EXHIBIT 4(ii)(h)
MASTER CREDIT FACILITY AGREEMENT
among
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation,
WOODLAKE VILLAGE, L.P.,
a California limited partnership
and
ARCS COMMERCIAL MORTGAGE CO., L.P.,
a California limited partnership,
dated as of
December 12, 2001
TABLE OF CONTENTS
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Page
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RECITALS ........................................................................ 1
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ARTICLE I ....................................................................... 2
ARTICLE II ...................................................................... 18
SECTION 2.01 Revolving Facility Commitment ................................... 18
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SECTION 2.02 Requests for Revolving Advances ................................. 18
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SECTION 2.03 Maturity Date of Revolving Advances ............................. 19
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SECTION 2.04 Interest on Revolving Facility Advances ......................... 19
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SECTION 2.05 Coupon Rates for Revolving Advances ............................. 20
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SECTION 2.06 Revolving Facility Note ......................................... 20
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SECTION 2.07 Extension of Revolving Facility Termination Date ................ 20
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ARTICLE III ..................................................................... 21
SECTION 3.01 Base Facility Commitment ........................................ 21
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SECTION 3.02 Requests for Base Facility Advances ............................. 21
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SECTION 3.03 Maturity Date of Base Facility Advances ......................... 21
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SECTION 3.04 Interest on Base Facility Advances .............................. 21
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SECTION 3.05 Coupon Rates for Base Facility Advances ......................... 22
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SECTION 3.06 Base Facility Note .............................................. 22
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SECTION 3.07 Conversion of Commitment from Revolving Facility Commitment to
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Base Facility Commitment ........................................ 22
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SECTION 3.08 Limitations on Right to Convert ................................. 22
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SECTION 3.09 Conditions Precedent to Conversion .............................. 23
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SECTION 3.10 Defeasance ...................................................... 23
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ARTICLE IV ...................................................................... 31
SECTION 4.01 Rate Setting for an Advance ..................................... 31
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SECTION 4.02 Advance Confirmation Instrument for Revolving Advances .......... 32
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SECTION 4.03 Breakage and other Costs ........................................ 32
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ARTICLE V ....................................................................... 32
SECTION 5.01 Initial Advance ................................................. 32
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SECTION 5.02 Future Advances ................................................. 33
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SECTION 5.03 Conditions Precedent to Future Advances ......................... 33
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SECTION 5.04 Determination of Allocable Facility Amount and Valuations ....... 34
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ARTICLE VI ...................................................................... 34
SECTION 6.01 Right to Add Collateral ......................................... 34
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SECTION 6.02 Procedure for Adding Collateral ................................. 34
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SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged
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Property to the Collateral Pool ................................. 36
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ARTICLE VII ..................................................................... 37
SECTION 7.01 Right to Obtain Releases of Collateral .......................... 37
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SECTION 7.02 Procedure for Obtaining Releases of Collateral .................. 37
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SECTION 7.03 Conditions Precedent to Release of Collateral Release Property
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from the Collateral ............................................. 38
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SECTION 7.04 Substitutions ................................................... 39
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ARTICLE VIII .................................................................... 40
SECTION 8.01 Right to Increase Commitment .................................... 40
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SECTION 8.02 Procedure for Obtaining Increases in Commitment ................. 40
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SECTION 8.03 Conditions Precedent to Increase in Commitment .................. 41
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ARTICLE IX ...................................................................... 41
SECTION 9.01 Right to Complete or Partial Termination of Facilities .......... 41
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SECTION 9.02 Procedure for Complete or Partial Termination of Facilities ..... 41
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SECTION 9.03 Conditions Precedent to Complete or Partial Termination of
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Facilities ...................................................... 42
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ARTICLE X ....................................................................... 43
SECTION 10.01 Right to Terminate Credit Facility .............................. 43
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SECTION 10.02 Procedure for Terminating Credit Facility ....................... 43
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SECTION 10.03 Conditions Precedent to Termination of Credit Facility .......... 43
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ARTICLE XI ...................................................................... 44
SECTION 11.01 Conditions Applicable to All Requests ........................... 44
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SECTION 11.02 Delivery of Closing Documents Relating to Initial Advance
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Request, Collateral Addition Request, Credit Facility Expansion
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Request or Future Advance Request ............................... 45
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SECTION 11.03 Delivery of Property-Related Documents .......................... 45
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ARTICLE XII ..................................................................... 46
SECTION 12.01 Representations and Warranties of the Borrower .................. 46
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SECTION 12.02 Representations and Warranties of the Borrower .................. 50
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SECTION 12.03 Representations and Warranties of the Lender .................... 53
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ARTICLE XIII .................................................................... 53
SECTION 13.01 Compliance with Agreements; No Amendments ....................... 53
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SECTION 13.02 Maintenance of Existence ........................................ 53
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SECTION 13.03 Maintenance of REIT Status ...................................... 54
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SECTION 13.04 Financial Statements; Accountants' Reports; Other Information ... 54
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SECTION 13.05 Certificate of Compliance ....................................... 56
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SECTION 13.06 Maintain Licenses ............................................... 56
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SECTION 13.07 Access to Records; Discussions With Officers and Accountants .... 56
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SECTION 13.08 Inform the Lender of Material Events ............................ 57
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SECTION 13.09 Intentionally Omitted ........................................... 58
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SECTION 13.10 Inspection ...................................................... 58
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SECTION 13.11 Compliance with Applicable Laws ................................. 58
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SECTION 13.12 Warranty of Title ............................................... 58
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SECTION 13.13 Defense of Actions .............................................. 58
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SECTION 13.14 Alterations to the Mortgaged Properties ......................... 59
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SECTION 13.15 ERISA ........................................................... 59
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SECTION 13.16 Loan Document Taxes ............................................. 60
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SECTION 13.17 Further Assurances .............................................. 60
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SECTION 13.18 Monitoring Compliance ........................................... 60
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SECTION 13.19 Leases .......................................................... 60
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SECTION 13.20 Appraisals ...................................................... 60
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SECTION 13.21 Transfer of Ownership Interests of the Borrower ................. 60
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SECTION 13.22 Change in Senior Management ..................................... 62
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SECTION 13.23 Date-Down Endorsements .......................................... 62
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SECTION 13.24 Geographical Diversification .................................... 63
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SECTION 13.25 Ownership of Mortgaged Properties ............................... 63
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SECTION 13.26 Facility Balancing .............................................. 63
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ARTICLE XIV ..................................................................... 63
SECTION 14.01 Other Activities ................................................ 63
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SECTION 14.02 Value of Security ............................................... 64
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SECTION 14.03 Zoning ........................................................ 64
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SECTION 14.04 Liens ......................................................... 64
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SECTION 14.05 Sale .......................................................... 64
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SECTION 14.06 Intentionally Omitted ......................................... 64
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SECTION 14.07 Principal Place of Business ................................... 64
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SECTION 14.08 Intentionally Omitted ......................................... 64
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SECTION 14.09 Change in Property Management ................................. 64
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SECTION 14.10 Condominiums .................................................. 64
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SECTION 14.11 Restrictions on Distributions ................................. 65
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SECTION 14.12 Conduct of Business ........................................... 65
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SECTION 14.13 Limitation on Unimproved Real Property and New Construction ... 65
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SECTION 14.14 No Encumbrance of Collateral Release Property ................. 65
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ARTICLE XV .................................................................... 65
SECTION 15.01 Financial Definitions ......................................... 65
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SECTION 15.02 Compliance with Debt Service Coverage Ratios .................. 70
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SECTION 15.03 Compliance with Loan to Value Ratios .......................... 70
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SECTION 15.04 Compliance with Concentration Test ............................ 70
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SECTION 15.05 Consolidated Adjusted Tangible Net Worth ...................... 70
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SECTION 15.06 Consolidated Funded Debt Ratio ................................ 70
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SECTION 15.07 Consolidated Total Fixed Charge Coverage Ratio ................ 70
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SECTION 15.08 Consolidated Unencumbered Realty to Consolidated Unsecured Debt
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Ratio ..................................................................... 70
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SECTION 15.09 Consolidated Unencumbered Interest Coverage Ratio ............. 70
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ARTICLE XVI ................................................................... 71
SECTION 16.01 Standby Fee ................................................... 71
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SECTION 16.02 Origination Fees .............................................. 71
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SECTION 16.03 Due Diligence Fees ............................................ 71
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SECTION 16.04 Legal Fees and Expenses ....................................... 71
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SECTION 16.05 MBS-Related Costs ............................................. 72
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SECTION 16.06 Failure to Close any Request .................................. 72
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SECTION 16.07 Other Fees .................................................... 72
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ARTICLE XVII .................................................................. 73
SECTION 17.01 Events of Default ............................................. 73
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ARTICLE XVIII ................................................................. 75
SECTION 18.01 Remedies; Waivers ............................................. 75
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SECTION 18.02 Waivers; Rescission of Declaration ............................ 75
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SECTION 18.03 The Lender's Right to Protect Collateral and Perform Covenants
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and Other Obligations ..................................................... 75
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SECTION 18.04 No Remedy Exclusive ........................................... 76
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SECTION 18.05 No Waiver ..................................................... 76
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SECTION 18.06 No Notice ..................................................... 76
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SECTION 18.07 Application of Payments ....................................... 76
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ARTICLE XIX ................................................................... 76
SECTION 19.01 Special Pool Purchase Contract ................................ 76
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SECTION 19.02 Assignment of Rights .......................................... 76
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SECTION 19.03 Release of Collateral ......................................... 77
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SECTION 19.04 Replacement of Lender ......................................... 77
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SECTION 19.05 ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses ....................... 77
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SECTION 19.06 Third-Party Beneficiary ....................................... 77
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ARTICLE XX .................................................................... 77
SECTION 20.01 Insurance and Real Estate Taxes ............................... 77
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SECTION 20.02 Replacement Reserves .......................................... 77
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ARTICLE XXI ................................................................... 78
ARTICLE XXII .................................................................. 78
SECTION 22.01 Personal Liability of the Borrower ............................ 78
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ARTICLE XXIII ................................................................. 78
SECTION 23.01 Counterparts .................................................. 78
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SECTION 23.02 Amendments, Changes and Modifications ......................... 78
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SECTION 23.03 Payment of Costs, Fees and Expenses ........................... 79
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SECTION 23.04 Payment Procedure ............................................. 79
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SECTION 23.05 Payments on Business Days ..................................... 79
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SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial .. 80
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SECTION 23.07 Severability .................................................. 81
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SECTION 23.08 Notices ....................................................... 81
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SECTION 23.09 Further Assurances and Corrective Instruments ................. 83
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SECTION 23.10 Term of this Agreement ........................................ 84
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SECTION 23.11 Assignments; Third-Party Rights ............................... 84
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SECTION 23.12 Headings ...................................................... 84
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SECTION 23.13 General Interpretive Principles ............................... 84
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SECTION 23.14 Interpretation ................................................ 84
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SECTION 23.15 Decisions in Writing .......................................... 84
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SECTION 23.16 Requests ...................................................... 84
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EXHIBIT A - Schedule of Initial Mortgaged Properties and Initial Valuations
EXHIBIT B - Base Facility Note
EXHIBIT C - Intentionally Omitted
EXHIBIT D - Compliance Certificate
EXHIBIT E - Sample Facility Debt Service
EXHIBIT F - Organizational Certificate
EXHIBIT G - Intentionally Omitted
EXHIBIT H - Revolving Credit Endorsement
EXHIBIT I - Revolving Facility Note
EXHIBIT J - Tie-In Endorsement
EXHIBIT K - Conversion Request
EXHIBIT L - Conversion Amendment
EXHIBIT M - Rate Setting Form
EXHIBIT N - Rate Confirmation Instrument
EXHIBIT O - Advance Confirmation Instrument
EXHIBIT P - Future Advance Request
EXHIBIT Q - Collateral Addition Request
EXHIBIT R - Collateral Addition Description Package
EXHIBIT S - Collateral Addition Supporting Documents
EXHIBIT T - Collateral Release Request
EXHIBIT U - Confirmation of Obligations
EXHIBIT V - Credit Facility Expansion Request
EXHIBIT W - Revolving Facility Termination Request
EXHIBIT X - Revolving Facility Termination Document
EXHIBIT Y - Credit Facility Termination Request
EXHIBIT Z - Intentionally Omitted
EXHIBIT AA - Independent Unit Encumbrances
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MASTER CREDIT FACILITY AGREEMENT
THIS MASTER CREDIT FACILITY AGREEMENT is made as of the 12/th/ day of
December, 2001 by (i) UNITED DOMINION REALTY TRUST, INC., a Virginia corporation
("UDRT"), (ii) WOODLAKE VILLAGE, L.P., a California limited partnership
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("Woodlake") (individually and collectively, UDRT and Woodlake, the "Borrower"),
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and (iii) ARCS COMMERCIAL MORTGAGE CO., L.P., a California limited partnership
(the "Lender").
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RECITALS
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A. The Borrower owns one or more Multifamily Residential Properties
(capitalized terms used but not defined shall have the meanings ascribed to such
terms in Article I of this Agreement) as more particularly described in Exhibit
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A to this Agreement.
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B. The Borrower has requested that the Lender establish a $300,000,000
Credit Facility in favor of the Borrower, comprised initially of a $300,000,000
Revolving Facility, all or part of which can be converted to a Base Facility in
accordance with, and subject to, the terms and conditions of this Agreement and
a $0 Base Facility.
C. To secure the obligations of the Borrower under this Agreement and the
other Loan Documents issued in connection with the Credit Facility, the Borrower
shall create a Collateral Pool in favor of the Lender. The Collateral Pool shall
be comprised of (i) Security Instruments on all of the Multifamily Residential
Properties owned by the Borrower listed on Exhibit A to this Agreement and (ii)
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any other Security Documents executed by the Borrower pursuant to this Agreement
or any other Loan Documents.
D. Each of the Security Documents shall be cross-defaulted (i.e., a
default under any Security Document, or under this Agreement, shall constitute a
default under each Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Instrument shall secure all of the
Borrower's obligations under this Agreement and the other Loan Documents issued
in connection with the Credit Facility) and it is the intent of the parties to
this Agreement that the Lender may accelerate any Note without the necessity to
accelerate any other Note and that in the exercise of its rights and remedies
under the Loan Documents, Lender may exercise and perfect any and all of its
rights in and under the Loan Documents with regard to any Mortgaged Property
without the necessity to exercise and perfect its rights and remedies with
respect to any other Mortgaged Property and that any such exercise shall be
without regard to the Allocable Facility Amount assigned to such Mortgaged
Property and that Lender may recover an amount equal to the full amount
outstanding in respect of any of the Notes in connection with such exercise and
any such amount shall be applied as determined by Lender in its sole and
absolute discretion.
E. Subject to the terms, conditions and limitations of this Agreement,
the Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, the Borrower and the Lender, in consideration of the mutual
promises and agreements contained in this Agreement, hereby agree as follows:
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ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Acquiring Person" means a "person" or "group of persons" within the
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meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended.
"Additional Mortgaged Property" means each Multifamily Residential
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Property owned by the Borrower (either in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide) and added to
the Collateral Pool after the Initial Closing Date pursuant to Article VI.
"Advance" means a Revolving Advance or a Base Facility Advance.
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"Advance Confirmation Instrument" shall have the meaning set forth in
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Section 4.02.
"Affiliate" means, with respect to any Person, any other Person (i)
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directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Debt Service Coverage Ratio for the Trailing 12 Month
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Period" means, for any specified date, the ratio (expressed as a
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percentage) of--
(a) the aggregate of the Net Operating Income for the Trailing 12
Month Period for the Mortgaged Properties
to
--
(b) the Facility Debt Service on the specified date.
"Aggregate Loan to Value Ratio for the Trailing 12 Month Period"
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means, for any specified date, the ratio (expressed as a percentage) of--
(a) the Advances Outstanding on the specified date,
to
--
(b) the aggregate of the Valuations most recently obtained prior to
the specified date for all of the Mortgaged Properties.
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"Agreement" means this Master Credit Facility Agreement, as it may be
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amended, supplemented or otherwise modified from time to time, including
all Recitals and Exhibits to this Agreement, each of which is hereby
incorporated into this Agreement by this reference.
"Allocable Facility Amount" means the portion of the Credit Facility
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allocated to a particular Mortgaged Property by Lender in accordance with
this Agreement. Lender shall determine the Allocable Facility Amount for
each Mortgaged Property on the Initial Closing Date and on or before
January 1 of each year (commencing January 1, 2002) during the term of this
Agreement and at such other times as provided by this Agreement (the
"Determination Date"). Once determined by Lender as aforesaid, the
Allocable Facility Amount for each Mortgaged Property shall be promptly
disclosed to Borrower by Lender and shall remain in effect until the next
Determination Date. The Allocable Facility Amount for any Additional
Mortgaged Property shall be 70% of the Valuation of such Mortgaged Property
on the date such Mortgaged Property is added to the Collateral Pool.
"Amortization Period" means, with respect to each Base Facility
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Advance, the period of 30 years.
"Applicable Law" means (a) all applicable provisions of all
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constitutions, statutes, rules, regulations and orders of all governmental
bodies, all Governmental Approvals and all orders, judgments and decrees of
all courts and arbitrators, (b) all zoning, building, environmental and
other laws, ordinances, rules, regulations and restrictions of any
Governmental Authority affecting the ownership, management, use, operation,
maintenance or repair of any Mortgaged Property, including the Americans
with Disabilities Act (if applicable), the Fair Housing Amendment Act of
1988 and Hazardous Materials Laws, (c) any building permits or any
conditions, easements, rights-of-way, covenants, restrictions of record or
any recorded or unrecorded agreement affecting or concerning any Mortgaged
Property including planned development permits, condominium declarations,
and reciprocal easement and regulatory agreements with any Governmental
Authority, (d) all laws, ordinances, rules and regulations, whether in the
form of rent control, rent stabilization or otherwise, that limit or impose
conditions on the amount of rent that may be collected from the units of
any Mortgaged Property, and (e) requirements of insurance companies or
similar organizations, affecting the operation or use of any Mortgaged
Property or the consummation of the transactions to be effected by this
Agreement or any of the other Loan Documents.
"Appraisal" means an appraisal of a Multifamily Residential Property
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or Multifamily Residential Properties conforming to the requirements of
Chapter 5 of Part III of the DUS Guide, and accepted by the Lender.
"Appraised Value" means the value set forth in an Appraisal.
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"Base Facility" means the agreement of the Lender to make Base
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Facility Advances to the Borrower pursuant to Section 3.01.
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"Base Facility Advance" means a loan made by the Lender to the
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Borrower under the Base Facility Commitment.
"Base Facility Availability Period" means the period beginning on the
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Initial Closing Date and ending on the date five (5) years after the
Initial Closing Date.
"Base Facility Commitment" means $0, plus such amount as the Borrower
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may elect to add to the Base Facility Commitment in accordance with
Articles III or VIII.
"Base Facility Fee" means (i) 50 basis points for a Base Facility
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Advance drawn from the Base Facility Commitment initially available
(whether drawn or undrawn) under this Agreement or converted from the
Revolving Facility Commitment during the period ending on the date 12
months after the Initial Closing Date, and (ii) for any Base Facility
Advance drawn from any portion of the Base Facility Commitment increased
under Article VIII or converted from any portion of the Revolving Facility
Commitment after the period ending on the date 12 months after the Initial
Closing Date, the number of basis points determined at the time of such
increase by the Lender as the Base Facility Fee for such Base Facility
Advances, provided that in no event shall the Base Facility Fee for Base
Facility Advances converted from the Revolving Facility Commitment
(expressed as a number of basis points) exceed the Revolving Facility Fee.
"Base Facility Note" means a promissory note, in the form attached as
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Exhibit B to this Agreement, which will be issued by the Borrower to the
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Lender, concurrently with the funding of each Base Facility Advance, to
evidence the Borrower's obligation to repay the Base Facility Advance.
"Borrower" means, individually and collectively, United Dominion
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Realty Trust, Inc., a Virginia corporation, and Woodlake Village, L.P., a
California limited partnership.
"Business Day" means a day on which ▇▇▇▇▇▇ ▇▇▇ is open for business.
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"Calendar Quarter" means, with respect to any year, any of the
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following three month periods: (a) January-February-March; (b)
April-May-June; (c) July-August-September; and (d)
October-November-December.
"Cap Rate" means, for each Mortgaged Property, a capitalization rate
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reasonably selected by the Lender for use in determining the Valuations, as
disclosed to the Borrower from time to time.
"Change of Control" means the earliest to occur of: (a) the date on
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which UDRT shall cease for any reason to be the holder, directly or
indirectly, of at least 70% of the voting interests of any other Borrower
or to own, directly or indirectly at least 70% of the equity, profits or
other partnership interest in, or Voting Equity Capital (or any other
Securities or ownership interests) of any other Borrower, (b) the date on
which an Acquiring Person or Acquiring Persons becomes (by acquisition,
consolidation, merger or otherwise), directly or indirectly, the beneficial
owner of more than, in the aggregate, 30% of the total Voting Equity
Capital (or of any other Securities or ownership interest) of the Borrower
then outstanding, or (c) the replacement (other than solely by reason of
retirement at age sixty
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five or older, death or disability) of more than 50% (or such lesser
percentage as is required for decision-making by the board of directors or
an equivalent governing body) of the members of the board of directors (or
an equivalent governing body) of the Borrower over a one-year period from
the directors who constituted such board of directors at the beginning of
such period and such replacement shall not have been approved by a vote of
at least a majority of the board of directors of the Borrower then still in
office who either were members of such board of directors at the beginning
of such one-year period or whose election as members of the board of
directors was previously so approved (it being understood and agreed that
in the case of any entity governed by a trustee, board of managers, or
other similar governing body, the foregoing clause (c) shall apply thereto
by substituting such governing body and the members thereof for the board
of directors and members thereof, respectively).
"Closing Date" means the Initial Closing Date and each date after the
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Initial Closing Date on which the funding or other transaction requested in
a Request is required to take place.
"Collateral" means, the Mortgaged Properties and other collateral from
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time to time or at any time encumbered by the Security Instruments, or any
other property securing any of the Borrower's obligations under the Loan
Documents.
"Collateral Addition Fee" means, with respect to a Multifamily
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Residential Property added to the Collateral Pool in accordance with
Article VI--
(i) 75 basis points, multiplied by
(ii) 70% of the Initial Valuation of the Multifamily
Residential Property, as determined by the Lender.
provided that no Collateral Addition Fee shall be due and payable until
aggregate Advances (regardless of the amount of Advances Outstanding) in
the amount of $300,000,000 have been made.
"Collateral Addition Loan Documents" means the Security Instrument
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covering an Additional Mortgaged Property and any other documents,
instruments or certificates required by the Lender in connection with the
addition of the Additional Mortgaged Property to the Collateral Pool
pursuant to Article VI.
"Collateral Addition Request" shall have the meaning set forth in
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Section 6.02(a).
"Collateral Pool" means the aggregate total of the Collateral.
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"Collateral Release Request" shall have the meaning set forth in
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Section 7.02(a).
"Collateral Release Property" shall have the meaning set forth in
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Section 7.02(a).
"Commitment" means, at any time, the sum of the Base Facility
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Commitment and the Revolving Facility Commitment.
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"Complete Revolving Facility Termination" shall have the meaning set
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forth in Section 9.02(a).
"Compliance Certificate" means a certificate of the Borrower in the
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form attached as Exhibit D to this Agreement.
"Conversion Documents" has the meaning specified in Section 3.07(b)
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hereof.
"Conversion Request" has the meaning specified in Section 3.07(a)
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hereof.
"Coupon Rate" means, with respect a Revolving Advance, the imputed
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interest rate determined by the Lender pursuant to Section 2.05 for the
Revolving Advance and, with respect a Base Facility Advance, the interest
rate determined by the Lender pursuant to Section 3.05 for the Base
Facility Advance.
"Coverage and LTV Tests" mean, for any specified date, each of the
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following financial tests:
(a) The Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period is not less than 130%.
(b) The Aggregate Loan to Value Ratio for the Trailing
12 Month Period does not exceed 70%.
"Credit Facility" means the Base Facility and the Revolving Facility.
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"Credit Facility Expansion" means an increase in the Commitment made
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in accordance with Article VIII.
"Credit Facility Expansion Loan Documents" means amendments to the
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Revolving Facility Note or the Base Facility Note, as the case may be,
increasing the amount of such Note to the amount of the Commitment, as
expanded in accordance with Article VIII and amendments to the Security
Instruments, increasing the amount secured by such Security Instruments to
the amount of the Commitment.
"Credit Facility Expansion Request" shall have the meaning set forth
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in Section 8.02(a).
"Credit Facility Termination Request" shall have the meaning set forth
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in Section 10.02(a).
"Debt Service Coverage Ratio for the Trailing 12 Month Period" means,
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for any Mortgaged Property, for any specified date, the ratio (expressed as
a percentage) of --
(a) the aggregate of the Net Operating Income for the Trailing 12
Month Period for the subject Mortgaged Property
to
--
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(b) the Facility Debt Service on the specified date, assuming,
for the purpose of calculating the Facility Debt Service for this
definition, that Advances Outstanding shall be the Allocable
Facility Amount for the subject Mortgaged Property.
"Discount" means, with respect to any Revolving Advance, an amount
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equal to the excess of --
(i) the face amount of the MBS backed by the Revolving Advance,
over
(ii) the Price of the MBS backed by the Revolving Advance.
"DUS Guide" means the ▇▇▇▇▇▇ Mae Multifamily Delegated Underwriting
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and Servicing (DUS) Guide, as such Guide may be amended from time to time,
including exhibits to the DUS Guide and amendments in the form of Lender
Memos, Guide Updates and Guide Announcements (and, if such Guide is no
longer used by ▇▇▇▇▇▇ ▇▇▇, the term "DUS Guide" as used in this Agreement
means the ▇▇▇▇▇▇ Mae Multifamily Negotiated Transactions Guide, as such
Guide may be amended from time to time, including amendments in the form of
Lender Memos, Guide Updates and Guide Announcements). All references to
specific articles and sections of, and exhibits to, the DUS Guide shall be
deemed references to such articles, sections and exhibits as they may be
amended, modified, updated, superseded, supplemented or replaced from time
to time.
"DUS Underwriting Requirements" means the overall underwriting
-----------------------------
requirements for Multifamily Residential Properties as set forth in the DUS
Guide.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default" means any event defined to be an "Event of Default"
----------------
under Article XVII.
"Facility Debt Service" means, as of any specified date, the sum of:
---------------------
(a) the amount of interest and principal amortization, during the 12
month period immediately succeeding the specified date, with
respect to the Advances Outstanding on the specified date,
except that, for these purposes:
(i) each Revolving Advance shall be deemed to require level
monthly payments of principal and interest (at the
Coupon Rate for the Revolving Advance) in an amount
necessary to fully amortize the original principal
amount of the Revolving Advance over a 30-year period,
with such amortization deemed to commence on the first
day of the 12 month period; and
(ii) each Base Facility Advance shall require level monthly
payments of principal and interest (at the Coupon Rate
for the Base Facility Advance) in an amount necessary
to fully amortize the original principal amount of the
Base Facility Advance over a 30-year period,
-7-
with such amortization to commence on the first day of the
12 month period; and
(b) the amount of the Standby Fees payable to the Lender pursuant to
Section 16.01 during such 12 month period (assuming, for these
purposes, that the Advances Outstanding throughout the 12 month
period are always equal to the amount of Advances Outstanding on
the specified date).
Exhibit E to this Agreement contains an example of the determination of the
---------
Facility Debt Service.
"Facility Termination Fee" means, with respect to a reduction in the
------------------------
Revolving Facility Commitment pursuant to Articles IX or X, an amount equal
to the product obtained by multiplying--
(1) the reduction in the Revolving Facility Commitment, by
(2) the Revolving Facility Fee in effect at such time, by
(3) the present value factor calculated using the following formula:
1 - (1 + r)/-n/
---------------
r
[r = Yield Rate
n= the number of years, and any fraction thereof, remaining between
the Closing Date for the reduction in the Revolving Facility
Commitment and the Revolving Facility Termination Date]
The "Yield Rate" means the rate on the Three-Month LIBOR on the second
Business Day preceding, as applicable, (x) the date of the reduction in the
Commitment, (y) the date of the Complete Facility Termination or (z) the
date of Lender's acceleration of the unpaid principal balance of the
Facility Note.
"▇▇▇▇▇▇ ▇▇▇" means the federally-chartered and stockholder-owned
----------
corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. (S) 1716 et seq.
"Financial Covenants" means the covenants set forth in Article XV.
-------------------
"Future Advance" means an Advance made after the Initial Closing Date.
--------------
"Future Advance Request" shall have the meaning set forth in Section
----------------------
5.02.
"GAAP" means generally accepted accounting principles in the United
----
States in effect from time to time, consistently applied.
"General Conditions" shall have the meaning set forth in Article XI.
------------------
-8-
"Geographical Diversification Requirements" means, from and
-----------------------------------------
after the date on which the Collateral Pool first consists of ten (10)
or more Mortgaged Properties, and prior to the occurrence of an
increase in the Commitment pursuant to Article VIII, a requirement that
the Collateral Pool consist of at least nine (9) Mortgaged Properties
located in at least five (5) SMSA's and, upon the occurrence of any
increase in the Commitment pursuant to Article VIII, such requirements
as to the geographical diversity of the Collateral Pool as the Lender
may reasonably determine and notify Borrower of prior to the time of
the increase.
"Governmental Approval" means an authorization, permit,
---------------------
consent, approval, license, registration or exemption from registration
or filing with, or report to, any Governmental Authority.
"Governmental Authority" means any court, board, agency,
----------------------
commission, office or authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Revenues" means, for any specified period, with respect
--------------
to any Multifamily Residential Property, all income in respect of such
Multifamily Residential Property, as determined by the Lender in
accordance with the method described in paragraph 3 of Section 403.02
of Part III of the DUS Guide, except that for these purposes the
financial statements to be used need not be audited and paragraph (b)
of such paragraph 3 shall be taken into account in the Lender's
discretion.
"Hazardous Materials", with respect to any Mortgaged Property,
-------------------
shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"Hazardous Materials Law", with respect to any Mortgaged
-----------------------
Property, shall have the meaning given that term in the Security
Instrument encumbering the Mortgaged Property.
"Hazardous Substance Activity" means any storage, holding,
----------------------------
existence, release, spill, leaking, pumping, pouring, injection,
escaping, deposit, disposal, dispersal, leaching, migration, use,
treatment, emission, discharge, generation, processing, abatement,
removal, disposition, handling or transportation of any Hazardous
Materials from, under, into or on any Mortgaged Property in violation
of Hazardous Materials Laws, including the discharge of any Hazardous
Materials emanating from any Mortgaged Property in violation of
Hazardous Materials Laws through the air, soil, surface water,
groundwater or property and also including the abandonment or disposal
of any barrels, containers and other receptacles containing any
Hazardous Materials from or on any Mortgaged Property in violation of
Hazardous Materials Laws, in each case whether sudden or nonsudden,
accidental or nonaccidental.
"Impositions" means, with respect to any Mortgaged Property,
-----------
all (1) water and sewer charges which, if not paid, may result in a
lien on all or any part of the Mortgaged Property, (2) premiums for
fire and other hazard insurance, rent loss insurance and such other
insurance as Lender may require under any Security Instrument, (3)
Taxes, and (4) amounts for other charges and expenses which Lender at
any time reasonably deems
-9-
necessary to protect the Mortgaged Property, to prevent the imposition
of liens on the Mortgaged Property, or otherwise to protect Lender's
interests.
"Indebtedness" means, with respect to any Person, as of any
------------
specified date, without duplication, all:
(a) indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices);
(b) other indebtedness of such Person which is
evidenced by a note, bond, debenture or similar instrument;
(c) obligations of such Person under any lease of
property, real or personal, the obligations of the lessee in respect of
which are required by GAAP to be capitalized on a balance sheet of the
lessee or to be otherwise disclosed as such in a note to such balance
sheet;
(d) obligations of such Person in respect of
acceptances (as defined in Article 3 of the Uniform Commercial Code of
the Commonwealth of Virginia) issued or created for the account of such
Person;
(e) liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment of such liabilities; and
(f) as to any Person ("guaranteeing person"), any
-------------------
obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation
of a primary obligation (as defined below) with respect to which the
guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing, or in effect
guaranteeing, any indebtedness, lease, dividend or other obligation
("primary obligations") of any third person ("primary obligor") in any
------------------- ---------------
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (2) advance or supply funds for the purchase or
payment of any such primary obligation or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (3) purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (4) otherwise assure or
hold harmless the owner of any such primary obligation against loss in
respect of the primary obligation, provided, however, that the term
"Contingent Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any guaranteeing person shall be
deemed to be the lesser of (i) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made and (ii) the maximum amount for which
such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such
-10-
Contingent Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Contingent Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by Owner in good faith.
"Initial Advance" means the Revolving Advance made on the
---------------
Initial Closing Date in the amount of $30,900,000.
"Initial Advance Request" shall have the meaning set forth in
-----------------------
Section 5.01.
"Initial Closing Date" means the date of this Agreement.
--------------------
"Initial Mortgaged Properties" means the Multifamily
----------------------------
Residential Properties described on Exhibit A to this Agreement and
which represent the Multifamily Residential Properties which are made
part of the Collateral Pool on the Initial Closing Date.
"Initial Security Instruments" means the Security Instruments
----------------------------
covering the Initial Mortgaged Properties.
"Initial Valuation" means, when used with reference to
-----------------
specified Collateral, the Valuation initially performed for the
Collateral as of the date on which the Collateral was added to the
Collateral Pool. The Initial Valuation for each of the Initial
Mortgaged Properties is as set forth in Exhibit A to this Agreement.
"Insurance Policy" means, with respect to a Mortgaged
----------------
Property, the insurance coverage and insurance certificates evidencing
such insurance required to be maintained pursuant to the Security
Instrument encumbering the Mortgaged Property.
"Internal Revenue Code" means the Internal Revenue Code of
---------------------
1986, as amended. Each reference to the Internal Revenue Code shall be
deemed to include (a) any successor internal revenue law and (b) the
applicable regulations whether final, temporary or proposed.
"Lease" means any lease, any sublease or subsublease, license,
-----
concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of
any space in any Mortgaged Property, and every modification, amendment
or other agreement relating to such lease, sublease, subsublease or
other agreement entered into in connection with such lease, sublease,
subsublease or other agreement, and every guarantee of the performance
and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.
"Lender" shall have the meaning set forth in the first
------
paragraph of this Agreement, but shall refer to any replacement Lender
if the initial Lender is replaced pursuant to the terms of Section
19.04.
"Lien" means any mortgage, pledge, hypothecation, assignment,
----
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference,
-11-
priority or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement,
any financing or similar statement or notice filed under the Uniform
Commercial Code as adopted and in effect in the relevant jurisdiction
or other similar recording or notice statute, and any lease in the
nature thereof).
"Loan Documents" means this Agreement, the Notes, the Advance
--------------
Confirmation Instruments for the Revolving Advances, the Security
Documents, all documents executed by the Borrower pursuant to the
General Conditions set forth in Article XI of this Agreement and any
other documents executed by the Borrower from time to time in
connection with this Agreement or the transactions contemplated by this
Agreement.
"Loan to Value Ratio for the Trailing 12 Month Period" means,
----------------------------------------------------
for a Mortgaged Property, for any specified date, the ratio (expressed
as a percentage) of --
(a) the Allocable Facility Amount of the subject Mortgaged
Property on the specified date,
to
--
(b) the Valuation most recently obtained prior to the
specified date for the subject Mortgaged Property.
"Loan Year" means the 12-month period from the first day of
---------
the first calendar month after the Initial Closing Date to and
including the last day before the first anniversary of the Initial
Closing Date, and each 12-month period thereafter.
"Material Adverse Effect" means, with respect to any
-----------------------
circumstance, act, condition or event of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with any
other event or events, act or acts, condition or conditions, or
circumstance or circumstances, whether or not related, a material
adverse change in or a materially adverse effect upon any of (a) the
business, operations, property or condition (financial or otherwise) of
the Borrower, (b) the present or future ability of the Borrower to
perform the Obligations for which it is liable, (c) the validity,
priority, perfection or enforceability of this Agreement or any other
Loan Document or the rights or remedies of the Lender under any Loan
Document, or (d) the value of, or the Lender's ability to have recourse
against, any Mortgaged Property.
"MBS" means a mortgage-backed security which is "backed" by an
---
Advance which is secured by an interest in the Notes and the Collateral
Pool securing the Notes, which interest permits the holder of the MBS
to participate in the Notes and the Collateral Pool to the extent of
such Advance.
"MBS Imputed Interest Rate" shall have the meaning set forth
-------------------------
in Section 2.05(a).
"MBS Issue Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS is
--------------
issued by ▇▇▇▇▇▇ Mae.
-12-
"MBS Delivery Date" means the date on which a ▇▇▇▇▇▇ ▇▇▇ MBS
-----------------
is delivered by ▇▇▇▇▇▇ Mae.
"MBS Pass-Through Rate" for a Base Facility Advance means the
---------------------
interest rate as determined by the Lender (rounded to three places)
payable in respect of the ▇▇▇▇▇▇ ▇▇▇ MBS issued pursuant to the MBS
Commitment backed by the Base Facility Advance as determined in
accordance with Section 4.01.
"Mortgaged Properties" means, collectively, the Additional
--------------------
Mortgaged Properties and the Initial Mortgaged Properties, but
excluding each Collateral Release Property from and after the date of
the release of the Collateral Release Property from the Collateral
Pool.
"Multifamily Residential Property" means a residential
--------------------------------
property, located in the United States, containing five or more
dwelling units in which not more than twenty percent (20%) of the net
rentable area is or will be rented to non-residential tenants, and
conforming to the requirements of Sections 201 and 203 of Part III of
the DUS Guide.
"Net Operating Income" means, for any specified period, with
--------------------
respect to any Multifamily Residential Property, the aggregate net
income during such period equal to Gross Revenues during such period
less the aggregate Operating Expenses during such period. If a
Mortgaged Property is not owned by the Borrower for the entire
specified period, the Net Operating Income for the Mortgaged Property
for the time within the specified period during which the Mortgaged
Property was owned by the Borrower shall be the Mortgaged Property's
pro forma net operating income determined by the Lender in accordance
with the underwriting procedures set forth in Chapter 4 of Part III of
the DUS Guide.
"Note" means a Base Facility Note or the Revolving Facility
----
Note.
"Obligations" means the aggregate of the obligations of the
-----------
Borrower under this Agreement and the other Loan Documents.
"Operating Expenses" means, for any period, with respect to
------------------
any Multifamily Residential Property, all expenses in respect of the
Multifamily Residential Property, as determined by the Lender in
accordance with the method described in paragraph 3 of Section 403.02
of Part III of the DUS Guide (Estimated Expenses), including
replacement reserves, if any, under the Replacement Reserve Agreements
for the Mortgaged Properties.
"Organizational Certificate" means a certificate of the
--------------------------
Borrower in the form attached as Exhibit F to this Agreement.
---------
"Organizational Documents" means all certificates, instruments
------------------------
and other documents pursuant to which an organization is organized or
operates, including but not limited to, (i) with respect to a
corporation, its articles of incorporation and bylaws, (ii) with
respect to a limited partnership, its limited partnership certificate
and partnership agreement, (iii) with respect to a general partnership
or joint venture, its partnership or joint venture agreement and (iv)
with respect to a limited liability company, its articles of
organization and operating agreement.
-13-
"Outstanding" means, when used in connection with promissory notes,
-----------
other debt instruments or Advances, for a specified date, promissory notes
or other debt instruments which have been issued, or Advances which have
been made, but have not been repaid in full as of the specified date.
"Ownership Interests" means, with respect to any entity, any ownership
-------------------
interests in the entity and any economic rights (such as a right to
distributions, net cash flow or net income) to which the owner of such
ownership interests is entitled.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permits" means all permits, or similar licenses or approvals issued
-------
and/or required by an applicable Governmental Authority or any Applicable
Law in connection with the ownership, use, occupancy, leasing, management,
operation, repair, maintenance or rehabilitation of any Mortgaged Property
or the Borrower's business.
"Permitted Liens" means, with respect to a Mortgaged Property, (i) the
---------------
exceptions to title to the Mortgaged Property set forth in the Title
Insurance Policy for the Mortgaged Property which are approved by the
Lender, (ii) the Security Instrument encumbering the Mortgaged Property,
and (iii) any other Liens approved by the Lender.
"Person" means an individual, an estate, a trust, a corporation, a
------
partnership, a limited liability company or any other organization or
entity (whether governmental or private).
"Potential Event of Default" means any event which, with the giving of
--------------------------
notice or the passage of time, or both, would constitute an Event of
Default.
"Price" means, with respect to an Advance, the proceeds of the sale of
-----
the MBS backed by the Advance.
"Property" means any estate or interest in any kind of property or
--------
asset, whether real, personal or mixed, and whether tangible or intangible.
"Rate Confirmation Form" shall have the meaning set forth in Section
----------------------
4.01(c).
"Rate Setting Date" shall have the meaning set forth in Section
-----------------
4.01(b).
"Rate Setting Form" shall have the meaning set forth in Section
-----------------
4.01(b).
"Release Price" shall have the meaning set forth in Section 7.02(c).
-------------
"Rent Roll" means, with respect to any Multifamily Residential
---------
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on ▇▇▇▇▇▇ ▇▇▇ Form 4243, as set forth in
Exhibit III-3 of the DUS Guide, or on another form approved by the Lender
and containing substantially the same information as Form 4243 requires.
-14-
"Replacement Reserve Agreement" means a Replacement Reserve and
-----------------------------
Security Agreement, reasonably required by the Lender, and completed in
accordance with the requirements of the DUS Guide.
"Request" means a Collateral Addition Request, a Collateral Release
-------
Request, a Conversion Request, a Credit Facility Expansion Request, a
Credit Facility Termination Request, a Future Advance Request, an Initial
Advance Request or a Revolving Facility Termination Request.
"Revolving Advance" means a loan made by the Lender to the Borrower
-----------------
under the Revolving Facility Commitment.
"Revolving Credit Endorsement" means an endorsement to a Title
----------------------------
Insurance Policy which contains substantially the same coverages, and is
subject to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as Exhibit H to
---------
this Agreement.
"Revolving Facility" means the agreement of the Lender to make
------------------
Advances to the Borrower pursuant to Section 2.01.
"Revolving Facility Availability Period" means the period beginning on
--------------------------------------
the Initial Closing Date and ending on the 90th day before the Revolving
Facility Termination Date.
"Revolving Facility Commitment" means an aggregate amount of
-----------------------------
$300,000,000 which shall be evidenced by the Revolving Facility Note in the
form attached hereto as Exhibit I, plus such amount as the Borrower may
---------
elect to add to the Revolving Facility Commitment in accordance with
Article VIII, and less such amount as the Borrower may elect to convert
from the Revolving Facility Commitment to the Base Facility Commitment in
accordance with Article III and less such amount by which the Borrower may
elect to reduce the Revolving Facility Commitment in accordance with
Article IX.
"Revolving Facility Fee" means (i) 60 basis points per annum for a
----------------------
Revolving Advance drawn from the Revolving Facility Commitment available
(whether drawn or undrawn) under this Agreement during the period ending on
the date 12 months after the Initial Closing Date, (ii) for any extended
term of the Revolving Facility, the number of basis points per annum
determined by the Lender as the Revolving Facility Fee for such period,
which fee shall be set by Lender not less than 30 days prior to the
commencement of such period, and (iii) for any Revolving Advance drawn from
any portion of the Revolving Facility Commitment increased under Article
VIII after the date 12 months after the Initial Closing Date, the number of
basis points per annum determined at the time of such increase by the
Lender as the Revolving Facility Fee for such Revolving Advances.
"Revolving Facility Note" means the promissory note, in the form
-----------------------
attached as Exhibit I to this Agreement, which has been issued by the
---------
Borrower to the Lender to evidence the Borrower's obligation to repay
Revolving Advances.
"Revolving Facility Termination Date" means the last day of the tenth
-----------------------------------
Loan Year, as such date may be extended pursuant to Section 2.07 of this
Agreement.
-15-
"Security" means a "security" as set forth in Section 2(1) of the
--------
Securities Act of 1933, as amended.
"Security Documents" means the Security Instruments, the Replacement
------------------
Reserve Agreements and any other documents executed by a Borrower from time
to time to secure any of the Borrower's obligations under the Loan
Documents.
"Security Instrument" means, for each Mortgaged Property, a separate
-------------------
Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of
Leases and Rents and Security Agreement given by the Borrower to or for the
benefit of the Lender to secure the obligations of the Borrower under the
Loan Documents. With respect to each Mortgaged Property owned by the
Borrower, the Security Instrument shall be substantially in the form
published by ▇▇▇▇▇▇ Mae for use in the state in which the Mortgaged
Property is located. The amount secured by the Security Instrument shall be
equal to the Commitment in effect from time to time.
"Senior Management" means (i) the Chief Executive Officer, Chairman of
-----------------
the Board, President, Chief Financial Officer and Chief Operating Officer
of UDRT, and (ii) any other individuals with responsibility for any of the
functions typically performed in a corporation by the officers described in
clause (i).
"SMSA" means a "standard metropolitan statistical area," as defined
----
from time to time by the United States Office of Management and Budget.
"Standby Fee" means, for any month, an amount equal to the product
-----------
obtained by multiplying: (i) 1/12, by (ii) 12.5 basis points, by (iii) the
Unused Capacity for such month.
"Subsidiary" means, as to any Person, any corporation, partnership,
----------
limited liability company or other entity of which securities or other
ownership interest having an ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person. Unless otherwise
provided, references to a "Subsidiary" or "Subsidiaries" shall mean a
Subsidiary or Subsidiaries of the Borrower.
"Surveys" means the as-built surveys of the Mortgaged Properties
-------
prepared in accordance with the requirements of Section 113 of the DUS
Guide, or otherwise approved by the Lender.
"Taxes" means all taxes, assessments, vault rentals and other charges,
-----
if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are
levied, assessed or imposed by any public authority or quasi-public
authority, and which, if not paid, will become a lien, on the Mortgaged
Properties.
"Term of this Agreement" shall be determined as provided in Section
----------------------
23.10 to this Agreement.
"Termination Date" means, at any time during which Base Facility
----------------
Advances are Outstanding, the latest maturity date for any Base Facility
Advance Outstanding, and, at any
-16-
time during which Base Facility Advances are not Outstanding, the Revolving
Facility Termination Date.
"Three-Month LIBOR" means the London interbank offered rate for
-----------------
three-month U.S. dollar deposits, as such rate is reported in The Wall
Street Journal. In the event that a rate is not published for the
Three-Month LIBOR, then the nearest equivalent duration London interbank
offered rate for U.S. Dollar deposits shall be selected at Lender's
reasonable discretion. If the publication of Three-Month LIBOR is
discontinued, Lender shall determine such rate from another source
reasonably selected by Lender which reasonably correlates (as to rate and
volatility) historically to Three-Month LIBOR.
"Tie-In Endorsement" means an endorsement to a Title Insurance Policy
------------------
which contains substantially the same coverages, and is subject to
substantially the same or fewer exceptions (or such other exceptions as the
Lender may approve), as the form attached as Exhibit J to this Agreement.
"Title Company" means Fidelity National Title Insurance Corporation.
-------------
"Title Insurance Policies" means the mortgagee's policies of title
------------------------
insurance issued by the Title Company from time to time relating to each of
the Security Instruments, conforming to the requirements of Section 111 of
the DUS Guide, together with such endorsements, coinsurance, reinsurance
and direct access agreements with respect to such policies as the Lender
may, from time to time, consider necessary or appropriate, whether or not
required by the DUS Guide, including Revolving Credit Endorsements, if
available, and Tie-In Endorsements, if available, and with a limit of
liability under the policy (subject to the limitations contained in
Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the
policy) equal to the Commitment.
"Trailing 12 Month Period" means, for any specified date, the 12 month
------------------------
period ending with the last day of the most recent Calendar Quarter for
which financial statements have been delivered by the Borrower to the
Lender pursuant to Sections 13.04(c) and (d).
"Transfer" means a sale, assignment, lease, pledge, transfer or other
--------
disposition (whether voluntary or by operation of law) of, or the granting
or creating of a lien, encumbrance or security interest in, any estate,
rights, title or interest in a Mortgaged Property, or any portion thereof.
"Transfer" does not include (i) a conveyance of the Mortgaged Property at a
judicial or non-judicial foreclosure sale under any Security Instrument or
(ii) the Mortgaged Property becoming part of a bankruptcy estate by
operation of law under the United States Bankruptcy Code.
"Unused Capacity" means, for any month, the sum of the daily average
---------------
during such month of the undrawn amount of the Commitment available under
this Agreement, without regard to any unclosed Requests or to the fact that
a Request must satisfy conditions precedent.
"Valuation" means, for any specified date, with respect to a
---------
Multifamily Residential Property, (a) if an Appraisal of the Multifamily
Residential Property was more recently obtained than a Cap Rate for the
Multifamily Residential Property, the Appraised Value of
-17-
such Multifamily Residential Property, or (b) if a Cap Rate for the
Multifamily Residential Property was more recently obtained than an
Appraisal of the Multifamily Residential Property, the value derived by
dividing--
(i) the Net Operating Income of such Multifamily Residential Property
for the Trailing 12 Month Period, by
(ii) the most recent Cap Rate determined by the Lender.
Notwithstanding the foregoing, any Valuation for a Multifamily Residential
Property calculated for a date occurring before the first anniversary of
the date on which the Multifamily Residential Property becomes a part of
the Collateral Pool shall equal the Appraised Value of such Multifamily
Residential Property, unless the Lender determines that changed market or
property conditions warrant that the value be determined as set forth in
the preceding sentence. Any special risk factors taken into account in
connection with the Initial Valuation of a Multifamily Residential Property
shall apply to any subsequent Valuation of such Multifamily Residential
Property unless Lender shall determine that such special risk factor no
longer applies to such Multifamily Residential Property. If the Borrower
does not accept Lender's Valuation, the Borrower may require that the
Lender obtain an additional Appraisal, if an Appraisal was the basis of the
Valuation, or two Appraisals, if a Cap Rate was the basis of the Valuation.
If the two appraisers do not agree on the valuation of the Mortgaged
Property, the Lender shall appoint a third appraiser. If a third appraiser
is appointed, such appraiser shall, within 30 days after appointment,
decide which one of the valuations determined by the other two appraisers
is closer to the valuation of the Mortgaged Property and the valuation so
selected by the third appraiser shall be binding on the parties as the
Valuation. The Borrower shall pay all of the Lender's costs of obtaining
any Appraisal or engaging any appraiser pursuant to this Section.
"Voting Equity Capital" means Securities or partnership interests of
---------------------
any class or classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the board of directors
(or Persons performing similar functions).
ARTICLE II
THE REVOLVING FACILITY COMMITMENT
SECTION 2.01 Revolving Facility Commitment. Subject to the terms, conditions and
-----------------------------
limitations of this Agreement, the Lender agrees to make Revolving Advances to
the Borrower from time to time during the Revolving Facility Availability
Period. The aggregate unpaid principal balance of the Revolving Advances
Outstanding at any time shall not exceed the Revolving Facility Commitment.
Subject to the terms, conditions and limitations of this Agreement, the Borrower
may re-borrow any amounts under the Revolving Facility which it has previously
borrowed and repaid under the Revolving Facility. The Borrower shall be entitled
to Revolving Advances based on increased Valuations of the Mortgaged Properties.
SECTION 2.02 Requests for Revolving Advances. The Borrower shall request a
-------------------------------
Revolving Advance by giving the Lender an Initial Advance Request in accordance
with Section 5.01 or a Future Advance Request in accordance with Section 5.02,
as applicable.
-18-
SECTION 2.03 Maturity Date of Revolving Advances. Regardless of the date on
-----------------------------------
which a Revolving Advance is made, the maturity date of each Revolving Advance
shall be a date selected by the Borrower in its Request for the Revolving
Advance, which date shall be the first day of a calendar month occurring:
(a) no earlier than the date which completes one full month after the
Closing Date for the Revolving Advance; and
(b) no later than the date which completes nine full months after the
Closing Date for the Revolving Advance.
For these purposes, a year shall be deemed to consist of 12 30-day months. For
example, the date which completes three full months after September 15 shall be
December 15; and the date which completes three full months after November 30
shall be February 28 or February 29 in 2000 and any leap year thereafter.
SECTION 2.04 Interest on Revolving Facility Advances.
---------------------------------------
(a) Discount. Each Revolving Advance shall be a discount loan. The
--------
original stated principal amount of a Revolving Advance shall be the sum of the
Price of the Revolving Advance and the Discount of the Revolving Advance. The
Price and Discount of each Revolving Advance shall be determined in accordance
with the procedures set out in Section 4.01. The proceeds of the Revolving
Advance made available by the Lender to the Borrower will equal the Price of the
Revolving Advance. The entire unpaid principal of each Revolving Advance shall
be due and payable by the Borrower to the Lender on the maturity date of the
Revolving Advance. However, if the Borrower has requested that the maturing
Revolving Advance (in whole or in part) be renewed with a new Revolving Advance
or converted to a Base Facility Advance, to take effect on the maturity date of
the maturing Revolving Advance, then the amount the Borrower is required to pay
on account of the maturing Revolving Advance will be reduced by, as the case
may, that amount of the Price of the new Revolving Advance allocable to the
principal of the maturing Revolving Advance being renewed, or that amount of the
net proceeds of the MBS related to the Base Facility Advance then converted from
the maturing Revolving Advance.
(b) Partial Month Interest. Notwithstanding anything to the contrary
----------------------
in this Section, if a Revolving Advance is not made on the first day of a
calendar month, and the MBS Issue Date for the MBS backed by the Revolving
Advance is the first day of the month following the month in which the Revolving
Advance is made, the Borrower shall pay interest on the original stated
principal amount of the Revolving Advance for the partial month period
commencing on the Closing Date for the Revolving Advance and ending on the last
day of the calendar month in which the Closing Date occurs, at a rate per annum
equal to the greater of (i) the Coupon Rate for the Revolving Advance as
determined in accordance with Section 2.05(b) and (ii) a rate reasonably
determined by the Lender, based on the Lender's cost of funds and approved in
advance, in writing, by the Borrower, pursuant to the procedures mutually agreed
upon by the Borrower and the Lender.
(c) Revolving Facility Fee. In addition to paying the Discount and
----------------------
the partial month interest, if any, the Borrower shall pay monthly installments
of the Revolving Facility Fee to the Lender on account of each Revolving Advance
over the whole number of calendar months the
-19-
MBS backed by the Revolving Advance is to run from the MBS Issue Date to the
maturity date of the MBS. The Revolving Facility Fee shall be payable in
advance, in accordance with the terms of the Revolving Facility Note. The first
installment shall be payable on or prior to the Closing Date for the Revolving
Advance and shall apply to the first full calendar month of the MBS backed by
the Revolving Advance. Subsequent installments shall be payable on the first day
of each calendar month, commencing on the first day of the second full calendar
month of such MBS, until the maturity of such MBS. Each installment of the
Revolving Facility Fee shall be in an amount equal to the product of multiplying
(i) the Revolving Facility Fee, by (ii) the amount of the Revolving Advance, by
(iii) 1/12.
SECTION 2.05 Coupon Rates for Revolving Advances. The Coupon Rate for a
-----------------------------------
Revolving Advance shall be a rate, per annum, as follows:
(a) The Coupon Rate for a Revolving Advance shall equal the sum of
(i) an interest rate as determined by the Lender (rounded to three places)
payable for the ▇▇▇▇▇▇ ▇▇▇ MBS pursuant to the MBS Commitment backed by the
Revolving Advance ("MBS Imputed Interest Rate") and (ii) the Revolving Facility
Fee.
(b) Notwithstanding anything to the contrary in this Section, if a
Revolving Advance is not made on the first day of a calendar month, and the MBS
Issue Date for the MBS backed by the Revolving Advance is the first day of the
month following the month in which the Revolving Advance is made, the Coupon
Rate for such Revolving Advance for such period shall be the greater of (i) the
rate for the Revolving Advance determined in accordance with subsection (a) of
this Section and (ii) a rate determined by the Lender, based on the Lender's
cost of funds, and approved in advance, in writing, by the Borrower, pursuant to
procedures mutually agreed upon by the Borrower and the Lender.
SECTION 2.06 Revolving Facility Note. The obligation of the Borrower to repay
-----------------------
the Revolving Advances will be evidenced by the Revolving Facility Note. The
Revolving Facility Note shall be payable to the order of the Lender and shall be
made in the aggregate amount of the Revolving Facility Commitment.
SECTION 2.07 Extension of Revolving Facility Termination Date. The Borrower
------------------------------------------------
shall have the right to extend the Revolving Facility Termination Date for one
(1) five (5) year period upon satisfaction of each of the following conditions:
(a) The Borrower provides written notice to the Lender not less than
thirty (30) nor more than ninety (90) days prior to the then effective Revolving
Facility Termination Date requesting that the Revolving Facility Termination
Date be extended.
(b) No Event of Default or Potential Event of Default exists on
either the date the notice required by paragraph (a) of this Section is given or
on the then effective Revolving Facility Termination Date.
(c) All of the representations and warranties of the Borrower set
forth in Article XII of this Agreement and the Other Loan Documents are true and
correct in all material respects on the date the notice required by paragraph
(a) of this Section is given and on the then effective Revolving Facility
Termination Date.
-20-
(d) The relevant Borrower is in compliance with all of the covenants
set forth in Article XIII, Article XIV and Article XV on the date the notice
required by paragraph (a) of this Section is given and on the then effective
Revolving Facility Termination Date.
Upon receipt of the notice required in paragraph (a) of this Section and upon
compliance with the other conditions set forth above, the Revolving Facility
Termination Date shall be extended for five (5) years on the terms and
conditions set forth in this Agreement and the Other Loan Documents, provided
that the maturity and pricing applicable to the Revolving Facility during the
period after the then effective Revolving Facility Termination Date shall be
acceptable to Lender in its discretion.
ARTICLE III
THE BASE FACILITY COMMITMENT
SECTION 3.01 Base Facility Commitment. Subject to the terms, conditions and
------------------------
limitations set forth in this Article, the Lender agrees to make Base Facility
Advances to the Borrower from time to time during the Base Facility Availability
Period. The aggregate original principal of the Base Facility Advances shall not
exceed the Base Facility Commitment. The borrowing of a Base Facility Advance
shall permanently reduce the Base Facility Commitment by the original principal
amount of the Base Facility Advance. The Borrower may not re-borrow any part of
the Base Facility Advance which it has previously borrowed and repaid. The
Borrower shall be entitled to Base Facility Advances based on increased
Valuations of the Mortgaged Properties.
SECTION 3.02 Requests for Base Facility Advances. The Borrower shall request a
-----------------------------------
Base Facility Advance by giving the Lender an Initial Advance Request in
accordance with Section 5.01 or a Future Advance Request in accordance with
Section 5.02, as applicable.
SECTION 3.03 Maturity Date of Base Facility Advances. The maturity date of each
---------------------------------------
Base Facility Advance shall be the maturity date selected by the Borrower at the
time of the making of each such Base Facility Advance, provided that such
maturity date shall not be earlier than the 5th anniversary of such Base
Facility Advance nor later than the 15/th/ anniversary of the Initial Closing
Date.
SECTION 3.04 Interest on Base Facility Advances.
----------------------------------
(a) Advances. Each Base Facility Advance shall bear interest at a
--------
rate, per annum, equal to the sum of (i) the MBS Pass-Through Rate determined
for such Base Facility Advance and (ii) the Base Facility Fee.
(b) Partial Month Interest. Notwithstanding anything to the contrary
----------------------
in this Section, if a Base Facility Advance is not made on the first day of a
calendar month, and the MBS Issue Date for the MBS backed by the Base Facility
Advance is the first day of the month following the month in which the Base
Facility Advance is made, the Borrower shall pay interest on the original stated
principal amount of the Base Facility Advance for the partial month period
commencing on the Closing Date for the Base Facility Advance and ending on the
last day of the calendar month in which the Closing Date occurs at a rate, per
annum, equal to the greater of (i) the interest rate for the Base Facility
Advance described in the first sentence of this Section and (ii) a rate
reasonably determined by the Lender, based on the Lender's cost of funds, and
approved in
-21-
advance, in writing, by the Borrower, pursuant to procedures mutually agreed
upon by the Borrower and the Lender.
SECTION 3.05 Coupon Rates for Base Facility Advances. The Coupon Rate for a Base
---------------------------------------
Facility Advance shall be the rate of interest applicable to such Base Facility
Advance pursuant to Section 3.04.
SECTION 3.06 Base Facility Note. The obligation of the Borrower to repay a Base
------------------
Facility Advance will be evidenced by a Base Facility Note. The Base Facility
Notes shall be payable to the order of the Lender and shall be made in the
original principal amount of each Base Facility Advance.
SECTION 3.07 Conversion of Commitment from Revolving Facility Commitment to Base
-------------------------------------------------------------------
Facility Commitment. The Borrower shall have the right, from time to time during
-------------------
the Base Facility Availability Period, to convert all or a portion of a
Revolving Facility Commitment to the Base Facility Commitment, in which event
the Revolving Facility Commitment shall be reduced by, and the Base Facility
Commitment shall be increased by, the amount of the conversion.
(a) Request. In order to convert all or a portion of the Revolving
-------
Facility Commitment to the Base Facility Commitment, the Borrower shall deliver
a written request for a conversion ("Conversion Request") to the Lender, in the
------------------
form attached as Exhibit K to this Agreement. Each Conversion Request shall be
---------
accompanied by a designation of the amount of the conversion and a designation
of any Revolving Advances Outstanding which will be prepaid on or before the
Closing Date for the conversion as required by Section 3.08(c).
(b) Closing. If none of the limitations contained in Section 3.08 is
-------
violated, and all conditions contained in Section 3.09 are satisfied, the Lender
shall permit the requested conversion, at a closing to be held at offices
designated by the Lender on a Closing Date selected by the Lender, and occurring
within 30 Business Days after the Lender's receipt of the Conversion Request (or
on such other date to which the Borrower and the Lender may agree), by executing
and delivering, all at the sole cost and expense of the Borrower, an amendment
to this Agreement, in the form attached as Exhibit L to this Agreement, together
---------
with an amendment to each Security Document and other applicable Loan Documents,
in form and substance satisfactory to the Lender, reflecting the change in the
Base Facility Commitment and the Revolving Facility Commitment. The documents
and instruments referred to in the preceding sentence are referred to in this
Article as the "Conversion Documents."
--------------------
SECTION 3.08 Limitations on Right to Convert. The right of the Borrower to
-------------------------------
convert all or a portion of the Revolving Facility Commitment to the Base
Facility Commitment is subject to the following limitations:
(a) Closing Date. The Closing Date shall occur during the Base Facility
------------
Availability Period.
(b) Minimum Request. Each Request for a conversion shall be in the minimum
---------------
amount of $10,000,000.
-22-
(c) Obligation to Prepay Revolving Advances. If, after the conversion, the
---------------------------------------
aggregate unpaid principal balance of all Revolving Advances Outstanding will
exceed the Revolving Facility Commitment, the Borrower shall be obligated to
prepay, as a condition precedent to the conversion, an amount of Revolving
Advances Outstanding which is at least equal to the amount of the excess.
SECTION 3.09 Conditions Precedent to Conversion. The conversion of all or a
----------------------------------
portion of the Revolving Facility Commitment to the Base Facility Commitment is
subject to the satisfaction of the following conditions precedent on or before
the Closing Date:
(a) After giving effect to the requested conversion, the Coverage and
LTV Tests will be satisfied;
(b) Prepayment by the Borrower in full of any Revolving Advances
Outstanding which the Borrower has designated for payment, together with any
associated prepayment premiums and other amounts due with respect to the
prepayment of such Revolving Advances;
(c) The receipt by the Lender of an endorsement to each Title
Insurance Policy, amending the effective date of the Title Insurance Policy to
the Closing Date and showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date and other exceptions approved by
the Lender;
(d) Receipt by the Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the parties
(other than the Lender) who is a party to such Conversion Document; and
(e) The satisfaction of all applicable General Conditions set forth
in Article XI.
SECTION 3.10 Defeasance. If at any time the Borrower elects to convert all or a
----------
portion of the Revolving Facility Commitment to a Base Facility Commitment
pursuant to Section 3.07 of this Agreement, or elects that any portion of any
expansion of the Commitment shall be a Base Facility Commitment, the Conversion
Request or the Credit Facility Expansion Request for the first Base Facility
Commitment shall select defeasance or yield maintenance with respect to
prepayments of Base Facility Advances. If defeasance is selected, this Section
3.10 shall apply. The election of the Borrower as to defeasance or yield
maintenance in the first Conversion Request or Credit Facility Expansion Request
relating to a Base Facility Commitment shall apply to all Base Facility Advances
during the term of this Agreement. Base Facility Advances are not prepayable at
any time, provided that, notwithstanding the foregoing, Borrower may prepay any
Base Facility Advance during the last one hundred eighty (180) days of the term
of such Base Facility Advance and provided that Base Facility Advances may be
defeased pursuant to the terms and conditions of this Section. This Section 3.10
shall not apply to Mortgaged Properties released from a Security Instrument in
connection with a substitution of Collateral pursuant to Section 7.04 of this
Agreement.
(a) Conditions. Subject to Section 3.10(d), Borrower shall have the
----------
right to obtain the release of Mortgaged Properties from the lien of the
related Security Instruments (and all collateral derived from such Mortgage
Properties, including assignment of leases, fixture filings and other
documents and instruments evidencing a lien or security interest in
-23-
Borrower's assets [except the Substitute Collateral] shall be released)
upon the satisfaction of all of the following conditions:
(1) Defeasance Notice. Borrower shall give Lender a notice (the
-----------------
"Defeasance Notice", in the manner specified in Section 3.10(g)(4), on
-----------------
a form provided by Lender, specifying a Business Day (the "Defeasance
----------
Closing Date") which Borrower desires to consummate the Defeasance.
------------
The Defeasance Closing Date specified by Borrower may not be more than
45 calendar days, nor less than 30 calendar days, after the date on
which the Defeasance Notice is received by Lender. Borrower shall also
specify in the Defeasance Notice the name, address and telephone
number of Borrower for notices pursuant to Section 3.10(g)(4). The
form Defeasance Notice provided by Lender specifies: (i) which
Mortgaged Properties Borrower proposes to be released; (ii) the name,
address and telephone number of Lender for notices pursuant to Section
3.10(g)(4); (iii) the account(s) to which payments to Lender are to be
made; (iv) whether a ▇▇▇▇▇▇ ▇▇▇ Investment Security will be offered
for use as the Substitute Collateral and, if not, that U.S. Treasury
Securities will be the Substitute Collateral; (v) whether the
Successor Borrower will be designated by Lender or Borrower; and (vi)
if a ▇▇▇▇▇▇ Mae Investment Security is offered for use as the
Substitute Collateral, the Defeasance Notice shall also include the
amount of the Defeasance Commitment Fee.
Any applicable Defeasance Commitment fee must be paid by Borrower and
received by Lender no later than the date and time when Lender
receives the Defeasance Notice from Borrower.
(2) Confirmation. After Lender has confirmed that the Defeasance
------------
is then permitted as provided in Section 3.10(d), and has confirmed
that the terms of the Defeasance Notice are acceptable to Lender,
Lender shall, with reasonable promptness, notify Borrower of such
confirmation by signing the Defeasance Notice, attaching the Annual
Yields for the Mortgage Payments beginning on the first day of the
second calendar month after the Defeasance Closing Date and ending on
the Stated Maturity Date (if a ▇▇▇▇▇▇ ▇▇▇ Investment Security is
offered as Substitute Collateral) and transmitting the signed
Defeasance Notice to Borrower pursuant to Section 3.10(g)(4). If,
after Lender has notified Borrower of its confirmation in accordance
with the foregoing, Lender does not receive the Defeasance Commitment
Fee within five (5) Business Days after the Defeasance Notice
Effective Date, then Borrower's right to obtain Defeasance pursuant to
that Defeasance Notice shall terminate.
(3) Substitute Collateral. On or before the Defeasance Closing
---------------------
Date, Borrower shall deliver to Lender a pledge and security
agreement, in form and substance satisfactory to Lender in its sole
discretion (the "Pledge Agreement"), creating a first priority
----------------
perfected security interest in favor of Lender in substitute
collateral constituting an Investment Security (the "Substitute
----------
Collateral"). The Pledge Agreement shall provide Borrower's
----------
authorization and direction that all interest on, principal of and
other amounts payable with respect to the Substitute Collateral shall
be paid directly to Lender to be applied to Mortgage Payments due
-24-
under the Base Facility Note subject to Defeasance. If the Substitute
Collateral is issued in a certificated form and Borrower has
possession of the certificate, the certificate shall be endorsed
(either on the certificate or on a separate writing attached thereto)
by Borrower as directed by Lender and delivered to Lender. If the
Substitute Collateral is issued in an uncertificated form, or in a
certificated form but Borrower does not have possession of the
certificate, Borrower shall execute and deliver to Lender all
documents and instruments required by Lender to create in Lender's
favor a first priority perfected security interest in such Substitute
Collateral, including a securities account control agreement or any
other instrument or document required to perfect a security interest
in each Substitute Collateral.
(4) Closing Documents. Borrower shall deliver to Lender on or
-----------------
before the Defeasance Closing Date the documents described in Section
3.10(b).
(5) Amounts Payable by Borrower. On or before the Defeasance
---------------------------
Closing Date, Borrower shall pay to Lender an amount equal to the sum
of:
(A) the Next Scheduled P&I Payment;
(B) all other sums then due and payable under the Base
Facility Note subject to Defeasance, the Security
Instruments related to the Mortgaged Properties to be
released; and
(C) all costs and expenses incurred by Lender or Servicer
in connection with the Defeasance, including the
reasonable fees and disbursements of Lender's or
Servicer's legal counsel.
(6) Defeasance Deposit. If a ▇▇▇▇▇▇ Mae Investment Security will
------------------
be the Substitute Collateral, then, on or before 3:00 p.m.,
Washington, D.C. time, on the Defeasance Closing Date, Borrower shall
pay the Defeasance Deposit (reduced by the Defeasance Commitment Fee)
to Lender to be used by Lender to purchase the ▇▇▇▇▇▇ ▇▇▇ Investment
Security as Borrower's agent.
(7) Covenants, Representations and Warranties. On the Defeasance
-----------------------------------------
Closing Date, all of the covenants of the relevant Borrower set forth
in Articles XIII, XIV and XV of this Agreement and all of the
representations and warranties of the Borrower set forth in Article
XII of this Agreement are true and correct in all material respects.
(8) Geographical Diversification. If, as a result of the
----------------------------
Defeasance, Lender determines that the geographical diversification of
the Collateral Pool is compromised (whether or not the Geographical
Diversification Requirement is met), Lender may require that Borrower
add or substitute Multifamily Residential Properties to the Collateral
Pool in a number and having a valuation required to restore the
geographical diversification of the Collateral Pool to a level at
least as diverse as before the Defeasance.
-25-
(b) Closing Documents. The documents required to be delivered to
-----------------
Lender on or before the Defeasance Closing Date pursuant to Section
3.10(a)(4) are:
(1) an opinion of counsel for Borrower, in form and substance
satisfactory to Lender, to the effect that Lender has a valid and
perfected lien and security interest of first priority in the
Substitute Collateral and the principal and interest payable
thereunder;
(2) an opinion of counsel for Borrower, in form and substance
satisfactory to Lender, that the Defeasance, including both Borrower's
granting to Lender of a lien and security interest in the Substitute
Collateral and the assignment and assumption by Successor Borrower,
and each of them, when considered in combination and separately, are
not subject to avoidance under any applicable federal or state laws,
including Sections 547 and 548 of the U.S. Bankruptcy Code;
(3) if a ▇▇▇▇▇▇ Mae Investment Security is not used as Substitute
Collateral, and unless waived by Lender, a certificate in form and
substance satisfactory to Lender, issued by an independent certified
public accountant, or financial institution, approved by Lender, to
the effect that the Substitute Collateral will generate the Scheduled
Defeasance Payments;
(4) unless waived by Lender, an opinion of counsel for Borrower
in form and substance satisfactory to Lender, that the Defeasance will
not result in a "sale or exchange" of any Base Facility Note within
the meaning of Section 1001(c) of the Internal Revenue Code and the
temporary and final regulations promulgated thereunder;
(5) such other opinions, certificates, documents or instruments
as Lender may reasonably request; and
(6) three counterparts of the executed Assignment and Assumption
Agreement described in Section 3.10(e).
(c) Release. Upon Borrower's compliance with the requirements of
-------
Sections 3.10(a)(1) through (7), the Mortgaged Properties shall be released
from the lien of the Security Instruments (and all collateral derived from
such Mortgaged Properties, including assignments of leases, fixture filings
and other documents and instruments evidencing a lien or security interest
in Borrower's assets [except the Substitute Collateral] shall be released).
Lender shall, with reasonable promptness, execute and deliver to Borrower,
at Borrower's cost and expense, any additional documents reasonably
requested by Borrower in order to evidence or confirm the release of
Lender's liens and security interests described in the immediately
preceding sentence.
(d) Defeasance Not Allowed. Borrower shall not have the right to
----------------------
obtain Defeasance at any of the following times:
(1) before the third anniversary of the date of the relevant Base
Facility Note;
-26-
(2) after the expiration of the Defeasance Period; or
(3) after Lender has accelerated the maturity of the unpaid
principal balance of, accrued interest on, and other amounts payable
under, any Note pursuant to Paragraph 6 of such Note.
(e) Assignment and Assumption. Upon Borrower's compliance with the
-------------------------
requirements of Section 3.10(a), Borrower shall assign all its obligations
and rights under the relevant Base Facility Note, together with the
Substitute Collateral, to a successor entity (the "Successor Borrower")
------------------
designated by Lender or, if not so designated by Lender, designated by
Borrower and acceptable to Lender in its sole discretion. Borrower and
Successor Borrower shall execute and deliver to Lender an assignment and
assumption agreement on a form provided by Lender (the "Assignment and
--------------
Assumption Agreement"). The Assignment and Assumption Agreement shall
--------------------
provide for (i) the transfer and assignment by Borrower to Successor
Borrower of the Substitute Collateral, subject to the lien and security
interest in favor of Lender, (ii) the assumption by Successor Borrower of
all liabilities and obligations of Borrower under the relevant Base
Facility Note, and (iii) the release by Lender of Borrower from all
liabilities and obligations under the relevant Base Facility Note. Lender
shall, at Borrower's request and expense, execute and deliver releases,
reconveyances and security interest terminations with respect to the
released Mortgage Properties and all other collateral held by Lender
(except the Defeasance Deposit). The Assignment and Assumption Agreement
shall be executed by Lender with a counterpart to be returned by Lender to
Borrower and Successor Borrower thereafter; provided, however, in all
events that it shall not be a condition of Defeasance that the Assignment
and Assumption Agreement be executed by Lender, or any Successor Borrower
that is designated by Lender.
(f) Agent. If the Defeasance Notice provides that Lender will make
-----
available a ▇▇▇▇▇▇ ▇▇▇ Investment Security for purchase by Borrower for use
as the Substitute Collateral, Borrower hereby authorizes Lender to use, and
appoints Lender as its agent and attorney-in-fact for the purpose of using,
the Defeasance Deposit (including any portion thereof that constitutes the
Defeasance Commitment Fee) to purchase a ▇▇▇▇▇▇ Mae Investment Security.
(g) Administrative Provisions.
-------------------------
(1) ▇▇▇▇▇▇ ▇▇▇ Security Liquidated Damages. If Borrower timely
--------------------------------------
pays the Defeasance Commitment Fee, and Lender and Borrower timely
transmit a signed facsimile copy of the Defeasance Notice pursuant to
Section 3.10(a)(2), but Borrower fails to perform its other
obligations under Sections 3.10(a) and Section 3.10(e), Lender shall
have the right to retain the Defeasance Commitment Fee as liquidated
damages for Borrower's default, as Lender's sole and exclusive remedy,
and, except as provided in Section 3.10(g)(2), Borrower shall be
released from all further obligations under this Section 3.10.
Borrower acknowledges that, from and after the date on which Lender
has executed the Defeasance Notice under Section 3.10(a)(2) and
Borrower has delivered the Defeasance Commitment Fee, Lender will
incur financing costs in arranging and preparing for the purchase of
the Substitute
-27-
Collateral and in arranging and preparing for the release of the Mortgaged
Properties from the lien of the Security Instruments in reliance on the
executed Defeasance Notice. Borrower agrees that the Defeasance Commitment
Fee represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Agreement, of the damages Lender
will incur by reason of Borrower's default.
(2) Third Party Costs. In the event that the Defeasance is not
-----------------
consummated on the Defeasance Closing Date for any reason, Borrower agrees
to reimburse Lender and Servicer for all third party costs and expenses
(other than financing costs covered by Section 3.10(g)(1) above), including
attorneys' fees and expenses, incurred by Lender in reliance on the
executed Defeasance Notice, within 10 Business Days after Borrower receives
a written demand for payment, accompanied by a statement, in reasonable
detail, of Lender's and Servicer's third party costs and expenses.
(3) Payments. All payments required to be made by Borrower to Lender
--------
or Servicer pursuant to this Section 3.10 shall be made by wire transfer of
immediately available finds to the account(s) designated by Lender or
Servicer, as the case may be, in the Defeasance Notice.
(4) Notice. The Defeasance Notice delivered pursuant to this Section
------
3.10(g)(4) shall be in writing and shall be sent by telecopier or facsimile
machine which automatically generates a transmission report that states the
date and time of the transmission, the length of the document transmitted
and the telephone number of the recipient's telecopier or facsimile machine
(or shall be sent by any distribution media, whether currently existing or
hereafter developed, including electronic mail and internet distribution,
as approved by Lender). Any notice so sent addressed to the parties at
their respective addresses designated in the Defeasance Notice pursuant to
Section 3.10(a), shall be deemed to have been received on the date and time
indicated on the transmission report of recipient. To be effective,
Borrower must send the Defeasance Notice (as described above) so that
Lender receives the Defeasance Notice no earlier than 11:00 a.m. and no
later than 3:00 p.m. Washington, D.C. time on a Business Day.
(h) Definitions. For purposes of this Section 3.10, the following terms
-----------
shall have the following meanings:
(1) The term "Annual Yield" means the yield for the theoretical
------------
zero coupon U.S. Treasury Security as calculated from the current
"on-the-run" U.S. Treasury yield curve with a term to maturity that
most closely matches the Applicable Defeasance Term for the Mortgage
Payment, as published by ▇▇▇▇▇▇ Mae on MORNET(R) (or in an alternative
electronic format) at 2:00 p.m. Washington, D.C. time on the Business
Day that Lender receives the Defeasance Notice in accordance with
Section 3.10(g)(4). If the publication of yields on MORNET(R) is
unavailable, Lender shall determine yields from another source
reasonably determined by Lender.
-28-
(2) The term "Applicable Defeasance Term" means, in the case of each
--------------------------
Mortgage Payment, the number of calendar months, based on a year containing
12 calendar months with 30 days each, in the period beginning on the first
day of the first calendar month after the Defeasance Closing Date to the
date on which such Mortgage Payment is due and payable.
(3) The term "Defeasance" means the transaction in which all (but not
----------
less than all) of the Mortgaged Properties are released from the lien of
the Security Instruments and Lender receives, as substitute collateral, a
valid and perfected lien and security interest of first priority in the
Substitute Collateral and the principal and interest payable thereunder.
(4) The term "Defeasance Commitment Fee" means the amount specified in
-------------------------
the Defeasance Notice as Borrower's good faith deposit to ensure
performance of its obligations under this Section, which shall equal two
percent (2%) of the aggregate unpaid principal balance of the Base Facility
Note subject to Defeasance as of the Defeasance Notice Effective Date, if
the Successor Borrower is designated by Borrower under Section 3.10(e), or
one percent (1%) of the aggregate unpaid principal balance of the Base
Facility Note subject to Defeasance as of the Defeasance Notice Effective
Date if the Successor Borrower is designated by Lender under Section
3.10(e). No Defeasance Commitment Fee will be applicable if U.S. Treasury
Securities are specified in the Defeasance Notice as the applicable
Investment Security.
(5) The term "Defeasance Deposit" means an amount equal to the sum of
the present value of each Mortgage Payment that becomes due and payable
during the period beginning on the first day of the second calendar month
after the Defeasance Closing Date and ending on the Stated Maturity Date,
where the present value of each Mortgage Payment is determined using the
following formula:
the amount of the Mortgage Payment
----------------------------------------------
(1 + (the Annual Yield/12))/n/
For this purpose, the last Mortgage Payment due and payable on the
Stated Maturity Date shall include the amounts that would constitute
the unpaid principal balance of the Base Facility Note subject to
Defeasance on the Stated Maturity Date if all prior Mortgage Payments
were paid on their due dates and "n" shall equal the Applicable
Defeasance Term.
(6) The term "Defeasance Period" means the period beginning on the
-----------------
earliest permitted date determined under Section 3.10(d)(l) and ending on
the 180th day before the Stated Maturity Date.
(7) The term "Defeasance Notice Effective Date" means the date on
--------------------------------
which Lender provides confirmation of the Defeasance Notice pursuant to
Section 3.10(a)(2).
-29-
(8) The term "▇▇▇▇▇▇ ▇▇▇ Investment Security" means
------------------------------
any bond, debenture, note, participation certificate or other
similar obligation issued by ▇▇▇▇▇▇ Mae in connection with the
Defeasance which provides for Scheduled Defeasance Payments
beginning in the second calendar month after the Defeasance
Closing Date.
(9) The term "Investment Security" means:
-------------------
(A) If offered by Lender pursuant to the
Defeasance Notice, a ▇▇▇▇▇▇ ▇▇▇ Investment Security
purchased in the manner described in Sections
3.10(a)(6) and 3.10(f), and
(B) If no ▇▇▇▇▇▇ Mae Investment Security is
offered by Lender pursuant to the Defeasance Notice,
U.S. Treasury Securities.
(10) The term "Mortgage Payment" means the amount of
----------------
each regularly scheduled monthly payment of principal and
interest due and payable under the Base Facility Note subject
to Defeasance during the period beginning on the first day of
the second calendar month after the Defeasance Closing Date
and ending on the Stated Maturity Date, and the amount that
would constitute the aggregate unpaid principal balance of the
Base Facility Note subject to Defeasance on the Stated
Maturity Date if all prior Mortgage Payments were paid on
their due dates.
(11) The term "Next Scheduled P&I Payment" means an
--------------------------
amount equal to the monthly installment of principal and
interest due under the Base Facility Note subject to
Defeasance on the first day of the first calendar month after
the Defeasance Closing Date.
(12) The term "Scheduled Defeasance Payments" means
-----------------------------
payments prior and as close as possible to (but in no event
later than) the successive scheduled dates on which Mortgage
Payments are required to be paid under the Base Facility Note
subject to Defeasance and in amounts equal to or greater than
the scheduled Mortgage Payments due and payable on such dates
under the Base Facility Note subject to Defeasance.
(13) The term "Stated Maturity Date" means the
--------------------
Maturity Date specified in the Base Facility Note subject to
Defeasance determined without regard to Lender's exercise of
any right of acceleration of the Base Facility Note subject to
Defeasance.
(14) The term "U.S. Treasury Securities" means
------------------------
direct, non-callable and non-redeemable obligations of the
United States of America which provided for Scheduled
Defeasance Payments beginning in the second calendar month
after the Defeasance Closing Date.
-30-
ARTICLE IV
RATE SETTING FOR THE ADVANCES
SECTION 4.01 Rate Setting for an Advance. Rates for an Advance shall be set in
---------------------------
accordance with the following procedures:
(a) Preliminary, Nonbinding Quote. At the Borrower's request the
-----------------------------
Lender shall quote to the Borrower an estimate of the MBS Pass-Through Rate
(for a proposed Base Facility Advance) or MBS Imputed Interest Rate (for a
proposed Revolving Advance) for a ▇▇▇▇▇▇ ▇▇▇ MBS backed by a proposed Advance.
The Lender's quote shall be based on (i) a solicitation of at least three (3)
bids from institutional investors selected by the Lender and (ii) the proposed
terms and amount of the Advance selected by the Borrower. The quote shall not be
binding upon the Lender.
(b) Rate Setting. If the Borrower satisfies all of the conditions
------------
to the Lender's obligation to make the Advance in accordance with Article V,
then the Borrower may propose a MBS Pass-Through Rate (for a Base Facility
Advance) or MBS Imputed Interest Rate (for a Revolving Advance) by submitting to
the Lender by facsimile transmission a completed and executed document, in the
form attached as Exhibit M to this Agreement ("Rate Setting Form"), before
--------- -----------------
1:00 p.m. Washington, D.C. time on any Business Day ("Rate Setting Date"). The
-----------------
Rate Setting Form contains various factual certifications required by the Lender
and specifies:
(i) for a Revolving Advance, the amount, term, MBS Issue Date,
Revolving Facility Fee and Closing Date for the Advance; and
(ii) for a Base Facility Advance, the amount, term, MBS Issue
Date, Base Facility Fee, Price (which will be in a range between
99-1/2 and 100-1/2), Yield Maintenance Period, if applicable, Yield
Rate Security, if applicable, Amortization Period and Closing Date for
the Advance.
(c) Rate Confirmation. Within one Business Day after receipt
-----------------
of the completed and executed Rate Setting Form, the Lender shall solicit bids
from institutional investors selected by the Lender based on the information in
the Rate Setting Form, shall obtain a commitment ("MBS Commitment") for the
--------------
purchase of a ▇▇▇▇▇▇ Mae MBS having the bid terms described in the related Rate
Setting Form, and shall immediately deliver to the Borrower by facsimile
transmission a completed document, in the form attached as Exhibit N to this
---------
Agreement ("Rate Confirmation Form"). The Rate Confirmation Form will confirm:
----------------------
(i) for a Revolving Advance, the amount, term, MBS Issue Date,
MBS Delivery Date, MBS Imputed Interest Rate, Revolving Facility Fee,
Coupon Rate, Discount, Price, and Closing Date for the Advance; and
(ii) for a Base Facility Advance, the amount, term, MBS Issue
Date, MBS Delivery Date, MBS Pass-Through Rate, Base Facility Fee,
Coupon Rate, Price, Yield Maintenance Period, Specified U.S. Treasury
Security, Amortization Period and Closing Date for the Advance.
-31-
SECTION 4.02 Advance Confirmation Instrument for Revolving Advances. On or
------------------------------------------------------
before the Closing Date for a Revolving Advance, the Borrower shall execute and
deliver to the Lender an instrument ("Advance Confirmation Instrument"), in the
-------------------------------
form attached as Exhibit O to this Agreement, confirming the amount, term, MBS
---------
Issue Date, MBS Delivery Date, MBS Imputed Interest Rate, Revolving Facility
Fee, Coupon Rate, Discount, Price and Closing Date for the Advance, and the
Borrower's obligation to repay the Advance in accordance with the terms of the
Notes and this Agreement. Upon the funding of the Revolving Advance, the Lender
shall note the date of funding in the appropriate space at the foot of the
Advance Confirmation Instrument and deliver a copy of the completed Advance
Confirmation Instrument to the Borrower. The Lender's failure to do so shall not
invalidate the Advance Confirmation Instrument or otherwise affect in any way
any obligation of the Borrower to repay Revolving Advances in accordance with
the Advance Confirmation Instrument, the Revolving Facility Note or the other
Loan Documents, but is merely meant to facilitate evidencing the date of funding
and to confirm that the Advance Confirmation Instrument is not effective until
the date of funding.
SECTION 4.03 Breakage and other Costs. In the event that the Lender obtains an
------------------------
MBS Commitment and the Lender fails to fulfill the MBS Commitment because the
Advance is not made (for a reason other than the default of the Lender to make
the Advance or the failure of the purchaser of the MBS to purchase such MBS),
the Borrower shall pay all breakage and other costs, fees and damages incurred
by the Lender in connection with its failure to fulfill the MBS Commitment. The
Lender reserves the right to require that the Borrower post a deposit at the
time the MBS Commitment is obtained.
ARTICLE V
MAKING THE ADVANCES
SECTION 5.01 Initial Advance. The Borrower may make a request ("Initial Advance
--------------- ---------------
Request") for the Lender to make the Initial Advance. If all conditions
-------
contained in this Section are satisfied on or before the Closing Date for the
Initial Advance, the Lender shall make the Initial Advance on the Initial
Closing Date or on another date selected by the Borrower and approved by the
Lender. The obligation of the Lender to make the Initial Advance is subject to
the following conditions precedent:
(a) Receipt by the Lender of the Initial Advance Request;
(b) [Intentionally Deleted]
(c) The delivery to the Title Company, for filing and/or recording
in all applicable jurisdictions, of all applicable Loan Documents required by
the Lender, including duly executed and delivered original copies of the
Revolving Facility Note, a Base Facility Note, the Initial Security Instruments
covering the Initial Mortgaged Properties and UCC-1 Financing Statements
covering the portion of the Collateral comprised of personal property, and other
appropriate instruments, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Liens created by the applicable Security Instruments and any other
Loan Documents creating a Lien in favor of the
-32-
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;
(d) If the Advance is a Revolving Advance, the receipt by the
Lender of the first installment of Revolving Facility Fee for the Revolving
Advance and the entire Discount for the Revolving Advance payable by the
Borrower pursuant to Section 2.04;
(e) The receipt by the Lender of the Initial Origination Fee
pursuant to Section 16.02(a), the Initial Due Diligence Fee pursuant to Section
16.03(a) to the extent calculated by Lender at such time (any portion of the
Initial Due Diligence Fee not paid by the Borrower on the Initial Closing Date
shall be paid promptly upon demand by Lender), all legal fees and expenses
payable pursuant to Section 16.04(a) and all legal fees and expenses payable in
connection with the Initial Advance pursuant to Section 16.04(b); and
(f) The satisfaction of all applicable General Conditions set forth
in Article XI.
SECTION 5.02 Future Advances. In order to obtain a Future Advance, the Borrower
---------------
may from time to time deliver a written request for a Future Advance ("Future
------
Advance Request") to the Lender, in the form attached as Exhibit P to this
--------------- ---------
Agreement. Each Future Advance Request shall be accompanied by (a) a designation
of the amount of the Future Advance requested, and (b) a designation of the
maturity date of the Advance. Each Future Advance Request shall be in the
minimum amount of $3,000,000. If all conditions contained in Section 5.03 are
satisfied, the Lender shall make the requested Future Advance, at a closing to
be held at offices designated by the Lender on a Closing Date selected by the
Lender, and occurring on a date selected by the Borrower, which date shall be
not more than three (3) Business Days, after the Lender's receipt of the Future
Advance Request and the Borrower's receipt of the Rate Confirmation Form (or on
such other date to which the Borrower and the Lender may agree). The Lender
reserves the right to require that the Borrower post a deposit at the time the
MBS Commitment is obtained as an additional condition to the Lender's obligation
to make the Future Advance.
SECTION 5.03 Conditions Precedent to Future Advances. The obligation of the
---------------------------------------
Lender to make a requested Future Advance is subject to the following conditions
precedent:
(a) The receipt by the Lender of a Future Advance Request;
(b) The Lender has delivered the Rate Setting Form for the Future
Advance to the Borrower;
(c) After giving effect to the requested Future Advance, the
Coverage and LTV Tests will be satisfied;
(d) If the Advance is a Base Facility Advance, delivery of a Base
Facility Note, duly executed by the Borrower, in the amount of the Advance,
reflecting all of the terms of the Base Facility Advance;
(e) If the Advance is a Revolving Advance, delivery of the Advance
Confirmation Instrument, duly executed by the Borrower;
-33-
(f) For any Title Insurance Policy not containing a Revolving Credit
Endorsement, the receipt by the Lender of an endorsement to the Title Insurance
Policy, amending the effective date of the Title Insurance Policy to the Closing
Date and showing no additional exceptions to coverage other than the exceptions
shown on the Initial Closing Date and other exceptions approved by the Lender;
(g) If the Advance is a Revolving Advance, the receipt by the Lender
of the first installment of Revolving Facility Fee for the Revolving Advance and
the entire Discount for the Revolving Advance payable by the Borrower pursuant
to Section 2.04;
(h) The receipt by the Lender of all legal fees and expenses payable
by the Borrower in connection with the Future Advance pursuant to Section
16.04(b); and
(i) The satisfaction of all applicable General Conditions set forth
in Article XI.
SECTION 5.04 Determination of Allocable Facility Amount and Valuations.
---------------------------------------------------------
(a) Initial Determinations. On the Initial Closing Date, Lender shall
----------------------
determine (i) the Allocable Facility Amount and Valuation for each Mortgaged
Property and (ii) the Aggregate Debt Service Coverage Ratio for the Trailing 12
Month Period and the Aggregate Loan to Value Ratio for the Trailing 12 Month
Period. The determinations made as of the Initial Closing Date shall remain
unchanged until the first anniversary of the Initial Closing Date.
(b) Future Determinations. (i) Once each Calendar Quarter or, if the
---------------------
Commitment consists only of a Base Facility Commitment, once each Calendar Year,
within twenty (20) Business Days after Borrower has delivered to Lender the
reports required in Section 13.04, Lender shall determine the Aggregate Debt
Service Coverage Ratio for the Trailing 12 Month Period and the Aggregate Loan
to Value Ratio for the Trailing 12 Month Period with the other covenants set
forth in the Loan Documents, and whether the Borrower is in compliance, (ii)
after the first anniversary of the Initial Closing Date, on an annual basis, and
if Lender reasonably decides that changed market or property conditions warrant,
Lender shall determine Allocable Facility Amounts and Valuations, and (iii)
Lender shall also redetermine Allocable Facility Amounts to take account of any
addition, release or substitution of Collateral or other event which invalidates
the outstanding determinations.
ARTICLE VI
ADDITIONS OF COLLATERAL
SECTION 6.01 Right to Add Collateral. Subject to the terms and conditions of
-----------------------
this Article, the Borrower shall have the right, from time to time during the
Term of this Agreement, to add Multifamily Residential Properties to the
Collateral Pool in accordance with the provisions of this Article.
SECTION 6.02 Procedure for Adding Collateral. The procedure for adding
-------------------------------
Collateral set forth in this Section 6.02 shall apply to all additions of
Collateral in connection with this Agreement, including but not limited to
additions of Collateral in connection with substitutions of Collateral and
expansion of the Credit Facility.
-34-
(a) Request. The Borrower may deliver a written request ("Collateral
------- ----------
Addition Request") to the Lender, in the form attached as Exhibit Q to this
---------------- ---------
Agreement, to add one or more Multifamily Residential Properties to the
Collateral Pool. Each Collateral Addition Request shall be accompanied by the
following:
(i) The information relating to the proposed Additional
Mortgaged Property required by the form attached as Exhibit R to this
---------
Agreement ("Collateral Addition Description Package"), as amended from time
---------------------------------------
to time to include information required under the DUS Guide; and
(ii) The payment of all Additional Collateral Due Diligence Fees
pursuant to Section 16.03(b) to the extent calculated by Lender at such
time (any portion of any Additional Collateral Due Diligence Fee not paid
by Borrower with the Collateral Additional Request shall be paid promptly
upon demand by Lender).
(b) Additional Information. The Borrower shall promptly deliver to
----------------------
the Lender any additional information concerning the proposed Additional
Mortgaged Property that the Lender may from time to time reasonably request.
(c) Underwriting. The Lender shall evaluate the proposed Additional
------------
Mortgaged Property, and shall make underwriting determinations as to (A) the
Aggregate Debt Service Coverage Ratios for the Trailing 12 Month Period and the
Aggregate Loan to Value Ratio for the Trailing 12 Month Period applicable to the
Collateral Pool, and (B) the Debt Service Coverage Ratio for the Trailing 12
Month Period and the Loan to Value Ratio for the Trailing 12 Month Period
applicable to the proposed Additional Property on the basis of the lesser of (i)
the acquisition price of the proposed Additional Mortgaged Property or (ii) a
Valuation made with respect to the proposed Additional Mortgaged Property, and
otherwise in accordance with ▇▇▇▇▇▇ Mae's DUS Underwriting Requirements. Within
30 days after receipt of (i) the Collateral Addition Request for the Additional
Mortgaged Property and (ii) all reports, certificates and documents set forth on
Exhibit S to this Agreement, including a zoning analysis undertaken in
---------
accordance with Section 206 of the DUS Guide, the Lender shall notify the
Borrower whether or not it shall consent to the addition of the proposed
Additional Mortgaged Property to the Collateral Pool and, if it shall so
consent, shall set forth the Aggregate Debt Service Coverage Ratios for the
Trailing 12 Month Period and the Aggregate Loan to Value Ratio for the Trailing
12 Month Period which it estimates shall result from the addition of the
proposed Additional Mortgaged Property to the Collateral Pool. If the Lender
declines to consent to the addition of the proposed Additional Mortgaged
Property to the Collateral Pool, the Lender shall include, in its notice, a
brief statement of the reasons for doing so. Within five Business Days after
receipt of the Lender's notice that it shall consent to the addition of the
proposed Additional Mortgaged Property to the Collateral Pool, the Borrower
shall notify the Lender whether or not it elects to cause the proposed
Additional Mortgaged Property to be added to the Collateral Pool. If the
Borrower fails to respond within the period of five Business Days, it shall be
conclusively deemed to have elected not to cause the proposed Additional
Mortgaged Property to be added to the Collateral Pool.
(d) Closing. If, pursuant to subsection (c), the Lender consents to
-------
the addition of the proposed Additional Mortgaged Property to the Collateral
Pool, the Borrower timely elects to cause the proposed Additional Mortgaged
Property to be added to the Collateral Pool and all
-35-
conditions contained in Section 6.03 are satisfied, the Lender shall permit the
proposed Additional Mortgaged Property to be added to the Collateral Pool, at a
closing to be held at offices designated by the Lender on a Closing Date
selected by the Lender, and occurring within 30 Business Days after the Lender's
receipt of the Borrower's election (or on such other date to which the Borrower
and the Lender may agree), provided that in any Calendar Quarter, the Closing
Date for any addition of an Additional Mortgaged Property to the Collateral Pool
shall be on the same day as the Closing Date of any release or substitution
pursuant to Article VII of this Agreement and any increase in the Credit
Facility pursuant to Article VIII of this Agreement
SECTION 6.03 Conditions Precedent to Addition of an Additional Mortgaged
-----------------------------------------------------------
Property to the Collateral Pool. The addition of an Additional Mortgaged
-------------------------------
Property to the Collateral Pool on the Closing Date applicable to the Additional
Mortgaged Property is subject to the satisfaction of the following conditions
precedent:
(a) If the Additional Mortgaged Property is being added to the
Collateral Pool prior to the first anniversary of the Initial Closing Date, the
Coverage and LTV Tests will be satisfied;
(b) If the Additional Mortgaged Property is being added to the
Collateral Pool after the first anniversary of the Initial Closing Date, the
proposed Additional Mortgaged Property has a Debt Service Coverage Ratio for the
Trailing 12 Month Period of not less than 130% and a Loan to Value Ratio for the
Trailing 12 Month Period of not more than 70% and immediately after giving
effect to the requested addition, the Coverage and LTV Tests will be satisfied,
and in the case of any substitution effected pursuant to Section 7.04 of this
Agreement, the Coverage and LTV Tests are not adversely affected after giving
effect to the proposed substitution;
(c) If the Collateral Addition Fee is due, the receipt by the Lender
of the Collateral Addition Fee and all legal fees and expenses payable by the
Borrower in connection with the Collateral Addition pursuant to Section
16.04(b);
(d) The delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all applicable
jurisdictions, all applicable Collateral Addition Loan Documents required by the
Lender, including duly executed and delivered original copies of any Security
Instruments and UCC-1 Financing Statements covering the portion of the
Additional Mortgaged Property comprised of personal property, and other
appropriate documents, in form and substance satisfactory to the Lender and in
form proper for recordation, as may be necessary in the opinion of the Lender to
perfect the Lien created by the applicable additional Security Instrument, and
any other Collateral Addition Loan Document creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing;
(e) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the addition of the Additional Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so amended,
the receipt by the Lender of an endorsement to the Title Insurance Policy
insuring the Security Instrument, amending the effective date of the Title
Insurance Policy to the Closing Date and showing no additional exceptions to
coverage other than the exceptions shown on the Initial Closing Date and other
exceptions approved by the Lender;
-36-
(f) If the Title Insurance Policy for the Additional Mortgaged
Property contains a Tie-In Endorsement, an endorsement to each other Title
Insurance Policy containing a Tie-In Endorsement, adding a reference to the
Additional Mortgaged Property; and
(g) The satisfaction of all applicable General Conditions set forth
in Article XI.
ARTICLE VII
RELEASES OF COLLATERAL
SECTION 7.01 Right to Obtain Releases of Collateral. Subject to the terms and
--------------------------------------
conditions of this Article, the Borrower shall have the right to obtain a
release of Collateral from the Collateral Pool in accordance with the provisions
of this Article.
SECTION 7.02 Procedure for Obtaining Releases of Collateral.
----------------------------------------------
(a) Request. In order to obtain a release of Collateral from the
-------
Collateral Pool, the Borrower may deliver a written request for the release of
Collateral from the Collateral Pool ("Collateral Release Request") to the
--------------------------
Lender, in the form attached as Exhibit T to this Agreement. The Collateral
---------
Release Request shall not result in a termination of all or any part of the
Credit Facility. The Borrower may only terminate all or any part of the Credit
Facility by delivering a Revolving Facility Termination Request or Credit
Facility Termination Request pursuant to Articles IX or X. The Collateral
Release Request shall be accompanied by (and shall not be effective unless it is
accompanied by) the name, address and location of the Mortgaged Property to be
released from the Collateral Pool ("Collateral Release Property").
---------------------------
(b) Closing. If all conditions contained in Section 7.03 are
-------
satisfied, the Lender shall cause the Collateral Release Property to be released
from the Collateral Pool, at a closing to be held at offices designated by the
Lender on a Closing Date selected by the Lender, and occurring within 30 days
after the Lender's receipt of the Collateral Release Request (or on such other
date to which the Borrower and the Lender may agree, provided that in any
Calendar Quarter, the Closing Date for any release shall be on the same day as
the Closing Date of any addition of an Additional Mortgaged Property to the
Collateral Pool pursuant to Article VI of this Agreement or any increase in the
Credit Facility pursuant to Article VIII of this Agreement), by executing and
delivering, and causing all applicable parties to execute and deliver, all at
the sole cost and expense of the Borrower, instruments, in the form customarily
used by the Lender and reasonably satisfactory to the Title Company for releases
in the jurisdiction governing the perfection of the security interest being
released, releasing the applicable Security Instrument as a Lien on the
Collateral Release Property, and UCC-3 Termination Statements terminating the
UCC-1 Financing Statements perfecting a Lien on the portion of the Collateral
Release Property comprised of personal property and such other documents and
instruments as the Borrower may reasonably request evidencing the release of the
applicable Collateral from any lien securing the Obligations (including a
termination of any restriction on the use of any accounts relating to the
Collateral Release Property) and the release and return to the Borrower of any
and all escrowed amounts relating thereto. The instruments referred to in the
preceding sentence are referred to in this Article as the "Collateral Release
------------------
Documents."
---------
-37-
(c) Release Price. The "Release Price" for each Mortgaged Property
------------- -------------
other than Mortgaged Properties released from a Security Instrument in
connection with a Substitution of Collateral pursuant to Section 7.04 of this
Agreement means the greater of (i) the Allocable Facility Amount for the
Mortgaged Property to be released and (ii) the amount, if any, of Advances
Outstanding which are required to be repaid by the Borrower to the Lender in
connection with the proposed release of the Mortgaged Property from the
Collateral Pool, so that, immediately after the release, the Coverage and LTV
Tests will be satisfied and neither the Aggregate Debt Service Coverage Ratios
for the Trailing 12 Month Period will be reduced nor the Aggregate Loan to Value
Ratio for the Trailing 12 Month Period will be increased as a result of such
release. In addition to the Release Price, the Borrower shall pay to the Lender
all associated prepayment premiums and other amounts due under the Notes and any
Advance Confirmation Instruments evidencing the Advances being repaid.
(d) Application of Release Price. The Release Price shall be applied
----------------------------
against the Revolving Advances Outstanding until there are no further Revolving
Advances Outstanding, and thereafter shall be held by the Lender (or its
appointed collateral agent) as substituted Collateral ("Substituted Cash
----------------
Collateral"), in accordance with a security agreement and other documents in
----------
form and substance acceptable to the Lender (or, at the Borrower's option, may
be applied against the prepayment of Base Facility Advances, so long as the
prepayment is permitted under the Base Facility Note for the Base Facility
Advance). Any portion of the Release Price held as Substituted Cash Collateral
may be released if, immediately after giving effect to the release, each of the
conditions set forth in Section 7.03(a) below shall have been satisfied. If, on
the date on which the Borrower pays the Release Price, Revolving Advances are
Outstanding but are not then due and payable, the Lender shall hold the payments
as additional Collateral for the Credit Facility, until the next date on which
Revolving Advances are due and payable, at which time the Lender shall apply the
amounts held by it to the amounts of the Revolving Advances due and payable.
SECTION 7.03 Conditions Precedent to Release of Collateral Release Property from
-------------------------------------------------------------------
the Collateral. The obligation of the Lender to release a Collateral Release
--------------
Property from the Collateral Pool by executing and delivering the Collateral
Release Documents on the Closing Date, are subject to the satisfaction of the
following conditions precedent on or before the Closing Date:
(a) Immediately after giving effect to the requested release the
Coverage and LTV Tests will be satisfied, and in the case of any substitution
effected pursuant to Section 7.04 of this Agreement, the Coverage and LTV Tests
are not adversely affected after giving effect to the proposed substitution;
(b) Receipt by the Lender of the Release Price;
(c) Receipt by the Lender of all legal fees and expenses payable by
the Borrower in connection with the release pursuant to Section 16.04(b);
(d) Receipt by the Lender on the Closing Date of one or more
counterparts of each Collateral Release Document, dated as of the Closing Date,
signed by each of the parties (other than the Lender) who is a party to such
Collateral Release Document;
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(e) If required by the Lender, amendments to the Notes and the
Security Instruments, reflecting the release of the Collateral Release Property
from the Collateral Pool and, as to any Security Instrument so amended, the
receipt by the Lender of an endorsement to the Title Insurance Policy insuring
the Security Instrument, amending the effective date of the Title Insurance
Policy to the Closing Date and showing no additional exceptions to coverage
other than the exceptions shown on the Initial Closing Date and other exceptions
approved by the Lender;
(f) If the Lender determines the Collateral Release Property to be
one phase of a project, and one or more other phases of the project are
Mortgaged Properties which will remain in the Collateral Pool ("Remaining
---------
Mortgaged Properties"), the Lender's determination that the Remaining Mortgaged
--------------------
Properties can be operated separately from the Collateral Release Property and
any other phases of the project which are not Mortgaged Properties. In making
this determination, the Lender shall evaluate whether the Remaining Mortgaged
Properties comply with the terms of Sections 203 and 208 of the DUS Guide,
which, as of the date of this Agreement, require, among other things, that a
phase which constitutes collateral for a loan made in accordance with the terms
of the DUS Guide (i) have adequate ingress and egress to existing public
roadways, either by location of the phase on a dedicated, all-weather road or by
access to such a road by means of a satisfactory easement, (ii) have access
which is sufficiently attractive and direct from major thoroughfares to be
conducive to continued good marketing, (iii) have a location which is not (A)
inferior to other phases, (B) such that inadequate maintenance of other phases
would have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project and
(iv) comply with such other issues as are dictated by prudent practice;
(g) Receipt by the Lender of endorsements to the Tie-In
Endorsements of the Title Insurance Policies, if deemed necessary by the Lender,
to reflect the release;
(h) Receipt by the Lender on the Closing Date of a writing, dated
as of the Closing Date, signed by the Borrower, in the form attached as Exhibit
-------
U to this Agreement, pursuant to which the Borrower confirms that its
-
obligations under the Loan Documents are not adversely affected by the release
of the Collateral Release Property from the Collateral;
(i) The remaining Mortgaged Properties in the Collateral Pool shall
satisfy the then-existing Geographical Diversification Requirements;
(j) The satisfaction of all applicable General Conditions set forth
in Article XI; and
(k) Notwithstanding the other provisions of this Section 7.03, no
release of any of the Mortgaged Properties shall be made unless the Borrower has
provided title insurance to Lender in respect of each of the remaining Mortgage
Properties in the Collateral Pool in an amount equal to 150% of the Initial
Value of each such Mortgaged Property.
SECTION 7.04 Substitutions. Subject to the terms, conditions and limitations of
-------------
Articles VI and VII, the Borrower may simultaneously add a Multifamily
Residential Property to the Collateral Pool and release a Mortgaged Property
from the Collateral Pool, thereby effecting a substitution of
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Collateral, provided that Sections 7.02(c), 7.02(d) and 7.03(b) shall not apply
to a substitution of Collateral.
ARTICLE VIII
EXPANSION OF CREDIT FACILITY
SECTION 8.01 Right to Increase Commitment. Subject to the terms, conditions and
----------------------------
limitations of this Article, the Borrower shall have the right to increase the
Base Facility Commitment, the Revolving Facility Commitment, or both. The
Borrower's right to increase the Commitment is subject to the following
limitations:
(a) Commitment. After giving effect to the proposed increase, the
----------
Commitment (without regard to the actual amount of Revolving Advances
Outstanding, but taking into account the aggregate original principal amount of
all Base Facility Advances made under this Agreement to the Closing Date) shall
not exceed $400,000,000.
(b) Minimum Request. Each Request for an increase in the
---------------
Commitment (other than an increase in the Commitment pursuant to Section
8.01(b), which shall be in the minimum amount of $3,000,000) shall be in the
minimum amount of $10,000,000.
(c) Terms and Conditions. The terms and conditions of this
---------------------
Agreement shall apply to any increase in the Commitment.
SECTION 8.02 Procedure for Obtaining Increases in Commitment.
-----------------------------------------------
(a) Request. In order to obtain an increase in the Commitment,
-------
the Borrower shall deliver a written request for an increase (a "Credit Facility
---------------
Expansion Request") to the Lender, in the form attached as Exhibit V to this
----------------- ---------
Agreement. Each Credit Facility Expansion Request shall be accompanied by the
following:
(i) A designation of the amount of the proposed increase;
(ii) A designation of the increase in the Base Facility
Credit Commitment and the Revolving Facility Credit Commitment;
(iii) A request that the Lender inform the Borrower of any
change in the Geographical Diversification Requirements; and
(iv) A request that the Lender inform the Borrower of the
Base Facility Fee and the Revolving Facility Fee to apply to Advances
drawn from such increase in the Commitment.
(b) Closing. If all conditions contained in Section 8.03 are
-------
satisfied, the Lender shall permit the requested increase in the Commitment, at
a closing to be held at offices designated by the Lender on a Closing Date
selected by the Lender, and occurring within fifteen (15) Business Days after
the Lender's receipt of the Credit Facility Expansion Request (or on such other
date to which the Borrower and the Lender may agree), provided that in any
Calendar Quarter the Closing
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Date for addition of an Additional Mortgaged Property to the Collateral Pool
pursuant to Article VI of this Agreement and any increase of the Credit Facility
shall be on the same day as the Closing Date for any release or substitution
pursuant to Article VII of this Agreement.
SECTION 8.03 Conditions Precedent to Increase in Commitment. The right of the
----------------------------------------------
Borrower to increase the Commitment is subject to the satisfaction of the
following conditions precedent on or before the Closing Date:
(a) After giving effect to the requested increase the Coverage and LTV
Tests will be satisfied;
(b) Payment by the Borrower of the Expansion Origination Fee in
accordance with Section 16.02(b) and all legal fees and expenses payable by the
Borrower in connection with the expansion of the Commitment pursuant to Section
16.04(b);
(c) The receipt by the Lender of an endorsement to each Title Insurance
Policy, amending the effective date of the Title Insurance Policy to the Closing
Date, increasing the limits of liability to the Commitment, as increased under
this Article, showing no additional exceptions to coverage other than the
exceptions shown on the Initial Closing Date (or, if applicable, the last
Closing Date with respect to which the Title Insurance Policy was endorsed) and
other exceptions approved by the Lender, together with any reinsurance
agreements required by the Lender;
(d) The receipt by the Lender of fully executed original copies of all
Credit Facility Expansion Loan Documents, each of which shall be in full force
and effect, and in form and substance satisfactory to the Lender in all
respects;
(e) if determined necessary by the Lender, the Borrower's agreement to
such geographical diversification requirements as the Lender may determine; and
(f) The satisfaction of all applicable General Conditions set forth in
Article XI.
ARTICLE IX
COMPLETE OR PARTIAL TERMINATION OF FACILITIES
SECTION 9.01 Right to Complete or Partial Termination of Facilities. Subject to
------------------------------------------------------
the terms and conditions of this Article, the Borrower shall have the right to
permanently reduce the Revolving Facility Commitment and the Base Facility
Commitment in accordance with the provisions of this Article.
SECTION 9.02 Procedure for Complete or Partial Termination of Facilities.
-----------------------------------------------------------
(a) Request. In order to permanently reduce the Revolving Facility
-------
Commitment (other than in connection with a conversion of all or a portion of
the Revolving Loan Commitment to a Base Facility Commitment, which reduction
shall be automatic) or the Base Facility Commitment, the Borrower may deliver a
written request for the reduction ("Facility Termination Request") to the
----------------------------
Lender, in the form attached as Exhibit W to this Agreement. A permanent
---------
reduction of the Revolving Facility Commitment to $0 shall be referred to as a
"Complete
--------
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Revolving Facility Termination." A permanent reduction of the Base Facility
------------------------------
Commitment to $0 shall be referred to as a "Complete Base Facility Termination."
----------------------------------
The Facility Termination Request shall be accompanied by the following:
(i) A designation of the proposed amount of the reduction in the
Commitment; and
(ii) Unless there is a Complete Revolving Facility Termination or
a Complete Base Facility Termination, a designation by the Borrower of any
Revolving Advances which will be prepaid or Fixed Advances which will be
prepaid, as the case may be.
Any release of Collateral, whether or not made in connection with a Facility
Termination Request, must comply with all conditions to a release which are set
forth in Article VII.
(b) Closing. If all conditions contained in Section 9.03 are
-------
satisfied, the Lender shall permit the Revolving Facility Commitment or Base
Facility Commitment, as the case may be, to be reduced to the amount designated
by the Borrower, at a closing to be held at offices designated by the Lender on
a Closing Date selected by the Lender, within fifteen (15) Business Days after
the Lender's receipt of the Facility Termination Request (or on such other date
to which the Borrower and the Lender may agree), by executing and delivering a
counterpart of an amendment to this Agreement, in the form attached as Exhibit X
---------
to this Agreement, evidencing the reduction in the Commitment. The document
referred to in the preceding sentence is referred to in this Article as the
"Facility Termination Document."
-----------------------------
SECTION 9.03 Conditions Precedent to Complete or Partial Termination of
----------------------------------------------------------
Facilities. The right of the Borrower to reduce the Commitments and the
----------
obligation of the Lender to execute the Facility Termination Document, are
subject to the satisfaction of the following conditions precedent on or before
the Closing Date:
(a) Payment by the Borrower in full of all of the Revolving Advances
Outstanding required to be paid in order that the aggregate unpaid principal
balance of all Revolving Advances Outstanding is not greater than the Revolving
Facility Commitment, including any associated prepayment premiums or other
amounts due under the Notes (but if the Borrower is not required to prepay all
of the Revolving Advances, the Borrower shall have the right to select which of
the Revolving Advances shall be repaid);
(b) If applicable, payment by the Borrower of the Facility
Termination Fee;
(c) Receipt by the Lender on the Closing Date of one or more
counterparts of the Facility Termination Document, dated as of the Closing Date,
signed by each of the parties (other than the Lender) who is a party to such
Facility Termination Document; and
(d) The satisfaction of all applicable General Conditions set forth
in Article XI.
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ARTICLE X
TERMINATION OF CREDIT FACILITY
SECTION 10.01 Right to Terminate Credit Facility. Subject to the terms and
----------------------------------
conditions of this Article, the Borrower shall have the right to terminate this
Agreement and the Credit Facility and receive a release of all of the Collateral
from the Collateral Pool in accordance with the provisions of this Article.
SECTION 10.02 Procedure for Terminating Credit Facility.
-----------------------------------------
(a) Request. In order to terminate this Agreement and the Credit
-------
Facility, the Borrower shall deliver a written request for the termination
("Credit Facility Termination Request") to the Lender, in the form attached as
-----------------------------------
Exhibit Y to this Agreement.
---------
(b) Closing. If all conditions contained in Section 10.03 are
-------
satisfied, this Agreement shall terminate, and the Lender shall cause all of the
Collateral to be released from the Collateral Pool, at a closing to be held at
offices designated by the Lender on a Closing Date selected by the Lender,
within 30 Business Days after the Lender's receipt of the Credit Facility
Termination Request (or on such other date to which the Borrower and the Lender
may agree), by executing and delivering, and causing all applicable parties to
execute and deliver, all at the sole cost and expense of the Borrower, (i)
instruments, in the form customarily used by the Lender for releases in the
jurisdictions in which the Mortgaged Properties are located, releasing all of
the Security Instruments as a Lien on the Mortgaged Properties, (ii) UCC
Termination Statements terminating all of the UCC-1 Financing Statements
perfecting a Lien on the personal property located on the Mortgaged Properties,
in form customarily used in the jurisdiction governing the perfection of the
security interest being released, (iii) such other documents and instruments as
the Borrower may reasonably request evidencing the release of the Collateral
from any lien securing the Obligations (including a termination of any
restriction on the use of any accounts relating to the Collateral) and the
release and return to the Borrower of any and all escrowed amounts relating
thereto, (iv) instruments releasing the Borrower from its obligations under this
Agreement and any and all other Loan Documents, and (v) the Notes, each marked
paid and canceled. The instruments referred to in the preceding sentence are
referred to in this Article as the "Facility Termination Documents."
------------------------------
SECTION 10.03 Conditions Precedent to Termination of Credit Facility. The right
------------------------------------------------------
of the Borrower to terminate this Agreement and the Credit Facility and to
receive a release of all of the Collateral from the Collateral Pool and the
Lender's obligation to execute and deliver the Facility Termination Documents on
the Closing Date are subject to the following conditions precedent:
(a) Payment by the Borrower in full of all of the Notes Outstanding
on the Closing Date, including any associated prepayment premiums or other
amounts due under the Notes and all other amounts owing by the Borrower to the
Lender under this Agreement;
(b) If applicable, defeasance by the Borrower, in accordance with the
provisions of Section 3.10 of this Agreement, with respect to all Base Facility
Notes Outstanding on the Closing Date;
(c) If applicable, payment of the Facility Termination Fee; and
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(d) The satisfaction of all applicable General Conditions set forth
in Article XI.
ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS
The obligation of the Lender to close the transaction requested in a
Request shall be subject to the following conditions precedent ("General
-------
Conditions") in addition to any other conditions precedent set forth in this
----------
Agreement:
SECTION 11.01 Conditions Applicable to All Requests. Each of the following
-------------------------------------
conditions precedent shall apply to all Requests:
(a) Payment of Expenses. The payment by the Borrower of the Lender's
-------------------
reasonable fees and expenses payable in accordance with this Agreement for which
the Lender has presented an invoice on or before the Closing Date for the
Request.
(b) No Material Adverse Change. There has been no material adverse
--------------------------
change in the financial condition, business or prospects of the Borrower or in
the physical condition, operating performance or value of any of the Mortgaged
Properties since the Initial Closing Date (or, with respect to the conditions
precedent to the Initial Advance, from the condition, business or prospects
reflected in the financial statements, reports and other information obtained by
the Lender during its review of the Borrower and the Initial Mortgaged
Properties).
(c) No Default. There shall exist no Event of Default or Potential
----------
Event of Default on the Closing Date for the Request and, after giving effect to
the transaction requested in the Request, no Event of Default or Potential Event
of Default shall have occurred.
(d) No Insolvency. The Borrower is not insolvent (within the meaning
-------------
of any applicable federal or state laws relating to bankruptcy or fraudulent
transfers) nor will it be rendered insolvent by the transactions contemplated by
the Loan Documents, including the making of a Future Advance, or, after giving
effect to such transactions, will be left with an unreasonably small capital
with which to engage in its business or undertakings, or will have intended to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature or will have intended to hinder, delay or defraud any
existing or future creditor.
(e) No Untrue Statements. The Loan Documents shall not contain any
--------------------
untrue or misleading statement of a material fact and shall not fail to state a
material fact necessary in order to make the information contained therein not
misleading.
(f) Representations and Warranties. All representations and
------------------------------
warranties made by the Borrower in the Loan Documents shall be true and correct
in all material respects on the Closing Date for the Request with the same force
and effect as if such representations and warranties had been made on and as of
the Closing Date for the Request.
(g) No Condemnation or Casualty. There shall not be pending or
---------------------------
threatened any condemnation or other taking, whether direct or indirect, against
any Mortgaged Property and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property.
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(h) Delivery of Closing Documents. The receipt by the Lender of the
-----------------------------
following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:
(i) A Compliance Certificate;
(ii) An Organizational Certificate; and
(iii) Such other documents, instruments, approvals (and, if
requested by the Lender, certified duplicates of executed copies thereof)
and opinions as the Lender may request.
(i) Covenants. The relevant Borrower is in full compliance with each
---------
of the covenants set forth in Articles XIII, XIV and XV of this Agreement,
without giving effect to any notice and cure rights of the relevant Borrower.
SECTION 11.02 Delivery of Closing Documents Relating to Initial Advance Request,
------------------------------------------------------------------
Collateral Addition Request, Credit Facility Expansion Request or Future Advance
--------------------------------------------------------------------------------
Request. With respect to the closing of the Initial Advance Request, a
-------
Collateral Addition Request, a Credit Facility Expansion Request, or a Future
Advance Request, it shall be a condition precedent that the Lender receives each
of the following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:
(a) Loan Documents. Fully executed original copies of each Loan
--------------
Document required to be executed in connection with the Request, duly executed
and delivered by the parties thereto (other than the Lender), each of which
shall be in full force and effect.
(b) Opinion. Favorable opinions of counsel to the Borrower, as to the
-------
due organization and qualification of the Borrower, the due authorization,
execution, delivery and enforceability of each Loan Document executed in
connection with the Request and such other matters as the Lender may reasonably
require.
SECTION 11.03 Delivery of Property-Related Documents. With respect to each of
--------------------------------------
the Mortgaged Properties to be made part of the Collateral Pool on the Closing
Date for the Initial Advance Request or a Collateral Addition Request, it shall
be a condition precedent that the Lender receive each of the following, each
dated as of the Closing Date for the Initial Advance Request or Collateral
Addition Request, as the case may be, in form and substance satisfactory to the
Lender in all respects:
(a) A favorable opinion of local counsel to the Borrower or the
Lender as to the enforceability of the Security Instrument, and any other Loan
Documents, executed in connection with the Request.
(b) A commitment for the Title Insurance Policy applicable to the
Mortgaged Property and a pro forma Title Insurance Policy based on the
Commitment.
(c) The Insurance Policy (or a certified copy of the Insurance
Policy) applicable to the Mortgaged Property.
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(d) The Survey applicable to the Mortgaged Property.
(e) Evidence satisfactory to the Lender of compliance of the
Mortgaged Property with property laws as required by Sections 205 and 206 of
Part III of the DUS Guide.
(f) An Appraisal of the Mortgaged Property.
(g) A Replacement Reserve Agreement, providing for the establishment
of a replacement reserve account, to be pledged to the Lender, in which the
owner shall (unless waived by the Lender) periodically deposit amounts for
replacements for improvements at the Mortgaged Property and as additional
security for the Borrower's obligations under the Loan Documents.
(h) A Completion/Repair and Security Agreement, on the standard form
required by the DUS Guide.
(i) If no management agreement is in effect for a Mortgaged Property,
an Agreement Regarding Management Agreement or, if a management agreement is in
effect for a Mortgaged Property, an Assignment of Management Agreement, on the
standard form required by the DUS Guide.
(j) An Assignment of Leases and Rents, if the Lender determines one
to be necessary or desirable, provided that the provisions of any such
assignment shall be substantively identical to those in the Security Instrument
covering the Collateral, with such modifications as may be necessitated by
applicable state or local law.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
SECTION 12.01 Representations and Warranties of the Borrower. The Borrower
----------------------------------------------
hereby represents and warrants to the Lender as follows:
(a) Due Organization; Qualification.
-------------------------------
(1) The Borrower is a duly formed and existing corporation. The
Borrower is qualified to transact business and is in good standing in each
other jurisdiction in which such qualification and/or standing is necessary
to the conduct of its business and where the failure to be so qualified
would adversely affect the validity of, the enforceability of, or the
ability of the Borrower to perform the Obligations under this Agreement and
the other Loan Documents. The Borrower is qualified to transact business
and is in good standing in each State in which it owns a Mortgaged
Property.
(2) The Borrower's principal place of business, principal office
and office where it keeps its books and records as to the Collateral is
located at its address set out in Section 23.08.
(3) The Borrower has observed all customary formalities regarding
its corporate existence.
-46-
(b) Power and Authority. The Borrower has the requisite power and
-------------------
authority (i) to own its properties and to carry on its business as now
conducted and as contemplated to be conducted in connection with the performance
of the Obligations hereunder and under the other Loan Documents and (ii) to
execute and deliver this Agreement and the other Loan Documents and to carry out
the transactions contemplated by this Agreement and the other Loan Documents.
(c) Due Authorization. The execution, delivery and performance of
-----------------
this Agreement and the other Loan Documents have been duly authorized by all
necessary action and proceedings by or on behalf of the Borrower, and no further
approvals or filings of any kind, including any approval of or filing with any
Governmental Authority, are required by or on behalf of the Borrower as a
condition to the valid execution, delivery and performance by the Borrower of
this Agreement or any of the other Loan Documents.
(d) Valid and Binding Obligations. This Agreement and the other Loan
-----------------------------
Documents have been duly authorized, executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles affecting the
enforcement of creditors' rights generally or by equitable principles or by the
exercise of discretion by any court.
(e) Non-contravention; No Liens. Neither the execution and delivery
---------------------------
of this Agreement and the other Loan Documents, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the other Loan
Documents nor the performance of the Obligations:
(1) does or will conflict with or result in any breach or
violation of any Applicable Law enacted or issued by any Governmental
Authority or other agency having jurisdiction over the Borrower, any of the
Mortgaged Properties or any other portion of the Collateral or other assets
of the Borrower, or any judgment or order applicable to the Borrower or to
which the Borrower, any of the Mortgaged Properties or other assets of the
Borrower are subject;
(2) does or will conflict with or result in any material breach
or violation of, or constitute a default under, any of the terms,
conditions or provisions of the Borrower's Organizational Documents, any
indenture, existing agreement or other instrument to which the Borrower is
a party or to which the Borrower, any of the Mortgaged Properties or any
other portion of the Collateral or other assets of the Borrower are
subject;
(3) does or will result in or require the creation of any Lien on
all or any portion of the Collateral or any of the Mortgaged Properties,
except for the Permitted Liens; or
(4) does or will require the consent or approval of any creditor
of the Borrower, any Governmental Authority or any other Person except such
consents or approvals which have already been obtained.
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(f) Pending Litigation or other Proceedings. There is no pending or,
---------------------------------------
to the best knowledge of the Borrower, threatened action, suit, proceeding or
investigation, at law or in equity, before any court, board, body or official of
any Governmental Authority or arbitrator against or affecting any Mortgaged
Property or any other portion of the Collateral or other assets of the Borrower,
which, if decided adversely to the Borrower, would have, or may reasonably be
expected to have, a Material Adverse Effect. The Borrower is not in default with
respect to any order of any Governmental Authority.
(g) Solvency. The Borrower is not insolvent and will not be rendered
--------
insolvent by the transactions contemplated by this Agreement or the other Loan
Documents and after giving effect to such transactions, the Borrower will not be
left with an unreasonably small amount of capital with which to engage in its
business or undertakings, nor will the Borrower have incurred, have intended to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Borrower did not receive less than a reasonably
equivalent value in exchange for incurrence of the Obligations. There (i) is no
contemplated, pending or, to the best of the Borrower's knowledge, threatened
bankruptcy, reorganization, receivership, insolvency or like proceeding, whether
voluntary or involuntary, affecting the Borrower or any of the Mortgaged
Properties and (ii) has been no assertion or exercise of jurisdiction over the
Borrower or any of the Mortgaged Properties by any court empowered to exercise
bankruptcy powers.
(h) No Contractual Defaults. There are no defaults by the Borrower
-----------------------
or, to the knowledge of the Borrower, by any other Person under any contract to
which the Borrower is a party relating to any Mortgaged Property, including any
management, rental, service, supply, security, maintenance or similar contract,
other than defaults which do not permit the non-defaulting party to terminate
the contract and which do not have, and are not reasonably expected to have, a
Material Adverse Effect. Neither the Borrower nor, to the knowledge of the
Borrower, any other Person, has received notice or has any knowledge of any
existing circumstances in respect of which it could receive any notice of
default or breach in respect of any contracts affecting or concerning any
Mortgaged Property, which would have a Material Adverse Effect.
(i) Compliance with the Loan Documents. The Borrower is in compliance
----------------------------------
with all provisions of the Loan Documents to which it is a party or by which it
is bound. The representations and warranties made by the Borrower in the Loan
Documents are true, complete and correct as of the Closing Date and do not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(j) ERISA. The Borrower is in compliance in all material respects
-----
with all applicable provisions of ERISA and has not incurred any liability to
the PBGC on a Plan under Title IV of ERISA. None of the assets of the Borrower
constitute plan assets (within the meaning of Department of Labor Regulation (S)
2510.3-101) of any employee benefit plan subject to Title I of ERISA.
(k) Financial Information. The financial projections relating to the
---------------------
Borrower and delivered to the Lender on or prior to the date hereof, if any,
were prepared on the basis of assumptions believed by the Borrower, in good
faith at the time of preparation, to be reasonable and the Borrower is not aware
of any fact or information that would lead it to believe that such
-48-
assumptions are incorrect or misleading in any material respect; provided,
however, that no representation or warranty is made that any result set forth in
such financial projections shall be achieved. The financial statements of the
Borrower which have been furnished to the Lender are complete and accurate in
all material respects and present fairly the financial condition of the
Borrower, as of its date in accordance with GAAP, applied on a consistent basis,
and since the date of the most recent of such financial statements no event has
occurred which would have, or may reasonably be expected to have a Material
Adverse Effect, and there has not been any material transaction entered into by
the Borrower other than transactions in the ordinary course of business. The
Borrower has no material contingent obligations which are not otherwise
disclosed in its most recent financial statements.
(l) Accuracy of Information. No information, statement or report
-----------------------
furnished in writing to the Lender by the Borrower in connection with this
Agreement or any other Loan Document or in connection with the consummation of
the transactions contemplated hereby and thereby contains any material
misstatement of fact or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading; and the representations and warranties of the
Borrower and the statements, information and descriptions contained in the
Borrower's closing certificates, as of the Closing Date, are true, correct and
complete in all material respects, do not contain any untrue statement or
misleading statement of a material fact, and do not omit to state a material
fact required to be stated therein or necessary to make the certifications,
representations, warranties, statements, information and descriptions contained
therein, in light of the circumstances under which they were made, not
misleading; and the estimates and the assumptions contained herein and in any
certificate of the Borrower delivered as of the Closing Date are reasonable and
based on the best information available to the Borrower.
(m) Intentionally Omitted.
---------------------
(n) Governmental Approvals. No Governmental Approval not already
----------------------
obtained or made is required for the execution and delivery of this Agreement or
any other Loan Document or the performance of the terms and provisions hereof or
thereof by the Borrower.
(o) Governmental Orders. The Borrower is not presently under any
-------------------
cease or desist order or other orders of a similar nature, temporary or
permanent, of any Governmental Authority which would have the effect of
preventing or hindering performance of its duties hereunder, nor are there any
proceedings presently in progress or to its knowledge contemplated which would,
if successful, lead to the issuance of any such order.
(p) No Reliance. The Borrower acknowledges, represents and warrants
-----------
that it understands the nature and structure of the transactions contemplated by
this Agreement and the other Loan Documents, that it is familiar with the
provisions of all of the documents and instruments relating to such
transactions; that it understands the risks inherent in such transactions,
including the risk of loss of all or any of the Mortgaged Properties; and that
it has not relied on the Lender or ▇▇▇▇▇▇ ▇▇▇ for any guidance or expertise in
analyzing the financial or other consequences of the transactions contemplated
by this Agreement or any other Loan Document or otherwise relied on the Lender
or ▇▇▇▇▇▇ Mae in any manner in connection with interpreting,
-49-
entering into or otherwise in connection with this Agreement, any other Loan
Document or any of the matters contemplated hereby or thereby.
(q) Compliance with Applicable Law. The Borrower is in compliance
------------------------------
with Applicable Law, including all Governmental Approvals, if any, except for
such items of noncompliance that, singly or in the aggregate, have not had and
are not reasonably expected to cause, a Material Adverse Effect.
(r) Contracts with Affiliates. Except as otherwise approved in
-------------------------
writing by the Lender, the Borrower has not entered into and is not a party to
any contract, lease or other agreement with any Affiliate of the Borrower for
the provision of any service, materials or supplies to any Mortgaged Property
(including any contract, lease or agreement for the provision of property
management services, cable television services or equipment, gas, electric or
other utilities, security services or equipment, laundry services or equipment
or telephone services or equipment).
(s) Lines of Business. Not less than sixty percent (60%) of the
-----------------
Consolidated Total Assets of each Borrower consist of Multifamily Residential
Properties.
(t) Status as a Real Estate Investment Trust. UDRT is qualified,
----------------------------------------
and is taxed as, a real estate investment trust under Subchapter M of the
Internal Revenue Code, and is not engaged in any activities which would
jeopardize such qualification and tax treatment.
SECTION 12.02 Representations and Warranties of the Borrower. The Borrower
----------------------------------------------
owning a Mortgaged Property hereby represents and warrants to the Lender as
follows with respect to each of the Mortgaged Properties owned by it:
(a) Title. The relevant Borrower has good, valid, marketable and
-----
indefeasible title to each Mortgaged Property (either in fee simple or as tenant
under a ground lease meeting all of the requirements of the DUS Guide), free and
clear of all Liens whatsoever except the Permitted Liens. Each Security
Instrument, if and when properly recorded in the appropriate records, together
with any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create a valid, perfected first lien on the Mortgaged
Property intended to be encumbered thereby (including the Leases related to such
Mortgaged Property and the rents and all rights to collect rents under such
Leases), subject only to Permitted Liens. Except for any Permitted Liens, there
are no Liens or claims for work, labor or materials affecting any Mortgaged
Property which are or may be prior to, subordinate to, or of equal priority
with, the Liens created by the Loan Documents. The Permitted Liens do not have,
and may not reasonably be expected to have, a Material Adverse Effect.
(b) Impositions. The Borrower has filed all property and similar
-----------
tax returns required to have been filed by it with respect to each Mortgaged
Property and has paid and discharged, or caused to be paid and discharged, all
installments for the payment of all Taxes due to date, and all other material
Impositions imposed against, affecting or relating to each Mortgaged Property
other than those which have not become due, together with any fine, penalty,
interest or cost for nonpayment pursuant to such returns or pursuant to any
assessment received by it. Except for any Tax, levy or other assessment or
charge resulting from a reassessment of the value of a Mortgaged Property in the
ordinary course of business, the Borrower has no knowledge of any new
-50-
proposed Tax, levy or other governmental or private assessment or charge in
respect of any Mortgaged Property which has not been disclosed in writing to the
Lender.
(c) Zoning. Each Mortgaged Property complies in all material
------
respects with all Applicable Laws affecting such Mortgaged Property. Without
limiting the foregoing, all material Permits, including certificates of
occupancy, have been issued and are in full force and effect. Neither the
Borrower nor, to the knowledge of the Borrower, any former owner of any
Mortgaged Property, has received any written notification or threat of any
actions or proceedings regarding the noncompliance or nonconformity of any
Mortgaged Property with any Applicable Laws or Permits, nor is the Borrower
otherwise aware of any such pending actions or proceedings.
(d) Leases. The Borrower has delivered to the Lender a true and
------
correct copy of its form apartment lease for each Mortgaged Property (and, with
respect to leases executed prior to the date on which the Borrower first owned
the Mortgaged Property, the form apartment lease used for such leases), and each
Lease with respect to such Mortgaged Property is in the form thereof, with no
material modifications thereto, except as previously disclosed in writing to the
Lender. Except as set forth in a Rent Roll, no Lease for any unit in any
Mortgaged Property (i) is for a term in excess of one year, including any
renewal or extension period unless such renewal or extension period is subject
to termination by the Borrower upon not more than 30 days' written notice, (ii)
provides for prepayment of more than one month's rent, or (iii) was entered into
in other than the ordinary course of business.
(e) Rent Roll. The Borrower has executed and delivered to the
---------
Lender a Rent Roll for each Mortgaged Property, each dated as of and delivered
within 30 days prior to the Closing Date. Each Rent Roll sets forth each and
every unit subject to a Lease which is in full force and effect as of the date
of such Rent Roll. The information set forth on each Rent Roll is true, correct
and complete in all material respects as of its date and there has occurred no
material adverse change in the information shown on any Rent Roll from the date
of each such Rent Roll to the Closing Date. Except as disclosed in the Rent Roll
with respect to each Mortgaged Property or otherwise previously disclosed in
writing to the Lender, no Lease is in effect as of the date of the Rent Roll
with respect to such Mortgaged Property. Notwithstanding the foregoing, any
representation in this subsection (e) made with respect to a time period
occurring prior to the date on which the Borrower owned the Mortgaged Property
is made to the best of the Borrower's knowledge.
(f) Status of Landlord under Leases. Except for any assignment of
-------------------------------
leases and rents which is a Permitted Lien or which is to be released in
connection with the consummation of the transactions contemplated by this
Agreement, the Borrower is the owner and holder of the landlord's interest under
each of the Leases of units in each Mortgaged Property and there are no prior
outstanding assignments of any such Lease, or any portion of the rents,
additional rents, charges, issues or profits due and payable or to become due
and payable thereunder.
(g) Enforceability of Leases. Each Lease constitutes the legal,
------------------------
valid and binding obligation of the Borrower and, to the knowledge of the
Borrower, of each of the other parties thereto, enforceable in accordance with
its terms, subject only to bankruptcy, insolvency, reorganization or other
similar laws relating to creditors' rights generally, and equitable principles,
and except as disclosed in writing to the Lender, no notice of any default by
the Borrower which
-51-
remains uncured has been sent by any tenant under any such Lease, other than
defaults which do not have, and are not reasonably expected to have, a Material
Adverse Effect on the Mortgaged Property subject to the Lease.
(h) No Lease Options. All premises demised to tenants under
----------------
Leases are occupied by such tenants as tenants only. No Lease contains any
option or right to purchase, right of first refusal or any other similar
provisions. No option or right to purchase, right of first refusal, purchase
contract or similar right exists with respect to any Mortgaged Property.
(i) Insurance. The Borrower has delivered to the Lender true and
---------
correct certified copies of all Insurance Policies currently in effect as of the
date of this Agreement with respect to the Mortgaged Property which it owns.
Each such Insurance Policy complies in all material respects with the
requirements set forth in the Loan Documents.
(j) Tax Parcels. Each Mortgaged Property is on one or more
-----------
separate tax parcels, and each such parcel (or parcels) is (or are) separate and
apart from any other property.
(k) Encroachments. Except as disclosed on the Survey with respect
-------------
to each Mortgaged Property, none of the improvements located on any Mortgaged
Property encroaches upon the property of any other Person or upon any easement
encumbering the Mortgaged Property, nor lies outside of the boundaries and
building restriction lines of such Mortgaged Property and no improvement located
on property adjoining such Mortgaged Property lies within the boundaries of or
in any way encroaches upon such Mortgaged Property.
(l) Independent Unit. Except for Permitted Liens and as disclosed
----------------
on Exhibit AA to this Agreement, or as disclosed in a Title Insurance Policy or
----------
Survey for the Mortgaged Property, each Mortgaged Property is an independent
unit which does not rely on any drainage, sewer, access, parking, structural or
other facilities located on any Property not included either in such Mortgaged
Property or on public or utility easements for the (i) fulfillment of any
zoning, building code or other requirement of any Governmental Authority that
has jurisdiction over such Mortgaged Property, (ii) structural support, or (iii)
the fulfillment of the requirements of any Lease or other agreement affecting
such Mortgaged Property. The Borrower, directly or indirectly, has the right to
use all amenities, easements, public or private utilities, parking, access
routes or other items necessary or currently used for the operation of each
Mortgaged Property. All public utilities are installed and operating at each
Mortgaged Property and all billed installation and connection charges have been
paid in full. Each Mortgaged Property is either (x) contiguous to or (y)
benefits from an irrevocable unsubordinated easement permitting access from such
Mortgaged Property to a physically open, dedicated public street, and has all
necessary permits for ingress and egress and is adequately serviced by public
water, sewer systems and utilities. No building or other improvement not located
on a Mortgaged Property relies on any part of the Mortgaged Property to fulfill
any zoning requirements, building code or other requirement of any Governmental
Authority that has jurisdiction over the Mortgaged Property, for structural
support or to furnish to such building or improvement any essential building
systems or utilities.
(m) Condition of the Mortgaged Properties. Except as disclosed in
-------------------------------------
any third party report delivered to the Lender prior to the date on which the
Borrower's Mortgaged Property is added to the Collateral Pool, or otherwise
disclosed in writing by the Borrower to the Lender
-52-
prior to such date, each Mortgaged Property is in good condition, order and
repair, there exist no structural or other material defects in such Mortgaged
Property (whether patent or, to the best knowledge of the Borrower, latent or
otherwise) and the Borrower has not received notice from any insurance company
or bonding company of any defects or inadequacies in such Mortgaged Property, or
any part of it, which would adversely affect the insurability of such Mortgaged
Property or cause the imposition of extraordinary premiums or charges for
insurance or of any termination or threatened termination of any policy of
insurance or bond. No claims have been made against any contractor, architect or
other party with respect to the condition of any Mortgaged Property or the
existence of any structural or other material defect therein. No Mortgaged
Property has been materially damaged by casualty which has not been fully
repaired or for which insurance proceeds have not been received or are not
expected to be received except as previously disclosed in writing to the Lender.
There are no proceedings pending for partial or total condemnation of any
Mortgaged Property except as disclosed in writing to the Lender.
SECTION 12.03 Representations and Warranties of the Lender. The Lender hereby
--------------------------------------------
represents and warrants to the Borrower as follows:
(a) Due Organization. The Lender is a corporation duly organized,
----------------
validly existing and in good standing under the laws of Ohio.
(b) Power and Authority. The Lender has the requisite power and
-------------------
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.
(c) Due Authorization. The execution and delivery by the Lender
-----------------
of this Agreement, and the consummation by it of the transactions contemplated
thereby, and the performance by it of its obligations thereunder, have been duly
and validly authorized by all necessary action and proceedings by it or on its
behalf.
ARTICLE XIII
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower agrees and covenants with the Lender that, at all times during the
Term of this Agreement:
SECTION 13.01 Compliance with Agreements; No Amendments. The Borrower shall
-----------------------------------------
comply with all the terms and conditions of each Loan Document to which it is a
party or by which it is bound; provided, however, that the Borrower's failure to
comply with such terms and conditions shall not be an Event of Default until the
expiration of the applicable notice and cure periods, if any, specified in the
applicable Loan Document.
SECTION 13.02 Maintenance of Existence. The Borrower shall maintain its
------------------------
existence and continue to be a corporation, limited liability company or limited
partnership, as applicable, organized under the laws of the state of its
organization. The Borrower shall continue to be duly qualified to do business in
each jurisdiction in which such qualification is necessary to the conduct of its
business and where the failure to be so qualified would adversely affect the
validity of, the enforceability of, or the ability to perform, its obligations
under this Agreement or any other Loan Document.
-53-
SECTION 13.03 Maintenance of REIT Status. During the Term of this Agreement,
--------------------------
UDRT shall qualify, and be taxed as, a real estate investment trust under
Subchapter M of the Internal Revenue Code, and will not be engaged in any
activities which would jeopardize such qualification and tax treatment.
SECTION 13.04 Financial Statements; Accountants' Reports; Other Information. The
-------------------------------------------------------------
Borrower shall keep and maintain at all times complete and accurate books of
accounts and records in sufficient detail to correctly reflect (x) all of the
Borrower's financial transactions and assets and (y) the results of the
operation of each Mortgaged Property and copies of all written contracts, Leases
and other instruments which affect each Mortgaged Property (including all bills,
invoices and contracts for electrical service, gas service, water and sewer
service, waste management service, telephone service and management services).
In addition, the Borrower shall furnish, or cause to be furnished, to the
Lender:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 90 days after the close of its fiscal year during the Term of this
Agreement, the audited balance sheet of UDRT and its Subsidiaries as of the end
of such fiscal year, the audited statement of income, UDRT's equity and retained
earnings of the UDRT and its Subsidiaries for such fiscal year and the audited
statement of cash flows of UDRT and its Subsidiaries for such fiscal year, all
in reasonable detail and stating in comparative form the respective figures for
the corresponding date and period in the prior fiscal year, prepared in
accordance with GAAP, consistently applied, and accompanied by a certificate of
UDRT's independent certified public accountants to the effect that such
financial statements have been prepared in accordance with GAAP, consistently
applied, and that such financial statements fairly present the results of its
operations and financial condition for the periods and dates indicated, with
such certification to be free of exceptions and qualifications as to the scope
of the audit or as to the going concern nature of the business.
(b) Quarterly Financial Statements. As soon as available, and in
------------------------------
any event within 45 days after each of the first three fiscal quarters of each
fiscal year during the Term of this Agreement, the unaudited balance sheet of
UDRT and its Subsidiaries as of the end of such fiscal quarter, the unaudited
statement of income and retained earnings of UDRT and its Subsidiaries and the
unaudited statement of cash flows of UDRT and its Subsidiaries for the portion
of the fiscal year ended with the last day of such quarter, all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the previous fiscal year, accompanied by a
certificate of the Chief Financial Officer or the Vice President of Finance of
UDRT to the effect that such financial statements have been prepared in
accordance with GAAP, consistently applied, and that such financial statements
fairly present the results of its operations and financial condition for the
periods and dates indicated subject to year end adjustments in accordance with
GAAP.
(c) Quarterly Property Statements. As soon as available, and in
-----------------------------
any event within forty-five (45) days after each Calendar Quarter, a statement
of income and expenses of each Mortgaged Property accompanied by a certificate
of the Chief Financial Officer of UDRT to the effect that each such statement of
income and expenses fairly, accurately and completely presents the operations of
each such Mortgaged Property for the period indicated.
(d) Annual Property Statements. On an annual basis within ninety
--------------------------
(90) days of the end of its fiscal year, an annual statement of income and
expenses of each Mortgaged Property
-54-
accompanied by a certificate of the Chief Financial Officer of UDRT to the
effect that each such statement of income and expenses fairly, accurately and
completely presents the operations of each such Mortgaged Property for the
period indicated.
(e) Updated Rent Rolls. As soon as available, and in any event
------------------
within forty-five (45) days after each Calendar Quarter, a current Rent Roll for
each Mortgaged Property, showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the rent payable, the rent paid
and any other information requested by the Lender and accompanied by a
certificate of the Chief Financial Officer of UDRT to the effect that each such
Rent Roll fairly, accurately and completely presents the information required
therein.
(f) Security Deposit Information. Upon the Lender's request,
----------------------------
an accounting of all security deposits held in connection with any Lease of any
part of any Mortgaged Property, including the name and identification number of
the accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits are held and the name
and telephone number of the person to contact at such financial institution,
along with any authority or release necessary for the Lender to access
information regarding such accounts.
(g) Security Law Reporting Information. So long as UDRT is a
----------------------------------
reporting company under the Securities and Exchange Act of 1934, promptly upon
becoming available, (a) copies of all financial statements, reports and proxy
statements sent or made available generally by UDRT, or any of its Affiliates,
to its respective security holders, (b) all regular and periodic reports and all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or a similar form) and prospectuses, if any, filed by
UDRT, or any of its Affiliates, with the Securities and Exchange Commission or
other Governmental Authorities, and (c) all press releases and other statements
made available generally by UDRT, or any of its Affiliates, to the public
concerning material developments in the business of UDRT or other party.
(h) Accountants' Reports. Promptly upon receipt thereof,
--------------------
copies of any reports or management letters submitted to the Borrower by its
independent certified public accountants in connection with the examination of
its financial statements made by such accountants (except for reports otherwise
provided pursuant to subsection (a) above); provided, however, that the Borrower
shall only be required to deliver such reports and management letters to the
extent that they relate to any Borrower or any Mortgaged Property.
(i) Annual Budgets. Promptly, and in any event within 60 days
--------------
after the start of its fiscal year, an annual budget for each Mortgaged Property
for such fiscal year, setting forth an estimate of all of the costs and
expenses, including capital expenses, of maintaining and operating each
Mortgaged Property.
(j) Borrower Plans and Projections. To the extent prepared in
------------------------------
the ordinary course of business of the Borrower and in the form prepared by the
Borrower in the ordinary course of business, within 30 days after its
preparation, copies of (1) the Borrower's business plan for the current and the
succeeding two fiscal years, (2) the Borrower's annual budget (including capital
expenditure budgets) and projections for each Mortgaged Property; and (3) the
Borrower's financial projections for the current and the succeeding two fiscal
years.
-55-
(k) Strategic Plan. To the extent prepared in the ordinary course
--------------
of business of the Borrower and in the form prepared by the Borrower in the
ordinary course of business, within 30 days after its preparation, a written
narrative discussing the Borrower's short and long range plans, including its
plans for operations, mergers, acquisitions and management, and accompanied by
supporting financial projections and schedules, certified by a member of Senior
Management as true, correct and complete ("Strategic Plan") If the Borrower's
Strategic Plan materially changes, then such person shall deliver to the Lender
the Strategic Plan as so changed.
(l) Annual Rental and Sales Comparable Analysis. To the extent
-------------------------------------------
prepared in the ordinary course of business of the Borrower and in the form
prepared by the Borrower in the ordinary course of business, within 30 days
after its preparation, a rental and sales comparable analysis of the local real
estate market in which each Mortgaged Property is located.
(m) Other Reports. Promptly upon receipt thereof, all schedules,
-------------
financial statements or other similar reports delivered by the Borrower pursuant
to the Loan Documents or requested by the Lender with respect to the Borrower's
business affairs or condition (financial or otherwise) or any of the Mortgaged
Properties.
(n) Certification. All certifications required to be delivered
-------------
pursuant to this Section 13.04 shall run directly to and be for the benefit of
Lender and ▇▇▇▇▇▇ ▇▇▇.
SECTION 13.05 Certificate of Compliance. The Borrower shall deliver to the
-------------------------
Lender concurrently with the delivery of the financial statements and/or reports
required to be delivered pursuant to Section 13.04 (a) and (b) above a
certificate signed by the Chief Financial Officer, Treasurer or Vice President
of Finance of UDRT stating that, to the best knowledge of such individual
following reasonable inquiry, (i) setting forth in reasonable detail the
calculations required to establish whether UDRT was in compliance with the
requirements of Sections 15.02 through 15.09 on the date of such financial
statements, and (ii) stating that, to the best knowledge of such individual
following reasonable inquiry, no Event of Default or Potential Event of Default
has occurred, or if an Event of Default or Potential Event of Default has
occurred, specifying the nature thereof in reasonable detail and the action
which UDRT is taking or proposes to take with respect thereto. Any certificate
required by this Section 13.05 shall run directly to and be for the benefit of
Lender and ▇▇▇▇▇▇ Mae.
SECTION 13.06 Maintain Licenses. The Borrower shall procure and maintain in full
-----------------
force and effect all licenses, Permits, charters and registrations which are
material to the conduct of its business and shall abide by and satisfy all terms
and conditions of all such licenses, Permits, charters and registrations.
SECTION 13.07 Access to Records; Discussions With Officers and Accountants. To
------------------------------------------------------------
the extent permitted by law and in addition to the applicable requirements of
the Security Instruments, the Borrower shall permit the Lender, upon reasonable
notice to the Borrower and provided Lender observes reasonable security and
confidentiality procedures of the Borrower:
(a) to inspect, make copies and abstracts of, and have reviewed or
audited, such of the Borrower's books and records as may relate to the
Obligations or any Mortgaged Property;
-56-
(b) to discuss the Borrower's affairs, finances and accounts
with any of UDRT's Chief Operating Officer, Chief Financial Officer, Vice
President of Finance, Treasurer, Assistant Treasurer, Comptroller and any other
person performing the functions of said officers;
(c) to discuss the Borrower's affairs, finances and accounts
with its independent public accountants, provided that the Chief Financial
Officer of UDRT has been given the opportunity by the Lender to be a party to
such discussions; and
(d) to receive any other information that the Lender deems
necessary or relevant in connection with any Advance, any Loan Document or the
Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours.
SECTION 13.08 Inform the Lender of Material Events. The Borrower shall promptly
------------------------------------
inform the Lender in writing of any of the following (and shall deliver to the
Lender copies of any related written communications, complaints, orders,
judgments and other documents relating to the following) of which the Borrower
has actual knowledge:
(a) Defaults. The occurrence of any Event of Default or any
--------
Potential Event of Default under this Agreement or any other Loan Document;
(b) Regulatory Proceedings. The commencement of any
-----------------------
rulemaking or disciplinary proceeding or the promulgation of any proposed or
final rule which would have, or may reasonably be expected to have, a Material
Adverse Effect;
(c) Legal Proceedings. The commencement or threat of, or
------------------
amendment to, any proceedings by or against the Borrower in any Federal, state
or local court or before any Governmental Authority, or before any arbitrator,
which, if adversely determined, would have, or at the time of determination may
reasonably be expected to have, a Material Adverse Effect;
(d) Bankruptcy Proceedings. The commencement of any
----------------------
proceedings by or against the Borrower under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
(e) Regulatory Supervision or Penalty. The receipt of notice
---------------------------------
from any Governmental Authority having jurisdiction over the Borrower that (A)
the Borrower is being placed under regulatory supervision, (B) any license,
Permit, charter, membership or registration material to the conduct of the
Borrower's business or the Mortgaged Properties is to be suspended or revoked or
(C) the Borrower is to cease and desist any practice, procedure or policy
employed by the Borrower, as the case may be, in the conduct of its business,
and such cessation would have, or may reasonably be expected to have, a Material
Adverse Effect;
(f) Environmental Claim. The receipt from any Governmental
-------------------
Authority or other Person of any notice of violation, claim, demand, abatement,
order or other order or direction (conditional or otherwise) for any damage,
including personal injury (including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity, indirect or consequential
-57-
damages, damage to the environment, pollution, contamination or other adverse
effects on the environment, removal, cleanup or remedial action or for fines,
penalties or restrictions, resulting from or based upon (a) the existence or
occurrence, or the alleged existence or occurrence, of a Hazardous Substance
Activity or (b) the violation, or alleged violation, of any Hazardous Materials
Laws in connection with any Mortgaged Property or any of the other assets of the
Borrower;
(g) Material Adverse Effects. The occurrence of any act,
------------------------
omission, change or event which has a Material Adverse Effect, subsequent to the
date of the most recent audited financial statements of the Borrower delivered
to the Lender pursuant to Section 13.04;
(h) Accounting Changes. Any material change in the Borrower's
------------------
accounting policies or financial reporting practices; and
(i) Legal and Regulatory Status. The occurrence of any act,
---------------------------
omission, change or event, including any Governmental Approval, the result of
which is to change or alter in any way the legal or regulatory status of the
Borrower.
SECTION 13.09 Intentionally Omitted.
---------------------
SECTION 13.10 Inspection. Subject to the rights of tenants and upon reasonable
----------
notice, the Borrower shall permit any Person designated by the Lender: (i) to
make entries upon and inspections of the Mortgaged Properties; and (ii) to
otherwise verify, examine and inspect the amount, quantity, quality, value
and/or condition of, or any other matter relating to, any Mortgaged Property;
provided, however, that prior to an Event of Default or Potential Event of
Default, all such entries, examinations and inspections shall be conducted at
reasonable times during normal business hours.
SECTION 13.11 Compliance with Applicable Laws. The Borrower shall comply in all
-------------------------------
material respects with all Applicable Laws now or hereafter affecting any
Mortgaged Property or any part of any Mortgaged Property or requiring any
alterations, repairs or improvements to any Mortgaged Property. The Borrower
shall procure and continuously maintain in full force and effect, and shall
abide by and satisfy all material terms and conditions of all Permits.
SECTION 13.12 Warranty of Title. The Borrower shall warrant and defend (a) the
-----------------
title to each Mortgaged Property and every part of each Mortgaged Property,
subject only to Permitted Liens, and (b) the validity and priority of the lien
of the applicable Loan Documents, subject only to Permitted Liens, in each case
against the claims of all Persons whatsoever. The Borrower shall reimburse the
Lender for any losses, costs, damages or expenses (including reasonable
attorneys' fees and court costs) incurred by the Lender if an interest in any
Mortgaged Property, other than with respect to a Permitted Lien, is claimed by
others.
SECTION 13.13 Defense of Actions. The Borrower shall appear in and defend
------------------
(whether or not such defense is provided by Borrower's insurance) any action or
proceeding purporting to affect the security for this Agreement or the rights or
power of the Lender hereunder, and shall pay all costs and expenses, including
the cost of evidence of title and reasonable attorneys' fees, in any such action
or proceeding in which the Lender may appear. If the claim is insured and
Borrower's insurance company provides a defense, Borrower may rely on such
defense. If the Borrower fails to perform any of the covenants or agreements
contained in this Agreement, or if any action or
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proceeding is commenced that is not diligently defended by the Borrower which
affects in any material respect the Lender's interest in any Mortgaged Property
or any part thereof, including eminent domain, code enforcement or proceedings
of any nature whatsoever under any Applicable Law, whether now existing or
hereafter enacted or amended, then the Lender may, but without obligation to do
so and without notice to or demand upon the Borrower and without releasing the
Borrower from any Obligation, make such appearances, disburse such sums and take
such action as the Lender deems necessary or appropriate to protect the Lender's
interest, including disbursement of attorney's fees, entry upon such Mortgaged
Property to make repairs or take other action to protect the security of said
Mortgaged Property, and payment, purchase, contest or compromise of any
encumbrance, charge or lien which in the judgment of the Lender appears to be
prior or superior to the Loan Documents. In the event (i) that any Security
Instrument is foreclosed in whole or in part or that any Loan Document is put
into the hands of an attorney for collection, suit, action or foreclosure, or
(ii) of the foreclosure of any mortgage, deed to secure debt, deed of trust or
other security instrument prior to or subsequent to any Security Instrument or
any Loan Document in which proceeding the Lender is made a party or (iii) of the
bankruptcy of the Borrower or an assignment by the Borrower for the benefit of
their respective creditors, the Borrower shall be chargeable with and agrees to
pay all costs of collection and defense, including actual attorneys' fees in
connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable together
with all required service or use taxes.
SECTION 13.14 Alterations to the Mortgaged Properties. Except as otherwise
---------------------------------------
provided in the Loan Documents, the Borrower shall have the right to undertake
any alteration, improvement, demolition, removal or construction (collectively,
"Alterations") to the Mortgaged Property which it owns without the prior consent
-----------
of the Lender; provided, however, that in any case, no such Alteration shall be
-------- -------
made to any Mortgaged Property without the prior written consent of the Lender
if (i) such Alteration could reasonably be expected to adversely affect the
value of such Mortgaged Property or its operation as a multifamily housing
facility in substantially the same manner in which it is being operated on the
date such property became Collateral, (ii) the construction of such Alteration
could reasonably be expected to result in interference to the occupancy of
tenants of such Mortgaged Property such that tenants in occupancy with respect
to five percent (5%) or more of the Leases would be permitted to terminate their
Leases or to ▇▇▇▇▇ the payment of all or any portion of their rent, or (iii)
such Alteration will be completed in more than 12 months from the date of
commencement or in the last year of the Term of this Agreement. Notwithstanding
the foregoing, the Borrower must obtain the Lender's prior written consent to
construct Alterations with respect to the Mortgaged Property costing in excess
of the lesser of (i) five percent (5%) of the Allocable Facility Amount of such
Mortgaged Property and (ii) $250,000 and the Borrower must give prior written
notice to the Lender of its intent to construct Alterations with respect to such
Mortgaged Property costing in excess of $100,000; provided, however, that the
preceding requirements shall not be applicable to Alterations made, conducted or
undertaken by the Borrower as part of the Borrower's routine maintenance and
repair of the Mortgaged Properties as required by the Loan Documents.
SECTION 13.15 ERISA. The Borrower shall at all times remain in compliance in all
-----
material respects with all applicable provisions of ERISA and similar
requirements of the PBGC.
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SECTION 13.16 Loan Document Taxes. If any tax, assessment or Imposition (other
-------------------
than a franchise tax imposed on or measured by, the net income or capital
(including branch profits tax) of the Lender (or any transferee or assignee
thereof, including a participation holder)) ("Loan Document Taxes") is levied,
-------------------
assessed or charged by the United States, or any State in the United States, or
any political subdivision or taxing authority thereof or therein upon any of the
Loan Documents or the obligations secured thereby, the interest of the Lender in
the Mortgaged Properties, or the Lender by reason of or as holder of the Loan
Documents, the Borrower shall pay all such Loan Document Taxes to, for, or on
account of the Lender (or provide funds to the Lender for such payment, as the
case may be) as they become due and payable and shall promptly furnish proof of
such payment to the Lender, as applicable. In the event of passage of any law or
regulation permitting, authorizing or requiring such Loan Document Taxes to be
levied, assessed or charged, which law or regulation in the opinion of counsel
to the Lender may prohibit the Borrower from paying the Loan Document Taxes to
or for the Lender, the Borrower shall enter into such further instruments as may
be permitted by law to obligate the Borrower to pay such Loan Document Taxes.
SECTION 13.17 Further Assurances. The Borrower, at the request of the Lender,
------------------
shall execute and deliver and, if necessary, file or record such statements,
documents, agreements, UCC financing and continuation statements and such other
instruments and take such further action as the Lender from time to time may
request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Agreement or any of the other Loan Documents or
to subject the Collateral to the lien and security interests of the Loan
Documents or to evidence, perfect or otherwise implement, to assure the lien and
security interests intended by the terms of the Loan Documents or in order to
exercise or enforce its rights under the Loan Documents.
SECTION 13.18 Monitoring Compliance. Upon the request of the Lender, from time
---------------------
to time, the Borrower shall promptly provide to the Lender such documents,
certificates and other information as may be deemed necessary to enable the
Lender to perform its functions under the Servicing Agreement.
SECTION 13.19 Leases. Each unit in each Mortgaged Property will be leased
------
pursuant to the form lease delivered to, and acceptable to, the Lender, with no
material modifications to such approved form lease, except as disclosed in
writing to the Lender.
SECTION 13.20 Appraisals. At any time and from time to time (but not to exceed
----------
once per calendar year), the Lender shall be entitled to obtain an Appraisal of
any Mortgaged Property. At the time of the addition of a Mortgaged Property to
the Collateral Pool, the Lender shall be entitled to obtain an Appraisal of such
Mortgaged Property. The Borrower shall pay all of the Lender's costs of
obtaining the Appraisal.
SECTION 13.21 Transfer of Ownership Interests of the Borrower.
-----------------------------------------------
(a) Prohibition on Transfers and Changes of Control. The
-----------------------------------------------
Borrower shall not cause or permit a Transfer or a Change of Control.
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(b) Permitted Acts. Notwithstanding the provisions of
--------------
paragraph (a) of this Section 13.21, the following Transfers and transactions by
the Borrower are permitted without the consent of the Lender:
(i) The grant of a leasehold interest in individual
dwelling units or commercial spaces in any Mortgaged Property in
accordance with the Security Instrument.
(ii) A sale or other disposition of obsolete or worn
out personal property located in any Mortgaged Property which is
contemporaneously replaced by comparable personal property of equal or
greater value which is free and clear of liens, encumbrances and
security interests other than those created by the Loan Documents.
(iii) The creation of a mechanic's or materialmen's
lien or judgment lien against a Mortgaged Property which is released of
record or otherwise remedied to Lender's satisfaction within 30 days of
the date of creation.
(iv) The grant of an easement, if prior to the
granting of the easement the Borrower causes to be submitted to Lender
all information required by Lender to evaluate the easement, and if
Lender consents to such easement based upon Lender's determination that
the easement will not materially affect the operation of the Mortgaged
Property or Lender's interest in the Mortgaged Property and Borrower
pays to Lender, on demand, all costs and expenses incurred by Lender in
connection with reviewing Borrower's request. Lender shall not
unreasonably withhold its consent to or withhold its agreement to
subordinate the lien of a Security Instrument to (A) the grant of a
utility easement serving a Mortgaged Property to a publicly operated
utility, or (B) the grant of an easement related to expansion or
widening of roadways, provided that any such easement is in form and
substance reasonably acceptable to Lender and does not materially and
adversely affect the access, use or marketability of a Mortgaged
Property.
(v) The transfer of shares of common stock,
membership interests, or other beneficial or ownership interest or
other forms of securities in the Borrower, and the issuance of all
varieties of convertible debt, equity and other similar securities of
the Borrower, and the subsequent transfer of such securities; provided,
however, that no Change in Control occurs as a result of such transfer,
either upon such transfer or upon the subsequent conversion to equity
or such convertible debt or other securities.
(vi) The issuance by Borrower of additional limited
partnership units or convertible debt, equity, membership interests,
and other similar securities, and the subsequent transfer of such units
or other securities; provided, however, that no Change in Control
occurs as the result of such transfer, either upon such transfer or
upon the subsequent conversion to equity of such convertible debt or
other securities.
(vii) A merger with or acquisition of another entity
by Borrower, provided that (A) Borrower is the surviving entity after
such merger or acquisition, (B) no Change in Control occurs, and (C)
such merger or acquisition does not result in an Event of Default, as
such terms are defined in this Agreement.
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(viii) A Transfer in connection with any substitution or
release pursuant to the terms and conditions of Article VII of this
Agreement.
(c) Consent to Prohibited Acts. Lender may, in its sole and
--------------------------
absolute discretion, consent to a Transfer or Change of Control that would
otherwise violate this Section 13.21 if, prior to the Transfer or Change of
Control, Borrower has satisfied each of the following requirements:
(i) the submission to Lender of all information
required by Lender to make the determination required by this Section
13.21(c);
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility,
credit, management and other standards (including any standards with
respect to previous relationships between Lender and the transferee and
the organization of the transferee) customarily applied by Lender at
the time of the proposed transaction to the approval of borrowers in
connection with the origination or purchase of similar mortgages, deeds
of trust or deeds to secure debt on multifamily properties;
(iv) in the case of a transfer of direct or indirect
ownership interests in Borrower, if transferor or any other person has
obligations under any Loan Documents, the execution by the transferee
of one or more individuals or entities acceptable to Lender of an
assumption agreement that is acceptable to Lender and that, among other
things, requires the transferee to perform all obligations of
transferor or such person set forth in such Loan Document, and may
require that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may have been
waived by Lender;
(v) Lender's receipt of all of the following:
(A) a transfer fee equal to 1 percent of the
Commitment immediately prior to the transfer.
(B) In addition, Borrower shall be required to
reimburse Lender for all of Lender's out-of-pocket costs
(including reasonable attorneys' fees) incurred in reviewing
the Borrower's request.
SECTION 13.22 Change in Senior Management. The Borrower shall give the Lender
---------------------------
notice of any change in the identity of the Chief Executive Officer or the Chief
Financial Officer of UDRT.
SECTION 13.23 Date-Down Endorsements. At any time and from time to time, a
----------------------
Lender may obtain an endorsement to each Title Insurance Policy containing a
Revolving Credit Endorsement, amending the effective date of the Title Insurance
Policy to the date of the title search performed in connection with the
endorsement. The Borrower shall pay for the cost and expenses incurred by the
Lender to the Title Company in obtaining such endorsement, provided that, for
each Title Insurance Policy, it shall not be liable to pay for more than one
such endorsement in any consecutive 12 month period.
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SECTION 13.24 Geographical Diversification. From and after the date on which the
----------------------------
Collateral Pool first consists of ten (10) or more Mortgaged Properties, the
Borrower shall maintain Mortgaged Properties in the Collateral Pool so that the
Collateral Pool consists of at least nine (9) Mortgaged Properties located in at
least five (5) SMSA's, provided, however, that, upon the occurrence of any
increase in the Commitment pursuant to Article VIII, the Borrower shall at all
times thereafter cause the Collateral Pool to satisfy such other Geographical
Diversification Requirements as the Lender may determine and notify Borrower of
at the time of the increase.
SECTION 13.25 Ownership of Mortgaged Properties. The Borrower shall be the sole
---------------------------------
owner of each of the Mortgaged Properties free and clear of any Liens other than
Permitted Liens. Each Mortgaged Property located in the State of California
shall be owned by a Borrower that owns no assets other than (i) the Mortgaged
Properties and (ii) assets incident to the ownership, maintenance or operation
of such Mortgaged Property.
SECTION 13.26 Facility Balancing. If the Borrower fails to meet the Coverage and
------------------
LTV Tests then, within 45 days of Lender's notice to Borrower of such failure,
the Borrower shall (i) add Additional Mortgaged Properties to the Collateral
Pool in accordance with Article VI so that after such addition the Coverage and
LTV Tests are met, or (ii) prepay Advances Outstanding in an amount sufficient
to cause the Borrower to be in compliance with the Coverage and LTV Tests. Any
prepayments made pursuant to the preceding sentence shall be applied first
against the Variable Advances Outstanding in the sequence specified by Borrower
until there are no further Variable Advances Outstanding then against the
prepayment of Fixed Advances Outstanding so long as the prepayment is permitted
under the applicable Fixed Facility Note. If no prepayment is permitted under
the applicable Fixed Facility Note, such prepayment amount shall be held by
Lender (or its appointed collateral agent) as Substitute Cash Collateral in
accordance with a security agreement and other documents in form and substance
acceptable to Lender. Any Substitute Cash Collateral remaining will be returned
to the Borrower on the earlier of the date when the Coverage and LTV Tests are
again met or the Termination Date. If on the date the Borrower pays any amounts
required by this Section, Variable Advances are Outstanding but are not then due
and payable, Lender shall hold such amounts (which amounts shall bear interest
at a rate determined by Lender) as additional collateral until the next date on
the Variable Advances are due and payable at which time Lender shall apply the
appropriate portion of such prepayment to such Variable Advances.
ARTICLE XIV
NEGATIVE COVENANTS OF THE BORROWER
The Borrower agrees and covenants with the Lender that, at all times during the
Term of this Agreement:
SECTION 14.01 Other Activities. The Borrower shall not:
----------------
(a) either directly or indirectly sell, transfer, exchange or
otherwise dispose of any of its assets if such sale, transfer, exchange or
disposal would result in an Event of Default or Potential Event of Default;
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(b) amend its Organizational Documents in any material respect
without the prior written consent of the Lender except in connection with a
stock split or the issuance of stock of the Borrower, provided such stock split
or issuance does not result in an Event of Default or Potential Event of
Default;
(c) dissolve or liquidate in whole or in part, unless the surviving
entity is in compliance with the terms and conditions of this Agreement and the
Other Loan Documents;
(d) merge or consolidate with any Person, unless the surviving
entity is in compliance with the terms and conditions of this Agreement and the
Other Loan Documents; or
(e) use, or permit to be used, any Mortgaged Property for any uses
or purposes other than as a Multifamily Residential Property.
SECTION 14.02 Value of Security. The Borrower shall not take any action which
-----------------
could reasonably be expected to have any Material Adverse Effect.
SECTION 14.03 Zoning. The Borrower shall not initiate or consent to any zoning
------
reclassification of any Mortgaged Property or seek any variance under any zoning
ordinance or use or permit the use of any Mortgaged Property in any manner that
could result in the use becoming a nonconforming use under any zoning ordinance
or any other applicable land use law, rule or regulation.
SECTION 14.04 Liens. The Borrower shall not create, incur, assume or suffer to
-----
exist any Lien on any Mortgaged Property or any part of any Mortgaged Property,
except the Permitted Liens.
SECTION 14.05 Sale. The Borrower shall not Transfer any Mortgaged Property or
----
any part of any Mortgaged Property without the prior written consent of the
Lender (which consent may be granted or withheld in the Lender's discretion), or
any interest in any Mortgaged Property, other than to enter into Leases for
units in a Mortgaged Property to any tenant in the ordinary course of business.
SECTION 14.06 Intentionally Omitted.
---------------------
SECTION 14.07 Principal Place of Business. The Borrower shall not change its
---------------------------
principal place of business or the location of its books and records, each as
set forth in Section 12.01(a), without first giving 30 days' prior written
notice to the Lender.
SECTION 14.08 Intentionally Omitted.
---------------------
SECTION 14.09 Change in Property Management. The Borrower shall not change the
-----------------------------
management agent for any Mortgaged Property except to a management agent which
the Lender determines is qualified in accordance with the criteria set forth in
Section 701 of the DUS Guide.
SECTION 14.10 Condominiums. The Borrower shall not submit any Mortgaged Property
------------
to a condominium regime during the Term of this Agreement.
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SECTION 14.11 Restrictions on Distributions. The Borrower shall not make any
-----------------------------
distributions of any nature or kind whatsoever to the owners of its Ownership
Interests as such if, at the time of such distribution, a Potential Event of
Default or an Event of Default has occurred and remains uncured.
SECTION 14.12 Conduct of Business. The conduct of the Borrower's businesses
-------------------
shall not violate the Organizational Documents pursuant to which it is formed.
SECTION 14.13 Limitation on Unimproved Real Property and New Construction. The
-----------------------------------------------------------
Borrower shall not permit:
(a) the value of its real property which is not improved (except real
property on which phases of a Mortgaged Property are contemplated to be
constructed) by one or more buildings leased, or held out for lease, to third
parties ("Unimproved Real Property") to exceed 10% of the value of all of its
"Real Estate Assets" (as that term is defined in Section 856(c)(6)(B) of the
Internal Revenue Code and the regulations thereunder); and
(b) the sum of (i) the value of its Unimproved Real Property and (ii)
the value of its Real Estate Assets which are under construction or subject to
substantial rehabilitation to exceed 20% of the value of all of its Real Estate
Assets.
All of the foregoing values shall be reasonably determined by the Lender.
SECTION 14.14 No Encumbrance of Collateral Release Property. Unless the Borrower
---------------------------------------------
sells a Collateral Release Property to a Person who is not an Affiliate of the
Borrower substantially simultaneously with the release of the Collateral Release
Property from the Collateral Pool, the Borrower shall not encumber the
Collateral Release Property for a period of 120 days following the release of
the Collateral Release Property from the Collateral Pool.
ARTICLE XV
FINANCIAL COVENANTS OF THE BORROWER
The Borrower agrees and covenants with the Lender that, at all times during the
Term of this Agreement:
SECTION 15.01 Financial Definitions. For all purposes of this Agreement, the
---------------------
following terms shall have the respective meanings set forth below:
"Cash Equivalents" means (a) securities issued or directly and fully
----------------
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (b) U.S. dollar denominated
time deposits and certificates of deposit of (i) any Lender, or (ii) any
domestic commercial bank of recognized standing (y) having capital and surplus
in excess of $500,000,000 and (z) whose short-term commercial paper rating from
S&P is at least A-2 (and not lower than A-3) or the equivalent thereof or from
▇▇▇▇▇'▇ is at least P-2 (and not lower than P-3) or the equivalent thereof (any
such bank being an "Approved Bank"), in each case with maturities of not more
-------------
than 270 days from the date
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of acquisition, (c) commercial paper and variable or fixed rate notes issued by
any Approved Bank (or by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated at least A-2 (and
not lower than A-3) or the equivalent thereof by S&P or at least P-2 (and not
lower than P-3) or the equivalent by Moody's and maturing within six months of
the date of acquisition, (d) repurchase agreements entered into by a Person with
a bank or trust company (including any of the Lenders) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States of America in
which such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair
market value of at least 100% of the amount of the repurchase obligations, (e)
obligations of any State of the United States or any political subdivision
thereof, the interest with respect to which is exempt from federal income
taxation under Section 103 of the Code, having a long term rating of at least
AA- or Aa-3 by S&P or Moody's, respectively, and maturing within three years
from the date of acquisition thereof, (f) Investments in municipal auction
preferred stock (i) rated A- (or the equivalent thereof) or better by S&P or A3
(or the equivalent thereof) or better by Moody's and (ii) with dividends that
reset at least once every 365 days and (g) Investments, classified in accordance
with GAAP as current assets, in money market investment programs registered
under the Investment Borrower Act of 1940, as amended, which are administered by
reputable financial institutions having capital of at least $100,000,000 and the
portfolios of which are limited to Investments of the character described in the
foregoing subdivisions (a) through (f).
"Consolidated Adjusted EBITDA" means for any period the Consolidated Group
----------------------------
the sum of Consolidated EBITDA for such period minus a reserve equal to $62.50
per apartment unit per quarter ($250 per apartment unit per year). Except as
expressly provided otherwise, the applicable period shall be for the single
fiscal quarter ending as of the date of determination.
"Consolidated EBITDA" means for any period for the Consolidated Group, the
-------------------
sum of Consolidated Net Income plus Consolidated Interest Expense plus all
provisions for any Federal, state, or other income taxes plus depreciation,
amortization and other non cash charges, in each case on a consolidated basis
determined in accordance with GAAP applied on a consistent basis, but excluding
in any event gains and losses on Investments and extraordinary gains and losses,
and taxes on such excluded gains and tax deductions or credit on account of such
excluded losses. Except as expressly provided otherwise, the applicable period
shall be for the single fiscal quarter ending as of the date of determination.
"Consolidated Adjusted Tangible Net Worth" means at any rate:
----------------------------------------
(i) the sum of (A) the consolidated shareholders equity of the
Consolidated Group (net of Minority Interests) plus (B) accumulated
depreciation of real estate owned to the extent reflected in the then book
value of the Consolidated Assets, minus without duplication
(ii) the Intangible Assets of the Consolidated Group.
"Consolidated Funded Debt" means total Debt of the Consolidated Group on a
------------------------
consolidated basis determined in accordance with GAAP applied on a consistent
basis.
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"Consolidated Group" means the Borrower and its consolidated Subsidiaries,
------------------
as determined in accordance with GAAP.
"Consolidated Interest Expense" means for any period for the Consolidated
-----------------------------
Group, all interest expense, including the amortization of debt discount and
premium, the interest component under capital leases and the implied interest
component under Securitization Transactions in each case on a consolidated basis
determined in accordance with GAAP applied on a consistent basis.
"Consolidated Net Income" means for any period the net income of the
-----------------------
Consolidated Group on a consolidated basis determined in accordance with GAAP
applied on a consistent basis.
"Consolidated Net Operating Income from Realty" means for any period for
---------------------------------------------
any Realty of the Consolidated Group, an amount equal to the aggregate rental
and other income from the operation of such Realty during such period; minus all
expenses and other proper charges incurred in connection with the operation of
such Realty (including, without limitation, real estate taxes and bad debt
expenses) during such period; but in any case, before payment of provision for
debt service charges for such period, income taxes for such period, and
depreciation, amortization and other non-cash expenses for such period, all on a
consolidated basis determined in accordance with GAAP on a consistent basis.
"Consolidated Net Operating Income from Unencumbered Realty" (i) the
----------------------------------------------------------
aggregate rental and other income from the operation of such Realty during such
period; minus all expenses and other proper charges incurred in connection with
the operation of such Realty (including, without limitation, real estate taxes
and bad debt expenses) during such period; but in any case, before payment of
provision for debt service charges for such period, income taxes for such
period, and depreciation, amortization and other non-cash expenses for such
period, all on a consolidated basis determined in accordance with GAAP on a
consistent basis minus (ii) a reserve equal to $62.50 per apartment unit per
quarter ($250 per apartment unit per year) for such period.
"Consolidated Total Fixed Charges" means as of the last day of each fiscal
--------------------------------
quarter for the Consolidated Group, the sum of (i) the cash portion of
Consolidated Interest Expense paid in the fiscal quarter ending on such day plus
(ii) scheduled maturities of Consolidated Funded Debt (excluding the amount by
which a final installment exceeds the next preceding principal installment
thereon and further excluding amortization on Insurance Company Debt which shall
not exceed $7.5 million annually) in the fiscal quarter ending on such day plus
(iii) all cash dividends and distributions on preferred stock or other preferred
beneficial interests of members of the Consolidated Group paid in the fiscal
quarter ending on such day, all on a consolidated basis determined in accordance
with GAAP on a consistent basis.
"Consolidated Unsecured Debt" means, for the Consolidated Group on a
---------------------------
consolidated basis, all unsecured Consolidated Funded Debt.
"Consolidated Unencumbered Realty" means for the Consolidated Group on a
--------------------------------
consolidated basis, all Realty which is not encumbered by a Lien securing Debt.
For purposes of the covenant, Consolidated Unencumbered Realty as of any date,
for the Consolidated Group, shall be valued at the sum (without duplication) of
(a) with respect to any consolidated Unencumbered Realty
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purchased or developed prior to January 1 of the year preceding such date, (i)
Consolidated Net Operating Income from Unencumbered Realty for the fiscal
quarter most recently ended prior to such date multiplied by four, divided by
(ii) 9.25%; plus (b) with respect to any Consolidated Unencumbered Realty
purchased or developed on or after January 1 of the year preceding such date,
the actual costs of such Realty; plus (c) with respect to any Consolidated
Unencumbered Realty that also constitutes consolidated Unimproved Realty, the
sum of (i) fifty percent (50%) of the GAAP value of the land associated with
such Realty plus (ii) an amount equal to fifty percent (50%) of the actual
expenditures for improvements on such Realty; plus (d) fifty percent (50%) of
the Consolidated Group's pro rata share of the GAAP value of any Realty
contributed to or otherwise invested in joint ventures which is not encumbered
by a Lien securing Debt.
"Debt" of any Person means at any date, without duplication, (i) all
----
obligations of such Person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (vi) all obligations of such person to reimburse
any bank or other person in respect of amounts payable under a letter of credit
or similar instrument (being the amount available to be drawn thereunder,
whether or not then drawn), (vii) all obligations of others secured by a Lien on
any asset of such Person, whether or not such obligation is assumed by such
Person, (viii) all obligations of others Guaranteed by such Person, (ix) all
obligations which in accordance with GAAP would be shown as liabilities on a
balance sheet of such Person, (x) the Attributed Principal Amount under any
Securitization Transaction and (xi) all obligations of such person owing under
any synthetic lease, tax retention operating lease, off balance sheet loan or
similar off balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for tax
purposes, but classified as an operating lease in accordance with GAAP. Debt of
any Person shall include Debt of any partnership or joint venture in which such
Person is a general partner or joint venturer to the extent of such Person's pro
rata portion of the ownership of such partnership or joint venture (except if
such Debt is recourse to such Person, in which case the greater of such Person's
pro rata portion of such Debt or the amount of the recourse portion of the Debt,
shall be included as Debt of such Person).
"Insurance Company Debt" means Debt owed by the Borrower with respect to
----------------------
the 7.98% Notes due March 2000-2003 as more fully described in note 4 of the
consolidated financial statements contained in the Borrower's report on form 10
- K filed with the Securities and Exchange commission for fiscal year 1999.
"Intangible Assets" of any Person means at any date the amount of (i) all
-----------------
write ups (other than write-ups resulting from write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) in the book value of any asset owned by such Person and (ii) all
unamortized debt discount and expense, unamortized deferred charges, capitalized
start up costs, goodwill, patents, licenses, trademarks, trade names,
copyrights, organization or developmental expenses, covenants not to compete and
other intangible items.
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"Minority Interest" means any shares of stock (or other equity interests)
-----------------
of any class of a Subsidiary (other than directors' qualifying shares as
required by law) that are not owned by the Borrower and/or one or more Wholly
Owned Subsidiaries. Minority Interests constituting preferred stock shall be
valued at the voluntary or involuntary liquidation value of such preferred
stock, whichever is greater, and by valuing common stock at the book value of
the capitalized surplus applicable thereto adjusted by the foregoing method of
valuing Minority Interests in preferred stock.
"Realty" means all real property and interests therein, together with all
------
improvements thereon.
"Securitization Transaction" means any financing transaction or series of
--------------------------
financing transactions that have been or may be entered into by a member of the
Consolidated Group pursuant to which such member of the Consolidated Group may
sell, convey or otherwise transfer to (i) a Subsidiary or affiliate (a
"Securitization Subsidiary") or (ii) any other Person, or may grant a security
interest in, any Receivables or interest therein secured by merchandise or
services financed thereby (whether such Receivables are then existing or arising
in the future) of such member of the Consolidated Group, and any assets related
thereto, including without limitation, all security interests in merchandise or
services financed thereby, the proceeds of such Receivables, and other assets
which are customarily sold or in respect of which security interests are
customarily granted in connection with securitization transactions involving
such assets. (Receivables means any right of payment from or on behalf of any
obligor, whether constituting an account, chattel paper, instrument, general
intangible or otherwise, arising from the sale or financing by a member of the
Consolidated Group or merchandise or services, and monies due thereunder,
security in the merchandise and services financed thereby, records related
thereto, and the right to payment of any interest or finance charges and other
obligations with respect thereto, proceeds from claims on insurance policies
related thereto, any other proceeds related thereto, and any other related
rights.)
"Tangible Fair Market Value of Assets" means, as of any date for the
------------------------------------
Consolidated Group, the sum (without duplication) of (a) with respect to any
Realty owned by a member of the Consolidated Group and purchased or developed
prior to January 1 of the year preceding such date, (i) the sum of (A)
Consolidated Net Operating Income for Realty for the fiscal quarter most
recently ended prior to such date multiplied by four, minus (B) a reserve of
$250 per apartment unit, divided by (ii) 9.25%, plus (b) with respect to any
Realty owned by a member of the Consolidated Group and purchased or developed on
or after January 1 of the year preceding such date, the actual cost of such
Realty, plus (c) with respect to any Consolidated Unimproved Realty, the sum of
(i) one hundred percent (100%) of the GAAP value of the land associated with
such Realty plus (ii) an amount equal to 100% (100%) of the actual expenditures
for improvements on such Realty, plus (d) cash and Cash Equivalents, in each
case on a consolidated basis determined in accordance with GAAP applied on a
consistent basis, plus (e) one hundred (100%) of the Consolidated Group's pro
rata share of the GAAP value of any asset contributed to or otherwise invested
in joint ventures.
"Wholly Owned Subsidiary" means as to any person, any Subsidiary all of the
-----------------------
voting stock or other similar voting interest are owned directly or indirectly
by such Person. Unless otherwise provided, references to "Wholly Owned
Subsidiary" shall mean Wholly Owned Subsidiaries of the Borrower.
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SECTION 15.02 Compliance with Debt Service Coverage Ratios. The Borrower shall
--------------------------------------------
at all times maintain the Aggregate Debt Service Coverage Ratio for the Trailing
12 Month Period so that it is not less than 1.30:1.0.
SECTION 15.03 Compliance with Loan to Value Ratios. The Borrower shall at all
------------------------------------
times maintain the Aggregate Loan to Value Ratio for the Trailing 12 Month
Period so that it is not greater than 70%.
SECTION 15.04 Compliance with Concentration Test.
----------------------------------
(a) The Borrower shall at all times maintain the Collateral so that
the aggregate Valuations of any group of Mortgaged Properties located within a
one mile radius shall not exceed 30% of the aggregate Valuations of all
Mortgaged Properties.
(b) The Borrower shall at all times maintain the Collateral so that
the Valuation of any one Mortgaged Property shall not exceed 30% of the
aggregate Valuations of all Mortgaged Properties.
(c) The Borrower shall at all times maintain the Collateral so that
the Valuation of all Mortgaged Properties subject to review and underwriting
under Section 305.09 of the DUS Guide (Projection Dependent on Military Bases)
shall not exceed 20% of the aggregate Valuations of all Mortgaged Properties.
Notwithstanding the preceding sentence, Lender may reject, in its sole
discretion, any proposed Mortgaged Property subject to review and underwriting
under Section 305.09 of the DUS Guide.
SECTION 15.05 Consolidated Adjusted Tangible Net Worth. Consolidated Adjusted
----------------------------------------
Tangible Net Worth of UDRT will not at any time be less than the sum of (i)
$1,500,000,000 plus (ii) 90% of the net proceeds (after customary underwriting
----
discounts and commissions and reasonable offering expenses) from Equity
Transactions occurring after December 31, 1999.
SECTION 15.06 Consolidated Funded Debt Ratio. As of the last day of each fiscal
------------------------------
quarter Consolidated Funded Debt of UDRT shall not exceed 60% of Tangible Fair
Market Value of Assets.
SECTION 15.07 Consolidated Total Fixed Charge Coverage Ratio. As of the end of
----------------------------------------------
each fiscal quarter, the ratio of Consolidated Adjusted EBITDA of UDRT to
Consolidated Total Fixed Charges for the fiscal quarter then ended shall be not
less than 1.4:1.0.
SECTION 15.08 Consolidated Unencumbered Realty to Consolidated Unsecured Debt
---------------------------------------------------------------
Ratio. As of the last day of each fiscal quarter, the ratio of Consolidated
-----
Unsecured Debt of UDRT to Consolidated Unencumbered Realty of UDRT shall not
exceed 60%.
SECTION 15.09 Consolidated Unencumbered Interest Coverage Ratio. As of the end
-------------------------------------------------
of each fiscal quarter, the ratio of Consolidated Net Operating Income of UDRT
from Unencumbered Realty of UDRT to Consolidated Interest Expense relating to
Consolidated Unsecured Debt of UDRT for the fiscal quarter then ended shall not
be less than 1.75:1.0.
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ARTICLE XVI
FEES
SECTION 16.01 Standby Fee. The Borrower shall pay the Standby Fee to the Lender
-----------
for the period from the date of this Agreement to the end of the Term of this
Agreement. Notwithstanding the preceding sentence, the Standby Fee shall be
waived for the period commencing on the Initial Closing Date and ending on March
31, 2002. The Standby Fee shall be payable monthly, in arrears, on the first
Business Day following the end of the month, except that the Standby Fee for the
last month during the Term of this Agreement shall be paid on the last day of
the Term of this Agreement.
SECTION 16.02 Origination Fees.
----------------
(a) Initial Origination Fee. The Borrower shall pay to the Lender
-----------------------
an origination fee ("Initial Origination Fee") equal to $2,250,000 (which is
-----------------------
equal to the product obtained by multiplying (i) the Commitment as of the date
of this Agreement ($300,000,000), by (ii) .75%). The Borrower shall pay the
Initial Origination Fee on the date of this Agreement. $1,687,500 of the Initial
Origination Fee shall be paid on the Initial Closing Date. The remainder of the
Initial Original Fee ($562,500) shall be paid on the earlier of (i) the date
Advances exceed $225,000,000 (to the extent of such excess multiplied by .75%)
and (ii) March 31, 2002.
(b) Expansion Origination Fee. Upon the closing of a Credit
-------------------------
Facility Expansion Request under Article VIII, the Borrower shall pay to the
Lender an origination fee ("Expansion Origination Fee") equal to the product
-------------------------
obtained by multiplying (i) the increase in the Commitment made on the Closing
Date for the Credit Facility Expansion Request, by (ii) .75%. The Borrower shall
pay the Expansion Origination Fee on or before the Closing Date for the Credit
Facility Expansion Request.
SECTION 16.03 Due Diligence Fees.
------------------
(a) Initial Due Diligence Fees. The Borrower shall pay to the
--------------------------
Lender due diligence fees ("Initial Due Diligence Fees") with respect to the
--------------------------
Initial Mortgaged Properties in an amount equal to Lender's reasonable actual
out-of-pocket due diligence costs and expenses plus $1,000 per Mortgaged
Property. The Borrower has previously paid to the Lender a portion of the
Initial Due Diligence Fees and shall pay the remainder of the Initial Due
Diligence Fees to the Lender on the Initial Closing Date.
(b) Additional Due Diligence Fees for Additional Collateral. The
-------------------------------------------------------
Borrower shall pay to the Lender additional due diligence fees (the "Additional
----------
Collateral Due Diligence Fees") with respect to each Additional Mortgaged
-----------------------------
Property in an amount equal to Lender's reasonable out-of-pocket due diligence
costs and expenses plus $2,500. The Borrower shall pay Additional Collateral Due
Diligence Fees for the Additional Mortgaged Property to the Lender on the date
on which it submits the Collateral Addition Request for the addition of the
Additional Mortgaged Property to the Collateral Pool.
SECTION 16.04 Legal Fees and Expenses.
-----------------------
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(a) Initial Legal Fees. The Borrower shall pay, or reimburse the
------------------
Lender for, all reasonable out-of-pocket legal fees and expenses incurred by the
Lender and by ▇▇▇▇▇▇ ▇▇▇ in connection with the preparation, review and
negotiation of this Agreement and any other Loan Documents executed on the date
of this Agreement based on the terms set forth in a separate letter from the
Lender to the Borrower. On the date of this Agreement, the Borrower shall pay
all such legal fees and expenses not previously paid or for which funds have not
been previously provided.
(b) Fees and Expenses Associated with Requests. The Borrower shall
------------------------------------------
pay, or reimburse the Lender for, all costs and expenses incurred by the Lender,
including the reasonable out-of-pocket legal fees and expenses incurred by the
Lender in connection with the preparation, review and negotiation of all
documents, instruments and certificates to be executed and delivered in
connection with each Request, the performance by the Lender of any of its
obligations with respect to the Request, the satisfaction of all conditions
precedent to the Borrower's rights or the Lender's obligations with respect to
the Request, and all transactions related to any of the foregoing, including the
cost of title insurance premiums and applicable recordation and transfer taxes
and charges and all other costs and expenses in connection with a Request. The
obligations of the Borrower under this subsection shall be absolute and
unconditional, regardless of whether the transaction requested in the Request
actually occurs. The Borrower shall pay such costs and expenses to the Lender on
the Closing Date for the Request, or, as the case may be, after demand by the
Lender when the Lender determines that such Request will not close.
SECTION 16.05 MBS-Related Costs. The Borrower shall pay to the Lender, within 30
-----------------
days after demand, all fees and expenses incurred by the Lender or ▇▇▇▇▇▇ Mae in
connection with the issuance of any MBS backed by an Advance, including the fees
charged by Depository Trust Company and State Street Bank or any successor
fiscal agent or custodian.
SECTION 16.06 Failure to Close any Request. If the Borrower makes a Request and
----------------------------
fails to close on the Request for any reason other than the default by the
Lender or, if applicable, the failure of the purchaser of an MBS to purchase
such MBS, then the Borrower shall pay to the Lender and ▇▇▇▇▇▇ ▇▇▇ all damages
incurred by the Lender and ▇▇▇▇▇▇ Mae in connection with the failure to close.
SECTION 16.07 Other Fees. The Borrower shall pay the following additional fees
----------
and payments, if and when required pursuant to the terms of this Agreement:
(a) If applicable, the Collateral Addition Fee, pursuant to
Section 6.03(c), in connection with the addition of an Additional Mortgaged
Property to the Collateral Pool pursuant to Article VI;
(b) The Release Price, pursuant to Section 7.02(c), in connection
with the release of a Mortgaged Property from the Collateral Pool pursuant to
Article VII;
(c) The Facility Termination Fee, pursuant to Section 9.03(b) in
connection with a complete or partial termination of the Revolving Facility
pursuant to Article IX; and
(d) The Facility Termination Fee, pursuant to Section 10.03(b), in
connection with the termination of the Credit Facility pursuant to Article X.
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ARTICLE XVII
EVENTS OF DEFAULT
SECTION 17.01 Events of Default. Each of the following events shall constitute
-----------------
an "Event of Default" under this Agreement, whatever the reason for such event
and whether it shall be voluntary or involuntary, or within or without the
control of the Borrower, or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority:
(a) the occurrence of a default under any Loan Document beyond the
cure period, if any, set forth therein; or
(b) the failure by the Borrower to pay when due any amount payable by
the Borrower under any Note, any Mortgage, this Agreement or any other Loan
Document, including any fees, costs or expenses; or
(c) the failure by the Borrower to perform or observe any covenant set
forth in Sections 13.01 through 13.25 or Sections 14.01 through 14.14 within
thirty (30) days after receipt of notice from Lender identifying such failure,
provided that such period shall be extended for up to forty-five (45) additional
days if the Borrower, in the discretion of the Lender, is diligently pursuing a
cure of such default; or
(d) any warranty, representation or other written statement made by or
on behalf of the Borrower contained in this Agreement, any other Loan Document
or in any instrument furnished in compliance with or in reference to any of the
foregoing, is false or misleading in any material respect on any date when made
or deemed made; or
(e) any other Indebtedness in an aggregate amount in excess of
$5,000,000 of the Borrower or assumed by the Borrower (i) is not paid when due
nor within any applicable grace period in any agreement or instrument relating
to such Indebtedness or (ii) becomes due and payable before its normal maturity
by reason of a default or event of default, however described, or any other
event of default shall occur and continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness; or
(f) (i) The Borrower shall (A) commence a voluntary case under the
Federal bankruptcy laws (as now or hereafter in effect), (B) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, debt adjustment, winding up or
composition or adjustment of debts, (C) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an involuntary
case under such bankruptcy laws or other laws, (D) apply for or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of a substantial part of its property, domestic or foreign, (E) admit in
writing its inability to pay, or generally not be paying, its debts as they
become due, (F) make a general assignment for the benefit of creditors, (G)
assert that the Borrower has no liability or obligations under this Agreement or
any other Loan Document to which it is a party; or (H) take any action for the
purpose of effecting any of the foregoing; or (ii) a case or other proceeding
shall be commenced against the Borrower in any court of competent jurisdiction
seeking (A) relief under the Federal bankruptcy laws (as now or
-73-
hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding upon or composition or
adjustment of debts, or (B) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower, or of all or a substantial part of the
property, domestic or foreign, of the Borrower and any such case or proceeding
shall continue undismissed or unstayed for a period of 60 consecutive calendar
days, or any order granting the relief requested in any such case or proceeding
against the Borrower (including an order for relief under such Federal
bankruptcy laws) shall be entered; or
(g) if any provision of this Agreement or any other Loan Document or
the lien and security interest purported to be created hereunder or under any
Loan Document shall at any time for any reason cease to be valid and binding in
accordance with its terms on the Borrower, or shall be declared to be null and
void, or the validity or enforceability hereof or thereof or the validity or
priority of the lien and security interest created hereunder or under any other
Loan Document shall be contested by the Borrower seeking to establish the
invalidity or unenforceability hereof or thereof, or the Borrower shall deny
that it has any further liability or obligation hereunder or thereunder; or
(h) (i) the execution by the Borrower without the prior written
consent of the Lender of a chattel mortgage or other security agreement on any
materials, fixtures or articles used in the construction or operation of the
improvements located on any Mortgaged Property or on articles of personal
property located therein, or (ii) if, without the prior written consent of the
Lender, any such materials, fixtures or articles are purchased pursuant to any
conditional sales contract or other security agreement or otherwise so that the
Ownership thereof will not vest unconditionally in the Borrower free from
encumbrances, or (iii) if the Borrower does not furnish to the Lender upon
request the contracts, bills of sale, statements, receipted vouchers and
agreements, or any of them, under which the Borrower claims title to such
materials, fixtures, or articles; or
(i) the failure by the Borrower to comply with any requirement of any
Governmental Authority within 30 days after written notice of such requirement
shall have been given to the Borrower by such Governmental Authority; provided
that, if action is commenced and diligently pursued by the Borrower within such
30 days, then the Borrower shall have an additional 45 days to comply with such
requirement; or
(j) a dissolution or liquidation for any reason (whether voluntary or
involuntary) of the Borrower; or
(k) any judgment against the Borrower, any attachment or other levy
against any portion of the Borrower's assets with respect to a claim or claims
in an amount in excess of $2,500,000 in the aggregate remains unpaid, unstayed
on appeal undischarged, unbonded, not fully insured or undismissed for a period
of 60 days; or
(l) [Intentionally Deleted]
(m) The failure of the Borrower to perform or observe any of the
Financial Covenants, which failure shall continue for a period of 30 days after
the date on which the Borrower receives a notice from the Lender specifying the
failure; or
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(n) the failure by the Borrower to perform or observe any term,
covenant, condition or agreement hereunder, other than as set forth in
subsections (a) through (m) above, or in any other Loan Document, within 30 days
after receipt of notice from the Lender identifying such failure.
ARTICLE XVIII
REMEDIES
SECTION 18.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the
-----------------
Lender may do any one or more of the following (without presentment, protest or
notice of protest, all of which are expressly waived by the Borrower):
(a) by written notice to the Borrower, to be effective upon dispatch,
terminate the Commitment and declare the principal of, and interest on, the
Advances and all other sums owing by the Borrower to the Lender under any of the
Loan Documents forthwith due and payable, whereupon the Commitment will
terminate and the principal of, and interest on, the Advances and all other sums
owing by the Borrower to the Lender under any of the Loan Documents will become
forthwith due and payable.
(b) The Lender shall have the right to pursue any other remedies
available to it under any of the Loan Documents.
(c) The Lender shall have the right to pursue all remedies available
to it at law or in equity, including obtaining specific performance and
injunctive relief.
SECTION 18.02 Waivers; Rescission of Declaration. The Lender shall have the
----------------------------------
right, to be exercised in its complete discretion, to waive any breach hereunder
(including the occurrence of an Event of Default), by a writing setting forth
the terms, conditions, and extent of such waiver signed by the Lender and
delivered to the Borrower. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
SECTION 18.03 The Lender's Right to Protect Collateral and Perform Covenants and
------------------------------------------------------------------
Other Obligations. If the Borrower fails to perform the covenants and agreements
-----------------
contained in this Agreement or any of the other Loan Documents, then the Lender
at the Lender's option may make such appearances, disburse such sums and take
such action as the Lender deems necessary, in its sole discretion, to protect
the Lender's interest, including (i) disbursement of attorneys' fees, (ii) entry
upon the Mortgaged Property to make repairs and Replacements, (iii) procurement
of satisfactory insurance as provided in paragraph 5 of the Security Instrument
encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a
leasehold, exercise of any option to renew or extend the ground lease on behalf
of the Borrower and the curing of any default of the Borrower in the terms and
conditions of the ground lease. Any amounts disbursed by the Lender pursuant to
this Section, with interest thereon, shall become additional indebtedness of the
Borrower secured by the Loan Documents. Unless the Borrower and the Lender agree
to other terms of payment, such amounts shall be immediately due and payable and
shall bear interest from the date of disbursement at the weighted average, as
determined by Lender, of the interest rates in effect
-75-
from time to time for each Advance unless collection from the Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. Nothing contained in this Section shall require
the Lender to incur any expense or take any action hereunder.
SECTION 18.04 No Remedy Exclusive. Unless otherwise expressly provided, no
-------------------
remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Loan Documents or existing at law or
in equity.
SECTION 18.05 No Waiver. No delay or omission to exercise any right or power
---------
accruing under any Loan Document upon the happening of any Event of Default or
Potential Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient.
SECTION 18.06 No Notice. In order to entitle the Lender to exercise any remedy
---------
reserved to the Lender in this Article, it shall not be necessary to give any
notice, other than such notice as may be required under the applicable
provisions of this Agreement or any of the other Loan Documents.
SECTION 18.07 Application of Payments. Except as otherwise expressly provided in
-----------------------
the Loan Documents, and unless applicable law provides otherwise, (i) all
payments received by the Lender from the Borrower under the Loan Documents shall
be applied by the Lender against any amounts then due and payable under the Loan
Documents by the Borrower, in any order of priority that the Lender may
determine and (ii) the Borrower shall have no right to determine the order of
priority or the allocation of any payment it makes to the Lender.
ARTICLE XIX
RIGHTS OF ▇▇▇▇▇▇ ▇▇▇
SECTION 19.01 Special Pool Purchase Contract. The Borrower acknowledges that
------------------------------
▇▇▇▇▇▇ Mae is entering into an agreement with the Lender ("Special Pool Purchase
---------------------
Contract"), pursuant to which, inter alia, (i) the Lender shall agree to assign
-------- ----- ----
all of its rights under this Agreement to ▇▇▇▇▇▇ ▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇ shall
accept the assignment of the rights, (iii) subject to the terms, limitations and
conditions set forth in the Special Pool Purchase Contract, ▇▇▇▇▇▇ Mae shall
agree to purchase a 100% participation interest in each Advance issued under
this Agreement by issuing to the Lender a ▇▇▇▇▇▇ ▇▇▇ MBS, in the amount and for
a term equal to the Advance purchased and backed by an interest in the Base
Facility Note or the Revolving Facility Note, as the case may be, and the
Collateral Pool securing the Notes, (iv) the Lender shall agree to assign to
▇▇▇▇▇▇ Mae all of the Lender's interest in the Notes and Collateral Pool
securing the Notes, and (v) the Lender shall agree to service the loans
evidenced by the Notes.
SECTION 19.02 Assignment of Rights. The Borrower acknowledges and consents to
--------------------
the assignment to ▇▇▇▇▇▇ ▇▇▇ of all of the rights of the Lender under this
Agreement and all other Loan Documents, including the right and power to make
all decisions on the part of the Lender to be made under this Agreement and the
other Loan Documents, but ▇▇▇▇▇▇ Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of the Lender under this Agreement or the
other Loan Documents.
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SECTION 19.03 Release of Collateral. The Borrower hereby acknowledges that,
---------------------
after the assignment of Loan Documents contemplated in Section 19.02, the Lender
shall not have the right or power to effect a release of any Collateral pursuant
to Articles VII or X. The Borrower acknowledges that the Security Instruments
provide for the release of the Collateral under Articles VII and X. Accordingly,
the Borrower shall not look to the Lender for performance of any obligations set
forth in Articles VII and X, but shall look solely to the party secured by the
Collateral to be released for such performance. The Lender represents and
warrants to the Borrower that the party secured by the Collateral shall be
subject to the release and substitution provisions contained in Articles VII and
X by virtue of the release provisions in each Security Instrument.
SECTION 19.04 Replacement of Lender. At the request of ▇▇▇▇▇▇ ▇▇▇, the Borrower
---------------------
and the Lender shall agree to the assumption by another lender designated by
▇▇▇▇▇▇ Mae, of all of the obligations of the Lender under this Agreement and the
other Loan Documents, and/or any related servicing obligations, and, at ▇▇▇▇▇▇
Mae's option, the concurrent release of the Lender from its obligations under
this Agreement and the other Loan Documents, and/or any related servicing
obligations, and shall execute all releases, modifications and other documents
which ▇▇▇▇▇▇ Mae determines are necessary or desirable to effect such
assumption.
SECTION 19.05 ▇▇▇▇▇▇ ▇▇▇ and Lender Fees and Expenses. The Borrower agrees that
---------------------------------------
any provision providing for the payment of fees, costs or expenses incurred or
charged by the Lender pursuant to this Agreement shall be deemed to provide for
the Borrower's payment of all reasonable fees, costs and expenses incurred or
charged by the Lender or ▇▇▇▇▇▇ Mae in connection with the matter for which
fees, costs or expenses are payable.
SECTION 19.06 Third-Party Beneficiary. The Borrower hereby acknowledges and
-----------------------
agrees that ▇▇▇▇▇▇ ▇▇▇ is a third party beneficiary of all of the
representations, warranties and covenants made by the Borrower to, and all
rights under this Agreement conferred upon, the Lender, and, by virtue of its
status as third-party beneficiary and/or assignee of the Lender's rights under
this Agreement, ▇▇▇▇▇▇ Mae shall have the right to enforce all of the provisions
of this Agreement against the Borrower.
ARTICLE XX
INSURANCE, REAL ESTATE TAXES
AND REPLACEMENT RESERVES
SECTION 20.01 Insurance and Real Estate Taxes. The Borrower shall (unless waived
-------------------------------
by Lender) establish funds for taxes, insurance premiums and certain other
charges for each Mortgaged Property in accordance with Section 7(a) of the
Security Instrument for each Mortgaged Property. The Borrower may provide a
letter of credit in lieu of deposits required by the preceding sentence. Any
letter of credit provided by the Borrower shall be (i) issued by a financial
institution reasonably acceptable to the Lender, (ii) be an amount reasonably
deferred, from time to time by the Lender and, (iii) in a form reasonably
satisfactory to Lender.
SECTION 20.02 Replacement Reserves. The Borrower shall execute a Replacement
--------------------
Reserve Agreement for the Mortgaged Property which it owns and shall (unless
waived by the Lender) make
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all deposits for replacement reserves in accordance with the terms of the
Replacement Reserve Agreement.
ARTICLE XXI
INTENTIONALLY OMITTED
ARTICLE XXII
PERSONAL LIABILITY OF THE BORROWER
SECTION 22.01 Personal Liability of the Borrower.
(a) Full Recourse. The Borrower is and shall remain personally liable
-------------
to the Lender for the payment and performance of all Obligations throughout the
term of this Agreement.
(b) Transfer Not Release. No Transfer by any Person of its Ownership
--------------------
Interests in the Borrower shall release the Borrower from liability under this
Article, this Agreement or any other Loan Document, unless the Lender shall have
approved the Transfer and shall have expressly released the Borrower in
connection with the Transfer.
(c) Miscellaneous. The Lender may exercise its rights against the
-------------
Borrower personally without regard to whether the Lender has exercised any
rights against the Mortgaged Property or any other security, or pursued any
rights against any guarantor, or pursued any other rights available to the
Lender under the Loan Documents or applicable law. For purposes of this Article,
the term "Mortgaged Property" shall not include any funds that (1) have been
applied by the Borrower as required or permitted by the Loan Documents prior to
the occurrence of an Event of Default, or (2) are owned by the Borrower and
which the Borrower was unable to apply as required or permitted by the Loan
Documents because of a bankruptcy, receivership, or similar judicial proceeding.
ARTICLE XXIII
MISCELLANEOUS PROVISIONS
SECTION 23.01 Counterparts. To facilitate execution, this Agreement may be
------------
executed in any number of counterparts. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
SECTION 23.02 Amendments, Changes and Modifications. This Agreement may be
-------------------------------------
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by all of the parties hereto.
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SECTION 23.03 Payment of Costs, Fees and Expenses. The Borrower shall pay, on
-----------------------------------
demand, all reasonable fees, costs, charges or expenses (including the fees and
expenses of attorneys, accountants and other experts) incurred by the Lender in
connection with:
(a) Any amendment, consent or waiver to this Agreement or any of the
Loan Documents (whether or not any such amendments, consents or waivers are
entered into).
(b) Defending or participating in any litigation arising from actions
by third parties and brought against or involving the Lender with respect to (i)
any Mortgaged Property, (ii) any event, act, condition or circumstance in
connection with any Mortgaged Property or (iii) the relationship between the
Lender and the Borrower in connection with this Agreement or any of the
transactions contemplated by this Agreement.
(c) The administration (to the extent of actual out-of-pocket fees,
costs, charges or expenses) or enforcement of, or preservation of rights or
remedies under, this Agreement or any other Loan Documents or in connection with
the foreclosure upon, sale of or other disposition of any Collateral granted
pursuant to the Loan Documents.
(d) UDRT's Registration Statement, or similar disclosure documents,
including fees payable to any rating agencies, including the fees and expenses
of the Lender's attorneys and accountants.
The Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents or the Advances. However, the Borrower will not be obligated
to pay any franchise, estate, inheritance, income, excess profits or similar tax
on the Lender. Any attorneys' fees and expenses payable by the Borrower pursuant
to this Section shall be recoverable separately from and in addition to any
other amount included in such judgment, and such obligation is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into any such judgment. Any amounts payable by the Borrower pursuant to
this Section, with interest thereon if not paid when due, shall become
additional indebtedness of the Borrower secured by the Loan Documents. Such
amounts shall bear interest from the date such amounts are due until paid in
full at the weighted average, as determined by Lender, of the interest rates in
effect from time to time for each Advance unless collection from the Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. The provisions of this Section are cumulative
with, and do not exclude the application and benefit to the Lender of, any
provision of any other Loan Document relating to any of the matters covered by
this Section.
SECTION 23.04 Payment Procedure. All payments to be made to the Lender pursuant
-----------------
to this Agreement or any of the Loan Documents shall be made in lawful currency
of the United States of America and in immediately available funds by wire
transfer to an account designated by the Lender before 1:00 p.m. (Washington,
D.C. time) on the date when due.
SECTION 23.05 Payments on Business Days. In any case in which the date of
-------------------------
payment to the Lender or the expiration of any time period hereunder occurs on a
day which is not a Business Day,
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then such payment or expiration of such time period need not occur on such date
but may be made on the next succeeding Business Day with the same force and
effect as if made on the day of maturity or expiration of such period, except
that interest shall continue to accrue for the period after such date to the
next Business Day.
SECTION 23.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
------------------------------------------------------------
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE
OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF THE BORROWER UNDER THE NOTES, AND THE BORROWER UNDER
THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND
ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF VIRGINIA (EXCLUDING THE
LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL
AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND
FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND
REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY
THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED UNLESS
SPECIFICALLY SET FORTH OTHERWISE IN THE RELEVANT SECURITY INSTRUMENT, (2) THE
PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF
SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT ACCOUNTS), WHICH
MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE
CHOICE OF LAW PROVISIONS OF THE VIRGINIA UNIFORM COMMERCIAL CODE AND (3) THE
PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF
DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. THE BORROWER AGREES THAT
ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY
DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED
HEREIN, LITIGATED IN VIRGINIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH
JURISDICTION IN VIRGINIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE
JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE
LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION,
JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY
DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH
ANY OF THE LOAN DOCUMENTS. THE BORROWER IRREVOCABLY CONSENTS TO SERVICE,
JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE
NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY
OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL
RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE
LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST THE BORROWER AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION.
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER
JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED
HEREIN THAT THE LAWS OF VIRGINIA SHALL
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GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER AS PROVIDED
HEREIN OR THE SUBMISSION HEREIN BY THE BORROWER TO PERSONAL JURISDICTION WITHIN
VIRGINIA. THE BORROWER (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A
JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL
WOULD OTHERWISE ACCRUE. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER'S
COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO THE BORROWER THAT LENDER
WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING
PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY THE BORROWER
UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY THE BORROWER'S FREE
WILL.
SECTION 23.07 Severability. In the event any provision of this Agreement or in
------------
any other Loan Document shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision will be severable from the remainder hereof as to
such jurisdiction and the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired in any jurisdiction.
SECTION 23.08 Notices.
-------
(a) Manner of Giving Notice. Each notice, direction,
-----------------------
certificate or other communication hereunder (in this Section referred to
collectively as "notices" and singly as a "notice") which any party is required
or permitted to give to the other party pursuant to this Agreement shall be in
writing and shall be deemed to have been duly and sufficiently given if:
(1) personally delivered with proof of delivery thereof
(any notice so delivered shall be deemed to have been received at the
time so delivered);
(2) sent by Federal Express (or other similar overnight
courier) designating morning delivery (any notice so delivered shall be
deemed to have been received on the Business Day it is delivered by the
courier);
(3) sent by United States registered or certified mail,
return receipt requested, postage prepaid, at a post office regularly
maintained by the United States Postal Service (any notice so sent
shall be deemed to have been received on the Business Day it is
delivered); or
(4) sent by telecopier or facsimile machine which
automatically generates a transmission report that states the date and
time of the transmission, the length of the document transmitted, and
the telephone number of the recipient's telecopier or facsimile machine
(to be confirmed with a copy thereof sent in accordance with paragraphs
(1), (2) or (3) above within two Business Days) (any notice so
delivered shall be deemed to have been received (i) on the date of
transmission, if so transmitted before 5:00 p.m. (local time of the
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recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a
Business Day or if transmitted on a day other than a Business Day);
addressed to the parties as follows:
As to [any] Borrower:
c/o United Dominion Realty Trust, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
c/o United Dominion Realty Trust, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hirschler, Fleischer, ▇▇▇▇▇▇▇▇, ▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
As to the Lender:
ARCS Commercial Mortgage Co., L.P.
▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
ARCS Commercial Mortgage
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Loan Administration Dept.
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As to ▇▇▇▇▇▇ ▇▇▇:
▇▇▇▇▇▇ Mae
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
Third Floor, L Street Entrance
Washington, D.C. 200006
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Change of Notice Address. Any party may, by notice given
pursuant to this Section, change the person or persons and/or address or
addresses, or designate an additional person or persons or an additional address
or addresses, for its notices, but notice of a change of address shall only be
effective upon receipt. Each party agrees that it shall not refuse or reject
delivery of any notice given hereunder, that it shall acknowledge, in writing,
receipt of the same upon request by the other party and that any notice rejected
or refused by it shall be deemed for all purposes of this Agreement to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the courier
service or facsimile.
SECTION 23.09 Further Assurances and Corrective Instruments.
---------------------------------------------
(a) Further Assurances. To the extent permitted by law, the
------------------
parties hereto agree that they shall, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as the Lender or the Borrower
may request and as may be required in the opinion of the Lender or its counsel
to effectuate the intention of or facilitate the performance of this Agreement
or any Loan Document.
(b) Further Documentation. Without limiting the generality of
---------------------
subsection (a), in the event any further documentation or information is
required by the Lender to correct patent mistakes in the Loan Documents,
materials relating to the Title Insurance Policies or the funding of the
Advances, the Borrower shall provide, or cause to be provided to the Lender, at
its cost and expense, such documentation or information. The Borrower shall
execute and deliver to the Lender such documentation, including any amendments,
corrections, deletions or additions to the Notes, the Security Instruments or
the other Loan Documents as is required by the Lender.
(c) Compliance with Investor Requirements. Without limiting the
-------------------------------------
generality of subsection (a), the Borrower shall do anything reasonably
necessary to comply with the requirements of the Lender in order to enable the
Lender to sell the MBS backed by an Advance.
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SECTION 23.10 Term of this Agreement. This Agreement shall continue in effect
----------------------
until the Credit Facility Termination Date.
SECTION 23.11 Assignments; Third-Party Rights. The Borrower shall not assign
-------------------------------
this Agreement, or delegate any of its obligations hereunder, without the prior
written consent of the Lender. The Lender may assign its rights and obligations
under this Agreement separately or together, without the Borrower's consent,
only to ▇▇▇▇▇▇ ▇▇▇, but may not delegate its obligations under this Agreement
unless required to do so pursuant to Section 19.04.
SECTION 23.12 Headings. Article and Section headings used herein are for
--------
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 23.13 General Interpretive Principles. For purposes of this Agreement,
-------------------------------
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in Article I, Section 15.01, Section 16.01 and elsewhere
in this Agreement have the meanings assigned to them in this Agreement and
include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to "Articles," "Sections," "subsections,"
"paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a reference to an Exhibit or a Schedule without a
further reference to the document to which the Exhibit or Schedule is attached
is a reference to an Exhibit or Schedule to this Agreement; (vi) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and (vii) the word
"including" means "including, but not limited to."
SECTION 23.14 Interpretation. The parties hereto acknowledge that each party
--------------
and their respective counsel have participated in the drafting and revision of
this Agreement and the Loan Documents. Accordingly, the parties agree that any
rule of construction which disfavors the drafting party shall not apply in the
interpretation of this Agreement and the Loan Documents or any amendment or
supplement or exhibit hereto or thereto.
SECTION 23.15 Decisions in Writing. Any approval, designation, determination,
--------------------
selection, action or decision of the Lender must be in writing to be effective.
SECTION 23.16 Requests. The Borrower may make up to a total of four (4)
--------
Collateral Addition Requests, Collateral Release Requests and Collateral
Substitution Requests in each Loan Year, provided that any Collateral Addition
Requests closed by March 31, 2002 shall not count against such limit. In
addition, the Borrower may make up to four (4) additional Collateral Addition
Requests, Collateral Release Requests and Collateral Substitution Requests in
each Loan Year upon payment of a fee, in addition to any fee due in connection
with the subject Request, equal to the greater of (i) $10,000 and (ii) 25 basis
points multiplied by the Allocable Facility Amount of the Mortgaged Property
that is the subject of the Request.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BORROWER
UNITED DOMINION REALTY TRUST, INC., a
Virginia corporation
By:_________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Treasurer
WOODLAKE VILLAGE, L.P., a California limited
partnership
By: UNITED DOMINION REALTY, L.P., a
Virginia limited partnership, its
General Partner
By: UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation, its
General Partner
By:__________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and
Treasurer
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LENDER
ARCS COMMERCIAL MORTGAGE CO., L.P., a
California limited partnership
By: ACMC Realty, Inc., a California
Corporation, its General Partner
By:___________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
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