Exhibit 10.10
MASTER CREDIT FACILITY AGREEMENT
dated as of December 1, 1998
by and among
ARCHSTONE COMMUNITIES TRUST,
a Maryland real estate investment trust,
and
ASN MULTIFAMILY LIMITED PARTNERSHIP,
a Delaware limited partnership,
collectively, as the "Borrower Parties,"
and
BERKSHIRE MORTGAGE FINANCE LIMITED PARTNERSHIP,
a Massachusetts limited partnership,
as the "Lender"
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................2
ARTICLE II THE REVOLVING FACILITY COMMITMENT......................................................28
SECTION 2.1 Revolving Facility Commitment.................................................28
SECTION 2.2 Requests for Advances.........................................................28
SECTION 2.3 Maturity Date of Revolving Advances...........................................28
SECTION 2.4 Repayment at Maturity; Partial Month Interest; Revolving Facility Fee.........28
SECTION 2.5 Coupon Rates for Revolving Advances...........................................29
SECTION 2.6 Revolving Facility Note.......................................................30
SECTION 2.7 No Amortization...............................................................30
SECTION 2.8 Limit on Number of Outstanding Advances.......................................30
SECTION 2.9 Reduction of Revolving Facility Commitment Upon Rating Downgrade..............30
ARTICLE III THE BASE FACILITY COMMITMENT...........................................................30
SECTION 3.1 Conversion of Revolving Facility Commitment to Base Facility Commitment.......30
SECTION 3.2 Base Facility Commitment......................................................31
SECTION 3.3 Requests for Base Facility Advances...........................................31
SECTION 3.4 Maturity Date of Base Facility Advances; Amortization Period..................31
SECTION 3.5 Interest on Base Facility Advances............................................31
SECTION 3.6 Coupon Rates for Base Facility Advances.......................................32
SECTION 3.7 Base Facility Notes...........................................................32
SECTION 3.8 Limitations on Right to Convert...............................................32
SECTION 3.9 Conditions Precedent to Conversion/Rollover...................................32
SECTION 3.10 Rollover of Maturing Base Facility Advances...................................33
SECTION 3.11 Repayment of Base Facility Advances Upon Rating Downgrade.....................33
ARTICLE IV RATE SETTING FOR THE ADVANCES..........................................................33
SECTION 4.1 Rate Setting for an Advance...................................................33
SECTION 4.2 Advance Confirmation Instrument for Revolving Advances........................35
SECTION 4.3 Breakage and other Costs......................................................35
ARTICLE V MAKING THE ADVANCES....................................................................35
SECTION 5.1 Initial Advance...............................................................35
SECTION 5.2 Future Advances...............................................................36
SECTION 5.3 Conditions Precedent to Future Advances.......................................36
ARTICLE VI ADDITIONS OF COLLATERAL................................................................38
SECTION 6.1 Right to Add Collateral.......................................................38
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SECTION 6.2 Procedure for Adding Collateral...............................................38
SECTION 6.3 Conditions Precedent to Addition of an Additional Mortgaged Property to
the Collateral Pool...........................................................39
ARTICLE VII SUBSTITUTION OF COLLATERAL.............................................................40
SECTION 7.1 Right to Substitute Collateral................................................40
SECTION 7.2 Procedure for Substituting Collateral.........................................40
SECTION 7.3 Conditions Precedent to Substitution of a Substituted Mortgaged Property
into the Collateral Pool......................................................42
SECTION 7.4 Restriction on Borrowings.....................................................43
ARTICLE VIII RELEASES OF COLLATERAL.................................................................44
SECTION 8.1 Right to Obtain Releases of Collateral........................................44
SECTION 8.2 Procedure for Obtaining Releases of Collateral................................44
SECTION 8.3 Conditions Precedent to Release of Collateral Release Property from the
Collateral....................................................................46
ARTICLE IX INCREASE OF REVOLVING FACILITY COMMITMENT..............................................47
SECTION 9.1 Request to Increase Revolving Facility Commitment.............................47
SECTION 9.2 Right to Increase Revolving Facility Commitment Based on "Oaks in
Fairlakes"....................................................................48
SECTION 9.3 Additional Limited Right to Increase Revolving Facility Commitment............48
ARTICLE X COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY..................................50
SECTION 10.1 Right to Complete or Partial Termination of Revolving Facility................50
SECTION 10.2 Procedure for Complete or Partial Termination of Revolving Facility...........50
SECTION 10.3 Conditions Precedent to Partial Termination of Revolving Facility.............50
ARTICLE XI TERMINATION OF CREDIT FACILITY.........................................................51
SECTION 11.1 Right to Terminate Credit Facility............................................51
SECTION 11.2 Procedure for Terminating Credit Facility.....................................51
SECTION 11.3 Conditions Precedent to Termination of Credit Facility........................52
ARTICLE XII GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS...........................................52
SECTION 12.1 Conditions Applicable to All Requests.........................................52
SECTION 12.2 Delivery of Closing Documents Relating to Initial Advance Request,
Collateral Addition Request, Collateral Substitution Request, Oaks in
Fairlakes Commitment Increase or Additional Commitment Increase...............53
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SECTION 12.3 Delivery of Property-Related Documents........................................54
ARTICLE XIII REPRESENTATIONS AND WARRANTIES.........................................................55
SECTION 13.1 Representations and Warranties of the Borrower Parties........................55
SECTION 13.2 Representations and Warranties of the Borrower................................57
ARTICLE XIV AFFIRMATIVE COVENANTS..................................................................62
SECTION 14.1 Covenants of the Borrower Parties.............................................62
SECTION 14.2 Covenants of the Borrower.....................................................66
ARTICLE XV NEGATIVE COVENANTS OF THE BORROWER.....................................................76
SECTION 15.1 Other Activities..............................................................76
SECTION 15.2 Value of Security.............................................................76
SECTION 15.3 Zoning........................................................................76
SECTION 15.4 Liens.........................................................................77
SECTION 15.6 Indebtedness..................................................................77
SECTION 15.7 Principal Place of Business...................................................77
SECTION 15.8 Frequency of Requests.........................................................77
SECTION 15.9 Change in Property Management.................................................77
SECTION 15.10 Shelf Condominiums............................................................77
SECTION 15.11 Restrictions on Partnership Distributions.....................................77
SECTION 15.12 Lines of Business.............................................................77
ARTICLE XVI FINANCIAL COVENANTS OF THE BORROWER PARTIES............................................78
SECTION 16.1 Financial Definitions.........................................................78
SECTION 16.2 Compliance with REIT's Consolidated Debt to Total Assets Ratio................79
SECTION 16.3 Compliance with REIT's Consolidated Income Available for Debt Service to
Annual Service Charge Ratio...................................................79
SECTION 16.4 Cure by REIT of Financial Covenants...........................................79
SECTION 16.5 Additional Collateral.........................................................80
ARTICLE XVII REPRESENTATIONS AND WARRANTIES AND COVENANTS BY LENDER.................................85
SECTION 17.1 Representations and Warranties of the Lender..................................85
SECTION 17.2 Determination of Allocable Credit Facility Amount and Valuations..............85
ARTICLE XVIII FEES...................................................................................87
SECTION 18.1 Standby Fee...................................................................87
SECTION 18.2 Origination Fees..............................................................87
SECTION 18.3 Due Diligence Fees............................................................88
SECTION 18.4 Legal Fees and Expenses.......................................................89
SECTION 18.5 MBS-Related Rollover Costs....................................................89
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SECTION 18.6 Failure to Close any Request..................................................89
SECTION 18.7 Other Fees....................................................................90
ARTICLE XIX EVENTS OF DEFAULT......................................................................90
SECTION 19.1 Events of Default.............................................................90
ARTICLE XX REMEDIES...............................................................................93
SECTION 20.1 Remedies; Waivers.............................................................93
SECTION 20.2 Waivers; Rescission of Declaration............................................93
SECTION 20.3 The Lender's Right to Protect Collateral and Perform Covenants and Other
Obligations...................................................................93
SECTION 20.4 No Remedy Exclusive...........................................................94
SECTION 20.5 No Waiver.....................................................................94
SECTION 20.6 No Notice.....................................................................94
SECTION 20.7 Application of Payments.......................................................94
ARTICLE XXI RIGHTS OF ▇▇▇▇▇▇ ▇▇▇...................................................................94
SECTION 21.1 Special Pool Purchase Contract................................................94
SECTION 21.2 Assignment of Rights..........................................................95
SECTION 21.3 Release of Collateral.........................................................95
SECTION 21.4 Replacement of Lender.........................................................95
SECTION 21.5 ▇▇▇▇▇▇ Mae and Lender Fees and Expenses.......................................95
SECTION 21.6 Third-Party Beneficiary.......................................................95
ARTICLE XXII INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES..................................96
SECTION 22.1 Insurance and Real Estate Taxes...............................................96
SECTION 22.2 Replacement Reserves.........................................................100
ARTICLE XXIII ▇▇▇▇▇▇................................................................................101
SECTION 23.1 Interest Rate Protection.....................................................101
SECTION 23.2 Terms and Conditions.........................................................102
SECTION 23.3 Hedge Assignment; Delivery of Hedge Payments.................................102
SECTION 23.4 Termination..................................................................102
SECTION 23.5 Performance Under Hedge Documents............................................102
SECTION 23.6 Escrow Provisions............................................................103
ARTICLE XXIV LIMITS ON PERSONAL LIABILITY..........................................................107
SECTION 24.1 Limits on Personal Liability.................................................107
ARTICLE XXV MISCELLANEOUS PROVISIONS..............................................................108
SECTION 25.1 Counterparts.................................................................108
SECTION 25.2 Amendments, Changes and Modifications........................................109
SECTION 25.3 Payment of Costs, Fees and Expenses..........................................109
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(continued)
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SECTION 25.4 Payment Procedure............................................................110
SECTION 25.5 Payments on Business Days....................................................110
SECTION 25.6 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.................110
SECTION 25.7 Severability.................................................................111
SECTION 25.8 Notices......................................................................111
SECTION 25.9 Further Assurances and Corrective Instruments................................114
SECTION 25.10 Term of this Agreement.......................................................114
SECTION 25.11 Assignments; Third-Party Rights..............................................114
SECTION 25.12 Headings.....................................................................114
SECTION 25.13 General Interpretive Principles..............................................114
SECTION 25.14 Interpretation...............................................................115
SECTION 25.15 Decisions in Writing.........................................................115
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LIST OF EXHIBITS
Exhibit A - List of Multifamily Residential Properties
Exhibit B - Base Facility Note
Exhibit C - Cap Security Agreement
Exhibit D - Cash Management Agreement
Exhibit E - Compliance Certificate
Exhibit F-1 - Facility Debt Service (Actual)
Exhibit F-2 - Facility Debt Service (Floor)
Exhibit G - Organizational Certificate (REIT and Borrower)
Exhibit H - Replacement Reserve Agreement
Exhibit I - Revolving Credit Endorsement
Exhibit J - Revolving Facility Note
Exhibit K - Form of Multifamily Mortgage, Deed of Trust or Deed
to Secure Debt, Assignment of Leases and Rents and
Security Agreement
Exhibit L - Tie-In Endorsement
Exhibit M - Conversion Request
Exhibit N - Master Credit Facility Agreement Conversion Amendment
Exhibit O - Rate Setting Form
Exhibit P - Rate Confirmation Form
Exhibit Q - Advance Confirmation Instrument
Exhibit R - Future Advance Request
Exhibit S - Collateral Addition Request
Exhibit T - Collateral Addition Description Package
Exhibit U - Collateral Addition Request - Supporting Documents
Exhibit V - Collateral Substitution Request
Exhibit W - Collateral Substitution Description Package
Exhibit X - Collateral Substitution Request - Supporting
Documents
Exhibit Y - Collateral Release Request
Exhibit Z - Borrower Parties' Confirmation of Obligations
Exhibit AA - Revolving Facility Termination Request
Exhibit BB - Revolving Facility Termination Notice
Exhibit CC - Credit Facility Termination Request
Exhibit DD - Schedule of Approved Property Management Agreements
Exhibit EE - REIT Guaranty
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MASTER CREDIT FACILITY AGREEMENT
THIS MASTER CREDIT FACILITY AGREEMENT is made as of the 1st day of
December, 1998 and among (i) (a) ARCHSTONE COMMUNITIES TRUST, a Maryland real
estate investment trust ("REIT"), and (b) ASN MULTIFAMILY LIMITED PARTNERSHIP, a
Delaware limited partnership ("Borrower") (the REIT and the Borrower being
collectively referred to as the "Borrower Parties"), and (ii) BERKSHIRE MORTGAGE
FINANCE LIMITED PARTNERSHIP, a Massachusetts limited partnership ("Lender").
RECITALS
--------
A. The REIT owns 100% of the outstanding stock of SCA - North
Carolina (1) Incorporated, a Maryland corporation, the sole general partner of
the Borrower, and 100% of the outstanding stock of SCA - North Carolina (2)
Incorporated, a Maryland corporation, the sole limited partner of the Borrower.
B. The Borrower owns the Multifamily Residential Properties
(capitalized terms used but not defined shall have the meanings ascribed to such
terms in Article I of this Agreement) as more particularly described in Exhibit
A to this Agreement.
C. The Borrower has requested that the Lender establish a
$300,000,000 Credit Facility in favor of the Borrower, comprised initially of a
$300,000,000 Revolving Facility, all or part of which can be converted to a Base
Facility in accordance with, and subject to, the terms and conditions of this
Agreement.
D. To secure the obligations of the Borrower Parties under this
Agreement and the other Loan Documents issued in connection with the Credit
Facility, the Borrower shall create a Collateral Pool in favor of the Lender.
The Collateral Pool shall be comprised of (i) Security Instruments on all of the
Multifamily Residential Properties owned by the Borrower and (ii) any other
Security Documents executed by any other Borrower Party pursuant to this
Agreement or any other Loan Documents.
E. Each of the Security Documents shall be cross-defaulted (i.e.,
a default under any Security Document, or under this Agreement, shall constitute
a default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of the
Borrower Parties' obligations under this Agreement and the other Loan Documents
issued in connection with the Credit Facility).
F. Subject to the terms, conditions and limitations of this
Agreement, the Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, the Borrower Parties and the Lender, in consideration
of the mutual promises and agreements contained in this Agreement, hereby agree
as follows:
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ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Additional Collateral" means (a) one or more Additional
Collateral Letters of Credit, as defined in, and delivered to Lender in
accordance with the provisions of, Section 16.5; (b) Permitted
Investments acceptable to Lender and pledged to Lender in accordance
with the provisions of Section 16.5; and (c) any Cash Collateral (as
defined in Section 8.2(d)) held by the Lender pursuant to Section
8.2(d) or 16.4.
"Additional Mortgaged Property" means each Multifamily
Residential Property owned by the Borrower and added to the Collateral
Pool after the Initial Closing Date pursuant to Article VI.
"Advance" means a Revolving Advance or a Base Facility
Advance.
"Advance Confirmation Instrument" shall have the meaning set
forth in Section 4.2.
"Affiliate" or "affiliated" means, when used with reference to
a specified Person, (a) 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, (b) 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, (c) any Person
that, directly or indirectly, is the beneficial owner of 10% or more of
any class of equity securities of, or otherwise has a substantial
beneficial interest in, the specified Person or of which the specified
Person is, directly or indirectly, the owner of 10% or more of any
class of equity securities or in which the specified Person has a
substantial beneficial interest, and (d) for the specified Person, any
of the individual's spouse, issue, parents, siblings and a trust for
the benefit of the individual's spouse or issue, or both.
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"Aggregate Debt Service Coverage Ratio for a 12 Month Period
(Actual)" means, for any specified date, the ratio (expressed as a
percentage) of --
(a) the sum of --
(i) the aggregate of the Net Operating Income
for the Trailing 12 Month Period for the Mortgaged Properties,
plus
(ii) the product of: (A) the aggregate principal
sum of Additional Collateral (exclusive of Additional
Collateral Letters of Credit) then held by the Lender, times
(B) the weighted average of the annual rates of interest then
being earned on the Additional Collateral described in the
immediately preceding clause (ii)(A),
to
(b) the Facility Debt Service (Actual) on such
date.
"Aggregate Debt Service Coverage Ratio for a 12 Month Period
(Floor)" means, for any specified date, the ratio (expressed as a
percentage) of --
(a) the sum of --
(i) the aggregate of the Net Operating Income
for the Trailing 12 Month Period for the Mortgaged Properties,
plus
(ii) the product of: (A) the aggregate principal
sum of Additional Collateral (exclusive of Additional
Collateral Letters of Credit) then held by the Lender, times
(B) the weighted average of the annual rates of interest then
being earned on the Additional Collateral described in the
immediately preceding clause (ii)(A), to
(b) the Facility Debt Service (Floor) on such date.
"Aggregate Debt Service Coverage Ratio for a Three Month
Period (Actual)" means, for any specified date, the ratio (expressed as
a percentage) of--
(a) the sum of --
(i) the product of: (A) the aggregate of
the Net Operating Income for the Trailing Three Month
Period for the Mortgaged Properties, times (B) four, plus
(ii) the product of: (A) the aggregate principal
sum of Additional Collateral (exclusive of Additional
Collateral Letters of Credit) then held by the Lender, times
(B) the weighted average of the annual rates of interest then
being
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earned on the Additional Collateral described in the
immediately preceding clause (ii)(A),
to
(b) the Facility Debt Service (Actual) on such date.
"Aggregate Debt Service Coverage Ratio for a Three Month
Period (Floor)" means, for any specified date, the ratio (expressed as
a percentage) of --
(a) the sum of --
(i) the product of: (A) the aggregate of the
Net Operating Income for the Trailing Three Month Period for
the Mortgaged Properties, times (B) four, plus
(ii) the product of: (A) the aggregate principal
sum of Additional Collateral (exclusive of Additional
Collateral Letters of Credit) then held by the Lender, times
(B) the weighted average of the annual rates of interest then
being earned on the Additional Collateral described in the
immediately preceding clause (ii)(A),
to
(b) the Facility Debt Service (Floor) on such date.
"Aggregate Debt Service Coverage Ratios" means, collectively,
the Aggregate Debt Service Coverage Ratio for a 12 Month Period
(Actual), the Aggregate Debt Service Coverage Ratio for a 12 Month
Period (Floor), the Aggregate Debt Service Coverage Ratio for a Three
Month Period (Actual) and the Aggregate Debt Service Coverage Ratio for
a Three Month Period (Floor).
"Aggregate Loan to Value Ratio" means, for any specified date,
the ratio (expressed as a percentage) of--
(a) the result of --
(i) the Advances Outstanding on the specified
date, minus
(ii) the aggregate principal sum of all Additional
Collateral then held by the Lender,
to
(b) the aggregate of the Valuations most recently
obtained prior to the specified date for all of the Mortgaged
Properties.
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"Agreement" means this Master Credit Facility Agreement, as it
may be amended, supplemented or otherwise modified from time to time,
including all Recitals and Exhibits to this Agreement, each of which is
hereby incorporated into this Agreement by this reference.
"Allocable Credit Facility Amount" means, as of the date of
determination, with respect to each Mortgaged Property, an amount equal
to the product obtained by multiplying --
(a) the ratio (expressed as a percentage) of --
(i) the most recent Valuation of the Mortgaged
Property to
(ii) the aggregate of the most recent Valuations
of all of the Mortgaged Properties; by
(b) the Maximum Credit Facility Commitment.
The Allocable Credit Facility Amount shall be redetermined on an annual
basis and at other specified times, all in accordance with Section
17.2.
"Amortization Period" means, with respect to each Base
Facility Advance, the period of 30 years, or such lesser period of time
as Borrower shall request and Lender shall approve pursuant to Section
3.4.
"Applicable Law" means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all
governmental bodies, all Governmental Approvals and all orders,
judgments and decrees of all courts and arbitrators, (b) all zoning,
building, environmental and other laws, ordinances, rules, regulations
and restrictions of any Governmental Authority affecting the ownership,
management, use, operation, maintenance or repair of any Mortgaged
Property, including the Americans with Disabilities Act (if
applicable), the Fair Housing Amendment Act of 1988 and Hazardous
Materials Laws, (c) any building permits or any conditions, easements,
rights-of-way, covenants, restrictions of record or any recorded or
unrecorded agreement affecting or concerning any Mortgaged Property
including planned development permits, condominium declarations, and
reciprocal easement and regulatory agreements with any Governmental
Authority, (d) all laws, ordinances, rules and regulations, whether in
the form of rent control, rent stabilization or otherwise, that limit
or impose conditions on the amount of rent that may be collected from
the units of any Mortgaged Property, and (e) requirements of insurance
companies or similar organizations, affecting the operation or use of
any Mortgaged Property or the consummation of the transactions to be
effected by this Agreement or any of the other Loan Documents.
"Appraisal" means an appraisal of a Multifamily Residential
Property or Multifamily Residential Properties conforming to the
requirements of Chapter 5 of Part III of the DUS Guide, and accepted by
the Lender.
"Appraised Value" means the value set forth in an Appraisal.
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"Base Facility" means the agreement of the Lender to make Base
Facility Advances to the Borrower pursuant to Article III.
"Base Facility Availability Period" means the period beginning
on the Initial Closing Date and ending on the 90th day before the
Revolving Facility Termination Date.
"Base Facility Advance" means a loan made by the Lender to the
Borrower under the Base Facility Commitment.
"Base Facility Commitment" means an amount equal to the
aggregate amount of Revolving Facility Commitment which is converted to
Base Facility Commitment in accordance with, and subject to, the
provisions of Article III.
"Base Facility Fee" means (a) for any Base Facility Advance
converted from the Revolving Facility Commitment available under this
Agreement which (i) has a maturity date which does not extend beyond
the Revolving Facility Termination Date and (ii) is, in all material
respects (as determined by the Lender), consistent with the terms of
the Revolving Facility hereunder (i.e. as to lock-out period, etc.), 58
basis points; and (b) for any Base Facility Advance converted from any
portion of the Revolving Facility Commitment available under this
Agreement which (i) has a maturity date which does extend beyond the
Revolving Credit Facility Termination Date and/or (ii) is not, in all
material respects (as determined by the Lender), consistent with the
terms of the Revolving Facility hereunder, the number of basis points
determined at the time of such conversion by the Lender as the Base
Facility Fee for such Base Facility Advance.
"Base Facility Fee Yield Maintenance Amount," for a specified
Base Facility Note, shall have the meaning set forth in the Base
Facility Note.
"Base Facility Note" means a promissory note, in the form
attached as Exhibit B to this Agreement, which will be issued by the
Borrower to the Lender, concurrently with the funding of each Base
Facility Advance, to evidence the Borrower's obligation to repay the
Base Facility Advance.
"Base Facility Termination Fee" means, with respect to any
Credit Facility Termination Request, the aggregate of the Base Facility
Fee Yield Maintenance Amounts calculated under the Base Facility Notes.
"Borrower" means ASN Multifamily Limited Partnership, a
Delaware limited partnership.
"Borrower Parties" means the REIT and the Borrower.
"Business Day" means a day on which ▇▇▇▇▇▇ ▇▇▇ is open for
business.
"Cap" means an interest rate cap.
"Cap Documents" means the documents evidencing and governing a
Cap, including a Cap Security Agreement.
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"Capitalization Rate" means, for each Mortgaged Property, a
capitalization rate selected by the Lender in accordance with Section
17.2 for use in determining the Valuations.
"Cap Security Agreement" means, with respect to a Cap, the
Interest Rate Hedge Security, Pledge and Assignment Agreement by and
among the Borrower, the Lender and the Servicer, for the benefit of the
Lender, in the form attached as Exhibit C to this Agreement, as such
agreement may be amended, modified, supplemented or restated from time
to time.
"Cash Management Agreement" means that certain Cash Management
Security, Pledge and Assignment Agreement between the Borrower and the
Lender in the form attached as Exhibit D to this Agreement.
"Change of Control" means, with respect to any Person and
during any period of twelve consecutive months, the failure of
individuals who are members of the board of directors of such Person at
the beginning of such period (together with any new or replacement
directors whose initial nomination for election was approved by a
majority of such members and other members previously so approved) to
constitute a majority of such board of directors at the end of such
period.
"Closing Date" means the Initial Closing Date and each date
after the Initial Closing Date on which the funding or other
transaction requested in a Request is required to take place.
"Collateral" means, the Mortgaged Properties and other
collateral from time to time or at any time encumbered by the Security
Instruments, or any other property securing any of the Borrower
Parties' obligations under the Loan Documents.
"Collateral Addition Fee" means, with respect to a Multifamily
Residential Property added to the Collateral Pool in accordance with
Article VI, a fee equal to the lesser of --
(a) the product obtained by multiplying --
(i) 30 basis points, by
(ii) the Allocable Credit Facility Amount to be
attributed to the Additional Mortgaged Property upon its
addition to the Collateral Pool; or
(b) $60,000.
"Collateral Addition Loan Documents" means the Security
Instrument covering an Additional Mortgaged Property and any other
documents, instruments or certificates required by the Lender in
connection with the addition of the Additional Mortgaged Property to
the Collateral Pool pursuant to Article VI.
"Collateral Addition Request" shall have the meaning set forth
in Section 6.2(a).
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"Collateral Pool" means the aggregate total of the Collateral.
"Collateral Release Documents" shall have the meaning set
forth in Section 8.2(b).
"Collateral Release Property" shall have the meaning set forth
in Section 8.2(a).
"Collateral Release Request" shall have the meaning set forth
in Section 8.2(a).
"Collateral Substitution Fee" means, with respect to a
Multifamily Residential Property substituted into the Collateral Pool
in accordance with Article VII, a fee equal to the lesser of --
(a) the product obtained by multiplying --
(i) 30 basis points, by
(ii) the Allocable Credit Facility Amount to be
attributed to the Substituted Mortgaged Property after its
substitution into the Collateral Pool; or
(b) $60,000.
"Collateral Substitution Loan Documents" means the Security
Instrument covering a Substituted Mortgaged Property and any other
documents, instruments or certificates required by the Lender in
connection with the addition of the Substituted Mortgaged Property to
the Collateral Pool pursuant to Article VII.
"Collateral Substitution Request" shall have the meaning set
forth in Section 7.2(a).
"Complete Revolving Facility Termination" shall have the
meaning set forth in Section 10.2(a).
"Compliance Certificate" means a certificate of the Borrower
Parties in the form attached as Exhibit E to this Agreement.
"Conversion Request" shall have the meaning set forth in
Section 3.1(a).
"Coupon Rate" means, with respect a Revolving Advance, the
imputed interest rate determined by the Lender pursuant to Section 2.5
for the Revolving Advance and, with respect to a Base Facility Advance,
the interest rate determined by the Lender pursuant to Section 3.5 for
the Base Facility Advance.
"Coverage and LTV Tests" mean, for any specified date, each of
the following financial tests:
(a) The Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period (Actual) is not less than 145%.
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(b) The Aggregate Debt Coverage Ratio for the Trailing 12
Month Period (Floor) is not less than 135%.
(c) The Aggregate Debt Service Coverage Ratio for the
Trailing Three Month Period (Actual) is not less than 140%.
(d) The Aggregate Debt Coverage Ratio for the Trailing
Three Month Period (Floor) is not less than 130%.
(e) The Aggregate Loan to Value Ratio does not exceed
65%.
"Credit Facility" means, collectively, the Base Facility and
the Revolving Facility.
"Credit Facility Expansion Loan Documents" means an amendment
to the Revolving Facility Note, increasing the amount of the Maximum
Credit Facility Commitment, as expanded in accordance with Article IX,
and amendments to the Security Instruments, increasing the amount
secured to the increased amount of the Maximum Credit Facility
Commitment.
"Credit Facility Termination Date" means, (a) at any time
during which Base Facility Advances are Outstanding, the latest of: (i)
the last maturity date for any Base Facility Advance Outstanding and
(ii) the Revolving Facility Termination Date, and (b) at any time
during which Base Facility Advances are not Outstanding, the Revolving
Facility Termination Date, but, in either case, on any earlier date on
which this Agreement is terminated.
"Credit Facility Termination Fee" means an amount equal to the
sum of--
(a) the Base Facility Termination Fee, if any;
and
(b) the Revolving Facility Termination Fee, if
any.
"Credit Facility Termination Request" shall have the meaning
set forth in Section 11.2(a).
"Discount" means, with respect to any Revolving Advance, an
amount equal to the excess of --
(a) the face amount of the MBS backed by the
Revolving Advance, over
(b) the Price of the MBS backed by the Revolving
Advance.
"Duff & ▇▇▇▇▇▇" means Duff & ▇▇▇▇▇▇ Credit Rating Company, a
Delaware corporation, and its successors and assigns.
-ix-
"DUS Guide" means the ▇▇▇▇▇▇ Mae Multifamily Delegated
Underwriting and Servicing (DUS) Guide, as such Guide may be amended
from time to time, including exhibits to the DUS Guide and amendments
in the form of Lender Memos, Guide Updates and Guide Announcements
(and, if such Guide is no longer used by ▇▇▇▇▇▇ ▇▇▇, the term "DUS
Guide" as used in this Agreement means the ▇▇▇▇▇▇ Mae Multifamily
Negotiated Transactions Guide, as such Guide may be amended from time
to time, including amendments in the form of Lender Memos, Guide
Updates and Guide Announcements). All references to specific articles
and sections of, and exhibits to, the DUS Guide shall be deemed
references to such articles, sections and exhibits as they may be
amended, modified, updated, superseded, supplemented or replaced from
time to time.
"DUS Underwriting Requirements" means the overall underwriting
requirements for Multifamily Residential Properties as set forth in the
DUS Guide.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" means any event defined to be an "Event of
Default" under Article XIX.
"Facility Debt Service (Actual)" means, as of any specified
date, the sum of--
(a) the amount of interest and principal amortization, during
the twelve month period following the specified date, with respect to
the Advances Outstanding on the specified date, except that, for these
purposes:
(i) each Revolving Advance shall be deemed to require
level monthly payments of principal and interest (at an
interest rate equal to the weighted average (based on ▇▇▇▇▇▇
then in effect) of the lesser of: (A) the Coupon Rate or (B)
the capped interest rate for all or that allocable portion of
Revolving Advances which are covered by a Cap, and at the
swapped fixed interest rate for all or that allocable portion
of Revolving Advances which are covered by a Swap; for
purposes of such allocation, Revolving Advances with the
higher Coupon Rates shall be allocated first to those
Revolving Advances covered by a Swap) in an amount necessary
to fully amortize the original principal amount of the
Revolving Advance over a 30-year period, with such
amortization deemed to commence on the first day of the twelve
month period, and
(ii) each Base Facility Advance shall be deemed to
require level monthly payments of principal and interest (at
the Coupon Rate for the Base Facility Advance) in an amount
necessary to fully amortize the original principal amount of
the Base Facility Advance over the Amortization Period for the
Base Facility Advance; and
(b) the amount of the Standby Fees payable to the Lender
pursuant to Section 18.1 during such twelve month period (assuming, for
these purposes, that the Advances Outstanding throughout the twelve
month period are always equal to the amount of Advances Outstanding on
the specified date).
-x-
Exhibit F-1 to this Agreement contains an example of the determination
of the Facility Debt Service (Actual).
"Facility Debt Service (Floor)" means, as of any specified
date, the sum of --
(a) the amount of interest and principal amortization, during
the twelve month period following the specified date, with respect to
the Advances Outstanding on the specified date, except that, for these
purposes:
(i) each Revolving Advance shall be deemed to require
level monthly payments of principal and interest (at the rate
of 7.5% per annum for the Revolving Advance) in an amount
necessary to fully amortize the original principal amount of
the Revolving Advance over a 30-year period, with such
amortization deemed to commence on the first day of the twelve
month period; and
(ii) each Base Facility Advance shall be deemed to
require level monthly payments of principal and interest (at
the lesser of the actual rate or the rate of 7.5% per annum
for the Base Facility Advance) in an amount necessary to fully
amortize the original principal amount of the Base Facility
Advance over the Amortization Period for the Base Facility
Advance; and
(b) the amount of the Standby Fees payable to the Lender
pursuant to Section 18.1 during such twelve month period (assuming, for
these purposes, that the Advances Outstanding throughout the twelve
month period are always equal to the amount of Advances Outstanding on
the specified date).
Exhibit F-2 to this Agreement contains an example of the determination
of the Facility Debt Service (Floor).
"▇▇▇▇▇▇ Mae" means the federally-chartered and
stockholder-owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, 12 U.S.C. Section 1716 et
seq.
"Financial Covenants" means the covenants set forth in Article
XVI.
"Fitch" means Fitch IBCA, Inc., a Delaware corporation, and
its successors and assigns.
"Future Advance" means an Advance made after the Initial
Closing Date.
"Future Advance Request" shall have the meaning set forth in
Section 5.2.
"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 XII.
-xi-
"Geographical Diversification Requirements" means, (a) prior
to the occurrence of an increase in the Maximum Credit Facility
Commitment pursuant to Article IX, a requirement that the Collateral
Pool consist of at least seven Mortgaged Properties located in at least
four states with the following additional limitations: (i) the
Mortgaged Properties in the Collateral Pool shall be located in at
least five SMSAs (for purposes of this limitation, any two or more
Mortgaged Properties that are located within one mile of each other
shall be deemed to be located in a single SMSA); (ii) the Mortgaged
Properties in the Collateral Pool that are located in a single SMSA
shall not comprise in the aggregate more than 30% of the Allocable
Credit Facility Amounts of all Mortgaged Properties then in the
Collateral Pool; and (iii) no Mortgaged Property in the Collateral Pool
shall comprise more than 20% of the Allocable Credit Facility Amounts
of all Mortgaged Properties then in the Collateral Pool (for purposes
of this limitation, any two or more Mortgaged Properties that are
located within one mile of each other shall be deemed to be a single
Mortgaged Property); and (b) upon the occurrence of any increase in the
Maximum Credit Facility Commitment pursuant to Article IX, such
requirements as to the geographical diversity of the Collateral Pool as
the Lender may determine and notify the Borrower of at the time of the
increase.
"Governmental Approval" means an authorization, permit,
consent, approval, license, registration or exemption from registration
or filing with, or report to, any Governmental Authority.
"Governmental Authority" means any court, board, agency,
commission, office or authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Revenues" means, for any specified period, with respect
to any Multifamily Residential Property, all gross rents collected from
or on behalf of tenants at such Multifamily Residential Property (other
than unforfeited tenant security deposits), any other income, receipts
or reserves (but only to the extent such reserves were included as
Operating Expenses at the times they were set aside) derived from such
Multifamily Residential Property (including from the use or operation
thereof) without regard to its source, including tenant reimbursements
for utilities, services and supplies (to the extent such tenant
reimbursement revenues were not "netted" from the corresponding
Operating Expenses), security deposit forfeitures, parking rents or
fees, concessions and vending fees and laundry income and proceeds from
rental interruption insurance, but excluding insurance proceeds (other
than proceeds from rental interruption insurance), condemnation
proceeds, unearned portion of prepaid rent, other refundable items,
interest on any account into which refundable items are deposited, and
proceeds from the sale or other disposition of all or any portion of a
Multifamily Residential Property.
"Hazardous Materials", with respect to any Mortgaged Property,
shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"Hazardous Materials Law", with respect to any Mortgaged
Property, shall have the meaning given that term in the Security
Instrument encumbering the Mortgaged Property.
-xii-
"Hazardous Substance Activity" means any storage, holding,
existence, release, spill, leaking, pumping, pouring, injection,
escaping, deposit, disposal, dispersal, leaching, migration, use,
treatment, emission, discharge, generation, processing, abatement,
removal, disposition, handling or transportation of any Hazardous
Materials from, under, into or on any Mortgaged Property in violation
of Hazardous Materials Laws, including the discharge of any Hazardous
Materials emanating from any Mortgaged Property in violation of
Hazardous Materials Laws through the air, soil, surface water,
groundwater or property and also including the abandonment or disposal
of any barrels, containers and other receptacles containing any
Hazardous Materials from or on any Mortgaged Property in violation of
Hazardous Materials Laws, in each case whether sudden or nonsudden,
accidental or nonaccidental.
"Hedge" means either a Cap or a Swap.
"Hedge Documents" means, collectively, the documents
evidencing and governing a Hedge.
"Impositions" means, with respect to any Mortgaged Property,
all (a) water and sewer charges which, if not paid, may result in a
lien on all or any part of the Mortgaged Property, (b) premiums for
fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under Section 19 of the Security
Instrument encumbering the Mortgaged Property, (c) Taxes, and (d)
amounts for other charges and expenses which Lender at any time
reasonably deems necessary to protect the Mortgaged Property, to
prevent the imposition of liens on the Mortgaged Property, or otherwise
to protect Lender's interests.
"Indebtedness" means, with respect to any Person, as of any
specified date, without duplication, all:
(a) indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than (i) current
trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices and (ii) amounts to be
paid by such Person, in performance stages or upon completion, pursuant
to a written contract for the making of capital improvements to a
Mortgaged Property permitted by this Agreement or the other Loan
Documents);
(b) other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument;
(c) obligations of such Person under any lease of property,
real or personal, the obligations of the lessee in respect of which are
required by GAAP to be capitalized on a balance sheet of the lessee;
(d) obligations of such Person in respect of acceptances (as
defined in Article 3 of the Uniform Commercial Code of the State of New
York) issued or created for the account of such Person;
-xiii-
(e) liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment of such liabilities; and
(f) as to any Person ("guaranteeing person"), any obligation
of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit) to induce the creation of a primary
obligation (as defined below) with respect to which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing, or in effect guaranteeing, any
indebtedness, lease, dividend or other obligation ("primary
obligations") of any third person ("primary obligor") in any manner,
whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (3) purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (4) otherwise assure or
hold harmless the owner of any such primary obligation against loss in
respect of the primary obligation, provided, however, that this clause
(f) shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any
Indebtedness included under this clause (f) with respect to any
guaranteeing person shall be deemed to be the lesser of (i) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Indebtedness is made and (ii) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Indebtedness, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Indebtedness shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by
Owner in good faith;
provided, however, that the term Indebtedness shall not include any
liability of the Borrower under any Hedge Documents.
"Initial Advance" means the Revolving Advance made on the
Initial Closing Date in the amount of $268,450,000.
"Initial Advance Request" shall have the meaning set forth in
Section 5.1.
"Initial Closing Date" means the date of the Initial Advance.
"Initial Mortgaged Properties" means the Multifamily
Residential Properties described on Exhibit A to this Agreement and
which represent the Multifamily Residential Properties which are made
part of the Collateral Pool on the Initial Closing Date.
-xiv-
"Initial Security Instruments" means the Security Instruments
covering the Initial Mortgaged Properties.
"Initial Valuation" means, when used with reference to
specified Collateral, the Valuation initially performed for the
Collateral as of the date on which the Collateral was added to the
Collateral Pool. The Initial Valuation for each of the Initial
Mortgaged Properties is as set forth in Exhibit A to this Agreement.
Notwithstanding the foregoing, in no event shall (a) the aggregate sum
of Initial Valuations for all Mortgaged Properties for which a Title
Insurance Policy was issued with a Tie-In Endorsement (exclusive of the
Mortgaged Properties situated in the State of Texas) exceed an amount
equal to the product obtained by multiplying (i) the limit of liability
of the Tie-In Endorsement (as such limit of liability may be increased
by the Borrower from time to time) by (ii) 1.54, (b) the aggregate sum
of Initial Valuations for all Mortgaged Properties situated in the
State of Texas, all of which Mortgaged Properties shall be insured
under a single Title Insurance Policy, exceed an amount equal to the
product obtained by multiplying the (i) limit of liability under such
Title Insurance Policy (as such limit of liability may be increased by
the Borrower from time to time) by (ii) 1.54.
"Insurance Policy" means, with respect to a Mortgaged
Property, the insurance coverage and insurance certificates evidencing
such insurance required to be maintained pursuant to the Security
Instrument encumbering the Mortgaged Property.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended. Each reference to the Internal Revenue Code shall be
deemed to include (a) any successor internal revenue law and (b) the
applicable regulations whether final or temporary.
"Lease" means any lease, any sublease or subsublease, license,
concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of
any space in any Mortgaged Property, and every modification, amendment
or other agreement relating to such lease, sublease, subsublease or
other agreement entered into in connection with such lease, sublease,
subsublease or other agreement, and every guarantee of the performance
and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Lender" shall have the meaning set forth in the first
paragraph of this Agreement, but shall refer to any replacement Lender
if the initial Lender is replaced pursuant to the terms of Section
21.4.
"Lien" means any mortgage, deed of trust, deed to secure debt,
security interest or other lien or encumbrance (including both
consensual and non-consensual liens and encumbrances).
"Loan Documents" means this Agreement, the Notes, the Advance
Confirmation Instruments for the Revolving Advances, the Security
Documents, the REIT Guaranty, all documents executed by the Borrower
Parties pursuant to the General Conditions set forth
-xv-
in Article XII of this Agreement and any other documents executed by a
Borrower Party from time to time in connection with this Agreement or
the transactions contemplated by this Agreement.
"Loan Year" means, (a) with respect to the first Loan Year,
the period from the Initial Closing Date through December 31, 1999, and
(b) with respect to each Loan Year thereafter, the 12-month period from
January 1 through December 31 of such Loan Year.
"Material Adverse Effect" means, with respect to any
circumstance, act, condition or event of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any
other event or events, act or acts, condition or conditions, or
circumstance or circumstances, whether or not related, a material
adverse change in or a materially adverse effect upon any of (a) the
business, operations, property or condition (financial or otherwise) of
any Borrower Party, (b) the present or future ability of any Borrower
Party to perform the Obligations for which it is liable, (c) the
validity, priority, perfection or enforceability of this Agreement or
any other Loan Document or the rights or remedies of the Lender under
any Loan Document, or (d) the value of, or the Lender's ability to have
recourse against, any Mortgaged Property.
"Maximum Credit Facility Commitment" means, at any time, the
sum of the Base Facility Commitment and the Revolving Facility
Commitment.
"MBS" means mortgage-backed securities. A 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.
"MBS Delivery Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS
is delivered by ▇▇▇▇▇▇ Mae.
"MBS Imputed Interest Rate" shall have the meaning set forth
in Section 2.5(a).
"MBS Issue Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS is
issued by ▇▇▇▇▇▇ Mae.
"MBS Pass-Through Rate" for a Base Facility Advance means the
interest rate as determined by the Lender (rounded to three places)
payable for the ▇▇▇▇▇▇ ▇▇▇ MBS pursuant to the MBS Commitment backed by
the Base Facility Advance as determined in accordance with Section 4.1.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, and its successors and assigns.
"Mortgaged Properties" means, collectively, the Additional
Mortgaged Properties, the Substituted Mortgaged Properties and the
Initial Mortgaged Properties, but excluding each Collateral Release
Property from and after the date of the release of the Collateral
Release Property from the Collateral Pool.
-xvi-
"Multifamily Residential Property" means a residential
property, located in the United States, containing five or more
dwelling units in which not more than twenty percent (20%) of the net
rentable area is or will be rented to non-residential tenants, and
conforming to the requirements of Sections 201 and 203 of Part III of
the DUS Guide.
"Net Operating Income" means, for any specified period, with
respect to any Multifamily Residential Property, the aggregate net
income during such period equal to Gross Revenues during such period
less the aggregate Operating Expenses during such period. If a
Mortgaged Property is not owned by the Borrower or an Affiliate of the
Borrower for the entire specified period, the Net Operating Income for
the Mortgaged Property for the time within the specified period during
which the Mortgaged Property was owned by the Borrower or an Affiliate
of the Borrower shall be the Mortgaged Property's pro forma net
operating income determined by the Lender in accordance with the
underwriting procedures set forth in Part III of the DUS Guide.
"Note" means any Base Facility Note or the Revolving Facility
Note.
"Obligations" means the aggregate of the obligations of each
of the Borrower Parties under this Agreement and the other Loan
Documents.
"Operating Expenses" means, for any period, with respect to
any Multifamily Residential Property, the aggregate of all direct,
ordinary, normal, recurring and necessary expenses thereof (to the
extent such expenses were not "netted" from tenant reimbursement
revenue received by the Borrower) including, without duplication, (a)
Impositions, (b) property and liability insurance premiums, (c) wages,
salaries and benefits of personnel employed on site to manage, lease,
maintain and operate such Multifamily Residential Property, (d) costs
or expenses of utility services to such Multifamily Residential
Property and tenant spaces to the extent payable by the Borrower, (e)
costs or expenses of providing security services to such Multifamily
Residential Property, if any, (f) costs or expenses of in-house or
outside service arrangements for landscaping, janitorial, window
washing and cleaning, trash, debris, make ready units, cable and
satellite television and other services, (g) expenses of maintaining,
repairing and cleaning the grounds, parking, amenities, exterior and
interior spaces of such Multifamily Residential Property, (h) expenses
of repairing and maintaining in good operable condition the mechanical,
structural, electrical, elevator, heating, ventilating, air
conditioning and plumbing expenses, (i) property management fees
payable to parties other than the Borrower (but specifically including
management fees paid to any Affiliate of the Borrower), (j)
administrative expenses including advertising incurred at the site of
such Multifamily Residential Property , (k) legal fees associated with
lease documentation and tenant matters and legal, accounting and other
professional fees relating to the operation of the Multifamily
Residential Property, (l) (for all purposes hereunder other than the
calculation of Valuation) the replacement and repair amount with
respect to such Multifamily Residential Property, and (m) any other
items that are treated as noncapital expenses under GAAP. All of the
foregoing (including Impositions) shall be computed on an accrual basis
and in accordance with GAAP consistently applied. During any period
such Multifamily Residential Property is not managed by a third party
professional management company unaffiliated with the
-xvii-
Borrower, Operating Expenses shall also include an amount equal to the
difference, if any, by which management fees paid by owners of similar
properties in the same geographic location exceed management fees then
payable by the Borrower. For purposes of the calculation of Valuation,
Operating Expenses shall exclude any amount not actually spent. In
addition, for all purposes Operating Expenses shall exclude (u)
payments on the Obligations and any other interest payments or
principal payments on any indebtedness, (v) depreciation and
amortization, (w) all legal, accounting and professional fees not
included in clause (k) above, and (x) items that would be treated as
capital expenses under GAAP consistently applied and calculated in
accordance with DUS Guide Form 4254.
"Organizational Certificate" means a certificate of the
Borrower Parties in the form attached as Exhibit G 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.
"Outstanding" means, when used in connection with promissory
notes, other debt instruments or Advances, for a specified date,
promissory notes or other debt instruments which have been issued, or
Advances which have been made, but have not been repaid in full as of
the specified date.
"Ownership Interests" means, with respect to any entity, any
ownership interests in the entity and any economic rights (such as a
right to distributions, net cash flow or net income) to which the owner
of such ownership interests is entitled.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permits" means all permits, or similar licenses or approvals
issued and/or required by an applicable Governmental Authority or any
Applicable Law in connection with the ownership, use, occupancy,
leasing, management, operation, repair, maintenance or rehabilitation
of any Mortgaged Property or any Borrower Party's business.
"Permitted Investments" means
(a) direct obligations of, and obligations on which the full
and timely payment of principal and interest is unconditionally
guaranteed by, the full faith and credit of the United States of
America;
(b) direct obligations of, and obligations on which the full
and timely payment of principal and interest is unconditionally
guaranteed by, any agency or instrumentality of the United States of
America (other than the Federal Home Loan
-xviii-
Mortgage Corporation) or direct obligations of the World Bank, provided
that such obligations are assigned a credit rating by S&P and Moody's
in the highest rating category of S&P and Moody's;
(c) obligations of any state or territory of the United States
of America, or obligations of any agency, instrumentality, authority or
political subdivision of such state or territory, or obligations of any
public benefit or municipal corporation the principal of and interest
on which are guaranteed by such state or political subdivision and the
interest on which is payable on a current basis, and which obligations
are rated in the highest long-term rating category of S&P and Moody's;
(d) any written repurchase agreement entered into with a
Qualified Financial Institution whose unsecured short-term obligations
are rated in the highest short-term rating category of S&P and Moody's;
(e) commercial paper rated in the highest rating category
of S&P and Moody's;
(f) (i) interest-bearing negotiable certificates of deposit,
interest-bearing time deposits, interest-bearing savings accounts or
bankers' acceptances, issued by a Qualified Financial Institution whose
unsecured short-term obligations are rated in the highest rating
category of S&P and Moody's, or (ii) interest-bearing negotiable
certificates of deposit, interest-bearing time deposits or
interest-bearing savings accounts, issued by a Qualified Financial
Institution, if such deposits or accounts are fully insured by the
Federal Deposit Insurance Corporation; and
(g) money market mutual funds registered under the Investment
Company Act of 1940 that have been rated "AAAm-G" or "AAAm" by S&P and
"Aaa" by Moody's, provided that the portfolio of such money market
mutual fund is limited to obligations described in (i) clause (a) above
and to agreements to repurchase such obligations or (ii) clauses (b) or
(c) above and approved in writing by the Lender;
provided that Permitted Investments shall not include the following:
(1) any investments with a final maturity or any agreements with a term
greater than 365 days from the date of the investment (except (A)
obligations that provide for the optional or mandatory tender, at par,
by the holder of such obligations at least once within 365 days of the
date of purchase and (B) agreements or investments listed in clauses
(g) and (h) above), (2) any obligation (other than obligations
described in clauses (a), (b) and (c) above) with a purchase price
greater or less than the par value of such obligation, (3)
mortgage-backed securities, real estate mortgage investment conduits or
collateralized mortgage obligations, (4) interest-only or
principal-only stripped securities, (5) obligations bearing interest at
inverse floating rates, (6) any investment which may be prepaid or
called at a price less than their purchase price prior to stated
maturity, (7) any investment described in clause (d) above with a
Qualified Financial Institution (as defined in clause (d) of the
definition of "Qualified Financial Institution") if the Qualified
Financial Institution does not agree to submit to jurisdiction, venue
and service of process in the United States of America in the
repurchase agreement and (8) any investment the interest rate on which
is
-xix-
variable, and is established other than by reference to a single
interest rate on which is variable, and is established other than by
reference to a single interest rate index plus a single fixed spread,
if any, and which interest rate moves proportionately with that index;
provided further that if any such investment described in clauses (a)
through (h) above is required to be rated, such rating requirement will
not be satisfied if an "r" highlighter or a "t" highlighter is affixed
to its rating or is otherwise applicable. Notwithstanding the
foregoing, if any of the investments described in clauses (b), (c),
(d), (e), (f)(i) or (g) above is rated by only one of S&P or Moody's,
then such investment shall still be included as a Permitted Investment
herein; however, if such investment is rated by Duff & ▇▇▇▇▇▇ and/or
Fitch, it must be rated in the appropriate highest rating category of
such agency, consistent with the minimum rating category required by
S&P or Moody's, as the case may be, above.
"Permitted Liens" means, with respect to a Mortgaged Property:
(a) the exceptions to title to the Mortgaged Property set
forth in the Title Insurance Policy for the Mortgaged Property and
approved by the Lender;
(b) Liens securing Obligations to the Lender, including the
Lien of the Security Instrument encumbering the Mortgaged Property;
(c) Liens for taxes not yet delinquent;
(d) Liens in respect of property imposed by law arising in the
ordinary course of business such as materialmen's, mechanics',
warehousemen's, carriers', landlords' and other nonconsensual statutory
Liens which (i) are not yet due and payable or (ii) are released of
record or otherwise remedied to the Lender's satisfaction within 60
days of the date of commencement of enforcement of any such Lien or
before such earlier date on which the Borrower's interest in the
applicable property is subject to forfeiture by enforcement of any such
Lien;
(e) easements, rights-of-way, restrictions (including zoning
restrictions), matters of plat, minor defects or irregularities in
title, license or lease agreements for laundry, cable tv, telephone and
other similar Liens which, in the aggregate, do not materially reduce
the value of the Mortgaged Property or materially interfere with the
operation and use of, or the ordinary conduct of the business on, the
Mortgaged Property (provided that any laundry or cable tv licenses or
leases shall not be a Permitted Lien if it does not comply with Section
108 of Part III of the DUS Guide);
(f) any other Liens expressly permitted by the Loan Documents
(including any delinquent tax Liens being contested in accordance with
the terms of the Security Instrument); and
(g) 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).
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"Potential Event of Default" means any event which, with the
giving of notice or the passage of time, or both, would constitute an
Event of Default.
"Price" means, with respect to a Revolving Advance or to an
MBS backed by a Revolving Advance, the proceeds of the sale of the MBS
backed by the Revolving Advance.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Qualified Financial Institution" means any (a) bank or trust
company organized under the laws of any state of the United States of
America, (b) national banking association, (c) savings bank, a savings
and loan association, or an insurance company or association chartered
or organized under the laws of any state of the United States of
America, (d) a federal branch or agency pursuant to the International
Banking Act of 1978 or any successor provisions of law, a domestic
branch or agency of a foreign bank which branch or agency is duly
licensed or authorized to do business under the laws of any state or
territory of the United States of America, (e) government bond dealer
reporting to, trading with, and recognized as a primary dealer by the
Federal Reserve Bank of New York, and (f) securities dealer approved in
writing by the Lender the liquidation of which is subject to the
Securities Investors Protection Corporation or other similar
corporation.
"Rate Confirmation Form" shall have the meaning set forth in
Section 3.1(c).
"Rate Setting Form" shall have the meaning set forth in
Section 3.1(b).
"REIT" means Archstone Communities Trust, a Maryland real
estate investment trust.
"REIT Guaranty" means the Exceptions to Non-Recourse Guaranty
executed by the REIT in the form attached as Exhibit EE to this
Agreement.
"Release Price" shall have the meaning set forth in Section
8.2(c).
"Rent Roll" means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on ▇▇▇▇▇▇ Mae Form 4243, as set forth
in Exhibit III-3 of the DUS Guide, or on another form approved by the
Lender and containing substantially the same information as Form 4243
requires.
"Replacement Reserve Agreement" means a Replacement Reserve
and Security Agreement, in the form attached as Exhibit H to this
Agreement, and completed in accordance with the requirements of the DUS
Guide.
"Request" means a Collateral Addition Request, a Collateral
Substitution Request, a Collateral Release Request, a Conversion
Request, a Credit Facility Expansion
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Request, a Credit Facility Termination Request, a Future Advance
Request, an Initial Advance Request or a Revolving Facility Termination
Request.
"Revolving Advance" means a loan made by the Lender to the
Borrower under the Revolving Facility Commitment.
"Revolving Credit Endorsement" means an endorsement to a Title
Insurance Policy which contains substantially the same coverages, and
is subject to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as Exhibit
I to this Agreement.
"Revolving Facility" means the agreement of the Lender to make
Revolving Advances to the Borrower pursuant to Article II.
"Revolving Facility Availability Period" means the period
beginning on the Initial Closing Date and ending on the 90th day before
the Revolving Facility Termination Date.
"Revolving Facility Commitment" means $300,000,000, less such
amount by which the Borrower may elect to permanently reduce the
Revolving Facility Commitment in accordance with Article X, less such
amount by which the Revolving Facility Commitment is reduced in
accordance with Section 8.2(e) in connection with a release of a
Mortgaged Property pursuant to Article VIII, less such amount as the
Borrower may elect to convert from the Revolving Facility Commitment to
the Base Facility Commitment in accordance with Article III, and plus
such amount by which the Revolving Facility Commitment is increased in
accordance with Article IX; provided however, that the Maximum Credit
Facility Commitment shall in no event exceed $300,000,000 or such
greater amount to which the Maximum Credit Facility Commitment has been
increased in accordance with Article IX.
"Revolving Facility Fee" means (a) 58 basis points per annum
for a Revolving Advance drawn from the Revolving Facility Commitment
initially available under this Agreement, and (b) for any Revolving
Advance drawn from any portion of the Revolving Facility Commitment
increased under Article IX, the number of basis points per annum
determined at the time of such increase by the Lender as the Revolving
Facility Fee for such Revolving Advance.
"Revolving Facility Note" means the promissory note, in the
form attached as Exhibit J to this Agreement, which has been issued by
the Borrower to the Lender to evidence the Borrower's obligation to
repay Revolving Advances.
"Revolving Facility Termination Date" means January 1, 2006.
"Revolving Facility Termination Fee" means, with respect to a
reduction in the Revolving Facility Commitment pursuant to Article
VIII, Article X or Article XI, as applicable, which occurs during the
first five Loan Years, an amount equal to the product obtained by
multiplying--
(a) the reduction in the Revolving Facility Commitment, by
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(b) 28 basis points, by
(c) 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 Closing Date for the reduction
in the Revolving Facility Commitment and the end of
the fifth Loan Year.]
The "Yield Rate" means the three month London Interbank Offered Rate of
interest as published in the Wall Street Journal on the second Business
Day preceding, as applicable, (i) the date of the reduction in the
Revolving Facility Commitment, (y) the date of the Complete Revolving
Facility Termination or (z) the date of Lender's acceleration of the
unpaid principal balance of the Notes. In the event that the Wall
Street Journal ceases to publish a three month London Interbank Offered
Rate, the Lender shall select and substitute the three month London
Interbank Offered Rate published by another financial newspaper.
"Revolving Facility Termination Request" shall have the
meaning set forth in Section 10.2(a).
"S&P" means Standard & Poor's Rating Services, a division of
McGraw Hills, Inc., a New York corporation, and its successors and
assigns.
"Sale" or "Sold" means the conveyance of a Multifamily
Residential Property to a Party that is unaffiliated to any of the
Borrower Parties pursuant to an arms-length sales transaction.
"Security Documents" means the Security Instruments, the Cash
Management Agreement, the Replacement Reserve Agreements, any Cap
Security Agreement, any Swap Security Agreement and any other documents
executed by a Borrower Party from time to time to secure any of the
Borrower Parties' obligations under the Loan Documents.
"Security Instrument" means, for each Mortgaged Property, a
separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt,
Assignment of Leases and Rents and Security Agreement given by the
Borrower to or for the benefit of the Lender to secure the obligations
of the Borrower Parties under the Loan Documents. The Security
Instrument shall be in the form attached as Exhibit K to this Agreement
with changes, to the extent applicable, to conform the Exhibit to the
form Security Instrument prescribed by ▇▇▇▇▇▇ ▇▇▇ from time to time for
use in the State in which the Mortgaged Property is located. The amount
secured by the Security Instrument shall be equal to the Maximum Credit
Facility Commitment in effect from time to time.
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"Senior Management" means (a) the Chief Executive Officer,
Co-Chairman of the Board, President, Chief Financial Officer and Chief
Operating Officer of the REIT, and (b) any other individuals with
responsibility for any of the functions typically performed in a
corporation by the officers described in clause (a).
"Single-Purpose" means, with respect to a Person which is any
form of partnership or corporation or limited liability company, that
such Person at all times since its formation:
(a) has been a duly formed and existing
partnership, corporation or limited
liability company, as the case may be;
(b) has been duly qualified in each jurisdiction
in which such qualification was at such time
necessary for the conduct of its business;
(c) has complied with the provisions of its
organizational documents and the laws of its
jurisdiction of formation in all respects;
(d) has observed all customary formalities
regarding its partnership or corporate
existence, as the case may be;
(e) has accurately maintained correct and
complete books and records and financial
statements separate from those of any other
Person;
(f) has not commingled its assets with those of
any other Person;
(g) has accurately maintained its own bank
accounts separate from those of any other
Person;
(h) has paid its own liabilities out of its own
funds except as contemplated under or in
connection with the Loan Documents;
(i) has identified itself under its own name and
as a separate entity;
(j) has not 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;
(k) 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;
(l) has conducted its own business in its own
name;
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(m) has paid the salaries of its own employees;
(n) has allocated fairly and reasonably any
overhead for shared office space;
(o) has used separate stationery, invoices (or
indicate that such correspondence or
invoices are on behalf or account of such
Person) and checks;
(p) has not pledged its assets for the benefit
of any other entity or made any loans or
advances to any person or entity;
(q) with respect to any consolidated financial
statements with any other Person or
Affiliate, has caused such Person or
Affiliate to include notes in such
consolidated financial statements indicating
its ownership of its own assets and its
obligations with respect to its own
liabilities; and
(r) has corrected any known misunderstanding
regarding its separate identity.
"Subsidiary" means, when used with reference to a specified
Person, (a) any Person that, directly or indirectly, through one or
more intermediaries, is controlled by the specified Person, (b) 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
(c) any Person (i) which is a partnership and (ii) of which the
specified Person is a general partner and owns more than 50% of the
partnership interests.
"Substituted Mortgaged Property" means a Multifamily
Residential Property owned by the Borrower and added to the Collateral
Pool after the Initial Closing Date in substitution of a Mortgaged
Property then in the Collateral Pool, all pursuant to Article VII.
"Surveys" means the as-built surveys of the Mortgaged
Properties prepared in accordance with the requirements of Section 113
of the DUS Guide, or otherwise approved by the Lender.
"Swap" means an interest rate swap.
"Swap Documents" means the documents evidencing and governing
a Swap, including a Swap Security Agreement.
"Swap Security Agreement" means, with respect to a Swap, the
Interest Rate Hedge Security, Pledge and Assignment Agreement by and
among the Borrower, the Lender and the Servicer, for the benefit of the
Lender, in the form attached as Exhibit C to this Agreement, as such
agreement may be amended, modified, supplemented or restated from time
to time.
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"Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local
improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will
become a lien, on the Land or the Improvements.
"Term of this Agreement" shall be determined as provided in
Section 25.10 to this Agreement.
"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 L to this
Agreement.
"Title Company" means Chicago Title Insurance Company, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Title Insurance Policies" means the mortgagee's policies of
title insurance issued by the Title Company from time to time relating
to each of the Security Instruments, conforming to the requirements of
Section 111 of the DUS Guide, together with such endorsements,
coinsurance, reinsurance and direct access agreements with respect to
such policies as the Lender may, from time to time, consider necessary
or appropriate, whether or not required by the DUS Guide, including
Revolving Credit Endorsements, if available, and Tie-In Endorsements,
if available, and with a limit of liability under the policy (subject
to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the
Stipulations and Conditions of the policy) equal to the following:
(a) for all Mortgaged Properties, exclusive of the Mortgaged
Properties situated in the State of Texas, an amount not less than the
aggregate Allocable Credit Facility Amounts of all such Mortgaged
Properties; and
(b) for all Mortgaged Properties situated in the State of
Texas, an amount not less than the aggregate Allocable Credit Facility
Amounts of all such Mortgaged Properties.
"Trailing 12 Month Period" means, for any specified date, the
12 month period ending with the last day of the most recent calendar
quarter for which financial statements have been delivered by the
Borrower to the Lender pursuant to Section 14.2(a)(i).
"Trailing Three Month Period" means, for any specified date,
the three month period ending with the last day of the most recent
calendar quarter for which financial statements have been delivered by
the Borrower to the Lender pursuant to Section 14.2(a)(i).
"Transfer" means (a) a sale, assignment, pledge, transfer or
other disposition (whether voluntary or by operation of law); (b) the
granting or creating of a Lien, other than a Permitted Lien; (c) the
issuance or other creation of an Ownership Interest in a legal entity,
including a partnership interest, interest in a limited liability
company or
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corporate stock; (d) the withdrawal, retirement, removal or involuntary
resignation of a partner in a partnership or a member or manager in a
limited liability company; or (e) the merger, dissolution, liquidation,
or consolidation of a legal entity. "Transfer" does not include (i) a
conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under a Security Instrument or (ii) the Mortgaged
Property becoming part of a bankruptcy estate by operation of law under
the United States Bankruptcy Code. For purposes of defining the term
"Transfer," the term "partnership" shall mean a general partnership, a
limited partnership, a joint venture and a limited liability
partnership, and the term "partner" shall mean a general partner, a
limited partner and a joint venturer.
"Unused Capacity" shall have the meaning set forth in Section
18.1.
"Valuation" means, for any specified date, with respect to a
Multifamily Residential Property:
(a) if an Appraisal of the Multifamily Residential Property
was more recently obtained than a Capitalization Rate for the
Multifamily Residential Property, the Appraised Value of such
Multifamily Residential Property; or
(b) if a Capitalization Rate for the Multifamily Residential
Property was more recently obtained than an Appraisal of the
Multifamily Residential Property, the value derived by dividing--
(i) the Net Operating Income of such Multifamily
Residential Property for the Trailing 12
Month Period, by
(ii) the most recent Capitalization Rate
determined pursuant to Section 17.2.
Notwithstanding the foregoing, (x) any Valuation for a Multifamily
Residential Property calculated for a date occurring before the first
anniversary of the date on which the Multifamily Residential Property
becomes a part of the Collateral Pool shall equal the Appraised Value
of such Multifamily Residential Property, unless the Lender determines
that changed market or property conditions warrant that the value be
determined as set forth in the preceding sentence; and (y) in no event
shall (A) the aggregate sum of Valuations for all Mortgaged Properties
for which a Title Insurance Policy was issued with a Tie-In Endorsement
(exclusive of the Mortgaged Properties situated in the State of Texas)
exceed an amount equal to the product obtained by multiplying (I) the
limit of liability of the Tie-In Endorsement (as such limit of
liability may be increased by the Borrower from time to time) by (II)
1.54, and (B) the aggregate sum of Valuations for all Mortgaged
Properties situated in the State of Texas, all of which Mortgaged
Properties shall be insured under a single Title Insurance Policy,
exceed an amount equal to the product obtained by multiplying (I) the
limit of liability under such Title Insurance Policy (as such limit of
liability may be increased by the Borrower from time to time) by (II)
1.54.
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ARTICLE II
THE REVOLVING FACILITY COMMITMENT
SECTION 2.1 Revolving Facility Commitment. Subject to the terms, conditions and
limitations of this Agreement, the Lender agrees to make Revolving Advances to
the Borrower from time to time during the Revolving Facility Availability
Period. The aggregate unpaid principal balance of the Revolving Advances
Outstanding at any time shall not exceed the Revolving Facility Commitment (as
such Revolving Facility Commitment may be permanently reduced pursuant to
Article III (in connection with a conversion), Section 8.2(e) (in connection
with a release) or Article X (in connection with a reduction) or temporarily
reduced pursuant to Section 7.4 (in connection with a substitution)). Subject to
the terms, conditions and limitations of this Agreement, the Borrower may
re-borrow any amounts under the Revolving Facility which it has previously
borrowed and repaid under the Revolving Facility.
SECTION 2.2 Requests for Advances. The Borrower shall request a Revolving
Advance by giving the Lender an Initial Advance Request in accordance with
Section 5.1 or a Future Advance Request in accordance with Section 5.2, as
applicable.
SECTION 2.3 Maturity Date of Revolving Advances. Regardless of the date on which
a Revolving Advance is made, the maturity date of each Revolving Advance shall
be a date selected by the Borrower in its Request for the Revolving Advance,
which date shall be the first day of a calendar month occurring:
(a) no earlier than the date which completes three full months after
the Closing Date for the Revolving Advance; and
(b) no later than the date which completes nine full months after the
Closing Date for the Revolving Advance or such longer time period as requested
by Borrower and approved by the Lender in the Lender's sole and absolute
discretion;
provided, however, that in no event shall the maturity date of any Revolving
Advance extend beyond the Revolving Facility Termination Date.
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 1 shall be
December 1; and the date which completes three full months after December 1
shall be March 1.
SECTION 2.4 Repayment at Maturity; Partial Month Interest; Revolving Facility
Fee.
(a) Repayment at Maturity. Each Revolving Advance shall be a discount
loan. The original stated principal amount of a Revolving Advance shall be the
sum of the Price of the Revolving Advance and the Discount of the Revolving
Advance. The Price and Discount of each Revolving Advance shall be determined in
accordance with the procedures set out in Section 4.1. The proceeds of the
Revolving Advance made available by the Lender to the Borrower will equal the
Price of the Revolving Advance. The entire unpaid principal of each Revolving
Advance shall be due and payable by the Borrower to the Lender on the maturity
date of the Revolving Advance. However, if the Borrower has requested that the
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maturing Revolving Advance (in whole or in part) be renewed with a new revolving
Advance or converted to a Base Facility Advance to take effect on the maturity
date of the maturing Revolving Advance, then the amount the Borrower is required
to pay on account of the maturing Revolving Advance will be reduced by, as the
case may be, that amount of the Price of the new Revolving Advance allocable to
the principal of the maturing Revolving Advance being renewed, or that amount of
the net proceeds of the MBS related to the Base Facility Advance then converted
from the maturing Revolving Advance.
(b) Partial Month Interest. Notwithstanding anything to the contrary
in this Section 2.4, if a Revolving Advance is not made on the first day of a
calendar month, and the MBS Issue Date for the MBS backed by the Revolving
Advance is the first day of the month following the month in which the Revolving
Advance is made, the Borrower shall pay interest on the original stated
principal amount of the Revolving Advance for the partial month period
commencing on the Closing Date for the Revolving Advance and ending on the last
day of the calendar month in which the Closing Date occurs, at a rate per annum
equal to the Coupon Rate for the Revolving Advance as determined in accordance
with Section 2.5(b).
(c) Revolving Facility Fee. In addition to paying the Discount and the
partial month interest, if any, the Borrower shall pay monthly installments of
the Revolving Facility Fee, in arrears, to the Lender on account of each
Revolving Advance over the whole number of calendar months the MBS backed by the
Revolving Advance is to run from the MBS Issue Date to the maturity date of the
MBS. The first installment shall be payable on or prior to the first day of each
calendar month, commencing on the first day of the second full calendar month of
the Revolving Advance and shall apply to the first full calendar month of the
MBS backed by the Revolving Advance. Subsequent installments shall be payable on
the first day of each calendar month thereafter during the term of such MBS with
the final installment being payable on the maturity date of such MBS. Each
installment of the Revolving Facility Fee shall be in an amount equal to the
product of multiplying (i) the Revolving Facility Fee, by (ii) the amount of the
Revolving Advance, by (iii) 1/12.
SECTION 2.5 Coupon Rates for Revolving Advances. The Coupon Rate for a
Revolving Advance shall be a rate, per annum, as follows:
(a) The Coupon Rate for a Revolving Advance shall equal the sum of (i)
an interest rate as determined by the Lender (rounded to three places) payable
for the ▇▇▇▇▇▇ ▇▇▇ MBS pursuant to the MBS Commitment backed by the Revolving
Advance ("MBS Imputed Interest Rate") and (ii) the Revolving Facility Fee.
(b) Notwithstanding anything to the contrary in this Section 2.5, if a
Revolving Advance is not made on the first day of a calendar month, and the MBS
Issue Date for the MBS backed by the Revolving Advance is the first day of the
month following the month in which the Revolving Advance is made, the Coupon
Rate for such Revolving Advance for such period shall be determined by the
Lender, based on the Lender's cost of funds, and approved in advance, in
writing, by the Borrower pursuant to procedures mutually agreed upon by the
Borrower and the Lender.
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SECTION 2.6 Revolving Facility Note. The obligation of the Borrower to repay the
Revolving Advances will be evidenced by the Revolving Facility Note. The
Revolving Facility Note shall be payable to the order of the Lender and shall be
made in the amount of the Revolving Facility Commitment.
SECTION 2.7 No Amortization. The Borrower shall not be required to make any
payments of principal on a Revolving Advance until the maturity date of such
Revolving Advance (or on any sooner date on which the principal of the Revolving
Advance is accelerated after the occurrence of an Event of Default or on which
the Revolving Advance is required to be repaid by the Borrower pursuant to the
terms of this Agreement for application by the Lender on the maturity date of
such Revolving Advance to repay such principal amount).
SECTION 2.8 Limit on Number of Outstanding Advances. The Borrower shall not be
permitted to have more than 10 Advances Outstanding at any one time.
SECTION 2.9 Reduction of Revolving Facility Commitment Upon Rating Downgrade. If
the credit rating of the long-term unsecured senior debt of ▇▇▇▇▇▇ Mae assigned
by ▇▇▇▇▇'▇ or S&P falls to or below "A3" or "A-", as applicable, for a period of
90 or more days (for all purposes hereof, only actual ratings of long-term
unsecured senior indebtedness of ▇▇▇▇▇▇ Mae shall be taken into account, and not
any rating that assumes the absence of any then-existing implicit or explicit
government benefits giving rise to the implication of such guarantee), and such
downgraded rating results in a material increase in the cost to the Borrower of
obtaining and maintaining Revolving Advances, then, so long as such conditions
continue, the Borrower may reduce or terminate the Revolving Facility Commitment
pursuant to Article VIII, Article X or Article XI without incurring a Revolving
Facility Termination Fee.
ARTICLE III
THE BASE FACILITY COMMITMENT
SECTION 3.1 Conversion of Revolving Facility Commitment to Base Facility
Commitment. The Borrower shall have the right, from time to time during the Base
Facility Availability Period, to convert all or a portion of the Revolving
Facility Commitment to the Base Facility Commitment, in which event the
Revolving Facility Commitment shall be reduced by, and the Base Facility
Commitment shall be increased by, the amount of the conversion.
(a) Request. In order to convert all or a portion of the Revolving
Facility Commitment to the Base Facility Commitment, the Borrower shall deliver
a written request for a conversion ("Conversion Request") to the Lender, in the
form attached as Exhibit M to this Agreement. Each Conversion Request shall be
accompanied by a designation of the amount of the conversion and a designation
of any Revolving Advances Outstanding which will be repaid on the Closing Date
for the conversion as required by Section 3.8(c).
(b) Closing. If none of the limitations contained in Section 3.8 is
violated, and all conditions contained in Section 3.9 are satisfied, the Lender
shall permit the requested
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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 (or on such other date to which
the Borrower and the Lender may agree), by executing and delivering, all at the
sole cost and expense of the Borrower, an amendment to this Agreement, in the
form attached as Exhibit N to this Agreement, together with an amendment to each
Security Document and other applicable Loan Documents, in form and substance
satisfactory to the Lender, reflecting the change in the Base Facility
Commitment and the Revolving Facility Commitment. The documents and instruments
referred to in the preceding sentence are referred to in this Article III as the
"Conversion Documents."
SECTION 3.2 Base Facility Commitment. Subject to the terms, conditions and
limitations set forth in this Article III, the Lender agrees to make Base
Facility Advances to the Borrower from time to time during the Base Facility
Availability Period. The aggregate original principal of the Base Facility
Advances shall not exceed the Base Facility Commitment. Except as permitted
pursuant to Section 3.10, the repayment of a Base Facility Advance shall
permanently reduce the Base Facility Commitment by the amount of such payment.
Except as permitted pursuant to Section 3.10, the Borrower may not re-borrow any
part of the Base Facility Advance which it has previously borrowed and repaid.
SECTION 3.3 Requests for Base Facility Advances. The Borrower shall request a
Base Facility Advance by giving the Lender an Initial Advance Request in
accordance with Section 5.1 or a Future Advance Request in accordance with
Section 5.2, as applicable.
SECTION 3.4 Maturity Date of Base Facility Advances; Amortization Period. The
maturity date of each Base Facility Advance shall be a date selected by the
Borrower and, if the maturity date of the Base Facility Advance will extend
beyond the Revolving Facility Termination Date, approved by the Lender in the
Lender's sole and absolute discretion, and shall be (i) no earlier than the
second anniversary of the date on which the Base Facility Advance is made and
(ii) no later than the 30th anniversary of the date on which the Base Facility
Advance is made. The principal of each Base Facility Advance shall be amortized
on a 30-year schedule or such lesser period of time as the Borrower shall
request ("Amortization Period"). If the maturity date of a Base Facility Advance
occurs during the first five Loan Years, or such Base Facility Advance is
accelerated after the occurrence of an Event of Default or is prepaid or repaid
at any time during the first five Loan Years, the Borrower shall pay to the
Lender at the time of such payment or prepayment, as applicable, the Base
Facility Fee Yield Maintenance Amount set forth in the Base Facility Note;
provided, however, that, in the case of a maturing Base Facility Advance, if all
or a portion of the maturing Base Facility Advance is rolled over by the
Borrower in accordance with Section 3.10, then such Base Facility Fee Yield
Maintenance Amount shall not be due and payable with respect to all or such
portion of such Base Facility Advance that is rolled over.
SECTION 3.5 Interest on Base Facility Advances. Each Base Facility Advance shall
bear interest at a rate, per annum, equal to the sum of (i) the MBS Pass-Through
Rate determined for such Base Facility Advance and (ii) the Base Facility Fee.
Notwithstanding anything to the contrary in this Section 3.5, if a Base Facility
Advance is
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the first day of the month following the month in which the Base Facility
Advance is made, the Borrower shall pay interest on the original stated
principal amount of the Base Facility Advance for the partial month period
commencing on the Closing Date for the Base Facility Advance and ending on the
last day of the calendar month in which the Closing Date occurs at a rate, per
annum, equal to the greater of (i) the interest rate for the Base Facility
Advance described in the first sentence of this Section 3.5 and (ii) a rate
determined by the Lender, based on the Lender's cost of funds, and approved in
advance, in writing, by the Borrower, pursuant to procedures mutually agreed
upon by the Borrower and the Lender.
SECTION 3.6 Coupon Rates for Base Facility Advances. The Coupon Rate for a Base
Facility Advance shall be the rate of interest applicable to such Base Facility
Advance pursuant to Section 3.5.
SECTION 3.7 Base Facility Notes. The obligation of the Borrower to repay a Base
Facility Advance will be evidenced by a Base Facility Note. The Base Facility
Note shall be payable to the order of the Lender and shall be made in the
original principal amount of the Base Facility Advance.
SECTION 3.8 Limitations on Right to Convert. The right of the Borrower to
convert all or a portion of the Revolving Facility Commitment to the Base
Facility Commitment is subject to the following limitations:
(a) Closing Date. The Closing Date shall occur during the Base
Facility Availability Period and, if in connection with such conversion, either:
(i) it will be necessary for the Borrower to repay a Revolving Advance
Outstanding pursuant to Section 3.8(c) or (ii) the Borrower is converting all or
any portion of a Revolving Advance Outstanding to a Base Facility Advance, such
Closing Date shall occur on the maturity date of such Revolving Advance.
(b) Minimum Request. Each Request for a conversion shall be in the
minimum amount of $3,000,000.
(c) Obligation to Repay Revolving Advances. If, after the conversion,
the aggregate unpaid principal balance of all Revolving Advances Outstanding
will exceed the Revolving Facility Commitment, the Borrower shall be obligated
to repay, as a condition precedent to the conversion, an amount of Revolving
Advances Outstanding which is at least equal to the amount of the excess. In
such instance, Borrower shall not be required to pay a Revolving Facility
Termination Fee.
SECTION 3.9 Conditions Precedent to Conversion/Rollover. The conversion of all
or a portion of the Revolving Facility Commitment to the Base Facility
Commitment is subject to the satisfaction of the following conditions precedent
on or before the Closing Date, and the rollover of a maturing Base Facility
Advance pursuant to Section 3.10 is subject to the satisfaction of the
conditions precedent set forth in Sections 3.9(c) and 3.9(e) on or before the
Closing Date:
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(a) If the conversion is evidenced by a Base Facility Advance that has
a maturity date which extends beyond the Revolving Facility Termination Date,
after giving effect to the requested conversion, the Coverage and LTV Tests will
be satisfied;
(b) Repayment by the Borrower in full of any Revolving Advances
Outstanding which the Borrower is required to pay pursuant to Section 3.8(c);
(c) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date and showing no additional exceptions to coverage other than
Permitted Liens;
(d) Receipt by the Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the parties
(other than the Lender) who is a party to such Conversion Document; and
(e) The satisfaction of all General Conditions set forth in Section
12.1; provided, however, that, (i) in the case of a conversion of a Revolving
Advance to a Base Facility Advance where the Base Facility Advance will have a
maturity date which does not extend beyond the Revolving Facility Termination
Date, only Sections 12.1(a) and 12.1(c) through 12.1(f), inclusive, shall be
applicable, and (ii) in the case of a rollover of a maturing Base Facility
Advance pursuant to Section 3.10, only Sections 12.1(a), 12.1(c), 12.1(e) and
12.1(f) shall be applicable.
SECTION 3.10 Rollover of Maturing Base Facility Advances. The Borrower shall
have the right to rollover all or a portion of a maturing Base Facility Advance
with another Base Facility Advance, but not with a Revolving Advance, provided
that:
(a) the maturity date of such rollover Base Facility Advance shall not
extend beyond the Revolving Facility Termination Date; and
(b) the requirements set forth in Sections 3.2 through 3.7, inclusive,
Section 3.8(b) and Section 3.9 shall have been satisfied.
All or such portion of a maturing Base Facility Advance that is repaid by a
rollover Base Facility Advance shall not result in a permanent reduction of the
Base Facility Commitment.
SECTION 3.11 Repayment of Base Facility Advances Upon Rating Downgrade. If the
credit rating of the long-term unsecured senior debt of ▇▇▇▇▇▇ ▇▇▇ assigned by
▇▇▇▇▇'▇ or S&P falls to or below "A3" or "A-", as applicable, for a period of 90
or more days (for all purposes hereof, only actual ratings of long-term
unsecured senior indebtedness of ▇▇▇▇▇▇ ▇▇▇ shall be taken into account, and not
any rating that assumes the absence of any then-existing implicit or explicit
government benefits giving rise to the implication of such guarantee), and such
downgraded rating results in a material increase in the cost to the Borrower of
obtaining and maintaining Base Facility Advances, then, so long as such
conditions continue, the Borrower may repay at maturity any or all Base Facility
Advances then Outstanding without incurring a Base Facility Termination Fee.
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ARTICLE IV
RATE SETTING FOR THE ADVANCES
SECTION 4.1 Rate Setting for an Advance. Rates for an Advance shall be set in
accordance with the following procedures:
(a) Preliminary, Nonbinding Quote. At the Borrower's request the
Lender shall quote to the Borrower an estimate of the MBS Pass-Through Rate (for
a proposed Base Facility Advance) or MBS Imputed Interest Rate (for a proposed
Revolving Advance) for a ▇▇▇▇▇▇ Mae MBS backed by a proposed Advance. The
Lender's quote shall be based on (i) a solicitation of bids from institutional
investors selected by the Lender and (ii) the proposed terms and amount of the
Advance selected by the Borrower. The quote shall not be binding upon the
Lender. Lender will consider soliciting bids from institutional investors
identified by the Borrower, but the Lender shall not have any obligation to do
so.
(b) Rate Setting. If the Borrower satisfies all of the conditions to
the Lender's obligation to make the Advance in accordance with Article V, then
the Borrower may propose a MBS Pass-Through Rate (for a proposed Base Facility
Advance) or MBS Imputed Interest Rate (for a proposed Revolving Advance) by
submitting to the Lender by facsimile transmission a completed and executed
document, in the form attached as Exhibit O to this Agreement ("Rate Setting
Form"), before 1:00 p.m. Washington, D.C. time on any Business Day ("Rate
Setting Date"). The Rate Setting Form contains various factual certifications
required by the Lender and specifies:
(i) for a Revolving Advance, the amount, term, MBS Issue Date,
MBS Delivery Date, Revolving Facility Fee, the proposed
maximum Coupon Rate ("Maximum Annual Coupon Rate"),
Discount, Price, and Closing Date for the Advance; and
(ii) for a Base Facility Advance, the amount, term, MBS Issue
Date, MBS Delivery Date, Base Facility Fee, Maximum Annual
Coupon Rate, Price (which will be in a range between 99-1/2
and 100-1/2), Yield Maintenance Period, Specified U.S.
Treasury Security, Amortization Period and Closing Date for
the Advance.
(c) Rate Confirmation. Within one Business Day after receipt of the
completed and executed Rate Setting Form, the Lender shall solicit bids from
institutional investors selected by the Lender based on the information in the
Rate Setting Form and, provided the actual Coupon Rate (if the low bid were
accepted) would be at or below the Maximum Annual Coupon Rate, shall obtain a
commitment ("MBS Commitment") for the purchase of a ▇▇▇▇▇▇ ▇▇▇ MBS having the
bid terms described in the related Rate Setting Form, and shall immediately
deliver to the Borrower by facsimile transmission a completed document, in the
form attached as Exhibit P to this Agreement ("Rate Confirmation Form"). The
Rate Confirmation Form will confirm:
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(i) for a Revolving Advance, the amount, term, MBS Issue Date,
MBS Delivery Date, MBS Imputed Interest Rate, Revolving
Facility Fee, Coupon Rate, Discount, Price, and Closing Date
for the Advance; and
(ii) for a Base Facility Advance, the amount, term, MBS Issue
Date, MBS Delivery Date, MBS Pass-Through Rate, Base
Facility Fee, Coupon Rate, Price, Yield Maintenance Period,
Specified U.S. Treasury Security, Amortization Period and
Closing Date for the Advance.
SECTION 4.2 Advance Confirmation Instrument for Revolving Advances. On or before
the Closing Date for a Revolving Advance, the Borrower shall execute and deliver
to the Lender an instrument ("Advance Confirmation Instrument"), in the form
attached as Exhibit Q to this Agreement, confirming the amount, term, MBS Issue
Date, MBS Delivery Date, MBS Imputed Interest Rate, Revolving Facility Fee,
Coupon Rate, Discount, Price and Closing Date for the Advance, and the
Borrower's obligation to repay the Revolving Advance in accordance with the
terms of the Revolving Facility Note and this Agreement. Upon the funding of the
Revolving Advance, the Lender shall note the date of funding in the appropriate
space at the foot of the Advance Confirmation Instrument and deliver a copy of
the completed Advance Confirmation Instrument to the Borrower. The Lender's
failure to do so shall not invalidate the Advance Confirmation Instrument or
otherwise affect in any way any obligation of the Borrower to repay Revolving
Advances in accordance with the Advance Confirmation Instrument, the Revolving
Facility Note or the other Loan Documents, but is merely meant to facilitate
evidencing the date of funding and to confirm that the Advance Confirmation
Instrument is not effective until the date of funding.
SECTION 4.3 Breakage and other Costs. In the event that the Lender obtains an
MBS Commitment and the Lender fails to fulfill the MBS Commitment because the
Advance is not made (for a reason other than the default of the Lender to make
the Advance), the Borrower shall pay all breakage and other costs, fees and
damages incurred by the Lender in connection with its failure to fulfill the MBS
Commitment.
ARTICLE V
MAKING THE ADVANCES
SECTION 5.1 Initial Advance. The Borrower may make a request ("Initial Advance
Request") for the Lender to make the Initial Advance. If all conditions
contained in this Section 5.1 are satisfied on or before the Closing Date for
the Initial Advance, the Lender shall make the Initial Advance on the Initial
Closing Date or on another date selected by the Borrower and approved by the
Lender. The obligation of the Lender to make the Initial Advance is subject to
the following conditions precedent:
(a) The receipt by the Lender of the Initial Advance Request;
(b) The receipt by the Lender of one or more counterparts of the Cash
Management Agreement, dated as of the Initial Closing Date, signed by the
Borrower;
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(c) The delivery to the Title Company, for filing and/or recording in
all applicable jurisdictions, of all applicable Loan Documents required by the
Lender, including duly executed and delivered original copies of the Revolving
Facility Note, the Initial Security Instruments covering the Initial Mortgaged
Properties and UCC-1 Financing Statements covering the portion of the Collateral
comprised of personal property, and other appropriate instruments, in form and
substance satisfactory to the Lender and in form proper for recordation, as may
be necessary in the opinion of the Lender to perfect the Liens created by the
applicable Security Instruments and any other Loan Documents creating a Lien in
favor of the Lender, and the payment of all taxes, fees and other charges
payable in connection with such execution, delivery, recording and filing;
(d) The receipt by the Lender, dated as of the Initial Closing Date,
in form and substance satisfactory to the Lender in all respects, of a favorable
opinion of the Borrower's counsel that, in the event of the bankruptcy of any
Person who is not the Borrower, there shall occur no substantive consolidation
of the assets of the Borrower with the assets of such Person;
(e) The receipt by the Lender of fully executed originals of the REIT
Guaranty, duly executed and delivered by the REIT;
(f) The receipt by the Lender of the Initial Origination Fee pursuant
to Section 18.2, the Initial Due Diligence Fee pursuant to Section 18.3(a), all
legal fees and expenses payable pursuant to Section 18.4(a) and all legal fees
and expenses payable in connection with the Initial Advance pursuant to Section
18.4(b);
(g) One or more ▇▇▇▇▇▇ shall be in effect in accordance with Article
XXIII in an aggregate notional principal amount at least equal to the aggregate
principal sum of the Initial Advance; and
(h) The satisfaction of all General Conditions set forth in Article
XII.
SECTION 5.2 Future Advances. In order to obtain a Future Advance, the Borrower
may from time to time deliver a written request for a Future Advance ("Future
Advance Request") to the Lender, in the form attached as Exhibit R to this
Agreement. Each Future Advance Request shall be accompanied by (a) a designation
of the amount of the Future Advance requested, and (b) a designation of the
maturity date of the Advance. Each Future Advance Request shall be in the
minimum amount of $3,000,000. If all conditions contained in Section 5.3 are
satisfied, the Lender shall make the requested Future Advance, at a closing to
be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring on a date selected by the Borrower, which date shall be
not less than 5 Business Days, and not more than 8 Business Days, after the
Lender's receipt of the Future Advance Request and the Borrower's receipt of the
Rate Confirmation Form (or on such other date to which the Borrower and the
Lender may agree).
SECTION 5.3 Conditions Precedent to Future Advances. The obligation of the
Lender to make a requested Future Advance is subject to the following conditions
precedent:
(a) The receipt by the Lender of a Future Advance Request;
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(b) The Lender has delivered the Rate Setting Form for the Future
Advance to the Borrower;
(c) (i) If the requested Future Advance is a new Advance, and not a
rollover of a maturing Advance or a conversion of a Revolving
Advance to a Base Facility Advance that has a maturity date
which does not extend beyond the Revolving Facility
Termination Date, after giving effect to the requested Future
Advance, the Coverage and LTV Tests will be satisfied;
(ii) If the requested Future Advance is a rollover of a maturing
Advance or a conversion of a Revolving Advance to a Base
Facility Advance that has a maturity date which does not
extend beyond the Revolving Facility Termination Date, the
Coverage and LTV Tests under this Section 5.3(c) will not be
applied; or
(iii) If the requested Future Advance is a conversion of a Revolving
Advance to a Base Facility Advance that has a maturity date
which does extend beyond the Revolving Facility Termination
Date, after giving effect to the requested Future Advance, the
Coverage and LTV Tests will be satisfied.
(d) If the Advance is a Base Facility Advance, delivery of a Base
Facility Note, duly executed by the Borrower, in the amount of the Advance,
reflecting all of the terms of the Base Facility Advance;
(e) If the Advance is a Revolving Advance, delivery of the Advance
Confirmation Instrument, duly executed by the Borrower;
(f) For any Title Insurance Policy not containing a Revolving Credit
Endorsement, the receipt by the Lender of an endorsement to the Title Insurance
Policy, amending the effective date of the Title Insurance Policy to the Closing
Date and showing no additional exceptions to coverage other than Permitted
Liens;
(g) The receipt by the Lender of all legal fees and expenses payable
by the Borrower in connection with the Future Advance pursuant to Section
18.4(b);
(h) The sum of the aggregate unpaid principal balance of Base Facility
Advances Outstanding and Revolving Advances Outstanding, at any time, shall not
exceed the Maximum Credit Facility Commitment;
(i) The making of the Advance shall not cause more than 10 separate
Advances to be Outstanding at any one time;
(j) One or more ▇▇▇▇▇▇ shall be in effect in accordance with Article
XXIII in an aggregate notional principal amount at least equal to the aggregate
principal sum of all Revolving Advances then Outstanding after giving effect to
such Future Advance; and
(k) The satisfaction of all General Conditions set forth in Section
12.1; provided, however, that (i) if the Advance is a conversion of a Revolving
Advance to a Base
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Facility Advance where the Base Facility Advance will have a maturity date which
does not extend beyond the Revolving Facility Termination Date, then only
Sections 12.1(a) and 12.1(c) through 12.1(f), inclusive, shall be applicable,
and (ii) if the Advance is a rollover of a maturing Advance, then only Sections
12.1(a), 12.1(c), 12.1(e) and 12.1(f) shall be applicable.
ARTICLE VI
ADDITIONS OF COLLATERAL
SECTION 6.1 Right to Add Collateral. Subject to the terms and conditions of this
Article VI, the Borrower shall have the right, from time to time during the Term
of this Agreement, but not more frequently than once each calendar month, to add
one or more Multifamily Residential Properties to the Collateral Pool in
accordance with the provisions of this Article VI. The addition of an Additional
Mortgaged Property to the Collateral Pool pursuant to this Article VI shall not
result in an increase to the Maximum Credit Facility Commitment, except in
accordance with an increase in the Revolving Facility Commitment pursuant to
Article IX.
SECTION 6.2 Procedure for Adding Collateral.
(a) Request. The Borrower may, not more frequently than once each
calendar month, deliver a written request ("Collateral Addition Request") to the
Lender, in the form attached as Exhibit S to this Agreement, to add one or more
Multifamily Residential Properties to the Collateral Pool. Each Collateral
Addition Request shall be accompanied by the following:
(i) The information relating to the proposed Additional Mortgaged
Property required by the form attached as Exhibit T to this
Agreement ("Collateral Addition Description Package"), as
amended from time to time to include information required
under the DUS Guide; and
(ii) The payment of all Additional Collateral Due Diligence Fees
pursuant to Section 18.3(b).
(b) Additional Information. The Borrower shall promptly deliver to the
Lender any additional information concerning the proposed Additional Mortgaged
Property that the Lender may from time to time reasonably request.
(c) Underwriting. The Lender shall evaluate the proposed Additional
Mortgaged Property, and shall make underwriting determinations as to the
Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio
applicable to the Collateral Pool, on the basis of a Valuation made with respect
to the proposed Additional Mortgaged Property, and otherwise in accordance with
▇▇▇▇▇▇ Mae's DUS Underwriting Requirements. Within 30 days after receipt of (i)
the Collateral Addition Request for the Additional Mortgaged Property and (ii)
all reports, certificates and documents set forth on Exhibit U to this
Agreement, including a zoning analysis undertaken in accordance with Section 206
of the DUS Guide, the Lender shall notify the Borrower whether or not it shall
consent to the addition of the proposed Additional Mortgaged Property to the
Collateral Pool and, if it shall so consent, shall set forth the Aggregate Debt
Service Coverage Ratios and the Aggregate Loan to Value Ratio which it estimates
shall result from the addition of the proposed
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Additional Mortgaged Property to the Collateral Pool. If the Lender declines to
consent to the addition of the proposed Additional Mortgaged Property to the
Collateral Pool, the Lender shall include, in its notice, a brief statement of
the reasons for doing so. Within five Business Days after receipt of the
Lender's notice that it shall consent to the addition of the proposed Additional
Mortgaged Property to the Collateral Pool, the Borrower shall notify the Lender
whether or not it elects to cause the proposed Additional Mortgaged Property to
be added to the Collateral Pool. If the Borrower fails to respond within the
period of five Business Days, it shall be conclusively deemed to have elected
not to cause the proposed Additional Mortgaged Property to be added to the
Collateral Pool.
(d) Closing. If, pursuant to Section 6.2(c), the Lender consents to
the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, the Borrower timely elects to cause the proposed Additional Mortgaged
Property to be added to the Collateral Pool and all conditions contained in
Section 6.3 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 10 Business Days after the Lender's receipt of the
Borrower's election (or on such other date to which the Borrower and the Lender
may agree).
SECTION 6.3 Conditions Precedent to Addition of an Additional Mortgaged Property
to the Collateral Pool. The addition of an Additional Mortgaged Property to the
Collateral Pool on the Closing Date applicable to the Additional Mortgaged
Property is subject to the satisfaction of the following conditions precedent:
(a) On the Closing Date the Coverage and LTV Tests are satisfied;
(b) The receipt by the Lender of the Collateral Addition Fee and all
legal fees and expenses payable by the Borrower in connection with the
Additional Mortgaged Property pursuant to Section 18.4(b);
(c) The delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Collateral Addition Loan Documents required by the
Lender, including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Lien created by the applicable additional Security Instrument, and
any other Collateral Addition Loan Document creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;
(d) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Additional Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so amended,
the receipt by the Lender of an endorsement to the Title Insurance Policy
insuring the Security Instrument, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional exceptions to
coverage other than Permitted Liens;
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(e) If the Title Insurance Policy for the Additional Mortgaged
Property contains a Tie-In Endorsement, an endorsement to each other Title
Insurance Policy containing a Tie-In Endorsement, adding a reference to the
Additional Mortgaged Property; and
(f) The satisfaction of all General Conditions set forth in Sections
12.1(a) and 12.1(c) through 12.1(f), inclusive, 12.2 and 12.3.
ARTICLE VII
SUBSTITUTION OF COLLATERAL
SECTION 7.1 Right to Substitute Collateral. Subject to the terms and conditions
of this Article VII, the Borrower shall have the right, from time to time during
the Term of this Agreement, but not more frequently than once each calendar
month, to add one or more Multifamily Residential Properties to the Collateral
Pool in substitution of one or more Mortgaged Properties then in the Collateral
Pool in accordance with the provisions of this Article VII.
SECTION 7.2 Procedure for Substituting Collateral.
(a) Request. The Borrower may, not more frequently than once each
calendar month, deliver a written request ("Collateral Substitution Request") to
the Lender, in the form attached as Exhibit V to this Agreement, to add one or
more Multifamily Residential Properties to the Collateral Pool in substitution
of one or more Mortgaged Properties then in the Collateral Pool. Each Collateral
Substitution Request shall be accompanied by the following:
(i) The information relating to the proposed Substituted Mortgaged
Property required by the form attached as Exhibit W to this
Agreement ("Collateral Substitution Description Package"), as
amended from time to time to include information required
under the DUS Guide;
(ii) A statement whether the addition of the proposed Substituted
Mortgaged Property will occur simultaneously with the release
of the proposed Collateral Release Property and, if not, the
Borrower shall provide the Lender with a certification that
the Collateral Release Property will be Sold, and the Borrower
shall specify the proposed date on which the proposed
Substituted Mortgaged Property will be added to the Collateral
Pool which, in no event, shall be a date which is more than 90
days after the proposed date of the release of the proposed
Collateral Release Property; and
(iii) The payment of all Substituted Collateral Due Diligence Fees
pursuant to Section 18.3(b).
(b) Additional Information. The Borrower shall promptly deliver to the
Lender any additional information concerning the proposed Substituted Mortgaged
Property
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and the proposed Collateral Release Property that the Lender may from time to
time reasonably request.
(c) Underwriting. The Lender shall evaluate the proposed Substituted
Mortgaged Property, and shall make underwriting determinations as to (i) the
Aggregate Debt Service Coverage Ratios and the Loan to Value Ratio applicable to
the Collateral Pool immediately prior to and immediately after giving effect to
the proposed substitution, and (ii) the Valuation and the Net Operating Income
for the Trailing 12 Month Period for both the proposed Substituted Mortgaged
Property and the proposed Collateral Release Property. Notwithstanding anything
to the contrary contained herein, for purposes of making such underwriting
determinations with respect to the proposed Substituted Mortgaged Property, such
determinations shall be made on the basis of a Valuation made with respect to
the proposed Substituted Mortgaged Property, and otherwise in accordance with
▇▇▇▇▇▇ Mae's DUS Underwriting Requirements. Within 30 days after receipt of (i)
the Collateral Substitution Request for the proposed Substituted Mortgaged
Property and the proposed Collateral Release Property and (ii) all reports,
certificates and documents set forth on Exhibit X to this Agreement, including a
zoning analysis undertaken in accordance with Section 206 of the DUS Guide, the
Lender shall notify the Borrower whether or not the proposed Substituted
Mortgaged Property meets the Coverage and LTV Tests and DUS Underwriting
Requirements required by this Section 7.2(c) and Section 7.3(b), and therefore
whether or not it shall consent to the addition of the proposed Substituted
Mortgaged Property to the Collateral Pool in substitution of the proposed
Collateral Release Property and, if it shall so consent, shall set forth the
Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value Ratio
which it estimates shall result from the substitution of the proposed
Substituted Mortgaged Property into the Collateral Pool in replacement of the
proposed Collateral Release Property. If the proposed Substituted Mortgaged
Property does not meet the Coverage and LTV Tests and DUS Underwriting
Requirements required by this Section 7.2(c) and Section 7.3(b), and therefore
the Lender does not consent to the substitution of the proposed Additional
Mortgaged Property into the Collateral Pool in replacement of the proposed
Collateral Release Property, 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 substitution of the proposed
Additional Mortgaged Property into the Collateral Pool in replacement of the
proposed Collateral Release Property, the Borrower shall notify the Lender
whether or not it elects to cause such substitution to occur. If the Borrower
fails to respond within the period of five Business Days, it shall be
conclusively deemed to have elected not to cause the proposed substitution to
occur.
(d) Closing. If, pursuant to Section 7.2(c), the Lender consents to
the substitution of the proposed Additional Mortgaged Property into the
Collateral Pool in replacement of the proposed Collateral Release Property, the
Borrower timely elects to cause such substitution to occur and all conditions
contained in Section 7.3 are satisfied, the Lender shall permit the proposed
Additional Mortgaged Property to be substituted into the Collateral Pool in
replacement of the proposed Collateral Release Property, at a closing to be held
at offices designated by the Lender on a Closing Date selected by the Lender,
and occurring --
(i) if the substitution of the proposed Substituted Collateral
Property is to occur simultaneously with the release of the
proposed Collateral Released
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Property, within 30 days after the Lender's receipt of the
Borrower's election (or on such other date to which the
Borrower and the Lender may agree); or
(ii) if the substitution of the proposed Substituted Collateral
Property is to occur subsequent to the release of the
Collateral Release Property, within 90 days after the release
of the Collateral Release Property in accordance with Section
8.3 (other than clause (b) with respect to the requirement
pertaining to a Release Price and clauses (h) and (i)).
If, in the case of clause (ii), the addition of the proposed Substituted
Collateral Property to the Collateral Pool does not occur within 90 days after
the release of the Collateral Release Property in accordance with such clause
(ii), then the Borrower shall have waived its right to substitute such
Collateral Release Property with the proposed Substituted Mortgaged Property,
the Release Price shall be determined pursuant to Section 8.2(c) and the
Borrower shall comply with the requirement set forth in Section 8.3(i). Such
Release Price, or the applicable portion thereof, shall be credited against the
undrawn amount of the Maximum Credit Facility Commitment available under this
Agreement and/or be immediately due and payable by the Borrower to the Lender to
reduce the Advances Outstanding as required by, and the manner set forth in,
Section 8.2(d), the Maximum Credit Facility Commitment shall be permanently
reduced by the amount of the Release Price in accordance with Section 8.2(e) and
the Borrower shall immediately pay to the Lender the Credit Facility Termination
Fee, if any, required by Section 8.2(e).
SECTION 7.3 Conditions Precedent to Substitution of a Substituted Mortgaged
Property into the Collateral Pool. The substitution of a Substituted Mortgaged
Property into the Collateral Pool in replacement of a Collateral Release
Property on the Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) On the Closing Date the Coverage and LTV Tests are satisfied both
immediately prior to and immediately after giving effect to such substitution;
(b) The Lender shall have made the determination, as a part of the
underwriting evaluations made in accordance with Section 7.2(c), that (i) the
Aggregate Debt Service Coverage Ratios immediately after giving effect to the
proposed substitution will be equal to or higher than the Debt Service Coverage
Ratios immediately prior to the proposed substitution, and (ii) the Aggregate
Loan to Value Ratio immediately after giving effect to the proposed substitution
will be equal to or less than the Aggregate Loan to Value Ratio immediately
prior to giving effect to the proposed substitution;
(c) With respect to the release of the proposed Collateral Release
Property, the Borrower shall have complied with Sections 8.3 (other than clause
(b) with respect to the requirement pertaining to the Release Price and clauses
(h) and (i)) within the applicable time period set forth therein;
(d) If the substitution of the proposed Substituted Mortgaged Property
is not to occur simultaneously with the release of the Collateral Release
Property, the Borrower shall deliver to the Lender a certification, certified by
the general partner of the Borrower, that
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the Collateral Release Property is to be Sold concurrently or substantially
concurrently with the release of such Collateral Release Property;
(e) The receipt by the Lender of the Collateral Substitution Fee and
all legal fees and expenses payable by the Borrower in connection with the
substitution pursuant to Section 18.4(b);
(f) The delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Collateral Substitution 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
Substituted Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Lien created by the applicable additional Security Instrument, and
any other Collateral Substitution 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;
(g) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Substituted Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so amended,
the receipt by the Lender of an endorsement to the Title Insurance Policy
insuring the Security Instrument, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional exceptions to
coverage other than Permitted Liens;
(h) If the Title Insurance Policy for the Substituted 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
Substituted Mortgaged Property;
(i) The delivery to the Lender of Additional Collateral or the
repayment of Advances Outstanding to the extent required pursuant to Section
7.4; and
(j) The satisfaction of all General Conditions set forth in Sections
12.1(a) and 12.1(c) through 12.1(f), inclusive, 12.2 and 12.3.
SECTION 7.4 Restriction on Borrowings. In the case that the substitution of the
proposed Substituted Mortgaged Property is not to occur simultaneously with the
release of the proposed Collateral Release Property, from and after the release
of the proposed Collateral Release Property until the addition of the proposed
Substituted Mortgaged Property into the Collateral Pool in accordance with this
Article VII, the Borrower shall not be permitted to have the aggregate unpaid
principal balance of Advances Outstanding to be in excess of an amount equal to
the then-existing Maximum Credit Facility Commitment minus the Allocable Credit
Facility Amount attributable to the Collateral Release Property that was
released, unless the Borrower shall have delivered to the Lender Additional
Collateral in an amount at least equal to such Allocable Credit Facility Amount.
In the event that the aggregate unpaid principal balance of Advances Outstanding
exceeds such amount (and Additional Collateral in an amount at least equal to
the applicable Allocable Credit Facility Amount has not been
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delivered by the Borrower to the Lender), as a condition precedent to the
substitution of a Substituted Mortgaged Property into the Collateral Pool, the
Borrower shall pay such excess. Any payment received by the Lender under this
Section 7.4 shall be applied against Advances Outstanding in the manner
prescribed for Release Prices pursuant to clauses (ii) and (iii) of Section
8.2(d). Subject to the provisions of Section 18.5, the Additional Collateral
shall be released to the Borrower upon the addition of the applicable
Substituted Mortgaged Property to the Collateral Pool in accordance with this
Article VII.
ARTICLE VIII
RELEASES OF COLLATERAL
SECTION 8.1 Right to Obtain Releases of Collateral. Subject to the terms and
conditions of this Article VIII, the Borrower shall have the right, from time to
time during the Term of this Agreement, but not more frequently than once each
calendar month, to obtain a release of one or more Mortgaged Properties and
other Collateral solely related to such Mortgaged Properties from the Collateral
Pool (other than in connection with a substitution of Collateral permitted in
accordance with Article VII) in accordance with the provisions of this Article
VIII.
SECTION 8.2 Procedure for Obtaining Releases of Collateral.
(a) Request. In order to obtain a release of Collateral from the
Collateral Pool, the Borrower may, not more frequently than once each calendar
month, deliver a written request for the release of one or more Mortgaged
Properties (and the related Collateral covered by the UCC-1 Financing Statements
filed with respect to such Mortgaged Properties) from the Collateral Pool
("Collateral Release Request") to the Lender, in the form attached as Exhibit Y
to this Agreement. The Collateral Release Request shall be accompanied by the
name, address and location of the Mortgaged Properties to be released from the
Collateral Pool ("Collateral Release Property").
(b) Closing. If all conditions contained in Section 8.3 are satisfied,
the Lender shall cause the Collateral Release Property to be released from the
Collateral Pool, at a closing to be held at offices designated by the Lender on
a Closing Date selected by the Lender, and occurring within 30 days after the
Lender's receipt of the Collateral Release Request (or on such other date to
which the Borrower and the Lender may agree), by executing and delivering, and
causing all applicable parties to execute and deliver, all at the sole cost and
expense of the Borrower, instruments, in the form customarily used by the Lender
for releases in the jurisdiction governing the perfection of the security
interest being released, releasing the applicable Security Instrument as a Lien
on the Collateral Release Property, and UCC-3 Termination Statements terminating
the UCC-1 Financing Statements perfecting a Lien on the portion of the
Collateral Release Property comprised of personal property and such other
documents and instruments as the Borrower may reasonably request evidencing the
release of the applicable Collateral from any lien securing the Obligations
(including a termination of any restriction on the use of any accounts relating
to the Collateral Release Property) and the release and return to the Borrower
of any and all escrowed amounts relating thereto. The instruments referred to in
the preceding sentence are referred to in this Article VIII as the "Collateral
Release Documents."
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(c) Release Price.
(i) With respect to the release of up to two Mortgaged Properties
up to the aggregate Allocable Credit Facility Amounts
attributable to such Mortgaged Properties of 10% of the
initial Revolving Facility Commitment, the "Release Price"
means 110% of the Allocable Credit Facility Amount for such
Mortgaged Property; or
(ii) With respect to any release of a Mortgaged Property for which
clause (i) does not apply, the "Release Price" means 125% of
the Allocable Credit Facility Amount attributable to such
Mortgaged Property;
provided, however, that with respect to clauses (i) or (ii) above, if,
immediately after giving effect to the release of a Mortgaged Property, the
Aggregate Debt Service Coverage Ratios are equal to or higher than 160% and the
Aggregate Loan to Value Ratio is equal to or less than 55%, all as determined by
the Lender, then the "Release Price" means 100% of the Allocable Credit Facility
Amount attributable to such Mortgaged Property.
(d) Application of Release Price. The Release Price shall be applied
as follows: (i) first, the Release Price, or the applicable portion thereof,
shall be credited against the undrawn amount of the Maximum Credit Facility
Commitment available under this Agreement; (ii) second, the Release Price, or
the applicable portion thereof, shall be paid by the Borrower to the Lender to
reduce the Revolving Advances Outstanding until there are no further Revolving
Advances Outstanding; and (iii) third, the Release Price, or the applicable
portion thereof, shall be paid by the Borrower to the Lender in an amount equal
to the aggregate unpaid principal balance of Base Facility Advances Outstanding
which amount shall be held by the Lender (or its appointed collateral agent) as
substituted Collateral ("Cash Collateral"), in accordance with a security
agreement and other documents in form and substance acceptable to the Lender.
Any portion of the Release Price held as Cash Collateral will, at the Borrower's
option, either be used by the Borrower to repay Base Facility Advances on the
applicable maturity dates of such Advances or be released by the Lender to the
Borrower, in whole or in part, as Base Facility Advances are repaid by the
Borrower on the applicable maturity dates of such Base Facility Advances (other
than as a result of a rollover of a Base Facility Advance pursuant to Section
3.10), provided that, in either case, no Event of Default or Potential Event of
Default then exists hereunder. If, on the date on which a release occurs all or
a portion of the Release Price is to be paid to reduce Revolving Advances
Outstanding, but all or a portion of such Revolving Advances Outstanding are not
then due and payable, the Lender shall hold the applicable payments as
additional Collateral for the Credit Facility until the next date on which such
Revolving Advances are due and payable, at which time the Lender shall apply the
amounts held by it to the amounts of the Revolving Advances then due and
payable.
(e) Permanent Reduction of Maximum Credit Facility Commitment/Payment
of Credit Facility Termination Fee. Immediately after giving effect to a release
of a Mortgaged Property pursuant to this Article VIII, the Maximum Credit
Facility Commitment shall be permanently reduced by the amount of the Release
Price paid in connection with such release. Subject to Sections 2.9 and 3.11,
with respect to any release of
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a Mortgaged Property (other than a release for which the Release Price set forth
in Section 8.2(c)(i) applies), the Borrower shall, concurrently with the
release, pay to the Lender the Credit Facility Termination Fee, if any,
calculated based on the entire amount of such Release Price.
(f) Release of Unimproved Parcel at "Oaks in Fairlakes". If the
Borrower decides not to construct the Additional Phase (as defined in Section
14.2(s)) at the Mortgaged Property known as "Oaks in Fairlakes" as contemplated
by Sections 9.2 and 14.2(s), then the Lender agrees to release the "Additional
Phase Land" (as hereinafter defined), provided that (i) the release of the
Additional Phase Land shall not cause any MBS backing an Advance to be deemed to
have been sold or exchanged under the Internal Revenue Code; (ii) the Lender
shall have approved in its sole discretion the intended use of the Additional
Phase Land and, if desired by the Lender, such release shall be expressly
conditioned upon an agreement in writing by the Borrower, and binding upon any
successor owners, that such Additional Phase Land shall be used solely for such
use; (iii) the Borrower shall have demonstrated to the Lender's satisfaction
that the Additional Phase Land has been properly subdivided in accordance with
Applicable Law; and (iv) the conditions set forth in Section 8.3 (other than
Sections 8.3(a), 8.3(b), 8.3(h) and 8.3(i)) shall have been satisfied by the
Borrower. For purposes hereof, the term "Additional Phase Land" shall mean that
undeveloped portion of the Mortgaged Property known as "Oaks in Fairlakes",
consisting of approximately 1.51 acres and located on Fair Lakes Parkway
directly west of Oak Creek Lane, upon which the contemplated Additional Phase is
to be constructed, and which is, as of the date hereof, subject to deed
restrictions regarding the future development of such land.
SECTION 8.3 Conditions Precedent to Release of Collateral Release Property from
the Collateral. The obligation of the Lender to release a Collateral Release
Property from the Collateral Pool, by executing and delivering the Collateral
Release Documents on the Closing Date, is subject to the satisfaction of the
following conditions precedent on or before the Closing Date:
(a) Immediately prior to and immediately after giving effect to the
requested release the Coverage and LTV Tests will be satisfied;
(b) Receipt by the Lender of the Release Price which is required to be
paid by the Borrower to the Lender to reduce Advances Outstanding pursuant to
Sections 8.2(c) and 8.2(d), the Credit Facility Termination Fee, if any, which
is required pursuant to Section 8.2(e) and all legal fees and expenses payable
by the Borrower in connection with the release pursuant to Section 18.4(b);
(c) 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;
(d) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the release of the Collateral Release Property
from the Collateral Pool and, as to any Security Instrument so amended, the
receipt by the Lender of an endorsement to the Title Insurance Policy insuring
the Security Instrument, amending the effective date of the
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Title Insurance Policy to the Closing Date and showing no additional exceptions
to coverage other than Permitted Liens;
(e) If the Lender determines the Collateral Release Property to be one
phase of a project, and one or more other phases of the project are Mortgaged
Properties which will remain in the Collateral Pool ("Remaining Mortgaged
Properties"), the Lender's determination that the Remaining Mortgaged Properties
can be operated separately from the Collateral Release Property and any other
phases of the project which are not Mortgaged Properties. In making this
determination, the Lender shall evaluate whether the Remaining Mortgaged
Properties comply with the terms of Sections 203 and 208 of the DUS Guide,
which, as of the date of this Agreement, require, among other things, that a
phase which constitutes collateral for a loan made in accordance with the terms
of the DUS Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather road or by
access to such a road by means of a satisfactory easement, (ii) have access
which is sufficiently attractive and direct from major thoroughfares to be
conducive to continued good marketing, (iii) have a location which is not (A)
inferior to other phases, (B) such that inadequate maintenance of other phases
would have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project and
(iv) comply with such other issues as are dictated by prudent practice;
(f) Receipt by the Lender of endorsements to the Tie-In Endorsements
of the Title Insurance Policies, if deemed necessary by the Lender, to reflect
the release;
(g) Receipt by the Lender on the Closing Date of a writing, dated as
of the Closing Date, signed by the Borrower Parties, in the form attached as
Exhibit Z to this Agreement, pursuant to which the Borrower Parties confirm that
their obligations under the Loan Documents are not adversely affected by the
release of the Collateral Release Property from the Collateral;
(h) The remaining Mortgaged Properties in the Collateral Pool shall
satisfy the Geographical Diversification Requirements;
(i) Receipt by the Lender of a Revolving Facility Termination Request
in the amount of the applicable Release Price; and
(j) The satisfaction of all General Conditions set forth in Sections
12.1(a) and 12.1(c) through 12.1(f), inclusive.
ARTICLE IX
INCREASE OF REVOLVING FACILITY COMMITMENT
SECTION 9.1 Request to Increase Revolving Facility Commitment. Subject to the
terms, conditions and limitations of this Section 9.1, the Borrower may, at any
time or from time to time during the first four Loan Years, request an increase
in the Revolving Facility Commitment. Any request to increase the Revolving
Facility Commitment is subject to the approval of the Lender, which approval may
be granted or withheld in Lender's sole discretion.
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SECTION 9.2 Right to Increase Revolving Facility Commitment Based on "Oaks in
Fairlakes". Subject to the terms, conditions and limitations of this Section
9.2, the Borrower shall have a one-time right, at any time during the first
three Loan Years, to increase the Revolving Facility Commitment by an amount not
to exceed $3,000,000 ("an "Oaks in Fairlakes Commitment Increase"). The
Borrower's right to increase the Revolving Facility Commitment pursuant to this
Section 9.2 is subject to the satisfaction of the following conditions precedent
on or before the Closing Date:
(a) The construction of the Additional Phase (as defined in Section
14.2(s)) of the Mortgaged Property known as "Oaks in Fairlakes" is fully
Completed (as defined in Section 14.2(s)) in accordance with Section 14.2(s),
and such Additional Phase has achieved stabilization, as determined by the
Lender;
(b) After giving effect to the requested increase the Coverage and LTV
Tests will be satisfied;
(c) Payment by the Borrower of the Expansion Origination Fee in
accordance with Section 18.2(b) and all legal fees and expenses payable by the
Borrower in connection with the increase of the Revolving Facility Commitment
pursuant to Section 18.4(b);
(d) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date, increasing the limits of liability to the increased Maximum
Credit Facility Commitment, as increased pursuant to this Section 9.2, showing
no additional exceptions to coverage other than the exceptions shown on the
Initial Closing Date (or, if applicable, the last Closing Date with respect to
which the Title Insurance Policy was endorsed) and other exceptions approved by
the Lender, together with any reinsurance agreements required by the Lender;
(e) The receipt by the Lender of fully executed original copies of the
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; and
(f) The satisfaction of all applicable General Conditions set forth in
Sections 12.1(a) and 12.1(c) through 12.1(f), inclusive, 12.2 and 12.3.
If all conditions contained in this Section 9.2 are satisfied, the Lender shall
permit the increase in the then-existing Maximum Credit Facility Commitment as a
result of the Oaks in Fairlakes Commitment Increase, 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.
SECTION 9.3 Additional Limited Right to Increase Revolving Facility Commitment.
Subject to the terms, conditions and limitations of this Section 9.3, the
Borrower shall have a right, at any time during the first six months after the
Initial Closing Date, to increase the Revolving Facility Commitment by an amount
not to exceed the lesser of: (i) $7,000,000 in the aggregate or (ii) an amount
which would not cause the ratio of (A) the Maximum Credit Facility Commitment,
after giving effect to such increase under this Section 9.3, to (B) the
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most recent Valuations of all of the Mortgaged Properties to exceed 65% ("an
"Additional Commitment Increase"). The Borrower's right to increase the
Revolving Facility Commitment pursuant to this Section 9.3 is subject to the
satisfaction of the following conditions precedent on or before the Closing
Date:
(a) After giving effect to the requested increase the Coverage and LTV
Tests will be satisfied;
(b) Payment by the Borrower of the Expansion Origination Fee in
accordance with Section 18.2(b) and all legal fees and expenses payable by the
Borrower in connection with the increase of the Revolving Facility Commitment
pursuant to Section 18.4(b);
(c) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date, increasing the limits of liability to the increased Maximum
Credit Facility Commitment, as increased pursuant to this Section 9.3, showing
no additional exceptions to coverage other than the exceptions shown on the
Initial Closing Date (or, if applicable, the last Closing Date with respect to
which the Title Insurance Policy was endorsed) and other exceptions approved by
the Lender, together with any reinsurance agreements required by the Lender;
(d) The receipt by the Lender of fully executed original copies of the
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; and
(e) The satisfaction of all applicable General Conditions set forth in
Sections 12.1(a) and 12.1(c) through 12.1(f), inclusive, 12.2 and 12.3.
If all conditions contained in this Section 9.3 are satisfied, the Lender shall
permit the increase in the then-existing Maximum Credit Facility Commitment as a
result of the Additional Commitment Increase, 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.
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ARTICLE X
COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY
SECTION 10.1 Right to Complete or Partial Termination of Revolving Facility.
Subject to the terms and conditions of this Article X, the Borrower shall have
the right to permanently reduce the Revolving Facility Commitment in accordance
with the provisions of this Article X.
SECTION 10.2 Procedure for Complete or Partial Termination of Revolving
Facility.
(a) Request. In order to permanently reduce the Revolving Facility
Commitment, the Borrower may deliver a written request for the reduction
("Revolving Facility Termination Request") to the Lender, in the form attached
as Exhibit AA to this Agreement. A permanent reduction of the Revolving Facility
Commitment to $0 shall be referred to as a "Complete Revolving Facility
Termination." The Revolving Facility Termination Request shall be accompanied by
the following:
(i) A designation of the proposed amount of the reduction in the
Revolving Facility Commitment; and
(ii) Unless there is a Complete Revolving Facility Termination, a
designation by the Borrower of any Advances which will be
prepaid.
Any release of Collateral, whether or not made in connection with a Revolving
Facility Termination Request, must comply with all conditions to a release which
are set forth in Article VIII.
(b) Closing. If all conditions contained in Section 10.3 are
satisfied, the Lender shall permit the Revolving Facility Commitment to be
reduced to the amount designated by the Borrower, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the Lender,
within 15 Business Days after the Lender's receipt of the Revolving Facility
Termination Request (or on such other date to which the Borrower and the Lender
may agree), by executing and delivering a counterpart of an amendment to this
Agreement, in the form attached as Exhibit BB to this Agreement, evidencing the
reduction in the Revolving Facility Commitment. The document referred to in the
preceding sentence is referred to in this Article X as the "Revolving Facility
Termination Document."
SECTION 10.3 Conditions Precedent to Partial Termination of Revolving Facility.
The right of the Borrower to reduce the Revolving Facility Commitment and the
obligation of the Lender to execute the Revolving Facility Termination Document,
are subject to the satisfaction of the following conditions precedent on or
before the Closing Date:
(a) Payment by the Borrower in full of all of the Revolving Advances
Outstanding required to be paid in order that the aggregate unpaid principal
balance of all Revolving Advances Outstanding is not greater than the Revolving
Facility Commitment (but if the Borrower is not required to prepay all of the
Revolving Advances, the Borrower shall have the right to select which of the
Revolving Advances shall be repaid). If, on the date on which the Borrower is
required to make such payment, the Revolving Advances to be paid are
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Outstanding but are not then due and payable, the Lender shall hold such payment
as additional Collateral for the Credit Facility until the next day on which
Revolving Advances are due and payable, at which time the Lender shall apply the
amounts held by it to the amounts of the Revolving Advances then due and
payable;
(b) Subject to Section 2.9, payment by the Borrower of the Revolving
Facility Termination Fee, if any;
(c) Receipt by the Lender on the Closing Date of one or more
counterparts of the Credit Facility Partial Termination Document, dated as of
the Closing Date, signed by each of the parties (other than the Lender) who is a
party to such Credit Facility Partial Termination Document; and
(d) Each Revolving Facility Termination request shall be in the
minimum amount of $3,000,000.
After giving effect to a Revolving Facility Termination Request in accordance
with this Article X, the Revolving Facility Commitment shall be permanently
reduced by the amount of the reduction.
ARTICLE XI
TERMINATION OF CREDIT FACILITY
SECTION 11.1 Right to Terminate Credit Facility. Subject to the terms and
conditions of this Article XI, the Borrower shall have the right to terminate
this Agreement and the Credit Facility and receive a release of all of the
Collateral from the Collateral Pool in accordance with the provisions of this
Article XI.
SECTION 11.2 Procedure for Terminating Credit Facility.
(a) Request. In order to terminate this Agreement and the Credit
Facility, the Borrower shall deliver a written request for the termination
("Credit Facility Termination Request") to the Lender, in the form attached as
Exhibit CC to this Agreement.
(b) Closing. If all conditions contained in Section 11.3 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 (or on such other date to which the Borrower and the Lender
may agree), by executing and delivering, and causing all applicable parties to
execute and deliver, all at the sole cost and expense of the Borrower, (i)
instruments, in the form customarily used by the Lender for releases in the
jurisdictions in which the Mortgaged Properties are located, releasing all of
the Security Instruments as a Lien on the Mortgaged Properties, (ii) UCC-3
Termination Statements terminating all of the UCC-1 Financing Statements
perfecting a Lien on the personal property located on the Mortgaged Properties,
in form customarily used in the jurisdiction governing the perfection of the
security interest being released, (iii) such other documents and instruments as
the Borrower may reasonably request evidencing the release of the Collateral
from any lien securing the Obligations (including a termination of any
restriction on the use of any accounts relating to the Collateral)
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and the release and return to the Borrower of any and all escrowed amounts
relating thereto, (iv) instruments releasing the REIT from its obligations under
the REIT's Guaranty and this Agreement and any and all other Loan Documents, and
(v) the Note, marked paid and cancelled. The instruments referred to in the
preceding sentence are referred to in this Article XX as the "Facility
Termination Documents."
SECTION 11.3 Conditions Precedent to Termination of Credit Facility. The right
of the Borrower to terminate this Agreement and the Credit Facility and to
receive a release of all of the Collateral from the Collateral Pool and the
Lender's obligation to execute and deliver the Facility Termination Documents on
the Closing Date are subject to the following conditions precedent:
(a) Payment by the Borrower in full of the Notes Outstanding on the
Closing Date and all other amounts owing by the Borrower to the Lender under
this Agreement; and
(b) Payment of the Credit Facility Termination Fee, if any.
ARTICLE XII
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS
Except as otherwise expressly provided in this Agreement, the
obligation of the Lender to close the transaction requested in a Request shall
be subject to the following conditions precedent ("General Conditions") in
addition to any other conditions precedent set forth in this Agreement:
SECTION 12.1 Conditions Applicable to All Requests. Except as otherwise
expressly provided in this Agreement, each of the following conditions precedent
shall apply to all Requests:
(a) Payment of Expenses. The payment by the Borrower on the Closing
Date for the Request of the Lender's fees and expenses payable in accordance
with this Agreement for which the Lender has presented an invoice (which invoice
shall include reasonable estimates by the Lender of additional fees and expenses
payable in accordance with this Agreement to and including the Closing Date) not
less than two Business Days before the Closing Date for such Request.
(b) No Material Adverse Change. There has been no material adverse
change in the financial condition or results of operation of the Borrower
Parties or in the operating performance of any of the Mortgaged Properties since
the Initial Closing Date (or, with respect to the conditions precedent to the
Initial Advance, from the condition or results of operation reflected in the
financial statements, reports and other information obtained by the Lender
during its review of the Borrower Parties and the Initial Mortgaged Properties).
(c) No Default. There shall exist no Event of Default or Potential
Event of Default on the Closing Date for the Request and, after giving effect to
the transaction requested in the Request, no Event of Default or Potential Event
of Default shall occur.
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(d) Representations and Warranties. All representations and warranties
made by any Borrower Party in the Loan Documents shall be true and correct in
all material respects on the Closing Date for the Request with the same force
and effect as if such representations and warranties had been made on and as of
the Closing Date for the Request; provided, however, that (i) in the case of a
Request for a rollover of a maturing Advance, the date-down of such
representations and warranties pursuant to this Section 12.1(d) shall not apply,
(ii) in the case of any Request occurring after the Initial Closing Date (other
than a Request for a rollover of a maturing Advance), the date-down of such
representations and warranties shall exclude Sections 13.1(g)(i) and 13.2(q) set
forth herein and any representation or warranty contained in any of the other
Loan Documents that is solely related to an earlier date; and (iii) in the case
of a Request for a conversion of a Revolving Advance to a Base Facility Advance
where the maturity date of such Base Facility Advance does not extend beyond the
Revolving Facility Termination Date, the date-down of such representations and
warranties shall also exclude Sections 13.1(g)(iii) and 13.2(y). On the Closing
Date of any Request (other than a Request for a rollover of a maturing Advance),
the applicable representations and warranties as referred to in this Section
12.1(d) shall be deemed remade by such Borrower Party.
(e) No Condemnation or Casualty. There shall not be pending or
threatened any condemnation or other taking, whether direct or indirect, against
any Mortgaged Property, and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property, which, in the case of any such
condemnation or taking or casualty, would have, or may reasonably be expected to
have, a Material Adverse Effect on the Mortgaged Properties then in the
Collateral Pool, taken as a whole.
(f) Delivery of Closing Documents. The receipt by the Lender of the
following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:
(i) A Compliance Certificate;
(ii) An Organizational Certificate (only if there is a change from
the Organizational Certificate previously submitted by the
Borrower); and
(iii) Such other documents, instruments, approvals (and, if
requested by the Lender, certified duplicates of executed
copies thereof) and opinions as the Lender may reasonably
request.
SECTION 12.2 Delivery of Closing Documents Relating to Initial Advance Request,
Collateral Addition Request, Collateral Substitution Request, Oaks in Fairlakes
Commitment Increase or Additional Commitment Increase. With respect to the
closing of the Initial Advance Request, a Collateral Addition Request, a
Collateral Substitution Request, an Oaks in Fairlakes Commitment Increase or an
Additional Commitment Increase, it shall be a condition precedent that the
Lender receives each of the following, each dated as of the Closing Date for the
Request, in form and substance satisfactory to the Lender in all respects:
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(a) Loan Documents. Fully executed original copies of each Loan
Document required to be executed in connection with the Request, duly executed
and delivered by the parties thereto (other than the Lender), each of which
shall be in full force and effect.
(b) Opinion. Favorable opinions of counsel to the Borrower Parties, as
to the due organization and qualification of the Borrower Parties, the due
authorization, execution, delivery and enforceability of each Loan Document
executed in connection with the Request and such other matters as the Lender may
reasonably require.
SECTION 12.3 Delivery of Property-Related Documents. With respect to each of the
Mortgaged Properties to be made part of the Collateral Pool on the Closing Date
for the Initial Advance Request, a Collateral Addition Request, a Collateral
Substitution Request, an Oaks in Fairlakes Commitment Increase or an Additional
Commitment Increase, it shall be a condition precedent that the Lender receive
the following, each dated as of the Closing Date for the Initial Advance
Request, a Collateral Addition Request or Collateral Substitution Request, as
the case may be, in form and substance satisfactory to the Lender in all
respects:
(a) A favorable opinion of local counsel to the Borrower Parties or
the Lender as to the enforceability of the Security Instrument, and any other
Loan Documents, executed in connection with the Request, which Security
Instrument and other Loan Documents shall be governed by the laws of the State
where the Mortgaged Property is located.
(b) A commitment for the Title Insurance Policy applicable to the
Mortgaged Property and a pro forma Title Insurance Policy based on the Maximum
Credit Facility Commitment.
(c) The Insurance Policy (or a certified copy of the Insurance Policy)
applicable to the Mortgaged Property.
(d) The Survey applicable to the Mortgaged Property.
(e) Evidence satisfactory to the Lender of compliance of the Mortgaged
Property with property laws as required by Sections 205 and 206 of Part III of
the DUS Guide.
(f) An Appraisal of the Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the establishment
of a replacement reserve account, to be pledged to the Lender, in which the
owner shall (unless waived by the Lender) periodically deposit amounts for
replacements for improvements at the Mortgaged Property and as additional
security for the Borrower Parties' obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, on the standard form
required by the DUS Guide, if the Lender determines such Agreement to be
necessary.
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(i) An Assignment of Management Agreement, on the standard form
required by the DUS Guide.
(j) An Assignment of Leases and Rents, if the Lender determines one to
be necessary or desirable, provided that the provisions of any such assignment
shall be substantively identical to those in the Security Instrument covering
the Collateral, with such modifications as may be necessitated by applicable
state or local law.
(k) With respect to a Collateral Addition Request or a Collateral
Substitution Request, an amendment to the Cash Management Agreement executed by
the Borrower on the Initial Closing Date, adding a Property Account for the
Mortgaged Property.
(l) If Borrower has entered into any Reimbursement Documents (as
defined in Section 15.4) which are still in effect, the Borrower shall have
delivered to ▇▇▇▇▇▇ ▇▇▇ a Second Security Instrument and a title insurance
policy for such Second Security Instrument, in an amount and otherwise in form
and substance satisfactory to ▇▇▇▇▇▇ Mae, and the Borrower shall have satisfied
any other requirements required by ▇▇▇▇▇▇ ▇▇▇ with respect to such Reimbursement
Documents.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES
SECTION 13.1 Representations and Warranties of the Borrower Parties. Each
Borrower Party hereby represents and warrants to the Lender, with respect to
itself, as follows:
(a) Due Organization; Qualification.
(1) The REIT is qualified to transact business and is in
good standing in the State of Maryland. The Borrower
is qualified to transact business and is in good
standing in the State in which it is organized and in
each other jurisdiction in which such qualification
and/or standing is necessary to the conduct of its
business and where the failure to be so qualified
would adversely affect the validity of, the
enforceability of, or the ability of the Borrower to
perform its Obligations under this Agreement and the
other Loan Documents. The Borrower is qualified to
transact business and is in good standing in each
State in which it owns a Mortgaged Property.
(2) The Borrower Party's principal place of business and
principal office is in Englewood, Colorado, and the
offices where it keeps its books and records as to
the Collateral are in Englewood, Colorado and El
Paso, Texas, both of which addresses are set out in
Section 25.8.
(b) Power and Authority. The Borrower Party has the requisite power
and authority to execute and deliver this Agreement and the other Loan Documents
and to carry out the transactions contemplated by this Agreement and the other
Loan Documents.
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(c) Due Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents have been duly authorized by all
necessary action and proceedings by or on behalf of the Borrower Party, and no
further approvals or filings of any kind, including any approval of or filing
with any Governmental Authority, are required by or on behalf of the Borrower
Party as a condition to the valid execution, delivery and performance by the
Borrower Party of this Agreement or any of the other Loan Documents.
(d) Valid and Binding Obligations. This Agreement and the other Loan
Documents have been duly authorized, executed and delivered by the Borrower
Party and constitute the legal, valid and binding obligations of the Borrower
Party, enforceable against the Borrower Party in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the enforcement of creditors' rights generally or by
equitable principles or by the exercise of discretion by any court.
(e) Compliance with the Loan Documents. The Borrower Party is in
compliance with all provisions of the Loan Documents to which it is a party or
by which it is bound. The representations and warranties made by the Borrower
Party in the Loan Documents are true, complete and correct as of the Closing
Date and do not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(f) Governmental Approvals. No Governmental Approval not already
obtained or made is required for the execution and delivery of this Agreement or
any other Loan Document or the performance of the terms and provisions hereof or
thereof by the Borrower.
(g) Financial Information.
(i) The financial projections relating to the Borrower Party and
delivered to the Lender on or prior to the date hereof, if
any, were prepared on the basis of assumptions believed by the
Borrower Party, in good faith at the time of preparation, to
be reasonable and the Borrower Party was not aware at such
time of any fact or information that would have lead it to
believe that such assumptions were incorrect or misleading in
any material respect; provided, however, that no
representation or warranty is made that any result set forth
in such financial projections shall be achieved.
(ii) The financial statements of the Borrower Party which have been
furnished to the Lender present fairly, in all material
respects, the financial condition of the Borrower Party, as of
the date of such statements, and were prepared in accordance
with generally accepted accounting methods, applied on a
consistent basis.
(iii) Since the date of the most recent of such financial statements
of the Borrower Party no event has occurred which has had, or
would reasonably be
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expected to have, a Material Adverse Effect. No Borrower Party
has any contingent obligation or liability for any taxes,
long-term leases or commitments, not reflected in its audited
financial statements delivered to the Lender on or prior to
the Initial Closing Date or otherwise disclosed in writing to
the Lender, which has had or would reasonably be expected to
have a Material Adverse Effect.
(h) Accuracy of Information. No information, statement or report
furnished in writing to the Lender by the Borrower Party in connection with this
Agreement or any other Loan Document or in connection with the consummation of
the transactions contemplated hereby contains any statement which is incorrect
in any material respect.
(i) Status as a Real Estate Investment Trust. The REIT currently
qualifies, and is being taxed as, a real estate investment trust under
Subchapter M of the Internal Revenue Code.
SECTION 13.2 Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to the Lender as follows:
(a) Non-contravention; No Liens. Neither the execution and delivery of
this Agreement and the other Loan Documents, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the other Loan
Documents nor the performance of the Obligations:
(1) will conflict with or result in any breach or
violation of any Applicable Law enacted or issued by
any Governmental Authority or other agency having
jurisdiction over the Borrower, any of the Mortgaged
Properties or any other portion of the Collateral or
other assets of the Borrower, or any judgment or
order applicable to the Borrower Party or to which
the Borrower, any of the Mortgaged Properties or
other assets of the Borrower are subject;
(2) will conflict with or result in any material breach
or violation of, or constitute a default under, any
of the terms, conditions or provisions of any
indenture, existing agreement or other instrument to
which the Borrower is a party or to which the
Borrower, any of the Mortgaged Properties or any
other portion of the Collateral or other assets of
the Borrower are subject;
(3) does or will result in or require the creation of any
Lien on all or any portion of the Collateral or any
of the Mortgaged Properties, except for the Permitted
Liens; or
(4) does or will require the consent or approval of any
creditor of the Borrower, any Governmental Authority
or any other Person except such consents or approvals
which have already been obtained.
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(b) Pending Litigation or other Proceedings. There is no pending or,
to the best knowledge of the Borrower, threatened action, proceeding or
investigation before any court, governmental agency or arbitrator against or
affecting any Mortgaged Property or any other portion of the Collateral or other
assets of the Borrower, which, if decided adversely to the Borrower, would have,
or may reasonably be expected to have, a Material Adverse Effect.
(c) Solvency. The Borrower is not insolvent and will not be rendered
insolvent by the transactions contemplated by this Agreement or the other Loan
Documents and, after giving effect to such transactions, the Borrower will not
be left with an unreasonably small amount of capital with which to engage in its
business or undertakings, nor will the Borrower have incurred, have intended to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. There (i) is no contemplated, pending or, to the best of
the Borrower's knowledge, threatened bankruptcy, reorganization, receivership,
insolvency or like proceeding, whether voluntary or involuntary, affecting the
Borrower or any of the Mortgaged Properties and (ii) has been no assertion or
exercise of jurisdiction over the Borrower or any of the Mortgaged Properties by
any court empowered to exercise bankruptcy powers.
(d) No Contractual Defaults. There are no defaults by the Borrower or,
to the knowledge of the Borrower, by any other Person under any contract to
which the Borrower is a party relating to any Mortgaged Property, including any
management, rental, service, supply, security, maintenance or similar contract,
other than defaults which do not permit the non-defaulting party to terminate
the contract and which do not have, and are not reasonably expected to have, a
Material Adverse Effect. Neither the Borrower nor, to the knowledge of the
Borrower, any other Person, has received notice or has any knowledge of any
existing circumstances in respect of which it could receive any notice of
default or breach in respect of any contracts affecting or concerning any
Mortgaged Property, other than defaults or breaches which do not have, and are
not reasonably expected to have, a Material Adverse Effect.
(e) ERISA. The Borrower is in compliance in all material respects with
all applicable provisions of ERISA and has not incurred any liability to the
PBGC on a Plan under Title IV of ERISA, other than violations or liabilities
which do not have, and are not reasonably expected to have, a Material Adverse
Effect. None of the assets of the Borrower constitute plan assets (within the
meaning of Department of Labor Regulation Section 2510.3-101) of any employee
benefit plan subject to Title I of ERISA.
(f) No Conflicts of Interest. To the best knowledge of the Borrower,
no member, officer, agent or employee of the Lender has been or is in any manner
interested, directly or indirectly, in that Person's own name, or in the name of
any other Person, in the Loan Documents, the Borrower or any Mortgaged Property,
in any contract for property or materials to be furnished or used in connection
with such Mortgaged Property or in any aspect of the transactions contemplated
by the Loan Documents.
(g) Governmental Orders. The Borrower is not presently under any cease
or desist order or other orders of a similar nature, temporary or permanent, of
any Governmental Authority which would have the effect of preventing or
hindering performance
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of its duties hereunder, nor are there any proceedings presently in progress or
to its knowledge contemplated which would, if successful, lead to the issuance
of any such order.
(h) No Reliance. The Borrower acknowledges, represents and warrants
that it understands the nature and structure of the transactions contemplated by
this Agreement and the other Loan Documents, that it is familiar with the
provisions of all of the documents and instruments relating to such
transactions; that it understands the risks inherent in such transactions,
including the risk of loss of all or any of the Mortgaged Properties; and that
it has not relied on the Lender or ▇▇▇▇▇▇ ▇▇▇ for any guidance or expertise in
analyzing the financial or other consequences of the transactions contemplated
by this Agreement or any other Loan Document or otherwise relied on the Lender
or ▇▇▇▇▇▇ Mae in any manner in connection with interpreting, entering into or
otherwise in connection with this Agreement, any other Loan Document or any of
the matters contemplated hereby or thereby.
(i) Compliance with Applicable Law. The Borrower is in compliance with
Applicable Law, including all Governmental Approvals, if any, except for such
items of noncompliance that, singly or in the aggregate, have not had and are
not reasonably expected to cause, a Material Adverse Effect.
(j) Contracts with Affiliates. Except as otherwise approved in writing
by the Lender, the Borrower has not entered into and is not a party to any
contract, lease or other agreement with any Affiliate of the Borrower for the
provision of any service, materials or supplies to any Mortgaged Property
(including any contract, lease or agreement for the provision of property
management services, cable television services or equipment, gas, electric or
other utilities, security services or equipment, laundry services or equipment
or telephone services or equipment). The Lender hereby approves the property
management agreements set forth on Exhibit DD to this Agreement.
(k) Lines of Business. The Borrower 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.
(l) Year 2000 Compliance. The Borrower has reviewed its business and
operations and has developed a plan (a "Year 2000 Plan") to address, and provide
for any reprogramming required, on a timely basis, the risk that computer
applications used by it in performing date sensitive functions in and following
the year 2000 (the "Year 2000 Problem") would reasonably be expected to result
in an Event of Default, a Potential Event of Default or a Material Adverse
Effect.
(m) Title. The Borrower has good, valid, marketable and indefeasible
title to each Mortgaged Property, free and clear of all Liens whatsoever except
the Permitted Liens. Each Security Instrument, if and when properly recorded in
the appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create a valid,
perfected first lien on the Mortgaged Property intended to be encumbered thereby
(including the Leases of such Mortgaged Property and the rents and all rights to
collect rents under such Leases), subject only to Permitted Liens.
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Except for any Permitted Liens, there are no Liens or claims for work, labor or
materials affecting any Mortgaged Property which are or may be prior to,
subordinate to, or of equal priority with, the Liens created by the Loan
Documents. The Permitted Liens do not have, and may not reasonably be expected
to have, a Material Adverse Effect.
(n) Impositions. Subject to Borrower's right to contest as set forth
in the Security Instruments, the Borrower has filed all property and similar tax
returns required to have been filed by it with respect to each Mortgaged
Property and has paid and discharged, or caused to be paid and discharged, all
installments for the payment of all Taxes due to date, and all other material
Impositions imposed against, affecting or relating to each Mortgaged Property
other than those which have not become due, together with any fine, penalty,
interest or cost for nonpayment pursuant to such returns or pursuant to any
assessment received by it. The Borrower has no knowledge of any new proposed
Tax, levy or other governmental or private assessment or charge in respect of
any Mortgaged Property which has not been disclosed in writing to the Lender.
(o) Zoning. Each Mortgaged Property complies in all material respects
with all Applicable Laws affecting such Mortgaged Property. Without limiting the
foregoing, all material Permits, including certificates of occupancy, have been
issued and are in full force and effect. Neither the Borrower nor, to the
knowledge of the Borrower, any former owner of any Mortgaged Property, has
received any written notification or threat of any actions or proceedings
regarding the noncompliance or nonconformity of any Mortgaged Property with any
Applicable Laws or Permits, nor is the Borrower otherwise aware of any such
pending actions or proceedings.
(p) Leases. The Borrower has delivered to the Lender a true and
correct copy of its form apartment lease for each Mortgaged Property. Except as
set forth in a Rent Roll or except as permitted pursuant to Section 14.2(n), no
Lease for any unit in any Mortgaged Property (i) is for a term in excess of one
year, including any renewal or extension period unless such renewal or extension
period is subject to termination by the Borrower upon not more than 30 days'
written notice, (ii) provides for prepayment of more than one month's rent, or
(iii) was entered into in other than the ordinary course of business.
(q) Rent Roll. The Borrower has executed and delivered to the Lender a
Rent Roll for each Mortgaged Property, each dated as of and delivered within 30
days prior to the Closing Date. Each Rent Roll sets forth each and every unit
subject to a Lease which is in full force and effect as of the date of such Rent
Roll. The information set forth on each Rent Roll is true, correct and complete
in all material respects as of its date and there has occurred no material
adverse change in the information shown on any Rent Roll from the date of each
such Rent Roll to the Closing Date. Except as disclosed in the Rent Roll with
respect to each Mortgaged Property or otherwise previously disclosed in writing
to the Lender, no Lease is in effect as of the date of the Rent Roll with
respect to such Mortgaged Property. Notwithstanding the foregoing, any
representation in this Section 13.2(q) made with respect to a time period
occurring prior to the date on which the Borrower owned the Mortgaged Property
is made to the best of the Borrower's knowledge.
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(r) Status of Landlord under Leases. Except for any assignment of
leases and rents which is a Permitted Lien or which is to be released in
connection with the consummation of the transactions contemplated by this
Agreement, the Borrower is the owner and holder of the landlord's interest under
each of the Leases of units in each Mortgaged Property and there are no prior
outstanding assignments of any such Lease, or any portion of the rents,
additional rents, charges, issues or profits due and payable or to become due
and payable thereunder.
(s) Enforceability of Leases. Each Lease constitutes the legal, valid
and binding obligation of the Borrower and, to the knowledge of the Borrower ,
of each of the other parties thereto, enforceable in accordance with its terms,
subject only to bankruptcy, insolvency, reorganization or other similar laws
relating to creditors' rights generally, and equitable principles, and except as
disclosed in writing to the Lender, no notice of any default by the Borrower
which remains uncured has been sent by any tenant under any such Lease, other
than defaults which do not have, and are not reasonably expected to have, a
Material Adverse Effect on the Mortgaged Property subject to the Lease.
(t) No Lease Options. All premises demised to tenants under Leases are
occupied by such tenants as tenants only. No Lease contains any option or right
to purchase, right of first refusal or any other similar provisions. No option
or right to purchase, right of first refusal, purchase contract or similar right
exists with respect to any Mortgaged Property.
(u) Insurance. The Borrower has delivered to the Lender true and
correct certified copies of all Insurance Policies currently in effect as of the
date of this Agreement with respect to the Mortgaged Properties. Each such
Insurance Policy complies in all material respects with the requirements set
forth in the Loan Documents.
(v) Tax Parcels. Each Mortgaged Property is on one or more separate
tax parcels, and each such parcel (or parcels) is (or are) separate and apart
from any other property.
(w) Encroachments. Except as disclosed on the Survey with respect to
each Mortgaged Property, none of the improvements located on any Mortgaged
Property encroaches upon the property of any other Person or upon any easement
encumbering the Mortgaged Property, nor lies outside of the boundaries and
building restriction lines of such Mortgaged Property and no improvement located
on property adjoining such Mortgaged Property lies within the boundaries of or
in any way encroaches upon such Mortgaged Property.
(x) Independent Unit. Except for Permitted Liens or as disclosed in a
Title Insurance Policy or Survey for the Mortgaged Property, each Mortgaged
Property is an independent unit which does not rely on any drainage, sewer,
access, parking, structural or other facilities located on any property not
included either in such Mortgaged Property or on public or utility easements for
the (i) fulfillment of any zoning, building code or other requirement of any
Governmental Authority that has jurisdiction over such Mortgaged Property, (ii)
structural support, or (iii) the fulfillment of the requirements of any Lease or
other agreement affecting such Mortgaged Property. The Borrower, directly or
indirectly, has
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the right to use all amenities, easements, public or private utilities, parking,
access routes or other items necessary or currently used for the operation of
each Mortgaged Property. All public utilities are installed and operating at
each Mortgaged Property and all billed installation and connection charges have
been paid in full. Each Mortgaged Property is either (x) contiguous to or (y)
benefits from an irrevocable unsubordinated easement permitting access from such
Mortgaged Property to a physically open, dedicated public street, and has all
necessary permits for ingress and egress and is adequately serviced by public
water, sewer systems and utilities. No building or other improvement not located
on a Mortgaged Property relies on any part of the Mortgaged Property to fulfill
any zoning requirements, building code or other governmental or municipal
requirement for structural support or to furnish to such building or improvement
any essential building systems or utilities.
(y) Condition of the Mortgaged Properties. Except as disclosed in any
third party report delivered to the Lender prior to the date on which the
Mortgaged Property is added to the Collateral Pool, or otherwise disclosed in
writing by the Borrower to the Lender prior to such date, each Mortgaged
Property is in good condition, order and repair, there exist no structural or
other material defects in such Mortgaged Property (whether latent or otherwise)
and the Borrower has not received notice from any insurance company or bonding
company of any defects or inadequacies in such Mortgaged Property, or any part
of it, which would adversely affect the insurability of such Mortgaged Property
or cause the imposition of extraordinary premiums or charges for insurance or of
any termination or threatened termination of any policy of insurance or bond,
other than such matters described in the foregoing which would not have, or
reasonably be expected to have, a Material Adverse Effect on the Mortgaged
Properties then in the Collateral Pool, taken as a whole. To the best knowledge
of the Borrower, no claims have been made against any contractor, architect or
other party with respect to the condition of any Mortgaged Property or the
existence of any structural or other material defect therein, other than claims
which would not have, or reasonably be expected to have, a Material Adverse
Effect on the Mortgaged Properties then in the Collateral Pool, taken as a
whole.
ARTICLE XIV
AFFIRMATIVE COVENANTS
SECTION 14.1 Covenants of the Borrower Parties. Each Borrower Party, with
respect to itself, agrees and covenants with the Lender that, at all times
during the Term of this Agreement:
(a) Compliance with Agreements; No Amendments. The Borrower Party
shall comply with all the terms and conditions of each Loan Document to which it
is a party or by which it is bound; provided, however, that the Borrower Party's
failure to comply with such terms and conditions shall not be an Event of
Default until the expiration of the applicable notice and cure periods, if any,
specified in the applicable Loan Document.
(b) Maintenance of Existence. The Borrower Party shall maintain its
existence and continue to be a limited partnership, real estate investment
trust, limited liability company or corporation, as the case may be, organized
under the laws of the state of its organization. The Borrower Party shall
continue to be duly qualified to do business in each
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jurisdiction in which such qualification is necessary to the conduct of its
business and where the failure to be so qualified would adversely affect the
validity of, the enforceability of, or the ability to perform, its obligations
under this Agreement or any other Loan Document.
(c) Maintenance of REIT Status. During the Term of this Agreement, the
REIT shall qualify and be taxed as a real estate investment trust under
Subchapter M of the Internal Revenue Code.
(d) Financial Statements; Accountants' Reports; Other Information. The
Borrower Party shall keep and maintain at all times complete and accurate books
of accounts and records in sufficient detail to correctly reflect all of the
Borrower Party's financial transactions and assets. In addition, the Borrower
Parties shall furnish, or cause to be furnished, to the Lender:
(i) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of its fiscal year during
the Term of this Agreement, the audited consolidated balance
sheet of the REIT as of the end of such fiscal year, the
audited consolidated statement of earnings, the audited
consolidated statement of owners' equity of the REIT for such
fiscal year and the audited consolidated statement of cash
flows of the REIT for such fiscal year, all in reasonable
detail and stating in comparative form the respective figures
for the corresponding date and period in the prior fiscal
year, prepared in accordance with GAAP, consistently applied,
and accompanied by a certificate of the REIT's independent
certified public accountants to the effect that such financial
statements have been prepared in accordance with GAAP,
consistently applied, and that such financial statements
fairly present the results of its operations and financial
condition for the periods and dates indicated, with such
certification to be free of exceptions and qualifications as
to the scope of the audit or as to the going concern nature of
the business.
(ii) Quarterly Financial Statements. As soon as available, and in
any event within 50 days after each of the first three fiscal
quarters of each fiscal year during the Term of this
Agreement, the unaudited balance sheet of the REIT as of the
end of such fiscal quarter, the unaudited statement of
earnings of the REIT and the unaudited statement of cash flows
of the REIT for the portion of the fiscal year ended with the
last day of such quarter, all in reasonable detail and stating
in comparative form the respective figures for the
corresponding date and period in the previous fiscal year,
accompanied by a certificate of any Senior Management, the
Controller, any Senior Vice President or any Vice President of
the REIT to the effect that such financial statements have
been prepared in accordance with GAAP, consistently applied,
and that such financial statements fairly present the results
of its operations and financial condition for the periods and
dates indicated subject to year end adjustments in accordance
with GAAP.
(iii) Security Law Reporting Information. Promptly upon the mailing
thereof, (a) copies of all financial statements, reports and
proxy statements sent
-lxiii-
or made available generally by the REIT or any other Borrower
Party, or any of their Affiliates, to their respective
security holders, and (b) all press releases and other
statements made available generally by the REIT or any
Borrower Party, or any of their Affiliates, to the public
concerning material developments in the business of the REIT
or other party. Promptly upon the filing thereof, all regular
and periodic reports and all registration statements (other
than the exhibits thereto and any registration statements on
Form S-8 or a similar form) and prospectuses, if any, filed by
the REIT or any other Borrower Party, or any of their
Affiliates, with the Securities and Exchange Commission or
other Governmental Authorities.
(iv) Accountants' Reports. Promptly upon receipt thereof, copies of
any reports or management letters submitted to the Borrower
Party by its independent certified public accountants in
connection with the examination of its financial statements
made by such accountants (except for reports otherwise
provided pursuant to Section 14.1(d)(i) above); provided,
however, that the Borrower Party shall only be required to
deliver such reports and management letters to the extent that
they relate to any Borrower Party or any Mortgaged Property.
(v) REIT Plans and Projections. Promptly after providing any
statement, report or other information to S&P, ▇▇▇▇▇'▇, ▇▇▇▇ &
▇▇▇▇▇▇, Fitch and/or any other rating agency on a collective
basis (as opposed to an individual basis, e.g., providing
information to a rating agency to respond to a particular
request of such rating agency), the REIT shall deliver to the
Lender information which is similar, in all material respects,
to the information provided to any such rating agencies.
(vi) Strategic Plan. The REIT shall brief the Lender on its
business plan and financial strategy upon request of the
Lender, but not more frequently than once per quarter.
(vii) Other Reports. Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by the
Borrower Party pursuant to the Loan Documents or reasonably
requested by the Lender with respect to the Borrower Party's
business affairs or condition (financial or otherwise).
(viii) Confidentiality of Certain Information. The Lender agrees to
treat all information received by the Lender under Sections
14.1(d)(v) and (vi) as confidential; provided, however, that
such confidential information may be disclosed (A) as required
by law or pursuant to generally accepted accounting
procedures, (B) to officers, directors, employees, agents,
partners, attorneys, accountants, engineers and other
consultants of the Lender or ▇▇▇▇▇▇ ▇▇▇, or its respective
successors or assigns, who need to know such information,
provided such Persons are instructed to treat such information
confidentially, (C) by the Lender or ▇▇▇▇▇▇ Mae to any
successor or assign of such Party, (D) to any federal or state
regulatory authority having jurisdiction over the Lender
-lxiv-
or ▇▇▇▇▇▇ ▇▇▇, or its respective successors or assigns, (E) to
any other Person to which such delivery or disclosure may be
necessary or appropriate (x) in compliance with any law, rule,
regulation or order applicable to the Lender or ▇▇▇▇▇▇ Mae, or
its respective successors or assigns, (y) in response to any
subpoena or other legal process or information investigative
demand or (z) in connection with any litigation to which the
Lender or ▇▇▇▇▇▇ ▇▇▇, or its respective successors or assigns,
is a party. Notwithstanding the foregoing, this Section
14.1(d)(viii) shall not apply to the Lender or ▇▇▇▇▇▇ Mae, or
its respective successors or assigns, so long as an Event of
Default shall have occurred and is continuing and, in any such
event, the Lender and ▇▇▇▇▇▇ ▇▇▇, and their respective
successors and assigns, shall be entitled to disclosure any
such information as they deem necessary or appropriate in
their sole discretion. The Borrower agrees that information
subject to this Section 14.1(d)(viii) does not include
information which (i) was publicly known, or otherwise known
to the Lender or ▇▇▇▇▇▇ ▇▇▇, or its respective successors or
assigns, at the time of disclosure, (ii) subsequently becomes
publicly known through no act of or omission by the Lender or
▇▇▇▇▇▇ Mae, or its respective successors or assigns, other
than through disclosure by Borrower or by any other Person in
violation of this or any other confidentiality arrangement and
the Lender or ▇▇▇▇▇▇ ▇▇▇, or its respective successors or
assigns, has knowledge of such violation; provided, however,
that in the event the Lender or ▇▇▇▇▇▇ Mae, or its respective
successors or assigns, discloses confidential information to
any Party, such disclosing Party shall reasonably endeavor to
notify the Borrower thereof as soon as possible after such
disclosure has been made and the Borrower shall be afforded an
opportunity to seek protective orders, or such other
confidential treatment of such disclosed information as the
Borrower may deem reasonable.
(e) Certificate of Compliance. The Borrower Party shall deliver to the
Lender concurrently with the delivery of the financial statements and/or reports
required to be delivered pursuant to Sections 14.1(d)(i) and (ii) above (i) a
certificate signed by any Senior Management, the Controller, any Senior Vice
President or any Vice President of the REIT stating, to the best of the
knowledge of such individual following reasonable inquiry, whether or not the
REIT was in compliance with the requirements of Sections 16.2 and 16.3 on the
date of such financial statements and setting forth in reasonable detail the
calculations required to make such determination, and (ii) a certificate signed
by a responsible officer of the general partner of the Borrower stating that, to
the best of the knowledge of such individual following reasonable inquiry, no
Event of Default or Potential Event of Default has occurred, or if an Event of
Default or Potential Event of Default has occurred, specifying the nature
thereof in reasonable detail and the action which the Borrower is taking or
proposes to take with respect thereto.
(f) Access to Records; Discussions With Officers and Accountants. To
the extent permitted by law and in addition to the applicable requirements of
the Security Instruments, the Borrower Party shall permit the Lender:
-lxv-
(i) to inspect, make copies and abstracts of, and have reviewed or
audited, such of the Borrower Party's books and records as may
relate to the Obligations or any Mortgaged Property;
(ii) to discuss the Borrower Party's affairs, finances and accounts
with any of the Borrower Party's officers, partners and
employees;
(iii) to discuss the Borrower Party's affairs, finances and accounts
with its independent public accountants, provided that a
responsible officer of the general partner of the Borrower has
been given the opportunity by the Lender to be a party to such
discussions; and
(iv) to receive any other information that the Lender deems
reasonably necessary or relevant in connection with any
Advance, any Loan Document or the Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours and, provided no Event of Default then exists, upon reasonable
prior notice to the Borrower Party.
(g) Ownership. SCA-North Carolina (1) Incorporated, a Maryland
corporation, shall be the sole general partner of, and SCA - North Carolina (1)
Incorporated, a Maryland corporation, and SCA - North Carolina (2) Incorporated,
a Maryland corporation, shall, in the aggregate, own at least 75% of the
Ownership Interests in, the Borrower, free and clear of any Liens. The REIT
shall continue, at all times, to own 100% of the outstanding stock of SCA-North
Carolina (1) Incorporated, a Maryland corporation, and of SCA - North Carolina
(2) Incorporated, a Maryland corporation.
(h) Minimum Assets in Multifamily Housing. The REIT shall, at all
times maintain, a minimum of 60% of its Total Assets in multifamily residential
real estate assets.
SECTION 14.2 Covenants of the Borrower. The Borrower agrees and covenants with
the Lender that, at all times during the Term of the Agreement.
(a) Property Statements; Other Information. The Borrower shall keep
and maintain at all times complete and accurate books of accounts and records in
sufficient detail to correctly reflect the results of operation of each
Mortgaged Property and copies of all written contracts, leases and other
instruments which affect each Mortgaged Property (including all bills, invoices
and contracts for electrical service, gas service, water and sewer service,
waste management service, telephone service and management services). In
addition, the Borrower shall furnish, or cause to be furnished, to the Lender:
(i) Monthly Property Statements. Upon the Lender's request (but
not more frequently than monthly) within 30 days of the last
day of the prior month, a statement of income and expenses of
each Mortgaged Property accompanied by a certificate of a
responsible officer of the general partner of the Borrower to
the effect that each such statement of income and expenses
fairly, accurately
-lxvi-
and completely presents the operations of each such Mortgaged
Property for the period indicated.
(ii) Annual Property Statements. On an annual basis within 30 days
of the end of the fiscal year, an annual statement of income
and expenses of each Mortgaged Property accompanied by a
certificate of a responsible officer of the general partner of
the Borrower to the effect that each such statement of income
and expenses fairly, accurately and completely presents the
operations of each such Mortgaged Property for the period
indicated.
(iii) Updated Rent Rolls. Upon the Lender's request (but not more
frequently than once each calendar quarter), a current Rent
Roll for each Mortgaged Property, showing the name of each
tenant, and for each tenant, the space occupied, the lease
expiration date, the rent payable, the rent paid and any other
information requested by the Lender and accompanied by a
certificate of a responsible officer of the general partner of
the Borrower to the effect that each such Rent Roll fairly,
accurately and completely presents the information required
therein.
(iv) Security Deposit Information. Upon the Lender's request (but
not more frequently than once each calendar quarter), an
accounting of all security deposits held in connection with
any lease of any part of any Mortgaged Property, including the
name and identification number of the accounts in which such
security deposits are held, the name and address of the
financial institutions in which such security deposits are
held and the name and telephone number of the person to
contact at such financial institution, along with any
authority or release necessary for the Lender to access
information regarding such accounts.
(v) 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.
(vi) Other Reports. Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by the
Borrower pursuant to the Loan Documents or reasonably
requested by the Lender with respect to any of the Mortgaged
Properties.
(vii) Upon Event of Default. If an Event of Default has occurred and
is continuing, upon written demand, the Borrower shall either
make readily available or deliver to the Lender all books and
records relating to the Mortgaged Properties, or any of them
as requested by the Lender.
(b) Inspection. The Borrower shall permit any Person designated by the
Lender: (i) to make entries upon and inspections of the Mortgaged Properties;
and (ii) to otherwise verify, examine and inspect the amount, quantity, quality,
value and/or condition of,
-lxvii-
or any other matter relating to, any Mortgaged Property; provided, however, that
so long as no Event of Default exists the Lender shall give the Borrower
reasonable prior notice of such entries, examinations and inspections and such
entries, examinations and inspections shall be conducted at reasonable times
during normal business hours.
(c) Maintain Licenses. The Borrower shall procure and maintain in full
force and effect all licenses, Permits, charters and registrations which are
material to the conduct of its business.
(d) Compliance with Applicable Laws. The Borrower shall comply in all
material respects with all Applicable Laws now or hereafter affecting any
Mortgaged Property or any part of any Mortgaged Property or requiring any
alterations or improvements to any Mortgaged Property. The Borrower shall
procure and continuously maintain in full force and effect, and shall abide by
and satisfy all material terms and conditions of all Permits.
(e) Inform the Lender of Material Events. The Borrower shall promptly
inform the Lender in writing of any of the following of which the Borrower has
actual knowledge:
(i) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under this Agreement or any other
Loan Document;
(ii) Regulatory Proceedings. The commencement of any rulemaking or
disciplinary proceeding or the promulgation of any proposed or
final rule which would have, or may reasonably be expected to
have, a Material Adverse Effect;
(iii) Legal Proceedings. The commencement or threat of, or amendment
to, any proceedings by or against any Borrower Party in any
Federal, state or local court or before any Governmental
Authority, or before any arbitrator, which, if adversely
determined, would have, or at the time of determination may
reasonably be expected to have, a Material Adverse Effect;
(iv) Bankruptcy Proceedings. The commencement of any proceedings by
or against any Borrower Party under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law
now or hereafter in effect or of any proceeding in which a
receiver, liquidator, trustee or other similar official is
sought to be appointed for it;
(v) Regulatory Supervision or Penalty. The receipt of notice from
any Governmental Authority having jurisdiction over any
Borrower Party that (A) the Borrower Party is being placed
under regulatory supervision, (B) any license, Permit,
charter, membership or registration material to the conduct of
the Borrower Party's business or the Mortgaged Properties is
to be suspended or revoked or (C) the Borrower Party is to
cease and desist any practice, procedure or policy employed by
the Borrower Party in the conduct of its business, and such
cessation would have, or may reasonably be expected to have, a
Material Adverse Effect;
-lxviii-
(vi) Environmental Claim. The receipt from any Governmental
Authority or other Person of any notice of violation, claim,
demand, abatement, order or other order or direction
(conditional or otherwise) for any damage, including personal
injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect
or consequential damages, damage to the environment,
pollution, contamination or other adverse effects on the
environment, removal, cleanup or remedial action or for fines,
penalties or restrictions, resulting from or based upon (a)
the existence or occurrence, or the alleged existence or
occurrence, of a Hazardous Substance Activity or (b) the
violation, or alleged violation, of any Hazardous Materials
Laws in connection with any Mortgaged Property or any of the
other assets of a Borrower Party;
(vii) Material Adverse Effects. The occurrence of any act, omission,
change or event which has a Material Adverse Effect,
subsequent to the date of the most recent audited financial
statements of the Borrower Parties delivered to the Lender
pursuant to Section 14.1(d)(i); and
(viii) Accounting Changes. Any material change in any Borrower
Party's accounting policies or financial reporting practices
not already reported in the financial statements delivered
pursuant to Sections 14.1(d)(i) and (ii).
(f) Single-Purpose Entities. The Borrower shall at all times maintain
and conduct itself as a Single-Purpose entity.
(g) Warranty of Title. The Borrower shall warrant and defend (a) the
title to each Mortgaged Property and every part of each Mortgaged Property,
subject only to Permitted Liens, and (b) the validity and priority of the lien
of the applicable Loan Documents, subject only to Permitted Liens, in each case
against the claims of all Persons whatsoever. The Borrower shall reimburse the
Lender for any losses, costs, damages or expenses (including reasonable
attorneys' fees and court costs) incurred by the Lender if an interest in any
Mortgaged Property, other than with respect to a Permitted Lien, is claimed by
others.
(h) Defense of Actions. The Borrower shall appear in and defend any
action or proceeding purporting to affect the security for this Agreement or the
rights or power of the Lender hereunder, and shall pay all costs and expenses,
including the cost of evidence of title and reasonable attorneys' fees, in any
such action or proceeding in which the Lender may appear. If the Borrower fails
to perform any of the covenants or agreements contained in this Agreement, or if
any action or proceeding is commenced that is not diligently defended by the
Borrower which affects in any material respect the Lender's interest in any
Mortgaged Property or any part thereof, including eminent domain, code
enforcement or proceedings of any nature whatsoever under any Applicable Law,
whether now existing or hereafter enacted or amended, then the Lender may, but
without obligation to do so and without notice to or demand upon the Borrower
and without releasing the Borrower from any Obligation, make such appearances,
disburse such sums and take such action as the Lender deems necessary or
appropriate to protect the Lender's interest, including disbursement of
attorney's fees, entry
-lxix-
upon such Mortgaged Property to make repairs or take other action to protect the
security of said Mortgaged Property, and payment, purchase, contest or
compromise of any encumbrance, charge or lien which in the judgment of the
Lender appears to be prior or superior to the Loan Documents. In the event (i)
that any Security Instrument is foreclosed in whole or in part or that any Loan
Document is put into the hands of an attorney for collection, suit, action or
foreclosure, or (ii) of the foreclosure of any mortgage, deed to secure debt,
deed of trust or other security instrument prior to or subsequent to any
Security Instrument or any Loan Document in which proceeding the Lender is made
a party or (iii) of the bankruptcy of the Borrower or an assignment by the
Borrower for the benefit of their respective creditors, the Borrower shall be
chargeable with and agrees to pay all costs of collection and defense, including
actual attorneys' fees in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, which shall be
due and payable together with all required service or use taxes.
(i) Additions to the Mortgaged Properties. Except as otherwise
provided in the Loan Documents, the Borrower shall have the right to undertake
any alteration, improvement, demolition, removal or construction (collectively,
"Alterations") to the Mortgaged Property which it owns without the prior consent
of the Lender; provided, however, that in any case, no such Alteration shall be
made to any Mortgaged Property without the prior written consent of the Lender
if (i) such Alteration could reasonably be expected to adversely affect the
value of such Mortgaged Property or its operation as a multifamily housing
facility in substantially the same manner in which it is being operated on the
date such property became Collateral, (ii) the construction of such Alteration
could reasonably be expected to result in interference to the occupancy of
tenants of such Mortgaged Property such that tenants in occupancy with respect
to five percent (5%) or more of the Leases would be permitted to terminate their
Leases or to ▇▇▇▇▇ the payment of all or any portion of their rent, or (iii)
such Alteration will be completed in more than 12 months from the date of
commencement or in the last year of the Term of this Agreement. Notwithstanding
the foregoing, the Borrower must obtain the Lender's prior written consent to
construct Alterations with respect to the Mortgaged Property costing in excess
of $250,000 and the Borrower must give prior written notice to the Lender of its
intent to construct Alterations with respect to such Mortgaged Property costing
in excess of $100,000 (the Lender shall be deemed to have received such notice
from the Borrower with respect to any Alteration costing in excess of $100,000
up to and including $250,000 if the Borrower includes such Alteration in the
budget for the applicable fiscal year required to be delivered by the Borrower
pursuant to Section 14.2(a)(v)); provided, however, that the preceding
requirements shall not be applicable to Alterations made, conducted or
undertaken by the Borrower as part of the Borrower's routine maintenance and
repair of the Mortgaged Properties as required by the Loan Documents. The
Borrower may, on an annual basis, obtain the prior consent of the Lender to
undertake, during a fiscal year, Alterations which require the Lender's consent
pursuant to this Section 14.2(i) by including in the annual budget for such
fiscal year delivered by the Borrower pursuant to Section 14.2(a)(v) the
following information: (x) the identity of the Mortgaged Property or Properties
affected by such Alterations, a description of the Alterations to be undertaken,
a proposed time schedule for the performance of such Alterations and a
description of the expenses shown in the annual budget that pertain to such
Alterations; (y) a description of the number of units that will be affected by
such Alterations, the time period that any or all of such units will not be
available for occupancy and an
-lxx-
estimate of the loss revenue that will result therefrom; and (z) a request, in
writing that the Lender consent, in advance, to the undertaking of such
specified Alterations. Within 45 days after receipt of any such request, the
Lender shall approve or disapprove such request in writing and, if the Lender
disapproves such request, it will provide the Borrower with a brief statement of
the reasons for such disapproval. If the Lender does not either approve or
disapprove such request within such 45 day period, such request shall be deemed
approved.
(j) ERISA. The Borrower shall at all times remain in compliance in all
material respects with all applicable provisions of ERISA and similar
requirements of the PBGC.
(k) Loan Document Taxes. If any tax, assessment or Imposition (other
than a franchise tax imposed on or measured by, the net income or capital
(including branch profits tax) of the Lender (or any transferee or assignee
thereof, including a participation holder)) ("Loan Document Taxes") is levied,
assessed or charged by the United States, or any State in the United States, or
any political subdivision or taxing authority thereof or therein upon any of the
Loan Documents or the obligations secured thereby, the interest of the Lender in
the Mortgaged Properties, or the Lender by reason of or as holder of the Loan
Documents, the Borrower Party shall pay all such Loan Document Taxes to, for, or
on account of the Lender (or provide funds to the Lender for such payment, as
the case may be) as they become due and payable and shall promptly furnish proof
of such payment to the Lender, as applicable. In the event of passage of any law
or regulation permitting, authorizing or requiring such Loan Document Taxes to
be levied, assessed or charged, which law or regulation in the opinion of
counsel to the Lender may prohibit the Borrower from paying the Loan Document
Taxes to or for the Lender, the Borrower shall enter into such further
instruments as may be permitted by law to obligate the Borrower to pay such Loan
Document Taxes.
(l) Further Assurances. The Borrower, at the request of the Lender,
shall execute and deliver and, if necessary, file or record such statements,
documents, agreements, UCC financing and continuation statements and such other
instruments and take such further action as the Lender from time to time may
request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any of the other Loan Documents or
to subject the Collateral to the lien and security interests of the Loan
Documents or to evidence, perfect or otherwise implement, to assure the lien and
security interests intended by the terms of the Loan Documents or in order to
exercise or enforce its rights under the Loan Documents.
(m) Monitoring Compliance. Upon the request of the Lender, from time
to time, the Borrower shall promptly provide to the Lender such documents,
certificates and other information as may be deemed reasonably necessary to
enable the Lender to perform its functions under the Special Pool Purchase
Contract.
(n) Leases. Each unit in each Mortgaged Property will be leased
pursuant to the form lease delivered to, and acceptable to, the Lender, with no
material modifications to such approved form lease, except as disclosed in
writing to the Lender. Each Lease will be for a term of no more than fifteen
months; provided, however, that the Borrower may enter into Leases for a
month-to-month term or for terms in excess of fifteen months so long as no more
-lxxi-
than (i) 25% of the total units in any one Mortgaged Property, or 10% of the
total units in all of the Mortgaged Properties in the Collateral Pool, will be
leased for a month-to-month term; (ii) 2% of the total units in all of the
Mortgaged Properties in the Collateral Pool will be originally leased for a
month-to-month term; and (iii) 25% of the total units in any one Mortgaged
Property, or 6% of the total units in all of the Mortgaged Properties in the
Collateral Pool, will be leased for a term in excess of fifteen months. No more
than 2% of the total Leases for units in the Mortgaged Property in the
Collateral Pool will provide for prepayment of more than one month's rent. The
Borrower may, from time to time, request increases in the foregoing limitations
subject to the Lender's approval, which approval shall not be unreasonably
withheld or delayed.
(o) Appraisals. At the time of the addition of a Mortgaged Property to
the Collateral Pool (including an addition as a result of a substitution), and
at any time and from time to time thereafter (so long as the Lender reasonably
believes that a Material Adverse Effect has or may have occurred with respect to
any Mortgaged Property), the Lender shall be entitled to obtain an Appraisal of
any Mortgaged Property. The Borrower shall pay all of the Lender's costs of
obtaining the Appraisal.
(p) Change in Senior Management. The Borrower shall give the Lender
notice of any change in the identity of any member of Senior Management within
10 Business Days of the occurrence thereof.
(q) Geographical Diversification. The Borrower shall maintain
Mortgaged Properties in the Collateral Pool so that the Geographic
Diversification Requirements are satisfied.
(r) Year 2000 Compliance. The Borrower is taking and will take
reasonable efforts to comply with its Year 2000 Plan (as defined in Section
13.2(l)) and to address the Year 2000 Plan on a timely basis. The Borrower will
provide the Lender with written notice of any deficiencies it discovers in its
Year 2000 Plan or if there is any change in the status, timing or cost of
implementing its Year 2000 Plan which would reasonably be expected to result in
an Event of Default or a Potential Event of Default or have a Material Adverse
Effect. The Lender acknowledges that (i) due to the inherent complexity and
nature of the Year 2000 Problem (as defined in Section 13.2(l)), it is
impossible to ensure that the Year 2000 Problem will be successfully addressed
and (ii) the Year 2000 Plan depends on factors beyond the control of the
Borrower (including, without limitation, timely provision of software products
and services and upgrades or replacements for embedded control systems by
vendors or other providers thereof and the Year 2000 Problem being
satisfactorily addressed by other Persons with whom the Borrower does business
or conducts its operations).
(s) Additional Phase at "Oaks in Fairlakes". In connection with the
development of additional multifamily residential housing units ("Additional
Phase") at the Mortgaged Property known as "Oaks in Fairlakes" (the "Oaks
Property"), the Borrower hereby agrees that:
-lxxii-
(i) Prior to commencing construction of such Additional Phase, the
Borrower shall have submitted to the Lender, and the Lender
shall have approved:
(1) true, correct and complete copies of all plans,
specifications, working drawings, and related items
that provide for and detail the manner of
construction of the Additional Phase (the "Plans and
Specifications"); and
(2) a construction schedule showing the commencement and
completion of construction of each stage of the
Additional Phase (the "Construction Schedule").
(ii) Prior to commencing construction of the Additional Phase, the
Borrower shall certify to the Lender that:
(1) the Plans and Specifications (A) have received final
approval from all Governmental Authorities required
to approve such Plans and Specifications and (B)
contain sufficient specificity to permit the
completion of the Additional Phase;
(2) the Borrower has the requisite power and the Borrower
is in compliance in all respects with all Applicable
Law (including all Hazardous Materials Laws) and all
Permits, and no notices of violation of any Permit
relating to the Oaks Property or the Additional Phase
have been issued, entered or received by the
Borrower;
(3) (A) there are no Permits that are required or
will become required for the ownership,
construction or operation of the Oaks
Property or the Additional Phase other than
the Permits disclosed in writing to and
approved by the Lender;
(B) such disclosure accurately states the stage
in construction by which each such Permit is
required to be obtained;
(C) each Permit disclosed and described as
required to be obtained by the date that
this certification is made by the Borrower
is in full force and effect and is not
subject to any appeals or further
proceedings or to any unsatisfied condition
that may allow modification or revocation;
(D) each Permit disclosed and described as not
required to have been obtained by the date
that this certification is made by the
Borrower is of a type that is granted on
application following ministerial review (as
opposed to discretionary review or public
hearing);
-lxxiii-
(E) the Borrower has no reason to believe that
any Permit so indicated will not be obtained
before it becomes necessary for the
ownership, construction or operation of the
Oaks Property or the Additional Phase or
that obtaining such Permit will result in
undue expense or delay; and
(F) the Borrower is not in violation of any
condition in any Permit.
(iii) The Borrower agrees and covenants that, at all times after the
commencement of construction and prior to the Completion (as
hereinafter defined) of the Additional Phase, the Borrower
shall:
(1) take or cause to be taken all actions, make or cause
to be made all contracts and do or cause to be done
all things necessary to construct and complete the
Additional Phase diligently in accordance with the
Plans and Specifications, and in any event, complete
each stage of the Additional Phase within the
applicable time period set forth in the Construction
Schedule, subject to such extensions as may be
granted by the Lender in its reasonable discretion.
The Borrower's completion of the Additional Phase
("Completion") shall be deemed to occur upon the
Borrower's receipt of written confirmation from the
Lender that the Additional Phase has been completed
to the Lender's reasonable satisfaction, which
written confirmation shall be issued by the Lender
upon the Borrower's satisfaction of each of the
following conditions:
(A) notwithstanding anything herein or in the
Plans and Specifications to the contrary,
the quality and class of the improvements
comprising the Additional Phase shall be
substantially equal to the original quality
and class of the other improvements on the
Oaks Property;
(B) delivery by the Borrower to the Lender of
duly executed acknowledgements of payments
and releases of mechanics' and materialmen's
liens in form and substance satisfactory to
the Lender, from the Borrower's general
contractor with respect to the Additional
Phase and from each other contractor and
supplier with respect to the Additional
Phase, for all work, services and materials,
done, performed or furnished for the
construction of the Additional Phase;
(C) delivery by the Borrower to the Lender of a
so-called "date-down" endorsement to the
Title Insurance Policy with respect to the
Oaks Property dated on or after the
completion date of the Additional Phase and
confirming the continuing priority of the
Lien of the Security Instrument with respect
to the Oaks Property and confirming that the
Oaks Property is (a)
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not subject to any mechanics' or
materialmen's liens and (b) free and clear
of all other Liens, except the Permitted
Liens (for purposes of this Section 14.2(s),
however, Permitted Liens shall not include
mechanics' or materialmen's liens referred
to in the immediately preceding clause (a));
(D) delivery of valid and unconditional
certificates of occupancy with respect to
all of the Additional Phase; and
(E) delivery of a certificate by the Borrower's
architect with respect to the Additional
Phase, certifying to the Lender that the
Additional Phase has been completed in
accordance with the Plans and Specifications
and in accordance with all applicable
zoning, subdivision, building, environmental
and land use laws, ordinances, rules,
regulations and similar regulations.
(2) After commencement of construction of the Additional
Phase, the Borrower shall not abandon the
construction of the Additional Phase or otherwise
cease to pursue Completion of the Additional Phase in
accordance with standard industry practice.
(3) The Borrower shall promptly and diligently (a)
construct, maintain and operate the Additional Phase
and the Oaks Property in compliance with all
requirements of Applicable Law (including, but not
limited to Hazardous Materials Laws) and (b) procure,
maintain and comply with the requirements of all
Permits necessary for the construction, maintenance
or operation of the Additional Phase and the Oaks
Property or any part thereof at or before the time
such Permit becomes necessary for the ownership,
construction, maintenance or operation of the
Additional Phase and the Oaks Property, as the case
may be.
(4) Prior to the Completion of the Additional Phase, the
Borrower shall deliver to the Lender, within thirty
(30) days following the end of each calendar quarter,
a quarterly status report describing in reasonable
detail the progress of the construction of the
Additional Phase as a whole since the immediately
preceding report hereunder, including without
limitation, any costs incurred to the end of such
quarter, an estimate of the time and costs required
to complete the Additional Phase and such other
information which the Lender may reasonably request.
(5) In addition to any insurance required to be obtained
by the Borrower under the terms of the Security
Instrument with respect to the Oaks Property, at all
times prior to Completion of the Additional Phase,
the Borrower shall maintain so-called builder's risk
insurance with respect to the construction of the
Additional Phase, in form, substance
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and amount and issued by carriers at all times
satisfactory to the Lender. All premiums on such
insurance policies shall be paid by the Borrower when
due, directly to the carrier and such insurance
coverage shall otherwise conform to the requirements
of the applicable Security Instrument.
(t) Creation of Accounts; Delivery of Restricted Account Letters. To
the extent that Borrower has failed to do so as of the Initial Closing Date, the
Borrower shall, within 60 days after the Initial Closing Date: (i) establish the
"Accounts" satisfying the requirements of the Cash Management Agreement; (ii)
notify each depository of the grant, pledge and assignment effected by the Cash
Management Agreement by executing and delivering to each such depository an
irrevocable "Restricted Account Letter" substantially in the form of Exhibit A
to the Cash Management Agreement, and delivering to and obtaining a
countersigned original of such "Restricted Account Letter" from the respective
depository, all in accordance with the requirements of the Cash Management
Agreement; (iii) delivering to the Lender a revised Schedule 1 to the Cash
Management Agreement, which shall (A) be in form and substance acceptable to the
Lender in its discretion and (B) upon acceptance thereof by the Lender, be
automatically deemed to supplement and amend the existing Schedule 1 to the Cash
Management Agreement and incorporated into the Cash Management Agreement; and
(iv) execute such uniform commercial code financing statements as may be
required by the Lender in order to perfect the security interest granted herein
in the "Collateral", as defined in the Cash Management Agreement (the
requirements in clauses (i) through (iv) being referred to herein as the "Cash
Management Post Closing Obligations"). Notwithstanding anything herein to the
contrary, the Borrower's failure to satisfy all of the Cash Management Post
Closing Obligations within the time period set forth above shall be an Event of
Default under this Agreement.
ARTICLE XV
NEGATIVE COVENANTS OF THE BORROWER
The Borrower agrees and covenants with the Lender that, at all times during the
Term of this Agreement:
SECTION 15.1 Other Activities. The Borrower shall not:
(a) either directly or indirectly sell, Transfer, exchange or
otherwise dispose of any of its assets except as permitted hereunder, by the
Security Instruments or the Cash Management Agreement;
(b) engage in any business or activity other than in connection with
the ownership, management and operation of Multifamily Residential Properties;
(c) amend its Organizational Documents in any manner inconsistent with
the Loan Documents without the prior written consent of the Lender;
(d) dissolve or liquidate in whole or in part;
(e) merge or consolidate with any Person; or
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(f) use, or permit to be used, any Mortgaged Property for any uses or
purposes other than as a Multifamily Residential Property.
SECTION 15.2 Value of Security. The Borrower shall not take any action which
could reasonably be expected to have any Material Adverse Effect.
SECTION 15.3 Zoning. The Borrower shall not initiate or consent to any zoning
reclassification of any Mortgaged Property or seek any variance under any zoning
ordinance or use or permit the use of any Mortgaged Property in any manner that
could result in the use becoming a nonconforming use under any zoning ordinance
or any other applicable land use law, rule or regulation.
SECTION 15.4 Liens. The Borrower shall not create, incur, assume or suffer to
exist any Lien on (a) any Mortgaged Property or any part of any Mortgaged
Property, except the Permitted Liens or any second priority deed of trust or
mortgage executed by the Borrower in favor of ▇▇▇▇▇▇ ▇▇▇ (each, a "Second
Security Instrument") which secures the Borrower's obligations under any
reimbursement agreement or any related documents which may be entered into by
the Borrower with ▇▇▇▇▇▇ Mae from time to time in connection with a Swap (in
each case, the "Reimbursement Documents"), or (b) any Ownership Interests in the
Borrower.
SECTION 15.5 [Intentionally omitted.]
SECTION 15.6 Indebtedness. The Borrower shall not incur or be obligated at any
time with respect to aggregate Indebtedness (other than Advances) in excess of
$100,000.
SECTION 15.7 Principal Place of Business. The Borrower shall not change its
principal place of business or the location of its books and records, each as
set forth in Section 25.8, without first giving 30 days' prior written notice to
the Lender.
SECTION 15.8 Frequency of Requests. The Borrower shall make all Requests (other
than a Future Advance Request) in any calendar month on the same day in the
calendar month. Accordingly, once the Borrower makes one or more Requests (other
than a Future Advance Request) in a calendar month, it shall not make any
further Requests (other than a Future Advance Request) in the calendar month.
The Borrower shall have the right, subject to the terms, conditions and
limitations of this Agreement, to make a Future Advance Request for a Revolving
Advance on any day until the expiration of the Revolving Facility Availability
Period and to make a Future Advance for a Base Facility Advance on any day until
the expiration of the Base Facility Availability Period.
SECTION 15.9 Change in Property Management. The Borrower shall not change the
management agent for any Mortgaged Property except to a management agent which
the Lender determines is qualified in accordance with the criteria set forth in
Section 701 of the DUS Guide.
SECTION 15.10 Shelf Condominiums. The Borrower shall not submit any Mortgaged
Property to a condominium regime during the Term of this Agreement.
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SECTION 15.11 Restrictions on Partnership Distributions. The Borrower shall not
make any distributions of any nature or kind whatsoever to the owners of its
Ownership Interests as such if, at the time of such distribution, an Event of
Default has occurred and remains uncured.
SECTION 15.12 Lines of Business. The Borrower shall not engage in any businesses
other than the acquisition, ownership, development, construction, leasing,
financing or management, directly or indirectly, of Multifamily Residential
Properties, and the conduct of these businesses shall not violate the
Organizational Documents pursuant to which it is formed.
ARTICLE XVI
FINANCIAL COVENANTS OF THE BORROWER PARTIES
Each Borrower Party agrees and covenants with the Lender that, at all times
during the Term of this Agreement:
SECTION 16.1 Financial Definitions. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"Annual Service Charge" as of any date means the interest expense in
any period for Consolidated Debt of the REIT and its Subsidiaries and the amount
of dividends which are payable in respect of any Disqualified Stock.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of such Person and any rights (other
than debt securities convertible or exchangeable for corporate stock), warrants
or options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the REIT and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (a) interest on Debt of the REIT and its Subsidiaries,
(b) provision for taxes of the REIT and its Subsidiaries based on income, (c)
amortization of debt discount, (d) provisions for gains and losses on properties
and property depreciation and amortization, (e) the effect of any noncash charge
resulting from a change in accounting principles in determining Earnings from
Operations for such period and (f) amortization of deferred charges.
"Consolidated Debt" of the REIT or any Subsidiary means any
indebtedness of the REIT or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness secured by any mortgage, pledge, lien,
charge, encumbrance or any security interest existing on property owned by the
REIT or any Subsidiary, (iii) the reimbursement obligations, contingent or
otherwise, in connection with any letters of credit actually issued or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the REIT or any Subsidiary with respect to redemption, repayment
or other repurchase of
-lxxviii-
any Disqualified Stock or (v) any lease of property by the REIT or any
Subsidiary as lessee which is reflected on the REIT's consolidated financial
statements as a capitalized lease in accordance with GAAP to the extent, in the
case of items of indebtedness under (i) through (iii) above, that any such items
(other than letters of credit) would appear as a liability on the REIT's
Consolidated Balance Sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation by the REIT or any Subsidiary to
be liable for, or to pay, as obligor, guarantor or otherwise (other than for
purposes of collection in the ordinary course of business), Debt of another
Person (other than the REIT or any Subsidiary).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (ii)
is convertible into or exchangeable or exercisable for Debt of Disqualified
Stock or (iii) is redeemable at the option of the holder thereof, in whole or in
part, in each case on or prior to the stated maturity of such debt securities.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of depreciated real estate, net as reflected in the
financial statements of the REIT and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP.
"Total Assets" as of any date means the sum of (i) the REIT's
Undepreciated Real Estate Assets and (ii) all other assets of the REIT
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the REIT and
its Subsidiaries on such date, before depreciation and amortization determined
on a consolidated basis in accordance with GAAP.
SECTION 16.2 Compliance with REIT's Consolidated Debt to Total Assets Ratio. The
REIT shall not permit the ratio of Consolidated Debt to Total Assets to exceed
58% at any time.
SECTION 16.3 Compliance with REIT's Consolidated Income Available for Debt
Service to Annual Service Charge Ratio. The REIT shall not permit the ratio of
Consolidated Income Available for Debt Service to Annual Service Charge for the
four consecutive quarters most recently ended prior to the date of such
determination, in the aggregate, to be less than 160%.
SECTION 16.4 Cure by REIT of Financial Covenants. If the REIT is in breach of
either or both of the covenants set forth in Sections 16.2 and 16.3, then such
breach shall not constitute a default hereunder provided that that the Borrower,
within 5 days after such breach, delivers Additional Collateral to the Lender in
an amount sufficient to cause the Aggregate Loan to Value Ratio to be 60% or
less; provided, however, that if, at such time, the Aggregate Debt Service
Coverage Ratios are then at 180% or higher, the requirement to deliver
Additional Collateral to the Lender shall be waived by the Lender. Any
Additional Collateral in the form
-lxxix-
of Cash Collateral (as defined in Section 8.2(d)) which is delivered to the
Lender pursuant to this Section 16.4 for application to Advances Outstanding
shall be applied in the order and manner set forth in clauses (ii) and (iii) of
Section 8.2(d). Any Cash Collateral held by the Lender as a result of this
Section 16.4 with respect to the repayment of Base Facility Advances then
Outstanding will be used by the Borrower to repay maturing Base Facility
Advances or released by the Lender to the Borrower in the same manner and
subject to the same conditions as set forth in Section 8.2(d).
SECTION 16.5 Additional Collateral.
(a) In order to comply with certain requirements set forth in this
Agreement, the Borrower may deliver to the Lender Additional Collateral. The
Additional Collateral may be in the form of an Additional Collateral Letter of
Credit (as hereinafter defined) or Permitted Investments acceptable to the
Lender. If the Additional Collateral is in the form of an Additional Collateral
Letter of Credit, then the Borrower shall, at all times, be in compliance with
Sections 16.5(b) through 16.5(g), inclusive, and if the Additional Collateral is
in the form of Permitted Investments acceptable to the Lender, then the Borrower
shall, at all times, be in compliance with Sections 16.5(h) through 16.5(l),
inclusive. Borrower acknowledges that an Additional Collateral Letter of Credit
cannot be used for purposes of satisfying the Aggregate Debt Service Coverage
Ratios.
(b) Delivery of Additional Collateral Letter of Credit. In accordance
with Section 16.5(a), the Borrower may deliver to the Lender a letter of credit
as Additional Collateral (an "Additional Collateral Letter of Credit"). Any
Additional Collateral Letter of Credit delivered to the Lender in accordance
with this Section 16.5(b) shall be a clean, irrevocable letter of credit, naming
the Lender as beneficiary, in an amount sufficient to cause the Borrower to be
in compliance with the requirements set forth in this Agreement. Any Additional
Collateral 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 and must comply with all other requirements
for letters of credit contained in the DUS Guide (including furnishing an
opinion of counsel relating to the Issuer and the Additional Collateral Letter
of Credit). (The term "Additional Collateral Letter of Credit" shall mean the
letter of credit delivered to the Lender pursuant to this Section 16.5(b), any
replacement letter of credit, and any amendment or renewal of the letter of
credit or the replacement letter of credit.) If the Borrower at any time
provides 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 "Additional Collateral
Letter of Credit" shall also mean the confirming letter of credit as so amended,
renewed or replaced.)
(c) Additional Collateral Letter of Credit as Additional Collateral.
The Borrower agrees that any Additional Collateral Letter of Credit provides
collateral for the Notes in addition to the lien of the Security Instruments on
the Mortgaged Properties and the other Collateral 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.
-lxxx-
(d) Conditions for Providing and Holding an Additional Collateral
Letter of Credit.
(i) Period During Which Borrower Must Renew, Amend or Replace a
Specific Additional Collateral Letter of Credit. Until the
earliest of (A) payment in full of all sums secured by the
Security Instruments and release by the Lender of the liens of
the Security Instruments, (B) the date that the Lender fully
draws on such Additional Collateral Letter of Credit as
permitted by this Agreement (no inference shall be drawn from
this clause that the Borrower shall not, at such time or at a
later time, be obligated to deliver to the Lender additional
Additional Collateral in accordance with the provisions of
this Agreement), or (C) the date that such Additional
Collateral Letter of Credit is no longer needed by the
Borrower to be in compliance with the requirements set forth
in this Agreement, the Borrower shall renew, amend or replace
such Additional Collateral Letter of Credit in accordance with
the terms of this Agreement, to ensure that such Additional
Collateral Letter of Credit remains in effect and does not
expire.
(ii) Return of an Additional Collateral Letter of Credit or the
Proceeds Thereof. The Lender shall return an Additional
Collateral Letter of Credit, or the proceeds of any draws on
such Additional Collateral Letter of Credit (less all amounts
which have been applied by the Lender pursuant to the terms of
this Article XVI) to the Borrower 10 days after the date on
which either clause (A) or (C) of Section 16.5(d)(i) is
satisfied.
(iii) Application for Prepayment. If the proceeds of an Additional
Collateral Letter of Credit are applied to payment of a
portion of the principal amount of a Note, a prepayment
premium attributable to such prepaid principal amount shall be
due to the Lender to the extent, if any, provided in such
Note.
(e) (i) Renewal or Replacement. At least 30 days prior to the
expiration date of any Additional Collateral Letter of Credit, the Borrower
shall either (A) cause such Additional Collateral Letter of Credit to be amended
to extend its expiration date, or (B) furnish a replacement Additional
Collateral Letter of Credit. In either case, the amended Additional Collateral
Letter of Credit or the replacement Additional Collateral Letter of Credit must
(x) 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, (y)
have a term of 364 days or more (unless a shorter term is approved in writing by
the Lender), and (z) be in an amount sufficient to cause the Borrower to be in
compliance with the requirements set forth in this Agreement.
(ii) Review of Rating of Issuer; Replacement of an Additional
Collateral Letter of Credit. From time to time, the Lender
shall review the rating of any Issuer of the then outstanding
Additional Collateral Letter of Credit. If the Lender
notifies the Borrower that at the time of any such review the
issuing bank does not meet Lender's requirements for ratings
of issuers of acceptable letters of credit as set forth in the
DUS Guide, the Borrower shall replace such
-lxxxi-
outstanding Additional Collateral Letter of Credit with an
Additional Collateral 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 Borrower, unless such
outstanding Additional Collateral Letter of Credit would
expire prior to such 30-day period, in which case the Borrower
shall provide the replacement Additional Collateral Letter of
Credit no later than 5 Business Days prior to the expiration
date of such outstanding Additional Collateral Letter of
Credit.
(iii) Draw on an Additional Collateral Letter of Credit. If the
Borrower does not provide an amendment to, or replacement of,
an Additional Collateral Letter of Credit when required
pursuant to Section 16.5(e)(i) or (ii) above, as the case may
be, which amended or replacement Additional Collateral Letter
of Credit satisfies all of the requirements of Sections
16.5(e)(i) and (ii) above, the Lender shall draw the full
amount of the Additional Collateral 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 Borrower's failure to comply with said Sections
16.5(e)(i) and (ii).
(f) (i) Remedies. During the continuance of an Event of Default, the
Lender shall be entitled, in its sole and absolute discretion, to:
(1) Draw on any Additional Collateral Letter of Credit
and hold the proceeds of such Additional Collateral
Letter of Credit as additional cash Collateral;
(2) Draw on any Additional Collateral Letter of Credit
and apply all or any portion of the proceeds of such
Additional Collateral Letter of Credit to payment of
the unpaid principal amount of any Note, the Credit
Facility Termination Fee resulting therefrom, if any,
and the prepayment premium, if any (calculated as
provided in the Note) on the principal amount
prepaid; provided, however, that such application of
proceeds shall not cure or be deemed to cure any
default;
(3) Draw on any Additional Collateral Letter of Credit
and apply all or any portion of the proceeds of such
Additional Collateral 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
(4) Exercise all rights and remedies available to the
Lender at law or in equity or under any of the Loan
Documents (including this Section 16.5).
(ii) No Obligation to Apply Proceeds; No Cure. Nothing in this
Section 16.5 shall obligate the Lender to apply all or any
portion of the proceeds of any Additional Collateral Letter of
Credit to cure any default under the Loan Documents or to
reduce the indebtedness evidenced by any Note. No
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application of proceeds of any Additional Collateral Letter
of Credit by Lender shall be deemed to cure any default.
(g) Proceeds of an Additional Collateral Letter of Credit.
(i) Providing Replacement Additional Collateral Letter of Credit
after a Draw. Provided that Borrower is not otherwise in
default under any of the Loan Documents (including the
Security Instruments), after the Lender has drawn on any
Additional Collateral Letter of Credit, but prior to
application of proceeds, the Lender may, but is not obligated
to, permit the Borrower to provide a replacement Additional
Collateral Letter of Credit that complies with all the
requirements set forth in the DUS Guide and in Section
16.5(e)(i), in which case the Lender shall return the proceeds
of the draw to the Borrower, less the Lender's costs and
expenses (including reasonable attorneys' fees and expenses).
(ii) Proceeds Held in Account(s). If the Lender draws on any
Additional Collateral Letter of Credit and holds the proceeds,
such funds shall be held by the Lender as cash Collateral in
accordance with a security agreement and other documents in
form and substance acceptable to the Lender.
(iii) No Obligation to Draw or to Apply Proceeds. The Lender shall
not be obligated to draw on any Additional Collateral Letter
of Credit upon any default under any of the Loan Documents or
apply the proceeds of any draw on any Additional Collateral
Letter of Credit to cure a default under the Loan Documents.
The Lender may hold any Additional Collateral Letter of Credit
or the proceeds of any Additional Collateral Letter of Credit
until the date for return as determined pursuant to Section
16.5(d)(ii), or apply all or any portion of the proceeds as
permitted by this Agreement or any of the Loan Documents and
hold any remaining proceeds until the date for return
determined under Section 16.5(d)(ii).
(h) Delivery of Permitted Investments. In accordance with Section
16.5(a), the Borrower may pledge to the Lender Permitted Investments acceptable
to the Lender as Additional Collateral ("Additional Collateral Permitted
Investments"). (The term "Additional Collateral Permitted Investments" shall
mean the Additional Collateral Permitted Investments pledged to the Lender
pursuant to this Section 16.5(h), any certificates and instruments, if any, from
time to time representing or evidencing such Additional Collateral Permitted
Investments, all investments from time to time representing or evidencing such
Additional Collateral Permitted Investments and all certificates and
instruments, if any, from time to time representing or evidencing such
investments, all instruments from time to time delivered to or otherwise
possessed by the Lender in substitution for or in addition to any or all of the
then-existing Additional Collateral Permitted Investments, and all cash and
noncash proceeds and products of any of the foregoing).
(i) Additional Collateral Permitted Investments as Additional
Collateral. The Borrower agrees that any Additional Collateral Permitted
Investments provides collateral
-lxxxiii-
for the Notes in addition to the lien of the Security Instruments on the
Mortgaged Properties and the other Collateral 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.
(j) Conditions for Providing and Holding Additional Collateral
Permitted Investments.
(i) Period During Which Borrower Must Provide Specific Additional
Collateral Permitted Investments. Until the earliest of (A)
payment in full of all sums secured by the Security
Instruments and release by the Lender of the liens of the
Security Instruments, or (B) the date that such Additional
Collateral Permitted Investments are no longer needed by the
Borrower to be in compliance with the requirements set forth
in this Agreement, the Borrower shall continue to provide such
Additional Collateral Permitted Investments in accordance with
the terms of this Agreement.
(ii) Return of Additional Collateral Permitted Investments. The
Lender shall return such Additional Collateral Permitted
Investments (less all amounts which have been applied by the
Lender pursuant to the terms of this Article XIV) to the
Borrower 10 days after the date on which either clause (A) or
(B) of Section 16.5(j)(i) is satisfied.
(iii) Application for Prepayment. If the proceeds of any Additional
Collateral Permitted Investments are applied to payment of a
portion of the principal amount of a Note, a prepayment
premium attributable to such prepaid principal amount shall be
due to the Lender to the extent, if any, provided in such
Note.
(k) (i) Remedies. During the continuance of an Event of Default, the
Lender shall be entitled, in its sole discretion, to:
(1) Liquidate any Additional Collateral Permitted
Investments and hold the proceeds of such Additional
Collateral Permitted Investments as additional cash
Collateral;
(2) Liquidate any Additional Collateral Permitted
Investments and apply all or any portion of the
proceeds of such Additional Collateral Permitted
Investments to payment of the unpaid principal amount
of any Note, the Credit Facility Termination Fee
resulting therefrom, if any, and the prepayment
premium, if any (calculated as provided in such Note)
on the principal amount prepaid; provided, however,
that such application of proceeds shall not cure or
be deemed to cure any default;
(3) Liquidate any Additional Collateral Permitted
Investments and apply all or any portion of the
proceeds of such Additional Collateral
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Permitted Investments 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
(4) Exercise all rights and remedies available to the
Lender at law or in equity or under any of the Loan
Documents (including this Section 16.5).
(ii) No Obligation to Apply Proceeds; No Cure. Nothing in this
Section 16.5 shall obligate the Lender to apply all or any
portion of the proceeds of any Additional Collateral Permitted
Investments to cure any default under the Loan Documents or to
reduce the indebtedness evidenced by any Note. No application
of proceeds of any Additional Collateral Permitted Investments
by Lender shall be deemed to cure any default.
(l) Proceeds of Additional Collateral Permitted Investments. The
Lender shall not be obligated to liquidate any Additional Collateral Permitted
Investments upon any default under any of the Loan Documents or apply any
Additional Collateral Permitted Investments to cure a default under the Loan
Documents. The Lender may hold any Additional Collateral Permitted Investments
or the proceeds of any Additional Collateral Permitted Investments until the
date for return as determined pursuant to Section 16.5(j)(ii), or apply all or
any portion of the proceeds as permitted by this Agreement or any of the Loan
Documents and hold any remaining proceeds until the date for return determined
under Section 16.5(j)(ii).
ARTICLE XVII
REPRESENTATIONS AND WARRANTIES
AND COVENANTS BY LENDER
SECTION 17.1 Representations and Warranties of the Lender. The Lender hereby
represents and warrants to the Borrower Parties as follows:
(a) Due Organization. The Lender is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Massachusetts.
(b) Power and Authority. The Lender has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(c) Due Authorization. The execution and delivery by the Lender of
this Agreement, and the consummation by it of the transactions contemplated
thereby, and the performance by it of its obligations thereunder, have been duly
and validly authorized by all necessary action and proceedings by it or on its
behalf.
SECTION 17.2 Determination of Allocable Credit Facility Amount and Valuations.
(a) The Lender shall determine the Allocable Credit Facility Amount
for each Mortgaged Property on the Initial Closing Date, annually thereafter on
or before
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December 31 of each year and at the time of any addition, release or
substitution of Collateral. Once each Loan Year, within 20 Business Days after
the Borrower Parties have delivered to the Lender the reports required in
Sections 14.1(d)(i) and (ii), the Lender shall perform a Valuation for each of
the Mortgaged Properties and determine the Aggregate Debt Service Coverage
Ratios and Aggregate Loan to Value Ratio. If the Lender decides that changed
market or property conditions warrant, the Lender may determine new Allocable
Credit Facility Amounts and Valuations at any other times. The Lender shall
determine Capitalization Rates when determining Valuations in its sole and
absolute discretion on the basis of its internal survey and analysis of
capitalization rates for comparable sales in the vicinity of the Mortgaged
Property, with such adjustments as the Lender deems appropriate and shall not be
obligated to use any information provided by the Borrower. The Lender shall
promptly disclose its determinations to the Borrower. Until redetermined, the
Allocable Credit Facility Amounts and Valuations determined by the Lender shall
remain in effect. In performing a Valuation of a Multifamily Residential
Property to be added to the Collateral Pool (including an addition as part of a
substitution), the Lender shall be entitled to obtain an Appraisal. The Lender
shall also have the right to obtain an Appraisal in connection with the
redetermination of a Valuation of a Mortgaged Property, but only if the Lender
is unable to determine a Capitalization Rate for such Mortgaged Property and
then only if the Lender has not obtained an Appraisal for such Mortgaged
Property within the prior year.
(b) If the Borrower disagrees with the Lender's Valuation of any
Mortgaged Property, the Borrower shall have the right to substitute for the
Capitalization Rate determined by the Lender with a new Capitalization Rate
based on a capitalization rate study conducted by an appraiser, provided the
Borrower gives notice to the Lender of its desire to substitute a new
Capitalization Rate for the Lender's Capitalization Rate within 15 Business Days
after the Borrower receives the Lender's determinations. In such event the
Borrower and the Lender shall determine the Capitalization Rate in accordance
with the following procedure:
(i) the Lender shall give the Borrower a list of approved
appraisers for the local market in which the Multifamily
Residential Property is located within 10 Business Days after
the date on which the Borrower gives the Lender its notice;
(ii) the Borrower shall select an appraiser within 10 Business Days
after the date on which the Lender gives the Borrower the list
of Lender-approved appraisers;
(iii) the Lender shall engage the appraiser selected by the Borrower
pursuant to clause (ii) to perform the capitalization rate
study within 10 Business Days after the date on which the
Borrower makes its selection; and
(iv) the Borrower shall pay all out-of-pocket fees and expenses of
obtaining the capitalization rate study, whether incurred by
the Borrower or the Lender.
If the Borrower elects to substitute a new Capitalization Rate for the Lender's
Capitalization Rate, the new Capitalization Rate shall be used to determine the
Valuation for the Mortgaged Property and, until the earlier of (A) the 30th day
after the date on which the appraiser is
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engaged by the Lender or (B) the date on which the new Capitalization Rate is
determined, the Valuation of the Mortgaged Property in effect immediately prior
to the Lender's Valuation shall continue to be in effect. In the event the new
Capitalization Rate is not determined on or before the 30th day after which the
appraiser is engaged by the Lender, then, commencing on such 30th day, and
continuing until the new Capitalization Rate is determined, the Valuation based
on the Lender's determination of the Capitalization Rate shall be in effect.
ARTICLE XVIII
FEES
SECTION 18.1 Standby Fee. The Borrower shall pay a Standby Fee to the Lender for
the period from the date of this Agreement to the end of the Term of this
Agreement. The Standby Fee shall be payable monthly, in arrears, on the first
Business Day following the end of the month, except that the Standby Fee for the
last month during the Term of this Agreement shall be paid on the last day of
the Term of this Agreement. The Standby Fee for a month shall be an amount equal
to the product obtained by multiplying: (i) 1/12, by (ii) 28 basis points, by
(iii) the Unused Capacity for such month. The term "Unused Capacity" means, for
any month, the sum of the daily average during such month of the undrawn amount
of the Maximum Credit Facility Commitment (i.e., the sum of Base Facility
Commitment and Revolving Facility Commitment) available under this Agreement for
the making of Advances, without regard to any unclosed Requests or to the fact
that a Request must satisfy conditions precedent.
SECTION 18.2 Origination Fees.
(a) Initial Origination Fee. The Borrower shall pay to the Lender an
origination fee ("Initial Origination Fee") equal to $1,800,000 (which is equal
to the product obtained by multiplying (i) the Maximum Credit Facility
Commitment as of the date of this Agreement ($300,000,000), by (ii) 60 basis
points). The Borrower shall pay a portion of the Initial Origination Fee, in the
amount of $1,705,350, on or before the Initial Closing Date. The remainder of
the Initial Origination Fee, in the amount of $94,650, shall be due and payable
to the Lender, in whole or in part, when one or more Additional Mortgaged
Properties or Substituted Mortgaged Properties, are added to the Collateral Pool
to increase the amount available to be borrowed under the Credit Facility (each,
an "Additional Origination Fee"). The amount of the Additional Origination Fee
that shall be paid, in each instance, will be in an amount equal to the product
of: (i) the increase in the amount available to be borrowed under the Credit
Facility up to the amount which, when added to the amount already available to
be borrowed under the Credit Facility, equals the initial Maximum Credit
Facility Commitment of $300,000,000, and (ii) 30 basis points. The origination
fee that is payable in connection with any increase in the Maximum Credit
Facility Commitment beyond $300,000,000 shall be governed by Section 18.2(b).
(b) Expansion Origination Fee. Upon the Closing of the Oaks in
Fairlakes Commitment Increase pursuant to Section 9.2 or upon the Closing of any
Additional Commitment Increase pursuant to Section 9.3, the Borrower shall pay
to the Lender an origination fee ("Expansion Origination Fee") equal to the
product obtained by multiplying (i) the increase in the then-existing Maximum
Credit Facility Commitment made on such Closing
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Date, by (ii) 60 basis points. The Borrower shall pay the applicable Expansion
Origination Fee on or before the Closing Date for the Oaks in Fairlakes
Commitment Increase or any Additional Commitment Increase, as the case may be.
SECTION 18.3 Due Diligence Fees.
(a) Initial Due Diligence Fees. The Borrower shall pay to the Lender
actual due diligence fees (including reasonable legal fees and expenses relating
to due diligence and the closing of this Agreement and the Initial Advance)
("Initial Due Diligence Fees") with respect to the Initial Mortgaged Properties
(such Initial Due Diligence Fees are estimated by the Lender to be equal to a
sum of the product obtained by multiplying -
(1) $13,500, by
(2) the number of Initial Mortgaged Properties, but such
estimate shall not be used to provide a ceiling or a
floor on the amount of the actual Fees).
The Borrower has previously paid to the Lender a portion of the estimated amount
of Initial Due Diligence Fees. On or prior to the Initial Closing Date, the
Lender shall notify the Borrower of the actual amount of the Initial Due
Diligence Fees and the Borrower shall pay to the Lender the remainder of such
Initial Due Diligence Fees (if the actual amount of such Fee exceeds the portion
of the estimated amount previously paid by the Borrower) or the Lender shall
return to the Borrower the excess payment of such Fees (if the actual amount of
such Fees is less than the portion of the estimated amount previously paid by
the Borrower). The Borrower acknowledges and agrees that the Initial Due
Diligence Fees shall include a fee payable to ▇▇▇▇▇▇ ▇▇▇ in an amount equal to
$1500 times the number of Initial Mortgaged Properties.
(b) Additional Due Diligence Fees for Additional/Substituted
Collateral. The Borrower shall pay to the Lender additional actual due diligence
fees (including reasonable legal fees and expenses related to due diligence and
the Closing of such Request) (the "Additional/Substituted Collateral Due
Diligence Fees") with respect to each Additional Mortgaged Property or
Substituted Mortgaged Property (such Additional/Substituted Collateral Due
Diligence Fees are estimated by the Lender to be $13,500, but such estimate
shall not be used to provide a ceiling or a floor on the amount of the actual
Fees). The Borrower shall pay the estimated amount of $13,500 as the
Additional/Substituted Collateral Due Diligence Fees for the Additional
Mortgaged Property or the Substituted Mortgaged Property, as applicable, to the
Lender on the date on which it submits the Collateral Addition Request or the
Collateral Substitution Request for the addition of the Additional Mortgaged
Property or the Substituted Mortgaged Property, as applicable, to the Collateral
Pool. Prior to the Closing of such Request, the Lender shall notify the Borrower
of the actual amount of the Additional/Substituted Due Diligence Fees and on or
prior to the Closing of such Request, the Borrower shall pay to the Lender the
remaining balance of such Fees (if the actual amount of such Fees exceeds the
estimated amount previously paid by the Borrower) or the Lender shall return to
the Borrower the excess payment of such Fees (if the actual amount of such Fees
is less than the estimated amount previously paid by the Borrower). The Borrower
acknowledges and agrees that the Additional/Substituted Collateral Due Diligence
Fees shall
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include a fee payable to ▇▇▇▇▇▇ Mae in an amount equal to $1500 times each
Additional Mortgaged Property or Substituted Mortgaged Property.
SECTION 18.4 Legal Fees and Expenses.
(a) Initial Legal Fees. The Borrower shall pay, or reimburse the
Lender for, all out-of-pocket legal fees and expenses incurred by the Lender and
by ▇▇▇▇▇▇ ▇▇▇ in connection with the preparation, review and negotiation of this
Agreement and any other Loan Documents executed on the date of this Agreement.
On the date of this Agreement, the Borrower shall pay all such legal fees and
expenses not previously paid or for which funds have not been previously
provided.
(b) Fees and Expenses Associated with Requests. The Borrower shall
pay, or reimburse the Lender for, all costs and expenses incurred by the Lender,
including the out-of-pocket legal fees and expenses reasonably incurred by the
Lender in connection with the preparation, review and negotiation of all
documents, instruments and certificates to be executed and delivered in
connection with each Request, the performance by the Lender of any of its
obligations with respect to the Request, the satisfaction of all conditions
precedent to the Borrower's rights or the Lender's obligations with respect to
the Request, and all transactions related to any of the foregoing, including the
cost of title insurance premiums and applicable recordation and transfer taxes
and charges and all other costs and expenses in connection with a Request. The
obligations of the Borrower under this subsection shall be absolute and
unconditional, regardless of whether the transaction requested in the Request
actually occurs. The Borrower shall pay such costs and expenses to the Lender on
the Closing Date for the Request, or, as the case may be, after demand by the
Lender when the Lender determines that such Request will not close.
SECTION 18.5 MBS-Related Rollover Costs. The Borrower shall be required to pay
to the Lender the following fees with respect to a rollover of a maturing
Revolving Advance on any given day:
(a) with respect to the first rollover of a maturing Revolving Advance
to be made by the Lender on such day, a fee equal to the lesser of: (i) the
actual expenses incurred by the Lender with respect to such rollover Revolving
Advance, as reasonably determined by the Lender, or (ii) $2500; and
(b) with respect to each additional rollover of a maturing Revolving
Advance to be made by the Lender on such day, a fee equal to the lesser of: (i)
the actual expenses incurred by the Lender with respect to such rollover
Revolving Advance, as reasonably determined by the Lender, or (ii) $1000.
SECTION 18.6 Failure to Close any Request. If the Borrower makes a Request and
fails to close on the Request for any reason other than the default by the
Lender, then the Borrower shall pay to the Lender all actual damages (excluding
consequential, punitive or exemplary damages) incurred by the Lender in
connection with the failure to close including, notwithstanding anything to the
contrary contained herein, and without limitation, all breakage costs incurred
or suffered by the Lender and any and all other losses or damages arising out of
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contractual obligations or commitments to third parties incurred or suffered by
the Lender as a result of the Borrower's failure to close on the Request.
SECTION 18.7 Other Fees. The Borrower shall pay the following additional fees
and payments, if and when required pursuant to the terms of this Agreement:
(a) The Collateral Substitution Fee, pursuant to Section 7.3(e), in
connection with the addition of a Substituted Mortgaged Property into the
Collateral Pool in replacement of a Mortgaged Property pursuant to Article VII;
(b) The Collateral Addition Fee, pursuant to Section 6.3(b), in
connection with the addition of an Additional Mortgaged Property into the
Collateral Pool pursuant to Article VI;
(c) All or the applicable portion of the Release Price which is
required by Sections 8.2(c) and 8.2(d) to be paid by the Borrower to the Lender
in connection with the release of a Mortgaged Property from the Collateral Pool
pursuant to Article VIII;
(d) The Revolving Facility Termination Fee, pursuant to Section
10.3(b) in connection with a complete or partial termination of the Revolving
Facility pursuant to Article X; and
(e) The Credit Facility Termination Fee, pursuant to Section 11.3(b),
in connection with the termination of the Credit Facility pursuant to Article
XI.
ARTICLE XIX
EVENTS OF DEFAULT
SECTION 19.1 Events of Default. Each of the following events shall constitute an
"Event of Default" under this Agreement, whatever the reason for such event and
whether it shall be voluntary or involuntary, or within or without the control
of a Borrower Party, or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority:
(a) the occurrence of a default under any Loan Document beyond any
cure period set forth therein; or
(b) the failure by the Borrower to pay when due any amount payable by
the Borrower under the Notes, any Security Instrument, this Agreement, any other
Loan Document, any Reimbursement Documents or any Second Security Instrument,
including any fees, costs or expenses; or
(c) the failure by any Borrower Party to perform or observe any
covenant set forth in Section 14.1(g), Section 14.2(e), or Sections 15.1 through
15.4, inclusive, 15.9 or 15.11 or to perform any obligation of the Borrower
under any Reimbursement Documents or any Second Security Instrument after the
expiration of any notice and/or cure period provided therein; or
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(d) (i) the failure by any Borrower Party to perform or observe any
covenant set forth in Section 14.1 (other than 14.1(g)), ▇▇▇▇▇▇▇▇ ▇▇.▇ (▇), (▇),
(▇), (▇), (▇), (▇), (▇), (▇) through (q), inclusive, or Section 15.7, 15.10 or
15.12 within 30 days after receipt of notice from the Lender, or (ii) the
failure by the Borrower to perform or observe the covenant set forth in Section
15.6 within 30 days after its breach of such covenant; or
(e) any warranty, representation or other written statement made by or
on behalf of a Borrower Party contained in this Agreement, any other Loan
Document or in any instrument furnished in compliance with or in reference to
any of the foregoing, is false or misleading in any material respect on any date
when made or deemed made; or
(f) any other Indebtedness in an aggregate amount in excess of
$150,000 of the Borrower or assumed by the Borrower (i) is not paid when due nor
within any applicable grace period in any agreement or instrument relating to
such Indebtedness or (ii) becomes due and payable before its normal maturity by
reason of a default or event of default, however described, or any other event
of default shall occur and continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness; or
(g) (i) A Borrower Party shall (A) commence a voluntary case under the
Federal bankruptcy laws (as now or hereafter in effect), (B) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, debt adjustment, winding up or
composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors, (G)
assert that the Borrower Party has no liability or obligations under this
Agreement or any other Loan Document to which it is a party; or (H) take any
action for the purpose of effecting any of the foregoing; or (ii) a case or
other proceeding shall be commenced against a Borrower Party in any court of
competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding upon or composition
or adjustment of debts, or (B) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower Party, or of all or a
substantial part of the property, domestic or foreign, of the Borrower Party and
any such case or proceeding shall continue undismissed or unstayed for a period
of 90 consecutive calendar days, or any order granting the relief requested in
any such case or proceeding against the Borrower Party (including an order for
relief under such Federal bankruptcy laws) shall be entered; or
(h) if any provision of this Agreement or any other Loan Document or
the lien and security interest purported to be created hereunder or under any
Loan Document shall at any time for any reason cease to be valid and binding in
accordance with its terms on any Borrower Party, or shall be declared to be null
and void, or the validity or enforceability hereof or thereof or the validity or
priority of the lien and security interest created hereunder or under any other
Loan Document shall be contested by any Borrower Party seeking to
-xci-
establish the invalidity or unenforceability hereof or thereof, or any Borrower
Party shall deny that it has any further liability or obligation hereunder or
thereunder; or
(i) (i) the execution by the Borrower of a chattel mortgage or other
security agreement on any materials, fixtures or articles used in the
construction or operation of the improvements located on any Mortgaged Property
or on articles of personal property located therein, or (ii) if any such
materials, fixtures or articles are purchased pursuant to any conditional sales
contract or other security agreement or otherwise so that the ownership thereof
will not vest unconditionally in the Borrower free from encumbrances, or (iii)
if the Borrower does not furnish to the Lender upon request the contracts, bills
of sale, statements, receipted vouchers and agreements, or any of them, under
which the Borrower claims title to such materials, fixtures, or articles; or
(j) the failure, upon request, to furnish to the Lender the results of
official searches made by any Governmental Authority, or the failure by the
Borrower to comply with any requirement of any Governmental Authority within 30
days after written notice of such requirement shall have been given to the
Borrower by such Governmental Authority; provided that, if action is commenced
and diligently pursued by the Borrower within such 30 days, then the Borrower
shall have such additional time to comply with such requirement as is permitted
by the Governmental Authority; or
(k) a dissolution or liquidation for any reason (whether voluntary or
involuntary) of any Borrower Party; or
(l) any judgment against any Borrower Party, any attachment or other
levy against any portion of any Borrower Party's assets with respect to a claim
(i) in the case of the Borrower, in an amount in excess of $250,000 individually
and/or $500,000 in the aggregate or (ii) in the case of the REIT, in an amount
in excess of $2,500,000 individually and/or $5,000,000 in the aggregate, which
remains unpaid, unstayed on appeal, undischarged, unbonded, not fully insured or
undismissed for a period of sixty (60) days; or
(m) the failure by the Borrower to cause the Gross Revenues with
respect to any Mortgaged Property to be deposited into the applicable Pledgee
Account in accordance with the requirements of the Cash Management Agreement; or
(n) The failure of any Borrower Party to perform or observe any of its
respective Financial Covenants in Sections 16.2 and 16.3, if not cured in
accordance with Section 16.4, which failure shall continue for a period of 30
days after the date on which the Borrower Party receives a notice from the
Lender specifying the failure; or
(o) Any of the following occurs without the prior written consent of
the Lender, which consent may be granted or denied, in Lender's sole and
absolute discretion (which consent may, among other things, be conditioned upon
the payment by the Borrower to the Lender of a fee equal to 1% of the
then-existing Maximum Credit Facility Amount):
(i) any Ownership Interests in the Borrower are Transferred, if
such Transfer will result in a breach of Section 14.1(g);
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(ii) any Ownership Interests in SCA - North Carolina (1)
Incorporated, a Maryland corporation, or in SCA North Carolina
(2) Incorporated, a Maryland corporation are Transferred; or
(iii) a Change in Control in the REIT occurs; or
(p) the failure by any Borrower Party to perform or observe any term,
covenant, condition or agreement hereunder, other than as set forth in
subsections (a) through (o) above, or in any other Loan Document, within 30 days
after receipt of notice from the Lender identifying such failure; provided,
however, that if in the Lender's judgment, (i) the cure of such failure requires
a period in excess of 30 days, (ii) such failure will not result in a Material
Adverse Effect, and (iii) corrective action is instituted by the Borrower Party
within such period and pursued diligently and in good faith, then such failure
shall not constitute an Event of Default unless such failure is not cured by the
Borrower Party within sixty (60) days after receipt of notice from the Lender
identifying such failure.
ARTICLE XX
REMEDIES
SECTION 20.1 Remedies; Waivers. Upon the occurrence of an Event of Default, the
Lender may do any one or more of the following (without presentment, protest or
notice of protest, all of which are expressly waived by the Borrower):
(a) by written notice to the Borrower, to be effective upon dispatch,
terminate the Maximum Credit Facility Commitment and declare the principal of,
and interest on, the Advances and all other sums owing by the Borrower to the
Lender under any of the Loan Documents forthwith due and payable, whereupon the
Maximum Credit Facility Commitment will terminate and the principal of, and
interest on, the Advances and all other sums owing by the Borrower to the Lender
under any of the Loan Documents will become forthwith due and payable.
(b) The Lender shall have the right to pursue any other remedies
available to it under any of the Loan Documents.
(c) The Lender shall have the right to pursue all remedies available
to it at law or in equity, including obtaining specific performance and
injunctive relief.
SECTION 20.2 Waivers; Rescission of Declaration. The Lender shall have the
right, to be exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting forth
the terms, conditions, and extent of such waiver signed by the Lender and
delivered to the Borrower Parties. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
SECTION 20.3 The Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations. If any Borrower Party fails to perform the covenants and
agreements contained
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in this Agreement or any of the other Loan Documents, then the Lender at the
Lender's option may make such appearances, disburse such sums and take such
action as the Lender deems necessary, in its sole discretion, to protect the
Lender's interest, including (i) disbursement of attorneys' fees, (ii) entry
upon the Mortgaged Property to make repairs and Replacements, (iii) procurement
of satisfactory insurance as provided in Section 19 of the Security Instrument
encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a
leasehold, exercise of any option to renew or extend the ground lease on behalf
of the Borrower and the curing of any default of the Borrower in the terms and
conditions of the ground lease. Any amounts disbursed by the Lender pursuant to
this Section 20.3, with interest thereon, shall become additional indebtedness
of the Borrower secured by the Loan Documents. Unless the Borrower and the
Lender agree to other terms of payment, such amounts shall be immediately due
and payable and shall bear interest from the date of disbursement at the Default
Rate (as defined in the Revolving Facility Note), unless collection from the
Borrower of interest at such rate would be contrary to applicable law, in which
event such amounts shall bear interest at the highest rate which may be
collected from the Borrower under applicable law. Nothing contained in this
Section 20.3 shall require the Lender to incur any expense or take any action
hereunder.
SECTION 20.4 No Remedy Exclusive. Unless otherwise expressly provided, no remedy
herein conferred upon or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in addition
to other remedies given under the Loan Documents or existing at law or in
equity.
SECTION 20.5 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 20.6 No Notice. In order to entitle the Lender to exercise any remedy
reserved to the Lender in this Article, it shall not be necessary to give any
notice, other than such notice as may be required under the applicable
provisions of this Agreement or any of the other Loan Documents.
SECTION 20.7 Application of Payments. Except as otherwise expressly provided in
the Loan Documents, and unless applicable law provides otherwise, (i) all
payments received by the Lender from any of the Borrower Parties under the Loan
Documents shall be applied by the Lender against any amounts then due and
payable under the Loan Documents by any of the Borrower Parties, in any order of
priority that the Lender may determine and (ii) the Borrower shall have no right
to determine the order of priority or the allocation of any payment it makes to
the Lender.
ARTICLE XXI
RIGHTS OF ▇▇▇▇▇▇ ▇▇▇
SECTION 21.1 Special Pool Purchase Contract. The Borrower Parties acknowledge
that ▇▇▇▇▇▇ Mae is entering into an agreement with the Lender ("Special Pool
Purchase Contract"),
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pursuant to which, inter alia, (i) the Lender shall agree to assign all of its
rights under this Agreement to ▇▇▇▇▇▇ ▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇ shall accept the
assignment of the rights, (iii) subject to the terms, limitations and conditions
set forth in the Special Pool Purchase Contract, ▇▇▇▇▇▇ Mae shall agree to
purchase 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 Note and the Collateral Pool securing the Notes,
(iv) the Lender shall agree to assign to ▇▇▇▇▇▇ Mae all of the Lender's interest
in the Notes and Collateral Pool securing the Notes, and (v) the Lender shall
agree to service the loans evidenced by the Notes.
SECTION 21.2 Assignment of Rights. The Borrower Parties acknowledge and consent
to the assignment to ▇▇▇▇▇▇ ▇▇▇ of all of the rights of the Lender under this
Agreement and all other Loan Documents, including the right and power to make
all decisions on the part of the Lender to be made under this Agreement and the
other Loan Documents, but ▇▇▇▇▇▇ Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of the Lender under this Agreement or the
other Loan Documents.
SECTION 21.3 Release of Collateral. The Borrower Parties hereby acknowledge
that, after the assignment of Loan Documents contemplated in Section 21.2, the
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Articles VII, VIII or XI. The Borrower Parties acknowledge that the
Security Instruments provide for the release of the Collateral under Articles
VII, VIII and XI. Accordingly, the Borrower Parties shall not look to the Lender
for performance of any obligations set forth in Articles VII, VIII and XI, but
shall look solely to the party secured by the Collateral to be released for such
performance. The Lender represents and warrants to the Borrower Parties that the
party secured by the Collateral shall be subject to the release provisions
contained in Articles VII, VIII and XI by virtue of the release provisions in
each Security Instrument.
SECTION 21.4 Replacement of Lender. At the request of ▇▇▇▇▇▇ ▇▇▇, the Borrower
Parties and the Lender shall agree to the assumption by another lender
designated by ▇▇▇▇▇▇ Mae, of all of the obligations of the Lender under this
Agreement and the other Loan Documents, and/or any related servicing
obligations, and, at ▇▇▇▇▇▇ Mae's option, the concurrent release of the Lender
from its obligations under this Agreement and the other Loan Documents, and/or
any related servicing obligations, and shall execute all releases, modifications
and other documents which ▇▇▇▇▇▇ Mae determines are necessary or desirable to
effect such assumption.
SECTION 21.5 ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses. The Borrower Parties agree
that any provision providing for the payment of fees, costs or expenses incurred
or charged by the Lender pursuant to this Agreement shall be deemed to provide
for the Borrower's payment of all fees, costs and expenses incurred or charged
by the Lender or ▇▇▇▇▇▇ Mae in connection with the matter for which fees, costs
or expenses are payable.
SECTION 21.6 Third-Party Beneficiary. The Borrower Parties hereby acknowledge
and agree that ▇▇▇▇▇▇ ▇▇▇ is a third party beneficiary of all of the
representations, warranties and covenants made by any Borrower Parties to, and
all rights under this Agreement conferred upon, the Lender, and, by virtue of
its status as third-party beneficiary and/or assignee of the
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Lender's rights under this Agreement, ▇▇▇▇▇▇ Mae shall have the right to enforce
all of the provisions of this Agreement against the Borrower Parties.
ARTICLE XXII
INSURANCE, REAL ESTATE TAXES AND
REPLACEMENT RESERVES
SECTION 22.1 Insurance and Real Estate Taxes.
(a) Imposition Deposits.
(i) The Borrower shall deposit with the Lender, on or before the
Initial Closing Date, cash in an amount equal to the highest
aggregate monthly amount which would have been in escrow for
Taxes and insurance premiums if individual escrow accounts
were established for each Mortgaged Property in the Collateral
Pool as of the Initial Closing Date, as such amount is
determined by the Lender based on the DUS Guide. The amounts
deposited under the preceding sentence are collectively
referred to as the "Imposition Deposits." On or before the
first day of each Loan Year after the Initial Closing Date,
and on or before the Closing Date of a Collateral Substitution
Request, a Collateral Addition Request or a Collateral Release
Request, if the Lender determines, based on the foregoing
methodology, that a modified amount is required to be
deposited with the Lender as Imposition Deposits, the Borrower
shall deposit any deficiency with the Lender, or the Lender
shall release any overage to the Borrower, provided that, in
the case of the latter, no Event of Default or Potential Event
of Default then exists hereunder. The Borrower shall, subject
to the Borrower's right to contest under Section 15(d) of the
Security Instruments, pay each Imposition relating to a
Mortgaged Property before the last date upon which such
payment may be made without any penalty or interest charge
being added. Subject to the Borrower's right to contest under
Section 15(d) of the Security Instruments, the Borrower shall
deliver to the Lender evidence that the Borrower has paid each
Imposition within thirty days after making such payment.
(ii) Imposition Deposits shall be held in an institution (which may
be the Lender, if the Lender is such an institution) whose
deposits or accounts are insured or guaranteed by a federal
agency. The Lender shall not be obligated to open additional
accounts or deposit Imposition Deposits in additional
institutions when the amount of the Imposition Deposits
exceeds the maximum amount of the federal deposit insurance or
guaranty. So long as no Event of Default or Potential Event of
Default has occurred and is continuing, the Lender shall
release, or cause to be released, to the Borrower, not more
frequently than once each month, interest on the Imposition
Deposits at a per annum rate equal to LIBOR (as hereinafter
defined) minus .65%, but not to exceed the actual amount of
interest and other income earned by the Lender on the
Imposition Deposits during such period of time. The Borrower
hereby pledges and grants to the Lender a security interest in
the Imposition Deposits
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as additional security for all of the Obligations under this
Agreement and the other Loan Documents. Any amounts deposited
with the Lender under this Section 22.1 shall not be trust
funds, nor shall they operate to reduce the Obligations,
unless applied by the Lender for that purpose under Section
22.1(v). For purposes of this Section 22.1(a), the term
"LIBOR" means interest per annum which is equal to the
arithmetic mean of the U.S. Dollar London Interbank Offered
Rates for one (1) month periods as of 11:00 a.m. London time
on the first Business Day of each week on which the London
Interbank market is open, as published by Bridge Information
Services on its MoneyCenter system. LIBOR shall be rounded,
if necessary, to the next higher one sixteenth of one percent
(1.16%). If such U.S. dollar LIBOR rates are not so offered
or published for any period, then during such period LIBOR
shall mean the London Interbank Offered Rate for one (1) month
periods published on the first Business Day of each week on
which the London Interbank market is open, in the Wall Street
Journal in its regular column entitled "Money Rates".
(iii) If an Event of Default has occurred and is continuing, the
Lender may apply any Imposition Deposits, in any amounts and
in any order as the Lender determines, in the Lender's
discretion, to pay any Impositions or as a credit against the
Obligations. On the Credit Facility Termination Date, the
Lender shall refund to the Borrower any Imposition Deposits
then held by the Lender.
(b) Delivery of Impounds 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 Imposition Deposits are deposited with the Lender, the
Borrower may, upon notice to the Lender, elect to substitute for the Imposition
Deposits a single Impounds Letter of Credit (as defined below) in accordance
with this Section 22.1(b), in which event the Lender shall return the Imposition
Deposits to the Borrower within 10 days after the Borrower delivers the Impounds
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 an Impounds Letter of Credit is held by the Lender, the Borrower may, upon
notice to the Lender, elect to substitute for the Impounds Letter of Credit the
Imposition Deposits, in which event the Borrower shall deliver to the Lender, in
cash, the amount of the Imposition Deposits which would have been required at
the time of the substitution if the Borrower had not elected to furnish the
Impounds Letter of Credit and the Lender shall return the Impounds Letter of
Credit to the Borrower within 10 days after its receipt of the cash for the
Imposition Deposits. Notwithstanding the foregoing, the Borrower may not
exercise its right to substitute an Impounds Letter of Credit for the Imposition
Deposits or the Imposition Deposits for the Impounds Letter of Credit if the
Borrower has made prior substitution under this Section 22.1(b) during the 12
months preceding the proposed substitution. Any Impounds Letter of Credit
delivered to the Lender in accordance with this Section 22.1(b) shall be a
clean, irrevocable letter of credit, naming the Lender as beneficiary, in an
amount equal to the amount which would have been required to have been on
deposit as Imposition Deposits (the "Maximum Escrow Amount"), if Imposition
Deposits had been maintained, as such amount is determined by the Lender in
accordance with the methodology set forth in Section 22.1(a)(i). The Impounds
Letter of Credit must be issued by an issuer (the "Issuer") that meets the
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Lender's requirements for ratings of issuers of acceptable letters of credit as
set forth in the DUS Guide and must comply with all other requirements for
letters of credit contained in the DUS Guide (including furnishing an opinion of
counsel relating to the Issuer and the Impounds Letter of Credit). (The term
"Impounds Letter of Credit" shall mean the letter of credit delivered to the
Lender pursuant to this Section 22.1(b), any replacement letter of credit, and
any amendment or renewal of the letter of credit or the replacement letter of
credit.) If the Borrower at any time provides 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 "Impounds Letter of Credit" shall also mean the confirming letter of
credit as so amended, renewed or replaced.)
(c) Impounds Letter of Credit as Additional Collateral. The Borrower
agrees that the Impounds Letter of Credit provides collateral for the Note in
addition to the lien of the Security Instruments on the Mortgaged Properties and
the other Collateral 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.
(d) Conditions for Providing and Holding the Impounds Letter of
Credit.
(i) Period During Which Borrower Must Provide Impounds Letter of
Credit. Until the earliest of (A) payment in full of all sums
secured by the Security Instruments and release by the Lender
of the liens of the Security Instruments, or (B) the date that
the Lender fully draws on the Impounds Letter of Credit as
permitted by this Agreement, the Borrower shall renew, amend
or replace the Impounds Letter of Credit in accordance with
the terms of this Agreement, to ensure that the Impounds
Letter of Credit remains in effect and does not expire.
(ii) Return of the Impounds Letter of Credit or the Proceeds
Thereof. The Lender shall return the Impounds Letter of
Credit, or the proceeds of any draws on such Impounds Letter
of Credit (less all amounts which have been applied by the
Lender pursuant to the terms of this Article XIX) to the
Borrower 10 days after the date on which the Lender releases
the lien of all of the Security Instruments following payment
in full of all amounts secured by the Security Instruments.
(iii) Application for Prepayment. If the proceeds of the Impounds
Letter of Credit are applied to payment of a portion of the
principal amount of a Note, a prepayment premium attributable
to such prepaid principal amount shall be due to the Lender to
the extent, if any, provided in such Note.
(iv) Adjustment of the Impounds Letter of Credit. The Maximum
Escrow Amount may be adjusted from time to time as set forth
in Section 22.1(a)(i). If the Maximum Escrow Amount is to be
adjusted upward, on or before the
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applicable date specified in Section 22.1(a)(i), the Borrower
shall deliver to the Lender an amendment or replacement of the
Impounds Letter of Credit.
(e) (i) Renewal or Replacement. At least 30 days prior to the
expiration date of the Impounds Letter of Credit, the Borrower shall either (A)
cause the Impounds Letter of Credit to be amended to extend its expiration date,
or (B) furnish a replacement Impounds Letter of Credit. In either case, the
amended Impounds Letter of Credit or the replacement Impounds Letter of Credit
must (x) 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, (y) have a term of 364 days or more (unless a shorter term is approved in
writing by the Lender), and (z) be in the amount of the outstanding Impounds
Letter of Credit, amended to the extent required pursuant to Section 22.1(d)(iv)
above.
(ii) Review of Rating of Issuer; Replacement of Impounds Letter of
Credit. From time to time, the Lender shall review the rating of the Issuer of
the then outstanding Impounds Letter of Credit. If the Lender notifies the
Borrower that at the time of any such review the issuing bank does not meet
Lender's requirements for ratings of issuers of acceptable letters of credit as
set forth in the DUS Guide, the Borrower shall replace the outstanding Impounds
Letter of Credit with an Impounds 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 Borrower, unless the outstanding Impounds Letter of
Credit would expire prior to such 30-day period, in which case the Borrower
shall provide the replacement Impounds Letter of Credit no later than 5 Business
Days prior to the expiration date of the outstanding Impounds Letter of Credit.
(iii) Draw on Letter of Credit. If the Borrower does not provide an
amendment to, or replacement of, the Impounds Letter of Credit when required
pursuant to Section 22.1(e)(i) or (ii) above, as the case may be, which amended
or replacement Impounds Letter of Credit satisfies all of the requirements of
Sections 22.1(e)(i) and (ii) above, the Lender shall draw the full amount of the
Impounds 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 Borrower's failure to comply with said Sections 22.1(e)(i) and (ii).
(f) (i) Remedies. During the continuance of an Event of Default, the
Lender shall be entitled, in its sole and absolute discretion, to:
(1) Draw on the Impounds Letter of Credit and hold the
proceeds of the Impounds Letter of Credit as
additional cash Collateral;
(2) Draw on the Impounds Letter of Credit and apply all
or any portion of the proceeds of the Impounds Letter
of Credit to payment of the unpaid principal amount
of any Note, the Credit Facility Termination Fee
resulting therefrom, if any, and the prepayment
premium, if any (calculated as provided in such Note)
on the principal amount prepaid; provided, however,
that such application of proceeds shall not cure or
be deemed to cure any default;
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(3) Draw on the Impounds Letter of Credit and apply all
or any portion of the proceeds of the Impounds 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
(4) Exercise all rights and remedies available to the
Lender at law or in equity or under any of the Loan
Documents (including this Section 22.1).
(ii) No Obligation to Apply Proceeds; No Cure. Nothing in this Section
22.1 shall obligate the Lender to apply all or any portion of the proceeds of
the Impounds Letter of Credit to cure any default under the Loan Documents or to
reduce the indebtedness evidenced by any Note. No application of proceeds of the
Impounds Letter of Credit by Lender shall be deemed to cure any default.
(g) Proceeds of the Impounds Letter of Credit.
(i) Providing Replacement Impounds Letter of Credit after a Draw.
Provided that Borrower is not otherwise in default under any
of the Loan Documents (including the Security Instruments),
after the Lender has drawn on the Impounds Letter of Credit,
but prior to application of proceeds, the Lender may, but is
not obligated to, permit the Borrower to provide a replacement
Impounds Letter of Credit that complies with all the
requirements set forth in the DUS Guide and Section
22.1(e)(i), in which case the Lender shall return the proceeds
of the draw to the Borrower, less the Lender's costs and
expenses (including reasonable attorneys' fees and expenses).
(ii) Proceeds Held in Escrow Funds Account(s). If the Lender draws
on the Impounds Letter of Credit and holds the proceeds under
the Security Instruments, such funds shall be held by the
Lender in an account in accordance with Section 22.1(a)(ii)
above.
(iii) No Obligation to Draw or to Apply Proceeds. The Lender shall
not be obligated to draw on the Impounds Letter of Credit upon
any default under any of the Loan Documents or apply the
proceeds of any draw on the Impounds Letter of Credit to cure
a default under the Loan Documents. The Lender may hold the
Impounds Letter of Credit or the proceeds of any Impounds
Letter of Credit until the date for return as determined
pursuant to Section 22.1(d)(ii), or apply all or any portion
of the proceeds as permitted by this Agreement or any of the
Loan Documents and hold any remaining proceeds until the date
for return determined under Section 22.1(d)(ii).
SECTION 22.2 Replacement Reserves. The Borrower shall execute a Replacement
Reserve Agreement for each of the Mortgaged Properties and shall (unless waived
by the Lender) make all deposits for replacement reserves in accordance with the
terms of the Replacement Reserve Agreement.
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ARTICLE XXIII
▇▇▇▇▇▇
SECTION 23.1 Interest Rate Protection.
(a) The Initial Hedge. To protect against fluctuations in interest
rates, the Borrower shall make arrangements for ▇▇▇▇▇▇, in an aggregate notional
principal amount equal to or greater than the Revolving Advances Outstanding
from time to time, to be in place and maintained at all times until the
Revolving Facility Termination Date. Notwithstanding the immediately preceding
sentence, the Hedge which shall be in place on the Initial Closing Date shall be
in the form of a Cap in a notional amount equal to $118,450,000, which covers
only a portion of the Revolving Advances Outstanding as of the Initial Closing
Date, for a period beginning on the Initial Closing Date and ending not earlier
than the last day of the fourth Loan Year or such earlier date as is acceptable
to the Lender in its sole and absolute discretion. On the Initial Closing Date
and until the earlier of (the "Initial Closing Hedge Escrow Termination Date"):
(i) January 29, 1999 or (ii) the date that the Borrower provides a Hedge, in an
amount which, when added to the notional amount of any ▇▇▇▇▇▇ then in effect, is
equal to or greater than the Revolving Advances then Outstanding, for a period
ending not earlier than the last day of the fourth Loan Year or such earlier
date as is acceptable to the Lender in its sole discretion and otherwise in
satisfaction of the requirements of this Article XXIII, the Borrower shall
deposit with the Lender an amount not less than 200% of the cost, as estimated
by the Lender, to obtain a Cap, in a notional amount of $150,000,000, at a
capped interest rate of 9.25% and for a term equal to four Loan Years (the
"Initial Closing Hedge Escrow Amount"). The Initial Closing Hedge Escrow Amount
shall be redetermined by the Lender on a weekly basis until the Initial Closing
Hedge Escrow Termination Date. If, based on any such redetermination, the amount
then on deposit with the Lender pursuant to this Section 23.1(a) is less than an
amount equal to 180% of the redetermined Initial Closing Hedge Escrow Amount,
the Borrower shall, within two Business Days of the Lender's request, deposit
with the Lender additional funds to cause the amount then on deposit with the
Lender to equal not less than 200% of the redetermined Initial Closing Hedge
Escrow Amount. The Borrower hereby pledges and assigns to the Lender, and grants
to the Lender a lien and security interest in, and right of setoff against, any
right, title and interest the Borrower may have in and to any funds deposited
with the Lender pursuant to this Section 23.1(a). If the Borrower fails to
provide a Hedge in compliance with the requirements of Section 23.1(a)(ii) above
on or before January 29, 1999, such failure shall constitute an Event of Default
hereunder, notwithstanding anything to the contrary contained herein. So long as
no Potential Event of Default or Event of Default exists, the Lender will permit
funds on deposit with the Lender pursuant to this Section 23.1(a) to be used to
acquire the Hedge contemplated by Section 23.1(a)(ii). Promptly after the
Initial Closing Hedge Escrow Termination Date, and provided that no Potential
Event of Default or Event of Default then exists, the Lender shall return to the
Borrower all remaining funds then on deposit with the Lender pursuant to this
Section 23.1(a).
Notwithstanding the foregoing, with the consent of the Lender, the Borrower may
provide interest rate protection through any combination of Swaps and Caps so
long as, from and after the Initial Closing Hedge Escrow Termination Date, a
Hedge or combination of ▇▇▇▇▇▇ is in effect with respect to all Revolving
Advances Outstanding from time to time until the last day
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of the fourth Loan Year or such earlier date as is acceptable to the Lender, and
such Hedge or ▇▇▇▇▇▇ otherwise satisfy the requirements of this Article XXIII.
In addition, with the consent of the Lender, any ▇▇▇▇▇▇ required under this
Article XXIII may be provided by the REIT, in which case the Cap Security
Agreement or Swap Security Agreement shall be executed by the REIT and shall be
in form and substance satisfactory to the Lender, and the covenants and
agreements contained in this Article XXIII with respect to such Hedge shall
apply to the REIT.
(b) Subsequent ▇▇▇▇▇▇. Additional ▇▇▇▇▇▇ (each, a "Subsequent Hedge")
shall be required if the aggregate sum of Revolving Advances Outstanding is
increased to an amount that exceeds the aggregate notional principal amount of
all ▇▇▇▇▇▇ then in effect; such Subsequent Hedge shall be in effect prior to or
concurrently with the Lender making any such Revolving Advance. It is the
intention of the parties, and a condition of the Revolving Facility Commitment,
that the Borrower shall obtain, and shall maintain at all times until the
Revolving Facility Termination Date, a Hedge or ▇▇▇▇▇▇ in an aggregate notional
principal amount not less than the aggregate sum of all Revolving Advances
Outstanding from time to time. If the aggregate sum of Revolving Advances
Outstanding at any time is less than the aggregate notional principal amount of
all ▇▇▇▇▇▇ then in effect, the Borrower may amend and/or terminate one or more
▇▇▇▇▇▇ to provide for a decrease in the aggregate notional principal amount of
all such ▇▇▇▇▇▇ then in place to an amount not less than the aggregate sum of
all Revolving Advances then Outstanding, provided that the Lender gives its
prior written approval to the documents reflecting the amendment or termination
(which approval shall not be unreasonably withheld or delayed), and provided
further that any such reduction shall not affect in any manner the Borrower's
obligation to provide a Subsequent Hedge when required by this Section 23.1.
SECTION 23.2 Terms and Conditions. The Borrower may determine from time to time
whether to provide a Cap and/or a Swap in satisfaction of the Hedge requirement,
provided that each Hedge shall:
(a) be obtained on terms and conditions approved by the Lender;
(b) be evidenced and governed by Hedge 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 which, when added to the
aggregate sum of all notional principal amounts of other ▇▇▇▇▇▇, if any, then in
effect, is at least equal to the aggregate sum of all Revolving Advances then
Outstanding;
(e) require the counterparty to make any interest or other payments
under the Hedge to an account pledged to the Lender pursuant to a Cap Security
Agreement or a Swap Security Agreement, as applicable; and
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(f) provide for a capped or a swapped fixed interest rate which is not
higher than the interest rate that would have resulted in the Debt Service
Coverage Ratios, computed as of the Initial Closing Date, being equal to 115%.
SECTION 23.3 Hedge Assignment; Delivery of Hedge Payments. Pursuant to a Cap
Security Agreement or a Swap Security Agreement, as applicable, the Lender shall
be granted an enforceable, perfected, first priority lien on and security
interest in each Hedge and payments due under the Hedge (including scheduled and
termination payments) in order to secure the Obligations under this Agreement
and the other Loan Documents. With respect to each Hedge, the Cap Security
Agreement or the Swap Security Agreement, as the case may be, must be delivered
by the Borrower to the Lender no later than the effective date of the Hedge.
SECTION 23.4 Termination. Except as provided in Section 23.1, the Borrower shall
not terminate, transfer or consent to any transfer of any existing Hedge without
the Lender's prior written consent as long as the Borrower is required to
maintain a Hedge pursuant to this Agreement; provided, however, that after the
Revolving Facility Termination Date, the Borrower shall have the right to
terminate the then-existing ▇▇▇▇▇▇.
SECTION 23.5 Performance Under Hedge Documents. The Borrower agrees to comply
fully with, and to otherwise perform when due, its obligations under, all
applicable Hedge Documents and all other agreements evidencing, governing and/or
securing any Hedge arrangement contemplated under this Article XXIII. Except as
specifically provided in this Article XXIII, the Borrower shall not exercise,
without the Lender's prior written consent, and shall exercise, at the Lender's
direction, any rights or remedies under any Hedge Document, including, without
limitation, the right of termination. The Borrower shall notify the Lender of
any downgrading of the credit rating of any counterparty under a Hedge promptly
after the Borrower receives notice from such counterparty of such downgrading.
SECTION 23.6 Escrow Provisions.
(a) Annual Cap Escrow Payment. Until the date on which the Borrower
obtains, and so long as the Borrower thereafter maintains, one or more ▇▇▇▇▇▇
expiring on the Revolving Facility Termination Date for the aggregate sum of all
Revolving Advances Outstanding from time to time, the Borrower shall, on the
first day of each Loan Year, deposit, in advance, with the Lender the Annual Cap
Escrow Payment. The "Annual Cap Escrow Payment" means, with respect to each Loan
Year, an amount equal to the quotient obtained by dividing --
(i) the difference between --
(1) 110% of the cost, as estimated by the Lender, and
computed on a weighted average basis, to obtain on
such date of determination a Cap for a term equal to
the time period from the expiration date of each
Hedge then in effect until the Revolving Credit
Termination Date and in an aggregate notional
principal amount at least equal to the aggregate sum
of all Revolving Advances then Outstanding, and
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(2) the amount in the Cap Escrow Fund on the date
immediately preceding the commencement of the Loan
Year, by
(ii) the number of Loan Years then remaining until the Revolving
Credit Termination Date, as of the date immediately preceding
the commencement of such Loan Year.
At least 10 days before the commencement of each Loan Year, the Lender shall
give the Borrower notice of the estimate under Section 23.6(a) and the amount of
the Annual Cap Escrow Payment for such Loan Year.
(b) Ninety Day Reconciliation. Approximately 90 days prior to the
expiration of the then effective Cap, the Lender shall determine the amount
equal to --
(i) 110% of the cost, as estimated by the Lender, and computed on
a weighted average basis, to obtain on such date of
determination a Cap for a term equal to the time period from
the expiration date of each Hedge then in effect until the
Revolving Credit Termination Date and in an aggregate notional
principal amount at least equal to the aggregate sum of all
Revolving Advances then Outstanding, minus
(ii) the amount in the Cap Escrow Fund on the date of such
calculation.
If the foregoing calculation results in a positive number, the Borrower shall,
within 10 days after the Lender's request, deposit with the Lender such amount.
Upon receipt, the Lender shall deposit such amount into the Cap Escrow Fund.
(c) Cap Escrow Fund. The Lender shall establish an escrow fund (the
"Cap Escrow Fund") and shall deposit each Annual Cap Escrow Payment, together
with any additional amount deposited by the Borrower with the Lender pursuant to
Section 23.6(b), into the Cap Escrow Fund. The Cap Escrow Fund shall be placed
in a deposit account with a financial institution selected by the Lender and
shall be invested by the Lender in Permitted Investments selected by the
Borrower. So long as no Event of Default or Potential Event of Default then
exists, all interest on funds in the Cap Escrow Fund, including all earnings on
such Permitted Investments, shall be released to the Borrower not more
frequently than once each month. The Borrower hereby pledges and assigns to the
Lender, and grants to Lender a lien and security interest in, and right of
setoff against, any right, title and interest the Borrower may have in and to
the Cap Escrow Fund. At the Lender's request, the Borrower 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 attached as an
Exhibit to the Cap Security Agreement. Provided no Event of Default or Potential
Event of Default has then occurred and is continuing, the Cap Escrow Fund shall
be returned to the Borrower within 10 days after the date on which the Borrower
obtains a Cap covering the period ending on the last day of the Term of this
Agreement.
(d) Delivery of Cap 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
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the Cap Escrow Fund is maintained, the Borrower may, upon notice to the Lender,
elect to substitute for the Cap Escrow Fund a Cap Letter of Credit (as defined
below) in accordance with this Section 23.6(d), in which event the Lender shall
return the amount in the Cap Escrow Fund to the Borrower within 10 days after
the Borrower delivers the Cap 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 Cap Letter of Credit is held by the
Lender, the Borrower may, upon notice to the Lender, elect to substitute for the
Cap Letter of Credit the Cap Escrow Funds, in which event the Borrower shall
deliver to the Lender, in cash, the amount of the Cap Escrow Funds which would
have been required at the time of the substitution if the Borrower had not
elected to furnish the Cap Letter of Credit and the Lender shall return the Cap
Letter of Credit to the Borrower within 10 days after its receipt of the cash
for the Cap Escrow Fund. Notwithstanding the foregoing, the Borrower may not
exercise its right to substitute a Cap Letter of Credit for the Cap Escrow Fund
or the Cap Escrow Fund for the Cap Letter of Credit if the Borrower has made
prior substitution under this Section 23.6(d) during the 12 months preceding the
proposed substitution. Any Cap Letter of Credit delivered to the Lender in
accordance with this Section 23.6(d) shall be a clean, irrevocable letter of
credit, naming the Lender as beneficiary, in an amount equal to the amount which
would have been required to have been on deposit in the Cap Escrow Fund (the
"Required Amount"), if Cap Escrow Funds had been maintained, as such amount is
determined by the Lender in accordance with this Section 23.6. The Cap 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 and must comply with all other requirements for letters of
credit contained in the DUS Guide (including furnishing an opinion of counsel
relating to the Issuer and the Cap Letter of Credit). (The term "Cap Letter of
Credit" shall mean the letter of credit delivered to the Lender pursuant to this
Section 23.6(d), any replacement letter of credit, and any amendment or renewal
of the letter of credit or the replacement letter of credit.) If the Borrower at
any time provides 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 "Cap Letter of Credit"
shall also mean the confirming letter of credit as so amended, renewed or
replaced.)
(e) Cap Letter of Credit as Additional Collateral. The Borrower agrees
that the Cap Letter of Credit provides collateral for the Notes in addition to
the lien of the Security Instruments on the Mortgaged Properties and the other
Collateral 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.
(f) Conditions for Providing and Holding Cap Letter of Credit.
(i) Period During Which Borrower Must Provide Cap Letter of
Credit. Until the earliest of (A) payment in full of all sums
secured by the Security Instruments and release by the Lender
of the liens of the Security Instruments, (B) the date that
the Lender fully draws on the Cap Letter of Credit as
permitted by this Agreement, or (C) the date on which the
Borrower obtains a Hedge expiring on the Revolving Facility
Termination Date covering all of the Revolving Advances then
Outstanding, the Borrower shall renew, amend or
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replace the Cap Letter of Credit in accordance with the terms
of this Agreement, to ensure that the Cap Letter of Credit
remains in effect and does not expire.
(ii) Return of the Cap Letter of Credit or the Proceeds Thereof.
The Lender shall return the Cap Letter of Credit, or the
proceeds of any draws on such Cap Letter of Credit (less all
amounts which have been applied by the Lender pursuant to the
terms of this Article XXIII) to the Borrower 10 days after the
date on which either clause (A) or (C) of Section 23.6(f)(i)
is satisfied.
(iii) Application for Prepayment. If the proceeds of the Cap Letter
of Credit are applied to payment of a portion of the principal
amount of a Note, a prepayment premium attributable to such
prepaid principal amount shall be due to the Lender to the
extent, if any, provided in such Note.
(iv) Adjustment of the Cap Letter of Credit. The Borrower shall,
within 10 days after receipt of notice from the Lender of the
dollar determinations under Sections 23.6(a) or 23.6(b),
deliver to Lender an amendment or replacement of the Cap
Letter of Credit in the then determined Required Amount.
(g) (i) Renewal or Replacement. At least 30 days prior to the
expiration date of the Cap Letter of Credit, the Borrower shall either (A) cause
the Cap Letter of Credit to be amended to extend its expiration date, or (B)
furnish a replacement Cap Letter of Credit. In either case, the amended Cap
Letter of Credit or the replacement Cap Letter of Credit must (x) 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, (y) have a term
of 364 days or more (unless a shorter term is approved in writing by the
Lender), and (z) be in the amount of the outstanding Cap Letter of Credit,
amended to the extent required pursuant to Section 23.6(f)(iv) above.
(ii) Review of Rating of Issuer; Replacement of Cap Letter of Credit.
From time to time, the Lender shall review the rating of the Issuer of the then
outstanding Cap Letter of Credit. If the Lender notifies the Borrower that at
the time of any such review the issuing bank does not meet Lender's requirements
for ratings of issuers of acceptable letters of credit as set forth in the DUS
Guide, the Borrower shall replace the outstanding Cap Letter of Credit with an
Cap Letter of Credit that complies with all of the requirements set forth in the
DUS Guide and Section 23.6(g)(i), no later than 30 days after the Lender's
notice to the Borrower, unless the outstanding Cap Letter of Credit would expire
prior to such 30-day period, in which case the Borrower shall provide the
replacement Cap Letter of Credit no later than 5 Business Days prior to the
expiration date of the outstanding Cap Letter of Credit.
(iii) Draw on Letter of Credit. If the Borrower does not provide an
amendment to, or replacement of, the Cap Letter of Credit when required pursuant
to Section 23.6(g)(i) or (ii) above, as the case may be, which amended or
replacement Cap Letter of Credit satisfies all of the requirements of Sections
23.6(g)(i) and (ii) above, the Lender shall draw the full amount of the Cap
Letter of Credit and hold and apply the proceeds as permitted
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hereunder and, in such event, no Event of Default shall be deemed to exist by
virtue of the Borrower's failure to comply with said Sections 23.6(g)(i) and
(ii).
(h) (i) Remedies. During the continuance of an Event of Default, the
Lender shall be entitled, in its sole discretion, to:
(1) Draw on the Cap Letter of Credit and hold the
proceeds of the Cap Letter of Credit as additional
cash Collateral;
(2) Draw on the Cap Letter of Credit and apply all or any
portion of the proceeds of the Cap Letter of Credit
to payment of the unpaid principal amount of any
Note, the Credit Facility Termination Fee resulting
therefrom, if any, and the prepayment premium, if any
(calculated as provided in such Note) on the
principal amount prepaid; provided, however, that
such application of proceeds shall not cure or be
deemed to cure any default;
(3) Draw on the Cap Letter of Credit and apply all or any
portion of the proceeds of the Cap 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
(4) Exercise all rights and remedies available to the
Lender at law or in equity or under any of the Loan
Documents (including this Section 23.6).
(ii) No Obligation to Apply Proceeds; No Cure. Nothing in this Section
23.6 shall obligate the Lender to apply all or any portion of the proceeds of
the Cap 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 Cap Letter of Credit by Lender shall be deemed to cure any default.
(i) Proceeds of the Cap Letter of Credit.
(i) Providing Replacement Cap Letter of Credit after a Draw.
Provided that Borrower is not otherwise in default under any
of the Loan Documents (including the Security Instruments),
after the Lender has drawn on the Cap Letter of Credit, but
prior to application of proceeds, the Lender may, but is not
obligated to, permit the Borrower to provide a replacement Cap
Letter of Credit that complies with all the requirements set
forth in the DUS Guide and Section 23.6(g)(i), in which case
the Lender shall return the proceeds of the draw to the
Borrower, less the Lender's costs and expenses (including
reasonable attorneys' fees and expenses).
(ii) Proceeds Held in Escrow Funds Account(s). If the Lender draws
on the Cap Letter of Credit and holds the proceeds, such funds
shall be held by the Lender in the Cap Escrow Fund account.
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(iii) No Obligation to Draw or to Apply Proceeds. The Lender shall
not be obligated to draw on the Cap Letter of Credit upon any
default under any of the Loan Documents or apply the proceeds
of any draw on the Cap Letter of Credit to cure a default
under the Loan Documents. The Lender may hold the Cap Letter
of Credit or the proceeds of any Cap Letter of Credit until
the date for return as determined pursuant to Section
23.6(f)(ii), or apply all or any portion of the proceeds as
permitted by this Agreement or any of the Loan Documents and
hold any remaining proceeds until the date for return
determined under Section 23.6(f)(ii).
ARTICLE XXIV
LIMITS ON PERSONAL LIABILITY
SECTION 24.1 Limits on Personal Liability.
(a) Limits on Personal Liability Except as otherwise provided in this
Article XXIV, no Borrower Party shall have any personal liability under this
Agreement, the Note, the Security Instruments or any other Loan Document for the
performance of any Obligations of any Borrower Party under the Loan Documents,
and the Lender's only recourse for the payment and performance of the
Obligations shall be the Lender's exercise of its rights and remedies with
respect to the Mortgaged Property and any other Collateral held by the Lender as
security for the Obligations. This limitation on the Borrower's Parties'
liability shall not limit or impair the Lender's enforcement of its rights
against any guarantor of all or part of the Obligations, but, if such guarantor
is a Borrower Party, such guarantor's liability shall also be limited to the
extent set forth in this Article XXIV.
(b) Exceptions to Limits on Personal Liability. The Borrower Parties
shall be personally liable to the Lender on a joint and several basis for the
repayment of a portion of the Advances and other amounts due under the Loan
Documents equal to any loss or damage suffered by the Lender as a result of (1)
failure of the Borrower to pay to the Lender upon demand after an Event of
Default, all Rents to which the Lender is entitled under Section 3(a) of the
Security Instrument encumbering the Mortgage Property and the amount of all
security deposits collected by the Borrower from tenants then in residence; (2)
failure of the Borrower to apply all insurance proceeds and condemnation
proceeds as required by the Security Instrument encumbering the applicable
Mortgage Property; (3) failure of the Borrower to comply with Section
14.2(a)(vii); (4) fraud or written material misrepresentation by any Borrower
Party or any officer, director, partner, member or employee of any Borrower
Party in connection with the application for or creation of the Obligations or
any request for any action or consent by the Lender; (5) failure to apply Rents,
first, to the payment of reasonable operating expenses and then to amounts
("Debt Service Amounts") payable under the Loan Documents (except that the
Borrower Party will not be personally liable (i) to the extent that the Borrower
Party lacks the legal right to direct the disbursement of such sums because of a
bankruptcy, receivership or similar judicial proceeding, or (ii) with respect to
Rents of a Mortgaged Property that are distributed in any calendar year if the
Borrower has paid all operating expenses and Debt Service Amounts for that
calendar year); or (6) the Borrower's failure to deposit all Gross Revenues into
a Property Account (as defined in the Cash Management Agreement) in accordance
with the Cash Management Agreement.
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(c) Full Recourse. The Borrower Parties shall become personally liable
to the Lender on a joint and several basis for the payment and performance of
all Obligations upon the occurrence of any of the following Events of Default:
(1) the Borrower's acquisition of any property or operation of any business not
permitted by Section 33 of the Security Instruments; or (2) an Event of Default
under Section 19.1(o) of this Agreement.
(d) Permitted Transfer Not Release. No Transfer by any party of its
Ownership Interests in the Borrower shall release the party from liability under
this Article XXIV, this Agreement or any other Loan Document, unless the Lender
shall have approved the Transfer in its sole and absolute discretion and shall
have expressly released the party in connection with the Transfer.
(e) Miscellaneous. To the extent that the Borrower Parties have
personal liability under this Article XXIV, the Lender may exercise its rights
against the Borrower Parties personally on a joint and several basis without
regard to whether the Lender has exercised any rights against the Mortgaged
Property or any other security, or pursued any rights against any guarantor, or
pursued any other rights available to the Lender under the Loan Documents or
applicable law. For purposes of this Article XXIV, the term "Mortgaged Property"
shall not include any funds that (1) have been applied by the Borrower as
required or permitted by the Loan Documents prior to the occurrence of an Event
of Default, or (2) are owned by the Borrower and which the Borrower was unable
to apply as required or permitted by the Loan Documents because of a bankruptcy,
receivership, or similar judicial proceeding.
ARTICLE XXV
MISCELLANEOUS PROVISIONS
SECTION 25.1 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 25.2 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 25.3 Payment of Costs, Fees and Expenses. The Borrower shall pay, on
demand, all fees, costs, charges or expenses (including the reasonable fees and
expenses of attorneys, accountants and other experts) incurred by the Lender in
connection with:
(a) Any amendment, consent or waiver to this Agreement or any of the
Loan Documents (whether or not any such amendments, consents or waivers are
entered into).
(b) Defending or participating in any litigation arising from actions
by third parties and brought against or involving the Lender with respect to (i)
any Mortgaged
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Property, (ii) any event, act, condition or circumstance in connection with any
Mortgaged Property or (iii) the relationship between the Lender and the
Borrower, any Borrower Party or the REIT in connection with this Agreement or
any of the transactions contemplated by this Agreement.
(c) The administration or enforcement of, or preservation of rights or
remedies under, this Agreement or any other Loan Documents or in connection with
the foreclosure upon, sale of or other disposition of any Collateral granted
pursuant to the Loan Documents (the reasonableness standard as to fees and
expenses of attorneys, accountants and other experts shall only apply under this
Section 25.3(c) with respect to the administration of this Agreement and the
other Loan Documents when no Event of Default exists hereunder).
The Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, the Borrower will not be obligated
to pay any franchise, estate, inheritance, income, excess profits or similar tax
on the Lender. Any attorneys' fees and expenses payable by the Borrower pursuant
to this Section shall be recoverable separately from and in addition to any
other amount included in such judgment, and such obligation is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into any such judgment. Any amounts payable by the Borrower pursuant to
this Section, with interest thereon if not paid when due, shall become
additional indebtedness of the Borrower secured by the Loan Documents. Such
amounts shall bear interest from the date such amounts are due until paid in
full at the weighted average, as determined by Lender, of the interest rates in
effect from time to time for each Advance unless collection from the Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. The provisions of this Section are cumulative
with, and do not exclude the application and benefit to the Lender of, any
provision of any other Loan Document relating to any of the matters covered by
this Section.
SECTION 25.4 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 25.5 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 25.6 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial. EACH
OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF EACH BORROWER PARTY
UNDER THIS AGREEMENT AND ANY OTHER LOAN DOCUMENT INCORPORATING THIS SECTION BY
REFERENCE SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO
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AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAW
APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND
SUBSTANTIVE MATTERS RELATING ONLY TO THE PERFECTION, THE EFFECT OF PERFECTION
AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE
GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS
LOCATED. THE BORROWER PARTIES AND LENDER AGREE, HOWEVER, THAT ANY CONTROVERSY
ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER
LOAN DOCUMENT SHALL BE, EXCEPT (1) AS OTHERWISE PROVIDED HEREIN, (2) 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, AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND
FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT
ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN
WHICH THE PERSONAL PROPERTY IS LOCATED, LITIGATED IN NEW YORK. THE LOCAL AND
FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN NEW YORK SHALL, EXCEPT AS
OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY
ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES
RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH
THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO,
OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER PARTY AND LENDER
IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY
LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER
LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY
VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN,
HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
OR EXERCISING ANY RIGHTS AGAINST THE BORROWER PARTIES, AND AGAINST THE
COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING
OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A
WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF NEW YORK SHALL GOVERN
THE RIGHTS AND OBLIGATIONS OF THE BORROWER PARTIES AND THE LENDER AS PROVIDED
HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER PARTIES TO PERSONAL JURISDICTION
WITHIN NEW YORK. EACH BORROWER PARTY AND LENDER (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
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EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER,
EACH BORROWER PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER
(INCLUDING, BUT NOT LIMITED TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO EACH BORROWER PARTY THAT LENDER WILL NOT SEEK TO ENFORCE THE
PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY
AND VOLUNTARILY AGREED TO BY THE BORROWER PARTIES UPON CONSULTATION WITH
INDEPENDENT LEGAL COUNSEL SELECTED BY THE BORROWER PARTIES' FREE WILL.
SECTION 25.7 Severability. In the event any provision of this Agreement or in
any other Loan Document shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision will be severable from the remainder hereof as to
such jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.
SECTION 25.8 Notices.
(a) Manner of Giving Notice. Each notice, direction, certificate or
other communication hereunder (in this Section referred to collectively as
"notices" and singly as a "notice") which any party is required or permitted to
give to the other party pursuant to this Agreement shall be in writing and shall
be deemed to have been duly and sufficiently given if:
(1) personally delivered with proof of delivery thereof
(any notice so delivered shall be deemed to have been
received at the time so delivered);
(2) sent by Federal Express (or other similar overnight
courier) designating morning delivery (any notice so
delivered shall be deemed to have been received on
the Business Day it is delivered by the courier);
(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
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after 5:00 p.m. (local time of the recipient) on a
Business Day or if transmitted on a day other than a
Business Day);
addressed to the parties as follows:
As to any Borrower Party:
Archstone Communities Trust
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Controller
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. or J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Archstone Communities Trust
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Archstone Communities Trust
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to the Lender:
Berkshire Mortgage Finance Limited Partnership
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Director of Portfolio Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to ▇▇▇▇▇▇ ▇▇▇:
▇▇▇▇▇▇ Mae
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Change of Notice Address. Any party may, by notice given pursuant
to this Section, change the person or persons and/or address or addresses, or
designate an additional person or persons or an additional address or addresses,
for its notices, but notice of a change of address shall only be effective upon
receipt. Each party agrees that it shall not refuse or reject delivery of any
notice given hereunder, that it shall acknowledge, in writing, receipt of the
same upon request by the other party and that any notice rejected or refused by
it shall be deemed for all purposes of this Agreement to have been received by
the rejecting
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party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service, the courier service or facsimile.
SECTION 25.9 Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the parties
hereto agree that they shall, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Lender or the Borrower Parties may
request and as may be required in the opinion of the Lender or its counsel to
effectuate the intention of or facilitate the performance of this Agreement or
any Loan Document.
(b) Further Documentation. Without limiting the generality of
subsection (a), in the event any further documentation or information is
required by the Lender to correct patent mistakes in the Loan Documents,
materials relating to the Title Insurance Policies or the funding of the
Advances, the Borrower Parties shall provide, or cause to be provided to the
Lender, at their cost and expense, such documentation or information. The
Borrower Parties shall execute and deliver to the Lender such documentation,
including any amendments, corrections, deletions or additions to the Notes, the
Security Instruments or the other Loan Documents as is required by the Lender.
(c) Compliance with Investor Requirements. Without limiting the
generality of subsection (a), the Borrower Parties shall do anything necessary
to comply with the requirements of the Lender in order to enable the Lender to
sell the MBS backed by an Advance.
SECTION 25.10 Term of this Agreement. This Agreement shall continue in effect
until the Credit Facility Termination Date.
SECTION 25.11 Assignments; Third-Party Rights. No Borrower Party shall assign
this Agreement, or delegate any of its obligations hereunder, without the prior
written consent of the Lender. The Lender may assign its rights and obligations
under this Agreement separately or together, without the Borrower Parties'
consent, only to ▇▇▇▇▇▇ ▇▇▇, but may not delegate its obligations under this
Agreement unless required to do so pursuant to Section 21.4.
SECTION 25.12 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 25.13 General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in Article I, Section 16.1 and elsewhere in this Agreement
have the meanings assigned to them in this Agreement and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other genders; (ii) accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP; (iii) references
herein to "Articles," "Sections," "subsections," "paragraphs" and other
subdivisions without reference to a document are to designated Articles,
Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv)
a reference to a subsection without further reference
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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 25.14 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.
SECTION 25.15 Decisions in Writing. Any approval, designation, determination,
selection, action or decision of the Lender must be in writing to be effective.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Borrower Parties
----------------
REIT
----
ARCHSTONE COMMUNITIES TRUST,
a Maryland real estate trust
By:
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Senior Vice President
Borrower
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ASN MULTIFAMILY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: SCA-NORTH CAROLINA (1)
INCORPORATED, a Maryland
corporation, Its General Partner
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Senior Vice President
Lender
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BERKSHIRE MORTGAGE FINANCE LIMITED
PARTNERSHIP, a Massachusetts limited
partnership
By: BRF CORPORATION,
a Massachusetts corporation,
Its General Partner
By:
-----------------------------
Name:
----------------------
Title:
---------------------
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