INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (the "Agreement") is dated this 30th day
of December, 1997, effective as of the 31st day of July, 1997, by and
between BANKBOSTON, N.A., a national bank organized under the laws of the
United States of America, its successors and assigns, for itself
("BankBoston") and as agent for certain other lenders ("Agent"), MORGAN
STANLEY SENIOR FUNDING, INC. ("MSSF"), and the other lenders a party
hereto. Collectively, BankBoston (except when acting as Agent), MSSF and
each other lending institution which may now or hereafter become a party to
the Credit Agreement shall be referred to collectively as the "Banks" and
individually as a "Bank".
RECITALS
A. Pursuant to the First Amended and Restated Master Credit
Agreement, dated of even date herewith (such agreement, as amended,
modified, extended, split, revised or supplemented in accordance with its
terms, is hereinafter referred to as the "Credit Agreement"), among The
Woodlands Commercial Properties Company, L.P., a Texas limited partnership
("Commercial Company"), The Woodlands Land Development Company, L.P., a
Texas limited partnership ("Land Company"; Commercial Company and Land
Company are hereinafter referred to collectively as the "Borrowers"), the
Agent, BankBoston, MSSF and the Banks, the Banks have agreed to make
available to the Borrowers loans in the aggregate principal amount of
$369,000,000.00 upon the terms set forth in the Credit Agreement
(collectively, the "Loans");
B. The Loans consist of a Revolving Credit Loan in the principal
amount of up to $179,000,000.00 (the "Revolving Loan"), a Secured Term Loan
in the principal amount of $130,000,000.00 (the "Secured Term Loan"; the
Revolving Credit Loan and the Secured Term Loan are hereinafter referred to
collectively as the "Senior Loan"), and a Second Secured Term Loan in the
principal amount of $60,000,000.00 (the "Second Secured Term Loan");
C. The Agent and the Banks desire to supplement the provisions of
the Credit Agreement relating to the relationship of the Banks with respect
to one another and the Agent;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Banks and the Agent agree as follows:
1. Definitions.
(a) For the purposes of this Agreement,
(i) "Majority Banks" shall mean any Bank or Banks
whose aggregate Commitment Percentage equals or exceeds sixty-six and
2/3 percent (66.67%);
(ii) "Senior Banks" shall mean the holders from
time to time of the Revolving Credit Notes and the Secured Term Loan
Notes;
(iii) "Second Secured Term Loan Banks" shall mean
the holders from time to time of the Second Secured Term Loan Notes;
(iv) "Enforcement Action" shall mean the
commencement of any litigation or proceeding, the commencement of any
foreclosure proceeding, the exercise of any statutory power of sale,
the taking of a deed or assignment in lieu of foreclosure, the
obtaining of a receiver or the taking of any other enforcement action
against, or the taking of possession or control of, or the exercise of
any remedies with respect to, a Borrower or any Collateral or any
portion thereof; and
(v) Any capitalized terms not otherwise defined
herein have the meanings ascribed to them in the Credit Agreement.
(b) For the purposes of the Credit Agreement, the
"Majority Banks" as defined in the Credit Agreement shall mean the
"Majority Banks" as such term is defined herein, except to the extent that
the approval of all of the Banks is specifically required for such action
or approval (in which case the "Majority Banks" as used in the Credit
Agreement shall mean all of the Banks).
2. Relationship with Credit Agreement. The parties hereto
acknowledge and ratify the Credit Agreement and acknowledge that this
Agreement is meant to supplement, and not to abrogate, the terms of the
Credit Agreement. All provisions of this Agreement shall be read so as to
be compatible with the provisions of the Credit Agreement. In the event of
any conflict between this Agreement and the Credit Agreement, this
Agreement shall control among the Agent and the Banks.
3. Interests in the Loan. The Banks hereby acknowledge and
agree that each Bank holds an undivided interest in the Loan and the Loan
Documents equal to its Commitment Percentage as in effect from time to
time. The Agent shall hold the Security Documents for the benefit of the
Banks as provided in this Agreement and the Loan Documents. The Commitment
and Commitment Percentage of each Bank under the Credit Agreement as of the
date hereof shall be as set forth in the Credit Agreement.
4. Representations of the Banks. Each Bank represents to and
agrees with each other Bank and Agent that (a) in the event that such Bank
now or hereafter has other loans, commitments, letters of credit or other
financial accommodations or arrangements outstanding to any Borrower,
Guarantor or an affiliate thereof, such Bank shall deal with the Loans and
Loan Documents as if it were the only loan in such Bank's portfolio to such
Borrower, Guarantor or such affiliate thereof; (b) such Bank's execution
and delivery of this Agreement has been duly authorized and it has full
power and authority to execute this Agreement; (c) such Bank's decision to
enter into this Agreement was based solely upon its own independent
evaluation of the Loans and the Loan Documents and the creditworthiness of
Borrowers and the value of the Collateral and without reliance upon any
warranties or representations of Agent or any other Bank or any of their
respective officers, directors, employees, agents or attorneys; (d) such
Bank acknowledges receipt of copies of all of the Loan Documents; (e) as of
the date hereof, except for MSSF, such Bank does not control, is not
controlled by, is not under common control with and is otherwise free from
influence or control by, Borrowers, their respective General Partners and
Guarantor; and (f) as of the date hereof, except for MSSF, [Chancellor LGT
Asset Management] and Wellsford Real Properties, Inc., such Bank is subject
to control, regulation or examination by a state or federal regulatory
agency. Except as set forth above or as otherwise provided herein or in
the Loan Documents, no Bank or Agent makes any further representations or
warranties, express or implied, including, without limitation, any
representation or warranty as to the collectability of the Loans,
enforceability of the Loan Documents, continued solvency of Borrowers or
any other Person or the continued existence, sufficiency or value of any
assets of Borrowers or any other Person which may be realized upon for the
repayment of the Loans. Neither Agent nor any Bank shall be responsible in
any manner to any other Bank for the observation of or compliance with any
of the terms, covenants or conditions of the Loan Documents on the part of
Borrowers.
5. Allocation of Fees.
(a) By execution hereof, each Bank acknowledges that it
has received its full share of the closing fee payable with respect to such
Bank's Commitment.
(b) Each Bank shall be entitled to its proportionate
share based on its respective Commitment Percentages of the facility fee
paid pursuant to Section 2.2 of the Credit Agreement. In the event that a
Bank shall not have owned its Commitment for the full quarter to which such
fee relates, such Bank's share thereof shall be prorated as of the day
immediately preceding the day on which the assignment to such Bank is
recorded by Agent on the Register.
(c) All of the Agent's fee described in Section 4.3 of
the Credit Agreement shall belong to the Agent and none of the Banks shall
be entitled to any portion thereof.
(d) Each Bank shall be entitled to its proportionate
share based on its Revolving Credit Commitment Percentage, Secured Term
Loan Commitment Percentage and Second Secured Term Loan Commitment
Percentage, as applicable, of any fee paid by Borrowers pursuant to Section
4.15 of the Credit Agreement.
6. Set-Off Against Other Indebtedness. Notwithstanding the
provisions of Section 4(a), above, each Bank agrees that any deposits of
money or property or other indebtedness held or owing by such Bank to or
for the credit or the account of any Borrower or Guarantor which may now or
hereafter be specifically pledged as collateral under the Credit Agreement
or other Loan Documents shall not be set-off against indebtedness other
than the Obligations; provided, however, that the foregoing restriction
shall not limit any Bank's right of set-off against any Indebtedness other
than the Obligations with respect to any such deposit of money, property or
other indebtedness which has not been specifically pledged as collateral
notwithstanding any general description of secured obligations contained in
any security agreement or other instrument held by such Bank; provided
further, however, that no Bank shall be permitted to exercise any right of
set-off against any Borrower, any partner thereof or any Guarantor in
respect of the Obligation if such exercise would jeopardize the Agent's
ability to realize upon the Collateral pursuant to the Security Documents
in any jurisdiction which has a so-called "single action rule."
7. Intentionally omitted.
8. Payments, Distributions.
(a) (i) All payments and proceeds received by Agent
(including any (A) payments made by Borrowers in connection with the
release of any portion of the Mortgaged Property or other Collateral from
the liens and security interests granted pursuant to the Loan Documents,
(B) insurance and condemnation proceeds and (C) amounts received in
connection with the liquidation or other realization by Agent upon any
portion of the Collateral) shall be applied, prior to the occurrence of an
Event of Default, first, to reimburse the Agent for any unpaid costs and
expenses incurred by the Agent, second, to accrued and unpaid interest on
the Senior Loan, third, to accrued and unpaid interest on the Second
Secured Term Loan, fourth, to Agent and Banks pro rata in respect of any
unpaid Agent's fee, late charges, default rate interest and other sums
payable under the Credit Agreement and the other Loan Documents, fifth, to
the principal amount of the Senior Loan as provided in the Credit Agreement
until such principal amount of the Senior Loan has been repaid in full, and
sixth, to the extent permitted by the Credit Agreement, to the principal
balance of the Second Secured Term Loan until such principal balance of the
Second Secured Term Loan has been repaid in full.
(ii) From and after the occurrence of an Event of
Default and during the continuance thereof, all payments and proceeds
received by Agent shall be applied, first, as provided in Section 12.4(a)
of the Credit Agreement, whether or not such payments constitute
administrative expenses under Section 503(b) of the Bankruptcy Code,
second, to the Senior Loan (pro rata based on the respective Revolving
Credit Commitments and the Secured Term Loan Commitments) until all amounts
due and payable in connection with the Senior Loan (including protective or
curative advances and expenses funded only by the Senior Banks) have been
repaid in full in cash or cash equivalents, third, the balance, if any, to
the Second Secured Term Loan until all amounts due and payable in
connection with the Second Secured Term Loan (including principal and
scheduled interest, default interest, late charges, protective or curative
advances and expenses funded only by the Second Secured Term Loan Banks)
have been repaid in full, fourth, to the Agent for the payment of the
Agent's fee payable pursuant to Section 4.3 of the Credit Agreement and
fifth, the balance, if any, shall be returned to the Borrowers or to such
other Persons as are entitled thereto. For the purposes of Section
12.4(b) of the Credit Agreement, Agent shall be deemed to have determined
to apply such payments and proceeds as provided in this Section 8(a).
(b) If at any time collections by Agent are sufficient
to fund only a partial principal, interest or fee payment under the Senior
Loan or Second Secured Term Loan (and after giving effect to the
distribution priorities established in Section 8 hereof), each Senior Bank
or Second Secured Term Loan Bank, as the case may be, shall be entitled to
receive an amount equal to the product of (i) the amount such Bank would
have been entitled to receive if Borrowers had made a full principal,
interest or fee payment under the Credit Agreement, multiplied by (ii) a
fraction (A) the numerator of which is the amount of the partial principal,
interest or fee payment collected by Agent under the Loan Documents, and
(B) the denominator of which is the amount of the full principal, interest
or fee payment that Borrowers were obligated to pay with respect to the
Revolving Credit Loan and the Secured Term Loan comprising the Senior Loan
(pro rata among the Revolving Credit Banks and the Secured Term Loan Banks
in accordance with the ratio that such Bank's Revolving Credit Commitment
or Secured Term Loan Commitment bears to the total of all Revolving Credit
Commitments and Secured Term Loan Commitments), or the Second Secured Term
Loan, as the case may be.
(c) In the event (i) the Senior Loan becomes or is
declared due and payable prior to its stated maturity, or (ii) of any
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the
property, assets or business of any Borrower or any other Person liable
with respect to the Loans or the proceeds thereof, in whatever form, to any
creditor or creditors of such Persons or to any holder of indebtedness of
such Persons by reason of any liquidation, dissolution or other winding up
of any of such Persons or its business, or of any receivership or
custodianship for such Persons of all or substantially all of its property,
or of any assignment for the benefit of creditors of any proceeding by or
against such Persons for relief under the United States Bankruptcy Code
(the "Bankruptcy Code") or any other bankruptcy, reorganization or
insolvency laws, federal or state, or any law, federal or state, relating
to the relief of debtors, readjustment of indebtedness, reorganization,
composition or extension (a "Bankruptcy Proceeding"), then any payment or
distribution of any kind or character, whether in cash, property or
securities which shall be payable or deliverable with respect to any or all
of the Second Secured Term Loan or which shall be received by the Second
Secured Term Loan Banks shall be held in trust by the Second Secured Term
Loan Banks and shall forthwith be paid or delivered directly to Agent for
application to the payment of the Senior Loan to the extent necessary to
make payment in full in cash or cash equivalents of all sums due under the
Senior Loan remaining unpaid after giving effect to any concurrent payment
or distribution to Agent or Senior Banks as required by this Agreement. In
any such event, Agent may, but shall not be obligated to, demand, claim and
collect any such payment or distribution that would, but for the provisions
of this Agreement, be payable or deliverable with respect to the Second
Secured Term Loan.
(d) To the extent any transfer, payment or distribution
of assets with respect to the Senior Loan (whether in cash, property or
securities and whether by or on behalf of a Borrower, as proceeds of
security or enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid to a
Borrower or a Guarantor, the estate in bankruptcy thereof, any third party,
or a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered
by, or paid over to, a Borrower or a Guarantor, the estate in bankruptcy
thereof, any third party, or such trustee, receiver or other similar party,
the Senior Loan or part thereof originally intended to be satisfied shall
be deemed to be reinstated and outstanding as if such payment or
distribution had not occurred, and this Agreement and the agreements and
payment priorities contained herein shall be reinstated with respect to any
such transfer, payment or distribution. Neither the Agent nor the Senior
Banks shall be required to contest any such declaration or obligation to
return such payment or distribution.
(e) If any Bank shall acquire by indemnification,
subrogation or otherwise, any lien, estate, right or other interest in the
Collateral or any portion thereof in connection with the Senior Loan or the
Second Secured Term Loan, that lien, estate, right, or other interest shall
be held in trust for the benefit of, and assigned to Agent for the benefit
of the Banks in accordance with the terms of this Agreement. Any such
lien, estate, right or other interest shall be subordinate to the lien and
security interests of the Security Documents and the other Loan Documents
as provided herein.
(f) Without limiting the terms of Section 9(d) below,
so long as any amounts remain outstanding under the Senior Loan, the Second
Secured Term Loan Banks shall not seek the appointment of a receiver with
respect to any portion of the Collateral without the prior written consent
of Agent, which consent may be granted or withheld by Agent at the
direction of the Majority Banks in their sole discretion.
(g) Notwithstanding anything herein to the contrary, in
the event that (i) an Event of Default shall occur and be continuing, (ii)
the effect of the operation of Section 8(a)(ii) is that the Senior Banks
shall be applying amounts received by the Agent to Obligations to the
Senior Banks, which amounts, but for the application of Section 8(a)(ii),
would have been received by the Second Secured Term Loan Banks pursuant to
Section 8(a)(i), (iii) the Majority Banks shall not have authorized the
Agent to commence or institute any Enforcement Action, and (iv) such
circumstances shall have existed for a period of 120 consecutive days, then
within sixty (60) days of the expiration of such 120-day period, the Bank
or Banks whose aggregate Second Secured Term Loan Commitment Percentage
exceeds fifty percent (50%) shall have the right to direct that the Agent
commence an Enforcement Action, which direction shall have the same force
and effect as if such direction was provided by the Majority Banks.
Notwithstanding the foregoing, such rights of the Second Secured Term Loan
Banks shall not be in effect more than once during any period of 360
consecutive days, and such rights shall not be in effect on more than three
occasions.
(h) The provisions of this Agreement concerning the
order of payments between the Second Secured Term Loan and the Senior Loan
shall apply to the Senior Loan as the same shall be amended, modified,
restated or renewed from time to time as permitted herein, and regardless
of the value of any Collateral or any other assets of the Borrowers or any
Guarantor, any failure to realize thereon, or any other action or failure
to act with respect to any thereof.
(i) For the purposes of this Agreement, the "Senior
Loan" shall include the payment of the outstanding principal, interest
(including contract interest, default interest, late charges and any of the
foregoing accruing subsequent to the filing of any bankruptcy petition by
or against either Borrower under the Bankruptcy Code) (and regardless of
the value of the Collateral and the security interest of Agent therein at
the time of such accrual), prepayment fees, breakage costs and other fees
and expenses payable in connection with the Senior Loan.
(j) Each Bank agrees that it shall not take any action
or in any way contest (i) the validity or enforceability of this Agreement,
(ii) the validity of the payment priority established by Section 8, or
(iii) the relative rights and duties of the parties hereto.
9. Notice of Event of Default, Exercise of Remedies, Approvals,
etc.
(a) In the event that Agent or any Bank acquires Actual
Knowledge (as herein defined) of the occurrence of a Default or an Event of
Default, Agent or the Bank acquiring such knowledge will notify the other
Banks and the Agent thereof as soon as is reasonably practical.
Thereafter, the Agent shall provide the Banks with prior written notice of
any actions proposed or recommended to be taken by Agent with respect
thereto unless the giving of such notice is impractical for reasons of
safety or preservation of Collateral, in which event Agent shall promptly
notify the Banks of such action. For purposes of this Agreement, "Actual
Knowledge" shall mean actual knowledge of any officer of Agent or any Bank
having primary, day-to-day responsibility for administration of the Loan.
WEL (i) Agent shall not take any action hereunder or
under the Loan Documents following a Default or Event of Default, except as
specifically authorized herein to the contrary, unless such action is
approved by the Majority Banks (except as provided in Section 8(g) hereof)
and, subject to the terms of this Agreement and the other Loan Documents,
the Agent shall take such actions as are directed by the Majority Banks
following a Default or Event of Default. Following such approval, the
Agent shall, subject to the terms of this Section 9(b), take such action
or actions, assert such rights, exercise such remedies and/or waive such
Default or Event of Default or refrain from taking such actions with
respect thereto as, but only as, agreed to in writing by the Majority
Banks. Notwithstanding anything herein or in the Credit Agreement to the
contrary, the Agent shall not be liable in connection with the making of
any advance to the Borrowers at any time at which there shall exist a
Default or Event of Default other than an uncured monetary or other
"material" (as defined herein) Default or Event of Default. For the
purposes of this Agreement, the term "material" Default or Event of Default
shall mean any monetary default, or any other default, the occurrence of
which could have a material adverse effect on repayment of the Loans or the
financial condition of the Borrowers. The Agent shall, if so requested by
the Majority Banks and the Banks have provided to the Agent such additional
indemnities and assurances in accordance with their respective Commitment
Percentages against expenses and liabilities as the Agent may reasonably
request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the
Collateral and exercise all or any legal and equitable and other rights or
remedies as it may have in respect of such Collateral or against Borrowers
or any other Person (which actions shall include any notices to Borrowers
as counsel to Agent may recommend be provided pursuant to M.G.L. Chapter
244, Section 17B). Subject to the terms hereof, the Majority Banks may
direct the Agent in writing as to the method and the extent of any such
action, sale or disposition, the Banks hereby agreeing to indemnify and
hold the Agent harmless in accordance with their respective Commitment
Percentages from all liabilities incurred in respect of all actions taken
or omitted in accordance with such directions, provided that the Agent need
not comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
(ii) Agent shall not be required to obtain the
consent of the Majority Banks to its taking any action with respect to the
Loans if immediate action is required to be taken in the best interest of
the Banks to preserve or protect the continued enforceability of the Loan
Documents. Agent shall promptly verbally notify the Banks if Agent takes
such immediate action, which notice shall be promptly confirmed in writing.
Without limiting the generality of the foregoing, if the Agent reasonably
determines payment is in the best interest of all the Banks and immediate
action is required to protect or preserve the interests of the Banks, Agent
may without the approval of the Banks (A) pay taxes and insurance premiums
and (B) spend money for maintenance, repairs or other expenses which may be
necessary to be incurred; provided that the amount that may be spent
annually by the Agent pursuant to clause (B) shall not exceed $1,000,000.00
without obtaining the consent of the Majority Banks. Each Bank shall,
within thirty (30) days of request therefor, pay to the Agent in the manner
set forth in Section 14 below, its Commitment Percentage of the costs
incurred by the Agent in taking any such actions hereunder to the extent
that such costs shall not be promptly reimbursed to the Agent by Borrowers
or a Guarantor or out of the Collateral within such period and such costs
shall be deemed an "Expense" as defined in Section 14 of this Agreement.
(c) If consent is required for some action under this
Agreement, or except as otherwise provided herein an approval of the
Majority Banks (as such term is used in the Credit Agreement) is required
or permitted under the Credit Agreement, each Bank agrees to give the Agent
and the other Banks, within ten (10) Business Days of receipt of the
request for action together with all reasonably requested information
related thereto (or such lesser period of time required by the terms of the
Loan Documents), notice in writing of approval or disapproval
(collectively "Directions") in respect of any action requested or proposed
in writing pursuant to the terms hereof. To the extent that any Bank does
not approve any recommendation of Agent, such Bank shall in such notice to
Agent describe the actions that would be acceptable to such Bank (to the
extent the organizational agreements of such Bank permit such Bank to
describe such actions). If consent is required for the requested action,
any Bank's failure to respond to a request for Directions within the
required time period shall be deemed to constitute a Direction to take such
requested action. In the event that any recommendation is not approved by
the requisite number of Banks and a subsequent approval on the same subject
matter is requested by Agent, then for the purposes of this paragraph each
Bank shall be required to respond to a request for Directions within five
(5) Business Days of receipt of such request. Agent and each Bank shall be
entitled to assume that any officer of the other Banks delivering any
notice, consent, certificate or other writing is authorized to give such
notice, consent, certificate or other writing unless Agent and such other
Banks have otherwise been notified in writing. Notwithstanding anything
herein to the contrary, the Agent may with the approval of the Majority
Banks temporarily waive compliance by Borrowers with any condition,
obligation or covenant contained in the Credit Agreement or the Loan
Documents (other than a failure to make a payment of any principal,
interest or fee when due) for a period not to exceed ninety (90) days, and
in obtaining such approval, Agent shall be authorized to waive such
compliance upon the verbal approval of the Majority Banks without
compliance with the provisions of this Paragraph 9(c).
(d) For the purposes of carrying out the provisions and
exercising the rights, remedies, powers and privileges granted by or
referred to in this Agreement and the Loan Documents, each of the Banks,
subject to the other terms of this Agreement and the Loan Documents, hereby
irrevocably and exclusively constitutes and appoints the Agent to hold the
Collateral and enforce the Loan Documents on behalf of the Banks and to
exercise such powers, rights and remedies under this Agreement and the Loan
Documents as are delegated to Agent by the terms hereof or thereof,
together with all such powers, rights and remedies as are reasonably
incidental thereto.
10. Required Bank Consents. Notwithstanding anything in this
Agreement or the Loan Documents to the contrary, none of the following may
occur without the written consent of each Bank: a change in the rate of
interest on and the term of the Notes; a change in the amount of the
Commitments of the Banks; a reduction or waiver of the principal of any
unpaid Senior Loan, Second Secured Term Loan, or any interest thereon or
any fee payable pursuant to the Credit Agreement; an extension of the
Maturity Date (except as permitted in the Credit Agreement); the release of
any Borrower or Guarantor which has executed any of the Loan Documents or
any Collateral except as permitted in the Loan Documents; any modification
to require a Bank to fund a pro rata share of a request for an advance of
the Revolving Credit Loans made by a Borrower other than based on its
Revolving Credit Commitment Percentage; a change to this Section 10; any
change of any date fixed for any payment of principal of or interest on the
Loan; or any change in the manner of distribution of any payments to the
Banks or Agent.
11. Bankruptcy.
(a) In the event of a Bankruptcy Proceeding affecting
any Borrower, the Senior Banks and the Second Secured Term Loan Banks agree
that, to the maximum extent permitted under the Bankruptcy Code, the Senior
Loan (including the Notes evidencing the Senior Loan) and the Second
Secured Term Loan shall constitute a single claim in such Bankruptcy
Proceeding. Whether or not the Senior Loan and the Second Secured Term
Loan are in fact filed as a single claim in such Bankruptcy Proceeding or
as multiple separate claims, all elections, consents and voting rights
afforded to the Senior Banks and Second Secured Term Loan Banks in such
Bankruptcy Proceeding shall be exercised collectively by Agent upon the
direction of the Majority Banks.
(b) This Agreement shall be applicable both before and
after the commencement, whether voluntary or involuntary, of any Bankruptcy
Proceeding by or against either Borrower or any Guarantor, and all
references herein to the Borrowers and Guarantor shall be deemed to apply
to either Borrower or any Guarantor as a debtor-in-possession and to any
trustee in bankruptcy for the estate of either Borrower or any Guarantor.
The provisions of this Agreement shall apply notwithstanding the fact that
the Senior Loan or any claim for or under the Senior Loan is subordinated,
avoided or disallowed, in whole or in part, under the Bankruptcy Code or
other applicable federal or state law. In the event of a Bankruptcy
Proceeding, the amounts due under the Senior Loan shall include all
interest, breakage costs and fees accrued on the Senior Loan, in accordance
with and at the rates specified in the Credit Agreement and the other Loan
Documents, both for periods before and for periods after the commencement
of any Bankruptcy Proceeding, even if the claim for such interest is
disallowed pursuant to applicable law.
12. Foreclosure; Possession of Collateral.
(a) If the Agent shall take possession of any of the
Collateral after the occurrence of any Event of Default (upon institution
of foreclosure proceedings or otherwise) as and to the extent provided by
the Loan Documents, the Agent shall collect all sales proceeds,
distributions, dividends, rents or other revenues from the Collateral and
pay all expenses incurred by it in connection with the operation and
management of the Collateral in question and such expenses shall be deemed
Expenses as defined in Section 14 below. With the consent of the Majority
Banks, the Agent may employ an independent third party management firm
whose fees shall be negotiated on an arm's length basis; provided, however,
notwithstanding the foregoing, if the Majority Banks cannot agree as to the
employment of a management firm within ten (10) Business Days of request
therefor by Agent, Agent shall be entitled to employ such independent third
party management firm as Agent deems necessary to protect and enforce the
interests and rights of all the Banks and to pay such management fees and
expenses to such firm as Agent in its good faith business judgment deems
appropriate under the circumstances. All management fees paid to an
independent third party and all other reasonable fees and expenses paid by
the Agent in accordance with the terms of this Agreement shall be deducted
from the distributions, dividends, revenues, rents and/or sales proceeds
collected, or if such rents and sales proceeds are insufficient, such fees
and expenses shall be paid by the Banks, with each Bank paying such Bank's
Commitment Percentage thereof within ten (10) days of request therefor.
(b) If there shall be a foreclosure sale of all or a
portion of the Collateral, the Agent shall bid at the foreclosure sale on
behalf of the Banks to raise any bid made by others at said sale, up to the
highest price agreed upon by the Majority Banks (not to exceed the
indebtedness outstanding under the Loan Documents), or if the Majority
Banks are unable to agree, then an amount determined by Agent in the
exercise of its good faith business judgment (but in no event in an amount
in excess of the indebtedness outstanding under the Loan Documents). Upon
completion of a foreclosure sale and the conveyance of said Collateral to
the highest bidder, the Agent shall render an accounting for monies
received and monies expended between the date of taking possession of such
Collateral and the date of conveyance to the highest bidder, including,
without limitation, expenses of foreclosure. If the highest bidder shall
be someone other than the Agent, then, upon receipt from the highest bidder
of the amount of the bid, the Agent will remit to the Banks, in accordance
with the provisions of Section 8, above, the net amount received from the
foreclosure sale, after deducting all reasonable Expenses incurred by Agent
in accordance with the terms of this Agreement.
(c) Any decision to sell any of the Collateral acquired
by the Agent, the Banks or their nominees must be approved by the Majority
Banks; provided, however, that the consent of all of the Banks shall be
required if the sale is other than for all cash. If all of the Banks agree
to take a purchase money obligation and mortgage instrument or security
interest in part payment for the sale of any of the Collateral acquired by
the Agent, the Banks or their nominees, as the case may be, then the Agent,
the Banks and their nominees, as applicable, agree to enter into an
agreement with respect to that obligation and mortgage instrument or
security interest, defining the Banks' or their nominees' rights in the
same in accordance with the Banks' or their nominees' Commitment
Percentage, which agreement shall be in all material respects similar to
this Agreement, to the extent this Agreement is appropriate or applicable.
In the absence of such an agreement, the obligation and mortgage instrument
or security interest shall be held by the mortgagee or security interest
holder for the ratable benefit of the Banks and their nominees in
accordance with their respective Commitment Percentages and shall be
subject to the terms of this Agreement to the extent applicable.
(d) If any of the Agent, the Banks or any nominee of
any of them acquires the Collateral either by foreclosure or deed in lieu
of foreclosure, then the Collateral shall be held for the pro rata benefit
of the Banks by a corporation or other entity approved by the Majority
Banks, the interests in which shall be owned by the Banks or their nominees
based upon their respective Commitment Percentages. This Agreement shall
continue in full force and effect during such ownership of the Collateral
and this Agreement shall govern the rights and obligations of the parties
in connection with such ownership, until such time as the written agreement
described below in this Subsection 12(d) below is executed. In the event
such acquisition shall occur, the Agent and the Banks agree to negotiate in
good faith to reach agreement relating to the ownership, operation,
maintenance, management, leasing and marketing of the Collateral, which
agreement shall be consistent with the following: (i) except as otherwise
provided in this subparagraph, decisions regarding the administration and
disposition of the Collateral and all other decisions with respect to the
Collateral shall require the consent of the Majority Banks; (ii) the
Collateral will not be held as a long-term investment and will be marketed
to sell such Collateral in a time period consistent with the regulations
applicable to national banks, foreign banks or life insurance companies for
owning real estate, whichever is shorter; (iii) certain decision making
with respect to the day-to-day operations of the Collateral may be
delegated to management and leasing agents, provided that, subject to the
terms of Paragraph 12(a) above, all agreements with such management and
leasing agents will be subject to the approval of the Majority Banks; (iv)
all decisions reserved to the owner in such agreements will be subject to
the approval of the Majority Banks; (v) all expenses incurred by the Agent
and the Banks in connection with the Collateral shall be allocated among
the Banks pro rata in accordance with their respective Commitment
Percentages; and (vi) each Bank shall waive its right to partition the
Collateral. The documents shall provide for customary remedies in the
event any Bank does not pay its pro rata share of such expenses. All
proceeds received from the operation, sale or other disposition of the
Collateral (net of expenses incurred in connection therewith) shall be paid
to the Banks in accordance with each Bank's Commitment Percentage, and
shall be paid in the same priority as set forth in Section 8(a)(ii),
above.
13. Transfers. Each Bank may sell, assign, pledge or enter into
participations for all or any part of their respective interests in the
Loan and Loan Documents in compliance with the terms of the Credit
Agreement, but not otherwise. Notwithstanding anything herein, in the
Credit Agreement or elsewhere to the contrary, any assignment, or sale of a
participation in, any interest in or part of the Loan or the Loan Documents
shall be subject to the terms of this Agreement and the Credit Agreement,
and as a condition to any such assignment, the assignee shall acknowledge
that it is subject to the terms of this Agreement and the Credit Agreement,
and assume the obligations of a Bank hereunder and thereunder, such
agreement to be in form and substance satisfactory to Agent.
14. Cost and Expense Sharing. Within thirty (30) days of
request therefor from Agent (to the extent that the same have not been paid
by Borrowers or Guarantor after demand for payment of the same), each Bank
will pay its pro rata share or otherwise make arrangements satisfactory to
Agent for the payment thereof (based on its Commitment Percentage) of all
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys' fees, appraisers' fees and consultants' fees) which
are incurred by the Agent (a) in connection with the administration of the
Loan and the Loan Documents or enforcement of the obligations of Borrowers
and the other parties thereto under the Loan and the Loan Documents, (b) in
connection with the foreclosure of the Loan Documents, or (c) which, by the
terms of this Agreement, are deemed to be expenses (hereinafter
collectively referred to as the "Expenses"). The Banks shall pay their
Commitment Percentage of Expenses for attorneys, appraisers and consultants
retained by Agent. In the event Agent later receives reimbursement from
Borrowers or Guarantor or another source for such costs, expenses or other
Expenses, Agent shall promptly refund to each Bank its ratable share of
such reimbursement.
15. Payments.
(a) Except as expressly provided herein to the
contrary, nothing herein shall be deemed (i) to give any Bank any advantage
over the others with respect to reimbursement for, or other payment on
account of, any of Borrowers', Guarantor's or other Person's obligations
under the Loan Documents or any attorneys' fees or expenses incurred by
Agent in connection with enforcement of the obligations of such Persons
under any of the Loan Documents, or (ii) to relieve any Bank from absorbing
its respective pro rata part of any losses sustained with respect to the
amount of such Person's obligations under any of the Loan Documents.
(b) If any Bank is entitled to and decides to require a
payment of any amounts described in Article 4 of the Credit Agreement, such
Bank shall (i) give written notice thereof to the Agent and the Borrowers,
and (ii) deliver to Agent such other information, certifications and
documentation as is required to be furnished to the Borrowers under the
terms of Section 4.13 of the Credit Agreement, and such amount shall be
payable to such Bank in accordance with the terms of the Credit Agreement.
16. Standard of Care. Agent shall service the Loan in
accordance with its customary practices in servicing loans entered into
solely for its own account, and as provided in this Agreement. Nothing
contained in this Agreement or the other Loan Documents is intended to
create an agency or fiduciary relationship, it being acknowledged that
Agent's obligations are primarily administrative in nature. Agent shall
not be required to take or omit to take any action which violates the terms
of this Agreement or any of the Loan Documents or violates any laws, rules,
court orders and decisions, ordinances, regulations, statutes,
requirements, codes and executive orders, now existing or hereafter
created.
17. Defaults by Bank.
(a) If for any reason any Bank (a "Defaulting Bank")
shall fail to abide by its obligations under this Agreement or under any
Loan Document and such failure shall continue for ten (10) Business Days
after notice with respect to monetary obligations hereunder or under any
Loan Document or thirty (30) days after notice with respect to non-monetary
obligations hereunder or under any Loan Document (provided, however, that
if such non-monetary default is of a nature that the same cannot be
reasonably cured within thirty (30) days and such Bank shall have commenced
to cure such non-monetary default within such period and shall thereafter
proceed with reasonable diligence and good faith to cure such non-monetary
default, such period shall be extended for such longer period as shall be
necessary for such Bank to cure such default with all reasonable diligence,
but in no event beyond that date which is one hundred twenty (120) days
after such Bank received notice of such default), then, in addition to the
rights and remedies that may be available to the Agent at law and in
equity, such Defaulting Bank's right to participate in the administration
of the Loan Documents, including, without limitation, any rights to consent
to or direct any action or inaction of the Agent pursuant to Section s 9 or
10 above or otherwise, or to be taken into account in the calculation of
Majority Banks, shall be suspended during the pendency of such failure. If
for any reason a Bank fails to make timely payment to the Agent of any
amount required to be paid to it hereunder (without giving effect to any
notice or cure periods), in addition to the other rights and remedies which
the Agent may have under this Section 17 or otherwise, the Agent shall be
entitled (i) to collect interest from such Bank for the period from the
date on which the payment was due at the Federal Funds Effective Rate, for
each day during such period, (ii) to withhold or setoff, and to apply to
the payment of the defaulted amount and any related interest, any amounts
to be paid to such Bank under this Agreement or the Loan Documents, and
(iii) to bring an action or suit against such Bank in a court of competent
jurisdiction to recover the defaulted amount and any related interest.
(b) In the event a Bank becomes a Defaulting Bank,
other Banks who are not Defaulting Banks (the "Current Banks") shall have
the right, but not the obligation, in their sole discretion, to acquire
(or, if more than one Bank exercises such right, each such Bank shall have
the right to acquire, pro rata based on their relative Commitment
Percentages, or such proportion as they may mutually agree) the Commitment
of the Defaulting Bank. Upon any such purchase of the Commitment of the
Defaulting Bank, the Defaulting Bank's interest in the Obligations and its
rights hereunder and under the Loan Documents (but not its liability with
respect thereto or under the Loan Documents or this Agreement to the extent
that the same relate to the period prior to the effective date of the
purchase) shall terminate at the date of purchase, and the Defaulting Bank
shall promptly execute all documents reasonably requested to surrender and
transfer such interest. The purchase price for the Defaulting Bank's
Commitment shall equal the principal balance of the Obligations outstanding
and owed by Borrowers to the Defaulting Bank, plus any and all accrued and
unpaid interest thereon and fees in connection therewith. On or before the
date of such purchase, the Defaulting Bank shall pay to the Agent a
processing fee of Two Thousand Dollars ($2,000.00).
18. Amendments. This Agreement may not be amended, modified or
terminated except by an agreement in writing signed by each Bank and Agent.
19. NOT A LOAN; NO DUTY TO PURCHASE. THIS AGREEMENT SHALL IN NO
WAY BE CONSTRUED AS PROVIDING AN EXTENSION OF CREDIT BY ANY BANK TO ANY
OTHER OF THE BANKS. NO BANK SHALL HAVE THE OBLIGATION TO PURCHASE THE
PERCENTAGE INTEREST OF ANY OTHER PARTY HERETO UPON ANY DEFAULT BY BORROWERS
OR ANY OTHER PERSON UNDER ANY OF THE LOAN DOCUMENTS OR IN ANY OTHER EVENT
WHATSOEVER.
20. Withholding Taxes. If Agent shall be required by law to
deduct and withhold taxes or other charges imposed by any jurisdiction
("Taxes") from any amounts payable to a Bank with respect to the Loan
because such Bank is a Non-Exempt Person (as hereinafter defined), Agent
shall be entitled to do so with respect to such Bank's interest in such
payment (all withheld amounts being deemed paid to such Bank). "Non-Exempt
Person" is any person other than a person who is either (i) a United States
person, or (ii) has on file with Agent for the year involved such duly
executed forms or statements which may, from time to time, be prescribed by
law and which, pursuant to applicable provisions of (a) an income tax
treaty between the United States and the country of residence of such
person, (b) the United States Internal Revenue Code of 1986, as amended and
as such may hereafter be amended, or (c) any applicable rules or
regulations in effect under (i) or (ii) above, and which permit Agent to
make such payments free of any obligation or liability for withholding.
Each Bank agrees to indemnify Agent against and to hold Agent harmless from
any Taxes, interest, penalties and attorneys' fees arising from any failure
of Agent to withhold Taxes from payments made to such Bank in reliance upon
any representation or document made or provided by such Bank to Agent, it
being agreed that (x) Agent shall be absolutely and unconditionally
entitled to accept any such representation or document as being true and
correct in all respects and to fully rely thereon without any obligation or
responsibility to investigate the same, and (y) such Bank shall, upon
request of Agent and at the Bank's sole cost and expense, defend any claim
relating to the indemnification by counsel selected by such Bank reasonably
satisfactory to Agent. Each Bank represents to Agent that such Bank is not
a Non-Exempt Person and that Agent is not obligated under applicable law to
withhold Taxes on any sum paid to such Bank pursuant to this Agreement. If
requested by Agent, contemporaneously with the execution of this Agreement,
and, if requested by Agent from time to time as necessary during the term
of this Agreement, each Bank shall deliver to Agent evidence reasonably
satisfactory to Agent substantiating that such Bank is not a Non-Exempt
Person and that Agent is not obligated under applicable law to withhold
Taxes on sums paid to it with respect to the Loan or otherwise. As used
herein, the term "Person" means any individual, firm, corporation,
association, partnership, joint venture, trust, other entity or tribunal,
and the term "Tribunal" means any state, federal, foreign or other court or
governmental department, commission, board, bureau, agency or
instrumentality.
21. No Reliance By Others. None of the provisions of this
Agreement shall inure to the benefit of Borrowers, Guarantor or any Person
other than the Banks and Agent; consequently, neither any Borrower nor
Guarantor shall be, and no Person other than the Banks and Agent shall be,
entitled to rely upon or raise as a defense, in any manner whatsoever, the
failure of any Bank or Agent to comply with the provisions of this
Agreement. Neither the Banks nor the Agent shall incur any liability to
Borrowers, Guarantor or any other Person for any act or omission of the
Banks or Agent.
22. Legal Fees. If any legal or equitable action or proceeding
is brought by Agent or a Bank to enforce or construe a provision of this
Agreement, the unsuccessful party in such action or proceeding, whether
such action or proceeding is settled or prosecuted to final judgment, shall
pay all of the reasonable attorneys' fees and costs incurred by the
prevailing party.
23. Notices. All notices and other communications hereunder
shall be in writing (unless verbal communications are expressly permitted
hereunder) and shall be personally delivered or delivered by commercial
courier service or deposited in the United States Mail (certified, return
receipt requested and postage prepaid), or transmitted by facsimile, in
each case addressed to the party to whom notice is being given at its
address set forth below its signature hereto or at such other address as
may hereafter be designated in writing by a party hereto to the Agent and
the other Banks. All such notices or communications shall be deemed given
on (i) the date received if delivered personally or when delivered by
commercial courier service, (ii) the date of receipt or refusal to accept
receipt thereof if sent by certified mail, or (iii) the first Business Day
following the Business Day of transmission by facsimile. Any verbal
communications permitted hereunder shall be promptly confirmed in writing.
24. Construction. All headings appearing in this Agreement are
for convenience only and shall be disregarded in construing this Agreement.
No waiver of any breach of the terms of this Agreement shall be implied
from any failure to take, or delay in taking, action with respect to such
breach or any previous waiver of any similar or unrelated breach. A waiver
of any term of this Agreement must be made in writing and shall be limited
to the express terms of such writing. The parties hereto intend that this
Agreement be afforded the protections of Section 510(a) of the Bankruptcy
Code.
25. Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
26. Severability. The invalidity, illegality or
unenforceability of any provision of this Agreement, pursuant to judicial
decree, shall not affect the validity or enforceability of any other
provision hereof, all of which shall remain in full force and effect.
27. Successors and Assigns. Except as otherwise provided
herein, the terms and provisions of this Agreement shall inure to the
benefit of and be binding upon and enforceable by the respective successors
and assigns of the parties hereto.
28. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
29. Termination. Unless otherwise agreed to by the parties,
this Agreement shall terminate when the Obligations have been paid and
finally discharged in full and the obligations of the Banks to advance
funds to Borrowers under the Credit Agreement are terminated and no portion
of the Obligations has been reinstated or is required to be repaid by the
Banks or Agent to Borrowers or, if the Agent, Banks or the Banks' nominees
take title to the Collateral by foreclosure or conveyance in lieu of
foreclosure, when the Collateral is thereafter sold to a third party
purchaser and all purchase money financing, if any, is paid in full. The
provisions of Section 14 of this Agreement and all provisions requiring
the Banks to indemnify the Agent shall survive repayment of the Loan and
termination of this Agreement.
30. Judicial Interpretation. In the event the provisions of
this Agreement require judicial or other interpretation, it is agreed that
the court interpreting or construing same shall not apply a presumption
that the terms hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be more strictly
construed against a party who by itself or through its agents prepared the
same, it being agreed that all parties to this Agreement participated in
the preparation of this Agreement.
31. No Joint Venture. This Agreement shall not be construed to
create a partnership or joint venture between the parties hereto nor shall
Agent have any fiduciary obligations to any of the Banks.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date
first above written.
BANKBOSTON, N.A. (as both Bank and Agent)
By: /s/ Kevin C. Hake
_____________________________________
Its: __________________________________
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Kevin C. Hake
Facsimile: 770/390-8434
and
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Facsimile: 617/434-7108
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ Christopher A. Pucill
________________________________
Its: ______________________________
Morgan Stanley Senior Funding, Inc.
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Michael T. McLaughlin
Fax: 212/761-0587
BANKTEXAS, N.A.
By: /s/ Robert Weakly
____________________________________
Its: ____________________________________
BankTEXAS, N.A.
8820 Westheimer
Houston, Texas 77063
Attn: Mr. Robert Weakly
Facsimile: ___________________
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
___________________________________
Its: ___________________________________
Bank of Scotland
New York Branch
565 Fifth Avenue
New York, New York 10017
Attn: Annie Chin Tat
Facsimile: 212/557-9460
COMERICA BANK-TEXAS
By: /s/ Michael McAffee
___________________________________
Its: ___________________________________
Comerica Bank-Texas
One Sugar Creek Center Blvd
2nd Floor
Sugarland, Texas 77478
Attn: Michael McAffee
Facsimile: ___________________
COMPASS BANK
By: /s/ John Reichenbach
_____________________________________
Its: ____________________________________
Compass Bank
8080 North Central Expressway, Suite 370
Dallas, Texas 75206
Attn: John Reichenbach
Facsimile: 214/890-8668
FIRST AMERICAN BANK TEXAS, SSB
By: /s/ James R. Reynolds
___________________________________
Its: ___________________________________
First American Bank Texas, SSB
14651 Dallas Parkway
Suite 400
Dallas, Texas 75240
Attn: Jeffrey C. Schultz
Facsimile: 972/419-3308
KREDIETBANK N.V.
By: /s/ Robert Smauffer
___________________________________
Its: ___________________________________
By: /s/ Michael Curran
___________________________________
Its: ___________________________________
Kredietbank N.V.
125 West 55th Street
10th Floor
New York, New York 10019
Attn: Frank Bayne
Facsimile: 212/541-0793
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Patricia Hudson
___________________________________
Its: ___________________________________
New York Life Insurance Company
51 Madison Avenue
Room 907
New York, New York 10010
Attn: Kevin Smith
Facsimile: 212/576-7528
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
___________________________________
Its: President
Wellsford Real Properties, Inc.
610 Fifth Avenue
7th Floor
New York, New York 10020
Attn: Greg Hughes
Facsimile: 212/333-2323
KEYPORT LIFE INSURANCE COMPANY
By: /s/ Daniel T.H. Yin
___________________________________
Its: ___________________________________
Keyport Life Insurance Company
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619
STRATA FUNDING LTD.
By: /s/ Gregory L. Smith
___________________________________
Its: ___________________________________
Strata Funding Ltd.
c/o Chancellor LGT Senior Secured
Management, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: Gregory L. Smith
Facsimile: 212/278-9619