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AMENDED AND RESTATED
MASTER CREDIT FACILITY AGREEMENT
by and among
THE GENERAL PARTNERSHIPS SET FORTH ON EXHIBIT A-1 TO THIS AGREEMENT,
THE TOWN AND COUNTRY TRUST,
THE TC OPERATING LIMITED PARTNERSHIP,
THE TOWN AND COUNTRY HOLDING CORPORATION,
THE TC PROPERTY COMPANY,
and
THE TOWN AND COUNTRY ORIOLE CORPORATION
collectively, as TC Parties,
and
PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
as Lender
Dated as of
April 25, 2002
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.....................................................................................2
ARTICLE II THE CREDIT FACILITY............................................................................28
SECTION 2.01. The Credit Facility.....................................................................28
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SECTION 2.02. Limitations on Commitment to Make Advances..............................................29
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SECTION 2.03. Determination and Confirmation of Interest Rate and Other Terms of Each Advance.........31
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SECTION 2.04. Special Amortization Requirements if Aggregate Debt Service Coverage Ratio for
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Advances Outstanding for the Trailing 12 Month Period Is Less than 125%.................32
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SECTION 2.05. Defeasance..............................................................................33
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SECTION 2.06 Cross-Default and Cross-Remedy..........................................................41
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ARTICLE III INITIAL ADVANCES...............................................................................41
SECTION 3.01. Request.................................................................................41
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SECTION 3.02. Conditions Precedent to Expansion Advance...............................................41
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ARTICLE IV FUTURE ADVANCES................................................................................42
SECTION 4.01. Procedure for Obtaining Future Advances.................................................42
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SECTION 4.02. Conditions Precedent to Future Advances.................................................42
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ARTICLE V CONVERSION OF REVOLVING FACILITY CREDIT COMMITMENT TO BASE FACILITY CREDIT COMMITMENT..........43
SECTION 5.01. Right to Convert........................................................................43
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SECTION 5.02. Procedure for Obtaining Conversion......................................................44
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SECTION 5.03. Limitations on Right to Convert.........................................................44
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SECTION 5.04. Conditions Precedent to Conversion......................................................45
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ARTICLE VI ADDITIONS OF COLLATERAL........................................................................46
SECTION 6.01. Right to Add Collateral.................................................................46
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SECTION 6.02. Procedure for Adding Collateral.........................................................46
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SECTION 6.03. Conditions Precedent to Addition of an Additional Mortgaged Property to
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the Collateral Pool.....................................................................48
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SECTION 6.04. Certain Unimproved Land.................................................................49
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ARTICLE VII RELEASES OF COLLATERAL.........................................................................49
SECTION 7.01. Right to Obtain Releases of Collateral..................................................49
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SECTION 7.02. Procedure for Obtaining Releases of Collateral..........................................49
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SECTION 7.03. Conditions Precedent to Release of Collateral Release Property from the
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Collateral Pool....................................................................................53
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SECTION 7.04. Certain Unimproved Land.................................................................55
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ARTICLE VIII EXPANSION OF CREDIT FACILITY..................................................................55
SECTION 8.01. Right to Increase Maximum Credit Commitment.............................................55
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SECTION 8.02. Procedure for Obtaining Increases in Maximum Credit Commitment..........................56
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SECTION 8.03. Limitations on Right to Increase Maximum Credit Commitment..............................56
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SECTION 8.04. Conditions Precedent to Increase in Maximum Credit Commitment...........................56
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i
SECTION 8.05. Interest Rate of Advances After Increase in Maximum Credit Commitment...................57
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SECTION 8.06. Maximum Amount of Increase..............................................................58
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ARTICLE IX COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY.........................................58
SECTION 9.01. Right to Complete or Partial Termination of Revolving Facility..........................58
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SECTION 9.02. Procedure for Complete or Partial Termination of Revolving Facility.....................58
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SECTION 9.03. Conditions Precedent to Complete or Partial Termination of Revolving Facility...........59
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ARTICLE X TERMINATION OF CREDIT FACILITY.................................................................60
SECTION 10.01. Right to Terminate Credit Facility.....................................................60
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SECTION 10.02. Procedure for Terminating Credit Facility..............................................60
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SECTION 10.03. Conditions Precedent to Termination of Credit Facility.................................60
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ARTICLE XI GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS...................................................61
SECTION 11.01 General Conditions........................................................................61
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ARTICLE XII REPRESENTATIONS AND WARRANTIES.................................................................63
SECTION 12.01. Representations and Warranties of the Owners...........................................63
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SECTION 12.02. Representations and Warranties of the REIT.............................................65
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SECTION 12.03. Representations and Warranties of the REIT Sub, the Property Company, the
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Operating Partnership and TC-Oriole............................................................67
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SECTION 12.04. Representations and Warranties of the Lender..........................................70
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ARTICLE XIII COVENANTS......................................................................................70
SECTION 13.01. Affirmative Covenants of the Owners....................................................70
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SECTION 13.02. Negative Covenants of the Owners.......................................................75
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SECTION 13.03. Affirmative Covenants of the REIT......................................................76
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SECTION 13.04. Negative Covenants of the REIT.........................................................80
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SECTION 13.05. Affirmative Covenants of the TC Parties (other than the Owners and the REIT)...........81
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SECTION 13.06. Negative Covenants of the TC Parties (other than the Owners and the REIT)..............83
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SECTION 13.07. Affirmative Covenants of the Borrowers.................................................86
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SECTION 13.08. Covenants of the Lender................................................................88
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SECTION 13.09. Covenant of the TC Parties Regarding Transfers.........................................89
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ARTICLE XIV FEES...........................................................................................92
SECTION 14.01. Fee Definitions........................................................................92
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SECTION 14.02. Standby Fee............................................................................93
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SECTION 14.03. Origination Fees.......................................................................93
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SECTION 14.04. Due Diligence Fees.....................................................................93
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SECTION 14.05. Intentionally Omitted..................................................................93
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SECTION 14.06. Legal Fees and Expenses................................................................93
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SECTION 14.07. MBS-Related Costs......................................................................94
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SECTION 14.08. Other Fees.............................................................................94
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ARTICLE XV INTENTIONALLY OMITTED..........................................................................95
ARTICLE XVI EVENTS OF DEFAULT..............................................................................95
SECTION 16.01. Events of Default......................................................................95
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ii
ARTICLE XVII REMEDIES.......................................................................................97
SECTION 17.01. Remedies; Waivers......................................................................98
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SECTION 17.02. No Remedy Exclusive....................................................................98
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SECTION 17.03. No Waiver..............................................................................98
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SECTION 17.04. No Notice..............................................................................99
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SECTION 17.05. Application of Payments................................................................99
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ARTICLE XVIII RIGHTS OF ▇▇▇▇▇▇ ▇▇▇...........................................................................99
SECTION 18.01. Special Pool Purchase Contract.........................................................99
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SECTION 18.02. Assignment of Rights...................................................................99
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SECTION 18.03. Release of Collateral.................................................................100
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SECTION 18.04. Replacement of Lender.................................................................100
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SECTION 18.05. ▇▇▇▇▇▇ Mae and Lender Fees and Expenses...............................................100
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SECTION 18.06. Third-Party Beneficiary...............................................................100
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ARTICLE XIX.....................................................................................................100
INSURANCE AND REAL ESTATE TAXES.................................................................................100
SECTION 19.01. Insurance Escrow Fund..................................................................100
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SECTION 19.02. Taxes..................................................................................101
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SECTION 19.03 Funds for Taxes, Insurance and Other Charges...........................................105
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ARTICLE XX......................................................................................................106
INTEREST RATE CAPS..............................................................................................106
SECTION 20.01. Cap Requirement........................................................................106
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SECTION 20.02. Terms and Conditions...................................................................106
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SECTION 20.03. Escrow Provisions......................................................................107
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ARTICLE XXI NONRECOURSE...................................................................................108
SECTION 21.01. Non-Recourse Liability.................................................................108
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SECTION 21.02. Special Provisions.....................................................................109
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ARTICLE XXII MISCELLANEOUS PROVISIONS......................................................................111
SECTION 22.01. Counterparts...........................................................................111
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SECTION 22.02. Amendments, Changes and Modifications..................................................111
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SECTION 22.03. Payment of Costs, Fees and Expenses....................................................111
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SECTION 22.04. Payment Procedure......................................................................112
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SECTION 22.05. Payments on Business Days..............................................................112
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SECTION 22.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial...........................112
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SECTION 22.07. Severability..........................................................................113
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SECTION 22.08. Notices...............................................................................113
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SECTION 22.09. Further Assurances and Corrective Instruments.........................................114
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SECTION 22.10. Term of this Agreement................................................................115
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SECTION 22.11. Assignments; Third-Party Rights.......................................................115
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SECTION 22.12. Headings..............................................................................115
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SECTION 22.13. General Interpretive Principles.......................................................115
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SECTION 22.14. Interpretation........................................................................115
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SECTION 22.15. Standards for Decisions, Etc..........................................................116
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SECTION 22.16. Decisions in Writing..................................................................116
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SECTION 22.17. (Intentionally omitted.)..............................................................116
iii
SECTION 22.18. Trust Liability.......................................................................116
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SECTION 22.19. Contribution Agreement................................................................116
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SECTION 22.20. Intentionally Omitted.................................................................116
SECTION 22.21. Recordation Tax Indemnity.............................................................116
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SECTION 22.22. Sale of Loan Documents in connection with Refinancing.................................118
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EXHIBITS
EXHIBIT A-1 - Schedule of Owners
EXHIBIT A-2 - Schedule of Indebtedness of Owners
EXHIBIT B - Base Facility Note
EXHIBIT C - Revolving Facility Note
EXHIBIT D - First Security Instrument
EXHIBIT E - Indemnity Security Instrument
EXHIBIT F-1 - Collateral Assignment of Partnership Interests (the Property Company)
EXHIBIT F-2 - Collateral Assignment of Partnership Interests (REIT Sub)
EXHIBIT G - Interest Rate Hedge Security, Pledge and Assignment Agreement
EXHIBIT H - Intentionally Omitted
EXHIBIT I - Compliance Certificate
EXHIBIT J-1 - Guaranty
EXHIBIT J-2 - Payment Guaranty
EXHIBIT K - Organizational Certificate
EXHIBIT L - Replacement Reserve Agreement
EXHIBIT M - Revolving Credit Endorsement
EXHIBIT N - Tie-In Endorsement
EXHIBIT O - Unimproved Land
EXHIBIT P-1 - Rate Setting Form (Base Facility Advance)
EXHIBIT P-2 - Rate Setting Form (Revolving Facility Advance)
EXHIBIT Q-1 - Rate Confirmation Form (Base Facility Advance)
EXHIBIT Q-2 - Rate Confirmation Form (Revolving Facility Advance)
EXHIBIT R - Advance Confirmation Instrument (Revolving Facility Advance)
EXHIBIT S-1 - Future Advance Request (Base Facility Advance)
EXHIBIT S-2 - Future Advance Request (Revolving Facility Advance)
EXHIBIT T - Conversion Request
EXHIBIT U - Conversion Amendment
EXHIBIT V - Collateral Addition Request
EXHIBIT W - Collateral Addition Description Package
EXHIBIT X - Collateral Release Request
EXHIBIT Y - [Intentionally Omitted]
EXHIBIT Z - Defeasance Conditions
EXHIBIT AA - TC Parties' Confirmation of Liability Certificate
EXHIBIT BB - Credit Facility Expansion Request
EXHIBIT CC - Revolving Facility Termination Request
EXHIBIT DD - Revolving Facility Termination Amendment
iv
EXHIBIT EE - Credit Facility Termination Request
EXHIBIT FF - [Intentionally Omitted]
EXHIBIT GG - Operations and Maintenance Agreement
EXHIBIT HH - Annual Report for a Mortgaged Property
EXHIBIT II - Quarterly Report for a Mortgaged Property
EXHIBIT JJ - Replacement Reserve Payment Schedules
EXHIBIT KK - Replacement Reserve Report
EXHIBIT LL - Contribution Agreement
v
AMENDED AND RESTATED
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MASTER CREDIT FACILITY AGREEMENT
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THIS AMENDED AND RESTATED MASTER CREDIT FACILITY AGREEMENT (this
"Agreement") is made as of the 25th day of April, 2002, by and among (i) EACH OF
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THE GENERAL PARTNERSHIPS SET FORTH ON EXHIBIT A-1 TO THIS AGREEMENT, each a
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Maryland general partnership (each, together with such additional Persons as may
agree to be bound by this Agreement in the future as an Owner, being
collectively referred to as the "Owners"), (ii)(a)THE TOWN AND COUNTRY TRUST, a
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Maryland real estate investment trust (the "REIT"), (b) THE TC OPERATING LIMITED
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PARTNERSHIP, a Maryland limited partnership (the "Operating Partnership"), (c)
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THE TOWN AND COUNTRY HOLDING CORPORATION, a Delaware corporation (the "REIT
----
Sub"), (d) THE TC PROPERTY COMPANY, a Maryland general partnership (the
---
"Property Company") and (e) THE TOWN AND COUNTRY ORIOLE CORPORATION, a Delaware
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corporation ("TC-Oriole") (the REIT, the Operating Partnership, the REIT Sub,
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the Property Company, TC-Oriole and each of the Owners being collectively
referred to as the "TC Parties" and individually referred to as a "TC Party")
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and (ii) PRUDENTIAL MULTIFAMILY MORTGAGE, INC., a Delaware corporation,
successor to WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a Delaware corporation
(the "Lender").
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RECITALS
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A. TC Parties and Lender entered into that certain Master Credit
Facility Agreement (each capitalized term used but not defined has the meaning
ascribed to such term in Article I of this Agreement) dated as of September 26,
1997 (the "Original Agreement"), pursuant to which the Lender agreed to make
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credit available to the Borrowers under the terms and conditions set forth in
the Original Agreement.
B. Pursuant to the Original Agreement, the Borrowers were
permitted to expand the amount of credit available to them from the Lender and
the Borrowers have elected to expand the amount of credit available to them
under the Original Agreement. In addition, the TC Parties have requested that
certain other terms and conditions of the Original Agreement be modified. The TC
Parties and the Lender now wish to amend and restate the Original Agreement in
its entirety.
C. The REIT and TC-Oriole are the sole general partners of the
Operating Partnership. The REIT Sub is a 1% general partner in, and the
Operating Partnership is a 99% general partner in, the Property Company. The
REIT Sub is a 1% general partner in, and the Property Company is a 99% general
partner in, each of the 35 Owners listed on Exhibit A-1.
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D. Each of the Owners is the owner of a certain Multifamily
Residential Property, as more particularly described in Exhibit A-1 to this
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Agreement opposite the name of the Owner.
1
E. Pursuant to the Original Agreement, the Lender established a
$375,000,000 Credit Facility, comprised of a $300,000,000 Base Facility in favor
all of the Owners and a $75,000,000 Revolving Facility in favor of the Property
Company.
F. Pursuant to the First Amendment to Multifamily Revolving
Facility Note dated as of June 21, 2000, the Revolving Facility was increased by
$7,152,000 to a total of $82,152,000.
G. The Property Company has requested, and the Lender has agreed
to increase the Revolving Facility Credit Commitment by $56,848,000.00.
H. To secure the obligations of the Owners and the Property
Company under this Agreement, the Notes and the Guaranties and the other Loan
Documents issued in connection with the Credit Facility, the Owners, the
Property Company and the REIT Sub have created the Collateral Pool in favor of
the Lender. The Collateral Pool is and shall be comprised of the following:
(1) the Initial First Security Instruments;
(2) the Initial Second Security Instruments; and
(3) a first priority assignment of all of the partnership
interests in the Owners owned by the Property Company
and REIT Sub, the sole partners of each of the Owners
(which assignment shall secure only the obligations
of the Property Company under the Base Facility Note
executed by the Property Company (but not any of the
other Base Facility Notes) and the Revolving Facility
Note.
I. Each of the Security Instruments shall be cross-defaulted
(i.e., a default under any Security Instrument, or under this Agreement, shall
constitute a default under each Security Instrument, and this Agreement), and
the Credit Facility shall be cross-collateralized (i.e., each second priority
Security Instrument shall secure a Guaranty (which Guaranty will guarantee all
of the TC Parties' obligations under this Agreement and the other Loan Documents
issued in connection with the Credit Facility)).
J. Subject to the terms, conditions and limitations of this
Agreement, the Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, the TC Parties and the Lender, in consideration of the
mutual promises and agreements contained in this Agreement, hereby agree to
amend and restate, in its entirety, the Original Agreement as follows:
2
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"12 Month Valuation" means, for any specified date, with
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respect to each of the Mortgaged Properties, (a) if an Appraisal of the
Mortgaged Property was more recently obtained than a Cap Rate for the
Mortgaged Property, the Appraised Value of such Mortgaged Property, or
(b) if a Cap Rate for the Mortgaged Property was more recently obtained
than an Appraisal of the Mortgaged Property, the value derived by
dividing--
(i) the Net Operating Income of such Mortgaged Property
for the Trailing 12 Month Period, by
(ii) the most recent Cap Rate selected by the Lender
pursuant to Section 13.08.
Notwithstanding the foregoing, any 12 Month Valuation for a Mortgaged
Property calculated for a date occurring before the first anniversary
of the date on which the Mortgaged Property becomes a part of the
Collateral Pool shall equal the Appraised Value of such Mortgaged
Property, unless the Lender determines that changed market or property
conditions warrant that the value be determined as set forth in the
preceding sentence.
"Acquiring Person" means a "person" or "group of persons"
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within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended.
"Actual Knowledge" means, with respect to any TC Party, the
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actual knowledge of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇, (iii)
each officer of the REIT at or above the level of vice president, (iv)
each officer of the management division of the Operating Partnership at
or above the level of senior vice president and (v) if one of the
persons described in clauses (i) through (iv) above is not the person
to whom the regional manager for each Mortgaged Property reports, each
other employee of the REIT or its Subsidiaries to whom the regional
manager for each Mortgaged Property reports.
"Additional Mortgaged Property" means each Multifamily
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Residential Property owned by an Owner (either in fee simple or as
tenant under a ground lease meeting all of the requirements of the DUS
Guide) and added to the Collateral Pool after the date hereof pursuant
to Article VI.
"Advance" means a loan made by the Lender to any of the
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Borrowers under the Credit Facility pursuant to this Agreement.
3
"Advance Confirmation Instrument" shall have the meaning set
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forth in Section 2.03(e).
"Affiliate" or "affiliated" means, when used with reference to
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a specified Person, (i) any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under common control with, the specified Person, (ii) any Person that
is an officer of, partner in or trustee of, or serves in a similar
capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity, (iii) any
Person that, directly or indirectly, is the beneficial owner of 10% or
more of any class of equity securities of the specified Person or of
which the specified Person is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities.
"Aggregate Debt Service Coverage Ratio for the Advances
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Outstanding for the Trailing 12 Month Period" means, for any specified
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date, the ratio (expressed as a percentage) of--
(a) the aggregate of the Net Operating Income for the Trailing 12
Month Period for all of the Mortgaged Properties
to
--
(b) the Debt Service on the Advances Outstanding on the specified
date.
"Aggregate Facility Debt Service Coverage Ratio for the
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Trailing 12 Month Period" means, for any specified date, the ratio
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(expressed as a percentage) of--
(a) the aggregate of the Net Operating Income for the Trailing 12
Month Period for all of the Mortgaged Properties
to
--
(b) the Facility Debt Service on the specified date.
"Aggregate Facility Debt Service Coverage Ratio for the
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Trailing Three Month Period" means, for any specified date, the ratio
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(expressed as a percentage) of--
(a) the product obtained by multiplying--
(i) the aggregate of the Net Operating Income for
the Trailing Three Month Period for all of
the Mortgaged Properties, by
(ii) four
4
to
--
(b) the Facility Debt Service on the specified date.
"Aggregate Facility Debt Service Coverage Ratios" means the
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Aggregate Facility Debt Service Coverage Ratio for the Trailing Three
Month Period and the Aggregate Facility Debt Service Coverage Ratio for
the Trailing 12 Month Period. "Aggregate Facility Debt Service Coverage
----------------------------------------
Ratio" means either the Aggregate Facility Debt Service Coverage Ratio
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for the Trailing Three Month Period or the Aggregate Facility Debt
Service Coverage Ratio for the Trailing 12 Month Period.
"Aggregate Loan to Value Ratio for the Trailing 12 Month
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Period" means, for any specified date, the ratio (expressed as a
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percentage) of--
(a) the Maximum Credit Commitment,
to
(b) the aggregate of the 12 Month Valuations most
recently obtained prior to the specified date for all
of the Mortgaged Properties.
"Agreement" means this Amended and Restated Master Credit
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Facility Agreement, as it may be amended, supplemented or otherwise
modified from time to time, including all Recitals and Exhibits to this
Agreement, each of which is hereby incorporated into this Agreement by
this reference.
"Allocable Facility Amount" shall have the meaning set forth
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in Section 7.02(c).
"Annual Reports" means the annual reports for the Mortgaged
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Properties which the Owners are obligated to deliver to the Lender
under Section 13.01(b)(1).
"Appraisals" means appraisals of a Multifamily Residential
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Property or Multifamily Residential Properties conforming to the
requirements of Chapter 5 of Part III of the DUS Guide, and accepted by
the Lender (or, if permitted by the Lender, in its sole discretion,
market studies of properties in the geographical area in which the
Multifamily Residential Property is located, performed in accordance
with such criteria as may be required by the Lender, and accepted by
the Lender).
"Assignment of Partnership Interests" means a Collateral
-----------------------------------
Assignment of Partnership Interests executed by the REIT Sub or the
Property Company, in the form attached as Exhibit F-1 or F-2 to this
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Agreement, as amended or modified from time to time.
"Base Facility" means the agreement of the Lender to make
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Advances to the Borrowers pursuant to Section 2.01(b)(2).
5
"Base Facility Advance" shall have the meaning set forth in
---------------------
Section 2.01(b)(2).
"Base Facility Credit Commitment" means, at any time, an
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amount equal to $300,000,000, or such greater amount, not to exceed the
Maximum Credit Commitment, as the Borrowers may elect in accordance
with, and subject to, the provisions of Article V or Article VIII or as
otherwise may be adjusted in accordance with the provisions of Sections
2.04, 7.05 and 8.06.
"Base Facility Notes" means, individually and collectively,
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the promissory notes, each substantially in the form attached as
Exhibit B to this Agreement, which has been issued by a Borrower to the
---------
Lender to evidence the Borrower's obligation to repay Base Facility
Advances, as such notes may be amended or modified from time to time.
"Base Facility Termination Fee" means, at any time before
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March 31, 2007, the present value of the Fee Portion of all Base
Facility Advances Outstanding on the Closing Date of a Credit Facility
Termination Request which would have accrued from the Closing Date of
the Credit Facility Termination Request to March 31, 2007, as
determined by the Lender. The Base Facility Termination Fee is included
as part of the prepayment premiums due under the Base Facility Notes,
and no payment separate from the payment of such prepayment premiums
shall be due from the Borrowers as a Base Facility Termination Fee. The
Base Facility Termination Fee means, at any time on or after March 31,
2007, $0.
"Blended Rate" means, with respect to one or more Advances
------------
Outstanding on a specified date, a blended rate reflecting the weighted
average, based on the respective Advances Outstanding on such date, of
the different interest rates per annum of each actual Advance
Outstanding on the specified date.
"Borrowers" means the Property Company and each Owner that
---------
executes a Base Facility Note. Exhibit A-1 identifies each Owner and
Exhibit A-2 identifies the principal amount of their respective Base
Facility Notes, as of the date hereof.
"Business Day" means a day on which ▇▇▇▇▇▇ Mae is open for
------------
business.
"Cap" means an interest rate cap.
---
"Cap Documents" means the documents evidencing and governing a
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Cap, including a Cap Security Agreement.
"Cap Rate" means, for each Mortgaged Property, a
--------
capitalization rate selected by the Lender for use in determining the
12 Month Valuations.
"Cap Security Agreement" means, with respect to a Cap, the
----------------------
Interest Rate Hedge Security, Pledge and Assignment Agreement by and
among the Borrowers, the Lender and
6
the applicable servicer, for the benefit of the Lender, in the form
attached as Exhibit G to this Agreement as such agreement may be
amended, modified, supplemented or restated from time to time.
"Cap Year" means the 12-month period commencing on the Initial
--------
Closing Date and each anniversary thereof.
"Cash Equivalents" means:
----------------
(a) securities issued or fully guaranteed or insured by
the United States Government or any agency thereof
and backed by the full faith and credit of the United
States having maturities of not more than twelve (12)
months from the date of acquisition;
(b) certificates of deposit, time deposits, demand
deposits, eurodollar time deposits, repurchase
agreements, reverse repurchase agreements, or
bankers' acceptances, having in each case a term of
not more than twelve (12) months, issued by any
commercial bank having membership in the FDIC, or by
any U.S. commercial lender (or any branch or agency
of a non-U.S. bank licensed to conduct business in
the U.S.) having combined capital and surplus of not
less than $100,000,000 whose short-term securities
are rated at least A-1 by S&P or P-1 by ▇▇▇▇▇'▇.; and
(c) commercial paper of an issuer rated at least A-1 by
S&P or P-1 by ▇▇▇▇▇'▇. and in either case having a
term of not more than twelve (12) months.
"Change of Control" means the earliest to occur of: (a) the
-----------------
date on which either or both of the REIT Sub and the Property Company
cease for any reason whatsoever to be the only general partners (or,
pursuant to a conversion of the type described in clause (v) of the
definition of Transfer, members) of any Owner, or (b) the date on which
the REIT and TC-Oriole cease for any reason whatsoever to be the sole
general partners of the Operating Partnership, or (c) the date on which
the REIT Sub and the Operating Partnership cease for any reason
whatsoever to be the sole general partners of the Property Company, or
(d) the date on which the REIT shall for any reason whatsoever cease to
own 100% of the outstanding stock of the REIT Sub, or (e) if any of the
TC Parties (other than the REIT and the REIT Sub) are not general
partnerships, the date on which the REIT shall cease for any reason to
be the holder, directly or indirectly, of at least 75% of the voting
interest of the other TC Parties or to own at least 51% of the equity,
profits or other limited partnership interests in, or Voting Equity
Capital (or any other Securities or ownership interests) of the other
TC Parties, or (f) the date on which an Acquiring Person becomes (by
acquisition, consolidation, merger or otherwise), directly or
indirectly, the beneficial owner of more than 40% of the total Voting
Equity Capital (or of any other Securities or ownership interest) of
any TC Party then outstanding, or (g) the replacement (other than
solely by reason of retirement at age sixty-five or older, death or
disability) of more than 50% (or such lesser percentage as is required
for decision-making by the board of trustees or an equivalent
7
governing body) of the members of the board of trustees or an
equivalent governing body) of the REIT or the Operating Partnership
over a one-year period from the trustees who constituted such board of
trustees at the beginning of such period and such replacement shall not
have been approved by a vote of at least a majority of the board of
trustees of the REIT or the Operating Partnership then still in office
who either were members of such board of trustees at the beginning of
such one-year period or whose election as members of the board of
trustees was previously so approved (it being understood and agreed
that in the case of any entity governed by a trustee, board of
managers, or other similar governing body, the foregoing clause (g)
shall apply thereto by substituting such governing body and the members
thereof for the board of trustees and members thereof, respectively).
"Closing Date" means the Initial Closing Date, the date hereof
------------
and each date thereafter on which the funding or other transaction
requested in a Request is required to take place.
"Collateral" means the Mortgaged Properties and other
----------
collateral from time to time or at any time encumbered by the Security
Instruments, the partnership interests in the Owners encumbered by the
Assignments of Partnership Interests, or any other property securing
any of the TC Parties' obligations under the Loan Documents.
"Collateral Addition Fee" means, with respect to an Additional
-----------------------
Mortgaged Property, a fee equal to the product obtained by
multiplying--
(i) 37.5 basis points, by
(ii) the Allocable Facility Amount of such
Additional Mortgaged Property.
"Collateral Addition Loan Documents" means the Security
----------------------------------
Instrument covering an Additional Mortgaged Property and securing the
obligations of the Owner under the Loan Documents, and any other
documents, instruments or certificates required by the Lender in
connection with the addition of the Additional Mortgaged Property to
the Collateral Pool pursuant to Article VI.
"Collateral Addition Request" shall have the meaning set forth
---------------------------
in Section 6.02(a).
"Collateral Pool" means the aggregate total of the Collateral.
---------------
"Collateral Release Property" shall have the meaning set forth
---------------------------
in Section 7.02(a).
"Collateral Release Request" shall have the meaning set forth
--------------------------
in Section 7.02(a).
"Compliance Certificate" means a certificate of the TC Parties
----------------------
in the form attached as Exhibit I to this Agreement.
---------
8
"Consolidated Total Assets" means, for any Person, all assets
-------------------------
of such Person and its Subsidiaries determined on a consolidated basis
in accordance with GAAP; provided that (i) all assets composed of real
property (other than the Mortgaged Properties) shall be valued on an
undepreciated cost basis and the pro rata portion of the assets of any
joint venture owned by such Person shall be included in Consolidated
Total Assets (with the real property assets of such joint venture also
being valued on an undepreciated cost basis), it being understood and
agreed that a limited partnership interest in the Operating Partnership
held by any other Person shall not be construed to reflect a joint
venture with the REIT and (ii) the value of the Mortgaged Properties
owned by such Person shall be the then most current Valuation of such
Mortgaged Properties. The assets of a Person and its Subsidiaries shall
be adjusted to reflect such Person's allocable share of such assets,
for the relevant period or as of the date of determination, taking into
account (a) the relative proportion of each such item derived from
assets directly owned by such Person and from assets owned by its
Subsidiaries, and (b) such Person's respective ownership interest in
its Subsidiaries.
"Consolidated Total Indebtedness" means, for any Person, as of
-------------------------------
any date, and without double counting any item, the Total Indebtedness
for such Person and its Subsidiaries as of such date (including the
portion of any Indebtedness of any joint venture in which any such
Person or any Subsidiary thereof is a venturer attributable to such
Person or its Subsidiary, it being understood and agreed that a limited
partnership interest in the Operating Partnership held by any other
Person shall not be construed to reflect a joint venture with the
REIT).
"Coupon Rate" means, with respect to an Advance, the interest
-----------
rate (or imputed interest rate) determined by the Lender pursuant to
Section 2.03 for the Advance.
"Credit Facility" means the Base Facility and the Revolving
---------------
Facility.
"Credit Facility Expansion Loan Documents" means amendments to
----------------------------------------
each Note and Security Instrument, duly executed and delivered by the
parties thereto (other than the Lender), increasing the amount secured
to the amount of the Maximum Credit Commitment, as expanded in
accordance with Article VIII.
"Credit Facility Expansion Request" shall have the meaning set
---------------------------------
forth in Section 8.02(a).
"Credit Facility Termination Date" means April 1, 2008.
--------------------------------
"Credit Facility Termination Fee" means an amount equal to the
-------------------------------
sum of--
(i) the Base Facility Termination Fee, if any; and
(ii) the Revolving Facility Termination Fee, if any.
9
"Credit Facility Termination Request" shall have the meaning
-----------------------------------
set forth in Section 10.02.
"Debt Service on the Advances Outstanding" means, as of any
----------------------------------------
specified date, the sum of
(i) the amount of imputed interest and principal
amortization, during the 12 month period immediately
succeeding the specified date, with respect to the
aggregate of Advances Outstanding on the specified
date, which would be payable if such Advances
required level monthly payments of principal and
interest at the Blended Rate, in an amount necessary
to fully amortize the original principal amount of
the Advances Outstanding over a 25-year period
commencing on the first day of the 12 month period,
and
(ii) the amount of the Monthly Cap Escrow Payments which
are payable during such 12 month period, as estimated
by the Lender, with respect to the aggregate of
Advances Outstanding on the specified date.
"Debt Service Coverage Ratio" means, for any Mortgaged
---------------------------
Property, for any specified date, the ratio (expressed as a percentage)
of--
(a) the aggregate of the Net Operating Income for the
preceding 12 month period for the subject Mortgaged Property
to
--
(b) the Facility Debt Service on the specified date,
assuming, for the purpose of calculating the Facility Debt
Service for this definition, that Advances Outstanding shall
be the Allocable Facility Amount for the subject Mortgaged
Property.
"Discount" means, with respect to any Advance, an amount equal
--------
to the excess of --
(i) the face amount of the MBS backed by the Advance,
over
(ii) the proceeds of the sale of the MBS backed by the
Advance.
"DUS Guide" means the ▇▇▇▇▇▇ ▇▇▇ Multifamily Delegated
---------
Underwriting and Servicing (DUS) Guide, as such Guide may be amended
from time to time, including amendments in the form of Lender Memos,
Guide Updates and Guide Announcements (and, if such Guide is superseded
by a Negotiated Transactions Guide, the term "DUS Guide" as used in
this Agreement means the Negotiated Transactions Guide, as such Guide
may be amended from time to time, including amendments in the form of
Lender Memos, Guide Updates and Guide Announcements). All references to
specific articles and sections of the
10
DUS Guide shall be deemed references to such articles and sections as
they may be amended, modified, updated, superseded, supplemented or
replaced from time to time.
"DUS Underwriting Requirements" means the overall underwriting
-----------------------------
requirements for Multifamily Residential Properties as set forth in the
DUS Guide.
"Environmental Assessment" means, with respect to a
------------------------
Multifamily Residential Property, an assessment and report on
environmental conditions performed in accordance with Section 204 of
Part III of the DUS Guide and Part X of the DUS Guide.
"Event of Default" means any event defined to be an "Event of
----------------
Default" under Article XVI.
"Evidence of Compliance with Property Laws" means evidence
-----------------------------------------
satisfactory to the Lender of compliance with Section 205 and 206 of
Part III of the DUS Guide.
"Expansion Advance" means, collectively, the Revolving Advance
-----------------
in the aggregate amount of $11,000,000 made on the date hereof.
"Expansion Advance Request" shall have the meaning set forth
-------------------------
in Section 3.01.
"Expansion Origination Fee" shall have the meaning set forth
-------------------------
in Section 14.03.
"Facility Debt Service" means, as of any specified date, the
---------------------
sum of
(i) the amount of imputed interest and principal
amortization, during the 12 month period immediately
succeeding the specified date, with respect to a
hypothetical amount of Advances Outstanding with the
following characteristics:
(1) the aggregate amount of the Advances
Outstanding is equal to the Maximum Credit
Commitment, and
(2) the hypothetical Advances require level
monthly payments of principal and interest
(at the Blended Rate) in an amount necessary
to fully amortize the original principal
amount of the Advances over a 25-year period
commencing on the first day of the 12 month
period, and
(ii) the amount of the Monthly Cap Escrow Payments during
such 12 month period, as estimated by the Lender.
11
"Family Member" means, when used with reference to a specified
-------------
individual, the individual's spouse, issue, parents, siblings and a
trust for the benefit of the individual's spouse or issue, or both.
"▇▇▇▇▇▇ Mae" means the federally-chartered and
----------
stockholder-owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, 12 U.S.C. ? 1716 et seq.
"Fee Portion" means,
-----------
(a) with respect to a Revolving Facility
Advance, an amount per month equal to the product obtained by
multiplying --
(i) the Fee Spread for the Revolving
Facility Advance, by
(ii) the amount of the Revolving
Facility Advance, by
(iii) 1/12; and
(b) with respect to a Base Facility Advance, an
amount per month equal to the product obtained by multiplying
--
(i) the Fee Spread for the Base
Facility Advance, by
(ii) the amount of the Base Facility
Advance, by
(iii) 1/12.
"Fee Spread" means the per annum rate of (a)(i) with respect
----------
to Revolving Facility Advances (or portion thereof) having an aggregate
principal amount Outstanding equal to or less than $75,000,000, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, (▇▇) with respect to the portion, if any, of the
aggregate Revolving Facility Advances Outstanding that exceed
$75,000,000 and are drawn from the Revolving Facility Credit Commitment
(or portion thereof) that became effective on or before the date that
is one year after the date hereof, 87 basis points, and (iii) with
respect to the portion, if any, of the aggregate Revolving Facility
Advances Outstanding that exceed $75,000,000 and are drawn from the
portion of the Revolving Facility Credit Commitment that became
effective after the date that is one year after the date hereof, the
number of basis points determined by Lender at the time such Revolving
Facility Credit Commitment is put in place, and (b) (i) with respect to
the Base Facility Advance made on the Initial Closing Date, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, (▇▇) with respect to any other Base Facility Advance drawn from
any portion of the Base Facility Credit Commitment that became
effective on or before the date that is one year after the date hereof,
67 basis points, and (iii) with respect to any Base Facility Advance
drawn from any portion of the Base Facility Credit Commitment that
became effective after the date that is one year after the date hereof,
the number of basis
12
points determined by Lender at the time such Base Facility Credit
Commitment is put in place.
"Financing Lease" means any lease of property, real or
---------------
personal, the obligations of the lessee in respect of which are
required by GAAP to be capitalized on a balance sheet of the lessee or
to be otherwise disclosed as such in a note to such balance sheet.
"Fitch" means Fitch Investors Service, Inc.
-----
"Future Advance" means an Advance made after the date hereof.
--------------
"Future Advance Request" shall have the meaning set forth in
----------------------
Section 4.01(a).
"GAAP" means generally accepted accounting principles in the
----
United States in effect from time to time, consistently applied.
"General Conditions" shall have the meaning set forth in
------------------
Article XI.
"Governmental Authority" means any court, board, agency,
----------------------
commission, office or authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Revenues" means, for any specified period, with respect
--------------
to any Multifamily Residential Property, all income in respect of such
Multifamily Residential Property as reflected on the certified
operating statement for such specified period as adjusted to exclude
unusual income (e.g., temporary or nonrecurring income), income not
allowed under the DUS Guide as shown in Section 403.02 of Part III
(e.g., interest income, furniture income, etc.), and the value of any
unreflected concessions.
"Guarantee Obligation" means, as to any Person (the
--------------------
"guaranteeing person"), any obligation of (a) the guaranteeing person
or (b) another Person (including any bank under any letter of credit)
to induce the creation of a primary obligation (as defined below) with
respect to which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing, or
in effect guaranteeing, any indebtedness, lease, dividend or other
obligation (the "primary obligations") of any third person (the
-------------------
"primary obligor") in any manner, whether directly or indirectly,
---------------
including any obligation of the guaranteeing person, whether or not
contingent, to (1) purchase any such primary obligation or any property
constituting direct or indirect security therefor, (2) advance or
supply funds for the purchase or payment of any such primary obligation
or to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary
obligor, (3) purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation, or (4) otherwise assure or hold harmless the owner of any
such primary obligation against loss in respect of the primary
obligation, provided,
13
however, that the term "Guarantee Obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business.
"Guaranty" means an Amended and Restated Guaranty, or a
--------
Guaranty, in the form attached as Exhibit J-1 or J-2 to this Agreement,
------------------
from an Owner to the Lender, as amended or modified from time to time.
"Indebtedness" means, with respect to any Person, as of any
------------
specified date, without duplication, all (a) indebtedness of such
Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with
customary practices), (b) other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument, (c)
obligations of such Person under Financing Leases, (d) obligations of
such Person in respect of acceptances (as defined in Article 3 of the
Uniform Commercial Code of the State of Maryland) issued or created for
the account of such Person, (e) liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed
or otherwise become liable for the payment of such liabilities and (f)
Guarantee Obligations.
"Initial Advance" means, collectively, the Base Facility
---------------
Advances in the aggregate amount of $300,000,000.
"Initial Closing Date" means September 26, 1997.
--------------------
"Initial First Security Instruments" means, individually and
----------------------------------
collectively, the amended and restated first priority Security
Instruments securing the Base Facility Note executed by each of the
Owners in respect of each of the Initial Mortgaged Properties, as
amended or modified from time to time.
"Initial Mortgaged Properties" means the Multifamily
----------------------------
Residential Properties described on Exhibit A-1 to this Agreement.
"Initial Second Security Instruments" means, individually and
-----------------------------------
collectively, the amended and restated second priority Security
Instruments securing the Base Facility Note executed by each of the
Owners in respect of each of the Initial Mortgaged Properties, as
amended or modified from time to time.
"Initial Security Instruments" means the Initial First
----------------------------
Security Instruments and the Initial Second Security Instruments
covering the Initial Mortgaged Properties.
"Initial 12 Month Valuation" means, when used with reference
--------------------------
to specified Collateral, the 12 Month Valuation initially performed for
the Collateral as of the date on which the Collateral was added to the
Collateral Pool.
14
"Institutional Lender" means a commercial or savings bank,
--------------------
savings and loan association, pension fund, insurance company,
endowment fund or real estate investment trust, government agency or
quasi-government agency or other Person regularly engaged in the
business of making loans secured by first mortgages or deeds of trust
on real property.
"Insurance Policies" means the insurance coverage and
------------------
insurance certificates evidencing such insurance required to be
maintained pursuant to the Security Instruments.
"Insurance Premiums" means the aggregate amount of the yearly
------------------
premium installments for fire and other hazard insurance, rent loss
insurance and such other insurance covering the Mortgaged Properties as
the Lender may require pursuant to Uniform Covenant 5 of the Security
Instruments.
"Internal Revenue Code" means the Internal Revenue Code of
---------------------
1986, as amended.
"Intra-Company Debt" means Indebtedness (whether book-entry or
------------------
evidenced by a term, demand or other note or other instrument) owed by
any TC Party to any other TC Party.
"Lender" shall have the meaning set forth in the first
------
paragraph of this Agreement.
"Lien" means any mortgage, deed of trust, charge (whether
----
fixed or floating), pledge, lien, encumbrance, assignment,
hypothecation, security interest, conditional sale, capital lease or
other title retention, preferential right, trust arrangement or any
other encumbrance, security agreement or arrangement securing any
obligation of any Person.
"Liquidity" means, on any specified date, with respect to any
---------
Person, on a consolidated basis, the amount of cash and Cash
Equivalents owned by such Person, plus the aggregate amount undrawn,
unrestricted and available to be drawn by such Person under its various
lines of credit, provided such lines of credit may not be terminated or
canceled by the lender with less than 90 days' written notice to such
Person.
"Loan Documents" means this Agreement, the Notes, the Advance
--------------
Confirmation Instruments for the Revolving Facility Advances, the
Security Documents, all documents executed by the TC Parties pursuant
to the General Conditions set forth in Article XI of this Agreement and
any other documents executed by a TC Party from time to time in
connection with this Agreement or the transactions contemplated by this
Agreement.
"Loan to Value Ratio for the Trailing 12 Month Period" means,
----------------------------------------------------
for a Mortgaged Property, for any specified date, the ratio (expressed
as a percentage) of --
(a) the Allocable Facility Amount of the subject
Mortgaged Property on the specified date,
to
--
15
(b) the 12 month Valuation most recently obtained prior
to the specified date for the subject Mortgaged Property.
"Maximum Aggregate Loan to Value Ratio for the Trailing 12
---------------------------------------------------------
Month Period" means an Aggregate Loan to Value Ratio for the Trailing
------------
12 Month Period equal to 65%.
"Maximum Credit Commitment" means, at any time, $439,000,000,
-------------------------
or such greater amount, not to exceed $500,000,000, as the Borrowers
may elect in accordance with, and subject to, the provisions of Article
VIII, or such lesser amount, not to be below $300,000,000, as the
Borrowers may elect in accordance with, and subject to, the provisions
of Article IX, or as otherwise may be adjusted in accordance with the
provisions of Sections 2.04 and 8.06.
"MBS" means mortgage-backed securities. An MBS which is
---
"backed" by an Advance means that it is backed by an interest in the
Notes and the Collateral Pool securing the Notes, which interest
permits the holder of the MBS to participate in the Notes and the
Collateral Pool to the extent of the Advance.
"Minimum Aggregate Facility Debt Service Coverage Ratio for
----------------------------------------------------------
the Trailing 12 Month Period" means an Aggregate Facility Debt Service
----------------------------
Coverage Ratio for the Trailing 12 Month Period of 150%.
"Minimum Aggregate Facility Debt Service Coverage Ratio for
----------------------------------------------------------
the Trailing Three Month Period" means an Aggregate Facility Debt
-------------------------------
Service Coverage Ratio for the Trailing Three Month Period of 135%.
"Monthly Cap Escrow Payments" shall have the meaning set forth
---------------------------
in Section 20.03.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Mortgaged Properties" means, collectively, the Initial
--------------------
Mortgaged Properties and the Additional Mortgaged Properties, but
excluding each Collateral Release Property from and after the date of
the release of the Collateral Release Property from the Collateral
Pool.
"Multifamily Residential Property" means a residential
--------------------------------
property, located in the United States, containing five or more
dwelling units in which not more than twenty percent (20%) of the net
rentable area is or will be rented to non-residential tenants, and
conforming to the requirements of Sections 201 and 203 of Part III of
the DUS Guide.
"Net Operating Income" means, for any specified period, with
--------------------
respect to any Multifamily Residential Property, the aggregate net
income during such period equal to Gross Revenues during such period
less the aggregate Operating Expenses during such period. If a
Mortgaged Property is not a part of the Collateral Pool for the entire
specified
16
period, the Net Operating Income for the Mortgaged Property for the
time within the specified period during which the Mortgaged Property
was not part of the Collateral Pool shall be the Mortgaged Property's
pro forma net operating income determined by the Lender in accordance
with the underwriting procedures set forth in Part III of the DUS
Guide.
"Net Worth" means, as of any specified date, for any Person,
---------
the excess of the Person's assets over the Person's liabilities,
determined in accordance with GAAP on a consolidated basis, provided
that for purposes of calculating Net Worth of the REIT, (i) the values
of the Mortgaged Properties shall be equal to the then current
Valuation of said Mortgaged Properties, (ii) the value of other assets
shall be on an undepreciated cost basis and (iii) Net Worth shall be
without deduction for the minority interests of any other Person
holding a limited partnership interest in the Operating Partnership.
"Note" means a Base Facility Note or the Revolving Facility
----
Note.
"Notice Address" means:
--------------
(a) as to the TC Parties:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) as to the Lender:
Prudential Multifamily Mortgage, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
17
with a copy to:
Prudential Asset Resources
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Director of ▇▇▇▇▇▇ Mae Asset Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Prudential Multifamily Mortgage, Inc.
Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) as to ▇▇▇▇▇▇ Mae:
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
Third Floor, L Street Entrance
Washington, D.C. 20006
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
"Obligations" means the aggregate of the obligations of each
-----------
of the TC Parties under this Agreement and the other Loan Documents.
"Operating Expenses" means, for any period, with respect to
------------------
any Multifamily Residential Property, all expenses in respect of the
Multifamily Residential Property, as determined by Lender based on the
certified operating statement for such specified period as adjusted to
provide for the following: (i) all appropriate types of expenses,
including a management fee and deposits to Replacement Reserves
(whether funded or not); (ii) upward adjustments to individual line
item expenses to reflect market norms or actual costs and
18
correct any unusually low expense items, which could not be
replicated by a different owner or manager (e.g., a market rate
management fee will be included regardless of whether or not a
management fee is charged, market rate payroll will be included
regardless of whether shared payroll provides for economies, etc.);
(iii) downward adjustments to individual line item expenses to
reflect unique or aberrant costs (e.g., non-recurring capital costs,
capital costs otherwise included in the Replacement Reserves,
non-operating borrower expenses, etc.); and (iv) the exclusion of
furniture rental expense to the extent of furniture rental income for
such period.
"Operating Partnership" shall have the meaning set forth in
---------------------
the first paragraph of this Agreement.
"Organizational Certificate" means a certificate of the TC
--------------------------
Parties in the form attached as Exhibit K to this Agreement.
"Organizational Documents" means all certificates, instruments
------------------------
and other documents pursuant to which an organization is organized or
operates, including, (i) with respect to a corporation, its articles of
incorporation and bylaws, (ii) with respect to a limited partnership,
its limited partnership certificate and partnership agreement, (iii)
with respect to a general partnership or joint venture, its partnership
or joint venture agreement and (iv) with respect to a limited liability
company, its articles of organization and operating agreement.
"Outside Review Date" means, with respect to the Lender's
-------------------
approval of any merger or consolidation pursuant to Section 13.09, the
30th day after the date on which the Lender shall have received a
written notice from the Borrowers requesting the Lender"s consent to
the proposed merger or consolidation, except that, if, on or before
such 30th day, the Lender reasonably requests any additional
information concerning the merger or consolidation, the Outside Review
Date shall be the later of (i) such 30th day or (ii) the fifth day
after the Lender receives such additional information.
"Outstanding" means, when used in connection with promissory
-----------
notes, other debt instruments or Advances, for a specified date,
promissory notes or other debt instruments which have been issued, or
Advances which have been made, to the extent such Notes or Advances
have not been repaid or defeased as of the specified date.
"Owners" means the 35 general partnerships set forth on
------
Exhibit A-1 to this Agreement, and each other Person who becomes an
-----------
Owner in accordance with the terms of this Agreement.
"Ownership Interests" means, with respect to any entity, any
-------------------
ownership interests in the entity and any economic rights (such as a
right to distributions, net cash flow or net income) to which the owner
of such ownership interests is entitled.
"Permitted Investments" means any of the following
---------------------
investments:
19
(a) (i) U.S. Government Securities and (ii) mutual funds
organized under the Investment Company Act of 1940 which have an
Acceptable Credit Rating from at least two of the three Rating
Agencies;
(b) certificates of deposit or other interest-bearing
obligations of a bank or trust company which is a member in good
standing of the Federal Reserve System having a combined capital,
surplus and undivided profits of not less than $100,000,000, provided
that the bank or trust company's short-term unsecured debt and
long-term unsecured debt each has an Acceptable Credit Rating from at
least two of the three Rating Agencies;
(c) bonds or other obligations issued by or by authority
of any State of the United States, any territory or possession of the
United States, including the Commonwealth of Puerto Rico, and agencies
thereof, or any political subdivision of any of the foregoing, whose
short-term unsecured debt and long-term unsecured debt each has an
Acceptable Credit Rating from at least two of the three Rating
Agencies;
(d) repurchase agreements which are secured by U.S.
Government Securities issued by an entity whose long-term unsecured
debt has an Acceptable Credit Rating from at least two of the three
Rating Agencies; or
(e) commercial paper which has an Acceptable Credit
Rating from at least two of the three Rating Agencies;
provided that any of the investments in paragraph (a) through (e) shall
mature or be redeemable upon the option of the holder thereof on or
prior to the earlier of (x) 365 days from the date of their purchase or
(y) the Business Day preceding the day on which such amounts are
required to be applied under the Loan Documents. For these purposes,
the term "Rating Agencies" means Fitch, Moody's and S&P and the term
---------------
"Acceptable Credit Rating" means, with respect to each Rating Agency,
------------------------
(i) with respect to short-term unsecured debt, a rating at least equal
to the following:
Fitch F-1
Moody's P-1
S&P A-1,
and (ii) with respect to all other investments and entities, a rating
at least equal to the following:
Fitch ▇▇
▇▇▇▇▇'▇ Aa2
S&P AA.
20
"Permitted Liens" means, with respect to a Mortgaged Property,
---------------
(i) the exceptions to title to the Mortgaged Property set forth in the
Title Insurance Policy for the Mortgaged Property and approved by the
Lender, (ii) the Security Instrument encumbering the Mortgaged Property
and (iii) any other Liens approved by the Lender.
"Person" means an individual, an estate, a trust, a
------
corporation, a partnership, a limited liability company or any other
organization or entity (whether governmental or private).
"Potential Event of Default" means any event which, with the
--------------------------
giving of notice or the passage of time, or both, would constitute an
Event of Default.
"Principally Engaged" means, as of any specified date, with
-------------------
respect to any business in which a Person may be engaged, that the
value of the assets of such business, calculated in accordance with
GAAP, is at least 51% of the value of all of the business assets of the
businesses in which the Person is engaged.
"Property Company" shall have the meaning set forth in the
----------------
first paragraph of this Agreement.
"Quarterly Reports" means the quarterly reports for the
-----------------
Mortgaged Properties which the Owners are obligated to deliver to the
Lender under Section 13.01(b)(2).
"Recourse Lien" shall have the meaning set forth in Section
-------------
21.02.
"Recourse Transfer" shall have the meaning set forth in
-----------------
Section 21.02.
"REIT" shall have the meaning set forth in the first paragraph
----
of this Agreement.
"REIT Sub" shall have the meaning set forth in the first
--------
paragraph of this Agreement.
"Release Fee" means, with respect to each Mortgaged Property
-----------
released from the Collateral Pool pursuant to Article VII, a fee equal
to $15,000.
"Release Price" shall have the meaning set forth in Section
-------------
7.02(c).
"Rent Roll" means, with respect to any Multifamily Residential
---------
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on ▇▇▇▇▇▇ Mae Form 4243, as set forth
in Exhibit III-3 of the DUS Guide, or on another form approved by the
Lender and containing substantially the same information as Form 4243
requires.
"Replacement Reserve Agreement" means the Replacement Reserve
-----------------------------
and Security Agreement, in the form attached as Exhibit L to this
---------
Agreement, executed by the Owners in favor of the Lender, as amended or
modified from time to time.
21
"Replacements" means, with respect to the Mortgaged
------------
Properties, the physical items which, as of the date hereof, are
capitalized by the Owners, as evidenced by reports and other
information furnished by the Owners to the Lender in connection with
the execution of this Agreement.
"Request" means a Collateral Addition Request, a Collateral
-------
Release Request, a Conversion Request, a Credit Facility Expansion
Request, a Credit Facility Termination Request, a Future Advance
Request, an Expansion Advance Request or a Revolving Facility
Termination Request.
"Revolving Credit Endorsement" means an endorsement to a Title
----------------------------
Insurance Policy which contains substantially the same coverages, and
is subject to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as Exhibit
-------
M to this Agreement.
-
"Revolving Facility" means the agreement of the Lender to make
------------------
Advances to the Borrowers pursuant to Section 2.01(c)(2).
"Revolving Facility Advance" shall have the meaning set forth
--------------------------
in Section 2.01(c)(2).
"Revolving Facility Availability Period" means the period
--------------------------------------
beginning on the Revolving Facility Commencement Date and ending on
January 1, 2008.
"Revolving Facility Commencement Date" means the Initial
------------------------------------
Closing Date.
"Revolving Facility Credit Commitment" means, at any time, an
------------------------------------
amount equal to $139,000,000, or such greater amount, not to exceed
$200,000,000, as the Borrowers may elect in accordance with, and
subject to, the provisions of Article VIII, or such lesser amount as
the Borrowers may elect in accordance with, and subject to, the
provisions of Article IX, or as otherwise may be adjusted in accordance
with the provisions of Sections 2.04 or 8.06.
"Revolving Facility Note" means the promissory note, in
-----------------------
substantially the form attached as Exhibit C to this Agreement, which
---------
has been issued by the Property Company to the Lender to evidence the
Property Company's obligation to repay Revolving Facility Advances, as
such note may be amended or modified from time to time.
"Revolving Facility Termination Fee" means, with respect to a
----------------------------------
reduction in the Revolving Facility Credit Commitment pursuant to
Article IX which occurs before March 31, 2004, an amount equal to the
product obtained by multiplying--
(1) the reduction in the Revolving Facility Credit
Commitment, by
(2) 0.19%, by
22
(3) the present value factor calculated using the
following formula:
1 - (1 + r)/-n/
-----------
r
[r = Yield Rate
n = the number of years,
and any fraction thereof,
remaining between the
prepayment date and March 31, 2004]
The "Yield Rate" means the yield rate on the 5.875% U.S. Treasury
Security due on February 15, 2004 (the "Specified U.S. Treasury
Security"), as the Yield Rate is reported in the Wall Street Journal on
the fifth Business Day preceding, as applicable,(x) the date of the
reduction in the Revolving Facility Credit Commitment, (y) the date of
the Complete Revolving Facility Termination or (z) the date of Lender's
acceleration of the unpaid principal balance of the Revolving Facility
Note. In the event that no Yield Rate is published for the Specified
U.S. Treasury Security, then the nearest equivalent U.S. Treasury
Security shall be selected at Lender's reasonable discretion. If the
publication of such Yield Rates in the Wall Street Journal is
discontinued, Lender shall determine such Yield Rates from another
source selected by Lender. If the reduction in the Revolving Facility
Credit Commitment occurs on or after March 31, 2004, the Revolving
Facility Termination Fee shall equal $0.
"Rollover Advances" means a Revolving Facility Advance which
-----------------
is equal in face amount to an Outstanding Revolving Facility Advance
which is being repaid with the proceeds of the Revolving Facility
Advance. If an Outstanding Revolving Facility Advance is repaid with
both the proceeds of a Revolving Facility Advance and principal
amortization payments under Section 2.04, the Revolving Facility
Advance shall be considered a Rollover Advance only to the extent the
proceeds of the Revolving Facility Advance are applied against the
Outstanding Revolving Facility Advance.
"Security" means a "security" as set forth in Section 2(l) of
--------
the Securities Act of 1933, as amended.
"Security Documents" means the Security Instruments, the
------------------
Assignments of Partnership Interests, the Cap Security Agreement, the
Replacement Reserve Agreement and any other documents executed by a TC
Party from time to time to secure any of the TC Parties' obligations
under the Loan Documents.
"Security Instrument" means, for each Mortgaged Property, a
-------------------
separate first priority or second priority Multifamily Mortgage, Deed
of Trust or Deed to Secure Debt, Assignment of Rents and Security
Agreement given by an Owner to or for the benefit of the Lender to
secure the obligations of the Owner under a Base Facility Note or a
Guaranty. With respect to each Security Instrument securing a Base
Facility Note, the Security Instrument shall be in
23
the form attached as Exhibit D to this Agreement, with changes, to
---------
the extent applicable, to conform the Exhibit to the form Security
Instrument prescribed from time to time by ▇▇▇▇▇▇ ▇▇▇ for use in the
State in which the Mortgaged Property is located. With respect to
each Security Instrument securing a Guaranty, the Security Instrument
shall be in the form attached as Exhibit E to this Agreement, with
---------
changes, to the extent applicable, to conform the Exhibit to the form
Security Instrument prescribed from time to time by ▇▇▇▇▇▇ Mae for
use in the State in which the Mortgaged Property is located.
"Single-Purpose" means, with respect to an Owner, that, except
--------------
with respect to the transactions effected by this Agreement or the Loan
Documents, such Person at all times since its formation:
(i) has been a duly formed and existing general
partnership or limited partnership or limited
liability company pursuant to a conversion of the
type described in clause (v) of the definition of
Transfer;
(ii) has been duly qualified in each jurisdiction in which
such qualification was at such time required by the
laws of such jurisdiction for the conduct of its
business;
(iii) has complied with the provisions of its
organizational documents and the laws of its
jurisdiction of formation in all respects;
(iv) has observed all customary formalities regarding its
partnership existence;
(v) has accurately maintained its financial statements,
accounting records and other partnership documents
separate from those of any other Person, other than
the other Owners;
(vi) has not commingled its assets or funds with those of
any other Person, other than the other Owners;
(vii) has accurately maintained its own bank accounts,
payroll and books and accounts separate from those of
any other Person, other than the other Owners;
(viii) has paid its own liabilities from its own separate
assets or from assets of the other Owners;
(ix) has identified itself in all dealings with the public
under its own name and as a separate and distinct
entity;
(x) has not identified itself as being a division or a
part of any other Person;
24
(xi) has not identified any other Person as being a
division or a part of itself;
(xii) has been adequately capitalized in light of its
contemplated business operations;
(xiii) has not assumed, guaranteed or become obligated for
the liabilities of any other Person (except in
connection with the Credit Facility or the
endorsement of negotiable instruments in the
ordinary course of business) or held out its credit
as being available to satisfy the obligations of
any other Person, other than the other Owners;
(xiv) has not acquired obligations or securities of any
other Person, other than the other Owners;
(xv) has not made loans or advances to any other Person,
other than the other Owners;
(xvi) has not entered into and was not a party to any
transaction with any Affiliate of such Person,
except in the ordinary course of business and on
terms which are no less favorable to such Person
than would be obtained in a comparable arm's-length
transaction with an unrelated third party;
(xvii) has conducted its own business in its own name or in
the name of its own Mortgaged Property;
(xviii) has paid the salaries of its own employees, if any,
and maintained a sufficient number of employees in
light of its contemplated business operations;
(xix) has allocated fairly and reasonably any overhead for
shared office space;
(xx) has not pledged its assets for the benefit of any
other entity;
(xxi) has not engaged in a non-exempt prohibited
transaction described in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code;
(xxii) has not acquired obligations or securities of its
partners or Affiliates, other than the other Owners;
and
(xxiii) has corrected any misunderstanding known to it
regarding its separate identity.
25
"S&P" means Standard & Poor's Ratings Group, a division of The
---
▇▇▇▇▇▇-▇▇▇▇ Companies.
"Standby Fee" shall have the meaning set forth in Section
-----------
14.01.
"Subsidiary" means, when used with reference to a specified
----------
Person, (i) any Person that, directly or indirectly, through one or
more intermediaries, is controlled by the specified Person, (ii) any
Person of which the specified Person is, directly or indirectly, the
owner of more than 50% of any voting class of Ownership Interests or
(iii) any Person (A) which is a partnership and (B) of which the
specified Person is a general partner and owns more than 50% of the
partnership interests.
"Surveys" means the as-built surveys of the Mortgaged
-------
Properties prepared in accordance with the requirements of Section 113
of the DUS Guide.
"TC Parties" means the REIT, TC-Oriole, the Operating
----------
Partnership, the Property Company, the REIT Sub and the Owners.
"Term of this Agreement" shall be determined as provided in
----------------------
Section 22.10 to this Agreement.
"Three Month Libor Rate" means, as of any specified date, a
----------------------
fluctuating rate per annum equal to the three month London Interbank
Offered Rate of interest as published in The Wall Street Journal for
-----------------------
the Business Day which is two Business Days prior to the specified
date, said Three Month Libor Rate to change from time to time as and
when the change is published. If The Wall Street Journal ceases to
-----------------------
publish a three month London Interbank Offered Rate, the Lender shall
have the right to substitute the three month London Interbank Offered
Rate published by another financial newspaper.
"Tie-In Endorsement" means an endorsement to a Title Insurance
------------------
Policy which contains substantially the same coverages, and is subject
to substantially the same or fewer exceptions (or such other exceptions
as the Lender may approve), as the form attached as Exhibit N to this
---------
Agreement.
"Title Company" means First American Title Insurance Company,
-------------
c/o Midland Title Security, Inc., its authorized agent, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
"Title Insurance Policies" means the mortgagee's policies of
------------------------
title insurance issued by the Title Company from time to time relating
to each of the Security Instruments, conforming to the requirements of
Section 111 of the DUS Guide, together with such endorsements,
coinsurance, reinsurance and direct access agreements with respect to
such policies as the Lender may, from time to time, consider necessary
or appropriate, whether or not required by the DUS Guide, including
Revolving Credit Endorsements, if available, and Tie-In
26
Endorsements, if available, and with a limit of liability under the
policy (subject to the limitations contained in Sections 6(a)(i) and
6(a)(iii) of the Stipulations and Conditions of the policy) equal to
the Maximum Credit Commitment.
"Total Indebtedness" means, as of any date of determination,
------------------
and in respect of any Person, all outstanding Indebtedness, and shall
include, without limitation: (i) such Person's share of the
Indebtedness of any partnership or joint venture in which such Person
directly or indirectly holds any interest; and (ii) any recourse or
contingent obligations, directly or indirectly, of such Person with
respect to any Indebtedness of such partnership or joint venture in
excess of its proportionate share. Notwithstanding the foregoing,
Intra-Company Debt shall be excluded from the calculation of "Total
Indebtedness".
"Trailing 12 Month Period" means, for any specified date, the
------------------------
12 month period ending with the last day of the most recent calendar
quarter for which the Quarterly Reports for the Mortgaged Properties
have been delivered by the Owners to the Lender pursuant to Section
13.01(b)(2).
"Trailing Three Month Period" means, for any specified date,
---------------------------
the three month period ending with the last day of the most recent
calendar quarter for which the Quarterly Reports for the Mortgaged
Properties have been delivered by the Owners to the Lender pursuant to
Section 13.01(b)(2).
"Transfer" means (i) a sale, assignment, lease, pledge,
--------
transfer or other disposition (whether voluntary or by operation of
law) of, or the granting or creating of a lien, encumbrance or security
interest in, any estate, rights, title or interest in a Mortgaged
Property, or any portion thereof, or (ii) a sale, assignment, pledge,
transfer or other disposition of any interest in a TC Party other than
to another TC Party, or (iii) the issuance or other creation of new
ownership interests in a TC Party other than (a) sales of the stock of
the REIT on the New York Stock Exchange (or other nationally recognized
exchange) or (b) private placements of ownership interests in a TC
Party that do not result in a Change of Control or any other
partnership, corporation, real estate investment trust or other entity
that has a direct or indirect ownership interest in a TC Party, or (iv)
a merger or consolidation of a TC Party into another entity or of
another entity into a TC Party other than into another TC Party, or (v)
the reconstitution of a TC Party from one type of entity to another
type of entity other than the conversion of an Owner to a limited
partnership or a limited liability company if such conversion does not
result in a Change of Control, or (vi) the amendment, modification or
any other change in the governing instrument or instruments of such
Person which has the effect of changing the relative powers, rights,
privileges, voting rights or economic interests of the ownership
interests in such Person so as to cause a Change of Control to occur.
"Transfer" does not include (i) a conveyance of the Mortgaged Property
at a judicial or non-judicial foreclosure sale under any Security
Instrument or (ii) the Mortgaged Properties becoming part of a
bankruptcy estate by operation of law under the United States
Bankruptcy Code.
27
"Triggering Event" means the occurrence of either (i) an Event
----------------
of Default or (ii) the Aggregate Debt Service Coverage Ratio for
Advances Outstanding for the Trailing 12 Month Period becomes less than
115%.
"U.S. Government Securities" means securities that are direct
--------------------------
obligations of the United States of America for the full and timely
payment of which its full faith and credit is pledged which are not
callable or redeemable at the option of the issuer thereof (including a
depository receipt issued by a bank(as defined in Section 3(a)(2) of
the United States Securities Act) as custodian with respect to any such
U.S. Government Securities or a specific payment of principal of or
interest on any such U.S. Government Securities held by such custodian
for the account of the holder of such depository receipt, provided that
(except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
securities or the specific payment of principal of or interest on the
securities evidenced by such depository receipt).
"Underwriting Rate" means (i) with respect to the portion of
-----------------
the Revolving Facility Credit Commitment that is equal to or less than
$75,000,000, 10.50% per annum, (ii) with respect to the portion of the
Revolving Facility Credit Commitment in excess of $75,000,000 that
becomes effective on the date hereof, 8.0% per annum, and (iii) with
respect to the portion, if any, of the Revolving Facility Credit
Commitment in excess of $75,000,000 that becomes effective after the
date hereof, determined by Lender at the time such portion of the
Revolving Facility Credit Commitment becomes effective.
"Unimproved Land" means any parcel of unimproved land
---------------
described on Exhibit O to this Agreement. The Unimproved Land is
---------
included as part of certain of the Initial Mortgaged Properties. Each
parcel of Unimproved Land constitutes unimproved land on which an Owner
could, subject to applicable zoning, land use and similar governmental
restrictions, if any, construct a separate Multifamily Residential
Property.
"Unused Capacity" shall have the meaning set forth in Section
---------------
14.01.
"Voting Equity Capital" means Securities or partnership
----------------------
interests of any class or classes, the holders of which are ordinarily,
in the absence of contingencies, entitled to elect a majority of the
board of directors (or Persons performing similar functions).
28
ARTICLE II
THE CREDIT FACILITY
SECTION 2.01. The Credit Facility.
-------------------
SECTION 2.01(a) Establishment of the Credit Facility. The
------------------------------------
Lender hereby establishes the Credit Facility, which shall be comprised
of the Base Facility and the Revolving Facility.
SECTION 2.01(b) Establishment of the Base Facility.
----------------------------------
SECTION 2.01(b)(1) Establishment. The Lender
-------------
hereby establishes the Base Facility, upon all of the terms of
this Agreement.
SECTION 2.01(b)(2) Base Facility Credit
--------------------
Commitment. Subject to the terms, conditions and limitations
----------
of this Article, the Lender agrees to make an Advance to the
Borrowers in the amount of the Base Facility Credit
Commitment. Each Advance made to the Borrowers pursuant to
this subsection (b)(2) shall be referred to as a "Base
----
Facility Advance." The Borrowers may not re-borrow any part of
----------------
the Base Facility Advance which it has previously borrowed and
repaid. Each Base Facility Advance shall be evidenced by a new
Base Facility Note of one or more Borrowers (or an amendment
to one or more existing Base Facility Notes) as designated in
a Future Advance Request or, if in connection with a
Conversion Request, comprised of the aggregate of separate
Advances to each of the Borrowers, in proportion to the
respective then-outstanding principal amounts of their
separate Base Facility Notes, and any reference to a Base
Facility Advance shall mean the aggregate of such separate
Advances.
SECTION 2.01(c) Establishment of Revolving Facility.
-----------------------------------
SECTION 2.01(c)(1) Establishment. The Lender
-------------
hereby establishes the Revolving Facility, upon all of the
terms of this Agreement.
SECTION 2.01(c)(2) Revolving Facility Credit
-------------------------
Commitment. Subject to the terms, conditions and limitations
----------
of this Article, the Lender agrees, from time to time during
the Revolving Facility Availability Period, after delivery of
a Request for an Advance from the Property Company, to make
Advances to the Property Company. Each Advance made to the
Property Company pursuant to this subsection (c)(2) shall be
referred to as a "Revolving Facility Advance." Subject to the
--------------------------
terms, conditions and limitations of this Article, the
Property Company may re-borrow any amounts under the Revolving
Facility which it has previously borrowed and repaid under the
Revolving Facility.
29
SECTION 2.02. Limitations on Commitment to Make Advances.
------------------------------------------
SECTION 2.02(a) Limitations on Base Facility Credit
-----------------------------------
Commitment. The Lender's obligations to make Base Facility Advances
----------
pursuant to Section 2.01(b)(2) are subject to the following
limitations:
SECTION 2.02(a)(1) Base Facility Credit
--------------------
Commitment. The sum of the aggregate unpaid principal balance
----------
of Base Facility Advances Outstanding at any time shall not
exceed the Base Facility Credit Commitment.
SECTION 2.02(a)(2) Maturity Date of Base
---------------------
Facility Advances. The maturity date of each Base Facility
------------------
Advance shall be the Credit Facility Termination Date.
SECTION 2.02(b) Limitations on Revolving Facility Credit
----------------------------------------
Commitment. The Lender's obligations to make Revolving Facility
----------
Advances pursuant to Section 2.01(c)(2) are subject to the following
limitations:
SECTION 2.02(b)(1) Term. The Lender shall not
----
be obligated to make any Revolving Facility Advances at any
time after the expiration of the Revolving Facility
Availability Period. The Lender shall not be obligated to
make any Revolving Facility Advances which are not Rollover
Advances at any time after the 90th day before the Credit
Facility at Termination Date.
SECTION 2.02(b)(2) Revolving Facility Credit
-------------------------
Commitment. The aggregate unpaid principal balance of
----------
Revolving Facility Advances Outstanding at any time shall not
exceed the Revolving Facility Credit Commitment.
SECTION 2.02(b)(3) Maturity Date of Revolving
--------------------------
Facility Advances. Regardless of the date on which a Revolving
-----------------
Facility Advance is made, the maturity date of each Revolving
Facility Advance shall be a date selected by the Property
Company in its Request for the Revolving Facility Advance,
which date shall occur--
(i) on or after the date which completes
three full months after the Closing Date
for the Revolving Facility Advance;
(ii) on or before the date which completes
nine full months after the Closing Date
for the Revolving Facility Advance; and
(iii) on the first Business Day of a calendar
month.
For these purposes, the year shall be deemed to consist of 12
30-day months. For example, the date which completes three
full months after September 15 shall be
30
December 15; the date which completes three full months
after November 30 shall be February 28, etc.
SECTION 2.02(b)(4) Final Maturity Date. In no
-------------------
event shall the maturity date of a Revolving Facility Advance
be later than the Credit Facility Termination Date.
SECTION 2.02(b)(5) Payment of Discount and Fee
---------------------------
Portion. The Lender shall not be obligated to make any
-------
Revolving Facility Advance unless the Property Company pays to
the Lender, in advance, the Fee Portion for the Revolving
Facility Advance allocable to the first full calendar month of
the MBS backed by the Revolving Facility Advance and the
entire Discount for the Revolving Facility Advance. After the
issuance of the Revolving Facility Advance, the Fee Portion
for the Revolving Facility Advance shall be payable monthly,
in advance, on the first day of the second full calendar month
of the MBS backed by the Revolving Facility Advance, and on
each month thereafter until the maturity date of the MBS, in
accordance with the terms of the Revolving Facility Note.
SECTION 2.02(c) Limitations on any Advance. The Lender's
--------------------------
obligations to make any Advance are subject to the following additional
limitations:
SECTION 2.02(c)(1) Maximum Credit Commitment.
-------------------------
The sum of the aggregate unpaid principal balance of Base
Facility Advances Outstanding and Revolving Facility
Advances Outstanding at any time shall not exceed the
Maximum Credit Commitment.
SECTION 2.02(c)(2) Minimum Request.
---------------
Each Future Advance Request shall be in the minimum amount of
$3,000,000.
SECTION 2.02(c)(3) Satisfaction of Conditions
--------------------------
Precedent. All conditions precedent to the making of the
---------
Advance must be satisfied within seven days after the date on
which the Future Advance Request is made.
SECTION 2.03. Determination and Confirmation of Interest Rate and
---------------------------------------------------
Other Terms of Each Advance. The interest rate applicable to each Advance (the
---------------------------
"Coupon Rate") and the other terms of the Advance shall be determined in
-----------
accordance with the following procedure:
SECTION 2.03(a) Quote. From time to time, at the request of
-----
the Borrowers, with respect to a Base Facility Advance, or the Property
Company, with respect to a Revolving Facility Advance, the Lender shall
quote to the Borrowers or the Property Company, as the case may be, an
estimate of the MBS Pass-Through Rate for a ▇▇▇▇▇▇ ▇▇▇ MBS backed by
the proposed Advance. The term "MBS Pass-Through Rate" means, for a
---------------------
specified ▇▇▇▇▇▇ Mae MBS, the interest rate (or, with respect to
non-interest bearing MBS purchased at a discount from par, the imputed
interest rate), as determined by the Lender, at
31
which the specified ▇▇▇▇▇▇ ▇▇▇ MBS would be purchased by arm's length
institutional investors (i) with respect to each Base Facility
Advance, at a price in a range between 99-1/2 and 100-1/2, and (ii)
with respect to each Revolving Facility Advance, at the price bid by
the institutional investors. The Lender's quote shall be based on (i)
a solicitation of bids from institutional investors selected by the
Lender and (ii) the proposed terms and amount of the Advance selected
by the Borrowers or the Property Company, as the case may be. The
quote shall not be binding upon the Lender.
SECTION 2.03(b) Rate Setting. If the Borrowers or the
------------
Property Company, as the case may be, satisfy all of the conditions
to the Lender's obligation to make the Advance requested in the
Request for the Advance delivered to the Lender, then the Borrowers
or the Property Company, as the case may be, may select the MBS
Pass-Through Rate by submitting to the Lender by facsimile
transmission a completed and executed document, in the form attached
as Exhibit P-1 or P-2 to this Agreement (the "Rate Setting Form"), as
------------------ -----------------
the case may be, before 1:00 p.m. Washington, D.C. time on any
Business Day (the "Rate Setting Date"). The Rate Setting Form (i)
-----------------
contains various factual certifications required by the Lender and
(ii) specifies the amount, term, MBS Issue Date, MBS Delivery Date,
Coupon Rate (the "Maximum Annual Coupon Rate"), Discount (if the
--------------------------
Advance is a Revolving Facility Advance), Price and Closing Date for
the Advance.
SECTION 2.03(c) Rate Confirmation. Within one Business Day
-----------------
after receipt of the completed and executed Rate Setting Form, the
Lender shall solicit bids from institutional investors selected by the
Lender based on the information in the Rate Setting Form and, provided
the actual Coupon Rate is at or below the Maximum Annual Coupon Rate,
shall obtain a commitment for the purchase of a ▇▇▇▇▇▇ Mae MBS having
the characteristics described in the related Rate Setting Form, and
shall immediately deliver to the Borrowers or the Property Company, as
the case may be, by facsimile transmission a completed document, in the
form attached as Exhibit Q-1 or Q-2 to this Agreement (the "Rate
------------------ ----
Confirmation Form"), as the case may be, confirming the amount, term,
-----------------
MBS Issue Date, MBS Delivery Date, Coupon Rate, the Discount (if the
Advance is a Revolving Facility Advance), Price and Closing Date for
the Advance.
SECTION 2.03(d) Coupon Rate.
-----------
SECTION 2.03(d)(1) General. Except as
-------
otherwise provided in paragraph (2), the Coupon Rate for the
Advance shall be the per annum rate equal to the sum of (i)
the MBS Pass-Through Rate for the Advance selected on the
Rate Setting Date, and (ii) with respect to a Base Facility
Advance, the Fee Spread for the Base Facility Advance, or,
with respect to a Revolving Facility Advance, the Fee Spread
for the Revolving Facility Advance.
SECTION 2.03(d)(2) Partial Month Interest.
----------------------
Notwithstanding anything to the contrary in this Agreement, if
an Advance is not made on the first day of a calendar month,
the Coupon Rate for the Advance for the partial month period
32
commencing on the Closing Date for the Advance and ending on
the last day of the calendar month in which the Closing Date
occurs shall be a rate determined by the Lender, based on the
Lender's cost of funds, and approved in advance, in writing,
by the Borrowers, pursuant to procedures mutually agreed upon
by the Borrowers and the Lender.
SECTION 2.03(e) Advance Confirmation Instrument. On or
-------------------------------
before the Closing Date for a Revolving Facility Advance, the
Property Company shall execute and deliver to the Lender an
instrument (the "Advance Confirmation Instrument"), in the form
-------------------------------
attached as Exhibit R to this Agreement, confirming the amount, term,
---------
MBS Issue Date, MBS Delivery Date, Coupon Rate, Discount, Price and
Closing Date for the Advance, and the obligation of the Property
Company to repay the Revolving Facility Advance in accordance with
the terms of the Revolving Facility Note and this Agreement.
SECTION 2.04. Special Amortization Requirements if Aggregate Debt
---------------------------------------------------
Service Coverage Ratio for Advances Outstanding for the Trailing 12 Month Period
--------------------------------------------------------------------------------
Is Less than 125%. If the provisions of Section 13.07(c) relating to facility
-----------------
balancing are not applicable, and if at any time during the Term of this
Agreement the Aggregate Debt Service Coverage Ratio for Advances Outstanding for
the Trailing 12 Month Period is less than 125%, then, until such time as the
Aggregate Debt Service Coverage Ratio for Advances Outstanding for the Trailing
12 Month Period is equal to or greater than 125%, the following provisions shall
apply at the Lender's option:
(a) the Property Company shall pay principal amortization
on the Revolving Facility Advances, payable on the first day of each
calendar month (commencing with the calendar month following the
calendar month in which the Property Company receives a notice from
the Lender stating that the Aggregate Debt Service Coverage Ratio for
the Advance Outstanding for the Trailing 12 Month Period is less than
125%), in an amount equal to $600,000 per month; and
(b) the Maximum Credit Commitment and the Revolving
Facility Credit Commitment shall each be reduced, as of the first day
of each calendar month (commencing with the calendar month following
the calendar month in which the Property Company receives a notice
from the Lender stating that the Aggregate Debt Service Coverage
Ratio for the Advance Outstanding for the Trailing 12 Month Period is
less than 125%), in an amount equal to $600,000 per month.
If, on the date on which the Property Company pays the principal amortization,
no Revolving Facility Advances are then due and payable, the Lender shall hold
the payments in an interest-bearing account in a financial institution selected
by the Property Company and approved by the Lender, as additional Collateral
for the Credit Facility, until the next date on which Revolving Facility
Advances are due and payable, at which time the Lender shall apply the amounts,
including accrued interest, held by it to the amounts of the Revolving Facility
Advances due and payable. If, at any time during the period in which the
Property Company is paying principal amortization under this Section, there are
no Revolving Facility Advances Outstanding, the principal amortization shall be
33
paid by the Borrowers and the Lender shall hold the payments in an
interest-bearing account in a financial institution selected by the Property
Company and approved by the Lender, as additional Collateral for the Credit
Facility, until the next maturity date of any Base Facility Advance, at which
time such amount shall be applied to the principal of the Base Facility Advance
to be repaid. If the Revolving Facility Credit Commitment is reduced pursuant
to this Section and, thereafter, the Aggregate Debt Service Coverage Ratio for
the Advances Outstanding for the Trailing 12 Month Period is equal to or
greater than 125%, the Revolving Facility Credit Commitment shall be increased
by the amount by which it had previously been reduced under this Section.
SECTION 2.05. Defeasance. With respect to the Initial Advance, the
----------
defeasance conditions set forth in Exhibit Z shall apply. With respect to any
---------
Base Facility Advance made on or after the date hereof or at such time as the
Borrower elects to convert all or a portion of any Revolving Facility Advance to
a Base Facility Advance pursuant to this Agreement, the Borrower shall select
defeasance or yield maintenance with respect to Base Facility Advances on the
Conversion Request or Expansion Advance Request for the first Base Facility
Advance made on or after the date hereof. If defeasance is selected, this
Section 2.05 shall apply. The election of the Borrower as to defeasance or yield
maintenance in the first Base Facility Advance made on or after the date hereof
shall apply to all Base Facility Advances (other than the Initial Advance)
during the term of this Agreement. Base Facility Advances may, at the option of
the Borrowers, be prepaid pursuant to the terms and conditions of the
"Prepayment Provisions" of the Base Facility Notes; provided that Base Facility
Advances may be defeased pursuant to the terms and conditions of this Section.
(a) Conditions. Subject to Section 2.05(d), the Borrower
----------
shall have the right to obtain the release of Mortgaged Properties
from the lien of the related Security Instruments (and all collateral
derived from such Mortgaged Properties, including assignment of
leases, fixture filings and other documents and instruments
evidencing a lien or security interest in the Borrower's assets
except the Substitute Collateral shall be released) upon the
satisfaction of all of the following conditions:
(1) Defeasance Notice. The Borrower shall give
-----------------
Lender a notice (the "Defeasance Notice"), in the manner
-----------------
specified in Section 2.05(g)(4), on a form provided by
Lender, specifying a Business Day (the "Defeasance Closing
------------------
Date") which the Borrower desires to consummate the
----
Defeasance. The Defeasance Closing Date specified by the
Borrower may not be more than 45 calendar days, nor less
than 30 calendar days, after the date on which the
Defeasance Notice is received by Lender. The Borrower shall
also specify in the Defeasance Notice the name, address and
telephone number of the Borrower for notices pursuant to
Section 2.05(g)(4). The form Defeasance Notice provided by
Lender specifies: (i) which Mortgaged Properties the
Borrower proposes to be released, provided that any
Mortgaged Property securing only Base Facility Advances must
be among the Mortgaged Properties proposed to be released;
(ii) the name, address and telephone number of Lender for
notices pursuant to Section 2.05(g)(4); (iii) the account(s)
to which payments to Lender are to be made; (iv) whether a
▇▇▇▇▇▇ ▇▇▇ Investment Security will be offered for use as
the Substitute Collateral and, if not, that U.S. Treasury
34
Securities will be the Substitute Collateral; (v) whether the
Successor Borrower will be designated by Lender or the
Borrower; and (vi) if a ▇▇▇▇▇▇ Mae Investment Security is
offered for use as the Substitute Collateral, the Defeasance
Notice shall also include the amount of the Defeasance
Commitment Fee.
Any applicable Defeasance Commitment Fee must be paid by the
Borrower and received by Lender no later than the date and
time when Lender receives the Defeasance Notice from the
Borrower.
(2) Confirmation. After Lender has confirmed
------------
that the Defeasance is then permitted as provided in Section
2.05(d), and has confirmed that the terms of the Defeasance
Notice are reasonably acceptable to Lender, Lender shall, with
reasonable promptness, notify the Borrower of such
confirmation by signing the Defeasance Notice, attaching the
Annual Yields for the Mortgage Payments beginning on the first
day of the second calendar month after the Defeasance Closing
Date and ending on the Stated Maturity Date (if a ▇▇▇▇▇▇ ▇▇▇
Investment Security is offered as Substitute Collateral) and
transmitting the signed Defeasance Notice to the Borrower
pursuant to Section 2.05(g)(4). If, after Lender has notified
the Borrower of its confirmation in accordance with the
foregoing, Lender does not receive the Defeasance Commitment
Fee within five (5) Business Days after the Defeasance Notice
Effective Date, then the Borrower's right to obtain Defeasance
pursuant to that Defeasance Notice shall terminate.
(3) Substitute Collateral. On or before the
---------------------
Defeasance Closing Date, the Borrower shall deliver to Lender
a pledge and security agreement, in form and substance
satisfactory to Lender in its sole discretion (the "Pledge
------
Agreement"), creating a first priority perfected security
---------
interest in favor of Lender in substitute collateral
constituting an Investment Security (the "Substitute
----------
Collateral"). The Pledge Agreement shall provide the
----------
Borrower's authorization and direction that all interest on,
principal of and other amounts payable with respect to the
Substitute Collateral shall be paid directly to Lender to be
applied to Mortgage Payments due under the Base Facility Note
subject to Defeasance. If the Substitute Collateral is issued
in a certificated form and the Borrower has possession of the
certificate, the certificate shall be endorsed (either on the
certificate or on a separate writing attached thereto) by the
Borrower as directed by Lender and delivered to Lender. If the
Substitute Collateral is issued in an uncertificated form, or
in a certificated form but the Borrower does not have
possession of the certificate, the Borrower shall execute and
deliver to Lender all documents and instruments required by
Lender to create in Lender's favor a first priority perfected
security interest in such Substitute Collateral, including a
securities account control agreement or any other instrument
or document required to perfect a security interest in each
Substitute Collateral.
(4) Closing Documents. The Borrower shall
------------------
deliver to Lender on or before the Defeasance Closing Date
the documents described in Section 2.05(b).
35
(5) Amounts Payable by the Borrower. On or
-------------------------------
before the Defeasance Closing Date, the Borrower shall pay to
Lender an amount equal to the sum of:
(A) the Next Scheduled P&I Payment;
(B) all other sums then due and payable
under the Base Facility Note subject
to Defeasance, the Security
Instruments related to the Mortgaged
Properties to be released; and
(C) all reasonable costs and expenses
incurred by Lender or Servicer in
connection with the Defeasance,
including the fees and disbursements
of Lender's or Servicer's legal
counsel.
(6) Defeasance Deposit. If a ▇▇▇▇▇▇ Mae
------------------
Investment Security will be the Substitute Collateral, then,
on or before 3:00 p.m., Washington, D.C. time, on the
Defeasance Closing Date, the Borrower shall pay the Defeasance
Deposit (reduced by the Defeasance Commitment Fee) to Lender
to be used by Lender to purchase the ▇▇▇▇▇▇ ▇▇▇ Investment
Security as the Borrower's agent.
(7) Covenants, Representations and Warranties.
-----------------------------------------
On the Defeasance Closing Date, all of the covenants of the TC
Parties set forth in this Agreement and all of the
representations and warranties of the TC Parties set forth in
this Agreement are true and correct in all material respects.
(8) Geographical Diversification. If, as a
----------------------------
result of the Defeasance, Lender determines that the
geographical diversification of the Collateral Pool is
compromised (whether or not the Geographical Diversification
Requirement is met), Lender may require that the Borrower add
or substitute Multifamily Residential Properties to the
Collateral Pool in a number and having a valuation required to
restore the Geographical Diversification of the Collateral
Pool to a level at least as diverse as before the Defeasance.
(b) Closing Documents. The documents required to be
------------------
delivered to Lender on or before the Defeasance Closing Date pursuant
to Section 2.05(a)(4) are:
(1) an opinion of counsel for the Borrower, in
form and substance satisfactory to Lender, to the effect that
Lender has a valid and perfected lien and security interest of
first priority in the Substitute Collateral and the principal
and interest payable thereunder;
(2) an opinion of counsel for the Borrower, in
form and substance satisfactory to Lender, that the
Defeasance, including both Borrowers granting to Lender of a
lien and security interest in the Substitute Collateral and
the assignment and assumption by Successor Borrower, and each
of them, when considered in combination and separately, are
not subject to avoidance under any applicable federal or state
laws, including Sections 547 and 548 of the U.S. Bankruptcy
Code;
36
(3) if a ▇▇▇▇▇▇ Mae Investment Security is not
used as Substitute Collateral, and unless waived by Lender, a
certificate in form and substance satisfactory to Lender,
issued by an independent certified public accountant, or
financial institution, approved by Lender, to the effect that
the Substitute Collateral will generate the Scheduled
Defeasance Payments;
(4) unless waived by Lender, an opinion of
counsel for the Borrower in form and substance satisfactory to
Lender, that the Defeasance will not result in a "sale or
exchange" of any Base Facility Note within the meaning of
Section 1001(c) of the Internal Revenue Code and the temporary
and final regulations promulgated thereunder;
(5) such other opinions, certificates, documents
or instruments as Lender may reasonably request; and
(6) three counterparts of the executed
Assignment and Assumption Agreement described in Section
2.05(e).
(c) Release. Upon the Borrower's compliance with the
-------
requirements of Sections 2.05(a)(1) through (6), the Mortgaged
Properties shall be released from the lien of the Security Instruments
(and all collateral derived from such Mortgaged Properties, including
assignments of leases, fixture filings and other documents and
instruments evidencing a lien or security interest in the TC Parties'
assets [except the Substitute Collateral] shall be released). Lender
shall, with reasonable promptness, execute and deliver to the Borrower,
at the Borrower's cost and expense, any additional documents reasonably
requested by the TC Parties in order to evidence or confirm the release
of Lender's liens and security interests described in the immediately
preceding sentence.
(d) Defeasance Not Allowed. The Borrower shall not have
----------------------
the right to obtain Defeasance at any of the following times:
(1) before the third anniversary of the date of
the relevant Base Facility Note;
(2) after the expiration of the Defeasance
Period; or
(3) after Lender has accelerated the maturity of
the unpaid principal balance of, accrued interest on, and
other amounts payable under, any Note pursuant to Paragraph 6
of such Note.
(e) Assignment and Assumption. Upon the Borrower's
-------------------------
compliance with the requirements of Section 2.05(a), the Borrower shall
assign all its obligations and rights under the relevant Base Facility
Note, together with the Substitute Collateral, to a successor entity
(the "Successor Borrower") designated by Lender or, if not so
------------------
designated by Lender, designated by the Borrower and acceptable to
Lender in its sole discretion. The TC Parties and Successor Borrower
shall execute and deliver to Lender an assignment and assumption
37
agreement on a form provided by Lender (the "Assignment and Assumption
-------------------------
Agreement"). The Assignment and Assumption Agreement shall provide for
---------
(i) the transfer and assignment by the Borrower to Successor Borrower
of the Substitute Collateral, subject to the lien and security interest
in favor of Lender, (ii) the assumption by Successor Borrower of all
liabilities and obligations of the Borrower under the relevant Base
Facility Note, and (iii) the release by Lender of the relevant Owner
from all liabilities and obligations under the relevant Base Facility
Note and all Obligations related thereto. Lender shall, at the
Borrower's request and expense, execute and deliver releases,
reconveyances and security interest terminations with respect to the
released Mortgage Properties and all other collateral held by Lender
(except the Defeasance Deposit). The Assignment and Assumption
Agreement shall be executed by Lender with a counterpart to be returned
by Lender to the Borrower and Successor Borrower thereafter; provided,
however, in all events that it shall not be a condition of Defeasance
that the Assignment and Assumption Agreement be executed by Lender, or
any Successor Borrower that is designated by Lender.
(f) Agent. If the Defeasance Notice provides that Lender
-----
will make available a ▇▇▇▇▇▇ ▇▇▇ Investment Security for purchase by
the Borrower for use as the Substitute Collateral, the Borrower hereby
authorizes Lender to use, and appoints Lender as its agent and
attorney-in-fact for the purpose of using, the Defeasance Deposit
(including any portion thereof that constitutes the Defeasance
Commitment Fee) to purchase a ▇▇▇▇▇▇ Mae Investment Security.
(g) Administrative Provisions.
-------------------------
(1) ▇▇▇▇▇▇ ▇▇▇ Security Liquidated Damages. If
--------------------------------------
the Borrower timely pays the Defeasance Commitment Fee, and
Lender and the Borrower timely transmits a signed facsimile
copy of the Defeasance Notice pursuant to Section 2.05(a)(2),
but the Borrower fails to perform its other obligations under
Sections 2.05(a) and Section 2.05(e), Lender shall have the
right to retain the Defeasance Commitment Fee as liquidated
damages for the Borrower's default, as Lender's sole and
exclusive remedy, and, except as provided in Section
2.05(g)(2), the Borrower shall be released from all further
obligations under this Section 2.05. The Borrower acknowledges
that, from and after the date on which Lender has executed the
Defeasance Notice under Section 2.05(a)(2) and the Borrower
has delivered the Defeasance Commitment Fee, Lender will incur
financing costs in arranging and preparing for the purchase of
the Substitute Collateral and in arranging and preparing for
the release of the Mortgaged Properties from the lien of the
Security Instruments in reliance on the executed Defeasance
Notice. The Borrower agrees that the Defeasance Commitment Fee
represents a fair and reasonable estimate, taking into account
all circumstances existing on the date of this Agreement, of
the damages Lender will incur by reason of the Borrower's
default.
(2) Third Party Costs. In the event that the
-----------------
Defeasance is not consummated on the Defeasance Closing Date
for any reason, the Borrower agrees to reimburse Lender and
Servicer for all reasonable third party costs and expenses
38
(other than financing costs covered by Section 4.0l(g)(1)
above), including attorneys' fees and expenses, incurred by
Lender in reliance on the executed Defeasance Notice, within
10 Business Days after the Borrower receives a written demand
for payment, accompanied by a statement, in reasonable detail,
of Lender's and Servicer's third party costs and expenses.
(3) Payments. All payments required to be made
--------
by the Borrower to Lender or Servicer pursuant to this Section
2.05 shall be made by wire transfer of immediately available
finds to the account(s) designated by Lender or Servicer, as
the case may be, in the Defeasance Notice.
(4) Notice. The Defeasance Notice delivered
------
pursuant to this Section 4.0l(g)(4) shall be in writing and
shall be sent by telecopier or facsimile machine which
automatically generates a transmission report that states the
date and time of the transmission, the length of the document
transmitted and the telephone number of the recipient's
telecopier or facsimile machine (or shall be sent by any
distribution media, whether currently existing or hereafter
developed, including electronic mail and internet
distribution, as approved by Lender). Any notice so sent
addressed to the parties at their respective addresses
designated in the Defeasance Notice pursuant to Section
2.05(a), shall be deemed to have been received on the date and
time indicated on the transmission report of recipient. To be
effective, the Borrower must send the Defeasance Notice (as
described above) so that Lender receives the Defeasance Notice
no earlier than 11:00 a.m. and no later than 3:00 p.m.
Washington, D.C. time on a Business Day.
(h) Definitions. For purposes of this Section 2.05, the
-----------
following terms shall have the following meanings:
(1) The term "Annual Yield" means the yield for
-------------
the theoretical zero coupon U.S. Treasury Security as
calculated from the current "on-the-run" U.S. Treasury yield
curve with a term to maturity that most closely matches the
Applicable Defeasance Term for the Mortgage Payment, as
published by ▇▇▇▇▇▇ ▇▇▇ on MORNET(R) (or in an alternative
electronic format) at 2:00 p.m. Washington, D.C. time on the
Business Day that Lender receives the Defeasance Notice in
accordance with Section 2.05(g)(4). If the publication of
yields on MORNET(R) is unavailable, Lender shall determine
yields from another source reasonably determined by Lender.
(2) The term "Applicable Defeasance Term" means,
---------------------------
in the case of each Mortgage Payment, the number of calendar
months, based on a year containing 12 calendar months with 30
days each, in the period beginning on the first day of the
first calendar month after the Defeasance Closing Date to
March 30, 2007.
(3) The term "Defeasance" means the transaction
-----------
in which all (but not less than all) of the Mortgaged
Properties are released from the lien of the Security
Instruments and Lender receives, as substitute collateral, a
valid and perfected lien
39
and security interest of first priority in the Substitute
Collateral and the principal and interest payable thereunder.
(4) The term "Defeasance Commitment Fee" means
--------------------------
the amount specified in the Defeasance Notice as the
Borrower's good faith deposit to ensure performance of its
obligations under this Section, which shall equal two percent
(2%) of the aggregate unpaid principal balance of the Base
Facility Note subject to Defeasance as of the Defeasance
Notice Effective Date, if the Successor Borrower is designated
by the Borrower under Section 2.05(e), or one percent (1%) of
the aggregate unpaid principal balance of the Base Facility
Note subject to Defeasance as of the Defeasance Notice
Effective Date if the Successor Borrower is designated by
Lender under Section 2.05(e). No Defeasance Commitment Fee
will be applicable if U.S. Treasury Securities are specified
in the Defeasance Notice as the applicable Investment
Security.
(5) The term "Defeasance Deposit" means an
-------------------
amount equal to the sum of the present value of each Mortgage
Payment that becomes due and payable during the period
beginning on the first day of the second calendar month after
the Defeasance Closing Date and ending on March 30, 2007,
where the present value of each Mortgage Payment is determined
using the following formula:
the amount of the Mortgage Payment
--------------------------------------------
(1 + (the Annual Yield/12))n
For this purpose, the last Mortgage Payment due and
payable on the Stated Maturity Date shall include the
amounts that would constitute the unpaid principal
balance of the Base Facility Note subject to
Defeasance on the Stated Maturity Date if all prior
Mortgage Payments were paid on their due dates and
"n" shall equal the Applicable Defeasance Term.
(6) The term "Defeasance Period" means the
------------------
period beginning on the earliest permitted date determined
under Section 2.05(d)(l) and ending on March 30, 2007.
(7) The term "Defeasance Notice Effective Date"
---------------------------------
means the date on which Lender provides confirmation of the
Defeasance Notice pursuant to Section 2.05(a)(2).
(8) The term "▇▇▇▇▇▇ Mae Investment Security"
-------------------------------
means any bond, debenture, note, participation certificate or
other similar obligation issued by ▇▇▇▇▇▇ ▇▇▇ in connection
with the Defeasance which provides for Scheduled Defeasance
Payments beginning in the second calendar month after the
Defeasance Closing Date.
(9) The term "Investment Security" means:
--------------------
40
(A) If offered by Lender pursuant to the
Defeasance Notice, a ▇▇▇▇▇▇ Mae Investment Security
purchased in the manner described in Sections
2.05(a)(6) and 2.05(f), and
(B) If no ▇▇▇▇▇▇ ▇▇▇ Investment
Security is offered by Lender pursuant to the
Defeasance Notice, U.S. Treasury Securities.
(10) The term "Mortgage Payment" means the amount
-----------------
of each regularly scheduled monthly payment of principal and
interest due and payable under the Base Facility Note subject
to Defeasance during the period beginning on the first day of
the second calendar month after the Defeasance Closing Date
and ending on the Stated Maturity Date, and the amount that
would constitute the aggregate unpaid principal balance of the
Base Facility Note subject to Defeasance on the Stated
Maturity Date if all prior Mortgage Payments were paid on
their due dates.
(11) The term "Next Scheduled P&I Payment" means
---------------------------
an amount equal to the monthly installment of principal and
interest due under the Base Facility Note subject to
Defeasance on the first day of the first calendar month after
the Defeasance Closing Date.
(12) The term "Scheduled Defeasance Payments"
------------------------------
means payments prior and as close as possible to (but in no
event later than) the successive scheduled dates on which
Mortgage Payments are required to be paid under the Base
Facility Note subject to Defeasance and in amounts equal to or
greater than the scheduled Mortgage Payments due and payable
on such dates under the Base Facility Note subject to
Defeasance.
(13) The term "Stated Maturity Date" means the
---------------------
Maturity Date specified in the Base Facility Note subject to
Defeasance determined without regard to Lender's exercise of
any right of acceleration of the Base Facility Note subject to
Defeasance.
(14) The term "U.S. Treasury Securities" means
-------------------------
direct, non-callable and non-redeemable obligations of the
United States of America which provided for Scheduled
Defeasance Payments beginning in the second calendar month
after the Defeasance Closing Date.
SECTION 2.06 Cross-Default and Cross-Remedy. While each Note
------------------------------
represents a separate and independent obligation of each Borrower, the Borrowers
nevertheless agree that if any Borrower fails to pay fully, when due, any amount
payable under any Note or any other Loan Document, then the Lender may elect to
treat such default with respect to such Note or other Loan Document as being a
default under the Note, Guaranty and Security Instruments of each other
Borrower. It is a material part of the consideration for the Lender's execution
and delivery of this Agreement that there cannot occur an Event of Default with
respect to one TC Party or one Mortgaged Property or under one Note or other
Loan Document, without the occurrence of such Event of Default constituting, and
resulting in, an Event of Default with respect to all TC Parties, all Mortgaged
Properties, all Notes, this
41
Agreement and the other Loan Documents. Accordingly, the Borrowers expressly
agree that irrespective of the actual payments made by any of them under the
Notes, this Agreement or the other Loan Documents, if the aggregate amount
actually paid is not sufficient to pay fully and timely all such Obligations,
then an Event of Default shall be deemed to exist as to all of the Loan
Documents of all TC Parties, notwithstanding that the amount paid was sufficient
to pay fully some but not all of the amounts then due and owing with respect to
the Notes or other Obligations. Nothing in this Section shall be construed to
prohibit one TC Party from paying or performing Obligations on behalf of another
TC Party or limit in any way the liability of any TC Party under this Agreement
or the other Loan Documents.
ARTICLE III
INITIAL ADVANCES
SECTION 3.01. Request.
-------
(a) On the Initial Closing Date, the Lender made the
Initial Advance.
(b) The Borrowers hereby make a request (the "Expansion
---------
Advance Request") for the Lender to make the Expansion Advance. If all
---------------
conditions contained in Section 3.02 are satisfied, on or before the
date hereof, the Lender shall make the Expansion Advance on the date
hereof, or on another date selected by the Borrowers and approved by
the Lender.
SECTION 3.02. Conditions Precedent to Expansion Advance. The
-----------------------------------------
obligation of the Lender to make the Expansion Advance is subject to the
following conditions precedent:
SECTION 3.02(a) The delivery to the Title Company, and the
filing and/or recording in all applicable jurisdictions, of all
applicable Loan Documents required by the Lender, including duly
executed and delivered original copies of amendments to the Initial
Security Instruments and UCC-1 Financing Statements covering the
portion of the Collateral comprised of personal property, and other
appropriate instruments, in form and substance satisfactory to the
Lender and in form proper for recordation, as may be necessary in the
opinion of the Lender to amend the applicable Initial Security
Instruments and any other Loan Documents;
SECTION 3.02(b) The satisfaction of all General Conditions
set forth in Article XI.
ARTICLE IV
FUTURE ADVANCES
SECTION 4.01. Procedure for Obtaining Future Advances.
---------------------------------------
42
SECTION 4.01(a) Request. In order to obtain a Future
-------
Advance, the Property Company (if the Future Advance is a Revolving
Facility Advance) or the Borrowers (if the Future Advance is a Base
Facility Advance) may from time to time deliver a written request for a
Future Advance (a "Future Advance Request") to the Lender, in the form
----------------------
attached as Exhibit S-1 or S-2 to this Agreement, as the case may be.
------------------
Each Future Advance Request shall be accompanied by (and no Future
Advance Request shall be effective unless it is accompanied by) the
following:
(i) a designation of the amount of the
Future Advance requested;
(ii) if the Future Advance Request is
for a Revolving Facility Advance, a designation of the
maturity date of the Revolving Facility Advance; and
(iii) all documents, instruments and
certificates required to be delivered pursuant to the
conditions contained in Section 4.02.
SECTION 4.01(b) Closing. If all conditions contained in
-------
Section 4.02 are satisfied, and the Lender has delivered the Rate
Confirmation Form to the Borrowers or the Property Company, as the case
may be, the Lender shall make the Future Advance requested in the
Future Advance Request, at a closing to be held at offices designated
by the Lender on a Closing Date selected by the Lender, and occurring
not more than 10 Business Days after the Lender's receipt of the Future
Advance Request, the Borrowers' or the Property Company's receipt of
the Rate Confirmation Form, and the satisfaction of all conditions
contained in Section 4.02.
SECTION 4.02. Conditions Precedent to Future Advances. The
-----------------------------------------
obligation of the Lender to make Future Advances is subject to the following
conditions precedent:
SECTION 4.02(a) With respect to any Future Advances (other
than Rollover Advances), after giving effect to the requested Future
Advance, the Aggregate Debt Service Coverage Ratio for the Advances
Outstanding for the Trailing 12 Month Period is not less than 150%;
SECTION 4.02(b) Receipt by the Lender of a facsimile copy of
the Advance Confirmation Instrument (if a Revolving Facility Advance),
duly executed by the Property Company, with an undertaking on the part
of the Property Company to deliver the original of the Advance
Confirmation Instrument to the Lender on the Closing Date;
SECTION 4.02(c) For any Title Insurance Policy not
containing a Revolving Credit Endorsement, receipt by the Lender of an
endorsement to each Title Insurance Policy, amending the effective date
of the Title Insurance Policy to the Closing Date and showing no
additional exceptions to coverage other than the exceptions shown on
the Initial Closing Date and other exceptions approved by the Lender;
43
SECTION 4.02(d) With respect to any Revolving Facility
Advance issued under the Revolving Facility (other than Rollover
Advances), the delivery to the Lender of a Cap complying with all of
the terms and conditions of Article XX; and
SECTION 4.02(e) The satisfaction of all General Conditions
set forth in Article XI.
ARTICLE V
CONVERSION OF REVOLVING FACILITY CREDIT COMMITMENT
TO BASE FACILITY CREDIT COMMITMENT
SECTION 5.01. Right to Convert. Subject to the terms, conditions and
----------------
limitations set forth in this Article, the Borrowers shall have the right, at
any time or from time to time before March 31, 2005, to convert all or a portion
of a Revolving Facility Credit Commitment to the Base Facility Credit
Commitment, in which event the Revolving Facility Credit Commitment shall be
reduced by, and the Base Facility Credit Commitment shall be increased by, the
amount of the conversion.
SECTION 5.02. Procedure for Obtaining Conversion.
----------------------------------
SECTION 5.02(a) Request. In order to obtain a conversion of
-------
all or a portion of the Revolving Facility Credit Commitment to the
Base Facility Credit Commitment, the Borrowers may from time to time
deliver a written request for a conversion (a "Conversion Request") to
------------------
the Lender, in the form attached as Exhibit T to this Agreement. Each
---------
Conversion Request shall be accompanied by (and no Conversion Request
shall be effective unless it is accompanied by) the following:
(i) A designation of the amount of the
conversion;
(ii) A designation of any Revolving Facility
Advances Outstanding which will be prepaid on the Closing
Date for the conversion; and
(iii) All documents, instruments and certificates
required to be delivered pursuant to the conditions contained
in Section 5.04.
SECTION 5.02(b) Closing. If none of the limitations
-------
contained in Section 5.03 is violated, and all conditions contained in
Section 5.04 are satisfied, the Lender shall permit the requested
conversion, at a closing to be held at offices designated by the Lender
on a Closing Date selected by the Lender, and occurring within 15
Business Days after the Lender's receipt of the Conversion Request and
the satisfaction of all conditions contained in Section 5.04, by
executing and delivering, all at the sole cost and expense of the
Borrowers, an amendment to this Agreement, in the form attached as
Exhibit U to this Agreement, together with all amendments to the Notes
---------
and Security Documents and other applicable
44
Loan Documents, in form and substance satisfactory to the Lender,
reflecting the change in the Base Facility Credit Commitment and the
Revolving Facility Credit Commitment. The documents and instruments
referred to in the preceding sentence are referred to in this Article
as the "Conversion Documents."
--------------------
SECTION 5.03. Limitations on Right to Convert. The right of the
-------------------------------
Borrowers to convert all or a portion of the Revolving Facility Credit
Commitment to the Base Facility Credit Commitment is subject to the following
limitations:
SECTION 5.03(a) Closing Date. The Closing Date shall
------------
occur on or before March 31, 2005.
SECTION 5.03(b) Minimum Request. Each Request for a
---------------
conversion shall be in the minimum amount of $5,000,000.
SECTION 5.03(c) Maximum Conversion Right. If, after
------------------------
the conversion, the aggregate unpaid principal balance of all
Revolving Facility Advances Outstanding will exceed the
Revolving Facility Credit Commitment, the Borrowers shall be
obligated to prepay, on or before the Closing Date for the
conversion, an amount of Revolving Facility Advances
Outstanding which is at least equal to the amount of the
excess.
SECTION 5.03(d) Prepayment in Full. Any Revolving
------------------
Facility Advance to be prepaid in accordance with this Article
must be prepaid in full, not in part.
SECTION 5.04. Conditions Precedent to Conversion. The right of the
----------------------------------
Borrowers to convert all or a portion of the Revolving Facility Credit
Commitment to the Base Facility Credit Commitment and the obligation of the
Lender to deliver the Conversion Documents on the Closing Date are subject to
the following conditions precedent:
SECTION 5.04(a) Either:
(1) on the date on which the closing of the
Conversion Request occurs:
(i) one or more of the Borrowers shall have
requested and shall have received a Base Facility
Advance which is allocable to the increase in the
Base Facility Credit Commitment requested in the
Conversion Request in an amount as to each such
Borrower requested by the Borrowers and approved by
the Lender in its discretion; and
(ii) the Coupon Rate for such Base Facility
Advance is equal to or less than the Underwriting
Rate;
or
45
(2) after giving effect to the requested
conversion:
(i) the Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period is
not less than the Minimum Aggregate Facility Debt
Service Coverage Ratio for the Trailing 12 Month
Period;
(ii) the Aggregate Facility Debt Service
Coverage Ratio for the Trailing Three Month Period is
not less than the Minimum Aggregate Facility Debt
Service Coverage Ratio for the Trailing Three Month
Period; and
(iii) the Aggregate Loan to Value Ratio for
the Trailing 12 Month Period is not greater than the
Maximum Aggregate Loan to Value Ratio for the
Trailing 12 Month Period.
SECTION 5.04(b) Payment by the Property Company in full of any
Revolving Facility Advances Outstanding which the Property Company has
designated for prepayment, including any charges under the Revolving
Facility Advance;
SECTION 5.04(c) Receipt by the Lender of an endorsement to
each Title Insurance Policy, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Initial
Closing Date and other exceptions approved by the Lender;
SECTION 5.04(d) Receipt by the Lender of one or more
counterparts of each Conversion Document, dated as of the Closing Date,
signed by each of the parties (other than the Lender) who is a party to
such Conversion Document; and
SECTION 5.04(e) The satisfaction of all General Conditions set
forth in Article XI.
ARTICLE VI
ADDITIONS OF COLLATERAL
SECTION 6.01. Right to Add Collateral. Subject to the terms and
-----------------------
conditions of this Article, the Borrowers shall have the right, from time to
time during the Term of this Agreement, to add Multifamily Residential
Properties to the Collateral Pool in accordance with the provisions of this
Article.
SECTION 6.02. Procedure for Adding Collateral.
-------------------------------
SECTION 6.02(a) Request. In order to add a Multifamily
-------
Residential Property to the Collateral Pool, the Borrowers may, not
more than once each calendar quarter, deliver a
46
written request (the "Collateral Addition Request") to the Lender, in
---------------------------
the form attached as Exhibit V to this Agreement, to add an Additional
---------
Mortgaged Property to the Collateral Pool. Each Collateral Addition
Request shall be accompanied by (and no Collateral Addition Request
shall be effective unless it is accompanied by) the following:
(1) The information relating to the proposed Additional
Mortgaged Property required by the form attached as Exhibit W to this
---------
Agreement (the "Collateral Addition Description Package"), as amended
---------------------------------------
from time to time to include information required under the DUS Guide;
(2) The payment of all Additional Collateral Due Diligence
Fees pursuant to Sections 14.04(b); and
(3) All documents, instruments, and certificates required to
be delivered pursuant to the conditions contained in Section 6.03.
SECTION 6.02(b) Additional Information. The Borrowers shall
----------------------
promptly deliver to the Lender any additional information concerning
the proposed Additional Mortgaged Property that the Lender may from
time to time reasonably request.
SECTION 6.02(c) Underwriting. The Lender shall evaluate the
------------
proposed Additional Mortgaged Property, and shall make underwriting
determinations as to the Aggregate Facility Debt Service Coverage
Ratios and the Aggregate Loan to Value Ratio for the Trailing 12 Month
Period applicable to the Collateral Pool, on the basis of 12 Month
Valuations made with respect to the proposed Additional Mortgaged
Property, and otherwise in accordance with ▇▇▇▇▇▇ Mae's DUS
Underwriting Requirements, as determined in Lender's discretion. The
amount of any increase in the Maximum Credit Commitment resulting from
the addition of any Additional Mortgaged Properties shall be determined
in accordance with Section 8.06. Within 25 Business Days after receipt
of (i) the Collateral Addition Request for the proposed Additional
Mortgaged Property and (ii) all reports, certificates and documents to
be prepared by third parties in connection with the underwriting
requirements, the Lender shall notify the Borrowers whether or not it
shall consent to the addition of the proposed Additional Mortgaged
Property to the Collateral Pool and, if it shall so consent, shall set
forth the Aggregate Facility Debt Service Coverage Ratios and the
Aggregate Loan to Value Ratio for the Trailing 12 Month Period which it
estimates shall result from the addition of the proposed Additional
Mortgaged Property to the Collateral Pool. If the Lender declines to
consent to the addition of the proposed Additional Mortgaged Property
to the Collateral Pool, the Lender shall include, in its notice, a
brief statement of the reasons for doing so. Within five Business Days
after receipt of the Lender's notice that it shall consent to the
addition of the proposed Additional Mortgaged Property to the
Collateral Pool, the Borrowers shall notify the Lender whether or not
they elect to cause the proposed Additional Mortgaged Property to be
added to the Collateral Pool. If the Borrowers fail to respond within
the period of five Business Days,
47
they shall be conclusively deemed to have elected not to cause the
proposed Additional Mortgaged Property to be added to the Collateral
Pool.
SECTION 6.02(d) Closing. If, pursuant to subsection (c), the
Lender consents to the addition of the proposed Additional Mortgaged
Property to the Collateral Pool, the Borrowers timely elect to cause
the proposed Additional Mortgaged Property to be added to the
Collateral Pool and all conditions contained in Section 6.03 are
satisfied, the Lender shall permit the proposed Additional Mortgaged
Property to be added to the Collateral Pool, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the
Lender, and occurring within five Business Days after the Lender's
receipt of the Borrowers[] election and the satisfaction of all
conditions contained in Section 6.03.
SECTION 6.03. Conditions Precedent to Addition of an Additional
-------------------------------------------------
Mortgaged Property to the Collateral Pool. The right of the Borrowers to add an
------------------------------------------
Additional Mortgaged Property to the Collateral Pool on the Closing Date
applicable to the Additional Mortgaged Property is subject to the following
conditions precedent:
SECTION 6.03(a) On the Closing Date for the addition
of the Additional Mortgaged Property to the Collateral
Pool:
(A) If the addition of an Additional Mortgaged
Property is completed prior to the date one year after the
date hereof:
(i) the Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period is not
less than the Minimum Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period;
(ii) the Aggregate Facility Debt Service
Coverage Ratio for the Trailing Three Month Period is not
less than the Minimum Aggregate Facility Debt Service
Coverage Ratio for the Trailing Three Month Period; and
(iii) the Aggregate Loan to Value Ratio for
the Trailing 12 Month Period is not greater than the
Maximum Aggregate Loan to Value Ratio for the Trailing 12
Month Period.
(B) If the addition of an Additional Mortgaged
Property is completed on or after the date one year after
the date hereof:
(i) each of the items in (A) above shall be
satisfied;
(ii) the Debt Service Coverage Ratio for the
Trailing 12 Months for the Additional Mortgaged Property
is not less than 150%; and
48
(iii) the Loan to Value Ratio for the
Trailing 12 Month Period for the Additional Mortgaged
Property shall be not more than 65%.
SECTION 6.03(b) To the extent an Expansion Origination Fee
has not been paid in connection with an Advance related to an
Additional Mortgaged Property, the payment by the Borrowers of the
Collateral Addition Fee;
SECTION 6.03(c) The delivery to the Title Company, with
fully executed instructions directing the Title Company to file
and/or record in all applicable jurisdictions as of the Closing Date,
all applicable Collateral Addition Loan Documents required by the
Lender, including duly executed and delivered original copies of any
Security Instruments and UCC-1 Financing Statements covering the
portion of the Additional Mortgaged Property comprised of personal
property, and other appropriate instruments, in form and substance
satisfactory to the Lender and in form proper for recordation, as may
be necessary in the opinion of the Lender to perfect the Lien created
by the applicable additional Security Instrument, and any other
Collateral Addition Loan Document creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable
in connection with such execution, delivery, recording and filing;
SECTION 6.03(d) If the Title Insurance Policy for the
Additional Mortgaged Property contains a Tie-In Endorsement, an
endorsement to each other Title Insurance Policy containing a Tie-In
Endorsement, adding a reference to the Additional Mortgaged Property;
SECTION 6.03(e) In the event the Additional Mortgaged
Property is owned by a Person who is not an Owner, such Person shall
execute a Guaranty, by which it is added as an Owner and agrees to
guarantee all of the TC Parties' obligations under this Agreement and
the other Loan Documents and such Guaranty shall be secured by a
Security Instrument granted by such Person; and
SECTION 6.03(f) The satisfaction of all General Conditions
set forth in Article XI.
SECTION 6.04. Certain Unimproved Land. The value of any parcel of
-----------------------
Unimproved Land, and any Net Operating Income allocable to any parcel of
Unimproved Land, shall not be taken into account in the Aggregate Facility Debt
Service Coverage Ratios or Aggregate Loan to Value Ratio for the Trailing 12
Month Period until such time as the Borrowers or Owners construct a Multifamily
Residential Property on the Unimproved Land and add the Unimproved Land as an
Additional Mortgaged Property pursuant to this Article VI. Nothing in the
foregoing shall be construed as the Lender's consent to any such construction.
49
ARTICLE VII
RELEASES OF COLLATERAL
SECTION 7.01. Right to Obtain Releases of Collateral. Subject to the
--------------------------------------
terms and conditions of this Article, the Borrowers shall have the right to
obtain a release of a Mortgaged Property from the Collateral Pool (and a
concurrent release of any Owner from its obligations under the Loan Documents
if, after the release of the Mortgaged Property, the Owner will not own any
Mortgaged Property), in accordance with the provisions of this Article.
SECTION 7.02. Procedure for Obtaining Releases of Collateral.
----------------------------------------------
SECTION 7.02(a) Request. In order to obtain a release of
-------
Collateral from the Collateral Pool, the Borrowers may, not more than
once each calendar quarter, deliver a written request for the release
of the Collateral from the Collateral Pool (the "Collateral Release
------------------
Request") to the Lender, in the form attached as Exhibit X to this
------- ---------
Agreement. The Collateral Release Request shall not result in a
termination of all or any part of the Credit Facility. The Borrowers
may only terminate all or any part of the Credit Facility by
delivering a Revolving Facility Termination Request or Credit
Facility Termination Request pursuant to Articles IX or X. The
Collateral Release Request shall be accompanied by (and the
Collateral Release Request shall not be effective unless it is
accompanied by) the following:
(i) The name, address and location of the
Mortgaged Property to be released from the Collateral Pool
(the "Collateral Release Property"); and
---------------------------
(ii) All documents, instruments and
certificates required to be delivered pursuant to the
conditions contained in Section 7.03.
SECTION 7.02(b) Closing. If all conditions contained in
-------
Section 7.03 are satisfied, the Lender shall cause the Collateral
Release Property to be released from the Collateral Pool, on a
Closing Date selected by the Lender, and occurring within 15 Business
Days after the Lender's receipt of the Collateral Release Request and
the satisfaction of all conditions contained in Section 7.03, by
executing and delivering, and causing all applicable parties to
execute and deliver, all at the sole cost and expense of the
Borrowers, (i) instruments, in the form customarily used by the
Lender for releases in the jurisdiction governing the perfection of
the security interest being released, releasing the applicable
Security Instrument as a Lien on the Collateral Release Property, and
UCC-3 Termination Statements terminating the UCC-1 Financing
Statements perfecting a Lien on the portion of the Collateral Release
Property comprised of personal property and (ii) instruments
releasing the Owner who owns the Collateral Release Property from its
obligations under any Base Facility Note it has executed and the
other Loan Documents (if, after giving effect to the release, the
Owner will not own any Mortgaged Properties). If the Owner is to be
released pursuant to the preceding sentence, then the Property
Company shall assume the
50
indebtedness evidenced by the Base Facility Note made by such Owner
by executing an amendment to the Base Facility Note previously made
by the Property Company, in a form approved by the Lender; provided,
however, if the Borrowers add an Additional Mortgaged Property to the
Collateral Pool in a transaction which is substantially
contemporaneous with the release, then the Lender shall have the
right to require the new Owner to assume the indebtedness evidenced
by the Base Facility Note made by the Owner being released, by
executing a novation, new Base Facility Note or other document in
form and substance satisfactory to the Lender, and by granting for
the benefit of the Lender a Security Instrument to secure its
obligations with respect to such indebtedness. The documents and
instruments referred to in the preceding two sentences are
collectively referred to in this Article as the "Collateral Release
------------------
Documents."
----------
SECTION 7.02(c) Definitions. For purposes of this
-----------
Agreement,
the term "Allocable Facility Amount" means, with respect
-------------------------
to each Mortgaged Property, an amount equal to the product obtained
by multiplying--
(i) the then current Aggregate
Loan to Value Ratio, by
(ii) the then current 12 Month
Valuation of the Mortgaged Property; and
the term "Release Price" means the greater of (i) 115% of
-------------
the Allocable Facility Amount for the Mortgaged Property to be
released and(ii) the amount, if any, of Advances Outstanding which
are required to be repaid so that (after giving effect to the
transactions in this Section) the Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period is not less than the
Minimum Aggregate Facility Debt Service Coverage Ratio for the
Trailing 12 Month Period and the Aggregate Loan to Value Ratio for
the Trailing 12 Month Period is not more than the Maximum Aggregate
Loan to Value Ratio for the Trailing 12 Month Period, provided that
if, after giving effect to the proposed Release, the remaining
Collateral Pool has an Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period of not less than 155%, and the Aggregate
Facility Loan to Value Ratio for the Trailing 12 Month Period is not
more than 60%, then the Release Price shall be the Allocable Facility
Amount.
SECTION 7.02(d) Payment and Application of Release
----------------------------------
Price.
-----
SECTION 7.02(d)(1) The Borrowers shall pay the
Release Price to the Lender, and the Release Price shall
be applied as follows:
(i) first, to the repayment of Revolving
Facility Advances Outstanding, until
the amount of Revolving Facility
Advances Outstanding equals zero;
and
51
(ii) next, at the Borrowers' option, to
be exercised by giving the Lender a
notice at the time of the Borrowers'
delivery of the Collateral Release
Request, either--
(A) if the Borrowers have selected
yield maintenance pursuant to
Section 2.05 of this
Agreement, to the partial
prepayment of the Base
Facility Advances Outstanding,
or
(B) with respect to the Initial
Advance or if the Borrowers
have selected defeasance
pursuant to Section 2.05 of
this Agreement, to the partial
defeasance of the Base
Facility Advances Outstanding,
in accordance with the
following procedure:
(I) the Closing Date for the
defeasance shall occur
not less than 60 days
after the date on which
the Borrowers deliver the
Collateral Release
Request;
(II) the Borrowers shall have
paid all accrued and
unpaid interest on all
Base Facility Advances
being defeased;
(III) with respect to the
Initial Advance, the
Borrowers shall have
delivered United States
Government Securities
with terms that will be
sufficient to make
scheduled payments on the
Base Facility Advances
being defeased; and
(IV) the Borrowers shall have
complied with the
additional conditions
described in Exhibit Z
---------
to this Agreement or
Section 2.05 of this
Agreement, as applicable.
SECTION 7.02(d)(2) In addition to the Release
Price, the Borrowers shall pay to the Lender all
associated prepayment premiums and other
52
charges due under the Notes and any Advance Confirmation
Instruments evidencing the Advances being repaid.
SECTION 7.02(d)(3) If, on the date on which the
Borrowers pay the Release Price, no Revolving Facility
Advances are then due and payable, the Lender shall hold
the payments in an interest-bearing account in a financial
institution selected by the Borrowers and approved by the
Lender, as additional Collateral for the Credit Facility,
until the next date on which Revolving Facility Advances
are due and payable, at which time the Lender shall apply
the amounts, including accrued interest, held by it to the
amounts of the Revolving Facility Advances due and
payable. For purposes of applying clause (d)(1)(i) above,
the Revolving Facility Advances Outstanding will be deemed
to have been repaid at the time the Release Price is paid.
SECTION 7.02(d)(4) Nothing in this Section shall
be construed as a waiver of the conditions to a release
set forth in Sections 7.03(a) and (b), and if, upon
payment of the Release Price, either of the conditions set
forth in Sections 7.03(a) or (b) will not satisfied, the
Lender shall not be obligated to make the release unless,
concurrently with or prior to the release, the Borrowers
repay such additional Advances Outstanding as may be
necessary to satisfy the conditions set forth in Sections
7.03(a) and (b) and satisfy each of the other conditions
set forth in Section 7.03.
SECTION 7.03. Conditions Precedent to Release of Collateral Release
-----------------------------------------------------
Property from the Collateral Pool. The right of the Borrowers to obtain a
---------------------------------
release of a Collateral Release Property from the Collateral Pool and the
obligation of the Lender to release a Collateral Release Property from the
Collateral Pool by executing and delivering the Collateral Release Documents on
the Closing Date, are subject to the following conditions precedent:
SECTION 7.03(a) Immediately before and after giving effect
to the requested release:
(1) the Aggregate Facility Debt Service Coverage
Ratio for the Trailing 12 Month Period is not less than
the Minimum Aggregate Facility Debt Service Coverage Ratio
for the Trailing 12 Month Period;
(2) the Aggregate Facility Debt Service Coverage
Ratio for the Trailing Three Month Period is not less than
the Minimum Aggregate Facility Debt Service Coverage Ratio
for the Trailing Three Month Period; and
(3) the Aggregate Loan to Value Ratio for the
Trailing 12 Month Period is not greater than the Maximum
Aggregate Loan to Value Ratio for the Trailing 12 Month
Period.
53
SECTION 7.03(b) Immediately after giving effect to the
requested release:
(1) the Aggregate Facility Debt Service Coverage
Ratio for the Trailing 12 Month Period is not less than
the Aggregate Facility Debt Service Coverage Ratio for the
Trailing 12 Month Period in effect immediately before
giving effect to the requested release;
(2) the Aggregate Facility Debt Service Coverage
Ratio for the Trailing Three Month Period is not less than
the Aggregate Facility Debt Service Coverage Ratio for the
Trailing Three Month Period in effect immediately before
giving effect to the requested release; and
(3) the Aggregate Loan to Value Ratio for the
Trailing 12 Month Period is not greater than the Aggregate
Loan to Value Ratio for the Trailing 12 Month Period in
effect immediately before giving effect to the requested
release.
SECTION 7.03(c) Payment of the Release Price for the
Collateral Release Property;
SECTION 7.03(d) Payment of the Release Fee for the
Collateral Release Property;
SECTION 7.03(e) Receipt by the Lender on the Closing
Date of one or more counterparts of each Collateral Release Document,
dated as of the Closing Date, signed by each of the parties (other
than the Lender) who is a party to such Collateral Release Document;
SECTION 7.03(f) If the Lender determines the
Collateral Release Property to be one phase of a project, and one or
more other phases of the project are Mortgaged Properties which will
remain in the Collateral Pool (the "Remaining Mortgaged Properties"),
------------------------------
the Lender's determination that the Remaining Mortgaged Properties
can be operated separately from the Collateral Release Property and
any other phases of the project which are not Mortgaged Properties.
In making this determination, the Lender shall evaluate whether the
Remaining Mortgaged Properties comply with the terms of Section 203
and 208 of the DUS Guide, which, as of the date of this Agreement,
require, among other things, that a phase which constitutes
collateral for a loan made in accordance with the terms of the DUS
Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather
road or by access to such a road by means of a satisfactory easement,
(ii) have access which is sufficiently attractive and direct from
major thoroughfares to be conducive to continued good marketing,
(iii) have a location which is not (A) inferior to other phases, (B)
such that inadequate maintenance of other phases would have a
significant negative impact on the phase, and (C) such that the phase
is visible only after passing through the other phases of the project
and (iv) comply with such other issues as are dictated by prudent
practice;
54
SECTION 7.03(g) Endorsements to the Tie-In Endorsements of
the Title Insurance Policies, if deemed necessary by the Lender, in its
reasonable judgment, to reflect the release;
SECTION 7.03(h) Receipt by the Lender of an endorsement to
each Title Insurance Policy, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Initial
Closing Date and other exceptions approved by the Lender;
SECTION 7.03(i) Receipt by the Lender on the Closing Date of
a writing, dated as of the Closing Date, signed by the TC Parties, in
the form attached as Exhibit AA to this Agreement, pursuant to which
----------
the TC Parties confirm that their obligations under the Loan Documents
are not adversely affected by the release of the Collateral Release
Property from the Collateral;
SECTION 7.03(j) Immediately after giving effect to the
release, there shall be at least 25 Mortgaged Properties in the
Collateral Pool and such Mortgaged Properties shall be located in at
least two states (other than Delaware);
SECTION 7.03(k) Notwithstanding the other provisions of this
Section 7.03, no release of any of the Mortgaged Properties shall be
made unless the Borrower has provided title insurance, taking into
account any applicable tie-in endorsements, to Lender in respect of
each of the remaining Mortgaged Properties in the Collateral Pool in
an amount equal to 125% of the 12 Month Valuation, in effect on the
date hereof of each such Mortgaged Property.
SECTION 7.03(l) The satisfaction of all General Conditions
set forth in Article XI.
SECTION 7.04. Certain Unimproved Land. Notwithstanding anything to
-----------------------
the contrary in this Agreement or the other Loan Documents, any release of any
parcel of Unimproved Land prior to the date on which any such parcel of
Unimproved Land becomes an Additional Mortgaged Property in accordance with
Article VI may be made for a Release Price of $0 and a Release Fee of $0 and the
sole condition to such release shall be that there shall exist no Event of
Default on the Closing Date for the release.
55
ARTICLE VIII
EXPANSION OF CREDIT FACILITY
SECTION 8.01. Right to Increase Maximum Credit Commitment. Subject
-------------------------------------------
to the terms, conditions and limitations of this Agreement, the Borrowers shall
have the right, at any time or from time to time before the Credit Facility
Termination Date, to increase the Maximum Credit Commitment. The Borrowers shall
be entitled to increase the Maximum Credit Commitment as a result of (i) adding
one or more Additional Mortgaged Properties to the Collateral Pool (subject to
compliance with all of the terms and conditions of Article VI) or (ii) increases
in the Valuations of the Mortgaged Properties in the Collateral Pool. In the
event the Maximum Credit Commitment increases pursuant to this Article, the Base
Facility Credit Commitment or the Revolving Facility Credit Commitment, or both,
shall increase by amounts selected by the Borrowers pursuant to Section 8.02,
provided that the sum of increases, if any, in each shall equal the amount of
the increase in the Maximum Credit Commitment.
SECTION 8.02. Procedure for Obtaining Increases in Maximum Credit
---------------------------------------------------
Commitment.
----------
SECTION 8.02(a) Request. In order to obtain an increase in
-------
the Maximum Credit Commitment, the Borrowers may from time to time
deliver a written request for an increase (a "Credit Facility
---------------
Expansion Request") to the Lender, in the form attached as Exhibit BB
----------------- ----------
to this Agreement. Each Credit Facility Expansion Request shall be
accompanied by (and no Credit Facility Expansion Request shall be
effective unless it is accompanied by) the following:
(1) A designation of the amount of the
proposed increase;
(2) A designation of, as applicable, the
increase in the Base Facility Credit Commitment and the
Revolving Facility Credit Commitment; and
(3) All documents, instruments and
certificates required to be delivered pursuant to the
conditions contained in Section 8.04.
SECTION 8.02(b) Closing. If none of the limitations
-------
contained in Section 8.03 is violated, and all conditions contained in
Section 8.04 are satisfied, the Lender shall permit the requested
increase in the Maximum Credit Commitment, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the
Lender, and occurring within 15 Business Days after the Lender's
receipt of the Credit Facility Expansion Request and the satisfaction
of all conditions contained in Section 8.04.
SECTION 8.03. Limitations on Right to Increase Maximum Credit
-----------------------------------------------
Commitment. The Borrowers' right to increase the Maximum
----------
Credit Commitment is subject to the following limitations:
56
SECTION 8.03(a) Maximum Credit Commitment. After giving
-------------------------
effect to the proposed increase, the Maximum Credit Commitment
shall not exceed $500,000,000.
SECTION 8.03(b) Minimum Request. Each Request for an increase
---------------
in the Maximum Credit Commitment shall be in the minimum amount of
$3,000,000.
SECTION 8.04. Conditions Precedent to Increase in Maximum Credit
--------------------------------------------------
Commitment. The right of the Borrowers to increase the Maximum Credit
----------
Commitment is subject to the following conditions precedent:
SECTION 8.04(a) After giving effect to (i) the requested
increase, and (ii) any releases from time to time of the Collateral in
the Collateral Pool--
(1) the Aggregate Facility Debt Service Coverage
Ratio for the Trailing 12 Month Period is not less than the
Minimum Aggregate Facility Debt Service Coverage Ratio for the
Trailing 12 Month Period; and
(2) the Aggregate Loan to Value Ratio for the
Trailing 12 Month Period is not greater than the Maximum
Aggregate Loan to Value Ratio for the Trailing 12 Month
Period;
except that, for purposes of determining the foregoing
Aggregate Loan to Value Ratio for the Trailing 12 Month Period
and the Aggregate Facility Debt Service Coverage Ratios, the
Borrowers shall be deemed to have received, on the Closing
Date for the proposed increase, a sufficient amount of Base
Facility Advances Outstanding so that the aggregate of the
Base Facility Advances Outstanding equals the Base Facility
Credit Commitment (as increased by any proposed increase in
the Base Facility Credit Commitment), and Revolving Facility
Advances so that the aggregate of the Revolving Facility
Advances equals the Revolving Facility Credit Commitment (as
increased by any proposed increase in the Revolving Facility
Credit Commitment), with the Advances deemed received bearing
interest at the Coupon Rates that they would have borne had
they actually been issued, as determined by the Lender;
SECTION 8.04(b) An endorsement to each Title Insurance
Policy, amending the effective date of the Title Insurance Policy to
the Closing Date, and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date and other
exceptions approved by the Lender;
SECTION 8.04(c) The receipt by the Lender of fully executed
original copies of all Credit Facility Expansion Loan Documents, each
of which shall be in full force and effect, and in form and substance
satisfactory to the Lender in all respects;
57
SECTION 8.04(d) If there is an increase in Revolving
Facility Credit Commitment, an increase in the notional principal
amount of the Cap, if any, as may be necessary to have such amount
equal or exceed the Revolving Facility Credit Commitment, as increased;
and
SECTION 8.04(e) The satisfaction of all General Conditions
set forth in Article XI.
SECTION 8.05. Interest Rate of Advances After Increase in Maximum
---------------------------------------------------
Credit Commitment. In the event the Base Facility Credit Commitment or the
-----------------
Revolving Facility Credit Commitment increases pursuant to an increase in the
Maximum Credit Commitment under this Article, the Coupon Rate for any Base
Facility Advance or Revolving Facility Advance which is allocable to the
increase shall equal the rate set forth in Section 2.03(d)(3).
SECTION 8.06. Maximum Amount of Increase. The increase in the
--------------------------
Commitment pursuant to this Article VIII shall be limited to the lesser of (a)
the amount that would result in an Aggregate Facility Loan to Value Ratio for
the Trailing 12 Month Period of 65% or (b) the amount that would result in (i)
an Aggregate Facility Debt Service Coverage Ratio for the Trailing 12 Month
Period of 110% for the portion of the Commitment (including the portion of any
additional advances to be made pursuant to Article VIII) that comprises the
Revolving Facility Credit Commitment (using a prorated portion of the Net
Operating Income and using the Facility Debt Service for only the Variable Rate
Commitment in making such determination of the Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period, provided such amount shall not
exceed 103% of the amount that would result using the calculation set forth in
(ii) below), and (ii) an Aggregate Debt Service Coverage Ratio for the Trailing
12 Month Period of 150% for the portion of the Commitment (including the portion
of any additional advances to be made pursuant to this Article VIII) that
comprises the Base Facility Credit Commitment (using a prorated portion of the
Net Operating Income and using the Aggregate Facility Debt Service Coverage
Ratio for the Trailing 12 Month Period for only the Fixed Facility Credit
Commitment in making such determination of Aggregate Debt Service Coverage Ratio
for the Trailing 12 Month Period).
ARTICLE IX
COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY
SECTION 9.01. Right to Complete or Partial Termination of Revolving
-----------------------------------------------------
Facility. Subject to the terms and conditions of this Article, the Property
--------
Company shall have the right to permanently reduce the Revolving Credit Facility
Commitment in accordance with the provisions of this Article.
SECTION 9.02. Procedure for Complete or Partial Termination of
------------------------------------------------
Revolving Facility.
------------------
58
SECTION 9.02(a) Request. In order to permanently reduce the
-------
Revolving Facility Credit Commitment, the Property Company may deliver
a written request for the reduction (the "Revolving Facility
------------------
Termination Request") to the Lender, in the form attached as Exhibit CC
------------------- ----------
to this Agreement. A permanent reduction of the Revolving Facility
Credit Commitment to $0 shall be referred to as a "Complete Revolving
------------------
Facility Termination." The Revolving Facility Termination Request shall
--------------------
be accompanied by (and the Revolving Facility Termination Request shall
not be effective unless it is accompanied by) the following:
(1) A designation of the proposed amount of the
reduction in the Revolving Facility Credit Commitment;
(2) Unless there is a Complete Revolving
Facility Termination, a designation by the Property Company of
any Revolving Facility Advances which will be prepaid; and
(3) All documents, instruments and certificates
required to be delivered pursuant to the conditions contained
in Section 9.03.
Any release of Collateral, whether or not made in connection with a
Revolving Facility Termination Request, must comply with all conditions
to a release which are set forth in Article VII.
SECTION 9.02(b) Closing. If all conditions contained in
-------
Section 9.03 are satisfied, the Lender shall permit the Revolving
Facility Credit Commitment to be reduced to the amount designated by
the Property Company, at a closing to be held at offices designated by
the Lender on a Closing Date selected by the Lender, within 15 Business
Days after the Lender's receipt of the Revolving Facility Termination
Request and the satisfaction of all conditions contained in Section
9.03, by executing and delivering a counterpart of an amendment to this
Agreement, in the form attached as Exhibit DD to this Agreement,
----------
evidencing the reduction in the Revolving Facility Credit Commitment.
The document referred to in the preceding sentence is referred to in
this Article as the "Revolving Facility Termination Document."
---------------------------------------
SECTION 9.03. Conditions Precedent to Complete or Partial
-------------------------------------------
Termination of Revolving Facility. The right of the Property Company to reduce
---------------------------------
the Revolving Facility Credit Commitment and the obligation of the Lender to
execute the Revolving Facility Termination Document, are subject to the
following conditions precedent:
SECTION 9.03(a) Payment by the Property Company in full of all of the
Revolving Facility Advances Outstanding required to be paid in order that the
aggregate unpaid principal balance of all Revolving Facility Advances
Outstanding is not greater than the Revolving Facility Credit Commitment, as
reduced pursuant to this Article, including any associated prepayment premiums
or other charges under the Notes (but if the Property Company is not required to
prepay all of the
59
Revolving Facility Advances, the Property Company shall have the right to select
which of the Revolving Facility Advances shall be repaid);
SECTION 9.03(b) Payment by the Property Company of the Revolving
Facility Termination Fee;
SECTION 9.03(c) Receipt by the Lender on the Closing Date of one or
more counterparts of the Revolving Facility Termination Document, dated as of
the Closing Date, signed by each of the parties (other than the Lender) who is a
party to such Revolving Facility Termination Document; and
SECTION 9.03(d) The satisfaction of the General Conditions set forth
in Sections 11.01(a), 11.01(b) and 11.01(g).
ARTICLE X
TERMINATION OF CREDIT FACILITY
SECTION 10.01. Right to Terminate Credit Facility. Subject to the
----------------------------------
terms and conditions of this Article, the Borrowers shall have the right to
terminate this Agreement and the Credit Facility and receive a release of all of
the Collateral from the Collateral Pool in accordance with the provisions of
this Article.
SECTION 10.02. Procedure for Terminating Credit Facility.
-----------------------------------------
SECTION 10.02(a) Request. In order to terminate this Agreement and the
-------
Credit Facility, the Borrowers may deliver a written request for the termination
(the "Credit Facility Termination Request") to the Lender, in the form attached
-----------------------------------
as Exhibit EE to this Agreement. The Credit Facility Termination Request shall
----------
be accompanied by (and the Credit Facility Termination Request shall not be
effective unless it is accompanied by) all documents, instruments and
certificates required to be delivered pursuant to the conditions contained in
Section 10.03.
SECTION 10.02(b) Closing. If all conditions contained in Section 10.03
-------
are satisfied, this Agreement shall terminate, and the Lender shall cause all of
the Collateral to be released from the Collateral Pool, at a closing to be held
at offices designated by the Lender on a Closing Date selected by the Lender,
within 15 Business Days after the Lender's receipt of the Credit Facility
Termination Request and the satisfaction of all conditions contained in Section
10.03, by executing and delivering, and causing all applicable parties to
execute and deliver, all at the sole cost and expense of the Borrowers,
instruments, in the form customarily used by the Lender for releases in the
jurisdictions in which the Mortgaged Properties are located, releasing all of
the Security Instruments as a Lien on the Mortgaged Properties, and UCC-3
Termination Statements terminating all of the UCC-1 Financing Statements
perfecting a Lien on the personal property located on the Mortgaged Properties,
in the form customarily used in the jurisdiction governing the perfection of the
security
60
interest being released. The instruments referred to in the preceding sentence
are referred to in this Article as the "Facility Termination Documents."
------------------------------
SECTION 10.03. Conditions Precedent to Termination of Credit
---------------------------------------------
Facility. The right of the Borrowers to terminate this Agreement and the Credit
--------
Facility and to receive a release of all of the Collateral from the Collateral
Pool and the Lender's obligation to execute and deliver the Facility Termination
Documents on the Closing Date are subject only to the following conditions
precedent:
Payment by the Borrowers in full of all of the Notes Outstanding on the
Closing Date, including any associated prepayment premiums (including
the component thereof consisting of the Credit Facility Termination
Fee) or other charges under the Notes.
ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS
SECTION 11.01 General Conditions. Except to the extent expressly
------------------
modified in Sections 9.03(d) and 10.03, the obligation of the Lender to close
the transaction requested in a Request shall be subject to the following
conditions precedent (the "General Conditions") in addition to any other
------------------
conditions precedent set forth in this Agreement:
SECTION 11.01(a) Payment of Expenses. The payment by the
-------------------
Borrowers of the Lender's fees and expenses payable in accordance with
this Agreement for which the Lender has presented an invoice on or
before the Closing Date for the Request;
SECTION 11.01(b) No Default. There shall exist no Event of
----------
Default or Potential Event of Default on the Closing Date for the
Request and, after giving effect to the transaction requested in the
Request, no Event of Default or Potential Event of Default shall have
occurred;
SECTION 11.01(c) No Insolvency. Receipt by the Lender on the
-------------
Closing Date for the Request of evidence satisfactory to the Lender
that no TC Party is insolvent (within the meaning of any applicable
federal or state laws relating to bankruptcy or fraudulent transfers)
or will be rendered insolvent by the transactions contemplated by the
Loan Documents, including the making of a Future Advance, or, after
giving effect to such transactions, will be left with an unreasonably
small capital with which to engage in its business or undertakings, or
will have intended to incur, or believe that it has incurred, debts
beyond its ability to pay such debts as they mature or will have
intended to hinder, delay or defraud any existing or future creditor;
SECTION 11.01(d) No Untrue Statements. The Loan Documents
--------------------
shall not contain any untrue or misleading statement of a material fact
and shall not fail to state a material fact necessary in order to make
the information contained therein not misleading;
61
SECTION 11.01(e) Representations and Warranties. All
------------------------------
representations and warranties made by any TC Party in the Loan
Documents shall be true and correct in all material respects on the
Closing Date for the Request with the same force and effect as if such
representations and warranties had been made on and as of the Closing
Date for the Request;
SECTION 11.01(f) No Condemnation or Casualty. There shall not
---------------------------
have occurred, and there shall not be pending or threatened, any
condemnation or other taking, whether direct or indirect, against any
Mortgaged Property and there shall not have occurred any casualty to
any improvements located on any Mortgaged Property which, as to any
such pending or threatened condemnation or casualty, is likely to have
a material adverse effect on the value of the Collateral, taken as a
whole, or the Borrowers' ability to perform their obligations under the
Loan Documents;
SECTION 11.01(g) Delivery of Closing Documents. The receipt
-----------------------------
by the Lender of the following, each dated as of the Closing Date for
the Request, in form and substance satisfactory to the Lender in all
respects:
(1) A Compliance Certificate;
(2) An Organizational Certificate; and
(3) Such other documents, instruments, approvals
(and, if requested by the Lender, certified duplicates of
executed copies thereof) and opinions as the Lender may
reasonably request;
SECTION 11.01(h) Delivery of Closing Documents Relating to
-----------------------------------------
Initial Advance Request, Collateral Addition Request or Credit Facility
-----------------------------------------------------------------------
Expansion Request. With respect to the closing of the Initial Advance
-----------------
Request, a Collateral Addition Request or a Credit Facility Expansion
Request, the receipt by the Lender of the following, each dated as of
the Closing Date for the Request, in form and substance satisfactory to
the Lender in all respects:
(1) Fully executed original copies of each Loan Document
required to be executed in connection with the
Request, duly executed and delivered by the parties
thereto (other than the Lender), each of which shall
be in full force and effect; and
(2) Favorable opinions of counsel to the TC Parties, as
to the due organization and qualification of the TC
Parties, the due authorization, execution, delivery
and enforceability of each Loan Document executed in
connection with the Request and such other matters as
the Lender may reasonably require.
62
SECTION 11.01(i) Delivery of Property-Related Documents. With
--------------------------------------
respect to each of the Mortgaged Properties to be made part of the
Collateral Pool on the Closing Date for the Expansion Advance Request
or a Collateral Addition Request, the receipt by the Lender of the
following, each dated as of the Closing Date for the Expansion Advance
Request or Collateral Addition Request, as the case may be, in form and
substance satisfactory to the Lender in all respects:
(1) A favorable opinion of local counsel to the
TC Parties or the Lender as to the enforceability of the
Security Instrument, and any other Loan Documents, executed in
connection with the Request;
(2) A commitment for the Title Insurance Policy
applicable to the Mortgaged Property and a pro forma Title
Insurance Policy based on the Commitment;
(3) The Insurance Policy applicable to the
Mortgaged Property;
(4) The Survey applicable to the Mortgaged
Property;
(5) Evidence of Compliance with Property Laws
applicable to the Mortgaged Property;
(6) A joinder to the Replacement Reserve
Agreement, providing for the establishment of a replacement
reserve account, to be pledged to the Lender, in which the
owner shall periodically deposit amounts for Replacements at
the Mortgaged Property and as additional security for the TC
Parties' obligations under the Loan Documents;
(7) A Completion/Repair and Security Agreement,
on the standard form required by the DUS Guide, if required by
Lender;
(8) A joinder to the Assignment of Management
Agreement, on the standard form required by the DUS Guide;
(9) An Operations and Maintenance Agreement, in
the form attached as Exhibit GG to this Agreement, if
----------
the Lender determines one to be necessary or desirable; and
(10) An Assignment of Leases and Rents, if the
Lender determines one to be necessary or desirable, provided
that the provisions of any such assignment shall be
substantively identical to those in the Security Instrument
covering the Collateral, with such modifications as may be
necessitated by applicable state or local law.
63
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
SECTION 12.01. Representations and Warranties of the Owners. Each
--------------------------------------------
Owner hereby represents and warrants to the Lender, with respect to itself, as
follows:
SECTION 12.01(a) Due Organization. It is a Single-Purpose
----------------
general partnership (or to the extent otherwise permitted hereunder, a
limited liability company or limited partnership) duly organized,
validly existing and in good standing under the laws of its formation,
and (except for Owners which only own Mortgaged Properties located in
the State of its formation) is duly qualified as a foreign general
partnership (or to the extent otherwise permitted hereunder, a limited
liability company or limited partnership) to transact business in the
jurisdiction in which the Mortgaged Property it owns is located, to the
extent, if any, that such qualification is required by the laws of such
jurisdiction. It has its principal place of business, principal office
and office in which it keeps its books and records as to the Collateral
at its Notice Address.
SECTION 12.01(b) Power and Authority. It has the requisite
-------------------
power and authority to own its own properties, to execute and deliver
the Loan Documents to which it is a party and to perform its
obligations contemplated by the Loan Documents to which it is a party.
SECTION 12.01(c) Due Authorization. The execution and
-----------------
delivery of the Loan Documents to which it is a party, and the
consummation by it of the transactions contemplated thereby, and the
performance by it of its obligations thereunder, have been duly and
validly authorized by all necessary action and proceedings by it or on
its behalf.
SECTION 12.01(d) No Approvals. No authorization, consent,
------------
approval or other action by, or filing with, any federal, state or
local court or Governmental Authority is required in connection with
the execution, delivery and performance by it of the Loan Documents to
which it is a party, other than the filing of the Security Instruments
and appropriate UCC-1 Filing Statements in the appropriate public
records.
SECTION 12.01(e) Non-contravention; No Liens. The execution
---------------------------
and delivery of the Loan Documents to which it is a party, and the
fulfillment of or compliance with the terms and conditions of the Loan
Documents to which it is a party:
(1) will not conflict with, or result in any
breach of, any court judgment, decree or order of any
Governmental Authority to which it is subject;
(2) will not cause it to be in violation of any
provision of any document or agreement pursuant to which it
is organized or pursuant to which it conducts its business;
64
(3) will not cause it to be in violation of, or
constitute a material default under, the provisions of any
Loan Document to which it is a party or by which it is bound;
and
(4) will not result in the creation of any Lien
on its property or assets, except as contemplated by or
permitted pursuant to the Loan Documents.
SECTION 12.01(f) Pending Litigation or Other Proceedings.
---------------------------------------
There is no litigation or other claim pending before any court or
administrative or other Governmental Authority, or threatened against
it, the Collateral it owns or any of its properties which would be
required to be disclosed pursuant to Section 13.01(d) other than those
previously disclosed to the Lender by separate submission.
SECTION 12.01(g) Valid and Binding Obligations. Each of the
-----------------------------
Loan Documents to which it is a party has been duly executed and
delivered by it, and will, when duly executed and delivered by the
other parties thereto, constitute its legal, valid and binding
obligations enforceable against it in accordance with its terms,
provided that such enforceability is subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws and applicable
creditors' rights generally.
SECTION 12.01(h) Ownership. It is the owner of one, and only
---------
one, of the Mortgaged Properties in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide. There
are no Liens upon or with respect to the Collateral which it owns
except the Permitted Liens. It owns no other assets other than
constituting Collateral.
SECTION 12.01(i) Solvency. It is not insolvent (within the
--------
meaning of any applicable federal or state law relating to bankruptcy
or fraudulent transfers) and will not be rendered insolvent by the
transactions contemplated by the Loan Documents to which it is a party,
including the making of a Future Advance, and, after giving effect to
such transactions, it will not be left with an unreasonably small
amount of capital with which to engage in its business or undertakings,
nor will it have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature.
SECTION 12.01(j) Lines of Business. It is not engaged in any
-----------------
businesses other than the acquisition, ownership, development,
construction, leasing, financing or management of Multifamily
Residential Properties, and the conduct of these businesses does not
violate the Organizational Documents pursuant to which it is formed.
65
SECTION 12.01(k) Delivery of Information. The financial
-----------------------
statements and projections relating to it delivered to the Lender on or
before the date hereof were prepared on the basis of assumptions it
believed in good faith at the time of preparation to be reasonable and
it is not aware of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any
material respect.
SECTION 12.01(l) No Material Adverse Change. Since the date
--------------------------
of the most recent financial statements delivered to the Lender, there
has occurred no material adverse change in its financial condition,
business or prospects, taken as a whole.
SECTION 12.01(m) Title Insurance. It will furnish the Title
---------------
Insurance Policies in compliance with all of the requirements set forth
in the definition of "Title Insurance Policies."
SECTION 12.02. Representations and Warranties of the REIT. The REIT
------------------------------------------
hereby represents and warrants to the Lender as follows:
SECTION 12.02(a) Due Organization. It is a real estate
----------------
investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland and is qualified to transact
business in each other jurisdiction in which it transacts business to
the extent, if any, that it is required to be so qualified by the laws
of such jurisdiction. It has its principal place of business, principal
office and office in which it keeps its books and records at its Notice
Address.
SECTION 12.02(b) Power and Authority. It has the requisite
-------------------
power and authority to own its own properties, to execute and deliver
the Loan Documents to which it is a party and to perform its
obligations contemplated by the Loan Documents to which it is a party.
SECTION 12.02(c) Due Authorization. The execution and
-----------------
delivery of the Loan Documents to which it is a party, and the
consummation by it of the transactions contemplated thereby, and the
performance by it of its obligations thereunder, have been duly and
validly authorized by all necessary action and proceedings by it or on
its behalf.
SECTION 12.02(d) No Approvals. No authorization, consent,
------------
approval or other action by, or filing with, any federal, state or
local court or Governmental Authority is required in connection with
the execution, delivery and performance by it of the Loan Documents to
which it is a party.
SECTION 12.02(e) Non-contravention; No Liens. The execution
---------------------------
and delivery of the Loan Documents to which it is a party, and the
fulfillment of or compliance with the terms and conditions of the Loan
Documents to which it is a party:
(1) will not conflict with, or result in any
breach of, any court judgment, decree or order of any
Governmental Authority to which it is subject;
66
(2) will not cause it to be in violation of any
provision of any document or agreement pursuant to which it is
organized or pursuant to which it conducts its business;
(3) will not cause it to be in violation of, or
constitute a material default under, the provisions of any
Loan Document to which it is a party or by which it is bound;
and
(4) will not result in the creation of any Lien
on its property or assets.
SECTION 12.02(f) Pending Litigation or Other Proceedings.
---------------------------------------
There is no litigation or other claim pending before any court or
administrative or other Governmental Authority, or threatened against
it or any of its properties which would be required to be disclosed
pursuant to Section 13.03(d) other than those previously disclosed to
the Lender by separate submission.
SECTION 12.02(g) Valid and Binding Obligations. Each of the
-----------------------------
Loan Documents to which it is a party has been duly executed and
delivered by it, and will, when duly executed and delivered by the
other parties thereto, constitutes its legal, valid and binding
obligations enforceable against it in accordance with its terms,
provided that such enforceability is subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws and applicable
creditors' rights generally.
SECTION 12.02(h) Solvency. It is not insolvent (within the
--------
meaning of any applicable federal or state law relating to bankruptcy
or fraudulent transfers) and will not be rendered insolvent by the
transactions contemplated by the Loan Documents to which it is a party,
including the making of a Future Advance, and, after giving effect to
such transactions, it will not be left with an unreasonably small
amount of capital with which to engage in its business or undertakings,
nor will it have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature.
SECTION 12.02(i) Lines of Business. On the date hereof, it is
-----------------
not Principally Engaged in any businesses other than the acquisition,
ownership, development, construction, leasing, financing or management
of Multifamily Residential Properties, and the conduct of these
businesses does not violate the Organizational Documents pursuant to
which it is formed.
SECTION 12.02(j) Status as a Real Estate Investment Trust. It
----------------------------------------
currently qualifies, and is taxed as, a real estate investment trust
under Subchapter M of the Internal Revenue Code, and is not engaged in
any activities which would jeopardize such qualification and tax
treatment.
67
SECTION 12.02(k) Delivery of Information. The financial
-----------------------
statements and projections relating to it delivered to the Lender on or
before the date hereof were prepared on the basis of assumptions it
believed in good faith at the time of preparation to be reasonable and
it is not aware of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any
material respect.
SECTION 12.03. Representations and Warranties of the REIT Sub, the
---------------------------------------------------
Property Company, the Operating Partnership and TC-Oriole. The REIT Sub, the
---------------------------------------------------------
Property Company, the Operating Partnership and TC-Oriole each hereby represents
and warrants to the Lender, with respect to itself, as follows:
SECTION 12.03(a) Due Organization.
----------------
(1) The Operating Partnership is a limited
partnership duly organized, validly existing and in good
standing under the laws of the State of Maryland and is
qualified to transact business in each other jurisdiction in
which it transacts business to the extent, if any, that it is
required to be so qualified by the laws of such jurisdiction.
(2) The REIT Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to transact
business in each other jurisdiction in which a Mortgaged
Property owned by an Owner is located and in each other
jurisdiction in which it transacts business, to the extent, if
any, that it is required to be so qualified by the laws of
such jurisdiction.
(3) The Property Company is a general
partnership duly organized and validly existing under the laws
of the State of Maryland and is qualified to transact business
in each other jurisdiction in which a Mortgaged Property owned
by an Owner is located and in each other jurisdiction in which
it transacts business, to the extent, if any, that it is
required to be so qualified by the laws of such jurisdiction.
(4) TC-Oriole is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is qualified to transact business in
each other jurisdiction in which it transacts business, to the
extent, if any, that it is required to be so qualified by the
laws of such jurisdiction.
(5) Each of the REIT Sub, the Property Company,
the Operating Partnership and TC-Oriole has its principal
place of business, principal office and office in which it
keeps its books and records at its Notice Address.
SECTION 12.03(b) Power and Authority. It has the requisite,
-------------------
partnership or corporate power and authority, as the case may be, to
own its own properties, to execute and
68
deliver the Loan Documents to which it is a party and to perform its
obligations contemplated by the Loan Documents to which it is a party.
SECTION 12.03(c) Due Authorization. The execution and
-----------------
delivery of the Loan Documents to which it is a party, and the
consummation by it of the transactions contemplated thereby, and the
performance by it of its obligations thereunder, have been duly and
validly authorized by all necessary action and proceedings by it or on
its behalf.
SECTION 12.03(d) No Approvals. No authorization, consent,
------------
approval or other action by, or filing with, any federal, state or
local court or Governmental Authority is required in connection with
the execution, delivery and performance by it of the Loan Documents to
which it is a party.
SECTION 12.03(e) Non-contravention; No Liens. The execution
---------------------------
and delivery of the Loan Documents to which it is a party, and the
fulfillment of or compliance with the terms and conditions of the Loan
Documents to which it is a party:
(1) will not conflict with, or result in any
breach of, any court judgment, decree or order of any
Governmental Authority to which it is subject;
(2) will not cause it to be in violation of any
provision of any document or agreement pursuant to which it
is organized or pursuant to which it conducts its business;
(3) will not cause it to be in violation of, or
constitute a material default under, the provisions of any
Loan Document to which it is a party or by which it is
bound; and
(4) will not result in the creation of any Lien
on its property or assets.
SECTION 12.03(f) Pending Litigation or Other Proceedings.
---------------------------------------
There is no litigation or other claim pending before any court or
administrative or other Governmental Authority, or threatened against
it, the Collateral it owns or any of its properties which would be
required to be disclosed pursuant to Section 13.05(d) other than those
previously disclosed to the Lender by separate submission.
SECTION 12.03(g) Valid and Binding Obligations. Each of the
-----------------------------
Loan Documents to which it is a party has been duly executed and
delivered by it, and will, when duly executed and delivered by the
other parties thereto, constitute its legal, valid and binding
obligations enforceable against it in accordance with its terms,
provided that such enforceability is subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws and applicable
creditors' rights generally.
69
SECTION 12.03(h) Solvency. It is not insolvent (within the
--------
meaning of any applicable federal or state law relating to bankruptcy
or fraudulent transfers) and will not be rendered insolvent by the
transactions contemplated by the Loan Documents to which it is a party,
including the making of a Future Advance, and, after giving effect to
such transactions, it will not be left with an unreasonably small
amount of capital with which to engage in its business or undertakings,
nor will it have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature.
SECTION 12.03(i) Lines of Business. On the date hereof, it is
-----------------
not Principally Engaged in any businesses other than the acquisition,
ownership, development, construction, leasing, financing or management
of Multifamily Residential Properties, and the conduct of these
businesses does not violate the Organizational Documents pursuant to
which it is formed.
SECTION 12.03(j) Delivery of Information. The financial
-----------------------
statements and projections relating to it delivered to the Lender on or
before the date hereof were prepared on the basis of assumptions it
believed in good faith at the time of preparation to be reasonable and
it is not aware of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any
material respect.
SECTION 12.03(k) Ownership Interests of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇. On the date hereof, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ owns at least a
-------------
1.15% limited partnership interest in the Operating Partnership and
▇▇▇▇▇▇ ▇▇▇▇▇▇ owns at least an 11.50% limited partnership interest in
the Operating Partnership.
SECTION 12.04. Representations and Warranties of the Lender. The
--------------------------------------------
Lender hereby represents and warrants to the TC Parties as follows:
SECTION 12.04(a) Due Organization. The Lender is a
----------------
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
SECTION 12.04(b) Power and Authority. The Lender has the
-------------------
requisite power and authority to execute and deliver this Agreement and
to perform its obligations under this Agreement.
SECTION 12.04(c) Due Authorization. The execution and
-----------------
delivery by the Lender of this Agreement, and the consummation by it of
the transactions contemplated thereby, and the performance by it of its
obligations thereunder, have been duly and validly authorized by all
necessary action and proceedings by it or on its behalf.
70
ARTICLE XIII
COVENANTS
SECTION 13.01. Affirmative Covenants of the Owners. Each Owner
-----------------------------------
agrees and covenants with the Lender, with respect to itself, that, at all times
during the Term of this Agreement:
SECTION 13.01(a) Maintenance of Existence. It shall maintain
------------------------
its existence and continue to be a general partnership (or to the
extent otherwise permitted hereunder, a limited liability company or
limited partnership) organized under the laws of the State of its
formation, to be duly qualified to transact business in each
jurisdiction in which the Mortgaged Property which it owns is located,
and be duly qualified to transact business in any other jurisdiction in
which it transacts business, to the extent, if any, that it is required
to be so qualified by the laws of such jurisdiction, and it shall
promptly inform the Lender of any change in the location of its
principal place of business, principal office or of any change in the
location of the office in which it keeps its books and records.
SECTION 13.01(b) Financial Statements. It shall keep and
--------------------
maintain and, upon the Lender's request, shall make available at its
Notice Address, complete and accurate books of accounts and records in
sufficient detail to correctly reflect the results of its operations
and the operations of each of the Mortgaged Properties and copies of
all written contracts, leases and other instruments which in any
material respect affect the Mortgaged Properties (including all bills,
invoices and contracts for electrical service, gas service, water and
sewer service, waste management service, telephone service and
management services). These books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any
reasonable time by the Lender. It shall deliver to the Lender the
following:
SECTION 13.01(b)(1) Annual Reports for Mortgaged
----------------------------
Properties. Promptly, and in any event within 60 days after
----------
the end of its fiscal year, with respect to each of the
Mortgaged Properties, a report prepared and certified by it in
the form attached to this Agreement as Exhibit HH to this
----------
Agreement or in such other form as the Lender may from time to
time may reasonably require which accurately sets forth a
statement of income and expenses for the Mortgaged Property
for the immediately prior fiscal year be accompanied by a Rent
Roll (if a Rent Roll has previously been requested in writing
by the Lender) and a certificate of the Property Company to
the effect that such report (and the accompanying Rent Roll,
if required) is true, correct and complete in all respects;
SECTION 13.01(b)(2) Quarterly Reports for Mortgaged
-------------------------------
Properties. Promptly, and in any event within 60 days, after
----------
the end of each calendar quarter (or, upon the request of the
Lender, within 30 days after the end of each month), with
respect to each of the Mortgaged Properties, a report prepared
and certified by it in the form attached to this Agreement as
Exhibit II to this Agreement or in such other
----------
71
form as the Lender may from time to time require which
accurately sets forth a statement of income and expenses for
the Mortgaged Properties for the immediately prior calendar
quarter or month, as the case may be, which report shall be
accompanied by a Rent Roll (if a Rent Roll has previously
been requested in writing by the Lender) and a certificate
of the Property Company to the effect that such report (and
the accompanying Rent Roll, if required) is true, correct
and complete in all respects;
SECTION 13.01(b)(3) Other Reports.
-------------
(A) Promptly upon the Lender's request,
all schedules, financial statements
or other reports which are then
maintained by it and which are
reasonably requested by the Lender
with respect to its business affairs
or condition (financial or
otherwise) or any of the Mortgaged
Properties.
(B) Promptly after delivered, all
reports, filings, communications or
correspondence which it delivers to
the United States Securities and
Exchange Commission to the extent
the same are matters of public
record when filed.
(C) Promptly after delivered, all
reports, filings, communications or
correspondence which it delivers to
any other Governmental Authority, or
which a Governmental Authority
delivers to it, relating to a matter
which, if decided adversely to it,
would have a material adverse effect
on its financial condition.
SECTION 13.01(b)(4) Annual Budgets. Promptly, and in
--------------
any event within 60 days after the start of its fiscal year,
an annual budget for each Mortgaged Property for such fiscal
year, setting forth an estimate of all of the costs and
expenses, including capital expenses, of maintaining and
operating each Mortgaged Property.
If it shall fail to timely provide the financial statements,
reports and other information required by this subsection, the Lender
shall have the right to have its books and records (and the books and
records of the other TC Parties) audited in order to obtain such
reports or other information and any such costs and expenses incurred
by the Lender which it fails to pay promptly to the Lender shall become
immediately due and payable.
SECTION 13.01(c) Maintain Licenses. It shall maintain all
-----------------
licenses, permits, charters and registrations which are material to the
conduct of its business.
72
SECTION 13.01(d) Inform the Lender of Material Events. It
------------------------------------
shall promptly inform the Lender of any of the following of which it
has Actual Knowledge:
SECTION 13.01(d)(1) Defaults. The
--------
occurrence of any Event of Default or any Potential
Event of Default;
SECTION 13.01(d)(2) Regulatory
----------
Proceedings. The commencement of any rulemaking or
-----------
disciplinary proceeding or the promulgation of any
proposed or final rule which would have a material
adverse effect on its financial condition or
materially and adversely affect its present or
future ability to perform its obligations under the
Loan Documents to which it is a party;
SECTION 13.01(d)(3) Complaints.
----------
The receipt of (A) any complaint filed with a
Governmental Authority against it or the manager of
its Mortgaged Property alleging (I) any violation of
fair housing law, handicap access or the Americans
with Disabilities Act or equal employment law or
regulations, regardless of the effect on the
financial condition of any TC Party, or (II) any
violation of any other law or regulation if an
adverse decision in the proceeding adjudicating the
complaint would have a material adverse effect on
the financial condition of any TC Party or (B) any
final administrative or judicial dispositions of any
complaints specified in clause (A);
SECTION 13.01(d)(4) Legal Proceedings. The
-----------------
commencement or threat of any proceedings in which it
is the debtor (or equivalent party otherwise named)
by or against it, in any federal, state or local
court or before any Governmental Authority, which, if
decided adversely to it, would have a material
adverse effect on its financial condition.
SECTION 13.01(d)(5) Bankruptcy
----------
Proceedings. The commencement of any proceedings by
-----------
or against it under any applicable bankruptcy,
reorganization, liquidation, insolvency or other
similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, trustee
or other similar official is sought to be appointed
for it;
SECTION 13.01(d)(6) Regulatory Supervision
----------------------
or Penalty. The receipt of notice from any agency or
----------
Governmental Authority having authority over the
conduct of its business that (A) it is being placed
under regulatory supervision, (B) any license,
permit, charter, membership or registration material
to the conduct of its business is to be suspended or
revoked or (C) it is to cease and desist any
practice, procedure or policy employed by it in the
conduct of its business, and such cessation would
have
73
a material adverse effect upon its present or future
ability to perform its obligations under the Loan
Documents to which it is a party;
SECTION 13.01(d)(7) Claims. The receipt of
------
notice from any Governmental Authority or other
Person relating to any claim involving it or any of
its assets, including the Mortgaged Properties
(including notice of any material tax deficiency)
which, if decided adversely to it, would have a
material adverse effect on its financial condition;
and
SECTION 13.01(d)(8) Insurance Change. The
----------------
receipt of notice from its insurer that there has
occurred a material adverse change in the reserves,
retainages, deposits or deductibles under its
Insurance Policies.
SECTION 13.01(e) Ownership. It shall be a general partnership
---------
(or to the extent otherwise permitted hereunder, a limited liability
company or limited partnership) and shall be the sole owner of one or
more Mortgaged Properties in fee simple or as tenant under a ground
lease meeting all of the requirements of the DUS Guide.
SECTION 13.01(f) Further Assurances. At the request of the
------------------
Lender, it shall execute and deliver and, if necessary, file, such
further instrument or instruments and take such further action or
actions, not inconsistent with the Loan Documents, as may be necessary,
in the opinion of the Lender, to effectuate the provisions of the Loan
Documents.
SECTION 13.01(g) Replacement Reserves.
--------------------
(1) The Owners have executed or shall execute
the Replacement Reserve Agreement for the Mortgaged
Properties. Any inconsistency between the terms of this
Agreement and the terms of the Replacement Reserve Agreement
shall be resolved in favor of this Agreement. The Owners
shall establish and maintain, in the name of the Lender, at
a financial institution selected by the Owners (unless
reasonably disapproved by the Lender), a separate, central
reserve account (the "Replacement Reserve"), for the benefit
-------------------
of all of the Mortgaged Properties, solely to fund the costs
of Replacements to the Mortgaged Properties. On the first
day of each month during the Term of this Agreement, the
Owners shall deposit the amount specified for such month in
the table attached as Exhibit JJ to this Agreement. By
making a withdrawal from the Replacement Reserve, the
Borrowers and Owners shall be deemed to represent to the
Lender that the amount withdrawn is being withdrawn for the
payment of, or reimbursement of the Owner for amounts
applied to, the costs of Replacements.
(2) The Replacement Reserve shall be (i)
segregated from all other monies of the Owners or other
Persons, (ii) invested in Permitted Investments and (iii)
pledged to the Lender pursuant to the provisions of the
Replacement Reserve Agreement. Prior to an Event of Default,
the Owners shall have the sole dominion
74
and control over the Replacement Reserve, and, from and after
a Triggering Event, the Lender shall have sole dominion and
control over the Replacement Reserve.
(3) The Lender, not more than one time in any 12
month period, may perform an inspection of the Mortgaged
Properties and an assessment of the Replacement Reserve. If
determined necessary by the Lender, after review of the
inspection and assessment, the Owner's monthly deposit to the
Replacement Reserve shall be adjusted, so that the monthly
deposit to the Replacement Reserve will create a Replacement
Reserve that will, in the Lender's determination, be
sufficient to meet required Replacements for the Mortgaged
Properties.
(3) Promptly, and in any event within 60 days,
after the end of each calendar quarter, the Owners shall
deliver to the Lender a report in the form attached as Exhibit
-------
KK to this Agreement which accurately sets forth the
--
disbursements from the Replacement Reserve for the immediately
prior quarter and the category of expense to which each
disbursement was applied, and a certificate of the Owners to
the effect that such report is true, correct and complete in
all respects. Promptly, and in any event within 60 days, after
the end of each calendar year, the Owners shall certify to the
Lender that they have spent not less than an average of $400
per unit in the Collateral Pool, determined by multiplying the
aggregate number of units in the Collateral Pool by $400, on
Replacements or other capital improvements to the Mortgaged
Properties during the calendar year.
SECTION 13.01(h) Single-Purpose Entities. It shall at all
-----------------------
times maintain and conduct itself as a Single-Purpose entity.
SECTION 13.01(i) Date-Down Endorsements. It shall pay for the
----------------------
cost and expenses incurred by the Lender to the Title Company in
obtaining from time to time an endorsement to each Title Insurance
Policy containing a Revolving Credit Endorsement, amending the
effective date of the Title Insurance Policy to the date of the title
search performed in connection with the endorsement, provided that it
shall not be liable to pay for more than one such endorsement
(including any endorsement given pursuant to Sections 7.03(h) or
8.04(c)) in any consecutive twelve month period.
SECTION 13.02. Negative Covenants of the Owners. Each Owner agrees and
--------------------------------
covenants with the Lender with respect to itself that, at all times during the
Term of this Agreement:
SECTION 13.02(a) No Amendments. Unless the Lender shall
-------------
otherwise consent, it shall not agree to, or permit, any amendment or
supplement to or modification of, the terms of any Loan Document or any
Organizational Document except for any change to the Organizational
Documents which does not have, in the Lender's judgment, a material
adverse change on the management of its affairs, on the enforceability
or validity of the Loan Documents or on any other material aspect of
the transactions contemplated by this Agreement.
75
SECTION 13.02(b) Intentionally Omitted.
---------------------
SECTION 13.02(c) Change in Property Management. There shall
-----------------------------
not be a change in the management agent for any Mortgaged Property
except to a management agent which the Lender determines is qualified
in accordance with the criteria set forth in Section 701 of the DUS
Guide.
SECTION 13.02(d) Lines of Business. It shall not be engaged
-----------------
in any businesses other than the acquisition, ownership, development,
construction, leasing, financing or management of Multifamily
Residential Properties, and the conduct of these businesses shall not
violate the Organizational Documents pursuant to which it is formed.
SECTION 13.02(e) Limitation on Fundamental Changes. Without
---------------------------------
the consent of the Lender, it shall not enter into any merger or
consolidation, unless the merger or consolidation is with another Owner
and the surviving entity expressly acknowledges in writing that it
assumes all of the obligations and liabilities of the non-surviving
entity under the Loan Documents, whether arising before or after the
date of the merger or consolidation.
SECTION 13.03. Affirmative Covenants of the REIT. The REIT
---------------------------------
agrees and covenants with the Lender that, at all times during the Term
of this Agreement:
SECTION 13.03(a) Maintenance of Existence. It shall maintain
------------------------
its existence and continue to be a real estate investment trust
organized under the laws of the State of Maryland and to be duly
qualified to transact business in any other jurisdiction in which it
transacts business, and it shall promptly inform the Lender of any
change in the location of its principal place of business, principal
office or of any change in the location of the office in which it keeps
its books and records.
SECTION 13.03(b) Financial Statements. It shall keep and
--------------------
maintain and, upon the Lender's request, shall make available at its
Notice Address, complete and accurate books of accounts and records in
sufficient detail to correctly reflect the results of its operations.
These books, records, contracts, leases and other instruments shall be
subject to examination and inspection at any reasonable time by the
Lender. It shall deliver to the Lender the following:
SECTION 13.03(b)(1) Annual Financial Statements.
---------------------------
Promptly, and in any event within 90 days after the end of its
fiscal year, a statement of income and expenses, a statement
of changes in cash flows, and a balance sheet of it and its
Subsidiaries, on a consolidated basis, each in reasonable
detail, certified by it, audited and certified by an
independent certified public accountant and stating in
comparative form the respective figures for the corresponding
date and period in the prior fiscal year. Each of the
financial statements shall be prepared in accordance with
GAAP, and shall be accompanied by (A) an opinion of its
independent certified public
76
accountant to the effect that such financial statements have
been prepared in accordance with GAAP and that such financial
statements fairly present the results of the operations and
financial condition of it and its Subsidiaries, on a
consolidated basis, for the periods and dates indicated, and
(B) a Compliance Certificate; provided, however, that the REIT
shall not be obligated to deliver any of the financial
statements or opinions described in this paragraph (1) (except
for the Compliance Certificate) if the Form 10-K delivered by
the REIT pursuant to Section 13.03(b)(3) provides
substantially identical information;
SECTION 13.03(b)(2) Quarterly Financial
-------------------
Statements. Promptly, and in any event within 60 days, after
----------
each of the first three fiscal quarters of its fiscal year, a
statement of income and expenses, a statement of changes in
cash flows, and a balance sheet of it and its Subsidiaries, on
a consolidated basis, each in reasonable detail, certified by
it, for the portion of the fiscal year ended with the last day
of such quarter, all in reasonable detail and stating in
comparative form the respective figures for the corresponding
date and period in the previous fiscal year, accompanied by
(A) a certificate from it, to the effect that such financial
statements have been prepared in accordance with GAAP, and
that such financial statements fairly present the results of
the operations and financial condition of it and its
Subsidiaries, on a consolidated basis, for the periods and
dates indicated, and (B) a Compliance Certificate; provided,
however, that the REIT shall not be obligated to deliver any
of the financial statements described in this paragraph (2)
(except for the Compliance Certificate) if the Form 10-Q
delivered by the REIT pursuant to Section 13.03(b)(4) provides
substantially identical information;
SECTION 13.03(b)(3) Annual Form 10-K. Promptly,
----------------
and in any event within 120 days after the end of its fiscal
year, the REIT's Form 10-K filed with the Securities and
Exchange Commission and its annual report to its shareholders;
SECTION 13.03(b)(4) Quarterly Form 10-Q.
-------------------
Promptly, and in any event within 60 days, after the end of
each calendar quarter, the REIT's Form 10-Q filed with the
Securities and Exchange Commission.
SECTION 13.03(b)(5) Form 8-K. Promptly after it
--------
is filed, any Form 8-K filed by the REIT with the Securities
and Exchange Commission.
SECTION 13.03(b)(6) Other Reports.
-------------
(A) Promptly after delivered, all
reports, filings, communications or
correspondence which it delivers to
the United States Securities and
Exchange Commission to the extent
the same are matters of public
record when filed.
77
(B) Promptly after delivered, all
reports, filings, communications or
correspondence which it delivers to
any other Governmental Authority,
relating to a matter which, if
decided adversely to it, would have
a material adverse effect on its
financial condition.
If it shall fail to timely provide the financial statements,
reports and other information required by this subsection, the Lender
shall have the right to have its books and records (and the books and
records of the other TC Parties) audited in order to obtain such
reports or other information and any such costs and expenses incurred
by the Lender which it fails to pay promptly to the Lender shall become
immediately due and payable.
SECTION 13.03(c) Maintain Licenses. It shall maintain all
-----------------
licenses, permits, charters and registrations which are material to the
conduct of its business.
SECTION 13.03(d) Inform the Lender of Material Events. It
------------------------------------
shall promptly inform the Lender of any of the following of which it
has Actual Knowledge:
SECTION 13.03(d)(1) Defaults. The
--------
occurrence of any Event of Default or any Potential
Event of Default which occurred by reason of a
default by the REIT in any representation, warranty
or covenant made by the REIT in this Agreement or the
other Loan Documents;
SECTION 13.03(d)(2) Regulatory
----------
Proceedings. The commencement of any rulemaking or
-----------
disciplinary proceeding or the promulgation of any
proposed or final rule which would have a material
adverse effect on its financial condition or
materially and adversely affect its present or future
ability to perform its obligations under the Loan
Documents to which it is a party or adversely affect
its real estate investment trust status;
SECTION 13.03(d)(3) Complaints. The
----------
receipt of (A) any complaint filed with a
Governmental Authority against it or the manager of
its Mortgaged Property alleging (I) any violation of
fair housing law, handicap access or the Americans
with Disabilities Act or equal employment law or
regulations, regardless of the effect on the
financial condition of any TC Party, or (II) any
violation of any other law or regulation if an
adverse decision in the proceeding adjudicating the
complaint would have a material adverse effect on the
financial condition of any TC Party or (B) any final
administrative or judicial dispositions of any
complaints specified in clause (A);
SECTION 13.03(d)(4) Legal Proceedings.
-------------------
The commencement or threat of any proceedings by or
against it, in any federal, state or local court or
before any Governmental Authority which, if decided
78
adversely to it, would have a material adverse effect
on its financial condition.
SECTION 13.03(d)(5) Bankruptcy
----------
Proceedings. The commencement of any proceedings
-----------
in which it is the debtor (or equivalent party
otherwise named) by or against it under any
applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official is
sought to be appointed for it;
SECTION 13.03(d)(6) Regulatory
----------
Supervision or Penalty. The receipt of notice from
----------------------
any agency or Governmental Authority having authority
over the conduct of its business that (A) it is being
placed under regulatory supervision, (B) any license,
permit, charter, membership or registration material
to the conduct of its business is to be suspended or
revoked or (C) it is to cease and desist any
practice, procedure or policy employed by it in the
conduct of its business, and such cessation would
have a material adverse effect upon its present or
future ability to perform its obligations under the
Loan Documents to which it is a party or upon its
real estate investment trust status; and
SECTION 13.03(d)(7) Claims. The receipt
------
of notice from any Governmental Authority or other
Person relating to any claim involving it or any of
its assets (including notice of any material tax
deficiency) which, if decided adversely to it, would
have a material adverse effect on its financial
condition.
SECTION 13.03(d)(8) Termination of Line
-------------------
of Credit. The receipt of notice from any lender that
---------
any lines of credit utilized to satisfy the Liquidity
covenant set forth in Section 13.03(j) has been
terminated or canceled by such lender.
SECTION 13.03(e) Status as a Real Estate Investment Trust. It
----------------------------------------
shall take all actions necessary to continue to qualify, and be taxed,
as a real estate investment trust under Subchapter M of the Internal
Revenue Code.
SECTION 13.03(f) Further Assurances. At the request of the
------------------
Lender, it shall execute and deliver and, if necessary, file, such
further instrument or instruments and take such further action or
actions, not inconsistent with the Loan Documents, as may be necessary,
in the opinion of the Lender, to effectuate the provisions of the Loan
Documents.
SECTION 13.03(g) Publicly Held REIT. It shall give the Lender
------------------
notice if it no longer is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended, or any
successor legislation thereto. The Lender shall have the right, upon
79
such notice, to impose such additional reporting and other requirements
as may be required under the DUS Guide.
SECTION 13.03(h) Compliance With Net Worth Requirement. It
-------------------------------------
shall, at all times, maintain its Net Worth so that it is not less than
$250,000,000.
SECTION 13.03(i) Compliance With Debt to Total Asset
-----------------------------------
Requirement. It shall not permit the ratio of Consolidated Total
-----------
Indebtedness to Consolidated Total Assets to exceed 70% at any time.
SECTION 13.03(j) Compliance With Liquidity Requirement. It
-------------------------------------
shall not permit at any time its Liquidity to be less than $1,000,000;
provided that at any time aggregate Advances Outstanding are equal to
or greater than $425,000,000, it shall not permit at any time its
Liquidity to be less than $1,750,000, and at any time aggregate
Advances Outstanding are equal to or greater than $450,000,000, it
shall not permit at any time its Liquidity to be less than $2,000,000,
and at any time aggregate Advances Outstanding are equal to
$500,000,000, it shall not permit at any time its Liquidity to be less
than $2,500,000.
SECTION 13.04. Negative Covenants of the REIT. The REIT agrees and
------------------------------
covenants with the Lender that, at all times during the Term of this Agreement:
SECTION 13.04(a) Transfers.
---------
(1) Except as otherwise provided in paragraph (2) and
Section 13.09,
(A) it shall not Transfer any Ownership
Interests in the Operating
Partnership or the REIT Sub which
would result in a breach of Section
13.09; and
(B) it shall not permit a Lien to
encumber any Ownership Interests in
the Operating Partnership or the
REIT Sub.
(2) Notwithstanding anything to the contrary in
paragraph (1), it may, without the consent of the Lender,
▇▇▇▇▇ ▇ ▇▇▇▇ on any Ownership Interests in the Operating
Partnership to an Institutional Lender to secure an
Indebtedness to the Institutional Lender, provided that (i) it
gives the Lender at least 15 days' advance written notice of
the Lien and (ii) the Lender has been given at least 15 days
to review and approve all documents creating, perfecting and
governing the Lien, which approval shall be given if there is
no provision which, in the Lender's determination, will
conflict with, or cause a breach under, the provisions of this
Agreement or the other Loan Documents. Nothing in the
foregoing shall be deemed to permit, without the Lender's
consent, the sale, assignment, transfer or other disposition
of an Ownership Interest which is subject to a Lien permitted
under this paragraph (2) to the purchaser at a secured party
sale or foreclosure sale (or to a transferee by a conveyance
in lieu
80
of foreclosure) in connection with a foreclosure or other
disposition of the Lien (but such sale, assignment, transfer
or other disposition shall not be considered a Recourse
Transfer under Section 21.02).
(3) With respect to the grant of a Lien which is
permitted under paragraph (2), it shall use reasonable
commercial efforts to obtain from the Institutional Lender a
written undertaking, for the benefit of the Lender, that, in
the event the Institutional Lender gives it a notice, under
the loan documents evidencing or otherwise relating to the
Indebtedness, which is in the nature of a notice of default, a
notice of acceleration of the Indebtedness, a notice of
foreclosure or a notice of the commencement of the exercise of
any other remedy against it or the Ownership Interests, then
the Institutional Lender shall also endeavor to give to the
Lender a simultaneous copy of the notice. The undertaking may
be conditioned on the receipt by the Institutional Lender of a
written confirmation by it and the Lender (which it and the
Lender hereby agree to give) that the failure of the
Institutional Lender to give such notices shall not (i)
constitute a default by the Institutional Lender under the
loan documents evidencing or otherwise relating to the
Indebtedness, (ii) give rise to any claim by it or the Lender
against the Institutional Lender or (iii) invalidate or
otherwise affect the efficacy of any notice given by the
Institutional Lender to it.
SECTION 13.04(b) Status as a Real Estate Investment Trust. It
----------------------------------------
shall not take or permit any actions which will cause it not to
qualify, and be taxed, as a real estate investment trust under
Subchapter M of the Internal Revenue Code, or which will jeopardize
such qualification or tax treatment.
SECTION 13.04(c) Lines of Business. It shall not be
-----------------
Principally Engaged in any businesses other than the acquisition,
ownership, development, construction, leasing, financing or management,
directly or through Affiliates, of Multifamily Residential Properties,
and the conduct of these businesses shall not violate the
Organizational Documents pursuant to which it is formed.
SECTION 13.04(d) Intentionally Omitted.
---------------------
SECTION 13.05. Affirmative Covenants of the TC Parties (other
----------------------------------------------
than the Owners and the REIT). Each TC Party (other than the Owners and
----------------------------
the REIT) agrees and covenants with the Lender, with respect to itself,
that, at all times during the Term of this Agreement:
SECTION 13.05(a) Maintenance of Existence. It shall maintain
------------------------
its existence and continue to be a general partnership, limited
partnership or corporation, as the case may be, organized under the
laws of the state of its organization, to be duly qualified to transact
business in each jurisdiction in which it transacts business, to the
extent, if any, that it is required to be so qualified by the laws of
such jurisdiction, and it shall promptly inform the Lender of any
change in the location of its principal place of business, principal
office or of any change in the location of the office in which it keeps
its books and records.
81
SECTION 13.05(b) Financial Statements. It shall keep and
--------------------
maintain and, upon the Lender's request, shall make available at its
Notice Address, complete and accurate books of accounts and records in
sufficient detail to correctly reflect the results of its operations.
These books, records, contracts, leases and other instruments shall be
subject to examination and inspection at any reasonable time by the
Lender. It shall deliver to the Lender the following:
(1) Promptly after delivered, all reports,
filings, communications or correspondence
which it delivers to the United States
Securities and Exchange Commission to the
extent the same are matters of public record
when filed.
(2) Promptly after delivered, all reports,
filings, communications or correspondence
which it delivers to any other Governmental
Authority, relating to a matter which, if
decided adversely to it, would have a
material adverse effect on its financial
condition.
If it shall fail to timely provide the financial statements,
reports and other information required by this subsection, the
Lender shall have the right to have its books and records (and
the books and records of the other TC Parties) audited in
order to obtain such financial statements, reports or other
information and any such costs and expenses incurred by the
Lender which it fails to pay promptly to the Lender shall
become immediately due and payable.
SECTION 13.05(c) Maintain Licenses. It shall maintain all
-----------------
licenses, permits, charters and registrations which are material to the
conduct of its business.
SECTION 13.05(d) Inform the Lender of Material Events. It
------------------------------------
shall promptly inform the Lender of any of the following of which it
has Actual Knowledge:
SECTION 13.05(d)(1) Defaults. The
--------
occurrence of any Event of Default or any Potential
Event of Default which occurred by reason of a
default by such TC Party in any representation,
warranty or covenant made by the TC Party in this
Agreement or the other Loan Documents;
SECTION 13.05(d)(2) Regulatory
----------
Proceedings. The commencement of any rulemaking
-----------
or disciplinary proceeding or the promulgation of any
proposed or final rule which would have a material
adverse effect on its financial condition or
materially and adversely affect its present or future
ability to perform its obligations under the Loan
Documents to which it is a party;
82
SECTION 13.05(d)(3) Complaints. The
----------
receipt of (A) any complaint filed with a
Governmental Authority against it or the manager of
its Mortgaged Property alleging (I) any violation of
fair housing law, handicap access or the Americans
with Disabilities Act or equal employment law or
regulations, regardless of the effect on the
financial condition of any TC Party, or (II) any
violation of any other law or regulation if an
adverse decision in the proceeding adjudicating the
complaint would have a material adverse effect on the
financial condition of any TC Party or (B) any final
administrative or judicial dispositions of any
complaints specified in clause (A);
SECTION 13.05(d)(4) Legal Proceedings.
-----------------
The commencement or threat of any proceedings by or
against it, in any federal, state or local court or
before any Governmental Authority which, if decided
adversely to it, would have a material adverse effect
on its financial condition.
SECTION 13.05(d)(5) Bankruptcy
Proceedings. The commencement of any proceedings
in which it is the debtor (or equivalent party
otherwise named) by or against it under any
applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official is
sought to be appointed for it;
SECTION 13.05(d)(6) Regulatory
----------
Supervision or Penalty. The receipt of notice from
----------------------
any agency or Governmental Authority having authority
over the conduct of its business that (A) it is being
placed under regulatory supervision, (B) any license,
permit, charter, membership or registration material
to the conduct of its business is to be suspended or
revoked or (C) it is to cease and desist any
practice, procedure or policy employed by it in the
conduct of its business, and such cessation would
have a material adverse effect upon its present or
future ability to perform its obligations under the
Loan Documents to which it is a party; and
SECTION 13.05(d)(7) Claims. The receipt
------
of notice from any Governmental Authority or other
Person relating to any claim involving it or any of
its assets, including the Mortgaged Properties
(including notice of any material tax deficiency)
which, if decided adversely to it, would have a
material adverse effect on its financial condition.
SECTION 13.05(e) No Publicly Traded Partnership. It shall
------------------------------
take all actions necessary to prevent itself from being taxed as a
publicly traded partnership under Section 7704 of the Internal Revenue
Code.
83
SECTION 13.05(f) Further Assurances. At the request of the
------------------
Lender, it shall execute and deliver and, if necessary, file, such
further instrument or instruments and take such further action or
actions, not inconsistent with the Loan Documents, as may be necessary,
in the opinion of the Lender, to effectuate the provisions of the Loan
Documents.
SECTION 13.06. Negative Covenants of the TC Parties (other than the
----------------------------------------------------
Owners and the REIT). Each TC Party (other than the Owners and the REIT) agrees
-------------------
and covenants with the Lender with respect to itself that, at all times during
the Term of this Agreement:
SECTION 13.06(a) Transfers.
---------
(1) Except as otherwise provided in paragraph
(2) and Section 13.09, (i) TC-Oriole shall not Transfer any
Ownership Interests in the Operating Partnership, (ii) neither
the Operating Partnership nor the REIT Sub shall Transfer any
Ownership Interests in the Property Company and (iii) neither
the Property Company nor the REIT Sub shall Transfer any
Ownership Interests in any Owner.
(2) Notwithstanding anything to the contrary in
paragraph (1), TC-Oriole, the Operating Partnership and the
REIT Sub may, without the consent of the Lender, ▇▇▇▇▇ ▇ ▇▇▇▇
on any Ownership Interests (other than the REIT Sub's
Ownership Interests in any Owner, such Ownership Interests
having been previously assigned to the Lender pursuant to the
Assignment of Partnership Interests) to an Institutional
Lender to secure an Indebtedness to the Institutional Lender,
provided that (i) the Person granting the Lien gives the
Lender at least 15 days' advance written notice of the Lien
and (ii) the Lender has been given at least 15 days to review
and approve all documents creating, perfecting and governing
the Lien, which approval shall be given if there is no
provision which, in the Lender's determination, will conflict
with, or cause a breach under, the provisions of this
Agreement or the other Loan Documents. Nothing in the
foregoing shall be deemed to permit, without the Lender's
consent, the sale, assignment, transfer or other disposition
of an Ownership Interest which is subject to a Lien permitted
under this paragraph (2) to the purchaser at a secured party
sale or foreclosure sale (or to a transferee by a conveyance
in lieu of foreclosure) in connection with a foreclosure or
other disposition of the Lien (but such sale, assignment,
transfer or other disposition shall not be considered a
Recourse Transfer under Section 21.02).
(3) With respect to the grant of a Lien which is
permitted under paragraph (2), the TC Party granting the Lien
shall use reasonable commercial efforts to obtain from the
Institutional Lender a written undertaking, for the benefit of
the Lender, that, in the event the Institutional Lender gives
the TC Party a notice, under the loan documents evidencing or
otherwise relating to the Indebtedness, which is in the nature
of a notice of default, a notice of acceleration of the
Indebtedness, a notice of foreclosure or a notice of the
commencement of the exercise of any other remedy against the
TC Party or the Ownership Interests, then the Institutional
Lender shall
84
also endeavor to give to the Lender a simultaneous copy of
the notice. The undertaking may be conditioned on the
receipt by the Institutional Lender of a written
confirmation by the TC Parties and the Lender (which the TC
Parties and the Lender hereby agree to give) that the
failure of the Institutional Lender to give such notices
shall not (i) constitute a default by the Institutional
Lender under the loan documents evidencing or otherwise
relating to the Indebtedness, (ii) give rise to any claim by
the TC Parties or the Lender against the Institutional
Lender or (iii) invalidate or otherwise affect the efficacy
of any notice given by the Institutional Lender to any TC
Party.
SECTION 13.06(b) No Publicly Traded Partnership. It shall
------------------------------
not take or permit any actions which will cause any of them, or the
Operating Partnership or the Property Company, to be taxed as a
publicly traded partnership under Section 7704 of the Internal Revenue
Code.
SECTION 13.06(c) Frequency of Requests. The Borrowers shall
---------------------
make all Requests (other than a Future Advance Request or a Credit
Facility Termination Request) in any calendar quarter on the same day
in the calendar quarter. Accordingly, once the Borrowers make one or
more Requests (other than a Future Advance Request or a Credit Facility
Termination Request) in a calendar quarter, they shall not make any
further Requests (other than a Future Advance Request or a Credit
Facility Termination Request) in the calendar quarter. The Property
Company shall have the right, subject to the terms, conditions and
limitations of this Agreement, to make a Future Advance Request for a
Revolving Facility Advance on any day until the expiration of the
Revolving Facility Availability Period and the Borrowers shall have the
right, subject to the terms, conditions and limitations of this
Agreement, to make a Credit Facility Termination Request on any day
until the expiration of the Term of this Agreement.
SECTION 13.06(d) Lines of Business. It shall not be
-----------------
Principally Engaged in any businesses other than the acquisition,
ownership, development, construction, leasing, financing or management,
directly or through Affiliates, of Multifamily Residential Properties,
and the conduct of these businesses shall not violate the
Organizational Documents pursuant to which it is formed.
SECTION 13.06(e) Intentionally Omitted.
---------------------
SECTION 13.06(f) Transfer by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇. Without the consent of the Lender, it shall not permit either
------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ to Transfer any of their limited
partnership interests (or any shares of beneficial interest in the REIT
into which such interests may be converted) in the Operating
Partnership, except for a Transfer by either or both of them in
connection with a Transfer permitted under the provisions of Section
13.09. The Lender hereby consents to the following Transfers by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ of such limited partnership interests (or
converted shares):
85
(1) A Transfer that occurs by inheritance, devise,
or bequest or by operation of law upon the death of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇;
(2) A Transfer to immediate family members of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ or trusts established for
the benefit of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ and/or their
respective immediate family members; provided, that ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the case may be, gives the
Lender notice of the Transfer concurrently with each Transfer;
(3) A Transfer subsequent to a merger or
consolidation of the REIT or Operating Partnership in which
the REIT or the Operating Partnership is not the surviving
entity and which is approved, or deemed approved, by the
Lender;
(4) The grant of a Lien on such limited partnership
interests to an Institutional Lender to secure an Indebtedness
of a TC Party to an Institutional Lender, if, concurrently
with the grant, the Operating Partnership has granted a Lien
to the same Institutional Lender in accordance with Sections
13.06(a)(2); and
(5) A conversion of limited partnership interests
into shares of beneficial interest in the REIT (but such
shares shall be subject to the prohibitions on Transfer set
forth in this Section 13.06(f)).
SECTION 13.07. Affirmative Covenants of the Borrowers. Each Borrower
--------------------------------------
agrees and covenants with the Lender, with respect to itself, that, at all times
during the Term of this Agreement:
SECTION 13.07(a) Appraisals. At the time of the addition of
----------
a Mortgaged Property to the Collateral Pool, and at any time and from
time to time thereafter, the Lender shall be entitled to obtain an
Appraisal of any Mortgaged Property. The Borrowers shall pay all of
the Lender's costs of obtaining the Appraisal, except that the
Borrowers shall not be required to pay for any Appraisal of a
Mortgaged Property if, within the 12 month period immediately
preceding the date of the Appraisal, the Lender had received another
Appraisal of the Mortgaged Property.
SECTION 13.07(b) Expenses.
-------
(1) The Borrowers, jointly and severally, shall
pay, or reimburse the Lender for, all costs and1 expenses
incurred by the Lender, including the legal fees and
expenses of the Lender's outside legal counsel, in
connection with the preparation, review and negotiation of
all documents, instruments and certificates to be executed
and delivered in connection with a Request, the performance
by the Lender of any of its obligations with respect to the
Request, the satisfaction of all conditions precedent to the
Borrowers' rights or the Lender's obligations with respect
to the Request and all transactions related to any of the
foregoing. The obligations of the Borrowers under this
subsection shall be absolute and unconditional, regardless
of whether the transaction requested in the Request actually
occurs.
86
(2) The Borrowers, jointly and severally, shall
pay, or reimburse the Lender for, all costs and expenses,
other than those costs and expenses described in paragraph
(1), in connection with a Request, the performance by the
Lender of any of its obligations with respect to the
Request, the satisfaction of all conditions precedent to the
Borrowers' rights or the Lender's obligations with respect
to the Request and all transactions related to any of the
foregoing, including the cost of title insurance premiums
and applicable recordation and transfer taxes and charges.
The obligations of the Borrowers under this subsection shall
be absolute and unconditional, regardless of whether the
transaction requested in the Request actually occurs.
(3) This subsection (b) does not apply to the costs
of due diligence fees (including legal fees relating to due
diligence) and the closing of this Agreement and the Initial
Advance, and the due diligence fee with respect to the
addition of an Additional Mortgaged Property to the
Collateral Pool, the fees for which are set forth in
Sections 14.04(a) and (b), respectively.
SECTION 13.07(c) Facility Balancing. If at any time after the
------------------
date hereof, the Borrowers have increased the Maximum Credit Commitment
or otherwise increased the Base Facility Credit Commitment or the
Revolving Facility Credit Commitment after the date hereof as a result
of increases in the Valuation of the Mortgaged Properties, and if after
such time the Aggregate Facility Debt Service Coverage Ratio for the
Trailing 12 Month Period is equal to or less than 145% or the Aggregate
Loan to Value Ratio for the Trailing 12 Month Period is equal to or
greater than 68%, then, within 30 days of Lender's notice to Borrowers
of such condition, the Borrowers shall (i) add Additional Mortgaged
Properties to the Collateral Pool in accordance with Article VI so that
after such addition the Aggregate Facility Debt Service Coverage Ratio
for the Trailing 12 Month Period is not less than the Minimum Aggregate
Facility Debt Service Coverage Ratio for the Trailing 12 Month Period
and the Aggregate Loan to Value Ratio for the Trailing 12 Month Period
is not greater than the Maximum Aggregate Loan to Value Ratio for the
Trailing 12 Month Period, (ii) prepay Advances Outstanding in an amount
sufficient to cause the Borrowers to be in compliance with the Minimum
Aggregate Facility Debt Service Coverage Ratio for the Trailing 12
Month Period and the Maximum Aggregate Loan to Value Ratio for the
Trailing 12 Month Period (to determine such compliance, as if the
Maximum Credit Commitment is equal to the Advances Outstanding after
giving effect to such prepayment), or (iii) reduce the Maximum Credit
Commitment by an amount sufficient to cause the Borrowers to be in
compliance with the Minimum Aggregate Facility Debt Service Coverage
Ratio for the Trailing 12 Month Period and the Maximum Aggregate Loan
to Value Ratio for the Trailing 12 Month Period pursuant to Article IX
of this Agreement. In lieu of the foregoing, Lender may, in its sole
discretion, permit the amount required to be prepaid to be paid in
equal monthly installments during the period between the date on which
such payment is to be made and the Credit Facility Termination Date.
Any prepayments made pursuant to the preceding sentence shall be
applied first against Revolving Advances Outstanding, then against the
prepayment of Base Advances Outstanding, so long as the prepayment is
permitted under the applicable
87
Base Facility Note. If no prepayment is permitted under the
applicable Base Facility Note, such prepayment amount shall
be held by Lender (or its appointed collateral agent) as
substitute cash collateral in accordance with a security
agreement and other documents in form and substance
acceptable to Lender. Any substitute cash collateral
remaining will be returned to the Borrower on the earlier of
the date when the Minimum Aggregate Facility Debt Service
Coverage Ratio for the Trailing 12 Month Period and the
Maximum Aggregate Loan to Value Ratio for the Trailing 12
Month Period are again met or the Credit Facility
Termination Date. If on the date the Borrower pays any
amounts required by this Section, Revolving Advances are
Outstanding but are not then due and payable, Lender shall
hold such amounts (which amounts shall bear interest at a
rate determined by Lender) as additional collateral until
the next date the Revolving Advances are due and payable, at
which time Lender shall apply the appropriate portion of
such prepayment to such Revolving Advances.
SECTION 13.08. Covenants of the Lender.
----------------------
SECTION 13.08(a) Cap Rates. The Lender shall determine Cap
---------
Rates for the Mortgaged Properties of the Owners approximately once
each year. The Lender shall determine the Cap Rates on the basis of its
internal survey and analysis of cap rates for comparable sales in the
vicinity of the Mortgaged Property, with such adjustments as the Lender
deems appropriate in its sole and absolute discretion. In determining
the Cap Rate, the Lender shall not be obligated to rely on any
information provided by the TC Parties. The Lender shall have the right
to select additional Cap Rates during the year at any time the Lender
determines that changed market or property conditions warrant such
action.
SECTION 13.08(b) Valuations. The Lender shall perform a 12
----------
Month Valuation for each of the Mortgaged Properties, and a
determination of Aggregate Facility Debt Service Coverage Ratios and
Aggregate Loan to Value Ratio for the Trailing 12 Month Period (all of
which 12 Month Valuations and determinations shall be binding and
conclusive on the TC Parties) once each calendar year, within 20
Business Days after the Owners have delivered to the Lender the reports
required in Section 13.01(b)(1) and (2). The Lender shall have the
right to perform additional 12 Month Valuations and determinations at
other times during the year (i) in connection with a Request, or (ii)
at any time the Lender determines that changed market or property
conditions warrant such action.
SECTION 13.08(c) Notice to Other Institutional Lenders of
----------------------------------------
the TC Parties. In the event a TC Party grants a Lien on any Ownership
--------------
Interests to an Institutional Lender which is permitted under Sections
13.04(a)(2) or 13.06(a)(2), and the TC Party obtains the undertaking
from the Institutional Lender described in Section 13.04(a)(3) or
13.06(a)(3), then, within 30 days after the TC Party's request, the
Lender will make a written undertaking, for the benefit of the
Institutional Lender, that, in the event the Lender gives the TC Party
a notice under the Loan Documents which is in the nature of a notice of
default, a notice of acceleration of the Indebtedness, a notice of
foreclosure or a notice of the commencement of the exercise of any
other remedy against the TC Party or any of the Collateral, then the
88
Lender shall also endeavor to give to the Institutional Lender a
simultaneous copy of the notice. The undertaking may be conditioned
upon the receipt by the Lender of a written confirmation by the TC
Parties and the Institutional Lender that the failure of the Lender to
give such notices shall not (i) constitute a default under the Loan
Documents, (ii) give rise to any claim whatsoever by the TC Parties or
the Institutional Lender against the Lender or (iii) invalidate or
otherwise affect the efficacy of any notice given by the Lender to any
TC Party.
SECTION 13.08(d) Insurance Claims Settlement. Notwithstanding the
---------------------------
provision of the second sentence of the third paragraph of Paragraph 5 of the
Uniform Provisions of the Security Instruments (as they provide on the date
hereof) relating to insurance claims, so long as (i) the casualty to a Mortgaged
Property has led to a claim of less than $500,000 and (ii) no Event of Default
then exists, the Lender shall not exercise the power of attorney granted
thereby, and an Owner may make proof of loss, adjust and compromise claims,
oppose and prosecute actions relating to the casualty insurance policy in
question and collect and receive the insurance proceeds in question.
SECTION 13.09. Covenant of the TC Parties Regarding Transfers.
----------------------------------------------
(a) Prohibition on Transfers. Subject to paragraph (b)
------------------------
of this Section 13.09, the TC Parties shall not cause or permit a Transfer or
a Change of Control.
(b) Permitted Transfers. Notwithstanding the
-------------------
provisions (a) of this Section 13.09, the following Transfers by the TC Parties
are permitted without the consent of the Lender:
(i) A Transfer that occurs by inheritance, devise,
or bequest or by operation of law upon the death of a natural person
who is an owner of a Mortgaged Property or the owner of a direct or
indirect ownership interest in the TC Parties.
(ii) The grant of a leasehold interest in
individual dwelling units in a Mortgaged Property for a term of two
years or less and leases for commercial uses as long as commercial
leases do not exceed 20 percent of the rentable space of the Mortgaged
Property (measured as required by Lender) and provided that all such
leasehold interests do not contain an option to purchase the Mortgaged
Property; provided that in no event shall the TC Party grant a
leasehold interest for a commercial use that permits pornographic or
similarly immoral or inappropriate uses.
(iii) A sale or other disposition of obsolete or
worn out personal property which is contemporaneously replaced by
comparable personal property of equal or greater value which is free
and clear of liens, encumbrances and security interests other than
those created by the Loan Documents.
(iv) The creation of a mechanic's or materialmen's
lien or judgment lien against a Mortgaged Property which is released of
record or otherwise remedied to Lender's satisfaction within 30 days of
the date of creation.
89
(v) The grant of an easement, if prior to the
granting of the easement the TC Parties cause to be submitted to Lender
all information required by Lender to evaluate the easement, and if
Lender consents to such easement based upon Lender's determination that
the easement will not materially affect the operation of the Mortgaged
Property or Lender's interest in the Mortgaged Property and TC Parties
pay to Lender, on demand, all reasonable costs and expenses incurred by
Lender in connection with reviewing TC Parties' request. Lender shall
not unreasonably withhold its consent to or withhold its agreement to
subordinate the lien of a Security Instrument to (A) the grant of a
utility easement serving a Mortgaged Property to a publicly operated
utility, or (B) the grant of an easement related to expansion or
widening of roadways, provided that any such easement is in form and
substance reasonably acceptable to Lender and does not materially and
adversely affect the access, use or marketability of a Mortgaged
Property.
(vi) The Transfer of shares of common stock,
limited partnership interests or other beneficial or ownership
interest or other forms of securities in the REIT or the Operating
Partnership, and the issuance of all varieties of convertible debt,
equity and other similar securities of the REIT or the Operating
Partnership, and the subsequent Transfer of such securities; provided,
however, that no Change in Control occurs as a result of such
Transfer, either upon such Transfer or upon the subsequent conversion
to equity of such convertible debt or other securities.
(vii) The Transfer of partnership or membership
interests by the TC Parties, including, without limitation, the
conversion or exchange of partnership or membership interests in TC
Parties to shares of common stock or other beneficial or ownership
interests or other forms of securities in the REIT; provided, however,
that no Change in Control occurs as the result of such Transfer and the
general partner requirements set forth in the definition of "Change of
Control" are met.
(viii) The issuance by TC Parties of additional
partnership units or convertible debt, equity and other similar
securities, and the subsequent Transfer of such units or other
securities; provided, however, that no Change in Control occurs as the
result of such Transfer, either upon such Transfer or upon the
subsequent conversion to equity of such convertible debt or other
securities.
(ix) A merger with or acquisition of another
entity by the TC Parties, provided that (A) the TC Parties are the
surviving entity after such merger or acquisition, (B) no Change in
Control occurs, and (C) such merger or acquisition does not result in
an Event of Default, as such terms are defined in this Agreement.
(x) A Transfer in connection with any
substitution or release pursuant to the terms and conditions of Article
VII of this Agreement.
(xi) A Transfer to a Person made in connection
with a conversion of the type described in clause (v) of the definition
of Transfer, provided that either or both of the
90
REIT Sub and the Property Company own, directly or indirectly, 100% of
the Ownership Interests of such transferee.
(xii) The REIT, TC-Oriole or the Operating
Partnership may merge with another Person if (a) the Lender consents to
such merger or consolidation (which consent shall not be unreasonably
withheld, delayed or conditioned; and provided that if the Lender does
not disapprove of a proposed merger or consolidation on or before the
Outside Review Date, the Lender shall be deemed to have given its
consent to the merger or consolidation), or (b) if
(i) either--
(A) it is the surviving entity; or
(B) it is not the surviving entity but either:
(I) the surviving entity has a net worth,
determined by the Lender in accordance with GAAP, at least
equal to $500,000,000; or
(II) the surviving entity has a market
capitalization, as determined by the Lender, at least equal
to $650,000,000;
and
(ii) the surviving entity expressly acknowledges in writing
that it assumes all of the obligations and liabilities of the REIT
under the Loan Documents, whether arising before or after the date of
the merger or consolidation;
provided that clause (B) shall not apply if the surviving entity has
either (i) loans or commitment to make loans (whether directly or
through Affiliates) held by ▇▇▇▇▇▇ ▇▇▇ in excess of the internal limit
on loans to one entity and its Affiliates set by ▇▇▇▇▇▇ Mae in effect
at such time, or (ii) engaged in conduct relating to the conduct of its
business such that Lender or ▇▇▇▇▇▇ ▇▇▇ would not make or hold loans
having such entity as an obligor.
(xii) A Transfer permitted under Section 13.06.
(c) Consent to Prohibited Transfers. Lender may, (except
-------------------------------
as provided in clause (xi) of paragraph (b) of this Section 13.09) in its sole
and absolute discretion, consent to a Transfer that would otherwise violate this
Section 13.09 if, prior to the Transfer, the TC Parties have satisfied each of
the following requirements:
(i) the submission to Lender of all information
required by Lender to make the determination required by this Section
13.09(c);
(ii) the absence of any Event of Default;
91
(iii) the transferee meets all of the eligibility,
credit, management and other standards (including any standards with
respect to previous relationships between Lender and the transferee and
the organization of the transferee) customarily applied by Lender at
the time of the proposed Transfer to the approval of TC Parties in
connection with the origination or purchase of similar mortgages, deeds
of trust or deeds to secure debt on multifamily properties;
(iv) in the case of a Transfer of direct or
indirect ownership interests in TC Parties, if transferor or any other
person has obligations under any Loan Documents, the execution by the
transferee or one or more individuals or entities acceptable to Lender
of an assumption agreement that is acceptable to Lender and that, among
other things, requires the transferee to perform all obligations of
transferor or such person set forth in such Loan Document, and may
require that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may have been
waived by Lender;
(v) Lender's receipt of all of the following:
(A) except with respect to Transfers (i)
permitted under Section 13.06(f), (ii) in clause (xi) of
paragraph (b) of this Section 13.09, or (iii) in connection
with a conversion of the type described in clause (v) of the
definition of Transfer, provided such Transfer is to one or
more Affiliates of a TC Party and provided further that the
Ownership Interests in such Affiliates are, directly or
indirectly, 100% owned by either or both of the REIT or the
Operating Partnership, a transfer fee equal to 1 percent of
the Advances Outstanding immediately prior to the transfer.
(B) In addition, TC Parties shall be
required to reimburse Lender for all of Lender's reasonable
out-of-pocket costs (including reasonable attorneys' fees)
incurred in reviewing the Transfer request.
ARTICLE XIV
FEES
SECTION 14.01. Fee Definitions. For all purposes of this
---------------
Agreement, the following terms shall have the respective meanings set forth
below:
"Standby Fee" means, for each calendar month, the product
-----------
obtained by multiplying-
(a) 1/12, by
(b) 19 basis points, by
(c) the average daily Unused Capacity during the
month.
92
"Unused Capacity" means, for any specified date, the excess
---------------
(if any) of-
(a) the Maximum Credit Commitment in effect on
such date, over
(b) the aggregate unpaid principal balance of
the Advances Outstanding on such date.
SECTION 14.02. Standby Fee. The Property Company shall pay the
-----------
Standby Fee to the Lender for each month during the Term of this Agreement, in
arrears, on the first Business Day following the end of the month, except that
the Standby Fee for the last month during the Term of this Agreement shall be
paid on the last day of the Term of this Agreement.
SECTION 14.03. Origination Fees. The Borrowers shall pay to the
----------------
Lender an origination fee (the "Origination Fee") equal to $568,480, which shall
---------------
be paid on the date hereof in respect of the Advances made on or before the date
hereof. The Borrowers shall pay to the Lender an additional origination fee in
an amount equal to 1% of any expansion of the Credit Facility (the "Expansion
---------
Origination Fee"). The Expansion Origination Fee shall be due at the time of the
---------------
Closing of any increase in the Maximum Credit Commitment.
SECTION 14.04. Due Diligence Fees.
------------------
SECTION 14.04(a) Restructuring Diligence Fees. The Borrowers
----------------------------
shall pay to the Lender due diligence fees (the "Restructuring Due
-----------------
Diligence Fees") with respect to the Initial Mortgaged Properties equal
--------------
to the product obtained by multiplying -
(1) the reasonable fees and expenses of the
Lender expended in respect of an Initial
Mortgaged Property, which shall not in any
event exceed $2,000 per Initial Mortgaged
Property, by
(2) the number of Initial Mortgaged Properties.
The Borrowers have previously paid to the Lender a portion of the
Restructuring Due Diligence Fees and shall pay the remainder of the
Restructuring Due Diligence Fees to the Lender on date hereof.
SECTION 14.04(b) Additional Due Diligence Fees for Additional
--------------------------------------------
Collateral. The Borrowers shall pay to the Lender additional due diligence fees
----------
(the "Additional Collateral Due Diligence Fees") with respect to each Additional
----------------------------------------
Mortgaged Property equal to the sum of (i) $1,000 and (ii) the actual
out-of-pocket expenses incurred by the Lender in connection with all due
diligence activities which the Lender deems necessary in connection with the
addition of the Additional Mortgaged Property to the Collateral Pool. The
Borrowers shall pay Additional Collateral Due Diligence Fees for the Additional
Mortgaged Property to the Lender on the date on which they submit the Collateral
Addition Request for the addition of the Additional Mortgaged Property to the
Collateral Pool.
93
SECTION 14.05. Intentionally Omitted..
---------------------
SECTION 14.06. Legal Fees and Expenses.
-----------------------
SECTION 14.06(a) Legal Fees. The Borrowers shall pay to the
----------
Lender, for delivery to ▇▇▇▇▇▇ Mae, the actual out-of-pocket legal fees
and expenses incurred by ▇▇▇▇▇▇ ▇▇▇ in connection with the preparation
and negotiation of this Agreement, the other Loan Documents executed on
the date hereof and the closing of the Advance to be made on the date
hereof. The Borrowers shall pay such legal fees and expenses of ▇▇▇▇▇▇
Mae to the Lender on the date hereof.
SECTION 14.06(b) Additional Legal Fees and Expenses for
--------------------------------------
Additional Collateral. The Borrowers shall pay to the Lender, with
---------------------
respect to each Additional Mortgaged Property, the actual out-of-pocket
legal fees and expenses incurred by the Lender and ▇▇▇▇▇▇ ▇▇▇ in
connection with the preparation and negotiation of the Collateral
Addition Loan Documents executed on the Closing Date for the addition
of the Additional Mortgaged Property and the closing of the addition of
the Additional Mortgaged Property to the Collateral Pool. The Borrowers
shall pay the legal fees and expenses to the Lender on the Closing Date
for the addition of the Additional Mortgaged Property to the Collateral
Pool.
SECTION 14.07. MBS-Related Costs. The Borrowers shall pay to the
-----------------
Lender, within 30 days after demand, all fees and expenses incurred by the
Lender or ▇▇▇▇▇▇ Mae in connection with the issuance of any MBS backed by an
Advance, including the fees charged by Depository Trust Company and State Street
Bank or any successor fiscal agent or custodian.
SECTION 14.08. Other Fees. The Borrowers shall pay the following
----------
additional fees and payments, if and when required pursuant to the terms of this
Agreement:
(a) The Collateral Addition Fee, pursuant to Section
6.03(b), in connection with the addition of an Additional Mortgaged
Property to the Collateral Pool pursuant to Article VI;
(b) The Release Price, pursuant to Section 7.03(c), in
connection with the release of a Mortgaged Property from the Collateral
Pool pursuant to Article VII;
(c) The Release Fee, pursuant to Section 7.03(d), in
connection with the release of a Mortgaged Property from the Collateral
Pool pursuant to Article VII;
(d) The Revolving Facility Termination Fee, pursuant to
Section 9.03(b), in connection with a complete or partial termination
of the Revolving Facility pursuant to Article IX; and
94
(e) As part of any required prepayment premium, the
Credit Facility Termination Fee, pursuant to Section 10.03, in
connection with the termination of the Credit Facility pursuant to
Article X.
SECTION 14.09 Restructuring Fee. The Borrowers shall pay to the
-----------------
Lender a restructuring fee (the "Restructuring Fee") equal to
-----------------
$382,152. The Restructuring Fee shall be paid on the date hereof.
ARTICLE XV
INTENTIONALLY OMITTED
ARTICLE XVI
EVENTS OF DEFAULT
SECTION 16.01. Events of Default. The occurrence of any one or
-----------------
more of the following events shall constitute an Event of Default:
SECTION 16.01(a) Any representation or warranty made by, or
on behalf of, any TC Party in this Agreement or any other Loan
Document shall prove to have been false in any material respect as of
the date on which it was made;
SECTION 16.01(b) The failure of any TC Party to pay, on or
before the date when due, (i) any interest or principal due with
respect to any Advance, (ii) any amount payable into the Tax Escrow
Fund in accordance with Section 19.02(a) and the Security Instruments,
(iii) any monthly deposit payable into the Replacement Reserve in
accordance with Section 13.01(g), and (iv) any Monthly Cap Escrow
Payment payable into the Cap Escrow Fund in accordance with Section
20.03.
SECTION 16.01(c) The failure of any TC Party to pay, on or
before the date when due, any amount (other than as set forth in
paragraph (b) above) due and payable by any TC Party under the Loan
Documents, including fees, costs or expenses, if the failure continues
for a period of 10 days after receipt by the TC Party of a written
notice from the Lender identifying the failure;
SECTION 16.01(d) There shall have been entered against any TC
Party a judgment against any TC Party or any attachment or other levy
against any portion of any TC Party's assets with respect to a claim in
an amount in excess of $1,000,000 individually or in the aggregate, and
the judgment, attachment or levy remains unpaid, unstayed on appeal,
undischarged, unbonded, not fully insured (other than stated
deductibles or retentions) or undismissed for a period of 60 days;
95
SECTION 16.01(e) With respect to any Indebtedness incurred by
a TC Party in an aggregate amount in excess of $1,000,000, the failure
of any TC Party (i) to pay all or any portion of the Indebtedness when
it is due and payable, or (ii) to perform and observe any of the terms,
covenants and conditions contained in any document or instrument
relating to the Indebtedness (other than those described in clause (i)
above) when such performance or observation is due, if
(x) the failure to pay, perform or observe
(I) continues after the expiration of any
applicable notice and cure period and
(II) gives the creditor to whom the Indebtedness
is owed the right to accelerate the
Indebtedness, and
(y) either
(I) the Indebtedness has matured or
(II) the creditor to whom the Indebtedness is due
and payable has accelerated the maturity of
the Indebtedness;
SECTION 16.01(f) With respect to any Indebtedness incurred by
a TC Party in an aggregate amount in excess of $1,000,000 which is
secured by a Lien on the Ownership Interests in an Owner, the REIT Sub,
the Property Company or the Operating Partnership, the failure of the
TC Party to pay all or any portion of the Indebtedness when it is due
and payable, if the failure to pay continues after the expiration of
any applicable notice and cure period;
SECTION 16.01(g) With respect to any Indebtedness incurred by
a TC Party in an aggregate amount in excess of $1,000,000 which is
secured by a Lien on the Ownership Interests in an Owner, the REIT Sub,
the Property Company or the Operating Partnership, the failure of the
TC Party to perform and observe any of the terms, covenants and
conditions contained in any document or instrument relating to such
Indebtedness (other than those described in subsection (f) above) when
such performance or observation is due, if
(x) the failure to perform or observe
(I) continues after the expiration of any
applicable notice and cure period and
(II) gives the creditor to whom the Indebtedness
is owed the right to accelerate the
Indebtedness and
96
(y) (I) the Indebtedness has matured,
(II) the creditor to whom the Indebtedness is due
and payable has accelerated the maturity
of the Indebtedness or
(III) the creditor to whom the Indebtedness is
owed has instituted foreclosure or other
comparable proceedings with respect to such
Ownership Interests;
SECTION 16.01(h) Any event under any Loan Document which (i)
is defined to be an "Event of Default," (ii) constitutes a default (but
only after the expiration of any applicable notice and cure period) or
(iii) permits the Lender to accelerate the indebtedness evidenced by a
Note;
SECTION 16.01(i) The failure of any TC Party to perform or
observe any term, covenant, condition or agreement under this
Agreement, or any other Loan Document, other than as set forth in
paragraphs (a) through (i) above, if the failure continues for a period
of 30 days after receipt by the TC Party of a written notice from the
Lender identifying the failure; provided, however, that if, in the
Lender's judgment:
(1) the cure of the failure requires a period
in excess of 30 days,
(2) the failure will not result in a material
adverse effect on:
(i) the financial condition of any TC
Party,
(ii) the validity, priority, perfection,
or enforceability of this Agreement
or any other Loan Document, or
(iii) the rights and remedies of the
Lender under any Loan Document, or
the value of, or the Lender's
ability to have recourse against,
any Collateral,
(3) the failure is capable of being cured within
a period not in excess of 60 days and
(4) corrective action is instituted by any Owner
within the 30-day period and is pursued
diligently and in good faith,
then the failure shall not constitute an Event of Default unless the
failure is not cured by the Owners within 60 days after receipt by the
TC Party of a written notice from the Lender identifying the failure.
97
ARTICLE XVII
REMEDIES
SECTION 17.01. Remedies; Waivers.
-----------------
SECTION 17.01(a) Upon the occurrence of an Event of Default,
the Lender shall have the right to pursue any remedies available to it
under any of the Loan Documents.
SECTION 17.01(b) Upon the occurrence of an Event of Default,
the Lender shall have the right to pursue all remedies available to it
at law or in equity, including obtaining specific performance and
injunctive relief.
SECTION 17.01(c) The Lender shall have the right, to be
exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting
forth the terms, conditions, and extent of such waiver signed by the
Lender and delivered to the Borrowers. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to
the specific event or occurrence which gave rise to the waiver and not
to any other similar event or occurrence which occurs subsequent to the
date of such waiver.
SECTION 17.01(d) If any TC Party fails to perform the
covenants and agreements contained in this Agreement or any of the
other Loan Documents, then the Lender at the Lender's option may make
such appearances, disburse such sums and take such action as the Lender
deems necessary, in its sole discretion, to protect the Lender's
interest, including (i) disbursement of attorney's fees, (ii) entry
upon the Mortgaged Property to make repairs and Replacements, (iii)
procurement of satisfactory insurance as provided in paragraph 5 of the
Security Instrument encumbering the Mortgaged Property, and (iv) if the
Security Instrument is on a leasehold, exercise of any option to renew
or extend the ground lease on behalf of the Owner and the curing of any
default of the Owner in the terms and conditions of the ground lease.
Any amounts disbursed by the Lender pursuant to this paragraph (d),
with interest thereon, shall become additional indebtedness of the
Borrowers secured by the Loan Documents. Unless the Borrowers and the
Lender agree to other terms of payment, such amounts shall be
immediately due and payable and shall bear interest from the date of
disbursement at the Blended Rate from time to time unless collection
from the Borrowers of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the
highest rate which may be collected from the Borrowers under applicable
law. Nothing contained in this paragraph (d) shall require the Lender
to incur any expense or take any action hereunder.
SECTION 17.02. No Remedy Exclusive. Unless otherwise expressly
-------------------
provided, no remedy herein conferred upon or reserved is intended to be
exclusive of any other available remedy, but each remedy shall be cumulative and
shall be in addition to other remedies given under the Loan Documents or
existing at law or in equity.
98
SECTION 17.03. No Waiver. No delay or omission to exercise any right or
---------
power accruing under any Loan Document upon the happening of any Event of
Default or Potential Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
SECTION 17.04. No Notice. In order to entitle the Lender to exercise
---------
any remedy reserved to the Lender in this Article, it shall not be necessary to
give any notice, other than such notice as may be required by applicable law
(except to the extent such notice may be waived by the TC Parties) or under the
applicable provisions of this Agreement or any of the other Loan Documents. The
TC Parties hereby waive any notices which are required by law, to the fullest
extent such waiver is permitted by applicable law.
SECTION 17.05 Application of Payments. Except as otherwise
-----------------------
expressly provided in the Loan Documents, and unless applicable law provides
otherwise, all payments received by the Lender from any of the TC Parties under
the Loan Documents shall be applied by the Lender against any amounts then due
and payable under the Loan Documents by any of the TC Parties, in any order of
priority that the Lender may determine.
ARTICLE XVIII
RIGHTS OF ▇▇▇▇▇▇ ▇▇▇
SECTION 18.01. Special Pool Purchase Contract. The TC Parties
------------------------------
acknowledge that ▇▇▇▇▇▇ Mae has entered into an agreement with the Lender (the
"Special Pool Purchase Contract"), pursuant to which, inter alia, (i) the Lender
------------------------------ ----- ----
assigned all of its rights under this Agreement to ▇▇▇▇▇▇ ▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇
accepted the assignment of the rights, (iii) subject to the terms, limitations
and conditions set forth in the Special Pool Purchase Contract, ▇▇▇▇▇▇ Mae shall
agree to purchase each Advance issued under this Agreement by issuing to the
Lender a ▇▇▇▇▇▇ ▇▇▇ MBS, in the amount and for a term equal to the Advance
purchased and backed by an interest in the Base Facility Notes or the Revolving
Facility Note, as the case may be, and the Collateral Pool securing the Notes
and the Guaranties, (iv) the Lender shall agree to assign to ▇▇▇▇▇▇ Mae all of
the Lender's interest in the Notes and Collateral Pool securing the Notes and
the Guaranties, and (v) the Lender shall agree to service the loans evidenced by
the Notes.
SECTION 18.02. Assignment of Rights. The TC Parties acknowledge and
--------------------
consent to the assignment to ▇▇▇▇▇▇ ▇▇▇ of all of the rights of the Lender under
this Agreement and all other Loan Documents, including the right and power to
make all decisions on the part of the Lender to be made under this Agreement and
the other Loan Documents, but ▇▇▇▇▇▇ Mae, by virtue of this assignment, shall
not be obligated to perform the obligations of the Lender under this Agreement
or the other Loan Documents. The Lender, however, shall remain fully liable for
all of its obligations under this Agreement, notwithstanding the assignment of
its rights described under this Section.
99
SECTION 18.03. Release of Collateral. The TC Parties hereby acknowledge
---------------------
that, after the assignment of Loan Documents contemplated in Section 18.02, the
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Articles VII or X. The TC Parties acknowledge that the Security
Instruments provide for the release of the Collateral under Articles VII and X.
Accordingly, the TC Parties shall not look to the Lender for performance of any
obligations set forth in Articles VII and X, but shall look solely to the party
secured by the Collateral to be released for such performance. The Lender
represents and warrants to the TC Parties that the party secured by the
Collateral shall be subject to the release provisions contained in Articles VII
and X by virtue of the release provisions in each Security Instrument.
SECTION 18.04. Replacement of Lender. At the request of ▇▇▇▇▇▇ ▇▇▇, the
---------------------
TC Parties and the Lender shall agree to the assumption by another lender
designated by ▇▇▇▇▇▇ Mae, of all of the obligations of the Lender under this
Agreement and the other Loan Documents (and assignment of concomitant rights),
and/or any related servicing obligations, and, at ▇▇▇▇▇▇ Mae's option, the
concurrent release of the Lender from its obligations under this Agreement and
the other Loan Documents and/or any related servicing obligations, and shall
execute all releases, modifications and other documents which ▇▇▇▇▇▇ Mae
determines are necessary or desirable to effect such assumption.
SECTION 18.05. ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses. The TC Parties
---------------------------------------
agree that any provision providing for the payment by any one or more of the TC
Parties of fees, costs or expenses incurred or charged by the Lender pursuant to
this Agreement shall be deemed to provide for the payment by such TC Party or
Parties of all fees, costs and expenses incurred or charged by the Lender or
▇▇▇▇▇▇ Mae in connection with the matter for which fees, costs or expenses are
payable.
SECTION 18.06. Third-Party Beneficiary. The TC Parties hereby
-----------------------
acknowledge and agree that ▇▇▇▇▇▇ ▇▇▇ is a third party beneficiary of all of the
representations, warranties and covenants made by any TC Parties to, and all
rights under this Agreement conferred upon, the Lender, and, by virtue of its
status as third-party beneficiary and/or assignee of the Lender's rights under
this Agreement, ▇▇▇▇▇▇ Mae shall have the right to enforce all of the provisions
of this Agreement against the TC Parties.
ARTICLE XIX
INSURANCE AND REAL ESTATE TAXES
SECTION 19.01. Insurance Escrow Fund.
---------------------
Except during the continuance of an Event of Default, no fund for
Insurance Premiums (a "Insurance Escrow Fund") shall be required to be
---------------------
established with the Lender under the Loan Documents, provided that, in the
event the insurance deductible(s) of, or required in, any Insurance Policy
exceeds $100,000 (but after giving effect to any supplemental policy that covers
all or any portion of such deductible otherwise in excess of $100,000), the
Lender reserves the right to require the Owners to establish with the Lender, as
additional security for the Notes, an Insurance Escrow Fund equal to the
aggregate amount of the insurance deductible(s) on the Insurance Policy, as
100
reasonably determined by the Lender. If the Lender shall require an Insurance
Escrow Fund, it shall establish the Insurance Escrow Fund in a deposit account
with a financial institution selected by the Owners and approved by the Lender,
which approval shall not be unreasonably withheld, conditioned or delayed, and
the amounts in the Insurance Escrow Fund shall be invested by the Lender in
Permitted Investments selected by the Lender. All earnings on such Permitted
Investments shall be added to, and become a part of, the Insurance Escrow Fund.
SECTION 19.02. Taxes.
-----
SECTION 19.02(a) Escrow. A fund (the "Tax Escrow Fund")for
------ ---------------
the aggregate amount of yearly water and sewer rates and taxes and
assessments ("Real Estate Taxes") which may be levied on the Mortgaged
-----------------
Properties shall be required to be established with the Lender
pursuant to this Article XIX. The Lender shall establish the Tax
Escrow Fund in a deposit account with a financial institution selected
by the Owners and approved by the Lender, which approval shall not be
unreasonably withheld, conditioned or delayed, and the amounts in the
Tax Escrow Fund shall be invested by the Lender in Permitted
Investments selected by the Lender. All earnings on such Permitted
Investments shall be added to, and become a part of, the Tax Escrow
Fund.
SECTION 19.02(b) Delivery of Letter of Credit. Provided that
----------------------------
no Event of Default has occurred and is then continuing, at any time
during the Term of this Agreement during which the Tax Escrow Fund is
held by the Lender, the Owners may, upon notice to the Lender, elect to
substitute for the Tax Escrow Fund a Letter of Credit (as defined
below) in accordance with this subsection, in which event the Lender
shall return the Tax Escrow Fund to the Owners within 30 days after the
Owners deliver the Letter of Credit to the Lender. Provided that no
Event of Default has occurred and is then continuing, at any time
during the Term of this Agreement during which a Letter of Credit for
Real Estate Taxes is held by the Lender, the Owners may, upon notice to
the Lender, elect to substitute for the Letter of Credit the Tax Escrow
Fund, in which event the Owners shall deliver to the Lender, in cash,
the amount of the Tax Escrow Fund which would have been required at the
time of the substitution if the Owners had not elected to furnish the
Letter of Credit and the Lender shall return the Letter of Credit to
the Owners within 30 days after its receipt of the cash for the Tax
Escrow Fund. Any Letter of Credit delivered to the Lender in accordance
with this subsection shall be a clean, irrevocable Letter of Credit,
naming the Lender as beneficiary, in an amount equal to the maximum
aggregate amount which, at any point in time during the 12 month period
immediately succeeding the date on which the Letter of Credit is
delivered, would have been required to have been on deposit in the Tax
Escrow Fund (the "Maximum Escrow Amount") if one had been maintained,
---------------------
as such amount is determined by the Lender. The Letter of Credit must
be issued by an issuer (the "Issuer") that meets the Lender's
------
requirements for ratings of issuers of acceptable Letters of Credit as
set forth in the DUS Guide, must comply with all other requirements for
letters of credit contained in the DUS Guide and must be a so-called
"evergreen" letter of credit which does not expire unless the Issuer
gives the Lender at least 30 days' advance written notice of the
expiration. (The term "Letter of Credit" shall mean the letter of
----------------
credit delivered to the Lender pursuant to this
101
paragraph (b) in connection with the Lender's making the loans
evidenced by the Notes to the Owners, any replacement letter of
credit, and any amendment or renewal of the letter of credit or the
replacement letter of credit.) If the Owners at any time provide a
confirming letter of credit, a replacement confirming letter of credit
or an amendment or renewal of the confirming letter of credit or the
replacement confirming letter of credit, then the term "Letter of
Credit" shall also mean the confirming letter of credit as so amended,
renewed or replaced.)
SECTION 19.02(c) Letter of Credit as Additional Collateral.
-----------------------------------------
The TC Parties agree that the Letter of Credit provides collateral for
the Notes in addition to the lien of the Security Instruments on the
Mortgaged Properties and, during the continuance of any Event of
Default, the Lender shall be entitled to take any action permitted
under this Agreement, in addition to pursuing any other remedy the
Lender may have with respect to any other Collateral or secured
property, including the Mortgaged Properties.
SECTION 19.02(d) Conditions for Providing and Holding Letter
-------------------------------------------
of Credit.
---------
SECTION 19.02(d)(1) Period During Which the Owners Must
-----------------------------------
Provide Letter of Credit. Until the earliest of (i) payment in full of
------------------------
all sums secured by the Security Instruments and release by the Lender
of the liens of the Security Instruments, or (ii) the date that the
Lender fully draws on the Letter of Credit as permitted by this
Agreement, the Owners shall renew, amend or replace the Letter of
Credit in accordance with the terms of this Agreement, to ensure that
the Letter of Credit remains in effect and does not expire.
SECTION 19.02(d)(2) Return of the Letter of Credit or the
-------------------------------------
Proceeds Thereof. The Lender shall return the Letter of Credit, or the
----------------
proceeds of any draws on such Letter of Credit (less all amounts which
have been applied by the Lender pursuant to the terms of this Article
XIX) to the Owners 10 days after the date on which the Lender releases
the lien of the Security Instruments following payment in full of all
amounts secured by the Security Instruments.
SECTION 19.02(d)(3) Application for Prepayment. If the
--------------------------
proceeds of the Letter of Credit are applied to payment of a portion of
the principal amount of the Notes, a prepayment premium attributable to
such prepaid principal amount shall be due to the Lender and to the
extent, if any, as provided in the Notes.
SECTION 19.02(d)(4) Adjustment of the Letter of Credit.
----------------------------------
The Owners shall deliver to the Lender copies of the bills and notices
of assessments for Real Estate Taxes for the Mortgaged Properties.
Promptly upon the Owners' receipt of each yearly ▇▇▇▇ of Real Estate
Taxes, the Owners shall deliver to the Lender an amendment or
replacement of the Letter of Credit. In addition, not more than two
times each calendar year, the Owners shall, promptly after receipt of
notice from the Lender, deliver to the Lender an amendment or
replacement of the Letter of Credit in the Maximum Escrow Amount for
the then-current
102
calendar year, as such yearly amount is reasonably estimated by Lender
on the basis of assessments and bills and reasonable estimates thereof.
SECTION 19.02(e) Renewal or Replacement of Letter of Credit.
------------------------------------------
SECTION 19.02(e)(1) Renewal or Replacement. At least
----------------------
30 days prior to the expiration date of the Letter of Credit,
the Owners shall either (i) cause the Letter of Credit to be
amended to extend its expiration date, or (ii) furnish a
replacement Letter of Credit. In either case, the amended
Letter of Credit or the replacement Letter of Credit must (A)
be in compliance with the requirements for letters of credit
under the DUS Guide, and be from an Issuer which meets the
Lender's requirements for ratings of issuers of acceptable
letters of credit as set forth in the DUS Guide, (B) have a
term not less than one (1) year (unless a shorter term is
approved in writing by the Lender), and (C) be in the amount
of the outstanding Letter of Credit, amended to the extent
required pursuant to paragraph (d)(4) above. The foregoing
shall not affect the requirement that, notwithstanding the
expiration date of the Letter of Credit, it will not expire
until the Issuer has given the Lender at least 30 days'
advance written notice.
SECTION 19.02(e)(2) Review of Rating of Issuer;
---------------------------
Replacement of Letter of Credit. From time to time, the Lender
-------------------------------
shall review the rating of the Issuer of the then outstanding
Letter of Credit. If the Lender notifies the Owners that at
the time of any such review the issuing bank does not meet the
Lender's requirements for ratings of issuers of acceptable
letters of credit as set forth in the DUS Guide, the Owners
shall replace the outstanding Letter of Credit with a Letter
of Credit that complies with all of the requirements set forth
in the DUS Guide, no later than 30 days after the Lender's
notice to the Owners, unless the outstanding Letter of Credit
would expire prior to such 30-day period, in which case the
Owners shall provide the replacement Letter of Credit no later
than five business days prior to the expiration date of the
outstanding Letter of Credit.
SECTION 19.02(e)(3) Draw on Letter of Credit. If the
------------------------
Owners do not provide an amendment to, or replacement of, the
Letter of Credit when required pursuant to paragraph (1) or
(2) above, as the case may be, which amended or replacement
Letter of Credit satisfies all of the requirements of
paragraphs (1) and (2) above, the Lender shall draw the full
amount of the Letter of Credit and hold and apply the proceeds
as permitted hereunder and, in such event, no Event of Default
shall be deemed to exist by virtue of the Borrowers' failure
to comply with said paragraphs (1) and (2).
SECTION 19.02(f) Default Under the Loan Documents.
--------------------------------
SECTION 19.02(f)(1) Remedies. During the continuance
--------
of an Event of Default, the Lender shall be entitled, in its
sole discretion, to:
103
(i) Draw on the Letter of Credit and
hold the proceeds of the Letter of Credit and hold
it as additional cash Collateral;
(ii) Draw on the Letter of Credit and
apply all or any portion of the proceeds of the
Letter of Credit to payment of the unpaid principal
amount of the Notes and the prepayment premium
(calculated as provided in the Notes) on the
principal amount prepaid; provided, however, that
such application of proceeds shall not cure or be
deemed to cure any default;
(iii) Draw on the Letter of Credit and
apply all or any portion of the proceeds of the
Letter of Credit to reimburse the Lender for any
losses or expenses (including legal fees) suffered
or incurred by the Lender as a result of such
default; and/or
(iv) Exercise all rights and remedies
available to the Lender at law or in equity or under
any of the Loan Documents (including this Section).
SECTION 19.02(f)(2) No Obligation to Apply Proceeds;
-------------------------------
No Cure. Nothing in this Section shall obligate the Lender to
-------
apply all or any portion of the proceeds of the Letter of
Credit to cure any default under the Loan Documents or to
reduce the indebtedness evidenced by the Notes. No application
of proceeds of the Letter of Credit by the Lender shall be
deemed to cure any default.
SECTION 19.02(g) Proceeds of the Letter of Credit.
--------------------------------
SECTION 19.02(g)(1) Providing Replacement Letter of
-------------------------------
Credit after a Draw. Provided that the Owners are not otherwise in
-------------------
default under any of the Loan Documents (including the Security
Instruments), after the Lender has drawn on the Letter of Credit, but
prior to application of proceeds, the Lender may, but is not obligated
to, permit the Owners to provide a replacement Letter of Credit that
complies with all the requirements set forth in the DUS Guide, in
which case the Lender shall return the proceeds of the draw to the
Owners, less the Lender's costs and expenses (including attorneys'
fees and expenses and allocable costs for time spent by officers,
employees, contractors and agents of the Lender).
SECTION 19.02(g)(2) Proceeds Held in Tax Escrow Fund
--------------------------------
Account. If the Lender draws on the Letter of Credit and holds the
-------
proceeds under the Security Instruments, such funds shall be held by
the Lender in the Tax Escrow Fund account.
SECTION 19.02(g)(3) No Obligation to Draw or to Apply
---------------------------------
Proceeds. The Lender shall not be obligated to draw on the Letter of
--------
Credit upon any default under any of the Loan Documents or apply the
proceeds of any draw on the Letter of Credit to cure a default under
the Loan Documents. The Lender may hold the Letter of Credit or the
proceeds of any Letter of Credit until the date for return as
determined pursuant to paragraph (d)(2), or apply all or any portion of
the proceeds as permitted by this Agreement or any of
104
the Loan Documents and hold any remaining proceeds until the date for
return determined under paragraph (d)(2).
SECTION 19.03 Funds for Taxes, Insurance and Other Charges.
--------------------------------------------
In the event an Insurance Escrow Fund or a Tax Escrow Fund is required under the
terms of this Article XIX, the following provisions shall apply:
SECTION 19.03(a) Deposits. Subject to applicable law, the
--------
Owners shall pay to the Lender on the first day of each calendar month
(or on another day designated in writing by the Lender), until the
Insurance Escrow Fund and Tax Escrow Fund are no longer required under
the Loan Documents, a sum (herein "Funds") equal to one-twelfth of (1)
-----
if a Tax Escrow Fund is required, the Real Estate Taxes which may be
levied on the Mortgaged Properties and (2) if an Insurance Escrow Fund
is required, the Insurance Premiums or insurance deductibles (either,
an "Insurance Payment"), whichever is required by the Loan Documents.
-----------------
The Lender may require the Owners to pay to the Lender, in advance,
such other Funds for other taxes, charges, premiums, assessments and
impositions in connection with the Owners or the Mortgaged Properties
to the extent such taxes, charges, premiums, assessments or impositions
constitute an encumbrance on a Mortgaged Property with priority over
the Security Instruments on the Mortgaged Property (herein "Other
-----
Impositions"). Unless otherwise provided by applicable law, the Lender
-----------
may require Funds for Other Impositions to be paid by the Owners in a
lump sum or in periodic installments, at the Lender's option.
SECTION 19.03(b) Application of Funds. The Lender shall apply
--------------------
the Funds to pay the Real Estate Taxes, Insurance Premiums or Other
Impositions, as the case may be, so long as no Event of Default has
occurred. The Lender shall make no charge for so holding and applying
the Funds, analyzing said account or for verifying and compiling said
assessments and bills, unless the Lender pays the Owners interest,
earnings or profits on the Funds and applicable law permits the Lender
to make such a charge. The Lender shall give to the Owners, without
charge, an annual accounting of the Funds in the Lender's normal format
showing credits and debits to the Funds and the purpose for which each
debit to the Funds was made. The Funds are pledged as additional
security for the sums secured by the Security Instruments.
SECTION 19.03(c) Adjustment of Amount of Funds. If the amount
-----------------------------
of the Funds held in the Tax Escrow Fund and the Insurance Escrow Fund
at the time of the annual accounting thereof shall exceed the amount
deemed necessary by the Lender to provide for the payment of any
Insurance Premiums (if an Insurance Escrow Fund is required), Real
Estate Taxes (if a Tax Escrow Fund is required) and Other Impositions
(if either an Insurance Escrow Fund or a Tax Escrow Fund is required),
as they fall due, such excess shall be credited to the Owners on the
next monthly installment or installments of Funds due. If at any time
the amount of the Funds held in the Tax Escrow Fund and the Insurance
Escrow Fund shall be less than the amount deemed necessary by the
Lender to pay such Insurance
105
Premiums (if an Insurance Escrow Fund is required), Real Estate Taxes
(if a Tax Escrow Fund is required) and Other Impositions (if either an
Insurance Escrow Fund or a Tax Escrow Fund is required) , as they fall
due, the Owners shall pay to the Lender any amount necessary to make
up the deficiency within 30 days after notice from the Lender to the
Owners requesting payment thereof.
SECTION 19.03(d) Return of Funds. Upon payment in full of all
---------------
sums secured by the Loan Documents, the Lender shall promptly refund to
the Owners any Funds held by the Lender.
ARTICLE XX
INTEREST RATE CAPS
SECTION 20.01. Cap Requirement. In connection with the issuance of the
---------------
first Revolving Facility Advance in the principal amount of $75,000,000, the
Property Company obtained a Cap (the "Initial Cap"). The Initial Cap expires on
-----------
October 1, 2002 (the "Initial Cap Expiration Date"). Effective not later than
---------------------------
Initial Cap Expiration Date, the Property Company shall obtain a new Cap (the
"Replacement Cap") for a period commencing on or before the Initial Cap
---------------
Expiration Date and ending not earlier than April 1, 2007 (the "Replacement Cap
---------------
Expiration Date"). In connection with the execution of this Agreement, the
---------------
Property Company shall obtain a Cap (the "New Cap"). The New Cap shall be for a
-------
period commencing no later than the date of the first Advance after the date
hereof and ending not earlier than April 1, 2007 (the "New Cap Expiration
------------------
Date"). Effective not later than the Replacement Cap Expiration Date and the New
----
Cap Expiration Date, the Property Company shall obtain new Cap or Caps (each, a
"Final Cap") for a period commencing on the Replacement Cap Expiration Date and
---------
the New Cap Expiration Date, as applicable, and ending on the Credit Facility
Termination Date.
SECTION 20.02. Terms and Conditions. Each Cap shall:
--------------------
(a) be obtained on terms and conditions approved by the Lender;
(b) be evidenced and governed by Cap Documents in form and
substance acceptable to the Lender;
(c) be with a Counterparty acceptable to the Lender;
(d) provide for a notional principal amount equal at all times to
the Revolving Facility Credit Commitment;
(e) provide for a notional interest rate equal to the Three Month
Libor Rate in effect from time to time;
106
(f) require the Counterparty to make interest payments on the
notional principal amount at a rate equal to the amount by
which the notional interest rate payable under the terms of
the Cap Documents exceeds the applicable Underwriting Rate;
and
(g) require the Counterparty to make such interest payments to an
account pledged to the Lender pursuant to the Cap Security
Agreement.
If the Revolving Facility Credit Commitment increases in accordance with the
terms of Article VIII, the Property Company shall obtain, and maintain at all
times during the Term of this Agreement, an additional Cap, meeting all of the
requirements of this Article, with a notional principal amount equal to the
amount of the increase. If the Revolving Facility Credit Commitment decreases in
accordance with the provisions of Articles V, IX or X, the Property Company may
amend one or more Caps to provide for a decrease in the notional amount to an
amount equal to the Revolving Facility Credit Commitment, provided that the
Lender gives its prior written approval to the documents reflecting the
amendment. The Property Company shall obtain and maintain each Cap or additional
Cap under this Agreement at its sole cost and expense.
SECTION 20.03. Escrow Provisions.
-----------------
SECTION 20.03(a) Monthly Cap Escrow Payment. Until the Property
--------------------------
Company obtains the Replacement Cap, the Property Company shall, on each date
that a payment of interest is due under the Base Facility Notes, deposit with
the Lender the Monthly Cap Escrow Payment. The "Monthly Cap Escrow Payment"
--------------------------
means, with respect to each Cap Year, an amount equal to the quotient obtained
by dividing --
(1) the excess of --
(i) 125% of the cost, as estimated by the
Lender, to obtain the Final Cap, over
(ii) the amount in the Cap Escrow Fund on the
date immediately preceding the commencement
of the Cap Year; by
(2) the number of full months then remaining in the
Initial Cap Period, as of the date immediately preceding the
commencement of such Cap Year.
At least 10 days before the commencement of each Cap Year, the Lender shall give
the Property Company notice of the estimate under Section 20.03(a)(1)(i) and the
amount of the Monthly Cap Escrow Payments for such Cap Year.
SECTION 20.03(b) Escrows for Final Cap. Until the Property Company
---------------------
obtains each required Final Cap, the Property Company shall, not later than the
date one year prior to the Replacement Cap Expiration Date or New Cap Expiration
Date, as applicable, deposit with the
107
Lender an amount equal to 125% of the cost, as estimated by the Lender, to
obtain each required Final Cap (the "Final Cap Escrow Payment").
------------------------
SECTION 20.03(c) Cap Escrow Fund. The Lender shall establish an escrow
---------------
fund (the "Cap Escrow Fund") and shall deposit each Monthly Cap Escrow Payment
---------------
and the Final Cap Escrow Payment into the Cap Escrow Fund. The Cap Escrow Fund
shall be placed in a deposit account with a financial institution selected by
the Property Company and reasonably satisfactory to the Lender and shall be
invested by the Lender in Permitted Investments selected by the Lender. All
earnings on such Permitted Investments shall be added to, and become a part of,
the Cap Escrow Fund. The Property Company hereby pledges and assigns to the
Lender, and grants a lien and security interest in, and right of setoff against,
any right, title and interest it may have in and to the Cap Escrow Fund. At the
Lender's request, the Property Company shall cause the financial institution
holding the Cap Escrow Fund to execute and deliver a Restricted Account Letter
in form and substance similar to that signed with respect to the pledged account
maintained under the Cap Security Agreement. In lieu of the Cap Escrow Fund, the
Property Company may deliver to the Lender an irrevocable Letter of Credit
meeting all of the terms set forth in Section 19.02(b)-(f), except that the
amount of the Letter of Credit during each Cap Year shall at all times be equal
to the amount which would otherwise have been required to be in the Cap Escrow
Fund at the end of such Cap Year, and the Property Company shall deliver a new
Letter of Credit (or an amendment to the existing Letter of Credit) on or before
the first day of each Cap Year, amending the amount of the Letter of Credit.
Provided no Event of Default or Potential Event of Default has then occurred and
is continuing, the Letter of Credit or Cap Escrow Fund shall be returned to the
Property Company within 30 days after the date on which the Property Company
obtains the Final Cap and delivers the Final Cap to the Lender or its designee.
ARTICLE XXI
NONRECOURSE OBLIGATIONS
SECTION 21.01. Non-Recourse Liability. Subject to the provisions of
----------------------
Section 21.02 and notwithstanding any other provision in the Notes, the Security
Instruments or any other Loan Documents (including provisions which are not by
their terms expressly subject to the provisions of this Section 21.01), the
personal liability (i) of the Borrowers (or any partners thereof) to pay the
principal of and interest on the Notes, and for each to pay and perform all of
their other Obligations and for a breach of any of their representations or
warranties under the Loan Documents, (ii) of the Guarantors (or any partners
thereof) to pay any amounts due under the Guaranties, and (iii) of each of the
TC Parties to pay and perform its respective Obligations and for a breach of any
of its representations or warranties under the Loan Documents, shall be limited
to (a) the real and personal property described as "Property" in any Security
Instrument granted by any Owner, (b) the personal property described in and
pledged under any other Loan Document executed by any TC Party (including all
deposit accounts pledged under the Cap Security Agreement, the Replacement
Reserve Agreement and this Agreement)(the "Pledged Property" and (c) the rents,
----------------
profits, issues, products and income of the Mortgaged Property of the Owners
received or collected by or on behalf of the Owners (the "Rents and Profits") to
-----------------
the extent such receipts are necessary, first, to pay the Operating Expenses of
the Owners' Mortgaged Properties then due and payable as of the time of receipt
of such
108
Rents and Profits, and then, to pay principal and interest due under the
applicable Notes, any other sums due under the Security Instruments, this
Agreement or any other Loan Documents and any other Obligations then due and
owing to the Lender, except to the extent that such Owner did not have the legal
right, because of a bankruptcy, receivership or similar judicial proceeding, to
direct the disbursement of such sums.
Except as provided in Section 21.02, the Lender shall not seek (a) any judgment
for a deficiency against any TC Party or any heirs, legal representatives,
successors or assigns of any TC Party, in any action to enforce any right or
remedy under the applicable Notes or Security Instruments, this Agreement or any
of the other Loan Documents, or (b) any judgment on any of the applicable Notes
or the Obligations of any TC Party under the Loan Documents except as may be
necessary in any action brought under any of the Security Instruments to enforce
the Lien against the Mortgaged Property encumbered thereby or to exercise any
other remedies to realize against any of the Collateral under any other Loan
Documents.
SECTION 21.02. Special Provisions. If, without obtaining the
------------------
Lender's prior written consent (a) a Recourse Transfer shall occur (other than a
Recourse Transfer to an Institutional Lender, or to the purchaser at a secured
party sale or foreclosure sale, in connection with a foreclosure or other
disposition of a Lien, the granting of which is permitted under Sections
13.04(a)(2), 13.06(a)(2) or 13.06(f)(4)) or (b) any Owner shall encumber any
Mortgaged Property with a Recourse Lien, then an Event of Default hereunder and
under the other Loan Documents shall be deemed to have occurred, and if any such
event shall continue for thirty (30) days after notice from the Lender, then,
from and after the date that is thirty (30) days after such notice, (1) Section
21.01 shall not apply and (2) the TC Parties shall be personally liable on a
joint and several basis for full recourse liability under this Agreement and the
other Loan Documents.
For purposes of this Agreement, the term "Recourse Lien" means the grant or
-------------
other creation by an Owner of a Lien attaching to the land and buildings
comprising all or a material portion of a Mortgaged Property and which (i) is
otherwise prohibited pursuant to the provisions of this Agreement or the other
Loan Documents and (ii) is effected by such Owner by a writing or other
affirmative act taken by the Owner.
For purposes of this Agreement, the term "Recourse Transfer" means a sale,
-----------------
assignment, transfer or other disposition (other than the granting of a Lien) of
title to, or beneficial ownership of:
(1) a Mortgaged Property by an Owner, or
(2) an Ownership Interest in:
(A) the Operating Partnership by the REIT or by
TC-Oriole,
(B) the REIT Sub by the REIT,
(C) the Property Company by the Operating Partnership or
by the REIT Sub, or
109
(D) an Owner by the Property Company or by the REIT Sub,
and which (i) is otherwise prohibited pursuant to the provisions of this
Agreement or the other Loan Documents and (ii) is effected by the transferor by
a writing or other affirmative act taken by the transferor.
Notwithstanding Section 21.01, the TC Parties shall be personally liable on a
joint and several basis in the amount of the Lender's actual loss, damage or
cost (including attorneys' fees and expenses) resulting from (a) fraud or
intentional misrepresentation by any TC Party, or any agent or employee of any
TC Party, in connection with obtaining the Advances evidenced by the Notes, or
in complying with any Obligations of a TC Party, (b) insurance proceeds,
condemnation awards or security deposits from tenants received by or on behalf
of an Owner in respect of its Mortgaged Property and not applied in accordance
with the provisions of the Security Instrument covering the Mortgaged Property
(except to the extent that the Owner did not have the legal right, because of a
bankruptcy, receivership or similar judicial proceeding, to direct disbursement
of such sums or payments), (c) all Rents and Profits (except to the extent that
the Owner did not have the legal right, because of a bankruptcy, receivership or
similar judicial proceeding, to direct the disbursement of such sums), and not
applied (1) to the payment of the Operating Expenses of the applicable Mortgaged
Property then due and payable, and (2) to the payment of principal and interest
due under the applicable Notes, any other sums due under the applicable Security
Instrument or any other Loan Document and any other Obligations then due and
owing to the Lender, or (d) any Owner's failure following an Event of Default to
deliver to the Lender on demand all Rents and Profits, and security deposits
(except to the extent that the Owner did not have the legal right because of a
bankruptcy, receivership or similar judicial proceeding to direct disbursement
of such sums).
No provision of this Section 21.02 shall (a) affect any guaranty or similar
agreement executed in connection with any Advance evidenced by a Note or
otherwise in connection with the Obligations of the TC Parties under the Loan
Documents, (b) release or reduce the Obligations, including the debt evidenced
by any Note, (c) impair the right of the Lender to enforce the provisions of
paragraph 6B of any Security Instrument, (d) impair the lien of any Security
Instrument or (e) impair the right of the Lender to enforce the provisions of
any Loan Document or any other agreement defined as an "Ancillary Collateral
Agreement" in any Security Instrument.
No Transfer by any TC Party of its Ownership Interests in any other TC Party
shall release the TC Party from liability under this Article, this Agreement or
any other Loan Document, unless the Lender shall have approved the Transfer and
shall have expressly released the TC Party in connection with the Transfer.
Notwithstanding anything to the contrary in this Section 21.02 or the other
provisions of the Loan Documents, except as may be permitted as a matter of law,
no Person other than a TC Party shall be liable in any respect for the payment
of any amounts or the performance of any obligations under the Loan Documents;
provided, however, that, whether or not permitted as a matter of law, no limited
partner of the Operating Partnership and no holder of beneficial interests in
the REIT shall be liable
110
in any respect for the payment of any amounts or the performance of
any obligations under the Loan Documents, but the foregoing
limitation on the liability of such limited partner or holder shall
not preclude the Lender from holding such parties liable (A) to the
extent of fraud or other tortious conduct committed by such limited
partner or holder personally, and (B) to the extent of distributions
or other amounts received by such limited partner or holder which, as
a matter of federal or applicable state law, constitute a fraudulent
conveyance or fraudulent transfer.
ARTICLE XXII
MISCELLANEOUS PROVISIONS
SECTION 22.01. Counterparts. To facilitate execution, this Agreement
------------
may be executed in any number of counterparts. It shall not be necessary that
the signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
SECTION 22.02. Amendments, Changes and Modifications. This Agreement
-------------------------------------
may be amended, changed, modified, altered or terminated only by written
instrument or written instruments signed by all of the parties hereto.
SECTION 22.03. Payment of Costs, Fees and Expenses.
-----------------------------------
(a) The Borrowers shall pay on demand all costs, expenses
and fees of the Lender pursuant to this Agreement and any of the Loan
Documents, including the fees and expenses of counsel to the Lender
with respect to defending or participating in any litigation arising
from the administration or enforcement of this Agreement or any of the
Loan Documents. Any such fees and expenses of counsel incurred in
enforcing a judgment under this Agreement shall be recoverable
separately from and in addition to any other amount included in such
judgment, and such counsels' fees and expenses obligation is intended
to be severable from the other provisions of this Agreement and to
survive and not be merged into any such judgment.
(b) The Borrowers shall pay on demand all expenses
incurred by the Lender in connection with the preparation and review
of this Agreement, the REIT's Registration Statement, or similar
disclosure documents, including fees payable to any rating agencies,
any tax or governmental charge imposed in connection with the issuance
of the Notes and the fees and expenses of the Lender's counsel and
accountants. The foregoing shall also include fees and expenses
relating to any (i) amendments, consents or waivers to this Agreement
or any of the Loan Documents (whether or not any such amendments,
consents or waivers are
111
entered into) or (ii) requests to evaluate any substitute or
additional Collateral or the release of any Collateral.
(c) This Section 22.03 shall not apply to the costs of
due diligence fees (including legal fees relating to due diligence)
and the closing of this Agreement and the Initial Advance, and the due
diligence fees with respect to the addition of an Additional Mortgaged
Property to the Collateral Pool, the fees for which are set forth in
Sections 14.04(a) and (b), respectively.
SECTION 22.04. Payment Procedure. All payments to be made to the Lender
-----------------
pursuant to this Agreement or any of the Loan Documents shall be made in lawful
currency of the United States of America and in immediately available funds by
wire transfer to an account designated by the Lender before 1:00 p.m.
(Washington, D.C. time) on the date when due.
SECTION 22.05. Payments on Business Days. In any case in which the date
-------------------------
of payment to the Lender or the expiration of any time period hereunder occurs
on a day which is not a Business Day, then such payment or expiration of such
time period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.
SECTION 22.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury
------------------------------------------------------
Trial. NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY INSTRUMENTS OR ANY OF
-----
THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF EACH BORROWER UNDER THE NOTES, AND EACH TC PARTY UNDER
THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND
ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
(EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE
EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE CREATION,
PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF
THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL
BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS
LOCATED. THE TC PARTIES AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION
TO THE NOTES, THE SECURITY INSTRUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE,
EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN MARYLAND. THE LOCAL AND
FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN MARYLAND SHALL, EXCEPT AS
OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY
ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES
RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH
THE NOTES, THE SECURITY INSTRUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING
TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH TC PARTY
112
IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY
LITIGATION ARISING FROM THE NOTES, THE SECURITY INSTRUMENTS OR ANY OF THE OTHER
LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY
VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN,
HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
OR EXERCISING ANY RIGHTS AGAINST THE TC PARTIES, AND AGAINST THE COLLATERAL IN
ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING
SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF
THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF MARYLAND SHALL GOVERN THE RIGHTS
AND OBLIGATIONS OF THE TC PARTIES AND THE LENDER AS PROVIDED HEREIN OR THE
SUBMISSION HEREIN BY THE TC PARTIES TO PERSONAL JURISDICTION WITHIN MARYLAND.
EACH TC PARTY (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT
TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II)
WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE.
FURTHER, EACH TC PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER'S COUNSEL) HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO EACH TC PARTY THAT LENDER WILL NOT SEEK TO ENFORCE
THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY,
WILLINGLY AND VOLUNTARILY AGREED TO BY THE TC PARTIES UPON CONSULTATION WITH
INDEPENDENT LEGAL COUNSEL SELECTED BY THE TC PARTIES[] FREE WILL.
SECTION 22.07. Severability. In the event any provision of this
------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
SECTION 22.08. Notices.
-------
SECTION 22.08(a) Manner of Giving Notice. Each notice,
-----------------------
direction, certificate or other communication hereunder (hereafter in
this Section referred to collectively as "notices" and referred to
singly as a "notice") which any party is required or permitted to give
to the other party pursuant to this Agreement shall be in writing and
shall be deemed to have been duly and sufficiently given if
(1) personally delivered with proof of delivery
thereof (any notice so delivered shall be deemed to have been
received at the time so delivered),
113
(2) sent by Federal Express (or other similar
overnight courier) designating morning delivery (any notice so
delivered shall be deemed to have been received on the
Business Day it is delivered by the courier),
(3) sent by United States registered or
certified mail, return receipt requested, postage prepaid, at
a post office regularly maintained by the United States
Postal Service (any notice so sent shall be deemed to have
been received on the Business Day it is delivered), or
(4) sent by telecopier or facsimile machine
which automatically generates a transmission report that
states the date and time of the transmission, the length of
the document transmitted, and the telephone number of the
recipient's telecopier or facsimile machine (to be confirmed
with a copy thereof sent in accordance with paragraphs (1),
(2) or (3) above within two Business Days) (any notice so
(delivered shall be deemed to have been received (i) on the
date of transmission, if so transmitted before 5:00 p.m.
(local time of the recipient) on a Business Day, or (ii) on
the next Business Day, if so transmitted on or after 5:00
p.m. (local time of the recipient) on a Business Day or if
transmitted on a day other than a Business Day), addressed to
the parties at their respective Notice Addresses.
SECTION 22.08(b) Change of Notice Address. Any party may, by
------------------------
notice given pursuant to this Section, change the person or persons
and/or address or addresses, or designate an additional person or
persons or an additional address or addresses, for its notices, but
notice of a change of address shall only be effective upon receipt.
Each party agrees that it shall not refuse or reject delivery of any
notice given hereunder, that it shall acknowledge, in writing, receipt
of the same upon request by the other party and that any notice
rejected or refused by it shall be deemed for all purposes of this
Agreement to have been received by the rejecting party on the date so
refused or rejected, as conclusively established by the records of the
U.S. Postal Service, the courier service or telecopier or facsimile
machine.
SECTION 22.09. Further Assurances and Corrective Instruments.
---------------------------------------------
SECTION 22.09(a) Further Assurances. To the extent permitted
------------------
by law, the parties hereto agree that they shall, from time to time,
execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, such supplements hereto and such further instruments as
the Lender or the TC Parties may request and as may be required in the
opinion of the Lender or its counsel to effectuate the intention of or
facilitate the performance of this Agreement or any Loan Document.
SECTION 22.09(b) Further Documentation. Without limiting the
---------------------
generality of subsection (a), in the event any further documentation or
information is required by the Lender to correct patent mistakes in the
Loan Documents, materials relating to the Title Insurance Policies or
the funding of the Advances, the TC Parties shall provide, or cause to
114
be provided to the Lender, at their cost and expense, such
documentation or information. The TC Parties shall execute and deliver
to the Lender such documentation, including any amendments,
corrections, deletions or additions to the Notes, the Security
Instruments or the other Loan Documents as is required by the Lender.
SECTION 22.09(c) Compliance with Investor Requirements.
-------------------------------------
Without limiting the generality of subsection (a), the TC Parties shall
use commercially reasonable efforts to comply with the requirements of
the Lender in order to enable the Lender to sell the MBS backed by an
Advance.
SECTION 22.10. Term of this Agreement. This Agreement shall continue in
----------------------
effect until the Credit Facility Termination Date.
SECTION 22.11. Assignments; Third-Party Rights. No TC Party shall
-------------------------------
assign this Agreement, or delegate any of its obligations hereunder, without the
prior written consent of the Lender. The Lender may assign its rights and
obligations under this Agreement separately or together, without the TC Parties'
consent, only to ▇▇▇▇▇▇ ▇▇▇, but may not delegate its obligations under this
Agreement unless required to do so pursuant to Section 18.04.
SECTION 22.12. Headings. Article and Section headings used herein are
--------
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 22.13. General Interpretive Principles. For purposes of this
-------------------------------
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
genders; (ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP; (iii) references herein to "Articles,"
"Sections," "subsections," "paragraphs" and other subdivisions without reference
to a document are to designated Articles, Sections, subsections, paragraphs and
other subdivisions of this Agreement; (iv) a reference to a subsection without
further reference to a Section is a reference to such subsection as contained in
the same Section in which the reference appears, and this rule shall also apply
to paragraphs and other subdivisions; (v) a reference to an Exhibit or a
Schedule without a further reference to the document to which the Exhibit or
Schedule is attached is a reference to an Exhibit or Schedule to this Agreement;
(vi) the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and
(vii) the word "including" means "including, but not limited to."
SECTION 22.14. Interpretation. The parties hereto acknowledge that each
--------------
party and their respective counsel have participated in the drafting and
revision of this Agreement and the Loan Documents. Accordingly, the parties
agree that any rule of construction which disfavors the drafting party shall not
apply in the interpretation of this Agreement and the Loan Documents or any
amendment or supplement or exhibit hereto or thereto.
115
SECTION 22.15. Standards for Decisions, Etc. If the Lender's approval
----------------------------
is required for any matter hereunder, unless expressly qualified otherwise, such
approval may be granted or withheld in the Lender's sole and absolute
discretion. If the Lender's designation, determination, selection, estimate,
action or decision is required, permitted or contemplated hereunder, unless
expressly qualified otherwise, such designation, determination, selection,
estimate, action or decision shall be made in the Lender's sole and absolute
discretion.
SECTION 22.16. Decisions in Writing. Any approval, designation,
--------------------
determination, selection, action or decision of the Lender must be in writing to
be effective.
SECTION 22.17. (Intentionally omitted.)
SECTION 22.18 Trust Liability. The First Amended and Restated
---------------
Declaration of Trust of the REIT, dated June 24, 1993, a copy of which is duly
filed with the Department of Assessments and Taxation of the State of Maryland,
provides that no trustee, officer, shareholder, employee or agent of the REIT
shall be held to any personal liability, jointly or severally, for any
obligation of or claim against the REIT. All persons dealing with the REIT in
any way shall look only to the assets of the REIT for the payment of any sum or
the performance of any obligation.
SECTION 22.19 Contribution Agreement. On the Initial Closing Date, the
----------------------
Borrowers executed a Contribution Agreement in the form attached as Exhibit LL
----------
to this Agreement, which Contribution Agreement shall be confirmed and amended
on the date hereof.
SECTION 22.20 Intentionally Omitted.
---------------------
SECTION 22.21 Recordation Tax Indemnity. The TC Parties agree to
-------------------------
indemnify and hold harmless the trustees, if any, named in the second priority
indemnity Security Instruments and their successors in the trusts, and the
Lender, ▇▇▇▇▇▇ Mae and their respective shareholders, directors, officers,
agents, employees and servicers (all hereinafter collectively referred to as the
"Indemnitees") of and from any and all claims, debts, demands, rights,
liabilities, actions and causes of action of whatsoever kind and nature and all
costs and expenses arising out of or relating thereto (including attorneys' fees
and disbursements) which any Governmental Authority or other Person has or may
have against the Indemnitees on account of, or because of, the failure to pay in
full all recordation, documentary or similar taxes, if any, that may be due
because of the establishment and implementation of the Credit Facility, the
execution, delivery or recordation of the second priority indemnity Security
Instruments or the execution or delivery of the Guaranties or otherwise arising
out of the loan transaction and all interest, penalties and fines that may be or
may become due. The Indemnitees may, at the cost of the TC Parties, defend all
claims made that are or may be covered by this Section unless the TC Parties
retain counsel acceptable to the Indemnitees.
116
SECTION 22.22 Sale of Loan Documents in connection with
-----------------------------------------
Refinancing. The Lender agrees that upon satisfaction in full of all of the
-----------
Obligations and the expiration of the Term of this Agreement or earlier
termination of this Agreement, it shall, upon request by the Borrowers, and
pursuant to documents acceptable to the Lender, transfer all of its right, title
and interest in and to the Collateral and the Loan Documents, without recourse,
representation or warranty, to any party designated by the Borrowers, provided
that the Borrowers pay all out-of-pocket expenses incurred by the Lender in
connection with the transfer, including any attorneys' fees and any applicable
recordation or other taxes or charges.
[Remainder of this page left intentionally blank.]
117
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TC Parties
----------
Owners
------
THE TC-WEST/GREENSVIEW COMPANY, a Maryland general
partnership
THE TC-EAST COMPANY, a Maryland general partnership
THE TC-HARFORD COMPANY, a Maryland general partnership
THE TC-HOLLOWS COMPANY, a Maryland general partnership
THE TC-▇▇▇▇▇▇▇▇▇▇ COMPANY, a Maryland general partnership
THE TC-NORTH COMPANY, a Maryland general partnership
THE TC-WOODMOOR COMPANY, a Maryland general partnership
THE TC-RIDGE-VIEW COMPANY, a Maryland general partnership
THE TC-SOUTH COMPANY, a Maryland general partnership
THE TC-GARDEN WOOD COMPANY, a Maryland general
partnership
THE TC-HALLFIELD MANOR COMPANY, a Maryland general
partnership
THE TC-MONTPELIER COMPANY, a Maryland general partnership
THE TC-NORTHEAST COMPANY, a Maryland general partnership
THE ▇▇-▇▇▇▇▇▇ COMPANY, a Maryland general partnership
THE TC-ROLLING ROAD COMPANY, a Maryland general
partnership
THE TC-VERSAILLES COMPANY, a Maryland general partnership
THE TC-FOX HAVEN COMPANY, a Maryland general partnership
THE TC-CHARLESMONT COMPANY, a Maryland general
partnership
THE TC-FOX RUN COMPANY, a Maryland general partnership
THE TC-STONEGATE COMPANY, a Maryland general partnership
118
THE TC-UNIVERSITY HEIGHTS COMPANY, a Maryland general partnership
THE TC-▇▇▇▇▇▇'▇ CROSSING COMPANY, a Maryland general partnership
THE ▇▇-▇▇▇▇ COMPANY, a Maryland general partnership
THE TC-▇▇▇▇▇▇ FARMS COMPANY, a Maryland general partnership
THE TC-CARLYLE STATION COMPANY, a Maryland general partnership
THE TC-ALLENTOWN COMPANY, a Maryland general partnership
THE TC-EMMAUS COMPANY, a Maryland general partnership
THE TC-HANOVER COMPANY, a Maryland general partnership
THE TC-HARRISBURG COMPANY, a Maryland general partnership
THE TC-HARRISBURG-EAST COMPANY, a Maryland general partnership
THE TC-LANCASTER WEST COMPANY, a Maryland general partnership
THE TC-LANCASTER EAST COMPANY, a Maryland general partnership
THE TC-YORK COMPANY, a Maryland general partnership
THE TC-ROLLING HILLS COMPANY, a Maryland general partnership
THE ▇▇-▇▇▇▇▇▇▇▇▇ MILL COMPANY, a Maryland general partnership
By: The TC Property Company, a Maryland general
partnership, in its capacity as general partner
of, and on behalf of, each of the foregoing
thirty-five (35) general partnerships
By: The TC Operating Limited Partnership,
a Maryland limited partnership, General
Partner
By: The Town and Country Trust, a
Maryland real estate investment
trust, General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
119
REIT
----
THE TOWN AND COUNTRY TRUST, a Maryland real
estate investment trust
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Operating Partnership
---------------------
THE TC OPERATING LIMITED PARTNERSHIP, a
Maryland limited partnership, General Partner
By: The Town and Country Trust, a Maryland
real estate investment trust
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
REIT Sub
--------
THE TOWN AND COUNTRY HOLDING CORPORATION, a
Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
Property Company
----------------
THE TC PROPERTY COMPANY, a Maryland general
partnership
By: The TC Operating Limited Partnership, a
Maryland limited partnership, General
Partner
By: The Town and Country Trust, a
Maryland real estate investment
trust, General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
120
Chief Financial Officer
TC-Oriole
---------
THE TOWN AND COUNTRY ORIOLE
CORPORATION, a Delaware corporation
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Title: Senior Vice President
-----------------------
Lender
------
PRUDENTIAL MULTIFAMILY MORTGAGE, INC.,
a Delaware corporation, successor to
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------
Title: Vice President
---------------------
121