Exhibit 10.41
TERM LOAN CREDIT AGREEMENT
AMONG
MHC OPERATING LIMITED PARTNERSHIP,
AN ILLINOIS LIMITED PARTNERSHIP,
AS BORROWER,
MANUFACTURED HOME COMMUNITIES, INC.,
A MARYLAND CORPORATION,
THE REIT,
▇▇▇▇▇ FARGO BANK, N.A.,
BANK OF AMERICA, N.A.,
COMMERZBANK AKTIENGESELLSCHAFT,
NEW YORK BRANCH,
AND
▇▇ ▇▇▇▇▇▇ CHASE BANK
(SUCCESSOR BY MERGER TO ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK)
TOGETHER WITH THOSE ASSIGNEES
BECOMING PARTIES HERETO PURSUANT
TO SECTION 10.11, AS LENDERS,
▇▇▇▇▇ FARGO BANK, N.A.,
AS AGENT AND SOLE LEAD ARRANGER
BANK OF AMERICA, N.A., AS SYNDICATION AGENT,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH, AS
DOCUMENTATION AGENT
AND
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK,
AS DOCUMENTATION AGENT
DATED AS OF FEBRUARY 11, 2002
RECITALS..........................................................................................................1
ARTICLE I - DEFINITIONS...........................................................................................1
1.01 CERTAIN DEFINED TERMS.......................................................................................1
1.02 COMPUTATION OF TIME PERIODS................................................................................21
1.03 TERMS......................................................................................................21
ARTICLE II - LOAN................................................................................................22
2.01 MAKING OF LOAN AND REPAYMENT...............................................................................22
2.02 BORROWING AND INTEREST RATE ELECTION AUTHORIZATION.........................................................23
2.03 INTEREST ON THE LOAN.......................................................................................24
2.04 FEES.......................................................................................................28
2.05 PAYMENTS...................................................................................................29
2.06 INCREASED CAPITAL..........................................................................................30
2.07 NOTICE OF INCREASED COSTS..................................................................................30
2.08 OPTION TO REPLACE LENDERS..................................................................................30
2.09 EXTENSION OPTIONS..........................................................................................31
ARTICLE III - CONDITIONS TO LOAN.................................................................................33
3.01 CONDITIONS TO DISBURSEMENT OF LOAN.........................................................................33
ARTICLE IV - REPRESENTATIONS AND WARRANTIES......................................................................35
4.01 REPRESENTATIONS AND WARRANTIES AS TO BORROWER..............................................................35
4.02 REPRESENTATIONS AND WARRANTIES AS TO THE REIT..............................................................40
ARTICLE V - REPORTING COVENANTS..................................................................................43
5.01 FINANCIAL STATEMENTS AND OTHER FINANCIAL AND OPERATING INFORMATION.........................................43
5.02 PRESS RELEASES; SEC FILINGS AND FINANCIAL STATEMENTS.......................................................46
5.03 ENVIRONMENTAL NOTICES......................................................................................46
5.04 QUALIFYING UNENCUMBERED PROPERTIES.........................................................................46
ARTICLE VI - AFFIRMATIVE COVENANTS...............................................................................47
6.01 WITH RESPECT TO BORROWER:..................................................................................47
6.02 WITH RESPECT TO THE REIT:..................................................................................49
ARTICLE VII - NEGATIVE COVENANTS.................................................................................50
7.01 WITH RESPECT TO BORROWER:..................................................................................50
7.02 WITH RESPECT TO THE REIT:..................................................................................55
ARTICLE VIII - FINANCIAL COVENANTS...............................................................................57
8.01 TOTAL LIABILITIES TO GROSS ASSET VALUE.....................................................................57
8.02 SECURED DEBT TO GROSS ASSET VALUE..........................................................................57
8.03 EBITDA TO INTEREST EXPENSE RATIO...........................................................................57
8.04 EBITDA TO FIXED CHARGES RATIO..............................................................................57
8.05 UNENCUMBERED NET OPERATING INCOME TO UNSECURED INTEREST EXPENSE............................................57
8.06 UNENCUMBERED POOL..........................................................................................57
8.07 MINIMUM NET WORTH..........................................................................................57
8.08 PERMITTED HOLDINGS.........................................................................................57
8.09 CALCULATION................................................................................................59
ARTICLE IX - EVENTS OF DEFAULT; RIGHTS AND REMEDIES..............................................................59
9.01 EVENTS OF DEFAULT..........................................................................................59
9.02 RIGHTS AND REMEDIES........................................................................................63
9.03 RESCISSION.................................................................................................64
ARTICLE X - AGENCY PROVISIONS....................................................................................64
10.01 APPOINTMENT...............................................................................................64
10.02 NATURE OF DUTIES..........................................................................................65
10.03 LOAN CONTINUATION/CONVERSION..............................................................................65
10.04 DISTRIBUTION AND APPORTIONMENT OF PAYMENTS................................................................66
10.05 RIGHTS, EXCULPATION, ETC..................................................................................66
10.06 RELIANCE..................................................................................................67
10.07 INDEMNIFICATION...........................................................................................67
10.08 AGENT INDIVIDUALLY........................................................................................68
10.09 SUCCESSOR AGENT; RESIGNATION OF AGENT; REMOVAL OF AGENT...................................................68
10.10 CONSENTS AND APPROVALS....................................................................................69
10.11 ASSIGNMENTS AND PARTICIPATIONS............................................................................70
10.12 RATABLE SHARING...........................................................................................73
10.13 DELIVERY OF DOCUMENTS.....................................................................................73
10.14 NOTICE OF EVENTS OF DEFAULT...............................................................................74
ARTICLE XI - MISCELLANEOUS.......................................................................................74
11.01 EXPENSES..................................................................................................74
11.02 INDEMNITY.................................................................................................75
11.03 CHANGE IN ACCOUNTING PRINCIPLES...........................................................................76
11.04 SETOFF....................................................................................................76
11.05 AMENDMENTS AND WAIVERS....................................................................................77
ii
11.06 INDEPENDENCE OF COVENANTS.................................................................................78
11.07 NOTICES AND DELIVERY......................................................................................78
11.08 SURVIVAL OF WARRANTIES, INDEMNITIES AND AGREEMENTS........................................................79
11.09 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.....................................................79
11.10 MARSHALING; RECOURSE TO SECURITY; PAYMENTS SET ASIDE......................................................79
11.11 SEVERABILITY..............................................................................................79
11.12 HEADINGS..................................................................................................79
11.13 GOVERNING LAW.............................................................................................79
11.14 LIMITATION OF LIABILITY...................................................................................80
11.15 SUCCESSORS AND ASSIGNS....................................................................................80
11.16 USURY LIMITATION..........................................................................................80
11.17 CONFIDENTIALITY...........................................................................................80
11.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL; WAIVER OF PERMISSIVE COUNTERCLAIMS..81
11.19 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES..............................................................82
11.20 CONSTRUCTION..............................................................................................82
11.21 ENTIRE AGREEMENT..........................................................................................82
11.22 AGENT'S ACTION FOR ITS OWN PROTECTION ONLY................................................................82
11.23 LENDERS' ERISA COVENANT...................................................................................83
11.24. SOLE LEAD ARRANGER, DOCUMENTATION AGENT AND SYNDICATION AGENT............................................83
EXHIBITS
A - Assignment and Assumption
B - Closing Checklist
C - [Intentionally Deleted]
D - Loan Note
E-1 - Notice of Borrowing
E-2 - Notice of Continuation
F - Qualifying Unencumbered Properties
SCHEDULES
4.01(c) - Ownership of Borrower
4.01(r) - Environmental Matters
4.01(v) - Subsidiaries and Investment Affiliates
iii
TERM LOAN CREDIT AGREEMENT
THIS TERM LOAN CREDIT AGREEMENT is dated as of February __,
2002, (as amended, supplemented or modified from time to time, the "Agreement")
and is among MHC Operating Limited Partnership, an Illinois limited partnership
("Borrower"), Manufactured Home Communities, Inc., a Maryland corporation (the
"REIT"), each of the Lenders, as hereinafter defined, and ▇▇▇▇▇ Fargo Bank, N.A.
("▇▇▇▇▇ Fargo") in its capacity as Agent, as Sole Lead Arranger and as a Lender,
Bank of America, N.A. , as Syndication Agent and as a Lender, Commerzbank
Aktiengesellschaft, New York Branch, as Documentation Agent and as a Lender, and
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank (successor by merger to ▇▇▇▇▇▇ Guaranty Trust Company of
New York), as Documentation Agent and as a Lender.
RECITALS
A. Borrower desires to borrow, and the Lenders desire to lend,
One Hundred Million Dollars ($100,000,000) in accordance with the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
AGREEMENT
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings (such meanings to be applicable,
except to the extent otherwise indicated in a definition of a particular term,
both to the singular and the plural forms of the terms defined):
"Accommodation Obligations" as applied to any Person, means
any obligation, contingent or otherwise, of that Person in respect of which that
Person is liable for any Indebtedness or other obligation or liability of
another Person, including without limitation and without duplication (i) any
such Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business), co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make payment other than for
value received and (ii) any obligation of such Person arising through such
Person's status as a general partner of a general or limited
partnership with respect to any Indebtedness, obligation or liability of such
general or limited partnership.
"Accountants" means any nationally recognized independent
accounting firm.
"Adjusted Asset Value" means, as of any date of determination,
(i) for any Property for which an acquisition or disposition by Borrower or any
Subsidiary has not occurred in the Fiscal Quarter most recently ended as of such
date, the product of four (4) and a fraction, the numerator of which is EBITDA
for such Fiscal Quarter attributable to such Property in a manner reasonably
acceptable to Agent, and the denominator of which is eight hundred seventy-five
ten-thousandths (0.0875), and (ii) for any Property which has been acquired by
Borrower or any Subsidiary in the Fiscal Quarter most recently ended as of such
date, the Net Price of the Property paid by Borrower or such Subsidiary for such
Property.
"Affiliates" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means (a) the possession, directly or
indirectly, of the power to vote twenty-five percent (25%) or more of the
Securities having voting power for the election of directors of such Person or
otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting Securities or by contract
or otherwise, (b) the ownership of a general partnership interest in such Person
or (c) the ownership of twenty-five percent (25%) or more of the limited
partnership interests (or other ownership interests with similarly limited
voting rights) in such Person; provided, however, that in no event shall the
Affiliates of Borrower or any Subsidiary or any Investment Affiliate include
Persons holding direct or indirect ownership interests in the REIT or any other
real estate investment trust which holds a general partnership interest in
Borrower if such Person does not otherwise constitute an "Affiliate" hereunder;
provided, further, that the REIT and Borrower shall at all times be deemed
Affiliates of each other.
"Agent" means ▇▇▇▇▇ Fargo in its capacity as administrative
agent for the Lenders under this Agreement, and shall include any successor
Agent appointed pursuant hereto and shall be deemed to refer to ▇▇▇▇▇ Fargo in
its individual capacity as a Lender where the context so requires.
"Agreement" has the meaning ascribed to such term in the
preamble hereto.
"Agreement Party" means any Person, other than the REIT and
Borrower, which concurrently with the execution of this Agreement or hereafter
executes and delivers a guaranty in connection with this Agreement, which as of
the date of determination, is in force and effect.
"Assignment and Assumption" means an Assignment and Assumption
in the form of Exhibit A hereto (with blanks appropriately filled in) delivered
to Agent in connection with each assignment of a Lender's interest under this
Agreement pursuant to Section 10.11.
2
"Applicable Margin" means, for any day, the rate per annum set
forth below opposite the applicable Level Period then in effect:
Level Period Applicable Margin
------------ -----------------
Level I Period 1.25%
Level II Period 1.375%
The Applicable Margin shall be adjusted for all purposes quarterly as soon as
reasonably practicable, but not later than five (5) days after the date of
receipt by Agent of the quarterly financial information in accordance with the
provisions of Section 5.01(a) hereof, together with a calculation by Borrower of
the ratio of Total Liabilities to the sum of Gross Asset Values for Borrower and
each of its Subsidiaries as of the end of the applicable Fiscal Quarter. No
adjustment in the Applicable Margin shall be made retroactively.
"Balloon Payment" means, with respect to any loan constituting
Indebtedness, any required principal payment of such loan which is either (i)
payable at the maturity of such loan or (ii) in an amount which exceeds
twenty-five percent (25%) of the original principal amount of such loan;
provided, however, that the final payment of a fully amortizing loan shall not
constitute a Balloon Payment.
"Base Rate" means, on any day, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall at all times be
equal to the higher of (a) the base rate of interest per annum established from
time to time by ▇▇▇▇▇ Fargo, and designated as its prime rate and in effect on
such day, and (b) the Federal Funds Rate as announced by the Federal Reserve
Bank of New York in effect on such day plus one half percent (0.5%) per annum.
Each change in the Base Rate shall become effective automatically as of the
opening of business on the date of such change in the Base Rate, without prior
written notice to Borrower or Lenders. The Base Rate may not be the lowest rate
of interest charged by any bank, Agent or Lender on similar loans.
"Base Rate Loans" means that portion of the Loan bearing
interest at the Base Rate.
"Base Rent" means the aggregate rent received, on a
consolidated basis, by Borrower or any Subsidiary from tenants which lease
manufactured home community sites owned by Borrower or any Subsidiary minus any
amounts specifically identified as and representing payments for trash removal,
cable television, water, electricity, other utilities, taxes, and other rent
which reimburses expenses related to the tenant's occupancy.
"Benefit Plan" means any employee pension benefit plan as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which a
Person or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, within the immediately
3
preceding five (5) years, maintained, administered, contributed to or was
required to contribute to, or under which a Person or any ERISA Affiliate may
have any liability.
"Borrower" has the meaning ascribed to such term in the
preamble hereto.
"Borrower Plan" shall mean any Plan (A) which Borrower, any of
its Subsidiaries or any of its ERISA Affiliates maintains, administers,
contributes to or is required to contribute to, or, within the five years prior
to the Closing Date, maintained, administered, contributed to or was required to
contribute to, or under which Borrower, any of its Subsidiaries or any of its
ERISA Affiliates may incur any liability and (B) which covers any employee or
former employee of Borrower, any of its Subsidiaries or any of its ERISA
Affiliates (with respect to their relationship with such entities).
"Borrower's Share" means Borrower's and/or the REIT's
collective direct or indirect share of the assets, liabilities, income, expenses
or expenditures, as applicable, of an Investment Affiliate based upon Borrower's
and/or the REIT's percentage ownership (whether direct or indirect) of such
Investment Affiliate, as the case may be.
"Business Day" means (a) with respect to any payment or rate
determination of LIBOR Loans, a day, other than a Saturday or Sunday, on which
Agent is open for business in Chicago and San Francisco and on which dealings in
Dollars are carried on in the London inter bank market, and (b) for all other
purposes any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the States of California and Illinois, or is a day on which
banking institutions located in California and Illinois are required or
authorized by law or other governmental action to close.
"Capital Expenditures" means, as applied to any Person for any
period, the aggregate of all expenditures (whether paid in cash or accrued as
liabilities during that period and including that portion of Capital Leases
which is capitalized on the balance sheet of a Person) by such Person during
such period that, in conformity with GAAP, are required to be included in or
reflected by the property, plant or equipment or similar fixed asset accounts
reflected in the balance sheet of such Person, excluding any expenditures
reasonably determined by such Person as having been incurred for expansion of
the number of manufactured home sites at a manufactured home community owned by
such Person.
"Capital Leases," as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by an agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one (1) year after the date of acquisition
thereof; (b) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from any two
4
nationally recognized rating services reasonably acceptable to Agent; (c)
domestic corporate bonds, other than domestic corporate bonds issued by Borrower
or any of its Affiliates, maturing no more than 2 years after the date of
acquisition thereof and, at the time of acquisition, having a rating of at least
A or the equivalent from two nationally recognized rating service reasonably
acceptable to Agent; (d) variable-rate domestic corporate notes or medium term
corporate notes, other than notes issued by Borrower or any of its Affiliates,
maturing or resetting no more than 1 year after the date of acquisition thereof
and having a rating of at least AA or the equivalent from two nationally
recognized rating services reasonably acceptable to Agent; (e) commercial paper
(foreign and domestic) or master notes, other than commercial paper or master
notes issued by Borrower or any of its Affiliates, and, at the time of
acquisition, having a long-term rating of at least A or the equivalent from a
nationally recognized rating service reasonably acceptable to Agent and having a
short-term rating of at least A-1 and P-1 from S&P and ▇▇▇▇▇'▇, respectively
(or, if at any time neither S&P nor ▇▇▇▇▇'▇ shall be rating such obligations,
then the highest rating from such other nationally recognized rating services
reasonably acceptable to Agent); (f) domestic and Eurodollar certificates of
deposit or domestic time deposits or Eurotime deposits or bankers' acceptances
(foreign or domestic) that are issued by a bank (I) which has, at the time of
acquisition, a long-term rating of at least A or the equivalent from a
nationally recognized rating service reasonably acceptable to Agent and (II) if
a domestic bank, which is a member of the FDIC; and (g) overnight securities
repurchase agreements, or reverse repurchase agreements secured by any of the
foregoing types of securities or debt instruments, provided that the collateral
supporting such repurchase agreements shall have a value not less than 101% of
the principal amount of the repurchase agreement plus accrued interest.
"Closing Checklist" means the Closing Checklist attached
hereto as Exhibit B, as the same may be amended by the parties.
"Closing Date" means the date on which this Agreement shall
become effective in accordance with Section 11.19, which date shall be February
__, 2002 or such later date as to which Agent and Borrower agree in writing.
"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to any Lender, the principal
amount set out under such Lender's name under the heading "Loan Commitment" on
the counterpart signature pages attached to this Agreement or as set forth on an
Assignment and Assumption complying with Section 10.11 and executed by such
Lender, as assignee, as such amount may be adjusted pursuant to the terms of
this Agreement.
"Contaminant" means any pollutant (as that term is defined in
42 U.S.C. 9601(33)) or toxic pollutant (as that term is defined in 33 U.S.C.
1362(13)), hazardous substance (as that term is defined in 42 U.S.C. 9601(14)),
hazardous chemical (as that term is defined by 29 C.F.R. Section 1910.1200(c)),
toxic substance, hazardous waste (as that term is defined in 42 U.S.C. 6903(5)),
radioactive material, special waste, petroleum (including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof), or any constituent of any such substance or waste, including, but not
limited to hydrocarbons (including
5
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, urea formaldehyde insulation, radioactive materials, biological
substances, PCBs, pesticides, herbicides, asbestos, sewage sludge, industrial
slag, acids, metals, or solvents.
"Continuation/Conversion Date" means, with respect to the
continuation of a LIBOR Loan or the conversion of a Base Rate Loan into a LIBOR
Loan, and vice versa, the date of such continuation or conversion.
"Contractual Obligation," as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, lease, contract, undertaking, document or instrument to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject (including without limitation any
restrictive covenant affecting such Person or any of its properties).
"Controlled Ownership Interests" means ownership interests in
a Person where the REIT or Borrower (independently or collectively) has control
over the management and operations of such Person.
"Convertible Securities" means evidences of indebtedness,
shares of stock, limited or general partnership interests or other ownership
interests, warrants, options, or other rights or securities which are
convertible into or exchangeable for, with or without payment of additional
consideration, shares of common stock of the REIT or partnership interests of
Borrower, as the case may be, either immediately or upon the arrival of a
specified date or the happening of a specified event.
"Court Order" means any judgment, writ, injunction, decree,
rule or regulation of any court or Governmental Authority binding upon the
Person in question.
"Debt Service" means, for any period, Interest Expense for
such period, plus scheduled principal amortization (exclusive of Balloon
Payments) for such period on all Indebtedness of the REIT, on a consolidated
basis.
"Development Activity" means construction in process, that is
being performed by or at the direction of Borrower, any Subsidiary or any
Investment Affiliate, of any manufactured home community that will be owned and
operated by Borrower, any Subsidiary or any Investment Affiliate upon completion
of construction, including construction in process of manufactured home
communities not owned by Borrower, any Subsidiary or any Investment Affiliate
but which Borrower, any Subsidiary or any Investment Affiliate has the
contractual obligation to purchase, but excluding construction in process for
the purpose of expanding manufactured home communities that have been operated
for at least one (1) year prior to the commencement of such expansion.
"Documentation Agent" means Commerzbank Aktiengesellschaft,
New York Branch and ▇▇ ▇▇▇▇▇▇ Chase Bank, each in its capacity as a
documentation agent for the Lenders under this Agreement.
6
"DOL" means the United States Department of Labor and any
successor department or agency.
"Dollars" and "$" means the lawful money of the United States
of America.
"EBITDA" means, for any period and without duplication, (i)
Net Income for such period, plus (ii) depreciation and amortization expense and
other non-cash items deducted in the calculation of Net Income for such period,
plus (iii) Interest Expense deducted in the calculation of Net Income for such
period, plus, (iv) Taxes deducted in the calculation of Net Income for such
period, minus (v) the gains (and plus the losses) from extraordinary or unusual
items or asset sales or write-ups or forgiveness of indebtedness included in the
calculation of Net Income for such period, minus (vi) earnings of Subsidiaries
for such period distributed to third parties, plus (or minus in the case of a
loss) (vii) Borrower's Share of the net income (or loss) of each Investment
Affiliate for such period calculated in conformity with GAAP before
depreciation, minus (or plus in the case of a loss) (viii) Borrower's Share of
the gains (or losses) from extraordinary or unusual items or asset sales or
write-ups or forgiveness of indebtedness included in the calculation of the net
income of each Investment Affiliate for such period.
"Environmental Laws" means all federal, state, district, local
and foreign laws, and all orders, consent orders, judgments, notices, permits or
demand letters issued, promulgated or entered thereunder, relating to pollution
or protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or industrial substances or Contaminants into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contamination, chemicals, industrial
substances or Contaminants. The term Environmental Laws shall include, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"); the Toxic Substances Control Act, as
amended; the Hazardous Materials Transportation Act, as amended; the Resource
Conservation and Recovery Act, as amended ("RCRA"); the Clean Water Act, as
amended; the Safe Drinking Water Act, as amended; the Clean Air Act, as amended;
all analogous state laws; the plans, rules, regulations or ordinances adopted,
or other criteria and guidelines promulgated pursuant to the preceding laws or
other similar laws, regulations, rules or ordinances now or hereafter in effect
regulating public health, welfare or the environment.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under federal or state Environmental Laws or
regulations, or (b) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant into
the environment
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
7
"ERISA Affiliate" means any (a) corporation which is, becomes,
or is deemed by any Governmental Authority to be a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Internal
Revenue Code) as a Person or is so deemed by such Person, (b) partnership, trade
or business (whether or not incorporated) which is, becomes or is deemed by any
Governmental Authority to be under common control (within the meaning of Section
414(c) of the Internal Revenue Code) with such Person or is so deemed by such
Person, (c) any Person which is, becomes or is deemed by any Governmental
Authority to be a member of the same "affiliated service group" (as defined in
Section 414(m) of the Internal Revenue Code) as such Person or is so deemed by
such Person, or (d) any other organization or arrangement described in Section
414(o) of the Internal Revenue Code which is, becomes or is deemed by such
Person or by any Governmental Authority to be required to be aggregated pursuant
to regulations issued under Section 414(o) of the Internal Revenue Code with
such Person pursuant to Section 414(o) of the Internal Revenue Code or is so
deemed by such Person.
"Event of Default" means any of the occurrences set forth in
Article IX after the expiration of any applicable grace period expressly
provided therein.
"Facility" means the loan facility of One Hundred Million
Dollars ($100,000,000) described in Section 2.01(a).
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate, rounded upwards to the nearest one hundredth of one percent
(0.01%), per annum equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal Funds brokers of recognized
standing selected by Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any governmental authority succeeding to its
functions.
"Financial Statements" has the meaning ascribed to such term
in Section 5.01(a).
"First Extended Maturity Date" has the meaning ascribed to
such term in Section 2.09(a).
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of Borrower and the REIT,
which shall be the twelve (12) month period ending on the last day of December
in each year.
8
"Fixed Charges" for any Fiscal Quarter period means the sum of
(i) Debt Service for such period, (ii) 3% of Base Rent for such period, and
(iii) Borrower's Share of Capital Expenditures from each Investment Affiliate
for such period.
"Funds from Operations" means the definition of "Funds from
Operations" of the National Association of Real Estate Investment Trusts on the
date of determination (before allocation to minority interests).
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination and which are consistent with the past practices of
the REIT and Borrower.
"Governmental Authority" means any nation or government, any
federal, state, local, municipal or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Gross Asset Value" means, with respect to any Person as of
any date of determination, the sum of the Adjusted Asset Values for each
Property then owned by such Person plus the value of any cash or Cash Equivalent
owned by such Person and not subject to any Lien.
"Indebtedness," as applied to any Person (and without
duplication), means (a) all indebtedness, obligations or other liabilities
(whether secured, unsecured, recourse, non-recourse, direct, senior or
subordinate) of such Person for borrowed money, (b) all indebtedness,
obligations or other liabilities of such Person evidenced by Securities or other
similar instruments, (c) all reimbursement obligations and other liabilities of
such Person with respect to letters of credit or banker's acceptances issued for
such Person's account or other similar instruments for which a contingent
liability exists, (d) all obligations of such Person to pay the deferred
purchase price of Property or services, (e) all obligations in respect of
Capital Leases of such Person, (f) all Accommodation Obligations of such Person,
(g) all indebtedness, obligations or other liabilities of such Person or others
secured by a Lien on any asset of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by, or are a personal liability of, such
Person, (h) all indebtedness, obligations or other liabilities (other than
interest expense liability) in respect of Interest Rate Contracts and foreign
currency exchange agreements, excluding all indebtedness, obligations or other
liabilities in respect of such Interest Rate Contracts to the extent that the
aggregate notional amount thereof does not exceed the aggregate principal amount
of any outstanding fixed or floating rate Indebtedness, obligations or other
liabilities permitted under this Agreement that exist as of the date that such
Interest Rate Contracts are entered into or that are incurred no more than
thirty (30) days after such Interest Rate Contracts are entered into and (i)
ERISA obligations currently due and payable.
"Initial Maturity Date" means August 9, 2003.
9
"Interest Expense" means, for any period and without
duplication, total interest expense, whether paid, accrued or capitalized
(including loan and letter of credit fees and the interest component of Capital
Leases but excluding interest expense covered by an interest reserve established
under a loan facility) of the REIT, on a consolidated basis and determined in
accordance with GAAP.
"Interest Period" means, relative to any LIBOR Loans, the
period beginning on (and including) the date on which such LIBOR Loans are made
as, or converted into, LIBOR Loans, and shall end on (but exclude) the day which
numerically corresponds to such date one (1), two (2), three (3), six (6) or
twelve (12) months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in either case as
Borrower may select in its relevant Notice of Continuation/Conversion pursuant
to Section 2.01(b); provided, however, that:
(a) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day);
(b) no Interest Period may end later than the Termination
Date; and
(c) with the reasonable approval of Agent (unless any Lender
has previously advised Agent and Borrower that it is unable to enter into LIBOR
contracts for an Interest Period of such duration), an Interest Period may have
a duration of less than one (1) month.
"Interest Rate Contracts" means, collectively, interest rate
swap, collar, cap or similar agreements providing interest rate protection.
"Interim Period" has the meaning ascribed to such term in
Section 3.01(g).
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and any successor statute.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by that Person of Securities, or of a
beneficial interest in Securities, of any other Person, and any direct or
indirect loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, advances to employees and
similar items made or incurred in the ordinary course of business), or capital
contribution by such Person to any other Person, including all Indebtedness and
accounts owed by that other Person which are not current assets or did not arise
from sales of goods or services to that Person in the ordinary course of
business. The amount of any Investment shall be determined in conformity with
GAAP except as otherwise specifically provided herein.
"Investment Affiliate" means any Person in whom the REIT,
Borrower or any Subsidiary holds an equity interest, directly or indirectly,
whose financial results are not
10
consolidated under GAAP with the financial results of the REIT or Borrower on
the consolidated financial statements of the REIT and Borrower.
"Investment Mortgages" means mortgages securing indebtedness
directly or indirectly owed to Borrower or any of its Subsidiaries, including
certificates of interest in real estate mortgage investment conduits.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"Land" means unimproved real estate purchased or leased or to
be purchased or leased by Borrower or any of its Subsidiaries for the purpose of
future development of improvements.
"Lender Affiliate" as applied to any Lender, means any other
Person directly or indirectly controlling, controlled by, or under common
control with, that Lender. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means (a) the possession,
directly or indirectly, of the power to vote more than fifty percent (50%) of
the Securities having voting power for the election of directors of such Person
or otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting Securities or by contract
or otherwise, or (b) the ownership of a general partnership interest or a
limited partnership interest representing more than fifty (50%) of the
outstanding limited partnership interests of a Person.
"Lender Reply Period" has the meaning ascribed to such term in
Section 10.10(a). "Lender Taxes" has the meaning ascribed to
such term in Section 2.03(g).
"Lenders" means ▇▇▇▇▇ Fargo and any other bank, finance
company, insurance or other financial institution which is or becomes a party to
this Agreement by execution of a counterpart signature page hereto or an
Assignment and Assumption, as assignee.
"Level I Period" means a period during which the ratio of
Total Liabilities to the sum of Gross Asset Values for Borrower and each of its
Subsidiaries shall be equal to or less than 0.45:1.
"Level II Period" means a period during which the ratio of
Total Liabilities to the sum of Gross Asset Values for Borrower and each of its
Subsidiaries shall exceed 0.45:1 but shall not exceed 0.60:1.
"Liabilities and Costs" means all claims, judgments,
liabilities, obligations, responsibilities, losses, damages (including punitive
and treble damages), costs, disbursements and expenses (including without
limitation reasonable attorneys', experts' and consulting fees and costs of
investigation and feasibility studies), fines, penalties and monetary sanctions,
and interest, direct or indirect, known or unknown, absolute or contingent,
past, present or future.
11
"LIBOR" means, relative to any Interest Period for any LIBOR
Loan, the rate of interest obtained by dividing (i) the rate of interest
determined by Agent (whose determination shall be conclusive absent manifest
error, which shall not include any lower determination by any other banks) equal
to the rate (rounded upwards, if necessary, to the nearest one one-hundredth of
one percent (.01%)) per annum reported by ▇▇▇▇▇ Fargo at which Dollar deposits
in immediately available funds are offered by ▇▇▇▇▇ Fargo to leading banks in
the Eurodollar inter bank market at or about 11:00 AM London time two (2)
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period for a period approximately equal to such
Interest Period and in an amount equal or comparable to the LIBOR Loan to which
such Interest Period relates, by (ii) a percentage expressed as a decimal equal
to one (1) minus the LIBOR Reserve Percentage.
"LIBOR Loans" means those portions of the Loan bearing
interest, at all times during an Interest Period applicable to such portion, at
a fixed rate of interest determined by reference to LIBOR.
"LIBOR Reserve Percentage" means, relative to any Interest
Period, the average daily maximum reserve requirement (including, without
limitation, all basic, emergency, supplemental, marginal and other reserves)
which is imposed under Regulation D, as Regulation D may be amended, modified or
supplemented, on "Eurocurrency liabilities" having a term equal to the
applicable Interest Period (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBOR Loans
is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to United States
residents), which requirement shall be expressed as a decimal. LIBOR shall be
adjusted automatically on, and as of the effective date of, any change in the
LIBOR Reserve Percentage.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, encumbrance
(including, but not limited to, easements, rights-of-way, zoning restrictions
and the like), lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including without limitation any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement (other than a financing statement filed by a
"true" lessor pursuant to Section 9-408 of the Uniform Commercial Code) naming
the owner of the asset to which such Lien relates as debtor, under the Uniform
Commercial Code or other comparable law of any jurisdiction.
"Loan" means the One Hundred Million Dollar ($100,000,000)
loan made pursuant to this Agreement.
"Loan Documents" means, this Agreement, the Loan Notes, the
REIT Guaranty, and all other agreements, instruments and documents (together
with amendments and supplements thereto and replacements thereof) now or
hereafter executed by the REIT, Borrower or any Agreement Party, which evidence,
guaranty or secure the Obligations.
12
"Loan Notes" means the promissory notes evidencing the Loan in
the aggregate original principal amount of One Hundred Million Dollars
($100,000,000) executed by Borrower in favor of Lenders, as they may be amended,
supplemented, replaced or modified from time to time. The initial Loan Notes and
any replacements thereof shall be substantially in the form of Exhibit D.
"Manufactured Home Community Mortgages" means Investment
Mortgages issued by any Person engaged primarily in the business of developing,
owning, and managing manufactured home communities.
"Manufactured Home Community Ownership Interests" means
partnership, joint venture, membership or other equity interests issued by any
Person engaged primarily in the business of developing, owning, and managing
manufactured home communities.
"Material Adverse Effect" means a material adverse effect upon
(i) the ability of Borrower or the REIT to perform its covenants and obligations
under this Agreement and the other Loan Documents or (ii) the ability of Agent
or Lenders to enforce the Loan Documents. The phrase "has a Material Adverse
Effect" or "will result in a Material Adverse Effect" or words substantially
similar thereto shall in all cases be intended to mean "has or will result in a
Material Adverse Effect," and the phrase "has no (or does not have a) Material
Adverse Effect" or "will not result in a Material Adverse Effect" or words
substantially similar thereto shall in all cases be intended to mean "does not
or will not result in a Material Adverse Effect."
"Maturity Date" means the Initial Maturity Date, as such date
may be extended pursuant to Section 2.09.
"Minimum Net Worth" means Three Hundred Fifty-Eight Million
Dollars ($358,000,000), plus ninety percent (90%) of all Net Offering Proceeds
received by the REIT or Borrower after the Closing Date, minus ninety percent
(90%) of the aggregate cost to the REIT or Borrower for the repurchase of any
common stock, preferred stock, partnership interests, limited liability company
interests, Convertible Securities or other ownership or equity interests in the
REIT or Borrower; provided, however, that in no event shall the Minimum Net
Worth be less than Three Hundred Twenty Two Million Dollars ($322,000,000).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, and its successors and assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized securities rating agency designated by Agent.
"Multiemployer Plan" means an employee benefit plan defined in
Section 4001(a)(3) or Section 3(37) of ERISA which is, or within the immediately
preceding six (6) years was, maintained, administered, contributed to by or was
required to be contributed to by a Person or any ERISA Affiliate, or under which
a Person or any ERISA Affiliate may incur any liability.
13
"Net Income" means, for any period, the net income (or loss)
after Taxes of the REIT, on a consolidated basis, for such period calculated in
conformity with GAAP; provided, however, that Net Income shall not include the
net income (or loss) of Investment Affiliates.
"Net Offering Proceeds" means all cash or other assets
received by the REIT or Borrower as a result of the sale of common stock,
preferred stock, partnership interests, limited liability company interests,
Convertible Securities or other ownership or equity interests in the REIT or
Borrower less customary costs and discounts of issuance paid by the REIT or
Borrower, as the case may be.
"Net Operating Income" means, for any period, and with respect
to any Qualifying Unencumbered Property, the net operating income of such
Qualifying Unencumbered Property (attributed to such Property in a manner
reasonably acceptable to Agent) for such period (i) determined in accordance
with GAAP, (ii) determined in a manner which is consistent with the past
practices of the REIT and Borrower, and (iii) inclusive of an allocation of
reasonable management fees and administrative costs to such Qualifying
Unencumbered Property consistent with the past practices of the REIT and
Borrower, except that, for purposes of determining Net Operating Income, income
shall not (a) include security or other deposits, lease termination or other
similar charges, delinquent rent recoveries, unless previously reflected in
reserves, or any other items reasonably deemed by Agent to be of a non-recurring
nature or (b) be reduced by depreciation or amortization or any other non-cash
item.
"Net Price" means, with respect to the purchase of any
Property by Borrower or any Subsidiary, without duplication, (i) cash and Cash
Equivalents paid as consideration for such purchase, plus (ii) the principal
amount of any note or other deferred payment obligation delivered in connection
with such purchase (except as described in clause (iv) below), plus (iii) the
value of any other consideration delivered in connection with such purchase or
sale (including, without limitation, shares in the REIT and operating
partnership units or preferred operating partnership units in Borrower) (as
reasonably determined by Agent), minus (iv) the value of any consideration
deposited into escrow or subject to disbursement or claim upon the occurrence of
any event, minus (v) reasonable costs of sale and taxes paid or payable in
connection with such purchase.
"Net Worth" means, at any time, the tangible net worth of the
REIT determined in accordance with GAAP, on a consolidated basis, not including
depreciation and amortization expense of the REIT since September 30, 2001 and
not including the REIT's share of depreciation and amortization expense of
Investment Affiliates since September 30, 2001.
"Non-Manufactured Home Community Property" means Property
which is not (i) used for lease or operation of manufactured home communities,
(ii) Land, (iii) Securities consisting of stock issued by real estate investment
trusts engaged primarily in the development, ownership and management of
manufactured home communities, (iv) Manufactured Home Community Mortgages, (v)
Manufactured Home Community Ownership Interests or (vi) Taxable REIT Subsidiary
Interests.
14
"Non-Recourse Indebtedness" means any single loan with respect
to which recourse for payment is limited to specific assets related to a
particular Property or group of Properties encumbered by a Lien securing such
Indebtedness, so long as the Adjusted Asset Value for such Property, or the
total of the Adjusted Asset Values for such group of Properties, does not exceed
One Hundred Million Dollars ($100,000,000); provided, however, that personal
recourse to the REIT, Borrower or any Subsidiary by a holder of any such loan
for fraud, misrepresentation, misapplication of cash, waste, environmental
claims and liabilities and other circumstances customarily excluded by
institutional lenders from exculpation provisions and/or included in separate
indemnification agreements in non-recourse financing of real estate shall not,
by itself, prevent such loan from being characterized as Non-Recourse
Indebtedness.
"Notice of Borrowing" means a notice of borrowing duly
executed by an authorized officer of Borrower substantially in the form of
Exhibit E-1.
"Notice of Continuation/Conversion" means a notice of
continuation or conversion of or to a LIBOR Loan duly executed by an authorized
officer of Borrower substantially in the form of Exhibit E-2.
"Obligations" means, from time to time, all Indebtedness of
Borrower owing to Agent, any Lender, or any Person entitled to indemnification
pursuant to Section 11.02, or any of their respective successors, transferees or
assigns, of every type and description, whether or not evidenced by any note,
guaranty or other instrument, arising under or in connection with this Agreement
or any other Loan Document, whether or not for the payment of money, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, reasonable attorneys' fees and disbursements and any other sum
now or hereafter chargeable to Borrower under or in connection with this
Agreement or any other Loan Document. Notwithstanding anything to the contrary
contained in this definition, Obligations shall not be deemed to include any
obligations or liabilities of Borrower to Agent or any Lender under an Interest
Rate Contract, foreign currency exchange agreement or other Contractual
Obligation unless the same is among Borrower and all Lenders. Obligations shall
also not include the "Obligations" under the Revolving Credit Agreement.
"Officer's Certificate" means a certificate signed by a
specified officer of a Person certifying as to the matters set forth therein.
"Other Indebtedness" means all Indebtedness other than the
Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Permit" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Holdings" means any of the holdings and activities
described in Section 8.08, but only to the extent permitted in Section 8.08.
15
"Permitted Liens" means:
(a) Liens for Taxes, assessments or other governmental charges
not yet due and payable or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted in
accordance with Sections 6.01(d) or 6.02(g);
(b) statutory liens of carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred in the
ordinary course of business for sums not more than sixty (60) days delinquent or
which are being contested in good faith in accordance with Sections 6.01(d) or
6.02(g);
(c) deposits made in the ordinary course of business to secure
liabilities to insurance carriers;
(d) Liens for purchase money obligations for equipment;
provided that (i) the Indebtedness secured by any such Lien does not exceed the
purchase price of such equipment, (ii) any such Lien encumbers only the asset so
purchased and the proceeds upon sale, disposition, loss or destruction thereof,
and (iii) such Lien, after giving effect to the Indebtedness secured thereby,
does not give rise to an Event of Default or Unmatured Event of Default pursuant
to Section 7.01(a);
(e) easements, rights-of-way, zoning restrictions, other
similar charges or encumbrances and all other items listed on Schedule B to
Borrower's or any Subsidiary's owner's title insurance policies for any of
Borrower's or any Subsidiary's, as applicable, real Properties, so long as the
foregoing do not interfere in any material respect with the use or ordinary
conduct of the business of Borrower or such Subsidiary, as applicable, and do
not diminish in any material respect the value of the Property to which it is
attached or for which it is listed; or
(f) Liens and judgments which have been or will be bonded or
released of record within thirty (30) days after the date such Lien or judgment
is entered or filed against the REIT, Borrower, any Subsidiary or any Agreement
Party.
"Person" means any natural person, employee, corporation,
limited partnership, limited liability partnership, general partnership, joint
stock company, limited liability company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, real estate investment
trust or other organization, whether or not a legal entity, or any other
nongovernmental entity, or any Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3)
of ERISA (other than a Multiemployer Plan) in respect of which a Person or an
ERISA Affiliate, as applicable, is an "employer" as defined in Section 3(5) of
ERISA.
"Pre-Closing Financials" has the meaning ascribed to such term
in Section 4.01(g).
16
"Prior Credit Agreement" means that certain Amended and
Restated Credit Agreement (Term Loan) dated as of April 28, 1998, by and among
Borrower, the REIT and the financial institutions named therein, as heretofore
amended.
"Pro Rata Share" means, with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the aggregate amount
of all of the Lenders' Commitments, as adjusted from time to time in accordance
with the provisions of this Agreement.
"Property" means, with respect to any Person, any real or
personal property, building, facility, structure, equipment or unit, or other
asset owned by such Person.
"Qualifying Unencumbered Property" means (a) the Properties
listed on Exhibit F hereto and (b) any Property designated by Borrower from time
to time pursuant to Section 5.04 which (i) is an operating manufactured home
community property wholly-owned (directly or beneficially) by Borrower or any
Subsidiary wholly-owned, directly or indirectly by Borrower and/or the REIT,
(ii) is not subject (nor are any direct or indirect equity interests in such
Property subject) to a Lien which secures Indebtedness of any Person other than
a Permitted Lien, (iii) is not subject (nor are any direct or indirect equity
interests in such Property subject) to any covenant, condition, or other
restriction which prohibits or limits the creation or assumption of any Lien
upon such Property (except as set forth in the Revolving Credit Agreement), and
(iv) has not been designated by Agent in a notice to Borrower as not acceptable
to the Requisite Lenders pursuant to Section 5.04; provided, however, that the
weighted average occupancy rate of the Properties listed on Exhibit F together
with those designated by Borrower to be Qualifying Unencumbered Properties
pursuant to Section 5.04 (excluding expansion areas of such Properties which are
purchased and/or developed on or after the Closing Date) shall be at least
eighty-five percent (85%); and provided, further, that Borrower may, upon at
least fifteen (15) Business Days prior notice to Agent, designate that any
Property listed on Exhibit F or otherwise designated as a Qualifying
Unencumbered Property is no longer a Qualifying Unencumbered Property (and upon
such designation, such Property shall no longer be a Qualifying Unencumbered
Property).
"Recourse Indebtedness" means, with respect to any Person,
Indebtedness which is not Non-Recourse Indebtedness.
"Regulation D" means Regulation D of the Federal Reserve Board
as in effect from time to time.
"Regulation T" means Regulation T of the Federal Reserve Board
as in effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board
as in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board
as in effect from time to time.
17
"REIT" has the meaning ascribed to such term in the preamble
hereto.
"REIT Guaranty" means the REIT Guaranty of even date herewith
executed by the REIT in favor of Agent and the Lenders.
"Release" may be either a noun or a verb and means the
release, spill, emission, leaking, pumping, pouring, emitting, emptying,
escaping, dumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of any
property, including the movement of Contaminants through or in the air, soil,
surface water, groundwater or property.
"Remedial Action" means any action undertaken pursuant to
Environmental Laws to (a) clean up, remove, remedy, respond to, treat or in any
other way address Contaminants in the indoor or outdoor environment; (b) prevent
the Release or threat of Release or minimize the further Release of Contaminants
so they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; or (c) perform pre-remedial
studies and investigations and post-remedial monitoring and care.
"Reportable Event" means any of the events described in
Section 4043(b) of ERISA, other than an event for which the thirty (30) day
notice requirement is waived by regulations, or any of the events described in
Section 4062(f) or 4063(a) of ERISA.
"Requirements of Law" means, as to any Person, the charter and
by-laws, partnership agreements or other organizational or governing documents
of such Person, and any law, rule or regulation, permit, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including without limitation, the Securities
Act, the Securities Exchange Act, Regulations T, U and X and any certificate of
occupancy, zoning ordinance, building or land use requirement or Permit or
occupational safety or health law, rule or regulation.
"Requisite Lenders" means, collectively, Lenders whose Pro
Rata Shares, in the aggregate, are at least sixty-six and two-thirds percent (66
2/3%); provided, however, that the Requisite Lenders must be comprised of a
minimum of two (2) Lenders; and provided, further, that for purposes of any
amendment, modification or waiver of the requirements of Article VIII, the
Requisite Lenders must include Agent in its capacity as a Lender.
"Revolving Credit Agreement" means that certain Second Amended
and Restated Credit Agreement dated as of April 28, 1998 by and among Borrower,
the REIT, ▇▇▇▇▇ Fargo, as Agent, and the lenders named therein, as heretofore
and hereafter amended or amended and restated.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw Hill, its successors and assigns, and, if Standard & Poor's Rating Group
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized securities rating agency designated by Agent.
18
"Second Extended Maturity Date" has the meaning ascribed to
such term in Section 2.09(b).
"Secretary's Certificate" has the meaning ascribed to such
term in Section 3.01(c)(i).
"Secured Debt" means Indebtedness, the payment of which is
secured by a Lien on any real Property owned or leased by the REIT, Borrower, or
any Subsidiary.
"Securities" means any stock, partnership interests, shares,
shares of beneficial interest, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities," or any certificates of interest, shares, or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire any of the foregoing, but shall not
include any evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended
to the date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"Sole Lead Arranger" means ▇▇▇▇▇ Fargo Bank, N.A. in its
capacity as sole lead arranger for the Lenders under this Agreement.
"Solvent" means as to any Person at the time of determination,
such Person (a) owns property the value of which (both at fair valuation and at
present fair saleable value) is greater than the amount required to pay all of
such Person's liabilities (including contingent liabilities and debts); (b) is
able to pay all of its debts as such debts mature; and (c) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Subsidiary" means any Person whose financial results are
consolidated under GAAP with the financial results of the REIT or Borrower on
the consolidated financial statements of the REIT or Borrower.
"Supermajority Lenders" means Lenders whose Pro Rata Shares,
in the aggregate, are at least eighty-five percent (85%); provided, however,
that the Supermajority Lenders must be comprised of a minimum of two (2)
Lenders; and provided, further, that for purposes of any amendment, modification
or waiver of the requirements of Article VIII, the Supermajority Lenders must
include Agent in its capacity as a Lender.
"Syndication Agent" means Bank of America National Trust and
Savings Association in its capacity as syndication agent for the Lenders under
this Agreement.
19
"Taxable REIT Subsidiary Interest" means equity interests in
Subsidiaries not engaged in the development, ownership or operation of real
estate and permitted to be held by Borrower and the REIT pursuant to Section
856(1) of the Internal Revenue Code (as amended from time to time) without
violating the REIT's status as a real estate investment trust.
"Taxes" means all federal, state, local and foreign income and
gross receipts taxes.
"Termination Date" has the meaning ascribed to such term in
Section 2.01(d).
"Termination Event" means (a) any Reportable Event, (b) the
withdrawal of a Person, or an ERISA Affiliate from a Benefit Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a) (2)
of ERISA, (c) the occurrence of an obligation arising under Section 4041 of
ERISA of a Person or an ERISA Affiliate to provide affected parties with a
written notice of an intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA, (d) the institution by the
PBGC of proceedings to terminate any Benefit Plan under Section 4042 of ERISA or
to appoint a trustee to administer any Benefit Plan, (e) any event or condition
which constitutes grounds under Section 4042 of ERISA for the appointment of a
trustee to administer a Benefit Plan, (f) the partial or complete withdrawal of
such Person or any ERISA Affiliate from a Multiemployer Plan which would have a
Material Adverse Effect, or (g) the adoption of an amendment by any Person or
any ERISA Affiliate to terminate any Benefit Plan which is subject to Title IV
of ERISA or Section 412 of the Internal Revenue Code or the treatment of an
amendment to a Benefit Plan as a termination under ERISA.
"Total Liabilities" means, without duplication, all
Indebtedness of the REIT on a consolidated basis, plus all other items which, in
accordance with GAAP, would be included as liabilities on the liability side of
the balance sheet of the REIT, on a consolidated basis, and in any event shall
include recourse and non-recourse mortgage debt, letters of credit, purchase
obligations, forward equity sales, repurchase obligations, unsecured debt,
accounts payable, lease obligations (including ground leases) to the extent
required, in accordance with GAAP, to be classified as capital leases on the
balance sheet of the REIT, guarantees of indebtedness, subordinated debt and
unfunded obligations; provided, however, that "Total Liabilities" shall not
include dividends declared by the REIT or Borrower which are permitted under
Section 7.01(d) but not yet paid.
"Unencumbered Asset Value" means, as of any date of
determination, (i) a fraction, the numerator of which is the product of four (4)
and the Net Operating Income for the most recently ended Fiscal Quarter which is
attributable (in a manner reasonably acceptable to Agent) to Qualifying
Unencumbered Properties wholly-owned (directly or beneficially) by Borrower or
any Subsidiary wholly-owned, directly or indirectly, by Borrower and/or the
REIT, for the entire Fiscal Quarter and the denominator of which is eight
hundred seventy-five ten-thousandths (0.0875) plus (ii) the aggregate of the Net
Prices paid by Borrower or such Subsidiary for all Qualifying Unencumbered
Properties which have been acquired in the Fiscal Quarter most recently ended.
20
"Unencumbered Net Operating Income" means for any Fiscal
Quarter, Net Operating Income for such period from each Qualifying Unencumbered
Property.
"Unfunded Pension Liabilities" means the excess of a Benefit
Plan's accrued benefits, as defined in Section 3(23) of ERISA, over the current
value of that Plan's assets, as defined in Section 3(26) of ERISA.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect on the date hereof in the State of Illinois.
"Unmatured Event of Default" means an event which, with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default.
"Unsecured Debt" means, as of any date of determination and
without duplication, all Indebtedness of the REIT, Borrower or any Subsidiary,
which is not Secured Debt plus all accounts payable of the REIT, Borrower or any
Subsidiary incurred in the ordinary course of business, the payment of which is
not secured by a Lien on any property owned or leased by the REIT, Borrower or
any Subsidiary.
"Unsecured Interest Expense" means Interest Expense other than
Interest Expense payable in respect of Secured Debt.
"Welfare Plan" means any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, which a Person or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or
within the immediately preceding five years maintained, administered,
contributed to or was required to contribute to, or under which a Person or any
ERISA Affiliate may incur any liability.
"▇▇▇▇▇ Fargo" has the meaning ascribed to such term in the
preamble hereto.
"Wholly-Owned Subsidiary" means any Subsidiary which is
wholly-owned directly or indirectly by Borrower or the REIT.
1.02 Computation of Time Periods. In this Agreement, unless
otherwise specified, in the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to and including." Periods of days referred to
in this Agreement shall be counted in calendar days unless Business Days are
expressly prescribed.
1.03 Terms
(a) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP, provided that for purposes of references to the financial
results of the "REIT, on a consolidated basis," the REIT shall be deemed to own
one hundred percent (100%) of the partnership interests in Borrower.
21
(b) Any time the phrase "to the best of Borrower's knowledge"
or a phrase similar thereto is used herein, it means: "to the actual knowledge
of the executive officers of Borrower and the REIT, after reasonable inquiry of
those agents, employees or contractors of the REIT, Borrower, any Agreement
Party or any Subsidiary who could reasonably be anticipated to have knowledge
with respect to the subject matter or circumstances in question and review of
those documents or instruments which could reasonably be anticipated to be
relevant to the subject matter or circumstances in question."
(c) In each case where the consent or approval of Agent,
Requisite Lenders, Supermajority Lenders or all Lenders is required or their
non-obligatory action is requested by Borrower, such consent, approval or action
shall be in the sole and absolute discretion of Agent and, as applicable, each
Lender, unless otherwise specifically indicated.
ARTICLE II
LOAN
2.01 Making of Loan and Repayment.
(a) Loan Availability.
(i) Subject to the terms and conditions set forth in
this Agreement and in reliance on the representation and warranties of
Borrower and the REIT set forth in this Agreement, each Lender hereby
agrees to make its share of the Loan to Borrower on the Closing Date in
an amount equal to such Lender's Commitment. The Loan will be evidenced
by the Loan Notes.
(ii) The Loan may be voluntarily prepaid pursuant to
Section 2.05(a), but Borrower may not reborrow any amounts so prepaid.
The principal balance of the Loan shall be payable in full on the
Termination Date.
(b) Notice of Borrowing; Continuation/Conversion. Borrower
shall give Agent, at ▇▇▇▇▇ Fargo Disbursement Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇ Fargo Bank, N.A.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Account
Officer, or such other address as Agent shall designate, an original or
facsimile Notice of Borrowing no later than 10:00 A.M. (California time), not
less than three (3) nor more than five (5) Business Days prior to the Closing
Date. The Notice of Borrowing shall specify whether the Loan will be a Base Rate
Loan or a LIBOR Loan and, if a LIBOR Loan, the applicable Interest Period. Any
Notice of Borrowing pursuant to this Section 2.01(b) shall be irrevocable.
Borrower may elect (A) so long as no Event of Default has occurred and is
continuing, to convert Base Rate Loans or any portion thereof into LIBOR Loans,
(B) to convert LIBOR Loans or any portion thereof into Base Rate Loans, or (C)
so long as no Event of Default has occurred and is continuing, to continue any
LIBOR Loans or any portion thereof for an additional Interest Period; provided,
however, that the amount of the Loan being continued as or converted to LIBOR
Loans shall, in the aggregate, equal One Million Dollars ($1,000,000) or an
integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof.
The
22
applicable Interest Period for the continuation of any LIBOR Loan shall commence
on the day on which the next preceding Interest Period expires. Each such
election shall be made by giving Agent, at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇, a Notice of
Continuation/Conversion by 10:00 A.M. (California time) on the date of a
conversion to a Base Rate Loan, or by 10:00 A.M. (California time) not less than
three (3) nor more than five (5) Business Days prior to the date of a conversion
to or continuation of a LIBOR Loan, specifying, in each case (1) whether a
conversion or continuation is to occur, (2) the amount of the conversion or
continuation, (3) the Interest Period therefor, in the case of a conversion to
or continuation of a LIBOR Loan, and (4) the date of the conversion or
continuation (which date shall be a Business Day). Agent shall promptly notify
each Lender, but in any event within one (1) Business Day after receipt of such
notice, of its receipt of each such notice and the contents thereof.
Notwithstanding anything to the contrary contained herein and subject to the
default interest provisions contained in Section 2.03, if an Event of Default
occurs, all LIBOR Loans will convert to Base Rate Loans upon the expiration of
the applicable Interest Periods therefor or the date the Loan becomes due,
whichever occurs first. Except as provided above, the conversion of a LIBOR Loan
to a Base Rate Loan shall only occur on the last Business Day of the Interest
Period relating to such LIBOR Loan. In the absence of an effective election by
Borrower of a LIBOR Loan and Interest Period in accordance with the above
procedures prior to the third (3rd) Business Day prior to the expiration of the
then current Interest Period with respect to any LIBOR Loan, interest on such
LIBOR Loan shall accrue at the interest rate then applicable to a LIBOR Loan for
an Interest Period of thirty (30) days, effective immediately upon the
expiration of the then-current Interest Period, without prejudice, however, to
the right of Borrower to elect a Base Rate Loan or a different Interest Period
in accordance with the terms and provisions of this Agreement; provided,
however, that if such continuation shall cause the number of LIBOR Loan tranches
to exceed three (3), such LIBOR Loan shall be converted to a Base Rate Loan.
(c) Making of Loan. Subject to Section 10.03, Agent shall make
the proceeds of the Loan available to Borrower in El Segundo, California on the
Closing Date and shall disburse such funds in Dollars and in immediately
available funds not later than 1:00 P.M. Chicago time to Borrower's account, at
Bank of America, Account Number 73-▇▇▇▇▇▇▇▇ in Chicago, Illinois, or such other
account specified in the Notice of Borrowing acceptable to Agent, with a
confirming telephone call to Quantaze ▇▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ at
(▇▇▇) ▇▇▇-▇▇▇▇.
(d) Term; Principal Payment. The outstanding balance of the
Loan shall be payable in full on the earlier to occur of (A) the Maturity Date,
and (B) the acceleration of the Loan pursuant to Section 9.02(a) (the
"Termination Date").
2.02 Borrowing and Interest Rate Election Authorization.
Borrower shall provide Agent with documentation reasonably satisfactory to Agent
indicating the names of those employees or agents of Borrower authorized by
Borrower to sign Notices of Borrowing and Continuation/Conversion, any extension
notice and to receive callback confirmations, and Agent and Lenders shall be
entitled to rely on such documentation until notified in writing by Borrower of
any change(s) of the persons so authorized. Agent shall be entitled to act in
good faith on the instructions of anyone identifying himself as one of the
Persons so authorized, and Borrower
23
shall be bound thereby in the same manner as if such Person were actually so
authorized. Borrower agrees to indemnify, defend and hold Lenders and Agent
harmless from and against any and all Liabilities and Costs which may arise or
be created by the acceptance of instructions for making the Loan.
2.03 Interest on the Loan.
(a) Base Rate Loans. Subject to Section 2.03(d), all Base Rate
Loans shall bear interest on the average daily unpaid principal amount thereof
from the date made until paid in full at a fluctuating rate per annum equal to
the Base Rate.
(b) LIBOR Loans. Subject to Section 2.03(d), all LIBOR Loans
shall bear interest on the unpaid principal amount thereof during the Interest
Period applicable thereto at a rate per annum equal to the sum of LIBOR for such
Interest Period plus the Applicable Margin. Upon receipt of a Notice of
Borrowing or Notice of Continuation/Conversion requesting the making of,
continuation of and/or conversion to LIBOR Loans, Agent shall determine LIBOR
applicable to the Interest Period for such LIBOR Loans, and shall give notice
thereof to Borrower and Lenders; provided, however, that failure to give such
notice shall not affect the validity of such rate. Each determination by Agent
of LIBOR shall be conclusive and binding upon the parties hereto in the absence
of demonstrable error. LIBOR Loans shall be in tranches of One Million Dollars
($1,000,000) or One Hundred Thousand Dollar ($100,000) increments in excess
thereof. No more than three (3) LIBOR Loan tranches shall be outstanding at any
one time.
(c) Interest Payments. Subject to Section 2.03(d), interest
accrued on the Loan shall be payable by Borrower in arrears on the first
Business Day of the first calendar month following the Closing Date, and the
first Business Day of each succeeding calendar month thereafter, and on the
Termination Date.
(d) Default Interest. Notwithstanding the rates of interest
specified in Sections 2.03(a) and 2.03(b) and the payment dates specified in
Section 2.03(c), effective immediately upon demand by Agent after the occurrence
of an Event of Default and during the continuance of any Event of Default, the
principal balance of the Loan then outstanding and, to the extent permitted by
applicable law, any interest payments on the Loan not paid when due shall bear
interest payable upon demand at a rate which is five percent (5%) per annum in
excess of the rate or rates of interest otherwise payable under this Agreement.
All other amounts due Agent or Lenders (whether directly or for reimbursement)
under this Agreement or any of the other Loan Documents if not paid when due, or
if no time period is expressed, if not paid within fifteen (15) days after
written demand to Borrower, shall bear interest from and after demand at the
rate which is five percent (5%) per annum in excess of the lowest rate or rates
of interest otherwise payable under this Agreement, or, if no portion of the
Loan is then outstanding, at the rate which is five percent (5%) per annum in
excess of the rate of interest applicable to Base Rate Loans.
(e) Late Fee. Borrower acknowledges that late payment to Agent
will cause Agent and Lenders to incur costs not contemplated by this Agreement.
Such costs include
24
without limitation processing and accounting charges. Therefore, if Borrower
fails timely to pay any sum due and payable hereunder through the Termination
Date (other than payments of principal), unless waived by Agent pursuant to
Section 11.05(e), a late charge of four cents ($.04) for each dollar of any
interest payment due hereon and which is not paid within ten (10) days after
such payment is due or of any other amount due hereon (other than payments of
principal) and which is not paid within thirty (30) days after such payment is
due, shall be charged by Agent (for the benefit of Lenders) and paid by Borrower
for the purpose of defraying the expense incident to handling such delinquent
payment; provided, however, that no late charges shall be assessed with respect
to any amount for which Borrower is obligated to pay interest at the rate
specified in Section 2.03(d), provided, further, that in no event shall Agent or
Lenders be required to refund any late fees paid by Borrower, notwithstanding
the preceding proviso. Borrower and Agent agree that this late charge represents
a reasonable sum considering all of the circumstances existing on the date
hereof and represents a fair and reasonable estimate of the costs that Agent and
Lenders will incur by reason of late payment. Borrower and Agent further agree
that proof of actual damages would be costly and inconvenient. Acceptance of any
late charge shall not constitute a waiver of the default with respect to the
overdue installment, and shall not prevent Agent from exercising any of the
other rights available hereunder or under any other Loan Document. Such late
charge shall be paid without prejudice to any other rights of Agent.
(f) Computation of Interest. Interest and fees shall be
computed on the basis of the actual number of days elapsed in the period during
which interest or fees accrue and a year of three hundred sixty (360) days. In
computing interest on the Loan, the date of the making of the Loan shall be
included and the date of payment shall be excluded. Notwithstanding subsections
(a), (b), (d) and (e) above, interest in respect of the Loan or any portion
thereof shall not exceed the maximum rate permitted by applicable law.
(g) Changes; Legal Restrictions. In the event that after the
Closing Date (A) the adoption of or any change in any law, treaty, rule,
regulation, guideline or determination of a court or Governmental Authority or
any change in the interpretation or application thereof by a court or
Governmental Authority, or (B) compliance by Agent or any Lender with any
request or directive made or issued after the Closing Date (whether or not
having the force of law and whether or not the failure to comply therewith would
be unlawful) from any central bank or other Governmental Authority or
quasi-governmental authority:
(i) subjects Agent or any Lender to any tax, duty or
other charge of any kind with respect to the Facility, this Agreement
or any of the other Loan Documents or changes the basis of taxation of
payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder, except for net income, gross receipts,
gross profits or franchise taxes imposed by any jurisdiction and not
specifically based upon loan transactions (all such non-excepted taxes,
duties and other charges being hereinafter referred to as "Lender
Taxes");
(ii) imposes, modifies or holds applicable, in the
determination of Agent or any Lender, any reserve, special deposit,
compulsory loan, FDIC insurance, capital
25
allocation or similar requirement against assets held by, or deposits
or other liabilities in or . for the account of, advances or loans by,
or other credit extended by, or any other acquisition of funds by,
Agent or such Lender or any applicable lending office (except to the
extent that reserve and FDIC insurance requirements are reflected in
the "Base Rate" or "LIBOR"; or
(iii) imposes on Agent or any Lender any other
condition materially more burdensome in nature, extent or consequence
than those in existence as of the Closing Date;
and the result of any of the foregoing is to (X) increase the cost to Agent or
any Lender of making, renewing, maintaining or participating in any portion of
the Loan or to reduce any amount receivable hereunder or thereunder or (Y) to
require Agent or any Lender or any applicable lending office to make any payment
calculated by reference to the amount of the portion of the Loan held or
interest received by it under such portion of the Loan; then, in any such case,
Borrower shall promptly pay to Agent or such Lender, as applicable, upon demand,
such amount or amounts (based upon a reasonable allocation thereof by Agent or
such Lender to the financing transactions contemplated by this Agreement and
affected by this Section 2.03(g)) as may be necessary to compensate Agent or
such Lender for any such additional cost incurred, reduced amounts received or
additional payments made to the extent Agent or such Lender generally imposes
such additional costs, losses and payments on other borrowers of Agent or such
Lender in similar circumstances. Agent or such Lender shall deliver to Borrower
and in the case of a delivery by a Lender, such Lender shall also deliver to
Agent, a written statement in reasonable detail of the claimed additional costs
incurred, reduced amounts received or additional payments made and the basis
therefor as soon as reasonably practicable after Agent or such Lender, as
applicable, obtains knowledge thereof.
(h) Certain Provisions Regarding LIBOR Loans.
(i) LIBOR Lending Unlawful. If any Lender shall
determine in good faith that the introduction of or any change in or in
the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for such
Lender to convert any Base Rate Loan into a LIBOR Loan or maintain any
Loan as a LIBOR Loan, (A) the obligations of the Lenders to convert any
Base Rate Loan into a LIBOR Loan or maintain any LIBOR Loans shall,
upon such determination, forthwith be suspended until such Lender shall
notify Agent that the circumstances causing such suspension no longer
exist, and (B) if required by law or such assertion, all LIBOR Loans
shall automatically convert into Base Rate Loans.
(ii) Deposits Unavailable. If Agent shall have
determined in good faith that adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBOR Loans,
then, upon notice from Agent to Borrower the obligations of all Lenders
to convert any Base Rate Loan into a LIBOR Loan or maintain any Loan as
a LIBOR Loan shall forthwith be suspended until Agent shall notify
Borrower that the circumstances causing such suspension no longer
exist. Agent will give such notice
26
when it determines, in good faith, that such circumstances no longer
exist; provided, however, that Agent shall not have any liability to
any Person with respect to any delay in giving such notice.
(iii) Funding Losses. In the event any Lender shall
incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to make or maintain any portion of the Loan as
a LIBOR Loan) as a result of:
(A) any continuance, conversion, repayment
or prepayment of the principal amount of any LIBOR Loans for
any reason whatsoever on a date other than the scheduled last
day of the Interest Period applicable thereto; or
(B) any Base Rate Loans not being converted
into LIBOR Loans or any LIBOR Loans not being continued as
LIBOR Loans in accordance with the Notice of
Continuation/Conversion therefor, other than as a result of
such Lender's breach of its obligation to continue or convert
such Loan in accordance with the terms hereof;
then, within fifteen (15) Business Days after Borrower's receipt of the
written notice of such Lender to Borrower with a copy to Agent,
Borrower shall reimburse such Lender for such loss or expense;
provided, however, that each Lender will use reasonable efforts to
minimize such loss or expense. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of
demonstrable error, be conclusive and binding on the parties hereto.
(i) Withholding Tax Exemption. Each Lender that is not created
or organized under the laws of the United States of America or a political
subdivision thereof shall deliver to Borrower and Agent no later than the
Closing Date (or, in the case of a Lender which becomes a Lender pursuant to
Section 10.11, the date upon which such Lender becomes a party hereto) a true
and accurate certificate executed in duplicate by a duly authorized officer of
such Lender, in a form satisfactory to Borrower and Agent, to the effect that
such Lender is capable, under the provisions of an applicable treaty concluded
by the United States of America (in which case the certificate shall be
accompanied by three (3) accurate and complete duly executed originals of Form
W-8BEN of the Internal Revenue Service) or under Section 1442 of the Internal
Revenue Code (in which case the certificate shall be accompanied by three (3)
accurate and complete duly executed originals of Form W-8ECI of the Internal
Revenue Service), of receiving payments of principal, interest and fees
hereunder without deduction or withholding of United States federal income tax.
Further, if at any time a Lender changes its applicable lending office or
selects an additional applicable lending office, it shall, at the same time or
promptly thereafter, but only to the extent the certificate and forms previously
delivered by it hereunder are no longer applicable or effective, deliver to
Borrower and Agent in replacement for, or in addition to, the certificate and
forms previously delivered by it hereunder, a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender accompanied by
three (3) accurate and complete duly executed originals of either Form W-8BEN of
the Internal Revenue Service or
27
Form W-8ECI of the Internal Revenue Service, whichever is applicable, indicating
that such Lender is entitled to receive payments of principal, interest and fees
for the account of such changed or additional applicable lending office under
this Agreement without deduction or withholding of United States federal tax.
Each Lender further agrees to deliver to Borrower and Agent a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender
accompanied by three (3) accurate and complete duly executed originals of either
Form W-8BEN of the Internal Revenue Service or Form W-8ECI of the Internal
Revenue Service, whichever is appropriate, substantially in a form satisfactory
to Borrower and Agent, before or promptly upon the occurrence of any event
requiring a change in the most recent certificate or Internal Revenue Service
form previously delivered by it to Borrower and Agent pursuant to this Section
2.03(j). Further, each Lender which delivers a certificate accompanied by Form
W-8BEN of the Internal Revenue Service covenants and agrees to deliver to
Borrower and Agent within fifteen (15) days prior to January 1, 2003, and every
third (3rd) anniversary of such date thereafter, on which this Agreement is
still in effect, another such certificate and three (3) accurate and complete
original signed copies of Form W-8BEN (or any successor form or forms required
under the Internal Revenue Code or the applicable regulations promulgated
thereunder), and each Lender that delivers a certificate accompanied by Form
W-8ECI of the Internal Revenue Service covenants and agrees to deliver to
Borrower and Agent within fifteen (15) days prior to the beginning of each
subsequent taxable year of such Lender during which this Agreement is still in
effect, another such certificate and three (3) accurate and complete original
signed copies of Internal Revenue Service Form W-8ECI (or any successor form or
forms required under the Internal Revenue Code or the applicable regulations
promulgated hereunder). If (i) any Lender is required under this Section 2.03(j)
to provide a certificate or other evidence described above and fails to deliver
to Borrower and Agent such certificate or other evidence or (ii) any Lender
delivers a certificate to the effect that, as a result of the adoption of or any
change in any law, treaty, rule, regulation, guideline or determination of a
Governmental Authority after the date such Lender became a party hereto, such
Lender is not capable of receiving payments of interest hereunder without
deduction or withholding of United States federal income tax as specified
therein and that it is not capable of recovering the full amount of the same
from a source other than Borrower, then, to the extent required by law, as the
sole consequence of such Lender's failure to deliver the certificate described
in (i) above or such Lender's delivery of the certificate described in (ii)
above, Borrower shall be entitled to deduct or withhold taxes from the payments
owed to such Lender.
2.04 Fees.
(a) Loan Fee. On the Closing Date, Borrower shall pay Agent,
for the benefit of the Lenders, the loan fee which is provided for in the
separate fee agreement between Agent and Borrower.
(b) Arrangement and Administrative Agency Fees. Borrower shall
pay Agent such fees as are provided for in the separate fee agreement between
Agent and Borrower, as in existence from time to time.
28
(c) Payment of Fees. The fees described in this Section 2.04
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit and do not constitute
compensation for the use, detention or forbearance of money, and the obligation
of Borrower to pay the fees described herein shall be in addition to, and not in
lieu of, the obligation of Borrower to pay interest, other fees and expenses
otherwise described in this Agreement. All fees shall be payable when due in
California in immediately available funds and shall be non-refundable when paid.
If Borrower fails to make any payment of fees or expenses specified or referred
to in this Agreement due to Agent or Lenders, including without limitation those
referred to in this Section 2.04 or otherwise under this Agreement or any
separate fee agreement between Borrower and Agent relating to this Agreement,
when due, the amount due shall bear interest until paid at the Base Rate and,
after five (5) days at the rate specified in Section 2.03(d) (but not to exceed
the maximum rate permitted by applicable law) and shall constitute part of the
Obligations. All fees described in this Section 2.04 which are expressed as a
per annum charge shall be calculated on the basis of the actual number of days
elapsed in a three hundred sixty (360) day year.
2.05 Payments.
(a) Voluntary Prepayments. Borrower may, upon not less than
three (3) Business Days prior written notice, at any time and from time to time,
prepay, without premium or penalty (other than as set forth in Section
2.03(h)(iii)), the Loan in whole or in part in amounts not less than One Hundred
Thousand Dollars ($100,000) or integral multiples of Twenty-Five Thousand
Dollars ($25,000) in excess of One Hundred Thousand Dollars ($100,000). Any
notice of prepayment given to Agent under this Section 2.05(a) shall specify the
date of prepayment and the aggregate principal amount of the prepayment. All
prepayments of principal shall be accompanied by a payment of all accrued and
unpaid interest thereon.
(b) Manner and Time of Payment. All payments of principal,
interest and fees hereunder payable to Agent or the Lenders shall be made
without condition or reservation of right and free of set-off or counterclaim,
in Dollars and by (i) wire transfer (pursuant to Agent's written wire transfer
instructions) of immediately available funds, delivered to Agent not later than
11:00 A.M. (California time) on the date due; and funds received by Agent after
that time and date shall be deemed to have been paid on the next succeeding
Business Day or (ii) by check (pursuant to Agent's written check payment
instructions) delivered to Agent, such check and the payment intended to be
covered thereby to be deemed to have been paid on the date Agent receives
immediately available funds therefor. All payments of principal, interest and
fees hereunder shall be made by (i) wire transfer of immediately available funds
to ▇▇▇▇▇ Fargo Bank, N.A. (ABA number ▇▇▇▇▇▇▇▇▇) for credit to account number
2934507203 reference MHC Operating Limited Partnership, loan number 1561ZMC with
telephonic notice to ▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇ at (▇▇▇) ▇▇▇-▇▇▇▇, or (ii) check payable
to ▇▇▇▇▇ Fargo Bank, N.A. and delivered to Agent at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇, or to such other
bank, account or address as Agent may specify in a written notice to Borrower.
29
(c) Payments on Non-Business Days. Whenever any payment to be
made by Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.04, as the case
may be.
2.06 Increased Capital. If either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii)
compliance by Agent or any Lender with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law and
whether or not the failure to comply therewith would be unlawful) made or issued
after the Closing Date affects or would affect the amount of capital required or
expected to be maintained by Agent or such Lender or any corporation controlling
Agent or such Lender, and Agent or such Lender determines that the amount of
such capital is increased by or based upon the existence of Agent's obligations
hereunder or such Lender's obligation to maintain, continue or convert to LIBOR
Loans hereunder, then, upon demand by Agent or such Lender, Borrower shall
immediately pay to Agent or such Lender, from time to time as specified by Agent
or such Lender, additional amounts sufficient to compensate Agent or such Lender
in the light of such circumstances, to the extent that Agent or such Lender
reasonably determines such increase in capital to be allocable to the existence
of Agent's obligations hereunder or such Lender's commitment and to the extent
Agent or such Lender generally imposes such amounts on other borrowers of Agent
or Lender in similar circumstances. A certificate as to such amounts in
reasonable detail submitted to Borrower by Agent or such Lender shall, in the
absence of manifest error, be conclusive and binding for all purposes.
2.07 Notice of Increased Costs. Each Lender agrees that, as
promptly as reasonably practicable after it becomes aware of the occurrence of
an event or the existence of a condition which would cause it to be affected by
any of the events or conditions described in Section 2.03(g) or (h), or Section
2.06, it will notify Borrower and provide in such notice a reasonably detailed
calculation of the amount due from Borrower, and provide a copy of such notice
to Agent, of such event and the possible effects thereof. If Agent or the
affected Lender shall fail to notify Borrower of the occurrence of any such
event or the existence of any such condition within ninety (90) days following
the end of the month during which such event occurred or such condition arose,
then Borrower's liability for any amounts described in said Sections 2.03(g) and
(h) and 2.06 incurred by Agent or such affected Lender as a result of such event
or condition shall be limited to those attributable to the period occurring
subsequent to the ninetieth (90th) day prior to the date upon which Agent or
such affected Lender actually notified Borrower of such event or condition.
2.08 Option to Replace Lenders.
(a) Lenders. If any Lender shall make any demand for payment
or reimbursement pursuant to Section 2.03(g), Section 2.03(h) or Section 2.06,
then, provided that (a) there does not then exist any Unmatured Event of Default
or Event of Default and (b) the circumstances resulting in such demand for
payment or reimbursement are not applicable to all Lenders, Borrower may
terminate the Commitment of such Lender, in whole but not in part, by
30
(i) giving such Lender and Agent not less than three (3) Business Days prior
written notice thereof, which notice shall be irrevocable and effective only
upon receipt thereof by such Lender and Agent and shall specify the effective
date of such termination, (ii) paying to such Lender (and there shall become due
and payable) on such date the outstanding principal amount of the portion of the
Loan made by such Lender, all interest thereon, and all other Obligations owed
to such Lender, including, without limitation, amounts owing under Sections
2.03(g), 2.03(h)(iii), 2.04 and 2.06, if any, and (iii) pursuant to the
provisions of Section 10.11, proposing the introduction of a replacement Lender
reasonably satisfactory to Agent, or obtaining the agreement of one or more
existing Lenders, to assume the entire amount of the Commitment of the Lender
whose Commitment is being terminated, on the effective date of such termination.
Upon the satisfaction of all of the foregoing conditions, such Lender which is
being terminated pursuant to this Section 2.08 shall cease to be a "Lender" for
purposes of this Agreement provided that Borrower shall continue to be obligated
to such Lender under Sections 11.01 and 11.02 (and any other indemnifications
contained herein or in any other Loan Document) with respect to or on account of
unpaid, unliquidated, unknown or similar claims or liabilities accruing prior to
such Lender ceasing to be a "Lender" for purposes of this Agreement.
(b) Agent. If Agent shall make any demand for payment or
reimbursement pursuant to Section 2.03(g), Section 2.03(h) or Section 2.06,
then, provided that (i) there does not then exist any Unmatured Event of Default
or Event of Default and (ii) the circumstances resulting in such demand for
payment or reimbursement are not applicable to all Lenders, Borrower may remove
Agent by (x) giving the Lenders and Agent not less than thirty (30) Business
Days prior written notice thereof, and (y) paying to Agent (and there shall
become due and payable) on such date all other Obligations owed to Agent,
including, without limitation, amounts owing under Sections 2.03(g), 2.03(h),
2.04 and 2.06, if any. Agent shall be replaced in accordance with the provisions
of Section 10.09 hereof.
2.09 Extension Options.
(a) First Extension Option. At the written request of Borrower
made to Agent at least thirty (30) days prior to the Initial Maturity Date, the
Maturity Date shall be extended to the one-year anniversary of the Initial
Maturity Date (the "First Extended Maturity Date") provided that the following
conditions are satisfied:
(i) no Event of Default or Unmatured Event of Default
shall have occurred and be continuing as of the Initial Maturity Date;
(ii) all representations and warranties made by
Borrower and the REIT contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects as of the
Initial Maturity Date except to the extent they related to a specific
date;
(iii) Agent shall have received an Officer's
Certificate of the REIT dated as of the Initial Maturity Date stating
that the executive officer who is the signatory thereto, which officer
shall be the chief executive officer or the chief financial officer of
31
the REIT, has reviewed, or caused under his supervision to be reviewed,
the terms of this Agreement and the other Loan Documents, and has made,
or caused to be made under his supervision, a review in reasonable
detail of the transactions and condition of Borrower, the REIT, the
Subsidiaries, and the Agreement Parties, and that (A) such review has
not disclosed the existence as of the date of such Officer's
Certificate, and that the signer does not have knowledge of the
existence as of the date of such Officer's Certificate, of any
condition or event which constitutes an Event of Default or Unmatured
Event of Default and (B) all representations and warranties made by
such entities contained in this Agreement and the other Loan Documents
are true and correct in all material respects as of the date of such
Officer's Certificate except to the extent they relate to a specific
date; and
(iv) on or before the Initial Maturity Date, Agent
shall have received, for the benefit of the Lenders, an extension fee
in the amount of three tenths of one percent (0.30%) of the amount of
the Facility.
(b) Second Extension Option. At the written request of
Borrower made to Agent at least thirty (30) days prior to the First Extended
Maturity Date, the Maturity Date shall be further extended to the one-year
anniversary of the First Extended Maturity Date (the "Second Extended Maturity
Date") provided that the following conditions are satisfied:
(i) no Event of Default or Unmatured Event of Default
shall have occurred and be continuing as of the First Extended
Maturity Date;
(ii) all representations and warranties made by
Borrower and the REIT contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects as of the
First Extended Maturity Date except to the extent they related to a
specific date;
(iii) Agent shall have received an Officer's
Certificate of the REIT dated as of the First Extended Maturity Date
stating that the executive officer who is the signatory thereto, which
officer shall be the chief executive officer or the chief financial
officer of the REIT, has reviewed, or caused under his supervision to
be reviewed, the terms of this Agreement and the other Loan Documents,
and has made, or caused to be made under his supervision, a review in
reasonable detail of the transactions and condition of Borrower, the
REIT, the Subsidiaries, and the Agreement Parties, and that (A) such
review has not disclosed the existence as of the date of such Officer's
Certificate, and that the signer does not have knowledge of the
existence as of the date of such Officer's Certificate, of any
condition or event which constitutes an Event of Default or Unmatured
Event of Default and (B) all representations and warranties made by
such entities contained in this Agreement and the other Loan Documents
are true and correct in all material respects as of the date of such
Officer's Certificate except to the extent they relate to a specific
date; and
32
(iv) on or before the First Extended Maturity Date,
Agent shall have received, for the benefit of the Lenders, an extension
fee in the amount of thirty-five hundredths of one percent (0.35%) of
the amount of the Facility.
ARTICLE III
CONDITIONS TO LOAN
3.01 Conditions to Disbursement of Loan. The obligation of
Lenders to make the Loan shall be subject to satisfaction of each of the
following conditions precedent on or before the Closing Date:
(a) Borrower Loan Documents. Borrower shall have executed and
delivered to Agent each of the following, in form and substance reasonably
acceptable to Agent and Agent's counsel:
(i) This Agreement;
(ii) The Loan Notes;
(iii) A solvency certificate;
(iv) Agent's form of Funds Transfer Agreement and
signature authorization form; and
(v) All other documents to be executed by or on
behalf of Borrower as listed on the Closing
Checklist.
(b) REIT Documents. The REIT shall have executed and delivered
to Agent each of the following, in form and substance reasonably acceptable to
Agent and Agent's counsel:
(i) The REIT Guaranty;
(ii) A solvency certificate;
(iii) A Compliance Certificate confirming the
matters described in Section 3.01(i); and
(iv) All other documents to be executed by or on
behalf of the REIT as listed on the Closing
Checklist.
(c) Corporate and Partnership Documents. Agent shall have
received the following corporate and partnership documents:
(i) With respect to Borrower: a certified copy of
Borrower's limited partnership agreement; a certified copy of
Borrower's Certificate of Limited Partnership;
33
a certificate of existence for Borrower from the State of
Illinois; and a certificate of Borrower's general partner's
secretary or an officer comparable thereto (a "Secretary's
Certificate") with respect to Borrower pertaining to
authorization, incumbency and by-laws, if any; and
(ii) With respect to the REIT: certified copies of
the REIT's certificate of incorporation and by-laws; a good standing
certificate of the REIT from the State of Maryland; and a Secretary's
Certificate with respect to the REIT pertaining to authorization,
incumbency and by-laws.
(d) Notice of Borrowing. Borrower shall have delivered to
Agent a Notice of Borrowing in compliance with Section 2.01(b).
(e) Performance. Borrower, the REIT and each Agreement Party
shall have performed in all material respects all agreements and covenants
required by Agent to be performed by them as a condition to funding the Loan.
(f) Solvency. Each of the REIT, Borrower and each Agreement
Party shall be Solvent.
(g) Material Adverse Changes. No change, as reasonably
determined by Agent, shall have occurred during the period commencing on
September 30, 2001 and ending on the Closing Date (the "Interim Period"), which
has a Material Adverse Effect.
(h) Litigation Proceedings. There shall not have been
instituted or, to the knowledge of Borrower or the REIT, threatened, during the
Interim Period, any litigation or proceeding in any court or by a Governmental
Authority affecting or threatening to affect Borrower, the REIT, any Subsidiary,
or any Agreement Party, in which there is a reasonable possibility of an adverse
decision that could, individually or in the aggregate, have a Material Adverse
Effect.
(i) No Event of Default; Satisfaction of Financial Covenants.
On the Closing Date and after giving effect to the disbursement of the Loan, no
Event of Default or Unmatured Event of Default shall exist and all of the
financial covenants contained in Articles VII and VIII shall be satisfied.
(j) Opinion of Counsel. Agent shall have received on behalf of
Agent and Lenders a favorable opinion of counsel for Borrower, each Agreement
Party and the REIT dated as of the Closing Date, in form and substance
reasonably satisfactory to Agent and its counsel.
(k) Due Diligence. Agent shall have completed its review of
all other information delivered by Borrower pursuant to this Section 3.01 and
shall have completed such additional due diligence investigations as Agent deems
reasonably necessary, and such review and investigations shall provide Agent
with results and information which, in Agent's reasonable determination, are
satisfactory to permit Agent to enter into this Agreement.
34
(l) Representations and Warranties. All representations and
warranties made by Borrower and the REIT contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects.
(m) Fees. Agent shall have received for the benefit of Agent
and Lenders all fees (or Borrower shall have made arrangements reasonably
acceptable to Agent therefor) then due, and Borrower shall have performed all of
its other obligations as set forth in the Loan Documents to make payments to
Agent on or before the Closing Date and all expenses of Agent incurred prior to
such Closing Date (including without limitation all reasonable attorneys' fees),
shall have been paid by Borrower.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties as to Borrower. In order
to induce Lenders to make the Loan, Borrower hereby represents and warrants to
Lenders as follows:
(a) Organization; Partnership Powers. Borrower (i) is a
limited partnership duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation, (ii) is duly qualified to do
business as a foreign limited partnership and in good standing under the laws of
each jurisdiction in which the nature of its business requires it to be so
qualified, except for those jurisdictions where failure to so qualify and be in
good standing would not have a Material Adverse Effect and (iii) has all
requisite partnership power and authority to own, operate and encumber its
property and assets and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the consummation of
the transactions contemplated by the Loan Documents.
(b) Authority. Borrower has the requisite partnership power
and authority to execute, deliver and perform each of the Loan Documents to
which it is or will be a party. The execution, delivery and performance thereof,
and the consummation of the transactions contemplated thereby, have been duly
approved by the general partner of Borrower, and no other partnership
proceedings or authorizations on the part of Borrower or its general or limited
partners are necessary to consummate such transactions. Each of the Loan
Documents to which Borrower is a party has been duly executed and delivered by
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights generally and general equitable
principles.
(c) Ownership of Borrower. Schedule 4.01(c) sets forth the
general partners of Borrower and their respective ownership percentages as of
the date hereof. Except as set forth in the partnership agreement of Borrower,
no partnership interests (or any securities, instruments, warrants, option or
purchase rights, conversion or exchange rights, calls, commitments or claims of
any character convertible into or exercisable for partnership interests) of
Borrower are subject to issuance under any security, instrument, warrant, option
or purchase rights, conversion or exchange rights, call, commitment or claim of
any right, title or interest therein or thereto. To
35
Borrower's knowledge, all of the partnership interests in Borrower have been
issued in compliance with all applicable Requirements of Law.
(d) No Conflict. The execution, delivery and performance by
Borrower of the Loan Documents to which it is or will be a party, and each of
the transactions contemplated thereby, do not and will not (i) conflict with or
violate Borrower's limited partnership agreement or Certificate of Limited
Partnership or other organizational documents, as the case may be, or the
organizational documents of any Subsidiary of Borrower or (ii) conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law, Contractual Obligation or Court
Order of or binding upon Borrower or any of its Subsidiaries, or require
termination of any such Contractual Obligation, the consequences of which
conflict or breach or default or termination would have a Material Adverse
Effect, or result in or require the creation or imposition of any Lien
whatsoever upon any Property (except as contemplated herein).
(e) Consents and Authorizations. Borrower has obtained all
consents and authorizations required pursuant to its Contractual Obligations
with any other Person, the failure of which to obtain would have a Material
Adverse Effect, and has obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority necessary
to allow Borrower to lawfully execute, deliver and perform its obligations under
the Loan Documents to which Borrower is a party.
(f) Governmental Regulation. Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 or
any other federal or state statute or regulation such that its ability to incur
indebtedness is limited or its ability to consummate the transactions
contemplated by the Loan Documents is materially impaired.
(g) Prior Financials. The Consolidated and Combined Balance
Sheet as of September 30, 2001, the Consolidated and Combined Statement of
Operations for the Quarter Ended September 30, 2001, and the Consolidated and
Combined Statement of Cash Flows for the Quarter Ended September 30, 2001, of
the REIT contained in the Form 10-Q Quarterly Report of the REIT as of September
30, 2001 (the "Pre-Closing Financials") delivered to Agent prior to the date
hereof were prepared in accordance with GAAP in effect on the date such
Pre-Closing Financials were prepared and fairly present the assets, liabilities
and financial condition of the REIT, on a consolidated basis, at such date and
the results of its operations and its cash flows, on a consolidated basis, for
the period then ended.
(h) Financial Statements; Projections and Forecasts. Each of
the Financial Statements to be delivered to Agent pursuant to Sections 5.01(a)
and (b), (i) has been, or will be, as applicable, prepared in accordance with
the books and records of the REIT, on a consolidated basis, and (ii) either
fairly present, or will fairly present, as applicable, the financial condition
of the REIT, on a consolidated basis, at the dates thereof (and, if applicable,
subject to normal year-end adjustments) and the results of its operations and
cash flows, on a consolidated basis, for the period then ended. Each of the
projections delivered to Agent (A) has been, or will be, as
36
applicable, prepared by the REIT and the REIT's financial personnel in light of
the past business and performance of the REIT, on a consolidated basis and (B)
represent, or will represent, as of the date thereof, the reasonable good faith
estimates of such personnel.
(i) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding,
governmental investigation or arbitration, at law or in equity, or
before or by any Governmental Authority, pending, or to the best of
Borrower's knowledge, threatened against Borrower or any of its
Subsidiaries or any of their respective Properties, in which there is a
reasonable possibility of an adverse decision that could have a
Material Adverse Effect; and
(ii) Neither Borrower nor any of its Subsidiaries is
(A) in violation of any Requirement of Law, which violation has a
Material Adverse Effect, or (B) subject to or in default with respect
to any Court Order which has a Material Adverse Effect.
(j) No Material Adverse Change. Since September 30, 2001,
there has occurred no event which has a Material Adverse Effect.
(k) Payment of Taxes. All tax returns and reports to be filed
by Borrower or any of its Subsidiaries have been timely filed, and all taxes,
assessments, fees and other governmental charges shown on such returns have been
paid when due and payable, except such taxes, if any, as are reserved against in
accordance with GAAP, such taxes as are being contested in good faith by
appropriate proceedings or such taxes, the failure to make payment of which when
due and payable will not have, in the aggregate, a Material Adverse Effect.
Borrower has no knowledge of any proposed tax assessment against Borrower or any
of its Subsidiaries that will have a Material Adverse Effect, which is not being
actively contested in good faith by such Person.
(l) Material Adverse Agreements. Neither Borrower nor any of
its Subsidiaries is a party to or subject to any Contractual Obligation or other
restriction contained in its partnership agreement, certificate of partnership,
by-laws, or similar governing documents which has a Material Adverse Effect.
(m) Performance. Neither Borrower nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it, and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute a default under such Contractual
Obligation in each case, except where the consequences, direct or indirect, of
such default or defaults, if any, will not have a Material Adverse Effect.
(n) Federal Reserve Regulations. No part of the proceeds of
the Loan hereunder will be used to purchase or carry any "margin security" as
defined in Regulation U or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation U. Borrower is not
engaged primarily in
37
the business of extending credit for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U. No part of the proceeds of the Loan
will be used for any purpose that violates, or which is inconsistent with, the
provisions of Regulation X or any other regulation of the Federal Reserve Board.
(o) Disclosure. Borrower has not intentionally or knowingly
withheld any material fact from Agent in regard to any matter raised in the Loan
Documents. Notwithstanding the foregoing, with respect to any projections of
Borrower's future performance such representations and warranties are made in
good faith and to the best judgment of Borrower at the time such projections
were made.
(p) Requirements of Law. To Borrower's knowledge, Borrower and
each of its Subsidiaries are in compliance with all Requirements of Law
(including without limitation the Securities Act and the Securities Exchange
Act, and the applicable rules and regulations thereunder, state securities law
and "Blue Sky" laws) applicable to them and their respective businesses, in each
case, where the failure to so comply will have a Material Adverse Effect.
(q) Patents, Trademarks, Permits, Etc. Borrower and each of
its Subsidiaries owns, is licensed or otherwise has the lawful right to use, or
has all permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or necessary for
the conduct of Borrower's or such Subsidiary's business as currently conducted,
the absence of which would have a Material Adverse Effect. To Borrower's
knowledge, the use of such permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes by
Borrower or such Subsidiary does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the aggregate, have a
Material Adverse Effect.
(r) Environmental Matters. To the knowledge of Borrower,
except as would not have a Material Adverse Effect and except as set forth on
Schedule 4.01(r), (i) the Property and operations of Borrower and each of its
Subsidiaries comply in all material respects with all applicable Environmental
Laws; (ii) none of the Property or operations of Borrower or any of its
Subsidiaries are subject to any Remedial Action or other Liabilities and Costs
arising from the Release or threatened Release of a Contaminant into the
environment or from the violation of any Environmental Laws, which Remedial
Action or other Liabilities and Costs would have a Material Adverse Effect;
(iii) neither Borrower nor any of its Subsidiaries has filed any notice under
applicable Environmental Laws reporting a Release of a Contaminant into the
environment in violation of any Environmental Laws, except as the same may have
been heretofore remedied; (iv) there is not now, nor to Borrower's knowledge has
there ever been, on or in the Property of Borrower or any of its Subsidiaries
(except in compliance in all material respects with all applicable Environmental
Laws): (A) any underground storage tanks, (B) any asbestos-containing material,
(C) any polychlorinated biphenyls (PCB's) used in hydraulic oils, electrical
transformers or other equipment, (D) any petroleum hydrocarbons or (E) any
chlorinated or halogenated solvents; and (v) neither Borrower nor any of its
Subsidiaries has received any notice or claim to the effect that it is or may be
liable to any Person as a result of the Release or threatened Release of a
Contaminant into the environment.
38
(s) ERISA. None of the REIT, Borrower or any Agreement Party
is an "employee pension benefit plan" as defined in Section 3(2) of ERISA, an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA, a
"multiemployer plan" as defined in Sections 4001(a)(3) or 3(37) of ERISA or a
"plan" as defined in Section 4975(e)(1) of the Internal Revenue Code. Except for
a prohibited transaction arising solely because of a Lender's breach of the
covenant set forth in Section 11.23, none of the Obligations, any of the Loan
Documents or the exercise of any of the Agent's or Lenders' rights in connection
therewith constitutes a prohibited transaction under ERISA or the Internal
Revenue Code (which is not exempt from the restrictions of Section 406 of ERISA
and the taxes and penalties imposed by Section 4975 of the Internal Revenue Code
and Section 502(i) of ERISA) or otherwise results in a Lender, Agent or the
Lenders being deemed in violation of Sections 404 or 406 of ERISA or Section
4975 of the Internal Revenue Code or will by itself result in a Lender, Agent or
the Lenders being a fiduciary or party in interest under ERISA or a
"disqualified person" as defined in Section 4975(e)(2) of the Internal Revenue
Code with respect to an "employee benefit plan" within the meaning of Section
3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of the
Internal Revenue Code. No assets of the REIT, Borrower or any Agreement Party
constitute "assets" (within the meaning of 29 C.F.R. ss. 2510.3-101 or any
successor regulation thereto) of an "employee benefit plan" within the meaning
of Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Internal Revenue Code.
Each Borrower Plan is in compliance with ERISA and the
applicable provisions of the Internal Revenue Code in all respects except where
the failure to comply would not have a Material Adverse Effect. There are no
claims (other than claims for benefits in the normal course), actions or
lawsuits asserted or instituted against, and none of Borrower, the REIT, any of
the Subsidiaries or any of their ERISA Affiliates has knowledge of any
threatened litigation or claims against the assets of any Borrower Plan or
against any fiduciary of such Borrower Plan with respect to the operation of
such Borrower Plan which could have a Material Adverse Effect. No liability to
the PBGC has been, or is likely to be, incurred by Borrower, the REIT, any of
the Subsidiaries or their ERISA Affiliates other than such liabilities which, in
the aggregate, would not have a Material Adverse Effect. None of Borrower, the
REIT, any of the Subsidiaries or any of their ERISA Affiliates is now
contributing to or has ever contributed to or been obligated to contribute to
any Multiemployer Plan, no employees or former employees of Borrower, the REIT,
any of the Subsidiaries or any of their ERISA Affiliates have been covered by
any Multiemployer Plan in respect of their employment by Borrower or such
Subsidiary or such ERISA Affiliate. None of Borrower, the REIT, any of the
Subsidiaries or any of their ERISA Affiliates has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Internal Revenue
Code or in a transaction subject to the prohibitions of Section 406 of ERISA, in
connection with any Benefit Plan or Welfare Plan which would subject Borrower,
the REIT, any of the Subsidiaries or any of their ERISA Affiliates (after giving
effect to any exemption) to the tax or penalty on prohibited transactions
imposed by Section 4975 of the Internal Revenue Code, Section 502 of ERISA or
any other liability under ERISA which tax, penalty or other liability would have
a Material Adverse Effect. None of the Benefit Plans subject to Title IV of
ERISA has any material Unfunded Pension Liability as to which Borrower, the
REIT, any of the Subsidiaries or any of their ERISA Affiliates is or may be
liable, which liability would have a Material Adverse Effect.
39
(t) Solvency. Borrower is and will be Solvent after giving
effect to the disbursements of the Loan and the payment and accrual of all fees
then payable hereunder.
(u) Use of Proceeds. Borrower's use of the proceeds of the
Loan are, and will continue to be, legal and proper uses (and to the extent
necessary, duly authorized by Borrower's partners) and such uses are consistent
with all applicable laws and statutes.
(v) Subsidiaries and Investment Affiliates. Each Subsidiary
and Investment Affiliate as of the date hereof is set forth on Schedule 4.01(v).
Schedule 4.01(v) sets forth the ownership of each such Subsidiary and Investment
Affiliate and the material Property owned by such Person as of the date hereof.
4.02 Representations and Warranties as to the REIT. In order
to induce Lenders to make the Loan, the REIT hereby represents and warrants to
Lenders as follows:
(a) Organization; Corporate Powers. The REIT (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, (ii) is duly qualified to do business as a foreign
corporation and in good standing under the laws of each jurisdiction in which
the nature of its business requires it to be so qualified, except for those
jurisdictions where failure to so qualify and be in good standing would not have
a Material Adverse Effect, and (iii) has all requisite corporate power and
authority to own, operate and encumber its property and assets and to conduct
its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the transactions contemplated
by the Loan Documents.
(b) Authority. The REIT has the requisite corporate power and
authority to execute, deliver and perform each of the Loan Documents to which it
is or will be a party. The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have been duly approved
by the Board of Directors of the REIT, and no other corporate proceedings on the
part of the REIT are necessary to consummate such transactions. Each of the Loan
Documents to which the REIT is a party has been duly executed and delivered by
the REIT and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights generally and general equitable
principles.
(c) No Conflict. The execution, delivery and performance by
the REIT of the Loan Documents to which it is a party, and each of the
transactions contemplated thereby, do not and will not (i) conflict with or
violate its Articles or Certificate of Incorporation or by-laws, or other
organizational documents, as the case may be, or the organizational documents of
Borrower or any Subsidiary, (ii) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under any
Requirement of Law, Contractual Obligation or Court Order of the REIT, Borrower
or any Subsidiary, or require termination of any such Contractual Obligation,
the consequences of which conflict or breach or default or termination will have
a Material Adverse Effect, or result in or require the creation or imposition of
any Lien
40
whatsoever upon any of its Property, or (iii) require any approval of the
stockholders of the REIT.
(d) Consents and Authorizations. The REIT has obtained all
consents and authorizations required pursuant to its Contractual Obligations
with any other Person, the failure of which to obtain would have a Material
Adverse Effect, and has obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority necessary
to allow the REIT to lawfully execute, deliver and perform its obligations under
the Loan Documents to which the REIT is a party.
(e) Governmental Regulation. The REIT is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 or
any other federal or state statute or regulation such that its ability to incur
indebtedness is limited or its ability to consummate the transactions
contemplated by the Loan Documents is materially impaired.
(f) Capitalization. To the REIT's knowledge, all of the
capital stock of the REIT has been issued in compliance with all applicable
Requirements of Law.
(g) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding,
governmental investigation or arbitration, at law or in equity, or
before or by any Governmental Authority, pending, or to best of the
REIT's knowledge, threatened against the REIT, any of its Subsidiaries
or any of their respective Properties in which there is a reasonable
possibility of an adverse decision that could have a Material Adverse
Effect; and
(ii) Neither the REIT nor any of its Subsidiaries is
(A) in violation of any applicable Requirement of Law, which violation
has a Material Adverse Effect, or (B) subject to or in default with
respect to any Court Order which has a Material Adverse Effect.
(h) Payment of Taxes. All tax returns and reports to be filed
by the REIT or any of its Subsidiaries have been timely filed, and all taxes,
assessments, fees and other governmental charges shown on such returns have been
paid when due and payable, except such taxes, if any, as are reserved against in
accordance with GAAP, such taxes as are being contested in good faith by
appropriate proceedings or such taxes, the failure to make payment of which when
due and payable would not have, in the aggregate, a Material Adverse Effect. The
REIT has no knowledge of any proposed tax assessment against the REIT or any of
its Subsidiaries that would have a Material Adverse Effect, which is not being
actively contested in good faith by the REIT or such Subsidiary.
(i) Material Adverse Agreements. The REIT is not a party to or
subject to any Contractual Obligation or other restriction contained in its
charter, by-laws, or similar governing documents which has a Material Adverse
Effect.
41
(j) Performance. Neither the REIT nor any of its Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it, and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute a default under such Contractual
Obligation in each case, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
(k) Securities Activities. The REIT is not engaged principally
in the business of extending credit for the purpose of purchasing or carrying
any "margin stock" (as defined in Regulation U).
(l) Disclosure. The REIT has not intentionally or knowingly
withheld any material fact from Agent in regard to any matter raised in the Loan
Documents. Notwithstanding the foregoing, with respect to any projections of the
REIT's future performance such representations and warranties are made in good
faith and to the best judgment of the management of the REIT at the time such
projections were made.
(m) Requirements of Law. To the REIT's knowledge, the REIT and
each of its Subsidiaries are in compliance with all Requirements of Law
(including without limitation the Securities Act and the Securities Exchange
Act, and the applicable rules and regulations thereunder, state securities law
and "Blue Sky" laws) applicable to them and their respective businesses, in each
case, where the failure to so comply would have a Material Adverse Effect. After
giving effect to all filings made simultaneously with the Closing Date, the REIT
has made all filings with and obtained all consents of the Commission required
under the Securities Act and the Securities Exchange Act in connection with the
execution, delivery and performance by the REIT of the Loan Documents to which
it is a party.
(n) Patents, Trademarks, Permits, Etc. The REIT and each of
its Subsidiaries owns, is licensed or otherwise has the lawful right to use, or
has all permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or necessary for
the conduct of the REIT's or such Subsidiary's business as currently conducted,
the absence of which would have a Material Adverse Effect. To the REIT's
knowledge, the use of such permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes by the
REIT or such Subsidiary does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate, have a Material
Adverse Effect.
(o) Environmental Matters. To the knowledge of the REIT,
except as would not have a Material Adverse Effect and except as set forth on
Schedule 4.01(r), (i) the Property and operations of the REIT and each of its
Subsidiaries comply in all material respects with all applicable Environmental
Laws; (ii) none of the Property or operations of the REIT or any of its
Subsidiaries are subject to any Remedial Action or other Liabilities and Costs
arising from the Release or threatened Release of a Contaminant into the
environment or from the violation of any Environmental Laws, which Remedial
Action or other Liabilities and Costs would have a Material Adverse Effect;
(iii) neither the REIT nor any of its Subsidiaries has filed any notice
42
under applicable Environmental Laws reporting a Release of a Contaminant into
the environment in violation of any Environmental Laws, except as the same may
have been heretofore remedied; (iv) there is not now, nor to the REIT's
knowledge has there ever been, on or in the Property of the REIT or any of its
Subsidiaries (except in compliance in all material respects with all applicable
Environmental Laws): (A) any underground storage tanks, (B) any
asbestos-containing material, (C) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment, (D) any petroleum
hydrocarbons or (E) any chlorinated or halogenated solvents; and (v) neither the
REIT nor any of its Subsidiaries has received any notice or claim to the effect
that it is or may be liable to any Person as a result of the Release or
threatened Release of a Contaminant into the environment.
(p) Solvency. The REIT is and will be Solvent after giving
effect to the disbursement of the Loan and the payment of all fees then payable
hereunder.
(q) Status as a REIT. The REIT (i) is a real estate investment
trust as defined in Section 856 of the Internal Revenue Code (or any successor
provision thereto), (ii) has not revoked its election to be a real estate
investment trust, (iii) has not engaged in any "prohibited transactions" as
defined in Section 856(b)(6)(iii) of the Internal Revenue Code (or any successor
provision thereto), except for the transfer of manufactured home inventory from
Borrower to Realty Systems, Inc., a Delaware corporation (provided that such
transfer does not adversely affect the REIT's status as a real estate investment
trust under the Internal Revenue Code), and (iv) for its current "tax year" (as
defined in the Internal Revenue Code) is and for all prior tax years subsequent
to its election to be a real estate investment trust has been entitled to a
dividends paid deduction which meets the requirements of Section 857 of the
Internal Revenue Code.
(r) Ownership. The REIT does not own any Property or have any
interest in any Person other than as set forth on Schedule 4.01(v).
(s) Listing. The common stock of the REIT is and will continue
to be listed for trading and traded on either the New York Stock Exchange or
American Stock Exchange.
ARTICLE V
REPORTING COVENANTS
Borrower covenants and agrees that, on and after the date
hereof, until payment in full of all of the Obligations and termination of this
Agreement:
5.01 Financial Statements and Other Financial and Operating
Information. Borrower shall maintain or cause to be maintained a system of
accounting established and administered in accordance with sound business
practices and consistent with past practice to permit preparation of quarterly
and annual financial statements in conformity with GAAP. Borrower shall deliver
or cause to be delivered to Agent with copies for each Lender:
43
(a) Quarterly Financial Statements Certified by CFO. As soon
as practicable, and in any event within fifty (50) days after the end of each
Fiscal Quarter, except the last Fiscal Quarter of a Fiscal Year, consolidated
balance sheets, statements of income and expenses and statements of cash flow
(collectively, "Financial Statements") for the REIT, on a consolidated basis, in
the form provided to the Commission on the REIT's Form 10-Q and certified by the
REIT's chief financial officer.
(b) Annual Financial Statements. Within one hundred and twenty
(120) days after the close of each Fiscal Year, annual Financial Statements of
the REIT, on a consolidated basis (in the form provided to the Commission on the
REIT's Form 10K), audited and certified without qualification by the
Accountants.
(c) Officer's Certificate of REIT. (i) Together with each
delivery of any Financial Statement pursuant to Sections 5.01(a) and (b), an
Officer's Certificate of the REIT, stating that (A) the executive officer who is
the signatory thereto, which officer shall be the chief executive officer or the
chief financial officer of the REIT, has reviewed, or caused under his
supervision to be reviewed, the terms of this Agreement and the other Loan
Documents, and has made, or caused to be made under his supervision, a review in
reasonable detail of the transactions and condition of Borrower, the REIT, the
Subsidiaries, and the Agreement Parties, during the accounting period covered by
such Financial Statements, and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signer does not
have knowledge of the existence as of the date of the Officer's Certificate, of
any condition or event which constitutes an Event of Default or Unmatured Event
of Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action has been taken, is being
taken and is proposed to be taken with respect thereto and (B) such Financial
Statements have been prepared in accordance with the books and records of the
REIT, on a consolidated basis, and fairly present the financial condition of the
REIT, on a consolidated basis, at the date thereof (and, if applicable, subject
to normal year-end adjustments) and the results of operations and cash flows, on
a consolidated basis, for the period then ended; and (ii) together with each
delivery pursuant to clauses (a) and (b) above, a compliance certificate
demonstrating, in reasonable detail (which detail shall include actual
calculations), compliance during and at the end of such accounting periods with
the financial covenants contained in Sections 7.01(a), 7.01(d) and 7.02(a) and
Article VIII.
(d) Knowledge of Event of Default. Promptly upon Borrower
obtaining knowledge (i) of any condition or event which constitutes an Event of
Default or Unmatured Event of Default, or (ii) of any condition or event which
has a Material Adverse Effect, an Officer's Certificate of the REIT specifying
the nature and period of existence of any such condition or event and the nature
of such claimed Event of Default, Unmatured Event of Default, event or
condition, and what action Borrower, the REIT or the Agreement Party, as the
case may be, has taken, is taking and proposes to take with respect thereto.
(e) Litigation, Arbitration or Government Investigation.
Promptly upon Borrower obtaining knowledge of (i) the institution of, or threat
of, any material action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower, any
44
Agreement Party, the REIT, any Subsidiary or any of their Property not
previously disclosed in writing by Borrower to Agent pursuant to this Section
5.01(e), or (ii) any material development in any action, suit, proceeding,
governmental investigation or arbitration already disclosed, in which, in either
case, there is a reasonable possibility of an adverse decision that could have a
Material Adverse Effect, a notice thereof to Agent and such other information as
may be reasonably available to it to enable Agent and its counsel to evaluate
such matters.
(f) Failure of the REIT to Qualify as Real Estate Investment
Trust. Promptly upon, and in any event within forty-eight (48) hours after
Borrower first has knowledge of (i) the REIT failing to continue to qualify as a
real estate investment trust as defined in Section 856 of the Internal Revenue
Code (or any successor provision thereof), (ii) any act by the REIT causing its
election to be taxed as a real estate investment trust to be terminated, (iii)
any act causing the REIT to be subject to the taxes imposed by Section 857(b)(6)
of the Internal Revenue Code (or any successor provision thereto), (iv) the REIT
failing to be entitled to a dividends paid deduction which meets the
requirements of Section 857 of the Internal Revenue Code or (v) any challenge by
the IRS to the REIT's status as a real estate investment trust, a notice of any
such occurrence or circumstance.
(g) Management Reports. Upon and after the occurrence of an
Event of Default, copies of any management reports prepared by the Accountants
as soon as available.
(h) Property Changes. Notice of any material acquisition,
disposition, merger, or purchase by the REIT, Borrower, any Subsidiary or any
Agreement Party no later than ten (10) days after the consummation thereof,
specifying the nature of the transaction in reasonable detail.
(i) Other Information. Such other information, reports,
contracts, schedules, lists, documents, agreements and instruments in the
possession of the REIT, Borrower, any Subsidiary, or any Agreement Party with
respect to the business, financial condition, operations, performance, or
properties of Borrower, the REIT, any Subsidiary, or any Agreement Party, as
Agent may, from time to time, reasonably request, including without limitation,
annual information with respect to cash flow projections, budgets, operating
statements (current year and immediately preceding year), rent rolls, lease
expiration reports, leasing status reports, note payable summaries, bullet note
summaries, equity funding requirements, contingent liability summaries, line of
credit summaries, line of credit collateral summaries, wrap note or note
receivable summaries, schedules of outstanding letters of credit, summaries of
cash and Cash Equivalents, projections of management and leasing fees and
overhead budgets, each in the form customarily prepared by the REIT or Borrower.
If Borrower fails to provide Agent with information requested from Borrower
within the time periods provided for herein, or if no time periods are provided
for, within ten (10) Business Days after Agent requests such information, and
provided that Agent gives Borrower reasonable prior notice and an opportunity to
participate, Borrower hereby authorizes Agent to communicate with the
Accountants and authorizes the Accountants to disclose to Agent any and all
financial statements and other information of any kind, including copies of any
management letter or the substance of any oral information, that such
Accountants may have with respect to financial condition, operations,
properties, performance and prospects of Borrower, the REIT, any Subsidiary, or
any Agreement
45
Party. Concurrently therewith, Agent will notify Borrower of any such
communication. At Agent's request, Borrower shall deliver a letter addressed to
the Accountants instructing them to disclose such information in compliance with
this Section 5.01(i).
5.02 Press Releases; SEC Filings and Financial Statements. The
REIT and Borrower will deliver to the Agent as soon as practicable after public
release all press releases concerning the REIT or Borrower. The REIT and
Borrower will deliver to Agent as soon as practicable after filing with the
Commission, all reports and notices, proxy statements, registration statements
and prospectuses. All materials sent or made available generally by the REIT to
the holders of its publicly-held Securities or to a trustee under any indenture
or filed with the Commission, including all periodic reports required to be
filed with the Commission, will be delivered to Agent as soon as available.
5.03 Environmental Notices. Except for events or occurrences
that will not result in a Material Adverse Effect, Borrower shall notify Agent,
in writing, as soon as practicable, and in any event within ten (10) days after
Borrower's learning thereof, of any: (a) written notice or claim to the effect
that Borrower, any Agreement Party, the REIT, or any Subsidiary is or may be
liable to any Person as a result of the Release or threatened Release of any
Contaminant into the environment; (b) written notice that Borrower, any
Agreement Party, the REIT, or any Subsidiary is subject to investigation by any
Governmental Authority evaluating whether any Remedial Action is needed to
respond to the Release or threatened Release of any Contaminant into the
environment; (c) written notice that any Property of Borrower, any Agreement
Party, the REIT, or any Subsidiary is subject to an Environmental Lien; (d)
written notice of violation to Borrower, any Agreement Party, the REIT, or any
Subsidiary or awareness of a condition which might reasonably result in a notice
of violation of any Environmental Laws by Borrower, the REIT, any Subsidiary or
any Agreement Party; (e) commencement or written threat of any judicial or
administrative proceeding alleging a violation by Borrower, the REIT, any
Subsidiary or any Agreement Party of any Environmental Laws; or (f) written
notice received directly from a Governmental Authority of any changes to any
existing Environmental Laws.
5.04 Qualifying Unencumbered Properties. Borrower may from
time to time but no more frequently than quarterly deliver notice to Agent
stating that Borrower intends to designate a Property to become a Qualifying
Unencumbered Property. Such notice shall (i) set forth the name of such Property
(or, if such Property has no name, such notice shall otherwise identify such
Property), and (ii) be accompanied by a statement of income, certified by the
chief financial officer of the REIT, for each such Property for the then most
recently completed Fiscal Quarter (or, if such statement of income is
unavailable, a pro forma financial statement setting forth the Net Operating
Income with respect to such Property for the then current Fiscal Quarter). If
any such Property meets the requirements set forth in the definition of
"Qualifying Unencumbered Properties" and Agent fails to deliver written notice
to Borrower stating that the Requisite Lenders have disapproved the designation
of such Property as a Qualifying Unencumbered Property (it being understood that
such notice shall provide Borrower with information regarding why such
designation was disapproved by the Requisite Lenders and that the Requisite
Lenders will not unreasonably disapprove such designation) within twenty (20)
46
days after receipt of such information by Agent, such Property shall become a
Qualifying Unencumbered Property.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower and the REIT covenant and agree that, on and after
the date hereof, until payment in full of all of the Obligations and termination
of this Agreement:
6.01 With respect to Borrower:
(a) Existence. Borrower shall, and shall cause each of its
Subsidiaries to, at all times maintain its and their respective partnership,
limited liability company, trust or corporate existence, as applicable, and
preserve and keep in full force and effect its and their respective rights and
franchises unless the failure to maintain such rights and franchises does not
have a Material Adverse Effect. Borrower shall maintain its status as a limited
partnership.
(b) Qualification. Borrower shall, and shall cause each of its
Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its and their businesses require them to be
so qualified except for those jurisdictions where failure to so qualify does not
have a Material Adverse Effect.
(c) Compliance with Laws, Etc. Borrower shall, and shall cause
each of its Subsidiaries to, (i) comply with all Requirements of Law and
Contractual Obligations, and all restrictive covenants affecting Borrower and
its Subsidiaries or their respective properties, performance, assets or
operations, and (ii) obtain as needed all Permits necessary for its and their
respective operations and maintain such in good standing, except in each of the
foregoing cases where the failure to do so will not have a Material Adverse
Effect or expose Agent or Lenders to any material liability therefor.
(d) Payment of Taxes and Claims. (a) Borrower shall, and shall
cause each of its Subsidiaries to, pay (i) all taxes, assessments and other
governmental charges imposed upon it or them or on any of its or their
respective properties or assets or in respect of any of its or their respective
franchises, business, income or property before any penalty or interest accrues
thereon, the failure to make payment of which in such time periods would have a
Material Adverse Effect, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) which have become due and
payable and which by law have or may become a Lien (other than a Permitted Lien)
upon any of its or their respective properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto, the failure to make
payment of which would have a Material Adverse Effect; provided, however, that
no such taxes, assessments, and governmental charges referred to in clause (i)
above or claims referred to in clause (ii) above need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if adequate reserves shall have been set aside therefor in
accordance with GAAP.
47
(e) Maintenance of Properties; Insurance. Borrower shall, and
shall cause each of its Subsidiaries to, maintain in good repair, working order
and condition, excepting ordinary wear and tear, all of its and their respective
Property (personal and real) and will make or cause to be made all appropriate
repairs, renewals and replacements thereof, in each case where the failure to so
maintain, repair, renew or replace would have a Material Adverse Effect.
Borrower shall, and shall cause each of its Subsidiaries to, maintain with
insurance companies that have a Best Rating of "A- VII" or higher or other
insurance companies reasonably acceptable to Agent that have similar financial
resources and stability, which companies shall be qualified to do business in
the states where such Property is located, insurance policies and programs
reasonably acceptable to Agent insuring all property and assets material to the
operations of Borrower and each of its Subsidiaries against loss or damage by
fire, theft, burglary, pilferage and loss in transit and business interruption,
together with such other hazards as is reasonably consistent with prudent
industry practice, and maintain liability insurance consistent with prudent
industry practice with financially sound insurance companies qualified to do
business in the states where such Property is located. The insurance policies
shall provide that they cannot be terminated or materially modified unless Agent
receives thirty (30) days prior written notice of said termination or
modification. At Agent's reasonable request, Borrower shall furnish evidence of
replacement costs, without cost to Agent, such as are regularly and ordinarily
made by insurance companies to determine the then replacement cost of the
improvements on any Property of Borrower or any of its Subsidiaries. In the
event Borrower fails to cause insurance to be carried as aforesaid, Agent shall
have the right (but not the obligation), with the consent of Requisite Lenders,
to place and maintain insurance required to be maintained hereunder and treat
the amounts expended therefor as additional Obligations, payable on demand;
provided however, that Agent shall give Borrower five (5) days' prior notice of
Agent's intent to place or maintain such insurance during which time Borrower
shall have the opportunity to obtain such insurance. All of the insurance
policies required hereunder shall be in form and substance reasonably
satisfactory to Agent. Agent hereby agrees that Borrower may use blanket
policies to satisfy the requirements of this Section 6.01(e), approves the
issuer, form and content of all insurance policies currently carried by Borrower
and agrees that such insurance satisfies the requirements of this Section
6.01(e). Furthermore, Agent agrees that it will not be unreasonable in
exercising any right hereunder to require Borrower to modify, alter or
supplement its insurance policies or coverage or in exercising any right it may
have hereunder to approve any changes Borrower may hereafter make with respect
to its insurance.
(f) Inspection of Property; Books and Records. Borrower shall
permit and shall cause each of the REIT, each Subsidiary, and each Agreement
Party to, upon reasonable prior notice by Agent to Borrower, permit any
authorized representative(s) designated by Agent to visit and inspect any of its
properties including inspection of financial and accounting records and leases,
and to make copies and take extracts therefrom, all at such times during normal
business hours and as often as Agent may reasonably request. In connection
therewith, Borrower shall pay all reasonable expenses of the types described in
Section 11.01. Borrower shall keep, and shall cause each of the REIT, each
Subsidiary and each Agreement Party to keep proper books of record and account
in conformity with GAAP, as modified and as otherwise required by this Agreement
and applicable Requirements of Law.
48
(g) Maintenance of Licenses, Permits, Etc. Borrower shall, and
shall cause each of its Subsidiaries to, maintain in full force and effect all
licenses, permits, governmental approvals, franchises, patents, trademarks,
trade names, copyrights, authorizations or other rights necessary for the
operation of their respective businesses, except where the failure to obtain any
of the foregoing would not have a Material Adverse Effect; and notify Agent in
writing, promptly after learning thereof, of the suspension, cancellation,
revocation or discontinuance of or of any pending or threatened action or
proceeding seeking to suspend, cancel, revoke or discontinue any such material
license, permit, patent, trademark, trade name, copyright, governmental
approval, franchise authorization or right, except where the suspension,
cancellation, revocation or discontinuance would not have a Material Adverse
Effect.
(h) Conduct of Business. Except for Permitted Holdings and
other Investments permitted under Section 7.01(c), Borrower shall engage only in
the business of owning, operating, managing and developing manufactured home
communities, whether directly or through its Subsidiaries.
(i) Use of Proceeds. Borrower shall use the proceeds of the
Loan only for the purpose of refinancing indebtedness outstanding under the
Prior Credit Agreement.
(j) Further Assurance. Borrower shall take and shall cause its
Subsidiaries and each Agreement Party to take all such further actions and
execute all such further documents and instruments as Agent may at any time
reasonably determine to be necessary or advisable to (i) correct any technical
defect or technical error that may be discovered in any Loan Document or in the
execution, acknowledgment or recordation thereof and (ii) cause the execution,
delivery and performance of the Loan Documents to be duly authorized.
6.02 With respect to the REIT:
(a) Corporate Existence. The REIT shall, and shall cause each
of its Subsidiaries to, at all times maintain its and their respective
partnership or corporate existence, as applicable, and preserve and keep in full
force and effect its and their respective rights and franchises unless the
failure to maintain such rights and franchises will not have a Material Adverse
Effect.
(b) Qualification, Name. The REIT shall, and shall cause each
of its Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its and their businesses requires them to be
so qualified except for those jurisdictions where failure to so qualify does not
have a Material Adverse Effect. The REIT will transact business solely in its or
its Subsidiaries' own name.
(c) Securities Law Compliance. The REIT shall comply in all
material respects with all rules and regulations of the Commission and file all
reports required by the Commission relating to the REIT's publicly-held
Securities.
(d) Continued Status as a REIT; Prohibited Transactions. The
REIT (i) will continue to be a real estate investment trust as defined in
Section 856 of the Internal Revenue Code (or any successor provision thereto),
(ii) will not revoke its election to be a real estate
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (▇▇▇) will not engage in any "prohibited transactions" as
defined in Section 856(b)(6)(iii) of the Internal Revenue Code (or any successor
provision thereto), and (iv) will do all acts necessary to continue to be
entitled to a dividend paid deduction meeting the requirements of Section 857 of
the Internal Revenue Code.
(e) NYSE or ASE Listed Company. The REIT shall cause its
common stock at all times to be listed for trading and be traded on the New York
Stock Exchange or American Stock Exchange.
(f) Compliance with Laws, Etc. The REIT shall, and shall cause
each of its Subsidiaries to, (i) comply with all Requirements of Law and
Contractual Obligations, and all restrictive covenants affecting the REIT and
its Subsidiaries or their respective properties, performance, prospects, assets
or operations, and (ii) obtain as needed all Permits necessary for its and their
respective operations and maintain such in good standing, except in each of the
foregoing cases where the failure to do so will not have a Material Adverse
Effect.
(g) Payment of Taxes and Claims. Subject to Section 6.02(d),
the REIT shall, and shall cause each of its Subsidiaries to, pay (i) all taxes,
assessments and other governmental charges imposed upon it or them or on any of
its or their respective properties or assets or in respect of any of its or
their respective franchises, business, income or property before any penalty or
interest accrues thereon, the failure to make payment of which would have a
Material Adverse Effect, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) which have become due and
payable and which by law have or may become a Lien (other than a Permitted Lien)
upon any of its or their respective properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto, the failure to make
payment of which would have a Material Adverse Effect; provided, however, that
no such taxes, assessments, and governmental charges referred to in clause (i)
above or claims referred to in clause (ii) above need be paid if being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if adequate reserves shall have been set aside therefor in
accordance with GAAP.
ARTICLE VII
NEGATIVE COVENANTS
Borrower and the REIT covenant and agree that, on and after
the date hereof, until payment in full of all of the Obligations and termination
of this Agreement:
7.01 With respect to Borrower:
(a) Indebtedness. Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) the Obligations;
50
(ii) trade debt incurred in the normal course of
business;
(iii) intercompany payables and receivables owing
between Subsidiaries in the nature of trade debt incurred in the normal
course of business; and
(iv) Indebtedness which, after giving effect thereto,
may be incurred or may remain outstanding without giving rise to an
Event of Default or Unmatured Event of Default under any provision of
Articles VII and VIII; provided, however, that (A) Borrower shall not,
and shall not permit any of its Subsidiaries to, guarantee or otherwise
become or remain directly or indirectly liable with respect to the
Indebtedness of any Investment Affiliate, and (B) Borrower shall not
permit any Subsidiary to create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to, any Recourse
Indebtedness in excess of Ten Million Dollars ($10,000,000) per
Subsidiary at any time or Thirty Million Dollars ($30,000,000) in the
aggregate for all Subsidiaries at any time.
(b) Liens. Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist
any Lien on or with respect to any of its Property, except:
(i) Permitted Liens; and
(ii) Liens securing Indebtedness permitted to be
incurred and remain outstanding pursuant to Section 7.01(a)(iv).
(c) Investments. Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly make or own any Investment
except:
(i) Investments in cash and Cash Equivalents;
(ii) Permitted Holdings;
(iii) Investments in Subsidiaries and Investment
Affiliates owned as of the Closing Date;
(iv) Investments permitted pursuant to Section
7.01(e)(v);
(v) Controlled Ownership Interests which do not
constitute Non-Manufactured Home Community Property; and
(vi) mortgage loans which do not constitute
Non-Manufactured Home Community Property and which are either
eliminated in the consolidation of the REIT, Borrower and the
Subsidiaries or are accounted for as investments in real estate under
GAAP.
51
(d) Distributions and Dividends. Neither Borrower nor the REIT
shall declare or make any dividend or other distribution on account of
partnership interests in excess of ninety-five percent (95%) of Funds From
Operations in any Fiscal Year; provided, however, that if an Event of Default
under Section 9.01(a) shall have occurred, neither Borrower nor the REIT shall
declare or make any dividend or other distribution on account of partnership
interests in excess of what is required for the REIT to maintain its status as a
real estate investment trust as defined in Section 856 of the Internal Revenue
Code.
(e) Restrictions on Fundamental Changes.
(i) Borrower shall not, and shall not permit any of
its Subsidiaries to, enter into any merger, consolidation,
reorganization or recapitalization or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), or discontinue its
business.
(ii) Borrower shall remain a limited partnership with
the REIT as its sole general partner.
(iii) Borrower shall not change its Fiscal Year.
(iv) Except for Permitted Holdings and other
Investments permitted under Section 7.01(c), Borrower shall not engage
in any line of business other than ownership, operation, management and
development of manufactured home communities and the provision of
services incidental thereto and the brokerage, purchase, and sale of
manufactured home units, whether directly or through its Subsidiaries
and Investment Affiliates.
(v) Borrower shall not acquire by purchase or
otherwise all or substantially all of the business, property or assets
of, or stock or other evidence of beneficial ownership of, any Person,
unless after giving effect thereto, Borrower is in pro forma compliance
with this Agreement.
(f) ERISA. Neither Borrower nor the REIT shall, and neither
shall permit any Subsidiary or any of their ERISA Affiliates to, do any of the
following to the extent that such act or failure to act would result in the
aggregate, after taking into account any other such acts or failure to act, in a
Material Adverse Effect:
(i) Engage, or knowingly permit a Subsidiary or an
ERISA Affiliate to engage, in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code which
is not exempt under Section 407 or 408 of ERISA or Section 4975(d) of
the Internal Revenue Code for which a class exemption is not available
or a private exemption has not been previously obtained from the DOL;
(ii) Permit to exist any accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Internal Revenue Code), whether or not waived;
52
(iii) Fail, or permit a Subsidiary or an ERISA
Affiliate of the REIT, Borrower or any Subsidiary to fail, to pay
timely required contributions or annual installments due with respect
to any waived funding deficiency to any Plan if such failure could
result in the imposition of a Lien or otherwise would have a Material
Adverse Effect;
(iv) Terminate, or permit an ERISA Affiliate of the
REIT, Borrower or any Subsidiary to terminate, any Benefit Plan which
would result in any liability of Borrower or a Subsidiary or an ERISA
Affiliate of the REIT, Borrower or any Subsidiary under Title IV of
ERISA;
(v) Fail, or permit any Subsidiary or ERISA Affiliate
to fail to pay any required installment under section (m) of Section
412 of the Internal Revenue Code or any other payment required under
Section 412 of the Internal Revenue Code on or before the due date for
such installment or other payment, if such failure could result in the
imposition of a Lien or otherwise would have a Material Adverse Effect;
(vi) Permit to exist any Termination Event;
(vii) Make, or permit a Subsidiary or an ERISA
Affiliate of the REIT, Borrower or any Subsidiary to make, a complete
or partial withdrawal (within the meaning of ERISA Section 4201) from
any Multiemployer Plan so as to result in liability to Borrower, a
Subsidiary or any ERISA Affiliate of the REIT, Borrower or any
Subsidiary which would have a Material Adverse Effect; or
(viii) Permit the total Unfunded Pension Liabilities
(using the actuarial assumptions utilized by the PBGC) for all Benefit
Plans (other than Benefit Plans which have no Unfunded Pension
Liabilities) to have a Material Adverse Effect.
None of the REIT, Borrower nor any Agreement Party shall use
any "assets" (within the meaning of ERISA or Section 4975 of the Internal
Revenue Code, including but not limited to 29 C.F.R. ss. 2510.3-101 or any
successor regulation thereto) of an "employee benefit plan" within the meaning
of Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Internal Revenue Code to repay or secure the Obligations if the use of such
assets may result in a prohibited transaction under ERISA or the Internal
Revenue Code (which is not exempt from the restrictions of Section 406 of ERISA
and Section 4975 of the Internal Revenue Code and the taxes and penalties
imposed by Section 4975 of the Internal Revenue Code and Section 502(i) of
ERISA) or in a Lender, Agent or the Lenders being deemed in violation of Section
404 or 406 of ERISA or Section 4975 of the Internal Revenue Code or otherwise by
itself results in or will result in a Lender, Agent or the Lenders being a
fiduciary or party in interest under ERISA or a "disqualified person" as defined
in Section 4975(e)(2) of the Internal Revenue Code with respect to an "employee
benefit plan" within the meaning of Section 3(3) of ERISA or a "plan" within the
meaning of Section 4975(e)(1) of the Internal Revenue Code. Without limitation
of any other provision of this Agreement, none of the REIT, Borrower or any
Agreement Party shall assign, sell, pledge, encumber, transfer, hypothecate or
otherwise
53
dispose of their respective interests or rights (direct or indirect) in any Loan
Document, or attempt to do any of the foregoing or suffer any of the foregoing,
or permit any party with a direct or indirect interest or right in any Loan
Document to do any of the foregoing, nor shall the REIT or Borrower assign,
sell, pledge, encumber, transfer, hypothecate or otherwise dispose of any of
their respective rights or interests (direct or indirect) in any Agreement
Party, Borrower or the REIT, as applicable, or attempt to do any of the
foregoing or suffer any of the foregoing, if such action would cause the
Obligations, or the exercise of any of the Agent's or Lenders' rights in
connection therewith, to constitute a prohibited transaction under ERISA or the
Internal Revenue Code (unless Borrower furnishes to Agent a legal opinion
reasonably satisfactory to Agent that the transaction is exempt from the
prohibited transaction provisions of ERISA and the Internal Revenue Code (for
this purpose, Agent and the Lenders agree to supply Borrower all relevant
non-confidential factual information reasonably necessary to such legal opinion
and reasonably requested by Borrower)) or otherwise results in a Lender, Agent
or the Lenders being deemed in violation of Sections 404 or 406 of ERISA or
Section 4975 of the Internal Revenue Code or otherwise by itself would result in
a Lender, Agent or the Lenders being a fiduciary or party in interest under
ERISA or a "disqualified person" as defined in Section 4975(e)(2) of the
Internal Revenue Code with respect to an "employee benefit plan" within the
meaning of Section 3(3) of ERISA or a "plan" within the meaning of Section
4975(e)(1) of the Internal Revenue Code.
(g) Environmental Liabilities. Borrower shall not, and shall
not permit any of its Subsidiaries to, become subject to any Liabilities and
Costs which would have a Material Adverse Effect arising out of or related to
(i) the Release or threatened Release of any Contaminant into the environment,
or any Remedial Action in response thereto, or (ii) any violation of any
Environmental Laws. Notwithstanding the foregoing provision, Borrower and its
Subsidiaries shall have the right to contest in good faith any claim of
violation of an Environmental Law by appropriate legal proceedings and shall be
entitled to postpone compliance with the obligation being contested as long as
(i) no Event of Default shall have occurred and be continuing, (ii) Borrower
shall have given Agent prior written notice of the commencement of such contest,
(iii) noncompliance with such Environmental Law shall not subject Borrower or
such Subsidiary to any criminal penalty or subject Agent to pay any civil
penalty or to prosecution for a crime, and (iv) no portion of any Property
material to Borrower or its condition or prospects shall be in imminent danger
of being sold, forfeited or lost, by reason of such contest or the continued
existence of the matter being contested.
(h) Amendment of Constituent Documents. Borrower shall not
permit any amendment of its limited partnership agreement, certificate of
limited partnership or by-laws, if any, which would materially and adversely
affect Agent or Lenders or their respective rights and remedies under the Loan
Documents.
(i) Disposal of Interests. Borrower will not directly or
indirectly convey, sell, transfer, assign, pledge or otherwise encumber or
dispose of any material portion of its partnership interests, stock or other
ownership interests in any Subsidiary or other Person in which it has an
interest unless Borrower has delivered to Agent a Compliance Certificate showing
on a pro forma basis (calculated in a manner reasonably acceptable to Agent)
that there
54
would be no breach of any of the financial covenants contained in Articles VII
and VIII after giving effect to such conveyance, sale, transfer, assignment,
pledge, or other encumbrance or disposition.
(j) Margin Regulations. No portion of the proceeds of any
credit extended under this Agreement shall be used in any manner which might
cause the extension of credit or the application of such proceeds to violate
Regulation U or Regulation X or any other regulation of the Federal Reserve
Board or to violate the Securities Exchange Act or the Securities Act, in each
case as in effect on the Closing Date and the date of such use of proceeds.
(k) Transactions with Affiliates. Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into, any transaction or
series of related transactions with any Affiliate of Borrower, other than
transactions in the ordinary course of business which are on terms and
conditions substantially as favorable to Borrower or such Subsidiary as would be
obtainable by Borrower or such Subsidiary in an arms-length transaction with a
Person other than an Affiliate.
7.02 With respect to the REIT:
(a) Indebtedness. The REIT shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) the Obligations; and
(ii) Indebtedness which, after giving effect thereto,
may be incurred or may remain outstanding without giving rise to an
Event of Default or Unmatured Event of Default under any provision of
Articles VII and VIII; provided, however, that (A) the REIT shall not,
and shall not permit any of its Subsidiaries to, guarantee or otherwise
become or remain directly or indirectly liable with respect to the
Indebtedness of any Investment Affiliate, and (B) the REIT shall not
permit any Subsidiary to create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to, any Recourse
Indebtedness in excess of Ten Million Dollars ($10,000,000) per
Subsidiary at any time or Thirty Million Dollars ($30,000,000) in the
aggregate for all Subsidiaries at any time.
(b) Liens. The REIT shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist
any Lien on or with respect to any of its Property, except:
(i) Permitted Liens; and
(ii) Liens securing Indebtedness permitted to be
incurred and remain outstanding pursuant to Section 7.02(a)(ii).
55
(c) Restriction on Fundamental Changes.
(i) The REIT shall not enter into any merger,
consolidation, reorganization or recapitalization or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution) or discontinue
its business.
(ii) The REIT shall not change its Fiscal Year.
(iii) The REIT shall not engage in any line of
business other than owning partnership interests in Borrower and the
interests identified on Schedule 4.01(v) as being owned by the REIT and
any other ownership interests in Subsidiaries and Investment Affiliates
which are permitted under the terms of Borrower's partnership
agreement.
(iv) The REIT shall not have an Investment in any
Person other than Borrower and the interests identified on Schedule
4.01(v) as being owned by the REIT and any other ownership interests in
Subsidiaries and Investment Affiliates which are permitted under the
terms of Borrower's partnership agreement.
(v) The REIT shall not acquire an interest in any
Property other than Securities issued by Borrower and the interests
identified on Schedule 4.01(v) and any other ownership interests in
Subsidiaries and Investment Affiliates which are permitted under the
terms of Borrower's partnership agreement.
(d) Environmental Liabilities. The REIT shall not, and shall
not permit any of its Subsidiaries to, become subject to any Liabilities and
Costs which would have a Material Adverse Effect arising out of or related to
(i) the Release or threatened Release of any Contaminant into the environment,
or any Remedial Action in response thereto, or (ii) any violation of any
Environmental Laws. Notwithstanding the foregoing provision, the REIT and its
Subsidiaries shall have the right to contest in good faith any claim of
violation of an Environmental Law by appropriate legal proceedings and shall be
entitled to postpone compliance with the obligation being contested as long as
(i) no Event of Default shall have occurred and be continuing, (ii) the REIT
shall have given Agent prior written notice of the commencement of such contest,
(iii) noncompliance with such Environmental Law shall not subject the REIT or
such Subsidiary to any criminal penalty or subject Agent to pay any civil
penalty or to prosecution for a crime, and (iv) no portion of any Property
material to Borrower or its condition or prospects shall be in imminent danger
of being sold, forfeited or lost, by reason of such contest or the continued
existence of the matter being contested.
(e) Amendment of Charter or By-Laws. The REIT shall not permit
any amendment of its charter documents or by-laws, which would materially and
adversely affect Agent or Lenders or their respective rights and remedies under
the Loan Documents.
(f) Disposal of Partnership Interests. The REIT will not
directly or indirectly convey, sell, transfer, assign, pledge or otherwise
encumber or dispose of any of its partnership interests in Borrower.
56
(g) Maximum Ownership Interests. No Person or group of Persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act) (other
than ▇▇▇▇▇▇ ▇▇▇▇) shall beneficially acquire ownership (within the meaning of
Rule 13d-3 promulgated by the Commission under such Act), directly or
indirectly, of more than fifteen percent (15%) of the Securities which have the
right to elect the board of directors of the REIT under ordinary circumstances
on a combined basis, after giving effect to the conversion of any Convertible
Securities in the REIT and Borrower.
ARTICLE VIII
FINANCIAL COVENANTS
Borrower covenants and agrees that, on and after the date of
this Agreement and until payment in full of all the Obligations, the expiration
of all Commitments and the termination of this Agreement:
8.01 Total Liabilities to Gross Asset Value. Borrower shall
not permit the ratio of Total Liabilities to the sum of Gross Asset Values for
Borrower and each of its Subsidiaries to exceed 0.6:1.
8.02 Secured Debt to Gross Asset Value. Borrower shall not
permit the ratio of Secured Debt to the sum of Gross Asset Values for Borrower
and each of its Subsidiaries to exceed 0.5:1.
8.03 EBITDA to Interest Expense Ratio. Borrower shall not
permit the ratio of EBITDA for any Fiscal Quarter to Interest Expense for such
Fiscal Quarter to be less than 2.0:1.
8.04 EBITDA to Fixed Charges Ratio. Borrower shall not permit
the ratio of EBITDA for any Fiscal Quarter to Fixed Charges for such Fiscal
Quarter to be less than 1.75:1.
8.05 Unencumbered Net Operating Income to Unsecured Interest
Expense. Borrower shall not permit the ratio of Unencumbered Net Operating
Income for any Fiscal Quarter to Unsecured Interest Expense for such Fiscal
Quarter to be less than 1.80:1.
8.06 Unencumbered Pool. Borrower shall not permit the ratio of
(a) the sum of (i) the Unencumbered Asset Value and (ii) the fair market value
of cash and Cash Equivalents owned collectively by Borrower and any Wholly-Owned
Subsidiary and subject to no Lien to (b) outstanding Unsecured Debt to be less
than 1.80:1.
8.07 Minimum Net Worth. Borrower will maintain a Net Worth of
not less than the Minimum Net Worth.
8.08 Permitted Holdings. Borrower's primary business will be
the ownership, operation, management and development of manufactured home
communities and any other business activities of Borrower and its Subsidiaries
will remain incidental thereto. Notwithstanding the foregoing, Borrower and its
Subsidiaries may acquire, maintain or engage in
57
the following "Permitted Holdings" if and so long as (i) the aggregate value of
such Permitted Holdings, whether held directly or indirectly by Borrower and its
Subsidiaries, does not exceed, at any time, twenty percent (20%) of Gross Asset
Value for Borrower as a whole and (ii) the value of each such Permitted Holding,
whether held directly or indirectly by Borrower and its Subsidiaries, does not
exceed, at any time, the following percentages of Borrower's Gross Asset Value:
Maximum Percentage of
Permitted Holdings Gross Asset Value
------------------ -----------------
Non-Manufactured Home Community Property (other than cash
or Cash Equivalents) 10%
Taxable REIT Subsidiary Interests 5%
Land 5%
Securities issued by real estate
investment trusts primarily engaged in the development,
ownership, operation and management of
manufactured home communities 5%
Manufactured Home Community Mortgages
other than mortgage indebtedness which is
either eliminated in the consolidation of the REIT,
Borrower and the Subsidiaries or
accounted for as investments in real estate
under GAAP 10%
Manufacturing Home Community Ownership Interests other
than Controlled Ownership Interests 10%
Development Activity 10%
The value of the foregoing categories of Permitted Holdings shall be calculated
as follows: (i) the value of any Non-Manufactured Home Community Property (other
than cash or Cash Equivalents) or any Manufactured Home Community Ownership
Interest (other than a Controlled Ownership Interest) shall be calculated based
upon its Adjusted Asset Value; (ii) the value of any Land or any Security issued
by a real estate investment trust primarily engaged in the development,
ownership, operation and management of manufactured home communities shall be
equal to the lesser of (A) the acquisition cost thereof or (B) the current
market value thereof (such market value to be determined in a manner reasonably
acceptable to Agent); (iii) the value of any Taxable REIT Subsidiary Interest
shall be the acquisition or investment cost thereof; (iv) the value of any
Manufactured Home Community Mortgage (other than mortgage indebtedness which is
either eliminated in the consolidation of the REIT, Borrower and the
58
Subsidiaries or accounted for as an investment in real estate under GAAP) shall
be equal to the book value thereof; (v) the value of Development Activity by
Borrower or any Subsidiary shall be equal to the full budgeted cost thereof; and
(vi) the value of any Development Activity by an Investment Affiliate shall be
equal to the greater of (A) Borrower's pro rata share of the full budgeted cost
thereof based upon its percentage of equity ownership, or (B) Borrower's pro
rata share of the full budgeted cost thereof based upon Borrower's economic
interest in the project (as determined by Borrower in a manner reasonably
satisfactory to Agent).
8.09 Calculation. Each of the foregoing ratios and financial
requirements shall be calculated as of the last day of each Fiscal Quarter, but
shall be satisfied at all times.
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.01 Events of Default. Each of the following occurrences
shall constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. (i) The failure to pay
in full any amount due on the Termination Date; (ii) the failure to pay in full
any principal when due; (iii) the failure to pay in full any interest owing
hereunder or under any of the other Loan Documents within ten (10) days after
the due date thereof and, unless Agent has previously delivered two (2) or more
notices of payment default to Borrower during the term of this Agreement (in
which event the following notice shall not be required), Agent shall have given
Borrower written notice that Agent has not received such payment on or before
the date such payment was required to be made and Borrower shall have failed to
make such payment within five (5) days after receipt of such notice; or (iv) the
failure to pay in full any other payment required hereunder or under any of the
other Loan Documents, whether such payment is required to be made to Agent or to
some other Person, within ten (10) days after Agent gives Borrower written
notice that such payment is due and unpaid.
(b) Dividends. Borrower or the REIT shall breach the covenant
set forth in Section 7.01(d).
(c) Breach of Financial Covenants. Borrower shall fail to
satisfy any covenant set forth in Article VIII and such failure shall continue
for forty (40) days after Borrower's knowledge thereof.
(d) Other Defaults. Borrower, the REIT or any Agreement Party
shall fail duly and punctually to perform or observe any agreement, covenant or
obligation binding on Borrower, the REIT or any Agreement Party under this
Agreement or under any of the other Loan Documents (other than as described in
Section 6.01(e) or Sections 9.01(a), (b), (c), (e), (g) or (p)), and such
failure shall continue for thirty (30) days after written notice from Agent to
Borrower, the REIT or any Agreement Party (or (i) such lesser period of time as
is mandated by applicable Requirements of Law or (ii) such longer period of time
(but in no case more than ninety (90) days) as is reasonably required to cure
such failure if Borrower, the REIT, or such
59
Agreement Party commences such cure within such thirty (30) days and diligently
pursues the completion thereof).
(e) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by Borrower, the REIT or any Agreement Party to
Agent or any Lender herein or in any of the other Loan Documents or in any
statement, certificate or financial statements at any time given by Borrower
pursuant to any of the Loan Documents shall be false or misleading in any
material respect on the date as of which made and, with respect to such
representations or warranties not known by Borrower at the time made or deemed
made to be false or misleading, the defect causing such representation or
warranty to be false or misleading is not removed within thirty (30) days after
the written notice thereof from Agent to Borrower.
(f) Default as to Other Indebtedness. Borrower, the REIT, any
Subsidiary or any Investment Affiliate shall have defaulted under any Other
Indebtedness of such party (other than Non-Recourse Indebtedness) and as a
result thereof the holders of such Other Indebtedness shall have accelerated
such Other Indebtedness (other than Non-Recourse Indebtedness), if the aggregate
amount of such accelerated Other Indebtedness (to the extent of any recourse to
Borrower, the REIT or any Subsidiary), together with the aggregate amount of any
Other Indebtedness (other than Non-Recourse Indebtedness) of Borrower, the REIT,
any Subsidiary or any Investment Affiliate which has theretofore been
accelerated (to the extent of any recourse to Borrower, the REIT or any
Subsidiary) is $10,000,000 or more.
(g) Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) An involuntary case or other proceeding shall be
commenced against the REIT, Borrower, any Subsidiary, or any Agreement
Party and the petition shall not be dismissed within sixty (60) days
after commencement of the case, or a court having jurisdiction shall
enter a decree or order for relief in respect of the REIT, Borrower,
any Subsidiary, or any Agreement Party, as the case may be, in an
involuntary case or other proceeding, under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or any
other similar relief shall be granted under any applicable federal,
state or foreign law; or
(ii) A decree or order of a court having jurisdiction
in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers
over Borrower, the REIT, any Subsidiary, or any Agreement Party, or
over all or a substantial part of the property of the REIT, Borrower,
any Subsidiary, or any Agreement Party shall be entered, or an interim
receiver, trustee or other custodian of the REIT, Borrower, any
Subsidiary, or any Agreement Party, or of all or a substantial part of
the property of the REIT, Borrower, any Subsidiary, or any Agreement
Party shall be appointed or a warrant of attachment, execution or
similar process against any substantial part of the property of the
REIT, Borrower, any Subsidiary, or any Agreement Party shall be issued
and any such event shall not be stayed, vacated, dismissed, bonded or
discharged within sixty (60) days of entry, appointment or issuance.
60
(h) Voluntary Bankruptcy; Appointment of Receiver, etc. The
REIT, Borrower, any Subsidiary, or any Agreement Party shall have an order for
relief entered with respect to it or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking of possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; the REIT, Borrower, any Subsidiary, or any Agreement Party shall make
any assignment for the benefit of creditors or shall be unable or fail, or admit
in writing its inability, to pay its debts as such debts become due; or the
general partner(s) or Board of Directors (or any committee thereof), as
applicable, of the REIT, Borrower, any Subsidiary, or any Agreement Party adopts
any resolution or otherwise authorizes any action to approve any of the
foregoing.
(i) Judgments and Attachments. (i) Any money judgments (other
than a money judgment covered by insurance but only if the insurer has admitted
liability with respect to such money judgment), writs or warrants of attachment,
or similar processes involving an aggregate amount in excess of $5,000,000 shall
be entered or filed against the REIT, Borrower, any Subsidiary, or any Agreement
Party or their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of thirty (30) days, or (ii) any judgment or
order of any court or administrative agency awarding material damages shall be
entered against the REIT, Borrower, any Subsidiary, or any Agreement Party in
any action under the Federal securities laws seeking rescission of the purchase
or sale of, or for damages arising from the purchase or sale of, any Securities,
such judgment or order shall have become final after exhaustion of all available
appellate remedies and such judgment or order would have a Material Adverse
Effect.
(j) Dissolution. Any order, judgment or decree shall be
entered against the REIT, Borrower, or any Agreement Party decreeing its
involuntary dissolution or split up and such order shall remain undischarged and
unstayed for a period in excess of thirty (30) days; or the REIT, Borrower, or
any Agreement Party shall otherwise dissolve or cease to exist.
(k) Loan Documents. Any Loan Document shall cease to be in
full force and effect for any reason or any guarantor under any guaranty of all
or any portion of the Obligations shall at any time disavow or deny liability
under such guaranty in writing.
(l) ERISA Plan Assets. Any assets of Borrower, the REIT or any
Agreement Party shall constitute "assets" (within the meaning of 29 C.F.R. ss.
2510.3-101 or any successor regulation thereto) of an "employee benefit plan"
within the meaning of Section 3(3) of ERISA or a "plan" within the meaning of
Section 4975(e)(1) of the Internal Revenue Code or Borrower, the REIT or any
Agreement Party shall be an "employee benefit plan" as defined in Section 3(3)
of ERISA, a "multiemployer plan" as defined in Sections 4001(a)(3) or 3(37) of
ERISA, or a "plan" as defined in Section 4975(e)(1) of the Internal Revenue
Code.
(m) ERISA Prohibited Transaction. The Obligations, any of the
Loan Documents or the exercise of any of the Agent's or Lenders' rights in
connection therewith shall constitute a prohibited transaction under ERISA
and/or the Internal Revenue Code (which is not
61
exempt from the restrictions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code and the taxes and penalties imposed by Section 4975 of the
Internal Revenue Code and Section 502(i) of ERISA).
(n) ERISA Liabilities. (i) Any Termination Event occurs which
will or is reasonably likely to subject Borrower, the REIT, any Subsidiary, any
Agreement Party, any ERISA Affiliate thereof or any of them to a liability which
Agent reasonably determines will have a Material Adverse Effect; (ii) the plan
administrator of any Benefit Plan applies for approval under Section 412(d) of
the Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code and Agent reasonably determines that
the business hardship upon which the Section 412(d) waiver request was based
will or would reasonably be anticipated to subject Borrower, the REIT, any
Subsidiary, any Agreement Party, or any ERISA Affiliate thereof or any of them
to a liability which Agent reasonably determines will have a Material Adverse
Effect; (iii) any Benefit Plan shall incur an "accumulated funding deficiency"
(as defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA)
for which a waiver shall not have been obtained in accordance with the
applicable provisions of the Internal Revenue Code or ERISA which "accumulated
funding deficiency" will or would reasonably be anticipated to subject Borrower,
the REIT, any Subsidiary, any Agreement Party, or any ERISA Affiliate thereof or
any of them to a liability which Agent reasonably determines will have a
Material Adverse Effect; (iv) Borrower, the REIT, any Subsidiary, any Agreement
Party, or any ERISA Affiliate thereof or any of them shall have engaged in a
transaction which is prohibited under Section 4975 of the Internal Revenue Code
or Section 406 of ERISA which will or would reasonably be anticipated to result
in the imposition of a liability on Borrower, the REIT, any Subsidiary, any
Agreement Party, or any ERISA Affiliate thereof or any of them which Agent
reasonably determines will have a Material Adverse Effect; (v) Borrower, the
REIT, any Subsidiary, any Agreement Party, or any ERISA Affiliate thereof or any
of them shall fail to pay when due an amount which it shall have become liable
to pay to the PBGC, a Plan or a trust established under Title IV of ERISA which
failure will or would reasonably be anticipated to result in the imposition of a
liability on Borrower, the REIT, any Subsidiary, any Agreement Party, or any
ERISA Affiliate thereof or any of them which Agent reasonably determines will
have a Material Adverse Effect; (vi) a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that a Benefit Plan
must be terminated or have a trustee appointed to administer such Plan which
condition will or would reasonably be anticipated to result in the imposition of
a liability on Borrower, the REIT, any Subsidiary, any Agreement Party, or any
ERISA Affiliate thereof or any of them which Agent reasonably determines will
have a Material Adverse Effect; (vii) a Lien shall be imposed on any assets of
Borrower, the REIT, any Subsidiary, any Agreement Party, or any ERISA Affiliate
thereof or any of them in favor of the PBGC or a Plan which Agent reasonably
determines will have a Material Adverse Effect; (viii) Borrower, the REIT, any
Subsidiary, any Agreement Party, or any ERISA Affiliate
62
thereof or any of them shall suffer a partial or complete withdrawal from a
Multiemployer Plan or shall be in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from a
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan which will or would reasonably be anticipated to
result in the imposition of a liability on Borrower, the REIT, any Subsidiary,
any Agreement Party, or any ERISA Affiliate thereof or any of them which Agent
reasonably determines will have a Material Adverse Effect; or (ix) a proceeding
shall be instituted by a fiduciary of any Multiemployer Plan against Borrower,
the REIT, any Subsidiary, any Agreement Party, or any ERISA Affiliate thereof or
any of them to enforce Section 515 of ERISA which will or would reasonably be
anticipated to result in the imposition of a liability on Borrower, the REIT,
any Subsidiary, any Agreement Party, or any ERISA Affiliate thereof or any of
them which Agent reasonably determines will have a Material Adverse Effect.
(o) Solvency. Borrower, any Agreement Party or the REIT shall
cease to be Solvent.
(p) Board of Directors. During any 12-month period,
individuals who were directors of the REIT on the first day of such period shall
not constitute a majority of the board of directors of the REIT.
(q) Revolving Credit Agreement. An "Event of Default" shall
have occurred under the Revolving Credit Agreement.
An Event of Default shall be deemed "continuing" until cured
or waived in writing in accordance with Section 11.05.
9.02 Rights and Remedies.
(a) Acceleration. Upon the occurrence of any Event of Default
with respect to Borrower described in the foregoing Section 9.01(g) or 9.01(h),
the unpaid principal amount of and any and all accrued interest on the Loan and
all of the other Obligations shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentment, demand or protest or other requirements of any kind
(including without limitation diligence, presentment, notice of intent to demand
or accelerate or notice of acceleration), all of which are hereby expressly
waived by Borrower, and the obligations of Lenders to make, continue or convert
any Loan hereunder shall thereupon terminate; and upon the occurrence and during
the continuance of any other Event of Default, Agent shall, at the request of,
or may, with the consent of, Requisite Lenders, by written notice to Borrower,
declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Loan and all of the other Obligations to be, and the same shall
thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including without limitation diligence, presentment,
notice of intent to demand or accelerate and of acceleration), all of which are
hereby expressly waived by Borrower. Upon the occurrence of and during the
continuance of an Event of Default, no Agreement Party shall be permitted to
make any distributions or dividends without the prior written consent of Agent.
Upon the occurrence of an Event of Default or an acceleration of the
Obligations, Agent and Lenders may exercise all or any portion of the rights and
remedies set forth in the Loan Documents.
(b) Access to Information. Notwithstanding anything to the
contrary contained in the Loan Documents, upon the occurrence of and during the
continuance of an Event of Default,
63
Agent shall be entitled to request and receive, by or through Borrower or
appropriate legal process, any and all information concerning the REIT,
Borrower, any Subsidiary of Borrower, any Investment Affiliate, any Agreement
Party, or any property of any of them, which is reasonably available to or
obtainable by Borrower.
(c) Waiver of Demand. Demand, presentment, protest and notice
of nonpayment are hereby waived by Borrower.
(d) Waivers, Amendments and Remedies. No delay or omission of
Agent or Lenders to exercise any right under any Loan Document shall impair such
right or be construed to be a waiver of any Event of Default or an acquiescence
therein, and any single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other right, and no
waiver, amendment or other variation of the terms, conditions or provisions of
the Loan Documents whatsoever shall be valid unless in a writing signed by Agent
after obtaining written approval thereof or the signature thereon of those
Lenders required to approve such waiver, amendment or other variation, and then
only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to Agent and Lenders until the Obligations have been paid in
full, the Commitments have expired or terminated and this Agreement has been
terminated.
9.03 Rescission. If at any time after acceleration of the
maturity of the Loan, Borrower shall pay all arrears of interest and all
payments on account of principal of the Loan which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Unmatured Events of Default (other than nonpayment
of principal of and accrued interest on the Loan due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to Section 11.05,
then by written notice to Borrower, Requisite Lenders may elect, in the sole
discretion of Requisite Lenders to rescind and annul the acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Unmatured Event of Default or impair any right or remedy in connection
therewith. The provisions of the preceding sentence are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders;
they are not intended to benefit Borrower and do not give Borrower the right to
require Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
ARTICLE X
AGENCY PROVISIONS
10.01 Appointment.
(a) Each Lender hereby designates and appoints ▇▇▇▇▇ Fargo as
Agent of such Lender under this Agreement and the Loan Documents, and each
Lender hereby irrevocably authorizes Agent to take such action on its behalf
under the provisions of this Agreement and the Loan Documents and to exercise
such powers as are set forth herein or therein, together with
64
such other powers as are reasonably incidental thereto. Agent agrees to act as
such on the express conditions contained in this Article X.
(b) The provisions of this Article X are solely for the
benefit of Agent and Lenders, and Borrower shall not have any rights to rely on
or enforce any of the provisions hereof. In performing its functions and duties
under this Agreement, Agent shall act solely as Agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower.
10.02 Nature of Duties. Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be administrative in nature. Subject
to the provisions of Sections 10.05 and 10.07, Agent shall administer the Loan
in the same manner as it administers its own loans. Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the Loan Documents, expressed or implied, is
intended or shall be construed to impose upon Agent any obligation in respect of
this Agreement or any of the Loan Documents except as expressly set forth herein
or therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the REIT, Borrower, the Subsidiaries, the
Investment Affiliates, and each Agreement Party in connection with the making
and the continuance of the Loan hereunder and shall make its own assessment of
the creditworthiness of the REIT, Borrower, the Subsidiaries, the Investment
Affiliates, and each Agreement Party, and, except as specifically provided
herein, Agent shall not have any duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the Closing Date
or at any time or times thereafter.
10.03 Loan Continuation/Conversion.
(a) Promptly after receipt of a Notice of
Continuation/Conversion, but in no event later than two (2) Business Days prior
to the proposed Continuation/Conversion Date for the continuation of a LIBOR
Loan or the conversion of a Base Rate Loan into a LIBOR Loan, Agent shall
notify, by telecopy, each Lender of the proposed continuation or conversion and
the Continuation/Conversion Date set forth therein. Each Lender shall make
available to Agent (or the funding bank or entity designated by Agent), the
amount of such Lender's Pro Rata Share of the Loan in immediately available
funds not later than the time designated in Section 10.03(b). Unless Agent shall
have been notified by any Lender prior to such time for funding in respect of
the Loan that such Lender does not intend to make available to Agent such
Lender's Pro Rata Share of the Loan, Agent may assume that such Lender has made
such amount available to Agent and Agent, in its sole discretion, may, but shall
not be obligated to, make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to Agent by such Lender on or
prior to the Closing Date, such Lender agrees to pay to Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to Borrower until the date such
amount is paid or repaid to Agent, at the Federal Funds Rate. If such Lender
shall pay to Agent such corresponding amount, such amount so paid shall
constitute such Lender's Pro Rata Share of the
65
Loan. If such Lender shall not pay to Agent such corresponding amount after
reasonable attempts are made by Agent to collect such amounts from such Lender,
Borrower agrees to repay to Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to Borrower until the date such amount is repaid to Agent, at the
interest rate applicable thereto.
(b) Each Lender shall make the amount of its Pro Rata Share of
the Loan available to Agent in Dollars and in immediately available funds, to
such bank and account, in El Segundo, California as Agent may designate, not
later than 9:00 A.M. (California time) on the Closing Date. Nothing in this
Section 10.03(b) shall be deemed to relieve any Lender of its obligation
hereunder to deliver its Pro Rata Share of the Loan on the Closing Date, nor
shall any Lender be responsible for the failure of any other Lender to perform
its obligations to deliver its Pro Rata Share of the Loan hereunder, and the
Commitment of any Lender shall not be increased or decreased as a result of the
failure by any other Lender to perform its obligation to deliver its Pro Rata
Share of the Loan as required by this Section 10.03.
10.04 Distribution and Apportionment of Payments. Payments
actually received by Agent for the account of Lenders shall be paid to them
promptly after receipt thereof by Agent, but in any event prior to 3:00 P.M.
(California time) on the day of receipt (if received by 11:00 A.M. (California
time) on such day), or within one (1) Business Day thereafter (if received after
11:00 A.M. (California time) on the day of receipt), provided that Agent shall
pay to such Lenders interest thereon at the Federal Funds Rate from the Business
Day on which such funds are required to be paid to Lenders by Agent until such
funds are actually paid in immediately available funds to such Lenders. All
payments of principal and interest in respect of the outstanding Loan, all
payments of the fees described in this Agreement (other than agency and
arrangement fees described in Section 2.04(b)), and all payments in respect of
any other Obligations shall be allocated among such of Lenders as are entitled
thereto, in proportion to their respective Pro Rata Shares or otherwise as
provided herein. Agent shall promptly, but in any event within two (2) Business
Days (with interest thereon, if required pursuant to this Section 11.04(a)),
distribute to each Lender at its primary address set forth on the appropriate
counterpart signature page hereof or on the Assignment and Assumption, or at
such other address as a Lender may request in writing, such funds as it may be
entitled to receive, provided that Agent shall in any event not be bound to
inquire into or determine the validity, scope or priority of any interest or
entitlement of any Lender and may suspend all payments and seek appropriate
relief (including without limitation instructions from Requisite Lenders, or all
Lenders, as applicable, or an action in the nature of interpleader) in the event
of any doubt or dispute as to any apportionment or distribution contemplated
hereby. The order of priority herein is set forth solely to determine the rights
and priorities of Lenders as among themselves and may at any time or from time
to time be changed by Lenders as they may elect, in writing in accordance with
Section 11.05, without necessity of notice to or consent of or approval by
Borrower or any other Person.
10.05 Rights, Exculpation, Etc. Neither Agent, any Affiliate
of Agent, nor any of their respective officers, directors, employees, agents,
attorneys or consultants, shall be liable to any Lender for any action taken or
omitted by them hereunder or under any of the Loan
66
Documents, or in connection herewith or therewith, except that Agent shall be
liable for its gross negligence or willful misconduct in the performance of its
express obligations hereunder. In the absence of gross negligence or willful
misconduct, Agent shall not be liable for any apportionment or distribution of
payments made by it in good faith pursuant to Section 10.04. Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, or any of the
other Loan Documents, or any of the transactions contemplated hereby and
thereby; or for the financial condition of the REIT, Borrower, any Subsidiary,
any Investment Affiliate, or any Agreement Party. Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of the Loan Documents
or the financial condition of the REIT, Borrower, any Subsidiary, any Investment
Affiliate, or any Agreement Party, or the existence or possible existence of any
Unmatured Event of Default or Event of Default. Agent may at any time request
instructions from Lenders with respect to any actions or approvals which, by the
terms of this Agreement or of any of the Loan Documents, Agent is permitted or
required to take or to grant without instructions from any Lenders, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from taking any
action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from Requisite Lenders or Supermajority
Lenders, as the case may be. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of Requisite Lenders, Supermajority Lenders
or, where applicable, all Lenders. Agent shall promptly notify each Lender at
any time that the Requisite Lenders or Supermajority Lenders, as the case may
be, have instructed Agent to act or refrain from acting pursuant hereto.
10.06 Reliance. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents, telecopies
or any telephone message believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person, and with respect to
all matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder, upon advice of legal counsel (including counsel
for Borrower), independent public accountant and other experts selected by it.
10.07 Indemnification. To the extent that Agent is not
reimbursed and indemnified by Borrower, Lenders will reimburse, within ten (10)
days after notice from Agent, and indemnify Agent for and against any and all
Liabilities and Costs which may be imposed on, incurred by, or asserted against
Agent (in its capacity as Agent) in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
Agent (in its capacity as Agent) under this Agreement or any of the other Loan
Documents, in proportion to each Lender's Pro Rata Share, provided that no
Lender shall be liable for any portion of such Liabilities and Costs resulting
from Agent's gross negligence or willful misconduct, bad faith or fraud. The
obligations of Lenders under this Section 10.07 shall survive the payment in
full of all Obligations and the termination of this Agreement. In the event that
after payment and distribution of any amount by Agent to Lenders, any Lender or
third party,
67
including Borrower, any creditor of Borrower or a trustee in bankruptcy,
recovers from Agent any amount found to have been wrongfully paid to Agent or
disbursed by Agent to Lenders, then Lenders, in proportion to their respective
Pro Rata Shares, shall reimburse Agent for all such amounts. Notwithstanding the
foregoing, Agent shall not be obligated to advance Liabilities and Costs and may
require the deposit by each Lender of its Pro Rata Share of any material
Liabilities and Costs anticipated by Agent before they are incurred or made
payable.
10.08 Agent Individually. With respect to its Pro Rata Share
of the Commitments hereunder and its Pro Rata share of the Loan, Agent shall
have and may exercise the same rights and powers hereunder and is subject to the
same obligations and liabilities as and to the extent set forth herein for any
other Lender. The terms "Lenders", "Requisite Lenders", "Supermajority Lenders",
or any similar terms may include Agent in its individual capacity as a Lender,
one of the Requisite Lenders or one of the Supermajority Lenders, but Requisite
Lenders and Supermajority Lenders shall not include Agent solely in its capacity
as Agent. Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
or any of its Subsidiaries or Affiliates as if it were not acting as Agent
pursuant hereto.
10.09 Successor Agent; Resignation of Agent; Removal of
Agent.
(a) Agent may resign from the performance of all its functions
and duties hereunder at any time by giving at least thirty (30) Business Days
prior written notice to Lenders and Borrower. For good cause, by a determination
of all the Lenders (excluding for such determination Agent in its capacity as a
Lender), Agent may be removed at any time by giving at least thirty (30)
Business Days prior written notice to Agent and Borrower. Such resignation or
removal shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clauses (b) and (c) below or as otherwise provided
below.
(b) Upon any such notice of resignation by or removal of
Agent, Requisite Lenders shall appoint a successor Agent with the consent of
Borrower, which shall not be unreasonably withheld or delayed (and which
approval from Borrower shall not be required upon the occurrence and during the
continuance of an Event of Default). Any successor Agent must be a bank (i) the
senior debt obligations of which (or such Bank's parent's senior debt
obligations) are rated not less than Baa-1 by ▇▇▇▇▇'▇ or a comparable rating by
a rating agency acceptable to Requisite Lenders, (ii) which has total assets in
excess of Ten Billion Dollars ($10,000,000,000) and (iii) which is a Lender as
of the date of such succession holding a Commitment without participants equal
to at least ten percent (10%) of the Facility. Agent hereby agrees to remit to
any successor Agent, a pro rata portion of any annual agent's fee received by
Agent, in advance, for the one-year period covered by such agent's fee based
upon the portion of such year then remaining.
(c) If a successor Agent shall not have been so appointed
within said thirty (30) Business Day period, the retiring or removed Agent, with
the consent of Borrower, which may not be unreasonably withheld or delayed (and
which approval from Borrower shall not be required upon the occurrence and
during the continuance of an Event of Default), shall then
68
appoint a successor Agent who shall meet the requirements described in
subsection (b) above and who shall serve as Agent until such time, if any, as
Requisite Lenders, with the consent of Borrower, which may not be unreasonably
withheld or delayed (and which approval from Borrower shall not be required upon
the occurrence and during the continuance of an Event of Default), appoint a
successor Agent as provided above.
10.10 Consents and Approvals.
(a) Each Lender authorizes and directs Agent to enter into the
Loan Documents other than this Agreement for the benefit of Lenders. Each Lender
agrees that any action taken by Agent at the direction or with the consent of
Requisite Lenders or the Supermajority Lenders and any action taken by Agent not
requiring consent by Requisite Lenders, Supermajority Lenders, or all Lenders in
accordance with the provisions of this Agreement or any Loan Document, and the
exercise by Agent at the direction or with the consent of Requisite Lenders or
the Supermajority Lenders of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all Lenders, except for actions specifically requiring the
approval of all Lenders. All communications from Agent to Lenders requesting
Lenders' determination, consent, approval or disapproval (i) shall be given in
the form of a written notice to each Lender, (ii) shall be accompanied by a
description of the matter or item as to which such determination, approval,
consent or disapproval is requested, or shall advise each Lender where such
matter or item may be inspected, or shall otherwise describe the matter or issue
to be resolved, (iii) shall include, if reasonably requested by a Lender and to
the extent not previously provided to such Lender, written materials and a
summary of all oral information provided to Agent by Borrower in respect of the
matter or issue to be resolved, and (iv) shall include Agent's recommended
course of action or determination in respect thereof. Each Lender shall reply
promptly, but in any event within fifteen (15) Business Days after receipt of
the request therefor from Agent (the "Lender Reply Period"). Unless a Lender
shall give written notice to Agent that it objects to the recommendation or
determination of Agent (together with a written explanation of the reasons
behind such objection) within the Lender Reply Period, such Lender shall be
deemed to have approved of or consented to such recommendation or determination.
With respect to decisions requiring the approval of Requisite Lenders,
Supermajority Lenders or all Lenders, Agent shall submit its recommendation or
determination for approval of or consent to such recommendation or determination
to all Lenders and upon receiving the required approval or consent shall follow
the course of action or determination recommended to Lenders by Agent or such
other course of action recommended by Requisite Lenders or Supermajority
Lenders, as the case may be, and each non-responding Lender shall be deemed to
have concurred with such recommended course of action. The following amendments,
modifications or waivers shall require the consent of the Requisite Lenders:
(i) Waiver of Sections 7.01(h) or 7.02(e);
(ii) Acceleration following an Event of Default
pursuant to Section 9.02(a) (except for any Event of Default pursuant
to Sections 9.01(g) or 9.01(h)) or rescission of such acceleration
pursuant to Section 9.03;
69
(iii) Approval of the exercise of remedies requiring
the consent of the Requisite Lenders under Section 9.02(a);
(iv) Appointment of a successor Agent in accordance
with Sections 10.09(b) and (c); or
(v) Disapproval of any Property as a Qualifying
Unencumbered Property.
(b) Except for amendments, modifications and waivers requiring
the consent of all Lenders pursuant to Section 11.05(b) hereof, the consent of
the Supermajority Lenders shall be required to amend or modify Sections 8.01,
8.02, 8.03, 8.04, 8.05, 8.06, 8.07 or 9.01(a) or to waive any requirement
thereof or to amend or modify this Section 10.10(b).
(c) In addition to the required consents or approvals referred
to in Section 11.05, Agent may at any time request instructions from Requisite
Lenders with respect to any actions or approvals which, by the terms of this
Agreement or of any of the Loan Documents, Agent is permitted or required to
take or to grant without instructions from any Lenders, and if such instructions
are promptly requested, Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from taking any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from Requisite Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement, any of
the other Loan Documents in accordance with the instructions of Requisite
Lenders or, where applicable, Supermajority Lenders or all Lenders. Agent shall
promptly notify each Lender at any time that the Requisite Lenders or
Supermajority Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
10.11 Assignments and Participations.
(a) Subject to the provisions of Section 10.11(j), after first
obtaining the approval of Agent and Borrower, which approval will not be
unreasonably withheld (and which approval from Borrower shall not be required
upon the occurrence and during the continuance of an Event of Default), each
Lender may assign to one or more banks, finance companies, insurance or other
institutions all or a portion of its rights and obligations under this Agreement
in accordance with the provisions of this Section (including without limitation
all or a portion of its Commitment and the portion of the Loan owing to it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of the assigning Lender's rights and obligations under
this Agreement and the assignment shall cover the same percentage of such
Lender's Commitment and the portion of the Loan owing to it, (ii) unless Agent
and Borrower otherwise consent (which consent of Borrower shall not be required
upon the occurrence and during the continuance of an Event of Default), the
aggregate amount of the Commitment of the assigning Lender being assigned to a
Person that is not already a Lender hereunder (provided such Lender was also a
Lender on the Closing Date) pursuant to each such assignment shall in no event
be less than Five Million Dollars ($5,000,000) and shall be an integral multiple
of One Million
70
Dollars ($1,000,000), (iii) the parties to each such assignment shall execute
and deliver to Agent, for its approval and acceptance, an Assignment and
Assumption and (iv) Agent shall receive from the assignor or assignors for its
sole account a processing fee of Three Thousand Dollars ($3,000). Upon such
execution, delivery, approval and acceptance, and upon the effective date
specified in the applicable Assignment and Assumption, (A) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been validly and effectively assigned to it pursuant
to such Assignment and Assumption, have the rights and obligations of a Lender
hereunder and (B) the Lender-assignor thereunder shall, to the extent that
rights and obligations hereunder have been validly and effectively assigned by
it pursuant to such Assignment and Assumption, relinquish its rights and be
released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and Assumption,
the Lender-assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Assumption, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the REIT, Borrower,
any Subsidiary, any Investment Affiliate, or any Agreement Party or the
performance or observance by the REIT, Borrower, any Subsidiary, any Investment
Affiliate, or any Agreement Party of any of their respective obligations under
any Loan Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Article V or
delivered pursuant to Article V to the date of such assignment and such other
Loan Documents and other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Assumption; (iv) such assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes Agent to take such action as Agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(c) Agent shall maintain at its address referred to on the
counterpart signature pages hereof a copy of each Assignment and Assumption
delivered to and accepted by it and shall record the names and addresses of each
Lender and the Commitment of, and principal amount of the Loan owing to, such
Lender from time to time. Borrower, Agent and Lenders may treat each Person
whose name is so recorded as a Lender hereunder for all purposes of this
Agreement.
71
(d) Upon its receipt of an Assignment and Assumption executed
by an assigning Lender and an assignee, Agent shall, if such Assignment and
Assumption has been properly completed and is in substantially the form of
Exhibit A, (i) accept such Assignment and Assumption, (ii) record the
information contained therein and (iii) give prompt notice thereof to Borrower.
Upon request, Borrower will execute and deliver to Agent an appropriate
replacement promissory note or replacement promissory notes in favor of each
assignee (and assignor, if such assignor is retaining a portion of its
Commitment and the Loan) reflecting such assignee's (and assignor's) Pro Rata
Share(s) of the Facility. Upon execution and delivery of such replacement
promissory notes, the original promissory note or notes evidencing all or a
portion of the Commitment and the Loan being assigned shall be canceled and
returned to Borrower.
(e) Each Lender may sell participations to one or more banks,
finance companies, insurance or other entities in or to all or a portion of its
rights and obligations under this Agreement (including without limitation all or
a portion of its Commitment and the portion of the Loan owing to it); provided,
however, that (i) such Lender's obligations under this Agreement (including
without limitation its Commitment to Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) Borrower, Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and with regard to any
and all payments to be made under this Agreement and (iv) the holder of any such
participation shall not be entitled to voting rights under this Agreement except
that such Participant may have the contractual right in the applicable
participation agreement to prevent (A) increases in the Facility, (B) extensions
of the Maturity Date (except pursuant to Section 2.09 hereof), (C) decreases in
the interest rates described in this Agreement, and (D) a release of the REIT
Guaranty.
(f) Borrower will use reasonable efforts to cooperate with
Agent and Lenders in connection with the assignment of interests under this
Agreement or the sale of participations herein.
(g) Anything in this Agreement to the contrary
notwithstanding, and without the need to comply with any of the formal or
procedural requirements of this Agreement, including Section 10.11, any Lender
may at any time and from time to time pledge and assign all or any portion of
its rights under all or any of the Loan Documents to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Lender from its
obligations thereunder. To facilitate any such pledge or assignment, Agent
shall, at the request of such Lender, enter into a letter agreement with the
Federal Reserve Bank in, or substantially in, the form of the exhibit to
Appendix C to the Federal Reserve Bank of New York Operating Circular No 12.
(h) Anything in this Agreement to the contrary
notwithstanding, any Lender may assign all or any portion of its rights and
obligations under this Agreement to a Lender Affiliate of such Lender without
first obtaining the approval of Agent and Borrower, provided that (i) such
Lender gives Agent and Borrower at least fifteen (15) days prior written notice
of any such assignment, (ii) the parties to each such assignment execute and
deliver to Agent an Assignment
72
and Assumption, and (iii) Agent receives from assignor for its sole account a
processing fee of Three Thousand Dollars ($3,000).
(i) No Lender shall be permitted to assign, or sell a
participation interest in, all or any portion of its rights and obligations
under this Agreement to Borrower or any Affiliate of Borrower.
(j) Anything in this Agreement to the contrary
notwithstanding, so long as no Event of Default shall have occurred and be
continuing, no Lender shall be permitted to enter into an assignment of its
rights and obligations hereunder which would result in such Lender holding a
Commitment of less than Ten Million Dollars ($10,000,000). In the event Agent
ceases to hold a Commitment of less than ten percent (10%) of the Facility,
Agent shall resign from the performance of all of its functions and duties
hereunder; provided, however, that no such resignation shall be required during
the continuance of an Event of Default.
10.12 Ratable Sharing. Subject to Sections 10.03 and 10.04,
Lenders agree among themselves that (i) with respect to all amounts received by
them which are applicable to the payment of the Obligations, equitable
adjustment will be made so that, in effect, all such amounts will be shared
among them ratably in accordance with their Pro Rata Shares, whether received by
voluntary payment, by the exercise of the right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations, (ii) if any of them shall by voluntary payment or by the exercise
of any right of counterclaim, set-off, banker's lien or otherwise, receive
payment of a proportion of the aggregate amount of the Obligations held by it
which is greater than its Pro Rata Share of the payments on account of the
Obligations, the one receiving such excess payment shall purchase, without
recourse or warranty, an undivided interest and participation (which it shall be
deemed to have done simultaneously upon the receipt of such payment) in such
Obligations owed to the others so that all such recoveries with respect to such
Obligations shall be applied ratably in accordance with their Pro Rata Shares;
provided, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to that party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 10.12 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 11.04, the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation.
10.13 Delivery of Documents. Agent shall as soon as reasonably
practicable distribute to each Lender at its primary address set forth on the
appropriate counterpart signature page hereof or at such other address as a
Lender may request in writing, (i) all documents to which such Lender is a party
or of which such Lender is a beneficiary set forth on the Closing Checklist
attached hereto as Exhibit B and (ii) all documents of which Agent receives
copies from Borrower for distribution to Lenders pursuant to Sections 5.01 and
11.07. In addition, within ten (10) Business Days after receipt of a request in
writing from a Lender for written
73
information or documents provided by or prepared by Borrower, the REIT or any
Agreement Party, Agent shall deliver such written information or documents to
such requesting Lender if Agent has possession of such written information or
documents in its capacity as Agent or as a Lender.
10.14 Notice of Events of Default. Except as expressly
provided in this Section 10.14, Agent shall not be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
(other than nonpayment of principal of or interest on the Loan) unless Agent has
received notice in writing from a Lender or Borrower referring to this Agreement
or the other Loan Documents, describing such event or condition and expressly
stating that such notice is a notice of an Unmatured Event of Default or Event
of Default. Should Agent receive such notice of the occurrence of an Unmatured
Event of Default or Event of Default, or should Agent send Borrower a notice of
Unmatured Event of Default or Event of Default, Agent shall promptly give notice
thereof to each Lender.
ARTICLE XI
MISCELLANEOUS
11.01 Expenses.
(a) Generally. Borrower agrees, within thirty (30) days after
receipt of a written notice from the Agent, to pay or reimburse Agent for all of
Agent's reasonable costs and expenses incurred by Agent at any time (whether
prior to, on or after the date of this Agreement) in connection with: (A) the
negotiation, preparation and execution of this Agreement and the other Loan
Documents and any amendments or waivers with respect hereto requested by
Borrower, including, without limitation, the reasonable fees, expenses and
disbursements of Agent's outside counsel incurred in connection therewith; (B)
the making of the Loan and (C) the collection or enforcement by Agent of any of
the Obligations, including, without limitation, reasonable attorneys' fees and
costs incurred in connection therewith.
(b) After Event of Default. Borrower further agrees to pay, or
reimburse Agent and Lenders, for all reasonable costs and expenses, including
without limitation reasonable attorneys' fees and disbursements incurred by
Agent or Lenders after the occurrence of an Event of Default (i) in enforcing
any Obligation or exercising or enforcing any other right or remedy available by
reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
Borrower, the REIT or any Agreement Party and related to or arising out of the
transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or otherwise); or (v)
attempting to enforce or enforcing any rights under the Loan Documents;
provided, however, that the attorneys' fees and disbursements for which Borrower
is obligated under this subsection (b) shall be limited to the reasonable
non-duplicative fees and disbursements of counsel for Agent and
74
counsel for all Lenders as a group. For purposes of this Section 11.01(b), (i)
counsel for Agent shall mean a single outside law firm representing Agent plus
any additional law firms providing special local law representation in
connection with the enforcement of the Loan Documents, and (ii) counsel for all
Lenders as a group shall mean a single outside law firm representing such
Lenders as a group.
11.02 Indemnity.
(a) Generally. Borrower shall indemnify and defend Agent and
each Lender and their respective affiliates, participants, officers, directors,
employees and agents (each an "Indemnitee") against, and shall hold each such
Indemnitee harmless from, any and all losses, damages (whether general, punitive
or otherwise), liabilities, claims, causes of action (whether legal, equitable
or administrative), judgments, court costs and legal or other expenses
(including reasonable attorneys' fees) which such Indemnitee may suffer or
incur: (i) in connection with claims made by third parties against such
Indemnitee for losses or damages suffered by such third party as a result of (A)
such Indemnitee's performance of this Agreement or any of the other Loan
Documents, including without limitation such Indemnitee's exercise or failure to
exercise any rights, remedies or powers in connection with this Agreement or any
of the other Loan Documents or (B) the failure by Borrower, the REIT or any
Agreement Party to perform any of their respective obligations under this
Agreement or any of the other Loan Documents as and when required hereby or
thereby, including without limitation any failure of any representation or
warranty of Borrower, the REIT or any Agreement Party to be true and correct;
(ii) in connection with any claim or cause of action of any kind by any Person
to the effect that such Indemnitee is in any way responsible or liable for any
act or omission by Borrower, the REIT or any Agreement Party, whether on account
of any theory of derivative liability or otherwise; (iii) in connection with the
past, present or future environmental condition of any Property owned by
Borrower, the REIT, Subsidiary or any Agreement Party, the presence of
asbestos-containing materials at any such Property, the presence of Contaminants
in groundwater at any such Property, or the Release or threatened Release of any
Contaminant into the environment from any such Property; or (iv) in connection
with any claim or cause of action of any kind by any Person which would have the
effect of denying such Indemnitee the full benefit or protection of any
provision of this Agreement or any of the other Loan Documents.
(b) ERISA. Without limitation of the provisions of subsection
(a) above, Borrower shall indemnify and hold each Indemnitee free and harmless
from and against all loss, costs (including reasonable attorneys' fees and
expenses), expenses, taxes, and damages (including consequential damages) such
Indemnitee may suffer or incur by reason of the investigation, defense and
settlement of claims and in obtaining any prohibited transaction exemption under
ERISA or the Internal Revenue Code necessary in such Indemnitee's reasonable
judgment by reason of the inaccuracy of the representations and warranties set
forth in the first paragraph of Section 4.01(s) or a breach of the provisions
set forth in the last paragraph of Section 7.01(f).
(c) Exceptions; Limitations. Notwithstanding anything to the
contrary set forth in this Section 11.02, Borrower shall have no obligation to
any Indemnitee hereunder with
75
respect to (i) any intentional tort, fraud or act of gross negligence or bad
faith which any Indemnitee is personally determined by the judgment of a court
of competent jurisdiction (sustained on appeal, if any) to have committed, (ii)
any liability of such Indemnitee to any third party based upon contractual
obligations of such Indemnitee owing to such third party which are not expressly
set forth in the Loan Documents or (iii) violations of Environmental Laws
relating to a Property which are caused by the act or omission of such
Indemnitee after such Indemnitee takes possession of such Property and which
would not have occurred if such Indemnitee had exercised reasonable care under
the circumstances. In addition, the indemnification set forth in this Section
11.02 in favor of any officer, director, partner, employee or agent of Agent or
any Lender shall be solely in their respective capacities as such officer,
director, partner, employee or agent. Such indemnification in favor of any
affiliate of Agent or any Lender shall be solely in its capacity as the provider
of services to Agent or such Lender in connection with this Agreement, and such
indemnification in favor of any participant of Agent or any Lender shall be
solely in its capacity as a participant in the Commitments and the Loan.
(d) Payment; Survival. Borrower shall pay any amount owing
under this Section 11.02 within thirty (30) days after written demand therefor
by the applicable Indemnitee together with reasonable supporting documentation
therefor. The indemnity set forth in this Section 11.02 shall survive the
payment of all amounts payable pursuant to, and secured by, this Agreement and
the other Loan Documents. Payment by any Indemnitee shall not be a condition
precedent to the obligations of Borrower under this Section 11.02. To the extent
that any indemnification obligation set forth in this Section 11.02 may be
unenforceable because it is violative of any law or public policy, Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of the applicable
indemnified matter.
11.03 Change in Accounting Principles. Except as otherwise
provided herein, if any changes in accounting principles from those used in the
preparation of the most recent financial statements delivered to Agent pursuant
to the terms hereof are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the REIT,
Borrower, any Subsidiary, any Investment Affiliate, or any Agreement Party with
the agreement of its independent certified public accountants and such changes
result in a change in the method of calculation of any of the financial
covenants, standards or terms found herein, the parties hereto agree to enter
into negotiations in order to amend such provisions so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of the REIT, on a consolidated basis, shall be the same
after such changes as if such changes had not been made; provided, however, that
no change in GAAP that would affect the method of calculation of any of the
financial covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner satisfactory to
Agent and all Lenders, to so reflect such change in accounting principles.
11.04 Setoff. In addition to any Liens granted to Agent and
any rights now or hereafter granted under applicable law and not by way of
limitation of any such Lien or rights,
76
upon the occurrence and during the continuance of any Event of Default, Agent
and each Lender are hereby authorized by Borrower at any time or from time to
time, with concurrent notice to Borrower, or to any other Person (any such
notice being hereby expressly waived) to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured
but not including trust accounts) and any other indebtedness at any time held or
owing by Agent or such Lender solely to or for the credit or the account of
Borrower against and on account of the Obligations of Borrower to Agent or such
Lender including but not limited to the Loan and all claims of any nature or
description arising out of or connected with this Agreement or any of the other
Loan Documents, irrespective of whether or not (a) Agent or such Lender shall
have made any demand hereunder or (b) Agent shall have declared the principal of
and interest on the Loan and other amounts due hereunder to be due and payable
as permitted by Article X and although said obligations and liabilities, or any
of them, may be contingent or unmatured.
11.05 Amendments and Waivers. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of Requisite Lenders (after notice to all Lenders) as provided in Section
10.10(a) and Borrower (provided that the agreement of Requisite Lenders shall
not be required for amendments or modifications that are purely of a clerical
nature or that correct a manifest error), and no termination or waiver of any
such provision of this Agreement (including without limitation any waiver of an
Event of Default which does not specifically require the consent of all
Lenders), or consent to any departure by Borrower therefrom, shall in any event
be effective without the written concurrence of Requisite Lenders (after notice
to all Lenders) as provided in Section 10.10(a), which Requisite Lenders shall
have the right to grant or withhold at their sole discretion, except that the
amendments, modifications or waivers specified in Section 10.10(b) shall require
the consent of the Supermajority Lenders and the following amendments,
modifications or waivers shall require the consent of all Lenders (other than
Section 11.05(i) which shall require the consent of all Lenders other than
Agent):
(a) Increasing the Facility;
(b) Changing the principal amount or final maturity of the
Loan;
(c) Reducing or increasing the interest rates applicable to
the Loan;
(d) Reducing the rates on which fees payable pursuant hereto
are determined;
(e) Forgiving or delaying any amount payable under Article II
(other than late fees);
(f) Changing the definition of "Requisite Lenders,"
"Supermajority Lenders," or "Pro Rata Shares";
(g) Changing any provision contained in Section 11.05;
77
(h) Releasing any obligor under any Loan Document, unless such
release is otherwise required by the terms of this Agreement or any other Loan
Document;
(i) Removal of Agent for good cause in accordance with Section
10.09(a); and
(j) Modifying or waiving any other provision herein which
specifically requires the consent of all Lenders.
Notwithstanding anything to the contrary contained in this Agreement, Borrower
shall have no right to consent to any amendment, modification, termination or
waiver of any provision of Article X hereof; provided, however, that no
amendment, modification, termination or waiver of Section 10.09(b), 10.09(c),
10.10(a), or 10.11 (except subsection (i) thereof) which has an adverse effect
on Borrower or Borrower's rights hereunder shall be effective without the
written concurrence of Borrower. Agent and Lenders further acknowledge and agree
that the remaining provisions of Article X are intended to and shall continue to
address only the rights and obligations of Agent and Lenders amongst each other
and do not and shall not impose obligations or restrictions upon Borrower or
result in any way in the loss of any rights, claims or defenses of Borrower. No
amendment, modification, termination or waiver of any provision of Article X
hereof or any other provision referring to any Agent shall be effective without
the written concurrence of the Agent. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Borrower in any case shall entitle Borrower to
any other further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this Section shall be binding on each assignee, transferee or recipient of
Agent's powers, functions or duties or any Lender's Commitment under this
Agreement or the Loan at the time outstanding.
11.06 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Unmatured Event of Default if
such action is taken or condition exists.
11.07 Notices and Delivery. Unless otherwise specifically
provided herein, any consent, notice or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied or sent by courier service or United States mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or if deposited in the United States mail (registered or
certified, with postage prepaid and properly addressed) upon receipt or refusal
to accept delivery. Notices to Agent shall not be effective until received by
Agent. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section 11.07) shall
be as set forth below each party's name on the signature pages hereof, or, as to
each party, at such other address as may be designated by such party in a
written notice to all of the other parties. All deliveries to be made to Agent
for distribution to the Lenders shall be made to Agent at the addresses
specified for notice on the signature page hereto and, in addition, a sufficient
78
number of copies of each such delivery shall be delivered to Agent for delivery
to each Lender at the address specified for deliveries on the signature page
hereto or such other address as may be designated by Agent or Lenders in a
written notice.
11.08 Survival of Warranties, Indemnities and Agreements. All
agreements, representations, warranties and indemnities made or given herein or
pursuant hereto shall survive the execution and delivery of this Agreement and
the other Loan Documents and the making and repayment of the Loan hereunder and
such indemnities shall survive termination hereof.
11.09 Failure or Indulgence Not Waiver; Remedies Cumulative.
Except as otherwise expressly provided in this Agreement or any other Loan
Document, no failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege under any of the Loan Documents shall impair
such power, right or privilege or be construed to be a waiver of any default or
acquiescence therein nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under the Loan
Documents are cumulative to and not exclusive of any rights or remedies
otherwise available.
11.10 Marshaling; Recourse to Security; Payments Set Aside.
Neither any Lender nor Agent shall be under any obligation to marshal any assets
in favor of Borrower or any other party or against or in payment of any or all
of the Obligations. Recourse to security shall not be required at any time. To
the extent that Borrower makes a payment or payments to Agent or the Lenders or
Agent or the Lenders exercise their rights of set off, and such payment or
payments or the proceeds of such enforcement or set off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied, and all rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or set off had not occurred.
11.11 Severability. In case any provision in or obligation
under this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
11.12 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
11.13 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS.
79
11.14 Limitation of Liability. To the extent permitted by
applicable law, no claim may be made by Borrower, the REIT, any Lender or any
other Person against Agent or any Lender, or the affiliates, directors,
officers, employees, attorneys or agents of any of them, for any punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection therewith; and
Borrower, the REIT and each Lender hereby waive, release and agree not to ▇▇▇
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
11.15 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of Agent and Lenders. The terms
and provisions of this Agreement shall inure to the benefit of any permitted
assignee or transferee of the Loan and the Commitments of Lenders under this
Agreement, and in the event of such transfer or assignment, the rights and
privileges herein conferred upon Agent and Lenders shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
conditions hereof. Borrower's rights or any interest therein hereunder, and
Borrower's duties and obligations hereunder, shall not be assigned (whether
directly, indirectly, by operation of law or otherwise) without the consent of
all Lenders.
11.16 Usury Limitation. Each Loan Document is expressly
limited so that in no contingency or event whatsoever, whether by reason of
error of fact or law, payment, prepayment or advancement of the proceeds of the
Loan, acceleration of maturity of the unpaid principal balance of the Loan, or
otherwise, shall the amount paid or agreed to be paid to Lenders for the use,
forbearance, or retention of money, including any fees or charges collected or
made in connection with the Loan which may be treated as interest under
applicable law, if any, exceed the maximum legal limit (if any such limit is
applicable) under United States federal laws or state laws (to the extent not
preempted by federal law, if any), now or hereafter governing the interest
payable under such Loan Documents. If, from any circumstances whatsoever,
fulfillment of any provision hereof or any of the other Loan Documents at the
time performance of such provision shall be due, shall involve transcending the
limit of validity (if any) prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any
circumstances Lenders shall ever receive as interest an amount which would
exceed the maximum legal limit (if any such limit is applicable), such amount
which would be excessive interest shall be applied to the reduction of the
unpaid principal balance due under the Loan Documents and not to the payment of
interest or, if necessary, to Borrower. Notwithstanding any other provision of
this Agreement or any of the other Loan Documents, this provision shall control
every other provision of all Loan Documents.
11.17 Confidentiality. Agent and Lenders shall use reasonable
efforts to assure that any information about Borrower, the REIT, Subsidiaries
and Investment Affiliates (and their respective Properties) not generally
disclosed to the public which is furnished to Agent or Lenders pursuant to the
provisions of this Agreement or any of the other Loan Documents is
80
used only for the purposes of this Agreement and the other Loan Documents and
shall not be divulged to any other Person other than Agent, Lenders and their
respective affiliates, officers, directors, employees and agents who are
actively and directly participating in the evaluation, administration or
enforcement of the Obligations; provided, however, that nothing herein shall
affect the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for Agent or
Lenders or to their accountants, (iii) to bank examiners and auditors, (iv) to
any transferee or participant or prospective transferee or participant hereunder
who agrees to be bound by this provision, (v) in connection with the enforcement
of the rights of Agent and Lenders under this Agreement and the other Loan
Documents, or (vi) in connection with any litigation to which Agent or any
Lender is a party so long as Agent or such Lender provides Borrower with prior
written notice of the need for such disclosure and exercises reasonable efforts
to obtain a protective order with respect to such information from the court or
other tribunal before which such litigation is pending.
11.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL; WAIVER OF PERMISSIVE COUNTERCLAIMS. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST BORROWER OR THE REIT WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE AND ALL JUDICIAL PROCEEDINGS BROUGHT BY BORROWER OR THE
REIT WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION HAVING SITUS WITHIN THE
BOUNDARIES OF THE FEDERAL COURT DISTRICT OF THE NORTHERN DISTRICT OF ILLINOIS,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER AND THE REIT ACCEPT,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY
ANY FINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. BORROWER AND THE REIT HEREBY DESIGNATE AND APPOINT ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
ESQ., MANUFACTURED HOME COMMUNITIES, INC., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
BY SUCH PERSON TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. SUCH
APPOINTMENT SHALL BE REVOCABLE ONLY WITH AGENT'S PRIOR WRITTEN APPROVAL.
BORROWER AND THE REIT IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS
RESPECTIVE NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE
TO BECOME EFFECTIVE UPON RECEIPT. BORROWER, THE REIT, AGENT AND LENDERS
IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING
WITHOUT LIMITATION ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
81
OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. BORROWER AND THE REIT AGREE THAT THEY WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIM IN ANY PROCEEDING BROUGHT BY LENDER WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
11.19 Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective when Borrower, the
initial Lenders and Agent have duly executed and delivered counterpart execution
pages of this Agreement to each other (delivery by Borrower and the REIT to
Lenders and by any Lender to Borrower, the REIT and any other Lender being
deemed to have been made by delivery to Agent). This Agreement and each of the
other Loan Documents shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the terms and conditions
of this Agreement are actually and directly inconsistent with the terms and
conditions of any other Loan Document, this Agreement shall govern.
11.20 Construction. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
11.21 Entire Agreement. This Agreement, taken together with
all of the other Loan Documents and all certificates and other documents
delivered by Borrower to Agent in connection herewith, embodies the entire
agreement and supersede all prior agreements, written and oral, relating to the
subject matter hereof.
11.22 Agent's Action for Its Own Protection Only. The
authority herein conferred upon Agent, and any action taken by Agent, to inspect
any Property will be exercised and taken by Agent for its own protection only
and may not be relied upon by Borrower for any purposes whatsoever, and Agent
shall not be deemed to have assumed any responsibility to Borrower with respect
to any such action herein authorized or taken by Agent. Any review,
investigation or inspection conducted by Agent, any consultants retained by
Agent or any agent or representative of Agent in order to verify independently
Borrower's satisfaction of any conditions precedent to the Loan, Borrower's
performance of any of the covenants, agreements and obligations of Borrower
under this Agreement, or the validity of any representations and warranties made
by Borrower hereunder (regardless of whether or not the party conducting such
review, investigation or inspection should have discovered that any of such
conditions precedent were not satisfied or that any such covenants, agreements
or obligations were not performed or that any such representations or warranties
were not true), shall not affect (or constitute a waiver by Agent or Lenders of)
(i) any of Borrower's representations and warranties under this Agreement or
Agent's or Lenders' reliance thereon or (ii) Agent's or Lenders' reliance upon
any certifications of Borrower required under this
82
Agreement or any other facts, information or reports furnished to Agent and
Lenders by Borrower hereunder.
11.23 Lenders' ERISA Covenant. Each Lender, by its signature
hereto or on the applicable Assignment and Assumption, hereby agrees (a) that on
the date any Loan is disbursed hereunder no portion of such Lender's Pro Rata
Share of such Loan will constitute "assets" within the meaning of 29 C.F.R. ss.
2510.3-101 of an "employee benefit plan" within the meaning of Section 3(3) of
ERISA or a "plan" within the meaning of Section 4975(e)(1) of the Internal
Revenue Code, and (b) that following such date such Lender shall not allocate
such Lender's Pro Rata Share of any Loan to an account of such Lender if such
allocation (i) by itself would cause such Pro Rata Share of such Loan to then
constitute "assets" (within the meaning of 29 C.F.R. ss. 2510.3-101 or any
successor regulation thereto) of an "employee benefit plan" within the meaning
of Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of
the Internal Revenue Code and (ii) by itself would cause such Loan to constitute
a prohibited transaction under ERISA or the Internal Revenue Code (which is not
exempt from the restrictions of Section 406 of ERISA and Section 4975 of the
Internal Revenue Code and the taxes and penalties imposed by Section 4975 of the
Internal Revenue Code and Section 502(i) of ERISA) or any Agent or Lender being
deemed in violation of Section 404 of ERISA.
11.24. Sole Lead Arranger, Documentation Agents and
Syndication Agent. Each of the parties to this Agreement acknowledges and agrees
that the obligations of Sole Lead Arranger, each Documentation Agent and
Syndication Agent hereunder shall be limited to those obligations that are
expressly set forth herein, if any, and Sole Lead Arranger, either Documentation
Agent and Syndication Agent shall not be required to take any action or assume
any liability except as may be required in their respective capacities as a
Lender hereunder. Each of the parties to this Agreement agrees that, for
purposes of the indemnifications set forth herein, the term "Agent" shall be
deemed to include Sole Lead Arranger, each Documentation Agent and Syndication
Agent.
[SIGNATURE PAGES FOLLOW]
83
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
"Borrower"
MHC OPERATING LIMITED PARTNERSHIP, an
Illinois limited partnership
By: MANUFACTURED HOME
COMMUNITIES, INC., a Maryland
corporation, as General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President/Chief Financial Officer
Address:
Two ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 312/279-1710
"REIT"
MANUFACTURED HOME COMMUNITIES,
INC., a Maryland corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President/Chief Financial Officer
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 312/279-1710
S-1
"Lenders"
▇▇▇▇▇ FARGO BANK, N.A., as Agent, as Sole
Lead Arranger and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: Vice President
------------------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Senior Loan Officer
Telecopy: 312/782-0969
with a copy to:
▇▇▇▇▇ Fargo & Co.
Real Estate Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Chief Credit Officer
Telecopy: 415/391-2971
with a copy to (for Financial Statements
and Reporting Information Only):
▇▇▇▇▇ Fargo Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: 949/251-4343
Loan Commitment: $40,000,000
40%
S-2
BANK OF AMERICA, N.A., as Syndication Agent
and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Principal
-------------------------------------
Address:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: 312/974-4970
Loan Commitment: $20,000,000
20%
S-3
COMMERZBANK AKTIENGESELLSCHAFT,
New York Branch, as a Documentation Agent
and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Assistant Vice President
-----------------------------------
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇
Loan Commitment: $20,000,000
20%
S-4
▇▇ ▇▇▇▇▇▇ CHASE BANK (successor by merger
to ▇▇▇▇▇▇ Guaranty Trust Company of New York),
as a Documentation Agent and as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: Vice President
----------------------------------------
Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10260-0060
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: 212/648-8111
Loan Commitment: $20,000,000
20%
S-5