Exhibit 10.7

 

 

LOAN AGREEMENT

 

By and Between

 

EDUCATIONAL DEVELOPMENT CORPORATION

 

and

 

MIDFIRST BANK

 

 

 

 

December 1, 2015

 

 

 

 

 

 

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TABLE OF CONTENTS

 

       

Page

ARTICLE I. DEFINITIONS

1

 

1.1.

Defined Terms

1

 

1.2.

Terms Generally; References and Titles; Accounting Terms

1

         

ARTICLE II. THE LOAN

   

2.1.

The Loan

1

   

(a)

Interest

1

   

(b)

Default Rate; Late Charge

2

   

(c)

Payment

2

   

(d)

Prepayment

2

   

(e)

Additional Expenditures

3

   

(f)

Additional Costs

3

   

(g)

Lenders Determinations

3

 

2.2.

Security for the Loan

4

         

ARTICLE III. REPRESENTATIONS

4

 

3.1.

Representations

4

   

(a)

Status; Operational Authority

4

   

(b)

Power; Transactional Authority; Enforceability

4

   

(c)

No Violation; No Consent

4

   

(d)

Financial Matters

4

   

(e)

No Default

4

   

(f)

Trade Name

4

   

(g)

Litigation

5

   

(h)

Title and Authority; Permitted Encumbrances

5

   

(i)

Taxes

5

   

(j)

Foreign Person

5

   

(k)

ERISA

5

   

(l)

Executive Order 13224; OFAC

5

   

(m)

Purpose

5

   

(n)

Investment Company Act

5

   

(o)

No Financing Statement

6

   

(p)

Location of Collateral

6

   

(q)

Compliance with Applicable Law

6

   

(r)

Brokerage Commissions

6

   

(s)

Leases

6

   

(t)

Collateral

6

   

(u)

Condition of Property

6

   

(v)

Operating Account

7

   

(w)

Environmental

7

   

(x)

No Reliance

7

         

ARTICLE IV. COVENANTS AND AGREEMENTS OF BORROWER

7

 

4.1.

Covenants and Agreements

7

   

(a)

Change of Name, Identity or Structure

7

   

(b)

Indemnity

7

   

(c)

Fees and Expenses

8

   

(d)

Waivers.

8

   

(e)

Books and Records

8

   

(f)

Financial Statements and other Reports

8

   

(g)

Compliance Certificate

9

   

(h)

Estoppel Certificate

9

   

(i)

Further Assurances

9

   

(j)

Location and Use of Collateral

10

 

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(k)

Insurance Requirements

10

   

(l)

Escrow

11

   

(m)

Operation of Property

11

   

(n)

Repair and Maintenance

11

   

(o)

Appraisal

11

   

(p)

Casualty and Condemnation

12

   

(q)

Title Insurance

13

   

(r)

Collateral

13

   

(s)

Litigation

13

   

(t)

Indebtedness

13

   

(u)

Limitation on Dividends

13

   

(v)

Hilti Lease

13

         

ARTICLE V. DEFAULTS AND REMEDIES

13

 

5.1.

Event of Default

14

   

(a)

Monetary Obligations

14

   

(b)

Representations

14

   

(c)

Bankruptcy Event

14

   

(d)

Third Party Matters

14

   

(e)

Transfers; Liens; Debt

14

   

(f)

Death; Dissolution; Change in Ownership or Control

14

   

(g)

Financial Reporting

14

   

(h)

DCR Test Default

14

   

(i)

DTW Test Default

14

   

(j)

Hilti Lease.  Hilti is 30 or more days past due on rent or any other payment to
Borrower, as landlord, under the Hilti Lease; or

14

   

(k)

Loan to Value Default

14

   

(l)

Non-Monetary Obligations

14

 

5.2.

Remedies

14

   

(a)

Pre-Event of Default

14

   

(b)

Post-Event of Default

15

   

(c)

Costs

15

         

ARTICLE VI. GENERAL CONDITIONS

15

 

6.1.

Waiver

15

 

6.2.

Lender's Action or Inaction

15

 

6.3.

Lender's Rights

16

 

6.4.

Third Party Rights

16

 

6.5.

Satisfaction of Condition; Time

16

 

6.6.

Assignment; Loan Participations

16

 

6.7.

Heirs, Successors and Assigns

16

 

6.8.

Exercise of Rights and Remedies

17

 

6.9.

Headings

17

 

6.10.

Inconsistency

17

 

6.11.

Applicable Law

17

 

6.12.

Forum; Service

17

 

6.13.

Usury

17

 

6.14.

Severability

17

 

6.15.

Counterparts

17

 

6.16.

Joint Liability

18

 

6.17.

Modification or Termination

18

 

6.18.

Notice

18

 

6.19.

Signatures

18

 

6.20.

No Partnership

18

 

6.21.

Waiver of Jury Trial

18

 

6.22.

Consent of Lender; Approvals

19

 

6.23.

Imaging

19

 

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6.24.

Entire Agreement

 

19

 

6.25.

Damage Waiver

 

19

 

 

 

 

 

 

iii

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LOAN AGREEMENT

 

Borrower and Lender, for the mutual promises in the Loan Documents and other
good and valuable consideration, enter into this Agreement on the Effective
Date.

 

Background Recitals

 

A.     Borrower has requested that Lender make the Loan to Borrower.

 

B.     Lender has agreed, subject to the terms of the Loan Documents, to make
the Loan to Borrower.

 

C.     Borrower and Lender desire to enter into this Agreement to specify the
terms and conditions of the Loan.

 

Borrower and Lender (1) acknowledge the receipt and sufficiency of the
above-referenced consideration, and, (2) therefore, agree as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1.     Defined Terms. Each capitalized term used in the Loan Documents has the
meaning set forth in Exhibit A of this Agreement.

 

1.2.     Terms Generally; References and Titles; Accounting Terms. References in
this Agreement to "Articles," "Sections," "Exhibits" or "Schedules" will be to
the Articles, Sections, Exhibits or Schedules of this Agreement unless otherwise
specifically provided. All Exhibits and Schedules attached to this Agreement are
incorporated in, and are a part of, this Agreement for the purposes set forth in
this Agreement. Any term defined in this Agreement may be used in the singular
or plural. Words of any gender include all other genders. The terms "include,"
"includes," and "including" are followed by "without limitation". Except as
otherwise specified or limited in this Agreement, a reference to any Person
includes the successors and assigns of the Person. Unless otherwise specified
all references "from" or "through" any date mean "from and including" or
"through and including" the date. References to any statute or act include all
related current regulations and all amendments and any successor statutes, acts
and regulations. References to any statute or act, without additional reference,
refer to federal statutes and acts of the United States. References to any
agreement, instrument or document includes all schedules, exhibits, annexes and
other attachments to the agreement, instrument or document. Except as otherwise
specifically provided herein, all accounting terms not specifically or
completely defined herein shall be construed in conformity with GAAP, applied in
a manner consistent with that used in preparing the financial statements
delivered pursuant to this Agreement.

 

ARTICLE II.
THE LOAN

 

2.1.     The Loan. Subject to the terms of this Agreement and in reliance on
Borrower’s representations and warranties in the Loan Documents, Lender agrees
to lend, and Borrower agrees to borrow, the Loan. THEREFORE, FOR VALUE RECEIVED,
Borrower promises to pay to the order of Lender the Principal Amount with fees,
costs and interest as set forth in, and payable (in Dollars at Lender's Offices)
pursuant to, this Agreement. The Loan shall be divided into two tranches,
Tranche A and Tranche B. The funding and closing of the Loan will take place in
Lender's Offices or at such other place as Lender may designate.

 

(a)     Interest(i)     .    

 

(i)     Subject to Subsection 2.1(b) below: (A) the Principal Amount of Tranche
A bears interest at the Contract Rate, and (B) subject to Subsection 2.1(a)(ii)
below, the Principal Amount of Tranche B and Additional Costs bear interest at
the LIBO Rate.

 

(ii)     All interest accruing under the Loan Documents will be calculated on
the basis of a 360-day year applied to the actual number of days in each month.
Borrower shall make each payment which it owes under the Loan Documents on or
before the Payment Deadline in immediately available Dollars without setoff,
counterclaim or other deduction. If Lender

 

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receives any payment after the Payment Deadline, then the payment will be
credited on the next following Business Day.

 

(iii)     Immediately after Lender gives a Suspension Notice to Borrower,
Lender's obligation to make or maintain Tranche B of the Loan and Additional
Costs at the LIBO Rate will be suspended and all interest and Additional Costs
payable at the LIBO Rate will automatically convert to the Prime Rate. If
circumstances further change and nullify the basis on which the Suspension
Notice was given, then Lender will advise Borrower of the change and thereafter
Tranche B and the Additional Costs will automatically bear interest at the LIBO
Rate.

 

(b)     Default Rate; Late Charge.

 

(i)     Any time during an Event of Default Period (and including any period
prior to and after any judgment against any Borrower Party concerning the Loan,
the Principal Amount or Additional Costs), the Principal Amount, any Additional
Costs and all past due installments of interest will, at Lender's option, bear
interest at the Default Rate.

 

(ii)     In addition to all other sums due under the Loan Documents, Borrower
shall pay to Lender on demand the Late Charge upon all Past Due Indebtedness.
The Late Charge is not a penalty, but is intended to compensate Lender for the
losses Lender incurs because of the delinquent payment. Borrower agrees that,
considering all of the circumstances existing on the date this Agreement is
executed, the Late Charge represents a reasonable estimate of the losses Lender
will incur because of any late payment, and that proof of Lender's actual losses
will be costly, inconvenient, impracticable and extremely difficult to fix.
Lender does not waive the Event of Default resulting from a past due payment
because Lender accepts a Late Charge.

 

(c)     Payment.

 

(i)     Borrower shall pay to Lender on each Principal Payment Date: (A) with
respect to Tranche A, interest on the Principal Amount, in arrears, on each
Interest Payment Date, and the Principal Installment Amount, and (B) with
respect to Tranche B, the Amortized Installment Amount. On the Maturity Date,
Borrower shall pay in full to Lender (1) the Principal Amount along with all
unpaid, accrued interest, and (2) all other Indebtedness.

 

(ii)     Except during an Event of Default Period, Lender will apply all Loan
payments: (A) first, to any unpaid Claims; (B) second, to any unpaid Additional
Costs; (C) third, to accrued but unpaid interest due under the Loan Documents;
(D) fourth, to all other unpaid sums due under the Loan Documents, except for
the Principal Amount; and (E) last, to the unpaid Principal Amount (first to
Tranche B, and then to Tranche A). During an Event of Default Period, Lender may
apply all Loan payments in any order Lender elects in its sole discretion.

 

(iii)     Borrower may not send any payments to Lender with a Paid in Full Mark.
If Borrower tenders a payment to Lender with a Paid in Full Mark, then Lender
may accept the payment without losing any of Lender's rights under the Loan
Documents, and Borrower will remain obligated to pay any further amounts owed to
Lender under the Loan Documents.

 

(d)     Prepayment. Borrower may prepay Tranche B of the Loan, in whole or in
part, without premium or penalty. Borrower may not prepay Tranche A of the Loan
in whole or in part, except during the Prepayment Period, except as set forth
below. Lender may refuse to accept any Loan prepayment which does not comply
with this Section 2.1(d). During the Prepayment Period, Borrower may prepay
Tranche A of the Loan, in whole or in part, without premium. However, if
Borrower prepays Tranche A of the Loan at any time other than during the
Prepayment Period, then concurrent with the prepayment, Borrower shall remit to
Lender the Prepayment Premium; provided, however, the Prepayment Premium shall
not be required to the extent the source of such prepayment is from Borrower's
operational cash flow (and only to such extent), and not a refinancing, sale of
the Property or any other source. Upon request, Borrower shall provide Lender
with evidence reasonably satisfactory to Lender that any such exception to the
Prepayment Premium is from Borrower's operational cash flow.

 

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(i)     Lender and Borrower agree that:

 

(A)     the Prepayment Premium is not a penalty;

 

(B)     the Prepayment Premium will compensate Lender for Lender's losses
resulting from Borrower's prepayment of Tranche A of the Loan;

 

(C)     Lender is likely to sustain losses if Borrower prepays Tranche A of the
Loan;

 

(D)     the calculation method used to determine the Prepayment Premium is a
reasonable determination of Lender's loss resulting from Borrower's prepayment
of Tranche A of the Loan;

 

(E)     Lender has no obligation to mitigate its loss arising from any
prepayment of Tranche A of the Loan; and

 

(F)     the compensation Lender will receive from Tranche A of the Loan, if
Tranche A of the Loan is not prepaid, is greater than or equal to the Prepayment
Premium.

 

(ii)     Borrower waives any right to claim that the Prepayment Premium is
unenforceable or a penalty.

 

(iii)     Borrower acknowledges that Lender:

 

(A)     made the Loan to Borrower expecting that Borrower will not repay Tranche
A of the Loan early but will repay Tranche A of the Loan as set forth in Section
2.1(c) above; and

 

(B)     was not willing to make Tranche A of the Loan for a shorter period.

 

(iv)     If during an Event of Default Period, Lender accelerates the maturity
and repayment of the Loan, then the Prepayment Premium for Tranche A will also
be due and added to the Indebtedness.

 

Borrower has read and understands the terms of this Prepayment Section.

 

EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation

 

By:                                                                      

Name: Randall W. White

Title:   Chairman, President and CEO

 

(e)     Additional Expenditures. All sums Lender pays or expends pursuant to the
Loan Documents in excess of the Maximum Principal Amount will be (i) an
additional loan to Borrower, (ii) Indebtedness, and (iii) immediately due and
payable, upon Lender's written demand to Borrower, together with interest at the
Default Rate from the date of Lender's expenditure until Borrower repays the
expenditure and interest to Lender. Notwithstanding anything to the contrary in
the Loan Documents, Lender is not obligated to make any expenditures.

 

(f)     Additional Costs. Notwithstanding anything to the contrary in any of the
Loan Documents, Borrower shall pay to Lender all Additional Costs immediately
after Lender's demand.

 

(g)     Lenders Determinations. All of Lender's reasonable determinations under
Section 2.1(a) are conclusive, absent manifest error.

 

2.2.     Security for the Loan. The Loan is secured by, among other things, the
Security Instrument and is guaranteed by the Guaranty.

 

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ARTICLE III.
REPRESENTATIONS

 

3.1.     Representations. On the Effective Date and on each Compliance
Certificate Delivery Date, Borrower represents to Lender that:

 

(a)     Status; Operational Authority. Each Borrower Party: (i) is duly
organized, validly existing, and in good standing, under the laws of the
jurisdiction in which it is formed; (ii) is duly qualified, authorized to do
business, and in good standing, in every jurisdiction (other than the
jurisdiction of its formation) in which it must be qualified; and (iii) has the
power and authority to own the Property and its other assets, and to transact
its present and proposed business.

 

(b)     Power; Transactional Authority; Enforceability. Each Borrower Party has
the requisite power and authority to execute, deliver and carry out the terms
and provisions of the Loan Documents to which it is a party, and has taken all
necessary actions to authorize its execution, delivery and performance of the
Loan Documents. Each Borrower Party has duly executed and delivered the Loan
Documents. The Loan Documents each Borrower Party executes or under which it is
obligated constitute the Borrower Party's legal, valid and binding obligations,
enforceable in accordance with the terms of the Loan Documents, subject to (i)
the effect of any Applicable Bankruptcy Law, or (ii) general principles of
equity.

 

(c)     No Violation; No Consent. Each Borrower Party's execution, delivery and
performance of the Loan Documents, and compliance with the terms and provisions
of the Loan Documents, will not (i) contravene any Applicable Law, (ii) conflict
or be inconsistent with or result in any breach of any term, covenant, condition
or provision of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien upon any of the
Property or the Borrower Party's other assets pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which the
Borrower Party is a party or by which the Borrower Party or any of the Property
or the Borrower Party's other assets is bound or may be subject, or (iii)
violate any term of any Borrower Party's certificate of incorporation or other
documents and agreements governing the Borrower Party's existence, management or
operation. No Borrower Party is required to obtain the consent of any other
party, including any Governmental Authority, in connection with the execution,
delivery, performance, validity or enforceability of the Loan Documents.

 

(d)     Financial Matters. Each Borrower Party financial statement previously
delivered to Lender was prepared in accordance with GAAP and completely,
correctly and fairly present the financial condition and the results of
operations of each Borrower Party on the date and for the period covered by the
financial statements. All other reports, statements and other data that any
Borrower Party furnished to Lender in connection with the Loan are true and
correct in all material respects and do not omit any fact or circumstance
necessary to ensure that the statements are not misleading. Each Borrower Party
(i) is solvent, (ii) is not bankrupt, and (iii) has no outstanding liens, suits,
garnishments, bankruptcies or court actions which may render the Borrower Party
insolvent or bankrupt. Since the date of the last financial statements each
Borrower Party delivered to Lender, no event, act, condition or liability has
occurred or exists, which has had, or may reasonably be expected to have, a
material adverse effect upon (A) such Borrower Party's business, condition
(financial or otherwise) or operations, or (B) such Borrower Party's ability to
perform or satisfy, or Lender's ability to enforce, any of the Indebtedness.

 

(e)     No Default. No Event of Default exists.

 

(f)     Trade Name. Borrower does not do business under any trade name or other
name with respect to the Property or otherwise.

 

(g)     Litigation. There are no suits or proceedings (including condemnation)
pending or (to Borrower's knowledge, after reasonable inquiry) threatened
against or affecting any Borrower Party or the Property or involving the
validity, enforceability or priority of any of the Loan Documents. Borrower has
not received notice from any Governmental Authority alleging that any Borrower
Party or the Property is violating any Applicable Law.

 

4

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(h)     Title and Authority; Permitted Encumbrances. Borrower is the lawful
owner of good and marketable title to the Property free and clear from all
liens, security interests and encumbrances, except the lien and security
interest evidenced by the Security Instrument and the Permitted Encumbrances.
Borrower has good right and authority to transfer and encumber the Property and
to grant a security interest in the Collateral. There are no mechanics' or
materialmen's liens, or other claims that may constitute a lien on the Property
other than claims for Real Estate Taxes which are not yet due or payable. There
are no defaults under any of the Permitted Encumbrances. No Permitted
Encumbrance has been modified unless approved by Lender in writing.

 

(i)     Taxes. Each Borrower Party has filed all required Tax returns. Each
Borrower Party has paid all Taxes for which it is obligated, other than those
Taxes which (A) are not yet delinquent or (B) the appropriate Borrower Party is
diligently, and in good faith, contesting and for which the Borrower Party has
made adequate reserves acceptable to Lender.

 

(j)     Foreign Person. Borrower is not a "foreign person" within the meaning of
the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701 (i.e.,
Borrower is not a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the Internal
Revenue Code and the regulations promulgated thereunder). Borrower's Taxpayer
Identification Number is true and correct.

 

(k)     ERISA. (i) Borrower is not an "employee benefit plan" or a "governmental
plan" within the meaning of ERISA; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; (iii) Borrower's assets do not constitute "plan assets"
under ERISA; and (iv) one or more of the following circumstances is true: (1)
Equity interests in Borrower are publicly offered securities under ERISA or are
securities issued by an investment company registered under the Investment
Company Act of 1940; (2) Less than 25% of the value of any class of equity
interests in Borrower is held by "benefit plan investors" within the meaning of
ERISA; or (3) Borrower qualifies as an "operating company," a "venture capital
operating company," or a "real estate operating company" within the meaning of
ERISA. Borrower will deliver to Lender such certifications and other evidence
periodically requested by Lender, in its sole discretion, to verify the
representations in this Subsection.

 

(l)     Executive Order 13224; OFAC. No Borrower Party or any Person with which
a Borrower Party is associated or affiliated is (i) referred to or described in
Executive Order 13224 (Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism, as amended) or (ii)
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department. Borrower will not use any Loan proceeds
in violation of any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department.

 

(m)     Purpose. The Loan is solely for the purpose of carrying on or acquiring
Borrower's business, and is not for personal, family, household or agricultural
purposes. Borrower does not use any portion of the Property as Borrower's
residence or business homestead and, therefore, no portion of the Property is
exempt from forced sale under Applicable Bankruptcy Law or any other Applicable
Law. Borrower will not use any Loan proceeds to purchase or carry "margin stock"
within the meaning of Federal Reserve Regulation U (12 C.F.R. §§ 221 et seq., as
amended).

 

(n)     Investment Company Act. No Borrower Party is (i) an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or (iii) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.

 

(o)     No Financing Statement. There are no effective financing statements
covering any of the Collateral, except for those financing statements filed in
connection with the Loan.

 

(p)     Location of Collateral. All tangible Collateral is located on the Land.

 

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(q)     Compliance with Applicable Law. Borrower and the Property comply with
all Applicable Laws. Borrower has not received notice that it or the Property is
violating Applicable Law. Borrower has obtained all requisite approvals, permits
and other authorizations from all Governmental Authorities with jurisdiction
over the Property, Borrower and Borrower's businesses.

 

(r)     Brokerage Commissions. Any brokerage commission due in connection with
any Lease has been paid in full.

 

(s)     Leases.

 

(i)     Borrower is the sole owner of the entire lessor's interest in the Leases
and has good title to, and the full right to assign, the Leases and Rent and no
other Person has any right, title or interest in the Leases or the Rent.
Borrower has not assigned the Leases or the Rent to any Person, other than
Lender.

 

(ii)     Borrower has delivered to Lender a true and complete copy of each Lease
and a rent roll.

 

(iii)     Each of the Leases is (A) in writing, (B) valid and subsisting, (C) in
full force and effect, and (D) except as disclosed to Lender in writing,
unmodified.

 

(iv)     After the Effective Date, Borrower has not collected Rent under any
Lease more than one month in advance of its due date.

 

(v)     No Tenant has: (A) an option to purchase any of the Property; (B) a
right to terminate its Lease without Lender's prior consent; or (C) any defense,
counterclaim or set-off to payment of the Rent.

 

(vi)     There are no existing defaults under the Leases; and no event has
occurred, which with the passage of time or the giving of notice (or both) would
constitute a default under the Leases. Borrower has taken all steps necessary to
continue each Lease in force and effect until at least 12 months after the
Maturity Date. Borrower has not, without Lender's prior written consent, (A)
waived any default under, (B) released any obligated Person under, or (C) agreed
to terminate, any Lease.

 

(t)     Collateral. Borrower is the sole owner of, has good title to, and the
right to assign, the Collateral. No Person (other than Borrower or Lender) has
any right, title or interest in the Collateral. The Leases, Licenses and
Contracts are (or will be when issued or entered into) in full force and effect
and there are no defaults (or any events which with the passage of time or the
giving of notice, would be a default) under the Leases, Licenses or Contracts.
Borrower has not assigned, transferred, encumbered, created or permitted any
lien upon or charge against the Collateral (except in favor of Lender). Borrower
has not done anything which might prevent Lender from enjoying and exercising
any of its rights and privileges under the Loan Documents. Borrower has
delivered to Lender a complete list, and certified copies, of all Contracts and
Licenses. Borrower has furnished to Lender the Plans and Specifications. The
Plans and Specifications comply with all Applicable Laws. There are no pending,
or (to Borrower's knowledge) threatened or contemplated, special or other
assessments against the Property.

 

(u)     Condition of Property. The Property has all necessary utility services
and legally sufficient parking required for Borrower's use of the Property. The
Property has legal access to all streets, alleys and easements necessary to
serve the Property, and all of the streets, alleys and easements use have been
completed, dedicated and accepted by the appropriate Governmental Authority. The
Property is in good condition and repair with no deferred maintenance. Borrower
is not aware of any latent or patent defects in the Property.

 

(v)     Operating Account. Borrower maintains all operating accounts for the
Property (including security deposit accounts) with Lender.

 

(w)     Environmental.

 

6

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(i)     Compliance. Borrower (A) is in compliance with all applicable
Environmental Laws, (B) has obtained all Environmental Approvals required to
operate its business as presently conducted or as reasonably anticipated to be
conducted, (C) has not received any written communication, whether from a
Governmental Authority, citizens group, employee or otherwise, that alleges that
Borrower or Guarantor has failed to comply with any Environmental Law, and (D)
no circumstance exists that may prevent or interfere with Borrower's full
compliance in the future with all applicable Environmental Laws.

 

(ii)     No Claim. There is no Environmental Claim pending or threatened against
Borrower or the Property.

 

(iii)     No Violation. There are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge or disposal of any Material of Environmental Concern that could form
the basis of any Environmental Claims against Borrower or the Property.

 

(iv)     No Materials of Environmental Concern. There are no on-site or off-site
locations in which Borrower has stored, disposed or arranged for the disposal of
Materials of Environmental Concern. There are no underground storage tanks
located on Property. There is no asbestos in the Improvements. No
polychlorinated biphenyls (PCBs) are used or stored at the Property.

 

(x)     No Reliance. Borrower has made the decision to enter into the Purchase
Agreement and the Hilti Lease based on its own investment decisions and due
diligence investigation, and that in connection therewith has not in any manner
relied on Lender and agrees that each of such actions is its free and voluntary
act.

 

ARTICLE IV.
COVENANTS AND AGREEMENTS OF BORROWER

 

4.1.     Covenants and Agreements. Borrower covenants to Lender as follows:

 

(a)     Change of Name, Identity or Structure. Borrower shall not (i) change its
name, identity (including trade name) or its entity structure or governance
without notifying Lender of any change in writing at least 30 days prior to the
effective date of the change or (ii) sell all or substantially all of its assets
or merge or consolidate with any corporation, partnership, limited liability
company or other legal entity.

 

(b)     Indemnity. Borrower's obligations under this Section 4.1(b) survive (1)
payment in full of all Indebtedness, (2) maturity of the Loan and (3)
termination of this Agreement and the other Loan Documents.

 

(i)     Borrower shall protect, defend, indemnify, reimburse and hold each
Indemnified Party harmless for, from and against all Claims of every kind, known
or unknown, foreseeable or unforeseeable, which may be imposed upon, asserted
against or incurred or paid by an Indemnified Party at any time, arising out of
or in any way connected with (A) the Loan, (B) the Property, (C) any Loan
Document, (D) bodily injury, death, or property damage occurring in, upon or
adjacent to the Property, through any cause whatsoever, (E) Indemnified Party's
exercise of remedies under the Loan Documents, (F) any act performed or omitted
to be performed by any Indemnified Party under any Loan Document, (G) any
Borrower failure to perform its obligations under any Contract or License, (H)
any Event of Default, (I) any Environmental Claim, or (J) any Borrower Party
violation of Applicable Law, INCLUDING ANY claims ACTUALLY OR ALLEGEDLY ARISING
FROM THE ORDINARY, CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE, OR STRICT
LIABILITY, OF ANY INDEMNIFIED PARTY, except to the extent a court of competent
jurisdiction determines in a final, non-appealable judgment that the Claims
actually arose from the Indemnified Party's gross negligence or intentional
misconduct.

 

(ii)     If an Indemnified Party notifies Borrower of any Claims for which
Borrower's

 

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indemnity in Subsection (i) above applies, Borrower shall, on behalf of the
Indemnified Party, assume and conduct, with due diligence and in good faith, the
investigation and defense of the Claims with counsel selected by the Indemnified
Party. If both Borrower and an Indemnified Party are defendants to the Claims
and the Indemnified Party has been advised in writing by counsel that there may
be legal defenses available to it which are inconsistent with those available to
Borrower, then the Indemnified Party may select separate counsel to participate
in the investigation and defense of the Claims on its own behalf, and Borrower
will pay or reimburse the Indemnified Party for all Attorneys' Fees incurred
with respect to separate counsel.

 

(iii)     If an Indemnified Party notifies Borrower of any Claims for which
Borrower's indemnity in Subsection (i) above applies and Borrower fails, within
15 days after being notified of the Claims, to take the actions required under
Subsection (ii) above, then (A) notwithstanding to the contrary in any of the
Loan Documents, an Event of Default will immediately occur, and (B) the
Indemnified Party may contest (or settle) the Claims at Borrower's expense using
counsel selected by the Indemnified Party.

 

(c)     Fees and Expenses. Borrower shall pay, immediately upon Lender's demand,
all fees (including appraisal fees, filing and recording fees, inspection fees,
survey fees, taxes, brokerage fees and commissions, abstract fees, title policy
fees, lien or security interest search fees, escrow fees, and Attorneys' Fees)
and all other costs Lender or Borrower incurs in connection with (A) the Loan
and the Loan Documents, (B) any Event of Default, (C) Lender's (1) exercise of
remedies under the Loan Document or (2) protection of the Property, or (D) any
modification to the Loan Document.

 

(d)     Waivers.

 

(i)     Borrower, with respect to the Indebtedness, waives, to the extent
permitted by the Governing Law: (A) PRESENTMENT FOR PAYMENT; (B) DEMAND; (C)
NOTICE OF DEMAND, DISHONOR AND NONPAYMENT; (D) NOTICE OF INTENTION TO
ACCELERATE; (E) NOTICE OF ACCELERATION; (F) NOTICE OF DISPOSITION OF COLLATERAL;
(G) THE DEFENSE OF IMPAIRMENT OF COLLATERAL; (H) THE RIGHT TO A COMMERCIALLY
REASONABLE SALE OF COLLATERAL; (I) PROTEST AND NOTICE OF PROTEST; and (J)
DILIGENCE IN COLLECTING, AND BRINGING SUIT AGAINST ANY OTHER PERSON.

 

(ii)     Borrower further waives and releases, to the extent permitted by the
Governing Law, the rights (A) of redemption, valuation, and appraisement of the
Property or other Collateral, (B) to (1) marshaling of Borrower's assets
(including the Property), (2) the sale in inverse order of alienation, (3) a
homestead exemption concerning any of the Collateral, and (C) to any matter to
defeat, reduce or affect the Lender's rights under the terms of the Loan
Documents to sell the Collateral or collect the full Indebtedness.

 

(e)     Books and Records. Borrower shall keep accurate books and records in
accordance with GAAP. Lender and its representatives may, at any time during
reasonable business hours, inspect and copy all of Borrower's books and records
(including all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction and operation of the
Improvements).

 

(f)     Financial Statements and other Reports. Borrower shall deliver to Lender
the below statements and reports on or before the below delivery deadline.
Borrower shall also deliver to Lender any other information, reports or
certificates as and when Lender requests.

 

Statement or Report

Frequency

Delivery Deadline

Borrower's audited annual financial statements

Annually

Within [90/120] days after each fiscal year ends

Borrower's financial statements

Quarterly

Within 30 days after each fiscal quarter ends

Guarantor's balance sheet

Annually

Within 90 days after each fiscal year ends

 

8

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Guarantor's personal financial statement

Annually

Within 90 days after each fiscal year ends

Audited annual financial statements of Hilti

Annually

Within [90/120] days after each fiscal year of Hilti

Confirmation of payment of rent by Hilti and CAM payments under Hilti Lease

Annually

Within 90 days after each anniversary of the Effective Date

Copies of filed federal income tax returns of Guarantor

Annually

Within 30 days after filing

 

All statements and reports must be in scope and detail reasonably satisfactory
to Lender. During any Event of Default Period, Lender may require that all
statements and reports be prepared, audited and certified (at Borrower's cost
and expense) by an independent certified public accountant, acceptable to
Lender. Each rent roll must, with respect to each of the Leases, contain: (i)
each Tenant's name and address; (ii) rental amount; (iii) square footage of the
premises; (iv) security deposit; (v) commencement date; (vi) termination date;
(vii) date through which rent is paid; and (viii) the occurrence of any default.
Each Guarantor balance sheet must include a detailed global schedule of all real
estate interests, directly or indirectly, owned. Borrower shall provide Lender
with such additional financial, management, or other information regarding any
Borrower Party or the Property, as Lender may request. Upon Lender's request,
Borrower shall deliver all items required by this Subsection in an electronic
format or by electronic transmission reasonably acceptable to Lender.

 

(g)     Compliance Certificate. Borrower shall deliver a Compliance Certificate
to Lender on or before the Compliance Certificate Due Date.

 

(h)     Estoppel Certificate. Borrower shall:

 

 

(i)

within 10 Business Days after receiving Lender's request, deliver a certificate
stating (or explaining why the statement is false) (A) that the Loan Documents
are valid and binding obligations of Borrower, (B) that the Loan Documents are
enforceable against Borrower in accordance with their terms, (C) the Principal
Amount, (D) that the Loan Documents have not been released, subordinated or
modified, (E) the date of the last Loan payment, and (F) that Borrower is
entitled to no offsets or defenses against enforcement of the Loan Documents;
and

 

 

(ii)

within 10 Business Days after receiving Lender's request, deliver a certificate
from each requested Tenant, in form and substance acceptable to Lender,
confirming the terms of the Tenant's Leases.

 

(i)     Further Assurances. Borrower shall, on Lender's request and at
Borrower's cost promptly: (i) correct any defect concerning the Loan Documents,
the Leases or the Collateral; (ii) execute, deliver and file any instrument, and
do anything Lender determines to be necessary or desirable to carry out the
purposes of the Loan Documents; (iii) take all necessary action to promptly
protect the liens or the security interests under the Loan Documents against any
Person other than Lender; (iv) take all actions necessary or desirable in
Lender's determination to comply with the requirements or requests of any
Governmental Authority; and (v) submit to Lender such additional information
concerning the Collateral or the Contractors as Lender may reasonably request.

 

(j)     Location and Use of Collateral. All tangible Collateral will be used in
the business of Borrower and shall remain in Borrower's control at all times at
Borrower's risk of loss.

 

(k)     Insurance Requirements.

 

(i)     Casualty; Business Interruption. Borrower must, at all times, keep the
Collateral insured, to the extent available, against damage or loss from all
hazards for the full insurable replacement cost of the Collateral (without
reduction for depreciation or co-insurance

 

9

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and without any exclusions or reduction of policy limits for acts of domestic
and foreign terrorism and other specified action or inaction). Borrower must, at
all times, also keep boiler and machinery insurance, domestic and foreign
terrorism coverage and such other insurance for the Collateral as Lender
reasonably requires. Borrower must keep the Collateral insured against loss by
flood if the Property is, now or in the future, located in an area in which
flood insurance is available under Applicable Law. Borrower shall maintain
business interruption insurance, including use and occupancy, rental income loss
and extra expense, for all periods covered by Borrower's property insurance for
a limit equal to twelve (12) calendar months' exposure, all without any
exclusions or reduction of policy limits for acts of domestic and foreign
terrorism or other specified action or inaction.

 

(ii)     Liability and Other Insurance. Borrower shall maintain: (A) commercial
general liability insurance with respect to the Property providing for limits of
liability in the amount approved by Lender for both injury to or death of a
person and for property damage per occurrence; (B) umbrella liability coverage
in the amount and to the extent required by Lender; and (C) other liability
insurance Lender reasonably requires from time to time. In addition, Borrower
shall maintain (1) worker's compensation insurance and employer's liability
insurance covering employees at the Property employed by Borrower (in the
amounts required by Applicable Laws), and (2) business interruption insurance.

 

(iii)     Form of Policies. All insurance policies must be fully paid and
non-assessable when issued. All insurance policies must contain the provisions,
endorsements, and expiration dates that Lender reasonably requires. All
insurance policies must (A) be issued by insurance companies (1) authorized to
do business in the State, and (2) approved by Lender, (B) if available, include
a standard mortgagee clause, without contribution, in the name of Lender, (C)
name Lender as an additional insured or loss payee, (D) not be cancellable,
amendable or alterable without 30 days' prior written notice to Lender, and (E)
include a waiver of subrogation for all liability and workers compensation
coverage issued in favor of Lender.

 

(iv)     General. Borrower shall not carry separate or additional insurance
concurrent in form or contributing to any loss for which coverage is required
under this Subsection (k) unless approved by Lender in all respects. If Lender
(or a third-party purchaser at or after a foreclosure) acquires title to the
Collateral, then all of Borrower's interest in all insurance policies then in
force concerning the Collateral will immediately vest in Lender (or the
purchaser of the Collateral). Lender's approval of any insurance policy or
insurer is not a representation or warranty of (A) the insurer's solvency or (B)
the sufficiency of any insurance policy. Borrower shall comply with all
insurance policy requirements and restrictions. Borrower will also provide all
additional insurance which Lender reasonably requires and approves. If Lender
requires, Borrower shall assign to Lender (on forms acceptable to Lender in its
discretion) all insurance policies required under the Loan Documents. Any
insurance proceeds Lender receives, because of (X) an assignment required under
the Loan Documents or (Y) Lender being named loss payee, are Collateral and are
not trust funds. If Borrower fails to obtain any insurance policy the Loan
Documents require or Lender requires from time to time, then Lender may (without
prior notice to Borrower) obtain the required insurance. The cost of any
insurance Lender obtains for the account of Borrower will be Additional Costs.

 

(l)     Escrow. As additional security for the Indebtedness and Borrower's
obligations under the Loan Documents, Borrower shall, upon Lender's written
request, and until the Maturity Date, establish and maintain the Tax and
Insurance Escrow Account. Upon such request, Borrower will deposit into the Tax
and Insurance Escrow Account a sum equal to all Real Estate Taxes and Insurance
Premiums for the then current year, as Lender estimates. Thereafter, on each
Interest Payment Date, Borrower shall pay to Lender, which Lender will deposit
into the Tax and Insurance Escrow Account, sufficient funds (as Lender
estimates) to permit Lender to pay, at least 30 days prior to the due date, the
next installments for Real Estate Taxes and Insurance Premiums. Borrower shall
ensure that Lender receives, at least 30 days prior to the due date, all
invoices for Real Estate Taxes and Insurance Premiums. So long as no Event of
Default has occurred and Lender has received all invoices for Real Estate Taxes
and Insurance Premiums, Lender shall pay all invoices for Real Estate Taxes and
Insurance

 

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Premiums. Any excess amounts in the Tax and Insurance Escrow Account may, at
Lender's option and subject to Applicable Law, be retained in the account for
future use, applied to the Indebtedness or refunded to Borrower. Borrower shall
immediately remit to Lender funds (as Lender determines and demands) sufficient
to satisfy any deficiency in the Tax and Insurance Escrow Account. The Tax and
Insurance Escrow Account is not, unless otherwise explicitly required by
Applicable Law, an escrow or trust fund. The Tax and Insurance Escrow Account
will not bear interest. The Tax and Insurance Escrow Account may be commingled
with the general funds of Lender. During an Event of Default Period, Lender may
apply the Tax and Insurance Escrow Account funds to the Indebtedness as Lender
determines.

 

(m)     Operation of Property. Borrower shall operate the Property in accordance
with all Applicable Laws and in the same manner as is customary and usual in the
operation of comparable properties in the same metropolitan area as the
Property. Borrower shall not use or allow the use of the Property in any manner
which constitutes a public or private nuisance. Without obtaining Lender's prior
written consent, Borrower shall: (i) use all commercially reasonable efforts to
oppose any zoning reclassification of the Property, (ii) not seek, or acquiesce
to, any zoning reclassification or variance for the Property; (iii) not impose
any restrictive covenants or encumbrances upon the Property; (iv) not execute or
file any subdivision plat affecting the Property; (v) not consent to any
municipality's annexation of the Property; (vi) not permit the Property to be
operated as a cooperative or condominium; (vii) not permit any drilling or
exploration for, or extraction, removal or production of, minerals from the
surface or subsurface of the Property; (viii) not permit any action or inaction
which may reasonably be expected to diminish the value of the Property; (ix) not
engage another Person to operate or manage the Property; or (x) not permit the
Property to be included in any special taxing district.

 

(n)     Repair and Maintenance. Borrower shall keep the Property in good order,
repair, condition and appearance. Borrower shall promptly make all necessary
repairs and replacements, to the Property. Borrower shall insure that the
Property is not deteriorated, misused, abused or wasted. All replacements to the
Property must be equal or better than the replaced Property was when it was new.
Borrower may not, without Lender's prior written consent: (i) erect any new
buildings, structures or other improvements on the Property; (ii) except for the
foregoing repairs, remove any Property from the Land; or (iii) make any
structural alteration or any other alteration to the Property involving an
estimated expenditure of $50,000 or more. Lender (or its designee) may, at
Borrower's expense, inspect or examine the Property during normal business hours
and without unnecessarily interrupting the Tenants or the operations of the
Property. Except during any Event of Default Period, Lender (or its designee)
shall give Borrower at least 24 hours advance notice (by any means and not
subject to the terms of Section 6.18 below). Borrower shall assist Lender (and
its designees) in completing any inspection. Borrower (or its designee) may
accompany Lender (and its designee) during any inspection of the Property. If
Lender's inspection reveals that repairs to the Property are necessary, then
Borrower shall complete all repairs or other work to Lender's reasonable
satisfaction within 60 days after Lender delivers written notice of the
necessary repairs to Borrower.

 

(o)     Appraisal. At Borrower's expense, Lender may obtain from time to time an
Appraisal. The cost for any Appraisal are Additional Costs. Borrower shall
cooperate (including providing access to the Collateral) with anyone preparing
an Appraisal.

 

(p)     Casualty and Condemnation.

 

(i)     Borrower's Obligation. If any Damage or a Taking occurs, then Borrower
shall promptly (A) notify Lender of the Damage and take all necessary steps to
preserve the Collateral, (B) at Borrower's expense (1) diligently prosecute any
Taking proceedings, (2) consult and cooperate with Lender in handling the Taking
proceedings, and (C) subject to Sections 4.1(p)(ii) – (iv) below and regardless
of whether the Net Proceeds are, or Award is, sufficient, commence and
diligently (but, unless Lender approves otherwise in writing, no later than 90
days after the Damage occurs) complete the Restoration. Borrower shall comply
with Lender's reasonable requirements to preserve the Collateral. Borrower may
not settle any Taking proceedings without Lender's prior written consent. Lender
may (but is not obligated

 

11

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to) participate in all Taking proceedings. Borrower shall sign and deliver all
instruments Lender requests in connection with Lender's participation in any
Taking proceeding. All of Lender's reasonable costs in any Taking proceeding are
Additional Costs.

 

(ii)     Lender's Rights. Borrower will remain liable for the Indebtedness
outstanding after Lender applies any Net Proceeds or Award. Lender will not pay
interest on any Net Proceeds or Award Lender holds. If Borrower receives any
insurance proceeds for the Damage or an Award, then Borrower shall promptly
deliver all of the proceeds or Award to Lender, without deduction.
Notwithstanding anything in the Loan Documents, at law or in equity to the
contrary, the Net Proceeds and Award will not be trust funds and Lender may
dispose of the Net Proceeds or Award as permitted in the Loan Documents.
Borrower assumes all risk of loss from any Damage or Taking.

 

a.     If any Damage occurs which is, at least partially, covered by insurance,
then: (A) if Borrower does not promptly make an insurance claim for the Damage,
then Lender may, but is not obligated to, make the insurance claim; (B) if
Lender makes an insurance claim, then Borrower authorizes and empowers Lender to
settle, adjust, or compromise the claim; (C) Borrower authorizes and directs the
insurer to make any Damage payment directly to Lender; and (D) unless otherwise
expressly set forth in Subsection (iii) below, Lender may apply the Net Proceeds
to the Indebtedness in any order it determines.

 

b.     Borrower assigns all Awards to Lender. All Awards must be paid to Lender.
Lender may (A) collect, receive, and give receipt for, any Award, (B) accept any
Award in any amount without question, and (C) appeal any judgment, decree, or
Award. Borrower shall sign and deliver all instruments Lender requests to
evidence Borrower's assignments and authorizations in this Subsection.

 

(iii)     Application of Net Proceeds or Award. Except during an Event of
Default Period, Lender shall make the Net Proceeds or the Award available to
Borrower for Restoration if: (A) prior to beginning the Restoration, in Lender's
determination, the Restoration is practical and will be completed (1) within a
reasonable time and (2) at least 90 days prior to the Stated Maturity Date; (B)
prior to beginning the Restoration, in Lender's determination, Borrower has
sufficient business interruption insurance; (C) prior to beginning the
Restoration, Borrower enters into Contracts acceptable to Lender for
Restoration; (D) prior to beginning the Restoration, if applicable, all Tenants
have waived any termination rights arising from the Damage or Taking; (E) prior
to the beginning and until completion of the Restoration, Borrower has deposited
and continuously maintains all Additional Funds with Lender; and (F) prior to
the beginning and until completion of the Restoration, in Lender's
determination, once the Restoration is complete, the Debt Coverage Ratio will
exceed 1.25:1.00. Lender may (as Lender determines in its sole discretion) apply
against the Indebtedness any Net Proceeds or Award in excess of the Restoration
costs.

 

(iv)     Disbursement of Net Proceeds or Award. If Net Proceeds or an Award are
available for Restoration, then Lender shall, in its sole discretion, establish
a disbursement procedure (including lien releases and title insurance) and
periodically make the Award or Net Proceeds (and the Additional Funds, if any)
available to Borrower (in installments).

 

(v)     Effect on Indebtedness. Prior to, during and after any Damage or Taking,
Borrower must continue to pay the Indebtedness and perform its obligations under
the Loan Documents. Lender's receipt of Net Proceeds, Rent Loss Proceeds,
Additional Funds or an Award does not reduce the Indebtedness until Lender
actually applies Net Proceeds, Rent Loss Proceeds, Additional Funds or the Award
to the Indebtedness.

 

(q)     Title Insurance. On or before the Effective Date, Borrower shall furnish
to Lender, at Borrower's expense, the Loan Title Policy. If the Loan Title
Policy becomes invalid, or the insurer becomes insolvent or is placed in
receivership, then Borrower shall, within 30 days after Lender's demand, furnish
to Lender, at Borrower's expense, a substitute Loan Title Policy.

 

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(r)     Collateral. Until the Maturity Date, Borrower:

 

(i)     shall faithfully perform each of its affirmative and negative
obligations under the Additional Collateral and the Leases;

 

(ii)     shall promptly enforce against all Persons (other than Lender) the
terms of the Additional Collateral and the Leases;

 

(iii)    may not, without Lender's prior written approval, (A) waive, modify or
amend any terms of the Additional Collateral or the Leases, (B) release or
discharge any Person from its obligations under any of the Additional Collateral
or the Leases, or (C) terminate any of the Licenses, Contracts or Leases;

 

(iv)    may not enter into any new Contracts without Lender's prior written
approval;

 

(v)     subject to the terms of the Security Instrument, may not enter into any
new Leases without Lender's prior written approval;

 

(vi)   shall, unless Lender otherwise agrees in writing, assign to Lender any
letter of credit securing any Tenant Lease obligations; and

 

(vii)     shall give Lender prompt notice of any actual or alleged default under
the Additional Collateral or the Leases along with a copy of any written notice
Borrower receives concerning the actual or alleged default.

 

(s)     Litigation. Borrower will promptly furnish to the Lender written notice
of any litigation in which any Borrower Party is involved and any litigation
affecting the Property or relating to the Improvements, all only to the extent
that such litigation would materially adversely affect any Borrower Party's
ability to perform under the Loan Documents to which such Borrower Party is a
party or materially adversely impair the ability of Borrower to carry on its
business substantially as now conducted or contemplated.

 

(t)     Indebtedness. Borrower shall not incur any indebtedness (including any
contingent indebtedness) other than with Lender in excess of $500,000 in the
aggregate.

 

(u)     Limitation on Dividends. Borrower shall not declare, make or pay any
dividend or distribution, or set apart any sum or any of its assets for the
payment of any dividend of distribution, if a Default or Event of Default
exists, or such action would be reasonably expected to result in a Default or
Event of Default (including pro forma compliance with the Debt Coverage Ratio
and the Debt-to-Worth Ratio).

 

(v)     Hilti Lease. Borrower shall not modify the Hilti Lease, terminate the
Hilti Lease or waive any default by Hilti under the Hilti Lease without the
prior written consent of Lender.

 

ARTICLE V.
DEFAULTS AND REMEDIES

 

5.1.     Event of Default. The term "Event of Default" means that:

 

(a)     Monetary Obligations. Borrower fails to pay: (i) prior to the Maturity
Date, any Indebtedness within 5 days after it is due and payable; or (ii) all of
the Indebtedness on the Maturity Date; or

 

(b)     Representations. Any Borrower Party representation to Lender in the Loan
Documents is false or misleading in any material respect; or

 

(c)     Bankruptcy Event. A Bankruptcy Event occurs; or

 

(d)     Third Party Matters. Any Borrower Party (i) is in default under any
agreement (other than the Loan Documents), (ii) fails to pay any final money
judgment, (iii) becomes party to any proceeding, or (iv) fails to comply with
any Applicable Laws, which may (in Lender's determination) materially and
adversely impair (A) the Borrower Party's ability to perform its obligations
under the

 

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Loan Documents, or (B) the value of, or Lender's rights in, the Collateral; or

 

(e)     Transfers; Liens; Debt. Without Lender's prior written consent (which
Lender may withhold for any reason or condition upon any event or consideration,
as Lender determines in its sole discretion), Borrower:

 

(i)     sells, leases (except as expressly permitted in the Loan Documents),
exchanges, assigns, transfers, conveys or otherwise disposes of any part of, or
any interest in, the Property, or legal or equitable title to any part of, or
any interest in, the Property is vested in any Person other than Borrower or
Lender, by operation of law or otherwise, whether voluntary or involuntary; or

 

(ii)     creates or permits any (voluntary or involuntary) lien, whether
statutory, constitutional or contractual (except for any lien for Real Estate
Taxes on the Collateral which are not delinquent), security interest or other
encumbrance, conditional sale or other title retention document, against or
covering any portion of the Collateral; or

 

(f)     Death; Dissolution; Change in Ownership or Control. Any Borrower Party
dies or becomes legally incapacitated, dissolves, liquidates, merges or
consolidates; or any interest in any Borrower Party is, voluntarily or
involuntarily, assigned, encumbered, or otherwise transferred; or, any time
after the Effective Date, the Person Controlling or owning Borrower changes; or

 

(g)     Financial Reporting. Lender does not receive any item on the date it is
due under Section 4.1(f); or

 

(h)     DCR Test Default. A DCR Test Default occurs; or

 

(i)     DTW Test Default. A DTW Test Default occurs; or

 

(j)     Hilti Lease. Hilti is 30 or more days past due on rent or any other
payment to Borrower, as landlord, under the Hilti Lease; or

 

(k)     Loan to Value Default. A Loan to Value Default occurs; or

 

(l)     Non-Monetary Obligations. Any Borrower Party fails, on or before the
expiration of the Grace Period, to timely perform any of its obligations in any
Loan Document, other than those failures specifically governed by any other (i)
Subsection of this Section 5.1, or (ii) Section of this Agreement or the Loan
Documents.

 

5.2.     Remedies.

 

(a)     Pre-Event of Default. Lender may file, appear in, or defend any Loan
Matter. Lender may employ counsel (including in-house counsel) and incur any
expenses, including Attorneys' Fees, in connection with any Loan Matter. If
Lender incurs any expense in connection with any Loan Matter, then the
expenditure will bear interest at the Default Rate from the date incurred until
the date on which Borrower fully repays the expenditure along with all accrued
interest. The expenditure and all accrued interest are Indebtedness. Borrower
shall immediately pay to Lender all amounts due under this Subsection upon
Lender's demand.

 

(b)     Post-Event of Default. Subject to any limitations under the Governing
Law and the applicable Laws of the State, during any Event of Default Period:

 

(i)     Lender may declare all Indebtedness in its entirety to be immediately
due and payable or exercise any right at law or in equity, or any remedy
expressly provided in any of the Loan Documents, including foreclosing any liens
or security interests;

 

(ii)     Lender may: (1) enforce all Additional Collateral terms and exercise
all rights under the Additional Collateral; (2) enter into, terminate, renew or
modify Contracts or Licenses, and make concessions to Governmental Authorities;
and (3) exercise all proprietary rights in, and fully utilize, the Plans and
Specifications.

 

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(iii)     Contractors and Governmental Authorities may: (1) continue work under
the Additional Collateral under the sole direction of Lender; and (2) permit
Lender to retain and use the Additional Collateral for any purpose Lender deems
appropriate. In furtherance of the foregoing, any Person may rely on an
affidavit from any officer, agent or attorney of Lender confirming that an Event
of Default Period exists.

 

By exercising any rights under the Loan Documents, Lender does not (unless
Lender expressly agrees in writing) become (i) a party to any of the Additional
Collateral, or (ii) liable to any Person, EVEN IF THE LIABILITY ACTUALLY OR
ALLEGEDLY AROSE FROM THE ORDINARY, CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE,
OR STRICT LIABILITY OF LENDER. Lender will only be liable for liabilities if a
court of competent jurisdiction determines in a final, non-appealable judgment
that the liability arose from Lender's gross negligence or intentional
misconduct.

 

Lender's rights under this Section are in addition to any other rights and
remedies Lender may have under the Loan Documents, at law, in equity or
otherwise. Lender may (but will not be obligated to) also:

 

(i)     at Borrower's sole cost and expense, take whatever action Lender deems
necessary or appropriate, including the use of legal proceedings, to (A) cause
Borrower to vacate the Property, and (B) take possession of the Property;

 

(ii)     at Borrower's sole cost and expense, employ security watchmen to
protect the Property; or

 

(iii)     at Borrower's sole cost and expense, perform or cause to be performed
any covenant or agreement of Borrower under any of the Loan Documents.

 

(c)     Costs. All sums Lender incurs in connection with exercising its rights
under the Loan Documents will be (1) additional Indebtedness and will bear
interest from the date on which Lender incurs the sum until the date on which
the sum is repaid in full at the Default Rate, and (2) secured by the Loan
Documents. In addition to Lender's rights under the Loan Documents, Lender will
be automatically subrogated to all rights of any Person receiving any sum from
Lender.

 

ARTICLE VI.
GENERAL CONDITIONS

 

6.1.     Waiver. Lender may, without impairing its rights under the Loan
Documents (a) waive or not enforce any term of the Loan Documents (b) release
any part of the Collateral from the lien or security interest of the Loan
Documents or (c) release any Person, directly or indirectly, liable for the
Indebtedness or any covenant in the Loan Documents, without releasing the
liability of any other Person.

 

6.2.     Lender's Action or Inaction. The liens, security interests or other
rights of Lender in any Loan Document will not be impaired by any indulgence,
moratorium or release that Lender may grant, including (a) any renewal,
extension, increase or modification which Lender may grant with respect to any
Indebtedness, (b) any surrender, compromise, release, renewal, extension,
exchange or substitution which Lender may grant in respect of the Property, or
any part thereof or any interest therein, or (c) any release or indulgence
granted to any endorser, guarantor or surety of any Indebtedness. If Lender
takes additional security, then Lender will not be deemed to have released or
impaired Lender's liens, assignments, security interests or other rights in and
to the Property or under the Loan Documents and Borrower's, Guarantor's and any
other endorser's, guarantor's or other surety's liability will not be affected,
and the rights of any permitted junior lienholder will not be improved, thereby.
Lender may resort to any Collateral (or to any other security now existing or
hereafter given to secure payment of the Indebtedness) in such order as Lender
deems best (in its sole discretion) without waiving any of the rights, benefits,
liens or security interests evidenced by the Security Instrument.

 

6.3.     Lender's Rights. Lender may waive any Event of Default without waiving
any other prior or subsequent Event of Default. Lender may remedy any Event of
Default without waiving the Event of Default remedied. Lender's failure to
exercise (in any period of time) any right, power or remedy after any Event of
Default will not be a waiver of (i) any Event of Default or (ii) Lender's right
to exercise any power or remedy at

 

15

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a later date. Lender's single or partial exercise of any right, power or remedy
under the Loan Documents will not exhaust the same or preclude any other or
further exercise thereof, and every such right, power or remedy under any of the
Loan Documents may be exercised at any time and from time to time. (x) The Loan
Documents will not be modified, (y) no waiver under the Loan Documents will be
granted, and (z) Lender will not have consented to Borrower's departure from any
term of the Loan Documents, unless Lender has executed such a written (a)
modification, (b) waiver, or (c) consent, and any such modification, waiver or
consent is effective only in the specific instance and purpose for which it was
given and to the extent specified in writing. Borrower will not be entitled to
any additional notice or demand under the Loan Documents, unless specified
therein, regardless of whether Lender has given Borrower any notice or made any
demand on Borrower which was not expressly required under the terms of the Loan
Documents. Lender may accept, on account only, any payment in an amount less
than the amount then due on the Indebtedness without in any way affecting the
existence of an Event of Default.

 

6.4.     Third Party Rights. No Person, other than Lender, the Indemnified
Parties and Borrower is a beneficiary of the Loan Documents. Lender makes no
representations and assumes no duties or obligations to any Person concerning
the Improvements.

 

6.5.     Satisfaction of Condition; Time. Lender may freely establish to its
satisfaction (in its absolute discretion) the existence (or nonexistence) of any
fact actually or implicitly required to satisfy any condition of this Agreement.
Time is of the essence for the Loan Documents.

 

6.6.     Assignment; Loan Participations.

 

(a)     Notwithstanding anything to the contrary in the Loan Documents, Borrower
may not assign its rights under any of the Loan Documents without the prior
written consent of Lender. Any Borrower assignment without Lender's written
consent will (i) be an immediate Event of Default, (ii) relieve Lender from all
further obligations under the Loan Documents, and (iii) at Lender's option, be
null and void.

 

(b)     Lender may assign, sell or offer to assign or sell interests in the Loan
or any portion of the Loan Documents and disseminate to any purchaser, assignee
or prospective purchaser or assignee any information Lender has pertaining to
the Loan, including credit information on Borrower Parties and any of their
respective principals. If Lender makes any assignment or sells any interest in
the Loan, then Borrower shall make all modifications, at Lender's or its
purchaser's or assignee's expense, to this Agreement as will facilitate Lender's
sale or assignment, provided that no modification will materially add to
Borrower's obligations under the Loan Documents.

 

6.7.     Heirs, Successors and Assigns. The Loan Documents (i) are binding upon
Borrower, and its heirs, devisees, representatives, successors and permitted
assigns, including all of Borrower's successors-in-interest in and to all or any
part of the Property, (ii) inure to the benefit of Lender and the Indemnified
Parties, and their respective successors, substitutes and assigns, and (iii)
will constitute covenants running with the Land. All references in this
Agreement to Borrower, Lender or Indemnified Parties will include all of their
respective heirs, devisees, representatives, successors, substitutes and
permitted assigns.

 

6.8.     Exercise of Rights and Remedies. Lender may exercise each right and
remedy under the Loan Documents, at law or in equity at any time and from time
to time. All of Lender's rights and remedies under the Loan Documents, at law or
in equity are separate, distinct and cumulative. Lender's exercise of any right
or remedy under the Loan Documents, at law or in equity will not preclude Lender
from later exercising the same right or remedy, or from exercising any other
right or remedy under the Loan Documents, at law or in equity.

 

6.9.     Headings. The headings of the sections and subsections of this
Agreement are for convenience of reference only and will not affect the scope or
meaning of the sections of this Agreement.

 

6.10.     Inconsistency. If there are any inconsistencies between this Agreement
and the other Loan Documents, then this Agreement will control all
inconsistencies, except those inconsistencies necessary to create or preserve a
valid lien upon or security interest in the Collateral. The Security Instrument
will control all inconsistencies among the Loan Documents concerning the
creation, preservation, perfection and foreclosure of

 

16

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all liens upon or security interests in the Collateral.

 

6.11.     Applicable Law. The Loan Documents and the rights and obligations of
Borrower and Lender are in all respects governed by, and construed and enforced
in accordance with the Governing Law (without giving effect to its principles of
conflicts of law), except for those terms of the Security Instrument pertaining
to the creation, perfections, validity, priority or foreclosure of the liens or
security interests on the Property located within the State, which terms will be
governed by, and construed and enforced in accordance with the laws of the State
(without giving effect to its principles of conflicts of law).

 

6.12.     Forum; Service. BORROWER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN TULSA, OKLAHOMA, OVER ANY
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS. BORROWER AGREES
THAT, IN ADDITION TO ANY METHOD OF SERVICE UNDER APPLICABLE LAW, ALL SERVICE OF
PROCESS IN ANY PROCEEDING RELATING TO THE LOAN DOCUMENTS AND FILED IN ANY STATE
OR FEDERAL COURT SITTING IN TULSA, OKLAHOMA, MAY BE SENT AND GIVEN AS SET FORTH
IN SECTION 6.18.

 

6.13.     Usury. Lender and Borrower intend that the Loan Documents strictly
comply with applicable usury law. Therefore, Lender and Borrower agree that: (i)
none of the terms of the Loan Documents create a contract to pay for the use,
forbearance or detention of money, or interest at a rate in excess of the
Maximum Rate; (ii) no Borrower Party will ever be obligated or required to pay
interest on the Indebtedness or any other sums due under the Loan Documents at a
rate in excess of the Maximum Rate; and (iii) this Section controls over all
other provisions of the Loan Documents which may be in conflict with this
Section. Lender expressly disavows any intention to charge or collect excessive
unearned interest or finance charges on any portion of the Indebtedness. If at
any time the interest received for the Indebtedness exceeds the Maximum Rate,
then Lender will, at its option, either refund to Borrower the amount of the
excess or credit the amount of the excess against the Principal Amount. Borrower
agrees that the Loan is not usurious and agrees that if, at any time, Borrower
believes that the Loan is usurious, it shall give Lender (a) notice of the
condition and (b) 60 days in which to make an appropriate refund or other
adjustment, if necessary, to correct the condition.

 

6.14.     Severability. If any term of the Loan Documents is unenforceable or
invalid, then those terms will either be (i) removed from the Loan Documents, or
(ii) if possible (and acceptable to Lender), reformed by the court finding the
term unenforceable or invalid to be a valid and enforceable term which is as
similar as legally possible to the invalid or unenforceable term. All remaining
portions of the Loan Documents will remain enforceable and valid.

 

6.15.     Counterparts. The Loan Documents may be executed in any number of
counterparts with the same effect as if all signers executed the same
instrument. All counterparts of each Loan Document must be construed together
and will constitute one instrument.

 

6.16.     Joint Liability. If more than one Person is included in the definition
of "Borrower", then each Person included in the definition of "Borrower" will be
jointly and severally liable for Borrower's obligations under this Agreement.

 

6.17.     Modification or Termination. The Loan Documents may only be amended,
modified or terminated by a written instrument executed by Lender and each
Borrower Party (who is a party to the Loan Document being amended, modified or
terminated). Notwithstanding the foregoing, Borrower agrees that it will be
bound by any written amendment or modification of the Loan Documents between
Lender and any subsequent owner of the Collateral, with or without notice to
Borrower, and Borrower's obligations under the Loan Documents will not be
impaired because of any such amendment or modification. This Section does not
permit Borrower to transfer any of the Collateral.

 

6.18.     Notice. Except for notices which are required to be given differently
by Applicable Law, any notice or communication required or permitted under the
Loan Documents must be made in writing and sent by (a) personal delivery, (b)
expedited delivery service with proof of delivery, or (c) United States Mail,
postage prepaid, registered or certified mail, addressed as follows:

 

17

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To Lender:

MidFirst Bank
2201 S. Utica Place

Tulsa, OK 74114

Attn: Marc Short, Senior Vice President

 

 

With a copy to:

MidFirst Bank
Legal Department
501 NW Grand Blvd.
Oklahoma City, OK 73118

 

 

To Borrower:

10302 E. 55th Place

Tulsa, OK 74146

Attn: Randall W. White, Chairman, President and CEO

 

or to such other address(es) as Lender or Borrower may designate in writing and
deliver in accordance with this Section. Any change of address will be effective
on the 5th Business Day after notice is given pursuant to the terms of this
Section. Any notice or communication sent in accordance with this Section will
be deemed to be given (i) at the time of personal delivery, or (ii) if sent by
delivery service or mail, as of the date of the first attempted delivery at the
address and in the manner provided in this Section. Borrower consents to Lender
recording any telephone communications between Lender and Borrower.

 

6.19.     Signatures. The Loan Documents may be executed by Facsimile Signature
and delivered by electronic means, including a PDF (or other format) attachment
to an email or fax. Subject to Applicable Law, any Loan Documents executed by
Facsimile Signature will have the same force and effect as a Loan Document
containing an original signature and will be binding on all parties to the Loan
Documents. Lender may require that any Loan Document with a Facsimile Signature
be confirmed by an original signature. However, Lender's failure to request or
Borrower's failure to deliver any original signature confirmation will not limit
the effectiveness of any Loan Document executed by Facsimile Signature. In this
Section, "original signature" means a manually signed document by a natural
person, as opposed to an electronic signature, and "Facsimile Signature" means
the signature of a natural person produced by mechanical means, printer or
stamp.

 

6.20.     No Partnership. Borrower and Lender are not partners or joint
venturers with respect to the Property. Nothing in the Loan Documents is
intended to create any partnership, joint venture or association between
Borrower and Lender.

 

6.21.     Waiver of Jury Trial. BORROWER AND LENDER WAIVE ANY RIGHT TO A JURY
TRIAL CONCERNING ANY DISPUTE ARISING FROM OR IN CONNECTION WITH ANY OF THE LOAN
DOCUMENTS. BORROWER AND LENDER HAVE BOTH BEEN ADVISED BY COMPETENT COUNSEL IN
CONNECTION WITH THIS WAIVER.

 

6.22.     Consent of Lender; Approvals. Except as otherwise expressly provided
in the Loan Documents, if Lender's approval, consent or judgment is required
under any Loan Document, then Lender may, in its sole discretion, exercise its
judgment in granting or denying its approval or consent regardless of the
reasonableness of the request or Lender's judgment.

 

6.23.     Imaging. Lender may image and destroy the executed, original Loan
Documents. Borrower waives any right it has, or may have in the future, to claim
that the imaged copies of the Loan Documents are not originals or the best
evidence of the Loan Documents.

 

6.24.     Entire Agreement. The Loan Documents constitute the entire
understanding and agreement between Borrower and Lender with respect to the
transactions arising in connection with the Loan. The Loan Documents supersede
all prior written or oral understandings and agreements between Borrower and
Lender with respect to the Loan.

 

6.25.     Damage Waiver. Borrower (and any other Borrower Party, who now or
hereafter executes a Loan Document) and Lender agree that neither party will be
liable to the other party or any other Person for any punitive, exemplary,
consequential or other special damages which may actually or allegedly arise
from the

 

18

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Loan, the Loan Documents or the Collateral, INCLUDING ANY PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES ACTUALLY OR ALLEGEDLY ARISING FROM THE ORDINARY,
CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE, GROSS NEGLIGENCE OR STRICT
LIABILITY, OF ANY BORROWER PARTY OR LENDER. The foregoing waiver does not limit
or otherwise impair the terms of Section 2.1(b) or Section 4.1(b) above.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

 

 

 

 

 

 

 

 

 

19

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Borrower and Lender have executed this Agreement to be effective on the
Effective Date.

 

EDUCATIONAL DEVELOPMENT CORPORATION,

a Delaware corporation

 

By:                                                                            
    

Name: Randall W. White

Title:   Chairman, President and CEO

 

 

 

 

 

 

 

 

Borrower's Signature Page

to

Loan Agreement

 

 

 

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MIDFIRST BANK, a federally chartered savings association

 

 

By:                                                               

Name: Marc Short

Title:   Senior Vice President

 

 

 

 

 

 

 

Lender's Signature Page

to

Loan Agreement

 

 

 

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EXHIBIT A

 

Definition of Terms

 

"Additional Collateral" means, collectively, any (a) Licenses, (b) Contracts,
(c) Plans and Specifications, (d) Net Proceeds, (e) Rent Loss Proceeds, and (f)
Additional Funds.

 

"Additional Costs" means (1) all costs, losses and expenses Lender (in its
reasonable determination) incurs (at any time) from (i) making or maintaining
the Loan, (ii) protecting the Collateral, or (iii) enforcing its remedies under
the Loan Documents during an Event of Default Period, and (2) any reduction in
any amount (including lost profits) to which Lender is entitled under the Loan
Documents. Additional Costs includes costs which (a) subject Lender to any tax,
duty or other charge with respect to the Loan, or changes the basis of taxation
of any amounts payable to Lender under the Loan (other than taxes imposed on the
overall net income of Lender or of its applicable lending office by the
jurisdiction in which Lender's principal office or such applicable lending
office is located) or (b) impose or modify any reserve, special deposit or
similar requirements relating to Lender. For purposes of this definition, the
term "Lender," at Lender's option, includes Lender's present and future
participants in the Loan.

 

"Additional Funds" means the difference, in Lender's determination from time to
time, between (i) the cost to complete the Restoration and (ii) the Net Proceeds
or Award, as the case may be.

 

"Agreement" means this Loan Agreement as, from time to time, amended, modified
or restated.

 

"Amortized Installment Amount" means an amount which would fully amortize the
stated principal amount of Tranche B of the Loan, together with interest thereon
at the initial interest rate determined in accordance with Section 2.1(a)(i),
over an assumed 20-year amortization period commencing as of the Effective Date.
Beginning December 1, 2016, and on each December 1 thereafter, the required
monthly installment amount shall be re-determined, effective with the
installment payment due on the following January 1, with the re-determined
installment amount being an amount which would fully amortize the then-unpaid
principal balance of Tranche B of the Loan, together with interest thereon at
the fluctuating interest rate determined in accordance with Section 2.1(a)(i) as
of such re-determination date, over the remainder of such assumed 20-year
amortization period.

 

"Applicable Bankruptcy Law" means Title 11 of the United States Code, any
regulation or rule promulgated thereunder or any other present or future
insolvency, bankruptcy or similar law, including laws concerning assignments for
the benefit of creditors, appointment of a receiver, trustee, custodian or
liquidator, under the laws of the United States or the State of Oklahoma.

 

"Applicable Law" means all Laws, covenants, conditions and restrictions
(including private restrictive covenants) and other requirements relating to or
affecting Borrower, Guarantor, Lender or the Property.

 

"Appraisal" means collectively (a) an MAI appraisal of the Property ordered by
Lender, dated within 90 days of its use, and prepared by a licensed appraiser
satisfactory to Lender, (b) any appraisal of the Property acceptable to Lender
in its sole discretion, (c) an environmental site assessment of the Property
acceptable to Lender in its sole discretion, and (d) any condition report of the
Property of the Property acceptable to Lender in its sole discretion.

 

"Attorneys' Fees" means all reasonable fees, costs and expenses of attorneys
(including allocated costs of in-house counsel), other professional consultants
and experts.

 

"Award" means all condemnation awards, judgments, decrees, or proceeds of any
sale in lieu of condemnation.

 

"Bankruptcy Event" means any of the following events: (i) any Borrower Party
files a petition for relief under Applicable Bankruptcy Law; (ii) any party
(other than Lender) files an involuntary petition for relief under Applicable
Bankruptcy Law against any Borrower Party and such petition is not dismissed
within 60 days after being filed; (iii) a court of competent jurisdiction enters
an order for relief under any Applicable Bankruptcy Law which is related in any
way to a petition filed under (i) or (ii) above; (iv) any Borrower Party, at any
time, requests or consents to any composition, rearrangement, extension,
reorganization or other relief of any debtor;

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

(v) any Borrower Party (A) is generally not paying its debts as they become due,
(B) is insolvent, (C) fraudulently transfers any of its assets to the detriment
of any of its creditors, (D) makes an assignment for the benefit of creditors,
or (E) admits in writing that it is unable to pay its debts as they become due;
or (vi) a receiver, trustee or custodian is appointed for, or takes possession
of, all or substantially all of a Borrower Party's assets or any of the
Property, either in a proceeding a Borrower Party brings, or any other Person
(except for Lender) brings against a Borrower Party, and any such appointment is
not discharged or such possession is not terminated within 60 days after
commencing, or the Borrower Party consents to or acquiesces in such appointment
or possession (unless such consent or acquiescence is in connection with any
Lender initiated proceeding). A Bankruptcy Event may exist even if an Event of
Default cannot be declared because of Applicable Bankruptcy Law.

 

"Borrower" means Educational Development Corporation, a Delaware corporation,
and its successors and permitted assigns.

 

"Borrower Party" means, collectively, Borrower, Guarantor, any general partner
or managing member of Borrower or Guarantor, and any general partner or managing
member in any partnership or limited liability company that is a general partner
or managing member of Borrower or Guarantor.

 

"Business Day" means each day of the week which is not a Saturday, Sunday or a
holiday recognized and observed by the Board of Governors of the Federal Reserve
System.

 

"Claims" means any claim (including any Environmental Claim or any other claims
arising under Environmental Laws), demands, liabilities, losses, damages, causes
of action, judgments, penalties, fines, costs and expenses (including Attorneys'
Fees, and of the investigation and defense of any claim, whether or not such
claim is ultimately defeated, and the settlement of any claim or judgment
including all value paid or given in settlement).

 

"Collateral" means the Property and all of Borrower's other assets which are
ever situated on, derived from or used in connection with the Property, whether
now owned or hereafter acquired, including the Leases and all proceeds from such
assets of Borrower.

 

"Compliance Certificate" means a certificate in the form set forth in Exhibit C
of this Agreement and executed by the Controller (or equivalent position) on
behalf of Borrower in favor of Lender.

 

"Compliance Certificate Delivery Date" means each date on which (1) Borrower
delivers a Compliance Certificate to Lender, and (2) if Borrower fails to
deliver a Compliance Certificate to Lender, then the Compliance Certificate Due
Date.

 

"Compliance Certificate Due Date" means the [30th / 45th] calendar day following
the end of each fiscal quarter. If the Compliance Certificate Due Date is on a
day which is not a Business Day, then the Compliance Certificate Due Date will
be the next Business Day.

 

"Contract Rate" means a per annum rate of interest equal to the lesser of (i)
[__].0%, and (ii) the Maximum Rate.

 

"Contractors" means, collectively, all parties with whom or to whom the
Contracts have been made or are given.

 

"Contracts" means all contracts, subcontracts, agreements, site development
agreements, service agreements, management agreements, warranties and purchase
orders, together with any and all renewals, extensions and modifications thereof
and all amendments, exhibits and addenda thereto, which have been or will be
executed by or on behalf of Borrower, or which have been assigned to Borrower,
in connection with the acquisition, use, operation or maintenance of the
Property or the construction of improvements on the Property.

 

"Control" or "controls" means, with respect to Borrower, the power to direct the
management and policies of Borrower, directly or indirectly, whether through the
ownership of voting securities or other beneficial interests, by contract or
otherwise; and the terms "Controlling" and "Controlled" have meanings
correlating to the foregoing.

 

"Damage" means any damage to, or loss or destruction of, the Property.

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

"DCR Test Default" means that, as of the last day of any fiscal quarter, the
Debt Coverage Ratio is less than 1.25:1.00.

 

"DTW Test Default" means that, as of the last day of any fiscal quarter, the
Debt to Worth Ratio is greater than 3.00:1.00.

 

"Debt Coverage Ratio" means, as of any date of determination, the ratio that
Lender reasonably determines on a trailing 12-month basis of (i) Borrower's net
income, plus interest expense, plus depreciation and amortization expense, less
dividends, to (ii) Debt Service. Upon request by Lender, an officer of Borrower
shall certify, in detail satisfactory to Lender, documentation of such amounts,
and such amounts shall not be effective until approved by Lender.

 

"Debt to Worth Ratio" means, as of any date of determination, the ratio that
Lender reasonably determines of Borrower's total liabilities to Borrower's
tangible net worth.

 

"Debt Service" means Borrower's current maturities of long term indebtedness and
capital leases plus interest expense for such period.

 

"Default Rate" means a per annum rate of interest equal to the lesser of (i) the
rate determined in accordance with Section 2.1(a) plus 5.0%, and (ii) the
Maximum Rate.

 

"Dollars" and "$" means lawful money of the United States of America, which at
the time of payment is legal tender for the payment of all public and private
debts.

 

"Effective Date" means the date on which each condition set forth on Exhibit D
of this Agreement is satisfied.

 

"Environmental Approvals" means any permit, license, approval, ruling, variance,
exemption or other authorization required under applicable Environmental Laws.

 

"Environmental Claim" means, with respect to any Person, any notice, claim,
demand or similar written communication by any other Person alleging potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the presence, or
release into the environment, of any Material of Environmental Concern at any
location, whether or not owned by such Person or (b) circumstances forming the
basis of any violation (or alleged violation) of any Environmental Law.

 

"Environmental Laws" means all federal, state and foreign laws and regulations
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
The term "Environmental Laws" includes the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations, guidelines and the like
addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including Subtitle I relating to underground
Storage Tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air
Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the
Occupational Safety and Health Act; the Federal Water Pollution Control Act; the
Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act;
the National Environmental Policy Act; and the River and Harbors Appropriation
Act. The term "Environmental Law" also includes any present and future federal,
state and local laws, statutes, ordinances, rules, regulations, guidelines and
the like, as well as common law, conditioning transfer of property upon a
negative declaration or other approval of a Governmental Authority of the
environmental condition of the Property; requiring notification or disclosure of
any releases of any Material of Environmental Concern or other environmental
condition of the Property to any Governmental Authority or other Person, whether
or not in connection with transfer of title to or interest in the Property; or
imposing conditions or requirements in connection with permits or other

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

authorization for lawful activity.

 

"ERISA" means, as amended, the Employee Retirement Income Security Act of 1974,
as amended, and all rules, regulations and guidance promulgated thereunder.

 

"Event of Default" has the meaning set forth in Section 5.1.

 

"Event of Default Period" means the period beginning on the occurrence of an
Event of Default and ending on the cure of such Event of Default and any other
Events of Default outstanding.

 

"GAAP" means those generally accepted accounting principles and practices
recognized from time-to-time by the Financial Accounting Standards Board (or any
generally recognized successor). Borrower, Guarantor and all parties who must
deliver any financial information to Lender under this Agreement or any other
Loan Document must consistently apply GAAP to all statements and information
delivered or provided, or otherwise made available, to Lender.

 

"Governing Law" means all United States (applicable to transactions in the State
of Oklahoma) and Oklahoma laws, statutes, regulations, ordinances, rules,
judgments, orders, decrees, and other governmental restrictions (include any
amendment or modification thereto) relating to or affecting the Loan, the
Indebtedness or the Loan Documents.

 

"Governmental Authority" means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank, or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supranational bodies such as the European Union or the European Central Bank).

 

"Grace Period" means a period of either: (i) 30 days after Lender delivers
written notice to Borrower (the "Initial Grace Period") and demand for the
performance of any default of any covenant, agreement, warranty or condition set
forth in this Agreement; or (ii) 60 days if (A) Borrower immediately commences
and diligently pursues the cure of such default and delivers (prior to the end
of the Initial Grace Period) to Lender a written request for more time, and (B)
Lender reasonably determines that the default cannot be cured within the Initial
Grace Period but can be cured within 90 days after the default.

 

"Guarantor" means, collectively, Randall W. White and Carol White.

 

"Guaranty" means the Continuing Guaranty of even date herewith made by Guarantor
in favor of Lender relating to the Loan.

 

"H.15 Report" means the Federal Reserve Board's Statistical Release H.15,
"Selected Interest Rates." The H.15 Report is generally available at the Federal
Reserve Board's website: www.federalreserve.gov.  If the H.15 Report is replaced
or otherwise unavailable, Lender will (in its discretion) designate the
replacement report or another report reasonably comparable to the H.15 Report.
Lender's designated replacement report will replace the H.15 Report.

 

"Hilti" means Hilti, Inc., an Oklahoma corporation.

 

"Hilti Lease" means that certain Lease Agreement dated as of the Effective Date,
between Borrower, as landlord, and Hilti, as tenant.

 

"IBA" means the ICE Benchmark Administration or its successor as the
administrator for LIBOR.

 

"ICE" means the Intercontinental Exchange.

 

"Improvements" means all improvements now or hereafter located upon the Land.

 

"Indebtedness" means all obligations, liabilities and indebtedness of Borrower
arising under the Loan Documents (including all Additional Costs).

 

"Indemnified Party" means Lender and its directors, officers, employees and
agents (and their predecessors and successors) and any Person owned or
controlled by, owning or controlling, or under common

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

control or affiliated with Lender or Trustee and their respective successors and
assigns.

 

"Insurance Premiums" means all costs for the insurance policies required under
Section 4.1(k) above.

 

"Interest Payment Date" means the first Business Day of each calendar month
beginning on the first month following the Effective Date and ending on the
earlier of (i) the date the Loan is repaid in full, and (ii) the Maturity Date.

 

"Interest Period" means a 1-month period commencing on the first day, and ending
on the last day, of each calendar month.

 

"Land" means the land described in Exhibit B of this Agreement.

 

"Late Charge" means a product equal to 5.0% times the amount of any Past Due
Indebtedness.

 

"Law" or "Laws" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction, or binding judicial (or tribunal) decisions of
any Governmental Authority. All references to Law include any amendment or
modification to the Law, and all regulations, rulings, and other Laws
promulgated under such Law.

 

"Leases" means all rights, title, interests, estates, powers, privileges,
options and other benefits of Borrower in, to and under the lease, sublease,
license, rental and other use or occupancy agreements which now or hereafter
cover or affect any portion of the Property, together with all renewals,
extensions, modifications, amendments, subleases and assignments of such lease
agreements.

 

"Lender" means MIDFIRST BANK, a federally chartered savings association, and its
successors and assigns.

 

"Lender's Offices" means 501 Northwest Grand Boulevard, Oklahoma City, OK 73118
or any other place Lender designates from time to time.

 

"LIBO Rate" means the lesser of (i) the Maximum Rate, and (ii) the rate per
annum equal to the sum of (a) the quotient of the LIBOR Index for Interest
Period in question divided by (1 minus the Reserve Requirement), and (b) 2.75%.

 

"LIBOR" means the London Interbank Offered Rate.

 

"LIBOR Business Day" means each day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits)
in London, England.

 

"LIBOR Index" means the rate equal to the offered rate (and not the bid rate)
for deposits in U.S. Dollars for a period equivalent to the Interest Period, as
published by the IBA two LIBOR Business Days before the beginning of the
applicable Interest Period.

 

"Licenses" means, collectively, all licenses, permits, approvals, certificates
and agreements with or from all boards, agencies, departments, governmental or
otherwise, relating directly or indirectly to the ownership, use, operation and
maintenance of the Property, or the construction of the Improvements, whether
heretofore or hereafter issued or executed.

 

"Loan" means the loan Lender makes to Borrower pursuant to this Agreement (or
the other Loan Documents) up to the Maximum Principal Amount.

 

"Loan Documents" means this Agreement, the Guaranty and all other instruments
evidencing, guarantying, securing, governing or relating to the Loan, and all
amendments, modifications, renewals, substitutions and replacements of any of
the foregoing Loan Documents.

 

"Loan Matter" means any action or proceeding which may affect the rights or
duties of any Person under the Loan Documents.

 

"Loan Title Policy" means the title insurance policy (i) naming Lender as the
insured, (ii) in the amount of the Maximum Principal Amount, (iii) in form
(including endorsements), date and substance, and written by a

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

title insurance underwriter, satisfactory to Lender, (iv) insuring a valid first
lien upon the Land and Improvements by virtue of the Security Instrument, and
(v) containing no exceptions other than the preprinted exceptions and the
Permitted Encumbrances.

 

"Loan to Value Default" means any point in time that the Loan to Value Ratio
exceeds 80%.

 

"Loan to Value Ratio" means the percentage resulting from a fraction having (i)
a numerator equal to the Principal Amount plus any unfunded amounts under the
Loan, and (ii) a denominator equal to the value of the Land and Improvements, as
determined by the most recent Appraisal, established as of the date on which the
fraction is determined.

 

"Loan Year" means a consecutive 365-day period. The first Loan Year will begin
on the Effective Date and end at 11:59 PM Central Time (Daylight or Standard
Time, as applicable) on the 364th day thereafter.

 

"Material of Environmental Concern" means all chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products, and
all other substances regulated by Environmental Laws.

 

"Maturity Date" means the earlier to occur of (i) the Stated Maturity Date and
(ii) the date on which the entire Loan must be paid in full after acceleration
pursuant to the terms of the Loan Documents.

 

"Maturity Months" means the number of months between the Prepayment Date and the
Stated Maturity Date.

 

"Maximum Principal Amount" means the lesser of (i) $18,500,000.00 and (ii) 80%
of the Loan to Value Ratio.

 

"Maximum Rate" means the maximum interest rate permitted under the Governing
Law.

 

"Net Proceeds" means the amount of all insurance proceeds Lender receives less
all reasonable costs and expenses Lender incurs in connection with the
collection and disbursement of the proceeds.

 

"Paid in Full Mark" means any payment Borrower tenders to Lender marked "paid in
full," "without recourse," or any similar language.

 

"Past Due Indebtedness" means the sum of any Indebtedness which Borrower fails
to pay to Lender within the earlier to occur of (i) 10 days after the date on
which the Indebtedness is due, and (ii) the Maturity Date.

 

"Payment Deadline" means no later than 11:00 a.m. Central Time (Daylight or
Standard Time, as applicable) on the date any payment is due and payable under
this Agreement or the date any voluntary prepayment is made.

 

"Permitted Encumbrances" means the encumbrances, approved by Lender, set forth
in Schedule B of the Loan Title Policy, except for the preprinted exceptions to
title coverage.

 

"Person" means a natural person, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.

 

"Plans and Specifications" means, collectively, all plans, specifications,
notes, drawings, approvals, certifications and similar work product (and all
modifications thereof) relating to the Property, including all engineering
plans, complete architectural plans, specifications and work drawings, projected
costs and related information, site plans, proposed plat dedications and
proposed development restrictions and conditions and all requisite building
permits authorizing construction of the Improvements (and repairs, modifications
and additions thereto).

 

"Prepayment Date" means the day on which Borrower (or any other Person) tenders
any Indebtedness which is not then due and payable.

 

"Prepayment Period" means the period of time beginning on the 60th day before
the Stated Maturity

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

Date and ending on the Stated Maturity Date.

 

"Prepayment Premium" means an amount equal to product of (i) the Principal
Amount being prepaid, and (ii) (a) in the first Loan Year, 5.0%, (b) in the
second Loan Year, 4.0%, (c) in the third Loan Year, 3.0%, (d) in the fourth Loan
Year, 2.0%, (e) in the fifth Loan Year, 1.0%, (f) in the sixth Loan Year, 1.0%,
(g) in the seventh Loan Year, 1.0%, and (h) in each Loan Year thereafter, 0.0%.

 

"Prime Rate" means, for any day, the lesser of (i) the prime rate as published
in The Wall Street Journal's "Money Rates" table for that day plus 2.15%, and
(ii) the Maximum Rate. If multiple prime rates are quoted in the "Money Rates"
table, then the highest quoted prime rate will be the Prime Rate. If the Prime
Rate is no longer published in The Wall Street Journal, then Lender will choose
a substitute index rate for calculating the Prime Rate and promptly notify
Borrower of the new index rate. The Prime Rate may not be the lowest rate of
interest that Lender charges. The Prime Rate will fluctuate with each change
reported by The Wall Street Journal (or as determined by Lender if no longer
published by The Wall Street Journal) as of the day of any reported change.

 

"Principal Amount" means, at any point in time, that portion of the principal
balance of the Loan which is unpaid.

 

"Principal Payment Date" means the first Business Day of each calendar month
beginning on January 1, 2016, and ending on the earlier of (i) the date the Loan
is repaid in full, and (ii) the Maturity Date.

 

"Property" means, collectively, the Land, the Improvements and the Additional
Collateral.

 

"Purchase Agreement" means that certain Purchase and Sale Agreement dated as of
October 1,2015, as amended by that certain Addendum No. I dated October 1, 2015,
executed November 6, 2015, between Hilti, as seller, and Borrower, as purchaser,
whereby Borrower will acquire the Land and the Improvements.

 

"Real Estate Taxes" means all ad valorem taxes, assessments and charges
(including ground rents, water and sewer rents, and all other recurring charge)
which may create a lien against the Property.

 

"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as amended or supplemented from time to time.

 

"Rent" means all of the rents, income, receipts, revenues, issues, profits and
other sums of money that are now or at any time hereafter become due and payable
to Borrower under the terms of any Lease or arising or issuing from or out of
any Lease or from or out of the Property or any part thereof, including minimum
rents, additional rents, percentage rents, deficiency rents and liquidated
damages following default, payments in consideration for cancellation of a
Lease, security deposits (whether cash, one or more letters of credit, bonds or
other form of security), advance rents, all proceeds payable under any policy of
insurance covering loss of rents resulting from untenantability caused by
destruction or damage to the Property and all of Borrower's rights to recover
monetary amounts from any lessee in bankruptcy, including (i) rights of recovery
for use and occupancy and damage claims arising out of lease defaults, (ii)
rejection, disaffirmance, repudiation, and similar actions, under Applicable
Bankruptcy Law and other statutes governing the rights of creditors, and (iii)
the immediate and continuing right to collect and receive all of the foregoing.

 

"Rent Loss Proceeds" means the aggregate of any loss or business interruption
insurance proceeds which the carrier acknowledges is payable to Lender.

 

"Reserve Requirement" means the rate at which Lender must maintain reserves
(including any marginal, supplemental or emergency reserves), if any, under
Regulation D of the Federal Reserve System (a) against "Eurocurrency
Liabilities" (as such term is used in Regulation D), or (b) pursuant to
Applicable Law against (i) any category of liabilities which includes deposits
by reference to which the LIBO Rate is to be determined as provided in this
Agreement, or (ii) any category of extensions of credit or other assets which
includes loans the interest rate on which is determined on the basis of rates
referred to in the definition of "LIBO Rate".

 

Exhibit A

to

Loan Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

"Restoration" means the restoration, replacement, and rebuilding of the Property
as nearly as possible to its value and condition immediately prior to any Damage
or Taking in accordance with Plans and Specifications Lender approves.

 

"Security Instrument" means each mortgage, assignment of leases and rents,
security agreement, fixture filing and financing statement (and all amendments
thereto and modifications thereof) executed by Borrower, Guarantor or any other
Person, in favor of Lender concerning the Property.

 

"State" means the state in which the Land is situated.

 

"Stated Maturity Date" means November 30, 2025.

 

"Suspension Notice" means the notice from Lender to Borrower setting forth
Lender's determination that (A) the LIBOR Index is not reported or (B) (as a
result of changes to Applicable Law) it has become unlawful for Lender to make
or maintain the Loan at the LIBO Rate.

 

"Taking" means any threatened or instituted proceedings for the condemnation or
taking by eminent domain, or offer to purchase in lieu of a taking, of all or
any portion of the Property including any change in any street (whether as to
grade, access, or otherwise).

 

"Tax" or "Taxes" means all (1) income, franchise, margin and other taxes, which
now or in the future, may be assessed against a Borrower Party, (2) stamp or
other taxes due with respect to the Loan Documents, (3) taxes and assessments,
which now or in the future, are levied or assessed against the Collateral, (4)
taxes (except for ordinary income taxes) and assessments, which now or in the
future, are levied or assessed against Lender in any way related to the
Indebtedness or the Loan Documents, and (5) all Real Estate Taxes.

 

"Tax and Insurance Escrow Account" means the impound account Borrower
establishes with Lender for the payment of Real Estate Taxes and Insurance
Premiums.

 

"Taxpayer Identification Number" means 73-0750007.

 

"Tenant" means each occupant of any portion of the Land or Improvements under a
Lease.

 

"Tranche A" means $13,400,000 of the principal amount of the Loan, such amount
to bear interest at the Contract Rate as provided in Section 2.1(a).

 

"Tranche B" means $5,000,000 of the principal amount of the Loan, such amount to
bear interest at the LIBO Rate as provided in Section 2.1(a).

 

"Transfer Event" means the conveyance of any Collateral to Lender or another
Person through a foreclosure (or deed in lieu), receivership, bankruptcy or
other voluntary or involuntary Borrower action.

 

"Treasury Note Rate" means the latest Treasury Constant Maturity Series yields
reported, for the last day for which such yields shall have been so reported as
of the applicable LIBOR Business Day, 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 10 years. If necessary,
the yield will be determined by (i) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice, and (ii)
interpolating linearly between reported yields.

 

 

Exhibit A

to

Loan Agreement