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EXHIBIT 10.2
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MASTER CREDIT FACILITY AGREEMENT
among
(i) ▇▇▇▇▇▇ RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation, and
(ii) ▇▇▇▇▇▇/DREVER OPERATING PARTNERSHIP,
a Delaware limited partnership
and
WMF WASHINGTON MORTGAGE CORP.,
a Delaware corporation,
formerly known as Washington Mortgage Financial Group, Ltd.
dated as of
December 18, 1998
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TABLE OF CONTENTS
Page
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RECITALS ........................................................................................................1
ARTICLE I DEFINITIONS...........................................................................................2
ARTICLE II THE REVOLVING FACILITY COMMITMENT...................................................................23
SECTION 2.01 Revolving Facility Commitment............................................................23
SECTION 2.02 Requests for Revolving Advances..........................................................23
SECTION 2.03 Maturity Date of Revolving Advances......................................................23
SECTION 2.04 Interest on Revolving Facility Advances..................................................24
SECTION 2.05 Coupon Rates for Revolving Advances......................................................24
SECTION 2.06 Revolving Facility Notes.................................................................25
ARTICLE III THE BASE FACILITY COMMITMENT.......................................................................25
SECTION 3.01 Base Facility Commitment.................................................................25
SECTION 3.02 Requests for Base Facility Advances......................................................25
SECTION 3.03 Maturity Date of Base Facility Advances; Amortization Period.............................25
SECTION 3.04 Interest on Base Facility Advances.......................................................25
SECTION 3.05 Coupon Rates for Base Facility Advances..................................................26
SECTION 3.06 Base Facility Note.......................................................................26
SECTION 3.07 Conversion of Commitment from Revolving Facility Commitment to
Base Facility Commitment......................................................................26
SECTION 3.08 Limitations on Right to Convert..........................................................27
SECTION 3.09 Conditions Precedent to Conversion.......................................................27
SECTION 3.10 Defeasance...............................................................................27
ARTICLE IV RATE SETTING FOR THE ADVANCES.......................................................................35
SECTION 4.01 Rate Setting for an Advance..............................................................35
SECTION 4.02 Advance Confirmation Instrument for Revolving Advances...................................36
SECTION 4.03 Breakage and other Costs.................................................................37
ARTICLE V MAKING THE ADVANCES..................................................................................37
SECTION 5.01 Initial Advance..........................................................................37
SECTION 5.02 Future Advances..........................................................................38
SECTION 5.03 Conditions Precedent to Future Advances..................................................38
ARTICLE VI ADDITIONS OF COLLATERAL.............................................................................39
SECTION 6.01 Right to Add Collateral..................................................................39
SECTION 6.02 Procedure for Adding Collateral..........................................................39
SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged Property
to the Collateral Pool........................................................................41
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ARTICLE VII RELEASES OF COLLATERAL.............................................................................41
SECTION 7.01 Right to Obtain Releases of Collateral...................................................41
SECTION 7.02 Procedure for Obtaining Releases of Collateral...........................................42
SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from the
Collateral....................................................................................43
SECTION 7.04 Substitutions............................................................................44
ARTICLE VIII EXPANSION OF CREDIT FACILITY......................................................................45
SECTION 8.01 Right to Increase Commitment.............................................................45
SECTION 8.02 Procedure for Obtaining Increases in Commitment..........................................45
SECTION 8.03 Conditions Precedent to Increase in Commitment...........................................46
ARTICLE IX COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY...............................................47
SECTION 9.01 Right to Complete or Partial Termination of Revolving Facility...........................47
SECTION 9.02 Procedure for Complete or Partial Termination of Revolving
Facility......................................................................................47
SECTION 9.03 Conditions Precedent to Complete or Partial Termination of Revolving
Facility......................................................................................47
ARTICLE X TERMINATION OF CREDIT FACILITY.......................................................................48
SECTION 10.01 Right to Terminate Credit Facility......................................................48
SECTION 10.02 Procedure for Terminating Credit Facility...............................................48
SECTION 10.03 Conditions Precedent to Termination of Credit Facility..................................49
ARTICLE XI GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS........................................................49
SECTION 11.01 Conditions Applicable to All Requests...................................................49
SECTION 11.02 Delivery of Closing Documents Relating to Initial Advance Request,
Collateral Addition Request, Credit Facility Expansion Request or Future
Advance Request...............................................................................51
SECTION 11.03 Delivery of Property-Related Documents..................................................51
ARTICLE XII REPRESENTATIONS AND WARRANTIES.....................................................................52
SECTION 12.01 Representations and Warranties of the Borrower Parties..................................52
SECTION 12.02 Representations and Warranties of the Borrower..........................................57
SECTION 12.03 Representations and Warranties of the Lender............................................60
ARTICLE XIII AFFIRMATIVE COVENANTS OF THE BORROWER PARTIES.....................................................60
SECTION 13.01 Compliance with Agreements; No Amendments...............................................60
SECTION 13.02 Maintenance of Existence................................................................60
SECTION 13.03 Maintenance of REIT Status..............................................................60
SECTION 13.04 Financial Statements; Accountants' Reports; Other Information...........................61
SECTION 13.05 Certificate of Compliance...............................................................63
SECTION 13.06 Maintain Licenses.......................................................................63
SECTION 13.07 Access to Records; Discussions With Officers and Accountants............................64
SECTION 13.08 Inform the Lender of Material Events....................................................64
SECTION 13.09 Single-Purpose Entities.................................................................65
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SECTION 13.10 Inspection..............................................................................65
SECTION 13.11 Compliance with Applicable Laws.........................................................65
SECTION 13.12 Warranty of Title.......................................................................66
SECTION 13.13 Defense of Actions......................................................................66
SECTION 13.14 Alterations to the Mortgaged Properties.................................................66
SECTION 13.15 ERISA...................................................................................67
SECTION 13.16 Loan Document Taxes.....................................................................67
SECTION 13.17 Further Assurances......................................................................67
SECTION 13.18 Monitoring Compliance...................................................................68
SECTION 13.19 Leases..................................................................................68
SECTION 13.20 Appraisals..............................................................................68
SECTION 13.21 Transfer of Ownership Interests of the Borrower and the REIT............................68
SECTION 13.22 Change in Senior Management.............................................................70
SECTION 13.23 Date-Down Endorsements..................................................................71
SECTION 13.24 Geographical Diversification............................................................71
SECTION 13.25 Ownership of Mortgaged Properties.......................................................71
ARTICLE XIV NEGATIVE COVENANTS OF THE BORROWER PARTIES.........................................................71
SECTION 14.01 Other Activities........................................................................71
SECTION 14.02 Value of Security.......................................................................72
SECTION 14.03 Zoning..................................................................................72
SECTION 14.04 Liens...................................................................................72
SECTION 14.05 Sale....................................................................................72
SECTION 14.06 Intentionally Omitted...................................................................72
SECTION 14.07 Principal Place of Business.............................................................72
SECTION 14.08 Frequency of Requests...................................................................72
SECTION 14.09 Change in Property Management...........................................................73
SECTION 14.10 Condominiums............................................................................73
SECTION 14.11 Restrictions on Partnership Distributions...............................................73
SECTION 14.12 Lines of Business.......................................................................73
SECTION 14.13 Limitation on Unimproved Real Property and New Construction.............................73
SECTION 14.14 No Encumbrance of Collateral Release Property...........................................73
ARTICLE XV FINANCIAL COVENANTS OF THE BORROWER PARTIES.........................................................74
SECTION 15.01 Financial Definitions...................................................................74
SECTION 15.02 Compliance with Debt Service Coverage Ratios............................................78
SECTION 15.03 Compliance with Loan to Value Ratios....................................................78
SECTION 15.04 Compliance with Concentration Test......................................................78
SECTION 15.05 Compliance with REIT's Net Worth Test...................................................78
SECTION 15.06 Compliance with REIT's Total Indebtedness to Gross Asset Value
Ratio.........................................................................................78
SECTION 15.07 Compliance with REIT's Consolidated EBITDA to Interest Ratio............................78
SECTION 15.08 Compliance with REIT's Consolidated EBITDA to Fixed Charge
Ratio.........................................................................................78
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ARTICLE XVI FEES...............................................................................................79
SECTION 16.01 Standby Fee.............................................................................79
SECTION 16.02 Origination Fees........................................................................79
SECTION 16.03 Due Diligence Fees......................................................................79
SECTION 16.04 Legal Fees and Expenses.................................................................80
SECTION 16.05 MBS-Related Costs.......................................................................80
SECTION 16.06 Failure to Close any Request............................................................80
SECTION 16.07 Other Fees..............................................................................80
ARTICLE XVII EVENTS OF DEFAULT.................................................................................81
SECTION 17.01 Events of Default.......................................................................81
ARTICLE XVIII REMEDIES.........................................................................................83
SECTION 18.01 Remedies; Waivers.......................................................................83
SECTION 18.02 Waivers; Rescission of Declaration......................................................84
SECTION 18.03 The Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations.............................................................................84
SECTION 18.04 No Remedy Exclusive.....................................................................84
SECTION 18.05 No Waiver...............................................................................84
SECTION 18.06 No Notice...............................................................................85
SECTION 18.07 Application of Payments.................................................................85
ARTICLE XIX RIGHTS OF ▇▇▇▇▇▇ ▇▇▇...............................................................................85
SECTION 19.01 Special Pool Purchase Contract..........................................................85
SECTION 19.02 Assignment of Rights....................................................................85
SECTION 19.03 Release of Collateral...................................................................85
SECTION 19.04 Replacement of Lender...................................................................86
SECTION 19.05 ▇▇▇▇▇▇ Mae and Lender Fees and Expenses.................................................86
SECTION 19.06 Third-Party Beneficiary.................................................................86
ARTICLE XX INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES......................................................................86
SECTION 20.01 Insurance and Real Estate Taxes.........................................................86
SECTION 20.02 Replacement Reserves....................................................................86
ARTICLE XXI INTEREST RATE PROTECTION...........................................................................86
SECTION 21.01 Interest Rate Protection................................................................86
SECTION 21.02. Hedge Terms............................................................................87
SECTION 21.03 Hedge Security Agreement; Delivery of Hedge Payments....................................88
SECTION 21.04 Termination.............................................................................88
SECTION 21.05 Performance Under Hedge Documents.......................................................88
ARTICLE XXII LIMITS ON PERSONAL LIABILITY......................................................................88
SECTION 22.01 Limits on Personal Liability............................................................88
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ARTICLE XXIII MISCELLANEOUS PROVISIONS.........................................................................90
SECTION 23.01 Counterparts............................................................................90
SECTION 23.02 Amendments, Changes and Modifications...................................................90
SECTION 23.03 Payment of Costs, Fees and Expenses.....................................................90
SECTION 23.04 Payment Procedure.......................................................................91
SECTION 23.05 Payments on Business Days...............................................................91
SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial............................91
SECTION 23.07 Severability............................................................................92
SECTION 23.08 Notices.................................................................................93
SECTION 23.09 Further Assurances and Corrective Instruments...........................................95
SECTION 23.10 Term of this Agreement..................................................................96
SECTION 23.11 Assignments; Third-Party Rights.........................................................96
SECTION 23.12 Headings................................................................................96
SECTION 23.13 General Interpretive Principles.........................................................96
SECTION 23.14 Interpretation..........................................................................96
SECTION 23.15 Standards for Decisions, Etc............................................................97
SECTION 23.16 Decisions in Writing....................................................................97
SECTION 23.17 Joint and Several Liability.............................................................97
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EXHIBIT A - Schedule of Initial Mortgaged Properties and Initial Valuations
EXHIBIT B - Base Facility Note
EXHIBIT C - Cash Management Agreement
EXHIBIT D - Compliance Certificate
EXHIBIT E - Sample Facility Debt Service
EXHIBIT F - Organizational Certificate
EXHIBIT G - REIT's Guaranty
EXHIBIT H - Revolving Credit Endorsement
EXHIBIT I-1 - Revolving Facility Note ($100,000,000)
EXHIBIT I-2 - Revolving Facility Note ($75,000,000)
EXHIBIT J - Tie-In Endorsement
EXHIBIT K - Conversion Request
EXHIBIT L - Conversion Amendment
EXHIBIT M - Rate Setting Form
EXHIBIT N - Rate Confirmation Instrument
EXHIBIT O - Advance Confirmation Instrument
EXHIBIT P - Future Advance Request
EXHIBIT Q - Collateral Addition Request
EXHIBIT R - Collateral Addition Description Package
EXHIBIT S - Collateral Addition Supporting Documents
EXHIBIT T - Collateral Release Request
EXHIBIT U - Confirmation of Obligations
EXHIBIT V - Credit Facility Expansion Request
EXHIBIT W - Revolving Facility Termination Request
EXHIBIT X - Revolving Facility Termination Document
EXHIBIT Y - Credit Facility Termination Request
EXHIBIT Z - Intentionally Omitted
EXHIBIT AA - Schedule of Approved Property Management Agreements
EXHIBIT BB - Independent Unit Encumbrances
EXHIBIT CC Hedge Security Agreement
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MASTER CREDIT FACILITY AGREEMENT
THIS MASTER CREDIT FACILITY AGREEMENT is made as of the 18th day of
December, 1998 and among (i) (a) ▇▇▇▇▇▇ RESIDENTIAL PROPERTIES, INC., a Maryland
corporation ("REIT"), and (b) ▇▇▇▇▇▇/DREVER OPERATING PARTNERSHIP, a Delaware
limited partnership ("Borrower") (the REIT and the Borrower being collectively
referred to as the "Borrower Parties") and (ii) WMF WASHINGTON MORTGAGE CORP., a
Delaware corporation formerly known as Washington Mortgage Financial Group, Ltd.
("Lender").
RECITALS
A. The REIT owns directly and indirectly 100% of the voting interests
in the Borrower.
B. The Borrower owns one or more Multifamily Residential Properties
(capitalized terms used but not defined shall have the meanings ascribed to such
terms in Article I of this Agreement) as more particularly described in Exhibit
A to this Agreement.
C. The Borrower has requested that the Lender establish a $250,000,000
Credit Facility in favor of the Borrower, comprised initially of a $175,000,000
Revolving Facility, all or part of which can be converted to a Base Facility in
accordance with, and subject to, the terms and conditions of this Agreement and
a $75,000,000 Base Facility.
D. To secure the obligations of the Borrower Parties under this
Agreement and the other Loan Documents issued in connection with the Credit
Facility, the Borrower shall create a Collateral Pool in favor of the Lender.
The Collateral Pool shall be comprised of (i) Security Instruments on all of the
Multifamily Residential Properties owned by the Borrower and (ii) any other
Security Documents executed by either Borrower Party pursuant to this Agreement
or any other Loan Documents.
E. Each of the Security Documents shall be cross-defaulted (i.e., a
default under any Security Document, or under this Agreement, shall constitute a
default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of the
Borrower Parties' obligations under this Agreement and the other Loan Documents
issued in connection with the Credit Facility) and it is the intent of the
parties to this Agreement that the Lender may accelerate any Note without the
necessity to accelerate any other Note and that in the exercise of its rights
and remedies under the Loan Documents, Lender may, except as provided in this
Agreement, exercise and perfect any and all of its rights in and under the Loan
Documents with regard to any Mortgaged Property without the necessity to
exercise and perfect its rights and remedies with respect to any other Mortgaged
Property and that any such exercise shall be without regard to the Allocable
Facility Amount assigned to such Mortgaged Property and that Lender may recover
an amount equal to the full amount outstanding in respect of any of the Notes in
connection with such exercise and any such amount shall be applied as determined
by Lender in its sole and absolute discretion.
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F. Subject to the terms, conditions and limitations of this Agreement,
the Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, the Borrower Parties and the Lender, in consideration
of the mutual promises and agreements contained in this Agreement, hereby agree
as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Acquiring Person" means a "person" or "group of persons"
within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
"Additional Mortgaged Property" means each Multifamily
Residential Property owned by the Borrower (either in fee simple or as
tenant under a ground lease meeting all of the requirements of the DUS
Guide) and added to the Collateral Pool after the Initial Closing Date
pursuant to Article VI.
"Advance" means a Revolving Advance or a Base Facility
Advance.
"Advance Confirmation Instrument" shall have the meaning set
forth in Section 4.02.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the 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 the possession, directly or indirectly, of
the power to direct or cause the direction of the management (other
than property management) and policies of that Person, whether through
the ownership of voting securities, partnership interests or by
contract or otherwise.
"Aggregate Debt Service Coverage Ratio for the Trailing 12
Month Period" means, for any specified date, the ratio (expressed as a
percentage) of--
(a) the aggregate of the Net Operating Income for the Trailing
12 Month Period for the Mortgaged Properties
to
(b) the Facility Debt Service on the specified date.
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"Aggregate Debt Service Coverage Ratio for the Trailing Three
Month Period" means, for any specified date, the ratio (expressed as a
percentage) of--
(a) the product obtained by multiplying--
(i) the aggregate of the Net Operating Income for
the Trailing Three Month Period for the
Mortgaged Properties, by
(ii) four
to
(b) the Facility Debt Service on the specified date.
"Aggregate Loan to Value Ratio for the Trailing 12 Month
Period" means, for any specified date, the ratio (expressed as a
percentage) of--
(a) the Advances Outstanding on the specified date,
to
(b) the aggregate of the Valuations most recently obtained
prior to the specified date for all of the Mortgaged
Properties.
"Agreement" means this Master Credit Facility Agreement, as it
may be amended, supplemented or otherwise modified from time to time,
including all Recitals and Exhibits to this Agreement, each of which is
hereby incorporated into this Agreement by this reference.
"Allocable Facility Amount" means the portion of the Credit
Facility allocated to a particular Mortgaged Property by Lender in
accordance with this Agreement.
"Amortization Period" means, with respect to each Base
Facility Advance, the period of not less than 25 years and not more
than 30 years.
"Applicable Law" means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all
governmental bodies, all Governmental Approvals and all orders,
judgments and decrees of all courts and arbitrators, (b) all zoning,
building, environmental and other laws, ordinances, rules, regulations
and restrictions of any Governmental Authority affecting the ownership,
management, use, operation, maintenance or repair of any Mortgaged
Property, including the Americans with Disabilities Act (if
applicable), the Fair Housing Amendment Act of 1988 and Hazardous
Materials Laws, (c) any building permits or any conditions, easements,
rights-of-way, covenants, restrictions of record or any recorded or
unrecorded agreement affecting or concerning any Mortgaged Property
including planned development permits, condominium declarations, and
reciprocal
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easement and regulatory agreements with any Governmental Authority, (d)
all laws, ordinances, rules and regulations, whether in the form of
rent control, rent stabilization or otherwise, that limit or impose
conditions on the amount of rent that may be collected from the units
of any Mortgaged Property, and (e) requirements of insurance companies
or similar organizations, affecting the operation or use of any
Mortgaged Property or the consummation of the transactions to be
effected by this Agreement or any of the other Loan Documents.
"Appraisal" means an appraisal of a Multifamily Residential
Property or Multifamily Residential Properties conforming to the
requirements of Chapter 5 of Part III of the DUS Guide, and accepted by
the Lender.
"Appraised Value" means the value set forth in an Appraisal.
"Base Facility" means the agreement of the Lender to make Base
Facility Advances to the Borrower pursuant to Section 3.01.
"Base Facility Advance" means a loan made by the Lender to the
Borrower under the Base Facility Commitment.
"Base Facility Availability Period" means the period beginning
on the Initial Closing Date and ending on the date nine (9) years and
six (6) months after the Initial Closing Date.
"Base Facility Commitment" means $75,000,000, plus such amount
as the Borrower may elect to add to the Base Facility Commitment in
accordance with Articles III or VIII.
"Base Facility Fee" means (i) 65 basis points for a Base
Facility Advance drawn from the Base Facility Commitment initially
available under this Agreement or converted from the Revolving
Commitment during the period ending on the date 12 months after the
Initial Closing Date, and (ii) for any Base Facility Advance drawn from
any portion of the Base Facility Commitment increased under Article
VIII or converted from any portion of the Revolving Commitment after
the period ending on the date 12 months after the Initial Closing Date,
the number of basis points determined at the time of such increase by
the Lender as the Base Facility Fee for such Base Facility Advances,
provided that in no event shall the Base Facility Fee for Base Facility
Advances converted from the Revolving Commitment (expressed as a number
of basis points) exceed the Revolving Facility Fee.
"Base Facility Note" means a promissory note, in the form
attached as Exhibit B to this Agreement, which will be issued by the
Borrower to the Lender, concurrently with the funding of each Base
Facility Advance, to evidence the Borrower's obligation to repay the
Base Facility Advance.
"Borrower" means ▇▇▇▇▇▇/▇▇▇▇▇▇ Operating Partnership, L.P., a
Delaware limited partnership.
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"Borrower Parties" means the REIT and the Borrower.
"Business Day" means a day on which ▇▇▇▇▇▇ Mae is open for
business.
"Calendar Quarter" means, with respect to any year, any of the
following three month periods: (a) January-February-March; (b)
April-May-June; (c) July-August- September; and (d)
October-November-December.
"Cap" means an interest rate cap provided pursuant to, and
satisfying the requirements of, Article XXI.
"Cap Rate" means, for each Mortgaged Property, a
capitalization rate selected by the Lender for use in determining the
Valuations.
"Cash Management Agreement" means that certain Cash Management
Security, Pledge and Assignment Agreement between the Borrower and the
Lender in the form attached as Exhibit C to this Agreement.
"Change of Control" means the earliest to occur of: (a) the
date on which the REIT ceases for any reason whatsoever to be the sole
general partner of Borrower, or (b) the date on which the REIT shall
cease for any reason to be the holder of 100% of the voting interest of
the Borrower or to own at least 40% of the equity, profits or other
limited partnership interests in, or Voting Equity Capital (or any
other Securities or ownership interests) of, the Borrower, or (c) the
date on which an Acquiring Person becomes (by acquisition,
consolidation, merger or otherwise), directly or indirectly, the
beneficial owner of more than 20% of the total Voting Equity Capital
(or of any other Securities or ownership interest) of the REIT then
outstanding, or (d) the replacement (other than solely by reason of
retirement at age sixty-five or older, death or disability) of more
than 50% (or such lesser percentage as is required for decision-making
by the board of directors or an equivalent governing body) of the
members of the board of directors or an equivalent governing body) of
the REIT over a one-year period from the directors who constituted such
board of directors at the beginning of such period and such replacement
shall not have been approved by a vote of at least a majority of the
board of directors of the REIT then still in office who either were
members of such board of directors at the beginning of such one-year
period or whose election as members of the board of directors was
previously so approved (it being understood and agreed that in the case
of any entity governed by a trustee, board of managers, or other
similar governing body, the foregoing clause (d) shall apply thereto by
substituting such governing body and the members thereof for the board
of directors and members thereof, respectively).
"Closing Date" means the Initial Closing Date and each date
after the Initial Closing Date on which the funding or other
transaction requested in a Request is required to take place.
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"Collateral" means, the Mortgaged Properties and other
collateral from time to time or at any time encumbered by the Security
Instruments, or any other property securing any of the Borrower
Parties' obligations under the Loan Documents.
"Collateral Addition Fee" means, with respect to a Multifamily
Residential Property added to the Collateral Pool in accordance with
Article VI--
(i) 100 basis points, multiplied by
(ii) 65% of the Initial Valuation of the Multifamily
Residential Property, as determined by the Lender.
"Collateral Addition Loan Documents" means the Security
Instrument covering an Additional Mortgaged Property and any other
documents, instruments or certificates required by the Lender in
connection with the addition of the Additional Mortgaged Property to
the Collateral Pool pursuant to Article VI.
"Collateral Addition Request" shall have the meaning set forth
in Section 6.02(a).
"Collateral Pool" means the aggregate total of the Collateral.
"Collateral Release Request" shall have the meaning set forth
in Section 7.02(a).
"Collateral Release Property" shall have the meaning set forth
in Section 7.02(a).
"Commitment" means, at any time, the sum of the Base Facility
Commitment and the Revolving Facility Commitment.
"Complete Revolving Facility Termination" shall have the
meaning set forth in Section 9.02(a).
"Compliance Certificate" means a certificate of the Borrower
Parties in the form attached as Exhibit D to this Agreement.
"Conversion Documents" has the meaning specified in Section
3.07(b) hereof.
"Conversion Request" has the meaning specified in Section
3.07(a) hereof.
"Coupon Rate" means, with respect a Revolving Advance, the
imputed interest rate determined by the Lender pursuant to Section 2.05
for the Revolving Advance and, with respect a Base Facility Advance,
the interest rate determined by the Lender pursuant to Section 3.05 for
the Base Facility Advance.
"Coverage and LTV Tests" mean, for any specified date, each of
the following financial tests:
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(a) The Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period is not less than 135%.
(b) The Aggregate Debt Service Coverage Ratio for the
Trailing Three Month Period is not less than 125%.
(c) The Aggregate Loan to Value Ratio for the
Trailing 12 Month Period does not exceed 65%.
"Credit Facility" means the Base Facility and the Revolving
Facility.
"Credit Facility Expansion" means an increase in the
Commitment made in accordance with Article VIII.
"Credit Facility Expansion Loan Documents" means amendments to
the Revolving Facility Note or the Base Facility Note, as the case may
be, increasing the amount of such Note to the amount of the Commitment,
as expanded in accordance with Article VIII and amendments to the
Security Instruments, increasing the amount secured by such Security
Instruments to the amount of the Commitment.
"Credit Facility Expansion Request" shall have the meaning set
forth in Section 8.02(a).
"Credit Facility Termination Request" shall have the meaning
set forth in Section 10.02(a).
"Discount" means, with respect to any Revolving Advance, an
amount equal to the excess of --
(i) the face amount of the MBS backed by the Revolving
Advance, over
(ii) the Price of the MBS backed by the Revolving Advance.
"DUS Guide" means the ▇▇▇▇▇▇ ▇▇▇ Multifamily Delegated
Underwriting and Servicing (DUS) Guide, as such Guide may be amended
from time to time, including exhibits to the DUS Guide and amendments
in the form of Lender Memos, Guide Updates and Guide Announcements
(and, if such Guide is no longer used by ▇▇▇▇▇▇ Mae, the term "DUS
Guide" as used in this Agreement means the ▇▇▇▇▇▇ ▇▇▇ Multifamily
Negotiated Transactions Guide, as such Guide may be amended from time
to time, including amendments in the form of Lender Memos, Guide
Updates and Guide Announcements). All references to specific articles
and sections of, and exhibits to, the DUS Guide shall be deemed
references to such articles, sections and exhibits as they may be
amended, modified, updated, superseded, supplemented or replaced from
time to time.
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"DUS Underwriting Requirements" means the overall underwriting
requirements for Multifamily Residential Properties as set forth in the
DUS Guide.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" means any event defined to be an "Event of
Default" under Article XVII.
"Facility Debt Service" means, as of any specified date, the
sum of:
(a) the amount of interest and principal amortization,
during the 12 month period immediately succeeding the
specified date, with respect to the Advances
Outstanding on the specified date, except that, for
these purposes:
(i) each Revolving Advance shall be deemed to
require level monthly payments of principal
and interest (at the Coupon Rate for the
Revolving Advance) in an amount necessary to
fully amortize the original principal amount
of the Revolving Advance over a 30-year
period, with such amortization deemed to
commence on the first day of the 12 month
period; and
(ii) each Base Facility Advance shall require
level monthly payments of principal and
interest (at the Coupon Rate for the Base
Facility Advance) in an amount necessary to
fully amortize the original principal amount
of the Base Facility Advance over a 30-year
period, with such amortization to commence
on the first day of the 12 month period; and
(b) the amount of the Standby Fees payable to the Lender
pursuant to Section 16.01 during such 12 month period
(assuming, for these purposes, that the Advances
Outstanding throughout the 12 month period are always
equal to the amount of Advances Outstanding on the
specified date).
Exhibit E to this Agreement contains an example of the determination of
the Facility Debt Service.
"▇▇▇▇▇▇ Mae" means the federally-chartered and
stockholder-owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, 12 U.S.C. ss. 1716 et seq.
"Financial Covenants" means the covenants set forth in Article
XV.
"Future Advance" means an Advance made after the Initial
Closing Date.
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"Future Advance Request" shall have the meaning set forth in
Section 5.02.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time, consistently applied.
"General Conditions" shall have the meaning set forth in
Article XI.
"Geographical Diversification Requirements" means, prior to
the occurrence of an increase in the Commitment pursuant to Article
VIII, a requirement that the Collateral Pool consist of at least 35
Mortgaged Properties located in at least six states and, upon the
occurrence of any increase in the Commitment pursuant to Article VIII,
such requirements as to the geographical diversity of the Collateral
Pool as the Lender may determine and notify Borrower of at the time of
the increase. For purposes of this definition of Geographical
Diversification Requirements, each SMSA in Texas (up to a maximum of
four) shall be considered a state.
"Governmental Approval" means an authorization, permit,
consent, approval, license, registration or exemption from registration
or filing with, or report to, any Governmental Authority.
"Governmental Authority" means any court, board, agency,
commission, office or authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Revenues" means, for any specified period, with respect
to any Multifamily Residential Property, all income in respect of such
Multifamily Residential Property, as determined by the Lender in
accordance with the method described in paragraph 3 of Section 302.02
of Part V of the DUS Guide, except that for these purposes the
financial statements to be used need not be audited and paragraph (b)
of such paragraph 3 shall be taken into account in the Lender's
discretion.
"Guaranty" means the REIT's Guaranty.
"Hazardous Materials", with respect to any Mortgaged Property,
shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"Hazardous Materials Law", with respect to any Mortgaged
Property, shall have the meaning given that term in the Security
Instrument encumbering the Mortgaged Property.
"Hazardous Substance Activity" means any storage, holding,
existence, release, spill, leaking, pumping, pouring, injection,
escaping, deposit, disposal, dispersal, leaching, migration, use,
treatment, emission, discharge, generation, processing, abatement,
removal, disposition, handling or transportation of any Hazardous
Materials from, under, into or on any Mortgaged Property in violation
of
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Hazardous Materials Laws, including the discharge of any Hazardous
Materials emanating from any Mortgaged Property in violation of
Hazardous Materials Laws through the air, soil, surface water,
groundwater or property and also including the abandonment or disposal
of any barrels, containers and other receptacles containing any
Hazardous Materials from or on any Mortgaged Property in violation of
Hazardous Materials Laws, in each case whether sudden or nonsudden,
accidental or nonaccidental.
"Hedge" means a Swap or a Cap satisfying the requirements of
Article XXI.
"Hedge Documents" has the meaning set forth in Section 21.02.
"Hedge Rate" has the meaning set forth in Section 21.02.
"Hedge Security Agreement" means, with respect to a Hedge, the
Interest Rate Hedge Security, Pledge and Assignment Agreement between
the Borrower and the Lender, for the benefit of the Lender, in the form
attached as Exhibit CC to this Agreement as such agreement may be
amended, modified, supplemented or restated from time to time.
"Impositions" means, with respect to any Mortgaged Property,
all (1) water and sewer charges which, if not paid, may result in a
lien on all or any part of the Mortgaged Property, (2) premiums for
fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under any Security Instrument, (3)
Taxes, and (4) amounts for other charges and expenses which Lender at
any time reasonably deems necessary to protect the Mortgaged Property,
to prevent the imposition of liens on the Mortgaged Property, or
otherwise to protect Lender's interests.
"Indebtedness" means, with respect to any Person, as of any
specified date, without duplication, all:
(a) indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than (i)
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices, and (ii) for
construction of improvements to property, if such person has a
non-contingent contract to purchase such property);
(b) other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument;
(c) obligations of such Person under any lease of
property, real or personal, the obligations of the lessee in respect of
which are required by GAAP to be capitalized on a balance sheet of the
lessee or to be otherwise disclosed as such in a note to such balance
sheet;
(d) obligations of such Person in respect of
acceptances (as defined in Article 3 of the Uniform Commercial Code of
the Commonwealth of Virginia) issued or created for the account of such
Person;
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(e) liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment of such liabilities; and
(f) as to any Person ("guaranteeing person"), any
obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation
of a primary obligation (as defined below) with respect to which the
guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing, or in effect
guaranteeing, any indebtedness, lease, dividend or other obligation
("primary obligations") of any third person ("primary obligor") in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (3) purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation (other than construction of
improvements to property, if the primary obligor has a non-contingent
contract to purchase such property), or (4) otherwise assure or hold
harmless the owner of any such primary obligation against loss in
respect of the primary obligation, provided, however, that the term
"Contingent Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any guaranteeing person shall be
deemed to be the lesser of (i) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made and (ii) the maximum amount for which
such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Contingent Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Contingent Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by Owner in good faith.
"Initial Advance" means the Revolving Advance made on the
Initial Closing Date in the amount of $175,000,000.
"Initial Advance Request" shall have the meaning set forth in
Section 5.01.
"Initial Closing Date" means the date of this Agreement.
"Initial Mortgaged Properties" means the Multifamily
Residential Properties described on Exhibit A to this Agreement and
which represent the Multifamily Residential Properties which are made
part of the Collateral Pool on the Initial Closing Date.
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"Initial Security Instruments" means the Security Instruments
covering the Initial Mortgaged Properties.
"Initial Valuation" means, when used with reference to
specified Collateral, the Valuation initially performed for the
Collateral as of the date on which the Collateral was added to the
Collateral Pool. The Initial Valuation for each of the Initial
Mortgaged Properties is as set forth in Exhibit A to this Agreement.
"Insurance Policy" means, with respect to a Mortgaged
Property, the insurance coverage and insurance certificates evidencing
such insurance required to be maintained pursuant to the Security
Instrument encumbering the Mortgaged Property.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended. Each reference to the Internal Revenue Code shall be
deemed to include (a) any successor internal revenue law and (b) the
applicable regulations whether final, temporary or proposed.
"Lease" means any lease, any sublease or subsublease, license,
concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of
any space in any Mortgaged Property, and every modification, amendment
or other agreement relating to such lease, sublease, subsublease or
other agreement entered into in connection with such lease, sublease,
subsublease or other agreement, and every guarantee of the performance
and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Lender" shall have the meaning set forth in the first
paragraph of this Agreement, but shall refer to any replacement Lender
if the initial Lender is replaced pursuant to the terms of Section
19.04.
"Lien" means any mortgage, deed of trust, deed to secure debt,
security interest or other lien or encumbrance (including both
consensual and non-consensual liens and encumbrances).
"Loan Documents" means this Agreement, the Notes, the Advance
Confirmation Instruments for the Revolving Advances, the REIT's
Guaranty, the Security Documents, all documents executed by the
Borrower Parties pursuant to the General Conditions set forth in
Article XI of this Agreement and any other documents executed by a
Borrower Party from time to time in connection with this Agreement or
the transactions contemplated by this Agreement.
"Loan Year" means the 12-month period from the first day of
the first calendar month after the Initial Closing Date to and
including the last day before the first anniversary of the Initial
Closing Date, and each 12-month period thereafter.
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"Material Adverse Effect" means, with respect to any
circumstance, act, condition or event of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any
other event or events, act or acts, condition or conditions, or
circumstance or circumstances, whether or not related, a material
adverse change in or a materially adverse effect upon any of (a) the
business, operations, property or condition (financial or otherwise) of
any Borrower Party, (b) the present or future ability of any Borrower
Party to perform the Obligations for which it is liable, (c) the
validity, priority, perfection or enforceability of this Agreement or
any other Loan Document or the rights or remedies of the Lender under
any Loan Document, or (d) the value of, or the Lender's ability to have
recourse against, any Mortgaged Property.
"MBS" means a mortgage-backed security which is "backed" by an
Advance means that it is backed by an interest in the Notes and the
Collateral Pool securing the Notes, which interest permits the holder
of the MBS to participate in the Notes and the Collateral Pool to the
extent of such Advance.
"MBS Imputed Interest Rate" shall have the meaning set forth
in Section 2.05(a).
"MBS Issue Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS is
issued by ▇▇▇▇▇▇ Mae.
"MBS Delivery Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS
is delivered by ▇▇▇▇▇▇ Mae.
"MBS Pass-Through Rate" for a Base Facility Advance means the
interest rate as determined by the Lender (rounded to three places)
payable in respect of the ▇▇▇▇▇▇ ▇▇▇ MBS issued pursuant to the MBS
Commitment backed by the Base Facility Advance as determined in
accordance with Section 4.01.
"Mortgaged Properties" means, collectively, the Additional
Mortgaged Properties and the Initial Mortgaged Properties, but
excluding each Collateral Release Property from and after the date of
the release of the Collateral Release Property from the Collateral
Pool.
"Multifamily Residential Property" means a residential
property, located in the United States, containing five or more
dwelling units in which not more than twenty percent (20%) of the net
rentable area is or will be rented to non-residential tenants, and
conforming to the requirements of Sections 201 and 203 of Part III of
the DUS Guide.
"Net Operating Income" means, for any specified period, with
respect to any Multifamily Residential Property, the aggregate net
income during such period equal to Gross Revenues during such period
less the aggregate Operating Expenses during such period. If a
Mortgaged Property is not owned by the Borrower for the entire
specified period, the Net Operating Income for the Mortgaged Property
for the time within the specified period during which the Mortgaged
Property was owned by the Borrower shall be the Mortgaged Property's
pro forma net operating income determined by the Lender in accordance
with the underwriting procedures set forth in Part III of the DUS
Guide.
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"Note" means the Base Facility Note or the Revolving Facility
Note.
"Obligations" means the aggregate of the obligations of each
of the Borrower Parties under this Agreement and the other Loan
Documents.
"Operating Expenses" means, for any period, with respect to
any Multifamily Residential Property, all expenses in respect of the
Multifamily Residential Property, as determined by the Lender in
accordance with the method described in paragraph 3 of Section 302.02
of Part V of the DUS Guide, including replacement reserves under the
Replacement Reserve Agreements for the Mortgaged Properties.
"Organizational Certificate" means a certificate of the
Borrower Parties in the form attached as Exhibit F to this Agreement.
"Organizational Documents" means all certificates, instruments
and other documents pursuant to which an organization is organized or
operates, including but not limited to, (i) with respect to a
corporation, its articles of incorporation and bylaws, (ii) with
respect to a limited partnership, its limited partnership certificate
and partnership agreement, (iii) with respect to a general partnership
or joint venture, its partnership or joint venture agreement and (iv)
with respect to a limited liability company, its articles of
organization and operating agreement.
"Outstanding" means, when used in connection with promissory
notes, other debt instruments or Advances, for a specified date,
promissory notes or other debt instruments which have been issued, or
Advances which have been made, but have not been repaid in full as of
the specified date.
"Ownership Interests" means, with respect to any entity, any
ownership interests in the entity and any economic rights (such as a
right to distributions, net cash flow or net income) to which the owner
of such ownership interests is entitled.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permits" means all permits, or similar licenses or approvals
issued and/or required by an applicable Governmental Authority or any
Applicable Law in connection with the ownership, use, occupancy,
leasing, management, operation, repair, maintenance or rehabilitation
of any Mortgaged Property or any Borrower Party's business.
"Permitted Liens" means, with respect to a Mortgaged Property,
(i) the exceptions to title to the Mortgaged Property set forth in the
Title Insurance Policy for the Mortgaged
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Property which are approved by the Lender, (ii) the Security Instrument
encumbering the Mortgaged Property, and (iii) any other Liens approved
by the Lender.
"Person" means an individual, an estate, a trust, a
corporation, a partnership, a limited liability company or any other
organization or entity (whether governmental or private).
"Potential Event of Default" means any event which, with the
giving of notice or the passage of time, or both, would constitute an
Event of Default.
"Price" means, with respect to an Advance, the proceeds of the
sale of the MBS backed by the Advance.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Rate Confirmation Form" shall have the meaning set forth in
Section 4.01(c).
"Rate Setting Date" shall have the meaning set forth in
Section 4.01(b).
"Rate Setting Form" shall have the meaning set forth in
Section 4.01(b).
"REIT" means ▇▇▇▇▇▇ Residential Properties, Inc., a Maryland
corporation.
"REIT's Guaranty" means that certain Guaranty executed by the
REIT and attached as Exhibit G to this Agreement.
"Release Fee" means, with respect to each Mortgaged Property
released from the Collateral Pool pursuant to Article VII, a fee equal
to $15,000.
"Release Price" shall have the meaning set forth in Section
7.02(c).
"Rent Roll" means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on ▇▇▇▇▇▇ Mae Form 4243, as set forth
in Exhibit III-3 of the DUS Guide, or on another form approved by the
Lender and containing substantially the same information as Form 4243
requires.
"Replacement Reserve Agreement" means a Replacement Reserve
and Security Agreement, reasonably required by the Lender, and
completed in accordance with the requirements of the DUS Guide.
"Request" means a Collateral Addition Request, a Collateral
Release Request, a Conversion Request, a Credit Facility Expansion
Request, a Credit Facility Termination Request, a Future Advance
Request, an Initial Advance Request or a Revolving Facility Termination
Request.
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"Revolving Advance" means a loan made by the Lender to the
Borrower under the Revolving Facility Commitment.
"Revolving Credit Endorsement" means an endorsement to a Title
Insurance Policy which contains substantially the same coverages, and
is subject to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as Exhibit
H to this Agreement.
"Revolving Facility" means the agreement of the Lender to make
Advances to the Borrower pursuant to Section 2.01.
"Revolving Facility Availability Period" means the period
beginning on the Initial Closing Date and ending on the 90th day before
the applicable Revolving Facility Termination Date.
"Revolving Facility Commitment" means an aggregate amount of
$175,000,000, of which $75,000,000 shall be available for a period of
five years (the "Five Year Revolving Facility") and be evidenced by the
Revolving Facility Note in the form attached hereto as Exhibit I-1, and
of which $100,000,000 shall be available for a period of ten years (the
"Ten Year Revolving Facility") and be evidenced by the Revolving
Facility Note in the form attached hereto as Exhibit I-2, plus such
amount as the Borrower may elect to add to the Revolving Facility
Commitment in accordance with Article VIII, and less such amount as the
Borrower may elect to convert from the Revolving Facility Commitment to
the Base Facility Commitment in accordance with Article III and less
such amount by which the Borrower may elect to reduce the Revolving
Facility Commitment in accordance with Article IX.
"Revolving Facility Fee" means (i) for the Five Year Revolving
Facility and the first five years of the term of the Ten Year Revolving
Facility, 80 basis points per annum (0.80%) for a Revolving Advance
drawn from the Revolving Commitment initially available under this
Agreement, (ii) for the second five years of the term of the Ten Year
Revolving Facility, the number of basis points per annum determined by
the Lender as the Revolving Facility Fee for such period, which fee
shall be set by Lender not less than 30 days prior to the commencement
of such period, and (iii) for any Revolving Advance drawn from any
portion of the Revolving Commitment increased under Article VIII, the
number of basis points per annum determined at the time of such
increase by the Lender as the Revolving Facility Fee for such Revolving
Advances.
"Revolving Facility Notes" means, collectively, the promissory
notes, in the forms attached as Exhibit I-1 and Exhibit I-2 to this
Agreement, which have been issued by the Borrower to the Lender to
evidence the Borrower's obligation to repay Revolving Advances.
"Revolving Facility Termination Date" means, with respect to a
Five Year Revolving Facility, the last day of the fifth Loan Year and,
with respect to the Ten Year Revolving Facility, the last day of the
tenth Loan Year.
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"Revolving Facility Termination Fee" means, with respect to a
reduction in the Revolving Facility Commitment pursuant to Articles IX
or X, an amount equal to the product obtained by multiplying--
(1) the reduction in the Revolving Facility Commitment, by
(2) 25 basis points, by
(3) the present value factor calculated using the following
formula:
-n
1 - (1 + r)
---------------
r
[r = Yield Rate
n = the number of years, and any fraction thereof, remaining
between the Closing Date for the reduction in the
Revolving Facility Commitment and the Revolving Facility
Termination Date]
The "Yield Rate" means the rate on the Three-Month LIBOR on the second
Business Day preceding, as applicable,(x) the date of the reduction in
the Revolving Facility Commitment, (y) the date of the Complete
Revolving Facility Termination or (z) the date of Lender's acceleration
of the unpaid principal balance of the Revolving Facility Note.
"Security" means a "security" as set forth in Section 2(1) of
the Securities Act of 1933, as amended.
"Security Documents" means the Security Instruments, the Cash
Management Agreement, the Replacement Reserve Agreements and any other
documents executed by a Borrower Party from time to time to secure any
of the Borrower Parties' obligations under the Loan Documents.
"Security Instrument" means, for each Mortgaged Property, a
separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt,
Assignment of Leases and Rents and Security Agreement given by the
Borrower to or for the benefit of the Lender to secure the obligations
of the Borrower Parties under the Loan Documents. With respect to each
Mortgaged Property owned by the Borrower, the Security Instrument shall
be substantially in the form published by ▇▇▇▇▇▇ ▇▇▇ for use in the
state in which the Mortgaged Property is located. The amount secured by
the Security Instrument shall be equal to the Commitment in effect from
time to time.
"Senior Management" means (i) the Chief Executive Officer,
Chairman of the Board, President, Chief Financial Officer and Chief
Operating Officer of the REIT, (ii) the Chief Executive Officer,
Chairman of the Board, President, Chief Financial Officer and Chief
Operating Officer of any advisor to the Borrower or the REIT and (iii)
any other individuals with responsibility for any of the functions
typically performed in a corporation by the officers described in
clauses (i) and (ii).
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"Single-Purpose" means, with respect to a Person which is any
form of partnership or corporation or limited liability company, that
such Person at all times since its formation:
(i) has been a duly formed and existing partnership,
corporation or limited liability company, as the case
may be;
(ii) has been duly qualified in each jurisdiction in which
such qualification was at such time necessary for the
conduct of its business;
(iii) has complied with the provisions of its
organizational documents and the laws of its
jurisdiction of formation in all respects;
(iv) has observed all customary formalities regarding its
partnership or corporate existence, as the case may
be;
(v) has accurately maintained its financial statements,
accounting records and other partnership or corporate
documents separate from those of any other Person;
(vi) has not commingled its assets or funds with those of
any other Person;
(vii) has accurately maintained its own bank accounts and
books and accounts separate from those of any other
Person;
(viii) has paid its own liabilities from its own separate
assets;
(ix) has identified itself in all dealings with creditors
(other than trade creditors in the ordinary course of
business and creditors for the construction of
improvements to property on which such Person has a
non-contingent contract to purchase such property)
under its own name and as a separate and distinct
entity;
(x) has not identified itself as being a division or a
part of any other Person;
(xi) has not identified any other Person as being a
division or a part of such Person;
(xii) has been adequately capitalized in light of its
contemplated business operations;
(xiii) has not assumed, guaranteed or become obligated for
the liabilities of any other Person (except in
connection with the Credit Facility or the
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endorsement of negotiable instruments in the ordinary
course of business) or held out its credit as being
available to satisfy the obligations of any other
Person;
(xiv) has not acquired obligations or securities of any
other Person;
(xv) in relation to the Borrower, except for loans made in
the ordinary course of business to the REIT or other
Affiliates, has not made loans or advances to any
other Person;
(xvi) has not entered into and was not a party to any
transaction with any Affiliate of such Person, except
in the ordinary course of business and on terms which
are no less favorable to such Person than would be
obtained in a comparable arm's-length transaction
with an unrelated third party;
(xvii) has conducted its own business in its own name;
(xviii) has paid the salaries of its own employees, if any,
and maintained a sufficient number of employees in
light of its contemplated business operations;
(xix) has allocated fairly and reasonably any overhead for
shared office space;
(xx) has not pledged its assets for the benefit of any
other entity or made any loans or advances to any
person or entity;
(xxi) has not engaged in a non-exempt prohibited
transaction described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code;
(xxii has not acquired obligations or securities of its
partners or Affiliates; and
(xxiii) has corrected any known misunderstanding regarding
its separate identity.
"SMSA" means a "standard metropolitan statistical area," as
defined from time to time by the United States Office of Management and
Budget.
"Standby Fee" means, for any month, an amount equal to the
product obtained by multiplying: (i) 1/12, by (ii) 25 basis points, by
(iii) the Unused Capacity for such month.
"Subsequent Hedge" has the meaning set forth in Section 21.02
"Subsidiary" means, when used with reference to a specified
Person, (i) any Person that, directly or indirectly, through one or
more intermediaries, is controlled by the specified Person, (ii) any
Person of which the specified Person is, directly or indirectly, the
owner of more than 50% of any voting class of Ownership Interests or
(iii) any Person (A) which is a partnership and (B) of which the
specified Person is a general partner and owns more than 50% of the
partnership interests.
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"Surveys" means the as-built surveys of the Mortgaged
Properties prepared in accordance with the requirements of Section 113
of the DUS Guide, or otherwise approved by the Lender.
"Swap" means an interest rate swap provided pursuant to, and
satisfying the requirements or, Article XXI.
"Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local
improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will
become a lien, on the Mortgaged Properties.
"Term of this Agreement" shall be determined as provided in
Section 23.10 to this Agreement.
"Termination Date" means, at any time during which Base
Facility Advances are Outstanding, the latest maturity date for any
Base Facility Advance Outstanding, and, at any time during which Base
Facility Advances are not Outstanding, the Revolving Facility
Termination Date.
"Three-Month LIBOR" means the London interbank offered rate
for three-month U.S. dollar deposits, as such rate is reported in The
Wall Street Journal. In the event that a rate is not published for the
Three-Month LIBOR, then the nearest equivalent duration London
interbank offered rate for U.S. Dollar deposits shall be selected at
Lender's reasonable discretion. If the publication of Three-Month LIBOR
is discontinued, Lender shall determine such rate from another source
selected by Lender..
"Tie-In Endorsement" means an endorsement to a Title Insurance
Policy which contains substantially the same coverages, and is subject
to substantially the same or fewer exceptions (or such other exceptions
as the Lender may approve), as the form attached as Exhibit J to this
Agreement.
"Title Company" means Chicago Title Insurance Company.
"Title Insurance Policies" means the mortgagee's policies of
title insurance issued by the Title Company from time to time relating
to each of the Security Instruments, conforming to the requirements of
Section 111 of the DUS Guide, together with such endorsements,
coinsurance, reinsurance and direct access agreements with respect to
such policies as the Lender may, from time to time, consider necessary
or appropriate, whether or not required by the DUS Guide, including
Revolving Credit Endorsements, if available, and Tie-In Endorsements,
if available, and with a limit of liability under the policy (subject
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to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the
Stipulations and Conditions of the policy) equal to the Commitment.
"Trailing Three Month Period" means, for any specified date,
the three month period ending with the last day of the most recent
Calendar Quarter for which financial statements have been delivered by
the REIT to the Lender pursuant to Section 13.04(d).
"Trailing 12 Month Period" means, for any specified date, the
12 month period ending with the last day of the most recent Calendar
Quarter for which financial statements have been delivered by the REIT
to the Lender pursuant to Sections 13.04(c) and (d).
"Transfer" means (i) a sale, assignment, lease, pledge,
transfer or other disposition (whether voluntary or by operation of
law) of, or the granting or creating of a lien, encumbrance or security
interest in, any estate, rights, title or interest in a Multifamily
Residential Property, or any portion thereof, or (ii) a sale,
assignment, pledge, transfer or other disposition of any interest in
Borrower or the REIT, or (iii) the issuance or other creation of new
ownership interests in Borrower or the REIT or any other partnership,
corporation, real estate investment trust or other entity that has a
direct or indirect ownership interest in Borrower or the REIT, or (iv)
a merger or consolidation of Borrower or the REIT into another entity
or of another entity into Borrower or the REIT, or (v) the
reconstitution of Borrower or the REIT from one type of entity to
another type of entity, or (vi) the amendment, modification or any
other change in the governing instrument or instruments of such Person
which has the effect of changing the relative powers, rights,
privileges, voting rights or economic interests of the ownership
interests in such Person. "Transfer" does not include (i) a conveyance
of the Mortgaged Property at a judicial or non-judicial foreclosure
sale under any Security Instrument or (ii) the Mortgaged Property
becoming part of a bankruptcy estate by operation of law under the
United States Bankruptcy Code.
"Unused Capacity" means, for any month, the sum of the daily
average during such month of the undrawn amount of the Revolving
Facility Commitment available under Article II for the making of
Revolving Advances, without regard to any unclosed Requests or to the
fact that a Request must satisfy conditions precedent.
"Valuation" means, for any specified date, with respect to a
Multifamily Residential Property, (a) if an Appraisal of the
Multifamily Residential Property was more recently obtained than a Cap
Rate for the Multifamily Residential Property, the Appraised Value of
such Multifamily Residential Property, or (b) if a Cap Rate for the
Multifamily Residential Property was more recently obtained than an
Appraisal of the Multifamily Residential Property, the value derived by
dividing--
(i) the Net Operating Income of such Multifamily
Residential Property for the Trailing 12 Month
Period, by
(ii) the most recent Cap Rate determined by the Lender.
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Notwithstanding the foregoing, any Valuation for a Multifamily
Residential Property calculated for a date occurring before the first
anniversary of the date on which the Multifamily Residential Property
becomes a part of the Collateral Pool shall equal the Appraised Value
of such Multifamily Residential Property, unless the Lender determines
that changed market or property conditions warrant that the value be
determined as set forth in the preceding sentence.
"Voting Equity Capital" means Securities or partnership
interests of any class or classes, the holders of which are ordinarily,
in the absence of contingencies, entitled to elect a majority of the
board of directors (or Persons performing similar functions).
ARTICLE II
THE REVOLVING FACILITY COMMITMENT
SECTION 2.01 Revolving Facility Commitment. Subject to the terms, conditions and
limitations of this Agreement, the Lender agrees to make Revolving Advances to
the Borrower from time to time during the applicable Revolving Facility
Availability Period. The aggregate unpaid principal balance of the Revolving
Advances Outstanding at any time shall not exceed the Revolving Facility
Commitment. Subject to the terms, conditions and limitations of this Agreement,
the Borrower may re-borrow any amounts under the Revolving Facility which it has
previously borrowed and repaid under the Revolving Facility.
SECTION 2.02 Requests for Revolving Advances. The Borrower shall request a
Revolving Advance by giving the Lender an Initial Advance Request in accordance
with Section 5.01 or a Future Advance Request in accordance with Section 5.02,
as applicable.
SECTION 2.03 Maturity Date of Revolving Advances. Regardless of the date on
which a Revolving Advance is made, the maturity date of each Revolving Advance
shall be a date selected by the Borrower in its Request for the Revolving
Advance, which date shall be the last day of a calendar month occurring:
(a) no earlier than the date which completes three full months
after the Closing Date for the Revolving Advance; and
(b) no later than the date which completes nine full months
after the Closing Date for the Revolving Advance.
For these purposes, a year shall be deemed to consist of 12 30-day months. For
example, the date which completes three full months after September 15 shall be
December 15; and the date which completes three full months after November 30
shall be February 28.
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SECTION 2.04 Interest on Revolving Facility Advances.
(a) Discount. Each Revolving Advance shall be a discount loan.
The original stated principal amount of a Revolving Advance shall be the sum of
the Price of the Revolving Advance and the Discount of the Revolving Advance.
The Price and Discount of each Revolving Advance shall be determined in
accordance with the procedures set out in Section 4.01. The proceeds of the
Revolving Advance made available by the Lender to the Borrower will equal the
Price of the Revolving Advance. The Borrower shall pay to the Lender, in advance
of the Lender making a Revolving Advance requested by the Borrower, the entire
Discount for the Revolving Advance.
(b) Partial Month Interest. Notwithstanding anything to the
contrary in this Section, if a Revolving Advance is not made on the first day of
a calendar month, and the MBS Issue Date for the MBS backed by the Revolving
Advance is the first day of the month following the month in which the Revolving
Advance is made, the Borrower shall pay interest on the original stated
principal amount of the Revolving Advance for the partial month period
commencing on the Closing Date for the Revolving Advance and ending on the last
day of the calendar month in which the Closing Date occurs, at a rate per annum
equal to the greater of (i) the Coupon Rate for the Revolving Advance as
determined in accordance with Section 2.05(b) and (ii) a rate determined by the
Lender, based on the Lender's cost of funds and approved in advance, in writing,
by the Borrower, pursuant to the procedures mutually agreed upon by the Borrower
and the Lender.
(c) Revolving Facility Fee. In addition to paying the Discount
and the partial month interest, if any, the Borrower shall pay monthly
installments of the Revolving Facility Fee to the Lender on account of each
Revolving Advance over the whole number of calendar months the MBS backed by the
Revolving Advance is to run from the MBS Issue Date to the maturity date of the
MBS. The Revolving Facility Fee shall be payable in advance, in accordance with
the terms of the Revolving Facility Note. The first installment shall be payable
on or prior to the Closing Date for the Revolving Advance and shall apply to the
first full calendar month of the MBS backed by the Revolving Advance. Subsequent
installments shall be payable on the first day of each calendar month,
commencing on the first day of the second full calendar month of such MBS, until
the maturity of such MBS. Each installment of the Revolving Facility Fee shall
be in an amount equal to the product of multiplying (i) the Revolving Facility
Fee, by (ii) the amount of the Revolving Advance, by (iii) 1/12.
SECTION 2.05 Coupon Rates for Revolving Advances. The Coupon Rate for a
Revolving Advance shall be a rate, per annum, as follows:
(a) The Coupon Rate for a Revolving Advance shall equal the
sum of (i) an interest rate as determined by the Lender (rounded to three
places) payable for the ▇▇▇▇▇▇ ▇▇▇ MBS pursuant to the MBS Commitment backed by
the Revolving Advance ("MBS Imputed Interest Rate") and (ii) the Revolving
Facility Fee.
(b) Notwithstanding anything to the contrary in this Section,
if a Revolving Advance is not made on the first day of a calendar month, and the
MBS Issue Date for the MBS
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backed by the Revolving Advance is the first day of the month following the
month in which the Revolving Advance is made, the Coupon Rate for such Revolving
Advance for such period shall be the greater of (i) the rate for the Revolving
Advance determined in accordance with subsection (a) of this Section and (ii) a
rate determined by the Lender, based on the Lender's cost of funds, and approved
in advance, in writing, by the Borrower, pursuant to procedures mutually agreed
upon by the Borrower and the Lender.
SECTION 2.06 Revolving Facility Notes. The obligation of the Borrower to repay
the Revolving Advances will be evidenced by the Revolving Facility Notes. The
Revolving Facility Notes shall be payable to the order of the Lender and shall
be made in the aggregate amount of the Revolving Facility Commitment.
ARTICLE III
THE BASE FACILITY COMMITMENT
SECTION 3.01 Base Facility Commitment. Subject to the terms, conditions and
limitations set forth in this Article, the Lender agrees to make Base Facility
Advances to the Borrower from time to time during the Base Facility Availability
Period. The aggregate original principal of the Base Facility Advances shall not
exceed the Base Facility Commitment. The borrowing of a Base Facility Advance
shall permanently reduce the Base Facility Commitment by the original principal
amount of the Base Facility Advance. The Borrower may not re-borrow any part of
the Base Facility Advance which it has previously borrowed and repaid.
SECTION 3.02 Requests for Base Facility Advances. The Borrower shall request a
Base Facility Advance by giving the Lender an Initial Advance Request in
accordance with Section 5.01 or a Future Advance Request in accordance with
Section 5.02, as applicable.
SECTION 3.03 Maturity Date of Base Facility Advances; Amortization Period. The
maturity date of each Base Facility Advance shall be the 10th anniversary of the
Initial Closing Date. The principal of each Base Facility Advance shall be
amortized on a 30-year schedule during the Amortization Period.
SECTION 3.04 Interest on Base Facility Advances.
(a) Advances. Each Base Facility Advance shall bear interest
at a rate, per annum, equal to the sum of (i) the MBS Pass-Through Rate
determined for such Base Facility Advance and (ii) the Base Facility Fee.
(b) Partial Month Interest. Notwithstanding anything to the
contrary in this Section, if a Base Facility Advance is not made on the first
day of a calendar month, and the MBS Issue Date for the MBS backed by the Base
Facility Advance is the first day of the month following the month in which the
Base Facility Advance is made, the Borrower shall pay interest on the original
stated principal amount of the Base Facility Advance for the partial month
period commencing on the Closing Date for the Base Facility Advance and ending
on the last day of the
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calendar month in which the Closing Date occurs at a rate, per annum, equal to
the greater of (i) the interest rate for the Base Facility Advance described in
the first sentence of this Section and (ii) a rate determined by the Lender,
based on the Lender's cost of funds, and approved in advance, in writing, by the
Borrower, pursuant to procedures mutually agreed upon by the Borrower and the
Lender.
SECTION 3.05 Coupon Rates for Base Facility Advances. The Coupon Rate for a Base
Facility Advance shall be the rate of interest applicable to such Base Facility
Advance pursuant to Section 3.04.
SECTION 3.06 Base Facility Note. The obligation of the Borrower to repay a Base
Facility Advance will be evidenced by a Base Facility Note. The Base Facility
Notes shall be payable to the order of the Lender and shall be made in the
original principal amount of each Base Facility Advance.
SECTION 3.07 Conversion of Commitment from Revolving Facility Commitment to Base
Facility Commitment. The Borrower shall have the right, from time to time during
the Base Facility Availability Period, to convert all or a portion of a
Revolving Facility Commitment to the Base Facility Commitment, in which event
the Revolving Facility Commitment shall be reduced by, and the Base Facility
Commitment shall be increased by, the amount of the conversion.
(a) Request. In order to convert all or a portion of the Revolving
Facility Commitment to the Base Facility Commitment, the Borrower shall deliver
a written request for a conversion ("Conversion Request") to the Lender, in the
form attached as Exhibit K to this Agreement. Each Conversion Request shall be
accompanied by a designation of the amount of the conversion and a designation
of any Revolving Advances Outstanding which will be prepaid on or before the
Closing Date for the conversion as required by Section 3.08(c).
(b) Closing. If none of the limitations contained in Section 3.08 is
violated, and all conditions contained in Section 3.09 are satisfied, the Lender
shall permit the requested conversion, at a closing to be held at offices
designated by the Lender on a Closing Date selected by the Lender, and occurring
within 30 Business Days after the Lender's receipt of the Conversion Request (or
on such other date to which the Borrower and the Lender may agree), by executing
and delivering, all at the sole cost and expense of the Borrower, an amendment
to this Agreement, in the form attached as Exhibit L to this Agreement, together
with an amendment to each Security Document and other applicable Loan Documents,
in form and substance satisfactory to the Lender, reflecting the change in the
Base Facility Commitment and the Revolving Facility Commitment. The documents
and instruments referred to in the preceding sentence are referred to in this
Article as the "Conversion Documents."
SECTION 3.08 Limitations on Right to Convert. The right of the Borrower to
convert all or a portion of the Revolving Facility Commitment to the Base
Facility Commitment is subject to the following limitations:
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(a) Closing Date. The Closing Date shall occur during the Base Facility
Availability Period.
(b) Minimum Request. Each Request for a conversion shall be in the
minimum amount of $25,000,000.
(c) Obligation to Prepay Revolving Advances. If, after the conversion,
the aggregate unpaid principal balance of all Revolving Advances Outstanding
will exceed the Revolving Facility Commitment, the Borrower shall be obligated
to prepay, as a condition precedent to the conversion, an amount of Revolving
Advances Outstanding which is at least equal to the amount of the excess. The
Borrower shall also pay any prepayment premium payable on account of such
prepayment in accordance with the terms of the Revolving Facility Note.
SECTION 3.09 Conditions Precedent to Conversion. The conversion of all or a
portion of the Revolving Facility Commitment to the Base Facility Commitment is
subject to the satisfaction of the following conditions precedent on or before
the Closing Date:
(a) After giving effect to the requested conversion, the
Coverage and LTV Tests will be satisfied;
(b) Prepayment by the Borrower in full of any Revolving
Advances Outstanding which the Borrower has designated for payment, together
with any associated prepayment premiums and other amounts due with respect to
the prepayment of such Revolving Advances;
(c) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date and showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date and other exceptions approved by
the Lender;
(d) Receipt by the Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the parties
(other than the Lender) who is a party to such Conversion Document; and
(e) The satisfaction of all applicable General Conditions set
forth in Article XI.
SECTION 3.10 Defeasance. Base Facility Advances are not prepayable at any time,
provided that, notwithstanding the foregoing, Borrower may prepay any Base
Facility Advance during the last ninety (90) days of the term of such Base
Facility Advance and provided that Base Facility Advances may be defeased
pursuant to the terms and conditions of this Section.
(a) Conditions. Subject to Section 3.10(d), Borrower shall
have the right to obtain the release of Mortgaged Properties from the
lien of the related Security Instruments (and all collateral derived
from such Mortgage Properties, including assignment of leases, fixture
filings and other documents and instruments evidencing a lien or
security interest in Borrower's assets [except the Substitute
Collateral] shall be released) upon the satisfaction of all of the
following conditions:
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(1) Defeasance Notice. Borrower shall give Lender a
notice (the "Defeasance Notice", in the manner specified in
Section 3.10(g)(4), on a form provided by Lender, specifying a
Business Day (the "Defeasance Closing Date") which Borrower
desires to consummate the Defeasance. The Defeasance Closing
Date specified by Borrower may not be more than 45 calendar
days, nor less than 30 calendar days, after the date on which
the Defeasance Notice is received by Lender. Borrower shall
also specify in the Defeasance Notice the name, address and
telephone number of Borrower for notices pursuant to Section
3.10(g)(4). The form Defeasance Notice provided by Lender
specifies: (i) which Mortgaged Properties Borrower proposes to
be released, provided that any Mortgaged Property securing
only Base Facility Advances must be among the Mortgaged
Properties proposed to be released; (ii) the name, address and
telephone number of Lender for notices pursuant to Section
3.10(g)(4); (iii) the account(s) to which payments to Lender
are to be made; (iv) whether a ▇▇▇▇▇▇ ▇▇▇ Investment Security
will be offered for use as the Substitute Collateral and, if
not, that U.S. Treasury Securities will be the Substitute
Collateral; (v) whether the Successor Borrower will be
designated by Lender or Borrower; and (vi) if a ▇▇▇▇▇▇ Mae
Investment Security is offered for use as the Substitute
Collateral, the Defeasance Notice shall also include the
amount of the Defeasance Commitment Fee.
Any applicable Defeasance Commitment fee must be paid by
Borrower and received by Lender no later than the date and
time when Lender receives the Defeasance Notice from Borrower.
(2) Confirmation. After Lender has confirmed that the
Defeasance is then permitted as provided in Section 3.10(d),
and has confirmed that the terms of the Defeasance Notice are
acceptable to Lender, Lender shall, with reasonable
promptness, notify Borrower of such confirmation by signing
the Defeasance Notice, attaching the Annual Yields for the
Mortgage Payments beginning on the first day of the second
calendar month after the Defeasance Closing Date and ending on
the Stated Maturity Date (if a ▇▇▇▇▇▇ ▇▇▇ Investment Security
is offered as Substitute Collateral) and transmitting the
signed Defeasance Notice to Borrower pursuant to Section
3.10(g)(4). If, after Lender has notified Borrower of its
confirmation in accordance with the foregoing, Lender does not
receive the Defeasance Commitment Fee within five (5) Business
Days after the Defeasance Notice Effective Date, then
Borrower's right to obtain Defeasance pursuant to that
Defeasance Notice shall terminate.
(3) Substitute Collateral. On or before the
Defeasance Closing Date, Borrower shall deliver to Lender a
pledge and security agreement, in form and substance
satisfactory to Lender in its sole discretion (the "Pledge
Agreement"), creating a first priority perfected security
interest in favor of Lender in substitute
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collateral constituting an Investment Security (the
"Substitute Collateral"). The Pledge Agreement shall provide
Borrower's authorization and direction that all interest on,
principal of and other amounts payable with respect to the
Substitute Collateral shall be paid directly to Lender to be
applied to Mortgage Payments due under the Base Facility Note
subject to Defeasance. If the Substitute Collateral is issued
in a certificated form and Borrower has possession of the
certificate, the certificate shall be endorsed (either on the
certificate or on a separate writing attached thereto) by
Borrower as directed by Lender and delivered to Lender. If the
Substitute Collateral is issued in an uncertificated form, or
in a certificated form but Borrower does not have possession
of the certificate, Borrower shall execute and deliver to
Lender all documents and instruments required by Lender to
create in Lender's favor a first priority perfected security
interest in such Substitute Collateral, including a securities
account control agreement or any other instrument or document
required to perfect a security interest in each Substitute
Collateral.
(4) Closing Documents. Borrower shall deliver to
Lender on or before the Defeasance Closing Date the documents
described in Section 3.10(b).
(5) Amounts Payable by Borrower. On or before the
Defeasance Closing Date, Borrower shall pay to Lender an
amount equal to the sum of:
(A) the Next Scheduled P&I Payment;
(B) all other sums then due and payable
under the Base Facility Note subject
to Defeasance, the Security
Instruments related to the Mortgaged
Properties to be released; and
(C) all costs and expenses incurred by
Lender or Servicer in connection
with the Defeasance, including the
fees and disbursements of Lender's
or Servicer's legal counsel.
(6) Defeasance Deposit. If a ▇▇▇▇▇▇ Mae Investment
Security will be the Substitute Collateral, then, on or before
3:00 p.m., Washington, D.C. time, on the Defeasance Closing
Date, Borrower shall pay the Defeasance Deposit (reduced by
the Defeasance Commitment Fee) to Lender to be used by Lender
to purchase the ▇▇▇▇▇▇ ▇▇▇ Investment Security as Borrower's
agent.
(7) Covenants, Representations and Warranties. On the
Defeasance Closing Date, all of the covenants of the Borrower
Parties set forth in Articles XIII, XIV and XV of this
Agreement and all of the representations and warranties of the
Borrower Parties set forth in Article XII of this Agreement
are true and correct in all material respects.
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(8) Geographical Diversification. If, as a result of
the Defeasance, Lender determines that the geographical
diversification of the Collateral Pool is compromised (whether
or not the Geographical Diversification Requirement is met),
Lender may require that Borrower add or substitute Multifamily
Residential Properties to the Collateral Pool in a number and
having a valuation required to restore the Geographical
Diversification of the Collateral Pool to a level at least as
diverse as before the Defeasance.
(b) Closing Documents. The documents required to be delivered
to Lender on or before the Defeasance Closing Date pursuant to Section
3.10(a)(4) are:
(1) an opinion of counsel for Borrower, in form and
substance satisfactory to Lender, to the effect that Lender
has a valid and perfected lien and security interest of first
priority in the Substitute Collateral and the principal and
interest payable thereunder;
(2) an opinion of counsel for Borrower, in form and
substance satisfactory to Lender, that the Defeasance,
including both Borrower's granting to Lender of a lien and
security interest in the Substitute Collateral and the
assignment and assumption by Successor Borrower, and each of
them, when considered in combination and separately, are not
subject to avoidance under any applicable federal or state
laws, including Sections 547 and 548 of the U.S. Bankruptcy
Code;
(3) if a ▇▇▇▇▇▇ Mae Investment Security is not used
as Substitute Collateral, and unless waived by Lender, a
certificate in form and substance satisfactory to Lender,
issued by an independent certified public accountant, or
financial institution, approved by Lender, to the effect that
the Substitute Collateral will generate the Scheduled
Defeasance Payments;
(4) unless waived by Lender, an opinion of counsel
for Borrower in form and substance satisfactory to Lender,
that the Defeasance will not result in a "sale or exchange" of
any Base Facility Note within the meaning of Section 1001(c)
of the Internal Revenue Code and the temporary and final
regulations promulgated thereunder;
(5) such other opinions, certificates, documents or
instruments as Lender may reasonably request; and
(7) three counterparts of the executed Assignment and
Assumption Agreement described in Section 3.10(e).
(c) Release. Upon Borrower's compliance with the requirements
of Sections 3.10(a)(1) through (7), the Mortgaged Properties shall be
released from the lien of the Security Instruments (and all collateral
derived from such Mortgaged Properties, including assignments of
leases, fixture filings and other documents and instruments evidencing
a lien or security interest in Borrower's assets [except the Substitute
Collateral] shall be released). Lender shall, with reasonable
promptness, execute and deliver to Borrower, at Borrower's
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cost and expense, any additional documents reasonably requested by
Borrower in order to evidence or confirm the release of Lender's liens
and security interests described in the immediately preceding sentence.
(d) Defeasance Not Allowed. Borrower shall not have the right
to obtain Defeasance at any of the following times:
(1) before the third anniversary of the date of the
relevant Base Facility Note;
(2) after the expiration of the Defeasance Period; or
(3) after Lender has accelerated the maturity of the
unpaid principal balance of, accrued interest on, and other
amounts payable under, any Note pursuant to Paragraph 6 of
such Note.
(e) Assignment and Assumption. Upon Borrower's compliance with
the requirements of Section 3.10(a), Borrower shall assign all its
obligations and rights under the relevant Base Facility Note, together
with the Substitute Collateral, to a successor entity (the "Successor
Borrower") designated by Lender or, if not so designated by Lender,
designated by Borrower and acceptable to Lender in its sole discretion.
Borrower and Successor Borrower shall execute and deliver to Lender an
assignment and assumption agreement on a form provided by Lender (the
"Assignment and Assumption Agreement"). The Assignment and Assumption
Agreement shall provide for (i) the transfer and assignment by Borrower
to Successor Borrower of the Substitute Collateral, subject to the lien
and security interest in favor of Lender, (ii) the assumption by
Successor Borrower of all liabilities and obligations of Borrower under
the relevant Base Facility Note, and (iii) the release by Lender of
Borrower from all liabilities and obligations under the relevant Base
Facility Note. Lender shall, at Borrower's request and expense, execute
and deliver releases, reconveyances and security interest terminations
with respect to the released Mortgage Properties and all other
collateral held by Lender (except the Defeasance Deposit). The
Assignment and Assumption Agreement shall be executed by Lender with a
counterpart to be returned by Lender to Borrower and Successor Borrower
thereafter; provided, however, in all events that it shall not be a
condition of Defeasance that the Assignment and Assumption Agreement be
executed by Lender, or any Successor Borrower that is designated by
Lender.
(f) Agent. If the Defeasance Notice provides that Lender will
make available a ▇▇▇▇▇▇ ▇▇▇ Investment Security for purchase by
Borrower for use as the Substitute Collateral, Borrower hereby
authorizes Lender to use, and appoints Lender as its agent and
attorney-in-fact for the purpose of using, the Defeasance Deposit
(including any portion thereof that constitutes the Defeasance
Commitment Fee) to purchase a ▇▇▇▇▇▇ Mae Investment Security.
(g) Administrative Provisions.
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(1) ▇▇▇▇▇▇ ▇▇▇ Security Liquidated Damages. If
Borrower timely pays the Defeasance Commitment Fee, and Lender
and Borrower timely transmit a signed facsimile copy of the
Defeasance Notice pursuant to Section 3.10(a)(2), but Borrower
fails to perform its other obligations under Sections 3.10(a)
and Section 3.10(e), Lender shall have the right to retain the
Defeasance Commitment Fee as liquidated damages for Borrower's
default, as Lender's sole and exclusive remedy, and, except as
provided in Section 3.10(g)(2), Borrower shall be released
from all further obligations under this Section 3.10. Borrower
acknowledges that, from and after the date on which Lender has
executed the Defeasance Notice under Section 3.10(a)(2) and
Borrower has delivered the Defeasance Commitment Fee, Lender
will incur financing costs in arranging and preparing for the
purchase of the Substitute Collateral and in arranging and
preparing for the release of the Mortgaged Properties from the
lien of the Security Instruments in reliance on the executed
Defeasance Notice. Borrower agrees that the Defeasance
Commitment Fee represents a fair and reasonable estimate,
taking into account all circumstances existing on the date of
this Agreement, of the damages Lender will incur by reason of
Borrower's default.
(2) Third Party Costs. In the event that the
Defeasance is not consummated on the Defeasance Closing Date
for any reason, Borrower agrees to reimburse Lender and
Servicer for all third party costs and expenses (other than
financing costs covered by Section 4.0l(g)(1) above),
including attorneys' fees and expenses, incurred by Lender in
reliance on the executed Defeasance Notice, within 10 Business
Days after Borrower receives a written demand for payment,
accompanied by a statement, in reasonable detail, of Lender's
and Servicer's third party costs and expenses.
(3) Payments. All payments required to be made by
Borrower to Lender or Servicer pursuant to this Section 3.10
shall be made by wire transfer of immediately available finds
to the account(s) designated by Lender or Servicer, as the
case may be, in the Defeasance Notice.
(4) Notice. The Defeasance Notice delivered pursuant
to this Section 4.0l(g)(4) shall be in writing and shall be
sent by telecopier or facsimile machine which automatically
generates a transmission report that states the date and time
of the transmission, the length of the document transmitted
and the telephone number of the recipient's telecopier or
facsimile machine (or shall be sent by any distribution media,
whether currently existing or hereafter developed, including
electronic mail and internet distribution, as approved by
Lender). Any notice so sent addressed to the parties at their
respective addresses designated in the Defeasance Notice
pursuant to Section 3.10(a), shall be deemed to have been
received on the date and time indicated on the transmission
report of recipient. To be effective, Borrower must send the
Defeasance Notice (as described above) so that Lender receives
the Defeasance Notice no earlier than 11:00 a.m. and no later
than 3:00 p.m. Washington, D.C. time on a Business Day.
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(h) Definitions. For purposes of this Section 3.10, the
following terms shall have the following meanings:
(1) The term "Annual Yield" means the yield for the
theoretical zero coupon U.S. Treasury Security as calculated
from the current "on-the-run" U.S. Treasury yield curve with a
term to maturity that most closely matches the Applicable
Defeasance Term for the Mortgage Payment, as published by
▇▇▇▇▇▇ Mae on MORNET(R) (or in an alternative electronic
format) at 2:00 p.m. Washington, D.C. time on the Business Day
that Lender receives the Defeasance Notice in accordance with
Section 3.10(g)(4). If the publication of yields on MORNET(R)
is unavailable, Lender shall determine yields from another
source determined by Lender.
(2) The term "Applicable Defeasance Term" means, in
the case of each Mortgage Payment, the number of calendar
months, based on a year containing 12 calendar months with 30
days each, in the period beginning on the first day of the
first calendar month after the Defeasance Closing Date to the
date on which such Mortgage Payment is due and payable.
(3) The term "Defeasance" means the transaction in
which all (but not less than all) of the Mortgaged Properties
are released from the lien of the Security Instruments and
Lender receives, as substitute collateral, a valid and
perfected lien and security interest of first priority in the
Substitute Collateral and the principal and interest payable
thereunder.
(4) The term "Defeasance Commitment Fee" means the
amount specified in the Defeasance Notice as Borrower's good
faith deposit to ensure performance of its obligations under
this Section, which shall equal two percent (2%) of the
aggregate unpaid principal balance of the Base Facility Note
subject to Defeasance as of the Defeasance Notice Effective
Date, if the Successor Borrower is designated by Borrower
under Section 3.10(e), or one percent (1%) of the aggregate
unpaid principal balance of the Base Facility Note subject to
Defeasance as of the Defeasance Notice Effective Date if the
Successor Borrower is designated by Lender under Section
3.10(e). No Defeasance Commitment Fee will be applicable if
U.S. Treasury Securities are specified in the Defeasance
Notice as the applicable Investment Security.
(5) The term "Defeasance Deposit" means an amount
equal to the sum of the present value of each Mortgage Payment
that becomes due and payable during the period beginning on
the first day of the second calendar month after the
Defeasance Closing Date and ending on the Stated Maturity
Date, where the present value of each Mortgage Payment is
determined using the following formula:
the amount of the Mortgage Payment
--------------------------------------------------
n
(1 + (the Annual Yield/12)
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For this purpose, the last Mortgage Payment due and
payable on the Stated Maturity Date shall include the
amounts that would constitute the unpaid principal
balance of the Base Facility Note subject to
Defeasance on the Stated Maturity Date if all prior
Mortgage Payments were paid on their due dates and
"n" shall equal the Applicable Defeasance Term.
(6) The term "Defeasance Period" means the period
beginning on the earliest permitted date determined under
Section 3.10(d)(l) and ending on the 90th day before the
Stated Maturity Date.
(7) The term "Defeasance Notice Effective Date" means
the date on which Lender provides confirmation of the
Defeasance Notice pursuant to Section 3.10(a)(2).
(8) The term "▇▇▇▇▇▇ ▇▇▇ Investment Security" means
any bond, debenture, note, participation certificate or other
similar obligation issued by ▇▇▇▇▇▇ Mae in connection with the
Defeasance which provides for Scheduled Defeasance Payments
beginning in the second calendar month after the Defeasance
Closing Date.
(9) The term "Investment Security" means:
(A) If offered by Lender pursuant to the
Defeasance Notice, a ▇▇▇▇▇▇ ▇▇▇ Investment Security
purchased in the manner described in Sections
3.10(a)(6) and 3.10(f), and
(B) If no ▇▇▇▇▇▇ Mae Investment Security is
offered by Lender pursuant to the Defeasance Notice,
U.S. Treasury Securities.
(10) The term "Mortgage Payment" means the amount of
each regularly scheduled monthly payment of principal and
interest due and payable under the Base Facility Note subject
to Defeasance during the period beginning on the first day of
the second calendar month after the Defeasance Closing Date
and ending on the Stated Maturity Date, and the amount that
would constitute the aggregate unpaid principal balance of the
Base Facility Note subject to Defeasance on the Stated
Maturity Date if all prior Mortgage Payments were paid on
their due dates.
(11) The term "Next Scheduled P&I Payment" means an
amount equal to the monthly installment of principal and
interest due under the Base Facility Note subject to
Defeasance on the first day of the first calendar month after
the Defeasance Closing Date.
(12) The term "Scheduled Defeasance Payments" means
payments prior and as close as possible to (but in no event
later than) the successive scheduled dates on which Mortgage
Payments are required to be paid under the Base Facility Note
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subject to Defeasance and in amounts equal to or greater than
the scheduled Mortgage Payments due and payable on such dates
under the Base Facility Note subject to Defeasance.
(13) The term "Stated Maturity Date" means the
Maturity Date specified in the Base Facility Note subject to
Defeasance determined without regard to Lender's exercise of
any right of acceleration of the Base Facility Note subject to
Defeasance.
(14) The term "U.S. Treasury Securities" means
direct, non-callable and non-redeemable obligations of the
United States of America which provided for Scheduled
Defeasance Payments beginning in the second calendar month
after the Defeasance Closing Date.
ARTICLE IV
RATE SETTING FOR THE ADVANCES
SECTION 4.01 Rate Setting for an Advance. Rates for an Advance shall be set in
accordance with the following procedures:
(a) Preliminary, Nonbinding Quote. At the Borrower's request
the Lender shall quote to the Borrower an estimate of the MBS Pass-Through Rate
(for a proposed Base Facility Advance) or MBS Imputed Interest Rate (for a
proposed Revolving Advance) for a ▇▇▇▇▇▇ ▇▇▇ MBS backed by a proposed Advance.
The Lender's quote shall be based on (i) a solicitation of bids from
institutional investors selected by the Lender and (ii) the proposed terms and
amount of the Advance selected by the Borrower. The quote shall not be binding
upon the Lender.
(b) Rate Setting. If the Borrower satisfies all of the
conditions to the Lender's obligation to make the Advance in accordance with
Article V, then the Borrower may propose a MBS Pass-Through Rate (for a Base
Facility Advance) or MBS Imputed Interest Rate (for a Revolving Advance) by
submitting to the Lender by facsimile transmission a completed and executed
document, in the form attached as Exhibit M to this Agreement ("Rate Setting
Form"), before 1:00 p.m. Washington, D.C. time on any Business Day ("Rate
Setting Date"). The Rate Setting Form contains various factual certifications
required by the Lender and specifies:
(i) for a Revolving Advance, the amount, term, MBS
Issue Date, Revolving Facility Fee, the proposed maximum Coupon Rate
("Maximum Annual Coupon Rate") and Closing Date for the Advance; and
(ii) for a Base Facility Advance, the amount, term,
MBS Issue Date, Base Facility Fee, Maximum Annual Coupon Rate, Price
(which will be in a range between 99-1/2 and 100-1/2), Yield
Maintenance Period, Yield Rate Security, Amortization Period and
Closing Date for the Advance.
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(c) Rate Confirmation. Within one Business Day after receipt
of the completed and executed Rate Setting Form, the Lender shall solicit bids
from institutional investors selected by the Lender based on the information in
the Rate Setting Form and, provided the actual Coupon Rate (if the low bid were
accepted) would be at or below the Maximum Annual Coupon Rate, shall obtain a
commitment ("MBS Commitment") for the purchase of a ▇▇▇▇▇▇ Mae MBS having the
bid terms described in the related Rate Setting Form, and shall immediately
deliver to the Borrower by facsimile transmission a completed document, in the
form attached as Exhibit N to this Agreement ("Rate Confirmation Form"). The
Rate Confirmation Form will confirm:
(i) for a Revolving Advance, the amount, term, MBS
Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Revolving
Facility Fee, Coupon Rate, Discount, Price, and Closing Date for the
Advance; and
(ii) for a Base Facility Advance, the amount, term,
MBS Issue Date, MBS Delivery Date, MBS Pass-Through Rate, Base Facility
Fee, Coupon Rate, Price, Yield Maintenance Period, Specified U.S.
Treasury Security, Amortization Period and Closing Date for the
Advance.
SECTION 4.02 Advance Confirmation Instrument for Revolving Advances. On or
before the Closing Date for a Revolving Advance, the Borrower shall execute and
deliver to the Lender an instrument ("Advance Confirmation Instrument"), in the
form attached as Exhibit O to this Agreement, confirming the amount, term, MBS
Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Revolving Facility
Fee, Coupon Rate, Discount, Price and Closing Date for the Advance, and the
Borrower's obligation to repay the Advance in accordance with the terms of the
Notes and this Agreement. Upon the funding of the Revolving Advance, the Lender
shall note the date of funding in the appropriate space at the foot of the
Advance Confirmation Instrument and deliver a copy of the completed Advance
Confirmation Instrument to the Borrower. The Lender's failure to do so shall not
invalidate the Advance Confirmation Instrument or otherwise affect in any way
any obligation of the Borrower to repay Revolving Advances in accordance with
the Advance Confirmation Instrument, the Revolving Facility Note or the other
Loan Documents, but is merely meant to facilitate evidencing the date of funding
and to confirm that the Advance Confirmation Instrument is not effective until
the date of funding.
SECTION 4.03 Breakage and other Costs. In the event that the Lender obtains an
MBS Commitment and the Lender fails to fulfill the MBS Commitment because the
Advance is not made (for a reason other than the default of the Lender to make
the Advance), the Borrower shall pay all breakage and other costs, fees and
damages incurred by the Lender in connection with its failure to fulfill the MBS
Commitment.
ARTICLE V
MAKING THE ADVANCES
SECTION 5.01 Initial Advance. The Borrower may make a request ("Initial Advance
Request") for the Lender to make the Initial Advance. If all conditions
contained in this Section are satisfied
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on or before the Closing Date for the Initial Advance, the Lender shall make the
Initial Advance on the Initial Closing Date or on another date selected by the
Borrower and approved by the Lender. The obligation of the Lender to make the
Initial Advance is subject to the following conditions precedent:
(a) Receipt by the Lender of the Initial Advance Request;
(b) Receipt by the Lender of one or more counterparts of the
Cash Management Agreement, dated as of the Initial Closing Date;
(c) Receipt by the Lender of one or more counterparts of the
Hedge Security Agreement, dated as of the Initial Closing Date, signed by the
Borrower;
(d) The delivery to the Title Company, for filing and/or
recording in all applicable jurisdictions, of all applicable Loan Documents
required by the Lender, including duly executed and delivered original copies of
the Revolving Facility Note, a Base Facility Note, the REIT's Guaranty, the
Initial Security Instruments covering the Initial Mortgaged Properties and UCC-1
Financing Statements covering the portion of the Collateral comprised of
personal property, and other appropriate instruments, in form and substance
satisfactory to the Lender and in form proper for recordation, as may be
necessary in the opinion of the Lender to perfect the Liens created by the
applicable Security Instruments and any other Loan Documents creating a Lien in
favor of the Lender, and the payment of all taxes, fees and other charges
payable in connection with such execution, delivery, recording and filing;
(e) If the Advance is a Revolving Advance, the receipt by the
Lender of the first installment of Revolving Facility Fee for the Revolving
Advance and the entire Discount for the Revolving Advance payable by the
Borrower pursuant to Section 2.04;
(f) The receipt by the Lender of the Initial Origination Fee
pursuant to Section 16.02(a), the Initial Due Diligence Fee pursuant to Section
16.03(a), all legal fees and expenses payable pursuant to Section 16.04(a) and
all legal fees and expenses payable in connection with the Initial Advance
pursuant to Section 16.04(b); and
(g) The satisfaction of all applicable General Conditions set
forth in Article XI.
SECTION 5.02 Future Advances. In order to obtain a Future Advance, the Borrower
may from time to time deliver a written request for a Future Advance ("Future
Advance Request") to the Lender, in the form attached as Exhibit P to this
Agreement. Each Future Advance Request shall be accompanied by (a) a designation
of the amount of the Future Advance requested, and (b) a designation of the
maturity date of the Advance. Each Future Advance Request shall be in the
minimum amount of $3,000,000. If all conditions contained in Section 5.03 are
satisfied, the Lender shall make the requested Future Advance, at a closing to
be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring on a date selected by the Borrower, which date shall be
not more than three (3) Business Days, after the Lender's receipt of the Future
Advance Request and the Borrower's receipt of the Rate Confirmation Form (or on
such
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other date to which the Borrower and the Lender may agree). The Lender reserves
the right to require that the Borrower post a deposit at the time the MBS
Commitment is obtained as an additional condition to the Lender's obligation to
make the Future Advance.
SECTION 5.03 Conditions Precedent to Future Advances. The obligation of the
Lender to make a requested Future Advance is subject to the following conditions
precedent:
(a) The receipt by the Lender of a Future Advance Request;
(b) The Lender has delivered the Rate Setting Form for the
Future Advance to the Borrower;
(c) After giving effect to the requested Future Advance, the
Coverage and LTV Tests will be satisfied;
(d) If the Advance is a Base Facility Advance, delivery of a
Base Facility Note, duly executed by the Borrower, in the amount of the Advance,
reflecting all of the terms of the Base Facility Advance;
(e) If the Advance is a Revolving Advance, delivery of the
Advance Confirmation Instrument, duly executed by the Borrower;
(f) For any Title Insurance Policy not containing a Revolving
Credit Endorsement, the receipt by the Lender of an endorsement to the Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date and showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date and other exceptions approved by
the Lender;
(g) If the Advance is a Revolving Advance, the receipt by the
Lender of the first installment of Revolving Facility Fee for the Revolving
Advance and the entire Discount for the Revolving Advance payable by the
Borrower pursuant to Section 2.04;
(h) The receipt by the Lender of all legal fees and expenses
payable by the Borrower in connection with the Future Advance pursuant to
Section 16.04(b); and
(i) The satisfaction of all applicable General Conditions set
forth in Article XI.
ARTICLE VI
ADDITIONS OF COLLATERAL
SECTION 6.01 Right to Add Collateral. Subject to the terms and conditions of
this Article, the Borrower shall have the right, from time to time during the
Term of this Agreement, to add Multifamily Residential Properties to the
Collateral Pool in accordance with the provisions of this Article.
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SECTION 6.02 Procedure for Adding Collateral. The procedure for adding
Collateral set forth in this Section 6.02 shall apply to all additions of
Collateral in connection with this Agreement, including but not limited to
additions of Collateral in connection with substitutions of Collateral and
expansion of the Credit Facility.
(a) Request. The Borrower may, not more than once each
Calendar Quarter, deliver a written request ("Collateral Addition Request") to
the Lender, in the form attached as Exhibit Q to this Agreement, to add one or
more Multifamily Residential Properties to the Collateral Pool. Each Collateral
Addition Request shall be accompanied by the following:
(i) The information relating to the proposed
Additional Mortgaged Property required by the form attached as Exhibit
R to this Agreement ("Collateral Addition Description Package"), as
amended from time to time to include information required under the DUS
Guide; and
(ii) The payment of all Additional Collateral Due
Diligence Fees pursuant to Section 16.03(b).
(b) Additional Information. The Borrower shall promptly
deliver to the Lender any additional information concerning the proposed
Additional Mortgaged Property that the Lender may from time to time reasonably
request.
(c) Underwriting. The Lender shall evaluate the proposed
Additional Mortgaged Property, and shall make underwriting determinations as to
the Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period and
the Aggregate Loan to Value Ratio for the Trailing 12 Month Period applicable to
the Collateral Pool, on the basis of the lesser of (i) the acquisition price of
the proposed Additional Mortgaged Property or (ii) a Valuation made with respect
to the proposed Additional Mortgaged Property, and otherwise in accordance with
▇▇▇▇▇▇ Mae's DUS Underwriting Requirements. Within 30 days after receipt of (i)
the Collateral Addition Request for the Additional Mortgaged Property and (ii)
all reports, certificates and documents set forth on Exhibit S to this
Agreement, including a zoning analysis undertaken in accordance with Section 206
of the DUS Guide, the Lender shall notify the Borrower whether or not it shall
consent to the addition of the proposed Additional Mortgaged Property to the
Collateral Pool and, if it shall so consent, shall set forth the Aggregate Debt
Service Coverage Ratios for the Trailing 12 Month Period and the Aggregate Loan
to Value Ratio for the Trailing 12 Month Period which it estimates shall result
from the addition of the proposed Additional Mortgaged Property to the
Collateral Pool. If the Lender declines to consent to the addition of the
proposed Additional Mortgaged Property to the Collateral Pool, the Lender shall
include, in its notice, a brief statement of the reasons for doing so. Within
five Business Days after receipt of the Lender's notice that it shall consent to
the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, the Borrower shall notify the Lender whether or not it elects to cause the
proposed Additional Mortgaged Property to be added to the Collateral Pool. If
the Borrower fails to respond within the period of five Business Days, it shall
be conclusively deemed to have elected not to cause the proposed Additional
Mortgaged Property to be added to the Collateral Pool.
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(d) Closing. If, pursuant to subsection (c), the Lender
consents to the addition of the proposed Additional Mortgaged Property to the
Collateral Pool, the Borrower timely elects to cause the proposed Additional
Mortgaged Property to be added to the Collateral Pool and all conditions
contained in Section 6.03 are satisfied, the Lender shall permit the proposed
Additional Mortgaged Property to be added to the Collateral Pool, at a closing
to be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring within 30 Business Days after the Lender's receipt of the
Borrower's election (or on such other date to which the Borrower and the Lender
may agree), provided that in any Calendar Quarter, the Closing Date for any
addition of an Additional Mortgaged Property to the Collateral Pool shall be on
the same day as the Closing Date of any release or substitution pursuant to
Article VII of this Agreement and any increase in the Credit Facility pursuant
to Article VIII of this Agreement.
SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged
Property to the Collateral Pool. The addition of an Additional Mortgaged
Property to the Collateral Pool on the Closing Date applicable to the Additional
Mortgaged Property is subject to the satisfaction of the following conditions
precedent:
(a) The receipt by the Lender of the Collateral Addition Fee
and all legal fees and expenses payable by the Borrower in connection with the
Collateral Addition pursuant to Section 16.04(b);
(b) The delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Collateral Addition Loan Documents required by the
Lender, including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Lien created by the applicable additional Security Instrument, and
any other Collateral Addition Loan Document creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;
(c) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Additional Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so amended,
the receipt by the Lender of an endorsement to the Title Insurance Policy
insuring the Security Instrument, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional exceptions to
coverage other than the exceptions shown on the Initial Closing Date and other
exceptions approved by the Lender;
(d) If the Title Insurance Policy for the Additional Mortgaged
Property contains a Tie-In Endorsement, an endorsement to each other Title
Insurance Policy containing a Tie-In Endorsement, adding a reference to the
Additional Mortgaged Property; and
(e) The satisfaction of all applicable General Conditions set
forth in Article XI.
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ARTICLE VII
RELEASES OF COLLATERAL
SECTION 7.01 Right to Obtain Releases of Collateral. Subject to the terms and
conditions of this Article, the Borrower shall have the right to obtain a
release of Collateral from the Collateral Pool in accordance with the provisions
of this Article.
SECTION 7.02 Procedure for Obtaining Releases of Collateral.
(a) Request. In order to obtain a release of Collateral from
the Collateral Pool, the Borrower may, not more than once each Calendar Quarter,
deliver a written request for the release of Collateral from the Collateral Pool
("Collateral Release Request") to the Lender, in the form attached as Exhibit T
to this Agreement. The Collateral Release Request shall not result in a
termination of all or any part of the Credit Facility. The Borrower may only
terminate all or any part of the Credit Facility by delivering a Revolving
Facility Termination Request or Credit Facility Termination Request pursuant to
Articles IX or X. The Collateral Release Request shall be accompanied by (and
shall not be effective unless it is accompanied by) the name, address and
location of the Mortgaged Property to be released from the Collateral Pool
("Collateral Release Property").
(b) Closing. If all conditions contained in Section 7.03 are
satisfied, the Lender shall cause the Collateral Release Property to be released
from the Collateral Pool, at a closing to be held at offices designated by the
Lender on a Closing Date selected by the Lender, and occurring within 30 days
after the Lender's receipt of the Collateral Release Request (or on such other
date to which the Borrower and the Lender may agree, provided that in any
Calendar Quarter, the Closing Date for any release shall be on the same day as
the Closing Date of any addition of an Additional Mortgaged Property to the
Collateral Pool pursuant to Article VI of this Agreement or any increase in the
Credit Facility pursuant to Article VIII of this Agreement), by executing and
delivering, and causing all applicable parties to execute and deliver, all at
the sole cost and expense of the Borrower, instruments, in the form customarily
used by the Lender for releases in the jurisdiction governing the perfection of
the security interest being released, releasing the applicable Security
Instrument as a Lien on the Collateral Release Property, and UCC-3 Termination
Statements terminating the UCC-1 Financing Statements perfecting a Lien on the
portion of the Collateral Release Property comprised of personal property and
such other documents and instruments as the Borrower may reasonably request
evidencing the release of the applicable Collateral from any lien securing the
Obligations (including a termination of any restriction on the use of any
accounts relating to the Collateral Release Property) and the release and return
to the Borrower of any and all escrowed amounts relating thereto. The
instruments referred to in the preceding sentence are referred to in this
Article as the "Collateral Release Documents."
(c) Release Price. The "Release Price" for each Mortgaged
Property means the greater of (i) 125% of the Allocable Facility Amount for the
Mortgaged Property to be released and (ii) the amount, if any, of Advances
Outstanding which are required to be repaid by the Borrower to the Lender in
connection with the proposed release of the Mortgaged Property from the
Collateral
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Pool, so that, immediately after the release, the Coverage and LTV Tests will be
satisfied and neither the Aggregate Debt Service Coverage Ratios for the
Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value Ratio
for the Trailing 12 Month Period will be increased as a result of such release.
Notwithstanding the foregoing, in the case of releases of Mortgaged Properties
on the Revolving Facility Termination Date with respect to the Five Year
Revolving Facility, the Release Price shall be (ii) above. In addition to the
Release Price, the Borrower shall pay to the Lender all associated prepayment
premiums and other amounts due under the Notes and any Advance Confirmation
Instruments evidencing the Advances being repaid. Lender shall determine the
Allocable Facility Amount for each Mortgaged Property on the Initial Closing
Date and on or before March 1 of each year (commencing March 1, 2000) during the
term of this Agreement (the "Determination Date"). Once determined by Lender as
aforesaid, the Allocable Facility Amount for each Mortgaged Property shall be
promptly disclosed to Borrower by Lender and shall remain in effect until the
next Determination Date.
(d) Application of Release Price. The Release Price shall be
applied against the Revolving Advances Outstanding until there are no further
Revolving Advances Outstanding, and thereafter shall be held by the Lender (or
its appointed collateral agent) as substituted Collateral ("Substituted Cash
Collateral"), in accordance with a security agreement and other documents in
form and substance acceptable to the Lender (or, at the Borrower's option, may
be applied against the prepayment of Base Facility Advances, so long as the
prepayment is permitted under the Base Facility Note for the Base Facility
Advance). Any portion of the Release Price held as Substituted Cash Collateral
may be released if, immediately after giving effect to the release, each of the
conditions set forth in Section 7.03(a) below shall have been satisfied. If, on
the date on which the Borrower pays the Release Price, Revolving Advances are
Outstanding but are not then due and payable, the Lender shall hold the payments
as additional Collateral for the Credit Facility, until the next date on which
Revolving Advances are due and payable, at which time the Lender shall apply the
amounts held by it to the amounts of the Revolving Advances due and payable.
SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from
the Collateral. The obligation of the Lender to release a Collateral Release
Property from the Collateral Pool by executing and delivering the Collateral
Release Documents on the Closing Date, are subject to the satisfaction of the
following conditions precedent on or before the Closing Date:
(a) Immediately after giving effect to the requested release
the Coverage and LTV Tests will be satisfied, and in the case of any
substitution effected pursuant to Section 7.04 of this Agreement, the Coverage
and LTV Tests are not adversely affected after giving effect to the proposed
substitution;
(b) Receipt by the Lender of the Release Price;
(c) Receipt by the Lender of the Release Fee for the
Collateral Release Property and all legal fees and expenses payable by the
Borrower in connection with the release pursuant to Section 16.04(b);
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(d) Receipt by the Lender on the Closing Date of one or more
counterparts of each Collateral Release Document, dated as of the Closing Date,
signed by each of the parties (other than the Lender) who is a party to such
Collateral Release Document;
(e) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the release of the Collateral Release Property
from the Collateral Pool and, as to any Security Instrument so amended, the
receipt by the Lender of an endorsement to the Title Insurance Policy insuring
the Security Instrument, amending the effective date of the Title Insurance
Policy to the Closing Date and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date and other exceptions
approved by the Lender;
(f) If the Lender determines the Collateral Release Property
to be one phase of a project, and one or more other phases of the project are
Mortgaged Properties which will remain in the Collateral Pool ("Remaining
Mortgaged Properties"), the Lender's determination that the Remaining Mortgaged
Properties can be operated separately from the Collateral Release Property and
any other phases of the project which are not Mortgaged Properties. In making
this determination, the Lender shall evaluate whether the Remaining Mortgaged
Properties comply with the terms of Sections 203 and 208 of the DUS Guide,
which, as of the date of this Agreement, require, among other things, that a
phase which constitutes collateral for a loan made in accordance with the terms
of the DUS Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather road or by
access to such a road by means of a satisfactory easement, (ii) have access
which is sufficiently attractive and direct from major thoroughfares to be
conducive to continued good marketing, (iii) have a location which is not (A)
inferior to other phases, (B) such that inadequate maintenance of other phases
would have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project and
(iv) comply with such other issues as are dictated by prudent practice;
(g) Receipt by the Lender of endorsements to the Tie-In
Endorsements of the Title Insurance Policies, if deemed necessary by the Lender,
to reflect the release;
(h) Receipt by the Lender on the Closing Date of a writing,
dated as of the Closing Date, signed by the Borrower Parties, in the form
attached as Exhibit U to this Agreement, pursuant to which the Borrower Parties
confirm that their obligations under the Loan Documents are not adversely
affected by the release of the Collateral Release Property from the Collateral;
(i) The remaining Mortgaged Properties in the Collateral Pool
shall satisfy the then-existing Geographical Diversification Requirements; and
(j) The satisfaction of all applicable General Conditions set
forth in Article XI.
SECTION 7.04 Substitutions. Subject to the terms, conditions and limitations of
Articles VI and VII and provided that the Valuation of the Multifamily
Residential Property sought to be added to the Collateral Pool equals or exceeds
the Valuation of the Mortgaged Property sought to be released from the
Collateral Pool, the Borrower may simultaneously add a Multifamily Residential
Property
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to the Collateral Pool and release a Mortgaged Property from the Collateral
Pool, thereby effecting a substitution of Collateral, provided that Sections
7.02(c), 7.02(d) and 7.03(b) shall not apply to a substitution of Collateral.
ARTICLE VIII
EXPANSION OF CREDIT FACILITY
SECTION 8.01 Right to Increase Commitment. Subject to the terms, conditions and
limitations of this Article, the Borrower shall have the right, at any time or
from time to time during the Base Facility Availability Period, to increase the
Base Facility Commitment, the Revolving Facility Commitment, or both. The
Borrower's right to increase the Commitment is subject to the following
limitations:
(a) Commitment. After giving effect to the proposed increase,
the Commitment (without regard to the actual amount of Revolving Advances
Outstanding, but taking into account the aggregate original principal amount of
all Base Facility Advances made under this Agreement to the Closing Date) shall
not exceed $350,000,000.
(b) Minimum Request. Each Request for an increase in the
Commitment shall be in the minimum amount of $25,000,000.
(c) Terms and Conditions. The terms and conditions of this
Agreement shall apply to any increase in the Commitment closed not later than
the date 12 months after the Initial Closing Date. The terms and conditions
(including pricing) applicable to any increase in the Commitment after the date
12 months after the Initial Closing Date shall be acceptable to Lender in its
discretion.
SECTION 8.02 Procedure for Obtaining Increases in Commitment.
(a) Request. In order to obtain an increase in the Commitment,
the Borrower shall deliver a written request for an increase (a "Credit Facility
Expansion Request") to the Lender, in the form attached as Exhibit V to this
Agreement. Each Credit Facility Expansion Request shall be accompanied by the
following:
(i) A designation of the amount of the proposed
increase;
(ii) A designation of the increase in the Base
Facility Credit Commitment and the Revolving Facility Credit
Commitment;
(iii) A request that the Lender inform the Borrower
of any change in the Geographical Diversification Requirements; and
(iv) A request that the Lender inform the Borrower of
the Base Facility Fee and the Revolving Facility Fee to apply to
Advances drawn from such increase in the Commitment.
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(b) Closing. If all conditions contained in Section 8.03 are
satisfied, the Lender shall permit the requested increase in the Commitment, at
a closing to be held at offices designated by the Lender on a Closing Date
selected by the Lender, and occurring within fifteen (15) Business Days after
the Lender's receipt of the Credit Facility Expansion Request (or on such other
date to which the Borrower and the Lender may agree), provided that in any
Calendar Quarter the Closing Date for addition of an Additional Mortgaged
Property to the Collateral Pool pursuant to Article VI of this Agreement and any
increase of the Credit Facility shall be on the same day as the Closing Date for
any release or substitution pursuant to Article VII of this Agreement.
SECTION 8.03 Conditions Precedent to Increase in Commitment. The right of the
Borrower to increase the Commitment is subject to the satisfaction of the
following conditions precedent on or before the Closing Date:
(a) After giving effect to the requested increase the Coverage
and LTV Tests will be satisfied;
(b) Payment by the Borrower of the Expansion Origination Fee
in accordance with Section 16.02(b) and all legal fees and expenses payable by
the Borrower in connection with the expansion of the Commitment pursuant to
Section 16.04(b);
(c) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date, increasing the limits of liability to the Commitment, as
increased under this Article, showing no additional exceptions to coverage other
than the exceptions shown on the Initial Closing Date (or, if applicable, the
last Closing Date with respect to which the Title Insurance Policy was endorsed)
and other exceptions approved by the Lender, together with any reinsurance
agreements required by the Lender;
(d) The receipt by the Lender of fully executed original
copies of all Credit Facility Expansion Loan Documents, each of which shall be
in full force and effect, and in form and substance satisfactory to the Lender
in all respects;
(e) if determined necessary by the Lender, the Borrower's
agreement to such geographical diversification requirements as the Lender may
determine; and
(f) The satisfaction of all applicable General Conditions set
forth in Article XI.
ARTICLE IX
COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY
SECTION 9.01 Right to Complete or Partial Termination of Revolving Facility.
Subject to the terms and conditions of this Article, the Borrower shall have the
right to permanently reduce the Revolving Facility Commitment in accordance with
the provisions of this Article.
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SECTION 9.02 Procedure for Complete or Partial Termination of Revolving
Facility.
(a) Request. In order to permanently reduce the Revolving
Facility Commitment, the Borrower may deliver a written request for the
reduction ("Revolving Facility Termination Request") to the Lender, in the form
attached as Exhibit W to this Agreement. A permanent reduction of the Revolving
Facility Commitment to $0 shall be referred to as a "Complete Revolving Facility
Termination." The Revolving Facility Termination Request shall be accompanied by
the following:
(i) A designation of the proposed amount of the
reduction in the Revolving Facility Commitment; and
(ii) Unless there is a Complete Revolving Facility
Termination, a designation by the Borrower of any Revolving Advances
which will be prepaid.
Any release of Collateral, whether or not made in connection with a Revolving
Facility Termination Request, must comply with all conditions to a release which
are set forth in Article VII.
(b) Closing. If all conditions contained in Section 9.03 are
satisfied, the Lender shall permit the Revolving Facility Commitment to be
reduced to the amount designated by the Borrower, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the Lender,
within fifteen (15) Business Days after the Lender's receipt of the Revolving
Facility Termination Request (or on such other date to which the Borrower and
the Lender may agree), by executing and delivering a counterpart of an amendment
to this Agreement, in the form attached as Exhibit X to this Agreement,
evidencing the reduction in the Revolving Facility Commitment. The document
referred to in the preceding sentence is referred to in this Article as the
"Revolving Facility Termination Document."
SECTION 9.03 Conditions Precedent to Complete or Partial Termination of
Revolving Facility. The right of the Borrower to reduce the Revolving Facility
Commitment and the obligation of the Lender to execute the Revolving Facility
Termination Document, are subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) Payment by the Borrower in full of all of the Revolving
Advances Outstanding required to be paid in order that the aggregate unpaid
principal balance of all Revolving Advances Outstanding is not greater than the
Revolving Facility Commitment, including any associated prepayment premiums or
other amounts due under the Notes (but if the Borrower is not required to prepay
all of the Revolving Advances, the Borrower shall have the right to select which
of the Revolving Advances shall be repaid);
(b) Payment by the Borrower of the Revolving Facility
Termination Fee;
(c) Receipt by the Lender on the Closing Date of one or more
counterparts of the Revolving Facility Termination Document, dated as of the
Closing Date, signed by each of the parties (other than the Lender) who is a
party to such Revolving Facility Termination Document; and
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(d) The satisfaction of all applicable General Conditions set
forth in Article XI.
ARTICLE X
TERMINATION OF CREDIT FACILITY
SECTION 10.01 Right to Terminate Credit Facility. Subject to the terms and
conditions of this Article, the Borrower shall have the right to terminate this
Agreement and the Credit Facility and receive a release of all of the Collateral
from the Collateral Pool in accordance with the provisions of this Article.
SECTION 10.02 Procedure for Terminating Credit Facility.
(a) Request. In order to terminate this Agreement and the
Credit Facility, the Borrower shall deliver a written request for the
termination ("Credit Facility Termination Request") to the Lender, in the form
attached as Exhibit Y to this Agreement.
(b) Closing. If all conditions contained in Section 10.03 are
satisfied, this Agreement shall terminate, and the Lender shall cause all of the
Collateral to be released from the Collateral Pool, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the Lender,
within 30 Business Days after the Lender's receipt of the Credit Facility
Termination Request (or on such other date to which the Borrower and the Lender
may agree), by executing and delivering, and causing all applicable parties to
execute and deliver, all at the sole cost and expense of the Borrower, (i)
instruments, in the form customarily used by the Lender for releases in the
jurisdictions in which the Mortgaged Properties are located, releasing all of
the Security Instruments as a Lien on the Mortgaged Properties, (ii) UCC-3
Termination Statements terminating all of the UCC-1 Financing Statements
perfecting a Lien on the personal property located on the Mortgaged Properties,
in form customarily used in the jurisdiction governing the perfection of the
security interest being released, (iii) such other documents and instruments as
the Borrower may reasonably request evidencing the release of the Collateral
from any lien securing the Obligations (including a termination of any
restriction on the use of any accounts relating to the Collateral) and the
release and return to the Borrower of any and all escrowed amounts relating
thereto, (iv) instruments releasing the REIT from its obligations under the
REIT's Guaranty and this Agreement and any and all other Loan Documents, and (v)
the Notes, each marked paid and canceled. The instruments referred to in the
preceding sentence are referred to in this Article as the "Facility Termination
Documents."
SECTION 10.03 Conditions Precedent to Termination of Credit Facility. The right
of the Borrower to terminate this Agreement and the Credit Facility and to
receive a release of all of the Collateral from the Collateral Pool and the
Lender's obligation to execute and deliver the Facility Termination Documents on
the Closing Date are subject to the following conditions precedent:
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(a) Payment by the Borrower in full of all of the Notes
Outstanding on the Closing Date, including any associated prepayment premiums or
other amounts due under the Notes and all other amounts owing by the Borrower to
the Lender under this Agreement;
(b) Defeasance by the Borrower, in accordance with the
provisions of Section 3.10 of this Agreement, with respect to all Base Facility
Notes Outstanding on the Closing Date;
(c) Payment of the Revolving Facility Termination Fee; and
(d) The satisfaction of all applicable General Conditions set
forth in Article XI.
ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS
The obligation of the Lender to close the transaction requested in a
Request shall be subject to the following conditions precedent ("General
Conditions") in addition to any other conditions precedent set forth in this
Agreement:
SECTION 11.01 Conditions Applicable to All Requests. Each of the following
conditions precedent shall apply to all Requests:
(a) Payment of Expenses. The payment by the Borrower of the
Lender's fees and expenses payable in accordance with this Agreement for which
the Lender has presented an invoice on or before the Closing Date for the
Request.
(b) No Material Adverse Change. There has been no material
adverse change in the financial condition, business or prospects of the Borrower
Parties or in the physical condition, operating performance or value of any of
the Mortgaged Properties since the Initial Closing Date (or, with respect to the
conditions precedent to the Initial Advance, from the condition, business or
prospects reflected in the financial statements, reports and other information
obtained by the Lender during its review of the Borrower Parties and the Initial
Mortgaged Properties).
(c) No Default. There shall exist no Event of Default or
Potential Event of Default on the Closing Date for the Request and, after giving
effect to the transaction requested in the Request, no Event of Default or
Potential Event of Default shall have occurred.
(d) No Insolvency. Receipt by the Lender on the Closing Date
for the Request of evidence satisfactory to the Lender that no Borrower Party is
insolvent (within the meaning of any applicable federal or state laws relating
to bankruptcy or fraudulent transfers) or will be rendered insolvent by the
transactions contemplated by the Loan Documents, including the making of a
Future Advance, or, after giving effect to such transactions, will be left with
an unreasonably small capital with which to engage in its business or
undertakings, or will have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature or will have intended
to hinder, delay or defraud any existing or future creditor.
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(e) No Untrue Statements. The Loan Documents shall not contain
any untrue or misleading statement of a material fact and shall not fail to
state a material fact necessary in order to make the information contained
therein not misleading.
(f) Representations and Warranties. All representations and
warranties made by any Borrower Party in the Loan Documents shall be true and
correct in all material respects on the Closing Date for the Request with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date for the Request.
(g) No Condemnation or Casualty. There shall not be pending or
threatened any condemnation or other taking, whether direct or indirect, against
any Mortgaged Property and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property.
(h) Delivery of Closing Documents. The receipt by the Lender
of the following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:
(i) A Compliance Certificate;
(ii) An Organizational Certificate; and
(iii) Such other documents, instruments, approvals
(and, if requested by the Lender, certified duplicates of executed
copies thereof) and opinions as the Lender may request.
(i) Covenants. The Borrower Parties are in full compliance
with each of the covenants set forth in Articles XIII, XIV and XV of this
Agreement, without giving effect to any notice and cure rights of the Borrower
Parties.
SECTION 11.02 Delivery of Closing Documents Relating to Initial Advance Request,
Collateral Addition Request, Credit Facility Expansion Request or Future Advance
Request. With respect to the closing of the Initial Advance Request, a
Collateral Addition Request, or a Credit Facility Expansion Request, it shall be
a condition precedent that the Lender receives each of the following, each dated
as of the Closing Date for the Request, in form and substance satisfactory to
the Lender in all respects:
(a) Loan Documents. Fully executed original copies of each
Loan Document required to be executed in connection with the Request, duly
executed and delivered by the parties thereto (other than the Lender), each of
which shall be in full force and effect.
(b) Opinion. Favorable opinions of counsel to the Borrower
Parties, as to the due organization and qualification of the Borrower Parties,
the due authorization, execution, delivery and enforceability of each Loan
Document executed in connection with the Request and such other matters as the
Lender may require.
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SECTION 11.03 Delivery of Property-Related Documents. With respect to each of
the Mortgaged Properties to be made part of the Collateral Pool on the Closing
Date for the Initial Advance Request or a Collateral Addition Request, it shall
be a condition precedent that the Lender receive each of the following, each
dated as of the Closing Date for the Initial Advance Request or Collateral
Addition Request, as the case may be, in form and substance satisfactory to the
Lender in all respects:
(a) A favorable opinion of local counsel to the Borrower
Parties or the Lender as to the enforceability of the Security Instrument, and
any other Loan Documents, executed in connection with the Request.
(b) A commitment for the Title Insurance Policy applicable to
the Mortgaged Property and a pro forma Title Insurance Policy based on the
Commitment.
(c) The Insurance Policy (or a certified copy of the Insurance
Policy) applicable to the Mortgaged Property.
(d) The Survey applicable to the Mortgaged Property.
(e) Evidence satisfactory to the Lender of compliance of the
Mortgaged Property with property laws as required by Sections 205 and 206 of
Part III of the DUS Guide.
(f) An Appraisal of the Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the
establishment of a replacement reserve account, to be pledged to the Lender, in
which the owner shall (unless waived by the Lender) periodically deposit amounts
for replacements for improvements at the Mortgaged Property and as additional
security for the Borrower Parties' obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, on the
standard form required by the DUS Guide.
(i) An Assignment of Management Agreement, on the standard
form required by the DUS Guide.
(j) An Assignment of Leases and Rents, if the Lender
determines one to be necessary or desirable, provided that the provisions of any
such assignment shall be substantively identical to those in the Security
Instrument covering the Collateral, with such modifications as may be
necessitated by applicable state or local law.
(k) With respect to a Collateral Addition Request, an
amendment to the Cash Management Agreement executed by the Borrower on the
Initial Closing Date, adding the Borrower as a party and adding a Property
Account for the Mortgaged Property.
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ARTICLE XII
REPRESENTATIONS AND WARRANTIES
SECTION 12.01 Representations and Warranties of the Borrower Parties. Each
Borrower Party hereby represents and warrants to the Lender, with respect to
itself, as follows:
(a) Due Organization; Qualification.
(1) The REIT is qualified to transact business and is
in good standing in the State of Maryland. The Borrower Party is
qualified to transact business and is in good standing in the State in
which it is organized and in each other jurisdiction in which such
qualification and/or standing is necessary to the conduct of its
business and where the failure to be so qualified would adversely
affect the validity of, the enforceability of, or the ability of the
Borrower Party to perform the Obligations under this Agreement and the
other Loan Documents. The Borrower is qualified to transact business
and is in good standing in each State in which it owns a Mortgaged
Property.
(2) The Borrower Party's principal place of business,
principal office and office where it keeps its books and records as to
the Collateral is located at its address set out in Section 23.08.
(b) Power and Authority. The Borrower Party has the requisite
power and authority (i) to own its properties and to carry on its business as
now conducted and as contemplated to be conducted in connection with the
performance of the Obligations hereunder and under the other Loan Documents and
(ii) to execute and deliver this Agreement and the other Loan Documents and to
carry out the transactions contemplated by this Agreement and the other Loan
Documents.
(c) Due Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents have been duly authorized by all
necessary action and proceedings by or on behalf of the Borrower Party, and no
further approvals or filings of any kind, including any approval of or filing
with any Governmental Authority, are required by or on behalf of the Borrower
Party as a condition to the valid execution, delivery and performance by the
Borrower Party of this Agreement or any of the other Loan Documents.
(d) Valid and Binding Obligations. This Agreement and the
other Loan Documents have been duly authorized, executed and delivered by the
Borrower Party and constitute the legal, valid and binding obligations of the
Borrower Party, enforceable against the Borrower Party in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the enforcement of creditors' rights generally or by
equitable principles or by the exercise of discretion by any court.
(e) Non-contravention; No Liens. Neither the execution and
delivery of this Agreement and the other Loan Documents, nor the fulfillment of
or compliance with the terms and conditions of this Agreement and the other Loan
Documents nor the performance of the Obligations:
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(1) does or will conflict with or result in any
breach or violation of any Applicable Law enacted or issued by any
Governmental Authority or other agency having jurisdiction over the
Borrower Party, any of the Mortgaged Properties or any other portion of
the Collateral or other assets of the Borrower Party, or any judgment
or order applicable to the Borrower Party or to which the Borrower
Party, any of the Mortgaged Properties or other assets of the Borrower
Party are subject;
(2) does or will conflict with or result in any
material breach or violation of, or constitute a default under, any of
the terms, conditions or provisions of the Borrower Party's
Organizational Documents, any indenture, existing agreement or other
instrument to which the Borrower Party is a party or to which the
Borrower Party, any of the Mortgaged Properties or any other portion of
the Collateral or other assets of the Borrower Party are subject;
(3) does or will result in or require the creation of
any Lien on all or any portion of the Collateral or any of the
Mortgaged Properties, except for the Permitted Liens; or
(4) does or will require the consent or approval of
any creditor of the Borrower Party, any Governmental Authority or any
other Person except such consents or approvals which have already been
obtained.
(f) Pending Litigation or other Proceedings. There is no
pending or, to the best knowledge of the Borrower Party, threatened action,
suit, proceeding or investigation, at law or in equity, before any court, board,
body or official of any Governmental Authority or arbitrator against or
affecting any Mortgaged Property or any other portion of the Collateral or other
assets of the Borrower Party, which, if decided adversely to the Borrower Party,
would have, or may reasonably be expected to have, a Material Adverse Effect.
The Borrower Party is not in default with respect to any order of any
Governmental Authority.
(g) Solvency. The Borrower Party is not insolvent and will not
be rendered insolvent by the transactions contemplated by this Agreement or the
other Loan Documents and after giving effect to such transactions, the Borrower
Party will not be left with an unreasonably small amount of capital with which
to engage in its business or undertakings, nor will the Borrower Party have
incurred, have intended to incur, or believe that it has incurred, debts beyond
its ability to pay such debts as they mature. The Borrower Party did not receive
less than a reasonably equivalent value in exchange for incurrence of the
Obligations. There (i) is no contemplated, pending or, to the best of the
Borrower Party's knowledge, threatened bankruptcy, reorganization, receivership,
insolvency or like proceeding, whether voluntary or involuntary, affecting the
Borrower Party or any of the Mortgaged Properties and (ii) has been no assertion
or exercise of jurisdiction over the Borrower Party or any of the Mortgaged
Properties by any court empowered to exercise bankruptcy powers.
(h) No Contractual Defaults. There are no defaults by the
Borrower Party or, to the knowledge of the Borrower Party, by any other Person
under any contract to which the Borrower
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Party is a party relating to any Mortgaged Property, including any management,
rental, service, supply, security, maintenance or similar contract, other than
defaults which do not permit the non-defaulting party to terminate the contract
and which do not have, and are not reasonably be expected to have, a Material
Adverse Effect. Neither the Borrower Party nor, to the knowledge of the Borrower
Party, any other Person, has received notice or has any knowledge of any
existing circumstances in respect of which it could receive any notice of
default or breach in respect of any contracts affecting or concerning any
Mortgaged Property.
(i) Compliance with the Loan Documents. The Borrower Party is
in compliance with all provisions of the Loan Documents to which it is a party
or by which it is bound. The representations and warranties made by the Borrower
Party in the Loan Documents are true, complete and correct as of the Closing
Date and do not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(j) ERISA. The Borrower Party is in compliance in all material
respects with all applicable provisions of ERISA and has not incurred any
liability to the PBGC on a Plan under Title IV of ERISA. None of the assets of
the Borrower Party constitute plan assets (within the meaning of Department of
Labor Regulation ss. 2510.3-101) of any employee benefit plan subject to Title I
of ERISA.
(k) Financial Information. The financial projections relating
to the Borrower Party and delivered to the Lender on or prior to the date
hereof, if any, were prepared on the basis of assumptions believed by the
Borrower Party, in good faith at the time of preparation, to be reasonable and
the Borrower Party is not aware of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any material
respect; provided, however, that no representation or warranty is made that any
result set forth in such financial projections shall be achieved. The financial
statements of the Borrower Party which have been furnished to the Lender are
complete and accurate in all material respects and present fairly the financial
condition of the Borrower Party, as of its date in accordance with GAAP, applied
on a consistent basis, and since the date of the most recent of such financial
statements no event has occurred which would have, or may reasonably be expected
to have a Material Adverse Effect, and there has not been any material
transaction entered into by the Borrower Party other than transactions in the
ordinary course of business. The Borrower Party has no material contingent
obligations which are not otherwise disclosed in its most recent financial
statements.
(l) Accuracy of Information. No information, statement or
report furnished in writing to the Lender by the Borrower Party in connection
with this Agreement or any other Loan Document or in connection with the
consummation of the transactions contemplated hereby and thereby contains any
material misstatement of fact or omits to state a material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading; and the representations and warranties of the
Borrower Party and the statements, information and descriptions contained in the
Borrower Party's closing certificates, as of the Closing Date, are true, correct
and complete in all material respects, do not contain any untrue statement or
misleading statement of a material fact, and do not omit to state a material
fact required to be stated
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therein or necessary to make the certifications, representations, warranties,
statements, information and descriptions contained therein, in light of the
circumstances under which they were made, not misleading; and the estimates and
the assumptions contained herein and in any certificate of the Borrower Party
delivered as of the Closing Date are reasonable and based on the best
information available to the Borrower Party.
(m) No Conflicts of Interest. To the best knowledge of the
Borrower Party, no member, officer, agent or employee of the Lender has been or
is in any manner interested, directly or indirectly, in that Person's own name,
or in the name of any other Person, in the Loan Documents, the Borrower Party or
any Mortgaged Property, in any contract for property or materials to be
furnished or used in connection with such Mortgaged Property or in any aspect of
the transactions contemplated by the Loan Documents.
(n) Governmental Approvals. No Governmental Approval not
already obtained or made is required for the execution and delivery of this
Agreement or any other Loan Document or the performance of the terms and
provisions hereof or thereof by the Borrower Party.
(o) Governmental Orders. The Borrower Party is not presently
under any cease or desist order or other orders of a similar nature, temporary
or permanent, of any Governmental Authority which would have the effect of
preventing or hindering performance of its duties hereunder, nor are there any
proceedings presently in progress or to its knowledge contemplated which would,
if successful, lead to the issuance of any such order.
(p) No Reliance. The Borrower Party acknowledges, represents
and warrants that it understands the nature and structure of the transactions
contemplated by this Agreement and the other Loan Documents, that it is familiar
with the provisions of all of the documents and instruments relating to such
transactions; that it understands the risks inherent in such transactions,
including the risk of loss of all or any of the Mortgaged Properties; and that
it has not relied on the Lender or ▇▇▇▇▇▇ ▇▇▇ for any guidance or expertise in
analyzing the financial or other consequences of the transactions contemplated
by this Agreement or any other Loan Document or otherwise relied on the Lender
or ▇▇▇▇▇▇ Mae in any manner in connection with interpreting, entering into or
otherwise in connection with this Agreement, any other Loan Document or any of
the matters contemplated hereby or thereby.
(q) Compliance with Applicable Law. The Borrower Party is in
compliance with Applicable Law, including all Governmental Approvals, if any,
except for such items of noncompliance that, singly or in the aggregate, have
not had and are not reasonably expected to cause, a Material Adverse Effect.
(r) Contracts with Affiliates. Except as otherwise approved in
writing by the Lender, the Borrower Party has not entered into and is not a
party to any contract, lease or other agreement with any Affiliate of the
Borrower Party for the provision of any service, materials or supplies to any
Mortgaged Property (including any contract, lease or agreement for the provision
of property management services, cable television services or equipment, gas,
electric or other utilities, security services or equipment, laundry services or
equipment or telephone services or equipment). The Lender hereby approves the
property management agreements set forth on Exhibit AA to this Agreement.
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(s) Lines of Business. The Borrower Party is not engaged in
any businesses other than the acquisition, ownership, development, construction,
leasing, financing or management of Multifamily Residential Properties, and the
conduct of these businesses does not violate the Organizational Documents
pursuant to which it is formed.
(t) Status as a Real Estate Investment Trust. The REIT is
qualified, and is taxed as, a real estate investment trust under Subchapter M of
the Internal Revenue Code, and is not engaged in any activities which would
jeopardize such qualification and tax treatment.
(u) Year 2000 Compliance. The Borrower Party has conducted a
comprehensive review and assessment of its computer systems and applications and
made inquiry of the Borrower Party's key suppliers and vendors with respect to
the so-called "year 2000 problem" (the risk that computer applications may not
be able to properly perform date-sensitive functions after December 31, 1999)
and, based on that review and inquiry, the Borrower Party does not believe that
the "year 2000 problem" will result in a material adverse change in the ability
of the Borrower Party and its Subsidiaries to manage and operate their
properties and pay and perform their obligations hereunder.
SECTION 12.02 Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants to the Lender as follows with respect to each of
the Mortgaged Properties:
(a) Title. The Borrower has good, valid, marketable and
indefeasible title to each Mortgaged Property (either in fee simple or as tenant
under a ground lease meeting all of the requirements of the DUS Guide), free and
clear of all Liens whatsoever except the Permitted Liens. Each Security
Instrument, if and when properly recorded in the appropriate records, together
with any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create a valid, perfected first lien on the Mortgaged
Property intended to be encumbered thereby (including the Leases related to such
Mortgaged Property and the rents and all rights to collect rents under such
Leases), subject only to Permitted Liens. Except for any Permitted Liens, there
are no Liens or claims for work, labor or materials affecting any Mortgaged
Property which are or may be prior to, subordinate to, or of equal priority
with, the Liens created by the Loan Documents. The Permitted Liens do not have,
and may not reasonably be expected to have, a Material Adverse Effect.
(b) Impositions. The Borrower has filed all property and
similar tax returns required to have been filed by it with respect to each
Mortgaged Property and has paid and discharged, or caused to be paid and
discharged, all installments for the payment of all Taxes due to date, and all
other material Impositions imposed against, affecting or relating to each
Mortgaged Property other than those which have not become due, together with any
fine, penalty, interest or cost for nonpayment pursuant to such returns or
pursuant to any assessment received by it. The Borrower has no knowledge of any
new proposed Tax, levy or other governmental or private assessment or charge in
respect of any Mortgaged Property which has not been disclosed in writing to the
Lender.
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(c) Zoning. Each Mortgaged Property complies in all material
respects with all Applicable Laws affecting such Mortgaged Property. Without
limiting the foregoing, all material Permits, including certificates of
occupancy, have been issued and are in full force and effect. Neither the
Borrower nor, to the knowledge of the Borrower, any former owner of any
Mortgaged Property, has received any written notification or threat of any
actions or proceedings regarding the noncompliance or nonconformity of any
Mortgaged Property with any Applicable Laws or Permits, nor is the Borrower
otherwise aware of any such pending actions or proceedings.
(d) Leases. The Borrower has delivered to the Lender a true
and correct copy of its form apartment lease for each Mortgaged Property (and,
with respect to leases executed prior to the date on which the Borrower first
owned the Mortgaged Property, the form apartment lease used for such leases),
and each Lease with respect to such Mortgaged Property is in the form thereof,
with no material modifications thereto, except as previously disclosed in
writing to the Lender. Except as set forth in a Rent Roll, no Lease for any unit
in any Mortgaged Property (i) is for a term in excess of one year, including any
renewal or extension period unless such renewal or extension period is subject
to termination by the Borrower upon not more than 30 days' written notice, (ii)
provides for prepayment of more than one month's rent, or (iii) was entered into
in other than the ordinary course of business.
(e) Rent Roll. The Borrower has executed and delivered to the
Lender a Rent Roll for each Mortgaged Property, each dated as of and delivered
within 30 days prior to the Closing Date. Each Rent Roll sets forth each and
every unit subject to a Lease which is in full force and effect as of the date
of such Rent Roll. The information set forth on each Rent Roll is true, correct
and complete in all material respects as of its date and there has occurred no
material adverse change in the information shown on any Rent Roll from the date
of each such Rent Roll to the Closing Date. Except as disclosed in the Rent Roll
with respect to each Mortgaged Property or otherwise previously disclosed in
writing to the Lender, no Lease is in effect as of the date of the Rent Roll
with respect to such Mortgaged Property. Notwithstanding the foregoing, any
representation in this subsection (e) made with respect to a time period
occurring prior to the date on which the Borrower owned the Mortgaged Property
is made to the best of the Borrower's knowledge.
(f) Status of Landlord under Leases. Except for any assignment
of leases and rents which is a Permitted Lien or which is to be released in
connection with the consummation of the transactions contemplated by this
Agreement, the Borrower is the owner and holder of the landlord's interest under
each of the Leases of units in each Mortgaged Property and there are no prior
outstanding assignments of any such Lease, or any portion of the rents,
additional rents, charges, issues or profits due and payable or to become due
and payable thereunder.
(g) Enforceability of Leases. Each Lease constitutes the
legal, valid and binding obligation of the Borrower and, to the knowledge of the
Borrower, of each of the other parties thereto, enforceable in accordance with
its terms, subject only to bankruptcy, insolvency, reorganization or other
similar laws relating to creditors' rights generally, and equitable principles,
and except as disclosed in writing to the Lender, no notice of any default by
the Borrower which remains uncured has been sent by any tenant under any such
Lease, other than defaults which do not have, and are not reasonably expected to
have, a Material Adverse Effect on the Mortgaged Property subject to the Lease.
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(h) No Lease Options. All premises demised to tenants under
Leases are occupied by such tenants as tenants only. No Lease contains any
option or right to purchase, right of first refusal or any other similar
provisions. No option or right to purchase, right of first refusal, purchase
contract or similar right exists with respect to any Mortgaged Property.
(i) Insurance. The Borrower has delivered to the Lender true
and correct certified copies of all Insurance Policies currently in effect as of
the date of this Agreement with respect to the Mortgaged Property which it owns.
Each such Insurance Policy complies in all material respects with the
requirements set forth in the Loan Documents.
(j) Tax Parcels. Each Mortgaged Property is on one or more
separate tax parcels, and each such parcel (or parcels) is (or are) separate and
apart from any other property.
(k) Encroachments. Except as disclosed on the Survey with
respect to each Mortgaged Property, none of the improvements located on any
Mortgaged Property encroaches upon the property of any other Person or upon any
easement encumbering the Mortgaged Property, nor lies outside of the boundaries
and building restriction lines of such Mortgaged Property and no improvement
located on property adjoining such Mortgaged Property lies within the boundaries
of or in any way encroaches upon such Mortgaged Property.
(l) Independent Unit. Except for Permitted Liens and as
disclosed on Exhibit BB to this Agreement, or as disclosed in a Title Insurance
Policy or Survey for the Mortgaged Property, each Mortgaged Property is an
independent unit which does not rely on any drainage, sewer, access, parking,
structural or other facilities located on any Property not included either in
such Mortgaged Property or on public or utility easements for the (i)
fulfillment of any zoning, building code or other requirement of any
Governmental Authority that has jurisdiction over such Mortgaged Property, (ii)
structural support, or (iii) the fulfillment of the requirements of any Lease or
other agreement affecting such Mortgaged Property. The Borrower, directly or
indirectly, has the right to use all amenities, easements, public or private
utilities, parking, access routes or other items necessary or currently used for
the operation of each Mortgaged Property. All public utilities are installed and
operating at each Mortgaged Property and all billed installation and connection
charges have been paid in full. Each Mortgaged Property is either (x) contiguous
to or (y) benefits from an irrevocable unsubordinated easement permitting access
from such Mortgaged Property to a physically open, dedicated public street, and
has all necessary permits for ingress and egress and is adequately serviced by
public water, sewer systems and utilities. No building or other improvement not
located on a Mortgaged Property relies on any part of the Mortgaged Property to
fulfill any zoning requirements, building code or other requirement of any
Governmental Authority that has jurisdiction over the Mortgaged Property, for
structural support or to furnish to such building or improvement any essential
building systems or utilities.
(m) Condition of the Mortgaged Properties. Except as disclosed
in any third party report delivered to the Lender prior to the date on which the
Borrower's Mortgaged Property is
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added to the Collateral Pool, or otherwise disclosed in writing by the Borrower
to the Lender prior to such date, each Mortgaged Property is in good condition,
order and repair, there exist no structural or other material defects in such
Mortgaged Property (whether patent or, to the best knowledge of the Borrower,
latent or otherwise) and the Borrower has not received notice from any insurance
company or bonding company of any defects or inadequacies in such Mortgaged
Property, or any part of it, which would adversely affect the insurability of
such Mortgaged Property or cause the imposition of extraordinary premiums or
charges for insurance or of any termination or threatened termination of any
policy of insurance or bond. No claims have been made against any contractor,
architect or other party with respect to the condition of any Mortgaged Property
or the existence of any structural or other material defect therein. No
Mortgaged Property has been materially damaged by casualty which has not been
fully repaired or for which insurance proceeds have not been received or are not
expected to be received except as previously disclosed in writing to the Lender.
There are no proceedings pending for partial or total condemnation of any
Mortgaged Property except as disclosed in writing to the Lender.
SECTION 12.03 Representations and Warranties of the Lender. The Lender hereby
represents and warrants to the Borrower Parties as follows:
(a) Due Organization. The Lender is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Power and Authority. The Lender has the requisite power
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.
(c) Due Authorization. The execution and delivery by the
Lender of this Agreement, and the consummation by it of the transactions
contemplated thereby, and the performance by it of its obligations thereunder,
have been duly and validly authorized by all necessary action and proceedings by
it or on its behalf.
ARTICLE XIII
AFFIRMATIVE COVENANTS OF THE BORROWER PARTIES
Each Borrower Party, with respect to itself, agrees and covenants with the
Lender that, at all times during the Term of this Agreement:
SECTION 13.01 Compliance with Agreements; No Amendments. The Borrower Party
shall comply with all the terms and conditions of each Loan Document to which it
is a party or by which it is bound; provided, however, that the Borrower Party's
failure to comply with such terms and conditions shall not be an Event of
Default until the expiration of the applicable notice and cure periods, if any,
specified in the applicable Loan Document.
SECTION 13.02 Maintenance of Existence. The Borrower Party shall maintain its
existence and continue to be a limited partnership or corporation, as the case
may be, organized under the laws of the state of its organization. The Borrower
Party shall continue to be duly qualified to do
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business in each jurisdiction in which such qualification is necessary to the
conduct of its business and where the failure to be so qualified would adversely
affect the validity of, the enforceability of, or the ability to perform, its
obligations under this Agreement or any other Loan Document.
SECTION 13.03 Maintenance of REIT Status. During the Term of this Agreement, the
REIT shall qualify, and be taxed as, a real estate investment trust under
Subchapter M of the Internal Revenue Code, and will not be engaged in any
activities which would jeopardize such qualification and tax treatment.
SECTION 13.04 Financial Statements; Accountants' Reports; Other Information. The
Borrower Party shall keep and maintain at all times complete and accurate books
of accounts and records in sufficient detail to correctly reflect (x) all of the
Borrower Party's financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and copies of all written contracts, Leases
and other instruments which affect each Mortgaged Property (including all bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, the Borrower Parties shall furnish, or cause to be furnished, to
the Lender:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of its fiscal year during the Term of
this Agreement, the audited balance sheet of the REIT and its Subsidiaries as of
the end of such fiscal year, the audited statement of income, Borrowers' equity
and retained earnings of the REIT and its Subsidiaries for such fiscal year and
the audited statement of cash flows of the REIT and its Subsidiaries for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year, prepared in accordance with GAAP, consistently applied, and accompanied by
a certificate of the REIT's independent certified public accountants to the
effect that such financial statements have been prepared in accordance with
GAAP, consistently applied, and that such financial statements fairly present
the results of its operations and financial condition for the periods and dates
indicated, with such certification to be free of exceptions and qualifications
as to the scope of the audit or as to the going concern nature of the business.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after each of the first three fiscal quarters of
each fiscal year during the Term of this Agreement, the unaudited balance sheet
of the REIT and its Subsidiaries as of the end of such fiscal quarter, the
unaudited statement of income and retained earnings of the REIT and its
Subsidiaries and the unaudited statement of cash flows of the REIT and its
Subsidiaries for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year,
accompanied by a certificate of the Chief Financial Officer of the REIT to the
effect that such financial statements have been prepared in accordance with
GAAP, consistently applied, and that such financial statements fairly present
the results of its operations and financial condition for the periods and dates
indicated subject to year end adjustments in accordance with GAAP.
(c) Quarterly Property Statements. As soon as available, and
in any event within 45 days after each Calendar Quarter, a statement of income
and expenses of each Mortgaged
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Property accompanied by a certificate of the Chief Financial Officer of the REIT
to the effect that each such statement of income and expenses fairly, accurately
and completely presents the operations of each such Mortgaged Property for the
period indicated.
(d) Annual Property Statements. On an annual basis within
forty-five (45) days of the end of its fiscal year, an annual statement of
income and expenses of each Mortgaged Property accompanied by a certificate of
the Chief Financial Officer of the REIT to the effect that each such statement
of income and expenses fairly, accurately and completely presents the operations
of each such Mortgaged Property for the period indicated.
(e) Updated Rent Rolls. Upon the Lender's request (but not
more frequently than quarterly), a current Rent Roll for each Mortgaged
Property, showing the name of each tenant, and for each tenant, the space
occupied, the lease expiration date, the rent payable, the rent paid and any
other information requested by the Lender and accompanied by a certificate of
the Chief Financial Officer of the Borrower or the REIT to the effect that each
such Rent Roll fairly, accurately and completely presents the information
required therein.
(f) Security Deposit Information. Upon the Lender's request,
an accounting of all security deposits held in connection with any Lease of any
part of any Mortgaged Property, including the name and identification number of
the accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits are held and the name
and telephone number of the person to contact at such financial institution,
along with any authority or release necessary for the Lender to access
information regarding such accounts.
(g) Security Law Reporting Information. So long as the REIT is
a reporting company under the Securities and Exchange Act of 1934, promptly upon
becoming available, (a) copies of all financial statements, reports and proxy
statements sent or made available generally by the REIT or the Borrower, or any
of their Affiliates, to their respective security holders, (b) all regular and
periodic reports and all registration statements (other than the exhibits
thereto and any registration statements on Form S-8 or a similar form) and
prospectuses, if any, filed by the REIT or the Borrower, or any of their
Affiliates, with the Securities and Exchange Commission or other Governmental
Authorities, and (c) all press releases and other statements made available
generally by the REIT or the Borrower, or any of their Affiliates, to the public
concerning material developments in the business of the REIT or other party.
(h) Accountants' Reports. Promptly upon receipt thereof,
copies of any reports or management letters submitted to the Borrower Party by
its independent certified public accountants in connection with the examination
of its financial statements made by such accountants (except for reports
otherwise provided pursuant to subsection (a) above); provided, however, that
the Borrower Party shall only be required to deliver such reports and management
letters to the extent that they relate to any Borrower Party or any Mortgaged
Property.
(i) Annual Budgets. Promptly, and in any event within 60 days
after the start of its fiscal year, an annual budget for each Mortgaged Property
for such fiscal year, setting forth
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an estimate of all of the costs and expenses, including capital expenses, of
maintaining and operating each Mortgaged Property.
(j) REIT Plans and Projections. Within 90 days after the
beginning of each fiscal year, copies of (1) the REIT's business plan for the
current and the succeeding two fiscal years, (2) the REIT's annual budget
(including capital expenditure budgets) and projections for each Mortgaged
Property; and (3) the REIT's financial projections for the current and the
succeeding two fiscal years, as prepared by the REIT's Chief Financial Officer
and in a format and with such detail as the Lender may require.
(k) Strategic Plan. Within 90 days after the end of each
fiscal year of the REIT, the REIT shall deliver to the Lender a written
narrative discussing the REIT's short and long range plans, including its plans
for operations, mergers, acquisitions and management, and accompanied by
supporting financial projections and schedules, certified by a member of Senior
Management as true, correct and complete ("Strategic Plan") If the REIT's or the
Borrower's Strategic Plan materially changes, then such person shall deliver to
the Lender the Strategic Plan as so changed.
(l) Annual Rental and Sales Comparable Analysis. Within 30
days after the Lender's request, a rental and sales comparable analysis of the
local real estate market in which each Mortgaged Property is located, in a form
approved by the Lender.
(m) Other Reports. Promptly upon receipt thereof, all
schedules, financial statements or other similar reports delivered by the
Borrower Party pursuant to the Loan Documents or requested by the Lender with
respect to the Borrower Party's business affairs or condition (financial or
otherwise) or any of the Mortgaged Properties.
(n) Certification. All certifications required to be delivered
pursuant to this Section 13.04 shall run directly to and be for the benefit of
Lender and ▇▇▇▇▇▇ ▇▇▇.
SECTION 13.05 Certificate of Compliance. The Borrower Party shall deliver to the
Lender concurrently with the delivery of the financial statements and/or reports
required to be delivered pursuant to Section 13.04 (a) and (b) above a
certificate signed by the Chief Financial Officer of the Borrower or the REIT
stating that, to the best knowledge of such individual following reasonable
inquiry, (i) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 15.02 through 15.08 on the date of such financial statements, and (ii)
stating that, to the best knowledge of such individual following reasonable
inquiry, no Event of Default or Potential Event of Default has occurred, or if
an Event of Default or Potential Event of Default has occurred, specifying the
nature thereof in reasonable detail and the action which the Borrower is taking
or proposes to take with respect thereto. Any certificate required by this
Section 13.05 shall run directly to and be for the benefit of Lender and ▇▇▇▇▇▇
Mae.
SECTION 13.06 Maintain Licenses. The Borrower Party shall procure and maintain
in full force and effect all licenses, Permits, charters and registrations which
are material to the conduct of its business and shall abide by and satisfy all
terms and conditions of all such licenses, Permits, charters and registrations.
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SECTION 13.07 Access to Records; Discussions With Officers and Accountants. To
the extent permitted by law and in addition to the applicable requirements of
the Security Instruments, the Borrower Party shall permit the Lender:
(a) to inspect, make copies and abstracts of, and have
reviewed or audited, such of the Borrower Party's books and records as may
relate to the Obligations or any Mortgaged Property;
(b) to discuss the Borrower Party's affairs, finances and
accounts with any of the Borrower Party's officers, partners and employees;
(c) to discuss the Borrower Party's affairs, finances and
accounts with its independent public accountants, provided that the Chief
Financial Officer of the Borrower Party has been given the opportunity by the
Lender to be a party to such discussions; and
(d) to receive any other information that the Lender deems
necessary or relevant in connection with any Advance, any Loan Document or the
Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours.
SECTION 13.08 Inform the Lender of Material Events. The Borrower Party shall
promptly inform the Lender in writing of any of the following (and shall deliver
to the Lender copies of any related written communications, complaints, orders,
judgments and other documents relating to the following) of which the Borrower
Party has actual knowledge:
(a) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under this Agreement or any other Loan Document;
(b) Regulatory Proceedings. The commencement of any rulemaking
or disciplinary proceeding or the promulgation of any proposed or final rule
which would have, or may reasonably be expected to have, a Material Adverse
Effect;
(c) Legal Proceedings. The commencement or threat of, or
amendment to, any proceedings by or against the Borrower Party in any Federal,
state or local court or before any Governmental Authority, or before any
arbitrator, which, if adversely determined, would have, or at the time of
determination may reasonably be expected to have, a Material Adverse Effect;
(d) Bankruptcy Proceedings. The commencement of any
proceedings by or against the Borrower Party under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
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(e) Regulatory Supervision or Penalty. The receipt of notice
from any Governmental Authority having jurisdiction over the Borrower Party that
(A) the Borrower Party is being placed under regulatory supervision, (B) any
license, Permit, charter, membership or registration material to the conduct of
the Borrower Party's business or the Mortgaged Properties is to be suspended or
revoked or (C) the Borrower Party is to cease and desist any practice, procedure
or policy employed by the Borrower Party, as the case may be, in the conduct of
its business, and such cessation would have, or may reasonably be expected to
have, a Material Adverse Effect;
(f) Environmental Claim. The receipt from any Governmental
Authority or other Person of any notice of violation, claim, demand, abatement,
order or other order or direction (conditional or otherwise) for any damage,
including personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, pollution, contamination or other adverse
effects on the environment, removal, cleanup or remedial action or for fines,
penalties or restrictions, resulting from or based upon (a) the existence or
occurrence, or the alleged existence or occurrence, of a Hazardous Substance
Activity or (b) the violation, or alleged violation, of any Hazardous Materials
Laws in connection with any Mortgaged Property or any of the other assets of a
Borrower Party;
(g) Material Adverse Effects. The occurrence of any act,
omission, change or event which has a Material Adverse Effect, subsequent to the
date of the most recent audited financial statements of the Borrower delivered
to the Lender pursuant to Section 13.04;
(h) Accounting Changes. Any material change in any Borrower
Party's accounting policies or financial reporting practices; and
(i) Legal and Regulatory Status. The occurrence of any act,
omission, change or event, including any Governmental Approval, the result of
which is to change or alter in any way the legal or regulatory status of any
Borrower Party.
SECTION 13.09 Single-Purpose Entities. The Borrower shall at all times maintain
and conduct itself as a Single-Purpose entity.
SECTION 13.10 Inspection. The Borrower shall permit any Person designated by the
Lender: (i) to make entries upon and inspections of the Mortgaged Properties;
and (ii) to otherwise verify, examine and inspect the amount, quantity, quality,
value and/or condition of, or any other matter relating to, any Mortgaged
Property; provided, however, that prior to an Event of Default or Potential
Event of Default, all such entries, examinations and inspections shall be
conducted at reasonable times during normal business hours.
SECTION 13.11 Compliance with Applicable Laws. The Borrower Party shall comply
in all material respects with all Applicable Laws now or hereafter affecting any
Mortgaged Property or any part of any Mortgaged Property or requiring any
alterations, repairs or improvements to any Mortgaged Property. The Borrower
Party shall procure and continuously maintain in full force and effect, and
shall abide by and satisfy all material terms and conditions of all Permits.
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SECTION 13.12 Warranty of Title. The Borrower shall warrant and defend (a) the
title to each Mortgaged Property and every part of each Mortgaged Property,
subject only to Permitted Liens, and (b) the validity and priority of the lien
of the applicable Loan Documents, subject only to Permitted Liens, in each case
against the claims of all Persons whatsoever. The Borrower shall reimburse the
Lender for any losses, costs, damages or expenses (including reasonable
attorneys' fees and court costs) incurred by the Lender if an interest in any
Mortgaged Property, other than with respect to a Permitted Lien, is claimed by
others.
SECTION 13.13 Defense of Actions. The Borrower Party shall appear in and defend
any action or proceeding purporting to affect the security for this Agreement or
the rights or power of the Lender hereunder, and shall pay all costs and
expenses, including the cost of evidence of title and reasonable attorneys'
fees, in any such action or proceeding in which the Lender may appear. If the
Borrower Party fails to perform any of the covenants or agreements contained in
this Agreement, or if any action or proceeding is commenced that is not
diligently defended by the Borrower Party which affects in any material respect
the Lender's interest in any Mortgaged Property or any part thereof, including
eminent domain, code enforcement or proceedings of any nature whatsoever under
any Applicable Law, whether now existing or hereafter enacted or amended, then
the Lender may, but without obligation to do so and without notice to or demand
upon the Borrower Party and without releasing the Borrower Party from any
Obligation, make such appearances, disburse such sums and take such action as
the Lender deems necessary or appropriate to protect the Lender's interest,
including disbursement of attorney's fees, entry upon such Mortgaged Property to
make repairs or take other action to protect the security of said Mortgaged
Property, and payment, purchase, contest or compromise of any encumbrance,
charge or lien which in the judgment of the Lender appears to be prior or
superior to the Loan Documents. In the event (i) that any Security Instrument is
foreclosed in whole or in part or that any Loan Document is put into the hands
of an attorney for collection, suit, action or foreclosure, or (ii) of the
foreclosure of any mortgage, deed to secure debt, deed of trust or other
security instrument prior to or subsequent to any Security Instrument or any
Loan Document in which proceeding the Lender is made a party or (iii) of the
bankruptcy of the Borrower Party or an assignment by the Borrower Party for the
benefit of their respective creditors, the Borrower Party shall be chargeable
with and agrees to pay all costs of collection and defense, including actual
attorneys' fees in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, which shall be due and
payable together with all required service or use taxes.
SECTION 13.14 Alterations to the Mortgaged Properties. Except as otherwise
provided in the Loan Documents, the Borrower shall have the right to undertake
any alteration, improvement, demolition, removal or construction (collectively,
"Alterations") to the Mortgaged Property which it owns without the prior consent
of the Lender; provided, however, that in any case, no such Alteration shall be
made to any Mortgaged Property without the prior written consent of the Lender
if (i) such Alteration could reasonably be expected to adversely affect the
value of such Mortgaged Property or its operation as a multifamily housing
facility in substantially the same manner in which it is being operated on the
date such property became Collateral, (ii) the construction of such Alteration
could reasonably be expected to result in interference to the occupancy of
tenants of such Mortgaged Property such that tenants in occupancy with respect
to five percent (5%) or more of the Leases would be permitted to terminate their
Leases or to ▇▇▇▇▇ the payment of all or any portion
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of their rent, or (iii) such Alteration will be completed in more than 12 months
from the date of commencement or in the last year of the Term of this Agreement.
Notwithstanding the foregoing, the Borrower must obtain the Lender's prior
written consent to construct Alterations with respect to the Mortgaged Property
costing in excess of $125,000 and the Borrower must give prior written notice to
the Lender of its intent to construct Alterations with respect to such Mortgaged
Property costing in excess of $50,000; provided, however, that the preceding
requirements shall not be applicable to Alterations made, conducted or
undertaken by the Borrower as part of the Borrower's routine maintenance and
repair of the Mortgaged Properties as required by the Loan Documents.
SECTION 13.15 ERISA. The Borrower Party shall at all times remain in compliance
in all material respects with all applicable provisions of ERISA and similar
requirements of the PBGC.
SECTION 13.16 Loan Document Taxes. If any tax, assessment or Imposition (other
than a franchise tax imposed on or measured by, the net income or capital
(including branch profits tax) of the Lender (or any transferee or assignee
thereof, including a participation holder)) ("Loan Document Taxes") is levied,
assessed or charged by the United States, or any State in the United States, or
any political subdivision or taxing authority thereof or therein upon any of the
Loan Documents or the obligations secured thereby, the interest of the Lender in
the Mortgaged Properties, or the Lender by reason of or as holder of the Loan
Documents, the Borrower Party shall pay all such Loan Document Taxes to, for, or
on account of the Lender (or provide funds to the Lender for such payment, as
the case may be) as they become due and payable and shall promptly furnish proof
of such payment to the Lender, as applicable. In the event of passage of any law
or regulation permitting, authorizing or requiring such Loan Document Taxes to
be levied, assessed or charged, which law or regulation in the opinion of
counsel to the Lender may prohibit the Borrower Party from paying the Loan
Document Taxes to or for the Lender, the Borrower Party shall enter into such
further instruments as may be permitted by law to obligate the Borrower Party to
pay such Loan Document Taxes.
SECTION 13.17 Further Assurances. The Borrower Party, at the request of the
Lender, shall execute and deliver and, if necessary, file or record such
statements, documents, agreements, UCC financing and continuation statements and
such other instruments and take such further action as the Lender from time to
time may request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any of the other Loan Documents or
to subject the Collateral to the lien and security interests of the Loan
Documents or to evidence, perfect or otherwise implement, to assure the lien and
security interests intended by the terms of the Loan Documents or in order to
exercise or enforce its rights under the Loan Documents.
SECTION 13.18 Monitoring Compliance. Upon the request of the Lender, from time
to time, the Borrower Party shall promptly provide to the Lender such documents,
certificates and other information as may be deemed necessary to enable the
Lender to perform its functions under the Servicing Agreement.
SECTION 13.19 Leases. Each unit in each Mortgaged Property will be leased
pursuant to the form lease delivered to, and acceptable to, the Lender, with no
material modifications to such approved form lease, except as disclosed in
writing to the Lender.
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SECTION 13.20 Appraisals. At any time and from time to time (but not to exceed
once per calendar year), the Lender shall be entitled to obtain an Appraisal of
any Mortgaged Property. At the time of the addition of a Mortgaged Property to
the Collateral Pool, the Lender shall be entitled to obtain an Appraisal of such
Mortgaged Property. The Borrower shall pay all of the Lender's costs of
obtaining the Appraisal.
SECTION 13.21 Transfer of Ownership Interests of the Borrower and the REIT.
(a) Prohibition on Transfers. Subject to paragraph (b) of this
Section 13.21, the Borrower Party shall not cause or permit a Transfer or a
Change of Control.
(b) Permitted Transfers. Notwithstanding the provisions (a) of
this Section 13.21, the following Transfers by the Borrower Party are permitted
without the consent of the Lender:
(i) A Transfer that occurs by inheritance, devise, or
bequest or by operation of law upon the death of a natural person who
is an owner of a Mortgaged Property or the owner of a direct or
indirect ownership interest in the Borrower.
(ii) The grant of a leasehold interest in individual
dwelling units or commercial spaces in accordance with the Security
Instrument.
(iii) A sale or other disposition of obsolete or worn
out personal property which is contemporaneously replaced by comparable
personal property of equal or greater value which is free and clear of
liens, encumbrances and security interests other than those created by
the Loan Documents.
(iv) The creation of a mechanic's or materialmen's
lien or judgment lien against a Mortgaged Property which is released of
record or otherwise remedied to Lender's satisfaction within 30 days of
the date of creation.
(v) The grant of an easement, if prior to the
granting of the easement the Borrower causes to be submitted to Lender
all information required by Lender to evaluate the easement, and if
Lender consents to such easement based upon Lender's determination
that the easement will not materially affect the operation of the
Mortgaged Property or Lender's interest in the Mortgaged Property and
Borrower pays to Lender, on demand, all costs and expenses incurred by
Lender in connection with reviewing Borrower's request. Lender shall
not unreasonably withhold its consent to or withhold its agreement to
subordinate the lien of a Security Instrument to (A) the grant of a
utility easement serving a Mortgaged Property to a publicly operated
utility, or (B) the grant of an easement related to expansion or
widening of roadways, provided that any such easement is in form and
substance reasonably acceptable to Lender and does not materially and
adversely affect the access, use or marketability of a Mortgaged
Property.
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(vi) The Transfer of shares of common stock, limited
partnership interests or other beneficial or ownership interest or
other forms of securities in the REIT, and the issuance of all
varieties of convertible debt, equity and other similar securities of
the REIT, and the subsequent Transfer of such securities; provided,
however, that no Change in Control occurs as a result of such Transfer,
either upon such Transfer or upon the subsequent conversion to equity
or such convertible debt or other securities.
(vii) The Transfer of limited partnership interests
by the limited partners of Borrower, including, without limitation, the
conversion or exchange of limited partnership interests in Borrower to
shares of common stock or other beneficial or ownership interests or
other forms of securities in the REIT; provided, however, that no
Change in Control occurs as the result of such Transfer.
(viii) The issuance by Borrower of additional limited
partnership units or convertible debt, equity and other similar
securities, and the subsequent Transfer of such units or other
securities; provided, however, that no Change in Control occurs as the
result of such Transfer, either upon such Transfer or upon the
subsequent conversion to equity of such convertible debt or other
securities.
(ix) A merger with or acquisition of another entity
by Borrower or the REIT, provided that (A) Borrower or the REIT, as the
case may be, is the surviving entity after such merger or acquisition,
(B) no Change in Control occurs, and (C) such merger or acquisition
does not result in an Event of Default, as such terms are defined in
this Agreement.
(x) A Transfer in connection with any substitution or
release pursuant to the terms and conditions of Article VII of this
Agreement.
(c) Consent to Prohibited Transfers. Lender may, in its sole
and absolute discretion, consent to a Transfer that would otherwise violate this
Section 13.21 if, prior to the Transfer, Borrower has satisfied each of the
following requirements:
(i) the submission to Lender of all information
required by Lender to make the determination required by this Section
13.21(c);
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility,
credit, management and other standards (including any standards with
respect to previous relationships between Lender and the transferee and
the organization of the transferee) customarily applied by Lender at
the time of the proposed Transfer to the approval of borrowers in
connection with the origination or purchase of similar mortgages, deeds
of trust or deeds to secure debt on multifamily properties;
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(iv) in the case of a Transfer of direct or indirect
ownership interests in Borrower or the REIT, if transferor or any other
person has obligations under any Loan Documents, the execution by the
transferee of one or more individuals or entities acceptable to Lender
of an assumption agreement that is acceptable to Lender and that, among
other things, requires the transferee to perform all obligations of
transferor or such person set forth in such Loan Document, and may
require that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may have been
waived by Lender;
(v) Lender's receipt of all of the following:
(A) a transfer fee equal to 1 percent of the
Commitment immediately prior to the transfer.
(B) In addition, Borrower shall be required
to reimburse Lender for all of Lender's out-of-pocket costs
(including reasonable attorneys' fees) incurred in reviewing
the Transfer request.
SECTION 13.22 Change in Senior Management.
(a) The Borrower shall give the Lender notice of any change in
the identity of the Chief Executive Officer or the Chief Financial Officer of
the REIT.
(b) Within 30 Business Days after receipt of the Borrower's
notice, the Lender shall have the right to terminate this Agreement and the
Credit Facility by giving a notice of such termination to the Borrower. In such
event, this Agreement and the Credit Facility shall terminate with the same
effect as if the Lender had approved a Credit Facility Termination Request
(including the Borrower's obligation, pursuant to Section 10.03(a), to pay in
full all of the Notes Outstanding on the Closing Date, including any other
charges under the Notes), except that, for these purposes, the Closing Date
shall be the 180th day after the date on which the Borrower first receives the
Lender's termination notice.
(c) If the Lender exercises its termination right pursuant to
subsection (b), the Borrower shall have a period of 90 days, commencing with the
date on which the Borrower receives the Lender's termination notice, to request
that the Lender rescind its termination notice. The Borrower may include in its
request any undertakings which it is willing to make in order to obtain such a
rescission. The Lender shall give the Borrower Parties notice of its acceptance
or rejection of the Borrower Parties' request within 30 Business Days after the
Borrower makes the request. If the Lender accepts the request, the Lender shall
give the Borrower a notice that the termination notice shall be deemed rescinded
and of no further force or effect, and this Agreement and the Credit Facility
shall continue in accordance with, and subject to the terms, conditions and
limitations contained in, this Agreement.
SECTION 13.23 Date-Down Endorsements. At any time and from time to time, a
Lender may obtain an endorsement to each Title Insurance Policy containing a
Revolving Credit Endorsement,
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amending the effective date of the Title Insurance Policy to the date of the
title search performed in connection with the endorsement. The Borrower shall
pay for the cost and expenses incurred by the Lender to the Title Company in
obtaining such endorsement, provided that, for each Title Insurance Policy, it
shall not be liable to pay for more than one such endorsement in any consecutive
12 month period.
SECTION 13.24 Geographical Diversification. The Borrower shall maintain
Mortgaged Properties in the Collateral Pool so that the Collateral Pool consists
of at least 35 Mortgaged Properties located in at least six states, provided
that for purposes of this Section 13.24, SMSA's in the State of Texas (up to a
maximum of four) shall count as states and provided, however, that, upon the
occurrence of any increase in the Commitment pursuant to Article VIII, the
Borrower shall at all times thereafter cause the Collateral Pool to satisfy such
other Geographical Diversification Requirements as the Lender may determine and
notify Borrower of at the time of the increase.
SECTION 13.25 Ownership of Mortgaged Properties. The Borrower shall be the sole
owner of each of the Mortgaged Properties free and clear of any Liens other than
Permitted Liens.
ARTICLE XIV
NEGATIVE COVENANTS OF THE BORROWER PARTIES
Each Borrower Party, with respect to itself, agrees and covenants with the
Lender that, at all times during the Term of this Agreement:
SECTION 14.01 Other Activities. No Borrower Party shall:
(a) either directly or indirectly sell, transfer, exchange or
otherwise dispose of any of its assets except as permitted hereunder, by the
Security Instruments or the Cash Management Agreement;
(b) engage in any business or activity other than in
connection with the Ownership, management and operation of Multifamily
Residential Properties;
(c) amend its Organizational Documents in any material respect
without the prior written consent of the Lender;
(d) dissolve or liquidate in whole or in part;
(e) merge or consolidate with any Person; or
(f) use, or permit to be used, any Mortgaged Property for any
uses or purposes other than as a Multifamily Residential Property.
SECTION 14.02 Value of Security. The Borrower Party shall not take any action
which could reasonably be expected to have any Material Adverse Effect.
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SECTION 14.03 Zoning. The Borrower Party shall not initiate or consent to any
zoning reclassification of any Mortgaged Property or seek any variance under any
zoning ordinance or use or permit the use of any Mortgaged Property in any
manner that could result in the use becoming a nonconforming use under any
zoning ordinance or any other applicable land use law, rule or regulation.
SECTION 14.04 Liens. The Borrower Party shall not create, incur, assume or
suffer to exist any Lien on any Mortgaged Property or any part of any Mortgaged
Property, except the Permitted Liens.
SECTION 14.05 Sale. The Borrower shall not Transfer any Mortgaged Property or
any part of any Mortgaged Property without the prior written consent of the
Lender (which consent may be granted or withheld in the Lender's discretion), or
any interest in any Mortgaged Property, other than to enter into Leases for
units in a Mortgaged Property to any tenant in the ordinary course of business.
SECTION 14.06 Intentionally Omitted.
SECTION 14.07 Principal Place of Business. The Borrower Party shall not change
its principal place of business or the location of its books and records, each
as set forth in Section 12.01(a), without first giving 30 days' prior written
notice to the Lender.
SECTION 14.08 Frequency of Requests. The Borrower shall make all Requests (other
than a Future Advance Request) in any Calendar Quarter on the same day in the
Calendar Quarter. Accordingly, once the Borrower makes one or more Requests
(other than a Future Advance Request or a Collateral Addition Request) in a
Calendar Quarter, it shall not make any further Requests (other than a Future
Advance Request) in the Calendar Quarter. The Borrower shall have the right,
subject to the terms, conditions and limitations of this Agreement, to make a
Future Advance Request for a Revolving Facility Advance on any day until the
expiration of the Revolving Facility Availability Period and to make a Future
Advance Request for a Base Facility Advance on any day until the expiration of
the Base Facility Availability Period.
SECTION 14.09 Change in Property Management. The Borrower shall not change the
management agent for any Mortgaged Property except to a management agent which
the Lender determines is qualified in accordance with the criteria set forth in
Section 701 of the DUS Guide.
SECTION 14.10 Condominiums. The Borrower shall not submit any Mortgaged Property
to a condominium regime during the Term of this Agreement.
SECTION 14.11 Restrictions on Partnership Distributions. The Borrower Party
shall not make any distributions of any nature or kind whatsoever to the owners
of its Ownership Interests as such if, at the time of such distribution, a
Potential Event of Default or an Event of Default has occurred and remains
uncured.
SECTION 14.12 Lines of Business. The Borrower Party shall not be substantially
involved in any businesses other than the acquisition, Ownership, development,
construction, leasing, financing or
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management, directly or through Affiliates, of Multifamily Residential
Properties, and the conduct of these businesses shall not violate the
Organizational Documents pursuant to which it is formed.
SECTION 14.13 Limitation on Unimproved Real Property and New Construction. The
Borrower Party shall not permit:
(a) the value of its real property which is not improved
(except real property on which phases of a Mortgaged Property are contemplated
to be constructed) by one or more buildings leased, or held out for lease, to
third parties ("Unimproved Real Property") to exceed 10% of the value of all of
its "Real Estate Assets" (as that term is defined in Section 856(c)(6)(B) of the
Internal Revenue Code and the regulations thereunder); and
(b) the sum of (i) the value of its Unimproved Real Property
and (ii) the value of its Real Estate Assets which are under construction or
subject to substantial rehabilitation to exceed 20% of the value of all of its
Real Estate Assets.
All of the foregoing values shall be determined by the Lender.
SECTION 14.14 No Encumbrance of Collateral Release Property. Unless the Borrower
sells a Collateral Release Property to a Person who is not an Affiliate of a
Borrower Party substantially simultaneously with the release of the Collateral
Release Property from the Collateral Pool, the Borrower shall not encumber the
Collateral Release Property for a period of 120 days following the release of
the Collateral Release Property from the Collateral Pool.
ARTICLE XV
FINANCIAL COVENANTS OF THE BORROWER PARTIES
Each Borrower Party agrees and covenants with the Lender that, at all times
during the Term of this Agreement:
SECTION 15.01 Financial Definitions. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"Consolidated EBITDA" means, for any period, and without double
counting any item, the EBITDA for the Borrower, the REIT and their respective
Subsidiaries for such period on a consolidated basis.
"Consolidated EBITDA to Fixed Charges Ratio" means, for any period of
determination, the ratio (expressed as a percentage) of--
(a) the excess of--
(i) the Consolidated EBITDA for the period, less
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(ii) the Imputed Capital Expenditures for the period;
to
(b) the Consolidated Fixed Charges for the period.
"Consolidated EBITDA to Interest Ratio" means, for any period of
determination, the ratio (expressed as a percentage) of--
(a) the excess of--
(i) the Consolidated EBITDA for the period, less
(ii) the Imputed Capital Expenditures for the period;
to
(b) the Consolidated Interest Expense for the period.
"Consolidated Fixed Charges" means, for any period of determination,
the sum of--
(a) the Consolidated Interest Expense for the period;
(b) the Consolidated Scheduled Amortization for the period;
and
(c) Preferred Distributions for the period.
"Consolidated Interest Expense" means, for any period of
determination, and without double counting any item, the sum of the Interest
Expense for the Borrower, the REIT and their respective Subsidiaries for such
period on a consolidated basis.
"Consolidated Scheduled Amortization" means, for any period of
determination, and without double counting any item, the sum of the Scheduled
Amortization for the Borrower, the REIT and their respective Subsidiaries for
such period on a consolidated basis.
"Consolidated Total Assets" means, for any Person, all assets
of such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided that all assets composed of real property shall
be valued on an undepreciated cost basis. The assets of a Person and its
Subsidiaries shall be adjusted to reflect such Person's allocable share of such
assets, for the relevant period or as of the date of determination, taking into
account (a) the relative proportion of each such item derived from assets
directly owned by such Person and from assets owned by its Subsidiaries, and (b)
such Persons' respective ownership interest in its Subsidiaries.
"Consolidated Total Indebtedness" means, as of any date, and
without double counting any item, the Total Indebtedness for the Borrower, the
REIT and their respective Subsidiaries as of such date (including the Total
Indebtedness of the Borrower Parties as of such date).
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"EBITDA" means, for any period, the sum determined in
accordance with GAAP, of the following, for any Person on a consolidated basis--
(a) the net income (or net loss) of such Person during such
Period;
(b) all amounts treated as expenses for depreciation, Interest
Expense and the amortization of intangibles of any kind to the extent included
in the determination of such net income (or loss); and
(c) all accrued taxes on or measured by income to the extent
included in the determination of such net income (or loss);
provided, however, that net income (or loss) shall be computed
for these purposes without giving effect to extraordinary losses or
extraordinary gains.
"Imputed Capital Expenditures" means, for any four (4)
consecutive quarters, an amount equal to the average number of apartment units
owned by the Borrower, the REIT or the Subsidiaries of the Borrower or the REIT
during such period multiplied by Three Hundred Dollars ($300.00)] per apartment
unit, and for any period of less than four (4) consecutive quarters, an
appropriate proration of such figure.
"Interest Expense" means, for any period, the sum of--
(a) gross interest expense for the period (including all
commissions, discounts, fees and other charges in connection with standby
letters of credit and similar instruments) for the Borrower, the REIT and their
respective Subsidiaries; and
(b) the portion of the up-front costs and expenses for Rate
Contracts entered into by the Borrower, the REIT and their respective
Subsidiaries (to the extent not included in gross interest expense) fairly
allocated to such Rate Contracts as expenses for such period, as determined in
accordance with GAAP;
(c) provided, that, all interest expense accrued by the
Borrower, the REIT and their respective Subsidiaries during such period, even if
not payable on or before the Credit Facility Termination Date, shall be included
within "Interest Expense." Notwithstanding the foregoing, interest accrued under
any Intra-Company Debt shall not be included within "Interest Expense" for any
purposes hereof.
"Intra-Company Debt" means Indebtedness (whether book-entry or
evidenced by a term, demand or other note or other instrument) owed by the
Borrower, the REIT or any of their respective Subsidiaries to any Subsidiary,
and incurred or assumed for the purpose of capitalizing a Subsidiary of the REIT
or the Borrower.
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"Management Entity" means the REIT.
"Net Worth" means, as of any specified date, for any Person,
the excess of the Person's assets over the Person's liabilities, determined in
accordance with GAAP, on a consolidated basis.
"Pledged Cash" shall mean the amount held on deposit in the
Pledgee Account.
"Preferred Distributions" means, for any period, the amount of
any and all distributions due and payable to the holders of any form of
preferred stock (whether perpetual, convertible or otherwise) or other ownership
or beneficial interest in the REIT or any of its Subsidiaries that entitles the
holders thereof to preferential payment or distribution priority with respect to
dividends, assets or other payments over the holders of any other stock or other
ownership or beneficial interest in such Person.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance, currency
spot and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates.
"Restricted Cash" means the sum of Pledged Cash plus any cash
pledged by the Borrower, the REIT or any of their respective Subsidiaries to
other lenders, as indicated in the line item for "restricted cash" in the REIT's
or the Borrower's balance sheet from time to time.
"Scheduled Amortization" means, with respect to any Person,
the sum, as of any date of determination, of the current portion (i.e., such
portion as is scheduled to be paid by the obligor thereof within 12 months from
the date of determination) of all regularly scheduled amortization payments due
on such Person's long-term fully amortizing mortgage Indebtedness (exclusive of
balloon payments).
"Stock" means all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, perpetual preferred stock or any other "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the Securities and
Exchange Act of 1934, and regulations promulgated thereunder).
"Total Indebtedness" means, as of any date of determination,
and in respect of any Person, all outstanding Indebtedness, and in the case of
clause (iii) below, Indebtedness available to be drawn, of a Person, and shall
include, without limitation: (i) such Person's share of the Indebtedness of any
partnership or joint venture in which such Person directly or indirectly holds
any interest; (ii) any recourse or contingent obligations, directly or
indirectly, of such Person with respect to any Indebtedness of such partnership
or joint venture in excess of its proportionate share and (iii) such Person's
liability in respect of letters of credit, whether such liability is contingent
or fixed (such liability to be determined on the assumption that all conditions
for drawing upon such
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letters of credit have been complied with). Notwithstanding the foregoing, (x)
Intra-Company Debt, and (y) accounts payable to trade creditors for goods and
services and current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of business in accordance with customary
terms and paid within the specified time, shall be excluded from the calculation
of "Total Indebtedness" but shall not otherwise be excluded as Indebtedness for
any other purpose hereof.
"Unconsolidated Partnership" means any partnership or joint
venture (a) in which the Borrower or any Subsidiary of the Borrower or the REIT
holds an interest which is not consolidated in the financial statements of the
REIT or (b) which is not a Subsidiary.
"Wholly-Owned Subsidiary" means a Subsidiary of the Borrower
or the REIT one hundred percent (100%) of the Stock or other equity or other
beneficial interests (in the case of Persons other than corporations) is owned
directly or indirectly by (i) the Borrower and/or (ii) the REIT; provided,
however, that where such term is qualified with respect to a specific Person
(e.g., "Wholly-Owned Subsidiary of the REIT") such terms means a Subsidiary one
hundred percent (100%) of the Stock or other equity or other beneficial
interests (in the case of Persons other than corporations) is owned directly or
indirectly by the specified Person.
SECTION 15.02 Compliance with Debt Service Coverage Ratios.
(a) The Borrower shall at all times maintain the Aggregate
Debt Service Coverage Ratio for the Trailing 12 Month Period so that it is not
less than 1.35:1.0.
(b) The Borrower shall at all times maintain the Aggregate
Debt Service Coverage Ratio for the Trailing Three Month Period so that it is
not less than 1.25:1.0.
SECTION 15.03 Compliance with Loan to Value Ratios. The Borrower shall at all
times maintain the Aggregate Loan to Value Ratio for the Trailing 12 Month
Period so that it is not greater than 65%.
SECTION 15.04 Compliance with Concentration Test.
(a) The Borrower shall at all times maintain the Collateral so
that the aggregate Valuations of any group of Mortgaged Properties located
within a one mile radius shall not exceed 25% of the aggregate Valuations of all
Mortgaged Properties.
(b) The Borrower shall at all times after the first Loan Year
maintain the Collateral so that the Valuation of any one Mortgaged Property
shall not exceed 10% of the aggregate Valuations of all Mortgaged Properties.
SECTION 15.05 Compliance with REIT's Net Worth Test. The REIT shall at all times
maintain its Net Worth so that it is not less than $600,000,000 plus 65% of
proceeds (less all reasonable and customary expenses and costs) of equity
offerings consummated by the REIT after the date of this Agreement.
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SECTION 15.06 Compliance with REIT's Total Indebtedness to Gross Asset Value
Ratio. The REIT shall not permit the ratio of Consolidated Total Indebtedness to
Gross Asset Value to exceed 56% at any time.
SECTION 15.07 Compliance with REIT's Consolidated EBITDA to Interest Ratio. The
REIT shall not permit the Consolidated EBITDA to Interest Ratio computed for any
fiscal quarter to be less than 200% for any period of four consecutive fiscal
quarters (treated as a single accounting period).
SECTION 15.08 Compliance with REIT's Consolidated EBITDA to Fixed Charge Ratio.
The REIT shall not permit the Consolidated EBITDA to Fixed Charges Ratio
computed for any fiscal quarter or year to be less than 150% for any period of
four consecutive fiscal quarters (treated as a single accounting period).
ARTICLE XVI
FEES
SECTION 16.01 Standby Fee. The Borrower shall pay the Standby Fee to the Lender
for the period from the date of this Agreement to the end of the Term of this
Agreement. The Standby Fee shall be payable monthly, in arrears, on the first
Business Day following the end of the month, except that the Standby Fee for the
last month during the Term of this Agreement shall be paid on the last day of
the Term of this Agreement.
SECTION 16.02 Origination Fees.
(a) Initial Origination Fee. The Borrower shall pay to the
Lender an origination fee ("Initial Origination Fee") equal to $2,500,000 (which
is equal to the product obtained by multiplying (i) the Commitment as of the
date of this Agreement ($250,000,000), by (ii) 1.0%). The Borrower shall pay the
Initial Origination Fee on the date of this Agreement.
(b) Expansion Origination Fee. Upon the closing of a Credit
Facility Expansion Request under Article VIII, the Borrower shall pay to the
Lender an origination fee ("Expansion Origination Fee") equal to the product
obtained by multiplying (i) the increase in the Commitment made on the Closing
Date for the Credit Facility Expansion Request, by (ii) 1%. The Borrower shall
pay the Expansion Origination Fee on or before the Closing Date for the Credit
Facility Expansion Request.
SECTION 16.03 Due Diligence Fees.
(a) Initial Due Diligence Fees. The Borrower shall pay to the
Lender due diligence fees ("Initial Due Diligence Fees") with respect to the
Initial Mortgaged Properties in an amount not to exceed the product obtained by
multiplying:
(A) $16,000, by
(B) the number of Initial Mortgaged Properties;
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The Borrower has previously paid to the Lender a portion of the Initial Due
Diligence Fees and shall pay the remainder of the Initial Due Diligence Fees to
the Lender on the Initial Closing Date.
(b) Additional Due Diligence Fees for Additional Collateral.
The Borrower shall pay to the Lender additional due diligence fees (the
"Additional Collateral Due Diligence Fees") with respect to each Additional
Mortgaged Property in an amount not to exceed the sum of $16,000. The Borrower
shall pay Additional Collateral Due Diligence Fees for the Additional Mortgaged
Property to the Lender on the date on which it submits the Collateral Addition
Request for the addition of the Additional Mortgaged Property to the Collateral
Pool.
SECTION 16.04 Legal Fees and Expenses.
(a) Initial Legal Fees. The Borrower shall pay, or reimburse
the Lender for, all out-of-pocket legal fees and expenses incurred by the Lender
and by ▇▇▇▇▇▇ ▇▇▇ in connection with the preparation, review and negotiation of
this Agreement and any other Loan Documents executed on the date of this
Agreement. On the date of this Agreement, the Borrower shall pay all such legal
fees and expenses not previously paid or for which funds have not been
previously provided.
(b) Fees and Expenses Associated with Requests. The Borrower
shall pay, or reimburse the Lender for, all costs and expenses incurred by the
Lender, including the out-of-pocket legal fees and expenses incurred by the
Lender in connection with the preparation, review and negotiation of all
documents, instruments and certificates to be executed and delivered in
connection with each Request, the performance by the Lender of any of its
obligations with respect to the Request, the satisfaction of all conditions
precedent to the Borrower's rights or the Lender's obligations with respect to
the Request, and all transactions related to any of the foregoing, including the
cost of title insurance premiums and applicable recordation and transfer taxes
and charges and all other costs and expenses in connection with a Request. The
obligations of the Borrower under this subsection shall be absolute and
unconditional, regardless of whether the transaction requested in the Request
actually occurs. The Borrower shall pay such costs and expenses to the Lender on
the Closing Date for the Request, or, as the case may be, after demand by the
Lender when the Lender determines that such Request will not close.
SECTION 16.05 MBS-Related Costs. The Borrower shall pay to the Lender, within 30
days after demand, all fees and expenses incurred by the Lender or ▇▇▇▇▇▇ Mae in
connection with the issuance of any MBS backed by an Advance, including the fees
charged by Depository Trust Company and State Street Bank or any successor
fiscal agent or custodian.
SECTION 16.06 Failure to Close any Request. If the Borrower makes a Request and
fails to close on the Request for any reason other than the default by the
Lender, then the Borrower shall pay to the Lender and ▇▇▇▇▇▇ ▇▇▇ all damages
incurred by the Lender and ▇▇▇▇▇▇ Mae in connection with the failure to close.
SECTION 16.07 Other Fees. The Borrower shall pay the following additional fees
and payments, if and when required pursuant to the terms of this Agreement:
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(a) The Collateral Addition Fee, pursuant to Section 6.03(b),
in connection with the addition of an Additional Mortgaged Property to the
Collateral Pool pursuant to Article VI;
(b) The Release Price, pursuant to Section 7.02(c), in
connection with the release of a Mortgaged Property from the Collateral Pool
pursuant to Article VII;
(c) The Release Fee, pursuant to Section 7.03(c), in
connection with the release of a Mortgaged Property from the Collateral Pool
pursuant to Article VII;
(d) The Revolving Facility Termination Fee, pursuant to
Section 9.03(b) in connection with a complete or partial termination of the
Revolving Facility pursuant to Article IX; and
(e) The Revolving Facility Termination Fee, pursuant to
Section 10.03(b), in connection with the termination of the Credit Facility
pursuant to Article X.
ARTICLE XVII
EVENTS OF DEFAULT
SECTION 17.01 Events of Default. Each of the following events shall constitute
an "Event of Default" under this Agreement, whatever the reason for such event
and whether it shall be voluntary or involuntary, or within or without the
control of a Borrower Party, or be effected by operation of law or pursuant to
any judgment or order of any court or any order, rule or regulation of any
Governmental Authority:
(a) the occurrence of a default under any Loan Document beyond
the cure period, if any, set forth therein; or
(b) the failure by the Borrower to pay when due any amount
payable by the Borrower under any Note, any Mortgage, this Agreement or any
other Loan Document, including any fees, costs or expenses; or
(c) the failure by any Borrower Party to perform or observe
any covenant set forth in Sections 13.01 through 13.24 or Sections 14.01 through
14.14, provided that such period shall be extended for up to 30 additional days
if the Borrower, in the discretion of the Lender, is diligently pursuing a cure
of such default within 30 days after receipt of notice from the Lender; or
(d) any warranty, representation or other written statement
made by or on behalf of a Borrower Party contained in this Agreement, any other
Loan Document or in any instrument furnished in compliance with or in reference
to any of the foregoing, is false or misleading in any material respect on any
date when made or deemed made; or
(e) any other Indebtedness in an aggregate amount in excess of
$1,000,000 of any Borrower Party or assumed by any Borrower Party (i) is not
paid when due nor within any
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applicable grace period in any agreement or instrument relating to such
Indebtedness or (ii) becomes due and payable before its normal maturity by
reason of a default or event of default, however described, or any other event
of default shall occur and continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness; or
(f) (i) A Borrower Party shall (A) commence a voluntary case
under the Federal bankruptcy laws (as now or hereafter in effect), (B) file a
petition seeking to take advantage of any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up
or composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors, (G)
assert that the Borrower Party has no liability or obligations under this
Agreement or any other Loan Document to which it is a party; or (H) take any
action for the purpose of effecting any of the foregoing; or (ii) a case or
other proceeding shall be commenced against a Borrower Party in any court of
competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding upon or composition
or adjustment of debts, or (B) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower Party, or of all or a
substantial part of the property, domestic or foreign, of the Borrower Party and
any such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or any order granting the relief requested in
any such case or proceeding against the Borrower Party (including an order for
relief under such Federal bankruptcy laws) shall be entered; or
(g) if any provision of this Agreement or any other Loan
Document or the lien and security interest purported to be created hereunder or
under any Loan Document shall at any time for any reason cease to be valid and
binding in accordance with its terms on any Borrower Party, or shall be declared
to be null and void, or the validity or enforceability hereof or thereof or the
validity or priority of the lien and security interest created hereunder or
under any other Loan Document shall be contested by any Borrower Party seeking
to establish the invalidity or unenforceability hereof or thereof, or any
Borrower Party shall deny that it has any further liability or obligation
hereunder or thereunder; or
(h) (i) the execution by the Borrower of a chattel mortgage or
other security agreement on any materials, fixtures or articles used in the
construction or operation of the improvements located on any Mortgaged Property
or on articles of personal property located therein, or (ii) if any such
materials, fixtures or articles are purchased pursuant to any conditional sales
contract or other security agreement or otherwise so that the Ownership thereof
will not vest unconditionally in the Borrower free from encumbrances, or (iii)
if the Borrower does not furnish to the Lender upon request the contracts, bills
of sale, statements, receipted vouchers and agreements, or any of them, under
which the Borrower claims title to such materials, fixtures, or articles; or
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(i) the failure by any Borrower Party to comply with any
requirement of any Governmental Authority within 30 days after written notice of
such requirement shall have been given to the Borrower Party by such
Governmental Authority; provided that, if action is commenced and diligently
pursued by the Borrower Party within such 30 days, then the Borrower Party shall
have an additional 30 days to comply with such requirement; or
(j) a dissolution or liquidation for any reason (whether
voluntary or involuntary) of any Borrower Party; or
(k) any judgment against any Borrower Party, any attachment or
other levy against any portion of any Borrower Party's assets with respect to a
claim or claims in an amount in excess of $500,000 in the aggregate remains
unpaid, unstayed on appeal undischarged, unbonded, not fully insured or
undismissed for a period of 60 days; or
(l) the failure by the Borrower to cause the Gross Revenues
with respect to any Mortgaged Property to be deposited into the applicable
Pledgee Account in accordance with the requirements of the Cash Management
Agreement; or
(m) The failure of the Borrower Party to perform or observe
any of the Financial Covenants, which failure shall continue for a period of 30
days after the date on which the Borrower Party receives a notice from the
Lender specifying the failure; or
(n) The failure of the Borrower to maintain the ▇▇▇▇▇▇
required by Article XXI of this Agreement; or
(o) the failure by any Borrower Party to perform or observe
any term, covenant, condition or agreement hereunder, other than as set forth in
subsections (a) through (m) above, or in any other Loan Document, within 30 days
after receipt of notice from the Lender identifying such failure.
ARTICLE XVIII
REMEDIES
SECTION 18.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the
Lender may do any one or more of the following (without presentment, protest or
notice of protest, all of which are expressly waived by the Borrower):
(a) by written notice to the Borrower, to be effective upon
dispatch, terminate the Commitment and declare the principal of, and interest
on, the Advances and all other sums owing by the Borrower to the Lender under
any of the Loan Documents forthwith due and payable, whereupon the Commitment
will terminate and the principal of, and interest on, the Advances and all other
sums owing by the Borrower to the Lender under any of the Loan Documents will
become forthwith due and payable.
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(b) The Lender shall have the right to pursue any other
remedies available to it under any of the Loan Documents.
(c) The Lender shall have the right to pursue all remedies
available to it at law or in equity, including obtaining specific performance
and injunctive relief.
SECTION 18.02 Waivers; Rescission of Declaration. The Lender shall have the
right, to be exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting forth
the terms, conditions, and extent of such waiver signed by the Lender and
delivered to the Borrower Parties. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
SECTION 18.03 The Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations. If any Borrower Party fails to perform the covenants and
agreements contained in this Agreement or any of the other Loan Documents, then
the Lender at the Lender's option may make such appearances, disburse such sums
and take such action as the Lender deems necessary, in its sole discretion, to
protect the Lender's interest, including (i) disbursement of attorneys' fees,
(ii) entry upon the Mortgaged Property to make repairs and Replacements, (iii)
procurement of satisfactory insurance as provided in paragraph 5 of the Security
Instrument encumbering the Mortgaged Property, and (iv) if the Security
Instrument is on a leasehold, exercise of any option to renew or extend the
ground lease on behalf of the Borrower and the curing of any default of the
Borrower in the terms and conditions of the ground lease. Any amounts disbursed
by the Lender pursuant to this Section, with interest thereon, shall become
additional indebtedness of the Borrower secured by the Loan Documents. Unless
the Borrower and the Lender agree to other terms of payment, such amounts shall
be immediately due and payable and shall bear interest from the date of
disbursement at the weighted average, as determined by Lender, of the interest
rates in effect from time to time for each Advance unless collection from the
Borrower of interest at such rate would be contrary to applicable law, in which
event such amounts shall bear interest at the highest rate which may be
collected from the Borrower under applicable law. Nothing contained in this
Section shall require the Lender to incur any expense or take any action
hereunder.
SECTION 18.04 No Remedy Exclusive. Unless otherwise expressly provided, no
remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Loan Documents or existing at law or
in equity.
SECTION 18.05 No Waiver. No delay or omission to exercise any right or power
accruing under any Loan Document upon the happening of any Event of Default or
Potential Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient.
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SECTION 18.06 No Notice. In order to entitle the Lender to exercise any remedy
reserved to the Lender in this Article, it shall not be necessary to give any
notice, other than such notice as may be required under the applicable
provisions of this Agreement or any of the other Loan Documents.
SECTION 18.07 Application of Payments. Except as otherwise expressly provided in
the Loan Documents, and unless applicable law provides otherwise, (i) all
payments received by the Lender from any of the Borrower Parties under the Loan
Documents shall be applied by the Lender against any amounts then due and
payable under the Loan Documents by any of the Borrower Parties, in any order of
priority that the Lender may determine and (ii) the Borrower shall have no right
to determine the order of priority or the allocation of any payment it makes to
the Lender.
ARTICLE XIX
RIGHTS OF ▇▇▇▇▇▇ MAE
SECTION 19.01 Special Pool Purchase Contract. The Borrower Parties acknowledge
that ▇▇▇▇▇▇ ▇▇▇ is entering into an agreement with the Lender ("Special Pool
Purchase Contract"), pursuant to which, inter alia, (i) the Lender shall agree
to assign all of its rights under this Agreement to ▇▇▇▇▇▇ Mae, (ii) ▇▇▇▇▇▇ ▇▇▇
shall accept the assignment of the rights, (iii) subject to the terms,
limitations and conditions set forth in the Special Pool Purchase Contract,
▇▇▇▇▇▇ Mae shall agree to purchase a 100% participation interest in each Advance
issued under this Agreement by issuing to the Lender a ▇▇▇▇▇▇ ▇▇▇ MBS, in the
amount and for a term equal to the Advance purchased and backed by an interest
in the Base Facility Note or the Revolving Facility Note, as the case may be,
and the Collateral Pool securing the Notes, (iv) the Lender shall agree to
assign to ▇▇▇▇▇▇ Mae all of the Lender's interest in the Notes and Collateral
Pool securing the Notes, and (v) the Lender shall agree to service the loans
evidenced by the Notes.
SECTION 19.02 Assignment of Rights. The Borrower Parties acknowledge and consent
to the assignment to ▇▇▇▇▇▇ ▇▇▇ of all of the rights of the Lender under this
Agreement and all other Loan Documents, including the right and power to make
all decisions on the part of the Lender to be made under this Agreement and the
other Loan Documents, but ▇▇▇▇▇▇ Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of the Lender under this Agreement or the
other Loan Documents.
SECTION 19.03 Release of Collateral. The Borrower Parties hereby acknowledge
that, after the assignment of Loan Documents contemplated in Section 19.02, the
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Articles VII or X. The Borrower Parties acknowledge that the
Security Instruments provide for the release of the Collateral under Articles
VII and X. Accordingly, the Borrower Parties shall not look to the Lender for
performance of any obligations set forth in Articles VII and X, but shall look
solely to the party secured by the Collateral to be released for such
performance. The Lender represents and warrants to the Borrower Parties that the
party secured by the Collateral shall be subject to the release provisions
contained in Articles VII and X by virtue of the release provisions in each
Security Instrument.
SECTION 19.04 Replacement of Lender. At the request of ▇▇▇▇▇▇ ▇▇▇, the Borrower
Parties and the Lender shall agree to the assumption by another lender
designated by ▇▇▇▇▇▇ Mae, of all of the
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obligations of the Lender under this Agreement and the other Loan Documents,
and/or any related servicing obligations, and, at ▇▇▇▇▇▇ Mae's option, the
concurrent release of the Lender from its obligations under this Agreement and
the other Loan Documents, and/or any related servicing obligations, and shall
execute all releases, modifications and other documents which ▇▇▇▇▇▇ Mae
determines are necessary or desirable to effect such assumption.
SECTION 19.05 ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses. The Borrower Parties
agree that any provision providing for the payment of fees, costs or expenses
incurred or charged by the Lender pursuant to this Agreement shall be deemed to
provide for the Borrower's payment of all fees, costs and expenses incurred or
charged by the Lender or ▇▇▇▇▇▇ Mae in connection with the matter for which
fees, costs or expenses are payable.
SECTION 19.06 Third-Party Beneficiary. The Borrower Parties hereby acknowledge
and agree that ▇▇▇▇▇▇ ▇▇▇ is a third party beneficiary of all of the
representations, warranties and covenants made by any Borrower Parties to, and
all rights under this Agreement conferred upon, the Lender, and, by virtue of
its status as third-party beneficiary and/or assignee of the Lender's rights
under this Agreement, ▇▇▇▇▇▇ Mae shall have the right to enforce all of the
provisions of this Agreement against the Borrower Parties.
ARTICLE XX
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES
SECTION 20.01 Insurance and Real Estate Taxes. The Borrower shall (unless waived
by Lender) establish funds for taxes, insurance premiums and certain other
charges for each Mortgaged Property in accordance with Section 7(a) of the
Security Instrument for each Mortgaged Property.
SECTION 20.02 Replacement Reserves. The Borrower shall execute a Replacement
Reserve Agreement for the Mortgaged Property which it owns and shall (unless
waived by the Lender) make all deposits for replacement reserves in accordance
with the terms of the Replacement Reserve Agreement.
ARTICLE XXI
INTEREST RATE PROTECTION
SECTION 21.01 Interest Rate Protection.
(a) The Initial Hedge. To protect against fluctuations in interest
rates, the Borrower shall make arrangements for a Hedge to be in place and
maintained at all times with respect to each Revolving Facility Commitment. The
Hedge for the initial Revolving Facility Commitment shall be a Swap for a period
beginning on the Closing Date and ending not earlier than the date which is the
fifth anniversary of the Initial Closing Date (the "Initial Hedge Period").
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(b) Subsequent ▇▇▇▇▇▇. Additional ▇▇▇▇▇▇ (each, a "Subsequent Hedge")
shall be required (i) for the remaining term of the Revolving Credit Facility
Commitment, upon the expiration of the Swap in place for the Initial Hedge
Period and (ii) if and at such times as a new Revolving Facility Commitment is
funded, such Subsequent Hedge to be in effect for a period beginning on the
Closing Date of the Future Advance Request and ending on the earlier of the
Revolving Facility Termination Date or the date of termination of the Revolving
Facility Commitment pursuant to which the advance is made. It is the intention
of the parties, and a condition of the Revolving Facility Commitment, that the
Borrower shall obtain, and shall maintain at all times during the term of this
Agreement so long as the Revolving Facility Commitment is Outstanding, a Hedge
or ▇▇▇▇▇▇ in an aggregate notional principal amount equal to the Revolving
Facility Commitment in effect from time to time and covering the entire term of
the Revolving Facility Commitment. If the Revolving Facility Commitment
decreases in accordance with the provisions of Article IX, the Borrower may
amend the Hedge or ▇▇▇▇▇▇ to provide for a decrease in the notional amount to an
amount equal to the reduced amount of the Revolving Facility Commitment,
provided that the Lender gives its prior written approval to the documents
reflecting the amendment (which approval shall not be unreasonably withheld,
delayed or conditioned).
SECTION 21.02. Hedge Terms. Each Hedge shall:
(i) provide for a notional principal amount equal at all times
to the outstanding principal balance of the Revolving Facility Commitment;
(ii) except the Swap in effect for the Initial Hedge Period,
be in effect for the entire term of the Revolving Facility Commitment;
(iii) provide for a notional interest rate equal to the Three
Month Libor Rate in effect from time to time (the "Hedge Rate");
(iv) require the counterparty to make interest payments on the
notional principal amount at a rate equal to the amount by which Coupon Rate
exceeds the Hedge Rate;
(v) require the counterparty to make such interest payments to
an account pledged to the Lender pursuant to the Hedge Security Agreement; and
(vi) be evidenced, governed and secured on terms and
conditions, and pursuant to documentation (the "Hedge Documents"), in form and
content acceptable to ▇▇▇▇▇▇ ▇▇▇, and with a counterparty (a "Counterparty")
approved by ▇▇▇▇▇▇ Mae.
SECTION 21.03 Hedge Security Agreement; Delivery of Hedge Payments. Pursuant to
a Hedge Security Agreement, the Lender shall be granted an enforceable,
perfected, first priority lien on and security interest in each Hedge and
payments due under the Hedge (including scheduled and termination payments) in
order to secure the Borrower's obligations to the Lender under this Agreement.
With respect to each Hedge, the Hedge Security Agreement must be delivered by
the Borrower to the Lender no later than the effective date of the Hedge.
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SECTION 21.04 Termination. The Borrower shall not terminate, transfer or consent
to any transfer of any existing Hedge without the Lender's prior written consent
as long as the Borrower is required to maintain a Hedge pursuant to this
Agreement; provided, however, that if, and at such time as, any Revolving
Facility Commitment terminates, the Borrower shall have the right to terminate
the existing Hedge with respect to such Revolving Facility Commitment.
SECTION 21.05 Performance Under Hedge Documents. The Borrower agrees to comply
fully with, and to otherwise perform when due, its obligations under, all
applicable Hedge Documents and all other agreements evidencing, governing and/or
securing any Hedge arrangement contemplated under this Article XXI. The Borrower
shall not exercise, without the Lender's prior written consent, and shall
exercise, at the Lender's direction, any rights or remedies under any Hedge
Document, including without limitation the right of termination.
ARTICLE XXII
LIMITS ON PERSONAL LIABILITY
SECTION 22.01 Limits on Personal Liability.
(a) Limits on Personal Liability. Except as otherwise provided
in this Article, the personal liability of the Borrower Parties under this
Agreement, the Notes, the Security Instrument or any other Loan Document for the
performance of any Obligations of any Borrower Party under the Loan Documents
shall be limited to an amount equal to 15% of the amount of the then current
Commitment regardless of the amount of the Credit Facility that is outstanding,
and the Lender's only recourse for the payment and performance of the
Obligations in excess of such amount shall be the Lender's exercise of its
rights and remedies with respect to the Mortgaged Property and any other
Collateral held by the Lender as security for the Obligations. The personal
liability of the Borrower Parties pursuant to the preceding sentence shall be
joint and several and shall be payable upon demand without notice or setoff.
This limitation on the Borrower Parties' liability shall not limit or impair the
Lender's enforcement of its rights against any guarantor of all or part of the
Obligations but, if such guarantor is a Borrower Party, such guarantor's
liability shall also be limited to the extent set forth in this Article.
(b) Exceptions to Limits on Personal Liability. In addition to
amounts the Borrower Parties are personally liable for pursuant to paragraph (a)
above, the Borrower Parties shall also be personally liable to the Lender on a
joint and several basis for the repayment of a portion of the Advances and other
amounts due under the Loan Documents equal to any loss or damage suffered by the
Lender as a result of (1) failure of the Borrower to pay to the Lender upon
demand after an Event of Default all Rents to which the Lender is entitled under
Section 3(a) of the Security Instrument encumbering the Mortgaged Property and
the amount of all security deposits collected by the Borrower from tenants then
in residence; (2) failure of the Borrower to apply all insurance proceeds and
condemnation proceeds as required by the Security Instrument encumbering the
Mortgaged Property; (3) failure of the Borrower to comply with Section 13.04
relating to the delivery of books and records, statements, schedules and
reports; (4) fraud or written material misrepresentation by any Borrower Party
or any officer, director, partner, member or employee of
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any Borrower Party in connection with the application for or creation of the
Obligations or any request for any action or consent by the Lender; (5) failure
to apply Rents, first, to the payment of reasonable operating expenses and then
to amounts ("Debt Service Amounts") payable under the Loan Documents (except
that the Borrower Party will not be personally liable (i) to the extent that the
Borrower Party lacks the legal right to direct the disbursement of such sums
because of a bankruptcy, receivership or similar judicial proceeding, or (ii)
with respect to Rents of a Mortgaged Property that are distributed in any
calendar year if the Borrower has paid all operating expenses and Debt Service
Amounts for that calendar year); or (6) the Borrower's failure to deposit all
Gross Revenues into a Property Account (as defined in the Cash Management
Agreement) in accordance with the Cash Management Agreement.
(c) Full Recourse. The Borrower Parties shall become
personally liable to the Lender for the payment and performance of all
Obligations upon the occurrence of any of the following Events of Default: (1)
the Borrower's acquisition of any property or operation of any business not
permitted by Section 33 of the Security Instrument; or (2) a Transfer that is an
Event of Default under Section 21 of the Security Instrument.
(d) Permitted Transfer Not Release. No Transfer by the REIT of
its Ownership Interests in the Borrower shall release the Borrower from
liability under this Article, this Agreement or any other Loan Document, unless
the Lender shall have approved the Transfer and shall have expressly released
the Borrower in connection with the Transfer.
(e) Miscellaneous. To the extent that a Borrower Party has
personal liability under this Section, the Lender may exercise its rights
against the Borrower Party personally without regard to whether the Lender has
exercised any rights against the Mortgaged Property or any other security, or
pursued any rights against any guarantor, or pursued any other rights available
to the Lender under the Loan Documents or applicable law. For purposes of this
Article, the term "Mortgaged Property" shall not include any funds that (1) have
been applied by any Borrower Party as required or permitted by the Loan
Documents prior to the occurrence of an Event of Default, or (2) are owned by a
Borrower Party and which the Borrower Party was unable to apply as required or
permitted by the Loan Documents because of a bankruptcy, receivership, or
similar judicial proceeding.
ARTICLE XXIII
MISCELLANEOUS PROVISIONS
SECTION 23.01 Counterparts. To facilitate execution, this Agreement may be
executed in any number of counterparts. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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SECTION 23.02 Amendments, Changes and Modifications. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by all of the parties hereto.
SECTION 23.03 Payment of Costs, Fees and Expenses. The Borrower shall pay, on
demand, all fees, costs, charges or expenses (including the fees and expenses of
attorneys, accountants and other experts) incurred by the Lender in connection
with:
(a) Any amendment, consent or waiver to this Agreement or any
of the Loan Documents (whether or not any such amendments, consents or waivers
are entered into).
(b) Defending or participating in any litigation arising from
actions by third parties and brought against or involving the Lender with
respect to (i) any Mortgaged Property, (ii) any event, act, condition or
circumstance in connection with any Mortgaged Property or (iii) the relationship
between the Lender and the Borrower or the REIT in connection with this
Agreement or any of the transactions contemplated by this Agreement.
(c) The administration or enforcement of, or preservation of
rights or remedies under, this Agreement or any other Loan Documents or in
connection with the foreclosure upon, sale of or other disposition of any
Collateral granted pursuant to the Loan Documents.
(d) The REIT's Registration Statement, or similar disclosure
documents, including fees payable to any rating agencies, including the fees and
expenses of the Lender's attorneys and accountants.
The Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, the Borrower will not be obligated
to pay any franchise, estate, inheritance, income, excess profits or similar tax
on the Lender. Any attorneys' fees and expenses payable by the Borrower pursuant
to this Section shall be recoverable separately from and in addition to any
other amount included in such judgment, and such obligation is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into any such judgment. Any amounts payable by the Borrower pursuant to
this Section, with interest thereon if not paid when due, shall become
additional indebtedness of the Borrower secured by the Loan Documents. Such
amounts shall bear interest from the date such amounts are due until paid in
full at the weighted average, as determined by Lender, of the interest rates in
effect from time to time for each Advance unless collection from the Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. The provisions of this Section are cumulative
with, and do not exclude the application and benefit to the Lender of, any
provision of any other Loan Document relating to any of the matters covered by
this Section.
SECTION 23.04 Payment Procedure. All payments to be made to the Lender pursuant
to this Agreement or any of the Loan Documents shall be made in lawful currency
of the United States of
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America and in immediately available funds by wire transfer to an account
designated by the Lender before 1:00 p.m. (Washington, D.C. time) on the date
when due.
SECTION 23.05 Payments on Business Days. In any case in which the date of
payment to the Lender or the expiration of any time period hereunder occurs on a
day which is not a Business Day, then such payment or expiration of such time
period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.
SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE
OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF EACH BORROWER PARTY UNDER THE NOTES, AND EACH BORROWER
PARTY UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED,
CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF VIRGINIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF
LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO
(1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS,
AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES,
WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE
MORTGAGED PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER
THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE VIRGINIA UNIFORM
COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE
GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS
LOCATED. THE BORROWER PARTIES AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN
RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL
BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN VIRGINIA. THE LOCAL AND
FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN VIRGINIA SHALL, EXCEPT AS
OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY
ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES
RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH
THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO,
OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER PARTY IRREVOCABLY
CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION
ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN
DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED
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BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED
HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING OR EXERCISING ANY RIGHTS AGAINST THE BORROWER PARTIES, AND AGAINST
THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR
PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF VIRGINIA
SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER PARTIES AND THE LENDER
AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER PARTIES TO PERSONAL
JURISDICTION WITHIN VIRGINIA EACH BORROWER PARTY (I) COVENANTS AND AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN
DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, EACH BORROWER PARTY HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED
TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO EACH BORROWER
PARTY THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE
FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY THE
BORROWER PARTIES UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY
THE BORROWER PARTIES' FREE WILL.
SECTION 23.07 Severability. In the event any provision of this Agreement or in
any other Loan Document shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision will be severable from the remainder hereof as to
such jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.
SECTION 23.08 Notices.
(a) Manner of Giving Notice. Each notice, direction,
certificate or other communication hereunder (in this Section referred to
collectively as "notices" and singly as a "notice") which any party is required
or permitted to give to the other party pursuant to this Agreement shall be in
writing and shall be deemed to have been duly and sufficiently given if:
(1) personally delivered with proof of delivery
thereof (any notice so delivered shall be deemed to have been received
at the time so delivered);
(2) sent by Federal Express (or other similar
overnight courier) designating morning delivery (any notice so
delivered shall be deemed to have been received on the Business Day it
is delivered by the courier);
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(3) sent by United States registered or certified
mail, return receipt requested, postage prepaid, at a post office
regularly maintained by the United States Postal Service (any notice so
sent shall be deemed to have been received on the Business Day it is
delivered); or
(4) sent by telecopier or facsimile machine which
automatically generates a transmission report that states the date and
time of the transmission, the length of the document transmitted, and
the telephone number of the recipient's telecopier or facsimile machine
(to be confirmed with a copy thereof sent in accordance with paragraphs
(1), (2) or (3) above within two Business Days) (any notice so
delivered shall be deemed to have been received (i) on the date of
transmission, if so transmitted before 5:00 p.m. (local time of the
recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a
Business Day or if transmitted on a day other than a Business Day);
addressed to the parties as follows:
As to any Borrower Party:
c/▇ ▇▇▇▇▇▇ Residential Properties, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Properties, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Senior Vice President and
In-House Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to the Lender:
WMF Washington Mortgage Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to ▇▇▇▇▇▇ Mae:
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Change of Notice Address. Any party may, by notice given
pursuant to this Section, change the person or persons and/or address or
addresses, or designate an additional person or persons or an additional address
or addresses, for its notices, but notice of a change of address shall only be
effective upon receipt. Each party agrees that it shall not refuse or reject
delivery of any notice given hereunder, that it shall acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Agreement to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the courier
service or facsimile.
SECTION 23.09 Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the
parties hereto agree that they shall, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as the Lender or the Borrower
Parties may request and as may be required in the opinion of the Lender or its
counsel to effectuate the intention of or facilitate the performance of this
Agreement or any Loan Document.
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(b) Further Documentation. Without limiting the generality of
subsection (a), in the event any further documentation or information is
required by the Lender to correct patent mistakes in the Loan Documents,
materials relating to the Title Insurance Policies or the funding of the
Advances, the Borrower Parties shall provide, or cause to be provided to the
Lender, at their cost and expense, such documentation or information. The
Borrower Parties shall execute and deliver to the Lender such documentation,
including any amendments, corrections, deletions or additions to the Notes, the
Security Instruments or the other Loan Documents as is required by the Lender.
(c) Compliance with Investor Requirements. Without limiting
the generality of subsection (a), the Borrower Parties shall do anything
necessary to comply with the requirements of the Lender in order to enable the
Lender to sell the MBS backed by an Advance.
SECTION 23.10 Term of this Agreement. This Agreement shall continue in effect
until the Credit Facility Termination Date.
SECTION 23.11 Assignments; Third-Party Rights. No Borrower Party shall assign
this Agreement, or delegate any of its obligations hereunder, without the prior
written consent of the Lender. The Lender may assign its rights and obligations
under this Agreement separately or together, without the Borrower Parties'
consent, only to ▇▇▇▇▇▇ ▇▇▇, but may not delegate its obligations under this
Agreement unless required to do so pursuant to Section 19.04.
SECTION 23.12 Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 23.13 General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in Article I, Section 15.01, Section 16.01 and elsewhere
in this Agreement have the meanings assigned to them in this Agreement and
include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to "Articles," "Sections," "subsections,"
"paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a reference to an Exhibit or a Schedule without a
further reference to the document to which the Exhibit or Schedule is attached
is a reference to an Exhibit or Schedule to this Agreement; (vi) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and (vii) the word
"including" means "including, but not limited to."
SECTION 23.14 Interpretation. The parties hereto acknowledge that each party and
their respective counsel have participated in the drafting and revision of this
Agreement and the Loan Documents. Accordingly, the parties agree that any rule
of construction which disfavors the
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drafting party shall not apply in the interpretation of this Agreement and the
Loan Documents or any amendment or supplement or exhibit hereto or thereto.
SECTION 23.15 Standards for Decisions, Etc. If the Lender's approval is required
for any matter hereunder, such approval may be granted or withheld in the
Lender's sole and absolute discretion. If the Lender's designation,
determination, selection, estimate, action or decision is required, permitted or
contemplated hereunder, such designation, determination, selection, estimate,
action or decision shall be made in the Lender's sole and absolute discretion.
SECTION 23.16 Decisions in Writing. Any approval, designation, determination,
selection, action or decision of the Lender must be in writing to be effective.
SECTION 23.17 Joint and Several Liability. Each Borrower Party shall be jointly
and severally liable for the payment and performance of each obligation of any
Borrower Party arising under any of the Loan Documents.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Borrower Parties
▇▇▇▇▇▇ RESIDENTIAL PROPERTIES, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
▇▇▇▇▇▇/▇▇▇▇▇▇ OPERATING PARTNERSHIP, L.P.
By: ▇▇▇▇▇▇ Residential Properties, Inc.,
General Partner
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
Lender
WMF WASHINGTON MORTGAGE CORP., a Delaware
corporation, formerly known as Washington
Mortgage Financial Group, Ltd.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------