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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): May 16, 1995
STANDARD BRANDS PAINT COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-4505 95-6029682
(Commission file number) (I.R.S. employer
identification number
4300 West 190th Street, Torrance, CA 90509-2956
(Address of principal (Zip Code)
executive offices)
(310) 214-2411
(Registrant's telephone number
including area code)
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Item 1. Changes in Control of Registrant
(a) On May 16, 1995, the stockholders of Standard Brands Paint
Company (the "Company") approved a financial restructuring (the
"Restructuring") of the Company at a special meeting of stockholders and
such Restructuring was consummated. The principal elements of the
Restructuring were:
A. Amendment to the Company's Restated Certificate of
Incorporation, which increased the amount of authorized capital stock of
the Company, and effected a 1-for-10 reverse stock split ("Reverse Stock
Split") pursuant to which each stockholder holds one share of the Company's
post-split shares for every ten shares previously held;
B. Sale to Corimon Corporation of 15,700,496 newly issued
shares of the Company's Common Stock, which constitutes approximately 76.1%
of the Company's outstanding common stock, for $14 million (such issuance
was priced at $0.89 per share (post-Reverse Stock Split), and the $14
million paid by Corimon Corporation was previously advanced in the form of
an interim loan);
C. Exchange of $16 million of the Company's outstanding debt
(including approximately $2 million of debt held by Corimon Corporation)
into 2,242,928 newly issued shares of Common Stock (at the same price per
share as the Corimon Corporation shares under B above) and 1,570,049 newly
issued shares of Preferred Stock (priced at $8.92 per share of the
Preferred Stock and including a conversion price for the Common Stock of
$1.11 per share); and
D. Transfer of 15 of the Company's real estate properties to
the real estate liquidating trust established on July 12, 1994
("Liquidating Property Trust"), in which the Company had a residual
interest; release of related long-term debt; and sale of the Company's
residual interest in the Liquidating Property Trust to Corimon Corporation
and to Fidelity Capital & Income Fund ("FCI"), Kodak Retirement Income Plan
Trust Fund ("KRI"), Transamerica Life Insurance and Annuity Co. ("TLIAC"),
Transamerica Occidental Life Insurance Co. ("TOLIC"), Sun Life Insurance
Company of America ("SAFI") and Anchor National Life Insurance Company
("ANLIC"), for an additional $2 million paid by Corimon Corporation and in
consideration of their participation in the Restructuring; in the aggregate
as a result of the Restructuring, properties or property interests having a
book value as of January 29, 1995 of approximately $84 million were
disposed of and consolidated long term debt of
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approximately $67 million was released. The Amended and Restated
Liquidating Property Trust Agreement, dated as of May 16, 1995 is filed as
Exhibit 10.1 to this report.
Corimon Corporation funded its equity investment in the Company
from the proceeds of the sale to FCI of 516,129 shares of Corimon
Corporation's Series A Preferred Stock at $15.50 per share and $9,939,175
aggregate principal amount of Put Notes of Corimon Corporation, at a
purchase price of 100% of the principal amount thereof, pursuant to a Stock
and Note Purchase Agreement, dated as of February 14, 1995, attached as an
exhibit to the Schedule 13D, dated February 15, 1995, that Corimon
Corporation filed with respect to the Company's Common Stock.
(b) The following table indicates the number of shares of the
Company's Common Stock beneficially owned as of May 16, 1995 after giving
effect to the Restructuring by (i) all persons known to the Company to own
more than 5% thereof, (ii) all directors of the Company and (iii) all
directors and officers of the Company as a group:
Beneficial Ownership
Name of Beneficial Owner Shares Percentage
Corimon Corporation(1) 23,922,342 84.0%
c/o Corimon, S.A.C.A.
Calle Hans Neumann
Edificio Corimon
Los Cortijos de Lourdes
Caracas, Venezuela 0171
Fidelity Capital & Income Fund(2)(3) 8,823,242 32.1
82 Devonshire Street, F7E
Boston, Massachusetts 02109
Kodak Retirement Income Plan
Trust Fund(2)(4) 1,659,240 7.6
c/o Fidelity Investments
82 Devonshire Street, F7E
Boston, Massachusetts 02109
Transamerica Occidental Life
Insurance Company(5) 1,084,691 5.1
1150 S. Olive Street
Los Angeles, CA 90015
Roland F. Breault 0 *
Juan J. Gramage 0 *
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Beneficial Ownership
Name of Beneficial Owner Shares Percentage
Gustavo Jose Blanco-Uribe 0 *
Thomas A. White 0 *
Richard L. Boje 1,000 *
Robert N. Dangremond 1,000 *
Deborah Hicks Midanek 1,000 *
William E. Yingling, III 1,000 *
All directors and officers
as a group (11 persons) 5,326 *
_________________________
* Less than 1% ownership.
(1) Includes 15,972,332 shares, 1,529,161 shares upon conversion of
Preferred Stock, 6,308,489 shares upon purchase and conversion of
Preferred Stock and 112,360 shares under a Put Agreement with Libra
Investments, Inc. Corimon Corporation is a wholly-owned subsidiary
of Corimon, S.A.C.A., a Venezuelan corporation with operations in
paint and related products.
(2) Fidelity Capital & Income Fund is a portfolio of an investment
company registered under Section 8 of the Investment Company Act of
1940, as amended. Fidelity Management and Research Company, a
Massachusetts corporation and an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 ("FMRC") provides
investment advisory services to FCI, to certain other registered
investment companies and to certain other funds that are generally
offered to United States groups of investors. Kodak Retirement
Income Plan Trust Fund is an account managed by Fidelity Management
Trust Company, a Massachusetts corporation and a bank as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, as amended
("FMTC"). FMRC and FMTC are wholly owned subsidiaries of FMR Corp.,
a Massachusetts corporation.
(3) Includes 1,979,626 shares and 6,843,616 shares upon conversion of
Preferred Stock.
(4) Includes 372,148 shares and 1,287,092 shares upon conversion of
Preferred Stock.
(5) Includes 345,416 shares and 739,275 shares upon conversion of
Preferred Stock. Transamerica Occidental Life Insurance Company is a
subsidiary of Transamerica
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Insurance Corporation of California which is a subsidiary of Transamerica
Corporation and is an affiliate of TLIAC.
Inasmuch as the conversion of the Company's Preferred Stock
currently depends upon a market price condition being met, which will be
met, if at all, only after approximately one month from May 16, 1995, the
foregoing persons may take the position that ownership of Preferred Stock
does not represent beneficial ownership of Common Stock.
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Item 4. Changes in Registrant's Certifying Accountant
On May 16, 1995, the Board of Directors of the Company engaged
Price Waterhouse LLP as the Company's principal accountant to audit the
Company's financial statements and dismissed the Company's former
accountant, Ernst & Young LLP. The reports of Ernst & Young LLP on the
Company's financial statements for each of the last two fiscal years
contained qualifications expressing substantial doubt about the Company's
ability to meet its obligations as they become due and therefore its
ability to continue as a going concern, and noting the absence of any
adjustments to reflect the possible further effects on the recoverability
and classification of assets or the amounts and classifications of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
During the two year period ended January 29, 1995 and the
period from January 30 to May 16, 1995, there were no disagreements between
Ernst & Young LLP and the Company on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not solved to the satisfaction of such accountants,
would have caused them to make reference to the subject matter of the
disagreement in their reports.
Price Waterhouse LLP has served as the accountant for Corimon,
S.A.C.A. and its subsidiaries (collectively, "Corimon"). Price Waterhouse
LLP consulted with Corimon prior to the Restructuring as part of Corimon's
due diligence procedures. Prior to May 16, 1995, Price Waterhouse LLP had
not been consulted by the Company on either application of accounting
principles to a completed or proposed specified transaction or the type of
opinion to be rendered on any financial statements of the Company.
The Company intends to file the letter from Ernst & Young LLP
required by the Commission by a subsequent Form 8-K after receipt thereof.
Item 5. Other Events
As part of the Restructuring, the terms of the Company's
existing mortgage indebtedness were modified to provide for a maturity of
10 years from May 16, 1995 and interest payable at 10% per annum,
compounded monthly. Interest only will be due in years one and two with
principal and interest due in years three through 10 based
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on a 15 year amortization schedule. At the end of 10 years the unpaid
principal of approximately $8.1 million will be due in full. The
indebtedness will be secured by the existing first trust deeds on eight of
the retained properties and a security interest on all of the Company's
personal property and equipment (excluding cash, inventory, trademarks,
accounts receivable and rolling stock). The Third Amended and Restated
Existing Loan Agreement, dated as of May 16, 1995, is filed as Exhibit 10.2
to this report.
As part of the Restructuring, on May 17, 1995 Fidelity
Capital & Income Fund purchased $5 million of working capital notes from
the Company. These notes are secured by a second lien on the Company's
inventory and receivables and two warehouse properties that comprise the
paint facility of the Company's wholly-owned subsidiary, Major Paint
Company. The notes have an interest rate equal to prime rate plus 5.5% and
mature in 24 months, but the Company has the option to extend the maturity
for two consecutive six month periods upon payment of a 2% fee for each
extension. The Fidelity Note Purchase Agreement is filed as Exhibit 10.3
to this report.
On May 16, 1995, Ronald I. Sharman resigned from, and Gustavo
Jose Blanco-Uribe was appointed to, the Board of Directors of the Company.
Juan Gramage, one of the directors appointed by Corimon, is
currently the General Manager, President and Chief Operating Officer of the
Company. He is also the de facto chief executive officer of the Company.
After the Company's July 1995 annual meeting, it is expected that Arthur W.
Broslat, a director to be appointed by Corimon, will be the Chairman of the
Board of Directors and Chief Executive Officer of the Company.
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Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(c) The following are filed as Exhibits to this report:
Exhibit
Number Description
10.1 Amended and Restated Liquidating Property Trust Agreement,
dated as of May 16, 1995.
10.2 Third Amended and Restated Existing Loan Agreement, dated as of
May 16, 1995.
10.3 Note Purchase Agreement, dated as of May 17, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: May 18, 1995
STANDARD BRANDS PAINT COMPANY
(Registrant)
By: /s/ EDWARD A. DRURY
Name: Edward A. Drury
Title: Vice President and
Corporate Secretary
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EXHIBIT INDEX
Exhibit
Number Description
10.1 Amended and Restated Liquidating Property Trust Agreement,
dated as of May 16, 1995.
10.2 Third Amended and Restated Existing Loan Agreement, dated as of
May 16, 1995.
10.3 Note Purchase Agreement, dated as of May 17, 1995.
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STANDARD BRANDS PAINT LIQUIDATING PROPERTY TRUST
AMENDED AND RESTATED
LIQUIDATING PROPERTY TRUST AGREEMENT
dated as of May 16, 1995,
among
STANDARD BRANDS PAINT CO.
and
STANDARD BRANDS REALTY CO., INC.,
as DEPOSITORS,
STANDARD BRANDS PAINT COMPANY,
CORIMON CORPORATION,
SBP LIQUIDATING PROPERTY CO.,
SUN LIFE INSURANCE COMPANY OF AMERICA,
ANCHOR NATIONAL LIFE INSURANCE CO.,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
and
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY,
TRANSAMERICA REALTY SERVICES, INC.,
as DISPOSITION AGENT, and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as TRUSTEE
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TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS . . . . . . . . . . . . . . 5
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 5
1.2. Other Definitional Provisions . . . . . . . . . . . . . . 17
SECTION 2.
DECLARATION OF LIQUIDATING TRUST; ISSUANCE AND
TRANSFER OF CERTIFICATES OF BENEFICIAL INTEREST;
DUTIES OF TRUSTEE . . . . . . . . . . . . 17
2.1. Declaration and Purpose of Liquidating
Trust and Termination Thereof . . . . . . . . . . . . . 17
2.2. Transfer of Property to the Trust; Acceptance
by Trustee; Situs of Trust and Title to Trust
Property . . . . . . . . . . . . . . . . . . . . . . . 20
2.3. Certificates of Beneficial Interest . . . . . . . . . . . . 21
2.4. Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . 24
2.5. Further Assurances . . . . . . . . . . . . . . . . . . . . 24
2.6. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . 24
2.7. Instructions to Trustee . . . . . . . . . . . . . . . . . . 25
2.8. Furnishing of Documents . . . . . . . . . . . . . . . . . . 26
2.9. Liability of Company and Depositors . . . . . . . . . . . . 26
2.10. Restrictions on Transfers of Loans under the
Trust Loan Agreement . . . . . . . . . . . . . . . . . 27
SECTION 3.
TRUST LOAN AGREEMENT; PLEDGE OF COLLATERAL;
DISPOSITION AGENT;
TRUST ACCOUNTS AND OTHER MATTERS . . . . . . . . 27
3.1. Execution of the Trust Loan Documents and
Related Agreements, Pledge of Collateral
and Other Matters . . . . . . . . . . . . . . . . . . . 27
3.2. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . 28
3.3. Designation and Role of Disposition Agent . . . . . . . . . 29
3.4. Collections, Distributions and Investments . . . . . . . . 36
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF DEPOSITORS AND COMPANY . . 38
4.1. Good Standing. . . . . . . . . . . . . . . . . . . . . . . 38
4.2. Corporate Power . . . . . . . . . . . . . . . . . . . . . . 38
4.3. Consents and Approvals . . . . . . . . . . . . . . . . . . 38
4.4. Title to Trust Property . . . . . . . . . . . . . . . . . . 39
4.5. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 39
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4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7. Compliance with Law . . . . . . . . . . . . . . . . . . . . 39
4.8. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.9. Environmental Matters . . . . . . . . . . . . . . . . . . . 39
4.10. Incorporation of Representations and
Warranties from the Trust Loan Agreement . . . . . . . . 40
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF TRUST COMPANY . . . . . 41
5.1. Good Standing . . . . . . . . . . . . . . . . . . . . . . . 41
5.2. Corporate Power . . . . . . . . . . . . . . . . . . . . . . 41
5.3. Consents and Approvals . . . . . . . . . . . . . . . . . . 41
5.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.
CERTAIN COVENANTS OF COMPANY,
DEPOSITORS, HOLDERS AND THE TRUST . . . . . . . . 42
6.1. Title to Trust Property . . . . . . . . . . . . . . . . . . 42
6.2. Notification of Transfer . . . . . . . . . . . . . . . . . 42
6.3. Investment Company . . . . . . . . . . . . . . . . . . . . 42
6.4. Deduction of Environmental Expenditures . . . . . . . . . . 42
SECTION 7.
CONCERNING TRUSTEE, DISPOSITION AGENT AND THE TRUST . . . . 42
7.1. General Matters Relating to Trustee and
Disposition Agent . . . . . . . . . . . . . . . . . . . 42
7.2. Books and Records; Mailings to Holder . . . . . . . . . . . 45
7.3. Compensation and Indemnification . . . . . . . . . . . . . 45
7.4. Resignation, Discharge or Removal of Trustee;
Successor . . . . . . . . . . . . . . . . . . . . . . . 48
7.5. Qualification of Trustee . . . . . . . . . . . . . . . . . 50
7.6. Co-trustees and Separate Trustees . . . . . . . . . . . . . 50
7.7. Not Acting In Individual Capacity . . . . . . . . . . . . . 51
7.8. Resignation, Discharge or Removal of
Disposition Agent; Successor . . . . . . . . . . . . . 52
7.9. Termination . . . . . . . . . . . . . . . . . . . . . . . . 53
7.10. Co-Disposition Agent and Separate Disposition
Agents . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.
REPRESENTATIONS AND WARRANTIES OF DISPOSITION AGENT . . . . 55
8.1. Corporate Power and Authority . . . . . . . . . . . . . . . 55
8.2. Authorization of Agreements . . . . . . . . . . . . . . . . 55
8.3. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . 55
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8.4. Governmental Consents . . . . . . . . . . . . . . . . . . . 55
8.5. Binding Obligation . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.
MISCELLANEOUS . . . . . . . . . . . . . 56
9.1. Benefit of Agreement. . . . . . . . . . . . . . . . . . . . 56
9.2. Severability . . . . . . . . . . . . . . . . . . . . . . . 56
9.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . 56
9.4. Notices; Instructions . . . . . . . . . . . . . . . . . . . 56
9.5. Termination of this Agreement; No Power
to Revoke or Withdraw Trust Property . . . . . . . . . . 57
9.6. Nature of Interest in Trust Property . . . . . . . . . . . 60
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 60
9.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 60
9.9. Limitations on Rights of Others . . . . . . . . . . . . . . 60
9.10. Merger and Consolidation . . . . . . . . . . . . . . . . . 61
9.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 61
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SCHEDULES:
Schedule A Remaining Initial Properties
Schedule B Additional Properties
Schedule C Annual Rentals
Schedule D Estimated Sales Price
Schedule E Maintenance Costs
Schedule F Existing Third Party Leases
Schedule G Environmental Liabilities
Schedule H Percentage Interests
Schedule I Signature Block
EXHIBITS:
I Form of Certificate of Beneficial Interest
II Form of Trust Transfer Documents
APPENDIX A
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STANDARD BRANDS PAINT LIQUIDATING PROPERTY TRUST
AMENDED AND RESTATED
LIQUIDATING PROPERTY TRUST AGREEMENT
AMENDED AND RESTATED LIQUIDATING PROPERTY TRUST AGREEMENT
relating to STANDARD BRANDS PAINT LIQUIDATING PROPERTY TRUST (the "Trust"),
dated as of May 16, 1995, by and among (i) STANDARD BRANDS PAINT CO., a
California corporation, and STANDARD BRANDS REALTY CO., INC., a California
corporation (collectively, "Depositors"), (ii) STANDARD BRANDS PAINT
COMPANY, a Delaware corporation ("Company"), (iii) CORIMON CORPORATION, a
Delaware corporation ("Corimon"), SBP LIQUIDATING PROPERTY CO., a Delaware
corporation ("Property Co."), SUN LIFE INSURANCE COMPANY OF AMERICA, an
Arizona corporation, ANCHOR NATIONAL LIFE INSURANCE CO., a California
corporation, TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, a California
corporation, and TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY, a North
Carolina corporation (collectively, "Holders"), (iv) TRANSAMERICA REALTY
SERVICES, INC., a Delaware corporation ("Disposition Agent"), and
(v) BANKERS TRUST COMPANY OF CALIFORNIA, N.A. (in its individual capacity,
"Trust Company").
RECITALS
1. Effective as of the Initial Effective Date, Depositors
transferred the properties listed on Schedule A, annexed hereto (the
"Initial Properties") to the Trust subject to (a) $68,671,980 in principal
amount of outstanding loans (the "Original Trust Loans") under the Amended
and Restated Loan Agreement, dated as of June 14, 1993 (as amended,
supplemented and otherwise modified from time to time, the "Existing
Insurance Company Loan Agreement") among Company, Depositors, The Art
Store, a California corporation ("TAS"), Sun Life Insurance Company of
America, Anchor National Life Insurance Co., Transamerica Occidental Life
Insurance Company and Transamerica Life Insurance and Annuity Company, as
lenders (collectively, "Lenders"), and Servicing Agent (capitalized terms
used in these Recitals without definition have the respective meanings
assigned such terms in Section 1.1) secured by a first priority lien on
such Initial Properties, and (b) a second lien securing obligations under
the New Loan Agreement, dated as of March 16, 1994 (as amended,
supplemented and otherwise modified from time to time, the "New Loan
Agreement") among Company, Depositors, Lenders, Standard Brands Paint
Collateral Trust ("SBP Collateral Trust"), as a lender thereunder, and
Servicing Agent. In exchange for such transfer the Depositors received
Certificates of Beneficial Interest evidencing 100% of the beneficial
interest in the Trust.
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2. Company and Depositors transferred the Initial Properties
to the Trust pursuant to the Standard Brands Paint Liquidating Property
Trust Liquidating Property Trust Agreement dated as of July 12, 1994 among
Company, Depositors, Transamerica Realty Services, Inc. and Trust Company
(the "Original Trust Agreement"). The Trust was created to dispose of the
Initial Properties as expeditiously as possible as provided therein.
3. The Original Trust Loan Agreement was amended and
restated pursuant to an Amended and Restated Trust Loan Agreement dated as
of July 12, 1994 (the "Original Trust Loan Agreement") among Trustee on
behalf of the Trust, as Borrower, Lenders and Servicing Agent.
4. As of the date hereof, the Trust has disposed of 28 of
the Initial Properties. The Trust continues to own 50 properties, as
indicated on Schedule A annexed hereto (the "Remaining Initial
Properties"), which consist of 46 properties which Depositors operate or
formerly operated as retail stores, 2 properties which Depositors operated
or formerly operated as warehouses and 2 parcels of vacant land. The
Remaining Initial Properties that are currently operated by the Depositors
are identified as such on Schedule A annexed hereto, and, together with the
Additional Properties, are referred to herein as the "Operational
Properties". The Remaining Initial Properties that are no longer operated
by Depositors are identified as such in Schedule A, annexed hereto and are
referred to herein as the "Vacant Properties", and the Remaining Initial
Properties that are leased to third parties are identified as such in
Schedule A annexed hereto and are referred to herein as the "Leased
Properties". As a result of the sales of the 28 Initial Properties, the
outstanding amount of the Original Trust Loans has been reduced to
$50,415,166.36 in principal amount (the "Remaining Trust Loans") and, as of
the date hereof, accrued and unpaid interest on the Remaining Trust Loans
is $0.
5. On May 15, 1995, Section 2.9 of the Original Trust
Agreement was amended (a) by adding Section 2.9(c) to provide that the
Holders shall be jointly and severally liable directly to and shall
indemnify each creditor of the Trust for all losses, claims, damages,
liabilities and expenses of the Trust, including fees, expenses, Taxes,
income taxes, and other liabilities of the Trust (other than any liability
with respect to the Original Trust Loans) to the extent the Holder would be
liable if the Trust were a partnership formed under the California Uniform
Partnership Act, and (b) by deleting the penultimate sentence in
Section 9.5(a). In addition, any third party creditors of the Trust were
deemed third party beneficiaries of Section 2.9(c).
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6. Depositors collectively own 15 properties listed on
Schedule B annexed hereto (the "Additional Properties" and together with
the Remaining Initial Properties, the "Properties") which consist of
Operational Properties operated by Depositors as retail paint stores.
7. Depositors have granted first priority liens on the
Additional Properties to Servicing Agent, which secure obligations of
Company and Depositors under the Existing Insurance Company Loan Agreement.
8. Company and Depositors have determined that it is in
their best interests to transfer the Additional Properties to the Trust
subject to certain of the loans outstanding under the Existing Loan
Agreement and have the Trust dispose of all of the Additional Properties as
expeditiously as possible as provided herein.
9. In order to permit Depositors to operate the Operational
Properties prior to their disposition, the Trust has and will lease back to
Depositors pursuant to the Depositors Leases (as defined below) such
Properties, on a triple net bond type lease basis, for a minimum annual
rental payable monthly equal to the minimum monthly rent corresponding to
each such Property as set forth on Schedule C. The disposition of the
Properties will be enhanced by such leases and said disposition will be
subject to such leases.
10. In connection with the transfer and deposit of the
Additional Properties into the Trust, Company and Depositors have requested
that Lenders under the Existing Insurance Company Loan Agreement permit the
transfer and deposit of the Additional Properties subject to $14,250,781.00
in principal amount of the outstanding loans under the Existing Insurance
Company Loan Agreement (the "Additional Trust Loans") which shall continue
to be secured by the Properties and reduce Company's and its Subsidiaries'
(including Depositors') obligations in respect of the Trust Loans as
provided in the Trust Acknowledgement Agreement. The Additional Trust
Loans and the Remaining Trust Loans are hereinafter referred to as the
"Trust Loans".
11. The Trust Loans will be amended and restated pursuant to
the Trust Loan Agreement. The principal and interest on the Trust Loans
prior to the maturity thereof shall be payable from the proceeds from the
disposition of the Properties and lease payments as provided herein and in
the Trust Loan Agreement. Company and Depositors have determined that the
agreements of Lenders, including those described in the preceding sentence,
will, among other things, reduce Company's and Depositors' current
liabilities and allow Company and Depositors to restructure their retail
operations.
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12. Pursuant to such transfer and certain modifications to
the liens encumbering the Properties occurring simultaneously herewith, the
Properties shall in the aggregate become subject to the lien of all of the
Trust Loans without regard to whether the Trust Loan is an Additional Trust
Loan or a Remaining Trust Loan and without regard to whether a particular
Property is a Remaining Initial Property or an Additional Property.
13. For ease of reference and clarity, Company, Depositors,
Disposition Agent and Trust Company desire to restate the Original Trust
Agreement and the Holders desire to become a party to the Original Trust
Agreement to incorporate the amendments made hereby. The parties hereto
expressly disclaim any intent to effect a novation or an extinguishment or
discharge of the Original Trust Agreement as a result of entering into this
Agreement and the other documents contemplated herein.
14. In order to facilitate and coordinate the disposition of
the Properties, the Trustee (as defined below) has engaged Disposition
Agent (as defined below), as agent of the Trust and Trustee, to dispose of
the Properties and perform the other services set forth herein.
15. Immediately upon the deposit of the Additional Properties
to the Trust by the Depositors, Depositors will sell their Certificates of
Beneficial Interest to the Holders (as defined below) as follows: a 49%
beneficial interest to Corimon; a 31% beneficial interest to Fidelity which
will immediately deposit such Certificates of Beneficial Interest in
Property Co. in exchange for all of the outstanding stock of Property Co.;
and a 20% beneficial interest to the Lenders (allocated among such Lenders
as set forth in Schedule 1 to Appendix A hereto) in consideration of the
release of claims for Contingent Interest (as defined in the Original Trust
Loan Agreement) on the Trust Loans.
16. Effective upon the transfer of the Additional Properties
to the Trust, the obligations of Company and Depositors under the New Loan
Agreement will be exchanged for common and preferred stock of Company and,
accordingly, the New Loan Agreement will be terminated and the liens on the
Properties securing the obligations thereunder will be released.
17. After such transfer, the Certificates of Beneficial
Interest held by Property Co. and Corimon shall be pledged to secure their
obligations to Lenders under the Note Purchase Agreement and any
distributions thereon shall be used on an after-tax basis to purchase
obligations of Company and Depositors owing to Lenders under the Existing
Loan Agreement as more fully set forth in the Note Purchase Agreement.
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18. This Agreement is completely amended and restated
hereunder immediately upon the transfer of the beneficial interest in the
Trust to Corimon, Property Co. and the Lenders, as set forth in Recital 15
above.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto, as of the transfer to the
Holders of the Certificates of Beneficial Interest, as set forth in
Recital 15, hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1. Definitions. Capitalized terms set forth below shall have the
following meanings when used in this Agreement:
"Act of Bankruptcy" means, with respect to any Person, (i) a court
having jurisdiction in the premises shall enter a decree or order for
relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect, which decree or order is not stayed; (ii) any other similar relief
shall be granted under any applicable federal or state law; (iii) 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 such Person, or over all or a
substantial part of property, shall have been entered; (iv) an involuntary
appointment of an interim receiver, trustee, or other custodian of such
Person for all or a substantial part of property has occurred; (v) the
issuance of a warrant of attachment, execution, or similar process against
any substantial part of the property of such Person, and the continuance of
any such events described above for 60 days has occurred (unless dismissed,
bonded, or discharged); or (vi) such Person shall have an order for relief
entered with respect to it or commence a voluntary case under any
applicable bankruptcy, insolvency, or other 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 to an involuntary 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.
"Actual Knowledge" means the actual knowledge of any vice president
or assistant vice president in the Corporate Trust Office of Trustee.
"Additional Properties" has the meaning assigned such term in the
Recitals hereof.
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"Additional Properties Lease" means that certain Additional
Properties Lease, substantially in the form of Exhibit II-B annexed hereto
among the Trust and Depositors pursuant to which the Additional Properties
are leased to Depositors subject to the terms and conditions set forth
therein, as such Additional Properties Lease may be amended, supplemented
or otherwise modified from time to time.
"Additional Trust Loans" has the meaning assigned such term in the
Recitals hereof.
"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. In no
event shall any Lender, Disposition Agent, Servicing Agent or SBP
Collateral Trust be deemed to be an Affiliate of Company or any of its
Subsidiaries, including the Trust.
"Agreement" means this Amended and Restated Liquidating Property
Trust Agreement, as it may be amended, supplemented or otherwise modified
from time to time.
"Amended and Restated Memorandum of Understanding" means the Amended
and Restated Memorandum of Understanding dated as of May 16, 1995, among
Company, Depositors, Lenders, Servicing Agent, the trustee of the SBP
Collateral Trust and the Trust, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"Authorized Officer" means the president or any vice president,
investment officer or assistant vice president of any Person.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of California 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" has the meaning assigned such term in the Trust
Loan Agreement.
"Certificate of Beneficial Interest" means a certificate representing
beneficial ownership interests in the Trust substantially in the form of
Exhibit I annexed hereto.
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<PAGE> 7
"Certificate Pledge Agreement" means that certain Pledge Agreement
pursuant to which Corimon and Property Co. as Holders pledge their
Certificates of Beneficial Interest to Transamerica Occidental Life
Insurance Company, as Servicing Agent under the Existing Insurance Company
Loan Agreement, to secure the obligations of Corimon and Property Co. under
the Note Purchase Agreement, as such agreement may be amended, supplemented
or otherwise modified from time to time.
"Collateral" means all right, title and interest of the Trust (and of
Trustee and any co-trustee or separate trustee to the extent title is
deemed vested in any such Person in accordance with this Agreement) in and
to the Trust Property (including, without limitation, the Properties), in
which a security interest is granted to Servicing Agent under and in
accordance with the Trust Loan Documents and in accordance with
Section 3.1, including, without limitation, (i) all proceeds of sales
received or to be received, or derived or to be derived, now or at any time
hereafter from or in connection with such Collateral and (ii) all powers
and rights of Trustee and the Trust now or hereafter acquired by Trustee or
the Trust and rights of enforcement under or to such Collateral.
"Collection Account" means the Collection Account established and
maintained by Disposition Agent in accordance with Section 3.4.
"Collections" means all cash receipts of every nature received by or
on behalf of the Trust in respect of any Trust Property and all cash
receipts received on account of reimbursement or indemnification
obligations of Company or any Depositor hereunder.
"Company" has the meaning assigned such term in the Recitals hereof.
"Corporate Trust Office" means the principal corporate trust or other
similar office of Trustee.
"Depositors" has the meaning assigned such term in the Recitals
hereof.
"Depositors Leases" means collectively, the Master Lease dated as of
July 12, 1994, as amended and the individual leases for certain of the
Properties, all in such form acceptable to the parties hereto, among the
Trust and Depositors pursuant to which the Operational Properties are
leased to Depositors subject to the terms and conditions set forth therein,
as such Depositors Leases may be amended, supplemented or otherwise
modified from time to time.
"Disposition Agent" means Transamerica Realty Services, Inc. in its
capacity as disposition agent pursuant to Section 3.3, and any
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<PAGE> 8
Person that becomes a successor Disposition Agent pursuant to Section 7.8.
"Disposition Agent Fees" means the Administration Fee and the
Disposition Fee payable to Disposition Agent, as such terms are defined in
Section 3.3.
"Disposition Agreements" means any and all agreements entered into
from time to time by Disposition Agent on behalf of the Trust or by Trustee
at the instruction of Disposition Agent in connection with the disposition
of any Property, including, without limitation, any listing or similar
agreement with any broker or any agreement for the sale of any Property.
"Disposition Improvements" means any physical additions or changes to
any Property made for the specific purpose of facilitating a lease or sale
of such property, including, but not limited to the following: (i)
replacement of roofs or repairs in excess of $20,000, or with respect to
the Torrance properties, $50,000 per occurrence, (ii) installation or
replacement of security fences, (iii) work on HVAC (heating, ventilation
and air conditioning) in excess of $5,000 per occurrence, (iv) major
overhaul or repairs on Properties, (v) parking lot resurfacing, and (vi)
structural changes or structural repairs in excess of $100,000 per
occurrence. Disposition Improvements do not include (y) Maintenance Costs
or (z) Environmental Expenditures, except as authorized by Disposition
Agent in its sole discretion.
"Distribution Date" means any Business Day on which Disposition Agent
has immediately available funds in the Collection Account at 8:00 a.m.
(Pacific time) on such day or any other Business Day on which Disposition
Agent elects to distribute the amounts available in the Collection Account
pursuant to Section 3.4. The Disposition Agent shall use reasonable
efforts to notify Trustee at least five (5) Business Days prior to each
Distribution Date.
"Effective Date" means the date on which all of the conditions set
forth in Section 3.1 required to be satisfied on or prior to the Effective
Date have occurred, as evidenced by an officer's certificate of Depositors.
"Environmental Claims" 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, 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
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<PAGE> 9
relating to, resulting from or in connection with Hazardous Materials and
relating to Company, Depositors, any of their respective Subsidiaries, any
of their respective Affiliates or any Property.
"Environmental Expenditures" means any and all actual costs and
expenses incurred in connection with any matter relating to Hazardous
Materials or Environmental Laws, including, without limitation, all
Environmental Claims, fees, expenses and disbursements of environmental
consultants retained for the Properties and all other actual costs and
expenses incurred by Company, Depositors, Trustee, Servicing Agent or
Disposition Agent in connection with any of the foregoing, including, but
not limited to, approximately $100,000 to complete an environmental clean
up near the South Warehouse in Torrance, California.
"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 or threatened
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.
"Estimated Sales Price" shall mean the estimated sales price for each
Property, as set forth in the Leventhal Report and on Schedule D attached
hereto, determined by opinions of the staff of Disposition Agent based on
interviews with employees of the Company without independent verification
from Kenneth Leventhal & Company (Schedule D also lists the 1992 vacant
values for the Properties that were taken from a report prepared by Buss-
Shelger and used to create the balance sheet for the Trust).
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<PAGE> 10
"Event of Default" has the meaning assigned such term in the Trust
Loan Agreement.
"Existing Insurance Company Loan Agreement" has the meaning assigned
such term in the Recitals hereto and, following the Effective Date, shall
also mean the Third Amended and Restated Existing Loan Agreement dated as
of May 16, 1995 among Company, Depositors, Lenders and Servicing Agent, as
such agreement may be amended, supplemented or otherwise modified from time
to time.
"Existing Insurance Company Loan Documents" has the meaning assigned
to the term "Loan Documents" in the Existing Insurance Company Loan
Agreement.
"Fee Agreement" means the letter from Trustee to Company, dated
December 27, 1994.
"Fidelity" means Fidelity Capital & Income Fund and Kodak Retirement
Income Plan Trust Fund.
"Governmental Authorization" means any permits, license,
authorization, plan, directive, consent order or consent decree of or from
any foreign, federal, state or local governmental authority, agency or
court.
"Gross Proceeds of Insurance or Condemnation" means the proceeds of
any insurance payment or condemnation award received by the Trust in
connection with the damage, destruction, or condemnation of any Property.
"Gross Sale Proceeds" means the gross cash received from the sale or
other disposition of any Property or other Trust Property.
"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;
(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; (v) any
radioactive materials; (vi) asbestos in any form; (vii) urea formaldehyde
foam insulation; (viii) electrical equipment which contains any oil or
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<PAGE> 11
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 Properties.
"Holder" means a holder of a Certificate of Beneficial Interest in
the Trust in accordance with this Agreement.
"Initial Properties" has the meaning assigned such term in the
Recitals hereof.
"Initial Effective Date" means August 1, 1994.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Lender" or "Lenders" has the meaning assigned such term in the
Recitals hereof.
"Leased Properties" has the meaning assigned such term in the
Recitals hereof.
"Leventhal Report" means the report dated April 7, 1994 prepared by
Kenneth Leventhal & Company, which sets forth, among other things, the
anticipated sales date, the estimated sales price and the estimated closing
costs with respect to each Property.
"Lien" means any lien, 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.
"Liquidating Trust Committee" means a committee to be established
prior to the Effective Date that will generally review the liquidation of
the Properties pursuant to this Agreement, and will consist of John
Casparian, Lyman Lokken, Robert Sydow and Howard S. Schwartz, and any
additional or substitute members selected by the members then serving on
such committee.
"Maintenance Costs" means all maintenance and operation costs of
every nature of all Properties, including, without limitation, Taxes, other
costs typically paid by a tenant under a "triple-net" lease and those costs
set forth on Schedule E annexed hereto, but excluding costs for Disposition
Improvements or Environmental Expenditures.
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<PAGE> 12
"Market Rent Leased Properties" means those Properties identified as
such on Schedule A annexed hereto.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) of Company and Depositors and their Subsidiaries, taken as a
whole, or (ii) a material adverse effect on the ability of Company or
Depositors to perform, or of Servicing Agent to enforce, the Trust Loan
Obligations or the obligations of the Company or any Depositor hereunder or
under any Related Agreement.
"Net Proceeds of Insurance or Condemnation" means Gross Proceeds of
Insurance or Condemnation received by the Trust in connection with the
damage, destruction, or condemnation of any Property, net of the expenses
incurred in the collection of such proceeds other than taxes paid or
payable as a result thereof.
"Net Sale Proceeds" means the Gross Sale Proceeds received from the
sale or other disposition of any Property or other Trust Property less the
Disposition Fees, normal and customary third party expenses of sale or
disposition, such as normal and customary real estate commissions to third
parties other than Company and any of its Subsidiaries or Affiliates,
normal and customary closing costs payable to third parties other than
Company and any of its Subsidiaries or Affiliates, transfer or stamp taxes
applicable to a particular sale, and minor Environmental Expenditures as
determined at the sole discretion of Disposition Agent, provided that such
fees, costs and expenses are actually paid. Notwithstanding this
definition, expenses of sale or disposition for purposes of determining Net
Sale Proceeds shall not include the payment of any Taxes, real property
taxes or special assessments or income taxes unless otherwise determined by
Disposition Agent at its sole discretion.
"New Loan Agreement" has the meaning assigned such term in the
Recitals hereof.
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of the date hereof among Corimon, Property Co., Lenders and Servicing
Agent, as such agreement may be amended, supplemented or otherwise modified
from time to time.
"No-Rent Properties" means those Properties identified as such on
Schedule A annexed hereto.
"Operational Properties" has the meaning assigned such term in the
Recitals hereof.
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<PAGE> 13
"Original Trust Agreement" has the meaning assigned such term in the
Recitals hereof.
"Original Trust Loan Agreement" has the meaning assigned such terms
in the Recitals hereof.
"Percentage Interest" means the percentage set forth next to each
Holder's name on Schedule H annexed hereto, as amended from time to time by
the Trustee upon transfer of interests in the Certificates of Beneficial
Interests, as and to the extent, permitted under this Agreement.
"Person" means natural persons, corporations, limited partnerships,
general partnerships, joint stock companies, 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" has the meaning assigned such term in
the Trust Loan Agreement.
"Proceeds" has the meaning assigned such term under the UCC and
relevant law and, in any event, shall include, but not be limited to, Gross
Sale Proceeds, Third Party Lease Proceeds, proceeds of the Depositors
Leases and Gross Proceeds of Insurance or Condemnation.
"Properties" has the meaning assigned such term in the Recitals
hereof.
"Property Co." has the meaning assigned such term in the Recitals
hereof.
"Record Date" means, with respect to any Distribution Date, the close
of business on the Business Day immediately preceding such Distribution
Date. Holders of record on any Record Date shall be determined from the
records of Trustee maintained pursuant to Section 7.2 which have on a
Record Date also been delivered to Disposition Agent.
"Related Agreements" means, collectively, the Trust Transfer
Documents, the Depositors Leases, the Third Party Leases, the Disposition
Agreements, the Amended and Restated Memorandum of Understanding and each
document, agreement, or other instrument delivered pursuant to or in
connection with this Agreement or any of the foregoing.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials
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<PAGE> 14
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
Property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
"Remaining Amount" has the meaning assigned such term in Section
3.4(a).
"Remaining Initial Properties" has the meaning assigned such term in
the Recitals hereof.
"Remaining Trust Loans" has the meaning assigned such term in the
Recitals hereof.
"Reserve Account" means the account with an initial deposit of
$200,000 established and maintained by Servicing Agent pursuant to the
Existing Insurance Company Loan Agreement to pay for certain Transaction
Expenses (as defined in the Existing Insurance Company Loan Agreement).
"SBP Collateral Trust" has the meaning assigned such term in the
Recitals hereof.
"Servicing Agent" means Transamerica Occidental Life Insurance
Company, in its capacity as servicing agent under the Trust Loan Agreement
or the Existing Insurance Company Loan Agreement, as the case may be, and
also means any successor thereto appointed pursuant to the terms thereof.
"Subaccount" has the meaning assigned such term in Section 3.4(c).
"TAS" has the meaning assigned such term in the Recitals hereof.
"Tax" means any form of tax, tax on or measured by income,
assessment, excise, license fee, business tax, personal property tax,
rental tax, improvement bond, levy, lien, charge or penalty (whether
general, special, ordinary or extraordinary, foreseen or unforeseen)
imposed or assessed by any authority having the direct or indirect power to
tax (including any city, county, state or federal government or any school,
agricultural, lighting, drainage, sewage, irrigation or other improvement
or other special district) against or in respect of or which may be or
become a lien or charge upon (i) any legal or equitable interest of the
Trust in the Properties or in the real property of which the Properties are
a part, or (ii) the Trust's right to or receipt of rent or other income
from the Properties or the disposition thereof or by the
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<PAGE> 15
Trust's business of leasing the Properties, and any tax imposed in
substitution, partially or totally, of or for any tax or service or right
charged to property owners. "Tax" includes any tax imposed or added to
real property taxes as a result of reassessment upon a transfer or lease of
all or part of the Trust's interest in the Properties or the real property
of which the Properties are a part, or any transfer of Certificates of
Beneficial Interests by Holders. All taxes of any kind or character
relating to or concerning the Properties or any part thereof, including a
reassessment of the value thereof (other than any transfer or stamp tax
payable upon the disposition thereof), are included within the term "Tax."
"Tenants" means Company and Depositors in their capacities as tenants
under the Depositors Leases.
"Termination Date" has the meaning assigned such term in Section
2.1(f).
"Third Party Lease Proceeds" means the gross income generated by any
Third Party Lease of any Property. Third Party Lease Proceeds shall not
include the gross income generated by the Depositors Leases or any
subleases by Company or any Depositor of any Property subject to the
Depositors Leases in accordance with the Depositors Leases.
"Third Party Leases" means leases entered into from time to time
between Disposition Agent or Trustee on behalf of the Trust and lessees
other than Company or any of its Affiliates for the lease of certain
Properties, including the leases identified on Schedule F annexed hereto in
effect as of the Effective Date to be assigned by Depositors to the Trust,
and any such leases entered into with a third party after the Effective
Date pursuant to Section 3.1, as such leases may be amended, supplemented
or otherwise modified from time to time.
"Trust" means the liquidating trust created and existing pursuant to
this Agreement, designated as the Standard Brands Paint Liquidating
Property Trust. The Trust shall be a liquidating trust and shall not be a
business trust.
"Trust Accounts" means the Collection Account and any other account
of the Trust established pursuant hereto.
"Trust Acknowledgement Agreement" means the Amended and Restated
Trust Acknowledgement Agreement and Consent among Company, Depositors,
Lenders and Servicing Agent substantially in the form of Exhibit IV to the
Trust Loan Agreement, as such agreement may be amended, supplemented or
otherwise modified from time to time.
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<PAGE> 16
"Trust Company" has the meaning assigned such term in the Recitals
hereof.
"Trust Loans" has the meaning assigned such term in the Recitals
hereof.
"Trust Loan Agreement" means that certain Second Amended and Restated
Trust Loan Agreement dated as of May 16, 1995 among the Trust as borrower,
the Lenders and Servicing Agent thereunder, including all exhibits,
schedules and other attachments thereto, and any successor agreements
refinancing or otherwise replacing such agreement, as any such agreements
may be amended, supplemented or otherwise modified from time to time.
"Trust Loan Documents" has the meaning assigned to the term "Loan
Documents" in the Trust Loan Agreement.
"Trust Loan Obligations" has the meaning assigned to the term
"Obligations" in the Trust Loan Agreement and shall include, without
limitation, all interest, fees and other charges that would accrue on such
obligations but for the filing of a petition in bankruptcy with respect to
any obligor thereunder, whether or not a claim for any of the same is
allowed in any such proceeding.
"Trust Mortgage" or "Trust Mortgages" means one or more of the Deeds
of Trust, Assignment of Rents, Security Agreement, Financing Statement, and
Fixture Filing or similar agreements with respect to any of the Properties
that secure the Trust Loan Obligations, as such Trust Mortgages may be
amended, supplemented, or otherwise modified from time to time.
"Trust Property" means all property deposited and held in or
otherwise acquired by the Trust, and all proceeds thereof, including,
without limitation, (a) the Properties, (b) the Trust's rights and
interests as lessor under the Depositors Leases and any Third Party Leases
and any other agreement or instrument entered into by the Trust, (c) all
revenues of every nature received in respect of the Properties and other
Trust Property on and after the Effective Date, including all Collections
and Proceeds, (d) the Trust Accounts and all Cash Equivalents held and all
amounts on deposit in the Trust Accounts and the Maintenance Cost Account
and all security deposits held under any Third Party Leases, (e) the rights
of Trustee under hazard, title and other insurance policies and the
Proceeds thereof, and (f) the Trust's rights and interests under purchase
and sale agreements relating to any potential disposition of any Property
and the amounts in escrow pursuant thereto.
"Trust Transfer Documents" means those agreements substantially in
the form of Exhibit III annexed hereto among the Trust and
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<PAGE> 17
Depositors, including all amendments, modifications and supplements thereto
and any appendices, exhibits or schedules to any of the foregoing, as the
same may be amended, supplemented or otherwise modified from time to time.
"Trustee" means the Trust Company, acting not in its individual
capacity, but solely in its fiduciary capacity as trustee hereunder, and
any Person that becomes its successor pursuant to Section 7.4.
"UCC" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of California or any other relevant
jurisdiction.
"Vacant Properties" has the meaning assigned such term in the
Recitals hereof.
1.2. Other Definitional Provisions. References to "Sections" shall be to
Sections of this Agreement unless otherwise specifically provided. Any of
the terms defined in Section 1.1 may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned such terms in the Trust Loan Agreement.
SECTION 2.
DECLARATION OF LIQUIDATING TRUST; ISSUANCE AND
TRANSFER OF CERTIFICATES OF BENEFICIAL INTEREST;
DUTIES OF TRUSTEE
2.1. Declaration and Purpose of Liquidating Trust and Termination Thereof.
(a) Trust Company is hereby appointed to hold, and Trust Company
hereby accepts such appointment and agrees to hold, the Trust Property as
Trustee in trust upon the terms and conditions and for the use and benefit
of the Holders as herein set forth. The Trust created hereby shall be
known as "Standard Brands Paint Liquidating Property Trust," in which name
Trustee may act pursuant hereto, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued. It is the intent
of the parties hereto that the Trust shall be a liquidating trust as
provided herein and shall not be a business trust for purposes of the
Bankruptcy Code.
(b) The Trust is organized for the sole purposes of collecting,
holding and liquidating the Trust Property, with no objective to engage in
the conduct of a trade or business. Trustee and its designees and agents
appointed pursuant hereto, including Disposition Agent, shall carry out the
purposes of the Trust and the
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<PAGE> 18
directions contained herein and shall not at any time enter into or engage
in any activities (except as may be consistent with the limited purposes of
the Trust), including, without limitation, the purchase of any asset or
property (other than the incurrence of Maintenance Costs, Disposition
Improvements costs, and Environmental Expenditures and the investment of
monies held by the Trust in Cash Equivalents as contemplated hereby).
(c) In accordance with Section 3.3, Disposition Agent on behalf of
Trustee and the Trust is directed to take all actions it believes in its
sole discretion are desirable to maintain and dispose of the Trust Property
in as prompt, efficient and orderly a fashion as possible, to make timely
distributions of the proceeds of the Trust Property, to engage in leasing
activities with respect to the Trust Property and otherwise not to unduly
prolong the duration of the Trust. In no event shall the Trust:
(a) receive transfers of listed stocks or securities, any readily-
marketable assets (other than those constituting the Trust Property), or
any assets of a going business; (b) receive or retain cash in excess of a
reasonable amount to meet claims and contingent liabilities, including
reserves for anticipated Environmental Expenditures, payment of Maintenance
Costs not payable by Tenants and payment of Disposition Improvements as
determined in the sole discretion of Disposition Agent in accordance with
the provisions of Section 3.3; or (c) receive general or limited
partnership interests or the unlisted stock of any single issuer that
represents 80 percent or more of the stock of such issuer.
(d) Depositors and Holders hereby express their intent to maintain
the Trust as a partnership only for local, state and federal income tax
purposes with each Holder being treated as a partner holding a partnership
interest in an amount equal to its Percentage Interest. Depositors and
Holders, however, express their intent to create and maintain the Trust as
a liquidating property trust for all other purposes, including, but not
limited to, applicable corporation, partnership, trust and bankruptcy laws.
In accordance with such agreement, Trustee is directed to authorize
Disposition Agent on behalf of the Trust to keep capital accounts for each
of the Holders and to allocate all income, gain, deduction and loss as set
forth in Appendix A. The Trust shall have all powers necessary or
incidental to accomplish the activities authorized in this Section 2.1. In
accordance with such express and limited purposes, Trustee and Disposition
Agent are authorized and the Holders agree (i) to take any and all steps
necessary to maintain the Trust as a partnership for local, state and
federal income tax purposes; (ii) to allow the Disposition Agent to take
all reasonable and necessary actions to conserve and protect the Trust
Property; and (iii) to allow the Tenants or Disposition Agent, as
applicable, to maintain, operate or lease (for purposes of holding for
sale), or sell or otherwise dispose of the Trust Property in
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<PAGE> 19
accordance with the terms of the Agreement and to allow Disposition Agent
to distribute the proceeds of such disposition in as prompt, efficient and
orderly a fashion as possible in accordance with the provisions hereof.
Further pursuant to these purposes, each Holder recognizes that only for
local, state and federal income tax purposes it will be deemed a "partner"
of this Trust and all income, deduction, gains, losses and credits shall be
attributed to the Holders, in accordance with its Percentage Interest. The
provisions hereof shall be interpreted accordingly and no party hereto
shall take a contrary position for federal income tax purposes. The Trust
shall comply at all times with the terms and conditions of the Trust Loan
Documents and the Related Agreements to which it is or becomes a party.
The Trust shall have all powers necessary or incidental to accomplish the
activities authorized in this Section 2.1.
(e) The Holders further agree that, if the above treatment is
determined to be impermissible by any taxing authority, for the applicable
jurisdiction's income tax purposes, the Holders shall treat the Trust as a
liquidating trust in accordance with Treasury Regulation Section 301.7701-
4(d) and as a "grantor trust" subject to the provisions of Subchapter J,
Part I, Subpart E of the Internal Revenue Code. In accordance with such
express and limited purposes, Trustee and Disposition Agent are authorized
and the Holders agree (i) to take any and all steps necessary to maintain
the Trust as a liquidating trust for federal income tax purposes in
accordance with Treasury Regulation Section 301.7701-4(d) and as a "grantor
trust" subject to the provisions of Subchapter J, Part I, Subpart E of the
Internal Revenue Code; (ii) to allow the Disposition Agent to take all
reasonable and necessary actions to conserve and protect the Trust
Property; and (iii) to allow the Tenants or Disposition Agent, as
applicable, to maintain, operate or lease (for purposes of holding for
sale), or sell or otherwise dispose of the Trust Property in accordance
with the terms of this Agreement and to allow Disposition Agent to
distribute the proceeds of such disposition in as prompt, efficient and
orderly a fashion as possible in accordance with the provisions hereof.
Further pursuant to these purposes, if the Trust may not be treated as a
partnership for local, federal and state income tax purposes, each Holder
recognizes that it will be deemed a "grantor" of this Trust pursuant to the
provisions of Subchapter J, Part I, Subpart E of the Internal Revenue Code
and all income, deduction, gains, losses and credits shall be attributed to
each Holder, in accordance with its Percentage Interest.
(f) The Trust shall terminate upon the liquidation of all of the
assets of the Trust Property and the distribution of the proceeds thereof
through the Collection Account as set forth herein, which date shall not be
more than three (3) years after the Effective Date (the "Termination
Date"); provided, however, that if in the determination of Disposition
Agent in its sole discretion, in
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<PAGE> 20
light of existing facts and circumstances, the liquidation of the Trust
Property and the distribution of the proceeds thereof will not be completed
prior to the Termination Date, then not more than ninety (90) days prior to
the Termination Date, and subject to the written agreement of Holders and
Lenders, which agreement shall not be unreasonably withheld, and the
receipt of an opinion of counsel that no adverse tax consequence will occur
as a result thereof, Trustee at the written direction of Disposition Agent
and at the expense of the Trust Property shall execute an amendment to this
Section 2.1(f) extending the Termination Date for an additional period not
to exceed the lesser of three (3) years or such other period required in
order to avoid any adverse tax consequence.
(g) Notwithstanding the provisions of Section 2.1(f), if any Act of
Bankruptcy occurs with respect to any Holder, the Termination Date shall
occur immediately unless a majority in interest of the Holders, other than
such bankrupt Holder, promptly notify Trustee in writing that they have
elected to continue the Trust. On such Termination Date, the Trust
Property shall be disposed of as soon as practicable in one or more bulk
sales or auctions, the proceeds of which shall be applied in accordance
with Section 3.4(a); provided that Depositors shall have a right to bid to
purchase such Trust Property. For purposes of this subsection 2.2(g), a
"majority in interest" means the Holders of a majority of the Percentage
Interests and a majority of the capital accounts maintained as provided in
Section 2.1(d), determined as of the Termination Date.
2.2. Transfer of Property to the Trust; Acceptance by Trustee; Situs of
Trust and Title to Trust Property.
(a) As of the Initial Effective Date, Depositors pursuant to the
Trust Transfer Documents granted, conveyed, sold, transferred and assigned
to the Trustee in trust for the benefit of the Holders in accordance with
the terms hereof, all right, title and interest in and to the sum of Ten
Dollars ($10.00) and all Trust Property owned by Depositors as of such date
constituting the Initial Properties, subject to the Trust Loan Obligations.
As of the Effective Date, Depositors, pursuant to the Trust Transfer
Documents hereby grant, convey, sell, transfer and assign to Trustee in
trust for the benefit of the Holders in accordance with the terms hereof,
all right, title and interest in and to the sum of Ten Dollars ($10.00) and
all Trust Property owned by Depositors as of such date constituting the
Additional Properties, subject to the Trust Loan Obligations.
(b) Trustee acknowledges receipt of the sum of Twenty Dollars
($20.00), in lawful money of the United States of America, and the Trust
Property subject to the provisions herein and declares that it holds and
will hold such property and all documents related thereto now or hereafter
delivered to it as Trustee in trust for the common
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<PAGE> 21
and equal use, benefit and security for all Holders from time to time and
without preference of any of the Certificates of Beneficial Interest over
any of the others by reason of priority in time of issuance, sale or
negotiation thereof.
(c) Without limiting the terms, effect or intent of Sections 2.2(a)
and the other provisions of this Agreement, each Depositor confirms that it
has granted, and hereby grants, a security interest in, and pledges and
assigns to, the Trust, all of its right, title and interest in and to the
Trust Property, whether now owned or hereafter acquired, and all Proceeds
thereof, as security for any obligations that may arise to the extent that,
notwithstanding the parties' intent, the deposit, assignment or transfer of
any Trust Property is held by a court of competent jurisdiction not to be
absolute, and for such purposes, this Agreement shall constitute a
"security agreement" under the UCC and the law of any other relevant
jurisdiction. To effect the purposes of the immediately preceding
sentence, each Depositor shall take or cause to be taken such actions in
such a manner so that the Trust has a valid and perfected first priority
security interest as of the Effective Date in the entire Trust Property.
Such actions shall include, without limitation, filing of UCC financing
statements or amendments thereto as to the Trust Property for all
jurisdictions as may be necessary or desirable to perfect the security
interests in the Trust Property on or prior to the Effective Date.
(d) Title to all of the Trust Property shall be vested in the
Trustee on behalf of the Trust until this Agreement terminates pursuant to
Section 2.1(f).
2.3. Certificates of Beneficial Interest.
(a) Concurrently with, and in consideration for, the conveyance,
delivery, receipt and deposit of the sum of Ten Dollars ($10.00) in lawful
money of the United States of America, duly paid by Depositors, and the
Initial Properties, Trustee issued, executed, countersigned and delivered
to or upon the order of Depositors, the Certificates of Beneficial Interest
evidencing ownership of 100% of the beneficial interest in the Trust.
Following the transfer of the Additional Properties to the Trust, the
Certificates of Beneficial Interest will continue to evidence ownership of
100% of the beneficial interest in the Trust.
(b) As set forth in Recital 15, immediately upon the transfer of
the Additional Properties to the Trust pursuant to Section 2.2(a) and the
amendments to the Existing Insurance Company Loan Agreement and the Trust
Loan Agreement described therein, Depositors, as Holders, will transfer,
with the consent of Lenders, 49% of the Certificates of Beneficial Interest
to Corimon, 31% of the Certificates of Beneficial Interest to Fidelity for
immediate
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<PAGE> 22
transfer to Property Co., and 20% of the Certificates of Beneficial
Interest to Lenders in the percentage amounts as set forth in Schedule 1 to
Appendix A. The Holders unanimously consent to such transfers. Depositors
will surrender their Certificates of Beneficial Interest to the Trustee and
the Trustee shall deliver to each of the Holders Certificates of Beneficial
Interest in the amounts set forth above. Depositors and Holders
acknowledge and agree that no Person has made any representations to them
as to the value of such Certificates of Beneficial Interest, and the
amounts paid for their interests in the Certificates of Beneficial Interest
may exceed the actual amount of distributions to be paid on the
Certificates of Beneficial Interest.
(c) Each Certificate of Beneficial Interest shall be executed by
manual signature on behalf of the Trust by one of the Authorized Officers
of Trustee. Certificates of Beneficial Interest bearing the manual
signature of an individual who was, at the time when such signature was
affixed, authorized to sign on behalf of Trustee shall bind the Trust,
notwithstanding that such individual has ceased to be so authorized prior
to the delivery of such Certificate of Beneficial Interest or does not hold
such office at the date of such Certificate of Beneficial Interest. Each
Certificate of Beneficial Interest shall be dated the date of its issuance.
(d) Each Holder shall be entitled to all rights provided to it
under this Agreement and in the Certificate of Beneficial Interest it holds
and shall be subject to the terms and conditions contained in this
Agreement and in the Certificate of Beneficial Interest.
(e) The Certificates of Beneficial Interest may not be sold,
exchanged or otherwise transferred except as expressly provided in this
Section 2.3(e). No Certificate of Beneficial Interest may be transferred
by a Holder without the unanimous consent of all other Holders, which
consent may be withheld at their absolute discretion. Any purported
transfer of any Certificate of Beneficial Interest in violation of this
Section 2.3(e) shall be null and void and shall not cause any rights to
inure to the benefit of the purported transferee. Any transfer of a
Certificate of Beneficial Interest arising by operation of law shall
transfer to the transferee only the applicable Holder's rights to
distributions on such Certificate of Beneficial Interest but such
transferee shall not become a substitute registered Holder and shall not
succeed to any of the rights of the Holder other than the right to receive
distributions on such Certificate of Beneficial Interest in accordance with
Section 9.5. Notwithstanding the foregoing, the Certificates of Beneficial
Interest may be pledged to Servicing Agent in its capacity as a collateral
and servicing agent under the Existing Insurance Company Loan Agreement
pursuant to the Certificate Pledge Agreement to secure the obligations of
Corimon and Property Co. under the Note Purchase Agreement. Upon the
exercise of rights
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<PAGE> 23
under the Certificate Pledge Agreement by Servicing Agent with respect to
the Certificates of Beneficial Interest, Servicing Agent or its designees,
successors or assigns (including any purchaser pursuant to sale upon
foreclosure or otherwise), shall succeed to all of the rights to
distribution of the applicable Holder, including rights to proceeds on
redemption, but shall not succeed to any obligation of Holders hereunder,
shall not become a substitute registered Holder and shall not succeed to
any of the rights of the Holders other than the right to receive such
distributions. Servicing Agent, in its capacity as collateral and
servicing agent under the Existing Insurance Company Loan Agreement, and
the lenders party to such agreements are intended third party beneficiaries
of the provisions contained in this Section 2.3(e).
(f) Each Certificate of Beneficial Interest held by each Holder
shall bear a legend setting forth the restrictions on transferability
substantially as follows:
"THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND EXCEPT AS PROVIDED IN THE TRUST AGREEMENT,
May NOT BE DIRECTLY OR INDIRECTLY OFFERED, PLEDGED,
TRANSFERRED, ASSIGNED, USED AS SECURITY, SOLD OR OTHERWISE
DISPOSED OF BY THE HOLDER HEREOF.
Each Certificate of Beneficial Interest held by any Holder
other than Lenders and their Affiliates shall bear an additional legend
substantially as follows:
ALL RIGHTS AND INTERESTS OF THE HOLDER UNDER THIS CERTIFICATE
HAVE BEEN PLEDGED TO TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY, AS SERVICING AGENT, AS SECURITY FOR THE OBLIGATIONS
UNDER THE NOTE PURCHASE AGREEMENT (AS DEFINED IN THE TRUST
AGREEMENT REFERRED TO BELOW)."
(g) If (i) any mutilated Certificate of Beneficial Interest is
surrendered to Trustee, or Trustee receives evidence to its satisfaction of
the destruction, loss or theft of the Certificate of Beneficial Interest,
and (ii) there is delivered to Trustee such security or indemnity as may be
required by it to save it harmless, then, in the absence of notice to
Trustee that such Certificate of Beneficial Interest has been acquired by a
bona fide purchaser, Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate of
Beneficial Interest, a new Certificate of Beneficial Interest of like tenor
and aggregate beneficial interest. In connection with the issuance of any
new Certificate of Beneficial Interest under this Section 2.3(g), Trustee
may require the payment by the holder of a sum sufficient to cover any tax
or other governmental charge that
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<PAGE> 24
may be imposed in relation thereto and any other expenses (including the
fees and expenses of Trustee) connected therewith. Any replacement
Certificate of Beneficial Interest issued pursuant to this Section 2.3(g)
shall constitute complete and indefeasible evidence of ownership of a
beneficial interest in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate of Beneficial Interest shall be
found at any time.
2.4. Tax Reporting. The parties agree that, unless otherwise required by
appropriate tax authorities, to the extent the Trust is required to file
any tax return or tax report, Trustee will file the tax returns and tax
reports prepared on behalf of the Trust by Kenneth Leventhal or any other
accountants selected by Disposition Agent in its sole discretion as a
partnership, for all income tax purposes in accordance with the written
instructions of such accountants. In addition, Disposition Agent, either
directly or through one of its Affiliates, shall serve as tax matters
partner pursuant to the Code and shall sign all tax returns. Although the
sale of the Certificates of Beneficial Interest as set forth in Recital 15
will constitute a liquidation of the Trust for tax purposes under Section
708(b)(1)(B) of the Code, the Tax Matters Partner shall nonetheless make a
protective Section 754 election under Section 754 of the Internal Revenue
Code.
2.5. Further Assurances. Subject to the provisions of Section 2.7,
Trustee shall execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the written
directions of Holders or Disposition Agent, as such Holders or Disposition
Agent, as the case may be, may deem necessary or advisable to give effect
to the transactions contemplated hereby.
2.6. Duties of Trustee.
(a) Notwithstanding anything in this Agreement to the contrary,
Trustee on behalf of the Trust is hereby authorized and directed to
execute, deliver and perform, and to comply with the terms of, the Trust
Loan Documents and the Related Agreements and any other documents related
thereto to which the Trust is or becomes a party. Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the
Trust Loan Documents and the Related Agreements to the extent Disposition
Agent has agreed pursuant to Section 3.3 to perform any act or to discharge
any duty of Trustee hereunder or under any of the other above-referenced
documents, and Trustee shall not be liable for the default or failure of
Disposition Agent to carry out its obligations under such documents.
Disposition Agent shall be liable for the default or failure to carry out
its obligations under any of such documents to the extent provided therein.
The Trustee shall have no duty to monitor the actions of the Disposition
Agent.
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<PAGE> 25
(b) Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Trust Property,
or otherwise to take or refrain from taking any action under or in
connection with this Agreement, except as expressly required by the terms
of this Agreement or expressly directed in written instructions pursuant to
Section 2.7; and no implied duties or obligations shall be read into this
Agreement against Trustee. Trust Company nevertheless agrees that it will,
at its own cost and expense, promptly take all actions as may be necessary
to discharge any liens on any part of the Trust Property which result from
actions by or claims against Trust Company that are not related to the
ownership of the Trust Property or any other property of the Trust or the
administration of the Trust Property or the transactions contemplated by
this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Trustee shall have no obligation or duty (and no such obligation or duty
shall be read into this Agreement or implied with respect to or against
Trustee) (i) to initiate or otherwise participate in, or consent to, any
bankruptcy, insolvency or other proceeding or adjudication of the Trust or
(ii) to otherwise take any action, or refrain from taking any action, which
action or failure to act would cause an Event of Default or Potential Event
of Default.
2.7. Instructions to Trustee.
(a) Trustee shall take such action or shall refrain from
taking such action and execute such documents under this Agreement, the
Trust Loan Documents and the Related Agreements as it shall be directed in
writing pursuant to a specific provision of this Agreement, including by
Disposition Agent pursuant to Section 3.3, or as to matters not otherwise
provided for under Section 3.3 or other provisions of this Agreement, by
Disposition Agent, which instructions shall be delivered by Disposition
Agent in accordance with Section 9.4. Trustee shall not initiate any claim
or lawsuit by the Trust or compromise any claim or lawsuit brought by or
against the Trust unless it shall have obtained the consent of Disposition
Agent or shall have been directed by Disposition Agent pursuant to
instructions delivered to it in accordance with Section 9.4.
(b)(i) If in performing its duties under this Agreement, Trustee is
required to decide between alternative courses of action, Trustee shall, or
(ii) if Trustee is unsure of the application of any provision of this
Agreement, then Trustee may, promptly deliver a notice to Disposition Agent
in accordance with Section 9.4 requesting written instructions as to the
course of action desired by Disposition Agent. Within ten (10) Business
Days of receipt of such notice, Disposition Agent may provide written
instructions to
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<PAGE> 26
Trustee in accordance with Section 9.4 setting forth the specific action to
be taken by Trustee. If Trustee does not receive such instructions within
ten (10) Business Days after it has delivered such notice, it may but shall
be under no duty to take or refrain from taking such action not
inconsistent with this Agreement as it shall deem advisable. In no event
shall Disposition Agent instruct Trustee, nor shall Trustee be required to
take any action, or refrain from taking any action, which action or failure
to act would cause an Event of Default or Potential Event of Default.
2.8. Furnishing of Documents. Trustee shall furnish to Depositors,
Disposition Agent, Holders and Servicing Agent promptly upon receipt
thereof, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to
Trustee hereunder or under the Trust Loan Documents or the Related
Agreements (other than documents originated by or otherwise furnished to
Depositors, Disposition Agent, Holders or Servicing Agent, as the case may
be).
2.9. Liability of Company and Depositors.
(a) Notwithstanding anything in this Agreement to the contrary,
Company and Depositors shall be jointly and severally responsible to pay
out of their own funds as an indemnity (i) all Environmental Expenditures,
and (ii) all compensation and indemnification obligations under
Section 7.3, it being understood that any such payments shall not be
payable with Third Party Lease Proceeds nor be subject to reimbursement
from the Third Party Lease Proceeds, the Collection Account or other Trust
Property.
(b) In addition to the foregoing, it is understood that the Trust
is to be treated as a partnership for federal income tax purposes and is
not intended to be an association taxable as a corporation or a trust other
than a grantor trust. If at any time on or after the Initial Effective
Date the Trust becomes an association taxable as a corporation or a trust,
other than a grantor trust, for federal income tax purposes as determined
by either (i) an opinion of counsel to Trustee, (ii) a judgment entered
into by a court having jurisdiction over the subject matter, or
(iii) settlement or acquiescence by Trustee with any such assertion made by
the Internal Revenue Service or other tax authority, then Company and each
Depositor shall jointly and severally reimburse the Trust on an after-tax
basis for 100% of the tax liability, including any interest or penalties,
incurred by the Trust, but not in excess of the after-tax, interest and
penalty, amount which would be payable by the Trust based on the sale of
the Properties for an aggregate price of $64,665,948.
(c) Depositors also agree to pay from their own funds (or reimburse
Disposition Agent or the Trust Property to the extent paid
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<PAGE> 27
pursuant to Sections 3.3(i) or 3.4 (a)) all bills for Maintenance Costs and
Disposition Improvements for the Initial Properties that include costs
incurred or payable on or prior to the Initial Effective Date, other than
property taxes on the Initial Properties, which will be prorated.
Depositors also agree to pay from their own funds (or reimburse Disposition
Agent or the Trust Property to the extent paid pursuant to Sections 3.3(i)
or 3.4(a)) all bills for Maintenance Costs and Disposition Improvements for
the Additional Properties that include costs incurred or payable on or
prior to the Effective Date, other than property taxes on the Additional
Properties, which will be prorated. For example, if a vendor submits a
bill for the period from February 15, 1995 through March 15, 1995 and the
Effective Date is March 1, 1995, Depositors shall pay such bill without
adjustment, and, subject to the terms of the Depositors Leases, any Third
Party Leases and other leases, all future bills from such vendor will be
payable from Trust Property.
(d) Depositors also agree (i) to transfer all vendor accounts with
respect to the Initial Properties to the Disposition Agent promptly after
August 1, 1994; provided that utility accounts may remain with Company and
Depositors; and provided further that Depositors forward the related bills
to Disposition Agent to pay out of Trust Property as provided in this
Agreement, (ii) to transfer all vendor accounts with respect to the
Additional Properties to the Disposition Agent promptly after the Effective
Date; provided that utility accounts may remain with Company and
Depositors; and provided further that Depositors forward the related bills
to Disposition Agent to pay out of Trust Property as provided in this
Agreement.
2.10. Restrictions on Transfers of Loans under the Trust Loan Agreement.
Lenders have agreed pursuant to the Trust Loan Agreement for the benefit of
the Trust not to sell, assign or otherwise transfer the Trust Loans
outstanding under the Trust Loan Agreement to any other Person except to
the extent otherwise provided therein.
SECTION 3.
TRUST LOAN AGREEMENT; PLEDGE OF COLLATERAL;
DISPOSITION AGENT;
TRUST ACCOUNTS AND OTHER MATTERS
3.1. Execution of the Trust Loan Documents and Related Agreements, Pledge
of Collateral and Other Matters.
(a) On and after the Effective Date, Trustee shall execute and
deliver the Trust Loan Documents and any Related Agreement (other than any
Disposition Agreement) to which the Trust is or becomes a party, in each
case, with such changes therein as Depositors deem appropriate, as
evidenced, conclusively but not exclusively, by
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<PAGE> 28
Trustee's execution of such documents upon the written instruction of
Depositors. From time to time after the Effective Date, Trustee shall
execute and deliver any Disposition Agreement and any other document at the
instruction of Disposition Agent as provided under Section 3.3, in each
case, with such changes therein as Disposition Agent deems appropriate, as
evidenced, conclusively but not exclusively, by Trustee's execution of such
document upon the written instruction of Disposition Agent, it being
understood that no consent of Company, any Holder or any Depositor shall be
required.
(b) On the Initial Effective Date, Depositors transferred to
Trustee the Initial Property under and as provided in the Trust Transfer
Documents. On the Effective Date, Depositors shall transfer to Trustee the
Additional Properties under and as provided in the Trust Transfer
Documents, Depositors shall cause all conditions to the effectiveness of
the Trust Transfer Documents to be satisfied or waived with the consent of
Lenders, including, without limitation, the receipt of letters from all
Persons engaged to sell the Properties confirming that the transfer of the
Properties to Trustee will not obligate Company or any of its Subsidiaries,
including Trustee, to make any payment to such Persons, and the Trust
Transfer Documents and the Trust Loan Agreement shall have become effective
in accordance with their respective terms. Depositors shall deposit with
the Disposition Agent all Trust Property upon receipt thereof and deposit
or make available to Disposition Agent upon its request all books, records
and files relating to the Trust Property.
(c) On the Effective Date, all conditions to the effectiveness of
the Trust Loan Agreement shall have been satisfied or waived with the
consent of all Lenders and Trustee shall have delivered or caused to be
delivered all Trust Loan Documents and other agreements requested by any
Lender.
(d) Trustee shall give, execute and deliver any notice, instrument,
document, agreement or other papers presented to it in execution form that
may be necessary or desirable in Servicing Agent's sole discretion in order
to enable Servicing Agent (i) to preserve, perfect, substantiate or
validate any security interest granted to it by Trustee under the Trust
Loan Agreement and the other Trust Loan Documents and (ii) to exercise and
enforce its rights and the rights of Trustee with respect to the related
Collateral.
3.2. [Intentionally Omitted].
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<PAGE> 29
3.3. Designation and Role of Disposition Agent.
(a) Trustee is hereby authorized and directed to designate
Transamerica Realty Services, Inc. to serve as Disposition Agent for
Trustee and the Trust under this Agreement. Trustee hereby appoints
Transamerica Realty Services, Inc. as Disposition Agent to perform the
duties and fulfill the obligations of Disposition Agent to the extent
provided herein. Transamerica Realty Services, Inc. hereby accepts the
appointment by Trustee as Disposition Agent and hereby agrees to perform
the duties and fulfill the obligations of Disposition Agent to the extent
provided herein. Trustee agrees that it will not execute any agreement,
document or instrument creating duties, liabilities or obligations on the
part of Disposition Agent without the Disposition Agent's consent.
(b) Disposition Agent shall provide such asset divestiture services
with respect to the Properties as it deems in its sole discretion desirable
to attempt to dispose of the Properties prior to the scheduled Termination
Date.
(c) Disposition Agent shall provide the following services:
(i) Disposition Agent shall use reasonable efforts to prepare
for execution by the Trust or Trustee, or cause the preparation by other
appropriate Persons of, all documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Trust or Trustee
to prepare, file or deliver and use reasonable efforts to take all other
appropriate action as it shall be the duty of the Trust or Trustee to take
pursuant to the Trust Loan Documents and the Related Agreements.
Disposition Agent shall use reasonable efforts (A) to submit the notice of
closing date, officer's certificates, and other instruments and all
notices, demands, requests and information (financial or otherwise) and
take all other actions required of Disposition Agent under the terms of the
Trust Loan Documents and the Related Agreements; and (B) to obtain the
insurance coverage and maintain the Properties on such terms as it deems
appropriate in its sole discretion, in each case at the expense of the
Trust. Disposition Agent shall be deemed to have discharged its duties and
responsibilities hereunder and under the Trust Loan Documents and Related
Agreements to the extent it has appointed a property inspector, regional
property manager, sub-contractor or other professional to perform any act
or to discharge any duty of Disposition Agent hereunder or under any of the
above-referenced documents, and Disposition Agent shall not be liable for
the default or failure of any such property inspector, regional property
manager, sub-contractor or other professional to carry out its obligations
under such documents.
(ii) Disposition Agent shall use reasonable efforts: (A) to
collect all Third Party Lease Proceeds, Net Sale Proceeds,
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<PAGE> 30
proceeds of the Depositors Leases and Net Proceeds of Insurance or
Condemnation from each Property; (B) to enter into or prepare and direct
Trustee to enter into the Depositors Leases, Disposition Agreements and
Third Party Leases from time to time with respect to certain Properties;
(C) to prepare and furnish to Depositors, Trustee, Holders, and Servicing
Agent each month a monthly accounting report setting forth a description of
any disposition of Properties for such month and accounting for the
proceeds of such disposition; and (D) to meet with one or more
representatives of each Depositor and provide them with a written report
relating to the activities of the Trust and Disposition Agent on a monthly
basis.
(iii) Disposition Agent shall establish and maintain a
Collection Account on behalf of the Trust which shall be titled "Standard
Brands Paint Liquidating Property Trust Collection Account." Disposition
Agent shall use reasonable efforts to cause the Third Party Lease Proceeds,
Net Sale Proceeds, proceeds of the Depositors Leases, Net Proceeds of
Insurance or Condemnation and other Collections to be deposited into the
Collection Account and shall invest and apply amounts on deposit in the
Collection Account in accordance with Section 3.4. Any such amounts
received by Disposition Agent shall not be commingled with any other funds
of Disposition Agent.
(iv) From time to time after the Effective Date, Disposition
Agent shall disburse amounts in the Collection Account to pay for
Disposition Improvements as it deems necessary, desirable or appropriate at
its sole discretion in accordance with Section 3.4.
(v) Notwithstanding any provision of this Agreement,
Disposition Agent shall not be under any obligation to retain counsel or to
institute litigation to enforce any provision contained in any Disposition
Agreement, Third Party Lease or other document relating to any Property,
nor shall Disposition Agent be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of its failure to attempt
to enforce any such provision. Disposition Agent may take any action
hereunder, including, without limitation, exercising any remedy under any
Disposition Agreement, Depositors Lease, Third Party Lease or other
document relating to any Property, retaining counsel in connection with
performance of its obligations hereunder and instigating litigation to
enforce any obligation of any other party to a Disposition Agreement,
Depositors Lease, Third Party Lease or other document relating to any
Property, without the consent or approval of Trustee, unless Trustee's
consent or approval is expressly required hereunder or under applicable
law.
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(d) Trustee, the Trust, Company and Depositors agree that
Disposition Agent is entitled and is hereby authorized to take all actions
it believes are desirable in its sole discretion to provide the asset
divestiture services contemplated hereby, including those actions described
in this Section 3.3, without the consent of Trustee, the Trust, Company,
Depositors, Holders, Servicing Agent or any other Person. Authorization of
any action that may be taken by Disposition Agent in this Section 3.3 shall
not impose an obligation on Disposition Agent to take such action.
Disposition Agent shall be held harmless by the Trust, Company, Depositors
and Holders from any liability if it takes any such action in good faith.
(e) Disposition Agent is authorized to develop and implement
policies for the disposition (including the leasing pursuant to a Third
Party Lease) of the Properties, coordinate the closing of the disposition
of the Properties, submit notices to Depositors that they shall pay the
amount of real estate and other taxes deducted from the proceeds of the
disposition of related Property, and engage in such other services and
activities relating to the Properties as Disposition Agent believes in its
sole discretion are desirable in order to fulfill its obligations under
this Agreement.
(f) Disposition Agent is authorized to do each of the following:
(i) retain regional property managers and supervise the activities of such
regional property managers whose responsibilities may include inspecting
the Properties on a regular basis to verify that the related Property is
being maintained and secured and assisting Disposition Agent in identifying
the sub-contractors to make repairs on the related Property; (ii) retain
regional inspectors and coordinate and supervise the activities of such
regional inspectors whose responsibilities may include preparing a report
on the related Property which sets forth, among other things, a good faith
estimate of the cost of the repairs, (iii) retain real estate brokers and
monitor the activities of such real estate brokers, (iv) review the status
of all escrows on a weekly basis, (v) review and approve the documents
required for the disposition of the Properties, including title reports and
ALTA surveys, (vi) retain local counsel and coordinate the allocation of
responsibilities and activities of such local counsel, (vii) execute
documents required for the disposition of the Properties and the release of
the liens on the Properties, (viii) maintain a sales control file on each
Property, (ix) provide notice to Depositors to vacate Operational
Properties pursuant to the terms of the Depositors Leases, (x) seek
potential lessees for Vacant Properties and determine the timing and terms
of any Third Party Lease, (xi) retain experts, consultants, property
managers, property inspectors, title companies, attorneys and other
professionals to enable it to perform the duties set forth herein in its
sole discretion, (xii) apply for a rezoning of certain Properties to
enhance the marketability of such Properties and to enter into
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<PAGE> 32
leases with third parties to provide additional space to accommodate the
needs of Company and Depositors at certain Operational Properties,
(xiii) enter into sale-leaseback transactions regarding the Properties, and
(xiv) take such other actions as may be necessary to accomplish any of the
foregoing.
(g) Disposition Agent is authorized to determine the amount and
timing of Maintenance Costs, Disposition Improvements and Environmental
Expenditures to be incurred with respect to any Property. Disposition
Agent is hereby authorized (and may so direct the tenants under the
Depositors Leases or Third Party Leases) (i) to incur or reserve for
Maintenance Costs and Disposition Improvements and otherwise maintain
Properties in accordance with the recommendations of inspectors or property
managers selected by Disposition Agent at its sole discretion, (ii) to
incur or reserve for Environmental Expenditures in accordance with the
recommendations of environmental consultants selected by Disposition Agent
in its sole discretion, (iii) to determine what amounts are to be
transferred into any Subaccount to reserve for Maintenance Costs,
Disposition Improvements or Environmental Expenditures payable in the
future, and (iv) to incur or reserve for such other costs and expenses that
Disposition Agent determines to be necessary in the administration of its
duties under this Agreement.
If Disposition Agent decides in its sole discretion to incur
any Maintenance Cost or any painting expenditures exceeding $20,000 for an
individual item, Disposition Agent shall (unless Disposition Agent deems
such expenditures to be an emergency) provide notice to Depositors of such
decision and allow Depositors to bid to provide such work within ten (10)
calendar days of receipt of such notice to Depositors. If Depositors do
not submit a bid within such ten-day period, Depositors shall be deemed to
have waived their rights to bid on such maintenance work. Disposition
Agent shall not be obligated to accept any bid from Depositors, and
Disposition Agent shall be held harmless by Trustee (in its capacity as
Trustee) solely out of Trust Property, the Trust, Company, Depositors and
Holders from any liability if it does not accept any bid from Depositors.
(h) Disposition Agent is authorized to take such actions as it
deems desirable to dispose of all Properties individually or in one or more
"bulk sales", sell Properties to Depositors or Holders, and sell Properties
subject to the Depositors Leases and the Third Party Leases to attempt to
dispose of all Properties prior to the Termination Date. Disposition Agent
is authorized to sell any Property (A) at a price determined in
consultation with appraisers selected by Disposition Agent in its sole
discretion or (B) at a price equal to or greater than 90% (plus or minus
$10,000) of the Estimated Sales Price set forth in the Leventhal Report
with respect to such Property. Disposition Agent is further authorized to
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<PAGE> 33
dispose of any Property at any price if it determines that the disposition
of the Property is desirable in order to attempt to dispose of all
Properties prior to the Termination Date or if a majority of the members of
the Liquidating Trust Committee shall have approved the sale based on a
written report provided to the Liquidating Trust Committee by Disposition
Agent. Disposition Agent shall be held harmless by Trustee (in its
capacity as Trustee) solely out of Trust Property, the Trust, Company,
Depositors and Holders from any liability if it disposes of the Properties
in accordance with this Section 3.3(h).
Without limiting the generality of the foregoing, if
Disposition Agent decides that a Property cannot be sold at a price equal
to or greater than 90% (plus or minus $10,000) of the Estimated Sales Price
set forth in the Leventhal Report for such Property, Disposition Agent may
accept from any Person the highest cash bid received that is determined by
Disposition Agent to be a fair price for such Property. In the absence of
any bid determined to be fair as provided in the immediately preceding
sentence, Disposition Agent may offer the Property for sale to any Person
in a commercially reasonable manner for a period of not less than thirty
(30) days, and may accept the highest cash bid received therefor in excess
of the highest bid previously submitted. In determining whether any bid
received represents a fair price for any Property, Disposition Agent is
hereby authorized to rely conclusively on the opinion of an independent
appraiser or other experts in real estate matters retained by Disposition
Agent at the expense of the Trust. To assist the appraiser or other
experts in determining whether any bid constitutes a fair price for any
Property, Disposition Agent may instruct such appraiser or experts to take
into account, as applicable, among other factors, the period and amount of
any delinquency on any Third Party Lease, the physical condition of the
Property, the state of the local economy, the Trust's obligation to dispose
of the Property prior to the Termination Date and the benefits to be
derived by the Trust in disposing of such Property as promptly as
commercially reasonable.
The Trust, Trustee, Company and Depositors hereby acknowledge
that the Estimated Sales Price for each Property set forth in the Leventhal
Report is an estimate for reference purposes only and that the proceeds of
the sale of each Property to be received by Disposition Agent may vary from
the Estimated Sales Price for such Property.
Any sale of a Property shall be final without recourse to
Trustee, Trust Company, Disposition Agent or the Trust, and neither
Disposition Agent nor Trustee shall have any liability to any Holder, any
Depositor or Company with respect to the purchase price therefor accepted
by Disposition Agent.
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<PAGE> 34
(i) Notwithstanding anything in this Agreement to the contrary,
Disposition Agent is authorized to advance from its own funds any
Environmental Expenditures, Disposition Improvements costs, other costs and
expenses it may incur and pay pursuant to Section 3.3, and any Maintenance
Costs that are due and payable but not timely paid; provided, that
advancement of any such amounts by Disposition Agent pursuant to this
Section 3.3(i) shall not relieve any party of its obligations to make such
payment under this Agreement; and provided, further, that within two (2)
Business Days of receipt of notice from Disposition Agent of any
Environmental Expenditures, Maintenance Costs, Disposition Improvements or
other amounts payable by Company or any Depositor but advanced by
Disposition Agent, Company or such Depositor, as the case may be, shall
make a payment from its own funds to Disposition Agent for deposit in the
Collection Account. Disposition Agent shall at all times be reimbursed for
all its advances in accordance with the provisions of this Section 3.3(i)
or from the Collection Account in accordance with Section 3.4(a).
(j) If Disposition Agent is undecided on alternate courses of
action, Disposition Agent may request instructions from the Holders and is
hereby authorized (but shall not be required) to follow and shall be held
harmless in relying on the instructions of Holders of a majority in
interest of the Certificates of Beneficial Interest.
(k) As compensation for its services hereunder, Disposition Agent
shall be entitled to the monthly Administration Fee (as defined below), the
Disposition Fee (as defined below) and any customary brokerage commission.
The monthly "Administration Fee" shall be equal to (i) $25,000 per month
accruing from July 1, 1994 through the Effective Date and $35,000 per month
thereafter, (ii) an accounting and asset administration fee of $6,000 per
month (reducing to $3,000 per month on the first month commencing after 50%
of the Initial Properties are sold) accruing from August 1, 1994, payable
for the months of July and August 1994 on the Initial Effective Date (such
Administration Fee not to be prorated) and thereafter monthly in advance on
the first Business Day of each month that is a Distribution Date thereafter
until the month in which the obligations and responsibilities of
Disposition Agent terminate in accordance with Section 7.9 hereof. The
"Disposition Fee" shall be equal to 1% of (i) the Gross Sale Proceeds plus
(ii) the Gross Proceeds of Insurance or Condemnation of each Property, such
Disposition Fee to be payable upon receipt of such proceeds. The brokerage
commission shall be equal to either (x) a 5% real estate commission,
payable from escrow, for any sale of a Property where Disposition Agent
acts as the sole real estate broker, or (y) 50% of a normal commission for
any sale of a Property where Disposition Agent acts as a co-op broker, such
brokerage commission to be payable upon closing of an escrow.
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<PAGE> 35
(l) Trustee is authorized and directed to and hereby appoints
Disposition Agent as Trustee's attorney-in-fact, with full authority in the
place and stead of Trustee and in the name of Trustee, Disposition Agent,
or otherwise, from time to time in Disposition Agent's discretion to take
any action and to execute any instrument that Disposition Agent may deem
necessary or advisable to accomplish its duties under this Agreement, the
Disposition Agreements, or the Third Party Leases, including, without
limitation, taking any action described in this Section 3.3 and executing
any Depositors Lease, any Third Party Lease, any Disposition Agreement, any
property management agreement and any instruments to maintain or effect the
disposition of any Properties. Disposition Agent is authorized to execute
documents on behalf of the Trust in the form of the signature block set
forth on Schedule I attached hereto. The Trustee shall not be liable for
any acts or omissions by Disposition Agent arising hereunder absent
Trustee's gross negligence or willful misconduct.
(m) Disposition Agent shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Trust
Property, or otherwise to take or refrain from taking any action under or
in connection with this Agreement, except as expressly required by the
terms of this Agreement; and no implied duties or obligations shall be read
into this Agreement against Disposition Agent.
(n) Notwithstanding anything in this Agreement to the contrary,
Disposition Agent shall have no obligation or duty (and no such obligation
or duty shall be read into this Agreement or implied with respect to or
against Disposition Agent) (i) to initiate or otherwise participate in, or
consent to, any bankruptcy, insolvency or other proceeding or adjudication
of the Trust or (ii) to otherwise take any action, or refrain from taking
any action, which action or failure to act would cause an Event of Default
or Potential Event of Default.
(o) Disposition Agent hereby accepts and assumes the foregoing
duties and agrees to provide all asset divestiture and other services
described herein in accordance herewith; provided that Disposition Agent
shall not be liable to the Trust or any other Person for taking any action
authorized in this Section 3.3 or otherwise in performing its duties under
this Agreement, except to the extent arising from its willful misconduct.
(p) Disposition Agent shall hold all security deposits under any
leases of any Property in a separate account in trust for Trustee on behalf
of the Trust, shall not commingle such funds with any funds of Disposition
Agent and shall only apply such funds in accordance with the related
leases.
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<PAGE> 36
3.4. Collections, Distributions and Investments.
(a) All Net Sale Proceeds, Net Proceeds of Insurance or
Condemnation and other Collections received by Disposition Agent from and
after the Effective Date shall be directly deposited into the Collection
Account and applied by Disposition Agent, on each Distribution Date, to the
extent reasonably practicable and available therefor, in the following
order:
(i) to the extent not otherwise paid, to pay all amounts (if
any) then due and owing to Disposition Agent hereunder, including,
without limitation, the Administration Fees, the Disposition Agent
Fees and amounts advanced by Disposition Agent from its own funds
pursuant to this Agreement, including Section 3.3(i), all amounts (if
any) then due and owing to Trustee, Disposition Agent or any
indemnified party pursuant to Sections 7.1 and 7.3, all other
operating or administrative expenses (if any) of the Trust, including
wire transfer fees, all fees, costs and expenses of third Persons
incurred pursuant to Section 3.3(f), all fees, costs and expenses
associated with any requirement that Disposition Agent or Trustee may
have to obtain any opinion of independent counsel as a condition
precedent to any action hereunder, all fees, costs and expenses of
any accountants or attorneys employed or used in connection with the
preparation of any tax return filed in respect of the Trust or the
Trust Property and any records, calculations, determinations made or
maintained and conflict resolution or litigation undertaken with
respect to tax matters of the Trust, and all fees, costs and expenses
incurred in connection with the appointment of a successor
Disposition Agent or a successor Trustee under this Agreement
(excluding, however, any Maintenance Costs, Environmental
Expenditures or Disposition Improvements, unless such amounts have
been advanced by Disposition Agent from its own funds pursuant to
Section 3.3(i));
(ii) to the extent not otherwise paid, and subject to the
provisions of the Depositors Leases, Third Party Leases and other
leases of the Properties, to pay all Maintenance Costs with respect
to the Properties;
(iii) to pay for the cost of all Disposition Improvements and
Environmental Expenditures not paid by Company or any Depositor;
(iv) to transfer to the Reserve Account or any Subaccount such
amounts as Disposition Agent in its sole discretion deems necessary
to reserve for payment of any amounts that may be subsequently
payable hereunder;
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<PAGE> 37
(v) to pay to Servicing Agent under the Trust Loan Agreement
all amounts due and payable in respect of the Trust Loan Obligations
pursuant to the Trust Loan Documents; and
(vi) after the Trust Loan Obligations have been paid in full,
any remaining cash amounts (the "Remaining Amount") in the Collection
Account after payments have been made pursuant to the foregoing
paragraphs shall be distributed to Holders of record on the
applicable Record Date proportionally based on their respective
Percentage Interests in the Trust to be applied by such Holders,
other than the Lenders, as provided in the Note Purchase Agreement.
(b) All payments and distributions required to be made to Servicing
Agent pursuant to this Section 3.4 shall be made in immediately available
funds by such means as are acceptable to Disposition Agent and Servicing
Agent. All payments and distributions required to be made to Holders
pursuant to this Section 3.4 shall be made to Holders by wire transfer of
immediately available funds or by such other means as are acceptable to
Disposition Agent in either case as specified in written instructions from
each Holder delivered to Trustee and Disposition Agent in accordance with
Section 9.4 at least five (5) Business Days prior to such payment or
distribution. Notwithstanding the foregoing, Trustee and Disposition Agent
hereby acknowledge receipt of notice from Corimon, Property Co. and
Servicing Agent that the Certificates of Beneficial Interest owned by
Corimon and Property Co. have been pledged to Servicing Agent pursuant to
the Certificate Pledge Agreement and the Disposition Agent hereby agrees to
deliver payments and distributions, less taxes, required to be made to such
Holders pursuant to this Section 3.4 in accordance with the terms of the
Certificate Pledge Agreement.
(c) At any time and from time to time, Disposition Agent may
establish with Disposition Agent or with Transamerica Occidental Life
Insurance Company or any of its Affiliates, or may direct Trustee to
establish, one or more Trust Accounts or subaccounts within such accounts
("Subaccounts"), as Trust Property of the Trust for the operations of the
Trust. Any funds in any Trust Account or Subaccount shall be applied in
accordance with the terms of the Trust Loan Agreement and other Trust Loan
Documents and, to the extent such funds are withdrawn by Disposition Agent
in its sole discretion to deposit in the Collection Account,
Section 3.4(a).
(d) Cash Proceeds of the Trust Property which are received by
Trustee or Disposition Agent and not distributed to Holders or otherwise
paid out pursuant to the terms hereof shall be invested and reinvested by
or upon the direction of Disposition Agent in Cash Equivalents (as defined
in the Trust Loan Agreement) or as otherwise permitted by the Trust Loan
Agreement. Investment in any specific
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<PAGE> 38
Cash Equivalent or as otherwise permitted by the Trust Loan Agreement shall
be at the sole discretion of Disposition Agent. Gains and losses from such
investment and reinvestment shall be credited and debited to the Trust
Property and to the Collection Account. Disposition Agent shall have no
responsibility for any loss resulting from a fluctuation in interest rates
or otherwise.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF DEPOSITORS AND COMPANY
Each Depositor, Holder and Company each hereby represents and
warrants as follows:
4.1. Good Standing. Each Depositor is a corporation incorporated under the
laws of the State of California, validly existing and in good standing
under the laws of the State of California and Company is a corporation
incorporated under the laws of the State of Delaware, validly existing and
in good standing under the laws of the State of Delaware, and each such
Person has all requisite powers and all material government licenses,
authorizations, consents and approvals required to carry on its business as
now conducted and to perform its obligations hereunder and under each Trust
Loan Document and Related Agreement to which it is or becomes a party.
4.2. Corporate Power. The execution, delivery and performance by Company
and each Depositor of this Agreement and each Trust Loan Document and
Related Agreement to which it is or becomes a party are within the
corporate power of Company and such Depositor, have been duly authorized by
all necessary corporate and shareholder action on the part of Company or
such Depositor and do not (i) violate or contravene any judgment,
injunction, order or decree binding on Company and such Depositor or any of
its properties or (ii) violate, contravene or constitute a default under
any provision of the certificate of incorporation or by-laws of Company or
such Depositor or of any material agreement, contract, mortgage or other
instrument or law, rule or regulation binding on Company or such Depositor
or any of its properties or (iii) result in the creation or imposition of
any Lien on any of the Trust Property or any property of Company or such
Depositor, except as are expressly contemplated hereby or thereby.
4.3. Consents and Approvals. No consent, approval, authorization or order
of, or filing with, any court or regulatory, supervisory or governmental
agency or body is required in connection with the execution, delivery and
performance by Company and each Depositor of this Agreement and each Trust
Loan Document and Related Agreement to which it is or becomes a party or
the consummation by Company and each Depositor of the transactions
contemplated hereby or thereby
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<PAGE> 39
(except as may be required under the Trust Loan Documents or to enforce the
Trust Mortgages).
4.4. Title to Trust Property. Upon the deposit, assignment or other
transfer of any of the Trust Property by each Depositor to Trustee under
this Agreement, such Depositor will have conveyed to Trustee all of its
right, title and interest therein free and clear of any Lien other than the
Trust Mortgages and Liens identified on the title insurance policies for
the Properties that are permitted under the Trust Loan Agreement.
4.5. Binding Effect. This Agreement, the Trust Loan Agreement, any other
Trust Loan Document and any Related Agreement to which Company or any
Depositor is a party have been duly and validly authorized, executed and
delivered by, and constitute valid and binding agreements of, Company and
each Depositor that is a party thereto, enforceable against Company and
each Depositor in accordance with their respective terms.
4.6. Litigation. There is no action, suit, investigation, complaint or
other proceeding pending, or to its knowledge, threatened against Company
or any Depositor or to Company's or any Depositor's knowledge any other
Person that involves any of the transactions contemplated by this Agreement
or that, individually or in the aggregate, if determined adversely to
Company or any Depositor or the other Person, could have a Material Adverse
Effect.
4.7. Compliance with Law. Neither Company nor any Depositor is in, or has
received notice of, a violation of or default with respect to any law or
regulation applicable to it or its business, properties or operations,
which violation or default, individually or in the aggregate, could have a
Material Adverse Effect.
4.8. Solvency. Company, each Depositor and each of its Subsidiaries will
be Solvent upon the establishment of the Trust and the transfer of the
Properties to Trustee.
4.9. Environmental Matters. Except as disclosed on Schedule G annexed
hereto:
(a) the operations of Company and each of its Subsidiaries comply
with all applicable Environmental Laws except to the extent that
noncompliance would not result in any material adverse effect on the
business, operations, properties, assets, or condition (financial or
otherwise) of any Depositor or Company and its Subsidiaries, taken as
a whole, and would not materially adversely affect any Property or
the ability of Company or Depositors to perform their respective
obligations under this Agreement, the Trust Loan Agreement, or the
Related Agreements;
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<PAGE> 40
(b) none of the Properties or the operations of Company or any of
its Subsidiaries is the subject of any private claims or any federal
or state investigation evaluating whether any remedial action is
needed to respond to a release of Hazardous Materials into the
environment except to the extent that such claims or remedial action
would not result in any material adverse effect on the business,
operations, properties, assets, or condition (financial or otherwise)
of Depositors or Company and its Subsidiaries, taken as a whole, and
would not materially adversely affect any Property or the ability of
Company or Depositors to perform their obligations under this
Agreement, the Trust Loan Agreement, or the Related Agreements;
(c) neither Company nor any of its Subsidiaries has any material
contingent liability in connection with any release of any Hazardous
Materials into the environment, including, without limitation, any
contingent liability arising in connection with a failure, or alleged
failure, to comply with the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
sec. 9601 et seq.), or the Federal Resource, Conservation, and
Recovery Act of 1976, as amended (42 U.S.C. sec.sec. 6901 et seq.),
except for such contingent liabilities that would not result in a
material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of Depositors or Company
and its Subsidiaries, taken as a whole, and that would not materially
adversely affect any Property or the ability of Company or Depositors
to perform their respective obligations under this Agreement, the
Trust Loan Agreement, or the Related Agreements.
4.10. Incorporation of Representations and Warranties from the Trust Loan
Agreement. Each of the representations and warranties given by each
Depositor as borrower in Section 4 of the Existing Insurance Company Loan
Agreement is true and correct in all material respects as of the date
hereof, except for those specifically relating to another time or times
which were or will be true and correct in all material respects at such
time or times, and such representations and warranties are hereby
incorporated herein by this reference with the same effect as though set
forth in their entirety herein. The representations and warranties
incorporated in this Agreement by the immediately preceding sentence shall,
solely for purposes of this Agreement, survive the execution and delivery
of this Agreement and the transactions contemplated hereby.
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<PAGE> 41
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF TRUST COMPANY
Trust Company hereby represents and warrants that:
5.1. Good Standing. Trust Company is a national banking association
organized under the laws of the United States and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
5.2. Corporate Power. The execution, delivery and performance by Trust
Company, in its individual capacity and in its capacity as Trustee, of this
Agreement, the Trust Loan Agreement and the other Trust Loan Documents and
Related Agreements to which it or the Trust is or becomes a party and the
issuance of the Certificates of Beneficial Interest pursuant to this
Agreement are within the corporate powers of Trust Company, have been duly
authorized by all necessary corporate action on the part of Trust Company
(no action by its shareholders being required) and do not (i) violate or
contravene any judgment, injunction, order or decree binding on Trust
Company or any of its properties or (ii) violate, contravene or constitute
a default under any provision of the certificate of incorporation or
by-laws of Trust Company or of any material agreement, contract, mortgage
or other instrument or law, rule or regulation binding on Trust Company or
any of its properties or (iii) result in the creation or imposition of any
Lien on any property of Trust Company or on any of the Trust Property,
except as are expressly contemplated hereby or thereby.
5.3. Consents and Approvals. No consent, approval, authorization or order
of, or filing with, any court or regulatory, supervisory or governmental
agency or body is required in connection with the execution, delivery and
performance by Trust Company, in its individual capacity and in its
capacity as Trustee, of this Agreement, the Trust Loan Agreement, other
Trust Loan Documents and Related Agreements to which it or the Trust is or
becomes a party or the issuance of Certificate of Beneficial Interest
pursuant to this Agreement or the consummation by Trustee of the
transactions contemplated hereby or thereby (except as may be required
under the Trust Loan Documents to enforce the Trust Mortgages).
5.4. Binding Effect. This Agreement, the Trust Loan Agreement, any other
Trust Loan Document and any Related Agreement to which Trust Company or
Trustee, as the case may be, is a party have been duly and validly
authorized, executed and delivered by duly authorized officers of Trust
Company.
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SECTION 6.
CERTAIN COVENANTS OF COMPANY,
DEPOSITORS, HOLDERS AND THE TRUST
6.1. Title to Trust Property. Each Holder from time to time is deemed to
acknowledge by its acquisition of a Certificate of Beneficial Interest that
the Trust owns all right, title and interest in and to the Trust Property,
and approves the assignment, transfer and pledge of all Collateral to
Servicing Agent under the Trust Loan Documents.
6.2. Notification of Transfer. Immediately upon the deposit, assignment
or other transfer of any Trust Property to the Trust pursuant to this
Agreement, Depositors will make any appropriate notations on their records
to indicate that such Trust Property has been deposited, assigned or
transferred to the Trust pursuant to this Agreement, and has been pledged
by the Trust as part of the Collateral to Servicing Agent under the Trust
Loan Documents to secure payment and performance of the Trust Loan
Obligations. Depositors shall keep on their premises and make available
for inspection and copying or, upon Disposition Agent's request, shall
transfer to Disposition Agent's possession, all of their books, records,
plans, files and blueprints relating to the Trust Property.
6.3. Investment Company. No Depositor shall take any action that would
cause the Trust to become an investment company that would be required to
register under the Investment Company Act of 1940, as amended.
6.4. Deduction of Environmental Expenditures. If any Environmental
Expenditures payable by Company and Depositors are deducted by an escrow
agent from the proceeds of the disposition of the related Property, Company
and Depositors, within two (2) Business Days of receipt of notice from
Disposition Agent as provided in Section 3.3(b), shall pay, as an indemnity
payment, to Disposition Agent for deposit in the Collection Account the
amount of Environmental Expenditures so deducted from such proceeds.
Subject to the provisions of Section 3 and Section 7.3(b), Company and
Depositors shall otherwise at all times pay directly all Environmental
Expenditures.
SECTION 7.
CONCERNING TRUSTEE, DISPOSITION AGENT AND THE TRUST
7.1. General Matters Relating to Trustee and Disposition Agent.
(a) Subject to the terms of the Trust Loan Agreement and
Section 7.3, all moneys deposited with or received by Trustee hereunder
shall be held by it in trust as part of the Trust Property
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<PAGE> 43
and immediately transferred to Disposition Agent for deposit into the
Collection Account.
(b) Trust Company, in its individual capacity and in its capacity
as Trustee, and Disposition Agent each shall be under no liability for any
action taken by such Person in good faith in reliance upon any paper,
order, instruction, list, demand, request, consent, affidavit, notice,
opinion, direction, endorsement, assignment, resolution, draft or other
document, prima facie properly executed, or for the disposition of moneys
or Trust Property pursuant to this Agreement; provided, however, that this
provision shall not protect any such Person against any liability to which
it would otherwise be subject by reason of bad faith, willful misconduct or
gross negligence in the performance of its duties.
(c) Trustee and Disposition Agent each may construe any of the
provisions of this Agreement, insofar as the same may appear ambiguous or
inconsistent with any other provisions hereof, and any such construction by
Trustee or Disposition Agent in good faith shall be binding upon the
parties hereto, Holders and Administrators; provided that this provision
shall not protect Trustee or Disposition Agent against any liability to
which it would otherwise be subject by reason of its own bad faith, willful
misconduct or gross negligence.
(d) Subject to the terms of Section 7.7, Trust Company shall not be
liable, either in its individual capacity or in its capacity as Trustee,
with respect to any action taken or omitted to be taken by Trustee in
accordance with instructions of a Depositor or a Holder delivered pursuant
to Section 9.4 hereof or Disposition Agent delivered pursuant to Section
3.3. Trust Company, either in its individual capacity or in its capacity
as Trustee, and Disposition Agent each shall not be liable for performing
any obligations or duties of the Trust under any agreement to which the
Trust is a party.
(e) Trust Company, either in its individual capacity or its
capacity as Trustee, and Disposition Agent each shall not be responsible
for or in respect of the recitals herein, the validity or sufficiency of
this Agreement or any Trust Loan Agreement or Related Agreement or for the
due execution hereof or thereof by any Person other than such Person or for
the form, character, genuineness, sufficiency, value or validity of any
Trust Property or for or in respect of the validity or sufficiency of any
Certificate of Beneficial Interest (except for the due execution thereof by
Trustee), and Trust Company, in its individual capacity and in its capacity
as Trustee, and Disposition Agent each shall in no event assume or incur
any liability, duty or obligation to Depositors or to any Holder, other
than as expressly provided for herein or therein.
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<PAGE> 44
(f) Trust Company shall promptly notify Depositors, Holders and
Disposition Agent of any legal action taken by any Person with respect to
the Trust of which it has Actual Knowledge. Trust Company, either in its
individual capacity or in its capacity as Trustee, and Disposition Agent
each shall not be under any obligation to appear in, prosecute or defend
any action, which in its opinion may require it to incur any out-of-pocket
expense or any liability unless it shall be furnished with such reasonable
security and indemnity against such expense or liability as it may require.
Trustee and Disposition Agent may, but shall be under no duty to, undertake
such action as it may deem necessary at any and all times, without any
further action by the Holders, to protect the Trust Property and the rights
and interests of the Holders pursuant to the terms of this Agreement.
(g) Trustee, in the exercise or administration of the trusts and
powers hereunder, including its obligations under Sections 2.5, 2.6 and
3.1, and Disposition Agent, in the exercise or administration of the trusts
and powers hereunder, including its obligations under Section 3.3, and
Trustee and Disposition Agent in the performance of any duties and
obligations under any agreement to which such Person is a party, may, at
the expense of the Trust, employ agents, attorneys, accountants and
auditors and enter into agreements with any of them and Trust Company
either in its individual capacity or in its capacity as Trustee, and
Disposition Agent each shall not be liable for the default or misconduct of
any such agents, attorneys, accountants or auditors if such agents,
attorneys, or accountants or auditors shall have been selected by it with
reasonable care.
(h) Trustee and Disposition Agent each shall not be under any duty
or obligation to inspect, review or examine any documents, interests or
other papers delivered to it as Trustee or Disposition Agent, as the case
may be, under this Agreement to determine that they are genuine,
enforceable or appropriate for the represented purpose or that they are
other than what they purport to be on their face. Without limiting the
generality of the foregoing, Trustee and Disposition Agent each shall not
incur any liability to any Person by reason of acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by
the proper party or parties. Unless other evidence in respect thereof is
specifically prescribed herein, any request, direction, order or demand of
any Person shall be sufficiently evidenced by a written instrument signed
by a person purporting to be an officer or official of such Person, as the
case may be. Trustee and Disposition Agent each may accept a copy of a
resolution of the Board of Directors (or comparable body) of any Person,
certified by the Secretary or an Assistant Secretary (or comparable
official) of
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<PAGE> 45
such Person, as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted by such Board of
Directors (or comparable body) and that the same is in full force and
effect. As to any fact or matter, the manner of ascertainment of which is
not specifically provided herein, Trustee and Disposition Agent each may
for all purposes hereof rely on a certificate signed by an officer or
official of any Person, as the case may be, as to such fact or matter, and
such certificate shall constitute full protection to Trustee and
Disposition Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon.
7.2. Books and Records; Mailings to Holder. Trustee shall keep proper
books of record and account of all the transactions by it as Trustee under
this Agreement at its Corporate Trust Office, including a record of the
name and address of all Holders, and such books and records shall be open
to inspection by Holders at all reasonable times during usual business
hours of Trustee upon reasonable notice. In addition, on the Effective
Date and upon the transfer of any Certificate of Beneficial Interest,
Trustee, upon written request, shall furnish to Depositors, Disposition
Agent, and Servicing Agent a list of the name and address of all Holders of
Certificates of Beneficial Interest.
7.3. Compensation and Indemnification.
(a) Trust Company shall be entitled, from the Trust Property and
(with respect to its acceptance fee and ongoing annual fee) Company and
Depositors (as specified in the Fee Agreement), to reasonable compensation
for the services of Trustee (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust). Trust
Company, in its individual capacity and its capacity as Trustee, and
Disposition Agent each shall be entitled from the Trust Property, Company
and Depositors for and reimbursement for all reasonable out-of-pocket
expenses, disbursements and advances incurred by such Person in accordance
with any of the provisions of this Agreement (including the reasonable
compensation, reasonable expenses and reasonable disbursements of its
counsel and of all persons not regularly in its employ), except any such
expense, disbursement or advance as may be incurred or arise out of the bad
faith, gross negligence or willful misconduct on the part of such Person.
Such Person shall notify Holders, Disposition Agent and Servicing Agent
upon receipt by such Person of compensation from the Trust Property
pursuant to the foregoing sentence of the amount of such compensation;
provided that Disposition Agent shall not be required to provide greater
notice than that contemplated by Section 3.3(c)(i). Notwithstanding this
Section 7.3, Trustee hereby agrees not to cause or participate in the
filing of a petition in bankruptcy against Company or any Depositor for the
non-payment to Trustee of any amounts provided by
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<PAGE> 46
this Agreement until one year and one day after the later of the cash
payment in full of all Trust Loan Obligations.
(b) Each Depositor, Company, and Trustee (solely in its capacity as
Trustee) out of the proceeds of Trust Property, jointly and severally agree
to indemnify Trust Company, Disposition Agent, Holders and the Liquidating
Trust Committee and each of their respective successors, assigns, agents
and servants for, and to hold them harmless against, any and all losses and
liabilities, obligations, damages, penalties, Taxes (excluding income taxes
but including any taxes payable by Depositors pursuant to Section 6.5 but
excluding any taxes payable by Trust Company or Disposition Agent on or
measured by any compensation for services rendered by Trustee or
Disposition Agent under this Agreement), claims, actions, suits or out-of-
pocket expenses or costs of any kind and nature, 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,
incurred or arising out of or in connection with the acceptance or
administration of this Trust, including the reasonable costs and out-of-
pocket expenses of defending itself against any claim of liability in the
premises, except to the extent that the same may be incurred or arise out
of the bad faith, gross negligence or willful misconduct of the applicable
indemnified Person, and also including the liabilities, obligations, costs
and expenses relating to any action as to which Trust Company has
reasonably determined, or has been advised by counsel, that such action is
likely to result in personal liability to any indemnified Person, or is
contrary to the terms hereof or of any document contemplated hereby to
which any indemnified Person or the Trust is a party, or is otherwise
contrary to law.
Each Depositor, Company, and Trustee (solely in its capacity as
Trustee) out of the proceeds of Trust Property, jointly and severally agrees
to indemnify and hold harmless Trust Company, Disposition Agent, Holders
and the Liquidating Trust Committee and each of their respective
successors, assigns, agents and servants, from and against any and all
claims, losses, damages, liabilities, fines, penalties, charges,
administrative, and judicial proceedings and orders, judgments, remedial
action requirements, enforcement actions of any kind, and all costs and
expenses incurred in connection therewith (including, but not limited to,
attorneys fees and expenses), arising directly or indirectly, in whole or
in part, out of (i) the presence on or under any Property of any Hazardous
Materials, or any Releases of any such Hazardous Materials on, under or
from such Properties, or (ii) any activity carried on or undertaken on or
off such Properties, whether prior to or during the term of this Agreement,
and whether by Company, the Depositors or
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<PAGE> 47
any predecessor in title or any employees, agents, contractors or
subcontractors of Company, the Depositors or any predecessor in title, or
any third persons at any time occupying or present on such Properties, in
connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport, or disposal of any such Hazardous Materials at any
time located or present on or under such Properties. The foregoing
indemnity shall further apply to any residual contamination on or under
such Properties, or affecting any natural resources arising in connection
with the generation, use, handling, storage, transport, or disposal of any
such Hazardous Materials, and irrespective of whether any of such
activities were or will be undertaken in accordance with applicable laws,
regulations, codes, and ordinances.
Company and Depositors acknowledge (a) the difficulty in ascertaining
to what extent any Environmental Expenditures or other claims are
attributable to actions of the Trustee, Disposition Agent, Holders or any
of their agents, (b) the likelihood that any Environmental Expenditures or
other claims would arise as a result of actions or inactions of Company and
its Subsidiaries on or prior to the Effective Date, (c) the importance of
paying all Environmental Expenditures promptly upon incurrence, and
(d) that Company and Depositors, as the previous owners and operators of
the Properties, are more knowledgeable with respect to any Environmental
Expenditures or Environmental Claims that might arise. Accordingly,
Company and Depositors agree that all Environmental Expenditures and all
other claims described in the second paragraph of Section 7.3(b) shall be
deemed to arise with respect to actions or inactions of Company and its
Subsidiaries on or prior to the Effective Date and shall be payable by
Company and Depositors from their own funds, subject to Company's and
Depositors' right to be reimbursed only from the Trust Property as provided
in Section 3.4(a) only to the extent any such Environmental Expenditures or
claims arise solely and directly from the willful misconduct of Trustee or
Disposition Agent or any Holder, as the case may be, as finally determined
by a court of competent jurisdiction.
The obligations of Company, Depositors and Trustee to indemnify Trust
Company, Disposition Agent, Holders and the Liquidating Trust Committee and
Trustee's and Disposition Agent's right to be compensated and be reimbursed
by Depositors for its reasonable out-of-pocket expenses, disbursements and
advances pursuant to Sections 7.3(a), (b) and (c), shall constitute
additional indebtedness of Company and Depositors and shall survive the
termination of this Agreement pursuant to Section 2.1(e). Such additional
indebtedness shall be, if so agreed to by Company and Depositors, secured
only by a Lien upon the Trust Property subordinate to the Trust Mortgages;
provided however that the indemnified party may not enforce such Lien on
any of the Trust Property until such time as each Trust Loan Document is
terminated
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<PAGE> 48
in accordance with its terms and all Trust Loan Obligations are
indefeasibly paid in full in cash in accordance with the terms of the Trust
Loan Documents.
The obligations of Company and Depositors under this Section 7.3(b)
are hereby extended to Servicing Agent, the Lenders and co-trustees or
separate trustees appointed pursuant to Section 7.8(c), under the same
terms and conditions stated herein.
(c) Trustee shall not be required to take or refrain from taking
any action under this Agreement (other than giving of notices) unless Trust
Company shall have been indemnified by Company, Depositors or any other
Person, in manner and form reasonably satisfactory to Trust Company,
against any liability, fee, cost or expense (including attorney's fees)
which may be incurred or charged in connection therewith, except to the
extent the same may be incurred or arise out of the bad faith, gross
negligence or willful misconduct of Trustee. Trustee shall not be required
to take any action if Trust Company shall reasonably determine, or shall
have been advised by counsel, that such action is likely to result in
personal liability, or is contrary to the terms hereof or of any document
contemplated hereby to which Trustee or the Trust is a party, or is
otherwise contrary to law and Trust Company has not been indemnified by
Depositors or any other Person as provided in Section 7.3(b).
(d) Any amounts paid to Trust Company pursuant to Section 7.1(f)
and this Section 7.3 shall be deemed not to be part of the Trust Property
immediately after such payment.
7.4. Resignation, Discharge or Removal of Trustee; Successor.
(a) Trustee may resign and be discharged of the trusts created by
this Agreement by executing an instrument in writing, filing the same with
Disposition Agent and Servicing Agent and mailing a copy of a notice of
resignation to Holders then of record, not less than ninety (90) days
before the date specified in such instrument when, subject to
Section 7.4(c) hereof, such resignation is to take effect. Upon receiving
such notice of resignation, Holders shall use their best efforts promptly
to appoint a successor Trustee in the manner and meeting the qualifications
hereinafter provided by written instrument or instruments delivered
pursuant to Section 9.4 to such resigning Trustee and the successor
Trustee. Except as provided in Section 7.4(b) and except if the proposed
successor Trustee shall be Disposition Agent or any lender under the Trust
Loan Agreement, the appointment of any successor Trustee shall be approved
by Holders and Servicing Agent. Holders may, with the prior written
consent of Servicing Agent, remove Trustee for any reason and appoint a
successor Trustee by written instrument or
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<PAGE> 49
instruments delivered to Trustee so removed and the successor Trustee.
(b) In case at any time Trustee shall resign and no successor
Trustee shall have been appointed within sixty (60) days after notice of
such resignation has been filed and mailed as required by Section 7.4(a),
the resigning Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(c) Any successor Trustee appointed hereunder shall promptly
execute and deliver to Holders, the retiring Trustee, Servicing Agent and
Disposition Agent an instrument accepting such appointment hereunder, and
the successor Trustee without any further act, deed or conveyance shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder with like effect as if originally named Trustee
herein and shall be bound by all the terms and conditions of this
Agreement. Upon the request of the successor Trustee, the retiring Trustee
shall, upon payment of all amounts due the retiring Trustee, execute and
deliver an instrument transferring to the successor Trustee all the rights
and powers of the retiring Trustee (provided that the failure to deliver
such instrument shall not affect the validity of such transfer of rights
and powers to such successor Trustee); and the retiring Trustee shall
transfer, deliver and pay over to the successor Trustee all of the Trust
Property at the time held by it, if any, together with all necessary
instruments of transfer and assignment or other documents properly executed
and necessary to effect such transfer and such of the records or copies
thereof maintained by the retiring Trustee in the administration hereof as
may be requested by the successor Trustee and shall thereupon be discharged
from all duties and responsibilities under this Agreement. Any resignation
or removal of a Trustee and appointment of a successor Trustee pursuant to
this Section 7.4 shall become effective upon such acceptance of appointment
by the successor Trustee.
(d) Any corporation into which Trust Company may be merged or with
which it may be consolidated, or any corporation resulting from any merger
or consolidation to which Trust Company shall be a party, shall be the
successor Trustee under this Agreement without the execution, delivery or
filing of any paper or instrument or any further act to be done on the part
of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which the predecessor corporation may seek
to retain certain powers, rights and privileges theretofore obtaining for
any period of time following such merger or consolidation, to the contrary
notwithstanding; provided that such corporation resulting from any such
merger or consolidation shall meet the qualifications set forth in
Section 7.5.
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<PAGE> 50
(e) Servicing Agent and the Lenders are intended third party
beneficiaries of the provisions contained in this Section 7.4.
7.5. Qualification of Trustee. Trustee shall at all times be a
corporation organized and doing business under the laws of the United
States, or any state thereof, having all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on a trust business, and having at all times an aggregate capital,
surplus, and undivided profits of not less than $50,000,000.
7.6. Co-trustees and Separate Trustees.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Properties may be
located, Depositors and Trustee shall have power to appoint, and, upon the
written request of Trustee, Depositors shall for such purpose join with
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by
Disposition Agent either to act as co-trustee, jointly with Trustee, of all
or any part of the Properties, or to act as separate trustee of any such
Property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Agreement.
(b) Should any written instrument from Depositors be required by
any co-trustee or separate trustee so appointed for more fully confirming
to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by Depositors. Trustee shall give notice of the
appointment of any co-trustee or separate trustee to Servicing Agent,
Lenders and Disposition Agent. Each notice shall include the name and
address of any such co-trustee or separate trustee.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms:
(i) The Certificate of Beneficial Interest shall be executed
and delivered and all rights, powers, duties and obligations of
Trustee hereunder in respect of the custody of securities, cash and
other personal property held by, or required to be deposited or
pledged with, Trustee hereunder, shall be exercised solely by
Trustee.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon Trustee in respect of any property
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<PAGE> 51
covered by such appointment shall be conferred or imposed upon and
exercised or performed by Trustee or by Trustee and such co-trustee
or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent
that under any law of any jurisdiction in which any particular act is
to be performed, Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or
separate trustee.
(iii) Trustee at any time, by an instrument in writing executed
by it, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section 7.8. Upon the written
request of Trustee, Depositors shall join with Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee which has resigned or
has been removed may be appointed in the manner provided in this
Section 7.8.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission by Trustee, or any
other such trustee hereunder.
(v) Any notice delivered to Trustee shall be deemed to have
been delivered to each such co-trustee and separate trustee.
7.7. Not Acting In Individual Capacity. Except as otherwise expressly
provided herein, in acting hereunder, Trust Company is acting solely as
Trustee and not in its individual capacity; and, except as so provided, all
Persons having any claim against Trust Company by reason of the
transactions contemplated hereby shall look only to the Trust Property for
payment or satisfaction thereof; provided, however, that notwithstanding
anything herein to the contrary, Trust Company shall be individually and
personally liable by reason of (i) its or Trustee's bad faith, willful
misconduct or gross negligence in the performance of its duties, (ii) the
inaccuracy of any representation or warranty contained in Section 5
expressly made by Trust Company, (iii) liabilities arising from the failure
by Trust Company to perform obligations expressly undertaken by it in the
last sentence of Section 2.6(b), or (iv) taxes, fees or other charges on,
based on, or measured by, any fees, commissions or compensation received by
Trust Company or Trustee in connection with any of the transactions
contemplated by this Agreement.
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<PAGE> 52
7.8. Resignation, Discharge or Removal of Disposition Agent; Successor.
(a) Disposition Agent may resign and be discharged of the duties
created by this Agreement by executing an instrument in writing, filing the
same with Trustee and mailing a copy of such notice of resignation to
Servicing Agent and Holders then of record not less than ninety (90) days
before the date specified in such instrument when, subject to paragraph (b)
hereof, such resignation is to take effect. Upon receiving such notice of
resignation, Trustee shall use its best efforts promptly to appoint a
successor Disposition Agent in the manner and meeting the qualifications
satisfactory to Servicing Agent, provided by written instrument or
instruments delivered to such resigning Disposition Agent and the successor
Disposition Agent. The appointment of any successor Disposition Agent
shall be approved by Holders and Servicing Agent. If no successor
Disposition Agent shall have been so appointed and approved and have
accepted appointment within ninety (90) days after the giving of such
notice of resignation, the resigning Disposition Agent may petition any
court of competent jurisdiction for the appointment of a successor
Disposition Agent at the expense of the Trust.
Disposition Agent may be removed by Trustee only in the event
of any failure by Disposition Agent to perform its obligations under this
Agreement, including, without limitation, any failure by Disposition Agent
to deposit into the Collection Account or any other Trust Account any
amount received by Disposition Agent and required to be so deposited or
remitted by Disposition Agent, and when such failure is not remedied within
thirty (30) Business Days following notice provided by Trustee or any
Holder to Disposition Agent, except in the event of failure by Disposition
Agent to deposit into the Collection Account or any other Trust Account any
amount required to be so deposited or remitted, such failure shall be
remedied within two (2) Business Days following notice provided by Trustee
or any Holder to Disposition Agent. In such event, Trustee shall obtain a
prior written consent of Servicing Agent, and upon the receipt of such
consent of Servicing Agent, remove Disposition Agent and appoint a
successor Disposition Agent by written instrument or instruments delivered
to Disposition Agent so removed and the successor Disposition Agent.
(b) Any successor Disposition Agent appointed hereunder shall
promptly execute and deliver to Trustee, Holders, the retiring Disposition
Agent, and Servicing Agent an instrument accepting such appointment
hereunder, and the successor Disposition Agent without any further act,
deed or conveyance shall become vested with all the rights, powers, duties
and obligations of its predecessor hereunder with like effect as if
originally named Disposition Agent herein and shall be bound by all the
terms and conditions of this Agreement.
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<PAGE> 53
Any resignation or removal of Disposition Agent and appointment of a
successor Disposition Agent pursuant to this section shall become effective
upon such acceptance of appointment by the successor Disposition Agent.
(c) Any corporation into which Disposition Agent may be merged or
with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which Disposition Agent shall be a party, shall
be the successor Disposition Agent under this Agreement without the
execution, delivery or filing of any paper or instrument or any further act
to be done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which the
predecessor corporation may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such
merger or consolidation, to the contrary notwithstanding; provided that
such corporation resulting from any such merger or consolidation shall meet
the qualifications satisfactory to Trustee and Servicing Agent.
(d) In the event Disposition Agent shall fail to perform any of its
duties under this Agreement and such failure is not remedied within thirty
(30) Business Days following notice (or two Business Days following notice
in the case of failure by Disposition Agent to deposit into the Collection
Account or any other Trust Account any amount required to be so deposited
or remitted) by Trustee to Disposition Agent, Trustee shall have the right
to (i) direct that payments that would otherwise be received by Disposition
Agent pursuant to the terms of this Agreement be paid directly into an
account held in the name of Trustee, and to (ii) withdraw funds from the
Trust Accounts in accordance with the terms of this Agreement. The
Depositors, Holders and Trustee agree that removal of the Disposition Agent
and recovery of any funds not properly transferred to the Collection
Account shall be the only remedies available upon any breach by the
Disposition Agent of its obligations hereunder.
7.9. Termination. The obligations and the responsibilities of Disposition
Agent created hereby shall terminate on the date which is the earlier of
(a) such time as each Trust Loan Document is terminated in accordance with
its terms and all Trust Loan Obligations are indefeasibly paid in full in
cash in accordance with the terms of the Trust Loan Documents, or (b) all
Trust Property has been disposed of and the Proceeds thereof have been
distributed as provided in this Agreement.
7.10. Co-Disposition Agent and Separate Disposition Agents.
(a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Properties may be
located, Trustee and Disposition Agent shall have power to appoint, and,
upon the written request of Disposition Agent, Trustee
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<PAGE> 54
shall for such purpose join with Disposition Agent in the execution,
delivery and performance of all instruments and agreements necessary or
proper to appoint, one or more Persons approved by Servicing Agent either
to act as co-disposition agent, jointly with Disposition Agent, of all or
any part of the Properties, or to act as separate disposition agent of any
such Property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Agreement. The
appointment of any co-disposition agent shall be subject to the consent of
Depositors, which consent shall not be unreasonably withheld.
(b) Should any written instrument from Depositors, Disposition
Agent or Trustee be required by any co-disposition agent or separate
disposition agent so appointed for more fully confirming to such co-
disposition agent or separate disposition agent such property, title, right
or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by Depositors, Disposition Agent or Trustee, as
the case may be. Disposition Agent shall give notice of the appointment of
any co-disposition agent or separate disposition agent to Servicing Agent,
Holders and Lenders. Each notice shall include the name and address of any
such co-disposition agent or separate disposition agent.
(c) Every co-disposition agent or separate disposition agent shall,
to the extent permitted by law, but to such extent only, be appointed
subject to the following terms:
(i) The rights, powers, duties and obligations hereby
conferred or imposed upon Disposition Agent in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by Disposition Agent or by
Disposition Agent and such co-disposition agent or separate
disposition agent jointly, as shall be provided in the instrument
appointing such co-disposition agent or separate disposition agent,
except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, Disposition Agent shall be
incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations shall be exercised and
performed by such co-disposition agent or separate disposition agent.
(ii) Disposition Agent at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any
co-disposition agent or separate disposition agent appointed under
this Section 7.10. Upon the written request of Disposition Agent,
Trustee shall join with Disposition Agent in the execution, delivery
and performance of all instruments and
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<PAGE> 55
agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-disposition agent or separate
disposition agent which has resigned or has been removed may be
appointed in the manner provided in this Section 7.10.
(iii) No co-disposition agent or separate disposition agent
hereunder shall be personally liable by reason of any act or omission
by Disposition Agent, or any other such disposition agent hereunder.
(iv) Any notice delivered to Disposition Agent shall be deemed
to have been delivered to each such co-disposition agent and separate
disposition agent.
SECTION 8.
REPRESENTATIONS AND WARRANTIES OF DISPOSITION AGENT
Disposition Agent hereby represents and warrants to Trustee as
follows:
8.1. Corporate Power and Authority. Disposition Agent has all requisite
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated by, and perform its obligations under, this
Agreement.
8.2. Authorization of Agreements. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary corporate
action on the part of Disposition Agent.
8.3. No Conflict. The execution, delivery and performance by Disposition
Agent of this Agreement do not (i) violate any provision of any law or any
governmental rule or regulation applicable to Disposition Agent, the
Certificate of Incorporation or Bylaws of Disposition Agent, or any order,
judgment or decree of any court or other agency of government binding on
Disposition Agent, or (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 Disposition Agent.
8.4. Governmental Consents. The execution, delivery and performance by
Disposition Agent of this Agreement do 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.
8.5. Binding Obligation. This Agreement has been duly executed and
delivered by Disposition Agent and is the legally valid and binding
obligation of Disposition Agent, enforceable against Disposition
<PAGE>
<PAGE> 56
Agent in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 9.
MISCELLANEOUS
9.1. Benefit of Agreement. All the representations, warranties, covenants
and agreements contained in this Agreement by or on behalf of Depositors,
Holders, Trust Company, Trustee or Disposition Agent shall bind, and inure
to the benefit of, their respective successors and assigns from time to
time, whether so expressed or not.
9.2. Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be held invalid for any reason
whatsoever, then such covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the
Certificates of Beneficial Interest or the rights of the owners thereof or
of Servicing Agent or Lenders.
9.3. Amendments and Waivers. This Agreement may not be amended and
compliance with any provision hereof may not be waived by Trustee or any
Holder, including Depositors, unless such amendment or waiver is in writing
and (A) is consented to by (i) Trustee, (ii) Holders and (iii) Disposition
Agent and (B) will not cause the Trust created hereunder to be an
association taxable as a corporation for federal income tax purposes, as
evidenced by an opinion of counsel satisfactory to Trustee. The parties
hereto agree that no such opinion shall be required in connection with the
amendments contemplated by this Agreement. Servicing Agent and Lenders are
intended third party beneficiaries of the provisions contained in this
Section 9.3.
9.4. Notices; Instructions.
(a) Any notice, demand, consent, direction or instruction to be
given to Trustee under this Agreement shall be in writing and shall be duly
given if personally served, telecopied, telexed, or sent by United States
Mail or courier service to the Corporate Trust Office at the address of
Trustee as set forth on the signature pages hereto or such other address as
shall be specified by Trustee in a notice to Holders in writing.
(b) Any notice, demand, consent, direction or instruction to be
given to Depositors under this Agreement shall be in writing and
<PAGE>
<PAGE> 57
shall be duly given if personally served, telecopied, telexed, or sent by
United States Mail or courier service to each Depositor at the address of
each such Depositor as set forth on the signature pages hereto, or at such
other address as shall be specified by such Depositor to Trustee in
writing.
(c) Any notice, demand, direction or instruction to be given to
Disposition Agent under this Agreement shall be in writing and shall be
duly given if personally served, telecopied, telexed, or sent by United
States Mail or courier service to Disposition Agent at the address of
Disposition Agent as set forth on the signature pages hereto, or at such
other address as shall be specified by Disposition Agent to Trustee in
writing.
(d) Any notice or other communication to be given to any Holder
(other than Depositors) under this Agreement shall be in writing and shall
be duly given if personally served, telecopied, telexed, or sent by United
States Mail or courier service to such Holder outstanding at the time such
notice or other communication is given at the address for such Holder
contained in the records maintained by Trustee pursuant to Section 7.2.
(e) All notices, demands, consents, directions or instruction shall
be deemed to have been given when delivered in person or by courier
service, upon receipt of telecopy or telex, or four Business Days after
depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that notices, demands,
consents, directions or instructions to Trustee shall not be effective
until received.
(f) A copy of any notice, demand, consent, direction or instruction
to be given to Trustee, Depositors, Disposition Agent, or any Holder shall
be sent to each Lender at its address as set forth in the Trust Loan
Agreement, or at such other address as shall be specified by the Lender in
writing, in the same manner as such notice, demand, consent, direction or
instruction is given to Trustee, Depositors, Disposition Agent, or any
Holder, as the case may be.
9.5. Termination of this Agreement; No Power to Revoke or Withdraw Trust
Property.
(a) Subject to the provisions of Sections 2.1(f) and 2.1(g), this
Agreement and the Trust created hereby may not be terminated for any reason
until after such time as each Trust Loan Document is terminated in
accordance with its terms and all Trust Loan Obligations are indefeasibly
paid in full in cash in accordance with the terms of the Trust Loan
Documents, or all Trust Property has been disposed of and the Proceeds
thereof distributed as provided herein. After such time, and upon
termination, this Agreement and
<PAGE>
<PAGE> 58
the estate and rights thereby granted by Depositors to the Trust and
Trustee in the Trust Property shall cease, terminate and be void as of the
date of the final distribution by Trustee or Disposition Agent of all the
Trust Property pursuant to this Section 9.5(a).
The respective obligations and responsibilities of Depositors,
Trustee and Disposition Agent created hereby with respect to the
Certificates of Beneficial Interest (other than the obligation to make
certain payments and send certain notices to Holders of Certificates of
Beneficial Interest as set forth in this Section 9.5) shall terminate
immediately following the occurrence of the last action required to be
taken by the Trustee pursuant to this Section 9.5; provided, however, that
in no event shall the Trust created hereby continue beyond the term allowed
under Section 2.1(f).
After payment of all amounts then due and payable to Trust
Company and Disposition Agent and any party owed funds pursuant to Section
7.3, all right, title and interest in the Trust Property still held by
Trustee at the time of such termination shall be transferred, assigned and
paid over to Holders in such manner and form as shall be directed by
Holders. Notwithstanding the foregoing, Trustee and Disposition Agent
hereby acknowledge receipt of notice from Corimon, Property Co. and
Servicing Agent that the Certificates of Beneficial Interest owned by
Corimon and Property Co. have been pledged to Servicing Agent pursuant to
the Certificate Pledge Agreement and Trustee and Disposition Agent hereby
agree to deliver payments and distributions required to be made to such
Holders pursuant to this Section 9.5(a) in accordance with the terms of the
Certificate Pledge Agreement. Servicing Agent and Lenders are intended
third party beneficiaries of the provisions contained in this Section
9.5(a).
(b) Neither Depositors nor any Holder shall be entitled to
terminate or revoke the Trust established hereunder except as otherwise
expressly provided herein. Neither Depositors nor any Holder may withdraw
any of the Trust Property from the Trust so long as any of the Trust Loan
Obligations have not been paid in full in cash in accordance with the terms
of the Trust Loan Agreement and the other Trust Loan Documents, remain in
effect. Servicing Agent and Lenders are intended third party beneficiaries
of the provisions contained in this Section.
(c) The Disposition Agent shall give the Trustee notice as soon as
practicable of the Distribution Date on which the Disposition Agent
anticipates that the final distribution will be made, and the amount of
such final distribution if known, from the liquidation or disposition
pursuant to Section 3.4 of the last asset held by the Trust. Notice of any
termination of the Trust pursuant to this Section 9.5 shall be mailed by
the Trustee to Holders at
<PAGE>
<PAGE> 59
their addresses shown in the records of the Trustee maintained pursuant to
Section 7.2 and to Servicing Agent at its address on the signature page
hereof as soon as practicable after the Trustee shall have received notice
of the anticipated final Distribution Date from the Disposition Agent. The
notice mailed by the Trustee hereunder shall:
(i) specify the anticipated Termination Date on which the
final distribution is anticipated to be made to Holders;
(ii) specify the amount of any such final distribution, if
known, and
(iii) state that the final distribution will be made only upon
presentation and surrender of Certificates of Beneficial Interest at
the office of the Trustee therein specified.
If the Trust is not terminated on any anticipated Termination Date for any
reason, the Trustee shall promptly mail notice thereof to each Holder and
to Servicing Agent.
(d) Any funds not distributed on the Termination Date because of
the failure of any Holder to tender its Certificate of Beneficial Interest
shall be set aside and held in trust for the account of the appropriate
non-tendering Holder, whereupon the Trust shall terminate. If any
Certificate of Beneficial Interest as to which notice of the Termination
Date has been given pursuant to this Section 9.5 shall not have been
surrendered for cancellation within six months after the time specified in
such notice, the Disposition Agent shall mail a second notice to the Holder
thereof, at its address shown in the records of the Trustee maintained
pursuant to Section 7.2 to surrender its Certificates of Beneficial
Interest for cancellation in order to receive, from such funds held, the
final distribution with respect thereto. If within one year after the
second notice any Certificate of Beneficial Interest shall not have been
surrendered for cancellation, the Disposition Agent may, directly or
through an agent, take appropriate steps to contact the remaining Holders
concerning surrender of their Certificates of Beneficial Interest. The
costs and expenses of maintaining the funds and contacting Holders shall be
paid out of the assets which remain held. If after two years after the
second notice any Certificates of Beneficial Interest shall not have been
surrendered for cancellation, the Disposition Agent may, unless otherwise
required by mandatory provisions of any applicable escheat or abandoned or
unclaimed property law, transfer all amounts to be distributable on account
of such non-tendered Certificates of Beneficial Interest and all other sums
held by the Disposition Agent to the Depositors to hold jointly or as they
may otherwise agree, free of any trust and the holder of such Certificates
of Beneficial Interest shall, unless otherwise required by mandatory
provisions of
<PAGE>
<PAGE> 60
any applicable escheat or abandoned or unclaimed property law, thereafter
look only to the Depositors receiving such transfer for any payment which
such holder may be entitled to collect, and all liability of the Trustee,
the Disposition Agent and any paying agent with respect to such moneys
shall thereupon cease. No interest shall accrue or be payable to any
Holder on any amount held as a result of such Holder's failure to surrender
its Certificate(s) of Beneficial Interest for final payment thereof in
accordance with this Section 9.5.
9.6. Nature of Interest in Trust Property. Neither Depositors nor any
Holder shall have legal title to any part of the Trust Property or any
interest in specific Trust Property and shall only be entitled to receive
distributions in accordance with Section 3.4 and distributions with respect
to their undivided beneficial interest in the Trust Property pursuant to
Section 9.5 once all Trust Loan Obligations have been paid in full in cash
in accordance with the Trust Loan Agreement, and each Trust Loan Document
has been terminated and all amounts then owing to Trustee, Company,
Disposition Agent or any party owed funds pursuant to Section 7.3 have been
paid in cash. Subject to the provisions of subsections 2.1(f) and (g), no
transfer, by operation of law or otherwise, of any right, title or interest
of Depositors or of any Holder shall operate to terminate this Agreement or
the Trust or entitle any successor transferee to an accounting or to the
transfer to it of legal title to any part of the Trust Property or any
interest in specific Trust Property. Servicing Agent and Lenders are
intended third party beneficiaries of the provisions contained in this
Section.
9.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO
CONFLICTS OF LAW PROVISIONS), AND ALL LAWS OR RULES OF CONSTRUCTION OF SUCH
STATE SHALL GOVERN THE RIGHTS OF THE PARTIES TO THIS AGREEMENT AND THE
INTERPRETATION OF THE PROVISIONS OF THIS AGREEMENT.
9.8. Counterparts. This Agreement may be executed and delivered in any
number of counterparts, and such counterparts taken together shall
constitute one and the same instrument.
9.9. Limitations on Rights of Others. Nothing in this Agreement, whether
express or implied, shall be construed to give to any person other than
Servicing Agent, Lenders, Trustee, Disposition Agent, Depositors and any
Holder any legal or equitable right, remedy or claim in the Trust Property
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
<PAGE>
<PAGE> 61
9.10. Merger and Consolidation. No merger or consolidation of the Trust
with or into any other business trust, common-law trust, corporation,
partnership (general or limited), unincorporated business or other Person
may be effected, and no agreement of merger or consolidation may be entered
into by the Trust, unless and until such merger or consolidation and such
agreement is approved in writing by Servicing Agent. Servicing Agent and
Lenders are intended third party beneficiaries of the provisions contained
in this Section.
9.11. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto in respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof and is not intended to
confer upon any other Person any rights or remedies hereunder, other than
as expressly provided herein.
<PAGE>
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above
written.
STANDARD BRANDS PAINT CO.,
a California corporation
By: /s/ HOWARD SCHWARTZ
Title: Senior Vice President and
Chief Financial Officer
Address:
4300 West 190th Street
Torrance, California 90509-2956
Attn: Chief Financial Officer
Telephone No. (310) 214-2411
Telecopy No. (310) 371-8770
STANDARD BRANDS REALTY CO., INC.,
a California corporation
By: /s/ HOWARD SCHWARTZ
Title: Senior Vice President and
Chief Financial Officer
Address:
4300 West 190th Street
Torrance, California 90509-2956
Attn: Chief Financial Officer
Telephone No. (310) 214-2411
Telecopy No. (310) 371-8770
<PAGE>
<PAGE> 63
STANDARD BRANDS PAINT COMPANY,
a Delaware corporation
By: /s/ HOWARD SCHWARTZ
Title: Senior Vice President and
Chief Financial Officer
Address:
4300 West 190th Street
Torrance, California 90509-2956
Attn: Chief Financial Officer
Telephone No. (310) 214-2411
Telecopy No. (310) 371-8770
CORIMON CORPORATION,
a Delaware Corporation
By: /s/ JOSE GREGORIO GARCIA
Title: Assistant Treasurer and
Authorized Officer
Address:
Telephone No.
Telecopy No.
SUN LIFE INSURANCE COMPANY OF AMERICA,
an Arizona corporation
By: /s/ KEVIN BUCKLE
Title: Authorized Agent
Address:
1 SunAmerica Center
Century City, California 90067-6022
Attn: Bob Sydow
Telephone No. (310) 772-6112
Telecopy No. (310) 772-6150
<PAGE>
<PAGE> 64
ANCHOR NATIONAL LIFE INSURANCE CO.,
a California corporation
By: /s/ KEVIN BUCKLE
Title: Authorized Agent
Address:
1 SunAmerica Center
Century City, California 90067-6022
Attn: Bob Sydow
Telephone No. (310) 772-6112
Telecopy No. (310) 772-6150
TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY, a California corporation
By: /s/ LYMAN LOKKEN
Title: Investment Officer
Address:
1150 S. Olive Street, Suite 2200
Los Angeles, California 90015
Attn: Lyman Lokken
Telephone No. (213) 742-3141
Telecopy No. (213) 741-6917
TRANSAMERICA LIFE INSURANCE AND ANNUITY
COMPANY, a North Carolina corporation
By: /s/ LYMAN LOKKEN
Title: Investment Officer
Address:
1150 S. Olive Street, Suite 2200
Los Angeles, California 90015
Attn: Lyman Lokken
Telephone No. (213) 742-3141
Telecopy No. (213) 741-6917
<PAGE>
<PAGE> 65
TRANSAMERICA REALTY SERVICES, INC.,
a Delaware corporation
By: /s/ LYMAN LOKKEN
Title: Investment Officer
Address:
1150 S. Olive Street, Suite 2200
Los Angeles, California 90015
Attn: Lyman K. Lokken
Telephone No. (213) 742-3141
Telecopy No. (213) 741-6917
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
By: /s/ TRACY A. GIVANT
Title: ___________________________
Address:
3 Park Plaza, 16th Floor
Irvine, California 92714
Attn: Standard Brands Paint
Liquidating Property Trust
Telephone No. (714) 253-7575
Telecopy No. (714) 253-7577
<PAGE>
<PAGE> 66
STANDARD BRANDS PAINT COMPANY
AMENDED AND RESTATED LIQUIDATING PROPERTY TRUST AGREEMENT
HOLDER SIGNATURE PAGE
In Witness Whereof, the parties hereto have caused this Amended and
Restated Liquidating Property Trust Agreement to be duly executed and
delivered as of the date first written above.
SBP Liquidating Property Co.
By: /s/ DAVID J. BREAZZANO
Title: Vice President
<PAGE>
<PAGE> 1
EXHIBIT I
[FORM OF CERTIFICATE OF BENEFICIAL INTEREST]
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND EXCEPT AS PROVIDED
IN THE TRUST AGREEMENT, MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED, PLEDGED,
TRANSFERRED, ASSIGNED, USED AS SECURITY, SOLD OR OTHERWISE DISPOSED OF BY
THE HOLDER HEREOF. ALL RIGHTS AND INTERESTS OF THE HOLDER UNDER THIS
CERTIFICATE HAVE BEEN PLEDGED TO TRANSAMERICA OCCIDENTAL LIFE INSURANCE
COMPANY, AS SERVICING AGENT AS SECURITY FOR THE OBLIGATIONS OF THE HOLDER
UNDER THE NOTE PURCHASE AGREEMENT (AS DEFINED IN THE TRUST AGREEMENT
REFERRED TO BELOW).
CERTIFICATE OF BENEFICIAL INTEREST
STANDARD BRANDS PAINT LIQUIDATING PROPERTY TRUST
__________________________________________________________
THIS CERTIFIES THAT ____________________ (the "Holder") is the
registered owner of a ___% undivided beneficial interest in the Standard
Brands Liquidating Property Trust existing under the laws of the State of
California pursuant to the Liquidating Property Trust Agreement (the
"Agreement"; the terms herein are used as therein defined) dated as of
May 16, 1995 among STANDARD BRANDS PAINT COMPANY, STANDARD BRANDS PAINT
CO., STANDARD BRANDS REALTY CO., INC., SUN LIFE INSURANCE COMPANY OF
AMERICA, ANCHOR NATIONAL LIFE INSURANCE CO., TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY, TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY, CORIMON
CORPORATION, SBP LIQUIDATING PROPERTY CO., TRANSAMERICA REALTY SERVICES,
INC., and BANKERS TRUST COMPANY OF CALIFORNIA, N.A. ("Trust Company").
Trust Company, not in its individual capacity but solely in its fiduciary
capacity as trustee under the Agreement (the "Trustee"), has executed this
Certificate of Beneficial Interest by one of its duly authorized
signatories as set forth below. It is expressly understood and agreed by
the Holder hereof that the Trustee has executed this Certificate of
Beneficial Interest subject to the protections, indemnities and limitation
of liability afforded to the Trustee under the Agreement. The
representations, undertakings and agreements made by the Trustee under the
Agreement are not made as those of the Trust Company but are for the sole
purpose of binding the Trust Property under the Agreement, except to the
extent arising from the bad faith, gross negligence or willful misconduct
of the Trustee.
<PAGE>
<PAGE> 2
This Certificate of Beneficial Interest is one of the Certificates of
Beneficial Interest referred to in the Agreement and is issued under and is
subject to the terms, provisions and conditions of the Agreement to which
the owner of this Certificate of Beneficial Interest by virtue of the
acceptance hereof agrees and by which the Holder is bound. Reference is
hereby made to the Agreement for a statement of the rights of the owner of
this Certificate of Beneficial Interest, as well as for a statement of the
terms and conditions of the Trust created by the Agreement.
IN WITNESS WHEREOF, Trustee has caused this Certificate of Beneficial
Interest to be executed as of the date hereof by one of its Authorized
Officers, by his or her manual signature. This Certificate of Beneficial
Interest shall not be valid or enforceable for any purpose until it shall
have been so signed by an Authorized Officer of Trustee.
Dated: ______________
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
not in its individual capacity but
solely as Trustee
By:
Title: Authorized Officer
<PAGE>
<PAGE> 1
SCHEDULE E
MAINTENANCE COSTS
"Maintenance Costs" shall include, without limitation, the
following:
1. Payments owing to property managers.
2. Payments owing to property inspectors.
3. Improvement assessments and other impositions.
4. Utilities.
5. Insurance Costs (as such term is defined in the Agreement).
6. Taxes (as such term is defined in the Agreement).
7. Other taxes (other than taxes based on income).
8. Landscaping costs.
9. Cost of replacing broken windows.
10. Cost of general sanitation cleanup.
11. Cost of patching potholes.
12. Cost of minor plumbing.
13. Cost of removing trade fixtures and costs of repair for damage as a
result of such removal.
14. Reimbursement or direct payment of repair, maintenance and operation
costs incurred by or at the direction of Disposition Agent in
accordance with Section 3.3.
<PAGE>
THIRD AMENDED AND RESTATED EXISTING LOAN AGREEMENT
DATED AS OF MAY 16, 1995
among
STANDARD BRANDS PAINT COMPANY,
("Company")
and
STANDARD BRANDS PAINT CO.,
STANDARD BRANDS REALTY CO., INC.,
("Borrowers")
and
SUN LIFE INSURANCE COMPANY OF AMERICA,
ANCHOR NATIONAL LIFE INSURANCE CO.,
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY,
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
("Lenders")
and
Transamerica Occidental Life Insurance Company,
as Servicing Agent
<PAGE>
<PAGE> i TABLE OF CONTENTS
Section Headings Page
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . 19
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . 19
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Loans and Notes . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Payments and Prepayments . . . . . . . . . . . . . . . . . 20
SECTION 3. CONDITIONS TO CLOSING DATE
3.1 Conditions to Modifications of Loans . . . . . . . . . . . 22
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Organization, Powers, Good Standing, and Subsidiaries . . . 27
4.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . 28
4.3 Financial Condition . . . . . . . . . . . . . . . . . . . . 29
4.4 Title to Properties and Assets; Liens. . . . . . . . . . . 29
4.5 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . 32
4.6 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 32
4.7 Materially Adverse Agreements . . . . . . . . . . . . . . . 33
4.8 Governmental Regulation . . . . . . . . . . . . . . . . . . 33
4.9 Securities Activities . . . . . . . . . . . . . . . . . . . 33
4.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 34
4.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 34
4.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTIon 5. AFFIRMATIVE COVENANTS
5.1 Financial Statements and Other Reports . . . . . . . . . . 35
5.2 Corporate Existence, etc. . . . . . . . . . . . . . . . . . 39
5.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . 39
5.4 Maintenance of Properties . . . . . . . . . . . . . . . . . 40
5.5 Insurance; Condemnation . . . . . . . . . . . . . . . . . . 41
5.6 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7 First Priority Lien . . . . . . . . . . . . . . . . . . . . 43
5.8 Inspection . . . . . . . . . . . . . . . . . . . . . . . . 43
5.9 Compliance with Loan Documents . . . . . . . . . . . . . . 44
5.10 Compliance with Laws, etc. . . . . . . . . . . . . . . . . 44
5.11 Equal Security for Loans and Notes . . . . . . . . . . . . 44
5.12 Board of Directors . . . . . . . . . . . . . . . . . . . . 44
5.13 Further Assurances . . . . . . . . . . . . . . . . . . . . 44
5.14 Capital Improvements . . . . . . . . . . . . . . . . . . . 45
5.15 Subordination of Intercompany Debt . . . . . . . . . . . . 45
<PAGE>
<PAGE> ii Page
5.16 Establishment of the Liquidating Property Trust . . . . . . 45
5.17 Transaction Expenses Reserve . . . . . . . . . . . . . . . 45
SECTION 6. NEGATIVE COVENANTS
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 46
6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . 48
6.4 Contingent Obligations . . . . . . . . . . . . . . . . . . 50
6.5 Restricted Junior Payments . . . . . . . . . . . . . . . . 50
6.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . 51
6.7 Restriction on Fundamental Changes . . . . . . . . . . . . 51
6.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.9 Restriction on Leases . . . . . . . . . . . . . . . . . . . 54
6.10 Sale or Discount of Receivables . . . . . . . . . . . . . . 54
6.11 Transactions with Shareholders and Affiliates . . . . . . . 54
6.12 Disposal of Subsidiary Indebtedness or Securities . . . . . 55
6.13 Limitation on Capital Expenditures . . . . . . . . . . . . 55
6.14 Amendments or Waivers of Certain Documents; Prepayments . . 56
6.15 Conduct of Business . . . . . . . . . . . . . . . . . . . . 56
6.16 Promark Group West . . . . . . . . . . . . . . . . . . . . 56
6.17 Independence of Covenants . . . . . . . . . . . . . . . . . 56
SECTION 7. EVENTS OF DEFAULT
7.1 Failure to Make Payments When Due . . . . . . . . . . . . . 57
7.2 Default in Other Agreements . . . . . . . . . . . . . . . . 57
7.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . 57
7.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . 57
7.5 Other Defaults Under Agreement . . . . . . . . . . . . . . 57
7.6 Involuntary Bankruptcy; Appointment of Receiver etc. . . . 58
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . 58
7.8 Judgments and Attachments . . . . . . . . . . . . . . . . . 58
7.9 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . 59
7.10 Unfunded ERISA Liabilities . . . . . . . . . . . . . . . . 59
7.11 Withdrawal Liability Under Multiemployer Plan . . . . . . . 59
7.12 Invalidity of Guaranties . . . . . . . . . . . . . . . . . 59
7.13 Failure of Security . . . . . . . . . . . . . . . . . . . . 60
7.14 Director . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8. SERVICING AGENT
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 61
8.2 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.3 Powers; General Immunity . . . . . . . . . . . . . . . . . 61
8.5 Right to Indemnity . . . . . . . . . . . . . . . . . . . . 63
8.6 Payee of Note Treated as Owner . . . . . . . . . . . . . . 63
<PAGE>
<PAGE> iii Page
8.7 Resignation and Appointment of Successor Servicing Agent . 63
8.8 Collateral Documents . . . . . . . . . . . . . . . . . . . 64
SECTION 9. MISCELLANEOUS
9.1 Securities Representation . . . . . . . . . . . . . . . . . 64
9.2 Assignments; Participations in Loans and Notes . . . . . . 65
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.5 Set Off; Actions Regarding the Collateral . . . . . . . . . 69
9.6 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Release of Mortgages . . . . . . . . . . . . . . . . . . . 71
9.8 Amendments and Waivers . . . . . . . . . . . . . . . . . . 71
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.10 Survival of Warranties and Certain Agreements . . . . . . . 72
9.11 Failure or Indulgence Not Waiver; Remedies Cumulative . . . 72
9.12 Severability . . . . . . . . . . . . . . . . . . . . . . . 72
9.13 Obligations Several . . . . . . . . . . . . . . . . . . . . 72
9.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.15 Applicable Law . . . . . . . . . . . . . . . . . . . . . . 73
9.16 Successors and Assigns; Subsequent Holders of Notes . . . . 73
9.17 Consent to Jurisdiction and Service of Process; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . 73
9.18 Change in Accounting Principles . . . . . . . . . . . . . . 73
9.19 Counterparts; Effectiveness . . . . . . . . . . . . . . . . 74
<PAGE>
<PAGE> iv
LIST OF EXHIBITS AND SCHEDULES
Section
Reference
Exhibit I Form of Notice of Closing Date . . . . . . . . . . . . sec.1.1
Exhibit II Form of Allonge . . . . . . . . . . . . . . . . . . . . sec.1.1
Exhibit III Form of Omnibus Consent . . . . . . . . . . . . . . . . sec.1.1
Exhibit IV Form of Mutual Release and Waiver . . . . . . . . . . . sec.1.1
Exhibit V Form of Compliance Certificate . . . . . . . . . . . . sec.1.1
Exhibit VI Form of Amended and Restated Trust
Acknowledgment Agreement and Consent . . . . . . . . . sec.1.1
Exhibit VII Form of Certificate Pledge Agreement . . . . . . . . . sec.1.1
Exhibit VIII Form of Opinion of Buchalter, Nemer,
Fields & Younger . . . . . . . . . . . . . . . . . . . sec.1.1
Schedule 1 Outstanding Obligations . . . . . . . . . . . . . . . . sec.2.1
Schedule 2 Principal Payment Schedule . . . . . . . . . . . . . . sec.2.1
Schedule 3 Material Contingent Obligations,
Liabilities and Long Term Leases
of Company and its Subsidiaries . . . . . . . . . . . . sec.4.3
Schedule 4 Existing Litigation Matters . . . . . . . . . . . . . . sec.4.5
Schedule 5 Liens with Respect to Any Property
or Assets of Company and Borrower
and Any of Their Subsidiaries
Existing on the Closing Date . . . . . . . . . . . . . sec.6.2
Schedule 6 Existing Investments . . . . . . . . . . . . . . . . . sec.6.3
Schedule 7 Existing Leases . . . . . . . . . . . . . . . . . . . . sec.6.7
Schedule 8 material Subsidiaries . . . . . . . . . . . . . . . . . sec.4.1
Schedule 9 Mortgaged Properties . . . . . . . . . . . . . . . . . sec.4.4
Schedule 10 Transactions with Affiliates . . . . . . . . . . . .. sec.6.11
<PAGE>
<PAGE> 1
STANDARD BRANDS PAINT COMPANY
STANDARD BRANDS PAINT CO.
STANDARD BRANDS REALTY CO., INC.
THIRD AMENDED AND RESTATED EXISTING LOAN AGREEMENT
DATED AS OF MAY 16, 1995
By this Third Amended and Restated Existing Loan Agreement
dated as of May 16, 1995, STANDARD BRANDS PAINT COMPANY, a Delaware
corporation ("Company"), STANDARD BRANDS PAINT CO., a California
corporation, and STANDARD BRANDS REALTY CO., INC., a California corporation
(individually referred to herein as "Borrower" and collectively as
"Borrowers"), Sun Life Insurance Company of America, Anchor National Life
Insurance Co., Transamerica Occidental Life Insurance Company, and
Transamerica Life Insurance and Annuity Company (individually referred to
herein as "Lender" and collectively as "Lenders"), and Transamerica
Occidental Life Insurance Company, as servicing and collateral agent for
Lenders ("Servicing Agent"), agree as follows:
PRELIMINARY STATEMENTS.
1. Company, Borrowers, TAS, Lenders and Servicing Agent have entered
into a Loan Agreement dated as of November 30, 1987, as amended to the date
hereof (as so amended, the "Original Agreement") providing for the making
of Loans (capitalized terms used in these Recitals having the meanings
assigned such terms in Section 1) by Lenders to Borrowers in an aggregate
principal amount not to exceed $132,500,000, of which amount
$119,642,773.68 in principal amount was outstanding on February 11, 1992.
2. On or about February 11, 1992, Company and Borrowers filed
petitions for relief under chapter 11 of the Bankruptcy Code in the
Bankruptcy Court, all of which cases are jointly administered.
3. The Original Agreement was amended and restated pursuant to the
Amended and Restated Loan Agreement dated as of June 14, 1993 as amended to
the date hereof (as so amended, the "First Amended Agreement") in
accordance with the Plan.
4. The First Amended Agreement was amended and restated pursuant to
the Second Amended and Restated Existing Loan Agreement dated as of
July 12, 1994 in connection with the establishment of the Liquidating
Property Trust and the transfer
<PAGE>
<PAGE> 2
of certain Mortgaged Properties and certain of the Obligations to the
Liquidating Property Trust (as so amended, the "Second Amended Agreement").
5. The obligations of TAS under the Original Agreement, the First
Amended Agreement and the Second Amended Agreement (including its
guarantees thereunder and related Loan Documents) have been terminated
pursuant to that certain Termination and Release dated as of February 15,
1995 by and between TAS and Servicing Agent as agent for Lenders, and all
liens in favor of Servicing Agent or Lenders securing such obligations were
released.
6. Company and Borrowers have requested that Lenders and Servicing
Agent consent to the transfer of certain additional Mortgaged Properties
and certain additional Obligations to the Liquidating Property Trust
provided that Borrowers amend the Second Amended Agreement to, inter alia,
amend the amortization, maturity and interest rate of the Loans and remove
TAS as a borrower under the Second Amended Agreement following the
repayment of its obligations under the Second Amended Agreement.
7. For ease of reference and clarity, Company, Borrowers, Lenders
and Servicing Agent desire to restate the Second Amended Agreement to
incorporate the amendments made hereby and amend the promissory notes
issued by the Borrowers pursuant to the Original Agreement. The parties
expressly disclaim any intent to effect a novation or an extinguishment or
discharge of the Original Agreement, the First Amended Agreement or the
Second Amended Agreement or a discharge of any obligations under the Loan
Documents or to issue new promissory notes as a result of entering into
this Agreement and the other documents contemplated herein.
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the
following meanings:
"ADDITIONAL TRUST TRANSFERS" means the transfers of certain
Mortgaged Properties into the Liquidating Property Trust subject to
$14,250,781.00 in aggregate principal amount of the Loans and $0 in
accrued and unpaid interest.
"ADEQUATE PROTECTION STIPULATION" means that certain "First
Amended Stipulation for Adequate Protection", approved by the
Bankruptcy Court in an order entered
<PAGE>
<PAGE> 3
August 20, 1992, and as thereafter may be amended with the approval
of the Bankruptcy Court.
"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.
"AGREEMENT" means this Third Amended and Restated Existing Loan
Agreement dated as of May 16, 1995, as it may be amended,
supplemented, or otherwise modified from time to time.
"ALLONGES" means the Allonges delivered by Borrowers to
Servicing Agent pursuant to subsection 3.1A, substantially in the
form of Exhibit II annexed hereto.
"ASSIGNMENT OF RENTS AND LEASES" means the Assignments of
Rents, Leases, Income, and Profits delivered by Borrowers pursuant to
subsection 3.1C of the Original Agreement, substantially in the form
of Exhibit VIII annexed to the Original Agreement, as such Assignment
of Rents and Leases may be amended, supplemented, or otherwise
modified from time to time; provided that on and after the Closing
Date, "Assignment of Rents and Leases" shall include only the
Assignments of Rents, Leases, Income, and Profits on the Mortgaged
Properties.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Central District of California.
"BANKRUPTCY CODE" means title 11 of the United States Code, the
Federal Rules of Bankruptcy Procedure promulgated thereunder, and the
Local Bankruptcy Rules for the Central District of California.
"BORROWER" and "BORROWERS" have the meanings assigned to those
terms in the introduction to this Agreement.
"BORROWER GUARANTY" means the Guaranty executed and delivered
by Borrowers pursuant to subsection 3.1C of the Original Agreement,
as such Guaranty may be amended, supplemented, or otherwise modified
from time to time.
<PAGE>
<PAGE> 4
"BUSINESS DAY" means any day excluding Saturday, Sunday, and
any day that is a legal holiday under the laws of the State of
California or is a day on which banking institutions located in the
State of California are authorized by law or other governmental
action to close.
"CAPITAL EXPENDITURES" means for any period the sum of
(i) expenditures (whether paid in cash or accrued as a liability,
including that portion of Capital Leases that is capitalized on the
consolidated balance sheet of Company and its Subsidiaries) by
Company and its Subsidiaries during that period that are included in
"capital expenditures," "additions to property, plant or equipment,"
or comparable items in the statement of cash flows of Company and its
Subsidiaries, (ii) to the extent not included in subclause (i), the
aggregate of all net long-term assets of businesses acquired by
Company and its Subsidiaries during that period, including all
purchase price adjustments, and (iii) any other expenditure that is
generally considered a capital expenditure under GAAP, on a basis
consistently applied, including any amount that is required to be
treated as a capitalized asset pursuant to Financial Accounting
Standards Board Statement No. 13.
"CAPITAL IMPROVEMENT" means any physical additions or changes
to any Mortgaged Property made for the specific purpose of
facilitating a lease or sale of such property. Capital Improvements
do not include those actions that Company or Borrowers would have
otherwise undertaken in order to keep their properties operational,
such as normal maintenance and repairs.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal, or mixed) by that Person as
lessee that would, in conformity with GAAP, be required to be
accounted for as a capital lease on the balance sheet of that Person.
"CERTIFICATE PLEDGE AGREEMENT" means the Certificate Pledge
Agreement executed and delivered by Fidelity, Corimon and Servicing
Agent pursuant to subsection 3.1, substantially in the form of
Exhibit VII annexed hereto, pursuant to which Property Co. and
Corimon grant to Servicing Agent for the benefit of Lenders a first
priority Lien on Fidelity's and Corimon's interest in the Liquidating
Property Trust, as such Certificate Pledge Agreement may be amended,
supplemented or modified from time to time.
<PAGE>
<PAGE> 5
"CLOSING DATE" means the date on or prior to May 16, 1995 on
which the conditions to effectiveness set forth in subsection 3.1 are
satisfied or waived by Lenders.
"COLLATERAL DOCUMENTS" means the Mortgages and the Assignments
of Rents and Leases.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par
value $.01 per share.
"COMPANY GUARANTY" means the Guaranty executed and delivered by
Company pursuant to subsection 3.1C of the Original Agreement,
substantially in the form of Exhibit IX annexed to the Original
Agreement, as such Guaranty may be amended, supplemented, or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit V annexed hereto delivered to Servicing Agent for
the benefit of Lenders by Borrowers and Company pursuant to
subsection 5.1(iii).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of
determination, the Current Assets of Company and its Subsidiaries on
a consolidated basis determined in conformity with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the Current Liabilities of Company and its
Subsidiaries on a consolidated basis determined in conformity with
GAAP.
"CONSOLIDATED TANGIBLE EFFECTIVE NET WORTH" means, as at any
date of determination (a) the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated deficit)
of Company and its Subsidiaries on a consolidated basis determined in
conformity with GAAP, minus (b) the amount at which Intangible Assets
are reflected on the books and records of Company and its Sub-
sidiaries on the date of determination.
"CONSOLIDATED TOTAL LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries
on a consolidated basis that should be reflected in a consolidated
balance sheet of Company and its Subsidiaries in conformity with
GAAP; provided that on and after the Closing Date, "CONSOLIDATED
TOTAL LIABILITIES"
<PAGE>
<PAGE> 6
shall not include the Liquidating Property Trust Obligations.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend, letter of credit,
or other obligation of another, including, without limitation, any
obligation under any interest rate swap agreement or currency swap
agreement, any obligation directly or indirectly guarantied, endorsed
(otherwise than for collection or deposit in the ordinary course of
business), co-made, or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or
indirectly liable, including, without limitation, any such obligation
for which that Person is in effect liable through any agreement
(contingent or otherwise) 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 to maintain the solvency or any balance sheet, income
or other financial condition of the obligor of such obligation, or to
make payment for any products, materials, or supplies or for any
transportation, services, or lease regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of
such agreement is to provide assurance 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. The
amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported.
"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.
"CORIMON" means Corimon Corporation, a Delaware corporation.
"CURRENT ASSETS" means, as at any date of determination, the
total assets of any Person that may properly be classified as current
assets in conformity with GAAP.
<PAGE>
<PAGE> 7
"CURRENT LIABILITIES" means, as at any date of determination,
the total liabilities of any Person that may properly be classified
as current liabilities in conformity with GAAP.
"DEPRECIATION EXPENSE" means, as of the last day of any fiscal
period, all amounts deducted from revenues in the calculation of Net
Income for that fiscal period for depreciation and amortization of
assets other than Intangible Assets.
"DISPOSITION AGENT" has the meaning assigned to such term in
the Liquidating Property Trust Agreement.
"DOLLARS" means the lawful money of the United States of
America.
"EBIRTDA" means, with respect to any fiscal period, (a) Net
Income (before restructuring gains or losses, gains and losses from
discontinued operations, and extraordinary items, including the
effect of changes in accounting principles) for that fiscal period,
plus (b) Interest Expense for that fiscal period, plus (c) Rental
Expense for that fiscal period, plus (d) depreciation and
amortization for that fiscal period, plus (e) the amount of taxes on
or measured by income, in each case to the extent deducted from
revenues or included in revenues, as the case may be, in the
calculation of Net Income for that fiscal period.
"EFFECTIVE DATE" means the effective date of the Plan, as
provided therein.
"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 any trade or
business (whether or not incorporated) that is a member of a group of
which that Person is also a member and that is under common control
within the meaning of the regulations promulgated under Section 414
of the Internal Revenue Code.
"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.
<PAGE>
<PAGE> 8
"FIDELITY" means Fidelity Capital & Income Fund and Kodak
Retirement Income Plan Trust Fund.
"FIDELITY INDEBTEDNESS" means any Indebtedness owed to Fidelity
whether under the Fidelity Note Purchase Agreement or otherwise.
"FIDELITY NOTE PURCHASE AGREEMENT" means that certain Note
Purchase Agreement dated as of May 16, 1995 among Fidelity Capital &
Income Fund, certain of its Subsidiaries and Standard Brands Paint
Company.
"FIRST AMENDED AGREEMENT" has the meaning assigned to such term
in the Recitals hereto.
"FISCAL QUARTER" means a fiscal quarter of Company consisting
of a thirteen or fourteen week fiscal period ending on the last
Sunday occurring during the months of January, April, July, and
October.
"FISCAL YEAR" means the Fiscal Year of Company consisting of a
fifty-two or fifty-three week fiscal period ending on the last Sunday
occurring during the month of January.
"FOOTHILL" means Foothill Capital Corporation.
"GAAP" means, subject to the provisions of subsection 9.18,
generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants, including,
without limitation, adjustments prescribed in accordance with SOP
90-7 if elected by Company, 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, that are applicable to the circumstances as of
the date of determination.
"GRANTOR TRUST" means Standard Brands Paint Collateral Trust,
the trust established pursuant to the Plan which only holds the stock
of Zynolyte Products Holding Company, a Delaware corporation, which
shall not hold any assets other than "Trust Proceeds" as defined in
the Grantor Trust Documents.
"GRANTOR TRUST DOCUMENTS" means the Grantor Trust Asset
Purchase Agreement (as defined in the Plan), the existing Grantor
Trust loan agreements, the Fidelity Indebtedness and the "Grantor
Trust Documents" as defined in the Plan.
<PAGE>
<PAGE> 9
"IMPROVEMENTS" has the meaning assigned to that term in the
Mortgages.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations
with respect to Capital Leases that is capitalized on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or
any part of the deferred purchase price of property or services which
purchase price is (y) due more than six months from the date of
incurrence of the obligation in respect thereof, or (z) evidenced by
a note or similar written instrument, and (v) all indebtedness
secured by any mortgage, pledge, Lien, security interest, or vendor's
interest under any conditional sale or other title retention
agreement existing on any property or asset owned or held by that
Person regardless whether the indebtedness secured thereby shall have
been assumed by that Person or is non-recourse to the credit of that
Person; provided that on and after the Closing Date, applied to
Borrowers, "INDEBTEDNESS" shall not include the Liquidating Property
Trust Obligations.
"INITIAL TRUST TRANSFERS" means the transfers of certain
Mortgaged Properties into the Liquidating Property Trust subject to
$68,671,980.00 in aggregate principal amount of the Loans and $0 in
accrued and unpaid interest.
"INTANGIBLE ASSETS" means, as at any date of determination,
assets of Company and its Subsidiaries that are considered intangible
assets under GAAP, including, without limitation, customer lists,
goodwill, copyrights, trade names, trademarks, patents and other
intangible assets.
"INTERCREDITOR AGREEMENT" means the Amended and Restated
Intercreditor Agreement dated as of March 16, 1994, substantially in
the form of Exhibit VI annexed to the Second Amended Agreement, among
Company, Borrowers, the Grantor Trust, Fidelity and Servicing Agent,
as it may be amended, supplemented or otherwise modified from time to
time.
"INTEREST COVERAGE RATIO" means, as of the last day of each
Fiscal Quarter, the ratio of (i) the sum of EBIRTDA for the fiscal
period consisting of that Fiscal Quarter and the three immediately
preceding Fiscal Quarters, to (ii) Interest Expense for that fiscal
period.
<PAGE>
<PAGE> 10
"INTEREST EXPENSE" means, as of the last day of any fiscal
period, the sum of (a) all interest, fees, charges, and related
expenses (other than Transaction Expenses) paid or payable (without
duplication) for that fiscal period to a lender in connection with
borrowed money or the deferred purchase price of assets that is
treated as interest in accordance with GAAP, plus (b) the portion of
rent paid or payable (without duplication) for that fiscal period
under leases required to be capitalized under Financial Accounting
Standards Board Statement No. 13 that should be treated as interest
in accordance with that Statement, plus (c) the portion of rent paid
or payable (without duplication) for that fiscal period under
operating leases that would be treated as interest pursuant to
Item 503 of Regulation S-K under the Exchange Act; provided that on
and after the Closing Date, "INTEREST EXPENSE" shall not include
interest, fees, charges, and related expenses paid or payable to a
lender constituting Liquidating Property Trust Obligations.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"INVESTMENT", as applied to any Person, means any direct or
indirect purchase or other acquisition by that Person of, or a
beneficial interest in, stock or other Securities of any other
Person, or any direct or indirect loan, advance, or capital
contribution by that Person 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. The amount of any Investment
shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases
in value, or write-ups, write-downs, or write-offs, with respect to
such Investment.
"INVESTMENT AGREEMENT" means that certain Investment Agreement
dated as of February 15, 1995 among Corimon, S.A.C.A., Corimon,
Fidelity, Lenders, Grantor Trust and Company, as such Investment
Agreement may be amended, supplemented or modified from time to time.
"LENDER" and "LENDERS" have the meaning assigned to those terms
in the introduction to this Agreement.
"LEVERAGE RATIO" means, as at any date of determination, the
ratio of Consolidated Total Liabilities to EBIRTDA for the prior 12
months.
<PAGE>
<PAGE> 11
"LIEN" means any lien, mortgage, pledge, 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).
"LIQUIDATING PROPERTY TRUST" means the liquidating property
trust established pursuant to the Liquidating Property Trust Docu-
ments, to which Company and Borrowers transferred, assigned, set over
and otherwise conveyed certain Mortgaged Properties.
"LIQUIDATING PROPERTY TRUST AGREEMENT" means the Amended and
Restated Liquidating Property Trust Agreement dated as of May 16,
1995 among Company, SBPCO, Standard Brands Realty Co. Inc., as
Depositors, Bankers Trust Company of California, N.A., as Trustee,
Transamerica Realty Services, Inc., as Disposition Agent, Property
Co., Corimon, and Lenders.
"LIQUIDATING PROPERTY TRUST DOCUMENTS" means the Liquidating
Property Trust Agreement and the Trust Loan Agreement and all related
documents and agreements, as such agreements may be amended, modified
or supplemented from time to time.
"LIQUIDATING PROPERTY TRUST OBLIGATIONS" means all of the
obligations of the Liquidating Property Trust to Lenders and
Servicing Agent under the Liquidating Property Trust Documents.
"LIQUIDATING PROPERTY TRUST TRANSFERS" means the Initial Trust
Transfers together with the Additional Trust Transfers.
"LOAN" or "LOANS" means one or more of the Loans made to
Borrowers by Lenders pursuant to subsection 2.1 of the Original
Agreement, and shall include the amounts added to the principal of
the Loans pursuant to subsection 2.3A of the First Amended Agreement;
provided that on and after the Closing Date, "LOAN" or "LOANS" shall
exclude the Liquidating Property Trust Obligations.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Mortgages and the other Collateral Documents, the Omnibus Consent,
the Release, the Allonges, the Company Guaranty, the Borrower
Guaranty, the Subsidiary Guaranty, the Subsidiary Interguarantor
Agreement, the Intercreditor Agreement and the Memorandum of
Understanding.
<PAGE>
<PAGE> 12
"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.
"MEMORANDUM OF UNDERSTANDING" means the Amended and Restated
Memorandum of Understanding dated as of May 16, 1995, among Company,
Borrowers, Lenders, Servicing Agent and the trustee of the
Liquidating Property Trust, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"MORTGAGE" or "MORTGAGES" means one or more of the Deed of
Trust, Assignment of Rents, Security Agreement, Financing Statement,
and Fixture Filing executed, acknowledged, and delivered to Servicing
Agent for the benefit of Lenders by Borrowers or any of them pursuant
to subsections 3.1D or 5.11 of the Original Agreement, substantially
in the form of Exhibit III annexed to the Original Agreement, as such
Mortgages may be amended, supplemented, or otherwise modified from
time to time; provided that on and after the Closing Date, "MORTGAGE"
or "MORTGAGES" shall include only the Mortgages on Mortgaged
Properties.
"MORTGAGEE TITLE POLICIES" means an ALTA Lenders' title
insurance policy or policies or an endorsement to an existing ALTA
Lenders' title insurance policy or policies issued by Transamerica
Title Insurance Company or Commonwealth Land Title Company, insuring
the first lien position of the Mortgages.
"MORTGAGED PROPERTY" means real and personal property subject
to the Lien of a Mortgage; provided that on and after the Closing
Date, "MORTGAGED PROPERTY" shall exclude the Mortgaged Properties
which were transferred to the Liquidating Property Trust pursuant to
the Liquidating Property Trust Documents.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA in which any employees of Company or any
ERISA Affiliate of Company participate or from which any such
employees may derive a benefit.
"NET INCOME" means, with respect to any fiscal period, the
consolidated net income from continuing operations before
extraordinary items of Company and its Subsidiaries (other than the
Liquidating Property Trust) for that period, determined in accordance
with GAAP. Notwithstanding this definition, for purposes of
calculating Net Income under this Agreement, income and expenses
relating to the
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<PAGE> 13
Liquidating Property Trust, including, without limitation, income and
expenses relating to the Master Lease (as defined in the Liquidating
Property Trust Agreement), shall not be included.
"NET LEASE PROCEEDS" means the gross income generated by any
lease of Mortgaged Property less normal and customary third party
expenses of the lease, including normal and customary real estate
commissions to third parties unrelated to the Company or the
Borrowers, normal and customary closing costs payable to third
parties unrelated to the Company or the Borrowers, and reasonable
costs and expenses for such items as repairs, maintenance,
association fees, and tenant requested improvements that may result
from the Company's or Borrowers' obligation under the lease, provided
that such expenses are actually paid.
"NET PROCEEDS OF INSURANCE OR CONDEMNATION" means the proceeds
of any insurance payment or condemnation award received by the
Company or any of its Subsidiaries in connection with the damage,
destruction, or condemnation of any Mortgaged Property, net of the
expenses incurred in the collection of such proceeds or designated
for restoration of such Mortgaged Property other than taxes paid or
payable as a result thereof.
"NET SALE PROCEEDS" means the gross sales price for any
Mortgaged Property less normal and customary third party expenses of
sale, such as normal and customary real estate commissions to third
parties unrelated to Company or Borrowers, normal and customary
closing costs payable to third parties unrelated to Company or
Borrowers, and transfer or stamp taxes applicable to the particular
sale, provided that such expenses are actually paid. Notwithstanding
this definition, expenses of sale for purposes of determining Net
Sale Proceeds shall not include the payment of any real property
taxes or special assessments.
"NOTICE OF CLOSING DATE" means a certificate to be executed and
delivered by Borrowers to Lenders substantially in the form of
Exhibit I annexed hereto.
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase
Agreement dated as of May 16, 1995 among Property Co., Corimon,
Lenders and Servicing Agent.
"NOTES" means the promissory notes of Borrowers issued pursuant
to subsection 2.1D of the Original Agreement and substantially in the
form of Exhibit II annexed to the Original Agreement, as modified
pursuant to the Allonges,
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<PAGE> 14
and as such Notes may be amended, supplemented, or otherwise modified
from time to time.
"OBLIGATIONS" means all obligations of every nature of Company
and Borrowers from time to time owed to Servicing Agent or Lenders or
any of them under this Agreement, the other Loan Documents and the
Notes.
"OFFICERS' CERTIFICATE" means a certificate executed on behalf
of Borrowers and Company by the Chairman of the Board of Company (if
an officer) or the President of Company or one of Company's Vice
Presidents and by the Chief Financial Officer or Treasurer of
Company.
"OMNIBUS CONSENT" means the Consent executed and delivered by
the Company and each of its Subsidiaries pursuant to subsection 3.1
and substantially in the form of Exhibit III annexed hereto.
"OPERATING LEASE" means, as applied to any Person, any lease of
any property (whether real, personal, or mixed) that is not a Capital
Lease other than any such lease under which that Person is the
lessor.
"ORIGINAL AGREEMENT" has the meaning assigned such term in the
Recitals hereto.
"PENSION PLAN" means any employee plan that is subject to the
provisions of Title IV of ERISA in which any employees of Company or
any ERISA Affiliate of Company participate or from which any such
employees may derive a benefit, other than a Multiemployer Plan.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies,
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.
"PLAN" means "Debtors' Fourth Amended Joint Plan of
Reorganization Filed March, 1993", filed by Company and Borrowers in
the Reorganization Cases on March, 1993 and as it was amended
thereafter, was confirmed on May 14, 1993 and became effective on
June 14, 1993.
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<PAGE> 15
"PLAN TRANSFERS" means the transfers of assets into the Grantor
Trust or the Liquidating Trust (as defined in the Plan) that occurred
on or prior to June 14, 1993 pursuant to the Plan.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"PROPERTY CO." means SBP Liquidating Property Co., a Delaware
corporation.
"PRO RATA SHARE" means with respect to each Lender the
percentage set forth opposite each Lender's name below:
Lender Pro Rata Share
Sun Life Insurance Company 37.6603774%
of America
Anchor National Life 12.3396226%
Insurance Co.
Subtotal 50.0000000%
Transamerica Occidental Life 27.3584906%
Insurance Company
Transamerica Life Insurance 22.6415094%
and Annuity Company
Subtotal 50.0000000%
Total 100.0000000%
"RELEASE" means the Mutual Release and Waiver executed and
delivered by the Company and each of its Subsidiaries pursuant to
subsection 3.1 and substantially in the form of Exhibit IV annexed
hereto.
"RENTAL EXPENSE" means, as of the last day of any fiscal
period, all rent and related expenses treated as rent paid or payable
(without duplication) for that fiscal period to a lessor for the use
of real or personal property (other than rent included within the
definition of Interest Expense).
"REORGANIZATION CASES" means Company's and Borrowers' jointly-
administered cases under the Bankruptcy Code.
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<PAGE> 16
"REQUISITE LENDERS" means Lenders making 60% of the aggregate
principal amount of the Loans, or, if no Loans are outstanding,
Lenders having 60% of the aggregate Commitments; provided however,
that Requisite Lenders shall also include Sun Life Insurance Company
of America, Anchor National Life Insurance Company, Transamerica
Occidental Life Insurance Company, and Transamerica Life Insurance
and Annuity Company, so long as such Persons collectively hold at
least 20% of the aggregate outstanding principal amount of the Loans.
"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 (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, or of any warrants,
options, or other rights to acquire any such shares of stock now or
hereafter outstanding.
"SBPCO" means Standard Brands Paint Co., a California
corporation.
"SECOND AMENDED AGREEMENT" has the meaning assigned such term
in the Recitals hereto.
"SECURITIES" means any stock, shares, voting trust
certificates, 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
participations 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.
"SELLING BORROWER" has the meaning assigned to that term in
subsection 2.3B(ii).
"SERVICING AGENT" has the meaning assigned to that term in the
introduction to this Agreement.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of
the property of such Person is (y) greater
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<PAGE> 17
than the total amount of liabilities (including the fair saleable
value of Contingent Obligations) of such Person and (z) greater than
the amount that will be required to pay the probable liabilities on
such Person's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales
reasonably available to such Person; (ii) such Person's capital is
not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does
not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as
they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances.
"STOCKHOLDERS AGREEMENT" means that certain Stockholders
Agreement dated as of February 15, 1995 between Corimon and the
Company.
"SUBSIDIARY" means any corporation, association, or other
business entity of which more than 50% of the total voting power of
shares of stock entitled to vote in the election of directors,
managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided,
however, that Zynolyte Products Holding Company shall not be deemed
a Subsidiary of Company.
"SUBSIDIARY GUARANTOR" means any Subsidiary of Company or any
Borrower that has executed and delivered the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means the Guaranty executed and delivered
by certain Subsidiaries of SBPCO dated as of November 30, 1987
pursuant to subsection 3.1D of the Original Agreement, substantially
in the form of Exhibit XI annexed to the Original Agreement, as such
Guaranty may be amended, supplemented, or otherwise modified from
time to time.
"SUBSIDIARY INTERGUARANTOR AGREEMENT" means the Interguarantor
Agreement dated as of November 30, 1987 among certain Subsidiaries of
SBPCO, substantially in the form of Exhibit XIII annexed to the
Original Agreement, as such Interguarantor Agreement may hereafter be
amended, supplemented, or otherwise modified from time to time.
"TAS" means The Art Store, a California corporation.
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<PAGE> 18
"TERMINATION EVENT" means (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (other
than a "Reportable Event" not subject to the provision for 30-day
notice to the Pension Benefit Guaranty Corporation under such
regulations), or (ii) the withdrawal of Company or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or
(iii) the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA, or (iv) the institution of proceedings to
terminate a Pension Plan by the Pension Benefit Guaranty Corporation,
or (v) any other event or condition that might constitute grounds
under Section 4042 of ERISA for the termination of, or the appoint-
ment of a trustee to administer, any Pension Plan.
"TORRANCE PROPERTIES" means those thirty-three acres of real
property currently owned by SBPCO and Realty and located at 4300 West
190th Street in Torrance, California which are listed as the Torrance
Properties on Schedule 9 annexed hereto.
"TRANSACTIONS" has the meaning assigned the term "TRANSACTIONS"
in the Investment Agreement.
"TRANSACTION EXPENSES" means all expenses paid or payable by
Company and Borrowers relating to the transactions contemplated by
this Agreement, including modification of the Liquidating Property
Trust and the transactions contemplated thereby, and execution and
delivery of the Trust Loan Agreement, including investment banking
fees, loan fees, finders fees, phase I environmental audit costs,
asbestos survey costs, title insurance fees, legal fees of Lenders,
recording fees, consulting fees, inspection fees, appraisal fees, and
accounting fees.
"TRANSACTION EXPENSES RESERVE" means $200,000 to cover
Transaction Expenses.
"TRUST ACKNOWLEDGMENT AGREEMENT" means the Amended and Restated
Trust Acknowledgment Agreement and Consent dated as of May 16, 1995
among Company, Borrowers, the Liquidating Property Trust and
Servicing Agent, substantially in the form of Exhibit VI annexed
hereto, pursuant to which the Liquidating Property Trust acknowledges
the transfer of certain of the Mortgaged Properties to the
Liquidating Property Trust, subject to certain of the Obligations of
Borrowers under the First Amended Agreement and the Second Amended
Agreement.
<PAGE>
<PAGE> 19
"TRUST LOAN AGREEMENT" means the Second Amended and Restated
Trust Loan Agreement dated as of May 16, 1995 among the Liquidating
Property Trust, Lenders and Servicing Agent, pursuant to which the
Liquidating Property Trust confirms, amends and restates the transfer
of certain of the Mortgaged Properties to the Liquidating Property
Trust, subject to certain of the Obligations of Borrowers under the
Second Amended Agreement, as such Second Amended and Restated Trust
Loan Agreement may be amended, supplemented or modified from time to
time.
1.2 ACCOUNTING TERMS. For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
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.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 LOANS AND NOTES.
A. Outstanding Obligations. Company, Borrowers, Lenders and
Servicing Agent confirm that the Obligations of Borrowers under this
Agreement as of the date hereof are as set forth on Schedule 1 annexed
hereto.
Company, Borrowers, Lenders and Servicing Agent acknowledge and
agree that there are no valid counterclaims, setoffs or rights of
reclamation against said Obligations or any other defenses to repayment by
the Borrowers of said Obligations.
B. Scheduled Payments of the Loans. Commencing on June 1,
1997, Borrowers shall pay on the first day of each month installments of
principal of the Loans in accordance with the Principal Payment Schedule
set forth on Schedule 2 attached hereto.
C. Notice of Closing Date. Each Borrower shall execute and
deliver to Servicing Agent a Notice of Closing Date substantially in the
form of Exhibit I annexed hereto, no later than 12:00 noon (Los Angeles
time) at least two Business Days in advance of the date upon which
Borrowers anticipate the Closing Date to occur, specifying the anticipated
Closing Date.
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<PAGE> 20
D. Allonges. Each Borrower shall execute and deliver to
each Lender on the Closing Date an Allonge to its Notes substantially in
the form of Exhibit II annexed hereto to evidence the modification to such
Lender's Loan to such Borrower contemplated herein.
2.2 INTEREST.
A. Accrual of Interest. The Loans shall accrue interest on
the unpaid principal amount thereof from the date made through maturity
(whether by acceleration or otherwise) at a rate of 10% per annum,
compounded monthly and payable as provided in subsection 2.3A.
B. Post-Maturity Interest. Any principal payments on the
Loans not paid when due and, to the extent permitted by applicable law, any
interest payments on the Loans not paid when due, in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise,
shall thereafter bear interest payable upon demand at a rate that is 12.25%
per annum.
C. Computation of Interest. Interest on the Loans shall be
computed on the basis of a 360-day year and composed of 12 months of
30 days.
2.3 PAYMENTS AND PREPAYMENTS.
A. Interest Payments. Each Borrower shall pay on the first
day of each month, commencing June 1, 1995, accrued and unpaid interest, in
arrears, on the outstanding principal amount of the Loans.
B. Prepayments.
(i) Voluntary Prepayments. In addition to any mandatory
prepayment under subsection 2.3B(ii), any Borrower may, upon not less than
three Business Days' prior written or telephonic notice confirmed in
writing to Servicing Agent (which notice Servicing Agent will promptly
transmit by telegram, telex, or telephone to each Lender), at any time
voluntarily prepay such Borrower's Loans in whole or in part in an
aggregate minimum amount of $100,000. Notice of prepayment having been
given as aforesaid, the principal amount of the Loans specified in such
notice, together with accrued and unpaid interest on such amount, shall
become due and payable on the prepayment date.
(ii) Mandatory Prepayments. Borrowers shall make the
following mandatory prepayments:
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<PAGE> 21
(a) immediately upon receipt by Company or any of its
Subsidiaries of Net Sale Proceeds of any Mortgaged Property of any
Borrower (a "Selling Borrower"), Borrowers shall prepay the Loans
(ratably in proportion to the then outstanding principal amount of
the Loans) in an amount equal to 100% of such Net Sale Proceeds; and
(b) no later than 60 days after receipt by Company or
any of its Subsidiaries of Net Proceeds of Insurance or Condemnation
as a result of damage, destruction, or condemnation of any Mortgaged
Property of any Borrower, (a "Selling Borrower"), Borrowers shall
prepay the Loans (ratably in proportion to the then outstanding
principal amount of the Loans) in an amount equal to that portion of
such Net Proceeds of Insurance or Condemnation not applied or
designated for application to the restoration of such Mortgaged
Property in accordance with the terms of the Mortgage.
In the event that Company or any of its Subsidiaries other than
a Selling Borrower receives any Net Sale Proceeds or Net Proceeds of
Insurance or Condemnation, Company shall, or shall cause such
Subsidiary, to deliver such Net Sale Proceeds or Net Proceeds of
Insurance or Condemnation to the Selling Borrower to enable such
Selling Borrower to make the prepayments required under this
subsection 2.3B(ii).
If, as a result of the prepayment or repayment provisions
contained in this subsection 2.3B, a mandatory prepayment or
repayment is required to be made on the principal of the Loans of a
Borrower in excess of the then outstanding principal amount of the
Loans of such Borrower (the amount of such required prepayment in
excess of such principal amount is herein called the "Excess
Amount"), then such Borrower shall be required to prepay all of its
outstanding Loans and the other Borrowers shall be required to prepay
the principal amount of their outstanding Loans by the Excess Amount
ratably in proportion to the then outstanding principal amount of
such Loans.
(iii) Application of Prepayments. All payments of principal
pursuant to this Agreement shall be allocated among Borrowers ratably
in proportion to the then outstanding principal amount of the Loans
and shall be applied in inverse order of maturity.
C. Manner and Time of Payment. All payments of principal,
interest, and other amounts payable hereunder and under the Notes shall be
in same day funds and delivered to Servicing Agent not later than 10:00
A.M. (Los Angeles time) or
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<PAGE> 22
11:00 A.M. if payment is made by wire transfer in immediately available
funds to an account designated by Servicing Agent on the date due at its
office located at 1150 South Olive Street, Suite 2200, Los Angeles,
California 90015 for the account of Lenders; funds received by Servicing
Agent after that time shall be deemed to have been paid by Borrowers on the
next succeeding Business Day.
D. Apportionment of Payments. Aggregate principal and
interest payments and premiums shall be apportioned among all outstanding
Loans to which such payments relate, proportionately to their respective
Pro Rata Shares. Servicing Agent shall promptly distribute to each Lender
at its primary address set forth below its name on the appropriate
signature page hereof or such other address as any Lender may request its
Pro Rata Share of all such payments received by Servicing Agent.
E. Payments on Non-Business Days. Whenever any payment to
be made hereunder or under the Notes shall be stated to be due on a day
that is not a Business Day, the 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 hereunder or under the Notes, as the
case may be.
F. Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof, that Lender will
make a notation thereon of all Loans and principal payments previously made
thereon, all reductions of principal thereof, and of the date to which
interest thereon has been paid, and will notify the applicable Borrower and
Servicing Agent of the name and address of the transferee of such Note;
provided, that the failure to make a notation of any Loan made under such
Notes shall not limit or otherwise affect the obligation of any Borrower
hereunder or under such Notes with respect to any Loan and payments of
principal, interest, or premium on any such Note.
SECTION 3. CONDITIONS TO CLOSING DATE
3.1 CONDITIONS TO MODIFICATIONS OF LOANS. The obligations of each
Lender to modify its Loans hereunder are subject to the satisfaction of all
of the following conditions:
A. On or before the Closing Date, each Borrower shall deliver
to Lenders:
(1) Certified copies of its Articles of Incorporation,
together with good standing certificates from the Secretary of State
of the State of California and each
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<PAGE> 23
jurisdiction in which Mortgaged Properties owned by such Borrower are
located, each to be dated a recent date prior to the Closing Date;
(2) Copies of its Bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(3) Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this
Agreement and the other Loan Documents to which it is a party, and
approving and authorizing the execution, delivery, and payment of the
Notes, each certified as of the Closing Date by its corporate
secretary or an assistant secretary;
(4) Signature and incumbency certificates of its
officers executing this Agreement, the other Loan Documents to which
it is a party, and the Allonges; and
(5) Original executed copies of the Loan Documents to
which it is a party, executed by such Borrower.
B. On or before the Closing Date, Company shall deliver to
Lenders:
(1) Copies of its Certificate of Incorporation certified by
the Secretary of State of the State of Delaware, together with good
standing certificates from the Secretary of State of the States of Delaware
and California, each to be dated a recent date prior to the Closing Date;
(2) Copies of its Bylaws, certified as of the Closing Date by
its corporate secretary or an assistant secretary;
(3) Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this Agreement and
the other Loan Documents to which it is a party, each certified as of the
Closing Date by its corporate secretary or an assistant secretary;
(4) Signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party;
(5) Original executed copies of the Loan Documents to which
it is a party; and
(6) A letter to Lenders and Servicing Agent from Fidelity, in
form and substance satisfactory to Servicing Agent,
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<PAGE> 24
setting forth a determination of the then outstanding principal amount of
the Fidelity Indebtedness.
C. On or before the Closing Date, each Subsidiary of Company
(other than SBP Leasing Company) shall deliver to Lenders:
(1) Certified copies of its Certificate or Articles of
Incorporation, together with good standing certificates from the
jurisdiction of its incorporation, each to be dated a recent date
prior to the Closing Date;
(2) Copies of its Bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(3) Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of the Loan
Documents to which it is a party, each certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(4) Signature and incumbency certificates of its
officers executing the Loan Documents to which it is a party; and
(5) Original executed copies of the Loan Documents to
which it is a party, executed by such Subsidiary.
D. On or before the Closing Date, Lenders shall receive
(i) executed copies of all of the Loan Documents, (ii) certificates of
insurance for each policy of insurance required pursuant to subsection 5.5
setting forth the coverage, the limits of liability, the name of the
carrier, the policy, and the period of coverage and containing, in the case
of "all-risk" policies, a lender's loss payable endorsement for the benefit
of Servicing Agent for the benefit of Lenders and in the case of
comprehensive general liability policies, naming Servicing Agent as an
additional insured for the benefit of Lenders, (iii) assurances of title
(including preliminary title reports) satisfactory to all Lenders and
evidence that Mortgages have been recorded in all jurisdictions as may be
necessary or, in the opinion of all Lenders desirable to effectively create
valid and perfected first priority Liens and security interests, and
(iv) confirmation from one or more title insurance companies satisfactory
to Requisite Lenders that such title insurance companies are prepared to
issue one or more ALTA Lender's title insurance policies or endorsements to
existing Mortgagee Title Policies with respect to the collateral described
in the Mortgages in an aggregate principal amount acceptable to Requisite
Lenders, subject only to such
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<PAGE> 25
exceptions as are approved by all Lenders in writing, and including such
endorsements as any Lender may reasonably request.
E. On the Closing Date (i) each of the Notes and the Loan
Documents shall be in full force and effect and no term or condition
thereof shall have been amended, modified, or waived except with the prior
written consent of all Lenders and (ii) each party to the Loan Documents
shall have performed and complied in all material respects with all
agreements and conditions contained in the Loan Documents and in any
agreements or documents referred to therein required to be performed or
complied with by such party on or prior to the Closing Date and such party
shall not be in default in any material respect in the performance or
compliance with any of the terms or provisions thereof.
F. Servicing Agent shall have received, in accordance with
the provisions of subsection 2.1C, on or before the Closing Date, an
originally executed Notice of Closing Date, substantially in the form of
Exhibit I annexed hereto, signed by the chief executive officer of each
Borrower.
G. Servicing Agent shall have received, for the benefit of
the Lenders, an opinion of counsel of Buchalter, Nemer, Fields & Younger,
counsel to Company and its Subsidiaries, in form and substance satisfactory
to Lenders, substantially in the form of Exhibit VIII annexed hereto.
H. On the Closing Date (i) the Liquidating Property Trust
shall have been modified, the Liquidating Property Trust Documents shall
have been executed and delivered and the transactions contemplated with
respect thereto shall have been consummated, (ii) the Additional Trust
Transfers shall have occurred, and (iii) the conditions to effectiveness of
the Trust Loan Agreement shall have occurred and such agreements shall have
become effective in accordance with their terms.
I. As of the Closing Date:
1. The representations and warranties of Company and each
Borrower contained herein shall be true, correct, and complete in all
material respects on and as of the Closing Date, to the same extent
as though made on and as of that date;
2. No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Closing Date that would constitute an Event of Default or a
Potential Event of Default;
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<PAGE> 26
3. Company and each Borrower shall have performed in all
material respects all agreements and satisfied all conditions that
this Agreement and the other Loan Documents provide shall be
performed by it on or before the Closing Date; and
4. No order, judgment, or decree of any court, arbitrator,
or governmental authority shall purport to enjoin or restrain any
Lender from modifying that Loan.
J. Lenders shall have received updated projected cash flows
giving effect to the transactions contemplated herein and any other
financial information requested by any Lender.
K. No litigation, inquiry, injunction or restraining order
shall be pending, entered or threatened, nor shall any statute, rule or
regulation have been proposed, which, in the opinion of Lenders, could
enjoin or restrain any Lender from modifying its Loans or have a material
adverse effect on (i) the transactions contemplated hereby or the business,
assets, operations, condition (financial or otherwise) or prospects of Com-
pany or Borrowers individually or Company and Borrowers and their
Subsidiaries taken as a whole or their ability to perform their obligations
under the Loan Documents or (ii) the rights and remedies of the Lenders.
L. All governmental and third party approvals necessary or
advisable in connection with the transactions contemplated hereby and the
continuing operations of Company, Borrowers and their Subsidiaries shall
have been obtained, be in full force and effect and be in form and
substance satisfactory to Lenders and all applicable waiting periods shall
have expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse
conditions on the transactions contemplated hereby described herein.
M. There shall not have occurred any change, or development
or event involving a prospective change, which, in either case, in the
opinion of Lenders could have a material adverse effect on (i) the
business, assets, operations, condition (financial or otherwise) or
prospects of Company or Borrowers individually or Company and Borrowers and
their Subsidiaries taken as a whole or their ability to consummate the
transactions contemplated hereby or perform their obligations under the
Loan Documents or (ii) the rights and remedies of the Lenders; provided,
that the foregoing restriction shall not apply to Transactions contemplated
by the Investment Agreement.
N. On the Closing Date, Lenders shall receive a modification
fee from Company in the amount of $500,000, in
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<PAGE> 27
exchange for the release of any guarantees on the Liquidating Property
Trust Obligations.
O. The conditions to effectiveness of the Investment
Agreement shall have occurred and the Investment Agreement, and the
transactions contemplated thereby, shall have become effective in
accordance with its terms.
P. Borrowers shall have deposited the Transaction Expenses
Reserve into an escrow account under the sole dominion and control of
Servicing Agent.
Q. All Mortgages delivered pursuant to the New Loan
Agreement shall have been released.
R. All accrued and unpaid amounts owing Lenders under the
Loan Documents and the Liquidating Property Trust Documents shall have been
paid.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
modify the Loans, Company and each Borrower jointly and severally represent
and warrant to each Lender that the following statements are true, correct,
and complete:
4.1 ORGANIZATION, POWERS, GOOD STANDING, AND SUBSIDIARIES.
A. Organization and Powers. Company and each of its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted, to enter into this Agreement and the other Loan Documents to
which it is a party, and to carry out the transactions contemplated hereby
and thereby, and, in the case of each Borrower, to issue the Notes. The
Liquidating Property Trust is a trust duly organized and validly existing
under the laws of the State of California and has all requisite power and
authority to enter into the Liquidating Property Trust Documents and to
carry out the transactions contemplated thereby.
B. Good Standing. Company and each of its Subsidiaries is
in good standing wherever necessary to carry on its present business and
operations, except in jurisdictions in which the failure to be in good
standing has and will have no material adverse effect on the conduct of its
business.
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<PAGE> 28
C. Conduct of Business. Company and each of its
Subsidiaries are on the date of this Agreement, and, on the Closing Date
will be, engaged only in the businesses described in Company's Annual
Report on Form 10-K for the Fiscal Year ended January 30, 1995.
D. Subsidiaries. Company has no material Subsidiaries other
than those set forth on Schedule 8. The capital stock of each of Company's
Subsidiaries is duly authorized, validly issued, and fully paid and
nonassessable. Each of Company's Subsidiaries is validly existing and in
good standing under the laws of its respective jurisdiction of
incorporation and has full corporate power and authority to own its assets
and properties and to operate its business as presently owned and
conducted. Company owns directly or indirectly, 100% of the capital stock
and other ownership interests in each of its Subsidiaries. Except as
permitted under subsection 6.3, neither Company nor any of its Subsidiaries
owns or holds, directly or indirectly, any capital stock or equity security
of, or any equity interest in, any corporation or business other than
Subsidiaries of Company.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. Authorization of Borrowing. The execution, delivery, and
performance of this Agreement and the other Loan Documents to which it is a
party by Company and each of its Subsidiaries and the issuance, delivery,
and payment of the Notes by each Borrower have been duly authorized by all
necessary corporate action by Company and each of its Subsidiaries.
B. No Conflict. The execution, delivery, and performance by
Company and each of its Subsidiaries of this Agreement and the other Loan
Documents to which it is a party, and the issuance, delivery, and payment
of the Notes by each Borrower do not and will not (i) violate any provision
of law applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation of Company or any of its Subsidiaries or the
Bylaws of Company or any of its Subsidiaries, or any order, judgment, or
decree of any court or other agency of government binding on Company or any
of its Subsidiaries, or (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, (iii) result
in or require the creation or imposition of any Lien, charge, or
encumbrance of any nature whatsoever upon any of properties or assets of
Company or any of its Subsidiaries except as permitted under subsection
6.2, or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries,
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<PAGE> 29
other than approvals or consents that have been obtained and disclosed in
writing to the Lenders.
C. Governmental Consents. As of the Closing Date, the
execution, delivery, and performance by Company and each of its
Subsidiaries of this Agreement and each other Loan Document to which it is
a party and the issuance, delivery, and payment of the Notes by each
Borrower 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 or other Person.
D. Binding Obligation. This Agreement and the other Loan
Documents to which Company and each of its Subsidiaries are a party, and
the Notes when executed and delivered hereunder, will be the legally valid
and binding obligations of Company and each of its Subsidiaries, as the
case may be, enforceable against them in accordance with their respective
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles re-
lating to or limiting creditors' rights generally and except as to the
availability of equitable relief that is subject to the discretion of a
court and general principles of equity.
4.3 FINANCIAL CONDITION. Borrowers have heretofore delivered to
Lenders a copy of its Annual Report on Form 10-K for the fiscal year ended
January 30, 1995. Such Annual Report on Form 10-K contains financial
statements prepared in accordance with GAAP and contains all adjustments
necessary to present fairly the financial information shown therein.
Neither Company nor any of its Subsidiaries has any material Contingent
Obligation, contingent liability or liability for taxes, long term lease or
unusual forward or long term commitment, which is not reflected in the
foregoing statements or in the notes thereto or disclosed in Schedule 3
annexed hereto or the Investment Agreement, except for the Transactions
contemplated by the Investment Agreement.
4.4 TITLE TO PROPERTIES AND ASSETS; LIENS.
A. Company and its Subsidiaries have good, sufficient and
legal title to all the properties and assets reflected in the most recent
consolidated balance sheet referred to in subsection 4.3 except for assets
acquired or disposed of in the ordinary course of business since the date
of such consolidated balance sheet or the Liquidating Property Trust
Transfers. All such properties and assets are free and clear of Liens,
except as permitted under subsection 6.2.
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<PAGE> 30
B. Schedule 9 hereto correctly sets forth the following
information with respect to each Mortgaged Property: (a) store number (if
applicable) and (b) street address. Each Borrower has good and marketable
fee title to each Mortgaged Property identified in Schedule 9 as being
owned by such Borrower and each Mortgaged Property is free and clear of
Liens, except as permitted under subsection 6.2.
C. Borrowers have previously furnished to Lenders true,
correct, and complete copies of all ground leases, space leases, subleases,
easement agreements, reciprocal easement agreements, two-party supplemental
agreements, option agreements, license agreements, and other agreements,
instruments, and documents (whether or not recorded) that encumber, or
otherwise affect in any material respect, its fee interest in or to any
Mortgaged Property or any portion thereof.
D. No condemnation proceeding involving any Mortgaged
Property or portion of any thereof or parking facility used in connection
therewith has commenced or, to the knowledge of any Borrower or Company, is
contemplated by any governmental authority, except as shall be described to
Lenders in a writing delivered by Company to Lenders at least one Business
Day prior to the execution of this Agreement identified as being delivered
pursuant to this subsection 4.4.
E. The operation of each Mortgaged Property does not involve
a violation of (i) any statutes, laws, regulations, rules, ordinances, or
orders of any kind whatsoever (including, without limitation, zoning and
building laws, ordinances, codes, or approvals and environmental protection
orders, laws, or regulations) other than violations that would not result
in any material change in the business, operations, properties, assets, or
condition (financial or otherwise) of any Borrower or Company and its
Subsidiaries, taken as a whole, and would not materially adversely affect
such Mortgaged Property or the ability of Company or any of its
Subsidiaries to perform their respective Obligations, or (ii) any building
permits, restrictions of record, or any agreement affecting any such
Mortgaged Property or portion thereof other than violations that would not
result in any material change in the business, operations, properties,
assets, or condition (financial or otherwise) of any Borrower or Company
and its Subsidiaries, taken as a whole, and would not materially adversely
affect such Mortgaged Property or the ability of Company or any of its
Subsidiaries to perform their respective Obligations.
F. Each Mortgaged Property has adequate water, gas,
telephone, electrical supply, storm, and sanitary sewerage facilities, and
means of access to and from public highways, and has
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<PAGE> 31
fire and police protection to the fullest extent available in the
jurisdiction in which such Mortgaged Property is located.
G. Servicing Agent has been granted, for the benefit of
Lenders, a first and prior lien on each Mortgaged Property subject only to
the exceptions contained in the Mortgagee Title Policies.
H. Except as disclosed in writing to Lenders, (i) the
operations of Company and each of its Subsidiaries comply with all
applicable environmental, health, and safety statutes and regulations
except to the extent that noncompliance would not result in any material
change in the business, operations, properties, assets, or condition
(financial or otherwise) of any Borrower or Company and its Subsidiaries,
taken as a whole, and would not materially adversely affect any Mortgaged
Property or the ability of Company or any of its Subsidiaries to perform
their respective Obligations; (ii) none of the Mortgaged Properties or the
operations of Company or any of its Subsidiaries is the subject of any
private claims or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous waste
(as such term is defined in any applicable state or federal environmental
law or regulations) or other hazardous material into the environment except
to the extent that such claims or remedial action would not result in any
material change in the business, operations, properties, assets, or condi-
tion (financial or otherwise) of any Borrower or Company and its
Subsidiaries, taken as a whole, and would not materially adversely affect
any Mortgaged Property or the ability of Company or any of its Subsidiaries
to perform their respective Obligations; and (iii) neither Company nor any
of its Subsidiaries has any material contingent liability in connection
with any release of any hazardous waste or hazardous material into the
environment including, without limitation, any contingent liability arising
in connection with a failure, or alleged failure, to comply with the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. sec. 9601 et seq.), or the Federal Resource,
Conservation, and Recovery Act of 1976, as amended (42 U.S.C. sec.sec. 6901
et seq.), except for such contingent liabilities that would not result in a
material change in the business, operations, properties, assets, or
condition (financial or otherwise) of any Borrower or Company and its
Subsidiaries, taken as a whole, and that would not materially adversely
affect any Mortgaged Property or the ability of Company or any of its
Subsidiaries to perform their respective Obligations.
<PAGE>
<PAGE> 32
4.5 LITIGATION; ADVERSE FACTS. There is no action, suit,
proceeding, or arbitration (whether or not purportedly on behalf of Company
or any of its Subsidiaries or the Liquidating Property Trust 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 (except as otherwise disclosed in Schedule 4 hereto)
or, to the knowledge of Company or any Borrower, threatened against or
affecting Company or any of its Subsidiaries or the Liquidating Property
Trust or any of Company's or such Subsidiary's or the Liquidating Property
Trust's properties not provided for in the Plan that would result in any
material adverse change in the business, operations, properties, assets, or
condition (financial or otherwise) of Company and its Subsidiaries, taken
as a whole, or would materially adversely affect any Mortgaged Property or
the ability of Company or any of its Subsidiaries to perform their
respective Obligations, and there is no basis known to Company or any
Borrower for any such action, suit, or proceeding. Neither Company nor any
of its Subsidiaries nor the Liquidating Property Trust is (i) in violation
of any applicable law that materially adversely affects or may materially
adversely affect any Mortgaged Property, the business, operations, pro-
perties, assets, or condition (financial or otherwise) of Company and its
Subsidiaries, taken as a whole, or the ability of Company or any of its
Subsidiaries to perform their respective Obligations, or (ii) subject to or
in default with respect to any final judgment, writ, injunction, decree,
rule, or regulation of any court or federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, that would have a materially adverse
effect on any Mortgaged Property, the business, operations, properties,
assets, or condition (financial or otherwise) of Company and its Subsidi-
aries, taken as a whole, or the ability of Company or any of its
Subsidiaries to perform their respective Obligations. There is no action,
suit, proceeding, or investigation pending or, to the knowledge of Company
or any Borrower, threatened against or affecting Company or any of its
Subsidiaries or the Liquidating Property Trust that questions the validity
or the enforceability of this Agreement, the other Loan Documents, or the
Notes.
4.6 PAYMENT OF TAXES. 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, and franchises that are due and payable have been paid when
due and payable or provided for otherwise in the Plan, except to the extent
permitted by subsection 5.3, and except to the extent that failure to pay
any tax, assessment, fee, or other governmental charge would not result in
the imposition of a Lien on any Mortgaged
<PAGE>
<PAGE> 33
Property or would not have a material adverse effect on any Mortgaged
Property, or the business, operations, properties, assets, or condition
(financial or otherwise) of Company and its Subsidiaries, taken as a whole,
or the ability of Company or any of its Subsidiaries to perform their
respective Obligations. Neither Company nor any Borrower knows of any
proposed tax assessment against Company or any of its Subsidiaries not pro-
vided for in the Plan that would be material to the condition (financial or
otherwise) of Company and its Subsidiaries, taken as a whole.
4.7 MATERIALLY ADVERSE AGREEMENTS.
A. Neither Company nor any of its Subsidiaries is a party to
or is subject to any material agreement or instrument or charter or other
internal restriction materially adversely affecting any Mortgaged Property
or the business, properties, assets, operations, or condition (financial or
otherwise) of Company and its Subsidiaries, taken as a whole, except for
the Investment Agreement.
B. 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 Contractual Obligation of Company
or any of its Subsidiaries, and no condition exists which, 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 on any Mortgaged
Property or the business, properties, assets, operations or condition
(financial or otherwise) of Company and its Subsidiaries, taken as a whole.
4.8 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 to any federal or state statute or
regulation, limiting its ability to incur Indebtedness for money borrowed
or to create Liens on any of its properties or assets to secure such
Indebtedness, other than SBP Transportation Co., Inc., a California
corporation, which is subject to the Interstate Commerce Act.
4.9 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.
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<PAGE> 34
4.10 EMPLOYEE BENEFIT PLANS.
A. Company and each of its ERISA Affiliates is in compliance
in all material respects with any applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all
Pension Plans and Multiemployer Plans, except to the extent that
noncompliance would not result in the loss of the deductibility of
contributions to any Pension Plan or Multiemployer Plan, and would not
result in the incurrence by Company and its ERISA Affiliates of any civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code in an amount in excess of
$500,000.
B. Except for termination of the Company's LESOP and PAYSOP,
as defined and described in the Plan, and the contemplated "freezing" of
the Company's three Pension Plans by ceasing the accrual of benefits under
such Pension Plans, no Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan; and none of the
terminations described above might result in the incurrence by Company or
any of its ERISA Affiliates of any liability to the Pension Benefit
Guaranty Corporation (or any successor thereto) or any other party under
Sections 4062, 4063, and 4064 of ERISA or any other law in excess of
$500,000.
C. Vested liabilities under all Pension Plans (with assets
less than vested liabilities) do not exceed the assets thereunder by more
than $500,000.
D. Neither Company nor any of its ERISA Affiliates has
incurred or reasonably expects to incur any withdrawal liability under
ERISA to any Multiemployer Plan in excess of $500,000.
4.11 DISCLOSURE. No representation or warranty of Company or any
Borrower contained in this Agreement, any other Loan Document, or any other
document, certificate, or written statement furnished to Lenders by or on
behalf of Company or any Borrower for use in connection with the
transactions contemplated by this Agreement or any other Loan Document
contains any untrue statement of a material fact or omits to state a
material fact (known to Company or any Borrower in the case of any document
not furnished by it) necessary in order to make the statements contained
herein or therein not misleading. There is no fact known to Company or any
Borrower (other than matters of a general economic nature) that materially
adversely affects any Mortgaged Property, the business, operations,
property, assets, or condition (financial or otherwise) of Company and its
Subsidiaries, taken as a whole, or the ability of Company or any Borrower
to
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<PAGE> 35
perform their respective Obligations that has not been disclosed herein or
in such other documents, certificates, and statements furnished to Lenders
for use in connection with the transactions contemplated hereby.
4.12 SOLVENCY. Company and Borrowers and each of their Subsidiaries
will be Solvent, upon the modification of the Loans pursuant to this
Agreement and upon establishment of the Liquidating Property Trust and
consummation of the Liquidating Property Trust Transfers.
SECTION 5. AFFIRMATIVE COVENANTS
Each Borrower and Company jointly and severally covenant and
agree that, so long as any of the Commitments hereunder shall be in effect
and until payment in full of all of the Loans and the Notes, unless
Requisite Lenders shall otherwise give prior written consent, each Borrower
and Company shall perform or cause to be performed all covenants in this
Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements
in conformity with GAAP. Company and each Borrower, as applicable, will
deliver to Lenders:
(i) as soon as practicable and in any event within 45 days
after the end of each Fiscal Quarter (a) consolidated and consolidating
balance sheets of Company and its Subsidiaries as at the end of such period
and the related consolidated statements of income, stockholders' equity,
and cash flow of Company and its Subsidiaries for such Fiscal Quarter, and
consolidating statements of income of Company and its Subsidiaries for such
Fiscal Quarter setting forth in each case (other than in the case of
consolidating balance sheets and income statements of Subsidiaries of
Company other than Borrowers) in comparative form the consolidated figures
for the corresponding periods of the previous Fiscal Year, all in
reasonable detail and certified by the chief financial officer or chief
accounting officer of Company that they fairly present the financial
information shown therein for Company and its Subsidiaries as at and for
the periods ended on the dates indicated, subject to changes resulting from
audit and normal year-end adjustment; (b) a summary of sales by each retail
facility of Borrowers for such Fiscal Quarter; (c) a summary of
transactions between Company and its Subsidiaries (other than the Grantor
Trust and its
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<PAGE> 36
Subsidiaries), on the one hand, and the Grantor Trust and its Subsidiaries,
on the other hand; and (d) a written report describing the status of
construction in progress, if any, on any Mortgaged Property during such
Fiscal Quarter.
(ii) as soon as practicable and in any event within 90 days
after the end of each Fiscal Year consolidated and consolidating balance
sheets of Company and its Subsidiaries as at the end of such Fiscal Year
and the related consolidated (and, as to statements of income only,
consolidating) statements of income, stockholders' equity, and cash flow of
Company and its Subsidiaries for such Fiscal Year, setting forth in each
case, in comparative form the consolidated figures for the previous Fiscal
Year, all in reasonable detail and (a) in the case of such consolidated
financial statements, accompanied by a report thereon of an independent
certified public accountant of recognized national standing selected by
Company and satisfactory to Requisite Lenders, which report shall be
unqualified and shall state that such consolidated financial statements
present fairly the financial position of Company and its Subsidiaries as at
the dates indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise stated therein) 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 (b) in the case of such consolidating financial
statements, certified by the chief financial officer of Company;
(iii) together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivisions (i) and (ii) above,
(a) an Officers' Certificate stating that the signers have reviewed the
terms of this Agreement, the other Loan Documents, and the Notes 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 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 or
anticipate the existence as at the date of the Officers' 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;
(b) a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of such accounting periods with the restrictions
contained in subsections 6.6, 6.7, 6.9 and 6.13 and, if not specified in
the financial statements delivered pursuant to
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<PAGE> 37
subdivisions (i) or (ii) above, as the case may be, specifying the
aggregate amount of interest paid or accrued by Company and its
Subsidiaries, and the aggregate amount of depreciation, depletion, and
amortization charged on the books of Company and its Subsidiaries, during
such accounting period;
(iv) promptly upon receipt thereof, copies of all detailed
audit reports or recommendations submitted to the audit committee of the
board of directors of Company by independent public accountants in
connection with each annual, interim, or special audit of the financial
statements of Company made by such accountants, including, without
limitation, the comment letter submitted by such accountants to management
in connection with their annual audit;
(v) promptly upon their becoming available, copies of all
financial statements, reports, notices, and proxy statements sent or made
available generally by Company to its security holders other than reports
made available by Company solely to any leveraged employee stock ownership
plan, or by any Subsidiary of Company to its security holders other than
Company or another Subsidiary, of all regular and periodic reports
(including, without limitation, reports filed by Company with the
Securities and Exchange Commission on Form 8-K) and all registration
statements and prospectuses filed by Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any governmental authority succeeding to any of its functions, and of
all press releases and other statements made available generally by Company
or any Subsidiary to the public concerning material developments in the
business of Company and its Subsidiaries;
(vi) promptly upon any corporate officer of Company or any
Borrower obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, or becoming aware that
any Lender has given any notice or taken any other action with respect to a
claimed Event of Default or Potential Event of Default under this
Agreement, (b) that any Person has given any notice to Company or any
Subsidiary of Company 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 filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4 and 5 of such Form as in effect on the date
hereof) if Company were required to file such reports under the Exchange
Act, and (d) of a material adverse change in the business, operations,
properties, assets, or condition (financial or otherwise) of Company and
its Subsidiaries, taken as a whole, an Officers' Certificate specifying the
nature and period of
<PAGE>
<PAGE> 38
existence of any such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or condition,
and what action Company or such Borrower has taken, is taking, and proposes
to take with respect thereto; provided, however, that in lieu of delivering
an Officers' Certificate concerning conditions or events described in
subparagraph (c) above, Company may deliver to Lenders a copy of the report
on Form 8-K filed by Company with the Securities and Exchange Commission;
(vii) promptly upon any corporate officer of Company or any
Borrower obtaining knowledge of (a) the institution of, or threat of, any
action, suit, proceeding, governmental investigation, or arbitration
against or affecting Company or any of its Subsidiaries or the Grantor
Trust, any Mortgaged Property, or any other property of Company or any of
its Subsidiaries or the Grantor Trust not previously disclosed by Company
or any Borrower to Lenders, that if adversely determined, might materially
and adversely affect any Mortgaged Property or the business, operations,
properties, assets, or condition (financial or otherwise) of Company and
its Subsidiaries, taken as a whole; (b) any material development in any
such action, suit, proceeding, governmental investigation, or arbitration;
or (c) all offers for all or any substantial portion of any of the assets
of the Grantor Trust or any of its Subsidiaries; Company or such Borrower
shall promptly give notice thereof to Lenders and provide such other
information as may be reasonably available to it to enable Lenders and
their counsel to evaluate such matters.
(viii) promptly upon becoming aware of the occurrence of any
(a) Termination Event, or (b) "prohibited transaction," as such term is
defined in Section 4975 of the Internal Revenue Code (other than an
"exempt" prohibited transaction), in connection with any Pension Plan or
any trust created thereunder, a written notice specifying the nature
thereof, what action Company has taken, is taking, or proposes to take with
respect thereto, and, when known, any action taken or threatened by the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect thereto;
(ix) with reasonable promptness copies of (a) all notices
received by Company or any of its ERISA Affiliates of the Pension Benefit
Guaranty Corporation's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan; (b) 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; and (c) all notices received by
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<PAGE> 39
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA;
(x) as soon as practicable, and in any event within 30 days
after the commencement of each Fiscal Year, a budget and projection by
month for that Fiscal Year, including projected balance sheets and
statements of income and cash flow of Company and its Subsidiaries, all in
reasonable detail; and
(xi) with reasonable promptness, such other information and
data with respect to Company or any of its Subsidiaries or the Grantor
Trust as from time to time may be reasonably requested by any Lender.
5.2 CORPORATE EXISTENCE, ETC. Except as provided in subsections
6.7(i) and 6.7(ii), each of Company and each Borrower will at all times
preserve and keep in full force and effect its corporate existence and
rights and franchises material to its business and those of each of its
Subsidiaries; provided, however, that the corporate existence of any
Subsidiary (other than a Borrower) may be terminated if such termination is
in the best interest of Company and is not materially disadvantageous to
the holder of any Note.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Each of Company and each Borrower 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 franchises, business, income, or property before
any penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable in accordance with the Plan or applicable
law 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, however, that subject to the terms of the
Mortgages, no such charge or claim need be paid if it is being contested in
good faith by appropriate proceedings timely instituted and 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.
B. Notwithstanding any provision of this Agreement to the
contrary, each Borrower will comply with the provisions of Section 2.07 of
the Mortgages relating to the payment of impositions relating to the
Collateral, which provisions are incorpor
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<PAGE> 40
ated into this Agreement by this reference with the same effect as though
set forth in their entirety herein.
C. Except for consolidated income tax returns required to be
filed with purchasers of property in accordance with applicable laws upon
the sale of such property as contemplated by subsections 6.7(i) and
6.7(ii), each of Company and each Borrower 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 a Subsidiary of
Company).
5.4 MAINTENANCE OF PROPERTIES.
A. Each of Company and each Borrower will maintain or cause
to be maintained in good repair, working order, and condition all material
properties used or useful in the business of Company or such Borrower, as
the case may be, and its Subsidiaries, and from time to time will make or
cause to be made all appropriate repairs, renewals, and replacements
thereof; provided, that Company and its Subsidiaries may dispose of their
respective properties to the extent permitted under subsection 6.7.
B. Each of Company and each Borrower (i) will keep the
Mortgaged Properties in good condition and repair; (ii) will not remove,
demolish, or structurally alter any of the Improvements, except upon the
prior written consent of all Lenders; provided, however, that Company or
any Borrower may alter the Improvements without the prior written consent
of all Lenders if (x) such alteration constitutes a Capital Improvement and
Company and Borrowers comply with the provisions of subsection 5.15,
(y) such alteration does not have a material adverse effect on the value,
nature, or use of the Improvements and (z) Company or such Borrower gives
prior written notice to Servicing Agent for distribution to Lenders before
commencing any such alteration that has a projected cost of $75,000 or
more; (iii) will complete promptly and in a good and workmanlike manner any
Improvements that may be now or hereafter constructed on the Mortgaged
Property and promptly restore in like manner any portion of the
Improvements that may be damaged or destroyed thereon from any cause
whatsoever, and pay when due all claims for labor performed and materials
furnished therefor; (iv) will comply with all laws, statutes, ordinances,
regulations, covenants, conditions, and restrictions now or hereafter
affecting the Collateral or any part thereof or requiring any alterations
or improvements; (v) will not commit, or permit, any waste or deterioration
of the Mortgaged Property; and (vi) will not commit, suffer, or permit any
act to be done in or upon the Mortgaged Property in violation of any law,
ordinance, or regulation.
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<PAGE> 41
5.5 INSURANCE; CONDEMNATION.
A. Each of Company and each Borrower will maintain or cause
to be maintained, with financially sound and reputable insurers, insurance
with respect to its properties and business and the properties and business
of its Subsidiaries and the Grantor Trust against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such
types and in such amounts as are customarily carried under similar
circumstances by such other corporations. Such insurance shall include,
but not be limited to the following with respect to each Mortgaged
Property:
(i) Insurance against loss or damage to the
Improvements by fire or any of the risks covered by insurance of the
type known as "all-risk" insurance, in an amount sufficient to
prevent the application of any co-insurance contributions on loss,
and not less than one-hundred percent (100%) of the full replacement
value of the Improvements and all personal property owned by
Borrowers with no more than a $50,000 deductible for the loss payable
with respect to any casualty. The policies of insurance required
under this paragraph shall contain a "replacement cost" endorsement
and a lender's loss payable endorsement for the benefit of Servicing
Agent;
(ii) Boiler and machinery insurance, if applicable, in
amounts reasonably satisfactory to all Lenders;
(iii) Insurance covering comprehensive general liability
claims brought against Company or any of its Subsidiaries for damages
allegedly arising out of the activities or property holdings of
Company or any of its Subsidiaries in a combined single limit of not
less than Twenty Million Dollars ($20,000,000) for injuries to one or
more persons in one accident with not more than a Two Hundred Fifty
Thousand Dollar ($250,000) deductible. The policies of insurance
required under this paragraph shall include Servicing Agent as an
additional insured;
(iv) Business interruption, extra expense, or rental
value insurance for a period of twelve months in an amount of not
less than twelve months gross earnings or the gross annual rental
income derived from the Mortgaged Property for the immediately
preceding year; and
(v) Such other insurance (other than earthquake
insurance but including flood insurance if the Mortgaged
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<PAGE> 42
Property is located in a designated flood hazard area and Lenders
nonetheless accept such Mortgaged Property as security for the Loans)
as may be required by Lenders.
If Requisite Lenders consent, Company and its Subsidiaries may
provide any of the required insurance through blanket policies carried by
Company and covering more than one location, or by policies procured by a
tenant or other party holding under Company or any of its Subsidiaries;
provided, however, all such policies shall be in form and substance
satisfactory to Requisite Lenders and issued by companies satisfactory to
Requisite Lenders. At least thirty (30) days prior to the expiration of
each required policy, Company shall deliver to Servicing Agent for the
benefit of Lenders evidence reasonably satisfactory to Requisite Lenders of
the payment of premiums and the renewal or replacement of such policy
continuing the insurance required by this subsection 5.5A. All policies of
insurance shall contain a provision that, notwithstanding any contrary
agreement between Company and the insurance company, such policies will not
be cancelled or allowed to lapse without renewal, surrendered, or
materially amended (which term shall include any reduction in the scope or
limits of coverage), without at least thirty (30) days' prior written
notice to Servicing Agent.
B. Notwithstanding any provisions of this Agreement to the
contrary, each Borrower will comply with the provisions of Sections 2.03,
2.04, 2.05, and 2.08 of the Mortgages relating to insurance and eminent
domain, which provisions are incorporated into this Agreement by this
reference with the same effect as though set forth in their entirety
herein. Company and Borrowers will apply all Net Proceeds of Insurance or
Condemnation that are not applied to the restoration of Mortgaged Property
in accordance with the provisions of Section 2.05 or 2.08 of the Mortgages
to the prepayment of Loans in accordance with the provisions of subsection
2.3B(ii).
5.6 UTILITIES. Each of Company and each Borrower will pay when due
all utility charges that are incurred for the benefit of the Mortgaged
Property or that may become a charge or Lien against the Mortgaged Property
for gas, electricity, water, or sewer services furnished to the Mortgaged
Property and all other assessments, or charges of a similar nature, whether
public or private, affecting or related to the Mortgaged Property or any
portion thereof, whether or not such taxes, assessments, or charges are or
may become Liens thereon.
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<PAGE> 43
5.7 FIRST PRIORITY LIEN. On the Closing Date, Borrowers will
deliver or cause to be delivered, at Borrowers' expense, to Servicing Agent
for the benefit of Lenders, endorsements to the Mortgagee Title Policies
for the Mortgaged Properties, in form and substance reasonably satisfactory
to Requisite Lenders, ensuring the first priority Lien of each Mortgage,
subject only to such exceptions as are approved in writing by all Lenders.
Each Borrower will maintain the Liens created by the Mortgages as first
Liens upon the Mortgaged Properties, subject to no Liens other than title
exceptions set forth in the Mortgagee Title Policies.
5.8 INSPECTION.
A. Company will permit any authorized representatives
designated by any Lender at the expense of that Lender to visit and inspect
any of the properties 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,
all upon reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested.
B. Without limiting the generality of the foregoing, each of
Company and each Borrower will permit any authorized representatives of any
Lender (including, without limitation, employees of any architectural or
engineering firm retained by any Lender) to visit and inspect any Mortgaged
Property for the purpose of inspecting such Mortgaged Property and for the
purpose of performing any acts that Servicing Agent or Lenders are author-
ized to perform under this Agreement or any other Loan Document. Any
investigation or inspection conducted by any authorized representative of
any Lender in order to independently verify the satisfaction of any
conditions under this Agreement or any other Loan Document or the validity
of any warranty, representation, certification, or statement made by
Company and Borrowers hereunder or under any of the other Loan Documents
(regardless of whether or not the party making such investigation or
inspection should have discovered that any of such conditions were not
satisfied or that any of such warranties, representations, certifications,
or statements were not true) shall not affect or impair the validity of (or
constitute a waiver by any Lender of) any of the warranties,
representations, certifications, or statements of Company or any Borrower
hereunder, under any term to be delivered pursuant to this Agreement or any
other Loan Document, or Lenders' reliance thereon. None of Company, any
Borrower, or any other party shall be entitled to rely on any such
inspection or investigation made by any Lender or its authorized
representative.
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<PAGE> 44
5.9 COMPLIANCE WITH LOAN DOCUMENTS. Each of Company and each
Borrower will comply with all of the covenants contained in each of the
other Loan Documents to which it is a party, all of which covenants are
incorporated in this Agreement by this reference with the same effect as
though set forth in their entirety herein.
5.10 COMPLIANCE WITH LAWS, ETC. Company and its Subsidiaries will
exercise all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations, and orders of any governmental
authority affecting the Mortgaged Property and all other laws, rules,
regulations, and orders of any governmental authority, noncompliance with
which would materially adversely affect the Mortgaged Property or the busi-
ness, properties, assets, operations, or condition (financial or otherwise)
of Company and its Subsidiaries, taken as a whole.
5.11 EQUAL SECURITY FOR LOANS AND NOTES. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens excepted
by the provisions of subsection 6.2 (unless prior written consent to the
creation or assumption thereof shall have been obtained from Requisite
Lenders), it shall, at the request of Requisite Lenders, make or cause to
be made effective provision whereby the Loans and the Notes will be secured
by such Lien equally and ratably with any and all other Indebtedness
thereby secured as long as any such other Indebtedness shall be so secured;
provided that this covenant shall not be construed as consent by Requisite
Lenders to any violation by Company or any of its Subsidiaries of the
provisions of subsection 6.2.
5.12 BOARD OF DIRECTORS. Subject to the provisions of the
Stockholders Agreement and the Bylaws of the Company, in the event that
Requisite Lenders nominate a Person having legal capacity to serve on
Company's Board of Directors, Company shall use its best efforts to cause
such Person to serve on its Board of Directors. Without limiting the
generality of the foregoing, Company shall recommend and endorse any
nominee of Requisite Lenders having legal capacity to serve on its Board of
Directors.
5.13 FURTHER ASSURANCES. At any time or from time to time upon the
request of any Lender, each of Company and each Borrower will, at its
expense, promptly execute, acknowledge, and deliver such further documents
and do such other acts and things as such Lender may reasonably request in
order to effect fully the purposes of this Agreement, the other Loan
Documents, or of the Notes and to provide for payment of the Loans made
hereunder and interest thereon in accordance with the terms of this
Agreement and the Notes.
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<PAGE> 45
5.14 CAPITAL IMPROVEMENTS. With respect to any Capital
Improvements, Company and Borrowers shall submit a description of any such
improvements that Company or Borrowers intend to make to the Lenders for
their examination whether the particular Capital Improvement meets the
definition of that term set forth in this Agreement. Such description
shall be sent to the attention of Lyman K. Lokken and Stanley C. Elman at
the following address:
Mr. Lyman K. Lokken
Mr. Stanley C. Elman
Transamerica Realty Services, Inc.
1150 South Olive Ave., Suite 2200
Los Angeles, CA 90015
If Lenders do not object to the proposed Capital Improvement within five
(5) business days following receipt of such description, which dispatch
shall be by messenger, telecopy, or other expedited means, Company and
Borrowers may proceed with the described Capital Improvement. If Lenders
object within the prescribed time period on the ground that proposed
improvement does not fall within the definition of Capital Improvement, and
if the dispute cannot be resolved promptly, any party to this Agreement may
submit the dispute to an independent arbitrator, in accordance with the
rules of the American Arbitration Association, with costs of such
arbitration to be assessed upon the losing party.
5.15 SUBORDINATION OF INTERCOMPANY DEBT. Company and Borrowers
hereby agree that the obligation of Company or any Borrower to repay
Indebtedness to its Subsidiaries (including Borrowers and Subsidiary
Guarantors), and the obligations of Borrowers to repay Indebtedness to
Company, is hereby subordinated in right of payment to the payment in full
of the Obligations, and no payments shall be made to repay such
Indebtedness upon the occurrence of any Event of Default or Potential Event
of Default.
5.16 ESTABLISHMENT OF THE LIQUIDATING PROPERTY TRUST. The
Liquidating Property Trust was established on August 1, 1994. On the date
hereof, Company and Borrowers have consummated the transactions relating to
the amendment of the Liquidating Property Trust and contemplated by the
amendment of the Trust Loan Agreement on terms and conditions satisfactory
to Lenders.
5.17 TRANSACTION EXPENSES RESERVE. Company and Borrowers
acknowledge and agree that the Transaction Expense Reserve and interest
thereon may only be applied to pay any Transaction Expenses.
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<PAGE> 46
Section 6. NEGATIVE COVENANTS
Company and each Borrower jointly and severally agree that, so
long as any of the Commitments shall be in effect and until payment in full
of all of the Loans and the Notes, unless Lenders shall otherwise give
prior written consent, each of Company and each Borrower will perform all
covenants in this Section 6.
6.1 INDEBTEDNESS.
After the Closing Date, Company and Borrowers will not, and
will not permit any of their respective Subsidiaries to, directly or
indirectly, create, incur, assume, guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(i) Company and Borrowers may become and remain liable
with respect to Indebtedness in an aggregate principal amount not to
exceed $20,000,000 to Foothill and $5,000,000 to Fidelity and any
lender replacing Foothill or Fidelity for working capital purposes.
(ii) Borrowers may become and remain liable with respect
to the Indebtedness evidenced by the Notes;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases to
the extent such Capital Leases are permitted under subsection 6.9 so
long as such Indebtedness is not secured by any real property
included in the Mortgaged Property;
(iv) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection
6.4 so long as such Indebtedness (other than Indebtedness described
in Section 6.4(v)) is not secured by any real property included in
the Mortgaged Property; and
(v) Company and Borrowers may become and remain liable
with respect to Indebtedness to any of their respective Subsidiaries
(including Borrowers and Subsidiary Guarantors) and Subsidiaries of
Company and any Borrower may become and remain liable with respect to
Indebtedness to Company or any Borrower.
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<PAGE> 47
6.2 LIENS.
Company and Borrowers will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, create, incur,
assume, or permit to exist any Lien on or with respect to any property or
asset (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, except:
(i) Subject to the provisions of subsection 5.7, Liens
in existence as of the Closing Date as set forth on Schedule 5
annexed hereto;
(ii) Liens for taxes, assessments, or governmental
charges or claims the payment of which is not at the time required by
subsection 5.3;
(iii) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, 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 and in the case of Mortgaged Property,
Company, or the applicable Borrower shall have complied with the
requirements of Section 2.07 of the Mortgage;
(iv) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance, and
other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance, and return-of-money bonds
and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(v) Any attachment or judgment Lien, unless the
judgment it secures shall not, within 30 days after the entry
thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 30 days after the
expiration of any such stay;
(vi) Leases or subleases granted to others permitted by
subsection 6.7;
(vii) Any interest or title of a lessor under any lease
permitted by subsection 6.9;
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<PAGE> 48
(viii) Liens created by the Collateral Documents;
(ix) Liens arising from the giving, simultaneously with
or within ninety (90) days after the acquisition of tangible personal
property of any purchase money Lien (including vendors' rights under
purchase contracts under an agreement whereby title is retained for
the purpose of securing the purchase price thereof) on tangible
personal property hereafter acquired and not heretofore owned by
Company or any of its Subsidiaries, or from the acquiring hereafter
of tangible personal property not heretofore owned by Company or any
of its Subsidiaries subject to any then existing Lien (whether or not
assumed), or from the extension, renewal, or replacement of any
Indebtedness secured by any of the foregoing Liens so long as the
aggregate principal amount thereof and the security therefor is not
thereby increased; provided, however, that in each case (i) such Lien
is limited to such acquired tangible personal property, and (ii) the
principal amount of the Indebtedness secured by such Lien, together
(without duplication) with the principal amount of all other
Indebtedness secured by Liens on such property, shall not exceed the
cost (which shall be deemed to include, without duplication, the
amount of Indebtedness secured by Liens, including existing Liens, on
such property) of such property to Company or any of its Subsidi-
aries;
(x) Second priority Liens on accounts receivables,
inventory, general intangibles, books and records and first priority
liens on the "Zynolyte Products Note," a promissory note dated
August 2, 1993, in the original principal amount of $1,831,549 issued
by Zynolyte Products Company to Company;
(xi) Second priority Liens on the "Major Paint Facility"
securing working capital Indebtedness; and
(xii) Liens granted pursuant to the Liquidating Property
Trust Documents.
6.3 INVESTMENTS.
Company and Borrowers will not, and will not permit any of
their respective 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 (w) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith
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<PAGE> 49
and credit of the United States, in each case maturing within one
year from the date of acquisition thereof, (x) marketable direct
obligations issued by any state of the United States of America or
any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc., (y) commercial paper maturing no
more than one year from the date of creation thereof and, at the time
of acquisition, having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., and
(z) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by commercial
banks organized under the laws of the United States of America or any
state thereof or the District of Columbia, each having combined
capital and surplus of not less than $200,000,000, or any foreign
bank whose long-term Indebtedness at the time of the Investment has
one of the two highest ratings obtainable from either Standard &
Poor's Corporation or Moody's Investors Service Inc., provided, how-
ever, that no more than $25,000,000 may be invested in any single
bank at any time;
(ii) Company and its Subsidiaries may own Investments in
existence as of the Closing Date and listed on Schedule 6 hereto, and
Company and its Subsidiaries may maintain their ownership interests
in any Subsidiary in which they hold a majority interest as of the
Closing Date;
(iii) Company and its Subsidiaries may acquire or own
stock, obligations, or Securities received in settlement of debts
(created in the ordinary course of business) owing to Company or such
Subsidiaries; and
(iv) Company and Borrowers may make and own Investments
consisting of advances, loans, extensions of credit to or purchases
of securities of, or other Investments in, their respective wholly-
owned Subsidiaries, and Subsidiaries of Company or any Borrower
(including Borrowers and Subsidiary Guarantors) may make and own
Investments consisting of advances, loans, extensions of credit or
purchases of securities of, or other investments in, Company and
Borrowers; provided, however, that (a) the obligation of Company,
Borrowers and Subsidiary Guarantors to repay such Investments shall
be evidenced in a writing available to Lenders upon request, which
writing shall provide that the obligations of Company, any Borrower,
or any Subsidiary Guarantor, as the case may be, thereunder shall not
be
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<PAGE> 50
secured and shall not be payable upon the occurrence of an Event of
Default or Potential Event of Default until repayment of all
Obligations; (b) the obligation of any Subsidiary (other than
Borrowers) to Company or any Borrower to repay such Investments shall
be evidenced by a writing available to Lenders upon request in a
reasonable time and manner and such Subsidiary shall, pursuant to the
terms of such writing or a separate writing, waive any and all right
to offset amounts owed by Company or such Borrower to such Subsidiary
against amounts owed by such Subsidiary under such promissory note.
6.4 CONTINGENT OBLIGATIONS.
Company and Borrowers will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation, except:
(i) obligations arising under the Company Guaranty, the
Borrower Guaranty, the Subsidiary Guaranty, the Subsidiary
Interguarantor Agreement, and any other guaranty and related
agreements entered into pursuant to the Fidelity Note Purchase
Agreement;
(ii) guaranties resulting from endorsement of negotiable
instruments for collection in the ordinary course of business; and
(iii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in an aggregate amount
not to exceed $7,000,000 at any time outstanding in respect of
documentary letters of credit issued by any bank or financial
institution for the account of Company or any of its Subsidiaries for
the purpose of financing the purchase of raw materials or finished
goods in the ordinary course of business.
6.5 RESTRICTED JUNIOR PAYMENTS.
Company and Borrowers will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, declare, order,
pay, make, or set apart any sum for any Restricted Junior Payment except:
(i) Subsidiaries of any Borrower may declare and pay
cash dividends to such Borrower or to a wholly-owned Subsidiary of
such Borrower;
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<PAGE> 51
(ii) Subsidiaries of Company may declare and pay cash
dividends to Company; and
(iii) Company may declare and pay cash dividends to the
holders of its Preferred Stock, provided that declaration or payment
of such dividends do not result in an Event of Default or a Potential
Event of Default.
6.6 FINANCIAL COVENANTS.
A. Commencing with the last day of Fiscal Year 1995, Company
and Borrowers will not permit the Leverage Ratio (i) as of the last day of
Fiscal Year 1995 to be greater than 106.4:1, (ii) as of the last day of the
following three Fiscal Quarters to be greater than 24.1:1, and (iii) as of
the last day of each Fiscal Quarter and Fiscal Year thereafter to be
greater than 6.1:1.
B. Commencing with the last day of Fiscal Year 1995, Company
and Borrowers will not permit the Interest Coverage Ratio (i) as of the
last day of Fiscal Year 1995 to be less than 0.17:1, (ii) as of the last
day of the following three Fiscal Quarters to be less than 1.4:1, (iii) as
of the last day of Fiscal Year 1996 and each of the following three Fiscal
Quarters to be less than 1.98:1, and (iv) as of the last day of Fiscal Year
1997 and each Fiscal Quarter and Fiscal Year thereafter to be less than
3.0:1.
C. Commencing with the last day of Fiscal Year 1995, Company
and Borrowers will not permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities (i) as of the last day of each Fiscal
Quarter and Fiscal Year until November 1, 1997 to be less than 1.10:1, and
(ii) as of the last day of each Fiscal Quarter and Fiscal Year thereafter
to be less than 1.20:1.
6.7 RESTRICTION ON FUNDAMENTAL CHANGES.
Company and Borrowers will not, and will not permit any of
their respective Subsidiaries to, 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, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any part
of its business, property, or fixed assets, whether now owned or hereafter
acquired, or acquire by purchase or otherwise all or substantially all the
business, property or fixed assets of, or stock or other evidence of
beneficial ownership of, any Person, except:
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<PAGE> 52
(i) any Subsidiary of Company (other than any Borrower)
may be merged or consolidated with or into Company, or be liquidated,
wound up, or dissolved, or all or substantially all 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, provided that, in the case of such a merger
or consolidation, Company shall be the continuing or surviving
corporation, and provided further that Borrowers comply with the
provisions of subsections 2.3B(ii) and 6.7(v) if any Mortgaged
Property is owned by such Subsidiary;
(ii) any Subsidiary of any Borrower (other than a
Borrower) may be merged or consolidated with or into such Borrower,
or be liquidated, wound up, or dissolved, or all or substantially all
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 such Borrower, provided that, in the case of such
a merger or consolidation, such Borrower shall be the continuing or
surviving corporation, and provided further that Borrowers comply
with the provisions of subsections 2.3B(ii) and 6.7(v) if any
Mortgaged Property is owned by such Subsidiary;
(iii) Company and its Subsidiaries may sell or otherwise
dispose of inventory in the ordinary course of business;
(iv) Borrowers may sell or otherwise dispose of
Mortgaged Property other than the Torrance Properties; provided, that
(w) any such sale or other disposition is made for not less than the
fair market value of such Mortgaged Property on the date of such sale
or disposition; (x) any such sale or other disposition is for all
cash, (y) the Net Sale Proceeds received by Company or any of its
Subsidiaries in connection with such sale or other disposition equal
or exceed the greater of (A) 70% of the 1987 appraised value of such
Mortgaged Property set forth in Schedule 9 hereto and (B) the fair
market value of such Mortgaged Property on the date of such sale or
other disposition; and (z) Borrowers apply the Net Sale Proceeds to
the prepayment of Loans in accordance with the provisions of
subsection 2.3B(ii)(a);
(v) Company and its Subsidiaries may sell or otherwise
dispose of shares of stock in or the assets of Promark Group West, a
Nevada corporation;
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(vi) The leases listed on Schedule 7 may continue in
effect and may be renewed or extended in accordance with their terms
or the terms of the existing options with respect thereto, and
Company and its Subsidiaries may further renew or extend such leases
if the rental payments payable under any such renewal or extension
shall not be less than the fair market rental of the leased property
at the time of the renewal or extension, and if the term of any such
renewal or extension shall not exceed five years;
(vii) Company and its Subsidiaries may sell or otherwise
dispose of obsolete or worn out personal property in the ordinary
course of business;
(viii) Company and Borrowers may take those actions
required on their part by the Investment Agreement.
In any sale of Mortgaged Properties pursuant to this subsection 6.7,
the escrow and title companies for such sale shall be satisfactory to
Requisite Lenders.
6.8 ERISA.
Company and Borrowers will not, and will not permit any of
their respective ERISA Affiliates to:
(i) engage in any transaction in connection with which
Company or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Internal Revenue Code in either case
in an amount in excess of $500,000;
(ii) fail to make full payment when due of all amounts
that, under the provisions of any Pension Plan, Company or any of its
ERISA Affiliates is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency, whether or not
waived, with respect to any Pension Plan in an aggregate amount
greater than $500,000;
(iii) permit the actuarial present value of all benefit
commitments under all Pension Plans to exceed the current value of
the assets of such Pension Plans (excluding Pension Plans with assets
greater than vested benefits) allocable to such vested benefits by
more than $500,000; or
(iv) fail to make any payments in an aggregate amount
greater than $500,000 to any Multiemployer Plan that Company or any
of its ERISA Affiliates may be required to
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make under any agreement relating to such Multiemployer Plan, or any
law pertaining thereto.
As used in this subsection 6.8, the term "accumulated funding deficiency"
has the meaning specified in Section 302 of ERISA and Section 412 of the
Internal Revenue Code, the term "accrued benefit" has the meaning specified
in Section 3 of ERISA and the terms "current value", "actuarial present
value", and "benefit commitment" have the respective meanings specified in
Section 4001 of ERISA.
6.9 RESTRICTION ON LEASES.
A. Company will not, and will 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 Capital Lease, unless (i) such lease is for data
processing, telephone, and electronic communications equipment and (ii)
immediately after giving effect to the incurrence of liability with respect
to such lease the aggregate amount of all rental and other payments
(without duplication) under such lease and all other Capital Leases at the
time in effect during the then current or any future period of twelve (12)
consecutive calendar months shall not exceed $5,000,000.
B. Without limiting the generality of the foregoing, Company
will not, and will 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 Capital Lease unless
after giving effect to the rental expense incurred in connection with such
lease and the declaration and payment of common stock dividends scheduled
to be paid in the Fiscal Quarter in which such lease obligation is
incurred, the Interest Coverage Ratio for such Fiscal Quarter will not be
less than the ratio required pursuant to subsection 6.6C.
6.10 SALE OR DISCOUNT OF RECEIVABLES. Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, sell with
recourse, or discount or otherwise sell for less than the face value
thereof, any of their notes or accounts receivable.
6.11 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Company will
not, and will 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, the issuance of any securities or the
establishment of transfer prices and allocation of overhead) with
(i) Fidelity or any of its Affiliates, (ii) any holder of five percent (5%)
or more of
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any class of equity securities of Company, or (iii) 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 any transaction between
Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries or between Company and Lenders; and provided
further that the foregoing restriction shall not apply to any transactions
with Fidelity or any of its Affiliates that are approved by a majority of
the Board of Directors of Company; and provided further that the foregoing
restriction shall not apply to the Transactions and those transactions set
forth on Schedule 10 hereto.
6.12 DISPOSAL OF SUBSIDIARY INDEBTEDNESS OR SECURITIES.
Except as provided in subsection 6.7, neither Company nor any
of its Subsidiaries will,
(i) directly or indirectly sell, assign, pledge, or otherwise
encumber or dispose of any Indebtedness of or claim against or any
shares or other securities of (or warrants, rights, or options to
acquire shares or other securities of) any of its Subsidiaries,
except to qualify directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge, or otherwise encumber or dispose of any
Indebtedness of or claim against Company or any other Subsidiary of
Company, or any shares or other securities of (or warrants, rights,
or options to acquire shares or other securities of) of such
Subsidiary or of any other such Subsidiary, except to Company,
another Subsidiary of Company, or to qualify directors if required by
applicable law.
6.13 LIMITATION ON CAPITAL EXPENDITURES. Company and Borrowers will
not, and will not permit any of their respective Subsidiaries to, purchase
or otherwise acquire, or commit to purchase or otherwise acquire, any fixed
or capital asset (excluding any asset replacement and maintenance programs
required by the Depositors' Leases (as defined in the Trust Agreement) and
operating leases) by the expenditure of cash or the incurrence of
Indebtedness in excess of $100,000 for any individual expenditure or
$2,000,000 in the aggregate for any Fiscal Year.
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6.14 AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS; PREPAYMENTS. After
the Closing Date, none of Company, any Borrower, or any of their respective
Subsidiaries will amend or otherwise change the terms of the Plan or of any
agreement relating to Indebtedness of Company or any of its Subsidiaries,
or make any payment consistent with an amendment or change thereto, without
the consent of Requisite Lenders, and, in the case of amendments relating
to extension of principal amortization or to optional redemption of such
Indebtedness, without the consent of all Lenders. Except for the
Obligations, any required mandatory prepayments, including prepayments of
obligations under the Trust Loan Agreement, and any trade obligations
incurred in the ordinary course of business, none of Company, any Borrower,
or any of their respective Subsidiaries will prepay any principal or
interest on any Indebtedness of Company, any Borrower, or any of their
respective Subsidiaries prior to the date when due, or make any payment or
deposit with any Person that has the effect of providing for the
satisfaction of any Indebtedness of Company, any Borrower, or any of their
respective Subsidiaries prior to the date when due. Notwithstanding the
foregoing, Company and Borrowers may refinance Indebtedness; provided, that
the weighted average life of the refinanced Indebtedness is greater than
the weighted average life of such Indebtedness prior to such refinancing;
and provided, further, that the interest rate of the refinanced
Indebtedness shall be no greater than the interest rate of such
Indebtedness prior to such refinancing.
6.15 CONDUCT OF BUSINESS. Company and each Borrower will not, and
will not permit any of their respective Subsidiaries to, engage in any
business other than the business engaged in by Company and its Subsidiaries
on the date hereof or the Transactions contemplated by the Investment
Agreement and other lines of business consented to by Requisite Lenders.
6.16 PROMARK GROUP WEST. Company will not permit Promark Group West
to own or otherwise hold any assets, except for the stock it currently
holds in CURE, an environmental cleanup entity.
6.17 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 be otherwise 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.
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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 to pay any amount
due with respect to principal of and/or interest on any Loan or any other
amount due under this Agreement within five days after the date due,
whether at stated maturity, by acceleration, by notice of prepayment, or
otherwise; or
7.2 DEFAULT IN OTHER AGREEMENTS. Company, any Borrower, or any of
their respective Subsidiaries shall fail to pay or default in the payment
of any principal or interest on any other Indebtedness (including the
Fidelity Indebtedness) or in the payment of any Contingent Obligation
beyond any period of grace provided; or there shall occur a breach or
default with respect to any other material term of any evidence of any
other Indebtedness or of any loan agreement, mortgage, indenture, or other
agreement relating thereto, if the effect of such failure, default, or
breach is to cause, or to permit the holder or holders of that Indebtedness
(or a trustee on behalf of such holder or holders) to cause, that
Indebtedness to become or be declared due prior to its stated maturity
(upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
7.3 BREACH OF CERTAIN COVENANTS. Failure of Company or any
Borrower to perform or comply with any term or condition contained in
subsections 2.3, 5.2, 5.7 or 5.13 or Section 6 of this Agreement; or
7.4 BREACH OF WARRANTY. Any of the representations or warranties
made by Company or any Borrower herein or in any statement or certificate
at any time given by Company or any Borrower in writing pursuant hereto or
in connection herewith shall be false in any material respect on the date
as of which made; or
7.5 OTHER DEFAULTS UNDER AGREEMENT. Company or any Borrower shall
default in the performance of or compliance with any term contained in this
Agreement or any other Loan Document (including the Intercreditor
Agreement) other than those referred to above in subsections 7.1, 7.3, or
7.4 and such default shall not have been remedied or waived within 30 days
after receipt of notice from any Lender of such default; or
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7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
A. (i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Company or any Borrower or
any of their respective Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect, which decree or order is not stayed; or (ii) any other similar
relief shall be granted under any applicable federal or state law; 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, any Borrower or any of
their respective Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or the involuntary appointment of an
interim receiver, trustee, or other custodian of Company, any Borrower or
any of their respective Subsidiaries for all or a substantial part of its
property; or the issuance of a warrant of attachment, execution, or similar
process against any substantial part of the property of Company, any
Borrower, or any of their respective Subsidiaries, and the continuance of
any such events in subpart (ii) for 60 days unless dismissed, bonded, or
discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
Company, any Borrower, or any of their respective Subsidiaries
shall have an order for relief entered with respect to it or commence a
voluntary case under any applicable bankruptcy, insolvency, or other
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 to an
involuntary 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; the making by Company, any Borrower,
or any of their respective Subsidiaries of any assignment for the benefit
of creditors; or the inability or failure of Company, any Borrower, or any
of their respective Subsidiaries, or the admission by Company, any
Borrower, or any of their respective Subsidiaries in writing of its
inability to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof)
adopts any resolution or otherwise authorizes action to approve any of the
foregoing; or
7.8 JUDGMENTS AND ATTACHMENTS. Any money judgment, writ, or
warrant of attachment, or similar process involving in any case an amount
in excess of $500,000 shall be entered or filed against Company, any
Borrower, or any of their respective Subsidiaries or the Grantor Trust or
any of their respective assets and shall remain undischarged, unvacated,
unbonded, or unstayed
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for a period of 45 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 Borrower decreeing the dissolution or split up of
Company or such Borrower and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
7.10 UNFUNDED ERISA LIABILITIES.
(i) Except for the termination of the LESOP and PAYSOP, as
defined and described in the Plan, any Pension Plan maintained by Company
or any of its ERISA Affiliates shall be terminated within the meaning of
Title IV of ERISA, (ii) a trustee shall be appointed by an appropriate
United States district court to administer any Pension Plan, (iii) the
Pension Benefit Guaranty Corporation (or any successor thereto) shall
institute proceedings to terminate any Pension Plan, or to appoint a
trustee to administer any Pension Plan, or (iv) Company or any of its ERISA
Affiliates shall withdraw (under Section 4063 of ERISA) from a Pension Plan
if as of the date thereof or any subsequent date the sum of each of
Company's and its ERISA Affiliate's various liabilities (such liabilities
to include, without limitation, any liability to the Pension Benefit
Guaranty Corporation (or any successor thereto) or to any other party under
Sections 4062, 4063 or 4064 of ERISA or any other provision of law and to
be calculated after giving effect to the tax consequences thereof)
resulting from or otherwise associated with any of the events listed in
subclauses (i) through (iv) above exceeds $500,000; or
7.11 WITHDRAWAL LIABILITY UNDER MULTIEMPLOYER PLAN. Company or any
of its ERISA Affiliates as employer under a Multiemployer Plan shall have
made a complete or partial withdrawal from such Multiemployer Plan and the
plan sponsor of such Multiemployer Plan shall have notified such
withdrawing employer that such employer has incurred a withdrawal liability
in an annual amount exceeding $500,000; or
7.12 INVALIDITY OF GUARANTIES. The Company Guaranty, the Borrower
Guaranty, or the Subsidiary Guaranty for any reason, other than the
satisfaction in full of all Obligations, ceases to be in full force and
effect or is declared to be null and void, or Company or any Borrower or
any Subsidiary of Company denies that it has any further liability,
including without limitation with respect to future advances by Lenders,
under its Guaranty or gives notice to such effect; or
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7.13 FAILURE OF SECURITY. Any Collateral Document shall be revoked
by any Borrower or the protection or security afforded Lenders in any
substantial portion of the Collateral is impaired for any reason (other
than as a result of actions by Lenders); or an event of default shall occur
under any Collateral Document; or for any reason Lenders shall fail to have
a valid, perfected and enforceable Lien on the Collateral pursuant to the
Collateral Documents (other than as a result of actions by Lenders or re-
lease of the Lien of a Collateral Document in accordance with the terms
thereof); or any Borrower shall contest in any manner that any Collateral
Document to which it is a party constitutes its valid and enforceable
agreement or any Borrower shall assert in any manner that it has no further
obligation or liability under any Collateral Document to which it is a
party; or
7.14 DIRECTOR.
Any Person nominated or designated by Requisite Lenders to
serve on Company's Board of Directors in accordance with the provisions of
the Stockholders Agreement and the Bylaws of Company, having legal capacity
to so serve, is not elected to serve as a director of Company;
THEN, (i) upon the occurrence of any Event of Default described
in the foregoing subsections 7.6 or 7.7 the unpaid principal amount of and
accrued interest on the Loans 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 each Borrower and by
Company and the obligation of each Lender to make any Loan hereunder shall
thereupon terminate, and (ii) upon the occurrence of any other Event of
Default, Requisite Lenders may, by written notice to Borrowers, declare all
of the Loans to be, and the same shall forthwith become due and payable,
together with accrued interest thereon, and the obligation of each Lender
to make any Loan hereunder shall thereupon terminate. Nevertheless, if at
any time after acceleration of the maturity of any Loan, Borrower shall pay
all arrears of interest and all payments on account of the principal which
shall have become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue interest, at the
rates specified in this Agreement or the Notes) and all Events of Default
and Potential Events of Default (other than non-payment of principal of and
accrued interest on the Loans and the Notes, due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to
subsection 9.8, then Requisite Lenders by written notice to Borrowers may,
but except as otherwise expressly required by applicable law shall have no
obligation to, rescind and annul the acceleration and its consequences; but
such
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action shall not affect any subsequent Event of Default or Potential Event
of Default or impair any right consequent thereon.
SECTION 8. SERVICING AGENT
8.1 APPOINTMENT. Transamerica Occidental Life Insurance Company is
hereby appointed Servicing Agent hereunder by each Lender and each Lender
hereby authorizes Servicing Agent to act hereunder as its agent under this
Agreement and the other Loan Documents. Servicing Agent agrees to act as
such upon the express conditions contained in this Section 8. The
provisions of this Section 8 are solely for the benefit of Servicing Agent
and Lenders and Borrowers shall not have any rights as third party
beneficiaries of any of the provisions hereof. In performing its functions
and duties under this Agreement and the other Loan Documents, Servicing
Agent shall act solely as 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 Borrowers.
8.2 FEES. As consideration for the performance of its services as
Servicing Agent hereunder, each Lender agrees to pay Servicing Agent an
annual fee equal to the product of its Pro Rata Share times 1/15 of 1% of
the principal amount of its Loans outstanding, determined and payable
monthly. Company and Borrowers shall not be liable with respect to any
fees of Servicing Agent pursuant to this subsection 8.2.
8.3 POWERS; GENERAL IMMUNITY.
A. Duties Specified. Each Lender irrevocably authorizes
Servicing Agent to take such action on such Lender's behalf and to exercise
such powers hereunder as are specifically delegated to Servicing Agent by
the terms hereof or of the other Loan Documents, together with such powers
as are reasonably incidental thereto. Servicing Agent shall have only
those duties and responsibilities that are expressly specified in this
Agreement and the other Loan Documents and it may perform such duties by or
through its agents or employees.
B. Standard of Care; No Responsibility for Certain Matters.
In performing its functions and duties hereunder on behalf of Lenders,
Servicing Agent shall exercise the same care that it would exercise in
dealing with loans for its own account but it shall not be responsible to
any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement, or other
Loan Documents or the Notes issued hereunder, or for any representations,
warranties, recitals, or statements made herein or therein or made
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in any written or oral statement or in any financial or other statements,
instruments, reports, certificates, or any other documents in connection
herewith or therewith furnished or made by Servicing Agent to Lenders or by
or on behalf of Borrowers or Company to Servicing Agent or any Lender or be
required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants, or agreements contained
herein or therein or as to the use of the proceeds of the Loans or, unless
the officers of Servicing Agent active in their capacity as officers of
Servicing Agent on the Loans have actual knowledge thereof or have been
notified in writing thereof by Lenders, of the existence or possible
existence of any Event of Default or Potential Event of Default.
C. Exculpatory Provisions. Neither Servicing Agent,
Transamerica Realty Services Inc., nor any of their respective officers,
directors, employees, or agents shall be liable to Lenders for any action
taken or omitted hereunder or in connection herewith unless caused by its
or their gross negligence or willful misconduct. Without prejudice to the
generality of the foregoing, (i) Servicing Agent and Transamerica Realty
Services, Inc. shall be entitled to rely on any communication, instrument,
or document believed by them 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, accountants, experts, and other professional advisors selected
by them; and (ii) no Lender shall have any right of action whatsoever
against Servicing Agent as a result of Servicing Agent acting or (where so
instructed) refraining from acting under this Agreement or any other Loan
Document in accordance with the instructions of Requisite Lenders.
Servicing Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement or any other Loan
Document unless and until it has obtained the instructions of Requisite
Lenders.
D. Servicing 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 Servicing Agent in its
individual capacity. With respect to its participation, if any, in the
Loans, Servicing 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, under such circumstances, unless the
context clearly otherwise indicates, include Servicing Agent in its
individual capacity. Servicing Agent and each of its Affiliates may lend
money to and generally engage in any kind of business with Company or
Borrowers as if it were not Servicing Agent.
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8.4 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL
OF CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company
and Borrowers in connection with the making of the Loans hereunder and has
made and shall continue to make its own appraisal of the creditworthiness
of Company and Borrowers. Servicing Agent shall have no duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether
coming into its possession before the making of the Loans or any time or
times thereafter and shall further have no responsibility with respect to
the accuracy of or the completeness of the information provided to Lenders.
8.5 RIGHT TO INDEMNITY. Each Lender severally agrees to indemnify
Servicing Agent proportionately to its Pro Rata Share, to the extent
Servicing Agent shall not have been reimbursed by Company or Borrowers, for
Servicing Agent's out-of-pocket expenses and costs incurred in connection
with its discharge of its duties and responsibilities under this Agreement
and the other Loan Documents, including, without limitation, its legal
fees, but such reimbursement shall not in any respect release Company or
Borrowers from any liability. If any indemnity furnished to Servicing
Agent for any purpose shall, in the opinion of Servicing Agent, be
insufficient or become impaired Servicing Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against
until such additional indemnity is furnished.
8.6 PAYEE OF NOTE TREATED AS OWNER. Servicing Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof
shall have been filed with Servicing Agent. Any request, authority, or
consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be con-
clusive and binding on any subsequent holder, transferee, or assignee of
that Note or of any Note or Notes issued in exchange therefor.
8.7 RESIGNATION AND APPOINTMENT OF SUCCESSOR SERVICING AGENT.
Servicing Agent may resign at any time by giving 30 days' prior written
notice thereof to Lenders and Borrowers. Upon any such notice Requisite
Lenders shall have the right to appoint a successor Servicing Agent. Upon
the acceptance of any appointment as a Servicing Agent hereunder by a
successor Servicing Agent, that successor Servicing Agent shall thereupon
succeed to
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and become vested with all the rights, powers, privileges, and duties of
the retiring Servicing Agent, and the retiring Servicing Agent shall be
discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Servicing Agent's resignation
hereunder as Servicing Agent, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Servicing Agent under this Agreement and the other Loan Documents.
8.8 COLLATERAL DOCUMENTS. Except as provided in subsection 9.7 or
subsection 6.7, Collateral may be released from the Lien of any Collateral
Document only upon the prior written instruction of all Lenders. Servicing
Agent shall take such other action to exercise rights, powers, and remedies
pursuant to the Collateral Documents as shall be directed by Requisite
Lenders. In the event that any remedy is to be exercised pursuant to any
of the Collateral Documents, Servicing Agent shall pursue remedies
designated by Requisite Lenders, to the same extent as though such demand
was caused by the action of all Lenders. Each Lender agrees that no Lender
shall have any right individually to institute any suit or action to
enforce payment of any principal, interest, or other amounts payable on the
Notes or to enforce any other obligation of any Borrower under the
Collateral Documents or to realize upon the security interest granted by
the Collateral Documents or to otherwise enforce or exercise any remedy in
respect of the Collateral or any properties, rights, titles, or interests
subject to the Collateral Documents, it being understood and agreed that
such rights and remedies may be exercised only by Servicing Agent for the
ratable benefit of Lenders; provided, however, that the foregoing agreement
is for the sole and exclusive benefit of Lenders and their successors and
assigns and nothing in the foregoing agreement, express or implied, is
intended or shall be construed to confer upon, or to give to, any person
other than Lenders and their successors and assigns, any right, remedy, and
claim.
SECTION 9. MISCELLANEOUS
9.1 SECURITIES REPRESENTATION. Each Lender hereby represents that
it has made any Loan for its own account in the ordinary course of its
business and not with a view to or for sale in connection with any
distribution of the Notes except as provided in subsection 9.2; provided,
however, that the disposition of the Notes or other evidence of
indebtedness held by that Lender shall at all times be within its exclusive
control.
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9.2 ASSIGNMENTS; PARTICIPATIONS IN LOANS AND NOTES.
A. Each Lender shall have the right at any time to sell,
assign, transfer, negotiate, or grant participations in all or any part of
the Loans, the Notes, or the Commitments to any Affiliate of such Lender or
to one or more commercial banks, savings and loan associations, insurance
companies, or other financial institutions, pension funds, or mutual funds;
provided that any such disposition shall not, without the consent of
Company or Borrowers, require Company or Borrowers to file a registration
statement with the Securities and Exchange Commission or apply to qualify
the Loans or the Notes under the blue sky law of any state. The parties
hereto hereby acknowledge and agree that (i) any assignment will give rise
to a direct obligation of Borrowers to the assignee of such interest and
the assignee of such interest shall for purposes of this Agreement be
considered to be a "Lender"; and (ii) any grant of a participation will
give rise to a direct obligation of Borrowers to the participant and the
participant shall solely for purposes of subsections 9.3, 9.4, 9.5, and 9.6
be considered to be a "Lender".
B. Borrowers and Company understand that each Lender
reserves the right to cause the Loans of such Lender to be deposited in one
or more mortgage pools and conveyed of record to a trustee pursuant to
pooling and servicing agreements with investors purchasing undivided
interests in a mortgage pool in the form of unrated mortgage pass-through
certificates to be issued pursuant to the trust agreement. The parties
hereto acknowledge and agree that any such trustee shall for purposes of
this Agreement be considered to be a "Lender" and each investor shall for
purposes of subsections 9.3, 9.4, 9.5, and 9.6 be considered to be a
"Lender". The number and configuration of the mortgage pools shall be
determined by such Lender in its sole discretion; provided, however, that
any trust agreement shall provide that the trustee may approve or
disapprove actions in connection with this Agreement that, in accordance
with the terms hereof, require the approval of all Lenders or Requisite
Lenders at the direction of the holders of not more than 50% of the bene-
ficial interests in the Loans and Notes held by the trustee thereunder. It
is understood that Lenders and/or their Affiliates are authorized, without
restriction, to approach any third-party institutional purchaser in
connection with the offer or sale of such certificates, provided that all
offers and sales of certificates to such third-party institutional
purchasers shall be in compliance with the applicable requirements of the
Securities Act of 1933, as amended, and state securities or blue sky laws.
At any time or from time to time upon the request of any Lender, each of
Company and each Borrower will promptly execute, acknowledge, and deliver
such further documents and do such other
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acts and things as such Lender may reasonably request in order to effect
fully the transactions contemplated by this subsection 9.2B.
9.3 EXPENSES. Company and Borrowers jointly and severally agree to
pay all of the costs and expenses incurred by Lenders in connection with
the transactions contemplated by this Agreement, including (i) all the
actual and reasonable costs and expenses incurred by Lenders in connection
with the negotiation, preparation and execution of this Agreement, the
other Loan Documents, the establishment and modification of the Liquidating
Property Trust, and the modification of the Loans hereunder, any
modification of the Trust Loan Agreement, any modification of the Existing
Grantor Trust Indebtedness, any modification of the Fidelity Indebtedness,
fees of the trustee and collateral agent for the Grantor Trust, the
Liquidating Property Trust, and any modification of the Grantor Trust
Documents; (ii) all the actual and reasonable costs of furnishing all
opinions by counsel for Company and Borrowers (including, without
limitation, any opinions requested by Lenders as to any legal matters
arising hereunder), and of Company's and Borrowers' performance of and
compliance with all agreements and conditions contained herein on their
part to be performed or complied with; (iii) all the actual and reasonable
fees, expenses and disbursements of counsel (including local counsel) to
Lenders in connection with the negotiation, preparation and execution of
this Agreement and the other Loan Documents, and the Loans hereunder, and
the creation and perfection of Liens in favor of Lenders, including,
without limitation, reasonable fees and expenses of counsel for providing
such opinions as Lenders may reasonably request; (iv) all the actual costs
and expenses of creating and perfecting Liens in favor of Lenders on the
Mortgaged Properties, including filing and recording fees and expenses,
title insurance, tax reporting service, and engineering reports; (v) all
the costs of Company's and Borrowers' performance of and compliance with
all agreements and conditions contained herein on its part to be performed
or complied with; (vi) the fees, expenses and disbursements of counsel
(including local counsel) to Lenders in connection with the administration
of this Agreement and the other Loan Documents, and the Loans hereunder,
and any amendments and waivers hereto and the creation and perfection of
Liens in favor of Lenders, including, without limitation, fees and expenses
of counsel for providing such opinions as Lenders may reasonably request;
(vii) all the actual costs and expenses incurred in connection with the
actions required under subsection 5.11 and the delivery of documents,
reports and other materials required thereunder; (viii) after the
occurrence of an Event of Default, all costs and expenses, including
attorneys' fees and costs of settlement, incurred by Lenders and enforcing
any obligations of or in collecting any payments due from Borrowers or
Company
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<PAGE> 67
hereunder under any other Loan Document or under the Notes by reason of
such Event of Default; and (ix) all reasonable fees, costs and expenses
required to be paid under the Collateral Documents.
9.4 INDEMNITY.
A. In addition to the payment of expenses pursuant to
subsection 9.3, whether or not the Closing Date occurs, Borrowers and
Company jointly and severally agree to indemnify, pay, and hold Lenders and
any holder of any of the Notes, and the officers, directors, employees, and
agents of Lenders and such holders (collectively called the "Indemnitees")
harmless 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, fees and disbursements of counsel for such Indemnitees
in connection with any investigative, administrative, or judicial
proceeding, whether or not such Indemnitee shall be designated a party
thereto), that may be imposed on, incurred by, or asserted against such
Indemnitee, in any manner relating to or arising out of the actions of
Company or any Borrower in connection with this Agreement, the other Loan
Documents, the Original Agreement, including the Related Agreements (as
defined in the Original Agreement) and the transactions contemplated by the
Offer to Purchase (as defined in the Original Agreement) (including,
without limitation, negotiations with other lenders), from the use by
Company or any Borrower or their agents of any materials furnished by
Lenders or from any of the statements contained in this Agreement, any Loan
Document, the Original Agreement or the Related Agreements, or from the use
or intended use of the proceeds of Loans, of loans under the Bank Credit
Agreement (as defined in the Original Agreement) or the proceeds of sale of
Company Preferred Stock (as defined in the Original Agreement) (the
"indemnified liabilities"); provided that neither Company nor any Borrower
shall have any obligation hereunder to a particular indemnitee with respect
to indemnified liabilities arising from the gross negligence or willful
misconduct of such person. To the extent that the undertaking to
indemnify, pay, and hold harmless set forth in the preceding sentence or in
subsections 9.4B or 9.4C may be unenforceable because it is violative of
any law or public policy, Company and Borrowers shall contribute the
maximum portion that they are 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.
B. Each of the Borrowers and Company hereby agrees to
indemnify and hold harmless each Lender and each subsequent
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<PAGE> 68
holder of any Note, and the directors, officers, employees, and agents of
each Lender and each subsequent holder of any Note, from and against any
and all claims, losses, damages, liabilities, fines, penalties, charges,
administrative, and judicial proceedings and orders, judgments, remedial
action requirements, enforcement actions of any kind, and all costs and
expenses incurred in connection therewith (including, but not limited to,
attorneys fees and expenses), arising directly or indirectly, in whole or
in part, out of (i) the presence on or under any Mortgaged Property of any
Hazardous Substances (as defined in any of the Mortgages), or any releases
or discharges of any such Hazardous Substances on, under or from such
properties, or (ii) any activity carried on or undertaken on or off such
Mortgaged Properties, whether prior to or during the term of this Agree-
ment, and whether by Company, Borrowers, or any predecessor in title or any
employees, agents, contractors or subcontractors of Company, Borrowers, or
any predecessor in title, or any third persons at any time occupying or
present on such Mortgaged Properties, in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport, or
disposal of any such Hazardous Substances at any time located or present on
or under such Mortgaged Properties. The foregoing indemnity shall further
apply to any residual contamination on or under such properties, or
affecting any natural resources arising in connection with the generation,
use, handling, storage, transport, or disposal of any such Hazardous
Substances, and irrespective of whether any of such activities were or will
be undertaken in accordance with applicable laws, regulations, codes, and
ordinances.
C. Each of the Borrowers and Company hereby agrees to
indemnify and hold harmless each of the Surviving Indemnitees (as defined
below) from and against any and all losses, claims, damages, penalties,
liabilities, response costs, and expenses (including, without limitation,
all out-of-pocket litigation costs and attorneys' fees and expenses):
(i) arising out of the inaccuracy or incompleteness of any representation
or warranty by Borrowers in Section 2.21 of the Mortgages or in any
document or writing delivered pursuant thereto; or (ii) arising out of any
lawsuit brought or threatened, settlement reached, or governmental order,
relating to the presence, disposal, release, or threatened release of any
such Hazardous Substance on, from, or under any of such properties, (1) if
such presence, disposal, release, or threatened release of any such
Hazardous Substance is or was attributable to the Company's or Borrowers'
activities, the activities of the Company's or Borrowers' agents or con-
tractors, or to activities of third parties (regardless of whether the
Company or the Borrowers were aware or unaware of such activities), during
the period of the Company's or Borrowers' ownership of such Mortgaged
Properties or, (2) if such
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<PAGE> 69
presence, disposal, release, or threatened release of any such Hazardous
substance occurred prior to the time of the Company's or Borrowers'
ownership of any of such Mortgaged Properties and the Company or the
Borrowers had knowledge of this fact and did not disclose such to Lenders
in writing prior to November 30, 1987. This agreement to indemnify and
hold harmless shall be in addition to any other obligations or liabilities
Company or any Borrower may have at common law or otherwise, and shall
survive any transfer of title to any of such Mortgaged Properties in any
manner described in the definition below of the term "Surviving
Indemnitees". Company and Borrowers expressly agree that the indemnities
stated herein are not personal to Lenders, and, so long as Company and
Borrowers are given written notice thereof by a Surviving Indemnitee, the
benefits hereunder may be assigned to subsequent Surviving Indemnitees,
which subsequent Surviving Indemnitees may proceed directly against Company
and Borrowers to recover pursuant to this indemnity. For the purposes of
this subsection 9.4, "Surviving Indemnitees", shall mean (i) Lenders, their
directors, officers, employees, and agents if, and to the extent that,
Lenders or any of them acquire any or all of the Collateral (as defined in
the Mortgages) whether through foreclosure, deed-in-lieu thereof or
otherwise and (ii) any successors to any interest of any of the Borrowers,
Company, or Lenders in the chain of title to such Collateral (and the
directors, officers, employees, and agents of such successor), if, and to
the extent that, such successor acquired title to such collateral
(1) through a foreclosure of any lien or security interest held by the
Lenders or any of them or their agent as security for the Obligations,
(2) from Lenders or any of them after such Lenders acquired title to such
Collateral from Company or Borrowers, whether through foreclosure, deed-in-
lieu thereof, or otherwise, or (3) from any person who acquired title
either directly, or indirectly by mesne conveyances, from a person who
acquired title in the manner described in the immediately preceding clauses
(1) and (2). Notwithstanding any provision to the contrary of the
Mortgages or any other security instrument securing all or any portion of
the Obligations, Company's and Borrowers' Obligations under this subsection
9.4C shall not be secured by the Mortgages or any such security
instruments.
9.5 SET OFF; ACTIONS REGARDING THE COLLATERAL. Each Lender and
each subsequent holder of any Note hereby expressly waives any right it may
now or hereafter have under applicable law to set off and to appropriate
and to apply any funds of any Borrower or Company and any Indebtedness at
any time held or owing by that Lender or that subsequent holder to or for
the credit or the account of Borrower or Company or against and on account
of the Obligations under this Agreement, the other Loan Documents, and the
Notes. Each Lender and each subsequent holder of any Note further agrees
that it shall not exercise any right individually
<PAGE>
<PAGE> 70
to exercise any right of set-off or to institute any judicial action or to
take any other action or exercise any right pertaining to the Collateral
Documents; provided, further, that the foregoing agreement is for the sole
and exclusive benefit of Lenders and their successors and assigns and
nothing in the foregoing agreement, express or implied, is intended or
shall be construed to confer upon, or to give to, any person other than
Lenders and their successors and assigns, any right, remedy, or claim.
9.6 RATABLE SHARING. Each Lender and each subsequent holder by
acceptance of a Note agree among themselves that (i) with respect to all
amounts received by them which are applicable to the payment of principal
of or interest on the Notes equitable adjustment will be made so that, in
effect, all such amounts will be shared among Lenders proportionately to
their respective Pro Rata Shares whether received by voluntary payment, by
the exercise of the right of set-off, by counterclaim or cross action or by
the enforcement of any or all of the Notes and (ii) if any of them shall
exercise any right of counterclaim, set-off, or similar right with respect
to amounts owed by Borrowers or Company hereunder, under any other Loan
Document or under the Notes, that Lender or holder, as the case may be,
shall apportion the amount recovered as a result of the exercise of such
right pro rata in accordance with (a) all amounts outstanding at such time
owed by Borrowers or Company to it hereunder and (b) all amounts otherwise
owed by Borrowers or Company to it, and (iii) if any of them shall thereby
through the exercise of any right of counterclaim, set-off, or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest due with respect to the Note held by that Lender or holder, as the
case may be, that is greater than the proportion received by any other
holder of a Note in respect to the aggregate amount of principal and
interest due with respect to the Note held by it, that Lender or that
holder of a Note receiving such proportionately greater payment shall
purchase participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the Notes held by the
other holders so that all such recoveries of principal and interest with
respect to the Notes shall be proportionate to their respective Pro Rata
Shares; provided that if all or part of such proportionately greater
payment received by such purchasing holder is thereafter recovered from
such holder, those purchases shall be rescinded and the purchase prices
paid for such participations shall be returned to that holder to the extent
of such recovery, but without interest. Borrowers and Company expressly
consent to the foregoing arrangements and agree that any holder of a
participation in any such Note so purchased and any other subsequent holder
of a participation in any such Note otherwise acquired may exercise any and
all rights of set-off or counterclaim with
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<PAGE> 71
respect to any and all monies owing by Borrowers or Company to that holder
as fully as if that holder were a holder of such a Note in the amount of
the participation held by that holder.
9.7 RELEASE OF MORTGAGES. Lenders agree, from time to time, upon
the request of any Selling Borrower in connection with the sale or other
disposition of Mortgaged Property pursuant to subsection 6.7 (including the
transfer of Mortgaged Properties to the Liquidating Property Trust) and
upon compliance with the conditions set forth therein, to surrender the
Mortgage relating to such Mortgaged Property or cause such Mortgage to be
surrendered for cancellation, satisfaction, or termination and to reconvey
or cause to be reconveyed to such Selling Borrower or to any other person
legally entitled thereto, without warranty, any of the real and personal
property held under such Mortgage.
9.8 AMENDMENTS AND WAIVERS. No amendment, modification,
termination, or waiver of any provision of this Agreement, any other Loan
Document, or of the Notes, or consent to any departure by any Borrower or
Company or any of their respective Subsidiaries therefrom, including,
without limitation, any consent to a departure from the requirement herein
that a sale of any Mortgaged Property be for cash only, shall in any event
be effective without the written concurrence of Requisite Lenders; except
any amendment, modification, termination, or waiver of any provision of
Section 2 relating to the principal amount of the Commitments or the Loans,
each Lender's Pro Rata Share, the definition of "Requisite Lenders", the
maturity dates of the Loans, the interest rate borne by the Loans, and the
provisions contained in subsections 7.1 and 9.8 shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders. No
amendment, modification, termination, or waiver of any provision of any
Note shall be effective without the written concurrence of the holder of
that Note. 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 any Borrower or Company in any case shall entitle any Borrower
or Company to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver, or
consent effected in accordance with this subsection 9.8 shall be binding
upon each holder of the Notes at the time outstanding, each future holder
of the Notes, and, if signed by any Borrower or Company, on such Borrower
or Company, as the case may be.
9.9 NOTICES. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telecopied, telexed, or
sent by United States mail and shall be deemed to have been given when
delivered in person, receipt of telecopy or telex or four Business Days
after deposit
<PAGE>
<PAGE> 72
in the United States mail, registered or certified, with postage prepaid
and properly addressed. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided
in this subsection 9.9) shall be as set forth under each party's name on
the signature pages hereof.
9.10 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.
A. All agreements, representations, and warranties made
herein shall survive the execution and delivery of this Agreement, the
making of the Loans hereunder and the execution and delivery of the Notes.
B. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of Borrowers and Company set forth in
subsections 9.3 and 9.4 and the agreements of Lenders set forth in
subsections 9.5 and 9.6 shall survive the payment of the Loans and the
Notes and the termination of this Agreement.
9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any Lender or any holder of any Note in the
exercise of any power, right, or privilege hereunder or under the Notes
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 right, power or privilege. All rights and
remedies existing under this Agreement or the Notes are cumulative to and
not exclusive of, any rights or remedies otherwise available.
9.12 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.
9.13 OBLIGATIONS SEVERAL. The obligation of each Lender hereunder
is several, and no Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. Nothing contained in this
Agreement and no action taken by Lenders pursuant hereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint venture, or
any other kind of entity.
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<PAGE> 73
9.14 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.
9.15 APPLICABLE LAW. This Agreement, the Notes and the legal
relations among the parties shall be governed by, and shall be construed
and enforced in accordance with the laws of the State of California.
9.16 SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTES. 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. The terms and provisions of
this Agreement shall inure to the benefit of any assignee or transferee of
the Notes, and in the event of such transfer or assignment, the rights and
privileges herein conferred upon Lenders shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof. Borrowers' or Company's rights or any interest therein
hereunder may not be assigned without the written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY
TRIAL. Except as otherwise provided in the Mortgages, all judicial
proceedings brought against Company and/or any Borrower with respect to
this Agreement, any other Loan Document or any Note may be brought in any
state or federal court of competent jurisdiction in the State of
California, and by execution and delivery of this Agreement, each of
Company and each Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. All parties to this
Agreement hereby irrevocably waive any and all right to trial by jury in
any judicial proceeding arising out of or relating to this Agreement, any
other Loan Document, or any Note or other Obligation.
9.18 CHANGE IN ACCOUNTING PRINCIPLES. If any changes in accounting
principles from those used in the preparation of the financial statements
referred to in subsection 4.3 hereafter occasioned by the promulgation of
rules, regulations, pronouncements, and opinions by or required by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar
functions), including an election to prepare financial statements in
accordance with SOP 90-7, result in a change in the method of calculation
of financial covenants, standards, or terms found in Sections 1, 6, and 7
hereof, the parties hereto agree to enter
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<PAGE> 74
into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for
evaluating Company's financial condition shall be the same after such
changes as if such changes had not been made, and Company and its
Subsidiaries shall be deemed to be in compliance with such provisions
during the 60-day period following any such change in GAAP if and to the
extent that Company and its Subsidiaries would have been in compliance
therewith under GAAP as in effect immediately prior to such change.
9.19 COUNTERPARTS; EFFECTIVENESS. This Agreement and any
amendments, waivers, consents, or supplements may be executed in any number
of counterparts, and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original,
but all such counterparts together shall constitute but one and the same
instrument. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and written or telephonic
notification of such execution and authorization of delivery thereof has
been received by the parties hereto.
<PAGE>
<PAGE> S-1
WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
STANDARD BRANDS PAINT COMPANY
By: /s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
By: /s/ EDWARD A. DRURY
Name: Edward A. Drury
Title: Vice President and Corporate
Secretary
Notice Address:
Standard Brands Paint Company
4300 West 190th Street
Torrance, California 90509-2956
Attention: Chief Financial Officer
STANDARD BRANDS PAINT CO.
By: /s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
By: /s/ EDWARD A. DRURY
Name: Edward A. Drury
Title: Vice President and Corporate
Secretary
Notice Address:
Standard Brands Paint Company
4300 West 190th Street
Torrance, California 90509-2956
Attention: Chief Financial Officer
<PAGE>
<PAGE> S-2
STANDARD BRANDS REALTY CO., INC.
By: /s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
By: /s/ EDWARD A. DRURY
Name: Edward A. Drury
Title: Vice President and Corporate
Secretary
Notice Address:
Standard Brands Paint Company
4300 West 190th Street
Torrance, California 90509-2956
Attention: Chief Financial Officer
SUN LIFE INSURANCE COMPANY OF AMERICA
By: /s/ KEVIN BUCKLE
Name: Kevin Buckle
Title: Authorized Agent
Notice Address:
Sun Life Insurance Company of
America
1 SunAmerica Center
Century City, California 90067
Attention: Robert Sydow
<PAGE>
<PAGE> S-3
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By: /s/ KEVIN BUCKLE
Name: Kevin Buckle
Title: Authorized Agent
Notice Address:
Anchor National Life Insurance
Company
1 SunAmerica Center
Century City, California 90067
Attention: Robert Sydow
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By: /s/ LYMAN LOKKEN
Name: Lyman Lokken
Title: Investment Officer
By_________________________________
Name:______________________________
Title:_____________________________
Notice Address:
Transamerica Occidental Life
Insurance Company
c/o Transamerica Realty Services,
Inc.
1150 South Olive Street, Suite 2200
Los Angeles, California 90015
Attention: Lyman Lokken
<PAGE>
<PAGE> S-4
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By: /s/ LYMAN LOKKEN
Name: Lyman Lokken
Title: Investment Officer
By_________________________________
Name:______________________________
Title:_____________________________
Notice Address:
Transamerica Life Insurance
And Annuity Company
c/o Transamerica Realty Services,
Inc.
1150 South Olive Street, Suite 2200
Los Angeles, California 90015
Attention: Lyman Lokken
<PAGE>
NOTE PURCHASE AGREEMENT
among
STANDARD BRANDS PAINT COMPANY,
a Delaware corporation,
STANDARD BRANDS PAINT CO.,
a California corporation,
MAJOR PAINT COMPANY,
a California corporation,
STANDARD BRANDS REALTY CO., INC.,
a California corporation,
and
FIDELITY CAPITAL & INCOME FUND
Dated as of May 17, 1995
$5,000,000 Principal Amount
<PAGE>
<PAGE> i
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Accounting Terms and Determinations . . . . . . . . . 8
SECTION 1.3. Evidence of Board Action . . . . . . . . . . . . . . 8
ARTICLE II PURCHASE OF NOTES. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1. Purchase of Notes . . . . . . . . . . . . . . . . . . 8
SECTION 2.2. Description and Terms of the Notes . . . . . . . . . 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BORROWERS . . . . . . 10
SECTION 3.1. Representations and Warranties of the Borrowers . . 10
(a) Organization, Standing and Corporate Power . . . . . 10
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . 11
(c) Capital Structure; New Shares; Preferred Shares . . . 11
(d) Authority; Noncontravention . . . . . . . . . . . . . 12
(e) SEC Documents; Undisclosed Liabilities . . . . . . . 13
(f) Proxy Statement . . . . . . . . . . . . . . . . . . . 14
(g) Absence of Certain Changes or Events . . . . . . . . 14
(h) Title to Properties and Assets; Liens . . . . . . . . 14
(i) Litigation; Adverse Facts . . . . . . . . . . . . . . 16
(j) Absence of Changes in Benefit Plans . . . . . . . . . 17
(k) Payment of Taxes . . . . . . . . . . . . . . . . . . 18
(1) Officers . . . . . . . . . . . . . . . . . . . . . . 18
(m) Brokers . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Material Contracts . . . . . . . . . . . . . . . . . 19
(o) Governmental Regulation . . . . . . . . . . . . . . . 19
(p) Disclosure . . . . . . . . . . . . . . . . . . . . . 19
(q) [Intentionally Omitted] . . . . . . . . . . . . . . . 20
(r) Licenses . . . . . . . . . . . . . . . . . . . . . . 20
(s) Private Offerings . . . . . . . . . . . . . . . . . . 20
(t) Foreign Assets Control Regulation, Etc. . . . . . . . 20
(u) Federal Reserve Regulations and Other Matters . . . . 21
(v) Insurance . . . . . . . . . . . . . . . . . . . . . . 21
(w) Intellectual Property . . . . . . . . . . . . . . . . 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . 22
SECTION 4.1. Representations and Warranties of the Purchaser . . 22
<PAGE>
<PAGE> ii
ARTICLE V CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . 23
SECTION 5.1. Conditions Precedent to Obligations of the Purchaser on
the Closing Date . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.2. Conditions Precedent to Obligations of the Company on
the Closing Date . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.1. Payment of Notes . . . . . . . . . . . . . . . . . 25
SECTION 6.2. Commission Reports . . . . . . . . . . . . . . . . 25
SECTION 6.3. Corporate Existence . . . . . . . . . . . . . . . . 25
SECTION 6.4. Payment of Taxes and Other Claims . . . . . . . . . 26
SECTION 6.5. Maintenance of Properties and Insurance . . . . . . 26
SECTION 6.6. Compliance Certificate; Notice of Default . . . . . 27
SECTION 6.7. Compliance with Laws . . . . . . . . . . . . . . . 28
SECTION 6.8. Legality of Investment . . . . . . . . . . . . . . 28
SECTION 6.9. ERISA and Code Compliance . . . . . . . . . . . . . 28
SECTION 6.10. Use of Proceeds . . . . . . . . . . . . . . . . . 29
SECTION 6.11. Defense of Usury . . . . . . . . . . . . . . . . . 29
SECTION 6.12. Fulfillment of Obligations . . . . . . . . . . . . 29
SECTION 6.13. Current Public Information . . . . . . . . . . . . 29
SECTION 6.14. Senior Indebtedness . . . . . . . . . . . . . . . 29
ARTICLE VII EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . 30
SECTION 7.1. Events of Default . . . . . . . . . . . . . . . . . 30
SECTION 7.2. Remedies on Default, Etc. . . . . . . . . . . . . . 31
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.1. Home Office Payment . . . . . . . . . . . . . . . . 32
SECTION 8.2. Survival of Representations, Warranties and Covenants;
Successors and Assigns . . . . . . . . . . . . . . . . . . 32
SECTION 8.3. Termination . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.4. No Waivers; Amendments . . . . . . . . . . . . . . 33
SECTION 8.5. Communications and Notices . . . . . . . . . . . . 33
SECTION 8.6. Delay Fees; Indemnification; Costs, Expenses
and Taxes . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.7. Lost, etc. Notes . . . . . . . . . . . . . . . . . 37
SECTION 8.8. Execution in Counterparts . . . . . . . . . . . . . 37
SECTION 8.9. Governing Law . . . . . . . . . . . . . . . . . . . 37
SECTION 8.10. Integration and Severability of Provisions . . . . 37
SECTION 8.11. Headings . . . . . . . . . . . . . . . . . . . . . 37
<PAGE>
<PAGE> iii
SCHEDULES
Schedule 3.1(b) Subsidiaries
Schedule 3.1(c) Stock Equivalents, Etc.
Schedule 3.1(d) Required Filings
Schedule 3.1(g) Absence of Changes, Including Severance Payments
Schedule 3.1(h) Mortgaged Properties and Environmental Issues
Schedule 3.1(i) Litigation
Schedule 3.1(k) Taxes
Schedule 3.1(n) Material Contracts
<PAGE>
<PAGE> 1
NOTE PURCHASE AGREEMENT dated as of May 17, 1995 (the "Agreement")
among Standard Brands Paint Company, a Delaware corporation (the
"Company"), Standard Brands Paint Co., a California corporation ("Paint
Co."), Major Paint Company, a California corporation ("Major Paint"),
Standard Brands Realty Co., Inc. a California corporation ("Realty Co." and
collectively with the Company, Paint Co., and Major Paint, the "Borrowers"
and each a "Borrower") and Fidelity Capital & Income Fund, a portfolio of a
Massachusetts business trust (the "Purchaser").
WHEREAS, the Borrowers have agreed to sell and the Purchaser has
agreed to purchase Notes in the aggregate principal amount of $5,000,000,
subject to the terms and conditions set forth below;
WHEREAS, the Borrowers are members of a group of related
corporations, the success of any one of which is dependent in part on the
success of the other members of such group.
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used in this Agreement, the following
terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any Person
(other than Persons affiliated with the Purchaser) that, directly or
indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power, alone or
together with others, to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the
terms hereof then in effect.
"Bankruptcy Code" means the United States Code, the Federal
Rules of Bankruptcy Procedure promulgated thereunder, and the local
Bankruptcy Rules for the Central District of California.
"Benefit Plan" has the meaning ascribed to such term under
ERISA.
"Business Day" means a day that is not a Legal Holiday.
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<PAGE> 2
"Charter Documents" has the meaning specified in Section 3.1(a)
of this Agreement.
"Closing" has the meaning specified in Section 2.1 of this
Agreement.
"Closing Date" has the meaning specified in Section 2.1 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, and the rules
and regulations promulgated thereunder, in each case as amended from
time to time.
"Commission" means the Securities and Exchange Commission or
any successor agency then having jurisdiction to enforce the
Securities Act.
"Company" means (i) Standard Brands Paint Company, a Delaware
corporation, (ii) its successors and assigns, and (iii) its
predecessors in interest, if any.
"Consolidated Subsidiary" means, with respect to any Person and
at any date, any Subsidiary the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements as of such date, as determined in accordance with GAAP.
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend, letter of credit,
or other obligation of itself or another, including, without
limitation, any obligation under any interest rate swap agreement or
currency swap agreement, any obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business), co-made, or discounted or sold with
recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including, without
limitation, any such obligation for which that Person is in effect
liable through any agreement (contingent or otherwise) 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 to maintain the solvency or
any balance sheet, income or other financial condition of the obligor
of such obligation, or to make payment for any products, materials,
or supplies or for any transportation, services, or lease regardless
of the non-delivery or non-furnishing thereof, in any such case if
the purpose or intent of such agreement is to provide assurance 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. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise
supported.
"Counsel to the Purchaser" means Goodwin, Procter & Hoar,
special counsel to the Purchaser.
<PAGE>
<PAGE> 3
"Deed of Trust" has the meaning specified in Section 5.1(e) of
this Agreement.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations promulgated thereunder, in each
case as amended from time to time.
"ERISA Affiliate", as applied to any Person, means any trade or
business (whether or not incorporated) that is a member of a group of
which that Person is also a member and that is under common control
within the meaning of the regulations promulgated under Section 414
of the Code.
"Event of Default" has the meaning specified in Section 7.1
hereof.
"Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder, in each case as
amended from time to time.
"Foothill Indebtedness" means the Indebtedness outstanding
under that certain Loan and Security Agreement, dated as of June 14,
1993, among Foothill Capital Corporation ("Foothill"), Paint Co. and
Major Paint, as amended from time to time; provided, however, that
the term "Foothill Indebtedness" shall under no circumstances refer
to any Indebtedness of any of the Borrowers to any person other than
Foothill.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America at the time such principles
are being applied pursuant to this Agreement.
"Governmental Authority" means any governmental or quasi-
governmental authority, including, without limitation, any federal,
state, territorial, county, municipal or other governmental or quasi-
governmental agency, board, branch, bureau, commission, court,
department or other instrumentality or political unit or subdivision,
whether domestic or foreign.
"Holder" means the Purchaser and each assignee or transferee of
the Purchaser, other than the Company and its Affiliates.
"Indebtedness" shall mean (a) all obligations of the Borrowers
for borrowed money; (b) all obligations of the Borrowers evidenced by
bonds, debentures, notes, or other similar instruments and all
reimbursements or other obligations of the Borrowers in respect of
letters of credit, letter of credit guaranties, bankers acceptances,
interest rate swaps, controlled disbursement accounts, or other
financial products; (c) all obligations under capitalized leases; (d)
all obligations or liabilities of others secured by a lien or
security interest on any asset owned by the Borrowers or
<PAGE>
<PAGE> 4
any of the Other Subsidiaries, irrespective of whether such
obligation or liability is assumed; or (e) any obligation of the
Borrowers or any of the Other Subsidiaries guaranteeing or intended
to guarantee (whether guaranteed, endorsed, co-made, discounted, or
sold with recourse to any of the Borrowers) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other Person.
"Indemnified Parties" has the meaning specified in Section
8.6(c) of this Agreement.
"Insurance Company Indebtedness" means the Indebtedness
outstanding under that certain Third Amended and Restated Loan
Agreement dated as of May 16, 1995, among the Company, Paint Co.,
Realty Co. and Transamerica Life Insurance and Annuity Company,
Transamerica Occidental Life Insurance Company, Sun Life Insurance
Company of America and Anchor National Life Insurance Co.
(collectively, the "Insurance Companies") and Transamerica Occidental
Life Insurance Company, as Servicing Agent; provided, however, that
the term "Insurance Company Indebtedness" shall under no
circumstances refer to any Indebtedness of any of the Borrowers to
any person other than the Insurance Companies.
"Interim Loan Agreement" means the Interim Loan Agreement,
dated as of February 15, 1995, among the Company, Standard Brands
Realty Co., Inc., Corimon Corporation and Standard Brands Paint Co.
"Investment Agreement" means the Investment Agreement, dated as
of February 15, 1995, among the Company, Standard Brands Paint
Collateral Trust, Corimon, S.A.C.A., Corimon Corporation, Kodak
Retirement Income Plan Trust Fund, Transamerica Life Insurance and
Annuity Co., Transamerica Occidental Life Insurance Co., Sun Life
Insurance Company of America, Anchor National Life Insurance Company
and the Purchaser.
"IRS" means the Internal Revenue Service.
"Legal Holiday" means, with respect to a particular place of
payment, a Saturday, a Sunday or a day on which banking institutions
at such place are not required to be open.
"Lien" means any mortgage, pledge, lien, encumbrance, easement,
restriction, covenant, right-of-way, charge or adverse claim
affecting title or resulting in an encumbrance against real or
personal property, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, any option, right of first refusal or other similar
agreement to sell securing indebtedness of the Company and any filing
of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statute or statutes) of any
jurisdiction).
<PAGE>
<PAGE> 5
"Liquidating Property Trust" means the liquidating property
trust established pursuant to the Liquidating Property Trust
Documents, to which the Company and its Subsidiaries transferred,
assigned, set over and otherwise conveyed certain real and personal
properties subject to the liens of Mortgages.
"Liquidating Property Trust Documents" means the Trust
Agreement dated as of July 12, 1994 among Company, Standard Brands
Paint Co., Standard Brands Realty Co., Inc., as Depositors, and
Bankers Trust Company of California, N.A., as Trustee (as defined in
such Trust Agreement) and the Amended and Restated Trust Loan
Agreement dated as of July 12, 1994 among the Liquidating Property
Trust, Sun Life Insurance Company of America, Anchor National Life
Insurance Co., Transamerica Occidental Life Insurance Company, and
Transamerica Life Insurance and Annuity Company and Transamerica
Occidental Life Insurance Company, as servicing and collateral agent,
as each such agreement may be amended, supplemented or modified from
time to time.
"Losses" has the meaning specified in Section 8.6(c) of this
Agreement.
"Major Paint Facility" means the land and improvements owned by
the Company and known as Store #900, located in Torrence, California,
all as more particularly described on Exhibit A to the Deed of Trust.
"material adverse change" or "material adverse effect" means
any change or effect (or any development that is likely to result in
any change or effect) that is materially adverse to the business,
properties, assets, condition (financial or otherwise), results of
operations or prospects of the Borrowers and the Other Subsidiaries
in each case taken as a whole.
"Material Contracts" has the meaning specified in Section
3.1(n) of this Agreement.
"Mortgage" and "Mortgages" have the meanings set forth in the
New Loan Agreement and the Loan Agreement.
"Mortgaged Property" means real and personal property subject
to the lien of a Mortgage; but shall not include the Mortgaged
Properties which were transferred to the Liquidating Property Trust
pursuant to the Liquidating Property Trust Documents.
"Multiemployer Plans" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA in which any employees of any of the
Borrowers or any ERISA Affiliate of such Borrower participate or from
which any such employees may derive a benefit.
"New Loan Agreement" means that certain Loan Agreement dated as
of March 16, 1994 by and among Company, Standard Brands Realty Co.,
Inc., Standard Brands Paint Co., the lenders named therein, the
Transamerica Occidental Life
<PAGE>
<PAGE> 6
Insurance Company, as servicing and collateral agent for lenders, as
such New Loan Agreement may be amended, restated, supplemented or
otherwise modified from time to time.
"Notes" means the Notes due May 17, 1997 issued and sold by the
Borrowers in the aggregate principal amount of $5,000,000 pursuant to
Section 2.1 of this Agreement. The Notes will be dated the Closing
Date, will bear interest commencing on the Closing Date payable as
provided therein, and will be substantially in the form of Exhibit A
to this Agreement. The term "Note" or "Notes" as used in this
Agreement shall include each such Note delivered pursuant to the
provisions of this Agreement and any such Notes issued in exchange or
replacement therefor.
"Obligations" means all obligations of every nature of the
Borrowers from time to time owed to the Purchaser and any Holders
under this Agreement and the Notes issued hereunder.
"Officers' Certificate" means, with respect to any Person
(other than an individual), a certificate signed by any two of the
chairman of the board, the president, any vice president, chief
financial officer, the treasurer, the secretary or the controller.
"Other Subsidiaries" means all of the Company's Subsidiaries
other than Paint Co., Major Paint and Realty Co.
"Outside Counsel to the Borrowers" means Buchalter, Nemer,
Fields & Younger.
"Pension Plan" means any employee plan that is subject to the
provisions of Title IV of ERISA in which any employees of any of the
Borrowers or any ERISA Affiliate of such Borrower participate or from
which any such employees may derive a benefit, other than a
Multiemployer Plan.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or a political subdivision, agency or
instrumentality thereof or other entity or organization of any kind.
"Plan" means Debtors Fourth Amended Joint Plan of
Reorganization filed March 1993, filed by the Company in the
Reorganization Cases and as it was amended thereafter, was confirmed
on May 14, 1993 and became effective on June 14, 1993.
"Prime Rate" means the rate of interest announced by Citibank,
N.A. in New York, New York from time to time as its prime lending
rate.
<PAGE>
<PAGE> 7
"Proxy Statement" means the proxy statement dated April 25,
1995 relating to the approval by the Company's stockholders of
certain transactions contemplated by the Investment Agreement, as
amended or supplemented from time to time.
"Reorganization Cases" means the Company's, Standard Brand
Paint Co.'s and Standard Brands Realty Co., Inc.'s jointly
administered cases under the Bankruptcy Code.
"Restricted Securities" means securities not registered under
the Securities Act.
"Restructuring" means the transactions contemplated by the
Investment Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated
thereunder.
"Security Agreement" has the meaning specified in Section
5.1(e) of this Agreement.
"Solvent" means with respect to any Person, that as of the date
of determination both (a) (i) the then fair saleable value of the
property of such Person is (A) greater than the total amount of
liabilities (including the fair market saleable value of Contingent
Obligations) of such Person and (B) greater than the amount that will
be required to pay the probable liabilities on such Person's then
existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available
to such Person; (ii) such Person's capital is not unreasonably small
in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (b) such
Person is "solvent" within the meaning given that term and similar
terms under applicable laws relating to the fraudulent transfers and
conveyances.
"Stock Equivalent" has the meaning specified in Section 3.1(c)
of this Agreement.
"Stock Split" means a 10-for-1 reverse stock split of the
Company's Common Stock, pursuant to which each ten outstanding shares
of its Common Stock, par value $.01 per share, was converted into one
share (a "Share") of its new Common Stock, par value $.01 per share.
"Subsidiary" means, (a) with respect to any Person (the
"parent") (i) a corporation a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at
the time, directly or indirectly, owned by the parent, by a
Subsidiary or Subsidiaries (as the case may be), or by the parent
and a
<PAGE>
<PAGE> 8
Subsidiary or Subsidiaries (as the case may be), or (ii) any other
Person (other than a corporation) in which the parent, one or more
Subsidiaries of the parent (as the case may be), or the parent and
one more of its Subsidiaries (as the case may be), directly or
indirectly, at the date of determination thereof, has at least a
majority equity ownership interest, and (b) in relation to
Subsidiaries of the Company, such Subsidiaries and each of the
predecessors in interest of such Subsidiaries, if any.
"Tax" or "Taxes" means all federal, state, local or foreign
taxes, including but not limited to, income, gross receipts, windfall
profits, alternative minimum, value added, severance, property,
production, sales, use, license, excise, franchise, employment,
withholding or similar taxes, together with and interest, additions
or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Tax Returns" means all reports and returns required to be
filed with respect to Taxes.
"Termination Event" has the meaning ascribed to such term under
ERISA.
"Transaction" means the transaction contemplated by this
Agreement.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder or pursuant hereto shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP and, except for changes concurred in by
the Company's independent accountants, consistently applied.
SECTION 1.3. Evidence of Board Action. To the extent that any
provision of this Agreement calls for a determination or judgment to be
made by the Board of Directors of any of the Borrowers, such determination
or judgment shall be evidenced by a resolution of such Borrower's Board of
Directors, which shall be filed in the minute books of such Borrower and
made available to the Purchaser upon request.
ARTICLE II
PURCHASE OF NOTES
SECTION 2.1. Purchase of Notes. On the terms and subject to the
conditions herein set forth, the Borrowers agree to sell to the Purchaser,
and the Purchaser agrees to purchase from the Borrowers, Notes in
substantially the form attached hereto as Exhibit A (each a "Note" and
collectively the "Notes"). The Notes will be dated the date of issuance
thereof and mature and bear interest and be payable as set forth below in
Section 2.2.
The Borrowers shall specify by notice to the Purchaser the date on
which they propose to sell to the Purchaser, and have the Purchaser
purchase from the Borrowers, the
<PAGE>
<PAGE> 9
Notes (the "Closing"). The date on which the Closing is to occur is
hereinafter referred to as the "Closing Date." Except as the parties may
otherwise agree, the Closing shall occur on May 17, 1995 and the Borrowers
hereby give notice to the Purchaser to that effect.
Delivery of the Notes to be purchased by the Purchaser pursuant to
this Agreement shall be made at the Closing by the Borrowers, delivering to
the Purchaser, against payment of the purchase price therefor, a Note or
Notes for the total principal amount of the Notes to be purchased by the
Purchaser, registered in the name of the Purchaser or such other Person
(which shall be an Affiliate of the Purchaser or a nominee of the Purchaser
or such Affiliate) as the Purchaser may have designated in writing to the
Borrowers at least one Business Day prior to the Closing Date, unless at
least two Business Days prior to the Closing Date the Purchaser shall have
requested that the Borrowers deliver more than one Note, in which event the
Borrowers will deliver to the Purchaser the number of Notes so requested,
registered in such name or names specified in such request(s) (subject to
the foregoing limitation) and in such principal amounts (which, in each
case, shall be a multiple of $1,000, and which shall not in the aggregate
exceed the aggregate principal amount of Notes to be purchased by the
Purchaser) as shall have been specified in such a request.
Payment of the purchase price for the Notes to be purchased hereunder
shall be made by the Purchaser by wire funds transfer of immediately
available funds to the following account: Bank of America San Francisco,
Routing No. 121000358, Standard Brands Paint Co. General/Concentration
Account, Account No. 1457-0-01992.
SECTION 2.2. Description and Terms of the Notes.
(a) Maturity. The Notes shall mature and all principal
payments and accrued interest shall be due and payable on the second
anniversary of the Closing Date (the "Maturity Date"), unless otherwise
extended at the option of the Borrowers as provided in subsection (f)
below.
(b) Principal Amount. The aggregate principal amount of the
Notes to be issued shall be FIVE MILLION DOLLARS AND NO CENTS ($5,000,000)
which amount shall be due and payable on the Maturity Date, without
set-off, deduction or counterclaim.
(c) Interest. The Notes shall bear interest on the unpaid
principal amount thereof from the date of issuance thereof until the
Maturity Date, at the Prime Rate plus five and one-half percent (5.5%) per
annum (the "Interest"). The Interest shall be computed on the basis of a
360-day year and the actual number of days elapsed, and be payable on each
March 31, June 30, September 30 and December 31 for the respective three-
month periods ending on each such date, commencing on June 30, 1995, and
upon any other payment of any principal amount of the Notes.
(d) Default Interest and Late Charges. In the event that any
principal amount of the Notes is not paid within fifteen (15) days of when
due and payable (whether at stated maturity, by acceleration or otherwise),
the Interest on such principal amount shall, notwithstanding anything
herein to the contrary and until all principal payments on the Notes
<PAGE>
<PAGE> 10
have been brought current, thereafter be increased by two percent (2%) per
annum, such interest rate shall be increased by one percent (1%) per annum
on each anniversary after the date when such payment was first due and
payable. Any Interest not paid when due and payable shall thereafter be
paid, on demand by the Purchaser, together with a late charge of two
percent (2%) of the amount of the interest payment due.
(e) Payments on the Notes. All payments of principal and
interest on the Notes shall be made by the Borrowers in accordance with
Section 8.1 hereof.
(f) Extension of Maturity Date. The Borrowers shall have the
option to extend the Maturity Date of the Notes for two consecutive six
month periods (the "Extension Options"). The Borrowers may exercise each
of the Extension Options by (i) providing the Purchasers and each Holder
with written notice 30 days prior to the applicable Maturity Date
requesting that the Maturity Date be extended for such additional six month
period (the "Extension Notice"), and (ii) making a payment to the Purchaser
and each of the Holders on or prior to the relevant Maturity Date of an
extension fee equal to two percent (2%) of the outstanding principal amount
of the Notes held by the Purchaser and each such Holder on the relevant
Maturity Date; provided, however, that the Maturity Date may not be
extended in accordance with this subsection 2.2(f) if at any time on or
after the Purchaser and the Holders receive the Extension Notice there
exists or occurs a Default or an Event of Default or a material adverse
change in the business, operations, properties, assets or condition
(financial or otherwise) of the Company and its Subsidiaries existing at
the date of this Agreement.
(g) Optional Prepayment. The Borrowers shall have the option
to prepay, in whole or in part and from time to time, without premium or
penalty, the Notes, by giving not less than 15 days nor more than 30 days
prior written notice thereof to the Purchaser and each of the other Holders
of the outstanding Notes; provided that in case of any partial prepayment
when the Notes shall be held by more than one Person, prepayment shall be
pro rata as among such Holders, as nearly as may be practicable, rounded to
the nearest $1,000 principal amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
SECTION 3.1. Representations and Warranties of the Borrowers. In
order to induce the Purchaser to enter into this Agreement, each of the
Borrowers hereby represents and warrants as follows:
(a) Organization, Standing and Corporate Power. Each of the
Borrowers and each of the Other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Each
of the Borrowers and each of the Other Subsidiaries is duly qualified or
licensed to do
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<PAGE> 11
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect on any of the
Borrowers. Each of the Borrowers has delivered to the Purchaser complete
and correct copies of its Certificate of Incorporation (the "Charter
Documents"), in each case as amended to the date of this Agreement.
(b) Subsidiaries. Schedule 3.1(b) lists each Subsidiary of
the Company. All of the outstanding shares of capital stock of each
Subsidiary that is a corporation have been validly issued and are fully
paid and nonassessable. Except as set forth in Schedule 3.1(b), the entire
equity interest in each Subsidiary of the Company is owned by the Company,
by another Subsidiary of the Company or by the Company and another such
Subsidiary, free and clear of all Liens. Except as permitted under Section
6.3 of the New Loan Agreement, neither the Company nor any of its
Subsidiaries owns or holds, directly or indirectly, any capital stock or
equity security of, or any equity interest in, any corporation or business
other than Subsidiaries of the Company.
(c) Capital Structure; New Shares; Preferred Shares. The
authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share and at the date hereof, (i) approximately
2,242,928 previously issued shares plus 18,392,008 newly issued shares of
Common Stock and 1,570,049 shares of preferred stock of the Company were
issued and outstanding, (ii) approximately 2,800 shares of Common Stock
were held by the Company in its treasury, (iii) there are no outstanding
employee stock options to purchase shares of Common Stock ("Employee Stock
Options") and no shares reserved for issuance pursuant to any Employee
Stock Option, and (iv) no shares of Common Stock were reserved for issuance
upon the exercise of outstanding warrants. The authorized capital stock of
Paint Co. consists of 20,000 shares of common stock, par value $100 per
share, and at the date hereof, 12,500 shares of common stock were issued
and outstanding, all of which shares are held by the Company. The
authorized capital stock of Major Paint consists of 25,000 shares of common
stock, no par value per share, and, at the date hereof, 1,000 shares of
common stock were issued and outstanding, all of which shares are held by
Paint Co. The authorized capital stock of Realty Co. consists of 10,000
shares of common stock, par value $100 per share, and, at the date hereof,
5,000 shares of common stock were issued and outstanding, all of which
shares are held by Paint Co. Except as set forth above, at the date
hereof, no shares of capital stock or other voting securities of any of the
Borrowers were issued, reserved for issuance or outstanding and except as
set forth on Schedule 3.1(c), there are not any phantom stock or other
contractual rights the value of which is determined in whole or in part by
the value of any capital stock of any of the respective Borrowers ("Stock
Equivalents"). There are no outstanding stock appreciation rights ("SARs")
with respect to the common stock of any of the Borrowers. No approval (not
already obtained) of the stockholders or the directors of any of the
Borrowers or of any Governmental Entity will be required by any of the
Borrowers for the issuance and sale of the Notes as contemplated by this
Agreement. All outstanding shares of capital stock of each the Borrowers
are, and all shares that may be issued pursuant to the Employee Stock
Options and the other agreements
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<PAGE> 12
and instruments listed above will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are not any outstanding bonds, debentures, notes or other
indebtedness of any of the Borrowers having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of such Borrower may vote. Except as
set forth above or as set forth in the Proxy Statement, as of the date of
this Agreement, there are not any securities, options, warrants, calls,
rights, convertible or exchangeable securities or commitments, agreements,
arrangements or undertakings of any kind to which any of the Borrowers or
any of the Other Subsidiaries is a party or by which any of them is bound
obligating any of the Borrowers or any of the Other Subsidiaries to issue,
deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of capital stock or other voting securities or
Stock Equivalents of any of the Borrowers or of any of the Other
Subsidiaries or obligating any of the Borrowers or any of the Other
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking and there are not any outstanding contractual obligations of
any of the Borrowers or any of the Other Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of any of the Borrowers or
any of the Other Subsidiaries. Except as set forth on Schedule 3.1(c), or
as contemplated by the Investment Agreement and the Ancillary Agreement (as
defined therein), neither the Company nor any of its Subsidiaries has
entered into any agreement to register its equity or debt securities under
the Securities Act.
(d) Authority; Noncontravention.
(i) Each of the Borrowers has the requisite corporate
(or other) power and authority to enter into this Agreement and to
consummate the Transaction. The execution and delivery by the
Borrowers of this Agreement and the consummation by the Borrowers of
the Transaction have been duly authorized by all necessary corporate
(or other) action on the part of each of the Borrowers. This
Agreement has been duly executed and delivered by each of the
Borrowers and constitutes a valid and legally binding agreement of
each of the Borrowers, enforceable against each of the Borrowers in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
(ii) The execution and delivery by the Borrowers of this
Agreement did not, and the consummation of the Transaction and
compliance with the provisions of this Agreement without obtaining
the consent of any third party will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss by any of
the Borrowers or any of the Other Subsidiaries of a material benefit
under, or the creation of any material additional benefit to any
third party under, or result in the creation of any Lien upon any of
the properties or assets of any of the Borrowers or any of the Other
Subsidiaries under, (i) the respective Certificate of Incorporation
or By-laws of any of the Borrowers or the comparable
<PAGE>
<PAGE> 13
charter or organizational documents of any of the Other Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise
or license applicable to any of the Borrowers or any of the Other
Subsidiaries or their respective properties or assets or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any of the Borrowers or any of the Other Subsidiaries
or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate could not
reasonably be expected to (x) have a material adverse effect on the
Borrowers, (y) impair the ability of the Borrowers to perform their
obligations under this Agreement or (z) prevent the consummation of
the Transaction. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or
any party to a Material Contract is required by or with respect to
any of the Borrowers or any of the Other Subsidiaries in connection
with the execution and delivery of this Agreement or the consummation
by the Borrowers of the Transaction, except for such consents,
approvals, orders, authorizations, registrations, declarations and
filings as are set forth on Schedule 3.1(d), or which have been
obtained prior to the date hereof.
(e) SEC Documents; Undisclosed Liabilities. The Company has
filed all required reports, schedules, forms, statements and other
documents with the SEC since January 31, 1993 (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any SEC Document has
been revised or superseded by a later Filed SEC Document, none of the SEC
Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its Subsidiaries as of the dates
thereof and their consolidated statements of operations, stockholders
equity and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in the Filed SEC Documents, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance sheet of
the Company and its Subsidiaries or in the notes thereto, other than
liabilities and obligations incurred in the ordinary course of business
consistent with prior practice and experience since January 30, 1995.
<PAGE>
<PAGE> 14
(f) Proxy Statement. The Proxy Statement did not, at the
date it was first mailed to the Company's stockholders or at the time of
the meeting of the Company's stockholders held to vote on approval of
certain proposals, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement complied as to
form in all material respects with the requirements of the Exchange Act.
No representation is made by the Company with respect to statements made or
incorporated by reference in the Proxy Statement based on information
supplied by unaffiliated third-parties for inclusion or incorporation by
reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed SEC Documents") or in Schedule 3.1(g),
since January 31, 1994, the Borrowers have conducted their respective
businesses only in the ordinary course, and there has not been (i) any
material adverse change in any of the Borrowers, (ii) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of the capital stock of any of
the Borrowers, (iii) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of capital stock of any of the Borrowers' (other than pursuant to
the Stock Split), (iv) except as set forth on Schedule 3.1(g) (x) any
granting by any of the Borrowers or any of the Other Subsidiaries to any
executive officer of any of the Borrowers or any of the Other Subsidiaries
of any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect on January 31, 1994, (y) any granting by any of the
Borrowers or any of the Other Subsidiaries to any such executive officer of
any increase in severance or termination pay, except as was required under
any employment, severance or termination agreements in effect on January
31, 1994, or (z) any entry by any of the Borrowers or any of the Other
Subsidiaries into any employment, severance or termination agreement with
any such executive officer, (v) any damage, destruction or loss, whether or
not covered by insurance, that has had or could reasonably be expected to
have a material adverse effect on any of the Borrowers or (vi) any change
in accounting methods, principles or practices by any of the Borrowers
materially affecting the respective assets, liabilities or business of the
Borrowers, except insofar as may have been required by a change in
generally accepted accounting principles.
(h) Title to Properties and Assets; Liens.
(i) Except as disclosed in the Proxy Statement, each of
the Borrowers and the Other Subsidiaries have good, sufficient and
legal title to all the properties and assets reflected in the
consolidated balance sheet as of January 30, 1995 included in Form
10-Q of the Company except for assets acquired or disposed of in the
ordinary course of business since the date of such consolidated
balance sheet. All such properties are free and clear of Liens,
except as permitted under Section 6.2 of the New Loan Agreement.
<PAGE>
<PAGE> 15
(ii) Schedule 3.1(h) hereto correctly sets forth the
following information with respect to each Mortgaged Property: (a)
store number (if applicable) and (b) street address. Each Subsidiary
has good and marketable fee title to each Mortgaged Property
identified in Schedule 3.1(h) as being owned by such Subsidiary and
each Mortgaged Property is free and clear of Liens, except as
permitted under Section 6.2 of the New Loan Agreement.
(iii) The Borrowers have previously furnished to the
Purchaser true, correct and complete copies of all ground leases,
space leases, subleases, easement agreements, reciprocal easement
agreements, two-party supplemental agreements, option agreements,
license agreements, and other agreements, instruments, and documents
(whether or not recorded) that encumber, or otherwise affect in any
material respect, their fee interest in or to any Mortgaged Property
or any portion thereof.
(iv) No condemnation proceeding involving any Mortgaged
Property or portion of any thereof or parking facility used in
connection therewith has commenced or, to the knowledge of any Other
Subsidiary or any of the Borrowers, is contemplated by any
governmental authority.
(v) The operation of each of the Borrowers, the Other
Subsidiaries and each Mortgaged Property does not involve a violation
of (i) any statutes, laws, regulations, rules, ordinances, or orders
of any kind whatsoever (including, without limitation, zoning and
building laws, ordinances, codes, or approvals and environmental
protection orders, laws or regulations) other than violations that
would not result in any material change in the business, operations,
properties, assets or condition (financial or otherwise) of any Other
Subsidiary, or any Borrower and would not materially adversely affect
such Mortgaged Property or the ability of any of the Borrowers or any
of the Other Subsidiaries to perform their respective Obligations or
consummate the Transaction, (ii) any building permits, restrictions
of record, or any agreement affecting any such Mortgaged Property or
portion thereof other than violations that would not result in any
material change in the business, operations, properties, assets or
condition (financial or otherwise) of any Other Subsidiary or any
Borrower and would not materially adversely affect such Mortgaged
Property or the ability of any of the Borrowers or any of the Other
Subsidiaries to perform their respective obligations or consummate
the Transaction.
(vi) Each Mortgaged Property has adequate water, gas,
telephone, electrical supply, storm and sanitary sewage facilities,
and means of access to and from public highways, and has fire and
police protection to the fullest extent available in the jurisdiction
in which such Mortgaged Property is located.
(vii) Except as disclosed in writing to the Purchaser on
Schedule 3.1(h), (x) the operations of each of the Borrowers and each
of the Other Subsidiaries comply with all applicable environmental,
health, and safety statutes and regulations except to the extent that
noncompliance would not result in any material change in the
<PAGE>
<PAGE> 16
business, operations, properties, assets, or condition (financial or
otherwise) of any Other Subsidiary or any of the Borrowers, and that
would not materially adversely affect any Mortgaged Property or the
ability of any Borrower or any of the Other Subsidiaries to perform
their respective Obligations or consummate the Transaction; (y) none
of the Mortgaged Properties or the operations of any Borrower or
any of the Other Subsidiaries is the subject of any private claims or
any federal or state investigation evaluating whether any remedial
action is needed in response to a release of any hazardous waste (as
such term is defined in any applicable state or federal or
environmental law or regulations) or other hazardous material into
the environment except to the extent that such claims or remedial
action would not result in any material change in the business,
operations, properties, assets, or condition (financial or otherwise)
of any Other Subsidiary or any Borrower and that would not materially
adversely affect any Mortgaged Property or the ability of any
Borrower or any of the Other Subsidiaries to perform their respective
Obligations or consummate the Transaction; and (z) neither any of the
Borrowers nor any of the Other Subsidiaries has any material
contingent liability in connection with any release of any hazardous
waste or hazardous material into the environment including, without
limitation, any contingent liability arising in connection with a
failure, or alleged failure, to comply with the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. sec.sec. 9601, et seq.), or the Federal Resource
Conservation and Recovery Act, as amended (42 U.S.C. sec.sec. 6901
et. seq.), except for such contingent liabilities that would not
result in a material change in the business, operations, properties,
assets, or condition (financial or otherwise) of any Other Subsidiary
or any Borrower and that would not materially adversely affect any
Mortgaged Property or the ability of any of the Borrowers or any of
the Other Subsidiaries to perform their respective Obligations or
consummate the Transaction.
(i) Litigation; Adverse Facts. There is no action, suit,
proceeding or arbitration (whether or not purportedly on behalf of any of
the Borrowers or any of the Other Subsidiaries at law or in equity or
before or by any federal, state, municipal or other government department,
commission, board, bureau, agency, or instrumentality, domestic or foreign)
pending (except as otherwise disclosed on Schedule 3.1(i) hereto) or, to
the knowledge of any of the Borrowers or any Other Subsidiary, threatened
against or affecting any of the Borrowers or any of the Other Subsidiaries
or any of such Borrower's or such Other Subsidiary's properties not
provided for in the Plan that would (i) result in any material adverse
change in the business, operations, properties, assets, or condition
(financial or otherwise) of the Borrowers and the Other Subsidiaries, taken
as a whole, (ii) materially adversely affect any Mortgaged Property, (iii)
impair the ability of any of the Borrowers to perform their obligations
under this Agreement or (iv) prevent the consummation of the Transaction,
and there is no basis known to any of the Borrowers for any such action,
suit or proceeding. Neither any of the Borrowers nor any of the Other
Subsidiaries is (i) in violation of any applicable law that materially
adversely affects or may materially adversely affect any Mortgaged
Property, the business, operations, properties, assets or condition
(financial or otherwise) of the Borrowers and the Other Subsidiaries, taken
as a whole, or the ability of any of the Borrowers or any of the Other
Subsidiaries to perform their respective Obligations or consummate the
Transaction, or (ii) subject to or in default with respect to
<PAGE>
<PAGE> 17
any final judgment, writ, injunction, decree, rule or regulation of any
court or any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
that would have a material adverse affect any Mortgaged Property, the
business, operations, properties, assets or condition (financial or
otherwise) of the Borrowers and the Other Subsidiaries, taken as a whole,
or the ability of any of the Borrowers or any of the Other Subsidiaries to
perform their respective Obligations or consummate the Transaction. There
is no action, suit, proceeding, or investigation pending or, to the
knowledge of any of the Borrowers, or any Other Subsidiary, threatened
against or affecting any of the Borrowers or any of the Other Subsidiaries
that questions the validity or enforceability of this Agreement or
challenges the Transaction.
(j) Absence of Changes in Benefit Plans.
(i) Each of the Borrowers and each of their respective
ERISA Affiliates is in compliance in all material respects with any
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Pension Plans and
Multiemployer Plans, except to the extent that all such
noncompliances would not result in the loss of the deductibility of
contributions to any Pension Plan or Multiemployer Plan, or would not
result in the incurrence by such Borrower and its ERISA Affiliates of
any civil penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of Internal Revenue Code in an aggregate
amount in excess of $100,000.
(ii) Except for the termination of the Company's LESOP
and PAYSOP, as defined and described in the Plan and the contemplated
"freezing" of the Company's three Pension Plans by ceasing the
accrual of benefits under such Pension Plans, no event or condition
which presents a material risk of plan termination or any other event
that may cause any Borrower or any ERISA Affiliate of any such
Borrower to incur liability or have a lien imposed on its assets
under title IV of ERISA has occurred or is reasonably expected to
occur with respect to any Pension Plan; and none of the events
described above might result in the imposition of any lien or
incurrence by any of the Borrowers or any of their ERISA Affiliates
of any liability under any Pension Plan or to the Pension Benefit
Guaranty Corporation (or any successor thereto) or any other party
under Sections 4062, 4063, and 4064 of ERISA or any other law in
excess of $100,000.
(iii) Vested liabilities (as defined in Section 3(25) of
ERISA) under all Pension Plans (with assets less than vested
liabilities only) do not exceed the assets thereunder by more than
$100,000.
(iv) Neither any of the Borrowers nor any of their ERISA
Affiliates has incurred or reasonably expects to incur any withdrawal
liability under ERISA to any Multiemployer Plan in excess of
$100,000.
(k) Payment of Taxes. Except as set forth in Schedule
3.1(k), as of the date of this agreement and on the Closing Date, (i) all
Tax Returns that are required to be
<PAGE>
<PAGE> 18
filed by or with respect to the Company and each of its Subsidiaries have
been duly filed, (ii) all Taxes due with respect to the periods covered by
the Tax Returns referred to in clause (i) have been timely paid, (iii) no
adjustments or deficiencies relating to the Tax Returns referred to in
clause (i) have been proposed, asserted or assessed by the Internal Revenue
Service or the appropriate state, local or foreign taxing authority, (iv)
no extension of time with respect to any date on which a Tax Return was or
is to be filed by the Company or any of its Subsidiaries is in force, and
there are no pending or threatened actions or proceedings for the
assessment or collection of Taxes against the Company or any of its
Subsidiaries, (v) each adjustment, deficiency, action or proceeding set
forth in Schedule 3.1(k) is being contested or handled in good faith, (vi)
there are no outstanding waivers or agreements extending the applicable
statute of limitations for any period with respect to any Taxes of the
Company or any of its Subsidiaries, (vii) the Company and the Subsidiaries
income Tax Returns have been examined by the Internal Revenue Service or
the appropriate state, local or foreign tax authority, (viii) no closing
agreement pursuant to Section 7121 of the Internal Revenue Code, or similar
provision of any state, local, or foreign law, has been entered into by or
with respect to the Company or any of its Subsidiaries, (ix) there are no
tax sharing agreements or similar contracts or arrangements to which the
Company or any of its Subsidiaries is a party, (x) the Company or any of
its Subsidiaries has not been a member of an affiliated group (within the
meaning of Section 1504 of the Internal Revenue Code) filing a consolidated
federal income Tax Return, other than a group the common parent of which is
the Company, (xi) no powers of attorney with respect to Taxes granted by
the Company or any of its Subsidiaries are in effect, (xii) no claim has
ever been made by an authority in a jurisdiction where the Company or any
Subsidiary does not file Tax Returns that the Company or such Subsidiary is
or may be subject to taxation by that jurisdiction, (xiii) no audit of any
Tax Return filed by the Company or any Subsidiary is in progress, and
neither the Company nor any Subsidiary has been notified by any tax
authority that any such audit is contemplated or pending, and (xiv) there
are no security interests on any of the assets of the Company or any
Subsidiary that arose in connection with any failure (or alleged failure)
to pay any Taxes.
(1) Officers. Except as set forth on Schedule 3.1(g), there
are no severance or other payment obligations triggered as a result of the
Transaction. No action, suit, proceeding or arbitration relating to any
officer of any of the Borrowers is pending or threatened against any of the
Borrowers.
(m) Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the Transaction based
upon arrangements made by or on behalf of any of the Borrowers.
(n) Material Contracts. All contracts, leases and other
agreements to which any of the Borrowers or any of the Other Subsidiaries
is a party and that are material to the business, properties, assets,
condition (financial or otherwise), results of operations or prospects of
the Borrowers and the Other Subsidiaries, taken as a whole (the "Material
Contracts"), have been filed as exhibits to the SEC Documents or are listed
on Schedule 3.1(n).
<PAGE>
<PAGE> 19
Except as disclosed in Schedule 3.1(n), each Material Contract is in
full force and effect; the Company and its Subsidiaries have performed in
all material respects all the obligations required to be performed thereby
under each Material Contract; neither the Company nor any of its
Subsidiaries has received any written assertion of default under any
Material Contract; neither the Company nor any of its Subsidiaries expects
any termination or material change to, or receipt of a proposal with
respect to, any of the Material Contracts as a result of the Transaction;
and neither the Company nor any of its Subsidiaries has knowledge of any
material breach or anticipated material breach by any other party to any
Material Contract. The Company has filed as an exhibit to an SEC Document
or has furnished the Purchaser with true, complete and unredacted copies of
each Material Contract, together with all amendments, waivers or other
changes thereto. Neither the Company nor any of its Subsidiaries has any
Material Contract or any other contract or agreement with the United States
Department of Energy, the United States Department of Defense or any of the
armed forces of the United States.
(o) 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 to any federal or state statute or
regulation, limiting any of the Borrowers' ability to (i) issue the Notes,
(ii) incur Indebtedness for money borrowed, (iii) create Liens on any of
its properties to secure such Indebtedness, or (iv) otherwise to consummate
the Transaction. SBP Transportation Co., Inc., a California corporation,
is subject to the Interstate Commerce Act, but such act does not limit the
actions described above.
(p) Disclosure. No representation or warranty of the Company
or any of its Subsidiaries contained in this Agreement, or any other
document, certificate, or written statement furnished to the Purchaser by
or on behalf of the Company or any of its Subsidiaries for use in
connection with the Transaction contains any untrue statement of a material
fact or omits to state a material fact (known to the Company or any of its
Subsidiaries in the case of any document not furnished by it) necessary in
order the make the statements contained herein or therein not misleading.
The term "material" in the preceding sentence shall be interpreted in
accordance with Section 10(b) of the Exchange Act. There is no fact known
to Company or any of its Subsidiaries (other than matters of general
economic nature) that materially adversely affects any Mortgaged Property,
the business, operations, property, assets, or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or the
ability of the Company or any of its Subsidiaries to perform their
respective obligations that have not been disclosed herein or in such other
documents, certificates and statements furnished to the Purchaser for use
in connection with the Transaction.
(q) [Intentionally Omitted]
(r) Licenses. Each of the Borrowers and the Other
Subsidiaries hold all material licenses, franchises, permits, consents,
registrations, certificates and other approvals (including, without
limitation, those relating to environmental matters, public and worker
health and safety, buildings, highways or zoning) (individually, a
"License" and collectively, "Licenses") required for the conduct of their
respective business as now being conducted,
<PAGE>
<PAGE> 20
and is operating in substantial compliance therewith, except where the
failure to hold any such License or to operate in compliance therewith
would not have a material adverse effect on the Borrowers and the Other
Subsidiaries.
(s) Private Offerings. No form of general solicitation or
general advertising was used by any of the Borrowers or any of the Other
Subsidiaries or any of such Borrower's or such Other Subsidiary's
representatives, or, to the knowledge of the Borrowers, any other Person
acting on behalf of the Borrowers or any of the Other Subsidiaries, in
connection with the offering of the securities being purchased under this
Agreement. Neither the Borrowers, any of the Other Subsidiaries nor any
person acting on such Borrower's or such Other Subsidiary's behalf has
directly or indirectly offered the Notes or any part thereof or any other
similar securities or the securities being purchased under any other
document, for sale to, or sold or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with
any Person or Persons other than the Purchaser. Assuming the accuracy of
the representations of the Purchaser as set forth in Section 4.1, neither
the Borrowers, any of the Other Subsidiaries nor any person acting on such
Borrower's or such Other Subsidiary's behalf has taken or will take any
action which would subject the issue and sale of the securities being
purchased under this Agreement to the provisions of Section 5 of the
Securities Act.
(t) Foreign Assets Control Regulation, Etc. Neither the
issue and sale of the Notes by the Borrowers nor their use of the proceeds
thereof as contemplated by this Agreement will violate the Foreign Assets
Control Regulations, the Control Regulations, the Cuban Assets Control
Regulations, the Foreign Funds Control Regulations, the Iranian Assets
Control Regulations, the Nicaraguan Trade Control Regulations, the South
African Transactions Control Regulations, the Libyan Sanctions Regulations,
the Soviet Gold Coin Regulations, the Panamanian Transactions Regulations,
the Haitian Transactions Regulations or the Iraqi Sanctions Regulations of
the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) or Executive Orders 12722 and 12724 (Transactions with Iraq).
(u) Federal Reserve Regulations and Other Matters. None of
the Borrowers nor any of the Other Subsidiaries will, directly or
indirectly, use any of the proceeds from the sale of the Notes for the
purpose, whether immediate, incidental or ultimate, of buying any "margin
stock," or of maintaining, reducing or retiring any indebtedness originally
incurred to purchase any stock that is currently a "margin stock," or for
any other purpose which might constitute the Transaction a "purpose
credit," in each case within the meaning of Regulation G or U of the Board
of Governors of the Federal Reserve System (12 C.F.R. 207 and 221, as
amended, respectively), or otherwise take or permit to be taken any action
which would involve a violation of such Regulation G or Regulation U or of
Regulations T or X of the Board of Governors of the Federal Reserve System
(12 C.F.R. 220 and 224, as amended, respectively) or any other regulation
of such Board. No indebtedness that may be maintained, reduced or retired
with the proceeds from the sale of the Notes was incurred for the purpose
of purchasing or carrying any "margin stock" and none of the Borrowers nor
any of the Other Subsidiaries own any such "margin
<PAGE>
<PAGE> 21
stock" or have any present intention of acquiring, directly or indirectly,
any such "margin stock."
(v) Insurance. The Borrowers will provide to the Purchaser,
if so requested in writing, a list of all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors under which the Borrowers or any of the
Other Subsidiaries may derive any material benefit, the term and deductible
for each such policy, the agency and company providing such insurance and
the name of each person scheduled as having an interest therein as loss
payee, pledgee or otherwise. There is no claim by any of the Borrowers or
any of the Other Subsidiaries pending under any of such policies or bonds
as to which coverage has been questioned, reserved, denied or disputed by
the underwriters of such policies or bonds or their agents where such
question, reservation, denial or dispute, in each case, would have a
material adverse effect on the Borrowers and the Other Subsidiaries on a
consolidated basis. All premiums due and payable under all such policies
and bonds have been paid, and the Company and its Subsidiaries are
otherwise in full compliance with the terms and conditions of all such
policies and bonds, except in each case where the failure would not have a
material adverse effect on the Borrowers and the Other Subsidiaries on a
consolidated basis. Such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance coverage) are
and have been in full force and effect for at least the last year or since
the inception of the Company or any of its Subsidiaries, as the case may
be, and remain in full force and effect. Such policies of insurance and
bonds are of the type and in amounts customarily carried by persons
conducting business similar to that presently conducted by the Company and
its Subsidiaries. None of the Borrowers knows of any threatened
termination of any such policies or bonds that would be material to the
Company and its Subsidiaries taken as a whole.
(w) Intellectual Property. The Borrowers and the Other
Subsidiaries have ownership of, or license to use, all patent, copyright,
trade secret, trademark, or other proprietary rights used or to be used in
the business of the Borrowers or any of the Other Subsidiaries and which
are material to the Borrowers and the Other Subsidiaries on a consolidated
basis (collectively, "Intellectual Property"). There are no claims or
demands of any other person pertaining to any of such Intellectual Property
and no proceedings have been instituted, or are pending or, to the
knowledge of any of the Borrowers, threatened, which challenge the rights
of the Borrowers or any of the Other Subsidiaries in respect thereof,
except those that would not have a material adverse effect on the Borrowers
and the Other Subsidiaries on a consolidated basis. The Borrowers and the
Other Subsidiaries have the right to use all customer lists, designs,
manufacturing or other processes, computer software, systems, data
compilations, research results and other information required for or
incident to its products or their business as presently conducted or
contemplated and which are material to the Borrowers and the Other
Subsidiaries on a consolidated basis.
<PAGE>
<PAGE> 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.1. Representations and Warranties of the Purchaser. To
induce the Borrowers to enter into this Agreement and to sell the Notes
hereunder, the Purchaser represents and warrants to, and covenants and
agrees with, the Borrowers, as follows:
(a) The Purchaser represents that, by reason of its business
and financial experience, and the business and financial experience of
those Persons, if any, retained by it to advise it with respect to its
investment in the Notes, the Purchasers together with such advisers have
such knowledge, sophistication and experience in business and financial
matters as to be capable of evaluating the merits and risk of the
prospective investment, and is purchasing the Notes to be purchased by it
for its own account or for one or more separate accounts maintained by it
or for the account of one or more institutional investors on whose behalf
the Purchaser has authority to make this representation for investment and
not with a view to the distribution thereof and with no present intention
of distributing or reselling said Notes or any part thereof other than
pursuant to a registration statement under the Securities Act or an
exemption thereunder and except to one or more such institutional
investors, without prejudice, however, to its right (subject to the terms
of the Notes) at all times to sell or otherwise dispose of all or any part
of said Notes pursuant to a registration under the Securities Act, or under
an exemption from such registration available under the Securities Act, and
subject, nevertheless, to the disposition of its assets being at all times
within its control.
(b) The Purchaser represents that it has full power and
authority and has taken all action necessary to authorize it to enter into
and perform its obligations under this Agreement and all other documents or
instruments contemplated hereby. This Agreement is a legal, valid and
binding obligation of the Purchaser, and this Agreement is enforceable in
accordance with its terms, except (i) that such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally; (ii) that such enforceability may be subject to general
equitable principles, including, without limitation, the principle that the
availability of equitable remedies, such as specific enforcement,
injunctive relief or reformation, is subject to the discretion of the court
before which any proceeding might be brought; and (iii) as rights to
indemnity referred to or provided in any such agreements may be limited by
federal or state securities laws or public policy underlying such laws.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. Conditions Precedent to Obligations of the Purchaser on
the Closing Date. The obligation of the Purchaser to purchase the Notes to
be purchased by it hereunder is subject to the satisfaction of the
following conditions, at or prior to the Closing:
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<PAGE> 23
(a) (i) The representations and warranties made by the
Borrowers herein shall be true and correct on and as of the date hereof and
at and as of the Closing; (ii) the Borrowers shall have complied with and
performed all covenants, agreements and conditions hereunder required to be
complied with or performed by them at or prior to the Closing; and (iii) at
the time of the Closing and after giving effect to the issuance by the
Borrowers of the Notes pursuant to this Agreement, and any other
transaction occurring on the Closing Date in connection with any of the
foregoing, no Default shall have occurred and be continuing; and the
Borrowers shall have furnished to the Purchaser Officers' Certificates for
each of the Borrowers, dated the Closing Date and with the signatories
thereto being appropriate authorized officers (A) to the foregoing effect,
and (B) to the further effect that the conditions specified in this Section
5.1 shall have been satisfied at and as of the Closing.
(b) [Intentionally Omitted.]
(c) The purchase of the Notes to be purchased by the
Purchaser hereunder shall not at the Closing be prohibited by, or contrary
to, any laws, regulations, credit controls (whether voluntary or mandatory)
or similar restraints applicable to the Purchaser, shall not be enjoined
(temporarily or permanently) under, prohibited by or contrary to, any
injunction, order or decree applicable to the Purchaser, shall not subject
the Purchaser to any penalty or other onerous condition under or pursuant
to any applicable law or governmental regulation, and shall be permitted by
the laws and regulations of the jurisdiction to which the Purchaser is
subject, and, if requested by the Purchaser, the Purchaser shall have
received, at least two Business Days prior to the Closing Date, Officers'
Certificates of each of the Borrowers certifying as to such matters of fact
as it may reasonably request in order to determine whether its purchase is
so prohibited or enjoined or would result in any such contravention or
penalty.
(d) The Borrowers shall have received all consents, permits
and other authorizations, and made all such filings and declarations, as
may be required from any Person pursuant to any law, statute, rule or
regulation (federal, state, local and foreign), or pursuant to any
agreement, order or decree to which any of the Borrowers or any of the
Other Subsidiaries is a party or to which it is subject, in connection with
the transactions contemplated by this Agreement.
(e) Paint Co. and Major Paint shall have executed and
delivered to the Purchaser a security agreement in a form approved by
Counsel to the Purchaser (the "Security Agreement"), granting to the
Purchaser a second security interest in all inventory and accounts
receivables of Paint Co. and Major Paint whether now owned or hereafter
acquired and a Second Deed of Trust relating to the Major Paint Facility
executed by Realty Co. (the "Deed of Trust"), and all financing statements,
mortgages and other documents in connection therewith shall have been duly
filed or recorded.
(f) All of the Conditions to Funding and Closing set forth in
Article IV of the Investment Agreement shall have been fulfilled or waived
by the parties thereto.
<PAGE>
<PAGE> 24
(g) The Purchaser shall have received a certificate, dated
the Closing Date, of the Secretary or an Assistant Secretary of each of the
Borrowers, (i) certifying as true, complete and correct its Charter
Documents and resolutions attached thereto relating to the transactions
contemplated by this Agreement, (ii) as to the absence of proceedings or
other action for dissolution, liquidation or reorganization of such
Borrower or any of its Subsidiaries, (iii) as to the incumbency of officers
who shall have executed instruments, agreements and other documents in
connection with the transactions contemplated hereby, (iv) as to the effect
that certain agreements, instruments and other documents are in
substantially the form approved in the resolutions referred to in clause
(i) above, if appropriate, and (v) covering such other matters, and with
such other attachments thereto, as such Counsel to the Purchaser may
reasonably request at least one (1) Business Day before the Closing Date,
each of which certificates and the attachments thereto shall be
satisfactory in form and substance to Counsel to the Purchaser.
(h) The Purchaser shall have received a favorable opinion,
addressed to the Purchaser and dated the Closing Date, from Outside Counsel
to the Borrowers, as to such matters and in form and substance satisfactory
to the Purchaser.
(i) All proceedings to be taken in connection with the
transactions contemplated by this Agreement to be consummated on or prior
to the Closing Date, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Counsel to the Purchaser,
and such Counsel shall have been provided with such closing documents in
addition to those expressly provided for herein as shall have been
reasonably requested.
SECTION 5.2. Conditions Precedent to Obligations of the Company on
the Closing Date. The obligation of the Borrowers to issue and sell the
Notes pursuant to this Agreement is subject to the satisfaction, at or
prior to the Closing, of the following conditions:
(a) The representations and warranties made by the Purchaser
herein shall be true and correct at and as of the Closing.
(b) At the Closing, the Purchaser shall purchase all of the
Notes pursuant to this Agreement upon payment of the aggregate purchase
price therefor specified herein.
(c) The issuance of the Notes shall not be prohibited by or
contrary to any law or regulation applicable to any of the Borrowers and
shall not be enjoined (temporarily or permanently) or prohibited by or
contrary to any injunction, order or decree applicable to any of the
Borrowers.
<PAGE>
<PAGE> 25
ARTICLE VI
COVENANTS
The Borrowers covenant and agree with the Purchaser that, as long as
any of the Notes remain outstanding:
SECTION 6.1. Payment of Notes. The Borrowers shall pay the
principal of, premium, if any, and Interest on the Notes on the dates and
in the manner provided in this Agreement and in the Notes. Principal,
premium, if any, and Interest shall be considered paid on the date due if
paid in accordance with the provisions of Section 8.1 hereof.
SECTION 6.2. Commission Reports. The Company shall cause to be
mailed to the Purchaser and each Holder at their respective addresses, in
each case within 15 days after it files them with the Commission and in any
event no later than 60 days after the end of each of the first three fiscal
quarters and no later than 105 days after the end of the fourth fiscal
quarter, copies of its annual report and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. In the event that the Company is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall nevertheless continue to file with the Commission, and cause
to be mailed to the Purchaser and each Holder, in each case in the manner
and within the time periods otherwise required by the immediately preceding
sentence, such annual reports and such information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which are specified in
Sections 13 and 15(d) of the Exchange Act as if the Company were subject to
the reporting requirements therein.
SECTION 6.3. Corporate Existence. Each of the Borrowers shall do or
cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, and the corporate, partnership or other
existence of each Subsidiary, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
each Subsidiary and the rights (charter and statutory), licenses and
franchises of such Borrower and the Other Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license
or franchise, or the corporate, partnership or other existence of any Other
Subsidiary, if the Board of Directors or the senior officers of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to
the Purchaser or any Holder.
SECTION 6.4. Payment of Taxes and Other Claims. Each of the
Borrowers shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all Taxes, assessments and
governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of the
Other Subsidiaries or properties of it or any of the Other Subsidiaries and
(ii) all lawful claims for labor, materials and supplies that, if unpaid,
might by law become a Lien upon the property
<PAGE>
<PAGE> 26
of it or any of the Other Subsidiaries; provided, however, that none of the
Borrowers shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim if either (a) the
amount, applicability or validity thereof is being contested in good faith
by appropriate proceedings and an adequate reserve has been established
therefor to the extent required by GAAP or (b) the failure to make such
payment or effect such discharge (together with all other such failures)
would not have a material adverse effect on the financial condition or
results or operations of the Company and its Subsidiaries taken as a whole.
SECTION 6.5. Maintenance of Properties and Insurance.
(a) The Company shall cause all properties used or useful to
the conduct of its business or the business of any Subsidiaries to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in its judgment may be necessary, so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times unless the failure to so maintain such properties
(together with all other such failures) would not have a material adverse
effect on the financial condition or results of operations of the Company
and its Subsidiaries taken as a whole; provided, however, that nothing in
this Section 6.5 shall prevent the Company or any of its Subsidiaries from
discontinuing the operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is either (i)
in the ordinary course of business, or (ii) in the good faith judgment of
the Board of Directors of the Company or the Subsidiary concerned, or of
the senior officers of the Company or such Subsidiary, as the case may be,
desirable in the conduct of the business of the Company or such Subsidiary,
as the case may be.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company, are adequate and appropriate
for the conduct of the business of the Company and such Subsidiaries in a
prudent manner, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as shall be either (i)
consistent with past practices of the Company or the applicable Subsidiary
or (ii) customary, in the reasonable, good faith opinion of the Company,
for corporations similarly situated in the industry, unless the failure to
provide such insurance (together with all other such failures) would not
have a material adverse effect on the financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole. The
Company shall, and shall cause its Subsidiaries to, use the proceeds from
any such insurance policy to repair, replace or otherwise restore the
property to which such proceeds relate, except to the extent that a
different use of such proceeds is, as determined by the Company, in good
faith, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Purchaser
or any Holder.
<PAGE>
<PAGE> 27
SECTION 6.6. Compliance Certificate; Notice of Default.
(a) Each of the Borrowers shall deliver to the Purchaser and
each Holder within 120 days after the end of such Borrower's fiscal year an
Officers' Certificate stating that a review of its activities and, with
respect to the Company, the activities of the Other Subsidiaries, during
the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether it has kept, observed,
performed and fulfilled its obligations under this Agreement and further
stating, as to each such Officer signing such certificate, that to the best
of his knowledge such Borrower during such preceding fiscal year has kept,
observed, performed and fulfilled each and every such covenant and no
Default or Event of Default occurred during such year or, if such signers
do know of such a Default or Event of Default, the certificate shall
describe the Default or Event of Default and its status with particularity.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants,
the Company shall deliver to the Purchaser and each Holder within 120 days
after the end of the fiscal year a written statement by the Company's
independent certified public accountants stating (A) that their audit
examination has included a review of the terms of this Agreement and the
Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default has come to their attention and
if such a Default has come to their attention, specifying the nature and
period of existence thereof.
(c) Each of the Borrowers shall deliver to the Purchaser and
each Holder promptly upon the occurrence of any Default, but in any event
within five (5) days after each such Borrower shall first have knowledge,
or in the exercise of diligence should have knowledge, of any Default or
facts constituting a Default, an Officer's Certificate of the Company
setting forth the material details thereof and the action that such
Borrower has taken, is taking or proposes to take with respect thereto.
(d) Each of the Borrowers shall deliver to the Purchaser and
each Holder promptly in the event that any indebtedness of such Borrower,
or, with respect to the Company, any of the Other Subsidiaries, is declared
due and payable before its expressed maturity, or any holder of such
indebtedness shall have the right to declare such indebtedness due and
payable before its expressed maturity, because of the occurrence of any
default under such indebtedness, or any other adverse event or
circumstances affecting such Borrower or, with respect to the Company, any
of the Other Subsidiaries, including the filing of any litigation against
such Borrower or, with respect to the Company, any of the Other
Subsidiaries, or the existence of any dispute with any individual,
partnership, joint venture, corporation, trust unincorporated organization
or any government or any department or agency thereof, which involves a
possibility of such litigation being filed, written notice of such
declaration or right of declaration or adverse event or circumstance.
SECTION 6.7. Compliance with Laws. Each of the Borrowers shall
comply, and the Company shall cause each of the Other Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states
<PAGE>
<PAGE> 28
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are being
contested in good faith and by appropriate proceedings and except for such
noncompliance as would not in the aggregate have a material adverse effect
on the financial condition or results of operations of the Borrowers and
the Other Subsidiaries taken as a whole.
SECTION 6.8. Legality of Investment. As promptly as practicable
after the Closing, each of the Borrowers will provide information to and
will cooperate with the Purchaser insofar as may be reasonably necessary to
make such financial and other calculations as may be required to determine
whether the purchase of the Notes hereunder by the Purchaser shall qualify
as a legal investment by the Purchaser under provisions of applicable law
other than so-called "basket" or "leeway" provisions thereof.
SECTION 6.9. ERISA and Code Compliance. Promptly upon becoming
aware of the occurrence of any (i) "reportable event," as such term is
defined in Section 4043(b) of ERISA for which the 30-day notice requirement
is not otherwise waived under such section, (ii) "complete withdrawal" or
"partial withdrawal" (within the meaning of Sections 4203 and 4205 of
ERISA) from a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA) or (iii) "prohibited transaction" as such term is defined in Section
4975 of the Code in connection with any pension plan or any trust created
thereunder, which may, either singly or in the aggregate, result in a
liability which would have a material adverse effect on the Borrowers or
any of the Other Subsidiaries, or the ability of the Borrowers to perform
their obligations under this Agreement or any instrument executed pursuant
hereto, the Borrowers shall furnish to the Purchaser, so long as the
Purchaser shall hold any of the Notes, a written notice specifying the
nature thereof and what action the Borrowers, the IRS, the Pension Benefit
Guaranty Corporation or any other relevant party is taking or proposes to
take with respect thereto. The Company and its Subsidiaries shall meet all
minimum funding requirements applicable to any pension plans imposed by
ERISA or the Code (without giving effect to any waivers of such
requirements or extensions of the related amortization periods which may be
granted) and shall at all times comply in all material respects with the
provisions of ERISA and the Code which are applicable to such pension plans
and to any welfare plans. Any reference to the Borrowers in this Section
6.9 shall be deemed to include a reference to all other entities within the
same "controlled group" as the Borrowers (within the meaning of Section
302(d)(8)(c) of ERISA).
SECTION 6.10. Use of Proceeds. Paint Co., Major Paint and Realty
Co. will use the proceeds from the sale of the Notes for their respective
ordinary working capital purposes.
SECTION 6.11. Defense of Usury. To the fullest extent permitted by
law, each of the Borrowers agrees that it will not assert, plead (as a
defense or otherwise) or in any manner whatsoever claim in any action, suit
or proceeding that the interest rate on the Notes violates usury or other
laws relating to the interest payable on any indebtedness and will not
otherwise avail itself of the benefits or advantages of any such laws.
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<PAGE> 29
SECTION 6.12. Fulfillment of Obligations. Each of the Borrowers
will observe and comply with all of the terms, conditions and covenants to
be performed by such Borrower under this Agreement, and the agreements and
instruments to be entered into by the Borrowers pursuant to this Agreement.
SECTION 6.13. Current Public Information. At all times after the
date hereof, each of the Borrowers will take such further action
(including, without limitation, the furnishing of information) as the
Purchaser or any Holder or Holders of Restricted Securities may reasonably
request, all to the extent required to enable the Purchaser or such
Holder(s) to sell Restricted Securities pursuant to Rule 144 adopted by the
Commission under the Securities Act, as such rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon reasonable request, each of the Borrowers will deliver to
the Purchaser or such Holder(s) a written statement as to whether it has
complied with such requirements.
SECTION 6.14. Senior Indebtedness. None of the Borrowers will
become indebted or create, incur, assume or be liable in any manner in
respect of, or suffer to exist any Indebtedness senior in right of payment
or security to the Notes other than the Foothill Indebtedness and the
Insurance Company Indebtedness, without the prior written consent from the
Purchaser, which consent will not be unreasonably withheld if (a) the
Borrowers negotiate, execute and deliver an amendment to this Agreement
providing for appropriate additional covenants acceptable to the Purchaser
and (b) the amount of all Indebtedness of the Borrowers senior to the Notes
does not exceed the sum of $12.5 million, plus the amount of the Insurance
Company Indebtedness outstanding on the date hereof.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
SECTION 7.1. Events of Default. The occurrence of any one of the
following shall constitute an Event of Default hereunder:
(a) the Borrowers shall fail to pay any interest on any Note
when the same becomes due and payable and the continuance of any such
failure for a period of 15 days;
(b) the Borrowers shall fail to pay any principal of or
premium, if any, on any Note when and as the same becomes due and payable
at maturity, upon acceleration or otherwise;
(c) the Borrowers shall default in the performance of any
covenant or agreement contained in this Agreement or the Security Agreement
which default is not cured or waived within a period of 30 days;
(d) any of the Borrowers shall (i) apply for or consent to
the appointment of a receiver, trustee or liquidator of it or of all a
substantial part of its assets; (ii) be adjudicated a bankrupt or
insolvent; (iii) file a voluntary petition in bankruptcy or a petition
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<PAGE> 30
or an answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law; or (iv) fail to obtain within 30 days
dismissal of any involuntary petition in bankruptcy filed or any
reorganization or insolvency proceeding commenced against such Borrower;
(e) an order, judgment or decree shall be entered against any
Borrower, without the application, approval or consent of such Borrower, by
any court of competent jurisdiction, approving a petition seeking
reorganization or liquidation of such Borrower or appointing a receiver,
trustee or liquidator of such Borrower or of all or a substantial part of
its assets and such order, judgment or decree shall remain unstayed and in
effect for a period of 30 days;
(f) any representation or warranty made by any Borrower
hereunder shall prove to have been false or incorrect in any material
respect when made;
(g) any of the Borrowers shall default in the performance of
any covenant or agreement contained in any other agreement for Indebtedness
to which it is a party or by which it is bound, which other agreement
involves a liability or obligation of such Borrower in excess of $500,000,
which default is not cured or waived within a period of 30 days;
(h) any Borrower shall default under any mortgage, indenture
or instrument under which there may be incurred or by which there may be
secured or evidenced any indebtedness for money borrowed by such Borrower
or any of the Other Subsidiaries (or the payment of which is guaranteed by
any Borrower or any of the Other Subsidiaries) whether such indebtedness
now exists, or is created after the date hereof, if such default results in
the acceleration of such indebtedness prior to its express maturity which
mortgage, indenture or instrument involves a liability or obligation of
such Borrower in excess of $500,000; or
(i) there occurs any further attachment of, or any voluntary
or involuntary lien or encumbrance against, the Collateral (as such term is
defined in the Security Agreement), that is inconsistent with the Security
Agreement.
SECTION 7.2. Remedies on Default, Etc. After an Event of Default
has occurred, the Borrowers shall promptly notify the Purchaser and each
Holder in writing of such occurrence. Upon the occurrence of an Event of
Default, and at any time thereafter while such Event of Default is
continuing, the Purchaser and the Holders, collectively holding not less
than 25% in aggregate principal amount of the then outstanding Notes by
written notice to the Borrowers, may declare (a "Declaration") due and
payable an amount equal to all unpaid principal of, premium, if any, and
accrued interest on, all Notes issued and outstanding (the "Default
Amount"). If an Event of Default specified in clause (d) or (e) of Section
7.1 occurs, the Default Amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the
Purchaser or any Holder. The holders of a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Company may
rescind any Declaration if all Events of Default then continuing (other
than any Events of Default with respect to the nonpayment of principal of
or interest on any Note which has become due solely as a result of such
Declaration) have been cured.
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<PAGE> 31
In addition, the Purchaser and any Holder may proceed to enforce its
rights by suit in equity, action at law and/or other appropriate means and
may exercise any and all rights afforded a secured creditor under the
Uniform Commercial Code.
The Borrowers hereby agree to pay on demand reasonable costs and
expenses, including without limitation reasonable attorneys' fees, incurred
or paid by the Purchaser and any Holder in enforcing the Purchaser's or
such Holder's Note upon the occurrence of an Event of Default.
No delay or omission on the part of the Purchaser or any Holder in
exercising any right hereunder shall operate as a waiver of such right of
any other right under this Agreement or the Purchaser's or such Holder's
Note, and a waiver, delay or omission on any one occasion shall not be
construed as a bar to or waiver of any such right on any future occasion.
No provision of this Agreement or the Notes shall alter or impair the
obligation of the Borrowers, which is absolute and unconditional, to pay
the principal and interest on the Notes at the times, places and rates, and
in the coin or currency provided.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Home Office Payment. The Borrowers will make payments
of interest on, and all or any portion of the principal of, any Note, other
than the final payment of principal, to the Holder of such Note, in
immediately available funds (whether by federal funds, wire transfer or
otherwise) by 12:00 noon, New York City time, at the location of the
Purchaser's bank account on the date of payment, to such account as is
specified beneath the Purchaser's name on an execution page hereof or as
shall have been specified by separate written notice to the Company by the
Purchaser (providing sufficient information with respect to such wire
transfer to identify the source and application of the funds and requesting
the bank to send a credit advice thereof to the Purchaser), or to such
other account or in such other similar manner as the Purchaser may
designate to the Borrowers in writing, without surrender or presentation
thereof to the Borrowers if the Borrowers have so agreed with such Holder.
SECTION 8.2. Survival of Representations, Warranties and Covenants;
Successors and Assigns.
(a) Each of the Borrowers agrees that each representation,
warranty, covenant and agreement made by it in this Agreement or in any
certificate, instrument or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Purchaser or any Holder or (ii)
acceptance of any of the Notes and payment therefor. The provisions of
Section 8.6 shall survive any
<PAGE>
<PAGE> 32
termination of this Agreement. All such representations, warranties,
covenants and agreements shall be binding upon any successors and assigns
of the Borrowers. In addition, whether or not any express agreement has
been made, except as otherwise provided in this Section 8.2, all Holders of
Notes as transferees from the Purchaser hereunder shall be entitled to the
benefit of all covenants and agreements of each of the Borrowers to be
performed or observed by it hereunder.
(b) Except as expressly provided in this Agreement, and
except that such rights and obligations shall inure to the benefit of, or
be assumed as binding on, as the case may be, each assignee who takes Notes
as Restricted Securities, the rights and obligations of any Purchaser or
Holder under this Agreement may not be assigned to any other Person and
this Agreement shall not be construed so as to confer any right or benefit
upon any Person other than the parties to this Agreement and any Holders,
and their respective successors and assigns. This Agreement shall be
binding upon the Borrowers and the Purchaser, and its successors and
assigns, provided that none of the Borrowers may assign any of its rights
under this Agreement.
(c) All provisions of this Agreement purporting to give
rights to any Holders are for the express benefit of such Holders,
respectively, and, without limitation to the foregoing, each of the
Borrowers hereby acknowledges and agrees that each Holder shall be entitled
to enforce such rights and the corresponding obligations of each of the
Borrowers under this Agreement.
(d) All provisions of this Agreement purporting to give
rights to the Purchaser shall extend to and include those Persons who on
the Closing Date received the beneficial interests of the Notes purchased
by the Purchaser at the Closing.
SECTION 8.3. Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by the Purchaser if any of the conditions specified in
Section 5.1 of this Agreement has not been satisfied or waived by the
Purchaser by August 16, 1995; or
(b) by the Borrowers if any of the conditions specified in
Section 5.2 of this Agreement has not been satisfied or waived by the
Borrowers by August 16, 1995.
Notwithstanding the foregoing, this Agreement shall terminate without
further liability to any of the parties at such time as all of the
obligations of the Borrowers under the Notes have been fully satisfied and
discharged.
SECTION 8.4. No Waivers; Amendments. No failure or delay on the
part of the Borrowers or the Purchaser or Holder 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. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Borrowers or the
Purchaser or Holder
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<PAGE> 33
at law or in equity or otherwise. This Agreement may be amended with the
prior written consent of the holders of at least a majority in aggregate
principal amount of the Notes outstanding at the time such action is taken
by the Borrowers.
SECTION 8.5. Communications and Notices. Except as otherwise
provided in this Agreement, all communications and notices provided for in
this Agreement or under the Notes shall be in writing and, if to the
Borrowers, mailed or delivered to them at 4300 West 190th Street, Torrence,
CA 90509-2956, Attention: Chief Financial Officer, with a copy to Sullivan
& Cromwell, 444 S. Flower Street, Los Angeles, CA 90071, Attention: Frank
H. Golay, Jr., or at any other office that the Borrowers may hereafter
designate by written notice to the Purchaser, and, if to the Purchaser,
mailed or delivered to its address specified on an execution page of this
Agreement, or to such other address and for such attention as the Purchaser
may from time to time designate to the Borrowers in writing, with copies to
Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109,
Attention: Laura Hodges Taylor, P.C. Each such notice, request or other
communication shall be effective (i) if given by telex or telecopy, when
such telex or telecopy is transmitted to the telex or telecopy number
specified in or pursuant to this Section 8.5 and (in the case of telex) the
appropriate answer-back, or (in the case of a telecopy) telephonic
confirmation of receipt, is received, (ii) if given by mail, four (4) days
after such communication is deposited in the U.S. mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered at the address specified in or pursuant to this
Section 8.5; provided that notices under Section 2.1 shall not be effective
until received.
SECTION 8.6. Delay Fees; Indemnification; Costs, Expenses and Taxes.
(a) If the Closing shall not actually occur on any date on
which the Closing is scheduled to occur, and the Borrowers shall have
failed to notify the Purchaser prior to 12:00, Noon, New York City Time on
the Business Day prior to such scheduled Closing that such Closing has been
postponed, unless such delay is solely the result of any action or inaction
of the Purchaser or Counsel to the Purchaser, the Borrowers agree to pay to
the Purchaser (as compensation for its loss of funds and administrative
costs) an amount equal to the interest on the purchase price for the Notes
to have been purchased by the Purchaser on such scheduled date at such
Closing, at the interest or dividend rate to be borne by such Notes, upon
the Closing, for each day from and including such scheduled date of Closing
to and including the earlier of the date on which such Closing actually
occurs or the date on which the amount to be paid by the Purchaser as the
purchase price of such Notes is available to the Purchaser for
reinvestment, but in any case not less than one day's interest; provided
that the Borrowers shall not owe the Purchaser anything under this Section
8.6(a) if they have fulfilled all of their obligations under this Agreement
by 12:00, Noon, New York City Time and the Purchaser is not willing or able
to fulfill its obligations on the scheduled Closing Date.
(b) Each of the Borrowers agrees (for the benefit of the
Purchaser and each Holder and whether or not the transactions contemplated
hereby are consummated) to pay, and to hold the Purchaser and each Holder
harmless against liability for the payment of, all reasonable costs and
expenses in connection with the negotiation, preparation, typing,
<PAGE>
<PAGE> 34
reproduction, execution and delivery of this Agreement, the Notes, any
amendment or supplement to or modification of any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in
connection herewith or therewith, including, without limitation, the
reasonable fees and disbursements of Counsel to the Purchaser, incurred in
connection with the preparation of and the out-of-pocket expenses incurred
by the Purchaser and its agents in connection with the negotiation and
execution of this Agreement, the Notes, all the reasonable fees and
expenses incurred in connection with the registration or qualification of
the Notes, for offer and sale under the state securities, "Blue Sky" or
insurance laws of such jurisdictions as may be necessary or desirable in
connection with validating or attempting to obtain an exception from such
requirements, the cost of delivery to the Purchaser's home office, insured
to its satisfaction, of the Notes to be purchased by it and all reasonable
costs and expenses in connection with the administration of this Agreement.
Each of the Borrowers agrees (for the benefit of the Purchaser and each
Holder) to pay, and to hold the Purchaser and each Holder harmless from and
against, all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses), if any, in connection with the enforcement
against the Borrowers of this Agreement, the Notes, or any other agreement
or instrument furnished pursuant hereto or thereto or in connection
herewith or therewith in any action in which the Purchaser or any Holder,
attempting to enforce any of the foregoing shall prevail or in any action
in which the Purchaser or Holders, shall validly assert any provision of
any of the foregoing as a defense. In addition, each of the Borrowers
agrees (for the benefit of the Purchaser and each Holder) to pay any and
all stamp, transfer and other similar taxes (together in each case with
interest and penalties, if any) payable or determined to be payable in
connection with the execution and delivery of this Agreement, or the
issuance of the Notes, and to hold the Purchaser and each Holder harmless
from and against any and all liabilities with respect to or resulting from
any delay in paying, or omission to pay, such taxes. In the event that the
issuance and sale of the Notes does not occur, each of the Borrowers agrees
to pay the aforesaid costs and expenses to be paid by the Borrowers
pursuant to this Section 8.6(b). The obligations of the Borrowers in this
Section 8.6(b) shall survive the payment or transfer of any of the Notes,
the enforcement of any provisions of any agreement or instrument referred
to in this Section 8.6(b) and any amendments or waivers.
(c) In addition to any and all obligations of the Borrowers
to indemnify the Purchaser and each Holder, hereunder, the Borrowers shall,
without limitation as to time (except as otherwise provided herein),
indemnify the Purchaser, or each Holder, its Affiliates, and its employees,
officers, directors and agents (collectively, the "Indemnified Parties")
against, and hold each Indemnified Party harmless from, all losses, claims,
damages, liabilities, costs (including the costs of preparation and
reasonable attorneys' fees) and expenses (collectively, the "Losses")
incurred by such Indemnified Party which relate to the ownership of the
Notes by the Purchaser or such Holder or Holders and which arise (i) in
connection with or arising from any breach of any warranty, or the
inaccuracy of any representation made by any of the Borrowers or the
failure of any of the Borrowers to fulfill any of its agreements or
undertakings under this Agreement, (ii) pursuant to any investigation or
proceeding against any of the Borrowers or any Indemnified Party, brought
by any third-party, arising out of or in connection with this Agreement (or
any other document or instrument executed herewith or pursuant hereto or
thereto) or the transactions to which they
<PAGE>
<PAGE> 35
relate, whether or not the transactions contemplated herein are
consummated, which investigation or proceeding requires the participation
of, or is commenced or filed against, any Indemnified Party because of this
Agreement (or any such document or instrument executed herewith or pursuant
hereto) or the transactions contemplated hereby, or (iii) in connection
with or arising from (A) the failure of any of the Borrowers, or any of the
Other Subsidiaries to comply with any federal, state or local
environmental, health or safety law, ordinance, regulation, rule or other
legally enforceable requirement, or (B) the presence, treatment, recycling,
storage, disposal or actual or potential release of any hazardous waste,
hazardous substance, hazardous material, or oil or any petroleum product or
pollutant or contaminant at, on or under any property owned or operated by
the Company, or any of its Subsidiaries, or at, on or under any other place
if such hazardous waste, hazardous substance, hazardous material, oil,
petroleum product, pollutant or contaminant was transported or generated by
the Company or any of its Subsidiaries. Notwithstanding the foregoing, the
Borrowers shall not be liable for any Losses resulting from action on the
part of any Indemnified Party which is finally determined in such
proceeding to be an act of gross negligence, recklessness or willful
misconduct by such Indemnified Party and is unrelated to any wrongful act
by the Borrowers or their representatives, and was not taken by any
Indemnified Party in reliance upon any of the warranties, covenants or
promises of the Borrowers herein or in any other documents contemplated
hereby or thereby, including certificates delivered by the Borrowers or its
representatives pursuant hereto or thereto. Each of the Borrowers agrees
to reimburse any Indemnified Party promptly for all such Losses as they are
incurred by any Indemnified Party, subject to repayment by such Indemnified
Party in the case of any Losses referred to in the previous sentence. The
obligations of the Borrowers to the Indemnified Parties hereunder shall be
separate obligations to each Indemnified Party, and the liability of the
Borrowers to such Indemnified Parties hereunder shall not be extinguished
solely because any Indemnified Party is not entitled to indemnity
hereunder. The obligations of the Borrowers under this Section 8.6(c)
shall survive the payment or prepayment of the Notes, at maturity, upon
redemption or otherwise, any transfer of the Notes and the termination of
this Agreement.
(d) If the indemnification provided for in Section 8.6(c) is
unavailable to any Indemnified Party in respect of any Losses referred to
therein, then the Borrowers, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses in such proportions as is appropriate to
reflect the relative fault of the Borrowers, on the one hand, and such
Indemnified Party, on the other hand, in connection with the actions which
resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of the Borrowers, on the one hand, and
any Indemnified Party, on the other hand, shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been taken by, or relates to
information supplied by, the Borrowers, on the one hand, or such
Indemnified Party, on the other hand, and the Borrowers' and such
Indemnified Party's relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
<PAGE>
<PAGE> 36
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.6(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.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in the second paragraph of
this Section 8.6(d), any reasonable legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or proceeding. The obligations of the Borrowers under
this Section 8.6(d) shall survive the payment or prepayment of the Notes,
at maturity, upon redemption or otherwise, any transfer of the Notes, and
the termination of this Agreement.
SECTION 8.7. Lost, etc. Notes. Notwithstanding any provision to the
contrary in the by-laws of any of the Borrowers, if any Note which the
Purchaser or any other Holder (or nominee thereof) is the owner is
mutilated, destroyed, lost or stolen, then the affidavit of the Purchaser's
or such Holder's treasurer or assistant treasurer (or other responsible
official), setting forth the circumstances with respect to such mutilation,
destruction, loss or theft, shall be accepted as satisfactory evidence
thereof, and an indemnity, security or payment of charges or expenses may
be required as a condition to the execution and delivery by the Borrowers
of Notes for a like aggregate principal amount in substitution therefor.
The Borrowers may charge such Holder for its reasonable expenses in
replacing such Notes.
SECTION 8.8. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
SECTION 8.9. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said
State without regard to principles of conflicts of laws thereof.
SECTION 8.10. Integration and Severability of Provisions. This
Agreement and any other agreement or instrument furnished pursuant hereto
or in connection herewith, embody the entire agreement and understanding
between the Purchaser and the Borrowers, and supersede all prior agreements
and understandings relating to the subject matter hereof. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
<PAGE>
<PAGE> 37
SECTION 8.11. Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
<PAGE>
<PAGE> 38
NOTE PURCHASE AGREEMENT
BORROWERS SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers hereunto duly authorized, as of
the date first above written.
STANDARD BRANDS PAINT COMPANY
By:/s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
STANDARD BRANDS PAINT CO.
By:/s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
MAJOR PAINT COMPANY
By:/s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
STANDARD BRANDS REALTY CO., INC.
By:/s/ HOWARD SCHWARTZ
Name: Howard Schwartz
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
<PAGE> 39
NOTE PURCHASE AGREEMENT
PURCHASER SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers hereunto duly authorized, as of
the date first above written.
FIDELITY CAPITAL & INCOME FUND
By: /s/ DAVID J. BREAZZANO
Name: David J. Breazzano
Title: Vice President
Addressee:
Fidelity Capital & Income
c/o Fidelity Management &
Research Co.
82 Devonshire Street - F7E
Boston, MA 02109
Attention: Portfolio Manager and
Robert M. Gervis, Esq.
Telecopier:(617) 570-7458
Nominee (name in which Notes should
be registered if different than name
of Purchaser):
Hudd & Co.
Tax I.D. # 13-6582164
(Use Nominee tax I.D. # is Notes
are registered in Nominee)
Fidelity Capital & Income Fund ("Purchaser") is a portfolio of a
Massachusetts business trust. A copy of the Purchaser's Declaration of
Trust (under the name Fidelity Summer Street Trust) is on file with the
Secretary of State of the Commonwealth of Massachusetts. Each of the
parties hereto acknowledges and agrees that this Agreement is not executed
on behalf of the trustees of the Purchaser as individuals, and the
obligations of this Agreement are not binding upon any of the trustees,
officers or shareholders of the Purchaser individually, but are binding
only upon the assets and property of the Purchaser. Each of the parties
hereto agrees that no shareholder, trustee or officer of the Purchaser may
be held personally liable or responsible for any obligations of the
Purchaser arising out of this
<PAGE>
<PAGE> 40
Agreement. With respect to obligations of the Purchaser arising out of
this Agreement, each of the parties hereto shall look for payment or
satisfaction of any claim solely to the assets and property of the
Purchaser. Each of the parties hereto is expressly put on notice that the
rights and obligations of each series of shares of the Purchaser under its
Declaration of Trust are separate and distinct from those of any and all
other series.
