SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 16, 2005
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BRT REALTY TRUST
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(Exact name of Registrant as specified in charter)
Massachusetts 001-07172 13-2755856
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(State or other (Commission file No.) (IRS Employer
jurisdiction of I.D. No.)
incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 516-466-3100
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Item 1.01. Entry Into A Material Definitive Agreement
On February 16, 2005, Registrant consummated a $85 million revolving credit
facility with North Fork Bank, Valley National Bank, Merchants Bank Division and
Signature Bank. This $85 million facility replaces a $60 million facility that
Registrant had with North Fork Bank. The material terms of the transaction are
as follows:
Lender: North Fork Bank (70.5882% or up to $60,000,000), Valley
National Bank, Merchants Bank Division (17.6471% or up to
$15,000,000) and Signature Bank (11.7647% or up to $10,000,000)
Borrower: BRT Realty Trust
Maximum
Loan Amount: $85,000,000
Term: Maturity is February 16, 2007.
Options to
Extend: Registrant may extend for two 1 year
periods for a fee of $212,500 each and by providing
notice no earlier than November 16, 2006 and no later
than December 16, 2006 for the first extension period
and no earlier than November 16, 2007 and no later
than December 16, 2007 for the second extension
period.
Rate: Prime + 1/2%
Collateral: The maximum amount of the loan cannot be more than 65% of
first mortgages pledged to the Lender.
Liquid Assets
Covenant: Registrant shall maintain cash or marketable securities at all
times of not less than $17,000,000. Registrant is also required
to maintain cash deposits at one of the Lender group equal to
at least $500,000.
Debt Covenant: Registrant must maintain a 1.65:1 debt coverage ratio on the
Loan. In addition, Registrant's shareholders equity to total
debt must not be less than 1.5:1.
Prepayment: Prepayment is permitted without penalty.
Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements - none.
(b) Pro Forma Financial Information - not applicable.
(c) Exhibits - Promissory Note dated as of February 16, 2005 by BRT
Realty Trust to the order of North Fork Bank, Valley National Bank, Merchants
Bank Division and Signature Bank; Revolving Credit Agreement dated as of
February 16, 2005 between BRT Realty Trust and North Fork Bank Valley National
Bank, Merchants Bank Division and Signature Bank
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned officer thereunto duly authorized.
BRT REALTY TRUST
Date: February 16, 2005 By: /s/ Mark H. Lundy
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Mark H. Lundy
Vice President
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this ("Agreement") is made as of the
16th day of February, 2005, between BRT REALTY TRUST, a Massachusetts business
trust, with offices at 60 Cutter Mill Road, Suite 303, Great Neck, New York
10021 (the "Borrower") and NORTH FORK BANK, a corporation organized under the
Banking Law of the State of New York having its principal offices at 275
Broadhollow Road, Melville, New York 11747 (the "Lender").
W I T N E S S E T H
WHEREAS, the Borrower or an affiliate of Borrower is and will be the
owner and holder of certain loans set forth on Exhibit A annexed hereto and from
time to time updated as set forth herein and made a part hereof (the "Pledged
Loans"), and the notes evidencing same (the "Pledged Notes"), which notes are or
will be secured by mortgages encumbering real property (the "Pledged
Mortgages"); and
WHEREAS, the Lender has agreed to make available to the Borrower a
credit facility (the "Facility") in the maximum principal amount of EIGHTY FIVE
MILLION AND 00/100 ($85,000,000.00) DOLLARS (the "Facility Amount"), provided,
however, that any no time shall the outstanding principal balance exceed
sixty-five (65%) percent of the principal due with respect to the Pledged Loans,
calculated exclusive of Defaulted Pledged Loans as defined in paragraph 8 (the
"Borrowing Base"), in lawful money of the United States, to be paid according to
a certain Promissory Note bearing even date herewith (the "Note"), together with
any additional sums due under the terms of the Note and this Agreement.
NOW, THEREFORE, in consideration of ten ($10.00) dollars, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower hereby covenants and agrees with the Lender that:
1. The Borrower will pay the amounts due with respect to the Facility
as provided herein and in the Note.
2. A. The Borrower will keep in effect such insurance with respect to
the Collateral as the Lender may reasonably require and shall pay the premiums
for such insurance as same become due and payable. All policies of insurance
(the "Policies") shall be issued by an insurer acceptable to the Lender. The
Borrower will assign and deliver the Policies to the Lender. Not later than
fifteen (15) days prior to the expiration date of each of the Policies the
Borrower will deliver to the Lender satisfactory evidence of the renewal of each
of the Policies. Sums paid to the Lender by any insurer shall be retained and
applied by the Lender toward payment of the sums due with respect to the
Facility in such priority and proportions as the Lender in its discretion shall
deem proper. If the Lender shall receive and retain such insurance money, the
sums due with respect to the Facility shall be reduced only by the amount
thereof received after expenses of collection and retained by the Lender and
actually applied by the Lender in reduction of the outstanding amount of the
Facility. The Lender shall be entitled, in the event of other insurance and
contribution between the insurers, to receive from the insurance moneys to be
paid such an amount as would have been payable under the policy or policies held
for the benefit of the Lender in case there had been no contribution.
(b) The Borrower shall at all times cause the mortgagors under
the Pledged Mortgages (each a "Mortgagor" and collectively, the "Mortgagors") to
keep the properties encumbered thereby (each, a "Mortgaged Property" and
collectively, the "Mortgaged Properties") insured in accordance with the
provisions of the Pledged Mortgages, and shall provide Lender with evidence of
not less than fifteen (15) days prior to the expiration of such insurance
policies, and at such other times as Lender may reasonably request. In the event
that the Borrower is at any time entitled, pursuant to the provisions of any
Pledged Mortgage, to receive and retain the proceeds of any such insurance
policy, such proceeds shall be received by the Borrower as trustee for the
Lender, and paid to the Lender in reduction of the sums due with respect to the
Facility (unless the Lender shall agree to Substitute Collateral, as provided
for in paragraph 8 hereof). If the Lender shall receive and retain such
insurance money, the sums due with respect to the Facility shall be reduced only
by the amount thereof received after reasonable expenses of collection and
retained by the Lender and actually applied by the Lender in reduction of the
sums due with respect to the Facility.
3. The Borrower will cause the Mortgagors to pay all taxes,
assessments, water rates, sewer rents and other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Mortgaged Properties, now or hereafter levied or
assessed against the Mortgaged Properties (the "Taxes") as same become due and
payable. The Borrower will deliver to the Lender, upon request, evidence
satisfactory to the Lender that the Taxes are not delinquent.
4. In the event that the Borrower shall collect escrow from any
Mortgagor to pay Taxes, insurance premiums, ground rents or any other sums
payable by Mortgagor, or in the event that the Borrower shall require any
Mortgagor to deposit any repair reserve, replacement reserve, leasing commission
reserve, interest reserve or other reserve or escrow of any kind or nature
whatsoever in connection with any Property, the Borrower shall cause all such
amounts to be maintained in one or more accounts with the Lender (except to the
extent that the documents executed in connection with the relevant Pledged
Mortgage require otherwise). In addition, to the extent permitted under the
Pledged Mortgages, the Borrower shall cause all tenant security deposit accounts
with respect to the Mortgaged Properties to be maintained with the Lender.
5. In the event that the Borrower shall receive any condemnation or
similar award with respect to any Mortgaged Property, such award shall be
received by the Borrower as trustee for the Lender, and paid to the Lender in
reduction of the sums due with respect to the Facility to the extent necessary
to reduce the outstanding principal balance of the Facility so that same shall
be no more than the Borrowing Base (unless the Lender shall agree to Substitute
Collateral, as provided for in paragraph 8 hereof). If the Lender shall receive
and retain any such condemnation award, the sums due with respect to the
Facility shall be reduced only by the amount thereof received after reasonable
expenses of collection and retained by the Lender and actually applied by the
Lender in reduction of the sums due with respect to the Facility. The Lender may
apply any such award to the repayment of the sums due with respect to the
Facility whether or not then due and payable.
6. All sums due and payable under the Facility will, at the option of
the Lender, become immediately due and payable, and no further funds will be
advanced under the Facility, in the event of a Change of Control of the Borrower
without the express written consent of the Lender, which may be granted or
withheld in the Lender's sole discretion. For purposes of this paragraph 6, a
"Change in Control" shall mean the occurrence of any event which causes Gould
Investors, L.P. (acting through its general partner, its officers and/or its
employees) to no longer control the management and operation of the Borrower, or
any event which causes the current principals of Gould Investors, L.P. to own,
directly or indirectly, less than 51% of the general partnership interests in
Gould Investors, L.P.
7 No material modifications or amendments shall be made with respect to
any Pledged Note, Pledged Mortgage or any other document executed in connection
therewith ("Other Document") without the express written consent of the Lender,
which may be granted or withheld in the Lender's sole discretion. In addition,
no extensions of the maturity date of any Pledged Loans shall extend such
maturity date beyond six (6) years from the origination thereof without the
express written consent of the Lender, which may be granted or withheld in the
Lender's sole discretion.
8. In the event that a default (other than escrow shortfalls in an
amount not in excess of two (2%) percent of the unpaid principal balance of the
Pledged Loan to which such escrow shortfall relates) shall occur under any
Pledged Note, Pledged Mortgage or any of the Other Documents executed in
connection with any Pledged Loans (after such default, a "Defaulted Pledge
Loan"), and such default shall continue for a period of sixty (60) days, the
Defaulted Pledged Mortgage, together with the Pledged Note and the Other
Documents executed in connection therewith, shall be reassigned to the Borrower
and the Borrower shall simultaneously be required to either (i) repay the
principal amount of the Facility to the extent necessary to cause the
outstanding principal balance of due with respect to the Facility to be less
than or equal to the Borrowing Base or (ii) replace the Defaulted Pledged Loans
with a different Pledged Loans of equivalent or greater comparable value, as
determined by the Lender in its sole discretion, which Pledged Loans shall (A)
be secured by a first Pledged Mortgage held by the Borrower or an affiliate of
the Borrower encumbering income producing properties located in the 48
contiguous continental United States or the District of Columbia, (B) not be
monetarily delinquent (other than escrow shortages in an amount not in excess
of two (2%) percent of the unpaid principal balance of the Pledged Loan to
which such escrow shortfall relates) for more than sixty (60) days or otherwise
in default, (iii) not have a significantly impaired value (in the reasonable
opinion of the Lender) and (iv) not have a term in excess of three (3) years
(the "Substitute Collateral"). The Pledged Mortgage, Pledged Note and Other
Documents with respect to any such Substitute Collateral shall (i) be prepared
on standard forms (the "Forms") which have been preapproved by the Lender and
(ii) be acceptable to Lender in all respects in its reasonable discretion.
Without limiting the generality of the foregoing, prior to the Lender accepting
any such Substitute Collateral, the Lender will receive (i)the original Pledged
Mortgage, Pledged Note and Other Documents with respect to the Substitute
Collateral, along with a written explanation of all changes that have been made
to the Forms in connection with such Substitute Collateral, which changes shall
be subject to review and approval by the Lender and the Lender's counsel prior
to the Lender accepting any such Pledged Loans for assignment; (ii) an affidavit
executed by a knowledgeable representative of the Borrower, stating that such
Pledged Loans or loans being assigned are not in default, and setting forth the
unpaid principal balance thereof; and (iii) an executed Collateral Assignment
with respect to such Substitute Collateral, in the form annexed hereto as
Exhibit B.
9. After request by the Lender, the Borrower, within ten (10) days and
at its expense, will furnish to the Lender a statement, duly acknowledged and
certified, setting forth the principal amount outstanding with respect to the
Facility, the rate of interest thereon, the date installments were last paid,
the offsets or defenses thereto, if any, and that the Note and this Agreement
have not been modified or, if modified, giving particulars of such modification.
10. Any notice, demand, statement, request or consent made hereunder
shall be in writing and will be deemed given when postmarked, addressed and
mailed to the address, as set forth above, of the party to whom such notice is
to be given, or to such other address as the Borrower or the Lender, as the case
may be, shall designate in writing in the manner hereinabove set forth.
11. The Lender shall assign any Pledged Note, Pledged Mortgage and
Other Documents (i) back to the Borrower upon (A) payment to the Lender of an
amount sufficient to reduce the outstanding principal amount outstanding under
the Facility (calculated exclusive of Defaulted Loans) to an amount not less
than the Borrowing Base, plus accrued and unpaid interest thereon or (B)
delivery of Substitute Collateral meeting the requirements of paragraph 8 hereof
to the Lender and the acceptance of same by the Lender or (ii) to or at the
direction of the Mortgagor, upon the payment to the Lender of all amounts due
with respect to the applicable Pledged Loans. The Borrower will pay the Lender's
reasonable expenses in connection with such assignment, including, but not
limited to, recording charges and reasonable attorneys fees.
12. If any law or ordinance is enacted or adopted which imposes a tax,
either directly or indirectly, on the Note, this Agreement or the Facility, the
Borrower will pay such tax with interest and penalties thereon, if any. In the
event that the Lender shall be advised by counsel chosen by it that the payment
of such tax or interest and penalties by the Borrower would be unlawful, taxable
to the Lender or unenforceable or would provide the basis for a defense of
usury, then and in that event the Lender shall have the option, by written
notice of not less than ninety (90) days, to declare all amounts then
outstanding with respect to the Facility immediately due and payable and to
refuse to make any additional advances with respect to the Facility.
13. If at any time the United States of America, any state thereof or
any subdivision of any such state shall require revenue or other stamps to be
affixed to the Note or this Agreement, or shall impose any other tax or charge
on the same, the Borrower will pay for the same with interest and penalties
thereon, if any.
14. The Borrower will keep proper books of records and account with
respect to their operations in accordance with generally accepted accounting
principles, and will furnish to the Lender with annual accounting statements
within ninety (90) days after the end of each calendar year, in form
satisfactory to the Lender, which shall disclose in reasonable detail all
earnings and expenses of the Borrower, certified by independent certified public
accountants of recognized standing satisfactory to the Lender. In addition, the
Borrower shall submit to the Lender within 15 days of the end of each calendar
month (a) a monthly aging report with respect to the Pledged Loans, which aging
report shall be in form and substance satisfactory to the Lender in its sole
discretion, (b) a schedule of any Pledged Loans modified or extended during such
month, and a description of such modification or extension and (c) a description
of any uncured monetary or other material events of default under any of the
Pledged Facility Documents. Additionally, the Borrower will submit to the Lender
a quarterly borrowing base and detailed portfolio information, in the form
previously submitted to and approved by the Lender.
15. The Borrower will observe and perform each and every term to be
observed or performed by the Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Collateral.
16. The Lender shall not make an advance with respect to the Facility
unless and until, with respect to each advance, the Borrower has satisfied the
following conditions precedent:
(a) The Lender shall have received all documents and
agreements comprising the Collateral, including without limitation an assignment
of each Pledged Mortgage and each Pledged Note from the Borrower to the Lender
in form annexed hereto as Exhibit B.
(b) Receipt of Borrowing Notice. The Lender shall have
received, no later than 12:00 noon (New York City time) on the Business Day on
which the Loan is requested to be made hereunder, a borrowing notice (a
"Borrowing Notice") from an authorized officer of Borrower, specifying the
amount of the requested advance, and the date on which it is requested to be
made. Each Borrowing Notice shall be in writing signed by Borrower, shall
certify the then outstanding principal amount of all existing Pledged Loans
under the Facility, and certify that both before and after funding the requested
advance, Borrower continues to be in compliance with the covenants, terms and
conditions set forth in the Agreement.
(c) All of the representations and warranties of Borrower
contained herein and in each other Facility Document shall be true and correct
in all material respects to the same extent as though made on and as of any date
of funding each advance.
(d) No Event of Default or event which upon notice, lapse of
time or both, would constitute an Event of Default shall exist or have occurred
or shall result from the making of the requested advance.
(e) No law or regulation shall prohibit, and no order,
judgment or decree of any court, arbitrator or governmental authority shall
enjoin or restrain, the Lender from making the requested advance.
(f) After giving effect to the amount of the requested
advance, the aggregate outstanding principal balance under the Facility shall
not exceed the lesser of (x) the Borrowing Base and (y) Facility Amount.
(g) The Borrower shall have paid all of the Lender's
reasonable fees and expenses, including, without limitation, the reasonable
legal fees and expenses of the Lender's counsel incurred in connection with the
acceptance, review and retention of the documents from time to time delivered to
the Lender as Collateral.
17. To secure the Obligations (as hereinafter defined), the Borrower
hereby grants to the Lender a first priority perfected and continuing security
interest in and to the following property of the Borrower now owned or hereafter
acquired, wherever located and of every kind, nature and description, including
but not limited to: (i) all Pledged Loans; (ii) all Supporting Obligations (as
defined under the UCC); (iii) the Pledged Notes assigned or negotiated by
Borrower to the Lender pursuant to this Agreement; (iv) the Pledged Mortgages;
(v) an assignment of each Pledged Mortgage from the Borrower to the Lender in
recordable form but unrecorded, along with the original recorded intervening
assignments (or if the original assignments have not been returned from the
applicable recording office, a copy of the assignments certified by Borrower or
the settlement agent to be a true and complete copy of the original assignment
submitted for recording); (vi) all monies, securities or other property and
deposit accounts of the Borrower held by the Lender or any of its affiliates;
(vii) all books and records relating to the business of the Borrower including
any computer programming data relating to the foregoing; (viii) each of the
Other Documents; (ix) each title policy, title binder or commitment to issue
title insurance insuring the Pledged Mortgages and the lien thereof, (x) each
policy of hazard insurance, rental interruption insurance, boiler insurance,
liability insurance or other forms of insurance now or hereafter issued with
respect to the Mortgaged Properties and improvements encumbered by the Pledged
Mortgages and the proceeds thereof, in which policies and proceeds the Borrower
shall have an interest as a mortgagee or otherwise; (xi) all deposit accounts,
credits, moneys, property or other security of any nature whatsoever now or
hereafter available to the Borrower for application in reduction, in whole or in
part, of the Pledged Loans; and (xii) all accessions and additions to,
substitutions and replacements, products and proceeds of each of the foregoing
in any form whatsoever (all of the foregoing being hereinafter referred to
collectively as the "Collateral"). As used in this Agreement, "Obligations"
shall mean all obligations, liabilities and indebtedness of the Borrower to the
Bank, whether now existing or hereafter created, absolute or contingent, direct
or indirect, due or not, whether created directly or acquired by assignment or
otherwise, including without limitation, all obligations, liabilities, and
indebtedness of the Borrower arising under or relating to this Agreement, the
Notes or any other Loan Document, which shall include, without limitation, all
obligations, liabilities and indebtedness of the Borrower with respect to the
principal of and interest on the Loans, and all fees, costs, expenses and
indemnity obligations of the Borrower hereunder, or under any other Loan
Document.
18. The Borrower represents and warrants to the Lender as follows:
(a) The Borrower owns the Collateral free and clear of any
lien, security interest, charge or encumbrance, except such security interest to
which the Lender has consented in writing. No effective financing statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any recording office, except such as may have been filed in favor of
the Lender relating to this Agreement;
(b) This Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly taken;
(c) No authorization, approval or other action by, and no
notice to or filing with, (except for the filing of UCC-l financing statements
in appropriate jurisdictions) any governmental authority or regulatory body is
required either (i) for the grant by the Borrower of the security interest
granted hereby or for the execution, delivery or performance of this Agreement
by the Borrower; or (ii) for the perfection of or the exercise by the Lender of
its rights and remedies hereunder;
(d) The Borrower (i) is a Massachusetts business trust in good
standing under the laws of the Commonwealth of Massachusetts and is duly
qualified in all other jurisdictions wherein the nature of the Borrower's
business or the character of its properties make qualification necessary; (ii)
has the power and authority to carry on its business as now conducted and to own
or hold under lease the assets and properties it purports to own or hold under
lease; (iii) is duly qualified, licensed or registered to transact its business
and is in good standing in every jurisdiction in which failure to be so
qualified, licensed or registered could have a Material Adverse Effect as
hereinafter defined; (iv) has the power and authority to execute and deliver
this Agreement, and each of the other Facility Documents to which it is or will
be a party and to perform all its obligations thereunder; (v) no action by, and
no notice to or filing with (except for the filing of UCC-1 financing statements
in appropriate jurisdictions, and except for the requirement that the Borrower
file a Form 8-K with the Securities and Exchange Commission upon the signing of
this Agreement), any governmental authority or regulatory body is required
either for the grant by the Borrower of the security interest granted hereby or
for the execution, delivery or performance of this Agreement by the Borrower; or
for the perfection of or the exercise by the Lender of its rights and remedies
hereunder and (vi) has its executive office and principal place of business at
60 Cutter Mill Road, Suite 303, Great Neck, New York 10021.
(e) The execution and delivery by the Borrower of this
Agreement, the Note and each of the other documents and certificates executed in
connection herein on the date hereof or from time to time hereafter,
(collectively, the "Facility Documents") to which it is or will be a party and
the performance by the Borrower of all of its obligations thereunder: (i) will
not violate or be in conflict with (A) any provision of applicable law
(including, without limitation, any applicable usury or similar law) or (B) any
order, rule or regulation of any court or other governmental authority; (ii)
will not violate, be in conflict with, result in a breach of or constitute
default (with or without the giving of notice or the passage of time or both)
under any material instrument, indenture, agreement or other obligation to which
it is a party or by which it or any of its assets and properties is or may be
bound or subject; and (iii) except as specifically contemplated by this
Agreement, will not result in the creation or imposition of any lien, charge or
encumbrance of any nature upon any of its assets and properties. This Agreement
and each of the other Facility Documents to which the Borrower is, or will be a
party, when executed and delivered, will be the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its respective terms
and provisions.
(f) There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Borrower) pending or, to the best of the Borrower's
knowledge, threatened or contemplated at law, in equity, in arbitration or
before any authority involving or affecting: (i) the Borrower that, if adversely
determined, could have a material adverse effect; (ii) the Obligations; (iii)
the Collateral; or (iv) this Agreement and the other Facility Documents; nor to
the best of the Borrower's knowledge is it in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any authority, which
default could have or has had a Material Adverse Effect.
(g) Any financial statements of the Borrower provided to the
Lender in connection with this transaction: (i) were prepared in good faith to
be accurate statements of the Borrower's business, (ii) show all indebtedness
and other liabilities, direct or contingent, of the Borrower as of the date
thereof (including, without limitation, liabilities for taxes and material
commitments), and (iii) are complete, accurate and a fair presentation, in all
material respects, of the Borrower's financial condition as of the date thereof
and results of operations for the period covered thereby. Since the date of such
financial statements, no event or events have occurred that individually or in
the aggregate have had a Material Adverse Effect.
(h) Each of the Pledged Notes, the Pledged Mortgages, the
Other Security Documents and each instrument, receivable, document of title,
contract and other intangible included in the Collateral is valid, legally
binding and enforceable in accordance with its respective terms and provisions,
does not violate or conflict with any provision of applicable law, has not been
amended or modified in any material respect or prepaid, and is assignable and
has been duly assigned to the Lender in accordance with the terms hereof; and,
to the best of the Borrower's knowledge, each such instrument or other document
was executed by persons of full age and legal capacity and contains no forgeries
or unauthorized signatures.
(i) No representation or warranty of the Borrower made or
contained in this Agreement or any other Facility Documents and no report,
statement, certificate, schedule or other document or information furnished or
to be furnished by or on behalf of the Borrower in connection with the
transactions contemplated by this Agreement and the other Facility Documents
contains or will contain a misstatement of a material fact or omits or will omit
to state a material fact required to be stated therein in order to make it, in
the light of the circumstances under which made, not misleading.
(j) That, the Borrower will furnish to the Lender from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection herewith and in such form as the Lender may
reasonably request. Exhibit A hereto shall be deemed to be supplemented, updated
and amended, effective upon funding of each Loan, to add each new Pledged Loan
relating thereto, to be part of the Collateral listed thereon. Exhibit A shall
be deemed to be amended automatically and immediately upon the addition to,
substitution or replacement of the Collateral pledged by Borrower hereunder to
Lender, and such addition, substitution or replacement shall be further
evidenced by receipt by the Lender of the monthly summary statements as
described herein in Paragraph 14.
(k) The owners of the property covered by the Pledged Mortgage
("Owners") are and (at the funding of any new Pledged Loan by Borrower, shall
be) the fee owners of the premises encumbered by the Pledged Mortgages and the
obligor under the Pledged Notes, and notices may be sent to such owners at the
addresses set forth in Exhibit A to this Agreement.
(l) The Pledged Mortgages constitute a valid and enforceable
lien covering the Premises.
(m) There are no defenses, counterclaims, set-offs, rights of
recoupment, abatements or other claims or determinations of any nature
whatsoever with respect to the Pledged Notes, the Pledged Mortgages or the
indebtedness evidenced and secured thereby or with respect to any other
instruments or documents evidencing, securing or guaranteeing payment of the
Pledged Loans, the Other Documents and all of the provisions of the Pledged
Notes, the Pledged Mortgages and the Other Documents are in full force and
effect.
(n) There are no defaults existing under the Pledged Notes,
the Pledged Mortgages or the Other Documents, which have remained uncured for a
period of more than sixty (60) days.
(o) No condemnation or eminent domain proceedings have been
commenced with respect to the Mortgaged Properties and no such condemnation or
eminent domain proceedings are about to be commenced.
(p) The Pledged Notes, the Pledged Mortgages and the Other
Documents and the provisions thereof have not been amended, modified or altered
in any manner whatsoever.
(q) The Borrower knows of no fact or circumstance which would
affect the enforceability, validity or priority of the Pledged Notes, the
Pledged Mortgages or the Other Security Documents, other than those facts or
circumstances set forth in the title policies, if any, insuring the Pledged
Mortgages and the lien thereof or which would affect the ability of the Owner(s)
and any other person or parties liable under the Pledged Notes, the Pledged
Mortgages and the Other Security Documents to continue to perform and observe
the terms, covenants and provisions of the Pledged Notes, the Pledged Mortgages
and any Other Security Documents. The Borrower represents and warrants that as
of the date hereof, the aggregate unpaid principal balance of the Pledged Notes
is One Hundred Sixteen Million Four Hundred Twenty Thousand One Hundred Sixty
and 00/100 ($116,420,160.00) Dollars.
19. The Borrower covenants and agrees that, from the date hereof and
until the Obligations have been fully paid and satisfied, unless the Lender
shall consent otherwise in a writing signed by the Lender:
(a) Borrower shall monitor and remain in compliance with the
Borrowing Base limitations set forth in this Agreement.
(b) Upon request of the Lender, from time to time, the
Borrower shall permit representatives designated by the Lender to (i) have
access to the premises of the Borrower, the books and records of the Borrower
and the Collateral, (ii) make copies of, or excerpts from, those books and
records and (iii) discuss the Collateral or the accounts, assets, business,
operations, properties or condition, financial or otherwise, of the Borrower
with its officers, directors, employees and accountants. The Lender agrees to
keep such documents confidential and shall not disclose any such information
except: (w) pursuant to court order; (x) as required by any regulatory agency;
(y) in connection with any action or proceeding to enforce its rights in
connection with the Facility Documents or otherwise; or (z) to any assignee or
participant in the Pledged Loans or the Facility.
(c) The Borrower shall defend and enforce its right, title and
interest in and to any portion of (i) the Collateral, or (ii) its assets and
properties the loss of which could have a Material Adverse Effect, and the
Borrower, at its sole expense, shall defend the Lender's right, title and
interest in and to the Collateral, each against all manner of claims and demands
on a timely basis to the full extent permitted by applicable law.
(d) The Borrower shall not, without the prior written approval
of the Lender, directly or indirectly consolidate or merge with or acquire
control of any other person or entity or offer or agree to do so.
(e) The Borrower shall execute and deliver, upon the Lender's
written request, any reasonable notice, statement, instrument, document,
agreement or other papers and/or to perform any act reasonably requested by the
Lender which may be necessary to create, perfect, preserve, validate or
otherwise protect any security interest granted pursuant hereto or to enable the
Lender to exercise and enforce its rights hereunder or with respect to such
security interest.
(f) The Borrower will furnish to the Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection herewith and such other documents and
information with respect to any Pledged Loan, all in such form as the Lender may
reasonably request. The Borrower further agrees to provide the Lender with such
information as the Lender may from time to time request with respect to the
location of any of its respective places of business. In addition, the Lender
will be notified promptly in writing of any change in its legal name, its
jurisdiction or form of organization, or the location of any office where
records concerning any of the accounts that constitute a portion of the
Collateral are maintained or of a change in location of the Borrower's principal
place of business.
(g) The Borrower shall notify the Lender of the occurrence of
any material default under the Pledged Notes and/or the Pledged Mortgages or of
the occurrence of any event, which but for the passage of time or the giving of
notice or both, would constitute a material default under the Pledged Notes
and/or the Pledged Mortgages, on the same day that the Borrower shall first be
given notice of or shall first become aware of the occurrence of any such
default or event and the Borrower shall immediately upon request by the Lender
give any notice which shall be required to cause any such event to constitute a
default under the Pledged Notes and/or the Pledged Mortgages (any such default
or event being hereinafter referred to as a "Collateral Event of Default").
(h) The Borrower shall not, without the prior consent of the
Lender, enter into any agreement, which shall materially adversely affect the
Collateral or which shall release from the lien of the Pledged Mortgages any
portion of the property presently covered thereby or which shall release any
party, now or hereafter liable or guaranteeing the payment of any portion of the
indebtedness evidenced and secured by the Pledged Notes and the Pledged
Mortgages or performance of the terms, covenants and provisions of the Pledged
Notes, the Pledged Mortgages or the Other Documents or which shall release any
other security of any nature whatsoever, now or hereafter, held by the Borrower
for the payment of any portion of the indebtedness evidenced and secured by the
Pledged Notes and the Pledged Mortgages.
(i) At all times throughout the term hereof, the Borrower
shall maintain cash or readily marketable securities in an aggregate amount of
not less than Seventeen Million and 00/100 ($17,000,000.00) Dollars.
(j) The Borrower shall maintain a Debt Service Coverage Ratio
of not less than 1.65:1.00 at the end of each fiscal quarter. "Debt Service
Coverage Ratio" shall mean, for any four fiscal period, the ratio of (a) net
income, plus to the extent deducted in determining net income, the sum of (A)
interest expense, and (B) all depreciation and amortization expenses or charges
to (b) the sum of (i) interest expense plus (ii) the scheduled installments of
principal on all indebtedness (including capital leases) having a final maturity
of one year or more from the date of incurrence thereof and the outstanding
principal amount of the Pledged Loans. All of the foregoing categories shall be
determined with respect to the Borrower in accordance with generally accepted
accounting principles applied on a consistent basis and shall be calculated
(without duplication) over the four fiscal quarters then most recently ended.
(k) Borrower shall not permit at any time its ratio of
shareholder equity to indebtedness for borrowed money, determined in accordance
with generally accepted accounting principles applied on a consistent basis, to
be less than 1.50:1.00.
(l) Borrower shall deliver to the Lender within in ten days of
Lender's request a certificate certifying the Borrower's compliance with the
covenants set forth in the preceding clauses (i), (j) and (k), which
certification shall show the quantitative computation of the financial covenants
set forth in those clauses.
20. The outstanding amount due with respect to the Facility, together
with all accrued and unpaid interest thereon and all other sums due in
connection therewith, shall become due, and the Lender shall have no obligation
to make any further advances with respect to the Facility, at the option of the
Lender upon any one or more of the following events (each, an "Event of
Default"):
(a) if any payment due hereunder is not paid within ten
(10) days after the same is due;
(b) Intentionally omitted;
(c) if the Policies are not kept in full force and
effect or if the Policies are not assigned and delivered to the Lender upon
request;
(d) if the Borrower does not furnish a statement, in the
manner provided herein, of the amount then due and owing with respect to the
Facility and the offsets or defenses thereto, if any;
(e) if without the consent of the Lender any material
modification, amendment or extension is made to any of the Pledged Notes, the
Pledged Mortgages and/or the Other Documents;
(f) if, within ninety (90) days of the occurrence a Collateral
Event of Default, the Borrower shall not have complied with the provisions of
paragraph 9 hereof.
(g) if any covenant, representation or warranty of the
Borrower or of any person (a "Guarantor") guaranteeing payment of the sums due
with respect to the Facility or any portion thereof or the performance by the
Borrower of any of the terms, this Agreement or the Note made herein or in any
such guaranty or in any certificate, report, financial statement or other
instrument furnished in connection with the making of the Note, this Agreement
or any such guaranty, shall prove false or misleading in any material respect;
(h) if the Borrower or any guarantor shall make an assignment
for the benefit of creditors;
(i) if a receiver, liquidator or trustee of the Borrower or of
any guarantor shall be appointed or if the Borrower or any guarantor shall be
adjudicated a bankrupt or insolvent or if any petition for bankruptcy,
reorganization or arrangement pursuant to the Federal Bankruptcy Code or any
similar federal or state statute shall be filed by or against the Borrower or
any guarantor or if any proceeding for the dissolution or liquidation of the
Borrower or of any guarantor shall be instituted and, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by the
Borrower or such guarantor, upon the same not being discharged, stayed or
dismissed within ninety (90) days;
(j) if the Borrower does not reimburse the Lender upon demand
for all reasonable expenses incurred in remedying any default of the Borrower
hereunder or in appearing in, defending or bringing any action or proceeding to
protect the Lender's interest in the Collateral, including reasonable attorneys'
fees, with interest as provided herein;
(k) the Borrower shall fail to comply with the requirements of
paragraph 19(i), (j) or (k) hereof or if for fifteen (15) days after notice from
the Lender the Borrower shall continue to be in default under any other covenant
of the Borrower hereunder or under the Note (not covered by any other clause of
this paragraph 20); or
(l) if, after a default thereunder, the Lender elects to
enforce its rights under the Note or any instrument which may be held by the
Lender as additional security for the repayment of the sums due with respect to
the Facility.
21. Upon the occurrence of an Event of Default, the Lender shall have
all of the rights and remedies provided to a secured party by the Uniform
Commercial Code in effect in New York State at that time. The Lender shall also
have the right to set-off against any sums owed to the Lender and reduce to the
Lender's immediate possession any and all amounts, balances, proceeds and funds
held by the Lender on any account of the Borrower or its affiliates maintained
by the Lender. Furthermore, in any such event, to the extent permitted under
applicable law, full power and authority are hereby given to the Lender to sell,
assign, and deliver the whole of the Collateral or any part thereof, at any time
at any broker's board, or at public or private sale, at the Lender's option, and
no delay on the Lender's part in exercising any power of sale or any other
rights or options hereunder, shall constitute a waiver thereof, or limit or
impair the Lender's right to take any action or to exercise any power of sale or
any other rights hereunder, without notice or demand, or prejudice the Lender's
rights as against the Borrower in any respect. In addition thereto, the Borrower
further agrees that (a) written notice mailed to the Borrower at its regular
address given ten (10) days prior to the date of public sale of any of the
Collateral subject to the security interest created herein or prior to the date
after which private sale or any other disposition of said Collateral will be
made shall constitute reasonable notice; (b) in the event of the sale or other
disposition of any such Collateral the Lender may apply the proceeds of any such
sale or disposition to the satisfaction of the Lender's reasonable attorneys'
fees, legal expenses, and other reasonable costs and expenses incurred in
connection with the Lender's taking, re-taking, holding, preparing for sale, and
selling of the Collateral; (c) without precluding any other methods of sale, the
sale of Collateral shall have been made in a commercially reasonable manner if,
among other ways, it is conducted in conformity with reasonable commercial
practices of creditors disposing of similar property; (d) the Lender may require
the Borrower to assemble the Collateral, taking all necessary or appropriate
action to preserve and keep it in good condition and make the Collateral
available to the Lender at a place and time convenient to all parties, all at
the expense of the Borrower; (e) the Lender shall have the right to: (i)
prohibit the Borrower from taking any action otherwise permitted by this
Agreement and the other Facility Documents; (ii) notify each of the Owners,
mortgagors, obligors, lessees, custodians and other parties with respect to or
interested in any item of the Collateral of the Lender's interest therein or of
any action proposed to be taken with respect thereto, and direct one or more of
those parties to make all payments, distributions and proceeds otherwise payable
to the Borrower with respect thereto directly to the Lender or its order until
notified by the Lender that all the Obligations have been fully paid and
satisfied; (iii) receive and retain all payments, distributions and proceeds of
any kind with respect to any and all of the Collateral; (iv) take any action
with respect to the offer, sale, lease or other disposition, and delivery of the
whole of, or from time to time any one or more items of, the Collateral,
including, without limitation: (A) to sell, assign, lease or otherwise dispose
of the whole of, or from time to time any part of, the Collateral, for cash,
credit or any other asset or property, for immediate or future delivery, and for
such consideration and upon such terms and subject to such conditions as the
Lender in its sole and absolute discretion may determine, and the Lender may
purchase (the consideration for which may consist in part of cancellation of
indebtedness) or any other person may purchase the whole or any one or more
items of the Collateral so sold free and clear of any and all rights, powers,
privileges, remedies and interest of the Borrower (which the Borrower has
expressly waived); or (B) to postpone or adjourn any such auction, sale or other
disposition or cause the same to be postponed or adjourned from time to time to
a subsequent time and place or abandon or cause the abandonment of the same, all
without any advertisement or other notice thereof; (v) transfer or cause the
transfer of the ownership of all or any part of the Collateral to its own name
and have such transfer recorded in any jurisdiction(s) and publicized in any
manner deemed appropriate by the Lender; and (vi) in addition to, and not by way
of limitation of, any of the rights specified above, exercise or enforce any and
all provisions of applicable law, whether as a secured party in possession of
collateral or otherwise; (f) the Lender shall collect the cash proceeds received
from any sale or other disposition or from any other source in connection with
such collection and sale or disposition of Collateral and apply the same in
accordance with the terms and provisions of this Agreement; (g) any funds
received from or on behalf of the Borrower (whether pursuant to the terms and
provisions of this Agreement or otherwise) by the Lender and in the event any of
the Pledged Notes are repaid to the Borrower, any funds received by the Lender
as a result thereof, shall be applied to the following items in such manner and
order as the Lender may determine in its sole and absolute discretion: (i) the
payment to or reimbursement of the Lender for any expenses for which it is
entitled to be paid or reimbursed pursuant to any of the provisions of this
Agreement and the other Facility Documents (including reasonable attorneys'
disbursements, expenses and fees); (ii) the payment of accrued and unpaid
interest on the Obligations; (iii) the payment of the outstanding principal on
the Obligations; (iv) the establishment or maintenance of any cash collateral
required or permitted under this Agreement or any other Facility Documents; and
(v) the payment in full of all other Obligations under this Agreement and the
other Facility Documents. In the event any funds remain after satisfaction in
full of the Obligations, then the remainder shall be returned to the Borrower,
subject, however, to any rights or interest the Lender may have therein under
any other instrument, agreement or document or applicable law. All advances and
payments made pursuant to this Agreement and the other Facility Documents may be
recorded by the Lender, and such records shall be presumptive as to the
existence and amounts thereof; (h) if the amount of all proceeds received with
respect to any liquidation of the Collateral that shall be applied to payment of
the Obligations shall be insufficient to pay and satisfy all of the Obligations
in full, the Borrower acknowledges that it shall remain liable for any
deficiency, together with interest thereon and costs of collection thereof
(including reasonable attorneys' disbursements, expenses and fees), in
accordance with the terms and provisions of this Agreement and the other
Facility Documents; (i) the Borrower hereby expressly waives, to the extent such
waiver is permitted by applicable law, any and all rights, powers, privileges,
remedies and interest accorded to it now or at any time in the future under
applicable law respecting (y) counterclaim, set-off, recoupment, abatement,
reduction, and other claims and determinations against the Lender and any other
person, and (z) notice, appraisal, evaluation, stay, extension, moratorium,
marshaling of assets, exemption and equity of redemption, provided, however,
that none of the terms and provisions of this Agreement and the other Facility
Documents are intended to confer upon the Lender any right, power, privilege,
remedy or interest not permissible under applicable law notwithstanding the
foregoing waivers; and (j) the rights, powers, privileges, remedies and interest
conferred upon the Lender in respect of the Collateral by this Agreement, the
other Facility Documents and applicable law are solely to enable the Lender to
protect and preserve the Collateral, as well as to realize upon it in accordance
with the Agreement and the other Facility Documents, all in such manner as the
Lender in its discretion may elect, and shall not impose upon the Lender any
duty or other obligation to exercise or enforce any such right, power,
privilege, remedy or interest. Any exercise or other enforcement of any such
right, power, privilege, remedy or interest, if undertaken by the Lender, in its
discretion, may be delayed, discontinued or otherwise not pursued or exhausted
for any reason whatsoever (whether intentionally or otherwise). Without limiting
the generality of the foregoing, the Lender shall be under no duty or obligation
to protect or preserve any of the Collateral, perform any obligation or duty of
the Borrower under any of the Collateral, or take any action to mitigate or
otherwise reduce any damage or other loss or to otherwise collect, exercise or
enforce any claim, right or other interest arising under or with respect to the
Collateral.
22. After the occurrence of an Event of Default, which shall then be
uncured or unremedied, the Lender shall have the unconditional right to notify
Owners of the security interest granted and assigned by the Borrower to the
Lender pursuant to this Agreement and to direct Owners to make all payments of
sums due or hereafter becoming due pursuant to the Pledged Notes and/or the
Pledged Mortgages directly to the Lender. The Borrower shall, upon request by
the Lender, sign and consent to all notices and directions given by the Lender
to Owners pursuant to this paragraph. The Lender's cost of collection and
enforcement, including reasonable attorneys' fees and out-of-pocket expenses,
shall be borne solely by the Borrower. Such costs of collection and enforcement
shall be paid by the Borrower to the Lender, on demand, and shall be secured by
this Agreement and the other Facility Documents. The Lender shall have the
unconditional right, at its option, to apply all sums received by the Lender
pursuant to this paragraph against the payment of sums outstanding with respect
to the Facility in such priority and proportions as the Lender, in its
discretion, shall deem proper. The balance of any sums held by the Lender, if
any, after payment of the outstanding Loans in full shall be paid over to the
Borrower by the Lender.
23. The Lender is authorized, at the Lender's option, and is hereby
irrevocably designated as attorney-in-fact with full power of substitution, as
the Borrower's true and lawful attorney-in- fact with full irrevocable power and
authority in the place and stead of the Borrower and in the name of the Borrower
or in the Lender's own name, and the Borrower hereby gives the Lender the power
and right, on behalf of the Borrower, without notice to or assent by the
Borrower to do the following:
(a) File any financing statements or amendments thereto in any
jurisdiction the Lender deems appropriate with respect to any of the Collateral;
and the Borrower agrees to reimburse the Lender for the reasonable expense of
any such filing, including reasonable attorneys' fees.
(b) After the occurrence of an Event of Default, which shall
then be uncured or unremedied, ask, demand, collect, sue for, recover, receive,
compound, and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
(c) receive, endorse and collect any drafts or other
instruments, documents, chattel paper or other evidence of indebtedness,
supporting obligations or letters of credit or other installment made payable to
the Borrower in connection with any of the Collateral and to credit to the
account of the Borrower with the proceeds thereof;
(d) After the occurrence of an Event of Default, which shall
then be uncured or unremedied, file any claims or take any action or institute
any proceeding which the Lender deems necessary, including, but not limited to,
a foreclosure proceeding or desirable for the collection of any Collateral or
otherwise to enforce or protect its rights with respect to the Collateral,
including but not limited to any notification to any account debtors of the
Borrower;
(e) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the Collateral, to
effect any repairs insurance called for by the terms of this Agreement and to
pay all or any part of the premiums therefor and the costs thereof; and
(f) After the occurrence of an Event of Default, which shall
then be uncured or unremedied, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due, and to
become due thereunder, directly to the Lender or as the Lender shall direct; (B)
to receive payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, in respect of or arising out of any
Collateral; (C) to sign and indorse any invoices, assignments, verifications and
notices in connection with accounts and other documents constituting or relating
to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral; (E) to defend any suit, action or proceeding brought
against the Borrower with respect to any Collateral; (F) to settle, compromise
or adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Lender may deem
appropriate; (G) to license or, to the extent permitted by an applicable
license, sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any patent or trademark, throughout the world
for such term or terms, on such conditions, and in such manner, as the Lender
shall in the Lender's sole discretion determine; and (H) generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Lender were the absolute
owner thereof for all purposes, and to do, at the Lender's option and the
Borrower's expense, at any time, or from time to time, all acts and things which
the Lender reasonably deems necessary to protect, preserve or realize upon the
Collateral and the Lender's lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Borrower might do.
(i) The Borrower hereby ratifies, to the extent
permitted by law, all that the attorneys acting
pursuant to this paragraph shall lawfully, and in good faith do or cause to be
done by virtue hereof. The power of attorney granted pursuant to this paragraph
23 is a power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full.
(ii) The powers conferred on the Lender hereunder are
solely to protect the Lender's interest in the
Collateral and shall not impose any duty upon the Lender to exercise any such
powers. The Lender shall be accountable only for amounts that the Lender
actually receives as a result of the exercise of such powers and neither the
Lender nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act, except for the
Lender's own gross negligence or willful misconduct.
(iii) The Borrower also authorizes the Lender, at any
time and from time to time upon an Event of
Default (i) to communicate in the Lender's own name with any party to any
contract with regard to the assignment of the right, title and interest of the
Borrower in and under the contracts hereunder and other matters relating
thereto, and (ii) to execute, in connection with the sale provided for in this
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
24. Upon the occurrence of an Event of Default and upon the Lender
exercising its option to declare all sums due with respect to the Facility
immediately due and payable by reason thereof, the Borrower will pay, from the
date of that event, interest at the rate of 24% per annum (the "Default Rate").
Notwithstanding anything contained in this paragraph 24 to the contrary, except
for items set forth in paragraph 26, Lender shall provide Borrower with thirty
(30) days written notice of defaults hereunder prior to the imposition of the
default rate set forth 5above.
25. If the Borrower fails to make any payment or to do any act as
herein provided, the Lender may, but without any obligation to do so and without
notice to or demand on the Borrower and without releasing the Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
the Lender may deem necessary to protect the security hereof, the Lender being
authorized to appear in, defend or bring any action or proceeding to protect its
interests in the Mortgaged Property or collect the sums due with respect to the
Facility. The cost and expense thereof (including reasonable attorneys' fees),
with interest as provided in this paragraph, shall be due from Borrower upon
demand made by the Lender. All such costs and expenses incurred by the Lender in
remedying such default or in appearing in, defending or bringing any such action
or proceeding shall be paid with interest at the Default Rate for the period
after notice from the Lender that such cost or expense was incurred to the date
of payment to the Lender. All such costs and expenses incurred by the Lender
pursuant to the terms hereof, with interest, shall be deemed to be secured by
the Collateral.
26. The failure of the Lender to insist upon strict performance of any
term of the Note or this Agreement shall not be deemed to be a waiver of any
term of the Note or this Agreement. The Borrower shall not be relieved of the
Borrower's obligations hereunder by reason of (a) the failure of the Lender to
comply with any request of the Borrower or any guarantor to take any action to
enforce any of the provisions hereof or of the Note, (b) the release, regardless
of consideration, of the whole or any part of the Collateral, or (c) any
agreement or stipulation by the Lender extending the time of payment or
otherwise modifying or supplementing the terms of the Note or this Agreement.
The Lender may resort for the payment of sums outstanding with respect to the
Facility to any other security held by the Lender in such order and manner as
the Lender, in its discretion, may elect. The rights of the Lender under this
Agreement shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of the Lender shall be construed
as an election to proceed under any one provision herein to the exclusion of any
other provision.
27. If the Borrower consists of more than one person, the obligations
and liabilities of each such person hereunder shall be joint and several.
28. The terms of the Note and this Agreement shall be construed by the
laws of the State of New York.
30. If any term, covenant or condition of the Note or this Agreement is
held to be invalid, illegal or unenforceable in any respect, the Note and this
Agreement shall be construed without such provision.
31. This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to constitute but one and the
same instrument.
32. Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Agreement shall be
used interchangeably in singular or plural form. The word "Lender" shall mean
"the Lender or any subsequent holder of the Note". The word "person" shall
include an individual, corporation, partnership, limited liability company,
trust, unincorporated association, government, governmental authority or other
entity. The word "Collateral" shall include any portion of the Collateral or
interest therein. The words "Mortgaged Property" shall include any portion of
the Mortgaged Property or interest therein. The word "Loans" shall mean the
principal with interest thereon and all other sums due pursuant to the Note and
secured by this Agreement. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms and
the singular form of nouns and pronouns shall include the plural and vice versa.
All references in this Agreement to the Collateral Assignments shall be deemed
to refer to such Collateral Assignments as are now or shall be from time to time
in the possession of the Lender. All references in this Agreement to Pledged
Notes, the Pledged Mortgages and the Other Documents shall be deemed to refer to
such Pledged Notes, Pledged Mortgages and Other Documents as are now or shall be
from time to time in the possession of the Lender. All references in this
Agreement to Loans shall be deemed to refer to such Loans evidenced and secured
by those Pledged Notes, Pledged Mortgages and Other Documents as are now or
shall be from time to time in the possession of the Lender.
33. This Agreement cannot be changed orally but only in writing by the
person to be charged.
34. The Borrower hereby agrees that upon its failure to pay all sums
due and owing with respect to the Facility on the maturity date the Borrower
will pay to the Lender interest on the then unpaid principal at the Default Rate
from the maturity date and until the actual receipt and collection of all sums
due and owing with respect to the Facility by the Lender. This paragraph,
however, shall not be construed as an agreement or privilege to extend this
Agreement, nor as a waiver of any other right or remedy accruing to the Lender
by reason of any such default.
35. The Borrower hereby waives the right to assert a counterclaim other
than a compulsory counterclaim in any action or proceeding brought against it by
the Lender and waives trial by jury in any action or proceeding brought by
either party hereto against the other or in any counterclaim asserted by the
Lender against the Borrower on any matters whatsoever arising out of or in any
way connected with the Note, this Agreement or the Facility.
36. This Agreement is subject to the express condition that at no time
shall the Borrower be obligated or required to pay interest on the principal
balance due hereunder at a rate which could subject the Lender to either civil
or criminal liability as a result of being in excess of the maximum interest
rate which the Borrower is permitted by law to contract or agree to pay. If by
the terms of this Agreement or the Note the Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of such maximum rate, the rate of interest under this Agreement and/or
the Note shall be deemed to be immediately reduced to such maximum rate and all
previous payments in excess of the maximum rate shall be deemed to have been
payments toward the reduction of principal and not to the interest due
hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Borrower and the Lender as of the date first above written.
BRT REALTY TRUST
By: /s/ Mark H. Lundy
-----------------
Mark H. Lundy, Vice President
NORTH FORK BANK
By: /s/ Matt Vega
----------------
Matt Vega, Senior Vice President
STATE OF NEW YORK )
)ss.:
COUNTY OF SUFFOLK )
On the 16th day of February, 2005, before me, the undersigned,
personally appeared Mark H. Lundy, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.
------------------------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF SUFFOLK )
On the 16th day of February, 2005, before me, the undersigned,
personally appeared Matt Vega, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.
------------------------------
Notary Public
EXHIBIT A
SCHEDULE OF COLLATERAL
----------------------
Address Original Current
------- -------- -------
Principal Principal
--------- ---------
Balance Balance
------- -------
EXHIBIT B
FORM OF COLLATERAL ASSIGNMENT
COLLATERAL ASSIGNMENT OF MORTGAGE
KNOW THAT, , a , having an
---------------------- ----------------------
address at 60 Cutter Mill Road, Suite 303, Great Neck, New York 10021
("Assignor"), in consideration of Ten ($10.00) Dollars paid by NORTH FORK BANK,
a corporation organized under the Banking Law of the State of New York having
its principal offices at 275 Broadhollow Road, Melville, New York 11747 (the
"Assignee"), hereby assigns unto the Assignee all of its right, title and
interest in and to the mortgage set forth on Schedule B annexed hereto and made
a part hereof, the mortgage secured thereby, and all other documents executed in
connection therewith
Covering premises known as and more particularly
-------------------------------
described by Schedule A annexed hereto
TOGETHER with the bonds or notes or obligations described in said mortgages and
the moneys due and to grow due thereon with the interest; TO HAVE AND TO HOLD
the same unto the Assignee and its successors and assigns forever.
This assignment is made without recourse to the Assignor in any event.
This assignment is not subject to section 275 of the Real Property Law because
it is an assignment within the secondary mortgage market.
This is a collateral assignment, intended to secure repayment of that certain
Promissory Note made by Assignor in favor of Assignee of even date herewith in
the principal amount of EIGHTY FIVE MILLION AND 00/100 ($85,000,000.00) DOLLARS,
and is given pursuant to the provisions of that certain Revolving Credit
Agreement dated February , 2005 between Assignor and Assignee.
---
IN WITNESS WHEREOF, the Assignor has duly executed this Assignment this day
of , 200 . -----
---- -
----------------------------------
By:
------------------------------
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On the day of , 200 , before me, the undersigned, personally
----- --- -
appeared , personally known to me or proved to me on the
--------------------
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.
----------------------------
Notary Public
SCHEDULE A
SCHEDULE B
NORTH FORK BANK
SECURED PROMISSORY NOTE
BORROWER: BRT REALTY TRUST
PRINCIPAL: $85,000,000.00 Date: As of February 16, 2005
-------------------------------------------------------------------------
PROMISE TO PAY: The undersigned Borrower, jointly and severally if more than one
--------------
signer, does hereby promise to pay to the order of NORTH FORK BANK (the "Bank")
at its offices at 275 Broadhollow Road, Melville, New York 11747, or at any of
its branches, the sum of Eighty Five Million and 00/100 ($85,000,000.00) DOLLARS
or the aggregate unpaid principal amount of all advances made to the Borrower by
the Bank, whichever is less, plus interest thereon, from the date hereof in the
manner set forth below.
RATE AND PAYMENT: The unpaid principal balance hereunder shall bear interest at
----------------
the rate of the Bank's Prime Rate plus one half of one (1/2%) percent per annum,
adjusted monthly, subject to increase or reduction as hereinafter provided (the
"Interest Rate"). Interest shall be payable monthly beginning on March 1, 2005
and on the 1st day of each month thereafter until February 16, 2007, when all
unpaid principal and interest shall be due in full, unless the term hereof is
extended as hereinafter provided.
Until the Debt, as defined in that certain Revolving Credit Agreement between
Borrower and Bank dated of even date herewith (the "Agreement"), has been repaid
in full, the Borrower agrees to maintain its account (account #6224002938) with
the Bank. Borrower hereby unconditionally and irrevocably authorizes the Bank to
automatically debit from such account any and all payments due hereunder and
unconditionally warrant and represent to Bank that Borrower shall, until the
Debt has been repaid in full, maintain sufficient funds in such account to pay
same. If no funds are available in such account, the Borrower hereby authorizes
Bank to debit any such payment due from any other account or accounts [other
than tenant security deposit accounts and escrow accounts in connection with the
Collateral (as defined in the Agreement)] maintained by Borrower with the Bank,
provided, however, Bank's authorization to debit such accounts is limited to the
amounts due under this Promissory Note and/or the other documents executed in
connection herewith.
Payments shall be applied first to interest on unpaid principal balances to the
date payment is received by the Bank and then to reduction of principal. If the
Interest Rate is based on the Bank's announced Prime Rate, the Interest Rate
shall change when the Prime Rate changes and nothing herein shall prevent the
Bank from loaning money at less than prime on such terms and conditions as it
deems advisable. Interest shall be calculated on the basis of a 360 day year and
shall be collected based upon actual number of days elapsed.
GRID NOTE: This is the promissory note referenced to in the Agreement and shall
---------
be governed by the terms thereof. The Borrower may borrow, repay in whole or in
part on a revolving basis aggregate amounts up to Eighty-Five Million and 00/100
($85,000,000.00) Dollars, subject to the provisions of the Agreement. The date
and amount of each advance made and each payment of principal received by the
Bank hereunder shall be recorded and entered on the books and records of the
Bank, which shall, in absence of manifest error, be presumptive evidence as to
the outstanding principal amount due hereunder; provided, however, that the
failure to record any advance or repayment shall not limit or otherwise affect
the obligation of Borrower under this Note.
PREPAYMENT: Prepayment in whole or in part may be made at any time without
----------
penalty. Prepayment must be made in the event and to the extent that the
outstanding amount hereunder exceeds sixty-five (65%) percent of the principal
amount of the Collateral. During the Term hereof, any funds so prepaid may be
re-advanced pursuant to the terms hereof.
DEFAULT INTEREST RATE: The unpaid principal sum under this Note shall bear
---------------------
interest at a rate equal to twenty four (24%) percent on and after the
occurrence of any event of default hereunder or under the Agreement, beyond
applicable notice, grace and cure periods, if any and until the entire principal
sum hereof has been fully paid, both before and after the entry of any judgment
with respect to such event, but in no event shall the rate either before or
after the occurrence of an event of default exceed the highest rate of interest,
if any, permitted under applicable New York or Federal Law.
SECURITY: This Note is secured by the Collateral (as defined in the Agreement).
--------
RIGHT OF OFFSET: If any payment is not made on time, or if the entire balance
---------------
becomes due and payable and is not paid, all or part of the amount due may be
offset out of any account or other property which the Borrower has at the Bank
or any affiliate of the Bank without prior notice or demand. This provision is
in addition to any not in limitation of any of the Bank's rights by statute or
at common law.
LATE CHARGES: Borrower will pay a charge of four (4%) percent of any amount
------------
which cannot be debited from its account due to insufficient balances on the
Debit Date, as liquidated damages for failure to make timely payment and such
late charge shall be secured by the Collateral.
DEFAULT: The Bank may decline to make advances and/or may declare the entire
-------
unpaid balance of the Note due and payable on the happening of any default
hereunder or under the Agreement or any of the other documents executed in
connection therewith.
ADVANCES: All advance requests must be in writing and must be made no less than
---------
three (3) business days in advance of the date that the funds are to be
disbursed. No advance will be made if such advance will cause the amount then
outstanding under this Note to exceed sixty-five (65%) percent of the
outstanding principal balance of the Mortgages (as defined in the Agreement)
then pledged as Collateral for the repayment of the sums advance hereunder,
provided that none of the loans secured by such Mortgages are monetarily
delinquent (other than minor escrow shortages) for more than sixty (60) days or
are otherwise in material default. The Bank shall make any requested advance to
the Borrower on the third (3rd) business day after such request is received,
notwithstanding that the Bank may not have received the funds required to be
transferred to the Bank by Valley National Bank and/or Signature Bank (the
"Participants") in accordance with the provisions of that certain Participation
Agreement of even date herewith between the Bank and the Participants.
Notwithstanding the foregoing, however, in no event shall the Bank be required
to advance in excess of Sixty Million and 00/100 ($60,000,000.00) Dollars of its
own funds hereunder, and to the extent that any advance by the Bank on behalf of
any Participant would cause the Bank to have advanced more than Sixty Million
and 00/100 ($60,000,000.00) Dollars, the Bank shall not be required to make such
advance until it shall have received the necessary funds from the Participants.
OPTION TO EXTEND. A. Provided that: (i) the Borrower is not in default under the
----------------
terms of this Note or the Agreement as of November 16, 2006 up to and including
February 16, 2007; (ii) the Borrower has furnished all of the information and
documentation the Borrower is required to furnish to the Bank pursuant to this
Note, the Agreement, and/or any other document executed in connection herewith
and (iii) the Borrower has not been late in making the monthly payments due
hereunder more than three (3) times in any twelve (12) month period the Borrower
shall have the option to extend the term of this Note for an additional one (1)
year (the "First Extended Term") on the same terms and conditions as set forth
herein. In order to exercise its option the Borrower must give written notice to
the Bank on or before December 16, 2006 but not prior to November 16, 2006 (with
time being of the essence) and must simultaneously therewith submit to the Bank
an extension fee the sum of Two Hundred Twelve Thousand Five Hundred and 00/100
($212,500.00) Dollars (the "First Extension Fee").
B. In the event that Borrower has extended the maturity date hereunder for the
First Extended Term, as provided in paragraph A hereof, and provided that: (i)
the Borrower is not in default under the terms of this Note or the Agreement as
of November 16, 2007 up to and including February 16, 2008; (ii) the Borrower
has furnished all of the information and documentation the Borrower is required
to furnish to the Bank pursuant to this Note, the Agreement, and/or any other
document executed in connection herewith and (iii) the Borrower has not been
late in making the monthly payments due hereunder more than three (3) times in
any twelve (12) month period the Borrower shall have the option to extend the
term of this Note for an additional one (1) year (the "Second Extended Term") on
the same terms and conditions as set forth herein. In order to exercise its
option the Borrower must give written notice to the Bank on or before December
16, 2007 but not prior to November 16, 2007 (with time being of the essence) and
must simultaneously therewith submit to the Bank an extension fee the sum of Two
Hundred Twelve Thousand Five Hundred and 00/100 ($212,500.00) (the "Second
Extension Fee" and, together with the First Extension Fee, the "Extension Fee").
NO ORAL MODIFICATIONS. This Note may not be changed or terminated orally.
---------------------
IN WITNESS WHEREOF, the Borrower has signed this Note as of the 16th day of
February, 2005.
BRT Realty Trust
By: /s/ Mark H. Lundy
-----------------
Mark H. Lundy, Vice President
STATE OF NEW YORK )
)ss.:
COUNTY OF SUFFOLK )
On the day of February, 2005, before me, the undersigned,
-----
personally appeared Mark H. Lundy, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person on behalf of which the individual acted, executed the instrument.
------------------------------
Notary Public
SECURED PROMISSORY NOTE
BRT REALTY TRUST
- to -
NORTH FORK BANK
Stark, Amron & Liner, LLP
7 Penn Plaza, Suite 600
New York, New York 10001
REVOLVING CREDIT AGREEMENT
BRT REALTY TRUST
- to -
NORTH FORK BANK
Stark, Amron, Liner & Narotsky, LLP
7 Penn Plaza, Suite 600
New York, New York 10001