EXHIBIT 10.1
Loan Number: 040401
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 29, 2004
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..................................................29
2.14. Termination.................................................30
2.15. Material Adverse Change to Borrower or a Collateral Pool
Property....................................................32
2.16. Release of Collateral Followed by a Permanent Loan..........33
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...............................................39
4.3. Prepayments.................................................40
4.4. Prepayment Fee..............................................41
4.5. Additional Payment Obligations..............................41
4.6. Additional Compensation in Certain Circumstances............44
5. CONDITIONS OF LENDING................................................45
5.1. Initial Borrowing Tranche...................................45
5.2. Each Subsequent Borrowing Tranche...........................47
6. REPRESENTATIONS AND WARRANTIES.......................................48
6.1. Representations and Warranties..............................48
6.2. Updates.....................................................57
6.3. Survival of Representations and Warranties..................58
7. COVENANTS............................................................58
7.1. Covenants...................................................58
7.2. Reporting Requirements......................................66
7.3. Additional Affirmative Covenants............................68
7.4. Additional Negative Covenants...............................74
7.5. Additional Financial Covenants..............................75
8. DEFAULT..............................................................76
8.1. Events of Default...........................................76
8.2. Consequences of Event of Default............................78
8.3. Notice of Sale..............................................78
9. MISCELLANEOUS........................................................79
9.1. Cooperation by Borrower; Borrower's Obligations.............79
9.2. Successors and Assigns......................................79
9.3. Modifications, Amendments or Waivers........................79
9.4. Forbearance.................................................79
9.5. Remedies Cumulative.........................................80
9.6. Reimbursement and Indemnification of Lender and Servicer by
Borrower; Taxes.............................................80
9.7. Holidays....................................................80
9.8. Notices.....................................................81
9.9. Severability................................................82
9.10. Governing Law; Consent to Jurisdiction and Venue............82
9.11. Prior Understanding.........................................82
9.12. Duration; Survival..........................................82
9.13. Disclosure of Information...................................83
9.14. Exceptions..................................................83
9.15. Relationship of Parties; No Third Parties Benefited.........83
9.16. Authority to File Notices...................................83
9.17. WAIVER OF TRIAL BY JURY.....................................84
9.18. Qualifying Rate Swap Agreements.............................84
9.19. Interpretation..............................................84
9.20. Brokerage Fee...............................................84
9.21. Advertising.................................................85
9.22. Time of Essence.............................................85
9.23. Counterparts................................................85
9.24. Interpretation of Certain Representations, Warranties and
Covenants...................................................85
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is dated as of June __, 2004 and is
made by and among MID-AMERICA APARTMENT COMMUNITIES, INC., a Tennessee
corporation having an address at 6584 Poplar Avenue, Suite 300, Memphis,
Tennessee 38138, ("REIT"), MID-AMERICA APARTMENTS, L.P., a Tennessee limited
partnership having an address c/o Mid-America Apartment Communities, Inc., 6584
Poplar Avenue, Suite 300, Memphis, Tennessee 38138 ("Operating Partnership"),
and MID-AMERICA APARTMENTS OF TEXAS, L.P., a Texas limited partnership having an
address c/o Mid-America Apartment Communities, Inc., 6584 Poplar Avenue, Suite
300, Memphis, Tennessee 38138 ("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 6305 Humphreys Boulevard, Suite 100, Memphis,
Tennessee 38120.
RECITALS
WHEREAS, Borrower desires to obtain a revolving credit loan from Lender in
an amount up to, but not exceeding One Hundred Million and No/100 Dollars
($100,000,000.00);
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.
"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 Agreement, 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.
"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.
"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 One Hundred Million and NO/100 Dollars
($100,000,000.00).
"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.
"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:
(a) eight basis points (.0008) for Qualifying Rate Swap Agreements having
an initial term less than twelve (12) months;
(b) ten basis points (.0010) for Qualifying Rate Swap Agreements having an
initial term less than thirty-six (36) months but equal to or greater than
twelve (12) months;
(c) twelve basis points (.0012) for Qualifying Rate Swap Agreements having
an initial term less than sixty (60) months but equal to or greater than
thirty-six (36) months; or
(d) fifteen basis points (.0015) for Qualifying Rate Swap Agreements having
an initial term equal to or greater than sixty (60) months.
"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 7.3.1.11.
"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
September 1 of each calendar year during the term of this Agreement, commencing
on or about September 1, 2005, (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.
"Freddie Mac" shall mean the Federal Home Loan Mortgage Corporation.
"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 sixty-two basis points (.0062) for thirty (30) day
Borrowing Tranches and ninety (90) day Borrowing Tranches, and sixty-nine basis
points (.0069) for one hundred eighty (180) day or three-hundred sixty (360) day
Borrowing Tranches.
"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 and (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
Qualifying Rate Cap Agreement;
(ii) for each Qualifying Rate Swap Agreement, the product of (a) the
stipulated notional amount times (b) the fixed pay rate stipulated in such
Qualifying Rate Swap Agreement;
(iii) seventy-five percent of the G-Fee Amount for all outstanding
Borrowing Tranches at the time of determination;
(iv) the greater of (A) seventy-five percent (75%) of the Servicing Fee
Payment for all outstanding Borrowing Tranches at the time of determination or
(B) seventy-five percent (75%) of the Minimum Servicing Fee payable under
Section 2.5.5;
(v) seventy-five percent (75%) 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
September 1 of each calendar year during the term of this Agreement, commencing
on or about September 1, 2005, (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.
"Hedged Debt Service Coverage Ratio" shall mean, at the time of
determination, the then prevailing computation of (i) seventy-five percent (75%)
of the Net Operating Income divided by (ii) the 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
(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 Notic" 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.
"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
Freddie Mac and, in connection therewith, shall assign all of its interests in
this Agreement and the other Loan Documents to Freddie 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 September 1 of each calendar year during the term of this Agreement,
commencing on or about September 1, 2005, (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.
"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 seventh (7th) 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 Loan to Value Ratio" shall mean 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.
"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
September 1, commencing September 1, 2005, 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 Freddie 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.
"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.
"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, and (vi)
other than in connection with a termination of this Agreement under and pursuant
to the terms of Section 2.14 hereof, 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.
"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 Freddie Mac
pursuant to Section 4.5.3 hereof, and (vii) other than in connection with a
termination of this Agreement under and pursuant to the terms of Section 2.14
hereof, 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.
"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 Freddie
Mac designated by Freddie Mac as "Reference BillsSM" and issued by Freddie Mac
at regularly scheduled auctions. In the event Freddie Mac shall at any time
cease to designate any unsecured general obligations of Freddie Mac as
"Reference BillsSM", Lender shall be permitted to exercise its rights under
Section 3.4.
"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 Bill Index Page (i.e. the
Freddie Mac debt securities web page accessed via the Freddie Mac website at
www.freddiemac.com), or (b) at the option of Lender, in any publication of
Reference BillsSM auction results designated by Freddie Mac. Notwithstanding any
of the foregoing to the contrary, in the event Freddie 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 seventy-five percent (75%) 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.
"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.
"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.
"Valuation Caused Decrease" shall have the meaning set forth in Section
2.13.3.
"Valuation Caused Increase" shall have the meaning set forth in Section
2.13.3.
"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;
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 Freddie 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.
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.
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.
Borrower shall pay to Lender (i) a non-refundable transaction fee in the
amount of Four Hundred Thousand and NO/100 Dollars ($400,000.00) which shall be
due on the Closing Date as further consideration for Lender's cost in
underwriting the Commitment, and (ii) a non-refundable transaction fee of Two
Hundred Fifty Thousand and NO/100 Dollars ($250,000.00) in the aggregate, of
which One Hundred Twenty-Five Thousand and NO/100 Dollars ($125,000.00) shall be
paid on the Closing Date, and 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, 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 such balance shall be paid to Lender in
full on the first anniversary of the Closing Date.
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 (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 six (6) months after the Closing Date.
2.5.4. Minimum Usage Fee.
Accruing from 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 for all Borrowing
Tranches outstanding 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.
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 1.40 : 1.00.
2.6.1.3. the number of Borrowing Tranches outstanding shall not
exceed ten (10);
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 1.40:1.00.
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.
Borrower or Proposed Borrower, as the case may be, may propose to add one
or more 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.
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.
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.
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, 2005. 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 Valuation(s) pursuant to Section 2.13.2 previously resulted in a
decrease in the Market Value of the Collateral Pool Properties in the aggregate
(each such decrease the "Valuation Caused Decrease"), and thereafter a Valuation
discloses that the Market Value of the Collateral Pool Properties in the
aggregate has increased over the then current Market Value of the Collateral
Pool Properties in the aggregate, then (i) the Market Value of the Collateral
Pool Properties shall be deemed to have increased (the "Valuation Caused
Increase") to the extent of the Valuation Caused Decrease, and (ii) the
Valuation Caused Decrease shall simultaneously be deemed reduced (but not below
zero) by an amount equal to the Valuation Caused Increase.
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 (a) Borrower delivers to
Lender thirty (30) days advance written notice of its irrevocable election to
terminate specifying the Expiration Date, (b) Borrower has provided each
counterparty with all necessary notice under each Qualifying Rate Swap Agreement
to terminate each Qualifying Rate Swap Agreement as of the Expiration Date and
the Borrower has deposited with the Lender for payment to the counterparty of
each Qualifying Rate Swap Agreement, any payments due under the Qualifying Rate
Swap Agreement and all Hedge Fees (as defined below) and (c) 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 (i) the Prepayment Fee, if any, and
(ii) 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,
(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.
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 Qualifying Rate Swap Agreement
to terminate each Qualifying 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 Qualifying Rate Swap Agreement, any payments due under
any Qualifying Rate Swap Agreement and all Hedge Fees.
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.
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 sixty-two basis points (.0062) for thirty (30) day or ninety (90) day
Borrowing Tranches and sixty-nine basis points (.0069) for one hundred eighty
(180) day or three hundred sixty (360) day Borrowing Tranches.
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.
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 1.40 : 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 1.40 : 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.
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 Freddie Mac shall at any time cease to designate any unsecured
general obligations of Freddie Mac as "Reference BillsSM", at its option, Lender
may (i) select from time to time another unsecured general obligation of Freddie
Mac having original maturities, most comparable to the term of the Interest
Period for the applicable Borrowing Tranche, and issued by Freddie 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 Freddie
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).
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 Qualifying Rate Swap Agreement to terminate
each Qualifying 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 Qualifying Rate Swap Agreement, any payments due under any
Qualifying 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.
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 any twelve (12)
month period following the Closing Date, 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 Section 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.
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 Business Day immediately prior to the first (1st) 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 simultaneous
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.
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, 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, or (iii) terminates this Credit
Agreement pursuant to Section 3.4.3, 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.
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. If any Qualifying Rate Cap Agreement or
Qualifying Rate Swap Agreement necessary for compliance with
Section 2.6.1.5 has an initial term expiring before the Maturity
Date, 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.
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.
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.
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, 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
Qualifying Rate Swap Agreement to terminate each Qualifying 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 Qualifying Rate Swap
Agreement, any payments due under any Qualifying 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:
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.
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 Freddie Mac to
the extent not previously paid all fees accrued through the Closing Date and all
of Lender's and Freddie 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 Freddie 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.
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.
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.
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,
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.
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.
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). 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.
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, Benefit Arrangements and
Multiemployer Plans have been administered in accordance
with their terms and any Law.
6.1.19. Intentionally Omitted.
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.
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.
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.
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.
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.
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.
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). Lender has
approved the property management agreements listed below: (a) Property
Management Agreement (Celery Stalk Apartments, Dallas County, Texas) by and
between MAA Texas and Operating Partnership dated June 29, 2004, (b) Property
Management Agreement (Cypresswood Court Apartments, Harris County, Texas) by and
between MAA Texas and Operating Partnership dated June 29, 2004, (c) Property
Management Agreement (Green Tree Place Apartments, Montgomery County, Texas) by
and between MAA Texas and Operating Partnership dated June 29, 2004, (d)
Property Management Agreement (Lodge at Timberglen Apartments, Dallas County,
Texas) by and between MAA Texas and Operating Partnership, dated June 29, 2004,
and (e) Property Management Agreement (Westborough Crossing Apartments, Harris
County, Texas) by and between MAA Texas and Operating Partnership dated June 29,
2004.
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.
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 Qualifying Rate Swap
Agreement, which shall include, but not be limited to, compliance with all
notice requirements under each Qualifying Rate Swap Agreement and the deposit
with Lender for payment to the applicable counterparty of each Qualifying Rate
Swap Agreement, any payments due under any Qualifying 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).
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
Section 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.
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.
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.
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:
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.
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
Qualifying Rate Swap Agreement, which shall include, but not be limited to,
compliance with all notice requirements under each Qualifying Rate Swap
Agreement and the deposit with Lender for payment to the applicable counterparty
of each Qualifying Rate Swap Agreement, any payments due under any Qualifying
Rate Swap Agreement and all Hedge Fees.
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 Qualifying Rate Swap Agreement, which
shall include, but not be limited to, compliance with all notice requirements
under each Qualifying Rate Swap Agreement and the deposit with Lender for
payment to the applicable counterparty of each Qualifying Rate Swap Agreement,
any payments due under any Qualifying Rate Swap Agreement and all Hedge Fees and
(ii) the Expiration Date, Borrower will furnish or cause to be furnished to
Lender:
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. Other Required Notice.
Borrower shall promptly notify Lender of any Material Adverse Change
affecting Borrower, any Collateral Pool Property, this Agreement or the other
Loan Documents taken as a whole, including, without limitation;
7.2.3.1. Regulatory Proceedings. The receipt of notice of the
commencement of any rulemaking or disciplinary proceeding or
the promulgation of any proposed or final rule which would
cause, or may reasonably be expected to cause, a Material
Adverse Change;
7.2.3.2. Bankruptcy Proceedings. The receipt of the notice of 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;
7.2.3.3. Regulatory Supervision or Penalty. The receipt of notice
from any Official Body having jurisdiction over Borrower
that (i) Borrower is being placed under regulatory
supervision, (ii) any license, necessary 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 (iii) 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 cause, or may reasonably
be expected to cause, a Material Adverse Change;
7.2.3.4. Environmental Claim. The receipt from any Official Body
or other Person of any notice of violation, claim, demand,
abatement, order or other order or direction (conditional or
otherwise) for any damage, including personal injury
(including sickness, disease or death), tangible or
intangible property damage, contribution, indemnity,
indirect or consequential 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 a Borrower;
7.2.3.5. Accounting Changes. Any material change in any
Borrower's accounting policies or financial reporting
practices;
7.2.3.6. Legal and Regulatory Status. The occurrence of any act,
omission, change or event, including any approval by an
Official Body, the result of which is to change or alter in
any way the legal or regulatory status of any Borrower; and
7.2.3.7. 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, 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.
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. 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.
7.3.1.2. 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:
(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.
(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.
(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.
7.3.1.3. 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.
7.3.1.4. 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.
7.3.1.5. 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
(e) to receive any other information that Lender deems
reasonably necessary or relevant in connection with any Loan
Request, any Loan Document or the Loan.
7.3.1.6. 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.
7.3.1.7. 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.
7.3.1.8. 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 abate 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.
7.3.1.9. 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.
7.3.1.10. 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.
7.3.1.11. 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 7.3.1.11(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.
7.3.1.12. 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.
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.
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 the aggregate
Market Values of any group of Collateral Pool Properties
located within a one mile radius shall not exceed
twenty-five percent (25%) of the aggregate Market Values of
all Collateral Pool Properties.
7.5.1.2. 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.
7.5.1.3. 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.
7.5.1.4. 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).
7.5.1.5. 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;
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;
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).
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, (iii) any Hedge Fees and other costs and expenses it may
incur in terminating any Qualifying 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.
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.
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.
Lender's Notice Address and Numbers:
Financial Federal Savings Bank
6305 Humphreys Blvd., Suite 100
Memphis, TN 38120
Attention: Jon Van Hoozer, Vice President
Fax: (615) 297-7265
with a copy to:
Financial Federal Savings Bank
2104 Portland Avenue
Nashville, TN 37212
Attention: Steve Curnutte, Senior Vice President
Fax: (615) 297-7265
Borrower's Notice Address:
Mid-America Apartment Communities, Inc.
Mid-America Apartments, L.P.
Mid-America Apartments of Texas, L.P.
6584 Poplar Avenue, Suite 300
Memphis, TN 38138
Attention: Simon R.C. Wadsworth
Fax: (901) 682-6667
with a copy to:
Bass, Berry & Sims PLC
100 Peabody Place, Suite 900
Memphis, Tennessee 38103
Attention: John A. Stemmler
Fax: (901) 543-5999
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.
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.
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.
/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.Qualifying Rate Swap Agreements. Notwithstanding anything to the
contrary contained herein, upon the termination of this Agreement and
repayment of the Loan in full, in lieu of terminating each Qualifying
Rate Swap Agreement, Borrower may cause the applicable counterparty to
deliver to Lender, in form and substance satisfactory to Lender, an
agreement to terminate the related Swap Credit Enhancement Agreement
(or any similar agreement pursuant to which Lender has provided any
credit enhancement with respect to a Rate Swap Agreement) in form and
substance satisfactory to Lender, effective as of the date on which
this Agreement is terminated and the Loan is paid in full.
9.19. 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.
9.20. 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.
9.21. 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.
9.22. Time of Essence.
Time is of the essence with respect to each obligation of Borrower and
Lender hereunder.
9.23. 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.
9.24. 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.
[SIGNATURE PAGE TO FOLLOW]
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:
WITNESS: MID-AMERICA APARTMENT COMMUNITIES, INC.
/s/John A Stemmler By: /s/Al Campbell
Name: Al Campbell
Seal Title: Senior Vice-President and Treasurer
WITNESS: MID-AMERICA APARTMENTS, L.P.
By: Mid-America Apartment Communities, Inc., its
sole general partner
/s/John A Stemmler By: /s/Al Campbell
Seal Name: Al Campbell
Title: Senior Vice-President and Treasurer
WITNESS: MID-AMERICA APARTMENTS OF TEXAS, L.P.
By: MAC of Delaware, Inc., its sole general partner
/s/Crystal Tessaro By: /s/John A Good
Name: John A. Good
Title: Assistant Secretary
Seal
[Signature Page to Credit Agreement]
LENDER:
FINANCIAL FEDERAL SAVINGS BANK
WITNESS: By: /s/Stephen B Curnutte
/s/Nancy Bre Name: Stephen B Curnutte
Title: Sr. Vice President
Seal
[Signature Page to Credit Agreement]
TABLE OF CONTENTS
SCHEDULE 1.1(A)
LIST OF COLLATERAL POOL PROPERTIES AND ASSOCIATED INITIAL MARKET VALUES
Collateral Pool Property Initial Market Value
Celery Stalk, Dallas, Texas $14,050,000.00
Lodge at Timberglen, Dallas, Texas $7,285,000.00
Green Tree Place, Woodlands, Texas $9,200,000.00
Cypresswood Court, Spring, Texas $8,930,000.00
Westborough Crossing, Katy, Texas $9,715,000.00
TABLE OF CONTENTS
SCHEDULE 1.1(B)
LIST OF COLLATERAL POOL PROPERTY DOCUMENTS
(1) Mortgage/Deed of Trust/Deed to Secure Debt
(2) UCC-1 Financing Statements
(3) FIRPTA Certificate
(4) Intentionally Omitted
(5) Collateral Agreements (if any)
(6) Documents evidencing O & M Programs (if any)
(7) Title insurance policy acceptable to Lender, in an amount equal to not less
than the Commitment, which title insurance shall include the following
endorsements (where and if applicable): (i) a tie-in endorsement, (ii) a
multiple foreclosure endorsement, (iii) a first loss endorsement, (iv) a
last dollar endorsement, (v) a variable rate mortgage endorsement, and (vi)
a revolving credit endorsement.
TABLE OF CONTENTS
SCHEDULE 1.1(C)
HEDGED DEBT SERVICE
Set forth below, for informational purposes only, is an example of the
computation of the Hedged Debt Service, based upon (i) a hypothetical Required
Hedge Amount of Seventy-Five Million and NO/100 Dollars ($75,000,000.00), (ii)
Borrower's purchase of three Qualifying Rate Cap Agreements and two Qualifying
Rate Swap Agreements, each with a notional amount of Twenty Million and NO/100
Dollars ($20,000,000.00) and with stipulated strike rates of two percent (2%),
four percent (4%) and six percent (6%) and stipulated fixed pay rates of three
percent (3%) and five percent (5%), respectively (further assumed that the
Qualifying Rate Swap Agreements have original terms of thirty-six (36) months
and eighty-four (84) months), and (iii) two outstanding Borrowing Tranches with
principal amounts of Sixty Million and NO/100 Dollars ($60,000,000.00) and Forty
Million and NO/100 Dollars ($40,000,000.00) and Interest Periods of thirty (30)
days and one hundred and eighty (180) days, respectively.
Hedged Debt Service shall equal $4,386,457.00, which is the sum of:
- ------- ----------------------------------------------------------------------------------------- --------------------
1. The sum of the following (Qualifying Rate Cap Agreement and Qualifying Rate Swap
Agreement components):
(i) 2% times $20,000,000.00, plus
(ii) 3% times $20,000,000.00, plus
(iii) 4% times $20,000,000.00, plus
(iv) 5% times $15,000,000.00
plus, $2,550,000.00
- ------- ----------------------------------------------------------------------------------------- --------------------
2. The sum of the following (G-Fee component):
(i) 75% times (.0062 times $60,000,000.00), plus
(ii) 75% times (.0069 times $40,000,000.00)
plus, $ 486,000.00
- ------- ----------------------------------------------------------------------------------------- --------------------
3. The greater of the following (Servicing Fee component):
(i) 75% times (.0007 times $100,000,000.00), or
(ii) 75% times (.0007 times $25,000,000.00)
plus, $ 52,500.00
- ------- ----------------------------------------------------------------------------------------- --------------------
4. The sum of the following (Credit Enhancement Fee component):
(i) 75% times (.0012 times $20,000,000.00), plus
(ii) 75% times (.0015 times $20,000,000.00)
plus $ 40,500.00
- ------- ----------------------------------------------------------------------------------------- --------------------
5. The (Amortization component) sum of the first twelve (12) principal payments based on a
full 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 (.04172) resulting from dividing (I) the aggregate amounts of the foregoing
items (1) through (4) ($3,129,000.00) by (II) the Required Hedge Amount
($75,000,000.00) (which in turn results in a mortgage constant of .0584861): $1,257,457.00
- ------- ----------------------------------------------------------------------------------------- --------------------
[Signature Page to Credit Agreement]
TABLE OF CONTENTS
[BORROWER MAY, SUBJECT TO LENDER'S CONSENT, REVISE THIS FORM OF LOAN REQUEST TO
PROVIDE FOR MULTIPLE BORROWING TRANCHES UNDER A SINGLE LOAN REQUEST FORM]
SCHEDULE 2.6
FORM OF LOAN REQUEST
______________, 20__
[Lenders Name and Address]
Attention:
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of _________ __, 20__,
as amended (the "Credit Agreement") by and among _______________________
(collectively, "Borrower"), and ____________________, a _______________________
("Lender"). Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein with the same meanings.
I, _______________, the _______________ of Borrower, a _______________, do
hereby certify on behalf of Borrower as of the date hereof, as follows:
Borrower is entitled to and hereby requests Lender to make an advance under
the Credit Agreement in the amount of $__________ (which must be greater than or
equal to ___________________ and NO/100 Dollars ($_____________). Funds should
be delivered to Borrower by wire to the following account:
Bank Name and Location:
ABA Number:
Account Name:
Account Number:
Further Credit Instructions:
Attention:
(1) The requested date of the advance (the "Borrowing
Date") is ______________.
(2) The Borrowing Tranche shall bear interest at (check
one):
_____ Prime Rate
_____ Base Rate (using Reference BillsSM Rate)
_____ Base Rate (using LIBO Rate; provided
Borrower has delivered the Index Conversion
Notice to Lender)
(3) The Interest Period (if the Base Rate is selected)
applicable to the advance is (check one):
_____ thirty (30) days
_____ ninety (90) days
_____ one hundred and eighty (180) days
_____ three hundred and sixty (360) days
(4) Borrower will (check one):
_____ Pay all interest due and payable under the
requested Borrowing Tranche in monthly
installments pursuant to the terms of the
Credit Agreement.
_____ Prepay all interest for such Borrowing
Tranche as of the Borrowing Date.
(5) If applicable, the Base Rate for the Borrowing Tranche
requested hereunder shall be ___________ (_____%)
consisting of a Reference BillsSM Rate/LIBO Rate of
__________ percent (___ %) and a Margin of ________
(__%).
(6) Following the disbursement of the funds comprising the
Borrowing Tranche requested herein, the total number of
Borrowing Tranches outstanding will be ________(__),
which is not more than ten (10).
(7) If applicable (i.e. in the event of a Loan Request for
a Base Rate Borrowing Tranche), the maturity date of
the Interest Period of the Borrowing Tranche requested
herein is (choose and complete one of the following):
____________, 20__ (which is the last day of the Interest
Period, in the event that such date is a Business Day)
______________, 20__ (which is the Business Day following the
last day of the Interest Period, in the event that such date is
not a Business Day).
(8) This request for an advance is made pursuant to and in
accordance with the provisions of the Credit Agreement.
The proceeds of such advance are to be used for a
permitted purpose under Section 2.9 of the Credit
Agreement.
(9) The principal amount outstanding under the Credit
Agreement on the date hereof, prior to any advance in
response to this request, is $_____________.
(10) To the best of Borrower's knowledge and belief
following diligent inquiry, the advance of the funds
requested herein will not cause Borrower to be in
non-compliance with the Sublimits set forth in Section
2.6.1 of the Credit Agreement.
(11) To the best of Borrower's knowledge and belief
following diligent inquiry, the computations set forth
in Paragraphs 19 through 26 as certified by Servicer
are accurate.
(12) All of the covenants and all of the representations and
warranties contained in the Credit Agreement and the
other Loan Documents, and all of the other terms,
covenants and conditions contained in the Loan
Documents continue to be materially true and correct
and continue to be complied with on the date hereof,
and will continue to be materially true and correct and
will continue to be complied with as of the date of,
and subsequent to, the requested advance.
(13) No Potential Default or Event of Default has occurred
or is continuing under the Loan Documents.
(14) There has been no Material Adverse Change to any
Collateral Pool Property or Borrower since the date of
the last Loan Request that will cause Borrower to be in
violation of the Sublimits after the funding of the
Borrowing Tranche requested herein or will render the
Base Rate requested herein inaccurate.
(15) All of the other terms and conditions set forth in the
Credit Agreement and the other Loan Documents
pertaining to the Loan have been satisfied.
(16) All items that Borrower is required to furnish to
Lender pursuant to the Credit Agreement accompany this
request and are true and complete in all respects.
(17) The undersigned is an Authorized Officer of Borrower.
(18) Notice of this Loan Request shall be deemed received by
Lender when (i) sent by facsimile to (703) 714-3273 and
(ii) verbally confirmed by telephone call to either
(when called in the following order of priority): (1)
Steven Dillon ((703) 714-2691), (2) Kathy Hurley ((703)
714-2639), (3) Jane Campbell ((703) 714-3201) or such
other names and numbers as Lender may specify upon
prior written notice to Borrower.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this __ day of
___________, 200_.
BORROWER:
_______________________
By: _______________________
Name:
Title:
19. The current Loan to Value Ratio is ___________(__%), which is less
than or equal to the Maximum Loan to Value Ratio specified in Section
2.6.1.1 of seventy percent (70%), determined as follows:
A. The current Loan balance $_____________
B. The current aggregate Market Value of $____________ the
Collateral Pool
C. Item A divided by Item B, expressed as ____________% a
percentage, equals the Loan to Value Ratio
20. Following the disbursement of the funds comprising the Borrowing
Tranche requested herein, the Loan to Value Ratio will equal
_________________(__%), which is less than or equal to the Maximum
Loan to Value Ratio set forth in Schedule 2.6.1.1 of the Credit
Agreement of seventy percent (70%), determined as follows:
A. The Loan balance upon disbursement of $_____________ the funds
comprising the Borrowing Tranche(s) requested herein
B. The current aggregate Market Value of $____________ the
Collateral Pool
C. Item A divided by Item B, expressed as ____________% a
percentage, equals the Loan to Value Ratio
21. The current Facility Debt Service Coverage Ratio is ______ : 1.00,
which is not less than 1.40 : 1.00, determined as follows:
A. Net Operating Income of the Collateral $_____________ Pool
Properties determined by Lender
B. Facility Debt Service (as defined in the $_____________ Credit
Agreement)
C. Item A divided by Item B equals the ______________ Facility Debt
Service Coverage Ratio
22. Following the disbursement of the funds comprising the Borrowing
Tranche requested herein, the Facility Debt Service Coverage Ratio
will be ______ : 1.00, which is not less than 1.40 : 1.00, determined
as follows:
A. Net Operating Income of the Collateral $_____________ Pool
Properties as determined by Lender
B. Facility Debt Service upon disbursement $_____________ of the
funds comprising the Borrowing Tranche(s) requested herein
C. Item A divided by Item B equals the ______________ Facility Debt
Service Coverage Ratio
23. The current notional amount of all Qualifying Rate Cap Agreements and
Qualifying Rate Swap Agreements is ______, which is equal to or
greater than the Required Hedge Amount of 75% of the outstanding
principal balance of the Loan set forth in Section 2.6.1.5, determined
as follows:
A. The current notional amount of all $_____________ Qualifying Rate
Cap Agreements and Qualifying Rate Swap Agreements
B. The current Loan balance $_____________
C. Item A divided by Item B, expressed as a ____________% percentage
24. Following the disbursement of the funds comprising the Borrowing
Tranche requested herein, the notional amount of all Qualifying Rate
Cap Agreements and Qualifying Rate Swap Agreements will be ______,
which is equal to or greater than the Required Hedge Amount of 75% of
the outstanding principal balance of the Loan set forth in Section
2.6.1.5, determined as follows:
A. The current notional amount of all $_____________ Qualifying Rate
Cap Agreements and Qualifying Rate Swap Agreements
B. The Loan balance upon disbursement of the $_____________ funds
comprising the Borrowing Tranche(s) requested herein
C. Item A divided by Item B, expressed as a ____________% percentage
25. The current Hedged Debt Service Coverage Ratio is ______ : 1.00, which
is not less than 1.40 : 1.00, determined as follows:
A. 75% of Net Operating Income of the $_____________ Collateral Pool
Properties as determined by Lender
B. Hedged Debt Service (as defined in the $_____________ Credit
Agreement)
C. Item A divided by Item B, expressed as a ____________%
percentage, equals the Hedged Debt Service Coverage Ratio
26. Following the disbursement of the funds comprising the Borrowing
Tranche requested herein, the Hedged Debt Service Coverage Ratio will
be ______ : 1.00, which is not less than 1.40 : 1.00, determined as
follows:
A. 75% of Net Operating Income of the $_____________ Collateral Pool
Properties as determined by Lender
B. Hedged Debt Service upon disbursement of $_____________ the funds
comprising the Borrower Tranche(s) requested herein
C. Item A divided by Item B equals the ______________ Hedged Debt
Service Coverage Ratio
Servicer hereby certifies (i) to the accuracy of each of the mathematical
computations set forth in paragraphs 19 through 26 above (acknowledging
that Servicer has relied, with Lender's consent and without independent
verification thereof, on the Net Operating Income and Market Value(s)
prepared by Lender), and (ii) to the best of its knowledge and belief, that
all statements made by Borrower herein are true and accurate in all
material respects.
SERVICER:
a
By:
Name:
Title:
Dated: ___________________________________
[BORROWER MAY, SUBJECT TO LENDER'S CONSENT, REVISE THIS FORM OF RENEWAL REQUEST
TO PROVIDE FOR THE RENEWAL OF MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL
REQUEST FORM OR TO PROVIDE FOR THE SPLITTING OF A MATURING BORROWING TRANCHE
INTO MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL REQUEST FORM]
SCHEDULE 3.3.3
RENEWAL REQUEST
______________, 20__
[Lender's Name and Address]
Attention:
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of ___________, 20__, as
amended (the "Credit Agreement") by and among _______________________
(collectively, "Borrower"), and ____________________, a _______________________
("Lender"). Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein with the same meanings.
I, __________________, the _______________ of Borrower, a
__________________________, do hereby certify on behalf of Borrower as of the
date hereof, as follows:
_____Borrower hereby requests Lender to renew the Borrowing Tranche in the
amount of $______________, whose Interest Period will mature on ___________,
____.
or
_____ Borrower, in accordance with the provisions of the Credit Agreement,
will repay $___________ of the outstanding principal amount of the Borrowing
Tranche originally funded in the amount of $____________, whose Interest Period
will mature on ________, ____, prior to such maturity date, and hereby requests
Lender to renew such Borrowing Tranche in the amount of the remaining principal
balance of such Borrowing Tranche, the remaining principal balance being equal
to $___________.
or
_____ Borrower hereby requests Lender to convert $_______________ of the
Prime rate Borrowing Tranche into a Base Rate Borrowing Tranche.
or
Borrower hereby requests Lender to convert $___________ of the Base Rate
Borrowing Tranche in the amount of $______________, whose Interest Period will
mature on ________________, to the Prime Rate Borrowing Tranche [and to renew
the remainder of said Borrowing Tranche as a separate Borrowing Tranche].
or
_____ Borrower hereby requests Lender to combine two (2) or more Borrowing
Tranches pursuant to the provisions of the Credit Agreement into a single
Borrowing Tranche, specifically Borrower hereby requests that Lender combine the
Borrowing Tranche in the amount of $______________, whose Interest Period will
mature on ___________, ____ with the Borrowing Tranche in the amount of
$______________, whose Interest Period will mature on ___________, ____ [add
descriptions of additional Borrowing Tranches as necessary].
1. The Borrowing Tranche shall bear interest at (check one):
_____ Prime Rate
_____ Base Rate (using Reference BillsSM Rate)
_____ Base Rate (using LIBO Rate; provided
Borrower has delivered the Index
Conversion Notice to Lender)
2. The Interest Period (if the Base Rate is selected) applicable to
the renewed Borrowing Tranche is (check one):
_____ thirty (30) days
_____ ninety (90) days
_____ one hundred and eighty (180) days
_____ three hundred and sixty (360) days
3. Borrower will (check one):
_____ Pay all interest due and payable under the
requested Borrowing Tranche in monthly
installments pursuant to the terms of the
Credit Agreement.
_____ Prepay all interest for such Borrowing
Tranche as of the Borrowing Date.
4. The principal amount outstanding under the Credit Agreement on
the date hereof, prior to any advance in response to this
request, is $_____________.
5. If applicable, the Base Rate for the Borrowing Tranche renewed
hereunder shall be ___________ (_____%) consisting of a Reference
BillsSM Rate/LIBO Rate of ___________ percent (____ %) and a
Margin of ________ (____%).
6. If applicable (i.e. in the event of the renewal a Base Rate
Borrowing Tranche), the maturity date of the Interest Period of
the Borrowing Tranche requested herein is (choose and complete
one of the following):
____________, 20__ (which is the last day of the
Interest Period, in the event that such date is a
Business Day)
______________, 20__ (which is the Business Day
following the last day of the Interest Period, in the
event that such date is not a Business Day).
7. To the best of Borrower's knowledge and belief following diligent
inquiry, the computations set forth in Paragraphs 12 through 16
as certified by Servicer are accurate.
8. [Check one of the following:]
____ No Event of Default has occurred or is
continuing under the Loan Documents; or
____ No Event of Default has occurred or is
continuing under the Loan Documents, and, other than
Borrower's non-compliance with Section 2.6.1.1, Section
2.6.1.2 and Section 2.6.1.5 of the Credit Agreement,
has occurred or is continuing under the Loan Documents,
Borrower is otherwise in full compliance with the terms
of the Loan Agreement, and will not increase the
outstanding principal balance of the Loan pursuant to
this Renewal Request.
9. All of the other terms and conditions set forth in the Credit
Agreement and the other Loan Documents pertaining to the Loan
have been satisfied.
10. The undersigned is an Authorized Officer of Borrower.
11. Notice of this Loan Request shall be deemed received by Lender
when (i) sent by facsimile to (703) 714-3273 and (ii) verbally
confirmed by telephone call to either (when called in the
following order of priority): (1) Steven Dillon ((703) 714-2691),
(2) Kathy Hurley ((703) 714-2639), Jane Campbell ((703) 714-3201)
or such other names and numbers as Lender may specify upon prior
written notice to Borrower
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ______
day of ___________, ____.
BORROWER:
a
By:
Name:
Title:
12. The current Loan to Value Ratio is ___________(__%), which is
less than or equal to the Maximum Loan to Value Ratio specified
in Section 2.6.1.1 of seventy percent (70%) determined as
follows:
A. The current Loan balance $_____________
B. The current aggregate Market Value of $____________ the
Collateral Pool
C. Item A divided by Item B, expressed as ____________% a
percentage, equals the Loan to Value Ratio
13. The current Facility Debt Service Coverage Ratio is ______ : 1.00,
which [check one:]
___ is less than ____ : 1.00, or
___ is greater than or equal to ____ : 1.00,
determined as follows:
A. Net Operating Income of the Collateral $_____________ Pool
Properties determined by Lender
B. Facility Debt Service (as defined in the $_____________
Credit Agreement)
C. Item A divided by Item B equals the ____________% Facility
Debt Service Coverage Ratio
14. Following the renewal of the Borrowing Tranche for the Interest Period
requested herein, the Facility Debt Service Coverage Ratio will be
______ : 1.00, which [check one:]
___ is less than ____ : 1.00, or
___ is greater than or equal to ____ : 1.00,
determined as follows:
A. Net Operating Income of the Collateral $_____________ Pool
Properties as determined by Lender
B. Facility Debt Service (as defined in the $_____________
Credit Agreement)
C. Item A divided by Item B equals the ______________ Facility
Debt Service Coverage Ratio
15. The current Hedged Debt Service Coverage Ratio is ______ : 1.00, which
[check one:]
___ is less than 1.40 : 1.00, or
___ is greater than or equal to 1.40 : 1.00,
determined as follows:
A. 75% of Net Operating Income of the $_____________ Collateral Pool
Properties determined by Lender
B. Hedged Debt Service (as defined in the $_____________ Credit
Agreement)
C. Item A divided by Item B equals the ______________ Facility Debt
Service Coverage Ratio
16. Following the renewal of the Borrowing Tranche for the Interest Period
requested herein, the Hedged Debt Service Coverage Ratio will be
______ : 1.00, which [check one:]
___ is less than 1.40 : 1.00, or
___ is greater than or equal to 1.40 : 1.00,
determined as follows:
A. 75% of Net Operating Income of the $_____________ Collateral Pool
Properties as determined by Lender
B. Hedged Debt Service (as defined in the $_____________ Credit
Agreement)
C. Item A divided by Item B equals the ______________ Facility Debt
Service Coverage Ratio
Servicer hereby certifies (i) to the accuracy of each of the mathematical
computations set forth in paragraphs 12 through 16 above (acknowledging
that Servicer has relied, with Lender's consent and without independent
verification thereof, on the Net Operating Income and Market Value(s)
prepared by Lender), and (ii) to the best of its knowledge and belief, that
all statements made by Borrower herein are true and accurate in all
material respects.
SERVICER:
a
By:
Name:
Title:
Dated: ___________________________________