CREDIT AGREEMENT BY AND AMONG MID-AMERICA APARTMENT COMMUNITIES, INC., MID- AMERICA APARTMENTS, L.P., AND MID-AMERICA APARTMENTS OF TEXAS, L.P., AS BORROWER AND FINANCIAL FEDERAL SAVINGS BANK, AS LENDER June 1, 2006
EXHIBIT
10.3
Loan
Number: 940970147
BY
AND AMONG
MID-AMERICA
APARTMENT COMMUNITIES, INC., MID-AMERICA
APARTMENTS,
L.P., AND MID-AMERICA APARTMENTS OF TEXAS, L.P., AS
BORROWER
AND
FINANCIAL
FEDERAL SAVINGS BANK, AS LENDER
June
1, 2006
TABLE
OF CONTENTS
|
1.
|
DEFINITIONS
|
1
|
|
|
1.1.
|
Definitions
|
1
|
|
|
1.2.
|
Construction
|
20
|
|
|
1.3.
|
Accounting
Principles
|
22
|
|
|
2.
|
REVOLVING
CREDIT FACILITY
|
22
|
|
|
2.1.
|
Revolving
Credit Commitment
|
22
|
|
|
2.2.
|
Multi-Asset
Entities
|
22
|
|
|
2.3.
|
Term
|
22
|
|
|
2.4.
|
Nature
of Lender’s Obligations with Respect to the Loan
|
23
|
|
|
2.5.
|
Fees
|
23
|
|
|
2.6.
|
Loan
Requests
|
25
|
|
|
2.7.
|
The
Loan
|
26
|
|
|
2.8.
|
Revolving
Credit Note
|
26
|
|
|
2.9.
|
Use
of Proceeds
|
26
|
|
|
2.10.
|
Additions
to the Collateral Pool
|
26
|
|
|
2.11.
|
Release
of Collateral
|
29
|
|
|
2.12.
|
Payment
of the Loan Balance Without Termination
|
29
|
|
|
2.13.
|
Valuations
|
30
|
|
|
2.14.
|
Termination
|
31
|
|
|
2.15.
|
Material
Adverse Change to Borrower or a Collateral Pool Property
|
33
|
|
|
2.16.
|
Release
of Collateral Followed by a Permanent Loan
|
34
|
|
|
3.
|
INTEREST
RATES
|
35
|
|
|
3.1.
|
Interest
Rate
|
35
|
|
|
3.2.
|
Interest
Rate Determinations
|
35
|
|
|
3.3.
|
Interest
Periods
|
35
|
|
|
3.4.
|
Reference
BillsSM Rate Unascertainable: Illegality; Increased Costs
|
37
|
|
|
3.5.
|
LIBO
Rate Conversion
|
39
|
|
|
4.
|
PAYMENTS
|
39
|
|
|
4.1.
|
Payments
|
39
|
|
|
4.2.
|
Payment
Dates
|
40
|
|
i
|
4.3.
|
Prepayments
|
40
|
|
|
4.4.
|
Prepayment
Fee
|
41
|
|
|
4.5.
|
Additional
Payment Obligations
|
42
|
|
|
4.6.
|
Additional
Compensation in Certain Circumstances
|
44
|
|
|
5.
|
CONDITIONS
OF LENDING
|
45
|
|
|
5.1.
|
Initial
Borrowing Tranche
|
46
|
|
|
5.2.
|
Each
Subsequent Borrowing Tranche
|
48
|
|
|
6.
|
REPRESENTATIONS AND WARRANTIES |
48
|
|
|
6.1.
|
Representations
and Warranties
|
48
|
|
|
6.2.
|
Updates
|
58
|
|
|
6.3.
|
Survival
of Representations and Warranties
|
58
|
|
|
7.
|
COVENANTS
|
59
|
|
|
7.1.
|
Covenants
|
59
|
|
|
7.2.
|
Reporting
Requirements
|
66
|
|
|
7.3.
|
Additional
Affirmative Covenants
|
67
|
|
|
7.4.
|
Additional
Negative Covenants
|
75
|
|
|
7.5.
|
Additional
Financial Covenants
|
76
|
|
|
8.
|
DEFAULT
|
77
|
|
|
8.1.
|
Events
of Default
|
77
|
|
|
8.2.
|
Consequences
of Event of Default
|
80
|
|
|
8.3.
|
Notice
of Sale
|
80
|
|
|
9.
|
MISCELLANEOUS
|
80
|
|
|
9.1.
|
Cooperation
by Borrower; Borrower’s Obligations
|
80
|
|
|
9.2.
|
Successors
and Assigns
|
80
|
|
|
9.3.
|
Modifications,
Amendments or Waivers
|
81
|
|
|
9.4.
|
Forbearance
|
81
|
|
|
9.5.
|
Remedies
Cumulative
|
81
|
|
|
9.6.
|
Reimbursement
and Indemnification of Lender and Servicer by Borrower;
Taxes
|
82
|
|
|
9.7.
|
Holidays
|
82
|
|
|
9.8.
|
Notices
|
82
|
|
ii
|
9.9.
|
Severability
|
83
|
|
|
9.10.
|
Governing
Law; Consent to Jurisdiction and Venue
|
84
|
|
|
9.11.
|
Prior
Understanding
|
84
|
|
|
9.12.
|
Duration;
Survival
|
84
|
|
|
9.13.
|
Disclosure
of Information
|
84
|
|
|
9.14.
|
Exceptions
|
85
|
|
|
9.15.
|
Relationship
of Parties; No Third Parties Benefited
|
85
|
|
|
9.16.
|
Authority
to File Notices
|
85
|
|
|
9.17.
|
WAIVER
OF TRIAL BY JURY
|
85
|
|
|
9.18.
|
Interpretation
|
86
|
|
|
9.19.
|
Brokerage
Fee
|
86
|
|
|
9.20.
|
Advertising
|
86
|
|
|
9.21.
|
Time
of Essence
|
86
|
|
|
9.22.
|
Counterparts
|
86
|
|
|
9.23.
|
Interpretation
of Certain Representations, Warranties and Covenants
|
86
|
iii
THIS
CREDIT AGREEMENT (“Agreement”) is dated as of June __, 2006 and is made by and
among MID-AMERICA APARTMENT
COMMUNITIES, INC., a Tennessee corporation having an address at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (“REIT”), MID-AMERICA APARTMENTS, L.P.,
a Tennessee limited partnership having an address c/o Mid-America Apartment
Communities, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“Operating Partnership”), and MID-AMERICA APARTMENTS OF TEXAS,
L.P., a Texas limited partnership having an address c/o Mid-America
Apartment Communities, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (“MAA Texas,” jointly and severally with REIT and Operating Partnership,
“Borrower”) and FINANCIAL
FEDERAL SAVINGS BANK, a federal savings bank organized and existing under
the laws of the United States of America, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
WHEREAS,
Borrower desires to obtain a revolving credit loan from Lender in the amount of
up to, but not exceeding Two Hundred Million and NO/100 Dollars
($200,000,000.00).
WHEREAS,
Borrower has offered to grant Lender a security interest in certain real
property and other assets owned by Borrower as security for Borrower’s repayment
of such revolving credit loan; and
WHEREAS,
Lender is willing to make a revolving credit loan to Borrower secured by an
interest in such real property and other assets owned by Borrower.
NOW,
THEREFORE, the parties hereto, in consideration of their mutual covenants and
agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:
1. DEFINITIONS
1.1. Definitions.
In
addition to words and terms defined elsewhere in this Agreement, the following
words and terms shall have the following meanings, respectively, unless the
context hereof clearly requires otherwise:
“Addition
Fee” shall have the meaning set forth in Section 2.10.3.
“Additional
Collateral Facility” shall mean the increase in the Maximum Facility Available
caused solely by (i) the addition of a real estate property to the Collateral
Pool at the time of its inclusion or (ii) certain increases in the Valuation of
the Collateral Pool as described in Section 2.13.3.
1
“Affiliate”
or “Affiliates” as to any Person shall mean any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds five percent (5%) or more of any
class of the voting or other equity interests of such Person, or (iii) five
percent (5%) or more of any class of voting interests or other equity interests
of which is beneficially owned or held, directly or indirectly, by such
Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.
“Agreement”
shall mean this Credit Agreement, as the same may be supplemented or amended
from time to time, including all schedules attached hereto.
“Acquiring
Person” shall mean a “person” or “group of persons” within the meaning of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended.
“Authorized
Officer” shall mean those individuals, designated by written notice to Lender
from Borrower, authorized to execute notices, reports and other documents on
behalf of Borrower required hereunder; provided, further, that the individuals
so designated as the Authorized Officers of Borrower shall be the sole
representatives of Borrower for the purpose of giving or receiving any notices
permitted or required by this Agreement. Borrower may amend such list
of individuals from time to time by giving written notice of such amendment to
Lender.
“Base
Rate” shall mean the Reference BillsSM Rate plus the Margin or the LIBO Rate
plus the Margin, as the context shall require. Interest accruing at
the Base Rate shall be calculated monthly in the manner provided herein based on
the aggregate principal balance of the Loan outstanding during the applicable
Month, and such interest shall be paid in arrears, as provided
herein. The Reference BillsSM Rate or the LIBO Rate, as applicable,
with respect to each Base Rate Borrowing Tranche shall remain fixed throughout
the applicable Interest Period and shall then be redetermined as of each renewal
of such Base Rate Borrowing Tranche in accordance with Section 3.2. The
Margin with respect to each Base Rate Borrowing Tranche shall be determined and
redetermined from time to time in accordance with Section 3.2.
“Base
Rate Borrowing Tranche” shall mean any Borrowing Tranche which accrues interest
at the Base Rate.
“Benefit
Arrangement” shall mean at any time an “employee benefit plan,” within the
meaning of Section 3(3) of ERISA, including without limitation a Pension Plan or
a Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.
“Borrower”
shall mean the entity(ies) which will execute this Agreement as Borrower,
together with any Proposed Borrower at such time as it joins in this Agreement
pursuant to the terms and conditions of Section 2.10.2.2.
“Borrower’s
knowledge” shall mean the actual knowledge of any officer or employee of
Borrower which manages or operates the Collateral Pool Properties.
2
“Borrowing
Date” shall mean, with respect to any Borrowing Tranche, the date of borrowing
or renewal, as the case may be, which shall be a Business Day or, in the case of
a renewal which would otherwise fall on a day other than a Business Day, the
first Business Day thereafter.
“Borrowing
Tranche” shall mean each advance at the Base Rate hereunder having a particular
Interest Period outstanding at any one time, and all advances at the Prime
Rate. Two (2) or more Borrowing Tranches may be combined to form a
single Borrowing Tranche with the same Interest Period (a) without Prepayment
Fee or other penalty or fee in the event two (2) or more Borrowing Tranches
mature and are renewed at the same time with the same Interest Period or (b)
with the applicable Prepayment Fee if one (1) or more Borrowing Tranches are
advanced or prepaid and at the request of the Borrower then combined with one
(1) or more other Borrowing Tranches with the same Interest
Period. For all purposes hereunder, all Prime Rate fundings shall be
aggregated and deemed a single Borrowing Tranche.
“Business
Day” shall mean any day other than (i) a Saturday or Sunday or a legal holiday
on which either Lender or Servicer is closed for business, and (ii) in
connection with any Loan Request or Renewal Request for a Base Rate Borrowing
Tranche which will accrue interest in part based on the LIBO Rate, any day in
which business is not carried on in the London interbank market.
“Change
in Control” shall
mean the earliest to occur of: (a) the date on which REIT ceases for any reason
whatsoever to be the sole general partner or managing member of Operating
Partnership or ceases to own, directly or indirectly, one hundred percent (100%)
of the sole general partner or managing member of Operating Partnership, or (b)
the date on which an Acquiring Person becomes (by acquisition, consolidation,
merger or otherwise), directly or indirectly, the beneficial owner of more than
twenty-five percent (25%) of the total Voting Equity Capital (or of any other
securities or ownership interest) of any Borrower then outstanding, or (c) the
replacement (other than solely by reason of retirement at age sixty-five or
older, death or disability) of fifty percent (50%) or more (or such lesser
percentage as is required for decision-making by the board of directors or an
equivalent governing body) of REIT or Operating Partnership 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 REIT or Operating
Partnership 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” shall mean the first date on which both of the following requirements are
met: (i) this Agreement has been fully executed and (ii) all
conditions to closing set forth in Section 5.1 hereof shall have
been satisfied. The closing shall take place on the Closing Date at
such time and place as the parties agree.
3
“Collateral”
shall mean the Collateral Pool Properties, and all other property of Borrower on
which first priority liens and security interests have been granted for the
benefit of Lender to secure the Loan and all other obligations of Borrower under
the Collateral Pool Property Documents.
“Collateral
Agreements” shall mean (i) any agreements between Borrower and Lender for the
purpose of establishing replacement reserves for the Collateral Pool Properties
or a particular Collateral Pool Property, including agreements establishing a
fund to assure the completion of repairs or improvements specified in any such
agreement and (ii) any other agreement or agreements between Borrower and Lender
which provide for the establishment of any other fund, reserve or account, all
of the foregoing to be imposed only pursuant to an express written agreement
between Borrower and Lender entered into (a) at the Closing Date, or (b) with
respect to real estate properties added to the Collateral Pool pursuant to Section 2.10, at or prior to
such addition.
“Collateral
Pool”, “Collateral Pool Property” and “Collateral Pool Properties” shall mean
the multi-family real property or properties, as the case may be, as set forth
in Schedule 1.1(A),
together with any multi-family real properties which have been added to the
Collateral Pool and less any real properties which have been released from the
Collateral Pool hereunder.
“Collateral
Pool Property Documents” shall mean the then current versions of the Security
Instruments, assignments of leases and rents, guaranties, indemnities,
Collateral Agreements, O&M Programs, and any other documents now or in the
future executed by Borrower, any guarantor or any other person or entity in
connection with the Loan or the Collateral, as such documents may be amended
from time to time. The Collateral Pool Property Documents shall
include those documents set forth in Schedule 1.1(B).
“Commitment”
shall mean Two Hundred Million and NO/100 Dollars ($200,000,000).
“Consolidated
EBITDA” means, for any period, and without double counting any item, the EBITDA
for Borrower and its respective subsidiaries for such period on a consolidated
basis.
“Consolidated
EBITDA to Fixed Charges Ratio” means, for any period of determination, the ratio
(expressed as a percentage) of
(a) the
excess of
(i) the
Consolidated EBITDA for the period, less
(ii) the
Imputed Capital Expenditures for the period;
to
(b) the
Consolidated Fixed Charges for the period.
4
“Consolidated
EBITDA to Interest Ratio” means, for any period of determination, the ratio
(expressed as a percentage) of
(a) the
excess of
(i) the
Consolidated EBITDA for the period, less
(ii) the
Imputed Capital Expenditures for the period;
to
(b) the
Consolidated Interest Expense for the period.
“Consolidated
Fixed Charges” means, for any period of determination, the sum of
(a) the
Consolidated Interest Expense for the period;
(b) the
Consolidated Scheduled Amortization for the period; and
(c) Preferred
Distributions for the period.
“Consolidated
Interest Expense” means, for any period of determination, and without double
counting any item, the sum of the Interest Expense for Borrower and its
respective subsidiaries for such period on a consolidated basis.
“Consolidated
Scheduled Amortization” means, for any period of determination, and without
double counting any item, the sum of the Scheduled Amortization (but excluding
balloon payments) for Borrower and its respective subsidiaries for such period
on a consolidated basis.
“Consolidated
Total Assets” means, for any Person, all assets of such Person and its
subsidiaries determined on a consolidated basis in accordance with GAAP;
provided that all assets composed of real property shall be valued on an
undepreciated cost basis and the portion of any joint venture assets owned by
such Person shall be included in Consolidated Total Assets. The
assets of a Person and its subsidiaries shall be adjusted to reflect such
Person’s allocable share of such assets, for the relevant period or as of the
date of determination, taking into account (a) the relative proportion of each
such item derived from assets directly owned by such Person and from assets
owned by its subsidiaries, and (b) such Person’s respective ownership interest
in its subsidiaries.
“Consolidated
Total Indebtedness” means, as of any date, and without double counting any item,
the Total Indebtedness for each Borrower and its respective subsidiaries as of
such date (including the Total Indebtedness of Borrower as of such date and the
portion of any indebtedness of any joint venture in which any Borrower or any
subsidiary thereof is a venturer attributable to such Borrower or its
subsidiary).
“Credit
Enhancement Fee” shall mean ten basis points (.0010) for Qualifying Rate Swap
Agreements.
5
“Deemed
Maximum Facility Available” shall mean as of the date of determination the sum
of seventy percent (70%) of the Initial Market Value of each property
contributed to the Collateral Pool (regardless of whether the same has been
released from the Collateral Pool), including in the determination thereof the
Market Value of any property then being added to the Collateral
Pool.
“Deemed
Minimum Loan Amount” shall mean an amount equal to twenty-five percent (25%) of
the Commitment.
“Dollar”,
“U.S. Dollars” and the symbol $ shall mean lawful money of the United States of
America.
“EBITDA”
means, for any period, the sum determined in accordance with GAAP, of the
following, for any Person on a consolidated basis
(a) the
net income (or net loss) of such Person during such Period, but excluding gains
and losses on the sale of fixed assets;
(b) all
amounts treated as expenses for depreciation, Interest Expense and the
amortization of intangibles of any kind to the extent included in the
determination of such net income (or loss); and
(c) all
accrued taxes on or measured by income to the extent included in the
determination of such net income (or loss);
provided,
however, that net income (or loss) shall be computed for these purposes without
giving effect to extraordinary losses or extraordinary gains.
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended or supplemented from time to time, and any successor statute of
similar import, and the rules and regulations thereunder, as from time to time
in effect.
“ERISA
Group” shall mean, at any time, Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with Borrower, are treated
as a single employer under Section 414 of the Internal Revenue
Code.
“Event of
Default” shall mean any of the events described in Section 8.1 or otherwise
referred to herein as an “Event of Default”.
“Expiration
Date” shall mean the earlier of (i) the Maturity Date, or (ii) the date
specified by Borrower as the Expiration Date under Section 2.14, or (iii) the
date specified by Lender pursuant to Section 7.3.1.16.
6
“Facility
Debt Service” shall mean, for the purposes of this Agreement, the sum of (i) the
Hedge Adjusted Interest Due, (ii) the amounts, if any, payable under Section 2.5.5, (iii) the
Credit Enhancement Fee payable under Section 4.5.3, and (iv) the
first twelve (12) principal payments based on the amortization of the then
outstanding principal balance of the Loan utilizing a thirty (30) year fully
amortizing schedule and level monthly payments, and using a coupon rate equal to
the quotient resulting from dividing the Hedge Adjusted Interest Due by the then
outstanding principal balance of the Loan. The Hedge Adjusted
Interest Due and Facility Debt Service shall be annualized at the time of
determination notwithstanding the duration of any Interest Period or the
duration of any Qualifying Rate Cap Agreement or Qualifying Rate Swap Agreement.
Facility Debt Service shall be recalculated (a) as of each Loan Request, (b) as
of each Renewal Request, or deemed renewal under Section 3.3.3, (c) on or
before July 1 of each calendar year during the term of this Agreement,
commencing on or about July 1, 2007, (d) as of each addition or deletion of a
property to or from the Collateral Pool, (e) as of each repayment of any
principal portion of the Loan, (f) upon the expiration termination, replacement,
or other modification of any Qualifying Rate Cap Agreement or Qualifying Rate
Swap Agreement, and (g) upon the occurrence of a Material Adverse Change. The
calculation of Facility Debt Service is made for purposes of computing the
Facility Debt Service Coverage Ratio and for other purposes under this Agreement
and not for purposes of calculating the interest payable hereunder or under the
Revolving Credit Note. The interest payable under the Revolving Credit Note and
this Agreement is payable at the rates and at the times provided in Section 3 and Section 4 hereof.
“Facility
Debt Service Coverage Ratio” shall mean, at the time of determination, the then
prevailing computation of Net Operating Income of the Collateral Pool Properties
divided by the then prevailing computation of Facility Debt
Service.
“▇▇▇▇▇▇▇
Mac” shall mean the Federal Home Loan Mortgage Corporation.
“Financial
Federal” shall mean Financial Federal Savings Bank.
“Funds
from Operations” shall mean consolidated net income of REIT, including minority
interest (computed in accordance with GAAP), excluding gains (or losses) from
debt restructuring, sales of property, impairment charges, or charges related to
the adjustment to the value of assumed debt, plus real property depreciation and
goodwill amortization, before extraordinary or unusual items, and after
adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect Funds from Operations on the same basis.
Funds from Operations shall be calculated for the trailing twelve (12) month
period preceding the date of determination.
“GAAP”
shall mean generally accepted accounting principles as are in effect from time
to time, subject to the provisions of Section 1.3, and applied on a
consistent basis both as to classification of items and amounts.
“G-Fee”
shall mean the applicable percentage per annum set forth in
Schedule
3.2.
7
“Hazardous
Materials” shall mean petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives; flammable materials;
radioactive materials; polychlorinated biphenyls ("PCBs") and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Collateral Pool Property(ies) is
prohibited by any federal, state or local authority; any substance that requires
special handling and any other material or substance now or in the future that
(i) is defined as a “hazardous substance,” “hazardous material,”
“hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or
“pollutant” by or within the meaning of any Hazardous Materials Law, or
(ii) is regulated in any way by or within the meaning of any Hazardous
Materials Law.
“Hazardous
Materials Laws” means all federal, state, and local laws, ordinances and
regulations and standards, rules, policies and other governmental requirements,
administrative rulings and court judgments and decrees in effect now or in the
future and including all amendments, that relate to Hazardous Materials or the
protection of human health or the environment and apply to Borrower or to the
Collateral Pool Property(ies). Hazardous Materials Laws include, but are not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901, et seq., the Toxic Substance
Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33
U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation
Act, 49 U.S.C. Section 5101 et seq., and their state analogs.
“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 Collateral Pool Property in
violation of Hazardous Materials Laws, including the discharge of any Hazardous
Materials emanating from any Collateral Pool 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 Collateral Pool
Property in violation of Hazardous Materials Laws, in each case whether sudden
or non-sudden, accidental or non-accidental.
“Hedge
Adjustments” shall mean the aggregate sum of (a) for each Qualifying Rate Swap
Agreement, the product of (i) the notional amount of said Rate Swap Agreement
times (ii) the difference, positive or negative, obtained by subtracting the
stipulated fixed rate paid under said Rate Swap Agreement from the applicable
LIBO Rate paid under such Rate Swap Agreement and (b) for each Qualifying Rate
Cap Agreement where the applicable LIBO Rate exceeds the strike rate, the
product of (x) the notional amount of said Rate Cap Agreement times (y) the
excess of such LIBO Rate over the strike rate.
“Hedge
Adjusted Interest Due” shall mean the sum of (i) the interest due on the
outstanding amount of the Loan hereunder and under the Revolving Credit Note,
including any default interest less (ii) any and all applicable Hedge
Adjustments.
“Hedged
Debt Service” shall mean, for the purposes of this Agreement, the aggregate sum
of:
(i) for
each Qualifying Rate Cap Agreement, the product of (x) the stipulated notional
amount times (y) the strike rate stipulated in such Qualified Rate Cap
Agreement;
8
(ii) for
each Qualifying Rate Swap Agreement, the product of (a) the stipulated notional
amount times (b) the fixed pay rate stipulated in such Qualified Rate Swap
Agreement;
(iii) fifty
percent (50%) of the G-Fee Amount for all outstanding Borrowing Tranches at the
time of determination;
(iv) the
greater of (A) fifty percent (50%) of the Servicing Fee Payment for all
outstanding Borrowing Tranches at the time of determination or (B) fifty percent
(50%) of the Minimum Servicing Fee payable under Section 2.5.5;
(v) fifty
percent (50%) of the Credit Enhancement Fee payable under Section 4.5.3;
and
(vi) the
first twelve (12) principal payments based on the amortization of the Required
Hedge Amount utilizing a thirty (30) year fully amortizing schedule and level
monthly payments, and using a coupon rate equal to the quotient resulting from
dividing (I) the aggregate amounts of the foregoing items (i) through (v) by
(II) the Required Hedge Amount;
provided,
however, that in the event Borrower shall purchase Qualifying Rate Cap
Agreements or Qualifying Rate Swap Agreement with aggregate notional amounts in
excess of the Required Hedge Amount, Hedged Debt Service shall be calculated
starting with the Qualifying Rate Cap Agreement or Qualifying Rate Swap
Agreement with the lowest stipulated strike rate or fixed pay rate, as
applicable, (relative to all of the Qualifying Rate Cap Agreements and
Qualifying Rate Swap Agreements) and proceeding to include those Qualifying Rate
Cap Agreements or Qualifying Rate Swap Agreements with the next higher
stipulated strike rate or fixed pay rate, until the aggregate notional amounts
of such Qualifying Rate Cap Agreements and/or Qualifying Rate Swap Agreements
considered for purposes of calculating Hedged Debt Service shall equal, but not
exceed, the Required Hedge Amount, further provided that the notional amount of
the last Qualifying Rate Cap Agreement or Qualifying Rate Swap Agreement
necessary to reach the Required Hedge Amount as herein provided shall be
prorated, as necessary, such that the aggregate notional amount of all
Qualifying Rate Cap Agreements and/or Qualifying Rate Swap Agreements considered
for purposes of calculating Hedged Debt Service shall equal, but not exceed, the
Required Hedge Amount at the time of determination. The foregoing
shall be illustrated by way example, as set forth in Schedule
1.1(C). Hedged Debt Service shall be annualized at the time of
determination notwithstanding the duration of any Qualifying Rate Cap Agreement
or Qualifying Rate Swap Agreement. Hedged Debt Service shall be
recalculated (a) as of each Loan Request, (b) as of each Renewal Request, or
deemed renewal under Section
3.3.3, (c) on or before July 1 of each calendar year during the term of
this Agreement, commencing on or about July 1, 2007, (d) as of each addition or
deletion of a property to or from the Collateral Pool, (e) as of each repayment
of any principal portion of the Loan, (f) upon the expiration, termination,
replacement or other modification of any Qualifying Rate Cap Agreement or
Qualifying Rate Swap Agreement, and (g) upon the occurrence of a Material
Adverse Change. The calculation of Hedged Debt Service is made for
purposes of computing the Hedged Debt Service Coverage Ratio and for other
purposes under this Agreement and not for purposes of calculating the interest
payable hereunder or under the Revolving Credit Note. The interest
payable under the Revolving Credit Note and this Agreement is payable at the
rates and at the times provided in Section 3 and Section 4 hereof.
9
“Hedged
Debt Service Coverage Ratio” shall mean, at the time of determination, the then
prevailing computation of (i) fifty percent (50%) of the Net Operating Income
divided by (ii) the maximum Hedged Debt Service.
“Hedge
Fees” shall have the meaning set forth in Section 2.14.2.
“Imputed
Capital Expenditures” means, for any four (4) consecutive fiscal quarters, an
amount equal to the average number of apartment units owned by Borrower or its
subsidiaries during such period multiplied by Three Hundred and NO/100 Dollars
($300.00) per apartment unit, and for any period of less than four (4)
consecutive fiscal quarters, an appropriate proration of such
figure.
“Indebtedness”
means, with respect to any Person, as of any specified date, without
duplication, all:
(a) indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than (i) current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices, and (ii)
for construction of improvements to property, if such Person has a
non-contingent contract to purchase such property);
(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) 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
10
(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 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 of the obligation in good faith.
“Index
Conversion Notice” shall have the meaning given to such term in Section 3.5.
“Initial
Market Value” shall mean the Market Value of any Collateral Pool Property as of
the date the same is included in the Collateral Pool pursuant to the provisions
hereof. The Initial Market Value of the Collateral Pool Properties is
shown at Schedule
1.1(A).
“Interest
Expense” means, for any period, the sum of
(a) gross
interest expense for the period (including all commissions, discounts, fees and
other charges in connection with standby letters of credit and similar
instruments) for Borrower and its respective subsidiaries; and
(b) the
portion of the up-front costs and expenses for Rate Contracts entered into by
Borrower and its respective subsidiaries (to the extent not included in gross
interest expense) fairly allocated to such Rate Contracts as expenses for such
period, as determined in accordance with GAAP;
(c) provided,
that, all interest expense accrued by Borrower and its respective subsidiaries
during such period, even if not payable on or before the Expiration Date, shall
be included within “Interest Expense.” Notwithstanding the foregoing,
interest accrued under any Intra-Company Debt shall not be included within
“Interest Expense” for any purposes hereof.
“Interest
Period” shall have the meaning assigned to such term in Section 3.3.
“Internal
Revenue Code” shall mean the Internal Revenue Code of 1986, as the same may be
amended or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.
“Intra-Company
Debt” means Indebtedness (whether book-entry or evidenced by a term, demand or
other note or other instrument) owed by Borrower or any of its respective
subsidiaries to any subsidiary, and incurred or assumed for the purpose of
capitalizing a subsidiary of Borrower.
11
“Law”
shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree or award of any Official Body.
“Lender”
shall mean at any time and from time to time, the entity that is the holder of
the Revolving Credit Note, provided that Lender may in its sole discretion
designate Servicer to perform some or all of Lender’s obligations under this
Agreement, the Revolving Credit Note and the other Loan
Documents. Promptly after the initial closing under this Agreement,
Financial Federal Savings Bank, the initial Lender, intends to sell the
Revolving Credit Note to ▇▇▇▇▇▇▇ Mac and, in connection therewith, shall assign
all of its interests in this Agreement and the other Loan Documents to ▇▇▇▇▇▇▇
Mac.
“LIBO
Rate” shall mean, with respect to any Base Rate Borrowing Tranche, the rate of
interest, rounded to the nearest basis point (i.e. one-hundredth of one percent
(.0001)), displayed as of 11:00 a.m. London time on the second Business Day
preceding the first day of the applicable Interest Period on the Bloomberg,
L.P., page “BBAM”, as the British Bankers Association (“BBA”) LIBO Rate (such
page, or such other page as may replace page BBAM on that service, or at the
option of Lender (i) the applicable page on another credible and generally
recognized service which electronically transmits or displays BBA LIBO Rates for
the applicable Interest Period or (ii) any publication of LIBO Rates available
from BBA for the applicable Interest Period, is referred to as the “Designated
Bloomberg Page”) for purposes of calculating effective rates of interest for
loans or obligations for an amount comparable to such Borrowing Tranche and
having a term equal to the Interest Period. If the Designated
Bloomberg Page is not available, but such information is generally still
published, the LIBO Rate for such Interest Period will be the BBA LIBO Rate most
recently published for such Interest Period.
“Lien”
shall mean any Security Instrument, pledge, lien, security interest, charge or
other encumbrance or security arrangement of any nature whatsoever, whether
voluntarily or involuntarily given, including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security and any filed financing statement or other
notice of any of the foregoing (whether or not a lien or other encumbrance is
created or exists at the time of the filing).
“Loan”
shall mean the sum of all Borrowing Tranches outstanding at any one
time.
“Loan
Document” or “Loan Documents” shall mean any or all of this Agreement, the
Revolving Credit Note, the Collateral Pool Property Documents and any other
instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the same may
be supplemented or amended from time to time in accordance herewith or
therewith.
“Loan to
Value Ratio” shall mean the quotient, expressed as a percentage, determined by
dividing the outstanding principal balance of the Loan by the aggregate of the
then current Market Values of the Collateral Pool Properties. The
Loan to Value Ratio shall be recalculated (a) as of each Loan Request, (b) as of
each Renewal Request, or deemed renewal under Section 3.3.3, (c) on or
before July 1 of each calendar year during the term of this Agreement,
commencing on or about July 1, 2007, (d) as of each addition or deletion of a
property to or from the Collateral Pool, (e) as of each repayment of any
principal portion of the Loan, and (f) upon the occurrence of a Material Adverse
Change.
12
“Loan
Request” shall have the meaning given to such term in Section 2.6.
“Margin”
shall mean the sum of the G-Fee and the Servicing Fee.
“Market
Value” shall mean, as to each individual Collateral Pool Property, the Initial
Market Value of such property, as such Market Value may be subsequently
increased or decreased in accordance with the terms and conditions of this
Agreement.
“Material
Adverse Change” shall mean any set of circumstances or events which, in Lender’s
reasonable discretion has a material adverse effect on (i) the validity or
enforceability of this Agreement or the other Loan Documents taken as a whole,
(ii) the financial condition of Borrower or any guarantor, (iii) the financial
condition or Market Value of any Collateral Pool Property, or (iv) the
compliance of any Collateral Pool Property with any Law.
“Maturity
Date” shall mean the first calendar day of the month following the eighth
(8th)
anniversary of the Closing Date.
“Maximum
Facility Available” shall mean, at the time of determination, the maximum amount
which Borrower may borrow under this Agreement without violating the Sublimits
set forth in Section
2.6.1.
“Maximum
Hedged Debt Service” shall mean, the sum of (i) the Maximum Hedged Interest Due,
on an annualized basis over the next succeeding twelve (12) month period, plus
(ii) the principal necessary to fully amortize fifty percent (50%) of the then
outstanding aggregate principal balance of all Borrowing Tranches over a thirty
(30) year period, at a coupon rate equal to the quotient resulting from dividing
the (a) Maximum Hedged Interest Due by (b) fifty percent (50%) of the aggregate
outstanding balance of all Borrowing Tranches, with such amortization deemed to
commence on the first day of the twelve (12) month period.
“Maximum
Hedged Interest Due” shall mean, the sum of (i) for all Qualifying
Rate Cap Agreements, the product of (a) the notional amount of each Qualifying
Rate Cap Agreement, times (b) the sum of the relevant strike rate plus the
G-Fee, plus the Servicing Fee; plus (ii) for all Qualifying Rate Swap
Agreements, the product of (a) the notional amount of each Qualifying Rate Swap
Agreement, times (b) the sum of the applicable fixed pay rate plus the G-Fee
plus the Servicing Fee.
“Maximum
Loan to Value Ratio” shall mean seventy percent (70%).
“Minimum
Servicing Fee” shall have the meaning set forth in Section 2.5.5.
“Minimum
Usage Fee” shall have the meaning set forth in Section 2.5.4.
“Month”
shall mean the appropriate calendar month.
13
“Monthly
Payment Statement” shall have the meaning given to such term in Section 4.2.
“Mortgage
Review Fee” shall mean a non-refundable fee in the amount of Four Thousand and
NO/100 Dollars ($4,000.00) per real property.
“Multiemployer
Plan” shall mean any employee benefit plan which is a “multiemployer plan”
within the meaning of Section 4001(a)(3) of ERISA and to which Borrower or any
member of the ERISA Group is then making or accruing an obligation to make
contributions or, within the preceding five (5) Pension Plan years, has made or
had an obligation to make such contributions.
“Net
Operating Income” shall mean an annualized dollar amount equal to all income
from the operations of the Collateral Pool Properties that is available for
repayment of debt and return of equity after deducting for economic vacancy and
all expenses (exclusive of Facility Debt Service, Credit Enhancement Fees and
payments made or received pursuant to Rate Cap Agreements or Rate Swap
Agreements). Net Operating Income shall be calculated by Lender for
each individual Collateral Pool Property as of the Closing Date and thereafter
as of July 1, commencing July 1, 2007, of each calendar year during the term of
this Agreement, in accordance with Lender’s then current methodology,
consistently applied, excluding from such calculation expenses from
depreciation, amortization, interest expenses, the cost of any Rate Cap
Agreement or Rate Swap Agreement, non-recurring items (including any costs and
expenses incurred by Borrower in connection with the closing of the Loan), and
capital expenses, but including in such calculation an assumed capital expense
reserve in a reasonable amount consistent with Lender’s then current
requirements for such capital reserves. In addition, upon the
addition or release of any real property in the Collateral Pool pursuant to the
provisions hereof, Lender shall redetermine Net Operating Income for the
Collateral Pool in the following manner: (i) in the event of an
addition of a real property to the Collateral Pool, Lender shall add the Net
Operating Income of the real property included in the Collateral Pool to the
then current determination of Net Operating Income for the Collateral Pool; or
(ii) in the event of a release of a real property from the Collateral Pool,
Lender shall subtract the Net Operating Income of the real property released
from the Collateral Pool from the then current determination of Net Operating
Income for the Collateral Pool.
“Net
Worth” means, as of any specified date, for any Person, the excess of the
Person’s assets over the Person’s liabilities, determined in accordance with
GAAP but excluding any adjustment for the value of Rate Cap Agreements or Rate
Swap Agreements, on a consolidated basis, provided that all real property shall
be valued on an undepreciated basis.
“O&M
Programs” shall mean a written program of operations and maintenance for a
Collateral Pool Property approved in writing by Lender.
“Obligation”
shall mean any obligation or liability of Borrower to Lender, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due (including any amounts paid by
▇▇▇▇▇▇▇ Mac as a result of its credit enhancement of a Rate Swap Agreement),
under or in connection with this Agreement, the Revolving Credit Note or any
other Loan Document, excluding any Permanent Loan or any other liability of
Borrower to Lender not created under this Agreement, the Revolving Credit Note
or the other Loan Documents.
14
“Official
Body” shall mean any national, federal, state, local or other government or
political subdivision or any agency, authority, bureau, commission, department
or instrumentality of either, or any court, tribunal, grand jury or arbitrator,
in each case whether foreign or domestic.
“Payment
Date” shall have the meaning given to that term in Section 4.2.
“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.
“Pension
Plan” shall mean at any time an employee pension benefit plan which is covered
by Title IV of ERISA or is subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii)
has at any time within the preceding five (5) years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
“Permanent
Loan” shall have the meaning assigned to that term in Section 2.16.1.
“Permanent
Loan Collateral” shall have the meaning assigned to that term in Section 2.16.1.
“Permitted
Exceptions” shall mean:
(a) Liens
for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable;
(b) Liens
of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing
obligations incurred in the ordinary course of business that are not yet due and
payable;
(c) Encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
a real property, none of which (i) materially impairs the use of such property
or the value thereof, (ii) is violated in any material respect by existing or
proposed structures or land use or (iii) impairs Borrower’s ability to rebuild,
repair or restore any improvements located on a Collateral Pool Property
following a casualty;
(d) Liens,
security interests and mortgages in favor of Lender for the benefit of
Lender;
(e) Encumbrances
listed as exceptions to Lender’s title insurance policies for the Collateral
Pool Properties and any such other title and survey exceptions as Lender has
approved or may approve in writing in Lender’s sole discretion; and
(f) Rights
of tenants under residential leases.
15
“Permitted
Transfer” shall have the meaning set forth in the Security
Instrument.
“Person”
shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.
“Potential
Default” shall mean any event or condition which, with the passage of time, the
giving of notice, or a determination by Lender, or any combination of the
foregoing, would constitute an Event of Default.
“Preferred
Distributions” means, for any period, the amount of any and all distributions
due and payable to the holders of any form of preferred stock (whether
perpetual, convertible or otherwise) or other ownership or beneficial interest
in Borrower or any of its subsidiaries that entitles the holders thereof to
preferential payment or distribution priority with respect to dividends, assets
or other payments over the holders of any other stock or other ownership or
beneficial interest in such Person.
“Prepayment
Fee” shall have the meaning set forth in Section 4.4.
“Prime
Rate” shall mean the rate of interest per annum established on the first day of
each Month during the term hereof and published in The Wall Street Journal as
the prime rate, or any comparable publication reasonably selected by Lender in
the event The Wall Street Journal no longer publishes the prime
rate.
“Prime
Rate Borrowing Tranche” shall mean any Borrowing Tranche which accrues interest
at the Prime Rate.
“Prohibited
Transaction” shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.
“Property
Borrower” shall mean each Borrower who owns or leases a Collateral Pool
Property.
“Proposed
Borrower” shall mean an Affiliate of Borrower that is the owner of a property
which has been proposed to be included in the Collateral Pool, pursuant to the
terms hereof.
“Qualifying
Rate Cap Agreement” shall mean a Rate Cap Agreement which (i) is purchased at
Borrower’s sole expense from a rate cap provider approved by Lender for the sole
benefit of Borrower and Lender, with all fees and expenses paid at the time such
Rate Cap Agreement is purchased and/or executed, (ii) is assigned to Lender as
collateral for the Loan, (iii) is delivered on Lender’s standard documents, (iv)
provides that Lender shall receive payments thereunder, payable on the Payment
Date(s) set forth in Section
4.2 of this Agreement, equal to the product of (a) the stipulated
notional amount times (b) the excess, if any, of the stipulated LIBO Rate as of
any applicable Payment Date, over the stipulated strike rate, (v) has an initial
term expiring no earlier than the earlier to occur of (x) that date which is
five (5) years from the date such Rate Cap Agreement is assigned to Lender, or
(y) the Maturity Date, (vi) cannot be terminated or canceled prior to the
expiration of its initial term without Lender’s prior consent, which may be
withheld in Lender’s sole discretion and (vii) is purchased within ten (10) days
of the addition of any Collateral to the Collateral Pool which increases the
amount that Borrower is permitted to borrow under the Loan.
16
“Qualifying
Rate Swap Agreement” shall mean a Rate Swap Agreement which (i) is purchased at
Borrower’s sole expense from a counterparty approved by Lender for the sole
benefit of Borrower and Lender, with all fees and expenses paid at the time such
Rate Swap Agreement is purchased and/or executed, (ii) is assigned to Lender as
collateral for the Loan, (iii) is delivered on Lender’s standard documents, (iv)
provides that Lender shall receive payments thereunder, payable on the Payment
Date(s) set forth in Section
4.2 of this Agreement equal to the product of (a) the stipulated notional
amount times (b) the stipulated LIBO Rate, which shall be either the thirty (30)
day or the ninety (90) day LIBO Rate, regardless of the duration of any then
outstanding Borrowing Tranche, (v) has an initial term expiring no earlier than
the earlier to occur of (x) that date which is five (5) years from the date such
Rate Swap Agreement is assigned to Lender, or (y) the Maturity Date, (vi) is
credit-enhanced by ▇▇▇▇▇▇▇ Mac pursuant to Section 4.5.3 hereof, (vii)
cannot be terminated or canceled prior to the expiration of its initial term
without Lender’s prior consent, which may be withheld in Lender’s sole
discretion and (viii) is purchased within ten (10) days of the addition of any
Collateral to the Collateral Pool which increases the amount that Borrower is
permitted to borrow under the Loan..
“Rate Cap
Agreement” shall mean an agreement, device or arrangement designed to protect
Borrower from fluctuations of interest rates, including interest rate cap or
collar protection agreements or interest rate options.
“Rate
Contracts” means interest rate and currency swap agreements, cap, floor and
collar agreements, interest rate insurance, currency spot and forward contracts
and other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
“Rate
Swap Agreement” shall mean an agreement, device or arrangement designed to
protect Borrower from fluctuations of interest rates, pursuant to which Borrower
agrees to pay to the applicable counterparty the product of (i) the stipulated
fixed pay rate times (ii) the stipulated notional amount, and the counterparty
agrees to pay to or for the benefit of Borrower the product of (x) the
stipulated LIBO Rate times (y) the stipulated notional amount.
“Reference
BillsSM” shall mean the unsecured general obligations of ▇▇▇▇▇▇▇ Mac designated
by ▇▇▇▇▇▇▇ Mac as “Reference BillsSM” and issued by ▇▇▇▇▇▇▇ Mac at regularly
scheduled auctions. In the event ▇▇▇▇▇▇▇ Mac shall at any time cease
to designate any unsecured general obligations of ▇▇▇▇▇▇▇ Mac as “Reference
BillsSM”, Lender shall be permitted to exercise its rights under Section 3.4.
17
“Reference
BillsSM Rate” shall mean, with respect to each Base Rate Borrowing Tranche, the
“Money Market Yield” (or any equivalent terms designated by Lender) applicable
to the Reference BillsSM (i) having an original maturity most comparable to the
term of the Interest Period for the applicable Borrowing Tranche and (ii) issued
at the most recently conducted regularly scheduled auction preceding the
commencement of the Interest Period for such Borrowing Tranche, as the same is
displayed (a) on the Reference ▇▇▇▇ Index Page (i.e. the ▇▇▇▇▇▇▇ Mac debt
securities web page accessed via the ▇▇▇▇▇▇▇ Mac website at ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇),
or (b) at the option of Lender, in any publication of Reference BillsSM auction
results designated by ▇▇▇▇▇▇▇ Mac. Notwithstanding any of the
foregoing to the contrary, in the event ▇▇▇▇▇▇▇ Mac shall not have conducted a
regularly scheduled auction of unsecured general obligations within the sixty
(60) day period prior to the first day of the Interest Period for any Base Rate
Borrowing Tranche requested under Sections 2.6 or 3.3 hereof, the Reference
BillsSM Rate shall be deemed to be unascertainable and Lender shall be permitted
to exercise its rights under Section 3.4.
“Renewal
Date” shall have the meaning given to such term in Section 3.3.3.
“Renewal
Request” shall have the meaning given to such term in Section 3.3.3.
“Replacement
Hedge Escrow” shall have the meaning given to such term in Section 4.5.2.
“Reportable
Event” shall mean a reportable event described in Section 4043 of ERISA and
regulations thereunder with respect to a Pension Plan or Multiemployer
Plan.
“Required
Hedge Amount” shall mean fifty percent (50%) of the outstanding principal
balance of the Loan.
“Revolving
Credit Note” shall mean the Multifamily Note of Borrower, in the face amount of
the Commitment, which evidences the Loan, together with all amendments,
extensions, renewals, replacements, refinancings or refundings thereof in whole
or in part.
“Scheduled
Amortization” means, with respect to any Person, the sum, as of any date of
determination, of the current portion (i.e., such portion as is scheduled to be
paid by the obligor thereof within twelve (12) months from the date of
determination) of all regularly scheduled amortization payments due on such
Person’s long-term fully amortizing mortgage Indebtedness (exclusive of balloon
payments).
“Security
Instrument” shall mean any mortgage, deed of trust, or deed to secure debt
securing any of the Collateral Pool Property(ies), or any pledge, assignment or
control agreement securing any Qualifying Rate Cap Agreement or Qualifying Rate
Swap Agreement.
“Seismic
Report” shall mean a report in form and substance satisfactory to Lender, made
by an inspector of Lender’s choosing, which assesses the earthquake risk of
proposed Collateral Pool Properties. Seismic Reports shall be ordered by Lender
at Borrower’s expense.
“Seismic
Report Fee” shall mean a non-refundable fee equal to Lender’s reasonable
out-of-pocket costs and expenses incurred in obtaining a seismic report with
respect to any real property proposed for addition to the Collateral Pool for
which Lender, in its discretion, deems such report necessary. Lender
currently requires a Seismic Report Fee of Five Hundred and NO/100 Dollars
($500.00) for each real property located in the states of California, Washington
and Oregon.
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“Senior
Management” shall mean (i) any Person holding the office of Chief Executive
Officer, Chair of the Board, President or Chief Financial Officer of REIT or
(ii) any other Person with responsibility for any of the functions typically
performed in a corporation by the officers described in clause (i).
“Servicer”
shall mean Financial Federal Savings Bank, or any subsequent independent
contractor appointed by Lender, at Lender’s sole cost and expense, to administer
the Loan and the Loan Documents or otherwise perform certain functions in
connection therewith under the terms of a Servicing
Agreement. Pursuant to the terms of any Servicing Agreement, Lender
may designate Servicer to perform some or all of Lender’s obligations under this
Agreement, the Revolving Credit Note and the other Loan Documents.
“Servicing
Agreement” shall mean any agreement between Lender and an independent contractor
pursuant to which Lender appoints said independent contractor as Servicer under
this Agreement, the Revolving Credit Note and the other Loan
Documents.
“Servicing
Fee” shall mean an annual fee of seven basis points (.0007).
“Servicing
Fee Payment” shall mean the product of the Servicing Fee times the principal
amount of the Borrowing Tranches then outstanding for each applicable Interest
Period.
“Solvent”
shall mean, with respect to any Person on a particular date, that on such date
(i) the fair value of the assets of such Person is greater than the total amount
of liabilities, including, without limitation, contingent liabilities, of such
Person, (ii) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability of such Person after giving effect to any rights of
contribution, subrogation or indemnification of such Person.
“Streamlined
Refinancing Program” shall mean Lender’s then current program for refinancing a
performing loan in its loan portfolio.
“Sublimits”
shall have the meaning assigned to that term in Section 2.6.1.
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“Total
Indebtedness” means, as of any date of determination, and in respect of any
Person, all outstanding Indebtedness, and shall include, without limitation: (i)
such Person’s share of the Indebtedness of any partnership or joint venture in
which such Person directly or indirectly holds any interest, and (ii) any
recourse or contingent obligations, directly or indirectly, of such Person with
respect to any Indebtedness of such partnership or joint venture in excess of
its proportionate share. Notwithstanding the foregoing, (x)
Intra-Company Debt, and (y) accounts payable to trade creditors for goods and
services and current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of business in accordance with customary
terms and paid within the specified time, shall be excluded from the calculation
of “Total Indebtedness” but shall not otherwise be excluded as Indebtedness for
any other purpose hereof.
“Treasury
Rate” shall mean the yield rate as of the date which is five (5) Business Days
prior to the Expiration Date, on a U.S. Treasury Security with a term of five
(5) years and a maturity date most nearly approximating the Maturity Date, as
reported in The Wall Street Journal, expressed as a decimal calculated to five
(5) digits. In the event no yield is published on the applicable date
for such Treasury Security, Lender, in its discretion, shall select the
non-callable U.S. Treasury Security maturing in the same year as the Maturity
Date with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rate in The Wall
Street Journal is discontinued for any reason, Lender shall, in its discretion,
select a security with a comparable rate and term to a U.S. Treasury Security
with a term of five (5) years and a maturity date most nearly approximating the
Maturity Date.
“Underwriting
Materials” shall mean all materials required by Lender pursuant to Lender’s then
current loan underwriting requirements.
“Uniform
Commercial Code” shall have the meaning assigned to that term in Section 6.1.13.
“Unused
Facility Fee” shall have the meaning assigned to that term in Section 2.5.3.
“Valuation”
shall have the meaning set forth in Section 2.13.
“Voting
Equity Capital” shall mean securities or partnership interest 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).
1.2. Construction.
Unless
the context of this Agreement otherwise clearly requires, the following rules of
construction shall apply to this Agreement and each of the other Loan
Documents.
1.2.1. Number;
Inclusion.
References
to the plural include the singular, the plural, the part and the whole; “or” has
the inclusive meaning represented by the phrase “and/or”, and “including” has
the meaning represented by the phrase “including without
limitation”;
1.2.2. Determination.
References
to “determination” of or by Lender shall be deemed to include good-faith
estimates by Lender (in the case of quantitative determinations) and good-faith
beliefs by Lender (in the case of qualitative determinations) and such
determinations shall be conclusive absent manifest error;
20
1.2.3. Lender’s
Discretion and Consent; References to Lender’s Requirements.
Whenever
Lender is granted the right herein to act in its sole discretion or to grant or
withhold consent, such right shall be exercised in good faith, and whenever a
reference is made to “Lender’s then current requirements”, “Lender’s then
current programs” or the like, such reference shall be deemed to mean such
requirements, programs and the like as are then standard in the secondary
multifamily mortgage industry, as such standards are generally reflected in the
then current version of the ▇▇▇▇▇▇▇ Mac Multifamily Seller/Servicer
Guide;
1.2.4. Documents
Taken as a Whole.
The words
“hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or
any other Loan Document refer to this Agreement or such other Loan Document as a
whole and not to any particular provision of this Agreement or such other Loan
Document;
1.2.5. Headings.
The
section and other headings contained in this Agreement or such other Loan
Document and the Table of Contents preceding this Agreement or such other Loan
Document are for reference purposes only and shall not control or affect the
construction of this Agreement or such other Loan Document or the interpretation
thereof in any respect;
1.2.6. Implied
References to this Agreement.
Article,
section, subsection, clause, and schedule references are to this Agreement
unless otherwise specified, and schedules attached hereto are incorporated
herein by this reference;
1.2.7. Persons.
Reference
to any Person includes such Person’s successors and assigns (but only if such
successors and assigns are permitted by this Agreement or such other Loan
Document, as the case may be), and reference to a Person in a particular
capacity excludes such Person in any other capacity;
1.2.8. Modifications
to Documents.
Reference
to any agreement (including this Agreement and any other Loan Document together
with any schedules and exhibits hereto or thereto), document or instrument means
such agreement, document or instrument as amended, modified, replaced,
substituted for, superseded or restated;
1.2.9. From,
To and Through.
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Relative
to the determination of any period of time, “from” means “from and including”,
“to” means “to but excluding”, and “through” means “through and including”;
and
1.2.10. Conflicts
with Other Loan Documents.
In the
event of any conflict between the terms and provisions of this Agreement and any
other Loan Document, the terms and provisions of this Agreement shall
prevail.
1.3. Accounting
Principles.
Except as
otherwise provided in this Agreement, all computations and determinations as to
accounting or financial matters and all financial statements to be delivered
pursuant to this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate) and all accounting or
financial terms shall have the meanings ascribed to such terms by
GAAP. In the event of any change after the date hereof in GAAP, and
if such change would result in the inability to determine compliance with any
financial covenants set forth herein, then the parties hereto agree to endeavor,
in good faith, to agree upon an amendment to this Agreement that would adjust
such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with Borrower’s financial statements at that time.
2. REVOLVING
CREDIT FACILITY
2.1. Revolving
Credit Commitment.
Subject
to the terms and conditions hereof and relying upon the representations and
warranties herein set forth, Lender agrees to advance funds to Borrower at any
time or from time to time during the term hereof, provided that after giving
effect to any particular advance the Loan amount outstanding at any one time
shall not exceed the amount which would be permitted to be outstanding under the
Sublimits. Within such limits of time and amount and subject to the
other provisions of this Agreement, Borrower may borrow, repay and reborrow
pursuant to this Section
2.1. All advances under this Agreement constitute a single
indebtedness, and all of the Collateral is security for the Revolving Credit
Note and for the performance of all of the Obligations.
2.2. Multi-Asset
Entities. Lender acknowledges that Collateral Pool Properties
included in and added to the Collateral Pool will not be owned by single-asset,
special-purpose entities. Borrower and Borrower’s subsidiaries currently own and
expect to continue to own assets other than those securing the Loan, and some
assets held by Borrower and Borrower’s subsidiaries are pledged as collateral
for purposes other than the Loan, including for the purpose of securing debt
held by other lenders.
2.3. Term.
2.3.1. The
term of the Loan shall commence on the Closing Date and terminate on the
Expiration Date unless otherwise terminated earlier pursuant to the provisions
hereof.
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2.3.2. Notwithstanding
anything contained herein to the contrary, provided there is no Event of
Default, Borrower may make a one time election by written notice served upon
Lender no less than sixty (60) days prior to the Maturity Date, to extend the
term of the Loan such that it shall terminate on the fifth (5th)
anniversary of the Maturity Date; such extension shall be subject to (i)
Lender’s approval, (ii) implementation of a revised schedule of G-Fees to be
determined by Lender in Lender’s sole discretion at the time of Borrower’s
election hereunder, and (iii) Borrower’s payment of applicable fees charged by
Lender pursuant to its then current policies. In the event Borrower shall not
accept the revised schedule of G-Fees or pay the applicable fees to be paid
pursuant to this Section
2.3.2 on or before the Maturity Date, the Loan shall terminate pursuant
to Section
2.3.1.
2.4. Nature
of Lender’s Obligations with Respect to the Loan.
Subject
to the provisions of this Agreement, the aggregate amount of the Loan
outstanding hereunder at any time shall never exceed the amount which would be
permitted to be outstanding under the Sublimits. Lender shall have no
obligation to make any advance hereunder on or after the Business Day next
preceding the Expiration Date. While a Potential Default, Event of
Default or Material Adverse Change exists, Lender may refuse to make any
additional advances to Borrower.
2.5. Fees.
2.5.1. Fees
Paid Prior to the Closing Date.
Lender
acknowledges that, in addition to Borrower’s obligations under Section 5.1.6, Borrower has
paid to Lender, as consideration for Lender’s costs in underwriting the
transaction contemplated hereby, a Mortgage Review Fee and a Seismic Report Fee,
if and as applicable, for each property described at Schedule 1.1(A) and proposed
by Borrower to be included in the Collateral Pool on the Closing Date. The
Seismic Report will be ordered by Lender at Borrower’s expense.
2.5.2. Fees
Due on the Closing Date.
2.5.2.1. Borrower
shall pay to Financial Federal a non-refundable transaction fee equal to forty
basis points (.0040) times the Commitment, to be paid at a rate of forty basis
points (.0040) times seventy percent (70%) of the Initial Market Value of each
property as it is added to the Collateral Pool pursuant to the terms and
conditions of Section
2.10, provided that the unpaid portion of such fee shall be paid to
Financial Federal in full on the first (1st)
anniversary of the Closing Date. If no properties are included within
the Collateral Pool on the Closing Date, no fee shall be due and payable to
Financial Federal at that time.
2.5.2.2. Borrower
shall pay to ▇▇▇▇▇▇▇ Mac a non-refundable transaction fee equal to the product
of twenty-five basis points (.0025) times the Commitment to be paid as follows:
(i) Two Hundred Fifty Thousand and NO/100 Dollars ($250,000.00) shall be paid on
the Closing Date, and (ii) the balance of which shall be paid upon each addition
of a property to the Collateral Pool pursuant to the terms and conditions of
Section 2.10, at a rate
equal to the product of twenty-five basis points (.0025) times seventy percent
(70%) of the Initial Market Value of each such property after crediting the
amount previously paid at the Closing, provided that in the event Borrower has
not paid the balance of the transaction fee referenced in (ii) above prior to
the first anniversary of the Closing Date, the unpaid portion of such balance
shall be paid to ▇▇▇▇▇▇▇ Mac in full on the first (1st)
anniversary of the Closing Date.
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2.5.3. Unused
Facility Fee.
Borrower
agrees to pay to Lender, as consideration for Lender’s Commitment hereunder, a
nonrefundable unused facility fee (the “Unused Facility Fee”) equal to fifteen
basis points (.0015) per annum (computed on the basis of a year of three hundred
and sixty (360) days and actual days elapsed) on the average daily difference
between the amount of either (i) the Commitment and (ii) the
outstanding principal amount of the Loan. Except as otherwise provided pursuant
to Section 2.14, with
respect to liquidated Unused Facility Fees, all Unused Facility Fees shall be
payable monthly in arrears on each Payment Date and shall be set forth on the
applicable Monthly Payment Statement. Unused Facility Fee payments
which cover less than one (1) month shall be prorated based on the actual number
of days elapsed. Any accrued but unpaid Unused Facility Fees shall
also be due and payable on the Expiration Date. Notwithstanding
anything in the foregoing to the contrary, the Unused Facility Fee shall begin
to accrue only from and after the date which is twelve (12) months after the
Closing Date.
2.5.4. Minimum
Usage Fee.
Accruing
from twelve (12) months after the Closing Date until the Expiration Date,
Borrower agrees to pay to Lender, to the extent the Deemed Minimum Loan Amount
exceeds the actual average annual Loan amount outstanding during the applicable
computation period, as further consideration for Lender’s commitment hereunder,
a nonrefundable minimum usage fee (the “Minimum Usage Fee”) equal to the product
obtained by multiplying (i) such excess times (ii) the lowest G-Fee plus the
Servicing Fee. The Minimum Usage Fee shall be computed for each
calendar year, or part thereof, during the term of this Agreement and shall be
payable, if at all, in arrears on the Payment Date scheduled for January of each
year of the term hereof, provided that any Minimum Usage Fee due in the year in
which the Expiration Date falls shall be due and payable on the Expiration Date.
Upon termination or acceleration of the Loan as provided herein, Borrower shall
pay the liquidated Minimum Usage Fee computed in accordance with Section
2.14.2. Minimum Usage Fee payments which cover a period of
less than one (1) calendar year shall be prorated based on the actual number of
days elapsed.
2.5.5. Minimum
Servicing Fee.
Accruing
from the Closing Date until the Expiration Date, Borrower agrees to pay to
Servicer a nonrefundable minimum servicing fee (the “Minimum Servicing Fee”)
equal to the product obtained by (i) an assumed Borrowing Tranche in an amount
equal to the Deemed Minimum Loan Amount times (ii) the Servicing Fee, provided
that the Minimum Servicing Fee shall be due and payable only if, and to the
extent that, the foregoing calculation results in an amount which is greater
than the Servicing Fee Payment actually paid by Borrower during the same
computation period. The Minimum Servicing Fee shall be computed for
each calendar year, or part thereof, during the term of this Agreement and shall
be payable, if at all, in arrears on the Payment Date scheduled for January of
each year of the term hereof, provided that any Minimum Servicing Fee due in the
year in which the Expiration Date falls shall be due and payable on the
Expiration Date. Upon termination or acceleration of the Loan as
provided herein, Borrower shall pay the liquidated Minimum Servicing Fee
computed in accordance with Section
2.14.2. Minimum Servicing Fee payments which cover a period of
less than one (1) calendar year shall be prorated based on the actual number of
days elapsed. Notwithstanding the characterization assigned to the
payments under this Section
2.5.5, such payment obligation shall be deemed interest payable under the
Agreement for the purpose of calculating the Facility Debt Service.
24
2.6. Loan
Requests.
Except as
otherwise provided herein, Borrower may from time to time prior to the
Expiration Date request Lender to make an advance to the extent of the Maximum
Facility Available less the Loan, by delivering to Lender via facsimile, a
request therefor (a
“Loan Request”) fully completed, authorized and executed by Servicer and an
Authorized Officer of Borrower, all in the form attached hereto as Schedule
2.6. Borrower may at any one time submit one (1) or more Loan
Requests; each Loan Request shall specify the items set forth on Schedule 2.6, including, but
not limited to, (i) the proposed Borrowing Date (which Borrowing Date shall be
in accordance with the requirements of Section 2.7); (ii) the amount
of the proposed Borrowing Tranche, which shall each not be less than Three
Million Dollars and NO/100 Dollars ($3,000,000.00) unless otherwise approved by
Lender in its sole discretion; and (iii) in the case of a Loan Request for a
Base Rate Borrowing Tranche, (a) the Interest Period for purposes of determining
the Reference BillsSM Rate (or such alternative index as may be selected by
Lender in accordance with the provisions of Section 3.4); and (b) the Base
Rate, including the Reference BillsSM Rate (or such alternative index as may be
selected by Lender in accordance with the provisions of Section 3.4) and Margin that
comprise such Base Rate.
2.6.1. Sublimits.
Notwithstanding
anything to the contrary set forth herein, Borrower may borrow hereunder only to
the extent that after giving effect to such borrowing (collectively, the
“Sublimits”):
2.6.1.1. the
Loan to Value Ratio shall not exceed seventy percent (70%) (the “Maximum Loan to
Value Ratio”);
2.6.1.2. the
Facility Debt Service Coverage Ratio shall not be less than 1.20 :
1.00.
2.6.1.3. the
number of Borrowing Tranches outstanding shall not exceed fifteen
(15);
2.6.1.4. the
Loan shall not exceed the Commitment; and
2.6.1.5. one
or more Qualifying Rate Cap Agreements and/or Qualifying Rate Swap Agreements
shall be maintained with (i) an aggregate notional amount equal to the Required
Hedge Amount and (ii) a Hedged Debt Service Coverage Ratio of no less than
1.20:1.00.
25
Notwithstanding
the foregoing, in the event Borrower shall fail to comply with any of the
Sublimits described in Section
2.6.1.1, Section
2.6.1.2 or Section
2.6.1.5, at any time prior to the Expiration Date, Borrower shall be
entitled to renew or consolidate (but not increase the outstanding principal
amount of) such existing outstanding Borrowing Tranches or convert the Prime
Rate Borrowing Tranche (if then outstanding) to a Base Rate Borrowing Tranche,
in each instance, with an Interest Period of thirty (30) days, provided that,
(i) as of the date of such renewal or consolidation (a) no Event of Default or
Material Adverse Change, other than Borrower’s failure to comply with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5 shall then
exist, (b) Borrower’s failure to comply with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5 shall have
been for a period of less than ninety (90) days, and (c) Borrower is otherwise
in full compliance with all other terms and conditions of the Loan Documents and
(ii) throughout the period of Borrower’s non-compliance with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5 Borrower shall
comply with the provisions of Section 4.5. Borrower may
assure compliance with Section
2.6.1.1, Section
2.6.1.2 or Section
2.6.1.5 pursuant to the provisions of Section 4.3. Notwithstanding
the foregoing, Borrower shall not be permitted to convert a Base Rate Borrowing
Tranche to the Prime Rate Borrowing Tranche during any period of non-compliance
with the provisions of Section
2.6.1.1, Section
2.6.1.2 or Section
2.6.1.5.
2.7. The
Loan.
After
receipt by Lender of a Loan Request pursuant to Section 2.6, and subject to
the Sublimits of Section
2.6.1 and the provisions of Section 5.2, Lender, relying
on the truth and accuracy of the matters set forth in the Loan Request (but
without any obligation to inquire into the truth and accuracy of such matters),
shall fund the amount requested in such Loan Request to Borrower in U.S. Dollars
and immediately available funds on the Borrowing Date. The Borrowing Date shall
be the Business Day set forth in the Loan Request, provided that such date is at
least two (2) but not more than five (5) Business Days after the date of the
Loan Request. Lender shall fund the amounts requested in any Loan
Request by 3:00 p.m. Eastern Time on the Borrowing Date.
2.8. Revolving
Credit Note.
The
obligation of Borrower to repay the aggregate unpaid principal amount of the
Loan, together with interest thereon, shall be evidenced by the Revolving Credit
Note dated the Closing Date payable to the order of Lender in a face amount
equal to the Commitment.
2.9. Use
of Proceeds.
The
proceeds of the Loan may be used for any lawful purpose and as set forth in
Borrower’s organizational documents.
2.10. Additions
to the Collateral Pool.
2.10.1. Procedure
for Proposing a Real Property Addition to the Collateral Pool.
26
Borrower
or Proposed Borrower, as the case may be, may propose to add one or more fully
stabilized, investment quality, multi-family real properties to the Collateral
Pool by delivering to Lender (i) a written proposal for addition of the proposed
real property(ies), (ii) a Mortgage Review Fee for each proposed real property,
(iii) a Seismic Report Fee, if and as applicable, for each proposed real
property and (iv) the Underwriting Materials with respect to the proposed real
property(ies) and with respect to Proposed Borrower, if applicable, provided
that, no more than two (2) such proposals shall be submitted to Lender in any
one (1) Month. Upon Lender’s receipt of the Mortgage Review Fee, the
Seismic Report Fee, if and as applicable, and all Underwriting Materials, Lender
shall notify Borrower or Proposed Borrower of the same. The
determination of whether Borrower or Proposed Borrower has provided Lender with
all Underwriting Materials shall be in Lender’s discretion. For
purposes of this Section
2.10, Borrower or Proposed Borrower may submit a multi-family real
property for addition to the Collateral Pool, if Borrower or Proposed Borrower
has a contract to purchase such real property, provided that Borrower or
Proposed Borrower consummates the purchase of such real property on or before
the date such real property is proposed to be added to the Collateral
Pool. Both the Mortgage Review Fee and the Seismic Report Fee, if
any, shall be deemed earned upon delivery thereof, whether or not Lender
approves or disapproves such real property for addition
hereunder. Borrower shall pay all reasonable costs and expenses that
Lender and Servicer incur in connection with any such proposal to add a real
property to the Collateral Pool, including, but not limited to, reasonable
attorney’s fees and any reasonable costs and expenses incurred with respect to
third party reports, whether or not Lender approves or disapproves such real
property for addition hereunder.
2.10.2. Procedure
for Adding a Real Property to the Collateral Pool.
2.10.2.1. With
respect to any multi-family real property that Borrower or Proposed Borrower, as
the case may be, proposes for addition to the Collateral Pool, Lender shall
employ a procedure similar to its early rate lock underwriting procedures, to
provide for a preliminary review and nonbinding indication of the preliminary
loan amount and interest rate. Thereafter, within fifty (50) days of
the date on which Lender notifies Borrower or Proposed Borrower that it has
received all Underwriting Materials, Lender shall use its best efforts to accept
or reject in writing the proposed real property on the basis of whether such
proposed real property meets Lender’s then current requirements for addition to
the Collateral Pool, and in the event that Lender accepts the proposed real
property for addition to the Collateral Pool, Lender shall use its best efforts
to add such real property in the Collateral Pool within twenty (20) days of the
date of such acceptance, subject to Borrower’s or Proposed Borrower’s timely
performance of all obligations listed under Section
2.10.2.2. Each property must pass Lender’s own assessment of
earthquake risk to be included in the Collateral Pool. Notwithstanding anything
contained herein to the contrary, no real property shall be submitted for
addition which (i) will yield an Additional Collateral Facility (to be
determined by Lender in accordance with its underwriting policies and
procedures, utilizing a capitalization of net operating income to determine
value) of less than Three Million and NO/100 Dollars ($3,000,000.00) or (ii) is
not fully stabilized. The failure of Lender to respond to Borrower’s
or Proposed Borrower’s request within such fifty (50) day period shall be deemed
a rejection by Lender of the proposal to add the real property to the Collateral
Pool. If Lender provide(s) the reason(s) for such rejection, Borrower
or Proposed Borrower shall have forty-five (45) days to cure or otherwise
resolve to the satisfaction of Lender, the objections of Lender to such proposed
real property (Lender, in its sole discretion, may require that Borrower provide
within such forty-five (45) day cure period necessary updates of any or all of
the Underwriting Materials). If Borrower or Proposed Borrower does
not satisfy Lender’s objections, then such proposal shall be deemed terminated
(unless Lender, in its sole discretion shall opt to extend such forty-five (45)
day cure period) provided that, any such termination shall not prevent Borrower
or Proposed Borrower from subsequently resubmitting a real property (together
with a Mortgage Review Fee, a Seismic Report Fee, if and as applicable, and the
Underwriting Materials) for addition to the Collateral
Pool. Notwithstanding anything contained in the foregoing to the
contrary, under no circumstances shall the addition of any real property
increase the amount of the Commitment.
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2.10.2.2. Upon
the date of acceptance by Lender under Section 2.10.2.1 of a
multi-family real property submitted for addition to the Collateral Pool (such
acceptance to be in writing, together with Lender’s determination of the Initial
Market Value of such real property and the Net Operating Income of such
property), whether following the initial proposal of such real property or after
satisfying any objections of Lender, such real property shall be added to the
Collateral Pool, provided that, prior to such addition (or in the instance of
the documents required under item (iii)(b) below, as soon as practicable after
such addition), Borrower or Proposed Borrower shall (i) pay the Addition Fee
pursuant to Section
2.10.3, (ii) pay all reasonable costs and expenses that Lender or
Servicer incur in connection with the inclusion of such real property,
including, but not limited to, reasonable attorney’s fees, and (iii) submit the
following to Lender: (a) all Collateral Pool Property Documents requested by
Lender, fully executed and where appropriate duly acknowledged and filed of
record in the appropriate official public records, (b) copies of all filing
receipts and acknowledgements issued by any governmental authority evidencing
any recordation or filing necessary to perfect Lender’s Lien on the subject real
property or other evidence satisfactory to Lender of such recordation and filing
of the applicable Security Instrument, (c) evidence satisfactory to Lender that,
subject to the Permitted Exceptions, (1) in the case of personal property, the
Lien constitutes a first priority security interest in favor of Lender and, (2)
in the case of real property, the Security Instrument constitutes a valid and
perfected first priority Lien in favor of Lender (such evidence to be in the
form of a title insurance policy acceptable to Lender in both form and
substance), and (d) an opinion of counsel acceptable to Lender and (iv) in the
case of a Proposed Borrower, such Proposed Borrower shall execute (a) an allonge
to the Revolving Credit Note and (b) a joinder agreement, both of which shall be
in form and substance satisfactory to Lender in its sole
discretion. If Borrower or Proposed Borrower fails to perform any of
the acts, where applicable, or to submit any of the documents and evidence
listed under (i), (ii), (iii) and (iv) above together with any and all updates
to the Underwriting Materials reasonably requested by Lender within forty-five
(45) days of the date of Lender’s acceptance, Lender may at its option reject
the proposed real estate property and terminate such proposal. In the
event that Borrower or Proposed Borrower performs all of the acts and submits
all of the documents and evidence listed in (i), (ii), (iii) and (iv) above
within forty-five (45) days of the date of Lender’s acceptance, the proposed
real estate property shall be added to the Collateral Pool.
2.10.3. Addition
Fee.
In
addition to other fees due and payable hereunder, including without limitation,
fees due pursuant to Section
2.5.2, Borrower shall pay a fee (the “Addition Fee”) equal to ten basis
points (.0010) times the product of (i) the Market Value of the property added
to the Collateral Pool in accordance with this Section 2.10 and (ii) the
Maximum Loan to Value Ratio, provided that (a) no such fee shall be payable in
connection with an addition until such time as the Deemed Maximum Facility
Available exceeds the Commitment and (b) at such time as the Deemed Maximum
Facility Available exceeds the Commitment, the Market Value described in (i)
above shall equal the Market Value of the property being added to the Collateral
Pool less any portion of such value necessary to cause the Deemed Maximum
Facility Available to equal the Commitment.
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2.11. Release
of Collateral.
Lender
shall, upon thirty (30) days advance written notice, release the Liens granted
hereunder with respect to a Collateral Pool Property or Properties which
constitute(s) less than all Collateral Pool Properties, provided that (i) prior
to such release Borrower shall pay Lender Ten Thousand Dollars and NO/100
($10,000.00) per property, and Borrower shall pay Lender and Servicer all
actual, reasonable out-of-pocket costs and expenses that Lender or Servicer
incur in connection with such release, including, but not limited to, reasonable
attorneys’ fees, (ii) at the time of the request for such release, no Event of
Default or Potential Default shall exist, and (iii) after giving effect to such
release, no Event of Default or Potential Default shall exist, and Borrower
shall be in compliance with all provisions hereof, provided, however, that if
such release would otherwise cause Borrower to be in non-compliance with the
Sublimits set forth in Section
2.6.1, Borrower shall have the opportunity to cure the same prior to or
simultaneously with such release by either (a) pledging collateral in form,
substance, value and in a manner all acceptable to Lender, in its sole
discretion (including, without limitation, Qualifying Rate Cap Agreements and
Qualifying Rate Swap Agreements), or (b) prepaying so much of the Loan as is
necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section
4.3. Notwithstanding such thirty (30) day time period to
obtain a release, Lender shall upon five (5) Business Days notice provide a
“payoff letter” stating the amount necessary to obtain a release so as to
effectuate a sale or refinance of the subject Collateral Pool
Property. Upon the release of a Lien on a Collateral Pool Property,
if the owner of such Collateral Pool Property owns no other Collateral Pool
Properties, such owner may be released from its obligations under the Loan
Documents in Lender’s sole discretion. Notwithstanding the foregoing,
under no circumstances may Borrower receive a release of the Security Instrument
with respect to the last property in the Collateral Pool prior to the Maturity
Date, unless this Agreement shall have been terminated pursuant to Section 2.14
hereunder.
2.12. Payment
of the Loan Balance Without Termination.
Borrower
shall have the right to repay the outstanding principal balance of the Loan
(subject to any Prepayment Fee due hereunder) without any release of any Lien,
and subsequently reborrow hereunder, provided that Borrower is at such time and
thereafter remains in compliance with the provisions of this Agreement,
including, without limitation, the obligations to pay all fees due and payable
hereunder.
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2.13. Valuations.
2.13.1. Timing
and Procedure of Valuation.
In
addition to any other provisions requiring valuations hereunder, Lender shall
perform, in accordance with its then current underwriting policies, practices
and procedures consistently applied (utilizing a capitalization of net operating
income to determine value), and at no cost to Borrower, an annual valuation (the
“Valuation”) to determine the then Market Value of each of the Collateral Pool
Properties as of January 1st of such year, which Valuation shall be performed on
or before September 1 of each calendar year during the term of this Agreement,
commencing on or about September 1, 2007. In connection with such Valuation,
Borrower shall deliver to Servicer within the first forty-five (45) days of the
applicable calendar year, a current rent roll and a twelve (12) month operating
statement with respect to each Collateral Pool Property and such additional
information as Borrower reasonably deems to be relevant to the Market Value of
the Collateral Pool Properties. Any operating statement required
hereunder shall relate to the operations of the applicable Collateral Pool
Property during the preceding calendar year. In addition to the
Valuation, Lender shall perform a re-valuation of any Collateral Pool
Property(ies) upon Borrower’s written request therefore, provided that (i)
Borrower may not request that Lender perform a re-valuation of any Collateral
Property more often than one (1) time in any calendar year, and (ii) such
request shall be accompanied by (a) a fee equal to the greater of (1) the
product of Five Hundred and NO/100 Dollars ($500.00) times the number of
Collateral Pool Properties with respect to which Borrower has requested such
re-valuation or (2) Three Thousand and NO/100 Dollars ($3,000.00), (b) a current
rent roll and a trailing twelve (12) month operating statement with respect to
each Collateral Pool Property for which Borrower has requested a re-valuation,
and (c) such additional information as Borrower reasonably deems to be relevant
to the Market Value of each Collateral Pool Property for which Borrower has
requested a re-valuation. Each such rent roll and operating statement
shall be in such form and contain such detail as Lender may reasonably require;
without limiting the foregoing, Lender may require that any such rent rolls and
operating statements shall be certified by an Authorized Officer and/or audited
by an independent accountant acceptable to Lender, provided, Lender shall not
require audited rent rolls or operating statements more than once in any twelve
(12) month period, except if an Event of Default or Potential Default has
occurred and is continuing.
2.13.2. Valuations
that Disclose a Decrease in Market Value.
If any
Valuation discloses that the Market Value of the Collateral Pool Properties has
decreased below the then current Market Value thereof, the Maximum Facility
Available shall be adjusted in accordance with the provisions hereof and in the
event such decrease in Market Value shall cause Borrower to be in non-compliance
with the Sublimits set forth in Section 2.6.1, Borrower shall
within ninety (90) days of notice from Lender of such decrease, cure the same by
bringing the Loan into compliance with the Sublimits by either (i) pledging
collateral in form, substance, value and in a manner all acceptable to Lender,
in its sole discretion (including, without limitation, Qualifying Rate Cap
Agreements and Qualifying Rate Swap Agreements), or (ii) prepaying so much of
the Loan as is necessary to cause compliance with the Sublimits, each in
accordance with the provisions of Section 4.3.
2.13.3. Valuations
that Disclose an Increase in Market Value.
If any
new Valuation discloses that the Market Value of the Collateral Pool Properties
has increased above the Market Value of such Collateral Pool Properties
immediately prior to such new Valuation, the Maximum Facility Available shall be
adjusted to the extent of the lesser of (i) the amount of such increase in
Market Value, or (ii) the Commitment.
30
2.14. Termination.
2.14.1. Termination
Rights.
Borrower
and Lender shall have the rights to terminate this Agreement or to accelerate
the Loan, as applicable, as set forth in this Section 2.14.
2.14.1.1. Borrower’s
Right to Terminate.
Borrower
shall have the right to terminate this Agreement and the parties’ obligations
under the Loan Documents provided that (i) Borrower delivers to Lender thirty
(30) days advance written notice of its irrevocable election to terminate
specifying the Expiration Date, (ii) Borrower has provided each counterparty
with all necessary notice under each Qualified Rate Swap Agreement to terminate
each Qualified Rate Swap Agreement as of the Expiration Date, (iii) Borrower has
deposited with the Lender for payment to the counterparty of each Qualified Rate
Swap Agreement, any payments due under the Qualified Rate Swap Agreement and all
Hedge Fees (as defined below) and (iv) Borrower repays all accrued interest on,
and principal with respect to, the Loan in full, and performs all Obligations
under this Agreement, the Revolving Credit Note and the other Loan Documents,
including, but not limited to, Borrower’s obligation (except as provided in
Section 3.4.3) to pay
(a) the Prepayment Fee, if any, and (b) the liquidated Unused Facility Fee,
Minimum Usage Fee, and Minimum Servicing Fee, all as specified in Section 2.14.2. In
the event that Borrower shall comply with the foregoing requirements, Lender
shall release the Liens granted hereunder on the Expiration Date in accordance
with Section 2.11.
Without limiting any other provision contained herein to the contrary, in the
event Borrower shall revoke any such request to terminate this Agreement and its
obligations hereunder, Borrower shall pay all costs and expenses incurred by
Lender and Servicer in connection with such revocation.
2.14.1.2. Lender’s
Right to Accelerate.
Lender
shall have the right to accelerate the Loan (a) upon an Event of Default that
remains uncured by Borrower beyond the expiration of any applicable cure period
under this Agreement, the Note, or any other of the Loan Documents or (b)
pursuant to the provisions of Section 7.3.1.11 (upon the
change in Senior Management of REIT). In the event of acceleration pursuant to
this Section 2.14.1.2,
Lender shall be entitled to collect certain fees pursuant to Section 2.14.2.
2.14.2. Fees
Due Upon Early Termination.
2.14.2.1. In
the event (i) Borrower shall terminate this Agreement and the parties’
obligations under the Loan Documents pursuant to the provisions of Section 2.14.1.1 (other than a
termination pursuant to Section
3.4.3), or (ii) Lender shall accelerate the Loan pursuant to the
provisions of subsection (a) of Section 2.14.1.2, Borrower
shall pay:
(i) a
Prepayment Fee with respect to each outstanding Base Rate Borrowing Tranche
calculated in accordance with Section 4.4,
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(ii) a
liquidated Unused Facility Fee to be calculated as the product of fifteen basis
points (.0015) per annum times the Maximum Facility Available, assuming the
Maximum Facility Available to be an amount equal to seventy-five percent (75%)
of the Commitment, as if this Agreement had not terminated or accelerated, for
each Month which will elapse from the Month in which such termination or
acceleration occurs through and including the Month of the Maturity Date, such
liquidated Unused Facility Fee to be discounted to net present value at a
discount rate equal to the Treasury Rate,
(iii) a
liquidated Minimum Usage Fee to be calculated as the product of the lowest G-Fee
charged hereunder times a Borrowing Tranche to be assumed in an amount equal to
the Deemed Minimum Loan Amount, as if this Agreement had not terminated or
accelerated, for each Month which will elapse from the Month in which such
termination or acceleration occurs through and including the Month of the
Maturity Date, such liquidated Minimum Usage Fee to be discounted to net present
value at a discount rate equal to the Treasury Rate, together with all accrued
Minimum Usage Fees payable as of the date of such termination or
acceleration,
(iv) a
liquidated Minimum Servicing Fee to be calculated as the product of the
Servicing Fee times a Borrowing Tranche to be assumed in an amount equal to the
Deemed Minimum Loan Amount, as if this Agreement had not terminated or
accelerated, for each Month which will elapse from the Month in which such
termination or acceleration occurs through and including the Month of the
Maturity Date, such liquidated Minimum Servicing Fee to be discounted to net
present value at a discount rate equal to the Treasury Rate, together with all
accrued Minimum Servicing Fees payable as of the date of such termination or
acceleration, and
(v) any
and all fees, including but not limited to, any termination fee or fee due upon
termination, costs and expenses payable under or with respect to any Rate Swap
Agreement (collectively, “Hedge Fees”).
2.14.2.2. Notwithstanding
anything contained herein to the contrary, in the event Lender shall accelerate
the Loan pursuant to subsection (b) of Section 2.14.1.2, Borrower
shall pay a Prepayment Fee with respect to each outstanding Base Rate Borrowing
Tranche calculated in accordance with Section 4.4.
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2.15. Material
Adverse Change to Borrower or a Collateral Pool Property.
If (i)
Borrower or a Collateral Pool Property experiences a Material Adverse Change or
(ii) a Material Adverse Change occurs with respect to this Agreement or any of
the other Loan Documents taken as a whole, Borrower shall promptly notify Lender
of the same in writing as soon as Borrower has notice thereof. If Lender shall
receive notice of a Material Adverse Change in accordance with the preceding
sentence, or otherwise becomes aware of a Material Adverse Change, which
Material Adverse Change affects a Collateral Pool Property, Lender shall
promptly conduct a Valuation of the affected Collateral Pool Property pursuant
to Section 2.13 (or, to
the extent Borrower agrees to pay a fee of $4,000.00 per property, a Valuation
of all Collateral Pool Properties). Until such time as such
Valuation(s) shall be completed, the Collateral Pool Property which experienced
the Material Adverse Change, or which is owned by a Borrower that experienced a
Material Adverse Change, shall be deemed (but only for the purposes of
determining whether any new borrowing request satisfies all of the Sublimits set
forth in Section 2.6.1)
to have a Market Value equal to a value to be reasonably determined and
quantified by Lender upon the information then available to
Lender. Lender shall promptly provide Borrower with written notice of
the results of such Valuation(s). If the results of such Valuation
disclose that the Market Value of the affected Collateral Pool Property (or the
Market Value of the Collateral Pool Properties in the aggregate, as the case may
be) has decreased, then the Market Value shall thereafter be deemed to be the
amount shown in such Valuation(s). In the event that such
Valuation(s) hereunder shall cause Borrower to be in non-compliance with the
Sublimits set forth in Section
2.6.1, Borrower shall, within fifteen (15) days of the notice of such
valuation, cure the same by bringing the Loan into compliance with the Sublimits
by either (i) pledging collateral in form, substance, value and in a manner all
acceptable to Lender, in its sole discretion (including, without limitation,
Qualifying Rate Cap Agreements or Qualifying Rate Swap Agreements), or (ii)
prepaying so much of the Loan as is necessary to cause compliance with the
Sublimits, each in accordance with the provisions of Section 4.3 (except as
otherwise specified in Section
4.3.2.3). If Lender shall receive notice of a Material Adverse
Change from Borrower hereunder, or otherwise becomes aware of a Material Adverse
Change which affects Borrower, any guarantor or the enforceability of this
Agreement or the other Loan Documents taken as a whole, Borrower shall
immediately provide any information or documents reasonably requested by Lender,
including, but not limited to, (a) with respect to a Material Adverse Change
which affects Borrower, financial statements and Borrower’s business plan to
cure such Material Adverse Change, or (b) with respect to a Material Adverse
Change which affects the enforceability of this Agreement or the other Loan
Documents taken as a whole, replacement documents in form and substance
acceptable to Lender in its discretion, together with a legal opinion regarding
the enforceability of such replacement documents, acceptable to Lender in its
discretion; provided however, that Borrower shall not be required to take any
action that has the effect of (i) changing the material economic or other
business terms of this Agreement, the Revolving Credit Note, or any other Loan
Document or (ii) imposing on Borrower greater liability or obligation than that
set forth in this Agreement, the Revolving Credit Note or any other Loan
Document. If Borrower would otherwise be required to change the
material economic or other business terms of this Agreement, the Revolving
Credit Note, or any other Loan Document, or undertake greater liability or
obligation than set forth in this Agreement, the Revolving Credit Note, or any
other Loan Document to cure a Material Adverse Change, Borrower may instead
elect to terminate this Agreement, and the parties’ obligations under the Loan
Documents, and upon repayment of the Loan in full, Borrower shall have no
further obligation hereunder, including any obligation to pay any Prepayment
Fee, or liquidated Unused Facility Fee, Unused Minimum Usage Fee, or Minimum
Servicing Fee otherwise payable hereunder. In addition, in the event
Borrower shall so elect to terminate this Agreement, Borrower shall provide each
counterparty with all necessary notice under each Qualified Rate Swap Agreement
to terminate each Qualified Rate Swap Agreement as of the date of repayment in
full of the Loan and the Borrower shall deposit with the Lender for payment to
the counterparty of each Qualified Rate Swap Agreement, any payments due under
any Qualified Rate Swap Agreement and all Hedge Fees.
33
2.16. Release
of Collateral Followed by a Permanent Loan.
2.16.1. Permanent
Loan.
Borrower
may request that Lender cause Servicer to make a permanent loan (the “Permanent
Loan”) to be secured by one or more Collateral Pool Properties designated by
Borrower (the “Permanent Loan Collateral”) to be simultaneously released from
the Collateral Pool and encumbered in favor of Servicer as security for
Borrower’s obligations under the Permanent Loan, which request shall be made in
accordance with the provisions of Section 2.16.2. The
Permanent Loan shall be made in accordance with the terms and conditions of the
Streamlined Refinancing Program. Notwithstanding the foregoing, under
no circumstances may Borrower receive a release of the Security Instrument with
respect to the last property in the Collateral Pool prior to the Maturity Date,
unless Borrower has elected to terminate this Agreement under Section 2.14
hereunder.
2.16.2. Procedure
for Making a Permanent Loan.
Borrower
may request that Lender cause Servicer to make a Permanent Loan to Borrower,
which request (i) shall be in writing, which writing shall specify (a) the
Collateral Pool Property(ies) that will constitute the Permanent Loan
Collateral, (b) the original principal amount of the requested Permanent Loan,
which amount shall be greater than or equal to Five Million and NO/100 Dollars
($5,000,000.00), (c) the related reduction in the Maximum Facility Available,
(d) whether Borrower has selected Lender’s then current early rate lock delivery
option, and (e) any payment or prepayment of a Borrowing Tranche, and (ii) shall
be accompanied by (a) any fees then due and owing under Lender’s Streamlined
Refinancing Program for each Collateral Pool Property proposed by Borrower to be
subject to the Permanent Loan, and (b) the Underwriting
Materials. Following receipt of all of the items specified in (i) and
(ii) of the previous sentence, Lender shall employ a procedure similar to its
early rate lock underwriting procedure, to provide for preliminary review and
nonbinding indication of the preliminary loan amount and interest
rate. Thereafter, Lender shall use best efforts to consent to
Borrower’s request within sixty (60) days of such notice, provided that (1) at
the time of such request no Event of Default or Potential Default exists, (2)
the Permanent Loan shall be made in accordance with the terms and conditions of
the Streamlined Refinancing Program, (3) after giving effect to such release no
Event of Default or Potential Default shall exist and Borrower will be in
compliance with all provisions hereof, including the Sublimits set forth in
Section 2.6.1, further
provided that if any release occasioned by a Permanent Loan would otherwise
cause Borrower to be in non-compliance with the Sublimits, Borrower shall have
the opportunity to cure the same, prior to or simultaneously with the release
and the consummation of the Permanent Loan (which shall occur pursuant to the
Streamlined Refinancing Program), by either (A) pledging collateral in form,
substance, value and in a manner all acceptable to Lender, in its sole
discretion (including, without limitation, Qualifying Rate Cap Agreements or
Qualifying Rate Swap Agreements), or (B) prepaying so much of the Loan as is
necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section
4.3, (4) Borrower shall provide evidence to Lender of title insurance in
form and substance acceptable to Lender and in the face amount of the Permanent
Loan, (5) the proposed Borrower under the Permanent Loan shall execute and
deliver such documents as Lender, in its discretion, may request in order to
evidence the making of the Permanent Loan and in order to grant Lender a first
priority Lien on the real and personal property constituting the Permanent Loan
Collateral subject, in each case, to any Permitted Exceptions, and (6) Borrower
shall pay Lender any fees then due and owing under Lender’s Streamlined
Refinancing Program. Thereafter, Lender shall use best efforts to
consummate the Permanent Loan within thirty (30) days of the granting of
Lender’s consent hereunder. Notwithstanding the foregoing, in the
event that Borrower selects Lender’s then current early rate lock delivery
option, Lender shall use best efforts, subject to Borrower’s timely compliance
with Lender’s requests, to lock the interest rate for the requested Permanent
Loan within seven (7) Business Days of Borrower’s notice
hereunder. Any Permanent Loan granted pursuant to the foregoing
provisions shall not reduce the Commitment hereunder. Simultaneous
with the closing of the Permanent Loan, Lender shall release the Lien granted
hereunder on the Permanent Loan Collateral.
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3. INTEREST
RATES
3.1. Interest
Rate.
The
interest rate on each Borrowing Tranche shall be either the Prime Rate or the
Base Rate, as specified in the Loan Request. Interest rates under this Credit
Agreement and the Revolving Credit Note shall be computed on the basis of a year
of three hundred and sixty (360) days and actual days elapsed.
3.2. Interest
Rate Determinations.
The
initial Prime Rate applicable to any Borrowing Tranche hereunder shall equal the
Prime Rate as of the Borrowing Date. The Prime Rate shall thereafter
fluctuate in accordance with any changes to the Prime Rate as published from
time to time during the term of the Prime Rate Borrowing Tranche. The
Base Rate applicable to any Base Rate Borrowing Tranche hereunder shall, subject
to the provisions set forth below, equal the Base Rate set forth in the Loan
Request, which shall be equal to the Base Rate as such rate exists on the date
of the Loan Request. In the event that the Base Rate determined on
the Borrowing Date is more than twenty-five basis points (.0025) higher or lower
than the Base Rate set forth in the Loan Request, the Base Rate shall be equal
to the Reference BillsSM Rate (or such alternative index as may be selected by
Lender in accordance with the provisions of Section 3.4) plus the Margin,
as each exists on the Borrowing Date. Thereafter, the portion of the
Base Rate attributable to the Reference BillsSM Rate (or such alternative index
as may be selected by Lender in accordance with the provisions of Section 3.4) for any Borrowing
Tranche shall be redetermined as of each renewal of such Borrowing Tranche
pursuant to Section
3.3.3. The portion of the Margin attributable to the G-Fee
shall be determined at the time of the Loan Request or Renewal Request and shall
equal the applicable G-Fee as set forth on Schedule 3.2.
3.3. Interest
Periods.
Upon each
Loan Request for a new Base Rate funding, and upon each Renewal Request
applicable to a Base Rate Borrowing Tranche (including, but not limited to, a
Renewal Request pursuant to which Borrower shall convert all or a portion of the
Prime Rate Borrowing Tranche to a Base Rate Borrowing Tranche), Borrower shall
notify Lender of the period (the “Interest Period”) (which may only be (i) a
thirty (30) day, ninety (90) day, one hundred and eighty (180) day or three
hundred and sixty (360) day period) for which the Reference BillsSM Rate or LIBO
Rate, as the case may be, shall be determined.
35
3.3.1. Interest
Period to End on a Business Day.
If the
last day of any Interest Period is not a Business Day, the Interest Period shall
be deemed to mature on the Business Day immediately following such
date.
3.3.2. No
Interest Periods Beyond the Expiration Date.
Borrower
shall not select or renew an Interest Period for any Base Rate Borrowing Tranche
that would end after the Expiration Date. If at the time of any such
selection or renewal the period of time remaining prior to the Expiration Date
is less than thirty (30) days then such Borrowing Tranche shall bear interest at
the Prime Rate. No Prime Rate Borrowing Tranche may remain
outstanding in excess of thirty (30) days at any one time.
3.3.3. Renewals.
In the
case of a redetermination of an Interest Period at the end of an Interest
Period, for purposes of calculating interest due under the applicable Borrowing
Tranche the first day of the new Interest Period shall be the first Business Day
immediately following the last day of the preceding Interest Period (such date,
the “Renewal Date”). For each Base Rate Borrowing Tranche, if no new
Interest Period is specified within two (2) Business Days prior to the last day
of such Interest Period, by delivery to Lender via facsimile of a fully
completed, authorized and executed request therefor (a “Renewal Request”) in the
form attached hereto as Schedule 3.3.3, the Borrowing
Tranche shall be renewed for an Interest Period of thirty (30) days at the Base
Rate then applicable to a Borrowing Tranche disbursed on the applicable Renewal
Date having a thirty (30) day Interest Period. Borrower may convert a
Prime Rate Borrowing Tranche to a Base Rate Borrowing Tranche or a Base Rate
Borrowing Tranche to a Prime Rate Borrowing Tranche by delivering to Lender via
facsimile, a fully completed, authorized and executed Renewal Request in the
form attached hereto as Schedule
3.3.3. Notwithstanding anything contained herein to the
contrary, (i) no Borrowing Tranche may be renewed with a principal amount of
less than Three Million and NO/100 Dollars ($3,000,000.00) unless otherwise
approved by Lender in its sole discretion and (ii) in the event the Facility
Debt Service Coverage Ratio is less than 1.20 : 1:00, the Loan to Value Ratio is
in excess of 70%, the notional amounts of the Qualifying Rate Cap Agreements
and/or Qualifying Rate Swap Agreements do not equal the Required Hedge Amount,
or the Hedged Debt Service Coverage Ratio is less than 1.20 : 1.00, Borrower may
renew or consolidate (but not increase the outstanding principal amount of) any
Borrowing Tranche(s) then outstanding in accordance with the provisions of this
Section 3.3.3, provided
that, as of the date of such renewal or consolidation (a) no Event of Default,
other than Borrower’s failure to comply with Section 2.6.1.1, 2.6.1.2 or 2.6.1.5, shall then exist, (b)
Borrower’s failure to comply with Section 2.6.1.1, 2.6.1.2 or 2.6.1.5 shall have been for a
period of less than ninety (90) days, and (c) Borrower is otherwise in full
compliance with all other terms and conditions of the Loan Documents, including
the provisions of Section
4.5. Borrower may assure compliance with Section 2.6.1.1, 2.6.1.2 and 2.6.1.5 pursuant to the
provisions of Section
4.3.
36
3.3.4. Interest
After Default.
So long
as (i) any payment under this Agreement remains past due for thirty (30) days or
more, or (ii) any other Event of Default has occurred and is continuing,
interest on all Borrowing Tranches shall accrue on the unpaid principal balance
from the earlier of the due date of the first unpaid installment or the
occurrence of such other Event of Default at the default rate set forth in the
Revolving Credit Note. If the unpaid principal balance and all
accrued interest are not paid in full on the Expiration Date, the unpaid
principal balance and all accrued interest shall bear interest from the
Expiration Date at the default rate set forth in the Revolving Credit
Note. Borrower acknowledges that (a) its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Loan, (b) during the time that any installment is delinquent for
more than thirty (30) days, Lender will incur additional costs and expenses
arising from its loss of the use of the money due and from the adverse impact on
Lender’s ability to meet its other obligations and to take advantage of other
investment opportunities, and (c) it is extremely difficult and impractical to
determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any installment is delinquent for more
than thirty (30) days or any other Event of Default has occurred and is
continuing, Lender’s risk of nonpayment will be materially increased and Lender
is entitled to be compensated for such increased risk. Borrower
agrees that the increase in the rate of interest set forth in the Revolving
Credit Note represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Agreement, of the additional costs
and expenses Lender will incur by reason of Borrower’s delinquent payment and
the additional compensation Lender is entitled to receive for the increased
risks of nonpayment associated with a delinquent loan.
3.3.5. Late
Charge.
If any
amount payable under this Agreement, the Revolving Credit Note or any other Loan
Document, other than the then outstanding amount of the Loan payable on the
Expiration Date or upon acceleration of the Revolving Credit Note, is not
received by Lender as provided in the Revolving Credit Note, Borrower shall pay
to Lender, immediately and without demand by Lender, a late charge as specified
in the Revolving Credit Note. Borrower acknowledges that its failure
to make timely payments will cause Lender to incur additional expenses in
servicing and processing the Loan, and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees
that the late charge payable specified in the Revolving Credit Note represents a
fair and reasonable estimate, taking into account all circumstances existing on
the date of this Agreement, of the additional expenses Lender will incur by
reason of such late payment. The late charge is payable in addition
to, and not in lieu of, any interest payable at the default rate specified in
the Revolving Credit Note.
3.4. Reference
BillsSM Rate Unascertainable: Illegality; Increased Costs.
3.4.1. Unascertainable.
In the
event ▇▇▇▇▇▇▇ Mac shall at any time cease to designate any unsecured general
obligations of ▇▇▇▇▇▇▇ Mac as “Reference BillsSM”, at its option, Lender may (i)
select from time to time another unsecured general obligation of ▇▇▇▇▇▇▇ Mac
having original maturities, most comparable to the term of the Interest Period
for the applicable Borrowing Tranche, and issued by ▇▇▇▇▇▇▇ Mac at regularly
scheduled auctions within the sixty (60) day period prior to the first day of
such Interest Period, and the term “Reference BillsSM” as used herein shall mean
such other unsecured general obligations as selected by Lender; or (ii) for any
one or more Interest Periods, use the applicable LIBO Rate for purposes of
determining the Base Rate for such Interest Period(s). If ▇▇▇▇▇▇▇ Mac
has not conducted an auction of its Reference BillsSM or other unsecured general
obligations within sixty (60) days prior to the first day of the Interest Period
for the proposed Borrowing Tranche, the Base Rate shall be determined as the
LIBO Rate plus the Margin for such Interest Period(s).
37
3.4.2. Illegality;
Increased Costs.
At any
time at which (i) either (x) the Reference BillsSM Rate shall not be available
and the Base Rate shall be determined based on the LIBO Rate in accordance with
the provisions of Section
3.4.1 or (y) Borrower has previously delivered an Index Conversion
Notice, and (ii) Lender shall have also reasonably determined that (a) adequate
and reasonable means do not exist for ascertaining the applicable LIBO Rate, (b)
a contingency has occurred which materially and adversely affects the London
interbank market, (c) the making, maintenance or funding of any Borrowing
Tranche bearing interest in part at the LIBO Rate has been made unlawful by
Lender’s compliance in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law, but other than as a
result of any misconduct by Lender), (d) the Base Rate as determined by the LIBO
Rate will not adequately and fairly reflect the cost to Lender of the
establishment or maintaining of any such Borrowing Tranche, or (e) after making
all reasonable efforts, deposits of the relevant amount in Dollars for the
relevant Interest Period for a Borrowing Tranche are not available to Lender in
the London interbank market, then Lender shall have the rights specified in
Section
3.4.3.
3.4.3. Lender’s
Rights.
In the
case of the events specified in items (i) and (ii) of Section 3.4.2 above, Lender
shall promptly notify Borrower thereof. Upon the date as shall be
specified in such notice, the obligation of Lender to make advances under any
Borrowing Tranche(s) at the Base Rate shall be suspended until Lender shall have
later notified Borrower of Lender’s reasonable determination that the
circumstances set forth in Section 3.4.2 no longer
exist. If at any time Lender notifies Borrower that it has made a
determination under Section
3.4.2, then with respect to any Loan Request previously submitted but not
yet funded and with respect to each Borrowing Tranche on which an Interest
Period shall thereafter expire, the applicable Borrowing Tranche(s) shall from
and after the date specified in such notice be deemed to bear interest utilizing
an index reasonably determined by Lender to reflect the cost to Lender of
establishing and maintaining any Borrowing Tranche. Any determination
of the resulting alternative interest rate shall be entitled to a presumption of
correctness absent manifest error. Notwithstanding the foregoing, in
such event Borrower may elect to terminate this Agreement and the parties’
obligations under the Loan Documents in accordance with the provisions of Section 2.14, provided that
(i) Borrower’s obligations hereunder shall only terminate upon Borrower’s
repayment of the Loan (ii) in the event such election shall occur at any time at
which any Rate Swap Agreement is in effect, Borrower shall provide each
counterparty with all necessary notice under each Qualified Rate Swap Agreement
to terminate each Qualified Rate Swap Agreement as of the date of repayment in
full of the Loan and the Borrower shall deposit with the Lender for payment to
the counterparty of each Qualified Rate Swap Agreement, any payments due under
any Qualified Rate Swap Agreement and all Hedge Fees and (iii) in the event such
election shall occur at any time at which any Borrowing Tranches then
outstanding shall have accrued interest at the alternative interest rate by
operation of the provisions of this Section 3.4.3 for a period of
at least thirty (30) consecutive days, Borrower shall not be obligated to pay
the Prepayment Fee, liquidated Unused Facility Fee, liquidated Minimum Usage
Fee, or liquidated Minimum Servicing Fee otherwise specified in Section 2.14.2 in connection
with such termination.
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3.5. LIBO
Rate Conversion.
LIBO Rate
shall be the index rate which shall apply to all Base Rate Borrowing Tranches
from and after the effective date specified in Borrower’s notice electing to
irrevocably utilize the LIBO Rate when determining the Base Rate (the “Index
Conversion Notice”). Within ten (10) Business Days of Borrower’s request, which
request shall not be made more often than once during the term of the Loan,
Lender shall deliver to Borrower a revised schedule of G-Fees applicable to Base
Rate Borrowing Tranches; in the event Borrower thereafter delivers the Index
Conversion Notice to Lender within five (5) Business Days of Borrower’s receipt
of said schedule, the revised G-Fees shall thenceforth irrevocably (i) apply to
all Base Rate Borrowing Tranches and (ii) supercede the G-Fees presently set
forth in Schedule 3.2.
In the event Borrower fails to deliver the Index Conversion Notice within five
(5) Business Days of Borrower’s receipt of the revised schedule, the revised
G-Fees quoted to Borrower shall not be binding on Lender or Borrower, and Base
Rate Borrowing Tranches shall continue to be based on the Reference BillsSM
Rate.
4. PAYMENTS
4.1. Payments.
All
payments and prepayments to be made in respect of principal, interest, Unused
Facility Fees, Minimum Usage Fees, Minimum Servicing Fees or other fees or
amounts due from Borrower hereunder shall be due and payable on the date when
due without presentment, demand, protest, or notice of any kind (unless
expressly provided in the Loan Documents), including, but not limited to, notice
of Lender’s intent to accelerate Borrower’s Obligations under the Loan and
notice of such acceleration, all of which (unless expressly provided in the Loan
Documents) are hereby waived by Borrower, and without set-off, counterclaim or
other deduction of any nature, and an action therefor shall immediately
accrue. Such payments shall be made to Lender in immediately
available funds when due. Lender’s Monthly Payment Statement shall,
in the absence of manifest error, be conclusive as to the amount of principal of
and interest on the Loan and other amounts owing under this Agreement, provided
that Borrower may challenge the accuracy of any Monthly Payment Statement within
one (1) year of the date of such Monthly Payment Statement.
39
4.2. Payment
Dates.
Subject
to the provisions of Section
4.3, interest on the Loan shall be payable in arrears and shall be due,
together with all other amounts set forth on the applicable Monthly Payment
Statement, prior to 12:00 noon Eastern Time on the first (1st) Business Day of
any calendar month during the term hereof (the “Payment Date”), and shall be
paid by wire transfer of immediately available funds to an account specified by
Servicer. Lender shall deliver to Borrower an invoice (the “Monthly
Payment Statement”) detailing the interest, Unused Facility Fees, Minimum Usage
Fees, Minimum Servicing Fees, Credit Enhancement Fees and other fees due and
payable. Except in the case of a prepayment under Section 4.3, Lender shall
deliver the Monthly Payment Statement detailing charges due for the current
calendar month via fax at least five (5) Business Days prior to the first day of
the succeeding calendar month. In the instance of a renewal of an
Interest Period pursuant to Section 3.3.3, interest on
such renewed Borrowing Tranche shall be due and payable on the next Payment
Date, subject to any adjustments in interest rates, as if the Interest Period
had not expired and then been renewed. Interest on prepayments under
Section 4.3 shall be due
on the date such prepayment is due. Interest on the principal amount
of the Loan or other monetary Obligation shall be due and payable on demand
after such principal amount or other monetary Obligation becomes due and payable
(whether on the stated maturity date, upon acceleration or
otherwise).
4.3. Prepayments.
4.3.1. Voluntary
Prepayments.
Borrower
shall have no right to prepay the Loan, in whole or in part, except as
follows: (i) prepayment of the Prime Rate Borrowing Tranche, (ii)
prepayment of a Base Rate Borrowing Tranche as required under Section 4.3.2, (iii)
prepayment of a Base Rate Borrowing Tranche where Borrower has previously
prepaid in advance all interest applicable to such Borrowing Tranche which would
have otherwise accrued over the applicable Interest Period, (iv) any prepayment
upon termination of this Agreement and the parties’ obligations hereunder in
accordance with the provisions of Section 2.14,and (v) any
payment upon the expiration of a Borrowing Tranche’s Interest
Period.
4.3.2. Prepayment
Fee Not Applicable (Mandatory Prepayment / Collateral Addition).
4.3.2.1. If
at the time of the release of a portion of the Collateral pursuant to Section 2.11, Borrower shall
be in violation of any of the Sublimits set forth in Section 2.6.1 (subject to the
exception described in Section
2.11), Borrower may cure such violation prior to or simultaneously with
such release by either (i) pledging collateral in form, substance, value and in
a manner all acceptable to Lender, in its sole discretion (including, without
limitation, Qualifying Rate Cap Agreements or Qualifying Rate Swap Agreements),
or (ii) prepaying that portion of the Loan outstanding as is necessary to cause
compliance with such Sublimit, without any Prepayment Fee or similar fee or
penalty. Lender shall deliver to Borrower as soon as practicable, but
in any event within two (2) Business Days prior to such release, a statement of
the principal and interest due with respect to any required
prepayment.
4.3.2.2. If
at the time of a Valuation pursuant to Section 2.13 or a Material
Adverse Change pursuant to Section 2.15, Borrower shall
be in violation of any of the Sublimits set forth in Section 2.6.1, Borrower shall
cure such violation within ninety (90) days of notice of such Valuation or
Material Adverse Change, by either (i) pledging collateral in form, substance,
value and in a manner all acceptable to Lender, in its sole discretion
(including, without limitation, Qualifying Rate Cap Agreements or Qualifying
Rate Swap Agreements), or (ii) prepaying that portion of the Loan outstanding as
is necessary to cause compliance with such Sublimit, without any Prepayment Fee
or similar fee or penalty. Lender shall deliver to Borrower within
two (2) Business Days following the notice of Valuation or Material Adverse
Change, as the case may be, a statement of the principal and interest due with
respect to any required prepayment.
40
4.3.2.3. Notwithstanding
anything to the contrary herein set forth, if Lender shall determine, at any
time, that the Borrower has failed to comply with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5, and the
provisions of the foregoing Section 4.3.2.1 and Section 4.3.2.2 do not
apply, Lender shall
provide written notice of said non-compliance to Borrower. Borrower shall have
ninety (90) days following receipt of said notice to cure the non-compliance
with Section 2.6.1.1,
Section 2.6.1.2 or Section 2.6.1.5 by either (i)
pledging collateral in form, substance, value and in a manner all acceptable to
Lender, in its sole discretion (including, without limitation, cash, letters of
credit, Qualifying Rate Cap Agreements or Qualifying Rate Swap Agreements), or
(ii) prepaying that portion of the Loan outstanding as is necessary to cause
compliance with the Sublimits, without any Prepayment Fee or similar fee or
penalty. In the
event that Borrower’s failure to comply with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5 shall continue
for a period of ninety (90) consecutive days following Borrower’s receipt of
Lender’s notice pursuant to this Section 4.3.2.3, the same
shall constitute an Event of Default.
4.3.2.4. In
the event of a casualty or condemnation affecting any of the Collateral Pool
Properties, any award and/or proceeds payable with respect to such casualty or
condemnation and applied to Borrower’s Obligations in accordance with the
provisions of the applicable Security Instrument shall be applied without any
Prepayment Fee or other penalty, and this Agreement, and the parties’
obligations under the Loan Documents, may be terminated, at Borrower’s election,
in accordance with Section
2.14.
4.3.2.5. Any
mandatory prepayment of the Loan in accordance with the provisions of this Section 4.3.2 shall be
applied, as directed by Borrower, to a particular Borrowing Tranche or Borrowing
Tranches or, in the absence of any specific direction from Borrower, as selected
by Lender in its sole discretion.
4.4. Prepayment
Fee.
Unless
Borrower (i) repays a Borrowing Tranche accruing interest at the Prime Rate,
(ii) repays all or a part of a Borrowing Tranche upon the expiration of such
Borrowing Tranche’s Interest Period, (iii) terminates this Credit Agreement
pursuant to Section
3.4.3, or (iv) prepays a portion of the Loan outstanding pursuant to
Section 4.3.2, any
prepayment under Section
4.3 shall be accompanied by a prepayment fee (the “Prepayment Fee”) which
shall equal all of the interest, applicable to the particular Borrowing Tranche
being prepaid, which would have otherwise accrued over the applicable Interest
Period. The Prepayment Fee shall not constitute the payment of
interest and therefore shall not be included in the calculation of Facility Debt
Service Coverage Ratio or the determination of Borrower’s compliance with the
Sublimits set forth in Section
2.6.1. In addition, upon Lender’s exercise of any right of
acceleration under this Agreement, the Revolving Credit Note, or any other Loan
Document following an Event of Default, Borrower shall pay to Lender the
Prepayment Fee on all Base Rate Borrowing Tranches outstanding at the time of
acceleration in addition to all interest accrued thereon, and all other sums and
fees payable to Lender hereunder.
41
4.5. Additional
Payment Obligations.
4.5.1. Additional
G-Fee Obligation. Notwithstanding anything to the contrary herein set
forth, if Lender shall determine, at any time, that Borrower has failed to
comply with Section
2.6.1.1, Section
2.6.1.2 or Section
2.6.1.5, Lender shall provide written notice of the same to Borrower.
After the expiration of fifteen (15) Business Days following Borrower’s receipt
of said notice, if such non-compliance with Section 2.6.1.1, Section 2.6.1.2, or Section 2.6.1.5 has not been
cured pursuant to the terms of Section 4.3, the G-Fee
applicable to all Borrowing Tranches then outstanding (and thereafter renewed)
shall automatically increase by an additional one hundred basis points (.0100)
over the applicable G-Fee until such time as Borrower shall cure said
non-compliance. In
the event that Borrower’s failure to comply with Section 2.6.1.1, Section 2.6.1.2 or Section 2.6.1.5 shall continue
for a period of ninety (90) consecutive days following Borrower’s receipt of
Lender’s notice pursuant to this Section 4.5, the same shall
constitute an Event of Default.
4.5.2. Rate
Cap Escrow. Upon the request of Lender, if any Qualifying Rate Cap
Agreement or Qualifying Rate Swap Agreement necessary for compliance with Section 2.6.1.5 has an initial
term of less than five (5) years, Borrower shall pay monthly payments
(determined from time to time by Lender in its sole discretion) into an escrow
account to be established by Lender pursuant to Lender’s then prevailing
interest rate cap replacement escrow policies (such account, the “Replacement
Hedge Escrow”).
4.5.2.1. Borrower
and Lender agree that all moneys deposited into the Replacement Hedge Escrow
shall be held by Lender in an interest bearing account, and any interest earned
on such moneys shall be added to the principal balance of the Replacement Hedge
Escrow. Lender shall not be responsible for any losses resulting from
investment of moneys in the Replacement Hedge Escrow or for obtaining any
specific level or percentage of earnings on such investment.
4.5.2.2. Lender
shall be entitled to deduct from the Replacement Hedge Escrow a one time fee for
establishing the Replacement Hedge Escrow in an amount not to exceed Two Hundred
and NO/100 Dollars ($200.00).
4.5.2.3. Subject
to the Security Instrument and the other rights of Lender set forth in the Loan
Documents, the Replacement Hedge Escrow shall be maintained for the payment of
the costs of purchasing replacement Qualifying Rate Cap Agreements to replace
any and all Qualifying Rate Cap Agreements and/or Qualifying Rate Swap
Agreements with initial terms expiring before the Maturity Date.
42
4.5.2.4. If
Borrower purchases such replacement Qualifying Rate Cap Agreements as are
necessary for compliance with Section 2.6.1.5, Borrower may
request reimbursement for such Qualifying Rate Cap Agreements from Lender to the
extent of available funds held in the Replacement Hedge Escrow not otherwise
determined by Lender to be necessary for future replacement Qualifying Rate Cap
Agreements; such request shall be in writing and shall include evidence
satisfactory to Lender that the costs of said Qualifying Rate Cap Agreements
have been paid in full. If Borrower purchases a replacement
Qualifying Rate Swap Agreement having a term expiring on the Maturity Date,
whether in place of an expiring Qualifying Rate Cap Agreement or an expiring
Qualifying Rate Swap Agreement, all amounts in the Replacement Hedge Escrow
which are not otherwise determined by Lender to be necessary for future
replacement Qualifying Rate Cap Agreements shall be released to
Borrower. Disbursements from the Replacement Hedge Escrow shall be
made no more frequently than quarter annually. Lender shall refuse to
make a disbursement from the Replacement Hedge Escrow unless (i) no Event of
Default shall exist beyond any applicable cure period pursuant to this Agreement
or any other Loan Document and (ii) all representations and warranties of
Borrower set forth in this Agreement and the other Loan Documents are and remain
true at the time of the disbursement request.
4.5.2.5. If
Borrower fails to purchase Qualifying Rate Cap Agreements and/or Qualifying Rate
Swap Agreements necessary to maintain compliance with Section 2.6.1.5, Lender shall
have the right (but not the obligation) to purchase Qualifying Rate Cap
Agreements in the name of Borrower, and Lender is hereby irrevocably appointed
the attorney in fact of Borrower, such appointment being coupled with an
interest, to enter into such contracts, incur such obligations, enforce any
contracts or agreements made by or on behalf of Borrower and do any and all
things necessary or proper to obtain a Qualifying Rate Cap Agreement, including
signing Borrower’s name on any contracts and documents as may be deemed
necessary by Lender.
4.5.2.6. In
no event shall Lender be required to expend its own funds to purchase any
Qualifying Rate Cap Agreement, but Lender may, in its sole discretion, advance
such funds or draw upon funds from the Replacement Hedge Escrow. Any
funds advanced by Lender pursuant to this Section 4.5.2, from sources
other than the Replacement Hedge Escrow (including without limitation, Lender’s
reasonable attorneys’ fees), shall be added to the outstanding principal balance
of the Loan, secured by the Security Instrument and made payable to Lender by
Borrower in accordance with the provisions of the Security Instrument pertaining
to the protection of Lender’s security and advances made by Lender.
4.5.2.7. Borrower
hereby conveys, pledges, transfers and grants to Lender a security interest
pursuant to the Uniform Commercial Code or any other applicable law in and to
all amounts in the Replacement Hedge Escrow, as same may increase or decrease
from time to time, for the purpose of securing Borrower’s Obligations under this
Agreement and to further secure Borrower’s Obligations under the Note, Security
Instrument and other Loan Documents.
4.5.3. Rate
Swap Enhancement Program.
At
Borrower’s request, and in order for any Rate Swap Agreement to be considered a
Qualifying Rate Swap Agreement, Lender shall guarantee Borrower’s obligations
under such Rate Swap Agreement to pay the applicable counterparty the product of
the stipulated fixed pay rate times the applicable notional amount. Lender shall
provide such guaranty subject to the terms and conditions of Lender’s then
current interest rate swap enhancement program, including without limitation,
that Lender shall only guaranty Rate Swap Agreements that (i) are “at market” or
“par swaps” and (ii) do not have an aggregate notional amount in excess of the
outstanding principal balance of the Loan. As consideration for Lender’s
guaranty of Borrower’s obligation(s) under this Section 4.5.3, Borrower shall
pay to Lender, on a monthly basis, an annual amount equal to the product of the
notional amounts of any and all Qualifying Rate Swap Agreements times the
applicable Credit Enhancement Fee. Borrower’s obligations to pay the Credit
Enhancement Fee shall be secured by the Collateral as if part of the
Loan.
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4.5.3.1. In
the event of a partial prepayment of the principal amount of the Loan, if after
giving effect to such prepayment, the aggregate notional amount of the Rate Swap
Agreements will exceed the remaining principal amount of the Loan, the Borrower
shall (a) with the consent of Lender and prior to such prepayment, terminate one
or more Rate Swap Agreements in whole or in part so that the aggregate notional
amount of the Rate Swap Agreements is equal to or less than the outstanding
principal balance of the Loan, or (b) allocate such excess notional amount of
the Rate Swap Agreement(s) to any other outstanding variable rate loan from the
Lender to the extent the outstanding principal amount of such variable rate loan
is unhedged by a rate swap agreement. To the extent a Rate Swap
Agreement obtained hereunder is allocated to a variable rate loan from the
Lender other than the Loan, the fees paid by Borrower to the Lender for the
Lender’s credit enhancement of the Borrower’s obligations under the Rate Swap
Agreement shall be governed by the credit agreement or other loan documents
governing the Borrower’s obligations with respect to the loan to which the Rate
Swap Agreement has been allocated. Prior to terminating any Rate Swap
Agreement in whole or in part as set forth in (a) above, Borrower shall deliver
to Lender any Hedge Fees (as defined in Section 2.14.2.1(v)) with respect to
such termination.
4.6. Additional
Compensation in Certain Circumstances.
4.6.1. Increased
Costs Resulting from Taxes, Etc.
If any
change in any Law, guideline or interpretation or application thereof by any
Official Body charged with the interpretation or administration thereof or
compliance with any written request or directive of any Official Body (other
than as a result of any misconduct by Lender) which is applicable to
Lender:
4.6.1.1. subjects
Lender to any tax or changes the basis of taxation with respect to this
Agreement, the Revolving Credit Note, the Loan or payments by Borrower of any
principal, interest, fees, or other amounts due from Borrower hereunder or under
the Revolving Credit Note (except for taxes on the overall net income of
Lender);
4.6.1.2. imposes
upon Lender any condition or denies Lender any right, the result of which is to
increase the cost to, reduce the income receivable by, or impose any expense
(including breakage costs) upon Lender with respect to this Agreement, the
Revolving Credit Note or the making, maintenance or funding of any Borrowing
Tranche by an amount which Lender in its discretion deems to be
material;
then
Lender shall from time to time notify Borrower of the amount determined in good
faith (using any averaging and attribution methods employed in good faith) by
Lender to be necessary to compensate Lender for such increase in
cost. Such notice shall set forth in reasonable detail the basis for
such determination. Such amount shall be due and payable by Borrower
to Lender thirty (30) days after such notice is given.
44
4.6.2. Termination.
Upon the
occurrence of any event described in Section 4.6.1, Borrower may
elect to terminate this Agreement and the parties’ obligations under the Loan
Documents, in accordance with the provisions of Section 2.14 without any
Prepayment Fee or similar fee or penalty, and Borrower’s obligations hereunder
shall terminate upon Borrower’s repayment in full of the Loan, provided that no
such termination shall be effective until such time as Borrower shall provide
each counterparty with all necessary notice under each Qualified Rate Swap
Agreement to terminate each Qualified Rate Swap Agreement as of the date of
repayment in full of the Loan and the Borrower shall deposit with the Lender for
payment to the counterparty of each Qualified Rate Swap Agreement, any payments
due under any Qualified Rate Swap Agreement and all Hedge Fees.
4.6.3. Indemnity.
In
addition to the compensation required by Section 4.6.1, Borrower shall
jointly and severally indemnify Lender and Servicer against all liabilities,
losses or expenses (including breakage costs) which Lender and/or Servicer
sustains or incurs as a consequence of any:
4.6.3.1. attempt
by Borrower to revoke (expressly, by later inconsistent notices or otherwise) in
whole or part any Loan Request under Section 2.6, any request to
release a Collateral Pool Property under Section 2.11, or notice
relating to prepayments under Section 4.3, or
4.6.3.2. default
by Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including without
limitation any Qualifying Rate Cap Agreement or Qualifying Rate Swap Agreement
and including any failure of Borrower to pay when due (by acceleration or
otherwise) any principal, interest, Prepayment Fee, Unused Facility Fee, Minimum
Usage Fee, Minimum Servicing Fee, Credit Enhancement Fee or any other amount due
hereunder.
If Lender
sustains or incurs any such loss or expense, it shall from time to time notify
Borrower of the amount determined in good faith by Lender (which determination
may include such assumptions, allocations of costs and expenses and averaging or
attribution methods as Lender shall deem reasonable) to be necessary to
indemnify Lender for such loss or expense. Such notice shall set
forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by Borrower to Lender thirty (30) days after
such notice is given. Notwithstanding the foregoing, Borrower shall not have any
obligation to Lender under this Section 4.6.3 with respect to
any loss or expense caused by or resulting from the gross negligence or willful
misconduct or omission of Lender.
5. CONDITIONS
OF LENDING
The
obligation of Lender to fund any Borrowing Tranche(s) hereunder is subject to
the performance by Borrower of its Obligations to be performed hereunder at or
prior to the funding of any such Borrowing Tranche(s) and to the satisfaction of
the following further conditions:
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5.1. Initial
Borrowing Tranche.
On the
Closing Date:
5.1.1. Delivery
of Loan Documents.
All Loan
Documents not previously executed and delivered to Lender shall have been duly
executed and delivered to Lender, together with all appropriate financing
statements.
5.1.2. Validity
of Representations.
The
representations and warranties of Borrower contained in Section 6 and in each of the
other Loan Documents shall be true and accurate in all material respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which relate solely to an earlier date or time, which representations
and warranties shall be true and correct on and as of the specific dates or
times referred to therein), and Borrower shall have performed and complied with
all covenants and conditions hereof and thereof, no Event of Default or
Potential Default shall have occurred and be continuing or shall
exist.
5.1.3. Officer’s
Certificate.
There
shall be delivered to and for the benefit of Lender a certificate, in form and
substance acceptable to Lender, dated the Closing Date and signed by an
Authorized Officer, certifying as appropriate as to:
5.1.3.1. all
required actions taken by Borrower in connection with this Agreement and the
other Loan Documents;
5.1.3.2. the
names of the officer or officers authorized to sign this Agreement and the other
Loan Documents and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of Borrower for
purposes of this Agreement and the true signatures of such Authorized Officers,
on which Lender may conclusively rely; and
5.1.3.3. copies
of the organizational documents of Borrower including its certificate of
incorporation, by-laws, certificate of limited partnership, partnership
agreement, certificate of formation, and limited liability company agreement, as
applicable, as in effect on the Closing Date certified by the appropriate state
official where such documents are filed in a state office together with
certificates from the appropriate state officials as to the continued existence
and good standing of Borrower in each state where organized or qualified to do
business and bring-down certificates by facsimile dated within thirty (30) days
of the Closing Date, all of which shall be attached to such officer’s
certificate; and
5.1.3.4. the
matters described in Section
5.1.8.
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5.1.4. Opinion
of Counsel.
There
shall be delivered to Lender, a written opinion of counsel for Borrower dated
the Closing Date and in form and substance satisfactory to Lender and its
counsel as to matters customary to the transactions contemplated herein, or as
Lender may reasonably request.
5.1.5. Legal
Details.
All legal
details and proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be in form and substance
satisfactory to Lender and counsel for Lender, and Lender shall have received
all such other counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in form and
substance satisfactory to Lender and said counsel, as Lender or said counsel may
reasonably request.
5.1.6. Payment
of Fees.
Borrower
shall have paid or caused to be paid to Lender and ▇▇▇▇▇▇▇ Mac to the extent not
previously paid all fees accrued through the Closing Date and all of Lender’s
and ▇▇▇▇▇▇▇ Mac’s reasonable costs and expenses, including, but not limited to,
attorneys’ fees, title insurance premiums, surveys, appraisals, all costs
incurred in obtaining environmental, engineering and credit reports, all third
party due diligence costs and other costs and expenses incurred by either Lender
or ▇▇▇▇▇▇▇ Mac in connection with the closing of this Loan.
5.1.7. Consents.
All
material consents required to effectuate the transactions contemplated hereby
shall have been obtained.
5.1.8. No
Material Adverse Change.
Since the
date of Borrower’s formation, no Material Adverse Change shall have occurred;
prior to the Closing Date, there shall have been no material change in the
management of Borrower.
5.1.9. No
Violation of Laws.
The
making of the Loan shall not contravene any Law applicable to Borrower or
Lender.
5.1.10. No
Actions or Proceedings.
No
action, proceeding, investigation, regulation or legislation shall have been
instituted, or, to Borrower’s knowledge, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, this Agreement, the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby or which, in
Lender’s sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan
Documents.
47
5.1.11. Collateral
Initially Included in Collateral Pool.
With
respect to the Collateral which is part of the Collateral Pool at Closing,
Borrower shall have delivered all Underwriting Materials required hereunder for
inclusion of such Collateral into the Collateral Pool, and Lender shall have
approved the inclusion therein.
5.1.12. Other
Conditions.
Borrower
shall have satisfied such other reasonable conditions as required by Lender or
Lender’s legal counsel.
5.2. Each
Subsequent Borrowing Tranche.
At the
time of funding of any Borrowing Tranche (excluding renewals, conversions and
continuances of any outstanding Borrowing Tranche(s) which do not increase the
outstanding principal amount of the Loan made hereunder) other than the funds
advanced on the Closing Date, and after giving effect to the proposed extensions
of credit: (i) the representations and warranties of Borrower contained in Section 6 and in the other
Loan Documents shall be true and correct in all material respects on and as of
the date of the funding of any such Borrowing Tranche with the same effect as
though such representations and warranties had been made on and as of the date
of the funding of any such Borrowing Tranche (except representations and
warranties that expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct in all material
respects on and as of the specific dates or times referred to therein and except
such changes as would not constitute a Material Adverse Change) and Borrower
shall have performed and complied with all covenants and conditions hereof; (ii)
no Event of Default or, to Borrower’s knowledge, Potential Default shall have
occurred and be continuing or shall exist; (iii) the funding of any Borrowing
Tranche shall not contravene any Law applicable to Borrower or Lender; (iv)
Borrower shall have delivered to Lender a duly executed and completed Loan
Request or Renewal Request, as the case may be; and (v) Borrower shall have paid
all reasonable fees and expenses incurred by Lender or Servicer in connection
therewith.
6. REPRESENTATIONS
AND WARRANTIES
6.1. Representations
and Warranties.
Borrower
represents and warrants to Lender as follows:
6.1.1. Organization
and Qualification.
Borrower
is duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization or formation, as the case may be, and has the
lawful power to engage in the business it presently conducts or proposes to
conduct. Borrower is duly licensed or qualified and in good standing
in all jurisdictions where the property owned or leased by it or the nature of
the business transacted by it or both makes such licensing or qualification
necessary and where the failure to be so qualified would result in a Material
Adverse Change. Each Property Borrower has the lawful power to own or
lease the Collateral Pool Properties.
48
6.1.2. Intentionally
Omitted.
6.1.3. Power
and Authority.
Borrower
has full power to enter into, execute, deliver and carry out this Agreement and
the other Loan Documents to which it is a party, to incur the Loan contemplated
by the Loan Documents and to perform its Obligations under the Loan Documents to
which it is a party, and all such actions have been duly authorized by all
necessary proceedings on its part.
6.1.4. Validity
and Binding Effect.
This
Agreement has been duly and validly executed and delivered by Borrower and each
other Loan Document which Borrower is required to execute and deliver on or
after the date hereof will have been duly executed and delivered by Borrower on
the required date of delivery of such Loan Document. This Agreement
and each other Loan Document to which Borrower is a party constitutes, or will
constitute, legal, valid and binding obligations of Borrower on and after its
date of delivery thereof, enforceable against Borrower in accordance with its
terms, except to the extent that enforceability of any of such Loan Documents
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors’ rights generally or
limiting the right of specific performance. There is no offset,
defense, counterclaim or right of rescission with respect to any of the Loan
Documents.
6.1.5. No
Conflict.
Neither
the execution and delivery of this Agreement or the other Loan Documents by
Borrower nor the consummation of the transactions herein or therein contemplated
or compliance with the terms and provisions hereof or thereof by any of them
will conflict with, constitute a default under or result in any breach or
violation of (i) the terms and conditions, as applicable, of the certificate of
limited partnership, limited partnership agreement, certificate of formation,
limited liability company agreement or other organizational documents of
Borrower, (ii) any Law or any material agreement or instrument or order, writ,
judgment, injunction or decree to which Borrower is a party or is subject, or by
which Borrower is bound, or (iii) result in the creation or enforcement of any
Lien, charge or encumbrance whatsoever upon any property (now or hereafter
acquired) of Borrower (other than Liens granted under the Loan Documents), nor
will they result in or require (except as specifically contemplated by this
Agreement) the creation or imposition of any lien of any nature upon any of the
collateral of Borrower.
6.1.6. Litigation.
There are
no actions, suits, proceedings or investigations pending, or to Borrower’s
knowledge threatened, against Borrower at law or equity before any Official Body
which individually or in the aggregate may result in any Material Adverse
Change. Borrower is not in violation of any order, writ, injunction
or decree of any Official Body which may result in any Material Adverse
Change.
49
6.1.7. Title
to Collateral Pool Properties.
Property
Borrowers have good and marketable title to all Collateral Pool Properties and
to all other assets which each purports to own or which are reflected as owned
on its books and records, free and clear of all Liens and encumbrances except
the Permitted Exceptions and such other Liens as are permitted pursuant to the
Loan Documents. The Permitted Exceptions do not and will not
materially and adversely affect (i) the ability of Borrower to pay in full all
sums due under the Revolving Credit Note or any of its other Obligations in a
timely manner, (ii) the use of any Collateral Pool Property for the use
currently being made thereof, (iii) the operation of any Collateral Pool
Property as currently being operated, or (iv) the value of any Collateral Pool
Property.
6.1.8. Use
of Proceeds.
Borrower
intends to use the proceeds of the Loan in accordance with Section 2.9.
6.1.9. Full
Disclosure.
Neither
this Agreement nor any other Loan Document, nor any material certificate,
statement, agreement or other documents furnished to Lender in connection
herewith or therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to Borrower which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of Borrower which has not been set forth in this
Agreement or in the certificates, statements, agreements, financial projections
or other documents furnished in writing to Lender prior to or at the date hereof
in connection with the transactions contemplated hereby.
6.1.10. Taxes.
Upon
information and belief after due and diligent inquiry, all federal, state, local
and other tax returns required to have been filed with respect to Borrower have
been filed, and payment or adequate provision has been made for the payment of
all taxes, fees, assessments and other governmental charges which have or may
become due pursuant to said returns or to assessments received, the failure of
any of which would not result in a Material Adverse Change, except to the extent
that such taxes, fees, assessments and other charges are being contested in good
faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. There are no agreements or waivers extending
the statutory period of limitations applicable to any federal income tax return
of Borrower for any period.
6.1.11. Consents
and Approvals.
Except
for the filing of financing statements and the relevant Collateral Pool Property
Documents in the appropriate state and county filing offices, there are no other
filings, consents and approvals necessary for the execution of this Agreement by
Borrower or its performance hereunder or under the Loan Documents, all of which
shall have been obtained or made on or prior to the Closing
Date.
50
6.1.12. No
Event of Default; Compliance with Instruments.
No event
has occurred and is continuing and no condition exists or will exist after
giving effect to the borrowings or other extensions of credit to be made on the
Closing Date or thereafter under or pursuant to the Loan Documents, which
constitutes an Event of Default or a Potential Default. Borrower is
not, by execution of this Agreement and the Collateral Pool Property Documents,
as applicable, in violation of (i) any term, as applicable, of its certificate
of limited partnership, limited partnership agreement, certificate of formation,
limited liability company agreement or other organizational documents or (ii)
any material agreement or instrument to which it is a party or by which it, or
any of the Collateral Pool Properties which it owns, may be subject or bound
where such violation would constitute a Material Adverse Change.
6.1.13. Security
Interests.
The Liens
and security interests granted to and for the benefit of Lender pursuant to the
Loan Documents constitute and will continue to constitute first priority
security interests under the Uniform Commercial Code covering the personal
property described therein as in effect in each applicable jurisdiction (the
“Uniform Commercial Code”) or other Law, entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code or such Law, subject to
the Permitted Exceptions. Upon the filing of financing statements
relating to said security interests in each office in which filing is required
under the Uniform Commercial Code all such action as is necessary or advisable
to establish such rights of Lender will have been taken, and there will be, upon
execution and delivery of the Loan Documents, such
filings and such taking of possession, no necessity for any further action in
order to preserve, protect and continue such rights, except the filing of
continuation statements with respect to such financing statements within six (6)
months prior to the expiration of such filing of such financing statements or
any other requirement under the Uniform Commercial Code to maintain the
perfection of such security interest. All filing fees and other
reasonable expenses in connection with each such action have been or will be
paid by Borrower. All continuations and any assignments of any such
financing statements have been or will be timely filed or refiled, as
appropriate, in the appropriate recording offices. Without limiting
the foregoing representations and warranties, Borrower hereby authorizes Lender
to file financing statements, continuation statements and financing statement
amendments, in such form as Lender may require to perfect or continue the
perfection of such security interests and in all events without Borrower’s
signature.
6.1.14. Mortgage
Liens.
The Liens
granted to and for the benefit of Lender pursuant to the Collateral Pool
Property Documents constitute a valid first priority Lien covering the real
property described therein under applicable Law, subject to any Permitted
Exceptions. All such action as will be necessary or advisable to
establish such Lien of Lender and its priority as described in the preceding
sentence will be taken at or prior to the time required for such purpose, and
there will be as of the date of execution and delivery of the Collateral Pool
Property Documents no necessity for any further action in order to protect,
preserve and continue such Lien and such priority. All filing fees
and other reasonable expenses in connection with each such action have been or
will be paid by Borrower.
51
6.1.15. Insurance.
All
insurance policies and other bonds to which Borrower is a party are valid and in
full force and effect. No notice has been given, no claim has been
made, and no grounds exist, to cancel or avoid any of such policies or bonds or
to reduce the coverage provided thereby. Such policies and bonds
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of Borrower in accordance with
prudent business practice in their respective industries.
6.1.16. Material
Contracts; Burdensome Restrictions.
All
material contracts relating to Borrower, taken as a whole, are valid, binding
and enforceable upon such parties, as applicable, and, to Borrower’s knowledge,
each of the other parties thereto in accordance with their respective terms
(except as disclosed in writing by Borrower to Lender prior to the date hereof)
and except to the extent that enforceability of any such contracts may be
limited by bankruptcy, insolvency, reorganization, moratorium or any other
similar Laws affecting the enforceability of creditors’ rights generally or
limited the rights of specific performance. There is no default under
any such contracts by Borrower, or to Borrower’s knowledge by any of the other
parties thereto, except for defaults which would not result in a Material
Adverse Change. Borrower is not bound by any contractual obligation,
or subject to any restriction in any organizational document, or any requirement
of Law, which is reasonably expected to result in a Material Adverse
Change.
6.1.17. Investment
Companies; Regulated Entities.
Borrower
is not an “investment company” registered or required to be registered under the
Investment Company Act of 1940 or under the “control” of an “investment company”
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an “investment company” or under such “control.” Borrower
is not subject to any other federal or state statute or regulation limiting its
ability to incur any debt.
6.1.18. Pension
Plans and Benefit Arrangements.
The
representations and warranties set forth in this Section 6.1.18 shall only
apply to the extent Borrower is at any time, and from time to time, subject to
the provisions of ERISA.
6.1.18.1. Borrower
and each other member of the ERISA Group are in compliance in all material
respects with any applicable provisions of ERISA with respect to all Benefit
Arrangements, Pension Plans and Multiemployer Plans. There has been
no Prohibited Transaction with respect to any Benefit Arrangement or any Pension
Plan or, with respect to any Multiemployer Plan, which could result in any
material liability of Borrower or any other member of the ERISA
Group. Borrower and all members of the ERISA Group have made when due
any and all payments required to be made under any agreement relating to a
Multiemployer Plan or any Law pertaining thereto. With respect to
each Pension Plan and Multiemployer Plan, Borrower and each member of the ERISA
Group (i) have fulfilled in all material respects their obligations under
the minimum funding standards of ERISA, (ii) have not incurred any
liability to the PBGC, and (iii) have not had asserted against them any
penalty for failure to fulfill the minimum funding requirements of
ERISA.
52
6.1.18.2. Each
Multiemployer Plan is able to pay benefits thereunder when due.
6.1.18.3. Neither
Borrower nor any other member of the ERISA Group has instituted or intends to
institute proceedings to terminate any Pension Plan.
6.1.18.4. No
event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has
occurred or is reasonably expected to occur with respect to any Pension Plan,
and no amendment with respect to which security is required under
Section 307 of ERISA has been made or is reasonably expected to be made to
any Pension Plan.
6.1.18.5. The
aggregate actuarial present value of all benefit liabilities (whether or not
vested) under each Pension Plan, determined on a plan termination basis, as
disclosed in, and as of the date of, the most recent actuarial report for such
Pension Plan, does not exceed the aggregate fair market value of the assets of
such Pension Plan.
6.1.18.6. Neither
Borrower nor any other member of the ERISA Group has incurred or reasonably
expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan. Neither Borrower nor any other member of the
ERISA Group has been notified by any Multiemployer Plan that such Multiemployer
Plan has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be reorganized or terminated,
within the meaning of Title IV of ERISA.
6.1.18.7. To
the extent that any Benefit Arrangement is insured, Borrower and all members of
the ERISA Group have paid when due all premiums required to be paid for all
periods through and including the Closing Date. To the extent that
any Benefit Arrangement is funded other than with insurance, Borrower and all
other members of the ERISA Group have made when due all contributions required
to be paid for all periods through the Closing Date.
6.1.18.8. All
Pension Plans, and with respect to Benefit Arrangements other than Pension Plans
and Multiemployer Plans, they have not failed to be administered in accordance
with their terms and any Law in any way that would result in a Material Adverse
Change and Multiemployer Plans have been administered in accordance with their
terms and any Law.
6.1.19. Intentionally
Omitted.
53
6.1.20. Solvency.
Borrower
is Solvent. After giving effect to the transactions contemplated by
the Loan Documents, including the Loan incurred thereunder and the Liens granted
to and for the benefit of Lender, Borrower will be Solvent. Borrower
has not entered into this Credit Agreement or any Loan Document with the actual
intent to hinder, delay, or defraud any creditor, and Borrower has received
reasonably equivalent value in exchange for its obligations under the Loan
Documents. Borrower does not intend to, and Borrower does not believe
that it will, incur debts and liabilities beyond its ability to pay such debts
as they mature (taking into account the timing and amounts to be payable on or
in respect of obligations of Borrower).
6.1.21. Agreements.
Borrower
is not a party to any agreement or instrument or subject to any restriction
which is likely to result in a Material Adverse Change. Borrower is
not in default in any respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any indenture,
agreement or instrument to which it is a party or by which Borrower or any
Collateral Pool Property is bound in any manner which would result in a Material
Adverse Change, and Borrower has received no notice of default under any such
indenture, agreement or instrument.
6.1.22. No
Bankruptcy Filing.
Borrower
is not contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency Laws or the liquidation of all or a major
portion of its assets or property and Borrower has no knowledge of any Person
contemplating the filing of any such petition against Borrower.
6.1.23. Formation.
REIT was
formed in the state of Tennessee; Operating Partnership was formed in the state
of Tennessee; and MAA Texas was formed in the state of Texas.
6.1.24. Compliance.
Borrower,
each Collateral Pool Property and the use thereof and operations thereat by a
Property Borrower, comply in all material respects with all applicable
Laws. Borrower is not in default or violation of any order, writ,
injunction, decree or demand of any Official Body, the violation of which is
reasonably likely to result in a Material Adverse Change. All
required permits, licenses, and certificates for the lawful use and operation of
the Collateral Pool Properties, including, but not limited to, certificates of
occupancy, apartment licenses, or the equivalent have been obtained and are in
full force and effect, the failure of which would result in a Material Adverse
Change, and Borrower has received no notice that it does not have all such
required permits, licenses and certificates.
6.1.25. Not
a Foreign Person.
Borrower
is not a “foreign person” within the meaning of Section 1445(f)(3) of the
Internal Revenue Code.
6.1.26. Labor
Matters.
Borrower
is not a party to any collective bargaining agreements.
54
6.1.27. Condemnation.
No
taking, condemnation or eminent domain proceeding has been commenced or, to
Borrower’s knowledge, is contemplated with respect to all or any portion of any
Collateral Pool Property or for the relocation of roadways providing access to
any Collateral Pool Property which would result in a Material Adverse
Change.
6.1.28. Utilities
and Public Access.
Each
Collateral Pool Property has adequate rights of access to public ways and is
served by adequate water, sewer, sanitary sewer and storm drain facilities as
are adequate for full utilization of such Collateral Pool Property for its use
as a multifamily residential property. All public utilities necessary
to the continued use and enjoyment of each Collateral Pool Property as presently
used and enjoyed are located in the public right-of-way abutting the premises,
and all such utilities are connected so as to serve each Collateral Pool
Property either (i) without passing over other property or, (ii) if such
utilities pass over other property, pursuant to valid easements. All
roads necessary for the full utilization of each Collateral Pool Property for
its current purpose have been completed and dedicated to public use and accepted
by all Official Bodies or are the subject of access easements for the benefit of
such Collateral Pool
Property.
6.1.29. No
Joint Assessment; Separate Lots.
Borrower
has not and shall not suffer, permit or initiate the joint assessment of any
Collateral Pool Property (i) with any other real estate property
constituting a separate tax lot, and (ii) with any portion of such
Collateral Pool Property which may be deemed to constitute personal property, or
any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to such Collateral
Pool Property as a single lien. Each Collateral Pool Property is
comprised of one or more parcels, each of which constitutes a separate tax lot
and none of which constitutes a portion of any other tax lot.
6.1.30. Assessments.
Except as
disclosed in the title insurance policies, there are no pending or, to
Borrower’s knowledge proposed special or other assessments for public
improvements or otherwise affecting any Collateral Pool Property, nor, to
Borrower’s knowledge are there any contemplated improvements to any Collateral
Pool Property that may result in such special or other assessments.
6.1.31. Intentionally
Omitted.
6.1.32. No
Prior Assignment.
As of the
Closing Date, (i) Lender shall be assignee of Property Borrower’s interest
under any leases with respect to the Collateral Pool Properties, and
(ii) there are no prior assignments of any such leases or any portion of
the rents due and payable thereunder or to become due and payable thereunder
which are presently outstanding.
55
6.1.33. Certificate
of Occupancy.
Each
Property Borrower has obtained (in its own name or is the express successor or
assignee of) all permits necessary to use and operate the Collateral Pool
Properties it owns for the uses described in Section 2.9, and all such
permits are in full force and effect. The use being made of each
Collateral Pool Property is in conformity in all respects with the certificate
of occupancy. The use being made of each Collateral Pool Property is
in conformity in all aspects with the permits for such Collateral Pool Property
and any other restrictions, covenants or conditions affecting such Collateral
Pool Property, including without limitation, the applicable zoning and land use
ordinances, except for those failures which would not result in a Material
Adverse Change, and Borrower has received no notice that it is not in conformity
with such permits, restrictions, covenants or conditions. Each
Collateral Pool Property contains all equipment necessary to use and operate
such Collateral Pool Property in a first-class manner. Property
Borrower will continue to operate its respective Collateral Pool Property in the
manner in which it is presently being operated.
6.1.34. Intellectual
Property.
All
trademarks, trade names and service marks that Borrower owns or has pending, or
under which Borrower is licensed, are in good standing and
uncontested. Borrower has not infringed, is not infringing, and has
not received notice of infringement with respect to any asserted trademarks,
trade names or service marks of others. To Borrower’s knowledge there
is no infringement by others of any trademarks, trade names or service marks of
Borrower.
6.1.35. Conduct
of Business.
Borrower
does not conduct its business “also known as”, “doing business as” or under any
other name except, in the case of a Property Borrower, as to the use of the name
of each Collateral Pool Property, and in such case, pursuant to any applicable
fictitious name statute.
6.1.36. Title
Insurance.
Each
Collateral Pool Property is covered by a title insurance policy acceptable to
Lender.
6.1.37. No
Default.
The
execution, delivery and performance of the obligations imposed on Borrower, if
any, under this Agreement, the Revolving Credit Note and the other Loan
Documents will not cause Borrower to be in default under the provisions of any
agreement, judgment or order to which Borrower is a party or by which Borrower
is bound. There is no litigation or other claim pending before any
court or administrative or governmental body or, to Borrower’s knowledge,
overtly threatened by a written communication against Borrower, any Collateral
Pool Property, or any other property of Borrower which would result in a
Material Adverse Change or which is not covered by insurance.
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6.1.38. Condition
of the Collateral Pool Properties.
To the
extent that any Collateral Pool Property has been damaged by fire, water, wind,
earthquake or other cause of loss, such Collateral Pool Property has been fully
restored or will be fully restored within a reasonable period of time after the
Closing Date or after any such casualty.
6.1.39. Non-Residential
Leases.
Each
Collateral Pool Property is a multi-family housing project. Gross
income derived from commercial space, if any, located in any Collateral Pool
Property shall not exceed fifty percent (50%) of the total gross income of such
Collateral Pool Property. Neither Borrower, nor any general partner,
managing member or principal thereof is, directly or indirectly, controlling,
controlled by, under common control with, or otherwise related to the lessor
under any leases for laundry equipment, telecommunications, television or
similar systems on or about any of the Collateral Pool Properties.
6.1.40. No
Low Income Housing Tax Credit.
Except as
disclosed to Lender in writing, Borrower has not claimed, nor does Borrower
intend to claim a low income housing tax credit for any of the Collateral Pool
Properties under Section 42 of the Internal Revenue Code of 1986, or any
successor Section thereto. Should Borrower later decide to pursue
claiming such a tax credit, Borrower will not proceed without obtaining Lender’s
prior written consent to do so, to be granted in Lender’s sole
discretion.
6.1.41. No
Restrictions.
Except as
disclosed to Lender in writing, there are no rent level restrictions or tenant
income restrictions on any Collateral Pool Property.
6.1.42. No
Adverse Affect on the Loan.
Nothing
involving the Collateral Pool Properties, Borrower or Borrower’s credit standing
may be reasonably expected to (i) cause any payments under this Agreement, the
Revolving Credit Note and any other Loan Documents to become delinquent or (ii)
adversely affect the Market Value of any Collateral Pool Property.
6.1.43. Term
of Leases.
Except as
disclosed to Lender in writing, all residential leases with respect to the
Collateral Pool Property are for terms of two (2) years or less.
6.1.44. Fraudulent
Conveyances.
Borrower
has not entered into any agreements, transactions or series of transactions with
the intent to hinder, delay, or defraud any creditor, and Borrower has not
entered into any agreements, transactions or series of transactions (except in
connection with a corporate merger or reorganization involving entities which
both prior to and following such merger or reorganization were Affiliates of
Borrower) other than for valid consideration of reasonably equivalent value in
exchange for its obligations thereunder.
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6.1.45. Affiliate
Transactions.
Except as
approved in writing by Lender, Borrower has not entered into and is not a party
to any contract, lease or other agreement with any Person directly or indirectly
controlling, controlled by, or under common control with Borrower for the
provision of any service, materials or supplies to any Collateral Pool 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).
6.2.
Updates.
Borrower
shall provide with each Loan Request that will result in an increase in the
Loan, written revisions to any representations or warranties in this Agreement
which have become outdated or incorrect in any material respect. In
addition, should any such updates, corrections or additions relate to a matter
which would be a Material Adverse Change, Borrower shall promptly provide Lender
in writing with such revisions as may be necessary or appropriate, to correct or
update same. Notwithstanding the providing of revised information, a
breach of warranty or representation resulting from the prior inaccuracy or
incompleteness shall not be deemed to have been cured thereby or waived by
Lender unless and until Lender, in its sole and absolute discretion, shall have
accepted in writing such revisions or updates, further provided that no
representation or warranty shall be deemed to have been updated by any such
revision unless and until Lender funds the additional Loan Request.
6.3.
Survival of Representations and Warranties.
Each
Borrower agrees that (i) all of the representations and warranties of such
Borrower set forth in this Agreement and in the other Loan Documents delivered
on the Closing Date are made as of the Closing Date (except as expressly
otherwise provided) and (ii) all representations and warranties made by such
Borrower shall survive the delivery of the Revolving Credit Note and continue
(a) for so long as any amount remains owing to Lender under this Agreement, the
Revolving Credit Note or any of the other Loan Documents or (b) until the date
on which Lender releases all assets in the Collateral Pool from any Lien
securing the Loan Documents pursuant to the provisions of Section 2.11 or Section 2.16, whichever is
later. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
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7. COVENANTS
7.1.
Covenants.
Borrower
covenants and agrees that until the later of (i) payment in full of the Loan and
interest thereon, and satisfaction of all of the other Obligations of Borrower
under the Loan Documents (including, but not limited to, performance of all
actions necessary to terminate each Qualified Rate Swap Agreement, which shall
include, but not be limited to, compliance with all notice requirements under
each Qualified Rate Swap Agreement and the deposit with Lender for payment to
the applicable counterparty of each Qualified Rate Swap Agreement, any payments
due under any Qualified Rate Swap Agreement and all Hedge Fees) and (ii) the
Expiration Date, Borrower shall comply at all times with the following
covenants:
7.1.1. Preservation
of Existence.
Borrower
shall maintain its legal existence as a corporation, general or limited
partnership or limited liability company, as applicable, and its license or
qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary unless the failure to maintain the same shall not result
in a Material Adverse Change to Borrower or any Collateral Pool
Property.
7.1.2. Maintenance
of Collateral Pool Properties and Leases.
Borrower
(i) shall not commit waste or permit impairment or deterioration of the
Collateral Pool Properties, (ii) shall not abandon any Collateral Pool Property,
(iii) shall restore or repair promptly, in a good and workmanlike manner, any
damaged part of any Collateral Pool Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing, whether or
not insurance proceeds or condemnation awards are available to cover any costs
of such restoration or repair (provided that Lender shall make any insurance
proceeds or condemnation awards received by Lender available to Borrower for
restoration and repair), (iv) shall keep the Collateral Pool Properties in good
repair (normal wear and tear excepted), including the replacement of any
personalty and fixtures located on any Collateral Pool Property with items of
equal or better function and quality, (v) shall provide for professional
management of the Collateral Pool Properties by a residential rental property
manager satisfactory to Lender under a contract approved by Lender in writing
(provided that Lender’s approval is not required for a manager or a management
agreement where an Affiliate of Borrower is the manager), (vi) shall not change
the use of any Collateral Pool Property as a multi-family residential property,
(vii) shall give notice to Lender of and, unless otherwise directed in writing
by Lender, shall appear in and defend any action or proceeding purporting to
affect any Collateral Pool Property, Lender’s security or Lender’s rights under
this Agreement, and (viii) shall make any reasonable repairs to a Collateral
Pool Property which is requested by Lender. Borrower shall not (and
shall not permit any tenant or other person to) remove, demolish or alter any
Collateral Pool Property or any part thereof except in connection with the
replacement of tangible personalty or in the ordinary course of
business.
7.1.3. Collateral
Agreements.
Borrower
shall deposit with Lender such amounts as may be required by any Collateral
Agreement and shall perform all other obligations of Borrower under each
Collateral Agreement.
7.1.4. Inspection
Rights.
Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of any Collateral Pool Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time upon reasonable notice (except in an emergency).
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7.1.5. Intentionally
Omitted.
7.1.6. Use
of Proceeds.
Borrower
will use the proceeds of the Loan only for lawful purposes in accordance with
Section 2.9
hereof.
7.1.7. Further
Assurances.
Borrower
shall, or shall cause Property Borrower to, from time to time, at its expense,
faithfully preserve and protect Lender’s Lien on and security interest in the
Collateral as a continuing first priority perfected Lien, subject only to
Permitted Exceptions, and shall do such other acts and things as Lender in its
sole discretion may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and to
exercise and enforce its rights and remedies thereunder with respect to the
Collateral, provided that (i) the terms and conditions of this Agreement and the
other Loan Documents are not changed thereby, (ii) Lender will use its best
efforts to minimize costs and expenses incurred in connection with a request
under this subsection, and (iii) Borrower’s obligations hereunder or under any
other Loan Documents are not increased or otherwise adversely affected thereby
except for incidental costs and expenses such as recording fees and reasonable
attorneys’ fees and expenses.
7.1.8. Collateral
Pool Properties.
7.1.8.1. Borrower,
as a whole, shall be in compliance with the Sublimits set forth in Section 2.6.1 at such
times as expressly required in this Agreement; and
7.1.8.2. Each
Property Borrower shall own at all times the entire equity interest in its
respective Collateral Pool Property.
7.1.9. Subsequent
Periodic Valuations.
Borrower
shall cooperate with Lender and its agent and provide such information in its
possession as such parties shall reasonably require to complete a new Valuation
for each Collateral Pool Property.
7.1.10. Special
ERISA Related Covenants.
The
covenants set forth in this Section 7.1.10, shall only
apply to the extent Borrower is at any time and from time to time subject to the
provisions of ERISA.
7.1.10.1. Borrower
shall at all times be a “real estate operating company” within the meaning of
such term contained in 29 CFR § 2510.3-101(d) or an entity whose underlying
assets are not deemed to be assets of a Pension Plan as defined in Section 3(3)
of ERISA.
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7.1.10.2. Borrower
shall, and shall cause each other member of the ERISA Group to, comply with
ERISA, the Internal Revenue Code and other applicable Laws applicable to
Pension Plans and Benefit Arrangements. Without limiting the
generality of the foregoing, Borrower shall cause all of its Pension Plans and
all Pension Plans maintained by any member of the ERISA Group to be funded in
accordance with the minimum funding requirements of ERISA and shall make, and
cause each member of the ERISA Group to make, in a timely manner, all
contributions due to Pension Plans, Benefit Arrangements and Multiemployer
Plans.
7.1.10.3. Borrower
and members of the ERISA Group shall not:
(i) fail
to satisfy the minimum funding requirements of ERISA and the Internal Revenue
Code with respect to any Pension Plan;
(ii) request
a minimum funding waiver from the Internal Revenue Service with respect to any
Pension Plan;
(iii) engage
in a Prohibited Transaction with any Pension Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would constitute a
Material Adverse Change;
(iv) permit
the aggregate actuarial present value of all benefit liabilities (whether or not
vested) under each Pension Plan, determined on a plan termination basis, as
disclosed in the most recent actuarial report completed with respect to such
Pension Plan, to exceed, as of any actuarial valuation date, the fair market
value of the assets of such Pension Plan;
(v) fail
to make when due any contribution to any Multiemployer Plan that Borrower or any
member of the ERISA Group may be required to make under any agreement relating
to such Multiemployer Plan, or any Law pertaining thereto;
(vi) withdraw
(completely or partially) from any Multiemployer Plan or withdraw (or be deemed
under Section 4062(e) of ERISA to withdraw) from any Multiple Employer
Pension Plan (as such term is defined in ERISA), where any such withdrawal is
likely to result in a material liability of Borrower or any member of the ERISA
Group;
(vii) terminate,
or institute proceedings to terminate, any Pension Plan, where such termination
is likely to result in a material liability to Borrower or any member of the
ERISA Group;
(viii) make
any amendment to any Pension Plan with respect to which security is required
under Section 307 of ERISA; or
(ix) fail
to give any and all notices and make all disclosures and governmental filings
required under ERISA or the Internal Revenue Code, where such failure is likely
to result in a Material Adverse
Change.
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7.1.11. Intentionally
Omitted.
7.1.12. Liens.
Borrower
shall not at any time create, incur, assume or suffer to exist any Lien on any
of the Collateral Pool Properties, or agree or become liable to do so, except
the Permitted Exceptions and any Liens created by or permitted pursuant to the
Loan Documents. Upon Lender’s reasonable request, Borrower shall
promptly perform or cause to be performed, at Borrower’s sole cost and expense,
a title search satisfactory to Lender, demonstrating compliance with the
provisions of this Section
7.1.12. Notwithstanding the foregoing, after prior written notice to
Lender, Borrower, at its own expense, may (i) contest by appropriate legal,
administrative or other proceeding, promptly initiated and conducted in good
faith and with due diligence, (A) the amount, validity or application in whole
or in part of any Lien, (B) the application of any instrument of record
affecting any Collateral Pool Property or any part thereof (other than the Loan
Documents), or (C) any claims or judgments of mechanics, materialmen, suppliers,
vendors, or any other persons, and may (ii) withhold payment of the same pending
such proceedings if permitted by law, provided that (A) no Event of Default has
occurred and remains uncured, except for, prior to acceleration, an Event of
Default caused by the matter being contested, (B) such proceedings shall suspend
any collection of the contested Lien from the applicable Collateral Pool
Property, Borrower or Lender, or adequate time for the final determination of
such contest shall remain prior to such collection, (C) Borrower shall have
furnished Lender with security (in an amount subject to Lender’s reasonable
approval) to insure the removal of the Lien, together with all reasonably
anticipated interest and penalties thereon, and (D) Borrower shall promptly,
upon the final determination of such contest, as applicable, pay the amount of
any such Liens, together with all costs, interest and penalties which may be
payable in connection therewith.
7.1.13. Liquidations,
Mergers, Consolidations, Acquisitions.
Except as
provided in Section
7.1.14, Borrower shall not dissolve, liquidate or wind-up its affairs, or
become a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other
Person other than the Collateral Pool Properties and all of the membership
interests of any Property Borrower provided any such Property Borrower becomes a
Borrower pursuant to the Loan Documents.
7.1.14. Dispositions
of Assets.
7.1.14.1. Except
for Permitted Transfers or in connection with a corporate merger or
reorganization involving entities which both prior to and following such merger
or reorganization were Affiliates of Borrower, Borrower shall not (i) sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, all or substantially all of its assets or (ii) transfer assets
with the intent to hinder, delay or defraud any creditor, provided that the
foregoing shall not be construed to prevent Borrower from selling, conveying or
leasing its assets in the ordinary course of Borrower’s business, in accordance
with its organizational documents, for valid consideration of reasonably
equivalent value, and as permitted pursuant to the terms of this Agreement,
further provided that following any such transfer Borrower shall (a) remain
solvent immediately thereafter and (b) retain sufficient capital to carry out
its business as previously conducted.
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7.1.14.2. Notwithstanding
the provisions of Section
7.1.14.1, the following transfers by Borrower are permitted without the
consent of Lender:
7.1.14.2.1. A
transfer that occurs by inheritance, devise, or bequest or by operation of law
upon the death of a natural person who is an owner of a Collateral Pool Property
or the owner of a direct or indirect ownership interest in
Borrower;
7.1.14.2.2. The
grant of a leasehold interest in individual dwelling units or commercial spaces
in accordance with the Security Instrument;
7.1.14.2.3. A
sale or other disposition of obsolete or worn out personal property which is
contemporaneously replaced by comparable personal property of equal or greater
value which is free and clear of liens, encumbrances and security interests
other than those created by the Loan Documents;
7.1.14.2.4. The
creation of a mechanic’s or materialmen’s lien or judgment lien against a
Collateral Pool Property which is released of record or otherwise remedied to
Lender’s satisfaction within thirty (30) days of the date of
creation;
7.1.14.2.5. The
issuance or transfer of shares of common stock, limited partnership interests or
other beneficial or ownership interests or other forms of securities in
Borrower, including all varieties of convertible debt, equity and other similar
securities (including interests in Operating Partnership or MAA Texas
convertible into interests in REIT); provided, however, that no Change in
Control occurs as a result of such issuance or transfer, either upon such
transfer or upon the subsequent conversion to equity of such convertible debt or
other securities;
7.1.14.2.6. A
merger with or acquisition of another entity by any Borrower, provided that (i)
said Borrower is the surviving entity after such merger or acquisition, (ii) no
Change in Control occurs, and (iii) such merger or acquisition does not result
in an Event of Default, Potential Default, or Material Adverse
Change;
7.1.14.2.7. A
transfer in connection with any addition, substitution, or release of any
Collateral Pool Property pursuant to the terms and conditions of this
Agreement.
7.1.14.3. Notwithstanding
the provisions of Section
7.1.14.1 or Section
7.1.14.2, the following transfers by Borrower are permitted only with the
consent of Lender:
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7.1.14.3.1. The
grant of an easement, if (i) prior to the granting of the easement Borrower
causes to be submitted to Lender all information required by Lender to evaluate
the easement, (ii) Lender consents to such easement based upon Lender’s
determination that the easement will not result in a Material Adverse Change
with respect to the applicable Collateral Pool Property or to Lender’s interest
therein and (iii) Borrower pays to Lender, on demand, all reasonable costs and
expenses incurred by Lender in connection with Lender’s review of said easement;
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 connecting a Collateral Pool 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 result in a Material Adverse Change with respect to the
applicable Collateral Pool Property or Lender’s interest therein.
7.1.15. Affiliate
Transactions.
Except as
approved in writing by Lender, Borrower shall not enter into or become a party
to any contract, lease or other agreement with any Person directly or indirectly
controlling, controlled by, or under common control with Borrower for the
provision of any service, materials or supplies to any Collateral Pool 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).
7.1.16. Continuation
of or Change in Business.
Borrower
shall not engage in any business activities except as permitted under its
organizational documents and this Agreement.
7.1.17. Changes
in Organizational Documents; Name.
Borrower
and its general partners, managing members, limited partners or principals, as
applicable, shall not (except for any Permitted Transfer) amend in any respect
their respective certificate of incorporation (including any provisions or
resolutions relating to capital stock), by-laws, certificate of limited
partnership, or limited partnership agreement (as applicable) or other formation
agreement or other organizational documents without first sending notice to
Lender and obtaining the prior written consent of Lender, which shall be granted
or denied within thirty (30) Business Days of Lender’s receipt of the proposed
amendment, a brief explanation of its purpose and effect, and such other
documents as Lender may reasonably request; provided, however, Borrower and such
parties described herein shall have the right to make such amendments without
Lender’s consent so long as such amendments (i) do not materially change the
terms of such referenced documents, (ii) do not result in an Event of Default or
Material Adverse Change, and (iii) after giving effect to such amendment,
Borrower shall be in compliance with all the provisions
herein. Borrower shall not amend, revise or otherwise change its name
in any respect, without the prior written consent of Lender.
7.1.18. Properties
Under Development.
Except as
disclosed to Lender in writing, no Collateral Pool Property shall be raw land or
property under construction or development with respect to which property
construction or reconstruction will be needed before the property can be leased
to tenants paying rent.
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7.1.19. Further
Documentation.
In the
event any further documentation or information is required by Lender to enable
Lender to sell the Loan, Borrower shall provide, or cause to be provided to
Lender, at Borrower’s sole cost and expense, such documentation or
information. Borrower shall execute and deliver to Lender such
documentation, including, but not limited to, any amendments, corrections,
deletions or additions to this Agreement, the Revolving Credit Note, and the
other Loan Documents as is required by Lender; provided that Borrower shall not
be required to do anything that has the effect of (i) changing the material
economic or other business terms of this Agreement, the Revolving Credit Note,
or any other Loan Documents or (ii) imposing on Borrower greater liability or
obligation than that set forth in this Agreement, the Revolving Credit Note or
any other Loan Documents.
7.1.20. Compliance
with Lender Requirements.
Borrower
shall comply with the requirements of Lender (a copy of which has been provided
to Borrower) in order to enable Lender to sell the Loan, provided that Borrower
shall not be required to do anything that has the effect of (i) changing the
material economic or other business terms of this Agreement, the Revolving
Credit Note, or any other Loan Documents or (ii) imposing on Borrower greater
liability or obligation than that set forth in this Agreement, the Revolving
Credit Note or any other Loan Documents.
7.1.21. Subordination
of Leases.
Borrower
covenants, if any lease of any Collateral Pool Property is not subordinate to
the Security Instrument securing such Collateral Pool Property, Borrower shall
(i) use a new standard lease form containing subordination language acceptable
to Lender, for all new leases of such Collateral Pool Property; and (ii) execute
the new form of lease on any renewal of any existing leases of such Collateral
Pool Property.
7.1.22. Enforceability
of Loan Documents.
In the
event that any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party’s
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof (except to the extent that enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors’ rights generally or
limiting the right to specific performance) or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested, resulting in the
failure to provide the practical benefit of the respective Liens, security
interests, rights, titles, interests, remedies, powers or privileges intended to
be created thereby, Borrower (with Lender’s cooperation) shall use best efforts
to cure any such defect(s) in such Loan Document(s), provided that if Borrower
is unable to cure any such defect(s) within a reasonable time period, not to
exceed thirty (30) days, Lender may in its discretion, upon ten (10) days
written notice to Borrower, accelerate Borrower’s obligations under the
Revolving Credit Note, except that if the Loan Documents lack enforceability
through no fault of the Borrower as determined by Lender in its sole discretion,
or as determined by a court of competent jurisdiction in a final, unappealable
decision, Borrower shall have no obligation to pay the Prepayment Fee and the
liquidated Unused Facility Fee, Minimum Usage Fee, and Minimum Servicing Fee
otherwise due hereunder, provided that the foregoing shall not excuse Borrower
from performance of all actions necessary to terminate each Qualified Rate Swap
Agreement, which shall include, but not be limited to, compliance with all
notice requirements under each Qualified Rate Swap Agreement and the deposit
with Lender for payment to the applicable counterparty of each Qualified Rate
Swap Agreement, any payments due under any Qualified Rate Swap Agreement and all
Hedge Fees.
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7.1.23. ERISA
Matters.
The
provisions set forth in this Section 7.1.23, shall only
apply to the extent Borrower is at any time and from time to time subject to the
provisions of ERISA. In the event that any of the following
occurs: (i) any Reportable Event, which Lender determines in
good faith constitutes grounds for the termination of any Pension Plan by the
PBGC or the appointment of a trustee to administer or liquidate any Pension
Plan, shall have occurred and be continuing; (ii) proceedings shall have
been instituted or other action taken to terminate any Pension Plan, or a
termination notice shall have been filed with respect to any Pension Plan;
(iii) a trustee shall be appointed to administer or liquidate any Pension
Plan; (iv) the PBGC shall give notice of its intent to institute
proceedings to terminate any Pension Plan or Pension Plans or to appoint a
trustee to administer or liquidate any Pension Plan; and, in the case of the
occurrence of (i), (ii), (iii) or (iv) above, Lender determines in
good faith that the amount of Borrower’s liability is likely to cause a Material
Adverse Change; (v) Borrower or any member of the ERISA Group shall fail to
make any contributions when due to a Pension Plan or a Multiemployer Plan;
(vi) Borrower or any member of the ERISA Group shall make any amendment to
a Pension Plan with respect to which security is required under Section 307
of ERISA; (vii) Borrower or any member of the ERISA Group shall withdraw
completely or partially from a Multiemployer Plan; or (viii) any applicable Law,
rule or regulation is adopted, changed or interpreted by any governmental
authority or agency or court with respect to or otherwise affecting one or more
Pension Plans, Multiemployer Plans or Benefit Arrangements; and, with respect to
any of the events specified in (v), (vi), (vii) or (viii), Lender determines in
good faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by Borrower and the other
members of the ERISA Group, Borrower shall use best efforts to cure such
occurrence(s), provided that if Borrower is unable to cure any such
occurrence(s) within a reasonable time period, not to exceed thirty (30) days,
Lender may in its discretion, upon ten (10) days notice to Borrower, accelerate
Borrower’s obligations under the Revolving Credit Note.
7.2.
Reporting Requirements.
Borrower
covenants and agrees that until the later of (i) payment in full of the Loan and
satisfaction of all of Borrower’s other Obligations hereunder and under the
other Loan Documents, including, but not limited to, performance of all actions
necessary to terminate each Qualified Rate Swap Agreement, which shall include,
but not be limited to, compliance with all notice requirements under each
Qualified Rate Swap Agreement and the deposit with Lender for payment to the
applicable counterparty of each Qualified Rate Swap Agreement, any payments due
under any Qualified Rate Swap Agreement and all Hedge Fees and (ii) the
Expiration Date, Borrower will furnish or cause to be furnished to
Lender:
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7.2.1. Notice
of Default.
If to
Borrower’s knowledge an Event of Default or Potential Default has occurred with
respect to Borrower, a certificate signed by an Authorized Officer of Borrower
setting forth the details of such Event of Default or Potential Default and the
actions that Borrower proposes to take with respect thereto;
7.2.2. Notice
of Litigation.
Promptly
after the commencement thereof, notice of all actions, suits, proceedings or
investigations before or by any Official Body or any other Person which (a)
relate to the Collateral, or (b) involve a claim or series of claims in excess
of One Million and NO/100 Dollars ($1,000,000.00) which is not covered by
Borrower’s insurance policies and which if adversely determined would constitute
a Material Adverse Change; and
7.2.3. Intentionally
Omitted.
7.3.
Additional Affirmative Covenants.
7.3.1. Each
Borrower, with respect to itself, agrees and covenants with Lender
that, at all times during the term of this Agreement:
7.3.1.1. Compliance
with Agreements. 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.
7.3.1.2. Maintenance
of REIT Status. During the term of this Agreement, REIT 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.
7.3.1.3. Financial
Statements; Accountants’ Reports; Other Information. 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 Borrower’s
financial transactions and assets and (y) the results of the operation of
each Collateral Pool Property and copies of all written contracts, leases and
other instruments which affect each Collateral Pool 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, Borrower shall furnish, or cause to be
furnished, to Lender:
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(a) Annual
Financial Statements. As soon as available, and in any event within
ninety (90) days after the close of its fiscal year during the term of this
Agreement, the audited balance sheet of REIT and its subsidiaries as of the end
of such fiscal year, the audited statement of income, equity and
retained earnings of REIT and its subsidiaries for such fiscal year and the
audited statement of cash flows of REIT 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 REIT’s independent certified public accountants to the effect that such
financial statements have been prepared in accordance with GAAP, consistently
applied, and that such financial statements fairly present the results of its
operations and financial condition for the periods and dates indicated, with
such certification to be free of exceptions and qualifications as to the scope
of the audit or as to the going concern nature of the business.
(b) Quarterly
Financial Statements. As soon as available, and in any event within
forty-five (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
REIT and its subsidiaries as of the end of such fiscal quarter, the unaudited
statement of income and retained earnings of REIT and its subsidiaries and the
unaudited statement of cash flows of REIT 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 of REIT (who shall be an Authorized
Officer) 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 Collateral Pool Property accompanied by a certificate of the
Chief Financial Officer of Borrower to the effect that each such statement of
income and expenses fairly, accurately and completely presents the operations of
each such Collateral Pool Property for the period indicated.
(d) Annual
Property Statements. On an annual basis, within the first forty-five
(45) days of the applicable calendar year, an annual statement of income and
expenses of each Collateral Pool Property accompanied by a certificate of the
Chief Financial Officer of Borrower to the effect that each such statement of
income and expenses fairly, accurately and completely presents the operations of
each such Collateral Pool Property for the period indicated.
(e) Updated
Rent Rolls. Upon Lender’s request (but not more frequently than
quarterly), a current rent roll for each Collateral Pool 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 Lender and accompanied by a certificate of the Chief Financial
Officer of Borrower to the effect that each such rent roll fairly, accurately
and completely presents the information required therein.
(f) Security
Deposit Information. Upon Lender’s request, an accounting of all
security deposits held in connection with any lease of any part of any
Collateral Pool 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 Lender to access information
regarding such accounts.
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(g) Security
Law Reporting Information. So long as REIT 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 REIT, or any Person directly or indirectly
controlling, controlled by, or under common control with REIT, to their
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
REIT, or any Person directly or indirectly controlling, controlled by, or under
common control with REIT, with the Securities and Exchange Commission or other
Governmental Authorities, and (c) all statements made available generally by
REIT, or any Person directly or indirectly controlling, controlled by, or under
common control with REIT, to the public concerning material developments in the
business of REIT or any Person directly or indirectly controlling, controlled
by, or under common control with REIT.
(h) Accountants’
Reports. Promptly upon receipt thereof, copies of any reports or
management letters submitted to 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 Borrower shall only be required
to deliver such reports and management letters to the extent that they relate to
any Borrower or any Collateral Pool Property.
(i) Annual
Budgets. Promptly, and in any event within sixty (60) days after the
start of the calendar year, an annual budget for each Collateral Pool Property
for such calendar year, setting forth an estimate of all of the costs and
expenses, including capital expenses, of maintaining and operating each
Collateral Pool Property.
(j) Borrower
Plans and Projections. If prepared by Borrower, within ninety (90)
days after the beginning of each fiscal year, copies of (i) Borrower’s business
plan for the current and the succeeding fiscal year, (ii) Borrower’s annual
budget (including capital expenditure budgets) and projected budgets for each
Collateral Pool Property for the current and the succeeding calendar year; and
(iii) Borrower’s financial projections for the current and the succeeding fiscal
year, as prepared by Borrower’s Chief Financial Officer and in a format and with
such detail as Lender may require.
(k) Strategic
Plan. Within ninety (90) days after the end of each fiscal year of
Borrower, Borrower shall deliver to Lender a written narrative discussing
Borrower’s publicly disclosed 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
Borrower’s Strategic Plan materially changes, then such person shall deliver to
Lender the Strategic Plan as so changed.
(l) Annual
Rental and Sales Comparable Analysis. Within thirty (30) days after
Lender’s request, a rental and sales comparable analysis of the local real
estate market in which each Collateral Pool Property is located, in a form
approved by Lender.
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(m) Federal
Tax Returns. Upon request of Lender, the federal tax returns of
Borrower.
(n) Other
Reports. Promptly upon receipt thereof, all schedules, financial
statements or other similar reports delivered by Borrower pursuant to the Loan
Documents or requested by Lender with respect to Borrower’s business affairs or
condition (financial or otherwise) or any of the Collateral Pool
Properties.
(o) Certification. All
certifications required to be delivered pursuant to this Section 7.3 shall run directly
to and be for the benefit of Lender.
7.3.1.4. Certificate
of Compliance. Borrower shall deliver to Lender concurrently with the
delivery of the financial statements and/or reports required to be delivered
pursuant to Section 7.3.1.2(a)
and (b) above a certificate signed by the Chief Financial Officer of
Borrower stating that, to the best knowledge of such individual following
reasonable inquiry, (i) setting forth in reasonable detail the calculations
required to establish whether each Borrower was in compliance with the
requirements of Sections
7.5.1.1 through 7.5.1.5 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
Default has occurred, or if an Event of Default or Potential Default has
occurred, specifying the nature thereof in reasonable detail and the action
which the relevant Borrower is taking or proposes to take with respect
thereto. Any certificate required by this Section 7.3.1.3 shall run
directly to and be for the benefit of Lender.
7.3.1.5. Maintain
Licenses. Borrower shall procure and maintain in full force and
effect all licenses, necessary 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, necessary permits, charters and
registrations.
7.3.1.6. 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, Borrower shall permit Lender:
(a) to
inspect, make copies and abstracts of, and have reviewed or audited, such of
Borrower’s books and records as may relate to the Loan or any Collateral Pool
Property, subject to the provisions of Section 7.1.4;
(b) to
discuss Borrower’s affairs, finances and accounts with any of Borrower’s
officers, partners and employees;
(c) to
discuss the Collateral Pool Properties’ conditions, operations or maintenance
with the managers of such Collateral Pool Properties and the officers and
employees of Borrower;
(d) to
discuss Borrower’s affairs, finances and accounts with its independent public
accountants; and
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(e) to
receive any other information that the Lender deems reasonably necessary or
relevant in connection with any Loan Request, any Loan Document or the
Loan.
7.3.1.7. Inform
the Lender of Material Events. 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 Borrower has actual
knowledge:
(a) Defaults. The
occurrence of any Event of Default or any Potential 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 Change;
(c) Legal
Proceedings. The commencement or threat of, or amendment to, any proceedings by
or against 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 Change;
(d) Bankruptcy
Proceedings. The commencement of any proceedings by or against
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 Official Body having
jurisdiction over Borrower that (A) Borrower is being placed under regulatory
supervision, (B) any license, Permit, charter, membership or registration
material to the conduct of Borrower’s business or the Collateral Pool Properties
is to be suspended or revoked or (C) Borrower is to cease and desist any
practice, procedure or policy employed by 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 Change;
(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 material damage, including personal injury
(including sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, pollution, contamination or other adverse effects on the
environment, removal, cleanup or remedial action or for fines, penalties or
restrictions, resulting from or based upon (a) the existence or occurrence, or
the alleged existence or occurrence, of a Hazardous Substance Activity or (b)
the violation, or alleged violation, of any Hazardous Materials Laws in
connection with any Collateral Pool Property or any of the other assets of
Borrower;
(g) Material
Adverse Effects. The occurrence of any act, omission, change or event which has
a Material Adverse Change, subsequent to the date of the most recent audited
financial statements of Borrower delivered to the Lender pursuant to Section
7.3.1.3;
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(h) Accounting
Changes. Any material change in any Borrower’s accounting policies or financial
reporting practices;
(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 any
Borrower; and
(j)
Default on Indebtedness. The occurrence of any event that
results in or could result in (i) any imminent default, default or waiver of
default in respect of any Indebtedness having an unpaid principal balance of
$1,000,000 or more, (ii) the failure of any Borrower to pay when due or within
any applicable grace period any Indebtedness of any Borrower which would result
in a Material Adverse Change, or (iii) any Indebtedness of any Borrower becoming
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 which would result in a Material
Adverse Change.
7.3.1.8. Compliance
with Applicable Laws. Borrower shall comply in all material respects
with all Laws now or hereafter affecting any Collateral Pool Property or any
part of any Collateral Pool Property or requiring any alterations, repairs or
improvements to any Collateral Pool Property. Borrower shall procure
and continuously maintain in full force and effect, and shall abide by and
satisfy all material terms and conditions of all necessary permits.
7.3.1.9. Warranty
of Title. The relevant Borrower shall warrant and defend (a) the title to each
Collateral Pool Property and every part of each Collateral Pool 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. 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
Collateral Pool Property, other than with respect to a Permitted Lien, is
claimed by others.
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7.3.1.10. Defense
of Actions. Borrower shall appear in and defend any action or
proceeding purporting to affect the security for this Agreement or the rights or
power of the Lender hereunder, and shall pay all costs and expenses, including
the cost of evidence of title and reasonable attorneys’ fees, in any such action
or proceeding in which Lender may appear. If Borrower fails to
perform any of the covenants or agreements contained in this Agreement, or if
any action or proceeding is commenced that is not diligently defended by
Borrower which affects in any material respect Lender’s interest in any
Collateral Pool Property or any part thereof, including eminent domain, code
enforcement or proceedings of any nature whatsoever under any Law, whether now
existing or hereafter enacted or amended, then Lender may, but without
obligation to do so and without notice to or demand upon Borrower and without
releasing Borrower from any Obligation, make such appearances, disburse such
sums and take such action as Lender deems necessary or appropriate to protect
Lender’s interest, including disbursement of attorney’s fees, entry upon such
Collateral Pool Property to make repairs or take other action to protect the
security of said Collateral Pool Property, and payment, purchase, contest or
compromise of any encumbrance, charge or lien which in the judgment of 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 Lender is made a
party or (iii) of the bankruptcy of Borrower or an assignment by Borrower for
the benefit of their respective creditors, Borrower shall be chargeable with and
agrees to pay all reasonable 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.
7.3.1.11. Alterations
to the Collateral Pool Properties. Except as otherwise provided in
the Loan Documents, Borrower shall have the right to undertake any alteration,
improvement, demolition, removal or construction (collectively, “Alterations”)
to the Collateral Pool Property(ies) which it owns without the prior consent of
Lender; provided, however, that in any case, no such Alteration shall be made to
any Collateral Pool Property without the prior written consent of Lender if (i)
such Alteration could reasonably be expected to adversely affect the value of
such Collateral Pool 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 Collateral Pool 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 twelve (12) months from the date of commencement or in the last year of the
term of this Agreement. Notwithstanding the foregoing, Borrower must
obtain Lender’s prior written consent to construct Alterations with respect to
the Collateral Pool Property costing in excess of, with respect to any
Collateral Pool Property, the lesser of (a), the number of units in such
Collateral Pool Property multiplied by Two Thousand and NO/100 Dollars
($2,000.00), or (b) Three Hundred Fifty Thousand and NO/100 Dollars
($350,000.00), and Borrower must give prior written notice to the Lender of its
intent to construct Alterations with respect to such Collateral Pool Property
costing in excess of One Hundred and Fifty Thousand and NO/100 Dollars
($150,000.00); provided, however, that the preceding requirements shall not be
applicable to Alterations made, conducted or undertaken by Borrower as part of
Borrower’s routine maintenance and repair of the Collateral Pool Properties as
required by the Loan Documents.
7.3.1.12. Loan
Document Taxes. If any tax, assessment or Imposition (other than a franchise tax
or excise 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 Collateral Pool Properties, or the Lender by
reason of or as holder of the Loan Documents, 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 Borrower from
paying the Loan Document Taxes to or for the Lender, Borrower shall enter into
such further instruments as may be permitted by law to obligate Borrower to pay
such Loan Document Taxes.
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7.3.1.13. Intentionally
Omitted.
7.3.1.14. Monitoring
Compliance. Upon the request of Lender or Servicer, from time to
time, Borrower shall promptly provide to Lender or Servicer such documents,
certificates and other information as may reasonably be deemed necessary to
enable Lender or Servicer to perform their respective functions under the
Servicing Agreement.
7.3.1.15. Leases. Each
unit in each Collateral Pool Property will be leased pursuant to the form lease
delivered to, and acceptable to, Lender, with no material modifications to such
approved form lease, except as disclosed in writing to Lender.
7.3.1.16. Change
in Senior Management.
(a) REIT
shall give Lender notice of any change in the identity of Senior
Management.
(b) Within
thirty (30) Business Days after receipt of REIT’s notice pursuant to Section 7.3.1.16(a), Lender
shall have the right to terminate this Agreement and the parties’ obligations
under the Loan Documents by giving notice of such termination to
Borrower. In such event, this Agreement and the parties’ obligations
under the Loan Documents shall terminate with the same effect as if Borrower had
elected to terminate this Agreement pursuant to Section 2.14.1.1 (including
Borrower’s obligation, to pay in full all of the Borrowing Tranches outstanding
on the Expiration Date, including any other charges under the Revolving Credit
Note, this Agreement, or any other Loan Documents; provided however, that
Borrower shall not be obligated to pay fees or charges described in Section 2.14.2.2 other than
the Prepayment Fee), except that, for these purposes, the Expiration Date shall
be the one hundred and eightieth (180th) day
after the date on which Borrower first receives Lender’s termination
notice.
(c) If
Lender exercises its termination right pursuant to subsection (b), Borrower
shall have a period of one hundred twenty (120) days, commencing with the date
on which Borrower receives Lender’s termination notice, to request that Lender
rescind its termination notice. Borrower may include in its request any
undertakings which Borrower is willing to make in order to obtain such a
rescission. Lender shall give Borrower notice of its acceptance or rejection of
Borrower’s request within thirty (30) Business Days after Borrower makes the
request. If Lender accepts the request, Lender shall give Borrower a
notice that the termination notice shall be deemed rescinded and of no further
force or effect, and this Agreement and the Credit Facility shall continue in
accordance with, and subject to the terms, conditions and limitations contained
in, this Agreement.
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7.3.1.17. 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, in form and substance satisfactory to Lender, amending the
effective date of the applicable title insurance policy to the date of the title
search performed in connection with the endorsement. Borrower shall
pay for the cost and expenses incurred by 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
twelve (12) month period.
7.3.1.18. Ownership
of Collateral Pool Properties. A Borrower shall be the sole owner of each of the
Collateral Pool Properties free and clear of any Liens other than Permitted
Liens.
In the
event of any conflict between the terms and provisions of Section 7.3 and the terms and
provisions of any other section of this Agreement, the terms and provisions of
such other section shall prevail and the terms and provisions of Section 7.3 shall be
subordinate thereto.
7.4. Additional
Negative Covenants.
7.4.1. Each
Borrower, with respect to itself, agrees and covenants with Lender that, at all
times during the term of this Agreement:
7.4.1.1. Zoning. Borrower
shall not initiate or consent to any zoning reclassification of any Collateral
Pool Property or seek any variance under any zoning ordinance or use or permit
the use of any Collateral Pool 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.
7.4.1.2. Principal
Place of Business. Borrower shall not change the location of its
books and records, without first giving thirty (30) days’ prior written notice
to Lender.
7.4.1.3. Condominiums. Borrower
shall not submit any Collateral Pool Property to a condominium regime during the
term of this Agreement.
7.4.1.4. Restrictions
on Partnership Distributions. 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 Default or
an Event of Default has occurred and remains uncured.
7.4.1.5. Lines
of Business. Borrower shall not be substantially involved in any
businesses other than the acquisition, ownership, development, construction,
leasing, financing or management, directly or through Affiliates, of multifamily
residential properties, and the conduct of these businesses shall not violate
the organizational documents pursuant to which it is formed.
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7.4.1.6. Limitation
on Unimproved Real Property and New Construction. Borrower shall not
permit:
(a) the
value of its real property which is not improved (except real property on which
phases of a Collateral Pool 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 ten percent (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 twenty percent (20%) of the value of all of its Real
Estate Assets.
All of
the foregoing values shall be reasonably determined by Lender.
7.4.1.7. Dividend
Payout. Borrower shall not make a dividend payment (including both
common stock dividends, unitholder distributions, and preferred stock dividends)
which is greater than ninety percent (90%) of Funds from Operations or that
would otherwise violate the United States federal tax laws governing the
qualifications of real estate investment trusts. Upon written
pre-approval of Lender, exceptions may be made where the Board of Directors of
REIT determines, in good faith, that a special dividend must be paid to avoid
taxes due to excess gains from the sale of multifamily residential properties.
In determining compliance with the dividend payout ratio set forth herein, the
amount of dividends paid and Funds from Operations shall be calculated for the
trailing twelve (12) month period preceding the date of
determination.
In the
event of any conflict between the terms and provisions of Section 7.4 and the terms and
provisions of any other section of this Agreement, the terms and provisions of
such other section shall prevail and the terms and provisions of Section 7.4 shall be
subordinate thereto.
7.5.
Additional Financial Covenants.
7.5.1. Each
Borrower, except those subject to pass-through tax classification, agrees and
covenants with Lender that, at all times during the term of this
Agreement:
7.5.1.1. Compliance
with Concentration Test. Borrower shall at all times maintain the
Collateral so that (i) the aggregate Market Values of any group of Collateral
Pool Properties located within a one mile radius shall not exceed thirty percent
(30%) of the aggregate Market Values of all Collateral Pool Properties and (ii)
the Market Value of any one Collateral Pool Property shall not exceed thirty
percent (30%) of the aggregate market value of all Collateral Pool Properties;
provided however, that the foregoing limitations shall not apply until the
Collateral shall consist of at least four (4) Collateral Pool
Properties.
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7.5.1.2. REIT
Compliance Test. The REIT shall maintain at least seventy percent
(70%) of its outstanding debt balances, either fixed or hedged, using an
accepted methodology at all times, to be tested quarter annually.
7.5.1.3. Compliance
with REIT's Net Worth Test. The REIT shall at all times maintain its
Net Worth so that it is not less than the highest Net Worth covenant required by
any other financial institution where REIT maintains a bank line (whether
secured or unsecured), but in no event less than Five Hundred Fifty Million and
NO/100 Dollars ($550,000,000) plus sixty-five percent (65%) of proceeds (less
all reasonable and customary expenses and costs) of equity offerings, net of
redemptions, consummated by the REIT after June 29, 2004.
7.5.1.4. Compliance
with REIT’s Total Indebtedness to Consolidated Total Assets
Ratio. REIT shall not permit the ratio of Consolidated Total
Indebtedness to Consolidated Total Assets to exceed sixty percent (60%) at any
time.
7.5.1.5. Compliance
with REIT’s Consolidated EBITDA to Interest Ratio. REIT shall not
permit the Consolidated EBITDA to Interest Ratio computed for any fiscal quarter
to be less than two hundred percent (200%) for any period of four (4)
consecutive fiscal quarters (treated as a single accounting
period).
7.5.1.6.
Compliance with REIT’s Consolidated EBITDA to Fixed Charges
Ratio. REIT shall not permit the Consolidated EBITDA to Fixed Charges
Ratio computed for any fiscal quarter or year to be less than one hundred fifty
percent (150%) for any period of four (4) consecutive fiscal quarters (treated
as a single accounting period).
In the
event of any conflict between the terms and provisions of Section 7.5 and the terms and
provisions of any other section of this Agreement, the terms and provisions of
such other section shall prevail and the terms and provisions of Section 7.5 shall be
subordinate thereto.
8.
DEFAULT
8.1.
Events of Default.
The
occurrence or existence of any one or more of the following events or conditions
after any applicable cure period (whatever the reason therefor and whether
voluntary, involuntary or effected by operation of Law) shall be an “Event of
Default”:
8.1.1. Payments
Under Loan Documents.
Borrower
shall fail to pay any principal under any Borrowing Tranche (including scheduled
installments, mandatory prepayments or the payment due at maturity), or shall
fail to pay any interest on any Loan or any other amount owing hereunder or
under any other Loan Documents or under any Qualifying Rate Cap Agreements or
Qualifying Rate Swap Agreements after such principal, interest or other amount
becomes due in accordance with the terms hereof or thereof;
77
8.1.2. Breach
of Representation or Warranty.
Any
representation or warranty made at any time by Borrower herein or in any other
Loan Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished and
the result of such false or misleading representation, warranty, certificate,
other instrument or statement is a Material Adverse Change which is not cured
within thirty (30) days after written notice thereof from Lender to Borrower, or
within such additional reasonable time as may be necessary, in Lender’s judgment
to cure such breach, in the event Borrower commences such cure within such
thirty (30) day period and thereafter diligently pursues such cure, not to
exceed sixty (60) additional days;
8.1.3. Breach
of Covenant.
Borrower
shall be in default in the observance or performance of any covenant, condition
or provision of this Agreement or under any other Loan Document (other than any
default specified as an “Event of Default” under (i) the other provisions of
this Article 8 or (ii)
Sections 22(a) through (f) of any Security Instrument with respect to the
initial Collateral Pool Property(ies) (or the same sections or any similar
sections of any Security Instrument with respect to any future Collateral Pool
Property(ies)), and shall fail to cure such default within thirty (30) days
after written notice thereof from Lender to Borrower of such default, provided
that, no such notice or grace period shall apply in the case of any default
which could, in Lender’s judgment, absent immediate exercise by Lender of a
right or remedy under this Agreement or any of the other Loan Documents, result
in harm to Lender, impairment of the Note, or any rights of Lender under this
Agreement or any security given under any other Loan Document;
8.1.4. Event
of Default under the Loan Documents.
Borrower
shall be in default under any provision of the Revolving Credit Note, or any
other Loan Document, including, without limitation, any Security Instrument,
beyond any applicable cure period;
8.1.5. Final
Judgments or Orders.
Any final
judgments or orders for the payment of money in excess of Five Hundred Thousand
and NO/100 Dollars ($500,000.00) in the aggregate shall be entered against
Borrower by a court having jurisdiction in the premises, which judgment is not
discharged, vacated, bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry or which is not otherwise covered by
insurance;
8.1.6. Notice
of Lien or Assessment.
A notice
of Lien or assessment in excess of One Million Dollars and NO/100
($1,000,000.00) which is not a Permitted Exception is filed of record with
respect to all or any part of any of Borrower’s assets, or any taxes or debts
owing at any time or times hereafter to the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal or other
governmental agency, including the PBGC, becomes payable and the same is not
paid or otherwise discharged within thirty (30) days after the same becomes
payable, unless the same is being contested in accordance with the Loan
Documents;
78
8.1.7. Insolvency.
Borrower
ceases to be Solvent or admits in writing its inability to pay its debts as they
mature;
8.1.8. Cessation
of Business.
Borrower
ceases to conduct the business of Borrower, or Borrower is enjoined, restrained
or in any way prevented by court order from conducting all or any material part
of the business of Borrower, and such injunction, restraint or other preventive
order is not dismissed within ten (10) Business Days after the entry
thereof;
8.1.9. Lien
Priority.
The Liens
granted to and for the benefit of Lender do not constitute valid first priority
Liens (subject to Permitted Exceptions) under applicable Laws and such default
shall continue unremedied for a period of thirty (30) Business Days after
Borrower’s knowledge of the occurrence thereof or such additional reasonable
time period necessary to cure such default, in the event Borrower commences such
cure within such thirty (30) day period and thereafter diligently pursues such
cure, not to exceed sixty (60) additional days (such cure period to be
applicable only in the event such default can be remedied by corrective action
of Borrower to the satisfaction of Lender as determined by Lender in its
reasonable discretion); or
8.1.10. Bankruptcy
and Other Proceedings.
Borrower
voluntarily files for bankruptcy protection under the United States Bankruptcy
Code or voluntarily becomes subject to any reorganization, receivership,
insolvency proceeding or other similar proceeding pursuant to any other federal
or state law affecting debtor and creditor rights, or an involuntary case is
commenced against Borrower by any creditor (other than Lender) of Borrower
pursuant to the United States Bankruptcy Code or other federal or state law
affecting debtor and creditor rights and is not dismissed or discharged within
sixty (60) days after filing.
8.1.11. Material
Adverse Change.
There
shall occur a Material Adverse Change which is not corrected to the reasonable
satisfaction of Lender within thirty (30) days after the occurrence of such
Material Adverse Change, or such additional reasonable time period necessary to
cure such Material Adverse Change, in the event Borrower commences such cure
within such thirty (30) day period and thereafter diligently pursues such cure,
not to exceed thirty (30) additional days (such cure period to be applicable
only in the event such default can be remedied by corrective action of Borrower
to the satisfaction of Lender as determined by Lender in its reasonable
discretion).
79
8.1.12. Purchase
of Qualifying Rate Cap Agreements and Qualifying Rate Swap
Agreements.
Borrower
shall fail to purchase a Qualifying Rate Cap Agreement or a Qualifying Rate Swap
Agreement, as applicable, within ten (10) days of the addition of any Collateral
to the Collateral Pool which increases the amount the Borrower is permitted to
borrow under the Loan and to the extent required under Section 2.6.1.5
hereof.
8.2.
Consequences of Event of Default.
8.2.1. Remedies
Cumulative.
Upon an
Event of Default under Section
8.1 Lender shall be entitled to all of the rights and remedies granted to
Lender under the Loan Documents and applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by
Law.
8.2.2. Acceleration
of Loan.
Upon an
Event of Default, Lender shall be entitled, without limitation, to (a)
accelerate the Loan and all of Borrower’s Obligations hereunder, and to (b)
collect as liquidated damages (i) a Prepayment Fee applicable to any outstanding
Borrowing Tranches, (ii) any Hedge Fees and other costs and expenses it may
incur in terminating any Qualified Rate Swap Agreement, (iii) the liquidated
Unused Facility Fee, (iv) the liquidated Minimum Usage Fee, and (v) the
liquidated Minimum Servicing Fee, all in accordance with Section 2.14.2.
8.3. Notice
of Sale.
Any
notice required to be given by Lender of a sale, lease, or other disposition of
the Collateral or any other intended action by Lender under the Uniform
Commercial Code, if given in writing at least ten (10) days prior to such
proposed action, shall constitute commercially reasonable and fair notice
thereof to Borrower.
9.
MISCELLANEOUS
9.1. Cooperation
by Borrower; Borrower’s Obligations.
Borrower
grants to Lender the right to distribute on a confidential basis financial and
other information concerning Borrower, each indemnitor, other Person, the
Collateral Pool Properties, and other pertinent information with respect to the
Loan to any party purchasing securities issued by Lender.
9.2. Successors
and Assigns.
This
Agreement shall be binding upon and shall inure to the benefit of Lender,
Borrower and their respective successors and assigns, except that Borrower may
not assign or transfer any of its respective rights or Obligations hereunder or
any interest herein without Lender’s prior written consent.
80
9.3. Modifications,
Amendments or Waivers.
Lender
and Borrower may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the
rights of Lender or Borrower hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of the Obligations
of Borrower hereunder or thereunder. Any such written agreement,
waiver or consent shall be effective to bind Lender and Borrower.
9.4. Forbearance.
Lender
may (but shall not be obligated to) agree with Borrower, from time to time, and
without giving notice to, or obtaining the consent of, or having any effect upon
the obligations of any guarantor or other third party obligor, to take any of
the following actions: extend the time for payment of all or any part
of the Loan; reduce the payments due under this Agreement, the Revolving Credit
Note, or any other Loan Document; release anyone liable for the payment of any
amounts under this Agreement, the Revolving Credit Note, or any other Loan
Document; modify the terms and time of payment of the Loan; join in any
extension or subordination agreement; release any Collateral Pool Property; take
or release other or additional security; modify the rate of interest or period
of amortization of the Revolving Credit Note or change the amount of the monthly
installments payable under the Revolving Credit Note; and otherwise modify this
Agreement, the Revolving Credit Note, or any other Loan Document.
Any
forbearance by Lender in exercising any right or remedy under the Revolving
Credit Note, this Agreement, or any other Loan Document or otherwise afforded by
applicable Law, shall be in writing and shall not be deemed a waiver of or
preclude the exercise of any right or remedy. The acceptance by
Lender of payment of all or any part of the Loan after the due date of such
payment, or in an amount which is less than the required payment, shall not be a
waiver of Lender’s right to require prompt payment when due of all other
payments on account of the Loan or to exercise any remedies for any failure to
make prompt payment. Enforcement by Lender of any security for the Loan shall
not constitute an election by Lender of remedies so as to preclude the exercise
of any other right available to Lender. Lender’s receipt of any
awards or proceeds shall not operate to cure or waive any Event of
Default.
9.5. Remedies
Cumulative.
Each
right and remedy provided in this Agreement is distinct from all other rights or
remedies under this Agreement or any other Loan Document or afforded by
applicable Law, and each shall be cumulative and may be exercised concurrently,
independently, or successively, in any order.
81
9.6. Reimbursement
and Indemnification of Lender and Servicer by Borrower; Taxes.
Borrower
agrees unconditionally upon demand to pay or reimburse to Lender and Servicer
and to hold Lender and Servicer harmless against (i) liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements (including
fees and expenses of counsel for Lender and Servicer, incurred by Lender and
Servicer (a) in connection with the administration and interpretation of this
Agreement, and other instruments and documents to be delivered hereunder
including, without limitation, any Rate Cap Agreements or Rate Swap Agreements,
(b) relating to any amendments, waivers or consents pursuant to the provisions
hereof, (c) in connection with the enforcement of this Agreement or any other
Loan Document, or collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(d) in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Lender or Servicer, in its capacity as such,
in any way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by Lender or Servicer hereunder or
thereunder, provided that no Borrower shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (A) if the same results from Lender’s negligent
act or omission or willful misconduct or breach of this Agreement or any action
taken with respect to a Collateral Pool Property after Lender has acquired title
to such Collateral Pool Property in a foreclosure proceeding, or (B) if Borrower
was not given notice of the subject claim and the opportunity to participate in
the defense thereof, at its expense (except that Borrower shall remain liable to
the extent such failure to give notice does not result in a loss to
Borrower). Borrower agrees unconditionally to pay all stamp,
document, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by Lender to be payable in connection with this
Agreement or any other Loan Document, and Borrower agrees unconditionally to
hold Lender and Servicer harmless from and against any and all present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying any such taxes, fees or impositions.
9.7.
Holidays.
Whenever
the funding of a Borrowing Tranche hereunder shall be due on a day which is not
a Business Day such payment shall be due on the next Business Day and such
extension of time shall be included in computing interest and fees, except that
the Loan shall be due on the Business Day preceding the Expiration Date if the
Expiration Date is not a Business Day. Whenever any payment or action
to be made or taken hereunder (other than payment of the Loan) shall be stated
to be due on a day which is not a Business Day, such payment or action shall be
made or taken on the next following Business Day, and such extension of time
shall not be included in computing interest or fees, if any, in connection with
such payment or action.
9.8.
Notices.
All
notices, requests, demands, directions and other communications given to or made
upon any party hereto under the provisions of this Agreement shall be in writing
unless otherwise expressly provided hereunder and shall be delivered or sent, if
to Lender, to Lender at the address and numbers set forth below, and if to
Borrower or Proposed Borrower, to each of them at the addresses and numbers set
forth below, or in accordance with any subsequent unrevoked written direction
from any party to the others. Each notice shall be deemed given on
the earliest to occur of (1) the date when the notice is received by the
addressee if by hand delivery; (2) the first Business Day after the notice if
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third Business Day
after the notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested.
82
Lender’s
Notice Address and Numbers:
Financial
Federal Savings Bank
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇
▇▇▇ ▇▇▇▇▇▇, Vice President
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy to:
Financial
Federal Savings Bank
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Senior Vice President
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Borrower’s
Notice Address:
Mid-America
Apartment Communities, Inc.
Mid-America
Apartments, L.P.
Mid-America
Apartments of Texas, L.P.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇
▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to:
Bass,
▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
9.9. Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision, and all other
provisions shall remain in full force and effect. This Agreement
contains the entire agreement between the parties as to the rights granted and
the obligations assumed in this Agreement. This Agreement may not be
amended or modified except by a writing signed by the party against whom
enforcement is sought.
83
9.10. Governing
Law; Consent to Jurisdiction and Venue.
This
Agreement, and any Loan Document which does not itself expressly identify the
Law that is to apply to it, shall be governed by the Laws of the Commonwealth of
Virginia. Borrower agrees that any controversy arising under or in relation to
this Agreement or any other Loan Document which does not expressly identify the
Law that is to apply to it, shall be litigated exclusively in the courts of the
Commonwealth of Virginia. The state and federal courts and
authorities with jurisdiction in the Commonwealth of Virginia shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to this Agreement. Borrower irrevocably consents to service,
jurisdiction, and venue of such courts for any such litigation and waives any
other venue to which it might be entitled by virtue of domicile, habitual
residence or otherwise.
9.11. Prior
Understanding.
This
Agreement and the other Loan Documents supersede all prior understandings and
agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein and therein, including any
prior confidentiality agreements and commitments.
9.12. Duration;
Survival.
All
representations and warranties of Borrower contained herein or made in
connection herewith shall survive the funding of the initial advance hereunder
and shall not be waived by the execution and delivery of this Agreement, any
investigation by Lender, the funding of any Borrowing Tranche, or payment in
full of the Loan. All covenants and agreements of Borrower contained
herein shall continue in full force and effect from and after the date hereof so
long as Borrower may borrow hereunder and until the later of (i) the Expiration
Date or (ii) the payment in full of the Obligations. All covenants
and agreements of Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Note, shall survive payment in
full of the Loan and the Expiration Date until the full and final payment of all
such principal, interest, premiums, additional compensation, expenses or
indemnification due under this Agreement and the Loan
Documents. Notwithstanding any of the foregoing to the contrary, in
no event shall (a) the release of Lender’s Lien on any Collateral Pool Property,
(b) the maturity, expiration or early termination of the Revolving Credit Note,
or (c) the expiration or early termination of this Agreement, be deemed to
terminate any covenants, agreements, representations or warranties contained in
this Agreement, the Note or any of the other Loan Documents to the extent that
such covenant, agreement, representation or warranty shall, by its terms,
survive the release, maturity, expiration or early termination of this
Agreement, the Note or any of the other Loan Documents.
9.13. Disclosure
of Information.
Lender
may furnish information regarding Borrower or the Collateral Pool Properties to
third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or securitization of the Loan,
including, but not limited to, trustees, master servicers, special servicers,
rating agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans. Borrower irrevocably
waives any and all rights it may have under applicable Law to prohibit such
disclosure, including, but not limited to, any right of
privacy.
84
9.14. Exceptions.
The
representations, warranties and covenants contained herein shall be independent
of each other, and no exception to any representation, warranty or covenant
shall be deemed to be an exception to any other representation, warranty or
covenant contained herein unless expressly provided, nor shall any such
exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
9.15. Relationship
of Parties; No Third Parties Benefited.
The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Agreement shall create any
other relationship between Lender and Borrower. No creditor of any party to this
Agreement and no other person shall be a third party beneficiary of this
Agreement or any other Loan Document. Without limiting the generality
of the preceding sentence, (i) an agreement, if any, including any Servicing
Agreement, between Lender and Servicer for interim advancement of funds shall
constitute a contractual obligation of such Servicer that is independent of the
obligation of Borrower for the payment of the Loan, (ii) Borrower shall not be a
third party beneficiary of any Servicing Agreement, and (iii) no payment by
Servicer under any such agreement will reduce the outstanding principal amount
of the Loan or any interest accrued thereon.
9.16. Authority
to File Notices.
Borrower
irrevocably appoints Lender as its attorney-in-fact, coupled with an interest,
with full power of substitution, to file for record, at Borrower’s cost and
expense and in Borrower’s name, any notices that Lender considers reasonably
necessary or desirable to protect the Collateral.
9.17. WAIVER OF TRIAL BY
JURY.
BORROWER
AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH
RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B)
WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT
ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH
THE BENEFIT OF COMPETENT LEGAL COUNSEL.
/s/AC
Initials
of the Authorized Officer of Mid-
America
Apartment Communities, Inc.
85
/s/AC
Initials
of the Authorized Officer of Mid-
America
Apartments, L.P.
/s/JAG
Initials
of the Authorized Officer of Mid-
America
Apartments Texas, L.P.
9.18. Interpretation.
Whenever
the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other
gender. The captions of the articles, sections and schedules of this
Agreement are for convenience only and do not define or limit any terms or
provisions. In the event of a conflict between the terms of the other
Loan Documents and the terms of this Agreement, the terms of this Agreement
shall control.
9.19. Brokerage
Fee.
Borrower
represents to Lender that no broker or other Person is entitled to a brokerage
fee or commission as a result of Borrower’s actions or undertakings in
connection with the financing contemplated hereunder and agrees to hold Lender
harmless from all claims for brokerage commissions which may be made as a result
of such actions or undertakings, if any.
9.20. Advertising.
Lender
may include the name of Borrower, the name and location of any Collateral Pool
Property, the Commitment and the number of apartment units contained in any
Collateral Pool Property on Lender’s client list and in any typical
advertisement.
9.21. Time
of Essence.
Time is
of the essence with respect to each obligation of Borrower and Lender
hereunder.
9.22. Counterparts.
This
Agreement may be executed by different parties hereto on any number of separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
9.23. Interpretation
of Certain Representations, Warranties and Covenants.
Notwithstanding
anything set forth herein to the contrary, the representations, warranties and
covenants with respect to any particular Collateral Pool Property shall be
deemed to be made only by the Property Borrower which owns the applicable
Collateral Pool Property and, to the extent applicable, the Persons comprising
said Property Borrower.
86
[SIGNATURE
PAGE TO FOLLOW]
87
IN
WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
|
BORROWER:
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||
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MID-AMERICA
APARTMENT
COMMUNITIES,
INC.
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||
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By:
|
/s/▇▇
▇▇▇▇▇▇▇
|
|
|
Name: ▇▇
▇▇▇▇▇▇▇▇
|
||
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Title: Senior
Vice-President and Treasurer
|
||
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MID-AMERICA
APARTMENTS, L.P.
|
||
|
By:
|
Mid-America
Apartment Communities,
Inc.,
its sole general partner
|
|
|
By:
|
/s/▇▇ ▇▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇
▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Senior
Vice-President and
Treasurer
|
|
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MID-AMERICA
APARTMENTS OF
TEXAS,
L.P.
|
||
|
By:
|
MAC
of Delaware, Inc., its sole general
partner
|
|
|
By:
|
/s/▇▇▇▇ A Good
|
|
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Name:
|
▇▇▇▇
▇. Good
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Title:
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Assistant
Secretary
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88
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LENDER:
FINANCIAL
FEDERAL SAVINGS BANK
By: /s/▇▇▇▇▇
▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇. ▇▇▇▇▇▇
Title: S.V.P.
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