in any of the
actions enumerated in Item 4 of Schedule 13D except as reported in Item 6
hereof.
The Reporting Persons reserve the right to buy additional securities
of the Issuer or sell securities of the Issuer from time to time.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a) and (b) The following is the aggregate amount of Shares that are
beneficially owned by each Reporting Person:
Aggregate Percentage
Name # of Shares of Class
MWIP 83,315 0.6
Restart 418,768 3.2
Restart II 692,830 5.2
Restart III 482,350 3.7
Restart IV 304,758 2.3
Restart V 100,855 0.8
Endowment 109,625 0.8
Total 2,192,501 16.6
Morgens Waterfall does not directly own any Shares. Morgens Waterfall
may be deemed an indirect beneficial owner of 109,625 Shares by virtue of a
contract with Endowment pursuant to which Morgens Waterfall provides
discretionary investment advisory services.
Prime, Inc. does not directly own any Shares. Prime, Inc. may be deemed
an indirect beneficial owner of 1,999,561 Shares by virtue of its position as
general partner of Prime, Prime II, Prime III, Prime IV and Prime V; which are
not direct beneficial owners of any Shares, but may be deemed to be indirect
beneficial owners of Shares by virtue of their positions as general partners
of Restart (418,768 Shares), Restart II (692,830 Shares), Restart III (482,350
Shares), Restart IV (304,758 Shares) and Restart V (100,855 Shares),
respectively.
MW Capital does not directly own any of the Shares. MW Capital may be
deemed an indirect beneficial owner of 83,315 Shares by virtue of its position
as general partner of MWIP.
Page 21 of 208 pages
<PAGE>
Waterfall does not directly own any of the Shares. Waterfall may be
deemed an indirect beneficial owner of 2,192,501 Shares by virtue of his
positions as President and a Director of Morgens Waterfall, as investment
adviser to Endowment (109,625 Shares); as a managing member of MW Capital, as
general partner of MWIP (83,315 Shares); as President and a Director of Prime,
Inc., as general partner of each of Prime, Prime II, Prime III, Prime IV and
Prime V, as general partners of Restart (418,768 Shares), Restart II (692,830
Shares), Restart III (482,350 Shares), Restart IV (304,758 Shares) and
Restart V (100,855 Shares), respectively.
Morgens does not directly own any of the Shares. Morgens may be deemed
an indirect beneficial owner of 2,192,501 Shares by virtue of his positions as
Chairman, and Director of Morgens Waterfall, as investment advisor to
Endowment (109,625 Shares); as a managing member of MW Capital, as general
partner of MWIP (83,315 Shares); as Chairman of Prime, Inc., as general
partner of each of Prime, Prime II, Prime III, Prime IV and Prime V, as
general partners of Restart (418,768 Shares), Restart II (692,830 Shares),
Restart III (482,350 Shares), Restart IV (304,758 Shares) and Restart V
(100,855 Shares), respectively.
Each Reporting Person hereby disclaims that it has any beneficial
ownership of the Shares owned, directly or indirectly, by any other entity.
The percentage of Shares beneficially owned by each Reporting Person and
in total is based upon 13,210,261 of Shares outstanding as of October 10, 1997
as reported by the Issuer.
(c) Except as set forth in Item 3 above, there have been no other
transactions involving the Shares by the Reporting Persons.
(d) Except as set forth in this Item and Item 2 above, no other person
is known to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SECURITIES OF THE ISSUER.
None of the persons identified in Item 2 above is a party to any
contract, arrangement, understanding or relationship with respect to any
securities of the Issuer, except to the extent described in Item 2 and as
described below.
Pursuant to a registration rights agreement dated October 10, 1997
between the Issuer and certain of the Reporting Persons (the "Registration
Rights Agreement"), the Issuer, under certain conditions, is obligated to
register the Shares with the SEC. A copy of the Registration Rights Agreement
is attached hereto as Exhibit 4.
Pursuant to a convertible term loan agreement dated October 10, 1997
between the Issuer and certain of the Reporting Persons as lenders (the
"Convertible Term Loan Agreement"), such Reporting Persons, under certain
conditions, may convert their debt into preferred shares of the Issuer, and
therafter convert such preferred shares into Shares. A copy of the
Convertible Term Loan Agreement is attached hereto as Exhibit 5.
Page 22 of 208 pages
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 1 Joint Acquisition Statement among the Reporting Persons dated
October 23, 1997, filed pursuant to Rule 13d-1(f)(1) under the Securities
Exchange Act of 1934, as amended.
EXHIBIT 2 Power of Attorney, dated October 23, 1997, granted to Morgens and
Waterfall by MWIP; MW Capital; Prime, Inc.; Prime; Prime II; Prime III; Prime
IV; Prime V; Restart; Restart II; Restart III; Restart IV; Restart V; Morgens
Waterfall; and Endowment for the specific purpose of executing on their behalf
any Schedule 13Ds and amendments thereto for filing with the Commission
pursuant to the requirements of Rule 13d-1(f).
EXHIBIT 3 Share Purchase Agreement by and among Banyan Strategic Realty Trust
and certain of the Reporting Persons, dated as of October 10, 1997.
EXHIBIT 4 Registration Rights Agreement by and among Banyan Strategic Realty
Trust and certain of the Reporting Persons, dated as of October 10, 1997.
EXHIBIT 5 Convertible Term Loan Agreement by and among Banyan Strategic
Realty Trust and certain of the Reporting Persons, dated as of October 10,
1997.
EXHIBIT 6 Form of Amendment to the Declaration of Trust of Banyan Strategic
Realty Trust.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of each
of the Reporting Persons, each such person or entity certifies that the
information set forth in this statement is true, complete and correct and
agrees that this statement is filed on behalf of each of them.
The Reporting Persons listed herein
/s/ Bruce Waterfall
Dated: October 23, 1997 By: ___________________________________
John C. "Bruce" Waterfall, on his
own behalf and as attorney-in-fact
for each of the other Reporting
Persons
/s/ Edwin H. Morgens
By: ___________________________________
Edwin H. Morgens, on his own
behalf and as attorney-in-fact
for each of the other Reporting
Persons
Page 23 of 208 pages
<PAGE>
EXHIBIT 1
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(f)(1)
The undersigned acknowledge and agree that this statement on Schedule 13D is
filed on behalf of each of the undersigned and that any subsequent amendments
to the statement on Schedule 13D shall be filed on behalf of each of the
undersigned without the necessity of filing additional joint acquisition
statements. The undersigned acknowledge that each shall be responsible for
the timely filing of such amendments, and for the completeness and accuracy of
the information concerning it contained therein, but shall not be responsible
for the completeness and accuracy of the information concerning the others,
except to the extent that it knows or has reason to believe that such
information is inaccurate.
The Reporting Persons listed herein
Dated: October 23, 1997 By: /s/ Bruce Waterfall
___________________________________
John C. "Bruce" Waterfall, on his
own and as attorney-in-fact for
each of the other Reporting Persons
By: /s/ Edwin H. Morgens
___________________________________
Edwin H. Morgens, on his own
behalf and as attorney-in-fact
for each of the other Reporting
Persons
Page 24 of 208 pages
<PAGE>
EXHIBIT 2
POWER OF ATTORNEY
The undersigned hereby appoint John C. "Bruce" Waterfall and Edwin H.
Morgens each with full power of substitution, as their attorneys-in-fact for
the specific purpose of executing on their behalf any Schedule 13Ds and
amendments thereto for filing with the Securities and Exchange Commission
pursuant to the requirements of Rule 13d-1(f) under the Securities Exchange
Act of 1934, as amended. The undersigned hereby ratify the execution on their
behalf, prior to the date hereof, by John C. "Bruce" Waterfall or Edwin H.
Morgens of any Schedule 13Ds or amendments thereto for the aforesaid purpose.
IN WITNESS WHEREOF, the undersigned have caused this Power of Attorney
to be duly executed as of October 23, 1997.
MORGENS WATERFALL INCOME PARTNERS, L.P.
By: MW Capital, L.L.C.
General Partner
/s/ Bruce Waterfall
By: _________________________
John C. "Bruce" Waterfall
Managing Member
MW CAPITAL, L.L.C.
/s/ Bruce Waterfall
By: _________________________
John C. "Bruce" Waterfall
Managing Member
ENDOWMENT RESTART, L.L.C.
By: Morgens, Waterfall, Vintiadis & Company, Inc.
Agent/Investment Advisor
/s/ Bruce Waterfall
By: _________________________
John C. "Bruce" Waterfall
President
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.
/s/ Bruce Waterfall
By: _________________________
John C. "Bruce" Waterfall
President
Page 25 of 208 pages
<PAGE>
RESTART PARTNERS, L.P.
RESTART PARTNERS II, L.P.
RESTART PARTNERS III, L.P.
RESTART PARTNERS IV, L.P.
RESTART PARTNERS V, L.P.
By: PRIME GROUP, L.P.
PRIME GROUP II, L.P.
PRIME GROUP III, L.P.
PRIME GROUP IV, L.P.
PRIME GROUP V, L.P.
As General Partners of Restart Partners, L.P.,
Restart Partners II, L.P., Restart Partners III, L.P.,
Restart Partners IV, L.P. and Restart Partners V, L.P., respectively
By: PRIME, INC.
As general partner of Prime Group, L.P., Prime Group II, L.P.,
Prime Group, III, L.P., Prime Group IV, L.P. and Prime Group V, L.P.
/s/ Bruce Waterfall
By: _________________________
John C. "Bruce" Waterfall
President
JOHN C. "BRUCE" WATERFALL
/s/ Bruce Waterfall
By: _________________________
EDWIN H. MORGENS
/s/ Edwin H. Morgens
By: _________________________
Page 26 of 208 pages
<PAGE>
EXHIBIT 3
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SHARE PURCHASE AGREEMENT
by and among
BANYAN STRATEGIC REALTY TRUST
and
THE PURCHASERS LISTED ON THE SIGNATURE PAGE ATTACHED HERETO
Dated as of October 10, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Page 27 of 208 pages
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF SHARES ...............................
1.1 Purchase and Sale
1.2 The Closing of Purchase and Sale of Shares .......................
1.3 Representations by the Purchasers ................................
(a) Experience ..................................................
(b) Investment ..................................................
(c) Rule 144 ....................................................
(d) Authorization ...............................................
(e) Access; Reports .............................................
ARTICLE 2 CONDITIONS TO PURCHASER'S OBLIGATIONS
2.1 Representations and Warranties ...................................
2.2 Documentation at Closing .........................................
2.3 Consents, Waivers, etc. ..........................................
2.4 Other Actions ....................................................
2.5 Loan Closing .....................................................
2.6 Material Adverse Change ..........................................
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
3.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries .................................................
(a) Organization and Powers .....................................
(b) Qualification and Good Standing .............................
(c) Conduct of Business .........................................
(d) Subsidiaries ................................................
(e) Capitalization ..............................................
3.2 Authorization of Borrowing, etc. .................................
(a) Authorization ...............................................
(b) No Conflict .................................................
(c) Governmental Consents .......................................
(d) Binding Obligation ..........................................
3.3 Financial Condition ..............................................
3.4 No Material Adverse Effect; No Restricted Junior Payments ........
3.5 Title to Properties; Liens .......................................
3.6 Litigation; Adverse Facts ........................................
3.7 Payment of Taxes .................................................
3.8 Performance of Agreements; Materially Adverse Agreements .........
3.9 Governmental Regulation ..........................................
3.10 Securities Activities ...........................................
3.11 Employee Benefit Plans ..........................................
3.12 Environmental Protection ........................................
3.13 Employee Matters ................................................
3.14 Insurance .......................................................
3.15 Disclosure ......................................................
Page 28 of 208 pages
<PAGE>
3.16 REIT Status .....................................................
3.17 Shareholder Agreements ..........................................
3.18 No Brokers or Finders ...........................................
3.19 Certain Transactions ............................................
3.20 Securities Regulation ...........................................
3.21 Registration Rights .............................................
4.1 Covenants of the Company
ARTICLE 5 COVENANTS OF THE PURCHASERS ...............................
5.1 Additional Shares ................................................
5.2 Purchaser Representation .........................................
5.3 Support of Board .................................................
5.4 Survival of Confidentiality Agreement ............................
ARTICLE 6 RIGHT TO PARTICIPATE IN FINANCINGS AND OBLIGATIONS
OF COMPANY TO PURCHASE SHARES .............................
6.1 Right of Participation ...........................................
6.2 Notice of Acceptance .............................................
6.3 Conditions to Acceptance By Purchasers ...........................
(a) Permitted Sales of Refused Securities .......................
(b) Reduction in Amount of Offered Securities ...................
(c) Closing .....................................................
6.4 Further Sale .....................................................
6.5 Exceptions .......................................................
ARTICLE 7 DEFINITIONS AND ACCOUNTING TERMS ..........................
7.1 Certain Defined Terms ............................................
7.2 Accounting Terms .................................................
ARTICLE 8 MISCELLANEOUS .............................................
8.1 No Waiver, Cumulative Remedies ...................................
8.2 Amendments, Waivers and Consents .................................
8.3 Addresses for Notices, etc. ......................................
8.4 Costs, Expenses and Taxes ........................................
8.5 Binding Effect; Assignment .......................................
8.6 Survival of Representations and Warranties .......................
8.7 Prior Agreements .................................................
8.8 Severability .....................................................
8.9 Governing Law ....................................................
8.10 Headings ........................................................
8.11 Counterparts ....................................................
8.12 Further Assurances ..............................................
Page 29 of 208 pages
<PAGE>
LIST OF EXHIBITS
Exhibit 2.2B Form of Legal Opinion
Exhibit 2.2F Form of Registration Rights Agreement
Exhibit 3 Schedule of Exceptions
Exhibit 3.2(b) No Conflict
Exhibit 3.9 Capitalization
Exhibit 3.10 Financial Statements
Exhibit 3.16 Certain Transactions
Exhibit 3.17 Contracts and Commitments
Exhibit 4.1N Use of Proceeds
Exhibit 4.2E Indebtedness
Page 30 of 208 pages
<PAGE>
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of October 10, 1997, by and among BANYAN STRATEGIC REALTY TRUST, a
Massachusetts business trust (the "Company") and the purchasers listed on the
signature page hereto (the "Purchasers"; individually referred to as a
"Purchaser").
R E C I T A L
The Company desires to sell to the Purchasers, and the Purchasers in
the aggregate desire to purchase from the Company, an aggregate 2,192,501
shares of the Company's Shares, for the consideration set forth herein,
including the representations, covenants and agreements of the Company and the
Purchasers set forth herein and in the Exhibits attached hereto.
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein, and subject to the terms and conditions hereinafter set
forth, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. On the basis of the representations,
warranties, covenants, and agreements, and subject to the satisfaction or
waiver of the terms and conditions, set forth herein, the Company agrees to
sell to each Purchaser and each Purchaser severally agrees to purchase from
the Company the number of Shares set forth opposite each Purchaser's signature
hereto, at a price per Purchased Share of $5.00, being, in the aggregate
2,192,501 Shares (the "Purchased Shares") for an aggregate purchase price of
Ten Million Nine Hundred Sixty Two Thousand Five Hundred Five Dollars
($10,962,505).
1.2 The Closing of Purchase and Sale of Shares. Such purchase and
sale shall take place at a closing (the "Closing") to be held at the offices
of O'Melveny & Myers LLP, on October 14, 1997 at 1:00 P.M., or on such other
date and at such time as may be mutually agreed upon. At the Closing, the
Company will issue and deliver a certificate (or certificates) evidencing the
Purchased Shares against a wire transfer (or wire transfers) in the aggregate
amount of $10,962,505 payable to the Company in immediately available funds in
full payment of the purchase price for the Purchased Shares.
1.3 Representations by the Purchasers. Each Purchaser severally
represents that:
Page 31 of 208 pages
<PAGE>
(a) Experience. Such Purchaser has substantial experience in
evaluating and investing in private placement transactions so that such
Purchaser is capable of evaluating the merits and risks of an investment in
the Company and has the capacity to protect its own interests in connection
with the purchase of the Purchased Shares. Such Purchaser understands that
the investment to be made in connection with the acquisition of the Purchased
Shares is speculative and involves significant risk. Such Purchaser has the
ability to bear the economic risk of this investment.
(b) Investment. Such Purchaser is acquiring the Purchased
Shares for investment for its own account, and not with the view to, or for
resale in connection with, any "distribution" of all or any portion thereof
within the meaning of the Securities Act or any state securities laws. Such
Purchaser understands that the Purchased Shares to be purchased hereunder have
not been registered under the Securities Act or any state securities laws by
reason of a specific exemption from the registration provisions of the
Securities Act and applicable state securities laws which depends upon, among
other things, the bona fide nature of such Purchaser's investment intent and
the accuracy of such Purchaser's representations as expressed herein. Such
Purchaser also represents that it has not been organized solely for the
purpose of acquiring the Purchased Shares.
(c) Rule 144. Such Purchaser acknowledges that the Purchased
Shares being purchased hereunder must be held indefinitely unless the transfer
thereof is registered under the Securities Act and applicable state securities
laws or unless an exemption from such registration is available. Such
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement, subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Company, the resale occurring after the expiration of minimum holding periods
after a party has purchased and paid for the security to be sold, the sale
being affected through a "broker's transaction" or in transactions directly
with a "market maker" and the number of shares being sold during any
three-month period not exceeding specified limitations (except as provided in
Rule 144(k)).
(d) Authorization. Each Purchaser further severally
represents that:
(i) It is duly authorized to execute and deliver this
Agreement and all other agreements and instruments executed in connection
herewith.
(ii) This Agreement and such other agreements and
instruments constitute the valid and binding obligations of such Purchaser,
enforceable against it in accordance with their respective terms;
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(iii) No consent or approval of any Person is required in
connection with the execution, delivery and performance of this Agreement and
such other agreements and instruments by each of the Purchasers which has not
heretofore been obtained.
(e) Access; Reports. Each Purchaser has been provided the
opportunity to discuss the transactions contemplated hereby with the Company.
Each Purchaser acknowledges receipt of the Company's Annual Report on Form 10-
K for the Fiscal Year ended December 31, 1996 and the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997.
(f) Other. (i) Each Purchaser severally represents that no Person
has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or valid claim upon or against the Company for
any commission, fee or other compensation as a finder or broker because of any
act or omission by such Purchaser, other than the fee to Josephthal Lyon &
Ross, Inc. for financial advisory services and the advisory fee to Leveraged
Equity Management, Inc., and such Purchaser agrees to indemnify and hold the
Company harmless against any such commissions, fees or other compensation.
(ii) Each Purchaser owns assets exceeding $5,000,000 in cost
or value, whichever is lower.
ARTICLE 2
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of each Purchaser to purchase and pay for the
Purchased Shares at the Closing is subject to the following conditions:
2.1 Representations and Warranties. Each of the representations
and warranties of the Company set forth in Article 3 hereof shall, if
qualified by references to "material" or "material effect," shall be true in
all respects, and, if not so qualified, shall be true in all respects material
to a potential investor on the date of the Closing as though made at such
time; the Company shall have performed all obligations and complied with all
covenants and conditions required by this Agreement to be performed or
complied with by it at or prior to such date; and the Company shall have
delivered to each Purchaser a certificate to such effect executed by the
Company's Chief Executive Officer and in form and substance satisfactory to
each Purchaser, dated the date of the Closing.
2.2 Documentation at Closing. Each Purchaser shall have received
prior to or at the Closing all of the following, each in form and substance
reasonably satisfactory to each Purchaser and its counsel, and all of the
following events shall have occurred prior to or simultaneous with the Closing
hereunder:
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(a) Certified copies of the Trust's Declaration of Trust,
together with a good standing certificate from the Secretary of State of the
Commonwealth of Massachusetts and each other state in which it is qualified as
a foreign trust to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of
such states, each dated a recent date prior to the Closing Date; copies of its
Bylaws, certified as of the Closing Date by its corporate secretary or an
assistant secretary; resolutions of its Board of Trustees approving and
authorizing the execution, delivery and performance of this Agreement,
certified as of the Closing Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or amendment;
and certified copies of all documents evidencing other necessary corporate or
other action and governmental approvals, if any, with respect to this
Agreement, the Shares and other matters contemplated hereby which each of the
Purchasers or its counsel reasonably requests.
(b) Signature and incumbency certificates of the Company's
officers executing this Agreement, the other Loan Documents to be executed by
the Company and the Term Loan Agreement.
(c) Certified copies (by the Secretary of the Company) of the
Certificates or Articles of Incorporation of each corporate Subsidiary of the
Company, together with good standing certificates from the respective states
of incorporation and the respective states in which the principal places of
business of each is located and from all states in which activities of such
Subsidiary require them to be qualified and/or licensed to do business, each
dated a recent date prior to the Closing Date.
(d) Copies of the Bylaws of each corporate Subsidiary of the
Company, certified as of the Closing Date by their respective corporate
secretaries or an assistant secretary.
(e) Certified copies (by the Secretary of the Company) of the
complete partnership agreement (as amended) of each Subsidiary of the Company
which is a partnership or joint venture, together with, with respect to any
limited partnership, a certified certificate of limited partnership and, with
respect to any general partnership or joint venture, a copy of the recorded
statement of partnership (if any), together with any fictitious business name
statements and authorizations from states in which the activities of such
Subsidiaries require them to be qualified and/or licensed to do business.
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(f) (i) Originally executed copies of one or more favorable
written opinions of Shefsky & Froelich Ltd., counsel for the Company and its
Subsidiaries, the favorable written opinions of Peabody & Brown (Massachusetts
counsel for the Company and its Subsidiaries), and the favorable written
opinions of Stroock & Stroock & Lavan (New York counsel for the Company and
its Subsidiaries), as the Purchasers may request, in form and substance
reasonably satisfactory to the Purchasers and their counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinion
designated in Exhibit 2.2B annexed hereto and as to such other matters as the
Purchasers may reasonably request, and (ii) evidence satisfactory to the
Purchasers that the Company and its Subsidiaries have requested Shefsky &
Froelich Ltd., Massachusetts counsel and New York counsel to deliver such
opinions to the Purchasers.
(g) A certificate of the Secretary or an Assistant Secretary
of the Company stating the names of the officers of the Company authorized to
sign this Agreement, the certificate (or certificates) for the Purchased
Shares and the other documents or certificates to be delivered pursuant to
this Agreement by the Company or any of its officers, together with the true
signatures of such officers. The Purchasers may conclusively rely on such
certificate until it shall receive a further certificate of the Secretary or
Assistant Secretary of the Company cancelling or amending the prior
certificate and submitting the signatures of the officers named in such
further certificate.
(h) Certificates of the Company as required pursuant to
Section 2.1.
(i) The Registration Rights Agreement duly executed by the
Company and the Purchasers.
(j) Such other documents as the Purchasers reasonably may
request.
2.3 Consents, Waivers, etc. Prior to the Closing, the Company
shall have obtained all consents or waivers, if any, necessary to execute and
deliver this Agreement, issue the Purchased Shares and to carry out the
transactions contemplated hereby and thereby, and all such consents and
waivers shall be in full force and effect. All corporate and other action and
governmental filings necessary to effectuate the terms of this Agreement, the
Purchased Shares and other agreements and instruments executed and delivered
by the Company in connection herewith shall have been made or taken, except
for any post-sale filings that may be required under federal or state
securities laws which filings will be timely made by the Company after the
Closing.
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2.4 Other Actions.
(a) The Company shall have paid or cause to have been paid at
or prior to the Closing all of the costs and expenses described in subsection
8.4 of this Agreement then incurred or accrued with respect to the
transactions described herein.
(b) As of the Closing Date, each Purchaser shall be satisfied,
in its sole discretion, with all inspections, investigations, studies, tests,
appraisals and reviews which the Purchasers have elected to make with respect
to the Company, its Subsidiaries and the Facilities.
2.5 Loan Closing. Concurrent with the Closing, the Closing (as
defined in the Term Loan Agreement) shall occur, and Company shall execute and
deliver the Loan Documents and carry out the transactions contemplated
thereby.
2.6 Material Adverse Change. As of the Closing Date, no event or
change has occurred that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect since December 31, 1996 (except as
otherwise fully disclosed in the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1997 and June 30, 1997).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Except as set forth in Exhibit 3, the Company represents and
warrants that:
3.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries.
(a) Organization and Powers. The Company is a business trust
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Company has all requisite trust power and
authority to own and operate its properties, to carry on its business as now
conducted and in accordance with Section 6.13 of the Term Loan Agreement, to
enter into this Agreement and the Loan Documents to be executed by the Company
and to carry out the transactions contemplated thereby.
(b) Qualification and Good Standing. The Company is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations,
except in jurisdictions where the failure to be so qualified or in good
standing has not had and will not have a Material Adverse Effect.
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(c) Conduct of Business. The Company and its Subsidiaries are
engaged only in and will engage only in the businesses permitted to be engaged
in pursuant to subsection 6.13 of the Term Loan Agreement.
(d) Subsidiaries. All of the Subsidiaries of the Company as
of the Closing Date are identified in Schedule 3.1 annexed hereto. The
capital stock of each of the corporate Subsidiaries of the Company identified
in Schedule 3.1 annexed hereto is duly authorized, validly issued, fully paid
and nonassessable and none of such capital stock constitutes Margin Stock.
Each of the corporate Subsidiaries of the Company identified in Schedule 3.1
annexed hereto is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its property and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and
authority has not had a Material Adverse Effect. Each of the Subsidiaries of
the Company identified in Schedule 3.1 annexed hereto which is a trust,
limited liability company, partnership or joint venture is duly formed,
validly existing and in good standing under the laws of its respective
jurisdiction of organization set forth therein, has all requisite power and
authority to own and operate its property and to carry on its business as now
conducted and as proposed to be conducted, and is qualified to do business and
in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, in each case
except where failure to be so qualified or in good standing or a lack of such
partnership power and authority has not had a Material Adverse Effect.
Schedule 3.1 annexed hereto correctly sets forth, as of the Closing Date, the
ownership interest of the Company and each of its Subsidiaries in each of the
Subsidiaries of the Company identified therein.
(e) Capitalization. The authorized capital of the Company
consists solely of Shares, of which 11,017,760 Shares are issued and
outstanding, 2,000,000 Shares are reserved for issuance under the Company's
dividend reinvestment program, and 1,000,000 Shares are reserved for issuance
upon the exercise of outstanding options for Shares. All outstanding Shares
have been duly authorized, are fully paid and nonassessable, and have been
validly issued in accordance with federal and state securities laws. Upon
issuance pursuant to the terms herein contained, the Purchased Shares will
have been duly authorized, will be fully paid and nonassessable, and (based,
in part, upon the validity of the relevant representations of the Purchasers)
will have been validly issued in accordance with federal and state securities
laws or an exemption therefrom.
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Except as contemplated herein and as described in the Company's
Annual Report on Form 10-K for the Fiscal Year ended December 31, 1996 with
respect to compensation payable to Leonard G. Levine, president of the Company
and the Company's existing stock option plan, no options, calls, warrants,
conversion privileges, preemptive rights, rights of first refusal or other
commitments or rights, of any character whatsoever, are presently outstanding
or in existence with respect to the purchase or other acquisition of any of
the authorized but unissued Shares or any other equity Security of the
Company.
3.2 Authorization of Borrowing, etc.
(a) Authorization. The execution, delivery and performance of
this Agreement and the Loan Documents to be executed by the Company, and the
execution, delivery and performance of the Loan Documents to be executed by
the respective Subsidiaries of the Company, have been duly authorized by all
necessary action on the part of each of the respective entities. The Board of
Trustees has taken all necessary action to exempt the ownership by each
Purchaser of Common Shares and Preferred Shares issued and issuable pursuant
to this Agreement and the Term Loan Agreement from the Limit, as that term in
defined in Section 7.12.3 of the Declaration of Trust.
(b) No Conflict. The execution, delivery and performance by
the Company of this Agreement, and the execution, delivery and performance of
the Loan Documents by the Company and its respective Subsidiaries, as
applicable, and the consummation of the transactions contemplated thereby, do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to the Company or any of its Subsidiaries (as the
case may be), the Declaration of Trust, Bylaws or other charter documents of
the Company or any of its corporate Subsidiaries, the partnership or other
organizational agreements of any of its Subsidiaries which are partnerships or
joint ventures, or any order, judgment or decree of any court or other agency
of government binding on the Company or any of its Subsidiaries (as
applicable), (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
the Company or any of its Subsidiaries (as the case may be), (iii) result in
or require the creation or imposition of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries (other than Liens in favor
of Lenders), or (iv) require any approval of shareholders or any approval or
consent of any Person under any Contractual Obligation of the Company or any
of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Closing Date and are disclosed in writing to the
Purchasers.
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(c) Governmental Consents. To the best knowledge of the
Company, the execution, delivery and performance by the Company of this
Agreement, and the execution, delivery and performance of the Loan Documents
by the Company and its respective Subsidiaries, as applicable, and the
consummation of the transactions contemplated thereby, do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body, except for any of the foregoing which will be made or
obtained by the Company on or before the Closing Date, other than approval by
NASDAQ of the listing of the Purchased Shares, the Preferred Shares (as
defined in the Term Loan Agreement) or Shares issuable upon conversion of the
Loans and Preferred Shares.
(d) Binding Obligation. This Agreement has been duly executed
and delivered by the Company and is the legally valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. Each
of the Loan Documents has been duly executed and delivered by the Company and
its respective Subsidiaries, as applicable, and is the legally valid and
binding obligation of the Company and/or its respective Subsidiaries (as the
case may be) enforceable against the Company and/or its respective
Subsidiaries (as the case may be) in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability. After
the Closing Date, each Funded Subsidiary will execute and deliver a Guaranty.
Upon execution and delivery, each such Guaranty will be the valid and binding
obligation of the applicable Funded Subsidiary, enforceable against such
Subsidiary in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
3.3 Financial Condition. The Company has heretofore delivered to
the Purchaser the following financial statements and information: (i) the
audited consolidated balance sheets of the Company and its Subsidiaries at
December 31, 1996 and the related consolidated statements of income and
expenses, shareholders' equity and cash flows of the Company and its
Subsidiaries for the Fiscal Year ended December 31, 1996, and (ii) the
unaudited consolidated balance sheets of the Company and its Subsidiaries at
June 30, 1997 and the related unaudited consolidated statements of income,
shareholders' equity and cash flows of the Company and its Subsidiaries for
the six months ended June 30, 1997. All such statements were prepared in
conformity with GAAP and fairly present the financial condition (on a
consolidated basis) of the Company and its Subsidiaries at the respective
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dates thereof and the results of operations and cash flows (on a consolidated
basis) of the Company and its Subsidiaries at the respective dates thereof,
subject, in the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments. As of the Closing Date,
the Company does not have any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term
commitment that is not reflected in the financial statements identified in
clauses (i) and (ii) above or the notes thereto which would have a Material
Adverse Effect on the Company or any of its Subsidiaries.
3.4 No Material Adverse Effect; No Restricted Junior Payments.
Since December 31, 1996 (except as disclosed in the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997),
(i) no event or change has occurred that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, and (ii) neither the
Company nor any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any Restricted
Junior Payment or agreed to do so except as permitted by subsection 6.5 of the
Term Loan Agreement.
3.5 Title to Properties; Liens. The Company and its Subsidiaries
have (i) good, marketable and legal title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case
of all other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 3.3, in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business and disclosed in writing to the Purchaser
or as otherwise permitted under subsection 6.7 of the Term Loan Agreement.
Except as permitted by the Term Loan Agreement, all such properties and assets
are free and clear of Liens.
3.6 Litigation; Adverse Facts. Except as set forth in Schedule 3.6
annexed hereto, there are no actions, suits, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of the
Company or any of its Subsidiaries) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries or any property of the Company or any of its Subsidiaries
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is (i) in violation of any applicable laws that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
or (ii) subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.
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3.7 Payment of Taxes. Except to the extent permitted by subsection
5.3 of the Term Loan Agreement, all tax returns and reports of the Company and
its Subsidiaries required to be filed by any of them have been timely filed,
and all taxes, assessments, fees and other governmental charges upon the
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid
when due and payable except for those that are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted for
which such reserve or other appropriate provision, if any, required in
conformity with GAAP has been made. The Company knows of no proposed tax
assessment against the Company or any of its Subsidiaries which is not being
actively contested by the Company or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been made or provided therefor.
3.8 Performance of Agreements; Materially Adverse Agreements.
(a) Neither the Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that as of the Closing Date, with the
giving of notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of such default or
defaults, if any, would not have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party
to or is otherwise subject to any agreements or instruments or any charter or
other internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
3.9 Governmental Regulation. Neither the Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or under any other federal or state statute or
regulation (other than the Securities Act) which may limit its ability to
offer and sell Shares, to incur Indebtedness or which may otherwise render all
or any portion of the Obligations unenforceable.
3.10 Securities Activities. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock, and not more than 25% of the value of the assets of the Company
(or of the Company and its Subsidiaries on a consolidated basis) consists of
Margin Stock.
3.11 Employee Benefit Plans.
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(a) The Company and each of its ERISA Affiliates are in
compliance with all applicable provisions and requirements of ERISA and the
regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan.
(b) No ERISA Event has occurred or is reasonably expected to
occur.
(c) Except to the extent required under Section 4980B of the
Internal Revenue Code, no Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employees of the Company or any of its ERISA Affiliates.
(d) As of the most recent valuation date for any Pension Plan,
there are no unfunded benefit liabilities (as defined in Section 4001(a)(18)
of ERISA).
3.12 Environmental Protection. Except as set forth in Schedule
3.12 annexed hereto, the Company and each of its Subsidiaries are in material
compliance with all applicable Environmental Laws.
3.13 Employee Matters. There is no strike or work stoppage in
existence or threatened involving the Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.
3.14 Insurance. Schedule 3.14 annexed hereto sets forth a complete
and accurate list of all policies of insurance in effect as of the Closing
Date for the Company and its Subsidiaries. No notice of cancellation has been
received with respect to such policies and the Company and its Subsidiaries
are in compliance with all conditions contained in such policies.
3.15 Disclosure. The projections and pro forma financial
information contained in any materials furnished to the Purchasers by or on
behalf of the Company or any of its Subsidiaries are based upon good faith
estimates and assumptions believed by the Company to be reasonable at the time
made, provided that no assurance can be given that the projected results will
be realized or with respect to the activity of the Company and its
Subsidiaries to achieve the projected results, it being recognized by the
Purchasers that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ, in any material manner, from the projected results.
There are no facts known (or which should upon the reasonable exercise of
diligence be known) to the Company (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect and that have not been disclosed herein
or in such other documents and certificates furnished to the Purchasers for
use in connection with the transactions contemplated hereby.
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3.16 REIT Status. The Company has, at all times, since 1986,
qualified as a REIT under the provisions of the Internal Revenue Code. Each
Subsidiary that is a corporation is a qualified REIT subsidiary, as that term
is defined in the Internal Revenue Code.
3.17 Shareholder Agreements. Except as required by this Agreement
and the Term Loan Agreement, there are no agreements or arrangements between
the Company and any of the Company's shareholders, or to the Company's
knowledge, between or among any of the Company's shareholders, which grant
special rights with respect to any shares of the Company's equity security or
subject to provisions of the Company's Declaration of Trust which affect any
shareholder's ability or right freely to alienate or vote such shares.
3.18 No Brokers or Finders. The Company owes no commission, fee or
other compensation to any Person as a finder or broker as a result of the
transactions contemplated by this Agreement, other than the fee to Josephthal
Lyon & Ross, Inc. for financial advisory services and the advisory fee to
Leveraged Equity Management, Inc.
3.19 Certain Transactions. Other than as disclosed in the
Company's most recent Annual Report on Form 10-K and as set forth on Exhibit
3.19, there are no transactions, agreements or obligations in which the amount
involved for any Person and entity and his or its affiliates exceeds $60,000
(other than transactions described in Instructions 7, 8A, 8B or 8C to
paragraph (a) or Instruction 2 to paragraph (b) of Rule 404 of Regulation S-K
under the Securities Act), either alone or in the aggregate, in any fiscal
year between the Company, on the one hand, and its officers, directors or
shareholders, or their immediate family members or other associates or
affiliates, on the other hand, and no such person is an interested party to
any contract of the Company or holds a direct or indirect ownership interest
in any business or corporation which competes with the Company.
3.20 Securities Regulation. Assuming the accuracy of each of the
Purchaser's representations contained in Section 1.3, the Company has complied
and will comply with all applicable federal or state securities laws in
connection with the issuance and sale of the Purchased Shares.
3.21 Registration Rights. Except for the rights granted to the
Purchasers pursuant to the Registration Rights Agreement, the Company's
existing stock option plan and an employment agreement with Leonard G. Levine,
no Person has demand or other rights to cause the Company to file any
registration statement under the Securities Act relating to any securities of
the Company or any right to participate in an offering of shares under any
such registration statement.
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ARTICLE 4
COVENANTS OF THE COMPANY
4.1 Covenants of the Company. Without limiting any other covenants
and provisions hereof, the Company covenants and agrees that it will perform
and observe the following covenants and provisions and will cause each
Subsidiary to perform and observe such of the following covenants and
provisions as are applicable to such Subsidiary:
(a) the Company will execute and deliver the Registration
Rights Agreement.
(b) the Board of Trustees has taken all necessary action to
exempt the Purchasers' acquisition of the Purchased Shares, the Series A
Convertible Preferred Shares and any Shares converted from or received as a
result of Series A Convertible Preferred Shares and the Term Loan Agreement
from the Limit, as that term is defined in Section 7.12.3 of the Declaration
of Trust, pursuant to Section 7.12.6 thereof.
(c) in filling (other than through election by the
shareholders) any vacancy created on the Board of Trustees by the death,
resignation or removal of any director or any increase in the authorized
number of trustees, the Company shall notify the Purchasers twenty (20) days
in advance of the appointment of any individual to fill such vacancy.
(d) there is and will be no "Advisor," as that term is defined
in Section 1.5 of the Declaration of Trust, retained by the Company, and there
are not, and will not be, any Class B Trustees, as that term is defined in
Section 1.5 of the Declaration of Trust, on the Board of Trustees.
(e) the Board of Trustees will not take any action described
in Section 4.2.2 of the Declaration of Trust or otherwise, if such action or
series of actions would constitute a merger, consolidation, reorganization or
sale of all or substantially all of the assets of the Company, without the
approving vote of at least a majority of Shares entitled to vote.
(f) the Company will use all reasonable efforts to acquire
such authorizations as are necessary to effect the transactions contemplated
in Article 6 hereof.
(g) the Board of Trustees will take all actions necessary to
exempt subsequent transfers of Shares by the Purchasers from the Limit, as
that term is defined in Section 7.12.3 of the Declaration of Trust (or any
similar restriction), except to the extent such transfer would cause the
Company to fail to qualify as a REIT.
Page 44 of 208 pages
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ARTICLE 5
COVENANTS OF THE PURCHASERS
5.1 Additional Shares. The Purchasers covenant and agree that,
unless the Company otherwise gives prior written consent, neither the
Purchasers nor their respective Subsidiaries shall purchase Shares of the
Company, other than the Purchased Shares, Shares purchased pursuant to Article
6, and shares issuable upon conversion of the Loans and the Series A
Convertible Preferred Shares, until the first anniversary of the date of this
Agreement.
5.2 Purchaser Representation. Each Purchaser severally represents
and warrants that its purchase of Shares pursuant to this Agreement and its
ability to acquire Series A Convertible Preferred Shares or Shares pursuant to
the Term Loan Agreement (and for purposes of this representation, each
Purchaser shall be treated as having acquired as of the Closing Date the
maximum number of such Series A Convertible Preferred Shares and Shares which
can be obtained under the Term Loan Agreement), will not result in any
individual, within the meaning of Section 856(h) of the Internal Revenue Code
of 1986, as amended (the "Code"), owning directly or indirectly more than 9.8%
of the outstanding Shares of the Company, as determined under Code Sections
856(a)(6) and 856(h), and Code Sections 542 and 544 (as those Sections are
incorporated by reference into Code Section 856(h)).
5.3 Support of Board. Each Purchaser covenants and agrees that
such Purchaser will vote its Purchased Shares (i) at the next annual meeting
of Shareholders (if such meeting is held on or before June 30, 1998) in favor
of Persons nominated by the Board of Trustees for re-election as Trustees,
(ii) in favor of Conversion Approval (as defined in the Term Loan Agreement),
(iii) in favor of Preferred Share Approval (as defined in the Term Loan
Agreement), and (iv) in favor of Shareholder Approval (as defined in the Term
Loan Agreement), provided however, that the Purchasers shall not be obligated
to vote in favor of any Shareholder Approval of amendments to the Declaration
of Trust which have not been mutually agreed between the Purchasers and the
Company. In addition, the Company shall not propose any Shareholder Approval
of amendments to the Declaration of Trust unless such amendments have been
mutually agreed between the Purchasers and the Company.
5.4 Survival of Confidentiality Agreement. Notwithstanding the
purchase of Shares contemplated hereby, except to the extent inconsistent with
the Purchasers' rights under this Agreement, the Term Loan Agreement, or the
Registration Rights Agreement, the Purchasers' obligations to hold certain
information concerning the Trust in confidence pursuant to the letter
agreement dated May 30, 1997, as amended July 29, 1997, to which the
Purchasers and the Company are parties, shall survive, and shall remain in
effect in accordance with its terms.
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ARTICLE 6
RIGHT TO PARTICIPATE IN FINANCINGS
AND OBLIGATION OF COMPANY TO PURCHASE SHARES
6.1 Right of Participation. Until the Conversion Approval, the
Company shall not issue, sell or exchange, agree to issue, sell or exchange,
or reserve or set aside for issuance, sale or exchange, for cash or cash
equivalents (i) any Shares, (ii) any other equity security of the Company,
including, without limitation, Preferred Shares, (iii) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any equity
security of the Company, or (iv) any Debt Securities (the "Offered
Securities"), unless in each such case the Company shall have offered to sell
a portion of the Offered Securities to the Purchasers (subject to required
approvals or authorizations, if any, pursuant to the applicable rules of the
NASDAQ trading system, if the Shares are then quoted on NASDAQ) as follows:
the Company shall offer to sell to a Purchaser that portion of the Offered
Securities as the aggregate number of Purchased Shares then held by or
issuable to such Purchaser bears to the total number of outstanding Shares of
the Company calculated on a fully diluted basis (so that such Purchaser shall
retain its then existing equity percentage of the Company on a fully diluted
basis), at a price and on such other terms and conditions as the Offered
Securities are proposed to be sold to other persons, as specified by the
Company in a writing delivered to such Purchaser (the "Offer"), and the Offer
by its terms shall remain open and irrevocable for a period of twenty (20)
days.
6.2 Notice of Acceptance. Notice of a Purchaser's intention to
accept, in whole or in part, an Offer made pursuant to Section 6.1 (a "Notice
of Acceptance") shall be evidenced by a writing signed by such Purchaser and
delivered to the Company prior to the end of the twenty (20) day period of the
Offer, setting forth the portion of the Offered Securities that such Purchaser
elects to purchase.
6.3 Conditions to Acceptance By Purchasers.
6.4 Permitted Sales of Refused Securities. In the event that a
Notice of Acceptance is not given by a Purchaser in respect of all the Offered
Securities, the Company shall have one hundred twenty (120) days from the
expiration of the period set forth in Section 6.1 to sell all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given
by such Purchaser (the "Refused Securities") to the Person or Persons
specified in the Offer, but only upon terms and conditions, including, without
limitation, unit price and interest rates, which are not more favorable to
such other Person or Persons or less favorable to the Company than those set
forth in the Offer.
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6.5 Reduction in Amount of Offered Securities. In the event the
Company shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 6.3(a) above),
then a Purchaser may, at its sole option and in its sole discretion, reduce
the number of, or other units of, the Offered Securities specified in its
Notice of Acceptance to an amount that shall be not less than the amount of
the Offered Securities that such Purchaser elected to purchase pursuant to
Section 6.2 multiplied by a fraction, (i) the numerator of which shall be the
amount of Offered Securities the Company actually proposes to sell, and (ii)
the denominator of which shall be the amount of all Offered Securities. In
the event that such Purchaser so elects to reduce the number or amount of
Offered Securities specified in its Notice of Acceptance, the Company may not
sell or otherwise dispose of more than the reduced amount of the Offered
Securities until such securities have again been offered to such Purchaser in
accordance with Section 6.1.
(c) Closing. Upon the closing, which shall include full
payment to the Company, of the sale to such other Person or Persons of all or
less than all the Offered Securities not being purchased by a Purchaser, such
Purchaser shall purchase from the Company, and the Company shall sell to such
Purchaser, the number of Offered Securities specified in the Notice of
Acceptance, as reduced pursuant to Section 6.3(b) if such Purchaser had so
elected, upon the terms and conditions specified in the Offer. The purchase
by a Purchaser of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and such Purchaser of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to such Purchaser and such other Person or Persons
purchasing the Offered Securities.
6.4 Further Sale. In each case, any Offered Securities not
purchased by a Purchaser or other Persons in accordance with Section 6.3 may
not be sold or otherwise disposed of until they are again offered to such
Purchaser under the procedures specified in Sections 6.1, 6.2 and 6.3.
6.5 Exceptions. The rights of the Purchasers under this Article 6
shall not apply to:
(a) Shares issued as a stock dividend to holders of Shares or
upon any subdivision or combination of Shares.
(b) the issuance of up to 1,000,000 Shares, or options
exercisable therefor (such number to be equitably adjusted in the event of any
stock split, combination, reclassification or other similar event occurring on
or after the date of the Closing), issuable to officers, employees, directors
or consultants of the Company and any Subsidiary pursuant to the Plan.
(c) the issuance of up to 2,000,000 Shares reserved for
issuance pursuant to the Company's Distribution Reinvestment and Share
Purchase Plan.
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ARTICLE 7
DEFINITIONS AND ACCOUNTING TERMS
7.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Administrative Services Agreement" means that certain
Administrative Services Agreement dated as of February 27, 1994, between
Company and BMC, as the same may be amended, supplemented or otherwise
modified from time to time as permitted by this Agreement.
"Agent" has the meaning assigned to that term in the introduction of
this Agreement and also means and includes any successor Agent appointed
pursuant to subsection 9.4 of the Term Loan Agreement.
"Agreement" means this Share Purchase Agreement, including all
Exhibits and Schedules, as from time to time amended and in effect between the
parties hereto.
"BMC" means Banyan Management Corp., an Illinois corporation.
"Board of Trustees" shall mean the then present members of the Board
of Trustees of the Company.
"Closing" shall have the meaning assigned to that term in Section
1.2 of this Agreement.
"Closing Date" shall have the meaning assigned to that term in the
Term Loan Agreement.
"Company" has the meaning assigned to that term in the introduction
to this Agreement.
"Contingent Obligation", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation that such
obligation will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof, or (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or sale
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with recourse by such Person of the obligation of another, (b) the obligation
to make take-or-pay or similar payments if required regardless of non-
performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (X) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another
if, in the case of any agreement described under subclauses (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"Debt Securities" means any debt security of the Company that by its
terms is convertible into or exchangeable for any equity security of the
Company.
"Declaration of Trust" means the Company's Declaration of Trust, as
amended, filed with the Secretary of the Commonwealth of the Commonwealth of
Massachusetts, and any successor charter documents.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by the Company or any of its ERISA Affiliates.
"Environmental Laws" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release of Hazardous Materials, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials,
or (iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to the Company or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.),
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the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Federal Water Pollution Control Act ( 33 U.S.C. 1251 et seq.), the Clean Air
Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. 651
et seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
11001 et seq.), each as amended or supplemented, and any analogous future or
present local, state and federal statutes and regulations promulgated pursuant
thereto, each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member
of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was at
any time, a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which
that Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is, or was at any time, a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(d) of
the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by the Company or any of its ERISA Affiliates from
any Pension Plan with two or more contributing sponsors or the termination of
any such Pension Plan resulting in liability pursuant to Sections 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on
the Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069
of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii)
the withdrawal by the Company or any of its ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA)
from any Multiemployer Plan if there is any potential liability therefor, or
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the receipt by the Company or any of its ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an
act or omission which could give rise to the imposition on the Company or any
of its ERISA Affiliates of fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against the Company or any of its ERISA Affiliates in connection
with any such Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or heretofore owned, leased, operated or used by the Company or
any of its Subsidiaries.
"Facility Budget" has the meaning set forth in subsection 5.1(v) of
the Term Loan Agreement.
"Fiscal Year" means a twelve month period ending on December 31 of
each year.
"Funded Subsidiary" means a Subsidiary of the Company that receives
proceeds of Loans under the Term Loan Agreement to acquire a Facility.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2 of the Term Loan Agreement, generally accepted
accounting principles set forth in opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, in each case
as the same are applicable to the circumstances as of the date of
determination.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
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"Guaranty" means the continuing Guaranty(ies) to be executed and
delivered by the Funded Subsidiaries of the Company pursuant to subsection 5.9
of the Term Loan Agreement, in form and substance satisfactory to the Lenders,
pursuant to which each Funded Subsidiary will guaranty Obligations of the
Company (limited to the amount of the Loan or Loans received by that Funded
Subsidiary) under the Loan Documents, as amended, supplemented or otherwise
modified from time to time.
"Hazardous Materials" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances"
or any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity"
or "EP toxicity" or words of similar import under any applicable Environmental
Laws or publications promulgated pursuant thereto; (ii) any oil, petroleum,
petroleum fraction or petroleum derived substance (excluding, however,
gasoline and motor oil contained in motor vehicles for the purpose of
operating such vehicles); (iii) any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives (excluding, however, gasoline and motor oil contained in motor
vehicles for the purpose of operating such vehicles); (v) any radioactive
materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million; (ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of the Facilities.
Notwithstanding the foregoing, the term "Hazardous Materials" shall not
include (x) standard office supplies or common cleaning supplies used or
stored at a Facility in compliance with Environmental Laws and in quantities
standard for similar properties, and (y) chemicals, materials or substances,
other than the materials described in clauses (iv), (v) (vi), (vii) and (viii)
above, which may be present in incidental quantities or amounts as a
component, or in a material which is a component, in construction and building
materials used or incorporated in the construction of any Facility, or which
otherwise may be used in the ordinary course of construction activities at any
Facility, if such presence or use is otherwise in compliance with
Environmental Laws.
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"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iii) any obligation owed for all or any part of the deferred purchase
price of property or services, which purchase price is (a) due more than six
months from the date of occurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument, and (iv) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.
Notwithstanding anything to the contrary in this Agreement, the term
"Indebtedness" will not include (a) amounts payable to officers and directors
of the Company and its Subsidiaries pursuant to standard indemnity provisions
contained in the Declaration of Trust or Certificate or Articles of
Incorporation (as the case may be) and Bylaws of the Company and its
Subsidiaries on the date of the Closing, as such may be amended to comply with
applicable law, (b) amounts which the Company is obligated to pay to BMC as
reimbursement for costs and expenses paid by BMC on behalf of the Company or
its Subsidiaries pursuant to the Administrative Services Agreement with
respect to the Company, its Subsidiaries or the Facilities, (c) the salary and
other compensation payable by the Company to Leonard G. Levine, its president,
in an amount and on the terms set forth in the existing employment contract
with the Company.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Lender" and "Lenders" means the Persons identified as "Lenders" and
executing the Term Loan Agreement, together with their successors and
permitted assigns pursuant to subsection 8.1 of the Term Loan Agreement.
"Lien" means any mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement
to give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"Loan" means a Loan made by Lenders to the Company pursuant to
subsection 2.1A of the Term Loan Agreement in an amount, when added to all
other Loans made pursuant thereto to the Company, that shall not exceed Twenty
Million and No/100 Dollars ($20,000,000.00).
"Loan Documents" means the Term Loan Agreement, the Notes and the
instruments, documents and agreements executed and delivered pursuant to the
foregoing or otherwise executed and delivered in connection with the Loan, all
as amended, supplemented or otherwise modified from time to time.
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"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or (ii) the
impairment of the ability of the Company to perform, or of Agent or Lenders to
enforce, the Obligations.
"Multiemployer Plan" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which the Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which the Company or any of its
ERISA Affiliates has, or ever has had, an obligation to contribute.
"Notes" means the promissory notes of the Company issued pursuant to
subsection 2.1B of the Term Loan Agreement on the Closing Date, in each case
substantially in the form of Exhibit I annexed thereto with appropriate
insertions, as they may be amended, supplemented or otherwise modified from
time to time.
"Notice of Acceptance" shall have the meaning assigned to that term
in Section 6.2 of this Agreement.
"Obligations" means all obligations of every nature of the Company
and its respective Subsidiaries from time to time owed to Agent, Lenders or
any of them under the Loan Documents, whether for principal, interest, fees,
expenses, indemnification or otherwise.
"Offer" shall have the meaning assigned to that term in Section 6.1
of this Agreement.
"Offered Securities" shall have the meaning assigned to that term in
Section 6.1 of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, limited liability partnerships, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
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"Plan" means the Company's 1997 Omnibus Stock and Incentive Plan.
"Preferred Share Amendment" means the amendment of the Company's
Declaration of Trust, the purpose of which is to create a class of preferred
shares, issuable, among other purposes, upon conversion of the Loans.
"Preferred Shares" means the preferred shares of beneficial interest
of the Company having the rights, preferences and privileges set forth in the
Preferred Share Amendment.
"Purchased Shares" shall have the meaning assigned to that term in
Section 1.1.
"Purchasers" means those individuals identified on the signature
page hereto.
"Refused Securities" shall have the meaning assigned to that term in
Section 6.3(a) of this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and the
Purchasers, in the form set forth in Exhibit 2.2F.
"Release" means any spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Company or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock to the
holders of that class, and except for dividends payable by a wholly-owned
corporate Subsidiary to its direct parent, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of the Company or any
of its Subsidiaries now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of the Company or any of
its Subsidiaries now or hereafter outstanding, (iv) any distribution or other
payment, direct or indirect, on account of any partnership interest in any of
the Company's Subsidiaries which is a partnership or joint venture, except for
distributions payable by a Subsidiary of the Company which is a partnership or
joint venture to its constituent partners which are wholly-owned Subsidiaries
of the Company, provided that such distribution or payment is in turn
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delivered to the Company, and (v) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking fund or
similar payment with respect to, any Indebtedness.
"Securities" means any stock, shares, shares of beneficial interest,
partnership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participation in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Securities
and Exchange Commission (or of any other Federal agency then administering the
Securities Act) thereunder, all as the same shall be in effect at the time.
"Series A Convertible Preferred Shares" means the convertible
preferred shares of beneficial interest of the Company having the rights,
preferences and privileges set forth in the Preferred Share Amendment.
"Shares" means the shares of beneficial interest, no par value, of
the Company.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which 50%
or more of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof.
"Term Loan Agreement" means the Convertible Term Loan Agreement
dated as of October 10, 1997, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
Capitalized terms used herein, but not otherwise defined shall have
the meaning assigned to them in the Loan Documents.
7.2 Accounting Terms.
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, and all other financial data submitted
pursuant to this Agreement shall be prepared and calculated in accordance with
such principles.
Page 56 of 208 pages
<PAGE>
ARTICLE 8
MISCELLANEOUS
8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of a Purchaser in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
8.2 Amendments, Waivers and Consents. Any provision in this
Agreement or the Purchased Shares to the contrary notwithstanding, no changes
in or additions to this Agreement or the Purchased Shares may be made, and
compliance with any covenant or provision herein or therein set forth may not
be omitted or waived, until and unless the Company obtains consent thereto in
writing from the Purchasers. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
8.3 Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing (including
telegraphic communication) and mailed, by certified or registered mail, or
telegraphed or delivered to the applicable party at the addresses indicated
below:
If to the Company:
Banyan Strategic Realty Trust
150 South Wacker Drive
Chicago, Illinois 60606
Suite 2900
Attention: General Counsel
Telephone: 312-553-9800
Telecopy: 312-553-0450
with a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Michael J. Choate, Esq.
Telephone: 312-836-4066
Telecopy: 312-527-5921
Page 57 of 208 pages
<PAGE>
If to the Purchasers:
Morgens, Waterfall, Vintiadis & Co., Inc.
10 East 50th Street
New York, New York 10022
Attention: David A. Ericson
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: Jack B. Hicks III, Esq.
8.4 Costs, Expenses and Taxes. Whether or not the transactions
contemplated hereby shall be consummated, the Company shall pay actual and
reasonable cost and expenses in connection with the investigation,
preparation, execution and delivery of this Agreement, the Purchased Shares
and other instruments and documents to be delivered hereunder and the
transactions contemplated hereby and thereby. In addition, the Company shall
pay any and all material stamp and other taxes payable or determined to be
payable by the Company in connection with the execution and delivery of this
Agreement, the Purchased Shares, and other instruments and documents to be
delivered hereunder or thereunder, and agrees to save the Purchasers harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and filing fees. In the event
of any controversy, claim or dispute among the parties hereto arising out of
or relating to this Agreement, or any breach hereof, the prevailing party
shall be entitled to recover from the losing party reasonable attorney's fees,
expenses and costs.
8.5 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Company and the Purchasers and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Purchasers obtained in accordance with Section 8.2
hereof and, subject to the following limitations, the rights and interests of
the Purchasers shall be assignable without the consent of the Company to any
assignee. A Purchaser may assign its rights hereunder only in connection with
a transfer of the Shares purchased from the Company pursuant to this
Agreement, and only in accordance with the Securities Act, applicable state
securities laws or an exemption therefrom, and in reliance on an opinion of
counsel. A Purchaser shall not assign its rights under this Agreement or
Registration Rights Agreements attached hereto as exhibits with respect to
less than 25% of the Purchased Shares in any one assignment (meaning that no
more than four (4) Persons may exercise rights under this and the foregoing
agreements).
Page 58 of 208 pages
<PAGE>
8.6 Survival of Representations and Warranties. All
representations and warranties made in this Agreement, the Purchased Shares,
or any other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or thereof for a
period of two (2) years from the Closing Date.
8.7 Prior Agreements. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.
8.8 Severability. The invalidity or unenforceability of any
provision hereto shall in no way affect the validity or enforceability of any
other provision.
8.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
8.10 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
8.12 Further Assurances. From and after the date of this Agreement,
upon the reasonable request of a Purchaser or the Company and each Subsidiary,
the other parties shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement
and the Shares.
(Remainder of page intentionally left blank)
Page 59 of 208 pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
COMPANY: BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
s/Leonard G. Levine
By: ______________________________
Printed Name:
Title:
Notice Address:
150 South Wacker Drive
Chicago, Illinois 60606
Suite 2900
Attention: General Counsel
Telephone: 312-553-9800
Telecopy: 312-553-0450
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Michael J. Choate, Esq.
Telephone: 312-836-4066
Telecopy: 312-527-5921
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 60 of 208 pages
<PAGE>
PURCHASERS:
RESTART PARTNERS, L.P.,
a Delaware limited partnership
By: PRIME GROUP L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 418,768
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 61 of 208 pages
<PAGE>
RESTART PARTNERS II, L.P.,
a Delaware limited partnership
By: PRIME GROUP II, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 692,830
RESTART PARTNERS III, L.P.,
a Delaware limited partnership
By: PRIME GROUP III, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 482,350
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 62 of 208 pages
<PAGE>
RESTART PARTNERS IV, L.P.,
a Delaware limited partnership
By: PRIME GROUP IV, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 304,758
RESTART PARTNERS V, L.P.,
a Delaware limited partnership
By: PRIME GROUP V, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 100,855
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 63 of 208 pages
<PAGE>
ENDOWMENT RESTART, LLC,
a Delaware limited liability company
By: ENDOWMENT PRIME, LLC,
a Delaware limited liability company,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 109,625
MORGENS WATERFALL INCOME PARTNERS, L.P.
a New York limited partnership
By: MW CAPITAL, LLC
a Delaware limited liability company
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Purchased Shares: 83,315
S/David A. Ericson
_____________________________________
David A. Ericson,
for the entities and in the capacities described above
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 64 of 208 pages
<PAGE>
Notice Address:
Morgens, Waterfall, Vintiadis & Company, Inc.
10 East 50th Street
New York, New York 10022
Attention: Mr. David A. Ericson
Telephone: 212-705-0533
Telecopy: 212-838-5540
With a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Jack B. Hicks III, Esq.
Telephone: 213-669-7263
Telecopy: 213-669-6407
Page 65 of 208 pages
<PAGE>
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of October 10, 1997, between Banyan Strategic Realty Trust, a
Massachusetts business trust (together with all of its successors, by merger
or otherwise, the "Company"), and the purchasers listed on the signature pages
hereto (the "Purchasers"; individually referred to as a "Purchaser").
RECITALS
WHEREAS, the Company has entered into a Share Purchase Agreement,
dated as of October 10, 1997 (the "Share Purchase Agreement"; all capitalized
terms used herein and not otherwise defined shall have the meanings given to
such terms in the Share Purchase Agreement), by and among the Company and the
Purchasers;
WHEREAS, the Purchasers are or will be holders of the Company's
convertible notes (issued pursuant to a Convertible Term Loan Agreement dated
as of October 10, 1997, the "Term Loan Agreement") which according to the
terms thereof may be converted into Series A Convertible Preferred Shares, to
be created by the Company in connection with the Amendment to Declaration of
Trust (as such term is defined in the Term Loan Agreement), which shares are
in turn, convertible into Common Shares. (Such Series A Convertible Preferred
Shares and Common Shares being referred to collectively as the "New Shares").
WHEREAS, pursuant to the Share Purchase Agreement the Company has
agreed to issue to the Purchasers on the Closing Date 2,192,501 shares of
Beneficial Interests, no par value, of the Company (the "Initial Shares" and,
together with the New Shares, the "Purchased Shares");
WHEREAS, the Purchased Shares have not been registered under the
Securities Act and are subject to restrictions on resale or other disposition;
WHEREAS, the Company desires to grant on behalf of itself and all
successors, and the Purchasers desire to accept, the registration rights set
forth in this Agreement in respect of the Registrable Shares, as defined
herein; and
WHEREAS, execution and delivery of this Agreement by the parties
hereto is a condition precedent to the closing of the Share Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein and intending to be legally bound the parties agree as follows:
SECTION 1. Definitions.
Page 66 of 208 pages
<PAGE>
As used in this Agreement, the following terms shall have the
following respective meanings:
"Holder" means the Purchasers and any transferee or assignee as
permitted under Section 7 hereof.
"Registrable Shares" means the Purchased Shares issued to the
Holders, including any securities issued in respect thereof pursuant to a
stock dividend, stock split, recapitalization or similar event. As to any
particular Registrable Shares, once issued such securities shall cease to be
Registrable Shares when (A) a registration statement with respect to the sale
of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, or (B) such securities shall have been sold in
accordance with Rule 144 (or any successor provision) under the Securities
Act.
The terms "register," "registered" and "registration" refer to the
preparation and filing with the SEC of a registration statement or similar
document in compliance with the Securities Act and the declaration or ordering
of the effectiveness of such registration statement or document.
"Registration Expenses" means all expenses, except Selling Expenses,
incurred by the Company and the Holders while complying with Section 2 of this
Agreement. Registration Expenses shall include, without limitation, all
registration and filing fees and other qualification fees, blue sky fees,
printing expenses and fees and disbursements of the Company's and the Holders'
accountants and legal counsel incurred in any registration pursuant to Section
2.
"SEC" means the United States Securities and Exchange Commission or
any successor agency.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Selling Expenses" means all underwriting discounts, selling
commissions and stock transfer taxes relating to any Holder's registered
securities.
SECTION 2. Registration.
(a) Piggybank Registration Statement. If the Company proposes to
register any equity securities (or securities convertible into or exchangeable
for equity securities), whether or not for sale for its own account (other
than a registration relating to the sale of securities to participants in a
dividend reinvestment plan, a registration on Form S-4 relating to a business
combination or similar transaction permitted to be registered on such Form S-
4, a registration on Form S-8 relating to the sale of securities to
participants in a stock or employee benefit plan and registrations pursuant to
Page 67 of 208 pages
<PAGE>
Section 2(b) of this Agreement) the Company will give written notice to all
Holders of the Company's intention to effect such a registration and include
in such registration all Registrable Shares with respect to which the Company
has received written notice from a Holder for inclusion therein within 30 days
after the date of the Company's notice (in such capacity such Holder a
"Requesting Holder"); provided, however, that:
(i) if, at any time after giving written notice of its
intention to register any securities and, prior to the effective
date of the Registration Statement filed in connection with
such registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give
written notice of such determination to each Holder requesting
inclusion therein, and, thereupon, the Company shall be relieved of
its obligation to register any Registrable Shares in connection with
such withdrawn or unfiled registration (but not of its obligation to
pay the Registration Expenses in connection therewith pursuant to
Section 3 hereto); and
(ii) if such registration shall be in connection with an
underwritten public offering and the underwriter or managing
underwriter, as the case may be, shall advise the Company that in
its opinion the number of shares requested to be included in such
registration or offering exceeds the number of such securities which
can be sold in such offering, the amount to be registered shall be
allocated pro rata among the Company and among the Requesting
Holders desiring to participate in such registration and the other
holders of the Company's securities requested to be included in such
registration, based on the numbers of shares initially proposed to
be included by the Company and/or such holders; provided, however,
that if such underwritten public offering is (x) the first to occur
after the date hereof and (y) completed prior to March 31, 1999,
then the amount to be registered shall be allocated first to the
Company, second pro rata among the Requesting Holders desiring to
participate in such registration, based on the numbers of shares
initially proposed to be included by such Requesting Holders, and
then pro rata among the other holders of the Company's securities
requested to be included in such registration, based on the numbers
of shares initially proposed to be included by such holders; and
(iii) if any registration pursuant to this Section 2(a) is an
underwritten public offering:
(A) the Requesting Holders shall not have the right to
select the managing underwriter to administer such offering;
and
Page 68 of 208 pages
<PAGE>
(B) the Requesting Holders agree to enter into customary
agreements (including, if requested, an underwriting
agreement), and take such other customary actions in connection
therewith as the Company or the underwriter(s) shall reasonably
request in order to consummate such registration.
(b) Demand Registration Statement. The Holder(s) of Registrable
Shares having an estimated offering price of $2.5 million or more (the
"Requisite Holders") may at any time, by delivery of written notice to the
Company, request that the Company register the offer and sale of all or a
portion of the Registrable Shares held by such Holders under the Securities
Act and register or qualify under applicable securities laws, and, subject to
the provisions of this Agreement, the Company shall effect such demand
registration promptly; provided, however, that the Company shall have no
obligation under this Section 2(b) if the sale of the Registrable Shares by
the Holders is then covered under any other registration statement (including,
pursuant to Section 2(a) hereof) that includes such shares on a continuing
basis.
Each notice to the Company delivered pursuant to the preceding
paragraph shall set forth (i) the names of the Requisite Holders requesting
registration ("Demanding Holders") and the number of shares to be sold by each
and (ii) the proposed manner of sale. Within ten (10) days after receipt of
notice from the Demanding Holders, the Company shall notify all Holders who
are not Demanding Holders and offer to them the opportunity to include their
shares in such registration. Each such Holder shall have 20 days following
delivery of such notice to elect, by notice to the Company, to have such
Holder's Registrable Shares included in such registration. The maximum number
of such demands under this Section 2(b) shall be two (2). A demand
registration will not count as a demand registration hereunder unless it is
declared effective by the SEC and remains effective for at least ninety (90)
days or such shorter period which shall terminate when all of the Registrable
Shares covered by such demand registration have been sold pursuant to such
demand registration; provided, however, that in the event a registration
statement is withdrawn at the request of the Demanding Holders, such Demanding
Holders will forfeit the demand registration rights granted pursuant to this
Section 2(b). These rights are in addition to, and shall not limit, the
registration rights of the Holders of Registrable Shares granted pursuant to
Section 2(a) hereunder. Except as expressly provided in this Section 2(b), no
holder of Company securities shall be entitled to participate in a
registration under this Section 2(b).
Page 69 of 208 pages
<PAGE>
If the managing underwriter of an underwritten offering under this
Section 2(b) advises the Company in writing that in its opinion the number of
shares requested to be included in such registration exceeds the number which
can be sold in such offering, the Company will include in such registration
only the number of shares which in the opinion of such underwriter can be
sold. If the number of shares which can be sold is less than the number of
shares proposed to be registered, the amount to be so registered shall be
allocated pro rata among the Holders of Registrable Shares desiring to
participate in such registration.
If any of the Registrable Shares covered by a demand registration
are to be sold in an underwritten offering, the Demanding Holders shall have
the right to select the managing underwriter(s) to administer the offering,
subject to the approval of the Holders of a majority in interest of the
Registrable Shares to be included therein, which approvals shall not be
unreasonably withheld.
(c) Notice of Effectiveness. Upon declaration of effectiveness by
the SEC of a registration statement filed pursuant to this Agreement, the
Company shall give written notice thereof to each Holder whose Registrable
Shares are included in such registration statement.
(d) Blackout Periods. Following the effective date of any
registration statement filed pursuant to this Section 2, the Company shall be
entitled, from time to time, to notify the Holders to discontinue offers or
sales of securities pursuant to such registration statement for Registrable
Shares for the period of time stated in such notice, up to a maximum of one
hundred eighty (180) consecutive days (such notice being a "Blackout Notice"),
if the Company determines, in its reasonable business judgment, that the
disclosure required in connection with such offers and sales would materially
damage the prospects for successfully completing an acquisition, corporate
reorganization, securities offering or other voluntary transaction undertaken
by the Company (which the Company would not be required to disclose at such
time other than in connection with the Purchasers' registration statement)
that is material to the Company and its subsidiaries taken as a whole. Such
notice shall be signed by an authorized officer of the Company and shall
certify such determination. Each Holder agrees that upon receipt of a
Blackout Notice such Holder shall discontinue offers or sales of Registrable
Shares pursuant to any such registration statement for the period of time
stated in the Blackout Notice (up to a maximum of one hundred eighty (180)
consecutive days) and the time period set forth in subsection 2(e) shall be
tolled during such period. The Company shall not cause more than 180 days
within any period of 360 consecutive days to be subjected to Blackout Notices
and shall use its best commercially reasonable efforts to minimize the period
of time subjected to Blackout Notices.
Page 70 of 208 pages
<PAGE>
(e) Effectiveness of Registration Statements. the Company shall
cause any registration statement filed pursuant to this Section 2 to remain
effective for at least ninety (90) days after it is declared or ordered
effective or until the Holders have completed the distribution described
therein, whichever first occurs.
SECTION 3. Expenses of Registration.
The Company shall bear the Registration Expenses arising out of all
registrations hereunder; provided, however, that all Selling Expenses relating
to the securities of any Holder whose Purchased Shares are included in such
registration (the "Participating Holder") shall be borne by the Participating
Holder and the Company shall have no liability therefor.
SECTION 4. Registration Procedures.
For each registration, qualification or compliance carried out by
the Company pursuant to this Agreement, the Company shall give each Holder
written notice of the initiation of such registration, qualification or
compliance and the Company will:
(a) provide to each Holder participating in such registration a
reasonable number of copies, without charge, of the registration statement,
preliminary prospectus, final prospectus and any other documents as may
reasonably be necessary to facilitate a public offering;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
the effectiveness of such registration statement;
(c) use its best efforts to register or qualify all securities
covered by such registration statement under such securities or blue sky laws
of such jurisdiction as each Holder shall reasonably request, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation in any such jurisdiction or to
consent generally to service of process in any such jurisdiction; and
(d) immediately notify each Holder of Purchased Shares covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
Page 71 of 208 pages
<PAGE>
then existing, and at the request of any such Holder prepare and furnish to
such Holder a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Purchased Shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
SECTION 5. Information by Holder.
Each Holder of Registrable Shares participating in any registration
shall provide the Company, when requested, with written information regarding
itself, its ownership of securities of the Company, the distribution proposed
by such Holder and such other information as may be legally required in
connection with such registration. Such writing shall expressly state that it
is being furnished to the Company for use in the preparation of a registration
statement, preliminary prospectus, supplementary prospectus, final prospectus
or amendment or supplement thereto, as the case may be. Each Holder agrees,
by its acceptance of the benefits provided to it hereunder, to furnish
promptly to the Company all information required to be disclosed in order to
make any previously furnished information not misleading.
SECTION 6. Indemnification.
(a) The Company will indemnify each Holder of Purchased Shares
covered by any such registration statement, its officers, directors and
partners and each person who controls such Holder within the meaning of
Section 15 of the Securities Act against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof), including without limitation
any of the foregoing incurred in the defense and settlement of any litigation,
(i) arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
preliminary prospectus, prospectus or documents incorporated by reference
therein, or based upon any omission (or alleged omission) of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) incurred or arising out of any violation by the Company of
the Securities Act or any rule or regulation promulgated under the Securities
Act; provided, however, that the Company will not be under an obligation to
indemnify any Holder if any of the foregoing are made in reliance upon
information furnished to the Company by such Holder in writing expressly for
inclusion in such registration statement.
Page 72 of 208 pages
<PAGE>
(b) Each Holder participating in a registration pursuant to this
Agreement will indemnify the Company, its directors and officers, each person
who controls the Company within the meaning of Section 15 of the Securities
Act, and each other Holder and each of its officers and directors and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
incurred (or actions in respect thereof) arising out of any untrue statement
(or alleged untrue statement) of a material fact contained in any registration
statement or based upon any omission (or alleged omission) of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent made in reliance upon information furnished to the
Company by such Holder in writing expressly for inclusion in such registration
statement.
(c) Each party entitled to indemnification under this Section 6
("Indemnified Party") shall give prompt notice to the party required to
provide indemnification ("Indemnifying Party") as soon as the Indemnified
Party has actual knowledge of any claim for which indemnity may be sought, and
shall permit Indemnifying Party to assume and control the defense of any such
claim or any litigation resulting therefrom, provided that Indemnified Party
will have the right to select counsel, subject to the approval of the
Indemnifying Party (whose approval shall not be unreasonably withheld), to
defend such claim or litigation, and provided further that Indemnified Party
may participate in such defense at Indemnified Party's expense. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, consent to the entry of any judgment or enter into any
settlement which (i) provides for any remedy other than the prompt payment of
damages (and expenses) by the Indemnifying Party, without the admission of
wrongdoing on the part of the Indemnified Party and (ii) does not include an
unconditional provision releasing Indemnified Party from all liability in
respect of such claim or litigation. The failure of any Indemnified Party to
give notice of a claim subject to indemnification shall not relieve
Indemnifying Party of its obligations under this Agreement except to the
extent the failure to give such notice is materially prejudicial to
Indemnifying Party's ability to defend such claim. Notwithstanding anything
to the contrary in this paragraph, the Indemnifying Party shall not have the
right to assume the defense for matters as to which there is a conflict of
interest with, or separate and different defenses available to, the
Indemnified Party. In defending such a claim the Indemnified Party shall
conduct the defense and settlement thereof, but the expenses, fees and
disbursements therefore shall be promptly paid by the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is
unavailable to or unenforceable by the Company or the Holders (or their
controlling persons) in respect of any expenses, claims, losses, damages, and
liabilities referred to herein, then each such Indemnifying Party, in lieu of
Page 73 of 208 pages
<PAGE>
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such expenses, claims,
losses, damages and liabilities in such proportions as is appropriate to
reflect the relative fault of the Indemnifying Party and the Indemnified
Parties in connection with the actions or inactions which resulted in such
expenses, claims, losses, damages, and liabilities, as well as any other
relevant equitable considerations (including the relative fault and
indemnification or contribution obligations of other relevant parties). The
relative fault of the Indemnifying Party on the one hand and of the
Indemnified Parties on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party,
and by such party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and Holders under this Section 6
shall survive the completion of any offering of Registrable Shares in a
registration statement under this Agreement, and otherwise.
SECTION 7. Transfer of Registration Rights.
Any Holder's rights under this Agreement may be assigned or
transferred (in whole or in part) to any party who is or becomes a holder of
Registrable Shares.
SECTION 8. Amendment of Registration Rights.
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Holders of a majority of the Registrable Shares then outstanding. Any
amendment or waiver effected in accordance with this Section 8 shall be
binding upon each Holder, each transferee or assignee of Holder pursuant to
Section 7 of this Agreement.
SECTION 9. Termination of Registration Rights.
No Holder shall be entitled to exercise any right provided for in
Section 2 of this Agreement after the tenth anniversary of the date hereof.
Page 74 of 208 pages
<PAGE>
SECTION 10. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made (i) when delivered
personally or by telecopier, (ii) if to a party in the same country as the
mailing party, when mailed first class registered or certified mail, postage
prepaid, or (iii) if to a party in a different country from the sending party,
on the second day following deposit with a reputable commercial air courier,
charges prepaid, to each respective party as shown below:
(a) If to the holders of Registrable Shares, to the addresses shown
on the signature page(s) hereto (or as otherwise instructed in writing from
time to time), with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: Jack B Hicks III, Esq.
Telecopier: (213) 669-6407
(b) If to the Company to:
Banyan Strategic Realty Trust
150 South Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
Telecopier: (312) 553-0450
with a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Michael J. Choate, Esq.
Telecopier: (312) 527-5921
SECTION 11. Parties in Interest.
This Agreement shall be binding upon and inure to the benefit of
each party, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement is intended
to relieve or discharge the obligation of any third person to any party to
this Agreement.
Page 75 of 208 pages
<PAGE>
SECTION 12. Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 13. Headings.
The headings in this Agreement are for convenience only and shall
not limit or otherwise affect the meaning hereof.
SECTION 14. Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflict of
law.
Each party hereby irrevocably submits to and accepts for itself and
its properties, generally and unconditionally, the exclusive jurisdiction of
and service of process pursuant to the laws of the State of New York and the
rules of its courts, waives any defense of forum non conveniens and agrees to
be bound by any judgment rendered thereby arising under or out of in respect
of or in connection with this Agreement or any related document or obligation.
Each party further irrevocably designates and appoints the individual
identified in or pursuant to Section 10 hereof to receive notices (not copies)
on its behalf, as its agent to receive on its behalf service of all process in
any such action before any body, such service being hereby acknowledged to be
effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to each party at its address
provided in Section 10; provided that, unless otherwise provided by applicable
law, any failure to mail such copy shall not affect the validity of the
service of such process. If any agent so appointed refuses to accept service,
the designating party hereby agrees that service of process sufficient for
personal jurisdiction in any action against it in the applicable jurisdiction
may be made by registered or certified mail, return receipt requested, to its
address provided in Section 10. Each party hereby acknowledges that such
service shall be effective and binding in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law.
SECTION 15. Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
Page 76 of 208 pages
<PAGE>
SECTION 16. Entire Agreement.
This Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement.
Page 77 of 208 pages
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
COMPANY: BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
S/Leonard G. Levine
By:_____________________________________
Printed Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 78 of 208 pages
<PAGE>
PURCHASERS:
RESTART PARTNERS, L.P.,
a Delaware limited partnership
By: PRIME GROUP L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 79 of 208 pages
<PAGE>
RESTART PARTNERS II, L.P.,
a Delaware limited partnership
By: PRIME GROUP II, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
RESTART PARTNERS III, L.P.,
a Delaware limited partnership
By: PRIME GROUP III, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 80 of 208 pages
<PAGE>
RESTART PARTNERS IV, L.P.,
a Delaware limited partnership
By: PRIME GROUP IV, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
RESTART PARTNERS V, L.P.,
a Delaware limited partnership
By: PRIME GROUP V, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 81 of 208 pages
<PAGE>
ENDOWMENT RESTART, LLC,
a Delaware limited liability company
By: ENDOWMENT PRIME, LLC,
a Delaware limited liability company,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
MORGENS WATERFALL INCOME PARTNERS, L.P.
a New York limited partnership
By: MW CAPITAL, LLC
a Delaware limited liability company
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
S/David A. Ericson
___________________________________
David A. Ericson,
for the entities and in the capacities described above
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 82 of 208 pages
<PAGE>
Notice Address for all Purchasers:
Morgens, Waterfall, Vintiadis & Company, Inc.
10 East 50th Street
New York, New York 10022
Attention: Mr. David A. Ericson
and
General Counsel
Page 83 of 208 pages
<PAGE>
Exhibit 5
CONVERTIBLE TERM LOAN AGREEMENT
DATED AS OF OCTOBER 10, 1997
AMONG
BANYAN STRATEGIC REALTY TRUST,
as Borrower,
and
THE LENDERS LISTED HEREIN,
as Lenders
Page 84 of 208 pages
<PAGE>
BANYAN STRATEGIC REALTY TRUST
CONVERTIBLE TERM LOAN AGREEMENT
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS................................................
1.1 Certain Defined Terms................................
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.........................
1.3 Other Definitional Provisions.......................
Section 2. AMOUNT AND TERMS OF LOANS.................................
2.1 Making of Loans; Notes..............................
2.2 Interest on the Loans...............................
2.3 Loan Fees...........................................
2.4 Principal Payments; Prepayment; General Provisions
Regarding Payments..................................
2.5 Use of Loan Proceeds................................
2.6 No Deductions.......................................
Section 3. CONDITIONS TO LOAN........................................
3.1 Delivery of Documents on Closing Date...............
3.2 Satisfaction of Conditions and Delivery of Documents on
any Funding Date....................................
Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES..................
4.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries...........................
4.2 Authorization of Borrowing, etc.....................
4.3 Financial Condition.................................
4.4 No Material Adverse Effect; No Restricted Junior
Payments............................................
4.5 Title to Properties; Liens..........................
4.6 Litigation; Adverse Facts...........................
4.7 Payment of Taxes....................................
4.8 Performance of Agreements; Materially Adverse
Agreements..........................................
4.9 Governmental Regulation.............................
4.10 Securities Activities...............................
4.11 Employee Benefit Plans..............................
4.12 Certain Fees........................................
4.13 Environmental Protection............................
4.14 Employee Matters....................................
4.15 Insurance...........................................
4.16 Disclosure..........................................
4.17 REIT Status.........................................
4.18 Registration Rights.................................
Page 85 of 208 pages
<PAGE>
4.19 Shareholder Agreements..............................
4.20 Status of Advisor under Declaration of Trust........
Section 5. COMPANY'S AFFIRMATIVE COVENANTS...........................
5.1 Financial Statements and Other Reports..............
5.2 Corporate and Partnership Existence, etc.; Status as
Real Estate Investment Trust........................
5.3 Payment of Taxes and Claims; Tax Consolidation......
5.4 Maintenance and Development of Properties;
Insurance...........................................
5.5 Inspection; Lender Meetings.........................
5.6 Compliance with Laws, etc...........................
5.7 Environmental Disclosure............................
5.8 Company's Remedial Action Regarding Hazardous
Materials...........................................
5.9 Further Assurances..................................
5.10 Shareholder Approvals...............................
5.11 Declaration of Trust and Capital Structure of
Company.............................................
Section 6. COMPANY'S NEGATIVE COVENANTS..............................
6.1 Indebtedness........................................
6.2 Liens and Related Matters...........................
6.3 Investments.........................................
6.4 Contingent Obligations..............................
6.5 Restricted Junior Payments..........................
6.6 Financial Covenants.................................
6.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions........................................
6.8 Capital Expenditures and Tenant Improvements........
6.9 Restriction on Leases and Sale-Leasebacks
6.10 Fiscal Year.........................................
6.11 Transactions with Shareholders and Affiliates.......
6.12 Disposal of Subsidiary Stock........................
6.13 Conduct of Business.................................
Section 7. EVENTS OF DEFAULT.........................................
7.1 Failure to Make Payments When Due...................
7.2 Default in Other Agreements.........................
7.3 Breach of Certain Covenants.........................
7.4 Breach of Warranty; Unqualified Financial
Statement...........................................
7.5 Other Defaults Under Loan Documents.................
7.6 Involuntary Bankruptcy; Appointment of
Receiver, etc.......................................
7.7 Voluntary Bankruptcy; Appointment of
Receiver, etc...............................
7.8 Judgments and Attachments
7.9 Dissolution
7.10 Employee Benefit Plans
7.11 Change in Control
Page 86 of 208 pages
<PAGE>
Section 8. MISCELLANEOUS
8.1 Assignments and Participation in Loans
8.2 Expenses
8.3 Indemnity
8.4 Set-Off
8.5 Amendments and Waivers
8.6 Independence of Covenants
8.7 Notices
8.8 Survival of Representations, Warranties and Agreements
8.9 Failure or Indulgence Not Waiver; Remedies Cumulative
8.10 Marshalling; Payments Set Aside
8.11 Severability
8.12 Headings
8.13 Applicable Law
8.14 Successors and Assigns
8.15 Consent to Jurisdiction and Service of Process
8.16 Waiver of Jury Trial
8.17 Confidentiality
8.18 Counterparts; Effectiveness
8.20 Entire Agreement
8.21 Obligations Several; Independent Nature of Lenders'
Rights
8.22 Lender Representations
Section 9. CONVERSION OF LOANS
9.1 Conversion
9.2 Issuance of Preferred Shares or Common Shares on
Conversion
9.3 No Adjustment of Conversion Price for Preferred Shares
9.4 Adjustment of Conversion Rate
9.5 No Fractional Shares
9.6 Covenant to Reserve Shares
9.7 Compliance with Legal and Governmental Requirements
9.8 Payment of Taxes
9.9 Notice of Certain Events
9.10 Purchase of Shares
Section 10. AGENT
10.1 Appointment
10.2 Powers; General Immunity
10.3 Right to Indemnity
10.4 Successor Agent
Signature pages S-1
Page 87 of 208 pages
<PAGE>
EXHIBITS
I FORM OF NOTE
II FORM OF COMPLIANCE CERTIFICATE
III FORM OF OPINION OF COMPANY COUNSEL
IV FORM OF AMENDMENT TO DECLARATION OF TRUST REGARDING PREFERRED SHARES
V FORM OF NOTICE OF BORROWING
VI FORM OF GUARANTY
SCHEDULES
4.1 SUBSIDIARIES OF COMPANY
4.5 DESCRIPTION OF THE FACILITIES
4.6 LITIGATION
4.13 ENVIRONMENTAL MATTERS
4.15 INSURANCE
6.1 EXISTING INDEBTEDNESS
6.2 EXISTING LIENS
6.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
Page 88 of 208 pages
<PAGE>
BANYAN STRATEGIC REALTY TRUST
CONVERTIBLE TERM LOAN AGREEMENT
This CONVERTIBLE TERM LOAN AGREEMENT is dated as of October 10, 1997
and entered into by and among BANYAN STRATEGIC REALTY TRUST, a Massachusetts
business trust ("Company"), and THE ENTITIES LISTED ON THE SIGNATURE PAGES
HEREOF (each individually referred to herein as a "Lender" and collectively as
"Lenders").
R E C I T A L S:
A. Company is desirous of obtaining loans and, subject to and
upon the terms and conditions contained herein, Lenders are willing to make
loans to Company, to provide financing for acquisition of new properties.
B. The loan proceeds will be used by Company for, among other
things, distribution to Funded Subsidiaries (as defined below) of Company for
the acquisition of certain properties; therefore, such Funded Subsidiaries
will benefit from the loans made to Company under this Agreement.
Accordingly, such Funded Subsidiaries of Company will guaranty portions of the
obligations of Company under this Agreement.
C. Lenders have agreed to acquire Common Shares (defined below)
on the terms set forth in the Share Purchase Agreement (defined below).
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company and Lenders agree as
follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Administrative Services Agreement" means that certain
Administrative Services Agreement dated as of February 27, 1994, between
Company and BMC, as the same may be amended, supplemented or otherwise
modified from time to time as permitted by this Agreement.
"Acquisition Price" means all amounts paid to a seller and the
amount of all Indebtedness assumed or created, in connection with the
acquisition of a Facility, and reasonable and ordinary costs related thereto,
including without limitation, capital improvements, due diligence expenses
paid to third parties, title and closing costs and legal and accounting fees.
Page 89 of 208 pages
<PAGE>
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of
voting securities or by contract or otherwise. For purposes of this
Agreement, BMC will not be considered an Affiliate of Company.
"Agent" means Morgens, Waterfall, Vintiadis & Company, Inc. or any
successor agent appointed by Requisite Lenders.
"Agreement" means this Convertible Term Loan Agreement dated as of
October 10, 1997, as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"Amended Declaration of Trust" means Company's Declaration of Trust,
as amended following Shareholder Approval.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BMC" means Banyan Management Corp., an Illinois corporation.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close.
"Cash Equivalents" means (i) marketable securities issued or
directly and unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed, directly or indirectly, by the full
faith and credit of the United States, in each case maturing within one year
from the date of acquisition thereof and repurchase agreements backed by
United States government securities; (ii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation and at least P-1 from Moody's Investors Service, Inc.; and (iii)
certificates of deposit, time deposits or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia having unimpaired capital and surplus of not less
than $250,000,000.
"Closing Date" means October 14, 1997.
"Commitment Termination Date" means October 14, 1998.
Page 90 of 208 pages
<PAGE>
"Common Share Conversion Rate" has the meaning set forth in
subsection 9.1B.
"Common Shares" means the shares of beneficial interest, no par
value, of Company.
"Company" has the meaning assigned to that term in the introduction
to this Agreement.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit II annexed hereto delivered to Lenders by Company pursuant to
subsection 5.1(iii).
"Consolidated Net Worth" means, as at any date of determination, the
excess of the assets of Company and its Subsidiaries over the liabilities of
Company and its Subsidiaries, all on a consolidated basis determined in
accordance with GAAP (as such assets and liabilities are shown on the then-
most recent consolidated financial statements delivered to Lenders pursuant to
subsection 5.1(i) or 5.1(ii) below).
"Consolidated Total Debt" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness of Company and
its Subsidiaries, determined on a consolidated basis.
"Contingent Obligation", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation that such
obligation will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof, or (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or sale
with recourse by such Person of the obligation of another, (b) the obligation
to make take-or-pay or similar payments if required regardless of non-
performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (X) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another
Page 91 of 208 pages
<PAGE>
if, in the case of any agreement described under subclauses (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"Conversion Approval" means the authorization by shareholders of
Company of the issuance of in excess of 19.9% of the shares of beneficial
interest of Company, whether by purchase, upon conversion or otherwise,
pursuant to the provisions of this Agreement.
"Current Market Price" means, on any date, the average of the sale
prices of a Common Share (or other security, as applicable) for the fifteen
consecutive trading days commencing twenty trading days before the earliest of
the date in question and the date before the "ex date" with respect to the
issuance or distribution requiring such computation. For the purposes of this
definition, the term "ex date", when used with respect to any issuance or
distribution, means the first date on which the Common Share (or other
security, as applicable) trades regular way on the principal national
securities exchange on which the share is listed or admitted to trading (or if
not so listed or admitted, on NASDAQ, or a similar organization if NASDAQ is
no longer reporting trading information) without the right to receive such
issuance or distribution.
"Declaration of Trust" means Company's Amended and Restated
Declaration of Trust, as in effect on the Closing Date.
"Determination Date" means, with respect to any dividend or other
distribution, the date fixed for the determination of the holders of shares of
beneficial interest or other equity securities of Company entitled to receive
such dividend or distribution, or if a dividend or distribution is paid or
made without such a date, the date of such dividend or distribution.
"Dollars" and the sign "$" mean the lawful money of the United
States of America.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by Company or any of its ERISA Affiliates.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
Page 92 of 208 pages
<PAGE>
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, in each case relating
to, resulting from or in connection with Hazardous Materials and relating to
Company, any of its Subsidiaries, or any Facility.
"Environmental Laws" means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release of Hazardous Materials, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials,
or (iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to Company or any of its Subsidiaries or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Sec. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Sec. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), the
Federal Water Pollution Control Act ( 33 U.S.C. Sec. 1251 et seq.), the Clean
Air Act (42 U.S.C. Sec. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Sec. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. Sec. 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. Sec. 651 et seq.) and the Emergency Planning and Community Right-to-
Know Act (42 U.S.C. Sec. 11001 et seq.), each as amended or supplemented, and
any analogous future or present local, state and federal statutes and
regulations promulgated pursuant thereto, each as in effect as of the date of
determination.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member
of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was at
any time, a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which
that Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is, or was at any time, a member.
Page 93 of 208 pages
<PAGE>
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(d) of
the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by Company or any of its ERISA Affiliates from any
Pension Plan with two or more contributing sponsors or the termination of any
such Pension Plan resulting in liability pursuant to Sections 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension
Plan, or the occurrence of any event or condition which might constitute
grounds under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company or
any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal by
Company or any of its ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan if there is any potential liability therefor, or the receipt by Company
or any of its ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Section 4041A or 4042
of ERISA; (viii) the occurrence of an act or omission which could give rise to
the imposition on Company or any of its ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal Revenue Code or
under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any
Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Company or any of its
ERISA Affiliates in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) to qualify under Section
401(a) of the Internal Revenue Code, or the failure of any trust forming part
of any Pension Plan to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant
to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to
ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
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"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or heretofore owned, leased, operated or used by Company or any
of its Subsidiaries.
"Fiscal Year" means a twelve month period ending on December 31 of
each year.
"Force Majeure Event" means an event of fire, earthquake, flood,
severe storm, washout, mud slide, casualty, riot, insurrection, civil
disturbance, strike (provided that, if practicable, such party shall make
reasonable efforts to staff its operations so as to minimize disruptions to
its operations), inability to obtain materials or supplies beyond the party's
reasonable control, act of civil or military authorities, act of public enemy,
embargo, war, act of God, rationing, or any other similar cause beyond a
Person's reasonable control (and each party agrees to notify promptly the
other party when the non-performance of its obligations hereunder is the
result of any of the circumstances described above, and shall use all
reasonable efforts to remedy such situation, and further agrees to provide the
other party with periodic reports describing in reasonable detail the current
condition of such circumstance for so long as such circumstance prevents the
performance of an obligation required hereunder).
"Funded Subsidiaries" means those Subsidiaries of Company that
receive proceeds of Loans hereunder to acquire a Facility.
"Funding Date" means the date of funding of a Loan to Company.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"Guaranty" means the continuing Guaranty(ies) to be executed and
delivered by the Funded Subsidiaries of Company pursuant to subsection 5.9, in
form and substance satisfactory to Lenders, pursuant to which each Funded
Subsidiary will guaranty Obligations of Company (limited to the amount of the
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Loan or Loans received by that Funded Subsidiary) under the Loan Documents, as
amended, supplemented or otherwise modified from time to time.
"Hazardous Materials" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances"
or any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity"
or "EP toxicity" or words of similar import under any applicable Environmental
Laws or publications promulgated pursuant thereto; (ii) any oil, petroleum,
petroleum fraction or petroleum derived substance (excluding, however,
gasoline and motor oil contained in motor vehicles for the purpose of
operating such vehicles); (iii) any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives (excluding, however, gasoline and motor oil contained in motor
vehicles for the purpose of operating such vehicles); (v) any radioactive
materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million; (ix) pesticides; and (x) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of the Facilities.
Notwithstanding the foregoing, the term "Hazardous Materials" shall not
include (x) standard office supplies or common cleaning supplies used or
stored at a Facility in compliance with Environmental Laws and in quantities
standard for similar properties, and (y) chemicals, materials or substances,
other than the materials described in clauses (iv), (v) (vi), (vii) and (viii)
above, which may be present in incidental quantities or amounts as a
component, or in a material which is a component, in construction and building
materials used or incorporated in the construction of any Facility, or which
otherwise may be used in the ordinary course of construction activities at any
Facility, if such presence or use is otherwise in compliance with
Environmental Laws.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iii) any obligation owed for all or any part of the deferred purchase
price of property or services, which purchase price is (a) due more than six
months from the date of occurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument, and (iv) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.
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Notwithstanding anything to the contrary in this Agreement, the term
"Indebtedness" will not include (a) amounts payable to officers and directors
of Company and its Subsidiaries pursuant to standard indemnity provisions
contained in the Declaration of Trust or Certificate or Articles of
Incorporation (as the case may be) and Bylaws of Company and its Subsidiaries
on the date of this Agreement, as such may be amended to comply with
applicable law, (b) amounts which Company is obligated to pay to BMC as
reimbursement for costs and expenses paid by BMC on behalf of Company or its
Subsidiaries pursuant to the Administrative Services Agreement with respect to
Company, its Subsidiaries or the Facilities, and (c) the salary and other
compensation payable by Company to Leonard G. Levine, its president, in an
amount and on the terms set forth in the existing employment contract with
Company.
"Indemnitee" has the meaning assigned to that term in subsection
8.3.
"Interest Payment Date" means each March 31, June 30, September 30
and December 31 of each year, commencing December 31, 1997, and any date of
conversion of the Loans pursuant to Section 9 with respect only to the portion
of the Loans converted.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person, or (ii) any direct or
indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures
in the ordinary course of business) or capital contribution by Company or any
of its Subsidiaries to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
"Lender" and "Lenders" means the Persons identified as "Lenders" and
executing this Agreement, together with their successors and permitted assigns
pursuant to subsection 8.1.
"Lien" means any mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement
to give any security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
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"Loan" means a loan (which shall be convertible into Preferred
Shares or Common Shares as provided in Section 9) made by Lenders to Company
pursuant to subsection 2.1A in an amount, when added to all other Loans made
pursuant hereto to Company, that shall not exceed Twenty Million and No/100
Dollars ($20,000,000.00).
"Loan Commitment" means the commitment of a Lender to make Loans to
Company pursuant to subsection 2.1.
"Loan Documents" means this Agreement, the Notes, the Guaranty, and
the instruments, documents and agreements executed and delivered pursuant to
the foregoing or otherwise executed and delivered in connection with the
Loans, all as amended, supplemented or otherwise modified from time to time.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) of Company and its Subsidiaries taken as a whole or (ii) the
impairment of the ability of Company to perform, or of Lenders to enforce, the
Obligations.
"Material Debt" means Indebtedness (other than Indebtedness referred
to in subsection 7.1) or Contingent Obligations arising in one or more related
or unrelated transactions in an aggregate principal amount exceeding (i)
$1,000,000, in case of Company, (ii) $500,000 in case of one or more Funded
Subsidiaries and (iii) $10,000,000 in case one or more Subsidiaries.
"Multiemployer Plan" means a "multiemployer plan", as defined in
Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"Notes" means the promissory notes of Company issued pursuant to
subsection 2.1B on the Closing Date, in each case substantially in the form of
Exhibit I annexed hereto with appropriate insertions, as they may be amended,
supplemented or otherwise modified from time to time.
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"Notice of Borrowing" means a notice substantially in the form of
Exhibit V annexed hereto delivered by Company to Agent pursuant to subsection
2.1B with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of Company and
its respective Subsidiaries from time to time owed to Lenders or any of them
under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents or by its
chief financial officer or its treasurer; provided that every Officer's
Certificate with respect to the compliance with a condition precedent to the
making of the Loan hereunder shall include (i) a statement that the officer or
officers making or giving such Officer's Certificate have read such condition
and any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the signers, they have made
or have caused to be made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not such condition
has been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by subsection
5.3 (other than any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA);
(ii) statutory Liens of carriers, warehousemen, mechanics and
materialmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor;
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(iii) any attachment or judgment Lien not constituting an Event
of Default under subsection 7.8;
(iv) any leases or subleases of space in any of the Facilities
not interfering in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries;
(v) the easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances affecting the Facilities as of the date hereof and any of
such matters which may in the future affect the Facilities without
interfering in any material respect with the development of any Facility
as the case may be, or the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) Liens with respect to Facility of a Funded Subsidiary
securing Indebtedness incurred to finance the acquisition of such
Facility on or after the Closing Date, in an amount not to exceed 75% of
the Acquisition Price;
(vii )Liens securing Indebtedness permitted pursuant to
subsection 6.1(iv); provided that any Lien incurred pursuant to this
clause (vii) shall be limited to all or a part of the property that
secured Indebtedness on the date hereof or property of a Subsidiary that
is not a Funded Subsidiary; and provided further that any Lien incurred
with respect to a Facility after the date hereof that does not secure
Indebtedness pursuant to Company's secured revolving credit agreement
shall not secure Indebtedness in an amount exceeding 75% of appraised
value of such Facility; and
(viii) Liens securing other Indebtedness in respect of any of
the Facilities and approved in writing by Lenders.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, limited liability partnerships, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Preferred Share Amendment" means the amendment to the Declaration
of Trust providing for issuance of preferred shares of beneficial interest of
Company in the form attached hereto as Exhibit IV.
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"Preferred Share Approval" means authorization by shareholders of
Company of the Preferred Share Amendment.
"Preferred Shares" means the convertible preferred shares of
beneficial interest of Company having the rights, preferences and privileges
set forth in the Preferred Share Amendment.
"Present Value Payment" means, at any time, in connection with a
prepayment of the Loans pursuant to Section 2.4B(ii), the value of all unpaid
fees and interest on the aggregate maximum outstanding amount of the Loans
through October 14, 1999, applying a discount rate of six percent per annum.
"Pro Rata Share" means, with respect to each Lender, the percentage
of the Loan held by such Lender, as such percentage may be adjusted by
assignments permitted by subsection 8.1. The initial Pro Rata Share of each
Lender is set forth after its name on the signature pages of this Agreement.
"REIT" means a real estate investment trust as that term is defined
in the Internal Revenue Code.
"Release" means any spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"Requisite Lenders" means with respect to the Loan, this Agreement
and the other Loan Documents, Lenders having or holding 51% or more of the
outstanding principal balance of the Loan.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock to the
holders of that class, and except for dividends payable by a wholly-owned
corporate Subsidiary to its direct parent, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of Company or any of
its Subsidiaries now or hereafter outstanding, (iii) 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 Company or any of its
Subsidiaries now or hereafter outstanding, (iv) any distribution or other
payment, direct or indirect, on account of any partnership interest in any of
Company's Subsidiaries which is a partnership or joint venture, except for
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distributions payable by a Subsidiary of Company which is a partnership or
joint venture to its constituent partners which are wholly-owned Subsidiaries
of Company, provided that such distribution or payment is in turn delivered to
Company, and (v) any payment or prepayment of principal of, premium, if any,
or interest on, or redemption, purchase, retirement, defeasance (including in-
substance or legal defeasance), sinking fund or similar payment with respect
to, any Indebtedness.
"Securities" means any stock, shares, shares of beneficial interest,
partnership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participation in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Share Purchase Agreement" means the Share Purchase Agreement
executed and delivered by Company to Lenders on the Closing Date, pursuant to
which Lenders shall acquire Common Shares on the terms set forth therein, as
the same may be amended, supplemented or otherwise modified from time to time.
"Shareholder Approval" means the authorization by shareholders of
Company of approval of the Amended Declaration of Trust in a form
substantially as set forth in Exhibit VI.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture, limited liability company, business
trust or other business entity of which 50% or more of the total voting power
of shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the Person or
Persons (whether directors, managers, trustees or other Persons performing
similar functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; provided that "Tax on the overall net income" of a Person shall
be construed as a reference to a tax imposed by the jurisdiction in which that
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Person's principal office is located or in which that Person is deemed to be
doing business on all or part of the net income, profits or gains of that
Person.
"Underwriting Guidelines" means the following criteria:
(A) Facilities must be office or industrial properties, but may
include portfolios of properties in which 80% or more of the square footage is
office or industrial property;
(B) The ratio of (i) the difference between projected net
operating income for the Facility for each of the three years following
acquisition to (ii) the sum of projected interest expense and scheduled debt
principal payments with respect to secured Indebtedness and ground lease
payments used for the acquisition for each such year shall be no less than
1.00:1.00;
(C) The ratio of (i) the difference between projected net
operating income for the Facility for the three years following acquisition to
(ii) the sum of projected interest expense and scheduled debt principal
payments with respect to secured Indebtedness, ground lease payment and
interest on proceeds of Loans used for the acquisition for such three year
period shall be no less than 1.00:1.00;
(D) Receipt by Agent of (i) an appraisal or other indication of
value from an independent third party indicating value at least equal to the
Acquisition Price of the Facility and (ii) a phase one or other similar
environmental report indicating no significant environmental issues, in each
case two Business Days prior to any borrowing for such Facility hereunder;
(E) Company or a Subsidiary of Company shall acquire the
Facility.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement. Except as otherwise expressly provided in this Agreement,
all accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP. Financial statements and other
information required to be delivered by Company to Lenders pursuant to clauses
(i), (ii) and (iv) of subsection 5.1 shall be prepared in accordance with GAAP
as in effect at the time of such preparation. Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall
utilize accounting principles and policies in conformity with those used to
prepare the financial statements referred to in subsection 4.3.
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1.3 Other Definitional Provisions. References to "Sections" and
"subsections" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference. The terms "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation or exclusion."
Section 2. AMOUNT AND TERMS OF LOANS
2.1 Making of Loans; Notes.
A. Agreement to Make Loans. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Company set forth herein, each Lender severally agrees, subject to the
limitations set forth below with respect to the maximum amount of Loans to
lend to Company from time to time during the period from the Closing Date to
but excluding the Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the Loan Commitments
to be used for the purposes identified in subsection 2.5. The original amount
of each Lender's Loan Commitment is set forth opposite its name on the
signature pages hereto and the aggregate original amount of the Loan
Commitments is $20,000,000; provided that the Loan Commitments of Lenders
shall be adjusted to give effect to any assignments of the Loan Commitments
pursuant to subsection 8.1; provided further that each Lender's Loan
Commitment shall be (i) reduced by the amount of that Lender's Pro Rata Share
of a Loan made pursuant to the provisions hereof and (ii) reduced to each
Lender's Pro Rata Share of $10,000,000 (or such lesser amount of Loan
Commitments that shall be outstanding on March 31, 1998) on March 31, 1998.
Each Lender's Loan Commitment shall expire on the Commitment Termination Date.
Amounts borrowed under this subsection 2.1A may be prepaid pursuant to
subsection 2.4, but may not be reborrowed.
B. Borrowing Mechanics. Loans made on any Funding Date shall be in
an aggregate minimum amount of $1,000,000 and multiples of $250,000 in excess
of that amount. Whenever Company desires that Lenders make Loans it shall
deliver to Agent (i) written notice at least ten days in advance of the
proposed Funding Date identifying (a) the nature and location of the Facility
and (b) the proposed amount of the Loans to be made on the proposed Funding
Date and (ii) a Notice of Borrowing no later than 10:00 A.M. (New York City
time) at least two Business Days in advance of the proposed Funding Date.
The Notice of Borrowing shall specify (a) the proposed Funding Date (which
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shall be a Business Day), (b) the amount of Loans requested, and (c) a
description of the Facility to be acquired, a statement demonstrating that the
acquisition of the Facility is in compliance with the Underwriting Guidelines.
Company shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
C. Disbursement of Funds. All Loans shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make a Loan be increased
or decreased as a result of a default by any other Lender in that other
Lender's obligation to make a Loan requested hereunder. Promptly after
receipt by Agent of a Notice of Borrowing pursuant to subsection 2.1B, Agent
shall notify each Lender of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Agent not later than 12:00 Noon (New York
City time) on the applicable Funding Date, in same day funds in dollars. Upon
satisfaction or waiver of the conditions precedent specified in Section 3,
Agent shall make the proceeds of such Loans available to Company on the
applicable Funding Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Loans received by Agent from Lenders to be
credited to the account of Company.
D. Notes. Company shall execute and deliver to each Lender on the
Closing Date a Note substantially in the form of Exhibit I annexed hereto to
evidence that Lender's Pro Rata Share of the Loans, in the principal amount of
that Lender's Pro Rata Share of the Loans and with other appropriate
insertions.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to subsection 2.2C, the Loans shall
bear interest on the unpaid principal amount thereof from the date made
through maturity (whether by acceleration or otherwise) at the rate of twelve
percent (12%) per annum. Interest on the Loans shall be compounded each
calendar quarter (or portion thereof) from the Closing Date and while any
portion of the Loans is outstanding at the rate of three percent (3.0%) per
calendar quarter.
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B. Interest Payments. Interest on the Loans shall be payable by
Company in arrears on each applicable Interest Payment Date, upon any
prepayment of the Loans and at maturity. Company and Lenders agree that, with
respect to the interest payment to be made on the first Interest Payment Date
(i.e., December 31, 1997), such payment shall include interest for the period
from and after the Closing Date.
C. Default Rate. To the extent permitted by law, any principal or
interest payments on the Loans or any fees or other amounts owed hereunder not
paid when due, in each case whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code
or other applicable bankruptcy laws) payable on demand at a rate of fourteen
percent (14%) per annum until paid. While bearing interest at such rate,
interest on the Loans shall be compounded each calendar quarter (or portion
thereof) from the date such rate is in effect at the rate of three and one-
half percent (3.5%) per calendar quarter. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2C is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Lenders.
D. Computation of Interest. Interest on the Loans shall be computed
on the basis of a 365-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on the
Loans, the Closing Date or the first day of any period specified in this
Agreement shall be included, and the date of payment shall be excluded.
2.3 Loan Fees.
Company shall pay to Lenders, as a loan fee, (i) on October 14 of each
year, commencing October 14, 1998, the Loans are outstanding two percent of
the balance of the Loans outstanding on such date and (ii) on the date of
payment or conversion in full of the Loans, one-half of one percent of the
maximum outstanding balance of the Loans over the term of this Agreement.
2.4 Principal Payments; Prepayment; General Provisions Regarding Payments
A. Maturity Date. The entire outstanding principal balance of the
Loans, and all interest accrued thereon (and all other amounts owing by
Company under this Agreement with respect to the Loans), shall be due and
payable by Company on September 30, 2002.
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B. Prepayments.
(i) Voluntary Prepayments. Company shall have no right to
prepay all or any portion of the principal balance of the Loans prior to
October 14, 1999. From and after October 14, 1999, and subject to the
rights of Lenders under Section 9, Company may, upon not less than 30
days' prior written notice, given to Agent at any time, prepay the Loans
in full on any Business Day. No partial payments of the Loans pursuant
to this subsection 2.4B(i) are permitted. Notice of prepayment having
been given as aforesaid, the entire principal amount of the Loans shall
become due and payable on the prepayment date specified therein.
(ii) Mandatory Prepayment. Company shall prepay the Loans in
full, upon a merger or sale of substantially all of the assets of Company
if Agent notifies Company that (a) Lenders have not consented to such
merger or sale and (b) Lenders require such prepayment. Notice having
been given to Company as aforesaid, the entire principal amount of the
Loans, plus, if such merger or sale occurs prior to October 14, 1999, the
Present Value Payment, shall become due and payable on the date of such
merger or sale. Prepayment of the Loans prior to October 14, 1999 in the
event of a merger or sale of assets of Company shall be in the Lenders'
sole and absolute discretion and the restrictions set forth in subsection
6.7 hereof shall be unaffected by the ability of Lenders to require
prepayment.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made only in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Agent on behalf of Lenders by wire transfer not later than
1:00 P.M. (New York time) on the date due; funds received by Agent after
that time on such due date shall be deemed to have been paid by Company
on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day. Agent's
wire transfer instructions are as follows:
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Citibank N.Y.
ABA Routing #: 021000089
For the Account of Morgan Stanley & Co.
Account # 38890774
For Further Credit to Edwin Morgens and
Bruce Waterfall, as Agents
Sub-Account #38-30008
Reference: Banyan Strategic Realty Trust
(ii) Application of Payments to Principal and Interest. Except
as otherwise provided herein, all payments in respect of the principal
amount of the Loans shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments shall be
applied to the payment of interest before application to principal.
Notwithstanding the foregoing, if any fees due Lenders hereunder are
unpaid when any payments are received by Agent in respect of Loans, such
payments shall be applied first to payment of such fees, and then to
principal and interest as aforesaid.
(iii) Interest Rate Limitation. It is the intent of Company and
Lenders in the execution of this Agreement and the other Loan Documents
that none of the terms and provisions of this Agreement or any of the
other Loan Documents shall ever be construed to create a contract for the
use, forbearance or detention of money requiring payment of interest at a
rate in excess of the maximum interest rate permitted to be charged by
law. If Agent or Lenders shall collect any monies which are deemed to
constitute interest which would otherwise increase the effective interest
rate on the Loans to a rate in excess of the maximum interest rate
permitted to be charged by law, all such sums deemed to constitute
interest in excess of such maximum rate shall, at the option of Agent on
behalf of Lenders, be credited to the payment of sums due hereunder or
under the other Loan Documents or shall be returned to Company.
(iv) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned and distributed by Agent to each
Lender in accordance with its Pro Rata Share. Lenders hereby acknowledge
and agree that Company's payment to Agent, on behalf of Lenders, of
principal and interest on the Loans, and other amounts payable by Company
under this Agreement, shall satisfy Company's obligation under this
Agreement to make such payments to Lenders, and Company shall have no
liability to Lenders for Agent's failure to apportion and distribute to
any Lender its Pro Rata Share of any such payment.
(v) Effect of Repayment. Loans that are prepaid or repaid
hereunder, whether prior to or after the Commitment Termination Date, may
not be reborrowed by Company.
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2.5 Use of Loan Proceeds. The proceeds of the Loans, shall be used by
Company solely to make acquisitions of additional Facilities, provided that no
Loan may be applied by Company to pay more than 100% of the Acquisition Price
of a Facility. No portion of the proceeds of the Loan shall be used by
Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.6 No Deductions. All sums payable by Company under this Agreement and
the other Loan Documents shall be paid free and clear of and (except to the
extent required by law) without any deduction or withholding on account of any
Tax (other than a Tax on the overall net income of any Lender) imposed,
levied, collected, withheld or assessed by or within the United States of
America. If Company or any other Person is required by law to make any
deduction or withholding on account of any such Tax from any sum paid or
payable by Company to Agent or any Lender under any of the Loan Documents:
(a) Company and Lenders shall notify each other and Agent of any
such requirement or any change in any such requirement as soon as either
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability is
imposed on Agent or such Lender) on behalf of and in the name of Agent or
such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to the
extent necessary to ensure that, after the making of that deduction,
withholding or payment, Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have received
had no such deduction, withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days
after the due date of payment of any Tax which it is required by clause
(b) above to pay, Company shall deliver to Agent evidence satisfactory to
the other affected parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date hereof in any such requirement for a deduction, withholding or payment as
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is mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement in respect of payments to such Lender and provided further, if any
additional amount is paid to the Lender pursuant to clause (c), any such
amount that is subsequently paid by a taxing authority as a return of such
deduction, withholding or payment shall upon receipt be paid by such Lender to
Company. In connection with the foregoing provisions of this subsection 2.6,
(i) each Lender, by executing this Agreement, confirms that it is a "United
States person" within the meaning of Section 7701(a)(30) of the Internal
Revenue Code, and that such Lender is not subject to any deduction or
withholding with respect to any payments to such Lender of principal, interest
or other amounts payable under any of the Loan Documents, and (ii) each Lender
agrees to notify Company if any such Lender is or becomes subject to any
deduction, withholding or payment mentioned in this subsection 2.6.
Section 3. CONDITIONS TO LOAN
3.1 Delivery of Documents on Closing Date. The obligations of Lenders to
make Loans on the Closing Date or any later Funding Date are subject to the
prior or concurrent satisfaction of all of the following conditions:
A. Company Documents. On or before the Closing Date, Company shall
deliver or cause to be delivered to Agent the following, each, unless
otherwise noted, dated the Closing Date:
(i) Certified copies of the Declaration of Trust, together with
a good standing certificate from the Secretary of State of the State of
Massachusetts and each other state in which it is qualified as a foreign
trust to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing
authority of each of such states, each dated a recent date prior to the
Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by
its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Trustees approving and
authorizing the execution, delivery and performance of this Agreement,
the other Loan Documents to be executed by Company and the Share Purchase
Agreement, certified as of the Closing Date by its corporate secretary or
an assistant secretary as being in full force and effect without
modification or amendment;
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(iv) Signature and incumbency certificates of its officers
executing this Agreement, the other Loan Documents to be executed by
Company and the Share Purchase Agreement;
(v) Executed originals of this Agreement, the Notes (drawn to
the order of each Lender), the other Loan Documents to be executed by
Company and the Share Purchase Agreement;
(vi)Such other documents as Agent reasonably may request.
B. Subsidiary Documents. On or before the Closing Date, Company
shall cause to be delivered to Agent the following documents on behalf of each
of its Subsidiaries:
(i) Certified copies (by the secretary of Company) of the
Certificates or Articles of Incorporation of each corporate Subsidiary of
Company, together with good standing certificates from the respective
states of incorporation and the respective states in which the principal
places of business of each is located and from all states in which
activities of such Subsidiary require them to be qualified and/or
licensed to do business, each dated a recent date prior to the Closing
Date;
(ii) Copies of the Bylaws of each corporate Subsidiary of
Company, certified as of the Closing Date by their respective corporate
secretaries or an assistant secretary;
(iii) Certified copies (by the secretary of Company) of the
complete partnership agreement (as amended) of each Subsidiary of Company
which is a partnership or joint venture, together with, with respect to
any limited partnership, a certified certificate of limited partnership
and, with respect to any general partnership or joint venture, a copy of
the recorded statement of partnership (if any), together with any
fictitious business name statements and authorizations from states in
which the activities of such Subsidiaries require them to be qualified
and/or licensed to do business; and
(iv) Such other documents as Agent reasonably may request.
C. Legal Opinions. Agent shall have received (i) originally executed
copies of one or more favorable written opinions of Shefsky & Froelich Ltd.
(counsel for Company and its Subsidiaries), Peabody & Brown (Massachusetts
counsel for Company and its subsidiaries), Stroock & Stroock & Lavan (New York
counsel for Company and its Subsidiaries), and Robert G. Higgins, Esq.
(General Counsel of Company), as Agent may request, in form and substance
reasonably satisfactory to Lenders and their counsel, dated as of the Closing
Date and setting forth substantially the matters in the forms of opinions set
forth in Exhibit III annexed hereto and as to such other matters as Agent may
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reasonably request, and (ii) evidence satisfactory to Lenders that Company and
its Subsidiaries have requested Shefsky & Froelich Ltd., Massachusetts counsel
and New York counsel to deliver such opinions to Agent. Each of the parties
hereto agrees that in connection with rendering such opinions, counsel may
rely upon the representations of such party set forth herein.
D. Other Actions.
(i) Company shall have paid or cause to have been paid at or
prior to the Closing all of the costs and expenses described in subsection 8.2
then incurred or accrued with respect to the transaction described in this
Agreement.
(ii) Company and its Subsidiaries shall have obtained all
consents to the transactions contemplated under this Agreement and the other
Loan Documents required under any Contractual Obligation, in form and
substance satisfactory to Lenders.
(iii) Company shall have paid to (1) Lenders, as an initial
commitment fee, $200,000; and (2) Leveraged Equity Management, Inc., as an
advisory fee $800,000.
(iv) As of the Closing Date, the transactions contemplated by
the Share Purchase Agreement shall have been consummated;
(v) As of the Closing Date, Agent shall be satisfied, in its
sole discretion, with all inspections, investigations, studies, tests,
appraisals and reviews which Agent has elected to make with respect to
Company, its Subsidiaries and the Facilities.
3.2 Satisfaction of Conditions and Delivery of Documents on any Funding
Date.
A. Officer's Certificate. On the Closing Date and on each Funding
Date the following conditions shall be satisfied and Company shall have
delivered to Agent an Officer's Certificate, in form and substance
satisfactory to Agent, to that effect:
(i) The representations and warranties contained herein and in
the other Loan Documents shall be true, correct and complete in all material
respects on and as of the Funding Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material respects
on and as of such earlier date.
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(ii) No event shall have occurred and be continuing as of the
Funding Date, or would result from the consummation of the making of the Loans
thereon, that would constitute an Event of Default or a Potential Event of
Default.
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall be
performed or satisfied by it on or before the Funding Date.
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loan to be made by it on the Funding Date.
(v) The making of the Loans, on any Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System.
B. No Material Adverse Effect. Since December 31, 1996 (except as
disclosed in Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997), no Material Adverse Effect shall have
occurred prior to the Funding Date.
Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loan hereunder, Company represents and warrants to each Lender, on the
date of this Agreement and on the Closing Date, that the following statements
are true, correct and complete:
4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Company is a business trust duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Company has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Share Purchase
Agreement and the Loan Documents to be executed by Company and to carry out
the transactions contemplated thereby.
B. Qualification and Good Standing. Company is qualified to do
business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations,
except in jurisdictions where the failure to be so qualified or in good
standing has not had and will not have a Material Adverse Effect.
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<PAGE>
C. Conduct of Business. Company and its Subsidiaries are engaged
only in and will engage only in the businesses permitted to be engaged in
pursuant to subsection 6.13.
D. Subsidiaries. All of the Subsidiaries of Company as of the
Closing Date are identified in Schedule 4.1 annexed hereto. The capital stock
of each of the corporate Subsidiaries of Company identified in Schedule 4.1
annexed hereto is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each
of the corporate Subsidiaries of Company identified in Schedule 4.1 annexed
hereto is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation set forth
therein, has all requisite corporate power and authority to own and operate
its property and to carry on its business as now conducted and as proposed to
be conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate power and authority
has not had a Material Adverse Effect. Each of the Subsidiaries of Company
identified in Schedule 4.1 annexed hereto which is a trust, limited liability
company, partnership or joint venture is duly formed, validly existing and in
good standing under the laws of its respective jurisdiction of organization
set forth therein, has all requisite power and authority to own and operate
its property and to carry on its business as now conducted and as proposed to
be conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such partnership power and
authority has not had a Material Adverse Effect. Schedule 4.1 annexed hereto
correctly sets forth, as of the Closing Date, the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein.
E. Capitalization. The authorized capital of the Company consists
solely of an unlimited number of Common Shares, of which 11,017,760 are issued
and outstanding, 2,000,000 are reserved for issuance under Company's dividend
reinvestment program and 1,000,000 are reserved for issuance upon the exercise
of outstanding options for Common Shares. All outstanding Common Shares were
duly authorized, are fully paid and nonassessable, and were validly issued in
accordance with federal and state securities laws.
Except as contemplated herein and as described in Company's Annual
Report on Form 10-K for the Fiscal Year ended December 31, 1996 with respect
to compensation payable to Leonard G. Levine, president of Company and
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Company's existing stock option plan, no options, calls, warrants, conversion
privileges, preemptive rights, rights of first refusal or other commitments or
rights, of any character whatsoever, are presently outstanding or in existence
with respect to the purchase or other acquisition of any of the authorized but
unissued Common Shares or any other equity Security of Company.
4.2 Authorization of Borrowing, etc.
A. Authorization. The execution, delivery and performance of the
Share Purchase Agreement and the Loan Documents to be executed by Company have
been duly authorized by all necessary action on the part of each of the
respective entities. The Board of Trustees has taken all necessary action to
exempt the ownership by each Lender of Common Shares and Preferred Shares
issued and issuable pursuant to the Share Purchase Agreement and this
Agreement from the Limit, as that term is defined in Section 7.12.3 of the
Declaration of Trust.
B. No Conflict. The execution, delivery and performance by Company
of the Share Purchase Agreement, and the execution, delivery and performance
of the Loan Documents by Company and its respective Subsidiaries, as
applicable, and the consummation of the transactions contemplated thereby, do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to Company or any of its Subsidiaries (as the case
may be), the Declaration of Trust or Bylaws of Company or any of its corporate
Subsidiaries, the partnership agreements of any of its Subsidiaries which are
partnerships or joint ventures, or any order, judgment or decree of any court
or other agency of government binding on Company or any of its Subsidiaries
(as applicable), (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual
Obligation of Company or any of its Subsidiaries (as the case may be), (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of Company or any of its Subsidiaries (other than Liens
in favor of Lenders), or (iv) require any approval of shareholders or any
approval or consent of any Person under any Contractual Obligation of Company
or any of its Subsidiaries, except for such approvals or consents which will
be obtained on or before the Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. To the best knowledge of Company, the
execution, delivery and performance by Company of the Share Purchase
Agreement, and the execution, delivery and performance of the Loan Documents
by Company and its respective Subsidiaries, as applicable, and the
consummation of the transactions contemplated thereby, do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body, except for any of the foregoing which will be made or
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obtained by Company on or before the Closing Date, other than approval by
NASDAQ of the listing of the Common Shares issued pursuant to the Share
Purchase Agreement, and of Preferred Shares or Common Shares issuable upon
conversion of the Loans and Preferred Shares.
D. Binding Obligation. The Share Purchase Agreement has been duly
executed and delivered by Company and is the legally valid and binding
obligation of Company, enforceable against Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability. Each of the Loan Documents has been duly executed and
delivered by Company and its respective Subsidiaries, as applicable, and is
the legally valid and binding obligation of Company and/or its respective
Subsidiaries (as the case may be) enforceable against Company and/or its
respective Subsidiaries (as the case may be) in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
4.3 Financial Condition. Company has heretofore delivered to Lenders the
following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries at December 31, 1996 and the
related consolidated statements of income and expenses, shareholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal Year ended
December 31, 1996, and (ii) the unaudited consolidated balance sheets of
Company and its Subsidiaries at June 30, 1997 and the related unaudited
consolidated statements of income, shareholders' equity and cash flows of
Company and its Subsidiaries for the six months ended June 30, 1997. All such
statements were prepared in conformity with GAAP and fairly present the
financial condition (on a consolidated basis) of Company and its Subsidiaries
at the respective dates thereof and the results of operations and cash flows
(on a consolidated basis) of Company and its Subsidiaries at the respective
dates thereof, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
As of the Closing Date, Company does not have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual
forward or long-term commitment that is not reflected in the financial
statements identified in clauses (i) and (ii) above or the notes thereto which
would have a Material Adverse Effect on Company or any of its Subsidiaries.
4.4 No Material Adverse Effect; No Restricted Junior Payments. Since
December 31, 1996 (except as disclosed in Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1997 and June 30, 1997), (i) no event or
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change has occurred that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, and (ii) neither Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or
set apart any sum or property for, any Restricted Junior Payment or agreed to
do so except as permitted by subsection 6.5.
4.5 Title to Properties; Liens. Company and its Subsidiaries have (i)
good, marketable and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case
of all other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 4.3, in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business and disclosed in writing to Lenders or as
otherwise permitted under subsection 6.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens. Each
Facility as of the Closing Date is described on Schedule 4.5.
4.6 Litigation; Adverse Facts. Except as set forth in Schedule 4.6
annexed hereto, there are no actions, suits, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of Company
or any of its Subsidiaries) at law or in equity or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to the knowledge
of Company, threatened against or affecting Company or any of its Subsidiaries
or any property of Company or any of its Subsidiaries that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect. Neither Company nor any of its Subsidiaries is (i) in violation of
any applicable laws that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect or (ii) subject to or in
default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
4.7 Payment of Taxes. Except to the extent permitted by subsection 5.3,
all tax returns and reports of Company and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes, assessments, fees
and other governmental charges upon Company and its Subsidiaries and upon
their respective properties, assets, income, businesses and franchises which
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are due and payable have been paid when due and payable except for those that
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted for which such reserve or other
appropriate provision, if any, required in conformity with GAAP has been made.
Company knows of no proposed tax assessment against Company or any of its
Subsidiaries which is not being actively contested by Company or such
Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
4.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that as of the Closing Date, with the giving of notice or the lapse of
time or both, would constitute such a default, except where the consequences,
direct or indirect, of such default or defaults, if any, would not have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
4.9 Governmental Regulation. Neither Company nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act or the Investment Company
Act of 1940 or under any other federal or state statute or regulation which
may limit its ability to incur Indebtedness or which may otherwise render all
or any portion of the Obligations unenforceable.
4.10 Securities Activities. Neither Company nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any Margin
Stock, and not more than 25% of the value of the assets of Company (or of
Company and its Subsidiaries on a consolidated basis) consists of Margin
Stock.
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4.11 Employee Benefit Plans.
A. Company and each of its ERISA Affiliates are in compliance with
all applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit
Plan, and have performed all their obligations under each Employee Benefit
Plan.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees of Company or any of its ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, there
are no unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA).
4.12 Certain Fees. Other than the fee to Josephthal Lyon & Ross, Inc. for
financial advisory services and the fee to Leveraged Equity Management, Inc.,
described in subsection 3.1D(iii) above (the payment of which is Company's
obligation on the Closing Date from the proceeds of the Loan), no broker's or
finder's fee or commission will be payable with respect to this Agreement or
any of the transactions contemplated hereby, and Company hereby indemnifies
Lenders against, and agrees that it will hold Lenders harmless from, any
claim, demand or liability for any such broker's or finder's fees alleged to
have been incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability. Lenders hereby represent
and warrant to Company that, other than with respect to Leveraged Equity
Management, Inc., Lenders have not entered into any agreement with or incurred
any obligation to any entity which might result in the obligation to pay a
broker's or finder's fee or commission, and Lenders agree to indemnify Company
against, and hold Company harmless from, any claim, demand or liability
(including reasonable fees, expenses and disbursements of counsel) arising
from a breach of such representation and warranty.
4.13 Environmental Protection. Except as set forth in Schedule 4.13
annexed hereto Company and each of its Subsidiaries are in material compliance
with all applicable Environmental Laws.
4.14 Employee Matters. There is no strike or work stoppage in existence
or threatened involving Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
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4.15 Insurance. Schedule 4.15 annexed hereto sets forth a complete and
accurate list of all policies of insurance in effect as of the Closing Date
for Company and its Subsidiaries. No notice of cancellation has been received
with respect to such policies and Company and its Subsidiaries are in
compliance with all conditions contained in such policies.
4.16 Disclosure. The projections and pro forma financial information
contained in any materials furnished to Lenders by or on behalf of Company or
any of its Subsidiaries are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, provided that no
assurance can be given that the projected results will be realized or with
respect to the activity of Company and its Subsidiaries to achieve the
projected results, it being recognized by Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ, in any material
manner, from the projected results. There are no facts known (or which should
upon the reasonable exercise of diligence be known) to Company (other than
matters of a general economic nature) that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
4.17 REIT Status. Company has, at all times, since 1986, qualified as a
REIT under the provisions of the Internal Revenue Code. Each Subsidiary that
is a corporation is a qualified REIT subsidiary, as that term is defined in
the Internal Revenue Code.
4.18 Registration Rights. Except as contemplated by the Share Purchase
Agreement, Company's existing stock option plan and an employment agreement
with Leonard G. Levine, Company is not under any obligation to "register" any
of its presently outstanding securities or any of its securities which may
hereafter be issued. For the purposes of the foregoing, the term "register"
refers to a registration effected by filing a registration statement in
compliance with the Securities Act of 1933, or the securities laws of any
state.
4.19 Shareholder Agreements. Except as required by this Agreement, there
are no agreements or arrangements between Company and any of Company's
shareholders, or to Company's knowledge, between or among any of Company's
shareholders, which grant special rights with respect to any shares of
Company's equity security or subject to provisions of the Declaration of Trust
which affect any shareholder's ability or right freely to alienate or vote
such shares.
4.20 Status of Advisor under Declaration of Trust. No Advisor, as that
term is defined in Section 1.5 of the Declaration of Trust, is currently
acting in the capacity contemplated by the Declaration of Trust, and there are
currently no Class B Trustees (as that term is defined in Section 1.5 of the
Declaration of Trust).
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Section 5. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, until termination of this
Agreement and payment in full of the Loans, unless Agent, on behalf of
Lenders, shall otherwise give prior written consent, Company shall perform,
and shall cause each of its Subsidiaries to perform, all covenants in this
Section 5.
5.1 Financial Statements and Other Reports. Company will maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements (including
those relating to its Subsidiaries) in conformity with GAAP. Company will
deliver to Agent:
(i) Quarterly Financials: within five days after made available
to the public, the Quarterly Report on Form 10-Q of Company and its
Subsidiaries for each calendar quarter (other than for the final quarter
of any Fiscal Year, as Company will file the Annual Report on Form 10-K
as provided in subsection 5.1(ii) below for the year in which such final
quarter occurs);
(ii) Year-End Financials: (a) within five days after made
available to the public, the Annual Report on Form 10-K of Company and
its Subsidiaries for such Fiscal Year, and (b) within five days after
delivered to shareholders, the Annual Report to Shareholders for such
Fiscal Year, and (c) with respect to the consolidated financial
statements contained in the Form 10-K, a report thereon from independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Lenders (and Lenders hereby agree that Ernst
& Young LLP, Company's present certified public accountants, is
satisfactory), which report shall express no doubts about the ability of
Company and its Subsidiaries to continue as a going concern, and shall
state that such consolidated financial statements fairly present the
consolidated financial position of Company and its Subsidiaries at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, and which report
shall be provided concurrently with the report provided pursuant to
clause (a) hereof;
(iii) Officer's and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i) and (ii) above, an Officer's Certificate of Company
stating that the signers have reviewed the terms of this Agreement and
have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
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Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officer's Certificate,
of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action Company has taken, is taking and proposes to take with respect
thereto; and together with each delivery of the financial statements of
Company and its Subsidiaries pursuant to subdivision (ii) above, a
Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 6;
(iv) Financial Plans and Monthly Financial Statements Prepared
for Management: as soon as practicable following preparation and
distribution thereof to management, (1) annually, a consolidated plan and
financial forecast, prepared on a cash basis, for such Fiscal Year,
including without limitation (a) forecasted consolidated balance sheets
and forecasted consolidated operating results of Company and its
Subsidiaries for such Fiscal Year and the two succeeding Fiscal Years,
(b) forecasted consolidated operating results of Company and its
Subsidiaries for each quarter of each such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based and (c)
such other information and projections as Lenders reasonably may request
and (2) monthly, consolidated financial statements for Company and
Subsidiaries, in each case in the form used for Company's internal
purposes (Lenders acknowledge that Company has no obligation to provide
monthly consolidated financial statements unless and until such
statements are completed for Company's internal purposes);
(v) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of any reports
which may be submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Company and its Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted
by such accountants to management in connection with their annual audit;
(vi) SEC Filings and Press Releases: within five days after
their becoming available to the public, copies of (a) all financial
statements, reports, notices and proxy statements sent or made available
generally by Company to its security holders or by any Subsidiary of
Company to its security holders other than Company or another Subsidiary
of Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses,
if any, filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
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governmental or private regulatory authority, and (c) all press releases
and other statements made available generally by Company or any of its
Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(vii) Events of Default, etc.: promptly upon Company obtaining
knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, (b) that any Person has given any
notice to Company or any of its Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type
referred to in subsection 7.2, (c) of any condition or event that would
be required to be disclosed in a Current Report on Form 8-K filed by
Company with the Securities and Exchange Commission (Items 1, 2, 4 and 6
of such Form as in effect on the date hereof) if Company were required to
file such reports under the Exchange Act, or (d) of the occurrence of any
event or change that has caused or evidences, either in any case or in
the aggregate, a Material Adverse Effect, Company shall notify Agent of
such matter, specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
Company has taken, is taking and proposes to take with respect thereto;
(viii) Litigation or Other Proceedings: promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or non-
frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Company to Agent or
(Y) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility
of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Agent and its counsel to evaluate
such matters;
(ix) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company or any of its
ERISA Affiliates has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect
thereto;
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(x) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Company or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; (b) all notices
received by Company or any of its ERISA Affiliates from a Multiemployer
Plan sponsor concerning an ERISA Event; and (c) such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Agent shall reasonably request;
(xi) Insurance: as soon as practicable, and in any event within
30 days after the date of renewal of any material insurance policies, a
report in form and substance satisfactory to Agent outlining all material
insurance coverage maintained as of the date of such report by Company
and its Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately succeeding
policy period;
(xii) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, or which relate to an
Environmental Claim which could result in a Material Adverse Effect;
(xiii) Board of Trustees: with reasonable promptness, written
notice of any change in the Board of Trustees of Company or any of its
Subsidiaries; and
(xiv) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries,
the Facilities as from time to time may be reasonably requested by Agent.
5.2 Corporate and Partnership Existence, etc.; Status as Real Estate
Investment Trust. Except as permitted under subsection 6.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its trust, corporate and partnership existence (as the case
may be) and all rights and franchises material to its business. Company will
at all times maintain its status as a REIT under the Internal Revenue Code.
5.3 Payment of Taxes and Claims; Tax Consolidation. Company will, and
will cause each of its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties
or assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly instituted and
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diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made
therefor. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
5.4 Maintenance and Development of Properties; Insurance.
A. With respect to improved properties owned by Company or its
Subsidiaries, Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and
condition, ordinary wear and tear excepted, all such properties, and from time
to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. Company will maintain or cause to be maintained the insurance
described on Schedule 4.15 annexed hereto, and such additional insurance as
appropriate under the circumstances in Company's reasonable judgment, with
respect to its properties and business and the properties and businesses of
its Subsidiaries. Certified copies of all such policies, and endorsements and
renewals thereof, shall be delivered to Lenders.
C. Company will comply, and will cause its Subsidiaries to comply,
with all of its (or their) respective obligations under all leases, licenses,
agreements and contracts relating to the Facilities, to which the Company
and/or its Subsidiaries (as the case may be) are a party, including, without
limitation, all ground leases and master leases under which a Subsidiary is
the ground lessee or master lessee. Without limiting the generality of
foregoing, Company shall cause to be paid when due all rents and other
payments due under any ground lease or master lease under which a Subsidiary
is the lessee, and none of the Subsidiaries shall cancel, terminate, abandon
or surrender, or modify or amend in any material respect, any such ground
lease or master lease, or take any action which would have the effect of
impairing or limiting such Subsidiary's rights as the ground lessee or the
master lessee thereunder; provided, however, that this subsection 5.4C shall
not prohibit the acquisition by Company or a Subsidiary (subject to compliance
with other provisions of this Agreement) of a fee interest in any Facility
with respect to which Company or a Subsidiary is a ground lessee.
5.5 Inspection; Lender Meetings. Company shall, and shall cause each of
its Subsidiaries to, permit any authorized representatives designated by
Lenders to visit and make reasonable inspections of any of the Facilities of
Company or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that Company may, if it
so chooses, be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal business hours
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and as often as may be reasonably requested, and in a manner that will not
unreasonably disrupt operations at the Facilities. Without in any way
limiting the foregoing, Company will, upon the request of Agent, participate
in periodic meetings with Lenders to be held at Company's corporate offices
(or such other location as may be agreed to by Company and Agent) at such
times as may be agreed to by Company and Agent.
5.6 Compliance with Laws, etc. Company shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
could reasonably be expected to cause a Material Adverse Effect.
5.7 Environmental Disclosure.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise due diligence in order to comply and cause, to the extent possible
(i) all tenants under any leases or occupancy agreements affecting any portion
of the Facilities and (ii) all other Persons on or occupying such property, to
comply with all applicable Environmental Laws.
B. Company shall promptly advise Agent in writing and in reasonable
detail, with respect to any Facility, of (i) any Release of any Hazardous
Materials required to be reported to any federal, state or local governmental
or regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any Release described in the preceding clause (i), (iii) any
remedial action taken by Company or any other Person in response to (x) any
Hazardous Materials on, under or about any Facility, the existence of which
has a reasonable possibility of resulting in an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim that could have a
reasonable probability of causing or resulting in a Material Adverse Effect,
(iv) Company's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such Facility or
any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any applicable Environmental
Laws, and (v) any request for information from any governmental agency that
suggests such agency is investigating whether Company or any of its
Subsidiaries may be potentially responsible for a Release of Hazardous
Materials.
C. Company shall, at its own expense, provide copies of such
documents or information in the possession or control of Company as Agent may
reasonably request in relation to any matters disclosed pursuant to this
subsection 5.7.
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5.8 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and necessary remedial action in connection
with the presence, storage, use, disposal, transportation or Release of any
Hazardous Materials on, under or about any of its or their properties in order
to comply with all applicable Environmental Laws and Governmental
Authorizations. In the event Company or any of its Subsidiaries undertakes
any remedial action with respect to any Hazardous Materials, Company or such
Subsidiary shall conduct and complete such remedial action in compliance with
all applicable Environmental Laws, and in accordance with the policies, orders
and directives of all federal, state and local governmental authorities except
when, and only to the extent that, Company's or such Subsidiary's liability
for such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith by Company or such
Subsidiary.
5.9 Further Assurances. Company shall, and shall cause its Funded
Subsidiaries to, from time to time, execute such documents, and reports as
Agent at any time may reasonably request to evidence or otherwise implement
the guaranties for repayment of the Obligations provided for in the Loan
Documents. On or prior to a Funding Date of a Loan, the proceeds of which are
made available by Company to a Funded Subsidiary to purchase a Facility,
Company shall cause such Funded Subsidiary to guaranty the Obligations (such
guaranty to be limited to the amount of the Loan Proceeds received by such
Funded Subsidiary, plus interest accrued as specified herein and expenses of
Lenders pursuant to subsection 8.2). The documentation for such guaranty
shall be substantially in the form attached hereto as Exhibit VI.
5.10 Shareholder Approvals. As soon as practicable prior to Company's
next annual meeting, Company shall convene a special meeting of its
shareholders for the purpose of obtaining Shareholder Approval, Preferred
Share Approval and Conversion Approval. If Shareholder Approval, Preferred
Share Approval, Conversion Approval, or any combination thereof is not
obtained at any such meeting or subsequent meeting, Company shall nonetheless
convene subsequent meetings of its shareholders (which may be Company's annual
meeting in 1998 and 1999) for the purpose of obtaining such approval.
5.11 Declaration of Trust and Capital Structure of Company. Following
Shareholder Approval, the Declaration of Trust shall be substantially in a
form that is mutually agreeable and the By-Laws of Company shall be in a form
that shall be mutually agreeable; following Preferred Share Approval, the
Declaration of Trust will include the Preferred Share Amendment annexed hereto
as Exhibit IV. Following Shareholder Approval, an unlimited number of common
shares of beneficial interest, without par value, and, subject to Preferred
Share Approval, 200,000 preferred shares of beneficial interest, per share,
shall be authorized. No preferred shares of beneficial interest shall be
issued and outstanding immediately after the Preferred Share Approval, other
than Preferred Shares, if any, issued upon conversion of the Loans.
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Section 6. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, until termination of this
Agreement and payment in full of the Loans, unless Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 Indebtedness. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Indebtedness incurred pursuant to the Loan Documents;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 6.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any wholly-
owned Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of Company;
and
(iv) Company may remain liable or incur any Indebtedness not
permitted by clauses (i) through (iii) after the date hereof, provided
that after the date of incurrence thereof, taking such Indebtedness into
account, (a) Company is in compliance with subsection 6.2 and subsection
6.6 and (b) the aggregate amount of all such Indebtedness does not exceed
the sum of (x) $127,887,515 and (y) three times the sum of (A) the Loans
outstanding on such date and (B) the net proceeds to Company of the sale
of any capital shares of Company (other than the Common Shares sold
pursuant to the Share Purchase Agreement) received on or prior to such
date; provided that the interest rate or rates of such Indebtedness shall
be reasonably related to market rates in the mortgage loan interest rate
market.
6.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
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similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances; and
(ii) Liens described in Schedule 6.2 annexed hereto.
B. No Further Negative Pledges. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to a sale of such property,
neither Company nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.
C. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (i) pay dividends or make any
other distributions on any of such Subsidiary's equity Securities owned by
Company or any other Subsidiary of Company, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other Subsidiary of
Company, or (iv) transfer any of its property or assets to Company or any
other Subsidiary of Company.
6.3 Investments. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
Company and in BMC;
(iii) Company and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 6.1(iii);
(iv) Company and its Subsidiaries may acquire Facilities
pursuant to the Underwriting Guidelines; and
(v) Company and its Subsidiaries may make capital expenditures
permitted by subsection 6.8.
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6.4 Contingent Obligations. Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create or become or remain
liable with respect to any Contingent Obligation, except:
(i) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with sales of property otherwise permitted under this
Agreement;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness of
Company or any of its Subsidiaries permitted by subsection 6.1;
(iii) Company may become and remain liable with respect to
Contingent Obligations in respect of indemnification obligations under
the Declaration of Trust, its By-laws or indemnification agreements made
pursuant to the Declaration of Trust or By-laws with any of Company's
trustees, officers, employees or agents, or any individual who has served
in such capacity in another entity at Company's request; and
(iv) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 6.4
annexed hereto.
6.5 Restricted Junior Payments. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, declare, order, pay, make
or set apart any sum for any Restricted Junior Payment other than cash
dividends and distributions paid by Company and any distribution by a
Subsidiary of Company that is a partnership or joint venture to a partner
which is not a Subsidiary of Company, if a partnership distribution is
required under the terms of the respective partnership or joint venture
agreement to be made concurrently with a distribution to Company (including
repayment of loans made by a partner, return of capital contributions,
distributions upon termination, or other fees payable to a partner).
6.6 Financial Covenants.
A. Maximum Leverage Ratio. Company shall not permit the ratio of (i)
Consolidated Total Debt to (ii) Consolidated Net Worth as of the last day of
any calendar quarter to exceed the ratio of 3.00:1.00.
B. Minimum Consolidated Net Worth. Company shall not permit
Consolidated Net Worth as of the last day of any calendar quarter to be less
than $52,500,000.
C. Debt Coverage Ratio. Company shall not permit the ratio of (i)
the sum of (a) Income before Minority Interest, Income (Loss) from Operations
of Real Estate Ventures and Gain (Loss) on Disposition of Investment in Real
Estate, (b) Interest Expense, (c) Depreciation and Amortization and (d)
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Amortization of Deferred Financing Fees to (ii) the sum of Interest Expense
and scheduled debt principal payments for any calendar quarter (for purposes
of this calculation, debt principal payments that are due only on an annual
basis may be amortized over the three quarters prior to and the quarter in
which the principal payment is due), as such items are shown on Company's
Consolidated Financial Statements, to be less than 1.5:1.00.
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions.
Company shall not, and shall not permit any of its Subsidiaries to, alter the
corporate, capital or legal structure of Company or any of its Subsidiaries,
or enter into any transaction of merger or consolidation, or liquidate, wind-
up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, sub-lease, transfer or otherwise dispose of, in one transaction
or a series of transactions, all or substantially all the business, property
or fixed assets of, or stock or other evidence of beneficial ownership of, any
Person or any division or line of business of any Person, except in the
ordinary course of such Person's business or except:
(i) any Subsidiary of Company may be merged with or into Company
or any wholly-owned Subsidiary of Company, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary of Company; provided that, in the case of any such merger or
other transaction or series of transactions involving Company, Company
must be the continuing or surviving corporation;
(ii) with respect to Facilities which are otherwise sold or
transferred as permitted under this Agreement, the Subsidiaries of
Company which owned such Facility, and any direct parent thereof (other
than Company) may be dissolved or merged into another Subsidiary of
Company or Company, provided that all of the assets of the Subsidiary
being dissolved or merged are first distributed to Company or a
Subsidiary; and
(iii) Company and its Subsidiaries may sell any individual
Facility, or portions thereof, in bona-fide third party transactions.
In addition, Company shall not amend, modify, supplement or terminate the
Administrative Services Agreement in any way which might have a Material
Adverse Effect (including an amendment, modification or supplement which would
alter the provisions for reimbursement of BMC by Company or its Subsidiaries).
6.8 Capital Expenditures and Tenant Improvements. Company shall not, and
shall not permit its Subsidiaries to, make or incur capital expenditures and
tenant improvements which, in any Fiscal Year, exceed in the aggregate for
such Fiscal Year 115% of the amount of the anticipated total capital
expenditures and tenant improvements shown on the applicable financial plan
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for such Fiscal Year delivered pursuant to subsection 5.1(iv).
Notwithstanding the foregoing, Company and its Subsidiaries may, in addition,
incur capital expenditures in an amount not to exceed $1,500,000 in the
aggregate to acquire land or construct a parking deck in order to comply with
the provisions of the Office Lease Agreement dated as of February 14, 1990
between Colonial Penn Insurance Company and Alandco/Cascade, Inc., as amended.
6.9 Restriction on Leases and Sale-Leasebacks. Company shall not, and
shall not permit any of its Subsidiaries to, become liable in any way, whether
directly or by assignment or as a guarantor or other surety, for the
obligations of the lessee under any lease of property (whether real, personal
or mixed), or in a transaction in which Company or any of its Subsidiaries has
sold property and intends to lease such property back from the buyer thereof,
if such transaction will result in a Material Adverse Effect, provided that
this subsection 6.9 shall not prohibit Company or any Subsidiary from leasing
a Facility pursuant to a ground lease or acquiring a Facility subject to a
ground lease.
6.10 Fiscal Year. Company shall not change its Fiscal Year-end from
December 31.
6.11 Transactions with Shareholders and Affiliates. Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with BMC or any Affiliate of Company or of any such holder, on
terms that are less favorable to Company or that Subsidiary, as the case may
be, than those that might be obtained at the time from Persons who are not
such a holder or Affiliate; provided that the foregoing restriction shall not
apply to (i) any transaction between Company and any of its wholly-owned
Subsidiaries or between any of its wholly-owned Subsidiaries, (ii) reasonable
and customary fees paid to members of the Boards of Directors of Company and
its Subsidiaries, (iii) reimbursements to BMC pursuant to the Administrative
Services Agreement, (iv) the salary and other compensation payable by Company
to Leonard G. Levine, its president, in an amount and on the terms set forth
in the existing employment contract with Company, (v) allowing a shareholder
representation on the Board of Trustees or (vi) a waiver by the Board of
Trustees of share ownership restrictions in the Declaration of Trust, provided
that no such action shall adversely affect Company's status as a REIT.
6.12 Disposal of Subsidiary Stock. Except as permitted in subsection 6.2
and subsection 6.7, Company shall not directly or indirectly sell, assign,
pledge or otherwise encumber or dispose of any shares of capital stock or
other equity Securities of any of its Funded Subsidiaries, except to qualify
directors if required by applicable law, or permit any of its Funded
Subsidiaries directly or indirectly to sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity Securities
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of any of its Funded Subsidiaries (including such Funded Subsidiary), except
to Company, another Subsidiary of Company, or to qualify directors if required
by applicable law.
6.13 Conduct of Business. From and after the Closing Date, Company shall
not, and shall not permit any of its Subsidiaries to, engage in any business
other than the businesses engaged in by Company and its Subsidiaries on the
Closing Date.
Section 7. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
7.1 Failure to Make Payments When Due. Failure by Company to pay any
installment of principal of or interest on the Loan when due, whether at
stated maturity, by acceleration, by notice of voluntary prepayment, by
mandatory prepayment or otherwise; or failure by Company to pay any fee or any
other amount due under this Agreement within five days after the date due;
7.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when
due (a) any principal of or interest on any Material Debt beyond the end
of any grace period provided therefor; or (ii) breach or default by
Company or any of its Subsidiaries with respect to any other material
term of (a) any evidence of any Material Debt or (b) any loan agreement,
mortgage, indenture or other agreement relating to such Material Debt, if
the effect of such breach or default is to cause, or to permit the holder
or holders of that Material Debt (or a trustee on behalf of such holder
or holders) to cause, that Material Debt to become or be declared due and
payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or
7.3 Breach of Certain Covenants. Failure of Company to perform or comply
with any term or condition contained in subsection 2.5 or 5.2 or Section 6 of
this Agreement; or
7.4 Breach of Warranty; Unqualified Financial Statement. Any
representation, warranty, certification or other statement made by Company or
any of its Subsidiaries in any Loan Document, the Share Purchase Agreement or
in any statement or certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith
or therewith shall be false in any material respect on the Closing Date, or
the certification by Company's accountants of the year-end consolidated
financial statements to be delivered by Company pursuant to subsection 5.1(ii)
above is not unqualified; or
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7.5 Other Defaults Under Loan Documents. Company or its Subsidiaries
shall default in the performance of or compliance with any material term
contained in this Agreement, any of the other Loan Documents or the Share
Purchase Agreement, other than any such term referred to in any other
subsection of this Section 7, and such default shall not have been remedied or
waived within 30 days after receipt by Company of notice from any Lender of
such default, where such default is not remedied within 30 days after receipt
by Company of notice from any Lender (provided that if such default is not
reasonably capable of being cured in such 30 day period, then such default
shall not be an Event of Default if Company commences to cure such default
within said 30 day period and thereafter diligently and continuously proceeds
to cure such default or impairment within 90 days after receipt of notice from
any Lender, subject to delays caused by Force Majeure Events); or
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc. Either (i) a
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of Company or any of its Subsidiaries in an involuntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be commenced against
Company or any of its Subsidiaries under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Company or any of its
Subsidiaries, or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Company or any of its
Subsidiaries for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Company or any of its Subsidiaries, and
any such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc. Either (i)
Company or any of its Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under
any such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or Company or any of its Subsidiaries shall make any assignment for
the benefit of creditors; or (ii) Company or any of its Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the Board of Trustees of Company or
any of its Subsidiaries (or any committee thereof) shall adopt any resolution
or otherwise authorize any action to approve any of the actions referred to in
clause (i) above or this clause (ii); or
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7.8 Judgments and Attachments. Any money judgment, writ or warrant of
attachment or similar process involving (i) in any individual case an amount
in excess of $500,000 or (ii) in the aggregate at any time an amount in excess
of $1,000,000 (in either case not adequately covered by insurance as to which
a solvent and unaffiliated insurance company has acknowledged coverage) shall
be entered or filed against Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days (or in any event later than five days prior
to the date of any proposed sale thereunder); or
7.9 Dissolution. Any order, judgment or decree shall be entered against
Company or any of its Subsidiaries (other than Subsidiaries which Company is
permitted to liquidate, wind-up or dissolve pursuant to subsection 6.7(ii)
above) decreeing the dissolution or split up of Company or that Subsidiary and
such order shall remain undischarged or unstayed for a period in excess of 45
days; or
7.10 Employee Benefit Plans. There shall occur one or more ERISA Events
which individually or in the aggregate results in or might reasonably be
expected to result in liability of Company or any of its ERISA Affiliates in
excess of $500,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $500,000; or
7.11 Change in Control. Any Person (other than Lenders or Affiliates of
Lenders) or any two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act), directly or indirectly, of equity
Securities of Company (or other Securities convertible into such equity
Securities) representing more than 50% of the combined voting power of all
equity Securities of Company entitled to vote in the election of directors,
other than Securities having such power only by reason of the happening of a
contingency; or
THEN (i) upon the occurrence of any Event of Default described in subsection
7.6 or 7.7, each of (a) the unpaid principal amount of and accrued interest on
the Loan and (b) all other Obligations shall automatically become immediately
due and payable, without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by Company, and (ii) upon
the occurrence and during the continuation of any other Event of Default,
Agent or Lenders, by written notice to Company, may declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same
shall forthwith become, immediately due and payable. In addition, upon any
Event of Default, Lenders, at their option and without notice to or demand
upon Company or its Subsidiaries (which are expressly waived by Company and
its Subsidiaries), may proceed to protect, exercise and enforce its rights and
remedies provided in the Loan Documents, and all other rights and remedies
available at law and in equity.
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Notwithstanding anything contained in the preceding paragraph, if at
any time within 60 days after an acceleration of the Loan pursuant to such
paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of
the principal of and accrued interest on the Loans, in each case which is due
and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to subsection 8.5, then Lenders, by written notice to Company, may at
its option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this
paragraph are intended merely to bind Lenders to a decision which may be made
at the election of Lenders and are not intended to benefit Company and do not
grant Company the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
Section 8. MISCELLANEOUS
8.1 Assignments and Participation in Loans. Each Lender shall have the
right, at any time after the Closing Date, to (i) sell, assign or transfer to
any party, or (ii) sell a participation to any Person in, all or any part of
its Pro Rata Share of the Loan or any other interest herein or in any other
Obligations owed to it; provided that (a) the selling, assigning or
transferring Lender shall notify Agent and Company concurrently with such
sale, assignment or transfer, the Person to whom such sale, assignment or
transfer was made, and any deduction, withholding or payment requirements
under subsection 2.6 to which such Person is subject (which deduction,
withholding or payment requirements will not be greater than those to which
the selling, assigning or transferring Lender was subject, and (b) no such
sale, assignment, transfer or participation shall (I) without the consent of
Company (and except as otherwise may be provided in the Share Purchase
Agreement), require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state or (II) in
and of itself result in Company failing to meet the requirements of the
Internal Revenue Code with respect to qualification as a REIT. To the extent
of any such sale, assignment or transfer in accordance with clause (i) above,
such Lender shall be relieved of its obligations with respect to its Pro Rata
Share of the Loan or other Obligations or the portion thereof so assigned
arising from and after the effective date of such assignment (which effective
date shall be set forth in the notice delivered pursuant to clause (a) above).
From and after the effective date of such assignment, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
shall have the rights and obligations of a Lender hereunder and (y) such
Lender shall relinquish its rights and be released from its obligations under
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this Agreement arising from and after the date of such assignment (and, in the
case of an assignment covering all or the remaining portion of such Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto). Such Lender may furnish any information concerning Company and
its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 8.17.
8.2 Expenses. Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (i) all the costs of furnishing
all opinions by counsel for Company (including without limitation any opinions
requested by Agent or Lenders as to any legal matters arising hereunder) and
of Company's performance of and compliance with all agreements and conditions
on its part to be performed or complied with under this Agreement, the other
Loan Documents and the Share Purchase Agreement, including, without
limitation, with respect to confirming compliance with environmental and
insurance requirements; (ii) the actual and reasonable costs and expenses of
preparing the Loan Documents and the Share Purchase Agreement, including the
reasonable fees, expenses and disbursements of counsel to Agent and Lenders in
connection with the negotiation, preparation and execution of the Loan
Documents and the Share Purchase Agreement, the administration of the Loan,
and any consents, amendments, waivers or other modifications hereto or thereto
and any other documents or matters requested by Company; (iii) all other
actual and reasonable costs and expenses incurred by Agent or Lenders in
connection with the negotiation, preparation and execution of the Loan
Documents and the Share Purchase Agreement and the transactions contemplated
hereby and thereby (including, without limitation, costs of investigations and
inspections of Company and its Subsidiaries and their respective assets, and
travel expenses of Agent, Lenders and their agents and attorneys); (iv) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees and expenses (including allocated costs of internal
counsel, and fees billed for law clerks, paralegals, librarians and others not
admitted to the bar but performing services under the supervision of an
attorney) and costs of settlement, incurred by Agent or Lenders in enforcing
any Obligations of or in collecting any payments due from Company hereunder or
under the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out", pursuant to any
insolvency or bankruptcy proceedings or in connection with enforcing any
judgment. Agent and Lenders acknowledge that, in the negotiation, preparation
and documentation of the Loan Documents and the Share Purchase Agreement, and
the investigations and inspections relating to the transactions contemplated
by this Agreement, Lenders have not each engaged separate counsel, and Agent
and Lenders agree that in connection with the administration of the Loan and
the enforcement of rights and remedies under the Loan Documents, Company shall
be responsible only for the payment of the attorneys' fees and costs of
counsel (including local counsel) engaged by Agent on behalf of Lenders or by
the Requisite Lenders on behalf of Lenders, and not for other counsel which
may be separately engaged by one or more Lenders.
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8.3 Indemnity. In addition to the payment of expenses pursuant to
subsection 8.2, whether or not the transactions contemplated hereby shall be
consummated, Company agrees to defend, indemnify, pay and hold harmless Agent,
Lenders (in their capacities as lenders), and the officers, directors,
employees, agents, nominees and affiliates of Agent and Lenders (collectively
called the "Indemnitees") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
without limitation the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto),
whether direct, indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations (including without
limitation securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the Loan hereunder or
the use or intended use of the proceeds of any of the Loan) (collectively
called the "Indemnified Liabilities"); provided that Company shall not have
any obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise solely from the
gross negligence or willful misconduct of that Indemnitee as determined by a
final judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
8.4 Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender is hereby authorized by
Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by such Lender to or for the credit or
the account of Company against and on account of the obligations and
liabilities of Company to such Lender under this Agreement and the other Loan
Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement or any other Loan
Document, irrespective of whether or not (i) such Lender shall have made any
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demand hereunder or (ii) the principal of or the interest on the Loan or any
other amounts due hereunder shall have become due and payable pursuant to
Section 7 and although said obligations and liabilities, or any of them, may
be contingent or unmatured.
8.5 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or the Notes, shall in any event be
effective without the written concurrence of Agent, Requisite Lenders and
Company, and no consent to any departure by Company from the provisions of
this Agreement or the Notes shall be effective without the written concurrence
of Requisite Lenders; provided that any such amendment, modification,
termination, waiver or consent which: changes any Lender's Pro Rata Share;
changes in any manner the definition of "Requisite Lenders"; changes in any
manner any provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of all Lenders; postpones the scheduled final
maturity date of the Loans; postpones the date or reduces the amount of any
scheduled payment of principal of the Loans; postpones the date on which any
interest is payable; decreases the interest rate borne by the Loans; or
changes in any manner the provisions contained in subsection 7.1 or this
subsection 8.5, shall be effective only if evidenced by a writing signed by or
on behalf of all Lenders. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given. No
notice to or demand on Company in any case shall entitle Company to any other
or further notice or demand in similar or other circumstances.
8.6 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another
covenant shall not avoid the occurrence of an Event of Default or Potential
Event of Default if such action is taken or condition exists.
8.7 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, or sent by telefacsimile (with a
confirmatory copy given by personal service, United States mail or courier
service in accordance with the provisions of this subsection 8.7) or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile, or
three Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or such other address as shall be designated by such Person in a
written notice delivered to the other parties hereto. Notices to Agent
hereunder shall be deemed notices to Lenders.
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8.8 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans
hereunder. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6, 8.2 and
8.3 shall survive the payment of the Loans and the termination of this
Agreement.
8.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any Lender in the exercise of any power, right or
privilege hereunder or under any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
8.10 Marshalling; Payments Set Aside. No Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Lenders (or to Agent for the benefit of
Lenders), or Lenders exercise their rights of setoff, and such payment or
payments or the proceeds of such setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such setoff had not
occurred.
8.11 Severability. In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
8.12 Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.
8.13 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
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8.14 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of Lenders
(it being understood that Lenders' rights of assignment are subject to
subsection 8.1). Neither Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders.
8.15 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, AND EACH LENDER ACCEPTS FOR ITSELF, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT
OR SUCH OBLIGATION. Company and Lenders hereby agree that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to each party at its address
provided in subsection 8.7, such service being hereby acknowledged to be
sufficient for personal jurisdiction in any action in any such court and to be
otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law
or shall limit the right to bring proceedings in the courts of any other
jurisdiction.
8.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
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8.17 Confidentiality. Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement that has been
identified as confidential by Company in accordance with Lender's customary
procedures for handling confidential information of this nature, provided that
in any event a Lender may make disclosures to Affiliates of such Lender or
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Loans or any participations therein or disclosures required or
requested by any governmental agency or representative thereof or pursuant to
legal process; provided that, unless specifically prohibited by applicable law
or court order, each Lender shall notify Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and provided, further that in no
event shall any Lender be obligated to return any materials furnished by
Company or any of its Subsidiaries.
8.18 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document. The submission
of this Agreement to Company or its agents or attorneys for review or
signature does not constitute a commitment by any Lender to make the Loan to
Company, and this Agreement shall become binding and effective only upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and of written notification of such execution and authorization of
delivery thereof.
8.19 Conflicting Provisions. Except as otherwise provided in this
Agreement or in any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any of the provisions of
any of the other Loan Documents, the provisions contained in this Agreement
shall govern and control.
8.20 Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to the matters contained in
this Agreement. All prior or contemporaneous understandings, oral
representations or agreements had among the parties with the respect to the
subject matter are merged and contained in this Agreement.
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8.21 Obligations Several; Independent Nature of Lenders' Rights. The
obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations of any other Lender hereunder. Nothing
contained herein, in any other Loan Document or in the Share Purchase
Agreement, and no action taken by Lenders pursuant hereto or thereto, shall be
deemed to constitute Lenders, or any of the Lenders, as a partnership, an
association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt
provided, however, that Lenders agree that Lenders will collectively, through
a Lender or other entity designated by Requisite Lenders exercise their rights
under this Agreement and other Loan Documents.
8.22 Lender Representations. Each Lender severally represents that
A. Its purchase of Common Shares pursuant to the Share Purchase
Agreement, and its ability to acquire Preferred Shares or Common Shares
pursuant to this Agreement (and for purposes of this representation, each
Lender shall be treated as having acquired as of the Closing Date the maximum
number of such Preferred Shares and Common Shares which can be obtained under
this Agreement), will not result in any individual within the meaning of
Section 856(h) of the Internal Revenue Code, owning directly or indirectly
more than 9.8% of the outstanding Common Shares of the Company, as determined
under Internal Revenue Code Sections 856(a)(6) and 856(h), and Internal
Revenue Code Sections 542 and 544 (as those Sections are incorporated by
reference into Internal Revenue Code Section 856(h)).
B. (i) It has substantial experience in evaluating and
investing in private placement transactions so that it is capable of
evaluating the merits and risks of an investment in Company and has the
capacity to protect its own interests in connection with the Loans and
the shares issuable upon conversion of the Loans. Such Lender
understands that the investment to be made in connection with the Loans
or shares issuable upon conversion of the Loans is speculative and
involves significant risk. Such Lender has the ability to bear the
economic risk of this investment.
(ii) Such Lender is acquiring the Loans or shares issuable
upon conversion of the Loans for investment for its own account, and not
with the view to, or for resale in connection with, any "distribution" of
all or any portion thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act") or any state securities laws.
Such Lender understands that neither the Loans or shares issuable upon
conversion of the Loans have been registered under the Securities Act or
any state securities laws by reason of a specific exemption from the
registration provisions of the Securities Act and applicable state
securities laws which depends upon, among other things, the bona fide
nature of such Lender's investment intent and the accuracy of such
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Lender's representations as expressed herein. Such Lender also
represents that it has not been organized solely for the purpose of
acquiring the Loans and the shares issuable upon conversion of the
Loans..
(iii) It acknowledges that the Loans and shares acquired
pursuant to conversion of the Loans must be held indefinitely unless the
transfer thereof is registered under the Securities Act and applicable
state securities laws or unless an exemption from such registration is
available. Such Lender is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement, subject to the satisfaction of
certain conditions, including, among other things, the availability of
certain current public information about Company, the resale occurring
after the expiration of minimum holding periods after a party has
purchased and paid for the security to be sold, the sale being affected
through a "broker's transaction" or in transactions directly with a
"market maker" and the number of shares being sold during any three-month
period not exceeding specified limitations (except as provided in Rule
144(k)).
(iv) It has been provided the opportunity to discuss the
transactions contemplated hereby with Company. Each Lender acknowledges
receipt of Company's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1996 and Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997.
(v) It owns assets exceeding $5,000,000 in cost or value,
whichever is lower.
Section 9. CONVERSION OF LOANS
9.1 Conversion.
A. Conversion to Preferred Shares. Following Conversion Approval
(or, if Conversion Approval has not been obtained, to the extent conversion of
the Loans does not result in Lenders owning in the aggregate in excess of
19.9% of the capital shares of Company) and Preferred Share Approval, in
addition to the right of any Lender to convert Loans to Common Shares as in
this Section 9 provided, at any time and from time to time until September 30,
2002 (except that, if Company has provided a notice of prepayment of the
Loans, such right shall terminate on the 30th day following receipt by Agent
of such notice of prepayment, as provided in subsection 2.4B(i)), Lenders may
convert all or a portion (but no less than $1,000,000, or such lesser
aggregate amount of Loans that is then outstanding, at any one time) of the
Loans into Preferred Shares, at a conversion price of $100.00 per share, upon
delivery of a conversion notice by the Lender or Lenders (or by Agent on
behalf of such Lender or Lenders) indicating the principal amount to be
converted and the name of Lender or the assignee of Lenders in whose name the
Preferred Shares shall be registered on the share transfer books of Company.
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B. Conversion to Common Shares. Following Conversion Approval (or,
if Conversion Approval has not been obtained, to the extent conversion of the
Loans does not result in Lenders owning in the aggregate in excess of 19.9% of
the capital shares of Company), in addition to the right of any Lender to
convert Loans to Preferred Shares as in this Section 9 provided, at any time
and from time to time until September 30, 2002 (except that, if Company has
provided a notice of prepayment of the Loans, such right shall terminate on
the 30th day following receipt by Agent of such notice of prepayment, as
provided in subsection 2.4B(i)), Lenders may convert all or a portion of the
Loans into Common Shares (but no less than $1,000,000 or such lesser amount of
Loans that is then outstanding, at any one time) at a rate of 19.4174 shares
of Common Stock for each $100 principal amount of Loans, subject to adjustment
as set forth below (such rate, as adjusted from time to time, being the
"Common Share Conversion Rate"). Conversion of Loans may be effected by
delivering a conversion notice by the Lender or Lenders (or by Agent on behalf
of such Lender or Lenders) indicating the principal amount to be converted and
the name of Lender or the assignee of Lenders in whose name the Common Shares
shall be registered on the share transfer books of Company.
C. Right of Conversion upon Notice of Prepayment. Within 30 days of
receipt of a notice of prepayment by Company pursuant to subsection 2.4(B)(i),
each Lender shall have the right to notify Company of its intention to convert
all or a portion of the Loans into Preferred Shares, as provided in subsection
9.1A at the conversion price of Preferred Shares, or into Common Shares as
provided in subsection 9.1B at the Common Share Conversion Rate.
9.2 Issuance of Preferred Shares or Common Shares on Conversion. As
promptly as practicable after receipt of a conversion notice, Company shall
deliver or cause to be delivered at the office of Agent, to or upon the
written order of Lender of the Loan to be converted, certificates representing
the number of fully paid and non-assessable Preferred Shares or Common Shares,
as the case may be, into which such Loan may be converted in accordance with
the provisions of this subsection 9.2. Such conversion shall be deemed to
have been made at the close of business on the date that the conversion notice
with respect to such Loan or Loans was delivered to Company so that the rights
of the Lender of such Loan or Loans as a Lender shall cease at such time and,
subject to the following provisions of this paragraph, the person or persons
entitled to receive the Preferred Shares or Common Shares, as the case may be,
upon conversion of such Loan or Loans shall be treated for all purposes as
having become the record holder or holders of such Preferred Shares or Common
Shares, as the case may be, at such time and such conversion shall be at the
conversion price in effect at such time; provided, however, that no such
conversion notice on any date when the share transfer books of Company shall
be closed shall be effective to constitute the person or persons entitled to
receive the Preferred Shares or the Common Shares upon such conversion as the
record holder or holders of such Preferred Shares or Common Shares, as the
case may be, on such date, but such conversion notice shall be effective to
constitute the person or persons entitled to receive such Preferred Shares or
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Common Shares, as the case may be, as the record holder or holders thereof for
all purposes as the close of business on the next succeeding day on which such
share transfer books are open; such conversion shall be at the conversion rate
in effect on the date that such Loan or Loans shall have been surrendered for
conversion, as if the share transfer books of Company had not been closed.
If the last day for the exercise of the conversion right shall not be a
Business Day, then such conversion right may be exercised on the next
succeeding Business Day.
9.3 No Adjustment of Conversion Price for Preferred Shares. The
conversion price for the Preferred Shares is not subject to adjustment.
9.4 Adjustment of Conversion Rate. The Common Share Conversion Rate shall
be subject to adjustment from time to time as follows:
A. Adjustment for Distributions or Sales.
(i) If Company shall fix a Determination Date with respect to
the payment of, or the making of, a dividend or other distribution with
respect to its Common Shares in Common Shares (including by way of
reclassification of any Common Shares), the Common Share Conversion Rate
in effect at the opening of business on the day following the
Determination Date shall be increased by multiplying the Common Share
Conversion Rate in effect at the closing of business on the Determination
Date by a fraction, the numerator of which shall be the sum of the number
of Common Shares outstanding at the close of business on the
Determination Date, excluding the effect of such dividend or
distribution, plus the total number of Common Shares constituting such
dividend or other distribution, and the denominator of which shall be the
number of Common Shares outstanding at the close of business on the
Determination Date, excluding the effect of such dividend or
distribution, such increase to become effective at the opening of
business on the day following the Determination Date. For the purposes
of this clause (i), the number of Common Shares at any time outstanding
shall not include shares held in the treasury of Company and the number
of shares constituting such dividend or other distribution shall include,
if applicable, Common Shares represented by cash issued in lieu of
fractional Common Shares.
(ii) If outstanding Common Shares shall be subdivided or split
into a greater number of Common Shares, the Common Share Conversion Rate
in effect at the opening of business on the day following the day upon
which such subdivision or split becomes effective shall be
proportionately increased, and, conversely, in case outstanding Common
Shares shall be combined into a lesser number of Common Shares, the
Common Share Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes effective shall
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be proportionately reduced, such increase or reduction, as the case may
be, to become effective at the opening of business on the day following
the day upon which such subdivision or split or combination becomes
effective.
(iii) If Company shall distribute to holders of Common Shares
evidences of indebtedness, equity securities other than Common Shares
(including, without limitation, equity interests in Company's
Subsidiaries) or other assets (other than regular cash dividends), or
shall distribute to holders of Common Shares rights, options or warrants
to subscribe to securities, then in each such case the Common Share
Conversion Rate shall be adjusted so that it shall equal the rate
determined by multiplying the Common Share Conversion Rate in effect
immediately prior to the date of such distribution by a fraction of which
the numerator shall be the Current Market Price per Common Share on the
record date mentioned below, and of which the denominator shall be such
Current Market Price less the then fair market value of the evidences of
indebtedness, equity securities and assets so distributed, or of such
subscription rights, warrants or options, applicable to one Common Share.
For the purposes of this clause (iii), in the event of a distribution of
capital shares or other securities of any Subsidiary of Company as a
dividend on Common Shares, the "then fair market value" of the shares or
other securities so distributed shall be the greater of the value of such
shares or other securities on the record date mentioned below as
determined by an independent appraiser of national repute appointed in
good faith, by the Board of Trustees and the Current Market Price of the
shares or other securities so distributed as of a date 20 days following
the distribution date thereof. Such adjustment shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such distribution.
(iv) If Company shall sell, transfer, or otherwise convey Common
Shares at a gross price per share (the "Sale Price") less than the
quotient derived by dividing $100 by the Common Share Conversion Rate
(or, if previously adjusted pursuant to this clause (iv), at a price per
share less than the lowest of all the preceding Sale Prices) per Common
Share, then in such case the Common Share Conversion Rate shall be
adjusted so that it shall equal the rate determined by dividing $100 by
the Sale Price. Notwithstanding the foregoing, Company shall not issue,
sell, transfer or otherwise convey Common Shares at a price that is less
than fair market value, as determined in the reasonable good faith
judgment of the Board of Trustees (which fair market value, under all the
circumstances relevant, might not be equivalent to the Current Market
Price).
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(v) No adjustment in the conversion rate shall be required (a)
with respect to shares issued upon conversion of Loans or (b) unless such
adjustment would require an increase or decrease of at least 1% of such
rate; provided, however, that any such adjustment which by reason of
subclause (b) of this clause (v) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
B. Adjustment for Reorganization, Consolidation or Merger. If there
shall occur any capital reorganization or any reclassification of the shares
of beneficial interest or other equity securities of Company, consolidation,
merger or other business combination of Company with or into a corporation or
other entity, or the conveyance of all or substantially all of the assets of
Company to another corporation or other entity, each $100 principal amount of
Loans shall thereafter be convertible into the number of shares or other
securities or property to which a holder of the number of Common Shares
deliverable upon conversion of each $100 principal amount of Loans would have
been entitled upon such reorganization, reclassification, consolidation,
merger or conveyance. In any such case, appropriate adjustment (as determined
by the Board of Trustees) shall be made in the application of the provisions
hereof with respect to the rights of the Lenders such that the provisions
hereof (including, without limitation, provisions with respect to changes in
and other adjustments of the Common Share Conversion Rate) shall thereafter be
applicable, as nearly as reasonably practicable, in relation to any shares or
other property thereafter deliverable upon the conversion of the Loans.
C. Notice to Lenders. Whenever the conversion rate is adjusted as
provided in this subsection 9.4, Company shall promptly file with Lenders an
Officer's Certificate setting forth the Common Share Conversion Rate after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment and the computation thereof.
D. Calculations. All calculations under this Section 9 shall be made
to the nearest cent or the nearest one-hundredth of a share, as the case may
be. In any case in which this Section 9 shall require that an adjustment
shall become effective immediately after a record date or an effective date
for an event, Company may defer until the occurrence of such event (i) issuing
to the Lender of any Loan converted after such record date or effective date
and before the occurrence of such event the additional shares issuable upon
such conversion by reason of the adjustment required by such event over and
above the shares issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such Lender any amount in cash in lieu of a
fractional share pursuant to subsection 9.5; provided, however, that Company
shall deliver to such Lender an appropriate instrument evidencing such
Lender's rights to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
9.5 No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Loan or Loans.
If the conversion of any Loan or Loans results in a fraction, an amount equal
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to such fraction multiplied by the closing price on the principal national
securities exchange on which the Common Shares are admitted to trading or
listed, or if not listed or admitted to trading on any national securities
exchange, the average of the highest reported bid and lowest reported asked
prices as furnished by the National Quotation Bureau Incorporated or such
other nationally recognized quotation service selected by Company for the
purpose, if said Bureau is not at the time furnishing quotations immediately
preceding the day on which the Loan (or specified portions thereof) is deemed
to have been converted shall be paid to such Lender in cash by Company.
9.6 Covenant to Reserve Shares. Company covenants that, following
Conversion Approval, it will at all times reserve and keep available, free
from pre-emptive rights, out of its authorized but unissued shares, or out of
shares held in its treasury, solely for the purpose of issue upon conversion
of Loans (or purchase pursuant to subsection 9.10) as herein provided, such
number of Preferred Shares, if Preferred Share Approval is obtained, as shall
then be issuable upon the conversion of all outstanding Loans, and such number
of Common Shares as shall then be issuable upon conversion of all Preferred
Shares then outstanding or issuable upon conversion of Loans. Company
covenants that all Preferred Shares and Common Shares that shall be so
issuable shall be duly and validly issued and fully paid and non-assessable
and free from all liens and charges with respect to the issue thereof. For
purposes of this subsection 9.6, the number of Preferred Shares and number of
Common Shares which shall be deliverable upon the conversion of all
outstanding Loans shall be computed as if at the time of computation all
outstanding Loans were held by a single Lender.
9.7 Compliance with Legal and Governmental Requirements. Company
covenants that if any Preferred Shares or any Common Shares required to be
reserved for purposes of conversion of Loans (or purchase pursuant to
subsection 9.10) hereunder, require registration with or approval of any
governmental authority under any Federal or State law, or listing upon any
national securities exchange, before such shares may be issued upon
conversion, Company will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered, approved or listed, as
the case may be; provided that this covenant shall not apply to registration
or qualification of the Preferred Shares with the Securities and Exchange
Commission or any state securities commission, which registration and
qualification are the subject of a registration rights agreement entered into
between Company and Lenders.
9.8 Payment of Taxes. The issuance of certificates for Preferred Shares
or Common Shares upon the conversion of Loans (or purchase pursuant to
subsection 9.10) shall be made without charge to the converting or purchasing
Lender for any tax in respect of the issuance of such certificates, and such
certificates shall be issued in the respective names of, or in such names as
may be directed by, the Lender of the Loan so converted (or the purchaser, as
the case may be); provided, however, that Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
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Lender of the Loan so converted (or the purchaser, as the case may be), and
Company shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
Company the amount of such tax or shall have established to the satisfaction
of Company that such tax has been paid.
9.9 Notice of Certain Events. In case at any time Company shall propose:
(a) to declare any dividend or make any distribution on its Preferred
Shares or its Common Shares or to fix a record date for the making of any
other distribution (other than a cash dividend or distribution not prohibited
under subsection 6.5 hereof) to all holders of its Preferred Shares or its
Common Shares; or
(b) to fix a record date for the issuance of rights or warrants to
all holders of its Preferred Shares or its Common Shares entitling them to
purchase any additional Preferred Shares or Common Shares or any other rights
or warrants; or
(c) to effect any liquidation, dissolution or winding up of Company;
then, and in any one or more of such cases, Company shall cause notice thereof
to be filed at least 15 days prior to the date on which (i) the books of
Company shall close, or a record be taken, for such dividend, distribution or
issuance of rights or warrants or (ii) consolidation, merger, sale, lease,
conveyance, liquidation, dissolution or winding up shall be effective, and the
date as of which it is expected that holders of Preferred Shares or Common
Shares of record shall be entitled to exchange their Preferred Shares or
Common Shares for Securities or other property deliverable upon such
consolidation, merger, sale, lease, conveyance, liquidation, or winding up, as
the case may be. Failure to give notice, or any defect therein, shall not
affect the legality or validity of such dividend, distribution, consolidation,
merger, sale, lease, conveyance, liquidation, dissolution or winding up.
9.10 Purchase of Shares.
A. Preferred Shares. In addition to the conversion rights of Lenders
set forth herein and the rights of Lenders set forth herein to purchase Common
Shares, following Conversion Approval (or, if Conversion Approval has not been
obtained, to the extent conversion of the Loans does not result in Lenders
owning in the aggregate in excess of 19.9% of the capital shares of Company)
and Preferred Share Approval, at any time prior to November 14, 1998, each
Lender shall be entitled to purchase a number of Preferred Shares equal to the
amount that it would have been able to obtain on conversion of a Loan pursuant
to subsection 9.1A if its Loan Commitment was fully utilized as contemplated
herein: each Lender will have the ability to purchase the number of Preferred
Shares derived by dividing the (i) difference between its Pro Rata Share of
$20,000,000 and the sum of its Pro Rata Share of the total amount of Loans
funded pursuant hereto and the aggregate purchase price of Common Shares
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purchased pursuant to subsection 9.10B by (ii) the purchase price (which is
$100 per Preferred Share). Lenders purchasing Preferred Shares pursuant to
the provisions of this subsection shall have the same rights as to the
Preferred Shares so purchased as those rights provided to Lenders converting
Loans, as provided in this Section 9.
B. Common Shares. In addition to the conversion rights of Lenders
set forth herein and the rights of Lenders set forth herein to purchase
Preferred Shares, following Conversion Approval (or, if Conversion Approval
has not been obtained, to the extent conversion of the Loans does not result
in Lenders owning in the aggregate in excess of 19.9% of the capital shares of
Company) at any time prior to November 14, 1998, each Lender shall be entitled
to purchase a number of Common Shares equal to the amount that it would have
been able to obtain on conversion of a Loan pursuant to subsection 9.1B if its
Loan Commitment was fully utilized as contemplated herein: each Lender will
have the ability to purchase the number of Common Shares derived by dividing
the (i) difference between its Pro Rata Share of $20,000,000 and the sum of
its Pro Rata Share of the total amount of Loans funded pursuant hereto and the
aggregate purchase price of Preferred Shares purchased pursuant to subsection
9.10A by (ii) the purchase price, as adjusted pursuant to subsection 9.4
(which, on the date hereof, is $5.15 per Common Share). Lenders purchasing
Common Shares pursuant to the provisions of this subsection shall have the
same rights as to the Common Shares so purchased as those rights provided to
Lenders converting Loans, as provided in this Section 9.
Section 10. AGENT
10.1 Appointment. Agent is hereby appointed and designated Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
Agent to act as its agent, at the direction of Lenders, for the sole purpose
of receiving communications from, and sending communications to, Company and
its Subsidiaries (including communications regarding approvals and consents),
accepting payments of principal and interest under the Loan, and such other
actions as requested or approved by Requisite Lenders, all in accordance with
the terms of this Agreement and the other Loan Documents. Agent agrees to act
upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 10 are solely for
the benefit of Agent and Lenders, and neither Company nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof (provided, however, Agent and Lenders agree that (i) the
provisions of this Section 10 do not, as between Company, on the one hand, and
Agent and Lenders, on the other, modify or alter the other provisions of this
Agreement and the other Loan Documents, (ii) Company may rely on the fact that
as of the Closing Date Agent has been duly appointed and designated by Lenders
and is duly authorized to act on behalf of Lenders in the capacity of Agent
under this Agreement and the other Loan Documents, for the purposes set forth
above, and (iii) Company may rely on a notice of resignation received from
Agent pursuant to subsection 10.4 below and a notice from Requisite Lenders of
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the appointment of a successor Agent pursuant to said subsection 10.4). In
performing its functions and duties under this Agreement, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries.
10.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers hereunder
and under the other Loan Documents as are specifically delegated to Agent by
the terms hereof and thereof, or as elsewhere may be agreed among Agent and
Lenders, together with such powers as are reasonably incidental thereto.
Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents, or as elsewhere
agreed among Agent and Lenders, and it may perform such duties by or through
its agents or employees. Agent shall not have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose
upon Agent any obligations in respect of this Agreement or any of the other
Loan Documents except as expressly set forth herein or therein or as elsewhere
may be agreed among Agent and Lenders.
B. No Responsibility for Certain Matters. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf
of Company to Agent or any Lender in connection with the Agreement or the Loan
Documents, and the transactions contemplated hereby or thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Agent be required to ascertain
or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents, or as to the use of the proceeds of the Loan or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
C. Exculpatory Provisions. Neither Agent nor any of its officers,
directors, employees or agents (specifically including David A. Ericson,
Stuart B. Brown, John C. Waterfall and Edwin H. Morgens) shall be liable to
Lenders for any action taken or omitted by Agent under or in connection with
the Agreement or any of the Loan Documents, except that Agent shall be liable
to the extent caused by the gross negligence or willful misconduct of Agent or
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Agent's officers, directors, employees or agents. If Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the
other Loan Documents, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions
from Requisite Lenders. Without prejudice to the generality of the foregoing,
(i) Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine
and correct and to have been signed or sent by the proper person or persons,
and shall be entitled to rely and shall be protected in relying on opinions
and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected
by it; and (ii) no Lender shall have any right of action whatsoever against
Agent as a result of Agent acting or (where so instructed) refraining from
acting under this Agreement or the other Loan Documents in accordance with the
instructions of Requisite Lenders.
D. Affiliates of Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, any Affiliate of Agent acting in its
individual capacity as a Lender hereunder. With respect to its participation
in the Loan, Affiliates of Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Affiliates of Agent in its individual capacity.
10.3 Right to Indemnity. Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify Agent, to the extent that Agent shall not
have been reimbursed by Company or any of its Subsidiaries, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation, counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against Agent in performing its duties
hereunder or under the other Loan Documents, or otherwise in its capacity as
Agent in any way relating to or arising out of this Agreement or the other
Loan Documents; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
Page 152 of 208 pages
<PAGE>
10.4 Successor Agent. Agent may resign at any time under this Agreement
and the other Loan Documents by giving 30 days' prior written notice thereof
to Lenders and Company. Upon any such notice of resignation, Requisite
Lenders shall have the right, upon five Business Days' notice to Company, to
appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, that successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
[SIGNATURES ON NEXT PAGE]
Page 154 of 208 pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
s/Leonard G. Levine
By:_____________________________________
Printed Name:
Title:
Notice Address:
150 South Wacker Drive, Suite 2900
Chicago, Illinois 60606
Attention: General Counsel
Telephone: 312-553-9800
Telecopy: 312-553-0450
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Michael J. Choate, Esq.
Telephone: 312-836-4066
Telecopy: 312-527-5921
AGENT: MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.,
a New York corporation
s/David A. Ericson
By:__________________________________________________
Printed Name: David A. Ericson
Title: Authorized Agent
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 155 of 208 pages
<PAGE>
LENDERS: RESTART PARTNERS, L.P.,
a Delaware limited partnership
By: PRIME GROUP L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 19.1%
RESTART PARTNERS II, L.P.,
a Delaware limited partnership
By: PRIME GROUP II, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 31.60%
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 156 of 208 pages
<PAGE>
RESTART PARTNERS III, L.P.,
a Delaware limited partnership
By: PRIME GROUP III, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 22.00%
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 157 of 208 pages
<PAGE>
RESTART PARTNERS IV, L.P.,
a Delaware limited partnership
By: PRIME GROUP IV, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP, INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 13.90%
RESTART PARTNERS V, L.P.,
a Delaware limited partnership
By: PRIME GROUP V, L.P.,
a Delaware limited partnership,
its General Partner
By: PRIME GROUP INC.,
a Delaware corporation,
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 4.60%
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 158 of 208 pages
<PAGE>
ENDOWMENT RESTART LLC,
a Delaware limited liability company
By: ENDOWMENT PRIME LLC,
a Delaware limited liability company,
its Managing Member
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 5.00%
MORGENS WATERFALL INCOME PARTNERS, L.P.
a New York limited partnership
By: MW CAPITAL, LLC
a Delaware limited liability company
its General Partner
By: David A. Ericson
(whose signature appears below),
Authorized Agent
Pro Rata Share: 3.80%
s/David A. Ericson
____________________________________________
David A. Ericson,
for the entities and in the capacities described above
[SIGNATURES CONTINUED ON NEXT PAGE]
Page 159 of 208 pages
<PAGE>
Notice Address:
Morgens, Waterfall, Vintiadis & Company, Inc.
10 East 50th Street
New York, New York 10022
Attention: Mr. David A. Ericson
Telephone: 212-705-0533
Telecopy: 212-838-5540
With a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
Attention: Jack B. Hicks III, Esq.
Telephone: 213-669-7263
Telecopy: 213-669-6407
Page 160 of 208 pages
<PAGE>
EXHIBIT I
FORM OF NOTE
BANYAN STRATEGIC REALTY TRUST
PROMISSORY NOTE DUE SEPTEMBER 30, 2002
$___________________ New York, New York
October 14, 1997
FOR VALUE RECEIVED, BANYAN STRATEGIC REALTY TRUST, a Massachusetts
business trust ("Company"), promises to pay to the order of
___________________________________________________ ("Payee") the principal
amount of ___________________________________________ Dollars
($_____________).
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Convertible Term Loan Agreement dated as of October 10, 1997 by and among
Company and the entities listed therein as Lenders, (said Convertible Term
Loan Agreement, as it may be amended, supplemented or otherwise modified from
time to time, being the "Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined).
This Note is one of Company's "Notes" in the aggregate principal
amount of $20,000,000.00 and is issued pursuant to and entitled to the
benefits of the Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loans evidenced
hereby were made and are to be repaid. Interest is payable at the rate
(including, without limitation, the default rate set forth in subsection 2.2C
of the Agreement) and at the times set forth in the Agreement, and the entire
outstanding principal balance of this Note, and all accrued and unpaid
interest thereon, is due and payable in full on September 30, 2002.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America by wire transfer of
same day funds to an account designated by Morgens, Waterfall, Vintiadis &
Company, Inc., as Agent for the benefit of Payee (in accordance with the
wiring instructions for Agent set forth in the Agreement) or at such other
place in the United States of America as shall be designated in writing for
such purpose in accordance with the terms of the Agreement. Payee hereby
agrees, by its acceptance hereof, that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall not limit or otherwise affect the obligations of
Company hereunder with respect to payments of principal of or interest on this
Note.
Page 161 of 208 pages
<PAGE>
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation
of the payment of interest on this Note.
This Note is subject to mandatory prepayment and prepayment at the
option of Company as provided in the Agreement.
THE AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued and unpaid
interest thereon, 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. In
addition, upon certain Events of Default under the Agreement, the interest
payable under this Note shall increase to the default rate specified in
subsection 2.2C of the Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Agreement.
No reference herein to the Agreement and no provision of this Note
or the Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.
Company promises to pay costs and expenses (including reasonable
attorneys' fees) as provided in subsection 8.2 of the Agreement incurred in
the collection and enforcement of this Note. Company and any endorsers of
this Note hereby consent to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waive diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFER OR ASSIGNMENT AS
PROVIDED IN SUBSECTIONS 8.1 AND 8.14 OF THE AGREEMENT.
Page 162 of 208 pages
<PAGE>
IN WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at
the place first written above.
BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
By: ____________________________________
Printed Name:
Title:
Page 163 of 208 pages
<PAGE>
EXHIBIT II
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of BANYAN
STRATEGIC REALTY TRUST, a Massachusetts business trust ("Company");
(2) We have reviewed the terms of that certain Convertible Term
Loan Agreement dated as October 10, 1997, as amended, supplemented or
otherwise modified to the date hereof (said Convertible Term Loan
Agreement, as so amended, supplemented or otherwise modified, being the
"Agreement", the terms defined therein and not otherwise defined in this
Certificate (including Attachment No. 1 annexed hereto and made a part
hereof) being used in this Certificate as therein defined), by and among
Company, the entities listed therein as Lenders, and the terms of the
other Loan Documents, and we have made, or have caused to be made under
our supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and to the best of our knowledge no condition or event has
occurred which constitutes an Event of Default or Potential Event of
Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate[,
except as set forth below].
[Set forth [below] [in a separate attachment to this Certificate]
are all exceptions to paragraph (3) above listing, in detail, the nature of
the condition or event, the period during which it has existed and the action
which Company has taken, is taking, or proposes to take with respect to each
such condition or event:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_________________________________________________________________]
Page 164 of 208 pages
<PAGE>
The foregoing certifications, together with the computations set
forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are
made and delivered this __________ day of _____________, 199_ pursuant to
subsection 5.1(iii) of the Agreement.
BANYAN STRATEGIC REALTY TRUST
a Massachusetts business trust
By: ___________________________________
Title: ________________________________
By: ____________________________________
Title: _________________________________
Page 165 of 208 pages
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, 199_ and pertains to the period from
____________, 199_ to ____________, 199_. Subsection references herein relate
to subsections of the Agreement.
A. Indebtedness
1. Indebtedness permitted under subsection 6.1(iv)
and Underwriting Guidelines for each Facility:
a. Proceeds of Loans used for acquisition: $_____________
b. Percentage of Acquisition Price: _____________%
c. Other Indebtedness incurred with respect
to Facility: $_____________
d. Percentage of Acquisition Price: _____________%
2. Maximum Percentage of other Indebtedness 75%
B. Maximum Leverage Ratio (as of _____________, 199_)
1. Consolidated Total Debt: $_____________
2. Consolidated Net Worth: $_____________
3. Leverage Ratio (1):(2): ____:1.00
4. Maximum ratio permitted under subsection 6.6A: 3.00:1.00
C. Minimum Consolidated Net Worth (as of ____________, 199_)
1. Consolidated Net Worth: $_____________
2. Minimum required under subsection 6.6B: $52,500,000
D. Debt Coverage Ratio (as of ________)
1. Income (see subsection 6.6C(i)(a)): $_____________
2. Interest Expense: $_____________
3. Depreciation and Amortization: $_____________
4. Amortization of Deferred Financing Fee: $_____________
Page 166 of 208 pages
<PAGE>
5. Sum of 1 through 4: $_____________
6. Scheduled Debt Principal Payments
(including amortizations of scheduled
annual principal payments: $_____________
7. Sum of 2 and 6: $_____________
8. Ratio of 5 to 7: ___:1.00
9. Minimum Permitted Ratio: 1.5:1.00
E. Capital Expenditures and Tenant Improvements (as of ________)
1. Capital expenditures for Fiscal
Year-to-date: $_____________
2. Tenant improvements for Fiscal Year-to-Date: $_____________
3. Sum of 1 and 2: $_____________
4. Anticipated capital expenditures and tenant
improvements for Fiscal Year: $_____________
5. Percentage of actual capital expenditures and
tenant improvements (3 divided by 4): ___%
6. Maximum permissible percentage 115%
Page 167 of 208 pages
<PAGE>
EXHIBIT III-A
POINT TO BE COVERED IN
OPINION OF SHEFSKY & FROELICH LTD.
[Defined terms have meanings set forth in Agreement.]
[Opinion to recite materials reviewed and such assumptions and
qualifications that are satisfactory to counsel to Lenders.]
[Opinion to cover the effect on the subject transactions of only
United States Federal law and the laws of the State of Illinois.]
1. Neither the execution and delivery of the Agreement, the Loan
Documents to which Company is a party or the Share Purchase Agreement, nor the
Registration Rights Agreement, nor the issuance and payment of the Notes (nor
the issuance of the Shares), by Company nor the consummation of the
transactions contemplated by the Agreement, the Loan Documents to which
Company is a party or the Share Purchase Agreement, nor the compliance with
the terms and conditions thereof by Company conflicts with, results in a
breach or violation of, any present federal or Illinois statute, rule or
regulation binding on Company.
2. No consent, approval, authorizations or order of, or
qualification with any court, governmental body or agency is required under
any present federal or Illinois statute, rule or regulation binding on the
Company in connection with the execution and delivery by Company of the
Agreement, the Loan Documents, the Share Purchase Agreement or the
Registration Rights Agreement, or the extensions of credit under the Agreement
or the payment by Company of the Obligations thereunder or the issuance and
payment of the Notes or the issuance and sale of the Shares.
3. REIT Opinion.
4. The making of the Loans and the application of the proceeds
thereof as provided in the Agreement do not violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
5. It is not necessary in connection with the execution and
delivery of the Notes or the Shares to Lenders to register the Notes, the
Shares or the Loans under the Securities Act of 1933, as amended (the
"Securities Act"), or to qualify any indenture in respect thereof under the
Trust Indenture Act of 1939, as amended.
6. Company is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
Page 168 of 208 pages
<PAGE>
7. The reports filed by Company since December 31, 1995 (the
"Company Reports"), but prior to the date hereof, pursuant to the Exchange
Act, as of the respective dates of their filing, complied on their face in all
material respects with the requirements as to form under the Exchange Act and
the related rules and regulations thereunder.
8. The Shares have been duly authorized by all necessary action
and are validly issued and are fully paid and nonassessable. Assuming the
Lenders are acquiring the Shares in good faith without notice of any adverse
claim, Lenders will own the Shares free and clear of any adverse claim.
9. Holders of Common Shares are not entitled to any statutory
preemptive rights to subscribed to any Shares.
10. Upon conversion of the Loans into Common Shares as provided in
the Agreement, such Common Shares will be validly issued, fully paid and
nonassessable.
Page 169 of 208 pages
<PAGE>
EXHIBIT III-B
POINT TO BE COVERED IN
OPINION OF ROBERT G. HIGGINS, ESQ.
October 14, 1997
[Defined terms have meanings set forth in Agreement.]
[Opinion to recite materials reviewed and such assumptions and
qualifications that are satisfactory to counsel to Lenders.]
[Opinion to cover the effect on the subject transactions of only the
laws of the State of Illinois].
On the basis of the foregoing, and in reliance thereon, and subject
to the limitations, qualifications and exceptions set forth below, we are of
the opinion that:
Company is not required to be in Illinois or any other jurisdiction
qualified to do business.
1. Neither the execution and delivery of the Agreement, the Loan
Documents to which Company is a party, the Registration Rights Agreement or
the Share Purchase Agreement, nor the issuance and payment of the Notes (nor
the issuance of the Shares), by Company nor the consummation of the
transactions contemplated by the Agreement, the Loan Documents to which
Company is a party the Registration Rights Agreement or the Share Purchase
Agreement, nor the compliance with the terms and conditions thereof by
Company, (A) conflicts with, results in a breach or violation of, or
constitutes a default under, any of the terms, conditions or provisions of (x)
any term of any material agreement, instrument, order, writ, judgment or
decree known to me after due inquiry to which Company or any of its
Subsidiaries is a party or by which any of its respective properties or assets
are bound (B) results in the creation of any Lien upon any of the properties
or assets of Company or any of its Subsidiaries under any agreement or order
referred to in clause (x) above.
2. Each Subsidiary of Company that is a corporation or a limited
liability company is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate or other power and authority to own and operate its properties and
to carry on its business as now conducted. Except with respect to those
subsidiaries that are Massachusetts business trusts (as to which Peabody &
Brown, Massachusetts counsel is rendering an opinion) each Subsidiary of
Company that is a trust, partnership or joint venture is duly formed, validly
existing and in good standing under the laws of its jurisdiction of formation,
Page 170 of 208 pages
<PAGE>
and has all requisite power and authority to own and operate its properties
and to carry on its business as now conducted. Each such Subsidiary is duly
qualified to do business, and is in good standing, in each jurisdiction in
which it is necessary to so qualify.
3. To the best of my knowledge other than as disclosed in Schedule
4.6 annexed to the Agreement, there are no actions, suits or proceedings
pending or threatened against Company or any of its Subsidiaries which have a
significant likelihood of materially and adversely affecting either the
ability of Company to perform its obligations under any Loan Document, the
Registration Rights Agreement or the Share Purchase Agreement, or the
financial condition or operations of Company and its Subsidiaries, taken as a
whole.
Page 171 of 208 pages
<PAGE>
EXHIBIT III-C
POINT TO BE COVERED IN
OPINION OF MASSACHUSETTS COUNSEL
October 14, 1997
[Defined terms have meanings set forth in Agreement.]
[Opinion to recite materials reviewed and such assumptions and
qualifications that are satisfactory to counsel to Lenders.]
[Opinion to cover the effect on the subject transactions of only
Massachusetts law.]
1. Company is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and
has all requisite power and authority to own and operate its properties and to
carry on its business as now conducted.
2. Company has all requisite power and authority to execute,
deliver and perform the Agreement, the Loan Documents to which Company is a
party and the Share Purchase Agreement, the Registration Rights Agreement to
issue the Notes and the Common Shares to be issued pursuant to the Share
Purchase Agreement (the "Shares") and the Agreement, and to carry out the
transactions contemplated thereby. The authorized shares of beneficial
interest of Company consists of ___ Common Shares, no par value, of which
___________ Common Shares have been issued. Such Common Shares that are
outstanding have been duly authorized, are validly issued and are fully paid
and nonassessable shares of beneficial interest.
3. The execution, delivery and performance of the Agreement, the
Loan Documents to which Company is a party and the Share Purchase Agreement,
the issuance and payment of the Notes, and the issuance of the Shares have
been duly authorized by all necessary action on the part of Company. The
Agreement, the Loan Documents to which Company is a party, the Share Purchase
Agreement, the Registration Rights Agreement and the Notes have been duly
executed and delivered by Company.
4. Neither the execution and delivery of the Agreement, the Loan
Documents to which Company is a party or the Share Purchase Agreement, nor the
Registration Rights Agreement, nor the issuance and payment of the Notes (nor
the issuance of the Shares), by Company nor the consummation of the
transactions contemplated by the Agreement, the Loan Documents to which
Company is a party or the Share Purchase Agreement nor the Registration Rights
Agreement, nor the compliance with the terms and conditions thereof by
Company, (A) conflicts with, results in a breach or violation of, (x) any
present federal statute, rule or regulation binding on Company, or (B) results
in the creation of any Lien upon any of the properties or assets of Company.
Page 172 of 208 pages
<PAGE>
5. Each Subsidiary of Company that is Massachusetts business trust
liability company is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted.
6. No consents or approvals of, authorizations by, or
registrations, declarations or filings with, any Massachusetts governmental
authority are required by Company in connection with the execution and
delivery by Company of the Agreement, the Loan Documents or the Share Purchase
Agreement, the Registration Rights Agreement, or the extensions of credit
under the Agreement or the payment by Company of the Obligations thereunder or
the issuance and payment of the Notes or the issuance and sale of the Shares.
Approval of the Preferred Shares Amendments by Shareholders and
conversion of the Loan into Preferred Shares, such Preferred Shares will be
validly issued, fully paid and nonassessable preferred shares of beneficial
interest, entitled to the benefits of the Preferred Share Amendment.
Page 173 of 208 pages
<PAGE>
EXHIBIT V
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to the Convertible Term Loan Agreement, dated as of October
10, 1997 (such Agreement, as it may be amended, amended and restated,
supplemented or otherwise modified from time to time, the "Agreement";
capitalized terms used herein without definition shall have the meanings
assigned those terms in the Agreement) by and among Banyan Strategic Realty
Trust Company, a Massachusetts business trust, ("Company") and the Lenders
party thereto, pursuant to which Morgens, Waterfall, Vintiadis & Company, Inc.
acts as agent ("Agent"), this represents the Company's request to borrow on
____________ 19__, a Business Day prior to the Commitment Termination Date
$____________ in the aggregate, from Lenders on a pro rata basis. The
proceeds of such Loans are to be deposited in the account of Company as
follows: _____________________________________.
The undersigned officer certifies on behalf of Company that (1) the
representations and warranties contained in the Agreement and in the other
Loan Documents are true, correct and complete in all material respects on and
as of the Funding Date to the same extent as though made on and as of such
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
are true, correct and complete in all material respects on and as of such
earlier date; (2) no event has occurred and is continuing as of the Funding
Date, or would result from the consummation of the making of the Loans on such
date, that would constitute an Event of Default or Potential Event of Default;
(3) Company has performed in all material respect all agreements and satisfied
all conditions which the Agreement provides shall be performed or satisfied by
Company on or before the Funding Date; (4) no order, judgment or decree of any
court, arbitrator or government authority is in effect that purports to enjoin
or restrain any Lender from making the Loan to be made by it pursuant hereto;
(5) the making of the Loans on the Funding Date will not violate any law,
including, without limitation, Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System; and (6)
the use of proceeds of the Loans made pursuant hereto is in accordance with
the Underwriting Guidelines.
Dated: ____________________
BANYAN STRATEGIC REALTY TRUST COMPANY
By:__________________________________
Page 174 of 208 pages
<PAGE>
EXHIBIT VI
FORM OF GUARANTY
This Limited Guaranty is entered into as of ____________, 19__ by
[NAME OF GUARANTOR], a __________ corporation ("Guarantor"), in favor of and
for the benefit of the lenders ("Lenders") party to that certain Convertible
Term Loan Agreement dated as of October 10, 1997 by and among Banyan Strategic
Realty Trust, a Massachusetts business trust ("Company") and Lenders, pursuant
to which Morgens, Waterfall, Vintiadis & Company, Inc. acts as agent ("Agent")
(said Convertible Term Loan Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Agreement";
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined).
In order to induce Lenders to extend credit to Company pursuant to
the Agreement, Guarantor hereby irrevocably and unconditionally guaranties, as
primary obligor and not merely as surety, the due and punctual payment in full
of all Guarantied Obligations (as hereinafter defined) when the same shall
become due, whether at stated maturity, by acceleration, demand or otherwise
(including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Sec.
362(a)). The term "Guarantied Obligations" is used herein in its most
comprehensive sense and includes any and all Obligations of Company now or
hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, whether due or not due, and however arising under
or in connection with the Agreement and the other Loan Documents, including
those arising under successive borrowing transactions under the Agreement
which shall either continue the Obligations of Company or from time to time
renew them after they have been satisfied, subject to the provisions of the
succeeding paragraph.
Notwithstanding any other provision of this Guaranty, the obligation
of the Guarantor hereunder will not exceed ______________________ Dollars
($___________) on account of principal plus interest properly applicable
thereto in accordance with the Agreement plus expenses of Lenders or Agent
pursuant to subsection 8.2 of the Agreement. This limitation on the liability
of Guarantor hereunder is not intended to relieve Guarantor of its obligations
hereunder upon payment by Company or any other guarantor of all or a part of
the Obligations of Company under the Loan Documents, but is merely a statement
of the limited amount of the Guarantied Obligations, which may be less than
the entire amount of the Obligations of Company under the Loan Documents.
Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor
or surety other than payment in full of the Guarantied Obligations. In
furtherance of the foregoing and without limiting the generality thereof,
Guarantor agrees as follows: (a) this Guaranty is a guaranty of payment when
due and not of collectibility; (b) Agent or any Lender may from time to time,
without notice or demand and without affecting the validity or enforceability
Page 175 of 208 pages
<PAGE>
of this Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (i) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept or
refuse any offer of performance with respect to, or substitutions for, the
Guarantied Obligations or any agreement relating thereto and/or subordinate
the payment of the same to the payment of any other obligations, (iii) request
and accept other guaranties of the Guarantied Obligations and take and hold
security for the payment of this Guaranty or the Guarantied Obligations, (iv)
release, exchange, compromise, subordinate or modify, with or without
consideration, any security for payment of the Guarantied Obligations, any
other guaranties of the Guarantied Obligations, or any other obligation of any
Person with respect to the Guarantied Obligations, (v) enforce and apply any
security now or hereafter held by or for the benefit of Agent or any Lender in
respect of this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that Agent or
Lenders, or any of them, may have against any such security, as Agent in its
discretion may determine consistent with the Agreement and any applicable
security agreement, including foreclosure on any such security pursuant to one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, and (vi) exercise any other rights available
to Agent or Lenders, or any of them, under the Loan Documents, at law or in
equity; and (c) this Guaranty and the obligations of Guarantor hereunder shall
be valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than payment in full of the
Guarantied Obligations), including without limitation the occurrence of any of
the following, whether or not Guarantor shall have had notice or knowledge of
any of them: (i) any failure to assert or enforce or agreement not to assert
or enforce, or the stay or enjoining, by order of court, by operation of law
or otherwise, of the exercise or enforcement of, any claim or demand or any
right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations, (ii) any waiver,
amendment or modification of, or any consent to departure from, any of the
terms or provisions (including without limitation provisions relating to
events of default) of the Agreement, any of the other Loan Documents or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Guarantied Obligations, (iii) the Guarantied Obligations, or
any agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect, (iv) the application of payments received
from any source to the payment of indebtedness other than the Guarantied
Obligations, even though Agent or Lenders, or any of them, might have elected
to apply such payment to any part or all of the Guarantied Obligations, (v)
any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (vi) any defenses,
set-offs or counterclaims which Company may allege or assert against Agent or
any Lender in respect of the Guarantied Obligations, including but not limited
to failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury, and (vii) any other
act or thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of Guarantor as an obligor
in respect of the Guarantied Obligations.
Page 176 of 208 pages
<PAGE>
Guarantor hereby waives, for the benefit of Lenders and Agent: (a)
any right to require Agent or Lenders, as a condition of payment or
performance by Guarantor, to (i) proceed against Company, any other guarantor
of the Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any other guarantor of the Guarantied
Obligations or any other Person, (iii) proceed against or have resort to any
balance of any deposit account or credit on the books of Agent or any Lender
in favor of Company or any other Person, or (iv) pursue any other remedy in
the power of Agent or any Lender whatsoever; (b) any defense arising by reason
of the incapacity, lack of authority or any disability or other defense of
Company including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Guarantied Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of Company from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (d)
any defense based upon Agent's or any Lender's errors or omissions in the
administration of the Guarantied Obligations, except behavior which amounts to
bad faith; (e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Guaranty
and any legal or equitable discharge of Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that
Agent or any Lender protect, secure, perfect or insure any security interest
or lien or any property subject thereto; (f) notices, demands, presentments,
protests, notices of protest, notices of dishonor and notices of any action or
inaction, including acceptance of this Guaranty, notices of default under the
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guarantied Obligations or any
agreement related thereto, notices of any extension of credit to Company and
notices of any of the matters referred to in the preceding paragraph and any
right to consent to any thereof; and (g) to the fullest extent permitted by
law, any defenses or benefits that may be derived from or afforded by law
which limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Guaranty.
Until the Guarantied Obligations shall have been paid in full and
the Loan Commitments shall have terminated, Guarantor shall withhold exercise
of (a) any claim, right or remedy, direct or indirect, that Guarantor now has
or may hereafter have against Company or any of its assets in connection with
this Guaranty or the performance by Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise and including without
limitation (i) any right of subrogation, reimbursement or indemnification that
Guarantor now has or may hereafter have against Company, (ii) any right to
enforce, or to participate in, any claim, right or remedy that Agent or any
Lender now has or may hereafter have against Company, and (iii) any benefit
of, and any right to participate in, any collateral or security now or
hereafter held by Agent or any Lender, and (b) any right of contribution
Guarantor may have against any other guarantor of any of the Guarantied
Page 177 of 208 pages
<PAGE>
Obligations. Guarantor further agrees that, to the extent the agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification Guarantor may have against
Company or against any collateral or security, and any rights of contribution
Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights Agent or Lenders may have against Company, to all
right, title and interest Agent or Lenders may have in any such collateral or
security, and to any right Agent or Lenders may have against such other
guarantor.
Any indebtedness of Company now or hereafter held by Guarantor is
hereby subordinated in right of payment to the Guarantied Obligations, and any
such indebtedness of Company to Guarantor collected or received by Guarantor
after an Event of Default has occurred and is continuing shall be held in
trust for Agent on behalf of Lenders and shall forthwith be paid over to Agent
for the benefit of Lenders to be credited and applied against the Guarantied
Obligations.
Guarantor agrees to pay, or cause to be paid, on demand, and to save
Agent and Lenders harmless against liability for, any and all costs and
expenses (including fees and disbursements of counsel and allocated costs of
internal counsel) incurred or expended by Agent or any Lender in connection
with the enforcement of or preservation of any rights under this Guaranty.
It is not necessary for Lenders or Agent to inquire into the
capacity or powers of Guarantor or Company or the officers, directors or any
agents acting or purporting to act on behalf of any of them.
Lenders and Agent shall have no obligation to disclose or discuss
with Guarantor their assessment, or Guarantor's assessment, of the financial
condition of Company. Guarantor has adequate means to obtain information from
Company on a continuing basis concerning the financial condition of Company
and its ability to perform its obligations under the Loan Documents, and
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk
of nonpayment of the Guarantied Obligations. Guarantor hereby waives and
relinquishes any duty on the part of Agent or any Lender to disclose any
matter, fact or thing relating to the business, operations or condition of
Company now known or hereafter known by Agent or any Lender.
The rights, powers and remedies given to Lenders and Agent by this
Guaranty are cumulative and shall be in addition to and independent of all
rights, powers and remedies given to Lenders and Agent by virtue of any
statute or rule of law or in any of the other Loan Documents or any agreement
between Guarantor and Lenders and/or Agent or between Company and Lenders
and/or Agent. Any forbearance or failure to exercise, and any delay by any
Lender or Agent in exercising, any right, power or remedy hereunder shall not
impair any such right, power or remedy or be construed to be a waiver thereof,
nor shall it preclude the further exercise of any such right, power or remedy.
Page 178 of 208 pages
<PAGE>
Guarantor acknowledges and agrees that any interest on any portion
of the Guarantied Obligations which accrues after the commencement of any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company (or, if
interest on any portion of the Guarantied Obligations ceases to accrue by
operation of law by reason of the commencement of said proceeding, such
interest as would have accrued on such portion of the Guarantied Obligations
if said proceeding had not been commenced) shall be included in the Guarantied
Obligations because it is the intention of Guarantor and Agent that the
Guarantied Obligations which are guarantied by Guarantor pursuant to this
Guaranty should be determined without regard to any rule of law or order which
may relieve Company of any portion of such Guarantied Obligations.
In the event that all or any portion of the Guarantied Obligations
are paid by Company or any other guarantor, the obligations of Guarantor
hereunder shall continue and remain in full force and effect or be reinstated,
as the case may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from Agent or any Lender as a
preference, fraudulent transfer or otherwise, and any such payments which are
so rescinded or recovered shall constitute Guarantied Obligations for all
purposes under this Guaranty.
Guarantor hereby represents and warrants to Lenders that: (a)
Guarantor is duly organized, validly existing and in good standing under the
laws of the state of its [incorporation][organization]; (b) Guarantor has the
power, authority and legal right to execute, deliver and perform this Guaranty
and has taken all necessary action to authorize its execution, delivery and
performance of this Guaranty; (c) this Guaranty has been duly executed and
delivered by a duly authorized signatory of Guarantor, and this Guaranty
constitutes the legally valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws or equitable principles relating to or limiting creditors'
rights generally; and (d) the execution, delivery and performance of this
Guaranty will not violate any provision of any existing law or regulation
binding on Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on Guarantor, or the certificate
of incorporation or bylaws of Guarantor or any securities issued by Guarantor,
or any mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which Guarantor is a party or by which Guarantor or any of its
assets may be bound, the violation of which would have a material adverse
effect on the business, operations, assets or financial condition of
Guarantor, and will not result in, or require, the creation or imposition of
any Lien on any of its property, assets or revenues pursuant to the provisions
of any such mortgage, indenture, lease, contract or other agreement,
instrument or undertaking.
In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Page 179 of 208 pages
<PAGE>
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR, AGENT AND
LENDERS HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Guaranty is a continuing guaranty and shall be binding upon
Guarantor and its successors and assigns, and Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guarantied Obligations. This Guaranty shall inure to the benefit of
Lenders, Agent and their respective successors and assigns.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR
RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS GUARANTY GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS GUARANTY. Guarantor hereby agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to Guarantor at its address set forth below
its signature hereto, such service being hereby acknowledged by Guarantor to
be sufficient for personal jurisdiction in any action against Guarantor in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against Guarantor in the courts of any other jurisdiction.
GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, AGENT EACH
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Guarantor and, by its
acceptance of the benefits hereof, Agent each (i) acknowledges that this
waiver is a material inducement for Guarantor and Agent to enter into a
business relationship, that Guarantor and Agent have already relied on this
waiver in entering into this Guaranty or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this waiver in their
related future dealings, and (ii) further warrants and represents that each
has reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY. In the
event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
Page 180 of 208 pages
<PAGE>
IN WITNESS WHEREOF, Guarantor has [executed this Guaranty] [caused
this Guaranty to be duly executed and delivered by its officer thereunto duly
authorized] as of the date first written above.
[NAME OF GUARANTOR]
By: __________________________
[Title:_______________________]
Address: __________________________
__________________________
__________________________
Page 181 of 208 Pages
<PAGE>
SCHEDULE A
Restart Partners, L.P.
Restart Partners II, L.P.
Restart Partners III, L.P.
Restart Partners IV, L.P.
Restart Partners V, L.P.
Endowment Restart LLC
Morgens Waterfall Income Partners
Page 182 of 208 pages
<PAGE>
SCHEDULE 4.1
SUBSIDIARIES OF COMPANY
Page 183 of 208 pages
<PAGE>
SCHEDULE 4.6
LITIGATION
NONE
Page 184 of 208 pages
<PAGE>
SCHEDULE 4.13
ENVIRONMENTAL MATTERS
NONE
Page 185 of 208 pages
<PAGE>
SCHEDULE 4.15
INSURANCE
Page 186 of 208 pages
<PAGE>
SCHEDULE 6.1
EXISTING INDEBTEDNESS
SEE SCHEDULE 4.5
Page 187 of 208 pages
<PAGE>
SCHEDULE 6.2
EXISTING LIENS
SEE SCHEDULE 4.5
Page 188 of 208 pages
<PAGE>
SCHEDULE 6.4
EXISTING CONTINGENT OBLIGATIONS
NONE
Page 189 of 208 pages
<PAGE>
Exhibit 6
FORM OF AMENDMENT TO THE DECLARATION OF TRUST
of
BANYAN STRATEGIC REALTY TRUST,
a Massachusetts business trust
BANYAN STRATEGIC REALTY TRUST, a Massachusetts business trust (the
"Trust") does hereby amend its Declaration of Trust in the following respects:
A new Section 7.2 is hereby added to the Declaration of Trust of the
Trust to read, in full, as follows:
7.2 The beneficial interests in the Trust designated as preferred
shares shall, in addition to those provided by applicable law, have the
following rights, preferences, privileges and terms:
7.2. Designation, Rank and Number of Shares. The preferred shares
created and authorized hereby shall be designated as the "Series A Convertible
Preferred Shares" ("Series A Convertible Preferred Shares"). The Series A
Convertible Preferred Shares will rank, with respect to dividend rights and
rights on liquidation, winding-up and dissolution, (i) senior to Junior
Securities, as they exist on the date hereof or as such Junior Securities may
be constituted from time to time; (ii) on a parity with Parity Securities, as
such Parity Securities may be constituted from time to time; and (iii) junior
to Senior Securities, as such Senior Securities may be constituted from time
to time. The number of Series A Convertible Preferred Shares shall be
200,000. The Series A Convertible Preferred Shares shall be issuable solely
in whole shares that shall entitle the holder thereof to exercise the voting
rights, to participate in the distributions and to have the benefit of all
other rights of holders of Series A Convertible Preferred Shares as set forth
herein and in the Declaration of Trust and under applicable law.
7.2.2 Definitions. Capitalized terms used herein have the
meanings assigned to them herein. The following terms, which are not
otherwise defined herein, when used herein have the meanings set forth below:
"Board" means the Board of Trustees of the Trust.
"Change in Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Trust's
assets as an entirety or substantially as an entirety to any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in one or a
series of transactions, provided that a transaction where the holders of
Common Shares immediately prior to such transaction own, directly or
Page 190 of 208 pages
<PAGE>
indirectly, 50% or more of the Common Shares of such person or group
immediately after such transactions shall not be a Change in Control; (ii) the
acquisition by the Trust and/or any of its subsidiaries of 50% or more of the
aggregate voting power of the Common Shares in one transaction or a series of
related transactions; (iii) the liquidation or dissolution of the Trust,
provided that a liquidation or dissolution of the Trust which is part of a
transaction or series of related transactions that does not constitute a
Change in Control under the "provided" clause of clause (i) above shall not
constitute a Change in Control under this clause (iii); or (iv) any
transaction or series of transactions (as a result of a tender offer, merger,
consolidation or otherwise) that results in, or that is in connection with,
(a) any person, including a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) that includes such person, acquiring "beneficial ownership"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
50% or more of the aggregate voting power of the Common Shares of the Trust or
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly, of 50% or more of the Common Shares outstanding, or (b) less than
50% (measured by either the aggregate voting power or the right to participate
in dividends, distributions or liquidation of all classes) of the Trust's
Common Shares being registered under Section 12(b) or 12(g) of the Exchange
Act.
"Change in Control Redemption Price" means 105% of the Liquidation
Preference.
"Common Shares" means the common shares of beneficial interest, $.01
par value per share, of the Trust.
"Conversion Rate" has the meaning specified in Section 7.2.8(a).
"Current Market Price" per share of beneficial interest (or other
security, as applicable) on any date shall be deemed to be the average of the
sale prices of a share of such beneficial interest (or other security, as
applicable) for the fifteen consecutive trading days commencing twenty trading
days before the earliest of the date in question and the date before the "ex
date" with respect to the issuance or distribution requiring such computation.
For the purposes of this definition, the term "ex date", when used with
respect to any issuance or distribution, means the first date on which the
share of beneficial interest (or other security, as applicable) trades regular
way on the principal national securities exchange on which the share of
beneficial interest is listed or admitted to trading (or if not so listed or
admitted, on NASDAQ, or a similar organization if NASDAQ is no longer
reporting trading information) without the right to receive such issuance or
distribution.
"Default Period" has the meaning specified in Section 7.2.3(b)(1).
"Determination Date" means, with respect to any dividend or other
distribution, the date fixed for the determination of the holders of shares of
beneficial interest or other equity securities of the Trust entitled to
receive such dividend or distribution, or if a dividend or distribution is
paid or made without fixing such a date, the date of such dividend or
distribution.
Page 191 of 208 pages
<PAGE>
"Exchange Act" - to come.
"Holder Redemption Date" has the meaning specified in Section
7.2.6(c).
"Holder Redemption Price" has the meaning specified in Section
7.2.6(a).
"Implied Price" means the Stated Value divided by the Conversion
Rate.
"Issue Date" has the meaning specified in Section 7.2.4(a).
"Liquidation" means the date of the final distribution of the assets
of the Trust upon any liquidation, dissolution or winding up of the Trust,
whether voluntary or involuntary.
"Liquidation Preference" has the meaning specified in Section
7.2.7.
"Junior Securities" means the Common Shares and the shares of any
other class or series of beneficial interest or other equity securities of the
Trust which (by the terms of the Declaration of Trust or of the instrument by
which the Board acting pursuant to authority granted in the Declaration of
Trust, shall fix the relative rights, preferences and limitations thereof)
shall be subordinated to the Series A Convertible Preferred Shares in respect
of the right to receive dividends and assets of the Trust in Liquidation.
"Optional Conversion" has the meaning specified in Section 7.2.8(a).
"Notice of Change in Control" shall state (i) that a Change in
Control has occurred, and that the holder may exercise its right to optional
redemption ("Change in Control Redemption Right"), (ii) the expiration of such
Change in Control Redemption Right (iii) the Change in Control Redemption
Price, and (iv) a description of the procedure which a holder must follow to
exercise its Change in Control Redemption Right.
"Parity Securities" means the shares of any class or series of
beneficial interest or other equity securities of the Trust which (by the
terms of the Declaration of Trust or of the instrument by which the Board,
acting pursuant to authority granted in the Declaration of Trust, shall fix
the relative rights, preferences and limitations thereof) shall, in the event
that the amounts payable thereon in Liquidation are not paid in full, be
entitled to share ratably with the Series A Convertible Preferred Shares in
any distribution of assets other than by way of dividends in accordance with
the sums which would be payable in such distribution of assets if all sums
payable were discharged in full.
"Preferred Shares" means the preferred shares of beneficial
interest, $.01 par value per share, of the Trust.
"Redemption Date" has the meaning specified in Section 7.2.5(b).
Page 192 of 208 pages
<PAGE>
"Redemption Default Period" has the meaning specified in Section
7.2.6(d)(1).
"Redemption Price" means 100% of Liquidation Preference, as required
pursuant to Section 7.2.5 herein.
"Sale Price" has the meaning specified in Section 7.2.8(c)(4).
"Senior Securities" means the shares of any class or series of
beneficial interest or other equity securities of the Trust which (by the
terms of the Declaration of Trust or of the instrument by which the Board
acting pursuant to authority granted in the Declaration of Trust, shall fix
the relative rights, preferences and limitations thereof) shall be senior to
the Series A Convertible Preferred Shares in respect of the right to receive
dividends and assets of the Trust in Liquidation.
"Series A Convertible Preferred Shares" has the meaning specified in
Section 7.2.1.
"Shares" means the Common Shares and the Preferred Shares.
"Stated Value" means the per share value of Series A Convertible
Preferred Shares, which shall be initially established at One Hundred Dollars
($100.00) per share.
"Trust" means Banyan Strategic Realty Trust, a Massachusetts
business trust.
"Voting Parity Securities" has the meaning specified in Section
7.2.3(b)(1).
7.2.3 Voting Rights.
(a)Voting Power. The holders of Series A Convertible Preferred
Shares shall have the right to vote together with the holders of Common Shares
as a single class in any and all matters with respect to which holders of
Common Shares have voting or consent rights. Each Series A Convertible
Preferred Share shall be entitled to cast such number of votes as are equal to
the number of votes which could be cast by the number of Common Shares into
which such Series A Convertible Preferred Share is then convertible; provided,
however, that any fraction of a vote attributable to the aggregate number of
votes entitled to be cast by a shareholder as a result of computing votes from
the voting conversion calculation shall be disregarded for voting purposes.
The Conversion Rate to be used in connection with the foregoing shall be the
Conversion Rate in effect on the date fixed for the determination of holders
of Common Shares entitled to vote on such matter. The holders of the Series A
Convertible Preferred Shares and the holders of Common Shares shall vote as
one class except as otherwise provided by law or this Declaration of Trust.
Page 193 of 208 pages
<PAGE>
(b) Votes on Default.
(1) In the event that any accrued dividends (whether or not
declared) on the Series A Convertible Preferred Shares shall not have been
paid when required by Section 7.2.4, in addition to their other rights,
holders of Series A Convertible Preferred Shares shall be entitled to vote
their Series A Convertible Preferred Shares, together with the holders of any
Parity Securities upon which like voting rights have been conferred and are
exercisable (the "Voting Parity Securities"), in accordance with the
procedures set forth below, (i) immediately to elect, as a class, two trustees
to the Board of Trustees, and, (ii) if, on the first anniversary after the
election (the "Initial Election") of such trustees, any accrued dividends
(whether or not declared) on the Series A Convertible Preferred Shares shall
not have been paid, to elect one additional trustee, and (iii) if, on each
succeeding anniversary of the Initial Election any accrued dividends (whether
or not declared) on the Series A Preferred Shares shall not have been paid, to
elect one additional trustee. So long as any Series A Convertible Preferred
Shares shall be outstanding, the holders of Series A Convertible Preferred
Shares shall retain the right to vote and elect, with the holders of such
Voting Parity Securities, as a class, the trustees permitted by the preceding
sentence until all accrued but unpaid dividends on the Series A Convertible
Preferred Shares are paid in full or declared and set aside for payment. The
period during which holders of Series A Convertible Preferred Shares retain
such right is referred to as a "Default Period".
(2) So long as any Series A Convertible Preferred Shares shall be
outstanding, during any Default Period, the voting right described in
subsection (1) above may be exercised initially at a special meeting called
pursuant to subsection (3) below or at any annual meeting of shareholders.
The absence of a quorum of holders of Common Shares (or any class thereof)
shall not affect the exercise of such voting rights by the holders of Series A
Convertible Preferred Shares and Voting Parity Securities. Holders of Series
A Convertible Preferred Shares and Voting Parity Securities shall be entitled,
as among the class of holders of Series A Convertible Preferred Shares and
Voting Parity Securities, to one vote for each $100 of Liquidation Preference
represented by the shares so held.
Page 194 of 208 pages
<PAGE>
(3) Unless the holders of Series A Convertible Preferred Shares
and Voting Parity Securities, if any are then outstanding, have, during an
existing Default Period, previously exercised their right to elect trustees,
the Board may, and upon the request of the holders of record of not less than
10% of the aggregate Liquidation Preference of Series A Convertible Preferred
Shares, the Board shall, order the calling of a special meeting of holders of
Series A Convertible Preferred Shares and Voting Parity Securities, if any are
then outstanding, which meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Trust. Notice of such meeting and of
any annual meeting at which holders of Series A Convertible Preferred Shares
and Voting Parity Securities are entitled to vote pursuant to this subsection
(3) shall be given to each holder of record of Series A Convertible Preferred
Shares by mailing a copy of such notice to such holder at such holder's last
address as it appears on the books of the Trust. Such meeting shall be called
for a date not later than 90 days after such order or request, or, in default
of the calling of such meeting within 90 days after such order or request,
such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than 10% of the aggregate
Liquidation Preference of the Series A Convertible Preferred Shares.
Notwithstanding the provisions of this subsection (3), the Trust shall not be
required to call such a special meeting if such request is received less than
120 days before the date fixed for the next ensuing annual meeting of
shareholders of the Trust, at which meeting such trusteeships shall be filled
by vote of the holders of Series A Convertible Preferred Shares and Voting
Parity Securities.
(4) During any Default Period, the holders of Common Shares, and
other classes of beneficial interest or other equity securities of the Trust,
if applicable, shall continue to be entitled to elect all of the trustees
unless and until the holders of Series A Convertible Preferred Shares and
Voting Parity Securities shall have exercised their right to elect trustees
voting as a class. After the exercise of this right (i) the trustees so
elected by the holders of Series A Convertible Preferred Shares and Voting
Parity Securities shall continue in office until the earlier of (A) such time
as their successors shall have been elected by such holders and (B) the
expiration of the Default Period, and (ii) any vacancy in the Board with
respect to a trusteeship to be elected pursuant to this Section by the holders
of Series A Convertible Preferred Shares and Voting Parity Securities may be
filled by vote of the remaining trustee(s) previously elected by such holders.
References in this subsection (b) to trustees elected by the holders of a
particular class of beneficial interest or other equity security shall include
trustees elected by such trustees to fill vacancies as provided in clause (ii)
of the foregoing sentence.
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(5) Immediately upon the expiration of a Default Period, (i) the
right of the holders of Series A Convertible Preferred Shares to elect
trustees pursuant to this Section 7.2.3(b) shall cease, (ii) the term of any
trustees elected by the holders of Series A Convertible Preferred Shares and
Voting Parity Securities pursuant to this Section shall terminate, and (iii)
the number of trustees shall be such number as may be provided for in the
Declaration of Trust or bylaws irrespective of any increase made pursuant to
subsection (1) of this Section 7.2.3(b) (such number being subject, however,
to subsequent change in any manner provided by law or in the Declaration of
Trust or bylaws).
(c) Issuance of Parity and Senior Securities. So long as any
Series A Convertible Preferred Shares are outstanding, the vote or consent of
the holders of 66-2/3% of the outstanding Series A Convertible Preferred
Shares, voting together as a single class, shall be necessary to authorize or
issue any additional class or series of Parity Securities or Senior
Securities, or any security convertible into Parity Securities or Senior
Securities, or to issue (except in replacement or exchange of outstanding
shares) any share of Series A Convertible Preferred Shares other than upon
conversion of the notes issued pursuant to the Convertible Term Loan Agreement
dated as of October 10, 1997 between the Trust and the Lenders named therein.
(d) Amendments to Declaration of Trust. So long as any Series A
Convertible Preferred Shares are outstanding, in addition to any vote or
consent that may be otherwise required by law or this Declaration of Trust,
the vote or consent of the holders of a majority of the Series A Convertible
Preferred Shares outstanding shall be required to amend, alter or repeal any
provision of this Declaration of Trust so as to affect adversely the rights,
preferences, powers or privileges of the Series A Convertible Preferred
Shares.
7.2.4 Dividends. (a)The holders of Series A Convertible Preferred
Shares shall be entitled to receive, when, as and if declared by the Board,
out of funds legally available therefor, cash dividends, accruing from the
date of issuance, at the annual rate of 10% per annum on the Stated Value of
the Series A Convertible Preferred Shares, and no more, payable, when, as and
if declared by the Board, quarterly on March 31, June 30, September 30 and
December 31 of each year (each quarterly period ending on any such date being
hereinafter referred to as a "dividend period"), at such annual rate. Each
dividend will be payable to holders of record as they appear on the stock
books of the Trust on such record dates, not exceeding 45 days preceding the
payment dates thereof, as shall be fixed by the Board of the Trust. The date
of initial issuance of a share of Series A Convertible Preferred Shares is
hereinafter referred to as the "Issue Date" of such share. Dividends payable
on the Series A Convertible Preferred Shares (i) for any period other than a
full dividend period, shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and (ii) for each full dividend period,
shall be computed by dividing the annual dividend rate by four.
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(b) Dividends on Series A Convertible Preferred Shares shall be
cumulative from the Issue Date whether or not there shall be funds legally
available for the payment thereof. If there shall be outstanding shares of
any other series of Preferred Shares ranking on a parity with the Series A
Convertible Preferred Shares as to dividends, no full dividends shall be
declared or paid or set apart for payment on any such other series for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Convertible Preferred Shares for all
dividend periods terminating on or prior to the date of payment of such
dividends. If dividends on the Series A Convertible Preferred Shares and on
any other series of Preferred Shares ranking on a parity as to dividends with
the Series A Convertible Preferred Shares are in arrears, in making any
dividend payment on account of such arrears, the Trust shall make payments
ratably upon all outstanding shares of the Series A Convertible Preferred
Shares and shares of such other series of Preferred Shares in proportion to
the respective amounts of dividends in arrears on the Series A Convertible
Preferred Shares and on such other series of Preferred Shares to the date of
such dividend payment. During a Default Period, the holders of the Series A
Convertible Preferred Shares shall be entitled to receive dividends at an
annual rate of 11% per annum. No further interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
which may be in arrears.
(c) Unless full cumulative dividends on all outstanding Series A
Convertible Preferred Shares shall have been paid or declared and set aside
for payment for all past dividend periods and the Trust is not in default or
in arrears in respect to the optional redemption of any Series A Convertible
Preferred Shares, no dividend shall be declared upon the Junior Securities,
nor shall the Trust make any payment on account of, or set apart money for,
the purchase, redemption or other retirement of, or for a sinking or other
analogous fund for any shares of Junior Securities or make any distribution in
respect thereof, whether in cash or property or in obligations or shares of
beneficial interest or other equity security of the Trust, other than
distributions of Junior Securities which is neither convertible into, nor
exchangeable or exercisable for, any securities of the Trust other than Junior
Securities.
Page 197 of 208 pages
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7.2.5 Redemption at the Option of the Trust.
(a) At any time, or from time to time, from and after three years
after their Issue Date, the Series A Convertible Preferred Shares issued on
such Issue Date shall be redeemable, in whole or in part, at the option of the
Trust, upon the giving of notice as provided in Section 7.2.5(b) hereof, at
the Redemption Price plus accrued and unpaid dividends to and including the
Redemption Date, without interest.
(b) At least 30 days, but not more than 60 days, prior to the date
fixed for the redemption of Series A Convertible Preferred Shares pursuant to
Section 7.2.5(a) hereof (the "Redemption Date"), written notice of such
redemption shall be mailed to each holder of record of Series A Convertible
Preferred Shares to be redeemed in a postage prepaid envelope sent by first
class mail and addressed to such holders at their last addresses as they shall
appear on the stock register of the Trust.
Each such notice shall state:
(i) the Redemption Date;
(ii) the number of Series A Convertible Preferred Shares to be
redeemed and, if less than all of the Series A Convertible Preferred Shares
held by such holder are to be redeemed from such holder, the number of Series
A Convertible Preferred Shares to be redeemed from such holder and the method
used to calculate such number;
(iii) the Redemption Price and the amount of any accrued but
unpaid dividends to and including the Redemption Date; and
(iv) the place or places where certificates for such Series A
Convertible Preferred Shares are to be surrendered for payment of the
Redemption Price.
On or after the Redemption Date, each holder of Series A Convertible
Preferred Shares to be redeemed shall present and surrender its certificate or
certificates for such Series A Convertible Preferred Shares to the Trust at
the place designated in such notice, and thereupon, the Redemption Price
(together with any accrued by unpaid dividends to and including the Redemption
Date) for such Series A Convertible Preferred Shares shall be paid to or on
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each surrendered certificate shall be canceled. In
the event that fewer than all of the Series A Convertible Preferred Shares
represented by such certificate shall be redeemed, a new certificate shall be
issued to the person whose name appears on such certificate representing the
unredeemed Series A Convertible Preferred Shares. The issuance of such new
certificates shall be made without charge to the holder for any tax or
withholding imposed in respect of the issuance thereof, other than any tax
which may be payable with respect to any transfer involved in the issue and
delivery of any certificate in a name other than that of the holder of the
Series A Convertible Preferred Shares being redeemed.
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(c) If following the making of the Redemption Notice contemplated
by Section 7.2.5(b), but on or before any Redemption Date, the Trust deposits
with any bank or trust company in New York, as a trust fund, (1) a sum
(including accrued and unpaid dividends) sufficient to redeem, on the
Redemption Date, the Series A Convertible Preferred Shares called for
redemption and (2) irrevocable instructions and authority to the bank or trust
company to give notice of redemption thereof (or to complete the giving of the
notice if already commenced) and to pay, on and after the Redemption Date or
prior thereto, the Redemption Price of the Series A Convertible Preferred
Shares to their respective holders upon the surrender of their share
certificates, then from and after the Redemption Date, the shares so called
shall be redeemed on, and dividends on those shares shall cease to accrue
after, the Redemption Date. The deposit shall constitute full payment of the
shares to their holders and from and after the Redemption Date the shares
shall no longer be outstanding and the holders shall cease to be shareholders
with respect to those shares and shall have no rights with respect thereto
except the right to receive from the bank or trust company payment of the
Redemption Price of the shares without interest (upon the surrender of their
certificates). Notwithstanding anything in this Section 7.2.5(c) to the
contrary, any rights of conversion which may be provided under this Section
7.2 for those shares shall continue until the Redemption Date. Any moneys so
deposited on account of the Redemption Price of Series A Convertible Preferred
Shares that are converted after the making of that deposit shall be repaid to
the Trust forthwith upon the conversion of such Series A Convertible Preferred
Shares. Any interest accrued on any funds so deposited shall be property of,
and paid to, the Trust. If the holders of Series A Convertible Preferred
Shares so called for redemption shall not, at the end of two years from the
Redemption Date, have claimed any funds so deposited, the bank or trust
company shall pay over to the Trust the unclaimed funds, and the bank or trust
company shall thereafter be relieved of all responsibility to those holders
and those holders shall look only to the Trust for payment of the Redemption
Price.
(d) If fewer than all of the Series A Convertible Preferred Shares
are to be redeemed, the Board of Trustees of the Trust shall allocate the
aggregate number of shares to be redeemed pro rata (or as nearly pro rata as
practicable) or by lot.
7.2.6 Redemption at the Option of the Holder.
(a) At any time, or from time to time, three years after the Issue
Date of Series A Convertible Preferred Shares, the Series A Convertible
Preferred Shares issued on such Issue Date shall be redeemable, in whole or in
part, at the option of the Holder, upon the giving of notice as provided in
Section 7.2.6(c) hereof, at a per share price equal to 100% of the Stated
Value (the "Holder Redemption Price") plus accrued and unpaid dividends to and
including the Holder Redemption Date, without interest.
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<PAGE>
(b) If there occurs a Change in Control with respect to the Trust,
then each share of Series A Convertible Preferred Shares may be redeemed, at
the option of the holder thereof at any time from the date of such Change in
Control until the expiration of 90 days after the date of the Notice of Change
in Control has been received by such holder of Series A Convertible Preferred
Shares, at the Change in Control Redemption Price.
(c) At least 5 days prior to the date of the Holder's exercise of
its option to have Series A Convertible Preferred Shares redeemed pursuant to
Section 7.2.6(a) hereof (the "Holder Redemption Date"), written notice of such
exercise of its option, stating the number of shares to be redeemed and the
Holder Redemption Date, shall be mailed to the Trust (the "Holder Redemption
Notice").
On or after the Holder Redemption Date, each holder of Series A
Convertible Preferred Shares to be redeemed shall present and surrender its
certificate or certificates for such Series A Convertible Preferred Shares to
the Trust at a place designated by the Trust, and thereupon, the Holder
Redemption Price (together with any accrued by unpaid dividends to and
including the Holder Redemption Date) for such Series A Convertible Preferred
Shares shall be paid to or on the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled. In the event that fewer than all of the Series
A Convertible Preferred Shares represented by such certificate shall be
redeemed, a new certificate shall be issued to the person whose name appears
on such certificate representing the unredeemed Series A Convertible Preferred
Shares. The issuance of such new certificates shall be made without charge to
the holder for any tax or withholding imposed in respect of the issuance
thereof; provided that the Trust shall not be required to pay any tax which
may be payable with respect to any transfer involved in the issue and delivery
of any certificate in a name other than that of the holder of the Series A
Convertible Preferred Shares being redeemed.
(d) If following the making of the Holder Redemption Notice
contemplated by Section 7.2.6(c), but on or before any Holder Redemption Date,
the Trust deposits with any bank or trust company in New York, as a trust
fund, (1) a sum (including accrued and unpaid dividends) sufficient to redeem,
on the Holder Redemption Date, the Series A Convertible Preferred Shares
selected for redemption and (2) irrevocable instructions and authority to the
bank or trust company to pay, on and after the Holder Redemption Date or prior
thereto, the Holder Redemption Price of the Series A Convertible Preferred
Shares to their respective holders upon the surrender of their share
certificates, then within 90 days after the Holder Redemption Date, the shares
so identified in the Holder Redemption Notice as shares to be redeemed shall
be redeemed on the date the respective share certificates for such shares have
been surrendered, or upon receipt of sufficient evidence as to lost, mutilated
or destroyed share certificates, and dividends on those shares shall cease to
accrue after, the Holder Redemption Date. Any shares identified in the Holder
Redemption Notice to be redeemed, whose respective share certificates, or
requisite evidence of loss, mutilation or destruction, have not been
surrendered within 90 days of the Holder Redemption Date, shall not be
Page 200 of 208 pages
<PAGE>
redeemed, and the Holder Redemption Notice relating to such unredeemed shares
shall be deemed cancelled, and such shares shall remain, and be deemed to have
been, outstanding. The deposit shall constitute full payment of the shares to
their holders and from and after the Holder Redemption Date the shares shall
no longer be outstanding and the holders shall cease to be shareholders with
respect to those shares and shall have no rights with respect thereto except
the right to receive from the bank or trust company payment of the Holder
Redemption Price of the shares without interest (upon the surrender of their
certificates). Notwithstanding anything in this Section 7.2.6(d) to the
contrary, any rights of conversion which may be provided in this Section 7.2
for those shares shall continue until the Holder Redemption Date. Any moneys
so deposited on account of the Holder Redemption Price of Series A Convertible
Preferred Shares that are converted after the making of that deposit shall be
repaid to the Trust forthwith upon the conversion of such Series A Convertible
Preferred Shares. Any interest accrued on any funds so deposited shall be
property of, and paid to, the Trust. If the holders of Series A Convertible
Preferred Shares so selected for redemption shall not, at the end of two years
from the Holder Redemption Date, have claimed any funds so deposited, the bank
or trust company shall pay over to the Trust the unclaimed funds, and the bank
or trust company shall thereafter be relieved of all responsibility to those
holders and those holders shall look only to the Trust for payment of the
Holder Redemption Price.
(e) Votes on Redemption Default.
(1) In the event that the Trust fails to redeem any share of
Series A Convertible Preferred Shares selected for redemption by the holder
thereof pursuant to Section 7.2.6(a) or 7.2.6(b) above in the manner set forth
in 7.2.6(c) and 7.2.6(d) above (the "Selected Shares"), then holders of Series
A Convertible Preferred Shares shall be entitled to vote their Series A
Convertible Preferred Shares, together with the holders of any Voting Parity
Securities, in accordance with the procedures set forth below, (i) immediately
to elect, as a class, two trustees to the Board of Trustees, and, (ii) if, on
the first anniversary after the election (the "Redemption Initial Election")
of such trustees, any Selected Shares have yet to be redeemed, to elect as a
class the one additional trustee, and (iii) if on each succeeding anniversary
of the Redemption Initial Election, any Selected Shares have yet to be
redeemed, to elect one additional trustee. So long as any Selected Shares are
outstanding, the holders of Series A Convertible Preferred Shares shall retain
the right to vote and elect, with the holders of such Voting Parity
Securities, as a class, the trustees permitted by the preceding sentence,
until all Selected Shares have been redeemed by the Trust. The period during
which holders of Series A Convertible Preferred Shares retain such right is
referred to as a "Redemption Default Period".
Page 201 of 208 pages
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(2) So long as any Selected Shares are outstanding, during any
Redemption Default Period, the voting right described in subsection (1) above
may be exercised initially at a special meeting called pursuant to subsection
(3) below or at any annual meeting of shareholders. The absence of a quorum
of holders of Common Shares (or any class thereof) shall not affect the
exercise of such voting rights by the holders of Series A Convertible
Preferred Shares and Voting Parity Securities. Holders of Series A
Convertible Preferred Shares and Voting Parity Securities shall be entitled,
as among the class of holders of Series A Convertible Preferred Shares and
Voting Parity Securities, to one vote for each $100 of Liquidation Preference
represented by the shares so held.
(3) Unless the holders of Series A Convertible Preferred Shares
and Voting Parity Securities, if any are then outstanding, have, during an
existing Redemption Default Period, previously exercised their right to elect
trustees, the Board may, and upon the request of the holders of record of not
less than 10% of the aggregate liquidation preference of Series A Convertible
Preferred Shares and Voting Parity Securities, the Board shall, order the
calling of a special meeting of holders of Series A Convertible Preferred
Shares and Voting Parity Securities, if any Series A Convertible Preferred
Shares are then outstanding, which meeting shall thereupon be called by the
President, a Vice President or the Secretary of the Trust. Notice of such
meeting and of any annual meeting at which holders of Series A Convertible
Preferred Shares and Voting Parity Securities are entitled to vote pursuant to
this subsection (3) shall be given to each holder of record of Series A
Convertible Preferred Shares by mailing a copy of such notice to such holder
at such holder's last address as it appears on the books of the Trust. Such
meeting shall be called for a date not later than 90 days after such order or
request, or, in default of the calling of such meeting within 90 days after
such order or request, such meeting may be called on similar notice by any
shareholder or shareholders owning in the aggregate not less than 10% of the
aggregate liquidation preference of the Series A Convertible Preferred Shares
and Voting Parity Securities. Notwithstanding the provisions of this
subsection (3), the Trust shall not be required to call such a special meeting
if such request is received less than 120 days before the date fixed for the
next ensuing annual meeting of shareholders of the Trust, at which meeting
such trusteeships shall be filled by vote of the holders of Series A
Convertible Preferred Shares and Voting Parity Securities.
(4) During any Redemption Default Period, the holders of Common
Shares, and other classes of beneficial interest or other equity securities of
the Trust, if applicable, shall continue to be entitled to elect all of the
trustees unless and until the holders of Series A Convertible Preferred Shares
and Voting Parity Securities shall have exercised their right to elect
trustees voting as a class. After the exercise of this right (i) the trustees
so elected by the holders of Series A Convertible Preferred Shares and Voting
Parity Securities shall continue in office until the earlier of (A) such time
as their successors shall have been elected by such holders and (B) the
expiration of the Redemption Default Period, and (ii) any vacancy in the Board
with respect to a trusteeship to be elected pursuant to this Section by the
holders of Series A Convertible Preferred Shares and Voting Parity Securities
Page 202 of 208 pages
<PAGE>
may be filled by vote of the remaining trustee(s) previously elected by such
holders. References in this subsection (c) to trustees elected by the holders
of a particular class of shares of beneficial interest or other equity
securities shall include trustees elected by such trustees to fill vacancies
as provided in clause (ii) of the foregoing sentence.
(5) Immediately upon the expiration of a Redemption Default
Period, (i) the right of the holders of Series A Convertible Preferred Shares
to elect trustees pursuant to this Section shall cease, (ii) the term of any
trustees elected by the holders of Series A Convertible Preferred Shares and
Voting Parity Securities pursuant to this Section shall terminate, and (iii)
the number of trustees shall be such number as may be provided for in the
Declaration of Trust or bylaws irrespective of any increase made pursuant to
subsection (1) of this Section 7.2.6(e) (such number being subject, however,
to subsequent change in any manner provided by law or in the Declaration of
Trust or bylaws).
7.2.7 Priority of Series A Convertible Preferred Shares in event
of Liquidation, Dissolution or Winding Up. In the event of any Liquidation,
after payment or provision for payment of the debts and other liabilities of
the Trust, and after payment or provision for payment to holders of Senior
Securities (provided that the issuance of such Senior Securities was duly
approved by the holders of Series A Convertible Preferred Shares in accordance
with the provision of Section 3(c) herein), the holders of Series A
Convertible Preferred Shares shall be entitled to receive, out of the
remaining net assets of the Trust, the amount of One Hundred dollars ($100.00)
plus accrued and unpaid dividends (the "Liquidation Preference") in cash for
each share of Series A Convertible Preferred Shares, before any payment shall
be made or any assets distributed to the holders of the Common Shares or any
other Junior Securities upon such Liquidation. If upon any Liquidation the
amounts payable with respect to the Liquidation Preference of Series A
Convertible Preferred Shares and any Parity Securities are not paid in full,
the holders of Series A Convertible Preferred Shares and of the Parity
Securities will share pro rata in the amounts payable and other property
distributable with respect to such Liquidation so that the per share amounts
to which holders of Series A Convertible Preferred Shares and the Parity
Securities are entitled will in all cases bear to each other the same ratio
that the Liquidation Preferences of the Series A Convertible Preferred Shares
and the liquidation preference of the Parity Securities bear to each other.
Except as otherwise provided in this Section 7.2.7, holders of Series A
Convertible Preferred Shares shall not be entitled to any distribution in the
event of Liquidation. Neither a consolidation, merger or other business
combination of the Trust with or into another corporation or other entity, nor
a sale or transfer of all or part of the Trust's assets for cash, securities
or other property shall constitute a Liquidation for purposes of this Section
7.2.7. With regard to rights to receive distributions upon Liquidation, the
Series A Convertible Preferred Shares shall rank prior to any other equity
securities of the Trust, including the Common Shares of the Trust except with
respect to Senior Securities and Parity Securities.
Page 203 of 208 pages
<PAGE>
7.2.8 Conversion.
(a) Optional Conversion. Each share of Series A Convertible
Preferred Shares is convertible, at any time or from time to time prior to the
close of business on the Redemption Date, in whole or in part, at the option
of the holders thereof ("Optional Conversion"), into duly and validly issued,
fully paid and nonassessable Common Shares at a rate of 19.4174 Common Shares
for each share of Series A Convertible Preferred Shares, subject to adjustment
as set forth below (such rate, as adjusted from time to time, being the
"Conversion Rate"). If sufficient funds for redemption have been deposited as
contemplated by subsections 7.2.5(a) or 7.2.6(a), the right of conversion of
any Series A Convertible Preferred Shares called for redemption will terminate
at the close of business on the Redemption Date or Holder Redemption Date, as
applicable, with respect to such Series A Convertible Preferred Shares.
(a) Optional Conversion of Series A Convertible Preferred Shares
may be effected by delivering the certificates evidencing such Series A
Convertible Preferred Shares, together with written notice of conversion and
proper assignment of such certificates to the Trust or in blank, to the office
maintained by the Trust for that purpose. Each Optional Conversion shall be
deemed to have been effected immediately prior to the close of business on the
date on which the foregoing requirements shall have been satisfied and the
person or persons entitled to receive the Common Shares deliverable upon
conversion of the Series A Convertible Preferred Shares shall be treated for
all purposes as the record holder or holders of such Common Shares at such
time on such date. The Optional Conversion shall be at the Conversion Rate in
effect at such time on such date.
(b) Issuance of Common Share Certificates. Upon any conversion
described in Section 7.2.8(a) above, the Trust shall, as soon as practicable
after the surrender for conversion of certificates evidencing Series A
Convertible Preferred Shares and compliance with any other required
conditions, deliver to the person for whom such Series A Convertible Preferred
Shares are so surrendered, or to the nominee or nominees of such person,
certificates evidencing the number of full Common Shares to which such person
shall be entitled, together with a cash payment in respect of any fraction of
a Common Share as hereinafter provided.
(c) Adjustment. From and after October 10, 1997, the Conversion
Rate is subject to adjustment from time to time as provided below in this
Section 7.2.8(c).
(1) If the Trust shall fix a Determination Date with respect to
the payment of, or the making of, a dividend or other distribution with
respect to its Common Shares in Common Shares (including by way of
reclassification of any of its Common Shares), the Conversion Rate in effect
at the opening of business on the day following the Determination Date shall
be increased by multiplying the Conversion Rate in effect at the closing of
business on the Determination Date by a fraction, the numerator of which shall
be the sum of the number of Common Shares outstanding at the close of business
on the Determination Date, excluding the effect of such dividend or
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distribution, plus the total number of Common Shares constituting such
dividend or other distribution, and the denominator of which shall be the
number of Common Shares outstanding at the close of business on the
Determination Date, excluding the effect of such dividend or distribution,
such increase to become effective at the opening of business on the day
following the Determination Date. For the purposes of this clause (1), the
number of Common Shares at any time outstanding shall not include shares held
in the treasury of the Trust and the number of shares constituting such
dividend or other distribution shall include, if applicable, shares
represented by cash issued in lieu of fractional Common Shares.
(2) If outstanding Common Shares shall be subdivided or split into
a greater number of Common Shares, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding Common Shares shall be combined into a lesser
number of Common Shares, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective at the opening of business on the day
following the day upon which such subdivision or split or combination becomes
effective.
(3) If the Trust shall distribute to holders of Common Shares
evidences of indebtedness, equity securities other than Common Shares
(including, without limitation, equity interests in the Trust's subsidiaries)
or other assets (other than regular cash dividends), or shall distribute to
holders of Common Shares rights, options or warrants to subscribe to
securities, then in each such case the Conversion Rate shall be adjusted so
that it shall equal the rate determined by multiplying the Conversion Rate in
effect immediately prior to the date of such distribution by a fraction of
which the numerator shall be the Current Market Price per Common Share on the
record date mentioned below, and of which the denominator shall be such
Current Market Price less the then fair market value of the evidences of
indebtedness, equity securities and assets so distributed, or of such
subscription rights, warrants or options, applicable to one Common Share. For
the purposes of this subsection (3), in the event of a distribution of shares
of capital stock or other securities of any subsidiary of the Trust as a
dividend on Common Shares, the "then fair market value" of the shares or other
securities so distributed shall be the greater of (x) the value of such shares
or other securities on the record date mentioned below as determined by an
independent appraiser of national repute appointed in good faith, by the Board
of Trustees, and (y) the Current Market Price of the shares or other
securities so distributed as of a date 20 days following the distribution date
thereof. Such adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
(4) If the Trust shall sell, transfer, or otherwise convey Common
Shares at a gross price per share (the "Sale Price") less than the Implied
Price (or, if previously adjusted pursuant to this subsection (4), at a price
per share less than the lowest of all the preceding Sale Prices) per Common
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Share, then in such case the Conversion Rate shall be adjusted so that it
shall equal the rate determined by dividing the Stated Value per Series A
Convertible Preferred Share in effect immediately prior to the date of such
conveyance by the Sale Price. Notwithstanding the foregoing, the Trust shall
not, issue, sell, transfer, or otherwise convey Common Shares at less than
their fair market value as determined in the reasonable good faith judgment of
the Board of Trustees (which fair market value, under all the circumstances
relevant, might not be equivalent to the Current Market Price).
(5) All adjustments to the Conversion Rate will be calculated to
the nearest 1/100th of a Common Share. No adjustment in the Conversion Rate
will be required unless such adjustment would require an increase or decrease
of at least one percent in the Conversion Rate; provided, however, that any
adjustments which by reason of this Section 7.2.8(c)(5) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All adjustments to the Conversion Rate shall be made
successively.
(d) Adjustment for Reorganization, Consolidation or Merger. If
there shall occur any capital reorganization or any reclassification of the
beneficial interest or other equity securities of the Trust, consolidation,
merger or other business combination of the Trust with or into another
corporation or other entity, or the conveyance of all or substantially all of
the assets of the Trust to another corporation or other entity, each share of
Series A Convertible Preferred Shares shall thereafter be convertible into the
number of shares or other securities or property to which a holder of the
number of Common Shares deliverable upon conversion of each share of Series A
Convertible Preferred Shares would have been entitled upon such
reorganization, reclassification, consolidation, merger or conveyance. In any
such case, appropriate adjustment (as determined by the Board) shall be made
in the application of the provisions hereof with respect to the rights of the
holders of Series A Convertible Preferred Shares such that the provisions
hereof (including, without limitation, provisions with respect to changes in
and other adjustments of the Conversion Rate) shall thereafter be applicable,
as nearly as reasonably practicable, in relation to any shares or other
property thereafter deliverable upon the conversion of the Series A
Convertible Preferred Shares.
(e) Computation and Notification of Adjustment. Whenever the
Conversion Rate is (or in the case of clause (3) below, will be) adjusted as
provided in Section 7.2.8, the Trust shall:
(1) forthwith compute the adjusted Conversion Rate in accordance
with this Section 7.2.8 and prepare a certificate signed and verified by the
Chairman of the Board, the President or a Vice President of the Trust and by
the Chief Financial Officer, the Treasurer or an Assistant Treasurer of the
Trust setting forth the adjusted Conversion Rate, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment and upon
which such adjustment is based, and shall maintain such certificate at its
principal executive office; and
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(2) mail a notice stating that the Conversion Rate has been
adjusted, the facts requiring such adjustment and upon which such adjustment
is based and setting forth the adjusted Conversion Rate, to the holders of
record of the outstanding Series A Convertible Preferred Shares at their last
addresses as they shall appear on the stock register of the Trust, as soon as
practicable after such adjustment has been made.
(3) at least twenty (20) days prior to the record date therefor,
mail a notice to each holder of Series A Convertible Preferred Shares stating,
if applicable, (a) the date as of which the holders of record of Common Shares
to be entitled to a dividend, distribution, split, right, option or warrant
are to be determined and a reasonably detailed description of such dividend,
distribution, split, right, option or warrant, or (b) the date on which a
reorganization, reclassification, consolidation, merger, sale, lease,
transfer, liquidation, dissolution or winding-up is expected to become
effective, and the date as of which it is expected that holders of record of
Common Shares shall be entitled to exchange their shares for securities or
other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, transfer, liquidation,
dissolution or winding-up.
7.2.9 No Fractional Shares. No fractional Common Shares shall be
issued upon the conversion of any Series A Convertible Preferred Shares. Upon
any such conversion, in lieu of any fractional Common Share otherwise issuable
in respect of the aggregate number of Series A Convertible Preferred Shares of
any holder that are converted, such holders shall be entitled to receive an
amount in cash (computed to the nearest cent, with one-half cent rounded
upward) equal to the same fraction of the current value of one Common Share,
such value to be conclusively determined by the Board in its sole and absolute
discretion. If more than one share of Series A Convertible Preferred Shares
shall be surrendered for conversion at one time by or for the same holder, the
number of full Common Shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Series A Convertible
Preferred Shares so surrendered.
7.2.10 Reservation of Common Shares. The Trust shall at all times
reserve and keep available out of its authorized and unissued Common Shares,
solely for issuance upon the conversion of Series A Convertible Preferred
Shares as herein provided, free from any preemptive rights, such number of
Common Shares as shall from time to time be sufficient to permit the
conversion of all the Series A Convertible Preferred Shares then outstanding.
7.2.11 Status of Redeemed or Converted Series A Convertible
Preferred Shares. So long as Series A Convertible Preferred Shares remain
outstanding, Series A Convertible Preferred Shares redeemed by the Trust or
converted into Common Shares will be restored to the status of authorized but
unissued Preferred Shares and may not thereafter be issued as Series A
Convertible Preferred Shares. Upon the redemption or conversion of Series A
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Convertible Preferred Shares such that no Series A Convertible Preferred
Shares remain outstanding, all unissued Series A Convertible Preferred Shares
will be restored to the status of authorized but unissued Preferred Shares
without designation as to series and may not thereafter be issued as Series A
Convertible Preferred Shares.
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