AMENDED AND RESTATED
BUSINESS LOAN AGREEMENT
This Amended and Restated Business Loan Agreement made September __,
1996, but effective as of September 21, 1996, by and between AGREE LIMITED
PARTNERSHIP, a Delaware limited partnership, with its chief executive offices
located at 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 (the
"Borrower"), and MICHIGAN NATIONAL BANK, a national banking association, of
27777 Inkster Road (10-02), Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000 (the
"Bank").
WHEREAS, Borrower and Bank entered into a Business Loan Agreement
dated September 21, 1995, as amended on December 29, 1995 and June 17, 1996
("Original Loan Agreement"), whereby Bank agreed to make a $5,000,000 Line of
Credit Loan ("Loan") available to Borrower;
WHEREAS, the Loan has matured or will mature on September 21, 1996;
WHEREAS, borrower has requested the Bank to extend the maturity date
of the Loan and modify and amend the terms and conditions of the Original Loan
Agreement to evidence the extension of the Loan and the Bank has agreed to do
so upon the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of and in reliance upon the foregoing
recitals of fact (which are a material part of this Agreement) and the
agreements among the parties set forth in this Agreement, the Original Loan
Agreement is hereby amended and restated in its entirety and Borrower and Bank
AGREE AS FOLLOWS:
I. LOAN.
The following Loans and any amendments, extensions, renewals or
refinancings thereof are subject to this Agreement:
INTEREST MATURITY LOAN
TYPE OF LOAN. RATE NOTE AMOUNT DATE DATE
------------- -------- ------------ -------- ----
Line of Credit MNB Prime $5,000,000.00 9/22/97 9/21/96
or 225 b.p.
(2.25%) in
excess of
1-month LIBOR
Purpose of Loans listed above:
Working capital, Letters of Credit, real estate investments and bridge
facility to Line of Credit Facility.
II. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank, all of which representations
and warranties shall be continuing and shall survive the execution of
this Agreement until all of the Indebtedness is fully paid to Bank and
Borrower's obligations under this Agreement and the Related Documents
are fully performed, as follows:
A. Borrower's Existence and Authority. Borrower is a Delaware limited
partnership authorized to do business in the State of Michigan and
each other jurisdiction where the nature of its business requires it
to be so qualified, whose general partner is Agree Realty Corporation,
a Maryland corporation ("Guarantor") qualified to do business in the
State of Michigan and each other jurisdiction where the nature of its
business requires it to be so qualified, and the Person executing this
Agreement has full power and complete authority to execute this
Agreement and all Related Documents.
B. Validity of Indebtedness and Agreement. Borrower's Indebtedness to
Bank, this Agreement, and all Related Documents are valid, binding
upon, and fully enforceable against Borrower in accordance with their
respective terms.
C. Nature of Borrower's Business. The nature of Borrower's business is:
The acquisition and ownership of retail shopping centers and related
business activities.
D. Financial Information. All financial information provided to Bank has
been prepared and will continue to be prepared in accordance with
generally accepted accounting principles ("GAAP"), consistently
applied, and fully and fairly present the financial condition of
Borrower and Guarantor. There has been no material adverse change in
Borrower's and/or Guarantor's business, Property, or financial
condition since the date of Borrower's latest Financial Statements
provided to Bank.
E. Title and Encumbrances. Borrower and Guarantor own and have good title
to all of their Property, and there are no liens or encumbrances on
any of the Property except as have been disclosed to Bank in writing
prior to the date of this Agreement and as are identified and listed
in an attachment to this Agreement (the "Permitted Encumbrances").
Borrower agrees that Borrower shall not obtain further loans, leases,
or extensions of credit from any Person identified in the Permitted
Encumbrances list or otherwise without Bank's prior written consent.
F. No Litigation. There are no suits or proceedings pending before any
court, government agency, arbitration panel, or administrative
tribunal, or, to Borrower's knowledge, threatened against Borrower or
Guarantor, which may result in any adverse change in the business,
Property or financial condition of Borrower or Guarantor.
G. No Misrepresentations. All representations and warranties in this
Agreement and the Related Documents are true and correct and no
material fact has been omitted.
H. Employee Benefit Plans. Borrower has not incurred any material
accumulated funding deficiency within the meaning of ERISA, and has
not incurred any material liability to the PBGC in connection with any
employee benefit plan established or maintained by Borrower, and no
reportable event or prohibited transaction, as defined in ERISA, has
occurred with respect to such plans.
I. Environmental Compliance. Borrower and Guarantor are in full
compliance and conformity with all applicable Environmental Laws and
Borrower (and all Obligors) agree to indemnify and hold Bank harmless
from all costs and expenses, including legal fees, incurred by Bank
related to any Borrower or Guarantor violation of any Environmental
Laws.
III. AFFIRMATIVE COVENANTS.
As of the date of this Agreement and continuing until Borrower's
obligations under this Agreement and the Related Documents are fully
performed and the Indebtedness is fully repaid to Bank, Borrower and
Guarantor on a consolidated basis shall at all times:
A. Financial Requirements.
1. Maintain for the most recently ended twelve (12) month period,
a ratio of Adjusted Funds from Operations to Total Interest
Expense equal to or greater than 2.00 to 1.00;
2. Maintain a consolidated Minimum Net Worth of not less than
$23,092,200.00 plus 90% of the cash proceeds of any equity
offering of Agree Realty net of underwriting discounts
and commissions and other reasonable costs associated
therewith; and
3. Maintain for the most recently ended twelve (12) month period,
a ratio of Adjusted Funds from Operations to Total Debt Service
equal to or greater than 1.65 to 1.00;
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B. Books and Reports.
1. Financial Statements. Within Ninety (90) days after the end of
each fiscal year, Borrower shall cause to be furnished to Bank,
in form acceptable to Bank, audited consolidated Financial
Statements of the Borrower and Guarantor prepared and certified
by certified public accountants acceptable to Bank.
2. Financial Statements. Within forty-five (45) days after the end
of each fiscal quarter Borrower shall cause to be furnished to
Bank, in form acceptable to Bank, unaudited consolidated
management Financial Statements of the Borrower and Guarantor,
prepared by management and certified by Borrower's treasurer or
chief financial officer.
3. Operating Statements. Within forty five (45) days after the end
of each fiscal quarter, Borrower shall cause to be forwarded to
Bank, in form acceptable to Bank, quarterly operating
statements for each of Borrower and Guarantor's real properties
which are management prepared and certified by Borrower's
treasurer or chief financial officer.
4. Guarantor's SEC Information. (a) Within forty five (45) days
after the end of each fiscal quarter, Borrower shall cause the
Guarantor to furnish to Bank a copy of its current quarterly
10-Q report; and (b) within ninety (90) days after the end of
each fiscal year, Borrower shall cause the Guarantor to furnish
Bank a copy of its current annual 10-K report.
5. Other. Promptly furnish to Bank such other information and
reports concerning the Borrower's and/or Guarantor's business,
Property, and financial condition as are provided to Borrower's
and/or Guarantor's owners or as Bank shall request, and permit
Bank to inspect, confirm, and copy Borrower's books and records
at any time during Borrower's and/or Guarantor's normal
business hours.
C. Notice of Adverse Events. Promptly notify Bank in writing of any
litigation, governmental proceeding, default or any other occurrence
which may have a material adverse effect on Borrower's and/or
Guarantor's business, Property or financial condition.
D. Maintain Business Existence and Operations. Do all things necessary to
keep in full force and effect Borrower's and Guarantor's corporate,
partnership, proprietorship, trust, or other existence, as the case
may be, and to continue its business described in Paragraph II C. as
presently conducted. Borrower and Guarantor shall not change its
corporate, partnership, proprietorship, trust, or other existence, nor
sell or merge Borrower's or Guarantor's business, in whole or in part,
to or with any other Person, without the prior written consent of
Bank.
E. Insurance. Maintain adequate fire and extended risk coverage, business
interruption, workers disability compensation, public liability,
environmental, flood, and such other insurance coverages as may be
required by law or as may be required by Bank. All insurance policies
shall be in such amounts, upon such terms, in form, and carried with
such insurers, as are acceptable to Bank. Borrower shall provide
evidence satisfactory to Bank of all insurance coverages and that the
policies are in full force and effect, and for all insurance coverages
upon any Property which is Collateral, the insurance policy shall be
endorsed to provide Bank with a standard loss payable clause with not
less than thirty (30) days advance written notice to Bank by the
insurer of any cancellation or modification of coverage (CF12181185).
Any failure by Borrower to maintain insurance as provided in this
Agreement shall be an Event of Default and Bank may obtain insurance,
without obligation to do so, and all amounts so expended by Bank shall
be added to the Indebtedness or shall be payable on demand, at Bank's
option.
F. Payment of Taxes. Promptly pay all taxes, levies and assessments due
to all local, State and Federal agencies. Except to the extent that
Borrower has established a cash reserve and is actively pursuing a tax
appeal, any failure by Borrower to promptly pay any taxes, levies and
assessments due shall be an Event of Default.
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G. Employee Benefit Plans.
1. At all times meet the minimum funding requirements of ERISA
concerning all of Borrower's employee benefit plans subject to
ERISA.
2. At no time allow any event to occur or condition concerning any
employee benefit plan subject to ERISA which might constitute
grounds for termination of the plan or for the appointment of a
trustee to administer the plan.
3. At no time allow any employee benefit plan subject to ERISA to
be the subject of voluntary or involuntary termination
proceeding.
H. Environmental Laws Compliance/Notices/Indemnity. Strictly comply with
all Environmental Laws applicable to Borrower's business. Borrower
agrees to notify Bank, not later than ten (10) days after Borrower's
receipt, of any summons, notice, lawsuit, citation, letter, or other
advice received by Borrower from any Federal, State, or local agency
or unit of government or other Person, which asserts that Borrower is
in violation of any Environmental Laws. Borrower (and the Obligors)
agree to indemnify and hold Bank harmless from all violations by
Borrower of any Environmental Laws, which indemnity shall include all
costs and expenses incurred by Bank, including legal fees, which are
related to any violation by Borrower of any Environmental Laws,
whether or not the Indebtedness has been paid at the time any such
proceeding, claim, or action is instituted against Bank. Borrower
further agrees that Bank may at any time, at Borrower's sole cost and
expense, require Borrower to provide Bank with an environmental audit
prepared by an independent environmental engineering firm acceptable
to Bank, to confirm the continuing truth and accuracy of Borrower's
environmental representations, warranties, and agreements set forth in
this Agreement.
I. Use of Proceeds; Purpose of Loans. Use the proceeds of the Loan(s)
only for Borrower's business described in Paragraph II C, and only for
those purposes stated in Paragraph I.
J. Maintenance of Records; Change in Place of Business or Name. Keep all
of its books and records at the address set forth in this Agreement,
and give the Bank prompt written notice of any change in its principal
place of business, in the location of Borrower's books and records, in
Borrower's name, and of any change in the location of the Collateral.
K. Employment Laws. Strictly comply with all Federal and State laws
pertaining to Borrower's employees, including by way of illustration
but not of limitation, the Michigan Worker's Disability Compensation
Act, MCL 418.101 et seq., as amended, Michigan Employment Security
Act, MCL 421.1 et seq., as amended, and the Fair Labor Standards Act,
29 USC 201 et seq., as amended.
L. General Compliance with Law. At all times operate Borrower's business
in strict compliance with all applicable Federal, State, and local
laws, ordinances and regulations, and refrain from and prevent
Borrower's partners, owners, directors, officers, employees and agents
from engaging in any civil or criminal activity proscribed by Federal,
State or local law.
M. Management Continuation. Borrower agrees that Xxxxxxx X. Agrees shall
continue to actively manage and operate Borrower's business, and
acknowledges that the Bank has made the Loan in reliance thereon.
N. Qualification as REIT. Guarantor shall continue to qualify as a
"qualified Real Estate Investment Trust" under the Internal Revenue
Code of 1986, as amended from time to time, with no charter amendments
permitted without Bank's prior written consent.
O. Ownership of REIT Shares. Xxxxxxx X. Agree and Xxxxxx Xxxxxxxxx, shall
at all times maintain an aggregate ownership interest in Borrower
and/or its Guarantor of at least ten percent (10%) of the outstanding
ownership interest therein.
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P. Borrower's Operations. Operations of Borrower shall be limited to the
acquisition and ownership of retail shopping centers and related
business activities.
IV. NEGATIVE COVENANTS.
Until all of Borrower's obligations under this Agreement and the
Related Documents are fully performed and the Indebtedness is fully
repaid, Borrower shall not:
A. Total Debt. Permit the total Debt of Borrower and Guarantor including
the Indebtedness, to exceed seventy (70%) percent of the Total Market
Capital.
B. Distributions by Guarantor. Distribute or permit the Guarantor to
distribute more than ninety-five percent (95%) of Funds from
Operations.
X. Xxxx and Encumbrances. Mortgage, assign or encumber any of its
property except to Bank.
D. No Borrowings, Guarantees, or Loans. Borrow money or act as Guarantor
of any loan or other obligation or permit Guarantor to borrow money or
act as guarantor of any loan or other obligation, without Bank's prior
written consent, excluding loans or guaranties pursuant to the Line of
Credit Agreement, and also excluding secured construction financing
from Borders Group, Inc. and/or Borders, Inc.
E. Debt to Value. Permit the aggregate total indebtedness in respect of
the Loan and the Line of Credit Facility to exceed 75% of the
aggregate fair market value of the properties identified in Exhibit A
hereto and more particularly described in the Mortgages, as set forth
in the most recent FIRREA appraisals for the properties delivered to
and acceptable to Bank.
V. SECURITY FOR LOANS.
A. Security/Mortgage Interests. Borrower has granted to Bank,
security/mortgage interests in certain Property as collateral security
for the Loan and repayment of the Indebtedness, among which are the
following Related Documents ("Mortgages" and "Assignments"):
1. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Xxxxxx'x Center, Roseville, MI
2. Second Assignment of Leases and Rents dated May 14, 1995 for
Xxxxxx'x Center, Roseville, MI
3. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Grayling Plaza, Grayling, MI
4. Second Assignment of Leases and Rents dated May 14, 1995 for
Grayling Plaza, Grayling, MI
5. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Iron Mountain Plaza, Iron Mountain, MI
6. Second Assignment of Leases and Rents dated May 14, 1995 for
Iron Mountain Plaza, Iron Mountain, MI
7. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Ironwood Commons, Ironwood, MI
8. Second Assignment of Leases and Rents dated May 14, 1995 for
Ironwood Commons, Ironwood, MI
9. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Oscoda Plaza, Oscoda, MI
10. Second Assignment of Leases and Rents dated May 14, 1995 for
Oscoda Plaza, Oscoda, MI
11. Second Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated May
14, 1995 for Capital Plaza, Frankfort, KY
12. Second Assignment of Leases and Rents dated May 14, 1995 for
Capital Plaza, Frankfort, KY
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13. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated May 14, 1995
for Xxxx Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxxx, XX
14. Second Assignment of Leases and Rents dated May 14, 1995 for
Xxxx Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxxx, XX
15. Second Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated June 6, 1996
for Omaha, NE (Borders Store #000, Xxxxx Xxxxxx)
16. Second Assignment of Leases and Rents dated June 6, 1996 for
Omaha, NE (Borders Store #000, Xxxxx Xxxxxx)
17. Second Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated June 6, 1996
for Borders Store #000, Xxxxxxx, XX
18. Second Assignment of Leases and Rents dated June 6, 1996 for
Borders Store #000, Xxxxxxx, XX
19. Second Open-End Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated June
6, 1996 for Borders Store #2, Columbus, OH
20. Second Assignment of Leases and Rents dated June 6, 1996 for
Borders Xxxxx #0, Xxxxxxxx, XX
21. Second Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Financing Statement dated June 6, 1996
for Borders Xxxxx #000, Xxxxx Xxxxxxx, XX
22. Second Assignment of Leases and Rents dated June 6, 1996 for
Borders Xxxxx #000, Xxxxx Xxxxxxx, XX
23. Second Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated June
17, 1996 for Borders Xxxxx #00, Xxxxxxxx, XX
24. Second Assignment of Leases and Rents dated June 17, 1996 for
Borders Store #83, Aventura, FL
25. Second Construction Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement dated August
20, 1996 for Boynton Festival Market (Circuit City), Boynton
Beach, Florida
26. Second Assignment of Leases and Rents dated August 20, 1996 for
Boynton Festival Market (Circuit City), Boynton Beach, Florida
At such time as K-Mart Corporation's debt rating by both Xxxxx'x
Corporation and Standard & Poor's Corporation is raised to investment
grade or better (Baaa3/BBB-,respectively), upon request by Borrower,
Bank shall release the Mortgages and Assignments; provided, however,
that in the event K-Mart Corporation's debt rating by either Xxxxx'x
Corporation or Standard & Poor's Corporation is downgraded to below
investment grade (Baaa3/BBB-) thereafter,Borrower shall, on the day
requested by Bank, grant, or cause to be granted to Bank, real estate
mortgages and assignments of leases and rents,subject only to
encumbrances acceptable to Bank, on all of the commercial properties
described on Exhibit A attached hereto, or such other substitute
properties as Bank in its sole discretion shall approve, as collateral
for the Loan. Borrower shall at its sole expense also furnish Bank
at the same time as it provides Bank with the aforementioned mortgages,
those due-diligence documents associated with the mortgaged properties,
including (without limitation) "as-built" surveys, title searches, and
appraisals.
Bank agrees that the Related Documents set forth at 23-26 above (the
"Florida Related Documents") will not be recorded unless and until an
Event of Default occurs under this Agreement or any Related Document
which is not cured within any applicable grace period ("Uncured
Default"). At any time upon or following the occurrence of an Uncured
Default, Bank may record the Florida Documents, and Borrower shall pay
to Bank upon demand all transfer, recording and documentary taxes and
charges imposed by any applicable governmental authority, and any
other costs and expenses incurred by Bank in connection therewith
("Recording Costs"). If Borrower fails to pay the Recording Costs upon
demand therefor, Borrower hereby authorizes and directs Bank, at
Bank's option, to make an Advance of the Loan payable to Bank in the
amount of the Recording Costs.
B. Guaranty of Payment. The prompt payment of Borrower's Loans and
Indebtedness to Bank has been guaranteed by the following Persons
pursuant to an Amended and Restated Guaranty of even date herewith
("Guaranty"):
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Guarantor Name Address Guaranty Amount
-------------- -------------------------------- ---------------
Agree Realty Corporation 00000 Xxxxxxxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
VI. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an
Event of Default under this Agreement:
A. Failure to Pay Amounts Due. Any principal or interest on any
Indebtedness to Bank is not paid within ten (10) days following its
due date.
B. Misrepresentation; False Financial Information. Any warranty or
representation of Borrower or Guarantor in connection with or
contained in this Agreement, the Related Documents, or any Financial
Statements now or hereafter furnished to the Bank by or on behalf of
the Borrower or Guarantor, are false or misleading in any material
respect.
C. Noncompliance with Bank Agreements. Borrower or Guarantor breaches any
covenant, term, condition or agreement under this Agreement, the
Related Documents, the Line of Credit Agreement and any documents
executed in connection therewith (collectively, the "Line of Credit
Documents") or any other agreements, provided, however, except for
those Events of Default otherwise referenced in this Section VI, for
which no notice shall be given, the Borrower shall be given written
notice of Events of Default under this Subsection C and shall have a
period of thirty (30) days following such notice within which to cure
such Events of Default.
D. Other Lender Default. Any non-Bank indebtedness of Borrower is
declared to be due and payable prior to the stated maturity thereof,
provided that Borrower has not cured such default within any
applicable notice or grace period.
E. Judgments; Attachments; Tax Liens. There shall be entered against
Borrower or any other Obligor, any judgment which materially affects
Borrower's or any Obligor's business, Property or financial condition,
or if any tax lien, levy, attachment, forfeiture, seizure,
garnishment, execution or similar writ or process shall be issued
against the Collateral or which materially affects Borrower's
business, Property or financial condition, and which remains unpaid,
unstayed on appeal, undischarged, unbonded, or undismissed for a
period of sixty (60) days after the date thereof.
F. Indictment. The institution of any criminal proceeding wherein
forfeiture of Borrower's or Guarantor's Property is a potential
penalty, and provided such proceedings are not dismissed within sixty
(60) days thereafter.
G. Business Merger, Suspension, Bankruptcy. Borrower or any other Obligor
shall sell or merge Borrower's business to or with any other Person;
shall voluntarily suspend transaction of its business; shall generally
not pay debts as they mature; shall make a general assignment for the
benefit of creditors; shall file or have filed against Borrower or any
other Obligor any reorganization or liquidation under the Bankruptcy
Code or under any other State or Federal law for the relief of
debtors, or a receiver, trustee or custodian shall be appointed for
Borrower or any other Obligor for any portion of Borrower's or other
Obligor's Property, which is not discharged within sixty (60) days
after filing.
VII. REMEDIES ON DEFAULT.
A. Acceleration. Upon the occurrence of any Event of Default, the Loans
and all Indebtedness to Bank may, at the option of Bank, and without
demand or notice of any kind, be declared to be immediately due and
payable.
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B. Remedies Cumulative. The remedies provided for in this Agreement are
cumulative and not exclusive, and Bank may exercise any remedies
available to it at law or in equity, and as are provided in this
Agreement, the Related Documents, and any other agreement between
Borrower and Bank.
C. No Waiver. No delay or failure of Bank in exercising any right,
remedy, power or privilege hereunder shall affect that right, remedy,
power or privilege, nor shall any single or partial exercise thereof
preclude the exercise of any other right, remedy, power or privilege.
No delay or failure of Bank to demand strict adherence to the terms of
this Agreement shall be deemed to constitute a course of conduct
inconsistent with the Bank's right to at any time, before or after any
Event of Default, demand strict adherence to the terms of this
Agreement and the Related Documents.
D. Bank's Right of Set-off. Upon the occurrence of any Event of Default,
Bank shall have the right to apply any or all of Borrower's and any
Obligor's bank accounts or any other Property held by Bank against any
Indebtedness of Borrower to Bank.
VIII. CROSS-COLLATERALIZATION/CROSS-DEFAULT.
Borrower agrees that all Collateral is security for the Loan under
this Agreement and for all other Indebtedness of Borrower to Bank,
whether or not such Indebtedness is related by class or kind and
whether or not contemplated by the parties at the time of executing
each evidence of Indebtedness. Any Borrower default, beyond any
applicable grace or cure period under the terms of any Indebtedness to
Bank or under the Line of Credit Documents shall constitute an Event
of Default under this Agreement.
IX. MISCELLANEOUS.
A. Compliance with Bank Agreements. Borrower acknowledges that it has
read, and agrees to fully comply with this Agreement, the Related
Documents, and all other agreements between Borrower and Bank.
B. Expenses. Borrower agrees to pay all of Bank's expenses incidental to
perfecting Bank's security interests and liens, the Bank's payment of
any insurance premiums, Uniform Commercial Code search fees,
Environmental Laws inspections and audits, appraisals, and fees
incurred by Bank for audits, inspection, and copying of Borrower's
books and records. Borrower also agrees to pay all costs and expenses
of Bank, including reasonable attorney fees, in connection with the
enforcement of the Bank's rights and remedies under this Agreement,
the Related Documents and any other agreement, and in connection with
the preparation of any amendments, modifications, waivers or consents
with respect to this Agreement.
C. Further Action. Borrower agrees, from time to time upon Bank's
request, to make, execute, acknowledge, and deliver to Bank such
further and additional instruments, documents, and agreements, and to
take such further action as may be required to carry out the intent
and purpose of this Agreement and repayment of the Loans.
D. Governing Law, Partial Illegality. This Agreement and the Related
Documents shall be interpreted and the rights of the parties
determined under the laws of the State of Michigan. Should any part,
term, or provision of this Agreement be adjudged illegal or in
conflict with any law of the United States or State of Michigan, the
validity of the remaining portion or provisions of the Agreement shall
not be affected.
E. Writings Constitute Entire Agreement; Modifications Only in Writing.
This Agreement, the Related Documents and all other written agreements
between Borrower and Bank, constitute the entire agreement of the
parties, and there are no other agreements, express or implied. This
Agreement supersedes any and all commitment letters or term sheets
heretofore issued in connection with this Loan. None of the parties
shall be bound by anything not expressed in writing, and neither this
Agreement, the Related Documents, nor any other agreement can be
modified except by a writing executed by Borrower and by the Bank.
This Agreement shall inure to the benefit of and shall be
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binding upon all of the parties to this Agreement and their respective
successors, estate representatives, and assigns, provided however,
that Borrower cannot assign or transfer its rights or obligations
under this Agreement without Bank's prior written consent.
F. Credit Inquiries. Borrower hereby authorizes Bank to respond to any
credit inquiries received by Bank from trade creditors or other credit
granting institutions.
G. Release of Claims Against Bank. In consideration of the Bank's making
the Loans described in this Agreement, Borrower and the Obligor(s) do
each hereby release and discharge Bank of and from any and all claims,
harm, injury, and damage of any and every kind, known or unknown,
legal or equitable, which Borrower or any of the Obligor(s) have
against the Bank from the date of Borrower's first contact with Bank
up to the date of this Agreement. Borrower and the Obligor(s) confirm
to Bank that they have reviewed the effect of this release with
competent legal counsel of their choice, or have been afforded the
opportunity to do so, prior to execution of this Agreement and the
Related Documents and each acknowledge and agree that Bank is relying
upon this release in extending the Loans to Borrower.
H. Waiver of Jury Trial. Borrower and the Obligor(s) do each knowingly,
voluntarily and intelligently waive their constitutional right to a
trial by jury with respect to any claim, dispute, conflict, or
contention, if any, as may arise under this Agreement or under the
Related Documents, and agree that any litigation between the parties
concerning this Agreement and the Related Documents shall be heard by
a court of competent jurisdiction sitting without a jury. Borrower and
the Obligor(s) hereby confirm to Bank that they have reviewed the
effect of this waiver of jury trial with competent legal counsel of
their choice, or have been afforded the opportunity to do so, prior to
signing this Agreement and the Related Documents and each acknowledge
and agree that Bank is relying upon this waiver in extending the Loans
to Borrower.
I. Headings. All section and paragraph headings in this Agreement are
included for convenience only and do not constitute a part of this
Agreement.
J. Term of Agreement. Unless superseded by a later Business Loan
Agreement, this Agreement shall continue in full force and effect
until all of Borrower's obligations to Bank are fully satisfied and
the Loans and Indebtedness are fully repaid.
X. DEFINITIONS.
The following words shall have the following meanings in this
Agreement:
A. "Adjusted Funds from Operation" shall mean, for the period for which
it is be determined, the operating income of Borrower and the
Guarantor for such period, less operating expenses of Borrower and the
Guarantor for such period, determined in accordance with GAAP,
calculated on a basis consistent with the definitions of Net Operating
Income and Operating Expenses herein; but excluding operating income
and expenses resulting from (i) cumulative changes in accounting
practices, (ii) discontinued operations, (iii) extraordinary items,
(iv) net income of a subsidiary that is unavailable to Borrower or the
Guarantor, (iv) net income not readily convertible into Dollars or
remittable to the United States, and (v) net income from corporations,
partnerships, associations, joint ventures or other entities in which
Borrower or the Guarantor or a subsidiary has a minority interest and
in which Borrower or the Guarantor does not have Control, except to
the extent actually received.
B. "Bank" shall mean Michigan National Bank, a national banking
association, and any successor or assign.
C. "Base Rate" or "Prime Rate" shall mean that variable rate of interest
from time to time established by the Bank designated in the Loan
Promissory Note and Section I. of this Agreement as its base or prime
commercial lending rate.
- 9 -
D. "Business Day" shall mean any day on which the Bank is open for normal
commercial business transactions (other than ATM or other similar
mechanical or automated services provided by Bank).
E. "Collateral" shall mean that Property which Borrower and any other
Obligor has pledged, mortgaged, or granted Bank a security interest
in, wherever located and whether now owned or hereafter acquired,
together with all replacements, substitutions, proceeds and products
thereof, as collateral security for the Loan.
F. "Control" shall mean in (a) in the case of a corporation, ownership,
directly or through ownership of other entities, of at least ten
percent (10%) of all the voting stock (exclusive of stock which his
voting only as required by applicable law or in the event of nonpayment
of dividends and pays dividends only on a nonparticipating basis at a
fixed or floating rate), and (b) in the case of any other entity,
ownership, directly or through ownership of other entities, of at least
ten percent (10%) of al of the beneficial equity interests therein
(calculated by a method that excludes from equity interests, ownership
interests that are nonvoting (except as required by applicable law or
in the event of nonpayment of dividends, or distributions) and pay
dividends or distributions only on a nonparticipating basis at a fixed
or floating rate) or, in any case, (c) the power directly or
indirectly, to direct or control, or cause the direction of, the
management policies of another Person, whether through the ownership
of voting securities, general partnership interest, common directors,
trustees, officers by contract or otherwise. The terms "controlled"
and "controlling" shall have meanings correlative to the foregoing
definition of "Control."
G. "Debt" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument,
(iii) the face amount of all letters of credit issued for the account
of such Person and, without duplication, all unreimbursed amounts
drawn thereunder, (iv) all indebtedness of any other Person secured by
an lien on any property owned by such Person, whether or not such
indebtedness has been assumed, (v) all contingent liabilities of such
Person, (vi) all payment obligations of such Person under any interest
rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars and similar agreements) and currency
swaps and similar agreements, (vii) all indebtedness and liabilities
secured by any lien or mortgage on any property of such Person,
whether or not the same would be classified as a liability on a
balance sheet, (viii) the liability of such Person in respect of
banker's acceptances and the estimated liability under any
participating mortgage, convertible mortgage or similar arrangement,
(ix) the aggregate amount of rentals or other consideration payable by
such Person in accordance with GAAP over the remaining unexpired term
of all capitalized leases, and (x) all indebtedness, contingent
obligations, etc. of any partnership in which such Person holds a
general partnership interest.
H. "Environmental Laws" shall mean all laws, regulations, and rules of
the United States of America, State of Michigan, and local authorities
which pertain to the environment, including but not limited to, the
Clean Air Act (42 USC 7401 et seq.), Clean Water Act (33 USC 1251 et
seq.), Resource Conservation and Recovery Act of 1976 (42 USC 6901 et
seq.), Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 USC 9601 et seq.), Hazardous Materials
Transportation Act- (49 USC 1801 et seq.), Solid Waste Disposal Act
(42 USC 6901 et seq.), Toxic Substances Control Act (15 USC 2601 et
seq.), Michigan Resource Recovery Act (MCL 299.501 et seq.),
Environmental Response Act (MCL 299.601), and Underground Storage Tank
Regulatory Act (MCL 299.701 et seq. and 299.801 et seq.), as each of
said statutes have been or are hereafter amended, together with all
rules and regulations promulgated by the Environmental Protection
Agency and Michigan Department of Natural Resources and all additional
environmental laws, rules, and regulations in effect on the date of
this Agreement and as may be enacted and effective.
I. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor act.
J. "Event of Default" shall mean any of the events described in Section
VI of this Agreement or in the Related Documents.
- 10 -
K. "Financial Statements" shall mean all balance sheets, cash flows,
earnings statements, and other financial information (whether of the
Borrower or an Obligor) which have been, are now, or are in the future
furnished to Bank.
L. "Funds from Operations" shall mean the consolidated net income (loss)
calculated in accordance with GAAP, excluding gains (or losses) from
debt restructuring and sales (or adjustments to basis or properties or
other assets), plus non-cash charges (primarily depreciation and
amortization), and after adjustments for unconsolidated partnerships
and joint ventures, which adjustments shall be calculated on the same
basis.
M. "GAAP" shall mean "generally accepted accounting principles"
consistently applied, as set forth from time to time in the Opinion of
the Accounting Principles Board of the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board, or
which have other substantial authoritative support.
N. "Indebtedness" or "Obligations" shall mean all Loans, indebtedness,
and obligations of Borrower to Bank, including but not limited to any
Bank advances for payments of insurance, taxes, amounts advanced by
Bank to protect its interest in the Collateral, overdrafts in deposit
accounts with Bank, and all other indebtedness, obligations and
liabilities of Borrower to Bank, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or
hereafter arising.
O. "LIBOR Rate" shall equal 225 basis points in excess of the 1-month
LIBOR, as such term is defined in the Addendum to Amended and Restated
Business Loan Agreement (Line of Credit with Letter of Credit
Advances).
P. "Line of Credit Agreement" shall mean the Line of Credit Agreement
between Borrower, Guarantor, Bank, NBD Bank and LaSalle National Bank
dated as of November 14, 1995, as now or hereafter amended or
supplemented ("Line of Credit Agreement").
Q. "Line of Credit Facility" shall mean the line of credit loan made to
Borrower under the Line of Credit Agreement.
R. "Michigan National Bank Prime Rate" or "MNB Prime" shall mean that
variable rate of interest so designated and from time to time
established by Michigan National Corporation as the Michigan National
Bank prime commercial lending rate.
S. "Net Operating Income" shall mean, with respect to any property, the
gross income derived from the operation of such Property, less
Operating Expenses attributable to such property, accounted for on an
accrual basis, in accordance with GAAP, including any rent loss or
business interruption insurance proceeds, and water and sewer charges,
and Operating Expenses actually paid or payable on an accrual basis
attributable to such property as set forth on operating statements
satisfactory to Bank. Net Operating Income shall be calculated in
accordance with customary accounting principles applicable to real
estate. Notwithstanding the foregoing, Net Operating Income shall not
include (i) any condemnation or insurance proceeds (excluding rent or
business interruption insurance proceeds), (ii) any proceeds resulting
from the sale, exchange, transfer, financing or refinancing of all or
any portion of the property for which it is to be determined, (iii)
amounts received from tenants as security deposits, (iv) amounts
received from affiliates of Borrower or the Guarantor, which amounts
do not represent pass-through rent payments received from bonafide
third party tenants, (v) interest income, and (vi) any type of income
otherwise included in Net Operating Income but paid directly by any
tenant to a Person other than Borrower or the Guarantor or its agents
or representatives.
T. "Net Worth" shall mean the difference between Borrower's total assets
and total liabilities, as determined under GAAP.
- 11 -
U. "Obligor" shall mean any person having any obligation to Bank, whether
for the payment of money or otherwise, under this Agreement or under
the Related Documents, including but not limited to any guarantors of
Borrower's Indebtedness.
V. "OP Units" shall mean operating units of Borrower as defined in
Borrower's partnership agreement.
W. "Operating Expenses" shall mean with respect to any property, for any
given period (and shall include the pro rata portion for such period
of all such expenses attributable to, but not paid during, such
period), all expenses to be paid or payable, as determined in
accordance with GAAP, the Borrower or the Guarantor during that period
in connection with the operation of such property for which it is to
be determined, including without limitation:
(i) expenses for cleaning, repair, maintenance, decoration and
painting of such property (including, without limitation, parking lots
and roadways), net of any insurance proceeds in respect of any of the
foregoing;
(ii) wages (including overtime payments), benefits, payroll
taxes and all other related expenses for Borrower and Guarantor's
on-site personnel, engage din the repair, operation and maintenance of
such property and service to tenants and on-site personnel engaged in
audit and accounting functions performed by Borrower;
(iii) actual management fees, if any, together with any
allocated management fees or similar fees received from tenants or
other parties. Such fees shall include all fees for management
services whether such services are performed at such property or
off-site;
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other similar item and the cost
of building and cleaning supplies;
(v) the cost of any leasing commissions and the tenant
concessions or improvements payable by Borrower, the Guarantor
pursuant to any leases which are in effect for such property at the
commencement of that period as such costs are recognized in accordance
with GAAP, but no less than a straight line basis over the remaining
term of the respective Lease, exclusive of any renewal or extension or
similar options;
(vi) rent, liability, casualty and fidelity insurance premiums;
(vii) legal, accounting and other professional fees and expenses;
(viii) the cost of all equipment to be used in the ordinary course
of business, which is not capitalized in accordance with GAAP;
(ix) real estate and other taxes;
(x) advertising and other marketing costs and expenses;
(xi) casualty losses to the extent not reimbursed by a third
party; and
(xii) all amounts that should be reserved, as reasonably
determined by Borrower and the Guarantor with approval by Bank in its
reasonable discretion, for repair or maintenance of the property and
to maintain the value of the property.
Notwithstanding the foregoing, Operating Expenses shall not include
(i) depreciation or amortization or any other non-cash items of expense; (ii)
interest, principal, fees, costs and expense reimbursements of Bank in
administering the Loan but not in exercising any of its rights under this
Agreement or the Loan Documents; or (iii) any expenditure (other than leasing
commissions, tenant concessions and improvements, and replacement reserves)
which is properly treatable as a capital item under GAAP.
- 12 -
X. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
Person succeeding to the powers and functions of the Pension Benefit
Guaranty Corporation.
Y. "Person" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated association, joint stock
company, government, municipality, political subdivision, agency or
other entity.
Z. "Property" shall mean all of Borrower's (or other Obligor's, as
applicable) assets, tangible and intangible, real and personal.
AA. "Related Documents" shall mean any and all documents, promissory
notes, security agreements, leases, mortgages, guaranties, pledges,
"swap agreement" (within the meaning of the United States Bankruptcy
Code of 1978, as amended, 11 USC 101 et seq.) and any other documents
or agreements executed in connection with this Agreement. The term
shall include both documents existing before, at the time of execution
of this Agreement, and documents executed after the date of this
Agreement.
AB. "Total Debt Service" shall mean for the period for which it is to be
determined, the amount of interest and regularly schedule principal
payments payable during such period in respect of Debt of Borrower and
the Guarantor, taking into account any interest rate swap, cap or
other interest rate management agreement; provided that the entity
providing such interest rate management agreement maintains a credit
rating by S&P of equal to or exceeding "A" or the equivalent rating by
Xxxxx'x.
AC. "Total Interest Expense" shall mean for the period for which it is to
be determined, the aggregate of all interest paid or payable by
Borrower and the Guarantor with respect to Debt, as determined in
accordance with GAAP.
AD. "Total Interest Bearing Funded Debt" shall mean, as of any date, the
outstanding principal amount of interest bearing indebtedness for
borrowed money of Borrower and the Company.
AE. "Total Market Capital" shall mean, as of any date the sum of (i) Total
Interest Bearing Funded Debt, and (ii) the product of the market value
per share of the common stock the Guarantor calculated on the basis of
the closing quotation published in the section entitled "New York
Stock Exchange Composite Transaction" in the Wall Street Journal
published in New York, New York on the date such calculation is made,
times the total number of shares of the common stock of the Guarantor
issued and outstanding ("Guarantor Share Price") and (iii) the
Guarantor Share Price times the total number of issued and outstanding
OP Units.
XI. ADDITIONAL PROVISIONS:
A. Effect of this Agreement and Construction with Related Documents:
This Agreement shall not be construed as an agreement to substitute a
new obligation or to extinguish an obligation under the Original Loan
Agreement or the Related Documents and shall not constitute a novation
as to the obligations of the parties. If any express conflict shall
exist between the agreements of the parties herein and as set forth in
the Related Documents, this Agreement shall govern and supersede the
agreements set forth in the previous documents. The Related Documents
shall continue in full force and effect, and except as above
specifically modified and amended, shall be unamended, unchanged, and
unmodified by this Agreement and shall continue to secure to Bank the
repayment and performance of Borrower's Indebtedness to Bank.
B. Addendum. See Addendum to Amended and Restated Business Loan Agreement
(Line of Credit with Letter of Credit Advances) attached hereto and
incorporated herein.
- 13 -
IN WITNESS WHEREOF the parties have executed this Agreement on the
date first written above.
BORROWER:
AGREE LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Agree Realty Corporation,
a Maryland corporation
Its: General Partner
By:/s/ Xxxxxxx X. Agree
-------------------------
Xxxxxxx X. Agree
Its: President
BANK:
MICHIGAN NATIONAL BANK,
a national banking association
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Its: Vice President
- 14 -
AGREEMENT OF GUARANTORS
By executing this Agreement the undersigned "Guarantor" agrees that the
Indebtedness of Borrower is and, notwithstanding this Agreement, will continue
to be guaranteed to Bank in accordance with the terms of the Guaranty
agreement heretofore executed and delivered by Guarantor to Bank, without
limit. In addition, Guarantor: (1) acknowledges and agrees that the Guarantor
has completely read and understands this Agreement; (2) consents to all of the
provisions of this Agreement relating to Borrower; (3) acknowledges and agrees
that the Guaranty executed and delivered by the undersigned continues in full
force and effect; (4) acknowledges receipt of good and lawful consideration
for execution of the guaranty agreement and this Agreement; (5) agrees
promptly to furnish such Financial Statements to Bank concerning the Guarantor
as Bank shall reasonably request; (6) agrees to all of those portions of this
Agreement which apply to Guarantor; (7) acknowledges and agrees that this
Agreement has been freely executed without duress and after an opportunity was
provided to Guarantor for review of this Agreement and the guaranty agreement
by competent legal counsel of Guarantor's choice; and (8) acknowledges that
the Bank has provided Guarantor with a copy of this Agreement, the guaranty
agreement, and such other Related Documents as Guarantor has requested.
GUARANTOR:
AGREE REALTY CORPORATION,
a Maryland corporation
By: /s/ Xxxxxxx X. Agree
-----------------------------------
Xxxxxxx X. Agree
Its: President
- 15 -
EXHIBIT A
Commercial Properties
1. A & P, Xxxxxx Center, Roseville, Michigan
2. Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
3. Grayling Plaza, I-75 Business Loop, Grayling, Michigan
4. Iron Xxxxxxxx Xxxxx, X.X. Xxxxxxx 000, Xxxx Xxxxxxxx, Xxxxxxxx
5. Xxxxxxxx Xxxxxxx, X.X. Xxxxxxx 0, Xxxxxxxx, Xxxxxxxx
6. Xxxxxx Xxxxx, X.X. Xxxxxxx 00, Xxxxxx, Xxxxxxxx
7. Xxxx Xxxxxxxxx, Xxxxx, Xxxx Xxxxxxxxx, Xxxxxxxx
8. Borders Store #2, Columbus, Ohio
9. Borders Store #000, Xxxxx, Xxxxxxxx
10. Borders Store #000, Xxxxxxx, Xxxxxx
11. Borders Xxxxx #000, Xxxxx Xxxxxxx, Xxxxxxxxxx
12. Borders Xxxxx #00, Xxxxxxxx, Xxxxxxx
00. Boynton Festival Market (Circuit City), Boynton Beach, Florida
- 16 -
EXHIBIT B
Permitted Encumbrances
First mortgage liens and related security interests have been granted to the
following lenders on the projects described below:
A. Nationwide Insurance Company
1. Charlevoix Commons
2. Chippewa Commons
3. Xxxxxxxx Plaza II
4. Petoskey Town Center
5. Plymouth Commons
6. Rapids Associates
7. Shawano Plaza
B. Travelers Indemnity
1. North Lakeland Plaza
C. American United Life
1. Winter Garden Plaza
D. Michigan National Bank
1. Perrysburg Plaza
E. Michigan National Bank, NBD Bank and LaSalle National Bank
1. The properties listed on Exhibit A to this Agreement.
- 17 -
