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EXHIBIT 99.2
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CRC ASSET ACQUISITION, LLC,
GP3 ASSET ACQUISITION, LLC, and
GP4 ASSET ACQUISTION, LLC,
as Borrower
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$6,750,000
LOAN AGREEMENT
dated as of July 1, 2001
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COMMERCIAL NET LEASE REALTY, INC.,
as Lender
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.......................................................................1
1.1 Defined Terms.......................................................................1
1.2 Other Definitional Provisions:......................................................7
SECTION 2. ADVANCE OF THE LOAN...............................................................7
2.1 Loan................................................................................7
2.2 Procedure for Loan Borrowing........................................................8
2.3 Note................................................................................8
2.4 Use of Proceeds of Loan.............................................................8
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST ON THE LOAN....................................8
3.1 Monthly Payments of Principal and Interest..........................................8
3.2 Prepayments of the Loan.............................................................8
3.3 Interest............................................................................9
3.4 Net Payments........................................................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................................9
4.1 Limited Liability Company/Corporate Existence; Compliance with Law.................10
4.2 Limited Liability Company/Corporate Power, Authorization,
Enforceable Obligations............................................................10
4.3 No Legal Bar.......................................................................10
4.4 No Material Litigation.............................................................10
4.5 No Default.........................................................................10
4.6 No Real Property...................................................................11
4.7 No Burdensome Restrictions.........................................................11
4.8 Taxes..............................................................................11
4.9 Federal Regulations................................................................11
4.10 ERISA..............................................................................11
4.11 Investment Company Act; Public Utility Holding Company Act;
Other Regulations..................................................................11
4.12 Assets.............................................................................11
4.13 No Insolvency......................................................................11
4.14 No Offsets.........................................................................12
4.15 CFG Note...........................................................................12
4.16 Sole Member of Borrower............................................................12
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SECTION 5. CONDITIONS PRECEDENT.............................................................12
5.1 Loan Documents.....................................................................12
5.2 Closing Certificates of Borrower...................................................12
5.3 Entity Structure...................................................................12
5.4 Legal Opinions.....................................................................13
5.5 Actions to Perfect Liens...........................................................13
5.6 Lien Searches......................................................................13
5.7 Merger. The Merger shall be effective.............................................13
5.8 Asset Purchase Agreement...........................................................13
5.9 Financing Statements...............................................................13
5.10 No Default or Event of Default; Representations and Warranties True................13
5.11 Consents Obtained under the Asset Purchase Agreement...............................13
5.12 No Bankruptcy Filings By or Against CFG............................................13
5.13 Miscellaneous......................................................................14
SECTION 6. AFFIRMATIVE COVENANTS............................................................14
6.1 Financial Statements...............................................................14
6.2 Compliance Certificates; Other Information.........................................15
6.3 Payment of Obligations.............................................................15
6.4 Conduct of Business and Maintenance of Existence...................................15
6.5 Maintenance of Property; Insurance.................................................15
6.6 Inspection of Property; Books and Records; Discussions.............................16
6.7 Notices. Promptly give notice to the Lender of:...................................16
6.8 Further Assurances.................................................................16
6.9 Use of Proceeds the Loan...........................................................17
6.10 Delivery of CFG Note to Trustee upon Default or Bankruptcy of CFG..................17
SECTION 7. NEGATIVE COVENANTS...............................................................17
7.1 Limitation on Indebtedness.........................................................17
7.2 Limitation on Liens................................................................18
7.3 Limitation on Guarantee Obligations................................................18
7.4 Limitation on Fundamental Changes..................................................18
7.5 Limitation on Sale of Assets.......................................................18
7.6 Limitation on Investments, Loans and Advances......................................18
7.7 Limitation on Lines of Business....................................................18
7.8 Limitation on Amendment of CFG Note, Articles of Organization,
Limited Liability Company Agreement, Etc...........................................18
SECTION 8. EVENTS OF DEFAULT................................................................18
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SECTION 9. MISCELLANEOUS....................................................................20
9.1 Amendments and Waivers.............................................................20
9.2 Notices............................................................................21
9.3 No Waiver; Cumulative Remedies.....................................................22
9.4 Survival of Representations and Warranties.........................................22
9.5 Expenses...........................................................................22
9.6 Successors and Assigns.............................................................22
9.7 Counterparts.......................................................................23
9.8 Severability.......................................................................23
9.9 Integration........................................................................23
9.10 GOVERNING LAW......................................................................23
9.11 Submission To Jurisdiction; Waivers................................................23
9.12 Acknowledgments....................................................................24
9.13 WAIVERS OF JURY TRIAL..............................................................24
EXHIBITS
EXHIBIT A Form of Note
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of July 1, 2001, by and
among CRC ASSET ACQUISITION, LLC, a Michigan limited liability company ("CRCA"),
GP3 ASSET ACQUISTION, LLC, a Michigan limited liability company and a
wholly-owned subsidiary of CRCA ("GP3"), GP4 ASSET ACQUISTION, LLC, a Michigan
limited liability company and a wholly-owned subsidiary of CRCA ("GP4" and
together with GP3 and CRCA, the "Borrower"), and COMMERCIAL NET LEASE REALTY,
INC., a Maryland corporation (the "Lender").
RECITALS:
WHEREAS, Captec Net Lease Realty, Inc., a Delaware corporation
("Captec"), has agreed to merge with and into the Lender pursuant to that
certain Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"), between the Lender and Captec in which the Lender shall be the
surviving corporation (the "Merger");
WHEREAS, in connection with the Merger, Captec, the Borrower and the
Lender have agreed that equity ownership interests in certain entities and
certain other assets belonging to Captec as of the date hereof (collectively,
the "Assets") shall be sold to the Borrower as described in, and pursuant to,
the Asset Purchase Agreement dated as of the date hereof, by and between Captec,
the Borrower and the Lender, as the same may be amended, supplemented or
otherwise modified from time to time (the "Asset Purchase Agreement");
WHEREAS, the Borrower has requested that the Lender make a loan in the
amount of Six Million Seven Hundred Fifty Thousand and 00/100 Dollars
($6,750,000.00) to the Borrower for the purpose of partially financing the
Borrower's purchase of the Assets; and
WHEREAS, the Lender is willing to make such loan to the Borrower only
upon the terms, and subject to the conditions, set forth herein;
NOW, THEREFORE, in consideration of the premises, representations and
the mutual covenants contained herein, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, (a) with respect to a corporation, any officer or
director thereof, and any Person that is, directly or indirectly, the legal or
beneficial owner of, or otherwise controls, more than five percent (5%) of any
class of shares or other equity security of such Person, or any Person that
directly or indirectly controls or is controlled by or is under common control
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such Person, (b) with respect to a partnership, limited liability company
or venture, any general partner, managing member general partner of a general
partner or managing member, partnership with a common general partner or
co-venturer or member thereof, or any sponsor of such partnership, as that term
is used in any offering memorandum prepared in respect of any federal or state
securities laws or the rules or regulations issued pursuant thereto, or any
Person that, directly or indirectly, controls or is controlled by or is under
common control with such partnership, limited liability company or venture and,
if any general partner, managing member, or general partner of a general partner
or managing member or co-venturer is a corporation, any Person that is an
Affiliate as defined in clause (a) above of such corporation, and (c) with
respect to any individual, any spouse of such individual and any lineal
descendants of such individual, including adopted children and step-children who
are under the age of 21 or who are living with and are financially dependent on
such individual. "Control" of a Person (including the correlative meanings of
"controls," "controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or as executor, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of stock or as trustee or executor, by contract or
credit arrangement or otherwise.
"Agreement" means this Loan Agreement, as amended, supplemented or
otherwise modified from time to time.
"Asset Purchase Agreement" has the meaning set forth in the Recitals.
"Assets" has the meaning set forth in the Recitals.
"Borrower" has the meaning set forth in the Recitals.
"Captec" has the meaning set forth in the Recitals.
"Cash Flow" means as to any Person, all cash dividends, distributions
and other amounts (and in the case of non-cash dividends or distributions, the
fair-market value of all such dividends and/or distributions as determined by
such Person in good faith at the time of receipt thereof) received by such
Person from all sources, all calculated and determined in accordance with GAAP.
"CFCP III" means Captec Franchise Capital Partners L.P. III, a Delaware
limited partnership.
"CFCP IV" means Captec Franchise Capital Partners X.X. XX, a Delaware
limited partnership.
"CFG" means Captec Financial Group, Inc., a Michigan corporation.
"CFG Note" means that certain Promissory Note from CFG in favor of
Captec dated July 1, 1995, in the original principal amount of $25,000,000, as
amended by an Amendment to Promissory Note between CFG and Captec dated as of
October 1, 1996, as further amended by a Second Amendment to Promissory Note
between CFG and Captec dated as of July 1, 1998, and as further amended by a
Third Amendment to Promissory Note between CFG and Captec dated as of January 1,
1999.
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"Change of Control" means the occurrence of either of the following: (i)
the failure of Xxxxxxx X. Beach to continue to directly own, free and clear of
all Liens except for Liens in favor of the Lender, not less than 51% of the
limited liability company interests of CRCA, or the failure of Xxxxxxx X. Beach
to continue to own, hold and/or exercise managing member voting control of CRCA;
provided that, Xxxxxxx X. Beach may transfer all or part of his other 49%
membership interest in CRCA to W. Xxxx Xxxxxx, Xxxxxxxx X. Xxxxxx, his spouse,
child, revocable trust controlled by him, a corporation or other entity
controlled by or under common control with Xxxxxxx X. Beach, or to a qualified
or unqualified retirement plan or account (e.g., an individual retirement
account) owned by him, so long as any such transfer and the transferee thereof
shall be bound by, and subject to, the provisions of this Agreement and the
Security Documents, including but not limited to the Lien of the Lender pursuant
to the Loan Documents; or (ii) the failure of CRCA to continue to own, directly
or indirectly, in the aggregate, free and clear of all Liens except for Liens in
favor of the Lender, 100% of the limited liability company interests of GP3 and
GP4.
"Closing Date" means the date on which the conditions precedent set
forth in Section 5 shall be satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means (i) all tangible and intangible personal property and
assets of CRCA, including all right, title and interest of CRCA in (aa) 300
shares of Class B Non-Voting Common Stock of FR I (excluding management fees),
(bb) 300 shares of Class B Non-Voting Common Stock of FR II (excluding
management fees), (cc) ; (dd) FCV1 (including management fees); (ee) FCV1's
interest in FCV, and (ff) the CFG Note, including all security related thereto,
(ii) all tangible and intangible personal property and assets of GP3, including
either (W) the general partnership interest of GP3 in CFCP III (including
management, acquisition and liquidation fees) to the extent that the consents
set forth in Item 1 of Schedule 3.3 of the Asset Purchase Agreement have been
obtained and GP3 has purchased such interest pursuant to the Asset Purchase
Agreement, or (X) all of the economic benefits of ownership of CFCP III acquired
by GP3 pursuant to Section 9.1(b) of the Asset Purchase Agreement, subject to
the Lender's right to terminate such economic benefits of ownership pursuant to
Section 9.4 of the Asset Purchase Agreement, (iii) all tangible and intangible
personal property and assets of GP4, including either (Y) the general
partnership interest of GP4 in CFCP IV (including management, acquisition and
liquidation fees) to the extent that the consents set forth in Item 2 of
Schedule 3.3 of the Asset Purchase Agreement have been obtained and GP4 has
purchased such interest pursuant to the Asset Purchase Agreement, or (X) all of
the economic benefits of ownership of CFCP IV acquired by GP4 pursuant to
Section 9.1(b) of the Asset Purchase Agreement, subject to the Lender's right to
terminate such economic benefits of ownership pursuant to Section 9.4 of the
Asset Purchase Agreement; (iv) that number of shares of the Lender's common
and/or preferred stock received by Xxxxxxx X. Beach as the sole member of CRCA
pursuant to the Merger equal to the result of $1,000,000 divided by the price
per share of the Lender's common stock at the close of business on the day
immediately prior to the Closing Date, as traded on the New York Stock Exchange
and reported in the Wall Street Journal, and/or $25.00 per share for the
Lender's preferred stock, as the case may be, provided that, the number of such
pledged shares shall be fixed pursuant to the immediately preceding clause as of
the Closing Date, and no adjustments to the number of such pledged shares shall
be required thereafter based upon fluctuations in the
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market value of such pledged shares, and provided further that, for each $1.00
of principal repayment of the Loan in excess of $2,225,000 (the "Excess
Amortization"), so long as no Default or Event of Default has occurred and is
continuing, such pledged shares equal to 20% of the Excess Amortization shall be
released from the Lien of the Lender under the Security Documents, and the
calculation of the release amount shall occur quarterly until the Loan has been
repaid in full, (v) the limited liability company interest of each Member in
CRCA, and (vi) the limited liability company interest of CRCA as sole Member in
GP3 and GP4. For purposes of the second proviso of clause (iv) of this
Collateral definition, the pledged shares to be released from the Lien of the
Lender shall be valued as of the time of pledge and delivery to the Lender
pursuant hereto.
"Commonly Controlled Entity" means any entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CRCA" has the meaning set forth in the Recitals.
"Default" means any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Dollars" and "$" mean dollars in lawful currency of the United States
of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"FCV" means FC Venture I, LLC, a Delaware limited liability company.
"FCV1" means FCV No. 1, Inc., a Delaware corporation.
"Fixed Rate" means nine percent (9.00%) per annum.
"FR I" means Family Realty, Inc., a Delaware corporation.
"FR II" means Family Realty II, Inc., a Delaware corporation.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
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"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GP3" has the meaning set forth in the Recitals.
"GP4" has the meaning set forth in the Recitals.
"Guarantee Obligation" means, with respect to any Person, a guaranty,
endorsement, or contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any other Person, or a guarantee of the payment
of dividends or other distributions upon the stock or equity interests of such
other Person, or an agreement to purchase, sell or lease (as lessee or lessor)
property, products, materials, supplies or services primarily for the purpose of
enabling a debtor to make payment of such debtor's obligations or an agreement
to assure a creditor against loss, and including, without limitation, causing a
bank or other financial institution to issue a letter of credit or other similar
instrument for the benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business; provided, however,
that the term "Guarantee Obligation" with respect to GP3 or GP4 shall not be
construed to include any guarantee, obligation or commitment now existing or
hereafter arising with respect to fulfillment of its respective duties,
obligations and responsibilities as general partner of CFCP III or CFCP IV, as
the case may be, in the ordinary course of business.
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (e) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof,
and (f) all Guarantee Obligations of such Person; provided, however, that the
term "Indebtedness" with respect to GP3 or GP4 shall not be construed to include
any guarantee, obligation or commitment now existing or hereafter arising with
respect to fulfillment of its respective duties, obligations and
responsibilities as general partner of CFCP III or CFCP IV, as the case may be,
in the ordinary course of business.
"Lender" has the meaning set forth in the Recitals.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Loan" has the meaning set forth in subsection 2.1.
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"Loan Documents" means this Agreement, the Note and the Security
Documents.
"Loan Parties" means the Borrower and Xxxxxxx X. Beach.
"Mandatory Prepayment Event" has the meaning set forth in subsection
3.2.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the validity or
enforceability of this or any of the other Loan Documents, taken as a whole, in
any manner that prevents the practical realization by the Lender of the benefits
intended by such Loan Documents, or (c) the rights or remedies of the Lender
hereunder or under any of the other Loan Documents, taken as a whole, in any
manner that prevents the practical realization of the benefits purported to be
provided by such rights and remedies with respect to the Lender's ability to
realize upon the principal benefits or security intended to be provided by the
Loan Documents.
"Maturity Date" has the meaning set forth in subsection 3.1.
"Note" has the meaning set forth in subsection 2.3.
"Person" means an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Requirement of Law" means as to any Person, the Certificate of
Incorporation, Certificate of Formation, Limited Liability Company Agreement,
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Security Documents" means the pledge and/or security agreements,
assignments, control agreements and/or other documents and instruments to be
entered into and delivered by the Loan Parties to the Lender at the Closing
Date, all in form and substance satisfactory to the Lender, pursuant to which
the Loan Parties shall grant a first priority security interest in favor of the
Lender in all of the Loan Parties' right, title and interest in the Collateral.
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"Subsidiary" means as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
1.2 Other Definitional Provisions:
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Note or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Note, and any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP
applied historically on a consistent basis by the Person to which they relate.
(c) Words used herein, regardless of the number and gender, shall be
deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context requires, and as
used herein, unless the context otherwise requires, the words "hereof," "herein"
and "hereunder," and words of similar import shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The term "including" shall be deemed to mean "including, without
limitation." In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding". Periods of days referred to in
this Agreement shall be counted in calendar days unless otherwise expressly
provided. Any period determined hereunder by reference to a month or months or
year or years shall end on the day in the relevant calendar month in the
relevant year, if applicable, immediately preceding the date numerically
corresponding to the first day of such period, provided, that if such period
commences on the last day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month during which such period is
to end), such period shall, unless otherwise expressly required by the other
provisions of this Agreement, end on the last day of the calendar month.
SECTION 2. ADVANCE OF THE LOAN
2.1 Loan. Subject to the terms and conditions hereof, the Lender
agrees to make a loan to the Borrower, jointly and severally, in the amount of
Six Million Seven Hundred Fifty Thousand and 00/100 Dollars ($6,750,000.00) (the
"Loan"). The Loan automatically shall be deemed to have been advanced in full to
the Borrower on the Closing Date upon execution and
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delivery of the Note to the Lender pursuant to Sections 2.4 and 7.4 of the Asset
Purchase Agreement. Amounts repaid or prepaid on the Loan may not be reborrowed.
2.2 Procedure for Loan Borrowing. The Borrower shall give the Lender
its irrevocable notice of borrowing not later than 2:00 p.m., Eastern Time, on
the Closing Date, requesting that the Lender make the Loan on the Closing Date.
2.3 Note The Loan shall be evidenced by a promissory note of the
Borrower, jointly and severally, to the order of the Lender dated the Closing
Date in the form of Exhibit A hereto with blanks appropriately filled in (the
"Note").
2.4 Use of Proceeds of Loan. The proceeds of the Loan shall be
utilized by the Borrower solely to purchase the Assets pursuant to the Asset
Purchase Agreement.
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST ON THE LOAN
3.1 Monthly Payments of Principal and Interest. The Borrower hereby
unconditionally promises to repay the principal amount of the Loan, together
with interest at the Fixed Rate, in fifty-nine (59) consecutive equal monthly
installments of $85,506.15, commencing on the date which is one month after the
Closing Date, and a payment on the date which is sixty (60) months after the
Closing Date (the "Maturity Date") of the full amount of the then outstanding
principal balance of the Loan and all accrued and unpaid interest thereon.
3.2 Prepayments of the Loan.
(a) The Borrower may at any time and from time to time prepay the
Loan, in whole or in part, without premium or penalty.
(b) In addition to the monthly principal payments required by
subsection 3.1, upon the occurrence of the following events (each of which shall
be called a "Mandatory Prepayment Event"), the Borrower shall pay, or cause to
be paid, to the Lender:
(i) 100% of the first $500,000 of Cash Flow, and 50% of all
Cash Flow in excess of $500,000, received by FCV1, including all fees and
distributions received by FCV1 from FCV, in each twelve (12) month period
commencing on the Closing Date and determined in accordance with GAAP; provided,
however, for purposes of this subsection 3.2(b)(i) only, the term "Cash Flow"
shall not include (AA) any cash received by FCV1 from third parties as
reimbursement for expenses incurred by FCV1, (BB) any amounts set aside by FCV1
in good faith on its books and records as a necessary reserve against contingent
liabilities in conformity with GAAP, and (CC) amounts estimated to be due and
owing by FCV1 in good faith representing its federal and/or state income tax
liability for such year with respect to distributions received from FCV during
such year (subject to a reconciliation upon preparation of the federal and state
income tax returns for such year);
(ii) 50% of any repayment of principal of the CFG Note on or
after the Closing Date (whether by demand, voluntary payment or otherwise); and
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(iii) 50% of all Cash Flow received by the Borrower resulting
from, or attributable to, the sale, liquidation or disposition of any assets or
property of FR I, FR II, CFCP III and/or CFCP IV, all determined in accordance
with GAAP; provided, however, for purposes of this subsection 3.2(b)(iii) only,
the term "Cash Flow" shall not include amounts estimated to be due and owing by
the Borrower in good faith representing its federal and/or state income tax
liability for such year with respect to distributions received by the Borrower
during such year (subject to a reconciliation upon preparation of the federal
and state income tax returns for such year).
(c) Any amounts paid pursuant to subsections 3.2(a) and 3.2(b) shall
be applied first, to any accrued interest on the Loan and second, to the then
outstanding principal installments thereof in the inverse order of maturity.
3.3 Interest.
(a) The Borrower hereby unconditionally promises to pay interest on
the unpaid principal amount of the Loan, for the period from and including the
date of the Loan to but excluding the date the Loan is paid in full, at the
Fixed Rate, which interest is included in the monthly payment set forth in
subsection 3.1 of this Agreement.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of the Loan shall bear interest at a rate per annum equal to
the Fixed Rate plus five percent (5%) per annum.
(c) Interest shall be payable on the date of each installment of
principal due hereunder, on the date of any prepayment (on the amount prepaid),
at maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(d) All computations of interest hereunder shall be made on the
actual number of days elapsed over a year of 360 days.
3.4 Net Payments. All payments made by the Borrower hereunder shall
be made without setoff, counterclaim or other defense. Except as otherwise
required by law, all payments made by the Borrower under this Agreement and the
Note shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future taxes, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority. If any such taxes, charges, fees, deductions or
withholdings are required to be withheld from any amounts payable to the Lender
hereunder or under the Note, then the amounts so payable to the Lender shall be
increased to the extent necessary to yield to the Lender the amount of interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, to make the Loan, and
to accept the Note in partial payment of the Assets pursuant to the Asset
Purchase Agreement, the Borrower hereby represents and warrants to the Lender
that:
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4.1 Limited Liability Company/Corporate Existence; Compliance with
Law. The Borrower (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the limited
liability company power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
limited liability company and is in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that all
failures to be so qualified could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law, except to the extent that all failures to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.2 Limited Liability Company/Corporate Power, Authorization,
Enforceable Obligations. The Borrower has the limited liability company and
authority, and the legal right, to make and deliver the Loan Documents to which
it is a party, to perform its obligations under the Loan Documents to which it
is a party, and to borrow hereunder, and the Borrower has taken all necessary
limited liability company action to authorize the borrowings on the terms and
conditions of this Agreement and the Note and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required by the
Borrower in connection with the borrowing hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
the Borrower is a party, except for filings in respect of Liens in favor of the
Lender in the Collateral. This Agreement has been, and each other Loan Document
to which the Borrower is a party will be, duly executed and delivered on behalf
of the Borrower. This Agreement constitutes, and each other Loan Document to
which the Borrower is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4.3 No Legal Bar. The execution, delivery and performance by the
Borrower of the Loan Documents to which the Borrower is a party, the borrowing
hereunder and the use of the proceeds thereof, will not violate any Requirement
of Law (except to the extent that all failures to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect) or
Contractual Obligation of the Borrower and will not result in, or require, the
creation or imposition of any Lien (other than in favor of the Lender), on any
of its properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
4.4 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority which could
reasonably be expected to have a Material Adverse Effect is pending or to the
Borrower's knowledge, threatened by or against the Borrower or to the knowledge
of the Borrower against any of its properties or revenues.
4.5 No Default. Subject to the receipt of the consents set forth in
Schedule 3.3 of the Asset Purchase Agreement, the Borrower is not in default
under or with respect to any of its
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Contractual Obligations in any respect that could have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
4.6 No Real Property. The Borrower does not own, lease, sublease,
license, sublicense, or have any other interest in, any real property.
4.7 No Burdensome Restrictions. No Requirement of Law applicable to
the Borrower could reasonably be expected to have a Material Adverse Effect.
4.8 Taxes. The Borrower has filed or caused to be filed all tax
returns which are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower); no tax Lien has been filed, and no claim is being
asserted, with respect to any such tax, fee or other charge which could have a
Material Adverse Effect.
4.9 Federal Regulations. No part of the proceeds of the Loan will be
used in any manner which would violate, or result in the violation of,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. If requested by the
Lender, the Borrower will furnish to the Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1
referred to in said or Regulation U, as the case may be.
4.10 ERISA.The Borrower does not, and will not, have any employees or
Plans.
4.11 Investment Company Act; Public Utility Holding Company Act;
Other Regulations. The Borrower is not required to register as an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended. The Borrower is not a
"holding company," or an "affiliate" of a "holding company" or a subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. The Borrower is not subject to
regulation under any federal or state statute or regulation (other than
Regulation X) which limits its ability to incur Indebtedness.
4.12 Assets. The Borrower has been formed for the sole purpose of
acquiring the Assets; it has no prior operating history; it has no assets or
property other than the capital contributions of its members and, after giving
effect to the Loan and the purchase of the Assets, it will have no assets or
property other than the Assets and the capital contributions of its members.
4.13 No Insolvency. The Borrower is not insolvent or has unreasonably
small capital with which to conduct its business. The Borrower will not be
rendered insolvent by the execution of this Agreement, the Note or the other
Loan Documents to which it is a party or the consummation of the transactions
contemplated thereby.
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4.14 No Offsets. The Borrower has no claim, counterclaim, offset or
defense with respect to the Loan or any other objection of the Borrower under
this Agreement, the Note or the other Loan Documents to which it is or will be a
party.
4.15 CFG Note. CRCA has made no demand for payment under the CFG
Note; no default exists under the CFG Note and CFG has neither made or
threatened to make any claim, or raised or threatened to raise any defense,
against payment by CFG under or with respect to the CFG Note; CRCA has not
consented or agreed to any waivers or amendments to the CFG Note; and the
current outstanding principal balance of the CFG Note is $9,719,798.00.
4.16 Sole Member of Borrower. Xxxxxxx X. Beach is the sole member of
CRCA (unless Xxxxxxx X. Beach's has transferred a portion of his membership
interests in CRCA to one or more permitted transferees pursuant to the
provisions of this Agreement), and CRCA is the sole member of GP3 and GP4.
SECTION 5. CONDITIONS PRECEDENT
The agreement of the Lender to make the Loan and to accept the Note in
partial payment of the Assets pursuant to the Asset Purchase Agreement is
subject to the satisfaction, immediately prior to or concurrently with the
making of the Loan on the Closing Date, of the following conditions precedent:
5.1 Loan Documents. The Lender shall have received (i) this
Agreement and the Note, executed and delivered by a member of the Borrower; (ii)
the Security Documents, executed and delivered by a member of the Borrower or
Xxxxxxx X. Beach, as applicable, and (iii) the CFG Note, duly indorsed in blank
by CRCA, and the certificates representing shares of stock constituting
Collateral and pledged pursuant to the Security Documents, together with
appropriately signed and undated stock powers for each such certificate, all of
the foregoing to be held by the Lender in accordance with the terms and
conditions of the Security Documents applicable thereto. The Security Documents
shall contain terms, conditions and covenants that are customary for commercial
loan security documents covering collateral similar to the Collateral and
granting a first priority perfected security interest therein in favor of the
secured party.
5.2 Closing Certificates of Borrower. The Lender shall have received
certificates of a member of the Borrower, dated the Closing Date; (i) attaching
the certified Articles of Organization of the Borrower evidencing filing with
the Michigan Corporation and Securities Bureau; (ii) attaching a certified true
and complete copy of the Limited Liability Company Agreement of the Borrower,
and all amendments thereto; (iii) attaching the resolutions of the sole member
of the Borrower with respect to the transactions contemplated hereby; and (iv)
certifying that such resolutions have not been amended, modified, revoked or
rescinded as of the date of such certificate; such certificate (and the
attachments thereto) shall be in form and substance satisfactory to the Lender.
5.3 Entity Structure. The Lender shall be satisfied with (i) the
legal structure and capitalization of the Loan Parties, including the terms and
conditions of the formation and organizational documents of the Loan Parties and
of each agreement or instrument relating to
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such structure or capitalization thereof, and (ii) the non-consolidation under
the Federal Bankruptcy Code and the bankruptcy-remote limited liability company
status of the Borrower with respect to CFG and its affiliates and the members of
the Borrower, including having an independent manager of the Borrower, and
having customary "separateness" terms, covenants and conditions in the
Borrower's Limited Liability Company Agreements and/or Certificates of
Organization and/or the Loan Documents.
5.4 Legal Opinions. The Lender shall have received an executed legal
opinion of Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to the Borrower, in form and
substance satisfactory to the Lender covering the valid existence of the
Borrower, the due authorization, execution and delivery of the Loan Documents to
which the Borrower is a party, the actions required under applicable state law
to validly create, attach and perfect the security interests granted in the
Collateral in favor of the Lender under the Security Documents, and such other
matters incident to the transactions contemplated by this Agreement as the
Lender may reasonably require.
5.5 Actions to Perfect Liens. The Lender shall have received
evidence in form and substance reasonably satisfactory to it that all filings,
recordings, registrations and other actions, necessary or, in the reasonable
opinion of the Lender, desirable to perfect the Liens created by the Security
Documents have been made.
5.6 Lien Searches. The Lender shall have received the results of a
recent search by a Person reasonably satisfactory to the Lender, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to the Collateral, and the results of such search shall be reasonably
satisfactory to the Lender. The Lender shall have received evidence satisfactory
to it that there are no Liens against the Collateral.
5.7 Merger. The Merger shall be effective.
5.8 Asset Purchase Agreement. The Lender shall have received, in
form and substance satisfactory to it, a fully executed copy of the Asset
Purchase Agreement, including all schedules and exhibits thereto.
5.9 Financing Statements. The Lender shall have received
authorization and/or ratification of its authorization from the Loan Parties for
the Lender to file initial financing statements in any Uniform Commercial Code
jurisdiction covering the Collateral.
5.10 No Default or Event of Default; Representations and Warranties
True. No Default or Event of Default shall have occurred and be continuing, and
the representations and warranties made by the Loan Parties herein and in the
other Loan Documents shall be true and correct on and as of the Closing Date as
though made on and as of such date.
5.11 Consents Obtained under the Asset Purchase Agreement. The
Borrower shall have obtained all of the consents set forth in Schedule 3.3 of
the Asset Purchase Agreement, except as otherwise permitted pursuant to Section
9.1 thereof.
5.12 No Bankruptcy Filings By or Against CFG. CFG shall not have
commenced any case, proceeding or other action under any law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of debtors seeking
to have an order for relief entered with
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respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets; CFG shall not
have made a general assignment for the benefit of its creditors; and there shall
not have been commenced against CFG any case, proceeding or other action of a
nature referred to above in this subsection 5.12.
5.13 Miscellaneous. The Lender shall have received such other
opinions, agreements or documents, in form and substance satisfactory to the
Lender, as the Lender reasonably requests; provided however, that no opinion
shall be required as to non-consolidation under the Federal Bankruptcy Code.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees with the Lender that, so long as all or any
portion of the Loan is outstanding or remains unpaid or any other amount is
owing to the Lender hereunder or under any other Loan Document, the Borrower
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each Subsidiary to:
6.1 Financial Statements. Furnish, or cause to be furnished, to the
Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of CRCA, commencing with fiscal year ending December 31,
2001, a copy of the unaudited balance sheet (or consolidated unaudited balance
sheet, if applicable) of CRCA (and its consolidated Subsidiaries, if applicable)
as at the end of such year and the related unaudited statements of income and
retained earnings and of cash flows of CRCA and its consolidated Subsidiaries,
if any, for such year, setting forth in each case in comparative form the
figures for the previous year, certified by the sole member of CRCA;
(b) as soon as available, but in any event within 90 days after the
end of each fiscal year of CFG, commencing with fiscal year ending December 31,
2001, a copy of the unaudited balance sheet (or consolidated unaudited balance
sheet, if applicable) of CFG (and its consolidated Subsidiaries, if applicable)
as at the end of such year and the related unaudited statements of income and
retained earnings and of cash flows of CFG and its consolidated Subsidiaries, if
any, for such year, setting forth in each case in comparative form the figures
for the previous year, certified by the Chief Financial Officer or Treasurer of
CFG;
(c) as soon as available, but in any event not later than 45 days
after the end of each of the first three fiscal quarterly periods of each fiscal
year of CRCA, the unaudited balance sheet (or consolidated unaudited balance
sheet, if applicable) of CRCA (and its consolidated Subsidiaries, if applicable)
as at the end of such fiscal quarter and the related unaudited statements of
income and retained earnings of CRCA and its consolidated Subsidiaries, if any,
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by the sole member of CRCA (subject to normal year-end
audit adjustments); and
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(d) as soon as available, but in any event not later than 45 days
after the end of each of the first three fiscal quarterly periods of each fiscal
year of CFG, the unaudited balance sheet (or consolidated unaudited balance
sheet, if applicable) of CFG (and its consolidated Subsidiaries, if applicable)
as at the end of such fiscal quarter and the related unaudited statements of
income and retained earnings of CFG and its consolidated Subsidiaries, if any,
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by the Chief Financial Officer or Treasurer of CFG
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Compliance Certificates; Other Information. Furnish to the
Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and 6.1(c), a certificate of a member of the
Borrower stating that, to the best of such member's knowledge, during such
period (A) no Subsidiary has been formed or acquired, and (B) the Borrower has
observed or performed all of its material covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such member has
obtained no knowledge of any Mandatory Prepayment Event or Default or Event of
Default except as specified in such certificate;
(b) promptly, such additional financial and other information as the
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity in accordance with customary terms or before they become
delinquent, as the case may be, all of its material obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or any
Subsidiary, as the case may be.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as conducted by it immediately
subsequent to the purchase of the Assets, and preserve, renew and keep in full
force and effect its limited liability company existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or (in the
reasonable judgment of the Borrower) desirable in the normal conduct of its
business; and comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. Maintain with financially
sound and reputable insurance companies reasonably acceptable to the Lender
insurance policies on all its material property and businesses, including any
insurance reasonably required by the Lender, in
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at least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar
business;
6.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities, except to the
extent that all failures to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; and permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time (upon reasonable advance notice, when no Default or Event of Default has
occurred and is continuing) and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and any Subsidiary with officers and key employees of the
Borrower and any Subsidiary.
6.7 Notices. Promptly give notice to the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any Subsidiary or (ii) litigation, investigation
or proceeding which may exist at any time between the Borrower or any Subsidiary
and any Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any (i) litigation or proceeding to which the Borrower or any
Subsidiary is a party in which the amount claimed against the Borrower or any
Subsidiary is $100,000 or more and not covered by insurance or in which
injunctive or similar relief is sought or (ii) other litigation or proceeding
affecting the Borrower or any Subsidiary of which the Borrower has knowledge and
which could reasonably be expected to have a Material Adverse Effect;
(d) the occurrence of (i) any material adverse change in the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower, or the Borrower and its Subsidiaries taken as a whole, or (ii)
any development or event which could reasonably be expected to have a Material
Adverse Effect on the rights or remedies of the Lender hereunder or under any of
the other Loan Documents; and
(e) any (i) Lien (other than the Liens permitted in subsection 7.2)
on any of the Collateral, or (ii) other event which could reasonably be expected
to have a Material Adverse Effect on the aggregate value of Collateral or on the
Lender's Lien on the Collateral.
Each notice pursuant to this subsection 6.7 shall be accompanied by a
statement of a member of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.
6.8 Further Assurances.
(a) Upon the request of the Lender, promptly perform or cause to be
performed any and all acts and execute or cause to be executed any and all
documents for filing under the
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provisions of all applicable Requirements of Law which are necessary or
reasonably advisable to maintain in favor of the Lender, for the benefit of the
Lender, Liens on the Collateral that are duly perfected in accordance with all
applicable Requirements of Law.
(b) Upon request of the Lender, promptly provide such documents in
respect of any aspect or consequence of the transactions contemplated hereby as
the Lender shall reasonably request.
6.9 Use of Proceeds the Loan. The proceeds of the Loan shall be
utilized by the Borrower solely to partially finance the purchase of the Assets
pursuant to the Asset Purchase Agreement.
6.10 Delivery of CFG Note to Trustee upon Default or Bankruptcy of
CFG. If CFG shall fail to make any payment of principal and interest under the
CFG Note within five (5) days of demand, or CFG shall have commenced any case,
proceeding or other action under any law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets; or CFG shall have made a general assignment for the benefit of
its creditors; or there shall have been commenced against CFG any case,
proceeding or other action of a nature referred to above in this subsection
6.10, then CRCA and the Lender agree either (i) that the Lender will promptly
deliver the CFG Note to a third party or trustee (the identity of such third
party or trustee, the terms and conditions under which it will hold the CFG Note
and take the actions contemplated hereby are to be mutually agreed upon by CRCA
and the Lender in good faith as soon as is reasonable after the date of this
Agreement) in order that such third party or trustee may independently and
objectively decide the best course of action to realize the maximum collection
value of such note, or (ii) CRCA and the Lender will enter into a standstill
agreement having terms and conditions mutually acceptable to such parties
pursuant to which the Lender will permit CRCA a finite period of time (not to
exceed 180 days) to effect a payment settlement or scheduled payment plan with
CFG (on terms satisfactory to the Lender), prior to the Lender exercising its
remedies pursuant to the Security Documents.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees with the Lender that, so long as all or any
portion of the Loan is outstanding or remains unpaid or any other amount is
owing to the Lender hereunder or under any other Loan Document, the Borrower
shall not, without the prior written consent of the Lender do any of the
following; provided, however, that with respect to GP3 or GP4, nothing herein
shall be construed to prohibit or limit the fulfillment of its respective
duties, obligations and responsibilities as general partner of CFCP III or CFCP
IV, as the case may be, in the ordinary course of business:
7.1 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except Indebtedness of the Borrower under this
Agreement.
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7.2 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon the Collateral or any of its property, assets or revenues, whether
now owned or hereafter acquired, except for Liens in favor of the Lender.
7.3 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation, winding up or dissolution), or acquire by purchase or
otherwise, all or substantially all of the property, business or assets, or any
stock or other evidence of beneficial ownership of, any Person other than the
purchase of the Assets, or modify or amend its Certificate of Formation or
Limited Liability Company Agreement.
7.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the Assets after purchase pursuant to the Asset
Purchase Agreement), whether now owned or hereafter acquired, except for
transactions effected in compliance with subsection 3.2(b) of this Agreement.
7.6 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or interests in, or any assets
constituting a business unit of, or make any other investment in, any Person,
including, without limitation, the establishment, acquisition or creation of a
subsidiary, except with respect to the purchase of the Assets pursuant to the
Asset Purchase Agreement.
7.7 Limitation on Lines of Business. Enter into any business except
the business of purchasing and holding the Assets.
7.8 Limitation on Amendment of CFG Note, Articles of Organization,
Limited Liability Company Agreement, Etc. Amend its Articles of Organization or
Limited Liability Company Agreement, or amend, consent to or suffer to exist any
amendment of, the CFG Note or any underlying formation or other document
affecting the Collateral, including the limited partnership agreements, articles
of incorporation, by-laws, articles of formation, limited liability company
agreement or other formation and organizational and governing documents of FR I,
FR II, FCV1, FCV, CFCP III or CFCP IV; provided, however, that any amendment may
be adopted with respect to the foregoing documents of FR I, FR II, FCV1, FCV,
CFCP III or CFCP IV that does not materially impair the value of the Collateral
or any of the foregoing or cause the Cash Flow from any of the foregoing to be
materially reduced.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to make any payment of principal and
interest or any other amount payable hereunder, including any mandatory
prepayment required pursuant to
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subsection 3.2(b) of this Agreement, within five (5) days of the date due in
accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or which
is contained in any certificate, document or financial or other statement
furnished by such Person at any time under or in connection with any of the
foregoing, shall prove to have been incorrect in any material respect on or as
of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of
any agreement contained in Section 7 hereof and such default is not cured within
ten (10) days after Borrower receives notice from Lender of such default; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement
(other than as provided in paragraphs (a) through (c) of this Section 8) or in
any other Loan Document, and such default is not cured within twenty (20) days
after Borrower receives notice from Lender of such default; provided, however,
that if such default is of such nature that it can be corrected but not within
the aforementioned 20-day cure period, then such default shall not constitute an
Event of Default so long as Borrower institutes curative action within the
aforementioned 20-day cure period and diligently pursues that action to
completion and cure within fifteen (15) days following the end of the
aforementioned 20-day cure period; or
(e) (i) The Borrower or any other Loan Party shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any other Loan Party shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Borrower or any
other Loan Party any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against the Borrower or any other Loan Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distrait or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof, or (iv) the Borrower or any other Loan Party shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any other Loan Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(f) One or more judgments or decrees shall be entered against the
Borrower or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of
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$100,000 or more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or
(g) The Security Documents shall cease for any reason to be in full
force and effect after the Closing Date, or the Borrower or any other Loan Party
thereto shall so assert, or the Lien created by each Security Document in the
Collateral described therein (subject to the right of the Lender to terminate
the economic benefits of ownership of CFCP III and CFCP IV acquired by GP3 and
GP4, respectively, pursuant to Section 9.1(b) of the Asset Purchase Agreement)
shall cease to be enforceable and of the same effect and priority purported to
be created thereby; or
(h) Any Change of Control of the Borrower shall have occurred;
provided, however that, in the case of the death or permanent incapacity of
Xxxxxxx X. Beach, representatives of Xxxxxxx X. Beach shall have thirty (30)
days in which to present to the Lender for its approval (which approval shall be
in the sole and absolute discretion of the Lender) a reasonably acceptable
replacement member or manager of CRCA;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (e) of this Section 8 with respect to the
Borrower, the Loan (with accrued interest thereon) and all other amounts owing
under this Agreement shall automatically become immediately due and payable, and
(B) if such event is any other Event of Default, the Lender may by notice to the
Borrower declare the Loan hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as expressly
provided above in this Section 8, presentment, demand, protest and all other
notices of any kind are hereby expressly waived. Upon the occurrence of an Event
of Default, the Lender shall, without limiting any other right or remedy
available to it, have the right to exercise all rights and remedies in the
Security Documents which apply following the occurrence of an Event of Default,
subject to applicable law.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this subsection 9.1. The
Lender may, from time to time, (a) enter into with the Borrower and/or any other
Loan Party written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lender,
the Borrower or other Loan Party hereunder or thereunder, or (b) waive, on such
terms and conditions as the Lender may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Borrower and the Lender and
all future holders of the Loan. In the case of any waiver, the Borrower and the
Lender shall be restored to their former positions and rights hereunder and
under the other Loan Documents, and any Default or Event of Default waived
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shall be deemed to be cured and not continuing; no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
9.2 Notices. Unless otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made (a) in the case of delivery by hand, when delivered, (b) in the case of
delivery by mail, three (3) days after being deposited in the mails, postage
prepaid, or (c) in the case of delivery by facsimile transmission, when sent and
receipt has been confirmed, addressed as follows in the case of the Borrower and
the Lender, or to such other address as may be hereafter notified by the
respective parties hereto:
If to CRCA, GP3 or GP4:
c/o CRC Asset Acquisition LLC
24 Xxxxx Xxxxx Xxxxxx Drive
Lobby L, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Beach
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxxxxx.xxx
with a copy to:
Xxxxxxxx, Loop & Xxxxxxxx, LLP
0000 Xxxxxxx Xx.
Xxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxx@xxx-xxx.xxx
If to the Lender:
Commercial Net Lease Realty, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Chief Financial Officer
Facsimile: (000) 000-0000
E-mail: xxxxx_xxxxxxx@xxxxxxx.xxx
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with a copy to:
Commercial Net Lease Realty, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
E-mail: xxx.xxxxxxxxxx@xxxxxxx-xxx.xxx
with a copy to:
Xxxx Xxxxxxx
0000 X. Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
E-mail: xxxx.xxxxxxxx@xxxxxxxxxxx.xxx
provided that any notice, request or demand to or upon the Lender pursuant to
subsection 2.2 or 3.2 shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising on the part of the Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loan hereunder.
9.5 Expenses. The Borrower agrees to pay or reimburse the Lender for
all out-of-pocket costs and expenses of Lender (including, without limitation,
reasonable attorney fees) in connection with (i) any Default or Event of Default
and any enforcement or collection proceedings resulting therefrom or in
connection with the negotiation of any restructuring or "work-out" (whether or
not consummated) of the obligations of the Borrower hereunder, and (ii)
enforcement of this subsection 9.5. The obligations of the Borrower under this
subsection 9.5 shall survive the repayment of the Loan.
9.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Lender, and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement or any other Loan Document
without the prior written consent of the Lender, except that rights and
obligations under this Agreement may be assigned in part to a transferee of
membership interests in CRCA to the extent such transfer is permitted under the
terms of this Agreement, does not
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constitute a Change in Control, and remains subject to the Lien of the Lender
under the Security Documents and the other terms and conditions of this
Agreement.
9.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Lender.
9.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.9 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower and the Lender with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Lender relative to subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
9.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.11 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 9.2 or at such other address of which the Lender
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
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(e) waives, except in the case of bad faith, willful misconduct or
gross negligence (and otherwise to the maximum extent not prohibited by law),
any right it may have to claim or recover in any legal action or proceeding
referred to in this subsection 9.11 any special, exemplary, or consequential
damages.
9.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, and will be advised by counsel in the negotiation,
execution and delivery of the other Loan Documents on the Closing Date;
(b) The Lender has no fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Lender and the Borrower, in
connection herewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
between the Borrower, the other Loan Parties and the Lender.
9.13 WAIVERS OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
LENDER:
COMMERCIAL NET LEASE REALTY, INC.,
By: /s/ XXXX X. XXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxx
Title: President
BORROWER:
CRC ASSET ACQUISTION, LLC,
By: /s/ XXXXXXX X. BEACH
----------------------------
Xxxxxxx X. Beach
Member
GP3 ASSET ACQUISTION, LLC,
By: CRC Asset Acquisition, LLC,
as sole member
By: /s/ XXXXXXX X. BEACH
----------------------------
Xxxxxxx X. Beach
Member
GP4 ASSET ACQUISTION, LLC,
By: CRC Asset Acquisition, LLC,
as sole member
By: /s/ XXXXXXX X. BEACH
----------------------------
Xxxxxxx X. Beach
Member
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