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EXHIBIT 10.1
REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT ("Agreement") is made as of July 2, 1999
by and between XXXXXXX-XXXXXX. INC., a Delaware corporation ("KW"),
XXXXXXX-XXXXXX INTERNATIONAL. INC.. a California corporation ("KWI"),
XXXXXXX-XXXXXX PROPERTIES, LTD., a Delaware corporation ("KWPL"), and K-W
PROPERTIES, INC., a California corporation ("KWP"), (individually and
collectively, "Borrower"), the financial institutions that are, or may hereafter
become, parties to this Agreement (individually a "Lender" and collectively,
"Lenders"), and TOKAI BANK OF CALIFORNIA, a California banking corporation,
hereinafter individually referred to as "Tokai" and a Lender, and in its
capacity as agent for Lenders, the "Agent".
A. Borrower has applied to Agent and Lenders for a line of credit in the
principal amount of $15,000.000.00.
B. Lenders have agreed to provide the line of credit to Borrower upon
the terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
1.1 DEFINITIONS. The definitions set forth in the recitals above
are incorporated herein by reference. For purposes of this Agreement, the
following words and phrases have the following meanings.
"Advances" means all funds advanced to or for the benefit
of Borrower under this Agreement.
"Affiliate" means any Person directly or indirectly,
related to, in control of, controlled by or under the common control of
Borrower, or of a successor thereof, whether through merger, consolidation,
transfer of assets or otherwise.
"Agreement" means this Revolving Loan Agreement, either as
originally executed or as it may from time to time be supplemented, modified, or
amended.
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"Assets" shall have the meaning usually given that term in
accordance with GAAP, but shall exclude sums due to Borrower from Affiliates
(other than subsidiaries).
"Bankruptcy Proceeding" means any proceeding, action,
petition or filing under the United States Bankruptcy Code or any similar state
or federal law now or hereafter in effect relating to bankruptcy reorganization
or insolvency, or the arrangement or adjustment of debts.
"Business Day" or "business day" means a day of the year
other than a Saturday or Sunday on which banks are not required or authorized to
close in California.
"Change of Control" means any transaction or event as a
direct or indirect result of which:
(a) any Person is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 51% of the outstanding shares of voting stock of KW; or
(b) during any period of twelve (12) consecutive months
(whether after the date of this Agreement), individuals who on the first day of
such period constituted the Board of Directors of KW (together with any new
directors subsequently elected whose election by such Board of Directors or
whose nomination for election by the stockholders of KW was approved by a vote
of a majority of the directors of KW then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of Directors of KW then in office; or
"Confirmation of Subordination" means that certain
Confirmation of Subordination in form and substance acceptable to Agent, duly
executed by Colony K-W, LLC, Xxxxxx, Xxxxxxx Strategic Partners Fund, L. P. and
Strategic Associates, L. P. in favor of Lenders.
"Credit" means the line of credit described in Article 3
of the Agreement, providing for Advances in the aggregate principal sum not
exceeding $15,000,000.00.
"Debt Coverage Ratio" means EBITDA divided by Total
Interest and Principal Payments. For purposes of this ratio, "EBITDA" means net
profit before taxes, plus interest expense, depreciation, amortization, and
taxes. "Total Interest and Principal Payments" means total interest expense and
all regularly scheduled payments of principal required to be made by Borrower
during the applicable period (but not including any balloon payments).
"Environmental Laws" means any and all applicable Laws,
each as amended from time to time, any judicial or administrative orders,
decrees, settlement agreements or judgments thereunder, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
in effect as of the relevant date, relating to the environment, health or
safety, or the Release (as defined in CERCLA) of Hazardous Substances into the
indoor or outdoor environment, including, without limitation, ambient air, soil,
surface water, groundwater,
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wetlands, land or subsurface strata or otherwise relating to the presence,
release or management of Hazardous Substances.
"Event of Default" means any of those events specified in
Article 5 hereof.
"Financial Statements" means for KW and its subsidiaries
on a consolidated basis, balance sheets, income statements, statements of
stockholder's equity, and statements of cash flows together with appropriate
notes and footnotes.
"GAAP" means generally accepted accounting principles
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of KW, except for changes mandated
by the Financial Accounting Standards Board or any similar accounting authority
of comparable standing.
"Governmental Agency" or "Government Agency" means any
federal, state or local governmental or quasi-governmental agency, authority,
board, bureau, commission, department. instrumentality or public body, court,
administrative tribunal, or public utility.
"Hazardous Substance" means: (i) those substances included
within the definitions of "hazardous substances", "hazardous materials." "toxic
substances," or "hazardous waste" pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et
seq. ("CERCLA"), the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901, et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1981, et seq., each as amended from time to time and the regulations
promulgated pursuant to said laws; (11) those substances defined as "hazardous
wastes" in Section 25117 of the California Health and Safety Code or as
"hazardous substances" in Section 25316 of the California Health and Safety Code
and the regulations promulgated thereunder; and (iii) such other substances,
materials, wastes, pollutants or contaminants which are or become regulated or
which are classified as hazardous or toxic under applicable Laws.
"Intercreditor Agreement" means that certain Intercreditor
Agreement of even date herewith between Lenders and East-West Bank as the same
may be amended from time to time.
"Laws" means, collectively, all federal. state, and local
laws, rules, statutes, regulations, ordinances, and codes.
"Leverage Ratio" means Borrowed Funds divided by Tangible
Net Worth plus Subordinated Debt. For the purposes of this ratio, "Borrowed
Funds" means the sum of all short-term debt, additional short-term debt,
long-term debt and the current maturities of long-term debt. "Subordinated Debt"
means debt subordinated to Borrowers' debt to Lender in a manner acceptable to
Lender, and shall include current maturities of Subordinated Debt.
"Loan" means the aggregate of Advances under this
Agreement.
"Loan Documents" means this Agreement, the Note(s), the
Intercreditor Agreement, the Confirmation of Subordination and such other
documents as Lenders may, in accordance with the terms of this Agreement,
require Borrower to give to Lenders as evidence of the Loan as any or all of
them may be supplemented, modified or amended from time to time.
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"Loan Fee" means, as to each Lender, an amount equal to
one quarter of one percent 0.25% of its respective percentage of the Credit,
payable at closing.
"Majority Lenders" means at any time Lenders holding more
than fifty percent (50%) of the then aggregate unpaid principal amount of the
Notes, or if no such principal amount is then outstanding, Lenders having more
than fifty percent (50%) share of the Credit.
"Material Adverse Effect" means a material adverse effect
on the financial condition of KW and its subsidiaries taken as a whole.
"Maturity Date" means the earlier of July 2, 2001 and the
date on which a Change of Control occurs.
"Note" means a Promissory Note of Borrower payable to the
order of a Lender. evidencing the Loan made by such Lender, substantially in the
form of Exhibit D hereto.
"Organizational Documents" means the Articles of
Incorporation and bylaws of each Borrower and the resolutions of the Board of
Directors of each Borrower approving this Agreement and the transactions
contemplated hereby.
"Other Lenders" means any Lenders, other than Tokai.
"Person" means an individual, corporation, partnership,
joint venture, limited liability company, trust or unincorporated organization
or a Government Agency.
"Tangible Net Worth" means the excess of total assets over
total liabilities (except debt subordinated to Lenders by agreement satisfactory
to Agent), total assets and total liabilities each to be determined in
accordance with the generally accepted accounting principles consistent with
those applied in the preparation of the Financial Statements referred to in
Section 4.8 below, excluding, however, from the determination of total assets,
(a) goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles; (b) all prepaid expenses,
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) all notes or accounts receivable from
any Affiliate of KW or any officer of KW or any of KW's Affiliates; (e)
securities which are not readily marketable; (f) cash held in a sinking or other
analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or indebtedness; (g) any write-up in the book value
of any asset resulting from a revaluation thereof subsequent to the date of this
Agreement; and (h) any items not included in clauses (a) through (g) above which
are treated as intangibles in conformity with generally accepted accounting
principles.
"Tokai's Commitment" means the commitment of Tokai to lend
to Borrower the maximum principal sum of $10,000,000.00 as more particularly
described in Section 3.1 herein.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
1.3 USE OF DEFINED TERMS. Any defined terms used in the plural
shall include the singular and such terms shall encompass all members of the
relevant class.
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1.4 SCHEDULES AND EXHIBITS. All schedules and exhibits to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by reference.
1.5 REFERENCES. Any reference to this Agreement or any other
document shall include such document both as originally executed and as it may
from time to time be supplemented and modified. References herein to Articles,
Sections and Exhibits shall be construed as references to this Agreement unless
a different document is named.
1.6 OTHER TERMS. The term "document" is used in its broadest
sense and encompasses agreements, certificates, opinions, consents, instruments
and other written material of every kind. The terms "including" and "include"
means "including (include), without limitation."
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BORROWER
Each Borrower hereby represents and warrants to Agent and Lenders
as of the date of this Agreement, the date of each Advance, and each and every
date during the existence of the Loan, or any portion thereof, as the context
admits or requires, that:
2.1 BORROWER'S CAPACITY. Borrower is a corporation duly
incorporated and existing under the laws of the state where organized. Borrower
is duly qualified to do business in any state in which the nature of its
business requires it to be so qualified, except where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect.
2.2 VALIDITY OF LOAN DOCUMENTS. To the best of Borrower's
knowledge, the Loan Documents are legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance With their terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at Law), provided,
however, that Borrower knows no reason why the implementation of such Laws would
affect the ultimate realization of the security afforded thereby. The execution
and delivery by Borrower of and the performance by Borrower of all its
obligations under the Loan Documents have been duly authorized by all necessary
corporate action and do not and will not:
(a) Require any consent or approval not heretofore
obtained of any other Person holding any interest or entitled to receive any
interest issued or to be issued by Borrower or otherwise.
(b) Violate any provision of the Organizational Documents
or other agreements to which Borrower is bound.
(c) Result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others or other encumbrance of any nature (other than under the Loan
Documents) upon or with respect to any property now owned or leased or hereafter
acquired by Borrower.
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(d) To the best of Borrower's knowledge, violate any
provision of any Laws, or of any order, writ, judgment, injunction, decree,
determination, or award to which Borrower is a party.
(e) Result in a breach of or constitute a default under,
cause or permit the acceleration of any obligation owed under, or require any
consent under any indenture or loan or credit agreement or any other agreement,
lease, or instrument to which Borrower is a party or by which Borrower or any
property of Borrower is bound or affected.
2.3 BORROWER NOT IN DEFAULT OR VIOLATION. To the best of
Borrower's knowledge, Borrower is not in default under or in violation of any
Laws, or any order, writ, judgment, injunction, decree, determination or award
to which Borrower is a party which default or violation could reasonably be
expected to have a Material Adverse Effect. Borrower is not in default under any
obligation, agreement, instrument, loan, or indenture, whether to Lender or
otherwise, or any lease which default could reasonably be expected to have a
Material Adverse Effect. No event has occurred and is continuing, or would
result from the making of any Advance, which constitutes an Event of Default, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
2.4 NO GOVERNMENTAL APPROVALS REQUIRED. Borrower does not require
any authorization, consent, approval, order, license, exemption from, or filing,
registration, or qualification with, any Governmental Agency in connection with
the execution and delivery by Borrower, and the performance by Borrower, of all
or any of its obligations under, the Loan Documents, except that filing and/or
recording with Governmental Agencies may be required to comply with public
disclosure requirements.
2.5 TAX LIABILITY. Borrower has filed all tax returns (federal,
state, and local) required to be filed and has paid all taxes shown thereon to
be due and all property taxes due, including interest and penalties, if any;
except where Borrower is contesting taxes Borrower reasonably believes are
improperly stated or assessed which contests are in accordance with applicable
Laws and the procedures of the appropriate Governmental Agency.
2.6 FINANCIAL STATEMENTS. All Financial Statements, tax returns
and other financial information of Borrower which have heretofore been submitted
to Lender fairly present the financial position of Borrower at the respective
dates of their preparation. Since the dates of such Financial Statements, tax
returns and other financial information, there has been no material adverse
change in the financial condition of Borrower.
2.7 PENDING LITIGATION. To the best of Borrower's knowledge,
there are no actions, suits, or proceedings pending, or to the knowledge of
Borrower threatened, against or affecting Borrower, including, without
limitation, any Bankruptcy Proceeding, or involving the validity or
enforceability of any of the Loan Documents or the priority of the lien thereof,
at Law or in equity, or before or by any Governmental Agency, which could
reasonably be expected to have a Material Adverse Effect or which, if adversely
determined, would not substantially impair the ability of Borrower to perform
each and every one of its obligations under and by virtue of the Loan Documents.
2.8 YEAR 2000 MATTERS. With respect to the data processing and
software programs used by Borrower in the conduct of the business of Borrower
(the "Software"), to the best of Borrower's knowledge, except as disclosed in
KW's Prospectus dated May 12, 1999:
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(a) The Software will record, store, process and present
calendar dates on and after January 1, 2000, and all information pertaining to
those dates in the same manner and with the same functionality as the Software
does with respect to calendar dates falling on or before December 31. 1999.
(b) The Software has all appropriate capabilities and
compatibility for operation of year-2000 compliant data.
(c) Date-related user interface functions, data-fields and
data-related program instructions and functions of the Software include the
indication of the century.
(d) Borrower has created a plan to comply with the
foregoing subsections (a), (b) and (c).
(e) Borrower has undertaken appropriate testing to verify
that its software programs are in compliance with the foregoing subsections (a),
(b) and (c) of this Section 2.8.
2.9 SOLVENCY. Borrower is able to pay its debts as they mature
and the realizable value of its Assets is sufficient to satisfy any and all
obligations hereunder.
2.10 PERMITS. Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
that are necessary to conduct its business substantially as now conducted and as
presently proposed to be conducted except where the failure to possess the same
could reasonably be expected to have a Material Adverse Effect, and Borrower is
not in material violation of any valid rights of others with respect to any of
the foregoing where any such violation could reasonably be expected to have a
Material Adverse Effect.
2.11 ERISA.
(a) Each Plan (other than a multiemployer plan) is in
compliance in all respects with the applicable provisions of ERISA, the Code and
other applicable Laws except to the extent that any non-compliance would not
result in a material liability of Borrower. Each Plan that is not a
multiemployer Plan has received a favorable determination letter from the IRS
and to the best knowledge of Borrower, nothing has occurred which would cause
the loss of such qualification. Borrower has fulfilled its obligations, if any,
under the minimum funding standards of ERISA and the Code with respect to each
Plan, except to the extent that any failure to fulfill such obligation would not
result in a material liability of Borrower, and has not incurred any material,
unsatisfied liability with respect to any Plan under Title IV of ERISA.
(b) There are no claims, lawsuits or actions (including by
any Governmental Authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) With respect to any Plan subject to Title IV of ERISA:
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(i) No reportable event has occurred under Section
4043)(c) of ERISA for which the PBGC requires thirty (30)-day notice which would
result in a material liability of Borrower.
(ii) No action by Borrower or any ERISA Affiliate to
terminate or withdraw from any Plan has been taken and no notice of intent to
terminate a Plan has been filed under Section 4041 of ERISA, which termination
or withdrawal would result in a material liability of Borrower.
(iii) No termination proceeding has been commenced
with respect to a Plan under Section 4042 of ERISA, and to Borrower's knowledge
no event has occurred or condition exists which would constitute grounds for the
commencement of such a proceeding; provided that with respect to any
multiemployer plan, this representation is made to Borrower's knowledge.
(d) The following terms have the meanings indicated for
purposes of this Agreement:
(i) "Code" means the Internal Revenue Code of
1986, as amended from time to time.
(ii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(iii) "ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control with Borrower within the
meaning of Section 414(b) or (c) of the Code.
(iv) "IRS" means the Internal Revenue Service.
(v) "PBGC" means the Pension Benefit Guaranty
Corporation.
(vi) "Plan" means a pension, profit-sharing, or
stock bonus plan intended to qualify under Section 401(a) of the Code,
maintained or contributed to by Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
2.12 CREDIT BENEFITS. Each Borrower acknowledges and agrees that
(i) it is in its best interest to receive the financial accommodations provided
by Lenders to itself and to each other Borrower under this Agreement and (ii)
because of the relationship of each Borrower to the other, each Borrower it will
derive direct and indirect benefits from the Credit and the Advances made to
self and to each other Borrower hereunder.
ARTICLE 3
THE LINE OF CREDIT
3.1 THE CREDIT. Upon the request of Borrower, made in accordance
with Section 3.7, and otherwise in compliance with this Agreement, provided that
no Event of Default has occurred, each Lender severally agrees to lend to
Borrower its pro rata share of Advances. The total amount outstanding under this
Agreement for each Lender shall not exceed at any one time
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the commitment amount set forth opposite such Lender's name on Exhibit A hereto.
In no event shall Lenders be obligated to make Advances to Borrower under this
Article 3 whenever the aggregate amount of the Advances made and requested to be
made pursuant to this Article 3 exceeds or would exceed, at any one time, the
sum of $15,000.000.00; provided, however, until Other Lenders become a party to
this Agreement, the aggregate amount of Advances made to Borrower hereunder,
shall not, at any one time, exceed the amount of Tokai's Commitment; and
provided, further, that in no event shall the aggregate amount of Advances made
for the purposes of investments outside of the United States of America exceed
at any one time fifty percent (50%) of the available Credit. Provided no Event
of Default occurs and shall be continuing, Advances fully and timely repaid by
Borrower during the term of the Notes may be reborrowed within such term,
subject to all conditions of Advances under this Agreement. Concurrently with
Borrower's execution of this Agreement, and as a condition to Lenders' making
any Advances, Borrower shall make, execute and deliver to each Lender its Note.
3.2 TERM. The Credit shall automatically terminate on the Maturity Date.
Notwithstanding the foregoing, upon the occurrence of an Event of Default,
Lenders may terminate the Credit pursuant to Section 6.1. On the date of
termination, all obligations owed by Borrower to Lenders under the Notes, shall
become immediately due and payable without notice or demand and shall be repaid
to Lenders in cash or by a wire transfer of immediately available funds.
3.3 NOTE. The Credit shall be evidenced by the Notes. Payments of
principal and interest shall be as provided for in the Notes. Each Advance and
each payment under the Credit shall be evidenced and recorded by each Lender
upon the records it maintains concerning its portion of the Credit (including,
without limitation, on any schedule attached to its Note), which recordation
shall be prima facie evidence of such Advance or payment; provided, however,
that the failure by any Lender to make any such recordation shall not limit or
otherwise affect the obligation of Borrower hereunder or under the Notes. Each
Lender is hereby authorized by Borrower to endorse its Note and to attach to and
make a part of its Note a continuation of any schedule attached to its Note as
and when required.
3.4 PURPOSE. The Credit is for the purpose of providing funds for
acquisitions and investments and for general corporate purposes.
3.5 TERMS OF REPAYMENT. The principal balance of each Note shall earn
interest at the Prime Rate or, at Borrower's option, the LIBOR Rate plus 200
basis points (2.00%), fixed for periods of one (1), three (3) or six (6) months,
but fixed only for principal increments of not less than $1,000,000.00. Interest
shall be due and payable monthly and principal shall be repayable on the
Maturity Date. The foregoing terms are more fully set forth in the Notes, the
terms of which shall prevail over the terms of this Section 3.5 if inconsistent
therewith.
All payments received by any Lender from or for the account of
Borrower may be applied by Lender, in its sole absolute discretion, in the
following manner, or in any other manner, or in any other order Lender chooses:
(a) to pay any and all interest due, owing and/or accrued;
(b) to pay any and all costs, advances, expenses or fees due
under this Agreement;
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(c) to pay the principal balance on the Note.
3.6 CONDITIONS TO CLOSING. Lenders shall not be obligated to make any
Advance hereunder until Borrower, at its sole expense, deposits or causes to be
deposited with Lenders, the following in form and substance satisfactory to
Agent, in Agent's sole opinion and judgment:
(a) The Loan Fee;
(b) The Note;
(c) The Intercreditor Agreement;
(d) The Confirmation of Subordination;
(e) True and correct copies of: Borrower's Organizational
Documents, and Financial Statements, all of which documents must be first
reviewed and approved by Lender, its counsel, or both;
(f) A favorable opinion of independent counsel to Borrower
acceptable to Agent and its counsel opining to, among other things, Borrower
being a validly organized and existing business entity in good standing with
full power and authority to carry on its business as now being conducted,
Borrower's execution and authority to execute the Loan Documents, the validity
and binding effect of the Loan Documents, and further opining as to any
additional matters required by Agent's counsel.
3.7 CONDITIONS TO EACH ADVANCE.
(a) Before each Advance, including the first, Agent shall have
received from Borrower: (A) a Request for Advance, in substantially the form of
Exhibit B hereto, (x) with respect to an Advance bearing interest at the Prime
Rate, not later than 10:00 a.m. (Los Angeles time) of the Business Day of such
Advance, and (y) with respect to an Advance bearing interest at the LIBOR Rate,
at least three (3) LIBOR Business Days prior to the date of the requested
Advance; and (B) a Compliance Certificate, substantially in the form of Exhibit
C hereto, with appropriate insertions.
(b) Upon receipt of the Request for Advance, Agent shall promptly
notify each Lender of the contents thereof and of such Lender's ratable share of
the Advance specified therein and such Request for Advance shall not thereafter
be revocable by Borrower.
(c) Not later than [2:00 p.m.] (Los Angeles time) on the date of
the Advance, each Lender shall make available its ratable share of the Advance,
in immediately available funds, to Agent at its address set forth herein or at
such other address as Agent may hereafter designate by notice to Borrower and
Lenders, and unless Agent determines that any applicable condition specified in
this Agreement has not been satisfied or that any Event of Default has occurred,
Agent will make the funds so received from Lenders available to Borrower.
3.8 NON-UTILIZATION FEE. Borrower agrees to pay a fee on any difference
between each Lender's pro rata share of the Credit and the principal balance
outstanding under such Lender's Note, determined by the weighted average credit
outstanding during the specified
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period. The fee shall be payable quarterly in arrears, commencing on September
30, 1999, and the last day of each calendar quarter thereafter. The fee will be
calculated at the per annum percentage determined as follows:
Weighted
Average Utilization Non-Utilization Fee
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Under 33.3% 0.25% of unused amount
33.3% to 66.6% 0.20% of unused amount
Over 66.6% 0.15% of unused amount
3.9 ADDITIONAL PROVISIONS REGARDING THE LOAN.
(a) Borrower hereby authorizes each Lender, if and to the extent
any payment of principal or interest or sum otherwise due hereunder, following
the occurrence of any Event of Default, is not promptly made pursuant to the
Note, and to the extent of any obligation of Borrower to such Lender under this
Agreement or any other agreement, to charge against any deposit account which
Borrower may maintain with such Lender an amount equal to part or all of the
principal costs and expenses then due and payable, and accrued interest from
time to time due and payable to such Lender under its Note or otherwise. Each
Lender is under no obligation to charge such past due payments against such
account of Borrower, but may elect to do so in such Lender's sole and absolute
opinion and judgement.
(b) If, with respect to the Credit there is, due to either (1) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in any Law or in the
interpretation thereof, or (ii) the compliance by each Lender with any
guidelines or request from any central bank or other governmental authority
(whether or not having the force of Law but which are generally complied with),
any increase in the cost of Lender of agreeing to make or making, funding or
maintaining such Credit, then Borrower shall from time to time, upon demand by
any Lender, pay to such Lender additional amounts sufficient to indemnify Lender
against such increased costs, provided that Lender shall determine such
additional amounts under the same formula and method that it uses for other
borrower's that obtain similar credit facilities to this Credit, from Lender. A
certificate as to the amount of such increased costs submitted to Borrower by
any Lender shall be prima facie evidence of the increased costs, and shall be
immediately due and payable upon demand.
(c) In the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
on all the parties hereto) at any time that by reason of Regulation D of the
Board of Governors of the Federal Reserve System ("Regulation D"), such Lender
is required to maintain reserves in respect of Eurocurrency Liabilities (as
defined in Regulation D) during any period that interest on any portion of its
Note is payable at the LIBOR Rate (each such period, for any Lender, a "Reserve
Period"), then such Lender shall promptly give notice (by telephone confirmed in
writing) to Borrower and to Agent of such determination (which notice the Agent
shall promptly transmit to each of the other Lenders), and Borrower shall
directly pay to such Lender additional interest on the unpaid portion of its
Note bearing interest at the LIBOR Rate during such Reserve Period at a rate per
annum which shall, during each LIBOR Interest Period, be the amount by which (i)
the LIBOR Rate for
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such LIBOR Interest Period divided (and rounded upward to the next whole
multiple of 1/16 of 1%) by a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency liabilities
(as defined in Regulation D) exceeds (ii) the LIBOR Rate for such LIBOR Interest
Period. Additional interest payable pursuant to the immediately preceding
sentence shall be paid by Borrower at the time that it is otherwise required to
pay interest in respect of such LIBOR Interest Period of, if later demanded by
the Lender, promptly on demand. Each Lender agrees that if it gives notice to
Borrower of the existence of a Reserve Period, it shall promptly notify Borrower
of any termination thereof at which time Borrower shall cease to be obligated to
pay additional interest to such Lender pursuant to the first sentence of this
Section 3.9(c) until such time, if any, as a subsequent Reserve Period shall
occur.
ARTICLE 4
BORROWER'S COVENANTS
In addition to anything else herein stated, Borrower agrees:
4.1 INSURANCE. To obtain and at all times maintain hazard and liability
insurance and such other insurance with such companies and in such amounts as is
usual for the business it is in.
4.2 LENDER MAY EXAMINE BOOKS AND RECORDS. Borrower shall keep and maintain
at all times at Borrower's address as stated in Section 8.1 1, or at such other
place as Borrower shall notify Agent from time to time, complete and accurate
books or accounts and records adequate to reflect correctly the results of the
operation of the Borrower's business and copies of all written contracts,
leases, rental agreements, concessions, licenses, and other documents and
instruments which affect Borrower's business, or any portion thereof or interest
therein. Such books, records, contracts, leases, documents. and other
instruments shall be subject to examination and inspection by any Lender, or any
Lender's agents or designated auditors, upon reasonable written notice, during
regular business hours at any reasonable time and from time to time.
4.3 NO AUTOMATIC SET-OFF. The existence of any deposit account maintained
with any Lender and/or the fact of any sum or sums being on deposit in said
account shall in no way constitute a set-off against or be deemed to compensate
the obligation of the Loan or any payment or performance due under this
Agreement or any of the other Loan Documents, unless and until such Lender, by
affirmative action, shall so apply said account or any portion thereof and then
only to the extent thereof so designated by such Lender.
4.4 PRESERVATION OF CORPORATE EXISTENCE. Borrower shall preserve and
maintain its corporate existence, right, franchises and privileges in the
jurisdiction of formation, and qualify and remain qualified as a foreign entity
in any jurisdiction in which such qualification is or may be necessary, in view
of Borrower's business and operations or the ownership of its properties, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
4.5 COMPLIANCE WITH LAWS AND CONTRACTS. Borrower shall comply with the
requirements of all applicable Laws and orders of any Governmental Agency,
provided that if Borrower has not so complied by the date prescribed in any such
Law or order Borrower shall
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13
comply therewith by the date set forth in any order of the Governmental Agency
charged with the enforcement of such Law or order if such date is later, and
comply with all contracts, agreements, indentures or instruments by which it is
bound, except where the failure to comply with such Laws, orders, contracts,
agreements, indentures or instruments could not reasonably be expected to have a
Material Adverse Effect.
4.6 MAINTENANCE OF PROPERTIES. Borrower shall use its best efforts to
maintain and preserve, or cause to be maintained and preserved, all of its
properties, necessary or useful in the proper conduct of its business, including
such as may be under lease, in good working order and condition, ordinary wear
and tear excepted, except where the failure to maintain or preserve the same
could not reasonably be expected to have a Material Adverse Effect. In the event
Borrower hereafter intends to move its principal place of business to a location
other than as set forth under Section 8.11 of this Agreement, Borrower shall
give at least thirty (30) days' prior written notice to Agent of its intention
to move, the date that such move is anticipated, and its new address.
4.7 LIMITATION ON ACQUISITIONS, MERGERS. KW shall not acquire, merge or
consolidate with or into any business organization unless KW is the surviving
entity following such action.
4.8 REPORTING REQUIREMENTS. So long as Borrower shall have any obligation
to Lenders under this Agreement, Borrower shall deliver to Agent the following
financial statements and reports:
(a) As soon as practicable and in any event within FIVE (5)
Business Days after Borrower or its President or Chief Financial Officer knows
or should reasonably have known of the commencement of any legal action against
it or its President or Chief Financial Officer except actions seeking money
judgment that are fully insured or bonded or could not reasonably be
expected to have a Material Adverse Effect, a report of the commencement of such
action containing a statement signed for and on behalf of Borrower by the
President or Chief Financial Officer setting forth details of such legal action
and any action Borrower proposes to take with respect thereto;
(b) Within five (5) Business Days of the occurrence of any Event
of Default or event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default, a report regarding such Event of Default
or event setting forth details and describing any action which Borrower proposes
to take with respect thereto, signed for and on behalf of Borrower by an
authorized officer of Borrower;
(c) Any change in name of Borrower or use of any trade names or
trade styles not presently used;
(d) As soon as possible, but in any event, within one hundred
twenty (120) days following the end of each calendar year during which the
Credit has not been fully repaid and performed, and discharged, audited
Financial Statements representing the financial condition of KW and its
subsidiaries on a consolidated basis as of the end of such calendar year. All
such Financial Statements shall be prepared, audited, and presented in
accordance with GAAP, or in such other form and content as Agent may permit, in
its sole opinion and judgment. All such Financial Statements shall contain a
certification signed by any individual providing a Financial Statement or by one
or more authorized representatives of any corporation, partnership limited
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14
liability company or other entity providing a Financial Statement, certifying to
the completeness and accuracy of all information, without exception;
(e) As soon as available and in any event within thirty (30) days
of filing each year, a copy of KW's federal and state income tax returns
complete with supporting schedules and exhibits;
(f) As soon as available, but in any event, within thirty (30)
days of the end of each calendar year, projection's by KW of the Financial
Statements for KW and its subsidiaries for the succeeding calendar year on a
quarterly basis, and on an annual basis for the following two (2) calendar
years. These Financial Statements may be Borrower prepared;
(g) Copies of KW's Form 10-K Annual Report, form 10-Q Quarterly
Report and Form 8-K Current Report within fifteen (15) days after the date of
filing with the Securities and Exchange Commission;
(h) Within the periods provided in (d) and (g) above, a
Compliance Certificate of KW signed by an authorized financial officer of KW
setting forth (i) the information and computations (in sufficient detail) to
establish that KW is in compliance with all financial covenants provided for in
Section 4.11 at the end of the period covered by the Financial Statements then
being furnished and (ii) whether there existed as of the date of such Financial
Statements and whether there exists as of the date of the Compliance
Certificate, any Event of Default under this Agreement or any event which with
notice or lapse of time or both would constitute an Event of Default and, if any
of the foregoing exists, specifying the nature thereof and the action KW is
taking or proposes to take with respect thereto;
(i) Promptly upon receipt thereof, one (1) copy of any other
report submitted to Borrower or any of Borrower's officers by independent
accountants in connection with any annual, interim or special audit made by them
of the books of Borrower;
(j) Within five (5) Business Days of becoming aware of any
developments or other information likely to materially and adversely affect
Borrower's properties, business, prospects, profits or condition (financial or
otherwise) or Borrower's ability to perform this Agreement or the other Loan
Documents, telephonic or facsimile notice specifying the nature of such
development or information and such anticipated effect which shall be promptly
confirmed in writing;
(k) Borrower agrees to furnish notice immediately to Lender if
Borrower has reason to believe or discovers any failure to comply with
subsections (a), (b) and/or (c) of Section 2.8;
(1) Borrower agrees to furnish notice immediately to Lender in
the event Borrower has reason to believe or discovers that the interface of
Borrower's data processing and/or software systems with any third party program
or system may or does result in material adverse consequence to Borrower;
(m) Such other information respecting the business, properties or
the condition or operations, financial or otherwise, of Borrower as Lender may
reasonably request from time to time.
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15
4.9 TRANSFER OF ASSETS. There shall not be, whether voluntarily,
involuntarily, or by operation of Law, a transfer, conveyance, lease, sale or
other disposition of any of the Assets of Borrower or any part thereof, except
as otherwise explicitly permitted hereunder or under any of the other Loan
Documents and other than (i) in the ordinary course of Borrower's business, and
(ii) the conveyance, sale or disposition of xxxxx.xxx (a.k.a. xxxxxxxxx.xxx),
without the prior written consent of Agent, which consent shall not be
unreasonably withheld.
4.10 YEAR 2000 COMPLIANCE. From and after December 31, 1999: (i) the
Software used by Borrower in the conduct and operation of the business of
Borrower will comply with the representations and warranties set forth in
Section 2.8, and (ii) the representations and warranties set forth in Section
2.8 shall continue in full force and effect, and Borrower will comply with and
otherwise act in accordance with such representations and warranties. Borrower
further covenants and agrees to indemnify and hold Lender harmless from any and
all claims, suits, actions, debts, damages, costs, losses, obligations, changes
and expenses of any nature whatsoever suffered or incurred by Agent and Lenders
arising from the failure of Borrower to comply with or act in accordance with
the terms of this Section 4.10.
4.11 FINANCIAL COVENANTS. KW shall maintain on a consolidated basis, the
following financial covenants, to be measured at the end of each calendar
quarter (other than (d) below), commencing on September 30, 1999. All financial
ratios shall be calculated at the end of each calendar quarter, using the
results of that quarter and each of the three (3) immediately preceding
quarters.
(a) Tangible Net Worth. Maintain on a consolidated basis Tangible
Net Worth equal to at least the amounts indicated for each period specified
below:
Period Amounts
------ -------
Ending December 31, 1999 $27,000,000.00
Ending December 31, 2000 $38,000,000.00
(b) Leverage Ratio. Maintain on a consolidated basis a Leverage
Ratio not exceeding the amounts indicated for each period specified below:
Period Ratio
------ -------
Ending December 31, 1999 3.00:1.0
Ending June 30, 2000 2.50:1.0
Ending June 30, 2001 2.00:1.0
(c) Debt Coverage Ratio. Maintain on a consolidated basis a Debt
Coverage Ratio of at least the amounts indicated for each period specified
below:
Period Ratio
------ -------
Ending December 31, 1999 1.50:1.0
Ending December 31, 2000 2.00:1.0
(d) Positive Net Income. Earn positive net income in each
calendar year.
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16
4.12 LIQUIDITY. KW shall maintain unencumbered liquid assets equal to at
least $2,712,500. "Liquid Assets" means the following assets of KW: (a) cash and
certificates of deposit; (b) U.S. Treasury Bills and other obligations of the
United States government; and (c) readily marketable securities (including
commercial paper, but excluding restricted stock and stock subject to the
provisions of Rule 144 of the Securities and Exchange Commission).
4.13 OTHER DEBT. Borrower shall not have outstanding or incur any direct
or contingent liabilities (other than to Lenders), or become liable for the
liabilities of others, without the Lenders' written consent. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit;
(b) Endorsing negotiable instruments received in the usual course
of business;
(c) Obtaining surety bonds in the usual course of business;
(d) Liabilities and lines of credit in existence on the date of
this Agreement disclosed in writing to Lenders; provided, that, without the
prior consent of Agent, at no time shall the aggregate amount of unsecured debt
of KW and its subsidiaries exceed $40,000,000.00, including the lines of credit
provided under this Agreement and by East-West Bank;
(e) Guaranties by KWP of the debt of its subsidiaries for the
acquisition, holding or development of real estate;
(f) Additional real estate secured or other non-recourse debt;
(g) Additional recourse debt approved by Lenders having (i) a
maturity date at least twenty-four (24) months beyond the Maturity Date and (ii)
covenants no more stringent than the covenants provided in Article IV of this
Agreement;
(h) Debts in favor of Affiliates and/or officers, directors or
shareholders provided such debts are subordinated, in form and substance
acceptable to Lenders, to all obligations of Borrower to Lenders under this
Agreement.
4.14 DIVIDENDS. KW shall not declare or pay any dividends on any of its
shares except dividends payable in capital stock of KW, and shall not purchase,
redeem or otherwise acquire for value any of its shares, or create any sinking
fund in relation thereto.
4.15 OTHER LIENS. Borrower shall not create, assume, or allow any security
interest or lien (including judicial liens) on property Borrower now or later
owns, except:
(a) Deeds of trust and security agreements in favor of Agent on
behalf of Lenders;
(b) Liens for taxes not yet due;
(c) Liens outstanding on the date of this Agreement disclosed in
writing to Agent, including, without limitation, the pledge and security
interest in favor of Colony K-W, LLC on the capital stock of KWPL;
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(d) Liens securing debt permitted in Section 4.13 (e) and (f).
ARTICLE 5
EVENTS OF DEFAULT
5.1 CONDITIONS UNDER WHICH LENDER MAY DECLARE AN EVENT OF DEFAULT BY
BORROWER: Each of the following shall constitute an Event of Default under this
Agreement, the Note and the other Loan Documents:
(a) failure in the payment of any principal or interest, or both,
within five (5) days of the date when due under the terms of any Note, this
Agreement or any other Loan Documents; and
(b) other than monetary defaults covered under Section 5.1(a),
default in the due observance or performance of any term, covenant or condition
contained in this Agreement, any Note or any other Loan Document which default
cannot be cured by the payment of money and such default shall continue for a
period of thirty (30) calendar days after Lender shall have given a written
notice to Borrower specifying such default; provided, however, that if such
non-monetary default is curable but is of a nature that such cure cannot be
completed within such thirty (30) day period, Borrower shall be allowed to cure
such default if Borrower shall promptly commence such cure after receipt of such
notice and diligently prosecutes the same to completion (provided further,
however, that in no event shall such extension operate to extend beyond the
earlier to occur of sixty (60) days or the Maturity Date); provided, however,
Lenders shall not be obligated to make any Advances to Borrower during any cure
period;
(c) if any representation or warranty made or agreed to be made
herein or in any other Loan Document shall prove to be untrue or misleading in
any material respect;
(d) if Borrower or any subsidiary consents to the filing of, or
commences or consents to the commencement of, any Bankruptcy Proceeding with
respect to Borrower;
(e) if any Bankruptcy Proceeding shall have been filed against
Borrower or any subsidiary and the same is not withdrawn, dismissed, canceled or
terminated within ninety (90) days of such filing; provided, however, Lenders
shall not be obligated to make any Advances to Borrower during such period;
(f) if Borrower or any subsidiary is adjudicated bankrupt or
insolvent or a petition for reorganization of Borrower or any subsidiary is
granted;
(g) if a receiver, liquidator or trustee shall be appointed for
Borrower or any subsidiary or for substantially all of their respective
property;
(h) if Borrower or any subsidiary shall make an assignment for
the benefit of its creditors or shall admit in writing the inability to pay its
debts generally as they become due;
(i) except as otherwise permitted herein, if Borrower shall
institute or cause to be instituted any proceeding for the termination or
dissolution of Borrower;
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(j) any suit shall be filed against Borrower, which, if adversely
determined could reasonably be expected to materially impair the ability of
Borrower to perform any or all of its obligations under this Agreement or any of
the other Loan Documents, unless Borrower's counsel furnishes to Agent its
opinion, to the satisfaction of Agent and Agent's counsel, that, in its judgment
the suit is not reasonably expected to have a Material Adverse Effect.
(k) a final judgment for the payment of money shall be rendered
by a court of competent jurisdiction against Borrower or any of its
subsidiaries, and Borrower or such subsidiary, as the case may be, shall not
discharge or bond the same or provide for its discharge or bonding in accordance
with its terms, or procure a stay of execution thereof, within forty-five (45)
days from the date of entry thereof and within said period of forty-five (45)
days, or such longer period during which execution of such judgment shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal, and such judgment together with all other such judgments
shall exceed in the aggregate $250,000.00;
(l) Borrower shall liquidate, dissolve, or fail to maintain its
status as a going concern;
(m) Borrower commits a breach or default in the payment or
performance of any other obligation of Borrower to Lender which is not remedied
within any period provided therein or waived by Lender;
(n) (i) any debt of Borrower, which individually or in the
aggregate exceeds $250,000.00 ("Material Debt"), shall be declared to be due and
payable or required to be prepaid, redeemed, purchased or defeased, or an offer
to prepay, redeem, purchase or defease Material Debt shall be required to be
made, in each case prior to the stated maturity thereof, or the maturity of any
or all of Material Debt is otherwise accelerated, or (ii) Borrower or any of its
subsidiaries shall fail to pay all or any portion of its Material Debt in full
upon the final stated maturity of such respective Material Debt (including any
extension thereof);
(o) (i) KW shall fail to pay any principal of, premium or
interest on or any other amount payable to East West Bank under KW's line of
credit therewith when the same becomes due and payable (whether at scheduled
maturity, or by required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such credit line; or (ii) any other
event shall occur or condition shall exist under any agreement or instrument
relating to such credit line and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to permit the acceleration of the maturity of amounts owed
under such credit line (whether or not such acceleration occurs);
(p) Any Confirmation of Subordination, security agreement or
other document required by this Agreement is revoked, violated or no longer in
effect;
(q) Any levy (including, but not limited to any levy following
the granting of an attachment lien) is made on any of Borrower's property under
any process or any lien creditor commences suit to enforce a judgment lien
against any of Borrower's property and such levy or action shall not be bonded
against by sureties deemed by Agent to be sufficient in its opinion and judgment
and shall continue unstayed for thirty (30) calendar days or more; provided,
however,
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Lenders shall not be obligated to make any Advances to Borrower during the
period of time the levy is unstayed;
5.2 CESSATION OF ADVANCES. Upon the occurrence of an Event of
Default by Borrower under this Agreement, Agent may, at its option, and upon the
request of Majority Lenders shall, without notice or demand, except as otherwise
provided in Section 5.1, cease making any Advances under this Agreement or under
any other agreement between Borrower and Lender.
ARTICLE 6
REMEDIES
6.1 RIGHTS OF LENDER. Upon the occurrence of an Event of Default by
Borrower under this Agreement, Agent may, at its option, and upon the request of
Majority Lenders shall, without notice or demand, in the case of any Event of
Default under Section 5.1(d) through (h), inclusive, and otherwise upon five
(5) Business Days written notice from Agent to Borrower, do any one or more of
the following, all of which are authorized by Borrower:
(a) Declare all obligations, whether evidenced by this Agreement,
the Notes, or otherwise, immediately due and payable;
(b) Terminate this Agreement and the Credit as to any future
obligation or liability of any Lender, but without affecting the obligations
owing by Borrower to any Lender.
6.2 RIGHTS AND REMEDIES NON-EXCLUSIVE. In addition to the specific rights
and remedies hereinabove mentioned, Agent shall have the right to avail itself
of any other rights or remedies to which Lenders may be entitled any other Loan
Documents, at Law or in equity, including, but not limited to, the right to
realize upon any or all of the security and for the Credit to do so in any
order. Furthermore, the rights and remedies set forth above are not exclusive,
and Agent, for itself and on behalf of Lenders may avail itself of any
individual right or remedy set forth in this Agreement, or available at Law or
in equity, without utilizing any other right or remedy.
ARTICLE 7
THE AGENT
7.1 APPOINTMENT AND AUTHORIZATION. Each Lender irrevocably appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to Agent by
the terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
7.2 AGENT AND AFFILIATES. Agent shall have the same rights and powers
under this Agreement as any other Lender and may exercise or refrain from
exercising the same as though it were not the Agent, and Agent and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any subsidiary or Affiliate of the
Borrower as if were not Agent hereunder.
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7.3 ACTION BY AGENT. The obligations of Agent hereunder and under the
other Loan Documents are only those expressly set forth herein and therein.
Without limiting the generality of the foregoing, Agent shall not be required to
take any action with respect to any Event of Default, except as expressly
provided in Article 5 hereof.
7.4 CONSULTATION WITH EXPERTS. Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accounts or experts.
7.5 LIABILITY OF AGENT. Neither Agent nor any of its directors, officers,
agents, or employees shall be liable for any action taken or not taken by it in
connection herewith or in connection with any other Loan Documents (i) with the
consent or at the request of the Majority Lenders or (ii) in the absence of its
own gross negligence or willful misconduct. Neither Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (a) any statement, warranty or
representation made in connection with this Agreement or any Advance hereunder
or in connection with any other Loan Documents; (b) the performance or
observance of any of the covenants or agreements of Borrower; (c) the
satisfaction of any condition specified in Article 3; or (d) the validity,
effectiveness or genuineness of any of the Loan Documents or any other
instrument or writing furnished in connection herewith or therewith. Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties. As to any matters not expressly provided for by this
Agreement, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or under any other Loan Document in accordance
with instructions signed by the Majority Lenders and such instructions of the
Majority Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of Lenders.
7.6 INDEMNIFICATION. Each Lender shall, ratably in proportion to the
amount of its commitment, indemnify the Agent (to the extent not reimbursed by
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that Agent may suffer or incur in
connection with this Agreement or any other Loan Document or any action taken
or omitted by Agent hereunder or thereunder.
7.7 FAILURE TO ACT. Except for action expressly required of Agent
hereunder or under any other Loan Document Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall be indemnified
to its satisfaction by Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
7.8 CREDIT DECISION. Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and each other Loan Document to which it
is a party. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue
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to make its own credit decisions in taking or not taking any action under this
Agreement or under any other Loan Document.
7.9 ADDITIONAL LENDERS. From time to time additional financial
institutions may, with the written consent of Agent and Borrower, become a
Lender under this Agreement upon the execution and delivery to Agent of a Lender
Participation Agreement, substantially in the form of Exhibit E. Upon receipt of
such executed agreement. Agent shall revise Exhibit A to this Agreement and
distribute same to all parties hereto and Borrower shall execute and deliver a
Note to the new Lender evidencing its pro rata share of the Credit.
7.10 SETOFF. Regardless of the adequacy of any collateral for the
Credit, during the continuance of any Event of Default, any deposits (general or
specific, time or demand, provisional or final, regardless of currency, maturity
or the branch of where such deposits are held) or other sums credit by or due
from any Lender to Borrower and any securities or other property of Borrower in
the possession of such Lender may be applied to or set off against the payment
of any obligations owing to such Lender hereunder, and any and all other
liabilities, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of Borrower to such Lender.
7.11 DISTRIBUTION OF PROCEEDS. In the event that, following the
occurrence or during the continuance of any Event of Default, any monies are
received in connection with the enforcement of the Loan Documents, except as
otherwise provided in Section 7.10, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be), the
reimbursement of, the Agent for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by Agent in
connection with the collection of such monies by Agent, for the exercise,
protection or enforcement by Agent of all or any of the rights, remedies, powers
and privileges of Agent under this Agreement or any of the other Loan Documents
or in support of any provision of adequate indemnity to Agent against any taxes
or liens which by Law shall have or may have, priority over the rights of Agent
to such monies;
(b) Second, to all obligations of Borrower to Tokai under the
Loan Documents; and
(c) Third, to all obligations of Borrower to Other Lenders under
the Loan Documents.
7.12 PAYMENTS.
(a) A payment by Borrower to Agent hereunder or under any of the
other Loan Documents for the account of any other Lender shall constitute a
payment to such other Lender. Agent agrees to distribute to such Lender not
later than one Business Day after Agent's receipt of good funds, determined in
accordance with Agent's customary practices, such Lenders pro rata share of
payments received by Agent for the account of such Lender except as otherwise
expressly
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provided herein or in any of the other Loan Documents. In the event that Agent
fails to distribute such amounts within one Business Day as provided above,
Agent shall pay interest on such amount at a rate per annum equal to the Federal
Funds Effective Rate (calculated for the purposes of this section only based on
overnight federal funds transactions) from time to time in effect.
(b) If, in the opinion of Agent the distribution of any amounts
received by it in such capacity hereunder, under the notes or under any of the
other Loan Documents might involve it in liability, it may refrain from making
such distribution until it is right to make such distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by Agent is
to be repaid, each Person to whom any such distribution shall have been made
shall either repay to Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons as shall
be determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i) to make
available to Agent its pro rata share of any Credit or (ii) to comply with any
of its obligations under this Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned any
and all payments due to it from Borrower, whether on account of outstanding
Credit, interest, fees or otherwise, to the remaining non-delinquent Lenders for
application to, and reduction of, their respective pro-rata shares of all
outstanding Credit in accordance with the terms of this Agreement. The
Delinquent Bank hereby authorizes Agent to distribute such payments to the
non-delinquent Lenders in proportion to their respective pro-rata shares of all
outstanding Credit in accordance with the terms of this Agreement. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and if, as a
result of application of the assigned payments to all outstanding Credit of the
non-delinquent Lenders or as a result of other payments by the Delinquent Bank
to the non-delinquent Lenders, Lenders respective pro rata shares of all
outstanding Credit have returned to those in effect immediately prior to such
delinquency and without giving effect to the non-payment causing such
delinquencies.
ARTICLE 8
GENERAL CONDITIONS AND MISCELLANEOUS
8.1 NON-LIABILITY OF LENDER. Borrower acknowledges and agrees that by
accepting or approving anything required to be observed, performed, fulfilled,
or given to Lenders pursuant to this Agreement or the other Loan Documents,
including any certificate, Financial Statement, appraisal or insurance policy,
Lenders shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision,
or condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Lenders.
8.2 NO THIRD PARTIES BENEFITTED. This Agreement is made for the purpose of
defining and setting forth certain obligations, rights, and duties of Borrower
and Lenders in
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23
connection with the Loan. It shall be deemed a supplement to the Note and the
other Loan Documents, and shall not be construed as a modification of the Note
or the other Loan Documents, except as provided herein. It is made for the sole
protection of Borrower and Lenders, and Lenders' successors and assigns and
Borrower's permitted successor and assigns. No other Person shall have any
rights of any nature hereunder or by reason hereof or the right to rely hereon.
In the event of a conflict between this Agreement and the Note, the provisions
of the Note shall control.
8.3 INDEMNITY BY BORROWER. Borrower hereby indemnifies and agrees to hold
harmless each Lender and its directors, officers, agents and employees
(individually and collectively the "Indemnitee(s)") from and against:
(a) Any and all claims, demands, actions or causes of action that
are asserted against any Indemnitee by any Person if the claim, demand, action
or cause of action, directly or indirectly, relates to a claim, demand, action
or cause of action that the Person has or asserts against Borrower; and
(b) Any and all liabilities, losses, costs or expenses (including
court costs and attorneys' fees) that any Indemnitee suffers or incurs as a
result of the assertion of any claim, demand, action or cause of action
specified in this Section 8.3.
(c) Notwithstanding the foregoing provisions of this Section 8.3,
Borrower is not obligated to defend, indemnify or hold any Indemnitee harmless
from any claims, actions, demands, causes of action, liabilities, damages,
losses, costs or expenses of any kind arising from any Indemnitee's gross
negligence or willful misconduct.
8.4 INTENTIONALLY OMITTED.
8.5 TIME IS OF THE ESSENCE. Time is of the essence of this Agreement and
of each and every provision hereof. The waiver by Lender of any breach or
breaches hereof shall not be deemed, nor shall the same constitute, a waiver of
any subsequent breach or breaches.
8.6 SUCCESSORS AND ASSIGNS; DISSEMINATION OF INFORMATION.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Borrower, Agent and Lenders and their respective successors and
assigns. Notwithstanding anything to the contrary contained or implied herein,
Borrower shall not be permitted to assign its rights and obligations hereunder
without the prior written consent of Lenders. Any purported assignment in
violation of the foregoing shall be null and void.
(b) Each Lender may, but only with the prior written consent of
the other Lender(s) and Borrower (which consent shall not be unreasonably
withheld), at any time sell, assign or transfer all or any portion of its
Credit, Loan or Note or of its right, title and interest therein or thereto or
in or to this Agreement to any other Person; provided that: (i) each such
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24
assignment (a) shall be of a constant, and not a varying, percentage of such
Lender's Loans and (b) if such assignment shall be a Novation (defined below),
it shall be of all of such Lender's rights and obligations under this Agreement
(including such Lender's commitment); and (ii) no consent from Borrower shall be
required in the case of (a) any assignment to another Lender or to a financial
institution or entity under common ownership with and directly controlled by
such Lender, or (b) pledges or assignments for security purposes by any Lender
to any Federal Reserve Bank, provided, in no event, shall any assignment
increase the costs or obligations of Borrower. If such assignment is to one or
more financial institutions which assume the obligations of such Lender
hereunder (a "Novation"): (x) the assigning Lender shall deliver to Agent an
Assignment and Assumption Agreement, duly executed by it and by the assignee
bank, in form and substance satisfactory to Agent; (y) the assigning Lender
shall thereupon be released from, and the assuming institution shall assume and
become obligated in respect of, the assigning Lender's commitment and its other
obligations hereunder to the extent of such Novation and (z) the assuming
institution shall be a party hereto (and shall constitute a Lender hereunder).
Following any Novation, Agent will prepare, and Borrower will execute and
deliver, a new Note for the assignee Lender reflecting the Novation. Each Lender
may furnish any information supplied to such Lender pursuant to this Agreement
to any proposed assignee previously consented to by Borrower (if such consent is
required); provided that such actual or potential assignees shall agree to treat
all information exchanged as confidential.
(c) Borrower hereby further agrees that any Lender may disclose
such information as it deems necessary or advisable regarding the Loan or
Borrower, in connection with any disclosure required of such Lender with respect
to its organization, capitalization or operations, or as may be required by any
applicable securities or other disclosure Laws or any laws, rules, statutes,
codes or regulations of Japan or the United States (and the laws, rules,
statutes, codes or regulations regulating or governing any other sovereign
matter having a similar import, scope or purpose) or as may otherwise be
necessary in connection with any such transaction or the preparation of audited
or unaudited financial statements of such Lender.
8.7 EXECUTION IN COUNTERPARTS. This Agreement and any other Loan Document,
except the Notes may be executed in any number of counterparts, and any party
hereto or thereto may execute any counterpart, each of which, when executed and
delivered, will be deemed to be an original, and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, taken together
will be deemed to be but one and the same instrument. The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until counterparts hereon or thereof, as the case may be, have
been executed by all the parties hereto or thereto.
8.8 INTEGRATION; AMENDMENTS; CONSENTS. This Agreement, together with the
documents referred to herein, constitute the entire agreement of the parties
touching upon the subject matter hereof, supersedes any prior negotiations or
agreements on such matter. No amendment, modification or supplement of any
provision of this Agreement or any of the other Loan Documents shall be
effective unless in writing, signed by Lenders and Borrower; and no waiver of
any of Borrower's obligations under this Agreement or any of the other Loan
- 24 -
25
Documents or consent to any departure by Borrower therefrom shall be effective
unless in writing, signed by Lenders, and then only in the specific instance and
for the specific purpose given.
8.9 COSTS, EXPENSES AND TAXES. Borrower shall pay to Lenders, on demand:
(a) The reasonable attorneys' fees and out-of-pocket expenses
incurred by Agent in connection with the negotiation, preparation, execution,
delivery and administration of the Agreement and any other Loan Document and any
matter related thereto;
(b) The reasonable costs and expenses of each Lender in connection
with the enforcement of this Agreement and any other Loan Document and any
matter related thereto, including the reasonable fees and out-of-pocket expenses
of any legal counsel, independent public accountants, and other outside experts
retained by each Lender, and including reasonable attorneys' fees and expenses
incurred by such Lender in connection with the analysis, monitoring, supervision
and/or assertion of such Lender's rights and claims in any Bankruptcy Proceeding
affecting Borrower, including, but not limited to, pursuing or opposing any
motion for relief from the automatic stay, use of cash collateral, post-petition
financing or confirmation of a plan; and
All sums paid or expended by Lenders under the terms of this
Agreement shall be payable by Borrower within five (5) Business Days of receipt
from Agent or any Lender of written demand for payment. All such sums, together
with all amounts to be paid by Borrower pursuant to this Agreement, shall bear
interest from the date of expenditure at the default rate provided in the Note.
8.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower contained herein or in any other Loan Document shall
survive the making of the Credit and the execution and delivery of the Notes,
and are material and have been or will be relied upon by Lenders,
notwithstanding any investigation made by any Lender or on behalf of any Lender.
For the purpose of this Agreement, all statements contained in any certificate,
agreement, Financial Statement, or other writing delivered by or on behalf of
Borrower pursuant hereto or to any other Loan Document or in connection with the
transactions contemplated hereby or thereby shall be deemed to be
representations and warranties of Borrower contained herein or in the other Loan
Documents, as the case may be.
8.11 NOTICES. All notices, requests, demands, directions, and other
communications provided for hereunder and under any other Loan Document, must be
in writing and must be mailed or delivered to the appropriate party at its
respective address set forth below or, as to any party, at any other address as
may be designated by it in a written notice sent to the other parties in
accordance with this Section.
If any notice is given by mail, it will be effective three (3)
calendar days after being deposited in the mails with first-class or air mail
postage prepaid; if given by a reputable overnight courier for next day
delivery, one (1) business day after being delivered to such courier;
- 25 -
26
if given by facsimile or other form of electronic written communication, when
confirmation of delivery has been received by sender; or if given by personal
delivery, when delivered.
Such notices will be given to the following:
To Agent TOKAI BANK OF CALIFORNIA
on behalf 000 Xxxxx Xxxxx Xxxxxx
of Lenders: Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Loan Servicing Group
To Borrower: XXXXXXX-XXXXXX, INC.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Chief Financial Officer
8.12 FURTHER ASSURANCES. Borrower shall, at its sole expense and
without expense to Lenders, do, execute and deliver such further acts and
documents as any Lender from time to time may reasonably require for the purpose
of assuring and confirming unto Lenders the rights hereby created or intended,
now or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Documents.
8.13 GOVERNING LAW. The Loan shall be deemed to have been made in
California, and this Agreement and the other Loan Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
California without application of conflict of laws principals. It is agreed that
exclusive venue for any legal action between the parties arising out of or
relating to this Agreement shall be in the Superior Court for Los Angeles
County, California, or in cases where federal diversity jurisdiction is
available and obtained in the United States District Court for the Central
District of California situated in Los Angeles, California.
8.14 SEVERABILITY OF PROVISIONS. If any provision of this
Agreement or of any of the other Loan Documents is held to be inoperative,
unenforceable or invalid, such provision shall be inoperative, unenforceable or
invalid without affecting the remaining provisions; this Agreement and the other
Loan Documents shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement or the
other Loan Documents; and to this end the provisions of this Agreement and the
other Loan Documents are declared to be severable, remaining in full force and
effect.
8.15 JOINT AND SEVERAL OBLIGATIONS. If this Agreement is executed
by more than one Person as Borrower, the obligations of each of such Person
hereunder shall be joint and several obligations.
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27
8.16 CONSTRUCTION. Whenever the context of this Agreement
requires, the singular shall include the plural and the masculine gender shall
include the feminine and/or neuter. Any representation or warranty made herein
or in the other Loan Documents based on the "knowledge" of Borrower or any other
Person making such representation or warranty shall be deemed and construed to
mean such facts and circumstances that the Person knows or should have known
after due inquiry regarding the making of such representation or warranty.
8.17 HEADINGS. Article and Section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose.
8.18 JURY TRIAL WAIVER. IN ANY ACTION BROUGHT BY LENDERS,
BORROWER OR ANY THIRD PARTY ARISING UNDER THIS AGREEMENT, THE NOTE, OR ANY
DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, ANY ACTION BASED UPON FRAUD, NEGLIGENCE, BREACH OF CONTRACT, WASTE,
INTENTIONAL TORT OR NEGLIGENT TORT, BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY AND AGREES THAT SUCH ACTION SHALL BE TRIED BY THE COURT ONLY. BORROWER
FURTHER AGREES TO EXECUTE AND TO FILE WITH ANY COURT IN WHICH ANY SUCH ACTION IS
COMMENCED, ANY DOCUMENTS OR INSTRUMENTS NECESSARY TO EVIDENCE OR TO EFFECTUATE
THIS WAIVER OF TRIAL BY JURY.
Borrower has initialed this Section 8.18 to further indicate its
awareness and acceptance of each and every provision hereof.
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
------------------- ------------------ ------------------- -------------------
Borrower's Initials Borrower's Initials Borrower's Initials Borrower's Initials
IN WITNESS WHEREOF, Borrower, Agent and Lenders have hereunto
caused this Agreement to be executed on the date first above written.
"Lender" and "Agent"
TOKAI BANK OF CALIFORNIA, a California
banking corporation
By: /s/ XXXX X. XXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
[Signatures continued on next page]
- 27 -
28
8.16 CONSTRUCTION. Whenever the context of this Agreement
requires, the singular shall include the plural and the masculine gender shall
include the feminine and/or neuter. Any representation or warranty made herein
or in the other Loan Documents based on the "knowledge" of Borrower or any other
Person making such representation or warranty shall be deemed and construed to
mean such facts and circumstances that the Person knows or should have known
after due inquiry regarding the making of such representation or warranty.
8.17 HEADINGS. Article and Section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose.
8.18 JURY TRIAL WAIVER. IN ANY ACTION BROUGHT BY LENDERS,
BORROWER OR ANY THIRD PARTY ARISING UNDER THIS AGREEMENT, THE NOTE, OR ANY
DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, ANY ACTION BASED UPON FRAUD, NEGLIGENCE, BREACH OF CONTRACT, WASTE,
INTENTIONAL TORT OR NEGLIGENT TORT, BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY AND AGREES THAT SUCH ACTION SHALL BE TRIED BY THE COURT ONLY. BORROWER
FURTHER AGREES TO EXECUTE AND TO FILE WITH ANY COURT IN WHICH ANY SUCH ACTION IS
COMMENCED, ANY DOCUMENTS OR INSTRUMENTS NECESSARY TO EVIDENCE OR TO EFFECTUATE
THIS WAIVER OF TRIAL BY JURY.
Borrower has initialed this Section 8.18 to further indicate its
awareness and acceptance of each and every provision hereof.
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
------------------- ------------------ ------------------- -------------------
Borrower's Initials Borrower's Initials Borrower's Initials Borrower's Initials
IN WITNESS WHEREOF, Borrower, Agent and Lenders have hereunto
caused this Agreement to be executed on the date first above written.
"Lender" and "Agent"
TOKAI BANK OF CALIFORNIA, a California
banking corporation
By: /s/ XXXX X. XXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: S.V.P.
----------------------------------
[Signatures continued on next page]
- 27 -
29
"Borrower"
XXXXXXX-XXXXXX, INC., a
Delaware corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: X. Xxxx
-----------------------------------
Title: [ILLEGIBLE]
----------------------------------
XXXXXXX-XXXXXX INTERNATIONAL, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: X. Xxxx
-----------------------------------
Title: Secretary
----------------------------------
XXXXXXX-XXXXXX PROPERTIES, LTD.,
a Delaware corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: X. Xxxx
-----------------------------------
Title: Secy
----------------------------------
K-W PROPERTIES, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: X. Xxxx
-----------------------------------
Title: Secy
----------------------------------
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30
EXHIBIT A
Name of Lender Commitment Amount Percentage Interest
-------------- ----------------- -------------------
Tokai Bank of California $10,000,000 66.66667
[Additional Lender(s)] [$ 5,000,000] [33.33333]
------------
$15,000,000 100.00000%
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31
EXHIBIT B
FORM OF REQUEST FOR ADVANCE
- 30 -
32
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
-31-
33
FORM OF COMPLIANCE CERTIFICATE
Dated:___________, 1999
TO: Tokai Bank of California
as Agent for the Lenders
under the Revolving Loan
Agreement referred to below
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Loan Servicing Group
Ladies and Gentlemen:
The undersigned hereby certifies to you pursuant to the Revolving Loan
Agreement dated as of July 2, 1999, ("Agreement") between Xxxxxxx-Xxxxxx, Inc.,
a Delaware corporation ("KW"), Xxxxxxx-Xxxxxx International, Inc., a California
corporation ("KWI"), Xxxxxxx-Xxxxxx Properties, Ltd., a Delaware corporation
("KWPL"), and K-W Properties, Inc., a California corporation ("KWP"),
(individually and collectively, "Borrower"), certain Lenders and Tokai Bank of
California, as agent for Lenders ("Agent"), as follows:
As of_______________ , no Event of Default or event which with the lapse
of time or the giving of notice, or both, would become an Event of Default (an
"Unmatured Event of Default") has occurred [except: (Specify nature and extent
of such Event of Default and/or Unmatured Event of Default) __________________].
If applicable, the corrective action taken or proposed to be taken to
prevent or cure such Event of Default or Unmatured Event of Default is as
follows:_______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
As of_____________________________, KW maintains on a consolidated basis
the following financial covenants pursuant to Section 4.11 of the Agreement:
a) Tangible Net Worth of $_______________________________
b) A Leverage Ratio of _____________________:1.0
C) A Debt Coverage Ratio of ________________:1.0
d) As of December 31,_______, positive net income of $______.
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34
As of____________________. KW maintains:
a) unencumbered liquid assets of $_______________
The Financial Statements and/or reports submitted as of this date are
true, complete, correct and consistent with GAAP.
Any and all capitalized terms set forth in this certificate without
definition shall have the respective meanings ascribed thereto in the Agreement.
XXXXXXX-XXXXXX, INC., a Delaware
corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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35
This determination of the LIBOR Rate by Agent shall be
binding and conclusive upon Borrower.
1.8 "LIBOR Rate Option" has the meaning set forth in Section 3.
1.9 "Loan Agreement" means that certain Revolving Loan Agreement
entered into by and between Borrower, Agent and Lenders of even
date herewith, as it may be amended from time to time, and is
subject to all of the terms and conditions thereof. All terms not
defined herein shall have the same meaning as in the Loan
Agreement. In the event of a conflict between the terms of this
Note and the Loan Agreement, the terms of this Note shall
prevail.
1.10 "Maturity Date" means the earlier of July 2, 2001 and the date on
which a Change of Control (as defined in the Loan Agreement)
occurs.
1.11 "Prime Rate" means the variable rate of interest per annum
announced, declared and/or published from time to time by Agent
as its "Prime Rate" with the understanding that Agent's "Prime
Rate" is one of its base rates and serves as a basis upon which
effective rates of interest are calculated for loans making
reference thereto and may not be the lowest of Agent's base
rates.
1.12 "Principal Balance" means the outstanding principal balance of
this Note from time to time.
1.13 "Rollover Date" means the last day of the LIBOR Interest Period.
2. Interest and principal shall be payable as follows:
2.1 Interest shall be payable monthly, in arrears, commencing on the
last day of the month following the initial disbursement, and
shall continue to be due and payable, in arrears, on the same day
of each calendar month thereafter until the Maturity Date.
2.2 Upon the Maturity Date, the Principal Balance together with all
accrued and unpaid interest and other sums due on this Note shall
be due and payable in full.
2.3 All sums outstanding under the Principal Balance not designated
by Borrower as bearing interest at the LIBOR Rate shall bear
interest at the Prime-Based Rate.
3. Borrower shall have the fight and/or option to elect to have the
Principal Balance, or portions thereof, bear interest at the LIBOR Rate (herein
"LIBOR Rate Option"), provided such election is made in the manner hereinafter
set forth. Any election of Borrower of the LIBOR Rate Option must be made in
accordance with the following:
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36
3.1 Borrower may only elect the LIBOR Rate Option for one (1) month,
three (3) month, or six (6) month periods, and only in regard to
principal increments of not less than $1,000,000.00.
3.2 For each and every election of the LIBOR Rate Option, Borrower
shall deliver to Agent and Lender a written notification or telex
of Borrower's election of such LIBOR Rate Option at least three
(3) LIBOR Business Days prior to the date of commencement of the
LIBOR Interest Period (herein "LIBOR Notice"). Each and every
LIBOR Notice must specify the date the LIBOR Interest Period is
to commence.
3.3 Agent shall, as soon as practicable after 3:00 p.m. Los Angeles
time two (2) LIBOR Business Days prior to the commencement of the
LIBOR Interest Period, determine the LIBOR Rate applicable to the
portion of the Principal Balance set forth in the LIBOR Notice,
and shall deliver oral and facsimile notice to Borrower and each
Lender of such rate on the date of determination. Interest shall
accrue at the LIBOR Rate so determined by Agent for the LIBOR
Interest Period commencing on the date specified in the LIBOR
Notice. The interest rate applicable to the Principal Balance,
with respect to which Borrower has elected a LIBOR Rate, shall
revert from the LIBOR Rate applicable thereto to the Prime Rate
on the Rollover Date applicable thereto, unless Borrower timely
exercises the LIBOR Rate Option with respect thereto within the
time periods provided herein. Lender shall be under no duty or
obligation to notify Borrower that the interest rate on any
portion of the Principal Balance is about to revert from a LIBOR
Rate to the Prime Rate.
3.4 Borrower's right to exercise any LIBOR Rate Option shall be
conditioned upon there not being an uncured Event of Default, as
defined in the Loan Agreement, and there not being more than ten
(10) LIBOR Rate Options outstanding at any one time.
3.5 The LIBOR Interest Period in any LIBOR Notice shall not extend
beyond the Maturity Date.
3.6 In the event, and on each occasion, that on the day two (2) LIBOR
Business Days prior to the commencement of a LIBOR Interest
Period, Agent or any Lender shall reasonably determine (which
determination, if reasonably made by Agent or any Lender, shall
be conclusive and binding upon Borrower) that dollar deposits in
an amount approximately equal to that portion of the Principal
Balance set forth in the LIBOR Notice:
3.6a are not generally available at such time in the London
Interbank Market;
3.6b the rate or term at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to
any Lender of making or maintaining a LIBOR Rate on such
portion of the Principal Balance or funding the same in
the London Interbank Market during such LIBOR Interest
Period;
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37
3.6c reasonable means do not exist for ascertaining a LIBOR
Rate; and/or
3.6d a LIBOR Rate on such portion of the Principal Balance
would be in excess of the maximum interest rate which
Borrower may by Law pay,
then Agent or any Lender shall so notify Borrower and such
portion of the Principal Balance shall continue to bear interest
at the Prime Rate.
3.7 If any change in any Law or in the interpretation thereof by any
Governmental Agency charged with the administration or
interpretation thereof shall make it unlawful for Lender to make
and/or maintain LIBOR Rates with respect to the Principal Balance
or to give effect to its obligations as contemplated hereby then
the LIBOR Rate shall immediately terminate. Lender shall notify
Borrower of such termination, and after such notification any
LIBOR Rate applicable to the Principal Balance shall be
automatically converted to the Prime Rate, and any such notice
given by Lender to Borrower pursuant to this paragraph shall, if
lawful, be effective on the last day of any existing LIBOR
Interest Period.
4. In addition to all other sums due hereunder, Borrower hereby agrees to
indemnify Lender against any loss or reasonable expense, and to pay Lender upon
demand any and all amounts that Lender may reasonably sustain or incur in
liquidating or reemploying deposits from third parties required to effect or
maintain any LIBOR Rate with respect to any portion of the Principal Balance
subject to a LIBOR Rate as a direct consequence of any default by Borrower in
the payment of the Principal Balance bearing interest at a LIBOR Rate, or any
part thereof, or interest accrued thereon at a LIBOR Rate, as and when due.
Lender shall provide to Borrower a statement explaining the amount of any such
loss or expense, which statement, in the absence of manifest error, shall be
conclusive and binding upon Borrower.
5. Borrower shall have the right, at any time, to prepay tiny portion of the
Principal Balance bearing interest at the Prime Rate, without premium or penalty
any such prepayment shall not result in a reamortization, deferral,
postponement, suspension or waiver of any and all other payments due under this
Note. Borrower shall have no right to prepay any portion of the Principal
Balance bearing interest at the LIBOR Rate, except on a Rollover Date.
6. Interest, late charges, costs, or expenses that are not received by
Lender within ten (10) calendar days from the date such interest, late charges,
costs, or expenses become due, shall, at the sole discretion of Lender, be added
to the Principal Balance and shall from the date due bear interest at the
Default Rate.
7. Whenever any payment to be made under this Note shall be due on other
than a Business Day, then the due date for such payment shall be automatically
extended to the next succeeding Business Day, and such extension of time shall
in such cases be included in the computation of the interest portion of any
payment due hereunder.
8. All payments under the Note shall be made by Borrower without any offset,
decrease, reduction or deduction of any kind or nature whatsoever, including,
but not limited to, any decrease,
5
38
reduction or deduction for, or on account of, any offset, withholdings, future
taxes, future reserves, imposts or duties of any kind or nature that are imposed
or levied by or on behalf of any Governmental Agency. If at any future time,
Lender shall be compelled by any Law or any other such requirement which on its
face or by its application requires or establishes reserves, or payment,
deduction or withholding of taxes, imposts or duties to act such that it causes
or results in a decrease, reduction and/or deduction in payment received by
Lender, then Borrower shall pay to Lender such additional amounts, as Lender
shall deem necessary and appropriate, such that every payment received under
this Note, after such decrease, reserve, reduction, deduction, payment and/or
required withholding, shall not be reduced in any manner whatsoever.
9. Upon the occurrence of an Event of Default under the Loan Agreement or a
default by Borrower hereunder, Lender may, in its sole and absolute discretion,
declare the entire unpaid principal balance, together with all accrued and
unpaid interest thereon, and all other amounts and/or payments owing hereunder,
immediately due and payable, without notice and/or demand.
10. From and after the occurrence of any Event of Default under the Loan
Agreement or a default by Borrower hereunder, whether by non-payment, maturity,
acceleration, non-performance or otherwise, and until such Event of Default has
been cured, all outstanding amounts under this Note (including, but not limited
to, interest, costs and late charges) shall bear interest at a per annum rate
(the "Default Rate") equal to five percent (5%) In excess of the rate(s) being
charged hereunder.
11. Time is of the essence for all payments and other obligations due under
this Note. Borrower acknowledges that if any payment required under this Note is
not received by Lender within ten (10) days after the same becomes due and
payable, Lender will incur extra administrative expenses (i.e., in addition to
expenses incident to receipt of timely payment) and the loss of the use of funds
in connection with the delinquency in payment. Because, from the nature of the
case, the actual damages suffered by Lender by reason of such administrative
expenses and loss of use of funds would be impracticable or extremely difficult
to ascertain, Borrower agrees that five percent (5%) of the amount of the
delinquent payment, together with the difference between interest accruing on
the entire unpaid principal balance of this Note at the rate(s) being charged
hereunder and at the Default Rate, as provided above, shall be the amount of
damages which Lender is entitled to receive upon such breach, in compensation
therefor. Therefore, Borrower shall, in such event, without further demand or
notice, pay to Lender, as Lender's monetary recovery for such extra
administrative expenses and loss of use of funds, liquidated damages in the
amount of five percent (5%) of the amount of the delinquent payment (in addition
to interest at the Default Rate). The provisions of this paragraph are intended
to govern only the determination of damages in the event of a breach in the
performance of Borrower to make timely payments hereunder. Nothing in this Note
shall be construed as in any way giving Borrower the right, express or implied,
to fail to make timely payments hereunder, whether upon payment of such damages
or otherwise. The right of Lender to receive payment of such liquidated and
actual damages, and receipt thereof, are without prejudice to the right of
Lender to collect such delinquent payments and any other amounts provided to be
paid hereunder or under the Loan Agreement or to declare a default hereunder or
under the Loan Agreement.
12. Borrower hereby agrees to pay any and all reasonable costs and/or
expenses paid and/or incurred by Lender by reason of, as a result of, or in
connection with the enforcement of this Note.
6
39
and the Loan Agreement including, but not limited to, any and all reasonable
attorneys' fees incurred in connection therewith whether or not suit is filed
including, by way of example, and not by way of limitation, any action or
proceeding under the bankruptcy Laws relating to this Note. Borrower's agreement
to pay any and all such costs and expenses includes, but is not limited to,
reasonable costs and expenses incurred in enforcing any judgment obtained by
Lender and in connection with any and all appeals therefrom. All such costs and
expenses are immediately due and payable to Lender by Borrower whether or not
demand therefor is made by Lender.
13. Borrower hereby waives grace, diligence, presentment, demand, notice of
demand, dishonor, notice of dishonor, protest, notice of protest, any and all
exemption rights against the indebtedness evidenced by this Note and the right
to plead any statute of limitations as a defense to the repayment of all or any
portion of this Note, and interest thereon, to the fullest extent allowed by
Law, and all compensation of cross-demands pursuant to California Code of Civil
Procedure Section 431.70. No delay, omission and/or failure on the part of
Lender in exercising any right and/or remedy hereunder shall operate as a waiver
of such right and/or remedy or of any other right and/or remedy of Lender.
14. This Note is subject to the express condition that at no time shall
Borrower be obligated, or required, to pay interest on the Principal Balance at
a rate which could subject Lender to either civil or criminal liability as a
result of such rate being in excess of the maximum rate which Lender is
permitted to charge. If, by the terms of this Note, Borrower is, at any time,
required or obligated to pay interest on the Principal Balance at a rate in
excess of such maximum rate, then the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate, and interest payable
hereunder shall be computed at such maximum rate, and any portion of all prior
interest payments in excess of such maximum rate shall be applied, and/or shall
retroactively be deemed to have been payments made, in reduction of the
Principal Balance.
15. This Note may be amended, changed, modified, terminated and/or canceled
only by a written agreement signed by the party against whom enforcement is
sought for any such action. This Note shall be governed by, and construed under,
the Laws of the State of California.
16. Borrower hereby represents and warrants to Lender, by its execution
below, that Borrower has the full power, authority and legal right to execute
and deliver this Note and that the indebtedness evidenced hereby constitutes a
valid and binding obligation of Borrower without exception or limitation.
IN WITNESS WHEREOF, Borrower has executed this Note on the day and year first
above written.
BORROWER:
XXXXXXX-XXXXXX, INC., a
Delaware corporation
By: /s/ XXXXXXX XXXX
---------------------------
Name: Xxxxxxx Xxxx
-------------------------
Title: [ILLEGIBLE]
------------------------
7
40
XXXXXXX-XXXXXX INTERNATIONAL, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: Xxxxxxx Xxxx
-----------------------------------
Title: Secy
----------------------------------
XXXXXXX-XXXXXX PROPERTIES, LTD.,
a Delaware corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: Xxxxxxx Xxxx
-----------------------------------
Title: Secy
----------------------------------
K-W PROPERTIES, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: Xxxxxxx Xxxx
-----------------------------------
Title: Secy
----------------------------------
8
41
EXHIBIT D
FORM OF PROMISSORY NOTE
- 32 -
42
PROMISSORY NOTE
$10,000,000.00 Los Angeles, California July 2, 1999
FOR VALUE RECEIVED, XXXXXXX-XXXXXX. INC., a Delaware corporation,
XXXXXXX-XXXXXX INTERNATIONAL, INC., a California corporation, XXXXXXX-XXXXXX
PROPERTIES, LTD., a Delaware corporation, and K-W PROPERTIES, INC., a California
corporation (individually and collectively, "Borrower"), jointly and severally
promise to pay to TOKAI BANK OF CALIFORNIA, a California banking corporation,
having an office at 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000 ("Lender"), or order, at said office or at such other place as may be
designated in writing, from time to time, the principal sum of $10,000,000.00 in
lawful money of the United States of America, or so much thereof as shall have
been advanced and is outstanding, together with interest calculated daily on the
outstanding Principal Balance (as herein defined), until paid in full in
accordance with the terms, conditions and provisions set forth herein (the
"Note"). Interest, as hereinafter provided, shall be computed on actual days
elapsed over the period of a three hundred sixty (360)-day year.
1. Definitions.
1.1 "Agent" means Tokai Bank of California, a California banking
corporation, and for the purposes of the LIBOR Rate, LIBOR Interest
Period, LIBOR Business Day and LIBOR Rate Option the term Agent
shall also mean and include The Tokai Bank, Limited, Los Angeles
Agency, and each of their successors and assigns.
1.2 "Basis Point" means one-one hundredth (1/100) of one percent (1%)
and therefore one hundred (100) basis points is equal to one
percent (1%).
1.3 "Business Day" means any day that is not a Saturday, Sunday or any
other day when commercial banks in California are authorized or
obligated by law or executive order to be closed.
1.4 "LIBOR Business Day" means any day on which Agent is open for
business in Los Angeles, California and on which commercial banks
in the City of London, England, are open for dealings in dollar
deposits in the London Interbank Market.
1.5 "LIBOR Interest Period" means a one (1), three (3), or six (6)
month period of time, and only in those increments, commencing on
the date specified in Borrower's Request for Advance (as defined in
the Loan Agreement) to Agent to commence a LIBOR Interest Period
and ending on the same numerical day of the last month of
1
43
the Interest Period that corresponds to the numerical day of the month
that the LIBOR Interest Period commences provided that:
1.5a whenever the last day of a LIBOR Interest Period would otherwise
occur on a day other than a LIBOR Business Day, the last day of such
LIBOR Interest Period shall be extended to occur on the next succeeding
LIBOR Business Day; provided, however, that, if such extension would
cause the last day of such LIBOR Interest Period to occur in the next
following calendar month, the last day of such LIBOR Interest Period
shall occur on the next preceding LIBOR Business Day; and
1.5b whenever the first day of a LIBOR Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such LIBOR Interest Period, such LIBOR Interest Period shall end on the
last LIBOR Business Day of such succeeding calendar month; and
1.5c notwithstanding the foregoing, in no event shall any LIBOR Interest
Period be extended beyond the Maturity Date.
1.6 "LIBOR Notice" has the meaning set forth in Section 3. A LIBOR Notice
setting forth Borrower's election of a LIBOR Rate Option, shall be in
the form set forth in the Request for Advance (as defined in the Loan
Agreement and attached as Exhibit B thereto).
1.7 "LIBOR Rate" means the per annum rate equal to two hundred (200) Basis
Points (2.00%) in excess of the following:
1.7a the rate at which dollar deposits in immediately available funds
are contracted for by Agent in the London Interbank Market for a
term comparable to the LIBOR Interest Period set forth in the
LIBOR Notice to Agent two (2) LIBOR Business Days prior to
commencement of the applicable LIBOR Interest Period in an
amount approximately equal to the amount set forth in the LIBOR
Notice; or
1.7b if Agent does not specifically contract for dollar deposits, as
set forth above, then Lender shall determine the LIBOR Rate using
the indication telerate quotes from the London Interbank Market
received at the London, England office of Agent at 11:00 a.m.,
London time, two (2) LIBOR Business Days prior to the
commencement of a LIBOR Interest Period, as being offered for
dollar deposits in an amount approximately equal to the amount
set forth in the LIBOR Notice to Agent two (2) LIBOR Business
Days prior to commencement of the applicable LIBOR Interest
Period, for a term comparable to the LIBOR Interest Period set
forth in the LIBOR Notice.
2
44
This determination of the LIBOR Rate by Agent shall be
binding and conclusive upon Borrower.
1.8 "LIBOR Rate Option" has the meaning set forth in Section 3.
1.9 "Loan Agreement" means that certain Revolving Loan Agreement
entered into by and between Borrower, Agent and Lenders of even
date herewith, as it may be amended from time to time, and is
subject to all of the terms and conditions thereof. All terms not
defined herein shall have the same meaning as in the Loan
Agreement. In the event of a conflict between the terms of this
Note and the Loan Agreement, the terms of this Note shall
prevail.
1.10 "Maturity Date" means the earlier of July 2, 2001 and the date on
which a Change of Control (as defined in the Loan Agreement)
occurs.
1.11 "Prime Rate" means the variable rate of interest per annum
announced, declared and/or published from time to time by Agent
as its "Prime Rate" with the understanding that Agent's "Prime
Rate" is one of its base rates and serves as a basis upon which
effective rates of interest are calculated for loans making
reference thereto and may not be the lowest of Agent's base
rates.
1.12 "Principal Balance" means the outstanding principal balance of
this Note from time to time.
1.13 "Rollover Date" means the last day of the LIBOR Interest Period.
2. Interest and principal shall be payable as follows:
2.1 Interest shall be payable monthly, in arrears, commencing on the
last day of the month following the initial disbursement, and
shall continue to be due and payable, in arrears, on the same day
of each calendar month thereafter until the Maturity Date.
2.2 Upon the Maturity Date, the Principal Balance together with all
accrued and unpaid interest and other sums due on this Note shall
be due and payable in full.
2.3 All sums outstanding under the Principal Balance not designated
by Borrower as bearing interest at the LIBOR Rate shall bear
interest at the Prime-Based Rate.
3. Borrower shall have the right and/or option to elect to have the
Principal Balance, or portions thereof, bear interest at the LIBOR Rate (herein
"LIBOR Rate Option"), provided such election is made in the manner hereinafter
set forth. Any election of Borrower of the LIBOR Rate Option must be made in
accordance with the following:
3
45
3.1 Borrower may only elect the LIBOR Rate Option for one (1) month,
three (3) month, or six (6) month periods, and only in regard to
principal increments of not less than $1,000,000.00.
3.2 For each and every election of the LIBOR Rate Option, Borrower
shall deliver to Agent and Lender a written notification or telex
of Borrower's election of such LIBOR Rate Option at least three
(3) LIBOR Business Days prior to the date of commencement of the
LIBOR Interest Period (herein "LIBOR Notice"). Each and every
LIBOR Notice must specify the date the LIBOR Interest Period is
to commence.
3.3 Agent shall, as soon as practicable after 3:00 p.m. Los Angeles
time two (2) LIBOR Business Days prior to the commencement of the
LIBOR Interest Period, determine the LIBOR Rate applicable to the
portion of the Principal Balance set forth in the LIBOR Notice,
and shall deliver oral and facsimile notice to Borrower and each
Lender of such rate on the date of determination. Interest shall
accrue at the LIBOR Rate so determined by Agent for the LIBOR
Interest Period commencing on the date specified in the LIBOR
Notice. The interest rate applicable to the Principal Balance,
with respect to which Borrower has elected a LIBOR Rate, shall
revert from the LIBOR Rate applicable thereto to the Prime Rate
on the Rollover Date applicable thereto, unless Borrower timely
exercises the LIBOR Rate Option with respect thereto within the
time periods provided herein. Lender shall be under no duty or
obligation to notify Borrower that the interest rate on any
portion of the Principal Balance is about to revert from a LIBOR
Rate to the Prime Rate.
3.4 Borrower's right to exercise any LIBOR Rate Option shall be
conditioned upon there not being an uncured Event of Default, as
defined in the Loan Agreement, and there not being more than ten
(10) LIBOR Rate Options outstanding at any one time.
3.5 The LIBOR Interest Period in any LIBOR Notice shall not extend
beyond the Maturity Date.
3.6 In the event, and on each occasion, that on the day two (2) LIBOR
Business Days prior to the commencement of a LIBOR Interest
Period, Agent or any Lender shall reasonably determine (which
determination, if reasonably made by Agent or any Lender, shall
be conclusive and binding upon Borrower) that dollar deposits in
an amount approximately equal to that portion of the Principal
Balance set forth in the LIBOR Notice:
3.6a are not generally available at such time in the London
Interbank Market;
3.6b the rate or term at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to
any Lender of making or maintaining a LIBOR Rate on such
portion of the Principal Balance or funding the same in
the London Interbank Market during such LIBOR Interest
Period;
4
46
3.6c reasonable means do not exist for ascertaining a LIBOR
Rate; and/or
3.6d a LIBOR Rate on such portion of the Principal Balance
would be in excess of the maximum interest rate which
Borrower may by Law pay,
then Agent or any Lender shall so notify Borrower and such portion
of the Principal Balance shall continue to bear interest at the
Prime Rate.
3.7 If any change in any Law or in the interpretation thereof by any
Governmental Agency charged with the administration or
interpretation thereof shall make it unlawful for Lender to make
and/or maintain LIBOR Rates with respect to the Principal Balance
or to give effect to its obligations as contemplated hereby then
the LIBOR Rate shall immediately terminate. Lender shall notify
Borrower of such termination, and after such notification any LIBOR
Rate applicable to the Principal Balance shall be automatically
converted to the Prime Rate, and any such notice given by Lender to
Borrower pursuant to this paragraph shall, if lawful, be effective
on the last day of any existing LIBOR Interest Period.
4. In addition to all other sums due hereunder, Borrower hereby agrees to
indemnify Lender against any loss or reasonable expense, and to pay Lender upon
demand any and all amounts that Lender may reasonably sustain or incur in
liquidating or reemploying deposits from third parties required to effect or
maintain any LIBOR Rate with respect to any portion of the Principal Balance
subject to a LIBOR Rate as a direct consequence of any default by Borrower in
the payment of the Principal Balance bearing interest at a LIBOR Rate, or any
part thereof, or interest accrued thereon at a LIBOR Rate, as and when due.
Lender shall provide to Borrower a statement explaining the amount of any such
loss or expense, which statement, in the absence of manifest error, shall be
conclusive and binding upon Borrower.
5. Borrower shall have the right, at any time, to prepay any portion of the
Principal Balance bearing interest at the Prime Rate, without premium or penalty
any such prepayment shall not result in a reamortization, deferral,
postponement, suspension or waiver of any and all other payments due under this
Note. Borrower shall have no right to prepay any portion of the Principal
Balance bearing interest at the LIBOR Rate, except on a Rollover Date.
6. Interest, late charges, costs, or expenses that are not received by Lender
within ten (10) calendar days from the date such interest, late charges, costs,
or expenses become due, shall, at the sole discretion of Lender, be added to the
Principal Balance and shall from the date due bear interest at the Default Rate.
7. Whenever any payment to be made under this Note shall be due on other than
a Business Day, then the due date for such payment shall be automatically
extended to the next succeeding Business Day, and such extension of time shall
in such cases be included in the computation of the interest portion of any
payment due hereunder.
8. All payments under the Note shall be made by Borrower without any offset,
decrease, reduction or deduction of any kind or nature whatsoever, including,
but not limited to, any decrease,
5
47
reduction or deduction for, or on account of, any offset, withholdings, future
taxes, future reserves, imposts or duties of any kind or nature that are imposed
or levied by or on behalf of any Governmental Agency. If at any future time,
Lender shall be compelled by any Law or any other such requirement which on its
face or by its application requires or establishes reserves, or payment,
deduction or withholding of taxes, imposts or duties to act such that it causes
or results in a decrease, reduction and/or deduction in payment received by
Lender, then Borrower shall pay to Lender such additional amounts, as Lender
shall deem necessary and appropriate, such that every payment received under
this Note, after such decrease, reserve, reduction, deduction, payment and/or
required withholding, shall not be reduced in any manner whatsoever.
9. Upon the occurrence of an Event of Default under the Loan Agreement or a
default by Borrower hereunder, Lender may, in its sole and absolute discretion,
declare the entire unpaid principal balance, together with all accrued and
unpaid interest thereon, and all other amounts and/or payments owing hereunder,
immediately due and payable, without notice and/or demand.
10. From and after the occurrence of any Event of Default under the Loan
Agreement or a default by Borrower hereunder, whether by non-payment, maturity,
acceleration, non-performance or otherwise, and until such Event of Default has
been cured, all outstanding amounts under this Note (including, but not limited
to, interest, costs and late charges) shall bear interest at a per annum rate
(the "Default Rate") equal to five percent (5%) in excess of the rate(s) being
charged hereunder.
11. Time is of the essence for all payments and other obligations due under
this Note. Borrower acknowledges that if any payment required under this Note is
not received by Lender within ten (10) days after the same becomes due and
payable, Lender will incur extra administrative expenses (i.e., in addition to
expenses incident to receipt of timely payment) and the loss of the use of funds
in connection with the delinquency in payment. Because, from the nature of the
case, the actual damages suffered by Lender by reason of such administrative
expenses and loss of use of funds would be impracticable or extremely difficult
to ascertain, Borrower agrees that five percent (5%) of the amount of the
delinquent payment, together with the difference between interest accruing on
the entire unpaid principal balance of this Note at the rate(s) being charged
hereunder and at the Default Rate, as provided above, shall be the amount of
damages which Lender is entitled to receive upon such breach, in compensation
therefor. Therefore, Borrower shall, in such event, without further demand or
notice, pay to Lender, as Lender's monetary recovery for such extra
administrative expenses and loss of use of funds, liquidated damages in the
amount of five percent (5%) of the amount of the delinquent payment (in addition
to interest at the Default Rate). The provisions of this paragraph are intended
to govern only the determination of damages in the event of a breach in the
performance of Borrower to make timely payments hereunder. Nothing in this Note
shall be construed as in any way giving Borrower the right, express or implied,
to fail to make timely payments hereunder, whether upon payment of such damages
or otherwise. The right of Lender to receive payment of such liquidated and
actual damages, and receipt thereof, are without prejudice to the right of
Lender to collect such delinquent payments and any other amounts provided to be
paid hereunder or under the Loan Agreement or to declare a default hereunder or
under the Loan Agreement.
12. Borrower hereby agrees to pay any and all reasonable costs and/or expenses
paid and/or incurred by Lender by reason of, as a result of, or in connection
with the enforcement of this Note
6
48
and the Loan Agreement including, but not limited to, any and all reasonable
attorneys' fees incurred in connection therewith whether or not suit is filed
including, by way of example, and not by way of limitation, any action or
proceeding under the bankruptcy Laws relating to this Note. Borrower's agreement
to pay any and all such costs and expenses includes, but is not limited to,
reasonable costs and expenses incurred in enforcing any judgment obtained by
Lender and in connection with any and all appeals therefrom. All such costs and
expenses are immediately due and payable to Lender by Borrower whether or not
demand therefor is made by Lender.
13. Borrower hereby waives grace, diligence, presentment, demand, notice of
demand, dishonor, notice of dishonor, protest, notice of protest, any and all
exemption rights against the indebtedness evidenced by this Note and the right
to plead any statute of limitations as a defense to the repayment of all or any
portion of this Note, and interest thereon, to the fullest extent allowed by
Law, and all compensation of cross-demands pursuant to California Code of Civil
Procedure Section 431.70. No delay, omission and/or failure on the part of
Lender in exercising any right and/or remedy hereunder shall operate as a waiver
of such right and/or remedy or of any other right and/or remedy of Lender.
14. This Note is subject to the express condition that at no time shall
Borrower be obligated, or required, to pay interest on the Principal Balance at
a rate which could subject Lender to either civil or criminal liability as a
result of such rate being in excess of the maximum rate which Lender is
permitted to charge. If, by the terms of this Note, Borrower is, at any time,
required or obligated to pay interest on the Principal Balance at a rate in
excess of such maximum rate, then the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate, and interest payable
hereunder shall be computed at such maximum rate, and any portion of all prior
interest payments in excess of such maximum rate shall be applied, and/or shall
retroactively be deemed to have been payments made, in reduction of the
Principal Balance.
15. This Note may be amended, changed, modified, terminated and/or canceled
only by a written agreement signed by the party against whom enforcement is
sought for any such action. This Note shall be governed by, and construed under,
the Laws of the State of California.
16. Borrower hereby represents and warrants to Lender, by its execution below,
that Borrower has the full power, authority and legal right to execute and
deliver this Note and that the indebtedness evidenced hereby constitutes a valid
and binding obligation of Borrower without exception or limitation.
IN WITNESS WHEREOF, Borrower has executed this Note on the day and year first
above written.
BORROWER:
XXXXXXX-XXXXXX, INC., a
Delaware corporation
By: /s/ XXXXXXX XXXX
--------------------------------------
Name Xxxxxxx Xxxx
-------------------------------------
Title: EVP-CFO
-----------------------------------
7
49
XXXXXXX-XXXXXX INTERNATIONAL, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
--------------------------------------
Name Xxxxxxx Xxxx
-------------------------------------
Title: SECY
-----------------------------------
XXXXXXX-XXXXXX PROPERTIES, LTD.,
a Delaware corporation
By: /s/ XXXXXXX XXXX
--------------------------------------
Name Xxxxxxx Xxxx
-------------------------------------
Title: SECY
-----------------------------------
K-W PROPERTIES, INC.,
a California corporation
By: /s/ XXXXXXX XXXX
--------------------------------------
Name Xxxxxxx Xxxx
-------------------------------------
Title: SECY
-----------------------------------
8
50
EXHIBIT E
FORM OF LENDER PARTICIPATION AGREEMENT
-33-
51
LENDER PARTICIPATION AGREEMENT
This Lender Participation Agreement ("Agreement") is made as of
this________, day of ________,_ 19____ by and among TOKAI BANK OF CALIFORNIA, a
California corporation, (hereinafter individually referred to as "Existing
Lender," and in its capacity as agent under the Revolving Loan Agreement (as
defined below), the "Agent") and______________________________ (hereinafter
referred to as "New Lender").
W I T N E S S E T H:
WHEREAS, Xxxxxxx-Xxxxxx, Inc., a Delaware corporation, Xxxxxxx-Xxxxxx
International, Inc., a California corporation, Xxxxxxx-Xxxxxx Properties, Ltd.,
a Delaware corporation, and K-W Properties, Inc., a California corporation
(individually and collectively "Borrower"), Agent and Lenders, including
Existing Lender, are parties to a certain Revolving Loan Agreement dated as of
July 2, 1999 ("Loan Agreement").
WHEREAS, pursuant to the Loan Agreement, Agent and Lenders have provided
a line of credit to Borrower in the principal sum of $15,000,000 ("Credit") and
the commitment of Existing Lender under the Credit is $ 10,000,000.
WHEREAS, New Lender has advised Agent, Existing Lender and Borrower of
its desire to become a Lender under the Loan Agreement and to assume the
unallocated portion of the Credit in the amount of [$5,000,000] on the terms
herein provided.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants hereinafter set forth and intending to be legally bound hereby agree
as follows:
AGREEMENT
1 . Definitions. Except as otherwise provided herein, capitalized terms
defined in the Loan Agreement are used herein with the meanings set forth
therein. As used in this Agreement, the following capitalized terms shall have
the meanings set forth below:
"New Lender's Commitment Percentage" means the percentage of the
aggregate Credit of New Lender under the Loan Agreement and the corresponding
dollar amount with respect to the aggregate Credit under the Loan Agreement as
set forth below:
Percentage: __________________%
Dollar Amount: $_________________
-1-
52
"Pro Rata" means a Pro Rata sharing among Lenders, based on the
ratio that a party's interest in the Credit bears to the outstanding principal
amount of the Loan made by such party at the time in question.
"Effective Date" means________________________________________.
2. Representations and Warranties of Agent. Agent represents and
warrants to New Lender as follows:
a. As of the date hereof, Existing Lender has a ratable share of
the Credit equal to $10,000,000 or 66.66667%.
b. As of the date hereof, there is [no] [$] outstanding
principal balance of Loans made by Existing Lender under the Loan Agreement.
C. As of the date hereof, there are no Other Lenders, except
Existing Lender, that are a party to the Loan Agreement.
d. Agent has obtained the approval of Borrower to having New
Lender become a Lender under the Loan Agreement as provided for herein.
Neither Agent nor Existing Lender makes any representation or warranty or
assumes any responsibility with respect to the financial condition of Borrower
or the performance of Borrower of the Loan, and neither Agent nor Existing
Lender assumes any responsibility with respect to any statements, warranties or
representations made under or in connection with the Loan Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement or any other documents under the Loan Agreement, other
than as expressly set forth above.
3. Representations and Warranties of New Lender. New Lender hereby
represents and warrants to Agent and Existing Lender as follows:
a. New Lender has full power and authority, and has taken all
action necessary to execute and deliver this Agreement, and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill so obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith;
b. This Agreement constitutes the legal, valid and binding
obligation of New Lender;
c. New Lender has independently and without reliance upon
Agent or Existing Lender and based on such information as New Lender has deemed
appropriate, made its
-2-
53
own credit analysis and decision to enter into this Agreement and became a
Lender under the Loan Agreement. New Lender will, independently and without
reliance upon Agent or any Lender, and based upon such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement; and
d. If New Lender is organized under the laws of a jurisdiction
outside the United States of America, attached hereto are forms certifying New
Lender's exemption from United States withholding taxes with respect to all
payments to be made to New Lender under the Loan Agreement.
4. Lender Status. On the Effective Date, New Lender assumes all rights
and obligations of a Lender under the Loan Agreement and severally agrees to
lend to Borrower its ratable share of Advances; provided, that, at no time shall
the aggregate amount of Advances made by New Lender to Borrower exceed New
Lender's Commitment Percentage. New Lender agrees to the provisions of Article 7
of the Loan Agreement and authorizes Agent to take such action on its behalf and
to exercise such powers as are provided in the Loan Agreement.
5. Payment. On the Effective Date, Agent shall advise New Lender of the
amount of its Pro Rata share of the outstanding principal Advances. New Lender
shall immediately make available to Agent its ratable share of the outstanding
Advances in immediately available funds. Agent shall use the funds so received
from New Lender to reduce the amount of outstanding Advances made by Existing
Lender so that, after giving effect to such payment, Lenders will share Pro Rata
in the outstanding Advances.
6. Notes. Agent shall make appropriate arrangements with Borrower
concurrently with the execution and delivery hereof so that a new Note is issued
to New Lender in the principal amount of the Credit as herein provided.
7. Further Assurances. Concurrently with the execution of this
Agreement, Agent shall register New Lender as a Lender under the Loan Agreement
and revise Exhibit "A" to the Loan Agreement to reflect New Lender's Commitment
Percentage.
8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL
OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. NEW LENDER HEREBY AGREES
TO THE PROVISIONS OF SECTION 8.13 OF THE LOAN AGREEMENT.
9. Notices. All communications among the parties or notices in
connection herewith must be in writing and must be mailed, telegraphed,
telecopied, delivered or sent by telex or cable, addressed to the appropriate
party at its address set forth on the signature pages hereof. All communications
and notices shall, if sent by telegraph, telex or telecopy, be deemed to have
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54
been given when received by the Person to whom addressed; if sent by overnight
courier service, be deemed to have been given one day after the date when sent;
and if sent by mail, be given to have been given three days after the date when
sent by registered or certificate mail, postage prepaid.
10. Attorneys' Fees. In the event of any action at law or any suit in
equity with respect to this Agreement, or any documents executed pursuant
hereto, whether in federal court, state court, administrative proceedings,
arbitration proceeding (if agreed upon by the parties hereto) or insolvency
proceedings, the prevailing party, in addition to all other sums to which it may
be entitled by law, shall be entitled to a reasonable sum for attorneys' fees
and costs incurred.
11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
12. Interpretation. The headings of the various sections hereof are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers, as of the date first above
written.
"Agent" and "Existing Lender"
TOKAI BANK OF CALIFORNIA,
a California corporation
BY:
---------------------------------
NAME:
-------------------------------
TITLE:
------------------------------
"New Lender"
------------------------------------
BY:
---------------------------------
NAME:
-------------------------------
TITLE:
------------------------------
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55
CONSENT OF BORROWER
Each Borrower confirms its approval of New Lender pursuant to the Lender
Participation Agreement.
XXXXXXX-XXXXXX. INC., a Delaware corporation
BY:
------------------------------
NAME:
----------------------------
TITLE:
---------------------------
XXXXXXX-XXXXXX INTERNATIONAL, INC.,
a California corporation
BY:
------------------------------
NAME:
----------------------------
TITLE:
---------------------------
XXXXXXX-XXXXXX PROPERTIES, LTD.,
a Delaware corporation
BY:
------------------------------
NAME:
----------------------------
TITLE:
---------------------------
K-W PROPERTIES, INC., a California corporation
BY:
------------------------------
NAME:
----------------------------
TITLE:
---------------------------
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