EXHIBIT 10.7
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT is made and entered into as of the
1st day of December, 1993, by and among RIVER BANK AMERICA, a New
York banking corporation formerly known as East River Savings
Bank (hereinafter called "Lender"); PELICAN SOUND APARTMENTS,
INC., a Florida corporation (hereinafter called "Borrower"); and
FENGAR INVESTMENTS CORPORATION, a Canadian corporation
(hereinafter called "Guarantor").
W I T N E S E T H:
WHEREAS, Lender heretofore made a mortgage loan evidenced by
certain promissory notes (the "Original Loan") to Pelican Sound
Limited Partnership, a Florida limited partnership ("Original
Borrower") in the aggregate principal amount of FIFTEEN MILLION
SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($15,750,000.00)
to provide mortgage financing of a 379 unit residential project
known as the "Pelican Sound Apartments" (the "Project"); and
WHEREAS, the Original Loan was further evidenced and/or
secured by the following instruments and documents (collectively,
the "Original Loan Documents"), each of which was executed by
Original Borrower and delivered to Lender:
(a) The Mortgage (as hereinafter defined);
(b) Assignment of Landlord's Interest in Rents
and Leases by Original Borrower (as hereinafter defined) in favor
of Lender, dated September 30, 1987 recorded October 2, 1987, in
Official Records Book 6593, Page 2016 of the Public Records of
Pinellas County, Florida ("Assignment of Leases 1");
(c) UCC1 Financing Statement by Original Borrower
as Debtor, in favor of Lender, as Secured Party, recorded
October 2, 1987, in Official Records Book 6593, Page 2032 of the
Public Records of Pinellas County, Florida;
(d) Assignment of Landlord's Interest in Rents
and Leases by Original Borrower in favor of Lender, dated
December 27, 1989 recorded January 3, 1990 in Official Records
Book 7167, Page 1945 of the Public Records of Pinellas County,
Florida ("Assignment of Leases 2");
(e) UCC1 Financing Statement by Original Borrower
as Debtor, in favor of Lender, as Secured Party, recorded
January 3, 1990, in Official Records Book 7167, Page 1994 of the
Public Records of Pinellas County, Florida.
WHEREAS, effective as of December 27, 1989, the Project was
conveyed to Pelican by Original Borrower, by special warranty
deed recorded in Official Records Book 7167, Page 1998, Public
Records of Pinellas County, Florida, and Pelican assumed all
obligations of Original Borrower with respect to the Original
Loan by virtue of a certain Release and Assumption Agreement
dated as of December 27, 1989, executed by and among Borrower,
Lender and Partnership (the "Assumption Agreement"), which
Assumption Agreement is recorded in Official Records Book 7167,
Page 2002, Public Records of Pinellas County, Florida; and
WHEREAS, following the conveyance of the Project to Pelican,
the Original Loan became guaranteed by Guarantor by virtue of a
certain Guaranty of Payment dated as of December 27, 1989 (the
"Guaranty");
WHEREAS, the outstanding principal amount of the Original
Loan has been reduced and Borrower has of even date herewith
executed and delivered to Lender that certain Renewal Mortgage
Promissory Note (the "Note") in the principal amount of TEN
MILLION AND NO/ 100 DOLLARS ($10,000,000.00) evidencing a renewed
loan (the "Renewed Loan") from Lender to Borrower; and
WHEREAS, Borrower, Guarantor and Lender have agreed to
certain terms and conditions with respect to the Renewed Loan as
more particularly set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
of the mutual covenants and agreements contained herein, the
mutual receipt and sufficiency of which are hereby acknowledged,
IT IS HEREBY AGREED, by and among the parties hereto, as
follows:
1. Recitals. The foregoing recitals are true and correct,
and are by this reference made a part of this Agreement.
2. Defined Terms. As used in this Agreement, the
following terms shall have the meanings hereinafter ascribed to
them in this subparagraph:
2.1 Budget. The budget of income and expenses for the
Project which has, from time to time, been provided Lender as
provided in Paragraph 6, below.
2.2 Extension Term. In the event that Borrower elects
the Extension Term as provided in the Note, the period commencing
on the fifth (5th) anniversary of the date of this Agreement and
ending on the Maturity Date.
2.3 Initial Term. The period commencing on the date
of this Agreement and ending on the fifth (5th) anniversary of
the date of this Agreement.
2.4 Letter of Credit. The letter of credit to be
provided to Lender as additional security pursuant to the
provisions of Paragraph 3, below.
2.5 Loan Documents. The Original Loan Documents, the
Note, the Mortgage, this Agreement and all other documents
heretofore or hereafter executed in connection with the Original
Loan and/or the Renewed Loan.
2.6 Loan Term. The period from the date of this
Agreement through and including the Maturity Date.
2.7 Maturity Date. The earlier of (i) the Stated
Maturity Date or (ii) the date upon which the indebtedness
evidenced by the Note becomes due and payable by reason of a
default, beyond any applicable grace or notice periods, hereunder
or under any of the other Loan Documents.
2.8 Monthly Tax Escrow Payment. The amount to be
placed in the Tax Account monthly for the payment of real and
personal property taxes on the Project, which shall be in the
amount of one-twelfth of the anticipated real and personal
property taxes to be assessed against the Project for the then-
applicable tax year, which Monthly Tax Escrow Payment for the
first twelve (12) month period commencing December 1, 1993, shall
be in the amount of $27,212.40.
2.9 Mortgage. That certain Building Loan Mortgage
dated as of the 30th day of September, 1987, executed by Original
Borrower in favor of the Lender (under its former name of "East
River Savings Bank") securing Note 1 and encumbering the Premises
("Mortgage 1"), Mortgage by Original Borrower in favor of the
Lender, dated December 27, 1989 recorded January 3, 1990 in
Official Records Book 7167, Page 1916 of the Public Records of
Pinellas County, Florida ("Mortgage 2"), given as security for
Note 2, as consolidate, amended and restated by Mortgage
Consolidation and Modification Agreement by and between the
Partnership and Lender, dated as of December 27, 1989, recorded
January 3, 1990 in Official Records Book 7167, Page 1961, in the
Public Records of Pinellas County, Florida, pursuant to which
Mortgage 1 and Mortgage 2 were amended and restated in their
entirety and consolidated as a single mortgage lien securing a
consolidated indebtedness as of the date thereof in the principal
amount of $15,750,000.00, as further amended by that certain
Mortgage Modification Agreement executed by the Borrower and the
Lender of even date herewith.
2.10 Project Manager. Decade Properties, Inc. or a
successor manager of the Project designated and approved as
provided in this Agreement.
2.11 Stated Maturity Date. The fifth (5th) anniversary
of the date of this Agreement unless the Borrower shall qualify
for and elect the Extension Term as provided in this Note, in
which case such term shall mean the tenth (10th) anniversary of
the date of this Agreement.
2.12 Tax Account. A segregated, interest bearing, bank
account maintained by Lender at River Bank America, in which
Lender shall deposit and hold the Monthly Tax Escrow Payments as
provided in this Agreement.
3. Letter of Credit. Borrower has of even date herewith
delivered to Lender an unconditional and irrevocable letter of
credit for the benefit of Lender in the face amount of
$58,334.00, expiring on January 1, 1995. The Letter of Credit is
hereby pledged to Lender as additional security for the Renewed
Loan. Lender shall hold the Letter of Credit until the earlier
to occur of (i) the occurrence of a default under the Renewed
Loan or (ii) December 1, 1994. If the event which first occurs
is the occurrence of a default under the Renewed Loan, Lender
shall be entitled to draw down the amount of the Letter of Credit
and apply the same to the reduction of the outstanding principal
and interest on the Renewed Loan in such order as Lender may
elect. If the event which first occurs is December 1, 1994,
Lender shall return the Letter of Credit to Borrower.
4. Tax Account. Borrower shall pay the Monthly Tax Escrow
Payment to Lender on the first day of each month during the Loan
Term (except that the initial Monthly Tax Escrow Payment shall be
made on or before December 15, 1993), together with Borrower's
payment of principal and/or interest under the Note. Lender
shall deposit each Monthly Tax Escrow Payment into the Tax
Account as soon as reasonably convenient after receipt thereof.
All funds on deposit in the Tax Account shall be held and
disbursed by Lender in accordance with the provisions of Article
5(b) of the Mortgage, provided that the Tax Account shall be an
interest bearing account, notwithstanding any provision to the
contrary contained in said Article 5(b).
5. Management of Project. The Project shall be managed by
the Project Manager in accordance with this Agreement and the
provisions of the property management agreement between the
Project Manager and Borrower (the "Management Agreement"), a true
and correct copy of which has been delivered to Lender. Borrower
shall not modify, amend or terminate the Management Agreement
without the prior written consent of Lender. In the event that
Decade Properties, Inc. is terminated as the Project Manager with
the consent of Lender, Borrower shall submit to Lender the name,
resume and such other materials concerning the qualifications and
experience of the property management entity which Borrower
proposes be designated as the new Project Manager as Lender may
reasonably request, and the designation of a new property
management entity to serve as Project Manager shall not be made
without the prior written approval of the new Project Manager by
Lender.
6. Budgets and Operating Reports.
6.1 Annually, on or before January 1, 1994 for
calendar year 1994 and on December 1 of each year thereafter for
subsequent calendar years during the Loan Term, Borrower shall
prepare and submit to Lender an operating budget for the Project
substantially in the form attached hereto as Exhibit "A." Such
Budget shall be for informational purposes, unless and until an
Event of Default shall occur. Following the occurrence of an
Event of Default, any budget submitted thereafter shall be
subject to Lender's approval and Borrower shall submit supporting
documentation with such budget. Any required approval by Lender
shall be granted or withheld by Lender in its sole, but
reasonable, discretion. Following the occurrence of an Event of
Default, Borrower shall not exceed any line item of the approved
Budget by more than ten percent (10%) without the prior written
approval of Lender.
6.2 Borrower shall provide to Lender monthly, a then
current rent roll for the Project in Borrower's standard form and
an operating statement for the Project for such month
substantially in the form attached hereto as Exhibit "B."
Further, Borrower shall deliver to Lender copies of any financial
statements (including Forms 10Q and 10K, with attachments) which
Borrower is required to file with the Securities and Exchange
Commission or other applicable governmental authority within ten
(10) days after the same is filed with such governmental
authority. The provisions of this Section 6.2 shall supersede
and replace, in their entirety, the provisions of Section 15 of
the Mortgage.
7. Operation of Project. Borrower shall, or shall cause
the Project Manager to, protect, preserve and maintain the
Security, pay and perform all obligations of the landlord under
tenant leases, timely pay all valid statements or invoices for
services rendered by third parties to or for the benefit of the
Security, maintain in full force and effect all insurance
required by the Loan Documents and otherwise comply with the
provisions of the Loan Documents applicable to the management and
operation of the Project which are not inconsistent with the
terms hereof.
8. Sale or Transfer of Interests in the Project and/or
Pelican. During the Loan Term, Borrower shall not voluntarily or
by operation of law, sell, convey, transfer or permit to be sold,
conveyed or transferred, any interest in the Project or any part
thereof without the prior written consent of Lender having been
first obtained. In the event that the Project is transferred by
Borrower to Decade Companies Income Properties, a Limited
Partnership ("Decade"), as contemplated by Borrower, Lender
agrees not to unreasonably withhold its consent to a one-time
transfer of the Project by Decade, provided the proposed
transferee (i) has a net worth of not less than $5,000,000, (ii)
has demonstrated multi-family residential management experience
and has not less than 2,000 multi-family residential units under
management and (iii) is not, and is not related to or affiliated
with, any entity which is or has been a borrower from Lender
which has been or then is in default to Lender with respect to
any such borrowing(s). In connection with any such approved
transfer, Lender may charge a transfer or assumption fee not to
exceed one percent (1%) of the then outstanding balance of the
Loan. Further, Borrower shall not sell or transfer any of its
stock to anyone who is not a shareholder as of the date of this
Agreement without the prior written consent of Lender having been
first obtained. Any prohibited transaction under this
subparagraph shall be null and void.
9. Event of Default. The occurrence of any of the
following events shall constitute an "Event of Default" for
purposes of this Agreement:
(a) if any payment required of Borrower pursuant
to this Agreement is not received within five (5) days after the
same becomes due and payable; or
(b) if Borrower (a) shall willfully fail, in any
material respect, to perform (or cause to be performed) any of
its covenants and agreements under this Agreement (other than the
making of a required payment), or (b) shall fail through
inadvertence, in any material respect, to perform (or cause to be
performed) any of its covenants and agreements under this
Agreement (other than the making of a required payment), and such
failure remains uncured upon the expiration of five (5) days
following notice of same from Lender to Borrower; or
(c) if an event shall occur which would entitle
Lender, pursuant to Article 18 of the Mortgage, to declare the
principal and interest under the Note to be due and payable; or
(d) if any representation or warranty of Borrower
contained herein or in the Loan Documents shall be determined to
have been materially false, inaccurate or misleading when made;
or
Upon the occurrence of an Event of Default, Lender shall be
entitled to pursue all rights and remedies provided in this
Agreement, the Note, the Mortgage and/or the other Loan
Documents, including, without limitation, the right to declare
the entire outstanding principal amount of the Note, together
with accrued and unpaid interest, to be immediately due and
payable and the right to foreclose the lien of the Mortgage.
10. Representations and Warranties. As a material
inducement to Lender's agreements and stipulations herein,
Borrower, as to all subparagraphs hereof, and Guarantor, as to
Subparagraphs 12.1, 12.2(d), 12.3 and 12.5, warrant and represent
to Lender as follows:
10.1 No Claims, Defenses, Etc. Neither Borrower nor
Guarantor has any claim, defense or right of setoff whatsoever
with respect to any of the obligations evidenced by or arising
under the Note or the other Loan Documents, or otherwise relating
to the Renewed Loan.
10.2 Organization, Corporation, Power, Etc.
(a) Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Florida;
(b) Borrower (i) has all requisite right, power
and authority to own property and to carry on its businesses in
the State of Florida, and (ii) is in compliance with all laws,
regulations, ordinances and rules of public authorities which are
applicable thereto;
(c) Borrower has all requisite right, power and
authority under its organizational documents and applicable law
to execute and deliver this Agreement, the Note and the other
documents executed in connection with the Renewed Loan and to
consummate the transactions contemplated hereby;
(d) Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of Canada
and has all requisite right, power and authority under its
organizational documents and applicable law to execute and
deliver this Agreement to consummate the transactions
contemplated hereby and thereby.
10.3 Validity of Agreement. The execution and delivery
of this Agreement and the performance by Borrower and Guarantor
of their respective covenants and agreements hereunder:
(a) have been duly authorized by all requisite
action on the part of Borrower and Guarantor, including, without
limitation, the obtaining of any required shareholder or partner
approvals;
(b) do not, to the best of Borrower's or
Guarantor's knowledge and belief, require the approval of any
governmental authority;
(c) will not violate any provision of law, any
order or regulation of any court or other governmental authority,
or any undertaking, indenture, contract, agreement or other
instrument to which Borrower or Guarantor is a party or by which
Borrower or Guarantor, or any of their properties or assets, is
bound; and
(d) will not conflict with, result in a breach of
or constitute (with due notice and/or lapse of time) a default
under or breach of any such undertaking, indenture, contract,
agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any such properties or assets.
10.4 Title. Borrower owns (i) fee simple title to the
Real Property, subject only to real property taxes and to
easements, encumbrances and other matters which are evidenced by
instruments recorded in the Public Records of Pinellas County,
Florida prior to the date of this Agreement. Borrower covenants
and agrees that, from and after the date of this Agreement, it
will not take, permit or suffer any action that would render the
representations and warranties contained in this subparagraph
untrue or inaccurate in any respect.
10.5 Financial Statements. To the best of Borrower's
knowledge, all financial and/or operating statements that have
been furnished to Lender with respect to the Project, Borrower
and\or any proposed purchaser of the Project are true, complete
and accurate in all material respects.
10.6 Compliance with Laws, Etc. The Project is in
compliance with all laws, codes, ordinances, rules and
regulations applicable thereto, and with all orders and
requirements imposed by any governmental authority having or
claiming jurisdiction thereof.
10.7 Accounts Payable. Except for certain unpaid
operating expenses for the current month, Borrower has paid or
caused to be paid all valid statements or invoices which (i)
relate to services rendered by third parties to or for the
benefit of the Project prior to the date of this Agreement, and
(ii) were due and payable on or before the date of this
Agreement.
11. Notice. Any notice, request, demand, consent, approval
or other communication made pursuant hereto or in connection
herewith shall be in writing and shall be delivered (except as
otherwise provided in this Agreement) either by personal delivery
or by certified or registered mail, return receipt requested,
postage prepaid, addressed to the party for whom it is intended
at the following addresses:
To Borrower
or Guarantor: Pelican Sound Apartments, Inc.
1231 Younge Street
Toronto, Ontario, Canada M4T 2T8
Attn: Sheldon Fenton
To Lender: River Bank America
145 Huguenot Street
New Rochelle, New York 10801
Attn: Edward L. Shugrue, III
with a copy to: Richard H. Sollner, Esq.
Trenam, Simmons, Kemker, Scharf,
Barkin, Frye & O'Neill, P.A.
Barnett Plaza, Suite 2700
Tampa, Florida 33602
provided, however, that any party may change its address for
purposes of receipt of any such communication by giving at least
ten (10) days' written notice of such change to the other parties
in the manner above prescribed. Any communication effected by
personal delivery (including without limitation personal delivery
by a nationally recognized overnight delivery service or by
courier) shall be effective upon delivery. Any communication
mailed in accordance with the above provisions shall be deemed
received and effective on the third business day after the date
on which mailed.
12. Governing Law. This Agreement shall be governed by and
be construed in accordance with the laws of the State of Florida.
13. Severability. In case any one or more of the
provisions of this Agreement is determined to be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining provisions shall be in no way affected, prejudiced
or impaired thereby.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but
all of which together shall constitute one and the same
agreement.
15. No Partnership or Joint Venture. Neither anything
contained in this Agreement nor any acts of the parties hereto
shall be construed to create a partnership or joint venture of
any kind between Lender and any one or more of Borrower or
Guarantor.
16. Headings. The paragraph and subparagraph headings of
this Agreement are for convenience and reference only and shall
not be considered a part hereof, nor shall they be deemed to
limit or otherwise affect any of the terms or provisions hereof.
17. Time of Essence. Time is of the essence of this
Agreement and all of the terms and conditions hereof.
18. Jury Trial is Waived. No party to this Agreement shall
seek a jury trial in any lawsuit, proceeding, counterclaim or any
other litigation based upon or arising out of this Agreement, the
Renewed Loan, any document or instrument related hereto or
thereto, any of the security for the Renewed Loan or any dealings
or relationships between or among the parties, or any of them.
If the subject matter of any such litigation is one in which the
waiver of a jury trial is prohibited, by constitutional or
statutory provision, no party hereto will present as a defense or
counterclaim in such litigation any claim which would reduce or
offset any amount or right claimed under the provisions of this
Agreement or the Loan Documents. No party will seek to
consolidate any such action, in which a jury has been waived,
with any other action in which a jury trial cannot or has not
been waived. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO. NO PARTY HAS IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
19. Attorneys' Fees. In the event of any litigation
arising out of any breach or alleged breach of this Agreement,
the prevailing party shall be entitled to recover all costs,
expenses and reasonable attorneys' fees incurred thereby in
connection with such litigation, including without limitation any
trial or appeal.
20. Indemnification by Borrower. Borrower covenants and
agrees that, in the event of the occurrence of any Event of
Default, it shall indemnify Lender and hold Lender harmless from
and against any and all loss, cost, expense, liability or claim
arising therefrom or in connection therewith.
21. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject
matter hereof, and may not be modified except by written
agreement of the party sought to be charged therewith. The terms
and conditions of this Agreement shall be binding upon, be
enforceable by and inure to the benefit of the parties hereto and
their respective successors and assigns. The parties acknowledge
and agree that this Agreement relates solely to the Renewed Loan,
and does not affect any other transactions between or among the
parties hereto.
22. Exhibits. All of the exhibits and schedules attached
hereto are incorporated herein by reference and form a part of
this Agreement.
23. Joinder by Guarantor. Guarantor joins in the execution
of this Agreement for the purposes of (i) making the
representations set forth in Paragraph 12, (ii) consenting to the
modification of the Original Loan in the manner set forth in this
Agreement, the Note, the Mortgage and the other Loan Documents
and (iii) confirming that that certain Guaranty of Payment dated
December 27, 1989, executed by Guarantor in favor of Lender
remains in full force and effect with respect to the Renewed
Loan.
IN WITNESS WHEREOF, Borrower, Guarantor and Lender have
caused this Agreement to be duly executed and delivered on the
date first above written.
BORROWER:
Signed, sealed and delivered PELICAN SOUND APARTMENTS, INC.,
in our presence as witnesses: a Florida corporation
__________________________ By: /s/ Renee Gareau
Name: Rene Gareau
Title: Vice President
__________________________
As to Pelican
GUARANTOR:
FENGAR INVESTMENTS CORPORATION,
a Canadian corporation
_________________________ By: /s/ Rene Gareau
Name: Rene Gareau
Title: Vice President
_________________________
As to Guarantor
LENDER:
RIVER BANK AMERICA, a New York
banking corporation
__________________________ By: _________________________
Name: _______________________
Title: _______________________
__________________________
As to Lender