________________________________________________________________________________
SECURED LOAN AGREEMENT
Dated as of March 12, 1998
between
RESOURCE PROPERTIES XLIX, INC., as Borrower
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
________________________________________________________________________________
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT........................................................ 1
ARTICLE IDEFINITIONS......................................................... 1
ARTICLE II LOAN.............................................................. 9
SECTION 2.01. Loan...................................................... 9
SECTION 2.02. The Note.................................................. 9
SECTION 2.03. Interest on Loan..........................................10
SECTION 2.04. Capital Adequacy; Increased Costs; Illegality.............10
SECTION 2.05. Security..................................................10
SECTION 2.06. Payments from Net Cash Flow...............................10
SECTION 2.07. Optional Prepayments; Break Funding.......................12
SECTION 2.08. Place and Time of Payment.................................12
ARTICLE III CONDITIONS TO LOAN...............................................12
SECTION 3.01. Conditions Precedent to Loan..............................12
ARTICLE IV WARRANTIES AND REPRESENTATIONS....................................16
SECTION 4.01. Warranties and Representations of Borrower................16
ARTICLE V COVENANTS..........................................................19
SECTION 5.01. Maintenance of Existence..................................19
SECTION 5.02. Maintenance of Records....................................19
SECTION 5.03. Maintenance of Insurance..................................20
SECTION 5.04. Compliance with Laws; Payment of Taxes....................20
SECTION 5.05. Right of Inspection.......................................20
SECTION 5.06. Compliance with Transaction Documents.....................20
SECTION 5.07. Payment of Costs..........................................20
SECTION 5.08. Payment of Lender's Expenses..............................20
SECTION 5.09. Special Purpose Entity; Other Limitations.................21
SECTION 5.10. Reporting and Miscellaneous Document Requirements.........21
SECTION 5.11. Management of Mortgaged Property..........................23
SECTION 5.12. Acquisition of Mortgaged Property.........................24
SECTION 5.13. Fictitious Name, etc......................................25
SECTION 5.14. Transfers of Shareholder Interests........................25
SECTION 5.15. Notice of Sale............................................25
SECTION 5.16. Major Decisions...........................................25
SECTION 5.17. Further Assurances........................................25
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ARTICLE VI EVENTS OF DEFAULT.................................................26
SECTION 6.01. Events of Default.........................................26
SECTION 6.02. Consequence of Event of Default...........................27
ARTICLE VII MISCELLANEOUS....................................................28
SECTION 7.01. Modification of Agreement.................................28
SECTION 7.02. No Waiver by Lender.......................................28
SECTION 7.03. Non-Recourse..............................................29
SECTION 7.04. Indemnification...........................................29
SECTION 7.05. Severability..............................................30
SECTION 7.06. Parties...................................................30
SECTION 7.07. Waivers by Borrower.......................................30
SECTION 7.08. Debtor-Creditor Relationship; No Partnership..............30
SECTION 7.09. Governing Law; Submission to Non-exclusive Jurisdiction;
Waiver of Objection to Inconvenient Forum.................31
SECTION 7.10. Waiver of Jury Trial......................................31
SECTION 7.11. Restoration or Set Aside..................................31
SECTION 7.12. Notices...................................................31
SECTION 7.13. Headings and References...................................32
SECTION 7.14. Counterparts..............................................32
SECTION 7.15. Survival of Representations and Warranties................33
SECTION 7.16. Entirety..................................................33
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Exhibits
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Exhibit A Form of Promissory Note
Exhibit B Underlying Loan Documents
Exhibit C Monthly Reports and Information
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SECURED LOAN AGREEMENT ("Agreement") dated as of March 12, 1998,
between RESOURCE PROPERTIES XLIX, INC., a Delaware corporation ("Borrower"),
and MERRILL LYNCH MORTGAGE CAPITAL INC., a Delaware corporation ("Lender").
PRELIMINARY STATEMENT
Borrower wishes to borrow and Lender has agreed to fund the sum
of $55,000,000 on the terms and subject to the conditions contained in this
Agreement and the other Loan Documents (as defined below) to provide, among
other things, financing for Borrower's acquisition of the Mortgage Loan (as
defined below).
In consideration of the terms and conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"Administration Expenses" means, as of any date of
determination, the sum of (i) fees and expenses payable by Borrower to or at the
direction of Manager or Custodian pursuant to the Management Agreement and the
Custodial Agreement, respectively, and to the extent, in the case of expenses
payable to or at the direction of Manager, such expenses have been previously
approved by Lender under the Operating Budget or otherwise in writing and (ii)
ongoing, third-party, out-of-pocket legal and accounting fees and expenses
actually paid by Borrower, and the reasonable operating expenses of Borrower
incurred and paid by Borrower, in each case to the extent that such fee or
expense is authorized by the Operating Budget or otherwise approved in writing
by Lender.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such first Person.
"Agents Recognition Agreement" means the Recognition,
Subordination and Non-Petition Agreement, dated March __, 1998, by and among
Lender, Manager and Disbursing Agent.
"Agreement" means this Secured Loan Agreement, as amended or
supplemented from time to time.
"Bankruptcy Code" means the Bankruptcy Code of 1978, Title 11 of
the United States Code, as amended from time to time.
"Borrower" has the meaning specified in the first paragraph of
this Agreement.
"Borrower Collection Account" has the meaning specified in
Section 2.06(b).
"Borrower Account" has the meaning specified in Section 2.06(b).
"Borrower Working Capital Account" has the meaning specified in
Section 2.06(b).
"Business Day" means any day excluding Saturday, Sunday and any
day on which banking institutions located in New York, New York are authorized
or required by law to remain closed.
"Bylaws" means the bylaws of Borrower, dated as of March __,
1998, as may be amended, supplemented or replaced from time to time.
"Collateral Assignment of Deed of Trust@ means the Collateral
Assignment of Deed of Trust and Other Documents, dated March 12, 1998, from
Borrower in favor of Lender.
"Certificate of Incorporation" means the certificate of
incorporation of Borrower, as filed with the Secretary of State of the State of
Delaware on March __, 1998, as such certificate may be amended from time to time
in accordance with this Agreement.
"Closing Date" means March 12, 1998, or such other date to which
Lender and Borrower mutually agree.
"Collateral" has the meaning specified in the Security
Agreement.
"Collections" means all collections received with respect to the
Mortgage Loan or Mortgaged Property, including principal and interest payments,
lease or other revenues from the use or occupancy of the Mortgaged Property and,
disposition and/or liquidation proceeds.
"Commercial Paper Rate" means, for each applicable Interest
Period (or portion thereof), if any, the per annum rate published in the Wall
Street Journal on the first day of such Interest Period (or portion thereof) for
high-grade thirty-day commercial paper sold through dealers by major
corporations.
"Current Interest" has the meaning specified in Section 2.06(a).
"Custodial Agreement" means the custodial agreement, dated as of
the date hereof, between Custodian and Lender, as such agreement may be amended,
supplemented or replaced from time to time.
"Custodian" means State Street Bank and Trust Company, as
custodian under the Custodial Agreement, and any successor custodian.
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"Debt" with respect to Borrower, means (i) any indebtedness,
contingent or otherwise, for borrowed money or the deferred purchase price of
property or services or evidenced by notes, bonds, or other instruments, (ii)
obligations as lessee under capital leases, (iii) obligations secured by any
Lien existing on any asset owned or held by Borrower whether or not Borrower has
assumed or become liable for the obligations secured thereby, (iv) any
obligation under any interest rate swap agreement (the principal amount of such
obligation being deemed to be notional principal amount on which such swap is
based), and (v) obligations under direct or indirect guarantees of (including
obligations, contingent or otherwise, to assure a creditor against loss in
respect of) indebtedness or obligations of the kinds referred to in clauses (i),
(ii), (iii), and (iv) above, provided that "Debt" shall not include obligations
in respect of any accounts payable that are incurred in the ordinary course of
Borrower's business and are not delinquent or are being contested by Borrower in
good faith in appropriate proceedings.
"Default" means any condition or event which, with the giving of
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Default Administration Fee" means the fee payable pursuant to
Section 6.02(d) by Borrower to Lender upon the occurrence of an Event of
Default, which fee shall equal two percent (2%) of the Principal Amount
outstanding on the date such fee becomes payable.
"Default Rate" means a rate per annum equal to five percent (5%)
above the then LIBOR Interest Rate.
"Disbursing Agent" means Commercial Title Group, Ltd.
"Disbursing Agreement" means the Disbursing Agreement, dated
March __, 1998, among Borrower, Disbursing Agent and the Debtor parties.
"Delinquent Interest" has the meaning specified in Section
2.06(a).
"Dollars" and the symbol "$" each means lawful currency of the
United States.
"Earned Income" means any and all earnings or income realized in
respect of amounts from time to time on deposit in the Borrower Collection
Account, the Manager Collection Account established pursuant to the Management
Agreement.
"Environmental Claim" means any notice, claim, administrative or
judicial action, suit, demand or other written communication by any Governmental
Authority alleging liability arising out of, based on or resulting from (i) the
presence, use or release into the environment of any Hazardous Materials on or
from the Mortgaged Property or (ii) any violation, or alleged violation, of any
Environmental Law as a result of the use, operation or ownership of the
Mortgaged Property.
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"Environmental Law" means all federal, state or local laws,
statutes, ordinances or regulations pertaining to the environmental conditions
on, under or about, or the release of Hazardous Materials onto, the Mortgaged
Property.
"Event of Default" means any of the events specified in Section
6.01.
"Exit Fee" means the fee payable pursuant to Section 2.07(a),
equal to 0.75% of that portion of the Principal Amount repaid, whether at
maturity or otherwise, from a source other than Collections.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time, provided that any financial statement
prepared in accordance with GAAP shall be based on accounting principles
consistently applied during the period covered by such financial statement.
"Governmental Authority" means any domestic or foreign
government, including any federal, state, or local government and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials" means any substance that is or becomes
regulated by, or that may form the basis of liability under, any Environmental
Law, including, in whatever form, any oil, petroleum, chemicals, asbestos,
polychlorinated biphenyls, flammable, explosive or radioactive materials or any
"Hazardous Waste", "Hazardous Material", "Toxic Substance" or "Hazardous
Substance" as those or similar terms are used in any Environmental Law.
"include", "includes", "included" and "including" mean include,
includes, included and including, in each case without limitation by reason of
enumeration.
"Initial Certification" has the meaning specified in the
Custodial Agreement.
"Interest Period" means each period during which interest at the
LIBOR Interest Rate shall be applicable to the Principal Amount; provided,
however, that (1) the initial Interest Period hereunder shall be the period from
and including April 10, 1998 to but excluding the first Payment Date and (2)
each such period (other than the initial Interest Period) shall be approximately
one month, and shall be measured, in each case, from and including a Payment
Date to but excluding the next Payment Date.
"Involuntary Proceeding" means the commencement of a proceeding
or case by any party other than Lender in any court having jurisdiction, seeking
(i) relief in respect of Borrower in an involuntary case or other similar
proceeding under any federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect or (ii) the appointment of a trustee, receiver,
liquidator,
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custodian or other similar official for Borrower or for any substantial part of
the property of Borrower, in each case without the consent of Borrower.
"Lender" has the meaning specified in the first paragraph of
this Agreement, and also means any other Person that becomes a Lender pursuant
to Section 7.07.
"Lender Account" has the meaning specified in Section 2.06(b).
"Lender Mortgage" has the meaning specified in Section 5.12.
"LIBOR Base Rate" means, for any LIBOR Determination Date, (1)
the rate (expressed as a percentage per annum and rounded up to the nearest
1/8th of 1%) that appears as one-month LIBOR on Telerate Page 3750 as of 11:00
a.m., New York City time, on such LIBOR Determination Date or (2) if such rate
does not appear on Telerate Page 3750 as of 11:00 a.m., New York City time, on
the applicable LIBOR Determination Date, the arithmetic mean of the offered
rates (expressed as a percentage as annum, rounded up to the nearest 1/8th of
1%) for deposits in Dollars for a period of one month that appears on the
Reuters Screen LIBO Page as of 11:00 a.m., New York City time, on such LIBOR
Determination Date, if at least two such offered rates so appear. If fewer than
two such offered rates appear on the Reuters Screen LIBO Page as of 11:00 a.m.,
New York City time, on the applicable LIBOR Determination Date, Lender will
request the principal London office of each of four major reference banks in the
London interbank market selected by Lender to provide such banks' respective
offered quotations (expressed as a percentage per annum) to prime banks in the
London interbank market for deposits in Dollars for a period of one month as of
11:00 a.m., London time, on such LIBOR Determination Date for amounts of not
less than $1,000,000. If at least two such offered quotations are so provided,
the LIBOR Base Rate will be the arithmetic mean of such quotations. If fewer
than two such quotations are so provided, Lender will request each of three
major banks in New York City selected by Lender to provide such banks'
respective rates (expressed as a percentage per annum) for loans in Dollars to
leading European banks for a period of one month as of approximately 11:00 a.m.,
New York City time, on the applicable LIBOR Determination Date for amounts of
not less than $1,000,000. If at least two such rates are so provided, the LIBOR
Base Rate will be the arithmetic means of such rates. If fewer than two such
rates are so provided, or if, for any other reason, the LIBOR Base Rate cannot
be determined for any Interest Period (or portion thereof) as provided above,
then the LIBOR Base Rate for such Interest Period (or portion thereof) shall be
deemed to be the Commercial Paper Rate, provided that if the LIBOR Base Rate can
once again be determined, as provided above, for the balance of an Interest
Period, then the LIBOR Interest Rate shall be determined based upon a LIBOR Base
Rate which assumes that the relevant "Interest Period" is the balance of the
Interest Period in question. The LIBOR Base Rate for the initial Interest Period
is 5.75% per annum.
"LIBOR Business Day" means a Business Day on which dealings in
Dollar deposits are carried out in the London interbank market and banks are
open for business in London.
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"LIBOR Determination Date" means (1) with respect to the
initial Interest Period, April 8, 1998 and (2) with respect to any Interest
Period other than the initial Interest Period, the second LIBOR Business Day
prior to the Payment Date on which such Interest Period commences.
"LIBOR Interest Rate" means a rate per annum (expressed as a
percentage), as determined by Lender, equal to the sum of (1) the LIBOR Base
Rate for the applicable Interest Period, plus (2) the Relevant LIBOR Spread
(except that if Lender sells, transfers, grants or assigns all or any part of
Lender's interests hereunder, including by way of participation, to a Person
subject to the LIBOR requirements of Regulation D, "LIBOR Interest Rate" shall
mean a rate per annum (expressed as a percentage), as determined by Lender,
equal to the sum of (a) the quotient of (i) the Base Rate for the applicable
Interest Period divided by (ii) one minus the LIBOR Reserve Requirement, plus
(b) the Relevant LIBOR Spread).
"LIBOR Reserve Requirement" means, for any Interest Period in
which the LIBOR Reserve Requirement shall be applicable, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D by member banks of the Federal Reserve System in New York City with
deposits exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
LIBOR Reserve Requirement shall also reflect any other reserves required to be
maintained by such member banks by reason of any regulatory change of any
Governmental Authority with respect to (1) any category of liabilities that
includes deposits by reference to which the LIBOR Base Rate is to be determined
as provided in the definition of "LIBOR Base Rate" in this Agreement or (2) any
category of extensions of credit or other assets which include loans the
interest rate in respect of which is determined on the basis of rates referred
to in such definition of "LIBOR Base Rate".
"Lien" means any mortgage, pledge, hypothecation, charge,
assignment, deposit arrangement, encumbrance, security interest, lien (statutory
or other), or preference, priority or other security or similar agreement or
preferential arrangement of any kind or nature whatsoever (including any
agreement to give or grant a lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Loan" means the secured loan to be made by Lender to Borrower
hereunder on the Closing Date.
"Loan Amount" means the sum of $55,000,000.
"Loan Documents" means this Agreement, the Note, the Security
Agreement, the Partnership Interest Pledge Agreement, any Lender Mortgage and
any other agreement, instrument, document or financial statement contemplated by
or delivered pursuant to any of the foregoing.
"Loan Fees and Expenses" has the meaning specified in Section
2.06(a).
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"Management Agreement" means the Management Agreement, dated as
of March __, 1998, between Borrower and Manager, as such agreement may be
amended, supplemented or replaced from time to time.
"Manager" means Brandywine Construction & Management, Inc. as
manager under the Management Agreement, and any successor manager (or, prior to
the conveyance of the Mortgaged Property to Borrower or its designee pursuant to
the Plan of Reorganization, the Liquidating Trustee under the Liquidating Trust
Agreement).
"Manager Recognition Agreement" means the Recognition,
Subordination and Non-Petition Agreement, dated March __, 1998 between Lender
and Manager.
"Material Agreement" means any agreement, commitment or
understanding (a) that requires payment by Borrower of more than $100,000 in any
12-calendar month period and (b)(i) that is not cancelable by Borrower upon
thirty (30) days' or less notice without liability for further payment and/or
(ii) that is not assignable without consent of the other party thereto.
"Material Adverse Effect" means, in the reasonable judgment of
Lender, a material adverse effect: (i) on the business, properties, assets,
condition (financial or otherwise) or operations of Borrower since the Closing
Date; (ii) on Borrower's ability to perform its obligations under this
Agreement; or (iii) on the enforceability or priority of Lender's security
interest in the Collateral.
"Maturity Date" means July 1, 1999 (or, if such day is not a
Business Day, the immediately succeeding Business Day).
"Mortgage Loan" means the loan, in the aggregate original
principal amount of $80,000,000, evidenced and secured by the Underlying Loan
Documents.
"Mortgaged Property" means the real property that constitutes
security for the Mortgage Loan.
"Net Cash Flow" means, with respect to any Payment Date,
Collections minus Administration Expenses plus Earned Income, in each case
received or paid prior to such Payment Date.
"Note" means the promissory note of Borrower referred to in
Section 2.02 (a form of which is attached hereto as Exhibit A), as such note may
be amended, supplemented or replaced from time to time.
"Obligations" means (i) all indebtedness, obligations and
liabilities of Borrower to Lender arising under, or in connection with, the Loan
Documents, whether now existing or hereafter
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arising; (ii) any and all sums paid by Lender in order to preserve the
Collateral or its security interest therein; (iii) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations or
liabilities of Borrower referred to in clause (i), the expenses of taking or
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by Lender of its
rights with respect to the Collateral under the Loan Documents, together with
reasonable attorneys' fees and expenses and court costs; and (iv) all indemnity
obligations of Borrower to Lender pursuant to the Loan Documents.
"Operating Budget" means the operating budget for Administrative
Expenses of Borrower, and otherwise as such budget may be modified or updated
with the prior written approval of Lender, which Operating Budget shall be
consistent with the Plan of Reorganization and the Property Operating Budget.
"Origination Fee" means an amount equal to $825,000.
"Payment Date" means the 10th day of each calendar month, or if
such day is not a Business Day, the immediately succeeding Business Day,
commencing May 10, 1998.
"Permitted Liens" means (a) Liens created by the Loan Documents,
(b) Liens for taxes, assessments and governmental charges or levies either (i)
not yet due and payable or (ii) being contested by Borrower in good faith and by
appropriate proceedings and as to which reserves in an amount reasonably
designated by Lender are being maintained by Borrower and (c) Liens approved in
writing by Lender in favor of Resource Assets Investment Trust.
"Person" means any natural person, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means an "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.
"Plan of Reorganization" means, Lender's Plan of Reorganization
for Debtor in re: The Avenue All Stars Limited Partnership, as confirmed by the
United States Bankruptcy Court for the District of Columbia on February 24, 1998
(Case No. 97-1386, Chapter 11).
"Property Operating Budget" means (i) the operating budget for
the Mortgaged Property approved by the United States Bankruptcy Court for the
District of Columbia as part of the Plan of Reorganization and (ii) any
operating budget for the Mortgaged Property proposed by Borrower and approved in
writing by Lender following Borrower's acquisition of the Mortgaged Property
pursuant to the Plan of Reorganization.
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"Principal Amount" means the principal amount of the Loan
outstanding from time to time.
"Purchase Agreement" means the Agreement for Purchase and Sale,
dated March 4, 1998, between Resource America, Inc., as purchaser, and The
Dai-Ichi Kangyo Bank, Limited, New York Branch, as seller.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from time
to time, or any similar law from time to time in effect.
"Relevant LIBOR Spread" means (i) except as provided in clause
(ii), a rate per annum equal to two and one-half percent (2.50%) until September
9, 1998, and four percent (4.0%) from September 10, 1998 through the date upon
which all Obligations have been paid in full, and (ii) for each Interest Period
(or portion thereof) during the continuance of an Event of Default, a rate per
annum equal to the Default Rate.
"Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
rates in Dollars).
"Security Agreement" means the Pledge and Security Agreement,
dated as of the date hereof, between Borrower, as pledgor, and Lender, as
secured party, as such agreement may be amended or supplemented from time to
time.
"Seller" means The Dai-Ichi Kangyo Bank, Limited, New York
Branch, in its capacity as seller of the Mortgage Loan under the Purchase
Agreement.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated
as of the date hereof, between Resource Properties, Inc., as pledgor, and
Lender, as secured party, as such agreement may be amended, supplemented or
replaced from time to time.
"Transaction Documents" means, collectively, the Custodial
Agreement and the Management Agreement.
"UCC" means at any time the Uniform Commercial Code as in effect
in the State of New York; provided that if, by reason of mandatory provisions of
law, the validity or perfection of Lender's security interest in any item of
Collateral is governed by the UCC or any similar law as in effect in a
jurisdiction other than New York, "UCC" means the UCC or such similar as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such validity or perfection.
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"Underlying Borrower" means The Avenue All Stars Limited
Partnership and its successors and assigns as obligor under the Mortgage Loan.
"Underlying Loan Documents" means all agreements, documents or
instruments evidencing, securing, guaranteeing or otherwise relating to the
Mortgage Loan, including the "Loan Documents" listed on Exhibit B hereto.
In addition, references in this Agreement to the approval,
determination, satisfaction or opinion of Lender shall mean, except as otherwise
expressly provided, such approval, determination, satisfaction or opinion as
determined in Lender's sole discretion.
ARTICLE II
LOAN
SECTION II.1. Loan. On the terms and subject to the conditions
set forth herein, Lender agrees to make the Loan to Borrower on the Closing Date
in the principal amount equal to the Loan Amount.
SECTION II.2. The Note. The Loan shall be evidenced by a
promissory note of Borrower substantially in the form of Exhibit A, dated the
Closing Date, duly executed and delivered by Borrower, scheduled to mature on
the Maturity Date, and payable to Lender. Lender shall, and is hereby
irrevocably authorized by Borrower to, endorse Schedule A to the Note to
evidence the date and amount of each payment or prepayment of principal of the
Loan. Lender shall furnish a photocopy of such Schedule to Borrower from time to
time upon request of Borrower and shall correct any error in such Schedule after
submission of evidence reasonably satisfactory to Lender of such error. The
outstanding principal amount of the Loan shown on Schedule A to the Note shall
be presumptive evidence as of any date of determination of the Principal Amount
owing to Lender with respect to the Loan.
SECTION II.3. Interest on Loan. Interest on the Loan shall
accrue from the Closing Date on the unpaid Principal Amount until such amount
shall become due and payable (whether at the stated maturity of the Note, by
acceleration or otherwise) at the LIBOR Interest Rate as in effect from Interest
Period to Interest Period. Interest for any period shall be calculated on the
basis of the actual number of days elapsed and a 360-day year and shall be
payable as provided herein and in the Note. Notwithstanding anything herein to
the contrary, the interest on the Loan shall not exceed the maximum amount
permitted by applicable law and, to the extent that any payments in excess of
such permitted amount are received by Lender, such excess shall be considered
payments in respect of the Principal Amount.
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SECTION II.4. Capital Adequacy; Increased Costs; Illegality. If
Lender shall determine that the adoption of any law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender (or its lending office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Lender's capital as a
consequence of its obligations hereunder or credit extended by it hereunder to a
level below that which Lender would have achieved but for such adoption, change
or compliance by an amount deemed by Lender to be material, then from time to
time as specified by Lender, Borrower shall pay promptly such additional amount
or amounts as will compensate Lender for such reduction as it accrues.
SECTION II.5. Security. The Loan shall be secured by
first-priority Liens on all tangible and intangible property of Borrower,
whether now owned by Borrower or hereafter acquired, as provided herein and in
the Security Agreement.
SECTION II.6. Payments from Net Cash Flow. (1) On each Payment
Date, all Net Cash Flow deposited into the Borrower Collection Account on or
after the preceding Payment Date shall be applied, subject to Section 4.03 of
the Security Agreement, to pay the following in full in the following order of
priority:
first, to the interest accrued on the Loan during the
Interest Period ending on the day preceding such Payment Date
("Current Interest");
second, to pay interest, if any, accrued and unpaid
on the Loan during any Interest Period preceding the Interest
Period ending on the day preceding such Payment Date
("Delinquent Interest");
third, to pay any fees, expenses and penalties then
payable to Lender under the Loan Documents, including, without
limitation, under Sections 5.08, 5.12, 7.03 and 7.11 hereof and
under Sections 3.03, 3.05, 4.06, 4.07(b), 5.13 and 5.14 of the
Security Agreement (collectively, "Loan Fees and Expenses").
fourth, (x) for the period to but excluding April 10,
1998, 100% of the remaining Net Cash Flow shall be paid to
Borrower, (y) for Payment Dates in May and June of 1998 and no
Event of Default has occurred and is continuing, 50% of the
remaining Net Cash Flow shall be applied to the Principal
Amount and 50% of the remaining Net Cash shall be paid to
Borrower, and (z) for all Payment Dates after the Payment Date
in June, 1998 or an Event of Default has occurred and
continuing, all
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of the remaining Net Cash Flow shall be applied to the Principal
Amount until paid in full and then paid to Borrower.
(2) Borrower represents that pursuant to the Management
Agreement, Manager has established a deposit account in the name of Borrower
(the "Borrower Collection Account"), into which account Manager is required to
deposit all Collections received by Manager. Borrower shall not, without the
approval of Lender, change the depository institution at which is established
the Borrower Collection Account, the Borrower's working capital account (the
"Borrower Working Capital Account") or any other bank account in the name or
under the control of Borrower (each such account, the Borrower Collection
Account and the Borrower Working Capital Account, each a "Borrower Account"). If
an Event of Default shall have occurred and be continuing, (i) Borrower shall,
promptly upon request by Lender, cause Manager immediately to remit all amounts
then on deposit in the Borrower Collection Account to an account designated by
and under the sole dominion and control of Lender or its designee (a "Lender
Account") and cause each other depository institution at which a Borrower
Account is established to remit all amounts then on deposit in such account to a
Lender Account and (ii) Lender shall immediately be entitled to transfer or
cause to be transferred to a Lender Account any and all amounts on deposit in
each Borrower Account. The Management Agreement shall contain an acknowledgment
by the Manager that Lender can itself direct Manager to remit amounts to a
Lender Account.
(3) Borrower shall cause Manager to remit to Lender on each
Payment Date all Net Cash Flow for such Payment Date, net of the amounts (the
"Borrower Amounts") payable to Borrower pursuant to priority fourth (if
applicable) of Section 2.06(a). Borrower shall not authorize Manager to make any
remittances from the Borrower Collection Account other than (i) payments to
Lender as required by the preceding sentence, and (ii) payments of Borrower
Amounts on the related Payment Dates to or as instructed by Borrower, (iii)
subject to the Operating Budget, payments of amounts representing Administrative
Expenses, which amounts shall be remitted by Manager to the Borrower Working
Capital Account and used by Manager to pay such Administrative Expenses. A copy
of each set of instructions delivered by Borrower to Manager for any such
payment purpose shall be delivered by Borrower to Lender simultaneously with
Borrower's delivery of such instructions to Manager.
SECTION II.7. Optional Prepayments; Break Funding. (1) Borrower
may prepay the Principal Amount in whole or in part on the last day of any
Interest Period, upon not less than ten (10) days' irrevocable prior notice to
Lender. Each optional prepayment pursuant to this Section shall be accompanied
by the payment of interest accrued to the date of such prepayment on the
Principal Amount, plus, if such prepayment is from a source other than
Collections, the Exit Fee. If the initial Lender or an Affiliate thereof is the
source of the funds from a permanent financing used to make such prepayment, the
Exit Fee shall not be payable. Any amounts prepaid may not be reborrowed.
(2) Borrower shall reimburse Lender on demand for any loss
incurred or to be incurred by Lender in the reemployment of the funds released
by any optional prepayment of Principal Amount if such prepayment occurs (i)
other than on the last day of an Interest Period or (ii) on less
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than ten (10) days' irrevocable prior notice to Lender. Such loss shall be the
difference, as reasonably determined by Lender, between the amount that would
have been realized by Lender for the remainder of such Interest Period based on
the LIBOR Base Rate applicable for such Interest Period and any lesser amount
that would be realized by Lender in reemploying the funds received in optional
prepayment by making a loan of the same type (but utilizing the then-applicable
LIBOR Base Rate) in the principal amount optionally prepaid during the period
from the date of such prepayment to the last day of the then-applicable Interest
Period.
SECTION II.8. Place and Time of Payment. Borrower shall make
(or cause to be made) each payment it is required to make (or cause to be made)
hereunder in Dollars, as provided in Sections 2.06, 2.07 or otherwise, not later
than 12:00 noon, New York City time, on the date due, by transfer of immediately
available funds to the following account: Merrill Lynch MCI-Firm, account number
00-813-108, at Bankers Trust, New York, New York, ABA number 021-00-1033,
reference Evening Star (attention: Carol Han) (or to such other account and in
such location as Lender may direct Borrower in writing at least two Business
Days prior to the applicable payment date). Payments received on such date after
such time shall be deemed to have been received on the next succeeding Business
Day.
ARTICLE III
CONDITIONS TO LOAN
SECTION III.1. Conditions Precedent to Loan. Lender's
obligations to make the Loan on the Closing Date shall be subject to the
fulfillment (or waiver in writing by Lender) of the following conditions
precedent:
(1) Borrower shall have delivered to Lender this Agreement,
which shall be duly executed by Borrower.
(2) The Note in form and substance reasonably satisfactory to
Lender, shall each have been duly executed and delivered by Borrower to
Lender.
(3) The Security Agreement and the Stock Pledge Agreement, in
each form and substance satisfactory to Lender, shall have been duly
executed and delivered by Borrower and Resource Properties Inc.,
respectively, to Lender.
(4) The Custodial Agreement, in form and substance satisfactory
to Lender, shall have been duly executed and delivered to Lender by
Custodian and Borrower shall have paid all fees and expenses of
Custodian in connection therewith.
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(5) Lender shall have received from Custodian the Initial
Certification in form and substance satisfactory to Lender.
(6) Agents Recognition Agreement and Manager Recognition
Agreement.
(7) Lender shall have received a true, correct and complete
copy of the Purchase Agreement.
(8) Lender shall have received a copy of the Management
Agreement, together with an acknowledgment executed by Manager, in form
and substance reasonably satisfactory to Lender, with respect to the
nature and priority of amounts payable to the Manager thereunder, with
respect to the institution of an Involuntary Proceeding as to Borrower
and with respect to the matters referred to in Section 2.07(b) and (c).
(9) Lender shall have received from Borrower evidence in form
and substance satisfactory to Lender that the conditions set forth in
the Plan of Reorganization have been satisfied, including, without
limitation, (i) delivery of the Lists by Borrower to the Disbursing
Agent to Section 3 of each of the Disbursing Agreement and the
Liquidating Trust Agreement and (ii) delivery by the Underlying
Borrower to the Disbursing Agent of the Conveyancing Documents pursuant
to Section 4 of each of the Disbursing Agreement and the Liquidating
Trust Agreement.
(10) Lender shall have received copies, certified to be true and
correct by the President of Borrower, (i) of all documents (including
the Certificate of Incorporation and a good standing certificate (dated
the most recent practicable date prior to the Closing Date) from the
Secretary of State of the State of Delaware) evidencing the formation,
organization, valid existence and good standing of Borrower, (ii) a
copy of the Bylaws and (iii) of all documents evidencing the due
authorization by Borrower of the execution, delivery, and performance
by Borrower of the Loan Documents.
(11) Endorsement of the existing Title Policy as of the
Closing Date and endorsement of the Collateral Assignment of Deed of
Trust in favor of Lender.
(12) Borrower shall have executed and delivered financing
statements on form UCC-1 satisfactory to Lender, and Borrower shall
have taken any such other action as Lender shall have reasonably
requested in order to perfect the security interests created pursuant
to the Loan Documents.
(13) Lender shall have received any letters of credit or other
cash and non-cash collateral held by Borrower as security for the
performance of any of the obligations of the Underlying Borrower.
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(14) No Default or Event of Default shall have occurred and be
continuing on the Closing Date.
(15) Each representation and warranty of Borrower in the Loan
Documents shall be true and correct in all material respects on and as
of the Closing Date.
(16) Since its formation, there shall not have occurred any
material adverse change in the business, financial condition or results
of operations of Borrower, or any event, condition or state of facts
that would reasonably be expected to affect materially and adversely
the business, financial condition or results of operations of Borrower.
(17) Lender shall have received a Certificate of Borrower, dated
the Closing Date, stating that, to the knowledge of the President of
Borrower signing such Certificate, after due inquiry, the statements
set forth in clauses (n), (o) and (p) above are true and correct on and
as of the Closing Date and Borrower has satisfied all conditions set
forth in this Section 3.01 other than those waived in writing by
Lender.
(18) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed, before
any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of, or which is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or which in Lender's judgment would make it
inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents.
(19) Lender shall have received opinions from Ledgewood Law
Firm, P.C., counsel to Borrower, in form and substance satisfactory to
Lender, addressing enforceability of the Loan Documents, creation and
perfection of security interests and such other matters as Lender may
request.
(20) Lender shall have received the Origination Fee and
interest payable on the Loan for the period from and including the
Closing Date to and including April 9, 1998, which, unless otherwise
directed by Borrower in writing at least two Business Days prior to the
Closing Date, shall be withheld by Lender from the proceeds of the
Loan.
(21) Borrower shall have paid all reasonable costs and expenses,
including Lender's due diligence expenses and the legal fees and
expenses of counsel to Lender, incurred by Lender in connection with
this Agreement through the Closing Date, which, unless otherwise
directed by Borrower in writing at least two Business Days prior to the
Closing Date, shall be withheld by Lender from the proceeds of the
Loan.
(22) Lender shall have received evidence satisfactory to it that
the balance of the Purchase Price for the Mortgage Loan shall have been
remitted to the Seller and that the proceeds of the Loan shall be used
by Borrower only to acquire the Mortgage Loan and to pay
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closing costs relating to the Loan and the Plan of Reorganization,
including the Origination Fee; and no Debt of Borrower shall be
outstanding other than the Obligations, and the duties and obligations
of Borrower under the Transaction Documents.
(23) Lender shall have received copies of the results of current
UCC searches conducted in appropriate jurisdictions with respect to
Borrower and the Collateral.
(24) Lender shall have received evidence that the insurance
policies required to be maintained pursuant to the Plan of
Reorganization with respect to the Mortgaged Property are in full force
and effect, together with either (x) appropriate evidence showing loss
payable clauses in favor of Lender.
(25) Lender shall have received copies of all surveys in respect
of the Mortgaged Property, if any, that are in the possession of
Borrower.
(26) Lender shall have received such evidence as shall be
reasonably required by Lender in order to determine the extent to which
the Mortgaged Property and the usage thereof comply with all applicable
zoning, building, health, traffic, environmental, safety and other
laws, regulations and rules applicable thereto, and with other fire,
safety and health standards.
(27) Lender shall have received copies of all engineering
reports or architect's certificates in respect of the Mortgaged
Property, if any, that are in the possession of Borrower.
(28) Lender shall have received copies of all environmental
assessment reports in respect of the Mortgaged Property that are in the
possession of Borrower.
(29) Lender shall have received copies of all certificates of
occupancy, building permits and other licenses, certificates, approvals
or consents required of any Governmental Authority that relate to the
Mortgaged Property and that are in the possession of Borrower.
(30) Lender shall have received copies of such title searches,
violation searches, lien searches and similar documents that are in the
possession of Borrower and that relate to the Underlying Borrower or
the Mortgaged Property.
(31) Lender shall have received from Borrower such other
documents, opinion letters, approvals and certificates as Lender may
reasonably request.
(32) Lender shall have received an acknowledgment from the
depository institution at which the Borrower Accounts are established
that Lender has a security interest in such Borrower Accounts and
following an Event of Default Lender has the authority to transfer all
amounts then on
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deposit in such accounts to another depository institution designated
by and for the sole benefit of Lender.
All documents delivered pursuant to this Section 3.01 shall be
in form and substance satisfactory to Lender in all material respects and all
legal matters in connection with the Loan shall be customary and proper and
shall be reasonably satisfactory in form and substance to Lender.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS
SECTION IV.1. Warranties and Representations of Borrower.
Borrower warrants and represents that:
(1) Good Standing; Qualification to do Business. Borrower is a
corporation duly formed, validly existing and in good standing under
the laws of the State of Delaware, and is qualified or licensed to do
business in all other jurisdictions the laws of which require Borrower
to be so qualified or licensed, except for such jurisdictions wherein
the failure of Borrower to be so qualified will not, individually or in
the aggregate, have a Material Adverse Effect.
(2) Enforceability of Loan Documents. Each Loan Document, upon
execution and delivery by Borrower and Lender, shall constitute
(assuming due authorization, execution and delivery by Lender and that
Lender has full power, authority and legal right to enter into and
perform its respective obligations thereunder) a legal, valid and
binding obligation of Borrower enforceable against Borrower in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject (as
to enforceability) to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(3) Enforceability of Transaction Documents. The Transaction
Documents are in full force and effect and constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject (as to enforceability) to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(4) Power; Due Authorization. Borrower has the power under its
organizational documents, and is duly authorized, to execute and
deliver, and to perform its obligations under, each of the Loan
Documents.
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(5) No Conflict. Neither the execution and delivery of any
Loan Document nor the performance by Borrower of its obligations
thereunder will, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of
any provision contained in the Certificate of Incorporation, the Bylaws
or any agreement, instrument or document to which Borrower is now a
party or by which it is bound, and will not give rise to any default
under, or to any acceleration of or right to accelerate the maturity of
any obligation set forth in, any such agreement, instrument or
document.
(6) No Material Litigation. There are no actions, suits,
proceedings or claims pending or, to the knowledge of Borrower,
threatened against Borrower which may have, individually or in the
aggregate, a Material Adverse Effect.
(7) No Violation. Borrower is not in violation of any
applicable statute, regulation or ordinance of any Governmental
Authority applicable to it or its properties, which violation may have
a Material Adverse Effect.
(8) Use of Proceeds. The proceeds of the Loan will be used
solely for the purposes specified in Section 3.01(v). None of the Loan
proceeds will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X, Regulation G
or Regulation T of the Board of Governors of the Federal Reserve
System, or for the purpose of reducing or retiring any Debt which was
originally incurred to purchase or carry "margin stock" or for any
other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U, Regulation X or Regulation
G. As of the Closing Date, Borrower does not own any "margin stock".
(9) No Liens. Borrower has good and marketable title to the
Collateral, and to all of its properties and assets, free and clear of
all Liens other than Permitted Liens.
(10) Indebtedness. Borrower has no Debt (including guaranty,
reimbursement or other contingent obligations) except for the Loan and
its obligations under the Transaction Documents.
(11) Material Agreements. Borrower is not a party to any
Material Agreements other than the Loan Documents and the Transaction
Documents, except as otherwise agreed to in advance in writing by
Lender.
(12) Investment Company. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
(13) Material Facts. There is no fact or circumstance known to
Borrower or General Partner that might materially and adversely affect
the ability of Borrower to perform its
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obligations under this Agreement and that Borrower has failed to
disclose to Lender in writing.
(14) ERISA. Borrower does not maintain or contribute to any
Plan or has any withdrawal liability in connection with a Plan.
(15) Taxes and Assessments. All federal, state, local and
foreign tax returns, reports and statements required to be filed by
Borrower have been filed with the appropriate Governmental Authority,
and all taxes and other impositions shown thereon to be due and payable
have been paid prior to the date on which any fine, penalty, interest
or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest or late charge has been paid. Borrower has paid
when due and payable all taxes required to be paid by it. Borrower does
not have any obligation under any tax sharing agreement.
(16) Environmental Compliance. Borrower has no knowledge of
any Environmental Claim or of the presence, release or discharge of any
Hazardous Materials located on the Mortgaged Property.
(17) Existence of Defaults. Borrower is not in default under
or with respect to any contract, agreement, lease or other instrument
to which Borrower is a party. No Default or Event of Default has
occurred.
(18) Condemnation. There is no pending or, to Borrower's
knowledge, threatened condemnation or similar proceeding affecting the
Mortgaged Property or any part thereof, and Borrower has not received
notice of any such proceeding.
(19) Casualty; Property Condition. To Borrower's knowledge,
the Mortgaged Property has not suffered any material damage by fire or
other casualty loss that has not heretofore been completely repaired
and restored to its original condition, and Borrower has not received
notice of any such material damage or loss.
(20) Mortgaged Property Compliance. To Borrower's knowledge,
the Mortgaged Property is in compliance with all applicable
subdivision, platting, building, land use, safety, traffic, fire and
zoning laws and requirements, and Borrower has not received notice that
the Mortgaged Property is not in such compliance.
(21) Delinquent Taxes, etc. To Borrower's knowledge, there are
no delinquent taxes, ground rents, water charges, sewer rents,
assessments (including assessments payable in future installments),
insurance premiums, leasehold payments, or other outstanding charges
affecting the Mortgaged Property, and Borrower has not received notice
of any such charges.
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(22) Leases. No lease affecting the Mortgaged Property (i)
contains an option to purchase, right of first refusal to purchase or
any other similar provision or (ii) is not subordinate to the Lien of
the Mortgage Loan.
(23) Single-Purpose Entity. Borrower, at all times since its
formation, has (i) been a duly formed and existing corporation, (ii)
complied with the provisions of its organizational documentation, (iii)
observed all material legal requirements regarding its existence as a
corporation, (iv) accurately maintained its financial statements,
accounting records and other corporate documents separate from those of
any other Person, (v) maintained its own bank accounts and separate
books of account, (vi) paid its own liabilities from its own separate
assets, and (vii) identified itself in all dealings with the public,
under its own name and as a separate and distinct entity, and not as a
division or a part of any other entity. Borrower has not at any time
since its formation commingled its assets with those of any other
Person.
(24) Status of Leases. To the knowledge of Borrower, (a) all
of the obligations of Underlying Borrower and each counterparty under
each lease affecting the Mortgaged Property have been duly performed,
(b) there are no existing conditions which are or with notice or the
passage of time would constitute a default on the part of Underlying
Borrower or the counterparty under the terms of such lease, and (c) the
counterparty under such lease is not entitled to any credits,
reductions, offsets, defenses concessions or abatements of rent.
(25) Plan of Reorganization Compliance. Borrower is in
compliance with all applicable terms and conditions of the Plan of
Reorganization and, to Borrower's knowledge, the Underlying Borrower is
in compliance with all applicable terms and conditions of the Plan of
Reorganization.
ARTICLE V
COVENANTS
For so long as the Note shall remain unpaid, or any other
amount is owing by Borrower to Lender hereunder or under any other Loan
Document, Borrower shall:
SECTION V.1. Maintenance of Existence. Preserve and maintain
its legal existence, rights, franchises and authority and, if applicable,
qualify and remain qualified in each jurisdiction in which such qualification is
required, except to the extent that failure to so qualify will not result in a
Material Adverse Effect.
SECTION V.2. Maintenance of Records. Keep complete, accurate
and separate records and books of account, in which complete entries will be
made in accordance with GAAP, reflecting all of its financial transactions.
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SECTION V.3. Maintenance of Insurance. (a) At all times (1)
maintain and keep in force insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated and (2) require the Underlying Borrower to maintain in full
force and effect all insurance required by the Underlying Loan Documents or, if
the Underlying Loan Documents permit Borrower to specify the insurance that the
Underlying Borrower must maintain, at least such insurance as is required by
prudent commercial mortgage lenders loaning against security comparable to the
Mortgaged Property or that Lender may specify in its reasonable discretion.
(b) All insurance maintained in respect of the Mortgaged
Property shall incorporate Borrower and Lender as their interests may appear and
shall name Lender as an additional insured and loss payee, and shall provide
that no cancellation or expiration thereof shall be effective without thirty
(30) days' prior written notice of cancellation of such policy to Lender.
SECTION V.4. Compliance with Laws; Payment of Taxes. Comply in
all respects with all laws, rules, regulations and orders of each Governmental
Authority applicable to it, such compliance to include paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, provided that Borrower may contest any such tax,
assessment or governmental charge in good faith and by appropriate proceedings.
SECTION V.5. Right of Inspection. At any reasonable time and
from time to time upon reasonable notice, (1) permit Lender or any agent or
representative thereof to examine and make copies and abstracts from the records
and books of account of Borrower and to discuss the affairs, finances and
accounts of Borrower with its officers, directors and internal accountants and
with its independent accountants (if any), and (2) otherwise provide Lender or
such agent or representative with any information possessed by Borrower relating
to the Mortgage Loan or the Mortgaged Property and requested by Lender.
SECTION V.6. Compliance with Transaction Documents. Comply in
all respects with all of the terms and conditions of, and not waive compliance
by any other party with any provision of, the Transaction Documents.
SECTION V.7. Payment of Costs. Pay all costs and expenses
required to be paid by it under the Transaction Documents, including the fees of
Custodian and Manager.
SECTION V.8. Payment of Lender's Expenses. Pay to Lender (a)
all reasonable costs and expenses, including reasonable fees and expenses of
counsel and other advisors to Lender, incurred by or on behalf of Lender,
without duplication in connection with (1) the perfection of Lender's security
interest in the Collateral, and (2) the administration of the Loan prior to the
occurrence or continuation of an Event of Default and (b) all costs and
expenses, including fees and expenses of counsel and other advisors to Lender,
incurred by or on behalf of Lender, without duplication, in connection with (1)
the protection of Lender's security interest in the Collateral, (2)
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the negotiation, preparation, execution and delivery of any amendment, waiver or
consent relating to any of the Loan Documents, (3) any litigation, contest,
dispute or proceeding (whether instituted by Borrower, Lender or any other
Person) in any way relating to the Collateral or any of the Loan Documents,
(4) any attempt to verify, protect, collect, sell or otherwise dispose of any
Collateral following an Event of Default, and (5) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein. All such costs and expenses shall be payable upon demand
and shall be additional Obligations.
SECTION V.9. Special Purpose Entity; Other Limitations. Not:
(1) engage in any business other than the acquisition, ownership, management and
liquidation of the Mortgage Loan and/or the Mortgaged Property as contemplated
by the Bylaws, the Transaction Documents and the Loan Documents, (2) commingle
its assets with the assets of any other Person or fail to hold itself out to the
public as a legal entity separate and distinct from any other Person, (3) merge
into or consolidate with any Person or transfer all or substantially all of its
assets to any Person (provided that, subject to Section 5.15, Borrower may sell
all or substantially all of its assets if the cash proceeds of such sale are
sufficient to, and are actually applied to, pay in full all amounts due on or in
respect of the Loan and all other Obligations under the Loan Documents), (4)
incur, directly or indirectly, any Debt whatsoever other than under the Loan
Documents and the Transaction Documents, (5) voluntarily dissolve, terminate or
liquidate in whole or in part, (6) amend its Certificate of Incorporation or any
Transaction Document or fail to comply with or waive compliance with any
provision thereof, (7) amend, or waive compliance with, any material provision
of, the Bylaws or any Transaction Document, (8) admit any new partners (other
than Affiliates of partners existing upon consummation of the transactions
contemplated by the Loan Documents), (9) grant or permit to exist any Lien on
any of its assets other than Permitted Liens or other Liens in favor of Lender,
(10) enter into any Material Agreement, (11) acquire any asset without Lender's
prior written approval or acquire any "margin security" as defined by any
regulation of the Federal Reserve Board, or (12) establish any subsidiaries.
SECTION V.10. Reporting and Miscellaneous Document
Requirements. Furnish to Lender:
(1) Financial Statements. Not later than five (5) Business
Days following the completion thereof, any reports and/or financial
statements prepared for delivery to the shareholders, or any of them,
of Borrower, together with such supporting documents, exhibits,
invoices and calculations of distributions as are necessary in Lender's
reasonable judgment for the administration of the Loan. No later than
fifteen (15) days following the end of each month, Borrower shall
deliver or cause to be delivered to Lender (i) an income and expense
statement showing the results of operations and distributions for the
preceding month and the fiscal year to date, and (ii) a comparison of
actual income and expenses to the income and expenses projected in the
Property Operating Budget (which may consist of the equivalent report
delivered by Manager to Borrower pursuant to Section 3(i) of the
Management Agreement).
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(2) Certificate of No Default. Within forty-five (45) days
after the end of each of the first three quarters of each fiscal year
and within ninety (90) days after the end of each fiscal year
(commencing, in the latter case, with the fiscal year ending September
30, 1998), a certificate of the President of the Borrower stating that,
to the best of his or her knowledge, no Default or Event of Default has
occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, specifying the nature thereof and the
action that is proposed to be taken with respect thereto.
(3) Notice of Litigation. Promptly following the commencement
thereof, notice of any and all actions, suits and proceedings before
any court, arbitrator or administrative body affecting Borrower or all
or any part of the Collateral which, if determined adversely to
Borrower, could result in a Material Adverse Effect.
(4) Negotiations with Prospective Purchasers, etc. From time
to time, as such developments occur or as reasonably requested by
Lender, reports, in reasonable detail, of the nature and status of any
material negotiations between Borrower, any tenants of the Mortgaged
Property, any prospective purchasers of the Mortgaged Property and the
holder or holders of any other Liens or interests in the Mortgaged
Property, or any combination of any such Persons, with respect to the
Mortgage Loan, the Mortgaged Property or any lease, lien or interest of
or in the Mortgaged Property.
(5) Notice of Defaults and Events of Default. As soon as
possible and in any event within two (2) Business Days after Borrower
becomes aware of the occurrence of a Default, Event of Default or event
or circumstance that can reasonably be expected to result in a Material
Adverse Effect, a written notice setting forth the details of such
Default, Event of Default or event or circumstance and the action that
is proposed to be taken with respect thereto.
(6) Notice of Corporate Events. Promptly, and in any case
prior to the effective date of any of the following, a written notice
setting forth the details of any capital call, any proposed amendment
of the Bylaws, the proposed transfer of all or any portion of any
interest in Borrower or the occurrence of any event or other
circumstance that has resulted or would result in a transfer of any of
the interests in Borrower or withdrawal from Borrower of a shareholder
or any proposed liquidation or dissolution of Borrower.
(7) Budgets. A copy of each proposed modification or amendment
of the Operating Budget or the Property Operating Budget. In addition,
Borrower shall submit to Lender for Lender's approval its proposed
Property Operating Budget for the calendar year 1999 on or before
December 1, 1998.
(8) Mortgage Loan Correspondence. No more than five (5)
Business Days following its receipt or delivery thereof, a copy of each
written notice, statement, request, consent or
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other written transmittal delivered by or on behalf of Borrower to the
Underlying Borrower or received by Borrower from the Underlying
Borrower.
(9) New Places of Business. Not later than thirty (30) days
after any change of Borrower's principal place of business, written
notice thereof and financing statements, if required by applicable law,
to perfect or continue the perfection of Lender's Liens in the
Collateral.
(10) Environmental Notices. Not later than two (2) Business
Days after becoming aware thereof, written notice, in reasonable
detail, of: (a) any proceeding, investigation or inquiry commenced or
threatened, or any Environmental Claim asserted, by any Governmental
Authority with respect to any Hazardous Materials on, in, under or
emanating from the Mortgaged Property; and (b) any occurrence or
condition on the Mortgaged Property or on any real property adjoining
the Mortgaged Property that Borrower, consistent with prudent
commercial loan servicing standards, then believes is likely to lead to
an Environmental Claim against the Underlying Borrower, Borrower or
Lender and that might involve remediation cost or liability in excess
of $100,000.
(11) Casualty; Condemnation. Not later than two (2) Business
Days after becoming aware thereof, written notice of (a) any uninsured
or partially uninsured material loss of the Mortgaged Property or any
material portion thereof, (b) any termination or cancellation of any
insurance policy that the Underlying Borrower or Borrower is required
to maintain, or (c) the commencement of, or the threatened commencement
of, any proceeding for the expropriation of the Mortgaged Property or
any material portion thereof.
(12) General Information. Promptly, such other information
respecting the business, condition (financial or otherwise), results of
operations or properties of Borrower as Lender may from time to time
reasonably request.
SECTION V.11. Management of Mortgaged Property. (1) Borrower
shall cause Manager promptly to deliver to Lender, or Borrower shall deliver to
Lender promptly following Borrower's preparation or receipt thereof, a copy of
any and all Property Operating Budgets for Lender review and approval, and all
reports, notices, statements, copies of correspondence and other materials
delivered or required to be delivered to Borrower or any partner of Borrower by
Manager; provided that Borrower, at a minimum, shall cause Manager to deliver to
Lender, or Borrower shall deliver to Lender the reports and information
described on Exhibit C hereto. In addition, Borrower shall deliver or cause to
be delivered to Lender, promptly following Borrower's receipt thereof from
Manager, a copy of each report delivered pursuant to any of Sections 2(e) and
3(i) of the Management Agreement (or the comparable reports delivered pursuant
to any successor Management Agreement).
(2) Borrower shall not replace Manager under, amend in any
material respect or terminate, the Management Agreement without Lender's prior
written approval, or enter into
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a successor Management Agreement without Lender's prior written approval.
Borrower shall fully perform all of its obligations under the Management
Agreement and shall enforce the obligations of Manager under the Management
Agreement in all respects.
(3) Borrower agrees to manage, or cause the management of, the
Mortgage Loan and (if acquired) the Mortgaged Property in accordance with (i)
applicable law, (b) the terms of this Agreement, (c) servicing standards and
asset management standards for nonperforming commercial mortgage loans and their
related properties that are customarily employed by prudent managers servicing
comparable loans for their own account and prudent asset managers managing
comparable properties for their own account, and (d) the Business Plan and
Property Operating Budget.
SECTION V.12. Acquisition of Mortgaged Property. (1) On or
before May 30, 1998, Borrower shall take title to the Mortgaged Property in
accordance with the terms and conditions of the Plan of Reorganization prior to
taking title to the Mortgaged Property and extinguishing of the indebtedness of
the Underlying Borrower in respect of the Mortgage Loan, Borrower shall cause to
be provided to Lender a duly executed first mortgage, deed of trust, assignment
of leases and rents, security agreement and fixture filing (or similar
instrument or instruments) in favor of, and in form and substance satisfactory
to, Lender (a "Lender Mortgage"), that encumbers the Mortgaged Property, which
Lender Mortgage shall name Lender or its designee as the mortgagee thereon or
the beneficiary thereof and be in recordable form in accordance with applicable
law. In connection with granting a Lender Mortgage, Borrower shall also (1)
execute and deliver to Lender such other documents and instruments necessary to
perfect Lender's Lien as Lender may request, (2) cause to be delivered to Lender
a mortgagee title insurance policy issued by a title insurance company
acceptable to Lender and insuring Lender Mortgage as a first-priority Lien on
the Mortgaged Property and (3) take such other actions in connection with the
execution and delivery of the Lender's Mortgage as Lender shall reasonably
request. All costs and expenses in connection with the preparation, execution,
delivery and filing or recording of any Lender Mortgage and related
documentation, all title insurance premiums and any filing or recording tax or
other charges with respect thereto shall be paid by Borrower.
(2) Borrower shall not acquire the Mortgaged Property (whether
by foreclosure, deed in lieu of foreclosure or otherwise) without the prior
written consent of Lender. In connection with any such proposed acquisition,
Borrower shall, at its expense, furnish to Lender such environmental
assessments, appraisals or other documents with respect to the Mortgaged
Property as Lender shall reasonably request.
SECTION V.13. Fictitious Name, etc. Borrower shall not use any
fictitious name or "d/b/a" unless, not later than thirty (30) days after its has
commenced using such fictitious name or "d/b/a", Borrower shall file any
financing statement necessary to continue the perfection of Lender's security
interest in the Collateral.
SECTION V.14. Transfers of Shareholder Interests. Without the
prior written consent of Lender, Borrower shall not permit any shareholder of
Borrower to transfer or pledge,
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whether directly or indirectly, by operation of law or otherwise, any of the
shareholder interests in Borrower or permit any change in its ownership except
with respect to transfers among such shareholders.
SECTION V.15. Notice of Sale. Borrower shall not sell the
Collateral or any material portion thereof unless Borrower shall have provided
Lender with ten (10) days' prior written notice of such proposed sale and the
terms and conditions thereof.
SECTION V.16. Major Decisions. Without the prior written
consent of Lender, Borrower shall not (1) commence any proceeding against the
Underlying Borrower, any guarantor of the Mortgage Loan or otherwise with
respect to the Mortgage Loan, or the Mortgaged Property, or exercising any other
remedies under the Underlying Loan Documents or otherwise with respect to the
Mortgage Loan; (2) amend, extend, renew or otherwise modify the Mortgage Loan or
any Underlying Loan Document or grant (by action or inaction) any consent,
waiver, or indulgence thereunder, or enter into any other agreement or grant any
other consent (oral or written ) the effect of which would be to (A) permit any
lease of space at the Mortgaged Property or permit or effect any amendment,
modification, assignment, subletting, termination, non-disturbance, termination
or surrender of or with respect to any such lease (provided that Borrower may
permit the leasing or related actions in a manner expressly permitted by the
Underlying Loan Documents), (B) permit any application of funds, including
without limitation condemnation and insurance proceeds and funds to be paid by
the Underlying Borrower under the Underlying Loan Documents, or deposited into
or withdrawn from any accounts maintained pursuant to the Underlying Loan
Documents, (C) change the nature of any party's obligations under or with
respect to the Underlying Loan Documents or (D) permit the transfer or
encumbrance of the Mortgaged Property or any portion thereof; (3) enter into any
agreement with any other holders of Liens or claims with respect to the
Mortgaged Property which subordinates or impairs the Lien priority of the
Underlying Loan Documents; (4) enter into any agreement or settlement, or give
any consent, with respect to the condemnation of all or any material portion of
the Mortgaged Property; (5) following the Closing Date (i) amend the existing
Plan of Reorganization or (ii) offer, propose or vote to approve any
reorganization plan or interim cash collateral agreement, or any other agreement
relating to creditors' rights, or participate in any manner in any action or
proceeding under applicable insolvency law with respect to Underlying Borrower
or the Mortgaged Property; or (6) offer, propose or vote to approve or direct
the Disbursing Agent or the Liquidating Agent with respect to any action or
matter in connection with the Disbursing Agreement or the Liquidating Trust
Agreement, including, without limitation, any payments or disbursements other
than pursuant to the Property Operating Budget.
SECTION V.17. Further Assurances. Borrower shall promptly (1)
cure any defects in the execution and delivery by it of the Loan Documents, and
(2) execute and deliver, or cause to be executed and delivered, all such other
documents, agreements and instruments as Lender may reasonably request to
further evidence and more fully describe the Collateral, to correct any
omissions in the Loan Documents, to better and more effectively carry out the
intents and purposes of any Loan Document, to perfect, protect or preserve any
Liens created under any of the Loan Documents, or to
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make any recordings, file any notices, or obtain any consents as may be
necessary or desirable in connection therewith.
SECTION V.18. Property Operating Budget. Lender shall have
received from Borrower a draft Property Operating Budget for the period [May 1,]
1998 to December 31, 1998 prepared by Borrower no later than the earlier of (i)
seven (7) days from the date Borrower or its nominee takes title to the
Mortgaged Property and (ii) thirty (30) days from the Closing Date.
ARTICLE VI
EVENTS OF DEFAULT
SECTION VI.1. Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default:
(1) Monetary Default. Borrower's default in (i) the payment of
any interest (which shall be payable in respect of each Interest
Accrual Period on the related Payment Date whether or not Net Cash Flow
is sufficient therefor) or other Obligation when due and payable or
(ii) in the payment of principal of the Loan after the same shall
become due and payable, whether at stated maturity, by declaration or
otherwise.
(2) Other Covenants; Representations and Warranties. (i)
Borrower's default in the performance of or compliance in any material
respect with any of its other obligations under any Loan Document, and
the continuation thereof for a period of thirty (30) days after
delivery to Borrower of notice thereof; or (ii) any representation or
warranty of Borrower contained herein shall be inaccurate in any
material respect when made, and such inaccuracy shall not be corrected
or cured within a period of thirty (30) days after delivery to Borrower
of notice thereof.
(3) Voluntary Petition. Borrower shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
similar relief with respect to itself or its debts or other liabilities
under any federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it under any
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall make a general assignment for the benefit
of its creditors.
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(4) Involuntary Proceeding. The entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of
Borrower in an Involuntary Proceeding or other similar proceeding under
any federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect or appointing a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and the continuance of any such decree or order in effect
and unstayed for a period of thirty (30) days.
(5) Transfer of Collateral. The sale, transfer, pledge,
hypothecation, or other transfer of an interest in, directly or
indirectly, any part of the Collateral, unless upon such sale or other
disposition all Obligations are fully paid.
(6) Judgments. Any judgment or order for the payment of money
in excess of $100,000 (excluding amounts covered by insurance) shall be
rendered against Borrower and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of ten (10) consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
(7) Loan Documents. At any time, for any reason, (i) any Loan
Document ceases to be in full force and effect or Borrower seeks to
repudiate its obligations thereunder and any Liens intended to be
created thereby are, or Borrower seeks to render such Liens, invalid
and unperfected, or (ii) (a) any one or more Liens in favor of Lender
contemplated by any of the Loan Documents shall, at any time, for any
reason, not constitute a valid and enforceable, perfected, continuing,
first-priority security interest, or shall be subordinated, in either
case, to the extent that the perfection of a security interest therein
is governed by the UCC as in effect in any applicable jurisdiction, or
(b) any one or more Liens in favor of Lender contemplated by any of the
Loan Documents shall, at any time, for any reason, in any material
respect not constitute valid and enforceable Liens of the priority
contemplated by such Loans Documents or shall be subordinated in any
material respect.
(8) Change in Constitution of Borrower. There shall occur any
violation of Section 5.14.
SECTION VI.2. Consequence of Event of Default. If an Event of
Default shall have occurred and be continuing, Lender may, by notice to
Borrower, at any time and from time to time, do any one or more of the
following:
(1) Acceleration. Declare the Principal Amount to be forthwith
due and payable, whereupon the Principal Amount, together with accrued
interest thereon and all other Obligations, shall become forthwith due
and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, anything contained
herein or in the Note or any other Loan Document to the contrary
notwithstanding;
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(2) Legal and Equitable Remedies. Exercise whatever rights and
remedies are given to it by law or equity or by this Agreement, the
Note, the Security Agreement or any other Loan Document, whether for
specific performance of any agreement therein or in aid of the exercise
of any power granted in such document or otherwise;
(3) Additional Interest. Impose, during the continuance of an
Event of Default and in accordance with Section 2.03, an interest rate
on overdue amounts payable in respect of the Loan at the Default Rate;
and
(4) Default Administration Fee. Impose, as reimbursement and
compensation for the additional internal expenditures, administrative
expenses and other costs associated with actions to be taken in
connection with an Event of Default, and regardless of whether Lender
shall have commenced the exercise of any other remedy, the Default
Administration Fee, which shall be an additional Obligation payable
upon demand.
Notwithstanding the foregoing, if an Event of Default specified in paragraph (c)
or (d) of Section 6.01 occurs, the Principal Amount shall automatically become
immediately due and payable, together with accrued interest thereon, without any
action by Lender and without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived. No remedy is intended to be
exclusive, and each remedy shall be cumulative.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1. Modification of Agreement. This agreement may
not be modified or amended except by an agreement in writing signed by Borrower
and Lender.
SECTION VII.2. No Waiver by Lender. Lender's failure, at any
time or times hereafter, to require strict performance by Borrower of any
provision of this Agreement shall not effect a waiver of or otherwise diminish
any right of Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Lender of an Event of Default shall not
suspend, waive or affect any other Event of Default, whether the same is prior
to subsequent thereto and of the same or of a different type. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of Lender to any other or further action in any circumstances without
notice or demand. None of the undertakings, agreements, warranties, covenants
and representations of Borrower contained in this Agreement and no Event of
Default shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing signed by an authorized
representative of Lender and directed to Borrower specifying such suspension or
waiver.
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SECTION VII.3. Non-Recourse. Anything contained herein, in the
Note or in any other Loan Document to the contrary notwithstanding, no recourse
shall be had for the payment of the principal or interest on the Note or for any
other Obligation hereunder or for any claim based hereon or thereon or otherwise
in respect hereof or thereof against Manager, any director, officer, employee or
shareholder of Borrower or any partner, director, shareholder, officer or
employee of any partner or shareholder of Borrower or Manager. Notwithstanding
the foregoing (1) nothing in this Agreement shall (a) prevent recourse to any
Collateral that is pledged by Borrower, (b) constitute a waiver, release or
discharge of any Obligation, and the same shall continue until paid or
discharged in full, or (c) be construed or be deemed to relieve or release
Borrower from personal liability for damages actually incurred by Lender (i) as
a result of the fraudulent conduct of Borrower or any of Borrower's
shareholders, directors, officers, employees or agents (collectively, the
"Borrower Parties") in connection with this Loan, including the misapplication
of any cash collected with respect to the Collateral or its disposition, (ii) if
any of the representations and warranties set forth in this Agreement, or any
other instrument, document or certificate delivered pursuant to this Agreement
or in connection with the making of the Loan shall prove to have been
intentionally false or misleading in any material respect, (iii) for any tenant
security deposits in the possession of any of the Borrower Parties and not
turned over to Lender upon foreclosure, sale pursuant to power of sale, or
conveyance by deed in lieu of foreclosure of the Mortgaged Property, (iv) for
insurance proceeds and condemnation proceeds or awards received by any of
Borrower Parties and not turned over to Lender or used by any of the Borrower
Parties for restoration or repair of the Mortgaged Property in accordance with
the terms of this Agreement, or (v) for any Collections not deposited in the
Borrower Collection Account or otherwise not applied in accordance with the
terms of this Agreement or as approved by Lender in writing and (2) the
exculpation from personal liability of Borrower shall be of no further force and
effect (a) if the Collateral or any part thereof shall become an asset in a
voluntary bankruptcy or insolvency proceeding in respect of Borrower or any
Affiliate of Borrower or (b) if an Event of Default occurs and continues and
Lender or its designee fails to obtain title to the Mortgage Loan or the
Mortgaged Property pursuant to an exercise of a power of sale, a consensual
foreclosure or a conveyance in lieu of foreclosure within one hundred and eighty
(180) days of notice to Borrower of such Event of Default by reason of
Borrower's impeding or restricting any action to enforce this Agreement or any
other Loan Document or failing to deliver to Lender or its designee all
instruments necessary to convey title to the Mortgage Loan or the Mortgaged
Property free and clear of all liens and encumbrances.
SECTION VII.4. Indemnification. Borrower shall indemnify
Lender and its officers, directors, employees, representatives and agents from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not such indemnified Person is a party thereto)
related to the entering into and/or performance of any Loan Document or the use
of proceeds of the Loan hereunder or the consummation of any other transactions
contemplated in any Loan Document, including the reasonable fees and expenses of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the
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extent incurred by reason of gross negligence or wilful misconduct on the part
of the Person to be indemnified).
SECTION VII.5. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable laws, then to the extent permitted by
law such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
SECTION VII.6. Parties. (1) This Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of
Borrower and Lender; provided that Borrower may not assign any of its rights or
delegate any of its duties hereunder without the prior written consent of
Lender, which Lender may withhold in its sole discretion.
(20 Lender may sell, transfer, grant or assign all or any part
of Lender's interest and obligations hereunder, including by way of
participations.
(30 Upon the effectiveness of any assignment of Lender's
rights and/or obligations in accordance with its terms, the assignee shall
become a "Lender" for all purposes of this Agreement and the other Loan
Documents. To the extent of such assignment and of the amount being assigned,
the assigning Lender shall be relieved of its obligations hereunder. Upon
effectiveness of any such assignment and surrender of the appropriate promissory
note, Borrower shall promptly provide to the assigning Lender and to the
assignee separate promissory notes in the amount of their respective interests
substantially in the form of Exhibit A (but, if applicable, with notation
thereon that such promissory notes are given in substitution for and replacement
of the original Note or any replacement promissory notes therefor).
(40 Lender shall have the right to disclose, on a confidential
basis, all information it has received from Borrower to prospective assignees or
participants.
SECTION VII.7. Waivers by Borrower. Except as otherwise
provided for in this Agreement, Borrower waives presentment, demand and protest
and notice of presentment, demand, protest, default, nonpayment and maturity.
SECTION VII.8. Debtor-Creditor Relationships; No Partnership.
The relationship between Borrower and Lender is, and at all times shall remain,
solely that of debtor and creditor. No covenant or provision of the Loan
Documents is intended, nor shall it be deemed or construed, to create a
partnership, joint venture, agency or common interest in profits or income
between Lender and Borrower or to create an equity in any asset in Lender.
Lender neither undertakes nor assumes any responsibility or duty to Borrower or
to any other Person with respect to the Mortgage Loan except as expressly
provided in the Loan Documents. Notwithstanding any provision of the Loan
Documents: (1) Lender is not, and shall not be construed as, a partner, joint
venturer, alter ego,
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manager, controlling person or other business associate or participant of any
kind of Borrower; (2) Lender shall in no event be liable for any debts, expenses
or losses incurred or sustained by Borrower; and (3) Lender shall not be deemed
responsible for, or a participant in, any acts, omissions or decisions of
Borrower. Lender and Borrower disclaim any intention to create any partnership,
joint venture, agency or common interest in profits or income between Lender and
Borrower, or to create an equity in any asset in Lender, or any sharing of
liabilities, losses, costs or expenses.
SECTION VII.9. Governing Law; Submission to Non-exclusive
Jurisdiction; Waiver of Objection to Inconvenient Forum. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflict of law. Borrower and Lender hereby
irrevocably submit to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
Court sitting in New York County for purposes of all legal proceedings arising
out of or relating to this Agreement. Each of Borrower and Lender irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION VII.10. Wavier of Jury Trial. Each of Borrower and
Lender hereby irrevocably waives any and all rights to trial by jury in any
legal proceeding arising out of or relating to this Agreement, the Collateral or
the transactions contemplated hereby.
SECTION VII.11. Restoration of Set Aside. If, for any reason,
any portion of Borrower's payments to Lender pursuant to this Agreement is set
aside or restored, whether voluntarily or involuntarily, after the making
thereof, then the obligation intended to be satisfied thereby shall be revived
and shall continue in full force and effect as if said payment or payments had
not been made, and Borrower shall be liable for the full amount Lender is
required to repay plus any and all costs and expense (including (i) attorneys'
fees and expenses and (ii) attorneys' fees and expenses incurred pursuant to the
Bankruptcy Code) paid by Lender in connection therewith.
SECTION VII.12. Notices. All notices, requests, demands and
other communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
telecopier, telegram, certified or registered mail, postage prepaid, or an
established overnight delivery service, addressed as follows:
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If to Lender:
Merrill Lynch Mortgage Capital Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
Facsimile No.: (212) 449-0735
Confirmation: (212) 449-9293
With a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
Facsimile No.: (212) 906-2021
Confirmation: (212) 906-2000
If to Borrower:
Resource Properties XLIX, Inc.
The Ledgewood Law Firm Building
1521 Locust Street, Suite 400
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5388
Confirmation: (215) 546-2005
With a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman
Facsimile: (215) 735-5005
Confirmation: (215) 731-5388
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or to such other address as the party to receive the notice shall designate by
notice to the other party.
SECTION VII.13. Headings and References. The headings used in
this Agreement are for convenience only and constitute no part of this
Agreement, and references herein to Articles, Sections, paragraphs or clauses,
unless otherwise specified, are to the Articles, Sections, paragraphs or clauses
of this Agreement.
SECTION VII.14. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
SECTION VII.15. Survival of Representations and Warranties.
All representations and warranties made by Borrower herein or in the other Loan
Documents shall survive delivery of the Note and the making of the Loan
hereunder.
SECTION VII.16. Entirety. The Loan Documents represent the
entire agreement of the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings,
whether express or implied, written or oral.
[Signatures begin on next page]
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IN WITNESS WHEREOF, the parties hereto have each caused this
Loan Agreement to be duly executed, as of the day and year first above written.
RESOURCE PROPERTIES XLIX, INC.
By:________________________________________
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.
By:________________________________________
Name: David W. Mahoney
Title: Vice President