EXHIBIT 10.7
LOAN AGREEMENT
THIS AGREEMENT made this 22nd day of November, 1995, by and
between XX Xxxxxxxxxx, L.P., a limited partnership duly organized and existing
under the laws of the State of Delaware, having its principal office and place
of business at 0000 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Borrower"), and NEW
YORK STATE URBAN DEVELOPMENT CORPORATION d\b\a EMPIRE STATE DEVELOPMENT
CORPORATION, a corporate governmental agency of the State of New York,
constituting a political subdivision and public benefit corporation, having its
principal office and place of business at 000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx
00000 ("Lender").
ARTICLE 1. DEFINITIONS AND ACCOUNTING MATTERS.
Section 1.01. Certain Defined Terms. As used herein, the
following terms have the following meanings (terms defined in the singular shall
have the same meaning when used in the plural and vice versa):
"Affiliate" means any Person: (a) which is a director, officer
or employee of Borrower or is a Related Person to any of the foregoing; (b)
which directly or indirectly controls, or is controlled by, or is under common
control with, Borrower; (c) which directly or indirectly beneficially owns or
holds 5% or more of any class of voting stock of Borrower; or (d) 5% or more of
the voting stock of which is directly or indirectly beneficially owned or held
by Borrower. The term "Related Person" means any Person related by blood or
marriage to another Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Application" means the application submitted by Borrower to
ESDC in connection with the Loan as such application may have been amended or
supplemented.
"Capital Expenditures" means for any period, the Dollar amount
of gross expenditures (including obligations under Capital Leases) made for
fixed assets, real property, plant and equipment, and all renewals, improvements
and replacements thereto (but not repairs thereof) incurred during such period.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Collateral" shall have the meaning assigned to such term in
the Security Agreement.
"Current Assets" means all assets treated as current assets in
accordance with GAAP, excluding, however, from the determination of current
assets: prepaid expenses; assets located outside the U.S.; loans to insiders,
and amounts due from Subsidiaries and Affiliates.
"Current Liabilities" means all liabilities treated as current
liabilities in accordance with GAAP, including without limitation (a) all
obligations payable on demand or within one year after the date in which the
determination is made, and (b) installment and sinking fund payments required to
be made within one year after the date on which determination is made, but
excluding all such liabilities or obligations which are renewable or extendable
at the option of Borrower to a date more than one year from the date of
determination.
"Debt" means, with respect to any Person, all indebtedness of
such Person for borrowed money, whether fixed or contingent or secured or
unsecured, including, without limitation, indebtedness for the deferred purchase
price of property or services (including trade obligations), the face amount of
any outstanding letters of credit issued for the account of such Person, all
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss, any obligations secured by any Lien on property of such
Person, and all obligations of such Person as lessee under Capital Leases.
"Debt Service" means, with respect to any Person, the current
portion of long term debt plus interest expense.
"Default" means any event which with the giving of notice or
lapse of time. or both, would become an Event of Default.
"Default Rate" means a variable rate per annum of 6% above the
Prime Rate as in effect from time to time upon the occurrence of each event
which causes the Loan to bear interest at the Default Rate.
"Event of Default" has the meaning giving such term in
Section 7.01.
"Full-Time Permanent Employee" means either (a) an employee on
Borrower's payroll, who has worked at the Premises for a minimum of thirty-five
hours per week for not less than four consecutive weeks and who is entitled to
receive the usual and customary fringe benefits extended by Borrower to other
employees with comparable rank and duties; or (b) two employees on Borrower's
payroll, who have worked at the Premises for a combined minimum of thirty-five
hours per week for not less than four consecutive weeks and who are entitled to
receive the usual and customary fringe benefits extended by Borrower to other
employees with comparable rank and duties.
"Funded Debt" means, with respect to any Person, all
indebtedness for borrowed money.
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"GAAP" means generally accepted accounting principles in the
United States of America.
"Intangible Assets" means (1) all loans or advances to and
other Receivables owing from any officers, employees, Subsidiaries and other
affiliates (other than the Subordinated Debt), (2) all investments, whether in a
Subsidiary or otherwise, (3) goodwill, (4) any other assets deemed intangible
under GAAP, and (5) any other assets determined to be intangible by Lender in
its reasonable credit judgment.
"Intercreditor Agreement" means that certain agreement dated
as of the date of this Agreement between Fleet Bank and Lender.
"Lien" means any lien (statutory or otherwise), security
interest, mortgage, deed of trust, priority, pledge, charge, conditional sale,
title retention agreement, financing lease or other encumbrance or similar right
of others, or any agreement to give any of the foregoing.
"Loan" means the loan made by Lender to Borrower pursuant to
this Agreement and the Note.
"Loan Documents" means this Agreement, the Note and the
Security Agreement.
"Net Operating Income" means, with respect to any Person, net
operating income plus depreciation expenses.
"Note" shall have the meaning assigned to such term in Section
2 02 hereof.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
"Premises" means the principal office of the Borrower located
at the address listed on page 1 of this Agreement.
"Prime Rate" means the prime rate of interest as published in
The Wall Street Journal from time to time.
"Project" shall have the meaning assigned to such term in
Section 2.03 hereof.
"Receivable" means the right to payment for goods sold or
leased or services rendered by Borrower, whether or not earned by performance,
and may, without limitation, in whole or in part be in the form of an account,
chattel paper, document or instrument.
"Reduction in Permanent Workforce" shall have the meaning
assigned to such term in Section 4.10 hereof.
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"Request for Disbursement" shall mean a request for a
disbursement of Loan proceeds substantially in the form of Exhibit C hereto.
"Security Agreement" means a security agreement dated the date
hereof, satisfactory to Lender in form and substance.
"Senior Debt" means Debt incurred by Borrower to other
Lenders, with Lender's prior consent, which is prior in right of payment to Debt
of Borrower hereunder and under the Note.
"Subordinated Debt" means Debt of Borrower to other lenders
which is subordinate in right of payment to Debt of Borrower hereunder and under
the Note pursuant to the Subordination Agreement.
"Subordination Agreement" means an agreement, satisfactory to
Lender in form and substance, by and among Lender, Borrower and a creditor of
Borrower providing for the subordination of Debt owing by Borrower to such
creditor to that owing by Borrower to Lender under the Loan Documents.
"Subsidiary" means any corporation by which at least 50% of
the voting stock is owned by Borrower directly or indirectly.
"Tangible Net Worth" means, the sum of partners capital, plus
the principal balance of all Subordinated Debt, which is subordinated in a
manner satisfactory to Lender, minus Intangible Assets, all otherwise determined
in accordance with GAAP.
"Third Party" means any party liable with respect to, or
otherwise granting support for the Loan, whether by guaranty, grant of security
or otherwise.
"Women-Owned Business Enterprise" means a business enterprise
certified as a Women-Owned Business Enterprise by the Governor's Office of
Minority and Women Business Development, or any successor agency thereof.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be compiled or delivered hereunder shall be prepared
in accordance with GAAP.
ARTICLE 2. THE CREDIT.
Section 2.01. The Loan. Subject to terms, covenants and
conditions of the Loan Documents, Lender has agreed to lend to Borrower the
aggregate sum of One Million Forty Thousand Dollars ($1,040,000) (the "Loan").
This Loan shall be superior in right of payment to those notes dated June 28,
1990 given by Borrower to: (i) Tonesons Partners in the amount of $200,000; (ii)
Learbury Clothes, Inc. in the amount of $783,000; and (iii) Xxx. X. Xxxxxxxxxx
Co., Inc. in the amount of $2,017,000.
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The Loan shall be made in two disbursements. The first
disbursement of Nine Hundred Ten Thousand Dollars ($910,000.00) shall be made on
the date of November 22, 1995 in accordance with this Agreement and the Second
Disbursement shall not be made later than nine months from the date of this
Agreement (the "Disbursement Period"). At the end of the Disbursement Period,
Lender's commitment to make any portion of the Loan not then disbursed shall
terminate.
The obligation of the Lender to make the Second Disbursement
under the Loan shall be subject to the conditions precedent that on the date of
such disbursement:
(a) the following statements shall be true:
(i) the representations and warranties contained
in Article 3 of this Agreement are true and correct on
and as of the date of the Second Disbursement as though
made on and as of such date; and
(ii) no Default or Event of Default has occurred
or would result from the disbursement.
(b) Lender shall have received such approvals, opinions
or documents as Lender may reasonably request.
(c) Neither Borrower nor any Third Party shall have
suffered a material adverse change in its financial condition.
(d) Lender shall have received a Request for
Disbursement in the form set forth as Exhibit
C to this Agreement, together with such purchase orders, invoices, bills of
sale, canceled checks or such other documentation as Lender may require in
support of their purchase of One Hundred Thirty Thousand Dollars ($130,000.00)
of additional Collateral.
Section 2.02. The Note. The Loan shall be evidenced by a
promissory note of even date herewith duly completed and executed by Borrower in
substantially the form attached hereto as Exhibit A (the "Note"), the terms,
covenants, and conditions of which are by this reference incorporated herein.
Section 2.03. Purpose of Loan: Project. Borrower will use the
proceeds of the Loan for construction of a 5,000 s.f. addition to the Premises
and for acquisition of machinery and equipment in connection with start up costs
to manufacture Polo clothes by Xxxxx Lauren (the "Project").
Section 2.04. Prepayments. Borrower shall have the right to
prepay the Loan at any time or from time to time without penalty.
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Section 2.05. Interest. Interest shall accrue on the
outstanding and unpaid principal amount of the Loan and shall be calculated in
accordance with the Note.
Section 2.06. Payments. The Loan shall be payable in
accordance with the Note.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants as follows:
Section 3.01. Incorporation. Good Standing and Due
Qualification. Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, has the
power and authority to own its assets and to transact the business in which it
is now engaged or proposed to be engaged and is duly qualified as a foreign
partnership and in good standing under the laws of each other jurisdiction in
which such qualification is required.
Section 3.02. Power and Authority: No Conflicts. The
execution, delivery and performance by Borrower of the Loan Documents have been
duly authorized by all necessary action and do not and will not: (a) require any
consent or approval of its partners; (b) contravene its charter or by-laws; (c)
violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower or affiliates, (d) result in a breach of, or constitute a default or
require any consent, which consent has not been obtained, under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by Borrower
except Liens securing the Loan; or (f) cause Borrower to be in default under any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or any such indenture, agreement, lease or instrument.
Section 3.03. Legally Enforceable Agreements. Each Loan
Document is, or when delivered under this Agreement will be, a legal, valid and
binding obligation of Borrower enforceable against Borrower in accordance with
its terms, except to the extent that such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting creditor's rights
generally.
Section 3.04. Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against, or
affecting Borrower before any court, governmental entity or arbitrator, which
may, in any one case or in the aggregate, materially adversely affect the
financial condition, operations, properties or business of Borrower, or the
ability of Borrower to perform its obligations under the Loan Documents.
Section 3.05. Financial Statements. The financial statements
of Borrower for the fiscal year of Borrower ended on December 31, 1994, together
with the opinion thereon, dated December 31, 1994, of Ernst & Young, independent
certified public accountants, and the interim compiled financial statements of
Borrower for the period ending September 30, 1995, copies of which have been
furnished to Lender, are complete and correct and fairly present the financial
condition of Borrower as at such dates and the results of the operations of
Borrower for the periods covered by such statements, all in accordance with GAAP
consistently applied (subject to year end adjustments in the case of the interim
financial statements). There are no liabilities of Borrower, fixed or
contingent, which are material but are not reflected in such financial
statements or in the notes thereto. Since the date of the financial statements
for the most recently concluded fiscal reporting period of Borrower referred to
above and submitted to Lender there has been no material adverse change in the
condition (financial or otherwise), business, operations or prospects of
Borrower.
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Section 3.06. Ownership and Liens. Borrower has title to, or
valid leasehold interests in, all of its properties and assets, real and
personal, including the properties and assets, and leasehold interests
identified in the Application or in any information report or exhibit submitted
in connection with the Application or reflected in the financial statements
referred to in Section 3.05 (other than any properties or assets disposed of in
the ordinary course of business), and none of the properties and assets owned by
Borrower and none of its leasehold interests is subject to any Lien, except as
disclosed in the Application or such information, exhibit, report or financial
statements or as may be permitted hereunder.
Section 3.07. Taxes. Borrower has filed all tax (federal,
state and local) returns required to be filed and has paid all taxes,
assessments and governmental charges and levies thereon to be due, including
interest and penalties. Borrower has no knowledge of any claims for taxes due
and unpaid which might become a Lien upon any of its assets.
Section 3.08. Operation of Business: Compliance with Laws.
Borrower possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
Borrower is not in violation of any valid rights of others with respect to any
of the foregoing. Borrower is in compliance in all respects with all applicable
laws, rules, regulations and orders.
Section 3.09. Credit Arrangements. Except as has been
disclosed to Lender in writing, the financial statements of Borrower referred in
Section 3.05 identify all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit) in respect of
which Borrower is in any manner directly or contingently obligated, which
individually or in the aggregate exceed $10,000; and the maximum principal or
face amounts of the credit in question outstanding and which can be outstanding
are correctly stated, and all Liens of any nature given as security therefor are
correctly described or indicated in such financial statements.
Section 3.10. No Default on Outstanding Judgments or Orders:
No Defaults on Other Agreements. Borrower has satisfied all judgments and
Borrower is not in default with respect to any judgment, writ, injunction,
decree, rule or regulation of any court, arbitrator or federal, state, municipal
or other governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign. Except as otherwise disclosed to Lender,
Borrower is not a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter or corporate
restriction which could have a material adverse effect on the business,
properties, assets, operations or conditions, financial or otherwise, of
Borrower, or the ability of Borrower to carry out its obligations under the Loan
Documents. Borrower is not in default in any material respect in the
performance, observance of fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party which could have a material adverse effect on the business,
properties, assets, operations or conditions, financial or otherwise, of
Borrower or the ability of Borrower to carry out its obligations under the Loan
Documents.
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Section 3.11. Labor Disputes and Acts of God. Neither the
business nor the properties of Borrower are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), materially and adversely affecting such
business or properties or the operation of Borrower.
Section 3.12. Financial Support. (a) Borrower has obtained
financial support or secured binding, written commitments to provide financial
support in the amount necessary to undertake the Project to completion. The
following Persons have provided Borrower with financial support or commitments
to provide financial support in amounts not less than those set forth opposite
their names: Bank Line of Credit ($16 million commitment of
which $12 million was available on January
11, 1994, $14 million will be available as
of January 1, 1995 and $16 million will be
available as of January 1, 1996)
(b) The amount contributed by Borrower in support of the
Project is $300,000.
Section 3.13. Application and Documents Submitted to Lender.
All information contained in the Application or submitted to Lender in
connection with the Loan is complete and correct and fairly presents the
condition, operations and prospects of Borrower as of the date hereof. Borrower
has not misstated, omitted or withheld any fact in connection with its
Application upon which Lender may have relied in its decision to make the Loan.
Each invoice, xxxx of sale, receipt, check or other document or instrument,
heretofore or hereafter submitted to Lender by Borrower in connection with the
Loan, upon submission was or shall be complete and genuine and accurately
reflect the transaction to which it relates.
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ARTICLE 4. AFFIRMATIVE COVENANTS. So long as the Note shall remain unpaid
Borrower agrees as follows:
Section 4.01. Maintenance of Existence. Borrower shall
preserve and maintain its existence and good standing in the jurisdiction of its
partnership, and qualify and remain qualified, as a foreign partnership in each
jurisdiction in which such qualification is required.
Section 4.02. Conduct of Business. Borrower shall continue to
engage in an efficient and economical manner in its business substantially as
conducted by it on the date of this Agreement.
Section 4.03. Maintenance of Properties. Borrower shall
maintain, keep and preserve, all of its properties (tangible and intangible)
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted.
Section 4.04. Maintenance of Records. Borrower shall keep
adequate records and books of account, in which complete entries will be made in
accordance with GAAP, reflecting all financial transactions of Borrower and
retain such records and books for three years after payment in full of the Loan
at the address of Borrower set forth above.
Section 4.05. Maintenance of Insurance. Borrower shall
maintain in full force and effect insurance in such amounts and covering such
risks as Lender may require from time to time.
All insurance required hereby shall be provided by companies
satisfactory to Lender pursuant to policies satisfactory to Lender in forte and
substance. Upon request, Borrower shall provide Lender with certificates
evidencing the insurance required hereby or, at Lender's discretion, with the
original or copies, of the policies of such insurance.
Section 4.06. Compliance with Laws. Borrower shall comply in
all respects with all applicable federal, state and local laws, rules,
regulations and orders.
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Section 4.07. Taxes. Borrower shall file when due all tax
returns required to be filed by all applicable federal, state and local laws and
shall make timely payment of all taxes, assessments and governmental charges and
levies assessed, charged or imposed upon Borrower or any of its properties.
Borrower shall not permit any such tax, assessment, charge or levy to become
Lien upon any of its assets.
Section 4.08. Right of Inspection and Audit. At any reasonable
time and from time to time, Borrower shall permit Lender or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, Borrower and to
discuss the affairs, finances and accounts of Borrower with any of its officers
and directors and Borrower's independent accountants. Lender's right of
inspection and audit pursuant to this Section shall survive the payment of the
Loan and remain in full force and effect for three years thereafter.
Section 4.09. Reporting Requirements. Borrower shall furnish
to Lender the following financial information:
(a) Annual Financial Statements. As soon as available
and in any event within 120 days after the end of each fiscal year of
Borrower financial statements of Borrower, reasonably detailed and
stating in comparative form the respective figures for the
corresponding date and period in the prior fiscal year and prepared
in accordance with GAAP and accompanied by an opinion thereon
satisfactory to Lender by an independent accountant acceptable to
Lender];
(b) Quarterly Financial Statements. As soon as
available and in any event within 45 days after the end of each of
the first three quarters of each fiscal year of Borrower financial
statements of Borrower as of the end of such quarter, reasonably
detailed and stating in comparative form the respective figures for
the corresponding date and period in the previous fiscal year and
prepared in accordance with GAAP and certified by the chief financial
officer of Borrower (subject to year-end adjustments).
(c) Management Letters. Promptly upon receipt
thereof, copies of any reports submitted to Borrower by independent
certified public accountants in connection with examination of the
financial statements of Borrower made by such accountants.
(d) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting
Borrower which, if determined adversely to Borrower, could have a
material adverse effect on the financial condition, properties, or
operations of Borrower.
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(e) Notice of Defaults and Events of Default. As soon
as possible and in any event within 10 days after the occurrence of
each Default or Event of Default a written notice setting forth the
details of such Default or Event of Default and the action which is
proposed to be taken by Borrower with respect thereto.
(f) General Information. Such other information
respecting the condition or operations, financial or otherwise, of
Borrower as Lender may from time to time reasonably request.
Section 4.10. Employee Reporting Form. Borrower shall furnish
to Lender, not later than February 1 of each year, an Employee Reporting Form
substantially in the form attached hereto as Exhibit B stating the number of
Full-Time Permanent Employees as of the immediately preceding January 1. The
first Employee Reporting Form shall be submitted no later than February 1, 1996.
Section 4.11. Reduction in Permanent Workforce. Borrower shall
notify Lender in writing, not less than ninety (90) days prior to the effective
date of a Reduction in Permanent Workforce. For the purposes hereof, "Reduction
in Permanent Workforce" means a reduction in the number of Borrower's Full-time
Permanent Employees which, individually, or in the aggregate, results in a
reduction of the greater of (a) 50 Full-time Permanent Employees or (b) 50% or
more of the number of Full-time Permanent Employees on the date of the first
reduction.
Section 4.12. Non-Discrimination and Affirmative Action.
Borrower shall comply with all terms and conditions, as
outlined in Exhibit D attached hereto and incorporated herein.
Section 4. 13. Job Training Partnership Act.
Borrower shall first consider, in good faith, for all
employment opportunities created in connection with the Project, individuals
referred by the State of New York who are eligible to participate in the Federal
Job Training Partnership Act Program.
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ARTICLE 5. NEGATIVE COVENANTS. So long as the Note shall remain unpaid Borrower
agrees as follows:
Section 5.01. Reserved
Section 5.02. Guaranties, Etc. Borrower shall not assume,
guarantee, endorse or otherwise be or become directly or contingently
responsible or liable, for the obligations of any Person (including, but not
limited to, any agreement to purchase any obligation, stock, assets, goods or
services or to supply or advance any funds, assets, goods or services, or any
agreement to maintain or cause such Person to maintain a minimum working capital
or net worth or otherwise to assure the creditors of any such Person against
loss), except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions the ordinary course of business.
Section 5.03. Extensions of Credit. Borrower shall not make
any loan or advance or extend any credit to any Person except in the ordinary
course of business. In addition, no debt service payments may be made on any
loan to an officer or employee of Borrower unless Borrower is current on all of
its obligations to ESDC.
Section 5.04. Dividends. Unless current on ESDC debt, Borrower
shall not declare or pay any dividends, purchase, redeem, retire or otherwise
acquire for value any of its capital stock now or hereafter outstanding, or make
any distribution of assets to its stockholders as such whether in cash, assets
or in obligations of Borrower, or allocate or otherwise set apart any sum for
the payment of any dividend or distribution on, or for the purchase, redemption
or retirement of any shares of its capital stock, or make any other distribution
by reduction of capital or otherwise in respect of any shares of its capital
stock except that: (a) Borrower may declare and deliver dividends and make
distributions payable solely in common stock of Borrower; (b) Borrower may
purchase or otherwise acquire shares of its capital stock by exchange for or out
of the proceeds received from a substantially concurrent issue of new shares of
its capital stock.
Section 5.05. Transactions with Affiliates. Subsequent to the
date hereof, (a) Borrower shall not enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the rendering
of any service, with any Affiliate, without limitation, the purchase, sale or
exchange of property or the rendering of any service with any Affiliate, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms no less favorable to
Borrower than would obtain in a comparable arm's length transaction with a
Person who is not an Affiliate.
(b) Borrower shall not incur or suffer to exist any
Debt to any Affiliate unless such Debt shall be subordinated to the Loan
pursuant to a Subordination Agreement, by and between Lender, Borrower and such
Affiliate.
Section 5.06. Sale of Assets, Mergers Etc. Borrower shall not
merge or consolidate with any Person, or sell, assign, lease or otherwise
dispose (whether in one transaction or in a series of transactions) of all or
substantially all of its assets (whether now owned or hereafter acquired) to any
Person, or acquire all or substantially all of the assets or the business of any
Person;
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Section 5.07. Location of Business. Borrower shall not remove
its business operations located at the Premises away from the State of New York,
or relocate its business operations from the Premises.
Section 5.08. Compensation. Borrower shall not pay any
compensation (whether by way of salary, emoluments, stock options, bonus or
otherwise) to any director, officer, employee or agent in excess to that which
is reasonable and customary for enterprises engaged in a similar business and
similarly situated.
ARTICLE 6. FINANCIAL COVENANTS. So long as the Note shall remain unpaid Borrower
agrees as follows:
Section 6.01. Minimum Tangible Net Worth. Borrower shall
maintain at all times a Tangible Net Worth of not less than $7.5 million.
Section 6.02. Intentionally Omitted
Section 6.03 Intentionally Omitted
ARTICLE 7. EVENTS OF DEFAULT.
Section 7.01. Events of Default. Any of the following events
shall be an "Event of Default":
(a) Borrower shall: (i) fail to pay the principal of the Note
within five (5) days after due and payable; (ii) fail to pay interest
on the Note or any fee or other amount due under the Loan Documents
within five (5) days after due and payable.
(b) Any representation or warranty made or deemed made by
Borrower or any Third Party in any Loan Document or which is contained
in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with any Loan Document
shall have been incorrect in any material respect on or as of the date
made or deemed made.
(c) Borrower or any Third Party shall fail to perform or
observe any term, covenant or agreement on its part to be performed or
observed (other than the obligations specifically referred to elsewhere
in this Section 7.01 and other than the voluntary undertakings
described in Section 4.11) in any Loan Document and such failure shall
continue for 20 consecutive days after notice.
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(d) Borrower or any Third Party shall: (i) fail to pay any of
its indebtedness, including but not limited to indebtedness for
borrowed money (other than the payment obligations described in (a)
above), or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise); or (ii) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement
or instrument relating to any such indebtedness, when required to be
performed or observed, if the effect of such failure to perform or
observe is to accelerate, after the giving of notice or passage of
time, or both, the maturity of such indebtedness, or any such
indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
prior to the stated maturity thereof.
(e) Borrower or any Third Party: (i) shall generally not, or
be unable to, or shall admit in writing its inability to, pay its debts
as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a substantial
part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding shall have been commenced
against it in which an adjudication or appointment is made or order for
relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or (v) by any act or
omission shall indicate its consent to, approval of or acquiescence in
any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any
substantial part of its properties; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for
a period of 45 days or more.
(f) One or more judgments, decrees or orders for the payment
of money which individually or in the aggregate shall result in a
material adverse change in the financial condition of Borrower or any
Third Party or any such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 30 consecutive days without
being vacated, discharged, satisfied or stayed or bonded pending
appeal.
(g) If Borrower or any Third Party shall dissolve or for any
reason cease to be in existence; or if Borrower or any Third Party is a
partnership, any general partner shall die, dissolve or for any reason
cease to be in existence or cease to be a partner.
(h) A transfer of 20% or more in the voting rights of Borrower
shall occur, whether in one or more transactions, without Lender's
prior written consent.
Section 7.02. Remedies. If any Event of Default shall occur,
Lender may, by notice to Borrower declare the outstanding principal of the Note,
all interest thereon and all other amounts payable under this Agreement and the
Note to be forthwith due and payable, whereupon the Note, all such interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower; provided that, in the case of an Event of
Default referred to in Section 7.01 (e) above, the Note, all interest thereon
and all other amounts payable under this Agreement shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by Borrower.
The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
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ARTICLE 8. MISCELLANEOUS.
Section 8.01. Amendments and Waivers. No amendment or waiver
of any provision of this Agreement nor consent to any departure by Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by an authorized officer of Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right.
Section 8.02. Usury. Anything herein to the contrary
notwithstanding, the obligations of Borrower under this Agreement and the Note
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to Lender limiting rates of interest which may be charged or
collected by Lender.
Section 8.03. Expenses. Borrower shall reimburse Lender on
demand for all costs, expenses, and charges (including, without limitation,
reasonable fees and charges of external legal counsel for Lender) incurred by
Lender in connection with the preparation, performance, or enforcement of this
Agreement or the Note or the making of the Loan. The obligations of Borrower
under this Section shall survive the repayment of the Loan.
Section 8.04. Indemnification. Borrower agrees to indemnify
Lender and its directors, officers, employees and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by Borrower of the proceeds of the Loan, including without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of Lender). The obligations
of Borrower under this Section shall survive repayment of the Loan.
Section 8.05. Assignment. This Agreement shall be binding
upon, and shall inure to the benefit of, Borrower, Lender and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights or obligations hereunder. Lender may assign all or any part of the Loan
to a bank or other entity, in which event upon notice thereof by Lender to
Borrower, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would have if it
were Lender hereunder. Lender may furnish any information concerning Borrower in
the possession of Lender from time to time to assignees and prospective
assignees.
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Section 8.06. Notices. Unless the party to be notified
otherwise notifies the other party in writing as provided in this Section, and
except as otherwise provided in this Agreement, notices shall be given to Lender
and to Borrower by hand or by certified mail, return receipt requested,
addressed to such party at its address set forth below. Notices shall be
effective: (a) if given by certified mail, 72 hours after deposit in the mails
with first class postage prepaid, addressed as aforesaid; and (b) if given by
hand, upon receipt; provided that notices to Lender shall be effective only upon
receipt:
Address for notices to Lender
Empire State Development Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President
and General Counsel
Address for notices to Borrower
XX Xxxxxxxxxx, L.P.
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Section 8.07. Jurisdiction: Immunities. (a) Borrower hereby
irrevocably submits to the jurisdiction of any New York State or United States
Federal court sitting in New York County or, at Lender's sole discretion, in the
county where the principal office of the Borrower is located over any action or
proceeding arising out of or relating to this Agreement or the Note, and
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
Borrower irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to Borrower at its
address set forth above. Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Borrower further waives any objection to venue in such county and any objection
to an action or proceeding in such county on the basis of forum non conveniens.
Borrower further agrees that any action or proceeding brought against Lender
shall be brought only in New York State or United States Federal court sitting
in New York County.
(b) Nothing in this Section shall affect the right of Lender
to serve legal process in any other manner permitted by law or affect the right
of Lender to bring any action or proceeding against Borrower or its property in
the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the Note.
Section 8.08. Captions. The captions and headings hereunder
are for convenience only and shall not affect the interpretation or construction
of this Agreement.
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Section 8.09. Severability. The provisions of this Agreement
are intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 8.10. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by signing
any such counterpart.
Section 8.11. Governing Law. This Agreement shall be governed
by, and interpreted and construed in accordance with, the laws of the State of
New York.
Section 8.12. Joint and Several Obligations. As used herein
the term Borrower shall include all signatories hereto, if more than one. In
such event, the obligations, representations and warranties of Borrower
hereunder shall be joint and several.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
XX XXXXXXXXXX, L.P.
By: XX XXXXXXXXXX ACQUISITION CORPORATION,
its GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxxxxx, Xx.
--------------------------------
NEW YORK STATE URBAN DEVELOPMENT CORPORATION
d\b\a EMPIRE STATE DEVELOPMENT CORPORATION
By: /s/ Xxxxx Xxxxxx
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