1
EXHIBIT 10.9
SENIOR UNSECURED
LINE OF CREDIT AGREEMENT
between
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
and
SUN COMMUNITIES, INC.
and
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
D/B/A ▇▇▇▇▇▇ CAPITAL, A DIVISION
OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
INDIVIDUALLY AS A CO-LENDER AND AS SYNDICATION AGENT
and
NBD BANK
INDIVIDUALLY AS A CO-LENDER AND
AS AGENT FOR ONE OR MORE CO-LENDERS
Dated as of May 1, 1996
Facility Amount $75,000,000.00
2
TABLE OF CONTENTS
SECTION 1. DEFINITIONS............................................................................................1
Section 1.01 Definitions.................................................................................1
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT FACILITY.........................................................22
Section 2.01 Advances...................................................................................22
Section 2.02 Notice of Borrowing........................................................................23
Section 2.03 Disbursement of Funds......................................................................23
Section 2.04 The Note...................................................................................23
Section 2.05 Interest...................................................................................24
Section 2.06 Interest Periods...........................................................................25
Section 2.07 Minimum Amount of Eurodollar Portions......................................................26
Section 2.08 Conversion or Continuation.................................................................26
Section 2.09 Voluntary Reduction of Facility Amount; Termination of Facility Amount.....................27
Section 2.10 Principal Amortization.....................................................................27
Section 2.11 Voluntary Prepayments......................................................................28
Section 2.12 Mandatory Prepayments......................................................................28
Section 2.13 Application of Payments and Prepayments....................................................28
Section 2.14 Method and Place of Payment................................................................28
Section 2.15 Fees.......................................................................................29
Section 2.16 Interest Rate Unascertainable, Increased Costs, Illegality.................................29
Section 2.17 Funding Losses.............................................................................31
Section 2.18 Increased Capital..........................................................................32
Section 2.19 Taxes......................................................................................32
Section 2.20 Use of Proceeds and Limitations on Advances................................................34
Section 2.21 Intentionally Deleted......................................................................34
Section 2.22 Intentionally Deleted......................................................................35
Section 2.23 Intentionally Deleted......................................................................35
Section 2.24 Decision Making by the Agent...............................................................35
Section 2.25 Additional Unencumbered Assets.............................................................35
Section 2.26 Pro Rata Interests.........................................................................35
SECTION 3. CONDITIONS PRECEDENT..................................................................................35
Section 3.01 Conditions Precedent to the Initial Advance................................................35
Section 3.02 Conditions Precedent to All Advances of the Loan...........................................40
Section 3.03 Acceptance of Borrowings...................................................................41
Section 3.04 Sufficient Counterparts....................................................................41
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................................42
Section 4.01 Corporate/Partnership Status...............................................................42
Section 4.02 Corporate/Partnership Power and Authority..................................................42
-i-
3
Section 4.03 No Violation...............................................................................42
Section 4.04 Litigation.................................................................................43
Section 4.05 Financial Statements: Financial Condition; etc.............................................43
Section 4.06 Solvency...................................................................................43
Section 4.07 Material Adverse Change....................................................................43
Section 4.08 Use of Proceeds; Margin Regulations........................................................43
Section 4.09 Governmental Approvals.....................................................................43
Section 4.10 Unsecured Debt Rating......................................................................44
Section 4.11 Tax Returns and Payments...................................................................44
Section 4.12 ERISA......................................................................................44
Section 4.13 Intentionally Deleted......................................................................45
Section 4.14 Representations and Warranties in Loan Documents...........................................45
Section 4.15 True and Complete Disclosure...............................................................45
Section 4.16 Ownership of Real Property; Existing Security Instruments..................................45
Section 4.17 No Default.................................................................................45
Section 4.18 Licenses, etc..............................................................................45
Section 4.19 Compliance With Law........................................................................46
Section 4.20 Brokers....................................................................................46
Section 4.21 Judgments..................................................................................46
Section 4.22 Property Manager...........................................................................46
Section 4.23 Assets of the REIT.........................................................................46
Section 4.24 REIT Status................................................................................46
Section 4.25 Operations.................................................................................47
Section 4.26 Stock......................................................................................47
Section 4.27 Ground Leases..............................................................................47
Section 4.28 Single Purpose.............................................................................47
Section 4.29 Status of Property.........................................................................47
Section 4.30 Canadian Properties........................................................................50
Section 4.31 Intentionally Deleted......................................................................50
Section 4.32 Survival...................................................................................50
SECTION 5. AFFIRMATIVE COVENANTS.................................................................................50
Section 5.01 Financial Reports..........................................................................50
Section 5.02 Books, Records and Inspections.............................................................53
Section 5.03 Maintenance of Insurance...................................................................53
Section 5.04 Taxes......................................................................................57
Section 5.05 Corporate Franchises; Conduct of Business..................................................57
Section 5.06 Compliance with Law........................................................................57
Section 5.07 Performance of Obligations.................................................................58
Section 5.08 Stock......................................................................................58
Section 5.09 Change in Rating...........................................................................58
Section 5.10 Maintenance of Properties..................................................................58
Section 5.11 Compliance with ERISA......................................................................58
Section 5.12 Settlement/Judgment Notice.................................................................59
Section 5.13 Acceleration Notice........................................................................59
Section 5.14 Lien Searches; Title Searches..............................................................59
-ii-
4
Section 5.15 Intentionally Deleted......................................................................60
Section 5.16 Minimum Net Worth..........................................................................60
Section 5.17 Total Indebtedness.........................................................................60
Section 5.18 Coverage Ratios............................................................................60
Section 5.19 Equity or Debt Offerings...................................................................61
Section 5.20 Minimum Asset Value........................................................................61
Section 5.21 Managers...................................................................................61
Section 5.22 Further Assurances.........................................................................61
Section 5.23 REIT Status................................................................................61
Section 5.24 Additional Covenants.......................................................................62
Section 5.25 Intentionally Deleted......................................................................62
Section 5.26 Intentionally Deleted......................................................................62
Section 5.27 Preparation of Environmental Reports.......................................................62
Section 5.28 Documentation following Acquisition of an Interest in Real Property Assets.................62
Section 5.29 Intentionally Deleted......................................................................62
Section 5.30 Preparation of Engineering Reports.........................................................62
Section 5.31 Intentionally Deleted......................................................................63
SECTION 6. NEGATIVE COVENANTS....................................................................................63
Section 6.01 Intentionally Deleted......................................................................63
Section 6.02 Intentionally Deleted......................................................................63
Section 6.03 Liens......................................................................................63
Section 6.04 Restriction on Fundamental Changes.........................................................63
Section 6.05 Transactions with Affiliates...............................................................64
Section 6.06 Plans......................................................................................64
Section 6.07 Distributions..............................................................................65
Section 6.08 Intentionally Deleted......................................................................65
Section 6.09 Restriction on Prepayment of Indebtedness..................................................65
Section 6.10 Real Property Assets.......................................................................65
Section 6.11 Intentionally Deleted......................................................................65
Section 6.12 Organizational Documents...................................................................65
Section 6.13 Intentionally Deleted......................................................................65
Section 6.14 Restrictions on Investments................................................................65
Section 6.15 RV Sites...................................................................................66
SECTION 7. EVENTS OF DEFAULT.....................................................................................67
Section 7.01 Events of Default..........................................................................67
Section 7.02 Rights and Remedies........................................................................69
SECTION 8. INTENTIONALLY DELETED.................................................................................70
SECTION 9. MISCELLANEOUS.........................................................................................70
-iii-
5
Section 9.01 Payment of Agent's, Syndication Agent's and Co-Lender's Expenses, Indemnity, etc...........70
Section 9.02 Notices....................................................................................71
Section 9.03 Successors and Assigns.....................................................................73
Section 9.04 Amendments and Waivers.....................................................................73
Section 9.05 No Waiver; Remedies Cumulative.............................................................73
Section 9.06 Governing Law; Submission to Jurisdiction..................................................74
Section 9.07 Confidentiality Disclosure of Information..................................................74
Section 9.08 Recourse...................................................................................75
Section 9.09 Sale of Loan, Co-Lenders, Participations and Servicing.....................................75
Section 9.10 Borrower's and the REIT's Assignment.......................................................78
Section 9.11 Counterparts...............................................................................78
Section 9.12 Effectiveness..............................................................................78
Section 9.13 Headings Descriptive.......................................................................78
Section 9.14 Marshaling; Recapture......................................................................78
Section 9.15 Severability...............................................................................78
Section 9.16 Survival...................................................................................79
Section 9.17 Domicile of Loan Portions..................................................................79
Section 9.18 Intentionally Deleted......................................................................79
Section 9.19 Calculations; Computations.................................................................79
Section 9.20 WAIVER OF TRIAL BY JURY....................................................................79
Section 9.21 No Joint Venture...........................................................................79
Section 9.22 Estoppel Certificates......................................................................79
Section 9.23 No Other Agreements........................................................................80
Section 9.24 Controlling Document.......................................................................80
Section 9.25 No Benefit to Third Parties................................................................80
-iv-
6
SCHEDULES
Schedule 1 Unencumbered Assets
Schedule 2 List of Real Property Assets
Schedule 3 Loan Parties, Operating Partnerships and Affiliates
Schedule 4 Intentionally Deleted
Schedule 5 Litigation
Schedule 6 Employee Benefit Plans
Schedule 7 Liens
Schedule 8 REIT Assets
Schedule 9A REIT Business Operations
Schedule 9B Borrower Business Operations
Schedule 10 Ground Leases
Schedule 11 Pro Rata Interests
Schedule 12 Exceptions to Representations and Warranties
Schedule 13 Canadian Properties and Mortgages
Schedule 14 Guarantors
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B The Note
Exhibit C Notice of Conversion or Continuation
Exhibit D Notice of Voluntary Reduction of Facility Amount
Exhibit E Voluntary Prepayment Notice
Exhibit F Intentionally Deleted
Exhibit G Intentionally Deleted
Exhibit H Intentionally Deleted
Exhibit I Intentionally Deleted
Exhibit J Subordination of Management Agreement
Exhibit K Intentionally Deleted
Exhibit L Ground Lease Estoppel
Exhibit M Intentionally Deleted
Exhibit N Intentionally Deleted
Exhibit O Intentionally Deleted
-v-
7
THIS SENIOR UNSECURED LINE OF CREDIT AGREEMENT, dated as of May 1, 1996
is made among SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP, a Michigan limited
partnership ("Borrower"), SUN COMMUNITIES, INC., a Maryland corporation (the
"REIT") (subject to Section 9.08 hereof,) and NBD BANK, a Michigan banking
corporation, individually as a Co-Lender ("Lender") and as Agent for one or more
Co-Lenders ("Agent") and ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., D/B/A ▇▇▇▇▇▇ CAPITAL, A
DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., a Delaware corporation, individually
as a Co-Lender ("▇▇▇▇▇▇") and as Syndication Agent ("Syndication Agent") (each,
including Lender, a "Co-Lender" and together with Lender, the "Co-Lenders").
SECTION 1. DEFINITIONS.
Section 1.01 Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Accounts Receivable" shall mean all income and revenues of Borrower
and any Loan Party received and Borrower's and the Loan Party's right to receive
all income and revenues arising from the operation of the Real Property Assets
and all payments for goods or property sold or leased or for services rendered
by Borrower or any Loan Party, whether or not yet earned by performance, and not
evidenced by an instrument or chattel paper, including, without limiting the
generality of the foregoing, (i) all accounts, contract rights, book debts, and
notes arising from the operation of a mobile home park or manufactured housing
community on the Real Property Assets or arising from the sale, lease or
exchange of goods or other property and/or the performance of services, (ii)
Borrower's and any Loan Party's rights to payment from any consumer
credit/charge card organization or entity (such as, or similar to, the
organizations or entities which sponsor and administer the American Express
Card, the Visa Card, the Bankamericard, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Card, or the
Mastercard), (iii) Borrower's and any Loan Party's rights in, to and under all
purchase orders for goods, services or other property, (iv) Borrower's and any
Loan Party's rights to any goods, services or other property represented by any
of the foregoing, (v) monies due to or to become due to Borrower or any Loan
Party under all contracts for the sale, lease or exchange of goods or other
property and/or the performance of services including the right to payment of
any interest or finance charges in respect thereto (whether or not yet earned by
performance on the part of Borrower or any Loan Party) and (vi) all collateral
security and guaranties of any kind given by any person or entity with respect
to any of the foregoing. Accounts Receivable shall include those now existing or
hereafter created, substitutions therefor, proceeds (whether cash or non-cash,
movable or immovable, tangible or intangible) received upon the sale, exchange,
transfer, collection or other disposition or substitution thereof and any and
all of the foregoing and proceeds therefrom.
"Administrative Fee" shall have the meaning provided in the Section
2.15(b).
"Advance" shall mean each advance and re-advance of the principal
balance of the Loan.
8
"Affiliate" shall mean, with reference to a specified Person, 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 and any
Subsidiaries (including Consolidated Subsidiaries) of such specified Person.
"Agent" shall have the meaning provided in the opening paragraph of
this Agreement and in Section 9.09(e).
"Agreement" shall mean this Senior Unsecured Line of Credit Agreement
as the same may from time to time hereafter be modified, supplemented or
amended.
"Applicable Laws" shall mean all existing and future federal, state and
local laws, statutes, orders, ordinances, rules, and regulations or orders,
writs, injunctions or decrees of any court affecting Borrower, any Loan Party or
any Real Property Asset, or the use thereof including, but not limited to, all
zoning, fire safety and building codes, the Americans with Disabilities Act, and
all Environmental Laws (as defined in the Environmental Indemnity).
"Aspen Acquisition" shall have the meaning provided in Section 5.16.
"Aspen Properties" shall mean those Real Property Assets identified on
Schedule 2 as the Aspen Properties.
"Assets" of any Person means all assets of such Person that would, in
accordance with GAAP, be classified as assets of a company conducting a business
the same as or similar to that of such Person, including without limitation, all
Real Property Assets.
"Assignment and Assumption" shall have the meaning provided in Section
9.09.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors' rights.
"Base Period" shall have the meaning provided in Section 5.18(a).
"Base Rate" shall mean, on any particular date, a rate per annum equal
to the rate of interest publicly announced by Agent as its prime rate in effect
on such day, with any change in said rate to be effective as of the date of such
change; if Agent does not announce its prime rate or ceases to announce a prime
rate, Base Rate shall mean, on any particular date, a rate per annum equal to
the rate of interest published in The Wall Street Journal as the "prime rate",
as in effect on such day, with any change in the Base Rate resulting from a
change in said prime rate to be effective as of the date of the relevant change
in said prime rate; provided, however, that if more than one prime rate is
published in The Wall Street Journal for a day, the average of the prime rates
shall be used; provided, further, however, that the prime rate (or the average
of the prime rates) will be rounded to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%.
-2-
9
In the event that The Wall Street Journal should cease or temporarily
interrupt publication, then the Prime Rate shall mean the daily average prime
rate published in another business newspaper, or business section of a
newspaper, of national standing chosen by Agent. If The Wall Street Journal
resumes publication, the substitute index will immediately be replaced by the
prime rate published in The Wall Street Journal.
In the event that a prime rate is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Agent shall select a comparable interest rate index which is readily
available to Borrower and verifiable by Borrower but is beyond the control of
Agent or any Co-Lender. Agent shall give Borrower prompt written notice of its
choice of a substitute index and when the change became effective.
Such substitute index will also be rounded to the nearest 1/16 of 1%
or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%.
The determination of the Base Rate by Agent shall be conclusive absent
manifest error.
"Base Rate Margin" shall mean a rate determined by reference to the
lowest Unsecured Debt Rating of Borrower as set forth below:
--------------------------------------------------------------------------------------------------------------------
Standard & Poor's Moody's Investors Margin from the date hereof Margin from the Margin
Ratings Services Rating Service, Inc. Rating or through and including the Adjustment Date through and
or a Substitute Rating a Substitute Rating Margin Adjustment Date including to date the Loan
Agency Equivalent Rating Agency Equivalent Rating is paid in full
--------------------------------------------------------------------------------------------------------------------
BBB+ or higher BAA1 or higher -0.10% 0.90%
--------------------------------------------------------------------------------------------------------------------
BBB BAA2 -0.05% 0.95%
--------------------------------------------------------------------------------------------------------------------
BBB- BAA3 0.00% 1.00%
--------------------------------------------------------------------------------------------------------------------
BB+ or lower Ba1 or lower 0.50% 1.50%
--------------------------------------------------------------------------------------------------------------------
If no Rating Agency or Substitute Rating Agency 0.50% 1.50%
assigns a rating to Borrower for whatever reason
====================================================================================================================
The Base Rate Margin for the Base Rate Portion shall be determined by
reference to the lowest Unsecured Debt Rating of Borrower in effect from time to
time, and each change in the Base Rate Margin shall be effective as of the date
such Unsecured Debt Rating is announced.
"Base Rate Portion" shall mean the portion of the Loan made and/or
being maintained at a rate of interest based upon the Base Rate.
-3-
10
"Best" shall mean A.M. Best Company, Inc.
"Book Value" shall mean the gross book value of all of a Person's
assets that is reflected on such Person's consolidated financial statements
(excluding adjustment or allowance for depreciation and amortization) and
calculated and prepared in accordance with GAAP.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement and any successor Borrower expressly permitted hereunder.
"Borrower's Partnership Agreement" shall mean the Second Amended and
Restated Limited Partnership Agreement of Sun Communities Operating Limited
Partnership dated as of April 30, 1996.
"Borrowing" shall mean a borrowing of one Type of Advance from Agent
and the Co-Lenders on a given date (or resulting from conversions or
continuations on a given date), having in the case of Eurodollar Portions the
same Interest Period.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which Agent, or any Co-Lender or
banking institutions are authorized or required by law or other government
actions to close, and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Portions,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks for U.S. dollar deposits in the relevant
interbank Eurodollar market.
"Canadian Mortgages" shall mean those certain mortgages encumbering the
Canadian Properties as described on Schedule 13.
"Canadian Properties" shall mean those certain properties encumbered by
mortgage loans as described on Schedule 13.
"Capital Expenditures" shall mean, for any period, the sum of all
expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that have a useful life of more than one year.
"Capitalized Lease" as to any Person shall mean (i) any lease of
property, real or personal, the obligations under which are capitalized on the
consolidated balance sheet of such Person and its Subsidiaries, and (ii) any
other such lease to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capitalized Lease Obligations" as to any Person shall mean all
obligations of such Person and its Subsidiaries under or in respect of
Capitalized Leases.
-4-
11
"Cash Equivalents" shall mean any of the following, to the extent owned
by a Person free and clear of all Liens: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that (i) is
a Co-Lender or a member of the Federal Reserve System, (ii) issues (or the
parent of which issues) commercial paper rated as described in clause (c) below,
and (iii) is organized under the laws of the United States or any State thereof
and has combined capital and surplus of at least $1 billion or (c) commercial
paper issued by any corporation organized under the laws of any State of the
United States and rated at least "Prime-1" (or the then equivalent grade) by
▇▇▇▇▇'▇ Investors Service, Inc. or "A-1" (or the then equivalent grade) by
Standard & Poor's Ratings Services.
"Change in Law" shall have the meaning provided in Section 2.19(c).
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, together with all rules and regulations
from time to time promulgated thereunder.
"Co-Lender" shall have the meaning set forth in the opening paragraph
of this Agreement, and any successors or assigns pursuant to Section 9.09.
"Common OP Units" shall have the meaning ascribed to it in the Borrower's
Partnership Agreement.
"Consolidated Interest Expense" means with respect to any Person for
any period, interest accrued or payable by such Person and its Subsidiaries
during such period in respect of Total Debt determined on a consolidated basis
in accordance with GAAP, taking into account any Hedge Agreement.
"Consolidated Subsidiaries" shall mean those Persons (including
Borrower and any Operating Partnership) set forth on Schedule 3 hereof, and any
other Persons required to be consolidated with Borrower or the REIT under GAAP
in Borrower's or the REIT's consolidated financial statements, and only for so
long as (i) such Persons continue to be required to be consolidated with
Borrower or the REIT under GAAP in Borrower's or the REIT's consolidated
financial statements or (ii) none of the events described in Section 7.01(e)
have occurred with respect to any such Persons.
"Construction in Progress" shall mean construction on any vacant,
unimproved or non-income producing Undeveloped Land or other Real Property Asset
or construction, renovation or rehabilitation of that portion of the net
rentable area of any Improvements on Real Property Assets as to which no
certificate of occupancy (or its equivalent) has been issued.
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases
(including Capitalized
-5-
12
Leases) dividends or other obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor,(ii) to advance or supply
funds (x) for the purchase or payment of any such primary obligation or (y) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth, solvency or other financial condition of the primary
obligor, (iii) to 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 (iv) otherwise
to assure or hold harmless the owner of such primary obligation against loss in
respect thereof: provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business or obligations of such Person which would not be
required under GAAP to be disclosed as liabilities or footnoted on such Person's
financial statement. The amount of any accrued or accruable Contingent
Obligation shall be determined in accordance with GAAP.
"Contract Rate" shall mean the rate or rates of interest (which rate
shall include the applicable margin added thereto pursuant to the terms of this
Agreement) per annum provided for in this Agreement which are applicable to the
Loan from time to time so long as no Event of Default has occurred and is
continuing. If more than one rate of interest is applicable to the Loan, then,
unless the context indicates that the Contract Rate is to be determined for each
Loan Portion, the Contract Rate shall be the average of such rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%) with such average to be
weighted according to the relative size of the Loan Portions to which such
different rates are applicable. The determination of the Contract Rate by Agent
shall be conclusive absent manifest error.
"Control" shall mean in (a) in the case of a corporation, ownership,
directly or through ownership of other entities, of at least ten percent (10%)
of all the voting stock (exclusive of stock which is voting only as required by
applicable law or in the event of nonpayment of dividends and pays dividends
only on a nonparticipating basis at a fixed or floating rate), and (b) in the
case of any other entity, ownership, directly or through ownership of other
entities, of at least ten percent (10%) of all of the beneficial equity
interests therein [calculated by a method that excludes from equity interests,
ownership interests that are nonvoting (except as required by applicable law or
in the event of nonpayment of dividends or distributions) and pay dividends or
distributions only on a non-participating basis at a fixed or floating rate] or,
in any case, (c) the power directly or indirectly, to direct or control, or
cause the direction of, the management policies of another Person, whether
through the ownership of voting securities, general partnership interests,
common directors, trustees, officers by contract or otherwise. The terms
"controlled" and "controlling" shall have meanings correlative to the foregoing
definition of "Control."
"Debt Service" means with respect to any Person for any period, the sum
(without duplication) of (a) Consolidated Interest Expense of such Person for
such period plus (b) scheduled principal amortization of Total Debt and any
unscheduled principal amortization payments actually made or required to be made
during such period pursuant to a settlement of debt (giving effect to any
principal payments actually made or required to be made other than
-6-
13
scheduled balloon payments due on the applicable maturity date that are not then
due or past due) of such Person for such period (whether or not such payments
are made).
"Default" shall mean any event, act or condition which, with the giving
of notice or lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall mean for each Loan Portion the lesser of (a) the
Maximum Legal Rate or (b) the rate per annum determined by adding 4% if prior to
the Margin Adjustment Date or 5% if after the Margin Adjustment Date to the Base
Rate as from time to time is in effect.
"Distribution" shall mean any dividends (other than dividend payable
solely in common stock), distributions, return of capital to any stockholders,
general or limited partners or members, other payments, distributions or
delivery of property or cash to stockholders, general or limited partners or
members, or any redemption, retirement, purchase or other acquisition, directly
or indirectly, of any shares of any class of capital stock now or hereafter
outstanding (or any options or warrants issued with respect to capital stock)
general or limited partnership interest, or the setting aside of any funds for
the foregoing.
"Dollars" and the symbol "$" each mean the lawful money of the United
States of America.
"Domestic Lending Office" shall mean the office set forth in Section
9.02 for Agent and the Co-Lenders, or such other office as may be designated
from time to time by written notice to Borrower.
"Draw Period" shall mean the period commencing on the date hereof and
expiring on May 1, 1999.
"EBITDA" shall mean with respect to any Person for any period, earnings
(or losses) before interest and taxes of such Person and its Affiliates for such
period plus, to the extent deducted in computing such earnings (or losses)
before interest and taxes, depreciation and amortization expense, all as
determined on a consolidated basis with respect to such Person and its
Affiliates in accordance with GAAP; provided, however, EBITDA shall exclude
earnings or losses resulting from (i) cumulative changes in accounting
practices, (ii) discontinued operations, (iii) extraordinary items, (iv) net
income of any entity acquired in a pooling of interest transaction for the
period prior to the acquisition, (v) net income of an Affiliate or any other
Loan Party that is unavailable to the Borrower or the REIT, (vi) net income not
readily convertible into Dollars or remittable to the United States, (vii) gains
and losses from the sale of assets, and (viii) net income from corporations,
partnerships, associations, joint ventures or other entities in which the
Borrower, the REIT or an Affiliate thereof has a minority interest and in which
neither Borrower, the REIT or their Affiliate has Control, except to the extent
actually received.
"Employee Benefit Plan" shall mean an employee benefit plan within the
meaning of Section 3(3) of ERISA.
-7-
14
"Engineering Reports" shall mean written engineering reports prepared
by licensed engineers acceptable to Agent, stating, among other things, that
such Real Property Asset is in good condition and repair, free from damage and
waste and is in compliance with the Americans with Disabilities Act and
otherwise in form and substance satisfactory to the Agent.
"Environmental Indemnity" shall mean that certain environmental
indemnity agreement dated the date hereof given by Borrower and the REIT to the
Agent, individually as a Co-Lender and as Agent, and ▇▇▇▇▇▇ as Syndication Agent
and Co-Lender, as the same may be supplemented or amended from time to time.
"Environmental Reports" shall mean written environmental site
assessments, prepared by independent qualified environmental professionals
acceptable to Agent, on any Real Property Assets in form and substance
satisfactory to Agent and containing the following: (i) a Phase I environmental
site assessment analyzing the presence of environmental contaminants,
polychlorinated biphenyls or storage tanks and other Hazardous Substances at
each of the Real Property Assets, the risk of contamination from off-site
Hazardous Substances and compliance with Environmental Laws, such assessments
shall be conducted in accordance with ASTM Standard E 1527-93, or any successor
thereto published by ASTM, with respect to each of the Real Property Assets,
(ii) an asbestos survey of each of the Real Property Assets, which shall include
random sampling of materials and air quality testing, (iii) if any of the Real
Property Assets is used for residential housing, an assessment of the presence
of lead-based paint, lead in water and radon in the improvements (other than
Units that are not owned or leased by Borrower, the REIT, any other Loan Party
or any Affiliate thereof), and (iv) such further site assessments Agent may
require or request due to the results obtained in (i), (ii) or (iii) hereof or
in its reasonable discretion.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute, together with all rules
and regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and any provisions of ERISA
substituted therefor.
"ERISA Controlled Group" means any corporation or entity or trade or
business or person that is a member of any group described in Section 414(b),
(c), (m) or (o) of the Code of which Borrower, the REIT or any other Loan Party
is a member.
"Eurocurrency Reserve Requirements" shall mean, with respect to each
day during an Interest Period for Eurodollar Portions, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Federal Reserve Board or other governmental authority or agency having
jurisdiction with respect thereto for determining the maximum reserves
(including, without limitation, basic, supplemental, marginal and emergency
reserves) for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate" shall mean, for any Interest Period, the rate
per annum (rounded upwards, if necessary, to the next higher one hundred of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period which appears on the Telerate
-8-
15
Page 3750 as of 11:00 a.m. (London, England time) two (2) Business Days prior to
the first day of such Interest Period. The determination of the Eurodollar Base
Rate by Agent shall be conclusive absent manifest error.
"Eurodollar Lending Office" shall mean the office of Agent (or any
Co-Lender) designated as such by Agent from time to time by written notice to
Borrower.
"Eurodollar Portions" shall mean each portion of the Loan made and/or
being maintained at a rate of interest calculated by reference to the Eurodollar
Rate.
"Eurodollar Rate" shall mean with respect to each day during an
Interest Period for Eurodollar Portions, a rate per annum equal to the
Eurodollar Base Rate, or, if any Co-Lender is subject to Eurocurrency Reserve
Requirements, whether or not such reserves are actually incurred or maintained,
the average of the Eurodollar Base Rate and the Adjusted Eurodollar Base Rate,
with such average to be weighted according to the percentage of the Eurodollar
Portion subject to such Co-Lender's interest in the Loan and the balance of such
Eurodollar Portion. The Adjusted Eurodollar Base Rate shall mean a rate per
annum, determined for each day during an Interest Period in accordance with the
following formula (rounded upwards to the nearest whole multiple of l/16th of
one percent):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Rate Margin" shall mean the rate determined by reference to
the lowest Unsecured Debt Rating of Borrower as set forth below:
--------------------------------------------------------------------------------------------------------------------
Standard & Poor's Moody's Investors Margin from the date hereof Margin from the Margin
Ratings Services Rating Service, Inc. Rating or through and including the Adjustment Date through and
or a Substitute Rating a Substitute Rating Margin Adjustment Date including to date the Loan
Agency Equivalent Rating Agency Equivalent Rating is paid in full
--------------------------------------------------------------------------------------------------------------------
BBB+ or higher BAA1 or higher 1.40% 2.40%
--------------------------------------------------------------------------------------------------------------------
BBB BAA2 1.45% 2.45%
--------------------------------------------------------------------------------------------------------------------
BBB- BAA3 1.50% 2.50%
--------------------------------------------------------------------------------------------------------------------
BB+ or lower Ba1 or lower 2.00% 3.00%
--------------------------------------------------------------------------------------------------------------------
If no Rating Agency or Substitute Rating Agency 2.00% 3.00%
assigns a rating to Borrower for whatever reason
====================================================================================================================
-9-
16
The Eurodollar Rate Margin for each Eurodollar Portion shall be
determined by reference to the lowest Unsecured Debt Rating of Borrower in
effect on the first day of the related Interest Period.
"Event of Default" shall have the meaning provided in Section 7.
"Fair Market Value" shall mean a value determined by Agent equal to (a)
with respect to any Real Property Asset, the quotient of Net Operating Income
for the twelve month period immediately preceding the calculation thereof for
such Real Property Asset divided by the Market Capitalization Rate, provided,
however, that if such Real Property Asset is not open for business and fully
operational at the time of such calculation, the Fair Market Value shall be the
value determined by Agent in its reasonable discretion, subject to approval by
the Majority Co-Lenders; (b) with respect to Other Assets, excluding the
Canadian Mortgages, the cash and Cash Equivalents owned by a Person at the time
of the calculation; and (c) with respect to the Canadian Mortgages, the net book
value of such mortgages as set forth in the consolidated financial statements of
the Borrower and its Consolidated Subsidiaries prepared in accordance with GAAP.
"Facility Amount" shall mean U.S. $75,000,000.00 as such amount may be
permanently reduced pursuant to Sections 2.09 or 2.12 or otherwise pursuant to
the terms and conditions of this Agreement.
"Facility Fee" shall have the meaning provided in Section 2.15(c).
"Federal Funds Rate" shall mean, on any particular date, a rate per
annum equal to the overnight rate of interest at which Agent can borrow Federal
Funds from the Federal Reserve on such day, with any change in said rate to be
effective as of the date of such change; if Agent cannot borrow Federal Funds
from the Federal Reserve, Federal Funds Rate shall mean, on any particular date,
a rate per annum equal to the rate of interest published in The Wall Street
Journal as the "Federal Funds" rate as in effect on such day, with any change in
the Federal Funds Rate to be effective as of the date of the relevant change in
said Federal Funds rate; provided, however, that if more than one Federal Funds
rate is published in The Wall Street Journal for a day, the average of the
Federal Funds shall be used; provided further, however, that the Federal Funds
rate (or the average of the Federal Funds rates) will be rounded to the nearest
1/16th of 1% or, if there is no nearest 1/16th of 1%, to the next higher 1/16th
of 1%.
"Federal Funds Rate Margin" shall mean a rate determined by reference
to the lowest Unsecured Debt Rating of Borrower as set forth below:
-10-
17
--------------------------------------------------------------------------------------------------------------------
Standard & Poor's Moody's Investors Margin from the date hereof Margin from the Margin
Ratings Services Rating Service, Inc. Rating or through and including the Adjustment Date through and
or a Substitute Rating a Substitute Rating Margin Adjustment Date including to date the Loan
Agency Equivalent Rating Agency Equivalent Rating is paid in full
--------------------------------------------------------------------------------------------------------------------
BBB+ or higher BAA1 or higher 1.60% 2.60%
--------------------------------------------------------------------------------------------------------------------
BBB BAA2 1.65% 2.65%
--------------------------------------------------------------------------------------------------------------------
BBB- BAA3 1.70% 2.70%
--------------------------------------------------------------------------------------------------------------------
BB+ or lower Ba1 or lower 2.20% 3.20%
--------------------------------------------------------------------------------------------------------------------
If no Rating Agency or Substitute Rating Agency 2.20% 3.20%
assigns a rating to Borrower for whatever reason
====================================================================================================================
"Federal Funds Portion" shall mean the portion of the Loan made and/or
being maintained at a rate of interest based upon the Federal Funds Rate.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time, or any successor
thereto in function.
"Fees" shall mean all amounts payable pursuant to Sections 2.09, 2.15,
2.17 and 9.01.
"Fixed Charges" means the amount of scheduled lease payments with
respect to leasehold interests or obligations of the respective Person and
dividends and distributions on all classes of preferred stock or Preferred OP
Units of such Person.
"Funding Costs" shall have the meaning provided in Section 2.17.
"Funds from Operations" shall mean consolidated net income (loss)
before extraordinary items, computed in accordance with GAAP, plus, to the
extent deducted in determining net income (loss) and without duplication, (i)
gains (or losses) from debt restructuring and sales of property, (ii)
non-recurring charges, (iii) provisions for losses, (iv) real estate related
depreciation and amortization (excluding amortization of financing costs), and
(v) amortization of organizational expenses less, to the extent included in net
income (loss), (a) non-recurring income and (b) equity income (loss) from
unconsolidated partnerships and joint ventures less the proportionate share of
funds from operations of such partnerships and joint ventures, which adjustments
shall be calculated on a consistent basis.
"Furnished Information" shall have the meaning provided in Section
4.15.
-11-
18
"GAAP" shall mean United States generally accepted accounting
principles on the date hereof and as in effect from time to time during the term
of this Agreement, and consistent with those utilized in the preparation of the
financial statements referred to in Section 4.05.
"Guarantor" shall mean the REIT and the Loan Parties identified on
Schedule 14.
"Guaranty" shall mean that certain Guaranty of Payment dated the date
hereof made by the REIT and the Guarantors to Agent, the Syndication Agent and
the Co-Lenders, as the same may be supplemented or amended from time to time.
"Hazardous Substances" shall have the meaning provided in the
Environmental Indemnity.
"Hedge Agreement" shall mean an interest rate swap, cap or other
interest rate management agreement, provided that the entity providing such
interest rate management agreement maintains a credit rating equal or exceeding
"A" as rated by Standard & Poor's Ratings Services or Aa2 by ▇▇▇▇▇'▇ Investors
Service, Inc. or such other reputable rating agency reasonably satisfactory to
Agent and the Majority Co-Lenders.
"Improvements" shall mean any building, structure, fixture, addition,
enlargement, extension, modification, repair, replacement or improvement now or
hereafter located or erected on any Real Property Asset.
"Increased Capital Costs" shall have the meaning provided in Section
2.18.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all indebtedness of such Person evidenced by
a note, bond, debenture or similar instrument, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all un-reimbursed amounts drawn thereunder, (iv) all indebtedness
of any other Person secured by any Lien on any property owned by such Person,
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of such Person, (vi) all Unfunded Benefit Liabilities of such
Person, (vii) all payment obligations of such Person under any interest rate
protection agreement (including, without limitation, any interest rate swaps,
caps, floors, collars and similar agreements) and currency swaps and similar
agreements, (viii) all indebtedness and liabilities secured by any Lien or
mortgage on any property of such Person, whether or not the same would be
classified as a liability on a balance sheet, (ix) the liability of such Person
in respect of banker's acceptances and the estimated liability under any
participating mortgage, convertible mortgage or similar arrangement, (x) the
aggregate amount of rentals or other consideration payable by such Person in
accordance with GAAP over the remaining unexpired term of all Capitalized
Leases, (xi) all judgments or decrees by a court or courts or competent
jurisdiction entered against such Person, (xii) all indebtedness, payment
obligations, contingent obligations, etc. of any partnership in which such
Person holds a general partnership interest, (xiii) all Preferred OP Units and
preferred stock of such Person that, in either case, are redeemable for cash, a
cash equivalent, a note receivable or similar instrument or are convertible
-12-
19
to Indebtedness as defined herein (other than Indebtedness described in clauses
(iii), (vi), (x), (xi) or (xiii) of this definition), and (xiv) all obligations,
liabilities, reserves and any other items which are listed as a liability on a
balance sheet of such Person determined on a consolidated basis in accordance
with GAAP, but excluding all general contingency reserves and reserves for
deferred income taxes and investment credit.
"Indemnitee" shall have the meaning provided in Section 9.01(c).
"Intercreditor Agreement" shall mean that certain intercreditor
agreement dated as of the date hereof between Agent, individually as a Co-Lender
and as Agent, and ▇▇▇▇▇▇, as Syndication Agent and a Co-Lender, as the same may
be supplemented or amended from time to time.
"Interest Period" shall have the meaning provided in Section 2.06.
"Leases" shall mean all written leases and rental agreements,
registration cards and agreements and other agreements, whether or not in
writing, affecting the use, enjoyment or occupancy of any Real Property Asset
heretofore or hereafter entered into.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same effect as
any of the foregoing, inchoate liens arising under ERISA to secure the
Contingent Liabilities of Borrower, the REIT, or any Loan Party, and the filing
of any financing statement or similar instrument under the Uniform Commercial
Code or comparable law of any jurisdiction, domestic or foreign.
"Loan" shall mean, in the aggregate, the Advances made to Borrower
under this Agreement and the Note pursuant to the terms hereof, the aggregate
principal amount of which shall not exceed the Facility Amount.
"Loan Documents" shall mean this Agreement, the Note, the Guaranty, the
Environmental Indemnity, the Subordination of Management Agreement, the
Intercreditor Agreement and any other documents or instruments evidencing,
securing or guaranteeing the Loan.
"Loan Party" shall mean, individually and collectively, as the context
requires, Borrower, the REIT, the Operating Partnerships, Borrower's
Consolidated Subsidiaries, the REIT's Consolidated Subsidiaries, and all of the
other parties set forth on Schedule 3.
"Loan Portion" shall mean the Base Rate Portion, the Federal Funds
Portion and each Eurodollar Portion of the Loan.
"Majority Co-Lenders" shall have the meaning provided in the
Intercreditor Agreement.
-13-
20
"Margin Adjustment Date" shall mean the date that is six (6) months
after the Termination Date.
"Margin Stock" shall have the meaning provided such term in Regulation
U and Regulation G of the Federal Reserve Board.
"Market Capitalization Rate" shall mean the appropriate capitalization
rate for mobile home parks and manufactured housing communities as published in
the then current Korpacz Real Estate Investor Survey as of the time of
calculation of Fair Market Value. If the Korpacz Real Estate Investor Survey (a)
has ceased publication, (b) does not report a capitalization rate for mobile
home parks and manufactured housing communities, or (c) the current survey is
dated more than three (3) months prior to the time of calculation, Agent shall
determine an appropriate capitalization rate, subject to the approval of the
Majority Co-Lenders, which rate shall in no event be less than 9% or greater
than 112. Agent may make such determination no more frequently than twice in any
consecutive twelve (12) month period upon sixty (60) days prior written notice
to Borrower. If Borrower has not submitted reasonably satisfactory evidence to
Agent and the Majority Co-Lenders that a different rate is appropriate, the rate
chosen by Agent shall be effective as of the end of such sixty (60) day period.
If Borrower and the REIT are required to submit any financial reports during
such sixty (60) day period, such reports shall include a pro forma statement
showing the impact of the Agent's selected rate on the calculations in such
reports. As of the date hereof, the parties agree that the appropriate
capitalization rate is 9.75%. The determination by Agent and Majority Co-Lenders
of the Market Capitalization Rate after review of any evidence submitted by
Borrower as provided above shall be final.
"Material Adverse Effect" shall mean any condition which causes or
continues the occurrence of an Event of Default or has a material adverse effect
upon (i) the business, operations, properties, assets, prospects, corporate
structure or condition (financial or otherwise) of Borrower, the REIT or any of
the Loan Parties, taken as a whole, (ii) the ability of Borrower, the REIT or
the Loan Parties to perform, or of Agent or any Co-Lender to enforce, any of the
Obligations.
"Maturity Date" shall mean May 1, 2001 or such earlier date on which
the principal balance of the Loan and all other sums due in connection with the
Loan shall be due as a result of the acceleration of the Loan.
"Maximum Legal Rate" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Minimum Capital Expenditure Reserves" shall mean, for any Real
Property Asset, an amount equal to $50.00 per Unit pad or site located on such
Real Property Asset for the
-14-
21
twelve (12) month period preceding the calculation that Borrower or the
appropriate Loan Party shall reserve for Capital Expenditures on such Real
Property Asset.
"Minimum Net Worth" shall have the meaning provided in Section 5.16.
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Net Operating Income" shall mean, with respect to any Real Property
Asset, the Rents derived from the customary operation of such Real Property
Asset, less Operating Expenses attributable to such Real Property Asset, and
shall include only the Rents and other such income actually received and earned,
in accordance with GAAP, including any rent loss or business interruption
insurance proceeds, water and sewer charges, recreational vehicle storage
charges, and laundry, parking or other vending or concession income, which are
actually received and earned, in accordance with GAAP, and Operating Expenses
actually paid or payable on an accrual basis in accordance with GAAP
attributable to such Real Property Asset during the twelve (12) month period
commencing on the date that the Aspen Acquisition was consummated or such
shorter period, as applicable, and thereafter during the twelve (12) month
period ending at the end of the calendar month for which the Net Operating
Income is being calculated, as set forth on operating statements satisfactory to
Agent. Notwithstanding the foregoing, (a) for purposes of calculating Fair
Market Value, Net Operating Income will be based on the twelve (12) month period
immediately preceding the date of calculation, and (b) for purposes of
calculating the Coverage Ratios in Section 5.18, for any Base Period of less
than twelve (12) months, Net Operating Income with respect to Seasonal RV Sites
on the Aspen Properties shall be based on the twelve month period immediately
preceding the calculation divided by 12, and multiplied by the number of months
in the applicable Base Period. Net Operating Income shall be calculated in
accordance with customary accounting principles applicable to real estate.
Notwithstanding the foregoing, Net Operating Income shall not include (i) any
condemnation or insurance proceeds (excluding rent or business interruption
insurance proceeds), (ii) any proceeds resulting from the sale, exchange,
transfer, financing or refinancing of all or any portion of the Real Property
Asset for which it is to be determined, (iii) amounts received from tenants as
security deposits, and (iv) any type of income otherwise included in Net
Operating Income but paid directly by any tenant to a Person other than Borrower
or a Loan Party or its agents or representatives.
"Net Worth" shall mean, with respect to a Person, net worth as
calculated in accordance with GAAP.
"New Manager" shall have the meaning provided in Section 5.21.
"Non-use Fee" shall have the meaning provided in Section 2.15(a).
"Non-use Fee Due Date" shall mean the tenth (10th) Business Day after
the last day of the first calendar quarter after the Closing Date and of each
succeeding calendar quarter thereafter through and including the Termination
Date.
-15-
22
"Note" shall have the meaning provided in Section 2.04.
"Notice of Borrowing" shall have the meaning provided in Section 2.02.
"Notice of Conversion or Continuation" shall have the meaning provided
in Section 2.08.
"Obligations" shall mean all payment, performance and other
obligations, liabilities and indebtedness of every nature of (i) Borrower from
time to time owing to Agent or any Co-Lender under or in connection with this
Agreement or any other Loan Document, or (ii) the REIT and the other Loan
Parties under or in connection with the Guaranty or any other Loan Document.
"Operating Expenses" shall mean, with respect to any Real Property
Asset, for any given period (and shall include the pro rata portion for such
period of all such expenses attributable to, but not paid during, such period),
all expenses to be paid or payable, as determined in accordance with GAAP, by
Borrower, the REIT or the applicable Loan Party during that period in connection
with the operation of such Real Property Asset for which it is to be determined,
including without limitation:
(i) expenses for cleaning, repair, maintenance, decoration and painting
of such Real Property Asset (including, without limitation, parking lots and
roadways), net of any insurance proceeds in respect of any of the foregoing;
(ii) wages (including overtime payments), benefits, payroll taxes and
all other related expenses for Borrower's, the REIT's or other Loan Party's
on-site personnel, up to and including (but not above) the level of the
on-site manager, engaged in the repair, operation and maintenance of such
Real Property Asset and service to tenants and on-site personnel engaged in
audit and accounting functions performed by Borrower, the REIT or the
applicable Loan Party;
(iii) management fees pursuant to the Management Agreement providing
for fees not exceeding market and approved by Agent. Such fees shall include
all fees for management services whether such services are performed at such
Real Property Asset or off-site;
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item
and the cost of building and cleaning supplies;
(v) the cost of any leasing commissions and tenant concessions or
improvements payable by Borrower, the REIT or any Loan Party pursuant to any
leases which are in effect for such Real Property Asset at the commencement
of that period as such costs are recognized in accordance with GAAP, but on
no less than a straight line basis over the expected term of the respective
tenancy, inclusive of any renewal or
-16-
23
extension or similar options (but in no event over a term longer than the
greater of (a) the actual remaining term of the respective tenancy or (b) 5
years);
(vi) rent, liability, casualty, fidelity, errors and omissions, dram
shop liability, workmen's compensation and other insurance premiums;
(vii) legal, accounting and other professional fees and expenses;
(viii) the cost of all equipment to be used in the ordinary course of
business, which is not capitalized in accordance with GAAP;
(ix) real estate, personal property and other taxes;
(x) advertising and other marketing costs and expenses;
(xi) casualty losses to the extent not reimbursed by an independent
third party; and
(xii) all amounts that should be reserved, as reasonably determined by
Borrower or the applicable Loan Party, with approval by Agent in its
reasonable discretion, for repair or maintenance of the Real Property Asset
and to maintain the value of the Real Property Asset including replacement
reserves equal to the greater of (a) the reserves provided for in Borrower's
or the applicable Loan Party's capital budget and (b) $50.00 per Unit pad or
site.
Notwithstanding the foregoing, Operating Expenses shall not include (i)
depreciation or amortization or any other non-cash item of expense unless
otherwise determined by Agent (ii) interest, principal, fees, costs and expense
reimbursements of Agent and the Co-Lenders in administering the Loan but not in
exercising any of its rights under this Agreement or the Loan Documents; or
(iii) any expenditure (other than leasing commissions, tenant concessions and
improvements, and replacement reserves) which is properly treatable as a capital
item under GAAP.
"Operating Partnership" shall mean those partnerships set forth on
Schedule 3, as such Schedule may be amended or supplemented from time to time,
and any partnership in which Borrower or the REIT own, singly or together, a
majority or all of the economic interest and either Borrower or the REIT, either
directly or indirectly, is the sole managing general partner.
"OP Units" shall mean the Common OP Units and the Preferred OP Units.
"Other Assets" shall mean all Assets of a Person that are not Real
Property Assets.
"Participant" shall have the meaning provided in Section 9.09(i).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
-17-
24
"Permitted Investments" shall mean, at any time, (a) an aggregate
amount of all investments, which shall be less than the lesser of (i) 50% of
Borrower's Net Worth as of the date of calculation, and (ii) 25% of the Book
Value of all of Borrower's Assets as of the date of calculation and (b) an
aggregate amount of each of the following categories of investments, which shall
be less than the specified percentage of the Book Value of all of Borrower's
Assets as of the date of calculation:
Maximum of Book Value of all
Permitted Investment of Borrower's Assets
-------------------- -----------------------------
Undeveloped Land: 5%
Construction in Progress: 7.5%
Mortgages, deeds of trust, deeds to secure debt or similar 7.5%
instruments or receivables that are a Lien on real property and secure
indebtedness evidenced by a note or bond:
Operating Partnerships in which Borrower and the REIT own, singly or 10%
together, a majority of the economic interest and either Borrower or the REIT,
either directly or indirectly, is the sole managing general partner:
Manufactured housing units and mobile homes that are personal
property and are not deemed fixtures or real property under the law 2%
of the jurisdiction in which they are located:
For purposes of calculating the foregoing: (A) the amount of each Permitted
Investment will be deemed to be the original acquisition price of such Asset,
verified by Borrower to the satisfaction of Agent, (B) in the case of Permitted
Investment in mortgages and Operating Partnerships, the nature of underlying
real property asset and the conduct of business in respect thereof shall in all
respects comply with the limitations set forth in Section 2.20(a)(i); and (C)
Operating Partnerships for purposes of determining Permitted Investments shall
not include Operating Partnerships that are wholly owned and controlled by
Borrower or the REIT, either directly or indirectly. Operating partnerships in
which Borrower and the REIT do not own, singly or together, a majority of the
economic interest and in which neither Borrower nor the REIT, either directly or
indirectly, is the sole managing partner, are not Permitted Investments.
"Permitted Liens" shall have the meaning provided in Section 6.03.
"Permitted Mortgage Debt" shall mean any debt financing which is
secured by a first priority Lien granted by Borrower, the REIT or any other Loan
Party on a Real Property Asset other than an Unencumbered Asset in favor of a
lending source other than pursuant to the terms of this Agreement, and which
meets the following condition: the value (determined in a manner consistent with
the method of determining Fair Market Value for Real Property Assets)
-18-
25
of each Real Property Asset subject to the mortgage securing such debt does not
exceed an amount equal to 75% of the Indebtedness secured thereby.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, limited liability company, association, company,
trust or other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA or
which is subject to Section 412 of the Code or Section 302 of ERISA, for which
Borrower, any other Loan Party or any member of either of their ERISA Controlled
Group has or may have any obligation or liability, whether direct or indirect.
"Plan Asset Entity" shall mean any "employee benefit plan" as defined
in ERISA, any "plan" as defined in Section 4975 of the Code, and any entity any
portion or all of the assets of which are deemed pursuant to United States
Department of Labor Regulation Section 2510.3-101 or otherwise pursuant to ERISA
or the Code to be, for any purpose of ERISA or Section 4975 of the Code, assets
of any such "employee benefit plan" or "plan" which invests in such entity.
"Policies" shall have the meaning provided in Section 5.03(c).
"Preferred OP Units" shall mean the class of convertible preferred OP
Units as defined in the Borrower's Partnership Agreement.
"Pro Rata Interest" shall mean the proportionate share of each
Co-Lender in the Loan, this Agreement, the other Loan Documents and the
obligations to make Advances pursuant to the terms of this Agreement.
"Qualifying Insurer" shall have the meaning provided in Section
5.03(c).
"Quarter" shall mean a period of ninety (90) days.
"Rating Agencies" shall mean both Standard & Poor's Ratings Services
and ▇▇▇▇▇'▇ Investor Service, Inc. If either of such agencies discontinue its
rating of Borrower or its ratings of real estate investment trusts generally,
Agent and all of the Co-Lenders shall, within six (6) months of such
discontinuance, determine another nationally recognized statistical ratings
agency that assigns a rating to Borrower (a "Substitute Rating Agency"), and the
term Rating Agencies shall include such substituted rating agency. During any
time that only one Rating Agency is assigning a rating to Borrower, that
agency's rating shall be used for all calculations under this Agreement.
"REIT" shall have the meaning set forth in the opening paragraph of
this Agreement.
"Real Property Assets" shall mean the real property set forth on
Schedules 1 and 2, as such Schedules may be amended or supplemented from time to
time, and all real property
-19-
26
owned or leased, directly or indirectly, wholly or partly, by Borrower, the
REIT, any Operating Partnership or any other Loan Party subject to the
conditions of Sections 6.10 and 6.14.
"Register" shall have the meaning provided in Section 9.09.
"Regulation D" shall mean Regulation D of the Federal Reserve Board as
from time to time in effect and any successor to all or any portion thereof.
"Rents" shall mean all income, rents, additional rents, revenues,
issues and profits (including all oil and gas or other mineral royalties and
bonuses), golf revenues, and all pass-throughs and tenant's required
contributions for taxes, maintenance costs, tenant improvements, leasing
commissions, capital expenditures and other items including without limitation,
all revenues and credit card receipts collected from recreation facilities,
vending machines and concessions and all Accounts Receivable (without
duplication) from the Real Property Assets.
"Reportable Event" has the meaning set forth in Section 4043(c)(3),
(5), (6) or (13) of ERISA (other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable
regulations).
"Responsible Officer" means the Chairman of the Board, President or the
Chief Operating Officer of the REIT.
"Restoration" shall have the meaning provided in Section 5.03(h).
"Seasonal RV Sites" shall have the meaning provided in Section 6.15.
"Scheduled Amortization Dates" shall have the meaning provided in
Section 2.10.
"Scheduled Amortization Payment" shall have the meaning provided in
Section 2.10.
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, at a fair valuation based upon appraisals or comparable valuation,
will exceed its liabilities, including contingent liabilities, (ii) such Person
will have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such Contingent Liabilities, such
liabilities shall be computed in accordance with GAAP at the amount which, in
light of all the facts and circumstances existing
-20-
27
at the time, represents the amount which can reasonably be expected to become
an actual or matured liability.
"Subordination of Management Agreement" shall mean a Subordination of
Management Agreement substantially in the form set forth as Exhibit "J" hereto.
"Subsidiary" of any Person shall mean and include (i) any corporation
Controlled by such Person, directly or indirectly through one or more
intermediaries, and (ii) any partnership, association, joint venture or other
entity Controlled by such Person, directly or indirectly through one or more
intermediaries and (iii) all of the parties listed as Subsidiaries on Schedule
3.
"Substantial Asset" shall mean Real Property Assets of Borrower, the
REIT and any other Loan Party which, in the aggregate, either (i) number more
than 7.5% of the total number of all Real Property Assets (ii) contribute more
than 7.5% of the consolidated Net Operating Income of Borrower, the REIT and the
other Loan Parties derived from all Real Property Assets.
"Substitute Rating Agency" shall have the meaning provided in the
definition of "Rating Agency".
"Syndication Agent" shall have the meaning provided in the opening
paragraph of this Agreement.
"Taxes" shall have the meaning provided in Section 2.19.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).
"Termination Date" shall mean the date on which the Draw Period
expires.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by Borrower, any member of Borrower's or any other Loan
Party's ERISA Controlled Group or any other person to terminate a Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, in
either case, which would result in liability to Borrower, any Loan Party or any
of their ERISA Controlled Group in excess of $3,000,000 (iii) the institution of
proceedings by the PBGC under Section 4042 of ERISA to terminate an ERISA Plan
or to appoint a trustee to administer any ERISA Plan, (iv) any partial or total
withdrawal from a Multiemployer Plan which in either case, which would result in
liability to Borrower, any Loan Party or any of their ERISA Controlled Groups in
excess of $3,000,000 or (v) the taking of any action would require security to
the Plan under Section 401(a)(29) of the Code.
"Title Searches" shall have the meaning provided in Section 5.14.
-21-
28
"Total Debt" means with respect to any Person at any time, all
Indebtedness of such Person as determined on a consolidated basis in accordance
with GAAP.
"Transferee" shall have the meaning provided in Section 9.07.
"Type" shall mean the type of any portion of the Loan determined with
respect to the interest option applicable thereto, i.e., the Base Rate Portion,
the Federal Funds Portion or a Eurodollar Portion.
"UCC Searches" shall have the meaning provided in Section 3.01(g).
"Undeveloped Land" shall mean any vacant or unimproved non-income
producing Real Property Asset.
"Unencumbered Assets" shall mean those Real Property Assets set forth
on Schedule 1, as such Schedule may be amended or supplemented from time, (i)
against which there are no liens or encumbrances except for Permitted Liens,
(ii) with respect to which Borrower has complied with all the requirements of
Section 3.01, (iii) with respect to which Borrower, the REIT or a Guarantor is
the sole record and beneficial owner, and (iv) which Agent and the Majority
Co-Lenders have agreed in writing are to be deemed Unencumbered Assets for
purposes of this Agreement pursuant to Section 2.25.
"Unfunded Benefit Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
"Unit" shall mean any mobile home units or manufactured housing units.
"Unsecured Debt" shall mean, with respect to a Person, the outstanding
principal balance of all Indebtedness (including all Advances hereunder) which
is not secured by any collateral or Assets of such Person and is evidenced by a
promissory note or other instrument or written agreement.
"Unsecured Debt Rating" shall mean with respect to a Person, the rating
assigned by the Rating Agencies to such Person's long term unsecured debt
obligations.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT FACILITY.
Section 2.01 Advances. (a) Subject to and upon the terms and conditions
herein set forth, Lender and each Co-Lender agrees, at any time and from time to
time on and after the Closing Date and prior to the Termination Date, to make
its pro rata share of Advances to Borrower, which Advances shall not exceed in
aggregate principal amount at any time outstanding the Facility Amount at such
time.
-22-
29
(b) Advances may be voluntarily prepaid pursuant to Section 2.11, and,
subject to the other provisions of this Agreement, including, without
limitation, Sections 2.09, 2.10 and 2.12, any amounts so prepaid may be
re-borrowed prior to the Termination Date. All outstanding Advances shall mature
on the Maturity Date, without further action on the part of Agent or any
Co-Lender.
(c) Each Advance of the Loan shall be in the aggregate minimum amount
of One Millions Dollars (U.S. $1,000,000.00) or any integral multiple of One
Hundred Thousand Dollars (U.S. $100,000.00) in excess thereof. No Advance shall
be made after the Termination Date.
(d) The obligation of Lender and each Co-Lender to make their pro rata
share of each Advance of the Loan is several and not joint. Neither Agent,
Lender, nor any Co-Lender shall be liable for the failure of any other Co-Lender
to fund its pro rata share of any Advance hereunder.
Section 2.02 Notice of Borrowing. Whenever Borrower desires an Advance
hereunder, it shall give Agent at Agent's Office prior to 10:00 A.M., New York
City time, at least three (3) Business Days' (or, if such Advance shall be a
Base Rate Portion or a Federal Funds Portion, one (1) Business Days') prior
telex, facsimile, or telephonic notice (promptly confirmed in writing) of each
Advance to be made hereunder. Each such notice (a "Notice of Borrowing") (i)
shall be irrevocable, (ii) shall be executed by the general partner of Borrower
or a senior executive officer of Borrower, (iii) shall specify (x) the aggregate
principal amount of the requested Advance, (y) the date of Borrowing (which
shall be a Business Day) and (z) the initial Interest Period to be applicable
thereto and Type of Advance, (or, if at the time of such request, Eurodollar
Loan Portions are not available pursuant to Section 2.16, that such Advance
shall be a Base Rate Portion), (iv) shall certify that, taking into account the
amount of the requested Advance, no Default or Event of Default has occurred and
is continuing, all provisions of the Loan Documents will be complied with after
giving effect to such Advance, (v) shall contain a description of the intended
use of the Advance and (vi) shall be in the form annexed hereto as Exhibit "A".
Agent shall, upon determining the Eurodollar Rate for any Interest
Period, promptly notify Borrower thereof.
Section 2.03 Disbursement of Funds. No later than 2:00 P.M., New York
City time on the date specified in each Notice of Borrowing, provided all
conditions precedent to the making of such Advance have been complied with, and
further provided that Agent has received, in immediately available federal
funds, each Co-Lender's pro rata share of such Advance from each Co-Lender,
Agent will make available to Borrower by disbursing to or at the direction of
Borrower, or by depositing in Borrower's account at Agent's Office, the amount
of the requested Advance.
Section 2.04 The Note. (a) Borrower's obligation to pay the principal
of, and interest on, the Loan shall be evidenced by the promissory note (as
amended, modified, supplemented, extended or consolidated, the "Note") duly
executed and delivered by Borrower
-23-
30
substantially in the form of Exhibit "B" hereto in a principal amount equal to
the Facility Amount, with blanks appropriately completed in conformity herewith.
The Note shall (i) be payable to the order of Agent, Lender and the Co-Lenders,
(ii) be dated the Closing Date, and (iii) mature on the Maturity Date. If
required by a Co-Lender that is not a Co-Lender as of the date hereof, Borrower
hereby agrees to execute a supplemental Note in the principal amount of such
Co-Lender's pro rata share of the Facility Amount substantially in the form of
Exhibit "B" hereto, with blanks appropriately completed, and such supplemental
Note shall (i) be payable to order of Agent, on account of such Co-Lender, (ii)
be dated as of the Closing Date, and (iii) mature on the Maturity Date. Such
supplemental Note shall evidence a portion of the existing indebtedness
hereunder and not any new or additional indebtedness of Borrower.
(b) Agent is hereby authorized, at its option, (i) to endorse on the
schedule attached to each Note (or on a continuation of such schedule attached
to each such Note and made a part thereof) an appropriate notation evidencing
the date and amount of each Advance evidenced thereby and the pro rata share
thereof of each Co-Lender, and the date and amount of each principal and
interest payment in respect thereof, and/or (ii) to record such Advances and
such payments in its books and records. Such schedule or such books and records,
as the case may be, shall be conclusive and binding on Borrower absent manifest
error, provided that the failure to make any notation shall not affect the
obligations of Borrower or any Guarantor or the rights of Lender or any
Co-Lender hereunder or under the Guaranty.
Section 2.05 Interest. (a) Borrower shall pay interest in respect of
the unpaid principal amount of the Base Rate Portion from the date of the making
of the Base Rate Portion until the Base Rate Portion shall be paid in full, or
converted to a Eurodollar Portion, at a rate per annum which shall be equal to
the sum of the Base Rate Margin plus the Base Rate in effect from time to time,
such rate to change as and when the Base Rate changes.
(b) Borrower shall pay interest in respect of the unpaid principal
amount of the Federal Funds Portion from the date of the making of the Federal
Funds Portion until the Federal Funds Portion shall be paid in full, or
converted to a Eurodollar Portion, at a rate per annum which shall be equal to
the sum of the Federal Funds Margin plus the Federal Funds Rate in effect from
time to time, such rate to change as and when the Federal Funds Rate changes.
(c) Borrower shall pay interest in respect of the unpaid principal
amount of each Eurodollar Portion from the date of the making of such Eurodollar
Portion until such Eurodollar Portion shall be paid in full, continued as a
Eurodollar Portion or converted to a Base Rate Portion or a Federal Funds
Portion, at a rate per annum which shall be equal to the sum of the Eurodollar
Rate Margin plus the relevant Eurodollar Rate.
(d) In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal amount of the Loan
and, to the extent permitted by law, overdue interest in respect of the Loan,
shall bear interest at the Default Rate, calculated from the date such payment
was due without regard to any grace or cure periods contained herein.
-24-
31
(e) Interest on the Loan shall accrue from and including the date of
each Borrowing thereof to but excluding the date of any repayment thereof
(provided that any Advance borrowed and repaid on the same day shall accrue one
day's interest) and Borrower shall pay such interest (i) in respect of the Base
Rate Portion or the Federal Funds Portion, (A) monthly in arrears on the first
day of each month, (B) on the Maturity Date (whether by acceleration or
otherwise) and (C) after the Maturity Date, on demand, and (ii) in respect of
each Eurodollar Portion, in arrears (A) on the last day of the applicable
Interest Period, (B) on the date of any prepayment or conversion (on the amount
prepaid or converted), (C) on the Maturity Date (whether by acceleration or
otherwise), and (D) after the Maturity Date, on demand.
(f) Interest on the outstanding principal balance of the Base Rate
Portion or the Federal Funds Portion shall be calculated on the basis of a three
hundred sixty (360) day year based on twelve (12) thirty (30) day months, except
that interest due and payable for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed in such period by a
daily rate based on said 360-day year. Interest on the outstanding principal
balance of Eurodollar Portions shall be calculated on the basis of a three
hundred sixty (360) day year based on the actual number of days elapsed.
(g) This Agreement and the Note are subject to the express condition
that at no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender or any
Co-Lender to either civil or criminal liability as a result of being in excess
of the Maximum Legal Rate. If by the terms of this Agreement or the Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the interest rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Agent for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Legal Rate of interest from time
to time in effect and applicable to the Loan for so long as the Loan is
outstanding.
Section 2.06 Interest Periods. (a) Borrower shall, in each Notice of
Borrowing or Notice of Conversion or Continuation in respect of the making of,
conversion into or continuation of a Eurodollar Portion, select the interest
period (each an "Interest Period") applicable to such Eurodollar Portion, which
Interest Period shall, at the option of Borrower, be either a one month,
two-month or three-month period, provided that:
(i) the Interest Period for any Eurodollar Portion shall commence
on the date of the making of such Advance (including the date of any
conversion from the Base Rate Portion) and each Interest Period occurring
thereafter in respect of such Portion shall commence on the date on which
the next preceding Interest Period expires;
-25-
32
(ii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, if such Interest Period would
otherwise expire on the Maturity Date, and the Maturity Date is not a
Business Day, such Interest Period shall expire on the immediately preceding
Business Day;
(iii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month; and
(iv) no Interest Period in respect of any Eurodollar Portion shall
extend beyond the Maturity Date.
(b) [Intentionally Deleted]
(c) If upon the expiration of any Interest Period, Borrower has failed
to elect or confirm a new Interest Period or Eurodollar Base Rate to be
applicable to any Eurodollar Portion in accordance with Section 2.08, Borrower
shall be deemed to have elected to convert such Eurodollar Portion into a Base
Rate Portion effective as of the expiration date of such current Interest
Period.
Section 2.07 Minimum Amount of Eurodollar Portions. All advances,
borrowings, conversions, continuations, payments, prepayments and selection of
Interest Periods hereunder shall be made or selected so that, after giving
effect thereto, each Eurodollar Portion shall (i) have a principal amount equal
to or greater than One Million Dollars (U.S. $1,000,000.00) and (ii) be in an
integral multiple of $100,000.00 in excess of such minimum amount. There shall
be no more than six (6) Eurodollar Portions outstanding at any one time.
Section 2.08 Conversion or Continuation. (a) Subject to the other
provisions hereof, Borrower shall have the option (i) to convert at any time all
or any part of the outstanding Base Rate Portion or Federal Funds Portion to
Eurodollar Portions, (ii) to continue all or any part of the outstanding
Eurodollar Portions as Eurodollar Portions for an additional Interest Period, on
the expiration of the Interest Period applicable thereto (or prior to such
expiration date, provided Borrower pays Funding Costs in connection therewith
pursuant to Section 2.17); provided that no Loan Portion may be continued as, or
converted into, a Eurodollar Portion when any Default with respect to the
payment of money or any Event of Default has occurred and is continuing, or
(iii) to convert at anytime all or any portion of the outstanding Eurodollar
Portions to a Base Rate Portion or a Federal Funds Portion. In the event
Eurodollar Portions are not available pursuant to Section 2.16, Borrower shall
be deemed to have elected to convert such Eurodollar Portions into a Base Rate
Portion, and if such conversion occurs prior to the expiration date of the
applicable Interest Period, Borrower shall also pay all Funding Costs and other
costs, expenses and losses in connection therewith pursuant to Sections 2.16 and
2.17.
(b) In order to elect to convert or continue a Loan Portion under this
Section 2.08, Borrower shall deliver an irrevocable notice thereof in the form
annexed hereto as Exhibit "C" (a "Notice of Conversion or Continuation") to
Agent no later than 11:00 A.M., New York
-26-
33
City time, (which notice may be by facsimile transmission provided that an
original is delivered prior to the close of business on the immediately
succeeding Business Day) three (3) Business Days prior to the proposed
conversion or continuation date in the case of a conversion to, or a
continuation of, a Eurodollar Portion. A Notice of Conversion or Continuation
shall specify (v) the requested conversion or continuation date (which shall be
a Business Day), (w) the amount and Type of the Loan Portion to be converted or
continued, (x) whether a conversion or continuation is requested, (y) in the
case of a conversion to, or a continuation of, a Eurodollar Portion, the
requested Interest Period and (z) the Contract Rate applicable to the Loan
Portion to be converted or continued as previously quoted by Agent.
Section 2.09 Voluntary Reduction of Facility Amount; Termination of
Facility Amount. (a) Upon at least three (3) Business Days' prior irrevocable
written notice annexed hereto as Exhibit "D" (or telephonic notice promptly
confirmed in writing) to Agent, Borrower shall have the right without premium or
penalty to permanently reduce the Facility Amount, provided that (a) Borrower
may not reduce the Facility Amount below the aggregate principal amount
outstanding under the Loan at the time of such requested reduction (unless
Borrower simultaneously prepays the Loan to the extent necessary so that the
aggregate principal amount outstanding does not exceed such reduced Facility
Amount, together with any applicable Funding Costs and accrued interest as a
result of such prepayment, (b) any such partial reduction shall be in the
minimum aggregate amount of Five Million Dollars (U.S. $5,000,000.00) or any
integral multiple of One Million Dollars (U.S. $1,000,000.00) in excess thereof,
and (c) Borrower may not reduce the Facility Amount to an amount less than Fifty
Million Dollars (U.S. $50,000,000.00) (unless the Loan is terminated and prepaid
in full pursuant to Section 2.09(b). Any reduction of the Facility Amount shall
be permanent and be applied pro rata to Lender's and each Co-Lender's respective
percentage interest in the Loan.
(b) Upon at least three (3) Business Days prior irrevocable written
notice to Agent, Borrower shall have the right to terminate the Loan, this
Agreement and reduce the Facility Amount to zero, provided that Borrower, on the
date specified in such notice, pays to Agent, on behalf of the Co-Lenders, the
entire outstanding principal balance of the Loan, together with all interest
accrued and unpaid thereon, all Funding Costs, and all other sums due under the
Note, this Agreement and the other Loan Documents; upon such termination, Lender
and the Co-Lenders shall have no further obligation to make any Advances.
Section 2.10 Principal Amortization. Commencing on the date
which is six (6) months after the Termination Date and continuing on each six
(6) month anniversary thereafter or until the Loan is paid in full (the
"Scheduled Amortization Dates"), Borrower shall make three equal amortization
payments of the outstanding principal balance of the Loan (the "Scheduled
Amortization Payments"), each such payment to be in an amount equal to
one-fourth (3th) of the outstanding principal balance at the Termination Date
together with accrued interest thereon and any Funding Costs, and on the
Maturity Date, the then outstanding principal balance together with accrued
interest thereon and any Funding Costs shall be paid in full. Each Scheduled
Amortization Payment shall be applied first to any outstanding Base Rate
Portion, second to any outstanding Federal Funds Portion, and third to any
outstanding Eurodollar Portion in order of such Loan Portion's maturity. The
prepayment of a Eurodollar Portion made as a result of a
-27-
34
Scheduled Amortization Payment shall be accompanied by payment of any Funding
Costs which Lender and the Co-Lenders shall incur as a result of such payment.
Section 2.11 Voluntary Prepayments. Borrower shall have the right to
prepay the Loan, in whole or in part, from time to time on the following terms
and conditions: (a) Borrower shall give Agent written notice (or telephonic
notice promptly confirmed in writing), in the form attached hereto as Exhibit E,
which notice shall be irrevocable, of its intent to prepay all or a portion of
the Loan, at least three (3) Business Days prior to a prepayment of Eurodollar
Portions and all or some of the Base Rate Portion or Federal Funds Portion,
which notice shall specify the amount of such prepayment and what Loan Portions
are to be prepaid and, in the case of Eurodollar Portions, the specific
Borrowing(s) pursuant to which made, (b) each prepayment shall be in an
aggregate principal amount of Five Hundred Thousand Dollars (U.S. $500,000.00)
or any integral multiple of One Hundred Thousand Dollars (U.S. $100,000.00) in
excess thereof, and (c) prepayments of Eurodollar Portions made pursuant to this
Section on a date other than the last day of the Interest Period applicable
thereto shall be accompanied by payment of any Funding Costs which Lender and
the Co-Lenders shall incur as a result of such early payment. If any such notice
is given, the amount specified in such notice shall be due and payable on the
date specified therein.
Section 2.12 Mandatory Prepayments. On each day on which the Facility
Amount is reduced pursuant to the terms of this Agreement, Borrower shall prepay
the Loan to the extent, if any, that the outstanding principal amount of the
Loan exceeds such reduced Facility Amount, together with any applicable Funding
Costs and accrued interest as a result of such payment.
Section 2.13 Application of Payments and Prepayments. Unless
specifically provided otherwise, all payments and prepayments of the Loan,
whether voluntary or otherwise, shall be applied first, to unpaid Fees, any
reasonable out-of-pocket costs and expenses of Agent and any Co-Lender arising
as a result of such prepayment and any Funding Costs, second, to pay any accrued
and unpaid interest then payable with respect to the Loan, and third, to pay the
outstanding principal amount of the Loan. Payments applied to the outstanding
principal amount of the Loan shall be first applied to the Base Rate Portion of
the Loan, then to the Federal Funds Portion of the Loan, and then to pay the
Eurodollar Portions of the Loan being repaid in the order of such Loan Portion's
maturity.
Section 2.14 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments, prepayments, and Scheduled
Amortization Payments under this Agreement and the Note shall be made to Agent
not later than 12:00 noon, New York City time, on the date when due and shall be
made in lawful money of the United States of America in immediately available
funds at Agent's Office, and any funds received by Agent after such time shall,
for all purposes hereof, be deemed to have been paid on the next succeeding
Business Day. Each payment (including all prepayments on account of principal
and interest on the Loan), to the extent received, shall constitute payment by
Borrower and the REIT to each Co-Lender in the amount of such Co-Lender's pro
rata share of such payment.
-28-
35
(b) Except as expressly provided to the contrary in Section 2.06
hereof, whenever any payment to be made hereunder or under the Note or other
Loan Documents shall be stated to be due on a day which is not an Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
(c) All payments made by Borrower hereunder, under the Note and the
other Loan Documents, shall be made irrespective of, and without any deduction
for, any setoff or counterclaims.
Section 2.15 Fees. (a) Borrower shall pay to Agent a fee (the "Non-use
Fee"), computed at the per annum rate (based on a year of 360 days, for the
actual number of days elapsed) of either (i) 0.25% or (ii) if Borrower's
Unsecured Debt Rating is at any time less than the lower of BBB- as assigned by
Standard & Poor's Ratings Services or Baa3 as assigned by ▇▇▇▇▇'▇ Investors
Service, Inc., 0.375% for so long as such condition exists, on the average daily
unfunded portion of the Facility Amount, from and including the Closing Date
through and including the Termination Date, payable, in arrears, on the Non-use
Fee Due Date through and including the Termination Date. Agent shall notify
Borrower within three (3) Business Days of the last day of the calendar Quarter
of the amount of Non-use Fee then due. Each payment of the Non-Use Fee, to the
extent received by Agent, shall constitute payment by Borrower to each Co-Lender
in the amount of such Co-Lender's Pro Rata Interest in such Non-Use Fee.
(b) Borrower shall pay to Agent an administrative fee as compensation
for administering and servicing the Loan and performing its duties under this
Agreement and the Loan Documents equal to $37,500.00 per annum (the
"Administrative Fee"). The Administrative Fee shall be paid in advance on the
date hereof and on the first day of each twelfth calendar month thereafter.
(c) On the Closing Date Borrower shall pay to ▇▇▇▇▇▇ for the benefit of
the Co-Lenders a Facility Fee equal to 0.45% of the Facility Amount (the
"Facility Fee").
Section 2.16 Interest Rate Unascertainable, Increased Costs,
Illegality. (a) In the event that Agent has determined or, with respect to any
Co-Lender, has been notified that (which determination or notice shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of the Eurodollar Rate; or
(ii) at any time, that the relevant Eurodollar Rate applicable to
any of its Eurodollar Portions shall not represent the effective pricing to
Lender or the Co-Lenders for funding or maintaining its Eurodollar Portions,
or Lender and the Co-Lenders shall incur increased costs or reduction in the
amounts received or receivable hereunder in
-29-
36
respect of any Eurodollar Portion, in any such case because of (x)
any change since the date of this Agreement in any applicable law or
governmental rule, regulation, guideline, order, request or directive or any
interpretation thereof and including the introduction of any new law or
governmental rule, regulation, guideline, order, request or directive (such
as, for example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D of the Federal Reserve Board to the extent included in the
computation of the Eurodollar Rate), whether or not having the force of law
and whether or not failure to comply therewith would be unlawful, and/or (y)
other circumstances affecting Lender, any Co-Lender or the interbank
Eurodollar market or the position of Lender or any Co-Lender in such market;
or
(iii) at any time, that the making or continuance by it of any
Eurodollar Portion has become unlawful in order for Lender or any Co-Lender,
in good faith, to comply with any law or governmental rule, regulation,
guideline, order, request or directive (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful), or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, Agent shall, promptly after making such
determination or receiving notice thereof from any Co-Lender, give notice by
telephone promptly confirmed in writing to Borrower. Thereafter (x) in the case
of clause (i) above, Borrower's right to request advances, conversions or
continuations of Eurodollar Portions shall be suspended, and any Notice of
Borrowing, or Notice of Conversion or Continuation given by Borrower with
respect to any Borrowing of Eurodollar Portions which has not yet been made
shall be deemed cancelled and rescinded by Borrower, (y) in the case of clause
(ii) above, Borrower shall pay to Agent, upon such Agent's written demand
therefor to Borrower, such additional amounts (in the form of an increased rate
of interest, or a different method of calculating interest, or otherwise, as
Agent and the affected Co-Lenders shall determine) as shall be required to
compensate Lender and any Co-Lender for such increased costs or reduction in
amounts received or receivable hereunder (it being understood and agreed by the
parties hereto that in the event that Agent shall fail to notify Borrower
promptly after such determination, then Borrower shall not be liable to pay to
Agent any additional amounts relating to the period prior to Agent's notifying
Borrower), and (z) in the case of clause (iii) above, Borrower shall take one of
the actions specified in clause (b) below as promptly as possible and, in any
event, within the time period required by law. The written demand provided for
in clause (y) shall demonstrate in reasonable detail the circumstances giving
rise to such demand and the calculation of the amounts demanded; provided that
Borrower shall not be obligated to pay an amount in excess of the amount
directly attributable to the Loan hereunder (it being understood and agreed that
Agent shall not be required to deliver any documentation substantiating such
amounts).
(b) In the case of any Eurodollar Portion or requested Eurodollar
Portion affected by the circumstances described in clause (a)(ii) above,
Borrower may, and in the case of any Eurodollar Portion affected by the
circumstances described in clause (a)(iii) above, Borrower
-30-
37
shall, either (i) if any such Eurodollar Portion has not yet been made but is
then the subject of a Notice of Borrowing or a Notice of Conversion or
Continuation, be deemed to have cancelled and rescinded such notice, or (ii) if
any such Eurodollar Portion is then outstanding, require Agent to convert each
such Eurodollar Portion into a Base Rate Portion at the end of the applicable
Interest Period or such earlier time as may be required by law, in each case by
giving Agent notice (by telephone promptly confirmed in writing) thereof within
two (2) Business Days after Borrower was notified by Agent pursuant to clause
(a) above.
(c) In the event that Agent determines at any time following the giving
of notice based on the conditions described in clause (a)(i) above that such
conditions no longer exist, Agent shall promptly give notice thereof to
Borrower, whereupon Borrower's right to request Eurodollar Portions from Agent
and Lender's and any Co-Lender's obligation to make Eurodollar Portions shall be
automatically restored and until such time as Borrower has delivered a Notice of
Conversion or Continuation, the entire Loan shall be deemed to be a Eurodollar
Portion with an Interest Period of one month at a Contract Rate determined as of
the date that Eurodollar Portions are again available to Borrower.
(d) In the event that Agent determines at any time following its giving
of a notice based on the conditions described in clause (a)(iii) above that such
conditions no longer exist, Agent shall promptly give notice thereof to
Borrower, whereupon Borrower's right to request Eurodollar Portions from Agent
and Lender's and any Co-Lender's obligation to make Eurodollar Portions shall be
automatically restored and until such time as Borrower has delivered a Notice of
Conversion or Continuation, the entire Loan shall be deemed to be a Eurodollar
Portion with an Interest Period of one month at a Contract Rate determined as of
the date that Eurodollar Portions are again available to Borrower.
(e) The amount of any increased costs or reductions in amounts referred
to in Section 2.16(a)(ii) with respect to Lender and each Co-Lender shall be
based on the assumption that Lender and any Co-Lender funded all of its
Eurodollar Portions in the interbank Eurodollar market, although the parties
hereto agree that Lender or Co-Lender may fund all or any portion of a
Eurodollar Portion, in any manner it independently determines. For purposes of
any demand for payment made by Agent under Sections 2.16(a)(ii) or 2.18, in
attributing Lender's or any Co-Lender's general costs relating to Eurocurrency
operations or its commitments or customers, or in averaging any costs over a
period of time, Agent and the affected Co-Lenders may use any reasonable
attribution and/or averaging method which it deems appropriate, reasonable and
practical. The agreements in this Section 2.16 shall survive the termination of
this Agreement and the payment of the Note and all other Obligations for a
period of one (1) year.
Section 2.17 Funding Losses. Borrower shall compensate Lender
and the Co-Lenders for all reasonable losses, expenses and liabilities, to the
extent actually incurred (including, without limitation, any loss, expense or
liability incurred by Lender or any Co-Lender in connection with the liquidation
or reemployment of deposits or funds required by it to make or carry its
Eurodollar Portions), excluding loss of anticipated profits ("Funding Costs"),
that Lender or any Co-Lender sustains: (a) if for any reason (other than a
default by Agent or any Co-Lender) a Borrowing of, or conversion from or into,
or a continuation of, Eurodollar Portions does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion or
-31-
38
Continuation (whether or not rescinded, cancelled or withdrawn or deemed
rescinded, cancelled or withdrawn, pursuant to Section 2.16(a) or 2.16(b) or
otherwise), (b) if any prepayment (whether voluntary or mandatory), repayment
(including, without limitation, payment after acceleration) or conversion of any
of its Eurodollar Portions occurs on a date which is not the last day of the
Interest Period applicable thereto, (c) if any prepayment of any of its
Eurodollar Portions is not made on any date specified in a notice of prepayment
given by Borrower, or (d) as a consequence of any default by Borrower in
repaying its Eurodollar Portions or any other amounts owing hereunder in respect
of its Eurodollar Portions when required by the terms of this Agreement.
Borrower shall pay such Funding Costs on the date specified for conversion or
continuation of any Eurodollar Portion, the date of prepayment or repayment of
any Eurodollar Portion under clause (b) or (c) above, or within five (5)
Business Days of written demand therefor by Agent with respect to clause (d)
above. Calculation of all amounts payable to Agent under this Section 2.17 shall
be made on the assumption that Lender and each Co-Lender has funded its relevant
Eurodollar Portion through (i) the purchase of a Eurodollar deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of such
Eurodollar Portion with a maturity equivalent to the Interest Period applicable
to such Eurodollar Portion, and (ii) the transfer of such Eurodollar deposit
from an offshore office of Lender or any Co-Lender to a domestic office of
Lender and the Co-Lenders in the United States of America, provided that Lender
and the Co-Lenders may fund their Eurodollar Portions in any manner that they in
their sole discretion choose and the foregoing assumption shall only be made in
order to calculate amounts payable under this Section 2.17. Agent shall provide
Borrower with a statement detailing the basis for requesting such amounts and
the calculation thereof, and such statement shall, absent manifest error, be
final and conclusive and binding upon Borrower, the REIT and all Loan Parties).
The agreements in this Section 2.17 shall survive the termination of this
Agreement and the payment of the Note and all other Obligations for a period of
one (1) year.
Section 2.18 Increased Capital. With respect to each Eurodollar
Portion, if Agent shall have determined (or received notice from any Co-Lender
of its determination that) in good faith, that compliance with any applicable
law, rule, regulation, guideline or directive (whether or not having the force
of law) which shall be imposed, issued or amended from and after the date of
this Agreement by any governmental authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on the capital or
assets of Lender or any Co-Lender as a consequence of its commitments or
obligations hereunder, then from time to time, upon Agent's delivering a written
demand therefor to Borrower, setting forth its reasonable calculations, Borrower
shall pay to Agent on demand such additional amount or amounts ("Increased
Capital Costs") as will compensate Lender and any Co-Lender for such reduction.
Such calculations may use any reasonable averaging and attribution methods
selected by Agent and the affected Co-Lenders. The agreements in this Section
2.18 shall survive the termination of this Agreement and the payment of the Note
and all other Obligations for a period of one (1) year.
Section 2.19 Taxes. (a) All payments made by Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of Lender or any Co-Lender, net income and
-32-
39
franchise taxes imposed on Lender or any Co-Lender by the jurisdiction under the
laws of which Lender or any Co-Lender is organized or any political subdivision
or taxing authority thereof or therein, or by any jurisdiction in which Lender's
or Co-Lender's Domestic Lending Office or Eurodollar Lending Office, as the case
may be, is located or any political subdivision or taxing authority thereof or
therein (all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes").
(b) Notwithstanding anything to the contrary herein, if at any time or
from time to time Taxes are required to be deducted or withheld from the
payments required to be made to Lender or any Co-Lender hereunder solely by
reason of a Change in Law after the date hereof (other than as a result of any
transfer or assignment of any of the obligations of Borrower hereunder), all
payment required to be made by Borrower hereunder (including any additional
amounts that may be payable pursuant to this clause (b)) shall be increased to
the extent required so that the net amount received by Lender or any Co-Lender
after the deduction or withholding of Taxes imposed solely by reason of a Change
in Law after the date hereof will be not less than the full amount that would
otherwise have been receivable had no such deduction or withholding been imposed
by reason of such Change in Law. In the event that this clause (b) shall be
operative, Borrower shall promptly provide to Agent evidence of payment of such
Taxes to the appropriate taxing authority and shall promptly forward to Agent
any official tax receipts or other documentation with respect to the payment of
the Taxes as may be issued by the taxing authority. If Borrower fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to Agent
the required receipts or other required documentary evidence, Borrower shall
indemnify Agent and any Co-Lender for any incremental taxes, interest or
penalties that may become payable by Lender or Co-Lender as a result of any such
failure. The agreements in this Section 2.19 shall survive the termination of
this Agreement and the payment of the Note and all other Obligations for a
period of one (1) year.
(c) For purposes of this Section 2.19 the term "Change in Law" shall
mean the following events: (i) the enactment of any legislation by the United
States, including the enactment, amendment or modification of a treaty; (ii) the
lapse, by its terms, of any law of the United States or any treaty to which the
United States is a party; or (iii) the promulgation of any temporary or final
regulation under the Code.
(d) Each Co-Lender that is not incorporated under the laws of the
United States of America or a state thereof agrees that, prior to the first
date on which any payment is due to it hereunder, it will deliver to Borrower
and Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Co-Lender is entitled to receive payments
under this Agreement and the Note payable to it, without deduction or
withholding of any United States federal income taxes, and (ii) an Internal
Revenue Service Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax. Each
Co-Lender required to deliver to Borrower and Agent a Form 1001 or 4224 and
Form W-8 or W-9 pursuant to the preceding sentence further undertakes to
deliver to Borrower and Agent two further copies of the said letter and Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other
manner of certification, as the case may be, on or before the date that any
such letter or form expires (which, in the case of the Form 4224, is the
-33-
40
last day of each U.S. taxable year of the non-U.S. Co-Lender) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent letter and form previously delivered by it to Borrower and Agent, and
such other extensions or renewals thereof as may reasonably be requested by
Borrower or Agent, certifying in the case of a Form 1001 or 4224 that such
Co-Lender is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes, unless in any such
case an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Co-Lender from duly completing and delivering any such letter or
form with respect to it and such Co-Lender advises Borrower and Agent that it is
not capable of receiving payments without any deduction or withholding of United
States federal income tax, and in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax. Notwithstanding clause (a),
if a Co-Lender fails to provide a duly completed Form 1001 or 4224 or other
applicable form and, under applicable law, in order to avoid liability for
Taxes, Borrower is required to withhold on payments made to such a Co-Lender
that has failed to provide the applicable form, Borrower shall be entitled to
withhold the appropriate amount of Taxes. In such event, Borrower shall promptly
provide to such Co-Lender or Agent evidence of payment of such Taxes to the
appropriate taxing authority and shall promptly forward to such Co-Lender or
Agent any official tax receipts or other documentation with respect to the
payment of the Taxes as may be issued by the taxing authority.
Section 2.20 Use of Proceeds and Limitations on Advances. (a) Borrower
shall use the proceeds of the Loan solely to provide short-term financing for
(i) the acquisition of fee interests in Real Property Assets which are utilized
principally for mobile home parks or manufactured housing communities, (ii)
capital improvements, expansion or additional development (subject to Section
6.14) to Real Property Assets owned by Borrower or any Loan Party, (iii) working
capital, (iv) the acquisition of Undeveloped Land that is non-income producing
or Real Property Assets which are held in any form other than undivided fee
simple ownership (such as co-tenancy interests, leasehold interests, partnership
interests, shares of stock in corporations owning real estate, or through
mortgages or participation interests in or assignments of mortgages), in both
cases provided that such Assets constitute Permitted Investments and subject
however to the limitations of Section 6.14, (v) to pay other Indebtedness
subject to the terms of Section 6.09, (vi) to pay various costs and expenses in
connection with the Loan and (vii) the redemption of OP Units, provided that no
more than $5,000,000.00 of Advances in the aggregate over the term of this
Agreement shall be used for such redemption. Notwithstanding anything contained
herein to the contrary, the principal amount outstanding at any time hereunder
which has been advanced for working capital (including the payment of dividends
and distributions) shall not exceed $15,000,000.00.
(b) The aggregate amount of any single Advance made hereunder shall not
exceed with respect to an acquisition by Borrower, the REIT or any Loan Party of
a Real Property Asset, an amount equal to the acquisition cost of such Real
Property Asset, as verified by Borrower to the satisfaction of Agent, less the
amount of any mortgage indebtedness secured by such Real Property Asset that
will remain outstanding following such acquisition.
Section 2.21 Intentionally Deleted.
-34-
41
Section 2.22 Intentionally Deleted.
Section 2.23 Intentionally Deleted.
Section 2.24 Decision Making by the Agent. Borrower and the REIT
acknowledge and agree that any and all approvals, consents, requests,
calculations, determinations, decisions, waivers, amendments and modifications
that Agent is entitled to make under this Agreement are subject to the approval
or consent of some or all of the Co-Lenders pursuant to the terms and conditions
of the Intercreditor Agreement, whether or not such approval or consent is
expressly stated herein or otherwise.
Section 2.25 Additional Unencumbered Assets. If Borrower desires to add
an Unencumbered Asset for purposes of this Agreement, it shall notify Agent and
together with such notification, deliver to Agent, with respect to such Asset
the documentation required in ▇▇▇▇▇▇▇ ▇.▇▇(▇)(▇▇), (▇), (▇), (▇), (▇), (▇), (▇),
(▇), (▇), (▇), (v) (and if Borrower or any Guarantor owns a leasehold interest
in such Asset, Section 3.01(a)(x)) and such other items as Agent and the
Co-Lenders may reasonably request. If such Asset is owned by a Loan Party other
than a Guarantor or Borrower, such Loan Party shall execute and deliver a
guaranty in the form of the Guaranty, together with the items required in
3.01(b), (c), (d) and (m) with respect to such Loan Party and Guaranty. If such
Asset is subject to no Liens or encumbrances other than Permitted Liens and is
otherwise satisfactory to Agent and the Majority Co-Lenders, Agent shall confirm
to Borrower in writing that such Asset shall be deemed an Unencumbered Asset and
Schedule 1 shall be amended accordingly. The cost of the review of such
documentation (but not the cost of preparation and delivery of such
documentation to Agent) shall be paid by Agent and the Co-Lenders.
Section 2.26 Pro Rata Interests. The Pro Rata Interest of each
Co-Lender is set forth on Schedule 11. The liabilities of each of the Co-Lenders
are several and not joint, and each Co-Lenders' obligations to Borrower and the
REIT under this Agreement shall be reduced by the amount of any Assignment and
Assumption. No Co-Lender shall be responsible for the obligations of any other
Co-Lender. Each Co-Lender shall be liable to Borrower and the REIT only for
their respective proportionate shares of the Loan. If for any reason any of the
Co-Lenders shall fail or refuse to abide by their obligations under this
Agreement, the other Co-Lenders shall not be relieved of their obligations, if
any, hereunder, including their obligations to make their pro rata share of any
Advance on the date set forth for such Advance in the Notice of Borrowing;
notwithstanding the foregoing, the Co-Lenders shall have the right, but not the
obligation, at their sole option, to make the defaulting Co-Lender's pro rata
share of such Advance pursuant to the terms of the Intercreditor Agreement.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.01 Conditions Precedent to the Initial Advance. The
obligation of Lender and each Co-Lender to make the initial Advance of the Loan
(or its pro rata share thereof) on the Closing Date is subject to the
satisfaction by Borrower on the Closing Date of the following conditions
precedent:
-35-
42
(a) Loan Documents.
(i) Line of Credit Agreement. Borrower and the REIT shall have
executed and delivered this Agreement to the Syndication Agent.
(ii) The Note. Borrower shall have executed and delivered to
Syndication Agent the Note in the amount, maturity and as otherwise provided
herein.
(iii) Intercreditor Agreement. Agent, the Syndication Agent, the
Co-Lenders, Borrower and the REIT shall have executed and delivered the
Intercreditor Agreement.
(iv) Guaranty. The REIT and the Guarantors shall have executed and
delivered the Guaranty to the Syndication Agent.
(v) Environmental Indemnity. Borrower and the REIT shall have
executed and delivered to the Syndication Agent the Environmental Indemnity.
(vi) Intentionally Deleted.
(vii) Intentionally Deleted.
(viii) Intentionally Deleted.
(ix) Intentionally Deleted.
(x) Ground Leases. If the Borrower or any other Loan Party owns a
leasehold estate in a Real Property Asset, (A) a certified copy of the
Ground Lease for such Real Property Asset, together with all amendments and
modifications thereto and a recorded memorandum thereof, which Ground Lease
shall be satisfactory in all respects to Agent and all of the Co-Lenders in
their sole discretion and (B) a Ground Lease Estoppel substantially in the
form of Exhibit L, executed by the fee owner and ground lessor of each
Unencumbered Asset, which estoppel shall be satisfactory to Agent and all of
the Co-Lenders in its sole discretion.
(xi) Flood Plain. The Syndication Agent shall have received
reasonably satisfactory evidence indicating which of the Real Property
Assets are in a flood plain.
(b) Opinions of Counsel.
The Syndication Agent shall have received legal opinions, dated the
Closing Date, from counsel to Borrower and the other Loan Parties, in form and
substance satisfactory to the Syndication Agent and all of the Co-Lenders and
its counsel, that, among other things: (i) this
-36-
43
Agreement and the Loan Documents have been duly authorized, executed and
delivered by Borrower and the REIT and the other Loan Parties and are valid and
enforceable in accordance with their terms, subject to bankruptcy and equitable
principles; (ii) that Borrower, the REIT and other Loan Parties are qualified to
do business and in good standing under the laws of the jurisdiction in which it
is organized, in which it is transacting business and where the Real Property
Assets are located; and (iii) the Loan does not violate any usury laws.
(c) Organizational Documents. The Syndication Agent shall have received
(i) with respect to the REIT and each of the Loan Parties which is a
corporation, the certificate of incorporation of the REIT and such Loan Party,
as amended, modified or supplemented to the Closing Date, certified to be true,
correct and complete by the appropriate Secretary of State as of a date not more
than thirty (30) days prior to the Closing Date, together with a good standing
certificate from such Secretary of State and a good standing certificate from
the Secretaries of State (or the equivalent thereof) of each other State in
which each Real Property Asset is located and in which each of them is required
to be qualified to transact business, each to be dated a date not more than
thirty (30) days prior to the Closing Date, (ii) with respect to Borrower and
each of the Loan Parties which is a limited partnership, the agreement of
limited partnership of such Person, as amended, modified or supplemented to the
Closing Date, certified to be true, correct and complete by a general partner of
such Person, together with a copy of the certificate of limited partnership of
such entity, as amended, modified or supplemented to the Closing Date, certified
to be true, correct and complete by the appropriate Secretary of State as of a
date not more than thirty (30) days prior to the Closing Date, together with a
good standing certificate from such Secretary of State and a good standing
certificate from the Secretary of State (or the equivalent thereof) of each
other State in which each such Person is required to be qualified to transact
business, each to be dated not more than thirty (30) days prior to the Closing
Date, (iii) with respect to any Loan Party which is a general partnership, the
agreement of general partnership of such Loan Party, as amended, modified or
supplemented to the Closing Date, certified to be true, complete and correct by
a general partner of such Loan Party, together with a copy of such Loan Party's
doing business certificate (or the equivalent thereof), as amended, modified or
supplemented to the Closing Date, certified to be true, correct and complete by
the appropriate Secretary of State (or County Clerk's or Recorder's Office, as
the case may be) as of a date not more than thirty (30) days prior to the
Closing Date in each case reasonably satisfactory to the Syndication Agent and
all of the Co-Lenders, and (iv) evidence satisfactory to the Syndication Agent
and all of the Co-Lenders that the REIT is a "qualified real estate investment
trust" as defined in Section 856 of the Code, including, without limitation,
copies of the REIT's real estate investment trust registration statement and all
amendments thereto, any similar material documents filed with the United States
Securities and Exchange Commission or issued in connection with a public
offering of equity securities by the REIT.
(d) Certified Resolutions, etc. The Syndication Agent shall have
received a certificate of the secretary or assistant secretary of the REIT and
each of the Loan Parties which is a corporation and dated the Closing Date,
certifying (i) the names and true signatures of the incumbent officers of such
Person authorized to sign the applicable Loan Documents, (ii) the by-laws of
such Person as in effect on the Closing Date, (iii) the resolutions of such
Person's board of directors approving and authorizing the execution, delivery
and performance of all Loan Documents executed by such Person, and (iv) that
there have been no changes in the certificate
-37-
44
of incorporation of such Person since the date of the most recent certification
thereof by the appropriate Secretary of State.
(e) Intentionally Deleted.
(f) Insurance. The Syndication Agent shall have received certificates
of insurance demonstrating insurance coverage in respect of each of the Real
Property Assets of types, in amounts, and with insurers satisfactory to the
Syndication Agent and all of the Co-Lenders and otherwise in compliance with the
terms, provisions and conditions of Section 5.03.
(g) Lien Search Reports. The Syndication Agent shall have received
satisfactory (i.e., showing no Liens other than Permitted Liens) UCC searches,
together with tax lien searches conducted in the appropriate jurisdictions by a
search firm acceptable to the Syndication Agent and all of the Co-Lenders with
respect to the Unencumbered Assets, Borrower and each of the other Loan Parties
(collectively, the "UCC Searches").
(h) Rating Agencies. Borrower shall deliver evidence satisfactory to
the Syndication Agent and all of the Co-Lenders, which evidence may include a
letter or other written confirmation from the respective Rating Agency, that
Borrower's Unsecured Debt Rating is BBB- or higher as assigned by Standard &
Poor's Ratings Services and Baa3 or higher as assigned by ▇▇▇▇▇'▇ Investor
Service, Inc., and that the consummation of the Loan will not cause any change,
downgrade or withdrawal of such rating.
(i) Title Insurance Policies; Surveys. The Syndication Agent shall have
received (i) title insurance policies issued by a title insurance company
satisfactory to the Syndication Agent, and all of the Co-Lenders in form and
substance satisfactory to Co-Lenders, insuring the Borrower's good and
marketable fee simple title to the Unencumbered Assets (the "Title Policy"),
together with a title "bring down" or lien search showing no liens or
encumbrances other than Permitted Liens on any Unencumbered Asset and (ii) a
recent survey with respect to each of the Unencumbered Assets reasonably
satisfactory in form and substance to the Syndication Agent and all of the
Co-Lenders.
(j) Financial Statements. The Syndication Agent shall have received the
(i) consolidated audited financial statements of Borrower and the REIT and their
Consolidated Subsidiaries for the most recently ended fiscal year of Borrower
and the REIT and the unaudited consolidated financial statements of Borrower and
the REIT and their Consolidated Subsidiaries for each fiscal quarter of Borrower
and the REIT and their Consolidated Subsidiaries ending since the end of such
entity's most recent fiscal year and (ii) for each Real Property Asset, annual
operating statements and occupancy statements for Borrower's most recent fiscal
year together with current year to date operating statements, current occupancy
statements and operating and capital budget approved by Borrower for the current
fiscal year. Such financial statements shall be reasonably acceptable to the
Syndication Agent and all of the Co-Lenders in their sole discretion, and each
such statement shall be certified by a general partner or senior executive
officer of Borrower and the REIT that, as of the Closing Date, there has been no
material adverse change in the financial condition of any Real Property Asset or
Borrower, the REIT or the respective Loan Parties since the date thereof.
-38-
45
(k) Environmental Matters. The Syndication Agent shall have received
environmental reports with respect to each of the Real Property Assets, each of
which shall be in form and substance reasonably satisfactory to the Syndication
Agent and all of the Co-Lenders.
(l) Fees and Operating Expenses. The Syndication Agent shall have
received, for its and the Co-Lenders' account, as applicable, the Facility Fee,
all costs and expenses of the Syndication Agent and the Co-Lenders in connection
with the Loan, Fees and other fees and expenses due and payable hereunder on or
before the Closing Date, including, without limitation, the costs of all
environmental reports required to be delivered hereunder and the fees and
expenses accrued through the Closing Date, of counsel retained by the
Syndication Agent and the Co-Lenders.
(m) Consents, Licenses, Approvals, etc. The Syndication Agent shall
have received certified copies of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by Borrower
and the other Loan Parties, and the validity and enforceability, of the Loan
Documents, or in connection with the Loan, and such consents, licenses and
approvals shall be in full force and effect.
(n) Intentionally Deleted.
(o) Intentionally Deleted.
(p) Zoning Compliance. The Syndication Agent shall have received
evidence reasonably satisfactory to the Syndication Agent and all of the
Co-Lenders to the effect that each of the Unencumbered Assets and the use
thereof are in substantial compliance with the applicable zoning, subdivision,
and all other applicable federal, state or local laws and ordinances affecting
each of the Unencumbered Assets, and that all building and operating licenses
and permits necessary for the use and occupancy of each of the Unencumbered
Assets as a mobile home park or manufactured housing community including, but
not limited to, current certificates of occupancy, if available, have been
obtained and are in full force and effect.
(q) Leases. The Syndication Agent shall have received certified copies
of the standard forms of lease which will be used by Borrower in leasing space
in each of the Unencumbered Assets.
(r) Contracts and Agreements. The Syndication Agent shall have received
certified copies of all contracts and agreements relating to the management,
leasing and operation of each of the Unencumbered Assets each of which shall be
reasonably satisfactory to the Syndication Agent and all of the Co-Lenders.
(s) Plans and Specifications. The Syndication Agent shall have been
provided access to the plans and specifications for each of the Unencumbered
Assets, if available.
(t) Representations and Warranties. The Syndication Agent shall have
received a certification by the REIT for itself and as general partner of
Borrower certifying that to the best of its knowledge, all of the
representations and warranties contained in this Agreement,
-39-
46
the Security Instruments and the other Loan Documents are true and correct with
respect to each of the Real Property Assets, Borrower and each Loan Party, and
that there is no Default or Event of Default hereunder.
(u) Certification as to Covenants. The Syndication Agent shall have
received a certificate of the REIT and for itself and as general partner of
Borrower together with other evidence satisfactory to Agent and all of the
Co-Lenders that, as of the Closing Date and after giving effect to the Loan to
be consummated thereon, there is no Default or Event of Default hereunder.
(v) Certification as to Applicable Laws. The Syndication Agent shall
have received such evidence as the Syndication Agent and all of the Co-Lenders
shall deem necessary to establish (including, without limitation, a
certification by the REIT for itself and as general partner of Borrower) that to
the best knowledge of Borrower and the REIT, each Real Property Asset is in
material compliance with all Applicable Laws as of the Closing Date.
(w) Additional Matters. The Syndication Agent shall have received such
other certificates, opinions, documents and instruments relating to the Loan as
may have been reasonably requested by the Syndication Agent and any of the
Co-Lenders, and all corporate and other proceedings and all other documents
(including, without limitation, all documents referred to herein and not
appearing as exhibits hereto) and all legal matters in connection with the Loan
shall be reasonably satisfactory in form and substance to the Syndication Agent
and all of the Co-Lenders.
Section 3.02 Conditions Precedent to All Advances of the Loan. The
obligation of Lender and each Co-Lender to make any Advance under the Loan
(including the initial Advance made on or after the Closing Date) (or its pro
rata share thereof) is subject to the satisfaction on the date such Advance is
made of the following conditions precedent:
(a) Representations and Warranties. The representations and warranties
contained herein and in the other Loan Documents (other than representations and
warranties which expressly speak only as of a different date) shall be true and
correct in all material respects on such date both before and after giving
effect to the making of such Advance.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date either before or after giving
effect to the making of such Advance.
(c) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any governmental authority shall have been issued,
and no litigation shall be pending or threatened, which in the good faith
judgment of Agent would enjoin, prohibit or restrain, or impose or result in the
imposition of any material adverse condition upon, the making of the Advances or
Borrower's obligation to pay (or Agent or any Co-Lender's rights to receive
payment) of the Loan and the other Obligations or the consummation of the Loan.
-40-
47
(d) No Material Adverse Change. No event, act or condition shall have
occurred after the Closing Date which, in the reasonable judgment of Agent has
had or would have a Material Adverse Effect.
(e) Notice of Borrowing. Agent shall have received a fully executed
Notice of Borrowing or Notice of Conversion or Continuation, as the case may be,
in respect of the Advance to be made on such date.
(f) No Litigation. Except for matters identified on Schedule 5 (as the
same may be amended or supplemented), no actions, suits or proceedings shall be
pending or threatened with respect to the Loan or the Loan Documents, Borrower
or any of the other Loan Parties, or with respect to the Real Property Assets,
that could, in the aggregate, result in a Material Adverse Effect and matters
identified on Schedule 5, in the aggregate, do not result in a Material Adverse
Effect.
(g) Title Insurance Searches. Agent, or any Co-Lender, may elect, in
its sole discretion, to perform or have performed Title Searches with respect to
some or all of the Unencumbered Assets at Borrower's sole cost and expense.
Provided that no Event of Default has occurred and is continuing, Borrower shall
be required to pay for only one Title Search per Real Property Asset per
consecutive twelve (12) month period, unless a Title Search indicates a Lien
other than a Permitted Lien or another state of facts not reasonably
satisfactory to Agent and the Majority Co-Lenders, in which case Borrower shall
pay for such Title Search and a subsequent Title Search to establish that such
Lien or state of facts has been removed. The results of all such Title Searches
shall be satisfactory to Agent in its reasonable discretion.
(h) UCC Searches. Agent shall have received satisfactory (i.e., showing
no Liens other than Permitted Liens) UCC searches, together with tax lien
searches conducted in the appropriate jurisdictions and as requested by Agent
and the Co-Lenders performed by a search firm acceptable to Agent with respect
to the Unencumbered Assets, Borrower and each of the other Loan Parties.
(i) Additional Matters. Agent shall have received such other
certificates, opinions, documents and instruments relating to the Loan as may
have been reasonably requested by Agent or any of the Co-Lenders and all
corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Loan shall be satisfactory
in form and substance to Agent and the Majority Co-Lenders.
Section 3.03 Acceptance of Borrowings. The acceptance by Borrower of
the proceeds of each Advance shall constitute a representation and warranty by
Borrower to Agent and the Co-Lenders that all of the conditions required to be
satisfied under this Section 3 in connection with the making of such Advance and
all of the terms and provisions of this Agreement have been satisfied.
Section 3.04 Sufficient Counterparts. All certificates, agreements,
legal opinions and other documents and papers referred to in this Section 3,
unless otherwise specified,
-41-
48
shall be delivered to Agent and shall be satisfactory in form and substance to
Agent and the Co-Lenders in their sole discretion (unless the form thereof is
prescribed herein) and Borrower shall deliver sufficient counterparts of all
such materials for distribution to Agent and each Co-Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce Agent, Lender and the Co-Lender to enter into this
Agreement and to make the Loan, Borrower and the REIT make the following
representations and warranties, which shall survive the execution and delivery
of this Agreement and the Note and the making of the Loan and each Advance:
Section 4.01 Corporate/Partnership Status. Each of Borrower and the
other Loan Parties (a) is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its incorporation or formation, (b) has all requisite corporate
or partnership power and authority, as the case may be, to own its property and
assets (including the Real Property Assets) and to transact the business in
which it is engaged or presently proposes to engage (including this Loan) and
(c) has duly qualified and is authorized to do business and is in good standing
as a foreign corporation or foreign partnership, as the case may be, in every
jurisdiction in which it owns or leases real property (including the Real
Property Assets) or in which the nature of its business requires it to be so
qualified.
Section 4.02 Corporate/Partnership Power and Authority. Each of
Borrower and the other Loan Parties has the corporate or partnership power and
authority, as the case may be, to execute, deliver and carry out the terms and
provisions of each of the Loan Documents to which it is a party and has taken
all necessary corporate or partnership action, as the case may be, to authorize
the execution, delivery and performance by it of such Loan Documents. Each of
Borrower and the other Loan Parties has duly executed and delivered each such
Loan Document, and each such Loan Document constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms, except as
enforcement may be limited by applicable insolvency, bankruptcy or other laws
affecting creditors' rights generally, or general principles of equity whether
enforcement is sought in a proceeding in equity or at law.
Section 4.03 No Violation. To the best of Borrower's and the REIT's
knowledge, neither the execution, delivery or performance by Borrower or any
other Loan Party of the Loan Documents to which it is a party, nor the
compliance by such Person with the terms and provisions thereof nor the
consummation of the Loan, (a) will contravene any applicable provision of any
law, statute, rule, regulation, order, writ, injunction or decree of any court
or governmental instrumentality, or (b) will conflict with or result in any
material breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the Assets (including the
Real Property Assets) of Borrower or any of the other Loan Parties (or of any
partnership of which such Person is a partner) pursuant to the terms of any
indenture, mortgage, deed of trust, agreement or other instrument to which
Borrower or any of the other Loan Parties (or of any partnership of which such
Person is a partner) is a party or by which it or any of its Assets (including
the Real Property Assets) is bound or to which it may be subject, or (c) will,
with respect to Borrower or any Loan Party which is a partnership, violate any
provisions of the
-42-
49
partnership agreement of such Person (or the partnership agreement of any
partnership of which such Person is a partner), or (d) will, with respect to the
REIT or any of the Loan Parties which is a corporation, violate any provision of
the Certificate of Incorporation or By-Laws of such Person.
Section 4.04 Litigation. Except as set forth on Schedule 5, there are
no actions, suits or proceedings, judicial, administrative or otherwise, pending
or, to the best of Borrower's or the REIT's knowledge, threatened with respect
to any of the Loan or any of the Loan Documents, Borrower, the REIT, or any of
the other Loan Parties, or with respect to the Real Property Assets, that could,
in the aggregate, result in a Material Adverse Effect. All matters set forth on
Schedule 5 do not, in the aggregate, result in a Material Adverse Effect.
Section 4.05 Financial Statements: Financial Condition; etc. The
financial statements delivered pursuant to Section 3.01(j) were prepared in
accordance with GAAP consistently applied and fairly present the financial
condition and the results of operations of Borrower, the REIT and their
Consolidated Subsidiaries and the Real Property Assets covered thereby on the
dates and for the periods covered thereby, except as disclosed in the notes
thereto and, with respect to interim financial statements, subject to usual
year-end adjustments. Neither Borrower nor the REIT nor any of their
Consolidated Subsidiaries has any material liability (contingent or otherwise)
not reflected in such financial statements or in the notes thereto. There has
been no adverse change in any condition, fact, circumstance or event that would
make any such information materially inaccurate, incomplete or otherwise
misleading or would affect Borrower's or the REIT's ability to perform its
obligations under this Agreement.
Section 4.06 Solvency. On the Closing Date and after and giving effect
to the Loan, Borrower and the Loan Parties will be Solvent.
Section 4.07 Material Adverse Change. Since the date of the most recent
audited financial statements delivered pursuant to Section 3.01(j), there has
occurred no event, act or condition, and to the best of Borrower's or the REIT's
knowledge, there is no prospective event or condition which has had, or could
have, a Material Adverse Effect.
Section 4.08 Use of Proceeds; Margin Regulations. All proceeds of each
Advance will be used by Borrower and the REIT only in accordance with the
provisions of Section 2.20. No part of the proceeds of any Advance will be used
by Borrower and the REIT to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Advance nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of Regulations G, T, U or X of
the Federal Reserve Board.
Section 4.09 Governmental Approvals. To the best knowledge of Borrower
and the REIT, no order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with (i) the execution, delivery and
performance of any Loan Document or the consummation of the Loan or (ii) the
legality, validity, binding effect or enforceability of any Loan Document.
-43-
50
Section 4.10 Unsecured Debt Rating. Borrower has an Unsecured Debt
Rating of BBB- or higher assigned by Standard & Poor's Ratings Services and of
Baa3 or higher assigned by ▇▇▇▇▇'▇ Investor Service, Inc., and the consummation
of the Loan will not cause any change, downgrade or withdrawal of such rating.
Section 4.11 Tax Returns and Payments. Borrower, the REIT and the other
Loan Parties have filed all tax returns required to be filed by them for which
the filing date has passed and not been extended and has paid all taxes and
assessments payable by such Persons which have become due, other than (a) those
not yet delinquent or (b) those that are reserved against in accordance with
GAAP which are being diligently contested in good faith by appropriate
proceedings.
Section 4.12 ERISA. Neither Borrower or any of the other Loan Parties
has any Employee Benefit Plans other than those listed on Schedule 6. No
accumulated funding deficiency (as defined in Section 412 of the Code or Section
302 of ERISA) or Reportable Event has occurred with respect to any Plan. As of
the Closing Date, the Unfunded Benefit Liabilities do not in the aggregate
exceed $500,000. Borrower, the other Loan Parties and each member of their
respective ERISA Controlled Group have complied in all material respects with
the requirements of ERISA and the Code and plan documents for each Employee
Benefit Plan and Plans and are not in default (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan. Neither Borrower nor
any of the other Loan Parties, nor any member of their respective ERISA
Controlled Groups is subject to any present or potential liability or withdrawal
liability or annual withdrawal liability payments, which, individually or in the
aggregate, could materially adversely affect any of such Persons. To the best
knowledge of Borrower, the other Loan Parties and their respective ERISA
Controlled Group, no Multiemployer Plan is or is likely to be in reorganization
(within the meaning of Section 4241 of ERISA or Section 418 of the Code) or is
insolvent (as defined in Section 4245 of ERISA). No material liability to the
PBGC (other than required premium payments), the Internal Revenue Service, any
Plan or any trust established under Title IV of ERISA has been, or is expected
by Borrower, the other Loan Parties, or any member of their respective ERISA
Controlled Group to be, incurred by Borrower, the other Loan Parties, or any
member of their respective ERISA Controlled Group. Except as otherwise disclosed
on Schedule 6 hereto, none of Borrower, the other Loan Parties, nor, any member
of their respective ERISA Controlled Group has any contingent liability with
respect to any post-retirement benefit under any "welfare plan" (as defined in
Section 3(1) of ERISA), other than liability for continuation coverage under
Part 6 of Title I of ERISA. No lien under Section 412(n) of the Code or 302(f)
of ERISA or requirement to provide security under Section 401(a)(29) of the Code
or Section 307 of ERISA has been or is reasonably expected by Borrower, the
other Loan Parties, or any member of their respective ERISA Controlled Group to
be imposed on the assets of Borrower, the other Loan Parties, or any member of
their respective ERISA Controlled Group. Neither Borrower nor any other Loan
Party is a party to any collective bargaining agreement. Neither Borrower nor
any Loan Party nor any of their ERISA Controlled Group has engaged in any
transaction prohibited by Section 408 of ERISA or Section 4975 of the Code. As
of the Closing Date and throughout the term of the Loan, neither Borrower nor
any other Loan Party is or will be an "employee benefit plan" as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, and none of the
assets of Borrower or any other Loan Party will constitute "plan assets" of one
or more such plans for
-44-
51
purposes of Title I of ERISA. As of the Closing Date and throughout the term of
the Loan, neither Borrower nor any other Loan Party is or will be a
"governmental plan" within the meaning of Section 3(3) of ERISA and neither
Borrower nor any other Loan Party will be subject to state statutes applicable
to Borrower or such Loan Party regulating investments and fiduciary obligations,
of Borrower or any Loan Party with respect to governmental plans.
Section 4.13 Intentionally Deleted.
Section 4.14 Representations and Warranties in Loan Documents. All
representations and warranties made by Borrower, the REIT or any other Loan
Party in the Loan Documents are true and correct in all material respects.
Section 4.15 True and Complete Disclosure. To the best knowledge of
Borrower and the REIT, all factual information (taken as a whole) furnished by
or on behalf of Borrower, the REIT or any other Loan Party in writing to Agent
and/or the Syndication Agent on or prior to the Closing Date, for purposes of or
in connection with this Agreement or the Loan (the "Furnished Information") is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower, the REIT or any other Loan Party in writing to Agent
and/or the Syndication Agent will be, true, accurate and complete in all
material respects and will not omit any material fact necessary to make such
information (taken as a whole) not misleading on the date as of which such
information is dated or furnished. As of the Closing Date, there are no facts,
events or conditions directly and specifically affecting Borrower, the REIT, or
any other Loan Party known to Borrower, the REIT or any other Loan Party and not
disclosed to Agent and the Syndication Agent, in the Furnished Information, in
the Schedules attached hereto or in the other Loan Documents, which, in the
aggregate, have or could be expected to have a Material Adverse Effect.
Section 4.16 Ownership of Real Property; Existing Security Instruments.
Borrower or the Operating Partnerships have good and marketable fee simple title
in all of the Real Property Assets and good title to all of their personal
property subject to no Lien of any kind except for Permitted Liens. Borrower or
a Guarantor, as applicable, has good and marketable fee simple title in all of
the Unencumbered Assets. As of the date of this Agreement, there are no options
or other rights to acquire any of the Real Property Assets that run in favor of
any Person and there are no mortgages, deeds of trust, indentures, debt
instruments or other agreements creating a Lien against any of the Real Property
Assets other than Permitted Liens and, except for Unencumbered Assets, Permitted
Mortgage Debt.
Section 4.17 No Default. No Default or Event of Default exists under or
with respect to any Loan Document. Neither Borrower, any Loan Party or any of
their respective Subsidiaries is in default in any material respect beyond any
applicable grace period under or with respect to any other material agreement,
instrument or undertaking to which it is a party or by which it or any of its
properties or assets is bound in any respect, the existence of which default
could result in a Material Adverse Effect.
Section 4.18 Licenses, etc. Borrower or the applicable Loan Party has
obtained and holds in full force and effect, all material franchises,
trademarks, tradenames, copyrights,
-45-
52
licenses, permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which are
necessary for the operation of the Real Property Assets and their respective
businesses as presently conducted.
Section 4.19 Compliance With Law. To the best knowledge of Borrower and
the REIT, Borrower, the REIT and each Loan Party is in material compliance with
all Applicable Laws and other laws, rules, regulations, orders, judgments, writs
and decrees, noncompliance with which could result in a Material Adverse Effect.
Section 4.20 Brokers. Borrower, the REIT, Agent and each Co-Lender
hereby represent and warrant that no brokers or finders were used in connection
with procuring the financing contemplated hereby and Borrower and the REIT
hereby agree to indemnify and save Agent and each Co-Lender harmless from and
against any and all liabilities, losses, costs and expenses (including
attorneys' fees or court costs) suffered or incurred by Agent or any Co-Lender
as a result of any claim or assertion by any party claiming by, through or under
Borrower, the REIT or any Loan Party, that it is entitled to compensation in
connection with the financing contemplated hereby and Agent and each Co-Lender
hereby agrees to indemnify and save Borrower harmless from and against any and
all liabilities, losses, costs and expenses (including attorneys' fees or court
costs) suffered or incurred by Borrower as a result of any claim or assertion by
any party claiming by, through or under Agent or any Co-Lender that it is
entitled to compensation in connection with the financing contemplated hereby.
Section 4.21 Judgments. To the best knowledge of Borrower and the REIT,
there are no judgments, decrees, or orders of any kind against Borrower or any
Loan Party unpaid of record which would materially or adversely affect the
ability of Borrower or any Loan Party to comply with its obligations under the
Loan or this Agreement in a timely manner. To the best knowledge of Borrower and
the REIT, there are no federal tax claims or liens assessed or filed against
Borrower or any Loan Party or any related entity, or any principal thereof, and
there are no material judgments against Borrower or any Loan Party unsatisfied
of record or docketed in any court of the States in which the Real Property
Assets are located or in any other court located in the United States and no
petition in bankruptcy or similar insolvency proceeding has ever been filed by
or against Borrower or any Loan Party, and neither Borrower nor any Loan Party
has ever made any assignment for the benefit of creditors or taken advantage of
any insolvency act or any act for the benefit of debtors.
Section 4.22 Property Manager. As of the date hereof, the manager of
the Real Property Assets is Borrower. The manager of the Canadian Properties is
Fort ▇▇▇▇▇▇▇▇, Inc.
Section 4.23 Assets of the REIT. The sole assets of the REIT are its
general partnership interest in Borrower, such other assets that may be
incidental to or required in connection with the ownership of such general
partnership interest, and as set forth on Schedule 8. The REIT is the sole
general partner of Borrower.
Section 4.24 REIT Status. The "REIT" is a "qualified real estate
investment trust" as defined in Section 856 of the Code.
-46-
53
Section 4.25 Operations. The REIT conducts its business directly only
through Borrower, except as described on Schedule 9A, and the Borrower conducts
its business only in its own name, except as described on Schedule 9B.
Section 4.26 Stock. The REIT lists all of its outstanding shares of
stock on the New York Stock Exchange.
Section 4.27 Ground Leases. With respect to those Real Property Assets
in which Borrower or any other Loan Party holds a leasehold estate under a
Ground Lease, with respect to each such Ground Lease (i) Borrower or the
respective Loan Party is the owner of a valid and subsisting interest as tenant
under the Ground Lease; (ii) the Ground Lease is in full force and effect,
unmodified and not supplemented by any writing or otherwise; (iii) all rent,
additional rent and other charges reserved therein have been paid to the extent
they are payable to the date hereof; (iv) the remaining term of the Ground Lease
is at least 10 years after the Maturity Date; (v) Borrower or the respective
Loan Party enjoys the quiet and peaceful possession of the estate demised
thereby, subject to any sublease; (vi) the Borrower or the respective Loan Party
is not in default under any of the terms thereof and there are no circumstances
which, with the passage of time or the giving of notice or both, would
constitute an event of default thereunder; (vii) the lessor under the Ground
Lease is not in default under any of the terms or provisions thereof on the part
of the lessor to be observed or performed; (viii) the lessor under the Ground
Lease has satisfied all of its repair or construction obligations, if any, to
date pursuant to the terms of the Ground Lease; (ix) Schedule 10 lists all the
Ground Leases to which any of the Real Property Assets are subject and all
amendments and modifications thereto; and (x) the lessor indicated on Schedule
10 for each Ground Lease is the current lessor under the related Ground Lease.
Section 4.28 Single Purpose. Each Operating Partnership is and will
continue to be engaged only in the business of owning, operating and developing
Real Property Assets. No Operating Partnership owns or has any interest in any
Person. The sole partners and beneficial owners of each Operating Partnership
are and will continue to be, directly or indirectly, Borrower and/or the REIT.
The principal place of business of each Operating Partnership is, and will
continue to be, the location of Borrower's principal place of business.
Section 4.29 Status of Property. With respect to each Real Property
Asset, except as set forth on Schedule 12:
(a) No portion of any improvement on the Real Property Asset is located
in an area identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, as amended, or any successor law, or, if located within any such area,
Borrower or the respective Loan Party has obtained and will maintain the
insurance prescribed in Section 5.03 hereof.
(b) To the best knowledge of Borrower and the REIT, Borrower or the
respective Loan Party has obtained all necessary certificates, licenses and
other approvals,
-47-
54
governmental and otherwise, necessary for the operation of the Real Property
Asset and the conduct of its business and all required zoning, building code,
land use, environmental and other similar permits or approvals, all of which are
in full force and effect as of the date hereof and not subject to revocation,
suspension, forfeiture or modification.
(c) To the best knowledge of Borrower and the REIT, the Real Property
Asset and the present and contemplated use and occupancy thereof are in material
compliance with all applicable zoning ordinances (without reliance upon
grandfather provisions or adjoining or other properties), building codes, land
use and environmental laws, laws relating to the disabled (including, but not
limited to, the ADA) and other similar laws.
(d) The Real Property Asset is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Real Property Asset has accepted or is equipped to accept such
utility service.
(e) All public roads and streets necessary for service of and access to
the Real Property Asset for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public.
(f) The Real Property Asset is served by public water and sewer
systems; or, if the Real Property Asset is not serviced by a public water and
sewer system, such alternate systems are adequate and meet, in all material
respects, all requirements and regulations of, and otherwise complies in all
material respects with, all Applicable Laws.
(g) Neither Borrower nor any Loan Party is aware of any latent or
patent structural or other significant deficiency of the Real Property Asset.
The Real Property Asset is free of damage and waste that would materially and
adversely affect the value of the Real Property Asset, is in good repair and
there is no deferred maintenance, other than ordinary wear and tear. The Real
Property Asset is free from damage caused by fire or other casualty. There is no
pending or, to the actual knowledge of Borrower, the REIT or the respective Loan
Party, threatened condemnation proceedings affecting the Real Property Asset, or
any part thereof.
(h) To the best knowledge of Borrower and the REIT, all costs and
expenses of any and all labor, materials, supplies and equipment used in the
construction of the improvements on the Real Property Asset have either (i) been
paid in full, (ii) not yet due and payable, or (iii) are being contested in good
faith by Borrower, the REIT or the applicable Loan Party. Subject to Borrower's
or the respective Loan Party's right to contest as set forth in any Permitted
Mortgage Debt related to such Real Property Asset, there are no mechanics' or
similar liens or claims that have been filed and recorded for work, labor or
materials that affects the Real Property Asset.
(i) To the best knowledge of Borrower and the REIT, Borrower or the
respective Loan Party has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Real Property Asset, free and clear of any
and all security interests, liens or encumbrances, except for Permitted Liens
and purchase money financing which is not a Lien on the fee title of such Real
-48-
55
Property Asset and is incurred in the ordinary course of business.
(j) To the best knowledge of Borrower and the REIT, all liquid and
solid waste disposal, septic and sewer systems located on the Real Property
Asset are in a good and safe condition and repair and are in material compliance
with all Applicable Laws.
(k) All improvements on the Real Property Asset lie within the
boundaries and building restrictions of the legal description of record of the
Real Property Asset, no such improvements encroach upon easements benefitting
the Real Property Asset other than encroachments that do not materially
adversely affect the use or occupancy of the Real Property Asset and no
improvements on adjoining properties encroach upon the Real Property Asset or
easements benefitting the Real Property Asset other than encroachments that do
not materially adversely affect the use or occupancy of the Real Property Asset.
All amenities, access routes or other items that materially benefit the Real
Property Asset are under direct control of Borrower or the respective Loan
Party, constitute permanent easements that benefit all or part of the Real
Property Asset or are public property, and the Real Property Asset, by virtue of
such easements or otherwise, is contiguous to a physically open, dedicated all
weather public street, and has the necessary permits for ingress and egress.
(l) If the Real Property Asset constitutes a legal non-conforming use,
the non-conforming Improvements may be rebuilt to current density and used and
occupied for such non-conforming purposes if damaged or destroyed.
(m) To the best knowledge of Borrower and the REIT, there are no
delinquent taxes, ground rents, water charges, sewer rents, assessments
(including assessments payable in future installments), insurance premiums,
leasehold payments, or other outstanding charges affecting the Real Property
Asset.
(n) To the best knowledge of Borrower and the REIT, the Real Property
Asset is assessed for real estate tax purposes as one or more wholly independent
tax lot or lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or improvements is
assessed and taxed together with the Real Property Asset or any portion thereof.
(o) (i) Borrower or the respective Loan Party is the sole owner of the
entire lessor's interest in the Leases; (ii) the Leases are valid and
enforceable; (iii) the terms of all alterations, modifications and amendments to
the Leases are reflected in the certified occupancy statement delivered to and
approved by Agent; (iv) none of the rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (v) none of the rents have been
collected for more than one (1) month in advance (other than rents in connection
with Seasonal RV Sites); (vi) the premises demised under the Leases have been
completed and the tenants under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis; (vii) there exist no offsets or
defenses to the payment of any portion of the rents; (viii) with respect to
Unencumbered Assets no Lease contains an option to purchase, right of first
refusal to purchase, or any other similar provision; (ix) no person or entity
has any possessory interest in, or right to occupy, the Real Property Asset
except under and pursuant to a Lease; (x) with respect to
-49-
56
Unencumbered Assets, there are no prior assignments, pledges, hypothecations or
other encumbrances of any Leases or any portion of rents due and payable or to
become due and payable thereunder which are presently outstanding; and (xi) the
Real Property Asset is not subject to any Lease other than the Leases described
in the rent rolls delivered pursuant to Section 5.01(a), none of which is a
lease for commercial use (other than laundry, cable television, vending and
other similar commercial leases for services).
(p) No portion of the Real Property Asset has been or will be purchased
with proceeds of any illegal activity.
(q) To the best knowledge of Borrower and the REIT, all contracts,
agreements, consents, waivers, documents and writings of every kind or character
at any time to which the Borrower or any Loan Party is a party to be delivered
to Agent pursuant to any of the provisions hereof are valid and enforceable
against the Borrower and such Loan Party and, to the best knowledge of Borrower,
are enforceable against all other parties thereto, and in all respects are what
they purport to be and, to the best knowledge of Borrower, to the extent that
any such writing shall impose any obligation or duty on the party thereto or
constitute a waiver of any rights which any such party might otherwise have,
said writing shall be valid and enforceable against said party in accordance
with the terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.
Section 4.30 Canadian Properties. With respect to each Canadian
Property, the Borrower's only interest therein is as the holder of a mortgage
lien on each Canadian Property as described on Schedule 13. The Borrower is the
sole holder of the mortgagee's interest in the Canadian Mortgages and such
interest has not been pledged, assigned, or participated.
Section 4.31 Intentionally Deleted.
Section 4.32 Survival. The foregoing representations and warranties
shall survive the execution and delivery of this Agreement and shall continue in
full force and effect until the indebtedness evidenced by the Note has been
fully paid and satisfied and Lender and the Co-Lenders have no further
commitment to advance funds hereunder. The request for any Advance under this
Agreement by Borrower or on its behalf shall constitute a certification that the
aforesaid representations and warranties are true and correct as of the date of
such request, except to the extent any such representation or warranty shall
relate solely to an earlier date.
SECTION 5. AFFIRMATIVE COVENANTS.
Borrower and the REIT covenant and agree that on and after the Closing
Date and until the Obligations are paid in full:
Section 5.01 Financial Reports. (a) Borrower will furnish to Agent: (i)
annual audited consolidated financial statements of the REIT and its
Consolidated Subsidiaries prepared in accordance with GAAP within 90 days of the
end of the REIT's fiscal year prepared by nationally recognized independent
public accountants (which accountant's opinion shall be
-50-
57
unqualified), including the related consolidated statements of income, cash flow
and retained earnings and setting forth in comparative form the figures for the
corresponding prior year period, satisfactory to Agent; (ii) within 60 days
after the close of each quarterly accounting period in each fiscal year, the
management prepared consolidated balance sheet of the REIT and its Consolidated
Subsidiaries as of the end of such quarterly period and the related consolidated
statements of income, cash flow and retained earnings for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, each prepared in accordance with GAAP; (iii) annual audited,
if available, or unaudited consolidated financial statements of Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP within 90 days of the
end of Borrower's fiscal year and, if audited, prepared by nationally recognized
independent public accountants (which accountant's opinion shall be
unqualified), including the related consolidated statements of income, cash flow
and retained earnings and setting forth in comparative form the figures for the
corresponding prior year period, satisfactory to Agent; (iv) within 60 days
after the close of each quarterly accounting period in each fiscal year, the
management prepared consolidated balance sheet of Borrower and its Consolidated
Subsidiaries as of the end of such quarterly period and the related consolidated
statements of income, cash flow and retained earnings for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, each prepared in accordance with GAAP; and (v) copies of all
of the REIT's, Borrower's and Loan Parties' quarterly and annual filings with
the Securities and Exchange Commission and all shareholder reports and letters
to the REIT's, Borrower's and all Loan Parties' shareholders or partners, as the
case may be and all other publicly released information promptly after their
filing or mailing. Borrower and the REIT will furnish such additional reports or
data, but no more often than on a quarterly basis, as Agent may reasonably
request including, without limitation, monthly operating statements, a certified
rent roll, leasing and management reports for each Unencumbered Asset. Borrower
and the REIT shall maintain a system of accounting capable of furnishing all
such information and data, and shall maintain its books and records respecting
financial and accounting matters in a proper manner and on a basis consistent
with that used in the preparation of the GAAP consolidated financial statements
of Borrower. Financial reports requested by Agent of Borrower shall be provided
to Agent no later than (A) the later of (I) 15 days after such request and (II)
60 days after the end of the fiscal quarter relating to the requested financial
reports described in clause (ii) or (iv) above or (B) 90 days after the end of
the fiscal year relating to such financial report described in clause (i) or
(iii) above.
(b) Officer's Certificates; Comfort Letters. (i) At the time of the
delivery of the financial statements under clause (a) above, Borrower and the
REIT shall provide a certificate of the REIT for itself and as general partner
of Borrower that (x) such financial statements have been prepared in accordance
with GAAP (unless such financial statements are not required to be prepared in
accordance with GAAP pursuant to this Agreement) and fairly present the
consolidated financial condition and the results of operations of the REIT, its
Consolidated Subsidiaries, Borrower, its Consolidated Subsidiaries and the Real
Property Assets, as applicable, on the dates and for the periods indicated,
subject, in the case of interim financial statements, to usual year end
adjustments, (y) to the best knowledge of Borrower and the REIT, that no Default
or Event of Default has occurred on the date of such certificate or, if any
Default or Event of Default has occurred and is continuing on such date,
specifying the nature and extent thereof and the action Borrower and the REIT
propose to take in respect thereof, and (z) that
-51-
58
since the date of the prior financial statements delivered pursuant to such
clause no change has occurred in the financial position of Borrower or the REIT
or their respective Consolidated Subsidiaries, which change could result in a
Material Adverse Effect.
(ii) Within 60 days of the end of each calendar quarter, Borrower and
the REIT shall provide a certificate of the REIT for itself and as general
partner of Borrower certifying that no Default or Event of Default has occurred,
that there has been no change in the REIT's tax status as a real estate
investment trust as defined under Section 856 of the Code, and demonstrating
compliance with the financial covenants set forth in Sections 5.16, 5.17, 5.18,
5.21 and 6.07 hereof (including providing copies of the most recently available
unaudited operating statements of the Real Property Assets) and the provisions
of Sections 5.12, 5.13, 5.19, 6.09, 6.10, 6.14 and 6.15 and containing
calculations verifying such compliance commencing with the calendar quarter
ending on June 30, 1996; provided that the certificate for the last calendar
quarter with respect to Sections 5.16, 5.17, 5.18 and 6.07 may be delivered
within 90 days after the end of such fiscal year with the audited financial
statements for the year then ended.
(c) Notice of Default or Litigation. Promptly after a Responsible
Officer obtains actual knowledge thereof, Borrower and the REIT shall give Agent
notice of (i) the occurrence of a Default or any Event of Default, (ii) the
occurrence of (x) any default that is not cured, or any event of default, under
any partnership agreement of Borrower or any Loan Party, any mortgage, deed of
trust, indenture or other debt or security instrument, covering any of the
Assets of Borrower or (y) any event of default under any other material
agreement to which Borrower or the REIT or any other Loan Party is a party,
which, if not cured could result in a Material Adverse Effect, (iii) any
litigation or governmental proceeding pending or threatened (in writing) against
Borrower, the REIT or any other Loan Party which could result in a Material
Adverse Effect and (iv) any other event, act or condition which could result in
a Material Adverse Effect. Each notice delivered pursuant to this Section
5.01(c) shall be accompanied by a certificate of the REIT for itself and as
general partner of Borrower setting forth the details of the occurrence referred
to therein and describing the actions Borrower and the REIT proposes to take
with respect thereto.
(d) Asset Information. Promptly after they have been prepared, but in
no event later than 60 days after the end of each calendar quarter, Borrower
shall deliver to Agent schedules that provide the following information:
(i) Funds from Operations calculation for the preceding quarter;
(ii) Net Operating Income and net cash flow calculations for the
preceding quarter for each Real Property Asset;
(iii) Consolidated listing of all unsecured and recourse
Indebtedness;
(iv) Listing of net Book Value and gross Book Value of all
Unencumbered Assets;
-52-
59
(v) Listing of all Real Property Assets and Other Assets acquired,
transferred or sold during the preceding quarter and the price paid or
received, as the case may be, for such Asset; and
(vi) Listing of pending acquisitions, transfers and sales of any
Assets and the estimated acquisition or sales price, as the case may be, for
any acquisition, transfer or sale for which a contract of sale has been
executed or a non-refundable deposit has been made or received.
(e) Intentionally Deleted.
(f) Other Information. From time to time, Borrower shall provide such
other information and financial documents relating to Borrower as Agent may
reasonably request.
Section 5.02 Books, Records and Inspections. Borrower shall, and shall
cause each applicable Loan Party to, at Borrower's or such Loan Party's
principal place of business or at each Real Property Asset, keep proper books of
record and account in which full, true and correct entries shall be made.
Borrower shall and shall cause each applicable Loan Party to, permit officers
and designated representatives of Agent to visit and inspect any of the Real
Property Assets, and to examine and copy the books of record and account of
Borrower and any Loan Party and the Real Property Assets (including, without
limitation, leases, statements, bills and invoices), discuss the affairs,
finances and accounts of Borrower and any Loan Party, and be advised as to the
same by, its and their officers and independent accountants, all upon reasonable
notice and at such reasonable times as Agent may desire. Any Co-Lender may
accompany the Agent on such visit or inspection. Provided that no Event of
Default has occurred and is continuing, such inspections shall be made no more
frequently than four (4) times in any consecutive twelve (12) month period.
Section 5.03 Maintenance of Insurance. (a) Borrower and the other Loan
Parties shall (i) maintain with financially sound and reputable insurance
companies insurance on itself and its Other Assets in commercially reasonable
amounts, (ii) maintain Agent as named additional insured in respect of any such
liability insurance required to be maintained hereunder, and (iii) furnish to
Agent from time to time, upon written request, certificates of insurance or
certified copies or abstracts of all insurance policies required under this
Agreement and such other information relating to such insurance as Agent or any
Co-Lender may reasonably request.
(b) With respect to each Real Property Asset, Borrower shall obtain and
maintain, or cause to be maintained, insurance providing at least the following
coverages:
(i) comprehensive all risk insurance on the Real Property Assets,
including contingent liability from Operation of Building Laws, Demolition
Costs and Increased Cost of Construction Endorsements, in each case (A) in
an amount equal to 100% of the "Full Replacement Cost," which for purposes
of this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver
of depreciation, but the amount shall in no event be less than the
outstanding principal balance of the Note; (B) containing an agreed amount
-53-
60
endorsement with respect to the improvements owned or leased by Borrower
waiving all co-insurance provisions; (C) providing for no deductible in
excess of $50,000; and (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the improvements or the use of the Real
Property Asset shall at any time constitute legal non-conforming structures
or uses. The Full Replacement Cost shall be redetermined from time to time
(but not more frequently than once in any twelve (12) calendar months) at
the request of Agent by an appraiser or contractor designated and paid by
Borrower and approved by Lender, or by an engineer or appraiser in the
regular employ of the insurer. After the first appraisal, additional
appraisals may be based on construction cost indices customarily employed in
the trade. No omission on the part of Agent to request any such
ascertainment shall relieve Borrower of any of its obligations under this
Section. In addition, Borrower shall obtain (y) flood hazard insurance if
any portion of the improvements is currently or at any time in the future
located in a federally designated "special flood hazard area", or otherwise
required by Agent and (z) earthquake insurance in amounts and in form and
substance satisfactory to Agent and the Majority Co-Lenders in the event the
Real Property Asset is located in an area with a high degree of seismic
activity, or otherwise as required by Agent, provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent with the
comprehensive all risk insurance policy required under this Section 5.03,
except that the deductible on such insurance shall not be in excess of five
percent (5%) of the appraised value of the Real Property Asset;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about the Real Property Asset, such insurance (A) to be on the so-called
"occurrence" form with a combined single limit of not less than $1,000,000;
(B) to continue at not less than the aforesaid limit until required to be
changed by Agent in writing by reason of changed economic conditions making
such protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations on an "if
any" basis; (3) independent contractors; and (4) blanket contractual
liability for all written and oral contracts;
(iii) business income and rent loss insurance (A) covering all
risks required to be covered by the insurance provided for in Subsection
5.03(b)(i); (B) containing an extended period of indemnity endorsement which
provides that after the physical loss to the improvements and personal
property has been repaired, the continued loss of income will be insured
until such income either returns to the same level it was at prior to the
loss, or the expiration of twelve (12) months from the date of the loss,
whichever first occurs, and notwithstanding that the policy may expire prior
to the end of such period; and (C) in an amount equal to 100% of the
projected gross income from the Real Property Asset for a period of twelve
(12) months. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year thereafter
based on the greatest of: (x) Borrower's reasonable estimate of the gross
income from the Real Property Asset; (y) the estimate of gross income set
forth in the annual operating budget delivered pursuant to Section 5.01(a);
and (z) the highest gross
-54-
61
income received during the term of the Note for any full calendar
year prior to the date the amount of such insurance is being determined;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Real Property Asset (A)
owner's contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in clause (i) above written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to Section 5.03(b)(i), (3) including permission to
occupy the Real Property Asset, and (4) with an agreed amount endorsement
waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
state in which the Real Property Asset is located, and employer's liability
insurance (A) with a limit per accident and per disease per employee, and
(B) in an amount for disease aggregate in respect of any work or operations
on or about the Real Property Asset, or in connection with the Real Property
Asset or its operation (if applicable), in each case reasonably required by
Agent;
(vi) comprehensive boiler and machinery insurance, if applicable,
in amounts as shall be reasonably required by Agent on terms consistent with
the commercial general liability insurance policy required under Subsection
3.3(a)(ii);
(vii) umbrella liability insurance in an amount not less than
$15,000,000 per occurrence on terms consistent with the commercial general
liability insurance policy required under Subsection 3.3(a)(ii);
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence of $1,000,000; and
(ix) such other insurance and in such amounts as Agent from time
to time may reasonably request against such other insurable hazards which at
the time are commonly insured against for property similar to the Real
Property Asset located in or around the region in which the Real Property
Asset is located.
(c) All insurance provided for hereunder shall be obtained under valid
and enforceable policies (the "Policies" or in the singular, the "Policy"), and
shall be subject to the approval of Agent and the Majority Co-Lenders as to
insurance companies, amounts, forms, deductibles, loss payees and insurers. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the state in which the Real Property
Asset is located and approved by Agent and the Co-Lenders. Each insurance
company must have a rating of "A" or better for claims paying ability assigned
by Standard & Poor's Rating Group or, if Standard & Poor's Rating Group does not
assign a rating for such insurance company, such insurance company must have a
general policy rating of A or better and a financial class of VIII or better by
Best (each such insurer shall be referred to below as a
-55-
62
"Qualified Insurer"). Not less than thirty (30) days prior to the expiration
dates of the Policies theretofore furnished to Agent, certified copies of the
Policies marked "premium paid" or accompanied by evidence satisfactory to Agent
of payment of the premiums due thereunder shall be delivered by Borrower to
Agent; provided, however, that in the case of renewal Policies, Borrower may
furnish Agent with binders therefor to be followed by the original Policies when
issued.
(d) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is approved in advance in
writing by Agent and approved by the Majority Co-Lenders and such Policy is
issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or
contributing in the event of loss with that required in Section 5.03(b) to be
furnished by, or which may be reasonably required to be furnished by, Borrower.
In the event Borrower obtains separate insurance or an umbrella or a blanket
Policy, Borrower shall notify Agent of the same and shall cause certified copies
of each Policy to be delivered as required in Section 5.03(b). Any blanket
insurance Policy shall (a) specifically allocate to the Real Property Asset the
amount of coverage from time to time required hereunder or (b) be written on an
occurrence basis for the coverages required hereunder with a limit per
occurrence in an amount equal to the amount of coverage required hereunder and
shall otherwise provide the same protection as would a separate Policy insuring
only the Property in compliance with the provisions of Section 5.03(b).
(e) All Policies of insurance provided for in Section 5.03(b) shall
contain clauses or endorsements to the effect that:
(i) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or cancelled without at least 30
days' written notice to Agent and any other party named therein as an
insured; and
(ii) each Policy shall provide that the issuers thereof shall give
written notice to Agent if the Policy has not been renewed thirty (30) days
prior to its expiration.
(f) Borrower shall furnish to Agent, on or before thirty (30) days
after the close of each of Borrower's fiscal years, a statement certified by
Borrower or a duly authorized officer of Borrower of the amounts of insurance
maintained in compliance herewith, of the risks covered by such insurance and of
the insurance company or companies which carry such insurance and, if requested
by Agent, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Agent. Agent and the Co-Lenders
agree that American Modern Home Group is an acceptable insurance company for so
long as its Best general policy rating is A+ or higher and its financial class
is VII or greater.
(g) If at any time Agent is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Agent shall have the
right, without notice to Borrower to take such action as Agent deems necessary
to obtain such insurance coverage as Agent and the Co-Lenders in their sole
discretion deems appropriate, and all expenses incurred by Agent and the
Co-Lenders in connection with such action or in obtaining such insurance and
-56-
63
keeping it in effect shall be paid by Borrower and the REIT to Agent upon demand
and shall bear interest in accordance with Section 10.2 hereof.
(h) If the Real Property Assets shall be damaged or destroyed, in whole
or in part, by fire or other casualty, or condemned or taken by eminent domain,
Borrower shall give prompt notice of such damage or taking to Agent and shall
promptly commence and diligently prosecute the completion of the repair and
restoration of the Property as nearly as possible to the condition the Property
was in immediately prior to such fire or other casualty or taking (the
"Restoration"). Borrower shall pay all costs of such Restoration whether or not
such costs are covered by insurance or any condemnation award.
Section 5.04 Taxes. Borrower and the other Loan Parties shall pay or
cause to be paid, when due (i.e., before any penalty or fine could be levied or
charged), all taxes, charges and assessments and all other lawful claims
required to be paid by Borrower, the other Loan Parties, except as contested in
good faith and by appropriate proceedings diligently conducted, if adequate
reserves have been established with respect thereto in accordance with GAAP.
Upon request from Agent, Borrower shall provide evidence to Agent of payment of
such taxes, charges, assessments and other lawful claims.
Section 5.05 Corporate Franchises; Conduct of Business. (a) Borrower
and each Loan Party shall do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and good standing in
the State of its organization and in each state in which a Real Property Asset
is located, and its respective franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals, except where the failure to so preserve
any of the foregoing (other than existence and good standing) could not, in the
aggregate, result in a Material Adverse Effect.
(b) Borrower shall carry on and conduct its business in substantially
the same manner and substantially the same field of enterprise as it is
presently conducted.
(c) The REIT shall carry on and conduct its business in substantially
the same manner and substantially the same field of enterprise as it is
presently conducted and only through Borrower, except as described in Schedule
9A.
Section 5.06 Compliance with Law. Borrower and the other Loan Parties
shall comply in all material respects with all Applicable Laws, rules, statutes,
regulations, decrees and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of their
business and the ownership of their property (including the Real Property
Assets), except for such laws, rules, statutes, regulations, decrees, orders and
restrictions, (a) which Borrower or such other Loan Party are contesting in good
faith and in compliance with and pursuant to appropriate proceedings diligently
prosecuted (provided that such contest does not and cannot (i) expose any of
Agent, the Co-Lenders Borrower, the other Loan Parties to any criminal liability
or penalty, (ii) give rise to a Lien against any of the Assets or any Real
Property Asset, or (iii) otherwise materially adversely affect any of the Assets
or the value thereof), or (b) the failure to observe which, taken individually
or in the aggregate, could
-57-
64
not result in a Material Adverse Effect. Borrower and the applicable Loan
Parties shall not permit the use of all or any portion of any Real Property
Asset to be used for any illegal activity.
Section 5.07 Performance of Obligations. Borrower, the REIT and each
Loan Party shall perform all of their obligations under the terms of each
mortgage, indenture, security agreement, debt instrument, lease, undertaking and
contract by which it or any of the Real Property Assets is bound or to which it
is a party (other than the Loan Documents) so as not to cause a Material Adverse
Effect.
Section 5.08 Stock. REIT shall cause its issued and outstanding shares
of stock to be listed for trading on the New York Stock Exchange.
Section 5.09 Change in Rating. Borrower shall promptly notify Agent in
writing of any change, downgrade or withdrawal, or threatened change, downgrade
or withdrawal of Borrower's Unsecured Debt Rating.
Section 5.10 Maintenance of Properties. Borrower and the other Loan
Parties shall ensure that the Real Property Assets are kept in their current
condition and repair, normal wear and tear and casualty damage in the process of
being repaired or restored excepted.
Section 5.11 Compliance with ERISA. (a) Borrower and the other Loan
Parties shall maintain each Employee Benefit Plan and Plan in compliance with
all material applicable requirements of ERISA and the Code and with all material
applicable regulations promulgated thereunder. Borrower and the other Loan
Parties shall provide to Agent, within ten (10) days of sending or receipt,
copies of all filings or correspondence with the Internal Revenue Service, PBGC,
Department of Labor, Plan, Multiemployer Plan or union, regarding any Plan, or
regarding or disclosing any liability or potential liability or violation of law
under any Employee Benefit Plan.
(b) Borrower and the other Loan Parties shall also provide to Agent,
with ten (10) days of filing or receipt, (i) any notice from the Department of
Labor or Internal Revenue Service of assessment or investigation regarding a
prohibited transaction under Section 4975 of the Code or Section 406 of ERISA,
(ii) any notice from a Multiemployer Plan of withdrawal with respect to a
Multiemployer Plan, (iii) notice from the Internal Revenue Service of imposition
of excise tax with respect to an Employee Benefit Plan, (iv) any Form 5500 filed
by any Borrower or Loan Party with respect to an Employee Benefit Plan which
includes a qualified accountant's opinion, or (v) notice regarding a proposed
termination from the PBGC.
(c) Neither Borrower nor any other Loan Party shall engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Agent or the Co-Lenders of any of its rights under
this Agreement or the other Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under ERISA
or result in a violation of a state statute regulating governmental plans that
would subject Agent or any Co-Lender to liability for a violation of ERISA or
such a state statute.
-58-
65
(d) Borrower and the REIT further covenant and agree to deliver to
Agent such certifications or other evidence from time to time throughout the
term of the Loan, as reasonably requested by Agent or the Co-Lenders in their
sole discretion, that (i) neither Borrower or any other Loan Party is an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a "governmental plan" within the meaning of Section 3(3) of
ERISA; (ii) neither Borrower or any other Loan Party is subject to state
statutes applicable to Borrower or any Loan Party regulating investments and
fiduciary obligations of Borrower or any Loan Party with respect to governmental
plans; and (iii) with respect to each Loan Party and Borrower, at least one of
the following circumstances is true:
(i) Equity interests in Borrower or such Loan Party are publicly
offered securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(ii) Less than 25 percent of each outstanding class of equity
interests in Borrower or such Loan Party are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(iii) Borrower or such Loan Party qualifies as an "operating
company" or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e) or an investment company registered
under The Investment Company Act of 1940.
Section 5.12 Settlement/Judgment Notice. Borrower agrees that it shall,
within ten (10) days after a settlement of any obligation in excess of
$1,000,000.00 provide written notice to Agent of such settlement together with a
certification signed by the REIT for itself and as general partner of Borrower
certifying that, based upon the most recent quarterly consolidated financial
statements of Borrower, the REIT and their Consolidated Subsidiaries, such
settlement will not cause Borrower or the REIT to violate the financial
covenants set forth in Sections 5.16, 5.17 and 5.18 hereof. Borrower further
agrees that it shall, within ten (10) days after entry of a final judgment in
excess of $1,000,000.00 or final judgments in excess of $1,000,000.00 in the
aggregate during the immediately preceding twelve (12) month period, provide
written notice to Agent of such judgment together with a certification signed by
the REIT for itself and as general partner of Borrower certifying based upon the
most recent quarterly consolidated financial statements of Borrower, such
judgment will not cause Borrower to violate the financial covenants set forth in
Sections 5.16 and 5.17 hereof.
Section 5.13 Acceleration Notice. Borrower agrees that it shall, within
ten (10) days after receipt of written notice that any Indebtedness of Borrower
or any Loan Party has been accelerated, provide written notice to Agent of such
acceleration.
Section 5.14 Lien Searches; Title Searches. In addition to searches and
endorsements that Agent or any Co-Lender may require in connection with an
Advance, Borrower shall, upon Agent's request therefor given from time to time,
but not more frequently than annually, unless an Event of Default shall have
occurred and be continuing or such Title Search indicates a Lien other than a
Permitted Lien or another state of facts not reasonably satisfactory to Agent
and the Majority Co-Lenders, pay for (a) reports of UCC, tax lien, judgment and
litigation searches with respect to Borrower, each of the other Loan Parties,
and (b) searches
-59-
66
of title to each of the Real Property Assets (each, a "Title Search"). Such
Title Searches and lien searches required under this Agreement shall be
conducted by search firms designated by Agent in each of the locations
designated by Agent.
Section 5.15 Intentionally Deleted.
Section 5.16 Minimum Net Worth. The consolidated minimum Net Worth of
Borrower shall not, at any time, be less than $145,000,000.00 plus 85% of the
net proceeds (after payment of underwriter and placement fees and other expenses
directly related to such equity offering) received from subsequent equity
offerings by the REIT, calculated on a GAAP basis. For purposes of determining
compliance with this covenant only, the stock offering by the REIT in connection
with the acquisition of 25 manufactured housing communities from Aspen
Enterprises Ltd. (the "Aspen Acquisition") shall be considered a subsequent
equity offering even though such acquisition has been consummated as of the date
hereof.
Section 5.17 Total Indebtedness. (a) The maximum consolidated Total
Debt of the REIT, Borrower and their Consolidated Subsidiaries (without
duplication) shall not exceed at any time 50% of the lesser of (i) the gross
Book Value of all Assets of Borrower and its Consolidated Subsidiaries, or (ii)
the total Fair Market Value of all Assets of Borrower and Consolidated
Subsidiaries. In the event that this covenant is breached solely as a result of
a change in the appropriate Market Capitalization Rate by Agent and the Majority
Co-Lenders (but not as a result of a change in such Market Capitalization Rate
as published in the Korpacz Real Estate Investment Survey), such breach shall
not be deemed an Event of Default unless Borrower and the REIT fail to cure such
breach within thirty (30) days of the date of such breach.
(b) The maximum consolidated aggregate Unsecured Debt of the REIT,
Borrower and their Consolidated Subsidiaries (without duplication) shall not
exceed at any time 50% of the lesser of (i) the gross Book Value of the
Unencumbered Assets, or (ii) the aggregate Fair Market Value of the Unencumbered
Assets. In the event that this covenant is breached solely as a result of a
change in the appropriate Market Capitalization Rate by Agent and the Majority
Co-Lenders (but not as a result of a change in such Market Capitalization Rate
as published in the Korpacz Real Estate Investment Survey), such breach shall
not be deemed an Event of Default unless Borrower and the REIT fail to cure such
breach within thirty (30) days of the date of such breach.
Section 5.18 Coverage Ratios. (a) The ratio of (x) actual consolidated
EBITDA of Borrower and its Consolidated Subsidiaries (adjusted to include
Minimum Capital Expenditure Reserves) for any period of twelve consecutive
months (or such shorter period since the date of the Aspen Acquisition pursuant
to Section 5.18(d)) (the "Base Period"), to (y) the Debt Service of the REIT,
Borrower and their Consolidated Subsidiaries (without duplication) for such Base
Period shall not at any time be less than 2.25 to 1.
(b) The ratio of (x) actual consolidated EBITDA (adjusted to include
Minimum Capital Expenditure Reserves) of Borrower and its Consolidated
Subsidiaries for the applicable Base Period, to (y) the sum of Debt Service plus
Fixed Charges of the REIT,
-60-
67
Borrower, and their Consolidated Subsidiaries (without duplication) for the same
Base Period shall not at any time be less than 1.85 to 1.
(c) The ratio of (x) actual Net Operating Income from the Unencumbered
Assets (adjusted to include Minimum Capital Expenditure Reserves) for the
applicable Base Period to (y) actual Debt Service with respect to all Unsecured
Debt of the REIT, Borrower and their Consolidated Subsidiaries, (without
duplication), for the applicable Base Period shall not at any time be less than
1.80 to 1.
(d) The Coverage Ratios required to be maintained pursuant to this
Section 5.18 shall be calculated on a monthly basis. For the purposes of the
calculation of these Coverage Ratios, until the first anniversary of the Aspen
Acquisition, the Base Period shall mean the period commencing upon the date that
the Aspen Acquisition was consummated until the first anniversary thereof.
Section 5.19 Equity or Debt Offerings. All net proceeds (after payment
of underwriter and placement fees and other expenses directly related to such
equity or debt offering) from any equity or debt offering by the REIT shall be
immediately distributed to Borrower.
Section 5.20 Minimum Asset Value. The lesser of (a) the consolidated
Book Value of all Unencumbered Assets or (b) the Fair Market Value of all
Unencumbered Assets shall at all times equal or exceed $150,000.000.00.
Section 5.21 Managers. The Real Property Assets shall at all times be
managed by the Borrower or an Affiliate of Borrower or the REIT. If (i) any
manager shall become insolvent or (ii) an Event of Default shall occur and be
continuing, then Agent and the Majority Co-Lenders, at their option, may require
Borrower to engage a bona-fide, independent third party management agent
approved by Agent and the Majority Co-Lenders in their sole discretion (the "New
Manager") to manage the Real Property Assets. The New Manager shall be engaged
by Borrower pursuant to a written management agreement that complies with the
terms hereof and is otherwise satisfactory to Agent and the Majority Co-Lenders
in all respects and the New Manager shall execute and deliver a Subordination of
Management Agreement.
Section 5.22 Further Assurances. Borrower will, at Borrower's sole cost
and expense, at any time and from time to time upon request of Agent take or
cause to be taken any action and execute, acknowledge, deliver or record any
further documents, opinions, negative pledge agreements or other instruments
which Agent or any Co-Lender in its reasonable discretion deems necessary or
appropriate to carry out the purposes of this Agreement and the other Loan
Documents including to consummate the transfer or sale of the Loan or any
portion thereof.
Section 5.23 REIT Status. The REIT shall at all times maintain its
status as a "qualified real estate investment trust" under Section 856 of the
Code.
-61-
68
Section 5.24 Additional Covenants. (a) Borrower and the REIT shall give
prompt notice to Agent of the receipt by Borrower, the REIT or any Loan Party of
any notice related to a violation of any Applicable Laws and of the commencement
of any proceedings or investigations which relate to compliance with Applicable
Laws.
(b) Borrower and the REIT will take appropriate measures to prevent and
will not engage in or knowingly permit any illegal activities at any Real
Property Asset.
Section 5.25 Intentionally Deleted.
Section 5.26 Intentionally Deleted.
Section 5.27 Preparation of Environmental Reports. At the request of
Agent, or any Co-Lender, from time to time, Borrower shall provide to Agent,
within 30 days after such request, at the expense of Borrower and the REIT, an
Environmental Report for all Real Property Assets that have been acquired after
the date hereof, or with respect to the Real Property Assets owned as of the
date hereof, any Real Property Asset for which Agent has a reasonable basis for
requiring such an Environmental Report (including, without limitation, the fact
that an environmental report was not delivered at or prior to the Closing Date
or there is a basis to believe that there may be Hazardous Materials or a threat
of a Release with respect to such Real Property Asset) as described in such
request. Without limiting the generality of the foregoing, if Agent or the
Majority Co-Lenders determine at any time that a material risk exists that any
such Environmental Report will not be provided within the time referred to
above, Agent may retain an environmental consulting firm to prepare such
Environmental Report at the expense of Borrower and the REIT, and Borrower
hereby grants and agrees to cause any Loan Party which owns any Real Property
Asset described in such request to grant at the time of such request, to Agent,
such firm and any agents of representatives thereof an irrevocable non-exclusive
license, subject to the rights of tenants, to enter onto their respective Real
Property Assets to undertake such an assessment.
Section 5.28 Documentation following Acquisition of an Interest in Real
Property Assets. Not later than 60 days following each acquisition of an
interest in a Real Property Asset (which shall include only Permitted
Investments) by the Borrower, the REIT or any Loan Party Borrower shall provide
Agent with each of the following: (i) the closing statement relating to such
acquisition, (ii) a description of the property acquired, (iii) a statement of
condition of such Real Property Asset prepared by the Borrower's internal or
approved external construction engineer, (iv) an historical operating statement
of such Real Property Asset for such period as may be available to the Borrower
and a current rent roll for such Real Property Asset and (v) such other
information as may be reasonably requested by Agent, including any Environmental
Reports prepared in accordance with Section 6.10.
Section 5.29 Intentionally Deleted.
Section 5.30 Preparation of Engineering Reports. At the request of
Agent from time to time, Borrower shall provide to Agent, within thirty (30)
days after such request, at the expense of Borrower and the REIT, an Engineering
Report for all Real Property Assets acquired
-62-
69
after the date hereof, and, with respect to any Real Property Asset, if Agent
has a reasonable basis to require an Engineering Report based on an inspection
of such Real Property Asset or such other information that may have come to the
Agent's attention, as described in such request.
Section 5.31 Intentionally Deleted.
SECTION 6. NEGATIVE COVENANTS.
Borrower and the REIT covenant and agree that on and after the Closing
Date until the Obligations are paid in full:
Section 6.01 Intentionally Deleted.
Section 6.02 Intentionally Deleted.
Section 6.03 Liens. Borrower and the other Loan Parties shall not,
create, incur, assume or suffer to exist, directly or indirectly, any Lien on
any Unencumbered Asset, or any other Real Property Asset, other than the
following (collectively, the "Permitted Liens"):
(a) Liens existing on the Closing Date and set forth on Schedule 7
hereto;
(b) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to which
adequate reserves are being maintained in accordance with GAAP;
(c) Statutory Liens of landlords and Liens of mechanics, materialmen
and other Liens imposed by Law (other than any Lien imposed by ERISA) created in
the ordinary course of business for amounts not yet due or (i) which are being
contested in good faith by appropriate proceedings diligently conducted, and
with respect to which adequate bonds have been posted if required to do so by
Applicable Law.
(d) Easements, rights-of-way, zoning and similar restrictions and other
similar charges or encumbrances not interfering with the ordinary conduct of the
business of Borrower and which do not detract materially from the value of any
of the Real Property Assets to which they attach or impair materially the use
thereof by Borrower; and
(e) With respect to Real Property Assets that are not Unencumbered
Assets, Permitted Mortgage Debt;
Section 6.04 Restriction on Fundamental Changes. (a) Without the prior
written consent of Agent and the Majority Co-Lenders, which consent may be
withheld in the sole and absolute discretion of Agent and the Majority
Co-Lenders, Borrower, the REIT and the other Loan Parties shall not enter into
any merger or consolidation with, or sell, lease, transfer or otherwise dispose
of any Substantial Assets to, any Person other than Borrower, the REIT or a
wholly owned Subsidiary of Borrower or the REIT. Notwithstanding the foregoing,
neither Borrower, the REIT nor any Loan Party shall enter into any arrangement,
directly or indirectly,
-63-
70
whereby Borrower, the REIT or any Loan Party shall sell or transfer any Real
Property Asset (in a single or multiple transaction) owned by any of them in
order then or thereafter to lease such property or lease other Real Property
Asset that it intends to use for substantially the same purpose as the Real
Property Asset being sold or transferred.
(b) Notwithstanding the foregoing, Borrower and the Loan Parties may
enter into a merger or consolidation, provided that following such merger or
consolidation, Borrower is the surviving entity of such merger or consolidation
and the REIT or an entity wholly owned and controlled by the REIT (i) is the
sole general partner of Borrower, and (ii) owns at least a 51% economic
ownership interest in Borrower.
(c) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall for so long as he is living, at all times own
at least 95,846 OP Units in Borrower and 405,930 shares of common stock in the
REIT; notwithstanding the foregoing, ▇▇▇▇ ▇▇▇▇▇▇▇▇ may redeem or convert some or
all of his OP Units in the Borrower to shares of common stock in the REIT,
provided that in the aggregate he at all times owns at least, in the aggregate,
405,930 shares of common stock in the REIT and 95,846 OP Units, either in the
form of OP Units or in the form of additional stock in the REIT equivalent to
such OP Units; and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall for so long as he is living, at all
times own at least 106,346 OP Units in Borrower and 303,162 shares of common
stock in the REIT; notwithstanding the foregoing, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may redeem or
convert some or all of his OP Units in the Borrower to shares of common stock in
the REIT, provided that in the aggregate he at all times owns at least, in the
aggregate, 303,162 shares of common stock in the REIT and 106,346 OP Units,
either in the form of OP Units or in the form of additional stock in the REIT
equivalent to such OP Units.
Section 6.05 Transactions with Affiliates. Borrower and the other Loan
Parties shall not enter into any material transaction or series of related
transactions, whether or not in the ordinary course of business, with any
Affiliate of Borrower, other than on terms and conditions substantially as
favorable as would be obtainable at the time in a comparable arm's-length
transaction with a Person other than an Affiliate of Borrower.
Section 6.06 Plans. Borrower and the other Loan Parties shall not, nor
shall they permit any member of their respective ERISA Controlled Group to, (i)
take any action which would (A) increase the aggregate present value of the
Unfunded Benefit Liabilities under all Plans or withdrawal liability under a
Multiemployer Plan for which Borrower or any Loan Party or any member of their
respective ERISA Controlled Groups (determined without reference to Section
414(m) or (o) of the Code, if liabilities of entities in Borrower or the Loan
Parties' ERISA Controlled Group solely by reason of Section 414(m) or (o) of the
Code could not result in liability to Borrower or any Loan Party) to an amount
in excess of $1,000,000.00 or (B) result in liability or Contingent Obligation
for any post-retirement benefit under any "welfare plan" (as defined in Section
3(1) of ERISA), or any withdrawal liability or exit fee or charge with respect
to any "welfare plan" (as defined in Section 3(1) of ERISA), other than
liability for continuation coverage under Part 6 of Title I of ERISA, or state
laws which require similar continuation coverage for which the employee pays
approximately the full cost of coverage, or (ii) engage in any transaction
prohibited by Section 408 of ERISA or Section 4975 of the Code.
-64-
71
Section 6.07 Distributions. The REIT and Borrower (without duplication)
shall not pay or declare Distributions (a) if an Event of Default has occurred
and is continuing or (b) that in the aggregate exceed 90% of the Funds From
Operations of Borrower individually and combined with the REIT (without
duplication), respectively, in any four consecutive calendar quarters (or if
four consecutive calendar quarters have not passed since the date hereof, the
quarterly periods from the date hereof); provided that notwithstanding the
foregoing, so long as no Event of Default has occurred and is continuing, the
REIT may pay or declare Distributions without violating this covenant in (i) the
amount necessary to maintain the REIT's status as a real estate investment trust
under Section 856 of the Code, or (ii) the amount necessary for the REIT to
avoid the payment of any federal income or excise tax. Any Distributions or
dividends or other sums received by the REIT must be paid promptly by the REIT
as Distributions but in no event later than ten (10) business days after such
funds have been received by the REIT. For purposes of the calculation only,
Funds From Operations shall be determined without taking into account the effect
of Distributions on either Preferred or Common OP Units, and Distributions shall
include all distributions on Preferred and Common OP Units.
Section 6.08 Intentionally Deleted.
Section 6.09 Restriction on Prepayment of Indebtedness. Neither
Borrower nor the REIT shall prepay the principal amount, in whole or in part, of
any Unsecured Debt other than the Obligations after the occurrence of any Event
of Default.
Section 6.10 Real Property Assets. Neither the Borrower, the
REIT nor any other Loan Party shall acquire any Real Property Asset unless an
Environmental Report for such Real Property Asset dated within 6 months of the
proposed acquisition date has been prepared and, if requested, delivered to
Agent and such Environmental Report is satisfactory to Agent and the Majority
Co-Lenders in all material respects.
Section 6.11 Intentionally Deleted.
Section 6.12 Organizational Documents. Neither Borrower, the REIT nor
any other Loan Party shall make any material amendments or modifications to
their partnership agreements, corporate charters, by-laws, certificates of
incorporation, articles of organization or other organizational documents
without the prior approval of the Agent and the Majority Co-Lenders;
notwithstanding the foregoing, Agent shall be promptly notified of all such
changes (other than modifications and amendments relating solely to the
admission or deletion of limited partners or changes in their limited
partnership interests, unless such limited partners are either ▇▇▇▇ ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇).
Section 6.13 Intentionally Deleted.
Section 6.14 Restrictions on Investments. Neither Borrower, the REIT or
any Loan Party shall make or permit to exist or remain outstanding any
investment other than investments in:
-65-
72
(a) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase by the
Borrower, the REIT or any Loan Party;
(b) marketable direct obligations of any of the following: Federal Home Loan
Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan
banks, Federal national Mortgage Association, Government National Mortgage
association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal Land Bank, or
any other agency or instrumentality of the United States of America;
(c) demand deposits, certificates of deposit, bankers acceptances and time
deposits of United States banks having total assets in excess of
$100,000,000.00; provided, however, that the aggregate amount at any time so
invested with any single bank having total assets of less than $1,000,000,000.00
will not exceed $200,000.00;
(d) securities commonly known as "commercial paper" issued by a corporation
organized and existing under the laws of the United States of America or any
State which at the times of purchase are rate by ▇▇▇▇▇'▇ Investors Service, Inc.
or by Standard & Poor's Ratings Services at not less than "P 2" if then rated by
▇▇▇▇▇'▇ Investors Service, Inc., and not less than "A 2", if then rated by
Standard & Poor's Ratings Services;
(e) mortgage-backed securities guaranteed by the Government National
Mortgage Association, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation and other mortgage-backed bonds which at the time
of purchase are rated by ▇▇▇▇▇'▇ Investors Service, Inc. or by Standard & Poor's
Ratings Services at not less than "Aa" if then rated by ▇▇▇▇▇'▇ Investors
Service, Inc. and not less than "AA" if then rated by Standard & Poor's Ratings
Services;
(f) repurchase agreements having a term not greater than 90 days and fully
secured by securities described in the foregoing subsection (a), (b) or (e) with
banks described in the foregoing subsection (c) or with financial institutions
or other corporations having total assets in excess of $500,000,000.00;
(g) shares of so-called "money market funds" registered with the SEC under
the Investment Company Act of 1940 which maintain a level per-share value,
invest principally in investments described in the foregoing subsections (a)
through (f) and have total assets in excess of $50,000,000.00;
(h) Permitted Investments.
Section 6.15 RV Sites. Except as shown as Schedule 2 no more than ten
percent (10%) of the Unit pads or sites on any Real Property Asset that are
actually available and capable of being leased or rented and that may be legally
leased or rented pursuant to Applicable Laws shall be designated, reserved for,
or leased or rented as Seasonal RV Sites or parking areas. For purposes hereof,
"Seasonal RV Sites" shall mean those sites available for lease to seasonal
recreational vehicle tenants who wish to spend only a portion of the season at a
particular Real Property Asset.
-66-
73
SECTION 7. EVENTS OF DEFAULT
Section 7.01 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. Borrower and the REIT shall (i) default
in the payment when due of any principal of the Loan, or (ii) default in the
payment within five (5) days after the due date of (x) any interest on the Loan
or (y) any Fees, or any other amounts owing hereunder; provided, however, that
any interest payable with respect to any delinquent payment shall be calculated
at the Default Rate from the date such payment was actually due as if there were
no grace period.
(b) Breach of Representation or Warranty. Any representation or
warranty made by Borrower, the REIT or any other Loan Party herein or in any
other Loan Document or in any certificate or statement delivered pursuant hereto
or thereto shall prove to be false or misleading in any material respect on the
date as of which made or deemed made: provided, however, that if such breach is
capable of being cured, then Borrower shall have a period of thirty (30) days
after delivery of notice from Agent to cure any such breach.
(c) Breach of Covenants.
(i) Borrower, the REIT or any other Loan Party shall fail to
perform or observe any agreement, covenant or obligation arising under
Sections 5.01, 5.03, 5.09, 5.12, 5.13, 5.16, 5.17, 5.18, 5.19, 5.23, 6.03
(other than Liens which are placed on a Real Property Asset without the
consent of Borrower, the REIT or any Loan Party), 6.04, 6.06, 6.07, 6.09,
6.10, and 6.14.
(ii) Borrower, the REIT or any of the Loan Parties shall fail to
perform or observe any agreement, covenant or obligation arising under this
Agreement (except those described in subsections (a), (b) and (c)(i) above),
and such failure shall continue uncured for thirty (30) days after delivery
of notice thereof, or such longer period of time as is reasonably necessary
to cure such Default, provided that Borrower has commenced and is diligently
prosecuting the cure of such Default and cures it within ninety (90) days.
(iii) Borrower, the REIT or any other Loan Party shall fail to
perform or observe any agreement, covenant or obligation arising under any
provision of the Loan Documents other than this Agreement, which failure
shall continue after the end of any applicable grace period provided
therein.
(d) Default Under Other Agreements. Borrower, the REIT or any other
Loan Party shall default beyond any applicable grace period in the payment,
performance or observance of any obligation or condition with respect to any
Indebtedness in excess of $2,000,000.00 or any other event shall occur or
condition exist, if the effect of such default, event or condition is to
accelerate the maturity of any such Indebtedness or to permit (without regard to
any required notice or lapse of time) the holder or holders thereof, or any
trustee or agent for such
-67-
74
holders, to accelerate the maturity of any such Indebtedness, or any such
Indebtedness shall become or be declared to be due and payable prior to its
stated maturity and the forgoing conditions are not cured within thirty (30)
days after the condition occurs.
(e) Bankruptcy, etc. (i) Borrower or any other Loan Party shall
commence a voluntary case concerning itself under the Bankruptcy Code; or (ii)
an involuntary case is commenced against Borrower or any other Loan Party and
the petition is not contested within sixty (60) days, or is not dismissed within
ninety (90) days, after commencement of the case or (iii) a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Borrower, any other Loan Party or Borrower
or any other Loan Party commences any other proceedings under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Borrower, any other Loan Party or there is
commenced against Borrower or any other Loan Party any such proceeding which
remains undismissed for a period of ninety (90) days; or (iv) any order of
relief or other order approving any such case or proceeding is entered; or (v)
Borrower or any other Loan Party is adjudicated insolvent or bankrupt; or (vi)
Borrower or any other Loan Party suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undischarged or
unstayed for a period of ninety (90) days; or (vii) Borrower or any other Loan
Party makes a general assignment for the benefit of creditors; or (viii)
Borrower, any other Loan Party shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts generally as they become
due; or (ix) Borrower or any other Loan Party shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debt; or
(x) Borrower or any other Loan Party shall by any act or failure to act consent
to, approve of or acquiesce in any of the foregoing; or (xi) any corporate or
partnership action is taken by Borrower or any other Loan Party for the purpose
of effecting any of the foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or (ii) any Plan
shall incur an accumulated funding deficiency (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived, or fail to make a required
installment payment on or before the due date under Section 412 of the Code or
Section 302 of ERISA, or (iii) Borrower or any of the Loan Parties or a member
of their respective ERISA Controlled Group shall have engaged in a transaction
which is prohibited under Section 4975 of the Code or Section 406 of ERISA which
could result in the imposition of liability in excess of $3,000,000 on any of
Borrower or any other Loan Party or any member of their respective ERISA
Controlled Group and an exemption shall not be applicable or have been obtained
under Section 408 of ERISA or Section 4975 of the Code, or (iv) Borrower or any
of the other Loan Parties or any member of their respective ERISA Controlled
Group shall fail to pay when due an amount which it shall have become liable to
pay to the PBGC, any Plan, any Multiemployer Plan or a trust established under
Section 4049 of ERISA, or (v) Borrower shall have received a notice from the
PBGC of its intention to terminate a Plan or to appoint a trustee to administer
such Plan or Multiemployer Plan, which notice shall not have been withdrawn
within fourteen (14) days after the date thereof, or (vi) a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that an ERISA Plan must be terminated or have a trustee appointed
to administer any ERISA Plan, or (vii) Borrower or any of the other Loan Parties
or a member of their respective ERISA Controlled Group suffers a partial or
complete withdrawal resulting in an assessment of
-68-
75
withdrawal liability in excess of $3,000,000.00 from a Multiemployer Plan or is
in default (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan, or (viii) a proceeding shall be instituted against any
of Borrower or any of the other Loan Parties or any member of their respective
ERISA Controlled Group to enforce Section 515 of ERISA, or (ix) any other event
or condition shall occur or exist with respect to any Employee Benefit Plan,
Plan or Multiemployer Plan which could subject Borrower or any of the other Loan
Parties or any member of their respective ERISA Controlled Group to any tax,
penalty or other liability in excess of $3,000,000 or the imposition of any lien
or security interest on Borrower or any of the other Loan Parties or any member
of their respective ERISA Controlled Group, or (ix) with respect to any
Multiemployer Plan, the institution of a proceeding to enforce Section 515 of
ERISA, to terminate such Plan, the receipt of a notice of reorganization or
insolvency under Sections 4241 or 4245 of ERISA, in any event which could result
in liability in excess of $3,000,000 to Borrower, any other Loan Party or any
member of any of their ERISA Controlled Group, or (xi) the assets of Borrower or
any other Loan Party become or are deemed to be assets of an Employee Benefit
Plan. No Event of Default under this Section 7.01(f) shall be deemed to be, or
have been, waived or corrected because of any disclosure by Borrower or any Loan
Party.
(g) Judgments. One or more judgments or decrees (i) in an aggregate
amount of $5,000,000 or more are entered against Borrower, the REIT or any other
Loan Parties in any consecutive twelve (12) month period or (ii) which, with
respect to Borrower and the other Loan Parties, could result in a Material
Adverse Effect, shall be entered by a court or courts of competent jurisdiction
against any of such Persons (other than any judgment as to which, and only to
the extent, a reputable insurance company has acknowledged coverage of such
claim in writing) and (x) any such judgments or decrees shall not be stayed (by
appeal or otherwise), discharged, paid, bonded or vacated within thirty (30)
days or (y) enforcement proceedings shall be commenced by any creditor on any
such judgments or decrees.
(h) REIT. The REIT fails to remain a publicly-traded real estate
investment trust in good standing with the New York Stock Exchange and with the
Securities and Exchange Commission.
(i) Material Adverse Effect. If any Material Adverse Effect shall occur
other than a down grade, withdrawal or termination of Borrower's or the REIT's
Unsecured Debt Rating.
Section 7.02 Rights and Remedies. (a) Upon the occurrence of any Event
of Default described in Section 7.01(e), the Facility Amount shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loan and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest thereon calculated at the Default Rate from the occurrence
of the Default until the Loan is paid in full and without presentation, demand,
or protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and notice of acceleration), all of which are hereby expressly
waived by Borrower and the other Loan Parties, and the obligation of Lender and
all Co-Lenders to make any Advances hereunder shall thereupon terminate; and
upon the occurrence and during the continuance of any other Event of Default,
Agent, upon approval of
-69-
76
the Majority Co-Lenders, may by written notice to Borrower, (i) declare that the
Facility Amount is terminated, whereupon the Facility Amount and the obligation
of Lender and all Co-Lenders to make any Advances (or their pro rata share
thereof) hereunder shall immediately terminate, and (ii) declare the unpaid
principal amount of and any and all accrued and unpaid interest on the Loan and
any and all accrued Fees and other Obligations to be, and the same shall
thereupon be, immediately due and payable with all additional interest thereon
calculated at the Default Rate from the occurrence of the Default until the Loan
is paid in full and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower and the other Loan Parties.
(b) Agent and any Co-Lender may offset any indebtedness, obligations or
liabilities owed to Borrower against any indebtedness, obligations or
liabilities of Borrower or the REIT to it.
(c) Agent and any Co-Lender may avail itself of any remedies available
to it under the Loan Documents or at law or equity.
SECTION 8. INTENTIONALLY DELETED.
SECTION 9. MISCELLANEOUS.
Section 9.01 Payment of Agent's, Syndication Agent's and Co-Lender's
Expenses, Indemnity, etc. Borrower shall:
(a) whether or not the Loan closes, except as otherwise provided in
this Agreement, pay all reasonable out-of-pocket costs and expenses of Agent,
the Syndication Agent and all Co-Lenders in connection with Agent's, the
Syndication Agent's, and such Co-Lender's due diligence review of the
Unencumbered Assets and Real Property Assets, the negotiation, preparation,
execution and delivery of the Loan Documents and the documents and instruments
referred to therein, in connection with the administration of the Loan and any
amendment, waiver or consent relating to any of the Loan Documents and of Agent,
the Syndication Agent and the Co-Lenders in connection with the preservation of
rights under, any amendment, waiver or consent relating to, and enforcement of,
the Loan Documents and the documents and instruments referred to therein or in
connection with any restructuring or rescheduling of the Obligations (including,
without limitation, the reasonable fees and disbursements of counsel for Agent,
the Syndication Agent and the Co-Lenders);
(b) pay, and hold Agent, the Syndication Agent and each Co-Lender
harmless from and against, any and all present and future stamp, excise and
other similar taxes with respect to the foregoing matters and hold Agent, the
Syndication Agent and each Co-Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to Agent, the Syndication Agent or such Co-Lender) to
pay such taxes; and
-70-
77
(c) indemnify Agent (in its capacity as Lender and as Agent) and the
Syndication Agent (in its capacity as Syndication Agent and as Co-Lender) and
each Co-Lender, its officers, directors, employees, representatives and agents
and any persons or entities owned or Controlled by, owning or Controlling, or
under common Control or Affiliated with Agent, the Syndication Agent or each
Co-Lender (each an "Indemnitee") from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising in any manner out of, or in any way related to or by
reason of, (i) the Loan or the execution, delivery or performance of any Loan
Document, (ii) the breach of any of Borrower's, the REIT's or other Loan Party's
representations and warranties or of any of Borrower's, REIT's or other Loan
Party's Obligations, (iii) a default under Sections 4.12 or 5.11, including,
without limitation, attorneys' fees and costs incurred in the investigation,
defense, and settlement of losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, and (iv) the
exercise by Agent, the Syndication Agent and the Co-Lenders of their rights and
remedies (including, without limitation, foreclosure) under any Loan Document
(but excluding, as to any Indemnitee, any such losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements incurred solely by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of competent
jurisdiction) (collectively, "Indemnified Liabilities"). Borrower and the REIT
further agree that, without Agent's, the Syndication Agent's or the Co-Lenders'
prior written consent, they will not enter into any settlement of a lawsuit,
claim or other proceeding arising or relating to any Indemnified Liability
unless such settlement includes an explicit and unconditional release from the
party bringing such lawsuit, claim or other proceeding of each Indemnitee.
Borrower's and the REIT's obligations under this Section shall survive the
termination of this Agreement and the payment of the Obligations.
Section 9.02 Notices. Except as otherwise by expressly provided herein,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile, telex, or cable
communication), and shall be deemed to have been duly given or made when
delivered by hand, or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, or, in the case of telex notice,
when sent, answerback received, or, in the case of facsimile notice, when sent,
answerback received, or, in the case of a nationally recognized overnight
courier service, one (1) Business Day after delivery to such courier service,
addressed, in the case of Borrower, Agent, and the Syndication Agent at the
addresses specified below, or to such other addresses as may be designated by
any party in a written notice to the other parties hereto, provided that notices
and communications to Agent shall not be effective until received by Agent.
If to Agent (including, without limitation, all notices pursuant to Sections
2.02, 2.08, 2.09 and 2.11 of this Agreement, as follows:
-71-
78
NBD BANK
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Syndication Agent, as follows:
▇▇▇▇▇▇ Brothers Holdings Inc.
d/b/a Lehman Capital, a division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with copies thereof to:
▇▇▇▇▇▇ Brothers Holdings Inc.
d/b/a Lehman Capital, a division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Brothers Holdings Inc.
d/b/a Lehman Capital, a division of
▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to Borrower or the REIT, as follows:
Sun Communities Operating Limited Partnership
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-72-
79
Sun Communities, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Jaffe, Raitt, Heuer & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.03 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Borrower, the REIT, Agent, the Syndication
Agent, the Co-Lenders, all future holders of the Note and their respective
successors and assigns.
Section 9.04 Amendments and Waivers. (a) Neither this Agreement, the
Note, any other Loan Document to which Borrower, the REIT or any other Loan
Party is a party nor any terms hereof or thereof may be amended, supplemented,
modified or waived other than in a writing executed by Borrower, the REIT, or
the applicable Loan Party and Agent. The parties hereto acknowledge and agree
that any amendment, modification, approval, waiver or request to be granted
regarding the terms of this Agreement shall be given in accordance with the
terms, provisions and conditions of the Intercreditor Agreement. The authority
of Agent to act as Agent hereunder arises pursuant to and is governed by the
Intercreditor Agreement.
(b) In the case of any waiver, Borrower, the REIT, Agent and all
Co-Lenders shall be restored to their former position and rights hereunder and
under the outstanding Note and any other Loan Documents, and any Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Event of Default, or impair any
right consequent thereon.
Section 9.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of Agent or any Co-Lender in exercising any right, power or privilege
hereunder or under any other Loan Document and no course of dealing between
Borrower or any other Loan Party and Agent or any Co-Lender shall operate as a
waiver thereof nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which Agent or any
Co-Lender would otherwise have. No notice to or demand on Borrower or any other
Loan Party in any case shall entitle Borrower or any other Loan Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of Agent or any Co-Lender, to any other or
further action in any circumstances without notice or demand.
-73-
80
Section 9.06 Governing Law; Submission to Jurisdiction. (a) This
Agreement shall be deemed to be a contract entered into pursuant to the laws of
the State of New York and shall in all respects be governed, construed, applied
and enforced in accordance with the laws of the State of New York, provided
however, that with respect to the creation, perfection, priority and enforcement
of the lien of the Security Instruments, and the determination of deficiency
judgments, the laws of the State where the Real Property Asset is located shall
apply.
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, Borrower and the REIT hereby accept
for themselves and in respect of their property, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid courts and appellate courts from
any thereof. Borrower and the REIT irrevocably consent to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Borrower and the REIT at their addresses set forth in Section 9.02. Borrower and
REIT hereby irrevocably waive any objection which they may now or hereafter have
to the laying of venue of any of the aforesaid actions or proceedings arising
out of or in connection with this Agreement or any other Loan Document brought
in the courts referred to above and hereby further irrevocably waive and agree
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of Agent or any Co-Lender, to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Borrower or the REIT in any other jurisdiction.
Section 9.07 Confidentiality Disclosure of Information. Each party
hereto shall treat the transactions contemplated hereby and all financial and
other information furnished to it about Borrower, the other Loan Parties and the
Real Property Assets, 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 parties
hereto who need to know such information, provided such Persons are instructed
to treat such information confidentially, (c) by Agent or the Syndication Agent
to any Participant, Co-Lender, servicer, or assignee ("Transferee"), which
disclosure to Transferees and prospective Transferees may include any and all
information which has been delivered to Agent or the Syndication Agent by
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents or which has been delivered to Agent or the Syndication Agent in
connection with Agent's or the Syndication Agent's and the Co-Lenders' credit
evaluation of Borrower and the REIT prior to entering into this Agreement, or
(d) upon the written consent of the party whose otherwise confidential
information would be disclosed.
Borrower and the REIT acknowledge and agree that Agent and the
Syndication Agent may provide to the Co-Lenders, and that Agent, the Syndication
Agent and each of the Co-Lenders may provide to any Participant, originals or
copies of this Agreement, all Loan Documents and all other documents,
instruments, certificates, opinions, insurance policies, letters
-74-
81
of credit, reports, requisitions and other materials and information of every
nature or description, and may communicate all oral information, at any time
submitted by or on behalf of Borrower or the REIT or received by Agent or the
Syndication Agent in connection with the Loan or Borrower or the REIT.
Section 9.08 Recourse. The Loan and the Obligations shall be full
recourse to Borrower. The REIT shall have no liability with respect to the Loan
or the Obligations except as set forth in the Guaranty.
Section 9.09 Sale of Loan, Co-Lenders, Participations and Servicing.
(a) Lender and any Co-Lender may, at their option, sell with novation
all or any part of their right, title and interest in, and to, and under the
Loan, including, without limitation, all or a portion of their obligation to
make Advances, and its interest in the outstanding principal balance of the
Loan, to one or more additional Co-Lenders; notwithstanding the foregoing,
provided that no Event of Default has occurred and is continuing, any such sale
with novation to any Co-Lender that is not an Affiliate of Lender or any
Co-Lender shall be subject to Borrower's prior written approval, which approval
shall not be unreasonably withheld or delayed; provided, further, however, that
Borrower shall be deemed to have approved any entity purchasing the Loan or part
thereof or an interest therein that has a long-term credit rating on its senior
debt equal or exceeding BBB as rated by Standard & Poor's Ratings Services or
equal or exceeding Baa-2 as rated by ▇▇▇▇▇'▇ Investors Service, Inc. Each
additional Co-Lender shall enter into an assignment and assumption agreement
(the "Assignment and Assumption") assigning a portion of Lender's or Co-Lender's
rights and obligations under the Loan, and pursuant to which the additional
Co-Lender accepts such assignment and assumes the assigned obligations. From and
after the effective date specified in the Assignment and Assumption (i) each
Co-Lender shall be a party hereto and to each Loan Document to the extent of the
applicable percentage or percentages set forth in the Assignment and Assumption
and, except as specified otherwise herein, shall succeed to the rights and
obligations of Lender and the Co-Lenders hereunder and thereunder in respect of
the Loan (including, without limitation, its pro rata share of Lender's and each
Co-Lenders' obligations to make Advances hereunder), and (ii) Lender, as lender
and each Co-Lender, as applicable shall, to the extent such rights and
obligations have been assigned by it pursuant to such Assignment and Assumption,
relinquish its rights and be released from its obligations hereunder and under
the Loan Documents.
(b) The liabilities of Lender and each of the Co-Lenders shall be
several and not joint, and Lender's and each Co-Lenders' obligations to Borrower
and the REIT under this Agreement shall be reduced by the amount of each such
Assignment and Assumption. Neither Lender nor any Co-Lender shall be responsible
for the obligations of any other Co-Lender. Lender and each Co-Lender shall be
liable to Borrower only for their respective proportionate shares of the Loan.
If for any reason any of the Co-Lenders shall fail or refuse to abide by their
obligations under this Agreement, Lender and the other Co-Lenders shall not be
relieved of their obligations, if any, hereunder, including their obligations to
make their pro rata share of any Advance on the date set forth for such Advance
in the Notice of Borrowing; notwithstanding the foregoing, Lender and the
Co-Lenders shall have the right, but not the obligation, at their sole
-75-
82
option, to make the defaulting Co-Lender's pro rata share of such Advance
pursuant to the terms of the Intercreditor Agreement.
(c) Borrower agrees that it shall, in connection with any sale of all
or any portion of the Loan, whether in whole or to an additional Co-Lender or
Participant, within ten (10) business days after requested by Agent or the
Syndication Agent, furnish Agent or the Syndication Agent with the certificates
required under Section 9.21(a) and (b) and such other information as reasonably
requested by any additional Co-Lender or Participant in performing its due
diligence in connection with its purchase of an interest in the Loan and the
Facility Amount. Borrower shall not be responsible for the costs of such
additional Co-Lender's or Participant's due diligence review, but shall be
responsible for the cost of preparing and delivering the required information
and certificates.
(d) Intentionally Deleted.
(e) Lender (or an Affiliate of Lender) shall act as administrative
agent for itself and the Co-Lenders (together with any successor administrative
agent, the "Agent") pursuant to this Section 9.09(e). Borrower acknowledges that
Lender, as Agent shall have the sole and exclusive authority to execute and
perform this Agreement and each Loan Document on behalf of itself, as Lender and
as agent for itself and the Co-Lenders subject to the terms of the Intercreditor
Agreement. Except as otherwise provided herein, Borrower shall have no
obligation to recognize or deal directly with any Co-Lender, and no Co-Lender
shall have any right to deal directly with Borrower with respect to the rights,
benefits and obligations of Borrower under this Agreement, the Loan Documents or
any one or more documents or instruments in respect thereof. Borrower may rely
conclusively on the actions of Lender as Agent to bind Lender and the
Co-Lenders, notwithstanding that the particular action in question may, pursuant
to this Agreement or any Intercreditor Agreement among Agent and the Co-Lenders,
be subject to the consent or direction of the Co-Lenders. Lender may resign as
Agent of the Co-Lenders, in its sole discretion, without the consent of
Borrower. Upon any such resignation, a successor Agent shall be determined
pursuant to the terms of the Intercreditor Agreement. The term Agent shall mean
any successor Agent.
Notwithstanding any provision to the contrary in this Agreement,
neither the Agent nor the Syndication Agent shall have any duties or
responsibilities except those expressly set forth herein and in the
Intercreditor Agreement and no covenants, functions, responsibilities, duties,
obligations or liabilities of Agent or the Syndication Agent shall be implied by
or inferred from this Agreement, the Intercreditor Agreement, or any other Loan
Document, or otherwise exist against Agent or the Syndication Agent.
(f) Except to the extent its obligations hereunder and its interest in
the Loan have been assigned pursuant to one or more Assignments and Assumption,
▇▇▇▇▇▇ Brothers Holdings Inc. ("▇▇▇▇▇▇") as Syndication Agent, and NBD Bank
("NBD") as Agent shall have the same rights and powers under this Agreement as
any other Co-Lender and may exercise the same as though it were not the
Syndication Agent or Agent respectively. The term "Co-Lender" or "Co-Lenders"
shall, unless otherwise expressly indicated, include ▇▇▇▇▇▇ and NBD in their
individual capacity. ▇▇▇▇▇▇, NBD and the other Co-Lenders and their respective
affiliates may
-76-
83
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, Borrower, any Loan Party or any
Affiliate of Borrower or any Loan Party and any Person or entity who may do
business with or own securities of Borrower or any Loan Party or any Affiliate
of Borrower or any Loan Party or any Affiliate thereof, all as if they were not
serving in such capacities hereunder and without any duty to account therefor to
each other.
(g) Intentionally Deleted.
(h) Lender, as Agent, shall maintain at its domestic lending office or
at such other location as Lender, as Agent, shall designate in writing to each
Co-Lender and Borrower a copy of each Assignment and Assumption delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Co-Lenders, the amount of each Co-Lender's proportionate share of the
Facility Amount and the Loan and the name and address of each Co-Lender's agent
for service of process (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Lender, as Agent, and the Co-Lenders may treat each person or entity whose name
is recorded in the Register as a Co-Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection and copying by
Borrower or any Co-Lender during normal business hours upon reasonable prior
notice to the Agent. A Co-Lender may change its address and its agent for
service of process upon written notice to Lender, as Agent, which notice shall
only be effective upon actual receipt by Lender, as Agent, which receipt will be
acknowledged by Lender, as Agent, upon request.
(i) Notwithstanding anything herein to the contrary, any financial
institution or other entity may be sold a participation interest in the Loan by
Lender or any Co-Lender without Borrower's consent (such financial institution
or entity, a "Participant") (x) if such sale is without novation and (y) if the
other conditions set forth in this paragraph are met. No Participant shall be
considered a Co-Lender hereunder or under the Note or the Loan Documents. No
Participant shall have any rights under this Agreement, the Note or any of the
Loan Documents and the Participant's rights in respect of such participation
shall be solely against Lender or Co-Lender, as the case may be, as set forth in
the participation agreement executed by and between Lender or Co-Lender, as the
case may be, and such Participant. The terms of any participation agreement
between Lender or Co-Lender, as the case may be, and its Participant shall not
grant the Participant any consent rights except for consent to (i) changes in
the interest rate and term of the Loan, (ii) increase in the principal amount of
the Loan, (iii) release of any party liable for repayment of the Loan, (iv)
forbearance, (v) consents to Liens other than Permitted Liens on the Real
Property Assets or the Rents related thereto, or (vi) the acceleration of the
Loan or the taking of any enforcement action with respect to the Loan. No
participation shall relieve Lender or Co-Lender, as the case may be, from its
obligations hereunder or under the Note or the Loan Documents and Lender or
Co-Lender, as the case may be,shall remain solely responsible for the
performance of its obligations hereunder.
(j) Notwithstanding any other provision set forth in this Agreement,
the Lender or any Co-Lender may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
amounts owing to it in favor of any
-77-
84
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System), provided that no such security interest or the
exercise by the secured party of any of its rights thereunder shall release
Lender or Co-Lender from its funding obligations hereunder.
(k) In the event that Lender or any Co-Lender sells or transfers any of
its Pro Rata Interest in the Loan whether by assignment and assumption or by
participation, the cost of such assignment or participation and the cost of any
assignee's or participant's due diligence and review of the Loan Documents or
any Assets shall be paid by such assignee or participant, but Borrower shall be
responsible for the cost of preparing and delivering the required information
and certificates.
Section 9.10 Borrower's and the REIT's Assignment. Neither Borrower nor
the REIT may assign its rights or obligations hereunder without the prior
written consent of Agent and all of the Co-Lenders.
Section 9.11 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 9.12 Effectiveness. This Agreement shall become effective on
the date on which all of the parties hereto shall have signed a counterpart
hereof and shall have delivered the same to the Syndication Agent.
Section 9.13 Headings Descriptive. The heading of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 9.14 Marshaling; Recapture. Agent shall be under no obligation
to marshal any assets in favor of Borrower, any other Loan Party or any other
party or against or in payment of any or all of the Obligations. To the extent
Agent receives any payment by or on behalf of Borrower or any other Loan Party,
which payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to Borrower or
such other Loan Party or its estate, trustee, receiver, custodian or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such payment or repayment, the obligation or part
thereof which has been paid, reduced or satisfied by the amount so repaid shall
be reinstated by the amount so repaid and shall be included within the
liabilities of Borrower or such other Loan Party to Agent and the Co-Lenders as
of the date such initial payment, reduction or satisfaction occurred.
Section 9.15 Severability. In case any provision in or obligation under
this Agreement or the Note or the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
-78-
85
Section 9.16 Survival. Except as expressly provided to the contrary
herein, all indemnities set forth herein including, without limitation, in
Sections 2.16, 2.17, 2.18, 2.19 and 9.01 shall survive the execution and
delivery of this Agreement, the Note and the Loan Documents and the making and
repayment of the Loan hereunder for a period of one (1) year.
Section 9.17 Domicile of Loan Portions. Lender and the Co-Lenders may
transfer and carry any Loan Portion at, to or for the account of any domestic or
foreign branch office, subsidiary or affiliate, subject to Section 2.19.
Section 9.18 Intentionally Deleted
Section 9.19 Calculations; Computations. Except as otherwise expressly
provided herein, the financial statements to be furnished to Agent or the
Syndication Agent pursuant hereto shall be made and prepared in accordance with
GAAP consistently applied throughout the periods involved and consistent with
GAAP as used in the preparation of the financial statements referred to in
Section 4.05.
SECTION 9.20 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER, AGENT AND ALL CO-LENDERS EACH HEREBY IRREVOCABLY
WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
Section 9.21 No Joint Venture. Notwithstanding anything to the contrary
herein contained, neither Agent, Syndication Agent nor any Co-Lender by entering
into this Agreement or by taking any action pursuant hereto, will be deemed a
partner or joint venturer with Borrower or the REIT or any Loan Party and
Borrower and the REIT agree to hold Agent, the Syndication Agent and each
Co-Lender harmless from any damages and expenses resulting from such a
construction of the relationship of the parties hereto or any assertion thereof.
Section 9.22 Estoppel Certificates. (a) Borrower, the REIT and Agent,
each hereby agree at any time and from time to time upon not less than ten (10)
days prior written notice by Borrower, the REIT or Agent to execute, acknowledge
and deliver to the party specified in such notice, a statement, in writing,
certifying whether this Agreement is unmodified and in full force and effect (or
if there have been modifications, whether the same, as modified, is in full
force and effect and stating the modifications hereto), and stating whether or
not, to the best knowledge of such certifying party, any Default or Event of
Default has occurred and is then continuing, and, if so, specifying each such
Default or Event of Default; provided, however, that it shall be a condition
precedent to Lender's obligation, as Agent, to deliver the statement pursuant to
this Section, that Agent shall receive, together with Borrower's request for
such statement, a certificate of the REIT for itself and as general partner of
Borrower, stating that to the best knowledge of Borrower and the REIT, no
Default or Event of Default exists as of the date of such certificate (or
specifying such Default or Event of Default).
-79-
86
(b) Within five (5) Business Days of Agent's request, Borrower shall
execute and deliver a certificate of the REIT for itself and as general partner
of Borrower confirming the then aggregate outstanding principal balance of the
Loan, the outstanding principal balance of each Eurodollar Portion and the Base
Rate Portion, the Contract Rate for each Loan Portion, the dates to which all
interest has been paid, and the Interest Period for each Eurodollar Portion.
Such statement shall be binding and conclusive on Borrower and the REIT absent
manifest error.
Section 9.23 No Other Agreements. The Loan Documents constitute the
entire understanding of the parties with respect to the transactions
contemplated hereby, and all prior understandings with respect thereto, whether
written or oral, shall be of no force and effect.
Section 9.24 Controlling Document. In the event of a conflict between
the provisions of this Agreement and the other Loan Documents, the provisions of
this Agreement shall control and govern the conflicting provisions of the other
Loan Documents.
Section 9.25 No Benefit to Third Parties. This Agreement is for the
sole and exclusive benefit of Borrower, the REIT, and the Syndication Agent,
Agent and the Co-Lenders and all conditions of the obligation of Lender and the
Co-Lenders to make Advances hereunder are imposed solely and exclusively for the
benefit of Lender and the Co-Lenders and their assigns and no other person shall
have standing to require satisfaction of such conditions in accordance with
their terms or be entitled to assume that Lender and the Co-Lenders will refuse
to make Advances in the absence of strict compliance with any and all thereof
and no other person shall under any circumstances be deemed to be a beneficiary
of such conditions, any or all of which may be freely waived in whole or in part
by Agent and the Co-Lenders at any time if they in their sole discretion deem it
advisable to do so. Without limiting the generality of the foregoing, neither
Agent nor the Co-Lenders shall have any duty or obligation to anyone to
ascertain that funds advanced hereunder are used as required by the terms hereof
or to pay the cost of constructing the improvements on any of the Real Property
Assets or to acquire materials and supplies to be used in connection therewith
or to pay costs of owning, operating and maintaining same.
[NO FURTHER TEXT ON THIS PAGE]
-80-
87
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
By: Sun Communities, Inc., its general partner
By:
------------------------------
Name:
Title:
SUN COMMUNITIES, INC.
By:
--------------------------------------
Name:
Title:
NBD BANK, individually as a Co-Lender and as Agent for one or
more Co-Lenders
By:
--------------------------------------
Name:
Title:
▇▇▇▇▇▇ BROTHERS HOLDINGS INC. D/B/A ▇▇▇▇▇▇ CAPITAL, A DIVISION
OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., individually as a Co-Lender
and as Syndication Agent for one or more Co-Lenders
By:
--------------------------------------
Name:
Title: