LOAN AGREEMENT
Dated as of July 2, 1998
Between
CUTTER SOUND DEVELOPMENT, LTD.,
MONTVERDE PROPERTY, LTD.,
NORTHSHORE GOLF PARTNERS, LTD.,
NORTHSHORE DEVELOPMENT, LTD.,
U.S. GOLF PELICAN STRAND, INC.,
U.S. GOLF PINEHURST PLANTATION, LTD.,
FSD GOLF CLUB, LTD.,
RH HOLDINGS, INC.,
WEDGEFIELD LIMITED PARTNERSHIP,
as Borrower
and
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
as Lender
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions
Section 1.2 Principles of Construction
ARTICLE II. PAYMENTS; ADVANCES
Section 2.1 The Loan
Section 2.2 Disbursements
Section 2.3 Loan Repayment; Exit Fee
Section 2.4 Prepayment
Section 2.5 Making of Payments
Section 2.6 Late Payment Charge
Section 2.7 Release on Payment in Full
Section 2.8 Construction Escrow Account
Section 2.9 Affiliate Payments
ARTICLE III. REQUIRED WORK; SUBSEQUENT ADVANCES
Section 3.1 Required Work
Section 3.2 Subsequent Advances
Section 3.3 Conditions Precedent to Subsequent Advances
Section 3.4 Conditions Precedent to Final Advances
Section 3.5 Reallocation of Budget
Section 3.6 Determinations
ARTICLE IV. RERESENTATIONS AND WARRANTIES
Section 4.1 Organization, Enforceability, Etc.
Section 4.2 No Structural Defects
Section 4.3 Financial Statements
Section 4.4 Litigation
Section 4.5 No Conflict with Law or Agreements
Section 4.6 Personal Property
Section 4.7 Easements
Section 4.8 No Flood Hazard, Etc.
Section 4.9 No Default
Section 4.10 No Offsets
Section 4.11 Valid Liens
Section 4.12 Compliance with Zoning and Legal Requirements
Section 4.13 No Condemnation
Section 4.14 No Casualty
Section 4.15 Purchase Options
Section 4.16 No Encroachments
Section 4.17 No Insolvency
Section 4.18 Fraudulent Conveyance
Section 4.19 Broker
Section 4.20 Environmental
Section 4.21 Borrower Address
Section 4.22 Structure of Borrower
Section 4.23 Leases
Section 4.24 Properties Taxed as a Separate Tax Lot
Section 4.25 Fiscal Year
Section 4.26 No Other Financing
Section 4.27 ERISA
Section 4.28 FIRPTA
Section 4.29 PUHCA
Section 4.30 Insurance
Section 4.31 No Margin Stock
Section 4.32 Investment Company Act
Section 4.33 Taxes
Section 4.34 Full and Accurate Disclosure
Section 4.35 Contracts
Section 4.36 Other Obligations and Liabilities
Section 4.37 Loan to Value Ratio
ARTICLE V. AFFIRMATIVE COVENANTS
Section 5.1 Transfers
Section 5.2 Liens
Section 5.3 Indebtedness
Section 5.4 Compliance with Easements, Restrictive Covenants and
Permitted Encumbrances
Section 5.5 Leases
Section 5.6 Delivery of Notices
Section 5.7 ERISA
Section 5.8 Agreements with Affiliates
Section 5.9 After Acquired Property
Section 5.10 Books and Records
Section 5.11 Delivery of Estoppel Certificates
Section 5.12 Management, Etc.
Section 5.13 Financial Statements; Audit Rights
Section 5.14 Maintenance of Non-Taxable Status
Section 5.15 Lender's Attorneys' Fees and Expenses Section 5.16 Environmental
Section 5.17 Report Updates Section 5.18 Lender Access to Properties Section
5.19 Delivery of Documents Regarding Ownership Section 5.20 Conduct of Business
ARTICLE VI. EVENTS OF DEFAULT
Section 6.1 Events of Default; Defaults
Section 6.1.1 Non-Payment
Section 6.1.2 Affirmative Covenants
Section 6.1.3 Negative Covenants
Section 6.1.4 Financial Statements
Section 6.1.5 Representations
Section 6.1.6 Other Loan Documents
Section 6.1.7 Demolition or Alterations
Section 6.1.8 Failure to Deliver Estoppel Certificate
Section 6.1.9 Receipts;
Deposits
Section 6.1.10 Cessation of Borrower
Section 6.1.11 Transfer
Section
6.1.12 Liens
Section 6.1.13 Involuntary Bankruptcy, Etc.
Section 6.1.14
Voluntary Bankruptcy
Section 6.1.15 Judgments
Section 6.1.16 Leases
Section
6.1.17 Organizational Documents
Section 6.1.18 Delivery of Financial Statements
Section 6.1.19 ERISA
Section 6.1.20 Termination of Management Agreement
Section 6.1.21 Other Conditions for Acceleration
Section 6.1.22 Material Adverse Change
Section 6.1.23 Denial of Obligation
Section 6.1.24 Misapplication of Receipts
Section 6.1.25 Failure to Provide Further Assurances
Section 6.1.26 Lender Access
Section 6.1.27 Certain Cross Defaults
Section 6.1.28 SEC Action
Section 6.1.29 Disclosed Violations
Section 6.1.30 Red Hawk Property
Section 6.2 Rights upon Event of Default
ARTICLE VII. GENERAL PROVISIONS
Section 7.1 Rights Cumulative; Waivers
Section 7.2 Lender's Action for its Own Protection Only
Section 7.3 No Third Party Beneficiaries
Section 7.4 Payment of Expenses
Section 7.5 Indemnification
Section 7.6 Notices
Section 7.7 No Oral Modification
Section 7.8 Assignment by Lender
Section 7.8.1 Assignment
Section 7.8.2 Participations
Section 7.8.3 Assignment and Acceptance
Section 7.8.4 Other Business
Section 7.8.5 Privity of Contract
Section 7.8.6 Availability of Records
Section 7.9 Severability
Section 7.10 No Assignment by Borrower
Section 7.11 Governing Law
Section 7.12 Successors and/or Assigns
Section 7.13 Entire Contract
Section 7.14 Joint and Several Liability
Section 7.15 Counterparts; Headings
Section 7.16 Time of the Essence
Section 7.17 Consents
Section 7.18 No Partnership
Section 7.19 Waiver Of Jury Trial
Section 7.20 Limited Recourse
Section 7.21 Limitation on Liability
Section 7.22 Jurisdiction, Venue, Service of Process
Section 7.23 Appointment of Agent for Service of Process
Section 7.24 Rule of Construction
Section 7.25 Further Assurances
Section 7.26 Placement of Loan
Section 7.27 Servicer
ARTICLE VIII. SPECIAL PROVISIONS
Section 8.1 Deposits for Tax and Insurance Premiums
Section 8.2 Replacement Reserve Fund
Section 8.3 Interest Reserve
Section 8.4 Approved Budget
Section 8.5 Working Capital Reserve
Section 8.6 Right of First Refusal to Provide Permanent Financing
Section 8.7 Release Provisions
Section 8.8 Subdivision Provisions
Section 8.9 Cash Management
Section 8.10 Right of First Refusal to Purchase Property
Section 8.11 Sale of Red Hawk Property
Section 8.12 Reserve Reimbursements
Section 8.13 Starwood Settlement
Section 8.14 Northshore Transfers
ARTICLE IX. SINGLE PURPOSE ENTITY/SEPARATENESS
Section 9.1 Representations, Warranties and Covenants
Section 9.2 Notice of Indemnification
Section 9.3 No Oral Agreements
LIST OF EXHIBITS
Exhibit A - Allocated Loan Amount, Appraised Values and Minimum
Release Prices
Exhibit B - Omitted
Exhibit C - Omitted
Exhibit D - Omitted
Exhibit E - Structure of Borrower
Exhibit F - Required Work
Exhibit G - Omitted
Exhibit H - Omitted
Exhibit I - Red Hawk Property
Exhibit J - Violations
Exhibit K - Reserve Amounts
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 2, 1998 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), between CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a
Delaware limited liability company having an address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender") and CUTTER SOUND DEVELOPMENT, LTD., MONTVERDE
PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE DEVELOPMENT, LTD.,
U.S. GOLF PELICAN STRAND, INC., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF
CLUB, LTD., RH HOLDINGS, INC. AND WEDGEFIELD LIMITED PARTNERSHIP, each having an
address at c/o Golf Communities of America, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Tower, Suite 1515, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, "Borrower"). All
capitalized terms used herein shall have the respective meanings set forth in
Article I hereof.
W I T N E S S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents;
NOW, THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions.
For all purposes of this Agreement, except as otherwise
expressly required or unless the context clearly indicates a contrary intent:
"ACM" shall mean any asbestos-containing materials.
"Affiliate" shall mean, with respect to any Person, (x) any
Person controlling, controlled by or under common control with, whether by
virtue of ownership or otherwise, such Person and (y) any spouse, parent or
sibling of any such Person who is a natural person, and any ancestor or lineal
descendent of such spouse, parent or sibling. For purposes of this Agreement and
the other Loan Documents, Affiliates of Borrower shall include, but not be
limited to,
(i) any partners, members or shareholders, as the case may be
(other than in their capacity as shareholders of any company whose
stock is publicly traded, where such shareholders do not control such
company) of Borrower,
(ii) any Guarantor, and any of the shareholders, members or
partners, if any, as the case may be, of such Guarantor (other than in
their capacity as shareholders of any company whose stock is publicly
traded, where such shareholders do not control such company),
(iii) the managing agent of the Property, if any, and any of
the shareholders, members or partners, if any, as the case may be, of
the managing agent (other than in their capacity as shareholders of any
company whose stock is publicly traded, where such shareholders do not
control such company) and
(iv) any Person which would constitute an Affiliate of any
Person described above pursuant to clause (x) or (y) above.
"Affirmative Covenant" shall mean a promise or covenant by any
Person to perform, act, suffer, permit or consent.
"Agreement" shall mean this Loan Agreement, as the same may be
amended, restated, replaced, supplemented, or otherwise modified from time to
time.
"Allocated Loan Amount" shall mean, for an Individual
Property, the amount set forth on Exhibit A hereto as the Allocated Loan Amount
for such Individual Property.
"Applicable Interest Rate" shall mean the rate of interest,
adjusted from time to time, applicable to the outstanding principal balance of
the Loan from time to time, calculated in accordance with the terms of the Note.
"Appraised Value" shall mean, for each Release Parcel, the
amount set forth on Exhibit A hereto as the appraised value of such Release
Parcel or such other amount as shall be determined by an Approved Appraisal of
such Release Parcel after the date hereof.
"Approved Accountant" shall mean one of the so-called "Big
Six" accounting firms or such other independent certified public accountant of
nationally recognized standing selected by the Person required to deliver the
applicable Financial Statements and other reports specified herein, which
Approved Accountant shall be approved by Lender, which approval shall not be
unreasonably withheld, delayed or conditioned.
"Approved Appraisal" shall mean, with respect to an Individual
Property, an appraisal of such Individual Property (a) executed and delivered to
Lender by a qualified MAI appraiser having no direct or indirect interest in
such Individual Property or any loan secured in whole or in part thereby and
whose compensation is not affected by the approval or disapproval of such
appraisal by Lender; (b) addressed to Lender and its successors and assigns; (c)
satisfying the requirements of the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation and Title XI of the Federal Institutions
Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date of such calculation, with respect to
the appraisal and the appraiser preparing same; and (d) otherwise satisfactory
to Lender in all respects in Lender's reasonable discretion.
"Approved Budget" shall have the meaning set forth in Section
8.4.1 hereof.
"Architect" shall mean, with respect to an Individual
Property, the architect preparing the Plans for such Individual Property in
accordance with Section 3.1.2 hereof.
"Assignees" shall have the meaning set forth in Section 7.8.1
hereof.
"Assignment of Leases" shall mean, collectively, those certain
first priority Assignments of Leases and Rents executed by an Individual
Borrower, as assignor, to Lender, as assignee, assigning to Lender all of such
Individual Borrower's interest in and to the Leases and Rents of the Individual
Property encumbered thereby as security for the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Assignment of Management Agreement" shall mean, with respect
to each Individual Property, as applicable, that certain Assignment of
Management Agreement and Subordination of Management Fees among an Individual
Borrower, as assignor, Manager, as manager, and Lender, as assignee, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
"best knowledge" or "knowledge" shall mean for the purpose of
this Agreement and the other Loan Documents the actual knowledge of the Person
in question, after having made due inquiry. If any entity with respect to which
this term would be applicable is a corporation, knowledge of such entity shall
refer to actual knowledge of its officers or directors after having made due
inquiry. If any such entity is a partnership, knowledge of such entity shall
refer to actual knowledge of each of its partners who participates in the
management of such partnership (directly or indirectly), after having made due
inquiry. If any such entity is a limited liability company, knowledge of such
entity shall refer to actual knowledge of its managing members after having made
due inquiry. The knowledge of Borrower for purposes of this definition shall
also include the knowledge of the Manager of the Individual Property in
question.
"Borrower" shall mean, collectively, the Persons identified as
Borrower in the first paragraph of this Agreement and each of their respective
successors and assigns.
"Borrower Information" shall have the meaning ascribed thereto
in Section 7.8.6.
"Broker" shall mean ▇▇▇▇ ▇▇▇▇▇▇.
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which commercial banks in New York, New York are
required or permitted by law to close.
"Cash Collateral Account" shall have the meaning ascribed to
such term in the Cash Management Agreement.
"Cash Management Agreement" shall mean that certain Cash
Management Agreement, dated as of the date hereof, between Borrower, Lender and
Manager, as the same may be amended or modified from time to time.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. **9601, et seq.), as the same may be
amended from time to time.
"Claim" shall have the meaning set forth in Section 7.5.2
hereof.
"Clearing Account" shall have the meaning ascribed to such
term in the Cash Management Agreement.
"Closing Date" shall mean the date of the funding of the
Initial Advance.
"Closing Period" shall have the meaning set forth in Section
8.6.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Collection Period" shall have the meaning ascribed to such
term in the Cash Management Agreement.
"Construction Draw" shall have the meaning ascribed to such
term in Section 3.2.1 hereof.
"Construction Escrow Account" shall have the meaning ascribed
to such term in Section 2.8.1 hereof.
"Construction Funds" shall mean the sum of (i) the amount
deposited in the Construction Escrow Account on the Closing Date and (ii) the
amount by which the Loan Amount shall exceed the Initial Advance.
"Contract" shall mean (i) any management, brokerage or leasing
agreement or (ii) any cleaning, maintenance, service or other contract or
agreement of any kind (other than Leases) of a material nature (materiality for
these purposes to include contracts providing for aggregate payments in excess
of $50,000 or which extend beyond one year (unless cancelable on thirty (30)
days' or less notice)), in the case of each of clause (i) or (ii) relating to
the ownership, leasing, management, use, operation, maintenance, repair or
restoration of the Property.
"Contribution Agreement" shall mean that certain Contribution
Agreement by and among the Individual Borrowers dated as of the date hereof, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"control" (and the correlative terms "controlled by" and
"controlling") shall mean the power to direct the business and affairs of the
entity in question by reason of the ownership of beneficial interests, by
contract or otherwise.
"Corrective Work" shall mean have the meaning ascribed to such
term in the Environmental Indemnification Agreement.
"Debt" shall have the same meaning as the term "Indebtedness".
"Debt Service" shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments under the Note.
"Default" shall have the meaning set forth in Section 6.1
hereof.
"Default Rate" shall have the meaning set forth in the Note.
"Designated Officer" shall mean if any Individual Borrower is
a corporation, the chief financial officer of such corporation or such other
officer of such corporation as is fully familiar with the financial affairs of
such Individual Borrower and is approved by Lender. If any Individual Borrower
is a partnership, such officer of such Individual Borrower's managing general
partner as satisfies the first sentence of this definition. If any Individual
Borrower is a limited liability company, such officer of such Individual
Borrower's managing member as satisfies the first sentence of this definition.
"Disclosed Contracts" shall mean the Contracts disclosed to
Lender in writing on the date hereof.
"Disclosed Violations" shall have the meaning set forth in
Section 4.12.1 hereof.
"Disclosure Document" shall have the meaning set forth in
Section 7.26.3 hereof.
"Disqualified Person" shall have the meaning set forth in
Section 4.27.1 hereof.
"Easements" shall have the meaning ascribed to such term in
Section 4.7 hereof.
"Engineer's Report" shall mean the engineering report made and
delivered to Lender with respect to an Individual Property.
"Entities" shall have the meaning set forth in Section 7.26.2
hereof.
"Environmental Costs" shall mean "Indemnified Costs" as such
term is defined in the Environmental Indemnification Agreement.
"Environmental Consultant" shall mean an environmental
consultant reasonably satisfactory to Lender.
"Environmental Indemnification Agreement" shall mean that
certain Environmental Indemnification Agreement dated the date hereof in favor
of Lender, as same may hereafter be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Environmental Laws" shall mean CERCLA; The Resource
Conservation and Recovery Act, 42 U.S.C. *1601, et seq.; The Hazardous
Substances Transportation Act, 49 U.S.C. *1801, et seq.; The Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. *11001, et seq.; The Toxic
Substances Control Act, 15 U.S.C. *2601 et seq.; The Clean Air Act, 42 U.S.C..
*7401 et seq., The Clean Water Act, 33 U.S.C. *1251 et seq.; The Safe Drinking
Water Act, 42 U.S.C. *300 et seq.; as any of the foregoing may be amended from
time to time; and any other federal, state and local laws or regulations, codes,
statutes, orders, decrees, judgments or injunctions, now or hereafter issued,
promulgated, approved or entered thereunder, relating to pollution,
contamination or protection of the environment, including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata, buildings or
facilities) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances.
"Environmental Matter" shall mean any matter arising out of,
relating to, or resulting from pollution, contamination or protection of the
environment (including natural resources), and any matters relating to emission,
discharge, release or threatened release, of Hazardous Substances into the air
(indoor and outdoor), surface water, groundwater, soil, land surface or
subsurface, buildings or facilities or otherwise arising out of, relating to, or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of
Hazardous Substances.
"Environmental Report" shall mean, collectively, the Phase I
and, if applicable, Phase II, environmental reports with respect to the Property
made and delivered to Lender by the Environmental Consultant in connection with
the Loan.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder from time to
time.
"Exchange Act" shall have the meaning set forth in Section
7.26.3 hereof.
"Event of Default" shall have the meaning set forth in Section
6.1 hereof.
"Financial Statements" shall mean (a) with respect to
Borrower, the financial statements and other documentation required to be
delivered pursuant to Section 5.13 hereof and, (b) with respect to Guarantors,
such financial statements as are required by the terms of the Guaranty, the
Environmental Indemnification Agreement or any of the other Loan Documents, to
the extent applicable to such Guarantor.
"Fiscal Year" shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of the Term.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the effective date of the applicable
financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) whether
now or hereafter in existence.
"Gross Income from Operations" shall mean the aggregate of all
income, computed in accordance with GAAP, derived from the ownership and
operation of the Properties from whatever source, including, but not limited to,
Receipts, utility charges, escalations, forfeited security deposits, interest on
credit accounts, service fees or charges, license fees, parking fees, rent
concessions or credits, but excluding sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any government or
governmental agency, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, proceeds of casualty insurance and condemnation awards
(other than business interruption or other loss of income insurance), and any
disbursements to the Borrower from the applicable Tax and Insurance Escrow Fund,
the applicable Replacement Reserve Fund or any other escrow fund or reserves
established pursuant to the Loan Documents.
"Guarantor" shall mean any guarantor or indemnitor under any
Guaranty including, without limitation, Golf Ventures, Inc., U.S. Golf
Communities, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Guaranty" shall mean any guaranty or indemnity executed and
delivered in connection with the Loan as of the date hereof or as of any date
hereafter.
"Hazardous Substances" shall mean asbestos, ACM, PCBs,
urea-formaldehyde and urea-formaldehyde foam insulation, nuclear fuel or waste,
petroleum products and any hazardous waste, toxic substance, related components,
related constituents, pollutant or contaminant, including, without limitation,
any substance defined or treated as a "hazardous substance", "extremely
hazardous substance" or "toxic substance" (or comparable term) in any applicable
Environmental Law and any other material which may give rise to Environmental
Costs.
"Improvements" shall have the meaning set forth in the
granting clause of the related Mortgage with respect to each Individual
Property.
"Indebtedness" shall mean the outstanding principal amount set
forth in and evidenced by the Note together with all interest accrued and unpaid
thereon and all other sums due to Lender in respect of the Loan under the Note,
this Agreement, each Mortgage or any other Loan Document.
"Indemnified Parties" shall mean each of Lender, the
Affiliates of Lender and the Participants and their respective successors,
partners, members, shareholders, officers, directors, attorneys, agents and
employees.
"Independent Director" shall mean a person who is not at the
time of appointment, and has not been at any time in the preceding five years,
(i) a stockholder, director, officer, member, employee or partner of Borrower or
any Affiliate of Borrower; (ii) a customer, supplier or other Person who derives
more than ten percent (10%) of his/her/its purchases or revenues from
his/her/its activities with Borrower or any Affiliate of Borrower; (iii) a
Person controlling or under common control with any such stockholder, director,
officer, member, employee, partner, customer, supplier or other Person or (iv) a
member of the immediate family of any such stockholder, director, officer,
member, employee, partner, customer, supplier or other Person.
"Individual Borrower" shall mean each of the Persons signing
this Agreement as Borrower and their respective successors and assigns.
"Individual Property" shall mean the real property and the
improvements thereon encumbered by a Mortgage executed by an Individual
Borrower, together with all rights pertaining to such Individual Property and
improvements thereon located, as more particularly described in the Granting
Clauses of such Mortgage and referred to therein as the "Premises".
"Initial Advance" shall mean Lender's initial advance of
proceeds of the Loan in the amount set forth on Exhibit K as the Initial
Advance.
"Insolvent" shall mean the inability of a Person to pay its
debts as they become due and/or if the fair market value of such Person's assets
do not exceed its liabilities, including without limitation, subordinated,
unliquidated, disputed or contingent liabilities.
"Insurance Premiums" shall have the meaning set forth in
Section 8.1 hereof.
"Lease" shall mean any lease, sublease or sub-sublease,
letting, license, concession or other agreement (whether now or hereafter in
effect) entered into by Borrower (or its predecessor-in-interest) 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 Individual Property, and every
modification, amendment or other agreement relating to such lease, sublease,
sub-sublease, or other agreement entered into in connection with such lease,
sublease, sub-sublease, 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.
"Legal Requirements" shall mean, with respect to each
Individual Property, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting such Individual
Property or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or actually known to Borrower, at any time in
force affecting such Individual Property or any part thereof, including, without
limitation, any which may (i) require repairs, modifications or alterations in
or to such Individual Property or any part thereof, or (ii) in any way limit the
use and enjoyment thereof.
"Lender" shall mean Credit Suisse First Boston Mortgage
Capital LLC, together with its successors and assigns.
"Lender's Consultant" shall mean EMG Consultants, or such
other similarly qualified person reasonably satisfactory to Lender.
"Lender's Counsel" shall mean Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
located in New York, New York, and any other law firm, wherever situated, acting
as counsel to Lender.
"Lender's Counsel Fees" shall mean all reasonable fees and
disbursements of Lender's Counsel.
"LIBOR" shall have the meaning ascribed thereto in the Note.
"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, or affecting an Individual Property or any portion thereof or
Borrower's interest therein, including, without limitation, any conditional sale
or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.
"Loan" shall mean the loan in the maximum principal amount of
$50,950,000 which shall be advanced by Lender in accordance with the terms and
conditions of this Agreement and which is evidenced by the Note and is secured
by each Mortgage and all of the other Loan Documents.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Mortgage and the Assignment of Leases encumbering each Individual
Property, the Assignment of Management Agreement for each Individual Property,
the Environmental Indemnification Agreement, the Contribution Agreement and any
other document pertaining to the Individual Properties, the Pledge Agreement
executed by U.S Golf (Pelican Strand), Inc., the Pledge Agreement executed by
U.S. Golf Communities, Inc. and any and all other documents executed and/or
delivered in connection with the Loan.
"Loan Interest" shall have the meaning set forth in Section
7.26.1 hereof.
"Loan Pool" shall have the meaning set forth in Section 7.26.1
hereof.
"Lot" shall mean each portion of an Individual Property
designated as a "lot" on a subdivision map or plat which has been filed with and
approved by all applicable Governmental Authorities with respect to such
Individual Property or, with respect to any Individual Property or part thereof
which shall be subjected to condominium ownership, each unit in such
condominium.
"Management Agreement" shall mean, with respect to any
Individual Property, the agreement pursuant to which Manager is to provide
management and other services with respect to such Individual Property.
"Manager" shall mean U.S. Golf Management, Inc. or such other
manager as shall be approved by Lender in accordance herewith.
"Material Adverse Effect" shall mean any event or condition
that has a material adverse effect on (i) all of the Properties taken as a
whole, (ii) the business, prospects, profits, operations or condition (financial
or otherwise) of Borrower, or (iii) the ability of Borrower to repay the
principal and interest of the Indebtedness as it becomes due and perform its
other obligations under this Agreement or any of the other Loan Documents.
"Maturity Date" shall have the meaning ascribed thereto in the
Note.
"Maximum Management Fee" shall mean with respect to each
Individual Property, an amount not to exceed the management fee which would be
paid to a third-party in an arms length transaction for services similar to the
services to be rendered by Manager under the Management Agreement.
"Minimum Release Price" shall have the meaning set forth in
Section 8.7.1 hereof.
"Mortgage" shall mean, collectively, those eight certain first
priority Mortgages and Security Agreements and Deeds of Trust and Security
Agreements, as the case may be, each executed and delivered by an Individual
Borrower as security for the Loan, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"Negative Covenant" shall mean a promise or covenant by any
Person to not act or perform or to not suffer, permit or consent to an action.
"Net Operating Income" shall mean the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.
"Note" shall mean that certain note of even date herewith in
the principal amount of $50,950,000, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Notices" shall have the meaning set forth in Section 7.6
hereof.
"Obligated Party" shall have the meaning set forth in Section
6.2 hereof.
"Obligations" shall have the meaning ascribed to such term in
the Mortgage.
"Offer" shall have the meaning set forth in Section 8.6.1.
"Offer Period" shall have the meaning set forth in Section
8.6.2.
"Officer's Certificate" shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized senior officer of the
general partner or managing member of each Individual Borrower.
"Operating Expenses" shall mean the aggregate of all
expenditures, computed in accordance with GAAP, of whatever kind relating to the
operation, maintenance and management of the Property that are incurred on a
regular monthly or other periodic basis, including without limitation,
expenditures for utilities, ordinary repairs and maintenance, insurance, license
fees, property taxes and assessments, advertising, management fees, payroll and
related taxes, computer processing charges, operational equipment or other lease
payments as reasonably approved by Lender, and other similar costs, but
excluding depreciation (and other non-cash charges), Debt Service (or any other
amounts paid by Borrower on account of the Indebtedness), and contributions to
the Replacement Reserve Fund, the Tax and Insurance Escrow Fund, and any other
reserves or escrows required under the Loan Documents.
"Organizational Documents" shall mean, with respect to any
Person who is not a natural person, the certificate or articles of
incorporation, memorandum of association, articles of association, trust
agreement, by-laws, partnership agreement, limited partnership agreement,
certificate of partnership or limited partnership, limited liability company
articles of organization, limited liability company operating agreement or any
other organizational document, and all shareholder agreements, voting trusts and
similar arrangements with respect to its stock, partnership interests,
membership interests or other equity interests.
"Other Charges" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against the Property or any part thereof.
"Outside Funding Date" shall mean the date that is eighteen
(18) months after the date of this Agreement.
"Participants" shall have the meaning set forth in Section
7.8.2 hereof.
"Party In Interest" shall have the meaning set forth Section
4.27.1 hereof.
"Payment Date" shall mean the first (1st) calendar day of each
calendar month commencing with July, 1998.
"PCBs" shall mean polychlorinated biphenyls.
"Permanent Financing" shall mean any financing or loan secured
in whole or in part by the Property, the proceeds of which will be used to pay
the Indebtedness.
"Permit" shall mean all approvals, consents, registrations,
franchises, permits, licenses, variances, certificates of occupancy and other
authorizations with regard to zoning, landmark, ecological, environmental, air
quality, subdivision, planning, building or land use required by any
Governmental Authority for the construction, lawful occupancy and operation of
the Improvements and the actual and contemplated uses thereof.
"Permitted Encumbrances" shall mean, with respect to each
Individual Property, collectively, (a) the Liens and security interests created
by the Loan Documents, (b) the Liens, encumbrances and other matters disclosed
in the Title Insurance Policies relating to such Individual Property, and (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, and (d) such other title and survey exceptions as Lender may
hereafter approve in writing in Lender in accordance herewith.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Placement Party" shall have the meaning set forth in Section
7.26.1 hereof.
"Plans" shall mean the plans and specifications approved by
Lender in accordance with Section 3.2.1, as the same may be amended in
accordance herewith.
"Prohibited Transaction" shall mean a prohibited transaction
as described under Section 406 of ERISA or Section 4975 of the Internal Revenue
Code which is not the subject of a statutory exemption under Section 408(b) of
ERISA or an administrative exemption granted pursuant to Section 408(a) of
ERISA.
"Property" or "Properties" shall mean, collectively, all of
the Individual Properties which are subject to the terms of this Agreement.
"Property Budget" shall mean, with respect to each Individual
Property, a schedule setting forth the proposed use or intended allocation of
the Construction Funds with respect to the Required Work on such Individual
Property.
"Rating Agencies" shall mean each of Standard & Poor's Ratings
Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff &
▇▇▇▇▇▇ Credit Rating Co. and Fitch IBCA, Inc., or any other
nationally-recognized statistical rating agency which has been reasonably
approved by Lender.
"Receipts" shall mean, without duplication, any and all rents,
issues, profits, payments, income, deposits (other than security deposits which
an Individual Borrower is not entitled to retain or apply to defaults),
revenues, proceeds, reimbursements, receipts and similar items in whatever form
(including, without limitation, cash, checks, money orders or other instruments
for the payment of money) derived from, or generated by, the use, ownership,
leasing or operation of any Individual Property, including, without limitation,
(a) real estate tax refunds, (b) proceeds of any insurance, including, without
limitation, business interruption insurance, (c) condemnation awards, (d) all
sums paid with respect to a modification, rejection or termination of any Lease
(including in any bankruptcy case) or otherwise paid in connection with an
Individual Borrower taking any action under any Lease (e.g., granting a consent)
or waiving any provision thereof, (e) damages or other payments in settlement of
claims by Borrower against tenants or other third parties in connection with
each Individual Property, (f) proceeds of any transfer or sale of any items of
the collateral securing the Loan or of any partial interest in such collateral
or the Individual Borrower other than a sale resulting in the satisfaction of
the Loan in full in which event this Agreement will be terminated and (g) all
amounts distributed to U.S. Golf Pelican Strand, Inc. (whether by dividend or
otherwise) by Pelican Strand Development Corporation.
"Related Party" shall have the meaning set forth in Section
7.20 hereof.
"Replacement Reserve Account" shall have the meaning set forth
in Section 8.2.2.
"Replacement Reserve Contribution" shall have the meaning set
forth in Section 8.2.1.
"Replacements" shall have the meaning set forth in Section
8.2.5.
"Request for Advance" shall have the meaning set forth in
Section 3.2.1.
"Required Work" shall have the meaning set forth in Section
3.1.1.
"Retainage" shall have the meaning set forth in Section 3.2.2.
"Securities" shall have the meaning set forth in Section 7.26.1 hereof.
"Securities Act" shall have the meaning set forth in Section
7.26.3 hereof.
"Securitization" shall have the meaning set forth in Section
7.26.1 hereof.
"Securitization Indemnification" shall have the meaning set
forth in Section 7.26.3 hereof.
"Securitization Indemnified Party" shall have the meaning set
forth in Section 7.26.3 hereof.
"Servicer" shall mean a servicer or account administrator of
the Lender designated by and acting for the benefit of the Lender.
"Significant Party" shall mean Borrower, Guarantor and each
SPE Entity.
"SPE Entity" shall mean either the managing member or general
partner, as the case may be, of any Individual Borrower and any Guarantor.
"Spread Maintenance Premium" shall mean, in connection with
any prepayment of all or any portion of the outstanding principal balance of the
Note, an amount equal to the present value of all future installments of
interest which would have been due under the Note on the portion of the
outstanding principal balance of the Note being prepaid if interest accrued on
such portion of the principal balance being prepaid at an interest rate per
annum equal to four and one-half percent (4.5%).
"State" shall mean, with respect to an Individual Property,
the State or Commonwealth in which such Individual Property or any part thereof
is located.
"Subsequent Advances" shall have the meaning set forth in
Section 2.2 hereof.
"Substantial Completion" or "Substantially Complete" shall
mean the stage in the progress of the Required Work with respect to an
Individual Property at which (a) such Required Work has, in the reasonable
opinion of the Lender's Consultant, been completed in accordance with the Plans
and the Requirements in all material respects, free of defects in construction
or materials, except for minor "punch list" items, (b) the Improvements shall
contain all furniture, fixtures and equipment required for the intended use and
operation of the Improvements, (c) a temporary or permanent certificate of
occupancy, if applicable, and all other certificates, licenses, consents and
approvals required for the intended use and operation of the Improvements shall
have been issued by or obtained from the appropriate Governmental Authorities,
and (d) all costs (other than punchlist items) incurred in connection with the
Required Work shall have been paid in full (subject to Retainage) and there
shall be no liens, claims for liens, encumbrances or security instruments (other
than the Mortgage) for or relating to materials supplied or services performed
in connection therewith (or any such liens shall be bonded to the reasonable
satisfaction of Lender).
"Tax and Insurance Escrow Account" shall have the meaning set
forth in Section 8.1.1.
"Taxes" shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against the Property or any part thereof.
"Title Insurance Policy" shall mean, with respect to each
Individual Property, the title insurance policy in the form (reasonably
acceptable to Lender) issued with respect to such Individual Property and
insuring the lien of the Mortgage encumbering such Individual Property.
"Title Insurer" shall mean, with respect to each Individual
Property, the issuer of the Title Insurance Policy.
"Transfer" shall have the meaning set forth in Section 5.1.1
hereof.
"UCC" or "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in the applicable State or Commonwealth in which an
Individual Property is located.
"Working Capital Reserve Account" shall have the meaning set
forth in Section 8.5.1.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange are carried on in London, England and in New York, New
York.
Section 1.2 Principles of Construction.
All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
ARTICLE II. PAYMENTS; ADVANCES
Section 2.1 The Loan. Subject to and upon the terms and
conditions set forth herein, Lender hereby agrees to make the Loan to Borrower
on the Closing Date in the principal amount not to exceed to Fifty Million Nine
Hundred and Fifty Thousand and No/100 Dollars ($50,950,000).
Section 2.2 Disbursements. Borrower may request and receive
only one borrowing hereunder in respect of the Loan, which borrowing may be
advanced in any number of disbursements in accordance with the terms hereof, and
any amount borrowed and repaid hereunder in respect of the Loan may not be
reborrowed. Lender shall make, and Borrower shall accept, the Initial Advance on
the date hereof and each Individual Borrower shall receive at least $2,500,000
from the Initial Advance. Borrower may request and Lender may make one or more
additional advances of a portion of the proceeds of the Loan not previously
advanced (each a "Subsequent Advance") in accordance with the provisions of
Section 3.2 hereof. Any and all Subsequent Advances shall be deemed advances of
the Loan and shall be evidenced by the Note and secured by the Mortgage.
Section 2.3 Loan Repayment; Exit Fee. Borrower shall pay the
Indebtedness to Lender in accordance with the terms and conditions of the Note.
In addition, upon the Maturity Date or such earlier date as the Loan shall be
paid in full, Borrower shall pay to Lender the sum of $1,298,250 as an exit fee.
All payments to Lender under this Agreement will be paid as provided in the Note
for payments thereunder with interest at the Applicable Interest Rate, Default
Rate or other rate as specified herein.
Section 2.4 Prepayment. Borrower shall not be permitted to
prepay all or any portion of the Loan except in connection with a release of all
or any portion of the Property under Section 8.7 hereof or as otherwise
expressly provided herein or in the other Loan Documents. If, after the Debt has
been accelerated due to a Default by Borrower, including, without limitation,
any attempt by Borrower to prepay the Debt at a time when prepayment is
prohibited hereunder, Borrower shall tender an amount sufficient to pay the
entire accelerated Debt, such tender shall be deemed a voluntary prepayment and
an attempt to evade the restrictions on prepayment set forth herein, and
Borrower shall, in addition to all other amounts then payable hereunder, be
required to pay Lender a prepayment fee equal to one percent (1%) of the amount
of principal being repaid together with a Spread Maintenance Premium calculated
with respect to the amount of principal being repaid.
Section 2.5 Making of Payments. Each payment by Borrower
hereunder or under the Note shall be made in funds settled through the New York
Clearing House Interbank Payments System or other funds immediately available to
Lender by 12:00 noon, New York City time, on the date such payment is due at
such place as Lender may direct, which place may be changed by Lender from time
to time by written notice to Borrower. Whenever any payment hereunder or under
the Note shall be stated to be due on a day which is not a Working Day, such
payment shall be made on the immediately preceding Working Day. Time is of the
essence as to all payments due under this Agreement.
Section 2.6 Late Payment Charge. If any sum due under this
Agreement or any other Loan Document is not paid by Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand a late charge as
provided in the Note for payments of principal or interest thereunder not paid
when due.
Section 2.7 Release on Payment in Full. Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of all
principal and interest on the Loan and all other amounts due and payable under
the Loan Documents in accordance with the terms and provisions of the Note and
this Loan Agreement, release the liens of each Mortgage not theretofore released
or, at Borrower's direction, this Agreement, the Note, each Mortgage and all
other Loan Documents held by Lender as security for the Loan shall be assigned
by Lender to such Person designated by Borrower for such purpose, provided
however, such assignment shall be without warranty or recourse to Lender.
Section 2.8 Construction Escrow Account.
2.8.1 On the Closing Date, the sum of set forth on Exhibit K
hereto as the Construction Escrow Account shall be deposited from the
Initial Advance and held in an account maintained at a bank designated
by Lender and pledged to Lender as additional collateral for the Loan
(the "Construction Escrow Account"). The Construction Escrow Account
shall be an interest-bearing account and all interest earned thereon
shall become part of the Construction Escrow Account for the benefit of
Borrower.
2.8.2 Any portion of the Loan not theretofore advanced shall
be advanced on the Outside Funding Date and deposited into the
Construction Escrow Account. Upon such deposit, the Loan shall be
deemed fully advanced to Borrower.
2.8.3 Upon satisfaction of the conditions contained in Section
3.3 and 3.4 hereof for a Construction Draw (other than the condition
contained in Section 3.3.9 hereof), Lender shall disburse the amount of
such Construction Draw from the Construction Escrow Account. Upon and
during the continuance of an Event of Default, any and all amounts in
the Construction Escrow Account may be applied to the Indebtedness in
such order, priority and proportions as Lender in its discretion shall
deem proper. Section 2.9 Affiliate Payments. Each Individual Borrower
represents and warrants that no portion of the Initial Advance is
intended to be paid to any Affiliate of such Individual Borrower (other
than Borrower) and covenants that (a) no portion of any Subsequent
Advance or Construction Draw shall be paid to any Affiliate of such
Individual Borrower, (b) no portion of any disbursement from any
reserve account maintained under this Loan Agreement shall be paid to
any Affiliate of such Individual Borrower and (c) no portion of the
Required Work shall be performed by any Affiliate of such Individual
Borrower, whether or not on competitive terms.
ARTICLE III. REQUIRED WORK; SUBSEQUENT ADVANCES
Section 3.1 Required Work.
3.1.1 Borrower shall promptly commence and diligently and
continuously perform all of the work set forth on Exhibit F hereto (the
"Required Work") and shall complete such Required Work expeditiously
and in any event not later than eighteen (18) months after the date
hereof.
3.1.2 Prior to the commencement of the Required Work
applicable to an Individual Property, Borrower shall prepare and submit
to Lender and applicable Governmental Authorities for approval (a) to
the extent appropriate for such Required Work, a complete set of plans
and specifications for such Required Work (the "Plans") prepared by an
architect reasonably acceptable to Lender (the "Architect") and (b) a
reasonably detailed Property Budget setting forth the estimated costs
of such Required Work. Borrower shall not modify the approved Plans in
any material respect without the consent of Lender in each instance.
Lender's approval of any Plans and consent to any modification thereof
shall not be unreasonably withheld, conditioned or delayed and shall be
deemed given if Lender does not object thereto in writing within twenty
(20) Business Days, with respect to approval of Plans, or ten (10)
Business Days, with respect to a modification of Plans, after receiving
Borrower's request for such approval or consent specifying in
reasonable detail the reasons for such objection, provided that
Borrower's request for such approval or consent shall have stated that
such consent shall be deemed given if Lender does not object to such
approval or modification within such twenty (20) or ten (10) Business
Days, as the case may be.
3.1.3 Borrower shall pay for and obtain or cause to be paid
for and obtained all Permits with regard to the Required Work, whether
necessary for commencement, completion, use or otherwise.
3.1.4 Borrower shall perform or cause to be performed all
Required Work in a good and workmanlike manner in compliance with all
applicable Legal Requirements and the Plans.
3.1.5 Borrower shall pay and discharge (by bonding or
otherwise) all claims for labor done and material and services
furnished in connection with the Required Work and cause the Required
Work to be completed free and clear of any and all liens (including
mechanic's, materialman's or other liens), claims and encumbrances
whatsoever.
3.1.6 Each contractor or subcontractor performing any portion
of the Required Work shall be licensed by the appropriate state agency,
bonded (if the cost of the work to be performed by such contractor
shall be in excess of $500,000 and such bonds shall be requested by
Lender) and unaffiliated with Borrower. Upon Lender's request, Borrower
shall provide written evidence that each contractor and subcontractor
meets the requirements of this paragraph.
3.1.7 Borrower shall permit Lender and Lender's consultants to
enter upon the Individual Property which is the subject of the Required
Work at all reasonable times to inspect the Required Work and all shop
and related drawings, daily logs and other reports and records used or
maintained in connection with the Required Work and shall furnish to
Lender, upon request, copies of the same.
3.1.8 Borrower shall furnish to Lender from time to time upon
request (i) copies of all contracts and subcontracts and the names and
addresses of all persons with whom Borrower or the general contractor,
if any, has contracted or intends to contract for the furnishing of
labor or materials in connection with the Required Work; (ii) copies of
all contracts, bills of sale, statements, receipts or other documents
under which Borrower claims title to any materials, fixtures or
articles incorporated in the Required Work or subject to the lien of
the Mortgage; (iii) a list of all unpaid bills for labor and materials
with respect to the Required Work and copies of all invoices therefor,
and (iv) such other information relating to the Required Work as shall
be reasonably requested by Lender.
Section 3.2 Construction Draws.
3.2.1 Lender shall disburse funds from the Construction Escrow
Account or, to the extent the amount therein shall be insufficient,
make a Subsequent Advance of the Loan in order to pay or reimburse
Borrower for the all or a portion of the cost of the Required Work
(each such disbursement or Subsequent Advance being a "Construction
Draw") upon (a) submission by Borrower of a request (a "Request for
Advance") setting forth the amount sought and the Required Work to be
paid for and (b) satisfaction of the conditions set forth in Section
3.3 below.
3.2.2 Each Construction Draw shall be equal to the lesser of
(a) the costs actually incurred by Borrower (subject to the limitations
contained in Section 3.2.4) to the extent due and payable and verified
to the reasonable satisfaction of Lender or (b) the value of the work
completed based on the estimated total cost of the Required Work and
the percentage of completion then attained, less (in either case) (x)
10% of such amount (the "Retainage") and (y) amounts theretofore
advanced, provided that no Construction Draw shall be in an amount less
than $500,000 unless the undisbursed portion of the Loan shall be less
than $500,000 in which event the final Construction Draw shall be in
the amount of the undisbursed portion of the Loan.
3.2.3 Borrower shall not request and Lender shall not be
obligated to make more than one Construction Draw in any calendar month
or thirty (30) day period or to make any Construction Draw after the
Outside Funding Date (except as provided in Section 3.2.5 below). All
advances shall be made at the principal office of the Lender or such
other place as the Lender may designate.
3.2.4 Lender shall not be obligated to advance any proceeds of
the Loan for (a) building materials purchased by Borrower to be
incorporated in or used in the construction of the Required Work until
such materials are so used or incorporated or (b) any labor or
materials not in accordance with the Plans or not included in the
Property Budget or (c) with respect to any item, more than the amount
set forth in the Property Budget for such item (subject to the
provisions of Section 3.5 below).
Section 3.3 Conditions Precedent to Construction Draws.
The obligation of Lender to make each Construction Draw
hereunder is subject to the fulfillment by Borrower or waiver by Lender of the
following conditions precedent:
3.3.1 The representations and warranties contained in this
Agreement and the Loan Documents shall be true and correct in all
material respects as of the date of such advance and, with respect to
any representations made to Borrower's knowledge, no event shall have
occurred or condition or circumstance shall exist which, if known to
Borrower, would render any such representation or warranty incorrect or
misleading in any material respect.
3.3.2 All of the obligations to be performed or complied with
by Borrower under the Loan Documents through the date of such advance
shall have been performed or complied with in all material respects and
no event shall have occurred or condition or circumstance shall exist
which is or, with the passage of time or giving of notice, or both,
would be an Event of Default under this Agreement or any other Loan
Document.
3.3.3 Borrower shall have furnished to Lender, to the extent
requested by Lender and not previously furnished, the following with
respect to the Required Work which is the subject of the Request for
Advance:
(a) The Plans;
(b) The Property Budget;
(c) Copies of all contracts entered into by Borrower,
including agreements with the architect, general contractor
and all sub-contractors;
(d) Letters executed by Borrower's architect, general
contractor and major subcontractors (or, if there is no
general contract, contractors) designated by Lender regarding
such matters as Lender shall reasonably request, including,
without limitation, (i) confirmation that their agreements
with Borrower are in full force and effect and unmodified and
that they have no other agreements with Borrower, (ii)
statements of the amounts owed and previously paid to them,
(iii) consents to the collateral assignment of their
agreements to Lender; (iv) agreements to continue performance
under their agreements for Lender or its designee in the event
of a default by Borrower under the Loan Documents and (v) with
respect to the Architect, consent to Lender's use of the Plans
without additional charge in connection with construction of
the Improvements;
(e) In connection with contracts for work in excess
of $500,000, payment and performance bonds in form and
substance satisfactory to Lender issued by companies
acceptable to Lender in the amount of one hundred percent
(100%) of the contract sum naming Borrower and Lender as dual
obligees;
(f) If such Required Work shall include new buildings
or structures or additions to existing buildings or
structures, a current soil test report prepared by an engineer
reasonably acceptable to Lender and certified to Lender
indicating a state of facts satisfactory to Lender and such
other geotechnical test reports as Lender shall reasonably
require;
(g) If such Required Work shall include new buildings
or structures or additions to existing buildings or
structures, a site plan prepared by Borrower's architect or
the surveyor and superimposed on a current survey of the
applicable Individual Property to show the proposed location
of the Improvements thereon;
(h) Evidence that all utilities and roads anticipated
to be necessary for the performance of the Required Work and
the operation of the Individual Property upon completion
thereof shall be available when needed;
(i) Copies of all Permits necessary for the
performance of the Required Work and evidence that such
Permits are in full force and effect;
(j) The opinion of the Architect that (i) the Plans
have been approved by it and by each Governmental Authority
whose approval is required, (ii) upon completion of the
Required Work in accordance with the Plans, the affected
Individual Property will comply with all applicable Legal
Requirements, (iii) Borrower has complied in all material
respects with all applicable Legal Requirements for the
Required Work and (iv) such other matters as Lender shall
reasonably request;
(k) The report of Lender's Consultant as to the
feasibility of the Required Work, adequacy of the Plans and
Property Budget and such other matters as Lender shall
reasonably request.
3.3.4 The Improvements on the Individual Property which is the
subject of a Request for Advance shall not have been injured or damaged
by fire or other casualty and shall not be the subject of any pending
or threatened condemnation or adverse zoning proceeding any of which
would materially and adversely affect the Required Work.
3.3.5 No material adverse change shall have occurred in the
financial condition of Borrower or any Guarantor.
3.3.6 No action, suit, proceeding or investigation, at law or
in equity, except for those disclosed to Lender in writing, shall be
pending against Borrower or with respect to the Property before any
court, arbitration board or Governmental Authority which, if adversely
determined, would materially adversely affect (i) the security for the
Loan, (ii) the ability of Borrower to complete the Required Work
substantially in accordance with the Plans, or (iii) the ability of
Borrower to operate the Property in the manner contemplated by the
Plans.
3.3.7 Lender shall have received (i) a statement from the
Architect that all work to date has been done in accordance with the
Plans and Legal Requirements in all material respects and setting forth
its estimate of the percentage of completion of the Required Work on
such Individual Property and (ii) a statement from the general
contractor (or, if there is no general contractor, the Borrower) that
the amounts sought in the Request for Advance are due and payable for
labor and materials furnished, that all work has been performed in
accordance with the Plans in all material respects, and that all
contractors have been paid in full for all work and materials
theretofore furnished to the extent such payments are due except such
as are intended to be paid out of the advance which is the subject of
the pending Request for Advance. Such statements shall be satisfied by
submitting AIA Document G702.
3.3.8 Lender shall have received advice from Lender's
Consultant that (i) the Required Work theretofore performed at the
Individual Property was performed in accordance with the Plans and
Legal Requirements in all material respects and setting forth its
estimate of the percentage of completion thereof; (ii) the amount
which, in its opinion, is due and payable for labor and materials
furnished; (iii) the amount which, in its opinion, is required to
complete the Required Work on such Individual Property and pay for all
items included in the Property Budget does not exceed the undisbursed
amount of the Loan allocated to such Required Work and the estimated
date of completion of such Required Work shall not be later than the
date required for such completion and (iv) all Permits required for
construction have been obtained and are in full force and effect.
3.3.9 Lender shall have received from the Title Insurer a
notice of title continuation or an endorsement to the title insurance
policy theretofore delivered in accordance with local law, regulation
and practice, indicating that since the last preceding advance, there
has been no change in the state of title and no survey exceptions not
theretofore approved by the Lender, which endorsement shall have the
effect of increasing the coverage of the policy by an amount equal to
the advance then being made if the policy does not by its terms provide
for such an increase and insuring the priority of such advance.
3.3.10 Lender shall have received, upon completion of the
exterior walls of any buildings and improvements, or if required in
connection with the endorsement to be delivered under Section 3.3.9, a
revised or redated survey showing the exterior lines of all buildings
and improvements in the course of construction or completed, or, after
completion of the exterior walls of the buildings and improvements, a
certificate from the surveyor certifying that there has been no change
in any exterior line of the buildings and improvements since the date
of the last advance.
3.3.11 Lender shall have received, if requested, advice from
the Title Insurer that a search of the public records of the County in
which the Individual Property is located and the County in which the
Individual Borrower owing such Individual Property shall have its
principal place of business discloses no leases of personalty,
financing statements, title retention agreements or other security
interests in favor of parties other than Lender in any of the personal
property intended to be subjected to the lien of the Mortgage.
3.3.12 Lender shall have received executed waivers of lien
from the Architect, general contractor (or, if there is no general
contractor, the major contractors designated by Lender), covering all
work, labor and materials previously performed and delivered in amounts
which aggregate the total payments received through and including the
last payment received.
3.3.13 Lender shall have received such additional documents in
support of the Request for Advance and the satisfaction of the
foregoing conditions as Lender may reasonably require.
Section 3.4 Conditions Precedent to Final Advances.
Upon Substantial Completion of the Required Work for an
Individual Property, Lender shall advance to Borrower an amount equal to the
Retainage less the amount, which in the opinion of Lender's Consultant, is
reasonably required for final completion of such Required Work provided that, in
addition to the conditions to advances set forth in Section 3.3 above, the
following additional conditions shall have been satisfied:
(a) Lender shall have received a certificate of the Architect
and advice from Lender's Consultant, that (i) the Improvements on such
Individual Property have been Substantially Completed in accordance with the
Plans and all Legal Requirements, (ii) all roads and utilities necessary for the
operation of such Improvements are available and operating and (iii) all Permits
necessary for the use and occupancy and operation of such Improvements for their
intended purposes, including a final or temporary certificate of occupancy, if
applicable, have been issued.
(b) Lender shall have received, if applicable, (i) a final,
"as-built" survey showing the completed Improvements and all easements
appurtenant to such Individual Property and (ii) "as-built" plans and
specifications for the completed Improvements and for underground site work and
interior utility and other building systems.
(c) Lender shall have received evidence that Borrower has
filed the notice of completion of the Improvements necessary to establish
commencement of the shortest statutory period for the filing of mechanics' and
materialmen's liens, if any.
Section 3.5 Reallocation of Budget. If any item of Required Work for an
Individual Property shall be completed or satisfied, such that no further
advances shall be required or made with respect thereto, any amount allocated to
such Required Work and not theretofore advanced shall, upon request of Borrower,
be reallocated to, and advanced in accordance herewith for, other items of
Required Work on such Individual Property or, if not necessary to complete the
Required Work on such Individual Property, on any other Individual Property,
provided that any such reallocation and advance (i) is permitted by applicable
law, (ii) shall be secured by a lien of equal priority with all prior advances
and (iii) shall not otherwise adversely affect the lien of the Mortgage or
Lender's security.
Section 3.6 Determinations. The determination of any fact or facts,
such as the percentage of completion of construction, estimated cost of
construction, estimated date of Substantial Completion and any other matters
relating to the amount of any advance or the satisfaction of the conditions
thereto, shall be made by Lender or at, Lender's option, by Lender's Consultant,
in its sole discretion unless otherwise expressly provided herein.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender:
Section 4.1 Organization, Enforceability, Etc.
4.1.1 Each Individual Borrower is duly formed, validly
existing and in good standing under the laws of the State of its
formation and is duly qualified to do business in the State in which
the Individual Property owned by it is located. Each Individual
Borrower has full power and authority to execute and deliver to Lender
this Agreement and all other Loan Documents to which it is a party and
to own and operate its respective Individual Property and perform the
obligations and carry out the duties imposed upon Borrower by this
Agreement and the other Loan Documents. All Loan Documents to be
executed by each Individual Borrower upon such execution, shall have
been duly authorized, approved, executed and delivered by all necessary
parties and shall constitute the legal, valid and binding obligations
of each Individual Borrower, enforceable against such Individual
Borrower in accordance with their respective terms.
4.1.2 Each SPE Entity is a duly formed corporation, validly
existing or qualified to do business in and in good standing under the
laws of the State in which the Individual Property owned by the
Individual Borrower of which such SPE Entity is a part is located. Each
SPE Entity has full power and authority to execute and deliver to
Lender all Loan Documents to which it is a party. All Loan Documents
executed by the SPE Entity have been duly authorized, approved,
executed and delivered by all necessary parties and constitute the
legal, valid and binding obligations of the SPE Entity, enforceable
against the SPE Entity in accordance with their respective terms.
Section 4.2 No Structural Defects. To the best knowledge of each
Individual Borrower, there are no structural defects in the Improvements
existing on the Individual Property owned by it or material defects to the
building systems thereof except as shown in the Engineer's Report for its
Individual Property.
Section 4.3 Financial Statements. All financial statements of each
Individual Borrower, Guarantor and SPE Entity heretofore or hereafter delivered
to Lender in connection with the Loan are true and correct in all material
respects and fairly present the financial condition of the subjects thereof as
of the respective dates thereof and that no material adverse change has occurred
in the financial condition reflected therein or the operations or business of
such Persons since the respective dates of such financial statements.
Section 4.4 Litigation. Except as disclosed to Lender in writing, (a)
there are no actions, suits, proceedings, arbitrations, labor disputes or
governmental investigations pending, or, to the best knowledge of Borrower,
threatened in writing against or affecting Borrower or, to the best knowledge of
Borrower, any Individual Property and there is no pending litigation (i) which,
if successful, could have a Material Adverse Effect on Borrower, any other
Significant Party or any Individual Property, or any such Person's ability to
perform its obligations pursuant to and as contemplated by this Agreement and
the other Loan Documents, (ii) which, if successful, might affect the validity
or enforceability of any of the Loan Documents or the priority of the Liens
thereof, or (iii) which, if successful, could materially adversely affect the
use of, operations at or capital improvements being made at any Individual
Property; (b) neither Borrower, nor the SPE Entity, nor any other Significant
Party are operating under or subject to any order, writ, injunction, decree or
demand of any court or any Governmental Authority and (c) no actions, suits,
proceedings or arbitrations are pending or, to the best knowledge of Borrower,
threatened against Borrower, SPE Entity or any other Significant Party which
involve claims, damages or sums of money not covered (including all applicable
deductibles) by insurance.
Section 4.5 No Conflict with Law or Agreements. The execution and
delivery of this Agreement and the other Loan Documents, and the performance and
consummation of the transaction contemplated hereby and thereby, on the part of
Borrower and all other Significant Parties (as applicable) and fulfillment of
the terms of the Loan Documents by Borrower and the other Significant Parties
(as applicable)
(i) do not and will not conflict with, violate, or constitute
a default (or a condition or event which, after notice or lapse of time
or both, would constitute such a default) under any provision of any
Organizational Document or contractual obligation of Borrower or any
Significant Party or any Legal Requirement or any court decree or order
binding on Borrower or any Significant Party, and
(ii) will not result in or require the creation or imposition
of any lien or encumbrance on or conveyance of any Individual Property
pursuant to any contractual obligation and
(iii) do not require the consent or approval of any
Governmental Authority or other person or entity except for consents
and approvals already obtained.
Section 4.6 Personal Property. All equipment and other personal
property necessary for (or otherwise actually used in connection with) the
proper and efficient operation and maintenance of each Individual Property and
the actual and contemplated uses thereof are owned by Borrower and constitute
part of such Individual Property subject to the Mortgage and located thereat,
other than any such equipment which is leased by Borrower or is owned by a
utility company.
Section 4.7 Easements. All easements, cross easements, licenses, air
rights, and rights-of-way or other similar property interests (collectively,
"Easements"), if any, necessary for the full utilization of the Improvements for
their intended purposes have been obtained, and are described in the Title
Insurance Policy, and are in full force and effect without default thereunder.
Each Individual Property has or will, upon Substantial Completion of the
Required Work for such Individual Property, have direct rights of access to
public ways (through public or private roads) and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service such Individual
Property for its intended uses. All public utilities necessary or convenient to
the full use and enjoyment of such Individual Property are located either in the
public right of way abutting such Individual Property (which are connected so as
to serve such Individual Property without passing over other property) or in
recorded easements serving such Individual Property and described in the Title
Insurance Policy. All roads necessary for the use of such Individual Property
for its current purposes have been or will, upon Substantial Completion of the
Required Work for such Individual Property, be completed and available for
public use.
Section 4.8 No Flood Hazard, Etc. Each Individual Property is either
not situated in a flood hazard area as defined by the Federal Insurance
Administration or is covered by flood insurance in accordance with the Mortgage
encumbering such Individual Property. Portions of the Property consist of
filled-in land.
Section 4.9 No Default. There is no default on the part of Borrower,
under this Agreement, the Note, the Mortgage or any other Loan Document.
Section 4.10 No Offsets. Borrower has no counterclaims, offsets or
defenses with respect to the Loan, the Note or any other Loan Document.
Section 4.11 Valid Liens. Subject to the Permitted Encumbrances, each
Mortgage is a good and valid first mortgage lien on each of the Properties and
first security interest in the personal property described in the Mortgage.
Section 4.12 Compliance with Zoning and Other Legal Requirements.
4.12.1 To the best of the Borrower's knowledge, except as may
be disclosed by the Engineer's Report and on Exhibit J hereto (the
"Disclosed Violations"), the Properties comply in all material respects
with all applicable Legal Requirements. Borrower shall cure, or cause
to be cured, the Disclosed Violations and have them removed of record
on or before December 31, 1998. To the best knowledge of Borrower, any
zoning or subdivision approval is based on no real property, or rights
appurtenant thereto, other than the Properties. The Properties as
improved and used are not in material violation of any recorded and, to
the best knowledge of Borrower, unrecorded covenants, conditions or
restrictions of any kind or nature affecting all or any part of the
Properties or any interest therein of which Borrower has knowledge. To
the best knowledge of Borrower, the Improvements can be fully rebuilt
in the event of casualty or destruction thereof under the Permits
applicable to the Properties, subject, however, to non-discretionary
requirements of any Governmental Authority. No amendment or change in
any Permit and no amendment or change in zoning or any other land use
control is being sought or obtained by Borrower or any Affiliate of
Borrower or will be sought or obtained by Borrower or any Affiliate of
Borrower with respect to any of the Properties or the Improvements,
except as specifically and reasonably approved in writing by Lender.
4.12.2 To the best knowledge of Borrower, except as may be
disclosed by the Engineer's Report, all Permits required by any
Governmental Authority for the operation of the Improvements and the
actual and contemplated uses thereof or otherwise required to be in
compliance with any Environmental Laws have been obtained. The copy of
the certificate of occupancy for any of the Properties delivered to
Lender is a true and correct copy of the certificate of occupancy for
such Properties and such certificate is in full force and effect and is
not subject to any conditions or limitations other than those of
general applicability to all certificates of occupancy for similar
properties in the applicable jurisdiction.
4.12.3 Borrower has heretofore delivered to Lender true,
correct and complete copies of each material Permit.
4.12.4 There are no pending or, to the best knowledge of
Borrower, threatened actions, suits or proceedings to revoke, attack,
invalidate, rescind or modify the zoning of any Individual Property, or
any material Permits issued with respect to any Individual Property or
any part thereof, or asserting that such Permits or the zoning of any
Individual Property do not permit the use of any Individual Property as
contemplated by the Loan Documents.
Section 4.13 No Condemnation. Borrower has not received any notice of,
and to the best of Borrower's knowledge there does not exist, any actual,
proposed or threatened exercise of the power of eminent domain or other taking
by any governmental or quasi-governmental body or agency of all or any portion
of any Individual Property or any interest therein or any right of access
thereto.
Section 4.14 No Casualty. The Improvements have suffered no casualty or
damage which has not been fully repaired.
Section 4.15 Purchase Options. No Individual Property or part thereof
is subject to any purchase options or other similar rights in favor of third
parties, except as set forth in Exhibit H annexed hereto.
Section 4.16 No Encroachments. To the best of the Borrower's knowledge,
there are no material encroachments on the Land and the Improvements do not
encroach upon any Easement, other interest in real property, any adjoining land
or adjoining street, except as set forth in the survey of each Individual
Property delivered to Lender in connection with the closing of the Loan.
Section 4.17 No Insolvency. Neither Borrower, any SPE Entity nor any
other Significant Party is Insolvent or will be rendered Insolvent by execution
of this Agreement, the Note or any other Loan Documents or consummation of the
transactions contemplated thereby.
Section 4.18 Fraudulent Conveyance. Borrower (a) has not entered into
the transactions contemplated by this Agreement or any other Loan Document with
the actual intent to hinder, delay, or defraud any creditor and (b) has received
reasonably equivalent value in exchange for its obligations under the Note, this
Agreement and the other Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair salable value of Borrower's assets
exceeds, and will immediately following the execution and delivery of the Loan
Documents and the advance of the proceeds thereof, exceed, Borrower's total
probable liabilities, including, without limitation, the maximum amount of its
subordinated, unliquidated, disputed or contingent liabilities. Borrower's
assets do not, and immediately following the execution and delivery of the Loan
Documents and the advance of the proceeds thereof, will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such debts and
liabilities as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).
Section 4.19 Broker. No broker or consultant other than Broker has been
retained by Borrower or any Affiliate of Borrower in connection with the Loan or
the Loan Documents. Borrower will pay any and all fees due to Broker in
connection with the Loan and will indemnify, defend and hold the Indemnified
Parties harmless from and against all loss, cost, liability and expense arising
from the claims of all brokers and consultants (including Broker) relating to
the Loan and/or any Individual Property with whom Borrower, any Affiliate of
Borrower or any employee or agent of Borrower has dealt, including, without
limitation, sales, mortgage or leasing brokers or consultants.
Section 4.20 Environmental. Except as may be actually disclosed in the
Environmental Report
(i) no Hazardous Substances are now or, to Borrower's best
knowledge, have ever been located, produced, used, stored, treated,
transported, incorporated, discharged, emitted, released, deposited or
disposed upon, under, over or from any Individual Property in a manner
that may give rise to any actual or potential liability to pay response
costs or other damages, losses or expenses or otherwise violate any
Environmental Laws;
(ii) no Hazardous Substances are currently located, stored or
used at any Individual Property, except with respect to such Hazardous
Substances which are (x) customarily located, stored or used in
properties similar to the Properties or (y) unique and necessary to
Borrower's business located on the Properties, provided that such
Hazardous Substances described in (x) or (y) are at all times stored,
located and used in compliance with all Environmental Laws;
(iii) to Borrower's knowledge, no Hazardous Substances have
been discharged, released or emitted, upon or from any Individual
Property into the environment and no threat exists of a discharge,
release or emission of a Hazardous Substance upon or from any
Individual Property into the environment, which discharge, release or
emission, in either case, would subject the owner of such Individual
Property to any damages, penalties or liabilities under any applicable
Environmental Laws;
(iv) no Property has ever been used as or for a mine, a
landfill, a dump or other disposal facility or a gasoline service
station;
(v) no underground storage tank is now located on or in any
Individual Property or if previously located therein has been removed
therefrom in compliance with all applicable Environmental Laws and any
clean-up of the surrounding soil in connection therewith has been
completed;
(vi) no asbestos, ACM, materials containing urea-formaldehyde,
or transformers, capacitors, ballasts or other equipment containing
PCBs are located on any Individual Property;
(vii) no Property has been used by Borrower or any Affiliate
or, to the best of Borrower's knowledge, after reasonable
investigation, any other person or entity (including any prior owner of
any Individual Property) as a permanent or temporary treatment, storage
or disposal site for any Hazardous Substance subject to regulation
under Environmental Laws;
(viii) no violation of any Environmental Law now exists or has
ever existed in, upon, under, over or from any Individual Property, no
notice of any such violation or any alleged violation thereof has been
issued or given by any governmental entity or agency, and there is not
now nor has there ever been any investigation or report involving any
Individual Property by any governmental entity or agency which in any
way relates to Hazardous Substances;
(ix) no Person has given any notice of or asserted any claim,
cause of action, penalty, cost or demand for payment or compensation,
whether or not involving any injury or threatened injury to human
health, the environment or natural resources, resulting or allegedly
resulting from any activity or event described in clauses (i)-(viii)
above and to the knowledge of Borrower, no basis for such a claim
exists;
(x) there are not now, nor to Borrower's best knowledge have
there ever been, any actions, suits, proceedings or damage settlements
relating in any way to Hazardous Substances, in, upon, under, over or
from any Property;
(xi) no oral or written notification of a Release (as such
term is defined in 42 U.S.C. * 9601(22)) of any Hazardous Substances
has been filed by or on behalf of Borrower through authorized employees
or agents and no Property is listed in the United States Environmental
Protection Agency's List of Hazardous Waste Sites or any other list of
Hazardous Substance sites maintained by any federal, state or local
governmental agency;
(xii) there are no environmental liens on any Property, and,
to the best knowledge of Borrower, no governmental actions have been
taken or are in process which could subject any Property to such liens;
(xiii) Borrower has not transported or arranged for the
transportation of any Hazardous Substances to any location which is
listed or proposed for listing under CERCLA or on any similar state
list or which is the subject of federal, state or local enforcement
actions or other investigations;
(xiv) no environmental or engineering investigations, studies,
audits, tests, reviews or other analyses have been conducted by or are
in the possession of Borrower or its Affiliates in relation to any
Property other than the Environmental Report; Borrower has delivered a
true, correct and complete copy of the Environmental Report to Lender;
and
(xv) to the best of Borrower's knowledge, the Environmental
Report does not contain any untrue statements of a material fact or
omit to state a material fact necessary to make any statement contained
therein or herein, in light of the circumstances under which such
statements were made, not misleading.
Section 4.21 Borrower Address. Borrower's principal place of business
is at the address first set forth in the initial paragraph of this Agreement and
shall not be changed during the term of the Loan without giving Lender at least
thirty (30) days' prior notice thereof. No Individual Borrower uses any trade
name and has not and will not do any business under any name other than its
actual name set forth herein except the name of the Individual Property owned by
such Individual Borrower.
Section 4.22 Structure of Borrower. (a) The Persons set forth on
Exhibit E annexed hereto are the sole partners or members of Borrower and have
the legal and beneficial ownership interests in Borrower set forth therein, and
(b) the shareholders of the SPE Entity set forth on Exhibit E annexed hereto are
the sole shareholders of the SPE Entity and have the legal and beneficial
ownership interests in Borrower set forth therein. The ownership structure of
Borrower and the SPE Entity for the term of the Loan shall remain the same as
set forth in Exhibit E annexed hereto.
Section 4.23 Leases. Borrower has not entered into any Lease which
continues in existence and is not bound by any such Lease.
Section 4.24 Properties Taxed as a Separate Tax Lot. Each Individual
Property is taxed as one or more separate and distinct tax lots or parcels, no
part of any Individual Property shares a tax lot with any adjoining lands not
wholly included in such Individual Property and for all purposes each Individual
Property may be mortgaged, conveyed and otherwise dealt with as one or more
independent parcels.
Section 4.25 Fiscal Year. Each Fiscal Year of Borrower commences on
January 1.
Section 4.26 No Other Financing. Borrower has not borrowed any funds
and has no indebtedness except for the Loan and trade payables or accrued
expenses incurred in the ordinary course of business of operating the Properties
not in excess of sixty (60) days past due, which have not heretofore been repaid
in full or which shall be repaid in full from the Initial Advance of the Loan.
Section 4.27 ERISA.
4.27.1 The execution, delivery and performance of this
Agreement, the Mortgage, and the other Loan Documents do not constitute
a Prohibited Transaction, assuming solely for this purpose that Lender
is a party in interest as defined in Section 3(14) of ERISA ("Party In
Interest"), or a disqualified person as defined in Section 4975(e)(2)
of the Internal Revenue Code ("Disqualified Person"), with respect to
an employee benefit plan, if any, which has directly or indirectly
invested in Borrower or in any Partner.
4.27.2 Borrower has made and shall continue to make all
required contributions to all employee benefit plans, if any, within
the time periods required by the applicable provisions of ERISA and any
other federal or state law and Borrower has no knowledge of any
material liability which has been incurred by Borrower which remains
unsatisfied for any taxes or penalties with respect to any employee
benefit plan or any multi-employer plan, and each such plan has been
administered in all material respects in compliance with its terms and
the applicable provisions of ERISA and any other federal or state law.
Section 4.28 FIRPTA. Borrower is not a "foreign person" within the
meaning of Sections 1445 or 7701 of the Internal Revenue Code.
Section 4.29 PUHCA. Borrower is not a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" as defined in the Public Utility
Holding Company Act of 1935, as amended.
Section 4.30 Insurance. All Insurance Policies (as defined in the
Mortgage) required to be obtained and maintained by each Individual Borrower
pursuant to the Mortgage are in full force and effect, the premiums due thereon
have been paid in full, Individual Borrower and each Property is in compliance
in all material respects with the provisions of such Insurance Policies and the
provisions relating to Insurance Policies in the Mortgage and no notice of
cancellation, termination or default has been received by Borrower with respect
to any such policy.
Section 4.31 No Margin Stock. None of the proceeds of the Loan will be
used by any Individual Borrower for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation G, T, U or X issued by the Board
of Governors of the Federal Reserve System, as at any time amended, and each
Individual Borrower agrees to execute all instruments which may be necessary
from time to time, if any, to comply with all the requirements of Regulation U
of the Federal Reserve System, as at any time amended.
Section 4.32 Investment Company Act. Each Individual Borrower is not
(a) an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended; or (b)
subject to any other United States federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
Section 4.33 Taxes. Each Individual Borrower has filed all Federal,
state and local tax returns required to be filed prior to the date hereof and
has paid all taxes, charges and assessments shown to be due from each Individual
Borrower on such tax returns. All Taxes due and owing in respect of, and
affecting, each Individual Property have been paid. There are no pending, or to
Borrower's knowledge, proposed special or other assessments for public
improvements or otherwise affecting any Individual Property.
Section 4.34 Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement, or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading in any
material respect. There is no material fact presently known to any Individual
Borrower which has not been disclosed to Lender which materially adversely
affects, nor as far as Borrower can reasonably foresee, might materially
adversely affect, any Individual Property or the business, operations or
condition (financial or otherwise) of Borrower.
Section 4.35 Contracts.
4.35.1 Borrower has not entered into and is not bound by any
Contract which continues in existence, except the Disclosed Contracts.
4.35.2 Each of the Contracts is in full force and effect,
there are no monetary or other material defaults by Borrower thereunder
and there are no monetary or other material defaults thereunder by any
other party thereto beyond any applicable grace or cure period except
for defaults which will be cured upon the Initial Advance of the Loan.
Neither Borrower nor Manager nor any other Person acting on Borrower's
behalf has given or received any written notice of an Event of Default
under any of the Contracts that remain uncured or in dispute.
4.35.3 Borrower has delivered true, correct and complete
copies of the Contracts (including all amendments and supplements
thereto) to Lender.
4.35.4 No Contract has as a party an Affiliate of Borrower
unless such Contract contains market rate terms and conditions
including fees which are no less favorable than would be available to
Borrower by a third party which is not an Affiliate of Borrower. All
fees and other compensation for services previously performed under
each Contract that are due have been paid in full.
Section 4.36 Other Obligations and Liabilities. Each Individual
Borrower has no liabilities or other obligations that arose or accrued prior to
the date hereof that, either individually or in the aggregate, could have a
Material Adverse Effect on Borrower's ability to perform its obligations under
this Agreement, or any of the other Loan Documents or any other obligations that
Borrower may have in connection with the ownership and operation of the
Properties as contemplated by the Loan Documents.
Section 4.37 Loan to Value Ratio. To the best of Borrower's knowledge,
based on Borrower's familiarity with the Properties and the Approved Appraisal
(which Borrower believes to contain a reasonable assessment of the fair market
value of the Properties), the maximum principal amount of the Loan does not
exceed eighty percent (80%) of the fair market value of the Properties. For the
purposes of this Section 4.37, the term "fair market value" shall not include
(i) the amount of any indebtedness secured by a Lien affecting the Properties
that is prior to, or on a parity with, the lien of the Mortgage, and (ii) the
value of any property that is not "real property" within the meaning of Treas.
Reg ** 1.860G-2 and 1.856-3(d).
ARTICLE V. AFFIRMATIVE COVENANTS
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Properties (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender as follows:
Section 5.1 Transfers.
5.1.1 Except as expressly permitted in this Section 5.1 and
Section 8.7, and subject to Section 8.10 hereof, Borrower will not,
directly or indirectly, sell, assign, convey, pledge, hypothecate,
encumber or otherwise transfer (each of the foregoing constituting a
"Transfer") any Individual Property or any part thereof or all of the
Properties, or any interest therein or suffer, consent to or permit the
foregoing without, in each instance, the prior written consent of
Lender. Borrower will not permit any owner of a legal or beneficial
interest in Borrower (including, without limitation, any owner
(directly or indirectly) of a legal or beneficial ownership interest in
the SPE Entity) to Transfer such interest, whether by transfer of
stock, assignment of partnership interest or other transfer of legal or
beneficial interest in Borrower or in any direct or indirect owner
thereof, or otherwise permit any new or additional legal or beneficial
ownership interests in Borrower or any direct or indirect owner, to be
issued, including, without limitation, by admission of new partners or
members, without, in each instance, the prior written consent of
Lender. The foregoing provisions of this Section 5.1.1 shall not,
however, apply to (a) Transfers of ownership interests in Borrower or
the SPE Entity by or on behalf of an individual owner thereof who is
deceased or declared judicially incompetent, to such owner's heirs,
legatees, devisees, executors, administrators, estate or personal
representatives, but shall continue to apply as to any subsequent
Transfer and (b) sales of publicly owned and traded shares of Golf
Ventures, Inc., provided that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall not sell more than
forty percent (40%) of the shares of common stock of Golf Ventures,
Inc. owned by him on the date hereof.
5.1.2 To the extent Lender elects to consent to any Transfer
as to which its consent is required hereunder, Lender shall be entitled
to condition its consent on such matters as Lender may elect, in its
sole reasonable discretion, including, without limitation, execution of
instruments of assignment and assumption with respect to the Loan
Documents and the collateral therefor, payment of reasonable
consideration, delivery of Officer's Certificates and affidavits and
indemnities, including an affidavit and indemnification regarding
Internal Revenue Code Section 1445 and 7701, receipt by Lender of
opinions regarding "non-consolidation" regarding the parties to the
Transfer and their respective Affiliates and the assumptions of
obligations hereunder, receipt of confirmations from the Rating
Agencies that the then current rating for the Securities will not be
withdrawn, qualified or downgraded as a result of the Transfer, the
transferee under the Transfer satisfies the criteria set forth in
Article IX of this Agreement and such other matters or documents as
Lender may request. Within ten (10) days after closing of any Transfer,
whether or not such Transfer required Lender's consent, if any
Individual Property or any part thereof or if any interest therein or
if any direct or indirect ownership interests in Borrower is
transferred, Borrower will provide Lender with a copy of the deed or
other instrument of Transfer to the transferee. Borrower will promptly
after request therefor provide Lender with such other information and
documentation with respect to such Transfer as Lender reasonably
requests, including, without limitation, information as to ownership of
such transferee.
5.1.3 Upon the occurrence of any Transfer, the provisions of
this Section 5.1 shall continue to apply to the transferee as if it
were the transferor hereunder and any consent by Lender permitting a
transaction otherwise prohibited under this Section 5.1 or any right of
Borrower or any other Person to Transfer without such consent, shall
not constitute a consent to or waiver of any right, remedy or power of
Lender to withhold its consent on a subsequent occasion to a
transaction not otherwise permitted by the provisions of this Section
5.1. Notwithstanding the giving of any consent hereunder by Lender,
Borrower shall not engage in any Prohibited Transaction.
5.1.4 Notwithstanding the provisions of Section 5.1.1 above,
Obsolete Collateral (as such term is defined in the Mortgage) may be
sold or otherwise disposed of, provided, that either (x) such Obsolete
Collateral has been or is contemporaneously being replaced by
Collateral (as such term is defined in the Mortgage) of at least equal
value and utility which is subject to the lien of the Mortgage with the
same priority as with respect to the Obsolete Collateral or (y) such
Obsolete Collateral may be removed without adversely affecting the
maintenance, safety and operations at such Individual Property, and
upon the sale of such Obsolete Collateral any net cash proceeds
received from such disposition are deposited as ordinary Receipts in
the Cash Collateral Account and applied as provided in the Cash
Management Agreement.
Section 5.2 Liens. Borrower shall not create, suffer or permit to exist
any Lien on, of or against, or otherwise affecting, all or any portion of the
Properties (including, without limitation, fixtures and other personal
property), or any other property of Borrower (whether tangible or intangible and
now owned or hereafter acquired) in favor of any Person other than Lender,
without the prior written consent of Lender, other than the Permitted
Encumbrances.
Section 5.3 Indebtedness.
5.3.1 Borrower shall not create, incur or assume any
indebtedness for borrowed money or otherwise evidenced by a note or
notes, whether secured or unsecured except for the Loan. Borrower shall
not create, incur or assume any other indebtedness, if doing so would
cause Borrower to be in violation of Section 9.1(h) hereof, or any
other provision of this Agreement or the other Loan Documents
applicable thereto.
5.3.2 Notwithstanding that any indebtedness incurred with
respect to the Property is otherwise permitted hereunder, Borrower
shall (subject to the terms of the next sentence) pay any portion of
such indebtedness which becomes due and payable within sixty (60) days
following the date on which each such amount is due and payable.
Nothing contained in this Section 5.3 shall be deemed to require
Borrower to pay any amount, so long as Borrower is in good faith, and
by proper legal proceedings, diligently contesting the validity, amount
or application thereof, provided that in each case, at the time of the
commencement of any such action or proceeding, and during the pendency
of such action or proceeding (i) adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP (as
determined by the Approved Accountant), (ii) such contest operates to
suspend collection or enforcement, as the case may be, of the contested
amount and such contest is maintained and prosecuted continuously and
with diligence and (iii) Borrower shall deliver to Lender cash in an
amount equal to one hundred twenty-five percent (125%) of the amounts
being contested which exceed One Hundred Thousand and No/100 Dollars
($100,000.00) in the aggregate and any additional interest, charge or
penalty arising from such contest. Any cash delivered shall constitute
additional security for the Loan. Any such cash shall be held and
invested in the same manner and subject to the same general terms as
amounts deposited in the Cash Collateral Account under the Cash
Management Agreement and, upon the occurrence of an Event of Default,
Lender may apply such monies in the same manner as other monies held in
the Cash Collateral Account. Borrower shall execute such instruments as
Lender shall require to evidence Lender's perfected first priority
security interest therein and to effectuate the provisions hereof. If
prior to the occurrence of an Event of Default, Borrower shall provide
evidence satisfactory to Lender, in its reasonable judgment, that
Borrower has paid the disputed amount, or otherwise settled the same
and paid any amount to be paid under such settlement, or that Borrower
has received a final unappealable judgment in its favor that it need
not pay any disputed amount, together with an Officer's Certificate
confirming the foregoing, then Lender shall return any cash deposited
with Lender with respect to such disputed amount. If Borrower ceases to
pursue continuously and with due diligence any contest described above,
or fails to provide Lender with evidence satisfactory to Lender that it
is doing so within ten (10) days after Lender's request, or if there
shall be a final judgment against Borrower with respect thereto, then
Lender may apply all or any portion of the cash to pay such disputed
amount and Lender shall have no liability to Borrower for any
determination made by Lender, in good faith, that it is entitled to do
so or as to the amount to then be paid with respect to such disputed
amount, whether or not that determination is found to be accurate.
Section 5.4 Compliance with Easements, Restrictive Covenants and
Permitted Encumbrances
5.4.1 Borrower will not modify, waive in any material respect
or release any Easements, restrictive covenants or other Permitted
Encumbrances, or suffer, consent to or permit the foregoing, without
Lender's prior written consent, which consent may be granted or denied
in Lender's sole discretion but shall not be unreasonably withheld,
conditioned or delayed if necessary for the completion of the Required
Work. Borrower will timely comply in all material respects with the
terms of all Easements, restrictive covenants and all other Permitted
Encumbrances.
5.4.2 Borrower shall observe and comply in all material
respects with any conditions and requirements necessary to preserve and
extend any and all rights, privileges, franchises and concessions that
are applicable to each Individual Property, the use and occupancy
thereof or the business conducted thereat.
Section 5.5 Leases.
5.5.1 Borrower will not enter into any Lease without the prior
written consent of Lender, which consent may be granted or withheld in
Lender's sole discretion.
5.5.2 Borrower will not modify, amend, consent to the
cancellation or surrender of (except to the extent such cancellation or
surrender is by the tenant thereunder pursuant to a pre-existing right
to do so under a Lease) or terminate any Lease hereafter approved by
Lender without the prior written consent of Lender, which consent may
be granted or withheld in Lender's sole discretion.
5.5.3 Borrower will timely comply with all material terms and
conditions on its part to be performed under any Lease hereafter
approved by Lender and shall neither neglect to do nor permit to be
done, anything which may cause a termination of any such Lease, other
than due to the default of the tenant(s). Borrower shall not collect
any rent or other payment under any such Lease more than one month in
advance of the due date thereof. Borrower will use commercially
reasonable efforts to require the performance of all of the obligations
of tenants and other Persons bound by such Leases and to enforce such
Leases.
5.5.4 Any security deposits of tenants, whether held in cash
or any other form, shall not be commingled with any other funds of
Borrower and, if cash, shall be deposited by Borrower at such
commercial or savings bank or banks as may be reasonably satisfactory
to Lender. Any bond or other instrument which Borrower is permitted to
hold in lieu of cash security deposits under any applicable legal
requirements shall be maintained in full force and effect in the full
amount of such deposits unless replaced by cash deposits as hereinabove
described, shall be issued by an institution reasonably satisfactory to
Lender, shall be fully assignable to Lender) and shall, in all
respects, comply with any applicable Legal Requirements and otherwise
be satisfactory to Lender. Borrower shall, upon request, provide Lender
with evidence satisfactory to Lender of Borrower's compliance with the
foregoing. Following the occurrence and during the continuance of any
Event of Default, upon Lender's demand, Borrower shall turn over to
Lender the security deposits (and any interest theretofore earned
thereon) with respect to all or any portion of the applicable Property,
to be held by Lender subject to the terms of the Leases. If Borrower is
entitled to retain a security deposit, then such amount shall be
transferred by Borrower into the Clearing Account.
Section 5.6 Delivery of Notices. Borrower will promptly, but in no
event later than ten (10) days after Borrower becomes aware of any of the
following events, furnish a written notice to Lender (together with the
applicable correspondence and papers relating thereto) specifying the nature and
period of existence of such condition or event and, with respect to events
described in clause (i) below, what action Borrower is taking or proposes to
take with respect thereto (compliance with the provisions of this Section 5.6
shall not be deemed or construed to constitute a waiver of or consent to any
default or Event of Default of which Borrower has given Lender notice pursuant
to this Section 5.6):
(i) any default hereunder or under any of the other Loan
Documents or any Event of Default;
(ii) receipt or delivery by Borrower of a notice of default or
termination, any proposed action with respect to any default or any
failure by any Person to perform any material obligation, maintain any
material representation or warranty or satisfy any material condition
in connection with any Lease, the Management Agreement, any Easement, a
recorded instrument or a Permit;
(iii) the filing of any action, suit or proceeding against or
affecting Borrower or the applicable Individual Property that, if
adversely determined, could (A) impair the validity or enforceability
of this Agreement or any of the other Loan Documents, (B) have a
Material Adverse Effect, or (C) result in a Lien on any portion of the
applicable Individual Property; and
(iv) any notice received from any Governmental Authority
asserting a violation of any material Legal Requirement and any
correspondence to or from Borrower with respect thereto. Without
limiting the generality of the foregoing, Borrower will transmit to
Lender, immediately upon receipt thereof, any communication (addressed
to Borrower or any Affiliate of Borrower) which relates to matters
which could materially adversely affect Lender's security for the Loan
or have a material adverse effect on the financial condition of
Borrower, and/or any other Significant Party, and will promptly respond
fully to any inquiry of Lender made with respect thereto.
Section 5.7 ERISA.
5.7.1 In addition to the prohibitions set forth in Section 5.1
hereof, and not in limitation thereof, Borrower shall not Transfer or
hypothecate its interest or rights in this Agreement or in the
Properties, or attempt to do any of the foregoing or suffer any of the
foregoing, nor shall any Person owning a direct or indirect interest in
Borrower Transfer any of its rights or interest (direct or indirect) in
Borrower, attempt to do any of the foregoing or suffer any of the
foregoing, nor shall Borrower or any Person owning a direct or indirect
interest in Borrower take, without limitation, any action or fail to
take any action, if, in any such case, doing so would (i) cause the
Loan or the exercise of any of Lender's rights in connection therewith,
to constitute a Prohibited Transaction (unless Borrower furnishes a
legal opinion reasonably satisfactory to Lender that the same is exempt
from the Prohibited Transaction provisions of ERISA and the Internal
Revenue Code or otherwise does not constitute a Prohibited
Transaction), assuming solely for this purpose that Lender is a Party
In Interest or a Disqualified Person with respect to an employee
benefit plan, if any, which has directly or indirectly invested in
Borrower, or (ii) otherwise result in Lender being deemed in violation
of any applicable provisions of ERISA with respect to the Loan.
Borrower shall take such steps as are reasonably necessary to assure
that it (and its shareholders, partners and members) does not commit
any act or fail to commit any act the occurrence of which or the
failure of which to occur would cause the Loan to be a Prohibited
Transaction.
5.7.2 If the provisions of this Section 5.7 are violated,
Borrower agrees, at its own cost and expense, to take such steps as
Lender shall reasonably request to prevent the occurrence of a
Prohibited Transaction or to correct the occurrence of a Prohibited
Transaction. Borrower agrees to indemnify, defend and hold the
Indemnified Parties free and harmless from and against all loss, costs
(including reasonable attorney's fees and expenses), taxes, penalties,
damages and expenses any of the Indemnified Parties may suffer by
reason of the investigation, defense and settlement of claims based
upon a breach of the foregoing provisions. The foregoing
indemnification shall survive repayment of the Note.
Section 5.8 Agreements with Affiliates. Borrower shall not enter into
any contract, agreement or other arrangement with any Affiliate of Borrower
without Lender's prior written consent (which consent may be granted or denied
in Lender's sole and absolute discretion) unless such contract contains terms
and conditions no less favorable than would be available to Borrower from an
unaffiliated third party.
Section 5.9 After Acquired Property. Borrower shall grant Lender a
first lien security interest in and to all equipment and other personal property
owned by Borrower, whether or not used in the construction, maintenance and/or
operation of the Improvements, immediately upon acquisition of same or any part
of same.
Section 5.10 Books and Records. Borrower shall keep and maintain at all
times at its principal office complete, true and accurate books of account and
records reflecting the results of its operations. Borrower shall permit Lender,
its agents, consultants and representatives, upon reasonable notice and at
reasonable times, to examine and audit the books and records of Borrower and
make copies thereof, at Borrower's expense. Borrower shall cause the Manager to
make all records relating to the Properties available to Lender and shall cause
the Manager to cooperate with any examination, audit or other inquiry (including
causing the personnel responsible for the Properties to be reasonably available
to respond to inquiries).
Section 5.11 Delivery of Estoppel Certificates. (a) Borrower shall,
from time to time, but not more frequently than three (3) times in any calendar
year, within ten (10) days after written request from Lender, furnish to Lender
or such other party (or parties as may be requested by Lender) a written
certificate setting forth the unpaid principal of and interest due on the Note
and any other sums evidenced or secured by the Mortgage, and/or the other Loan
Documents, stating the date through which interest has been paid and stating
whether or not any offsets, defenses or counterclaims exist with respect to the
Loan Documents. If requested, such certificate will also attach true and correct
copies of any Loan Documents and state such other information as Lender shall
reasonably require. Upon request of Lender, Borrower shall cause the Manager
within ten (10) days after such request to furnish Lender or such other party or
parties as Lender may request, a written certificate as to such matters as
Lender may reasonably request.
(b) Borrower shall use all reasonable efforts to deliver to Lender upon
request, which may be made from time to time but not more frequently than three
(3) times in any calendar year, tenant estoppel certificates from each tenant
under a Lease, which tenant estoppel certificates shall be in form and substance
reasonably satisfactory to Lender. Section 5.12 Management, Etc.
5.12.1 Borrower represents, warrants and covenants that (a)
the Management Agreement previously delivered to Lender is a true,
correct and complete copy of the Management Agreement between Manager
and Borrower with respect to the Property, including any amendment or
modification thereof, which Lender hereby approves; (b) the Management
Agreement is in full force and effect and there is no default or
violation by any party thereunder; (c) Borrower shall maintain the
Management Agreement in full force and effect and timely perform all of
its material obligations thereunder and enforce performance of all
material obligations of the Manager thereunder; (d) Borrower shall
simultaneously herewith enter into and cause Manager to enter into an
agreement in form reasonably satisfactory to Lender subordinating the
Manager's fees and other rights to the rights of Lender and (e)
Borrower shall not terminate, cancel, or modify the Management
Agreement, or enter into any agreement relating to the management or
operation of the Property with Manager or any other party (other than
an extension of the existing Management Agreement for compensation
which is no greater, and on terms and conditions no less favorable to
Borrower, than those contained in the existing Management Agreement)
without the express written consent of Lender, which consent shall not
be unreasonably withheld, conditioned or delayed. Any compensation of
Manager with respect to its services performed at or in connection with
the Properties (other than the compensation provided in the existing
Management Agreement) is subject to approval by Lender in its sole and
absolute discretion and shall in no event exceed the Maximum Management
Fee. If at any time there shall be a new manager, such new manager and
Borrower shall, as a condition to Lender's consent, execute an
agreement in the form then customarily used by Lender subordinating the
management fees and other rights of the manager to the rights of
Lender.
5.12.2 Borrower agrees that at any time after and during the
continuance of an Event of Default, at the request of Lender, Borrower
shall immediately replace the Manager with an independent, third-party
managing agent designated by Lender.
Section 5.13 Financial Statements; Audit Rights.
5.13.1 Until the Loan is repaid in full, Borrower shall cause
the following financial statements and documentation to be delivered at
the time and in the form and manner referenced below:
(a) audited statements of financial position (balance
sheet) of Borrower as of the close of each fiscal year of
Borrower during the term of the Loan, and of income and
retained earnings, changes in financial position and cash
flows for such fiscal year, which statements shall be duly
certified by the Designated Officer to fairly represent the
financial condition of Borrower as of the date thereof and to
have been prepared in accordance with GAAP and accompanied by
an opinion of the Approved Accountant (which opinion shall be
unqualified and shall not contain any "statement of emphasis")
to the effect that such financial statements present fairly,
in all material respects, the financial condition of Borrower
as of the end of the fiscal year being reported on and that
the results of the operations and cash flows for said year are
in conformity with GAAP, consistently applied, and that the
examination of the Approved Accountant in connection with such
financial statements has been conducted in accordance with
GAAP and included such tests of the accounting records and
such other auditing procedures as the Approved Accountant
deemed necessary in the circumstances,
(b) an unaudited quarterly balance sheet of Borrower
and statement of profits and losses, such quarterly financial
statements to be certified by a Designated Officer to fairly
represent the financial condition of Borrower as of the date
thereof and to have been prepared in accordance with GAAP,
(c) unaudited monthly and quarterly operating
statements showing all revenues, expenses and net cash flow
(including a calculation of Net Operating Income) for the
applicable calendar month or quarter and year-to-date results
and variances from any Approved Budget and such other matters
as Lender shall reasonably require, which monthly and
quarterly operating statements shall be certified by a
Designated Officer to be true, correct and complete in all
material respects and shall be prepared on a cash basis,
(d) the statements to be delivered to Lender in
accordance with Section 6(f) of the Cash Management Agreement,
certified as provided therein,
(e) the annual Form 1065 (with accompanying schedules
K-1) (or any substitute therefor) for each Individual Borrower
(other than U.S. Golf Pelican Strand, Inc.) and for Pelican
Strand Ltd.,
(f) a schedule of all accounts payable at the end of
each month, certified by a Designated Officer to be true,
correct and complete in all material respects,
(g) such other reports and information which Lender
reasonably requires certified by a Designated Officer to be
true, correct and complete in all material respects.
5.13.2 The statements referred to in paragraph (a) of Section
5.13.1 above shall be delivered to Lender within one hundred and twenty
(120) days after the last day of each fiscal year of Borrower. The
quarterly statements referred to in paragraph (b) and referred to in
paragraph (c) of Section 5.13.1 above shall be delivered to Lender
within forty-five (45) days after the last day of each calendar
quarter. The monthly reports referred to in paragraph (c) and paragraph
(f) above shall be delivered to Lender within thirty (30) days after
the last day of each calendar month. All Financial Statements shall be
in form and substance satisfactory to Lender.
5.13.3 Each Financial Statement described in paragraphs
(a)-(c) of Section 5.13.1 above shall be accompanied by an Officer's
Certificate of Borrower certifying that to the best of such officer's
knowledge, Borrower has observed and performed, in all material
respects, all of its covenants and other agreements contained in this
Agreement, and the other Loan Documents, whether there exists any
material default or Event of Default and, if there is, specifying the
nature and period of existence thereof and the action Borrower is
taking or proposing to take with respect thereto. Section 5.14
Maintenance of Non-Taxable Status. Borrower will maintain its status of
being taxed as a partnership for the purposes of federal, state and
local income taxes. Section 5.15 Lender's Attorneys' Fees and Expenses.
Borrower shall appear in and defend any action or proceeding purporting
to affect the security of the Mortgage or the security interests
granted under any of the other Loan Documents or the rights and powers
of Lender under any of the Loan Documents and Borrower (in addition to
Lender's reasonable attorneys' fees and expenses to be paid by Borrower
pursuant to this Agreement or the other Loan Documents) shall pay all
of Lender's reasonable attorneys' fees and expenses in connection with
the enforcement of this Agreement and the other Loan Documents and the
collection of all amounts payable hereunder and thereunder. In case of
any default under this Agreement or any of the other Loan Documents or
if any action or proceeding is commenced in which it becomes necessary
to defend or uphold the Lien or priority of the Mortgage or any of the
other Loan Documents or which adversely affects the interests of Lender
in the Property or any part thereof, including, but not limited to
eminent domain, or proceedings of any nature affecting the Property or
involving the bankruptcy, insolvency, arrangement, reorganization of,
or other form of debtor relief with respect to, Borrower or any other
Significant Party, then Lender may, but without obligation to do so,
and without releasing Borrower or any other Significant Party from any
obligation hereunder or under any other Loan Document, make such
appearances, disburse such reasonable sums and take such action as
Lender deems necessary or appropriate to protect Lender's interest in
the Properties. All reasonable costs incurred by Lender, including
reasonable attorneys' fees and disbursements, in taking any action
described above, shall be paid by Borrower upon demand together with
interest thereon at the Default Rate from the date paid by Lender
through the date of repayment by Borrower and the same shall be deemed
to constitute protective advances evidenced by the Note and secured by
the Mortgage and the other Loan Documents. In addition to, and without
limiting the generality of, the foregoing, if at any time hereafter,
Lender employs counsel (a) for advice or other representation (whether
or not any suit has been, or shall thereafter be, filed, and whether or
not other legal proceedings have been, or shall thereafter be,
instituted, and whether or not Lender shall be a party thereto) with
respect to the Loan, the Properties or any part thereof, this Agreement
or any of the other Loan Documents, or (b) to protect, collect, lease,
sell, take possession of, foreclose upon or liquidate all or any part
of the Properties, or to attempt to enforce any security interest or
Lien in all or on any part of the Properties, or to enforce any rights
of Lender or any of Borrower's obligations hereunder or under any of
the other Loan Documents, or any obligations of any other Person 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, then, in any such event, all
of the reasonable attorneys' fees and expenses arising from such
services, and all expenses, costs and charges relating thereto, shall
be paid by Borrower upon demand, together with interest thereon at the
Default Rate from the date paid by Lender through the date of repayment
by Borrower, and the same shall be deemed to constitute protective
advances evidenced by the Note and secured by the Mortgage and other
Loan Documents.
Section 5.16 Environmental.
5.16.1 Borrower shall not (and it shall not permit any tenant,
contractor, agent or manager to) locate, produce, use, store, treat,
transport, incorporate, discharge, emit, release, deposit or dispose of
any Hazardous Substance in, upon, under, at, over or from any
Properties, except that Borrower (and its tenants, contractors or
agents) may store, locate and use on an Individual Property, Hazardous
Substances which are (1) customarily located, stored or used in
properties similar to such Property or (2) unique to Borrower's or a
tenant's business located on such Individual Property, provided that
such Hazardous Substances described in clauses (1) or (2) above are at
all times stored, located and used in compliance with all Environmental
Laws. Borrower shall not grant permission for any Hazardous Substances
to be located, produced, used, stored, treated, transported,
incorporated, discharged, emitted, released, deposited, disposed of or
to escape therein, thereupon, thereunder, thereover or therefrom in
violation of any Environmental Law, and shall comply with all
Environmental Laws which are applicable to the Individual Property.
Borrower shall not engage in any conduct in connection with the
Individual Property (other than Corrective Work) that may subject
Borrower to Environmental Costs, or contribute to or aggravate a
release of Hazardous Substances. In addition to the foregoing
restrictions, Borrower agrees that no asbestos, ACM, materials
containing urea-formaldehyde, or transformers, capacitors, ballasts or
other equipment containing PCBs are, or will at any time be, located
about the Individual Property.
5.16.2 Borrower shall promptly within the time permitted by
Environmental Laws, initiate and diligently pursue to completion, any
and all remedial action required pursuant to any Environmental Laws in
response to the presence of any Hazardous Substances at, on, under or
about, or emanating from, any Individual Property and shall take such
remedial action as is required to minimize any impairment of Lender's
Lien on, and security interest in, the Individual Property. If Borrower
undertakes any remedial action with respect to any Hazardous Substance
on the Individual Property, Borrower shall conduct and complete such
remedial action in compliance with all applicable Environmental Laws.
If any Hazardous Substance is removed or caused to be removed from the
Individual Property by Borrower, the generator number assigned by the
Environmental Protection Agency to such Hazardous Substance shall not
be in the name of Lender, and as between Lender and Borrower, Borrower
shall assume any and all liability for such removed Hazardous
Substance.
5.16.3 The representations and warranties contained in Section
4.20 and the covenants contained in this Section 5.16 shall be deemed
continuing covenants for the benefit of Lender, and any successors and
assigns of Lender, including but not limited to any purchaser at a
foreclosure sale, any transferee of the title of Lender or any other
purchaser at a foreclosure sale, and any subsequent owner of an
Individual Property, and shall survive the termination of this
Agreement, or the satisfaction or release of the Mortgage, any
foreclosure of the Mortgage and/or any acquisition of title to an
Individual Property or any part thereof by Lender, or anyone claiming
by, through or under Lender, by deed in lieu of foreclosure or
otherwise; provided, however, that such representations and warranties
and covenants shall terminate six (6) years after the Loan shall be
repaid in full. The rights and remedies of Lender under this Agreement
with respect to this Section 5.16 shall not inure to the benefit of (i)
any purchaser of an Individual Property at a foreclosure sale, (ii) any
Person taking title to the Individual Property by deed in lieu of
foreclosure or (iii) any successor or assign of any Person described in
clauses (i) and (ii) above, except that Lender's rights shall inure to
the benefit of the parties described in clauses (i), (ii) and (iii)
hereof if such parties are Lender (including, for these purposes,
Lender's successors and assigns as holder of the Loan Documents), any
beneficiaries of any Loan Pool, any Participant and any of Lender's (or
such successors', assigns', beneficiaries' or Participant's) Affiliates
or nominees.
5.16.4 Borrower shall give prompt written notice to Lender of:
(i) any proceeding or inquiry by any Governmental
Authority with respect to the presence of any Hazardous
Substance on an Individual Property or the migration thereof
from or to other property;
(ii) all claims made or threatened by any third party
against Borrower or the Property relating to any loss or
injury resulting from any Hazardous Substance;
(iii) the storage, production, release, discharge or
disposal of any Hazardous Substances on an Individual Property
other than in accordance with all applicable Environmental
Laws; and
(iv) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of
an Individual Property that could cause an Individual Property
or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of the an
Individual Property under any Environmental Law or to be
otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of an Individual Property
under any Environmental Law.
5.16.5 Borrower shall keep Lender apprised of the status of,
and any material developments in, any governmental investigation
relating to Environmental Matters at or about the Properties, any and
all enforcement, clean-up, removal or other governmental or regulatory
actions instituted, completed or threatened pursuant to any
Environmental Law with respect to the Properties and any other claims,
actions or proceedings with respect the Properties relating to
Environmental Matters. Borrower shall provide Lender with copies of all
communications with all Governmental Authorities relating to Hazardous
Substances Claims. Without Lender's prior written consent, Borrower
shall not enter into any settlement agreement, consent decree or other
compromise with respect to any such governmental investigation or
action, or other claim, action or proceeding relating to Hazardous
Substances which Borrower does not have the funds available to pay or
which may adversely affect Lender's lien on, or the value of, the
Properties.
5.16.6 The foregoing rights and remedies contained in this
Section 5.16 are cumulative with, and in addition to, any rights and
remedies Lender may have against Borrower or any Significant Party
under the other terms and provisions of this Agreement, under any other
Loan Document or under any Environmental Law, including, without
limitation, CERCLA. Section 5.17 Report Updates.
5.17.1 Lender reserves the right at any time during the term
of the Loan to conduct or require Borrower to update any environmental
reports previously delivered to Lender or, in the absence thereof, to
conduct such environmental inspections, audits and tests as Lender
shall deem necessary or advisable from time to time utilizing a company
acceptable to Lender; provided, however, that Borrower shall not be
required to pay for such environmental inspections, audits and tests
more often than once a year so long as:
(i) no Event of Default exists under this Agreement
or any other Loan Document;
(ii) Lender has no cause to believe, in Lender's sole
but good faith judgment, that there has been a release or a
threatened release of Hazardous Substances at the Properties
or that Borrower or the Properties is in violation of any
applicable Environmental Law,
(iii) such inspections, audits and tests are not
being obtained in satisfaction of the provisions of Section
7.26 hereof; and
(iv) such inspection, audit or test has not been
recommended in any other audit, inspection, test or
consultants report previously conducted with respect to the
Properties. Borrower shall be provided with a copy of any such
report prepared for Lender promptly after such report is
delivered to Lender. In the event that any environmental site
assessment report prepared for the Properties recommends that
an operations and maintenance plan be implemented for any
Hazardous Substance, including, without limitation, asbestos,
Borrower shall cause such operations and maintenance plan to
be prepared and implemented at Borrower's expense upon request
of Lender and in accordance with the recommendation.
5.17.2 Lender shall have the right from time to time
throughout the term of the Loan with respect to any Property to order
additional Engineering Reports with respect to any of the Properties.
Such additional engineering reports shall be paid for by Borrower in
accordance with Section 7.4; provided, that Borrower shall not be
required to pay for such additional Engineering Reports more frequently
than once every calendar year unless (w) an Event of Default has
occurred, (x) any such additional Engineering Report is being obtained
pursuant to Section 7.26 hereof, (y) any such additional Engineering
Report is required by applicable Requirements to be obtained or (z) in
Lender's sole but good faith judgment, a material adverse change in the
condition of an Individual Property has occurred.
5.17.3 Lender shall not be liable for any action or inaction
by Borrower with respect to any remedial or other response activity in
connection with any Hazardous Substance or any repair or replacement
recommended in any engineering report, notwithstanding any review or
approval of Borrower's method of remediation or repair or replacement,
as applicable, or any response by Lender.
Section 5.18 Lender Access to Properties. Borrower will permit Lender,
and its agents, consultants or representatives, to enter upon each Individual
Property on reasonable notice at reasonable times to inspect the Improvements.
Lender or its agents, consultants or representatives as part of any inspection
may take soil, air, water, building material and other samples but shall restore
the Individual Property to its original condition in accordance with applicable
law.
Section 5.19 Delivery of Documents Regarding Ownership. Borrower will
deliver to Lender, on demand made therefor by Lender, copies of all documents
which evidence Borrower's title in or to any materials, fixtures or articles
incorporated in the Improvements or subject to the Lien of any of the Loan
Documents.
Section 5.20 Conduct of Business. Borrower shall at all times conduct
its business so that each of the representations and warranties set forth herein
shall be and at all times shall remain true in all material respects and, to the
extent any legal opinion delivered to Lender contains assumptions of fact based
thereon, all such assumptions of fact are and shall at all times remain true in
all material respects.
ARTICLE VI. EVENTS OF DEFAULT
Section 6.1 Events of Default; Defaults. The term "Default" as used
herein shall mean any one or more of the events set forth below prior to the
expiration of the applicable notice or grace period, if any. The term "Event of
Default" wherever used in this Agreement shall mean any one or more of the
events set forth below after the expiration of the applicable notice or grace
period, if any.
6.1.1 Non-Payment. Failure by Borrower to pay (a) any periodic
installment of interest or principal when the same shall become due and
payable hereunder or under the Note; or (b) the outstanding principal
balance of the Note, together with the interest accrued thereon and all
other sums which may then be owed by Borrower to Lender, at maturity or
upon prepayment of the Note in full; or (c) any other sums to be paid
by Borrower hereunder or under any other Loan Document within five (5)
days from the date which Lender gives Borrower written notice of such
failure.
6.1.2 Affirmative Covenants. Failure by Borrower or any other
Person to duly keep, perform and observe any Affirmative Covenant or
agreement in this Agreement, the Note, the Mortgage, or in any other
Loan Document (unless same constitutes a default under any other clause
of this Section 6.1 or any other Loan Document, in which case, the
grace or cure period, if any, set forth in such other clause shall
govern) within thirty (30) days after Lender gives Borrower written
notice of such failure; provided, that in the event such failure is not
susceptible of cure within such thirty (30) day period it shall not be
an Event of Default hereunder if such failure is curable and Borrower
commences to cure such default within such thirty (30) day period and
diligently prosecutes such cure to completion within one hundred twenty
(120) days of the expiration of such thirty (30) day period.
6.1.3 Negative Covenants. If Borrower or any other Person
shall breach or otherwise not comply with any Negative Covenant set
forth herein or in any other Loan Document (unless same constitutes a
default under any other clause of this Section 6.1 or any other Loan
Document, in which case, the grace or cure period, if any, set forth in
such other clause shall govern) and such default shall continue for ten
(10) Business Days after written notice thereof by Lender to Borrower;
provided that no such notice and grace shall be required with respect
to a knowing, intentional and willful breach of a Negative Covenant.
6.1.4 Financial Statements. If any material inaccuracy shall
exist in any of the Financial Statements or in any other financial
statement or other information furnished to Lender by Borrower, any
other Significant Party, any officer of Borrower or any other
Significant Party (or their direct or indirect general partners,
managers or managing members), or any other Person on behalf of the
foregoing Persons pursuant to the provisions of this Agreement or any
other Loan Document or furnished to, or to be furnished to, Lender to
induce Lender to make the Loan or any advance thereunder, to extend the
term of the Loan or consent to any matter hereunder or under any other
Loan Document.
6.1.5 Representations. If at any time any representation,
warranty or certification made by Borrower or any other Significant
Party, as applicable, in this Agreement, the Note or any other Loan
Document or in any document delivered pursuant to any Loan Document or
otherwise delivered in connection with the Loan shall be untrue,
incorrect or misleading in any material respect when made.
6.1.6 Other Loan Documents. If an "Event of Default" shall
occur under the Mortgage or any other Loan Document (or under any
document evidencing or securing or delivered in connection with any
loan (other than the Loan) which Lender may hereafter elect to make to
Borrower) or any other default shall occur and continue beyond the
applicable notice or grace period, if any, under or with respect to any
other Loan Document (or under or with respect to any of the documents
evidencing or securing any such other loan).
6.1.7 Demolition or Alterations. Except as permitted herein or
in the other Loan Documents, the commencement of demolition of or
material alterations (as such term is defined in the Mortgage) to any
Property without the prior written consent of Lender, which consent may
be withheld by Lender in Lender's sole discretion.
6.1.8 Failure to Deliver Estoppel Certificate. If Borrower
shall fail to deliver any estoppel certificate required by Section 5.11
within the time period provided in said Section and within ten (10)
days after receipt of a notice of such failure.
6.1.9 Receipts; Deposits. If Borrower fails to deposit (or
cause to be deposited) any Receipts into the Clearing Account within
the time period provided in the Cash Management Agreement to do so.
6.1.10 Cessation of Borrower. If Borrower or any other
non-natural Person which is a Significant Party ceases to exist.
6.1.11 Transfer. If in violation of Section 5.1 hereof (a) any
Property, or any part thereof, is Transferred or (b) any direct or
indirect legal or beneficial interest in Borrower shall be Transferred.
6.1.12 Liens. If in violation of Section 5.2, any Property or
any part thereof is mortgaged or any other Lien is voluntarily placed
thereon by Borrower.
6.1.13 Involuntary Bankruptcy, Etc. The entry by a court of
(a) a decree or order for relief in respect of any Significant Party in
an involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or (b) a
decree or order adjudging any Significant Party a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect
of any Significant Party under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of any Significant Party or of
any substantial part of the property of, or ordering the winding up or
liquidation of the affairs of, any Significant Party, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of sixty (60) days.
6.1.14 Voluntary Bankruptcy. The commencement by any
Significant Party of a voluntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated
a bankrupt or insolvent, or the consent by any Significant Party to the
entry of a decree or order for relief in respect of such Significant
Party in an involuntary case or proceeding under any applicable Federal
or state bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding
against such Significant Party or the filing by any Significant Party
of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, or the consent by any Significant
Party to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of any Significant Party or of any
substantial part of any property of any Significant Party or the making
by any Significant Party of an assignment for the benefit of creditors,
or the admission by any Significant Party in writing of its inability
to pay its debts generally as they become due.
6.1.15 Judgments. If, at any time, a judgment shall be
rendered against a Significant Party which could have a Material
Adverse Effect on the ability of a Significant Party to perform any of
its obligations, if any, under this Agreement, the Note, or any other
Loan Document provided, that, if such Significant Party appeals said
judgment and (w) said appeal (i) is timely filed, (ii) is diligently
pursued, (iii) is permitted by law, (iv) has the effect of staying any
action on such judgment, (x) such Significant Party posts any security
required by law or reasonably required by Lender in respect of said
judgment, and (y) said judgment does not subject Lender or any Property
to any civil or criminal penalties and (z) such judgment is not a Lien
on any Property or any other collateral for the Loan, then it shall not
be an Event of Default hereunder until such judgment is final and
non-appealable.
6.1.16 Leases. If any Lease shall be entered into by Borrower
without the prior written consent of Lender in accordance herewith.
6.1.17 Organizational Documents. If (a) at any time any
Organizational Document of Borrower or the SPE Entity is modified in
violation of Article IX hereof or (b) Borrower or the SPE Entity shall
fail to comply with the bankruptcy-remote, single-purpose entity
requirements of its Organizational Documents or (c) Borrower or SPE
Entity shall otherwise violate Article IX of this Agreement.
6.1.18 Delivery of Financial Statements. If Borrower or any
Guarantor fails to deliver (or cause to be delivered) to Lender any
Financial Statement required to be delivered hereunder or under the
Cash Management Agreement or any other Loan Document, and such failure
continues
(i) for fifteen (15) days after the date such
Financial Statement was required to be so delivered with
respect to any Financial Statement required to be delivered to
Lender on a monthly basis,
(ii) for thirty (30) days after the date such
Financial Statement was required to be so delivered with
respect to any Financial Statement required to be delivered to
Lender on a quarterly basis,
(iii) for sixty (60) days after the date such
Financial Statement was required to be so delivered with
respect to any Financial Statement required to be delivered to
Lender on an annual basis and
(iv) for thirty (30) days after request therefor by
Lender with respect to any other Financial Statement.
6.1.19 ERISA. If Borrower shall breach any of the provisions
of Section 5.7.
6.1.20 Termination of Management Agreement. TC "6.1.20
Termination of Management Agreement.##If without Lender's prior written
consent: (i) the Manager resigns or is removed or any Management
Agreement terminates other than by reason of any default thereunder by
Borrower, unless, in the case of a Management Agreement with a property
manager which is not an Affiliate of Borrower, such Management
Agreement is replaced, within twenty (20) days after notice of such
resignation, removal or termination with a replacement Management
Agreement and Manager satisfying the provisions of Section 5.12 hereof,
(ii) there is any material change in the Management Agreement or
termination thereof by reason of any default thereunder by Borrower, or
(iii) with respect to any Manager that is an Affiliate of Borrower, the
ownership, management or control of such Manager is transferred to a
Person who is not an Affiliate of Borrower.
6.1.21 Other Conditions for Acceleration. The occurrence of
any conditions set forth herein, in the Note, the Mortgage, or any
other Loan Document permitting Lender to accelerate the Indebtedness.
6.1.22 Material Adverse Change. If, in Lender's reasonably
exercised commercial business judgment, there shall occur any event (a)
which has a Material Adverse Effect on the financial condition,
operations, performance, business of all of the Properties, or the
ability of Borrower and the Guarantors to make any payment or otherwise
perform any or all of their respective material obligations under this
Agreement, the Note and/or any other Loan Document to which each is a
party, (b) as a result of which, the legality, validity or
enforceability of this Agreement, the Note and/or any other Loan
Document, or the lien and security interest of Lender pursuant to the
Mortgage or any other Loan Document purporting to grant to Lender a
Lien in any collateral shall be materially adversely effected.
6.1.23 Denial of Obligation. If (a) Borrower or any Guarantor
shall take the position in any written communication with Lender or in
any litigation that any Loan Document is no longer the valid, binding
and enforceable obligation of Borrower or any Guarantor that is a party
thereto or (b) any Guarantor shall revoke, contest, commence any action
or raise any defense against its obligations under the Guaranty or any
other Loan Document.
6.1.24 Misapplication of Receipts. If Borrower shall (a) apply
any monies delivered to Borrower pursuant to Section 6 of the Cash
Management Agreement other than to pay amounts permitted to be paid
with such funds and such breach shall continue for five (5) Business
Days following notice thereof; provided that no such notice and grace
shall be required with respect to an intentional breach of such
provision or (b) fail to pay to Lender any amounts required to be paid
to Lender pursuant to Section 6(f) of the Cash Management Agreement at
the time such payment is to be made to Lender thereunder.
6.1.25 Failure to Provide Further Assurances. If, after
fifteen (15) days' notice from Lender to Borrower that Borrower has
failed to comply with any of the provisions of Section 7.26 hereof,
Borrower fails to cure such default.
6.1.26 Lender Access. If Lender or its agents, consultants or
representatives are not permitted, at all reasonable times on two (2)
Business Days' notice, to enter upon an Individual Property and to
inspect the Improvements or, if Lender or its representatives are not
permitted to inspect Borrower's books and records or are not furnished,
within five (5) Business Days after requested, copies of any of
Borrower's books and records.
6.1.27 Certain Cross Defaults. If any default shall occur,
beyond any applicable grace or cure period, under (a) that certain Loan
Agreement of even date herewith between Lender and Pelican Strand,
Ltd., (b) that certain Guaranty of Payment of even date herewith by
Golf Ventures, Inc. and U.S. Golf Communities, Inc. in favor of Lender
or under any other Guaranty and (c) under any agreement binding upon
Golf Ventures, Inc. for the sale or issuance of more than fifteen
percent (15%) of the shares of common stock of Golf Ventures, Inc.
6.1.28 SEC Action. If, at any time, an action or proceeding
shall be commenced against Golf Ventures, Inc. or any other Significant
Party by the Securities and Exchange Commission or any shareholders of
Golf Ventures, Inc. or such shareholders.
6.1.29 Disclosed Violations. If Borrower shall fail to cure
the Disclosed Violations in accordance herewith on or before December
31, 1998.
6.1.30 Red Hawk Property. If Borrower shall fail to sell the
Red Hawk Property in accordance herewith on or before March 31, 1999.
Section 6.2 Rights upon Event of Default. Upon the occurrence and
during the continuance of any Event of Default, Lender shall, in addition to all
other remedies conferred upon Lender at law or in equity or by the terms of the
Note, the Mortgage and the other Loan Documents, 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) take any action which, in Lender's sole judgment, is
necessary or appropriate to effect observance and performance of the
covenants, agreements and obligations (under this Agreement and the
other Loan Documents) of Borrower, the Guarantors, or any other person
providing collateral pursuant to or obligated to perform any of the
terms and provisions of this Agreement or the other Loan Documents
(each, an "Obligated Party");
(b) declare the Note to be immediately due and payable;
(c) use and apply any monies deposited in the Clearing
Account, the Cash Collateral Account or the Tax and Insurance Escrow
Account or any other monies deposited by Borrower with Lender,
regardless of the purpose for which the same were deposited, to cure
any default or Event of Default or to apply on account of any
indebtedness under this Agreement or any of the other Loan Documents
which is due and owing to Lender or to operate the Properties or for
any other purposes described herein or in any other Loan Document;
(d) institute an action, suit or proceeding at law or in
equity for the specific performance of any covenant, condition or
agreement contained herein or in the Mortgage, Note or any other Loan
Document, or in aid of the execution of any power granted hereunder or
for the enforcement of any other appropriate legal or equitable remedy;
and
(e) set-off against the obligations to Lender of Borrower or
any other Obligated Party, any sum owed by Lender or any Affiliate of
Lender in any capacity to Borrower or such other Obligated Party, or
any property of any of them in the possession of Lender or any
Affiliate of Lender.
ARTICLE VII. GENERAL PROVISIONS
Section 7.1 Rights Cumulative; Waivers.
7.1.1. Each right, power and remedy conferred upon Lender
herein or in any of the other Loan Documents is cumulative and in
addition to every other right, power or remedy, express or implied, now
or hereafter provided by law or in equity, and each and every right,
power and remedy herein set forth or otherwise so existing may be
exercised, concurrently or independently, from time to time as often
and in such order as may be deemed expedient to Lender. The exercise of
one right, power or remedy shall not be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy; and no delay or omission of Lender in the exercise of any
right, power or remedy accruing hereunder or arising otherwise shall
impair any such right, power or remedy, or be construed to be a waiver
of any default or acquiescence therein. Enumeration of special rights
or powers herein, in the Mortgage or in the other Loan Documents shall
not be construed to limit any grant of general rights or powers herein,
in the Mortgage or in the other Loan Documents or limit Lender's
exercise of any and all rights granted under the laws of the State of
New York or the United States of America. No act of Lender shall be
construed as an election to proceed under any provision herein or in
any other Loan Document to the exclusion of any other provision herein.
Except as otherwise specifically required herein, notice of the
exercise of any right, remedy or power granted to Lender by this
Agreement or any other Loan Document is not required to be given.
Lender shall be entitled to enforce payment of the Loan and any other
amount payable under the Loan Documents and performance of this
Agreement and the other Loan Documents and to exercise all rights and
remedies under this Agreement or the other Loan Documents or otherwise
at law or in equity, notwithstanding that some or all of the
indebtedness secured thereby may now or hereafter be otherwise secured,
whether by mortgage, security agreement, pledge, lien, assignment or
otherwise. Neither the acceptance of this Agreement nor its
enforcement, shall prejudice or in any manner affect Lender's right to
realize upon or enforce any other security now or hereafter held by
Lender, it being agreed that Lender shall be entitled to enforce this
Agreement, the Mortgage, and any other security now or hereafter held
by Lender hereunder, under any of the other Loan Documents or otherwise
in such order and manner as Lender may determine in its absolute
discretion.
7.1.2. Lender may, by written notice to Borrower, at any time
and from time to time, waive in whole or in part and absolutely or
conditionally any default or Event of Default hereunder. Any such
waiver shall be subject to such conditions or limitations as shall be
specified in any such notice. In the case of any such waiver, the
rights of Borrower shall be otherwise unaffected, and any default or
Event of Default so waived shall be deemed to be cured and not
continuing only to the extent and only on the conditions or limitations
set forth in such waiver, but no such waiver shall extend to any
subsequent or other default or Event of Default, or impair any right,
remedy or power consequent thereupon.
Section 7.2 Lender's Action for its Own Protection Only. The authority
herein conferred upon Lender, and any action taken by Lender, to inspect the
Properties, to review and/or approve all documents and instruments submitted to
Lender, or otherwise, will be exercised and taken by Lender and by Lender's
employees, agents, consultants and representatives for their own protection only
and may not be relied upon by Borrower or any other party for any purposes
whatever; and neither Lender nor Lender's employees, agents, consultants and
representatives shall be deemed to have assumed any responsibility to Borrower
or any other party with respect to any such action herein or under any of the
other Loan Documents authorized to be taken by Lender or Lender's employees,
agents and representatives. Any review, investigation or inspection conducted by
Lender, any architect, engineer or other consultant retained by Lender, or any
agent or representative of Lender in order to verify independently Borrower's
satisfaction of the covenants, agreements and obligations of Borrower under this
Agreement or any of the other Loan Documents, or the validity of any
representations and warranties made by Borrower (regardless of whether or not
the party conducting such review, investigation or inspection should have
discovered that any of such conditions precedent were not satisfied or that any
such covenants, agreements or obligations were not performed or that any such
representations or warranties were not true) shall not affect (or constitute,
except as may specifically be provided in this Agreement or in the other Loan
Documents to the contrary, a waiver by Lender of) (i) any representations and
warranties under this Agreement or the other Loan Documents or Lender's reliance
thereon or (ii) Lender's reliance upon any certifications of Borrower or any
other party in connection with the Loan, or any other facts, information or
reports furnished to Lender by Borrower or any other party in connection with
the Loan. Lender neither undertakes nor assumes any responsibility or duty to
Borrower to select, review, inspect, supervise, pass judgment upon or inform
Borrower of any matter in connection with the Properties, and Borrower shall
rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
to Borrower by Lender in connection with such matters is for the protection of
Lender only and neither Borrower nor any third party is entitled to rely
thereon.
Section 7.3 No Third Party Beneficiaries. All conditions to the
obligations of Lender hereunder and under the other Loan Documents are imposed
solely and exclusively for the benefit of Lender and its participants, if any,
and assigns and no other Person (other than Servicer) shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will advance proceeds of the Loan or agree or
consent to any matter in the absence of strict compliance with any or all
thereof, and no other Person shall, under any circumstances, be deemed to be the
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by Lender at any time if in its sole discretion it deems it
advisable to do so, it being further understood that Lender and its assigns or
participants, if any, shall have no obligation to see to it that the
Improvements or any other work required or contemplated hereby or by the other
Loan Documents are properly and/or timely completed.
Section 7.4 Payment of Expenses.
7.4.1. Borrower will, at and in connection with the closing of
the Loan and at all times thereafter, pay all reasonable and actual
costs and fees incurred by Lender in connection with the preparation,
negotiation, consummation, execution, administration, repayment,
collection and enforcement of the Loan, the Loan Documents and any
approval, consent, amendment, modification or waiver related thereto.
Without limiting the generality of the foregoing, Borrower will pay:
(a) Lender's Counsel Fees and the reasonable fees of
Lender's Consultant in connection with the foregoing;
(b) all taxes and recording fees and expenses,
including, without limitation, stamp and/or mortgage taxes and
transfer taxes, if any;
(c) all fees and out-of-pocket expenses incurred by
Lender, including all expenses of Lender and its respective
agents and representatives, in connection with any default
hereunder, under the Note, or under any other Loan Document or
the collection or enforcement thereof;
(d) subject to Section 5.17, all fees and expenses of
any environmental, engineering, appraisal, construction,
insurance or other consultants retained by Lender in
connection with the Loan or the administration, enforcement or
collection thereof; and
(e) all brokers' fees and commissions relative to the
Loan, the Properties and any lease or purchase contract
affecting same except to the extent any such claims are made
solely as a result of any dealings between Lender and any
broker, finder or similar person claiming to be entitled to a
commission in connection with the Loan, and with whom Borrower
has had no dealings in connection with the Loan.
7.4.2. All reasonable and actual costs and expenses incurred
and payments made by Lender under this Agreement or any of the other
Loan Documents from time to time, which are to be paid or reimbursed by
Borrower as described herein or in any of the other Loan Documents
shall, as and when advanced or incurred by Lender, constitute
protective advances evidenced by the Note and secured by the Mortgage
and the other Loan Documents to the same extent and with the same
effect as if the terms and provisions of this Agreement were set forth
therein, whether or not the principal balance of the Note plus such
protective advances shall exceed the face amount of the Note. If
Borrower shall fail to reimburse or pay to Lender the amount of such
protective advances by the applicable due date therefor, interest at
the Default Rate shall accrue on such protective advances from the date
such protective advances were made by Lender to and including the date
that such protective advances are reimbursed or paid to Lender in full
together with all such accrued interest thereon.
Section 7.5 Indemnification.
7.5.1. In addition to any other indemnifications
provided herein or in the other Loan Documents, Borrower shall
protect, defend, indemnify and save harmless the Indemnified
Parties from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines,
costs, expenses (including, without limitation, reasonable
attorneys' fees and disbursements) and Environmental Costs,
imposed upon or incurred by or asserted against any
Indemnified Party (other than by reason of such Indemnified
Party's gross negligence or willful misconduct, provided such
gross negligence or willful misconduct is determined to have
occurred by a final and unappealable decision of a court of
competent jurisdiction) by reason of (a) any funds deposited
with Lender, (b) receipt and application of any Receipts or an
Indemnified Party's payment or non-payment of costs and
expenses of operating the Properties following an Event of
Default which continues beyond any applicable grace or cure
period; (c) any accident, injury to or death of Persons or
loss of or damage to property occurring on or about the
Properties or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or
ways; (d) any design, construction, alteration, operation,
maintenance, use, nonuse or condition of the Properties or any
part thereof or on adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any
failure on the part of Borrower to perform or comply with any
of the terms of this Agreement or any other Loan Document; (f)
performance of any labor or services or the furnishing of any
materials or other property in respect of the Properties or
any part thereof; (g) any failure of the Properties to comply
with any Requirements; (h) the presence in, at or under the
Properties of any Hazardous Substance, or any release or
discharge on or from the Properties of any Hazardous
Substance; (i) any representation or warranty made in the
Note, the Mortgage, this Agreement or any of the other Loan
Documents being false or misleading in any material respect as
of the date such representation or warranty was made; (j)
except to the extent any such claims are made solely as a
result of any dealings between Lender and any broker, finder
or similar person claiming to be entitled to a commission in
connection with the Loan, and with whom Borrower has had no
dealings with in connection with the Loan, any claim by
brokers, finders or similar Persons claiming to be entitled to
a commission in connection with any Lease or other action
involving the Properties or any part thereof; or (k) the
claims of any lessee of any portion of the Properties or any
person acting through or out of any lessee or otherwise
arising out of or as a consequence of any Lease. Any amounts
payable to any Indemnified Party by reason of the application
of this Section 7.5 shall become immediately due and payable
and shall bear interest at the Default Rate from the date any
Indemnified Party advances any funds to pay any such loss or
damage until paid. The obligations and liabilities of Borrower
under this Section 7.5 shall survive any termination,
satisfaction, or assignment of this Agreement and the exercise
by Lender of any of its rights or remedies hereunder,
including, but not limited to, the acquisition of the
Properties by foreclosure or a conveyance in lieu of
foreclosure.
7.5.2 In case any claim, action or proceeding (a
"Claim") is brought against any Indemnified Parties in respect
of which indemnification may be sought by such Indemnified
Parties pursuant to Section 7.5.1, such Indemnified Parties
shall give notice thereof to Borrower, provided, however, that
the failure of such Indemnified Parties to so notify Borrower
shall not limit or affect such Indemnified Parties' rights to
be indemnified pursuant to Section 7.5.1, except to the extent
such failure shall materially and adversely prejudice
Borrower's defense of such Claim. Upon receipt of such notice
of Claim, Borrower shall, at its sole cost and expense,
diligently defend any such Claim with counsel reasonably
satisfactory to such Indemnified Parties (it being understood
that counsel selected by Borrower's insurance carrier shall be
deemed to be acceptable to such Indemnified Parties provided
such insurer is an acceptable insurer under this Agreement and
the other Loan Documents or otherwise was accepted by Lender
as an insurer), which counsel may, without limiting the rights
of Indemnified Parties pursuant to the next succeeding
sentence of this Section 7.5.2, also represent Borrower in
such Claim. In the alternative, Indemnified Parties may elect
to conduct their own defense through counsel of their own
choosing, and at the expense of Borrower, if (A) such
Indemnified Parties reasonably determine that the conduct of
its defense by Borrower presents a conflict or potential
conflict between Borrower and Lender that would make separate
representation advisable or otherwise could be prejudicial to
its interests, (B) Borrower refuses to defend or (C) Borrower
(or, if applicable, its insurance carrier) shall have failed,
in Lender's reasonable judgment, to diligently defend the
Claim. Except as provided in the preceding sentence, Borrower
shall not be responsible for the fees of counsel for any
Indemnified Parties incurred in connection with the
indemnification contained in Section 7.5.1. Borrower may
settle any Claim against Indemnified Parties without such
Indemnified Parties' consent, provided (i) such settlement is
without any liability, cost or expense whatsoever to such
Indemnified Parties, (ii) the settlement does not include or
require any admission of liability or culpability by such
Indemnified Parties under any Requirement, whether criminal or
civil in nature, and (iii) Borrower obtains an effective
written release of liability for such Indemnified Parties from
the party to the Claim with whom such settlement is being
made, which release must be reasonably acceptable to such
Indemnified Parties, and a dismissal with prejudice with
respect to all claims made by the party with whom such
settlement is being made, with respect to any pending legal
action against such Indemnified Parties in connection with
such Claim. If Indemnified Parties are conducting their own
defense as provided above, Borrower shall be responsible for
any good faith settlement of such Claim entered into by such
Indemnified Parties upon Borrower's consent. Nothing contained
herein shall be construed as requiring any Indemnified Parties
to expend funds or incur costs to defend any Claim in
connection with the matters for which such Indemnified Parties
are entitled to indemnification pursuant to Section 7.5.1.
Section 7.6 Notices. Any notice, report, demand or other instrument
authorized or required to be given or furnished ("Notices") shall be in writing
and shall be given as follows: (a) by hand delivery; (b) by deposit in the
United States mail as first class certified mail, return receipt requested,
postage paid; (c) by overnight nationwide commercial courier service; or (d) by
telecopy transmission (other than for notices of default) with a confirmation
copy to be delivered by duplicate notice in accordance with any of clauses
(a)-(c) above, in each case, to the party intended to receive the same at the
following address(es):
Lender: Credit Suisse First Boston Mortgage Capital LLC
Principal Transactions Group
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Golf Communities/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Credit Suisse First Boston Mortgage Capital LLC
Legal & Compliance Department
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Re: Golf Communities/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and: Credit Suisse First Boston Mortgage Capital LLC
Principal Transactions Group
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Golf Communities
and: the Servicer
or any successor Servicer of the Loan.
Borrower: c/o Golf Communities of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Firstate Tower, Suite 1515
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which any such Notice is to be
delivered, by furnishing ten (10) days written notice of such change to the
other parties in accordance with the provisions of this Section 7.6. Notices
shall be deemed to have been given on the date they are actually received;
provided that the inability to deliver Notices because of a changed address of
which no Notice was given, or rejection or refusal to accept any Notice offered
for delivery shall be deemed to be receipt of the Notice as of the date of such
inability to deliver or rejection or refusal to accept delivery. Notice for
either party may be given by its respective counsel. Additionally, notice from
Lender may also be given by the Servicer.
Section 7.7 No Oral Modification. Borrower acknowledges that this
Agreement, the Mortgage, the Note, and the other Loan Documents and all
instruments referred to in any of them can be extended, modified or amended only
in writing executed by Lender and Borrower and that none of the rights or
benefits of Lender can be waived permanently except in a written document
executed by Lender. Borrower further acknowledges Borrower's understanding that
no officer or administrator of Lender has the power or the authority from Lender
to make an oral extension or modification or amendment of any such instrument or
agreement on behalf of Lender.
Section 7.8 Assignment by Lender.
7.8.1 Assignment. Lender may assign (and thereafter, at any
time and from time to time, repurchase) all or a portion of its rights
and obligations under this Agreement and the other Loan Documents to
one or more Persons ("Assignees"; the term "Assignee" or "Assignees"
shall, unless otherwise expressly indicated, include Lender) and, upon
such assignment to any such Assignee, be released from its rights and
obligations as Lender in respect of such portion of the Loan, this
Agreement and the other Loan Documents, except that Lender shall not be
released from the obligation to make Subsequent Advances hereunder, nor
shall such obligation be reduced or diminished, prior to the Outside
Funding Date.
7.8.2 Participations. Lender and each of the other Assignees
may sell participations in the Loan to one or more Persons
(collectively, the "Participants"). Notwithstanding such sale, (i) the
selling party's obligations to Borrower under this Agreement and the
other Loan Documents shall remain unchanged by reason thereof and (ii)
the selling party shall remain solely responsible to Borrower for the
performance of such obligations. In order to assist Lender in any sales
of interests in the Loan, Borrower agrees for itself and agrees to
cause the SPE Entity, each Guarantor and the Manager to reasonably
cooperate with Lender in connection with any efforts by Lender to
obtain one or more Assignees or Participants, to provide additional
information and to execute and deliver such further documents,
instruments or agreements, in each case, as Lender or any Assignee or
Participant may reasonably require.
7.8.3 Assignment and Acceptance. From and after the effective
date of any assignment to an Assignee (i) the Assignee shall be a party
hereto and to each of the other Loan Documents to the extent of the
applicable percentage or percentages assigned to such Assignee and,
except as otherwise specified herein, shall succeed to the rights and
obligations of Lender hereunder in respect of such applicable
percentage or percentages, and (ii) Lender shall relinquish its rights
and be released from its obligations hereunder and under the Loan
Documents accruing after the date of such assignment to the extent of
such applicable percentage or percentages. The liabilities of Lender
and each of the other Assignees shall be separate and not joint and
several. Neither Lender nor any Assignee shall be responsible for the
obligations of any other Assignee. Notwithstanding the foregoing,
Lender shall not be released from the obligation to make Subsequent
Advances hereunder, nor shall such obligation be reduced or diminished,
prior to the Outside Funding Date.
7.8.4 Other Business. Lender, each Assignee and each
Participant and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, Borrower, any Affiliate of Borrower, any
of Borrower's subsidiaries and any Person who may do business with or
own interests in or securities of Borrower or any such Affiliate or
subsidiary, without any duty to account therefor to each other.
7.8.5 Privity of Contract. This Agreement is being entered
into by Lender individually and as agent for all present and future
Assignees, and privity of contract is hereby created among Lender, all
present and future Assignees and Borrower.
7.8.6 Availability of Records. Borrower acknowledges and
agrees that Lender may provide to any Assignees or prospective
Assignees, and that Lender and each of the Assignees may provide to any
Participants or prospective Participants, originals or copies of this
Agreement, all other Loan Documents and all other documents,
instruments, certificates, opinions, insurance policies, letters of
credit, reports, requisitions and other materials and information
(collectively, "Borrower Information") of every nature or description,
and may communicate all oral information, at any time submitted by or
on behalf of Borrower, the SPE Entity, the Manager, any Guarantor or
any Affiliate of Borrower, the SPE Entity, any Guarantor or the
Manager.
Section 7.9 Severability. In the event that any of the covenants,
agreements, terms or provisions contained in the Note, this Agreement, the
Mortgage, or in any other Loan Document shall be invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants,
agreements, terms or provisions contained herein or in the Note, the Mortgage,
or in any other Loan Document shall be in no way affected or prejudiced thereby.
Section 7.10 No Assignment by Borrower. Except as expressly permitted
herein, Borrower shall not assign or transfer any of its rights hereunder
without the prior written consent of Lender. Any assignment made without
Lender's prior written consent shall be void.
Section 7.11 Governing Law. THIS AGREEMENT WAS NEGOTIATED IN THE STATE
OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM
THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO *
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 7.12 Successors and/or Assigns. Subject to the restrictions on
transfer and assignment contained in this Agreement and the other Loan
Documents, whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the permitted successors and/or
assigns of such party, and this Agreement shall inure to the benefit of and
shall be binding on the parties hereto, the successors and/or assigns of such
party.
Section 7.13 Entire Contract. This Agreement and the other Loan
Documents, including all annexes, schedules and exhibits hereto and all other
documents furnished to Lender in connection with this Agreement, constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
transactions contemplated hereby, including, without limitation, any letter of
intent or loan commitment letter.
Section 7.14 Joint and Several Liability. If Borrower consists of more
than one Person, the obligations and liabilities of each such Person hereunder
and under the other Loan Documents shall be joint and several, subject to the
limitations contained in Section 7.20 hereof.
Section 7.15 Counterparts; Headings. This Agreement may be executed in
counterparts, each of which shall constitute an original, and which, when taken
together, shall constitute but one instrument. The captions and headings of the
various sections of this Agreement are for purposes of reference only and are
not to be construed as confining or limiting in any way the scope or intent of
the provisions hereof. Whenever the context requires or permits, the singular
shall include the plural, the plural shall include the singular, and the
masculine, feminine and neuter shall be freely interchangeable.
Section 7.16 Time of the Essence. Time is of the essence as to
Borrower's obligations under this Agreement and the other Loan Documents.
Section 7.17 Consents.
7.17.1. Any consent or approval by Lender in any single
instance shall not be deemed or construed to be Lender's consent or
approval in any like matter arising at a subsequent date. Any consent
or approval requested of and granted by Lender pursuant hereto or any
of the other Loan Documents shall be narrowly construed to be
applicable only to Borrower and the matter identified in such consent
or approval and no third party shall claim any benefit by reason
thereof. Wherever this Agreement, the Mortgage, the Cash Management
Agreement or any other Loan Document refers to the consent or approval
of Lender, or provides that any document or Person will be satisfactory
or acceptable to Lender or words of similar import, (x) such consent or
approval may be given or withheld by Lender, and such document or
Person must be satisfactory or acceptable to Lender, in its sole and
absolute discretion, unless otherwise expressly provided herein or
therein and (y) such consent or approval shall not be effective unless
given in writing. Wherever this Agreement, the Mortgage, the Cash
Management Agreement or any other Loan Document refers to the provision
of documents or other items being as Lender may require, provides for
the selection by Lender of any Person to provide reports or other items
hereunder or thereunder or selection by Lender of any means of
determining any matter or otherwise refers to terms and conditions
hereof being as Lender deems appropriate, any such requirement,
selection or determination of appropriateness shall be made by Lender
in its sole and absolute discretion, unless expressly provided
otherwise herein or therein. The foregoing provisions are intended to
be effective whether or not the applicable provision hereof or of any
other Loan Document specifies that the applicable consent, approval or
other matter is to be determined by Lender in its "sole and absolute
discretion" or words of similar import.
7.17.2. Wherever in this Agreement, the Mortgage, the Cash
Management Agreement or any other Loan Document, reference is made to
any consent or approval not being "unreasonably withheld" or words of
similar import, the same shall be deemed to include within its meaning
(unless expressly provided otherwise) that if such consent or approval
is to be granted, the same will occur within a commercially reasonable
period of time. If Borrower believes that Lender has improperly failed
to grant its consent or approval (or otherwise improperly failed to act
as requested by Borrower as described in Section 7.17.1 (e.g.,
determined that a document is not acceptable to Lender) hereunder or
under the Mortgage, the Cash Management Agreement or any other Loan
Document (including, without limitation, by failing to respond within a
commercially reasonable period of time) where such consent or approval
is required to be given by (or such action which was not taken is in
breach of) the terms of this Agreement or such other Loan Document,
Borrower's sole remedy shall be to obtain declaratory relief in a
final, non-appealable judgment determining such withholding to have
been improper, whereupon such consent or approval shall be deemed given
(or such other action described in Section 7.17.1 shall be deemed
taken), and Borrower hereby waives all claims for damages or set-off
resulting from any withholding of consent or approval (or failure to
take any other action described in Section 7.17.1) by Lender.
Section 7.18 No Partnership. Nothing contained in this Agreement, or
the other Loan Documents shall be deemed to create an equity investment on the
part of Lender, or a joint venture or partnership between Lender and Borrower,
it being the intent of the parties hereto that only the relationship of lender
and borrower shall exist with respect to the Properties. Borrower agrees that it
shall report this transaction for income tax purposes, and file all related tax
returns, in a manner consistent with the form of this transaction as a loan.
SECTION 7.19 WAIVER OF JURY TRIAL. EACH OF BORROWER AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, THIS AGREEMENT, THE MORTGAGE, THE CASH MANAGEMENT
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF BORROWER, ANY OTHER
SIGNIFICANT PARTY, THE GUARANTORS OR LENDER RELATING TO THE LOAN, AND THE
LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN AND ENTERING INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
Section 7.20 Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement or in any of the other Loan Documents, except as
provided otherwise in this Section, neither Borrower nor any direct or indirect
member, shareholder, partner, principal, any Affiliate of Borrower, any SPE
Entity or any Significant Party, employee, officer, director, agent or
representative or Affiliate of any of them (each, a "Related Party") shall have
any personal liability for (a) the payment of any sum of money which is or may
be payable hereunder or under the Note, or any other Loan Document, including,
but not limited to, the repayment of the Indebtedness, or (b) the performance or
discharge of any covenants, obligations or undertakings of Borrower hereunder or
under any other Loan Document and no monetary or deficiency judgment shall be
sought or enforced against Borrower or any Related Party with respect thereto;
provided, however, that a judgment may be sought against Borrower to enforce the
rights of Lender in, to, or against the Properties, including the Receipts, and
all other collateral granted as security under any Loan Document and Lender
shall have full recourse to and the right to proceed against the Properties and
such other collateral. Notwithstanding the foregoing, nothing contained herein
shall (i) impair the validity of the Indebtedness or in any way affect or impair
the Lien of the Mortgage, or the right of Lender to enforce any and all rights
and remedies under and by virtue of the Note, this Agreement, or any other Loan
Document (limited, however, as expressly provided otherwise above), including,
without limitation, naming Borrower as a party defendant in any foreclosure
action, or (ii) limit Lender from pursuing or seeking to enforce the rights of
Lender against any third parties, including any guarantor, indemnitor or surety
under any guaranty or indemnity delivered in connection with this Agreement, the
Note, or otherwise in connection with the Loan. Additionally, the provisions of
this Section 7.20 shall not relieve Borrower from any personal liability for,
and each Individual Borrower (as well as the Guarantors, to the extent provided
in the Guaranty) shall be fully and personally liable for, any liabilities,
costs, losses (including, without limitation, any reduction in value of the
Property, or any other collateral securing the Loan, or the loss of any such
collateral or Lender's security interest therein), damages, expenses (including,
without limitation, reasonable attorneys' fees and disbursements, and court
costs, if any), or claims suffered or incurred by Lender (or any Indemnified
Party) by reason of or in connection with the following:
(a) fraud or misrepresentation by such Individual Borrower,
any Related Party or any Guarantor in connection with the Loan;
(b) the gross negligence or willful misconduct of such
Individual Borrower;
(c) physical waste of the Individual Property of such
Individual Borrower;
(d) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnification
Agreement or in this Agreement concerning Environmental Laws or
Hazardous Substances with respect to the Individual Property of such
Individual Borrower;
(e) the removal or disposal of any portion of the Individual
Property of such Individual Borrower in violation of the Loan Documents
or after an Event of Default;
(f) the misapplication or conversion by such Individual
Borrower of (i) any insurance proceeds paid by reason of any loss,
damage or destruction to the Property, (ii) any awards or other amounts
received in connection with the condemnation of all or a portion of the
Property, (iii) any Receipts or (iv) any monies held in or paid out
from any account (including any reserve or escrow) maintained under
this Agreement, the Cash Management Agreement or any of the other Loan
Documents;
(g) failure of such Individual Borrower to pay charges for
labor or materials or taxes or other charges that can create liens on
any portion of the Property to the extent funds are available from the
operation of the Individual Property of such Individual Borrower;
(h) failure of such Individual Borrower to deliver to Lender
any security deposits collected with respect to the Individual Property
of such Individual Borrower upon a foreclosure of the Property or
action in lieu thereof, except to the extent any such security deposits
were applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of the Event of Default that gave rise
to such foreclosure or action in lieu thereof;
(i) any damage or destruction of the Individual Property of
such Individual Borrower or any part thereof due to fire or other
casualty to the extent not covered by insurance required hereby but
only to the extent the same would have been covered by insurance if
such Individual Borrower had obtained and maintained the insurance
coverage required under this Agreement, and
(j) the cost of enforcement of any of Lender's rights or
remedies hereunder or under any Guaranty or any of the other Loan
Documents or costs incurred in any bankruptcy or similar proceeding
which may be brought by or against Borrower.
Notwithstanding anything to the contrary in any of the Loan Documents
(i) Lender shall not be deemed to have waived any right which Lender may have
under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount of the Indebtedness secured
by the Mortgage or to require that all collateral shall continue to secure all
of the Indebtedness owing to Lender in accordance with the Loan Documents, and
(ii) the Indebtedness shall become fully recourse to Borrower in the event that:
(A) the first full monthly payment of principal and interest under the Note is
not paid when due; (B) any Individual Borrower violates the provisions of
Article 9 of this Agreement or fails to maintain its status as a single purpose
entity in accordance with the provisions of this Agreement; (C) any violation of
Sections 5.2 or 5.3 of this Agreement or failure to obtain the prior written
consent of Lender to any subordinate financing or other voluntary lien
encumbering all or any portion of the Property as required by this Agreement;
(D) any violation of Sections 5.1 or 5.7 of this Agreement or failure to obtain
the prior written consent of Lender to any assignment, transfer, or conveyance
of all or any portion of the Property or any interest therein as required by
this Agreement; (E) all or any material portion of the Property shall be
forfeited by reason of criminal activity by any Individual Borrower or a Related
Party; (F) a receiver, liquidator or trustee of Borrower or a Guarantor shall be
appointed or if any Individual Borrower or a Guarantor shall be adjudicated a
bankrupt or insolvent, or if any petition for federal bankruptcy, reorganization
or arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by, consented to, or acquiesced in by, any Individual
Borrower or a Guarantor or if any proceeding for the dissolution or liquidation
of any Individual Borrower or the Guarantor shall be instituted by any
Individual Borrower or Guarantor or any Related Party or (G) following an Event
of Default, any Individual Borrower, Guarantor or any Related Party delays,
hinders or interferes in any material respect with Lender's pursuit of any of
its rights or remedies under the Note, this Loan Agreement, the Mortgage or any
of the Loan Documents.
Section 7.21 Limitation on Liability. 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 other Loan
Documents and Borrower for itself and all Related Parties hereby waives all
claims for consequential damages.
Section 7.22 Jurisdiction, Venue, Service of Process. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK IN WHICH THE PROPERTIES IS LOCATED. BORROWER
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS
ADDRESS FOR NOTICES PURSUANT TO SECTION 7.6 HEREOF. BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, THE MORTGAGE, OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE
COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY OTHER JURISDICTION.
Section 7.23 Appointment of Agent for Service of Process. Each
Individual Borrower hereby designates the Secretary of State of the State in
which such Individual Borrower was organized as its agent to accept service of
process in any action or proceeding arising under or in connection with this
Agreement, the Mortgage, and the other Loan Documents.
Section 7.24 Rule of Construction. This Agreement and the other Loan
Documents shall not be construed more strictly against one party than against
the other, merely by virtue of the fact that it may have been prepared by
counsel for one of the parties, it being recognized that both Lender and
Borrower have contributed substantially and materially to the preparation of
this Agreement and the other Loan Documents.
Section 7.25 Further Assurances.
7.25.1 Borrower will, at its sole cost and expense, do,
execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, conveyances, notes,
mortgages, assignments, security agreements, financing statements and
assurances as Lender shall from time to time require or deem advisable
(v) to carry into effect the purposes of this Agreement and the other
Loan Documents, (w) for the better assuring, conveying, mortgaging,
assigning and confirming unto Lender of all property and rights
mortgaged, granted, bargained, alienated, confirmed, pledged,
hypothecated, conveyed or assigned by this Agreement, or any of the
other Loan Documents or property intended now or hereafter to be, or
which Borrower may be or may hereafter become bound to convey or assign
to Lender, (x) for facilitating the placement of a Loan Interest in a
Loan Pool as described in Section 7.26 below, (y) for the perfection of
any such lien or security interest granted herein or in the other Loan
Documents and (z) for the better assuring and confirming of all of
Lender's rights, powers and remedies hereunder. Borrower, on demand,
will execute and deliver and hereby authorizes Lender to execute in the
name of Borrower or without the signature of Borrower to the extent
Lender may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the
security interest of Lender in the Properties and the other collateral
under the Loan Documents.
7.25.2 Borrower forthwith upon the execution and delivery of
this Agreement and thereafter, from time to time, will cause the
Mortgage and any security instrument creating a Lien or security
interest or evidencing the Lien of the Mortgage and the other
applicable Loan Documents upon the Properties or other property and
each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any
present or future Legal Requirement in order to publish notice of and
fully to protect the Lien or security interest of, and the priority of,
the Mortgage and the other Loan Documents upon, and the interest of
Lender in, the Properties or other applicable property. Borrower will
pay all filing, registration or recording fees, and all expenses
incident to the foregoing and all taxes, duties, assessments and
charges of any Governmental Authority arising out of or in connection
with the execution and delivery of the Mortgage, any other security
instrument, any instrument of further assurance or any other Loan
Document. Upon Lender's request, Borrower shall, from time to time,
furnish Lender with evidence reasonably satisfactory to Lender that
such property is free of Liens and security interests (except as
permitted hereunder), including searches of applicable public records.
7.25.3 Upon any failure by Borrower to do so, Lender may
make, execute, record, file, re-record or refile any and all such
mortgages, instruments, certificates and documents for and in the name
of Borrower, and Borrower hereby irrevocably appoints (which
appointment is coupled with an interest and with full power of
substitution) Lender the agent and attorney-in-fact of Borrower to do
so; and Borrower shall reimburse Lender, on demand, for all costs and
expenses (including reasonable attorneys' fees) incurred by Lender in
connection therewith. Upon foreclosure, the appointment of a receiver
or any other relevant action, Borrower will, at Borrower's sole cost
and expense, cooperate fully and completely to effect the assignment or
transfer of any Permit, agreement or any other right necessary or
useful to the operation of the Properties and shall deliver to Lender
all books and records relating to the Properties.
Section 7.26 Placement of Loan.
7.26.1 Borrower acknowledges that Lender, any Assignee or any
Participant (each of Lender, such Assignee or Participant is called a
"Placement Party") may elect to place the Loan, or its participation
interest, as the case may be (whichever of the Loan or such
participation is to be so placed is called the "Loan Interest") in a
pool of loans, participation interests and/or notes secured by or
dependent on the cash flow of mortgage loans, which will constitute
security for a rated securities offering (such pool is called a "Loan
Pool"; such rated securities being the "Securities" and such offering
being a "Securitization").
7.26.2 At the request of Lender, Borrower will use
commercially reasonable efforts to satisfy the market standards to
which Lender customarily adheres or which may be required in the
marketplace or by the Rating Agencies in order to enable a Placement
Party to place a Loan Interest in a Loan Pool, including, without
limitation, to:
(a) structure and maintain its organizational,
operational and financial affairs and those of its Affiliates
(collectively, the "Entities") as special-purpose
bankruptcy-remote entities to enable its counsel to render a
reasoned opinion customarily given in securitization
transactions that upon a petition for bankruptcy under the
bankruptcy code, none of the Entities as a debtor in
possession nor its bankruptcy trustee or creditors could cause
a court to order the substantive consolidation of the assets
and liabilities of any such entities with those of the
Borrower or the SPE Entity, which counsel shall be reasonably
satisfactory to, and which opinions or memoranda shall be
satisfactory to, Lender and the Rating Agencies;
(b) provide such financial and other information with
respect to the Properties, the Manager and the Entities as may
be reasonably requested by Lender or the Rating Agencies or
annual rating reviews for the Properties prepared by a firm of
certified public accountants reasonably acceptable to Lender
and the Rating Agencies (Lender acknowledges that the Approved
Accountant is an accounting firm acceptable to Lender);
(c) prepare and deliver such agreements and
instruments relating to the Note, the Loan Interest, the
Property and the Entities, including (A) agreements to
indemnify the Rating Agencies, Lender and any servicer or
trustee (except to the extent that any requested
indemnification for any loss, claim, damage, cost, expense or
liability results solely from the negligent or willful, or
with respect to Lender, grossly negligent or willful, acts or
omissions by such indemnified party in performing the duties,
functions and activities undertaken by it in connection with
the placement of the Loan Interest in a Loan Pool, including,
without limitation, any failure by such indemnified party or
parties to comply with all applicable securities laws and
regulations) and (B) amendments of any of the Loan Documents
that are necessary to effect the placement of the Loan
Interest in a Loan Pool, as may be reasonably requested by,
and in form and scope reasonably satisfactory to, Lender and
the Rating Agencies; provided, however, that such amendments
shall not without the consent of the Borrower affect the terms
and conditions of the Note, or any other material business
term of, or material obligation of the Borrower under, the
Loan Documents;
(d) cause to be performed such site inspections,
appraisals, market studies, environmental reviews and reports
(Phase I assessments and, where appropriate, Phase II),
Engineer's Reports and other due diligence investigations of
the Properties customarily and reasonably requested by Lender
or the Rating Agencies in connection with the placement of the
Loan Interest in a Loan Pool and the rating of any securities
issues in connection therewith;
(e) provide business plans, budgets and title
insurance (including surveys) relating to the Properties as
may be reasonably requested by Lender or the Rating Agencies;
(f) cause counsel to render opinions as to "true
sale" and bankruptcy remoteness and other matters customary in
securitization transactions with respect to the Property, the
Entities, the Loan Interest and the Loan Documents, which
counsel shall be reasonably satisfactory to, and which opinion
shall be satisfactory to, Lender and the Rating Agencies;
provided, that Borrower shall not be responsible for providing
a "true sale" opinion that relates solely to the sale by
Lender of the Loan or a Loan Interest into a Loan Pool; and
(g) make the representations and warranties contained
in the Loan Documents as of the date of the closing of the
transfer of the Loan Interest to the extent such
representations and warranties may be truthfully made and make
such other representations with respect to the Property, the
Entities, the Loan Interest and the Loan Documents as are
customarily provided in securitization transactions and as may
be reasonably requested by Lender or the Rating Agencies in
connection with such closing to the extent such
representations and warranties may be truthfully made.
7.26.3 At Lender's request, Borrower shall cooperate with
Lender's preparation of a private placement memorandum or registration
statement and amendments and supplements thereto (the "Disclosure
Document") to privately place or publicly distribute the Note or the
Loan Interest or securities issued in connection therewith in a manner
that satisfies the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Securities and Exchange Act of
1934, as amended (the "Exchange Act") and applicable state
Requirements. At the time of Lender's preparation of such Disclosure
Document, Borrower shall execute and deliver to Lender and any
underwriter or placement agent an instrument (a "Securitization
Indemnification") (in form and substance reasonably satisfactory to
Lender)
(i) certifying as to the veracity in all material respects of
all written information that it supplied and was incorporated in such
Disclosure Document and
(ii) indemnifying and holding each of them and any Person who
controls any of them within the meaning of Section 15 of the Securities
Act or Section 70 of the Exchange Act (each, an "Securitization
Indemnified Party") harmless against all costs, expenses and damages
incurred by any Securitization Indemnified Party as a result of any
untrue statement of a material fact made or supplied by Borrower as
contained in such Disclosure Document or the failure by Borrower (after
receipt of a draft of the Disclosure Statement) to specify for
inclusion in the Disclosure Document any material fact regarding
Borrower (or any member or partner thereof), the Property or the Loan
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only to
the extent that such statement of material fact is made in reliance
upon and in conformity with written information Borrower furnished for
use therein or the omission of such a material fact is based upon
Borrower's failure to specify such material fact or upon Borrower's
furnishing inaccurate information that shows that such material fact is
not material. If Lender (or a placement agent or underwriter acting on
behalf of Lender) shall deliver a draft of the Disclosure Document to
Borrower for its review, Borrower shall provide Lender (or the
placement agent or underwriter acting on behalf of Lender) with its
comments, if any, on such Disclosure Document as soon as practicable,
but in all events within fifteen (15) days after receipt thereof, in
the case of the first draft of such Disclosure Document, and within
five (5) Business Days after receipt of any subsequent draft of such
Disclosure Document. If in connection with such review, Borrower
advises Lender of the existence of a fact regarding Borrower (or any
member or partner thereof), the Properties or the Loan and advises
Lender that it deems such fact material, Lender shall include such fact
in the Disclosure Document or shall waive the rights of the Indemnified
Parties with respect to such fact. Upon receipt of the Securitization
Indemnification, Lender shall execute and deliver to Borrower an
instrument (in form and substance reasonably satisfactory to Borrower)
indemnifying and holding Borrower harmless against all costs, expenses
and damages incurred by it as a result of the preparation or
distribution of, and any untrue statement of a material fact contained
in, such Disclosure Document or the failure to include therein any
material fact in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that such indemnification shall not apply if any such costs,
expenses or damages arise out of or are based upon an untrue statement
of a material fact or an omission to state a material fact in such
Disclosure Document made in reliance upon and in conformity with
written information furnished by Borrower expressly for use therein or
(after receipt of a draft of the Disclosure Statement) the omission of
a material fact concerning Borrower (or any member or partner thereof),
the Properties, the Loan (other than the express terms of the Loan
Documents) necessary to make the statements in the Disclosure Statement
not misleading. Borrower shall notify Lender if, in Borrower's opinion,
it is necessary to amend or supplement such Disclosure Document at any
time in order that such Disclosure Document does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Lender shall
prepare as soon as may be reasonably practicable an amendment or
supplement to such Disclosure Document correcting such statement or
omission. At the request of Lender, in connection with any sale of the
Note or any Loan Interest, Borrower shall confirm, as of the date of
such sale, that such Disclosure Document, as it may be so amended or
supplemented, does not contain any untrue statement of a material fact
concerning Borrower, the Properties or the Loan or omit to state a
material fact concerning Borrower, the Properties or the Loan necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
7.26.4 It is expressly understood hereunder that in connection
with the placement of any Loan Interest in a Loan Pool, Lender intends
to transfer the Loan Interest to a trustee which shall hold such Loan
Interest for the benefit of the holders of the interests in the Loan
Pool. In connection therewith, Borrower shall execute and deliver or
cause to be executed and delivered, all such additional instruments,
and do, or cause to be done, all such additional acts as (i) may be
reasonably necessary or proper to carry out such transfer, including,
without limitation, the delivery of such instruments and documents,
including assignments of mortgage (and similar documents), assignments
of Loan Documents, re-certifications of surveys with respect to the
Properties, and the delivery of such Lender's title insurance
endorsements in favor of the trustee as may be reasonably required to
confirm and/or evidence the transfer to the trustee of the title
insurance issued to Lender in respect of the Properties or, the
Mortgage, including payment of all fees, title insurance premiums and
other insurance premiums in connection therewith or (ii) Lender may
reasonably request.
7.26.5 Lender shall be permitted to share any information
provided by Borrower pursuant to this Section 7.26 in connection with
the placement of a Loan Interest in a Loan Pool with the investment
banking firms, Rating Agencies, accounting firms, law firms and other
third-party advisory firms involved with any transfer of the Loan, the
Loan Documents or the applicable Securitization. It is understood that
the information provided by Borrower to Lender may ultimately be
incorporated into the offering documents for the Securitization and
thus various investors may also see some or all of the information.
7.26.6 Borrower acknowledges that any transfer of the Loan or
the placement of the Loan Interest in a Loan Pool may occur at any time
during the term of this Agreement and the provisions of this Section
7.26 shall be applicable throughout the term of the Loan.
Section 7.27 Servicer. At the option of Lender, the Loan may be
serviced by a Servicer selected by Lender and Lender may delegate all or any
portion of its responsibilities under this Loan Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement between Lender and
Servicer. Borrower shall pay (a) any set-up fees or other initial costs relating
to or arising under such servicing agreement, (b) a monthly servicing fee due to
the Servicer in an amount not to exceed 0.2% per annum of the outstanding
principal balance of the Loan and (c) the fees of the Servicer in accordance
with the customary fees then charged by the Servicer for services requested by
Borrower, as such fees are established from time to time. Any action taken by
such Servicer or other agent on behalf of Lender hereunder or under any other
Loan Document shall have the same force and effect as if taken by Lender.
ARTICLE VIII. SPECIAL PROVISIONS
Section 8.1 Deposits for Tax and Insurance Premiums. In order to assure
the payment of Taxes and premiums with respect to all insurance coverage
required pursuant to Paragraph 7 of the Mortgage (collectively, "Insurance
Premiums") as and when the same shall become due and payable, the following
provisions shall apply:
8.1.1 On the date hereof, Borrower shall deposit with Lender
the sum set forth on Exhibit K hereto as the Tax and Insurance Deposit
to be held in an account maintained at a bank designated by Lender and
pledged to Lender as additional collateral for the Loan, all as more
particularly described in the Cash Management Agreement, and referred
to therein as the "Tax and Insurance Impound Fund Account" (the "Tax
and Insurance Escrow Account"). Thereafter, on each Payment Date,
Borrower shall pay to Lender, in immediately available funds for
deposit into the Tax and Insurance Escrow Account an amount equal to
one-twelfth (1/12) of the Taxes and Insurance Premiums to become due
during the period commencing on the first day of the first month
following such Payment Date and ending twelve (12) months following
such first day. In all cases there must be paid hereunder to be
deposited and held in the Tax and Insurance Escrow Account, an amount
sufficient to pay such Taxes and Insurance Premiums, one month prior to
the date when they are due and payable. The amounts of such deposits
with respect to Taxes and Insurance Premiums (herein collectively
called "Tax and Insurance Deposits") shall be based upon Lender's good
faith estimate as to the amount of Taxes and Insurance Premiums.
Borrower shall promptly, upon the demand of Lender, make additional Tax
and Insurance Deposits as Lender may from time to time reasonably
require due to
(i) failure of Borrower to make Tax and Insurance
Deposits in previous months,
(ii) underestimation of the amounts of Taxes and/or
Insurance Premiums,
(iii) the particular due dates and amounts of Taxes
and/or Insurance Premiums, or (iv) application of the Tax and
Insurance Deposits pursuant to this Agreement. All Tax and
Insurance Deposits shall be held by Lender in the Tax and
Insurance Escrow Account and invested and applied as provided
in the Cash Management Agreement.
8.1.2 Provided no Event of Default has then occurred and is
continuing, Lender will, out of the funds in the Tax and Insurance
Escrow Account (provided such funds are sufficient for such purpose),
upon the presentation to Lender by Borrower of the bills therefor, pay
the Taxes and Insurance Premiums or will, upon the presentation of
official receipted bills therefor, reimburse Borrower for such payments
made by Borrower. If the total of all funds in the Tax and Insurance
Escrow Account shall not be sufficient to pay all of the Taxes and
Insurance Premiums when the same shall become due, then Borrower shall
pay to Lender on demand the amount necessary to make up the deficiency.
Lender shall be entitled, without request of Borrower, but, prior to an
Event of Default upon two (2) Business Days notice to Borrower, to
apply any funds in the Tax and Insurance Escrow Account to the payment
of any Taxes (other than any Taxes which Borrower has notified Lender
that it is contesting and such contest is then permitted under the
Mortgage) and Insurance Premiums which have become due and have not yet
been paid. Borrower and Lender acknowledge and agree that Borrower
shall not be in default under the Mortgage for failure to pay Taxes or
Insurance Premiums, if such failure arises by reason of Lender's
failure to comply with its agreement contained in this Section 8.1.2.
8.1.3 Upon the occurrence and during the continuance of an
Event of Default, Lender may, at its option, without being required to
do so, apply any Tax and Insurance Deposits on hand to pay Taxes,
Insurance Premiums or to pay principal, interest and other amounts
payable to Lender hereunder or under the other Loan Documents, all in
such order and manner as Lender, in its sole discretion, may elect.
When the principal and interest under the Note and all prepayment
premiums, if any, in connection therewith and all other Obligations
have been fully and properly paid, any remaining Tax and Insurance
Deposits shall be returned to Borrower.
8.1.4 Lender shall be absolutely entitled to rely on any
statements of any Governmental Authority with respect to Taxes and any
statement of Borrower's insurance carrier or its agent with respect to
Insurance Premiums.
8.1.5 Borrower and Lender acknowledge that Borrower shall not
be in default hereunder in its obligation to make the Tax and Insurance
Deposit on any Payment Date, to the extent funds are available to make
such deposit from monies deposited in the Cash Collateral Account
during the applicable Collection Period after applying such funds to
any item with a higher priority than such application to the Tax and
Insurance Escrow Account in accordance with the terms of the Cash
Management Agreement. Any transfer of funds from the Cash Collateral
Account to the Tax and Insurance Escrow Account shall satisfy
Borrower's obligation hereunder to make the corresponding Tax and
Insurance Deposit, to the extent of the funds so transferred.
8.1.6 No provision of this Agreement, the Mortgage or any
other Loan Document shall be construed as creating in any party other
than Borrower and Lender (and the Servicer), any rights in and to the
Tax and Insurance Deposits or any rights to have the Tax and Insurance
Deposits applied to payment of Taxes and Insurance Premiums. Lender
shall have no obligation or duty to any third party to collect Tax and
Insurance Deposits.
Section 8.2 Replacement Reserve Fund.
8.2.1 For purposes hereof, the term "Replacement Revenue
Contribution" shall mean the lesser of (i) the sum set forth on Exhibit
K hereto as the Replacement Reserve Contribution per month and (ii) the
amount, if any, by which the balance in the Replacement Reverse Account
(as hereinafter defined) shall be less than the sum set forth on
Exhibit K hereto as the Replacement Reserve Cap.
8.2.2 Borrower shall pay to Lender on each Payment Date an
amount equal to the Replacement Reserve Contribution for deposit into
an account maintained at a bank designated by Lender and pledged to
Lender as additional collateral for the Loan, all as more particularly
described in the Cash Management Agreement, and referred to therein as
the "Replacement Escrow Fund Subaccount" (the "Replacement Reserve
Account").
8.2.3 Provided that no Event of Default shall exist hereunder
and be continuing, Lender shall disburse funds from the Replacement
Reserve Account to Borrower to pay the costs of Replacements (as
hereinafter defined) which, in the reasonable, good faith opinion of
Lender, are necessary or desirable for the Properties. Such
disbursements shall be made within ten (10) Business Days after receipt
of (i) a request by Borrower describing the costs for which such
disbursement is requested and the amount sought, (ii) invoices,
receipts and/or other evidence reasonably satisfactory to Lender
evidencing that such costs are payable and that the work to which such
costs relate has been completed, (iii) lien waivers or other evidence
reasonably satisfactory to Lender that all materialmen, laborers,
subcontractors or other parties who could claim any statutory or common
law lien against the Property in connection with such Replacement and
who are being paid from such disbursement have been (or will, upon such
disbursement, be) fully paid for all labor or materials furnished to
date and have waived any such lien, (iv) for disbursement requests
relating to a Replacement which shall cost in excess of $75,000 for any
Individual Property, the certification of an architect or other third
party reasonably acceptable to Lender verifying that the portion of the
Replacement for which disbursement is sought has been completed in
accordance with plans approved by Lender, if any, and the cost thereof
and (v) for final disbursement requests relating to a Replacement which
shall cost in excess of $75,000 for any Individual Property, a new
certificate of occupancy for the portion of the Improvements affected
by such Replacement, if such new certificate of occupancy is required,
or a certification by Borrower that no new certificate of occupancy is
required. Lender may retain ten percent (10%) of the amount of any
disbursements requested hereunder and shall disburse such retained
amounts to Borrower in accordance herewith upon completion of the
Replacement to which such retainage relates. Lender shall not be
obligated to make disbursements from the Replacement Reserve Account
more frequently than once in any thirty (30) day period. In addition,
Lender shall not be obligated to disburse any funds from the
Replacement Reserve Account for a Replacement if, in the reasonable,
good faith opinion of Lender, the balance in the Replacement Reserve
Account shall be insufficient to pay for such Replacement.
8.2.4 If an Event of Default has occurred and is continuing
hereunder, Lender may apply all amounts on deposit in the Replacement
Reserve Account to the Indebtedness in such order, priority and
proportions as Lender in its discretion shall deem proper.
8.2.5 For purposes hereof, "Replacement" shall mean repairs,
replacements and improvements to the Properties in the ordinary course
of operating such Properties which would, for federal income tax
purposes, be included in the cost of such Properties, excluding the
Required Work.
8.2.6 Nothing contained in this paragraph shall limit the
obligation of Borrower to perform any work or otherwise to repair and
maintain the Properties in accordance with the Mortgage or any other
Loan Document or shall be deemed approval by Lender of any work
otherwise requiring the approval of Lender under the Mortgage or any
other Loan Document. The Replacement Reserve Account shall not
constitute a trust fund and may not be commingled with other monies
held by Lender. Upon assignment of the Note and the Mortgage by Lender
in their entirety, Lender's security interest in, and all other right,
title and interest of Lender in and to, the funds in the Replacement
Reserve Account shall be transferred and assigned to the assignee and
Lender shall have no further obligation with respect thereto.
Section 8.3 Interest Reserve.
8.3.1 On the date hereof, Borrower shall deposit with Lender
the sum set forth on Exhibit K hereto as the Interest Reserve to be
held in an account maintained at a bank designated by Lender and
pledged to Lender as additional collateral for the Loan (the "Interest
Reserve Account"). The Interest Reserve Account shall be an
interest-bearing account and all interest earned thereon shall become
part of the Interest Reserve Account for the benefit of Borrower.
8.3.2 Provided that no Event of Default shall then exist and
be continuing, if, on any Payment Date, the amount then on deposit in
the Monthly Debt Service Subaccount (as defined in the Cash Management
Agreement), minus the amount, if any, due under Section 8.7.3 hereof,
shall be less than the amount of interest then due under the Note,
Lender shall disburse the amount of such deficiency from the Interest
Reserve Account to pay such interest. Any such amounts so disbursed
shall be deemed paid by Borrower and Borrower shall not be deemed to
have failed to pay such interest for the purposes of Section 6.1.1 by
reason thereof.
8.3.3 If an Event of Default has occurred and is continuing
hereunder, Lender may apply all amounts on deposit in the Interest
Reserve Account to the Indebtedness in such order, priority and
proportions as Lender in its discretion shall deem proper.
8.3.4 Nothing contained in this paragraph shall limit the
obligation of Borrower to pay interest or other amounts due under the
Note or any other Loan Document. The Interest Reserve Account shall not
constitute a trust fund and may not be commingled with other monies
held by Lender. Upon assignment of the Note and Mortgage by Lender in
their entirety, Lender's security interest in, and all other right,
title and interest of Lender in and to, the funds in the Interest
Reserve Account shall be transferred and assigned to the assignee and
Lender shall have no further obligation with respect thereto.
Section 8.4 Approved Budget.
8.4.1 The term "Approved Budget" shall mean, upon approval by
Lender, which approval shall not be unreasonably withheld, conditioned
or delayed, Borrower's proposed operating budget for the Properties,
which sets forth the estimated Operating Expenses to be incurred in
connection with the Properties for each month of the applicable
calendar year.
8.4.2 Borrower shall deliver to Lender not later than sixty
(60) days prior to the commencement of each calendar year a proposed
operating budget in form satisfactory to Lender setting forth in
reasonable detail budgeted monthly operating income and monthly
operating capital and other expenses for the Properties. Lender shall
have the right to approve such budget, which approval shall not be
unreasonably withheld, conditioned or delayed.
8.4.3 If Lender shall object to the proposed budget submitted
by Borrower, Lender shall advise Borrower of such objections within
fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall
within ten (10) days after receipt of notice of any such objections
revise such budget and resubmit the same to Lender. Lender shall advise
Borrower of any objections to such revised budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed
description of such objections) and Borrower shall revise the same in
accordance with the process described in this subparagraph until the
Lender approves a budget, provided, however, that if Lender shall not
advise Borrower of objections to a proposed budget within the time
period set forth in this paragraph, then such proposed budget shall be
deemed approved by Lender.
8.4.4 Borrower shall operate the Properties in accordance with
the Approved Budget and shall not enter into any contracts or other
agreements nor expend any funds not provided for therein, other than
expenditures required to be made by reason of the occurrence of an
emergency (i.e., an unexpected event which threatens imminent harm to
persons or property at the Properties) and with respect to which it
would be impracticable, under the circumstances, to obtain Lender's
prior consent thereto. Notwithstanding the foregoing, Borrower shall
notify Lender as promptly as practicable with respect to any such
emergency expenditures made.
8.4.5 In the event that there shall not be an Approved Budget
with respect to a calendar year prior to the commencement thereof, then
the most recent Approved Budget (subject to any increases required by
reason of increases in non-discretionary expenses such as real estate
taxes and utility costs) shall continue to be the Approved Budget.
Section 8.5 Working Capital Reserve.
8.5.1 On the date hereof, Borrower shall deposit with Lender
the sum set forth on Exhibit K hereto as the Working Capital Reserve to
be held in an account maintained at a bank designated by Lender and
pledged to Lender as additional collateral for the Loan (the "Working
Capital Reserve Account"). The Working Capital Reserve Account shall be
an interest-bearing account and all interest earned thereon shall
become part of the Working Capital Reserve Account for the benefit of
Borrower.
8.5.2 Provided that no Event of Default shall then exist and
be continuing, if, on any Payment Date, (a) the amount then on deposit
in the Tax and Insurance Impound Account (as defined in the Cash
Management Agreement) shall be less than the amount required to be
deposited in the Tax and Insurance Escrow Account on such Payment Date
in accordance with Section 8.1 hereof, (b) the amount then on deposit
in the Replacement Escrow Fund Subaccount (as defined in the Cash
Management Agreement) shall be less than the amount required to be
deposited in the Replacement Reserve Account on such Payment Date in
accordance with Section 8.2 hereof, or (c) the amount then on deposit
in the Operating Expense Subaccount (as defined in the Cash Management
Agreement) shall be less than the Budgeted Expenses (as defined in the
Cash Management Agreement) for the month in which such Payment Date
shall occur, Lender shall disburse the amount of any such deficiency
from the Working Capital Reserve Account and deposit such amount on the
Payment Date to the account or accounts in which such deficiency shall
exist in the order set forth above.
8.5.3 In addition, provided that no Event of Default shall
exist hereunder and be continuing, Lender shall disburse funds from the
Working Capital Reserve Account to Borrower to pay the costs of
Operating Expenses incurred by Borrower in any period in excess of the
Budgeted Expenses for such period. Such disbursements shall be made
within ten (10) Business Days after receipt of (i) a request by
Borrower describing the Operating Expenses for which such disbursement
is requested and the amount sought, (ii) the Financial Statements
required hereunder for such period and (iii) invoices, receipts and/or
other evidence reasonably satisfactory to Lender evidencing that such
Operating Expenses are payable. Lender shall not be obligated to make
disbursements from the Working Capital Reserve Account under this
Section 8.5.3 more frequently than once in any calendar month thirty
(30) day period.
8.5.4 If an Event of Default has occurred and is continuing
hereunder, Lender may apply all amounts on deposit in the Working
Capital Reserve Account to the Indebtedness in such order, priority and
proportions as Lender in its discretion shall deem proper.
8.5.5 Nothing contained in this paragraph shall limit the
obligation of Borrower to pay interest or other amounts due under the
Note or any other Loan Document. The Working Capital Reserve Account
shall not constitute a trust fund and may not be commingled with other
monies held by Lender. Upon assignment of the Note and Mortgage by
Lender in their entirety, Lender's security interest in, and all other
right, title and interest of Lender in and to, the funds in the Working
Capital Reserve Account shall be transferred and assigned to the
assignee and Lender shall have no further obligation with respect
thereto.
Section 8.6 Right of First Refusal to Provide Permanent Financing.
8.6.1 Offer. In the event that any Individual Borrower obtains
a bona fide commitment from a third party to provide Permanent
Financing to be secured by all or any portion of an Individual
Property, or such third party provides a term sheet to such Individual
Borrower containing all of the material terms of such Permanent
Financing, or such Individual Borrower otherwise desires to close any
such Permanent Financing (any of the foregoing being hereinafter
referred to as the "Offer"), then, such Individual Borrower shall
deliver to Lender written notice of Individual Borrower's intent to
close such Permanent Financing, together with a copy of the commitment,
term sheet or any other documents and instruments setting forth the
material terms of such Permanent Financing or, if delivery of any such
documents is prohibited by the terms thereof, such other documentation
as Lender shall deem sufficient evidence of such Offer.
8.6.2 Notice from Lender. Lender shall have ten (10) days from
the date of receipt of all of the information required to be delivered
to Lender under Section 8.6.1 above (the "Offer Period"), to notify
such Individual Borrower in writing of Lender's interest in providing
the Permanent Financing on the same material terms and conditions as
are set forth in the Offer and which are no less favorable to such
Individual Borrower than those contained in the Offer. If Lender gives
notice to such Individual Borrower during the Offer Period that Lender
does not desire to provide the Permanent Financing, or if Lender fails
to respond within the Offer Period, such Individual Borrower shall have
one hundred and twenty (120) days from the date of receipt by such
Individual Borrower of such notice from Lender or the expiration of the
Offer Period if Lender fails to respond, as the case may be (the
"Closing Period"), to close the Permanent Financing on the same
material terms as contained in the Offer.
8.6.3 Closing. If Lender notifies such Individual Borrower in
writing during the Offer Period that Lender is interested in providing
the Permanent Financing, Lender and such Individual Borrower shall have
thirty (30) days (or such longer period of time as is necessary under
the circumstances if Individual Borrower is acting in good faith) from
the date of such Individual Borrower's receipt of such written notice
from Lender to agree upon the terms and conditions of and close such
transaction and the documentation thereof, which shall be in all
material respects the same as the terms and conditions of the Offer, to
the extent the same are specified in the Offer, except that any loan
documents to be executed in connection with such Permanent Financing
shall be substantially identical in all material respects to the Loan
Documents, except to the extent inconsistent with the terms of the
Offer.
8.6.4 Failure to Close. If such Individual Borrower fails to
close the Permanent Financing with the third party lender prior to the
expiration of the Closing Period, such Individual Borrower shall be
required to make a new offer to Lender in accordance with the
provisions of this Section 8.6 before such Borrower accepts any
Permanent Financing from any other party.
8.6.5 Compliance with Offer. Any Permanent Financing must be
consummated substantially in accordance with the terms and provisions
of the documents provided to Lender evidencing the Offer, or terms and
provisions which are more favorable to such Individual Borrower than
such terms and provisions provided to Lender, and in compliance with
the requirements of this Section 8.6. In the event that the terms are
modified by such third party prior to such closing to be less favorable
to such Individual Borrower, Individual Borrower shall re-submit such
revised terms to Lender for consideration under Section 8.6.1.
Section 8.7 Release Provisions.
8.7.1 Certain Definitions. For the purposes hereof:
(a) The term "Bona Fide Contract" shall mean, with
respect to a Release Parcel or Lot, an agreement between an
Individual Borrower and a Person other than an Affiliate of
Borrower for the sale of such Release Parcel or Lot to such
Person on an "all cash" basis in a bona-fide arms length
transaction.
(b) The term "Gross Sales Proceeds" shall mean, with
respect to the sale of a Release Parcel or Lot, the aggregate
amount payable to or for the benefit of the seller thereof
under the Bona Fide Contract for the sale of such Release
Parcel or Lot, including the purchase price set forth in such
Bona Fide Contract and all other amounts paid to discharge
obligations of Seller or otherwise for the account or benefit
of, or at the direction of, seller and not credited to such
purchase price.
(c) The term "Minimum Release Price" shall mean, with
respect to a Release Parcel or Lot, 200% of the amount set
forth on Exhibit A hereto as the Allocated Loan Amount for
such Release Parcel or Lot (which amount, with respect to
Lots, shall be the amount set forth in column 10a of Exhibit
A).
(d) The term "Net Sales Proceeds" shall mean, with
respect to a Release Parcel or Lot, the Gross Sales Proceeds
from the sale of such n Release Parcel or Lot less all
customary and reasonable selling expenses actually incurred by
Borrower in good faith in connection with the sale of such
Release Parcel or Lot, including, without limitation,
reasonable attorney's fees and disbursements, usual and
customary brokerage commissions payable to brokers
unaffiliated with Borrower and, if customarily paid by sellers
in the State in which such Release Parcel or Lot is located,
transfer taxes or documentary stamp taxes, title insurance
premiums and survey costs.
(e) The term "Release Date" shall mean, with respect
to a Release Parcel or Lot to be released from the lien of the
Mortgage, the date of the closing of the sale of such Release
Parcel or Lot pursuant to a Bona Fide Contract.
(f) The term "Release Parcel" shall mean each
Individual Property and the portion of each Individual
Property consisting solely of a golf course.
(g) The term "Release Price" shall mean, with respect
to a Release Parcel or Lot, the greater of (i) the Minimum
Release Price for such Release Parcel or Lot and (ii) eighty
percent (80%) of the Net Sales Proceeds from the sale of such
Release Parcel or Lot.
(h) The term "Release Proceeds" shall mean, with
respect to a Release Parcel or Lot, the greater of (i) the
Minimum Release Price for such Release Parcel or Lot and (ii)
100% of the Net Sales Proceeds from the sale of such Release
Parcel or Lot.
8.7.2 Releases. Notwithstanding anything to the contrary
contained in the Loan Documents, Borrower may from time to time request
and Lender shall release a Release Parcel or Lot from the lien of the
Mortgage thereon upon satisfaction of the following conditions:
(a) Lender shall have received, not less than fifteen
(15) days prior to the Release Date with respect to a Release
Parcel and ten (10) days prior to the Release Date with
respect to a Lot, notice of the proposed release (a "Release
Notice") identifying the Release Parcel or Lot proposed to be
released and the proposed Release Date, together with (i) a
copy of the Bona Fide Contract for the sale of such Release
Parcel or Lot, (ii) a calculation of the Release Proceeds and
Release Price for such Release Parcel or Lot, (iii) an
accurate legal description of such Release Parcel or Lot, and
(iv) any and all documents and instruments to be executed by
Lender in order to effect the release.
(b) Such release shall occur simultaneously with the
sale of the Release Parcel or Lot pursuant to a Bona Fide
Contract;
(c) Borrower shall obtain the approval or consent of
all Persons having the legal right to approve or consent to
the sale or release of such Release Parcel or Lot, including
the approval or consent of any Persons having an interest in
the Individual Property that would be affected thereby to the
extent such approval is required pursuant to the terms of the
documents evidencing such interest;
(d) The Release Parcel or Lot and the balance of the
Individual Property affected thereby shall, after giving
effect to such release, each conform to and be in compliance
with all Legal Requirements and constitute separately assessed
tax lots;
(e) Lender shall have received such additional
documentation and information as shall be reasonably requested
by Lender in connection with such release not more than three
(3) Business Days after such request; and
(f) No Event of Default, and no event that, with
notice and/or the passage of time would become an Event of
Default, shall have occurred and be continuing under the Loan
Documents on the date Lender shall receive the Release Notice
or on the Release Date;
(g) On the Release Date an amount equal to (i) the
Release Proceeds for such Release Parcel or Lot and (ii) all
costs and expenses (including, but not limited to, recording
charges, taxes and fees and reasonable attorneys' fees and
disbursements) in connection with the such release shall be
deposited by wire transfer into the Cash Collateral Account;
(h) If the Release Parcel is a portion of an
Individual Property, Lender shall receive promptly after the
Release Date an endorsement to the Title Insurance Policy
insuring the Mortgage (A) extending the effective date of the
policy or policies to the Release Date and (B) confirming no
change in the priority of the Mortgage on the balance of the
Property or in the amount of the insurance or the coverage
under the policy or policies (including coverage provided by
any "zoning" endorsement and "separate tax lot" endorsement,
if applicable); and
(i) Lender shall receive on the Release Date a
certificate of Borrower, dated the Release Date, confirming
that (A) all of the conditions to the release of the Release
Parcel or Lot under this Paragraph have been satisfied and (B)
the Bona Fide Contract for the sale of such Release Parcel or
Lot has not been modified or amended and there are no
agreements, oral or written, relating thereto.
8.7.3 Application of Release Price; Credits.
(a) Upon the release of a Release Parcel or Lot from
the lien of the Mortgage, the Release Proceeds shallbe
deposited in the Cash Collateral Account and an amount equal
to the Release Price for such Release Parcel or Lot shall, at
the option of Lender, either (i) be allocated to the Monthly
Debt Service Subaccount and disbursed to Lender on the Payment
Date next following such release in accordance with the Cash
Management Agreement and, upon receipt of such Release Price,
Lender shall apply such amount to the reduction of the
outstanding principal balance of the Loan without any
prepayment premium or charge or (ii) be applied to the
satisfaction of Borrowers's obligation under Section 8.12.
(b) If insurance proceeds or condemnation awards
shall be paid with respect to any Release Parcel or Lot and
shall not be made available by Lender to Borrower, Lender
shall release such Release Parcel or Lot from the lien of the
Mortgage thereon in accordance herewith except that Lender
shall credit to the Release Price the amount of such insurance
proceeds or condemnation award applied by Lender to the
outstanding principal amount of the Loan.
8.7.4 Special Conditions for Initial Release of Lots. Prior to
the initial release of a Lot from any Mortgage, Lender shall have
received and approved the following, all of which shall be in form and
substance satisfactory to Lender in its sole and absolute discretion:
(a) a copy of a subdivision map or plat with respect
to the Individual Property (the "Subdivision Map") which shall
show such Lot (and, if such Lot is a condominium unit, the
Declaration of Condominium), together with evidence that
(i) such Subdivision Map has been approved
by all applicable Governmental Authorities and is
otherwise in compliance with all applicable Legal
Requirements;
(ii) each of the Lots has been assigned or
shall, upon filing of such Subdivision Map or
conveyance of such Lots, in accordance with local law
or practice, be assigned a separate tax lot or
similar designation by the appropriate Governmental
Authority and no further action (other than filing of
such Subdivision Map in the Office of the Clerk of
the County in which the Individual Property is
located, if such Subdivision Map has not been
previously filed therein) is required in order to
create the Lots as independent parcels of real
property which are separately assessed for real
estate tax purposes and which may be freely conveyed
by the owner thereof without the approval of any
Governmental Authority and
(iii) each of the Lots may be used for
single family residential use in accordance with the
Plans under the applicable zoning law, if any,
without any variance or other special approval;
(b) a copy of the declaration of covenants,
restrictions, easements, charges and liens with respect to the
regulation and governance of the Individual Property as a
homeowner's association or condominium association, as the
case may be, (the "Declaration"), if any, together with
evidence that such declaration has been properly filed in the
Recording Office applicable to the Individual Property so as
to be binding upon the Individual Property and each of the
Lots;
(c) evidence that the roads, sidewalks and other
common areas and amenities identified in the Subdivision Map
or the Declaration, as applicable, shall have been constructed
to completion and that either the roads have been dedicated to
the public and accepted by the appropriate Governmental
Authority or the owners of the Lots shall have easements over
such roads for ingress and egress to and from a public road;
(d) copies of all materials filed or required to be
filed with Governmental Authorities in order to sell the Lots
to the public (the "Offering Materials"), if any, together
with evidence that such materials have been accepted as
approved to the extent required by Legal Requirements and that
no further action is required to be taken by any Governmental
Authority in order to sell Lots; and
(f) with respect to a condominium unit, unconditional
Bona Fide Contracts with respect to not less than ten percent
(10%) (or such greater amount as may be required by law) of
such Lots providing for the sale of each Lot on commercially
reasonable terms and conditions, together with evidence that
the purchaser under each such Bona Fide Contract has
deposited, on account thereof, and Borrower is holding in
escrow with respect thereto, not less than 10% of the sales
price thereunder, which amounts shall be applied by Borrower
to the purchase price upon the closing of such sale.
8.7.5 Lender shall have no obligation whatsoever to grant any
release which does not satisfy all of the terms and conditions
precedent thereto set forth in this Section 8.7; provided, however,
that Lender hereby reserves the right to release any Lot or Individual
Property without notice to, or the consent, approval or agreement of
other parties in interest, including, but not limited to junior liens
or, if any, and such releases shall not impair in any manner the
validity or the priority of the Mortgage on any property remaining
subject thereto, nor release Borrower from the obligations and
liabilities set forth therein or in any other Loan Document (but this
provision shall not constitute consent by Lender to the placing of any
such junior liens or other interests or a waiver of the provisions
hereof). Upon the filing of a Subdivision Map for a portion of an
Individual Property not previously covered thereby, the provisions of
Section 8.7.4 shall apply to the initial release of a Lot from such
portion of such Individual Property.
Section 8.8 Subdivision Provisions. Borrower hereby represents, warrant
and covenants as follows:
8.8.1 Borrower will prepare and submit to Lender and all
applicable Governmental Authorities the Subdivision Map, Declaration
and Offering Materials, as applicable, and diligently pursue the
approval and filing thereof to the extent required and will use
commercially reasonable efforts to market and sell each of the Lots.
The Subdivision Map, Declaration, Offering Materials and all
documentation in connection therewith, including, without limitation,
the by-laws and rules and regulations of the homeowner's association,
if any, the management agreement, the form of contract of sale and
deeds, and all other documents used by Borrower in connection with the
subdivision of the Property, the sale of Lots and the operation,
regulation, management and administration thereof shall be submitted to
Lender for review and approval prior to the submission or resubmission
thereof to any Governmental Authority or third parties and no changes
or modifications thereto shall be made without Lender's prior approval,
which shall not be unreasonably withheld, conditioned or delayed.
Borrower shall not sell Lots unless and until the Subdivision Map,
Declaration and Offering Materials, as applicable, shall have been
approved by Lender and applicable Governmental Authorities.
8.8.2 Borrower shall sell Lots in a manner which is in
compliance with all Legal Requirements including, without limitation,
the Interstate Land Sales Act, to the extent applicable, and Borrower
will not accept money or other sums, consideration or compensation in
connection with the sale of a Lot, other than what is expressly set
forth in the Bona Fide Contract as consideration for the purchase.
8.8.3 Borrower shall perform or cause to be performed all
obligations of the developers or sponsors under the Declaration or
Offering Materials, as applicable, and do or cause to be done all
things necessary to operate and maintain the Property in compliance
with all Legal Requirements, and will comply with the regulations of
any relevant Governmental Authority, including securities regulations,
which may apply to the sale of Lots and will furnish such evidence of
compliance therewith as Lender may reasonably request.
8.8.4 Borrower shall (and hereby does) collaterally assign to
Lender all of Borrower's right, title and interest in the Offering
Materials so that Lender or any subsequent owner of the Mortgaged
Property who acquires title thereto pursuant to a foreclosure hereunder
or by taking a deed in lieu thereof may complete the filings required
in order to sell the Lots to the public. Borrower covenants and agrees
to execute and deliver to Lender or such subsequent owner such
documents, and deliver to Lender or such subsequent owner such
financial information concerning the Mortgaged Property, as Lender or
such subsequent owner may reasonably request in order to complete such
filings. In addition, promptly after a contract of sale is entered into
for the sale of a Lot, such contract and the right to receive any
deposit made thereunder, to the extent not prohibited by applicable
law, shall be collaterally assigned to Lender as security for the
Indebtedness. At Lender's request, each collateral assignment referred
to above shall be further evidenced by an instrument of assignment,
executed and delivered by Borrower, in form and substance reasonably
satisfactory to Lender, which collateral assignment shall be released
upon the termination of the contract of sale on account of which such
deposit was made in accordance with its terms and return of such
deposit to the purchaser thereunder.
8.8.5 The rights granted hereunder to Lender to review,
approve and comment upon the Subdivision Map, Declaration and Offering
Materials are not intended to, nor shall they be deemed to, constitute
Lender as a sponsor or developer for the purposes hereof but is
intended merely to afford Lender the ability (i) to insure correct
disclosure of Lender's involvement with the Mortgaged Property, and
(ii) to protect and preserve the security intended to be granted to
Lender under this Mortgage and the Loan Documents, and Lender shall
have no liability for the performance of any obligations of Borrower or
any such sponsor or developer thereunder. Any approval by Lender of any
such documents shall be evidence solely of Lender's determination that
such document properly discloses such involvement and that the terms
thereof, if implemented, would not have an adverse effect on such
security, and not evidence of Lender's (A) determination that such
document is in compliance with any laws, rules or regulations or (B)
approval of the terms of such documents.
8.8.6 Upon the filing of the Subdivision Map, all references
herein to the Individual Property shall be deemed to refer to such
Individual Property excepting therefrom those Lots which may have been
released from the lien of this Mortgage in accordance with the
provisions hereof.
Section 8.9 Cash Management.
8.9.1 Borrower shall deposit or cause to be deposited into the
Clearing Account (as defined in the Cash Management Agreement) all
Receipts within one Business Day after receipt thereof. 8.9.2
Commencing on the first day of each Collection Period, all amounts
deposited in the Cash Collateral Account shall be allocated in the
order and priority set forth in Section 3(a) of the Cash Management
Agreement.
Section 8.10 Right of First Refusal to Purchase Property.
8.10.1 Offer. In the event that (a) any Individual Borrower
obtains a bona fide offer from a third party to purchase a (i) the
Individual Property owned by such Individual Borrower, (ii) any portion
of such Individual Property that includes the golf course, if any,
located thereon or (iii) or any portion of such Individual Property
which is used or intended to be used for commercial purposes or (b) any
offer by such Individual Borrower to sell such Individual Property or
part thereof shall be accepted by any third party (any of the foregoing
being hereinafter referred to as an "Offer"), then, such Individual
Borrower shall deliver to Lender written notice of Individual
Borrower's intent to close such sale, together with a copy of the
offer, contract or other documents and instruments setting forth the
material terms of such sale.
8.10.2 Notice from Lender. Lender shall have ten (10) days
from the date of receipt of all of the information required to be
delivered to Lender under Section 8.10.1 above (the "Offer Period"), to
notify such Individual Borrower in writing of Lender's interest in
purchasing such Individual Property or part thereof on the same
material terms and conditions as are set forth in the Offer. If Lender
gives notice to such Individual Borrower during the Offer Period that
Lender does not desire to purchase such Individual Property or part
thereof, or if Lender fails to respond within the Offer Period, such
Individual Borrower shall have one hundred and twenty (120) days from
the date of receipt by such Individual Borrower of such notice from
Lender or the expiration of the Offer Period if Lender fails to
respond, as the case may be (the "Closing Period"), to close such sale
on the same material terms as contained in the Offer.
8.10.3 Closing. If Lender notifies such Individual Borrower in
writing during the Offer Period that Lender is interested in purchasing
such Individual Property or part thereof, Lender and such Individual
Borrower shall have thirty (30) days (or such longer period of time as
is necessary under the circumstances if Individual Borrower is acting
in good faith) from the date of such Individual Borrower's receipt of
such written notice from Lender to agree upon the terms and conditions
of and close such transaction and the documentation thereof, which
shall be in all material respects the same as the terms and conditions
of the Offer, to the extent the same are specified in the Offer.
8.10.4 Failure to Close. If such Individual Borrower fails to
close a sale subject to this provision with the third party purchaser
prior to the expiration of the Closing Period, such Individual Borrower
shall be required to make a new offer to Lender in accordance with the
provisions of this Section 8.10 before such Individual Borrower accepts
any other Offer from any other party.
8.10.5 Compliance with Offer. Any sale must be consummated
substantially in accordance with the terms and provisions of the
documents provided to Lender evidencing the Offer, or terms and
provisions which are more favorable to such Individual Borrower than
such terms and provisions provided to Lender, and in compliance with
the requirements of this Section 8.10. In the event that the terms are
modified by such third party prior to such closing to be less favorable
to such Individual Borrower, Individual Borrower shall re-submit such
revised terms to Lender for consideration under Section 8.10.1. Section
8.11 Sale of Red Hawk Property. RH Holdings, Inc. shall, on or before
March 31, 1999, sell and convey title to the Individual Property known
as Red Hawk International and more particularly described in Exhibit I
annexed hereto for an amount not less than the sum of the Allocated
Loan Amount for such Individual Property plus the amount of any other
indebtedness secured by such Individual Property (the "Minimum Red Hawk
Price"), which amount shall be payable entirely in cash and may be used
to pay, among other things, such other indebtedness. Such sale shall be
subject to the provisions of Sections 8.7 and 8.10 hereof, except that
if such sale shall be consummated prior to March 31, 1999 and no Event
of Default shall then exist, the Minimum Release Price and the Release
Price for such Individual Property shall be an amount equal to the
Allocated Loan Amount therefor plus the amount by which the Net Sales
Proceeds shall exceed the Minimum Red Hawk Price.
Section 8.12 Reserve Reimbursements. On or before January 1, 2000 (or
such earlier date as shall be set forth on Exhibit K annexed hereto), Borrower
shall pay to Lender for deposit in the accounts set forth on Exhibit K hereto
the amounts, if any, indicated on Exhibit K for such deposit. Failure to make
such deposits on or before January 1, 2000 shall be an Event of Default
hereunder.
Section 8.13 Starwood Settlement. On or before November 15, 1998, Golf
Ventures, Inc. Borrower shall pay to Starwood Capital Group, LLC ("Starwood")
the balance of the settlement amount due Starwood under the settlement agreement
between Starwood and Borrower. In the event Borrower does not make the payment
due Starwood on or before November 15, 1998 then (a) Borrower's failure shall be
an Event of Default hereunder, (b) Lender may make the payment on Borrower's
behalf from any escrow reserve account.
Section 8.14 Northshore Transfers. Within thirty (30) days after the
request by Lender, Northshore Development, Ltd. shall convey the Individual
Property owned by it to Northshore Golf Partners, Ltd. and Northshore
Development, Ltd. shall be released from any further liability under the Loan
Documents.
ARTICLE IX. SINGLE PURPOSE ENTITY/SEPARATENESS
Section 9.1 Representations, Warranties and Covenants. Each Individual
Borrower represents, warrants and covenants as of the date hereof and until such
time as the Loan and all other amounts payable under any of the Loan Documents
are paid in full, that:
(a) neither such Individual Borrower nor its applicable SPE
Entity will dissolve or liquidate (or suffer any liquidation or
dissolution) or amend the terms of their respective Organizational
Documents;
(b) neither such Individual Borrower nor its applicable SPE
Entity are contemplating either the filing of a petition by such
Individual Borrower or SPE Entity under any state or federal bankruptcy
or insolvency laws or the liquidation of all or a major portion of such
Individual Borrower's or SPE Entity's assets or property, and such
Individual Borrower has no knowledge of any Person contemplating the
filing of any such petition against it;
(c) neither such Individual Borrower nor its applicable SPE
Entity will enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all the business
or assets of, or any stock or other evidence of beneficial ownership
of, any entity;
(d) except with respect to a Person which is a SPE Entity, in
the ordinary course of such Person acting as such SPE Entity, neither
such Individual Borrower nor SPE Entity has, and neither such Person
will, guarantee or otherwise hold out its credit as being available to
satisfy obligations of any other Person other than in connection with
the Loan;
(e) such Individual Borrower was organized for the sole
purpose of owning, managing and operating its Individual Property and
activities ancillary thereto and its applicable SPE Entity was
organized for the sole purpose of acting as the SPE Entity of such
Individual Borrower;
(f) such Individual Borrower has not and will not engage in
any business unrelated to the ownership, management and operation of
the Properties and activities ancillary thereto and will conduct and
operate its business as presently conducted and operated. Its
applicable SPE Entity has not and will not engage in any business
unrelated to acting as SPE Entity of such Individual Borrower;
(g) neither such Individual Borrower nor its applicable SPE
Entity will enter into any contract or agreement with any member,
partner, principal or Affiliate of Individual Borrower or SPE Entity,
except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an
arms-length basis with unrelated third parties;
(h) in addition to any limitations with respect thereto
contained in Section 5.3 hereof, such Individual Borrower and SPE
Entity have not incurred and will not incur any indebtedness or
material liabilities, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Loan and
the other obligations of such Individual Borrower to Lender contained
in the Loan Documents and (ii) trade payables or accrued expenses
incurred in the ordinary course of business of operating the Properties
not in excess of sixty (60) days past due; no indebtedness or
liabilities (other than debt described in clause (i) above) may be
secured (senior, subordinate or pari passu) by the Properties or any
interest therein or in Borrower;
(i) such Individual Borrower and SPE Entity have not made and
will not make any loans or advances to any third party (including any
Affiliate of such Individual Borrower) and will not pledge its assets
for the benefits of any third party (including any Affiliate of such
Individual Borrower) other than in connection with the Loan;
(j) each of such Individual Borrower and SPE Entity is and
will be solvent and able to pay its debts and liabilities (including
employment and overhead expenses) from its own assets as the same shall
become due;
(k) each of such Individual Borrower and SPE Entity will
maintain its own separate books and records and bank accounts in each
case which are separate and apart from those of any other Person;
(l) each of such Individual Borrower and SPE Entity will be,
and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate
thereof) and shall maintain and utilize separate stationery, invoices
and checks, shall otherwise conduct its business and own its assets in
its own name (or in the name of the Individual Property owned by such
Individual Borrower) and shall correct any known misunderstanding
regarding its separate identity;
(m) each of such Individual Borrower and SPE Entity (i) has
and will maintain separate financial statements and shall not be
included in any consolidated financial statements unless such
statements shall note that such Individual Borrower is included in such
financial statements solely for the purposes of complying with GAAP,
and (ii) will file its own tax returns, except that consolidated tax
returns may be filed with respect to each SPE Entity and Golf Ventures,
Inc. if such filing is required under the Internal Revenue Code and
shall not be waived by the Internal Revenue Service;
(n) each of such Individual Borrower and SPE Entity will
maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;
(o) neither such Individual Borrower nor SPE Entity will seek
the dissolution or winding up, in whole or in part, of Individual
Borrower or the SPE Entity;
(p) neither such Individual Borrower nor SPE Entity will
commingle its funds and other assets with those of any Affiliate or
other Person;
(q) each of such Individual Borrower and SPE Entity has and
will maintain its assets in such a manner that it is not costly or
difficult to segregate, ascertain or identify its individual assets
from those of any Affiliate or any other Person;
(r) each of such Individual Borrower and SPE Entity has and
will maintain a reasonable number of employees (which may be zero) in
light of its contemplated business operations and will not do any act
which would make it impossible to carry on the ordinary business of
Individual Borrower;
(s) neither such Individual Borrower nor SPE Entity will file
or consent to the filing of a petition for bankruptcy, reorganization,
assignment for the benefit of creditors or similar proceeding under any
federal or state bankruptcy, insolvency, reorganization or other
similar law with respect to such Individual Borrower or the SPE Entity,
if such Individual Borrower shall be a limited liability company,
without the unanimous consent of its members (and to the extent its SPE
Entity is a corporation, the Independent Director of such corporation),
if such Individual Borrower shall be a partnership, the unanimous
consent of its limited partners and SPE Entities (and, to the extent
any SPE Entity is a corporation, the consent of the Independent
Director of such SPE Entity), or if such Individual Borrower or SPE
Entity shall be a corporation, the unanimous consent of its directors,
including its Independent Director, and the consent of a majority of
its shareholders, as the case may be;
(t) the sole assets of such Individual Borrower are, and for
the term of the Loan shall be (i) the fee or leasehold interest in the
Properties, (ii) such assets as are otherwise acquired in connection
with the use, operation, maintenance, repair or management of the
Properties and (iii) cash and accounts receivable;
(u) each of such Individual Borrower and SPE Entity has and
will observe all partnership formalities, limited liability company
formalities or corporate formalities, as applicable;
(v) such Individual Borrower and SPE Entity have not and will
not acquire the obligations or securities of any of their partners,
members or shareholders, as applicable;
(w) such Individual Borrower and SPE Entity shall each
allocate fairly and reasonably any overhead for any office space which
such entity shares with any other entity; SPE Entity will at all times
comply, with each of the representations, warranties, and covenants
contained in this Article IX;
(x) such Individual Borrower will have, at all times, an
Independent Director (if a corporation), or, if a limited liability
company or limited partnership, all SPE Entities or all SPE Entities,
as applicable, will have at all times an Independent Director, except
if such SPE Entity is itself a limited partnership or a limited
liability company, then only the SPE Entity of such entity, as
applicable, is required to have at all times an Independent Director;
(y) In connection with any Securitization or similar
transaction to be undertaken by Lender (or any assignee or participant)
with respect to the Loan, if Lender (or any such assignee or
participant) shall request that the Independent Director of the SPE
Entity be replaced, such Individual Borrower will cause such
replacement with an Independent Director acceptable to Lender and the
Rating Agencies within ten (10) days following such request; and
(z) no Individual Borrower or SPE Entity shall declare any
dividend or otherwise distribute any funds to the holders of any
interests in such Individual Borrower or SPE Entity.
Section 9.2 Notice of Indemnification. BORROWER ACKNOWLEDGES THAT THIS
AGREEMENT PROVIDES FOR INDEMNIFICATION OF LENDER BY BORROWER PURSUANT TO
SECTIONS 7.5 AND THAT SUCH INDEMNIFICATION IS WITHOUT LIMIT AND WITHOUT REGARD
TO THE CAUSE OR CAUSES THEREOF, INCLUDING PREEXISTING CONDITIONS, STRICT
LIABILITY, OR LENDER'S OWN NEGLIGENCE (WHETHER SOLE, JOINT, CONCURRENT OR
PASSIVE) EXCEPT AS PROVIDED IN THOSE SECTIONS.
Section 9.3 No Oral Agreements. THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDER-STANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LENDER:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
a Delaware limited liability company
By:______________________________________
Name:
Title:
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
U.S. GOLF PELICAN STRAND, INC., a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
RH HOLDINGS, INC., a Utah corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President