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Exhibit 10.2
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ALLIED CAPITAL CORPORATION
NOTE AGREEMENT
Dated as of April 30, 1998
Re: $140,000,000 7.055% Senior Notes, Series A, due May 30, 2003,
$30,000,000 7.168% Senior Notes, Series B, due May 30, 2005
and
$10,000,000 9.530% Senior Notes, Series C, due May 30, 2005
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TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT......................1
Section 1.1. Description of Notes.................................1
Section 1.2. Commitment, Closing Date.............................1
SECTION 2. PAYMENT OF NOTES.........................................2
Section 2.1. Required Payments....................................2
Section 2.2. Optional Prepayment with Premium.....................2
Section 2.3. Notice of Optional Prepayments.......................2
Section 2.4. Application of Prepayments...........................3
Section 2.5. Direct Payment.......................................3
SECTION 3. REPRESENTATIONS..........................................3
Section 3.1. Representations of the Company.......................3
Section 3.2. Representations of the Purchasers....................3
SECTION 4. CLOSING CONDITIONS.......................................5
Section 4.1. Conditions...........................................5
Section 4.2. Waiver of Conditions.................................6
SECTION 5. COVENANTS................................................6
Section 5.1. Corporate Existence, Etc.............................6
Section 5.2. Insurance............................................6
Section 5.3. Taxes, Claims for Labor and Materials, Compliance
with Laws..........................................6
Section 5.4. Maintenance, Etc.....................................7
Section 5.5. Nature of Business...................................7
Section 5.6. Capital Maintenance..................................7
Section 5.7. Interest Charges Coverage Ratio......................7
Section 5.8. Limitations on Debt..................................7
Section 5.9. Limitation on Liens..................................8
Section 5.10. Restricted Payments.................................10
Section 5.11. Mergers, Consolidations and Sales of Assets.........11
Section 5.12. Repurchase of Notes.................................13
Section 5.13. Transactions with Affiliates........................13
Section 5.14. Termination of Pension Plans........................13
Section 5.15. Reports and Rights of Inspection....................14
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.................16
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Section 6.1. Events of Default...................................16
Section 6.2. Notice to Holders...................................18
Section 6.3. Acceleration of Maturities..........................18
Section 6.4. Rescission of Acceleration..........................18
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS........................19
Section 7.1. Consent Required....................................19
Section 7.2. Solicitation of Holders.............................19
Section 7.3. Effect of Amendment or Waiver.......................19
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS................20
Section 8.1. Definitions.........................................20
Section 8.2. Accounting Principles...............................29
Section 8.3. Directly or Indirectly..............................29
SECTION 9. MISCELLANEOUS...........................................29
Section 9.1. Registered Notes....................................29
Section 9.2. Exchange of Notes...................................30
Section 9.3. Loss, Theft, Etc. of Notes..........................30
Section 9.4. Expenses, Stamp Tax Indemnity.......................30
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative...31
Section 9.6. Notices.............................................31
Section 9.7. Successors and Assigns..............................31
Section 9.8. Survival of Covenants and Representations...........31
Section 9.9. Severability........................................31
Section 9.10. Governing Law.......................................32
Section 9.11. Captions............................................32
Signature....................................................................33
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ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Name and Address of Purchasers and Amounts of Commitment
Exhibit A-1 -- Form of 7.055% Senior Note, Series A, due May 30, 2003
Exhibit A-2 -- Form of 7.168% Senior Note, Series B, due May 30, 2005
Exhibit A-3 -- Form of 9.530% Senior Note, Series C, due May 30, 2005
Exhibit B -- Representations and Warranties of the Company
Exhibit C -- Description of Special Counsel's Closing Opinion
Exhibit D -- Description of Closing Opinion of Counsel to the Company
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ALLIED CAPITAL CORPORATION
NOTE AGREEMENT
Re: $140,000,000 7.055% Senior Notes, Series A, due May 30, 2003,
$30,000,000 7.168% Senior Notes, Series B, due May 30, 2005
and
$10,000,000 9.530% Senior Notes, Series C, due May 30, 2005
Dated as of
April 30, 1998
To the Purchasers named
on Schedule I to this Agreement
Ladies and Gentlemen:
The undersigned, ALLIED CAPITAL CORPORATION (the "Company"), a Maryland
corporation, hereby agrees with the Purchasers named on Schedule I to this
Agreement (the "Purchasers") as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the issue and
sale of (i) $140,000,000 7.055% Senior Notes, Series A, due May 30, 2003 (the
"Series A Notes"), (ii) $30,000,000 7.168% Senior Notes, Series B, due May 30,
2005 (the "Series B Notes"), and (iii) $10,000,000 9.530% Senior Notes, Series
C, due May 30, 2005 (the "Series C Notes") (the Series A Notes, the Series B
Notes and the Series C Notes are collectively referred to as the "Notes," such
term to include any such notes issued in substitution therefor pursuant to
Section 9 of this Agreement). The Series A Notes, the Series B Notes and the
Series C Notes shall be substantially in the form set out in Exhibits X-0, X-0
xxx X-0, respectively, with such changes therefrom, if any, as may be approved
by the Purchasers and the Company. Interest on the Notes shall be computed on
the basis of a 360-day year of twelve 30-day months. The Notes are not subject
to prepayment or redemption at the option of the Company prior to their
expressed maturity dates except on the terms and conditions and in the amounts
and with the premium, if any, set forth in Section 2 of this Agreement.
Section 1.2. Commitment, Closing Date. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to each Purchaser, and such
Purchaser agrees to purchase from the Company, Notes of the Series and in the
principal amount set forth opposite such Purchaser's name on Schedule I hereto
at a price equal to the principal amount thereof on
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June 4, 1998 (the "Closing Date"); provided that the Closing Date may be
postponed to such other date (but not more than ten days after the originally
scheduled Closing Date) as shall mutually be agreed upon by the Company and the
Purchasers scheduled to purchase the Notes on the Closing Date. Delivery of the
Notes will be made at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000. On the Closing Date, the Company will deliver to each
Purchaser the Notes of the Series to be purchased by such Purchaser in the form
of a single Note (or such greater number of Notes in denominations of at least
$500,000 as such Purchaser may request) dated the Closing Date and registered in
such Purchaser's name (or in the name of such Purchaser's nominee), against
delivery by such Purchaser to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer via Fedwire
of immediately available funds for the account of the Company to account number
3918973064 at Nations Bank, Bethesda, Maryland, (ABA #052-001-633).
SECTION 2. PAYMENT OF NOTES.
Section 2.1. Required Payments. (a) The entire principal amount of the
Series A Notes shall become due and payable on May 30, 2003.
(b) The entire principal amount of the Series B Notes shall become due
and payable on May 30, 2005.
(c) The entire principal amount of the Series C Notes shall become due
and payable on May 30, 2005.
Section 2.2. Optional Prepayment with Premium. In addition to the payments
required by Section 2.1, upon compliance with Section 2.3 the Company shall have
the privilege, at any time and from time to time, of prepaying the outstanding
Notes, either in whole or in part (but if in part then in a minimum principal
amount of $1,000,000) and ratably among the Series A Notes, Series B Notes and
the Series C Notes by payment of the principal amount of the Notes, or portion
thereof to be prepaid, and accrued interest thereon to the date of such
prepayment, together with a premium equal to the Make-Whole Amount, determined
as of two Business Days prior to the date of such prepayment pursuant to this
Section 2.2.
Section 2.3. Notice of Optional Prepayments. The Company will give notice
of any prepayment of the Notes pursuant to Section 2.2 to each holder thereof
not less than 30 days nor more than 60 days before the date fixed for such
optional prepayment specifying (i) such date, (ii) the principal amount of the
holder's Notes to be prepaid on such date, (iii) that a premium may be payable,
(iv) the date when such premium will be calculated, (v) the estimated premium
and (vi) the accrued interest applicable to the prepayment. Notice of prepayment
having been so given, the aggregate principal amount of the Notes specified in
such notice, together with accrued interest thereon and the premium, if any,
payable with respect thereto shall become due and payable on the prepayment date
specified in said notice. Not later than two Business Days prior to the
prepayment date specified in such notice, the Company shall provide each holder
of a Note written notice of the premium, if any, payable in connection with such
prepayment and, whether or not any premium is payable, a
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reasonably detailed computation of the Make-Whole Amount (which calculation
shall be reasonably satisfactory to each Holder of the Notes to be prepaid).
Section 2.4. Application of Prepayments. All partial prepayments pursuant
to Section 2.2 shall be applied on all outstanding Notes ratably in accordance
with the unpaid principal amounts thereof.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary
contained in this Agreement or the Notes, in the case of any Note owned by any
Holder that is a Purchaser or any other Institutional Holder which has given
written notice to the Company requesting that the provisions of this Section 2.5
shall apply, the Company will punctually pay when due the principal thereof,
interest thereon and premium, if any, due with respect to said principal,
without any presentment thereof, directly to such Holder at its address set
forth in Schedule I hereto or such other address as such Holder may from time to
time designate in writing to the Company or, if a bank account with a United
States bank is so designated for such Holder on Schedule I hereto the Company
will make such payments in immediately available funds to such bank account,
marked for attention as indicated, or in such other manner or to such other
account in any United States bank as such Holder may from time to time direct in
writing.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents and
warrants that all representations and warranties set forth in Exhibit B are true
and correct as of the date hereof and are incorporated herein by reference with
the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchasers. Each Purchaser represents,
and in entering into this Agreement the Company understands, that such Purchaser
is acquiring the Notes in a private placement for the purpose of investment and
not with a view to the distribution thereof, and that such Purchaser has no
present intention of selling, negotiating or otherwise disposing of the Notes;
it being understood, however, that the disposition of such Purchaser's property
shall at all times be and remain within its control. Each Purchaser represents
that it is an institutional "accredited investor" within the meaning of Rule 501
of Regulation D as promulgated under the Securities Act of 1933 and at least one
of the following statements is an accurate representation as to each source of
funds (a "Source") to be used by it to pay the purchase price of the Notes to be
purchased by it hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan all plans maintained by the same employer (or
affiliate thereof as defined in Section V(a)(1) of PTE 95-60) or employee
organization, with respect to which the amount of the general account
reserves and liabilities for all contracts held by or on behalf of such
plan exceeds ten percent (10%) of the total reserves and liabilities of
such general
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account (exclusive of separate account liabilities) plus surplus, as set
forth in the NAIC Annual Statement filed with such Purchaser's state of
domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit plan
or group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such transferee is relying on any representation contained in
paragraphs (b), (c) or (e) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) it is neither a party in interest nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Code), with respect to any plan
identified pursuant to paragraphs (b) or (e) above, or (ii) with respect to any
plan, identified pursuant to paragraph (c) above, neither it nor any "affiliate"
(as defined in Section V(c) of the QPAM Exemption) has at such time, and during
the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to
paragraph (c) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plan.
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As used in this Section 3.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. The obligation of each Purchaser to purchase the
Notes on the Closing Date shall be subject to the performance by the Company of
its agreements hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Notes and to the following further
conditions precedent:
(a) Closing Certificates. On the Closing Date such Purchaser shall
have received a certificate dated the Closing Date, signed by the President
or a Managing Director or a Principal of the Company, the truth and
accuracy of which shall be a condition to such Purchaser's obligation to
purchase the Notes proposed to be sold to such Purchaser on the Closing
Date and to the effect that (i) the representations and warranties of the
Company set forth in Exhibit B hereto are true and correct on and with
respect to the Closing Date, (ii) the Company has performed all of its
obligations hereunder which are to be performed on or prior to the Closing
Date, and (iii) no Default or Event of Default has occurred and is
continuing.
(b) Legal Opinions. Such Purchaser shall have received from Xxxxxxx
and Xxxxxx, who are acting as special counsel to the Purchasers in this
transaction, and from Xxxxxxxxxx, Xxxxxx & Xxxxxxx LLP, counsel for the
Company, their respective opinions dated the Closing Date, in form and
substance satisfactory to such Purchaser, and covering the matters set
forth in Exhibits C and D, respectively, hereto.
(c) Purchase Permitted By Applicable Law, Etc. On the Closing Date,
each purchase of Notes shall (a) be permitted by the laws and regulations
of each jurisdiction to which such Purchaser is subject, without recourse
to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any
applicable law or regulation (including, without limitation, Regulation U,
T or X of the Board of Governors of the Federal Reserve System) and (c) not
subject any Purchaser to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect
on the date hereof. If requested by any Purchaser, such Purchaser shall
have received an officer's certificate certifying as to such matters of
fact as such Purchaser may reasonably specify to enable such Purchaser to
determine whether such purchase is so permitted.
(d) Sale of Other Notes. The Company shall have consummated the sale
of the entire principal amount of the Notes scheduled to be sold on the
Closing Date as specified in Schedule I.
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(e) Private Placement Number. A Private Placement Number issued by
S&P's CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners) shall have
been obtained for each Series of Notes.
(f) Satisfactory Proceedings. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to such Purchaser and such Purchaser's special counsel, and such
Purchaser shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in connection with
the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company fails
to tender to any Purchaser the Notes to be issued to such Purchaser on such date
or if the conditions specified in Section 4.1 have not been fulfilled, such
Purchaser may thereupon elect to be relieved of all further obligations under
this Agreement. Without limiting the foregoing, if the conditions specified in
Section 4.1 have not been fulfilled, such Purchaser may waive compliance by the
Company with any such condition to such extent as such Purchaser may in its sole
discretion determine. Nothing in this Section 4.2 shall operate to relieve the
Company of any of its obligations hereunder or to waive any Purchaser's rights
against the Company.
SECTION 5. COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and keep
in full force and effect, and will cause each Consolidated Subsidiary to keep in
full force and effect, its corporate existence and all registrations, licenses,
permits and governmental approvals necessary to the proper conduct of its
business; provided, however, that the foregoing shall not prevent any
transaction permitted by Section 5.11.
Section 5.2. Insurance. The Company will maintain, and will cause each
Consolidated Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties.
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws.
The Company will promptly pay and discharge, and will cause each Consolidated
Subsidiary to pay and discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or such Consolidated Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Consolidated Subsidiary, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials, which if unpaid might become a Lien upon any
property of the Company or such Consolidated Subsidiary; provided, however, that
the
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Company or such Consolidated Subsidiary shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any property
of the Company or such Consolidated Subsidiary or any material interference with
the use thereof by the Company or such Consolidated Subsidiary, and (ii) the
Company or such Consolidated Subsidiary shall set aside on its books, reserves
deemed by it to be adequate with respect thereto. The Company will promptly
comply and will cause each Subsidiary to promptly comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which could materially and adversely affect the properties,
business, prospects, profits or condition of the Company and its Consolidated
Subsidiaries or would result in any Lien not permitted under Section 5.9.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Consolidated Subsidiary to maintain, preserve and
keep, its properties which are used in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order, ordinary
wear and tear excepted, and from time to time will make all necessary repairs,
replacements and renewals as the Company may determine to be appropriate to the
conduct of its business.
Section 5.5. Nature of Business. Neither the Company nor any Consolidated
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Consolidated Subsidiaries would be substantially changed
from the general nature of the business engaged in by the Company and its
Consolidated Subsidiaries on the date of this Agreement as described in the
Memorandum.
Section 5.6. Capital Maintenance. The Company shall at all times maintain
Consolidated Shareholders Equity in an amount not less than (i) $375,000,000
plus (ii) 75% of the Net Proceeds of all Equity Issuance effected by the Company
or any of its Consolidated Subsidiaries at any time after April 30, 1998
(excluding the Net Proceeds of any Equity Issuance by a Consolidated Subsidiary
to a Consolidated Subsidiary or to the Company).
Section 5.7. Interest Charges Coverage Ratio. The Company shall maintain
the ratio of Adjusted EBIT to Interest Expense of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of the last day
of each fiscal quarter for the period of four consecutive fiscal quarters ending
on such day, at not less than 1.8 to 1.
Section 5.8. Limitations on Debt; Interest Rate Swaps. (a) The Company will
have on the last day of each quarterly fiscal period a ratio of Consolidated
Debt to Consolidated Shareholders' Equity not exceeding 1.5 to 1.
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(b) The Company will not at any time permit the aggregate principal amount
of Priority Debt to exceed 25% of Consolidated Shareholders' Equity; provided
that in the case of any determination of Priority Debt made prior to April 30,
2001, outstanding Indebtedness secured by Real Estate Assets in an aggregate
principal amount of up to $200,000,000 shall be excluded from Priority Debt.
(c) The Company will not at any time permit the Asset Coverage Ratio to be
less than 2 to 1.
(d) The Company will not permit any Consolidated Subsidiary to enter into
any Subsidiary Bank Guaranty, unless the Company shall first furnish to each
Holder of the Notes (i) an unconditional Subsidiary Note Guaranty, (ii) an
Intercreditor Agreement, and (iii) an opinion of counsel to the effect that such
Subsidiary Note Guaranty has been duly authorized, executed and delivered by
such Consolidated Subsidiary and constitutes the legal, valid and binding
obligation of such Consolidated Subsidiary, enforceable against such
Consolidated Subsidiary in accordance with the terms thereof, and covering such
other matters as the Holders of 51% or more of the principal amount of the Notes
at the time outstanding may reasonably request.
(e) The Company will not and will not permit any Consolidated Subsidiary to
enter into any Interest Rate Swap except in the ordinary course of business
pursuant to bona fide hedging transactions and not for speculation.
Section 5.9. Limitation on Liens. The Company will not, and will not permit
any Consolidated Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire any property or assets upon conditional sales agreements or other
title retention devices, except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by
Section 5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Consolidated Subsidiary shall at any time
in good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding for
review shall have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with the making of
loans to customers, worker's compensation, unemployment insurance and other
like laws, warehousemen's and attorneys' liens and statutory landlords'
liens) and Liens to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations,
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surety or appeal bonds or other Liens of like general nature incurred in
the ordinary course of business and not in connection with (i) the
borrowing of money or (ii) obligations pursuant to ERISA, provided in each
case, the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Consolidated Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in the
operation of the business of the Company and its Consolidated Subsidiaries;
(e) Liens securing Indebtedness of a Consolidated Subsidiary to the
Company or to another Wholly-owned Consolidated Subsidiary;
(f) Liens existing as of April 30, 1998 and reflected on Annex B to
Exhibit B hereto;
(g) Liens incurred after the Closing Date given to secure the payment
of the purchase price or cost of construction incurred in connection with
the acquisition of, or improvements to, fixed assets useful and intended to
be used in carrying on the business of the Company or a Consolidated
Subsidiary, including Liens existing on such assets at the time of
acquisition thereof or at the time of acquisition by the Company or a
Consolidated Subsidiary of any business entity then owning such assets,
whether or not such existing Liens were given to secure the payment of the
purchase price of the assets to which they attach so long as they were not
incurred, extended or renewed in contemplation of such acquisition,
provided that (i) the Lien shall attach solely to the assets acquired or
purchased, (ii) the Lien (other than Liens that are existing on such assets
at the time of acquisition thereof and that are permitted as aforesaid)
shall have been created or incurred within 180 days of the date of
acquisition of such fixed assets, except in the case of construction or
acquisition of improvements to real estate, the land on which such
improvements are located shall not be required to have been acquired within
such 180 period; (iii) at the time of acquisition of such assets, the
aggregate amount remaining unpaid on all Indebtedness secured by Liens on
such assets whether or not assumed by the Company or a Consolidated
Subsidiary shall not exceed an amount equal to 80% (or 100% in the case of
Capitalized Leases) of the lesser of the total purchase price or fair
market value at the time of acquisition of such assets (as determined in
good faith by the Board of Directors of the Company), and (iv) all
Indebtedness secured by such Liens shall be permitted hereunder;
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(h) Liens on Real Estate Assets securing Non-Recourse Indebtedness;
provided that such Non-Recourse Indebtedness shall be permitted within the
limitations of Section 5.8; and
(i) Liens securing Indebtedness under Mortgage Repurchase Facilities
or Interest Rate Swaps; provided that (i) the Lien of any such Mortgage
Repurchase Facility shall extend only to the Commercial Mortgage Loans
which are financed or refinanced under such Mortgage Repurchase Facility
and the Related Collateral, (ii) the aggregate advances under such Mortgage
Repurchase Facility shall not exceed 80% of the aggregate unpaid principal
amount of the mortgage loans securing such Mortgage Repurchase Facility,
(iii) the Lien securing any Interest Rate Swap shall extend only to
Commercial Mortgage Loans and Related Collateral, and (iv) all such
Indebtedness shall be permitted within the limitations of Section 5.8.
The Company will not, and will not permit any Consolidated Subsidiary to,
directly or indirectly, create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property which secures Debt outstanding under the Bank Credit Agreement, unless
the Company makes, or causes to be made, effective provision whereby the Notes
will be equally and ratably secured with any and all other obligations thereby
secured; provided that such security is granted pursuant to an agreement
reasonably satisfactory to the Holders of 51% or more of the principal amount of
the Notes at the time outstanding.
Section 5.10. Restricted Payments. The Company will not except as
hereinafter provided:
(a) Declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company);
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock (other than in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto (i) an Event of Default described in
paragraph (a) or (b) of Section 6.1 shall exist, (ii) as the result of an
occurrence of any other Event of Default described in Section 6.1 the Notes
shall have been
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accelerated under Section 6.3 or (iii) the Company would not be in compliance
with the limitations of Section 5.8.
The Company will not declare any regular quarterly dividend which
constitutes a Restricted Payment payable more than 60 days after the date of
declaration thereof; provided that any year-end extra dividend which constitutes
a Restricted Payment shall not be payable more than 120 days after the date of
declaration thereof.
For the purposes of this Section 5.10, the amount of any Restricted Payment
declared, paid or distributed in property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith by the Board of
Directors of the Company) of such property at the time of the making of the
Restricted Payment in question.
Section 5.11. Mergers, Consolidations and Sales of Assets. (a) The Company
will not, and will not permit any Consolidated Subsidiary to, consolidate with
or be a party to a merger with any other Person or dispose of all or a
substantial part of the assets of the Company and its Consolidated Subsidiaries;
provided that:
(1) any Consolidated Subsidiary may merge or consolidate with or into,
sell, lease or otherwise dispose of all or a substantial part of its assets
to the Company or any Wholly-owned Subsidiary so long as (A) (i) in any
merger or consolidation involving the Company, the Company shall be the
surviving or continuing corporation and (ii) in any merger or consolidation
involving a Wholly-owned Subsidiary (and not the Company), a Wholly-owned
Subsidiary shall be the surviving or continuing corporation, and (B) at the
time of such consolidation or merger and immediately after giving effect
thereto, no Default or Event of Default would exist;
(2) the Company may consolidate or merge with or into any other
corporation if (i) the corporation which results from such consolidation or
merger (the "surviving corporation") is organized under the laws of any
state of the United States or the District of Columbia, (ii) the due and
punctual payment of the principal of and premium, if any, and interest on
all of the Notes, according to their tenor, and the due and punctual
performance and observation of all of the covenants in the Notes and this
Agreement, to be performed or observed by the Company are expressly assumed
in writing by the surviving corporation and the surviving corporation shall
furnish to the holders of the Notes an opinion of counsel reasonably
satisfactory to the holder or holders of 51% or more of the principal
amount of the Notes at the time outstanding to the effect that the
instrument of assumption has been duly authorized, executed and delivered
and constitutes the legal, valid and binding contract and agreement of the
surviving corporation enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles, and (iii)
at the time of such consolidation or merger and immediately after giving
effect thereto and to the incurrence of any Debt assumed or incurred in
connection therewith, (x) the aggregate amount of outstanding Consolidated
Debt and Priority Debt of the surviving
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corporation would be permitted by the terms of Section 5.8 as of the last
day of the fiscal quarter immediately preceding the date of such
consolidation or merger, and (y) no Default or Event of Default would
exist; and
(3) the Company and any Consolidated Subsidiary may, sell, transfer or
otherwise dispose of all or any part of its Investments in the ordinary
course of business including, without limitation, in securitization
transactions.
(b) The Company will not permit any Consolidated Subsidiary to issue any
Voting Stock of such Consolidated Subsidiary except to satisfy the rights of
minority shareholders to receive issuances of stock which are non-dilutive to
the Company and/or any Consolidated Subsidiary; provided that the foregoing
restrictions do not apply to issuances to the Company or to a Wholly-owned
Subsidiary or the issuance of directors' qualifying shares.
(c) The Company will not sell, transfer or otherwise dispose of stock or
Debt of any Consolidated Subsidiary (except issuance of directors' qualifying
shares and sales, transfers and dispositions of all the stock of a special
purpose Consolidated Subsidiary for consideration if (x) substantially all the
assets of such Consolidated Subsidiary constitute Investments and (y) the sale,
transfer or disposition of all such Investments for substantially the same
consideration would be permitted by Section 5.11(a)(3)) and will not permit any
ConsolidATED Subsidiary to sell, transfer or otherwise dispose of stock
(otherwise than by purchase or redemption of preferred stock) of a Consolidated
Subsidiary or Debt of any other Consolidated Subsidiary (except issuances to the
Company or to a Wholly-owned Subsidiary or issuance of directors' qualifying
shares); provided that the foregoing restrictions do not apply if the following
conditions are met:
(1) all shares of stock and all Debt of such Consolidated Subsidiary
held by the Company and its Subsidiaries shall be sold simultaneously;
(2) in the opinion of the Company's Board of Directors:
(i) such sale of stock or Debt is in the best interests of the
Company; and
(ii) the consideration paid for such stock and Debt is deemed
adequate and satisfactory.
(3) the Consolidated Subsidiary being disposed of shall not have any
continuing investment in the Company or any Consolidated Subsidiary that is
not being disposed of simultaneously; and
(4) such sale or disposition does not involve a substantial part of
assets of the Company and its Consolidated Subsidiaries.
As used in this Section 5.11, a sale of assets will be deemed a
"substantial part" of the assets of the Company and its Consolidated
Subsidiaries if (i) the book value of such assets sold in
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a given fiscal year (except those sold in the ordinary course of business)
exceeds 15% of the Consolidated Total Assets of the Company and its Consolidated
Subsidiaries determined at the close of the immediately preceding fiscal year,
or (ii) the operations of such assets sold (except those sold in the ordinary
course of business) generated 15% or more of the consolidated operating profit
of the Company and its Consolidated Subsidiaries during the immediately
preceding fiscal year; provided, however, that for purposes of the foregoing
calculation, there shall not be included any assets if a portion of the proceeds
of such assets equal to the aggregate Book Value thereof immediately prior to
such sale was or is applied within 365 days of the date of sale of such assets
to either (A) the acquisition of Investments useful and intended to be used in
the operation of the business of the Company and its Consolidated Subsidiaries
and having a fair market value (as determined in good faith by the Board of
Directors of the Company) at least equal to the Book Value of the assets so
disposed of, or (B) the prepayment at any applicable prepayment premium, on a
pro rata basis, of Senior Funded Debt of the Company. It is understood and
agreed by the Company that any such proceeds paid and applied to the prepayment
of the Notes as hereinabove provided shall be prepaid as and to the extent
provided in Section 2.2.
Section 5.12. Repurchase of Notes. Neither the Company nor any Consolidated
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless an offer has been made to repurchase Notes,
pro rata, from all holders of the Notes at the same time and upon the same
terms. In case the Company repurchases or otherwise acquires any Notes, such
Notes shall immediately thereafter be canceled and no Notes shall be issued in
substitution therefor. Without limiting the foregoing, upon the repurchase or
other acquisition of any Notes by the Company, any Consolidated Subsidiary or
any Affiliate, such Notes shall no longer be outstanding for purposes of any
section of this Agreement relating to the taking by the holders of the Notes of
any actions with respect hereto, including without limitation, Section 6.3,
Section 6.4 and Section 7.1.
Section 5.13. Transactions with Affiliates. The Company will not, and will
not permit any Consolidated Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except transactions in the ordinary course of
and pursuant to the reasonable requirements of the Company's or such
Consolidated Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Consolidated Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.14. Termination of Pension Plans. The Company will not, and will
not permit any Consolidated Subsidiary to, withdraw from any Multiemployer Plan
to which it may hereafter contribute or permit any employee benefit plan
hereafter maintained by it to be terminated if such withdrawal or termination
could result in withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) or the imposition of a Lien on any property of the Company or
any Subsidiary pursuant to Section 4068 of ERISA.
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Section 5.15. Reports and Rights of Inspection. The Company will keep, and
will cause each Consolidated Subsidiary to keep, proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of, or in relation to, the business and affairs of the Company or
such Consolidated Subsidiary, in accordance with GAAP consistently applied
(except for changes disclosed in the financial statements furnished to the
Holders pursuant to this Section 5.15 and concurred in by the independent public
accountants referred to in Section 5.15(b) hereof), and will furnish to each
Institutional Holder of the then outstanding Notes (in duplicate if so specified
below or otherwise requested):
(a) Quarterly Statements. As soon as available and in any event within
45 days after the end of each quarterly fiscal period (except the last) of
each fiscal year, copies of:
(1) consolidated statements of financial position of the Company
and its Consolidated Subsidiaries as of the close of such quarterly
fiscal period, setting forth in comparative form the consolidated
figures for the fiscal year then most recently ended,
(2) consolidated statements of operations of the Company and its
Consolidated Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal period,
in each case setting forth in comparative form the consolidated
figures for the corresponding periods of the preceding fiscal year,
and
(3) consolidated statements of changes in net assets of the
Company and its Consolidated Subsidiaries for the portion of the
fiscal year ending with such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the corresponding period
of the preceding fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within 90
days after the close of each fiscal year, copies of:
(1) consolidated and consolidating statements of financial
position of the Company and its Consolidated Subsidiaries as of the
close of such fiscal year,
(2) consolidated and consolidating statements of operations,
changes in net assets and cash flows, and
(3) consolidated and consolidating statements of investments
setting forth in comparative form the consolidated figures for the
preceding fiscal year (except in the case of such statements of
investments) and in each case all in
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reasonable detail and accompanied by a report thereon of a firm of
independent public accountants of recognized national standing selected by
the Company to the effect that the consolidated financial statements
present fairly, in all material respects, the consolidated financial
position of the Company and its Consolidated Subsidiaries as of the end of
the fiscal year being reported on and the consolidated results of their
operations, changes in net assets and cash flows for said year in
conformity with GAAP and that the examination of such accountants in
connection with such financial statements has been conducted in accordance
with generally accepted auditing standards and included such tests of the
accounting records and such other auditing procedures as said accountants
deemed necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Consolidated Subsidiary and any management letter
received from such accountants;
(d) SEC and Other Reports. Promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed by the Company
with any securities exchange or the Securities and Exchange Commission or
any successor agency, and copies of any orders in any proceedings to which
the Company or any Subsidiary is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company or any of
its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan hereafter
maintained by the Company or any ERISA Affiliate; (ii) the institution of
any steps by the Company, any ERISA Affiliate, the PBGC or any other person
to terminate any such Plan; (iii) the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any such Plan; (iv) a
non-exempt "prohibited transaction" within the meaning of Section 406 of
ERISA in connection with any such Plan; (v) any material contingent
liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability hereafter existing; or (vi) the taking of
any action by, or the threatening of the taking of any action by, the
Internal Revenue Service, the Department of Labor or the PBGC with respect
to any of the foregoing;
(f) Officer's Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that such officer has reviewed the provisions of this
Agreement and setting forth: (i) the information and computations (in
sufficient detail) required in order to establish whether the Company was
in compliance with the requirements of Section 5.6 through Section 5.11 at
the end of the period covered by the financial statements then being
furnished and (ii) whether there existed as of the date of such financial
statements and whether, to the best of such officer's knowledge, there
exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default
and, if any such condition or event exists
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on the date of the certificate, specifying the nature and period of
existence thereof and the action the Company is taking and proposes to take
with respect thereto;
(g) Accountant's Certificates. Within the period provided in paragraph
(b) above, a certificate of the accountants who render an opinion with
respect to such financial statements, stating that they have reviewed this
Agreement and stating further whether, in making their audit, such
accountants have become aware of any Default or Event of Default under any
of the terms or provisions of this Agreement insofar as any such terms or
provisions pertain to or involve accounting matters or determinations, and
if any such condition or event then exists, specifying the nature and
period of existence thereof; and
(h) Requested Information. With reasonable promptness, such other data
and information as any Holder or any such Institutional Holder may
reasonably request.
Without limiting the foregoing, the Company will permit each Institutional
Holder of the then outstanding Notes (or such Persons as such Holder may
designate), to visit and inspect, under the Company's guidance, any of the
properties of the Company or any Consolidated Subsidiary, to examine all of
their books of account, records, reports and other papers, to make copies and
extracts therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with such Holder the finances and affairs of the Company and its
Consolidated Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. Any visitation shall be at the sole expense of such
Institutional Holder, unless a Default or Event of Default shall have occurred
and be continuing or the Holder of any Note or of any other evidence of
Indebtedness of the Company or any Consolidated Subsidiary gives any written
notice or takes any other action with respect to a claimed default, in which
case, any such visitation or inspection shall be at the sole expense of the
Company.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as such term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five Business Days; or
(b) Default shall occur in the making of any payment of the principal
of any Note or premium, if any, thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
(c) Default shall be made in the payment when due (whether by lapse of
time, by declaration, by call for redemption or otherwise) of the principal
of or interest on any Consolidated Debt (other than the Notes) of the
Company or any Consolidated
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Subsidiary having an aggregate unpaid principal amount in excess of
$5,000,000 and such default shall continue beyond the period of grace, if
any, allowed with respect thereto; or
(d) Default or the happening of any event shall occur under any
indenture, agreement or other instrument under which Consolidated Debt of
the Company or any Consolidated Subsidiary having an aggregate unpaid
principal amount in excess of $5,000,000 may be issued and such default or
event shall continue for a period of time sufficient to permit the
acceleration of the maturity of such Consolidated Debt or the Company or a
Consolidated Subsidiary has become obligated to purchase such Consolidated
Debt or one or more Persons have the right to require the Company or any
Consolidated Subsidiary to purchase such Consolidated Debt; or
(e) Default shall occur in the observance or performance of any
covenant or agreement contained in Section 5.6 through Section 5.11 and
such default shall continue for more than five Business Days; or
(f) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 days after the
earlier of (i) the day on which a Senior Financial Officer first obtains
knowledge of such default, or (ii) the day on which written notice thereof
is given to the Company by the Holder of any Note; or
(g) Any representation or warranty made by the Company herein, or made
by the Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and delivery of the Notes
or furnished by the Company pursuant hereto, is untrue in any material
respect as of the date of the issuance or making thereof; or
(h) Final judgment or final judgments for the payment of money
aggregating in excess of $5,000,000 is or are outstanding against the
Company or any Material Subsidiary or against any property or assets of the
Company or any Material Subsidiary and any such final judgment or final
judgments have remained unpaid, unvacated, unbonded or unstayed by appeal
or otherwise for a period of 60 days from the date of its entry; or
(i) A custodian, liquidator, receiver or similar official is appointed
for the Company or any Material Subsidiary or for the major part of its
property and is not discharged within 60 days after such appointment; or
(j) The Company or any Material Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any Material
Subsidiary applies for or consents to the appointment of a custodian,
liquidator, trustee or receiver for the Company or such Material Subsidiary
or for the major part of its property; or
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(k) Bankruptcy, reorganization, arrangement or insolvency proceedings,
or other proceedings for relief under any bankruptcy or similar law or laws
for the relief of debtors, are instituted by or against the Company or any
Material Subsidiary and, if instituted against the Company or such Material
Subsidiary, are consented to or are not dismissed within 60 days after such
institution.
Section 6.2. Notice to Holders. When any Event of Default described in the
foregoing Section 6.1 has occurred, or if the holder of any Note or of any other
evidence of Debt of the Company gives any notice or takes any other action with
respect to a claimed default, the Company agrees to give notice within three
Business Days of such event to all holders of the Notes then outstanding.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a) or (b) of Section 6.1 has happened and is continuing,
any Holder of any Note may declare the entire principal and all interest accrued
on such Holder's Notes to be and such Notes shall thereupon become, forthwith
due and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby waived. When any Event of Default described in
paragraphs (a) through (i), inclusive, of Section 6.1 has happened and is
continuing, the Holder or Holders of 51% or more of the principal amount of
Notes at the time outstanding may, by notice to the Company, declare the entire
principal and all interest accrued on all Notes to be, and all Notes shall
thereupon become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in paragraph (j) or (k) of Section 6.1 has
occurred, then all outstanDing Notes shall immediately become due and payable
without presentment, demand or notice of any kind. Upon any Note becoming due
and payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the Holder of such Note the entire principal and interest
accrued on such Note and (to the extent permitted by applicable law) an amount
as liquidated damages for the loss of the bargain evidenced hereby (and not as a
penalty) equal to the Make-Whole Amount, determined as of the date on which such
Note shall so become due and payable. No course of dealing on the part of the
Holder or Holders of any Notes nor any delay or failure on the part of any
Holder of Notes to exercise any right shall operate as a waiver of such right or
otherwise prejudice such Holder's rights, powers and remedies. The Company
further agrees, to the extent permitted by law, to pay to the Holder or Holders
of the Notes all costs and expenses incurred by them in the collection of any
Notes upon any default hereunder or thereon, including reasonable compensation
to such Holder's or Holders' attorneys for all services rendered in connection
therewith.
Section 6.4. Rescission of Acceleration. The provisions of Section 6.3 are
subject to the condition that if the principal of and accrued interest on all or
any outstanding Notes have been declared immediately due and payable by reason
of the occurrence of any Event of Default described in paragraphs (a) through
(i), inclusive, of Section 6.1, the holders of 66-2/3% in aggregate principal
amount of the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
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(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under Section 6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to Section 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or condition
of this Agreement may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Company has obtained the consent in
writing of the Holders of at least 66-2/3% in aggregate principal amount of
outstanding Notes; provided that without the written consent of the Holders of
all of the Notes then outstanding, no such amendment or waiver shall be
effective (i) which will change the time of payment of the principal of or the
interest on any Note or change the principal amount thereof or change the rate
of interest thereon or the method of computation of the Make-Whole Amount, or
(ii) which will change any of the provisions with respect to optional
prepayments or (iii) which will change the percentage of holders of the Notes
required to consent to any such amendment or waiver of any of the provisions of
this Section 7 or Section 6.
Section 7.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each Holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. The Company will not, directly or indirectly, pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Holder of Notes as consideration for or as an
inducement to entering into by any holder of Notes of any waiver or amendment of
any of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently paid on the same terms, ratably to each Holder of
Notes then outstanding even if such Holder did not consent to such waiver or
amendment.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or waiver
shall apply equally to all of the Holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company, whether or not
such Note shall have been
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marked to indicate such amendment or waiver. No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or impair any
right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and the
following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Adjusted EBIT" means, for any period with respect to the Company and its
Consolidated Subsidiaries on a consolidated basis, income after deduction of all
expenses and other proper charges other than taxes and Interest Expense, all as
determined in accordance with GAAP.
"Affiliate" shall mean any Person (other than a Consolidated Subsidiary)
which (i) directly or indirectly, or through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of which
is beneficially owned by the Company or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Asset Coverage Ratio" shall mean on a consolidated basis for the Company
and its Consolidated Subsidiaries the ratio which the value of total assets,
less all liabilities and indebtedness not represented by senior securities (all
as determined pursuant to the Investment Company Act and any orders of the
Securities and Exchange Commission issued to the Company thereunder), bears to
the aggregate amount of senior securities representing indebtedness of the
Company and its Consolidated Subsidiaries.
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement between the Banks and the Company dated as of June 4, 1998, as amended
from time to time, pursuant to which the Banks have extended credit to the
Company, and any renewals, extensions or replacements thereof.
"Banks" means the banks or financial institutions which are party to the
Bank Credit Agreement from time to time.
"Business Day" shall mean (a) for the purposes of computation of the
Make-Whole Amount only, any day of the week (excluding Saturday or Sunday) on
which banks in New York, New York are not obligated by law to close, and (b) for
the purposes of any other provision of this Agreement any day of the week
(excluding Saturday or Sunday) on which banks in Washington, D.C. and New York,
New York are not obligated by law to close.
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"Book Value" means, with respect to any asset at any time, the cost
thereof as the same would be reflected on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as at such time prepared in accordance
with GAAP.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"Code" shall mean the Internal Revenue Code of 1986, as amended and the
rules and regulations promulgated thereunder.
"Commercial Mortgage Loan" means a loan secured by a Lien on improved
real estate used for commercial purposes.
"Consolidated Debt" shall mean as of the date of any determination
thereof, the aggregate unpaid amount of all Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"Consolidated Shareholders' Equity" as of the date of determination
thereof, shall mean the total shareholders' equity of the Company and its
Consolidated Subsidiaries as the same would appear on a consolidated balance
sheet of the Company and its Consolidated Subsidiaries prepared as of such date
in accordance with GAAP, including, in any case, common stock of the Company
(valued at cost) held in the Allied Capital Corporation Deferred Compensation
Trust and Permitted Preferred Stock of the Company and its Consolidated
Subsidiaries but excluding any stock, common or preferred, not both issued and
outstanding.
"Consolidated Subsidiary" shall mean any Subsidiary which is required to
be consolidated on financial statements of the Company prepared in accordance
with GAAP.
"Consolidated Total Assets" shall mean total assets of the Company and
its Consolidated Subsidiaries on a consolidated basis.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
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26
(c) its Capitalized Rentals;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Equity Issuance" means any issuance or sale by a Person of its capital
stock or other similar equity security, or any warrants, options or similar
rights to acquire, or securities convertible into or exchangeable for, such
capital stock or other similar equity security.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in Section 6.1.
"GAAP" shall mean generally accepted accounting principles at the time in
the United States.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the
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27
owner of such Indebtedness or obligation of the ability of the primary obligor
to make payment of the Indebtedness or obligation, or (iv) otherwise to assure
the owner of the Indebtedness or obligation of the primary obligor against loss
in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for borrowed money shall be
deemed to be Indebtedness equal to the principal amount of such Indebtedness for
borrowed money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Holder" shall mean any Person which is, at the time of reference, the
registered Holder of any Note.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capitalized Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of unreimbursed drawings under
letters of credit or instruments serving a similar function issued or
accepted for its account by banks and other financial institutions
(whether or not representing obligations for borrowed money);
(f) Interest Rate Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
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"Institutional Holder" shall mean any insurance company, bank, savings and
loan association, trust company, investment company, charitable foundation,
employee benefit plan (as defined in ERISA) or other institutional investor or
financial institution which is not principally engaged, or as one of its
important activities, in the business of making small business investments of
the type made by the Company.
"Intercreditor Agreement" means an intercreditor agreement pursuant to
which the Banks and the Holders of the Notes have agreed to share payments made
by any Consolidated Subsidiary under a Subsidiary Note Guaranty or a Subsidiary
Bank Guaranty on an equal and ratable basis.
"Interest Expense" means, with respect to a Person and for any period, the
total consolidated interest expense (including, without limitation, capitalized
interest expense and interest expense attributable to Capitalized Leases) of
such Person and in any event shall include all interest expense with respect to
any Debt in respect of which such Person is wholly or partially liable.
"Interest Rate Swap" means a currency swap, an interest rate swap or other
currency or interest rate hedge entered into by the Company or a Consolidated
Subsidiary. For the purposes of this Agreement, the amount of the obligation
under any Interest Rate Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Interest Rate Swap had terminated at the end
of such fiscal quarter, and in making such determination, if any agreement
relating to such Interest Rate Swap provides for the netting of amounts payable
by and to such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so determined.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and all rules and regulations promulgated thereunder.
"Investments" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, Indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise.
"Lien" shall mean any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Company or any Consolidated Subsidiary shall be deemed to be the
owner of any property which it has
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acquired or holds subject to a conditional sale agreement, Capitalized Lease or
other arrangement pursuant to which title to the property has been retained by
or vested in some other Person for security purposes and such retention or
vesting shall constitute a Lien.
"Make-Whole Amount" means, with respect to a Note of any series, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of the Note of such
series over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:
"Called Principal" means, with respect to a Note of any
Series, the principal of such Note that is to be prepaid pursuant to
Section 2.2 or has become or is declared to be immediately due and
payable pursuant to Section 6.3, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of a Note of any Series, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal from
their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial
practice and at a discount factor (applied on the same periodic basis
as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of a Note of any Series, 0.50% over the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York City
time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as "PX-1"
of the Bloomberg Financial Markets Services Screen (or such other
display as may replace PX-1 of the Bloomberg Financial Markets Services
Screen) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable
(including by way of interpolation), the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury xxxx
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the actively traded
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
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"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of a Note of any Series, all payments of such Called
Principal and interest thereon that would be due after the Settlement
Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes of such Series, then the amount
of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to
be paid on such Settlement Date pursuant to or Section 2.2 or
Section 6.3.
"Settlement Date" means, with respect to the Called Principal
of a Note of any Series, the date on which such Called Principal is to
be prepaid pursuant to Section 2.2 or has become or is declared to be
immediately due and payable pursuant to Section 6.3, as the context
requires.
"Material Subsidiary" shall mean any Consolidated Subsidiary which has
total assets having a value (determined in accordance with the market valuation
method pursuant to GAAP) greater than or equal to $20,000,000.
"Memorandum" is described in paragraph 5 of Exhibit B hereto.
"Mortgage Repurchase Facility" means financing agreements providing for
(i) the pledge and assignment of Commercial Mortgage Loans owned by the Company
and its Consolidated Subsidiaries as security for loans to the Company and its
Consolidated Subsidiaries, or (ii) the sale of such Commercial Mortgage Loans to
a commercial lender pursuant to an agreement under which such loans shall be
repurchased by the Company or a Consolidated Subsidiary at a future date.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Proceeds" means, with respect to an Equity Issuance by a Person,
the aggregate amount of all cash received by such Person in respect of such
Equity Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.
"Non-Recourse Indebtedness" means Indebtedness secured by Real Estate
Assets if recourse for the payment of such Indebtedness is limited to such Real
Estate Assets.
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"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Preferred Stock" means (i) preferred stock that is issued
from time to time by a Subsidiary to the United States Small Business
Administration having an aggregate stated value not exceeding $7,000,000 at any
one time outstanding or (ii) preferred stock that is issued from time to time by
a Subsidiary for the purpose of qualifying such Subsidiary as a real estate
investment trust under Sections 856 through 860 of the Code and having an
aggregate stated value not exceeding $500,000 at any one time outstanding,
provided that in any event Permitted Preferred Stock shall not include any
Voting Stock.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Debt" means the sum of (i) all Debt of the Company and its
Consolidated Subsidiaries secured by a Lien, and (ii) all unsecured Debt of
Consolidated Subsidiaries (excluding in each case, Debt owing to the Company or
another Consolidated Subsidiary).
"Purchaser" shall have the meaning set forth in Section 1.1.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Real Estate" means fee ownership or co-ownership of, or leaseholds of,
land or improvements thereon.
"Real Estate Assets" means (i) Real Estate securing Investments made in
the ordinary course of business, (ii) Commercial Mortgage Loans and (iii)
Related Collateral.
"Related Collateral" means, in respect of any Commercial Mortgage Loan:
(i) any and all documents, instruments, agreements, records or other collateral
of any kind evidencing, securing, guaranteeing or otherwise relating to such
Commercial Mortgage Loan, including without limitation all promissory notes or
other negotiable instruments, mortgages, deeds of trust or similar instruments,
assignments of leases or rents or other collateral assignments, financing
statements, guaranties, indemnities, servicing agreements, servicing records,
files, surveys, certificates, affidavits, title abstracts, title insurance
policies and commitments, correspondence, opinions, appraisals, closing
documents, computer programs, computer storage media, data bases, accounting
records and other books and records relating thereto, (ii) any and all mortgage
guaranties and insurance (issued by governmental agencies or otherwise) and
mortgage insurance certificates or other documents evidencing such mortgage
guaranties or insurance relating to any such Commercial
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Mortgage Loan and all claims and payments thereunder, (iii) any and all other
insurance policies and insurance proceeds relating to such Commercial Mortgage
Loan or the related real property, (iv) all "general intangibles" as defined in
the Uniform Commercial Code relating to or constituting any and all of the
foregoing, and (v) any and all replacements, substitutions or distributions on
or proceeds of any and all of the foregoing.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or any Consolidated Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive of
any amounts required to be paid by the Company or any Consolidated Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"SBA" shall mean the United States Small Business Administration.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Senior Funded Debt" means any Debt of the Company which is classified
as long term debt in accordance with GAAP other than Subordinated Debt.
"Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under the Notes).
"Subsidiary" with respect to any Person shall mean (i) any corporation,
partnership, association or other business entity at least 50% of the
outstanding shares of Voting Stock or similar interests of which are owned,
directly or indirectly, by such Person (including, without limitation, any
limited partnership in which such Person, directly or indirectly, shall have at
least a 50% vote on matters as to which limited partners may vote), (ii) any
general or limited partnership of which such Person shall be a general partner
or as to which such Person otherwise shall have unlimited liability, (iii) any
general or limited partnership a general partner of which can be changed or
removed by such Person (other than removals that could be accomplished by
voluntary withdrawal of such general partner only), or (iv) any general or
limited partnership in which (x) the amount represented by such Person's capital
account shall be equal to at least 50% of the aggregate amount represented by
the total of all partners' capital accounts or (y) such Person shall be
allocated at least 50% of the
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profit (or loss) or distributable cash of the partnership; provided, however,
that the term "Subsidiary", when used in this Agreement without reference to any
particular Person, shall mean a Subsidiary of the Company.
"Subsidiary Bank Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the Bank
Credit Agreement.
"Subsidiary Note Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the Notes.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares and Permitted Preferred Stock)
shall be owned by the Company and/or one or more of its Wholly-owned
Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at the
principal office of the Company a register for the registration and transfer of
the Notes (hereinafter called the "Note Register") and the Company will register
or transfer or cause to be registered or transferred as hereinafter provided any
Note issued pursuant to this Agreement.
At any time and from time to time the registered holder of any Note which
has been duly registered as hereinabove provided may transfer such Note to
another Institutional Holder upon surrender thereof at the principal office of
the Company duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing.
The Person in whose name any registered Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or
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on account of the principal, premium, if any, and interest on any registered
Note shall be made to or upon the written order of such registered holder.
Section 9.2. Exchange of Notes. At any time and from time to time, upon
not less than ten days' notice to that effect given by the holder of any Note
initially delivered or of any Note substituted therefor pursuant to Section 9.1,
this Section 9.2 or Section 9.3, and, upon surrender of such Note at its office,
the Company will deliver in exchange therefor, without expense to such holder,
except as set forth below, a Note for the same aggregate principal amount as the
then unpaid principal amount of the Note so surrendered, or Notes in the
denomination of $500,000 or any amount in excess thereof as such holder shall
specify, dated as of the date to which interest has been paid on the Note so
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, registered in the name of such one
or more Institutional Holders as may be designated by such holder, and otherwise
of the same form and tenor as the Notes so surrendered for exchange. The Company
may require the payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent Institutional Holder is the
owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of such Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of the Purchasers' reasonable out-of-pocket expenses in connection
with the preparation, execution and delivery of this Agreement and the
transactions contemplated hereby, including but not limited to the reasonable
charges and disbursements of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, duplicating and printing costs and charges for shipping the Notes,
adequately insured to each Purchaser's home office or at such other place as
such Purchaser may designate, the cost of obtaining a Private Placement Number
for the Notes from Standard & Poor's Corporation, and all such reasonable
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof, including, without limitation, any amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save each Purchaser harmless
against any and all liability with respect to stamp and other taxes, if any,
which may be payable or which may be determined to be payable in connection with
the execution and delivery of this Agreement or the Notes, (other than as
specified in the last
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sentence of Section 9.2) whether or not any Notes are then outstanding. The
Company agrees to protect and indemnify each Purchaser against any liability for
any and all brokerage fees and commissions payable or claimed to be payable to
any Person in connection with the transactions contemplated by this Agreement.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay
or failure on the part of the holder of any Note in the exercise of any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the holder
of any Note are cumulative to, and are not exclusive of, any rights or remedies
any such holder would otherwise have.
Section 9.6. Notices. All communications provided for hereunder shall be
in writing and, if to a Holder, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication (with a
confirming copy of any such facsimile communication sent via overnight courier
service), in each case addressed to such Holder at its address appearing on
Schedule I to this Agreement or such other address as such Holder may designate
to the Company in writing, and if to the Company delivered or mailed by
registered or certified mail or overnight air courier, or by facsimile
communication, to the Company at 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx,
X.X. 00000, Attention: Xxxx X. Xxxxxxx or to such other address as the Company
may in writing designate to the Holders; provided, however, that a notice to a
Holder by overnight air courier shall only be effective if delivered to such
Holder at a street address designated for such purpose in Schedule I, and a
notice to you by facsimile communication shall only be effective if made by
confirmed transmission to such Holder at a telephone number designated for such
purpose in Schedule I, or, in either case, as such Holder may designate to the
Company in writing.
Section 9.7. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
each Purchaser and to the benefit of its successors and assigns, including each
successive Holder.
Section 9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes and shall terminate upon payment in full of all amounts due under the
Notes and this Agreement.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
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Section 9.10. Governing Law. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with New York law.
Section 9.11. Captions. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
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The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
ALLIED CAPITAL CORPORATION
By /s/ Xxx X. XxXxxx
---------------------------
Its Chief Financial Officer
38
Accepted as of the first date written above:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Xxxx X. Xxxxxxxxxx Xx.
------------------------------------------
Name: XXXX X. XXXXXXXXXX XX.
Title: MANAGING DIRECTOR
39
Accepted as of the first date written above:
SUNAMERICA LIFE INSURANCE COMPANY
By /s/ Xxxxxxxxxxx X. Xxxx
------------------------------
Its Xxxxxxxxxxx X. Xxxx
Authorized Agent
40
Accepted as of the first date written above:
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By /s/ Xxxxxxxxxxx X. Xxxx
---------------------------
Its Xxxxxxxxxxx X. Xxxx
Authorized Agent
41
Accepted as of the first date written above.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By /s/ Xxxxxx X. Xxxxx
-------------------------------------
Its: Xxxxxx X. Xxxxx,
Second Vice President
42
Accepted as of the first date written above.
ALLIED LIFE INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By /s/ Xxxxxx X. Xxxxx
-------------------------------------
Its Xxxxxx X. Xxxxx,
Second Vice President
43
Accepted as of the first date written above.
LINCOLN NATIONAL HEALTH & CASUALTY
INSURANCE COMPANY
BY: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By /s/ Xxxxxx X. Xxxxx
____________________________________
Its Xxxxxx X. Xxxxx, Second Vice President
44
Accepted as of the first date written above.
LINCOLN NATIONAL REINSURANCE
COMPANY (BARBADOS) LTD.
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Its: Xxxxxx X. Xxxxx, Second Vice President
45
Accepted as of the first date written above.
SONS OF NORWAY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By /s/ Xxxxxx X. Xxxxx
----------------------------------------
Its Xxxxxx X. Xxxxx,
Second Vice President
46
Accepted as of the first date written above:
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Name: XXXXXXXX X. XXXXXX
By /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: XXXXX X. XXXXXXX
Authorized Signatures
47
Accepted as of the first date written above:
CM LIFE INSURANCE COMPANY
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
48
Accepted as of the first date written above:
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
49
Accepted as of the first date written above.
XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY
By /s/ Xxxxxxx X. Xxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx Xxxxx
Title: Senior Investment Officer
50
Accepted as of the first date written above.
XXXX XXXXXXX VARIABLE LIFE INSURANCE
COMPANY
By /s/ Xxxxxxx X. Xxxxx Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx Xxxxx
Title: Authorized Officer
51
Accepted as of the first date written above.
INVESTORS PARTNER LIFE INSURANCE
COMPANY
By Xxxxxxx X. Xxxxx Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx Xxxxx
Title: Senior Investment Officer
52
Accepted as of the first date written above.
XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY, on behalf of the Xxxx Xxxxxxx
Separate Account Trust No. 86
By /s/ Xxxxxxx X. Xxxxx Xxxxx
-------------------------------
Its Senior Investment Officer
53
Accepted as of the first date written above.
SIGNATURE 1A (CAYMAN), LTD.
By: Xxxx Xxxxxxx Mutual Life Insurance
Company, Portfolio Advisor
By: /s/ Xxxxxxx X. Xxxxx Xxxxx
----------------------------------------
Title: Senior Investment Officer
54
Accepted as of the first date written above.
GE CAPITAL EDISON LIFE INSURANCE
COMPANY
By /s/ Xxxxxxx X. Xxxxxx
___________________________________
Its: Xxxxxxx X. Xxxxxx
Vice President & Investment Officer
55
Accepted as of the first date written above.
GREAT NORTHERN INSURED ANNUITY
CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Xxxxxxx X. Xxxxxx
Vice President & Investment Officer
56
Accepted as of the first date written above.
NATIONWIDE LIFE AND ANNUITY INSURANCE
COMPANY
By /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: XXXX X. XXXXXXXXXX
Title: INVESTMENT OFFICER
57
Accepted as of the first date written above:
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ XXXX X. XXXXXXXXXX
-------------------------------
Name: XXXX X. XXXXXXXXXX
Title: INVESTMENT OFFICER
58
Accepted as of the first date written above.
AMERICAN GENERAL ANNUITY INSURANCE
COMPANY
AMERICAN GENERAL LIFE INSURANCE
COMPANY
THE OLD LINE LIFE INSURANCE COMPANY
OF AMERICA
AMERICAN GENERAL LIFE INSURANCE
COMPANY OF NEW YORK
By /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Investment Officer
59
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASERS PURCHASED
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Securities Investment Division
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. #00-0000000
SCHEDULE I
(to Note Agreement)
60
ALLIED CAPITAL CORPORATION
7.055% Senior Note, Series A
Due May 30, 2003
No. RA-
________________, ______
$
ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to
or registered assigns
on the thirtieth day of May, 2003
the principal amount of
DOLLARS ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 7.055% per annum from the date hereof until maturity, payable
semiannually on the thirtieth day of each May and November in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 9.055% per annum after the due date, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the
United States of America which at the time of payment shall be legal tender for
the payment of public and private debts.
This Note is one of the 7.055% Senior Notes, Series A, due May 30, 2003
(the "Series A Notes") of the Company in the aggregate principal amount of
$140,000,000 issued or to be issued together with the $30,000,000 aggregate
principal amount of 7.168% Senior Notes, Series B, due May 30, 2005 (the "Series
B Notes") and the $10,000,000 aggregate principal amount of 9.530% Senior Notes,
Series C, due May 30, 2005 (the "Series C Notes" and collectively with the
Series A Notes and the Series B Notes, the "Notes") of the Company, under and
pursuant to the terms and provisions of the Note Agreement, dated as of April
30, 1998 (the "Note Agreement"), entered into by the Company with the Purchasers
named therein and this Series A Note and the holder hereof are entitled with the
holders of all other Notes outstanding under the Note Agreement to all the
benefits provided for thereby or referred to therein to the extent provided in
the Note Agreement. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
EXHIBIT A-1
(to Note Agreement)
61
This Series A Note and the other Series A Notes outstanding under the
Note Agreement may be declared due prior to their expressed maturity dates in
the events, on the terms and in the manner and amounts as provided in the Note
Agreement.
The Series A Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Note Agreement.
This Series A Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series A Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and interest
on this Series A Note shall be made only to or upon the order in writing of the
registered holder.
ALLIED CAPITAL CORPORATION
By________________________
Its
A-1-2
62
ALLIED CAPITAL CORPORATION
7.168% Senior Note, Series B
Due May 30, 2005
No. RB-
____________, ____
$
ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to
or registered assigns
on the thirtieth day of May, 2005
the principal amount of
DOLLARS ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 7.168% per annum from the date hereof until maturity, payable
semiannually on the thirtieth day of each May and November in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 9.168% per annum after the due date, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the
United States of America which at the time of payment shall be legal tender for
the payment of public and private debts.
This Note is one of the 7.168% Senior Notes, Series B, due May 30, 2005
(the "Series B Notes") of the Company in the aggregate principal amount of
$30,000,000 issued or to be issued together with the $140,000,000 aggregate
principal amount of 7.055% Senior Notes, Series A, due May 30, 2003 (the "Series
A Notes") and the $10,000,000 aggregate principal amount of the 9.530% Senior
Notes, Series C, due May 30, 2005 (the "Series C Notes" and collectively with
the Series A Notes and Series B Notes, the "Notes") of the Company, under and
pursuant to the terms and provisions of the Note Agreement, dated as of April
30, 1998 (the "Note Agreement"), entered into by the Company with the Purchasers
named therein and this Series B Note and the holder hereof are entitled with the
holders of all other Notes outstanding under the Note Agreement to all the
benefits provided for thereby or referred to therein to the extent provided in
the Note Agreement. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
EXHIBIT A-2
(to Note Agreement)
63
This Series B Note and the other Series B Notes outstanding under the
Note Agreement may be declared due prior to their expressed maturity dates all
in the events, on the terms and in the manner and amounts as provided in the
Note Agreement.
The Series B Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Note Agreement.
This Series B Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series B Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and interest
on this Series B Note shall be made only to or upon the order in writing of the
registered holder.
ALLIED CAPITAL CORPORATION
By________________________
Its
A-2-2
64
ALLIED CAPITAL CORPORATION
9.530% Senior Note, Series C
Due May 30, 2005
No. RC-
____________, ____
$
ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to
or registered assigns
on the thirtieth day of May, 2005
the principal amount of
DOLLARS ($____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 9.530% per annum from the date hereof until maturity, payable
semiannually on the thirtieth day of each May and November in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 11.530% per annum after the due date, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the
United States of America which at the time of payment shall be legal tender for
the payment of public and private debts.
This Note is one of the 9.530% Senior Notes, Series C, due May 30, 2005
(the "Series C Notes") of the Company in the aggregate principal amount of
$10,000,000 issued or to be issued together with the $140,000,000 aggregate
principal amount of 7.055% Senior Notes, Series A, due May 30, 2003 (the "Series
A Notes") and the $30,000,000 aggregate principal amount of the 7.168% Senior
Notes, Series B, due May 30, 2005 (the "Series B Notes" and collectively with
the Series A Notes and Series C Notes, the "Notes") of the Company, under and
pursuant to the terms and provisions of the Note Agreement, dated as of April
30, 1998 (the "Note Agreement"), entered into by the Company with the Purchasers
named therein and this Series C Note and the holder hereof are entitled with the
holders of all other Notes outstanding under the Note Agreement to all the
benefits provided for thereby or referred to therein to the extent provided in
the Note Agreement. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
EXHIBIT A-3
(to Note Agreement)
65
This Series C Note and the other Series C Notes outstanding under the
Note Agreement may be declared due prior to their expressed maturity dates all
in the events, on the terms and in the manner and amounts as provided in the
Note Agreement.
The Series C Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Note Agreement.
This Series C Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series C Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and interest
on this Series C Note shall be made only to or upon the order in writing of the
registered holder.
ALLIED CAPITAL CORPORATION
By________________________
Its
A-3-2
66
REPRESENTATIONS AND WARRANTIES
The Company represent and warrant to each Purchaser as follows:
1. Subsidiaries. Annex A attached hereto states the name of each of the
Company's Subsidiaries, its jurisdiction of incorporation and the percentage of
its Voting Stock owned by the Company and/or its Subsidiaries. Those
Subsidiaries listed in Section 1 of said Annex A constitute Consolidated
Subsidiaries. The Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and non-assessable. The Company is a Business Development Company
under the Investment Company Act.
2. Corporate Organization and Authority. The Company and each
Consolidated Subsidiary,
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on
its business as now conducted and as presently proposed to be
conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary.
3. Financial Statements. (a) The consolidated balance sheet at December
31, 1997 and 1996 and the consolidated statements of operations, changes in net
assets and cash flows of the Company for three years ended December 31, 1997,
each accompanied by a report thereon containing an opinion unqualified as to
scope limitations imposed by the Company and otherwise without qualification
except as therein noted, by Xxxxxx Xxxxxxxx LLP, have been prepared in
accordance with GAAP consistently applied except as therein noted, are correct
and complete and present fairly the financial position of the Company and its
Consolidated Subsidiaries as of such dates and the results of their operations
for such periods. The unaudited consolidated statement of financial position of
the Company and its Consolidated Subsidiaries as of March 31, 1998, and the
unaudited statements of operations and changes in net assets for the three month
period ended on said date prepared by the Company have been prepared in
accordance with GAAP consistently applied, are correct and complete and present
fairly the financial position of the Company and its Consolidated Subsidiaries
as of such date and the results of their operations and changes in their
financial position for such period.
(b) Since December 31, 1997, there has been no change in the condition,
financial or otherwise, of the Company and its Consolidated Subsidiaries as
shown on the consolidated
EXHIBIT B
(to Note Agreement)
67
balance sheet as of such date except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.
4. Debt. Annex B attached hereto correctly describes all Debt
(including, without limitation, Debt held by the SBA) and Capitalized Leases of
the Company and its Consolidated Subsidiaries outstanding on April 30, 1998
since which date there has been no material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Indebtedness of
the Company or its Consolidated Subsidiaries.
5. Full Disclosure. The Company, through its agent, NationsBanc
Xxxxxxxxxx Securities LLP, has delivered to each of you a copy of a Private
Placement Memorandum, dated April, 1998 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in this Agreement, the
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial statements described in paragraph 3 hereof, taken as a whole,
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or in one of the documents, certificates or other writings identified
therein, or in the financial statements described in paragraph 3 hereof, since
December 31, 1997, there has been no change in the financial condition,
operations, business, properties or prospects of the Company or any Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to materially affect adversely the properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole. There is no fact known to the Company that could
reasonably be expected to materially affect adversely the properties, business,
prospects, profits or condition (financial or otherwise) of the Company and its
Subsidiaries that has not been set forth herein or in the Memorandum or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Company specifically for use in connection with the transactions
contemplated hereby, except matters of an economic or regulatory nature
generally affecting businesses of the type engaged in by the Company.
6. Pending Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Consolidated Subsidiary in any court or before any governmental
authority or arbitration board or tribunal which involve the possibility of
materially and adversely affecting the properties, business, profits or
condition (financial or otherwise) of the Company and its Consolidated
Subsidiaries, taken as a whole.
7. Title to Properties. The Company and each Consolidated Subsidiary
has good and marketable title in fee simple (or its equivalent under applicable
law) to all material parcels of real property and has good title to all the
other material items of property it purports to own, including that reflected in
the most recent balance sheet referred to in paragraph 3 hereof, except as sold
or otherwise disposed of in the ordinary course of
B-2
68
business and except for Liens permitted by the Agreement. The Company and each
Consolidated Subsidiary has the right to, and does, enjoy peaceful and
undisturbed possession under all leases to which it is a party or under which it
is a party. All such leases are valid, subsisting and in full force and effect,
none of such leases is in default and no event has occurred and is continuing,
and no condition exists which, after the passage of time or giving of notice or
both could become an event of default under any such lease.
8. Patents and Trademarks. The Company and each Consolidated Subsidiary
owns or possesses all the patents, trademarks, trade names, service marks,
copyrights, licenses, permits, registrations, consents (governmental or other)
and rights with respect to the foregoing necessary for the present and planned
future conduct of its business, without any known conflict with the rights of
others.
9. Sale is Legal and Authorized. The sale of the Notes to the
Purchasers, compliance by the Company with all of the provisions of the Notes
and compliance by the Company with all of the provisions of the Agreement --
(a) are within the corporate powers of the Company;
(b) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict
with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under the Articles of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which it
may be bound or result in the imposition of any Liens or encumbrances
on any property of the Company; and
(c) have been duly authorized by proper corporate action on
the part of the Company (no action by the stockholders of the Company
being required by law, by the Articles of Incorporation or By-laws of
the Company or otherwise), the Agreement and the Notes have been
executed and delivered by the Company and upon payment of the purchase
price of the Notes by the Purchaser, the Notes and the Agreement
constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable in accordance with their terms.
10. No Defaults. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Debt and is not in default under any instrument or instruments
or agreements under and subject to which any Debt has been issued and no event
has occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
11. Governmental Consent. No approval, consent or authorization of, or
registration, filing or declaration with or withholding of objection on the part
of, any regulatory body, state, Federal or local, is necessary in connection
with the execution and delivery by the Company of the Notes and the Agreement or
compliance by the Company with any of the provisions of the Agreement or the
Notes.
B-3
69
12. Taxes. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. For all
taxable years ending on or before December 31, 1993, the Federal income tax
liability of the Company has been satisfied and either the period of limitations
on assessment of additional Federal income tax has expired or the Company has
entered into an agreement with the Internal Revenue Service closing conclusively
the total tax liability for the taxable year. The Company does not know of any
proposed additional tax assessment against it for which adequate provision has
not been made on its accounts, and no material controversy in respect of
additional Federal or state income taxes due since said date is pending or to
the knowledge of the Company threatened. The provisions for taxes on the books
of the Company and its Consolidated Subsidiaries are adequate for all open
years, and for its current fiscal period.
13. Use of Proceeds. The net proceeds from the sale of the Notes will
be used by the Company as follows: for general corporate purposes. None of the
transactions contemplated in the Agreement (including, without limitation
thereof, the use of proceeds from the issuance of the Notes) will violate or
result in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any regulation issued pursuant thereto,
including, without limitation, Regulations U, T and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any "margin stock" within the
meaning of said Regulation U. None of the proceeds from the sale of the Notes
will be used to purchase, or refinance any borrowing the proceeds of which were
used to purchase, any such margin stock.
14. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Notes or any similar
Security or has solicited or will solicit an offer to acquire the Notes or any
similar Security from or has otherwise approached or negotiated or will approach
or negotiate in respect of the Notes or any similar Security with any Person
other than such Purchaser and not more than 75 other institutional investors,
each of whom was offered a portion of the Notes at private sale for investment.
Neither the Company, directly or indirectly, nor any agent on its behalf has
offered or will offer the Notes or any similar Security or has solicited or will
solicit an offer to acquire the Notes or any similar Security from any Person so
as to bring the issuance and sale of the Notes within the provisions of Section
5 of the Securities Act of 1933, as amended. When issued the Notes will not be
of the same class as Securities listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as amended,
or quoted in a U.S. automated inter-dealer quotation system, and will not be
convertible or exchangeable into any such Securities.
15. ERISA. The consummation of the transactions provided for in the
Agreement and compliance by the Company with the provisions thereof and of the
Notes issued thereunder will not involve any non-exempt prohibited transaction
within the meaning of
B-4
70
Section 406(a) of ERISA or Sections 4975(c)(1)(A)-(D) of the Code. Neither the
Company nor any ERISA Affiliate has heretofore, is presently or presently
intends to, contribute to, maintain or establish, any Plan subject to the
minimum funding requirements of Section 302 of ERISA or Section 412 of the Code.
Neither the Company nor any ERISA Affiliate has any contingent liability with
respect to any post-retirement "welfare benefit plan" (as such term is defined
in ERISA) except as has been disclosed to the Purchaser. The representation by
the Company in the first sentence of this SECTION 15 is made in reliance upon
and subject to the accuracy of the representation in SECTION 3.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by each Purchaser.
16. Compliance with Law. Neither the Company nor any Consolidated
Subsidiary (a) is in violation of any law, ordinance, franchise, governmental
rule or regulation to which it is subject; or (b) has failed to obtain any
license, permit, registration, consent, franchise or other governmental
authorization necessary to the ownership of its property or to the conduct of
its business, which violation or failure to obtain would materially adversely
affect the business, profits, properties or condition (financial or otherwise)
of the Company and its Consolidated Subsidiaries, taken as a whole, or impair
the ability of the Company to perform its obligations contained in the
Agreements or the Notes. Neither the Company nor any Consolidated Subsidiary is
in default with respect to any order of any court or governmental authority or
arbitration board or tribunal.
17. Compliance with Environmental Laws. The Company is not in violation
of any applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management or
hazardous substances (including, without limitation, petroleum, crude oil or any
fraction thereof, or other hydrocarbons), pollutants or contaminants, or to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances, which violation could have a material adverse effect on the
business, profits, properties or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries, taken as a whole. The Company does
not know of any liability or class of liability of the Company or any Subsidiary
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et
seq.).
18. Foreign Assets Control Regulations, etc. Neither the sale of the
Notes by the Company hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.
B-5
71
ALLIED CAPITAL CORPORATION
SUBSIDIARIES OF THE COMPANY
1. CONSOLIDATED SUBSIDIARIES
PERCENTAGE OF VOTING
STOCK OWNED BY COMPANY
JURISDICTION OF AND EACH OTHER
NAME OF SUBSIDIARY INCORPORATION SUBSIDIARY
Allied Investment Corporation Maryland 100%
Allied Capital Financial Corporation Maryland 100%
Allied Capital SBLC Corporation Maryland 100%
Allied Capital REIT Inc. Delaware 100%
Allied Capital Property LLC Delaware 100%
Allied Capital Equity LLC Delaware 100%
Allied Capital Holdings LLC Delaware 100%
0000 X-00 Xxxx Xxxxxxxx Xxxx, Xxxxxxxx XX Delaware 100%
80504 LLC
0000 Xxxxxxxx Xxxxxxxxx LLC Delaware 100%
Allied Capital Beteiligungs Beratung GmbH Germany 100%
2. UNCONSOLIDATED SUBSIDIARIES
PERCENTAGE OF VOTING
STOCK OWNED BY COMPANY
JURISDICTION OF AND EACH OTHER
NAME OF SUBSIDIARY INCORPORATION SUBSIDIARY
Allied Capital Germany Fund LLC Delaware 100%
Allied Capital CMT Inc. Delaware 100%
Allied Capital Commercial Mortgage
Trust 1998-1 Delaware 100%
ANNEX B
(to Exhibit B)
72
DESCRIPTION OF DEBT AND LEASES
DEBT OF COMPANY AND OBLIGOR
CONSOLIDATED SUBSIDIARIES BALANCE COMPANIES COLLATERAL
Revolving lines of credit $103,000,000 ACC None
Master repurchase agreement 3,243,057 ACC Commercial Mortgage Loans
Master loan and security agreement 9,000,000 ACC Commercial Mortgage Loans
Senior note payable 16,000,000* ACC, AIC, AFC None
OPIC loan 8,700,000 ACC None
------------
$139,943,057
============
DEBT OF CONSOLIDATED SUBSIDIARIES
SBA debentures $ 53,300,000 AIC, AFC None
ALCC Equity LLC
Mortgage Loan 2,749,920 Office Building
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$ 56,049,920
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*To be paid in full on Closing Date.
ACC = the Company
AIC = Allied Investment Corporation
AFC = Allied Capital Financial Corporation
-2-
73
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, called for by SECTION 4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Maryland and has the corporate
power and the corporate authority to execute and deliver the Agreement;
and the Company has the corporate power and the corporate authority to
issue the Notes.
2. The Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
3. Each Series of Notes has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement do not, under existing law,
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Xxxxxxx and Xxxxxx shall also state that the opinion of
Xxxxxxxxxx, Xxxxxx & Xxxxxxx is satisfactory in scope and form to Xxxxxxx and
Xxxxxx and that, in their opinion, the Purchaser is justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and
Xxxxxx may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Maryland and the By-laws of the Company.
With respect to matters of fact upon which such opinion is based,
Xxxxxxx and Xxxxxx may rely on appropriate certificates of public officials and
officers of the Company.
EXHIBIT C
(to Note Agreement)
74
DESCRIPTION OF CLOSING OPINION
OF COUNSEL FOR THE COMPANY
The closing opinion of Xxxxxxxxxx, Xxxxxx & Xxxxxxx, LLP, counsel for
the Company, which is called for by SECTION 4.1 of the Agreement, shall be dated
the Closing Date and addressed to the Purchasers purchasing Notes on the Closing
Date, shall be satisfactory in scope and form to the Purchasers and shall be to
the effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Maryland
and has the full corporate power and the corporate authority to conduct
the activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in the
States of California and Illinois and the District of Columbia.
2. The Company has the corporate power and the corporate
authority to execute and perform the Agreement and to issue the Notes.
3. The Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
4. Each Series of Notes has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. No other approval, consent or withholding of objection on
the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery of the Agreement or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Agreement do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition of
any Lien upon any of the property of the Company pursuant to the
provisions of the Articles of Incorporation or By-laws of the Company
or any agreement or other instrument known to such counsel to which the
Company is a party or by which the Company may be bound.
EXHIBIT D
(to Note Agreement)
75
7. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement do not, under existing law,
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxxxxx,
Xxxxxx & Xxxxxxx, LLP may rely solely upon an examination of the Charter of the
Company certified by, and a certificate of good standing of the Company from,
the State Department of Assessments and Taxation of the State of Maryland and
the By-laws of the Company.
The opinion of Xxxxxxxxxx, Xxxxxx & Xxxxxxx, LLP shall cover such other
matters relating to the sale of the Notes as the Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.
D-2
