SCHEDULE OF OMITTED
LOAN AGREEMENT
The Company has also entered into an additional Loan Agreement which is
substantially identical to the following Loan Agreement in all material respects
except as to the company and amount. Listed below are the material details in
which such documents differ from the document filed as part of this exhibit.
Company Amount
------------------------------------- ---------------------
CAX La Casa ▇▇▇▇▇▇, L.L.C. $3,840,000.00
PPM Loan No.: 99-0087-AZ
LOAN AGREEMENT
by and between
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY, as Lender
and
CAX RANCHO MIRAGE, L.L.C., as Borrower
Date: As of January 19, 2000
LOAN AGREEMENT
This Loan Agreement is made as of this 19th day of January, 2000, by
and between CAX RANCHO MIRAGE, L.L.C., a Delaware limited liability company
("Borrower"), and ▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY, a Michigan
corporation ("Lender").
RECITALS
▇. ▇▇▇▇▇▇▇▇ is a Delaware limited liability company which has its
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Its sole member and manager is Commercial Assets, Inc., a
Delaware corporation. Borrower is the owner of certain real estate, known as
Rancho Mirage Adult Mobile Home Park, located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, consisting of approximately 60 acres, and
legally described in Exhibit A hereto (the "Land"), which is improved with 312
pad spaces, including 310 double wide pad spaces, a clubhouse, lighted tennis
courts, a swimming pool and a 9 hole "pitch and putt" golf course (the
"Improvements").
▇. ▇▇▇▇▇▇▇▇ has applied to Lender for a loan (the "Loan") in the
maximum amount of Six Million Two Hundred Seventy Thousand and No/100ths Dollars
($6,270,000.00) and Lender has agreed to make the Loan on the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. The following terms as used herein shall have the
following meanings:
Affiliated Party: (i) if Borrower or any Affiliated Party is a
general or limited partnership, the general partners thereof and any
person or entity directly or indirectly controlling any general partner
thereof; (ii) if Borrower or any Affiliated Party is a joint venture,
its joint venture partners and any person or entity directly or
indirectly controlling any joint venture partner thereof; (iii) if
Borrower is a corporation or limited liability company, any person or
entity directly or indirectly controlling Borrower; and (iv)
Indemnitor.
Agreement: This Loan Agreement, as originally executed or as
may be hereafter supplemented or amended from time to time in writing.
Application/Commitment: Collectively, the "Application" to PPM
Finance, Inc. for the Loan dated September 2, 1999, and the acceptance
thereof as a commitment dated October 21, 1999.
Appraisal: An appraisal prepared by a member of a national
appraisal organization that has adopted the Uniform Standards of
Professional Appraisal Practice (USPAP) established by the Appraisal
Standards Board of the Appraisal Foundation. The appraiser shall use
assumptions and limiting conditions established by ▇▇▇▇▇▇, and the
appraisal shall be in conformity with ▇▇▇▇▇▇'s appraisal guidelines and
the requirements of the Application/Commitment.
Building Laws: All federal, state and local laws, statutes,
regulations, codes, ordinances, orders, rules and requirements
applicable to the development, construction, use, operation, management
and maintenance of the Project, including without limitation, all
access, building, zoning, planning, subdivision, fire, traffic, safety,
health, labor, discrimination, environmental, air quality, wetlands,
shoreline, flood plain laws, regulations and ordinances, including,
without limitation, all applicable requirements of the Fair Housing Act
of 1988, as amended, the Americans with Disabilities Act of 1990, as
amended, and all orders or decrees of any court adopted or enacted with
respect thereto applicable to the Project, as any of the same may from
time to time be amended, modified or supplemented.
Deed of Trust: The Deed of Trust, Mortgage, Security Deed,
Deed to Secure Debt or similar instrument described in Section 2.2 of
this Agreement, as originally executed or as may be hereafter
supplemented or amended from time to time in writing.
Default: Any event which, if it were to continue uncured,
would, with notice or lapse of time or both, constitute an Event of
Default (as such term is defined in Section 7.1 of this Agreement).
Default Rate: The default interest rate specified in the Note.
Environmental Indemnity Agreement: The Environmental Indemnity
Agreement described in Section 2.2 of this Agreement, executed by
▇▇▇▇▇▇▇▇ and Indemnitor, as originally executed or as may be hereafter
supplemented or amended from time to time in writing.
ERISA: Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder from time to time.
Governmental Approvals: The meaning set forth in Section 4.11
of this Agreement.
Governmental Authority: Any federal, state, county or
municipal government, or political subdivision thereof, any
governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality, or public body, or any court,
administrative tribunal, or public utility.
Improvements: The meaning set forth in Recital A of this
Agreement.
2
Indemnification Agreement: The indemnification agreement
described in Section 2.2 of this Agreement, executed by Indemnitor, as
originally executed or as may be hereafter supplemented or amended from
time to time in writing.
Include or including: Including but not limited to.
Indemnitor: Commercial Assets, Inc.
Internal Revenue Code: The Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder from time to time.
Knowledge: When used to modify a representation or warranty,
actual knowledge or such knowledge as a reasonable person under the
circumstances should have after diligent inquiry and investigation.
Land: The land legally described in Exhibit A hereto.
Laws: Collectively, all federal, state and local laws,
statutes, codes, ordinances, orders, rules and regulations, including
judicial opinions or precedential authority in the applicable
jurisdiction, as any of the same may from time to time be amended,
modified or supplemented.
Loan Documents: This Agreement, the Environmental Indemnity,
the Indemnification Agreement, the Deed of Trust, the Note, the other
documents and instruments listed in Section 2.2 of this Agreement, and
all other documents and instruments given to Lender from time to time
in connection with or to secure the Loan, as originally executed or as
any of the same may be hereafter supplemented or amended from time to
time, in writing.
Loan Maturity: Maturity Date (as defined in the Note).
Loan Opening Date: The date of the initial disbursement of the
Loan.
Mortgage: The mortgage, deed of trust, security deed, deed to
secure debt or similar instrument described in Section 2.2 of this
Agreement, as originally executed or as may be hereafter supplemented
or amended from time to time in writing.
Note: The mortgage note described in Section 2.2 of this
Agreement, as originally executed or as may be hereafter supplemented
or amended from time to time in writing.
3
Permitted Exceptions: Those matters listed in Exhibit B hereto
to which the interest of Borrower in the Real Property may be subject
and any such other title exceptions, if any, as Lender, or its counsel,
may approve in advance in writing.
Project: The Land together with the Improvements and any and
all other buildings, structures and improvements located or to be
located thereon and all rights, privileges, easements, hereditaments
and appurtenances, thereunto relating or appertaining, including
parking for at least 624 vehicles, but in any event parking in
compliance with any applicable zoning ordinance and tenant leases, and
all personal property, fixtures and equipment required or used (or to
be used) for the operation thereof.
Real Property: That portion of the Project constituting real
property.
Title Insurer: Transnation Title Insurance Company, or such
other title insurance company licensed in the State of Arizona, as may
be approved by Lender in connection with the Loan.
Defined terms may be used in the singular or the plural. When used in the
singular preceded by "a", "an", or "any", such term shall be taken to indicate
one or more members of the relevant class. When used in the plural, such term
shall be taken to indicate all members of the relevant class.
2. TERMS OF LOAN AND DOCUMENTS.
2.1 Agreement to Borrow and Lend. Subject to all of the terms,
provisions and conditions set forth in this Agreement, ▇▇▇▇▇▇ agrees to make and
▇▇▇▇▇▇▇▇ agrees to accept the Loan described in the Recitals of this Agreement.
▇▇▇▇▇▇▇▇ agrees to pay all indebtedness evidenced and secured by the Loan
Documents in accordance with the terms thereof.
2.2 Loan Documents. In consideration of ▇▇▇▇▇▇'s entry into this
Agreement and ▇▇▇▇▇▇'s agreement to make the Loan, ▇▇▇▇▇▇▇▇ agrees that it will,
in sufficient time for review by ▇▇▇▇▇▇ and its counsel prior to the Loan
Opening Date, execute and deliver or cause to be executed and delivered to
Lender the following documents and instruments in form and substance acceptable
to Lender:
(a) A mortgage note from Borrower payable to the order of
Lender in the original principal amount of Six Million Two
Hundred Seventy Thousand and No/100ths Dollars
($6,270,000.00).
(b) A first mortgage deed of trust, on ▇▇▇▇▇▇▇▇'s fee simple
estate in the Project securing the Note, subject only to the
Permitted Exceptions;
4
(c) An assignment to Lender of all rents, income, issues and
profits of, and all leases, licenses, concessions and other
similar agreements relating to or connected with the Project
which shall be a present first priority absolute assignment of
all present and future leases of all or any part of the
Project, all guarantees thereof and all rents and other sums
payable thereunder;
(d) A security agreement granting Lender a security interest
in all personal property, tangible and intangible, owned or
hereafter acquired by Borrower and relating to the Project,
including bank accounts, accounts receivable, all escrow,
impound or reserve accounts required in the Loan Documents,
and other intangible property, which agreement may be combined
with the Mortgage;
(e) Uniform Commercial Code financing statements, in
duplicate, executed by ▇▇▇▇▇▇▇▇ as debtor with respect to all
of the personal property;
(f) An indemnity agreement with respect to certain matters
including environmental covenants (the "Environmental
Indemnity");
(g) An indemnity agreement with respect to certain matters
excluded from the non-recourse provisions of the Loan
Documents, executed by Indemnitor;
(h) A borrower's affidavit containing certain warranties and
representations by ▇▇▇▇▇▇▇▇;
(i) A certificate regarding personal property containing
certain warranties and representations by ▇▇▇▇▇▇▇▇ regarding
the personal property included in the Project;
(j) Any other documents required by the
Application/Commitment; and
(k) Such other papers and documents as may be required by this
Agreement or as Lender may reasonably require.
2.3 Terms of the Loan. The Loan will bear interest for the period and
at the rate or rates set forth in the Note, and be payable in accordance with
the terms of the Note. The unpaid principal balance, all accrued and unpaid
interest and all other sums due and payable under the Note or other Loan
Documents, if not sooner paid, shall be paid in full at Loan Maturity.
2.4 Prepayments. Borrower shall have no right to make prepayments of
the Loan in whole or in part except in accordance with the terms of the Note.
2.5 Conditions to Disbursement. ▇▇▇▇▇▇▇▇ agrees to perform and satisfy
all conditions precedent to the disbursement of the Loan set forth in the
Application/Commitment, including those set forth in Sections 2.4 (Third Party
Reports) and 3 (The Closing) thereof.
5
2.6 Sources and Uses. Borrower shall use the proceeds of the Loan
solely for the purposes set forth in Exhibit C hereto. This sources and uses
statement must be in substantial accordance with the sources and uses statement
attached to the Application/Commitment.
3. BORROWER'S COVENANTS. Borrower further covenants and agrees with
▇▇▇▇▇▇ as follows:
3.1 Escrow Deposits. (a) Unless specifically waived by a separate
written agreement, Borrower shall deposit monthly with Lender a sum equal to
one-twelfth (1/12th) of the amount estimated by ▇▇▇▇▇▇ to be required to pay, at
least thirty (30) days prior to their respective due dates, annual taxes,
assessments, ground rent and insurance premiums for the Project (the "Escrow
Account"). Lender shall not pay interest on or segregate the Escrow Account
unless required to do so under applicable law. If Lender is required to
segregate the Escrow Account, Borrower shall execute such documents as Lender,
in its sole discretion, deems necessary to perfect its security interest in the
Escrow Account. On the Loan Opening Date, Borrower shall make an initial deposit
with Lender of a sum equal to one-twelfth (1/12th) of the estimated annual
property taxes and assessments, a sum equal to one-twelfth (1/12th) of the
annual ground rent, if applicable, and a sum equal to one-twelfth (1/12th) of
the estimated annual insurance premiums, multiplied by the number of months
elapsed in the respective billing periods. For example, if annual taxes and
assessments are paid every six (6) months (in June and December) and the Loan
Opening Date occurs in March, the initial tax impound would be four-twelfths
(4/12ths) of the estimated annual property taxes and assessments; and
(b) The Escrow Account is hereby pledged as additional
security for the Loan and shall be held to be irrevocably applied for the
purposes for which made hereunder and shall not be subject to the direction or
control of Borrower; provided, however, that neither Lender nor any depository
holding such funds shall be liable for any failure to apply to the payment of
taxes, assessments, ground rent or insurance premiums any amount so deposited
unless (i) Borrower shall have requested Lender or said depository in writing to
make application of such funds to the payment of the particular taxes,
assessments, ground rent or insurance premiums as the case may be, accompanied
by the bills therefor, (ii) there shall exist no Default or Event of Default
hereunder or under any of the Loan Documents, (iii) there are sufficient funds
in the Escrow Account to pay the particular taxes, assessments, ground rent or
insurance premiums and (iv) following payment of such taxes, assessments, ground
rent or insurance premiums, the Escrow Account will be "in balance" in the
reasonable opinion of ▇▇▇▇▇▇.
3.2 Payment of Taxes. Borrower shall pay all real estate taxes,
assessments and charges of every kind upon the Project before the same become
delinquent; provided, however, that Borrower shall have the right to pay any
such tax, assessment or charge under protest or to otherwise contest any such
tax, assessment or charge but only if (i) such contest has the effect of
preventing the collection of such tax, assessment or charge so contested and
also preventing the sale or forfeiture of the Project or any part thereof or any
6
interest therein, (ii) Borrower has notified Lender in writing in advance of its
intent to contest such tax, assessment or charge, and (iii) Borrower has
deposited security in form and amount satisfactory to Lender, in its sole
judgment, and increases the amount of such security so deposited promptly after
▇▇▇▇▇▇'s request therefor. If Borrower shall fail to commence such contest or,
having commenced such contest, and having deposited such security required by
Lender for its full amount, shall thereafter fail to prosecute such contest in
good faith or with due diligence, or, upon adverse conclusion of any such
contest, shall fail to pay the tax, assessment or charge so contested, Lender
may at its election (but shall not be required to), pay and discharge any such
tax, assessment or charge, and any interest or penalty thereon, and any amounts
so expended by Lender shall be deemed to constitute disbursements of the Loan
proceeds hereunder (even if the total amount of disbursements would exceed the
face amount of the Note), and shall bear interest from the date expended at the
Default Rate and be payable with such interest upon demand. Lender in making any
payment hereby authorized relating to any tax, assessment or charge, may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax, assessment, charge, sale, forfeiture,
tax lien or title or claim thereof.
3.3 Maintenance of Insurance. (a) Insurance Coverage Requirements:
Borrower shall maintain the following insurance coverages, all in forms, with
companies and in amounts satisfactory to Lender:
(i) All risk/open perils special form property insurance must
be in force with limits of 100% replacement cost. ▇▇▇▇▇▇▇▇ agrees to
furnish upon ▇▇▇▇▇▇'s request evidence of replacement cost, without
cost to Lender, such as is regularly and ordinarily obtained by
insurance companies to determine such replacement cost. If a
coinsurance clause is in effect, an agreed amount endorsement is
required. Blanket policies must include limits by property location.
The coverage shall insure the Real Property and all tangible personal
property.
(ii) Broad form boiler and machinery coverage, including a
form of business income, must be in force if any such item is located
on or about the Real Property.
(iii) If available, flood insurance must be in force if the
Real Property is located in a special flood hazard area according to
the most current flood insurance rate map issued by the Federal
Emergency Management Agency. The coverage shall include the Real
Property and the tangible personal property.
(iv) A form of business income or rent loss coverage must be
in force in the amount of one year's business income or rental income
from the Property. Blanket policies must include limits by property
location.
(v) Comprehensive/general liability coverage must be in force
with a $3,000,000 combined single limit per occurrence with a minimum
aggregate limit of $5,000,000. Umbrella/excess liability insurance may
7
be used to satisfy this requirement. Liquor liability coverage must be
in force if alcoholic beverages are or will be sold, served or given on
the Real Property, either in the name of Borrower or in the name of the
tenant which sells, serves or gives such alcoholic beverages.
(vi) Such additional coverages appropriate to the property
type and site location as Lender may require. Additional coverages may
include earthquake, mine subsidence, sinkhole, personal property,
supplemental liability, or coverages of other property-specific risks.
(b) Insurance Procedures:
(i) How Lender Should Be Named. On all property policies and
coverages (including coverage against loss of business or rental
income), Lender must be named as "First Mortgagee" and "Lenders Loss
Payee" under a standard mortgage clause. On all liability policies and
coverages, including any liquor liability coverage maintained by any
tenant, Lender must be named as an "Additional Insured." ▇▇▇▇▇▇ should
be referred to verbatim as follows: ▇▇▇▇▇▇▇ National Life Insurance
Company and its successors, assigns and affiliates, as their interest
may appear; c/o PPM Finance, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or its Mortgage Correspondent.
(ii) Rating. The insurance carrier must be rated A, Class VII
or better by Best's Rating Service, without regard to its parent's or
any reinsurer's rating.
(iii) Deductible. The maximum deductible on all coverages and
policies is $25,000.
(iv) Notices, Changes and Renewals. All policies must require
the insurance carrier to give Lender a minimum of thirty (30) days
notice in the event of modification, cancellation or non-renewal. Any
vacancy, change of title, tenant occupancy or use, physical damage,
additional improvements or other factors affecting any insurance
contract must be reported to Lender immediately. Borrower must provide
Lender with a paid insurance agent's receipt for all current coverages
unless such bills are paid by ▇▇▇▇▇▇ from proceeds on deposit in the
Escrow Account established pursuant to Section 3.1. An original or
certified copy of each policy is required on or prior to the Loan
Opening Date and upon renewal. If no such copy is available, Lender
will accept a binder for a period not to exceed 90 days. All binders,
certificates of insurance, and original or certified copies of policies
must name ▇▇▇▇▇▇▇▇ as a named insured, or as an additional insured,
must include the complete and accurate property address and must bear
the original signature of the issuing insurance agent.
(v) No Other Insurance. Borrower shall not take out separate
insurance concurrent in form or contributing in the event of loss with
that required to be maintained hereunder unless ▇▇▇▇▇▇ is included
8
thereon under a standard, non-contributory Lender clause acceptable to
▇▇▇▇▇▇. Borrower shall immediately notify Lender whenever any such
separate insurance is taken out and shall promptly deliver to Lender
the original policy or policies of such insurance.
(c) ▇▇▇▇▇▇'s Right to Obtain Insurance: Notwithstanding this
Section 3.3, in the Event of a Default under this Agreement or a Default under
any of the other Loan Documents, Lender shall have the right (but not the
obligation) to place and maintain insurance required to be placed and maintained
by Borrower hereunder, and use funds on deposit in the Escrow Account for the
payment of insurance to pay for same. Any additional amounts expended therefor
shall constitute additional disbursements of Loan proceeds (even if the total
amount of disbursements would exceed the face amount of the Note), and shall
bear interest from the date expended at the Default Rate and be payable together
with such interest upon demand.
3.4 Mechanics' Liens and Contest Thereof. Borrower will not suffer or
permit any mechanics' lien claims to be filed or otherwise asserted against the
Project and will promptly discharge the same if any claims for lien or any
proceedings for the enforcement thereof are filed or commenced; provided,
however, that Borrower shall have the right to contest in good faith and with
due diligence the validity of any such lien or claim upon furnishing to the
Title Insurer such security or indemnity as it may require to induce the Title
Insurer to insure against all such claims, liens or proceedings; and provided
further that Lender will not be required to make any further disbursements of
the Loan proceeds unless (a) any mechanics' lien claims shown by any title
insurance commitments or interim binders or certifications have been released or
insured against by the Title Insurer or (b) Borrower shall have provided Lender
with such other security with respect to such claim as may be acceptable to
Lender, in its sole discretion.
3.5 Settlement of Mechanics' Lien Claims. If Borrower shall fail
promptly to discharge any mechanics' lien claim filed or otherwise asserted or
to contest any such claims and give security or indemnity in the manner provided
in Section 3.4 hereof, or, having commenced to contest the same, and having
given such security or indemnity, shall thereafter fail to prosecute such
contest in good faith or with due diligence, or fail to maintain such indemnity
or security so required by the Title Insurer for its full amount, or, upon
adverse conclusion of any such contest, shall fail to cause any judgment or
decree to be satisfied and lien to be promptly released, then, and in any such
event, Lender may, at its election, but shall not be required to, (i) procure
the release and discharge of any such claim and any judgment or decree thereon,
without inquiring into or investigating the amount, validity or enforceability
of such lien or claim and (ii) effect any settlement or compromise of the same,
or may furnish such security or indemnity to the Title Insurer, and any amounts
expended by Lender in doing so, including premiums paid or security furnished in
connection with the issuance of any surety company bonds, shall be deemed to
constitute disbursements of the Loan proceeds hereunder (even if the total
amount of disbursements would exceed the face amount of the Note), and shall
bear interest from the date expended at the Default Rate and be payable together
with such interest upon demand.
9
3.6 Maintenance, Repair and Restoration of Improvements. Borrower shall
(i) promptly repair, restore or rebuild any Improvements which may become
damaged or be destroyed; and (ii) keep the Improvements in good condition and
repair, without waste.
3.7 Leases and Lease Reports. (i) Except in the ordinary course of
business and in the exercise of sound business judgment, and at market rents, a
schedule of which has been approved by Lender, and in accordance with the
standard form of lease approved by Lender, Borrower shall not enter into,
modify, amend, waive any material provision of, terminate or cancel any leases
of space in the Project without the prior written consent of Lender, and (ii)
annually, upon request or upon an Event of Default, Borrower shall deliver to
Lender a report showing the status of the leasing of space in the Project
certified by Borrower. Such report shall include information on the amount of
space covered by any letters of intent, leases out for execution, and fully
executed leases; the rental under each lease agreement or proposed lease
agreement; the term of each lease agreement; and a summary of any terms which
vary from the standard form of lease previously approved by Lender. Any new
lease, modification, amendment, waiver of any material provision, termination or
cancellation of any lease of space in the Project without the prior written
consent of Lender shall be deemed by Lender, in its sole discretion, as an Event
of Default. Notwithstanding the foregoing, Borrower shall have the right,
without the prior written consent of Lender, to enter into a lease of a portion
of the Project with a person or party not affiliated with Borrower provided that
the lease is written with only minor modifications or clarifications of the
lease form which has been approved by Lender.
3.8 Compliance With Laws. Borrower shall promptly comply with all
applicable Laws of any Governmental Authority having jurisdiction over Borrower
or the Project, and shall take all actions necessary to bring the Project into
compliance with all applicable Laws, including without limitation all Building
Laws (whether now existing or hereafter enacted).
3.9 Alterations. Without the prior written consent of Lender, Borrower
shall not make any material alterations to the Project (other than completion of
tenant work required in accordance with leases entered into in accordance with
the terms of this Agreement).
3.10 Personal Property. (i) All of Borrower's personal property,
fixtures, furnishings, furniture, attachments and equipment located on or used
in connection with the Project, shall always be located at the Project and shall
also be kept free and clear of all chattel mortgages, conditional vendor's liens
and all other liens, encumbrances and security interests of any kind whatever,
(ii) Borrower will be the absolute owner of said personal property, fixtures,
furnishings, furniture, attachments and equipment, and (iii) Borrower shall,
from time to time, furnish Lender with evidence of such ownership satisfactory
to Lender, including searches of applicable public records.
3.11 Prohibition Against Cash Distributions and Application of Cash
Flow. Borrower shall first apply all cash flow from the Project to pay Project
expenses, including amounts due to Lender pursuant to the Loan Documents. No
10
cash flow from the Project shall be distributed to any partners, principals,
members or shareholders of Borrower or applied to the payment of any
obligations, debts or expenses not related to the Project if an Event of Default
has occurred or if there is a reasonable likelihood that such money will be
necessary for the operation of the Project or the payment of principal and
interest due in connection with the Loan within ninety (90) days following any
contemplated cash flow distribution.
3.12 Inspection by ▇▇▇▇▇▇. Borrower will cooperate (and will cause the
managing agent to cooperate) with ▇▇▇▇▇▇ in arranging for inspections of the
Project from time to time by ▇▇▇▇▇▇ and its agents and representatives.
3.13 Furnishing Information. Borrower shall deliver or cause to be
delivered to Lender annual and (if required) quarterly financial statements for
Borrower and annual financial statements for Indemnitor as soon as available and
in all events no later than one hundred twenty (120) days after the close of
each fiscal year for annual statements and, if Lender required quarterly
statements thirty (30) days after the close of each quarter. The annual and if
(required) quarterly statements shall be certified as true and correct by an
authorized financial officer of Borrower or Indemnitor, as the case may be. If a
Default has occurred or Lender reasonably believes that previously provided
financial statements are inaccurate, the annual statements shall be audited by
certified public accountants acceptable to Lender. Borrower shall also furnish a
current operating statement for the Project (including a rent roll if there are
any leases of the Project or any part thereof), at the time it delivers its
financial statements. Quarterly statements will not initially be required by
▇▇▇▇▇▇.
Additionally, Borrower and Indemnitor will:
(i) promptly supply Lender with such information concerning
their respective affairs and property relating to the
development and operation of the Project as Lender may
hereafter request from time to time;
(ii) at any time during regular business hours permit Lender
or any of its agents or representatives to have access to and
examine all of its books and records regarding the development
and operation of the Project;
(iii) permit Lender to copy and make abstracts from any and
all of such books and records;
(iv) immediately notify Lender if Borrower receives any actual
notice, action or lien notice or otherwise becomes aware that
the Project violates or is alleged to violate any Building
Law, or of a condition or situation on the Property which will
constitute violation of a Building Law (whether now existing
or hereafter enacted). The notice to Lender shall describe
with particularity the Building Law violation and the
Borrower's plan to promptly correct the violation.
11
3.14 Documents of Further Assurance. Borrower shall, from time to time,
upon ▇▇▇▇▇▇'s request, execute, deliver, record and furnish such documents as
Lender may reasonably deem necessary or desirable to (i) perfect and maintain
perfected as valid liens upon the Project, the liens granted by Borrower to
Lender under the Mortgage and the collateral assignments and other security
interests under the other Loan Documents as contemplated by this Agreement, (ii)
correct any errors of a typographical nature or inconsistencies which may be
contained in any of the Loan Documents, and (iii) consummate fully the
transaction contemplated under this Agreement.
3.15 Furnishing Reports. Borrower shall provide Lender promptly after
receipt with copies of all inspections, reports, test results and other
information received by Borrower from time to time from its employees, agents,
representatives, architects and engineers, which in any way relate to the
Project, or any part thereof.
3.16 Operation of Project and Zoning. As long as any portion of the
Loan remains outstanding, the Project shall be operated in a first class manner
as a manufactured housing community. Borrower shall fully and faithfully perform
all of its covenants, agreements and obligations under each of the leases of
space in the Project. Borrower shall not initiate or acquiesce in a zoning
variation or reclassification without ▇▇▇▇▇▇'s consent.
3.17 Management Agents' and Brokers' Contracts. Borrower shall not
enter into, modify, amend, waive any material provision of, terminate or cancel
any management contracts for the Project without the prior written approval of
Lender. If, in the ordinary course of business, Borrower shall enter into,
modify, amend, waive any provision of, terminate or cancel any contracts or
agreements (other than Management contracts) with agents or brokers, Borrower
shall notify Lender within ten (10) days after such action.
3.18 Furnishing Notices. Borrower shall deliver to Lender copies of all
material notices received or given by Borrower (or its agents or
representatives) in connection with the Project.
3.19 Indemnification. Borrower shall indemnify, defend and hold Lender,
and its officers, directors, employees, shareholders, advisers, and agents
(collectively, "Indemnified Parties") harmless from and against all claims,
injury, damage, loss, costs (including reasonable attorney fees and costs) and
liability of any and every kind incurred by Indemnified Parties by reason of (i)
the operation or maintenance of the Project or any construction at the Project;
(ii) the payment of any brokerage commissions or fees of any kind with respect
to the Application/Commitment or the Loan, and for any reasonable legal fees or
expenses incurred by Lender in connection with any claims for such commissions
or fees; (iii) any other action or inaction by, or matter which is the
responsibility of, Borrower (other than the payments due under the Note); and
(iv) the breach of any material representation or warranty or failure to fulfill
any of Borrower's obligations under this Agreement or any other Loan Document
(other than the payments due under the Note). The foregoing indemnity shall
include the cost of all alterations, repairs and replacements to the Project
12
(including without limitation architectural, engineering, legal and accounting
costs), all fines, fees and penalties, and all legal and other expenses
(including reasonable attorney fees), incurred in connection with the Project
being in violation of Building Laws and for the cost of collection of the sums
due under this indemnity, whether or not Borrower is in possession of the
Project. If Lender shall become the owner of or acquire an interest in or rights
to the Project by foreclosure or deed in lieu of foreclosure of the Mortgage or
by other means, the foregoing indemnification obligation shall survive such
foreclosure or deed in lieu of foreclosure or other acquisition of the Project,
unless ▇▇▇▇▇▇'s own negligent acts or omissions cause what would otherwise be
considered an indemnification obligation by Borrower and/or Indemnitor.
3.20 Organization Documents. Without the prior written consent of
Lender, Borrower shall not permit or suffer any amendment or modification of its
member control agreement or operating agreement, and shall not permit or suffer
the admission of any new member, except as permitted pursuant to Section 6.3.
3.21 Publicity. During the term of the Loan, Lender may issue or
publish releases or announcements stating that the financing for the Project is
being provided by ▇▇▇▇▇▇ to Borrower, and Borrower hereby consents thereto.
3.22 ▇▇▇▇▇▇'s Attorney Fees and Expenses. If at any time hereafter
prior to repayment of the Loan in full, Lender employs counsel for advice or
other representation (whether or not any suit has been or shall be filed and
whether or not other legal proceedings have been or shall be instituted and, if
such suit is filed or legal proceedings instituted, through all administrative,
trial, and appellate levels) with respect to the Loan, the Project or any part
thereof, this Agreement or any of the Loan Documents, including any proposed or
actual restructuring of the Loan, or to protect, collect, lease, sell, take
possession of, or liquidate any of the Project, or to attempt to enforce any
security interest or lien on any of the Project, or to enforce any rights of
Lender or any of Borrower's obligations hereunder or those of any other person,
firm or corporation which may be obligated to Lender by virtue of this Agreement
or any other agreement, instrument or document heretofore or hereafter delivered
to Lender by or for the benefit of Borrower, or to analyze and respond to any
request for consent or approval made by Borrower, then, in any such event, all
of the reasonable attorney fees and expenses arising from such services, and all
expenses, costs and charges relating thereto, shall bear interest from the date
expended at the Default Rate and shall be paid by Borrower on demand, and if
Borrower fails to pay such fees, costs and expenses payment thereof by Lender
shall be deemed to constitute disbursement of the Loan proceeds hereunder (even
if the total amount of disbursements would exceed the face amount of the Note)
and shall constitute additional indebtedness of Borrower to Lender, payable on
demand and secured by the Mortgage and other Loan Documents.
3.23 Loan Expenses. ▇▇▇▇▇▇▇▇ agrees to pay all expenses of the Loan,
including all amounts payable pursuant to Section 3.25 of this Agreement, and
also including all recording charges, title insurance charges, costs of surveys,
13
costs for certified copies of instruments, escrow charges, fees, expenses and
charges of architectural/engineering consultants of Lender, fees and expenses of
▇▇▇▇▇▇'s attorneys, and all costs and expenses incurred by ▇▇▇▇▇▇ in connection
with the determination of whether ▇▇▇▇▇▇▇▇ has performed the obligations
undertaken by Borrower under this Agreement or has satisfied any conditions
precedent to the obligations of Lender under this Agreement. All such expenses,
charges, costs and fees shall be the Borrower's obligation regardless of whether
the Loan is disbursed in whole or in part unless such failure to disburse is due
to ▇▇▇▇▇▇'s wrongful failure to disburse hereunder. Any and all advances or
payments made by Lender under this Agreement from time to time, or for fees of
architectural and engineering consultants and attorney fees and expenses, if
any, and all other Loan expenses shall, as and when advanced or incurred by
▇▇▇▇▇▇, constitute additional indebtedness evidenced by the Note and secured by
the Mortgage and the other Loan Documents to the same extent and effect as if
the terms and provisions of this Agreement were set forth therein, whether or
not the aggregate of such indebtedness shall exceed the aggregate face amount of
the Note.
3.24 Loan Fees. ▇▇▇▇▇▇▇▇ agrees to pay the loan fees ("Loan Fees") as
are set forth in the Application/Commitment, subject to the terms and conditions
set forth therein. Borrower shall pay all Loan Fees at the times set forth in
the Application/Commitment and shall pay all expenses incurred by Lender at the
Loan Opening Date and on demand at such subsequent times as Lender may determine
including administrative fees and expenses in connection with any modification
of any of the terms of the Loan. Lender may require the payment of such fees and
expenses as a condition to the disbursement of the Loan.
3.25 Additional Debt. The Lender will consent to a second mortgage on
the Project securing a fixed-rate loan from a lender if the following conditions
are met.
(A) Net operating income from the Project, as determined
by the Lender at the time of the request, is at least
1.25 times total debt service on the Loan and the
secondary financing;
(B) Under the note secured by the second mortgage, level
monthly payments fully amortize principal on or
before the maturity of that note;
(C) Combined principal balance under the notes evidencing
both loans does not exceed the lesser of: i) 75% of
the value of the Project at such times, as
established by the Lender, based on its review of a
then current MAI appraisal performed by an appraiser
approved by the Lender, and ii) $8,662,500;
(D) The interest rate on the loan secured by the second
mortgage reasonably reflects market rates for similar
loans; and
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(E) The documentation of the second mortgage is
satisfactory to Lender. A formal subordination
agreement satisfactory to the Lender in form and
substance will be required. ▇▇▇▇▇▇ will not agree to
permit the second mortgagee to assume the Loan in the
event of foreclosure of the second mortgage.
4. REPRESENTATIONS AND WARRANTIES. To induce ▇▇▇▇▇▇ to execute this
Agreement and perform the obligations of Lender hereunder, ▇▇▇▇▇▇▇▇ hereby
represents and warrants to Lender as follows:
4.1 Title. On the Loan Opening Date and thereafter, Borrower will have
good and marketable fee simple title to the Real Property, subject only to the
Permitted Exceptions.
4.2 No Litigation. Except for claims fully covered by insurance, where
the insurance company is defending such claims and such defense is not being
provided under a reservation of rights, and except as disclosed in writing to
Lender prior to the date hereof, there is no pending litigation or unsatisfied
judgment entered of record against Borrower or the Project. No litigation or
proceedings are pending, or to Borrower's knowledge are threatened, against any
Affiliated Party (i) which might affect the validity or priority of the lien of
the Mortgage, (ii) which might affect the ability of Borrower or any Indemnitor
to perform their respective obligations pursuant to and as contemplated by the
terms and provisions of this Agreement and the other Loan Documents, or (iii)
which could materially affect the operations or financial condition of the
Project, Borrower, or any Affiliated Party.
4.3 Due Authorization. The execution and delivery of the Loan Documents
and all other documents executed or delivered by or on behalf of Borrower and
pertaining to the Loan have been duly authorized or approved by ▇▇▇▇▇▇▇▇ and,
when executed and delivered by Borrower or when caused to be executed and
delivered on behalf of Borrower, will constitute the legal, valid and binding
obligations of the obligor thereon, enforceable in accordance with their
respective terms except as limited by bankruptcy, insolvency, or other laws of
general application relating to the enforcement of creditor's rights, and the
payment or performance thereof will be subject to no offsets, claims or defenses
of any kind or nature whatsoever.
4.4 Breach of Laws or Agreements. The execution, delivery and
performance of this Agreement and the other Loan Documents have not constituted
(and will not, upon the giving of notice or lapse of time or both, constitute) a
breach or default under any other agreement to which Borrower or any Indemnitor
is a party or may be bound or affected, or a violation of any Law which may
affect the Project, any part thereof, any interest therein, or the use thereof,
or Borrower or any Indemnitor.
4.5 Leases. Borrower and its agents have not entered into any leases or
other arrangements for occupancy of space within the Project other than leases
shown on the most recent rent roll furnished to Lender (the "Rent Roll") or
entered into in accordance with the requirements of this Agreement. All leases
15
disclosed on the Rent Roll are in full force and effect and to ▇▇▇▇▇▇▇▇'s
knowledge, there are no existing defaults thereunder other than as disclosed in
writing to Lender.
4.6 Condemnation. (i) No condemnation of any portion of the Project,
(ii) no condemnation or relocation of any roadways abutting the Project, and
(iii) no denial of access to the Project from any point of access to the
Project, has commenced or, to ▇▇▇▇▇▇▇▇'s knowledge, is contemplated by any
Governmental Authority.
4.7 Condition of Improvements. To the best of ▇▇▇▇▇▇▇▇'s knowledge, the
foundations and structure of the Improvements are structurally sound and the
various mechanical systems have adequate capacities and are in good working
condition. The Improvements were built in substantial compliance with applicable
plans and specifications furnished to the Lender's engineering consultant, and
the Improvements are in full compliance with all applicable Building Laws.
Certificates of occupancy with respect to the Improvements, and any other
certificates which may be required to evidence compliance with building codes
and permits and approval for full occupancy of the Improvements and all
installations therein have been issued by all appropriate authorities. Borrower
has no knowledge of required capital expenditures or deferred maintenance other
than those that would be normally expected for a building of similar age and
type. No notice of violation of any Building Law has been received.
4.8 Information Correct. All financial statements furnished to Lender
by Borrower or any Affiliated Party fairly present the financial condition of
such persons or entities and were prepared in accordance with a method of
preparation approved by Lender, consistently applied, and all other information
previously furnished by Borrower or any Affiliated Party to Lender in connection
with the Loan are true, complete and correct in all respects except as otherwise
disclosed to Lender in writing and do not fail to state any material fact
necessary to make the statements made not misleading. Neither Borrower nor
Indemnitor has misstated or failed to disclose to Lender any material fact
relating to: (i) the condition, use or operation of the Project, (ii) the status
or any material condition of any tenant or lease at the Project known to it,
(iii) Borrower, (iv) any Indemnitor, or (v) the litigation disclosure provided
by ▇▇▇▇▇▇▇▇ and Indemnitor, except as disclosed in writing to Lender prior to
the date hereof.
4.9 Material Adverse Change. No material adverse change in the
operations or financial condition of Borrower or Indemnitor has occurred since
the respective effective dates of their financial statements previously
submitted to Lender, and no material adverse change in the condition (physical
or otherwise) of the Project has occurred since the date of the
Application/Commitment.
4.10 Solvency. Neither Borrower, nor, if ▇▇▇▇▇▇▇▇ is a partnership, any
general partner of Borrower nor any Indemnitor is (a) currently insolvent on a
balance sheet basis, or (b) currently unable to pay its debts as they come due;
and no bankruptcy or receivership proceedings are contemplated or pending as to
any of them.
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4.11 Zoning. The use of the Project (including contemplated accessory
uses) does not violate (i) any Law (including subdivision, zoning, building,
environmental protection and wetlands protection Laws), or (ii) any restrictions
of record, or any agreement affecting the Project or any part thereof. Without
limiting the generality of the foregoing, all consents, licenses and permits and
all other authorizations or approvals (collectively, "Governmental Approvals")
relating to the use and operation of the Project have been complied with.
4.12 Utilities. The Project has adequate water, gas and electrical
supply, facilities, other required public utilities, fire and police protection,
and means of appropriate access between the Project and public highways.
4.13 Brokerage Fees. No brokerage fees or commissions are payable by or
to any person in connection with this Agreement or the Loan to be disbursed
hereunder other than fees payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., which fees
shall be paid by Borrower.
4.14 Encroachments. Unless otherwise disclosed by the survey required
by ▇▇▇▇▇▇, no building or other improvement in the Project encroaches upon any
building line, setback line, side yard line, or any recorded or visible easement
(or other easement of which Borrower has knowledge with respect to the Project).
4.15 Separate Parcel. The Project is taxed separately without regard to
any other property and for all purposes the Project may be mortgaged, conveyed,
and otherwise dealt with as an independent parcel.
4.16 ERISA. The assets of Borrower are not "plan assets" of any
employee benefit plan covered by ERISA or Section 4975 of the Internal Revenue
Code. The transactions contemplated by this Agreement by or with Borrower are
not in violation of state statutes regulating investments of and fiduciary
obligations with respect to "governmental plans", as defined in Section 3(32) of
ERISA.
4.17 No Default. No Default or Event of Default has occurred and is
continuing.
4.18 Trade Name; Principal Place of Business. Borrower uses no trade
name other than its actual name set forth herein. The principal place of
business of Borrower is as stated on page 1 hereof.
4.19 FIRPTA. Borrower is not a "foreign person" within the meaning of
Sections 1445 or 7701 of the Internal Revenue Code.
4.20 RICO. ▇▇▇▇▇▇▇▇ has not been charged with nor, to its knowledge, is
it under investigation for, possible violations of the Racketeer Influenced and
Corrupt Organizations Act, the Continuing Criminal Enterprise Act, the
17
Controlled Substance Act of 1978, or similar laws providing for the possible
forfeiture of any of its respective assets or properties.
4.21 No Casualty. No part of the Project has been damaged by fire or
other casualty except as disclosed in writing to Lender.
4.22 Truth of Recitals. All statements set forth in the Recitals are
true and correct.
5. CASUALTY AND CONDEMNATION.
5.1 ▇▇▇▇▇▇'s Election to Apply Insurance and Condemnation Proceeds to
Indebtedness. In the event of any loss or damage to any portion of the Project
due to fire or other casualty, or any taking of any portion of the Project by
condemnation or under power of eminent domain, ▇▇▇▇▇▇ shall have the right, but
not the obligation, to settle insurance claims and condemnation claims or awards
for more than $100,000.00 and if Lender elects not to settle such claim or award
then Borrower shall settle such claim or award and such settlement or award
shall be subject to ▇▇▇▇▇▇'s prior written approval. Borrower shall have the
right to settle claims or awards for $100,000.00 or less, provided that Lender
shall have the right to settle any claim or award that ▇▇▇▇▇▇▇▇ has not settled
on or before one hundred twenty (120) days after the date of such loss or prior
to the date of such taking. If (i) no Default exists under the this Agreement,
the Note or the other Loan Documents; (ii) no more than one payment default has
occurred during the preceding twelve months; (iii) no non-monetary default has
occurred that has been noticed and remained uncured beyond the applicable cure
period; (iv) the proceeds received by ▇▇▇▇▇▇, together with any additional funds
deposited with Lender by Borrower, are sufficient, in ▇▇▇▇▇▇'s discretion,
either to restore the Project to its condition before the casualty or to remedy
the condemnation; (v) the Loan-to-value ratio of the Project on completion of
the restoration will be 65% or less, as determined by an Appraisal (unless the
amount of proceeds is less than 3% of the original Loan amount); (vi) Borrower
complies with all conditions set forth in Section 5.2 of this Agreement,
Borrower shall be entitled to use the insurance or condemnation proceeds to
rebuild the Project or to remedy the effect of the condemnation, as the case may
be. The Appraisal required pursuant to the foregoing provision shall be at
Borrower's expense and Borrower is required to provide proof of such payment to
Lender and ▇▇▇▇▇▇'s Mortgage Correspondent. In all other cases, ▇▇▇▇▇▇ shall
have the right (but not the obligation) to collect, retain and apply to the
indebtedness of Borrower under this Agreement and the other Loan Documents all
insurance and condemnation proceeds (after deduction of all expense of
collection and settlement, including attorney and adjusters' fees and expenses),
and if such proceeds are insufficient to pay such amount in full, to declare the
balance remaining unpaid on the Note and Mortgage to be due and payable
forthwith and to avail itself of any of the remedies afforded thereby as in the
case of any default beyond applicable cure periods thereunder. Any proceeds
remaining after application to the indebtedness of Borrower under this Agreement
and the other Loan Documents shall be paid by ▇▇▇▇▇▇ to Borrower or the party
then entitled thereto.
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5.2 Borrower's Obligation to Rebuild and Use of Proceeds Therefor. If
Lender does not elect to or is not entitled to apply fire or casualty insurance
proceeds to the indebtedness, as provided under Section 5.1 of this Agreement,
Lender shall have the right (but not the obligation) to settle, collect and
retain such proceeds, and after deduction of all expenses of collection and
settlement, including attorney and adjusters' fees and expenses, to release the
same to Borrower periodically provided that Borrower shall:
(a) Expeditiously repair and restore all damage to the portion
of the Project in question resulting from such fire or other casualty,
including completion of the construction if such fire or other casualty
shall have occurred prior to completion, so that the Project will be
completed in accordance with the plans and specifications therefor; and
(b) If the proceeds of fire or casualty insurance (and the
undisbursed available Loan proceeds for construction) are, in ▇▇▇▇▇▇'s
sole judgment, insufficient to complete the repair and restoration of
the buildings, structures and other improvements constituting the
Project, then Borrower shall promptly deposit with Lender the amount of
such deficiency.
Any request by Borrower for a disbursement by Lender of fire or
casualty insurance proceeds and funds deposited by Borrower pursuant to this
Section 5.2 and the disbursement thereof shall be conditioned upon Borrower's
compliance with and satisfaction of the same conditions precedent as would be
applicable in connection with construction loans made by institutional lenders
for projects similar to the Project, including approval of plans and
specifications, submittal of evidence of completion, updated title insurance,
lien waivers, and other customary safeguards.
6. ASSIGNMENTS.
6.1 ▇▇▇▇▇▇'s Right to Assign. Lender shall have the right to assign,
transfer, sell, negotiate, pledge or otherwise hypothecate this Agreement and
any of its rights and security hereunder, including the Note, Mortgage, and any
other Loan Documents. ▇▇▇▇▇▇▇▇ hereby agrees that all of the rights and remedies
of Lender in connection with the interest so assigned shall be enforceable
against Borrower by such assignee with the same force and effect and to the same
extent as the same would have been enforceable by ▇▇▇▇▇▇ but for such
assignment. ▇▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇▇ shall have the right to sell
participations in the Loan or to include the Note in a securitized pool of
indebtedness without the consent of Borrower.
6.2 Prohibition of Assignments by ▇▇▇▇▇▇▇▇. Borrower shall not assign
or attempt to assign its rights under this Agreement. Borrower will not suffer
or permit any of its interest or rights in the Project to be assigned, sold,
pledged, encumbered, transferred, hypothecated or otherwise disposed of until
the provisions of this Agreement have been fully complied with and the Loan and
19
all other sums evidenced by the Note and/or secured by the Mortgage and other
Loan Documents have been repaid in full.
6.3 Transfers of Interests in Borrower . For estate-planning purposes
only, Borrower, or any partner, member or shareholder of Borrower shall be
permitted to make a sale, conveyance, transfer or other vesting of any direct or
indirect interest in Borrower (other than a general partnership interest in
Borrower if Borrower is a partnership) up to an aggregate, over the term of the
Loan, of twenty-five (25%) percent of the total interests in Borrower, without
the prior consent of Lender, provided that any such sale, conveyance, transfer
or other vesting does not change the direct or indirect control or management of
Borrower. Copies of any and all documents evidencing any such sale, conveyance,
transfer or other vesting must be provided to Lender within fifteen (15) days
after the occurrence of said action including, without limitation, a statement
detailing the action and a listing of reallocations and percentages of ownership
interest in Borrower. Notwithstanding the foregoing, any sale, conveyance,
transfer or other vesting of any direct or indirect interest in Borrower, other
than the above said 25% aggregate amount, or for purposes other than
estate-planning, or any change of direct or indirect control or management of
Borrower or any encumbrance of or granting of any security interest in Project
or Borrower, if such event occurs without Lender's written consent (which Lender
may withhold at its sole discretion), shall constitute an event of default under
the Loan Documents. Borrower shall pay ▇▇▇▇▇▇'s out-of-pocket expenses incurred
in connection with the review of any sale, conveyance, transfer or other vesting
pursuant to this Section 6.3 and pursuant to Section 6.2 hereof.
6.4 Successors and Assigns Subject to the foregoing restrictions on
transfer and assignment contained in this Section 6, this Agreement shall inure
to the benefit of and shall be binding on the parties hereto and their
respective successors and assigns.
6.5 One Time Transfer Right Notwithstanding the foregoing, Lender shall
consent to a one-time transfer of the Project to a purchaser, if the Loan is not
in default and if Lender approves of the proposed buyer's ownership structure,
financial strength, creditworthiness and management capabilities. The transferee
and its principals must assume all of Borrower's liabilities and obligations
under the terms of the Loan Documents including those liabilities and
obligations listed in Section 9.18, clauses (i) through (xii). Borrower and
Indemnitor shall not remain liable for any liabilities and obligations described
in the Loan Documents and at Section 9.18, clauses (i) through (xii) of the Loan
first occurring after such transfer; however, Borrower and Indemnitor shall
remain liable for any liabilities and obligations in the Loan Documents and at
Section 9.18 clauses (i) through (xii) first occurring prior to such transfer.
Such a transfer will be conditioned on the payment of an assumption fee of one
percent (1%) of the then outstanding principal balance. Lender shall not be
obligated to entertain any request from a proposed buyer for the modification of
the Loan Documents.
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7. EVENTS OF DEFAULT.
7.1 The occurrence of any one or more of the following shall constitute
an "Event of Default," as such term is used herein:
(a) If Borrower fails to pay principal or interest under the
Note when due and fails to cure such default within ten (10) days after
written notice thereof from Lender provided; however, ▇▇▇▇▇▇'s
obligation to provide written notice of monetary default shall be
limited to not more than two times during any consecutive twelve (12)
month period;
(b) If Borrower defaults in the performance of any of its
other covenants, agreements and obligations under this Agreement
involving the payment of money;
(c) If Borrower defaults in the performance of any of its
non-monetary covenants, agreements and obligations under this Agreement
and fails to cure such default within thirty (30) days after written
notice thereof from Lender provided, however, that if such default is
reasonably susceptible of cure, but cannot be cured within such thirty
(30) day period, then so long as Borrower promptly commences cure and
thereafter diligently pursues such cure to completion, the cure period
shall be extended for an additional sixty (60) days, within which
Borrower may complete such cure;
(d) If at any time or times hereafter any representation or
warranty (including the representations and warranties of Borrower set
forth in any Loan Document), statement, report or certificate furnished
to Lender in connection with the Loan is not true and correct in any
material respect;
(e) If any petition is filed by or against Borrower or any
Affiliated Party under the Federal Bankruptcy Code or any similar state
or federal Law, whether now or hereafter existing (and, in the case of
involuntary proceedings, failure to cause the same to be vacated,
stayed or set aside within thirty (30) days after filing);
(f) If any assignment, pledge, encumbrance, transfer,
hypothecation or other disposition is made in violation of Section 6.2
or Section 6.3 of this Agreement;
(g) If Borrower, any general partner of Borrower or any
Guarantor or Indemnitor shall fail to pay any debt owed by it or is in
default under any agreement with Lender or any other party (other than
a failure or default for which the maximum liability of Borrower or
such general partner, Guarantor or Indemnitor does not exceed 25% of
their respective assets) and such failure or default continues after
any applicable grace period specified in the instrument or agreement
relating thereto; or
21
(h) If a default occurs under any of the Loan Documents and
continues beyond the applicable grace period, if any, contained
therein.
8. REMEDIES.
8.1 Remedies Conferred Upon Lender. Upon the occurrence of any Event of
Default, including without limitation the filing, by ▇▇▇▇▇▇▇▇, of a voluntary
petition under Chapter 11 of the Bankruptcy Code, Lender shall have the right
(but not the obligation) to pursue any one or more of the following remedies
concurrently or successively, it being the intent hereof that all such remedies
shall be cumulative and that no such remedy shall be to the exclusion of any
other:
(a) Declare the Note to be immediately due and payable;
(b) Use and apply any monies deposited by Borrower with
Lender, including amounts in the Escrow Account, regardless of the
purpose for which the same was deposited, to cure any such default or
to apply on account of any indebtedness under this Agreement which is
due and owing to Lender; and
(c) Exercise or pursue any other right or remedy permitted
under this Agreement or any of the Loan Documents or conferred upon or
available to Lender at law or in equity or otherwise.
8.2 Non-Waiver of Remedies. No waiver of any breach or default
hereunder shall constitute or be construed as a waiver by Lender of any
subsequent breach or default or of any breach or default of any other provision
of this Agreement.
8.3 Cash Collateral Account. Upon the occurrence of an Event of
Default, Borrower shall deposit all revenues from the operation of the Project
into an account held by and pledged to Lender ("Cash Collateral Account").
Lender shall not pay interest on any amounts held on deposit in the Cash
Collateral Account, unless required to do so under applicable law. Borrower
shall execute such documents as Lender, in its sole discretion, deems necessary
to perfect its interest in the Cash Collateral Account.
9. GENERAL PROVISIONS
9.1 Captions. The captions and headings of various Articles and
Sections of this Agreement and Exhibits pertaining hereto are for convenience
only and are not to be considered as defining or limiting in any way, the scope
or intent of the provisions hereof.
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9.2 Merger. This Agreement, the Application/Commitment and the Loan
Documents and instruments delivered in connection herewith, as may be amended
from time to time in writing, constitute the entire agreement of the parties
with respect to the Project and the Loan, and all prior discussions,
negotiations and document drafts are merged herein and therein. If there are any
inconsistencies between the Application/Commitment and this Agreement or the
Loan Documents, the terms contained in this Agreement and the other Loan
Documents shall prevail. Neither Lender nor any employee of Lender has made or
is authorized to make any representation or agreement upon which Borrower may
rely unless such matter is made for the benefit of Borrower and is in writing
signed by an authorized officer of Lender. ▇▇▇▇▇▇▇▇ agrees that it has not and
will not rely on any custom or practice of Lender, or on any course of dealing
with ▇▇▇▇▇▇, in connection with the Loan unless such matters are set forth in
this Agreement or the Loan Documents or in an instrument made for the benefit of
Borrower and in a writing signed by an authorized officer of Lender.
9.3 Notices. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give hereunder shall be in
writing, addressed as follows and shall be deemed to have been properly given if
hand delivered, if sent by reputable overnight courier (effective the business
day following delivery to such courier) or if mailed (effective two business
days after mailing) by United States registered or certified mail, postage
prepaid, return receipt requested:
If to Borrower:
CAX Rancho Mirage, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Lender:
▇▇▇▇▇▇▇ National Life Insurance Company
c/o PPM Finance, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Manager of Commercial Mortgage Servicing
with a copy to:
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▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice. Notices given in any other fashion shall be deemed
effective only upon receipt.
9.4 Modification; Waiver. No modification, waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and
signed by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is sought. Lender reserves the right to charge an
administrative fee for any such modification, waiver, amendment, discharge, or
change of this Agreement.
9.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE INTERNAL LAWS (AS OPPOSED TO THE LAWS OF CONFLICTS) OF THE STATE OF
ARIZONA.
9.6 Acquiescence Not to Constitute Waiver of ▇▇▇▇▇▇'s Requirements.
Each and every covenant and condition for the benefit of Lender contained in
this Agreement may be waived by Lender.
9.7 Disclaimer by ▇▇▇▇▇▇. (a)This Agreement is made for the sole
benefit of Borrower and Lender (and ▇▇▇▇▇▇'s successors and assigns and
participants, if any), and no other person or persons shall have any benefits,
rights or remedies under or by reason of this Agreement, or by reason of any
actions taken by Lender pursuant to this Agreement. Lender shall not be liable
for any debts or claims accruing in favor of any third parties against Borrower
or others or against the Project. Borrower is not and shall not be an agent of
Lender for any purposes. Except as expressly set forth in the Loan Documents,
Lender is not and shall not be an agent of Borrower for any purposes. Lender, by
making the Loan or taking any action pursuant to any of the Loan Documents,
shall not be deemed a partner or a joint venturer with Borrower or fiduciary of
Borrower.
(b) Any review, investigation or inspection conducted by
▇▇▇▇▇▇, any architectural or engineering consultants retained by ▇▇▇▇▇▇ or any
agent or representative of Lender in order to verify independently Borrower's
satisfaction of any conditions precedent to the disbursement of the Loan,
▇▇▇▇▇▇▇▇'s performance of any of the covenants, agreements and obligations of
Borrower under this Agreement, or the truth of any representations and
warranties made by Borrower hereunder (regardless of whether or not the party
conducting such review, investigation or inspection should have discovered that
any of such conditions precedent were not satisfied or that any such covenants,
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agreements or obligations were not performed or that any such representations or
warranties were not true), shall not affect, or constitute a waiver by Lender
of, (i) any of Borrower's representations and warranties under this Agreement or
Lender's reliance thereon, or (ii) Lender's reliance upon any certifications
required under this Agreement or any other facts, information or reports
furnished Lender by Borrower hereunder.
(c) By accepting or approving anything required to be
observed, performed, fulfilled or given to Lender pursuant to the Loan
Documents, including any certificate, statement of profit and loss or other
financial statement, survey, appraisal, lease or insurance policy, Lender shall
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not constitute
a warranty or representation to anyone with respect thereto by Lender.
9.8 Right of Lender to Make Advances to Cure ▇▇▇▇▇▇▇▇'s Defaults. If
Borrower shall fail to perform in a timely fashion any of Borrower's covenants,
agreements or obligations contained in this Agreement or the Loan Documents,
Lender may (but shall not be required to) perform any of such covenants,
agreements and obligations. Any funds advanced by ▇▇▇▇▇▇ in the exercise of its
judgment that the same are needed to protect its security for the Loan are
deemed to be obligatory advances hereunder and any amounts expended (whether by
disbursement of undisbursed Loan proceeds or otherwise) by ▇▇▇▇▇▇ in so doing,
shall constitute additional indebtedness evidenced and secured by the Note, the
Mortgage and the other Loan Documents, shall bear interest from the date
expended at the Default Rate and be payable together with such interest upon
demand.
9.9 Definitions Include Amendments. Definitions contained in this
Agreement which identify documents, including the Loan Documents, shall be
deemed to include all amendments and supplements to such documents from the date
hereof, and all future amendments and supplements thereto entered into from time
to time to satisfy the requirements of this Agreement or otherwise with the
consent of the Lender. Reference to this Agreement contained in any of the
foregoing documents shall be deemed to include all amendments and supplements to
this Agreement.
9.10 Time Is of the Essence. Time is hereby declared to be of the
essence of this Agreement and of every part hereof.
9.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
9.12 Waiver of Consequential Damages. In no event shall Lender be
liable to Borrower for consequential damages, whatever the nature of a breach by
Lender of its obligations under this Agreement, or any of the Loan Documents,
25
and Borrower for itself and all Affiliated Parties hereby waives all claims for
consequential damages.
9.13 Claims Against Lender. Lender shall not be in default under this
Agreement, or under any other Loan Documents, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within thirty (30) days after ▇▇▇▇▇▇▇▇ first had knowledge of, or reasonably
should have had knowledge of, the occurrence of the event which Borrower alleges
gave rise to such claim and Lender does not remedy or cure the default, if any
there be, promptly thereafter. If it is determined in any proceedings that
▇▇▇▇▇▇ has improperly failed to grant its consent or approval, where such
consent or approval is required by this Agreement or any other Loan Documents,
Borrower's sole remedy shall be to obtain declaratory relief determining such
withholding to have been improper, and for itself and all Affiliated Parties,
Borrower hereby waives all claims for damages or set-off against Lender
resulting from any withholding of consent or approval by Lender.
9.14 Jurisdiction and Venue. With respect to any suit, action or
proceedings relating to this Agreement, the Project, or any of the other Loan
Documents ("Proceedings") each party irrevocably (i) submits to the
non-exclusive jurisdiction of (A) the state and federal courts located in the
State where the Project is located, (B) the federal court for the Northern
District of Illinois and (C) the Circuit Court of Cook County, Illinois, and
(ii) waives any objection which it may have at any time to the laying of venue
of any proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such court does not have
jurisdiction over such party. Nothing in this Agreement shall preclude either
party from bringing Proceedings in any other jurisdiction nor will the bringing
of Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
9.15 Severability. The parties hereto intend and believe that each
provision in this Agreement comports with all applicable local, state and
federal Laws. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Agreement is found by a court of law to be in
violation of any applicable Law, and if such court declaress such portion,
provision, or provisions of this Agreement to be illegal, invalid, unlawful,
void or unenforceable as written, then it is the intent of all parties hereto
that such portion, provision, or provisions shall be given force to the fullest
possible extent that they are legal, valid and enforceable, and that the
remainder of this Agreement shall be construed as if such illegal, invalid,
unlawful, void, or unenforceable portion, provision, or provisions were not
contained herein, and that the rights, obligations, and interests of Borrower
and Lender under the remainder of this Agreement shall continue in full force
and effect.
9.16 Incorporation of Recitals. The Recitals set forth herein and the
Exhibits attached hereto are incorporated herein and expressly made a part
hereof.
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9.17 WAIVER OF JURY TRIAL. BORROWER AND ▇▇▇▇▇▇ EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR
ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND
AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
9.18 The Loan shall be non-recourse to the Borrower. Notwithstanding
the foregoing, Borrower and, if Borrower is a partnership, its general
partner(s), shall be liable for and shall indemnify and defend Lender against,
and hold Lender harmless from and against ▇▇▇▇▇▇'s costs, expenses (including
reasonable attorney fees), losses and damages caused by or related to any of the
following "Recourse Events" committed, permitted or omitted by Borrower, its
agents, employees and/or contractors: (i) waste to or of the Project or a
failure to maintain the Project as a first-class manufactured housing community;
(ii) fraud or material misrepresentation by Borrower; (iii) failure to pay, or
to make sufficient payments into the Escrow Account pursuant to Section 3.1
hereof to pay, insurance premiums, taxes, assessments, ground rent or any other
lienable impositions as required under the Loan Documents; (iv) misapplication
of tenant security deposits, insurance proceeds or condemnation proceeds; (v)
failure while in monetary default to pay to Lender all rents, income and profits
of and from the Project, net of reasonable and customary operating expenses;
(vi) breach of, or failure to perform under the environmental warranties,
representations, covenants or indemnifications described in the Environmental
Indemnity Agreement; (vii) destruction or removal of fixtures or personal
property securing the Loan from the Project, unless replaced by items of equal
value; (viii) failure of the Project to comply with the Americans with
Disabilities Act of 1990, as amended, the Fair Housing Act of 1988, as amended,
or any other similar Building Laws after any Governmental Authority has notified
Borrower, its agents, employees and/or contractors of such non-compliance; (ix)
failure to pay to Lender any rent, income or profits which have been prepaid
more than 30 days in advance if such advance payments exceed 10% of the total
annual rental income; (x) willful or grossly negligent violation of applicable
law; and (xi) failure of Borrower to pay all amounts payable under the Note in
full, together with reasonable attorney fees, if Borrower transfers or encumbers
the Project in contravention of the Loan Documents, or (xii) if Borrower files a
voluntary petition under Chapter 11 of the Bankruptcy Code prior to the one-year
anniversary of the transfer of title to the Project to Lender by foreclosure of
deed or other conveyance in lieu of foreclosure or otherwise.
Nothing contained herein shall be construed to prevent Lender from
exercising any remedy allowed by Law or by the terms of this Agreement or any
other Loan Document which does not result in an obligation by Borrower or, if
Borrower is a general partnership, any of its general partners, to pay money.
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ have executed this Agreement as
of the day and year first set forth above.
BORROWER:
CAX RANCHO MIRAGE, L.L.C.,
a Delaware limited liability company
By: Commercial Assets, Inc.,
a Delaware corporation, its Sole Member
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
LENDER:
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY,
a Michigan corporation
By: PPM Finance, Inc., it authorized agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇: Executive Vice President
28